<PAGE>
As filed with the Securities and Exchange Commission on September 23, 1999
Registration No. 333-85149
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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TRITON PCS HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 4812 23-2974475
(State or other (Primary Standard (IRS Employer
jurisdiction Industrial Identification Number)
of incorporation or Classification Code)
organization)
375 Technology Drive
Malvern, Pennsylvania 19355
(610) 651-5900
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
--------------
David D. Clark
Chief Financial Officer and Senior Vice President
Triton PCS Holdings, Inc.
375 Technology Drive
Malvern, Pennsylvania 19355
(610) 651-5900
(Address, including zip code, and telephone number, including area code, of
agent for service)
Copies to:
Leonard J. Baxt William A. Robinson Alan Dean
John W. McNamara Triton PCS Holdings, Davis Polk & Wardwell
Dow, Lohnes & Albertson, Inc. 450 Lexington Avenue
PLLC 375 Technology Drive New York, New York 10017
1200 New Hampshire Ave., Malvern, Pennsylvania (212) 450-4000
N.W. 19355
Washington, D.C. 20036 (610) 651-5900
(202) 776-2000
--------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, 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(c)
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. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
Proposed Amount of
Title of Each Class of Securities To Be Maximum Aggregate Registration
Registered Offering Price(1)(2) Fee(3)
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<S> <C> <C>
Class A Common Stock, par value $0.01 per
share..................................... $125,000,000 $39,963
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</TABLE>
(1) A portion of the proposed maximum aggregate offering price represents
shares that are to be offered outside of the United States but that may be
resold from time to time in the United States.
(2) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457 under the Securities Act of 1933.
(3) $34,750 of the registration fee was paid on August 13, 1999.
--------------
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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<PAGE>
Explanatory Note
This registration statement contains two separate prospectuses. The first
prospectus relates to a public offering in the United States and Canada of an
aggregate of shares of Class A common stock. The second prospectus relates
to a concurrent offering outside the United States and Canada of an aggregate
of shares of Class A common stock. The prospectuses for each of the U.S.
offering and the international offering will be identical with the exception
of an alternate front cover page for the international offering. This
alternate page appears in this registration statement immediately following
the complete prospectus for the U.S. offering.
<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 we are not soliciting offers to buy these +
+securities in any jurisdiction where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (Subject to Completion)
Issued September 23, 1999
Shares
[LOGO OG TRITON PCS, INC. APPEARS HERE]
Triton PCS Holdings, Inc.
CLASS A COMMON STOCK
-----------
Triton PCS Holdings, Inc. is offering shares of its Class A common
stock. This is our initial public offering. We anticipate that the initial
public offering price will be between $ and $ per share.
-----------
We have applied for quotation of the Class A common stock on the Nasdaq
National Market under the symbol "TPCS."
-----------
Investing in our Class A common stock involves risks. See "Risk Factors"
beginning on page 6.
-----------
PRICE $ A SHARE
-----------
<TABLE>
<CAPTION>
Underwriting
Price Discounts Proceeds
to and to
Public Commissions Triton
------ ------------ --------
<S> <C> <C> <C>
Per Share.......................................... $ $ $
Total.............................................. $ $ $
</TABLE>
Triton PCS Holdings, Inc. has granted the underwriters the right to purchase up
to an additional shares to cover over-allotments.
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
Morgan Stanley & Co. Incorporated expects to deliver the shares to purchasers
on , 1999.
-----------
MORGAN STANLEY DEAN WITTER LEHMAN BROTHERS
SALOMON SMITH BARNEY
FIRST UNION CAPITAL MARKETS CORP.
J.P. MORGAN & CO.
, 1999
<PAGE>
Map showing Triton PCS and AT&T wireless networks in Southeastern U.S.
Triton and AT&T covered markets shaded in appropriate regions.
Triton PCS, AT&T and SunCom logos also displayed.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary......................................................... 1
Risk Factors............................................................... 6
Use of Proceeds............................................................ 17
Dividend Policy............................................................ 17
Capitalization............................................................. 18
Dilution................................................................... 19
Selected Historical Consolidated Financial
Data...................................................................... 20
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................................................ 22
Business................................................................... 32
The Wireless Communications Industry....................................... 46
Management................................................................. 53
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Principal Stockholders.................................................... 64
Certain Relationships and Related Transactions............................ 66
Description of Certain Indebtedness....................................... 75
Description of Capital Stock.............................................. 80
Certain United States Federal Tax Considerations to Non-U.S. Holders...... 85
Shares Eligible for Future Sale........................................... 89
Underwriters.............................................................. 91
Legal Matters............................................................. 94
Experts................................................................... 94
Change in Accountants..................................................... 94
Available Information..................................................... 94
Index to Financial Statements............................................. F-1
</TABLE>
----------------
We are a Delaware corporation. Our principal executive offices are located
at 375 Technology Drive, Malvern, Pennsylvania 19355, and our telephone number
at that address is (610) 651-5900. Our World Wide Web site address is
http://www.tritonpcs.com. The information in our website is not part of this
prospectus.
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
which is contained in this prospectus. We are offering to sell shares of Class
A common stock and seeking offers to buy shares of Class A common stock only
in jurisdictions where offers and sales are permitted. The information
contained in this prospectus is accurate only as of the date of this
prospectus, regardless of the time of delivery of this prospectus or of any
sale of the Class A common stock.
Until , 1999, 25 days after the commencement of this offering, all
dealers that buy, sell or trade in our Class A common stock, whether or not
participating in this offering, may be required to deliver a prospectus. This
delivery requirement is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
<PAGE>
PROSPECTUS SUMMARY
This summary highlights information about Triton and the Class A common
stock offered by this prospectus. It does not contain all of the information
that is important to you. You should read this summary together with the more
detailed information and our financial statements and notes appearing elsewhere
in this prospectus. You should carefully consider, among other things, the
matters set forth in "Risk Factors."
Triton
We are a rapidly growing provider of wireless personal communications
services in the southeastern United States. In February 1998, we entered into a
joint venture with AT&T, our largest equity sponsor. AT&T contributed personal
communications services licenses to us in exchange for an equity position in
Triton. Since that time, we have expanded our coverage area through
acquisitions and additional license exchanges with AT&T. We believe our markets
are strategically attractive because of their proximity to AT&T's wireless
systems in the Washington, D.C., Charlotte, North Carolina and Atlanta, Georgia
markets, which collectively cover a population of more than 27 million
individuals. Our market location is attractive as we are the preferred provider
of wireless mobility services to AT&T's digital wireless customers who roam
into our markets. Our management team is led by Michael Kalogris and Steven
Skinner, the former Chief Executive Officer and Chief Operating Officer of
Horizon Cellular Group, respectively.
Our personal communications services licenses cover approximately 13 million
potential customers. Our network build-out for these licenses is scheduled for
three phases. In the first half of 1999, we completed Phase I of this build-out
and successfully launched personal communications services in 15 markets. We
are now able to provide service to over 8.7 million individuals, or 67% of our
potential customers. Since we began offering services in our first 15 markets,
our subscriber base and the number of minutes generated by non-Triton
subscribers roaming onto our network have grown dramatically. From January 1999
to June 1999, our subscriber base grew from 33,844 users to 78,364 users, and
roaming minutes generated by non-Triton subscribers increased from
approximately 0.7 million minutes per month to approximately 11.4 million
minutes per month. We expect to complete Phases II and III of our network
build-out by the end of the first quarter of 2000 and by year-end 2001,
respectively. Upon completion of Phase III, we will be able to provide services
to 13 million potential customers, and our network will include approximately
2,300 cell sites and eight switches and span approximately 18,000 highway
miles.
Our markets have attractive demographic characteristics for wireless
communications services, including population growth rates that are higher than
the national average and population densities that are 87% greater than the
national average. These markets include both major population centers and
resort destinations. Our strategy is to become the leading provider of wireless
communications services in the markets we serve. We intend to achieve this
objective by providing our customers with simple, easy-to-use wireless services
with coast-to-coast coverage, superior call quality, personalized customer care
and competitive pricing.
Strategic Alliance with AT&T
One of our most important competitive advantages is our strategic alliance
with AT&T, the largest provider of wireless communications services in the
United States. As part of its strategy to rapidly expand its digital wireless
coverage in the United States, AT&T has focused on constructing its own
network, as well as entering into agreements with four independent wireless
operators, including Triton, to construct and operate personal communications
services networks in other markets. Our strategic alliance with AT&T provides
us with many business, operational and marketing advantages. Some of these
advantages include:
. Recognized Brand Name. We market our wireless services to our potential
customers giving equal emphasis to our regional SunCom brand name and
logo and AT&T's brand name and logo. We believe
1
<PAGE>
that association with the AT&T brand name significantly increases the
likelihood that potential customers will purchase our wireless
communications services.
. Preferred Roaming Partner. We are the preferred carrier for AT&T's
digital wireless customers who roam into our coverage area. We expect to
benefit from growth in roaming traffic as AT&T's digital wireless
customers, particularly those in Washington, D.C., Charlotte, North
Carolina and Atlanta, Georgia, travel into our markets.
. Coverage Across the Nation. Our customers have access to coast-to-coast
coverage through our agreements with AT&T, other Members of the AT&T
Wireless Network and other third-party roaming partners. We believe this
coast-to-coast coverage provides a significant advantage over our
personal communications services competitors in our markets and allows
us to offer competitive pricing plans, including national rate plans.
Competitive Strengths
In addition to the advantages provided by our strategic alliance with AT&T,
we have a number of competitive strengths. These strengths include the
following:
. Advanced Technology. We are building our network using time division
multiple access digital technology, which enables us to offer enhanced
features such as longer battery life, higher network quality, improved
in-building penetration and greater network capacity relative to analog
cellular service.
. Experienced Management. Our senior management team has an average of 11
years of experience in the wireless communications industry with
companies such as AT&T, Bell Atlantic Mobile Systems, Horizon Cellular
and ALLTEL Communications Inc.
. Contiguous Service Area. We operate in a contiguous service area that
allows us to cost effectively offer large regional calling areas,
generate operational cost savings and route a large number of minutes
through our network, thereby reducing interconnect costs for access to
other networks.
. Strong Capital Base. Following the completion of this offering, our
business plan will be fully funded with capital of approximately $1.4
billion.
Risk Factors
Potential investors in our Class A common stock should carefully consider
the risk factors set forth under the caption "Risk Factors," including the fact
that we have never been profitable and there is no guarantee that we will ever
be profitable, and the other information included in this prospectus prior to
making an investment decision.
2
<PAGE>
THE OFFERING
<TABLE>
<S> <C> <C>
Class A common stock offered in:
United States offering........................ shares
International offering........................ shares
----
Total:...................................... shares
====
Class A common stock to be outstanding after the
offering....................................... shares
Over-allotment option........................... shares
</TABLE>
- --------
Unless we specifically state otherwise, the information in this prospectus
does not take into account the sale of up to shares of Class A common stock
which the underwriters have the option to purchase from Triton to cover over-
allotments.
The number of shares of our Class A common stock that will be outstanding
upon consummation of the offering listed above includes shares of
Class A common stock that are expected to be issued in connection with the
offering upon the conversion of shares of our Series C preferred stock.
The number of shares listed above does not include
. shares of common stock that are issuable upon conversion of all of the
outstanding shares of our Series D preferred stock, which are immediately
convertible into either Class A or Class B common stock at the holder's
option,
. shares of Class B non-voting common stock, which are immediately
convertible into Class A common stock at the holder's option, and
. shares of Class A common stock that may ultimately be issued upon
conversion of the outstanding shares of our Series A preferred stock,
which are not available for conversion until 2006.
The Class B non-voting common stock is identical to the Class A common stock in
all respects, except that the Class B non-voting common stock has no voting
rights.
3
<PAGE>
SUMMARY FINANCIAL DATA
The following tables present summary financial data derived from the audited
combined financial statements of Triton and its predecessor company for the
period from March 6, 1997 through December 31, 1997, and the year ended
December 31, 1998 and the unaudited financial statements of Triton for the six
months ended June 30, 1998 and 1999. In addition, subscriber and customer data
for the same periods are presented. The following financial information is
qualified by reference to and should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the financial statements and related notes appearing elsewhere in this
prospectus.
<TABLE>
<CAPTION>
March 6, 1997 Six Months Ended
Through Year Ended June 30,
December 31, December 31, --------------------
1997 1998 1998 1999
------------- ------------ --------- ---------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Statement of Operations Data:
Revenues:
Service revenues........... -- $ 11,172 -- $ 17,662
Roaming revenues........... -- 4,651 -- 12,953
Equipment revenues......... -- 755 -- 7,627
------- --------- --------- ---------
Total revenues........... -- 16,578 -- 38,242
------- --------- --------- ---------
Costs and expenses:
Costs of services and
equipment................. -- 5,997 -- 27,625
Operations................. -- 13,045 $ 1,444 11,023
Sales and marketing........ -- 1,703 -- 20,562
General and
administrative............ $ 2,736 8,570 3,709 10,653
Depreciation and
amortization.............. 5 6,663 1,114 15,969
------- --------- --------- ---------
Total operating
expenses................ 2,741 35,978 6,267 85,832
------- --------- --------- ---------
Loss from operations......... (2,741) (19,400) (6,267) (47,590)
Interest expense............. (1,228) (30,391) (9,872) (18,847)
Interest and other income.... 8 10,635 2,739 2,652
------- --------- --------- ---------
Loss before income taxes..... (3,961) (39,156) (13,400) (63,785)
Income tax benefit........... -- 7,536 6,803 --
------- --------- --------- ---------
Net loss..................... $(3,961) $ (31,620) $ (6,597) $ (63,785)
Accretion on preferred
stock....................... -- (6,853) (2,977) (4,149)
------- --------- --------- ---------
Net loss available to common
stockholders................ $(3,961) $ (38,473) $ (9,574) $ (67,934)
======= ========= ========= =========
Unaudited pro forma basic and
diluted net loss per common
share....................... $ (23.26) $ (7.27) $ (31.10)
========= ========= =========
Unaudited pro forma weighted
average common shares
outstanding................. 1,654,104 1,316,498 2,184,224
========= ========= =========
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
As of June 30, 1999
-----------------------
Actual As Adjusted(1)
-------- --------------
(in thousands)
<S> <C> <C>
Balance Sheet Data:
Cash and cash equivalents............................... $ 9,250
Working capital......................................... 40,646
Property, plant and equipment, net...................... 293,706
Total assets............................................ 701,135
Long-term debt and capital lease obligations............ 483,574
Redeemable preferred stock.............................. 89,627
Shareholders' equity.................................... 70,912
</TABLE>
<TABLE>
<CAPTION>
March 6, 1997 Six Months Ended
Through Year Ended June 30,
December 31, December 31, -------------------
1997 1998 1998 1999
------------- ------------ -------- ---------
<S> <C> <C> <C> <C>
Other Operating Data:
Subscribers (end of period)... -- 33,844 -- 78,364
Launched potential customers
(end of period).............. -- 248,000 -- 8,700,000
EBITDA(2) (in thousands)...... $(2,736) $(12,737) $ (5,153) $ (31,621)
Cash flows (in thousands)
from:
Operating activities........ $(1,077) $ (4,130) $ (188) $ (49,575)
Investing activities........ (478) (372,372) (172,229) (124,108)
Financing activities........ 12,917 511,312 422,563 36,761
</TABLE>
- --------
(1) The as adjusted financial information has been adjusted to give effect to
(a) the conversion of all outstanding shares of Series C preferred stock
into shares of common stock upon closing of this offering and (b) the
issuance of the Class A common stock to be issued upon closing of the
offering.
(2) "EBITDA" is defined as operating loss plus depreciation and amortization
expense. EBITDA is a key financial measure but should not be construed as
an alternative to operating income, cash flows from operating activities or
net income (or loss), as determined in accordance with generally accepted
accounting principles. EBITDA is not a measure determined in accordance
with generally accepted accounting principles and should not be considered
a source of liquidity. We believe that EBITDA is a standard measure
commonly reported and widely used by analysts and investors in the wireless
communications industry. However, our method of computation may or may not
be comparable to other similarly titled measures of other companies.
5
<PAGE>
RISK FACTORS
In addition to the other information in this prospectus, you should
carefully consider the following risks before making an investment decision.
The trading price of our Class A common stock could decline due to any of
these risks, and you could lose all or a part of your investment.
We expect to continue to incur operating losses.
We have a history of operating losses and expect to continue to incur
operating losses and to generate negative cash flow from operating activities
during the next several years while we develop and construct our personal
communications services network and build our customer base. Now that we have
completed Phase I of our network build-out, our operating profitability will
depend on our ability to:
. market our services successfully;
. achieve our projected market penetration;
. manage customer turnover rates effectively;
. price our services competitively; and
. complete Phases II and III of our network build-out.
We may not be able to successfully accomplish these tasks, and if we do
not, we may not be able to achieve operating profitability.
If we are not able to complete our personal communications services network,
we may not be successful.
In order for us to complete our personal communications services network
and to provide our wireless communications services to customers throughout
our licensed area, we must successfully:
. lease or otherwise obtain rights to a sufficient number of cell and
switch sites for the location of our base station equipment;
. expand our existing customer service, network management and billing
systems; and
. complete the purchase and installation of equipment, build out the
physical infrastructure and test the network.
These events may not occur on a timely basis or on the cost basis that we have
assumed, or at all. Implementation of the network involves various risks and
contingencies, many of which are not within our control and any of which could
have a material adverse effect on the implementation of our system should
there be delays or other problems. We could lose our FCC licenses if we fail
to build out a specified percentage of our network within various time limits.
See "--We are dependent on our FCC licenses, and our business could be harmed
by adverse regulatory changes" and "The Wireless Communications Industry--
Regulation."
If AT&T is not successful as a provider of wireless communications, we may not
be successful.
Our results of operations are highly dependent on our relationship with
AT&T and the success of its wireless strategy. AT&T is subject, to varying
degrees, to the economic, administrative, logistical and other risks set forth
in this prospectus. Because we market our products under the AT&T brand name,
our results of operations could be adversely affected if AT&T's reputation as
a wireless provider declines.
6
<PAGE>
We depend on our agreements with AT&T for our success, and we would have
difficulty operating without them.
Our results of operations are dependent upon agreements we have entered
into with AT&T in several ways:
. We market our products using equal emphasis co-branding with AT&T in
accordance with a license agreement with AT&T, which we believe provides
us with significant marketing advantages. The license agreement has an
initial five-year term expiring February 2003 and may be terminated if
we fail to comply with any of its material provisions.
. Most of our roaming revenues have historically been derived from AT&T's
wireless customers traveling through our areas. Our roaming agreement
with AT&T contemplates that the roaming rate charges to AT&T for AT&T's
customers roaming onto our network will decline over the next several
years and may be renegotiated. The roaming agreement has a 20-year term
and may be terminated by AT&T if we breach any of its material
provisions.
AT&T may also terminate the license and roaming agreements in the event of
specified acquisitions or mergers. See "Certain Relationships and Related
Transactions--The AT&T Agreements."
Our results of operations would be adversely affected if any of our
agreements with AT&T are terminated.
Our agreements with AT&T contain stringent development requirements which, if
not met, will result in the loss of some of our rights under those agreements.
The various agreements we have entered into with AT&T contain requirements
regarding the construction of our network, and, in many instances, these
requirements are more stringent than those imposed by the FCC. Failure to meet
those requirements could result in termination of exclusivity provisions
contained in our agreements with AT&T. We will need to complete the
construction of additional phases of our network on a timely basis to meet
those requirements. The construction of the remainder of our network involves
risks of unanticipated costs and delays. See "Certain Relationships and
Related Transactions--The AT&T Agreements."
AT&T may compete with us.
Under the terms of our stockholders' agreement, we are required to enter
into a resale agreement at AT&T's request. The resale agreement will allow
AT&T to sell access to, and usage of, our services in our licensed area on a
nonexclusive basis and using the AT&T brand. AT&T may be able to develop its
own customer base in our licensed area during the term of the resale
agreement. In addition, if AT&T engages in specified business combinations,
the exercise of its termination rights under the stockholders' agreement could
result in increased competition detrimental to our business. We cannot assure
you that AT&T will not enter into such a business combination, and the
termination of the non-compete and exclusivity provisions of the stockholders'
agreement could have a material adverse effect on our operations.
Our inability to effectively manage our planned rapid growth could adversely
affect our operations.
We have experienced rapid growth and development in a relatively short
period of time and expect to continue to experience rapid growth in the
future. The management of such growth will require, among other things,
continued development of our financial and management controls and management
information systems, stringent control of costs, increased marketing
activities, ability to attract and retain qualified management personnel and
the training of new personnel. We intend to hire additional personnel in order
to manage our expected growth and expansion. Failure to successfully manage
our expected rapid growth and development and difficulties in managing the
build-out of our network could have a material adverse effect on our business,
results of operations and financial condition.
7
<PAGE>
Our future growth may require additional significant capital and we may not be
able to obtain additional capital.
We currently estimate that capital requirements for the period from
inception through year-end 2001 will total approximately $1.3 billion. We
currently plan to fund these requirements with the net proceeds of this
offering, together with:
. borrowings under our credit facility,
. net proceeds from our senior subordinated discount notes offering,
. proceeds from the sale of our towers, and
. proceeds from the irrevocable equity commitments we have received from
some of our stockholders.
However, if we are unable to borrow under our credit facility because we
cannot satisfy the borrowing conditions, which include the absence of any
material adverse change, or if one or more of our stockholders fails to honor
its equity commitment on a timely basis, we would need additional funds to
satisfy our capital requirements. In addition, the funds we actually require
may vary materially from these estimates. We could require additional funds if
we depart from our current business plan or due to unforeseen delays,
regulatory changes, cost overruns or other unanticipated expenses. This may
require us to delay or abandon our expansion or spending plans, which could
have a material adverse effect on our business. In addition, we may elect to
pursue possible acquisitions of additional personal communications services or
cellular licenses which could require additional capital investments in our
network. If any of these events were to happen, we could be required to borrow
more money or issue additional debt or equity securities.
If we need and cannot obtain additional financing to complete our network and
fund operating losses, it may slow our growth and we may not be able to repay
our existing debt.
Due to our highly leveraged capital structure, additional financing may not
be available to us, or, if it were available, we may not be able to obtain
financing on a timely basis, on terms acceptable to us and within the
limitations contained in our credit facility or the indenture governing our
senior subordinated discount notes or any new financing arrangements. Failure
to obtain any appropriate financing, should the need for it develop, could
result in the delay or abandonment of our development and expansion plans and
our failure to meet regulatory and contractual requirements. It could also
impair our ability to meet our debt service requirements and could have a
material adverse effect on our business.
Our substantial amount of debt makes us especially susceptible to competition
and market fluctuations.
The degree to which we are leveraged increases our vulnerability to:
. changes in general economic conditions;
. increases in prevailing interest rates; and
. competitive pressures on pricing.
In addition, the fact that we may be more leveraged than some of our
competitors may become a competitive disadvantage.
Competitors who entered the wireless communications market before us may be
better positioned than we are to attract customers.
Competitors who entered the wireless communications services market before
us may have a significant time-to-market advantage over us. As a new entrant
in the market, we may have to engage in significant and prolonged discounting
to attract customers, which would materially adversely affect our business. We
may not be able to compete successfully with competitors who have a
significant time-to-market advantage. See "Business--Competition."
8
<PAGE>
We have many competitors in our markets that have substantial coverage areas,
which makes it difficult for us to acquire and maintain a strong competitive
position.
We compete in our markets with most of the major cellular and personal
communications services companies in the United States. Many of our
competitors have substantially greater financial, technological, marketing and
sales and distribution resources than we do. Some of our competitors have more
extensive coverage within our licensed areas than we provide and also have
broader regional coverage. We may have to significantly discount our prices
over a long period of time to attract customers, which would put downward
pressure on our prices and make it more difficult for us to achieve positive
cash flow. See "Business--Competition" and "The Wireless Communications
Industry."
Some competitors may have different or better technology than we do and may
attract more customers.
We compete with companies that use other communications technologies,
including paging and digital two-way paging, enhanced specialized mobile radio
and domestic and global mobile satellite service. We may compete in the future
with companies who offer new technologies. These technologies may have
advantages over our technology and may attract our customers. See "Business--
Competition" and "The Wireless Communications Industry."
Competitors who offer more services than we do may attract customers.
Some of our competitors market other services, such as traditional
telephone services, cable television access and access to the Internet,
together with their wireless communications services, which makes their
services more attractive to customers.
In addition, we expect that in the future, providers of wireless
communications services will compete more directly with providers of
traditional landline telephone services, energy companies, utility companies
and cable operators who expand their services to offer communications
services. See "Business--Competition."
We are dependent upon roaming revenue which is seasonal.
In 1998, approximately 28.1%, and in the six months ended June 30, 1999,
approximately 33.9%, of our revenues were derived from roaming as the result
of payments by other wireless providers for use of our network by their
customers who had traveled within our coverage area. Most of that revenue was
derived from AT&T's wireless customers. Our coverage area includes a number of
resort areas that contribute to our roaming revenue. As a result, our roaming
revenue increases during vacation periods, introducing a measure of
seasonality to our roaming revenue.
The personal communications services industry is relatively new and unproven.
Personal communications services systems have a limited operating history
in the United States, and our operation of these systems in our markets may
not become profitable. In addition, we cannot estimate with any degree of
certainty the extent of potential demand for personal communications services
in our markets. Our inability to establish and successfully market personal
communications services could have a material adverse effect on our financial
condition and results of operations.
The wireless telecommunications industry is experiencing significant
technological change, as evidenced by the increasing pace of digital upgrades
in existing analog wireless systems, ongoing improvements in the capacity and
quality of digital technology, shorter development cycles for new products and
enhancements and changes in end-user requirements and preferences. The extent
of customer demand remains uncertain, as does the extent to which airtime and
monthly access rates may continue to decline. As a result, our future
prospects and those of the industry also remain uncertain.
9
<PAGE>
We depend on consultants and contractors to build out our network, and if any
of them fails to perform its obligation to us, we may not complete the
construction of our network on a timely basis.
We have retained Ericsson Inc. and other consultants and contractors to
assist in the design and engineering of our systems, construct cell sites,
switch facilities and towers, lease cell sites and deploy our personal
communications services network systems. The failure by any of these
consultants or contractors to fulfill its contractual obligations could
materially delay the construction of our personal communications services
network, which could slow our growth and our ability to compete in the
wireless communications industry and could materially adversely affect our
financial condition and results of operations.
Difficulties in obtaining infrastructure equipment may affect our ability to
construct our network, meet our development requirements and compete in the
wireless communications industry.
We have obtained a substantial majority of our network equipment from
Ericsson. The equipment that we require to construct our network is in high
demand, and Ericsson could have a substantial backlog of orders. Accordingly,
the lead time for the delivery of this equipment may be long. Some of our
competitors purchase large quantities of communications equipment and may have
established relationships with the manufacturers of this equipment, such as
Ericsson. Consequently, they may receive priority in the delivery of this
equipment. We also purchase a significant amount of handsets from a few
providers. Handsets are in high demand, and some providers have had a
substantial backlog of orders. If Ericsson or any other vendor fails to
deliver equipment to us in a timely manner, we may be unable to provide
wireless communications services comparable to those of our competitors. In
addition, we may be unable to satisfy the requirements regarding the
construction of our network contained in FCC regulations and our agreements
with AT&T. Any of these outcomes could lessen our revenue. See "Business--
Network Build-Out," "The Wireless Communications Industry--Regulation" and
"Certain Relationships and Related Transactions--The AT&T Agreements."
A high rate of customer turnover may negatively impact our business.
Many providers in the personal communications services industry have
experienced a high rate of customer turnover as compared to cellular industry
averages. The rate of customer turnover may be the result of several factors,
including network coverage, reliability issues such as blocked and dropped
calls, handset problems, non-use of phones, change of employment,
affordability, customer care concerns and other competitive factors. Our
strategy to address customer turnover may not be successful, or the rate of
customer turnover may be unacceptable. Price competition and other competitive
factors could also cause increased customer turnover. A high rate of customer
turnover could have a material adverse effect on our competitive position and
results of operations.
We are dependent on our FCC licenses, and our business could be harmed by
adverse regulatory changes.
The FCC regulates the licensing, construction, operation, sale and
interconnection arrangements of wireless telecommunications systems to varying
degrees, as do some state and local regulatory agencies. In addition, the FCC,
in conjunction with the Federal Aviation Administration, regulates tower
marking and lighting. The FCC, the FAA or the state and local agencies and
courts having jurisdiction over our business may adopt regulations or take
other actions that would adversely affect our business.
The loss of any of our licenses from the FCC to provide wireless services
would have a material adverse effect on our business. Our FCC licenses are
subject to renewal and revocation. Our licenses were initially granted to AT&T
on June 23, 1995 and expire in 2005, with the exception of our cellular
license for Myrtle Beach which expires in 2000. As the licensee for those
licenses, we must construct facilities that offer coverage to one-third of the
population of our service areas by June 2000 and coverage to two-thirds of the
population by June 2005. Licensees who fail to meet these coverage
requirements are subject to forfeiture of the license. We
10
<PAGE>
expect to comply with these coverage requirements within the requisite time
period; however, the non-renewal or loss of any of our licenses could
materially adversely affect our business. See "The Wireless Communications
Industry--Regulation."
If we cannot retain senior management, we may not be able to effectively run
our business.
We depend on Michael Kalogris, our chief executive officer, and Steven
Skinner, our president and chief operating officer, for management services.
Messrs. Kalogris and Skinner have extensive experience in the wireless
communications industry, and their loss could have a material adverse effect
on our operations. We believe that there is, and will continue to be, intense
competition for qualified personnel in the personal communications services
industry as the emerging personal communications services market develops, and
we may not be successful in retaining our key personnel or in attracting and
retaining other highly qualified technical and management personnel. We do not
presently maintain key-man life insurance on any of our executives or other
employees.
We will likely incur operating costs due to unauthorized use of our network.
As do most companies in the wireless industry, we will likely incur costs
associated with the unauthorized use of our network, including administrative
and capital costs associated with detecting, monitoring and reducing the
incidence of fraud. Fraud impacts interconnection costs, capacity costs,
administrative costs, fraud prevention costs and payments to other carriers
for unbillable fraudulent roaming.
The technologies that we use may become obsolete, which would limit our
ability to compete effectively.
We have employed digital wireless communications technology using the
current time division multiple access/IS-136 standards. Other digital
technologies may ultimately prove to be more advantageous than time division
multiple access. If another technology becomes the preferred industry
standard, we may be at a competitive disadvantage, and competitive pressures
may require us to change our digital technology at substantial cost. We may
not be able to respond to those pressures and implement new technology on a
timely basis, or at an acceptable cost. If time division multiple access
technology becomes obsolete at some time in the future, and we are unable to
effect a cost-effective migration path, it could materially and adversely
affect our financial condition, results of operations and liquidity. Time
division multiple access/IS-136 standards may not always meet or exceed the
capabilities and quality of other technologies. See "Business--Time Division
Multiple Access Digital Technology."
In addition, if AT&T adopts a new technology other than time division
multiple access digital technology, and we do not adopt the new technology,
our exclusivity rights will terminate under our agreements with AT&T. See
"Certain Relationships and Related Transactions--The AT&T Agreements--The
Stockholders' Agreement--Exclusivity."
If hand-held phones pose health and safety risks, we may be subject to new
regulations, and there may be a decrease in demand for our services.
Media reports have suggested that certain radio frequency emissions from
wireless handsets may be linked to various health concerns, including cancer,
and may interfere with various electronic medical devices, including hearing
aids and pacemakers. Concerns over radio frequency emissions may have the
effect of discouraging the use of wireless handsets, which would decrease
demand for our services. During the past two years, the FCC has updated the
guidelines and methods it uses for evaluating radio frequency emissions from
radio equipment, including wireless handsets. In addition, interest groups
have requested that the FCC investigate claims that time division multiple
access and other digital technologies pose health concerns and cause
interference with hearing aids and other medical devices. Although the updates
impose new restrictive standards on radio frequency emissions from lower power
devices such as wireless handsets, all wireless handsets that we offer our
customers comply with the proposed standards. Additionally, the FCC has
initiated a rulemaking proceeding to implement
11
<PAGE>
provisions of the Telecommunications Act of 1996 that is designed to ensure
that personal communications services handsets and other technological
equipment are accessible to people with disabilities. See "The Wireless
Communications Industry--Regulation."
Our use of the SunCom brand name for marketing may link our reputation with
those of the other SunCom companies and may expose us to litigation.
We use the SunCom brand name to market our products and services in
conjunction with two other Members of the AT&T Wireless Network, TeleCorp PCS
and Tritel PCS, in order to broaden our marketing exposure and share the costs
of advertising. It is possible that our reputation for quality products and
services under the SunCom brand name will be associated with the reputation of
TeleCorp PCS and Tritel PCS, and any unfavorable consumer reaction to our
wireless partners using the SunCom brand name could adversely affect our own
reputation.
The State of Florida has contacted AT&T concerning its alleged rights in
the trademark SunCom. The State of Florida uses the trademark SunCom for a
communications network used solely by state agencies in the State of Florida
and certain not-for-profit entities that conduct a threshold level of business
with the State of Florida. If we are not successful in reaching an amicable
resolution with the State of Florida regarding the SunCom trademark, we may
need to litigate to determine the scope of the rights of the State of Florida
with respect to the SunCom trademark. The outcome of any litigation is
uncertain, and we may not have a continuing right to use the SunCom brand name
in the areas in which the State of Florida has done business under the SunCom
trademark.
As a holding company, we depend on distributions from our subsidiaries to meet
our obligations, and our subsidiaries are subject to various agreements and
laws that restrict their ability to distribute funds to us.
We are a holding company with no direct operations and no significant
assets other than the stock of our subsidiaries. We depend on the cash flows
of our subsidiaries to meet our obligations and to pay any potential
dividends. The ability of our subsidiaries to distribute funds to us is and
will be restricted by the terms of existing and future indebtedness, including
our credit facility and indenture, and by applicable state laws that limit the
payments of dividends. See "Description of Certain Indebtedness--Notes" and
"--Credit Facility."
Our debt instruments contain restrictive covenants that may limit our
operating flexibility.
The documents governing our indebtedness, including the credit facility and
indenture, contain significant covenants that limit our ability to engage in
various transactions and, in the case of the credit facility, require
satisfaction of specified financial performance criteria. In addition, under
each of these documents, the occurrence of specific events, in some cases
after notice and grace periods, would constitute an event of default
permitting acceleration of the respective indebtedness. The limitations
imposed by the documents governing our outstanding indebtedness are
substantial, and failure to comply with them could have a material adverse
effect on our business. See "Description of Certain Indebtedness."
A limited number of stockholders controls us, and their interests may be
different from yours.
Chase Capital Partners, J.P. Morgan Investment Corporation, Desai Capital
Management Incorporated, Toronto Dominion Capital (USA), Inc., First Union
Capital Partners, Inc. and Duff Ackerman Goodrich & Assoc. L.P., our principal
institutional investors, will control approximately % of our total voting
power, in the aggregate, after the offering, and Michael Kalogris and Steven
Skinner will control approximately % of our total voting power, in the
aggregate, after the offering. Those stockholders are party to a stockholders'
agreement under which they have agreed that after the offering they will vote
their shares together to elect two of our directors. As a result of their
share ownership, these institutional investors and our management will have
the ability to control our future operations and strategy. Conflicts of
interest between the institutional investors and management stockholders and
our public stockholders may arise with respect to sales of shares of Class A
common stock owned by the institutional investors and management stockholders
or other matters. For example, sales of shares by the institutional investors
and management stockholders could result in a change of control
12
<PAGE>
under our credit facility, which would constitute an event of default under
the credit facility, and under our indenture, which would require us to offer
to repurchase our senior subordinated discount notes. In addition, the
interests of our institutional investors and other existing stockholders
regarding any proposed merger or sale may differ from the interests of our new
public stockholders, especially if the consideration to be paid for the Class
A common stock is less than the price paid by public stockholders.
Our institutional investors invest in other personal communications services
companies, and conflicts of interest may arise from these investments and from
other directorships held by our directors.
Our principal institutional investors, or their affiliates, currently have
significant investments in personal communications services companies other
than Triton. These institutional investors may in the future invest in other
entities that compete with us. In addition, several of our directors,
including our chief executive officer and chief operating officer, serve as
directors of other communications services companies. As a result, these
directors may be subject to conflicts of interest during their tenure as
directors of Triton. Because of these potential conflicts, these directors may
be required to disclose periodically financial or business opportunities to us
and to the other companies to which they owe fiduciary duties.
We do not intend to pay dividends in the foreseeable future.
We have never declared or paid any cash dividends on our common stock. For
the foreseeable future, we intend to retain any earnings to finance the
development and expansion of our business, and we do not anticipate paying any
cash dividends on our common stock. Payment of any future dividends on our
common stock will depend upon our earnings and capital requirements, the terms
of our debt instruments and preferred stock and other factors our board of
directors considers appropriate. See "--As a holding company, we depend on
distributions from our subsidiaries to meet our obligations."
We may face additional costs and other adverse effects due to year 2000
computer problems.
We use a significant number of computer systems and software programs in
our operations, including applications used in support of our personal
communications services network equipment and various administrative
functions. We have not completed our assessment of the year 2000 issue, or the
remediation and validation of non-compliant systems, such as those associated
with our Myrtle Beach operations, and do not expect to complete such
remediation and validation until November 30, 1999, only one month before the
start of the year 2000.
We do not anticipate that we will incur material expenses to make our
systems year 2000 compliant. However, unanticipated costs necessary to avoid
potential system interruptions could exceed our present expectations and
consequently have a material adverse effect on our business. Further, if our
key equipment and service providers fail to make their respective computer
systems and software programs year 2000 compliant, their failure could have a
material adverse effect on our business. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Year 2000
Compliance."
Our stock price is likely to be very volatile.
Prior to this offering, you could not buy or sell our Class A common stock
publicly. Although the initial public offering price will be determined based
on several factors, the market price after the offering may vary from the
initial offering price. The market price of our Class A common stock is likely
to be highly volatile and could be subject to wide fluctuations in response to
factors such as the following, some of which are beyond our control:
. quarterly variations in our operating results;
. operating results that vary from the expectations of securities analysts
and investors;
. changes in expectations as to our future financial performance,
including financial estimates by securities analysts and investors;
. changes in market valuations of other personal communications services
companies;
13
<PAGE>
. announcements of technological innovations or new services by us or our
competitors;
. announcements by us or our competitors of significant contracts,
acquisitions, strategic partnerships, joint ventures or capital
commitments;
. additions or departures of key personnel;
. future sales of our Class A common stock; and
. stock market price and volume fluctuations.
Stock markets in the United States often experience extreme price and
volume fluctuations. Market fluctuations, as well as general political and
economic conditions such as a recession or interest rate or currency rate
fluctuations, could adversely affect the market price of our Class A common
stock.
Additional shares of our Class A common stock will be eligible for public sale
in the future and could cause our stock price to drop, even if our business is
doing well.
After this offering, we will have shares of Class A common stock
outstanding, or shares if the underwriters' over-allotment option is
exercised in full, and we have reserved an additional shares of Class A
common stock for issuance under outstanding stock options. In addition,
shares of our Class A common stock may be issued upon conversion of our Class
B non-voting common stock and shares of our Class A common stock may be
issued upon conversion of our Series D preferred stock. The shares sold in the
offering, except for any shares purchased by our affiliates, as that term is
defined in Rule 144 under the Securities Act, may be resold in the public
market immediately. The remaining shares of our outstanding Class A common
stock, representing approximately %, or % if the underwriters' over-
allotment option is exercised in full, will be restricted securities and will
become available for resale in the public market as shown in the chart below.
<TABLE>
<CAPTION>
Number of shares/
% of total outstanding Date of availability for resale into public market
---------------------- --------------------------------------------------
<C> <S>
/ % 180 days after the date of this prospectus due to an
agreement these stockholders have with the
underwriters. However, the underwriters can waive
this restriction and allow these stockholders to sell
their shares at any time.
/ % Between 90 and 365 days after the date of this
prospectus due to the requirements of the federal
securities laws.
/ % February 4, 2001 due to restrictions on transfer
under the stockholders' agreement.
</TABLE>
We also intend to register under the Securities Act of 1933 up to
approximately shares of our Class A common stock reserved for issuance
under our equity incentive plan.
In addition, shares of our Class B non-voting common stock, which are
convertible into shares of Class A common stock at any time at the holder's
option, will become available for resale in the public market on February 4,
2001.
As restrictions on resale end, the market price could drop significantly if
the holders of these restricted shares sell them or are perceived by the
market as intending to sell them. See "Shares Eligible for Future Sale."
Anti-takeover provisions affecting us could prevent or delay a change of
control.
Provisions of our certificate of incorporation and bylaws, provisions of
our debt instruments and other agreements, and provisions of applicable
Delaware law and applicable federal and state regulations may
14
<PAGE>
discourage, delay or prevent a merger or other change of control that
stockholders may consider favorable. The provisions of our certificate of
incorporation or bylaws, among other things:
. divide our board of directors into three classes, with members of each
class to be elected in staggered three-year terms;
. limit the right of stockholders to remove directors;
. regulate how stockholders may present proposals or nominate directors for
election at annual meetings of stockholders; and
. authorize our board of directors to issue preferred stock in one or more
series, without stockholder approval.
These provisions could:
. have the effect of delaying, deferring or preventing a change in control
of our company;
. discourage bids for our Class A common stock at a premium over the
market price;
. adversely affect the market price of, and the voting and other rights of
the holders of, our Class A common stock; or
. impede the ability of the holders of our Class A common stock to change
our management.
In addition, our stockholders' agreement, credit facility and the indenture
for our outstanding public debt contain limitations on our ability to enter
into change of control transactions. See "Certain Relationships and Related
Transactions--The AT&T Agreements," "Description of Certain Indebtedness" and
"Description of Capital Stock--Anti-Takeover Provisions."
Our business is subject to regulation by the FCC and state regulatory
commissions or similar state regulatory agencies in the states in which we
operate. The FCC and some states have statutes or regulations that would
require an investor who acquires a specified percentage of our securities or
the securities of one of our subsidiaries to obtain approval to own those
securities from the FCC or the applicable state commission.
You will experience immediate and substantial dilution.
The initial public offering price is expected to be substantially higher
than the net tangible book value of each outstanding share of common stock.
Therefore, purchasers of common stock in this offering will suffer immediate
and substantial dilution. The dilution will be $ per share in the net
tangible book value of the Class A common stock at an assumed initial public
offering price of $ per share.
Your ownership interest could be diluted upon conversion of our Series A
preferred stock.
AT&T owns shares of our Series A preferred stock. On or after February
4, 2006, AT&T may convert each share of Series A preferred stock into a number
of shares of common stock equal to:
. $100 plus unpaid dividends accruing at a rate of 10% per year,
compounding quarterly from March 31, 1998
divided by
. the market price of one share of Class A common stock on that date.
As a result, AT&T will be entitled to a larger number of shares of Class A
common stock if the market value of the Class A common stock declines. Any
conversion by AT&T will dilute the ownership interest of our existing shares
of Class A common stock, which could cause the price of shares of our Class A
common stock to decline.
15
<PAGE>
This prospectus contains forward-looking statements that may prove to be
incorrect.
This prospectus contains forward-looking statements that involve
substantial risks and uncertainties. You can identify these statements by
forward-looking words such as "anticipate," "believe," "could," "estimate,"
"expect," "intend," "may," "should," "will and "would" or similar words. You
should read statements that contain these words carefully because they discuss
our future expectations, contain projections of our future results of
operations or of our financial position or state other "forward-looking"
information. We believe that it is important to communicate our future
expectations to our investors. However, there may be events in the future that
we are not able to accurately predict or control. The factors listed in this
"Risk Factors" section, as well as any cautionary language in this prospectus,
provide examples of risk, uncertainties and events that may cause our actual
results to differ materially from the expectations we describe in our forward-
looking statements. Before you invest in our Class A common stock, you should
be aware that the occurrence of the events described in these risk factors and
elsewhere in this prospectus could have a material adverse effect on our
business, results of operations, financial position and the price of our Class
A common stock.
16
<PAGE>
USE OF PROCEEDS
The net proceeds we receive from the sale of shares of our Class A
common stock in this offering are estimated to be $ , or $ if the
underwriters exercise their over-allotment option in full, at an assumed
initial public offering price of $ per share and after deducting
underwriting discounts and commissions and estimated offering expenses of $
payable by us.
We expect to use the net proceeds for general corporate purposes, including
capital expenditures in connection with the expansion of our personal
communications services network, sales and marketing activities and working
capital. We anticipate spending approximately $157.0 million in the fourth
quarter of 1999 and approximately $250.0 million in the year 2000 on capital
expenditures to continue our network build-out, although actual amounts
expended may vary significantly depending upon the progress of the build-out
and other factors. These capital expenditures will be funded through a
combination of the proceeds of this offering, cash on hand, available credit
facility borrowings, committed equity investments and other sources. A portion
of the net proceeds may also be used to acquire or invest in complimentary
businesses, technologies, product lines or products. We have no current plans,
agreements or commitments with respect to any such acquisition, and we are not
currently engaged in any negotiations with respect to any such transaction.
Pending such uses, the net proceeds of this offering will be invested in short
term, interest-bearing, investment grade securities.
DIVIDEND POLICY
We have never declared or paid a cash dividend on our common stock. For the
foreseeable future, we intend to retain any earnings to finance the
development and expansion of our business, and we do not anticipate paying any
cash dividends on our common stock. Any future determination to pay dividends
will be at the discretion of our board of directors and will be dependent upon
then existing conditions, including our financial condition and results of
operations, contractual restrictions, business prospects and other factors
that the board of directors considers relevant. Our ability to pay dividends
is restricted by the terms of our preferred stock, our indenture and our
credit facility. See "Description of Capital Stock" and "Description of
Certain Indebtedness."
17
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of June 30, 1999:
. on an actual basis;
. on a pro forma basis to reflect the conversion upon the closing of the
offering of all outstanding shares of Series C preferred stock; and
. on a pro forma basis as adjusted to reflect the sale of the Class A
common stock offered by this prospectus at an assumed initial public
offering price of $ per share and the receipt of the net proceeds
therefrom.
This information should be read in conjunction with our financial statements
and related notes thereto included elsewhere in this prospectus.
<TABLE>
<CAPTION>
As of June 30, 1999
--------------------------------
Pro Forma
Actual Pro Forma As Adjusted
-------- --------- -----------
(in thousands, except share
data)
<S> <C> <C> <C>
Long term obligations:
Bank credit facility......................... $150,000 $150,000 $150,000
Senior subordinated debt..................... 331,650 331,650 331,650
Capital lease obligations.................... 1,924 1,924 1,924
-------- -------- --------
483,574 483,574 483,574
-------- -------- --------
Series A redeemable convertible preferred stock
1,000,000 shares authorized, $.01 par value,
786,253 shares issued and outstanding......... 89,627 89,627 89,627
Shareholders' Equity:
Series B preferred stock, $.01 par value;
2,000,000 shares authorized, no shares
issued or outstanding....................... -- -- --
Series C preferred stock, $.01 par value;
3,000,000 shares authorized, 1,915,187
shares issued and outstanding, none on a pro
forma and as adjusted basis................. 19 -- --
Series D preferred stock, $.01 par value;
1,000,000 shares authorized, 543,683 shares
issued and outstanding...................... 5 5 5
Class A common stock, $.01 par value;
10,000,000 shares authorized, 273,208 shares
issued and outstanding, 2,188,395 shares on
a pro forma basis and as adjusted...... 3 17
Class B non-voting common stock $ par
value; shares authorized,
shares issued and outstanding on a pro forma
as adjusted basis........................... 5
Additional paid-in capital................... 229,755 229,755
Subscription receivable...................... (60,000) (60,000) (60,000)
Accumulated deficit.......................... (99,366) (99,366) (99,366)
Accumulated other comprehensive income....... 735 735 735
Deferred compensation........................ (239) (239) (239)
-------- -------- --------
Total Shareholders' Equity................. 70,912 70,912
-------- -------- --------
Total Capitalization....................... $644,113 $644,113
======== ======== ========
</TABLE>
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<PAGE>
DILUTION
Our pro forma net tangible book value as of June 30, 1999 was approximately
$ million, or $ per share of common stock. Pro forma net tangible book
value represents the amount of total tangible assets less total liabilities,
divided by the number of shares of common stock outstanding, assuming
conversion of all outstanding shares of Series C preferred stock and Series D
preferred stock into common stock. Without taking into account any other
changes in the net tangible book value after June 30, 1999, other than to give
effect to our sale of the shares of Class A common stock offered hereby at
an assumed initial public offering price of $ per share and our receipt of
the estimated net proceeds therefrom, our as adjusted pro forma net tangible
book value as of June 30, 1999 would have been approximately $ million, or
$ per share of common stock. This represents an immediate increase in net
tangible book value of $ per share to existing stockholders and an
immediate dilution of $ per share to new investors. The following table
illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share...................... $
Pro forma net tangible book value per share before this offering... $
Increase per share attributable to new investors...................
---
As adjusted pro forma net tangible book value per share after this
offering............................................................
----
Dilution per share to new investors................................ $
====
</TABLE>
The following table summarizes, on a pro forma basis as of June 30, 1999,
the differences between existing stockholders and the new investors with
respect to the number of shares of Class A common stock purchased from us, the
total consideration paid and the average price per share paid before deducting
the underwriting discounts and commissions and estimated offering expenses
payable by us.
<TABLE>
<CAPTION>
Shares Purchased Total Consideration Average
------------------- ---------------------- Price
Number Percent Amount Percent Per Share
-------- -------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders... % $ % $
New investors........... % %
-------- -------- ---------- --------- ----
Total................... % $ % $
======== ======== ========== ========= ====
</TABLE>
19
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The following tables present selected financial data derived from the
audited combined financial statements of Triton and its predecessor company
for the period from March 6, 1997 through December 31, 1997 and the year ended
December 31, 1998 and the unaudited financial statements of Triton for the six
months ended June 30, 1998 and 1999. In addition, subscriber and customer data
for the same periods are presented. The following financial information is
qualified by reference to and should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the financial statements and related notes appearing elsewhere in this
prospectus.
<TABLE>
<CAPTION>
March 6, 1997 Six Months Ended
Through Year Ended June 30,
December 31, December 31, --------------------
1997 1998 1998 1999
------------- ------------ --------- ---------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Statement of Operations Data:
Revenues:
Service revenues........... -- $ 11,172 -- $ 17,662
Roaming revenues........... -- 4,651 -- 12,953
Equipment revenues......... -- 755 -- 7,627
------- --------- --------- ---------
Total revenues........... -- 16,578 -- 38,242
------- --------- --------- ---------
Cost and expenses:
Costs of services and
equipment................. -- 5,997 -- 27,625
Operations................. -- 13,045 $ 1,444 11,023
Sales and marketing........ -- 1,703 -- 20,562
General and
administrative............ $ 2,736 8,570 3,709 10,653
Depreciation and
amortization.............. 5 6,663 1,114 15,969
------- --------- --------- ---------
Total operating
expenses................ 2,741 35,978 6,267 85,832
------- --------- --------- ---------
Loss from operations......... (2,741) (19,400) (6,267) (47,590)
Interest expense............. (1,228) (30,391) (9,872) (18,847)
Interest and other income.... 8 10,635 2,739 2,652
------- --------- --------- ---------
Loss before income taxes..... (3,961) (39,156) (13,400) (63,785)
Income tax benefit........... -- 7,536 6,803 --
------- --------- --------- ---------
Net loss..................... $(3,961) $ (31,620) $ (6,597) $ (63,785)
Accretion on preferred
stock....................... -- (6,853) (2,977) (4,149)
------- --------- --------- ---------
Net loss available to common
stockholders................ $(3,961) $ (38,473) $ (9,574) $ (67,934)
======= ========= ========= =========
Unaudited pro forma basic and
diluted net loss per common
share....................... $ (23.26) $ (7.27) $ (31.10)
========= ========= =========
Unaudited pro forma weighted
average common shares
outstanding................. 1,654,104 1,316,498 2,184,224
========= ========= =========
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
December 31,
----------------- June 30,
1997 1998 1999
------- -------- --------
(in thousands)
<S> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents........................... $11,362 $146,172 $ 9,250
Working capital..................................... (5,681) 146,192 40,646
Property, plant and equipment, net.................. 473 198,953 293,706
Total assets........................................ 13,253 686,859 701,135
Long-term debt and capital lease obligations........ -- 465,689 483,574
Redeemable preferred stock.......................... -- 80,090 89,627
Shareholders' equity (deficit)...................... (3,959) 95,889 70,912
</TABLE>
<TABLE>
<CAPTION>
March 6, 1997 Six Months Ended
Through Year Ended June 30,
December 31, December 31, -------------------
1997 1998 1998 1999
------------- ------------ -------- ---------
<S> <C> <C> <C> <C>
Other Data:
Subscribers (end of period)... -- 33,844 -- 78,364
Launched potential customers
(end of period).............. -- 248,000 -- 8,700,000
EBITDA(1) (in thousands)...... $(2,736) $(12,737) $ (5,153) $ (31,621)
Cash flows (in thousands)
from:
Operating activities........ $(1,077) $ (4,130) $ (188) $ (49,575)
Investing activities........ (478) (372,372) (172,229) (124,108)
Financing activities........ 12,917 511,312 422,563 36,761
</TABLE>
- --------
(1) "EBITDA" is defined as operating loss plus depreciation and amortization
expense. EBITDA is a key financial measure but should not be construed as
an alternative to operating income, cash flows from operating activities,
or net income (or loss), as determined in accordance with generally
accepted accounting principles. EBITDA is also not a measure determined in
accordance with generally accepted accounting principle and should not be
considered a source of liquidity. We believe that EBITDA is a standard
measure commonly reported and widely used by analysts and investors in the
wireless communications industry. However, our method of computation may or
may not be comparable to other similarly titled measures of other
companies.
21
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Introduction
The following discussion and analysis are based upon our financial
statements as of the dates and for the periods presented in this section. You
should read this discussion and analysis in conjunction with our financial
statements and the related notes contained elsewhere in this prospectus.
We were incorporated in October 1997. In February 1998, we entered into a
joint venture with AT&T whereby AT&T contributed to us personal communications
services licenses covering 20 MHz of authorized frequencies in a contiguous
geographic area encompassing portions of Virginia, North Carolina, South
Carolina, Tennessee, Georgia and Kentucky. As part of this agreement, AT&T
became our largest equity holder, and we were granted the right to be the
exclusive provider of wireless mobility services using equal emphasis co-
branding with AT&T in our licensed markets.
We began commercial operations and earning recurring revenues in July 1998
in connection with our acquisition of an existing cellular system serving
Myrtle Beach, South Carolina and the surrounding area on June 30, 1998. We
began generating revenues from the sale of personal communications services in
the first quarter of 1999 as part of Phase I of our personal communications
services network build-out. Our personal communications services network
build-out is scheduled for three phases. We completed the first phase of our
build-out in the first half of 1999.
On June 30, 1998, we acquired an existing cellular system serving Myrtle
Beach and the surrounding area from Vanguard Cellular Systems of South
Carolina, Inc. This transaction was accounted for as a purchase. We integrated
the Myrtle Beach system into our personal communications services network as
part of our Phase I network deployment. Substantially all of our revenues
prior to 1999 were generated by cellular services provided in Myrtle Beach.
Our results of operations do not include the Myrtle Beach system prior to our
acquisition of that system.
Revenue
We derive our revenue from the following sources:
. Service. We sell wireless personal communications services. The various
types of service revenue associated with wireless communications services
for our subscribers include monthly recurring charges and monthly non-
recurring airtime charges for local, long distance and roaming airtime
used in excess of pre-subscribed usage. Our customers' roaming charges
are rate plan dependent and based on the number of pooled minutes
included in their plans. Service revenue also includes monthly non-
recurring airtime usage charges associated with our prepaid subscribers
and non-recurring activation and de-activation service charges.
. Equipment. We sell wireless personal communications handsets and
accessories that are used by our customers in connection with our
wireless services.
. Roaming. We charge per minute fees to other wireless companies for their
customers' use of our network facilities to place and receive wireless
services.
Industry statistics indicate that average revenue per subscriber for the
wireless communications business has declined substantially over the period
from 1993-1998. Although this decline has stabilized recently, we believe that
some deterioration in average revenue per subscriber will continue.
A particular focus of our strategy is to reduce subscriber churn. Industry
data suggest that those providers, including personal communications services
providers, that have offered poor or spotty coverage, poor voice
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<PAGE>
quality, unresponsive customer care or confusing billing suffer higher than
average churn rates. Accordingly, we have launched, and will continue to
launch, service in our markets only after comprehensive and reliable coverage
and service can be maintained in that market. In addition, our billing systems
have been designed to provide customers with simple, understandable bills and
flexible billing cycles. Specifically, we offer simplified rate plans in each
of our markets that are tailored to meet the needs of targeted customer
segments. We offer regional and national rate plans which include local, long
distance and roaming services, as well as bundled minutes with multiple
options, designed to suit customers' needs. Finally, proactive subscriber
retention is an important initiative for our customer care program.
We believe our roaming revenues will be subject to seasonality. We expect
to derive increased revenues from roaming during vacation periods, reflecting
the large number of tourists visiting resorts in our coverage area. We believe
that our equipment revenues will also be seasonal, as we expect sales of
telephones to peak in the fourth quarter, primarily as a result of increased
sales during the holiday season. Although we expect our overall revenues to
increase due to increasing roaming minutes, our per-minute roaming revenue
will decrease over time according to the terms of our agreements with AT&T.
Costs and Expenses
Cost of Services and Equipment
Our costs of services and equipment include:
. Equipment. We purchase personal communications services handsets and
accessories from third party vendors to resell to our customers for use
in connection with our services. Because we subsidize the sale of
handsets to encourage the use of our services, the cost of handsets is
higher than the resale price to the customer. We do not manufacture any
of this equipment. 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.
. Roaming Fees. We incur fees to other wireless communications companies
based on airtime usage by our customers on other communications
networks.
. Transport and Variable Interconnect. We incur charges associated with
interconnection with other carriers' networks. These fees include
monthly connection costs and other fees based on minutes of use by our
customers.
. Variable Long Distance. We pay usage charges to other communications
companies for long distance service provided to our customers. These
variable charges are based on our subscribers' usage, applied at pre-
negotiated rates with the other carriers.
. Cell Site Costs. We will incur expenses for the rent of towers and
network facilities and related utility and maintenance charges. We have
recently agreed to sell our towers and lease them back.
Recent industry data indicate that transport, interconnect, roaming and
long distance charges that we currently incur will continue to decline, due
principally to competitive pressures and new technologies. Cell site costs are
expected to increase due to escalation factors included in the lease
agreements.
Operating Expenses
Our operating expenses include:
. Operations. Our operations expense includes engineering operations and
support, field technicians, network implementation support, product
development and engineering management. These expenses reflect employee
expenses and also include charges directly associated with the
maintenance of network facilities and equipment.
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<PAGE>
. Selling and Marketing. Our selling and marketing expense includes the
cost of brand management, external communications, retail distribution,
sales training, direct, indirect, third party and telemarketing support.
. General and Administrative. Our general and administrative expense
includes customer care, billing, information technology, finance,
accounting and legal services. Functions such as customer care, billing,
finance, accounting and legal services are likely to remain centralized
in order to achieve economies of scale.
. Depreciation and Amortization. Depreciation of property and equipment is
computed using the straight-line method, generally over three to twelve
years, based upon estimated useful lives. Leasehold improvements are
amortized over the lesser of the useful lives of the assets or the term
of the lease. Network development costs incurred to ready our network for
use are capitalized. Amortization of network development costs begins
when the network equipment is ready for its intended use and is amortized
over the estimated useful life of the asset. Our personal communications
services licenses and our cellular license are being amortized over a
period of 40 years.
. Interest Income (Expense). Interest income is earned primarily on our
cash and cash equivalents. Interest expense through June 30, 1999
consists of interest on our credit facility and our senior subordinated
discount notes.
Our ability to improve our margins will depend on our ability to manage our
variable costs, including selling general and administrative expense, costs
per gross added subscriber and costs of building out our network. We expect
our operating costs to grow significantly as our operations expand and our
customer base and call volumes increase. Over time, these expenses should
represent a reduced percentage of revenues as our customer base grows.
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.
Results of Operations
Six months ended June 30, 1999 compared to six months ended June 30, 1998
For the six months ended June 30, 1999, total revenue was $38.2 million.
This was comprised of service revenue of approximately $17.7 million,
equipment revenue which totaled approximately $7.6 million and roaming revenue
of approximately $13.0 million. This revenue was primarily related to
launching our first 15 markets as part of our Phase I network build-out. We
generated no revenue for the six months ended June 30, 1998.
Cost of services and equipment for the six months ended June 30, 1999 was
approximately $27.6 million. These costs were primarily related to launching
our first 15 markets as part of completing our Phase I network build-out. We
did not incur any cost of services and equipment for the six months ended June
30, 1998.
Operations expense for the six months ended June 30, 1999 was approximately
$11.0 million, as compared to approximately $1.4 million for the six months
ended June 30, 1998. This increase was primarily related to launching our
first 15 markets as part of completing our Phase I network build-out.
Selling and marketing expense for the six months ended June 30, 1999 was
approximately $20.6 million. These costs were due to higher salary and
benefits expenses for new sales and marketing staff and advertising and
promotion associated with launching our first 15 markets as part of completing
our Phase I network build-out. We did not incur any cost for the six months
ended June 30, 1998.
General and administrative expenses for the six months ended June 30, 1999
were approximately $10.7 million, as compared to approximately $3.7 million
for the six months ended June 30, 1998. The increase was
24
<PAGE>
due to the development and growth of infrastructure and staffing related to
information technology, customer care and other administrative functions
incurred in conjunction with the commercial launch of our first 15 markets
during the six months ended June 30, 1999.
Depreciation and amortization expense for the six months ended June 30,
1999 was approximately $16.0 million, as compared to approximately $1.1
million for the six months ended June 30, 1998. This increase was related to
depreciation of our fixed assets, as well as the initiation of amortization on
personal communications services licenses and the AT&T agreements upon the
commercial launch of our Phase I markets.
For the six months ended June 30, 1999, interest expense was $18.8 million,
net of capitalized interest of $7.2 million, an increase of $9.0 million over
the same period in 1998. The increase is attributable to increased borrowings
as compared to the same period in 1998. We capitalize the interest expense on
debt incurred to build out our network until the applicable asset is placed in
service.
For the six months ended June 30, 1999, interest income was $2.5 million, a
decrease of $0.2 million over the same period in 1998. This reduction is due
primarily to lower cash balances.
For the six months ended June 30, 1999, our net loss was $63.8 million, as
compared to $6.6 million for the same period in 1998. The net loss increased
$57.2 million primarily due to the items discussed above.
Year ended December 31, 1998 compared to the period from March 6, 1997 to
December 31, 1997
Total revenue for the year ended December 31, 1998 was $16.6 million, which
was comprised of services, roaming and equipment revenues related to our
Myrtle Beach operations, which we acquired in June 1998. We had no revenue for
the period from March 6, 1997 to December 31, 1997.
Costs of services and equipment were $6.0 million for the year ended
December 31, 1998. These costs were associated with our Myrtle Beach
operations. We had no costs of services and equipment for the period from
March 6, 1997 to December 31, 1997.
Operations expense for the year ended December 31, 1998 was approximately
$13.0 million, which was related to our Myrtle Beach operations. We had no
operations expense for the period from March 6, 1997 to December 31, 1997.
Selling and marketing costs were $1.7 million for the year ended December
31, 1998, relating primarily to advertising, marketing and promotional
activities associated with our Myrtle Beach operations. We had no selling and
marketing expense for the period from March 6, 1997 to December 31, 1997.
General and administrative expenses increased by $5.8 million to $8.6
million for the year ended December 31, 1998, as compared to the period from
March 6, 1997 to December 31, 1997. The increase was due primarily to
administrative costs associated with the Myrtle Beach network and our
establishment of our corporate and regional operational infrastructure.
For the year ended December 31, 1998, depreciation and amortization expense
was $6.7 million. This amount relates primarily to the depreciation of the
tangible and intangible assets acquired in the Myrtle Beach transaction and
amortization attributable to certain agreements executed in connection with
the AT&T joint venture.
For the year ended December 31, 1998, interest expense was $30.4 million,
net of capitalized interest of $3.5 million, as compared to $1.2 million for
the period from March 6, 1997 to December 31, 1997. This increase is
attributable to increased borrowings in the year ended December 31, 1998.
For the year ended December 31, 1998, interest and other income was $10.6
million. This amount relates primarily to interest income on our cash and cash
equivalents.
25
<PAGE>
For the year ended December 31, 1998, we recorded a tax benefit of $7.5
million related to temporary deductible differences, primarily net operating
losses.
For the year ended December 31, 1998, our net loss was $31.6 million, as
compared to $4.0 million for the period from March 6, 1997 to December 31,
1997. The net loss increased $27.6 million, resulting primarily from the items
discussed above.
Liquidity and Capital Resources
Since inception, our activities have consisted principally of hiring a
management team, raising capital, negotiating strategic business
relationships, participating in personal communications services auctions,
initiating research and development, conducting market research, developing
our wireless services offering and network, and launching our wireless
services in our Phase I markets. Our primary source of financing during this
time has been from borrowings under our credit facility and the net proceeds
from issuances of capital stock and senior discount notes.
The construction of our network and the marketing and distribution of
wireless communications products and services has required, and will continue
to require, substantial capital. These capital requirements include license
acquisition costs, capital expenditures for network construction, operating
cash flow losses and other working capital costs, debt service and closing
fees and expenses. We have incurred significant amounts of debt to implement
our business plan, and therefore we are highly leveraged. We estimate that our
total capital requirements, assuming substantial completion of our network
build-out, which will allow us to provide services to 100% of the potential
customers in our licensed area, from our inception until December 31, 2001
will be approximately $1.3 billion.
Costs associated with our network build-out include switches, base
stations, towers and antennae, radio frequency engineering, cell site
acquisition and construction and microwave relocation, and include $94.0
million of capital expenditures related to purchase commitments as part of our
agreement with Ericsson. The actual funds required to build out our personal
communications services network may vary materially from these estimates, and
additional funds could be required in the event of significant departures from
the current business plan, in the event of unforeseen delays, cost overruns,
unanticipated expenses, regulatory expenses, engineering design changes and
other technological risks.
We have funded, and expect to continue to fund, our capital requirements
with:
. the proceeds from equity investments by our shareholders and from
additional irrevocable equity commitments by our shareholders;
. borrowings under our credit facility;
. the proceeds from an offering of senior discount notes in 1998;
. the proceeds from the sale of our towers; and
. the proceeds of this offering.
We believe that the proceeds from this offering coupled with cash on hand,
available credit facility borrowings, the equity investments that have been
committed to us and proceeds from the tower sale will be sufficient to meet
our projected capital requirements through the end of 2001. See "Use of
Proceeds." Although we estimate that these funds will be sufficient to build-
out our network and to enable us to provide services to 100% of the customers
in our licensed area, it is possible that additional funding will be
necessary. See "Risk Factors--Our future growth may require additional
significant capital and we may not be able to obtain additional capital." Our
ability to secure our capital requirements is subject to our ability to
construct our network and obtain customers in accordance with our plans and
assumptions and a number of other risks and uncertainties, including those
discussed under the heading "Risk Factors." The build-out of our network may
26
<PAGE>
not be completed as projected, or we may not be able to generate positive cash
flow. If any of our projections are incorrect, we may not be able to secure
funding for our projected capital requirements.
Equity Contributions. As part of our joint venture agreement with AT&T,
AT&T transferred personal communications services licenses covering 20 MHz of
authorized frequencies in exchange for 732,371 shares of our Series A
preferred stock and 336,131 shares of our Series D preferred stock. The Series
A preferred stock provides for cumulative dividends at an annual 10% rate on
the $100 liquidation value per share plus unpaid dividends. These dividends
accrue and are payable quarterly; however, we may defer all cash payments due
to the holders until June 30, 2008 and quarterly dividends are payable in cash
thereafter. The Series A preferred stock is redeemable at the option of its
holders beginning in 2018 and at our option, at its accreted value, on or
after February 4, 2008. We may not pay dividends on, or, subject to specified
exceptions, repurchase shares of, our common stock without the consent of the
holders of the Series A preferred stock. The Series D preferred stock provides
for dividends when, as and if declared by our board of directors and contains
limitations on the payment of dividends on our common stock. For a discussion
of our preferred stock in tabular form, see the chart labelled "Principal
Terms of Preferred Stock" under "Description of Capital Stock--Preferred
Stock."
In connection with the consummation of the joint venture with AT&T, we
received unconditional and irrevocable equity commitments from institutional
equity investors, as well as Michael Kalogris and Steven Skinner, in the
aggregate amount of $140.0 million in return for the issuance of 1.4 million
shares of Series C preferred stock. As of June 30, 1999, $80.0 million of
these equity commitments had been funded. The remaining equity commitments
will be funded in installments of $35.0 million in February 2000 and $25.0
million in February 2001. The Series C preferred stock provides for dividends
when, as and if declared by our board of directors and contains limitation on
the payment of dividends on our common stock.
We also received equity contributions from our stockholders in the
aggregate amount of $35.0 million in return for the issuance of 350,000 shares
of Series C preferred stock in order to fund a portion of our acquisition of
an existing cellular system in Myrtle Beach, South Carolina. In addition, we
received equity contributions from our stockholders in the aggregate amount of
approximately $30.0 million in return for the issuance of 165,187 shares of
our Series C preferred stock and 134,813 shares of our Series D preferred
stock in order to fund a portion of our Norfolk license acquisition.
On June 8, 1999, we completed an exchange of licenses with AT&T. We
transferred licenses covering the Hagerstown and Cumberland, Maryland areas
and received licenses covering the Savannah and Athens, Georgia areas. We
issued to AT&T 53,882 shares of our Series A preferred stock and 42,739 shares
of our Series D preferred stock in connection with this exchange.
Credit Facility. On February 3, 1998, we entered into a loan agreement that
provided for a senior secured bank facility with a group of lenders for an
aggregate amount of $425.0 million of borrowings. On September 22, 1999, we
entered into an amendment to that loan agreement under which the amount of
credit available to us was increased to $600.0 million. The bank facility
provides for:
. a $175.0 million senior secured Tranche A term loan maturing on August
4, 2006;
. a $150.0 million senior secured Tranche B term loan maturing on May 4,
2007;
. a $175.0 million senior secured Tranche C term loan maturing on August
4, 2006; and
. a $100.0 million senior secured revolving credit facility maturing on
August 4, 2006.
The terms of the bank facility will permit us, subject to various terms and
conditions, including compliance with specified leverage ratios and
satisfaction of build-out and subscriber milestones, to draw up to $600.0
million to finance working capital requirements, capital expenditures,
permitted acquisitions and other corporate
27
<PAGE>
purposes. Our borrowings under these facilities are subject to customary
conditions, including the absence of material adverse changes.
We must begin to repay the term loans in quarterly installments, beginning
on February 4, 2002, and the commitments to make loans under the revolving
credit facility are automatically and permanently reduced beginning on August
4, 2004. In addition, the credit facility requires us to make mandatory
prepayments of outstanding borrowings under the credit facility, commencing
with the fiscal year ending December 31, 2001, based on a percentage of excess
cash flow and contains financial and other covenants customary for facilities
of this type, including limitations on investments and on our ability to incur
debt and pay dividends. As of June 30, 1999, we had drawn $150.0 million under
the Tranche B term loan, which we expect to use to fund future operations. See
"Description of Certain Indebtedness--Credit Facility."
Before giving effect to the amendment, we had an additional $275.0 million
available under our credit facility as of June 30, 1999.
Senior Discount Notes. On May 7, 1998, we completed an offering of $512.0
million aggregate principal amount at maturity of 11% senior subordinated
discount notes due 2008 under Rule 144A of the Securities Act. The proceeds of
the offering, after deducting an initial purchasers' discount of $9.0 million,
were $291.0 million. The notes are guaranteed by all of our subsidiaries. The
indenture for the notes contains customary covenants, including covenants that
limit our subsidiaries' ability to pay dividends to us, make investments and
incur debt. The indenture also contains customary events of default.
Tower Sale. We entered into an agreement on July 13, 1999 with American
Tower Corporation to sell all of our owned personal communications tower
facilities, along with certain other related assets, and we completed the sale
on September 22, 1999. The net proceeds from the sale were $71.06 million at
the closing, and we expect to receive an additional $1.52 million upon our
construction and sale to American Tower of four additional tower facilities.
At the closing of the transaction, the parties entered into certain other
agreements, including:
. a master license and sublease agreement providing for our lease of the
tower facilities from American Tower;
. an amendment to an existing build-to-suit agreement between us and
American Tower providing for American Tower's construction of 100
additional tower sites that we will then lease from American Tower; and
. an amendment to an existing site acquisition agreement expanding the
agreement to provide for American Tower to perform site acquisition
services for 70% of the tower sites we develop through December 31,
2000.
Historical. For the year ended December 31, 1998, net cash provided by
financing activities increased $498.4 million to $511.3 million, as compared
to the period from March 6, 1997 to December 31, 1997. The increase was due
primarily to proceeds from borrowings under our credit facility of $150.0
million, proceeds from the issuance of subordinated debt of $291.0 million,
which was net of an initial purchasers' discount of $9.0 million, and capital
contributions of $82.7 million from the cash equity investors and certain
management shareholders related to funding of their capital commitments and
receipt of additional capital contributions related to the Myrtle Beach and
Norfolk acquisitions.
Cash and cash equivalents totaled $9.3 million at June 30, 1999, as
compared to $146.2 million at December 31, 1998. This decrease was the result
of capital expenditures of $111.4 million related to our network build-out and
the purchase of marketable securities of $22.5 million. Net working capital
totaled approximately $40.6 million at June 30, 1999, as compared to $146.2
million at December 31, 1998.
Total capital expenditures for 1998 were approximately $87.7 million. We
estimate that capital expenditures will total approximately $300.0 million for
the year ended December 31, 1999, and we have incurred $111.4 million of
capital expenditures in the six months ended June 30, 1999.
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<PAGE>
Year 2000 Compliance
The year 2000 issue is the result of computer programs being written using
two digits rather than four digits to define the applicable year. Computer
programs that have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in a system failure
or miscalculations causing disruptions of operations and a temporary inability
to process transactions, send invoices or engage in normal business
activities.
Currently, we are actively taking measures to eliminate or mitigate the
impact of any issues associated with the year 2000. To that end, we have
established a project team with senior management sponsorship to provide
centralized coordination for our year 2000 related activities. Our program is
divided into five major phases which we implemented concurrently.
Awareness Phase. In the awareness phase we established the guidelines for
the year 2000 project and communicated this information to the appropriate
parties. We have completed this phase.
Assessment Phase. In the assessment phase of the program we defined the
scope and level of effort for our project by conducting an inventory of
potentially date and time sensitive applications. Upon completion of the
inventory we must have determined the compliance status and the actions that
will be required to bring non-conforming items into a conforming status.
Through this assessment and surveying process, we are identifying those
remediation efforts necessary to ensure that our systems and applications will
continue to operate without interruption prior to, during and after the year
2000. We expect to complete the assessment phase fully by November 1, 1999 and
have completed the assessment for all our mission critical systems and
components. However, we cannot assure you that the information provided to us
by our vendors, suppliers and third-party providers, upon whom we rely for our
services, is accurate. As such, we cannot guarantee that inaccurate
information provided to us could not have a material adverse effect upon our
business.
The project team has substantially completed the inventory phase and has
made significant progress on completing the assessment phase. We procured the
majority of our software, hardware and firmware deployed as part of our start-
up operation at the latest revision levels and we believe to be year 2000
capable, but our process requires a reverification of the year 2000 readiness
capabilities of our vendors, suppliers and third party providers.
To date, our assessments have shown that our main switching and
transmission equipment, with the exception of the Myrtle Beach operational
systems, is capable of correctly recognizing and processing date sensitive
information. This capability was further demonstrated through inter-
operability testing conducted by the Cellular Telecommunications Industry
Association. In addition to revealing the year 2000 readiness of the wireless
operational infrastructure, initial assessments of support system providers
have revealed some products and applications that are not currently year 2000
compatible. In all the instances we have identified to date, the suppliers of
those products or applications have asserted that their products will be
compliant in the third quarter of 1999.
Remediation Phase. The remediation phase of our program encompasses the
upgrade, modification or replacement of the non-conforming systems and
components. The remediation phase has begun, and we will continue to conduct
our remediation program in parallel with our assessment phase to assure all
remediation is completed in a timely fashion. All systems that we have found
to be non-compliant have either been remediated or are in the process of
remediation. Although the Myrtle Beach operational systems are not currently
year 2000 compliant, we expect to complete this remediation effort by the end
of November 1999. Our failure to upgrade the Myrtle Beach operational systems
to year 2000 compliance could have a material adverse effect on our business.
Validation Phase. Validation is the process used to ensure that the systems
and components will properly function prior to, during and after the year
2000. The focus of our validation efforts is on testing and analysis of
29
<PAGE>
vendor supplied testing. We expect to complete all mission critical testing
and the validation phase by November 30, 1999. However, we cannot guarantee
that the systems of other companies which we rely on will be converted on a
timely basis or that another company's failure to convert would not have a
material adverse effect on our business.
Implementation Phase. The implementation phase of the project involves the
development and implementation of contingency plans. We have begun the process
of developing a comprehensive set of contingency plans to address situations
that may result if we experience any disruptions of our critical operations
due to year 2000 related issues. The goal of the contingency plans is to
minimize the impact of any year 2000 interruptions as well as to mitigate any
resulting damages. We expect to have all contingency plans for mission
critical functions in place by November 15, 1999 and the remaining plans
shortly thereafter. We expect to complete the implementation phase, as a
whole, by November 30, 1999. We cannot assure you that we will be able to
develop contingency plans that will adequately address issues that may arise
due to year 2000 issues. Our failure to resolve such issues successfully could
result in a disruption of our service and operations, which would have a
material adverse effect on our business.
We estimate the costs associated with year 2000 issues to be approximately
$350,000, excluding internal costs, of which we have spent $220,000 to date.
These costs are not material to our business operations or financial position.
The costs of our contingency plan and the date on which we believe we will
complete year 2000 modifications are based on management's best estimates,
which were derived utilizing numerous assumptions regarding future events,
including the continued availability of certain resources, third-party
modification plans and other factors. We cannot assure you that we will
achieve these estimates, and actual results could differ materially from those
we anticipate.
Inflation
We do not believe that inflation has had a material impact on operations.
Qualitative and Quantitative Disclosures About Market Risks
We utilize interest rate swaps to hedge against the effect of interest rate
fluctuations on our senior debt portfolio. We do not hold or issue financial
instruments for trading or speculative purposes. As of June 30, 1999, we
entered into two interest rate swap transactions having an aggregate non-
amortizing notional amount of $75 million. Both instruments terminate on
December 4, 2003. As of December 31, 1998 and June 30, 1999, we were in a net
gain position. Net gain or loss positions are settled quarterly. We pay a
fixed rate (4.76% and 4.805%) and receive a floating rate, equivalent to the
three month London interbank offered rate, on respective $40 million and $35
million notional amounts. A 100 basis point fluctuation in market rates would
not have a material effect on our overall financial condition. We are required
to fix or limit the interest cost with respect to at least 50%, as amended in
September 1999, of the total amount of our outstanding indebtedness, as
dictated by our credit agreement. Swap counterparties are major commercial
banks.
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<PAGE>
Our investment portfolio consists of short-term assets having maturities of
less than one year and is managed by institutions which carry the highest
credit rating from S&P or from Moody's. While these investments are subject to
a degree of interest rate risk, it is not considered to be material relative
to our overall investment income position.
Interest Rate Risk Management Agreements
Our interest rate risk management program focuses on minimizing exposure to
interest rate movements, setting an optimal mixture of floating and fixed rate
debt and minimizing liquidity risk. To the extent possible, we manage interest
rate exposure and the floating to fixed ratio through our borrowings, but
sometimes we use interest rate swaps to adjust our risk profile. We
selectively enter into interest rate swaps to manage interest rate exposure
only.
We enter into interest rate protection agreements to lock in interest rates
on the variable portion of our debt. We do not use these agreements for
trading or other speculative purposes, nor are we a party to any leveraged
derivative instrument. Although these agreements are subject to fluctuations
in value, they are generally offset by fluctuations in the value of the
underlying instrument or anticipated transaction.
In an interest rate swap, we agree to exchange, at specified intervals, the
difference between a variable interest rate, based on the three-month London
interbank offer rate, and either a fixed rate or another variable interest
rate calculated by reference to an agreed-upon notional principal amount. The
resulting rate differential is reflected as an adjustment to interest expense
over the life of the swap. We did not exercise these swaps during 1998. At
December 31, 1998, we would have received $23,000 to settle these agreements.
The following table summarizes our off-balance sheet interest rate swap
agreements at December 31, 1998:
<TABLE>
<CAPTION>
Notional Pay Rate Receive Rate
Amount Fair Value Maturity (Fixed) (Variable)
-------- ---------- ---------------------- -------- ------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Pay fixed rate, receive
floating rate.......... $35,000 $254 12/03 4.805% 5.156%
Pay fixed rate, receive
floating rate.......... $40,000 $369 12/03 4.760% 5.156%
</TABLE>
Payments under each agreement are quarterly, commencing March 1999 and
ending December 2003.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board, or FASB, issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
which establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments imbedded in other
contracts, collectively referred to as derivatives, and for hedging
activities. As issued, SFAS 133 is effective for all fiscal quarters of all
fiscal years beginning after June 15, 1999, with earlier application
encouraged. On July 8, 1999, the FASB issued SFAS No. 137, "Deferral of the
Effective Date of SFAS No. 133," which delayed the effective date of SFAS 133
for one year to fiscal years beginning after June 15, 2000. We are currently
evaluating the financial impact of adopting SFAS No. 133. The adoption is not
expected to have a material impact on our consolidated result of operations,
financial position or cash flows.
31
<PAGE>
BUSINESS
Overview
We are a rapidly growing provider of wireless personal communications
services in the southeastern United States. Our personal communications
services licenses cover approximately 13 million potential customers in a
contiguous geographic area encompassing portions of Virginia, North Carolina,
South Carolina, Tennessee, Georgia and Kentucky. In February 1998, we entered
into a joint venture with AT&T, our largest equity sponsor. As part of the
agreement, AT&T contributed personal communications services licenses for 20
MHz of authorized frequencies covering 11 million potential customers within
defined areas of our region in exchange for an equity position in Triton.
Since that time, we have expanded our coverage area to include an additional 2
million potential customers through acquisitions and license exchanges with
AT&T. As part of the transactions with AT&T, we were granted the right to be
the exclusive provider of wireless mobility services using equal emphasis co-
branding with AT&T within our region. We believe our markets are strategically
attractive because of their proximity to AT&T's wireless systems in the
Washington, D.C., Charlotte, North Carolina and Atlanta, Georgia markets,
which collectively cover a population of more than 27 million individuals. Our
market location is attractive as we are the preferred provider of wireless
mobility services to AT&T's digital wireless customers who roam into our
markets. Our strategy is to provide extensive coverage to customers within our
region, to offer our customers coast-to-coast coverage and to benefit from
roaming revenues generated by AT&T's and other carriers' wireless customers
who roam into our covered area. Our management team is led by Michael Kalogris
and Steven Skinner, the former Chief Executive Officer and Chief Operating
Officer of Horizon Cellular Group, respectively.
Our network build-out is scheduled for three phases. In the first half of
1999, we completed Phase I of this build-out and successfully launched
personal communications services in 15 markets. We are now able to provide
service to over 8.7 million individuals, or 67% of our potential customers.
Our network in these 15 markets includes 660 cell sites and four switches.
Since we began offering services in these 15 markets, our subscriber base and
the number of minutes generated by non-Triton subscribers roaming onto our
network have grown dramatically. From January 1999 to June 1999, our
subscriber base grew from 33,844 users to 78,364 users, and roaming minutes
generated by non-Triton subscribers increased from approximately 0.7 million
minutes per month to approximately 11.4 million minutes per month.
We are in the process of completing our Phase II network build-out. Phase
II of our network will cover 18 additional cities, 4.1 million potential
customers, approximately 4,400 highway miles, 580 new cell sites and two
incremental switches. We expect to complete Phase II of our build-out and
launch services in these 18 new markets by the end of the first quarter of
2000. When Phase II is complete, we will be able to provide services to 98% of
the potential customers in our licensed area.
Phase III of our network build-out will focus on covering major highways
linking the cities in our licensed area, as well as neighboring cities where
AT&T and other carriers use compatible wireless technology. We expect Phase
III to be completed by year-end 2001 and to add approximately 1,050 cell sites
and two switches to our network. Upon completion of Phase III, we will be able
to provide services to 13 million potential customers, and our network will
include approximately 2,300 cell sites and eight switches and span
approximately 18,000 highway miles.
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<PAGE>
The following table shows the three phases of our planned network build-
out:
<TABLE>
<CAPTION>
Phase I Phase II Phase III
---------------------- ------------------------ ------------------
<S> <C> <C> <C>
North
Carolina... Fayetteville-Lumberton Asheville-Hendersonville Roanoke Rapids
Hickory-Lenoir Rocky Mount-Wilson
Wilmington New Bern
Jacksonville
Greenville-Washington
Goldsboro-Kinston
South
Carolina... Myrtle Beach Sumter Greenwood
Anderson Hilton Head Orangeburg
Charleston Beaufort
Columbia
Florence
Greenville-Spartanburg
Georgia..... Augusta Savannah
Athens
Virginia.... Norfolk-Virginia Beach Danville
Charlottesville Harrisonburg
Fredericksburg Lynchburg
Richmond-Petersburg Martinsville
Roanoke Staunton-Waynesboro
Winchester
Tennessee... Kingsport
Kentucky.... Middlesboro-Harlan
Highway
Miles...... 427 4,379 13,224
</TABLE>
Our markets have attractive demographic characteristics for wireless
communications services, including population growth rates which are higher
than the national average and population densities which are 87% greater than
the national average.
Our goal is to provide our customers with simple, easy-to-use wireless
services with coast-to-coast service, superior call quality, personalized
customer care and competitive pricing. We utilize a mix of sales and
distribution channels, including a network of 42 company-owned retail stores,
over 150 indirect outlets, including nationally recognized retailers such as
Circuit City, Office Depot, Staples and Best Buy, and approximately 60 direct
sales representatives covering corporate accounts. We currently plan to add
approximately 46 additional company-owned retail stores in 1999.
We believe that as a Member of the AT&T Wireless Network, we will attract
customers by capitalizing on AT&T's national brand and its extensive digital
wireless network. We have also entered into an agreement with two other
Members of the AT&T Wireless Network, TeleCorp PCS and Tritel PCS, to operate
with those affiliates under a common regional brand name, SunCom, throughout
an area covering approximately 43 million potential customers primarily in the
south-central and southeastern United States. We believe this arrangement will
allow us to establish a strong regional brand name within our markets.
Strategic Alliance with AT&T
One of our most important competitive advantages is our strategic alliance
with AT&T, the largest provider of wireless communications services in the
United States. As part of its strategy to rapidly expand its digital wireless
coverage in the United States, AT&T has focused on constructing its own
network and making strategic
33
<PAGE>
acquisitions in selected cities, as well as entering into agreements with four
independent wireless operators, including Triton, to construct and operate
personal communications services networks in other markets.
Our strategic alliance with AT&T provides us with many business,
operational and marketing advantages, including the following:
. Recognized Brand Name. We market our wireless services to our potential
customers giving equal emphasis to the SunCom and AT&T brand names and
logos. We believe that association with the AT&T brand name
significantly increases the likelihood that potential customers will
purchase our wireless communications services.
. Exclusivity. We are AT&T's exclusive provider of facilities-based
wireless mobility communications services using equal emphasis co-
branding with AT&T in our covered markets, and, from time to time, we
may participate with AT&T in other programs. Additionally, we have
entered into an agreement whereby AT&T provides long distance services
to us at preferred rates.
. Preferred Roaming Partner. We are the preferred carrier for AT&T's
digital wireless customers who roam into our coverage area. We expect to
benefit from growth in roaming traffic as AT&T's digital wireless
customers, particularly those in Washington, D.C., Charlotte, North
Carolina and Atlanta, Georgia, travel into our markets.
. Coverage Across the Nation. With the use of advanced multi-mode handsets
which transition between personal communications services and cellular
frequencies, our customers have access to coast-to-coast coverage
through our agreements with AT&T, other Members of the AT&T Wireless
Network and with other third-party roaming partners. These agreements
cover approximately 98% of the United States population, including in-
region roaming coverage in all of our covered markets. We believe this
coast-to-coast coverage provides a significant advantage over our
personal communications services competitors in our markets and allows
us to offer competitive pricing plans, including national rate plans.
. Volume Discounts. We receive preferred terms on certain products and
services, including handsets, infrastructure equipment and
administrative support from companies who provide these products and
services to AT&T. For example, we have arrangements with Lucent
Technologies, Inc., Ericsson and Nokia Corp. to supply us with handsets,
mobile telephone equipment, software and services at preferred prices.
. Marketing. We benefit from AT&T's nationwide marketing and advertising
campaigns, including the success of AT&T's national rate plans, in the
marketing of our own plans. In addition, we are working with AT&T's
national sales representatives to market our wireless services to AT&T
corporate customers located in our markets.
Competitive Strengths
In addition to the advantages provided by our strategic alliance with AT&T,
we have the following competitive strengths:
. Attractive Licensed Area. Our markets have favorable demographic
characteristics for wireless communications services, such as population
growth which is higher than the national average and population
densities which are 87% greater than the national average. In addition,
we believe our markets are strategically important to AT&T's digital
wireless network as our licensed areas are adjacent to three of its most
important markets on the eastern seaboard--Washington, D.C., Charlotte,
North Carolina and Atlanta, Georgia.
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<PAGE>
. Advanced Technology. We are building our personal communications
services network using time division multiple access digital technology.
This technology is also used by AT&T, and, therefore, our network is
compatible with AT&T's network and other time division multiple access
digital technology networks. This technology allows wireless
communications service providers to offer enhanced features, higher
network quality, improved in-building penetration and greater network
capacity relative to analog cellular service. In addition, handsets
operating on a digital system are capable of sleep-mode while turned on
but not in use, thus increasing standby availability for incoming calls
as users will be able to leave these phones on for significantly longer
periods than they can with wireless phones using an earlier technology.
. Experienced Management. We have a management team with a high level of
experience in the wireless communications industry. Our senior
management team has an average of 11 years of experience with wireless
leaders such as AT&T, Bell Atlantic, Horizon Cellular and ALLTEL. Our
senior management team also owns in excess of % of our common stock,
after giving effect to the offering.
. Contiguous Service Area. We believe our contiguous service area allows
us to cost effectively offer large regional calling areas to our
customers. Further, we believe that we generate operational cost
savings, including sales and marketing efficiencies, by operating in a
contiguous service area. Operating in a contiguous service area also
enables us to route a large number of minutes on our network, thereby
reducing interconnect costs for access to other networks.
. Strong Capital Base. Following the completion of this offering, our
business plan from inception through year-end 2001 will be fully funded
with capital of approximately $1.4 billion, consisting of $191.5 million
of irrevocable equity commitments, $133.2 million of AT&T capital
contributions, up to $600.0 million of borrowings under our senior
credit facilities, approximately $290.0 million of net proceeds from a
senior subordinated notes offering completed in 1998, approximately
$70.0 million of proceeds from the sale of communications towers and
$125.0 million of proceeds from this offering. Our equity sponsors
include AT&T, Chase Capital Partners, J.P. Morgan Investment
Corporation, Desai Capital Management Incorporated, Toronto Dominion
Capital (USA), Inc., First Union Capital Partners, Inc. and Duff
Ackerman Goodrich & Assoc. L.P.
Business Strategy
Our objective is to become the leading provider of wireless communications
services in the markets we serve. We intend to achieve this objective by
pursuing the following business strategies:
. Operate a Superior, High Quality Network. We are committed to making the
capital investment required to develop and operate a superior, high
quality network. Our network, when complete, will include approximately
2,300 cell sites and eight switches and span approximately 18,000
highway miles. We believe this network will enable us to provide
extensive coverage within our region and consistent quality performance,
resulting in a high level of customer satisfaction. Our capital
investment is designed to provide a highly reliable network as measured
by performance factors such as percentage of call completion and number
of dropped calls. We maintain a state-of-the-art network operations
system to ensure continuous monitoring and maintenance of our network,
and we also have a disaster recovery plan.
. Provide Superior Coast-to-Coast and In-Market Coverage. Our market
research indicates that scope and quality of coverage are extremely
important to customers in their choice of a wireless service provider.
We have designed extensive local calling areas, and we offer coast-to-
coast coverage through our arrangements with AT&T, its affiliates and
other third-party roaming partners. Our network covers those areas where
people are most likely to take advantage of wireless coverage, such as
suburbs, metropolitan areas and vacation locations. Through the use of
multi-mode handsets, we offer our customers a large in-market licensed
area and coast-to-coast roaming, providing them with reliable, quality
service.
. Provide Enhanced Value at Low Cost. We offer our customers advanced
services and features at competitive prices. Our affordable, simple
pricing plans are designed to promote the use of wireless services by
enhancing the value of our services to our customers. We include usage-
enhancing features
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<PAGE>
such as call waiting, voice mail, three-way conference calling and short
message service in our basic packages. We market our services with a
simple, all-in-one focus: digital phone, pager and voice mail. We also
allow customers to purchase large packages of minutes per month for a low
fixed price. These minutes can generally be used throughout the southeast
region of the United States without paying additional roaming fees or long
distance charges. We believe we can offer competitive services because of
the cost advantages provided by our agreements with AT&T and the other
SunCom companies, the cost-effective characteristics of time division
multiple access digital technology and our centralized administrative
functions and efficient distribution.
. Deliver Quality Customer Service. We believe that superior customer
service is a critical element in attracting and retaining customers. Our
systems have been designed with an infrastructure that provides an open
interface to other systems without requiring significant redesign to
each application. This flexibility allows us to select and deploy the
best software package, even if made by another manufacturer, in each
application in building a superior administrative system. In addition,
our point-of-sale activation process is designed to ensure quick and
easy service initiation, including customer qualification. We also
emphasize proactive and responsive customer care, including rapid call-
answer times, welcome packages and anniversary calls. We currently
operate state-of-the-art customer care facilities in Richmond, Virginia
and Charleston, South Carolina that house our customer service and
collections personnel.
License Acquisition Transactions
Our original personal communications services licenses were acquired as part
of our joint venture agreement with AT&T.
On June 30, 1998, we acquired an existing cellular system serving Myrtle
Beach and the surrounding area from Vanguard Cellular Systems for a purchase
price of approximately $160.0 million. We integrated the Myrtle Beach system,
which used time division multiple access digital technology, into our personal
communications services network as part of our Phase I network deployment.
Substantially all of our revenues prior to 1999 were generated by services
provided in Myrtle Beach. We have used our position in Myrtle Beach to secure
roaming arrangements with other carriers that enable us to offer regional
calling plans on a cost-effective basis.
On December 31, 1998, we acquired from AT&T a personal communications
services license covering the Norfolk, Virginia basic trading area, as well as
a recently deployed network plant and infrastructure, for an aggregate purchase
price of $105.0 million. The integration and launch of our Norfolk personal
communications services were completed as part of our Phase I network build-
out.
On June 8, 1999, we completed an exchange of personal communications
services licenses with AT&T. As part of this transaction, we transferred
Hagerstown and Cumberland, Maryland personal communications services licenses
that cover approximately 512,000 potential customers, with an estimated value
of $5.1 million, for Savannah and Athens, Georgia personal communications
services licenses that cover approximately 517,000 potential customers, with an
estimated value of $15.5 million. We also issued to AT&T 53,882 shares of our
Series A preferred stock and 42,739 shares of our Series D preferred stock,
with estimated values of $5.8 million and $4.6 million, respectively, in
connection with the exchange. We expect to build out our Savannah and Athens
licenses as part of Phase II of our network deployment plan.
36
<PAGE>
Summary Market Data
The following table presents statistical information concerning the markets
covered by our licenses.
<TABLE>
<CAPTION>
Estimated
Potential % Growth Population Local Interstate
Licensed Areas(1) Customers(2) 1995-2000 Density(3) Traffic Density(4)
- ----------------- ------------ --------- ---------- ------------------
<S> <C> <C> <C> <C>
Charlotte Major Trading
Area
Anderson, SC............. 329.4 0.97% 114 29,830
Asheville/Hendersonville,
NC...................... 568.2 1.41 93 28,806
Charleston, SC........... 638.0 (0.10) 118 36,887
Columbia, SC............. 627.9 1.18 158 31,678
Fayetteville/Lumberton,
NC...................... 642.0 1.51 133 27,781
Florence, SC............. 257.0 0.80 113 24,924
Goldsboro/Kinston, NC.... 233.0 0.98 114 9,068
Greenville/Washington,
NC...................... 241.3 1.31 60 n.m.
Greenville/Spartanburg,
SC...................... 853.2 0.94 215 28,578
Greenwood, SC............ 72.8 0.58 91 n.m.
Hickory/Lenoir, NC....... 319.9 1.16 196 31,709
Jacksonville, NC......... 150.3 0.67 197 n.m.
Myrtle Beach, SC......... 156.6 0.83 137 n.m.
New Bern, NC............. 166.9 0.49 82 n.m.
Orangeburg, SC........... 118.8 0.25 63 27,530
Roanoke Rapids, NC....... 79.6 0.55 63 28,837
Rocky Mount/Wilson, NC... 212.7 0.82 150 26,101
Sumter, SC............... 154.1 0.87 92 19,303
Wilmington, NC........... 304.3 2.50 106 14,139
Knoxville Major Trading
Area
Kingsport, TN............ 682.2 0.38 116 23,560
Middlesboro/Harlan, KY... 123.3 0.23 77 n.m.
Atlanta Major Trading
Area
Athens, GA............... 187.8 1.66 136 37,150
Augusta, GA.............. 567.8 0.51 88 24,425
Savannah, GA............. 715.0 1.38 78 24,362
Washington Major Trading
Area
Charlottesville, VA...... 211.4 1.13 73 15,981
Fredericksburg, VA....... 132.5 2.64 98 67,775
Harrisonburg, VA......... 140.9 0.98 57 29,618
Winchester, VA........... 154.8 1.23 116 25,166
Richmond Major Trading
Area
Danville, VA............. 177.6 0.32 79 n.m.
Lynchburg, VA............ 158.1 0.01 116 32,447
Martinsville, VA......... 89.3 (0.34) 102 n.m.
Norfolk-Virginia Beach,
VA...................... 1,771.9 0.93 299 61,252
Richmond/Petersburg, VA.. 1,202.7 0.84 131 36,233
Roanoke, VA.............. 638.8 0.48 90 27,649
Staunton/Waynesboro, VA.. 106.9 0.62 75 27,180
Triton total/average.... 13,186.1(5) 0.91(6) 144(7) 30,240(8)
U.S. average............ n.a. 0.83 77(9) 31,521
</TABLE>
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<PAGE>
All figures are based on 1997 estimates published by Paul Kagan Associates,
Inc. in 1998.
(1) Licensed areas are segmented into basic trading areas.
(2) The estimated average annual population growth rate for 1995-2000 was
applied to estimates of 1995 potential customers to calculate the 1997
potential customers in each market.
(3) Number of potential customers per square mile.
(4) Daily vehicle miles traveled (interstate only) divided by interstate
highway miles in the relevant area.
(5) Total potential customers in the licensed area.
(6) Weighted by potential customers. Projected average annual population
growth in our licensed area.
(7) Weighted by population equivalents. Average number of potential
customers per square mile in our licensed area.
(8) Weighted by interstate miles. Average daily vehicle miles traveled
(interstate only) divided by interstate highway miles in our licensed
area.
(9) Average number of potential customers per square mile for the U.S.
Sales and Distribution
Our sales strategy is to utilize multiple distribution channels to minimize
customer acquisition costs and maximize penetration within our licensed
service area. Our distribution channels include a network of company-owned
retail stores, independent retailers and a direct sales force for corporate
accounts, as well as direct marketing channels such as telesales, neighborhood
sales and online sales. We also work with AT&T's national corporate account
sales force to cooperatively exchange leads and develop new business.
. Company-Owned Retail Stores. We make extensive use of company-owned
retail stores for the distribution and sale of our handsets and
services. We believe that company-owned retail stores offer a
considerable competitive advantage by providing a strong local presence,
which is required to achieve high penetration in suburban and rural
areas. We also believe that company-owned retail stores offer one of the
lowest customer acquisition costs among our different distribution
channels. Sales representatives in company-owned retail stores receive
in-depth training, which allows them to explain our wireless
communications services simply and clearly. This training, combined with
the use of a highly sophisticated point-of-sale terminal, enables
completion of an entire transaction, from the time the customer enters
the store to the time of handset activation, within ten minutes. We
believe this process distinguishes us from our competitors and will
increase subscribership within our markets. Our flagship stores are
located in the principal retail district in each market. We have opened
42 company-owned SunCom stores as of June 30, 1999, and by year-end
1999, we expect to own approximately 90 SunCom stores.
. Retail Outlets. We have negotiated distribution agreements with national
and regional mass merchandisers and consumer electronics retailers,
including Circuit City, Office Depot, Staples, Best Buy, Metro Call and
Zap's. We currently have over 150 retail outlet locations where
customers can purchase our services. These distributors are chosen based
upon their ability to reach our target customers in our service area. In
some of these retail store locations, we are implementing a store-
within-a-store concept, which uses visual merchandising to capitalize on
the brand awareness created by both SunCom and AT&T advertising. We
support their dedication of valuable floor space to wireless
communications products through a local team of retail merchandisers and
attention grabbing point-of-sale materials.
. Direct Sales. We focus our direct sales force on high-revenue, high-
profit corporate users. Our direct corporate sales force consists of
approximately 60 dedicated professionals targeting wireless decision-
makers within large corporations. We also benefit from AT&T's national
corporate accounts sales force, which supports the marketing of our
services to AT&T's large national accounts located in certain of our
38
<PAGE>
service areas. We have formed regional advisory groups as an additional
way to interface with corporate customers in our markets. These advisory
groups are comprised of local business leaders who are wireless users or
prospective users and are designed to provide timely feedback regarding
our proposed wireless offerings and to establish a customer base prior to
launch. See "--Marketing Strategy."
. Direct Marketing. We use direct marketing efforts such as direct mail
and telemarketing to generate customer leads. Telesales allow us to
maintain low selling costs and to sell additional features or customized
services.
. Website. Our web page provides current information about us, our markets
and our product offerings. We are also establishing an online store on
our website. The web page conveys our marketing message, and we expect
it will generate customers through online purchasing. We deliver all
information that a customer requires to make a purchasing decision at
our website. Customers are able to choose rate plans, features, handsets
and accessories. The online store will provide a secure environment for
transactions, and customers purchasing through the online store will
encounter a transaction experience similar to that of customers
purchasing service through other channels.
Marketing Strategy
Our marketing strategy has been developed on the basis of extensive market
research in each of our markets. This research indicates that the limited
coverage of existing wireless systems, relatively high cost, inconsistent
performance and overall confusion about wireless services create subscriber
dissatisfaction and reduce the attractiveness of wireless services for
potential new subscribers. We believe that our affiliation with the AT&T brand
name and the distinctive advantages of our time division multiple access
digital technology, combined with simplified, attractive pricing plans, will
allow us to capture significant market share from existing analog cellular
providers in our markets and to attract new wireless users. We are focusing
our marketing efforts on four primary market segments:
. current cellular users;
. individuals with the intent to purchase a wireless product within six
months;
. corporate accounts; and
. pre-paid subscribers.
For each segment, we are creating a specific marketing program including a
service package, pricing plan and promotional strategy. We believe that
targeted service offerings will increase customer loyalty and satisfaction,
thereby reducing customer turnover.
The following are key components of our marketing strategy:
. Regional Co-Branding. We have entered into agreements with TeleCorp PCS
and Tritel PCS, two other companies affiliated with AT&T, to adopt a
common regional brand, SunCom. We market our wireless services as
SunCom, Member of the AT&T Wireless Network and use the globally
recognized AT&T brand name and logo in equal emphasis with the SunCom
brand name and logo. We believe that use of the AT&T brand reinforces an
association with reliability and quality. We and the other SunCom
companies are establishing the SunCom brand as a strong local presence
with a service area covering approximately 43 million potential
customers. We enjoy preferred pricing on equipment, handset packaging
and distribution by virtue of our affiliation with AT&T and the other
SunCom companies. See "Certain Relationships and Related Transactions--
The AT&T Agreements" and "--Other Related Party Transactions."
. Pricing. Our pricing plans are competitive and straightforward, offering
large packages of minutes, large regional calling areas and usage
enhancing features. One way we differentiate ourselves from existing
wireless competitors is through our pricing policies. We offer pricing
plans designed to encourage customers to enter into long term service
contract plans.
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<PAGE>
We offer our customers regional, network only and national rate plans. Our
rate plans allow customers to make and receive calls anywhere within the
southeast region and the District of Columbia without paying additional
roaming or long distance charges. By contrast, competing flat rate plans
generally restrict flat rate usage to such competitors' owned networks. By
virtue of our roaming arrangements with AT&T, its affiliates and other third-
party roaming partners, we believe we can offer competitive regional, network
only and national rate plans. Our sizable licensed area allows us to offer
large regional calling areas at rates as low as $.07 per minute throughout the
Southeast.
We also offer pre-pay plans that provide an opportunity for individuals
whose credit profiles would not otherwise allow them access to wireless
communications to take advantage of our services and an attractive alternative
for parents and employers who may need or want to control use by family
members or employees, respectively. We offer our pre-paid subscribers most of
the same digital services and features available to our other customer
segments. Typical pre-pay plans of competitors, by contrast, provide low
quality handsets, high per-minute rates and limited services and features.
Customer Care. We are committed to building strong customer relationships
by providing our customers with service that exceeds expectations. We
currently operate state-of-the-art customer care facilities in Richmond,
Virginia and Charleston, South Carolina that house our customer service and
collections personnel. Through the support of approximately 100 customer care
representatives and a sophisticated customer care platform provided by
Integrated Customer Systems, we have been able to implement one ring customer
care service using live operators and state-of-the-art call routing, so that
over 90% of incoming calls to our customer care centers are answered on the
first ring. In addition, we emphasize proactive and responsive customer
service, including at least four customer contacts annually such as welcome
calls, first bill calls and anniversary calls. We believe these initiatives
will result in higher levels of customer satisfaction and reduced customer
turnover. We also intend to expand our web-based services to include online
account-specific information that allows customers to check billing, modify
service or otherwise manage their accounts to enhance our customer care.
Future Product Offerings. We may bundle our wireless communications
services with other communications services through strategic alliances and
resale agreements with AT&T and others. We also may offer service options in
partnership with local business and affinity marketing groups. Examples of
these arrangements include offering wireless services with utility services,
banking services, cable television, Internet access or alarm monitoring
services in conjunction with local information services. Such offerings
provide the customer access to information, such as account status, weather
and traffic reports, stock quotes, sports scores and text messages from any
location.
Advertising. We believe our most successful marketing strategy is to
establish a strong local presence in each of our markets. We are directing our
media and promotional efforts at the community level with advertisements in
local publications and sponsorship of local and regional events. We combine
our local efforts with mass marketing strategies and tactics to build the
SunCom and AT&T brands locally. Our media effort includes television, radio,
newspaper, magazine, outdoor and Internet advertisements to promote our brand
name. In addition, we use newspaper and radio advertising and our web page to
promote specific product offerings and direct marketing programs for targeted
audiences.
Services and Features
We provide affordable, reliable, high-quality mobile telecommunications
service. Our advanced digital personal communications services network allows
us to offer customers the most advanced wireless features that are designed to
provide greater call management and increase usage for both incoming and
outgoing calls.
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. Feature-Rich Handsets. As part of our service offering, we sell our
customers the most advanced, easy-to-use, interactive, menu-driven
handsets that can be activated over the air. These handsets have many
advanced features, including word prompts and easy-to-use menus, one-
touch dialing, multiple ring settings, call logs and hands-free
adaptability. These handsets also allow us to offer the most advanced
digital services, such as voice mail, call waiting, call forwarding,
three-way conference calling, e-mail messaging and paging.
. Multi-Mode Handsets. We exclusively offer multi-mode handsets, which are
compatible with personal communication services, digital cellular and
analog cellular frequencies and service modes. These multi-mode handsets
allow us to offer customers coast-to-coast nationwide roaming across a
variety of wireless networks. These handsets incorporate a roaming
database, which can be updated over the air, that controls roaming
preferences from both a quality and cost perspective. We have branded
our multi-mode handsets under the name m-net(TM) Technology.
Network Build-Out
The principal objective for the build-out of our network is to maximize
population coverage levels within targeted demographic segments and geographic
areas, rather than building out wide-area cellular-like networks. We have
successfully launched service in all of our Phase I markets, which includes 15
cities, 427 highway miles, 660 cell sites and four switches. During Phase II,
which we expect to complete by the end of the first quarter of 2000, we plan
to launch services in an additional 18 cities, cover approximately 4,400
highway miles, and add 580 new cell sites and two incremental switches. The
Phase III network design will complete our initial network build-out plan. We
expect Phase III to add four cities, approximately 13,000 highway miles,
approximately 1,050 cell sites and two switches to our network by year-end
2001.
The build-out of our network involves the following:
. Radio Frequency Design. Triton, along with Wireless Facilities Inc., a
radio frequency engineering firm, has developed the radio frequency
design for the build-out of our network. This process includes cell site
design, frequency planning and network optimization for each of these
markets and also the allocation of voice channels and assignment of
frequencies to cell sites.
. Property Acquisition, Construction and Installation. Two experienced
vendors, Crown Castle International Corp. and American Tower, identify
and obtain the property we require to build out our network, which
includes securing all zoning, permitting and surveying approvals and
licenses. As of June 30, 1999, we had signed leases or options for 785
sites, 48 of which were awaiting required zoning approvals. Crown Castle
and American Tower also act as our construction management contractors
and employ local construction firms to build the cell sites.
. Microwave Relocation. We must clear our personal communications services
spectrum by relocating certain commercial microwave service users within
our licensed area before we can become operational. We have contracted
with Crown Castle to assist in the microwave relocation process. We
believe that we still have to relocate two additional microwave paths,
which we plan to relocate as business requirements for service coverage
expansion dictate and as FCC negotiation periods expire.
. Interconnection. Our digital wireless network connects to local exchange
carriers. We have negotiated and received state approval of
interconnection agreements with telephone companies operating or
providing service in the areas where we are currently operating our
digital personal communications services network. We use AT&T as our
inter-exchange or long-distance carrier.
. Roaming. In areas where time division multiple access-based personal
communications services are not available, we offer a roaming option on
the traditional analog cellular and digital cellular systems via multi-
mode handsets capable of transmitting over either cellular or personal
communications services frequencies. Under the terms of our agreements
with AT&T, our customers who own multi-mode handsets are able to roam on
AT&T's network, and we benefit from roaming agreements with AT&T, other
Members of the AT&T Wireless Network and third-party operators of
wireless systems.
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Network Operations
The effective operation of our network requires public switched
interconnection and backhaul agreements with other communications providers,
long distance interconnection, the implementation of roaming arrangements, the
development of network monitoring systems and the implementation of
information technology systems.
Switched Interconnection/Backhaul. Our network is connected to the public
switched telephone network to facilitate the origination and termination of
traffic between our network and both the local exchange and long distance
carriers. We have signed agreements with numerous carriers.
Long Distance. We have executed a wholesale long distance agreement with
AT&T providing for preferred rates for long distance services.
Roaming. Through our arrangements with AT&T and via the use of multi-mode
handsets, our customers have roaming capabilities on AT&T's wireless network.
Further, we have established roaming agreements with third-party carriers at
preferred pricing, including in-region roaming agreements covering all of our
launched service areas.
Network Monitoring Systems. Our network monitoring systems provide around-
the-clock monitoring and maintenance of our entire network. Our network
monitoring center is equipped with sophisticated systems that constantly
monitor the status of all base stations and switches and record network
traffic. The network monitoring systems provide continuous monitoring of
system quality for blocked or dropped calls, call clarity and evidence of
tampering, cloning or fraud. We designed our network monitoring center to
oversee the interface between customer usage, data collected at switch
facilities and our billing systems. We manage usage reports, feature
activation and related billing times on a timely and accurate basis. Our
network monitoring center is located in the Richmond, Virginia switching
center, and we also have back-up network monitoring center capabilities in our
Greenville, South Carolina switching center. In addition, we utilize
Ericsson's network operations center in Richardson, Texas for off-hour network
monitoring and dispatch, thereby providing constant network monitoring and
support.
Information Technology. We operate management information systems to handle
customer care, billing, network management and financial and administrative
services. These systems focus on three primary areas:
. network management, including service activation, pre-pay systems,
traffic and usage monitoring, trouble management and operational support
systems;
. customer care, including billing systems and customer service and support
systems; and
. business systems, including financial, purchasing, human resources and
other administrative systems.
We have incorporated sophisticated network management and operations
support systems to facilitate network fault detection, correction and
management, performance and usage monitoring and security. We employ system
capabilities developed to allow over-the-air activation of handsets and to
implement fraud protection measures. We maintain stringent controls for both
voluntary and involuntary deactivations. We try to minimize subscriber
disconnections by:
. preactivation screening to identify any prior fraudulent or bad debt
activity;
. credit review; and
. call pattern profiling to identify needed activation and termination
policy adjustments.
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These systems have been designed with an infrastructure that provides an
open interface to other systems without requiring significant redesign to each
application. This flexibility allows us to select and deploy the best software
package in each application, even if made by a different manufacturer, in
building a superior administrative system. We have engaged a variety of
industry leaders to provide these management information systems, including:
<TABLE>
<CAPTION>
System Vendor
------ ------
<S> <C>
Billing.......................................... Convergys Corporation
Customer Care.................................... Integrated Customer Systems
Telephone/Call Center............................ Lucent Technologies, Inc.
Fraud Detection.................................. Systems Link
Activation....................................... Aldiscon
Point-of-Sale.................................... Lightbridge, Inc.
</TABLE>
We are developing a state-of-the-art database and reporting system, which
will also allow us to cross-link billing, marketing and customer care systems
to collect customer profile and usage information. We believe this information
provides us with the tools necessary to increase revenue through channel and
product profitability analysis and to reduce customer acquisition costs
through implementation of more effective marketing strategies.
Time Division Multiple Access Digital Technology
We are building our network using time division multiple access digital
technology on the IS-136 platform. This technology allows for the use of
advanced multi-mode handsets, which allow roaming across personal
communications services and cellular frequencies, including both analog and
digital cellular. This technology allows for enhanced services and features
over other technologies, such as short-messaging, extended battery life, added
call security and improved voice quality, and its hierarchical cell structure
enables us to enhance network coverage with lower incremental investment
through the deployment of micro, as opposed to full-size, cell sites. This
will enable us to offer customized billing options and to track billing
information per individual cell site, which is practical for advanced wireless
applications such as wireless local loop and wireless office applications.
Management believes that time division multiple access digital technology
provides significant operating and customer benefits relative to analog
systems. In addition, management believes that time division multiple access
digital technology provides customer benefits, including available features
and roaming capabilities, and call quality that is similar to or superior to
that of other wireless technologies. Time division multiple access technology
allows three times the capacity of analog systems. Some manufacturers,
however, believe that code division multiple access technology will eventually
provide system capacity that is greater than that of time division multiple
access technology and global systems for mobile communications.
Time division multiple access digital technology is the digital technology
choice of two of the three largest wireless communications companies in the
United States, AT&T and SBC Communications. This technology served an
estimated 19 million subscribers worldwide and nine million subscribers in
North America as of December 31, 1998, according to the Universal Wireless
Communications Consortium, an association of time division multiple access
service providers and manufacturers. We believe that the increased volume of
time division multiple access users has increased the probability that this
technology will remain an industry standard. Time division multiple access
equipment is available from leading telecommunication vendors such as Lucent,
Ericsson and Northern Telecom, Inc. See "Risk Factors--The technologies that
we use may become obsolete, which would limit our ability to compete
effectively."
Competition
We compete directly with two cellular providers and other personal
communications services providers in each of our markets except Myrtle Beach,
where we are one of two cellular providers, and against enhanced specialized
mobile radio providers in some of our markets. The principal cellular
competitors in our region include Bell Atlantic Corporation, BellSouth
Corporation, ALLTEL Corporation and GTE Corporation. These cellular providers
have an infrastructure in place and have been operational for a number of
years, and some of these competitors have greater financial and technical
resources than we do. These cellular operators
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may upgrade their networks to provide services comparable to those we offer.
The technologies employed by these competitors are code division multiple
access and global system for mobile communications, two competing digital
wireless standards.
We will also compete with personal communications services license holders
in each of our markets. We believe that the ownership of other personal
communications services licenses in our licensed area is fragmented. However,
Sprint Corporation and BellSouth, among others, hold licenses that overlap
large portions of our licensed area. We believe that most personal
communications services license holders have not commenced the roll-out of
their networks in our licensed area. However, we expect to compete directly
with one or more personal communications service providers in each of our
markets in the future. See "The Wireless Communications Industry--Regulation."
We also expect to face competition from other existing communications
technologies such as specialized mobile radio and enhanced specialized mobile
radio, which is currently employed by Nextel Communications, Inc. in our
licensed area. Although the FCC originally created specialized mobile radio as
a non-interconnected service principally for fleet dispatch, in the last
decade it has liberalized the rules to permit enhanced specialized mobile
radio, which can offer services that are functionally equivalent to cellular
and personal communications services and may be less expensive to build and
operate than personal communications services systems.
The FCC requires all cellular and personal communications services
licensees to provide service to resellers. A reseller provides wireless
service to customers but does not hold an FCC license or own facilities.
Instead, the reseller buys blocks of wireless telephone numbers and capacity
from a licensed carrier and resells service through its own distribution
network to the public. Thus, a reseller is both a customer of a wireless
licensee's services and a competitor of that licensee. Several small resellers
currently compete with us in our licensed area. Several years ago, the FCC
initiated an administrative proceeding seeking comments on whether resellers
should be permitted to install separate switching facilities in cellular
systems. Although it tentatively concluded it would not require
interconnection, this issue is still pending at the FCC. The FCC is also
considering whether resellers should receive direct assignments of telephone
numbers from the North American Numbering Plan Administrator. With respect to
personal communications services licensees, the resale obligations terminate
five years after the last group of initial licenses of currently allotted
personal communications services spectrum were awarded. Accordingly, our
resale obligations end on November 24, 2002. On September 16, 1999, the FCC
modified its resale rules. The order in this proceeding has not been released.
According to the FCC's press release on the order, the FCC has limited the
rules by no longer subjecting customer equipment, such as handsets, to the
rule when the equipment is sold as part of a bundled package and by exempting
some categories of providers, which do not include us, from the requirement.
We have also agreed to permit AT&T to resell our services. See "Certain
Relationships and Related Transactions--The AT&T Agreements--Resale
Agreement."
The FCC is likely to offer additional spectrum for wireless mobile licenses
in the future. Some applicants have received and others are seeking FCC
authorization to construct and operate global satellite networks to provide
domestic and international mobile communications services from geostationary
and low-earth-orbit satellites. One such system, the Iridium system, began
commercial operations in 1998. We anticipate that market prices for two-way
wireless services generally will decline in the future based upon increased
competition.
Our ability to compete successfully will depend, in part, on our ability to
anticipate and respond to various competitive factors affecting the industry,
including new services that may be introduced, changes in consumer
preferences, demographic trends, economic conditions and competitors' discount
pricing strategies, all of which could adversely affect our operating margins.
We plan to use our digital feature offerings, coast-to-coast digital wireless
network through our AT&T joint venture, contiguous presence providing an
expanded home-rate billing area and local presence in secondary markets to
combat potential competition. We expect that our extensive digital network,
once deployed, will provide cost-effective means to react effectively to any
price competition. See "Risk Factors--The technologies that we use may become
obsolete, which would limit our ability to compete effectively."
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Intellectual Property
The AT&T globe design logo is a service mark owned by AT&T and registered
with the United States Patent and Trademark Office. Under the terms of our
license agreement with AT&T, we use the AT&T globe design logo and certain
other service marks of AT&T royalty-free in connection with marketing,
offering and providing licensed services to end-users and resellers within our
licensed area. The license agreement also grants us the right to use the
licensed marks on certain permitted mobile phones.
AT&T has agreed not to grant to any other person a right or license to
provide or resell, or act as agent for any person offering, licensed services
under the licensed marks in our licensed area except:
. to any person who resells, or acts as our agent for, licensed services
provided by us, or
. any person who provides or resells wireless communications services to
or from specific locations such as buildings or office complexes, even
if the applicable subscriber equipment being used is capable of routine
movement within a limited area and even if such subscriber equipment may
be capable of obtaining other telecommunications services beyond that
limited area and handing-off between the service to the specific
location and those other telecommunications services.
In all other instances, AT&T reserves for itself and its affiliates the right
to use the licensed marks in providing its services whether within or outside
of our licensed area.
The license agreement contains numerous restrictions with respect to the
use and modification of any of the license marks. See "Certain Relationships
and Related Transactions--The AT&T Agreements--License Agreement."
We have entered into agreements with TeleCorp PCS and Tritel PCS to adopt
and use a common regional brand name, SunCom. Under these agreements, we have
formed the Affiliate Licensing Company with TeleCorp PCS and Tritel PCS for
the purpose of sharing ownership of and maintaining the SunCom brand name.
Each of the companies shares equally in the ownership of the SunCom brand name
and the responsibility of securing protection for the SunCom brand name in the
United States Patent and Trademark Office, enforcing our rights in the SunCom
brand name against third parties and defending against potential claims
against the SunCom brand name. The agreements provide parameters for each
company's use of the SunCom brand name, including certain quality control
measures and provisions in the event that any one of these company's licensing
arrangements with AT&T is terminated.
An application for registration of the SunCom brand name was filed in the
United States Patent and Trademark Office on September 4, 1998, and the
application is pending. Affiliate Licensing Company owns the application for
the SunCom brand name. The application has undergone a preliminary examination
at the United States Patent and Trademark Office, and no pre-existing
registrations or applications were raised as a bar or potential bar to the
registration of the SunCom brand name.
We also filed an application for registration of the m-net Technology
trademark, relating to our multi-mode handsets, in the United States Patent
and Trademark Office on October 19, 1998, and the application is pending. We
are the sole owner of the application for the m-net Technology trademark. The
application has undergone a preliminary examination at the United States
Patent and Trademark Office, and no pre-existing registrations or applications
were raised as a bar or potential bar to the registration of the m-net
Technology trademark.
Employees
As of June 30, 1999, we had 664 employees. We believe our relations with
our employees are good.
Properties
Triton maintains its executive offices in Malvern, Pennsylvania. We also
maintain two regional offices in Richmond, Virginia and Charleston, South
Carolina.
Legal Proceedings
We are not a party to any lawsuit or proceeding which, in management's
opinion, is likely to have a material adverse effect on our business or
operations.
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THE WIRELESS COMMUNICATIONS INDUSTRY
Overview
Wireless communications systems use a variety of radio frequencies to
transmit voice and data. Broadly defined, the wireless communications industry
includes one-way radio applications, such as paging or beeper services, and
two-way radio applications, such as personal communications services, cellular
telephone and enhanced specialized mobile radio services. Historically, the
FCC licenses these applications, each of which operates in a distinct radio
frequency block.
Since its introduction in 1983, wireless service has grown dramatically.
The following chart illustrates the annual growth in United States wireless
customers through December 31, 1998:
<TABLE>
<CAPTION>
Wireless Industry Statistics(1) 1992 1993 1994 1995 1996 1997 1998
- ------------------------------- ------ ------ ------ ------ ------ ------ ------
<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
Subscribers at year-end
(in millions).......... 11.0 16.0 24.1 33.8 44.0 55.3 69.2
Subscriber growth....... 45.9% 45.1% 50.8% 40.0% 30.4% 25.6% 25.1%
Average monthly service
revenue per
subscriber(2).......... $70.13 $67.13 $59.08 $54.91 $50.61 $46.11 $44.35
Average monthly
subscriber revenue per
subscriber(3).......... $61.40 $58.74 $51.48 $47.59 $44.66 $41.12 $39.66
Penetration at year-
end.................... 4.4% 6.2% 9.4% 13.0% 16.3% 20.7% 25.7%
</TABLE>
- --------
Sources: Cellular Telecommunications Industry Association and Paul Kagan
Associates.
(1) Reflects domestic U.S. commercially operational cellular, enhanced
specialized mobile radio and personal communications services providers.
(2) Per subscriber revenue including roaming revenue.
(3) Per subscriber revenue excluding roaming revenue.
In the wireless communications industry, there are two principal services
licensed by the FCC for transmitting voice and data signals: cellular and
personal communications services. The FCC began auctioning personal
communications services spectrum between 1850-1990 MHz in late 1994 to be used
by personal communications services licensees to provide wireless
communications services. Personal communications services will initially
compete directly with existing cellular telephone, paging and specialized
mobile radio services. Personal communications services will also include
features that are not generally offered by cellular providers, such as data
transmissions to and from portable computers, advanced paging services and
facsimile services. In addition, wireless providers may offer mass market
wireless local loop applications in competition with wired local
communications services. See "--Regulation."
Cellular service is currently the predominant form of wireless voice
communications service available. The FCC has made available for cellular
service a portion of the radio spectrum from 824-894 MHz. Cellular systems
were originally analog-based systems, although digital technology has been
introduced in most markets. Analog technology currently has several
limitations, including lack of privacy and limited capacity. Digital systems
convert voice or data signals into a stream of digits that is compressed
before transmission, enabling a single radio channel to carry multiple
simultaneous signal transmissions. This enhanced capacity, along with
improvements in digital signaling, allows digital-based wireless technologies
to offer new and enhanced services, such as greater call privacy, and robust
data transmission features, such as mobile office applications including
facsimile, electronic mail and wireless connections to computer/data networks,
including the Internet.
Operation of Wireless Communications Systems
Wireless telecommunications service areas, whether cellular or personal
communications services, are divided into multiple cells. In both cellular and
personal communications services, each cell contains a transmitter, a receiver
and signaling equipment, which is the cell site. The cell site is connected by
microwave or
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<PAGE>
landline telephone lines to a switch that uses computers to control the
operation of the cellular or personal communications services 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 inter-exchange carriers, thus
integrating their systems 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 may hand off the call to another cell site where the signal
strength is stronger. If a handset leaves the service area of a cellular or
personal communications services system, the call is disconnected unless there
is a technical connection with the adjacent system.
Analog cellular handsets are functionally compatible with cellular systems
in all markets within the United States. As a result, analog cellular handsets
may generally be used wherever a subscriber is located, as long as a cellular
system is operational in the area.
Although cellular and personal communications services systems use similar
technologies and hardware, they operate on different frequencies and may use
different technical and network standards. As a result, until the introduction
of dual-band/dual-mode handsets in June 1997, it was not possible for users of
one type of system to roam on a different type of system outside of their
service area, or to hand off calls from one type of system to another.
Personal communications services systems in the United States operate under
one of three principal digital signal transmission technologies, or standards,
that have been proposed by various operators and vendors for use in personal
communications services systems:
. time division multiple access;
. code division multiple access; or
. global system for mobile communications.
Time division multiple access and global system for mobile communications
are both time division-based standards, but are incompatible with each other
and with code division multiple access. Accordingly, a subscriber of a system
that utilizes time division multiple access technology is currently unable to
use a time division multiple access handset when traveling in an area not
served by time division multiple access-based personal communications services
operators, unless the subscriber carries a dual band/dual-mode or multi-mode
handset that permits the subscriber to use the analog or digital cellular
system in that area.
Regulation
The FCC regulates the licensing, construction, operation, acquisition and
sale of personal communications services and cellular systems in the United
States pursuant to the Communications Act, as amended from time to time, and
the associated rules, regulations and policies promulgated by the FCC.
Licensing of Cellular and Personal Communications Services Systems. A
broadband personal communications services system operates under a protected
geographic service area license granted by the FCC for a particular market on
one of six frequency blocks allocated for broadband personal communications
services. Broadband personal communications services systems generally are
used for two-way voice applications. Narrowband personal communications
services, in contrast, are for non-voice applications such as paging and data
service and are separately licensed. The FCC has segmented the United States
into personal communications services markets, resulting in 51 large regions
called major trading areas, which are comprised of 493 smaller
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regions called basic trading areas. The FCC awards two broadband personal
communications services licenses for each major trading area and four licenses
for each basic trading area. Thus, generally, six licensees will be authorized
to compete in each area. The two major trading area licenses authorize the use
of 30 MHz of spectrum. One of the basic trading area licenses is for 30 MHz of
spectrum, and the other three are for 10 MHz each. The FCC permits licensees
to split their licenses and assign a portion, on either a geographic or
frequency basis or both, to a third party. In this fashion, AT&T assigned us
20 MHz of its 30 MHz licenses covering our licensed area. Two cellular
licenses are also available in each market. Cellular markets are defined as
either metropolitan or rural service areas.
The FCC awards initial personal communications services licenses by
auction. Auctions began with the 30 MHz major trading area licenses and
concluded in 1998 with the last of the basic trading area licenses. However,
in March 1998, the FCC adopted an order that allowed troubled entities that
won personal communications services 30 MHz C-Block licenses at auction to
obtain financial relief from their payment obligations and to return some or
all of their C-Block licenses to the FCC for reauctioning. The FCC completed
the reauction of the returned licenses in April 1999. This action places
additional spectrum in the hands of our potential competitors. The FCC may
reauction other licenses that are returned by bidders or that are subject to
default.
Under the FCC's current rules specifying spectrum aggregation limits
affecting broadband personal communications services and cellular licensees,
no entity may hold attributable interests, generally 20% or more of the equity
of, or an officer or director position with, the licensee, in licenses for
more than 45 MHz of personal communications services, cellular and certain
specialized mobile radio services where there is significant overlap in any
geographic area. Significant overlap will occur when at least 10% of the
population of the personal communications services licensed service area is
within the cellular and/or specialized mobile radio service area(s). On
September 15, 1999, the FCC adopted an order revising the spectrum cap rules.
This order has not been released. According to the FCC's press release, the
order raises the 45 MHz limit to 55 MHz for rural areas and raises the
investment limit for passive institutional investors to 40%. In addition, the
FCC noted that new broadband wireless services, such as third generation
wireless, may be included in the cap when those services are authorized.
All personal communications services licenses have a 10-year term, at the
end of which they must be renewed. The FCC will award a renewal expectancy to
a personal communications services licensee that has:
. provided substantial service during its past license term; and
. has substantially complied with applicable FCC rules and policies and
the Communications Act.
Cellular radio licenses also generally expire after a 10-year term in the
particular market and are renewable for periods of 10 years upon application
to the FCC. Licenses may be revoked for cause and license renewal applications
denied if the FCC determines that a renewal would not serve the public
interest. FCC rules provide that competing renewal applications for cellular
licenses will be considered in comparative hearings, and establish the
qualifications for competing applications and the standards to be applied in
hearings. Under current policies, the FCC will grant incumbent cellular
licenses the same renewal expectancy granted to personal communications
services licensees.
All personal communications services licensees must satisfy coverage
requirements. In our case, we must construct facilities that offer coverage to
one-third of the population of our service area within five years of the
original license grants to AT&T and to two-thirds of the population within ten
years. Licensees that fail to meet the coverage requirements may be subject to
forfeiture of the license. Our cellular license, which covers the Myrtle Beach
area, is not subject to coverage requirements.
For a period of up to five years, subject to extension, after the grant of
a personal communications services license, a licensee will be required to
share spectrum with existing licensees that operate certain fixed microwave
systems within its license area. To secure a sufficient amount of unencumbered
spectrum to operate our personal
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communications services systems efficiently and with adequate population
coverage, we have relocated two of these incumbent licensees and will need to
relocate two more licensees. In an effort to balance the competing interests
of existing microwave users and newly authorized personal communications
services licensees, the FCC has adopted:
. a transition plan to relocate such microwave operators to other spectrum
blocks; and
. a cost sharing plan so that if the relocation of an incumbent benefits
more than one personal communications services licensee, those licensees
will share the cost of the relocation.
Initially, this transition plan allowed most microwave users to operate in
the personal communications services spectrum for a two-year voluntary
negotiation period and an additional one-year mandatory negotiation period.
For public safety entities that dedicate a majority of their system
communications to police, fire or emergency medical services operations, the
voluntary negotiation period is three years, with an additional two-year
mandatory negotiation period. In 1998 the FCC shortened the voluntary
negotiation period by one year, without lengthening the mandatory negotiation
period, for non-public safety personal communications services licensees in
the C, D, E and F Blocks. Parties unable to reach agreement within these time
periods may refer the matter to the FCC for resolution, but the incumbent
microwave user is permitted to continue its operations until final FCC
resolution of the matter. The transition and cost sharing plans expire on
April 4, 2005, at which time remaining microwave incumbents in the personal
communications services spectrum will be responsible for the costs of
relocating to alternate spectrum locations. Our cellular license is not
encumbered by existing microwave licenses.
Personal communications services and cellular systems are subject to
certain FAA regulations governing the location, lighting and construction of
transmitter towers and antennas and may be subject to regulation under Federal
environmental laws and the FCC's environmental regulations. State or local
zoning and land use regulations also apply to our activities. We expect to use
common carrier point to point microwave facilities to connect the transmitter,
receiver, and signaling equipment for each personal communications services or
cellular cell, the cell sites, and to link them to the main switching office.
The FCC licenses these facilities separately and they are subject to
regulation as to technical parameters and service.
The Communications Act preempts state and local regulation of the entry of,
or the rates charged by, any provider of private mobile radio service or of
commercial mobile radio service, which includes personal communications
services and cellular service. The FCC does not regulate commercial mobile
radio service or private mobile radio service rates.
Transfer and Assignments of Cellular and Personal Communications Services
Licences. The Communications Act and FCC rules require the FCC's prior
approval of the assignment or transfer of control of a license for a personal
communications services or cellular system. In addition, the FCC has
established transfer disclosure requirements that require licensees who assign
or transfer control of a personal communications services license within the
first three years of their license terms to file associated sale contracts,
option agreements, management agreements or other documents disclosing the
total consideration that the licensee would receive in return for the transfer
or assignment of its license. Non-controlling interests in an entity that
holds an FCC license generally may be bought or sold without FCC approval
subject to the FCC's spectrum aggregation limits. However, we may require
approval of the Federal Trade Commission and the Department of Justice, as
well as state or local regulatory authorities having competent jurisdiction,
if we sell or acquire personal communications services or cellular interests
over a certain size.
Foreign Ownership. Under existing law, no more than 20% of an FCC
licensee's capital stock may be owned, directly or indirectly, or voted by
non-U.S. citizens or their representatives, by a foreign government or its
representatives or by a foreign corporation. If an FCC licensee is controlled
by another entity, as is the case with our ownership structure, up to 25% of
that entity's capital stock may be owned or voted by non-US citizens or their
representatives, by a foreign government or its representatives or by a
foreign corporation. Foreign
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ownership above the 25% level may be allowed should the FCC find such higher
levels not inconsistent with the public interest. The FCC has ruled that
higher levels of foreign ownership, even up to 100%, are presumptively
consistent with the public interest with respect to investors from certain
nations. If our foreign ownership were to exceed the permitted level, the FCC
could revoke our FCC licenses, although we could seek a declaratory ruling
from the FCC allowing the foreign ownership or take other actions to reduce
our foreign ownership percentage in order to avoid the loss of our licenses.
We have no knowledge of any present foreign ownership in violation of these
restrictions.
Recent Industry Developments. The FCC has announced rules for making
emergency 911 services available by cellular, personal communications services
and other commercial mobile radio service providers, including enhanced 911
services that provide the caller's telephone number, location and other useful
information. The original timetable required commercial mobile radio services
providers:
. to be able to process and transmit 911 calls without call validation,
including those from callers with speech or hearing disabilities, by
late 1997;
. to take actions enabling them to relay a caller's automatic number
identification and cell site by mid-1998; and
. by 2001 to be able to identify the location of a 911 caller within 125
meters in 67% of all cases.
On September 15, 1999, the FCC adopted an order modifying the deadlines for
identifying caller locations. This order has not been released. According to
the FCC's press release on the order, wireless carriers may now implement the
identification requirement through either network-based or handset-based
technologies. Carriers that use handset-based technologies must:
. begin selling compliant handsets by March 1, 2001;
. ensure that 50% of all newly activated handsets are compliant by October
1, 2001 and that all newly activated handsets are compliant by October 1,
2002; and
. comply with additional requirements relating to passing location
information upon the request of 911 operators.
Carriers that use network-based technologies must provide location information
for 50% of callers within six months and 100% of callers within 18 months of a
request from a 911 operator. The FCC will require network-based solutions to
be accurate for 67% of calls to within 100 meters and for 95% of calls to
within 300 meters and handset-based solutions to be accurate for 67% of calls
to within 50 meters and for 95% of calls to within 150 meters.
The FCC has granted waivers of the requirement to provide 911 service to
users with speech or hearing disabilities to various providers, and we have
obtained a waiver. On June 9, 1999, the FCC also adopted rules designed to
ensure that analog cellular calls to 911 are completed. These rules, which do
not apply to digital cellular service or to personal communications services,
give each cellular provider a choice of three ways to meet this requirement.
State actions incompatible with the FCC rules are subject to preemption.
On August 8, 1996, the FCC released its order implementing the
interconnection provisions of the Telecommunications Act. Although many of the
provisions of this order were struck down by the United States Court of
Appeals for the Eighth Circuit, on January 25, 1999, the United States Supreme
Court reversed the Eighth Circuit and upheld the FCC in all respects material
to our operations. On June 10, 1999, the Eighth Circuit issued an order
requesting briefs on certain issues it did not address in its earlier order,
including the pricing regime for interconnection. While appeals have been
pending, the rationale of the FCC' s order has been adopted by many states'
public utility commissions, with the result that the charges that cellular and
personal communications services operators pay to interconnect their traffic
to the public switched telephone network have declined significantly from pre-
1996 levels.
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In its implementation of the Telecommunications Act, the FCC established
federal universal service requirements that affect commercial mobile radio
service operators. Under the FCC' s rules, commercial mobile radio service
providers are potentially eligible to receive universal service subsidies for
the first time; however, they are also required to contribute to both federal
and state universal service funds. Many states are also moving forward to
develop state universal service fund programs. A number of these state funds
require contributions, varying greatly from state to state, from commercial
mobile radio service providers. On July 30, 1999, the United States Court of
Appeals for the Fifth Circuit in New Orleans affirmed most of the aspects of
the FCC's universal service programs that are relevant to Triton.
On August 1, 1996, the FCC released a report and order expanding the
flexibility of cellular, personal communications services and other commercial
mobile radio service providers to provide fixed as well as mobile services.
Such fixed services include, but need not be limited to, wireless local loop
services, for example, to apartment and office buildings, and wireless backup
to private branch exchange or switchboards and local area networks, to be used
in the event of interruptions due to weather or other emergencies. The FCC has
not yet decided how these services should be regulated, but it has proposed a
presumption that they be regulated as commercial mobile radio service
services.
The FCC has adopted rules on telephone number portability that will enable
customers to migrate their landline and cellular telephone numbers to cellular
or personal communications services providers and from a cellular or personal
communications services provider to another service provider. On February 8,
1999, the FCC extended the deadline for compliance with this requirement to
November 24, 2002, subject to any later determination that number portability
is necessary to conserve telephone numbers. The FCC also has adopted rules
requiring providers of wireless services that are interconnected to the public
switched telephone network to provide functions to facilitate electronic
surveillance by law enforcement officials. On August 27, 1999, the FCC adopted
an order requiring wireless providers to provide information that identifies
the cell sites at the origin and destination of a mobile call to law
enforcement personnel in response to a lawful court order or other legal
requirement. Providers may petition the FCC for a waiver of these law
enforcement obligations if they can prove under a multi-factor test that these
requirements are not reasonably achievable.
The FCC has determined that the interstate, interexchange offerings,
commonly referred to as long distance, of commercial mobile radio service
providers are subject to the interstate, interexchange rate averaging and
integration provisions of the Communications Act. Rate averaging requires us
to average our interstate long distance commercial mobile radio service rates
between high cost and urban areas. The FCC has delayed implementation of the
rate integration requirements with respect to wide area rate plans we offer
pending further reconsideration of its rules. The FCC also delayed the
requirement that there be commercial mobile radio service long distance rate
integration among commercial mobile radio service affiliates. On December 31,
1998, the FCC reaffirmed, on reconsideration, that its interexchange rate
integration rules apply to interexchange commercial mobile radio service
services. The FCC announced it would initiate a further proceeding to
determine how integration requirements apply to typical commercial mobile
radio service offerings, including single-rate plans. Until this further
proceeding is concluded, the FCC will enforce long distance rate integration
on our services only where we separately state a long distance toll charge and
bill to our customers. To the extent that we offer services subject to the
FCC' s rate integration and averaging requirements, these requirements
generally reduce our pricing flexibility. We cannot assure you that the FCC
will decline to impose rate integration or averaging requirements on us or
decline to require us to integrate our commercial mobile radio service long
distance rates across our commercial mobile radio service affiliates.
The FCC recently adopted an order modifying rules limiting the use of
customer proprietary network information by telecommunications carriers,
including Triton, in marketing a broad range of telecommunications and other
services to their customers and the customers of affiliated companies. The new
rules give wireless carriers broader discretion to use customer proprietary
network information, without customer approval, to market all information
services used in the provision of wireless services. The FCC also allowed all
telephone companies to use customer proprietary network information to solicit
lost customers. While all carriers must
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establish a customer's approval prior to using customer proprietary network
information for purposes not explicitly permitted by the rules, the specific
details of gathering and storing this approval are now left to the carriers.
The FCC's order was issued following a decision by the U.S. Court of Appeals
for the 10th Circuit, which overturned the FCC's rules, but not the underlying
statute, on First Amendment grounds. The FCC has not indicated how it will
reconcile the court's decision with its most recent order.
In addition, state commissions have become increasingly aggressive in their
efforts to conserve numbering resources. These efforts may impact wireless
service providers disproportionately by imposing additional costs or limiting
access to numbering resources. Examples of state conservation methods include:
. number pooling;
. number rationing; and
. transparent overlays.
Number pooling is especially problematic for wireless providers because it
is dependent on number portability technology. In addition, the FCC has
rejected transparent overlays, although that decision is subject to petitions
for reconsideration before the FCC. On June 2, 1999, the FCC released a notice
of proposed rulemaking soliciting comments on a variety of administrative and
technical measures that would promote more efficient allocation and use of
numbering resources. Adoption of some of the proposed methods could have a
disproportionate impact on commercial mobile radio services providers.
The FCC is also considering adopting rules to govern customer billing by
commercial mobile radio services providers. The FCC adopted billing rules for
landline telecommunications service providers and is considering whether to
extend those rules to commercial mobile radio services providers. The FCC may
require that more billing detail be provided to consumers, which could add to
the expense of the billing process as systems are modified to conform to any
new requirements. Adoption of some of the FCC' s proposals could increase the
complexity of our billing processes and restrict our ability to bill customers
for services in the most commercially advantageous way.
The FCC has adopted an order that determines the obligations of
telecommunications carriers to make their services accessible to individuals
with disabilities. While the text of the order has not been released, public
statements indicate that the order will require telecommunications services
providers, including Triton, to offer equipment and services that are
accessible to and useable by persons with disabilities, if that equipment can
be made available without much difficulty or expense. While we do not expect
that the final rules will have a material adverse effect on our business,
until the text of the order and the rules are released, we cannot assure you
that the final rules may not require us to make material changes to our
network, product line, or services.
In June 1999, the FCC initiated an administrative rulemaking proceeding to
help facilitate the offering of calling party pays as an optional wireless
service. Under the calling party pays service, the party placing the call to a
wireless customer pays the wireless airtime charges. Most wireless customers
in the United States now pay both to place calls and to receive them. Adoption
of a calling party pays system on a widespread basis could make commercial
mobile radio service providers more competitive with traditional landline
telecommunications providers for the provision of regular telephone service.
State Regulation and Local Approvals
The states in which we operate do not regulate wireless service at this
time; however, before we offer service in Kentucky, we will need to register
with the state and file an informational tariff. In the 1993 Budget Act,
Congress gave the FCC the authority to preempt states from regulating rates or
entry into commercial mobile radio service, including cellular and personal
communications services. The FCC, to date, has denied all state petitions to
regulate the rates charged by commercial mobile radio service providers.
States may, however, regulate the other terms and conditions of commercial
mobile radio service. The siting of cells also remains subject to state and
local jurisdiction, although the FCC is considering issues relating to siting
in a pending rulemaking. States also may require wireless service providers to
charge and collect from their customers fees such as the fee for state
emergency 911 services programs.
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MANAGEMENT
Executive Officers and Directors
The table below sets forth certain information regarding the directors and
executive officers of Triton and certain executive officers of Triton' s
subsidiaries.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Michael Kalogris.................. 50 Chairman of the Board of Directors and
Chief Executive Officer
Steven Skinner.................... 57 President, Chief Operating Officer and
Director
Clyde Smith....................... 59 Executive Vice President and Chief
Technical Officer
David Clark....................... 35 Senior Vice President, Chief Financial
Officer and Secretary
Stephen McNulty................... 46 President and General Manager of the Mid-
Atlantic Region
Michael Mears..................... 44 President and General Manager of the
Southern Region
Scott Anderson.................... 41 Director
John Beletic...................... 47 Director
Arnold Chavkin.................... 48 Director
Mary Hawkins-Key.................. 48 Director
John Watkins...................... 38 Director
</TABLE>
Michael Kalogris has served as Chairman and Chief Executive Officer of
Triton since its inception. Mr. Kalogris was previously President and Chief
Executive Officer of Horizon Cellular Group, which he joined October 1, 1991.
Under Mr. Kalogris' leadership, Horizon Cellular Group became the fifth
largest independent non-wireline company in the United States, specializing in
suburban markets and small cities encompassing approximately 3.2 million
potential customers, and was sold for approximately $575.0 million. Before
joining Horizon Cellular Group, Mr. Kalogris served as President and Chief
Executive Officer of Metrophone of Philadelphia, a non-wireline wireless
carrier. Comcast Corporation acquired Metrophone for over $1.1 billion. Prior
to joining Metrophone, Mr. Kalogris worked at IBM. Mr. Kalogris is chairman of
the advisory committee of Triton Cellular Partners, L.P., a cellular service
provider, and is a member of the board of directors of General Magic, Inc. Mr.
Kalogris is also a member of the board of directors of the Cellular Telephone
Industry Association and is a member of its public policy committee.
Steven Skinner has served as President, Chief Operating Officer and a
Director of Triton since its inception. Mr. Skinner previously served as the
Vice President of Operations and Chief Operating Officer of Horizon Cellular
Group beginning in January of 1994. From March 1992 to December 1993, Mr.
Skinner served as Vice President of Acquisitions for Horizon Cellular Group.
From January 1991 to March 1992, he served as a consultant in the area of
cellular acquisitions to Norwest Venture Capital Management, Inc. and others.
From August 1987 to January 1991, he served as President and General Manager
of Houston Cellular Telephone Company. Before 1987, he served as a General
Manager of Cybertel, Inc., a non-wireline carrier serving St. Louis. Mr.
Skinner has also been active in the National CellularOne Group, most recently
acting as Chairman of the Advisory Committee. Mr. Skinner is vice-chairman of
the advisory committee of Triton Cellular Partners, L.P.
Clyde Smith has served as the Executive Vice President and Chief Technical
Officer of Triton since January 1998. Mr. Smith previously served as Vice
President and Chief Technical Officer of ALLTEL Communications Inc. from
January 1993 to January 1998, where he oversaw the expansion and migration of
its wireless network to include digital and wireless data technologies. Before
joining ALLTEL, Mr. Smith served as Director of Wireless Technologies for Bell
Atlantic Mobile Systems, where he was responsible for the evaluation of new
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technologies. Mr. Smith is active in industry organizations, having served as
the Chairman of the CTIA Chief Technical Officers Forum. In addition, Mr.
Smith served as Secretary/Treasurer of the Code Division Multiple Access
Development Group.
David Clark has served as Senior Vice President, Chief Financial Officer
and Secretary of Triton since its inception. Before joining Triton, he was a
Managing Director at Furman Selz L.L.C. specializing in communications
finance, which he joined in February 1996. Prior to joining Furman Selz, Mr.
Clark spent over ten years at Citibank N.A. and Citicorp Securities Inc. as a
lending officer and a high yield finance specialist. Mr. Clark is also the
Chief Financial Officer of Triton Cellular Partners, L.P.
Stephen McNulty has served as President and General Manager of Triton's
Mid-Atlantic region since July 1998. Before joining Triton, he was Vice
President Central/West Operations with United States Cellular in Chicago,
Illinois. Mr. McNulty previously served as Vice President of Marketing for
ALLTEL Communications from February 1994 to May 1997.
Michael Mears has served as President and General Manager of Triton's
Southern region since its inception. Mr. Mears previously served as the Vice
President and General Manager of American Telecommunications Inc. from June
1995 until April 1997. Before that, Mr. Mears was the Regional and Area
General Manager of GTE Corp., serving in that capacity from October 1992 to
June 1995. From 1986 to 1992, Mr. Mears served as Regional and Area General
Manager for Providence Journal Co.
Scott Anderson has served as a Director of Triton since February 1998. He
is currently a member of the board of directors of TeleCorp PCS, Tritel
Communications, Tegic Corp. and Xypoint and a principal of Cedar Grove
Partners, LLC. and Cedar Grove Investments. Mr. Anderson was previously Senior
Vice President for Acquisitions and Development at AT&T Wireless Services,
Inc., formerly McCaw Cellular Communications, Inc., which he joined in 1986,
and a director of Horizon Cellular Group.
John Beletic has served as a Director of Triton since February 1998. Mr.
Beletic currently serves as Chairman and Chief Executive Officer of Pagemart
Wireless Inc., which he joined in March 1992. He also serves as a director of
Tessco Technologies Inc. and President of the Paging Leadership Association.
Arnold Chavkin has served as a Director of Triton since February 1998. Mr.
Chavkin is also a member of the advisory board of Triton Cellular and a
director of American Tower Corporation, Encore Acquisition Partners, Inc.,
Hallmark Entertainment Network, R&B Falcon Corporation, SMG, Inc., Telecorp
PCS, Inc. and U.S. Silica Company. He also serves on the Advisory Investment
Boards of Richina Group, the Indian Private Equity Fund and the Asia
Development Partners Fund. Mr. Chavkin has been a General Partner of Chase
Capital Partners since January 1992. Prior to joining Chase Capital Partners,
he was a member of Chemical Bank's merchant banking group and a generalist in
its corporate finance group specializing in mergers and acquisitions and
private placements for the energy industry.
Mary Hawkins-Key has served as a Director of Triton since January 1999. Ms.
Hawkins-Key is the Senior Vice President of Partnership Operations for AT&T
Wireless Services. Ms. Hawkins-Key joined AT&T Wireless in 1995. She is a
director of TeleCorp PCS and a member of the partner committee for CMT
Partners.
John Watkins has served as a Director of Triton since October 1997. Mr.
Watkins serves as a member of the advisory boards of FrontierVision Partners
L.P. and Triton Cellular. Mr. Watkins is also a Managing Director and an
officer of J.P. Morgan Capital Corporation. Previously, Mr. Watkins was a
director of Horizon Cellular Group, Prism Radio Partners, L.P. and Inference
Corp.
Election of Directors
Our board of directors presently consists of seven members. At present all
directors are elected annually and serve until the next annual meeting of
stockholders or until the election and qualification of their successors.
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Effective upon completion of the offering, the board of directors will be
divided into three classes, as nearly equal in number as possible. Each
director will serve a three-year term, and one class will be elected at each
year's annual meeting of stockholders. Mr. Anderson and Mr. Chavkin will be in
the class of directors whose term will expire at our 2000 annual meeting of
stockholders. Ms. Hawkins-Key and Mr. Beletic will be in the class of
directors whose term will expire at our 2001 annual meeting of stockholders.
Mr. Kalogris, Mr. Skinner and Mr. Watkins will be in the class of directors
whose term will expire at our 2002 annual meeting of stockholders. At each
annual meeting of stockholders, successors to the class of directors whose
terms expire at the meeting will be elected to serve for three-year terms and
until their successors are elected and qualified.
Audit Committee
Our audit committee consists of Mr. Anderson, as chairman, Mr. Chavkin and
Ms. Hawkins-Key.
Compensation Committee
Our compensation committee consists of Mr. Beletic, as chairman, Mr.
Chavkin and Mr. Watkins.
Compensation Committee Interlocks and Insider Participation
The members of our compensation committee include Mr. Chavkin, who is a
general partner of Chase Capital Partners, and Mr. Watkins, a managing
director of J.P. Morgan Capital Corporation. See "Certain Relationships and
Related Transactions" for a description of various transactions between
affiliates of these entities and Triton.
Compensation of Directors
The non-independent members and the AT&T-nominated member of the board of
directors do not receive cash compensation for service on the board, although
they are reimbursed for certain out-of-pocket expenses in connection with
attendance at board meetings. Our independent directors receive compensation
of $10,000 per year, plus $1,000 for each meeting they attend in person and
$500 for each meeting they attend via conference call, as well as shares of
our Class A common stock awarded to them under our Amended and Restated Common
Stock Trust Agreement for Management Employees and Independent Directors,
dated June 26, 1998. See "--Executive Compensation."
On August 12, 1999, we entered into stock purchase agreements with each of
Scott Anderson and John Beletic, our two independent directors, and an
officer, under which we agreed to sell to them an aggregate of 3,400 shares of
our Series C preferred stock for a purchase price of $100 per share. These
agreements are subject to and conditioned only upon the waiver of the
preemptive rights of the other stockholders.
Executive Compensation
The following table presents information concerning the compensation we
paid for the years ended December 31, 1997 and 1998 to our Chief Executive
Officer and to each of our other executive officers.
Several executive officers were issued shares of restricted stock in
connection with the consummation of our joint venture with AT&T, the Norfolk
acquisition, the Myrtle Beach acquisition and the license exchange with AT&T.
In addition, several executive officers were issued restricted stock under the
amended and restated
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common stock trust agreement for management employees and independent
directors dated June 26, 1998. Approximately 1.07% of our total outstanding
Class A common stock is currently held in trust under this common stock trust
agreement of which Michael Kalogris is the trustee. The trustee is required to
distribute stock to management employees and independent directors as directed
in writing by us. Our compensation committee of the board of directors
determines at its discretion which persons shall receive awards and the amount
of such stock awards. Our stock and incentive plan provides that Class A
common stock held under the common stock trust agreement would be issued upon
the exercise of granted stock options. See "--1999 Stock and Incentive Plan."
The shares issued in connection with the consummation of our joint venture
with AT&T, the Norfolk and Myrtle Beach acquisitions, the license exchange and
acquisition with AT&T and under the amended and restated common stock trust
agreement had nominal value at the date of issuance, and, therefore, no
amounts are reported as compensation in the table below. The restricted shares
vest in equal installments over a five-year period from the date of issuance.
As of December 31, 1998, Messrs. Kalogris, Skinner, Clark, Smith and Mears
held approximately 96,645 shares, 72,484 shares, 8,054 shares, 4,295 shares
and 2,685 shares, respectively, of restricted stock.
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Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
----------------------
All Other
Name Principal Position Year Salary Bonus Compensation
---- -------------------------- ---- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
Michael Kalogris........ Chairman of the Board of 1998 $350,000 $350,000 --
Directors and Chief 1997 228,619 350,000 --
Executive Officer
Steven Skinner.......... President and Chief 1998 $225,000 $225,000 --
Operating Officer 1997 148,712 225,000 --
Clyde Smith............. Executive Vice President 1998 $205,051 $220,000 --
and Chief Technical 1997 N/A N/A N/A
Officer
David Clark............. Senior Vice President, 1998 $190,000 $190,000 83,188(1)
Chief Financial Officer 1997 122,243 165,000
and Secretary
Michael Mears........... President and General 1998 $158,667 $115,000 --
Manager of the Southern 1997 N/A N/A N/A
Region
</TABLE>
- --------
(1) Consists of relocation and related expenses.
Restricted Stock Awards in Last Fiscal Year
<TABLE>
<CAPTION>
Performance Or
Number of Other Period
Shares, Units or Until Maturation
Name Other Rights(1) or Payout
---- ---------------- ----------------
<S> <C> <C>
Michael Kalogris.............................. 107,383.60 2003(2)
Steven Skinner................................ 80,537.70 2003(2)
Clyde Smith................................... 4,295.34 2003(3)
David Clark................................... 8,053.77 2003(4)
Michael Mears................................. 2,684.59 2003(4)
</TABLE>
- --------
(1) Consists of restricted shares of our Class A common stock awarded during
1998 that vest over a five-year period commencing February 4, 1998. A
significant portion of these shares remain subject to forfeiture at
December 31, 1998. See "Principal Stockholders."
(2) Mr. Kalogis' and Mr. Skinner's awards vest as follows: 10% vested as of
February 4, 1998, 5% vested during 1998 in connection with the activation
of our systems and 17% vest per year for five years beginning February 4,
1999.
(3) Mr. Smith's awards vest as follows: 17% vest per year for five years
beginning February 4, 1999 and 15% vest based upon performance measures
to be determined.
(4) Mr. Clark's and Mr. Mears' awards vest as follows: 20% per year for five
years beginning February 4, 1999.
Employment Agreements
Michael Kalogris
On February 4, 1998, we entered into an employment agreement with Michael
Kalogris, chairman of our board of directors and Chief Executive Officer. Mr.
Kalogris' employment agreement has a term of five years unless the agreement
is terminated earlier by either Mr. Kalogris or us. Mr. Kalogris may terminate
his employment agreement:
. at any time at his sole discretion upon 30 days' prior written notice;
and
. immediately, upon written notice for good reason, which includes:
(a) if there is a change of control, as defined in the employment
agreement;
(b) if Mr. Kalogris is demoted, removed or not re-elected as chairman
of our board of directors. However, after the date of this
offering, so long as Mr. Kalogris remains a member of our board
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of directors and our Chief Executive Officer, it is not considered
good reason if Mr. Kalogris is no longer Chairman of our board of
directors;
(c) there is a material diminishment of Mr. Kalogris' responsibilities,
duties or status and that diminishment is not rescinded within 30
days after receiving written notice of the diminishment;
(d) we fail to pay or provide benefits to Mr. Kalogris when due and do
not cure that failure within 10 days of receiving written notice of
that failure;
(e) we relocate our principal offices more than 30 miles from Malvern,
Pennsylvania without the consent of Mr. Kalogris; or
(f) we purport to terminate Mr. Kalogris for cause for any reason other
than those permitted as for cause reasons under the employment
agreement.
We may terminate Mr. Kalogris' employment agreement:
. at any time, upon written notice, without cause at our sole discretion;
. for cause; or
. upon the death or disability of Mr. Kalogris.
If Mr. Kalogris terminates the employment agreement for good reason other
than due to a change of control, or we terminate the employment agreement
without cause, Mr. Kalogris is entitled to receive the following severance
benefits:
. $1.0 million;
. up to an additional $0.5 million if he is unable to secure employment in
a senior executive capacity by the second anniversary of the date of
termination;
. the vesting of some of his unvested shares as follows:
(a) if the termination occurs before February 4, 2001, 50% of all
shares of Class A common stock that are unvested under the
employment agreement as of such date will vest,
(b) if the termination occurs between February 4, 2001 and February 3,
2002, 25% of the unvested shares will vest, and
(c) if the termination occurs after such period, none of the unvested
shares will vest.
We will also allow Mr. Kalogris to participate in all health, dental,
disability and other benefit plans maintained by us for a period of two years
following the date of termination of the employment agreement.
If Mr. Kalogris' employment is terminated on or after the initial five-year
term of the employment agreement or due to our failure to renew the agreement,
we will pay him a severance benefit in the amount of his base salary at that
time. Mr. Kalogris' employment agreement provides for an initial annual base
salary of $350,000, subject to annual increases at the discretion of the
compensation committee of the board of directors, and an annual bonus in an
amount up to 100% of his base salary based on our performance. Mr. Kalogris is
also entitled to acquire shares of our Series C preferred stock under a stock
purchase plan that may be created under the terms of the employment agreement
and is required to invest 30% of any amounts he receives on account of an
annual bonus in excess of 50% of his base salary toward the purchase of such
shares.
In the event of any change of control, regardless of whether Mr. Kalogris
terminates the employment agreement, all of his previously unvested shares
will vest immediately.
58
<PAGE>
Steven Skinner
On February 4, 1998, we entered into an employment agreement with Steven
Skinner, our President and Chief Operating Officer. The employment agreement
has a term of five years unless terminated earlier by either Mr. Skinner or
us. Mr. Skinner may terminate his employment agreement:
. at any time at his sole discretion upon 30 days' prior written notice;
and
. immediately, upon written notice for good reason, which includes:
(a) if there is a change of control, as defined in the employment
agreement;
(b) if Mr. Skinner is demoted, removed or, before the date of this
offering, not re-elected to our board of directors;
(c) there is a material diminishment of Mr. Skinner's responsibilities,
duties or status and that diminishment is not rescinded within 30
days after receiving written notice of the diminishment;
(d) we fail to pay or provide benefits to Mr. Skinner when due and do
not cure that failure within 10 days of receiving written notice of
that failure;
(e) we relocate our principal offices more than 30 miles from Malvern,
Pennsylvania without the consent of Mr. Skinner; or
(f) we purport to terminate Mr. Skinner for cause for any reason other
than those permitted as for cause reasons under the employment
agreement.
We may terminate the employment agreement:
. at any time, upon written notice, at our sole discretion;
. for cause; or
. upon the death or disability of Mr. Skinner.
If Mr. Skinner terminates the employment agreement for good reason other
than due to a change of control, or we terminate the employment agreement
without cause, Mr. Skinner is entitled to receive the following severance
benefits:
. $675,000;
. up to an additional $337,500 if he is unable to secure employment in a
senior executive capacity by the second anniversary date of the
termination of the agreement;
. the vesting of some of his unvested shares as follows:
(a) if the termination occurs before February 4, 2001, 50% of all
shares of Class A common stock that are unvested under the
employment agreement as of that date will vest,
(b) if the termination occurs between February 4, 2001 and February 3,
2002, 25% of the unvested shares will vest, and
(c) if the termination occurs after such period, none of the unvested
shares will vest; and
. we will allow Mr. Skinner to participate in all health, dental,
disability and other benefit plans maintained by us for a period of two
years following the date of termination of the agreement.
If Mr. Skinner's employment is terminated on or after the initial five-year
term of the employment agreement, or due to our failure to renew the
employment agreement, we will pay Mr. Skinner a severance benefit in the
amount of his base salary at that time. Mr. Skinner's employment agreement
provides for an initial annual base salary of $225,000, subject to annual
increases at the discretion of the compensation committee of the board of
directors, and an annual bonus in an amount up to 100% of his base salary
based on our performance. Mr.
59
<PAGE>
Skinner is also entitled to acquire shares of our Series C preferred stock
under a stock purchase plan and is required to invest 30% of any amounts he
receives on account of an annual bonus in excess of 50% of his base salary
toward the purchase of such shares.
In the event of any change of control, regardless of whether Mr. Skinner
terminates the employment agreement, all of his previously unvested shares
will vest immediately.
Clyde Smith
On January 8, 1998, we entered into an employment agreement with Clyde
Smith, Executive Vice President and Chief Technical Officer of Triton. The
employment agreement has a term of five years unless terminated earlier by
either Mr. Smith or us. Mr. Smith may terminate the employment agreement:
. at any time at his sole discretion upon 60 days' prior written notice;
and
. upon 60 days' written notice, for good reason, which means that our
employment of each of Michael Kalogris and Steve Skinner has been
terminated during the five-year period.
We may terminate the employment agreement:
. at any time, upon 60 days' written notice, at our sole discretion;
. for cause, as defined in the employment agreement;
. upon Mr. Smith's death; or
. a specified period of disability, as described in the employment
agreement.
If Mr. Smith terminates the employment agreement for good reason or we
terminate the employment agreement without cause, Mr. Smith is entitled to
receive the following severance benefits:
. an amount equal to 150% of his then annual base salary; and
. the vesting of some of his unvested shares as follows:
(a) the percentage of unvested shares that would have vested in the
year following the year of his termination, and
(b) a proportionate amount, based on the number of days worked that
year, of the shares that would have vested in the year of his
termination.
Mr. Smith's employment agreement provides for an initial annual base salary
of $220,000, subject to annual increases at the discretion of the compensation
committee of the board of directors, and an annual bonus in an amount up to
100% of his base salary based on our performance. Mr. Smith has also received
shares of our Class A common stock, which vest according to the schedule set
forth in a letter agreement dated as of February 4, 1998, between Mr. Smith
and us.
1999 Stock and Incentive Plan
We have adopted the Triton PCS Holdings, Inc. 1999 Stock and Incentive
Plan, which is effective as of May 1, 1999. The stock and incentive plan
provides for the issuance of incentive stock options, non-qualified stock
options, restricted stock awards and any combination of such awards to certain
employees and independent directors of Triton and its subsidiaries. Under the
stock and incentive plan, 300,000 shares of Class A common stock have been
reserved for issuance. The number of shares available under the stock and
incentive plan may be adjusted in the event of a recapitalization, stock
split, reverse split, reorganization, merger, consolidation, spin-off,
combination, repurchase or share exchange or other similar corporate
transaction or event affecting the Class A common stock. Shares subject to an
option which expires, is terminated or canceled or which are repurchased by us
are available for future grants under the stock and incentive plan. The stock
and incentive
60
<PAGE>
plan shall remain effective until all options granted under the stock and
incentive plan have been exercised or expired by reason of the lapse of time,
or all restrictions imposed upon awards of restricted stock have been
eliminated or the restricted stock has been forfeited.
Administration. The stock and incentive plan is administered by the
compensation committee. The compensation committee has the discretion to
determine which eligible individuals will receive awards, the time or times
when such awards will be made, the number of shares to be covered by the
awards, the exercise date and price of the awards, whether the options should
be incentive stock options or non-qualified stock options and the terms and
conditions of the awards.
Stock Options--Incentive Stock Options and Nonqualified Stock
Options. Under the stock and incentive plan, the compensation committee has
the discretion to grant incentive stock options qualifying for special tax
treatment under Section 422 of the Internal Revenue Code as well as
nonqualified stock options. The exercise price of any incentive stock option
may not be less than the fair market value of the Class A common stock on the
date the option is granted, provided the exercise price of any incentive stock
option shall be not less than 110% of the fair market value of a share of
Class A common stock on the date the option is granted in the event the
participant owns stock possessing more than 10% of the total combined voting
power of all of our classes of stock. Only employees are eligible to receive
incentive stock options, and at the time an incentive stock option is granted,
the fair market value of the Class A common stock for which the incentive
stock option will become exercisable in any one calendar year may not exceed
$100,000.
Payment of the option price may be made in cash or by delivery of shares of
Class A common stock equivalent in value to the option price. The compensation
committee is authorized to award reload options to participants in order to
enable a participant to use previously owned shares to pay the exercise price
of the stock options without reducing the participant's overall ownership of
shares. Reload options are not intended to be incentive stock options, become
exercisable twelve months after the date of grant and must be exercised within
the term of the original stock option.
Restricted Stock Awards. Under the stock and incentive plan, the
compensation committee has the discretion to grant awards of restricted stock,
which are subject to certain transfer restrictions and/or risk of forfeiture,
determined by the committee in its sole discretion. Except as specifically set
forth in the restricted stock award agreement, the participant will have all
rights and privileges of a stockholder as to his restricted stock, including
the rights to vote and to receive dividends. A participant is not required to
make any payment for shares of Class A common stock issued under a restricted
stock award, except to the extent required by law or the compensation
committee.
Change of Control. In the event of:
. a sale of our stock that results in any person owning 50% or more of our
voting stock where such person was not an owner of our stock on
February 4, 1998;
. a sale of all or substantially all of our assets; or
. a proxy contest for the election of our directors that results in a
change in the majority make-up of the board,
the compensation committee may determine that any, all or none of the
outstanding options shall immediately vest and become exercisable.
The compensation committee may also provide that outstanding awards will
terminate upon a change of control and upon such termination each participant
may receive cash in an amount equal to the excess of:
. the higher of
(a) the fair market value of the Class A common stock immediately prior
to the occurrence of the change of control, or
61
<PAGE>
(b) the value of the consideration to be received in connection with
such change of control for one share of Class A common stock
over
. the exercise price per share.
Assignment of Interest/Non-Transferability. Awards under the stock and
incentive plan generally are not assignable or transferable except by the laws
of descent and distribution. With respect to awards of non-qualified stock
options, the compensation committee may permit a participant to transfer such
options to members of the participant's immediate family or to a trust solely
for the benefit of the participant and the participant's family, or to a
partnership or limited liability company whose only partners or stockholders
are the participant and members of the participant's family.
Amendment or Termination of Plan. The stock and incentive plan may be
amended, suspended or terminated in whole or in part by the board of directors
at any time, provided that no such amendment, suspension or termination of the
stock and incentive plan may adversely affect the rights of or obligations to
the participants without such participants' consent. The board must obtain
stockholder approval for any change in the stock and incentive plan that would
materially increase the number of shares which may be issued under the stock
and incentive plan, or change the class of individuals eligible to receive
awards under the stock and incentive plan.
Stockholder Approval. The disclosure contained in this prospectus of the
Triton 1999 Stock and Incentive Plan will constitute approval of our adoption
of the stock and incentive plan for purposes of the stockholder approval
requirements of Internal Revenue Code Section 162(m).
Employee Stock Purchase Plan
We have adopted the Triton PCS Holdings, Inc. Employee Stock Purchase Plan,
which was effective upon the approval of our stockholders on September 17,
1999. The stock purchase plan is administered by the stock plan committee. The
board of directors has reserved and authorized for issuance under the stock
purchase plan 1,812,431 shares of Class A common stock. We intend to register
the shares reserved under the stock purchase plan with the SEC.
All individuals who have been employed by us for a minimum of three months
as of a grant date and who customarily work at least 20 hours per week and
five months per year will be eligible to participate in the stock purchase
plan, except an employee who, immediately after the grant date, would own 5%
or more of the total combined voting power or value of all classes of our
stock. Each eligible employee will be given an option to purchase a number of
shares of Class A common stock equal to an amount not to exceed 10% of his
compensation divided by the purchase price per share under the option. In no
event may an employee receive an option that would permit him during any one
calendar year to purchase shares that have a fair market value on the grant
date in excess of $25,000. The price of the shares offered to employees under
the stock purchase plan will be the lesser of:
. 85% of the fair market value of the Class A common stock on the grant
date; or
. 85% of the fair market value of the Class A common stock on the exercise
date.
Payment of an eligible employee's subscription amount will be made through
payroll deductions, and an employee's participation in the stock purchase plan
is contingent on the employee providing Triton with written authorization to
withhold from his pay an amount to be applied toward the purchase of shares of
Class A common stock. An eligible employee is deemed to have exercised his
option granted under the stock purchase plan as of the exercise date.
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<PAGE>
Generally, the employee does not recognized taxable income, and we are not
entitled to an income tax deduction, on the grant or exercise of an option
issued under the stock purchase plan. If the employee sells the shares
acquired upon exercise of his option at least one year after the date he
exercised the option and at least two years after the date the option was
granted to him, then the employee will recognize ordinary income equal to the
difference between the fair market value of the Class A common stock as of the
date of grant and the exercise price. Any additional appreciation realized on
the sale of the Class A common stock will be treated as a capital gain. We
will be entitled to an income tax deduction corresponding to the amount of
ordinary income recognized by the employee. If the employee sells the shares
acquired upon the exercise of his option at any time within:
. one year after the date of exercise of the option; or
. two years after the date the option was granted,
then the employee will recognize ordinary income in an amount equal to the
excess, if any, of:
. the lesser of the sale price or the fair market value on the date of
exercise,
over
. the exercise price of the option.
We will generally be entitled to a deduction in an amount equal to the amount
of ordinary income recognized by the employee.
The stock purchase plan may be amended by the board of directors at any
time; provided that no such amendment of the stock purchase plan may
materially adversely affect any previously issued option without the affected
participant's written consent. The board of directors may terminate, at any
time, the stock purchase plan and all rights of employees under the stock
purchase plan.
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<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of June 30, 1999, information with
respect to the beneficial holdings of each director, each of the executive
officers named in the summary compensation table, and all of our executive
officers and directors as a group, as well as the holdings of each of our
stockholders who was known to us to be the beneficial owner, as defined in
Rule 13d-3 under the Exchange Act, of more than 5% of our Class A common stock
and Series D preferred stock, based on our records. shares of Series C
preferred stock will be converted into Class A common stock upon closing of
this offering on a one-for-one basis, and accordingly, are included as Class A
common stock in the table below.
<TABLE>
<CAPTION>
Percentage of
Shares
Beneficially
Owned
-----------------
Number of Shares Before After
Name and Address of Beneficial Owner(1) Beneficially Owned Offering Offering
- --------------------------------------- ------------------ -------- --------
<S> <C> <C> <C>
Michael Kalogris......................... 150,068.23(8) 5.5
Steven Skinner........................... 84,474.19(9) 3.1
Clyde Smith.............................. 4,371.95(10) *
David Clark.............................. 8,197.42(11) *
Michael Mears............................ 2,732.47(12) *
Scott Anderson........................... 984.46 *
John Beletic............................. 984.46 *
Arnold Chavkin(2)........................ -- --
Mary Hawkins-Key......................... -- --
John Watkins(3).......................... -- --
CB Capital Investors, L.P.(2)............ 533,510.62 19.5
J.P. Morgan Investment Corporation(3).... 469,113.00(13) 17.2
Desai Capital Management
Incorporated(4)......................... 517,510.62(14) 18.9
Toronto Dominion Capital (USA), Inc.(5).. 129,378.18 4.7
First Union Capital Partners, Inc.(6).... 177,385.94 6.5
DAG--Triton PCS, L.P..................... 80,788.15 3.0
AT&T Wireless PCS(7)..................... 543,683.47(15) 19.9
All directors and executive officers as a
group (10 persons)...................... 251,813.18 9.2
</TABLE>
- --------
* Represents less than 1%.
(1) Unless otherwise indicated, the address of each person listed in this
table is c/o Triton Management Company, 375 Technology Drive, Malvern,
Pennsylvania 19355.
(2) CB Capital Investment Inc. is the sole general partner of CB Capital
Investors, L.P. Mr. Chavkin is a vice president of CB Capital
Investments Inc. Mr. Chavkin disclaims beneficial ownership of any such
shares. The address of CB Capital Investors is 380 Madison Avenue, New
York, New York 10017.
(3) Mr. Watkins is a managing director and an officer of J.P. Morgan
Investment Corporation. Mr. Watkins disclaims beneficial ownership of
any such shares. The address of J.P. Morgan is 101 California Street,
San Francisco, California 94111.
(4) The address of Desai Capital Management Incorporated is 540 Madison
Avenue, New York, New York 10022.
(5) The address of Toronto Dominion Capital (USA), Inc. is 31 West 52nd
Street, New York, New York 10019.
(6) The address of First Union Capital Partners is One First Union Center,
301 S. College Street, Charlotte, North Carolina 28288.
(7) The address of AT&T Wireless PCS is 5000 Carillon Point, Kirkland,
Washington 98033.
(8) Includes 35,769.31 shares of Class A common stock held by Mr. Kalogris
as trustee under an amended and restated common stock trust agreement
for management employees and independent directors, dated June 26, 1998,
under which we will distribute Class A common stock to management
employees and
64
<PAGE>
independent directors. 74,323.26 of the 114,298.92 shares of Class A
common stock directly held by Mr. Kalogris are subject to forfeiture in
accordance with Mr. Kalogris' employment agreement over a five-year
period.
(9) 55,742.45 of the 84,474.19 shares of Class A common stock are subject to
forfeiture according to the terms of Mr. Skinner's employment agreement.
(10) 3,628.72 of the 4,371.95 shares of Class A common stock are subject to
forfeiture according to the terms of Mr. Smith's employment agreement.
(11) 6,557.94 of the 8,197.42 shares of Class A common stock are subject to
forfeiture according to the terms of a letter agreement, dated as of
February 4, 1998, between Triton and Mr. Clark.
(12) 2,185.98 of the 2,732.47 shares of Class A common stock are subject to
forfeiture according to the terms of a letter agreement, dated as of
February 4, 1998, between Triton and Mr. Mears.
(13) Includes 23,907 shares of Series C preferred stock held by Sixty Wall
Street SBIC Fund, L.P., an affiliate of J.P. Morgan Investment
Corporation. The address for Sixty Wall Street SBIC is 60 Wall Street,
New York, New York 10260.
(14) Consists of 258,755.31 shares of Series C preferred stock held by
Private Equity Investors III, L.P., and 258,755.31 shares of Series C
preferred stock held by Equity-Linked Investors-II, each an affiliate of
Desai Capital Management. The address for Private Equity Investors III
and Equity-Linked Investors-II is 540 Madison Avenue, 38th Floor, New
York, New York 10022.
(15) Consists of 543,683.47 shares of Series D preferred stock. Shares of
Series D preferred stock are convertible into an equivalent number of
shares of Series C preferred stock at any time, and Series C preferred
stock is convertible into Class A or Class B non-voting common stock at
any time.
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following summary highlights the material provisions of the securities
purchase agreement and the agreements with AT&T, as each has been modified to
date. It may not contain all of the information that is important to you. To
understand these agreements fully, you should carefully read each of the
agreements. We have filed copies of the securities purchase agreement and the
AT&T agreements with the SEC as described under the caption "Available
Information."
The Securities Purchase Agreement
Under the terms of a securities purchase agreement, dated as of October 8,
1997, among AT&T, the cash equity investors, Michael Kalogris, Steven Skinner
and Triton, on February 4, 1998, AT&T transferred to us personal
communications services licenses which cover 20 MHz of authorized frequencies,
and entered into other agreements, in exchange for 732,371 shares of our
Series A preferred stock and 366,131 shares of our Series D preferred stock.
AT&T has retained 10 MHz of spectrum within our licensed areas.
The cash equity investors and Michael Kalogris and Steven Skinner have each
made irrevocable commitments to contribute to Triton the following amounts in
cash exchange for the number of shares of Series C preferred stock set forth
beside their name:
<TABLE>
<CAPTION>
Value of Shares
Shares of Series C at Initial Public
Cash Commitment Preferred Stock Offering Price
--------------- ------------------ -----------------
<S> <C> <C> <C>
Chase Capital Partners
and/or affiliates...... $ 39,785,713 404,714
J.P. Morgan Investment
Corporation and/or
affiliates............. 39,785,713 404,715
Desai Capital Management
Incorporated and/or
affiliates............. 39,785,714 388,714
Toronto Dominion Capital
(USA), Inc............. 9,946,430 97,179
First Union Capital
Partners, Inc.......... 4,973,215 48,589
Duff Ackerman Goodrich &
Assoc. L.P. ........... 4,973,215 48,589
Michael Kalogris........ 500,000 5,000
Steven Skinner.......... 250,000 2,500
------------ --------- ---
Total................. $140,000,000 1,400,000
============ ========= ===
</TABLE>
The cash equity investors, together with Michael Kalogris and Steven
Skinner, have contributed an aggregate of $80.0 million of their $140.0
million commitment as of the date of this prospectus. The cash equity
investors and Michael Kalogris and Steven Skinner are required to contribute
the unfunded portion of their respective commitments under the securities
purchase agreement to us on February 4, 2000 and 2001. Each cash equity
investor's obligation to make those additional capital contributions to us is
unconditional and irrevocable, is not subject to set-off or reduction for any
reason and is secured by a pledge of the investor's Series C preferred stock
that was issued in respect of such commitments. The cash equity investors have
also agreed to contribute all or a part of their unfunded commitment amount to
us upon 20 business days' notice from our board of directors. We expect to
require all of the unfunded commitments to be funded by October, 1999.
The Myrtle Beach Equity Contribution
Under the terms of a preferred stock purchase agreement, dated as of June
29, 1998, we received additional equity contributions of $35.0 million in
exchange for the issuance of 350,000 shares of our Series C preferred stock,
as shown below:
66
<PAGE>
<TABLE>
<CAPTION>
Value of Shares
Shares of Series C at Initial Public
Cash Commitment Preferred Stock Offering Price
--------------- ------------------ -----------------
<S> <C> <C> <C>
Chase Capital Partners
and/or affiliates...... $10,242,968 102,430
J.P. Morgan Capital
Investment Corporation
and/or affiliates...... 10,000,000 100,000
Desai Capital Management
Incorporated and/or
affiliates............. 9,838,022 98,380
Toronto Dominion Capital
(USA), Inc............. 2,459,518 24,595
First Union Capital
Partners, Inc.......... 1,229,746 12,297
Duff Ackerman Goodrich &
Assoc. L.P. ........... 1,229,746 12,298
----------- ------- ---
Total................. $35,000,000 350,000
=========== ======= ===
</TABLE>
These contributions were contributed to us at the same time and were used
to finance the Myrtle Beach acquisition, and the shares were issued on terms
substantially similar to the terms of the securities purchase agreement.
Redemption and Reissuance of Series C Preferred Stock
On December 7, 1998, we redeemed an aggregate amount of 35,602 shares of
Series C preferred stock for an aggregate price of $3,560,200 from J.P. Morgan
Capital Investment Corporation and its affiliate and contemporaneously
reissued to our other institutional stockholders the following shares for the
following cash contributions:
<TABLE>
<CAPTION>
Value of Shares
Shares of Series C at Initial Public
Cash Contribution Preferred Stock Offering Price
----------------- ------------------ -----------------
<S> <C> <C> <C>
Chase Capital Partners
and/or affiliates...... $ 467,511 4,675
Desai Capital Management
Incorporated and/or
affiliates............. 539,312 5,393
Toronto Dominion Capital
(USA), Inc............. 134,826 1,348
First Union Capital
Partners, Inc.......... 2,065,675 20,657
Duff Ackerman Goodrich &
Assoc. L P. ........... 352,876 3,529
---------- ------ ---
Total................. $3,560,200 35,602
========== ====== ===
</TABLE>
The Norfolk Contribution
Under the terms of a preferred stock purchase agreement, dated as of
December 31, 1998, we received an additional contribution of approximately
$16.5 million from some of the cash equity investors in order to fund a
portion of the $105.0 million purchase price for the Norfolk acquisition. We
issued approximately $16.5 million of our Series C preferred stock to those
cash equity investors as shown below:
<TABLE>
<CAPTION>
Value of Shares
Shares of Series C at Initial Public
Cash Contribution Preferred Stock Offering Price
----------------- ------------------ -----------------
<S> <C> <C> <C>
Chase Capital Partners
and/or affiliates...... $ 2,169,183 21,692
Desai Capital Management
Incorporated and/or
affiliates............. 2,502,328 25,023
Toronto Dominion Capital
(USA), Inc............. 625,574 6,256
First Union Capital
Partners, Inc.......... 9,584,273 95,842
Duff Ackerman Goodrich &
Assoc. L.P. ........... 1,637,293 16,373
----------- ------- ---
Total................. $16,518,651 165,186
=========== ======= ===
</TABLE>
At closing, we also issued $13.5 million, or $ million at the initial
public offering price, of our Series D preferred stock to AT&T. We financed
the balance of the purchase price through use of $75.0 million from the net
proceeds of the notes offering.
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<PAGE>
License Exchange with AT&T
On June 8, 1999, we completed a license exchange with AT&T, transferring
licenses for the Hagerstown and Cumberland, Maryland basic trading areas,
which cover 512,000 potential customers, to AT&T in exchange for licenses for
certain counties in the Savannah and Athens, Georgia basic trading areas,
which cover 517,000 potential customers. In addition, we issued 53,882 shares
of our Series A preferred stock, or $ million at the initial public offering
price, and 42,739 shares of our Series D preferred stock, or $ million at
the initial public offering price. The licenses we acquired in the exchange
are contiguous to our existing service area and have not been built out. We
are including these licenses in our current build-out plan for our licensed
area.
The AT&T Agreements
The Stockholders' Agreement
General. We entered into a stockholders' agreement, dated as of February 4,
1998, with AT&T, the cash equity investors and certain of our current and
former executive officers. Additional management stockholders and the
independent directors have also agreed to be bound by the provisions of the
stockholders' agreement in connection with the issuance to them of capital
stock. The agreement covers matters in connection with our management and
operations and the sale, transfer or other disposition of our capital stock.
Board of Directors. A board of directors consisting of seven persons
governs Triton. Actions of the board of directors require the affirmative vote
of a majority of the entire board, although some transactions require a higher
vote. The stockholders who are party to our stockholders' agreement have
agreed that after the offering they will vote their shares together to elect
as two of our seven directors the nominees selected by our cash equity
investors.
Representatives of AT&T and several cash equity investors also have the
right to attend each meeting of the board of directors as observers, provided
that they continue to own a certain amount of our capital stock as described
in our certificate of incorporation. A majority of disinterested directors
must approve any transactions between us and our stockholders, except for
transactions under the AT&T agreements and arm's-length agreements with AT&T.
If an executive committee of the board is formed, it must consist of at least
the director nominated by AT&T as the holder of Series A preferred stock, one
of the directors selected by the cash equity investors and Michael Kalogris,
so long as he is an officer of Triton.
Restrictions on Transfer. The stockholders' agreement imposes restrictions
with respect to the sale, transfer or other disposition of our capital stock
held under the terms of the agreement, primarily concerning transfers before
the date of this offering. Stockholders may not transfer their shares of
common stock prior to February 4, 2001 other than to any affiliated successor;
thereafter, stockholders holding shares of common stock may transfer the
shares to any person, subject to rights of first offer granted to specified
parties to the stockholders' agreement. Additionally, holders of common stock
and Series D preferred stock may transfer those shares at any time to an
affiliated successor or an equity investor affiliate, and, after February 4,
2001, the cash equity investors may transfer or otherwise dispose of any of
those shares held by them to any other cash equity investors.
AT&T may not transfer or dispose of any of its shares of Series D preferred
stock at any time other than to an affiliated successor. In addition, each
stockholder who is a party to the stockholders' agreement has agreed, subject
to some exceptions, not to transfer or otherwise dispose of any shares of our
capital stock to any of the three largest carriers of telecommunications
services that currently constitute interexchange services, other than AT&T and
other specified wireless carriers.
Registration Rights. The stockholders' agreement grants certain demand and
piggyback registration rights to the stockholders. On or after the 91st day
after the offering is consummated, the following stockholders may,
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subject to the restrictions on transfer described above, cause an underwritten
demand registration, subject to customary proportionate cutback and blackout
restrictions, so long as registration is reasonably expected to result in
aggregate proceeds of at least $10.0 million:
. AT&T;
. a holder of shares of Series C preferred stock or common stock, if the
registration is reasonably expected to result in aggregate gross
proceeds of at least $25.0 million; or
. employee stockholders beneficially owning at least 50.1% of the shares
of common stock then beneficially owned by all employee stockholders
together.
In addition to the demand registration rights, any stockholder may, subject
to the restrictions on transfer described above, piggyback on a registration
by us at any time, other than registrations on Forms S-4 or S-8 of the
Securities Act, subject to customary proportionate cutback restrictions. The
demand and piggyback registration rights and obligations survive 20 years.
Preemptive Rights. The stockholders' agreement grants preemptive rights in
some circumstances to the stockholders, including in connection with this
offering. Each stockholder has a preemptive right to purchase a proportionate
amount of shares if we propose to issue for cash any equity security. However,
the stockholders' preemptive rights do not extend to any stock option or stock
appreciation rights plan. These preemptive rights will terminate upon the
closing of this offering. See "Description of Capital Stock--Preemptive
Rights."
Rights of Inclusion. In the event of a proposed sale by any stockholder to
any person other than an affiliated successor that would constitute 25% or
more of the aggregate outstanding Series C preferred stock and common stock on
a fully-diluted basis, excluding the Series A preferred stock, the other
stockholders have the right to participate in any such proposed sale by
exercising such right within 30 days after receipt of a notice informing them
of such proposed sale. The purchaser may either purchase all stock offered by
all stockholders electing to participate in such sale, or the purchaser may
purchase stock from stockholders electing to participate in such sale on a
pro-rata basis up to the aggregate dollar amount offered by the purchaser to
the initial selling stockholder.
Exclusivity. The stockholders have agreed that during the term of the
stockholders' agreement, none of the stockholders nor their respective
affiliates will provide or resell, or act as the agent for any person
offering, within the territory defined in the stockholders' agreement,
wireless mobility telecommunications services initiated or terminated using
time division multiple access and frequencies licensed by the FCC. However,
AT&T and its affiliates may:
. resell or act as agent for us;
. provide or resell wireless telecommunications services to or from
specified locations; and
. resell wireless telecommunications services for another person in any
area where we have not yet placed a system into commercial service.
AT&T must provide us with prior written notice of its intention to engage
in resales, and only dual band/dual mode phones may be used in connection with
the resale activities. Additionally, with respect to the markets listed on the
roaming agreement, we and AT&T have agreed to cause our 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 roaming provider in such markets. Each party also
agrees to refrain from inducing any of its customers to change programming.
Build-Out. We are required to:
. meet the construction requirements described in an agreed-upon minimum
build-out plan;
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. ensure compatibility of our personal communications services systems
with the majority of systems in the southeastern region of the United
States;
. satisfy the FCC construction requirements in the territory defined in
the stockholders' agreement;
. offer various core service features with respect to our systems;
. cause our systems to comply with AT&T's time division multiple access
quality standards; and
. refrain from providing or reselling interexchange services, other than
interexchange services under our FCC licenses or that we procure from
AT&T.
If we materially breach any of the foregoing operational obligations or if
AT&T decides to adopt a new technology standard in a majority of its markets
and we decline to adopt the new technology, AT&T may terminate its exclusivity
obligations.
Certain Transactions. In the event of a merger, consolidation, asset
acquisition or disposition or other business combination involving AT&T and an
entity that:
. derives from telecommunications businesses annual revenues in excess of
$5.0 billion;
. derives less than one-third of its aggregate revenues from the provision
of wireless telecommunications; and
. owns FCC licenses to offer and does offer wireless mobility
telecommunications services serving more than 25% of the potential
customers within the territory defined in the stockholders' agreement,
AT&T will have the right, upon written notice, to terminate substantially
all of its exclusivity obligations described above in a portion of the
territory in which the other party owns an FCC license to offer commercial
mobile radio service. However, upon such a termination, we have the right to
cause AT&T to exchange:
. all of the shares of its Series A preferred stock into shares of Series
B preferred stock; and
. all of the shares of its Series D preferred stock, or its Series C
preferred stock or any Class A or Class B non-voting common stock if it
may have been received upon conversion of its Series D preferred stock
into any one of them, into shares of Series B preferred stock.
In the event that AT&T is required in any such transaction to dispose of
any of its personal communications services systems in the Charlotte, North
Carolina, Atlanta, Georgia, Baltimore, Maryland/Washington, D.C. or Richmond,
Virginia basic trading areas, we have certain marketing rights. AT&T has
agreed, for a period of 180 days, to jointly market with any of its applicable
markets any of our personal communications services systems that are located
within the major trading areas that include the applicable AT&T basic trading
areas. Our right is exercisable at any time within the period commencing with
the date of the announcement by AT&T of any such transaction and terminating
on the later of six months after consummation of the transaction and the date
by which AT&T is required under applicable law to dispose of any such system.
Without the prior written consent of AT&T, we and our subsidiaries may not
effect any sale of substantially all the assets or liquidation, merger or
consolidation of Triton or any of its subsidiaries. There are limited
exceptions to this provision.
Acquisition of Cellular Licenses. We may acquire cellular licenses that the
board of directors has determined are demonstrably superior alternatives to
construction of a personal communications services system in the applicable
area within the territory, provided that:
. a majority of the cellular potential customers are within the territory
defined in the stockholders' agreement;
. AT&T and its affiliates do not own commercial mobile radio service
licenses in the area; and
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. our ownership of the cellular license will not cause AT&T or any
affiliate to be in breach of any law or contract.
Equipment, Discounts and Roaming. At our request, AT&T will use all
commercially reasonable efforts to assist us in obtaining discounts from any
vendor with whom we are negotiating for the purchase of any infrastructure
equipment or billing services and to enable us to become a party to the
roaming agreements between AT&T and its affiliates which operate other
cellular and personal communications services systems so long as AT&T, in its
sole discretion, does not determine such activities to be adverse to its
interests.
Resale Agreements. At AT&T's request, we will enter into resale agreements
relating to the territory defined in the stockholders' agreement. The rates,
terms and conditions of service that we provide shall be at least as favorable
to AT&T, taken as a whole, as the rates, terms and conditions provided by
Triton to other customers.
Subsidiaries. All of our subsidiaries must be direct or indirect wholly-
owned subsidiaries.
Amendments. Amendments to the stockholders' agreement require the consent
of the holders of:
. a majority of the shares of each class of capital stock, including the
shares held by AT&T;
. two-thirds of the common stock beneficially owned by the cash equity
investors; and
. 60.1% of the common stock beneficially owned by the employee
stockholders.
However, in the event any party to the stockholders' agreement ceases to
own any shares of capital stock, the party ceases to be a party to the
stockholders' agreement and his or her corresponding rights and obligations
terminate.
Termination. The stockholders' agreement terminates upon the earliest to
occur of:
. the written consent of each party to the agreement;
. February 4, 2009; and
.one stockholder owning all of the shares of common stock.
However, some provisions expire on the offering date and some consent
rights of AT&T expire when and if it fails to own a specified amount of
capital stock.
License Agreement
Under the terms of a network membership license agreement, dated as of
February 4, 1998, between AT&T and us, AT&T has granted us a royalty-free,
non-exclusive, limited right and license to use various licensed marks solely
in connection with specified licensed activities, as described below. The
licensed marks include the logo containing the AT&T and globe design and the
expression Member, AT&T Wireless Services Network. The licensed activities
include:
. the provision to end-users and resellers, solely within the territory
specified in the agreement, of communications services on frequencies
licensed to us for commercial mobile and radio service provided in
accordance with the AT&T agreements; and
. marketing and offering the licensed services within the territory.
The license agreement also grants us the right and license to use the
licensed marks on permitted mobile phones.
AT&T has agreed not to grant to any other person a right or license to
provide or resell, or act as agent for any person offering, the communications
services we are offering within the territory under the licensed marks
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except to:
. any person who resells, or acts as our agent for, licensed services
provided by us, or
. any person who provides or resells wireless communications services to
or from specific locations such as buildings or office complexes, even
if the applicable subscriber equipment being used is capable of routine
movement within a limited area and even if such subscriber equipment may
be capable of obtaining other telecommunications services beyond that
limited area and handing-off between the service to the specific
location and those other telecommunications services.
In all other instances, except as described above, AT&T reserves for itself
the right to use the licensed marks in connection with its provision of
services, whether within or without the territory.
The license agreement contains numerous restrictions with respect to our
use and modification of any of the licensed marks. We are obligated to use
commercially reasonable efforts to cause all licensed services that use the
licensed marks to be of comparable quality to the licensed services AT&T
markets and provides in areas comparable to our licensed territory, taking
into account the relative stage of development of the areas and other factors.
The license agreement also sets forth specific testing procedures to determine
compliance with these standards and affords us a grace period to cure any
instances of alleged noncompliance. Following the cure period, we must cease
using the licensed marks until we are in compliance.
We may not assign or sublicense any of our rights under the license
agreement. However, the license agreement may be, and has been, assigned to
our lenders under our credit facility. After the expiration of any applicable
grace and cure periods under the credit facility, our lenders may enforce our
rights under the license agreement and assign the license agreement to any
person with AT&T's consent.
The license agreement has a five-year term, which renews for an additional
five-year period if neither party terminates the agreement. The license
agreement may be terminated at any time in the event of our significant
breach, including our misuse of any licensed marks, our license or assignment
of any of the rights in the license agreement, our failure to maintain AT&T's
quality standards or if we experience a change of control. After the initial
five-year term, in the event AT&T converts any shares of Series A preferred
stock into common stock in connection with the stockholders' agreement, the
license agreement terminates on the later of two years from the date of such
conversion and the then existing expiration date of the license agreement.
After the initial five-year term, AT&T may also terminate the license
agreement upon the occurrence of specified transactions. See "--The
Stockholders' Agreement--Certain Transactions."
Roaming Agreement
Under an intercarrier roamer service agreement, dated as of February 4,
1998, between AT&T, on behalf of its affiliates, and us, AT&T and we agreed to
provide wireless mobility radiotelephone service for registered customers of
the other party's customers when they are out of their 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
wireless mobility radio-telephone system and station. Each home carrier whose
customers receive service from a serving carrier shall pay the serving carrier
100% of the wireless service charges and 100% of the pass-through charges,
such as toll or other charges. Each serving carrier's service charges per
minute of use or partial minute of use for the first three years will be fixed
at a declining rate, and after the first three years will be equal to an
adjusted average home rate or any lower rate the parties negotiate from time
to time. Each serving carrier's toll charges per minute of use for the first
three years will be fixed at a declining rate. After the first three years,
the parties may renegotiate the rate from time to time.
The roaming agreement has a term of 20 years, unless a party terminates
earlier due to:
. the other party's uncured breach of any term of the roaming agreement;
. the other party's voluntary liquidation or dissolution; or
. the FCC's revocation or denial of the other party's license or permit to
provide commercial mobile radio service.
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Neither party may assign or transfer the roaming agreement or any of its
rights under the agreement except to an assignee of all or part of its license
or permit to provide commercial mobile radio service, provided that the
assignee expressly assumes all or the applicable part of the assigning party's
obligations under the agreement.
Resale Agreement
Under the terms of the stockholders' agreement, we are required at AT&T's
request to enter into a resale agreement in an agreed-upon form. Under the
resale agreement, AT&T will be granted the right to purchase and resell on a
nonexclusive basis access to and usage of our services in the territory. AT&T
will pay us the charges, including usage and roaming charges, associated with
services it requests under the agreement. We will retain the continuing right
to market and sell our services to customers and potential customers.
The resale agreement will have a term of 10 years and will renew
automatically for successive one-year periods unless either party elects to
terminate the agreement. Following the eleventh anniversary of the agreement,
either party may terminate with 90 days' prior written notice. Furthermore,
AT&T may terminate the agreement at any time for any reason on 180-days'
written notice.
Under the terms of the stockholders' agreement, we have agreed that the
rates, terms and conditions of service, taken as a whole, that we provide to
AT&T under 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, to any other customer. We will design the rate plan
we will offer under the resale agreement to result in a discounted average
actual rate per minute of use AT&T pays for service at least 25% below the
weighted average actual rate per minute that we bill our customers generally
for access and air time.
Neither party may assign or transfer the resale agreement or any of its
rights thereunder without the other party's prior written consent, which will
not be unreasonably withheld, except:
. to an affiliate of that party at the time of the agreement's execution;
. by us to any of our operating subsidiaries; and
. to the transferee of a party's stock or substantially all of the party's
assets, provided that all FCC and other necessary approvals have been
received.
Other Related Party Transactions
First Union Capital Partners, Inc. and J.P. Morgan Investment Corporation,
each of which owns more than 5% of our capital stock, are serving as
underwriters and will be receiving underwriter fees in connection with this
initial public offering.
Over the course of 1997, Triton Communications L.L.C., our predecessor,
incurred certain costs on behalf of Triton Cellular, an entity affiliated with
us through management overlap and shared leased facilities. These costs
totaled $148,100 and Triton Cellular reimbursed us in 1999. In addition, we
purchased $22,800 of equipment from Horizon Cellular Telephone Company, L.P.,
an entity affiliated with us through management overlap and shared leased
facilities. In addition, under an agreement between Triton Cellular, Inc. and
us, allocations for management services rendered by some of our management
employees on behalf of Triton Cellular and allocations for shared lease
facilities are charged to Triton Cellular. Those allocations totaled $469,000
during 1998 and $375,000 for the six months ended June 30, 1999. The
outstanding balance at June 30, 1999 was approximately $1.0 million. We expect
settlement of these outstanding charges during 1999.
On February 3, 1998, Triton PCS entered into a credit facility. On
September 22, 1999, Triton PCS entered into an amendment to that credit
facility that increased the credit facility to $600.0 million. Affiliates of
each of J.P. Morgan Investment Corporation, a holder of approximately 17.2% of
our issued and outstanding capital stock, CB Capital Investors, a holder of
approximately 19.5% of our issued and outstanding capital stock, First Union
Capital Partners, Inc., a holder of approximately 6.5% of our issued and
outstanding capital stock, and Toronto Dominion Capital (USA), Inc., a holder
of approximately 4.7% of our
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issued and outstanding capital stock, serve as agent and lenders under the
credit facility. Each of the agent and lenders under the credit facility
execution has received and will continue to receive customary fees and
expenses in connection with the credit facility execution. Through June 30,
1999, affiliates of J.P. Morgan Investment Corporation and CB Capital
Investors have received approximately $98,000 and $204,000, respectively, in
their capacity as agent and lender under such facility.
We have entered into letter agreements with several of our management
employees and with our independent directors. Under the letter agreements,
these individuals were issued shares of our Class A common stock that vest at
20% per year over a five-year period. See "Principal Stockholders."
On March 7, 1997, each of Chase Venture Capital Associates, L.P., an
affiliate of Chase Capital Partners, and J.P. Morgan Investment Corporation
provided $0.55 million in financing, and on July 3, 1997, each of Chase
Venture Capital L.P. and J.P. Morgan Investment Corporation provided an
additional $0.25 million in financing to Triton Communications in the form of
convertible promissory notes in order to fund its start-up costs. The $1.6
million in notes originally bore interest at 14% annually, payable at
maturity. On January 15, 1998, Triton Communications assigned the notes to us.
In conjunction with the noteholders, we subsequently negotiated a revised
arrangement under which we would not pay interest on the notes and the
promissory notes would be converted into approximately $3.2 million worth of
our Series C preferred stock. We converted the cash repayment of the notes
into 16,000 shares each of Series C preferred stock on February 4, 1998. We
accounted for the $1.6 million preferred return to the investors as a
financing cost during the period the notes were outstanding. Accordingly, we
accrued $1.2 million in financing costs on the notes as of December 31, 1997.
We recognized the remaining $0.4 million financing costs in the first quarter
of 1998.
On August 12, 1999, we entered into stock purchase agreements with each of
Scott Anderson and John Beletic, our two independent directors, and one
officer under which we agreed to sell to them an aggregate of 3,400 shares of
our Series C preferred stock for a purchase price of $100 per share. These
agreements are subject to and conditioned only upon the waiver of the
preemptive rights of the other stockholders.
On January 19, 1998, we entered into a master services agreement with
Wireless Facilities Inc. Wireless Facilities will provide us with radio
frequency design and system optimization support services. We have paid
approximately $12.0 million to Wireless Facilities against the $18.0 million
under the agreement. Mr. Scott Anderson, a director of Triton, is also a
director of Wireless Facilities.
On May 4, 1998, we consummated a private offering of 11% senior
subordinated discount notes pursuant to which we raised net proceeds of
approximately $290.0 million. J.P. Morgan Securities Inc. and Chase Securities
Inc., each an affiliate of entities that own in the aggregate approximately
37.7% of our outstanding preferred stock, were initial purchasers in the
private offering and received a placement fee of $6.3 million.
An affiliate of First Union Capital Investors, Inc. acted as our exclusive
financial advisor in connection with the sale of our personal communications
towers to American Tower, L.P. pursuant to an asset purchase agreement dated
July 13, 1999. We paid a fee to such entity of $1.07 million in connection
with the consummation of such sales which occurred on September 22, 1999.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
The following are summaries of certain material provisions of our notes and
credit facility. These summaries are qualified in their entirety by the
indenture and the credit facility, which we have previously filed with the
SEC.
Notes
The notes were issued under an indenture, dated as of May 4, 1998, between
Triton PCS, the guarantors and The Chase Manhattan Bank, as trustee. The
notes:
. mature on May 1, 2008 and are limited to an aggregate principal amount
at maturity of $511,989,000;
. were issued at an issue price of $585.95 per $1,000 aggregate principal
amount at maturity and generated gross proceeds to us of $300.0 million;
. are general, unsecured obligations, subordinated in right of payment to
all senior debt, including all obligations under the credit facility;
. bear interest at a rate of 11% per annum, computed on a semiannual bond
equivalent basis, calculated from May 4, 1998 and cash interest will not
accrue prior to May 1, 2003 and will be payable semiannually on May 1
and November 1; and
. are guaranteed on a joint and several basis by all of our other
subsidiaries that are direct or indirect obligors under, or in respect
of, any senior credit facilities. As of the date of this prospectus, all
of our other direct and indirect subsidiaries are guarantors on a full,
unconditional and joint and several basis and are wholly-owned by us. We
are not a guarantor. The guarantees are unsecured obligations of the
guarantors, subordinated in right of payment to all senior debt of the
guarantors, including all of the guarantors' obligations under their
guarantees of the credit facility.
We may elect to redeem all or part of the notes at any time on or after May
1, 2003 and prior to maturity, at the following redemption prices, expressed
as percentages of principal amount, plus accrued and unpaid interest if
redeemed during the 12-month period beginning on May 1 of the years indicated:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003........................................ 105.50%
2004........................................ 103.67%
2005........................................ 101.84%
2006 and thereafter......................... 100.00%
</TABLE>
In addition, on or prior to May 1, 2001, we may redeem up to 35% of the
principal amount at maturity of notes issued under the indenture, at a
redemption price equal to 111% of the accreted value to the redemption date,
with the net proceeds of one or more equity offerings of:
. our qualified stock; or
. a special purpose corporation formed to hold our qualified stock.
However, at least 65% of the aggregate principal amount at maturity of notes
issued under the indenture must remain outstanding immediately after giving
effect to the redemption. We do not intend to redeem any notes with the net
proceeds of the offering.
If a change of control, as defined below, occurs, each noteholder may
require us to repurchase its notes, in whole or in part, at a purchase price
equal to 101% of the notes' accreted value or the principal amount at
maturity, as applicable, plus accrued and unpaid interest to the purchase
date. Our credit facility will prohibit the purchase of outstanding notes
prior to repayment of the borrowings under the credit facility.
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A change of control will occur under the indenture if any one or more of
the following events occurs:
. any person or group, as those terms are used in Sections 13(d) and 14(d)
of the Exchange Act, other than a permitted holder or permitted holders
or a person or group controlled by a permitted holder or permitted
holders, becomes the beneficial owner, as defined in Rules 13d-3 and
13d-5 under the Exchange Act, except that a person shall be deemed to
have beneficial ownership of all securities that person has the right to
acquire within one year, upon the happening of an event or otherwise, is
or becomes the beneficial owner, directly or indirectly, of:
(a) Triton's securities representing 50% or more of the combined
voting power of its then outstanding voting stock, or
(b) Triton PCS' securities representing 50% or more of the combined
voting power of its then outstanding voting stock;
. the following individuals cease for any reason to constitute more than a
majority of the number of directors then serving on the board of Triton
or Triton PCS:
(a) individuals who, on May 4, 1998, constitute the board, and
(b) any new director, other than a director whose initial assumption
of office is in connection with an actual or threatened election
contest, including a consent solicitation relating to the election
of directors of Triton or Triton PCS, whose appointment or
election by the board or nomination for election by Triton PCS'
stockholders was approved by the vote of at least two-thirds of
the directors then still in office or whose appointment, election
or nomination was previously so approved or recommended; or
. the stockholders of Triton or Triton PCS shall approve any plan of
liquidation, whether or not otherwise in compliance with the provisions
of the indenture.
The transfer, by lease, assignment, sale or otherwise, in a single
transaction or series of transactions, of all or substantially all of the
properties or assets of one or more of our other subsidiaries, the capital
stock of which constitutes all or substantially all of Triton PCS' properties
and assets, shall be deemed to be the transfer of all or substantially all of
Triton PCS' properties and assets.
We are also required to offer to repurchase the notes if all or some of the
net proceeds of an asset sale are not used to acquire an entity engaged in a
permitted business, to purchase other long term assets used or useful in a
permitted business or to repay any senior indebtedness.
The indenture contains restrictive covenants which, among other things,
restrict Triton PCS' and its restricted subsidiaries' ability to:
. incur additional indebtedness;
. pay dividends, make investments or redeem or retire stock of Triton PCS
or subordinated indebtedness of Triton PCS or any subsidiary;
. cause encumbrances or restrictions to exist on the ability of its
subsidiaries to pay dividends and make investments in, or transfer any
property or assets to Triton;
. create liens on their assets;
. sell assets;
. engage in transactions with affiliates;
. engage in businesses other than a permitted business;
. designate any of our subsidiaries as an unrestricted subsidiary under
the indenture;
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. engage in mergers or consolidations; or
. amend, modify or waive, or refrain from enforcing, any provision of the
securities purchase agreement dated October 8, 1997.
The indenture provides for acceleration upon customary events of default,
including cross defaults, judgment defaults and events of bankruptcy.
Credit Facility
On February 3, 1998, Triton PCS entered into a $425.0 million credit
facility with The Chase Manhattan Bank, as administrative agent, and other
financial institutions. On September 22, 1999, Triton PCS entered into an
amendment to that credit facility that increased the credit facility to $600.0
million.
The credit facility provides for:
. an aggregate of $175.0 million Tranche A senior secured term loans,
which may be drawn at any time until February 2001, and which mature in
August 2006;
. an aggregate of $150.0 million Tranche B senior secured term loans,
which could be drawn through August 1998, and which mature in May 2007;
. an aggregate of $175.0 million Tranche C senior secured term loans, which
may be drawn at any time until February 2001, and which mature in August
2006; and
. a $100.0 million senior secured revolving credit facility which matures
in August 2006 and includes a $3.0 million subfacility for the issuance
of letters of credit.
As of June 30, 1999, $150.0 million of the Tranche B term loans were
outstanding and we had not drawn down on the Tranche A term or revolving
credit loans. Borrowings are subject to customary conditions, including the
absence of a material adverse change. Loans under the credit facility are
available to fund capital expenditures related to the construction of our
personal communications services network, the acquisition of related
businesses, our working capital needs and customer acquisition costs.
We must repay the Tranche A term loans, if borrowed, in eighteen
consecutive quarterly installments, beginning in February 2002. The amount of
each of the first four installments is $4,375,000, the amount of each of the
next four installments is $6,562,500, the amount of each of the next four
installments is $8,750,000, the amount of each of the next four installments
is $10,937,500, and the amount of each of the last two installments is
$26,250,000.
We must repay the Tranche B term loans in twenty-one consecutive quarterly
installments, beginning in February 2002. The amount of each of the first 16
installments is $375,000, the amount of each of the next four installments is
$7.5 million, and the amount of the last installment is $114.0 million.
We must repay the Tranche C term loans, if borrowed, in eighteen
consecutive quarterly installments, beginning in February 2002. The amount of
each of the first four installments is $4,375,000, the amount of each of the
next four installments is $6,562,500, the amount of each of the next four
installments is $8,750,000, the amount of each of the next four installments
is $10,937,500 and the amount of each of the last two installments is
$26,250,000.
The amount that we can borrow and that can be outstanding under the
revolving credit facility reduces in eight quarterly reductions, beginning in
August 2004. The amount of each of the first two reductions is $5.0 million,
the amount of each of the next four reductions is $10.0 million, and the
amount of each of the last two reductions is $25.0 million.
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Interest on the Tranche A term loans, the Tranche C term loans and the
revolving credit loans accrues, at our option, either at:
. the reserve adjusted London interbank offered rate, plus an applicable
margin of between 2.25% and 1.00%, depending on the level of our ratio
of debt to EBITDA; or
. the higher of The Chase Manhattan Bank's prime rate or the federal funds
rate plus 0.5%, plus an applicable margin of between 1.25% and 0%,
depending on the level of our ratio of debt to EBITDA.
Interest on the Tranche B term loans accrues, at our option, either at:
. the reserve adjusted London interbank offered rate, plus a margin of
3.0%; or
. the higher of The Chase Manhattan Bank's prime rate or the federal funds
rate plus 0.5%, plus a margin of 2.00%.
Interest on any overdue amounts will accrue at a rate per annum equal to 2%
plus the rate otherwise applicable to that amount.
The credit facility requires that we pay an annual commitment fee to the
lenders. Initially, the commitment fee is based on a percentage of the undrawn
amounts of the revolving credit facility, the Tranche A term loan facility and
the Tranche C loan facility; if 50% or more of the aggregate amount of the
facilities is drawn, the commitment fee is .50% of the undrawn amount, and if
less than 50% of the aggregate amount of the facilities is drawn, the
commitment fee is .75% of the undrawn amount. On the earlier of September 22,
2000 and the date on which we demonstrate to the lenders that we have positive
EBITDA, the commitment fee will range between 0.375% and 0.50%, depending on
the ratio of debt to EBITDA, of the unused portion of the credit facilities.
The commitment fees are payable quarterly in arrears and a separate agent's
fee is payable to the administrative agent. The credit facility also requires
us to maintain at least 50% of total outstanding indebtedness as fixed rate
instruments. Although we have not been required to purchase any interest rate
hedges, in 1998 we purchased two interest rate hedges with a notional amount
totaling $75.0 million.
We must repay the term loans, and the commitments under the revolving
credit facility will be reduced, in an aggregate amount equal to:
. 50% of excess cash flow of each of our fiscal years commencing with the
fiscal year ending December 31, 2001;
. 100% of the net proceeds of specified asset sales outside the ordinary
course of business, in excess of a $1.0 million yearly threshold, and of
unused insurance proceeds;
. 100% of the net cash proceeds of specified incurrences of indebtedness;
and
. 50% of the net cash proceeds of specified issuances of equity securities
or specified capital contributions other than those made under the
securities purchase agreement.
We, and each of our other subsidiaries, have guaranteed all of Triton PCS'
obligations under the credit facility. Triton PCS' obligations under the
credit facility are secured by security interests in substantially all of its
assets, and in substantially all of the assets of each of our other
subsidiaries, and by a pledge of all of Triton PCS' capital stock and of all
of the capital stock and other equity interests of all of our domestic
subsidiaries and 65% of the shares of capital stock of foreign subsidiaries.
The credit facility contains customary covenants, including covenants
limiting indebtedness, dividends and distributions on, and redemptions and
repurchases of, capital stock and other similar payments, and the acquisition
and disposition of assets, and covenants relating to the number of potential
customers covered by our network and number of customers. The credit facility
also requires that we comply with specified financial covenants.
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In addition, the credit facility provides that we may not permit certain of
our subsidiaries to incur any liabilities or obligations other than their
guarantee of the credit facility, the security agreement they have entered into
in connection with the credit facility, and, in the case of any subsidiary
established to hold real estate, liabilities incurred in the ordinary course of
business of that subsidiary which are incidental to being the lessee of real
property or the purchaser, owner or lessee of equipment and taxes and other
liabilities incurred in the ordinary course in order to maintain its existence.
The credit facility provides for acceleration upon the occurrence of
customary events of default.
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DESCRIPTION OF CAPITAL STOCK
General
Upon completion of the offering, our authorized capital stock will consist
of:
. 530,000,000 shares of common stock, par value $0.01 per share, including:
(a) 520,000,000 shares designated Class A common stock, and
(b) 10,000,000 shares designated Class B non-voting common stock; and
. 70,000,000 shares of preferred stock, par value $0.01 per share,
including:
(a) 1,000,000 shares designated Series A convertible preferred stock,
(b) 50,000,000 shares designated Series B preferred stock,
(c) 3,000,000 shares designated Series C convertible preferred stock,
and
(d) 16,000,000 shares designated Series D convertible preferred stock.
Upon completion of the offering:
. shares of Class A common stock;
. shares of Class B non-voting common stock;
. 786,252.64 shares of Series A preferred stock,
. no shares of Series B preferred stock or Series C preferred stock; and
. 543,683.47 shares of Series D preferred stock
will be issued and outstanding.
In addition, 1,329,936.11 shares of Series B preferred stock, 543,683.47
shares of Series C preferred stock and shares of Class A common stock are
reserved for issuance in connection with transactions contemplated by the
stockholders' agreement. On the date of this offering, each share of Series C
preferred stock issued and outstanding will automatically convert into one
share of Class A common stock unless any holder of Series C preferred stock
should elect, by written notice, instead to receive one share of Class B non-
voting common stock for each share of Series C preferred stock held by the
holder.
Common Stock
Class A Common Stock. Each holder of Class A common stock is entitled to
one vote for each share of Class A common stock on all matters on which
stockholders generally are entitled to vote and to all other rights, powers
and privileges of stockholders under Delaware law. Upon the dissolution,
liquidation or winding up of Triton, after any preferential amounts to be
distributed to the holders of the preferred stock then outstanding have been
paid or declared and funds sufficient for payment in full have been set apart
for payment, the holders of the Class A common stock and the Class B non-
voting common stock will be entitled to receive all the remaining assets of
Triton legally available for distribution to its stockholders in proportion to
the number of shares of common stock held by them.
Class B Non-Voting Common Stock. The Class B non-voting common stock is
identical in all respects to the Class A common stock except that holders of
shares of Class B non-voting common stock shall not have the right to vote on
any matters to be voted on by our stockholders.
At any time and from time to time, any holders of shares of Class B non-
voting common stock may, upon written request to Triton, convert all, but not
less than all, of such shares of Class B non-voting common stock into an
equivalent number of fully paid and non-assessable shares of Class A common
stock.
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Preferred Stock
Our certificate of incorporation gives our board of directors the authority
to issue preferred stock in one or more series and to fix the relative powers,
preferences, rights, privileges and restrictions thereof, including dividend
rights, dividend rates, conversion rights, voting rights, terms of redemption,
redemption prices, liquidation preferences and the number of shares
constituting any series or the designation of such series.
The issuance of preferred stock may have the effect of delaying, deferring
or preventing a change in control of Triton and may adversely affect the
voting or other rights of the holders of common stock. These effects may
include the loss of voting control to others.
The table below summarizes the principal terms of our preferred stock:
Principal Terms of Preferred Stock
<TABLE>
<CAPTION>
Terms Series A Series B Series C Series D
----- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Dividends............... Quarterly cash Same as Series A No fixed Same as Series C
dividends at dividend, but
annual rate of participates
10% of the with Class A
accreted value common stock on
of Series A, but an as-converted
cash dividend basis
payments may be
deferred until
June 30, 2008
No dividends may No dividend may
be paid on any be paid on
junior preferred common stock
stock or common unless Series C
stock unless receives a
dividends to dividend as
Series A holders well, payment to
are paid in full be based on a
formula
Convertibility.......... At the holder's None At the holder's At the holder's
option, on or option, at any option, at any
after February time at a rate time at a rate
4, 2006, each of one share of of one share of
share of Series Class A common Class A common
A preferred stock for each stock for each
stock will share of Series share of Series
convert into a C (subject to D (subject to
number of shares anti-dilution anti-dilution
of Class A provisions) provisions)
common stock
equal to $100
plus all unpaid
dividends on
such Series A
preferred share
divided by the
fair market
value of a share
of Class A
common stock
Automatic At the holder's
conversion upon option, at any
initial public time at a rate
offering at a of one share of
rate of one Series C for
share of Class A each share of
common stock for Series D
each share of (subject to
Series C anti-dilution
(subject to provisions)
anti-dilution
provisions)
Holder may Holder may elect
elect, by by written
written notice, notice, to
to receive receive shares
shares of Class of Class B non-
B non-voting voting common
common stock stock instead of
instead of Class Class A common
A common stock stock
Liquidation Preference.. $100 per share Same as Series A Same as Series Same as Series
(subject to A, but junior to A, but junior to
customary anti- Series A and Series A and
dilution Series B and Series B and
provisions) junior to Series senior to Series
D with respect C with respect
to a statutory to a statutory
liquidation liquidation
Voting.................. Limited class Limited class Votes with Class Limited class
voting rights voting rights A common stock voting rights
on an as-
converted basis
Entitled to Additional class
nominate one voting rights
director so long
as initial
holder owns at
least two-thirds
of Series A
shares it owned
on February 4,
1998
Redemption.............. At our option on Same as Series A At our option, Same as Series C
or after requires prior
February 4, 2008 written consent
of all holders
of outstanding
Series C shares,
all holders of
outstanding
Series D shares
and any other
holders of
capital stock as
required by the
certificate of
incorporation
At the holder's
option on or
after February
4, 2018
</TABLE>
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Anti-Takeover Provisions
Delaware law, our certificate of incorporation, our bylaws and the
stockholders' agreement contain provisions that could have the effect of
delaying, deterring or preventing the acquisition of control of Triton by
means of changes to our governing documents or a proxy contest.
Delaware Law. We are subject to the provisions of Section 203 of the
Delaware General Corporation Law, which prohibits a Delaware corporation from
engaging in a broad range of business combinations with interested
stockholders for a period of three years following the time that person became
an interested stockholder, unless any of the following occurs:
. the transaction resulting in a person's becoming an interested
stockholder, or the business combination, is approved by the board of
directors of the corporation before the person becomes an interested
stockholder;
. the interested stockholder acquires 85% or more of the outstanding
voting stock of the corporation in the same transaction that makes the
person an interested stockholder, excluding shares owned by persons who
are both officers and directors of the corporation and shares held by
employee stock ownership plans; or
. on or after the date the person became an interested stockholder, the
business combination is approved by the corporation's board of directors
and by the holders of at least 66 2/3% of the corporation's outstanding
voting stock at a stockholder meeting, excluding shares held by the
interested stockholder.
An interested stockholder is defined as any person that is:
. the owner of 15% or more of the outstanding voting stock of the
corporation; or
. an affiliate or associate of the corporation and was the owner of 15% or
more of the outstanding voting stock of the corporation at any time
within the three-year period immediately prior to the date on which it
is sought to be determined whether the person is an interested
stockholder.
Nomination and Election of Directors. Our certificate of incorporation,
bylaws and the stockholders' agreement contain provisions which affect the
nomination and election of directors to our board. Our board of directors
consists of seven directors, and each director serves until his or her
successor has been duly elected and qualified, or until his or her earlier
death, resignation or removal. Following completion of the offering, our board
of directors will be divided into three classes of directors. Each class will
serve a staggered three-year term. As a result, approximately one-third of the
board of directors will be elected each year. Generally a director will stand
for election only once every three years. The classified board provision could
have the effect of discouraging a third party from making a tender offer or
otherwise attempting to obtain control of us, even though the attempt might be
beneficial to us and our stockholders. In addition, the classified board
provision could delay stockholders who do not agree with the policies of the
board from removing a majority of the board for two years. Under our
certificate of incorporation, as long as AT&T owns at least two-thirds of the
number of shares of Series A preferred stock that it owned on February 4,
1998, it has the exclusive right, voting separately as a single class, to
nominate one director. Each of the stockholders party to the stockholders'
agreement has agreed to vote all its shares of Series C preferred stock or
Class A common stock held of record by it to cause the election of directors
selected by the cash equity investors and their continuation in office. See
"Certain Relationships and Related Transactions--The AT&T Agreements--The
Stockholders' Agreement--Board of Directors."
Supermajority Vote Required to Amend Our Certificate of Incorporation or
Bylaws. Any amendment to our certificate of incorporation or the bylaws must
be approved by the affirmative vote of the holders of shares of Series C
preferred stock and Class A common stock representing at least two-thirds of
the votes entitled to be cast for the election of directors, voting together
as a single class, subject to the separate class vote requirements relating to
any class or series of preferred stock. In addition, our bylaws may be amended
by a majority of our board of directors.
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Other Provisions. Following completion of the offering, our certificate of
incorporation and bylaws will provide, in general, that:
. the directors in office will fill any vacancy or newly created
directorship on the board of directors, with any new director to
serve for the remaining term of the class of directors to which he is
elected, except that any vacancy that which was left by a nominee of
AT&T will be filled by a new director selected by AT&T; and
. directors may be removed only for cause and only by the affirmative
vote of the holders of a majority of the outstanding shares of voting
stock cast, at an annual or special meeting, except any director
nominated by any holder of our preferred stock having the right to
nominate such director may be removed and replaced by such holder
with or without cause.
The bylaws also require that stockholders wishing to bring any business,
including director nominations, before an annual meeting of stockholders
deliver written notice to us not less than 60 days or more than 90 days prior
to the date of the annual meeting of stockholders. If, however, less than 70
days' notice or prior public disclosure of the date of the meeting is given or
made to stockholders, notice by the stockholder must be delivered to us not
later than the close of business on the tenth day following the day on which
we publicly announce the date of our annual meeting. The bylaws further
require that the notice by the stockholder set forth, among other things:
. a description of the business to be brought before the meeting,
including information with respect to a nominated director;
. the reasons for conducting the business at the meeting;
. specific information concerning the stockholder proposing the
business and the beneficial owner, if any, on whose behalf the
proposal is made;
. a description of all arrangements and understandings between or among
the stockholder delivering the notice and any other person or
persons, including any director nominee where applicable, with a
material interest in the business to be brought before the meeting;
and
. with respect to notice nominating a director, any other information
relating to the director nominee and the nominating stockholder that
would be required to be disclosed in a proxy statement or other
similar filing with the SEC.
The foregoing provisions regarding director nomination procedures do not
apply to holders of our preferred stock who have the right to nominate
directors. The provisions of the certificate of incorporation and bylaws
relating to removal of directors and advance notice of stockholder proposals
may discourage or make more difficult the acquisition of control of us by
means of a tender offer, open market purchase, proxy contest or otherwise.
These provisions may have the effect of discouraging specific types of
coercive takeover practices and inadequate takeover bids and may encourage
persons seeking to acquire control of us first to negotiate with the board of
directors.
Limitation on Directors' Liabilities
The Delaware General Corporation Law authorizes corporations to limit or
eliminate the personal liability of directors to corporations and their
stockholders for monetary damages for breach of directors' fiduciary duty of
care. The duty of care requires that, when acting on behalf of the
corporation, directors must exercise an informed business judgment based on
all material information reasonably available to them. In the absence of the
limitations authorized by the Delaware statute, directors could be accountable
to corporations and their stockholders for monetary damages for conduct that
does not satisfy their duty of care. Although the statute does not change
directors' duty of care, it enables corporations to limit available relief to
equitable remedies such as injunction or rescission. Our certificate of
incorporation and bylaws limit the liability of our directors to Triton or our
stockholders to the fullest extent permitted by the Delaware statute.
Specifically, the directors will not be personably liable for monetary damages
for breach of a director's fiduciary duty as a director, except for liability:
. for any breach of the director's duty of loyalty to Triton or its
stockholders;
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. for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
. under Section 174 of the Delaware General Corporation Law, which relates
to the unlawful payment of dividend or unlawful stock purchase or
redemption by a corporation; or
. for any transaction from which a director derived an improper personal
benefit.
The inclusion of this provision in our certificate of incorporation may
have the effect of reducing the likelihood of derivative litigation against
directors and may discourage or deter stockholders or management from bringing
a lawsuit against directors for breach of their duty of care, even though such
an action, if successful, might otherwise have benefited Triton and its
stockholders. In addition, we have purchased directors' and officers'
liability insurance coverage for our directors and certain of our officers in
amounts customary for similarly situated companies.
Under the applicable provisions of Delaware General Corporation Law, in
general, a corporation may indemnify its directors, officers, employees or
agents against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by them in
connection with any action, suit or proceeding brought by third parties to
which they may be made parties by reason of their being or having been
directors, officers, employees or agents and shall so indemnify such persons
only if they acted in good faith and in a manner they 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 their conduct was unlawful. Our certificate of incorporation gives us
the power to indemnify our officers, directors, employees and agents to the
full extent permitted by Delaware law. Immediately prior to the consummation
of the offering, we plan to enter into indemnification agreements with each of
our directors and certain of our executive officers which generally provide
for indemnification of the director or officer to the fullest extent provided
by law.
Preemptive Rights
We have granted preemptive rights to some of our stockholders that will
terminate upon closing of this offering. Prior to this offering, we are
required to give these stockholders notice of the offering, setting forth the
aggregate number of shares of Class A common stock proposed to be issued, the
anticipated price range and the other terms and conditions of the proposed
issuance. Each stockholder then has the right to acquire a pro rata amount of
Class A common stock based upon the number of shares of Class A common stock
that is beneficially owned by such stockholder, provided the stockholder gives
us written notice of its intent to exercise its preemptive rights within 30
days of receiving notice of the offering from us.
If a stockholder exercises its preemptive right in this offering, it will
be obligated to exercise that right if the offering price does not exceed the
highest price in the anticipated range; if the offering price exceeds the
highest price in the anticipated range, however, the stockholder will have the
right, but not the obligation, to exercise its preemptive right at that
offering price. In addition, if the public offering price is more than 20%
below the lowest price in the anticipated range, AT&T has the right to
exercise its preemptive right at the time of the pricing of this offering. We
expect our stockholders to waive these rights in connection with the offering.
Registration Rights
We have granted registration rights to some of our stockholders. See
"Certain Relationships and Related Transactions--The AT&T Agreements--The
Stockholders' Agreement--Registration Rights" for a description of these
registration rights.
Listing
We have applied for the Class A common stock to be included for quotation
on the Nasdaq National Market under the symbol "TPCS."
Transfer Agent and Registrar
We have appointed Equiserve (BankBoston) as the transfer agent and
registrar for our Class A common stock.
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CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS TO
NON-U.S. HOLDERS
The following is a summary of the material United States federal income,
estate and gift tax consequences of the purchase, ownership and disposition of
the common stock by holders that are non-U.S. holders, as that term is defined
below. This summary does not purport to be a complete analysis of all
potential tax effects and is based upon the Internal Revenue Code of 1986, as
amended, existing and proposed regulations promulgated 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. Unless otherwise specifically noted, this summary applies only to
those persons that hold the common stock as capital asset within the meaning
of Section 1221 of the Internal Revenue Code.
This summary is for general information only and does not address the tax
consequences to taxpayers who are subject to special rules or circumstances.
This summary does not address any tax consequences arising under any state,
municipality, foreign country or other taxing jurisdiction. Prospective
investors are urged to consult their tax advisors regarding the United States
federal tax consequences of purchasing, owning and disposing of the Class A
common stock, including the investor's status as a non-U.S. holder, as well as
any tax consequences that may arise under the laws of any state, municipality,
foreign country or other taxing jurisdiction.
General
For purposes of this discussion, a non-U.S. holder is a beneficial owner of
Triton Class A common stock that is not:
. a citizen or individual resident of the United States;
. a corporation or partnership, including any entity treated as a
corporation or partnership for United States federal income tax
purposes, created or organized under the laws of the United States or
any subdivision thereof;
. an estate the income of which is subject to United States federal income
tax without regard to its source; or
. a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United
States persons have the authority to control all substantial decisions
of the trust.
Dividends
Dividends, if any, paid to a non-U.S. holder will generally be subject to
the withholding of United States federal income tax at the rate of 30% of the
gross amount of such dividends, unless:
. the dividends are effectively connected with the conduct of a trade or
business, or, if an income tax treaty applies, are attributable to a
permanent establishment, as defined therein, within the United States of
the non-U.S. holder, and such non-U.S. holder furnishes to Triton or its
agent a duly executed Internal Revenue Service Form W-8ECI, or any
successor form; or
. such non-U.S. holder is entitled to a reduced withholding tax rate
pursuant to any applicable income tax treaty.
For purposes of determining whether tax will be withheld at a reduced rate
as specified by an income tax treaty, current law permits Triton to presume
that dividends paid to an address in a foreign country are paid to a resident
of such country absent actual knowledge that such presumption is not
warranted. However, under newly issued U.S. Treasury regulations, in the case
of dividends paid after December 31, 2000, in order to obtain a reduced rate
of withholding under an income tax treaty, a non-U.S. holder generally will be
required to furnish
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to us or our agent a duly executed Internal Revenue Service Form W-8BEN, or
any successor form, certifying, under penalties of perjury, that such non-U.S.
holder is entitled to benefits under an income tax treaty. The new regulations
also provide special rules for dividend payments made to foreign
intermediaries, U.S. or foreign wholly-owned entities that are disregarded for
U.S. federal income tax purposes and entities that are treated as fiscally
transparent in the United States, the applicable income tax treaty
jurisdiction or both. Prospective investors should consult their tax advisors
concerning the effect, if any, of the adoption of these new U.S. Treasury
regulations on an investment in our Class A common stock. A non-U.S. holder
who is eligible for a reduced withholding rate may obtain a refund of any
excess amounts withheld by filing an appropriate claim for a refund with the
Internal Revenue Service.
Dividends paid to a non-U.S. holder that are effectively connected with the
conduct of a trade or business, or, if an income tax treaty applies, are
attributable to a permanent establishment, as defined therein, within the
United States of the non-U.S. holder will generally be taxed on a net income
basis, that is, after allowance for applicable deductions, at the graduated
rates that are applicable to United States persons. In the case of a non-U.S.
holder that is a corporation, such income may also be subject to the United
States federal branch profits tax, which is generally imposed on a foreign
corporation upon the deemed repatriation from the United States of effectively
connected earnings and profits, at a 30% rate, unless the rate is reduced or
eliminated by an applicable income tax treaty and the non-U.S. holder is a
qualified resident of the treaty country.
Gain on Sale or Other Disposition
A non-U.S. holder generally will not be subject to regular United States
federal income or withholding tax on gain recognized on a sale or other
disposition of the Class A common stock, unless:
. the gain is effectively connected with the conduct of a trade or
business, or, if an income tax treaty applies, is attributable to a
permanent establishment, as defined therein, within the United States of
the non-U.S. holder or of a partnership, trust or estate in which such
non-U.S. holder is a partner or beneficiary;
. Triton has been, is or becomes a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Internal
Revenue Code at any time within the shorter of the five-year period
preceding such sale or other disposition or such non-U.S. holder's
holding period for Triton Class A common stock; or
. the non-U.S. holder is an individual who:
(a) is present in the United States for 183 days or more in the
taxable year of the sale or other disposition; and
(b) either (i) has a tax home in the United States, as specially
defined for purposes of the United States federal income tax, or
(ii) maintains an office or other fixed place of business in the
United States and the gain from the sale or other disposition of
the Class A common stock is attributable to such office or other
fixed place of business.
A corporation is generally considered to be a United States real property
holding corporation if the fair market value of its United States real
property interests within the meaning of Section 897(c)(1) of the Internal
Revenue Code equals or exceeds 50% of the sum of the fair market value of its
worldwide real property interests plus the fair market value of any other of
its assets used or held for use in a trade or business. Triton believes that
it has not been, is not currently and is not likely to become a United States
real property holding corporation. Further, even if Triton were to become a
United States real property holding corporation, any gain recognized by a non-
U.S. holder still would not be subject to U.S. federal income tax if the
Triton Class A common stock were considered to be regularly traded, within the
meaning of applicable U.S. Treasury regulations, on an established securities
market, for example, the Nasdaq National Market, on which Triton's Class A
common stock will be listed, and the non-U.S. holder did not own, directly or
indirectly, at any time during the five-year period ending on the date of the
sale or other disposition, more than 5% of the Class A common stock.
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Gains realized by a non-U.S. holder that are effectively connected with the
conduct of a trade or business, or, if an income tax treaty applies, are
attributable to a permanent establishment, as defined therein, within the
United States of the non-U.S. holder will generally be taxed on a net income
basis, that is, after allowance for applicable deductions, at the graduated
rates that are applicable to United States persons. In the case of a non-U.S.
holder that is a corporation, such income may also be subject to the United
States federal branch profits tax, which is generally imposed on a foreign
corporation upon the deemed repatriation from the United States of effectively
connected earnings and profits, at a 30% rate, unless the rate is reduced or
eliminated by an applicable income tax treaty and the non-U.S. holder is a
qualified resident of the treaty country.
Individual non-U.S. holders may also be subject to tax under provisions of
United States federal income tax law applicable to certain United States
expatriates, including former long-term residents of the United States.
Federal Estate and Gift Taxes
Class A common stock owned or treated as owned by a non-U.S. holder at the
date of death will be included in such individual's estate for United States
federal estate tax purposes, unless an applicable estate tax treaty provides
otherwise.
A non-U.S. holder will not be subject to United States federal gift tax on
a transfer of Class A common stock, unless such person is engaged in business
in the United States or such person is an individual subject to provisions of
United States federal gift tax law applicable to certain United States
expatriates, including certain former long-term residents of the United
States.
Backup Withholding Tax and Information Reporting
Triton must report annually to the Internal Revenue Service and to each
non-U.S. holder the amount of dividends paid to, and the tax withheld with
respect to, such non-U.S. holder, regardless of whether tax was actually
withheld and whether withholding was reduced by an applicable income tax
treaty. Under certain income tax treaties and other agreements, that
information may also be made available to the tax authorities of the country
in which the non-U.S. holder resides.
United States federal backup withholding, which generally is withholding
tax imposed at the rate of 31% on certain payments to persons not otherwise
exempt who fail to furnish certain identifying information, will generally not
apply to:
. dividends paid to a non-U.S. holder that are subject to withholding at
the 30% rate or that are subject to withholding at a reduced rate under
an applicable income tax treaty; or
. under current law, dividends paid to a non-U.S. holder at an address
outside of the United States, unless the payor has knowledge that the
payee is a United States person.
Under newly issued U.S. Treasury regulations, in the case of dividends paid
after December 31, 2000, a non-U.S. holder will generally be subject to backup
withholding, unless certain certification procedures, or, in the case of
payments made outside of the United States with respect to an offshore
account, certain documentary evidence procedures, are satisfied, directly or
through a foreign intermediary.
The backup withholding and information reporting requirements will
generally also apply to the gross proceeds paid to a non-U.S. holder upon the
sale or other disposition of Class A common stock by or through a United
States office of a United States or foreign broker, unless the non-U.S. holder
certifies to the broker under penalties of perjury as to, among other things,
its name, address and status as a non-U.S. holder by filing the Internal
Revenue Service's Form W-8BEN, or any successor form, with the broker, or
unless the non-U.S. holder otherwise establishes an exemption.
Information reporting requirements, but not backup withholding, will
generally apply to a payment of the proceeds of a sale or other disposition of
Class A common stock effected at a foreign office of:
87
<PAGE>
(c) a United States broker;
(d) a foreign broker 50% or more of whose gross income for certain
periods is effectively connected with the conduct of a trade or
business within the United States;
(e) a foreign broker that is a controlled foreign corporation for
United States federal income tax purposes; or
(f) under newly issued U.S. Treasury regulations effective after
December 31, 2000, a foreign broker that is (a) a foreign
partnership one or more of whose partners are U.S. persons that in
the aggregate hold more than 50% of the income or capital interest
in the partnership at any time during its tax year, or (b) a
foreign partnership engaged at any time during its tax year in the
conduct of a trade or business in the United States, unless the
broker has certain documentary evidence in its records that the
holder is a non-U.S. holder and the broker has no knowledge to the
contrary and certain other conditions are met, or unless the non-
U.S. holder otherwise establishes an exemption.
Neither backup withholding nor information reporting will generally apply
to a payment of the proceeds of a sale or other disposition of Class A common
stock effected at a foreign office of a foreign broker not subject to the
preceding paragraph. Prospective investors should consult their tax advisors
concerning the effect, if any, of the adoption of the newly issued U.S.
Treasury regulations on backup withholding and information reporting on an
investment in the Class A common stock.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules will be refunded or credited against the non-U.S.
holder's United States federal income tax liability, provided that the non-
U.S. holder files an appropriate claim for a refund with the Internal Revenue
Service.
88
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no market for our Class A common
stock, and we cannot assure you that a significant public market for the Class
A common stock will develop or be sustained after this offering. Future sales
of substantial amounts of Class A common stock, including shares issued upon
exercise of outstanding options, in the public market after this offering
could adversely affect market prices prevailing from time to time and could
impair our ability to raise capital through the sale of our equity securities.
Sales of substantial amounts of our Class A common stock in the public market
could adversely affect the prevailing market price and our ability to raise
equity capital in the future.
Upon completion of this offering, we will have outstanding shares of
Class A common stock, assuming no exercise of the underwriters' over-allotment
option. Of these shares, shares, or shares if the underwriters
exercise their over-allotment option in full, of the Class A common stock sold
in this offering will be freely tradable without restriction under the
Securities Act unless purchased by our affiliates as that term is defined in
Rule 144 under the Securities Act. The remaining shares of Class A common
stock outstanding will be restricted securities under Rule 144 and may in the
future be sold without registration under the Securities Act to the extent
permitted by Rule 144 or any other applicable exemption under the Securities
Act, subject to the restrictions on transfer contained in the stockholders'
agreement and described in "Certain Relationships and Related Transactions--
The AT&T Agreements--The Stockholders' Agreement" and the lock-up agreements
described in "Underwriters." In addition, we will have shares of Class B
non-voting common stock that are immediately convertible into Class A common
stock at any time at the holder's option. These shares are also restricted
securities under Rule 144. Some holders of outstanding shares of Class A
common stock immediately prior to the offering may, under certain
circumstances, include their shares in a registration statement filed by
Triton for a public offering of Class A common stock. Some existing
stockholders also have the right to demand that we register their shares of
Class A common stock for resale. See "Description of Capital Stock--
Registration Rights."
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person, or persons whose shares are aggregated,
who has beneficially owned restricted shares for at least one year, including
the holding period of any prior owner except an affiliate, would be entitled
to sell within any three-month period a number of shares that does not exceed
the greater of:
. one percent of the number of shares of Class A common stock then
outstanding, which will equal approximately shares immediately after
this offering, or
. the average weekly trading volume of the Class A common stock during the
four calendar weeks preceding the filing of a Form 144 with respect to
the sale.
Sales under Rule 144 also are subject to manner of sale provisions and
notice requirements and to the availability of current public information
about us. Under Rule 144(k), a person who is not deemed to have been an
affiliate of Triton at any time during the three months preceding a sale and
who has beneficially owned the shares proposed to be sold for at least two
years, including the holding period of any prior owner except an affiliate, is
entitled to sell those shares without complying with the manner of sale,
public information, volume limitation or notice provisions of Rule 144.
Rule 701 permits resales of shares in reliance on Rule 144 but without
compliance with specified restrictions of Rule 144. Any employee, officer or
director of or consultant to Triton who purchased his or her shares under a
written compensatory plan or contract may be entitled to rely on the resale
provisions of Rule 701. Rule 701 permits affiliates to sell their Rule 701
shares under Rule 144 without complying with the holding period requirements
of Rule 144. Rule 701 further provides that non-affiliates may sell those
shares in reliance on Rule 144 without having to comply with the holding
period, public information, volume limitation or notice provisions of Rule
144. All holders of Rule 701 shares are required to wait until 90 days after
the date of this prospectus before selling those shares.
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<PAGE>
Following consummation of this offering we intend to file a registration
statement on Form S-8 under the Securities Act covering shares of Class A
common stock subject to outstanding options under our stock and incentive
option plan. Based on the number of shares currently reserved for issuance
under our stock and incentive plan, that registration statement would cover
approximately shares issuable on exercise of the options, of which no
options will have vested as of the date of this offering. The registration
statement on Form S-8 will automatically become effective upon filing.
Accordingly, subject to the exercise of those options, shares registered under
that registration statement will be available for sale in the open market
immediately after the 180-day lock-up agreements expire. See "Underwriters."
90
<PAGE>
UNDERWRITERS
Under the terms and subject to the conditions contained in an underwriting
agreement dated the date of this prospectus, the U.S. underwriters named
below, for whom Morgan Stanley & Co. Incorporated, Lehman Brothers Inc.,
Salomon Smith Barney Inc., First Union Capital Markets Corp. and J.P. Morgan
Securities Inc. are acting as U.S. representatives, and the international
underwriters named below for whom Morgan Stanley & Co. International Limited,
Lehman Brothers International (Europe), Salomon Brothers International
Limited, First Union Capital Markets Corp. and J.P. Morgan Securities Ltd. are
acting as international representatives, have severally agreed to purchase,
and Triton has agreed to sell to them, severally, the number of shares
indicated below:
<TABLE>
<CAPTION>
Number of
Name Shares
---- ---------
<S> <C>
U.S. Underwriters:
Morgan Stanley & Co. Incorporated................................
Lehman Brothers Inc. ............................................
Salomon Smith Barney Inc. .......................................
First Union Capital Markets Corp. ...............................
J.P. Morgan Securities Inc. .....................................
---
Subtotal.........................................................
---
International Underwriters:
Morgan Stanley & Co. International Limited.......................
Lehman Brothers International (Europe)...........................
Salomon Brothers International Limited...........................
First Union Capital Markets Corp. ...............................
J.P. Morgan Securities Ltd.......................................
Subtotal.........................................................
---
Total............................................................
===
</TABLE>
The U.S. underwriters and the international underwriters, and the U.S.
representatives and the international representatives, are collectively
referred to as the "underwriters" and the "representatives," respectively. The
underwriters are offering the shares of Class A common stock subject to their
acceptance of the shares from Triton and subject to prior sale. The
underwriting agreement provides that the obligations of the several
underwriters to pay for and accept delivery of the shares of Class A common
stock offered by this prospectus are subject to the approval of certain legal
matters by their counsel and to certain other conditions. The underwriters are
obligated to take and pay for all of the shares of Class A common stock
offered by this prospectus if any such shares are taken. However, the
underwriters are not required to take or pay for the shares covered by the
underwriters' over-allotment option described below.
In the agreement between U.S. and international underwriters, sales may be
made between U.S. underwriters and international underwriters of any number of
shares as may be mutually agreed. The per share price of any
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<PAGE>
shares sold by the underwriters shall be the public offering price listed on
the cover page of this prospectus, in United States dollars, less an amount
not greater than the per share amount of the concession to dealers described
below.
The underwriters initially propose to offer part of the shares of Class A
common stock directly to the public at the public offering price listed on the
cover page of this prospectus and part to certain dealers at a price that
represents a concession not in excess of $ a share under the public offering
price. Any underwriter may allow, and such dealers may reallow, a concession
not in excess of $ a share to other underwriters or to certain dealers.
After the initial offering of the shares of Class A common stock, the offering
price and other selling terms may from time to time be varied by the
representatives.
Triton has granted to the U.S. underwriters an option, exercisable for 30
days from the date of this prospectus, to purchase up to an aggregate of
additional shares of Class A common stock at the public offering price listed
on the cover page of this prospectus, less underwriting discounts and
commissions. The U.S. underwriters may exercise this option solely for the
purpose of covering over-allotments, if any, made in connection with the
offering of the shares of Class A common stock offered by this prospectus. To
the extent the option is exercised, each U.S. underwriter will become
obligated, subject to certain conditions, to purchase about the same
percentage of the additional shares of Class A common stock as the number
listed next to the U.S. underwriter's name in the preceding table bears to the
total number of shares of Class A common stock listed next to the names of all
U.S. underwriters in the preceding table. If the U.S. underwriters' option is
exercised in full, the total price to the public would be $ , the total
underwriters' discounts and commissions would be $ and total proceeds to
Triton would be $ .
The underwriters have informed Triton that they do not intend sales to
discretionary accounts to exceed five percent of the total number of shares of
Class A common stock offered by them. In addition, the underwriters have
informed us that they will not confirm sales to any accounts over which they
exercise discretionary authority without prior approval of the transaction by
the customer.
We have applied for quotation of our Class A common stock on the Nasdaq
National Market under the symbol "TPCS."
At the request of Triton, the underwriters have reserved for sale, at the
initial offering price, up to shares offered in this prospectus for
directors, officers, employees, business associates, and related persons of
Triton. The number of shares of Class A common stock available for sale to the
general public will be reduced to the extent such persons purchase such
reserved shares. Any reserved shares, which are not so purchased, will be
offered by the underwriters to the general public on the same basis as the
other shares offered in this prospectus.
Each of Triton and the directors, executive officers and certain other
stockholders of Triton has agreed that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the underwriters, it will not,
during the period ending 180 days after the date of this prospectus:
. offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend or otherwise transfer or dispose of
directly or indirectly, any shares of Class A common stock or any
securities convertible into or exercisable or exchangeable for common
stock; or
. enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the
Class A common stock,
whether any transaction described above is to be settled by delivery of Class
A common stock or such other securities, in cash or otherwise. In addition,
those directors, executive officers and stockholders have agreed that, without
the prior written consent of Morgan Stanley & Co. Incorporated on behalf of
the underwriters, they will not, during the period ending 180 days after the
date of this prospectus, make any demand for, or exercise any
92
<PAGE>
right with respect to, the registration of any shares of Class A common stock
or any securities convertible into or exercisable or exchangeable for common
stock.
The restrictions described in this paragraph do not apply to:
. the sale of shares to the underwriters;
. the issuance by Triton of shares of Class A common stock upon the
exercise of an option or a warrant or the conversion of a security
outstanding on the date of this prospectus of which the underwriters
have been advised in writing; or
. transactions by any person other than Triton relating to shares of Class
A common stock or other securities acquired in open market transactions
after the completion of the offering of the shares; or
. the pledge by each stockholder to Triton of that stockholder's shares of
Class A common stock under the terms of the securities purchase
agreement.
In order to facilitate the offering of the Class A common stock, the
underwriters may engage in transactions that stabilize, maintain or otherwise
affect the price of the Class A common stock. Specifically, the underwriters
may over-allot in connection with the offering, creating a short position in
the Class A common stock for their own account. In addition, to cover over-
allotments or to stabilize the price of the Class A common stock, the
underwriters may bid for, and purchase, shares of common stock in the open
market. Finally, the underwriting syndicate may reclaim selling concessions
allowed to an underwriter or a dealer for distributing the Class A common
stock in the offering, if the syndicate repurchases previously distributed
Class A common stock in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the common stock above independent market
levels. The underwriters are not required to engage in these activities, and
may end any of these activities at any time.
From time to time, some of the underwriters have provided, and may continue
to provide, investment banking services to us. Affiliates of First Union
Capital Markets Corp. and J.P. Morgan Securities Inc. act as agents and
lenders under our credit facility and an affiliate of Lehman Brothers Inc. is
a lender under that credit facility, and each receives fees customary for
performing those services. In addition, an affiliate of First Union provides
cash management and investment management services to Triton and receives fees
customary for performing those services, and First Union provided advisory
services to us in connection with our expected towers sale and will receive
customary fees upon closing of that sale.
Affiliates of J.P. Morgan Securities Inc. and First Union Capital Markets
Corp. beneficially own more than 10% of Triton's preferred equity. Under the
provisions of Rule 2720 of the Conduct rules of the National Association of
Securities Dealers, when an NASD member distributes securities of a company in
which it owns more than 10% of the company's preferred equity, the public
offering price of the securities can be no higher than that recommended by the
"qualified independent underwriter" as that term is defined in Rule 2720. In
accordance with those requirements, Morgan Stanley & Co. Incorporated has
agreed to serve as a "qualified independent underwriter" and has conducted due
diligence and will recommend a maximum price for the shares of Class A common
stock.
Triton and the underwriters have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act.
Pricing of the Offering
Prior to this offering, there has been no public market for the Class A
common stock. The initial public offering price will be determined by
negotiations between Triton and the U.S. representatives. Among the factors to
be considered in determining the initial public offering price will be the
future prospects of Triton and its industry in general, sales, earnings and
certain other financial operating information of Triton in recent periods, and
the price-earnings ratios, price-sales ratios, market prices of securities and
certain financial and operating information of companies engaged in activities
similar to those of Triton. The estimated initial public offering price range
set forth on the cover page of this preliminary prospectus is subject to
change as a result of market conditions and other factors.
93
<PAGE>
LEGAL MATTERS
Dow, Lohnes and Albertson, PLLC in Washington, D.C. will pass upon the
validity of the shares of Class A common stock offered under this prospectus
and certain regulatory legal matters. Davis Polk & Wardwell in New York, New
York will pass upon the validity of the shares of Class A common stock for the
underwriters.
EXPERTS
The combined financial statements of Triton PCS Holdings, Inc. as of
December 31, 1997 and 1998 and for the period from inception on March 6, 1997
to December 31, 1997 and the year ended December 31, 1998 have been included
herein and in the registration statement in reliance upon the report of KPMG
LLP, independent certified public accountants, appearing elsewhere herein, and
upon the authority of said firm as experts in accounting and auditing.
The audited financial statements of Vanguard Cellular Systems of South
Carolina, Inc. as of December 31, 1996 and 1997 and for the three years in the
period ended December 31, 1997 included in this registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect to those financial statements, and are
included in this registration statement in reliance upon the authority of said
firm as experts in accounting and auditing in giving that report.
CHANGE IN ACCOUNTANTS
Effective July 16, 1999, we engaged PricewaterhouseCoopers LLP as our
independent accountants. Prior to July 16, 1999, KPMG LLP had been our
independent accountants. The decision to change independent accountants was
approved by our board of directors. During the period of coverage from March
6, 1997, the date of inception, through December 31, 1997, the year ended
December 31, 1998 and the subsequent interim period through July 16, 1999,
there were no disagreements with KPMG regarding any matters with respect to
accounting principles or practices, financial statement disclosure or audit
scope or procedure, which disagreements, if not resolved to the satisfaction
of the former accountants, would have caused KPMG to make reference to the
subject matter of the disagreement in connection with its report. The former
accountants' reports for the year ended December 31, 1998 and the period from
inception on March 6, 1997 to December 31, 1997 are included in this
prospectus. KPMG's report does not contain an adverse opinion or disclaimer of
opinion or qualifications or modifications as to uncertainty, audit scope or
accounting principles. Prior to July 16, 1999, we had not consulted with
PricewaterhouseCoopers on any items, which involved our accounting principles
or the form of an audit opinion to be issued on our financial statements.
AVAILABLE INFORMATION
We have filed a registration statement on Form S-1 with the SEC covering
the Class A common stock. This prospectus is part of that registration
statement. For further information about Triton, you should refer to our
registration statement and the exhibits filed with our registration statement.
This prospectus summarizes material provisions of contracts and other
documents that we refer you to. Since this prospectus may not contain all the
information that you may find important, you should review the full text of
these documents. We have included copies of these documents as exhibits to our
registration statement.
In addition, we will file annual, quarterly and special reports with the
SEC after the effectiveness of the registration statement. Triton's SEC
filings are available over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, and Chicago.
Please call the SEC at 1-800-SEC-0330 for more information on the public
reference rooms and their copy charges.
94
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Triton PCS Holdings, Inc. Consolidated Interim Unaudited Financial
Statements
Consolidated Balance Sheets at December 31, 1998 and June 30, 1999 ..... F-2
Consolidated Statements of Operations for the six months ended June 30,
1998 and 1999.......................................................... F-3
Consolidated Statements of Shareholders' Equity (Deficit) for the year
ended December 31, 1998 and the six months ended June 30, 1999 ........ F-4
Consolidated Statements of Cash Flows for the six months ended June 30,
1998 and 1999.......................................................... F-5
Notes to the Consolidated Financial Statements.......................... F-6
Triton PCS Holdings, Inc. Combined Audited Financial Statements
Report of KPMG LLP...................................................... F-8
Combined Balance Sheets as of December 31, 1997 and 1998................ F-9
Combined Statements of Operations for the period March 6, 1997
(inception) to December 31, 1997 and the year ended December 31, 1998.. F-10
Combined Statements of Shareholders' Equity (Deficit) for the period
March 6, 1997 (inception) to December 31, 1997 and the year ended
December 31, 1998...................................................... F-11
Combined Statements of Cash Flows for the period March 6, 1997
(inception) to December 31, 1997 and the year ended December 31, 1998.. F-12
Notes to Combined Financial Statements.................................. F-13
Vanguard Cellular Systems of South Carolina, Inc. Audited Financial
Statements
Report of Arthur Andersen LLP........................................... F-32
Balance Sheets as of December 31, 1996 and 1997......................... F-33
Statements of Operations for the years ended December 31, 1995, 1996 and
1997................................................................... F-34
Statements of Cash Flows for the years ended December 31, 1995, 1996 and
1997................................................................... F-35
Statements of Changes in Shareholder's Deficit for the years ended
December 31, 1995, 1996 and 1997....................................... F-36
Notes to Financial Statements........................................... F-37
Myrtle Beach System of Vanguard Cellular Systems of South Carolina, Inc.
Balance Sheet at June 30, 1998 ......................................... F-42
Statements of Operations for the six months ended June 30, 1997 and
1998................................................................... F-43
Statements of Cash Flows for the six months ended June 30, 1997 and
1998................................................................... F-44
Notes to Financial Statements........................................... F-45
Triton PCS Holdings, Inc. Pro Forma Information
Financial Statements.................................................... F-50
Condensed Combined Statement of Operations.............................. F-51
Notes to Combined Financial Statements.................................. F-52
</TABLE>
F-1
<PAGE>
TRITON PCS HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
($000's)
<TABLE>
<CAPTION>
Pro forma
December 31, June 30, June 30,
1998 1999 1999
------------ ----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents................ $146,172 $ 9,250 $ 9,250
Marketable securities.................... 23,612 37,058 37,058
Due from related party................... 951 1,021 1,021
Accounts receivable net of allowance for
doubtful accounts of $1,071and $468,
respectively............................ 3,102 24,949 24,949
Inventory................................ 1,433 7,564 7,564
Prepaid expenses and other current
assets.................................. 4,288 6,001 6,001
Deferred income tax...................... 81 81 81
-------- -------- --------
Total current assets..................... 179,639 85,924 85,924
Property, plant, and equipment:
Land..................................... 313 313 313
Network infrastructure and equipment..... 34,147 198,045 198,045
Office furniture and equipment........... 17,642 31,624 31,624
Capital lease assets..................... 2,263 2,263 2,263
Construction in progress................. 145,667 71,836 71,836
-------- -------- --------
200,032 304,081 304,081
Less accumulated depreciation............ (1,079) (10,375) (10,375)
-------- -------- --------
Net property and equipment............... 198,953 293,706 293,706
Intangible assets, net.................... 307,361 318,381 318,381
Deferred transaction costs................ 906 1,124 1,124
Other long term assets.................... -- 2,000 2,000
-------- -------- --------
Total assets............................. $686,859 $701,135 $701,135
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable......................... $ 25,256 $ 35,486 $ 35,486
Accrued payroll & related expenses....... 3,719 4,654 4,654
Accrued expenses......................... 3,646 4,081 4,081
Accrued interest......................... 545 779 779
Capital lease obligation................. 281 278 278
-------- -------- --------
Total current liabilities................ 33,447 45,278 45,278
Long-term debt............................ 463,648 481,650 481,650
Capital lease obligations................. 2,041 1,924 1,924
Deferred income taxes..................... 11,744 11,744 11,744
Commitments and Contingencies
Series A redeemable preferred stock
1,000,000 shares authorized, $.01 par
value, 732,371 and 786,253 shares issued
and outstanding at December 31, 1998 and
June 30, 1999, respectively, plus
accreted dividends....................... 80,090 89,627 89,627
Shareholders' equity:
Series B preferred stock, $.01 par value
2,000,000 shares authorized, no shares
issued or outstanding................... -- -- --
Series C preferred stock, $.01 par value,
3,000,000 shares authorized, 1,915,187
shares issued and outstanding at
December 31, 1998 and June 30, 1999,
respectively (no shares issued proforma
at June 30, 1999)....................... 19 19 --
Series D preferred stock, $.01 par value,
1,000,000 shares authorized, 500,944 and
543,683 shares issued and outstanding at
December 31, 1998 and June 30, 1999,
respectively............................ 5 5 5
Class A common stock, $.01 par value;
10,000,000 shares authorized, 268,459
and 273,208 shares issued and
outstanding at December 31, 1998 and
June 30, 1999, respectively, (2,188,395
shares issued pro forma at June 30,
1999)................................... 3 3 17
Class B common stock $ par vaule;
shares authorized, shares issued
and outstanding on a pro forma basis.... 5
Additional paid-in capital............... 226,443 229,755 229,755
Subscription receivable.................. (95,000) (60,000) (60,000)
Accumulated deficit...................... (35,581) (99,366) (99,366)
Accumulated other comprehensive income... -- 735 735
Deferred compensation.................... -- (239) (239)
-------- -------- --------
Total shareholders' equity............... 95,889 70,912 70,912
-------- -------- --------
Total liabilities & shareholders'
equity................................. $686,859 $701,135 $701,135
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-2
<PAGE>
TRITON PCS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
($000's except per share amounts)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------
1998 1999
--------- ---------
(unaudited)
<S> <C> <C>
Revenues:
Service revenues...................................... $ -- $ 17,662
Roaming revenues...................................... -- 12,953
Equipment revenues.................................... -- 7,627
--------- ---------
Total revenues...................................... -- 38,242
Expenses:
Cost of service....................................... -- 14,809
Cost of equipment..................................... -- 12,816
Operations............................................ 1,444 11,023
Selling and marketing................................. -- 20,562
General and administrative............................ 3,709 10,653
Depreciation and amortization......................... 1,114 15,969
--------- ---------
Loss from operations.................................. 6,267 47,590
Interest expense, net of capitalized interest........... 9,872 18,847
Interest income......................................... 2,739 2,474
Other income, net....................................... -- 178
--------- ---------
Loss before taxes....................................... 13,400 63,785
Tax benefit............................................. 6,803 --
--------- ---------
Net loss................................................ 6,597 63,785
Accretion on preferred stock............................ 2,977 4,149
--------- ---------
Net loss available to common stockholders............... $ 9,574 $ 67,934
========= =========
Basic and diluted net loss per common share............. $ (51.67) $ (252.51)
========= =========
Weighted average common shares outstanding (basic and
diluted)............................................... 185,283 269,037
========= =========
Pro forma basic and diluted net loss per common share... $ (7.27) $ (31.10)
========= =========
Pro forma weighted average common shares outstanding
(basic and diluted).................................... 1,316,498 2,184,224
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
TRITON PCS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
($000s)
For the Year ended December 31, 1998 and the six months ended June 30, 1999
<TABLE>
<CAPTION>
Series A Accumulated
Redeemable Series C Series D Additional Other
Preferred Preferred Preferred Common Paid-In Subscription Accumulated Comprehensive Comprehensive
Stock Stock Stock Stock Capital Receivable Deficit Income Loss
---------- --------- --------- ------ ---------- ------------ ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at Decem-
ber 31, 1997.... $ -- $-- $-- $ 2 $ -- $ -- $ (3,961) $--
Issuance of stock
in connection
with private
equity
investment and
AT&T
transaction..... 73,237 14 4 1 169,305 (95,000) -- --
Issuance of stock
in connection
with Myrtle
Beach transac-
tion............ -- 3 -- -- 35,088 -- -- --
Issuance of stock
in connection
with Norfolk
transaction..... -- 2 1 -- 28,903 -- -- --
Redemption of Se-
ries C Preferred
Stock........... -- -- -- -- (3,560) -- -- --
Re-issuance of
Series C Pre-
ferred Stock.... -- -- -- -- 3,560 -- -- --
Accreted divi-
dends........... 6,853 -- -- -- (6,853) -- -- --
Net loss......... -- -- -- -- -- -- (31,620) --
------- ---- ---- --- -------- -------- -------- ----
Balance at Decem-
ber 31, 1998.... 80,090 19 5 3 226,443 (95,000) (35,581) --
------- ---- ---- --- -------- -------- -------- ----
Payment for stock
in connection
with private
equity
investment and
AT&T
transaction..... -- -- -- -- -- 35,000 -- --
Issuance of stock
in connection
with Norfolk
transaction..... -- -- -- -- 2,169 -- -- --
Issuance of stock
in connection
with
Savannah/Athens
transaction..... 5,388 -- -- -- 5,044 -- -- --
Deferred compen-
sation.......... -- -- -- -- 248 -- -- --
Amortization of
deferred compen-
sation.......... -- -- -- -- -- -- -- --
Accreted divi-
dends........... 4,149 -- -- -- (4,149) -- -- --
Comprehensive
loss............
Unrealized gain
on securities.. -- -- -- -- -- -- -- 735 $ 735
Net loss........ -- -- -- -- -- -- (63,785) -- (63,785)
--------
Total comprehen-
sive loss...... $(63,050)
------- ---- ---- --- -------- -------- -------- ---- ========
Balance at June
30, 1999........ $89,627 $ 19 $ 5 $ 3 $229,755 $(60,000) $(99,366) $735
======= ==== ==== === ======== ======== ======== ====
<CAPTION>
Deferred
Compensation Total
------------ --------
<S> <C> <C>
Balance at Decem-
ber 31, 1997.... $ -- $(3,959)
Issuance of stock
in connection
with private
equity
investment and
AT&T
transaction..... -- 74,324
Issuance of stock
in connection
with Myrtle
Beach transac-
tion............ -- 35,091
Issuance of stock
in connection
with Norfolk
transaction..... -- 28,906
Redemption of Se-
ries C Preferred
Stock........... -- (3,560)
Re-issuance of
Series C Pre-
ferred Stock.... -- 3,560
Accreted divi-
dends........... -- (6,853)
Net loss......... -- (31,620)
------------ --------
Balance at Decem-
ber 31, 1998.... -- 95,889
------------ --------
Payment for stock
in connection
with private
equity
investment and
AT&T
transaction..... -- 35,000
Issuance of stock
in connection
with Norfolk
transaction..... -- 2,169
Issuance of stock
in connection
with
Savannah/Athens
transaction..... -- 5,044
Deferred compen-
sation.......... (248) --
Amortization of
deferred compen-
sation.......... 9 9
Accreted divi-
dends........... -- (4,149)
Comprehensive
loss............
Unrealized gain
on securities.. -- 735
Net loss........ -- (63,785)
Total comprehen-
sive loss......
------------ --------
Balance at June
30, 1999........ $(239) $70,912
============ ========
</TABLE>
See accompanying notes to combined financial statements.
F-4
<PAGE>
TRITON PCS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
($000's)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------
1998 1999
--------- ---------
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss................................................ $ (6,597) $ (63,785)
Adjustments to reconcile net loss to cash used in
operating activities:
Depreciation and amortization.......................... 1,114 15,969
Amortization of bond discount.......................... 104 307
Deferred income taxes.................................. (6,802) --
Accretion of interest.................................. 5,876 17,694
Amortization of deferred compensation.................. -- 9
Change in operating assets and liabilities:
Accounts receivable................................... -- (21,847)
Inventory............................................. -- (6,131)
Prepaid expenses and other current assets............. (296) (1,713)
Other noncurrent assets............................... -- (2,196)
Accounts payable...................................... 2,400 10,230
Accrued expenses...................................... -- 1,654
Accrued interest...................................... 4,013 234
--------- ---------
Net cash used in operating activities............... (188) (49,575)
--------- ---------
Cash flows from investing activities:
Capital expenditures.................................... (9,754) (111,397)
Proceeds from maturity of short term investments........ -- 9,793
Purchase of marketable securities....................... -- (22,504)
Myrtle Beach acquisition, net of cash acquired.......... (162,475) --
--------- ---------
Net cash used in investing activities............... (172,229) (124,108)
--------- ---------
Cash flows from financing activities:
Borrowings under credit facility........................ 75,000 --
Borrowings on subordinated debt......................... 291,000 --
Proceeds from issuance of stock in connection with
Private equity investment.............................. 33,256 35,000
Proceeds from issuance of stock in connection with
Myrtle Beach transaction............................... 35,091 --
Proceeds from issuance of stock in connection with
Norfolk transaction.................................... -- 2,169
Redemption of Series C Preferred Stock.................. (3,560) --
Re-issuance of Series C Preferred Stock................. 3,560 --
Payment of deferred transaction costs................... (11,822) (218)
Advances to related party, net.......................... 38 (70)
Principal payments under capital lease obligations...... -- (120)
--------- ---------
Net cash provided by financing activities........... 422,563 36,761
--------- ---------
Net increase (decrease) in cash.......................... 250,146 (136,922)
Cash and cash equivalents, beginning of period........... 11,362 146,172
--------- ---------
Cash and cash equivalents, end of period................. $ 261,508 $ 9,250
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
TRITON PCS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999
(1) Basis of Presentation
The accompanying consolidated financial statements are unaudited and have
been prepared by management. In the opinion of management, these consolidated
financial statements contain all of the adjustments, consisting of normal
recurring adjustments, necessary to present fairly, in summarized from, the
financial position and the results of operations of Triton PCS Holdings, Inc.
("Triton" or "the Company"). The results of operations for the six months
ended June 30, 1999 are not indicative of the results that may be expected for
the year ending December 31, 1999. The financial information presented herein
should be read in conjunction with the combined financial statements for the
year ended December 31, 1998 which include information and disclosures not
included herein.
The consolidated accounts of the Company include Triton PCS Holdings Inc.,
Triton PCS, Inc. and wholly-owned subsidiaries. All significant intercompany
accounts or balances have been eliminated in consolidation.
(2) New Accounting Pronouncements
On July 8, 1999, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 137, "Deferral of the Effective Date of FAS 133", which defers the
effective date of SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" to all fiscal quarters of all fiscal years beginning after
June 15, 2000. The Company is currently evaluating the financial impact of
adoption of SFAS No. 133. The adoption is not expected to have a material
effect on the Company's consolidated results of operations, financial
position, or cash flows.
(3) Savannah/Athens Exchange
On June 8, 1999, Triton PCS, Inc. completed an exchange of personal
communication services licenses with AT&T. As part of this transaction, Triton
PCS, Inc. transferred Hagerstown and Cumberland, Maryland licenses that cover
approximately 512,000 potential customers, with an estimated value of $5.1
million, for Savannah and Athens, Georgia licenses that cover approximately
517,000 potential customers, with an estimated value of $15.5 million. The
Company also issued to AT&T 53,882 shares of Series A preferred stock and
42,739 shares of Series D preferred stock, with estimated values of $5.8
million and $4.6 million, respectively, in connection with the exchange. All
of the acquired licenses are continguous to the Company's existing service
area. The licensed areas in Savannah and Athens have not been built out and
are expected to be included in the current build-out plan developed for the
existing footprint.
(4) Capital Contributions
On February 4, 1998, pursuant to the Securities Purchase Agreement, the
Company issued $140.0 million of equity to certain institutional investors and
management stockholders in exchange for irrevocable capital commitments and
contributions aggregating $140.0 million, of which $45.0 million was received
on February 4, 1998 and $35.0 million was received on February 4, 1999. The
balance of the unfunded commitments are to be contributed as follows: $35.0
million on February 4, 2000 and $25.0 million on February 4, 2001.
The securities purchase agreement provided that the initial cash
contributions and the unfunded commitments be made to the Company. The Company
has directed that all cash contributions subsequent to the initial cash
contributions be made directly to Triton PCS, Inc.
(5) Stock Compensation
In October 1997 and February 1998 the Company granted 196,237 shares of
restricted common stock to certain employees and a trust intended for future
grants. The shares are subject to vesting provisions. At the issuance date,
the estimated value of the shares was insignificant, and, accordingly, no
deferred compensation was recognized.
F-6
<PAGE>
TRITON PCS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
June 30, 1999
On June 30, 1998 and December 31, 1998, additional shares of 38,890 and
33,333, respectively, were issued as anti-dilutive protection related to
capital contributions received by the Company for the Myrtle Beach and Norfolk
transactions. The estimated value of the shares was insignificant, and,
accordingly, no deferred compensation was recognized.
On June 8, 1999, 4,749 additional shares were issued as anti-dilutive
protection related to capital contributions received by the Company for the
Norfolk transaction. Deferred compensation of $31,000 was recorded based on
the estimated value of the shares at the date of issuance.
On June 30, 1999, the Company granted, through the trust, 25,788 shares of
restricted common stock to certain management employees. The shares are
subject to vesting provisions. Deferred compensation of $217,000 was recorded
based on the estimated fair value at the date of issuance.
(6) Unaudited Pro Forma Balance Sheet
The board of directors has authorized the Company to file a Registration
Statement with the Securities and Exchange Commission permitting the Company
to sell shares of Common Stock in an initial public offering ("IPO"). If the
IPO is consummated as presently anticipated, all shares of Series C Preferred
Stock will automatically convert into an equal number of common shares. The
unaudited pro forma balance sheet reflects the subsequent conversion of the
Series C Preferred Stock as if such conversion had occurred as of June 30,
1999.
(7) Subsequent Event
On September 22, 1999, Triton PCS, Inc. sold and transferred to American
Tower Inc, a subsidiary of American Tower Corporation ("ATC"), 187 of its
towers, related assets and certain liabilities. The purchase price was $71.1
million, reflecting a purchase price of $380,000 per site. Triton PCS, Inc.
has also contracted with ATC for an additional 100 build-to-suit towers in
addition to its current 125 build-to-suit towers, and to extend its current
agreement for turnkey services for co-location sites through 2001. In
addition, Triton PCS, Inc. expects to receive an additional $1.52 million upon
the construction and sale to ATC of four additional tower facilities. An
affiliate of an investor has acted as the Company's financial advisor in
connection with the sale of the Company's personal communication towers.
The Company has also entered into a master lease agreement with ATC, in
which the Company has agreed to pay ATC monthly rent for the continued use of
the space that the Company occupied on the towers prior to the sale. The
initial term of the leases is 12 years and the monthly rental amount is
subject to certain escalation clauses over the life of the lease and related
options. Annual payments under the operating lease are $2.7 million.
The gain on the sale of the towers is approximately $43.8 million, of which
$6.1 will be recognized immediately, and the remaining $37.7 will deferred
over the operating leases term.
On September 22, 1999, Triton entered into a fifth amendment to the
Company's credit facility, according to which the credit facility was
increased from $425.0 to $600.0 million.
In August 1999, the Company entered into stock purchase agreements with
certain directors and an officer under which the Company agreed to sell to
these individuals an aggregate of 3,400 shares of the Company's Series C
Preferred Stock for a purchase price of $100 per share.
F-7
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Triton PCS Holdings, Inc.:
We have audited the accompanying combined balance sheets of Triton PCS
Holdings, Inc. and predecessor company, as defined in note 1 to the financial
statements, as of December 31, 1998 and 1997, and the related combined
statements of operations, shareholders' equity (deficit) and cash flows for
the year ended December 31, 1998 and the period from March 6, 1997 (inception)
to December 31, 1997. These combined financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these combined financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Triton PCS
Holdings, Inc. and predecessor company as of December 31, 1998 and 1997, and
the results of their operations and their cash flows for the year ended
December 31, 1998 and the period from March 6, 1997 (inception) to December
31, 1997, in conformity with generally accepted accounting principles.
/s/ KPMG LLP
Philadelphia, Pennsylvania
March 8, 1999
F-8
<PAGE>
TRITON PCS HOLDINGS, INC. AND PREDECESSOR COMPANY
COMBINED BALANCE SHEETS
($000's except share data)
<TABLE>
<CAPTION>
December 31,
-----------------
1997 1998
------- --------
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents................................ $11,362 $146,172
Marketable securities.................................... -- 23,612
Due from related party................................... 148 951
Accounts receivable, net of allowance for doubtful
accounts of $1,071 in 1998.............................. -- 3,102
Inventory................................................ -- 1,433
Prepaid expenses and other current assets................ 21 4,288
Deferred income taxes.................................... -- 81
------- --------
Total current assets................................... 11,531 179,639
Property, plant, and equipment, net:....................... 473 198,953
Intangible assets, net..................................... 1,249 308,267
------- --------
Total assets........................................... $13,253 $686,859
======= ========
LIABILITIES AND SHAREHOLDER'S EQUITY (DEFICIT) AND MEMBERS CAPITAL:
Current liabilities:
Accounts payable......................................... $ 1,581 $ 25,256
Accrued payroll and related expenses..................... 970 3,719
Accrued expenses......................................... 44 3,646
Accrued interest......................................... 1,228 545
Capital lease obligations................................ -- 281
Due to related party..................................... 45 --
Notes payable............................................ 13,344 --
------- --------
Total current liabilities.............................. 17,212 33,447
------- --------
Long-term debt............................................. -- 463,648
Capital lease obligations.................................. -- 2,041
Deferred income taxes...................................... -- 11,744
Commitments and contingencies (note 14)....................
Series A Redeemable Preferred Stock 1,000,000 shares
authorized, $.01 par value, no shares issued at December
31, 1997; 732,371 shares issued and outstanding at
December 31, 1998, plus accreted dividends................ -- 80,090
Shareholders' equity (deficit):
Series B preferred stock, $.01 par value 2,000,000 shares
authorized, no shares issued or outstanding............. -- --
Series C preferred stock, $.01 par value, 2,000,000
shares authorized, no shares issued or outstanding at
December 31, 1997; 3,000,000 shares authorized,
1,915,187 shares issued and outstanding at December 31,
1998.................................................... -- 19
Series D preferred stock, $.01 par value, 500,000 shares
authorized, no shares issued or outstanding at December
31, 1997; 1,000,000 shares authorized, 500,944 shares
issued and outstanding at December 31, 1998............. -- 5
Common stock, $.01 par value, 10,000,000 shares
authorized, 137,366 and 268,459 shares issued and
outstanding at December 31, 1997 and 1998,
respectively............................................ 2 3
Additional paid-in capital............................... -- 226,443
Subscription receivable.................................. -- (95,000)
Accumulated deficit...................................... (3,961) (35,581)
------- --------
Total shareholder's equity (deficit) and members
capital............................................... (3,959) 95,889
------- --------
Total liabilities and shareholder's equity (deficit)... $13,253 $686,859
======= ========
</TABLE>
See accompanying notes to combined financial statements.
F-9
<PAGE>
TRITON PCS HOLDINGS, INC. AND PREDECESSOR COMPANY
COMBINED STATEMENTS OF OPERATIONS
($000's except share and per share amounts)
<TABLE>
<CAPTION>
Period from
March 6, 1997 For the
(Inception) Year Ended
to December 31, December 31,
1997 1998
--------------- ------------
<S> <C> <C>
Revenues:
Service revenues............................... $ -- $ 15,823
Equipment revenues............................. -- 755
------- ---------
Total revenues............................... -- 16,578
Expenses:
Cost of service revenues....................... -- 4,298
Cost of equipment revenues..................... -- 1,699
Operations..................................... -- 13,045
Sales and marketing............................ -- 1,703
General and administrative..................... 2,736 8,570
Depreciation and amortization.................. 5 6,663
------- ---------
Total operating expenses..................... 2,741 35,978
Loss from operations......................... 2,741 19,400
Interest expense................................. 1,228 30,391
Interest and other (income)...................... (8) (10,635)
------- ---------
Loss before income taxes......................... 3,961 39,156
Income taxes (benefit)........................... -- (7,536)
------- ---------
Net loss......................................... 3,961 31,620
Accretion of preferred stock..................... -- 6,853
------- ---------
Net loss available to common shareholders........ $ 3,961 $ 38,473
======= =========
Net loss per common share (Basic and Diluted).... $(28.84) $ (182.77)
======= =========
Weighted average common shares outstanding (Basic
and Diluted).................................... 137,366 210,501
======= =========
Pro forma net loss per common share (Unaudited).. $ (23.26)
=========
Pro forma weighted average common shares
outstanding (Unaudited)......................... 1,654,104
=========
</TABLE>
See accompanying notes to combined financial statements.
F-10
<PAGE>
TRITON PCS HOLDINGS, INC. AND PREDECESSOR COMPANY
COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
($000s)
For the Year ended December 31, 1998 and the period from March 6, 1997
(inception) to December 31, 1997
<TABLE>
<CAPTION>
Series A
Redeemable Series C Series D Additional
Preferred Preferred Preferred Common Paid-in Subscription Accumulated
Stock Stock Stock Stock Capital Receivable Deficit
---------- --------- --------- ------ ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock.............. $ -- $-- $-- $ 2 $ -- $ -- $ --
Net loss.............................. -- -- -- -- -- -- (3,961)
------- ---- ---- --- -------- -------- --------
Balance at December 31, 1997.......... -- -- -- 2 -- -- (3,961)
------- ---- ---- --- -------- -------- --------
Issuance of stock in connection with
private equity investment and AT&T
transaction (notes 3 and 15)......... 73,237 14 4 1 169,305 (95,000) --
Issuance of stock in connection with
Myrtle Beach transaction (note 4).... -- 3 -- -- 35,088 --- --
Issuance of stock in connection with
Norfolk transaction (note 4)......... -- 2 1 -- 28,903 --- --
Redemption of Series C Preferred
Stock................................ -- -- -- -- (3,560) --- --
Re-issuance of Series C Preferred
Stock................................ -- -- -- -- 3,560 --- --
Accreted dividends.................... 6,853 -- -- -- (6,853) --- --
Net loss.............................. -- -- -- -- -- --- (31,620)
------- ---- ---- --- -------- -------- --------
Balance at December 31, 1998.......... $80,090 $ 19 $ 5 $ 3 $226,443 $(95,000) $(35,581)
- --------------------------------------------------
======= ==== ==== === ======== ======== ========
<CAPTION>
Total
--------
<S> <C>
Issuance of common stock.............. $ 2
Net loss.............................. (3,961)
--------
Balance at December 31, 1997.......... (3,959)
--------
Issuance of stock in connection with
private equity investment and AT&T
transaction (notes 3 and 15)......... 74,324
Issuance of stock in connection with
Myrtle Beach transaction (note 4).... 35,091
Issuance of stock in connection with
Norfolk transaction (note 4)......... 28,906
Redemption of Series C Preferred
Stock................................ (3,560)
Re-issuance of Series C Preferred
Stock................................ 3,560
Accreted dividends.................... (6,853)
Net loss.............................. (31,620)
--------
Balance at December 31, 1998.......... $95,889
- --------------------------------------------------
========
</TABLE>
See accompanying notes to combined financial statements.
F-11
<PAGE>
TRITON PCS HOLDINGS, INC. AND PREDECESSOR COMPANY
COMBINED STATEMENTS OF CASH FLOWS
($000's)
<TABLE>
<CAPTION>
Period from
March 6, 1997 For the
(Inception) Year Ended
to December 31, December 31,
1997 1998
--------------- ------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net loss.......................................... $(3,961) $ (31,620)
Adjustments to reconcile net loss to cash used in
operating activities:
Depreciation and amortization................... 5 6,663
Deferred income taxes........................... -- (7,536)
Accretion of interest on subordinated debt...... -- 22,648
Change in operating assets and liabilities, net
of effects of acquisitions:
Accounts receivable............................ -- 37
Inventory...................................... -- (1,046)
Prepaid expenses and other current assets...... (21) (468)
Accounts payable............................... 658 2,647
Accrued payroll and related expenses........... 970 2,749
Accrued expenses............................... 44 3,456
Accrued interest............................... 1,228 (1,660)
------- ---------
Net cash used in operating activities......... (1,077) (4,130)
------- ---------
Cash Flows From Investing Activities:
Capital expenditures............................. (478) (87,715)
Myrtle Beach acquisition, net of cash acquired... -- (164,488)
Norfolk acquisition.............................. -- (96,557)
Purchase of marketable securities................ -- (23,612)
------- ---------
Net cash used in investing activities......... (478) (372,372)
------- ---------
Cash Flows From Financing Activities:
Borrowings under credit facility................. -- 150,000
Borrowings on notes payable...................... 13,344 --
Proceeds from issuance of subordinated debt, net
of discount..................................... -- 291,000
Proceeds from issuance of stock in connection
with private equity investment.................. -- 33,256
Proceeds from issuance of stock in connection
with Myrtle Beach transaction................... -- 35,091
Proceeds from issuance of stock in connection
with Norfolk transaction........................ -- 14,349
Redemption of Series C Preferred Stock........... -- (3,560)
Re-issuance of Series C Preferred Stock.......... -- 3,560
Payment of deferred transaction costs............ (324) (11,329)
Advances to related party, net................... (103) (848)
Principal payments under capital lease
obligations..................................... -- (207)
------- ---------
Net cash provided by financing activities..... 12,917 511,312
------- ---------
Net Increase In Cash and Cash Equivalents......... 11,362 134,810
Cash And Cash Equivalents, Beginning of Period.... -- 11,362
------- ---------
Cash And Cash Equivalents, End of Period.......... $11,362 $ 146,172
======= =========
</TABLE>
See accompanying notes to combined financial statements.
F-12
<PAGE>
TRITON PCS HOLDINGS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS
Year ended December 31, 1998 and the period from March 6, 1997 (inception) to
December 31, 1997
(1) Organization and Nature of Business
On March 6, 1997, Triton Communications L.L.C. ("L.L.C.") was formed to
explore various business opportunities in the wireless telecommunications
industry, principally related to personal communications services (PCS) and
cellular activities. During the period March 6, 1997 through October 1, 1997,
L.L.C.'S activities consisted principally of hiring a management team, raising
capital and negotiating strategic business relationships, primarily related to
PCS business opportunities. On October 1, 1997, Triton PCS Holdings, Inc.
("Holdings") was organized to pursue PCS-related activities. Holdings
subsequently formed a wholly owned subsidiary, Triton PCS, Inc. ("Triton")
which directly or indirectly owns several related wholly owned subsidiaries.
Subsequent to October 2, 1997, these PCS-related activities continued but were
conducted primarily through Triton and its subsidiaries. Consequently, for
purposes of the accompanying financial statements, L.L.C. has been treated as
a "predecessor" entity. As a result of certain financing relationships and the
similar nature of the business activities conducted by each respective legal
entity, L.L.C., Triton and Holdings are considered companies under common
control and were combined for financial reporting purposes for periods prior
to October 2, 1997.
The combined financial statements incorporate the PCS-related business
activities of L.L.C. and the activities of Triton and Holdings. The
consolidated accounts of Holdings include Triton; Triton PCS Holdings Company
L.L.C.; Triton Management Company, Inc.; Triton PCS Property Company L.L.C.;
Triton PCS Equipment Company L.L.C.; Triton PCS Operating Company L.L.C.; and
Triton PCS License Company L.L.C. (collectively The "Company"). All
significant intercompany accounts or balances have been eliminated in
consolidation.
(2) Summary Of Significant Accounting Policies
(a) Use Of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities, at the date of the financial
statements and the reported amount of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(b) Cash And Cash Equivalents
Cash and cash equivalents includes cash on hand, demand deposits and short
term investments with maturities of three months or less.
(c) Marketable Securities
Marketable securities at December 31, 1998, consist of debt securities with
maturities between three and ten months. The Company has adopted the
provisions of Statement of Financial Accounting Standards (SFAS) No. 115,
Accounting for Certain Investments in Debt and Equity Securities in fiscal
1998. Under Statement No. 115, the Company classifies all of its debt
securities as available for sale and records them at fair value with
unrealized holding gains and losses to be included as a separate component of
other comprehensive income until realized. Realized gains and losses from the
sale of available for sale securities are determined on the specific
identification basis.
F-13
<PAGE>
TRITON PCS HOLDINGS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
Year ended December 31, 1998 and the period from March 6, 1997 (inception) to
December 31, 1997
(d) Inventory
Inventory, consisting primarily of wireless handsets and accessories held
for resale, is valued at lower of cost or market. Cost is determined by the
first-in, first-out method.
(e) Property, Plant and Equipment
Property, Plant and Equipment is stated at original cost and includes
primarily computer equipment, software, and office equipment. Depreciation is
calculated based on the straight-line method over the estimated useful lives
of the respective assets. In addition, the Company capitalizes interest on
expenditures related to the buildout of the network. Expenditures for repairs
and maintenance are charged to expense as incurred.
(f) Construction In Progress
Construction in progress includes expenditures for the design, construction
and testing of the Company's PCS network and also includes costs associated
with developing information systems. The Company capitalizes interest on
certain of its construction in progress activities. Interest capitalized for
the year ended December 31, 1998 totaled $3.5 million. When the assets are
placed in service, the Company transfers the assets to the appropriate
property and equipment category and depreciates these assets over their
respective estimated useful lives.
(g) Investment in PCS Licenses
Investments in PCS Licenses are recorded at their estimated fair value at
the time of acquisition (See Notes 3 and 4). Licenses are amortized on a
straight-line basis over 40 years.
(h) Deferred Transaction Costs
Costs incurred in connection with the negotiation and documentation of the
AT&T transaction (see Note 3), were deferred and included in the aggregate
purchase price allocated to the net assets acquired upon completion of the
transaction.
Costs incurred in connection with the negotiation and documentation of the
bank financing and the Company's issuance of senior subordinated discount
notes were deferred and amortized over the terms of the bank financing and
notes using the effective interest rate method.
(i) Long-Lived Assets
In accordance with SFAS No. 121, Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of, the Company
periodically evaluates the carrying value of long-term assets when events and
circumstances warrant such review. The carrying value of a long lived asset is
considered impaired when the anticipated undiscounted cash flows from such
assets are separately identifiable and are less than the carrying value. In
that event a loss is recognized based on the amount by which the carrying
value exceeds the fair market value of the long lived asset. Fair market value
is determined by using the anticipated cash flows discounted at a rate
commensurate with the risk involved. Measurement of the impairment, if any,
will be based upon the difference between carrying value and the fair value of
the asset. The Company has identified no such impairment losses.
F-14
<PAGE>
TRITON PCS HOLDINGS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
Year ended December 31, 1998 and the period from March 6, 1997 (inception) to
December 31, 1997
(j) Revenue Recognition
Revenues from operations consist of charges to customers for monthly
access, airtime, roaming charges, long-distance charges, and equipment sales.
Revenues are recognized as services are rendered. Unbilled revenues result
from service provided from the billing cycle date to the end of the month and
from other carrier's customers using the Company's systems for the last half
of each month. Equipment sales are recognized upon delivery to the customer
and reflect charges to customers for wireless handset equipment purchases.
(k) Income Taxes
The Company accounts for income taxes in accordance with SFAS No. 109,
Accounting for Income Taxes. Under the asset and liability method of SFAS No.
109, deferred income tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred income tax assets and liabilities are measured using statutory
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled.
(l) Financial Instruments
The Company utilized derivative financial instruments to reduce its
exposure resulting from fluctuations in interest rates. Amounts to be paid or
received under interest rate swap agreements are accrued as interest rates
change and are recognized over the life of the swap agreements as an
adjustment to interest expense.
(m) Advertising Costs
The Company expenses advertising costs when the advertisement occurs. Total
advertising expense amounted to $0 in 1997 and $643,000 in 1998.
(n) Comprehensive Income (Loss)
The Company adopted SFAS No. 130, Reporting Comprehensive Income
(SFAS 130), effective January 1, 1998. SFAS 130 establishes standards for
reporting and display of comprehensive income and its components in a full set
of general-purpose financial statements. Comprehensive income is the change in
equity of a business enterprise during a period from certain transactions and
the events and circumstances from non-owner sources. For the periods presented
in the accompanying combined statements of operations, comprehensive loss
equals the amounts of net loss reported on the accompanying combined
statements of operations.
(o) New Accounting Pronouncements
In April 1998, the Accounting Standards Executive Committee (AcSEC) of the
AICPA issued Statement of Position (SOP) 98-5, Reporting on the Costs of
Start-up Activities ("SOP 98-5"). This statement requires that the costs of
start-up activities, including organization costs, be expensed as incurred and
is effective for fiscal years beginning after December 31, 1998. The Company
has always expensed these costs as incurred and therefore the initial
application of the statement did not have any effect on the Company's combined
financial statements.
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities SFAS which establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments imbedded in other contracts and for hedging activities. SFAS 133
is effective for
F-15
<PAGE>
TRITON PCS HOLDINGS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
Year ended December 31, 1998 and the period from March 6, 1997 (inception) to
December 31, 1997
fiscal years beginning after June 15, 2000. While the impact of SFAS No. 133
has not been fully assessed, the Company does not expect it will have a
material effect on the financial statements.
(p) Historical Net Loss Per Share
The Company computes net loss per common share in accordance with SFAS No.
128, "Earnings per Share" and SEC Staff Accounting Bulletin No. 98 ("SAB 98").
Under the provisions of SFAS No. 128 and SAB 98, basic and diluted net loss
per common share is computed by dividing the net loss available to common
shareholders for the period by the weighted average number of shares of common
stock outstanding during the period. In accordance with SFAS No. 128, no
conversion of preferred shares has been assumed in the calculation of diluted
loss per share since the effect would be antidilutive. Accordingly, the number
of weighted average shares outstanding as well as the amount of net loss per
share are the same for basic and diluted per share calculations for all
periods reflected in the accompanying financial statements. As of December 31,
1998, the calculation of historical loss per share excludes the antidilutive
impact of 1,915,817 shares of Series C Preferred Stock and 500,944 shares of
Series D Preferred Stock.
(q) Pro Forma Net Loss Per Common Share (unaudited)
Pro forma net loss per common share for the year ended December 31, 1998 is
computed using the weighted average number of shares of common stock
outstanding during the period and gives effect to the conversion of the Series
C Preferred Stock into common stock upon effectiveness of an Initial Public
Offering as if such conversion occurred on January 1, 1998 or at the date of
original issuance, if later.
(3) AT&T Transaction
On October 8, 1997, the Company entered into a Securities Purchase
Agreement with AT&T Wireless PCS, Inc. ("AT&T"), a subsidiary of AT&T Corp.,
and the stockholders of the Company, whereby Triton was to become the
exclusive provider of wireless mobility services in the AT&T Southeast
regions.
On February 4, 1998, the Company executed the Closing Agreement with AT&T
and the other stockholders of the Company, finalizing the transactions
contemplated in the Securities Purchase Agreement. In accordance with the
Closing Agreement, the Company and AT&T and the other stockholders of the
Company consented that one or more of the Company's subsidiaries shall enter
into certain agreements or conduct certain operations on the condition that
such subsidiaries shall, at all times, be direct or indirect wholly owned
subsidiaries of the Company and the Company shall cause such subsidiaries to
perform the obligations and conduct such operations required to be performed
or conducted under those agreements.
Under the Closing Agreement, the Company issued 732,371 shares of Series A
convertible preferred stock and 366,131 shares of Series D convertible
preferred stock to AT&T in exchange for 20 MHz A and B block PCS licenses
covering certain areas in the southeastern United States and the execution of
certain related agreements, as further described below. The fair value of the
FCC licenses was $92.8 million with an estimated useful life of 40 years. This
amount is substantially in excess of the tax basis of such licenses, and
accordingly, the Company recorded a deferred tax liability, upon the closing
of the transaction.
In connection with the closing of the AT&T transaction, the Company
executed or was a party to certain agreements, including the following:
F-16
<PAGE>
TRITON PCS HOLDINGS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
Year ended December 31, 1998 and the period from March 6, 1997 (inception) to
December 31, 1997
(a) Stockholders' Agreement
Resale Agreement
Pursuant to the Stockholders' Agreement, the Company is required to enter
into a Resale Agreement at the request of AT&T. Under this agreement, AT&T
will be granted the right to purchase and resell on a nonexclusive basis
access to and usage of the Company's services in the Company's Licensed Area.
The Company will retain the continuing right to market and sell its services
to customers and potential customers in competition with AT&T.
The Resale Agreement will have a term of ten years and will renew
automatically for successive one-year periods unless, after the eleventh
anniversary thereof, either party elects to terminate the Resale Agreement.
Furthermore, AT&T may terminate the Resale Agreement at any time for any
reason on 180-days written notice.
The Company has agreed that the rates, terms, and conditions of service,
taken as a whole, provided by the Company to AT&T pursuant to the Resale
Agreement, shall be at least as favorable as (or if permitted by applicable
law, superior to) the rates, terms, and conditions of service, taken as a
whole, provided by the Company to any other customer. Without limiting the
foregoing, the rate plans offered by the Company pursuant to the Resale
Agreement shall be designed to result in a discounted average actual rate per
minute paid by AT&T for service below the weighted average actual rate per
minute billed by the Company to its subscribers generally for access and air
time.
Neither party may assign or transfer the Resale Agreement or any of its
rights thereunder without the other party's prior written consent, which will
not be unreasonably withheld, except (a) to an affiliate of that party at the
time of execution of the Resale Agreement, (b) by the Company to any of its
operating subsidiaries, and (c) to the transferee of a party's stock or
substantially all of its assets, provided that all FCC and other necessary
approvals have been received.
The Company expects to enter into the Resale Agreement upon commencement of
its operations or shortly thereafter.
Exclusivity
Under the Stockholders' Agreement, none of the Stockholders will provide or
resell, or act as the agent for any person offering, within the Territory
wireless mobility telecommunications services initiated or terminated using
Time Division Multiple Access and frequencies licensed by the FCC (Company
Communications Services), except AT&T and its affiliates may (i) resell or act
as agent for the Company in connection with the provision of Company
Communications Services, (ii) provide or resell wireless telecommunications
services to or from certain specific locations, and (iii) resell Company
Communications Services for another person in any area where the Company has
not placed a system into commercial service, provided that AT&T has provided
the Company with prior written notice of AT&T's intention to do so and only
dual band/dual mode phones are used in connection with such resale activities.
Additionally, with respect to the markets listed in the Roaming Agreement,
each of the Company and AT&T agreed to cause their respective affiliates in
their home carrier capacities to program and direct the programming of
customer equipment so that the other party in its capacity as the serving
carrier is the preferred provider in such markets, and refrain from inducing
any of its customers to change such programming.
Build-out
The Company is required to conform to certain requirements regarding the
construction of the Company's PCS system. In the event that the Company
breaches these requirements, AT&T may terminate its exclusivity provisions.
F-17
<PAGE>
TRITON PCS HOLDINGS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
Year ended December 31, 1998 and the period from March 6, 1997 (inception) to
December 31, 1997
Disqualifying Transactions
In the event of a merger, asset sale, or consolidation, as defined,
involving AT&T and another person that derives annual revenues in excess of
$5.0 billion, derives less than one third of its aggregate revenues from
wireless telecommunications, and owns FCC licenses to offer wireless mobility
telecommunication services to more than 25% of the population within the
Company's territory, AT&T and the Company have certain rights. AT&T may
terminate its exclusivity in the territory in which the other party overlaps
that of the Company. In the event that AT&T proposes to sell, transfer, or
assign to a non-affiliate its PCS system owned and operated in Charlotte, NC;
Atlanta, GA; Baltimore, MD; and Washington, DC, BTAs, then AT&T will provide
the Company with the opportunity for a 180 day period to have AT&T jointly
market the Company's licenses that are included in the MTA that AT&T is
requesting to sell.
The Stockholders' Agreement expires on February 4, 2009. Certain provisions
expire upon an initial public offering.
(b) License Agreement
Pursuant to a Network Membership License Agreement, dated February 4, 1998
(the License Agreement), between AT&T and the Company, AT&T granted to the
Company a royalty-free, nontransferable, nonsublicensable, limited right, and
license to use certain Licensed Marks solely in connection with certain
licensed activities. The Licensed Marks include the logo containing the AT&T
and globe design and the expression "Member, AT&T Wireless Services Network."
The "Licensed Activities" include (i) the provision to end-users and
resellers, solely within the Territory, of Company Communications Services on
frequencies licensed to the Company for Commercial Mobile Radio Services
(CMRS) provided in accordance with the AT&T Agreement (collectively, the
Licensed Services) and (ii) marketing and offering the Licensed Services
within the Territory. The License Agreement also grants to the Company the
right and license to use Licensed Marks on certain permitted mobile phones.
The License Agreement contains numerous restrictions with respect to the
use and modification of any of the Licensed Marks. Furthermore, the Company is
obligated to use commercially reasonable efforts to cause all Licensed
Services marketed and provided using the Licensed Marks to be of comparable
quality to the Licensed Services marketed and provided by AT&T and its
affiliates in areas that are comparable to the Territory taking into account,
among other things, the relative stage of development of the areas. The
License Agreement also sets forth specific testing procedures to determine
compliance with these standards, and affords the Company with a grace period
to cure any instances of alleged noncompliance therewith.
The Company may not assign or sublicense any if its rights under the
License Agreement; provided, however, that the License Agreement may be
assigned to the Company's lenders under the Credit Facility (note 9) and after
the expiration of any applicable grace and cure periods under the Credit
Facility, such lenders may enforce the Company's rights under the License
Agreement and assign the License Agreement to any person with AT&T's consent.
The term of the License Agreement is for five years (the "Initial Term")
and renews for an additional five-year period if neither party terminates the
Agreement. The License Agreement may be terminated by AT&T at any time in the
event of a significant breach by the Company, including the Company's misuse
of any Licensed Marks, the Company licensing or assigning any of the rights in
the License Agreement, the Company's failure to maintain AT&T's quality
standards, or a change in control of the Company occurs.
After the Initial Term, AT&T may also terminate the License Agreement upon
the occurrence of certain transactions described in the Stockholders'
Agreement.
F-18
<PAGE>
TRITON PCS HOLDINGS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
Year ended December 31, 1998 and the period from March 6, 1997 (inception) to
December 31, 1997
The License Agreement, along with the Exclusivity and Resale Agreements,
have a fair value of $20.3 million, as determined by an independent appraisal,
with an estimated useful life of 10 years. Amortization commenced upon the
effective date of the agreement.
(c) Roaming Agreement
Pursuant to the Intercarrier Roamer Service Agreement, dated as of February
4, 1998 (as amended the "Roaming Agreement"), between AT&T and the Company,
each of AT&T and the Company agrees to provide (each in its capacity as
serving provider, the "Serving Provider") wireless mobility 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 wireless
mobility radio/telephone system and station. Each Home Carrier whose customers
receive service from a Serving Carrier shall pay to such Serving Carrier 100%
of the Serving Carrier's charges for wireless service and 100% of pass-through
charges (i.e., toll or other charges). Except with respect to the Norfolk BTA,
each Service Carrier's service charges per minute or partial minute for the
first 3 years will be fixed at a declining rate, and thereafter will be equal
to an adjusted average home rate or such lower rate as the parties negotiate
from time to time; provided, however, that with respect to the Norfolk BTA,
the service rate is equal to the lesser of (a) $0.25 per minute and (b) the
applicable home rate of AT&T, or such other rate as agreed to by the parties.
Each Service Carrier's toll charges per minute of use for the first 3 years
will be fixed at a declining rate and thereafter, such other rates as the
parties negotiate from time to time.
The Roaming Agreement has a term of 20 years, unless earlier terminated by
a party due to the other party's uncured breach of any term of the Roaming
Agreement, the other party's license or permit to provide CMRS.
Neither party may assign or transfer the Roaming Agreement or any of its
rights thereunder except to an assignee of all or part of its license or
permit to provide CMRS, provided that such assignee expressly assumes all or
the applicable part of the obligations of such party under the Roaming
Agreement.
The fair value of the Roaming Agreement, as determined by an independent
appraisal, was $5.5 million, with an estimated useful life of 20 years.
Amortization commenced upon the effective date of the agreement.
(4) Acquisitions
(a) Myrtle Beach Acquisition
On June 30, 1998, the Company acquired an existing cellular system (the
Myrtle Beach System) which serves the South Carolina 5-Georgetown Rural
Service Area (the SC-5) for a purchase price of approximately $164.5 million
from Vanguard Cellular Systems. The Company has integrated the Myrtle Beach
System into its planned PCS Network. As a result of the acquisition, the
Company is no longer considered a development stage enterprise under SFAS No.
7. The acquisition has been accounted for using the purchase method and,
accordingly, the purchase price was allocated to the assets acquired and
liabilities assumed based upon management's best estimate of their fair value.
The purchase price was allocated to FCC licenses of approximately $116
million; subscriber lists of approximately $20 million; fixed assets of
approximately $24.7 million and other net assets of $3.8 million.
The Myrtle Beach Acquisition was funded through the use of proceeds from
the Subordinated Debt offering (see note 10) and the issuance of 350,000
shares of Series C preferred stock, valued at $35.0 million, to certain cash
equity shareholders. In addition, 38,890 shares of Common Stock were issued as
anti-dilutive protection.
F-19
<PAGE>
TRITON PCS HOLDINGS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
Year ended December 31, 1998 and the period from March 6, 1997 (inception) to
December 31, 1997
Results of operations after the acquisition date are included in the
Statement of Operations from July 1, 1998. The following unaudited pro forma
information has been prepared assuming that this acquisition had taken place
on January 1, 1997. The pro forma information includes adjustments to interest
expense that would have been incurred to finance the purchase, additional
depreciation based on the fair market value of the property, plant and
equipment acquired, and the amortization of intangibles arising from the
transaction.
<TABLE>
<CAPTION>
1997 1998
-------- --------
Unaudited
<S> <C> <C>
Net revenues.......................................... $ 23,608 $ 31,116
Net loss.............................................. $ 47,336 $ 43,434
Accretion of preferred stock.......................... -- 6,853
Net loss available to common shareholders............. 47,336 50,287
Net loss per common share............................. $(268.56) $(219.05)
Weighted average shares outstanding................... 176,256 229,573
</TABLE>
(b) Norfolk Acquisition
On December 31, 1998, the Company acquired from AT&T (the Norfolk
Acquisition) (i) an FCC license to use 20MHz of authorized frequencies to
provide broadband PCS services throughout the entirety of the Norfolk,
Virginia BTA and (ii) certain assets of AT&T used in the operation of the PCS
system in such BTA for an aggregate purchase price of approximately $111
million. The excess of the aggregate purchase price over the fair market value
of tangible net assets acquired of approximately $46.3 million was assigned to
FCC licenses and is being amortized over 40 years. The build-out of the
network relating to the Norfolk Acquisition, including the installation of a
switch, has been substantially completed. The Company has commenced PCS
service in the Norfolk BTA in the first quarter 1999. The purchase price
allocation is preliminary at December 31, 1998 and is expected to be finalized
in 1999.
The Norfolk Acquisition was funded through the use of proceeds from the
Subordinated Debt offering (see note 10); the issuance of 134,813 shares of
Series D preferred stock, valued at $14.6 million, and the issuance of 165,187
shares of Series C preferred stock, valued at $16.5 million. In addition,
33,333 shares of Common Stock were issued as anti-dilutive protection.
(5) Property, Plant and Equipment
<TABLE>
<CAPTION>
December 31,
-------------- Depreciable
1997 1998 Lives
---- -------- -----------
($000's)
<S> <C> <C> <C>
Land........................................... $-- $ 313
Network infrastructure and equipment........... -- 34,147 10-12 years
Office furniture and equipment................. 121 17,642 3-5 years
Capital leases................................. -- 2,263
Construction in progress....................... 357 145,667
---- --------
Property, plant and equipment................ 478 200,032
Less: accumulated depreciation and
amortization.................................. (5) (1,079)
---- --------
Property, plant, and equipment, net............ $473 $198,953
==== ========
</TABLE>
The depreciable life of capital lease assets is based upon the life of the
underlying asset or the life of the lease, whichever is shorter.
F-20
<PAGE>
TRITON PCS HOLDINGS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
Year ended December 31, 1998 and the period from March 6, 1997 (inception) to
December 31, 1997
(6) Intangible Assets
<TABLE>
<CAPTION>
December 31,
--------------- Amortizable
1997 1998 Lives
------ -------- ------------
($000's)
<S> <C> <C> <C>
AT&T license................................... $ -- $ 95,248 40 years
AT&T agreements................................ -- 26,026 10-20 years
Myrtle Beach license........................... -- 116,252 40 years
Norfolk license................................ -- 46,299 40 years
Subscriber lists............................... -- 20,000 5 years
Bank financing................................. 1,249 10,994 8.5-10 years
------ --------
Other assets................................. 1,249 314,819
Less: accumulated amortization................. -- (6,552)
------ --------
Other assets, net $1,249 $308,267
====== ========
</TABLE>
Amortization charged to operations for the year ended December 31, 1998
totaled $5,589.
(7) Short-Term Debt
(a) Convertible Notes
At various dates in 1997, certain private equity investors provided $1.6
million in financing to L.L.C. in the form of convertible promissory notes.
The notes originally bore interest at 14% annually, payable at maturity. On
January 15, 1998, L.L.C. assigned the notes to the Company. The Company and
the noteholders subsequently negotiated a revised arrangement under which no
interest would be paid on the notes, which became convertible into
approximately $3.2 million worth of the Company's Series C preferred stock.
The conversion of L.L.C. notes into the Company's equity occurred on February
4, 1998. The $1.6 million preferred return to the investors was accounted for
as a financing cost during the period the notes were outstanding.
(b) Noninterest-Bearing Loans
During 1997, the company's Cash Equity Investors provided short-term
financing in the form of $11.8 million noninterest-bearing loans. Pursuant to
the Closing Agreement, such loans were converted to equity of the company as a
reduction of the requirements of the initial cash contributions of the
investors. No gain or loss was recognized on the conversion of the shares.
(8) Long-Term Debt
<TABLE>
<CAPTION>
December 31,
--------------
1997 1998
----- --------
<S> <C> <C>
Bank credit facility....................................... $ -- $150,000
Senior subordinated debt................................... -- 313,648
----- --------
-- 463,648
Current portion of long-term debt.......................... -- --
----- --------
Long-term debt............................................. $ -- $463,648
===== ========
</TABLE>
The weighted average interest rate for total debt outstanding during
December 31, 1998 was 10.33%. The average rate at December 31, 1998 was
10.16%.
F-21
<PAGE>
TRITON PCS HOLDINGS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
Year ended December 31, 1998 and the period from March 6, 1997 (inception) to
December 31, 1997
(9) Bank Credit Facility
On February 3, 1998, (the Credit Facility Effective Date), the Company
entered into a Credit Agreement (as amended from time to time, the Credit
Facility), with The Chase Manhattan Bank, as Administrative Agent, and certain
banks and other financial institutions party thereto. The Credit Facility
provides for (i) a $175.0 million senior secured term loan (the Tranche A Term
Loan) which may be drawn in installments at any time through the third
anniversary of the Credit Facility Effective Date and matures on the date that
is eight and one-half years from the Credit Facility Effective Date, (ii) a
$150.0 million senior secured term loan (the Tranche B Term Loan and, together
with the Tranche A Term Loan, the Term Loans) which matures on the date that
is nine and one-quarter years from the Credit Facility Effective Date, and
(iii) a $100.0 million senior secured revolving credit facility (the Revolving
Credit Facility and, together with the commitments to make the Term Loans, the
Facilities) which matures on the date that is eight and one-half years from
the Credit Facility Effective Date. At December 31, 1998 the Tranche B Term
Loan was completely drawn.
The commitment to make loans under the Revolving Credit Facility (Revolving
Credit Loans and, together with the Term Loans, the Loans) automatically and
permanently reduces, beginning on the date that is six years and six months
after the Credit Facility Effective Date, in eight quarterly reductions (the
amount of each of the first two reductions, $5.0 million, the next four
reductions, $10.0 million, and the last two reductions, $25.0 million). The
Tranche A Term Loans are required to be repaid, beginning on the date that is
four years after the Credit Facility Effective Date, in eighteen consecutive
quarterly installments (the amount of each of the first four installments,
$4,375,000, the next four installments, $6,562,500, the next four installments
$8,750,000, the next four installments, $10,937,500, and the last two
installments, $26,250,000). The Tranche B Term Loans are required to be repaid
beginning on the date that is four years after the Credit Facility Effective
Date, in twenty-one consecutive quarterly installments (the amount of the
first sixteen installments, $375,000, the next four installments $7.5 million,
and the last installment, $114.0 million).
Interest on all loans accrue, at the Company's option, either at (i) (a) a
LIBOR rate, as defined in the Credit Facility plus (b) the Applicable Rate (as
defined below) (Loans bearing interest described in (i), Eurodollar Loans) or
(ii) (a) the higher of (1) the Administrative Agent's prime rate and (2) the
Federal Funds Effective Rate (as defined in the Credit Facility) plus 0.5%,
plus (b) the Applicable Rate (Loans bearing interest described in (ii), ABR
Loans). Interest on any overdue amounts will be at a rate per annum equal to
2% plus the rate otherwise applicable to such amounts. The Applicable Rate
means, with respect to Tranche B Term Loans, 1.75% per annum, in the case of
an ABR Loan, and 3.00% per annum, in the case of a Eurodollar Loan, and, with
respect to Tranche A Term Loans and Revolving Credit Loans, a rate between
0.0% to 1.25% per annum (depending on the level of the Company's ratio of debt
to earnings before income taxes, depreciation, and amortization (EBITDA) in
the case of an ABR Loan, and a rate between 1.00% and 2.25% per annum
(depending on the level of the Company's ratio of debt to EBITDA), in the case
of a Eurodollar Loan.
The Credit Facility requires an annual commitment fee of between 0.375% and
0.50% (depending on the level of the Company's ratio of debt to EBITDA) of the
unused portion of the Facilities payable quarterly in arrears and a separate
agent's fee payable to the Administrative Agent. The Credit Facility also
requires the Company to fix or limit the interest cost with respect to at
least 60% (as amended in July 1998) of the total amount of the outstanding
indebtedness of the Company. The Company incurred commitment fees of $2.0
million in 1998. At December 31, 1998, approximately 84% of the Company's
outstanding debt was at a fixed rate.
The Term Loans are required to be prepaid and commitments under the
Revolving Credit Facility reduced in an aggregate amount equal to (i) 50% of
excess cash flow of each fiscal year commencing the fiscal year
F-22
<PAGE>
TRITON PCS HOLDINGS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
Year ended December 31, 1998 and the period from March 6, 1997 (inception) to
December 31, 1997
ending December 31, 2001, (ii) 100% of the net proceeds of asset sales, in
excess of a yearly threshold, outside the ordinary course of business or
unused insurance proceeds, (iii) 100% of the net cash proceeds in excess of
the initial $150.0 million of issuances of debt obligations and (iv) 50% of
the net cash proceeds of issuances of equity securities (other than in
connection with the Equity Commitments); provided, that the prepayments and
reductions set forth under clauses (iii) and (iv) will not be required if,
after giving effect to such issuance, (a) the Company's ratio of senior debt
to EBITDA would be less than 5 to 1 and (b) the Company would be in pro forma
compliance with certain covenants in the Credit Facility.
All obligations of the Company under the Facilities are unconditionally and
irrevocably guaranteed (the Bank Facility Guarantees) by each existing and
subsequently acquired or organized domestic subsidiary of the Company. The
Facilities and the Bank Facility Guarantees, and any related hedging contracts
provided by the lenders under the Credit Facility, are secured by
substantially all of the assets of the Company and each existing and
subsequently acquired or organized domestic subsidiary of the Company,
including a first priority pledge of all of the capital stock held by the
Company or any of its subsidiaries; provided that the pledge of shares of
foreign subsidiaries may be limited to 65% of the outstanding shares of such
foreign subsidiaries. The PCS Licenses will be held by one or more single
purpose subsidiaries of the Company and will not be pledged to secure the
obligations of the Company under the Credit Facility, although the equity
interests of such subsidiaries will be pledged thereunder. Each single purpose
subsidiary will not be allowed by the Company to incur any liabilities or
obligations other than the Bank Facility Guarantee issued by it, the security
agreement entered into by it in connection with the Credit Facility, and, in
the case of any single purpose subsidiary established to hold real estate,
liabilities incurred in the ordinary course of business of such subsidiary
which are incident to being the lessee of real property of the purchaser,
owner or lessee of equipment and taxes and other liabilities incurred in the
ordinary course in order to maintain its existence.
The Credit Facility contains covenants customary for facilities and
transactions similar to the Credit Facility, including covenants relating to
the amounts of indebtedness that the Company may incur, limitations on
dividends and distributions on, and redemptions and repurchases of, capital
stock and other similar payments and various financial maintenance covenants.
The Credit Facility also contains covenants relating to the population covered
by the Company's network and number of customers and customary
representations, warranties, indemnities, conditions precedent to borrowing,
and events of default.
Loans under the Credit Facility are available to fund capital expenditures
related to the construction of the Company's PCS network, the acquisition of
related businesses, working capital needs of the Company, and customer
acquisition costs. All indebtedness under the Credit Facility will constitute
Senior Debt under the Company's 11% Senior Subordinated Discount Notes.
The terms of the Credit Facility originally allowed the Company to incur
only $150 million of indebtedness pursuant to the issuance of Subordinated
Debt (as defined in the Credit Facility). In April 1998, the Company
negotiated an amendment to the Credit Facility, which included provisions that
(i) permit certain acquisitions (note 4); (ii) permit up to a total of $450
million in high yield debt; and (iii) exclude the equity issuances associated
with certain acquisitions from the mandatory prepayment requirement.
(10) Subordinated Debt
On May 7, 1998, Triton PCS, Inc. completed an offering (the "Offering") of
$512 million of 11% Senior Subordinated Discount Notes ("the Notes"), pursuant
to Rule 144A of the Securities Act of 1933, as amended. The net proceeds of
the Offering (after deducting an Initial Purchaser's Discount of $9 million)
were approximately $291 million. Triton PCS, Inc. has used and intends to use
the net proceeds from the Offering,
F-23
<PAGE>
TRITON PCS HOLDINGS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
Year ended December 31, 1998 and the period from March 6, 1997 (inception) to
December 31, 1997
together with the Capital Contributions (note 15) and borrowings under the
Credit Facility, to fund: (i) capital expenditures, including the build-out of
its PCS network; (ii) the Myrtle Beach acquisition and the Norfolk acquisition
(note 4); (iii) working capital as required; (iv) operating losses; (v)
general corporate purposes, and (vi) potential acquisitions.
Commencing on November 1, 2003, cash interest will be payable semiannually.
Each Note was offered at an original issue discount (Initial Purchaser's
Discount). Although cash interest will not be paid prior to May 1, 2003, the
original issue discount will accrue from the issue date to May 1, 2003.
The Notes are not redeemable prior to May 1, 2003, except as set forth
below. The Notes will be redeemable at the option of Triton PCS, Inc., in
whole or in part, at any time on or after May 1, 2003 and prior to maturity at
the following redemption prices (expressed as percentages of principal
amount), plus accrued interest, if any, up to but excluding the redemption
date, if redeemed during the 12-month period beginning on May 1 of the years
indicated:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003.............................. 105.50%
2004.............................. 103.67
2005.............................. 101.84
2006 and thereafter............... 100.00
</TABLE>
In addition, on or prior to May 1, 2001, Triton PCS, Inc. may redeem up to
35% of the principal amount at maturity of Notes issued under the Indenture at
a redemption price equal to 111% of the accreted value at the redemption date
with the net proceeds of one or more equity offerings of qualified stock of
(a) the Company, (b) a special purpose corporation formed to own qualified
stock of Triton PCS, Inc., provided that at least 65% of the aggregate
principal amount at maturity of Notes issued under the Indenture would remain
outstanding immediately after giving effect to such redemption.
The Notes are guaranteed on a joint and several basis by all of the
subsidiaries of Triton PCS Inc. and are not guaranteed by Triton PCS Holdings,
Inc. The Guarantees are unsecured obligations of the guarantors, and are
subordinated in right to the full payment to all senior debt of the
guarantors, including all of their obligations under their guarantees of the
Credit Facility.
Upon a change in control, each holder of the Notes may require Triton PCS,
Inc. to repurchase such Holder's Notes, in whole or in part, at a purchase
price equal to 101% of the accreted value thereof or the principal amount at
maturity, as applicable plus accrued and unpaid interest to the purchase date.
The debt principal begins to mature in 2003 and is fully repaid in 2008.
(11) Income Taxes
Income tax expense (benefit) at year ended December 31, 1998 consists of
the following:
<TABLE>
<CAPTION>
Current Deferred Total
------- -------- -------
<S> <C> <C> <C>
Federal.......................................... $ -- $(7,054) $(7,054)
State............................................ $ -- $ (482) $ (482)
------ ------- -------
$ -- $(7,536) $(7,536)
====== ======= =======
</TABLE>
F-24
<PAGE>
TRITON PCS HOLDINGS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
Year ended December 31, 1998 and the period from March 6, 1997 (inception) to
December 31, 1997
The income tax expense (benefit) differs from those computed using the
statutory U.S. Federal income tax rate as set forth below.
<TABLE>
<CAPTION>
1997 1998
------ ------
<S> <C> <C>
U.S. Federal statutory rate.............................. 35.00% 35.00%
State income taxes, net of federal benefit............... -- 0.80%
Change in valuation allowance............................ (35.00%) (16.56%)
Other, net............................................... -- 0.01%
------ ------
Effective Tax Rate..................................... 0.00% 19.25%
====== ======
</TABLE>
The tax effects of significant temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax liabilities
are as follows.
<TABLE>
<CAPTION>
1997 1998
------- -------
<S> <C> <C>
Deferred tax assets:
Nondeductible accrued liabilities........................ $ 491 $ 1,049
Deferred transaction costs............................... 1,093 2,736
Net operating loss carryforward.......................... -- 16,022
------- -------
1,584 19,807
Valuation allowance...................................... (1,584) (8,506)
------- -------
Net deferred tax assets................................ -- 11,301
------- -------
Deferred tax liabilities:
Intangible assets........................................ -- 21,438
Capitalized interest..................................... -- 1,150
Others................................................... -- 376
------- -------
Deferred tax liabilities............................... -- 22,964
------- -------
Net deferred tax liabilities............................. $ -- $11,663
======= =======
</TABLE>
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred
tax assets will not be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Because the
Company does not have an operating history, management has only considered the
scheduled reversal of deferred tax liabilities and tax planning strategies in
making this assessment. Based upon the assessment, management believes it is
more likely than not the Company will realize the benefits of the deferred tax
assets, net of the existing valuation allowance at December 31, 1998. The
Company recorded a deferred tax liability of $17,771 in connection with the
contribution of licenses pursuant to the AT&T transaction (note 3).
F-25
<PAGE>
TRITON PCS HOLDINGS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
Year ended December 31, 1998 and the period from March 6, 1997 (inception) to
December 31, 1997
(12) Fair Value Of Financial Instruments
Fair value estimates, assumptions, and methods used to estimate the fair
value of the Company's financial instruments are made in accordance with the
requirements of Statement of Financial Accounting Standards No. 107,
Disclosures about Fair Value of Financial Instruments. The Company has used
available market information to derive its estimates. However, because these
estimates are made as of a specific point in time, they are not necessarily
indicative of amounts the Company could realize currently. The use of
different assumptions or estimating methods may have a material effect on the
estimated fair value amounts.
<TABLE>
<CAPTION>
December 31,
---------------------------------------
1997 1998
------------------- -------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
-------- ---------- -------- ----------
($000s)
<S> <C> <C> <C> <C>
Cash and cash equivalents.......... 11,362 11,362 $146,172 146,172
Marketable securities.............. -- -- 23,612 23,612
Accounts and notes receivable...... -- -- 3,102 3,102
Accounts payable................... 1,581 1,581 25,256 25,256
Accrued expenses................... 1,014 1,014 7,365 7,365
Capital leases..................... -- -- 2,322 2,322
Interest rate risk management
agreements........................ -- -- -- 623
Long-term debt:
Subordinated debt................ -- -- 313,648 239,355
Bank term loan................... -- -- 150,000 150,000
</TABLE>
(a) Cash and Cash Equivalents, Accounts and Notes Receivable, Accounts
Payable and Accrued Expenses
The carrying amounts of these items are a reasonable estimate of their fair
value due to the short-term nature of the instruments.
(b) Marketable Securities
The fair value of these securities are estimated based on quoted market
prices. At December 31, 1998, marketable securities consist of the following:
<TABLE>
<CAPTION>
Unrealized
Cost Fair value gain (loss)
------- ---------- -----------
($000s)
<S> <C> <C> <C>
Available for sale securities:
Debt securities due in one year or less.... $23,612 23,612 --
</TABLE>
(c) Long-Term Debt
Long-term debt is comprised of subordinated debt, bank term loan, and
capital leases. The fair value of subordinated debt is stated at quoted market
value. The carrying amount of the bank term loan is a reasonable estimate of
its fair value because its market rate interest is variable. Capital leases
are recorded at their net present value, which approximates fair value.
(d) Interest Rate Risk Management Agreements
The Company enters into interest rate protection agreements to lock in
interest rates on the variable portion of its debt. The Company does not use
these agreements for trading or other speculative purposes, nor is it a
F-26
<PAGE>
TRITON PCS HOLDINGS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
Year ended December 31, 1998 and the period from March 6, 1997 (inception) to
December 31, 1997
party to any leveraged derivative instrument. Although these agreements are
subject to fluctuations in value, they are generally offset by fluctuations in
the value of the underlying instrument or anticipated transaction.
In an interest rate swap, the Company agrees to exchange, at specified
intervals, the difference between a variable interest rate (based on 3 month
Libor) and either a fixed or another variable interest rate calculated by
reference to an agreed-upon notional principal amount. The resulting rate
differential is reflected as an adjustment to interest expense over the life
of the swap.
At December 31, 1998, the Company would receive $23,000 to settle its
agreements.
The following table summarizes the Company's off-balance sheet interest
rate swap agreements at December 31, 1998:
<TABLE>
<CAPTION>
Receive
Notional Fair Pay Rate Rate
Amount Value Maturity (Fixed) (Variable)
-------- -------- -------- -------- ----------
($000's) ($000's) ($000's) ($000's)
<S> <C> <C> <C> <C> <C>
Pay fixed rate, receive
floating rate............. $35,000 $254 12/03 4.805% 5.156%
Pay fixed rate, receive
floating rate............. $40,000 $369 12/03 4.760% 5.156%
</TABLE>
(13) Related-Party Transactions
The Company is associated with Triton Cellular Partners L.P. (Triton
Cellular) by virtue of certain management overlap and the sharing of leased
facilities. As part of this association, certain costs are incurred on behalf
of Triton Cellular and subsequently reimbursed to the Company. Such costs
totaled $148,000 and $482,000 during 1997 and 1998, respectively. In addition,
pursuant to an agreement between the Company and Triton Cellular, allocations
for management services rendered are charged to Triton Cellular. Such
allocations totaled $469,000 during 1998. The outstanding balance at December
31, 1998 was $951,000. The Company expects settlement of these outstanding
charges during 1999.
In January 1998, we entered into a master service agreement with a related
party pursuant to which the related party will provide Triton with radio
frequency design and system optimization support services.
In February 1998, Triton entered into a credit facility for which
affiliates of certain investors serve as agent and lenders. In connection with
execution of the credit facility, the agent and lenders receive customary fees
and expenses.
In May 1998, Triton consummated a private offering of senior subordinated
notes. Affiliates of several cash investors were initial purchasers in the
private offering and received a placement fee of $6.3 million.
Triton has entered into letter agreements with certain management employees
and independent directors under which these individuals were issued shares of
the Company's common stock subject to a five year vesting period.
F-27
<PAGE>
TRITON PCS HOLDINGS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
Year ended December 31, 1998 and the period from March 6, 1997 (inception) to
December 31, 1997
(14) Commitments and Contingencies
(a) Leases
The Company has entered into various leases for its offices, land for cell
sites, cell sites, and furniture and equipment under capital and operating
leases expiring through 2010. The Company has various capital lease
commitments of approximately $2.3 million as of December 31, 1998. As of
December 31, 1998, the future minimum rental payments under these lease
agreements having an initial or remaining term in excess of one year were as
follows:
<TABLE>
<CAPTION>
Operating Capital
--------- -------
($000)
<S> <C> <C>
1999..................................................... $ 6,484 $ 474
2000..................................................... 6,305 614
2001..................................................... 5,962 600
2002..................................................... 5,849 578
2003..................................................... 4,397 434
Thereafter............................................... 1,724 --
------- ------
Total.................................................. $30,721 2,700
=======
Interest expense......................................... 378
------
Net present value of future payments..................... 2,322
Current portion of capital lease obligation.............. 281
------
$2,041
======
</TABLE>
Rent expense under operating leases was $3.0 million for the year ended
December 31, 1998 and $59,000 for the period from March 6, 1997 to December
31, 1997, respectively.
(b) Employment Agreements
In 1998, the Company entered into five-year employment agreements with
three of its officers. The employment agreements provide for minimum aggregate
annual compensation of $795,000 for the years 1999 through 2001, as well as
annual bonuses based upon performance. The employment agreements also provide
that in the event that the officers are terminated, certain liabilities will
be incurred by the Company. Also, upon death or disability of the officers,
the Company will be required to make certain payments.
(c) Litigation
The Company has been involved in litigation relating to claims arising out
of its operations in the normal course of business. The Company does not
believe that an adverse outcome of any of these legal proceedings will have a
material adverse effect on the Company's results of operations.
(15) Shareholders' Equity and Members' Capital
On February 4, 1998, pursuant to the Securities Purchase Agreement, the
Company issued 1,400,000 shares of its Series C preferred stock at $100 per
share. The Securities Purchase Agreement requires the purchasers of the Series
C preferred stock to fund their unconditional and irrevocable obligations in
installments in accordance with the following schedule:
F-28
<PAGE>
TRITON PCS HOLDINGS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
Year ended December 31, 1998 and the period from March 6, 1997 (inception) to
December 31, 1997
<TABLE>
<CAPTION>
Date due Amount
-------- ------------
<S> <C>
Initial closing (funded on February 4, 1998)................ $ 45,000,000
First anniversary of initial closing (funded on February 4,
1999)...................................................... 35,000,000
Second anniversary of initial closing....................... 35,000,000
Third anniversary of initial closing........................ 25,000,000
------------
$140,000,000
============
</TABLE>
Pursuant to a Stockholders' Agreement, under certain circumstances, the
Board of Directors may require the Cash Equity Investors to contribute in
advance any portion of the unfunded commitment.
During 1997, the Company's Cash Equity Investors provided short-term
financing in the form of $11.7 million in non-interest-bearing loans. Pursuant
to the Closing Agreement, such loans were converted to equity of the Company
as a reduction of the requirements of the initial cash contribution on
February 4, 1998.
The Company's Restated Certificate of Incorporation provides the Company
with the authority to issue 17,000,000 shares of capital stock, consisting of
(a) 1,000,000 shares of the Company's Series A preferred stock, (b) 2,000,000
shares of the Company's Series B preferred stock, (c) 3,000,000 shares of the
Company's Series C preferred stock, (d) 1,000,000 shares of the Company's
Series D preferred stock, and (e) 10,000,000 shares of the Company's common
stock.
As of December 31, 1998, the Company received additional equity
contributions of $49.3 million, of which $35.0 million related to the
acquisition of the Myrtle Beach System and $14.3 million related to the
Norfolk Acquisition (see note 4). As of December 31, 1998, the Company had
outstanding equity commitments of $2.2 million related to the Norfolk
Acquisition, which were received in January 1999.
(a) Preferred Stock
The Series A preferred stock (Series A) is convertible into common stock at
the option of the holders after the 8th anniversary of its issuance. The
conversion rate for each share of Series A is equal to its accreted value
divided by the then fair market value of the Company's common stock.
The holders of the Series A are entitled to 10% cumulative annual dividends
as defined, payable quarterly. At December 31, 1998, cumulative dividends
accrued and classified as a component of preferred stock in the accompanying
balance sheet are $6,853,000. The Company may defer payment of the dividends
until the 42nd payment due date, at which time all deferred dividend payments
must be made. The Series A is redeemable at its accreted value at the option
of the Company after the 10th anniversary of its issuance. The Series A is
redeemable at the option of the holders after the 20th anniversary of its
issuance. The Series A and the Series B preferred stock (Series B) are on a
parity basis with respect to dividend rights and rights on liquidation and
senior to all other classes of preferred or common stock of the Company. The
Series A holders do not have any voting rights, except as required by law or
in certain circumstances, and have the right to elect one director.
In the event that there is a disqualifying transaction, the Company has the
right to cause AT&T to exchange certain shares of its Series A convertible
preferred stock into Series B convertible preferred stock. The Series B
preferred stock has dividend rights equal to that of the Series A. The Series
B is not convertible into any other security of the Company. The Series B is
redeemable at its accreted value, at the option of the Company. The Series B
holders do not have any voting rights.
F-29
<PAGE>
TRITON PCS HOLDINGS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
Year ended December 31, 1998 and the period from March 6, 1997 (inception) to
December 31, 1997
The Series C preferred stock (Series C) is convertible into common stock on
a 1:1 basis, subject to adjustments. Mandatory conversion occurs upon an
initial public offering of the Company's common stock, as defined. The holders
of the Series C vote on an as converted basis as a single class with the
holders of the common stock. Upon liquidation or dissolution, the holders of
the Series C preferred have a liquidation preference of $100 per share,
subject to adjustment which is subordinated to the Series D preferred (Series
D) but ranks senior to the common stock.
In December 1998, the Company redeemed from a certain equity investor, and
simultaneously sold for the same amount to certain other equity investors
approximately 35,600 shares of the Company's Series C Preferred Stock for
approximately $3,560,000.
The Series D is convertible into an equivalent number of shares of Series C
at the option of the holder. The holders of the Series D do not have any
voting rights. Upon liquidation or dissolution, the holders of the Series D
have a liquidation preference of $100 per share, subject to adjustment and
rank senior to the Series C and the common stock.
(b) Common Stock
On October 1, 1997, the Company issued 137,366 shares of its common stock
to its founders. The shares are subject to the vesting schedules detailed in
the executives' employment agreements.
In February 1998 the Company established a trust to hold 58,871 shares of
the Company's common stock to be issued to employees in the future, at
management's discretion. On February 4, 1998, the Company issued 16,876 shares
of common stock that vest ratably over a five-year period to certain key
employees.
In connection with the acquisition of the Myrtle Beach System and the
Norfolk Acquisition (see note 4), the Company issued 38,890 and 33,333 shares
of common stock, respectively, to or for the benefit of management
stockholders and independent directors (see note 5). The estimated value of
the shares was insignificant, and, accordingly, no deferred compensation was
recognized.
(c) LLC Members' Capital
Members' capital contributions are recorded when received. Total committed
capital at October 31, 1997 was $1.00. Distributions, if any, will be made in
proportion to capital accounts. Allocation of income, gains, losses, and
deductions will be in proportion to capital accounts.
(16) Stockholders' Agreement
In connection with the closing of the AT&T transaction and the sale of
Series C preferred, the Cash Equity Investors, AT&T, and certain management
shareholders executed certain agreements among the stockholders, which address
the following areas:
(a) Board of Directors
The Stockholders' Agreement specifies the number of directors and how they
will be selected.
(b) Registration Rights
The Stockholder's Agreement grants certain demand and piggyback
registration rights to stockholders. Certain stockholders, as defined in the
Stockholders Agreement, may cause an underwriter demand registration,
F-30
<PAGE>
TRITON PCS HOLDINGS, INC. AND PREDECESSOR COMPANY
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
Year ended December 31, 1998 and the period from March 6, 1997 (inception) to
December 31, 1997
as defined. In addition, if the Company has not completed an initial public
offering of its common stock by February 4, 2003, certain holders of the
Company's capital stock can cause the registration of the Company's common
stock.
(c) Restrictions on Transfer
The Stockholder's Agreement imposes numerous restrictions with respect to
the sale and or transfer of the Company's capital stock. Generally, prior to
the Company completing its initial public offering, as defined, the holders of
the Series C, Series D, and the common stock are restricted except as defined
until February 4, 2001. After February 4, 2001, the Series C holders and
common stock holders may transfer their interests subject to certain
restrictions and rights of first refusal.
On or after the completion of the Company's initial public offering, the
holders of the common stock and Series D are restricted until February 4,
2001. The sale of common stock is subject to the rights of refusal.
The Stockholders' Agreement expires on February 4, 2009. Certain provisions
expire upon an initial public offering.
(17) 401(K) Savings Plan
The Company sponsors a 401(k) Savings Plan which permits employees to make
contributions to the Savings Plan on a pre-tax salary reduction basis in
accordance with the Internal Revenue Code. Substantially all full-time
employees are eligible to participate in the next quarterly open enrollment
after 90 days of service. The Company matches a portion of the voluntary
employee contributions. The cost of the Savings Plan charged to expense was
$65,000 in 1998.
(18) Supplemental Cash Flow Information
<TABLE>
<CAPTION>
1997 1998
------ --------
($000s)
<S> <C> <C>
Cash paid during the year for interest, net of amounts
capitalized............................................... $ -- $ 8,150
Cash paid during the year for income taxes................. -- --
Noncash investing and financing activities:
Equipment acquired under capital lease obligation......... -- 2,529
Capital contribution in connection with conversion of
short-term debt to equity................................ -- 13,362
Issuance of Preferred stock in connection with Norfolk
Acquisition.............................................. -- 14,555
Issuance of Preferred stock in connection with AT&T
transaction net of deferred taxes........................ -- 100,947
Capital expenditures included in accounts payable......... -- 21,027
Deferred transaction cost financed via accounts payable... 924 --
</TABLE>
F-31
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Vanguard Cellular Systems of South Carolina, Inc.:
We have audited the accompanying balance sheets of Vanguard Cellular
Systems of South Carolina, Inc. (a South Carolina corporation and an indirect,
wholly-owned subsidiary of Vanguard Cellular Systems, Inc.) as of December 31,
1997 and 1996, and the related statements of operations, changes in
shareholder's deficit and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
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 financial statements referred to above present fairly,
in all material respects, the financial position of Vanguard Cellular Systems
of South Carolina, Inc. as of December 31, 1997 and 1996 and the results of
their operations and their cash flows for each of the three years in the
period ended December 31, 1997, in conformity with generally accepted
accounting principles.
Arthur Andersen LLP
Greensboro, North Carolina,
March 20, 1998.
F-32
<PAGE>
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
BALANCE SHEETS
(Dollar amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
December 31,
------------------
1996 1997
-------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash.................................................... $ 199 $ 121
Accounts receivable, net of allowances for doubtful
accounts of $200 and $475.............................. 1,485 3,199
Cellular telephone inventories.......................... 511 526
Prepaid expenses........................................ 10 33
Deferred income tax asset............................... -- 8,190
-------- --------
Total current assets.................................. 2,205 12,069
-------- --------
Deferred Cellular License Acquisition Costs, net of
accumulated amortization of $2,860 and $3,343............ 16,247 15,764
-------- --------
Property and Equipment, at cost:
Land.................................................... 306 313
Cellular telephones held for rental..................... 1,653 1,859
Cellular telephone systems.............................. 24,068 29,453
Office furniture and equipment.......................... 2,323 3,139
-------- --------
28,350 34,764
Less--Accumulated depreciation.......................... 5,864 9,252
-------- --------
22,486 25,512
Construction in progress................................ 198 565
-------- --------
22,684 26,077
Other Assets.............................................. 22 21
-------- --------
Total assets............................................ $ 41,158 $ 53,931
======== ========
LIABILITIES AND SHAREHOLDER'S DEFICIT
Current Liabilities:
Accounts payable and accrued expenses................... $ 315 $ 686
Advances from Vanguard.................................. 53,350 63,092
-------- --------
Total current liabilities............................. 53,665 63,778
-------- --------
Deferred Income Tax Liability............................. -- 1,298
-------- --------
Commitments and Contingencies (Note 5)
Shareholder's Deficit:
Common stock--$1 par value, 1,000 shares issued and
outstanding............................................ 1 1
Accumulated deficit..................................... (12,508) (11,146)
-------- --------
Total shareholder's deficit........................... (12,507) (11,145)
-------- --------
Total liabilities and shareholder's deficit........... $ 41,158 $ 53,931
======== ========
</TABLE>
The accompanying notes to financial statements are an integral part of these
balance sheets.
F-33
<PAGE>
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
STATEMENTS OF OPERATIONS
(Amounts in thousands)
<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Service fees.............................. $ 16,428 $ 19,778 $ 22,508
Cellular telephone equipment revenues..... 1,077 673 1,100
---------- ---------- ----------
17,505 20,451 23,608
---------- ---------- ----------
Costs and Expenses:
Cost of service........................... 1,796 3,014 2,811
Cost of cellular telephone equipment...... 1,853 1,478 2,495
General and administrative................ 2,260 2,948 4,793
Marketing and selling..................... 2,564 2,731 3,944
Depreciation and amortization............. 1,765 2,907 5,162
Management fees........................... 1,374 1,620 1,896
Corporate costs allocated from Vanguard... 989 1,195 1,586
---------- ---------- ----------
12,601 15,893 22,687
---------- ---------- ----------
Income From Operations...................... 4,904 4,558 921
Interest Expense............................ (4,414) (5,214) (6,451)
Other, net.................................. (326) (186) --
---------- ---------- ----------
Income (Loss) Before Income Taxes........... 164 (842) (5,530)
Income Tax Benefit.......................... -- -- 6,892
---------- ---------- ----------
Net Income (Loss)........................... $ 164 $ (842) $ 1,362
========== ========== ==========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-34
<PAGE>
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<TABLE>
<CAPTION>
For the Years Ended December 31,
-----------------------------------
1995 1996 1997
---------- ----------- ----------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income (loss)........................ $ 164 $ (842) $ 1,362
Adjustments to reconcile net income
(loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization........... 1,765 2,907 5,162
Net losses on dispositions of property
and equipment.......................... 326 186 --
Deferred income tax benefit............. -- -- (6,892)
Changes in current items:
Accounts receivable, net............... (527) 404 (1,714)
Cellular telephone inventories......... (162) (104) (15)
Accounts payable and accrued expenses.. (47) (97) 371
Other, net............................. (20) 13 (23)
---------- ----------- ----------
Net cash provided by (used in)
operating activities................. 1,499 2,467 (1,749)
---------- ----------- ----------
Cash Flows From Investing Activities--
Purchases of property and equipment...... (8,948) (12,531) (8,072)
---------- ----------- ----------
Cash Flows From Financing Activities:
Net increase in advances from Vanguard... 7,603 10,050 9,742
Other, net............................... (12) -- 1
---------- ----------- ----------
Net cash provided by financing
activities........................... 7,591 10,050 9,743
---------- ----------- ----------
Net Increase (Decrease) in Cash........... 142 (14) (78)
Cash, beginning of period................. 71 213 199
---------- ----------- ----------
Cash, end of period....................... $ 213 $ 199 $ 121
========== =========== ==========
Supplemental Disclosure of Cash Paid
During the Period for Interest, net of
amounts capitalized...................... $ 4,414 $ 5,214 $ 6,451
========== =========== ==========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-35
<PAGE>
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
STATEMENTS OF CHANGES IN SHAREHOLDER'S DEFICIT
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
For the years ended December 31, 1995, 1996 and 1997
------------------------------------------------------------
Common Stock Total
----------------------- Accumulated Shareholder's
Shares Amount Deficit Deficit
----------- ---------- --------------- -----------------
<S> <C> <C> <C> <C>
Balance, January 1,
1995................... 1,000 $ 1 $ (11,830) $ (11,829)
Net income............ -- -- 164 164
----------- ---------- -------------- --------------
Balance, December 31,
1995................... 1,000 1 (11,666) (11,665)
Net loss.............. -- -- (842) (842)
----------- ---------- -------------- --------------
Balance, December 31,
1996................... 1,000 1 (12,508) (12,507)
Net income............ -- -- 1,362 1,362
----------- ---------- -------------- --------------
Balance, December 31,
1997................... 1,000 $ 1 $ (11,146) $ (11,145)
=========== ========== ============== ==============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-36
<PAGE>
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
NOTES TO FINANCIAL STATEMENTS
(Dollar amounts in thousands)
Note 1. Organization and Basis of Presentation:
Vanguard Cellular Systems of South Carolina, Inc. (the Company), a South
Carolina corporation, is a provider of nonwireline cellular telephone service
to the SC-5 (Myrtle Beach) Rural Statistical Area (RSA). The Company acquired
the Myrtle Beach RSA license in January 1991 and the cellular system in this
market became operational in the second quarter of 1991. The Company is 100%
controlled by Vanguard Cellular Systems, Inc. (Vanguard) and operates under
the trade name of CellularOne(R), which is the trade name many nonwireline
carriers have adopted to provide conformity throughout the industry.
The accompanying financial statements present the financial position,
results of operations and cash flows of the Company as if it were a separate
entity for all periods presented. In accordance with Staff Accounting Bulletin
No. 54 of the Securities and Exchange Commission, Vanguard's investment in the
Company is reflected in the financial statements of the Company ("pushdown
accounting"). The accompanying financial statements reflect the allocation of
the purchase price in excess of the net assets acquired on the same basis as
in the consolidation with Vanguard.
Substantially all of the Company's assets are pledged under Vanguard's
long-term credit facility. Operating and capital expansion funds have been
advanced between Vanguard and the Company on an interest bearing basis, with
the net amounts of these transfers reflected in advances from Vanguard in the
accompanying balance sheets. The debt of Vanguard has not been specifically
allocated to the Company; however, advances from Vanguard approximate the
borrowings of Vanguard that are attributable to the Company. Interest has been
charged by Vanguard to the Company on funds advanced to the Company as an
approximation of the Company's share of Vanguard's consolidated interest cost.
Vanguard charges interest to its subsidiaries based on its consolidated
borrowing rates plus 200 basis points. For each of the three years in the
period ended December 31, 1997, the average interest rate charged to the
Company by Vanguard was approximately 11%. Total interest charged, net of
amounts capitalized, from Vanguard to the Company was $4,414, $5,214 and
$6,451 for the years ended December 31, 1995, 1996 and 1997, respectively.
The net balance in Advances from Vanguard has been classified as a
liability in the accompanying balance sheets as the Company will repay these
advances to Vanguard upon receipt of the proceeds from the sale of the
company's assets to Triton PCS, Inc. (See Note 7) .
Note 2. Significant Accounting and Reporting Policies:
Use of Estimates
The preparation of these financial statements and footnote disclosures in
accordance with generally accepted accounting principles requires the use of
certain estimates by management in determining the Company's financial
position and results of operations. Actual results could differ from those
estimates.
Revenue Recognition
Service fees are recognized at the time cellular services are provided.
Cellular telephone equipment revenues consist primarily of sales to
subscribers, which are recognized at the time equipment is delivered to the
subscriber, and equipment rentals, which are recognized monthly over the terms
of the rental agreement with the subscriber.
F-37
<PAGE>
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
Cellular Telephone Inventories
Inventories, consisting primarily of cellular telephones held for resale,
are valued at the lower of first-in, first-out (FIFO) cost or market.
Deferred Cellular License Acquisition Costs
The Company's investment in deferred cellular license acquisition costs
consists of amounts paid for the acquisition of the Federal Communications
Commission construction permit to build and subsequently provide cellular
service in the Myrtle Beach RSA. The Company amortizes its investment over 40
years. Amortization expense of $446, $483 and $483 was recorded in 1995, 1996
and 1997, respectively.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is calculated on
a straight-line basis for financial reporting purposes over the following
estimated useful lives:
<TABLE>
<S> <C>
Cellular telephones held for rental............................. 3 years
Cellular telephone systems...................................... 7-20 years
Office furniture and equipment.................................. 3-10 years
</TABLE>
At December 31, 1996 and 1997, construction in progress was composed
primarily of the cost of uncompleted additions to the Company's cellular
telephone systems. The Company capitalized interest costs of $106, $125 and
$43 in 1995, 1996 and 1997, respectively, as part of the cost of cellular
telephone systems.
Maintenance, repairs and minor renewals are charged to operations as
incurred. Gains or losses at the time of disposition of property and equipment
are reflected in the statements of operations currently.
Cellular telephones are rented to certain customers generally with a
contract for a minimum length of service. Such customers have the option to
purchase the cellular telephone at any time during the term of the agreement.
Long-Lived Assets
In accordance with Statement of Financial Accounting Standards ("SFAS") No.
121. "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of", the Company reviews for the impairment of long-
lived assets and certain identifiable intangibles, whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Under SFAS No. 121 an impairment loss would be recognized when
estimated future cash flows expected to result from the use of the asset and
its eventual disposition are less than its carrying amount. No such impairment
losses have been identified by the Company.
Income Taxes
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes", which requires the use of the "asset and
liability method" of accounting for income taxes. Accordingly, deferred income
tax liabilities and assets are determined based on the differences between the
financial statement and income tax bases of assets and liabilities, using
enacted tax rates in effect for the year in which the differences are expected
to reverse. The Company is included in the consolidated Federal income tax
return of
F-38
<PAGE>
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
Vanguard and its subsidiaries. The Company records its share of consolidated
Federal income taxes as if the Company filed a separate return.
Note 3. Future Cash Flow Requirements:
The Company's ability to sustain its current and planned operations,
maintain adequate working capital and make required or planned capital
expenditures will depend on its ability to generate sufficient cash flow from
operations and obtain additional financing from Vanguard in the form of
interest bearing advances. During 1995, 1996 and 1997, the Company received
$7,603, $10,050 and $9,742, respectively, of these advances. Vanguard has
committed to fund the cash requirements of the Company at least through fiscal
1998 or through the ultimate date of disposition (Note 7), whichever is
earlier. Accordingly, the accompanying financial statements have been prepared
assuming the Company will continue as a going concern and, as such,
adjustments, if any, that may be required for presentation on another basis
have not been considered.
Note 4. Income Taxes:
For Federal income tax reporting purposes, the Company's identified portion
of Vanguard's consolidated net operating loss carryforward was approximately
$20,700 at December 31, 1997. These losses may be used to reduce future
taxable income, if any, and expire through 2012. The primary differences
between the accumulated deficit for financial reporting purposes and the
income tax loss carryforwards relate to differences in the treatment of
deferred cellular license acquisition costs and differences in the
depreciation methods and estimated useful lives of property and equipment.
Deferred income taxes are provided for the temporary differences between
the financial reporting and income tax bases of the Company's assets and
liabilities. The components of net deferred taxes as of December 31, 1996, and
1997 were as follows:
<TABLE>
<CAPTION>
December 31, December 31,
1996 1997
------------ ------------
<S> <C> <C>
Deferred income tax assets:
Net operating loss carryforward.............. $ 5,802 $7,936
Other liabilities and reserves............... 216 254
Valuation allowance.......................... (4,776) --
------- ------
Total deferred income tax assets........... 1,242 8,190
------- ------
Deferred income tax liabilities:
Unamortized deferred cellular license
acquisition costs........................... 594 705
Property and equipment....................... 648 593
------- ------
Total deferred income tax liabilities...... 1,242 1,298
------- ------
Net deferred income taxes...................... $ -- $6,892
======= ======
</TABLE>
A valuation allowance of $4,454 as of December 31, 1995 was established
because in the Company's assessment, it was uncertain whether the net deferred
income tax assets would be realized. In addition, because of its continuing
assessment that it was uncertain whether the net deferred income tax assets
would be realized, the Company increased the valuation allowance by $322 to
offset the 1996 net deferred income tax benefit.
F-39
<PAGE>
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
In March 1998, Vanguard entered into an agreement to sell the operational
assets of the Company for a cash purchase price of $160,000, subject to
adjustment (Note 7). This transaction is expected to generate substantial
capital gains which will utilize an equivalent amount of Vanguard's
accumulated net operating loss carryforwards. Based on these anticipated
gains, management has assessed that it is more likely than not that the
deferred income tax assets of Vanguard and its subsidiaries, including the
Company, are realizable. Accordingly, for the year ended December 31, 1997,
the Company recognized a net deferred income tax benefit of $6,892 upon
reversal of the valuation allowance on its net deferred income tax assets.
A reconciliation between income taxes computed at the statutory Federal
rate of 35% and the reported income tax benefit is as follows:
<TABLE>
<CAPTION>
For the Years Ended
--------------------------------------
December 31, December 31, December 31,
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
Amount at statutory Federal rate... $ 57 $(295) $(1,936)
Change in valuation allowance...... (63) 322 (4,776)
Other.............................. 6 (27) (180)
----- ----- -------
Income tax benefit................. $ -- $ -- $(6,892)
===== ===== =======
</TABLE>
Note 5. Operating Leases:
The Company leases office space and land under noncancelable operating
leases expiring through 2004. The future minimum rental payments required
under these lease agreements as of December 31, 1997, were as follows:
<TABLE>
<S> <C>
1998.................................. $ 562
1999.................................. 508
2000.................................. 508
2001.................................. 485
2002.................................. 438
Thereafter............................ 4,686
------
$7,187
======
</TABLE>
Rent expense under these leases was $349, $439 and $573, for the years
ended December 31, 1995, 1996 and 1997, respectively.
Note 6. Transactions with Parent and Affiliates:
At December 31, 1997, Vanguard has pledged its investment in the stock of
the Company as well as the assets of the Company as security for debt of
Vanguard totaling $569,000.
Operations Management Agreement
The Company is charged a management fee by Vanguard based upon a percentage
of service fees. The management fee expense under this agreement was $1,374,
$1,620 and $1,896, for the years ended December 31, 1995, 1996 and 1997,
respectively.
F-40
<PAGE>
VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
Services Provided by Vanguard
Vanguard performs certain services and incurs certain costs for the
Company. Services provided include treasury, human resources, legal, technical
support, data processing, financial accounting, marketing, and other general
corporate services. The costs of the services provided by Vanguard have been
allocated to the Company based upon the Company's annual subscriber
activations and subscriber base as a percentage of Vanguard's total annual
subscriber activations and total subscriber base. Corporate costs of Vanguard
totaling $989, $1,195 and $1,586, have been allocated to the Company for the
years ended December 31, 1995, 1996 and 1997, respectively. In the opinion of
management, the method of allocating these costs is believed to be reasonable.
However, the costs of these services charged to the Company are not
necessarily indicative of the costs that would have been incurred if the
Company had performed these functions.
Other Transactions
During 1997, the Company added certain engineering and managerial functions
and incurred costs for such functions totaling $700. These services benefited
the Company and other Vanguard markets; however, none of these costs have been
allocated to other markets. These costs are included in general and
administrative expenses in the accompanying statement of operations.
Employee benefits costs are incurred by Vanguard and are allocated to the
Company based on an overall percentage of salaries expense. Such costs totaled
$267, $322 and $557 for the years ended December 31, 1995, 1996 and 1997,
respectively, and are included in general and administrative expenses in the
accompanying statements of operations. For purposes of these financial
statements, these costs are assumed to be fully funded by the Company and are
included in the Advances from Vanguard in the accompanying balance sheets.
Note 7. Subsequent Event:
In March 1998, Vanguard reached an agreement with Triton PCS, Inc. to sell
the assets of the Company, including the cellular license for the Myrtle Beach
RSA, for a cash purchase price of approximately $160,000, subject to
adjustment. The consummation of this transaction is subject to receipt of
customary regulatory approvals.
F-41
<PAGE>
MYRTLE BEACH SYSTEM OF VANGUARD CELLULAR SYSTEMS
OF SOUTH CAROLINA, INC.
BALANCE SHEET
(Dollar amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
June 30,
1998
-----------
(Unaudited)
<S> <C>
ASSETS
Current Assets:
Cash............................................................ $ 46
Accounts receivable, net of allowances for doubtful accounts of
$461........................................................... 5,487
Cellular telephone inventories.................................. 387
Prepaid expenses................................................ 225
Deferred income tax asset....................................... 8,671
-------
Total current assets.......................................... 14,816
-------
Deferred Cellular License Acquisition costs, net of accumulated
amortization of $3,585........................................... 15,522
-------
Property and Equipment, at cost:
Land............................................................ 313
Cellular telephones held for rental............................. 1,710
Cellular telephone systems...................................... 30,761
Office furniture and equipment.................................. 3,317
-------
36,101
Less--Accumulated depreciation.................................. 11,739
-------
24,362
Construction in progress........................................ 330
-------
24,692
Other assets...................................................... 140
-------
Total assets.................................................... $55,170
=======
LIABILITIES AND DIVISIONAL EQUITY
Current Liabilities:
Accounts payable and accrued expenses........................... $ 2,509
Deferred income tax liability..................................... 1,181
-------
Commitments and Contingencies (Note 5)
Divisional equity--investments and advances from Vanguard....... 51,480
-------
Total liabilities and divisional equity....................... $55,170
=======
</TABLE>
The accompanying notes to financial statements are an integral part of this
balance sheet.
F-42
<PAGE>
MYRTLE BEACH SYSTEM OF VANGUARD CELLULAR SYSTEMS
OF SOUTH CAROLINA, INC.
STATEMENTS OF OPERATIONS
(Amounts in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------
1997 1998
-------- --------
(unaudited)
<S> <C> <C>
Revenues:
Service fees............................................. $ 10,602 $ 13,424
Cellular telephone equipment revenues.................... 457 1,114
-------- --------
11,059 14,538
-------- --------
Costs and Expenses:
Cost of service.......................................... 1,185 1,367
Cost of cellular telephone equipment..................... 979 1,388
General and administrative............................... 1,980 2,502
Marketing and selling.................................... 1,664 2,215
Depreciation and amortization............................ 2,023 3,080
Management fees.......................................... 890 1,106
Corporate costs allocated from Vanguard.................. 740 878
-------- --------
9,461 12,536
-------- --------
Income From Operations..................................... 1,598 2,002
Interest Expense........................................... (3,072) (3,560)
Other, net................................................. (334) (6)
-------- --------
Income (Loss) Before Income Taxes.......................... (1,808) (1,564)
Income Tax Benefit (Provision)............................. -- 598
-------- --------
Net Income (Loss).......................................... $ (1,808) $ (966)
======== ========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-43
<PAGE>
MYRTLE BEACH SYSTEM OF VANGUARD CELLULAR SYSTEMS OF SOUTH CAROLINA, INC.
STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------
1997 1998
-------- --------
(unaudited)
<S> <C> <C>
Cash Flows From Operating Activities:
Net loss.................................................. $ (1,808) $ (966)
Adjustments to reconcile net loss to net cash each used in
operating activities:
Depreciation and amortization............................ 2,023 3,080
Deferred income tax benefit.............................. -- (598)
Changes in current items:
Accounts receivable, net................................ (1,560) (2,288)
Cellular telephone inventories.......................... (260) 139
Accounts payable and accrued expenses................... 907 1,823
Other, net.............................................. (44) (192)
-------- -------
Net cash provided by (used in) operating activities.... (742) 998
-------- -------
Cash Flows From Investing Activities:
Purchases of property and equipment....................... (4,143) (1,453)
-------- -------
Cash Flows From Financing Activities:
Net increase in advances from Vanguard.................... 4,945 499
Other, net................................................ -- (119)
-------- -------
Net cash provided by financing activities.............. 4,945 380
-------- -------
Net Increase (Decrease) in Cash............................ 60 (75)
Cash, beginning of period.................................. 199 121
-------- -------
Cash, end of period........................................ $ 259 $ 46
======== =======
Supplemental Disclosure of Cash Paid During the Period for
Interest, net of amounts capitalized...................... $ 3,072 $ 3,560
======== =======
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-44
<PAGE>
MYRTLE BEACH SYSTEM OF VANGUARD CELLULAR SYSTEMS
OF SOUTH CAROLINA, INC.
NOTES TO FINANCIAL STATEMENTS
(Dollar amounts in thousands)
Note 1. Organization and Basis of Presentation:
The Myrtle Beach System (the System) of Vanguard Cellular Systems of South
Carolina, Inc. (the Company), a North Carolina corporation, is a provider of
nonwireline cellular telephone service to the SC-5 (Myrtle Beach) Rural
Service Area (RSA). The Company acquired the Myrtle Beach RSA license in
January 1991 and the cellular system in this market became operational in the
second quarter of 1991. The Company is 100% controlled by Vanguard Cellular
Systems, Inc. (Vanguard) and operates the System under the trade name of
CellularOne(R), which is the trade name many nonwireline carriers have adopted
to provide conformity throughout the industry. Prior to June 1998, the
Company's only operations and net assets were related to the System. During
June 1998, Vanguard transferred certain assets to the Company. Such assets
were not acquired by Triton PCS, Inc. (See Note 7) and are, therefore, not a
part of the System in these financial statements. The accompanying financial
statements and footnotes reflect the historical basis financial position of
the System as of June 30, 1998, immediately prior to its sale to Triton, and
the results of operations for the three and six months ended June 30, 1998 and
1997 and the cash flows of the System for the six months ended June 30, 1997
and 1998.
The accompanying financial statements present the financial position,
results of operations and cash flows of the System as if it were a separate
entity for all periods presented. In accordance with Staff Accounting Bulletin
No. 54 of the Securities and Exchange Commission, Vanguard's investment in the
System is reflected in the financial statements of the Company ("pushdown
accounting"). The accompanying financial statements reflect the allocation of
the purchase price in excess of the net assets acquired on the same basis as
in the consolidation with Vanguard.
Substantially all of the System's assets were pledged under Vanguard's
long-term credit facility prior to sale of the system to Triton PCS, Inc.
Operating and capital expansion funds have been advanced between Vanguard and
the System on an interest bearing basis, with the net amounts of these
transfers reflected in advances from Vanguard in the accompanying balance
sheets. The debt of Vanguard has not been specifically allocated to the
System; however, advances from Vanguard approximate the borrowings of Vanguard
that are attributable to the System. Interest has been charged by Vanguard to
the System on funds advanced to the System as an approximation of the System's
share of Vanguard's consolidated interest cost. Vanguard charges interest to
its subsidiaries based on its consolidated borrowing rates plus 200 basis
points. For the six months ended June 30, 1997 and 1998, the average interest
rate charged to the System by Vanguard was approximately 11%. Total interest
charged, net of amounts capitalized, from Vanguard to the System was $1,568
(unaudited) and $1,791 (unaudited) for the three months ended June 30, 1997
and 1998, respectively; and $3,072 (unaudited) and $3,560 (unaudited) for the
six months ended June 30, 1997 and 1998, respectively.
Note 2. Significant Accounting and Reporting Policies:
Use of Estimates
The preparation of these financial statements and footnote disclosures in
accordance with generally accepted accounting principles requires the use of
certain estimates by management in determining the System's financial position
and results of operations. Actual results could differ from those estimates.
Revenue Recognition
Service fees are recognized at the time cellular services are provided.
Cellular telephone equipment revenues consist primarily of sales to
subscribers, which are recognized at the time equipment is delivered to the
subscriber, and equipment rentals, which are recognized monthly over the terms
of the rental agreement with the subscriber.
F-45
<PAGE>
MYRTLE BEACH SYSTEM OF VANGUARD CELLULAR SYSTEMS
OF SOUTH CAROLINA, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
Cellular Telephone Inventories
Inventories, consisting primarily of cellular telephones held for resale,
are valued at the lower of first-in, first-out (FIFO) cost or market.
Deferred Cellular License Acquisition Costs
The System's investment in deferred cellular license acquisition costs
consists of amounts paid for the acquisition of the Federal Communications
Commission construction permit to build and subsequently provide cellular
service in the Myrtle Beach RSA. The System amortizes its investment over 40
years. Amortization expense of $121 (unaudited) and $121 (unaudited) was
recorded for three months ended June 30, 1997 and 1998 respectively; and $242
(unaudited) and $242 (unaudited) for the six months ended June 30, 1997 and
1998, respectively.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is calculated on
a straight-line basis for financial reporting purposes over the following
estimated useful lives:
<TABLE>
<S> <C>
Cellular telephones held for rental............................. 3 years
Cellular telephone systems...................................... 7-20 years
Office furniture and equipment.................................. 3-10 years
</TABLE>
At June 30, 1998, construction in progress was composed primarily of the
cost of uncompleted additions to the System's cellular telephone systems. The
System capitalized interest costs of $14 (unaudited) and $7 (unaudited) in the
three-months ended June 30, 1997 and 1998, respectively, and $21 (unaudited)
and $17 (unaudited) for the six months ended June 30, 1997 and 1998,
respectively, as part of the cost of cellular telephone systems.
During the first quarter of 1998, the System revised its estimate of the
useful life of cellular telephones held for rental from 3 years to 18 months
as more closely approximate its historical experience. This change increased
depreciation expense for the three-months ended June 30, 1998 by approximately
$400 (unaudited) and $800 (unaudited) for the six months ended June 30, 1998.
Maintenance, repairs and minor renewals are charged to operations as
incurred. Gains or losses at the time of disposition of property and equipment
are reflected in the statements of operations currently.
Cellular telephones are rented to certain customers generally with a
contract for a minimum length of service. Such customers have the option to
purchase the cellular telephone at any time during the term of the agreement.
Long-Lived Assets
In accordance with Statement of Financial Accounting Standards ("SFAS") No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of", management reviews for the impairment of long-lived
assets and certain identifiable intangibles, whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Under SFAS No. 121 an impairment loss would be recognized when
estimated future cash flows expected to result from the use of the asset and
its eventual disposition are less than its carrying amount. No such impairment
losses have been identified by management.
F-46
<PAGE>
MYRTLE BEACH SYSTEM OF VANGUARD CELLULAR SYSTEMS
OF SOUTH CAROLINA, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
Income Taxes
The System accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes", which requires the use of the "asset and
liability method" of accounting for income taxes. Accordingly, deferred income
tax liabilities and assets are determined based on the differences between the
financial statement and income tax bases of assets and liabilities, using
enacted tax rates in effect for the year in which the differences are expected
to reverse. The System is included in the consolidated Federal income tax
return of Vanguard and its subsidiaries. The System records its share of
consolidated Federal income taxes as if the System filed a separate return.
Note 3. Future Cash Flow Requirements:
The System's ability to sustain its current and planned operations,
maintain adequate working capital and make required or planned capital
expenditures will depend on its ability to generate sufficient cash flow from
operations and obtain additional financing from Vanguard in the form of
interest bearing advances. During the six months ended June 30, 1997 and 1998,
the System received $4,945 (unaudited) and $499 (unaudited), respectively, of
these advances.
Note 4. Income Taxes:
For Federal income tax reporting purposes, the System's identified portion
of Vanguard's consolidated net operating loss carryforward was approximately
$20,700 at December 31, 1997. These losses may be used to reduce future
taxable income, if any, and expire through 2012. The primary differences
between the accumulated deficit for financial reporting purposes and the
income tax loss carryforwards relate to differences in the treatment of
deferred cellular license acquisition costs and differences in the
depreciation methods and estimated useful lives of property and equipment.
Deferred income taxes are provided for the temporary differences between
the financial reporting and income tax bases of the System's assets and
liabilities. The components of net deferred taxes as of June 30, 1998 were as
follows:
<TABLE>
<CAPTION>
June 30,
1998
-----------
(unaudited)
<S> <C>
Deferred income tax assets:
Net operating loss carryforward............................... $8,424
Other liabilities and reserves................................ 247
------
Total deferred income tax assets............................. 8,671
------
Deferred income tax liabilities:
Unamortized deferred cellular license acquisition costs....... 760
Property and equipment........................................ 421
------
Total deferred income tax liabilities........................ 1,181
------
Net deferred income taxes...................................... $7,490
======
</TABLE>
Based on substantial capital gains expected to be realized during 1998 by
Vanguard, for the year ended December 31, 1997, the System recognized a net
deferred income tax benefit of $6,892 upon reversal of the
F-47
<PAGE>
MYRTLE BEACH SYSTEM OF VANGUARD CELLULAR SYSTEMS
OF SOUTH CAROLINA, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
previously provided valuation allowance on its net deferred income tax assets.
For the six months ended June 30, 1998, the System recognized a net deferred
income tax benefit of $598 (unaudited) related to operating losses generated
during the period.
A reconciliation between income taxes computed at the statutory Federal
rate of 35% and the reported income tax benefit is as follows:
<TABLE>
<CAPTION>
For the For he
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------------
1997 1998 1997 1998
--------- ----------------- --------
(unaudited)
<S> <C> <C> <C> <C>
Amount at statutory Federal rate... $ (211) $ 135 $ (633) $ (548)
Change in valuation allowance...... 231 692 --
Other.............................. (20) 13 (59) (50)
--------- -------- -------- --------
Income tax benefit................. $ -- $ 148 $ -- $ (598)
========= ======== ======== ========
</TABLE>
Note 5. Operating Leases:
The System leases office space and land under noncancelable operating
leases expiring through 2004. The future minimum rental payments required
under these lease agreements as of December 31, 1997, were as follows:
<TABLE>
<S> <C>
1998.................................. $ 562
1999.................................. 508
2000.................................. 508
2001.................................. 485
2002.................................. 438
Thereafter............................ 4,686
------
$7,187
======
</TABLE>
Rent expense under these leases was $127 (unaudited) and $170 (unaudited)
for the three-months ended June 30, 1997 and 1998, respectively; and $254
(unaudited) and $340 (unaudited) for the six months ended June 30, 1998,
respectively.
Note 6. Transactions with Parent and Affiliates:
At December 31, 1997, Vanguard has pledged its investment in the stock of
the Company as well as the assets of the System as security for debt of
Vanguard totaling $569,000.
Operations Management Agreement
The System is charged a management fee by Vanguard based upon a percentage
of service fees. The management fee expense under this agreement was $612
(unaudited) and $648 (unaudited) for the three months ended June 30, 1997 and
1998, respectively; and $890 (unaudited) and $1,106 (unaudited) for the six
months ended June 30, 1997 and 1998, respectively.
F-48
<PAGE>
MYRTLE BEACH SYSTEM OF VANGUARD CELLULAR SYSTEMS
OF SOUTH CAROLINA, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollar amounts in thousands)
Services Provided by Vanguard
Vanguard performs certain services and incurs certain costs for the System.
Services provided include treasury, human resources, legal, technical support,
data processing, financial accounting, marketing, and other general corporate
services. The costs of the services provided by Vanguard have been allocated
to the System based upon the System's annual subscriber activations and
subscriber base as a percentage of Vanguard's total annual subscriber
activations and total subscriber base. Corporate costs of Vanguard totaling
$422 (unaudited), and $438 (unaudited), have been allocated to the System for
the three-months ended June 30, 1997 and 1998, respectively; and $740
(unaudited) and $878 (unaudited) have been allocated to the System for the
six-months ended June 30, 1997 and 1998, respectively. In the opinion of
management, the method of allocating these costs is believed to be reasonable.
However, the costs of these services charged to the System are not necessarily
indicative of the costs that would have been incurred if the System had
performed these functions.
Other Transactions
During 1997, the System added certain engineering and managerial functions
and incurred costs for such functions totaling $45 (unaudited) and $96
(unaudited) for the three months and six months ended June 30, 1997,
respectively. These services benefited the System and other Vanguard markets;
however, none of these costs has been allocated to other markets. For the
three and six months ended June 30, 1998, such costs totaled approximately $0
(unaudited) and $55 (unaudited), respectively. Those costs are included in
general and administrative expenses in the accompanying statement of
operations.
Employee benefits costs are incurred by Vanguard and are allocated to the
System based on an overall percentage of salaries expense. Such costs totaled
$131 (unaudited), and $115 (unaudited) for the three months ended June 30,
1997 and 1998, respectively, and $240 (unaudited) and $249 (unaudited) for the
six months ended June 30, 1997 and 1998, respectively, and are included in
general and administrative expenses in the accompanying statements of
operations. For purposes of these financial statements, these costs are
assumed to be fully funded by the System.
Note 7. Sale of System Assets:
Effective at the close of the business on June 30, 1998, the Company sold
substantially all of the assets of the System to Triton PCS, Inc. for a
purchase price of approximately $162.5 million.
F-49
<PAGE>
Triton PCS Holdings Inc.
Unaudited Pro Forma Condensed Combined Financial Statements
On June 30, 1998, Triton acquired an existing cellular system which serves
the South Carolina/Georgetown rural service area for a purchase price of
approximately $164.5 million from Vanguard Cellular Systems. The effects of
the acquisition are reflected in Triton's historical balance sheets after that
date. In addition, as Triton recorded the results of operations of the Myrtle
Beach system from the date of acquisition, its combined statement of
operations for the year ended December 31, 1998 includes the actual Myrtle
Beach results, as well as the impact of purchase accounting adjustments for
the six months ended December 31, 1998. The accompanying pro forma statement
of operations reflects Triton's results assuming the Myrtle Beach transaction
had occurred on January 1, 1998. Since the pro forma financial statements are
based upon the financial condition and operating results of the Myrtle Beach
system during periods when they were not under the control or management of
Triton, the information presented may not be indicative of the results which
would have actually been obtained had the acquisition been completed as of
January 1, 1998, nor are they indicative of future financial or operating
results. The unaudited pro forma financial information does not give effect to
any synergies that may occur due to the integration of Triton and the Myrtle
Beach system. The condensed combined pro forma financial statements should be
read in conjunction with the historical audited financial statements of Triton
PCS Holdings, Inc. and the notes thereto, as well as the audited historical
consolidated financial statements of Vanguard Cellular Systems of South
Carolina, Inc. and the notes thereto included elsewhere in this prospectus.
F-50
<PAGE>
Triton PCS Holdings, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 1998
($000, except per share amounts)
<TABLE>
<CAPTION>
Triton PCS Myrtle Pro Forma Pro Forma
Holdings, Inc. Beach System Adjustments Combined
-------------- ------------ ----------- ---------
<S> <C> <C> <C> <C>
Revenues:................... $ 16,578 $14,538 $ -- $ 31,116
Costs and expenses
Costs of revenues......... 5,997 2,755 -- 8,752
Operations................ 13,045 -- -- 13,045
Marketing and selling..... 1,703 2,215 -- 3,918
General and
administrative........... 8,570 4,486 -- 13,056
Depreciation and
amortization............. 6,663 3,080 1,889 11,632
-------- ------- --------- --------
Total costs and
expenses............... 35,978 12,536 1,889 50,403
-------- ------- --------- --------
Income (loss) from
operations................. (19,400) 2,002 (1,889) (19,287)
Interest expense and other,
net........................ 19,756 3,566 8,361 31,683
-------- ------- --------- --------
Loss before taxes........... (39,156) (1,564) (10,250) (50,970)
Tax benefit................. 7,536 598 (598) 7,536
-------- ------- --------- --------
Net loss.................... (31,620) $ (966) $ (10,848) (43,434)
======= =========
Accretion of preferred
stock...................... (6,853) (6,853)
-------- --------
Net loss available to common
shareholders............... $(38,473) $(50,287)
======== ========
Basic and diluted net loss
per common share........... $(182.77) $(219.05)
======== ========
Weighted average common
shares outstanding (basic
and diluted)............... 210,501 229,573
======== ========
</TABLE>
F-51
<PAGE>
Triton PCS Holdings, Inc.
Notes to Pro Forma Condensed Combined Financial Statements
The Myrtle Beach acquisition has been accounted for by the purchase method
and, accordingly, the purchase price was allocated to the assets acquired and
liabilities assumed based upon management's best estimate of their fair value.
The pro forma adjustments related to the purchase price allocation of the
acquisition represent our best estimate of the effects of the acquisition.
The pro forma statement of operation adjustments for the year ended
December 31, 1998 consist of:
. Pro forma depreciation and amortization expense has been adjusted to
reflect the amortization of the intangibles recorded in the purchase of
the Myrtle Beach system, which amounted to approximately $136.0 million
and the adjusted depreciation expense related to the fixed assets
purchased, which amounted to approximately $24.9 million over an
estimated useful life of eight years.
. Pro forma interest expense includes (1) interest on the $313.6 million
of Subordinated Debt at a rate of 11% per year as of December 31, 1998
and (2) interest on the $75.0 million of initial borrowings under the
Credit Agreement at a rate of 8.5%. The impact of a 1/8% change in the
interest rate on the Credit Facility would increase the pro forma loss
by $0.04 million.
. The pro forma tax provision has been adjusted to reverse the $598 tax
benefit recorded by the Myrtle Beach system for the six months ended
June 30, 1998 as it is directly related to the transaction.
. Pro forma combined basic and diluted net loss per common share for the
year ended December 31, 1998 is computed using the weighted average of
shares of common stock outstanding during the period and gives effect to
the issuance of common shares related to the Myrtle Beach acquisition,
assuming that this acquisition had taken place on January 1, 1998.
F-52
<PAGE>
Photo collage showing the following:
(1) Cell site;
(2) SunCom marketing van in front of SunCom retail store;
(3) Individual talking on a wireless phone;
(4) Customer care center employees at customer care stations;
(5) Nokia wireless phone; and
(6) Customer interaction at representative store.
Triton PCS, AT&T and SunCom logos also displayed.
<PAGE>
[LOGO OF TRITON PCS, INC. APPEARS HERE]
<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 we are not soliciting offers to buy these +
+securities in any jurisdiction where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
[Alternate international cover]
PROSPECTUS (Subject to Completion)
Issued September 23, 1999
Shares
[LOGO OF TRITON PCS, INC. APPEARS HERE]
Triton PCS Holdings, Inc.
CLASS A COMMON STOCK
-----------
Triton PCS Holdings, Inc. is offering shares of its Class A common stock.
This is our initial public offering. We anticipate that the initial public
offering price will be between $ and $ per share.
-----------
We have applied for quotation of the Class A common stock on the Nasdaq
National Market under the symbol "TPCS."
-----------
Investing in our Class A common stock involves risks. See "Risk Factors"
beginning on page 6.
-----------
PRICE $ A SHARE
-----------
<TABLE>
<CAPTION>
Underwriting
Price Discounts Proceeds
to and to
Public Commissions Triton
------ ------------ --------
<S> <C> <C> <C>
Per Share.......................................... $ $ $
Total.............................................. $ $ $
</TABLE>
Triton PCS Holdings, Inc. has granted the underwriters the right to purchase up
to an additional shares to cover over-allotments.
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities or determined if this prospectus is
complete or truthful. Any representation to the contrary is a criminal offense.
Morgan Stanley & Co. Incorporated expects to deliver the shares to purchasers
on , 1999.
-----------
MORGAN STANLEY DEAN WITTER LEHMAN BROTHERS
SALOMON BROTHERS INTERNATIONAL
FIRST UNION CAPITAL MARKETS CORP.
J.P. MORGAN & CO.
, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, other than the
underwriting discounts and commissions. All amounts shown are estimates except
for the Securities and Exchange Commission registration fee and the NASD
filing fee. All of these fees are being paid by Triton.
<TABLE>
<S> <C>
Registration Fee.................................................... $34,750
NASD Filing Fee..................................................... 13,000
Blue Sky Fees and Expenses.......................................... *
Legal Fees and Expenses............................................. *
Accounting Fees and Expenses........................................ *
Printing and Engraving Fees......................................... *
Miscellaneous....................................................... *
-------
Total............................................................... $ *
=======
</TABLE>
- --------
* To be supplied by amendment.
Item 14. Indemnification of Directors and Officers
The Delaware General Corporation Law authorizes corporations to limit or
eliminate the personal liability of directors to corporations and their
stockholders for monetary damages for breach of directors' fiduciary duty of
care. The duty of care requires that, when acting on behalf of the
corporation, directors must exercise an informed business judgment based on
all material information reasonably available to them. In the absence of the
limitations authorized by the Delaware statute, directors could be accountable
to corporations and their stockholders for monetary damages for conduct that
does not satisfy their duty of care. Although the statute does not change
directors' duty of care, it enables corporations to limit available relief to
equitable remedies such as injunction or rescission. The second restated
certificate of incorporation limits the liability of Triton's directors to
Triton or its stockholders to the fullest extent permitted by the Delaware
statute. Specifically, the directors of Triton will not be personably liable
for monetary damages for breach of a director' s fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to
Triton or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law (which relates
to the unlawful payment of dividend or unlawful stock purchase or redemption
by a corporation) or (iv) for any transaction from which a director derived an
improper personal benefit. The inclusion of this provision in the second
restated certificate of incorporation may have the effect of reducing the
likelihood of derivative litigation against directors and may discourage or
deter stockholders or management from bringing a lawsuit against directors for
breach of their duty of care, even though such an action, if successful, might
otherwise have benefited Triton and its stockholders. Under the applicable
provisions of the Delaware General Corporation Law, in general, a corporation
may indemnify its directors, officers, employees or agents against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by them in connection with any action, suit
or proceeding brought by third parties to which they may be made parties by
reason of their being or having been directors, officers, employees or agents
and shall so indemnify such persons only if they acted in good faith and in a
manner they 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 their conduct was unlawful. The second restated
certificate of incorporation gives Triton the power to indemnify its officers,
directors, employees and agents to the full extent permitted by Delaware law.
II-1
<PAGE>
Immediately prior to the consummation of the offering, Triton plans to
enter into indemnification agreements with each of its directors and certain
of its executive officers which generally provide for indemnification of the
director or officer to the fullest extent provided by law. In addition, Triton
has purchased directors' and officers' liability insurance coverage for its
directors and certain of its officers in amounts customary for similarly
situated companies.
Item 15. Recent Sales of Unregistered Securities
In October 1997, the Registrant issued to Michael Kalogris and Steven
Skinner 78,494.80 shares and 58,871.10 shares, respectively, of its Common
Stock in connection with the Registrant's formation. The aggregate
consideration paid for such securities was $1,373.66. Such securities were
issued pursuant to the exemption set forth in Section 4(2) of the Securities
Act.
In February 1998, the Registrant issued to one of its executive officers
3,139.79 shares of its Common Stock in connection with the anticipated closing
of the transactions contemplated by the Securities Purchase Agreement. The
aggregate consideration paid for such securities was $31.40. Such securities
were issued pursuant to the exemption set forth in Section 4(2) of the
Securities Act.
In February 1998, the Registrant issued to AT&T Wireless PCS, Inc. 732,371
shares of its Series A Convertible Preferred Stock and 366,131 shares of its
Series D Convertible Preferred Stock in connection with the closing of the
transactions contemplated by the Securities Purchase Agreement. The aggregate
consideration paid for such securities was $109,850,200. Such securities were
issued pursuant to the exemption set forth in Section 4(2) of the Securities
Act.
In February 1998, the Registrant issued to several institutional investors
and two of its executive officers an aggregate of 1,400,000 shares of its
Series C Convertible Preferred Stock in connection with the closing of the
transactions contemplated by the Securities Purchase Agreement. The aggregate
consideration paid for such securities was $45.0 million paid at the time of
the transaction and irrevocable commitments to contribute an additional
aggregate $95.0 million to the Registrant over a three-year period. Such
securities were issued pursuant to the exemption set forth in Section 4(2) of
the Securities Act.
In February 1998, the Registrant issued to several officers of the
Registrant 196,237 shares of its Common Stock in connection with the closing
of the transactions contemplated by the Securities Purchase Agreement. The
aggregate consideration paid for such securities was $1,962.37. Such
securities were issued pursuant to the exemption set forth in Section 4(2) of
the Securities Act.
In March 1998, the Registrant issued to one of its institutional
stockholders 80,000 shares of its Series C Convertible Preferred Stock. The
aggregate consideration paid for such securities was $8.0 million. Such
securities were issued pursuant to the exemption set forth in Section 4(2) of
the Securities Act.
In May 1998, the Registrant issued to J.P. Morgan Securities Inc., Chase
Securities Inc. and Lehman Brothers Inc. $511,989,000 principal amount at
maturity of 11% Senior Subordinated Discount Notes due 2008. The aggregate
consideration paid for such securities was approximately $291.0 million in net
proceeds. Such securities were issued pursuant to the exemption set forth in
Section 4(2) of the Securities Act.
In June 1998, the Registrant issued to each of its two independent
directors 707 shares of its Common Stock under its Restated Common Stock Trust
for Management Stockholders and Independent Directors. The aggregate
consideration paid for such securities was $14.14. Such securities were issued
pursuant to the exemption set forth in Section 4(2) of the Securities Act.
In June 1998, the Registrant issued to its institutional stockholders an
aggregate of 270,000 shares of its Series C Convertible Preferred Stock in
connection with the closing of the Myrtle Beach Acquisition. The aggregate
consideration paid for such securities was $27.0 million. Such securities were
issued pursuant to the exemption set forth in Section 4(2) of the Securities
Act.
II-2
<PAGE>
In June 1998, the Registrant issued to its management stockholders and
independent directors 30,846.72 shares of its Common Stock under its Restated
Common Stock Trust for Management Stockholders and Independent Directors in
connection with the closing of the Myrtle Beach Acquisition. The aggregate
consideration paid for such securities was $308.47. Such securities were
issued pursuant to the exemption set forth in Section 4(2) of the Securities
Act.
In December 1998, the Registrant redeemed from two of its institutional
stockholders an aggregate of 35,602 shares of its Series C Convertible
Preferred Stock. The aggregate purchase price paid for such securities was
$3,560,200. The Registrant contemporaneously reissued to its other
institutional stockholders the 35,602 shares of its Series C Convertible
Preferred Stock. The aggregate consideration paid for such securities was
$3,560,200. Such securities were issued pursuant to the exemption set forth in
Section 4(2) of the Securities Act.
In December 1998, the Registrant issued to AT&T Wireless PCS Inc.
134,813.49 shares of its Series D Convertible Preferred Stock in connection
with the closing of the Norfolk Acquisition. The aggregate value of such
securities was $13,481,349 and the shares were issued in partial consideration
of AT&T Wireless' sale to the Registrant of personal communications services
licenses and other assets. Such securities were issued pursuant to the
exemption set forth in Section 4(2) of the Securities Act.
In December 1998, the Registrant issued to several institutional investors
and two of its executive officers an aggregate of 165,186.51 shares of its
Series C Convertible Preferred Stock in connection with the closing of the
Norfolk Acquisition. The aggregate consideration paid for such securities was
$16,518,651. Such securities were issued pursuant to the exemption set forth
in Section 4(2) of the Securities Act.
In December 1998, the Registrant issued to its management stockholders and
independent directors an aggregate of 25,940.17 shares of its Common Stock
under its Restated Common Stock Trust for Management Stockholders and
Independent Directors in connection with the closing of the Norfolk
Acquisition. The aggregate consideration paid for such securities was $259.40.
Such securities were issued pursuant to the exemption set forth in Section
4(2) of the Securities Act.
In January 1999, the Registrant issued to one of its executive officers
2,684.59 shares of its Common Stock. The aggregate consideration paid for such
securities was $26.85. Such securities were issued pursuant to the exemption
set forth in Section 4(2) of the Securities Act.
In June 1999 the Registrant issued to AT&T Wireless PCS, Inc. 53,881.64
shares of its Series A Convertible Preferred Stock and 42,738.98 shares of its
Series D Convertible Preferred Stock in connection with the closing of the
transactions contemplated by the License Exchange and Acquisition Agreement.
The aggregate value of such securities was $9,662,062 and the shares were
issued in partial consideration of AT&T Wireless' contribution to the
Registrant of personal communications services licenses. Such securities were
issued pursuant to the exemption set forth in Section 4(2) of the Securities
Act.
In June 1999, the Registrant issued to its management stockholders and
independent directors an aggregate of 4,748.78 shares of its Common Stock
under its Restated Common Stock Trust for Management Stockholders and
Independent Directors in connection with the closing of the transactions
contemplated by the License Exchange and Acquisition Agreement. The aggregate
consideration paid for such securities was $47.49. Such securities were issued
pursuant to the exemption set forth in Section 4(2) of the Securities Act.
In June 1999, the Registrant issued to each of thirteen of its officers
1,842 shares of its Common Stock under its Restated Common Stock Trust for
Management Stockholders and Independent Directors. The aggregate consideration
paid for such securities was $239.46. Such securities were issued pursuant to
the exemption set forth in Section 4(2) of the Securities Act.
In July 1999, the Registrant issued to one of its officers 1,842 shares of
its Common Stock under its Restated Common Stock Trust for Management
Stockholders and Independent Directors. The aggregate consideration paid
II-3
<PAGE>
for such securities was $18.42. Such securities were issued pursuant to the
exemption set forth in Section 4(2) of the Securities Act.
In August 1999, the Registrant issued to four of its officers an aggregate
of 15,500 shares of its Common Stock under its Restated Common Stock Trust for
Management Stockholders and Independent Directors. The aggregate consideration
paid for such securities was $155.00. Such securities were issued pursuant to
the exemption set forth in Section 4(2) of the Securities Act.
Item 16. Exhibits and Financial Statement Schedules
Exhibit Index
<TABLE>
<CAPTION>
Exhibit
-------
<C> <S>
**1.1 Form of Underwriting Agreement
*3.1 Restated Certificate of Incorporation of Triton PCS Holdings, Inc.
*3.2 Amendment to the Restated Certificate of Incorporation of Triton PCS
Holdings, Inc. dated November 27, 1998.
*3.3 Amendment to the Restated Certificate of Incorporation of Triton PCS
Holdings, Inc. dated May 28, 1999.
**3.4 Form of Second Restated Certificate of Incorporation of Triton PCS
Holdings, Inc.
*3.5 Amended and Restated Bylaws of Triton PCS Holdings, Inc.
**3.6 Form of Second Amended and Restated Bylaws of Triton PCS Holdings,
Inc.
**4.1 Specimen Common Stock Certificate
**5.1 Opinion of Dow Lohnes & Albertson, pllc regarding the validity of
the Class A common stock.
***10.1 Indenture, dated as of May 4, 1998, between Triton PCS, Inc., the
Guarantors party thereto and PNC Bank, National Association.
****10.2 First Supplemental Indenture, dated as of March 30, 1999, to the
Indenture dated as of May 4, 1998
***10.3 Credit Agreement, dated as of February 3, 1998 (the "Credit
Agreement"), among Triton PCS, Inc., Triton PCS Holdings, Inc., the
Lenders (as defined therein) party thereto, and The Chase Manhattan
Bank, as administrative agent.
***10.4 First Amendment, Consent and Waiver, dated as of April 16, 1998, to
the Credit Agreement
***10.5 Second Amendment, dated as of July 29, 1998, to the Credit Agreement
****10.6 Fourth Amendment, dated as of March 29, 1999, to the Credit
Agreement
10.7 Fifth Amendment, dated as of September 22, 1999, to the Credit
Agreement
***10.8 Securities Purchase Agreement, dated as of October 8, 1997, (the
"Securities Purchase Agreement") among AT&T Wireless PCS, Inc., the
cash equity investors listed on the signature pages thereto, the
management stockholders listed on the signature pages thereto and
Triton PCS, Inc., now known as Triton PCS Holdings, Inc.
***10.9 Amendment No. 1 to Securities Purchase Agreement, dated as of March
10, 1998.
***10.10 Closing Agreement, dated as of February 4, 1998, among AT&T Wireless
PCS, Inc., the cash equity investors listed on the signature pages
thereto, the management stockholders listed on the signature pages
thereto, and Triton PCS Holdings, Inc.
***10.11 Asset Purchase Agreement, dated as of March 10, 1998, between Triton
PCS, Inc. and Vanguard Cellular Systems of South Carolina, Inc.
***10.12 Preferred Stock Purchase Agreement by and among Cash Equity
Investors, Management Stockholders, Independent Directors, and
Triton PCS Holdings, Inc. dated as of June 29, 1998.
10.13 License Exchange and Acquisition Agreement dated as of June 8, 1999
by and among Triton PCS Holdings, Inc., Triton PCS License Company
L.L.C., and AT&T Wireless PCS, Inc.
10.14 Preferred Stock Repurchase and Issuance Agreement, dated as of
December 7, 1998 by and among J.P. Morgan Investment Corporation,
Sixty Wall Street SBIC Fund, L.P., the investors listed as cash
equity investors on the signature pages thereto, Triton PCS
Holdings, Inc., and certain of Triton PCS Holdings, Inc.'s other
stockholders listed on the signature pages thereto.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit
-------
<C> <S>
10.15 Norfolk Preferred Stock Purchase Agreement, dated as of December
31, 1998 by and among the cash equity investors listed on Schedule
I thereto, the management stockholders listed on Schedule II
thereto, the independent directors listed on Schedule III thereto,
and Triton PCS Holdings, Inc.
***10.16 AT&T Wireless Services Network Membership License Agreement, dated
as of February 4, 1998, between AT&T Corp. and Triton PCS Operating
Company L.L.C.
10.17 Amendment No. 1 to AT&T Wireless Services Network Membership
License Agreement, dated as of December 31, 1998, between AT&T
Corp. and Triton PCS Operating Company L.L.C.
10.18 Amendment No. 2 to AT&T Wireless Services Network Membership
License Agreement, dated as of June 8, 1999, between AT&T Corp. and
Triton PCS Operating Company L.L.C.
***10.19 Stockholders' Agreement, dated as of February 4, 1998, among AT&T
Wireless PCS, Inc., Triton PCS Holdings, Inc., CB Capital
Investors, L.P., J.P. Morgan Investment Corporation, Sixty Wall
Street SBIC Fund, L.P., Private Equity Investors III, L.P., Equity-
linked Investors-II, Toronto Dominion Capital (USA), Inc., First
Union Capital Partners, Inc., DAG-Triton PCS, L.P., Michael E.
Kalogris, Steven R. Skinner, David D. Clark, Clyde Smith, Patricia
Gallagher and David Standig.t
10.20 Amendment No. 1 to Stockholders' Agreement, dated as of December
31, 1998, among AT&T Wireless PCS, Inc., Triton PCS Holdings, Inc.,
CB Capital Investors, L.P., J.P. Morgan Investment Corporation,
Sixty Wall Street SBIC Fund, L.P., Private Equity Investors III,
L.P., Equity-linked Investors-II, Toronto Dominion Capital (USA),
Inc., First Union Capital Partners, Inc., DAG-Triton PCS, L.P.,
Michael E. Kalogris, Steven R. Skinner, David D. Clark, Clyde
Smith, David Standig, Michael Mears, Michael E. Kalogris, as
Trustee under Amended and Restated Common Stock Trust Agreement for
Management Employees and Independent Directors, dated June 26,
1998, Scott Anderson and John Beletic.
10.21 Amendment No. 2 to Stockholders' Agreement, dated as of June 8,
1999, among AT&T Wireless PCS, Inc., Triton PCS Holdings, Inc., CB
Capital Investors, L.P., J.P. Morgan Investment Corporation, Sixty
Wall Street SBIC Fund, L.P., Private Equity Investors III, L.P.,
Equity-linked Investors-II, Toronto Dominion Capital (USA), Inc.,
First Union Capital Partners, Inc., DAG-Triton PCS, L.P., Michael
E. Kalogris, Steven R. Skinner, David D. Clark, Clyde Smith, David
Standig, Michael Mears, Michael E. Kalogris, as Trustee under
Amended and Restated Common Stock Trust Agreement for Management
Employees and Independent Directors, dated June 26, 1998, Scott
Anderson and John Beletic.
***10.22 Investors Stockholders' Agreement, dated as of February 4, 1998,
among CB Capital Investors, L.P., J.P. Morgan Investment
Corporation, Sixty Wall Street SBIC Fund, L.P., Private Equity
Investors III, L.P., Equity-Linked Investors-II, Toronto Dominion
Capital (USA), Inc., DAG-Triton PCS, L.P., First Union Capital
Partners, Inc., and the stockholders named therein.
***10.23 Intercarrier Roamer Service Agreement, dated as of February 4,
1998, between AT&T Wireless Services, Inc. and Triton PCS Operating
Company L.L.C.
10.24 Amendment No. 1 to Intercarrier Roamer Service Agreement, dated as
of December 31, 1998, between AT&T Wireless Services, Inc. and
Triton PCS Operating Company L.L.C.
10.25 Amendment No. 2 to Intercarrier Roamer Service Agreement, dated as
of June 8, 1999, between AT&T Wireless Services, Inc. and Triton
PCS Operating Company L.L.C.
***++10.26 Ericsson Acquisition Agreement, dated as of March 11, 1998, between
Triton Equipment Company L.L.C. and Ericsson, Inc.
*++++10.27 First Addendum to Acquisition Agreement, dated as of May 24, 1999,
between Triton PCS Equipment Company L.L.C. and Ericsson, Inc.
***10.28 Employment Agreement, dated as of February 4, 1998, among Triton
Management Company, Inc., Triton PCS Holdings, Inc. and Michael E.
Kalogris.
***10.29 Amendment No. 1 to Employment Agreement, dated as of June 29, 1998,
among Triton Management Company, Inc., Triton PCS Holdings, Inc.,
and Michael E. Kalogris.
***10.30 Amendment No. 2 to the Employment Agreement by and among Triton
Management Company, Inc., Triton PCS Holdings, Inc. and Michael E.
Kalogris, dated December, 1998.
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Exhibit
-------
<C> <S>
***10.31 Amendment No. 3 to the Employment Agreement by and among Triton
Management Company, Inc., Triton PCS Holdings, Inc. and Michael E.
Kalogris, dated June 8, 1999.
***10.32 Employment Agreement, dated as of January 8, 1998, between Triton
Management Company and Clyde Smith.
***10.34 Employment Agreement, dated as of February 4, 1998, between Triton
Management Company and Steven R. Skinner.
***10.34 Amendment No. 1 to Employment Agreement, dated as of June 29, 1998,
among Triton Management Company, Inc., Triton PCS Holdings, Inc.,
and Steven R. Skinner.
***10.35 Amendment No. 2 to the Employment Agreement by and among Triton
Management Company, Inc., Triton PCS Holdings, Inc. and Steven R.
Skinner, dated December 1998.
***10.36 Amendment No. 3 to the Employment Agreement by and among Triton
Management Company, Inc., Triton PCS Holdings, Inc. and Steven R.
Skinner, dated June 8, 1999.
***10.37 Amended and Restated Common Stock Trust Agreement for Management
Employees and Independent Directors, dated as of June 26, 1998.
***10.38 Form of Pledge Agreement, dated as of February 4, 1998, between
certain shareholders and Triton PCS, Inc. Each of (a) Michael E.
Kalogris, (b) Steven R. Skinner, (c) Sixty Wall Street SBIC Fund,
L.P., (d) CB Capital Investors, L.P., (e) J.P. Morgan Investment
Corporation, (f) DAG-Triton PCS, L.P., (g) First Union Capital
Partners, Inc., (h) Toronto Dominion Capital (USA), Inc. and
(i) Private Equity Investors III, L.P., are party to separate
Pledge Agreements. The terms of each Pledge Agreement are identical
other than (1) the shareholder party thereto and (2) the number of
shares of stock held by such shareholder and, therefore, the number
of shares subject to the applicable Pledge Agreement.
***++10.39 Master Tower Site Lease Agreement, dated as of May 28, 1998,
between Triton PCS Property Company L.L.C. and AT&T Corp.
***10.40 Independent Director Stock Award Plan adopted as of February 4,
1998.
***10.41 Asset Purchase Agreement dated as of August 20, 1998 between Triton
PCS Holdings, Inc. and AT&T Wireless PCS, Inc.
***10.42 Asset Purchase Agreement, dated as of July 13, 1999, among Triton
PCS Operating Company, L.L.C., Triton PCS Property Company L.L.C.
and American Tower, L.P.
***10.43 Form of Stockholders Letter Agreement for management employees.
***10.44 Form of Stockholders Letter Agreement for independent directors.
***10.45 Triton PCS Holdings, Inc. 1999 Stock and Incentive Plan.
10.46 Triton PCS Holdings, Inc. Employee Stock Purchase Plan.
16.1 Letter from KPMG LLP.
*21.1 Subsidiaries of Triton PCS Holdings, Inc.
**23.1 Consent of Dow, Lohnes & Albertson, PLLC (included in their opinion
filed as Exhibit 5.1).
23.2 Consent of KPMG LLP.
23.3 Consent of Arthur Andersen LLP.
*24.1 Power of Attorney (set forth on the signature page of this
registration statement).
*27.1 Financial Data Schedule
</TABLE>
- --------
* Filed with this Registration Statement.
** To be filed by amendment.
*** Previously filed with the registration statement on Form S-4 of Triton
PCS, Inc. and its subsidiaries, dated October 1, 1998, or pre-effective or
post-effective amendments thereto and incorporated herein by reference.
**** Previously filed with the Form 10-Q of Triton PCS, Inc. and its
subsidiaries for the period ended March 31, 1999 and incorporated herein by
reference.
++ Portions of this exhibit have been omitted under an SEC order granting
confidential treatment under the Securities Act.
++++ Portions of this exhibit have been omitted pursuant to a request for
confidential treatment, and the omitted portions have been filed separately
with the Securities and Exchange Commission,
II-6
<PAGE>
Financial Statement Schedule
VALUATION AND QUALIFYING ACCOUNTS
($000's)
<TABLE>
<CAPTION>
Deductions
Additions credited
Balance at charged to to Add Balance
Beginning cost and costs and Myrtle Beach at end
of year expenses expenses acquisitions year
---------- ---------- ---------- ------------ -------
<S> <C> <C> <C> <C> <C>
Year ended December 31,
1997................... -- -- -- -- --
Allowance for doubtful
accounts............... -- -- -- -- --
Year ended December 31,
1998................... -- -- -- -- --
Allowance for doubtful
accounts............... -- $636 $480 $915 $1,071
</TABLE>
Item 17. Undertakings
The undersigned Registrant hereby undertakes to provide to the underwriter
at the closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.
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 provision, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim of
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit paid by
a director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted against the Registrant
by such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such indemnification
by it is against public policy as expressed in the Securities Act of 1933 and
will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
1. For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as a part of this
Registration Statement in reliance upon Rule 430A and contained in the form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed part of this Registration
Statement as of the time it was declared effective.
2. For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at such time shall be
deemed to be the initial bona fide offering thereof.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Triton PCS
Holdings, Inc. has duly caused this amendment no. 1 to the registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Malvern, Commonwealth of Pennsylvania, on September
23, 1999.
Triton PCS Holdings, Inc.
/s/ Michael Kalogris
By: _________________________________
Michael Kalogris
Chief Executive Officer and
Chairman of the Board of
Directors
Pursuant to the requirements of the Securities Act of 1933, this amendment
no. 1 to the registration statement has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Michael Kalogris Chief Executive Officer September 23, 1999
______________________________________ and Chairman of the Board
Michael Kalogris of Directors (Principal
Executive Officer)
* President, Chief Operating September 23, 1999
______________________________________ Officer and Director
Steven Skinner
* Senior Vice President, September 23, 1999
______________________________________ Chief Financial Officer
David D. Clark and Secretary (Principal
Financial Officer)
* Vice President and September 23, 1999
______________________________________ Controller (Principal
William A. Robinson Accounting Officer)
* Director September 23, 1999
______________________________________
Scott Anderson
* Director September 23, 1999
______________________________________
John Beletic
</TABLE>
II-8
<PAGE>
<TABLE>
<S> <C> <C>
* Director September 23, 1999
______________________________________
Arnold Chavkin
* Director September 23, 1999
______________________________________
Mary Hawkins-Key
* Director September 23, 1999
______________________________________
John Watkins
</TABLE>
*Power of Attorney
Michael Kalogris, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above for whom he is attorney-in-fact
pursuant to a power of attorney duly executed by such person and filed with
the Securities and Exchange Commission.
/s/ Michael Kalogris
By: ____________________________
Michael Kalogris
Attorney-in-fact
II-9
<PAGE>
Exhibit 10.7
FIFTH AMENDMENT dated as of September 22, 1999 (this "Amendment"), to the
---------
Credit Agreement, dated as of February 3, 1998 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"), among TRITON PCS,
----------------
INC., a corporation organized under the laws of the State of Delaware (the
"Borrower"), TRITON PCS HOLDINGS, INC., a corporation organized under the laws
- ---------
of the State of Delaware ("Holdings"), the several banks and other financial
--------
institutions and entities from time to time parties thereto (the "Lenders"), and
-------
THE CHASE MANHATTAN BANK, as administrative agent (the "Administrative Agent")
--------------------
for the Lenders.
WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make
certain loans to the Borrower;
WHEREAS the Borrower has requested the Lenders (i) to make available credit
facilities to finance capital expenditures related to the construction of the
Network, the acquisition of Related Businesses, working capital needs of the
Borrower and subscriber acquisition costs and (ii) to amend and restate the
Credit Agreement as provided herein; and
WHEREAS the Lenders are willing to make the requested credit facilities
available and amend and restate the Credit Agreement on the terms and subject to
the conditions set forth in this Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Defined Terms. Capitalized terms used and not defined herein shall
--------------
have the meanings given to them in the Credit Agreement, as amended hereby.
2. Amendment to the Credit Agreement. The Credit Agreement is hereby
----------------------------------
amended and restated in its entirety in the form of Exhibit A attached hereto.
3. No Other Amendments, Waivers or Consents; Confirmation. Except as
-------------------------------------------------------
expressly amended, waived,
1
<PAGE>
modified and supplemented hereby, the provisions of the Credit Agreement are and
shall remain in full force and effect.
4. Representations and Warranties. Each of Borrower and Holdings hereby
-------------------------------
represents and warrants to the Administrative Agent and the Lenders as of the
date hereof:
(a) After giving pro forma effect to this Amendment, no Default or Event of
Default has occurred and is continuing.
(b) The execution, delivery and performance by each of the Borrower and
Holdings of this Amendment have been duly authorized by all necessary corporate
and other action and do not and will not require any registration with, consent
or approval of, notice to or action by, any person (including any governmental
agency) in order to be effective and enforceable. The Credit Agreement as
amended by this Amendment constitutes the legal, valid and binding obligation of
each of the Borrower and Holdings, enforceable against each in accordance with
its terms, subject only to the operation of the Bankruptcy Code and other
similar statutes for the benefit of debtors generally and to the application of
general equitable principles.
(c) After giving pro forma effect to this Amendment, all representations
and warranties of the Borrower and Holdings contained in the Credit Agreement
(other than representations or warranties expressly made only on and as of an
earlier date) are true and correct in all material respects as of the date
hereof.
5. Effectiveness. This Amendment shall become effective only upon the
--------------
satisfaction in full of the following conditions precedent:
(a) The Administrative Agent (or its counsel) shall have received from the
Required Lenders under the Original Credit Agreement and each Tranche C
Lender either (i) a counterpart of this Amendment signed on behalf of such
party or (ii) written evidence satisfactory to the Administrative Agent
(which may include telecopy transmission of a signed
2
<PAGE>
signature page of this Amendment) that such party has signed a counterpart
of this Amendment.
(b) The Administrative Agent shall have received such written opinion or
opinions (addressed to the Administrative Agent and the Lenders and dated
the Amendment Effective Date) from counsel for the Borrower as the
Administrative Agent shall reasonably request. The Borrower hereby
requests such counsel to deliver such opinions.
(c) The Administrative Agent shall have received (i) a certificate of the
Secretary or Assistant Secretary of the Borrower and each Subsidiary Loan
Party dated the Amendment Effective Date and certifying (A) that attached
thereto is a true and complete copy of the by-laws, operating agreement or
partnership agreement of such Loan Party as in effect on the Amendment
Effective Date and at all times since a date prior to the date of the
resolutions described in clause (B) below, (B) that attached thereto is a
true and complete copy of resolutions duly adopted by the board of
directors (or equivalent governing body), members or partners of the
Borrower and each Subsidiary Loan Party authorizing the execution, delivery
and performance of the Loan Documents to which such person is a party and,
in the case of the Borrower, the borrowings hereunder, and that such
resolutions have not been modified, rescinded or amended and are in full
force and effect, and (C) as to the incumbency and specimen signature of
each officer or partner of the Borrower (or its general partner) and any
Subsidiary Loan Party executing any Loan Document on behalf of such Loan
Party; (ii) a certificate of another officer as to the incumbency and
specimen signature of the Secretary or Assistant Secretary executing the
certificate pursuant to (i) above; and (iii) such other documents as the
Lenders or Cravath, Swaine & Moore, counsel for the Administrative Agent,
may reasonably request.
(d) The Administrative Agent shall have received a certificate, dated the
Amendment Effective Date and signed by the President, a Vice President or a
Financial Officer of the Borrower, confirming
3
<PAGE>
compliance with the conditions set forth in paragraphs (a) and (b) of
Section 4.02 of the Credit Agreement.
(e) The Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Amendment Effective Date,
including (i) for the account of each Lender under the Original Credit
Agreement that signs this Amendment, an amendment fee equal to 0.25% of the
aggregate amount of the outstanding Loans and unused Commitments of such
Lender under the Original Credit Agreement and (ii) to the extent invoiced,
reimbursement or payment of all out-of-pocket expenses required to be
reimbursed or paid by any Loan Party hereunder or under any other Loan
Document.
(f) The Administrative Agent shall have received from the Borrower
conformed copies, certified and true and complete, of the Tower Sale Asset
Purchase Agreement and the Tower Sale Asset Purchase Agreement shall have
been duly executed and delivered on behalf of each party thereto, shall
have been duly authorized thereby, and shall constitute a legal, valid and
binding obligation of such party, enforceable against such party in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, and general equitable principles
(whether considered in a proceeding in equity or at law); and the Borrower
shall have delivered to the Lenders a certificate of a Responsible Officer
as to the accuracy of the foregoing.
(g) Each of the parties thereto shall have executed and delivered to the
Administrative Agent consents to assignment ("Consents to Assignment") to
the Administrative Agent for the benefit of the Secured Parties, in form
and substance satisfactory to the Administrative Agent, with respect to the
Tower Sale Asset Purchase Agreement.
(h) All consents and approvals required to be obtained from any
Governmental Authority or other Person in connection with the Transactions
shall have
4
<PAGE>
been obtained, and all applicable waiting periods and appeal periods shall
have expired.
(i) There shall have been no material adverse change in the business,
assets, results of operations, properties, prospects or financial condition
of the Borrower and the Subsidiaries, taken as a whole, or of Holdings
since December 31, 1998.
(j) Holdings and the Borrower shall be in Pro Forma Compliance.
6. Expenses. The Borrower agrees to reimburse the Administrative Agent
---------
for its reasonable out-of-pocket expenses in connection with this Amendment,
including the reasonable fees, charges and disbursements of Cravath, Swaine &
Moore, counsel for the Administrative Agent.
7. Governing Law; Counterparts. (a) This Amendment and the rights and
----------------------------
obligations of the parties hereto shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York.
(b) This Amendment may be executed by one or more of the parties to this
Amendment on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. This
Amendment may be delivered by facsimile transmission of the relevant signature
pages hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
TRITON PCS, INC.,
by /s/ Daniel E. Hopkins
-----------------------
Name: Daniel E. Hopkins
Title: Vice President of
Finance and Treasurer
5
<PAGE>
TRITON PCS HOLDINGS, INC.,
by
----------------------
Name:
Title:
TRITON MANAGEMENT COMPANY, INC.,
by
----------------------
Name:
Title:
TRITON PCS HOLDINGS COMPANY L.L.C.,
by TRITON MANAGEMENT COMPANY, INC., its manager,
by
----------------------
Name:
Title:
TRITON PCS INVESTMENT COMPANY L.L.C.,
by TRITON MANAGEMENT COMPANY, INC., its manager,
by
----------------------
Name:
Title:
TRITON PCS OPERATING COMPANY L.L.C,
by TRITON MANAGEMENT COMPANY, INC., its manager,
by
----------------------
Name:
Title:
6
<PAGE>
TRITON PCS LICENSE COMPANY L.L.C.,
by TRITON MANAGEMENT COMPANY, INC., its manager,
by /s/ Daniel E. Hopkins
----------------------
Name: Daniel E. Hopkins
Title: Vice President of
Finance and Treasurer
TRITON PCS PROPERTY COMPANY L.L.C.,
by TRITON MANAGEMENT COMPANY, INC., its manager,
by /s/ Daniel E. Hopkins
----------------------
Name: Daniel E. Hopkins
Title: Vice President of
Finance and Treasurer
TRITON PCS EQUIPMENT COMPANY L.L.C.,
by TRITON MANAGEMENT COMPANY, INC., its manager,
by /s/ Daniel E. Hopkins
----------------------
Name: Daniel E. Hopkins
Title: Vice President of
Finance and Treasurer
THE CHASE MANHATTAN BANK,
individually and as Administrative
Agent,
by /s/ Tracey Navin Ewing
----------------------
Name: Tracey Navin Ewing
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
by /s/ Gery M. Sampere
----------------------
7
<PAGE>
Name: Gere M. Sampere
Title: Vice President
TORONTO DOMINION BANK (TEXAS),
by /s/ Azar S. Azarpour
----------------------
Name: Azar S. Azarpour
Title: Vice President
ABN AMRO BANK N.V.,
by /s/ Frances O'R. Logan
----------------------
Name: Frances O'R. Logan
Title: Group Vice
President
by /s/ Ann Schwalbenberg
----------------------
Name: Ann Schwalbenberg
Title: Vice President
BALANCED HIGH-YIELD FUND I LTD.,
by BHF (USA) CAPITAL CORPORATION
acting as Attorney-in-fact,
by /s/ Michael Pellerite
----------------------
Name: Michael Pellerite
Title:Assistant Vice
President
by /s/ Anthony Heyman
----------------------
Name: Anthony Heyman
Title: Assistant Vice
President
BANKBOSTON, N.A.,
by /s/ Daniel P. Gilbert
----------------------
Name: Daniel P. Gilbert
Title: Vice President
8
<PAGE>
BANK OF HAWAII,
by /s/ Eric N. Pelletier
----------------------
Name: Eric N. Pelletier
Title: Vice President
BANK OF TOKYO-MITSUBISHI TRUST COMPANY,
by /s/ Glenn B. Eckert
----------------------
Name: Glenn B. Eckert
Title: Vice President
THE BANK OF NEW YORK,
by /s/ Brendan T. Nedzi
----------------------
Name: Brendan T. Nedzi
Title: Senior Vice
President
THE BANK OF NOVA SCOTIA,
by /s/ Vincent J. Fitzgerald
----------------------
Name: Vincent J. Fitzgerald
Title: Authorized Signatory
BARCLAYS BANK PLC,
by /s/ Daniele Iacovone
----------------------
Name: Daniele Iacovone
Title: Associate Director
9
<PAGE>
BAYERISCHE HYPO- UND VEREINSBANK
AG, NEW YORK BRANCH,
by /s/ Andrew G. Mathews
----------------------
Name: Andrew G. Mathews
Title: Managing Director
by /s/ Eric A. Muth
----------------------
Name: Eric A. Muth
Title: Associate Director
BHF (USA) CAPITAL CORPORATION,
by /s/ Michael Pellerite
----------------------
Name: Michael Pellerite
Title: Assistant Vice
President
by /s/ Anthony Heyman
----------------------
Name: Anthony Heyman
Title: Assistant Vice
President
CIBC INC.,
by /s/ Laura Horn
----------------------
Name: Laura Horn
Title: Executive Director,
CIBC World
Markets Corp.
As Agent
THE CIT GROUP/EQUIPMENT FINANCING, INC.,
by /s/ J.E. Palmer
----------------------
Name: J.E. Palmer
Title: Assistant Vice
President
10
<PAGE>
CREDIT LYONNAIS, NEW YORK BRANCH,
by /s/ Mark D. Thorsheim
----------------------
Name: Mark D. Thorsheim
Title: Vice President
CRESTAR BANK,
by /s/ J. Eric Millham
----------------------
Name: J. Eric Millham
Title: Vice President
DE NATIONALE INVESTERINGSBANK N.V.,
by /s/ Henk L. Huizing
----------------------
Name: Henk L. Huizing
Title: Senior Vice
President
by /s/ C. Mulder
----------------------
Name: C. Mulder
Title: Legal Counsel
FIRST UNION NATIONAL BANK,
by /s/ Jon W. Peterson
----------------------
Name: Jon W. Peterson
Title: Vice President
THE FUJI BANK, LIMITED
New York Branch,
by /s/ Teiji Teramoto
----------------------
Name: Teiji Teramoto
Title: Vice President and
Manager
11
<PAGE>
GENERAL ELECTRIC CAPITAL CORPORATION,
by /s/ Mark F. Mylon
----------------------
Name: Mark F. Mylon
Title: Manager-Operations
LEHMAN COMMERCIAL PAPER, INC.,
by /s/ Michele Swanson
----------------------
Name: Michele Swanson
Title: Authorized
Signatory
MERITA BANK PLC,
by /s/ Charles J. Lansown
----------------------
Name: Charles J. Lansown
Title: Senior Vice
President
by /s/ Joseph A. Ciccolini
----------------------
Name: Joseph A. Ciccolini
Title: Assistant Vice
President
MOUNTAIN CAPITAL CLO I, LTD.,
by /s/ J. Geoff Kirby
----------------------
Name: J. Geoff Kirby
Title: Director
PNC BANK, NATIONAL ASSOCIATION,
by /s/ John T. Wilden
----------------------
Name: John T. Wilden
Title: Vice President
12
<PAGE>
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK INTERNATIONAL",
New York Branch,
by /s/ Michiel Vandervoort
----------------------
Name: Michiel Vandervoort
Title: Vice President
by /s/ Pieter Koddle
----------------------
Name: Pieter Koddle
Title: Senior Vice
President
UNION BANK OF CALIFORNIA, N.A.,
by /s/ Seth Yakatan
----------------------
Name: Seth Yakatan
Title: Assistant Vice
President
U.S. BANK NATIONAL ASSOCIATION,
by /s/ Andy McDonald
----------------------
Name: Andy McDonald
Title: Senior Vice
President
VAN KAMPEN PRIME RATE INCOME TRUST,
by /s/ Dennis J. McDonnell
----------------------
Name: Dennis J. McDonnell
Title: President
13
<PAGE>
VAN KAMPEN CLO II, LIMITED,
By: Van Kampen Management Inc., as
Collateral Manager
by /s/ Dennis J. McDonnell
----------------------
Name: Dennis J. McDonnell
Title: President
VAN KAMPEN SENIOR INCOME TRUST,
by /s/ Dennis J. McDonnell
----------------------
Name: Dennis J. McDonnell
Title: President
ELC (CAYMAN) LTD. 1999-II
by /s/ E.A. Kratzman III
----------------------
Name: E.A. Kratzman III
Title: Managing Director
14
<PAGE>
Exhibit A
================================================================================
FIRST AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
February 3, 1998
as amended and restated as of
September 22, 1999
among
TRITON PCS, INC.
TRITON PCS HOLDINGS, INC.
The Lenders Party Hereto
THE CHASE MANHATTAN BANK,
as Administrative Agent,
CHASE SECURITIES INC.,
as Sole Book Manager and Co-Lead Arranger,
TORONTO DOMINION SECURITIES (USA) INC.,
as Co-Lead Arranger and Syndication Agent, and
J. P. MORGAN SECURITIES INC.
as Documentation Agent
___________________________
================================================================================
15
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
-----------
SECTION 1.01. Defined Terms............................ 1
SECTION 1.02. Classification of Loans and Borrowings... 42
SECTION 1.03. Terms Generally.......................... 42
SECTION 1.04. Accounting Terms; GAAP................... 42
ARTICLE II
The Credits
------------
SECTION 2.01. Commitments.............................. 43
SECTION 2.02. Loans and Borrowings..................... 44
SECTION 2.03. Requests for Borrowings.................. 45
SECTION 2.04. Funding of Borrowings.................... 46
SECTION 2.05. Interest Elections....................... 47
SECTION 2.06. Termination and Optional Reduction of
Commitments............................. 48
SECTION 2.07. Repayment of Loans; Evidence of Debt..... 49
SECTION 2.08. Automatic Revolving Commitment
Reductions; Amortization of Term Loans.. 50
SECTION 2.09. Prepayment of Loans...................... 52
SECTION 2.10. Fees..................................... 55
SECTION 2.11. Interest................................. 56
SECTION 2.12. Alternate Rate of Interest............... 57
SECTION 2.13. Increased Costs.......................... 58
SECTION 2.14. Break Funding Payments................... 59
SECTION 2.15. Taxes.................................... 60
SECTION 2.16. Payments Generally; Pro Rata Treatment;
Sharing of Setoffs...................... 62
SECTION 2.17. Mitigation Obligations; Replacement of
Lenders................................. 64
SECTION 2.18. Letters of Credit........................ 65
SECTION 2.19. Incremental Term Loans................... 71
SECTION 2.20. Swingline Loans.......................... 72
17
<PAGE>
ARTICLE III
Representations and Warranties
------------------------------
SECTION 3.01. Organization; Powers....................... 73
SECTION 3.02. Authorization; Enforceability.............. 73
SECTION 3.03. Governmental Approvals; No Conflicts....... 73
SECTION 3.04. Financial Condition; No Material
Adverse Change............................ 74
SECTION 3.05. Properties................................. 75
SECTION 3.06. Litigation and Environmental Matters....... 75
SECTION 3.07. Compliance with Laws and Agreements........ 76
SECTION 3.08. Investment and Holding Company Status...... 76
SECTION 3.09. Taxes...................................... 76
SECTION 3.10. ERISA...................................... 77
SECTION 3.11. Disclosure................................. 77
SECTION 3.12. Subsidiaries; Parents...................... 77
SECTION 3.13. Absence of Non-Permitted Obligations....... 78
SECTION 3.14. Licenses................................... 79
SECTION 3.15. No Burdensome Restrictions................. 79
SECTION 3.16. [Intentionally Omitted].................... 79
SECTION 3.17. Flood Insurance............................ 79
SECTION 3.18. Insurance.................................. 79
SECTION 3.19. Labor Matters.............................. 79
SECTION 3.20. Solvency................................... 80
SECTION 3.21. FCC Compliance............................. 80
SECTION 3.22. Security Documents......................... 81
SECTION 3.23. Copyrights, Trademarks, etc................ 82
SECTION 3.24. Federal Regulations........................ 82
SECTION 3.25. Assets and Business of Holdings............ 82
SECTION 3.26. Year 2000.................................. 83
ARTICLE IV
Conditions
----------
SECTION 4.01. Effective Date............................. 83
SECTION 4.02. Each Credit Event.......................... 90
ARTICLE V
Affirmative Covenants
-----------------------
SECTION 5.01. Financial Statements and Other
Information............................... 91
SECTION 5.02. Notices of Material Events................. 94
SECTION 5.03. Information Regarding Collateral........... 94
SECTION 5.04. Existence; Conduct of Business............. 95
SECTION 5.05. Payment of Obligations..................... 95
18
<PAGE>
SECTION 5.06. Maintenance of Properties.................. 96
SECTION 5.07. Insurance.................................. 96
SECTION 5.08. Casualty and Condemnation.................. 96
SECTION 5.09. Books and Records; Inspection and
Audit Rights.............................. 97
SECTION 5.10. Compliance with Laws....................... 97
SECTION 5.11. Use of Proceeds............................ 97
SECTION 5.12. Additional Subsidiaries.................... 97
SECTION 5.13. Further Assurances......................... 98
SECTION 5.14. Interest Rate Protection................... 99
SECTION 5.15. License Drop Down.......................... 100
SECTION 5.16. Business of Holdings; Immediate
Contributions to the Borrower............. 100
SECTION 5.17. Execution of Other Agreements.............. 100
SECTION 5.18. Notification of Acquisition of
Additional Licenses....................... 100
ARTICLE VI
Negative Covenants
------------------
SECTION 6.01. Indebtedness; Certain Equity Securities.... 101
SECTION 6.02. Liens...................................... 103
SECTION 6.03. Sale and Lease-Back Transactions........... 105
SECTION 6.04. Fundamental Changes........................ 105
SECTION 6.05. Investments, Loans, Advances, Guarantees
and Acquisitions.......................... 105
SECTION 6.06. Asset Sales................................ 108
SECTION 6.07. Hedging Agreements......................... 108
SECTION 6.08. Restricted Payments; Certain Payments
of Indebtedness........................... 109
SECTION 6.09. Transactions with Affiliates............... 110
SECTION 6.10. Restrictive Agreements..................... 110
SECTION 6.11. Amendment of Material Documents............ 111
SECTION 6.12. Financial Covenants........................ 111
SECTION 6.13. Liabilities of Special Purpose
Subsidiaries.............................. 115
ARTICLE VII
Events of Default
-----------------
ARTICLE VIII
The Administrative Agent
------------------------
19
<PAGE>
ARTICLE IX
Miscellaneous
---------------
SECTION 9.01. Notices.................................. 123
SECTION 9.02. Waivers; Amendments...................... 124
SECTION 9.03. Expenses; Indemnity; Damage Waiver....... 126
SECTION 9.04. Successors and Assigns................... 128
SECTION 9.05. Survival................................. 131
SECTION 9.06. Counterparts; Integration;
Effectiveness........................... 131
SECTION 9.07. Severability............................. 132
SECTION 9.08. Right of Setoff.......................... 132
SECTION 9.09. Governing Law; Jurisdiction; Consent to
Service of Process...................... 132
SECTION 9.10. WAIVER OF JURY TRIAL..................... 133
SECTION 9.11. Headings................................. 134
SECTION 9.12. Confidentiality.......................... 134
SCHEDULES:
- ---------
Schedule 2.01 -- Commitments
Schedule 3.05 -- Real Property
Schedule 3.06 -- Litigation and Environmental Matters
Schedule 3.14 -- Network Area
Schedule 3.22 -- Mortgaged Property
Schedule 5.01(i)-- Revenue and System Build Information
Schedule 6.02 -- Existing Liens
Schedule 6.10 -- Existing Restrictions
EXHIBITS:
- --------
Exhibit A -- Form of Assignment and Acceptance
Exhibit B -- Form of Opinion of Borrower's Counsel
Exhibit C -- Form of Guarantee Agreement
Exhibit D -- Form of Pledge Agreement
Exhibit E -- Form of Security Agreement
Exhibit F -- Form of Indemnity, Subrogation and
Contribution Agreement
Exhibit G -- Form of AW License Exchange and Acquisition
Agreement
20
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement")
dated as of February 3, 1998, as amended and restated as of
September 22, 1999 among TRITON PCS, INC., a Delaware corporation
(the "Borrower"), TRITON PCS HOLDINGS, INC. ("Holdings"), the
LENDERS (as defined in Article I) party hereto, and THE CHASE
MANHATTAN BANK, as Administrative Agent.
WHEREAS the Borrower intends to construct and operate the Network (as
defined in Article I);
WHEREAS the Borrower has requested the Lenders (i) to make available
credit facilities to finance capital expenditures related to the construction of
the Network, the acquisition of Related Businesses, working capital needs of the
Borrower and subscriber acquisition costs and (ii) to amend and restate the
Original Credit Agreement (as defined in Article I) as provided herein; and
WHEREAS the Lenders are willing to make the requested credit
facilities available and amend and restate the Original Credit Agreement on the
terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth below, the parties hereto agree as follows:
ARTICLE I
Definitions
-----------
SECTION 1.01. Defined Terms. As used in this Agreement, the
--------------
following terms have the meanings specified below:
"ABC" means ABC Wireless, L.L.C., a Delaware limited liability
---
company.
"ABR", when used in reference to any Loan or Borrowing, refers to
---
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
21
<PAGE>
"Additional Lender" shall have the meaning assigned thereto in Section
-----------------
2.19.
"Additional Capital Contributions" means (i) the issuance by Holdings
--------------------------------
of $50,000,000 of Common Stock or Series C or D Preferred Stock to Holdings'
existing investors or other investors reasonably acceptable to the
Administrative Agent and (ii) the issuance by Holdings of $25,000,000 of Common
Stock, Series E Preferred Stock or Deeply Subordinated Debt to a Qualified
Vendor or other investors reasonably acceptable to the Administrative Agent, in
each case for cash pursuant to the Additional Capital Contribution Commitments.
"Additional Capital Contribution Commitments" means unconditional,
-------------------------------------------
irrevocable commitments from Holdings' existing investors, a Qualified Vendor or
other investors reasonably acceptable to the Administrative Agent to purchase
additional shares of Common Stock or Series C, D or E Preferred Stock or Deeply
Subordinated Debt for cash in an aggregate amount of $75,000,000, the proceeds
of which will, on receipt by Holdings, be immediately contributed to the
Borrower; provided, however, that the Additional Capital Contribution
-------- -------
Commitments may be terminable upon receipt by the Borrower of $75,000,000 of Net
Proceeds from an initial public offering of equity securities of Holdings.
"Adjusted EBITDA" means for any fiscal period, the sum of (a)
---------------
Consolidated EBITDA for such period plus (b) the aggregate amount deducted in
----
determining Consolidated Net Income for such period in respect of sales,
marketing and advertising expenses and consumer-related equipment subsidy
expenses.
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
------------------
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means The Chase Manhattan Bank, in its capacity
--------------------
as administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative Questionnaire
----------------------------
in the form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another Person
---------
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified and with
22
<PAGE>
respect to any Lender that is a fund that invests in commercial loans, any other
fund that invests in commercial loans and is managed by the same investment
advisor as such Lender or by an Affiliate of such investment advisor.
"Aggregate Service Revenue" means for any period, total revenues less
-------------------------
revenues from equipment sales of the Borrower and the Subsidiaries.
"Alternate Base Rate" means, for any day, a rate per annum equal to
-------------------
the greater of (a) the Prime Rate in effect on such day and (b) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective from and including the effective date of such
change in the Prime Rate or the Federal Funds Effective Rate, respectively.
"Amendment Execution Date" means September 22, 1999, the date of
-------------------------
execution of the amendment (the "Amendment") to the Original Credit Agreement
that amends and restates such agreement.
"Amendment Effective Date" means the date on which the conditions
------------------------
specified in Section 5 of the Amendment are satisfied (or waived).
"Annualized Adjusted EBITDA" means for the period ending on the last
---------------------------
day of any fiscal quarter, the product of (a) Adjusted EBITDA for the two
consecutive fiscal quarters ending on such last day, multiplied by (b) two.
"Annualized EBITDA" means for the period ending on the last day of any
-----------------
fiscal quarter, the product of (a) Consolidated EBITDA for the two consecutive
fiscal quarters ending on such last day, multiplied by (b) two.
"Applicable Margin" means, for any day (a) prior to the Amendment
-----------------
Execution Date, the "Applicable Rate" as defined in the Original Credit
Agreement and (b) on and after the Amendment Execution Date, (i) with respect to
any Tranche B Term Loan, the applicable Tranche B Rate, or (ii) with respect to
a Revolving Loan, a Tranche A Term Loan or a Tranche C Term Loan, 1.50% per
annum, in the case of an ABR Loan, or 2.50% per annum, in the case of a
Eurodollar Loan; provided, that after the earlier of (x) the date that is twelve
--------
months subsequent to the Amendment Effective Date and (y) the date the Borrower
delivers financial statements pursuant to Sections 5.01(a) or (b) of this
Agreement that demonstrate positive Consolidated EBITDA for the fiscal quarter
then most recently ended, the applicable rate per annum for a Revolving Loan, a
Tranche A Term Loan or a
23
<PAGE>
Tranche C Term Loan shall be based upon the Leverage Ratio as of the most recent
determination date as set forth below under the caption "ABR Spread" or
"Eurodollar Spread", as the case may be; provided further, that unless
-------- -------
Consolidated EBITDA for the most recent fiscal quarter for which financial
statements have been delivered pursuant to Section 5.01 is positive, the
"Applicable Margin" for purposes of clause (b)(ii) shall be the applicable rate
per annum set forth below in Category 1:
ABR EURODOLLAR
--- ----------
LEVERAGE RATIO: Spread Spread
-------------- ------ ------
Category 1
----------
Not Applicable 1.250% 2.250%
- --------------------------------------------------------------------------------
Category 2
----------
Greater than or equal to 10.0 to 1.00 1.000% 2.000%
- --------------------------------------------------------------------------------
Category 3
----------
Greater than or equal to 9.0 to 1.00 but less
than 10.0 to 1.00 0.875% 1.875%
- --------------------------------------------------------------------------------
Category 4
----------
Greater than or equal to 8.0 to 1.00 but less
than 9.0 to 1.00 0.750% 1.750%
- --------------------------------------------------------------------------------
Category 5
----------
Greater than or equal to 6.0 to 1.00 but less
than 8.0 to 1.00 0.500% 1.500%
- --------------------------------------------------------------------------------
Category 6
----------
Greater than or equal to 5.0 to 1.00 but less
than 6.0 to 1.00 0.250% 1.250%
- --------------------------------------------------------------------------------
Category 7
----------
Less than 5.0 to 1.00 ---- 1.000%
- --------------------------------------------------------------------------------
For purposes of the foregoing, (i) the Leverage Ratio shall be
determined as of the end of each fiscal quarter of the Borrower's fiscal year
based upon the Borrower's consolidated financial statements delivered pursuant
to Section 5.01(a) or (b) and (ii) each change in the Applicable Margin
resulting from a change in the
24
<PAGE>
Leverage Ratio shall be effective during the period commencing on and including
the date of delivery to the Administrative Agent of such consolidated financial
statements indicating such change and ending on the date immediately preceding
the effective date of the next such change; provided that the Leverage Ratio
--------
shall be deemed to be in Category 1 (A) at any time that an Event of Default has
occurred and is continuing or (B) if the Borrower fails to deliver the
consolidated financial statements required to be delivered by it pursuant to
Section 5.01(a) or (b), during the period from the expiration of the time for
delivery thereof until such consolidated financial statements are delivered.
"Applicable Percentage" means, with respect to any Revolving Lender,
---------------------
the percentage of the total Revolving Commitments represented by such Lender's
Revolving Commitment. If the Revolving Commitments have terminated or expired,
the Applicable Percentages shall be determined based upon the Revolving
Commitments most recently in effect, giving effect to any assignments.
"Applicable Rate" means with respect to the commitment fees payable
---------------
hereunder, (a) for any day prior to the Amendment Execution Date, the
"Applicable Rate" as defined in the Original Credit Agreement and (b) for any
day on or after the Amendment Execution Date, the applicable rate per annum set
forth below based upon the percentage of the total Revolving Commitments,
Tranche A Commitments, and Tranche C Commitments which are used on such date:
Drawn Commitments as a Percentage of the Total
Revolving Commitments, Tranche A
Commitments, and Tranche C Commitments Commitment Fee
- --------------------------------------------------------------------------------
Greater than or equal to 50% 0.50%
- --------------------------------------------------------------------------------
Less than 50% 0.75%
- --------------------------------------------------------------------------------
; provided, that from and after the earlier of (i) the date that is twelve
-------- ----
months subsequent to the Amendment Effective Date and (ii) the date the Borrower
delivers financial statements pursuant to Sections 5.01(a) or (b) of this
Agreement that demonstrate positive Consolidated EBITDA for the fiscal quarter
then most recently ended, the Applicable Rate shall be based upon the Leverage
Ratio as of the most recent determination date; provided further, that unless
-------- -------
Consolidated EBITDA for the most recent fiscal quarter for which financial
statements have been delivered pursuant to
25
<PAGE>
Section 5.01 is positive, the Applicable Rate shall be the applicable rate per
annum set forth below in Category 1:
Commitment
Leverage Ratio: Fee Rate
- -------------------------------------------------------------------------------
Category 1
----------
Not Applicable 0.50%
- -------------------------------------------------------------------------------
Category 2
----------
Greater than or equal to 10.0 to 1 0.50%
- -------------------------------------------------------------------------------
Category 3
----------
Less than 10.0 to 1 0.375%
- -------------------------------------------------------------------------------
For purposes of the foregoing, (i) the Leverage Ratio shall be
determined as of the end of each fiscal quarter of the Borrower's fiscal year
based upon the Borrower's consolidated financial statements delivered pursuant
to Section 5.01(a) or (b) and (ii) each change in the Applicable Rate resulting
from a change in the Leverage Ratio shall be effective during the period
commencing on and including the date of delivery to the Administrative Agent of
such consolidated financial statements indicating such change and ending on the
date immediately preceding the effective date of the next such change; provided
--------
that the Leverage Ratio shall be deemed to be in Category 1 (A) at any time that
an Event of Default has occurred and is continuing or (B) if the Borrower fails
to deliver the consolidated financial statements required to be delivered by it
pursuant to Section 5.01(a) or (b), during the period from the expiration of the
time for delivery thereof until such consolidated financial statements are
delivered.
"Assignment and Acceptance" means an assignment and acceptance entered
-------------------------
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.
"AW" means AT&T Wireless PCS, Inc.
--
"AW License Exchange and Acquisition Agreement" means the License
---------------------------------------------
Exchange and Acquisition Agreement executed by AW, Holdings and Triton PCS
License Company, L.L.C. dated as of July 13, 1999.
26
<PAGE>
"AW Licenses" has the meaning set forth in the definition of Initial
-----------
Equity Contributions.
"AW Pops Swap" means the acquisition by one or more of the Borrower
------------
and the Subsidiaries of 20 MHz of the 30 MHz of PCS licenses owned by AW
covering the Savannah, Georgia, BTA and the Athens, Georgia BTA (collectively,
the "AW Swap Licenses"), in exchange for the 20 MHz of PCS licenses owned by the
Borrower and its Subsidiaries covering the Cumberland, Maryland BTA and the
Hagerstown, Maryland BTA (collectively, the "Exchanged Licenses") and the
issuance to AW of approximately 53,881.64 shares of Series A Preferred Stock and
approximately 42,738.98 shares of Series D Preferred Stock in connection
therewith in accordance with the terms of the AW License Exchange and
Acquisition Agreement and in connection therewith the issuance of approximately
4,748.78 shares of common stock of Holdings to the current holders of common
stock.
"Bidding Entity" means Lafayette Communications Company, L.L.C., a
--------------
Delaware limited liability company.
"Bidding Entity Note" means a promissory note of the Bidding Entity
-------------------
payable to the Borrower or a Wholly Owned Subsidiary in an amount equal to the
funds invested in the Bidding Entity by the Borrower and any Subsidiary dated as
of March 1, 1999.
"Board" means the Board of Governors of the Federal Reserve System of
-----
the United States of America.
"Borrower" means Triton PCS, Inc., a Delaware corporation.
--------
"Borrowing" means (a) Loans of the same Class and Type, made,
---------
converted or continued on the same date and, in the case of Eurodollar Loans as
to which a single Interest Period is in effect or (b) a Swingline Loan.
"Borrowing Request" means a request by the Borrower for a Borrowing in
-----------------
accordance with Section 2.03.
"BTA" means a Basic Trading Area, as defined in 47 C.F.R. (S)24.202.
---
"Business Day" means any day that is not a Saturday, Sunday or other
------------
day on which commercial banks in New York City are authorized or required by law
to remain closed; provided that, when used in connection with a Eurodollar Loan,
--------
the term "Business Day" shall also exclude any day on which banks are not open
------------
for dealings in dollar deposits in the London interbank market.
27
<PAGE>
"Capital Expenditures" means, for any period, without duplication, (a)
--------------------
the capital expenditures of the Borrower and its consolidated Subsidiaries that
are (or would be) set forth in a consolidated statement of cash flows of the
Borrower for such period prepared in accordance with GAAP, plus (b) the capital
expenditures of the Borrower and its consolidated Subsidiaries made but not yet
paid for included in accounts payable at the end of such period, minus (c) any
capital expenditures shown on such statement of cash flows of the Borrower for
such period to the extent included in accounts payable at the end of any prior
period, plus (d) Capital Lease Obligations incurred by the Borrower and its
consolidated Subsidiaries during such period (other than Capital Lease
Obligations permitted by Section 6.01(a)(viii)), minus (e) any capital
expenditures made with casualty or other insurance proceeds to repair, restore
or replace lost or damaged property or assets within 270 days of such loss or
damage, minus (f) any capital expenditures that represent the purchase price of
the acquisition of a business or business unit permitted by Section 6.05.
"Capital Lease Obligations" of any Person means the obligations of
-------------------------
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Capital Stock" means any and all shares, interests, participations or
-------------
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase or subscribe for any of
the foregoing, or any warrants, rights or options to purchase or subscribe for
any such warrants, rights or options.
"Cash Interest Expense" means, for any period, (a) Consolidated
---------------------
Interest Expense for such period, minus (b) the aggregate amount of pay-in-kind,
accreted or other Consolidated Interest Expense for such period not involving
any payment in cash.
"Change in Control" means (a) the sale or other disposition by AW of
-----------------
any shares of the Series C Preferred Stock, Series D Preferred Stock or Common
Stock of Holdings or of any Common Stock of the Borrower prior to February 4,
2001 (provided that the conversion of any such shares, in accordance with their
terms, into other shares of Capital
28
<PAGE>
Stock of Holdings shall not constitute a disposition of such shares so long as
AW retains the shares into which such shares are converted); (b) the acquisition
of ownership, directly or indirectly, beneficially or of record, by any Person
or group (within the meaning of the Securities Exchange Act of 1934 and the
rules of the Securities and Exchange Commission thereunder as in effect on the
date hereof) other than Holdings or Persons (or Affiliates thereof) owning
capital stock of Holdings on the Effective Date, of shares representing more
than 30% of the aggregate ordinary voting power represented by the issued and
outstanding capital stock of either the Borrower or Holdings; (c) occupation of
a majority of the seats (other than vacant seats) on the board of directors of
Holdings or the Borrower by Persons who were not (i) nominated by the board of
directors of Holdings (in the case of Holdings' board) or the Borrower (in the
case of the Borrowers' board) (ii) appointed by directors so nominated or (iii)
in the case of Holdings, appointed by shareholders of Holdings who are
shareholders of Holdings on the Effective Date; or (d) the acquisition of direct
or indirect Control of the Borrower or Holdings by any Person or group other
than Holdings or Persons (or Affiliates thereof) owning capital stock of
Holdings on the date hereof; provided, however, that neither (A) the sale by AW
-------- -------
of all or any of its equity interest in Holdings subsequent to February 4, 2001,
nor (B) the sale by Holdings or the Borrower of newly issued Common Stock in a
public offering, shall constitute a Change of Control so long as no event
described in clause (b) above occurs as a result thereof.
"Change in Law" means (a) the adoption of any law, rule or regulation
-------------
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender or Issuing Bank
(or, for purposes of Section 2.13(b), by any lending office of such Lender or by
such Lender's or Issuing Bank's holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
"Class", when used in reference to any Loan or Borrowing, refers to
-----
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans,
Tranche A Term Loans, Tranche B Term Loans, Tranche C Term Loans, Incremental
Term Loans, if any, or Swingline Loans and, when used in reference to any
Commitment, refers to whether such Commitment is a Revolving Commitment, Tranche
A Commitment, Tranche B Commitment, Tranche C Commitment or Incremental
Commitment, if any.
29
<PAGE>
"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time.
"Collateral" means any and all "Collateral", as defined in any
----------
applicable Security Document and shall also include the Mortgaged Properties.
"Committed Equity" means irrevocable binding commitments (i) to
----------------
purchase stock of Holdings pursuant to the Securities Purchase Agreement or (ii)
to make the Additional Capital Contributions; provided that, the Additional
--------
Capital Contributions shall be considered Committed Equity only to the extent
that final, definitive documentation with respect thereto has been executed on
terms satisfactory to the Administrative Agent.
"Commitment" means a Revolving Commitment, Tranche A Commitment,
----------
Tranche B Commitment, Tranche C Commitment or Incremental Commitment, if any, or
any combination thereof (as the context requires).
"Common Stock" means the Common Stock, par value $.01 per share, of
------------
Holdings.
"Communications Act" means the Communications Act of 1934, and any
------------------
similar or successor federal statute, and the rules and regulations and
published policies of the FCC thereunder, all as amended and as the same may be
in effect from time to time.
"Consents to Assignment" has the meaning set forth in subsection
----------------------
4.01(r).
"Consolidated EBITDA" means, for any period, Consolidated Net Income
-------------------
plus, to the extent deducted in computing such Consolidated Net Income, the sum
of (a) income or franchise tax expense for such period, (b) Consolidated
Interest Expense, (c) depreciation and amortization expense and (d) any non-cash
charges or non-cash losses, minus, to the extent added in computing such
Consolidated Net Income, (i) any non-cash gains or other non-cash items and (ii)
any income tax credits, all as determined on a consolidated basis with respect
to the Borrower and the Subsidiaries in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, the interest
-----------------------------
expense of Holdings, the Borrower and the Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, including but not
limited to the portion of any payments or accruals with respect to Capital Lease
Obligations that are allocable to interest expense.
30
<PAGE>
"Consolidated Net Income" means, for any period, net income or loss of
-----------------------
the Borrower and the Subsidiaries for such period determined on a consolidated
basis in accordance with GAAP; provided that there shall be excluded (a) the
--------
income of any Person in which any other Person (other than the Borrower or any
of the Subsidiaries or any director holding qualifying shares in compliance with
applicable law) has a joint interest, except to the extent of the amount of
dividends or other distributions (i) that the Borrower or any of the
Subsidiaries has the power to cause such Person to make to the Borrower or any
Subsidiary during such period and such dividend or other distribution is not
prohibited by the terms of any agreement binding upon such Person or otherwise
or (ii) that, to the extent not already included in Consolidated Net Income for
any period pursuant to clause (i) above, were actually paid to the Borrower or
any of the Subsidiaries by such Person during such period, (b) any after tax
gains or losses attributable to sales of assets out of the ordinary course of
business and (c) (to the extent not included in clauses (a) or (b) above) any
extraordinary gains or extraordinary losses.
"Contractual Obligations" means as to any Person, any provision of any
-----------------------
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Contributed Equity" means at any time or for any period, the
------------------
aggregate amount which shall have been received by the Borrower and/or Holdings
prior to such time or during such period as consideration for the issuance of
Capital Stock of Holdings (valued (i) in the case of cash, at the dollar amount
thereof, (ii) in the case of the AW Licenses, at $109,850,200, the agreed value
of the AW Licenses in the Securities Purchase Agreement, (iii) in the case of
the AW Swap Licenses, at approximately $9,662,062, the agreed amount by which
the value of the AW Swap Licenses exceeds the value of the Exchanged Licenses
and (iv) in the case of any other non-cash consideration, at the fair value
thereof as reasonably determined by the Administrative Agent) less (x) any
amounts contributed to any Unrestricted Subsidiary by Holdings and (y) any
amounts paid by Holdings in connection with the Equity Swap.
"Control" means the possession, directly or indirectly, of the power
-------
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
----------- ----------
31
<PAGE>
"Covered Pops" means the aggregate number of Pops within each
------------
geographic area for which facilities owned by the Borrower or its Subsidiaries
that provide service to such geographic area have achieved substantial
completion.
"Debt Service" means for any period, the sum of (a) Cash Interest
------------
Expense for such period plus (b) scheduled principal amortization of Total Debt
----
for such period.
"Deeply Subordinated Debt" means subordinated Indebtedness of Holdings
------------------------
which (i) is not mandatorily redeemable or required to be repurchased or
reacquired by Holdings, the Borrower or any Subsidiary prior to the date that is
six months after the Tranche B Maturity Date; provided that upon a public
--------
offering of Capital Stock of Holdings or other Deeply Subordinated Debt in an
aggregate amount of at least $75,000,000, the Net Proceeds received therefrom
may be used to redeem, repurchase or reacquire such Deeply Subordinated Debt,
(ii) does not require a cash interest payment prior to the date that is six
months after the Tranche B Maturity Date, (iii) is not secured by any assets of
Holdings, the Borrower or any Subsidiary, (iv) is not Guaranteed by the Borrower
or any Subsidiary and (v) is otherwise on terms satisfactory to the
Administrative Agent. The Deeply Subordinated Debt shall not be deemed to be
Indebtedness of Holdings for purposes of this Agreement or any Loan Document.
"Default" means any event or condition which constitutes an Event of
-------
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Disclosed Matters" means the actions, suits and proceedings and the
-----------------
environmental matters disclosed in Schedule 3.06.
"Disqualifying Transaction" has the meaning set forth in the
-------------------------
Stockholders Agreement.
"dollars" or "$" refers to lawful money of the United States of
------- -
America.
"Effective Date" means February 4, 1998.
--------------
"11% Notes" means the 11% Senior Subordinated Discount Notes due 2008
---------
issued by Holdings on May 4, 1998 with an aggregate principal amount at maturity
of $511,989,000 and the subordinated Guarantees thereof as in effect on the date
of issuance thereof.
32
<PAGE>
"Environmental Laws" means all laws, rules, regulations, codes,
------------------
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
-----------------------
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"Equipment Subsidiary" means Triton PCS Equipment Company LLC and/or
--------------------
any Wholly Owned Subsidiary of the Borrower designated by the Borrower as the
Equipment Subsidiary by notice to the Administrative Agent; provided, however,
-------- -------
that (i) such Subsidiary has no obligations or liabilities other than as
permitted by Section 3.13, (ii) the stock of such Subsidiary is pledged to the
Collateral Agent for the benefit of the Lenders in accordance with the terms of
the Pledge Agreement and (iii) the Borrower and such Subsidiary have entered
into a Special Purpose Subsidiary Funding Agreement.
"Equity Swap" means the sale by Holdings of approximately 35,601.68
-----------
shares of Series C Preferred Stock to certain of its existing equity investors
for approximately $3,560,117 and the simultaneous redemption by Holdings of
approximately 35,601.68 shares of Series C Preferred Stock held by its existing
equity investor, J.P. Morgan and one or more of its Affiliates, for
approximately $3,560,117.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
---------------
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
33
<PAGE>
"ERISA Event" means (a) any "reportable event", as defined in Section
-----------
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing, refers
----------
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in Article
----------------
VII.
"Excess Cash Flow" means, for any period, the sum of (without
----------------
duplication):
(a) Consolidated Net Income for such period, adjusted to exclude any
gains or losses attributable to Prepayment Events; plus
----
(b) depreciation, amortization and other non-cash charges or losses
deducted in determining such consolidated net income (or loss) for such
period; plus
----
(c) the sum of (i) the amount, if any, by which Net Working Capital
decreased during such period plus (ii) the amount, if any, by which the
consolidated deferred revenues of the Borrower and its consolidated
Subsidiaries increased during such period plus (iii)
34
<PAGE>
the aggregate principal amount of Capital Lease Obligations and other
Indebtedness incurred during such period to finance Capital Expenditures,
to the extent that mandatory principal payments in respect of such
Indebtedness would not be excluded from clause (f) below when made; minus
-----
(d) the sum of (i) any non-cash gains included in determining such
Consolidated Net Income (or loss) for such period plus (ii) the amount, if
any, by which Net Working Capital increased during such period plus (iii)
the amount, if any, by which the consolidated deferred revenues of the
Borrower and its consolidated Subsidiaries decreased during such period;
minus
-----
(e) cash Capital Expenditures for such period; minus
-----
(f) the aggregate principal amount of Indebtedness repaid or prepaid
by the Borrower and its consolidated Subsidiaries during such period,
excluding (i) Indebtedness in respect of Revolving Loans and Letters of
Credit, (ii) Term Loans prepaid pursuant to Section 2.09(b) or (c), (iii)
repayments or prepayments of Indebtedness financed by incurring other
Indebtedness, to the extent that mandatory principal payments in respect of
such other Indebtedness would not be excluded from this clause (f) when
made and (iv) Indebtedness referred to in clauses (ii), (ix), (x), (xi) and
(xiii) of Section 6.01(a); minus
-----
(g) Restricted Payments made pursuant to Section 6.08(a)(iv); plus
----
(h) any cash dividends or any other cash distributions paid or made
by, and received by the Borrower or any Subsidiary from, any Unrestricted
Subsidiary.
"Excluded Assets" means at any time, the collective reference to all
---------------
assets of the Borrower or any Subsidiary then subject to a Lien permitted by
sub-Section 6.02(iii)-(vi).
"Excluded Real Property Assets" means Real Property Assets which
-----------------------------
constitute Excluded Assets.
"Excluded Real Property-Related Equipment" means Real Property-Related
----------------------------------------
Equipment which constitutes Excluded Assets.
35
<PAGE>
"Excluded Taxes" means, with respect to the Issuing Bank, the
--------------
Administrative Agent, or any Lender (a) income or franchise Taxes imposed on (or
measured by) its net income or profits by the United States of America, or by
the jurisdiction under the laws of which such recipient is organized or in which
its principal office is located or, in the case of any Lender, in which its
applicable lending office is located or any Governmental Authority of or in any
of the foregoing (including, without limitation, minimum Taxes and Taxes
computed under alternative methods, the principal one of which is based on or
measured by net income or profits), (b) any branch profits Taxes imposed by the
United States of America or any similar Tax imposed by any other jurisdiction in
which the Borrower is located or the Issuing Bank, the Administrative Agent or
Lender as applicable, or organized or any Governmental Authority of or in any of
the foregoing, (c) in the case of a Foreign Lender (other than an assignee
pursuant to a request by the Borrower under Section 2.17(b)), any withholding
Tax that is in effect and would apply to a payment to such Foreign Lender at the
time such Foreign Lender becomes a party to this Agreement (or designates a new
lending office), except to the extent that such Foreign Lender (or its assignor,
if any) was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts from the Borrower with respect to
such withholding Tax pursuant to Section 2.15(a), (d) any Taxes to the extent
imposed by reason of the Issuing Bank, Lender or Administrative Agent, as
applicable, engaging in activities in the jurisdiction imposing the Tax that are
unrelated to the transactions contemplated hereby, and (e) any Tax that would
not have been imposed but for the failure of a Lender or the Administrative
Agent, as applicable, to comply with the certification requirements described in
Section 2.15(e).
"FCC" means the Federal Communications Commission, or any other
---
similar or successor agency of the Federal government administering the
Communications Act.
"Federal Funds Effective Rate" means, for any day, the weighted
----------------------------
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
36
<PAGE>
"Financial Officer" means the chief financial officer, principal
-----------------
accounting officer, treasurer or controller of the Borrower.
"Fixed Charges" means (a) Debt Service, (b) Capital Expenditures, (c)
-------------
Taxes and (d) dividends and distributions paid pursuant to Section 6.08(a)(iii).
"Foreign Lender" means any Lender that is organized under the laws of
--------------
a jurisdiction other than that in which the Borrower is located. For purposes
of this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Subsidiary" means any Subsidiary that is organized under the
------------------
laws of a jurisdiction other than the United States of America or any State
thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles in the United
----
States of America.
"Governmental Authority" means the government of the United States of
----------------------
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" of or by any Person (the "guarantor") means any
--------- ---------
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
---------------
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include
--------
endorsements for collection or deposit in the ordinary course of business.
37
<PAGE>
"Guarantee Agreement" means the Guarantee Agreement with respect to
-------------------
the Obligations substantially in the form of Exhibit C, made by the Subsidiary
Loan Parties in favor of the Administrative Agent for the benefit of the Secured
Parties.
"Hazardous Materials" means all explosive or radioactive substances
-------------------
or wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Agreement" means any interest rate protection agreement,
-----------------
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"Holdings" means Triton PCS Holdings, Inc., a Delaware corporation.
--------
"Incremental Commitment" shall have the meaning assigned thereto in
----------------------
Section 2.19.
"Incremental Facility Amendment" means an amendment to this Agreement
------------------------------
which contains the procedures for borrowing Incremental Term Loans, the
administrative information of the Lenders of such Incremental Term Loans and
other matters which have no adverse impact on any Lender, which amendment shall
be in form and substance satisfactory to the Administrative Agent and the
Borrower.
"Incremental Term Loan Lender" means a Person with an outstanding
----------------------------
Incremental Term Loan.
"Incremental Term Loans" shall have the meaning assigned thereto in
----------------------
Section 2.19.
"Indebtedness" of any Person means, without duplication, (a) all
------------
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of
38
<PAGE>
business), (f) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on property owned or acquired by such Person, whether or not the
Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person
of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
"Indemnity, Subrogation and Contribution Agreement" means the
-------------------------------------------------
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit F, among the Borrower and the Subsidiaries.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
-----------------
"Information Memorandum" means (a) the Confidential Information
----------------------
Memorandum dated November 1997 relating to the Borrower and the Transactions and
(b) the Confidential Information Memorandum dated July 1999 relating to the
Borrower and the Transactions.
"Initial Equity Contributions" means (i) AW's contribution to the
----------------------------
Borrower of 20 MHz of A or B Block PCS licenses covering the markets and Pops
set forth in Schedule 3.14 hereto (the "AW Licenses") in exchange for 732,371
shares of Series A Preferred Stock and 366,131 shares of Series D Preferred
Stock and (ii) purchases of 1,400,000 shares of Series C Preferred Stock of
Holdings by other investors for cash consideration and irrevocable commitments
of not less than $140,000,000, the purchase price for which will be paid
directly to the Borrower.
"Interest Election Request" means a request by the Borrower to convert
-------------------------
or continue a Revolving Borrowing or Term Borrowing in accordance with Section
2.05.
"Interest Payment Date" means (a) with respect to any ABR Loan (other
---------------------
than a Swingline Loan), the last day of each March, June, September and
December, (b) with respect to any Eurodollar Loan, the last day of the Interest
Period
39
<PAGE>
applicable to the Borrowing of which such Loan is a part and, in the case of a
Eurodollar Borrowing with an Interest Period of more than three months'
duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months' duration after the first day of such Interest Period
and (c) with respect to any Swingline Loan, the day that such Loan is required
to be repaid.
"Interest Period" means with respect to any Eurodollar Borrowing, the
---------------
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
(or, with the consent of each Lender, nine or twelve months) thereafter, as the
Borrower may elect; provided, that (i) if any Interest Period would end on a day
--------
other than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless such next succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day and (ii) any Interest Period that commences on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of such Interest
Period) shall end on the last Business Day of the last calendar month of such
Interest Period. For purposes hereof, the date of a Borrowing initially shall
be the date on which such Borrowing is made and thereafter shall be the
effective date of the most recent conversion or continuation of such Borrowing.
"Issuing Bank" means The Chase Manhattan Bank, in its capacity as the
------------
issuer of Letters of Credit hereunder, and its successors in such capacity as
provided in Section 2.18(i). The Issuing Bank may, in its discretion, arrange
for one or more Letters of Credit to be issued by Affiliates of the Issuing
Bank, in which case the term "Issuing Bank" shall include any such Affiliate
with respect to Letters of Credit issued by such Affiliate.
"LC Disbursement" means a payment made by the Issuing Bank pursuant to
---------------
a Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
-----------
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
----
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Revolving Lender at any
time shall be its Applicable Percentage of the total LC Exposure at such time.
"Lenders" means the Persons listed on Schedule 2.01 and any other
-------
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than
40
<PAGE>
any such Person that ceases to be a party hereto pursuant to an Assignment and
Acceptance. In the event that any Incremental Term Loans shall have been
extended to the Borrower pursuant to Section 2.19 of this Agreement, "Lenders"
shall include the Incremental Term Loan Lenders. Unless the context otherwise
requires, the term "Lenders" includes the Swingline Lender. For purposes of the
definitions of "Obligations" and "Secured Parties" under the Security Agreement,
the term "Lender" shall also include an Affiliate of a Lender that is a
counterparty to a Hedging Agreement with a Loan Party.
"Letter of Credit" means any letter of credit issued pursuant to this
----------------
Agreement.
"Leverage Ratio" means for any fiscal period, the ratio of (a) Total
--------------
Debt on the last day of such fiscal period to (b) Annualized EBITDA for the
period ending on the last day of such fiscal period.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
---------
Interest Period, the rate appearing on Page 3750 of Dow Jones Market (or on any
successor or substitute page of such service, or any successor to or substitute
for such service, providing rate quotations comparable to those currently
provided on such page of such service, as determined by the Administrative Agent
from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market) at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period, as the rate for dollar deposits with a maturity comparable to
such Interest Period. In the event that such rate is not available at such time
for any reason, then the "LIBO Rate" with respect to such Eurodollar Borrowing
---------
for such Interest Period shall be the rate at which dollar deposits of
$5,000,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.
"License" means any broadband Personal Communications Services license
-------
or cellular license issued by the FCC in connection with the operation of a
System.
"License Subsidiary" means Triton PCS License Company, L.L.C. and/or
------------------
any other Wholly Owned Subsidiary of the Borrower designated as a License
Subsidiary by notice to the Administrative Agent; provided, however, that (i)
-------- -------
such Subsidiary has no obligations or liabilities other than as permitted by
Section 3.13, (ii) the stock of such
41
<PAGE>
Subsidiary is pledged to the Collateral Agent for the benefit of the Lenders in
accordance with the terms of the Pledge Agreement and (iii) the Borrower and
such Subsidiary have entered into a Special Purpose Subsidiary Funding
Agreement.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
----
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loan Documents" means this Agreement, the Guarantee Agreement, the
--------------
Pledge Agreement, the Security Agreement, the Indemnity, Subrogation and
Contribution Agreement, the Special Purpose Subsidiary Funding Agreements, the
Consents to Assignment and the other Security Documents.
"Loan Parties" means Holdings, the Borrower and the Subsidiary Loan
------------
Parties.
"Loans" means the loans made by the Lenders to the Borrower pursuant
-----
to this Agreement.
"Marketing Affiliate" means Affiliate License Co., L.L.C., a Delaware
-------------------
limited liability company owned 1/3 by the Borrower, 1/3 by Telecorp PCS, Inc.
and 1/3 by TriTel PCS, Inc., which engages in no significant activity other than
the registering, holding, maintenance and protection of trademarks and the
licensing thereof to its members.
"Material Adverse Effect" means a material adverse effect on (a) the
-----------------------
business, assets, results of operations, prospects or financial condition of
Holdings, the Borrower and the Subsidiaries taken as a whole, (b) the ability of
any Loan Party to perform any of its obligations under any Loan Document or (c)
the validity or enforceability of any Loan Document or the rights of or remedies
available to the Administrative Agent or the Lenders under any Loan Document;
provided that, on or after February 4, 2003, neither (x) the nonrenewal of the
- --------
Network License Agreement by AW nor (y) the termination of the Network License
Agreement by AW in accordance with its terms as a result of a Disqualifying
Transaction shall be a Material Adverse Effect.
42
<PAGE>
"Material Indebtedness" means Indebtedness (other than the Loans and
---------------------
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of Holdings, the Borrower and the Subsidiaries in an
aggregate principal amount exceeding $10,000,000. For purposes of determining
Material Indebtedness, the "principal amount" of the obligations of Holdings,
the Borrower or any Subsidiary in respect of any Hedging Agreement at any time
shall be the maximum aggregate amount (giving effect to any netting agreements)
that the Borrower or such Subsidiary would be required to pay if such Hedging
Agreement were terminated at such time.
"Moody's" means Moody's Investors Service, Inc.
-------
"Mortgage" means a mortgage, deed of trust, assignment of leases and
--------
rents, leasehold mortgage or other security document granting a Lien on any
Mortgaged Property to secure the Obligations. Each Mortgage shall be
reasonably satisfactory in form and substance to the Administrative Agent.
"Mortgaged Property" means, initially, each interest in real property
------------------
and any improvements thereto owned by a Loan Party and identified on Schedule
3.22, and includes each interest in real property and any improvements thereto
with respect to which a Mortgage is granted pursuant to Section 5.12 or 5.13.
"MSA" means a Metropolitan Statistical Area, as defined in 47 C.F.R.
---
(S) 24.202.
"MTA" means a Major Trading Area, as defined in 47 C.F.R. (S) 24.202.
---
"Multiemployer Plan" means a multiemployer plan as defined in Section
------------------
4001(a)(3) of ERISA.
"Myrtle Acquisition" means the acquisition by one or more of Triton
------------------
PCS License Company L.L.C., Triton Myrtle Acquisition, L.L.C. or any other
Subsidiary (the "Myrtle Entities") of substantially all the assets of Vanguard
---------------
Cellular Systems of South Carolina, Inc. ("Vanguard"), including the FCC
--------
cellular licence for the South Carolina 5--Georgetown RSA, Market 629A, for cash
consideration of $160,000,000 (subject to working capital and subscriber
adjustments) in accordance with the terms of the Asset Purchase Agreement (the
"Myrtle Asset Purchase Agreement") dated March 10, 1998, between the Borrower,
- --------------------------------
the Myrtle Entities and Vanguard.
"Net Proceeds" means, with respect to any event (a) the cash proceeds
------------
received by Holdings, the Borrower
43
<PAGE>
and the Subsidiaries in respect of such event including (i) any cash received in
respect of any non-cash proceeds, but only as and when received, (ii) in the
case of a casualty, insurance proceeds, and (iii) in the case of a condemnation
or similar event, condemnation awards and similar payments, net of (b) the sum
of (i) all reasonable fees and out-of-pocket expenses paid by Holdings, the
Borrower and the Subsidiaries to third parties (other than Affiliates) in
connection with such event, (ii) in the case of a sale or other disposition of
an asset (including pursuant to a casualty or condemnation), the amount of all
payments required to be made by the Borrower and the Subsidiaries as a result of
such event to repay Indebtedness (other than Loans) secured by such asset or
otherwise subject to mandatory prepayment as a result of such event, (iii) the
amount of all taxes paid (or reasonably estimated to be payable) by Holdings,
the Borrower and the Subsidiaries, and the amount of any reserves established by
Holdings, the Borrower and the Subsidiaries to fund contingent liabilities
reasonably estimated to be payable, in each case during the year that such event
occurred or the next succeeding year and that are directly attributable to such
event (as determined reasonably and in good faith by the chief financial officer
of the Borrower) and (iv) in the case of the sale of an entity in which Persons
other than Holdings, the Borrower and the Subsidiaries hold a minority interest
but the full amount of the proceeds relating to the sale of such entity are
received by Holdings, the Borrower or a Subsidiary, any amounts required to be
paid to such minority interest holder in connection with such sale; provided
--------
such amounts are not in excess of such minority interest holder's pro rata share
of the proceeds from such sale.
"Network" means the Borrower's mobile wireless telecommunications
-------
network that serves the Service Regions.
"Network License Agreement" means the Network Membership License
-------------------------
Agreement, dated the date hereof, between AT&T Corp. and Triton PCS Operating
Company, L.L.C., as the same may be amended, supplemented or otherwise modified
from time to time in accordance with Section 6.11 hereof.
"Net Working Capital" means, at any date, (a) the consolidated current
-------------------
assets of the Borrower and its consolidated Subsidiaries as of such date
(excluding cash and Permitted Investments) minus (b) the consolidated current
liabilities of the Borrower and its consolidated Subsidiaries as of such date
(excluding current liabilities in respect of Indebtedness). Net Working Capital
at any date may be a positive or negative number. Net Working Capital increases
when it becomes more positive or less
44
<PAGE>
negative and decreases when it becomes less positive or more negative.
"Norfolk Acquisition" means the acquisition by one or more of Triton
-------------------
PCS License Company, L.L.C., the Borrower or any direct or indirect subsidiary
thereof (the "Norfolk Entities") of substantially all the assets of AW that are
----------------
used in or useful to the operation of the PCS system operated in the Norfolk,
Virginia BTA, including 20 MHz of the 30 MHz of PCS licenses owned by AW
covering such market, for cash consideration of $91,518,651 and the issuance of
$13,481,349 of Series D Preferred Stock in accordance with the terms of an Asset
Purchase Agreement dated as of August 20, 1998 between AW and Holdings (the
"Norfolk Asset Purchase Agreement").
- ---------------------------------
"Obligations" has the meaning assigned to such term in the Guarantee
-----------
Agreement and the Security Documents.
"Original Credit Agreement" means the Credit Agreement dated as of
-------------------------
February 3, 1998, among the Borrower, Holdings, the lenders party thereto and
The Chase Manhattan Bank, as administrative agent, as amended and in effect
immediately prior to the Amendment Execution Date.
"Other Taxes" means any and all present or future stamp or documentary
-----------
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
----
defined in ERISA and any successor entity performing similar functions.
"PCS C Block Auction" means the reauction conducted by the FCC for the
-------------------
sale of Licenses in the C block as set forth in parts 1 and 24 of Title 47 of
the Code of Federal Regulations that commenced on March 23, 1999.
"PCS Documents" means the Securities Purchase Agreement and each of
-------------
the documents that is an exhibit thereto (including the Network License
Agreement).
"Perfection Certificate" means a certificate in the form of Annex 2 to
----------------------
the Security Agreement or any other form approved by the Administrative Agent.
"Permitted Encumbrances" means:
----------------------
45
<PAGE>
(a) Liens imposed by law for taxes, assessments or other governmental
charges that are not yet due or are being contested in compliance with
Section 5.05;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's,
landlords' and other like Liens imposed by law, arising in the ordinary
course of business and securing obligations that are not overdue by more
than 60 days or are being contested in compliance with Section 5.05;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations and deposits securing liability to
insurance carriers under insurance or self-insurance arrangements;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature, in each case in the ordinary course
of business;
(e) liens of attachments, judgments or awards in respect of judgments
that do not constitute an Event of Default under clause (k) of Article VII
and in respect of which adequate reserves have been established in
accordance with GAAP;
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or interfere
with the ordinary conduct of business of the Borrower or any Subsidiary;
(g) restrictions on the transfer of assets contained in any License or
imposed by the Communications Act or comparable state legislation;
(h) leases or subleases granted to others not interfering in any
material respect with the business of the Borrower and its Subsidiaries
taken as a whole and any interest or title of a lessor under any lease not
prohibited by this Agreement;
(i) ground leases in respect of real property on which facilities
owned or leased by the Borrower or its Subsidiaries are located; and
46
<PAGE>
(j) the filing of financing statements regarding leases not prohibited
by this Agreement and rights of lessors in property subject to such leases
; provided that the term "Permitted Encumbrances" shall not include any Lien
--------
securing Indebtedness.
"Permitted Investments" means:
---------------------
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed
by the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the
highest credit rating obtainable from S&P or from Moody's;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts
issued or offered by, any domestic office of any commercial bank organized
under the laws of the United States of America or any State thereof which
has a combined capital and surplus and undivided profits of not less than
$500,000,000; and
(d) fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) above and entered into
with a financial institution satisfying the criteria described in clause
(c) above.
"Person" means any natural person, corporation, limited liability
------
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
----
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Pledge Agreement" shall mean the Pledge Agreement, substantially in
----------------
the form of Exhibit D, between the Borrower, the Subsidiary Loan Parties and the
47
<PAGE>
Administrative Agent for the benefit of the Secured Parties.
"Pops" means, as of any date, with respect to any BTA, MTA, MSA or
----
RSA, as applicable, the population of such BTA, MTA, MSA or RSA, as applicable,
as such number is most recently published in the "PCS Atlas and Data Book" by
Paul Kagan Associates, Inc.
"Preferred Stock Agreement" means the securities purchase agreement or
-------------------------
agreements (or an amendment or amendments to the Securities Purchase Agreement
entered into for such purpose) to be entered into by some or all of the current
equity investors in Holdings, relating to the purchase by some or all of the
current equity investors in Holdings of (a) $25,000,000 of equity securities of
Holdings for the purpose of funding a portion of the buildout of the Network in
the geographic areas covered by the Additional Licenses, (b) $35,000,000 of
equity securities of Holdings for the purpose of funding a portion of the
purchase price of the Myrtle Acquisition and (c) $30,000,000 of equity
securities of Holdings for the purpose of funding a portion of the purchase
price of the Norfolk Acquisition, in each case in form and substance reasonably
satisfactory to the Lenders.
"Prepayment Event" means:
----------------
(a) any sale, transfer or other disposition (including pursuant to a
sale and leaseback transaction) of any property or asset of the Borrower or
any Subsidiary, other than (i) dispositions described in clauses (a), (b),
(d), (e) and (f) of Section 6.06 or (ii) other dispositions resulting in
aggregate Net Proceeds not exceeding $1,000,000 during any fiscal year of
the Borrower; provided that, if no Default exists or would result
--------
therefrom, such dispositions shall constitute a Prepayment Event only to
the extent that the Net Proceeds therefrom have not been applied, within
270 days of receipt thereof, to rebuild or replace the property or assets
sold, transferred or disposed, or to fund additional Capital Expenditures,
and such Prepayment Event shall be deemed to have occurred on such 270th
day; or
(b) any casualty or other insured damage to, or any taking under power
of eminent domain or by condemnation or similar proceeding of, any property
or asset of the Borrower or any Subsidiary; provided that, if no Default
--------
exists or would result therefrom, such event shall constitute a Prepayment
Event only to the extent that the Net Proceeds therefrom have not been
applied to repair, restore or replace such
48
<PAGE>
property or asset within 270 days after such event, and such Prepayment
Event shall be deemed to have occurred on such 270th day; or
(c) the issuance by Holdings, the Borrower or any Subsidiary of any
equity securities for cash, or the receipt by Holdings, the Borrower or any
Subsidiary of any capital contribution in cash, other than, in the case of
the Borrower or any Subsidiary, any such issuance of equity securities to,
or receipt of any such capital contribution from, the Borrower or a
Subsidiary; provided that no such issuance or receipt shall constitute a
--------
Prepayment Event if (i) such equity is part of the initial $140,000,000
cash contribution and commitment of capital to Holdings pursuant to the
Securities Purchase Agreement or the immediate contribution by Holdings of
such capital to the Borrower, (ii) such equity is part of the $25,000,000
cash contribution to Holdings pursuant to the Preferred Stock Agreement
(without giving effect to any amendments to or waivers of the Preferred
Stock Agreement (other than such amendments or waivers that are not adverse
in a material respect to the interests of the Lenders)) and the AW Pops
Acquisition is consummated substantially contemporaneously with such
issuance or receipt; (iii) such equity is part of the $35,000,000
contribution to Holdings pursuant to the Preferred Stock Agreement (without
giving effect to any amendments to or waivers of the Preferred Stock
Agreement (other than such amendments or waivers that are not adverse in a
material respect to the interests of the Lenders)) and the Myrtle
Acquisition is consummated substantially contemporaneously with such
issuance or receipt; (iv) such equity is part of the $30,000,000
contribution to Holdings pursuant to the Preferred Stock Agreement (without
giving effect to any amendments to or waivers of the Preferred Stock
Agreement (other than such amendments or waivers that are not adverse in a
material respect to the interests of the Lenders)) and the Norfolk
Acquisition is consummated substantially contemporaneously with such
issuance or receipt; (v) such equity is part of cash contributions in an
aggregate amount not to exceed $75,000,000 to be used by Holdings to
capitalize Unrestricted Subsidiaries in accordance with clause (vii) of the
definition of "Unrestricted Subsidiary"; (vi) such equity is the
approximately 53,881.64 shares of Series A Preferred Stock and
approximately 42,738.98 shares of Series D Preferred Stock of Holdings
issued to AW or the approximately 4,748.78 shares of Common Stock issued to
the current holders of Common Stock in connection with the consummation of
the AW Pops Swap; (vii) such equity is part of the
49
<PAGE>
issuance in an initial public offering of Common Stock; (viii) such equity
is part of the Additional Capital Contributions; (ix) such equity is part
of the $340,000 contribution in connection with the issuance of shares of
Series C Preferred Stock to certain directors and/or officers of Holdings
pursuant to the terms of those several Series C Preferred Stock Purchase
Agreements dated as of August 12, 1999 between Holdings and such
individuals; (x) after giving effect to any such issuance or receipt, (A)
Senior Leverage would be less than 5:1 and (B) the Borrower would be in Pro
Forma Compliance; or (xi) such issuance shall be to, or such receipt shall
be from, Holdings or Persons (or Affiliates thereof) owning capital stock
of Holdings on the Effective Date and no Default shall have occurred and be
continuing at the time of, or immediately after giving effect to, such
issuance or receipt.
(d) the incurrence by Holdings, the Borrower or any Subsidiary of any
Indebtedness, other than Indebtedness permitted by Section 6.01; provided
--------
that (i) no such issuance or receipt shall constitute a Prepayment Event
if, after giving effect to such issuance or receipt (x) (I) Senior Leverage
would be less than 5:1 and (II) the Borrower would be in Pro Forma
Compliance or (y) the Borrower shall have incurred in the aggregate less
than $150,000,000 of Indebtedness and (ii) the foregoing shall not relieve
the Borrower from any requirement hereunder to obtain the consent of the
Lenders for the incurrence of any Indebtedness.
"Prime Rate" means the rate of interest per annum publicly announced
----------
from time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"Pro Forma Compliance" shall exist if (a) Holdings and the Borrower
--------------------
shall be in pro forma compliance with the covenants set forth in Section 6.12
--- -----
recomputed, with respect to income statement items, as of the last day of the
most recently ended fiscal quarter for which financial statements have been
delivered in accordance with Section 5.01 as if the events with respect to which
Pro Forma Compliance is being measured had occurred on the first day of each
relevant period with respect to which Pro Forma Compliance is being measured and
as if Restricted Payments under Section 6.08(a)(iii) were deductions to
Consolidated EBITDA and (b) no Default or Event of Default shall exist either
immediately prior to the events with
50
<PAGE>
respect to which Pro Forma Compliance is being determined or after giving effect
to such events.
"Qualified Vendor" means Ericsson Inc. or an affiliate thereof or
----------------
Lucent Technologies Inc. or an affiliate thereof.
"Qualified Vendor Agreement" shall have the meaning assigned thereto
--------------------------
in Section 6.01(a)(vii).
"Real Property Assets" means all interests (including leasehold
--------------------
interests) of the Borrower and its Subsidiaries in real property.
"Real Property-Related Equipment" means all equipment (as defined in
-------------------------------
the UCC) of the Borrower or any Subsidiary that constitutes a fixture (as
defined in the UCC) on Real Property Assets.
"Real Property Subsidiary" means Triton PCS Property Company, L.L.C.
------------------------
and/or any Wholly Owned Subsidiary of the Borrower designated by the Borrower as
a Real Property Subsidiary by notice to the Administrative Agent; provided,
--------
however, that (i) such Subsidiary has no obligations or liabilities other than
- -------
as permitted by Section 3.13, (ii) the stock of such Subsidiary is pledged to
the Collateral Agent for the benefit of the Lenders in accordance with the terms
of the Pledge Agreement and (iii) the Borrower and such Subsidiary have entered
into a Special Purpose Subsidiary Funding Agreement.
"Register" has the meaning set forth in Section 9.04(c).
--------
"Related Business" means any business of the type conducted by the
----------------
Borrower and its Subsidiaries on the Effective Date or any business contemplated
to be conducted by the Borrower and its Subsidiaries in the business plan
delivered to the Lenders prior to the Amendment Effective Date and any business
directly related thereto(including the business contemplated to be conducted by
the Borrower by (S) 7.11(b) of the Stockholders Agreement, subject to the
conditions therein).
"Related Parties" means, with respect to any specified Person, such
---------------
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Required Lenders" means, at any time, Lenders having Revolving
----------------
Exposures, Term Loans and unused Commitments representing more than 50% of the
sum of the
51
<PAGE>
total Revolving Exposures, outstanding Term Loans and unused Commitments at such
time.
"Requirement of Law" means, as to any Person, the certificate of
------------------
incorporation and by-laws, the partnership agreement or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation, or
determination, judgment, writ, injunction, decree or order of an arbitrator or a
court or other Governmental Authority, in each case applicable to or binding
upon such Person or any of its property or to which such Person or any of its
property is subject.
"Responsible Officer" means any of the president, chief executive
-------------------
officer, chief financial officer, treasurer or controller of the Borrower.
"Restricted Payment" means any dividend or other distribution (whether
------------------
in cash, securities or other property) with respect to any shares of any class
of capital stock of the Borrower or any Subsidiary, or any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancelation or termination of any such shares of capital stock of the Borrower
or any Subsidiary or any option, warrant or other right to acquire any such
shares of capital stock of the Borrower or any Subsidiary.
"Revolving Availability Period" means the period from and including
-----------------------------
the Effective Date to but excluding the earlier of the Revolving Maturity Date
and the date of termination of the Revolving Commitments.
"Revolving Commitment" means, with respect to each Lender, the
--------------------
commitment, if any, of such Lender to make Revolving Loans and to acquire
participations in Letters of Credit hereunder, as such commitment may be (a)
reduced from time to time pursuant to Section 2.06 and (b) reduced or increased
from time to time pursuant to assignments by or to such Lender pursuant to
Section 9.04. The initial amount of each Lender's Revolving Commitment is set
forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which
such Lender shall have assumed its Revolving Commitment, as applicable. The
initial aggregate amount of the Lenders' Revolving Commitments is $100,000,000.
"Revolving Exposure" means, with respect to any Lender at any time,
------------------
the sum of (i) the outstanding principal amount of such Lender's Revolving
Loans, (ii) its LC Exposure at such time and (iii) in the case of the Swingline
Lender, its Swingline Exposure.
52
<PAGE>
"Revolving Lender" means a Lender with a Revolving Commitment or, if
----------------
the Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.
"Revolving Loan" means a Loan made pursuant to clause (d) of Section
--------------
2.01.
"Revolving Maturity Date" means August 4, 2006.
-----------------------
"RSA" means a Rural Service Area, as defined in 47 C.F.R. (S) 24.202.
---
"S&P" means Standard & Poor's.
---
"Secured Parties" has the meaning assigned to such term in the
---------------
Security Agreement.
"Secured Real Property Assets" means all Real Property Assets
----------------------------
(including Mortgaged Properties) in which the Administrative Agent, for the
benefit of the Secured Parties, has a first priority perfected Mortgage or other
first priority perfected security interest pursuant to the Security Documents.
"Secured Real Property-Related Equipment" means Real Property Related
---------------------------------------
Equipment in which the Administrative Agent, for the benefit of the Secured
Parties, has a first priority perfected security interest pursuant to the
Security Documents.
"Securities Purchase Agreement" means the Securities Purchase
-----------------------------
Agreement by and among AW, Holdings, and the other parties thereto dated as of
October 8, 1997, including the schedules thereto.
"Security Agreement" means the Security Agreement among the Borrower,
------------------
the Subsidiary Loan Parties and the Administrative Agent, substantially in the
form of Exhibit E.
"Security Documents" means the Security Agreement, the Pledge
------------------
Agreement, the Mortgages and the Consents to Assignment and each other security
agreement or other instrument or document executed and delivered pursuant to any
of the foregoing or Section 5.12 or 5.13 to secure any of the Obligations.
"Senior Debt" shall mean all Indebtedness of Holdings, the Borrower
-----------
and the Subsidiaries on a consolidated basis other than the Subordinated Debt.
53
<PAGE>
"Senior Leverage" means, on any date, the ratio of (a) Senior Debt on
---------------
such date to (b) Annualized EBITDA for the most recently ended fiscal quarter
for which financial statements have been delivered in accordance with Section
5.01.
"Series A Preferred Stock" means the Series A Preferred Stock, par
------------------------
value $.01 per share, of Holdings.
"Series C Preferred Stock" means the Series C Preferred Stock, par
------------------------
value $.01 per share, of Holdings.
"Series D Preferred Stock" means the Series D Preferred Stock, par
------------------------
value $.01 per share, of Holdings.
"Service Regions" means (i) the BTAs, MSAs and RSAs listed on Schedule
---------------
3.14 (excluding any areas in which the Borrower and its Subsidiaries have ceased
to provide service with the consent of the Required Lenders or as a result of a
transfer of assets pursuant to Section 6.06(c)) and (ii) any other areas with
respect to which the Borrower or its Subsidiaries acquire Licenses after the
Amendment Effective Date in accordance with the terms of this Agreement.
"Special Purpose Subsidiary" means any License Subsidiary and any Real
--------------------------
Property Subsidiary.
"Special Purpose Subsidiary Funding Agreement" means an agreement
--------------------------------------------
between the Borrower and/or Triton PCS Operating Company, L.L.C. and each
Special Purpose Subsidiary whereby (a) such Special Purpose Subsidiary agrees to
provide to the Borrower the benefit of the use of such Special Purpose
Subsidiary's assets, (b) the Borrower agrees to pay to such Special Purpose
Subsidiary an amount equal to all liabilities of such Special Purpose Subsidiary
less any amounts contributed by the Borrower to the equity of such Special
Purpose Subsidiary to fund such liabilities, (c) the Borrower agrees to cause
all Contractual Obligations of such Special Purpose Subsidiary to be performed
and all Requirements of Law of such Special Purpose Subsidiary to be complied
with and (d) the Borrower and such Special Purpose Subsidiary agree, for the
benefit of the Administrative Agent and the Secured Parties, to the assignment
by each of its rights thereunder to the Administrative Agent for the benefit of
the Secured Parties.
54
<PAGE>
"Statutory Reserve Rate" means a fraction (expressed as a decimal),
----------------------
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board). Such reserve percentages shall include those
imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to
constitute eurocurrency funding and to be subject to such reserve requirements
without benefit of or credit for proration, exemptions or offsets that may be
available from time to time to any Lender under such Regulation D or any
comparable regulation. The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"Stockholders Agreement" means the Stockholders' Agreement among AW,
----------------------
the Borrower and the other parties thereto dated as of February 4, 1998.
"Subordinated Debt" means high yield subordinated debt issued by the
-----------------
Borrower or Holdings on terms not less favorable to the Lenders than the terms
governing the 11% Notes and maturing on a date that is not earlier than November
4, 2007 and subordinated Guarantees thereof by the Subsidiaries (provided such
Guarantees are on terms not less favorable to the Lenders than the existing
subordinated Guarantees of the 11% Notes) and refinancings of such Indebtedness;
provided that (i) any such refinancing Indebtedness (a) shall not have a greater
outstanding principal amount, an earlier maturity date, or a decreased weighted
average life than the Subordinated Debt refinanced and (b) shall be subordinated
to the Indebtedness created under the Loan Documents to at least the extent of,
and shall otherwise be issued on terms no less favorable to the Lenders than,
the Subordinated Debt refinanced and (ii) the proceeds of such refinancing
Indebtedness shall be used solely to repay the Subordinated Debt refinanced
thereby and fees and expenses in connection therewith.
"Subordinated Debt Documents" means the indenture or indentures under
---------------------------
which any Subordinated Debt is issued and all other instruments, agreements and
other documents
55
<PAGE>
evidencing or governing such Subordinated Debt, if any, or providing for any
Guarantee or other right in respect thereof.
"Subscribers" means as of any date, all customers then receiving
-----------
Wireless Services from the Borrower or any of its Subsidiaries none of the
subscriber payments (other than those disputed in good faith by such customer)
of which are, as of such date, past due more than 60 days (or past due for more
than such shorter period of time as the Borrower may have established for
accounting or credit policy purposes for treating a customer as not being in
good standing).
"subsidiary" means, with respect to any Person (such Person, the
----------
"parent") at any date, any corporation, limited liability company, partnership,
- -------
association or other entity the accounts of which would be consolidated with
those of the parent in the parent's consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, limited liability company, partnership,
association or other entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or, in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, controlled or held, or (b) that is, as of
such date, otherwise Controlled, by the parent or one or more subsidiaries of
the parent or by the parent and one or more subsidiaries of the parent.
"Subsidiary" means any subsidiary of the Borrower. The parties hereto
----------
acknowledge that the Bidding Entity is not a Subsidiary.
"Subsidiary Loan Party" means any Subsidiary that is not a Foreign
---------------------
Subsidiary.
"Swingline Exposure" means, at any time, the aggregate principal
------------------
amount of all Swingline Loans outstanding at such time.
"Swingline Lender" means a Lender to be selected by the Borrower (with
----------------
the consent of the Administrative Agent, such consent not to be unreasonably
withheld), in its capacity as lender of Swingline Loans hereunder or any
56
<PAGE>
successor Swingline Lender appointed pursuant to Section 2.20(c).
"Swingline Loan" means a Loan made pursuant to Section 2.20.
--------------
"System" means, as to any Person, assets constituting a radio
------
communications system authorized under the rules for wireless communications
services (including any license and the network, marketing, distribution, sales,
customer interface and operations functions relating thereto) owned and operated
by such Person.
"Taxes" means any and all present or future taxes, levies, imposts,
-----
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Term Loans" means Tranche A Term Loans, Tranche B Term Loans, Tranche
----------
C Term Loans and Incremental Term Loans.
"Total Capital" means, at any date, the sum of (a) Total Debt
-------------
outstanding on such date plus (b) Contributed Equity on such date plus (c)
----
Committed Equity on such date.
"Total Debt" shall mean, at any time, all Indebtedness of Holdings
----------
(other than Indebtedness of any Unrestricted Subsidiary), the Borrower and the
Subsidiaries as determined on a consolidated basis in accordance with GAAP.
"Tower Sale" means the sale of up to $75,000,000 of assets to American
----------
Tower, L.P. and the leaseback of such assets pursuant to the Asset Purchase
Agreement (the "Tower Sale Asset Purchase Agreement") dated July 13, 1999, among
-----------------------------------
Triton PCS Operating Company L.L.C., Triton PCS Property Company L.L.C. and
American Tower, L.P.; provided that the value of the assets sold in connection
--------
with the Tower Sale shall not exceed $75,000,000 in the aggregate.
"Tranche A Availability Period" means the period from and including
-----------------------------
the Effective Date to but excluding the earlier of February 4, 2001 and the date
of termination of the Tranche A Commitments.
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"Tranche A Commitment" means, with respect to each Lender, the
--------------------
commitment, if any, of such Lender to make Tranche A Term Loans hereunder,
expressed as an amount representing the maximum principal amount of the Tranche
A Term Loans to be made by such Lender hereunder, as such commitment may be (a)
reduced from time to time pursuant to Section 2.06 and (b) reduced or increased
from time to time pursuant to assignments by or to such Lender pursuant to
Section 9.04. The initial amount of each Lender's Tranche A Commitment is set
forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which
such Lender shall have assumed its Tranche A Commitment, as applicable. The
initial aggregate amount of the Lenders' Tranche A Commitments is $175,000,000.
"Tranche A Lender" means a Lender with a Tranche A Commitment or an
----------------
outstanding Tranche A Term Loan.
"Tranche A Maturity Date" means August 4, 2006.
-----------------------
"Tranche A Term Loan" means a Loan made pursuant to clause (a) of
-------------------
Section 2.01.
"Tranche B Availability Period" means the period from and including
-----------------------------
the Effective Date to but excluding the earlier of the date that is six months
from the Effective Date and the date of termination of the Tranche B
Commitments.
"Tranche B Commitment" means, with respect to each Lender, the
--------------------
commitment, if any, of such Lender to make Tranche B Term Loans hereunder,
expressed as an amount representing the maximum principal amount of the Tranche
B Term Loans to be made by such Lender hereunder, as such commitment may be (a)
reduced from time to time pursuant to Section 2.06 and (b) reduced or increased
from time to time pursuant to assignments by or to such Lender pursuant to
Section 9.04. The initial amount of each Lender's Tranche B Commitment is set
forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which
such Lender shall have assumed its Tranche B Commitment, as applicable. The
initial aggregate amount of the Lenders' Tranche B Commitments is $150,000,000.
"Tranche B Lender" means a Lender with a Tranche B Commitment or an
----------------
outstanding Tranche B Term Loan.
58
<PAGE>
"Tranche B Maturity Date" means May 4, 2007.
-----------------------
"Tranche B Rate" means, with respect to any Tranche B Term Loan (a)
--------------
2.00% per annum, in the case of an ABR Loan, and (b) 3.00% per annum, in the
case of a Eurodollar Loan.
"Tranche B Term Loan" means a Loan made pursuant to clause (b) of
-------------------
Section 2.01.
"Tranche C Availability Period" means the period from and including
-----------------------------
the earlier of (i) the date that final definitive documentation with respect to
the Additional Capital Contributions has been executed on terms reasonably
satisfactory to the Administrative Agent and (ii) the date that Holdings
receives Net Proceeds of at least $75,000,000 from an initial public offering of
its equity securities to but excluding the earlier of February 4, 2001 and the
date of termination of the Tranche C Commitments.
"Tranche C Commitment" means, with respect to each Lender, the
--------------------
commitment, if any, of such Lender to make Tranche C Term Loans hereunder,
expressed as an amount representing the maximum principal amount of the Tranche
C Term Loans to be made by such Lender hereunder, as such commitment may be (a)
reduced from time to time pursuant to Section 2.06 and (b) reduced or increased
from time to time pursuant to assignments by or to such Lender pursuant to
Section 9.04. The initial amount of each Lender's Tranche C Commitment is set
forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which
such Lender shall have assumed its Tranche C Commitment, as applicable. The
initial aggregate amount of the Lenders' Tranche C Commitments is $175,000,000.
"Tranche C Lender" means a Lender with a Tranche C Commitment or an
----------------
outstanding Tranche C Term Loan.
"Tranche C Maturity Date" means August 4, 2006.
-----------------------
"Tranche C Term Loan" means a Loan made pursuant to clause (c) of
-------------------
Section 2.01.
"Transactions" means (a) the execution, delivery and performance by
------------
each Loan Party of the Loan Documents to which it is to be a party, the
borrowing of Loans, the use of the proceeds thereof and the issuance of Letters
of
59
<PAGE>
Credit hereunder, (b) the execution, delivery and performance by each Loan
Party of the Subordinated Debt Documents relating to the 11% Notes to which it
is to be a party, the issuance of such Subordinated Debt, if any, and the use of
the proceeds thereof, (c) the Tower Sale and (d) the Initial Equity
Contributions and the Additional Capital Contributions.
"Type", when used in reference to any Loan or Borrowing, refers to
----
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.
"UCC" mean the Uniform Commercial Code of the State of New York.
---
"Unrestricted Subsidiary" means any subsidiary of Holdings or any
-----------------------
other direct or indirect investment by Holdings in the Capital Stock of any
other Person (other than the Borrower or any Subsidiary) so long as at the time
such subsidiary is acquired or created or such investment is made (i) no Default
or Event of Default shall have occurred and be continuing or would result
therefrom, (ii) Holdings shall have notified the Administrative Agent of its
acquisition or creation of such subsidiary or its making of such investment and
its ownership interest therein and its designation thereof as an Unrestricted
Subsidiary concurrently with such acquisition, creation or investment and the
intended purposes of such subsidiary or investment, (iii) all transactions
related thereto shall be consummated in accordance with applicable laws, (iv)
Holdings and the Borrower shall be in Pro Forma Compliance, (v) none of
Holdings, the Borrower or any Subsidiary shall have any contingent liability in
respect thereof (other than any contingent tax liabilities in respect of which
there shall exist a tax sharing agreement with the other owners of such
Unrestricted Subsidiary providing for an allocation of tax liabilities and
benefits customary in similar circumstances), (vi) any management or service
provided by Holdings, the Borrower or any Subsidiary to such subsidiary or
investment shall be provided in consideration of cash remuneration in an amount
not less than could have been obtained from a third party on an arms' length
basis and (vii) such subsidiary or investment shall be capitalized solely from
(A) contributions to the capital of Holdings in an aggregate amount not to
exceed
60
<PAGE>
$75,000,000 to be contributed substantially contemporaneously by Holdings
to such Unrestricted Subsidiary, (B) investments by Persons other than Holdings,
the Borrower or any Subsidiary and (C) the proceeds of Indebtedness of Persons
other than Holdings, the Borrower or any Subsidiary.
"Wholly Owned Subsidiary" of any Person shall mean a subsidiary of
-----------------------
such Person of which securities (except for directors' qualifying shares) or
other ownership interests representing 100% of the equity or 100% of the
ordinary voting power or 100% of the general partnership interests are, at the
time any determination is being made, owned, controlled or held by such Person
or one or more wholly owned subsidiaries of such Person or by such Person and
one or more wholly owned subsidiaries of such Person.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
--------------------
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
"Wireless Services" means broadband personal communications services
-----------------
or cellular services provided in one or more Systems (including cellular
services provided on the 850 MHz band to the extent such services constitute a
Related Business).
SECTION 1.02. Classification of Loans and Borrowings. For purposes
---------------------------------------
of this Agreement, Loans may be classified and referred to by Class (e.g., a
----
"Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type
----
(e.g., a "Eurodollar Revolving Loan"). Borrowings also may be classified and
- -----
referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a
---- ----
"Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving
----
Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein shall
----------------
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without limitation". The word
"will" shall be construed to have the same meaning and effect as the
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<PAGE>
word "shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement, (e) the words "asset" and "property" shall be construed to have
the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights
and (f) the words "on the date hereof," "as of the date hereof" or "the date of
this Agreement" shall be construed to refer to February 3, 1998, the Agreement
Date.
SECTION 1.04. Accounting Terms; GAAP. (a) Except as otherwise
-----------------------
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
--------
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
(b) All computations required to be made hereunder with respect to
the Borrower to demonstrate compliance with any of the financial covenants
contained in Section 6.12 and any computation based on "Consolidated EBITDA"
(except for the computation of "Excess Cash Flow")
62
<PAGE>
shall be computed to give effect on a pro forma basis to any acquisition,
disposition or similar event permitted by this Agreement and consummated prior
to the computation as if such acquisition, disposition or other event had
occurred on the first day of the relevant period. All pro forma computations
required to be made hereunder giving effect to any such acquisition, disposition
or similar event shall reflect on a pro forma basis such event and, to the
extent applicable, the historical earnings, cash flows and expenses associated
with the assets acquired or disposed of and any related incurrence or reduction
of Indebtedness, but shall not take into account any projected synergies or
similar benefits expected to be realized as a result of such event.
ARTICLE II
The Credits
-----------
SECTION 2.01. Commitments. Subject to the terms and conditions set
------------
forth herein, each Lender agrees (a) to make Tranche A Term Loans to the
Borrower during the Tranche A Availability Period in an aggregate principal
amount not exceeding its Tranche A Commitment, (b) to make Tranche B Term Loans
to the Borrower during the Tranche B Availability Period in a principal amount
not exceeding its Tranche B Commitment, (c) to make Tranche C Term Loans to the
Borrower during the Tranche C Availability Period in an aggregate principal
amount not exceeding its Tranche C Commitment, and (d) to make Revolving Loans
to the Borrower from time to time during the Revolving Availability Period in an
aggregate principal amount that will not result in such Lender's Revolving
Exposure exceeding such Lender's Revolving Commitment. Within the foregoing
limits and subject to the terms and conditions set forth herein, the Borrower
may borrow, prepay and reborrow Revolving Loans. Amounts repaid or prepaid in
respect of Term Loans may not be reborrowed.
SECTION 2.02. Loans and Borrowings. (a) Each Loan (other than a
---------------------
Swingline Loan) shall be made as part of a Borrowing consisting of Loans of the
same Class and Type made by the Lenders ratably in accordance with their
respective Commitments of the applicable Class. The failure of any Lender to
make any Loan required to be made by it shall not relieve any other Lender of
its obligations
63
<PAGE>
hereunder; provided that the Commitments of the Lenders are several and no
--------
Lender shall be responsible for any other Lender's failure to make Loans as
required.
(b) Subject to Section 2.12, each Revolving Borrowing and Term
Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the
Borrower may request in accordance herewith. Each Lender at its option may make
any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of
such Lender to make such Loan; provided that any exercise of such option shall
--------
not affect the obligation of the Borrower to repay such Loan in accordance with
the terms of this Agreement.
(c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $5,000,000. At the time that each ABR
Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that
is an integral multiple of $1,000,000 and not less than $2,000,000; provided
--------
that an ABR Revolving Borrowing may be in an aggregate amount that is equal to
the entire unused balance of the total Revolving Commitments or that is required
to finance the reimbursement of an LC Disbursement as contemplated by Section
2.18(e)(ii). Borrowings of more than one Type and Class may be outstanding at
the same time; provided that there shall not at any time be more than a total of
--------
10 Eurodollar Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Revolving Maturity Date, Tranche A Maturity Date, Tranche B Maturity
Date or Tranche C Maturity Date, as applicable.
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<PAGE>
SECTION 2.03. Requests for Borrowings. To request a Revolving
------------------------
Borrowing or Term Borrowing, the Borrower shall notify the Administrative Agent
of such request by telephone (a) in the case of a Eurodollar Borrowing, not
later than 11:00 a.m., New York City time, three Business Days before the date
of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than
11:00 a.m., New York City time, one Business Day before the date of the proposed
Borrowing. Each such telephonic Borrowing Request shall be irrevocable and
shall be confirmed promptly by hand delivery or telecopy to the Administrative
Agent of a written Borrowing Request in a form approved by the Administrative
Agent and signed by the Borrower. Each such telephonic and written Borrowing
Request shall specify the following information in compliance with Section 2.02:
(i) whether the requested Borrowing is to be a Revolving Borrowing,
Tranche A Term Borrowing, Tranche B Term Borrowing or Tranche C Term
Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) the date of such Borrowing, which shall be a Business Day;
(iv) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;
(v) in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated by
the definition of the term "Interest Period"; and
(vi) the location and number of the Borrower's account to which funds
are to be disbursed, which shall comply with the requirements of Section
2.04.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Revolving Borrowing, then the Borrower shall
be deemed to have selected an Interest Period of one month's duration. Promptly
following receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the
65
<PAGE>
details thereof and of the amount of such Lender's Loan to be made as part of
the requested Borrowing.
SECTION 2.04. Funding of Borrowings. (a) Each Lender shall make
----------------------
each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by 12:00 noon, New York City time, to
the account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders; provided that Swingline Loans shall be made as
--------
provided in Section 2.20. The Administrative Agent will make such Loans
available to the Borrower by promptly crediting the amounts so received, in like
funds, to an account of the Borrower maintained with the Administrative Agent in
New York City and designated by the Borrower in the applicable Borrowing
Request; provided, that ABR Revolving Loans made to finance the reimbursement of
--------
an LC Disbursement as provided in Section 2.18(e)(ii) shall be remitted by the
Administrative Agent to the Issuing Bank.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at
(i) in the case of such Lender, the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation or (ii) in the case of the Borrower,
the interest rate applicable to ABR Loans. If such Lender pays such amount to
the Administrative Agent, then such amount shall constitute such Lender's Loan
included in such Borrowing.
SECTION 2.05. Interest Elections. (a) Each Revolving Borrowing and
-------------------
Term Borrowing initially shall be
66
<PAGE>
of the Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section. The Borrower may elect different options with respect to different
portions of the affected Borrowing, in which case each such portion shall be
allocated ratably among the Lenders holding the Loans comprising such Borrowing,
and the Loans comprising each such portion shall be considered a separate
Borrowing.
(b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02 and paragraph
(f) of this Section:
(i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the information to be specified pursuant to
clauses (iii) and (iv) below shall be specified for each resulting
Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and
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<PAGE>
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election
Request with respect to a Eurodollar Borrowing prior to the end of the Interest
Period applicable thereto, then, unless such Borrowing is repaid as provided
herein, at the end of such Interest Period such Borrowing shall be converted to
an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is continuing and the Administrative Agent, at the
request of the Required Lenders, so notifies the Borrower, then, so long as an
Event of Default is continuing (i) no outstanding Borrowing may be converted to
or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.
(f) A Borrowing of any Class may not be converted to or continued as
a Eurodollar Borrowing if after giving effect thereto (i) the Interest Period
therefor would commence before and end after a date on which any principal of
the Loans of such Class is scheduled to be repaid and (ii) the sum of the
aggregate principal amount of outstanding Eurodollar Borrowings of such Class
with Interest Periods ending on or prior to such scheduled repayment date plus
the aggregate principal amount of outstanding ABR Borrowings of such Class would
be less than the aggregate principal amount of Loans of such Class required to
be repaid on such scheduled repayment date.
SECTION 2.06. Termination and Optional Reduction of Commitments. (a)
--------------------------------------------------
Unless previously terminated, (i) the
68
<PAGE>
Tranche A Commitments shall terminate at 5:00 p.m., New York City time, on the
last day of the Tranche A Availability Period, (ii) the Tranche B Commitments
shall terminate at 5:00 p.m., New York City time, on the last day of the Tranche
B Availability Period, (iii) the Tranche C Commitments shall terminate at 5:00
p.m., New York City time, on the last day of the Tranche C Availability Period
and (iv) the Revolving Commitments shall terminate on the Revolving Maturity
Date.
(b) The Borrower may at any time terminate, or from time to time
reduce, the Commitments of any Class; provided that (i) each reduction of the
--------
Commitments of any Class shall be in an amount that is an integral multiple of
$1,000,000 and not less than $2,000,000, (ii) the Borrower shall not terminate
or reduce the Revolving Commitments if, after giving effect to any concurrent
prepayment of the Revolving Loans in accordance with Section 2.09, the sum of
the Revolving Exposures would exceed the total Revolving Commitments and (iii)
the Borrower may not reduce or terminate the Tranche B Commitments if any
portion of the Revolving Commitments or Tranche A Commitments is outstanding.
(c) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) of this
Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable; provided that a notice
--------
of termination of the Revolving Commitments delivered by the Borrower may state
that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by the Borrower (by notice
to the Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Any termination or reduction of the Commitments of
any Class shall be permanent. Each reduction of the Commitments of any Class
shall be made ratably among the Lenders in accordance with their respective
Commitments of such Class.
SECTION 2.07. Repayment of Loans; Evidence of Debt. (a) The
-------------------------------------
Borrower hereby unconditionally promises to
69
<PAGE>
pay (i) to the Administrative Agent for the account of each Lender the then
unpaid principal amount of each Revolving Loan of such Lender on the Revolving
Maturity Date, (ii) to the Administrative Agent for the account of each Lender
the then unpaid principal amount of each Term Loan of such Lender as provided in
Section 2.08 and (iii) to the Swingline Lender the then unpaid principal amount
of each Swingline Loan on the earlier of (i) the Revolving Maturity Date and
(ii) the first Business Day after the Swingline Lender demands repayment of such
Swingline Loan (or such other date as may be fixed by agreement between the
Borrower and the Swingline Lender).
(b) In the event and on such occasion that the sum of the Revolving
Exposures exceeds the total Revolving Commitments, the Borrower shall prepay
Revolving Borrowings (or, if no such Borrowings are outstanding, deposit cash
collateral in an account with the Agent pursuant to Section 2.18(j)) in an
aggregate amount equal to such excess.
(c) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(d) The Administrative Agent shall maintain accounts in which it
shall record (i) the amount of each Loan made hereunder, the Class and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders and each
Lender's share thereof.
(e) The entries made in the accounts maintained pursuant to paragraph
(c) or (d) of this Section shall, to the extent permitted by law, be prima facie
----- -----
evidence of the existence and amounts of the obligations recorded therein;
provided that the failure of any Lender or the Administrative Agent to maintain
- --------
such accounts or any error therein shall not in any manner affect the obligation
of the Borrower to repay the Loans in accordance with the terms of this
Agreement.
70
<PAGE>
(f) Any Lender may request that Loans of any Class made by it be
evidenced by a promissory note. In such event, the Borrower shall execute and
deliver to such Lender a promissory note payable to the order of such Lender
(or, if requested by such Lender, to such Lender and its registered assigns) and
in a form approved by the Administrative Agent and the Borrower. Thereafter,
the Loans evidenced by such promissory note and interest thereon shall at all
times (including after assignment pursuant to Section 9.04) be represented by
one or more promissory notes in such form payable to the order of the payee
named therein (or, if such promissory note is a registered note, to such payee
and its registered assigns).
SECTION 2.08. Automatic Revolving Commitment Reductions; Amortization
-------------------------------------------------------
of Term Loans. (a) The aggregate amount of the Lenders' Revolving Commitments
- --------------
shall automatically and permanently reduce in eight consecutive quarterly
reductions occurring on August 4, 2004, and on each successive date thereafter
which is three months after the preceding reduction date, in the aggregate
amount set forth below for each reduction:
Reduction Amount
--------- ------
1-2 $ 5,000,000
---
3-6 $10,000,000
---
7-8 $25,000,000
---
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(b) Subject to adjustment pursuant to paragraph (e) of this Section,
the Borrower shall repay each of the Tranche A Term Loans and the Tranche C
Term Loans in 18 consecutive quarterly installments, payable on February 4,
2002, and on each successive date thereafter which is three months after the
preceding installment date, in the aggregate amount set forth below for each
installment:
Tranche A Tranche C
Installment Amount Amount
----------- --------- ---------
1-4 $ 4,375,000 $ 4,375,000
5-8 $ 6,562,500 $ 6,562,500
9-12 $ 8,750,000 $ 8,750,000
13-16 $10,937,500 $10,937,500
17-18 $26,250,000 $26,250,000
(c) Subject to adjustment pursuant to paragraph (e) of this Section,
the Borrower shall repay each of the Tranche B Term Loans in 21 consecutive
quarterly installments, payable on February 4, 2002, and on each successive date
thereafter which is three months after the preceding installment date, in the
aggregate amount set forth below for each installment:
Tranche B
Installment Amount
----------- ---------
1-4 $ 375,000
5-8 $ 375,000
9-12 $ 375,000
13-16 $ 375,000
17-20 $ 7,500,000
21 $114,000,000
(d) To the extent not previously paid, (i) all Tranche A Term Loans
shall be due and payable on the Tranche A Maturity Date, (ii) all Tranche B Term
Loans shall be due and payable on the Tranche B Maturity Date and (iii) all
Tranche C Term Loans shall be due and payable on the Tranche C Maturity Date.
(e) If the initial aggregate amount of the Lenders' Term Commitments
of any Class exceeds the aggregate principal amount of Term Loans of such Class
that are made during the Tranche A Availability Period, the
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Tranche B Availability Period or the Tranche C Availability Period, as the case
may be, then the scheduled repayments of Term Borrowings of such Class to be
made pursuant to this Section shall be reduced ratably by an aggregate amount
equal to such excess. Any prepayment of a Term Borrowing of any Class shall be
applied to reduce the subsequent scheduled repayments of the Term Borrowings of
such Class to be made pursuant to this Section ratably.
(f) Prior to any repayment of any Term Borrowings of any Class
hereunder, the Borrower shall select the Borrowing or Borrowings of the
applicable Class to be repaid and shall notify the Administrative Agent by
telephone (confirmed by telecopy) of such selection not later than 11:00 a.m.,
New York City time, three Business Days before the scheduled date of such
repayment; provided that each repayment of Term Borrowings of any Class shall be
--------
applied to repay any outstanding ABR Term Borrowings of such Class before any
other Borrowings of such Class. Each repayment of a Borrowing shall be applied
ratably to the Loans included in the repaid Borrowing. Repayments of Term
Borrowings shall be accompanied by accrued interest on the amount repaid.
SECTION 2.09. Prepayment of Loans. (a) The Borrower shall have the
--------------------
right at any time and from time to time to prepay any Borrowing in whole or in
part, subject to the requirements of this Section.
(b) In the event and on each occasion that any Net Proceeds are
received by or on behalf of the Borrower or any Subsidiary in respect of any
Prepayment Event, immediately after such Net Proceeds are received, the Borrower
shall prepay Term Borrowings and the Revolving Commitments shall be
automatically and permanently reduced in an aggregate amount (to be applied
ratably among the Tranche A Term Loans, the Tranche B Term Loans, the Tranche C
Term Loans, the Incremental Term Loans, if any, and the Revolving Commitments
based on their then respective amounts) equal to (i) in the case of an event
described in clause (c) of the definition of "Prepayment Event", 50% of such Net
Proceeds and (ii) in the case of an event described in any other clause of the
definition of "Prepayment Event", 100% of such Net Proceeds.
(c) Following the end of the fiscal year of the Borrower ending
December 31, 2001 and following the end of
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each subsequent fiscal year, the Borrower shall prepay Term Borrowings and the
Revolving Commitments shall be automatically and permanently reduced in an
aggregate amount (to be applied ratably among the Tranche A Term Loans, the
Tranche B Term Loans, the Tranche C Term Loans, the Incremental Term Loans, if
any, and the Revolving Commitments based on their then respective amounts) equal
to 50% of Excess Cash Flow for such fiscal year. Each prepayment pursuant to
this paragraph shall be made on or before the date on which financial statements
are delivered pursuant to Section 5.01 with respect to the fiscal year for which
Excess Cash Flow is being calculated (and in any event within 105 days after the
end of such fiscal year).
(d) Prior to any optional or mandatory prepayment of Borrowings
hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid
and shall specify such selection in the notice of such prepayment pursuant to
paragraph (f) of this Section; provided that each prepayment of Borrowings of
--------
any Class shall be applied to prepay ABR Borrowings of such Class before any
other Borrowings of such Class. In the event of any optional or mandatory
prepayment of Term Borrowings made at a time when Term Borrowings of more than
one Class remain outstanding, the Borrower shall select Term Borrowings to be
prepaid so that the aggregate amount of such prepayment is allocated among the
Tranche A Term Borrowings, Tranche B Term Borrowings, Tranche C Term Borrowings
and Incremental Term Borrowings, if any, pro rata based on the aggregate
principal amount of outstanding Borrowings of each such Class; provided that any
--------
Tranche B Lender may elect, by notice to the Administrative Agent by telephone
(confirmed by telecopy) at least one Business Day prior to the prepayment date,
to decline all or any portion of any prepayment of its Tranche B Term Loans
pursuant to this Section (other than an optional prepayment pursuant to
paragraph (a) of this Section, which may not be declined), in which case the Net
Proceeds or Excess Cash Flow that would have been applied to prepay Tranche B
Term Loans but were so declined shall be applied to prepay Tranche A Term Loans,
Tranche C Term Loans and Incremental Term Loans, if any, and to reduce the
Revolving Commitments on a pro rata basis based on their then respective
amounts.
(e) The amount of any optional or mandatory prepayments allocated to
Tranche A Term Loans, Tranche B Term Loans, Tranche C Term Loans and Incremental
Term Loans, if any, shall be applied pro rata to reduce the
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principal amount of the then remaining amortization installments applicable to
such Loans set forth in Section 2.08. The amount of any optional or mandatory
commitment reductions allocated to the Revolving Loans shall be applied pro rata
to reduce the principal amount of the then remaining reductions applicable to
such Commitments set forth in Section 2.08. Any reduction of the Revolving
Commitments shall be accompanied by prepayment of Revolving Loans to the extent
the aggregate amount of such loans outstanding exceeds the total amount of the
Revolving Commitments as so reduced.
(f) The Borrower shall notify the Administrative Agent (and, in the
case of prepayment of a Swingline Loan, the Swingline Lender) by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Revolving Borrowing, not later than 11:00 a.m., New
York City time, three Business Days before the date of prepayment, (ii) in the
case of prepayment of an ABR Revolving Borrowing for which the Tranche B Lenders
may make the election described in the proviso to the second sentence of Section
2.09(d), not later than 11:00 a.m., New York City time, on the Business Day
before the date of prepayment and, for all other ABR Borrowings, not later than
11:00 a.m., New York City time, on the date of prepayment, and (iii) in the case
of prepayment of a Swingline Loan, not later than 12:00 noon, New York City
time, on the date of prepayment, or such other time as may be agreed by the
Borrower and the Swingline Lender. Each such notice shall be irrevocable and
shall specify the prepayment date, the principal amount of each Borrowing or
portion thereof to be prepaid and, in the case of a mandatory prepayment, a
reasonably detailed calculation of the amount of such prepayment; provided that,
--------
if a notice of optional prepayment is given in connection with a conditional
notice of termination of the Revolving Commitments as contemplated by Section
2.06, then such notice of prepayment may be revoked if such notice of
termination is revoked in accordance with Section 2.06. Promptly following
receipt of any such notice (other than a notice relating solely to Swingline
Loans), the Administrative Agent shall advise the Lenders of the contents
thereof. Each partial prepayment of any Borrowing shall be in an amount that
would be permitted in the case of an advance of a Borrowing of the same Type as
provided in Section 2.02, except as necessary to apply fully the required amount
of a mandatory prepayment. Each prepayment
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of a Borrowing shall be applied ratably to the Loans included in the prepaid
Borrowing. Prepayments shall be accompanied by accrued interest to the extent
required by Section 2.11.
SECTION 2.10. Fees. (a) The Borrower agrees to pay to the
-----
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at the Applicable Rate on the daily unused amount of each
Commitment of such Lender for each day during the period (i) with respect to any
Revolving Commitment, Tranche A Commitment, or Tranche B Commitment, from and
including the date hereof to but excluding the date on which such Commitment
terminates and (ii) with respect to any Tranche C Commitment, from and including
the Amendment Execution Date to but excluding the date on which such Commitment
terminates. Accrued commitment fees shall be payable in arrears on the last day
of March, June, September and December of each year and on the date on which any
Commitments of such Lender shall expire or terminate, commencing on the first
such date to occur after the date hereof. All commitment fees shall be computed
on the basis of a year of 360 days and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day). For purposes
of computing commitment fees with respect to Revolving Commitments, a Revolving
Commitment of a Lender shall be deemed to be used to the extent of the
outstanding Revolving Loans and LC Exposure of such Lender, but the Swingline
Exposure shall not be deemed to be a use of the Swingline Lender's Commitment.
(b) The Borrower agrees to pay to the Administrative Agent, for its
own account, fees payable in the amounts and at the times separately agreed upon
between the Borrower and the Administrative Agent.
(c) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the Issuing Bank
in the case of fees payable to it) for distribution, in the case of commitment
fees and participation fees, to the Lenders entitled thereto. Fees paid shall
not be refundable under any circumstances.
(d) The Borrower agrees to pay (i) to the Administrative Agent for the
account of each Revolving
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Lender a participation fee with respect to its participations in Letters of
Credit, which shall accrue at the same Applicable Margin as interest on
Eurodollar Revolving Loans on the average daily amount of such Lender's LC
Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the Amendment Effective Date
to but excluding the later of the date on which such Lender's Revolving
Commitment terminates and the date on which such Lender ceases to have any LC
Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue at the
rate or rates separately agreed upon between the Borrower and the Issuing Bank
on the average daily amount of the LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) during the period from and
including the Amendment Effective Date to but excluding the later of the date of
termination of the Revolving Commitments and the date on which there ceases to
be any LC Exposure, as well as the Issuing Bank's standard fees with respect to
the issuance, amendment, renewal or extension of any Letter of Credit or any
processing of drawings thereunder. Participation fees and fronting fees accrued
through and including the last day of March, June, September and December of
each year shall be payable on the third Business Day following such last day,
commencing on the first such date to occur after the Amendment Effective Date;
provided that all such fees shall be payable on the date on which the Revolving
- --------
Commitments terminate and any such fees accruing after the date on which the
Revolving Commitments terminate shall be payable on demand. Any other fees
payable to the Issuing Bank pursuant to this paragraph shall be payable within
10 days after demand. All participation fees and fronting fees shall be computed
on the basis of a year of 360 days and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).
SECTION 2.11. Interest. (a) The Loans comprising each ABR Borrowing
---------
shall bear interest at the Alternate Base Rate plus the Applicable Margin.
(b) The Loans comprising each Eurodollar Borrowing shall bear
interest at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Margin.
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(c) The Loans comprising each Swingline Borrowing shall bear interest
at the rate agreed by the Borrower and the Swingline Lender in accordance with
Section 2.20(b).
(d) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Revolving Loans as provided in paragraph (a) of this Section.
(e) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and, in the case of Revolving Loans, upon
termination of the Revolving Commitments; provided that (i) interest accrued
--------
pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in
the event of any repayment or prepayment of any Loan (other than a prepayment of
an ABR Revolving Loan prior to the end of the Revolving Availability Period),
accrued interest on the principal amount repaid or prepaid shall be payable on
the date of such repayment or prepayment and (iii) in the event of any
conversion of any Eurodollar Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the effective
date of such conversion.
(f) All interest hereunder shall be computed on the basis of a year
of 360 days, except that interest computed by reference to the Alternate Base
Rate at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate or
Adjusted LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
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SECTION 2.12. Alternate Rate of Interest. If prior to the
---------------------------
commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist
for ascertaining the Adjusted LIBO Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBO Rate for such Interest Period will not adequately and
fairly reflect the cost to such Lenders (or Lender) of making or
maintaining their Loans (or its Loan) included in such Borrowing for such
Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist (provided that the
Administrative Agent shall use commercially reasonable efforts to determine
whether or not the circumstances which have caused the notice, continue to
exist), (i) any Interest Election Request that requests the conversion of any
Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall
be ineffective and (ii) if any Borrowing Request requests a Eurodollar
Borrowing, such Borrowing shall be made as an ABR Borrowing.
SECTION 2.13. Increased Costs. (a) If any Change in Law shall:
----------------
(i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender (except any such reserve requirement
reflected in the Adjusted LIBO Rate) or the Issuing Bank; or
(ii) impose on any Lender or the Issuing Bank or the London interbank
market any other condition (other than a condition relating to a Tax)
affecting this Agreement or Eurodollar Loans made by such Lender (or any
Letter of Credit or participation therein);
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and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank,
as the case may be, for such additional costs incurred or reduction suffered.
(b) If any Lender or Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender's or Issuing Bank's capital or on the capital of such
Lender's or Issuing Bank's holding company, if any, as a consequence of this
Agreement or the Loans made by, or participations in Letters of Credit held by,
such Lender, or the Letters of Credit issued by such Issuing Bank, to a level
below that which such Lender or Issuing Bank or such Lender's or Issuing Bank's
holding company could have achieved but for such Change in Law (taking into
consideration such Lender's or Issuing Bank's policies and the policies of such
Lender's or Issuing Bank's holding company with respect to capital adequacy),
then from time to time the Borrower will pay to such Lender or Issuing Bank, as
the case may be, such additional amount or amounts as will compensate such
Lender or Issuing Bank or such Lender's or Issuing Bank's holding company for
any such reduction suffered.
(c) A certificate of a Lender or Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or Issuing Bank or its
holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or Issuing Bank the amount
shown as due on any such certificate within 10 days after receipt thereof.
(d) Failure or delay on the part of any Lender or Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or
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Issuing Bank's right to demand such compensation; provided that the Borrower
--------
shall not be required to compensate a Lender or Issuing Bank pursuant to this
Section for any increased costs or reductions incurred more than 270 days prior
to the date that such Lender or Issuing Bank, as the case may be, notifies the
Borrower of the Change in Law giving rise to such increased costs or reductions
and of such Lender's or Issuing Bank's intention to claim compensation therefor;
provided further that, if the Change in Law giving rise to such increased
- ----------------
costs or reductions is retroactive, then the 270-day period referred to above
shall be extended to include the period of retroactive effect thereof.
SECTION 2.14. Break Funding Payments. In the event of (a) the
-----------------------
payment of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Revolving Loan or Term Loan on the date specified in any
notice delivered pursuant hereto (regardless of whether such notice may be
revoked under Section 2.09(f) and is revoked in accordance therewith), or (d)
the assignment of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto as a result of a request by the Borrower pursuant to
Section 2.17, then, in any such event, the Borrower shall compensate each Lender
for the loss, cost and expense attributable to such event. In the case of a
Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to
include an amount reasonably determined by such Lender to be the excess, if any,
of (i) the amount of interest which would have accrued on the principal amount
of such Loan had such event not occurred, at the Adjusted LIBO Rate that would
have been applicable to such Loan, for the period from the date of such event to
the last day of the then current Interest Period therefor (or, in the case of a
failure to borrow, convert or continue, for the period that would have been the
Interest Period for such Loan), over (ii) the amount of interest which would
accrue on such principal amount for such period at the interest rate which such
Lender would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the eurodollar
market. A certificate of any Lender setting forth any amount or
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amounts that such Lender is entitled to receive pursuant to this Section shall
be delivered to the Borrower and shall be conclusive absent manifest error. The
Borrower shall pay such Lender the amount shown as due on any such certificate
within 10 days after receipt thereof.
SECTION 2.15. Taxes. (a) Any and all payments by or on account of
------
any obligation of the Borrower hereunder or under any other Loan Document shall
be made free and clear of and without deduction for any Indemnified Taxes or
Other Taxes; provided that if the Borrower shall be required to deduct any
--------
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent, Lender or Issuing Bank (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall
pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent, each
Lender, and the Issuing Bank within 30 days after written demand therefor, for
the full amount of any Indemnified Taxes or Other Taxes paid by the
Administrative Agent, such Lender, or the Issuing Bank, on or with respect to
any payment by or on account of any obligation of the Borrower hereunder or
under any other Loan Document (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section)
and any penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender, the Issuing Bank or by the Administrative Agent on its own
behalf or on behalf of a Lender, or the Issuing Bank, shall be conclusive absent
manifest error.
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(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall,
upon request, deliver to the Administrative Agent the original or a certified
copy of a receipt issued by such Governmental Authority evidencing such payment,
a copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable
law or reasonably requested by the Borrower as will permit such payments to be
made without withholding or at a reduced rate, including, without limitation, if
such Lender is not a "bank" within the meaning of Section 881(c)(3)(A) of the
Code and intends to claim exemption from the U.S. Federal withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of "portfolio
interest", a Form W-8, or any subsequent versions thereof or successors thereto
(and, if such Foreign Lender delivers a Form W-8, a certificate representing
that such Foreign Lender is not a bank for purposes of Section 881(c) of the
Code, is not a 10-percent shareholder (within the meaning of Section
871(h)(3)(B) of the Code of the Borrower and is not a controlled foreign
corporation related to the Borrower (within the meaning of Section 864(d)(4) of
the Code)), properly completed and duly executed by such Foreign Lender claiming
complete exemption from, or a reduced rate of, U.S. Federal withholding tax on
payments of interest by the Borrower under this Agreement and the other Loan
Documents.
(f) If the Administrative Agent or a Lender receives a refund in
respect of any Indemnified Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 2.15, it shall within 30 days from
the date of such receipt pay over to the Borrower (a) such refund (but only to
the extent of indemnity payments made, or additional amounts paid, by the
Borrower under this Section 2.15 with respect to the
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Indemnified Taxes or Other Taxes giving rise to such refund), net of all out-of-
pocket expenses of the Administrative Agent or such Lender and (b) interest paid
by the relevant Governmental Authority with respect to such refund); provided,
--------
however, that the Borrower, upon the request of the Administrative Agent or such
- -------
Lender shall repay the amount paid over to the Borrower (plus penalties,
interest or other charges) to the Administrative Agent or such Lender in the
event the Administrative Agent or such Lender is required to repay such refund
to such Governmental Authority.
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of
--------------------------------------------------
Setoffs. (a) The Borrower shall make each payment required to be made by it
- --------
hereunder or under any other Loan Document (whether of principal, interest, fees
or reimbursement of LC Disbursements, or of amounts payable under Section 2.13,
2.14 or 2.15, or otherwise) prior to 12:00 noon, New York City time, on the date
when due, in immediately available funds, without setoff or counterclaim. Any
amounts received after 2:00 p.m. on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 270 Park Avenue, New
York, New York, except payments to be made directly to the Issuing Bank or
Swingline Lender as expressly provided herein and except that payments pursuant
to Sections 2.13, 2.14, 2.15 and 9.03 shall be made directly to the Persons
entitled thereto and payments pursuant to other Loan Documents shall be made to
the Persons specified therein. The Administrative Agent shall distribute any
such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof. If any payment under
any Loan Document shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day, and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments under each Loan Document shall be made
in dollars.
(b) If at any time insufficient funds are received by and available
to the Administrative Agent to pay fully all amounts of principal, unreimbursed
LC Disbursements, interest and fees then due hereunder, such
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funds shall be applied (i) first, towards payment of interest and fees then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of interest and fees then due to such parties, and (ii) second, towards
payment of principal and unreimbursed LC Disbursements then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
principal and unreimbursed LC Disbursements then due to such parties.
(c) If any Lender shall, by exercising any right of set off or
counterclaim or otherwise, obtain payment in respect of any Loan or
participation in LC Disbursements as a result of which the unpaid principal
portion of its Tranche A Term Loans, Tranche B Term Loans, Tranche C Term Loans,
Incremental Term Loans (if any), Revolving Loans or participations in LC
Disbursements shall be proportionately less than the unpaid principal portion of
the Tranche A Term Loans, Tranche B Term Loans, Tranche C Term Loans,
Incremental Term Loans (if any), Revolving Loans or participations in LC
Disbursements of any other Lender, it shall be deemed simultaneously to have
purchased from such other Lender at face value, and shall promptly pay to such
other Lender the purchase price for, a participation in the Tranche A Term
Loans, Tranche B Term Loans, Tranche C Term Loans, Incremental Term Loans (if
any), Revolving Loans or participations in LC Disbursements, as the case may be,
of such other Lender, so that the aggregate unpaid principal amount of the
Tranche A Term Loans, Tranche B Term Loans, Tranche C Term Loans, Incremental
Term Loans (if any), Revolving Loans and participations in LC Disbursements and
participations in Tranche A Term Loans, Tranche B Term Loans, Tranche C Term
Loans, Incremental Term Loans (if any), Revolving Loans or participations in LC
Disbursements held by each Lender shall be in the same proportion to the
aggregate unpaid principal amount of all Tranche A Term Loans, Tranche B Term
Loans, Tranche C Term Loans, Incremental Term Loans (if any), Revolving Loans or
participations in LC Disbursements then outstanding as the principal amount of
its Tranche A Term Loans, Tranche B Term Loans, Tranche C Term Loans,
Incremental Term Loans (if any), Revolving Loans or participations in LC
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Disbursements outstanding prior to such exercise of any right of setoff or
counterclaim or other event was to the principal amount of all Tranche A Term
Loans, Tranche B Term Loans, Tranche C Term Loans, Incremental Term Loans (if
any), Revolving Loans or participations in LC Disbursements outstanding prior to
such exercise of any right of setoff or counterclaim or other event; provided
--------
that (i) if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations shall be
rescinded and the purchase price restored to the extent of such recovery,
without interest, and (ii) the provisions of this paragraph shall not be
construed to apply to any payment made by the Borrower pursuant to and in
accordance with the express terms of this Agreement or any payment obtained by a
Lender as consideration for the assignment of or sale of a participation in any
of its Loans or participations in LC Disbursements to any assignee or
participant, other than to the Borrower or any Subsidiary or Affiliate thereof
(as to which the provisions of this paragraph shall apply). The Borrower
consents to the foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against the Borrower rights of setoff and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or the Issuing Bank hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute to the Lenders or the Issuing Bank,
the amount due. In such event, if the Borrower has not in fact made such
payment, then each of the Lenders or the Issuing Bank severally agrees to repay
to the Administrative Agent forthwith on demand the amount so distributed to
such Lender or the Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.04(b), 2.16(d), 2.18(d) or (e) or 9.03(c), then the
Administrative
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Agent may, in its discretion (notwithstanding any contrary provision hereof),
apply any amounts thereafter received by the Administrative Agent for the
account of such Lender to satisfy such Lender's obligations under such Sections
until all such unsatisfied obligations are fully paid.
SECTION 2.17. Mitigation Obligations; Replacement of Lenders. (a)
-----------------------------------------------
If any Lender requests compensation under Section 2.13, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.15, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.13 or 2.15, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.13, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.15,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrower
--------
shall have received the prior written consent of the Administrative Agent (and,
if a Revolving Commitment is being assigned, the Issuing Bank), which consent
shall not unreasonably be withheld, (ii) such Lender shall have received payment
of an amount equal to the outstanding principal of its Loans and participations
in LC Disbursements, accrued interest thereon, accrued fees and all other
amounts payable to it hereunder, from the assignee (to the extent of such
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outstanding principal and accrued interest and fees) or the Borrower (in the
case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.13 or payments required
to be made pursuant to Section 2.15, such assignment will result in a reduction
in such compensation or payments. A Lender shall not be required to make any
such assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply.
SECTION 2.18. Letters of Credit. (a) General. Subject to the terms
------------------ --------
and conditions set forth herein, the Borrower may request the issuance of
Letters of Credit for its own account, in a form reasonably acceptable to the
Administrative Agent and the Issuing Bank, at any time and from time to time
during the Revolving Availability Period. In the event of any inconsistency
between the terms and conditions of this Agreement and the terms and conditions
of any form of letter of credit application or other agreement submitted by the
Borrower to, or entered into by the Borrower with, the Issuing Bank relating to
any Letter of Credit, the terms and conditions of this Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
----------------------------------------------------------
Conditions. To request the issuance of a Letter of Credit (or the amendment,
- -----------
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank and the Administrative Agent (reasonably in advance of the requested date
of issuance, amendment, renewal or extension) a notice requesting the issuance
of a Letter of Credit, or identifying the Letter of Credit to be amended,
renewed or extended, and specifying the date of issuance, amendment, renewal or
extension (which shall be a Business Day), the date on which such Letter of
Credit is to expire (which shall comply with paragraph (c) of this Section), the
amount of such Letter of Credit, the name and address of the beneficiary thereof
and such other information as shall be necessary to prepare, amend, renew or
extend such Letter of Credit. If requested by the Issuing Bank, the Borrower
also shall submit a letter of credit application on the Issuing Bank's standard
form in connection with any
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request for a Letter of Credit. A Letter of Credit shall be issued, amended,
renewed or extended only if (and upon issuance, amendment, renewal or extension
of each Letter of Credit the Borrower shall be deemed to represent and warrant
that), after giving effect to such issuance, amendment, renewal or extension (i)
the LC Exposure shall not exceed $25,000,000 and (ii) the total Revolving
Exposures shall not exceed the total Revolving Commitments.
(c) Expiration Date. Each Letter of Credit shall expire at or prior
----------------
to the close of business on the earlier of (i) the date one year after the date
of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Revolving Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or an
---------------
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Revolving Lender, and each Revolving Lender hereby
acquires from the Issuing Bank, a participation in such Letter of Credit equal
to such Lender's Applicable Percentage of the aggregate amount available to be
drawn under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to
pay to the Administrative Agent, for the account of the Issuing Bank, such
Lender's Applicable Percentage of each LC Disbursement made by the Issuing Bank
and not reimbursed by the Borrower on the date due as provided in paragraph (e)
of this Section, or of any reimbursement payment required to be refunded to the
Borrower for any reason. Each Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in respect of
Letters of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement.
--------------
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(i) If the Issuing Bank shall make any LC Disbursement in respect of a
Letter of Credit and such LC Disbursement is less than $2,000,000, the
Borrower shall reimburse such LC Disbursement by paying to the
Administrative Agent an amount equal to such LC Disbursement not later than
12:00 noon, New York City time, on the date that such LC Disbursement is
made, if the Borrower shall have received notice of such LC Disbursement
prior to 10:00 a.m., New York City time, on such date, or, if such notice
has not been received by the Borrower prior to such time on such date, then
not later than 12:00 noon, New York City time, on (A) the Business Day that
the Borrower receives such notice, if such notice is received prior to
10:00 a.m., New York City time, on the day of receipt, or (B) the Business
Day immediately following the day that the Borrower receives such notice,
if such notice is not received prior to such time on the day of receipt.
The Administrative Agent shall notify each Revolving Lender of any LC
Disbursement that is required to be reimbursed under the preceding sentence
and that is not so reimbursed. Such notice shall include the payment then
due from the Borrower in respect thereof and such Lender's Applicable
Percentage thereof. Promptly following receipt of such notice, each
Revolving Lender shall pay to the Administrative Agent its Applicable
Percentage of the payment then due from the Borrower, in the same manner as
provided in Section 2.04 with respect to Loans made by such Lender (and
Section 2.04 shall apply, mutatis mutandis, to the payment obligations of
------- --------
the Revolving Lenders), and the Administrative Agent shall promptly pay to
the Issuing Bank the amounts so received by it from the Revolving Lenders.
Promptly following receipt by the Administrative Agent of any payment from
the Borrower pursuant to this paragraph, the Administrative Agent shall
distribute such payment to the Issuing Bank or, to the extent that
Revolving Lenders have made payments pursuant to this paragraph to
reimburse the Issuing Bank, then to such Lenders and the Issuing Bank as
their interests may appear. Any payment made by a Revolving Lender
pursuant to this paragraph to reimburse the Issuing Bank for any LC
Disbursement shall not constitute a Loan and shall not relieve the Borrower
of its obligation to reimburse such LC Disbursement.
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(ii) If the Issuing Bank shall make any LC Disbursement in respect of
any Letter of Credit and such LC Disbursement is greater than or equal to
$2,000,000, the Borrower shall be deemed to have made an ABR Revolving
Borrowing in the equivalent amount on the date of such LC Disbursement.
The Administrative Agent shall notify each Revolving Lender of any ABR
Revolving Borrowing that is deemed to have been made pursuant to this
paragraph. Such notice shall include the principal amount in respect
thereof and such Lender's Applicable Percentage thereof. Promptly
following receipt of such notice, each Revolving Lender shall pay to the
Administrative Agent its Applicable Percentage of the ABR Revolving
Borrowing that is deemed to have been made, in the manner provided in
Section 2.04, and the Administrative Agent shall promptly pay to the
Issuing Bank the amounts so received by it from the Revolving Lenders.
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(f) Obligations Absolute. The Borrower's obligation to reimburse LC
---------------------
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower's obligations hereunder.
Neither the Administrative Agent, the Lenders nor the Issuing Bank, nor any of
their Related Parties, shall have any liability or responsibility by reason of
or in connection with the issuance or transfer of any Letter of Credit or any
payment or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; provided that the foregoing shall not be construed to excuse the
--------
Issuing Bank from liability to the Borrower to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by the Borrower to the extent permitted by applicable law) suffered by
the Borrower that are caused by the Issuing Bank's failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or wilful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the
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generality thereof, the parties agree that, with respect to documents presented
which appear on their face to be in substantial compliance with the terms of a
Letter of Credit, the Issuing Bank may, in its sole discretion, either accept
and make payment upon such documents without responsibility for further
investigation, regardless of any notice or information to the contrary, or
refuse to accept and make payment upon such documents if such documents are not
in strict compliance with the terms of such Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall, promptly
------------------------
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall promptly
notify the Administrative Agent and the Borrower by telephone (confirmed by
telecopy) of such demand for payment and whether the Issuing Bank has made or
will make an LC Disbursement thereunder; provided that any failure to give or
--------
delay in giving such notice shall not relieve the Borrower of its obligation to
reimburse the Issuing Bank and the Revolving Lenders with respect to any such LC
Disbursement.
(h) Interim Interest. If the Issuing Bank shall make any LC
-----------------
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans;
provided that, if the Borrower fails to reimburse such LC Disbursement when due
- --------
pursuant to paragraph (e) of this Section, then Section 2.11(d) shall apply.
Interest accrued pursuant to this paragraph shall be for the account of the
Issuing Bank, except that interest accrued on and after the date of payment by
any Revolving Lender pursuant to paragraph (e) of this Section to reimburse the
Issuing Bank shall be for the account of such Lender to the extent of such
payment.
(i) Replacement of the Issuing Bank. The Issuing Bank may be
--------------------------------
replaced at any time by written agreement among the Borrower, the Administrative
Agent, the replaced Issuing Bank and the successor Issuing Bank. The
Administrative Agent shall notify the Lenders of any such replacement of the
Issuing Bank. At the time any such replacement shall become effective, the
Borrower shall pay all unpaid fees accrued for the account of the replaced
Issuing Bank pursuant to Section 2.10(d). From and after the effective date of
any such
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replacement, (i) the successor Issuing Bank shall have all the rights and
obligations of the Issuing Bank under this Agreement with respect to Letters of
Credit to be issued thereafter and (ii) references herein to the term "Issuing
Bank" shall be deemed to refer to such successor or to any previous Issuing
Bank, or to such successor and all previous Issuing Banks, as the context shall
require. After the replacement of an Issuing Bank hereunder, the replaced
Issuing Bank shall remain a party hereto and shall continue to have all the
rights and obligations of an Issuing Bank under this Agreement with respect to
Letters of Credit issued by it prior to such replacement, but shall not be
required to issue additional Letters of Credit.
(j) Cash Collateralization. If any Event of Default shall occur and
-----------------------
be continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with LC Exposure representing greater
than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Borrower shall deposit in an account with the
Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders, an amount in cash equal to the LC Exposure as of such
date plus any accrued and unpaid interest thereon; provided that the obligation
--------
to deposit such cash collateral shall become effective immediately, and such
deposit shall become immediately due and payable, without demand or other notice
of any kind, upon the occurrence of any Event of Default with respect to the
Borrower described in clause (h) or (i) of Article VII. The Borrower also shall
deposit cash collateral pursuant to this paragraph as and to the extent required
by Section 2.07(b). Each such deposit shall be held by the Administrative Agent
as collateral for the payment and performance of the obligations of the Borrower
under this Agreement. The Administrative Agent shall have exclusive dominion
and control, including the exclusive right of withdrawal, over such account.
Other than any interest earned on the investment of such deposits, which
investments shall be made at the option and sole discretion of the
Administrative Agent and at the Borrower's risk and
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expense, such deposits shall not bear interest. Interest or profits, if any, on
such investments shall accumulate in such account. Moneys in such account shall
be applied by the Administrative Agent to reimburse the Issuing Bank for LC
Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the Borrower for the LC Exposure at such time or, if the maturity of the Loans
has been accelerated (but subject to the consent of Revolving Lenders with LC
Exposure representing greater than 50% of the total LC Exposure), be applied to
satisfy other obligations of the Borrower under this Agreement. If the Borrower
is required to provide an amount of cash collateral hereunder as a result of the
occurrence of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower within three Business Days after
all Events of Default have been cured or waived. If the Borrower is required to
provide an amount of cash collateral hereunder pursuant to Section 2.07(b), such
amount (to the extent not applied as aforesaid) shall be returned to the
Borrower as and to the extent that, after giving effect to such return, the
Borrower would remain in compliance with Section 2.07(b) and no Default shall
have occurred and be continuing.
SECTION 2.19. Incremental Term Loans. On or prior to February 2,
-----------------------
2001, the Borrower may, by notice to the Administrative Agent (which shall
promptly deliver a copy to each of the Lenders), request the addition of a new
tranche of term loans (the "Incremental Term Loans"); provided, however, that
---------------------- -------
both at the time of any such request and after giving effect to any such
Incremental Term Loans, no Default shall exist and the Borrower shall be in Pro
Forma Compliance with each financial covenant. The Incremental Term Loans shall
(i) be in an aggregate principal amount not in excess of $150,000,000 less the
aggregate principal amount of any outstanding Subordinated Debt permitted by
Section 6.01(a)(iii), (ii) rank pari passu in right of payment and of security
---- -----
with the other Loans, (iii) not be available unless the Tranche C Term Loans are
fully drawn, (iv) mature not earlier than the date that is six months subsequent
to the Tranche B Maturity Date, (v) have a longer average weighted life than the
Tranche B Term Loans, (vi) be drawn on or prior to February 2, 2001, (vii) have
such pricing as may be agreed by the Borrower and the Persons providing such
Incremental
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Term Loans and (viii) otherwise be treated hereunder no more favorably than the
Tranche B Term Loans. Such notice shall set forth the requested amount of
Incremental Term Loans, and shall offer each Lender the opportunity to offer a
commitment (the "Incremental Commitment") to provide Incremental Term Loans by
----------------------
giving written notice of such offered commitment to the Administrative Agent and
the Borrower within a time period (the "Offer Period") to be specified in the
Borrower's notice; provided, however, that no existing Lender will be obligated
-------- -------
to subscribe for any portion of such commitments. In the event that, at the
expiration of the Offer Period, Lenders shall have provided commitments in an
aggregate amount less than the total amount of the Incremental Term Loans
requested by the Borrower, the Borrower shall have the right to arrange for one
or more banks or other financial institutions (any such bank or other financial
institution being called an "Additional Lender") to extend commitments to
------------------
provide Incremental Term Loans in an aggregate amount equal to the unsubscribed
amount; provided that each Additional Lender shall be subject to the approval of
--------
the Administrative Agent (which approval shall not be unreasonably withheld);
and provided further that the Additional Lenders shall be offered the
-------- -------
opportunity to provide the Incremental Term Loans only on terms previously
offered to the existing Lenders pursuant to the immediately preceding sentence.
Commitments in respect of Incremental Term Loans shall become Commitments under
this Agreement pursuant to an Incremental Facility Amendment executed by each of
the Borrower, each Lender agreeing to provide such Commitment, if any, each
Additional Lender, if any, and the Administrative Agent. The effectiveness of
any Incremental Facility Amendment shall be subject to the satisfaction on the
date thereof and, if different, on the date on which the Incremental Term Loans
are made, of each of the conditions set forth in Section 4.02.
SECTION 2.20. Swingline Loans. (a) Subject to the terms and
----------------
conditions set forth herein, the Swingline Lender agrees to make Swingline Loans
to the Borrower from time to time during the Revolving Availability Period, in
an aggregate principal amount at any time outstanding that will not result in
(i) the aggregate principal amount of outstanding Swingline Loans exceeding
$5,000,000 or (ii) the sum of the total Revolving Exposures exceeding the total
Revolving Commitments. Within the foregoing limits and subject to the terms and
conditions set forth herein,
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the Borrower may borrow, prepay and reborrow Swingline Loans.
(b) To request a Swingline Loan, the Borrower shall notify the
Administrative Agent and the Swingline Lender of such request by telephone
(confirmed by telecopy), not later than 12:00 noon, New York City time, on the
day of a proposed Swingline Loan. Each such notice shall be irrevocable and
shall specify the requested date (which shall be a Business Day), the amount of
the requested Swingline Loan, the proposed interest rate (or basis of
determining the interest rate) with respect to such Swingline Loan (which may
not exceed the interest rate then applicable to Revolving ABR Loans), and
whether such Swingline Loan is to be repayable on demand of the Swingline Lender
or on an agreed date (in which case the Borrower shall specify a proposed date
of repayment). The Swingline Lender shall, after confirming with the
Administrative Agent that there are sufficient unused Revolving Commitments to
permit such Swingline Loan, make such Swingline Loan available to the Borrower
by means of a credit to the general deposit account of the Borrower with the
Swingline Lender by 2:00 p.m., New York City time, on the requested date of such
Swingline Loan.
(c) The Borrower may, with the consent of the Administrative Agent
(which consent shall not be unreasonably withheld) and the acting Swingline
Lender, replace the acting Swingline Lender with a successor Swingline Lender;
provided, that (i) the successor Swingline Lender shall be a Lender hereunder,
- --------
(ii) the successor Swingline Lender shall be engaged as the primary cash
management bank for the Borrower and (iii) prior to the effectiveness of the
appointment of the successor Swingline Lender, all Swingline Loans payable to
the retiring Swingline Lender shall be repaid.
ARTICLE III
Representations and Warranties
------------------------------
Holdings and the Borrower represent and warrant to the Lenders that:
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SECTION 3.01. Organization; Powers. Each of Holdings, the Borrower
---------------------
and its Subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, has all requisite power
and authority to carry on its business as now conducted and to own and operate
its Systems in the Service Regions, and, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.
SECTION 3.02. Authorization; Enforceability. The Transactions
------------------------------
entered into or to be entered into by each Loan Party are within such Loan
Party's corporate or other organizational powers and have been duly authorized
by all necessary action. This Agreement has been duly executed and delivered by
the Borrower and constitutes, and each other Loan Document to which any Loan
Party is to be a party, when executed and delivered by such Loan Party,
constituted or will constitute, a legal, valid and binding obligation of the
Borrower or such Loan Party (as the case may be), enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions
-------------------------------------
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except such as have been
obtained or made and are in full force and effect and except filings with the
Securities and Exchange Commission in connection with the 11% Notes, filings
required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the
rules thereunder in connection with the Tower Sale, and filings necessary to
perfect Liens created under the Loan Documents, (b) have not and will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of any Loan Party or any order of any Governmental
Authority, (c) have not and will not violate or result in a default under any
indenture, agreement or other instrument binding upon any Loan Party or any of
their assets, or give rise to a right thereunder to require any payment to be
made by any Loan Party and (d)
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have not and will not result in the creation or imposition of any Lien on any
asset of any Loan Party, except Liens created under the Loan Documents.
SECTION 3.04. Financial Condition; No Material Adverse Change.
------------------------------------------------
(a) Holdings and the Borrower have heretofore furnished to the
Lenders projected consolidated balance sheets as of December 31, 1999, prepared
giving effect to the Transactions as if the Transactions had occurred on such
date. Such pro forma consolidated balance sheets (i) have been prepared in good
faith based on the same assumptions used to prepare the pro forma financial
statements included in the Information Memorandum (which assumptions are
believed by the Borrower to be reasonable), (ii) are based on the best
information available to the Borrower after due inquiry, (iii) accurately
reflect all adjustments necessary to give effect to the Transactions and (iv)
present fairly, in all material respects, the pro forma financial position of
the Borrower and its consolidated Subsidiaries as of such date as if the
Transactions had occurred on such date.
(b) Except as disclosed in the financial statements referred to above
or the notes thereto, in the Borrower's quarterly report filed with the
Securities and Exchange Commission on Form 10-Q for the quarter ended June 30,
1999, or in the Information Memorandum and except for the Disclosed Matters,
after giving effect to the Transactions, none of Holdings, the Borrower or its
Subsidiaries has, as of the Amendment Effective Date, any material contingent
liabilities, unusual long-term commitments or unrealized losses.
(c) Since December 31, 1998, there has been no material adverse
change in the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and its Subsidiaries, taken as a whole.
SECTION 3.05. Properties. (a) Each of the Borrower and its
-----------
Subsidiaries has, or with respect to assets to be purchased from a Qualified
Vendor will have upon execution of the Qualified Vendor Agreement and delivery
of the assets contemplated thereby, good title to, or valid leasehold interests
in, all real and personal property material to its business (including its
Mortgaged
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Properties), except for minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes.
(b) Each of the Borrower and its Subsidiaries owns, or is licensed to
use, all trademarks, trade names, copyrights, patents and other intellectual
property material to its business, and the use thereof by the Borrower and its
Subsidiaries does not infringe upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
(c) Schedule 3.05 sets forth the address of each real property that
is owned or leased by the Borrower or any of its Subsidiaries as of the
Effective Date after giving effect to the Transactions (other than the Tower
Sale and the Additional Capital Contributions).
(d) As of the Effective Date, neither the Borrower nor any of its
Subsidiaries has received notice of, or has knowledge of, any pending or
contemplated condemnation proceeding affecting any Mortgaged Property or any
sale or disposition thereof in lieu of condemnation. Neither any Mortgaged
Property nor any interest therein is subject to any right of first refusal,
option or other contractual right to purchase such Mortgaged Property or
interest therein.
SECTION 3.06. Litigation and Environmental Matters. (a) There are
-------------------------------------
no actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting Holdings, the Borrower or any of its Subsidiaries (i) as to
which there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve any of the Loan Documents or the Transactions.
(b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result
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in a Material Adverse Effect, none of Holdings, the Borrower or any Subsidiary
(i) has failed to comply with any Environmental Law or to obtain, maintain or
comply with any permit, license or other approval required under any
Environmental Law, (ii) has become subject to any Environmental Liability, (iii)
has received notice of any claim with respect to any Environmental Liability or
(iv) knows of any basis for any Environmental Liability.
(c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each Loan Party
------------------------------------
is in compliance with (a) all laws, regulations and orders of any Governmental
Authority applicable to it or its property, except where the failure to so
comply would not have a Material Adverse Effect and (b) the terms of the PCS
Documents and all other indentures, agreements and instruments binding upon it
or its property, except, in the case of agreements, indentures and instruments
other than the PCS Documents, where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect. No Default has occurred and is continuing.
SECTION 3.08. Investment and Holding Company Status. No Loan Party
--------------------------------------
is (a) an "investment company" as defined in, or subject to regulation under,
the Investment Company Act of 1940 or (b) a "holding company" as defined in, or
subject to regulation under, the Public Utility Holding Company Act of 1935.
SECTION 3.09. Taxes. Each Loan Party has filed or caused to be filed
------
all Tax returns which, to the knowledge of the Borrower are required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such Subsidiary, as
applicable, has set aside on its books reserves in accordance with GAAP or (b)
to the extent that the failure to do so could not reasonably be expected to
result in a Material Adverse Effect.
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SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
------
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $1,000,000 the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $1,000,000 the fair
market value of the assets of all such underfunded Plans.
SECTION 3.11. Disclosure. The Borrower has disclosed to the Lenders
-----------
all agreements, instruments and corporate or other restrictions to which any
Loan Party is subject, and all other matters known to any of them, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. Neither the Information Memorandum nor any of the
other reports, financial statements, certificates or other information furnished
by or on behalf of any Loan Party to the Administrative Agent or any Lender in
connection with the negotiation of this Agreement or any other Loan Document or
delivered hereunder or thereunder (as modified or supplemented by other
information so furnished) contained any material misstatement of fact or omitted
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading as of the
date thereof; provided that, with respect to projected financial information,
--------
the Borrower represents only that such information was prepared in good faith
based upon assumptions believed to be reasonable at the time.
SECTION 3.12. Subsidiaries; Parents. (a) Schedule 3.12 sets forth
----------------------
the name of, and the ownership interest of the Borrower in, each Subsidiary of
the Borrower and identifies each Subsidiary that is a Subsidiary Loan Party, in
each case as of the Effective Date. Each of the License Subsidiary and the Real
Property
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Subsidiary is a Wholly Owned Subsidiary, and all the Capital Stock of each such
Person is directly or indirectly owned by the Borrower free and clear of any
Lien (other than Liens created by the Security Documents).
(b) As of the Effective Date, the Capital Stock of Holdings will be
owned as set forth on Schedule 3.12. As of the date hereof, to the best of the
Borrower's knowledge, AW is a Wholly Owned Subsidiary of AT&T Corp.
(c) As of the date hereof, there is not, and as of the Effective
Date, there will not be, any issued or outstanding Capital Stock or other
interest of or in Holdings, the Borrower or any of its Subsidiaries other than
as described in subsections 3.12(a) and (b). Except to the extent resulting
from a transaction after the Amendment Effective Date in compliance with the
terms hereof, all outstanding Capital Stock of each Subsidiary of the Borrower
is owned, directly or indirectly, by the Borrower or another Subsidiary, and all
outstanding Capital Stock of the Borrower, is owned by Holdings, in each case
free and clear of all Liens whatsoever (other than Liens created by the Security
Documents).
(d) All Licenses which are directly or indirectly held by the
Borrower or any of its Subsidiaries are owned, beneficially and of record by the
License Subsidiary, free and clear of all Liens (other than Liens under the
Security Documents or imposed by the Communications Act).
(e) All Real Property Assets and Real Property-Related Equipment
(other than Excluded Real Property Assets, Excluded Real Property-Related
Equipment, Secured Real Property Assets and Secured Real Property-Related
Equipment) which are directly or indirectly owned by the Borrower or any other
Loan Party are owned, beneficially and of record by the Real Property
Subsidiary, free and clear of all Liens (other than Liens under the Security
Documents or Permitted Encumbrances). At least 90% of the value of (A) the Real
Property Assets and (B) the Real Property-Related Equipment of the Borrower and
its Subsidiaries (excluding Secured Real Property Assets and Secured Real
Property-Related Equipment) are owned, beneficially and of record, free and
clear of all Liens (other than the Liens under the Security Documents) by the
Real Property Subsidiary.
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SECTION 3.13. Absence of Non-Permitted Obligations. None of the
-------------------------------------
Special Purpose Subsidiaries has any obligations or liabilities other than (a)
under the Guarantee Agreement and the Security Agreement, (b) in the case of the
Real Property Subsidiary, under any lease of real property or equipment which it
has entered into in the ordinary course of business and for taxes incurred in
the ordinary course of business which are incident to being the owner or lessee
of real property and equipment, (c) under the Special Purpose Subsidiary Funding
Agreements, (d) franchise and corporate taxes incurred in the ordinary course in
order for it to continue to maintain its existence and (e) Guarantees of the 11%
Notes and of the Subordinated Debt permitted by Section 6.01 (a)(ii) and (iii)
hereof.
SECTION 3.14. Licenses. (i) The Borrower and its Subsidiaries have
---------
the full use and benefit of all Licenses necessary to operate a System in the
Service Regions and each other area in which the Borrower or any Subsidiary
conducts a broadband personal communications services or cellular services
business, (ii) such Licenses have been duly issued by the FCC, are held by the
License Subsidiary or, in the case of Licenses acquired in the PCS C Block
Auction, the Bidding Entity and are in full force and effect and (iii) the
Borrower and its Subsidiaries are in compliance in all material respects with
all of the provisions of each such License.
SECTION 3.15. No Burdensome Restrictions. No Requirement of Law or
---------------------------
Contractual Obligation (other than, in the case of clause (b) below, any
restriction under subsection 6.08(a)) applicable to Holdings, the Borrower or
any Subsidiary could reasonably be expected to (a) have a Material Adverse
Effect or (b) limit the ability of any Subsidiary to pay dividends or to make
distributions or advances to the Borrower or any other Subsidiary.
SECTION 3.16. [Intentionally Omitted].
SECTION 3.17. Flood Insurance. To the extent reasonably available,
----------------
the Borrower has obtained for all Mortgaged Properties which are located in a
"flood hazard area", as designated in any Flood Insurance Rate Map published by
the Federal Emergency Management Agency, such
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flood insurance in such total amount as the Administrative Agent has from time
to time reasonably required.
SECTION 3.18. Insurance. Schedule 3.18 sets forth a description of
----------
all insurance maintained by or on behalf of the Borrower and its Subsidiaries as
of the Effective Date. As of the Effective Date, all premiums in respect of
such insurance have been paid.
SECTION 3.19. Labor Matters. As of the Effective Date, there are no
--------------
strikes, lockouts or slowdowns against the Borrower or any Subsidiary pending
or, to the knowledge of the Borrower, threatened. With such exceptions as could
not reasonably be expected to result in a Material Adverse Effect, (i) the hours
worked by and payments made to employees of the Borrower and the Subsidiaries
have not been in violation of the Fair Labor Standards Act or any other
applicable Federal, state, local or foreign law dealing with such matters and
(ii) all payments due from the Borrower or any Subsidiary, or for which any
claim may be made against the Borrower or any Subsidiary, on account of wages
and employee health and welfare insurance and other benefits, have been paid or
accrued as a liability on the books of the Borrower or such Subsidiary.
SECTION 3.20. Solvency. Immediately after the consummation of the
---------
Transactions to occur on the Effective Date and immediately following the making
of each Loan made on the Effective Date and after giving effect to the
application of the proceeds of such Loans, (a) the fair value of the assets of
each Loan Party, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of
the property of each Loan Party will be greater than the amount that will be
required to pay the probable liability of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (c) each Loan Party will be able to pay its debts
and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) each Loan Party will not have
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted
following the Effective Date.
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SECTION 3.21. FCC Compliance. (a) The Borrower and each Subsidiary
---------------
are in compliance in all material respects with the Communications Act.
(b) The Borrower has no knowledge of any investigation, notice of
apparent liability, violation, forfeiture or other order or complaint issued by
or before the FCC, or of any other proceedings (other than proceedings relating
to the wireless communications industries generally) of or before the FCC, which
could reasonably be expected to have a Material Adverse Effect.
(c) No event has occurred which (i) results in, or after notice or
lapse of time or both would result in, revocation, suspension, adverse
modification, non-renewal, impairment, restriction or termination of, or order
of forfeiture with respect to, any License in any respect which could reasonably
be expected to have a Material Adverse Effect or (ii) affects or could
reasonably be expected in the future to affect any of the rights of the Borrower
or the License Subsidiary under any License held by the Borrower or the License
Subsidiary in any respect which could reasonably be expected to have a Material
Adverse Effect.
(d) The Borrower and the License Subsidiary have duly filed in a
timely manner all material filings, reports, applications, documents,
instruments and information required to be filed by it under the Communications
Act, and all such filings were when made true, correct and complete in all
material respects.
(e) The Borrower has no reason to believe that each License of the
Borrower or any Subsidiary will not be renewed in the ordinary course.
SECTION 3.22. Security Documents. (a) The Pledge Agreement is
-------------------
effective to create in favor of the Administrative Agent, for the ratable
benefit of the Secured Parties, a legal, valid and enforceable security interest
in the Collateral (as defined in the Pledge Agreement) and, when the Collateral
is delivered to the Administrative Agent, the Pledge Agreement shall create a
fully perfected first priority Lien on, and security interest in, all right,
title and interest of the pledgors thereunder in such Collateral, in each case
prior and superior in right to any other Person.
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(b) The Security Agreement is effective to create in favor of the
Administrative Agent, for the ratable benefit of the Secured Parties, a legal,
valid and enforceable security interest in the Collateral (as defined in the
Security Agreement) and, when financing statements in appropriate form are filed
in the offices specified on Schedule 6 to the Perfection Certificate, as updated
by the Borrower from time to time in accordance with Section 5.03, the Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the grantors thereunder in such Collateral
(other than the Intellectual Property, as defined in the Security Agreement), in
each case prior and superior in right to any other Person, other than with
respect to Liens expressly permitted by Section 6.02. Following an Event of
Default, the Borrower's rights under the PCS Documents (other than the
Stockholders Agreement) will be enforceable by the Lenders; provided, however,
-------- -------
that the Administrative Agent shall not assign the Network Licensing Agreement
to a third party without first obtaining AW's consent.
(c) When the Security Agreement is filed in the United States Patent
and Trademark Office and the United States Copyright Office, and, with respect
to Collateral in which a security interest cannot be perfected by such filings,
upon the filing of the financing statements referred to in paragraph (b) above,
the Security Agreement and such financing statements shall constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
the grantors thereunder in the Intellectual Property (as defined in the Security
Agreement), in each case prior and superior in right to any other Person (it
being understood that subsequent recordings in the United States Patent and
Trademark Office and the United States Copyright Office may be necessary to
perfect a lien on registered trademarks, trademark applications and copyrights
acquired by the grantors after the date hereof).
(d) The Mortgages are effective to create in favor of the
Administrative Agent, for the ratable benefit of the Secured Parties, a legal,
valid and enforceable Lien on all of the Borrower's right, title and interest in
and to the Mortgaged Property thereunder and the proceeds thereof, and when the
Mortgages are filed in the offices specified on Schedule 3.22, the Mortgages
shall constitute
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a fully perfected Lien on, and security interest in, all right, title and
interest of the Borrower in such Mortgaged Property and the proceeds thereof, in
each case prior and superior in right to any other Person, other than with
respect to the rights of Persons pursuant to Liens expressly permitted by
Section 6.02.
SECTION 3.23. Copyrights, Trademarks, etc. The Borrower and the
----------------------------
Subsidiaries own, or are licensed to use, all copyrights, trademarks, trade
names, patents, technology, know-how and processes, service marks and rights
with respect to the foregoing that are (a) used in or necessary for the conduct
of their respective businesses as currently conducted and (b) material to the
business, assets, operations, properties, prospects or condition (financial or
otherwise) of the Borrower and the Subsidiaries taken as a whole. The use of
such copyrights, trademarks, trade names, patents, technology, know-how and
processes, service marks and rights with respect to the foregoing by the
Borrower and the Subsidiaries does not infringe in any material respect on the
rights of any Person.
SECTION 3.24. Federal Regulations. No part of the proceeds of any
--------------------
Loans will be used in any manner which would result in a violation of Regulation
U or X of the Board as now and from time to time hereafter in effect or to buy
or carry "margin stock" (as defined thereunder) or to refinance any Indebtedness
incurred for such purpose.
SECTION 3.25. Assets and Business of Holdings.
--------------------------------
(a) As of the date hereof Holdings has, and as of the Effective Date
Holdings will have, no assets other than (i) the Capital Stock of the Borrower,
(ii) contract rights under the Securities Purchase Agreement and (iii) rights
under the Stockholders Agreement.
(b) Holdings is engaged in no business other than the holding of such
assets and, to the extent permitted hereunder, Capital Stock of Unrestricted
Subsidiaries and the incurrence of debt permitted under Section 6.01(a).
SECTION 3.26. Year 2000. The Borrower is implementing a plan
----------
pursuant to which it will complete any systems certifications and related
upgrades or replacements
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("Systems Certifications") required to permit the proper functioning, in and
----------------------
following the year 2000, of the Borrower's and its Subsidiaries' computer
systems and equipment containing embedded microchips (including systems and
equipment supplied by others or with which the Borrower's and its Subsidiaries'
systems interface) and the testing of all such systems and equipment, as so
certified, upgraded and replaced, on or prior to October 31, 1999. The Borrower
believes that the cost to the Borrower and the Subsidiaries of such Systems
Certifications and testing and of the reasonably foreseeable consequences of
year 2000 to the Borrower and the Subsidiaries (including, without limitation,
errors in Systems Certifications and the failure of others' systems or
equipment) will not result in a Default or a Material Adverse Effect. The
Borrower believes that except for such of the Systems Certifications referred to
in the preceding sentence as may be necessary, the computer and management
information systems of the Borrower and the Subsidiaries are and, with ordinary
course upgrading and maintenance, will continue for the term of this Agreement
to be, sufficient to permit the Borrower and the Subsidiaries to conduct their
business without Material Adverse Effect.
ARTICLE IV
Conditions
----------
SECTION 4.01. Effective Date. The obligations of the Lenders to make
---------------
Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not
become effective until the date on which each of the following conditions is
satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received
from each party hereto either (i) a counterpart of this Agreement signed on
behalf of such party or (ii) written evidence satisfactory to the
Administrative Agent (which may include telecopy transmission of a signed
signature page of this Agreement) that such party has signed a counterpart
of this Agreement.
(b) The Administrative Agent shall have received a favorable written
opinion or opinions (addressed to the Administrative Agent and the Lenders
and dated the
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Effective Date) of (i) Latham & Watkins and Kleinbard, Bell & Brecker LLP,
counsel for the Borrower, which when taken together will be substantially
in the form of Exhibit B-1 and (ii) Latham & Watkins, special counsel to
the Borrower with respect to FCC matters, substantially in the form of
Exhibit B-2 and, in the case of each such opinion required by this
paragraph, covering such other matters relating to the Loan Parties, the
Loan Documents or the Transactions as the Required Lenders shall reasonably
request. The Borrower hereby requests such counsel to deliver such
opinions.
(c) The Administrative Agent shall have received (i) a certificate of
the Secretary or Assistant Secretary of the Borrower and each Subsidiary
Loan Party dated the Effective Date and certifying (A) that attached
thereto is a true and complete copy of the by-laws, operating agreement or
partnership agreement of such Loan Party as in effect on the Effective Date
and at all times since a date prior to the date of the resolutions
described in clause (B) below, (B) that attached thereto is a true and
complete copy of resolutions duly adopted by the board of directors (or
equivalent governing body), members or partners of the Borrower and each
Subsidiary Loan Party authorizing the execution, delivery and performance
of the Loan Documents to which such Person is a party and, in the case of
the Borrower, the borrowings hereunder, and that such resolutions have not
been modified, rescinded or amended and are in full force and effect, and
(C) as to the incumbency and specimen signature of each officer or partner
of the Borrower (or its general partner) and any Subsidiary Loan Party
executing any Loan Document on behalf of such Loan Party; (ii) a
certificate of another officer as to the incumbency and specimen signature
of the Secretary or Assistant Secretary executing the certificate pursuant
to (i) above; and (iii) such other documents as the Lenders or Cravath,
Swaine & Moore, counsel for the Administrative Agent, may reasonably
request.
(d) The Administrative Agent shall have received a certificate, dated
the Effective Date and signed by the President, a Vice President or a
Financial Officer of the Borrower, confirming compliance with the
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conditions set forth in paragraphs (a) and (b) of Section 4.02.
(e) The Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Effective Date, including, to
the extent invoiced, reimbursement or payment of all out-of-pocket expenses
required to be reimbursed or paid by any Loan Party hereunder or under any
other Loan Document.
(f) Special Purpose Subsidiaries. The Borrower shall have
-----------------------------
transferred to a Real Property Subsidiary all Real Property Assets and Real
Property-Related Equipment other than (A) Real Property Assets constituting
rights under leases that as of the date hereof prohibit such transfer
(without regard to any such prohibition which contains exceptions if the
obligations under the applicable lease were to be assumed by the Borrower
or its Subsidiaries or if the Borrower or its Subsidiaries were to take
other actions which are reasonably within their power to take ("Restricted
Real Property Assets")) and (B) equipment which constitutes a fixture to
any Restricted Real Property Asset ("Restricted Real Property-Related
Equipment") but in any event the Borrower shall have so transferred assets
constituting at least 90% of the value of all Real Property Assets and Real
Property-Related Equipment of the Borrower and its Subsidiaries (excluding
Secured Real Property Assets and Secured Real Property-Related Equipment)
as of the date hereof and provided evidence reasonably satisfactory to the
Administrative Agent of the transfers described above and each of the Real
Property Subsidiary and the License Subsidiary shall have entered into
Special Purpose Subsidiary Funding Agreements with the Borrower.
(g) The Pledge Agreement shall have been duly executed by the parties
thereto, shall have been delivered to the Administrative Agent and shall be
in full force and effect, and all the outstanding (i) intercompany
Indebtedness owed to any Loan Party by the Borrower or any Subsidiary and
(ii) equity interests that are owned by the Borrower or any Subsidiary Loan
Party (in each case as of the Effective Date after giving effect to the
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Transactions) (A) shall have been duly and validly pledged thereunder to
the Administrative Agent for the ratable benefit of the Secured Parties,
and (B) certificates representing such equity interests (except that such
certificates representing equity interests in a Foreign Subsidiary may be
limited to 65% of the outstanding shares of such partnership interests or
equity interests in such Foreign Subsidiary) and promissory notes
evidencing such intercompany Indebtedness shall be in the actual possession
of the Administrative Agent, accompanied by stock powers or other
instruments of transfer, endorsed in blank, with respect to such
certificates and such promissory notes.
(h) The Security Agreement shall have been duly executed by the
parties thereto, shall have been delivered to the Administrative Agent and
shall be in full force and effect, and all documents and instruments,
including Uniform Commercial Code financing statements, required by law or
reasonably requested by the Administrative Agent to be filed, registered or
recorded to create or perfect the Liens intended to be created under the
Security Agreement shall have been delivered to the Administrative Agent.
(i) The Administrative Agent shall have received a completed
Perfection Certificate (giving effect to the Transactions) dated the
Effective Date and signed by an executive officer or Financial Officer of
the Borrower, together with all attachments contemplated thereby, including
the results of a search of the Uniform Commercial Code (or equivalent)
filings made with respect to the Borrower and the Subsidiary Loan Parties
in the jurisdictions contemplated by the Perfection Certificate and copies
of the financing statements (or similar documents) disclosed by such search
and evidence reasonably satisfactory to the Administrative Agent that the
Liens indicated by such financing statements (or similar documents) are
permitted by Section 6.02 or have been released.
(j) The Guarantee Agreement shall have been duly executed by the
Subsidiary Loan Parties and the Administrative Agent, shall have been
delivered to the Administrative Agent and shall be in full force and
effect.
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(k) The Indemnity, Subrogation and Contribution Agreement shall have
been duly executed by the parties thereto, shall have been delivered to the
Administrative Agent and shall be in full force and effect.
(l) The Administrative Agent shall have received evidence
satisfactory to it that the insurance required by Section 5.07 is in
effect.
(m) The Administrative Agent shall have received from the Borrower a
photocopy, certified to be true and complete, of its Licenses for the BTAs
listed in Schedule 3.14 and such Licenses shall be owned by the Borrower
free and clear of all Liens other than liens imposed by the Communications
Act.
(n) The Administrative Agent shall have received from the Borrower
conformed copies, certified and true and complete, of (i) the Securities
Purchase Agreement, (ii) the Network License Agreement, (iii) the
Stockholders Agreement, (iv) the Roaming Agreement, (v) the Resale
Agreement (unexecuted) and (vi) the Special Purpose Subsidiary Funding
Agreements. Each of the agreements referred to in the previous sentence
(other than the Resale Agreement) shall have been duly executed and
delivered on behalf of each party thereto, shall have been duly authorized
thereby, and shall constitute a legal, valid and binding obligation of such
party, enforceable against such party in accordance with its terms, subject
to the effects of bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally,
general equitable principles (whether considered in a proceeding in equity
or at law); and the Borrower shall have delivered to the Lenders a
certificate of a Responsible Officer as to the accuracy of the foregoing.
(o) To the extent not expressly contemplated in the final form of
Securities Purchase Agreement or the final form of Restated Certificate of
Incorporation delivered to the Administrative Agent prior to October 8,
1997, the Administrative Agent shall be satisfied with (i) the corporate
and capital structure of the
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Borrower and its subsidiaries, (ii) the contributions to the Borrower's
equity and (iii) all legal, tax and accounting matters related to the
formation, capitalization and operations of the Borrower.
(p) The Borrower shall have entered into or, with respect to the
Qualified Vendor Agreement, will enter into by April 15, 1998, (i) supply
contracts with vendors for the build out of the Network and the acquisition
of related equipment, and, to the extent material, such contracts shall be
reasonably satisfactory to the Lenders and (ii) such other agreements with
third parties as may be reasonably necessary to the conduct of its proposed
operations in accordance with its business plan.
(q) The Borrower shall have received all scheduled cash capital
contributions set forth on Schedule I to the Securities Purchase Agreement,
including contributions of $45,000,000 in cash on or prior to the Effective
Date as set forth therein.
(r) Each of Holdings, the Borrower, AW and the other parties thereto
shall have executed and delivered to the Administrative Agent consents to
assignment ("Consents to Assignment") to the Administrative Agent for the
benefit of the Secured Parties, in form and substance satisfactory to the
Administrative Agent, with respect to the Securities Purchase Agreement,
the Network License Agreement and such of the other PCS Documents as are
requested by the Administrative Agent; provided, however, that the Consent
-------- -------
to Assignment with respect to AW shall be set forth in the Network License
Agreement and, with respect to the Network License Agreement, such Consent
to Assignment will not permit the Administrative Agent to assign the
Network License Agreement to any Person other than the Lenders without
first obtaining AW's consent.
(s) The terms and conditions of any Subordinated Debt, if any, and
the provisions of the Subordinated Debt Documents, if any, shall be
satisfactory to the Lenders and the Administrative Agent shall have
received copies of any Subordinated Debt Documents, if any, certified by a
Responsible Officer as complete and correct.
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(t) All consents and approvals required to be obtained from any
Governmental Authority or other Person in connection with the Transactions
shall have been obtained, and all applicable waiting periods and appeal
periods shall have expired or, with respect to the consent of the FCC to
the License Transfer (as defined in the Securities Purchase Agreement) a
Final Order (as defined in the Securities Purchase Agreement) shall have
been obtained, in each case without the imposition of any burdensome
conditions and there shall be no governmental or judicial action, actual or
threatened, that could reasonably be expected to restrain, prevent or
impose burdensome conditions on the Transactions. To the extent
contemplated by the terms of this Agreement and the Securities Purchase
Agreement, the Transactions shall have been, or substantially
simultaneously with the initial funding of Loans on the Effective Date
shall be, consummated in accordance with the PCS Documents and applicable
law, without any amendment to or waiver of any material terms or conditions
of the PCS Documents not approved by the Required Lenders. The
Administrative Agent shall have received copies of the PCS Documents and
all certificates, opinions and other documents delivered thereunder,
certified by a Responsible Officer as complete and correct and the PCS
Documents shall contain no material changes adverse to the interests of the
Lenders compared to the final form of such documents delivered to the
Administrative Agent prior to October 8, 1997.
(u) The Lenders shall have received pro forma consolidated balance
sheets of the Borrower and Holdings as of October 31, 1997, reflecting all
pro forma adjustments as if the Transactions had been consummated on such
date, and such pro forma consolidated balance sheets shall be consistent in
all material respects with the projections and other information previously
provided to the Lenders. After giving effect to the Transactions, neither
Holdings, the Borrower nor any of their Subsidiaries shall have outstanding
any shares of preferred stock or any Indebtedness, other than (i)
Indebtedness incurred under the Loan Documents, (ii) the Subordinated Debt
and (iii) preferred stock issued to AW and the other equity investors
listed on Schedules I and II to the
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Securities Purchase Agreement pursuant to the terms of the Securities
Purchase Agreement.
(v) The Administrative Agent shall have received from the Borrower
(i) the financial statements referred to in Section 3.04 and (ii) a
certificate dated the Effective Date and duly executed by a Responsible
Officer of the Borrower certifying that attached thereto is the annual
budget of the Borrower for the fiscal year ending December 31, 1998 as well
as a 10-year business plan of the Borrower satisfactory to the
Administrative Agent with quarterly projections for at least the two-year
period following the Effective Date.
(w) There shall have been no material adverse change in the business,
assets, results of operations, properties, prospects or financial condition
of the Borrower and the Subsidiaries, taken as a whole, or of Holdings
since October 31, 1997.
(x) Holdings and the Borrower shall be in Pro Forma Compliance.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.02) at or prior to 3:00 p.m., New York City time, on the
date hereof (and, in the event such conditions are not so satisfied or waived,
the Commitments shall terminate at such time).
SECTION 4.02. Each Credit Event. The obligation of each Lender to
------------------
make a Loan on the occasion of any Borrowing, and of the Issuing Bank to issue,
amend, renew or extend any Letter of Credit, is subject to the satisfaction of
the following conditions:
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(a) The representations and warranties of each Loan Party set forth
in the Loan Documents shall be true and correct in all material respects on
and as of the date of such Borrowing or the date of issuance, extension or
renewal of such Letter of Credit, as applicable, except with respect to
representations and warranties expressly made only as of the Effective Date
or any other specified date which shall be true in all material respects as
of such date.
(b) At the time of and immediately after giving effect to such
Borrowing or the issuance, extension or renewal of a Letter of Credit, as
applicable, no Default shall have occurred and be continuing and the
Borrower shall be in Pro Forma Compliance.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in paragraphs (a) and
(b) of this Section.
ARTICLE V
Affirmative Covenants
---------------------
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full and all Letters of Credit shall have expired or terminated and
all LC Disbursements shall have been reimbursed, each of Holdings and the
Borrower covenants and agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other Information. Each of
-------------------------------------------
Holdings and the Borrower will furnish to the Administrative Agent and each
Lender:
(a) within 90 days after the end of each fiscal year its audited
consolidated balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all reported on by PriceWaterhouseCoopers L.L.P. or other
independent public accountants of recognized national standing (without a
"going concern" or like qualification or
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exception and without any qualification or exception as to the scope of
such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results
of operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year, its consolidated balance sheet and related
statements of operations, stockholders' equity and cash flows as of the end
of and for such fiscal quarter and the then elapsed portion of the fiscal
year, setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet,
as of the end of) the previous fiscal year, all certified by one of its
Financial Officers as presenting fairly in all material respects the
financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes;
(c) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the
Borrower (i) certifying as to whether, to his knowledge after due inquiry,
a Default has occurred and, if a Default has occurred, specifying the
details thereof and any action taken or proposed to be taken with respect
thereto, (ii) setting forth reasonably detailed calculations demonstrating
compliance with Sections 6.08 and 6.12 and (iii) stating whether any change
in GAAP or in the application thereof has occurred since the date of the
Borrower's audited financial statements referred to in Section 3.04 and, if
any such change has occurred, specifying the effect of such change on the
financial statements accompanying such certificate;
(d) concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on
such financial statements stating whether they obtained knowledge during
the course of their examination of such
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financial statements of any Default (which certificate may be limited to
the extent required by accounting rules or guidelines);
(e) no more than 45 days after the commencement of each fiscal year, a
detailed consolidated budget for such fiscal year, broken down by fiscal
quarters (including (i) a projected summary statement of operations, (ii) a
projected statement of capital expenditures and (iii) a projected statement
of Indebtedness, as of the end and for each such fiscal quarter) and,
promptly when available, any significant revisions of such budget;
(f) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
Holdings, the Borrower or any Subsidiary with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of the
functions of said Commission, or with any national securities exchange, as
the case may be;
(g) on an annual basis, a copy of the projections as to the
performance of Holdings (excluding any Unrestricted Subsidiaries) and the
Borrower, presented in a manner consistent with the projections in the
Information Memorandum for the period from the date of the most recent
balance sheet included in the financial statements delivered pursuant to
(a) above through the last day of the fiscal year in which the Tranche B
Maturity Date occurs, such projections to be accompanied by a certificate
of a Responsible Officer of the Borrower to the effect that such
projections have been prepared using assumptions believed in good faith by
the management of the Borrower to be reasonable as of the date of such
certificate (which shall be subsequent to the date of the most recent
balance sheet included in such financial statements);
(h) within 30 days after the end of each calendar month ending on or
prior to December 31, 2000, a certificate of a Responsible Officer setting
forth (A) the aggregate number of Subscribers at the end of the calendar
month preceding such calendar month and (B) the aggregate number of
Subscribers at the end of such calendar month;
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(i) within 30 days after the end of each fiscal quarter, a certificate
of a Responsible Officer setting forth (A) the aggregate number of
Subscribers whose service terminated during such fiscal quarter, (B) the
aggregate number of Subscribers added during such fiscal quarter and (C)
the revenue and system build information listed on Schedule 5.01(i);
(j) within ten Business Days after the same are sent, a copy of any
financial statement, report or notice which Holdings, the Borrower or any
Subsidiary sends to any Person under or pursuant to or in connection with
the Securities Purchase Agreement, the Network License Agreement, the
Stockholders Agreement, the Roaming Agreement, the Resale Agreement, or any
other PCS Document, the Tower Sale Asset Purchase Agreement or the
commitment letters or definitive documentation for the Additional Capital
Contributions, in each case if such statement, report or notice relates to
an event that has resulted or could reasonably be expected to result in an
Event of Default or a Material Adverse Effect; and, within five Business
Days after the same are received by Holdings, the Borrower or any
Subsidiary, copies of all notices sent to any such Person under or pursuant
to or in connection with any such agreement or instrument which notice
relates to an event that has resulted or could reasonably be expected to
result in an Event of Default or a Material Adverse Effect;
(k) concurrently with any delivery of financial statements under
clause (a) or (b) above, a balance sheet and related statements of
operations, stockholders' equity and cash flows for each Unrestricted
Subsidiary for the applicable period (each of which may be unaudited); and
(l) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of
Holdings, the Borrower or any Subsidiary, or compliance with the terms of
any Loan Document, or such consolidating financial statements, or such
financial statements showing the results of operations of any Unrestricted
Subsidiary, as the Administrative Agent or any Lender may reasonably
request.
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SECTION 5.02. Notices of Material Events. Upon a Responsible Officer
---------------------------
having knowledge of the following, the Borrower will furnish to the
Administrative Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting
Holdings, the Borrower or any Affiliate thereof that, if adversely
determined, could reasonably be expected to result in a Material Adverse
Effect;
(c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to
result in a Material Adverse Effect; and
(d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 5.03. Information Regarding Collateral. (a) The Borrower
---------------------------------
will furnish to the Administrative Agent prompt written notice of any change (i)
in any Loan Party's legal name or in any trade name used to identify it in the
conduct of its business or in the ownership of its properties, (ii) in the
location of any Loan Party's chief executive office, its principal place of
business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility),
(iii) in any Loan Party's identity or legal structure or (iv) in any Loan
Party's Federal Taxpayer Identification Number. The Borrower agrees not to
effect or permit any change referred to in the preceding sentence unless all
filings have been made under the Uniform Commercial Code or otherwise that are
required in order for the Administrative Agent to
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continue at all times following such change to have a valid, legal and perfected
security interest in all the Collateral.
(b) Each year, at the time of delivery of annual financial statements
with respect to the preceding fiscal year pursuant to clause (a) of Section
5.01, the Borrower shall deliver to the Administrative Agent a certificate of a
Financial Officer of the Borrower (i) setting forth the information required
pursuant to Section 2 of the Perfection Certificate or confirming that there has
been no change in such information since the date of the Perfection Certificate
delivered on the Effective Date or the date of the most recent certificate
delivered pursuant to this Section and (ii) certifying that all Uniform
Commercial Code financing statements (including fixture filings, as applicable)
or other appropriate filings, recordings or registrations, including all
refilings, rerecordings and reregistrations, containing a description of the
Collateral have been filed of record in each governmental, municipal or other
appropriate office in each jurisdiction identified pursuant to clause (i) above
to the extent necessary to protect and perfect the security interests under the
Security Agreement for a period of not less than 18 months after the date of
such certificate (except as noted therein with respect to any continuation
statements to be filed within such period).
SECTION 5.04. Existence; Conduct of Business. Holdings and the
-------------------------------
Borrower will, and will cause each of its Subsidiaries to, do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence and the rights, licenses, permits, privileges, franchises,
patents, copyrights, trademarks and trade names material to the conduct of its
business; provided that the foregoing shall not prohibit any merger,
--------
consolidation, liquidation or dissolution permitted under Section 6.04.
SECTION 5.05. Payment of Obligations. Holdings and the Borrower
-----------------------
will, and will cause each of its Subsidiaries to, pay its material Indebtedness
and other obligations, including Tax liabilities, before the same shall become
delinquent or in default, except where (a) the validity or amount thereof is
being contested in good faith by appropriate proceedings, (b) the Borrower or
such Subsidiary has set aside on its books reserves with respect
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thereto in accordance with GAAP, (c) such contest effectively suspends
collection of the contested obligation and the enforcement of any Lien securing
such obligation and (d) the failure to make payment pending such contest could
not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.06. Maintenance of Properties. Holdings and the Borrower
--------------------------
will, and will cause each of its Subsidiaries to, maintain (i) all property
necessary to the conduct of its business in good working order and condition
with such exceptions as would not have a Material Adverse Effect and (ii) its
accounting, software and billing systems and controls at a level consistent with
the standards of other reputable wireless services providers and reasonably
required in connection with the Borrower's business.
SECTION 5.07. Insurance. Holdings and the Borrower will, and will
----------
cause each of its Subsidiaries to, maintain, with financially sound and
reputable insurance companies insurance on all its property in at least such
amounts and against at least such risks as are usually insured against by
companies engaged in the same or a similar business in the same or similar
locations, and furnish to the Administrative Agent, upon written request, full
information as to the insurance carried.
SECTION 5.08. Casualty and Condemnation. (a) Holdings and the
--------------------------
Borrower will furnish to the Administrative Agent and the Lenders prompt written
notice of any casualty or other insured damage to any material portion of any
Collateral or the commencement of any action or proceeding for the taking of any
material portion of the Collateral under power of eminent domain or by
condemnation or similar proceeding.
(b) If any event described in paragraph (a) of this Section results
in Net Proceeds (whether in the form of insurance proceeds, condemnation award
or otherwise), the Administrative Agent is authorized to collect such Net
Proceeds and, if received by Holdings, the Borrower or any Subsidiary, such Net
Proceeds shall be paid over to the Administrative Agent; provided that (i) if
--------
the aggregate Net Proceeds in respect of such event (other than proceeds of
business income insurance) are less than $3,000,000, such Net Proceeds shall be
paid over to the Borrower unless a Default has occurred and is continuing, and
(ii) all
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proceeds of business income insurance shall be paid over to the Borrower unless
a Default has occurred and is continuing. All such Net Proceeds retained by or
paid over to the Administrative Agent shall be held by the Administrative Agent
and released from time to time to pay the costs of repairing, restoring or
replacing the affected property in accordance with the terms of the applicable
Security Document, subject to the provisions of the applicable Security Document
regarding application of such Net Proceeds during a Default.
(c) If any Net Proceeds retained by or paid over to the
Administrative Agent as provided above continue to be held by the Administrative
Agent on the date that is 270 days after the occurrence of the event resulting
in such Net Proceeds, then such Net Proceeds shall be applied to prepay
Borrowings as provided in Section 2.09(b).
SECTION 5.09. Books and Records; Inspection and Audit Rights.
-----------------------------------------------
Holdings and the Borrower will, and will cause each of its Subsidiaries to, keep
proper books of record and account in which entries which are accurate and
complete in all material respects are made of all dealings and transactions in
relation to its business and activities. The Borrower will, and will cause each
of its Subsidiaries to, permit any representatives designated by the
Administrative Agent or any Lender, upon reasonable prior notice, to visit and
inspect its properties, to examine and make extracts from its books and records,
and to discuss its affairs, finances and condition with its officers and
independent accountants, all at such reasonable times and as often as reasonably
requested.
SECTION 5.10. Compliance with Laws. Holdings and the Borrower will,
---------------------
and will cause each of its Subsidiaries to, comply with all laws, rules,
regulations and orders of any Governmental Authority applicable to it or its
property, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect and to
comply in all material respects with all of its material Contractual Obligations
(including obligations under any License).
SECTION 5.11. Use of Proceeds. The proceeds of the Loans, together
----------------
with the proceeds of the Initial Equity Contributions and the Subordinated Debt,
if any, will be
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used only to fund capital expenditures related to the construction of the
Network, the acquisition of Related Businesses (including acquisitions permitted
by Section 6.05(m)), working capital needs of the Borrower, the investment in
the Bidding Entity permitted by Section 6.05(i) and subscriber acquisition
costs. No part of the proceeds of any Loan will be used, whether directly or
indirectly, for any purpose that entails a violation of any of the Regulations
of the Board, including Regulations U and X.
SECTION 5.12. Additional Subsidiaries. If any additional Subsidiary
------------------------
is formed or acquired after the Effective Date, the Borrower will notify the
Administrative Agent and the Lenders thereof and (a) if such Subsidiary is a
Subsidiary Loan Party, the Borrower will cause such Subsidiary to become a party
to the Pledge Agreement (if such Subsidiary owns capital stock or intercompany
Indebtedness), the Security Agreement, the Guarantee Agreement and the
Indemnity, Subrogation and Contribution Agreement as contemplated under each
agreement, within three Business Days after such Subsidiary is formed or
acquired and promptly take such actions to create and perfect Liens on such
Subsidiary's assets to secure the Obligations as the Administrative Agent or the
Required Lenders shall reasonably request and (b) if any shares of capital stock
or Indebtedness of such Subsidiary are owned by or on behalf of any Loan Party,
the Borrower will cause such shares and promissory notes evidencing such
Indebtedness to be pledged pursuant to the Pledge Agreement within three
Business Days after such Subsidiary is formed or acquired (except that, if such
Subsidiary is a Foreign Subsidiary, shares of common stock of such Subsidiary to
be pledged pursuant to the Pledge Agreement may be limited to 65% of the
outstanding shares of common stock of such Subsidiary).
SECTION 5.13. Further Assurances. (a) Holdings and the Borrower
-------------------
will, and will cause each Loan Party to, execute any and all further documents,
financing statements, agreements and instruments, and take all such further
actions (including the filing and recording of financing statements, fixture
filings, mortgages, deeds of trust and other documents), which may be required
under any applicable law, or which the Administrative Agent or the Required
Lenders may reasonably request, to effectuate the transactions contemplated by
the Loan Documents or to
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grant, preserve, protect or perfect the Liens created or intended to be created
by the Security Documents or the validity or priority of any such Lien, all at
the expense of the Loan Parties. The Borrower also agrees to provide to the
Administrative Agent, from time to time upon request, evidence reasonably
satisfactory to the Administrative Agent as to the perfection and priority of
the Liens created or intended to be created by the Security Documents (including
opinions of local counsel in the jurisdictions in which assets of any Loan Party
are located).
(b) If any material assets (including any real property or
improvements thereto or any interest therein) are acquired by the Borrower or
any Loan Party (other than assets held by Holdings in or through an Unrestricted
Subsidiary) after the Effective Date (other than assets constituting Collateral
under the Security Documents that become subject to the Lien of the Security
Documents upon acquisition thereof), the Borrower will notify the Administrative
Agent and the Lenders thereof, and, if requested by the Administrative Agent or
the Required Lenders, the Borrower will cause such assets to be subjected to a
Lien securing the Obligations and will take, and cause the Loan Parties to take,
such actions as shall be necessary or reasonably requested by the Administrative
Agent to grant and perfect such Liens, including actions described in paragraph
(a) of this Section, all at the expense of the Borrower. In addition, if (i)
any License is acquired by the Borrower or any Subsidiary (other than the
License Subsidiary) the Borrower will promptly transfer or cause the transfer to
the License Subsidiary of such License, (ii) any Real Property Assets (other
than Restricted Real Property Assets, Secured Real Property Assets and Excluded
Real Property Assets) or any Real Property-Related Equipment (other than
Restricted Real Property-Related Equipment, Secured Real Property-Related
Equipment and Excluded Real Property Equipment) is acquired by the Borrower or
any Subsidiary or with respect to the leasehold in 375 Technology Drive,
Malvern, Pennsylvania, Triton Management Company Inc. ("Triton Management")
-----------------
(other than the Real Property Subsidiary) the Borrower will promptly transfer or
cause the transfer of such assets to the Real Property Subsidiary and (iii) any
fee interests in real property having at the time of acquisition thereof a
purchase price or fair market value greater than $1,000,000 (a "Mortgaged
---------
Property") are acquired by the Borrower or
- --------
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any Subsidiary after the date hereof (including Mortgaged Properties of any
Person that becomes a Subsidiary or is merged with or into or consolidated with
the Borrower or any Subsidiary) the Borrower will promptly create or cause to be
created a first priority perfected Mortgage in favor of the Administrative Agent
for the benefit of the Secured Parties on, and pay all recording taxes, title
insurance costs, survey costs and other costs in connection with such Mortgage.
SECTION 5.14. Interest Rate Protection. As promptly as practicable,
-------------------------
and in any event within 90 days after the Effective Date, the Borrower will
enter into, and thereafter until the final maturity of all the Loans, will
maintain in effect, one or more interest rate protection agreements with one or
more Lenders on such terms as shall be reasonably satisfactory to the
Administrative Agent, the effect of which shall be to fix or limit the interest
cost to the Borrower with respect to at least 50% of the outstanding
Indebtedness (other than Deeply Subordinated Debt) of the Borrower at a maximum
rate reasonably acceptable to the Administrative Agent (it being understood that
outstanding Indebtedness of the Borrower that bears interest at a fixed rate,
including the 11% Notes and any Subordinated Debt issued pursuant to Section
6.01(a)(iii) hereof but excluding any Deeply Subordinated Debt shall be
considered Indebtedness fixed at a maximum rate reasonably acceptable to the
Administrative Agent.
SECTION 5.15. License Drop Down. As promptly as practicable, and in
------------------
any event within 90 days after the Effective Date, the Borrower shall contribute
to the License Subsidiary all Licenses owned by the Borrower (including the
Licenses for the BTAs listed in Schedule 3.14) and the License Subsidiary shall
own such Licenses free and clear of all Liens (other than Liens imposed by the
Communications Act).
SECTION 5.16. Business of Holdings; Immediate Contributions to the
----------------------------------------------------
Borrower. (a) Holdings shall not engage in any business other than holding the
- ---------
Capital Stock of the Borrower and any Unrestricted Subsidiary and issuing
Indebtedness permitted by Section 6.01.
(b) Holdings shall cause the management, business and affairs of each
of Holdings, the Subsidiaries and the Unrestricted Subsidiaries to be conducted
in such a
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manner so that each of Holdings and the Unrestricted Subsidiaries will be
perceived as a legal entity separate and distinct from one another and the
Subsidiaries.
(c) Holdings shall immediately contribute to the Borrower upon receipt
(i) any cash capital contributions (other than those permitted to be contributed
to an Unrestricted Subsidiary pursuant to clause (vii) of the definition of
"Unrestricted Subsidiary" and those received in connection with the Equity
Swap), (ii) any cash dividends or any other cash distributions paid or made by,
and received from, any Unrestricted Subsidiary and (iii) the net proceeds of the
issuance of any Indebtedness.
SECTION 5.17. Execution of Other Agreements. By April 15, 1998, the
------------------------------
Borrower (or a wholly owned Subsidiary) and the other parties thereto will enter
into the Qualified Vendor Agreement and deliver copies thereof to the
Administrative Agent.
SECTION 5.18. Notification of Acquisition of Additional Licenses. As
---------------------------------------------------
promptly as practicable, and in any event within 5 days after acquisition of any
License, the Borrower shall notify the Administrative Agent of the acquisition
of such License.
ARTICLE VI
Negative Covenants
------------------
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired or terminated and all LC Disbursements
shall have been reimbursed, each of Holdings and the Borrower covenants and
agrees with the Lenders that:
SECTION 6.01. Indebtedness; Certain Equity Securities. (a) Holdings
----------------------------------------
and the Borrower will not, and will not permit any Subsidiary to, create, incur,
assume or permit to exist any Indebtedness, except:
(i) Indebtedness created under the Loan Documents;
(ii) the 11% Notes;
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(iii) Subordinated Debt (other than Subordinated Debt permitted by
clause (ii) or (iv) hereof) in an aggregate principal amount not to exceed
$150,000,000 less the aggregate principal amount of any Incremental Term
Loans outstanding; provided that the proceeds of such Subordinated Debt
shall be used by the Borrower solely to fund the build-out of the Network;
(iv) Deeply Subordinated Debt issued pursuant to the Additional
Capital Contribution Commitments in an aggregate principal amount not to
exceed $25,000,000;
(v) Indebtedness of the Borrower to any Subsidiary (other than any
Special Purpose Subsidiary) and of any Subsidiary (other than any Special
Purpose Subsidiary) to the Borrower or any other Subsidiary (other than any
Special Purpose Subsidiary); provided that Indebtedness of any Subsidiary
--------
that is not a Loan Party to the Borrower or any Subsidiary Loan Party shall
be subject to Section 6.05;
(vi) Guarantees by the Borrower of Indebtedness of any Subsidiary
(other than any Special Purpose Subsidiary) and by any Subsidiary (other
than any Special Purpose Subsidiary) of Indebtedness of the Borrower or any
other Subsidiary (other than any Special Purpose Subsidiary); provided that
--------
Guarantees by the Borrower or any Subsidiary Loan Party of Indebtedness of
any Subsidiary that is not a Loan Party shall be subject to Section 6.05;
(vii) Indebtedness of the Borrower or any Subsidiary (other than a
Special Purpose Subsidiary) incurred to finance the acquisition from a
Qualified Vendor or other equipment vendor reasonably acceptable to the
Administrative Agent of cellular equipment and ancillary services required
for the buildout of the Network pursuant to a purchase agreement between
Triton PCS Equipment Company, L.L.C. and such Qualified Vendor to be
entered into by April 15, 1998 (the "Qualified Vendor Agreement") or a
--------------------------
purchase agreement with such other equipment vendor; provided that the
--------
aggregate principal amount of such Indebtedness shall not exceed $65
million at any time outstanding;
129
<PAGE>
(viii) Capital Lease Obligations of the Borrower or any Subsidiary
(other than any Special Purpose Subsidiary) incurred (i) in connection with
the Tower Sale pursuant to the Tower Sale Asset Purchase Agreement or (ii)
pursuant to the Build-to-Suit Agreement (as defined in the Tower Sale Asset
Purchase Agreement);
(ix) Indebtedness (other than Indebtedness described in (vii) or
(viii) above) of the Borrower or any Subsidiary (other than any Special
Purpose Subsidiary) incurred to finance the acquisition, construction or
improvement of any fixed or capital assets, including Capital Lease
Obligations and any Indebtedness assumed in connection with the acquisition
of any such assets or secured by a Lien on any such assets prior to the
acquisition thereof, and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount thereof
or result in an earlier maturity date or decreased weighted average life
thereof; provided that such Indebtedness is incurred prior to or within 90
--------
days after such acquisition or the completion of such construction or
improvement and shall not exceed $20,000,000 in aggregate principal amount
at any time outstanding;
(x) Indebtedness incurred to refinance any senior secured
Indebtedness; provided that (x) such refinancing Indebtedness (a) shall not
--------
have a greater outstanding principal amount, an earlier maturity date or a
decreased weighted average life than the Indebtedness refinanced (b) shall
be subordinated to the Indebtedness created under the Loan Documents to at
least the extent of, and shall otherwise be issued on terms no less
favorable to the Lenders than, the Subordinated Debt and (y) the proceeds
of such Indebtedness shall be used solely to repay the senior secured
Indebtedness refinanced thereby and fees and expenses in connection
therewith;
(xi) to the extent that the accrual of dividends with respect to the
Series A Preferred Stock would be considered Indebtedness, the accrual of
dividends with respect to such Series A Preferred Stock; provided that no
--------
dividends may be paid in respect thereof under
130
<PAGE>
any circumstances prior to the date that is six months after the Tranche B
Maturity Date;
(xii) the lease by Triton Management of the property located at 375
Technology Drive, Malvern, Pennsylvania; and
(xiii) other unsecured Indebtedness of the Borrower and the
Subsidiaries (other than any Special Purpose Subsidiary); provided that the
--------
aggregate principal amount of such Indebtedness shall not exceed $5,000,000
at any time outstanding.
(b) Holdings and the Borrower will not, and will not permit any
Subsidiary to, issue any preferred stock (other than (i) preferred stock of
Holdings issued pursuant to the terms of the Securities Purchase Agreement and
the Preferred Stock Agreement and (ii) preferred stock issued to Holdings or
Persons (or Affiliates thereof) owning capital stock of Holdings on the
Effective Date) or be or become liable in respect of any obligation (contingent
or otherwise) to purchase, redeem, retire, acquire or make any other payment in
respect of any shares of capital stock of Holdings, the Borrower or any
Subsidiary or any option, warrant or other right to acquire any such shares of
capital stock, except for the obligation of Holdings to repurchase unvested
rights to Common Stock in an amount not to exceed $2,000 in the aggregate. No
preferred stock issued by Holdings, the Borrower or any Subsidiary shall be
mandatorily redeemable or subject to mandatory purchase by the Borrower or any
Subsidiary, and no dividends may be paid (it being understood that dividends may
accrue) in respect thereof, under any circumstances prior to November 4, 2007.
SECTION 6.02. Liens. Holdings and the Borrower will not, and will
------
not permit any Subsidiary to, create, incur, assume or permit to exist any Lien
on any property or asset now owned or hereafter acquired by it, or assign or
sell any income or revenues (including accounts receivable) or rights in respect
of any thereof, except:
(i) Liens created under the Loan Documents;
(ii) Permitted Encumbrances;
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<PAGE>
(iii) any Lien on any property or asset of the Borrower or any
Subsidiary (other than the License Subsidiary or the Real Property
Subsidiary) existing on the date hereof and set forth in Schedule 6.02;
provided that (A) such Lien shall not apply to any other property or asset
--------
of the Borrower or any Subsidiary and (B) such Lien shall secure only those
obligations which it secures on the date hereof;
(iv) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary or existing on any
property or asset of any Person that becomes a Subsidiary after the date
hereof prior to the time such Person becomes a Subsidiary; provided that
--------
(A) such Lien is not created in contemplation of or in connection with such
acquisition or such Person becoming a Subsidiary, as the case may be, (B)
such Lien shall not apply to any other property or assets of the Borrower
or any Subsidiary and (C) such Lien shall secure only those obligations
which it secures on the date of such acquisition or the date such Person
becomes a Subsidiary, as the case may be;
(v) Liens on fixed or capital assets acquired, constructed or improved
by the Borrower or any Subsidiary; provided that (A) such security
--------
interests secure Indebtedness permitted by clause (ix) of Section 6.01(a),
(B) such security interests and the Indebtedness secured thereby are
incurred prior to or within 180 days after such acquisition or the
completion of such construction or improvement, (C) the Indebtedness
secured thereby does not exceed 100% of the cost of acquiring, constructing
or improving such fixed or capital assets and (D) such security interests
shall not apply to any other property or assets of the Borrower or any
Subsidiary;
(vi) Liens on assets leased to the Borrower or any Subsidiary pursuant
to the Tower Sale Asset Purchase Agreement; provided, that such security
interests shall not apply to any other property or assets of the Borrower
or any Subsidiary;
(vii) Liens on assets acquired from a Qualified Vendor or other
equipment vendor reasonably acceptable to the Administrative Agent securing
Indebtedness
132
<PAGE>
permitted by clause (vii) of Section 6.01(a) incurred to finance the
acquisition of such assets; provided, however, that (i) such Qualified
-------- -------
Vendor or other equipment vendor reasonably acceptable to the
Administrative Agent and the Collateral Agent, on behalf of the Secured
Parties, enter into an intercreditor agreement or joint security agreement
providing for the sharing of the security interest in such assets on terms
satisfactory to the Administrative Agent and (ii) the Borrower or a wholly
owned Subsidiary has title to such assets; and
(viii) Liens on the Capital Stock of Unrestricted Subsidiaries.
SECTION 6.03. Sale and Lease-Back Transactions. The Borrower will
---------------------------------
not, nor will it permit any Subsidiary to, enter into any arrangement, directly
or indirectly, with any Person whereby it shall sell or transfer any property,
real or personal, used or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease such property or other property which it
intends to use for substantially the same purpose as the property being sold or
transferred, other than the Tower Sale.
SECTION 6.04. Fundamental Changes. (a) Holdings and the Borrower
--------------------
will not, and will not permit any Subsidiary to, merge into or consolidate with
any other Person, or permit any other Person to merge into or consolidate with
it, or liquidate or dissolve, except that, if at the time thereof and
immediately after giving effect thereto no Default shall have occurred and be
continuing (i) any Subsidiary (other than a License Subsidiary or a Real
Property Subsidiary) may merge into the Borrower in a transaction in which the
Borrower is the surviving corporation, (ii) any Subsidiary (other than a License
Subsidiary or a Real Property Subsidiary) may merge into any Subsidiary (other
than the License Subsidiary or the Real Property Subsidiary) in a transaction in
which the surviving entity is a Wholly Owned Subsidiary, (iii) any Subsidiary
(other than a License Subsidiary or a Real Property Subsidiary) may liquidate or
dissolve if the Borrower determines in good faith that such liquidation or
dissolution is in the best interests of the Borrower and is not materially
disadvantageous to the Lenders and (iv) the
133
<PAGE>
Bidding Entity may merge with or into any License Subsidiary in a transaction in
which a Wholly Owned License Subsidiary is the surviving corporation.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, engage in any business other than businesses of the type
conducted or contemplated to be conducted by the Borrower and its Subsidiaries
on the Amendment Effective Date and Related Businesses.
SECTION 6.05. Investments, Loans, Advances, Guarantees and
--------------------------------------------
Acquisitions. The Borrower will not, and will not permit any of its
- -------------
Subsidiaries to, purchase, hold or acquire (including pursuant to any merger
with any Person that was not a Wholly Owned Subsidiary prior to such merger) any
capital stock, evidences of indebtedness or other securities (including any
option, warrant or other right to acquire any of the foregoing) of, make or
permit to exist any loans or advances to, Guarantee any obligations of, or make
or permit to exist any investment or any other interest in, any other Person, or
purchase or otherwise acquire (in one transaction or a series of transactions)
any assets of any other Person constituting a business unit, except:
(a) Permitted Investments;
(b) investments existing on February 3, 1998, to the extent such
investments would not be permitted under any other clause of this Section;
(c) investments by the Borrower and its Subsidiaries (other than the
License Subsidiary or the Real Property Subsidiary) in the capital stock of
their Subsidiaries; provided that any such shares of capital stock held by
--------
a Loan Party shall be pledged pursuant to the Pledge Agreement (subject to
the limitations applicable to common stock of a Foreign Subsidiary referred
to in Section 5.12) and no investments may be made in Subsidiaries that are
not Loan Parties;
(d) loans or advances made by the Borrower to any Subsidiary and made
by any Subsidiary to the Borrower or any other Subsidiary; provided that
--------
any such loans and advances made by a Loan Party shall be evidenced by a
promissory note pledged pursuant to the Pledge
134
<PAGE>
Agreement and no loans or advances may be made to Subsidiaries that are not
Loan Parties;
(e) Guarantees constituting Indebtedness permitted by Section 6.01;
provided that a Subsidiary shall not Guarantee any Subordinated Debt unless
--------
(A) such Subsidiary also has Guaranteed the Obligations pursuant to the
Guarantee Agreement, (B) such Guarantee of Subordinated Debt is
subordinated to such Guarantee of the Obligations on terms no less
favorable to the Lenders than the subordination provisions of the
Subordinated Debt and (C) such Guarantee of Subordinated Debt provides for
the release and termination thereof, without action by any party, upon any
release and termination of such Guarantee of the Obligations;
(f) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
(g) (i) the purchase of assets contemplated by the Myrtle Asset
Purchase Agreement (without giving effect to any amendments to or waivers
of the Myrtle Asset Purchase Agreement (other than such amendments or
waivers that are not adverse in a material respect to the interests of the
Lenders)) and (ii) the purchase of assets contemplated by the Norfolk Asset
Purchase Agreement (without giving effect to any amendments to or waivers
of the Norfolk Asset Purchase Agreement (other than such amendments or
waivers that are not adverse in a material respect to the interests of the
Lenders));
(h) the acquisition of the AW Swap Licenses in connection with the
consummation of the AW Pops Swap;
(i) the investment of up to $2,800,000 in the Bidding Entity; provided
that (i) all Capital Stock and debt securities of the Bidding Entity owned
by a Loan Party are pledged pursuant to the Pledge Agreement and (ii) all
agreements entered into between the Bidding Entity and any Loan Party are
assigned to the Administrative Agent, as agent for the Lenders as
collateral;
135
<PAGE>
(j) investments in the Capital Stock of the Marketing Affiliate, the
consideration for which consists of the transfer of the SunCom trademark;
provided that (i) all such Capital Stock is pledged pursuant to the Pledge
Agreement and (ii) all agreements entered into between the Marketing
Affiliate and any Loan Party are assigned to the Administrative Agent, as
agent for the Lenders as collateral; provided, further, that if an Event of
-------- -------
Default exists, the Lenders may enforce the Loan Parties' rights with
respect to such Capital Stock and agreements but may transfer such Capital
Stock and assign such agreements to third parties only after obtaining any
required consents from the equity holders (other than any Loan Party) in
the Marketing Affiliate, such consents not to be unreasonably withheld;
(k) loans or advances made to employees in an aggregate amount not to
exceed $2,000,000 at any time outstanding;
(l) buy-backs of Capital Stock of Holdings from employees upon death
or termination of employment in an aggregate amount not to exceed
$1,000,000 during any fiscal year of the Borrower; and
(m) acquisitions of or investments in Persons engaged in Related
Businesses so long as (i) the consideration paid in connection with all
such acquisitions or investments consists solely of cash and/or Capital
Stock of Holdings with an aggregate value not in excess of $30,000,000 and
(ii) Holdings, the Borrower and the Subsidiaries shall be in Pro Forma
Compliance after giving effect to any such acquisition or investment.
136
<PAGE>
SECTION 6.06. Asset Sales. Holdings and the Borrower will not, and
------------
will not permit any Subsidiary to, sell, transfer, lease or otherwise dispose of
any asset (other than assets of Holdings constituting an Unrestricted
Subsidiary), including any capital stock, nor will the Borrower permit any of
its Subsidiaries to issue any additional shares of its capital stock or other
ownership interest in such Subsidiary, except in the case of the Borrower and
its Subsidiaries:
(a) sales of inventory, used or surplus equipment and Permitted
Investments in the ordinary course of business;
(b) sales, transfers and dispositions to the Borrower or a Subsidiary;
provided that any such sales, transfers or dispositions involving a
--------
Subsidiary that is not a Loan Party shall be made in compliance with
Section 6.09;
(c) sales, transfers and dispositions of assets (other than capital
stock of a Subsidiary) that are not permitted by any other clause of this
Section; provided that the aggregate fair market value of all assets sold,
--------
transferred or otherwise disposed of in reliance upon this clause (c) shall
not exceed $5,000,000 during any fiscal year of the Borrower;
(d) the sale to AW of the Exchanged Licenses contemplated by the
definition of AW Pops Swap;
(e) the transfer of the SunCom trademark to the Marketing Affiliate;
and
(f) the Tower Sale;
provided that all sales, transfers, leases and other dispositions permitted
- --------
hereby (other than those permitted in clauses (d) and (e) above) shall be made
for fair value and solely for cash consideration.
SECTION 6.07. Hedging Agreements. Holdings and the Borrower will
-------------------
not, and will not permit any Subsidiary to, enter into any Hedging Agreement,
other than (a) Hedging Agreements required by Section 5.14 and (b) Hedging
Agreements entered into in the ordinary course of business to hedge or mitigate
risks to which the Borrower or any
137
<PAGE>
Subsidiary is exposed in the conduct of its business or the management of its
liabilities.
SECTION 6.08. Restricted Payments; Certain Payments of Indebtedness.
------------------------------------------------------
(a) The Borrower will not, nor will it permit any Subsidiary to, declare or
make, or agree to pay or make, directly or indirectly, any Restricted Payment,
except (i) the Borrower may declare and pay dividends with respect to its
capital stock payable solely in additional shares of its common stock, (ii)
Subsidiaries may declare and pay dividends ratably with respect to their capital
stock, provided that no distribution referred to in this clause (ii) shall be
--------
permitted to be made by any Special Purpose Subsidiary if any Default or Event
of Default shall have occurred and be continuing or would result therefrom,
(iii) the Borrower may make Restricted Payments, not exceeding $1,000,000 during
any fiscal year, pursuant to and in accordance with stock option plans or other
benefit plans for management or employees of the Borrower and its Subsidiaries
and (iv) if no Default has occurred and is continuing, the Borrower may make
Restricted Payments to Holdings (A) to fund, as and when due, payments of
regularly scheduled interest and principal in respect of any Indebtedness
incurred by Holdings that is permitted by Section 6.01(a), other than payments
in respect of the Subordinated Debt prohibited by the subordination provisions
thereof, and, (B) to fund, as and when due, payments in respect of taxes, audit
fees and directors and officers insurance premiums incurred by Holdings (to the
extent fairly allocable to the business of the Borrower and the Subsidiaries
rather than the business of the Unrestricted Subsidiaries) in an aggregate
amount not to exceed $3,000,000 (or such higher amount as the Administrative
Agent may agree) during any fiscal year of the Borrower.
(b) Holdings and the Borrower will not, and will not permit any
Subsidiary to, make or agree to pay or make, directly or indirectly, any payment
or other distribution (whether in cash, securities or other property) of or in
respect of principal of or interest on any Indebtedness, or any payment or other
distribution (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancelation or termination of any Indebtedness, except:
138
<PAGE>
(i) payment of Indebtedness created under the Loan Documents;
(ii) payment of regularly scheduled interest and principal payments as
and when due in respect of any Indebtedness permitted by Section 6.01(a),
other than payments in respect of the Subordinated Debt prohibited by the
subordination provisions thereof;
(iii) refinancings of Indebtedness to the extent permitted by Section
6.01;
(iv) payment of secured Indebtedness permitted by Section 6.01(a) that
becomes due as a result of the voluntary sale or transfer of the property
or assets securing such Indebtedness;
(v) returns of deposits or advances in the ordinary course of
business;
(vi) payment made to satisfy the Borrower's reimbursement obligations
under any Letters of Credit issued hereunder;
(vii) payments under Guarantees of obligations of Persons other than
Holdings, the Borrower and the Subsidiaries that are permitted under
Section 6.01; and
(viii) regularly scheduled rent payments in respect of any Capital
Lease Obligations that are permitted under Section 6.01.
SECTION 6.09. Transactions with Affiliates. Holdings and the
-----------------------------
Borrower will not, and will not permit any Subsidiary to, sell, lease or
otherwise transfer any property or assets to, or purchase, lease or otherwise
acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except (a) transactions in the
ordinary course of business that are at prices and on terms and conditions not
less favorable to Holdings, the Borrower or such Subsidiary than could be
obtained on an arm's-length basis from unrelated third parties, (b) transactions
between or among Holdings, the Borrower and the Subsidiary Loan Parties not
involving any other Affiliate, (c) the transactions contemplated by the
Preferred Stock Agreement and the Norfolk Asset
139
<PAGE>
Purchase Agreement, (d) the AW Pops Swap and (e) any Restricted Payment
permitted by Section 6.08.
SECTION 6.10. Restrictive Agreements. The Borrower will not, nor
-----------------------
will it permit any Subsidiary to, directly or indirectly, enter into, incur or
permit to exist any agreement or other arrangement that prohibits, restricts or
imposes any condition upon (a) the ability of the Borrower or any Subsidiary to
create, incur or permit to exist any Lien upon any of its property or assets, or
(b) the ability of any Subsidiary to pay dividends or other distributions with
respect to any shares of its capital stock or to make or repay loans or advances
to the Borrower or any other Subsidiary or to Guarantee Indebtedness of the
Borrower or any other Subsidiary; provided that (i) the foregoing shall not
--------
apply to restrictions and conditions imposed by law or by any Loan Document or
Subordinated Debt Document, (ii) the foregoing shall not apply to restrictions
and conditions existing on the date hereof identified on Schedule 6.10 (but
shall apply to any extension or renewal of, or any amendment or modification
expanding the scope of, any such restriction or condition), (iii) the foregoing
shall not apply to customary restrictions and conditions contained in agreements
relating to the sale of a Subsidiary pending such sale, provided such
restrictions and conditions apply only to the Subsidiary that is to be sold and
such sale is permitted hereunder, (iv) clause (a) of the foregoing shall not
apply to restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness and (v) clause
(a) of the foregoing shall not apply to customary provisions in leases and other
agreements restricting the assignment thereof.
SECTION 6.11. Amendment of Material Documents. Holdings and the
--------------------------------
Borrower will not, and will not permit any Subsidiary to, amend, modify or waive
any of its rights under (a) any agreement relating to material Indebtedness, (b)
its certificate of incorporation, by-laws or other organizational documents, (c)
the Special Purpose Subsidiary Funding Agreements, (d) the PCS Documents, (e)
the Tower Sale Asset Purchase Agreement, (f) the Additional Capital
Contributions Commitments and (g) the definitive documentation for the
Additional Capital Contributions, in the case of clauses (a), (b), (c), (e), (f)
and (g) above,
140
<PAGE>
in a manner adverse to the interests of the Lenders and, in the
case of clause (d) above, in a manner that could be adverse in a material
respect to the interests of the Lenders provided that, if requested by the
--------
Borrower, the Administrative Agent will review any contemplated amendment or
waiver of such debt or other agreements and promptly advise the Borrower if such
amendment or waiver could be adverse to the interests of the Lenders.
SECTION 6.12. Financial Covenants. (a) Senior Debt to Total
-------------------- --------------------
Capital. Holdings and the Borrower will not permit the ratio of Senior Debt to
- --------
Total Capital in each case on any day on which a Borrowing occurs and the last
day of each fiscal quarter to exceed .50 to 1; provided, however, that if (i)
-------- -------
all Unfunded Commitments (as defined in the Securities Purchase Agreement) have
been contributed in full in cash to the Borrower and (ii) Covered Pops meet or
exceed 60% of the aggregate number of Pops within the Licensed Territory (as
defined in the Network License Agreement) then the ratio of Senior Debt to Total
Capital may exceed .50 to 1 but shall not exceed .55 to 1 on or prior to
December 31, 2000 and thereafter shall not be limited.
(b) Total Debt to Total Capital. Holdings and the Borrower will not
----------------------------
permit the ratio of Total Debt to Total Capital in each case on any day on which
a Borrowing occurs and the last day of each fiscal quarter to exceed (i) on or
prior to March 31, 2005, .75 to 1 and (ii) thereafter, .70 to 1.
(c) Capital Expenditures. The Borrower will not permit Capital
---------------------
Expenditures of the Borrower and its Subsidiaries for any period set forth below
to exceed the sum set forth opposite such period:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
Date of formation through
December 31, 1998 $275,000,000
January 1, 1999 - December 31, 1999 $375,000,000
January 1, 2000 - December 31, 2000 $250,000,000
January 1, 2001 - December 31, 2001 $175,000,000
January 1, 2002 - December 31, 2002 $100,000,000
</TABLE>
; provided, that any permitted amount which is not expended in any of the
--------
periods specified above (other than the period from the date of formation
through December 31,
141
<PAGE>
1998) may be carried over for expenditure in the immediately subsequent period.
(d) Covered Pops. The Borrower will not permit Covered Pops as a
-------------
percentage of the total number of Pops in the Service Regions on or after any
date set forth below to be less than the percentage set forth opposite such
date.
<TABLE>
<CAPTION>
Date Minimum Covered Pops
- ---- --------------------
<S> <C>
June 30, 1999 40%
June 30, 2000 60%
June 30, 2001 75%
June 30, 2002 and thereafter 80%
</TABLE>
(e) Aggregate Service Revenue. The Borrower will not permit
--------------------------
Aggregate Service Revenue for any period of four consecutive fiscal quarters
ending on or after any date set forth below and prior to January 1, 2001 to be
less than Aggregate Service Revenue set forth opposite such date.
<TABLE>
<CAPTION>
Minimum Aggregate
Date Service Revenue
- --------------------------------------------- ------------------------
<S> <C>
June 30, 1999 15,000,000
December 31, 1999 60,000,000
June 30, 2000 125,000,000
December 31, 2000 190,000,000
</TABLE>
(f) Subscribers. The Borrower will not permit the number of
------------
Subscribers on or after any date set forth below and prior to January 1, 2001 to
be less than the number of Subscribers set forth opposite such date:
<TABLE>
<CAPTION>
Date Minimum Subscribers
- ----- --------------------
<S> <C>
December 31, 1999 155,000
June 30, 2000 210,000
December 31, 2000 295,000
</TABLE>
142
<PAGE>
(g) Senior Debt to Annualized Adjusted EBITDA. Holdings and the
------------------------------------------
Borrower will not permit the ratio of (i) Senior Debt outstanding on any day
from and including (a) the last day of any fiscal quarter set forth below
through (b) the day immediately preceding the last day of the immediately
following fiscal quarter to (ii) Annualized Adjusted EBITDA for the period
ending on the date referred to in clause (i)(a) above to exceed the ratio set
forth opposite such date:
<TABLE>
<CAPTION>
Fiscal Quarter Ending On Ratio
- ------------------------ --------------------------
<S> <C>
March 31, 2000 14.0 to 1
June 30, 2000 8.0 to 1
September 30, 2000 8.0 to 1
December 31, 2000 7.0 to 1
March 31, 2001 6.0 to 1
June 30, 2001 5.0 to 1
</TABLE>
(h) Total Debt to Annualized Adjusted EBITDA. Holdings and the
-----------------------------------------
Borrower will not permit the ratio of (i) Total Debt outstanding on any day from
and including (a) the last day of any fiscal quarter set forth below through (b)
the day immediately preceding the last day of the immediately following fiscal
quarter to (ii) Annualized Adjusted EBITDA for the period ending on the date
referred to in clause (i)(a) above to exceed the ratio set forth opposite such
date:
<TABLE>
<CAPTION>
Fiscal Quarter Ending On Ratio
- ------------------------ ---------
<S> <C>
September 30, 2000 23.0 to 1
December 31, 2000 17.0 to 1
March 31, 2001 14.0 to 1
June 30, 2001 12.0 to 1
September 30, 2001 10.0 to 1
</TABLE>
143
<PAGE>
(i) Senior Debt to Annualized EBITDA. Holdings and the Borrower will
---------------------------------
not permit the ratio of (i) Senior Debt outstanding on any day from and
including (a) the last day of any fiscal quarter set forth below through (b) the
day immediately preceding the last day of the immediately following fiscal
quarter to (ii) Annualized EBITDA for the period ending on the date referred to
in clause (i)(a) above to exceed the ratio set forth opposite such date:
<TABLE>
<CAPTION>
Fiscal Quarter Ending On Ratio
- ------------------------ -----------
<S> <C>
September 30, 2001 9.0 to 1
December 31, 2001 7.0 to 1
March 31, 2002 7.0 to 1
June 30, 2002 6.0 to 1
September 30, 2002 5.0 to 1
December 31, 2002 4.0 to 1
March 31, 2003 4.0 to 1
June 30, 2003 4.0 to 1
September 30, 2003 3.0 to 1
December 31, 2003 and thereafter 3.0 to 1
</TABLE>
(j) Total Debt to Annualized EBITDA. Holdings and the Borrower will
--------------------------------
not permit the ratio of (i) Total Debt outstanding on any day from and including
(a) the last day of any fiscal quarter set forth below through (B) the day
immediately preceding the last day of the immediately following fiscal quarter
to (ii) Annualized EBITDA for the period ending on the date referred to in
clause (i)(a) above to exceed the ratio set forth opposite such date:
<TABLE>
<CAPTION>
Fiscal Quarter Ending On Ratio
- ------------------------ ------------
<S> <C>
December 31, 2001 19.0 to 1
March 31, 2002 17.0 to 1
June 30, 2002 14.0 to 1
September 30, 2002 11.0 to 1
December 31, 2002 8.0 to 1
March 31, 2003 8.0 to 1
June 30, 2003 8.0 to 1
September 30, 2003 6.0 to 1
December 31, 2003 6.0 to 1
March 31, 2004 6.0 to 1
June 30, 2004 6.0 to 1
September 30, 2004 and thereafter 4.5 to 1
</TABLE>
144
<PAGE>
(k) Interest Coverage Ratio. Holdings and the Borrower will not
------------------------
permit the ratio of (i) Consolidated EBITDA for any period of four consecutive
fiscal quarters ending on any date or during any "Test Period" set forth below
to (ii) Cash Interest Expense for such period to be less than the ratio set
forth opposite such date or Test Period:
<TABLE>
<CAPTION>
Date or Test Period Ratio
- ------------------- -------------
<S> <C>
March 31, 2002 - June 30, 2002 1.50 to 1
September 30, 2002 1.75 to 1
December 31, 2002 - June 30, 2005 2.00 to 1
September 30, 2005 and thereafter 2.25 to 1
</TABLE>
(l) Fixed Charges Ratio. Holdings and the Borrower will not permit
--------------------
the ratio of (i) Consolidated EBITDA for any period of four consecutive fiscal
quarters ending during any "Test Period" set forth below to Fixed Charges for
such period to be less than the ratio set forth opposite such Test Period.
<TABLE>
<CAPTION>
Test Period Ratio
- ----------- -----------
<S> <C>
September 30, 2002 - June 30, 2003 1.00 to 1
September 30, 2003 and thereafter 1.10 to 1
</TABLE>
SECTION 6.13. Liabilities of Special Purpose Subsidiaries. The
--------------------------------------------
Borrower will not:
(a) permit the License Subsidiary to incur, assume or permit to exist
any liabilities (other than under the Guarantee Agreement and the Security
Agreement and the Communications Act and taxes and other liabilities incurred in
the ordinary course in order to maintain its existence or Guarantees of 11%
Notes and of the Subordinated Debt permitted by Section 6.01(a)(ii) and (iii)
hereof) or to engage in any business or activities other than the holding of
Licenses; provided that a License Subsidiary may hold an asset which is to be
--------
immediately transferred in accordance with Section 5.13(b) hereof; or
(b) permit the Real Property Subsidiary to incur, assume or permit to
exist any liabilities (other than under the Guarantee Agreement and the Security
Agreement and other liabilities incurred in the ordinary course of business
which are incident to being the lessee of real
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property or the purchaser, owner or lessee of equipment and taxes and other
liabilities in the ordinary course in order to maintain its existence or
Guarantees of the 11% Notes and of the Subordinated Debt permitted by Section
6.01 (a)(ii) and (iii) hereof) or to engage in any business or activities other
than the owning or leasing, as lessee, of Real Property Assets and the leasing,
as lessor, or, as the case may be, subleasing, as sublessor, thereof to the
Borrower or another Subsidiary, and the owning of Real Property-Related
Equipment constituting fixtures thereto and the leasing thereof to the Borrower
or another Subsidiary.
ARTICLE VII
Events of Default
-----------------
If any of the following events ("Events of Default") shall occur:
-----------------
(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the
same shall become due and payable, whether at the due date thereof or at a
date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement or any other Loan Document, when and
as the same shall become due and payable, and such failure shall continue
unremedied for a period of five days;
(c) any representation or warranty made or deemed made by or on behalf
of any Loan Party in or in connection with any Loan Document or any
amendment or modification thereof or waiver thereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or
in connection with any Loan Document or any amendment or modification
thereof or waiver thereunder, shall prove to have been incorrect in any
material respect when made or deemed made;
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(d) Holdings or the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.02, 5.04 (with
respect to the existence of the Borrower and Holdings), 5.11 or 5.16(b) or
in Article VI;
(e) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in clause (a), (b) or (d) of this Article), and such failure
shall continue unremedied for a period of 30 days after notice thereof from
the Administrative Agent to the Borrower (which notice will be given at the
request of any Lender);
(f) any Loan Party shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material
Indebtedness, when and as the same shall become due and payable;
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables
or permits (with or without the giving of notice, the lapse of time or
both) the holder or holders of any Material Indebtedness or any trustee or
agent on its or their behalf to cause any Material Indebtedness to become
due, or to require the prepayment, repurchase, redemption or defeasance
thereof, prior to its scheduled maturity; provided that this clause (g)
--------
shall not apply to secured Indebtedness that becomes due as a result of the
voluntary sale or transfer of the property or assets securing such
Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of any Loan Party or its debts, or of a substantial part
of its assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Subsidiary or for a substantial
part of its assets, and, in any such case, such proceeding or petition
shall continue undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered;
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<PAGE>
(i) any Loan Party shall (i) voluntarily commence any proceeding or
file any petition seeking liquidation, reorganization or other relief under
any Federal, state or foreign bankruptcy, insolvency, receivership or
similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (h) of this Article, (iii) apply for or
consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Subsidiary or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make
a general assignment for the benefit of creditors or (vi) take any action
for the purpose of effecting any of the foregoing;
(j) any Loan Party shall become unable, admit in writing its inability
or fail generally to pay its debts as they become due;
(k) one or more judgments for the payment of money to the extent not
covered by insurance in an aggregate amount in excess of $5,000,000 shall
be rendered against the Borrower, any Loan Party or any combination thereof
and the same shall remain undischarged for a period of 30 consecutive days
during which execution shall not be effectively stayed, or any action shall
be legally taken by a judgment creditor to attach or levy upon any assets
of the Borrower or any Subsidiary to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in a Material Adverse
Effect;
(m) any Lien purported to be created under any Security Document shall
cease to be, or shall be asserted by any Loan Party not to be, a valid and
perfected Lien on any Collateral, with the priority required by the
applicable Security Document, except (i) as a result of the sale or other
disposition of
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the applicable Collateral in a transaction permitted under the Loan
Documents or (ii) as a result of the Administrative Agent's failure to
maintain possession of any stock certificates, promissory notes or other
instruments delivered to it under the Pledge Agreement or the
Administrative Agent's failure to file necessary continuation financing
statements or make required filings with the Patent and Trademark Office of
the United States after delivery to the Administrative Agent by the
Borrower of executed copies of such financing statements and filings;
provided, that if the failure of any such Lien to be valid and perfected is
--------
amenable to cure without materially disadvantaging the position of the
Administrative Agent and the Lenders as secured parties, the failure of
such Lien to be valid and perfected shall not constitute a default under
this clause (m) if the Borrower shall have cured such failure within 30
days after notice from the Administrative Agent (or such shorter period as
may be reasonable under the circumstances and is specified by the
Administrative Agent in such notice).
(n) any of the Security Documents shall cease to be or shall be
asserted by any Loan Party not to be in full force and effect;
(o) the Guarantee Agreement shall cease to be or shall be asserted by
any Loan Party not to be in full force and effect or the Borrower;
(p) a Change in Control shall occur;
(q) the failure of the Borrower to make any payments required to be
made to the FCC or any other Governmental Authority with respect to any
License held by the Borrower or any Subsidiary or any Indebtedness or other
payment obligations relating thereto as and when due which failure could
reasonably be expected to lead to the loss, termination, revocation, non-
renewal or material impairment of any License or otherwise result in a
Material Adverse Effect;
(r) any termination (prior to the expiration of its term), revocation
or non-renewal by the FCC of one or more Licenses of the Borrower or its
Subsidiaries;
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<PAGE>
(s) the Borrower's right to use any "AT&T" trademark pursuant to the
Network License Agreement shall terminate (it being understood that, on or
after February 4, 2003, neither the non-renewal of the Network License
Agreement by AW nor the termination of the Network License Agreement by AW
as a result of a Disqualifying Transaction (as defined in the Stockholders
Agreement) shall constitute an Event of Default hereunder);
(t) the loss by any Loan Party of any rights to the benefit of, or the
occurrence of any default or the termination of any rights under, any
application, marketing or other material agreements, which loss, occurrence
or termination could reasonably be expected to affect in a material and
adverse respect the Borrower's ability to satisfy its obligations to the
Lenders hereunder or to result in a Material Adverse Effect (it being
understood that, on or after the date which is five years from the
Effective Date, neither the non-renewal of the Network License Agreement by
AW nor the termination of the Network License Agreement by AW as a result
of a Disqualifying Transaction (as defined in the Stockholders Agreement)
shall constitute an Event of Default hereunder);
(u) the failure of any party to the Securities Purchase Agreement or
the Stockholders Agreement to comply with any funding or contribution
obligation under such Agreement and such failure shall continue unremedied
for a period of 30 days;
(v) On or prior to December 31, 1999, Holdings shall not have either
(i) executed definitive documentation with respect to the Additional
Capital Contributions on terms satisfactory to the Administrative Agent or
(ii) received Net Proceeds of at least $75,000,000 from an initial public
offering of its equity securities;
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate
the
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<PAGE>
Commitments, and thereupon the Commitments shall terminate immediately, and
(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower; and
in case of any event with respect to the Borrower described in clause (h) or (i)
of this Article, the Commitments shall automatically terminate and the principal
of the Loans then outstanding, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower.
ARTICLE VIII
The Administrative Agent
------------------------
Each of the Lenders and the Issuing Bank hereby irrevocably appoints
the Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms of the Loan Documents, together with such
actions and powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth in the Loan Documents. Without limiting the
generality of the foregoing, (a) the Administrative Agent shall not be
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subject to any fiduciary or other implied duties, regardless of whether a
Default has occurred and is continuing, (b) the Administrative Agent shall not
have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated by the
Loan Documents that the Administrative Agent is required to exercise in writing
by the Required Lenders (or such other number or percentage of the Lenders as
shall be necessary under the circumstances as provided in Section 9.02), and (c)
except as expressly set forth in the Loan Documents, the Administrative Agent
shall not have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Borrower or any of its Subsidiaries
that is communicated to or obtained by the bank serving as Administrative Agent
or any of its Affiliates in any capacity. The Administrative Agent shall not be
liable for any action taken or not taken by it with the consent or at the
request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
9.02) or in the absence of its own gross negligence or wilful misconduct. The
Administrative Agent shall be deemed not to have knowledge of any Default unless
and until written notice thereof is given to the Administrative Agent by the
Borrower or a Lender, and the Administrative Agent shall not be responsible for
or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with any Loan Document, (ii) the
contents of any certificate, report or other document delivered thereunder or in
connection therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth in any Loan
Document, (iv) the validity, enforceability, effectiveness or genuineness of any
Loan Document or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere in any Loan
Document, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any
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<PAGE>
statement made to it orally or by telephone and believed by it to be made by the
proper Person, and shall not incur any liability for relying thereon. The
Administrative Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of each Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this paragraph, the Administrative Agent may
resign at any time by notifying the Lenders, the Issuing Bank and the Borrower.
Upon any such resignation, the Required Lenders shall have the right, with the
consent of the Borrower (which consent shall not be unreasonably withheld), to
appoint a successor. If no successor shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days after
the retiring Administrative Agent gives notice of its resignation, then the
retiring Administrative Agent may, on behalf of the Lenders and the Issuing
Bank, appoint a successor Administrative Agent which shall be a bank with an
office in New York, New York, or an Affiliate of any such bank. Upon the
acceptance of its appointment as Administrative Agent hereunder by a successor,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the Administrative Agent's
resignation
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hereunder, the provisions of this Article and Section 9.03 shall continue in
effect for the benefit of such retiring Administrative Agent, its sub-agents and
their respective Related Parties in respect of any actions taken or omitted to
be taken by any of them while it was acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or related agreement or any document furnished hereunder
or thereunder.
ARTICLE IX
Miscellaneous
-------------
SECTION 9.01. Notices. Except in the case of notices and other
--------
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower or Holdings, to it c/o Triton Communications
L.L.C., 375 Technology Drive, Malvern, Pennsylvania 19355, Attention of
David Clark and Daniel E. Hopkins (Telecopy No. 610-933-2683);
with copies to
Klienbard, Bell & Brecker LLP
1900 Market Street, Suite 700
Philadelphia, PA 19103
Attn: Howard Davis and Ralph Mauro
Telecopy: 215-568-0140
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<PAGE>
and
Dow Lohnes & Albertson, PLLC
1200 New Hampshire, N.W., Suite 800
Washington, D.C. 20036
Attn: Timothy J. Kelley
Telecopy: 202-776-2222
(b) if to the Administrative Agent or the Issuing Bank, to The Chase
Manhattan Bank, Loan and Agency Services Group, One Chase Manhattan, 8th
Floor, New York, New York 10081, Attention of Rana Khan (Telecopy No. (212)
552-5700), with a copy to The Chase Manhattan Bank, 270 Park Avenue, New
York, New York 10017, Attention of Tracey Ewing (Telecopy No. (212) 270-
4584; and
(d) if to the Swingline Lender, to it at the address notified to the
Borrower and the Administrative Agent; and
(e) if to any other Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the
--------------------
Administrative Agent or any Lender in exercising any right or power hereunder or
under any other Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The
rights and remedies of the Administrative Agent, the Issuing Bank and the
Lenders hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver
of any provision of any Loan Document or consent to any departure by any Loan
Party therefrom shall in any event be effective unless the same
155
<PAGE>
shall be permitted by paragraph (b) of this Section, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. Without limiting the generality of the foregoing, the making of a
Loan or the issuance of a Letter of Credit shall not be construed as a waiver of
any Default, regardless of whether the Administrative Agent, the Issuing Bank or
any Lender may have had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders or, in the case of any
other Loan Document, pursuant to an agreement or agreements in writing entered
into by the Administrative Agent and the Loan Party or Loan Parties that are
parties thereto, in each case with the consent of the Required Lenders; provided
--------
that no such agreement shall (i) increase the Commitment of any Lender without
the written consent of such Lender, (ii) reduce the principal amount of any Loan
or LC Disbursement or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the written consent of each Lender affected thereby,
(iii) postpone the scheduled date of payment of the principal amount of any
Loan, or the required date of reimbursement of any LC Disbursement, or any
interest thereon, or any fees payable hereunder, or reduce the amount of, waive
or excuse any such payment, or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender affected thereby, (iv)
change Section 2.16(b) or (c) in a manner that would alter the pro rata sharing
of payments required thereby, without the written consent of each Lender, (v)
change any of the provisions of this Section or the definition of "Required
Lenders" or any other provision of any Loan Document specifying the number or
percentage of Lenders (or Lenders of any Class) required to waive, amend or
modify any rights thereunder or make any determination or grant any consent
thereunder, without the written consent of each Lender (or each Lender of such
Class, as the case may be), (vi) release any Subsidiary Loan Party from its
Guarantee under the Guarantee Agreement (except as expressly provided in the
Guarantee Agreement), or limit its liability in respect of such Guarantee,
without the written consent of each Lender, (vii) release all or a substantial
part of the Collateral from the Liens
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<PAGE>
of the Security Documents, without the written consent of each Lender, (viii)
change any provisions of any Loan Document in a manner that by its terms
adversely affects the rights in respect of payments due to Lenders holding Loans
of any Class differently than those holding Loans of any other Class, without
the written consent of Lenders holding a majority in interest of the outstanding
Loans and unused Commitments of each affected Class or (ix) change the rights of
the Tranche B Lenders to decline mandatory prepayments as provided in Section
2.09, without the written consent of Tranche B Lenders holding a majority of the
outstanding Tranche B Loans; provided further that (A) no such agreement shall
----------------
amend, modify or otherwise affect the rights or duties of the Administrative
Agent, the Issuing Bank or the Swingline Lender hereunder without the prior
written consent of the Administrative Agent, the Issuing Bank or the Swingline
Lender, as the case may be and (B) any waiver, amendment or modification of this
Agreement that by its terms affects the rights or duties of the Lenders holding
one particular Class of Loans but not of Lenders holding any other Class of
Loans under this Agreement may be effected by an agreement or agreements in
writing entered into by the Borrower and the Lenders who hold the requisite
percentage in interest of such affected Class of Loans.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower
-----------------------------------
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including due diligence expenses and
the reasonable fees, charges and disbursements of counsel for the Administrative
Agent, in connection with the syndication of the credit facilities provided for
herein, the preparation and administration of the Loan Documents or any
amendments, modifications or waivers of the provisions thereof (whether or not
the transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable out-of-pocket expenses incurred by the Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder and (iii) all out-of-pocket expenses incurred
by the Administrative Agent, the Issuing Bank or any Lender, including the fees,
charges and disbursements of any counsel for the Administrative Agent, the
Issuing Bank or any Lender, in connection with the enforcement or protection of
its rights in connection with the Loan Documents, including its rights under
this Section, or in
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connection with the Loans made or Letters of Credit issued hereunder, including
all such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.
(b) The Borrower shall indemnify the Administrative Agent, the
Issuing Bank and each Lender, and each Related Party of any of the foregoing
Persons (each such Person being called an "Indemnitee") against, and hold each
----------
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the fees, charges and disbursements of any counsel
for any Indemnitee, incurred by or asserted against any Indemnitee arising out
of, in connection with, or as a result of (i) the execution or delivery of any
Loan Document or any other agreement or instrument contemplated hereby, the
performance by the parties to the Loan Documents of their respective obligations
thereunder or the consummation of the Transactions or any other transactions
contemplated hereby, (ii) any Loan or Letter of Credit or the use of the
proceeds therefrom (including any failure of the Issuing Bank to honor a demand
for payment under a Letter of Credit if the documents presented in connection
with such demand do not strictly comply with the terms of such Letter of
Credit), (iii) any actual or alleged presence or release of Hazardous Materials
on or from any Mortgaged Property or any other property owned or operated by the
Borrower or any of its Subsidiaries, or any Environmental Liability related in
any way to the Borrower or any of its Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that such
--------
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or wilful misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount required
to be paid by it to the Administrative Agent or the Issuing Bank under paragraph
(a) or (b) of this Section, each Lender severally agrees to pay to the
Administrative Agent or the Issuing Bank, as the case may be, such Lender's pro
rata share (determined as of the time that the applicable unreimbursed expense
or indemnity
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<PAGE>
payment is sought) of such unpaid amount; provided that the unreimbursed expense
--------
or indemnified loss, claim, damage, liability or related expense, as the case
may be, was incurred by or asserted against the Administrative Agent or the
Issuing Bank in its capacity as such and provided, further, that payments by the
-------- -------
Lenders to the Administrative Agent pursuant to this sentence shall be returned
to the Lenders to the extent the Borrower subsequently pays such unpaid amount.
For purposes hereof, a Lender's "pro rata share" shall be determined based upon
its share of the sum of the total Revolving Exposures, outstanding Term Loans
and unused Commitments at the time.
(d) To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the
Transactions, any Loan or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly
after written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of this
-----------------------
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit), and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent,
the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim
under or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a portion
of its rights and obligations
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under this Agreement (including all or a portion of its Commitment and the Loans
at the time owing to it); provided that (i) except in the case of an assignment
--------
to a Lender or an Affiliate of a Lender, each of the Borrower and the
Administrative Agent (and, in the case of an assignment of all or a portion of a
Revolving Commitment or any Lender's obligations in respect of its LC Exposure,
the Issuing Bank) must give their prior written consent to such assignment
(which consent shall not be unreasonably withheld or delayed), (ii) except in
the case of an assignment to a Lender or an Affiliate of a Lender or an
assignment of the entire remaining amount of the assigning Lender's Commitment
or Loans, the amount of the Commitment or Loans of the assigning Lender subject
to each such assignment (determined as of the date the Assignment and Acceptance
with respect to such assignment is delivered to the Administrative Agent) shall
not be less than $5,000,000 unless each of the Borrower and the Administrative
Agent otherwise consent, (iii) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender's rights and
obligations under this Agreement, except that this clause (iii) shall not be
construed to prohibit the assignment of a proportionate part of all the
assigning Lender's rights and obligations in respect of one Class of Commitments
or Loans, (iv) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance, together with a processing
and recordation fee of $3,500, and (v) the assignee, if it shall not be a
Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire; and provided further that any consent of the Borrower otherwise
----------------
required under this paragraph shall not be required if an Event of Default under
clause (h) or (i) of Article VII has occurred and is continuing. Subject to
acceptance and recording thereof pursuant to paragraph (d) of this Section, from
and after the effective date specified in each Assignment and Acceptance the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of a
Lender under this Agreement, and the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to
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<PAGE>
the benefits of Sections 2.13, 2.14, 2.15 and 9.03). Any assignment or transfer
by a Lender of rights or obligations under this Agreement that does not comply
with this paragraph shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
--------
the Register shall be conclusive, and the Borrower, the Administrative Agent,
the Issuing Bank and the Lenders may treat each Person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall
be available for inspection by the Borrower, the Issuing Bank and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower, the
Administrative Agent or the Issuing Bank, sell participations to one or more
banks or other entities (a "Participant") in all or a portion of such Lender's
-----------
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (i) such Lender's
--------
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
161
<PAGE>
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrower, the Administrative Agent, the Issuing
Bank and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce the Loan Documents and to approve any amendment, modification or waiver
of any provision of the Loan Documents; provided that such agreement or
--------
instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver described in the
first proviso to Section 9.02(b) that affects such Participant. Subject to
paragraph (f) of this Section, the Borrower agrees that each Participant shall
be entitled to the benefits of Sections 2.13, 2.14 and 2.15 to the same extent
as if it were a Lender and had acquired its interest by assignment pursuant to
paragraph (b) of this Section. To the extent permitted by law, each Participant
also shall be entitled to the benefits of Section 9.08 as though it were a
Lender, provided such Participant agrees to be subject to Section 2.16(c) as
though it were a Lender.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.13 or 2.15 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.15 unless
the Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with Section
2.15(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
--------
a security interest shall release a Lender from any of its obligations
162
<PAGE>
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.
SECTION 9.05. Survival. All covenants, agreements, representations
---------
and warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, the Issuing
Bank or any Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated. The provisions of
Sections 2.13, 2.14, 2.15 and 9.03 and Article VIII shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letters of Credit and the Commitments or the termination of this
Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This
-----------------------------------------
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement,
the other Loan Documents and any separate letter agreements with respect to fees
payable to the Administrative Agent constitute the entire contract among the
parties relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be
163
<PAGE>
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement held to
-------------
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall have
----------------
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of the
Borrower against any of and all the obligations of the Borrower now or hereafter
existing under this Agreement held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement and although
such obligations may be unmatured. The rights of each Lender under this Section
are in addition to other rights and remedies (including other rights of setoff)
which such Lender may have. Any Lender exercising a set-off pursuant to this
Section 9.08 shall give notice thereof to the Borrower as soon as reasonably
practicable thereafter.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of
--------------------------------------------------
Process. (a) This Agreement shall be construed in accordance with and governed
- --------
by the law of the State of New York.
(b) The Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any
164
<PAGE>
action or proceeding arising out of or relating to any Loan Document, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement or any other Loan
Document shall affect any right that the Administrative Agent, the Issuing Bank
or any Lender may otherwise have to bring any action or proceeding relating to
this Agreement or any other Loan Document against the Borrower or its properties
in the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any other Loan
Document in any court referred to in paragraph (b) of this Section. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
---------------------
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION,
165
<PAGE>
SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the Table
---------
of Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Administrative Agent,
----------------
the Issuing Bank and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any
assignee of or Participant in, or any prospective assignee of or Participant in,
any of its rights or obligations under this Agreement, (g) with the consent of
the Borrower or (h) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section or (ii) becomes
available to the Administrative Agent, the Issuing Bank or any Lender on a
nonconfidential basis from a source other than the Borrower. For the purposes
of this Section, "Information" means all information received from Holdings or
-----------
the Borrower relating to Holdings or the Borrower or their business, other than
any such information that is available to the Administrative Agent, the Issuing
Bank or any Lender on a nonconfidential basis prior to disclosure by the
Borrower; provided that, in the case of information received from the Borrower
--------
after the date hereof, such information is clearly identified at the time of
delivery
166
<PAGE>
as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.
167
<PAGE>
EXHIBIT 10.13
LICENSE EXCHANGE AND ACQUISITION AGREEMENT
among
AT&T WIRELESS PCS INC.,
TRITON PCS HOLDINGS, INC.
and
TRITON PCS LICENSE COMPANY L.L.C.
Dated as of June 8, 1999
<PAGE>
LICENSE EXCHANGE AND ACQUISITION AGREEMENT
------------------------------------------
LICENSE EXCHANGE AND ACQUISITION AGREEMENT, dated as of June 8,
1999, among AT&T WIRELESS PCS INC., a Delaware corporation ("AT&T PCS"), TRITON
--------
PCS HOLDINGS, INC., a Delaware corporation (the "Company") and TRITON PCS
-------
LICENSE COMPANY L.L.C., a Delaware limited liability company and an indirect
wholly owned Subsidiary (as hereinafter defined) of the Company ("Triton License
--------------
Company"). Each of the Company and Triton License Company are sometimes
- -------
referred to herein, individually as a "Triton Entity" and, collectively, as the
-------------
"Triton Entities".
---------------
WHEREAS, AT&T PCS has been granted the PCS license described on
Schedule I (the "Atlanta License");
---------------
WHEREAS, Triton License Company has been granted the PCS license
described on Schedule II (the "Washington-Baltimore License");
----------------------------
WHEREAS, (a) AT&T PCS wishes to purchase additional securities of
the Company in consideration of the contribution to the capital of the Company
of a 20 MHz portion of the Atlanta License covering Bryan County, GA, Chatham
County, GA, Effingham County, GA and Liberty County, GA, and the Company wishes
to accept such contribution and issue such securities to AT&T PCS, and (b) the
parties to this Agreement desire to effect an exchange of a 20 MHz portion of
the Atlanta License covering the Athens BTA for the portions of the Washington-
Baltimore License covering the Cumberland, MD BTA and the Hagerstown-
Chambersburg, PA-Martinsburg, WV BTA in a like kind exchange of property
pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended (the
"Code"), all on the terms and subject to the conditions herein set forth below.
- -----
NOW, THEREFORE, in consideration of the promises and the mutual
representations, warranties, covenants, conditions and agreements hereinafter
set forth, the parties agree as follows:
ARTICLE I
DEFINITIONS
-----------
For purposes of this Agreement:
"Affiliate" means, with respect to any Person, any other Person that
---------
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with that Person. For purposes of
this definition, "control" (including the terms "controlling" and "controlled")
------- ----------- ----------
means the power to direct or cause the direction of the management and policies
of a Person, directly or indirectly, whether through the ownership of securities
or partnership or other ownership interests, by contract or otherwise.
<PAGE>
"Agreement" means this License Exchange and Acquisition Agreement, as
---------
the same may be amended, modified or supplemented in accordance with the terms
hereof.
"AT&T PCS Material Adverse Effect" means a material adverse effect on
--------------------------------
the AT&T PCS Transferred License.
"AT&T Party" means AT&T PCS and each Affiliate of AT&T PCS that is a
----------
party to any of the Related Agreements.
"AT&T PCS" has the meaning set forth in the preamble.
--------
"AT&T PCS Retained License" means a License or multiple Licenses,
-------------------------
which, after giving effect to the Transactions set forth in Sections 2.1(a)(i)
and 2.2(a)(i)(A), provides in the aggregate the right to use the balance of the
authorized frequencies under the Atlanta License to provide PCS throughout the
entirety of the territory covered by the Atlanta License, as more particularly
described on Schedule 2(a).
"AT&T PCS Transferred License" means a License or multiple Licenses
----------------------------
covering the right to use 20 MHz of authorized frequencies to provide PCS
throughout (i) Bryan County, GA, Chatham County, GA, Effingham County, GA and
Liberty County, GA within the Atlanta MTA, as more particularly described in
Section 2.1(a)(i), in connection with the License Contribution, and (ii) the
Athens, GA BTA within the Atlanta MTA, as more particularly described in Section
2.2(a)(i)(A), in connection with the License Exchange.
"Atlanta License" has the meaning set forth in the recitals.
---------------
"BTA" means the unit of division (of which there are four hundred
---
ninety-three (493)) for the United States of America, devised by Rand McNally
based upon geography, population and other factors, which units form the basis
for the auction by the FCC of a portion of the Licenses for PCS Systems for
Basic Trading Areas, as defined by the FCC.
"Business Day" means any day other than a Saturday, Sunday or a legal
------------
holiday in New York, New York or any other day on which commercial banks in New
York, New York are authorized by law or governmental decree to close.
"Capital Stock" means any and all shares, interests, participations or
-------------
other equivalents (however designated) of capital stock of a corporation, and
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants, rights or options to purchase or
subscribe for any of the foregoing or any warrants, rights or options to
purchase or subscribe for any such warrants, rights or options.
"Claim" has the meaning set forth in Section 8.4(a).
-----
-2-
<PAGE>
"Closing" has the meaning set forth in Section 3.1.
-------
"Closing Date" has the meaning set forth in Section 3.1.
------------
"Code" has the meaning set forth in the recitals.
----
"Common Stock" has the meaning set forth in Section 2.4.
------------
"Company" has the meaning set forth in the preamble.
-------
"Company Material Adverse Effect" means a material adverse effect on
-------------------------------
the business, financial condition, assets, liabilities or results of operations,
taken as a whole, of the Company, or Cumberland/Hagerstown Exchanged License.
"Confidential Information" means any and all information regarding the
------------------------
business, finances, operations, products, services and customers of the Person
specified and its Affiliates, in written or oral form or in any other medium.
"Consents" means all consents and approvals of Governmental
--------
Authorities or other third parties necessary to authorize, approve or permit the
parties hereto to consummate the Transactions and for the Company to operate its
business after the Closing Date as currently contemplated.
"Cumberland/Hagerstown Exchanged License" has the meaning set forth in
---------------------------------------
Section 2.2(a)(ii)(A).
"Cumberland/Hagerstown Retained License" has the meaning set forth in
--------------------------------------
Section 2.2(a)(ii)(B).
"Designated Purchaser" has the meaning set forth in Section 10.14.
--------------------
"FCC" means the Federal Communications Commission or similar
---
regulatory authority established in replacement thereof.
"FCC Law" means the Communications Act of 1934, as amended, including
-------
as amended by the Telecommunications Act of 1996, and the rules, regulations and
policies promulgated thereunder.
"Final Order" has the meaning set forth in Section 7.1(b).
-----------
"Governmental Authority" means a Federal, state or local court,
----------------------
legislature, governmental agency, commission or regulatory or administrative
authority or instrumentality.
-3-
<PAGE>
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
-------
1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnified Party" has the meaning set forth in Section 8.4(a).
-----------------
"Indemnifying Party" has the meaning set forth in Section 8.4(a).
------------------
"Independent Accountant" means Deloitte & Touche LLP.
----------------------
"Independent Directors" means the individuals listed on Schedule III.
---------------------
"Initial Closing Date" has the meaning set forth in the recitals.
--------------------
"Law" means applicable common law and any statute, ordinance, code or
---
other law, rule, permit, permit condition, regulation, order, decree, technical
or other standard, requirement or procedure enacted, adopted, promulgated,
applied or followed by any Governmental Authority.
"License" means a license, permit, certificate of authority, waiver,
-------
approval, certificate of public convenience and necessity, registration or other
authorization, consent or clearance to construct or operate a facility,
including any emissions, discharges or releases therefrom, or to transact an
activity or business, to construct a tower or to use an asset or process, in
each case issued or granted by a Governmental Authority.
"License Contribution" has the meaning set forth in Section 2.1(a).
--------------------
"License Exchange" has the meaning set forth in Section 2.2.(a)
----------------
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
----
charge, security interest, right of first refusal or right of others therein, or
encumbrance of any nature whatsoever in respect of such asset.
"Losses" has the meaning set forth in Section 8.2.
------
"Management Stockholders" means the individuals listed on Schedule IV.
-----------------------
"Minutes" has the meaning set forth in Section 4.1(e).
-------
"MTA" means the unit of division (of which there are fifty-one (51))
---
for the United States of America, devised by Rand McNally based upon geography,
population and other factors, which units form the basis for the auction by the
FCC of a portion of the Licenses for PCS Systems for Major Trading Areas, as
defined by the FCC.
-4-
<PAGE>
"Network Membership License Agreement" means the Network Membership
------------------------------------
License Agreement dated as of February 4, 1998 between AT&T Corp., a New York
corporation, and Triton Operating Company, as the same may be amended, modified
or supplemented in accordance with the terms thereof.
"New York Courts" has the meaning set forth in Section 10.5.
---------------
"Person" means an individual, corporation, partnership, limited
------
liability company, association, joint stock company, Governmental Authority,
business trust, unincorporated organization, or other legal entity.
"PCS" means Personal Communications Services, which is the term to
---
describe the services that may be provided as a result of obtaining the AT&T PCS
Transferred License under FCC Law.
"Related Agreements" means the Stockholders' Agreement, the Roaming
------------------
Agreement, the Network Membership License Agreement and the Resale Agreement,
collectively.
"Related Agreement Amendments" means Amendment No. 2 to Stockholders'
----------------------------
Agreement attached as Exhibit A, Amendment No. 2 to Intercarrier Roaming Service
Agreement attached as Exhibit B, and Amendment No. 2 to Network Membership
License Agreement attached as Exhibit C.
"Representatives" has the meaning set forth in Section 4.2(a).
---------------
"Resale Agreement" means the form of Resale Agreement attached as
----------------
Exhibit C to the Securities Purchase Agreement, as the same may be amended,
modified or supplemented in accordance with the terms thereof.
"Restated Certificate Amendment" means an amendment to the Restated
------------------------------
Certificate, which has been (or as of the Closing will have been) duly
authorized and approved in accordance with Delaware General Corporation Law by
the Board of Directors and Stockholders of the Company, amending Section
4.3(d)(iii) and Section 4.4 of the Restated Certificate as set forth on Schedule
V.
"Roaming Agreement" means the Intercarrier Roamer Service Agreement
-----------------
dated as of February 4, 1998 between Triton Operating Company and AT&T Wireless
Services, Inc., as the same may be amended, modified or supplemented in
accordance with the terms thereof.
"Section 8.2 Indemnified Party" has the meaning set forth in Section
-----------------------------
8.2.
"Section 8.3 Indemnified Party" has the meaning set forth in Section
-----------------------------
8.3.
-5-
<PAGE>
"Securities" means the shares of Series A Preferred Stock, Series D
----------
Preferred Stock and Common Stock to be issued hereunder in accordance with the
terms hereof, together with any shares of Capital Stock issued upon conversion
of any of the foregoing.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Securities Purchase Agreement" means the Securities Purchase
-----------------------------
Agreement dated as of October 8, 1997, among AT&T PCS, the Company, and the
other stockholders of the Company party thereto, as amended.
"Series A Preferred Stock" has the meaning set forth in Section 2.3.
------------------------
"Series B Preferred Stock" has the meaning set forth in Section 6.7.
------------------------
"Series C Preferred Stock" has the meaning set forth in Section 6.7.
------------------------
"Series D Preferred Stock" has the meaning set forth in Section 2.3.
------------------------
"Stockholders' Agreement" means the Stockholders' Agreement of the
-----------------------
Company, dated as of February 4, 1998, as the same may be amended, modified or
supplemented in accordance with the terms thereof.
"Subsidiary" shall mean, with respect to any Person, a corporation or
----------
other entity of which 50% or more of the voting power or the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
"Telephones" has the meaning set forth in Section 4.1(e).
----------
"Third-Party Proposal" has the meaning set forth in Section 4.8(a).
--------------------
"Transactions" means the transactions contemplated by this Agreement
------------
and the Related Agreement Amendments.
"Triton Entity" or "Triton Entities" has the meaning set forth in the
------------- ---------------
preamble.
"Triton License Company" has the meaning set forth in the preamble.
----------------------
"Triton PCS" has the meaning set forth in the recitals.
----------
"Washington-Baltimore License" has the meaning set forth in the
----------------------------
recitals.
When a reference is made in this Agreement to an Article or a Section,
such reference shall be to an Article or a Section of this Agreement unless
otherwise indicated. Unless
-6-
<PAGE>
the context otherwise requires, the terms defined hereunder 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. 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 whenever necessary or appropriate. Whenever the word "herein" or
"hereof" is used in this Agreement, it shall be deemed to refer to this
Agreement and not to a particular Section of this Agreement unless expressly
stated otherwise.
ARTICLE II
LICENSE CONTRIBUTION;
LICENSE EXCHANGE
----------------
2.1 License Contribution.
--------------------
(a) Upon the terms and subject to the conditions hereof and in
reliance upon the representations, warranties, covenants and agreements herein
contained AT&T PCS shall, partition and disaggregate the Atlanta License, in
addition to the partitioning and disaggregation of the Atlanta License described
on Section 2.2(a)(i), to create, as more particularly described on Schedule
2(a), (i) a License providing in the aggregate the right to use 20 MHz of
authorized frequencies to provide PCS throughout the entirety of Bryan County,
GA, Chatham County, GA, Effingham County, GA and Liberty County, GA within the
Atlanta MTA, and (ii) after giving effect to the Transactions described in
clause (i) hereof and in Section 2.2(a)(i)(A), a License providing in the
aggregate the right to use the balance of the authorized frequencies under the
Atlanta License to provide PCS throughout the entirety of the territory covered
by the Atlanta License (which right shall be exercised by AT&T PCS in accordance
with the terms of the Stockholders' Agreement). At the Closing, AT&T PCS shall
assign to the Company (or one or more Designated Purchasers), free and clear of
any Liens, a License for the portion of the Atlanta MTA described in Section
2.1(a)(i) and the Company shall issue to AT&T PCS, in full consideration for
such License, the securities of the Company specified in Section 2.3 (such
transactions relating to such contribution are herein collectively referred to
as the "License Contribution").
--------------------
(b) Notwithstanding anything to the contrary herein contained, with
respect to the License Contribution, AT&T PCS is not selling, transferring or
assigning to the Company pursuant to this Agreement any assets, rights or
properties other than a License for the portion of the Atlanta MTA described in
Section 2.1(a)(i).
2.2 License Exchange.
----------------
(a) Upon the terms and subject to the conditions hereof and in
reliance upon the representations, warranties, covenants and agreements herein
contained, (i) AT&T PCS shall
-7-
<PAGE>
partition and disaggregate the Atlanta License, in addition to the partitioning
and disaggregation of the Atlanta License described in Section 2.1, to create,
as more particularly described on Schedule 2(a), (A) a License providing in the
aggregate the right to use 20 MHz of authorized frequencies to provide PCS
throughout the entirety of the Athens, Georgia BTA within the Atlanta MTA, and
(B) after giving effect to the transactions described in clause (i) hereof and
in Section 2.1(a)(i), a License providing in the aggregate the right to use the
balance of the authorized frequencies under the Atlanta License to provide PCS
throughout the entirety of the territory covered by the Atlanta License (which
right shall be exercised by AT&T PCS in accordance with the terms of the
Stockholders' Agreement); and (ii the Triton Entities shall partition the
Washington-Baltimore License to create, as more particularly described on
Schedule 2(b), (A) a License (the "Cumberland/Hagerstown Exchanged License")
---------------------------------------
providing in the aggregate the right to use the entirety (consisting of 20MHz)
of the authorized frequencies under the Washington-Baltimore License to provide
PCS throughout the entirety of the Cumberland, MD BTA and the Hagerstown MD-
Chambersburg, PA-Martinsburg, WV BTA, and (B) a License (the
"Cumberland/Hagerstown Retained License") to use the entirety of the authorized
--------------------------------------
frequencies under the Washington-Baltimore License to provide PCS throughout the
balance of the territory covered by the Washington-Baltimore License (which
right shall be exercised by the Triton Entities in accordance with the terms of
the Stockholders' Agreement). At the Closing, Triton License Company shall, and
the Company will cause Triton License Company to, assign to AT&T PCS, free and
clear of any Liens, in full consideration for a License for the Athens, GA BTA
within the Atlanta MTA described in Section 2.2(a)(i)(A), the
Cumberland/Hagerstown Exchanged License, and AT&T PCS shall assign to Triton
License Company free and clear of any Liens, in full consideration for the
Cumberland/Hagerstown Exchanged License, a License for the Athens, GA BTA within
the Atlanta MTA described in Section 2.2(a)(i)(A) (such transactions relating to
such exchange are herein collectively referred to as the "License Exchange").
----------------
(b) Notwithstanding anything to the contrary herein contained, with
respect to the License Exchange, (i) AT&T PCS is not selling, transferring or
assigning to the Triton Entities pursuant to this Agreement any assets, rights
or properties other than a License for the Athens, GA BTA within the Atlanta MTA
described in Section 2.2(a)(i)(A), and (ii) the Triton Entities are not selling,
transferring or assigning to AT&T PCS pursuant to this Agreement any assets,
rights or properties other than the Cumberland/Hagerstown Exchanged License.
(c) The parties hereby agree that the License Exchange shall be
treated as a like kind exchange of property pursuant to Section 1031 of the
Code.
2.3 Payment of Consideration for the License Contribution. Upon the terms
-----------------------------------------------------
and subject to the conditions hereof and in reliance upon the representations,
warranties, covenants and agreements herein contained, at the Closing, in
consideration of the License Contribution, the Company shall issue and deliver
to AT&T PCS (i) 53,881.64 shares of the Company's Series A Convertible
Preferred Stock, par value $0.01 per share ("Series A Preferred Stock"), and
------------------------
(ii) 42,738.98 shares of the Company's Series D Convertible Preferred Stock, par
value
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<PAGE>
$0.01 per share ("Series D Preferred Stock" and, collectively with the shares of
------------------------
Series A Preferred Stock issued and delivered to AT&T PCS pursuant to Section
2.3(i), the "Purchase Price"). The Company shall not issue or deliver any
--------------
securities in connection with the License Exchange.
2.4 Issuance of Securities to Management Stockholders and Independent
-----------------------------------------------------------------
Directors.
- ---------
(a) Upon the terms and subject to the conditions hereof and in
reliance upon the representations warranties, covenants and agreements contained
in the Joinder of Management Stockholders and Independent Directors attached
hereto, in consideration of the Transactions, the Company shall issue, sell and
deliver to the Management Stockholders and the Independent Directors the
following Securities at the Closing:
(i) to each of the Management Stockholders, the number of shares
of the Company's Common Stock, par value $.01 per share ("Common Stock"), set
------------
forth opposite his name on Schedule IV; and
(ii) to each of the Independent Directors, the number of shares of
Common Stock set forth opposite his name on Schedule III.
(b) On the Closing Date, the Company shall deliver to the Management
Stockholders and Independent Directors, certificates duly executed by authorized
signatories of the Company, representing the shares of Common Stock to be issued
in accordance with Section 2.4(a).
2.5 Payment of Certain Expenses. The Company agrees, in the event the
---------------------------
Transactions are consummated, to pay, and save AT&T PCS harmless against, the
reasonable and documented fees and disbursements of AT&T PCS's counsel in
connection with (i) the preparation, negotiation, execution and delivery of this
Agreement, and the instruments and documents executed pursuant hereto or in
connection herewith, and (ii) the consummation of the Transactions, including
all legal fees and related expenses incurred in connection with the preparation
and filing of applications on Form 603 with the FCC necessary to effect the
License Exchange and the License Contribution.
2.6 Restrictive Legends. Each certificate representing Securities
-------------------
(including the Securities originally issued hereunder or delivered upon
conversion of the Series A Preferred Stock or Series D Preferred Stock, or
delivered in substitution or exchange for any of the foregoing) will bear a
legend reading substantially as follows until such Securities have been sold
pursuant to an effective registration statement under the Securities Act, Rule
144 under the Securities Act, or an opinion of counsel reasonably satisfactory
in form and substance to the Company and otherwise in full compliance with any
other applicable restrictions on transfer, including those contained in this
Agreement and the Stockholders' Agreement:
-9-
<PAGE>
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE `ACT'), OR UNDER ANY STATE SECURITIES OR `BLUE SKY' LAWS. SAID
SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF, UNLESS AND UNTIL REGISTERED UNDER THE ACT AND THE RULES
AND REGULATIONS THEREUNDER AND ALL APPLICABLE STATE SECURITIES OR `BLUE SKY'
LAWS OR EXEMPTED THEREFROM UNDER THE ACT AND ALL APPLICABLE STATE SECURITIES OR
`BLUE SKY' LAWS."
2.7 Allocation of Purchase Price. On or prior to the Closing Date, the
----------------------------
Company and AT&T PCS shall mutually agree upon the allocation of the Purchase
Price paid pursuant to the License Contribution. The parties agree that such
allocation shall be made based upon the fair market value of the License being
transferred pursuant to the License Contribution as of the Closing Date. In the
absence of mutual agreement within such period, the parties shall submit
promptly the determination of such allocation to the Independent Accountant who
will be engaged by the parties to allocate the Purchase Price for such License
being transferred pursuant to the License Contribution based upon its relative
fair market value as of the Closing Date. The determination of the Independent
Accountant shall be final, binding and conclusive on the parties hereto, and the
fees and expenses of the Independent Accountant shall be borne equally by the
parties. The Company and AT&T PCS agree to file all tax returns and reports,
including Internal Revenue Service Form 8594, in accordance with such allocation
and not to take any position inconsistent therewith unless required to do so
pursuant to a "determination" as such term is defined in Section 1313 of the
Code.
ARTICLE III
CLOSING
-------
3.1 Time and Place of Closing. Upon the terms and subject to the
-------------------------
conditions hereof, the closing of the Transactions (the "Closing") shall take
-------
place at the offices of Friedman Kaplan & Seiler LLP, 875 Third Avenue, New
York, New York, at 10:00 a.m. local time on the twelfth Business Day following
the date of receipt of the last Consent required by subsections (a) through (c)
of Section 7.1, or at such other place and/or time and/or on such other date as
the parties may agree or as may be necessary to permit the fulfillment or waiver
of the conditions set forth in Article VII (the "Closing Date"). The Closing
------------
shall be deemed to have occurred as of 12:01 a.m. on the Closing Date.
3.2 Closing Actions and Deliveries. Upon the terms and subject to the
------------------------------
satisfaction or waiver by the appropriate party, if applicable, of the
conditions set forth in Article VII, to consummate the Transaction, the parties
shall on the Closing Date take the following actions:
-10-
<PAGE>
(a) AT&T PCS Deliveries. AT&T PCS shall execute and deliver (or
-------------------
cause to be executed and delivered) to the Company :
(i) one or more instruments of assignment, substantially in the form
of Exhibit 3.2(a)(i), sufficient to assign to Triton License Company the AT&T
PCS Transferred License;
(ii) the opinion of Friedman Kaplan & Seiler LLP, dated the Closing
Date, addressed to the Triton Entities (and its lenders, if applicable) and
substantially in the form of Exhibit 3.2(a)(ii);
(ii) the opinion of Young & Jatlow, dated the Closing Date, addressed
to the Company (and its lenders, if applicable) and substantially in the form of
Exhibit 3.2(a)(iii);
(iv) a certificate of an officer of AT&T PCS, dated the Closing Date,
certifying as to the fulfillment of the conditions set forth in Sections 7.2(a)
and 7.2(b) and that each of the conditions precedent to the obligations of AT&T
PCS hereunder have been waived by AT&T PCS or have been satisfied;
(v) a certificate of an officer of AT&T PCS, dated the Closing Date,
certifying as to (A) the resolutions adopted by AT&T PCS duly authorizing the
execution, delivery and performance of this Agreement by AT&T PCS and the
execution and delivery by AT&T PCS of all instruments and documents contemplated
hereby, and (B) the signatures of the Persons who have been authorized to
execute and deliver this Agreement on behalf of AT&T PCS and any other agreement
executed or to be executed in connection herewith;
(vi) a good standing certificate of AT&T PCS from the Secretary of
State of Delaware, dated no earlier than 30 days prior to the Closing;
(vii) the Related Agreement Amendments executed by any AT&T Party
thereto; and
(viii) all such other documents and instruments as the Company or its
counsel may reasonably request in order to consummate the Transactions.
(b) Triton Entity Deliveries. The Triton Entities shall execute and deliver
------------------------
(or cause to be executed and delivered) to AT&T PCS:
(i) certificates duly executed by authorized signatories of the
Company, representing the shares of Series A Preferred Stock and Series D
Preferred Stock to be issued in accordance with Section 2.3;
-11-
<PAGE>
(ii) one or more instruments of assignment, substantially in the form
of Exhibit 3.2(b)(ii), sufficient to assign to AT&T PCS the
Cumberland/Hagerstown Exchanged License;
(iii) the opinion of Kleinbard, Bell & Brecker LLP, dated the Closing
Date, addressed to AT&T PCS and substantially in the form of Exhibit
3.2(b)(iii);
(iv) the opinion of Latham & Watkins, dated the Closing Date,
addressed to AT&T PCS and substantially in the form of Exhibit 3.2(b)(iv);
(v) a certificate of an officer of each Triton Entity, dated the
Closing Date, certifying as to the fulfillment of the conditions set forth in
Sections 7.3(a) and 7.3(b) and that each of the conditions precedent to the
obligations of such Triton Entity hereunder have been waived by such Triton
Entity or have been satisfied;
(vi) a certificate of an officer of each Triton Entity, dated the
Closing Date, certifying as to (A) the resolutions adopted by such Triton Entity
duly authorizing the execution, delivery and performance of this Agreement by
such Triton Entity and the execution and delivery by such Triton Entity of all
instruments and documents contemplated hereby, and (B) the signatures of the
Persons who have been authorized to execute and deliver this Agreement on behalf
of such Triton Entity and any other agreement executed or to be executed in
connection herewith;
(vii) a good standing certificate of each Triton Entity from the
Secretary of State of Delaware, dated no earlier than 30 days prior to the
Closing;
(vi the Related Agreement Amendments executed by the parties
thereto (other than any AT&T Party);
(ix a copy of the Restated Certificate Amendment certified by
the Secretary of State of the State of Delaware; and
(x) all such other documents and instruments as AT&T PCS or its
counsel may reasonably request in order to consummate the Transactions.
3.3 Closing Costs; Taxes and Fees. The Company shall pay or cause to be
-----------------------------
paid at the Closing or, if due prior to the Closing or thereafter, promptly when
due: (i) all gross receipts taxes, transfer taxes, sales taxes, stamp taxes,
and any other taxes, but excluding any Federal, State or local income taxes (or
franchise taxes similar to income taxes) payable by AT&T PCS, if any, in
connection with the Transactions; and (ii) one fee under the HSR Act relating to
the Transactions hereunder. AT&T PCS shall pay or cause to be paid at the
Closing, or if due prior to the Closing or thereafter, promptly when due, any
additional fee under the HSR Act that may be required to consummate the
Transactions.
-12-
<PAGE>
ARTICLE IV
COVENANTS
---------
4.1 Consummation of Transactions. Each party shall use (except as
----------------------------
otherwise provided in this Section 4.1) all commercially reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable and consistent with applicable Law to
carry out all of their respective obligations under this Agreement and the
Related Agreements Amendments and to consummate the Transactions, which efforts
shall include the following:
(a) The parties shall use all commercially reasonable efforts to cause
the Closing to occur and the Transactions to be consummated in accordance with
the terms hereof, and, without limiting the generality of the foregoing, to
obtain all necessary Consents including the approval of this Agreement and the
Transactions by all Governmental Authorities and agencies, including the FCC,
and any Consents necessary or advisable in the reasonable judgment of AT&T PCS
in connection with franchise laws applicable to the execution, delivery and
performance of this Agreement or the Related Agreement Amendments or the
consummation of the Transactions, and to make all filings with and to give all
notices to third parties which may be necessary or reasonably required in order
for the parties to consummate the Transactions.
(b) Each party shall furnish to the other party all information
concerning such party and its Affiliates reasonably required for inclusion in
any application or filing to be made by AT&T PCS, the Company, Triton License
Company or any other party in connection with the Transactions or otherwise to
comply with applicable FCC Law.
(c) Upon the request of another party, each party shall forthwith
execute and deliver, or cause to be executed and delivered, such further
instruments of assignment, transfer, conveyance, endorsement, direction or
authorization and other documents as may reasonably be requested by such party
in order to effectuate the purposes of this Agreement and the Related Agreements
Amendments.
(d) Each party covenants and agrees from and after the execution and
delivery of this Agreement to and including the Closing Date as follows:
(i) As reported by Public Notice issued by the FCC (Report No. 204
dated April 14, 1999), the parties acknowledged that the FCC approved separately
filed applications by each of AT&T PCS and Triton License Company, respectively,
requesting FCC Consent to the assignment of, in the case of AT&T PCS, the AT&T
PCS Transferred License and, in the case of Triton License Company, the
Cumberland/Hagerstown Exchanged License. Each party hereby agrees to use its
best efforts to take, or forbear from taking, all such actions, so as to
maintain such approval in full force and effect and not to engage in, or forbear
from engaging in, any activity which would result in the revocation or
modification of such approval. In addition to FCC approval, it is understood
that the Closing may be subject to the prior
-13-
<PAGE>
approval of one or more state regulatory commissions. The parties shall use
their best efforts to file with any relevant state agency or agencies, as soon
as practicable following the date hereof and in no event later than ten (10)
Business Days from the date hereof, a joint application requesting the approval
of the License Exchange and the License Contribution. Each of the parties hereto
shall diligently take or cooperate in the taking of all steps which are
necessary or appropriate to expedite the prosecution and favorable consideration
of such applications. The parties covenant and agree to undertake all actions
reasonably requested by any regulatory authority and to file such material as
shall be necessary or any required to obtain any necessary waivers or other
authority from the any state agency or agencies in connection with the foregoing
applications.
(ii) Within fifteen (15) Business Days of the date of execution
hereof, the parties shall file, or cause to be filed, with the Federal Trade
Commission and the Antitrust Division of the Department of Justice any and all
reports or notifications which are required to be filed under the HSR Act or
other Law.
(e) Each party shall use all commercially reasonable efforts to modify
the structure of the Transactions in such a manner that no franchise laws shall
be applicable to the relationship between AT&T PCS (or its Affiliates) and the
Company; provided that, no party shall be obligated to agree to any modification
that adversely affects such party. The Company acknowledges that (i) the
Company and AT&T PCS and its Affiliates do not intend to create a franchise or
business opportunity relationship; (ii) the wireless telephones ("Telephones")
----------
if any, purchased by the Company from AT&T PCS and its Affiliates and minutes
for mobile wireless radiotelephonic service ("Minutes") purchased by the Company
-------
under the terms of the Roaming Agreement are being sold at bona fide wholesale
prices; (iii) the Company is not required by this Agreement or the Related
Agreements or as a matter of practical necessity to purchase more than a
reasonable quantity of Telephones or Minutes; and (iv) neither AT&T PCS nor any
of its Affiliates has made any representation to the Company that (a) the
Company or its equity holders will earn, or are likely to earn, a gross or net
profit, (b) AT&T PCS or any of its Affiliates has knowledge of the market that
the Company will operate in or that the market demand will enable the Company to
earn a profit, (c) there is a guaranteed market for the Company, or (d) AT&T PCS
or any of its Affiliates will provide the Company with locations or assist the
Company in finding locations for use or operation of its business. The Company
has been informed at least seven days prior to the execution of this Agreement
that AT&T PCS's principal business address is, and AT&T's agent for service of
process is, c/o AT&T Corp., 32 Avenue of the Americas, New York, New York 10013.
Notwithstanding the foregoing, no acknowledgment of the Company contained in
this Section 4.1(e) shall be deemed to alter, modify or otherwise amend any of
the Related Agreements or the rights and obligations of the parties thereunder.
Nothing in this Agreement shall be construed to require the parties to
consummate the Closing if any regulatory approval would require that it (i)
divest or hold separate any of its assets existing as of the date hereof other
than as contemplated by this Agreement and the Related Agreements or (ii)
otherwise take or commit to take any action that limits its freedom of action in
any
-14-
<PAGE>
material respect with respect to any of its businesses, product lines or assets
other than as contemplated by this Agreement or the Related Agreements.
4.2 Confidentiality.
---------------
(a) Each party shall, and shall cause each of its Affiliates, and its
and their respective shareholders, members, managers, directors, officers,
employees and agents (collectively, "Representatives") to, keep secret and
---------------
retain in strictest confidence any and all Confidential Information relating to
any other party that it receives in connection with the negotiation or
performance of this Agreement, and shall not disclose such Confidential
Information, and shall cause its Representatives not to disclose such
Confidential Information, to anyone except the receiving party's Affiliates and
Representatives and any other Person that agrees in writing to keep in
confidence all Confidential Information in accordance with the terms of this
Section 4.2. Until the Closing, each party agrees to use Confidential
Information received from another party only to pursue such Transactions, but
not for any other purpose. All tangible embodiments of Confidential Information
furnished pursuant to this Agreement shall be returned promptly to the party to
whom it belongs upon request by such party.
(b) The obligations set forth in Section 4.2(a) shall be inoperative
with respect to Confidential Information that (i) is or becomes generally
available to the public other than as a result of disclosure by the receiving
party or its Representatives, (ii) was available to the receiving party on a
non-confidential basis prior to its disclosure to the receiving party, or (iii)
becomes available to the receiving party on a non-confidential basis from a
source other than the providing party or its agents, provided, that such source
is not known by the receiving party to be bound by a confidentiality agreement
with the providing party or the providing party's agents.
(c) To the fullest extent permitted by Law, if a party or any of its
Affiliates or Representatives breaches, or threatens to commit a breach of, this
Section 4.2, the party whose Confidential Information shall be disclosed, or
threatened to be disclosed, shall have the right and remedy to have this Section
4.2 specifically enforced by any court having jurisdiction, it being
acknowledged and agreed that money damages will not provide an adequate remedy
to such party. Nothing in this Section 4.2 shall be construed to limit the
right of any party to collect money damages in the event of breach of this
Section 4.2.
(d) Anything else in this Agreement notwithstanding, each party shall
have the right to disclose any information, including Confidential Information
of the other party or such other party's Affiliates: (i) to the other party and
its Affiliates or Representatives; (ii) as otherwise required by Law, including
securities Laws; provided, that any such disclosure shall be as limited in scope
as possible and shall be made only after giving the other party as much notice
as practicable of such required disclosure and an opportunity to contest such
disclosure if possible; (iii) as required by its existing or potential lending
sources (such lending sources to acknowledge that any such Confidential
Information disclosed to them is subject to the
<PAGE>
provisions hereof); (iv) as required to enforce its rights under this Agreement;
(v) as required to obtain the Consents specified in Sections 7.1(a) through (c);
or (vi) in the case of the Company, relating solely to the AT&T PCS Transferred
License, and in the case of AT&T PCS, relating solely to the
Cumberland/Hagerstown Exchanged License, on and after the Closing Date.
4.3 AT&T PCS Retained License. AT&T PCS and its Affiliates may use the
-------------------------
AT&T PCS Retained License and may market and sell to their customers or others
any services that use such Licenses permitted under applicable Laws, in each
case as it may determine, and may otherwise deal with and permit others to deal
with the AT&T PCS Retained License except from and after the date hereof to the
extent otherwise expressly agreed by any AT&T Party in any of the Related
Agreements.
4.4 No Further Commitment. The parties acknowledge and agree that,
---------------------
except to the extent expressly set forth in this Agreement and the Related
Agreements, neither AT&T PCS nor any of its Affiliates has any legal,
contractual or other obligation to acquire debt or equity securities of the
Company, provide or arrange for debt or equity financing required by the
Company, provide services to or otherwise assist the Company in connection with
the conduct of its business or in any other manner, refrain from exercising its
rights under this Agreement and the Related Agreements (including the right to
terminate the Network Membership License Agreement in accordance with its terms)
or refrain from competing, directly or indirectly, with businesses conducted by
the Company. Nothing herein shall be construed to relieve any Person of its
express contractual obligations under this Agreement and the Related Agreements
or from any common Law obligation of good faith relating to its performance of
such contractual obligations.
4.5 Offering of Securities. None of the Company or any Person acting
----------------------
on its behalf will, directly or indirectly, take any action which might subject
the offering, issuance or sale of the Securities to the registration and
prospectus delivery requirements of Section 5 of the Securities Act.
4.6 Covenants of AT&T PCS. From and after the execution and delivery
---------------------
of this Agreement to and including the Closing Date, AT&T PCS shall:
(a) Comply with all applicable Laws relating to the Atlanta License
except to the extent that such failure to comply would not have an AT&T PCS
Material Adverse Effect or a material adverse effect on the Transactions;
(b) Use its reasonable best efforts to maintain the Atlanta License
in full force and effect;
(c) Without the Company's prior written consent, such consent not to
be unreasonably withheld, delayed or conditioned, not (i) create, incur or
suffer to exist any Lien of any nature whatsoever relating to the AT&T PCS
Transferred License or any interest therein, or
-16-
<PAGE>
(ii) enter into any contract or agreement relating exclusively to the AT&T PCS
Transferred License other than those which are terminable by AT&T PCS without
penalty or any liability at the Closing;
(d) Not sell, transfer, assign or dispose of, or offer to, or enter
into any agreement, arrangement or understanding to, sell, transfer, assign or
dispose of any of the AT&T PCS Transferred License or any interest therein, or
negotiate therefor;
(e) Furnish the Company with all such information concerning the AT&T
PCS Transferred License as the Company may reasonably request and cause the
appropriate officers, employees, consultants, agents, accountants and attorneys
of AT&T PCS to cooperate with the Company in connection with such review and
examination;
(f) Give written notice to the Company promptly upon the commencement
of, or upon obtaining knowledge of any facts that would give rise to a threat
of, any claim, action or proceeding commenced against or relating to (other than
proceedings affecting the PCS or wireless communications services industry
generally) the AT&T PCS Transferred License, and which would reasonably be
expected to have an AT&T PCS Material Adverse Effect or a material adverse
effect on the Transactions;
(g) Promptly after obtaining knowledge of the occurrence of, or the
impending or threatened occurrence of, any event which would cause or constitute
a material breach of any of its warranties, representations, covenants or
agreements contained in this Agreement, or which would reasonably be expected to
have an AT&T PCS Material Adverse Effect or a material adverse effect on the
Transactions, give notice in writing of such event or occurrence or impending or
threatened event or occurrence (provided, that such disclosure shall not be
deemed to cure any violation or breach of any such representation, warranty,
covenant, agreement or provision), to the Company and use commercially
reasonable efforts to prevent or to promptly remedy such breach; and
(h) Cause the Company to be advised promptly in writing of (i) any
event, condition or state of facts known to it, which has had or would
reasonably be expected to have an AT&T PCS Material Adverse Effect or a material
adverse effect on the Transactions (other than proceedings affecting the PCS or
wireless communications services industry generally), (ii) any claim, action or
proceeding which seeks to enjoin the consummation of the Transactions, and (iii)
any event, occurrence, transaction or other item that would have been required
to have been disclosed on any Exhibit or Schedule delivered hereunder, had such
event, occurrence, transaction or item existed on the date hereof.
4.7 Covenants of the Triton Entities. From and after the
--------------------------------
execution and delivery of this Agreement to and including the Closing Date, each
Triton Entity shall:
-17-
<PAGE>
(a) Comply with all applicable Laws, including all such Laws relating
to the Washington-Baltimore License, except to the extent that such failure to
comply would not have a Company Material Adverse Effect or a material adverse
effect on the Transactions;
(b) Use its reasonable best efforts to maintain the Washington-
Baltimore License in full force and effect;
(c) Without the prior written consent of AT&T PCS, such consent not
to be unreasonably withheld, delayed or conditioned, not (i) create, incur or
suffer to exist any Lien of any nature whatsoever relating to the
Cumberland/Hagerstown Exchanged License or any interest therein, or (ii) enter
into any contract or agreement relating exclusively to the Cumberland/Hagerstown
Exchanged License other than those which are terminable by the Company without
penalty or any liability at the Closing;
(d) Not sell, transfer, assign or dispose of, or offer to, or enter
into any agreement, arrangement or understanding to, sell, transfer, assign or
dispose of the Cumberland/Hagerstown Exchanged License or any interest therein,
or negotiate therefor;
(e) Furnish AT&T PCS with all such information concerning the
Cumberland/Hagerstown Exchanged License as AT&T PCS may reasonably request and
cause the appropriate officers, employees, consultants, agents, accountants and
attorneys of such Triton Entity to cooperate with AT&T PCS in connection with
such review and examination;
(f) Give written notice to AT&T PCS promptly upon the commencement
of, or upon obtaining knowledge of any facts that would give rise to a threat
of, any claim, action or proceeding commenced against or relating to (other than
proceedings affecting the PCS or wireless communications services industry
generally) the Cumberland/Hagerstown Exchanged License, its properties or
assets, and which would reasonably be expected to have a Company Material
Adverse Effect or a material adverse effect on the Transactions;
(g) Promptly after obtaining knowledge of the occurrence of, or the
impending or threatened occurrence of, any event which would cause or constitute
a material breach of any of its warranties, representations, covenants or
agreements contained in this Agreement, or which would reasonably be expected to
have a Company Material Adverse Effect or a material adverse effect on the
Transactions, give notice in writing of such event or occurrence or impending or
threatened event or occurrence (provided, that such disclosure shall not be
deemed to cure any violation or breach of any such representation, warranty,
covenant, agreement or provision), to AT&T PCS and use commercially reasonable
efforts to prevent or to promptly remedy such breach;
(h) Cause AT&T PCS to be advised promptly in writing of (i) any
event, condition or state of facts known to it, which has had or would
reasonably be expected to have a Company Material Adverse Effect or a material
adverse effect on the Transactions (other than
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proceedings affecting the PCS or wireless communications services industry
generally), (ii) any claim, action or proceeding which seeks to enjoin the
consummation of the Transactions, and (iii) any event, occurrence, transaction
or other item that would have been required to have been disclosed on any
Exhibit or Schedule delivered hereunder, had such event, occurrence, transaction
or item existed on the date hereof; and
(i) The Company shall use its reasonable best efforts to cause the
Restated Certificate Amendment to be (A) authorized and approved by the
Company's Board of Directors and the stockholders of the Company and, (B) duly
executed by the appropriate officers of the Company and filed with the Secretary
of State of the State of Delaware.
4.8 Non-Solicitation.
----------------
(a) From the date hereof until the Closing Date, AT&T PCS (and any of
AT&T PCS's officers, directors, partners, employees, representatives or agents)
with respect to the AT&T PCS Transferred License, and each Triton Entity (and
any of such Triton Entity's officers, directors, partners, employees,
representatives or agents) with respect to the Cumberland/Hagerstown Exchanged
License, will not solicit, initiate, encourage or participate in negotiations in
any manner with respect to, or furnish or cause or permit to be furnished any
information to any Person (other than to the Company or the Company's
representatives) in connection with, any inquiry or offer for any purchase or
sale of any of, in the case of AT&T PCS, the AT&T PCS Transferred License, and
in the case of each Triton Entity, the Cumberland/Hagerstown Exchanged License
(collectively, a "Third-Party Proposal"). During such period, AT&T PCS or such
--------------------
Triton Entity, as the case may be, shall promptly inform the other parties of
the occurrence of a Third-Party Proposal and the terms thereof (including the
identity of the prospective soliciting party).
(b) If any party (or any of such party's respective officers,
directors, partners, employees, representatives or agents) breaches or threatens
to commit a breach of any of the provisions of this section, the non-breaching
party shall have the right (in addition to any other rights and remedies
available to it at law or in equity) to equitable relief (including injunctions)
against such breach or threatened breach, it being acknowledged and agreed that
any such breach or threatened breach will cause irreparable harm to such
non-breaching party and that money damages would not be an adequate remedy to
the such non-breaching party. Each party agrees that it will not seek, and
hereby waives any requirement for, the securing or posting of a bond or proving
actual damages in connection with such non-breaching party's seeking or
obtaining such relief.
4.9 FCC Construction Requirement. The Triton Entities and AT&T PCS
----------------------------
hereby agree that the Triton Entities shall (i) assume and be obligated to
satisfy the construction requirements set forth in 47 C.F.R. 24.203 with respect
to the Atlanta License covering the Athens, GA BTA and Bryan County, GA, Chatham
County, GA, Effingham County, GA and Liberty County, GA; and (ii) be released
from the obligation to provide "substantial service" (as
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defined in 47 C.F.R. 24.16(a)) throughout the territory covered by the
Cumberland/Hagerstown Exchanged License.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF AT&T PCS
------------------------------------------
AT&T PCS represents and warrants as to itself and each other AT&T
Party to the Company as follows:
5.1 Organization, Power and Authority.
---------------------------------
(a) It is a corporation duly organized, validly existing and in good
standing under the Laws of its jurisdiction of incorporation.
(b) It has the requisite power and authority to execute, deliver and
perform this Agreement, each Related Agreement Amendment to which it is (or will
be) a party and each other instrument, document, certificate and agreement
required or contemplated to be executed, delivered and performed by it hereunder
and thereunder to which it is or will be a party and to consummate the
Transactions.
(c) It is duly qualified to do business in each jurisdiction where the
nature of its activities makes such qualification necessary other than any such
jurisdiction in which the failure to be so qualified would not have an AT&T PCS
Material Adverse Effect or a material adverse effect on the Transactions.
(d) The execution and delivery of this Agreement by it and the
consummation of the Transactions by it, including the execution and delivery of
the Related Agreement Amendments to which it is (or will be) a party, have been
duly and validly authorized by its Board of Directors (or equivalent body) and
no other proceedings on its part which have not been taken (including approval
of its stockholders, partners or members) are or, in the case of the Related
Agreement Amendments will be, necessary to authorize this Agreement or the
Related Agreement Amendments or to consummate the Transactions.
(e) This Agreement has been duly executed and delivered by it and
constitutes its valid and binding obligation, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar Laws affecting or relating
to enforcement of creditors' rights generally or may be subject to general
principles of equity. Each of the Related Agreement Amendments to which it is a
party shall be duly executed and delivered by it at (or prior to) the Closing
and, upon such execution and delivery, shall constitute its valid and binding
obligation, enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
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moratorium or other similar Laws affecting or relating to enforcement of
creditors' rights generally and may be subject to general principles of equity.
(f) As of the Closing Date, after giving effect to the Transactions,
it will not be in breach of any obligation under this Agreement or any of the
Related Agreement Amendments.
5.2 Consents; No Conflicts. Neither the execution, delivery and
----------------------
performance by it of this Agreement and the Related Agreement Amendments to
which it is a party, nor the consummation of the Transactions will (a) conflict
with, or result in a breach or violation of, any provision of its organizational
documents; (b) constitute, with or without the giving of notice or passage of
time or both, a breach, violation or default, create a Lien on the AT&T PCS
Transferred License, or give rise to any right of termination, modification,
cancellation, prepayment or acceleration, under (i) any Law or the AT&T PCS
Transferred License or (ii) any note, bond, mortgage, indenture, lease,
agreement or other instrument, in each case which is applicable to or binding
upon it or any of its assets; or (c) require any Consent, other than those set
forth on Schedule 5.2, except in the case of clauses (a) and (b), where such
breach, violation, default, Lien or right would not have an AT&T PCS Material
Adverse Effect or a material adverse effect on the Transactions. To its
knowledge, there is no fact relating to it or its Affiliates that would be
reasonably expected to prevent it from consummating the Transactions or
performing its obligations under this Agreement or the Related Agreement
Amendments or disqualify AT&T PCS from obtaining the Consents (including the
Consent of the FCC) required in order to consummate the Transactions.
5.3 Litigation. There is no action, proceeding or investigation pending
----------
or, to its knowledge, threatened against it or any of its properties or assets
that, if adversely determined, would be reasonably expected to have a material
adverse effect on its ability to consummate the Transactions or to fulfill its
obligations under this Agreement or the Related Agreement Amendments or which
seeks to prevent or challenge the Transactions.
5.4 FCC Compliance. To its knowledge, it is in compliance with all
--------------
eligibility rules issued by the FCC to hold broadband PCS Licenses, including
FCC rules on foreign ownership and the CMRS spectrum cap. To its knowledge, the
fact that it will own the interest in the Company contemplated by this Agreement
will not cause the Company or its wholly owned Subsidiaries to be ineligible
under FCC rules to hold PCS Licenses in general or the AT&T PCS Transferred
License.
5.5 Brokers. It has not employed any broker, finder or investment
-------
banker and has not incurred and will not incur any liability for any brokerage
fees, commissions or finder's fees in connection with the Transactions.
5.6 License. AT&T PCS is the authorized legal holder, free and clear of
-------
any Liens, of the Atlanta License evidence of which is attached as Schedule I.
The AT&T PCS Transferred
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License is, and on the Closing Date the AT&T PCS Transferred License will be,
valid and in full force and effect. Except for proceedings affecting the PCS or
wireless communications services industry generally, there is not pending, nor
to the knowledge of AT&T PCS, threatened against AT&T PCS or against the AT&T
PCS Transferred License, any application, action, petition, objection or other
pleading, or any proceeding with the FCC which questions or contests the
validity of, or seeks the revocation, nonrenewal or suspension of, the AT&T PCS
Transferred License, which seeks the imposition of any modification or amendment
with respect thereto, or which adversely affects the ability of the Company to
employ the AT&T PCS Transferred License in its business after the Closing Date.
The Atlanta License is not subject to any conditions other than those appearing
on the face of the Atlanta License itself, and those imposed by FCC Law.
5.7 Compliance With Laws. With respect to the Atlanta License, AT&T PCS
--------------------
is in, and has operated in, compliance with all applicable Laws, including all
FCC Laws, except for noncompliance that, individually or in the aggregate, has
not and would not reasonably be expected to have an AT&T PCS Material Adverse
Effect. AT&T PCS has not received notice to the effect that, or otherwise been
advised that, it is not in compliance with any Laws with respect to the Atlanta
License and AT&T PCS has not taken any action or failed to take any action that
is a violation of any such Laws with respect to the Atlanta License, except for
actions or failures to take action that, individually or in the aggregate, have
not and would not reasonably be expected to have an AT&T PCS Material Adverse
Effect or a material adverse effect on the Transactions.
5.8 No Distribution. It is acquiring the Securities to be acquired by
---------------
it hereunder for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof (other than in compliance with the
Stockholders' Agreement and the Securities Act and all applicable state
securities laws).
5.9 Investor Acknowledgments.
------------------------
(a) It is an "accredited investor" as defined in Regulation D of the
Securities Act. Its representatives have been provided an opportunity to ask
questions of, and have received answers thereto from, the Company and its
representatives regarding the terms and conditions of its acquisition of
Securities, and the Company and its proposed business generally, and have
obtained all additional information requested by it to verify the accuracy of
all information furnished to it in connection with such purchase. It is an
existing stockholder of the Company, owning on the date hereof 732,371 shares of
the Series A Preferred Stock and 366,131 shares of Series D Preferred Stock.
(b) It has such knowledge and experience in financial and business
affairs that it is capable of evaluating the merits and risks of acquiring the
Securities it is acquiring hereunder.
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<PAGE>
(c) It is not relying on and acknowledges that no representation is
being made by the Company or any of its officers, employees, Affiliates, agents
or representatives, except for representations and warranties expressly set
forth in this Agreement (including the Exhibits and Schedule attached hereto),
and, in particular, it is not relying on, and acknowledges that no
representation is being made in respect of, (i) any projections, estimates or
budgets delivered to or made available to it of future revenues, expenses or
expenditures, or future results of operations and (ii) any other information or
documents delivered or made available to it or its representatives, except for
representations and warranties expressly set forth in this Agreement (including
the Exhibits and Schedule attached hereto) and such information and documents
obtained by it as a stockholder of the Company and through its representative
who serves as a member of the Company's board of directors.
(d) In deciding to invest in the Company, it has relied exclusively on
the representations and warranties expressly set forth in this Agreement,
investigations made by itself and its representatives and its and such
representatives' knowledge of the industry in which AT&T PCS and the Company
operate. Based solely on such representations and warranties and such
investigations and knowledge and such information obtained by AT&T PCS by virtue
of its status as a stockholder of the Company and through its representative who
serves as a member of the Company's board of directors, it has determined that
the Securities it is acquiring are a suitable investment for it.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE TRITON ENTITIES
----------------------------------------------------
Each Triton Entity, jointly and severally, represents and warrants, as
to itself and each of its Subsidiaries, to AT&T PCS as follows:
6.1 Organization, Power and Authority.
---------------------------------
(a) Each of the Company and each Subsidiary of a Triton Entity that
is a corporation, is a corporation duly organized, validly existing and in good
standing under the laws of Delaware and has the requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted and proposed to be conducted. Each of Triton License
Company and each Subsidiary of a Triton Entity that is a limited liability
company, is duly formed, validly existing and in good standing under the Laws of
the State of Delaware and has the requisite power and authority to own, lease
and operate its properties and to carry on its business as now being conducted
and as proposed to be conducted.
(b) It has the requisite power and authority to execute, deliver and
perform this Agreement, each Related Agreement Amendment to which it is (or will
be) a party, and each other instrument, document, certificate and agreement
required or contemplated to be executed,
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delivered and performed by it hereunder and thereunder to which it is or will be
a party and to consummate the Transactions.
(c) It is duly qualified to do business in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary other than any such jurisdiction
in which the failure to be so qualified would not have a Company Material
Adverse Effect or a material adverse effect on the Transactions.
(d) The execution and delivery of this Agreement by it and the
consummation of the Transactions by it, including the execution and delivery of
the Related Agreement Amendments to which it is (or will be) a party, have been
duly and validly authorized by its Board of Directors (or equivalent body) and
no other proceedings on its part which have not been taken (including
stockholders) are or, in the case of the Related Agreement Amendments, will be,
necessary to authorize this Agreement, the Related Agreement Amendments or to
consummate the Transactions.
(e) This Agreement has been duly executed and delivered by it and
constitutes its valid and binding obligation, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar Laws affecting or relating
to enforcement of creditors' rights generally or may be subject to general
principles of equity. Each of the Related Agreement Amendments to which it is a
party shall be duly executed and delivered by it at (or prior to) the Closing
and, upon such execution and delivery, shall constitute its valid and binding
obligation, enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar Laws affecting or relating to enforcement of creditors' rights generally
and may be subject to general principles of equity.
(f) As of the Closing, after giving effect to the Transactions, it
will not be in breach of any obligation under this Agreement or any of the
Related Agreement Amendments.
6.2 Consents; No Conflicts. Neither the execution, delivery and
----------------------
performance by it of this Agreement and the Related Agreement Amendments to
which it is a party, nor the consummation of the Transactions will (a) conflict
with, or result in a breach or violation of, any provision of its organizational
documents; (b) constitute, with or without the giving of notice or passage of
time or both, a breach, violation or default, create a Lien on its assets,
including the Cumberland/Hagerstown Exchanged License, or give rise to any right
of termination, modification, cancellation, prepayment or acceleration, under
(i) any Law or the Cumberland/Hagerstown Exchanged License, or (ii) any note,
bond, mortgage, indenture, lease, agreement or other instrument, in each case
which is applicable to or binding upon it or any of its assets; or (c) require
any Consent, other than those set forth on Schedule 6.2 or the approval of its
Board of Directors, except in the case of clauses (a) and (b) where such breach,
violation, default, Lien or right would not have a Company Material Adverse
Effect or a material adverse effect on the Transactions. To its knowledge,
there is no fact relating to it or its Affiliates that would be
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<PAGE>
reasonably expected to prevent it from consummating the Transactions or
performing its obligations under this Agreement or the Related Agreement
Amendments or disqualify it from obtaining the Consents (including the Consent
of the FCC) required in order to consummate the Transactions.
6.3 Litigation. There is no action, proceeding or investigation
----------
pending or, to its knowledge, threatened against it or any of its properties or
assets that, if adversely determined, would have a material adverse effect on
its ability to consummate the Transactions or to fulfill its obligations under
this Agreement or the Related Agreement Amendments, or to operate its business
after the Closing Date, or which seeks to prevent or challenge the Transactions.
There is no judgment, decree, injunction, rule or order outstanding against the
Company which would limit in any material respect its ability to operate its
business in the manner currently contemplated.
6.4 FCC Compliance. It complies, and after giving effect to the
--------------
consummation of the Transactions will comply, with all eligibility rules issued
by the FCC to hold broadband PCS Licenses, including FCC rules on foreign
ownership and the CMRS spectrum cap.
6.5 Brokers. It has not employed any broker, finder or investment
-------
banker and has not incurred and will not incur any liability for any brokerage
fees, commissions or finder's fees in connection with the Transactions.
6.6 Stockholders' Agreement. From and after February 4, 1998, through
-----------------------
and including the Closing Date, the Company has performed, or will perform, all
covenants and agreements required to be performed by it pursuant to the
Stockholders' Agreement.
6.7 Capitalization.
--------------
(a) As of the date hereof, the authorized capital stock of the
Company consists of 10,000,000 shares of Common Stock, 1,000,000 shares of the
Company's Series A Convertible Preferred Stock, 2,000,000 shares of the
Company's Series B Preferred Stock, par value $.01 per share ("Series B
--------
Preferred Stock"), 3,000,000 shares of Series C Convertible Preferred Stock, par
- ---------------
value $0.01 per share ("Series C Preferred Stock"), and 1,000,000 shares of
------------------------
Series D Preferred Stock. As of the date hereof, there have been issued and are
outstanding 268,459.01 shares of Common Stock, 732,371 shares of Series A
Preferred Stock, no shares of Series B Preferred Stock, 1,195,186.51 shares of
Series C Preferred Stock and 500,944.49 shares of Series D Preferred Stock. The
record and beneficial owners of such outstanding shares of Capital Stock of the
Company as of the date hereof are set forth on Schedule 6.7(a).
(b) As of the date hereof, except as set forth on Schedule 6.7(b),
there are not any existing options, warrants, calls, subscriptions, or other
rights, or other agreements or commitments, obligating the Company to issue,
transfer or sell any shares of its Capital Stock, except the Securities
hereunder.
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<PAGE>
6.8 Shares. The Series A Preferred Stock and Series D Preferred Stock
------
being issued to AT&T PCS hereunder, and the shares of Common Stock being issued
to the Management Stockholders and the Independent Directors hereunder, when
issued pursuant to the terms of this Agreement, will be duly authorized, validly
issued, fully paid and non-assessable, and will be free of any Liens caused or
created by the Company, except as set forth in the Stockholders' Agreement and
the Restated Certificate of Incorporation of the Company. The Securities issued
upon conversion of the Series A Preferred Stock and Series D Preferred Stock,
when issued pursuant to the terms of the Series A Preferred Stock or Series D
Preferred Stock, as the case may be, will be validly issued, fully paid and non-
assessable, and will be free of any Liens caused or created by the Company,
except as set forth in the Stockholders' Agreement and the Certificate of
Incorporation of the Company.
6.9 License. Triton License Company is the authorized legal holder,
-------
free and clear of any Liens, of the Washington-Baltimore License, evidence of
which is attached as Schedule II. The Cumberland/Hagerstown Exchanged License
is, and on the Closing Date the Cumberland/Hagerstown Exchanged License will be,
valid and in full force and effect. Except for proceedings affecting the PCS or
wireless communications services industry generally, there is not pending, nor
to the knowledge of it, threatened against it or against the
Cumberland/Hagerstown Exchanged Licenses, any application, action, petition,
objection or other pleading, or any proceeding with the FCC which questions or
contests the validity of, or seeks the revocation, nonrenewal or suspension of,
the Cumberland/Hagerstown Exchanged License, which seeks the imposition of any
modification or amendment with respect thereto, or which adversely affects the
ability of it to employ the Cumberland/Hagerstown Exchanged License in its
business after the Closing Date. The Washington-Baltimore License is not
subject to any conditions other than those appearing on the face of the
Washington-Baltimore License itself and those imposed by FCC Law.
6.10 No Additional Representations. It is not relying on and
-----------------------------
acknowledges that no representation or warranty is being made by AT&T PCS or any
of its officers, employees, Affiliates, agents or representatives, except for
representations and warranties expressly set forth in this Agreement (including
the Exhibits and Schedule attached hereto), and, in particular, it is not
relying on, and acknowledges that no representation or warranty is being made in
respect of, (i) any projections, estimates or budgets delivered to or made
available to them of future revenues, expenses or expenditures, or future
results of operations, and (ii) any other information or documents delivered or
made available to it or its representatives, except for representations and
warranties expressly set forth in this Agreement (including the Exhibits and
Schedule attached hereto).
6.11 Compliance With Laws. It is in, and has operated in, compliance
--------------------
with all applicable Laws, including all FCC Laws, except for noncompliance that,
individually or in the aggregate, has not and would not reasonably be expected
to have a Company Material Adverse Effect. It has not received notice to the
effect that, or otherwise been advised that, it is not in compliance with any
Laws, including with respect to the Washington-Baltimore License, and it
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has not taken any action or failed to take any action that is a violation of any
such Laws, including with respect to the Washington-Baltimore License, except
for actions or failures to take action that, individually or in the aggregate,
have not and would not reasonably be expected to have a Company Material Adverse
Effect or a material adverse effect on the Transactions.
6.12 No Material Adverse Effect. Since December 31, 1998, there has
--------------------------
been no Company Material Adverse Effect.
6.13 Subsidiaries. Except for the Liens set forth on Schedule 6.13,
------------
the Company owns directly or indirectly all of the outstanding shares of Capital
Stock of each of its Subsidiaries, free and clear of any Liens. Set forth on
Schedule 6.13 is a complete list of its direct and indirect Subsidiaries
indicating the jurisdictions in which each such Subsidiary is organized or
qualified to conduct business.
6.14 Offering of Securities.
----------------------
(a) None of the Company or any Person acting on its behalf has
offered the Securities or any similar equity securities of the Company for sale
to, or solicited any offers to buy Securities or any similar equity securities
of the Company from, any Person, other than the Stockholders (as such term is
defined in the Stockholders' Agreement) and a limited number of other
"accredited investors" (as defined in Rule 501(a) under the Securities Act).
(b) Assuming the accuracy of the representations and warranties of
the AT&T PCS, in Section 5.8 and 5.9, the offering and sale of Securities under
this Agreement to AT&T PCS, complies with all applicable requirements of Federal
and state securities Laws.
ARTICLE VII
CLOSING CONDITIONS
------------------
7.1 Conditions to Obligations of All Parties. The obligation of each
----------------------------------------
of the parties to consummate the Transactions contemplated to occur at the
Closing shall be conditioned on the following, unless waived, in writing, by
each of the parties at or prior to Closing:
(a) Any applicable waiting period under the HSR Act shall have
expired or been terminated.
(b) The Consent of the FCC to each of the License Exchange and the
License Contribution shall have been obtained pursuant to a Final Order, free of
any conditions materially adverse to the Company or AT&T PCS, other than those
applicable to the PCS or wireless communications services industry generally.
For the purposes of this paragraph, "Final Order" means an action or decision
-----------
that has been granted by the FCC as to which (i) no request for a stay or
similar request is pending, no stay is in effect, the action or decision has not
been vacated,
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reversed, set aside, annulled or suspended and any deadline for filing such
request that may be designated by statute or regulation has passed, (ii) no
petition for rehearing or reconsideration or application for review is pending
and the time for the filing of any such petition or application has passed,
(iii) the FCC does not have the action or decision under reconsideration on its
own motion and the time within which it may effect such reconsideration has
passed and (iv) no appeal is pending, including other administrative or judicial
review, or in effect and any deadline for filing any such appeal that may be
designated by statute or rule has passed.
(c) All Consents by any Governmental Authority (other than the
Consents referred to in paragraphs (a) and (b) above) required to permit the
consummation of the Transactions shall have been obtained, except where the
failure to obtain such Consents would not be reasonably expected to have an AT&T
PCS Material Adverse Effect or a Company Material Adverse Effect or to
materially adversely affect the Transactions or the ability of AT&T PCS or any
Triton Entity to perform its obligations under this Agreement or the Related
Agreement Amendments.
(d) No preliminary or permanent injunction or other order, decree or
ruling issued by a Governmental Authority, nor any Law promulgated or enacted by
any Governmental Authority, shall be in effect that would (i) impose material
limitations on the ability of any party to consummate the Transactions or
prohibit such consummation, or (ii) impair in any material respect the
operations of any Triton Entity.
7.2 Conditions to Obligations of the Triton Entities. The obligation
------------------------------------------------
of the Triton Entities to consummate the Transactions contemplated to occur at
the Closing shall be further conditioned upon the satisfaction or fulfillment,
at or prior to the Closing, of the following conditions unless waived, in
writing, by the Company:
(a) The representations and warranties of AT&T PCS contained herein
shall be true and correct in all material respects, in each case when made and
at and as of the Closing (except for representations and warranties (i) made as
of a specified date, which shall be true and correct as of such date, and (ii)
that are qualified as to materiality which shall be true and correct in all
respects) with the same force and effect as though made at and as of such time,
except for inaccuracies in respect of the representations and warranties set
forth in Section 5.3 and the third sentence of Section 5.6 (disregarding any
qualifications as to materiality contained therein) that in the aggregate would
not be reasonably expected to have an AT&T PCS Material Adverse Effect or would
not adversely affect AT&T PCS's ability to perform its obligations under this
Agreement.
(b) AT&T PCS shall have performed in all material respects all
agreements contained herein required to be performed by it at or before the
Closing.
(c) AT&T PCS shall have delivered to the Company the documents
required pursuant to Section 3.2(a).
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(d) Each of the Related Agreement Amendments shall have been executed
and delivered by the parties thereto (other than the Company) and shall be in
full force and effect.
(e) The Company shall have received any Consent of the lenders
required pursuant to the terms of that certain Credit Agreement dated as of
February 3, 1998 among the Company and the lenders and agents party thereto, as
amended.
7.3 Conditions to the Obligations of AT&T PCS. The obligation of AT&T PCS
-----------------------------------------
to consummate the Transactions contemplated to occur at the Closing shall be
further conditioned upon the satisfaction or fulfillment, at or prior to the
Closing, of the following conditions, unless waived, in writing, by AT&T PCS:
(a) The representations and warranties of the Triton Entities
contained herein shall be true and correct in all material respects, in each
case when made and at and as of the Closing (except for representations and
warranties (i) made as of a specified date, which shall be true and correct as
of such date, and (ii) that are qualified as to materiality which shall be true
and correct in all respects) with the same force and effect as though made at
and as of such time, except for inaccuracies in respect of the representations
and warranties set forth in Section 6.3 and the third sentence of Section 6.9
(disregarding any qualifications as to materiality contained therein) that in
the aggregate would not be reasonably expected to have a Company Material
Adverse Effect or would not adversely affect the Triton Entities' ability to
perform their respective obligations under this Agreement.
(b) Each Triton Entity shall have performed in all material respects
all agreements contained herein required to be performed by it at or before the
Closing.
(c) Each Triton Entity shall have delivered to AT&T PCS the documents
required pursuant to Section 3.2(b).
(d) Each of the Related Agreement Amendments shall have been executed
and delivered by the parties thereto (other than any AT&T PCS Party) and shall
be in full force and effect.
ARTICLE VII
SURVIVAL AND INDEMNIFICATION
----------------------------
8.1 Survival. Except for the representations and warranties contained in
--------
Sections 5.1(a), (b), (d), (e) and the first sentence of Section 5.6 and
6.1(a), (b), (d) and (e), and the first sentence of Section 6.9 (which shall
survive the Closing, without regard to any investigation made by any of the
parties hereto, until the expiration of the applicable statute of limitations
relating thereto), the representations and warranties made in this Agreement
shall survive the Closing without regard to any investigation made by any of the
parties hereto until the second
-29-
<PAGE>
anniversary thereof and shall thereupon expire together with any right to
indemnification in respect thereof (except to the extent a written notice
asserting a claim for breach of any such representation or warranty and
describing such claim in reasonable detail shall have been given prior to the
expiration of the applicable survival period to the party which made such
representation or warranty). The covenants and agreements contained herein to be
performed or complied with prior to the Closing shall expire at the Closing. The
covenants and agreements contained in this Agreement to be performed or complied
with after the Closing shall survive the Closing; provided, that the right to
indemnification pursuant to this Article VIII in respect of a breach of a
representation or warranty shall expire upon the application of the applicable
survival period (except to the extent written notice asserting a claim
thereunder and describing such claim in reasonable detail shall have been given
prior to such expiration to the party from whom such indemnification is sought).
After the Closing, the sole and exclusive remedy of the parties for any breach
or inaccuracy of any representation or warranty contained in this Agreement, or
any other claim (whether or not alleging a breach of this Agreement) that arises
out of the facts and circumstances constituting such breach or inaccuracy, shall
be the indemnity provided in this Article VIII.
8.2 Indemnification by AT&T PCS. AT&T PCS shall indemnify and hold
---------------------------
harmless the Triton Entities and their respective Affiliates, and the
shareholders, members, managers, officers, employees, agents and/or the legal
representatives of any of them (each, a "Section 8.2 Indemnified Party"),
-----------------------------
against all liabilities and expenses (collectively, "Losses") incurred by any
------
Section 8.2 Indemnified Party (including, without limitation, amounts paid in
satisfaction of judgments, in compromise, as fines and penalties, and as counsel
fees and Losses incurred in connection with the investigation, defense, or
disposition of any action, suit or other proceeding in which any Section 8.2
Indemnified Party may be involved or with which any Section 8.2 Indemnified
Party may be threatened (whether arising out of or relating to matters asserted
by third parties against a Section 8.2 Indemnified Party or incurred or
sustained by such party in the absence of a third-party claim)), that arise out
of or result from (a) any representation or warranty of AT&T PCS contained in
this Agreement being untrue, or (b) any default by AT&T PCS or any of its
Affiliates in the performance of their respective obligations under this
Agreement, except to the extent (but only to the extent) any such Losses arise
out of or result from the gross negligence or willful misconduct of such Section
8.2 Indemnified Party or its Affiliates provided, that the aggregate liability
of AT&T PCS to indemnify Section 8.2 Indemnified Parties against Losses arising
out of or resulting from (x) any representation or warranty of AT&T PCS
contained in this Agreement being untrue, or (y) any default by AT&T PCS or any
of its Affiliates in the performance of their respective obligations under this
Agreement shall (except, in the case of clause (y), to the extent (but only to
the extent) any such Losses arise out of or result from the gross negligence or
willful misconduct of AT&T PCS) be limited to Five Million ($5,000,000) Dollars.
8.3 Indemnification by the Triton Entities. Each Triton Entity shall,
--------------------------------------
jointly and severally, indemnify and hold harmless AT&T PCS and its Affiliates,
and the shareholders,
-30-
<PAGE>
members, managers, officers, employees, agents and/or the legal representatives
of any of them (each, a "Section 8.3 Indemnified Party"), against all Losses
-----------------------------
incurred by any Section 8.3 Indemnified Party (including, without limitation,
amounts paid in satisfaction of judgments, in compromise, as fines and
penalties, and as counsel fees and Losses incurred in connection with the
investigation, defense, or disposition of any action, suit or other proceeding
in which any Section 8.3 Indemnified Party may be involved or with which any
Section 8.3 Indemnified Party may be threatened (whether arising out of or
relating to matters asserted by third parties against a Section 8.3 Indemnified
Party or incurred or sustained by such party in the absence of a third party
claim)) that arise out of or result from (a) any representation or warranty of
the Company contained in this Agreement being untrue or (b) any default by the
Company or any of its Affiliates in the performance of their respective
obligations under this Agreement, except to the extent (but only to the extent)
any such Losses arise out of or result from the gross negligence or willful
misconduct of such Section 8.3 Indemnified Party or its Affiliates; provided,
that the aggregate liability of the Company to indemnify Section 8.3 Indemnified
Parties against Losses arising out of or resulting from (x) any representation
or warranty of the Company contained in this Agreement being untrue, or (y) any
default by the Company or any of its Affiliates in the performance of their
respective obligations under this Agreement shall (except, in the case of clause
(y), to the extent (but only to the extent) any such Losses arise out of or
result from the gross negligence or willful misconduct of the Company) be
limited to Five Million ($5,000,000) Dollars.
8.4 Procedures.
----------
(a) The terms of this Section 8.4 shall apply to any claim (a
"Claim") for indemnification under the terms of Sections 8.2 or 8.3. The Section
-----
8.2 Indemnified Party or Section 8.3 Indemnified Party (each, an "Indemnified
-----------------------------
Party"), as the case may be, shall give prompt written notice of such Claim to
the indemnifying party (the "Indemnifying Party") under the applicable Section,
which party may assume the defense thereof, provided, that any delay or failure
to so notify the Indemnifying Party shall relieve the Indemnifying Party of its
obligations hereunder only to the extent, if at all, that it is materially
prejudiced by reason of such delay or failure. The Indemnified Party shall have
the right to approve any counsel selected by the Indemnifying Party and to
approve the terms of any proposed settlement, such approvals not to be
unreasonably delayed or withheld (unless, in the case of approval of a proposed
settlement, such settlement provides only, as to the Indemnified Party, the
payment of money damages actually paid by the Indemnifying Party and a complete
release of the Indemnified Party in respect of the claim in question).
Notwithstanding any of the foregoing to the contrary, the provisions of this
Article VIII shall not be construed so as to provide for the indemnification of
any Indemnified Party for any liability to the extent (but only to the extent)
that such indemnification would be in violation of applicable law or that such
liability may not be waived, modified or limited under applicable law, but shall
be construed so as to effectuate the provisions of this Article VIII to the
fullest extent permitted by law.
-31-
<PAGE>
(b) In the event that the Indemnifying Party undertakes the defense
of any Claim, the Indemnifying Party will keep the Indemnified Party advised as
to all material developments in connection with such Claim, including promptly
furnishing the Indemnified Party with copies of all material documents filed or
served in connection therewith.
(c) In the event that the Indemnifying Party fails to assume the
defense of any Claim within thirty (30) days after receiving written notice
thereof, the Indemnified Party shall have the right, subject to the Indemnifying
Party's right to assume the defense pursuant to the provisions of this Article
VIII, to undertake the defense, compromise or settlement of such Claim for the
account of the Indemnifying Party. Unless and until the Indemnified Party
assumes the defense of any Claim, the Indemnifying Party shall advance to the
Indemnified Party any of its reasonable attorneys' fees and other costs and
expenses incurred in connection with the defense of any such action or
proceeding. Each Indemnified Party shall agree in writing prior to any such
advance that, in the event he, she or it receives any such advance, such
Indemnified Party shall reimburse the Indemnifying Party for such fees, costs
and expenses to the extent that it shall be determined that he, she or it was
not entitled to indemnification under this Article VIII.
(d) In no event shall an Indemnifying Party be required to pay in
connection with any Claim for more than one firm of counsel (and local counsel)
for each of the following groups of Indemnified Parties: (i) AT&T PCS, its
Affiliates, and the shareholders, members, managers, officers, employees, agents
and/or the legal representatives of any of them; and (ii) the Triton Entities
and their respective Affiliates, and the shareholders, members, managers,
officers, employees, agents and/or the legal representatives of any of them.
ARTICLE IX
TERMINATION
-----------
9.1 Termination. In addition to any other rights of termination set forth
-----------
herein, this Agreement may be terminated, and the Transactions abandoned,
without further obligation of any party, except as set forth herein, at any time
prior to the Closing Date:
(a) by mutual written consent of the parties;
(b) by any party by written notice to the other parties, if the
Closing shall not have occurred on or before the date that is nine months after
the date hereof, provided, that the party electing to exercise such right is not
otherwise in breach of its obligations under this Agreement; or
(c) by any party by written notice to the other party, if the
consummation of the Transactions shall be prohibited by a final, non-appealable
order, decree or injunction of a court of competent jurisdiction.
-32-
<PAGE>
9.2 Effect of Termination
---------------------
(a) In the event of a termination of this Agreement, no party hereto
shall have any liability or further obligation to any other party to this
Agreement, except as set forth in paragraph (b) below, and except that nothing
herein will relieve any party from liability for any breach by such party of
this Agreement.
(b) In the event of a termination of this Agreement pursuant to
Section 9.1, all provisions of this Agreement shall terminate, except Section
4.2 and Articles VIII and X, except that nothing herein will relieve any party
from liability for any breach of this Agreement.
(c) Whether or not the Closing occurs, all costs and expenses
incurred in connection with this Agreement and the Transactions shall be paid by
the party incurring such expenses, except as otherwise provided in Section 2.5.
ARTICLE X
MISCELLANEOUS PROVISIONS
------------------------
10.1 Amendment and Modification. This Agreement may be amended, modified
--------------------------
or supplemented only by written agreement of each of the parties.
10.2 Waiver of Compliance; Consents. Any failure of any of the parties to
------------------------------
comply with any obligation, covenant, agreement or condition herein may be
waived by the party or parties entitled to the benefits thereof only by a
written instrument signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires
or permits consent by or on behalf of any party hereto, such consent shall be
given in writing in a manner consistent with the requirement for a waiver of
compliance as set forth in this Section 10.2.
10.3 Notices. All notices or other communications hereunder shall be in
-------
writing and shall be given (and shall be deemed to have been duly given upon
receipt) by delivery in person against receipt, by facsimile transmission with
confirmation of receipt, or by registered or certified mail (return receipt
requested), postage prepaid, with an acknowledgment of receipt signed by the
addressee or an authorized representative thereof, addressed as follows (or to
such other address for a party as shall be specified by like notice; provided,
that notice of a change of address shall be effective only upon receipt
thereof):
-33-
<PAGE>
If to AT&T PCS, to it at:
c/o AT&T Wireless Services, Inc.
7277 164th Ave., N.E.
Redmond, WA 98052
Attn: William H. Hague, Esq.
Facsimile: (425) 828-8451
With a copy to:
Friedman Kaplan & Seiler LLP
875 Third Avenue
New York, NY 10022
Attn: Gregg S. Lerner, Esq.
Facsimile: (212) 355-6401
If to the Triton Entities, to it at:
Triton PCS Holdings, Inc.
c/o Triton Communications
375 Technology Drive
Malvern, PA 19355
Attn: Michael E. Kalogris
Facsimile: (610) 993-2683
With a copy to:
Kleinbard, Bell & Brecker LLP
1900 Market Suite, Suite 700
Philadelphia, PA 19103
Attn: Howard J. Davis, Esq.
Facsimile: (215) 568-0140
10.4 Parties in Interest; Assignment. This Agreement is binding upon, and
-------------------------------
is solely for the benefit of (except to the extent set forth in Section 10.13)
the parties hereto and their respective permitted successors, legal
representatives and permitted assigns. Subject to Section 10.14, neither party
may assign its rights and obligations hereunder without the prior written
consent of the other party.
10.5 Applicable Law. This Agreement shall be governed by and construed in
--------------
accordance with the Laws of the State of New York without giving effect to the
conflicts of law principles thereof. The parties hereto hereby irrevocably and
unconditionally consent to submit to the non-exclusive jurisdiction of the
courts of the State of New York and of the United States
-34-
<PAGE>
of America located in the County of New York, New York (the "New York Courts")
---------------
for any litigation arising out of or relating to this Agreement and the
Transactions, waive any objection to the laying of venue of any such litigation
in the New York Courts and agrees not to plead or claim in any New York Court
that such litigation brought therein has been brought in an inconvenient forum.
10.6 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument. Facsimile signatures on
this Agreement shall be deemed to be original signatures for all purposes.
10.7 Interpretation. The article and section headings contained in this
--------------
Agreement are for convenience of reference only, are not part of the agreement
of the parties and shall not affect in any way the meaning or interpretation of
this Agreement.
10.8 Entire Agreement. This Agreement, including the Exhibits and
----------------
Schedule hereto and the certificates and instruments delivered pursuant to the
terms of this Agreement, embody the entire agreement and understanding of the
parties hereto in respect of the Transactions. There are no restrictions,
promises, representations, warranties, covenants or undertakings, other than
those expressly set forth or referred to herein or in the Stockholders'
Agreement. This Agreement supersedes all prior agreements and understandings
between the parties with respect to the Transactions.
10.9 Publicity. So long as this Agreement is in effect, the parties agree
---------
to consult with each other in issuing any press release or otherwise making any
public statement with respect to the Transactions, and no party shall issue any
press release or make any such public statement prior to such consultation,
except as may be required by Law, including state and Federal securities Laws.
No press release or other public statement by a party shall disclose any of the
financial terms of the Transactions without the prior consent of the other
party, except as may be required by Law. A breach of the provisions of this
Section 10.9 by a party shall not give rise to any right to terminate this
Agreement.
10.10 Specific Performance. The parties hereto agree that irreparable
--------------------
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any New York Courts.
10.11 Remedies Cumulative. All rights, powers and remedies provided under
-------------------
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise or beginning of the
exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
-35-
<PAGE>
10.12 Severability. Any provision of this Agreement that is prohibited or
------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. If any court determines that any covenant or any part of
any covenant is invalid or unenforceable, such covenant shall be enforced to the
extent permitted by such court, and all other covenants shall not thereby be
affected and shall be given full effect, without regard to the invalid portions.
10.13 Beneficiaries of Agreement. The representations, warranties,
--------------------------
covenants and agreements expressed in this Agreement are for the sole benefit of
the parties hereto and the Section 8.2 Indemnified Parties and Section 8.3
Indemnified Parties, and solely for purposes of Section 2.4, the Management
Stockholders and Independent Directors and are not intended to benefit, and may
not be relied upon or enforced by, any other party as a third party beneficiary
or otherwise.
10.14 Designated Purchasers. It is understood and agreed between the
---------------------
parties that the Company may cause one or more of its direct or indirect wholly
owned Subsidiaries (each a "Designated Purchaser") to acquire all or part of the
--------------------
AT&T PCS Transferred License hereunder; provided, that notwithstanding any such
designation, the Company shall remain fully liable for all of its obligations
and those of the Designated Purchaser hereunder.
10.15 Access to Records. From and after the Closing Date (i) AT&T PCS
-----------------
shall furnish the Triton Entities with reasonable access to AT&T PCS's books and
records relating solely to the AT&T PCS Transferred License that after the
Closing are in the custody and control of AT&T PCS as the Triton Entities may
reasonably request in order to comply with their obligations under Law, and (ii)
each Triton Entity shall furnish AT&T PCS with reasonable access to such Triton
Entity's books and records relating solely to the Cumberland/Hagerstown
Exchanged License that after the Closing are in the custody and control of any
such Triton Entity as AT&T PCS reasonably request in order to comply with its
obligations under Law.
-36-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
TRITON PCS HOLDINGS, INC.
By: ______________________________
Name:
Title:
AT&T WIRELESS PCS INC.
By: ______________________________
Name:
Title:
TRITON PCS LICENSE COMPANY L.L.C.
By: Triton Management Company, Inc.,
its manager
By:__________________________
-37-
<PAGE>
SCHEDULE 5.2
AT&T PCS Consents
The execution, delivery and performance of the Agreement will or may
require the following consents, approvals and reviews:
1. The Federal Communications Commission.
2. The Federal Trade Commission/Department of Justice.
3. Various Governmental Authorities with respect to Franchise Laws.
<PAGE>
SCHEDULE 6.2
Company Consents
----------------
The execution, delivery and performance of the Agreement will or may
require the following consents, approvals and reviews:
1. The Federal Communications Commission.
2. The Federal Trade Commission/Department of Justice.
3. Various Governmental Authorities with respect to Franchise Laws.
4. The lenders party to that certain Credit Agreement dated as of
February 3, 1998 among the Company and the lenders and agents party
thereto, as amended.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I - DEFINITIONS.................................................... -1-
ARTICLE II - LICENSE CONTRIBUTION; LICENSE EXCHANGE........................ -7-
2.1 License Contribution........................................ -7-
2.2 License Exchange............................................ -7-
2.3 Payment of Consideration for the License Contribution....... -8-
2.4 Issuance of Securities to Management Stockholders and
Independent Directors....................................... -9-
2.5 Payment of Certain Expenses................................. -9-
2.6 Restrictive Legends......................................... -9-
2.7 Allocation of Purchase Price................................ -10-
ARTICLE III - CLOSING...................................................... -10-
3.1 Time and Place of Closing................................... -10-
3.2 Closing Actions and Deliveries.............................. -10-
3.3 Closing Costs; Taxes and Fees............................... -12-
ARTICLE IV - COVENANTS..................................................... -13-
4.1 Consummation of Transactions................................ -13-
4.2 Confidentiality............................................. -15-
4.3 Atlanta Retained License.................................... -16-
4.4 No Further Commitment....................................... -16-
4.5 Offering of Securities...................................... -16-
4.6 Covenants of AT&T PCS....................................... -16-
4.7 Covenants of the Triton Entities............................ -17-
4.8 Non-Solicitation............................................ -19-
4.9 FCC Construction Requirement................................ -19-
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF AT&T PCS..................... -20-
5.1 Organization, Power and Authority........................... -20-
5.2 Consents; No Conflicts...................................... -21-
5.3 Litigation.................................................. -21-
5.4 FCC Compliance.............................................. -21-
5.5 Brokers..................................................... -21-
5.6 License..................................................... -21-
5.7 Compliance With Laws........................................ -22-
5.8 No Distribution............................................. -22-
5.9 Investor Acknowledgments.................................... -22-
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF THE
TRITON ENTITIES................................................... -23-
6.1 Organization, Power and Authority............................... -23-
6.2 Consents; No Conflicts.......................................... -24-
6.3 Litigation...................................................... -25-
6.4 FCC Compliance.................................................. -25-
6.5 Brokers......................................................... -25-
6.6 Stockholders' Agreement......................................... -25-
6.7 Capitalization.................................................. -25-
6.8 Shares.......................................................... -26-
6.9 License......................................................... -26-
6.10 No Additional Representations................................... -26-
6.11 Compliance With Laws............................................ -26-
6.12 No Material Adverse Effect...................................... -27-
6.13 Subsidiaries.................................................... -27-
6.14 Offering of Securities.......................................... -27-
ARTICLE VII - CLOSING CONDITIONS................................................ -27-
7.1 Conditions to Obligations of All Parties........................ -27-
7.2 Conditions to Obligations of the Triton Entities................ -28-
7.3 Conditions to the Obligations of AT&T PCS....................... -29-
ARTICLE VIII - SURVIVAL AND INDEMNIFICATION..................................... -29-
8.1 Survival........................................................ -29-
8.2 Indemnification by AT&T PCS..................................... -30-
8.3 Indemnification by the Triton Entities.......................... -31-
8.4 Procedures...................................................... -31-
ARTICLE IX - TERMINATION........................................................ -32-
9.1 Termination..................................................... -32-
9.2 Effect of Termination........................................... -33-
ARTICLE X - MISCELLANEOUS PROVISIONS............................................ -33-
10.1 Amendment and Modification...................................... -33-
10.2 Waiver of Compliance; Consents.................................. -33-
10.3 Notices......................................................... -33-
10.4 Parties in Interest; Assignment................................. -34-
10.5 Applicable Law.................................................. -34-
10.6 Counterparts.................................................... -35-
10.7 Interpretation.................................................. -35-
10.8 Entire Agreement................................................ -35-
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
10.9 Publicity.................................................... -35-
10.10 Specific Performance......................................... -35-
10.11 Remedies Cumulative.......................................... -35-
10.12 Severability................................................. -36-
10.13 Beneficiaries of Agreement................................... -36-
10.14 Designated Purchasers........................................ -36-
10.15 Access to Records............................................ -36-
</TABLE>
-iii-
<PAGE>
Schedules
- ---------
Schedule I -- Atlanta License
Schedule II -- Washington-Baltimore License
Schedule III -- Independent Directors
Schedule IV -- Management Stockholders
Schedule V -- Amendment to Section 4.3(d)(iii) of the Restated
Certificate
Schedule 2(a) -- Description of AT&T PCS Transferred License
Schedule 2(b) -- Description of Cumberland/Hagerstown Exchanged
License
Schedule 5.2 -- AT&T PCS Consents
Schedule 6.2 -- Company Consents
Schedule 6.7(a) -- Owners of Company's Capital Stock
Schedule 6.7(b) -- Agreements with Respect to Capital Stock
Schedule 6.13 -- Subsidiaries
Exhibits
Exhibit A -- Amendment No. 2 to Stockholders Agreement
Exhibit B -- Amendment No. 2 to Intercarrier Roaming Service
Agreement
Exhibit C -- Amendment No. 2 to Network Membership License
Agreements
Exhibit 3.2(a)(i) -- Instrument of Assignment by AT&T PCS
Exhibit 3.2(a)(ii) -- Opinion of Counsel Friedman Kaplan & Seiler LLP
Exhibit 3.2(a)(iii) -- Opinion of Young & Jatlow
Exhibit 3.2(b)(ii) -- Instrument of Assignment by Triton License
Company
Exhibit 3.2(b)(iii) -- Opinion of Kleinbard, Bell & Brecker LLP
Exhibit 3.2(b)(iv) -- Opinion of Latham & Watkins
-iv-
<PAGE>
Exhibit 10.14
================================================================================
PREFERRED STOCK REPURCHASE AND ISSUANCE AGREEMENT
by and among
MORGAN ENTITIES,
CASH EQUITY INVESTORS,
OTHER STOCKHOLDERS,
and
TRITON PCS HOLDINGS, INC.
Dated as of December 7, 1998
================================================================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE I.................................................................. 1
DEFINITIONS....................................................... 1
ARTICLE II................................................................. 7
REPURCHASE AND ISSUANCE OF SECURITIES;
CERTAIN RESTRICTIONS ON TRANSFER.................................. 7
2.1 Repurchase of Shares............................ 7
--------------------
2.2 Issuance of Shares.............................. 8
------------------
2.3 Restrictive Legends............................. 8
-------------------
2.4 Use of Proceeds................................. 9
---------------
ARTICLE III................................................................ 9
REPRESENTATIONS AND WARRANTIES OF
CASH EQUITY INVESTORS AND MORGAN ENTITIES ........................ 9
3.1 Organization, Power and Authority............... 9
---------------------------------
3.2 Consents; No Conflicts.......................... 10
----------------------
3.3 Litigation...................................... 10
----------
3.4 FCC Compliance.................................. 11
--------------
3.5 Brokers......................................... 11
-------
3.6 No Distribution................................. 11
---------------
3.7 Investor Acknowledgments........................ 11
------------------------
ARTICLE IV................................................................. 12
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY....................................................... 12
4.1 Organization, Power and Authority............... 12
---------------------------------
4.2 Consents; No Conflicts.......................... 13
----------------------
4.3 Litigation...................................... 13
----------
4.4 FCC Compliance.................................. 13
--------------
4.5 Brokers......................................... 13
-------
4.6 Capitalization.................................. 14
--------------
4.7 Shares.......................................... 14
------
4.8 Subsidiaries.................................... 14
------------
4.9 Offering of Securities.......................... 14
----------------------
4.10 Small Business Matters.......................... 15
----------------------
ARTICLE V.................................................................. 15
COVENANTS......................................................... 15
5.1 Use of Proceeds................................. 15
---------------
5.2 SBIC Regulatory Provisions...................... 15
--------------------------
5.3 Regulatory Compliance Cooperation............... 15
---------------------------------
5.4 Related Agreement Amendments.................... 16
----------------------------
5.5 Offering of Securities.......................... 16
----------------------
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
5.6 Certain Waivers and Consents....................................................... 16
----------------------------
ARTICLE VI.................................................................................................... 17
SURVIVAL AND INDEMNIFICATION......................................................................... 17
6.1 Survival........................................................................... 17
--------
6.2 Indemnification by the Cash Equity Investors and Morgan Entities................... 17
----------------------------------------------------------------
6.3 Indemnification by the Company..................................................... 17
------------------------------
6.4 Procedures......................................................................... 18
----------
6.5 Registration Rights................................................................ 19
-------------------
6.6 Limit on Indemnity................................................................. 19
------------------
ARTICLE VII................................................................................................... 19
MISCELLANEOUS PROVISIONS............................................................................. 19
7.1 Amendment and Modification......................................................... 19
--------------------------
7.2 Waiver of Compliance; Consents..................................................... 19
------------------------------
7.3 Notices............................................................................ 19
-------
7.4 Expenses........................................................................... 20
--------
7.5 Parties in Interest; Assignment.................................................... 21
-------------------------------
7.6 Applicable Law..................................................................... 21
--------------
7.7 Counterparts....................................................................... 21
------------
7.8 Interpretation..................................................................... 21
--------------
7.9 Entire Agreement................................................................... 21
----------------
7.10 Specific Performance............................................................... 21
--------------------
7.11 Remedies Cumulative................................................................ 22
-------------------
</TABLE>
ii
<PAGE>
LIST OF SCHEDULES AND EXHIBITS
Schedules
- ---------
Schedule I -- Morgan Entities
Schedule II -- Cash Equity Investors
Schedule 4.6(a) -- Equity Ownership
Schedule 4.6(b) -- Obligations to Issue Capital Stock
Schedule 4.8 -- Company Subsidiaries
iii
<PAGE>
Preferred Stock Repurchase and Issuance Agreement
PREFERRED STOCK REPURCHASE AND ISSUANCE AGREEMENT, dated as of
December 7, 1998 by and among J.P. MORGAN INVESTMENT CORPORATION ("J.P.
---
Morgan"), SIXTY WALL STREET SBIC FUND, L.P. ("Sixty Wall Street" and
- ------ -----------------
collectively with J.P. Morgan, the "Morgan Entities"), the investors listed as
---------------
cash equity investors on the signature pages hereto (individually, a "Cash
----
Equity Investor" and, collectively, the "Cash Equity Investors"), Triton PCS
- --------------- ---------------------
Holdings, Inc., a Delaware corporation (the "Company"), and certain of the
-------
Company's other stockholders listed on the signature pages hereto (collectively,
the "Other Stockholders")
------------------
W I T N E S S E T H
WHEREAS, the Morgan Entities, the Cash Equity Investors and the Other
Stockholders are stockholders of the Company; and
WHEREAS, in connection with the consummation of the transactions
contemplated by that certain Preferred Stock Purchase Agreement dated as of July
29, 1998 (the "Myrtle Beach Stock Purchase Agreement"), the Morgan Entities
-------------------------------------
purchased an aggregate of 100,000 shares (the "Myrtle Beach Shares") of the
-------------------
Company's Series C Convertible Preferred Stock, par value $0.01 per share (the
"Series C Preferred Stock"), in consideration of contributions of cash to the
------------------------
capital of the Company in the aggregate amount of $10 million, all as more fully
set forth on Schedule I ; and
----------
WHEREAS, in connection with the consummation of the transactions
contemplated hereby, on the date hereof (a) J.P. Morgan and Sixty Wall Street
wish to sell to the Company, and the Company wishes to repurchase from J.P.
Morgan and Sixty Wall Street, 33,822 and 1,780 shares, respectively, of the
Series C Preferred Stock that the Morgan Entities purchased from the Company
pursuant to the Myrtle Beach Stock Purchase Agreement (the "Repurchased
-----------
Shares"), and (b) the Cash Equity Investors wish to purchase from the Company
- ------
the Repurchased Shares in consideration of contributions of cash to the capital
of the Company, and the Company wishes to accept such contributions and issue
additional shares of Series C Preferred Stock to the Cash Equity Investors, all
on the terms and subject to the conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, conditions and agreements hereinafter
set forth, the parties agree as follows:
ARTICLE I
DEFINITIONS
-----------
As used herein, the following terms have the following meanings
(unless indicated otherwise, all Section and Article references are to Sections
and Articles in this Agreement, and all Schedule and Exhibit references are to
Schedules and Exhibits to this Agreement):
1
<PAGE>
"Affiliate" means, with respect to any Person, any other Person that
---------
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with that Person. For purposes of this
definition, "control" (including the terms "controlling" and "controlled") means
------- ----------- ----------
the power to direct or cause the direction of the management and policies of a
Person, directly or indirectly, whether through the ownership of securities or
partnership or other ownership interests, by contract or otherwise.
"Agreement" means this Preferred Stock Repurchase and Issuance
---------
Agreement, as the same may be amended, modified or supplemented in accordance
with the terms hereof.
"Business Day" means any day that is not a Saturday, Sunday or other
------------
day on which commercial banks in New York City are authorized or required by Law
to remain closed.
"Capital Stock" means any and all shares, interests, participations or
-------------
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase or subscribe for any of
the foregoing, or any warrants, rights or options to purchase or subscribe for
any such warrants, rights or options.
"Cash Equity Investors" has the meaning set forth in the preamble.
---------------------
"Claim" has the meaning set forth in Section 6.4(a).
----- --------------
"Common Stock" has the meaning set forth in Section 2.1(b).
------------ --------------
"Company" has the meaning set forth in the preamble.
-------
"Consents" means all consents and approvals of Governmental
--------
Authorities or other third parties necessary to authorize, approve or permit the
parties hereto to consummate the Transactions.
"Contributions" means the contributions of cash to the capital of the
-------------
Company by the Cash Equity Investors as set forth on Schedule II.
-----------
"Credit Agreement" means the agreement among Triton PCS, the lenders
----------------
and the agents referred to therein, dated as of the February 3, 1998, as amended
by the First Amendment, Consent and Waiver dated as of April 24, 1998, the
Second Amendment to Credit Agreement dated as of July 29, 1998 and the Third
Amendment to Credit Agreement dated as of November ____, 1998, providing a
credit facility having aggregate commitments of $425 million, as the same may be
amended, modified or supplemented in accordance with the terms thereof.
"Credit Documents" means the Credit Agreement and all agreements,
----------------
instruments and documents executed and delivered pursuant thereto, as the same
may from time to time be amended, modified or supplemented in accordance with
the terms thereof.
2
<PAGE>
"Employment Agreements" means collectively the Employment Agreements
---------------------
dated as of February 4, 1998 between Triton Management and each of Michael E.
Kalogris and Steven R. Skinner, and the Employment Agreement dated as of January
8, 1998 between Triton Management and Clyde Smith, each as amended as of June
29, 1998 and as the same may be amended, modified or supplemented in accordance
with the terms thereof.
"FCC" means the Federal Communications Commission or similar
---
regulatory authority established in replacement thereof.
"FCC Law" means the Communications Act of 1934, as amended, including
-------
as amended by the Telecommunications Act of 1996, and the rules, regulations and
policies promulgated thereunder.
"Financing" has the meaning set forth in the SBIC Regulations.
---------
"Governmental Authority" means a Federal, state or local court,
----------------------
legislature, governmental agency (including, without limitation, the United
States Department of Justice), commission or regulatory or administrative
authority or instrumentality.
"Indemnified Party" has the meaning set forth in Section 6.4(a).
----------------- --------------
"Indemnifying Party" has the meaning set forth in Section 6.4(a).
------------------ --------------
"Investors Stockholders' Agreement" means the Investors Stockholders'
---------------------------------
Agreement dated as of February 4, 1998 by and among certain stockholders of the
Company, as the same may be amended, modified or supplemented in accordance with
the terms thereof.
"J.P. Morgan" has the meaning set forth in the preamble.
-----------
"Law" means applicable common law and any statute, ordinance, code or
---
other law, rule, permit, permit condition, regulation, order, decree, technical
or other standard, requirement or procedure enacted, adopted, promulgated,
applied or followed by any Governmental Authority.
"License" means a license, permit, certificate of authority, waiver,
-------
approval, certificate of public convenience and necessity, registration or other
authorization, consent or clearance issued or granted by a Governmental
Authority, including without limitation, Licenses to construct or operate a
facility, including any emissions, discharges or releases therefrom, or to
transact an activity or business, to construct a tower or to use an asset or
process.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
----
charge, security interest, right of first refusal or right of others therein, or
encumbrance of any nature whatsoever in respect of such asset.
"Losses" has the meaning set forth in Section 6.2.
------ -----------
3
<PAGE>
"Material Adverse Effect" means a material adverse effect on the
-----------------------
business, financial condition, assets, liabilities or results of operations or
prospects of the Person specified.
"Morgan Entities" has the meaning set forth in the preamble.
---------------
"Myrtle Beach Shares" has the meaning set forth in the recitals.
-------------------
"Myrtle Beach Stock Purchase Agreement" has the meaning set forth in
-------------------------------------
the recitals.
"Network Membership License Agreement" means the Network Membership
------------------------------------
License Agreement dated as of February 4, 1998 between AT&T Corp., a New York
corporation, and Triton Operating Company, as the same may be amended, modified
or supplemented in accordance with the terms thereof.
"New York Courts" has the meaning set forth in Section 7.6.
--------------- -----------
"Other Stockholders" has the meaning set forth in the preamble.
------------------
"Person" means an individual, corporation, partnership, limited
------
liability company, association, joint stock company, Governmental Authority,
business trust, unincorporated organization, or other legal entity.
"Preferred Stock" means, collectively, the Series A Preferred Stock,
---------------
the Series B Preferred Stock, the Series C Preferred Stock and the Series D
Preferred Stock.
"Regulatory Problem" means, with respect to any SBIC Holder providing
------------------
Financing under this Agreement, any set of facts or circumstances wherein it has
been asserted by any governmental regulatory agency (or any SBIC Holder
reasonably believes in good faith that there is a substantial risk of such
assertion) that such SBIC Holder and its Affiliates are not entitled to hold, or
exercise any significant right with respect to, the Securities.
"Related Agreements" means the Network Membership License Agreement,
------------------
the Employment Agreements, the Vesting Agreements, the Resale Agreement, the
Roaming Agreement, the Stockholders' Agreement, and the Investors Stockholders'
Agreement.
"Repurchased Shares" has the meaning set forth in the recitals.
------------------
"Resale Agreement" means the form of Resale Agreement attached as
----------------
Exhibit C to the Securities Purchase Agreement, as the same may be amended,
- ---------
modified or supplemented in accordance with the terms thereof.
"Restated Certificate" means the Amended and Restated Certificate of
--------------------
Incorporation of the Company, dated as of February 4, 1998, as amended as of the
date hereof, as the same may be amended, modified or supplemented in accordance
with the terms thereof.
4
<PAGE>
"Roaming Agreement" means the Intercarrier Roamer Service Agreement
-----------------
dated as of February 4, 1998 between Triton Operating Company and AT&T Wireless
Services, Inc., as the same may be amended, modified or supplemented in
accordance with the terms thereof.
"SBA" has the meaning set forth in Section 5.2(b).
--- --------------
"SBA Compliance Documents" has the meaning set forth in Section
------------------------ -------
2.2(b).
"SBIC" means a small business investment company licensed under the
----
SBIC Act.
"SBIC Act" means the Small Business Investment Company Act of 1958, as
--------
amended.
"SBIC Holder" means each Cash Equity Investor that is an SBIC.
-----------
"SBIC Regulations" means the SBIC Act and the regulations issued
----------------
thereunder as set forth in 13 CFR (S)(S) 107 and 121, as amended.
"Section 6.2 Indemnified Party" has the meaning set forth in Section
----------------------------- -------
6.2.
- ---
"Section 6.3 Indemnified Party" has the meaning set forth in Section
----------------------------- -------
6.3.
- ---
"Securities" means the shares of Series C Preferred Stock to be issued
----------
hereunder in accordance with the terms hereof, together with any shares of
Common Stock issued upon conversion of the Series C Preferred Stock.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules, regulations and policies promulgated thereunder.
"Series A Preferred Stock" means the Company's Series A Convertible
------------------------
Preferred Stock, par value $0.01 per share.
"Series B Preferred Stock" means the Company's Series B Preferred
------------------------
Stock, par value $0.01 per share.
"Series C Preferred Stock" has the meaning set forth in the recitals.
------------------------
"Series C Shares" means the shares of Series C Preferred Stock that
---------------
are issued hereunder by the Company to the Cash Equity Investors.
"Series D Preferred Stock" means the Company's Series D Convertible
------------------------
Preferred Stock, par value $0.01 per share.
5
<PAGE>
"Share Repurchase Price" has the meaning set forth in Section 2.1(a).
---------------------- --------------
"Sixty Wall Street" has the meaning set forth in the preamble.
-----------------
"Stockholders" means, collectively, the Morgan Entities, the Cash
------------
Equity Investors and the Other Stockholders.
"Stockholders' Agreement" means the Stockholders' Agreement dated as
-----------------------
of February 4, 1998 by and among the Company, "T&T Wireless PCS, Inc. and the
other stockholders of the Company, as the same may be amended, modified or
supplemented in accordance with the terms thereof.
"Subsidiary" shall mean, with respect to any Person, a corporation or
----------
other entity of which 50% or more of the voting power or the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
"Transactions" means the transactions contemplated by this Agreement
------------
in its entirety.
"Triton Management" means Triton Management Company, Inc., a Delaware
-----------------
corporation and Subsidiary of the Company.
"Triton Operating Company" means Triton PCS Operating Company L.L.C.,
------------------------
a Delaware limited liability company and Subsidiary of the Company.
"Triton PCS" means Triton PCS, Inc., a Delaware corporation and
----------
Subsidiary of the Company.
"Vesting Agreements" means the letter agreements dated as of February
------------------
4, 1998 among Triton Management, the Company and each of Clyde Smith, David
Clark, Patricia Gallagher, David Standig, Michael Mears, and any other Person
(including the Independent Directors who have executed similar agreements dated
June 26, 1998) who has been required to sign a similar agreement as a condition
to the award of any of the Company's Capital Stock, each as amended as of June
29, 1998 and as the same may be amended, modified or supplemented in accordance
with the terms thereof.
6
<PAGE>
ARTICLE II
REPURCHASE AND ISSUANCE
OF SECURITIES; CERTAIN RESTRICTIONS ON TRANSFER
-----------------------------------------------
1.1 Repurchase of Shares.
--------------------
(1) In reliance upon the representations, warranties and agreements
of the parties herein contained, the Morgan Entities hereby transfer, assign,
sell and deliver to the Company, and the Company hereby purchases, the
Repurchased Shares in consideration of the payment by the Company to the Morgan
Entities of the aggregate amount of $3,560,200 (the "Share Repurchase Price").
----------------------
(2) On the date hereof, the Company and the Morgan Entities shall
take the following actions to effectuate the foregoing:
(i) the Morgan Entities shall deliver to the Company
certificates representing the Myrtle Beach Shares, duly endorsed or accompanied
by stock powers duly executed in blank;
(ii) the Company shall deliver to the Morgan Entities (as
specified on Schedule I) by wire transfer of immediately available funds an
----------
aggregate amount equal to the Share Repurchase Price; and
(iii) the Company shall deliver to J.P. Morgan and Sixty Wall,
61,527 and 2,871 shares, respectively, of Series C Preferred Stock (representing
in the aggregate the difference between the number of Myrtle Beach Shares issued
to the Morgan Entities pursuant to the Myrtle Beach Stock Purchase Agreement and
the number of Repurchased Shares being repurchased from the Morgan Entities
hereunder), the terms of which are set forth in the Restated Certificate, which,
subject to the terms thereof, are convertible at any time into shares of newly
issued common stock, par value $.01 per share (the "Common Stock") of the
------------
Company (as provided in the Restated Certificate).
1.2 Issuance of Shares.
------------------
(1) In reliance upon the representations, warranties and agreements
of the parties herein contained, each Cash Equity Investor hereby agrees to
contribute to the capital of the Company an amount equal to its portion of the
Contribution, and the Company hereby agrees to accept such contribution to the
capital of the Company and to issue to the Cash Equity Investors the Series C
Shares, all as more fully set forth on Schedule II.
-----------
(2) On the date hereof, the Company and the Cash Equity Investors
shall take the following actions to effectuate the foregoing:
7
<PAGE>
(i) each Cash Equity Investor shall deliver by wire transfer
of immediately available funds an amount equal to the portion of the
Contribution set forth opposite its name on Schedule II under the heading
-----------
"Contribution";
(ii) the Company shall deliver to each Cash Equity Investor the
number of Series C Shares set forth opposite its name on Schedule II under the
-----------
heading "Number of Series C Shares";
(iii) the Company shall deliver to each SBIC Holder, (A) the
Size Status Declaration on Form 480, the Assurance of Compliance for
Nondiscrimination on Form 652 and the Portfolio Financing Report on Form 1031
(Parts A and B) (collectively, the "SBA Compliance Documents"), and (B) a list,
------------------------
after giving effect to the Transactions of (1) the name of each of the
Company's directors, (2) the name and title of each of the Company's officers
and (3) the name of each of the Company's stockholders and the number and class
of shares held by each stockholder; and
(iv) the Company shall deliver to the Cash Equity Investors,
one or more opinions of the Company's counsel respecting the valid issuance of
the Series C Preferred Stock and the enforceability of this Agreement against
the Company.
1.3 Restrictive Legends. Each certificate representing
-------------------
Securities (including Securities issued hereunder or delivered upon conversion
of the Series C Preferred Stock, or delivered in substitution or exchange for
any of the foregoing) will bear a legend reading substantially as follows until
such Securities have been sold pursuant to an effective registration statement
under the Securities Act, Rule 144 under the Securities Act, or an opinion of
counsel reasonably satisfactory in form and substance to the Company and
otherwise in full compliance with any other applicable restrictions on transfer,
including those contained in this Agreement and the Stockholders' Agreement:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE
SECURITIES OR `BLUE SKY' LAWS. SAID SECURITIES MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF, UNLESS AND UNTIL REGISTERED UNDER THE ACT AND THE RULES AND
REGULATIONS THEREUNDER AND ALL APPLICABLE STATE SECURITIES OR `BLUE
SKY' LAWS OR EXEMPTED THEREFROM UNDER THE ACT AND ALL APPLICABLE
STATE SECURITIES OR `BLUE SKY' LAWS."
8
<PAGE>
1.4 Use of Proceeds. The Company shall use the net cash proceeds of
---------------
its sale of Series C Preferred Stock hereunder for consummation of the purchase
of the Repurchased Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
---------------------------------
CASH EQUITY INVESTORS AND MORGAN ENTITIES
-----------------------------------------
Each of the Cash Equity Investors (as to itself) and each of the
Morgan Entities (as to itself) represents and warrants to the Company and each
of the other parties as follows (it being understood and agreed that all of the
following representations and warranties are made by the Cash Equity Investors
and the Morgan Entities unless otherwise specified below):
1.5 Organization, Power and Authority.
---------------------------------
(1) It is a corporation, general partnership or limited partnership,
duly organized, validly existing and in good standing under the Laws of its
jurisdiction of organization and has the requisite power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted.
(2) It has the requisite power and authority to execute, deliver and
perform this Agreement, and each other instrument, document, certificate and
agreement required or contemplated to be executed, delivered and performed by it
hereunder and thereunder to which it is or will be a party.
(3) It is duly qualified to do business in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary other than any such jurisdiction
in which the failure to be so qualified would not have a Material Adverse Effect
on it or materially adversely affect the Transactions or its ability to perform
its obligations under the Related Agreements.
(4) The execution and delivery of this Agreement by it and the
consummation of the Transactions by it have been duly and validly authorized by
its Board of Directors (or equivalent body) and no other proceedings on its part
which have not been taken (including, without limitation, approval of its
stockholders, partners or members) are necessary to authorize this Agreement or
to consummate the Transactions.
(5) This Agreement has been duly executed and delivered by it and
constitutes its valid and binding obligation, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar Laws affecting or relating
to enforcement of creditors' rights generally and may be subject to general
principles of equity.
9
<PAGE>
(6) After giving effect to the Transactions, it is not in breach of
any obligation under this Agreement or any of the Related Agreements.
1.6 Consents; No Conflicts. Neither the execution, delivery and
----------------------
performance by it of this Agreement nor the consummation of the Transactions
will (a) conflict with, or result in a breach or violation of, any provision of
its organizational documents; (b) constitute, with or without the giving of
notice or passage of time or both, a breach, violation or default, create a
Lien, or give rise to any right of termination, modification, cancellation,
prepayment or acceleration, under (i) any Law or License or (ii) any note, bond,
mortgage, indenture, lease, agreement or other instrument, in each case which is
applicable to or binding upon it or any of its assets; or (c) require any
Consent or the approval of its board of directors, general partner, stockholders
or similar constituent bodies, as the case may be (which approvals have been
obtained), except in each case, where such breach, violation, default, Lien,
right, or the failure to obtain or give such Consent would not have a Material
Adverse Effect on it or materially adversely affect the Transactions or its
ability to perform its obligations under the Related Agreements. To its
knowledge, there is no fact relating to it or its Affiliates that would be
reasonably expected to prevent it from consummating any of the Transactions or
performing its obligations under any of the Related Agreements.
1.7 Litigation. There is no action, proceeding or investigation
----------
pending or, to its knowledge, threatened against it or any of its properties or
assets that would be reasonably expected to have an adverse effect on its
ability to consummate the Transactions to which it is a party or to fulfill its
obligations under this Agreement or any of the Related Agreements to which it is
a party, or which seeks to prevent or challenge the Transactions.
1.8 FCC Compliance. It complies with all eligibility rules issued by
--------------
the FCC to hold broadband PCS licenses, including without limitation, FCC rules
on foreign ownership and the CMRS spectrum cap. The fact that it owns an equity
interest in the Company will not cause the Company to be ineligible under FCC
rules to hold PCS Licenses in general or any other FCC licenses held by the
Company.
1.9 Brokers. It has not employed any broker, finder or investment
-------
banker or incurred any liability for any brokerage fees, commissions or finder's
fees in connection with the Transactions.
1.10 No Distribution. Each Cash Equity Investor has acquired the
---------------
Securities purchased by it hereunder for the purpose of investment and not with
a view to or for sale in connection with any distribution thereof (other than in
compliance with the Securities Act and all applicable state securities Laws).
1.11 Investor Acknowledgments.
------------------------
(1) Each Cash Equity Investor is an "accredited investor" as defined
in Regulation D of the Securities Act. Its representatives have been provided an
opportunity to ask questions of, and have received answers thereto from, the
Company and its representatives regarding
10
<PAGE>
the terms and conditions of its purchase of Securities, and the Company and its
proposed business generally, and have obtained all additional information
requested by it to verify the accuracy of all information furnished to it in
connection with such purchase.
(2) Each Cash Equity Investor has such knowledge and experience in
financial and business affairs that it is capable of evaluating the merits and
risks of purchasing the Securities it is purchasing hereunder.
(3) Each Cash Equity Investor agrees that it is not relying on and
acknowledges that no representation is being made by any other Cash Equity
Investor, the Morgan Entities, the Company or any of its officers, employees,
Affiliates, agents or representatives, except for representations and warranties
expressly set forth in this Agreement, and, in particular, it is not relying on,
and acknowledges that no representation is being made in respect of, (x) any
projections, estimates or budgets delivered to or made available to them of
future revenues, expenses or expenditures, or future results of operations and
(y) any other information or documents delivered or made available to it or its
representatives, except for representations and warranties expressly set forth
in this Agreement.
(4) In deciding to invest in the Company, each Cash Equity Investor
has relied exclusively on the representations and warranties expressly set forth
in this Agreement and the investigations made by itself and its representatives
and its and such representatives' knowledge of the industry in which the Company
operates. Based solely on such representations and warranties and such
investigations and knowledge, it has determined that the Securities it is
purchasing are a suitable investment for it.
11
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
-----------
The Company represents and warrants to the Cash Equity Investors and
the Morgan Entities as follows:
1.12 Organization, Power and Authority.
---------------------------------
(1) Each of the Company and each of its Subsidiaries that is a
corporation is a corporation, duly organized, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted and as proposed to be
conducted pursuant to the Related Agreements. Each of the Company's Subsidiaries
that is a limited liability company is a limited liability company, duly formed,
validly existing and in good standing under the Laws of the jurisdiction of
formation and has the requisite limited liability company power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted and as proposed to be conducted pursuant to the Related Agreements.
(2) It has the requisite power, authority and/or legal capacity to
execute, deliver and perform this Agreement and each other instrument, document,
certificate and agreement required or contemplated to be executed, delivered and
performed by it hereunder and thereunder to which it is or will be a party.
(3) Each of the Company and each of its Subsidiaries is duly
qualified to do business in each jurisdiction where the character of its
properties owned or held under lease or the nature of its activities makes such
qualification necessary other than any such jurisdiction in which the failure to
be so qualified would not have a Material Adverse Effect on the Company or such
Subsidiary or materially adversely affect the Transactions or its ability to
perform its obligations under the Related Agreements.
(4) The execution and delivery of this Agreement by the Company and
the consummation of the Transactions by the Company have been duly and validly
authorized by the Board of Directors of the Company and, no other corporate
proceedings on the part of the Company which have not been taken (including,
without limitation, approval of its stockholders) are necessary to authorize
this Agreement or to consummate the Transactions.
(5) This Agreement has been duly executed and delivered by the
Company and constitutes the valid and binding obligation of the Company,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium
12
<PAGE>
or other similar Laws affecting or relating to enforcement of creditors' rights
generally and may be subject to general principles of equity.
(6) After giving effect to the Transactions, the Company is not in
breach of any obligation under this Agreement, any Related Agreement or any of
the Credit Documents.
1.13 Consents; No Conflicts. Neither the execution, delivery and
----------------------
performance by the Company of this Agreement nor the consummation of the
Transactions will (a) conflict with, or result in a breach or violation of, any
provision of the Company's organizational documents; (b) constitute, with or
without the giving of notice or passage of time or both, a breach, violation or
default, create a Lien (other than Liens under the Credit Documents), or give
rise to any right of termination, modification, cancellation, prepayment or
acceleration, under (i) any Law or License, or (ii) any note, bond, mortgage,
indenture, lease, agreement or other instrument, in each case which is
applicable to or binding upon the Company or any of its assets; or (c) require
any Consent on the part of the Company or the approval of the Company's Board of
Directors (which approval has been obtained), except in each case where such
breach, violation, default, Lien, right, or the failure to obtain or give such
Consent would not have a Material Adverse Effect on it or materially adversely
affect the Transactions, its ability to perform its obligations under the
Related Agreements or the operation of the Company's business after the date
hereof. To its knowledge, there is no fact relating to it or its Affiliates that
would be reasonably expected to prevent it from consummating any of the
Transactions or performing any of its obligations under the Related Agreements.
1.14 Litigation. There is no action, proceeding or investigation
----------
pending or, to the knowledge of the Company, threatened against the Company or
any of its properties or assets that would have an adverse effect on its ability
to consummate the Transactions or to fulfill its obligations under this
Agreement or any of the Related Agreements, or to operate its business after the
date hereof, or which seeks to prevent or challenge the Transactions. There is
no judgment, decree, injunction, rule or order outstanding against the Company
which would limit in any material respect the ability of the Company to operate
its business in the manner currently contemplated.
1.15 FCC Compliance. Assuming the accuracy of the representations
--------------
and warranties contained in Section 3.4, it complies with all eligibility rules
-----------
issued by the FCC to hold broadband PCS licenses, including without limitation,
FCC rules on foreign ownership and the CMRS spectrum cap.
1.16 Brokers. The Company has not employed any broker, finder or
-------
investment banker or incurred any liability for any brokerage fees, commissions
or finder's fees in connection with the Transactions.
13
<PAGE>
1.17 Capitalization.
--------------
(1) As of the date hereof, the authorized capital stock of the
Company consists of 10,000,000 shares of Common Stock, 1,000,000 shares of
Series A Preferred Stock, 2,000,000 shares of Series B Preferred Stock,
3,000,000 shares of Series C Preferred Stock, and 1,000,000 shares of Series D
Preferred Stock. As of the date hereof, prior to giving effect to the
Transactions, there have been issued and are outstanding 235,125.68 shares of
Common Stock, 732,371 shares of Series A Preferred Stock, no shares of Series B
Preferred Stock, 1,750,000 shares of Series C Preferred Stock and 366,131 shares
of Series D Preferred Stock. The record and beneficial owners of such
outstanding shares of Common Stock and Preferred Stock are set forth on Schedule
--------
4.6(a).
- ------
(2) Except as set forth on Schedule 4.6(b), there are not any
---------------
existing options, warrants, calls, subscriptions, or other rights, or other
agreements or commitments, obligating the Company to issue, transfer or sell any
shares of capital stock of the Company, except the Series C Preferred Stock
hereunder.
1.18 Shares. The shares of Series C Preferred Stock being issued tO
------
the Cash Equity Investors hereunder, when issued and paid for pursuant to the
terms of this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will be free of any Liens caused or created by the Company,
except as set forth in the Stockholders' Agreement and the Restated Certificate.
The shares of Common Stock issued upon conversion of the Series C Preferred
Stock, when issued pursuant to the terms of the Series C Preferred Stock, will
be validly issued, fully paid and nonassessable, and will be free of any Liens
caused or created by the Company, except as set forth in the Stockholders'
Agreement and the Restated Certificate.
1.19 Subsidiaries. The Company owns directly or indirectly all of
------------
the outstanding shares of Capital Stock of each of its Subsidiaries, free and
clear of any Liens, except Liens granted to the Lenders pursuant to the Credit
Documents. Set forth on Schedule 4.8 is a complete list of its direct and
------------
indirect Subsidiaries indicating the jurisdictions in which each such Subsidiary
is organized or qualified to conduct business.
1.20 Offering of Securities.
----------------------
(1) None of the Company or any Person acting on its behalf has
offered the Securities or any similar equity securities of the Company for sale
to, or solicited any offers to buy the Securities or any similar equity
securities of the Company from, any Person, other than the Cash Equity Investors
and a limited number of other "accredited investors" (as defined in Rule 501(a)
under the Securities Act).
(2) Assuming the accuracy of the representations and warranties
of the Cash Equity Investors contained in Sections 3.6 and 3.7, the offering and
--------------------
sale of Securities under this
14
<PAGE>
Agreement to the Cash Equity Investors complies with all applicable requirements
of Federal and state securities Laws.
1.21 Small Business Matters. Neither the Company nor any
----------------------
Subsidiary: (a) presently engages in, and none of them shall hereafter engage
in, any activities, or (b) shall use directly or indirectly the proceeds from
the sale of the Securities for any purpose, which, in either case, a SBIC is
prohibited from engaging in or providing funds for by the SBIC Act and the
regulations thereunder (including Title 13, Code of Federal Regulations, Section
107.720).
ARTICLE V
COVENANTS
---------
1.22 Use of Proceeds. The Company shall use the proceeds of the sale
---------------
of Securities only for the purpose described in Section 2.4.
-----------
1.23 SBIC Regulatory Provisions.
--------------------------
(1) The Company shall notify each SBIC Holder as soon as
practicable (and, in any event, not later than 15 days) prior to taking any
action after which the number of record holders of the Company's voting stock
would be increased from fewer than 50 to 50 or more, and the Company shall
notify each SBIC Holder of any other action or occurrence after which the number
of record holders of the Company's voting stock was increased (or would
increase) from fewer than 50 to 50 or more, as soon as practicable after the
Company becomes aware that such other action or occurrence has occurred or is
proposed to occur.
(2) Within 75 days after the date hereof, the Company shall deliver
to each SBIC Holder a written statement certified by the Company's president or
chief financial officer describing in reasonable detail the use of the proceeds
of the sale of Securities hereunder by the Company and its Subsidiaries. In
addition to any other rights granted hereunder, the Company shall grant each
SBIC Holder and the United States Small Business Administration (the "SBA")
---
access to the Company's records for the purpose of verifying the use of such
proceeds to the extent required pursuant to SBIC Regulations.
(3) Promptly after the end of each fiscal year (but in any event
prior to February 28 of each year), the Company shall deliver to each SBIC
Holder a written assessment of the economic impact of each SBIC Holder's
investment in the Company, specifying the full-time equivalent jobs created or
retained in connection with the investment, the impact of the investment on the
revenues and profits of the business and on taxes paid by the business and its
employees.
1.24 Regulatory Compliance Cooperation. In the event that any SBIC
---------------------------------
Holder reasonably determines that it has a Regulatory Problem, to the extent
reasonably necessary, such SBIC Holder shall have the right to transfer its
Securities (and any shares of Common Stock issued
15
<PAGE>
upon conversion thereof) to another Person without regard to any restrictions on
transfer set forth in this Agreement or in Section 4.1(c) of the Stockholders'
--------------
Agreement and without complying with the provisions of Section 4.3 of the
-----------
Stockholders' Agreement, but subject to the other provisions of the
Stockholders' Agreement and all applicable Laws, including without limitation
federal and state securities Law restrictions, and the Company shall take all
such actions as are reasonably requested by such SBIC Holder in order to (i)
effectuate and facilitate such transfer by such SBIC Holder of any Securities of
the Company then held by such SBIC Holder to such Person, (ii) permit such SBIC
Holder (or any of its Affiliates) to exchange all or any portion of voting
Securities then held by it on a share-for-share basis for shares of a class of
non-voting Securities of the Company, which non-voting Securities shall be
identical in all respects to such voting Securities, except that such non-voting
Securities (or Common Stock, as applicable) shall be non-voting and shall be
convertible into voting Securities (or Common Stock, as applicable) on such
reasonable terms as are requested by such SBIC Holder in light of regulatory
considerations then prevailing, (iii) continue and preserve the respective
allocation of the voting interests with respect to the Company arising out of
the SBIC Holder's ownership of voting Securities and/or provided for in the
Stockholders' Agreement before the transfers and amendments referred to in this
Section (including entering into such additional agreements as are reasonably
requested by such SBIC Holder to permit any Person(s) designated by such SBIC
Holder) to exercise any voting power which is relinquished by such SBIC Holder
and (iv) amend this Agreement, the Restated Certificate, and any other related
documents, agreements or instruments to effectuate and reflect the foregoing.
The parties to this Agreement agree to vote their Securities in favor of such
amendments and actions.
1.25 Related Agreement Amendments. Certain of the parties hereto
----------------------------
(and/or certain of their respective Affiliates) are (or, with respect to the
Resale Agreement, will be) parties to the Related Agreements. It is the
intention of the parties hereto that, upon consummation of the Transactions,
each Related Agreement shall be amended and/or restated as necessary to give
effect to, among other things, the Securities issued to the Cash Equity
Investors, it being agreed that the rights and obligations of the parties under
the Related Agreements pertaining to the securities thereunder shall pertain
also to the Securities hereunder.
1.26 Offering of Securities. None of the Company or any Person
----------------------
acting on its behalf will, directly or indirectly, take any action which might
subject the offering, issuance or sale of the Securities to the registration and
prospectus delivery requirements of Section 5 of the Securities Act.
1.27 Certain Waivers and Consents. With respect to the Transactions
----------------------------
and the issuance of the Series C Shares hereunder, each of the Stockholders
hereby (a) waives the notice requirements set forth in Section 7.2(b) of the
--------------
Stockholders' Agreement; (b) waives its preemptive rights that are afforded such
party in Section 7.2 of the Stockholders' Agreement; (c) waives compliance by
-----------
the Morgan Entities and the Cash Equity Investors with the transfer restrictions
contained in Article 4 of the Stockholders' Agreement, and (d) consents to the
amendment of the Restated Certificate to (i) increase the number of authorized
shares of Series C Preferred Stock from _2,000,000 to 3,000,000, (ii) increase
the number of authorized shares of Series D Preferred Stock from 500,000 to
1,000,000, and (iii) authorize the redemption by the Company of shares of Series
16
<PAGE>
C Preferred Stock upon receiving the affirmative vote of all of the holders of
shares of Series C Preferred Stock.
ARTICLE VI
SURVIVAL AND INDEMNIFICATION
----------------------------
1.28 Survival. The representations and warranties made in this
--------
Agreement shall survive until the second anniversary of the date hereof and
shall thereupon expire together with any right to indemnification in respect
thereof (except to the extent a written notice asserting a claim for breach of
any such representation or warranty and describing such claim in reasonable
detail shall have been given prior to such date to the party which made such
representation or warranty). The sole and exclusive remedy of the parties for
any breach or inaccuracy of any representation or warranty contained in this
Agreement, or any other claim (whether or not alleging a breach of this
Agreement) that arises out of the facts and circumstances constituting such
breach or inaccuracy, shall be the indemnity provided in this Article VI.
----------
1.29 Indemnification by the Cash Equity Investors and Morgan
-------------------------------------------------------
Entities. Each Cash Equity Investor and Morgan Entity, severally and not
- --------
jointly, shall indemnify and hold harmless each other Cash Equity Investor and
Morgan Entity, the Company and their respective Affiliates, and the
shareholders, members, managers, officers, employees, agents and/or the legal
representatives of any of them (each, a "Section 6.2 Indemnified Party"),
-----------------------------
against all liabilities and expenses (including amounts paid in satisfaction of
judgments, in compromise, as fines and penalties, and as counsel fees)
(collectively, "Losses") incurred by him or it in connection with the
------
investigation, defense, or disposition of any action, suit or other proceeding
in which any Section 6.2 Indemnified Party may be involved or with which he or
it may be threatened that arises out of or results from (a) any representation
or warranty of such Cash Equity Investor or Morgan Entity contained in this
Agreement being untrue in any material respect as of the date on which it was
made or (b) any material default by such Cash Equity Investor or Morgan Entity
or any of its Affiliates in the performance of their respective obligations
under this Agreement, except to the extent (but only to the extent) any such
Losses arise out of or result from the gross negligence or willful misconduct of
such Section 6.2 Indemnified Party or its Affiliates.
1.30 Indemnification by the Company. The Company shall indemnify and
------------------------------
hold harmless each Cash Equity Investor and Morgan Entity and their respective
Affiliates, and the shareholders, members, managers, officers, employees, agents
and/or the legal representatives of any of them (each, a "Section 6.3
-----------
Indemnified Party"), against all Losses incurred by him or it in connection with
- -----------------
the investigation, defense, or disposition of any action, suit or other
proceeding in which any Section 6.3 Indemnified Party may be involved or with
which he or it may be threatened that arises out of or results from (a) any
representation or warranty of the Company contained in this Agreement being
untrue in any material respect as of the date on which it was made or (b) any
material default by the Company or any of its Affiliates in the performance of
their respective obligations under this Agreement, except to the extent (but
only to the extent) any such Losses arise
17
<PAGE>
out of or result from the gross negligence or willful misconduct of such Section
6.3 Indemnified Party or its Affiliates.
1.31 Procedures.
----------
(1) The terms of this Section 6.4 shall apply to any claim (a
-----------
"Claim") for indemnification under the terms of Sections 6.2 or 6.3. The Section
----- -------------------
6.2 Indemnified Party or Section 6.3 Indemnified Party (each, an "Indemnified
-----------
Party"), as the case may be, shall give prompt written notice of such Claim to
- -----
the indemnifying party (the "Indemnifying Party") under the applicable Section,
------------------
which party may assume the defense thereof, provided that any delay or failure
to so notify the Indemnifying Party shall relieve the Indemnifying Party of its
obligations hereunder only to the extent, if at all, that it is materially
prejudiced by reason of such delay or failure. The Indemnified Party shall have
the right to approve any counsel selected by the Indemnifying Party and to
approve the terms of any proposed settlement, such approval not to be
unreasonably delayed or withheld (unless such settlement provides only, as to
the Indemnified Party, the payment of money damages actually paid by the
Indemnifying Party and a complete release of the Indemnified Party in respect of
the claim in question). Notwithstanding any of the foregoing to the contrary,
the provisions of this Article VI shall not be construed so as to provide for
----------
the indemnification of any Indemnified Party for any liability to the extent
(but only to the extent) that such indemnification would be in violation of
applicable Law or that such liability may not be waived, modified or limited
under applicable Law, but shall be construed so as to effectuate the provisions
of this Article VI to the fullest extent permitted by Law.
----------
(2) In the event that the Indemnifying Party undertakes the defense
of any Claim, the Indemnifying Party will keep the Indemnified Party advised as
to all material developments in connection with such Claim, including, but not
limited to, promptly furnishing the Indemnified Party with copies of all
material documents filed or served in connection therewith.
(3) In the event that the Indemnifying Party fails to assume the
defense of any Claim within ten Business Days after receiving written notice
thereof, the Indemnified Party shall have the right, subject to the Indemnifying
Party's right to assume the defense pursuant to the provisions of this Article
-------
VI, to undertake the defense, compromise or settlement of such Claim for the
- --
account of the Indemnifying Party. Unless and until the Indemnifying Party
assumes the defense of any Claim, the Indemnifying Party shall advance to the
Indemnified Party any of its reasonable attorneys' fees and other costs and
expenses incurred in connection with the defense of any such action or
proceeding. Each Indemnified Party shall agree in writing prior to any such
advancement that, in the event he or it receives any such advance, such
Indemnified Party shall reimburse the Indemnifying Party for such fees, costs
and expenses to the extent that it shall be determined that he or it was not
entitled to indemnification under this Article VI.
----------
(4) In no event shall an Indemnifying Party be required to pay in
connection with any Claim for more than one firm of counsel (and local counsel)
for each of the following groups of Indemnified Parties: (i) the Cash Equity
Investors and the Morgan Entities, their respective Affiliates and the
shareholders, members, managers, officers, employees, agents and/or the legal
18
<PAGE>
representatives of any of them; and (ii) the Company, its Affiliates and the
shareholders, members, managers, officers, employees, agents and/or the legal
representatives of any of them.
1.32 Registration Rights. Notwithstanding anything to the contrary
-------------------
in this Article VI, the indemnification and contribution provisions set forth in
----------
Sections 5(e) and 5(f) of the Stockholders' Agreement shall govern any claim
- ----------------------
made with respect to the registration statements filed pursuant to Section 5 of
---------
the Stockholders' Agreement or sales made thereunder.
1.33 Limit on Indemnity. So long as the Company does not conduct any
------------------
business or engage in any activities other than those described in the first
sentence of the definition of "Business" (as such term is defined in the
Stockholders' Agreement), each party waives its right to indemnification under
this Article VI or any other right to assert any claim arising from any
----------
inaccuracy in the Company's representations and warranties set forth in Section
-------
4.10 or the violation by the Company of the covenant set forth in Section 5.2(d)
- ---- --------------
to the extent such Section relates to ineligible or prohibited activities of
SBICs.
ARTICLE VII
MISCELLANEOUS PROVISIONS
------------------------
1.34 Amendment and Modification. This Agreement may be amended,
--------------------------
modified or supplemented only by written agreement of each of the Cash Equity
Investors, the Morgan Entities and the Company, and (solely with respect to the
provisions contained in Section 5.6) the Other Stockholders.
-----------
1.35 Waiver of Compliance; Consents. Any failure of any of the
------------------------------
parties to comply with any obligation, covenant, agreement or condition herein
may be waived by the party or parties entitled to the benefits thereof only by a
written instrument signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirement for a waiver of
compliance as set forth in this Section 7.2.
-----------
1.36 Notices. All notices or other communications hereunder shall be
-------
in writing and shall be given (and shall be deemed to have been duly given upon
receipt) by delivery in person, by facsimile transmission, or by overnight
courier or registered or certified mail (return receipt requested), postage
prepaid, with an acknowledgment of receipt signed by the addressee or an
authorized representative thereof, addressed as follows (or to such other
address for a party as shall be specified by like notice; provided that notice
of a change of address shall be effective only upon receipt thereof):
19
<PAGE>
If to a Cash Equity Investor or a Morgan Entity, to its address
set forth on Schedule I.
----------
With a copy to:
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Attention: Mark S. Wojciechowski
Facsimile: (212) 262-1910
If to the Company or any Other Stockholder, to it or him/her:
c/o Triton Management Company, Inc.
375 Technology Drive
Malvern, PA 19355
Attention: Michael E. Kalogris
Steven R. Skinner
Facsimile: (610) 993-2683
With a copy to:
Kleinbard Bell & Brecker LLP
1900 Market Street, Suite 700
Philadelphia, PA 19103
Attention: Howard J. Davis
Facsimile: (215) 568-0140
And with a copy to each other party sent to the addresses set forth in
this Section 7.3.
-----------
1.37 Expenses. The Company agrees to pay, and save the Cash Equity
--------
Investors and Morgan Entities harmless against, the reasonable fees and
disbursements of counsel to each of the Cash Equity Investors and Morgan
Entities in connection with the preparation, negotiation, execution and delivery
of this Agreement, the instruments and documents executed pursuant hereto or
thereto or in connection herewith or therewith, and the consummation of any such
Transaction; provided, however, that as a condition to the Company's foregoing
obligation, counsel for the Cash Equity Investors and Morgan Entities shall be
directed to, and shall, deliver to the Company on a monthly basis detailed
invoices for legal services rendered during such month.
1.38 Parties in Interest; Assignment. This Agreement is binding upon
-------------------------------
and is solely for the benefit of the parties hereto and their respective
permitted successors, legal representatives and permitted assigns. None of the
Company or any Stockholder may assign its rights and
20
<PAGE>
obligations hereunder without the prior written consent of each of the other
parties, except (a) either Morgan Entity may assign its rights and obligations
hereunder to the other without any prior consent and (b) CB Capital Investors,
L.P. shall have the right to assign to one or more of its Affiliates, any and
all rights and obligations of C.B. Capital Investors, L.P. under this Agreement
(provided that such assignee shall have assumed in writing all the obligations
of C.B. Capital Investors, L.P. hereunder and no such assignment shall relieve
C.B. Capital Investors, L.P. of its obligations hereunder).
1.39 Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the Laws of the State of New York without giving
effect to the conflicts of Law principles thereof. The parties hereto hereby
irrevocably and unconditionally consent to submit to the non-exclusive
jurisdiction of the courts of the State Of New York and of the United States of
America located in the County of New York, New York (the "New York Courts") for
---------------
any litigation arising out of or relating to this Agreement and the
Transactions, waive any objection to the laying of venue of any such litigation
in the New York Courts and agrees not to plead or claim in any New York Court
that such litigation brought therein has been brought in an inconvenient forum.
1.40 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
1.41 Interpretation. The article and section headings contained in
--------------
this Agreement are for convenience of reference only, are not part of the
agreement of the parties and shall not affect in any way the meaning or
interpretation of this Agreement. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine or neuter, singular or plural, as
the identity of the antecedent Person or Person may require.
1.42 Entire Agreement. This Agreement, including the exhibits and
----------------
schedules hereto and the certificates and instruments delivered pursuant to the
terms of this Agreement, embodies the entire agreement and understanding of the
parties hereto in respect of the Transactions. There are no restrictions,
promises, representations, warranties, covenants or undertakings, other than
those expressly set forth or referred to herein or therein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such Transactions.
1.43 Specific Performance. The parties hereto agree that irreparable
--------------------
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any New York Courts.
1.44 Remedies Cumulative. All rights, powers and remedies provided
-------------------
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not
21
<PAGE>
alternative, and the exercise or beginning of the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party.
[signature pages follow]
* * *
22
<PAGE>
[SIGNATURE PAGES TO PREFERRED STOCK REPURCHASE AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
Company:
TRITON PCS HOLDINGS, INC.
By:_______________________________________________
Name:
Title:
Morgan Entities:
J.P. MORGAN INVESTMENT CORPORATION
By:_______________________________________________
Name:
Title:
SIXTY WALL STREET SBIC FUND, L.P.
By: Sixty Wall Street SBIC Corporation, its
general partner
By:_______________________________________________
Name:
Title:
Cash Equity Investors:
CB CAPITAL INVESTORS, L.P.
By: CB Capital Investors, Inc., its general
partner
By:_______________________________________________
Name:
Title:
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
PRIVATE EQUITY INVESTORS III, L.P.
By: Rohit M. Desai Associates III, L.L.C., its
general partner
By:_______________________________________________
Name:
Title:
EQUITY-LINKED INVESTORS-II
By: Rohit M. Desai Associates-II, its general
partner
By:_______________________________________________
Name:
Title:
TORONTO DOMINION CAPITAL (U.S.A.), INC.
By:_______________________________________________
Name:
Title:
FIRST UNION CAPITAL PARTNERS, INC.
By:_______________________________________________
Name:
Title:
DAG-TRITON PCS, L.P.
By: Duff Ackerman Goodrich, L.L.C., its general
partner
By:_______________________________________________
Name:
Title:
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
Other Stockholders:
_________________________________________________
Michael E. Kalogris
_________________________________________________
Steven R. Skinner
_________________________________________________
David D. Clark
_________________________________________________
Clyde Smith
_________________________________________________
David Standig
_________________________________________________
Michael Mears
_________________________________________________
Michael E. Kalogris, as Trustee under Amended and
Restated Common Stock Trust Agreement for
Management Employees and Independent Directors
dated June 26, 1998
_________________________________________________
Scott Anderson
<PAGE>
_________________________________________________
John Beletic
<PAGE>
SCHEDULE I
Morgan Entities
<TABLE>
<CAPTION>
Aggregate Myrtle Number of Myrtle
Beach Contribution Beach Shares
------------------ -----------------
<S> <C> <C>
JP Morgan Capital Investment Corporation $ 9,534,900 95,349.00
Sixty Wall Street SBIC Fund, L.P. 465,100 4,651.00
----------- ----------
Total $10,000,000 100,000.00
</TABLE>
<PAGE>
SCHEDULE II
Cash Equity Investors
<TABLE>
<CAPTION>
Number of
Contribution Series C Shares
------------ -----------------------
<S> <C> <C>
CB Capital Investors, L.P. $ 467,511 4,675.11
Private Equity Investors III, L.P. 269,656 2,696.56
Equity-Linked Investors-II 269,656 2,696.56
Toronto Dominion Capital (U.S.A.) Inc. 134,826 1,348.26
First Union Capital Partners, Inc. 2,065,675 20,656.75
DAG-Triton PCS, L.P. 352,876 3,528.76
---------- ---------
Total $3,560,200 35,602.00
</TABLE>
<PAGE>
SCHEDULE III
Address For Notices
CB Capital Investors, L.P.
380 Madison Avenue, 12th Floor
New York, NY 10017
Attn: Arnie Chavkin
Tel: (212) 622-3100
Fax: (212) 622-3101
J.P. Morgan Investment Corporation
101 California Street, 38th Floor
San Francisco, CA 94111
Attn: John Watkins
Tel: (415) 954-3200
Fax: (415) 954-4737
Sixty Wall Street SBIC Fund, L.P.
101 California Street, 38th Floor
San Francisco, CA 94111
Attn: John Watkins
Tel: (415) 954-3200
Fax: (415) 954-4737
Private Equity Investors III, L.P.
540 Madison Avenue, 36th Floor
New York, NY 10022
Attn: Damon Ball
Tel: (212) 838-9191
Fax: (212) 838-9807
Equity-Linked Investors-II
540 Madison Avenue, 36th Floor
New York, NY 10022
Attn: Damon Ball
Tel: (212) 838-9191
Fax: (212) 838-9807
Toronto Dominion Capital (U.S.A.), Inc.
31 West 52nd Street
New York, NY 10019
Attn: Brian Rich
Tel: (212) 468-0740
Fax: (212) 974-0429
Toronto Dominion Capital (U.S.A.), Inc.
909 Fannin
Suite 1700
Houston, TX 77010
Attn: Martha Gariepy
Tel: (713) 653-8225
Fax: (713) 652-2647
First Union Capital Partners, Inc.
One First Union Center
301 South College Street / 5th Floor
Charlotte, NC 28288-0732
Attn: Watts Hamrick
Tel: (704) 374-4791
Fax: (704) 374-6711
DAG-Triton PCS, L.P.
Two Embarcadero Center
Suite 2930
San Francisco, CA 94111
Attn: John Duff
Tel: (415) 788-2755
Fax: (415) 788-7311
<PAGE>
SCHEDULE 4.6(a)
Equity Ownership
<TABLE>
<CAPTION>
Shares
Stockholders Owned
- ------------------------------------------------------
<S> <C>
Series A Preferred Stock:
- ------------------------
AT&T Wireless PCS, Inc. 732,371.00
Total Series A 732,371.00
Series C Preferred Stock:
- ------------------------
CB Capital Investors, L.P. 507,143.68
J.P. Morgan Investment
Corporation 479,028.00
Sixty Wall Street SBIC
Fund, L.P. 25,687.00
Private Equity Investors III, L.P. 243,547.11
Equity-Linked Investors-II 243,547.11
Toronto Dominion Capital
(USA) Inc. 121,774.18
First Union Capital Partners, Inc. 60,886.46
DAG-Triton PCS, L.P. 60,886.46
Michael E. Kalogris 5,000.00
Steven R. Skinner 2,500.00
Total Series C 1,750,000.00
</TABLE>
<PAGE>
SCHEDULE 4.6(a) (cont.)
<TABLE>
<S> <C>
Series D Preferred Stock:
- ------------------------
AT&T Wireless PCS, Inc. 366,131.00
Total Series D 366,131.00
Common Stock:
- -------------
Michael E. Kalogris 94,050.27
Steven R. Skinner 70,537.70
David D. Clark 7,053.77
Clyde Smith 3,762.01
Patricia Gallagher 1,410.76
David Standig 3,526.89
Michael Mears 2,351.26
Scott Anderson 847.11
John Beletic 847.11
Michael E. Kalogris, as Trustee
under Amended and Restated
Common Stock Trust
Agreement for Management
Employees and Independent
Directors dated June 26, 1998 50,738.80
Total Common 235,125.68
</TABLE>
<PAGE>
SCHEDULE 4.6(b)
Obligations to Issue Capital Stock
1. Pursuant to the terms of the Restated Certificate, the Series A
Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock,
the Company may be required under certain circumstances contained therein to
issue shares of Preferred Stock or Common Stock, as the case may be, upon
conversion thereof.
2. The Company and AT&T Wireless PCS, Inc. ("AT&T PCS") are parties to
that certain Asset Purchase Agreement dated as August 20, 1998 (the "Norfolk
Acquisition Agreement") pursuant to which the Company and/or one or more of its
direct or indirect wholly-owned subsidiaries intends to acquire substantially
all of AT&T PCS' assets relating to the PCS system in the Norfolk, Virginia BTA
(the "Norfolk Acquisition"), including 20 MHz of the 30 MHz of the PCS license
owned by AT&T PCS covering such market. On the terms and subject to the
conditions contained in the Norfolk Acquisition Agreement, upon consummation of
the Norfolk Acquisition, the Company has agreed to issue to AT&T PCS 134,813.49
shares of Series D Preferred Stock.
<PAGE>
SCHEDULE 5.8
Company Subsidiaries
<TABLE>
<CAPTION>
State of Foreign
Subsidiary Organization Qualification
----------------------------------- ------------ --------------
<S> <C> <C>
1. Triton PCS, Inc. DE None
2. Triton Management Company, Inc. DE PA, VA, SC, NC
3. Triton PCS Holdings Company L.L.C. DE None
4. Triton PCS Property Company L.L.C. DE VA, SC, NC, GA
5. Triton PCS License Company L.L.C. DE None
6. Triton PCS Equipment Company L.L.C. DE VA, SC, NC, GA
7. Triton PCS Operating Company L.L.C. DE VA, SC, NC, GA
</TABLE>
<PAGE>
Exhibit 10.15
- --------------------------------------------------------------------------------
NORFOLK PREFERRED STOCK PURCHASE AGREEMENT
by and among
CASH EQUITY INVESTORS,
MANAGEMENT STOCKHOLDERS,
INDEPENDENT DIRECTORS,
and
TRITON PCS HOLDINGS, INC.
Dated as of December 31, 1998
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
ARTICLE I.............................................................. -2-
DEFINITIONS....................................................... -2-
ARTICLE II............................................................. -8-
CONTRIBUTIONS; PURCHASE AND SALE OF SECURITIES; CERTAIN
RESTRICTIONS ON TRANSFER.......................................... -8-
2.1 Norfolk Commitments..................................... -8-
-------------------
2.2 Issuance of Securities.................................. -8-
----------------------
2.3 Restrictive Legends..................................... -8-
-------------------
2.4 Use of Proceeds......................................... -9-
---------------
ARTICLE III............................................................ -9-
CLOSING........................................................... -9-
3.1 Time and Place of Closing............................... -9-
-------------------------
3.2 Closing Actions and Deliveries.......................... -9-
------------------------------
3.3 Payment of Transfer Taxes............................... -10-
-------------------------
ARTICLE IV............................................................. -10-
REPRESENTATIONS AND WARRANTIES OF CASH EQUITY INVESTORS,
MANAGEMENT STOCKHOLDERS AND INDEPENDENT DIRECTORS................. -10-
4.1 Organization, Power and Authority....................... -10-
---------------------------------
4.2 Consents; No Conflicts.................................. -11-
----------------------
4.3 Litigation.............................................. -12-
----------
4.4 FCC Compliance.......................................... -12-
--------------
4.5 Brokers................................................. -12-
-------
4.6 Capital Commitment...................................... -12-
------------------
4.7 No Distribution......................................... -12-
---------------
4.8 Investor Acknowledgments................................ -12-
------------------------
ARTICLE V.............................................................. -13-
REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................... -13-
5.1 Organization, Power and Authority....................... -13-
---------------------------------
5.2 Consents; No Conflicts.................................. -14-
----------------------
5.3 Litigation.............................................. -15-
----------
5.4 FCC Compliance.......................................... -15-
--------------
5.5 Brokers................................................. -15-
-------
5.6 Capitalization.......................................... -15-
--------------
5.7 Shares.................................................. -15-
------
</TABLE>
- i -
<PAGE>
<TABLE>
<S> <C>
5.8 Subsidiaries.......................................... -16-
------------
5.9 Offering of Securities................................ -16-
----------------------
5.10 Small Business Matters................................ -16-
----------------------
ARTICLE VI............................................................. -16-
COVENANTS......................................................... -16-
6.1 Consummation of Transactions............................ -16-
----------------------------
6.2 [INTENTIONALLY OMITTED]................................. -17-
6.3 [INTENTIONALLY OMITTED]................................. -17-
6.4 [INTENTIONALLY OMITTED]................................. -17-
6.5 Use of Proceeds......................................... -17-
---------------
6.6 SBIC Regulatory Provisions.............................. -17-
--------------------------
6.7 Regulatory Compliance Cooperation....................... -18-
---------------------------------
6.8 Related Agreement Amendments............................ -18-
----------------------------
6.9 Offering of Securities.................................. -19-
----------------------
6.10 Waiver of Preemptive Rights............................. -19-
---------------------------
ARTICLE VII............................................................ -19-
CLOSING CONDITIONS................................................ -19-
7.1 Conditions to Obligations of All Parties................ -19-
----------------------------------------
7.2 Conditions to the Obligations of the Company............ -20-
--------------------------------------------
7.3 [INTENTIONALLY OMITTED]................................. -21-
7.4 Conditions to the Obligations of the Cash Equity
------------------------------------------------
Investors............................................... -21-
ARTICLE VIII........................................................... -22-
SURVIVAL AND INDEMNIFICATION...................................... -22-
8.1 Survival................................................ -22-
--------
8.2 [INTENTIONALLY OMITTED]................................. -22-
8.3 Indemnification by the Cash Equity Investors............ -22-
--------------------------------------------
8.4 Indemnification by the Company.......................... -23-
------------------------------
8.5 Indemnification by the Management Stockholders.......... -23-
----------------------------------------------
8.6 Indemnification by the Independent Directors............ -23-
--------------------------------------------
8.7 Procedures.............................................. -24-
----------
8.8 Registration Rights..................................... -25-
-------------------
8.9 Limit on Indemnity...................................... -25-
------------------
ARTICLE IX............................................................. -25-
TERMINATION....................................................... -25-
9.1 Termination............................................. -25-
----------
9.2 Effect of Termination................................... -26-
---------------------
ARTICLE X.............................................................. -26-
MISCELLANEOUS PROVISIONS.......................................... -26-
</TABLE>
- ii -
<PAGE>
<TABLE>
<S> <C>
10.1 Amendment and Modification............................ -26-
--------------------------
10.2 Waiver of Compliance; Consents........................ -26-
------------------------------
10.3 Notices............................................... -26-
-------
10.4 Expenses.............................................. -27-
--------
10.5 Parties in Interest; Assignment....................... -27-
-------------------------------
10.6 Applicable Law........................................ -28-
--------------
10.7 Counterparts.......................................... -28-
------------
10.8 Interpretation........................................ -28-
--------------
10.9 Entire Agreement...................................... -28-
----------------
10.10 Specific Performance.................................. -28-
--------------------
10.11 Remedies Cumulative................................... -28-
-------------------
</TABLE>
- iii -
<PAGE>
LIST OF SCHEDULES
Schedule I -- Cash Equity Investors and Commitments
Schedule II -- Management Stockholders
Schedule III -- Independent Directors
Schedule 4.2 -- Cash Equity Investor Consents
Schedule 4.4 -- Cash Equity Investor Attributable Interests
Schedule 5.2 -- Company Consents
Schedule 5.6(a) -- Equity Ownership
Schedule 5.6(b) -- Obligations to Issue Capital Stock
Schedule 5.8 -- Company Subsidiaries
<PAGE>
Norfolk Preferred Stock Purchase Agreement
NORFOLK PREFERRED STOCK PURCHASE AGREEMENT, dated as of December 31,
1998 by and among the investors listed on Schedule I (individually, a "Cash
---------- ----
Equity Investor" and, collectively, the "Cash Equity Investors"), the
- --------------- ---------------------
individuals listed on Schedule II (individually, a "Management Stockholder" and
----------- ----------------------
collectively, the "Management Stockholders"), the individuals listed on Schedule
----------------------- --------
III (individually, an "Independent Director" and collectively, the "Independent
- --- -------------------- -----------
Directors"), and Triton PCS Holdings, Inc., a Delaware corporation (the
- ---------
"Company").
-------
W I T N E S S E T H
WHEREAS, the Cash Equity Investors, the Management Stockholders and
the Independent Directors are stockholders of the Company; and
WHEREAS, the Company and AT&T Wireless PCS, Inc., a Delaware
corporation ("AT&T PCS"), are parties to that certain Asset Purchase Agreement
--------
dated as August 20, 1998 (the "Norfolk Acquisition Agreement") pursuant to which
-----------------------------
the Company and/or one or more of its direct or indirect wholly-owned
subsidiaries intends to acquire certain of AT&T PCS' assets relating to the PCS
system in the Norfolk, Virginia BTA (the "Norfolk Acquisition"), including 20
-------------------
MHz of the 30 MHz of the PCS license owned by AT&T PCS covering such market
(the "AT&T PCS License"); and
----------------
WHEREAS, in connection with the consummation of the transactions
contemplated by the Norfolk Acquisition Agreement, (a) as part of the
consideration payable by the Company to AT&T PCS thereunder, the Company will
issue additional securities to AT&T PCS, (b) each of the Cash Equity Investors
wishes to purchase additional securities of the Company in consideration of
contributions of cash to the capital of the Company, and (c) the Company wishes
to accept such contributions and to issue additional securities to each of the
Cash Equity Investors, the Management Stockholders and the Independent
Directors, all on the terms and subject to the conditions herein set forth; and
WHEREAS, the parties intend to consummate the transactions
contemplated hereby immediately prior to the consummation of the transactions
contemplated by the Norfolk Acquisition Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, conditions and agreements hereinafter
set forth, the parties agree as follows:
-1-
<PAGE>
ARTICLE I
DEFINITIONS
-----------
As used herein, the following terms have the following meanings
(unless indicated otherwise, all Section and Article references are to Sections
and Articles in this Agreement, and all Schedule and Exhibit references are to
Schedules and Exhibits to this Agreement):
"Affiliate" means, with respect to any Person, any other Person that
---------
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with that Person. For purposes of this
definition, "control" (including the terms "controlling" and "controlled") means
------- ----------- ----------
the power to direct or cause the direction of the management and policies of a
Person, directly or indirectly, whether through the ownership of securities or
partnership or other ownership interests, by contract or otherwise.
"Agreement" means this Norfolk Preferred Stock Purchase Agreement, as
---------
the same may be amended, modified or supplemented in accordance with the terms
hereof.
"AT&T PCS" has the meaning set forth in the recitals.
--------
"AT&T PCS License" has the meaning set forth in the recitals.
----------------
"Business Day" means any day that is not a Saturday, Sunday or other
------------
day on which commercial banks in New York City are authorized or required by Law
to remain closed.
"Capital Stock" means any and all shares, interests, participations or
-------------
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase or subscribe for any of
the foregoing, or any warrants, rights or options to purchase or subscribe for
any such warrants, rights or options.
"Cash Equity Investors" has the meaning set forth in the preamble.
---------------------
"Claim" has the meaning set forth in Section 8.7(a).
----- --------------
"Closing" has the meaning set forth in Section 3.1.
------- -----------
"Closing Date" has the meaning set forth in Section 3.1.
------------ -----------
"Common Stock" has the meaning set forth in Section 2.2(a).
------------ --------------
"Company" has the meaning set forth in the preamble.
-------
-2-
<PAGE>
"Confidential Information" means any and all information regarding the
------------------------
business, finances, operations, products, services and customers of the Person
specified and its Affiliates, in written or oral form or in any other medium.
"Consents" means all consents and approvals of Governmental
--------
Authorities or other third parties necessary to authorize, approve or permit the
parties hereto to consummate the Transactions.
"Contributions" means the cash contributions of Cash Equity Investors
-------------
in respect of their Norfolk Commitment.
"Credit Agreement" means the agreement among the Company, the lenders
----------------
and the agents referred to therein, dated as of the February 3, 1998, as amended
by the First Amendment, Consent and Waiver dated as of April 24, 1998 and the
Second Amendment dated as of July 29, 1998 and the Third Amendment dated as of
November 17, 1998, providing a credit facility having aggregate commitments of
$425 million, as the same may be amended, modified or supplemented in accordance
with the terms thereof.
"Credit Documents" means the Credit Agreement and all agreements,
----------------
instruments and documents executed and delivered pursuant thereto, as the same
may from time to time be amended, modified or supplemented in accordance with
the terms thereof.
"Employment Agreements" means collectively the Employment Agreements
---------------------
dated as of February 4, 1998 between Triton Management and each of Michael E.
Kalogris and Steven R. Skinner, and the Employment Agreement dated as of January
8, 1998 between Triton Management and Clyde Smith, each as amended as of June
29, 1998 and as the same may be amended, modified or supplemented in accordance
with the terms thereof.
"FCC" means the Federal Communications Commission or similar
---
regulatory authority established in replacement thereof.
"FCC Law" means the Communications Act of 1934, as amended, including
-------
as amended by the Telecommunications Act of 1996, and the rules, regulations and
policies promulgated thereunder.
"Final Order" has the meaning set forth in Section 7.1(b).
----------- --------------
"Financing" has the meaning set forth in the SBIC Regulations.
---------
"Governmental Authority" means a Federal, state or local court,
----------------------
legislature, governmental agency (including, without limitation, the United
States Department of Justice), commission or regulatory or administrative
authority or instrumentality.
-3-
<PAGE>
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
-------
of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnified Party" has the meaning set forth in Section 8.7(a).
----------------- --------------
"Indemnifying Party" has the meaning set forth in Section 8.7(a).
------------------ --------------
"Independent Directors" has the meaning set forth in the preamble.
---------------------
"Investors Stockholders' Agreement" means the Investors Stockholders'
---------------------------------
Agreement dated as of February 4, 1998 by and among the Company and certain
stockholders of the Company, as the same may be amended, modified or
supplemented in accordance with the terms thereof.
"Law" means applicable common law and any statute, ordinance, code or
---
other law, rule, permit, permit condition, regulation, order, decree, technical
or other standard, requirement or procedure enacted, adopted, promulgated,
applied or followed by any Governmental Authority.
"License" means a license, permit, certificate of authority, waiver,
-------
approval, certificate of public convenience and necessity, registration or other
authorization, Consent or clearance issued or granted by a Governmental
Authority, including without limitation, Licenses to construct or operate a
facility, including any emissions, discharges or releases therefrom, or to
transact an activity or business, to construct a tower or to use an asset or
process.
"License Transfer" means the assignment of any License requiring the
----------------
Consent of the FCC or any equivalent state Governmental Authority.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
----
charge, security interest, right of first refusal or right of others therein, or
encumbrance of any nature whatsoever in respect of such asset.
"Losses" has the meaning set forth in Section 8.2.
------ -----------
"Management Agreement" means the Construction and Operating Agreement
--------------------
dated July 31, 1998 between AT&T PCS and Triton Operating Company.
"Management Stockholders" has the meaning set forth in the preamble.
-----------------------
"Material Adverse Effect" means a material adverse effect on the
-----------------------
business, financial condition, assets, liabilities or results of operations or
prospects of the Person specified.
"Morgan Entity" means J.P. Morgan Investment Corporation and Sixty
-------------
Wall Street SBIC Fund, L.P.
-4-
<PAGE>
"Network Membership License Agreement" means the Network Membership
------------------------------------
License Agreement dated as of February 4, 1998 between AT&T Corp., a New York
corporation, and Triton Operating Company, as the same may be amended, modified
or supplemented in accordance with the terms thereof.
"New York Courts" has the meaning set forth in Section 10.6.
--------------- ------------
"Norfolk Acquisition" has the meaning set forth in the recitals.
-------------------
"Norfolk Acquisition Agreement" has the meaning set forth in the
-----------------------------
recitals.
"Norfolk Commitment" means, with respect to each Cash Equity Investor,
------------------
the amount set forth opposite its name on Schedule I under the heading "Norfolk
----------
Commitment".
"Opinion of Counsel" or "Opinion of Special FCC Counsel" means, with
------------------ ------------------------------
respect to any Person, a legal opinion of such Person's counsel substantially in
the form and substance of the legal opinion rendered on behalf of such Person
in connection with the consummation on February 4, 1998 of the transactions
contemplated by the Securities Purchase Agreement.
"Person" means an individual, corporation, partnership, limited
------
liability company, association, joint stock company, Governmental Authority,
business trust, unincorporated organization, or other legal entity.
"Preferred Stock" means the shares of Series C Preferred Stock and
---------------
Series D Preferred Stock to be issued hereunder in accordance with the terms
hereof.
"Regulatory Problem" means, with respect to any SBIC Holder providing
------------------
Financing under this Agreement, any set of facts or circumstances wherein it has
been asserted by any Governmental Authority (or any SBIC Holder reasonably
believes in good faith that there is a substantial risk of such assertion) that
such SBIC Holder and its Affiliates are not entitled to hold, or exercise any
significant right with respect to, the Securities.
"Related Agreement Amendments" has the meaning set forth in Section
---------------------------- -------
6.8.
- ----
"Related Agreements" means the Network Membership License Agreement,
------------------
the Employment Agreements, the Vesting Agreements, the Resale Agreement, the
Roaming Agreement, the Stockholders' Agreement, and the Investors Stockholders'
Agreement.
"Resale Agreement" means the form of Resale Agreement attached as
----------------
Exhibit C to the Securities Purchase Agreement, as the same may be amended,
- ---------
modified or supplemented in accordance with the terms thereof.
-5-
<PAGE>
"Restated Certificate" means the Amended and Restated Certificate of
--------------------
Incorporation of the Company, dated as of February 4, 1998, as amended December
7, 1998, as the same may be amended, modified or supplemented in accordance with
the terms thereof.
"Roaming Agreement" means the Intercarrier Roamer Service Agreement
-----------------
dated as of February 4, 1998 between Triton Operating Company and AT&T Wireless
Services, Inc., as the same may be amended, modified or supplemented in
accordance with the terms thereof.
"SBA" has the meaning set forth in Section 6.6(b).
--- --------------
"SBA Compliance Documents" has the meaning set forth in Section
------------------------ -------
7.4(f).
"SBIC" means a small business investment company licensed under the
----
SBIC Act.
"SBIC Act" means the Small Business Investment Company Act of 1958, as
--------
amended.
"SBIC Holder" means each Cash Equity Investor that is an SBIC.
-----------
"SBIC Regulations" means the SBIC Act and the regulations issued
----------------
thereunder as set forth in 13 CFR ''107 and 121, as amended.
"Section 8.3 Indemnified Party" has the meaning set forth in Section
----------------------------- -------
8.3.
- ---
"Section 8.4 Indemnified Party" has the meaning set forth in Section
----------------------------- -------
8.4.
- ---
"Section 8.5 Indemnified Party" has the meaning set forth in Section
----------------------------- -------
8.5.
- ---
"Section 8.6 Indemnified Party" has the meaning set forth in Section
----------------------------- -------
8.5.
- ---
"Securities" means the shares of Common Stock, Series C Preferred
----------
Stock and Series D Preferred Stock to be issued hereunder in accordance with the
terms hereof, together with any shares of Series C Preferred Stock or Common
Stock issued upon conversion of any of the foregoing.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules, regulations and policies promulgated thereunder.
"Securities Purchase Agreement" means the Securities Purchase
-----------------------------
Agreement dated as of October 8, 1997 by and among the Company, AT&T PCS, the
Cash Equity Investors and certain of the Management Stockholders, as amended by
that certain Amendment No. 1 to Securities Purchase Agreement and Consent
Agreement dated as of March 10, 1998, as the same may be amended, modified or
supplemented in accordance with the terms thereof.
-6-
<PAGE>
"Series A Preferred Stock" has the meaning set forth in Section
------------------------ -------
5.6(a).
"Series B Preferred Stock" has the meaning set forth in Section
------------------------ -------
5.6(a).
"Series C Preferred Stock" has the meaning set forth in Section
------------------------ -------
2.2(a).
"Series D Preferred Stock" has the meaning set forth in Section
------------------------ -------
2.2(b).
"Stockholders' Agreement" means the Stockholders' Agreement dated as
-----------------------
of February 4, 1998 by and among the Company, AT&T PCS, and the other
stockholders of the Company, as the same may be amended, modified or
supplemented in accordance with the terms thereof.
"Subsidiary" shall mean, with respect to any Person, a corporation or
----------
other entity of which 50% or more of the voting power or the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
"Transactions" means the transactions contemplated by this Agreement.
------------
"Transfer Taxes" has the meaning set forth in Section 3.3.
-------------- -----------
"Triton Management" means Triton Management Company, Inc., a Delaware
-----------------
corporation and Subsidiary of the Company.
"Triton Operating Company" means Triton PCS Operating Company L.L.C.,
------------------------
a Delaware limited liability company and Subsidiary of the Company.
"Triton PCS" means Triton PCS, Inc., a Delaware corporation and
----------
Subsidiary of the Company.
"Vesting Agreements" means the letter agreements dated as of February
------------------
4, 1998 among the Company, Triton Management and each of Clyde Smith, David
Clark, Patricia Gallagher, David Standig, Michael Mears, and any other Person
who has been required to sign a similar agreement (including the Independent
Directors pursuant to letter agreements dated as of June 26, 1998) as a
condition to the award of any of the Company's Capital Stock, each as amended as
of June 29, 1998 and as the same may be amended, modified or supplemented in
accordance with the terms thereof.
ARTICLE II
CONTRIBUTIONS; PURCHASE AND SALE
OF SECURITIES; CERTAIN RESTRICTIONS ON TRANSFER
-----------------------------------------------
-7-
<PAGE>
1.1 Norfolk Commitments. Upon the terms and subject to the
-------------------
conditions hereof and in reliance upon the representations, warranties and
agreements herein contained: (a) each Cash Equity Investor hereby irrevocably
commits, severally and not jointly, to contribute to the capital of the Company
an amount equal to its Norfolk Commitment, and (b) at the Closing, each Cash
Equity Investor shall contribute to the capital of the Company an amount equal
to its Norfolk Commitment and the Company shall accept such Contribution to the
capital of the Company.
1.2 Issuance of Securities. Upon terms and subject to the
----------------------
conditions hereof and in reliance upon the representations, warranties and
agreements herein contained, in consideration of the Transactions, the Company
shall issue, sell and deliver to the Cash Equity Investors, the Management
Stockholders and the Independent Directors the following Securities at the
Closing:
(1) to each of the Cash Equity Investors, the number of shares of the
Company's Series C Convertible Preferred Stock, par value $.01 per share (the
"Series C Preferred Stock"), the terms of which are set forth in the Restated
------------------------
Certificate, which, subject to the terms thereof, are convertible at any time
into shares of newly issued common stock, par value $.01 per share (the "Common
------
Stock") of the Company (as provided in the Restated Certificate), set forth
- -----
opposite its name on Schedule I under the heading "Number of Norfolk Shares";
----------
(2) to AT&T PCS, that number of shares, as set forth in the Norfolk
Acquisition Agreement (i.e., 134,813.49 shares), of the Company's Series D
Convertible Preferred Stock, par value $.01 per share (the "Series D Preferred
------------------
Stock"), the terms of which are set forth in the Restated Certificate, which,
- -----
subject to the terms thereof, are convertible at any time into shares of newly
issued Series C Preferred Stock or shares of newly issued Common Stock (as
provided in the Restated Certificate);
(3) to each of the Management Stockholders, the number of shares of
Common Stock set forth opposite his name on Schedule II under the heading
-----------
"Number of Norfolk Shares"; and
(4) to each of the Independent Directors, the number of shares of
Common Stock set forth opposite his name on Schedule III under the heading
------------
"Number of Norfolk Shares";
1.3 Restrictive Legends. Each certificate representing
-------------------
Securities (including Securities originally issued hereunder or delivered upon
conversion of the Preferred Stock, or delivered in substitution or exchange for
any of the foregoing) will bear a legend reading substantially as follows until
such Securities have been sold pursuant to an effective registration statement
under the Securities Act, Rule 144 under the Securities Act, or an opinion of
counsel reasonably satisfactory in form and substance to the Company and
otherwise in full compliance with any other applicable restrictions on transfer,
including those contained in this Agreement and the Stockholders= Agreement:
-8-
<PAGE>
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES OR `BLUE SKY' LAWS.
SAID SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF, UNLESS AND UNTIL REGISTERED UNDER
THE ACT AND THE RULES AND REGULATIONS THEREUNDER AND ALL APPLICABLE STATE
SECURITIES OR `BLUE SKY' LAWS OR EXEMPTED THEREFROM UNDER THE ACT AND ALL
APPLICABLE STATE SECURITIES OR `BLUE SKY' LAWS."
1.4 Use of Proceeds. The Company shall use the net cash
---------------
proceeds of its sale of Securities hereunder in respect of the Norfolk
Commitments for consummation of the Transactions contemplated by the Norfolk
Acquisition.
ARTICLE III
CLOSING
-------
1.5 Time and Place of Closing. Upon the terms and subject to
-------------------------
the conditions hereof, the closing of the Transactions (the "Closing") shall
-------
take place at the offices of Mayer, Brown & Platt, 1675 Broadway, New York, New
York at 10:00 a.m. local time on the twelfth Business Day following the date of
receipt of the last Consent required by subsections (a) through (c) of Section
--------
7.1, or at such other place and/or time and/or on such other date as the parties
- ---
may agree or as may be necessary to permit the fulfillment or waiver of the
conditions set forth in Article VII (the "Closing Date").
----------- ------------
1.6 Closing Actions and Deliveries. Upon the terms and subject
------------------------------
to the satisfaction or waiver by the appropriate parties, if applicable, of the
conditions set forth in Article VII, to effect the purchase and sale of the
-----------
Securities and consummate the Transactions, the parties shall on the Closing
Date take the following actions:
(1) Each Cash Equity Investor shall deliver to the Company by
wire transfer of immediately available funds to the account designated by the
Company on or prior to the Closing Date an amount equal to its respective
Norfolk Commitment as set forth on Schedule I.
----------
(2) The Company shall deliver to each Cash Equity Investor,
certificates, duly executed by authorized signatories of the Company,
representing shares of Series C Preferred Stock to be issued to each of them in
accordance with the terms of Section 2.2(a).
--------------
(3) The Company shall deliver to each Management Stockholder
and Independent Director, certificates, duly executed by authorized signatories
of the Company,
-9-
<PAGE>
representing shares of Common Stock to be issued to each of them in accordance
with the terms of Sections 2.2(c) and 2.2(d).
--------------------------
(4) On the terms and subject to the conditions contained in the
Norfolk Acquisition Agreement, the Company shall deliver to AT&T PCS a
certificate, duly executed by authorized signatories of the Company,
representing shares of Series D Preferred Stock to be issued to AT&T PCS in
accordance with the terms of Section 2.2(b).
--------------
(5) The parties shall execute and deliver or cause to be
executed and delivered all other documents, instruments, opinions and
certificates contemplated by this Agreement to be delivered at the Closing or
necessary and appropriate in order to consummate the Transactions.
1.7 Payment of Transfer Taxes. The Company shall pay or cause
-------------------------
to be paid at the Closing or, if due thereafter, promptly when due, all gross
receipts taxes, transfer taxes, sales taxes, stamp taxes, and any other taxes,
but excluding any Federal, State or local income taxes (collectively, "Transfer
--------
Taxes"), payable in connection with the transfer of the Contributions.
- -----
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CASH EQUITY INVESTORS,
-------------------------------------------------------
MANAGEMENT STOCKHOLDERS AND INDEPENDENT DIRECTORS
------------------------------------------------
Each of the Cash Equity Investors (as to itself), the Management
Stockholders (as to himself, and solely with respect to the representations
contained in Sections 4.1(e), 4.1(f), 4.7 and 4.8) and the Independent Directors
------------------------------------
(as to himself, and solely with respect to the representations and warranties
contained in Sections 4.1(e), 4.1(f), and 4.7 and 4.8), represents and warrants
-----------------------------------------
to the Company and each of the other parties as follows:
1.8 Organization, Power and Authority.
---------------------------------
(1) Each Cash Equity Investor is a corporation, general partnership
or limited partnership, duly organized, validly existing and in good standing
under the Laws of its jurisdiction of organization and has the requisite power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted.
(2) It has the requisite power and authority to execute, deliver and
perform this Agreement, each of the Related Agreement Amendments to which it is
(or be) a party and each other instrument, document, certificate and agreement
required or contemplated to be executed, delivered and performed by it hereunder
and thereunder to which it is or will be a party.
(3) It is duly qualified to do business in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification
-10-
<PAGE>
necessary other than any such jurisdiction in which the failure to be so
qualified would not have a Material Adverse Effect on it or materially adversely
affect the Transactions or its ability to perform its obligations under the
Related Agreements.
(4) The execution and delivery of this Agreement by it and the
consummation of the Transactions by it, including without limitation the
execution and delivery of the Related Agreement Amendments to which it is a
party, have been duly and validly authorized by its Board of Directors (or
equivalent body) and no other proceedings on its part which have not been taken
(including, without limitation, approval of its stockholders, partners or
members) are necessary to authorize this Agreement or to consummate the
Transactions.
(5) This Agreement has been duly executed and delivered by it and
constitutes its valid and binding obligation, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar Laws affecting or relating
to enforcement of creditors' rights generally and may be subject to general
principles of equity. Each of the Related Agreement Amendments to which it is a
party upon execution and delivery, shall constitute its valid and binding
obligation, enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar Laws affecting or relating to enforcement of creditors' rights generally
and may be subject to general principles of equity.
(6) As of the Closing Date, after giving effect to the Transactions,
it is not in breach of any obligation under this Agreement or any of the Related
Agreements.
1.9 Consents; No Conflicts. Neither the execution, delivery and
----------------------
performance by it of this Agreement or the Related Agreement Amendments to which
it is a party nor the consummation of the Transactions will (a) violate any
provision of its organizational documents; (b) constitute, with or without the
giving of notice or passage of time or both, a breach, violation or default,
create a Lien, or give rise to any right of termination, modification,
cancellation, prepayment or acceleration, under (i) any Law or License or (ii)
any note, bond, mortgage, indenture, lease, agreement or other instrument, in
each case which is applicable to or binding upon it or any of its assets; or (c)
require any Consent, other than those set forth on Schedule 4.2 or the approval
------------
of its board of directors, general partner, stockholders or similar constituent
bodies, as the case may be (which approvals have been obtained), except in each
case, where such breach, violation, default, Lien, right, or the failure to
obtain or give such Consent would not have a Material Adverse Effect on it or
materially adversely affect the Transactions or its ability to perform its
obligations under the Related Agreements and Related Agreement Amendments. To
its knowledge, there is no fact relating to it or its Affiliates that would be
reasonably expected to prevent it from consummating the Transactions or
performing its obligations under any of the Related Agreements and Related
Agreement Amendments or disqualify the Company from obtaining the Consents
(including without limitation, FCC Consent) required in order to consummate the
License Transfers as provided for in this Agreement.
-11-
<PAGE>
1.10 Litigation. There is no action, proceeding or investigation
----------
pending or, to its knowledge, threatened against it or any of its properties or
assets that would be reasonably expected to have an adverse effect on its
ability to consummate the Transactions or to fulfill its obligations under this
Agreement or any of the Related Agreements to which it is a party, or which
seeks to prevent or challenge the Transactions.
1.11 FCC Compliance. It complies with all eligibility rules issued by
--------------
the FCC to hold broadband PCS Licenses, including without limitation, FCC rules
on foreign ownership. Set forth opposite its name on Schedule 4.4 are all
------------
"attributable" interests (within the meaning of Section 20.6 of the FCC's rules)
that it holds in CMRS licenses that overlap the territory covered by the AT&T
PCS License.
1.12 Brokers. It has not employed any broker, finder or investment
-------
banker or incurred any liability for any brokerage fees, commissions or finder's
fees in connection with the Transactions.
1.13 Capital Commitment. Each Cash Equity Investor has, and will
------------------
have on the Closing Date, cash available to it in an amount sufficient to make
its respective Contributions in accordance with the terms of Section 2.1.
-----------
1.14 No Distribution. It is acquiring the Securities to be purchased
---------------
by it hereunder for the purpose of investment and not with a view to or for sale
in connection with any distribution thereof (other than in compliance with the
Securities Act and all applicable state securities Laws).
1.15 Investor Acknowledgments.
------------------------
(1) It is an "accredited investor" as defined in Regulation D of the
Securities Act. Its representatives have been provided an opportunity to ask
questions of, and have received answers thereto from, the Company and its
representatives regarding the terms and conditions of its purchase of
Securities, and the Company and its proposed business generally, and have
obtained all additional information requested by it to verify the accuracy of
all information furnished to it in connection with such purchase.
(2) It has such knowledge and experience in financial and business
affairs that it is capable of evaluating the merits and risks of purchasing the
Securities it is purchasing hereunder.
(3) It is not relying on and acknowledges that no representation is
being made by any other Cash Equity Investor, the Company or any of its
officers, employees, Affiliates, agents or representatives, or any Management
Stockholder or Independent Director, except for representations and warranties
expressly set forth in this Agreement and the Related Agreements, and, in
particular, it is not relying on, and acknowledges that no representation is
being made in respect of, (x) any projections, estimates or budgets delivered to
or made available to them of future revenues, expenses or expenditures, or
future results of operations and (y) any other information or documents
delivered
-12-
<PAGE>
or made available to it or its representatives, except for representations and
warranties expressly set forth in this Agreement and the Related Agreements.
(4) In deciding to invest in the Company, it has relied exclusively
on the representations and warranties expressly set forth in this Agreement and
the Related Agreements and the investigations made by itself and its
representatives and its and such representatives' knowledge of the industry in
which the Company operates. Based solely on such representations and warranties
and such investigations and knowledge, it has determined that the Securities it
is purchasing are a suitable investment for it.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
-----------
The Company represents and warrants to the Cash Equity Investors, the
Management Stockholders and the Independent Directors as follows:
1.16 Organization, Power and Authority.
---------------------------------
(1) Each of the Company and each of its Subsidiaries that is a
corporation is a corporation, duly organized, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted and as proposed to be
conducted. Each of the Company's Subsidiaries that is a limited liability
company is a limited liability company, duly formed, validly existing and in
good standing under the Laws of the jurisdiction of its formation and has the
requisite limited liability company power and authority to own, lease and
operate its properties and to carry on its business as now being conducted and
as proposed to be conducted pursuant to the Related Agreements.
(2) It has the requisite power, authority and/or legal capacity to
execute, deliver and perform this Agreement, each of the Related Agreement
Amendments to which it is (or shall be) a party and each other instrument,
document, certificate and agreement required or contemplated to be executed,
delivered and performed by it hereunder and thereunder to which it is or will be
a party.
(3) Each of the Company and each of its Subsidiaries is duly
qualified to do business in each jurisdiction where the character of its
properties owned or held under lease or the nature of its activities makes such
qualification necessary other than any such jurisdiction in which the failure to
be so qualified would not have a Material Adverse Effect on the Company or such
Subsidiary or materially adversely affect the Transactions or its ability to
perform its obligations under the Related Agreements.
-13-
<PAGE>
(4) The execution and delivery of this Agreement by the Company and
the consummation of the Transactions by the Company, including without
limitation the execution and delivery of the Related Agreement Amendments to
which it is a party, have been duly and validly authorized by the Board of
Directors of the Company and, no other corporate proceedings on the part of the
Company which have not been taken (including, without limitation, approval of
its stockholders) are necessary to authorize this Agreement or to consummate the
Transactions.
(5) This Agreement has been duly executed and delivered by the
Company and constitutes the valid and binding obligation of the Company,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar Laws affecting or relating to enforcement of creditors' rights generally
and may be subject to general principles of equity. Each of the Related
Agreement Amendments to which it is a party upon execution and delivery, shall
constitute the valid and binding obligation of it, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar Laws affecting or relating
to enforcement of creditors' rights generally and may be subject to general
principles of equity.
(6) As of the Closing Date, after giving effect to the Transactions,
the Company is not in breach of any obligation under this Agreement, any Related
Agreement or any of the Credit Documents.
1.17 Consents; No Conflicts. Neither the execution, delivery and
----------------------
performance by the Company of this Agreement and the Related Agreement
Amendments to which it is a party nor the consummation of the Transactions will
(a) violate any provision of the Company's organizational documents; (b)
constitute, with or without the giving of notice or passage of time or both, a
breach, violation or default, create a Lien (other than Liens under the Credit
Documents), or give rise to any right of termination, modification,
cancellation, prepayment or acceleration, under (i) any Law or License, or (ii)
any note, bond, mortgage, indenture, lease, agreement or other instrument, in
each case which is applicable to or binding upon the Company or any of its
assets; or (c) require any Consent on the part of the Company other than those
set forth on Schedule 5.2, except in each case where such breach, violation,
------------
default, Lien, right, or the failure to obtain or give such Consent would not
have a Material Adverse Effect on it or materially adversely affect the
Transactions, its ability to perform its obligations under the Related
Agreements and Related Agreement Amendments or the operation of the Company's
business after the Closing Date. To its knowledge, there is no fact relating to
it or its Affiliates that would be reasonably expected to prevent it from
consummating the Transactions or performing any of its obligations under the
Related Agreements and Related Agreement Amendments or disqualify the Company
from obtaining the Consents (including without limitation, FCC Consent) required
in order to consummate the License Transfers as provided for in this Agreement.
1.18 Litigation. There is no action, proceeding or investigation
----------
pending or, to the knowledge of the Company, threatened against the Company or
any of its properties or assets that would have an adverse effect on its ability
to consummate the Transactions or to fulfill its
-14-
<PAGE>
obligations under this Agreement or any of the Related Agreements, or to operate
its business after the Closing Date, or which seeks to prevent or challenge the
Transactions. There is no judgment, decree, injunction, rule or order
outstanding against the Company which would limit in any material respect the
ability of the Company to operate its business in the manner currently
contemplated.
1.19 FCC Compliance. Assuming the accuracy of the representations and
--------------
warranties contained in Section 4.4, it complies with all eligibility rules
-----------
issued by the FCC to hold broadband PCS Licenses, including without limitation,
FCC rules on foreign ownership, and with the CMRS spectrum cap as it applies to
the territory covered by the AT&T PCS License.
1.20 Brokers. The Company has not employed any broker, finder or
-------
investment banker or incurred any liability for any brokerage fees, commissions
or finder's fees in connection with the Transactions.
1.21 Capitalization.
--------------
(1) As of the date hereof, the authorized capital stock of the
Company consists of 10,000,000 shares of Common Stock, 1,000,000 shares of the
Company's Series A Convertible Preferred Stock, par value $0.01 per share
("Series A Preferred Stock"), 2,000,000 shares of the Company's Series B
------------------------
Preferred Stock, par value $.01 per share ("Series B Preferred Stock"),
------------------------
3,000,000 shares of Series C Preferred Stock, and 1,000,000 shares of Series D
Preferred Stock. As of the date hereof, there have been issued and are
outstanding 235,125.68 shares of Common Stock, 732,371 shares of Series A
Preferred Stock, no shares of Series B Preferred Stock, 1,750,000 shares of
Series C Preferred Stock and 366,131 shares of Series D Preferred Stock. The
record and beneficial owners of such outstanding shares of Common Stock and
Preferred Stock as of the date hereof are set forth on Schedule 5.6(a).
---------------
(2) As of the date hereof, except as set forth on Schedule 5.6(b),
---------------
there are not any existing options, warrants, calls, subscriptions, or other
rights, or other agreements or commitments, obligating the Company to issue,
transfer or sell any shares of capital stock of the Company, except the
Preferred Stock and Common Stock hereunder.
1.22 Shares. The shares of Preferred Stock being issued to the Cash
------
Equity Investors hereunder, when issued and paid for pursuant to the terms of
this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will be free of any Liens caused or created by the Company,
except as set forth in the Stockholders' Agreement and the Restated Certificate.
The shares of Common Stock or Preferred Stock, as the case may be, issued upon
conversion of the Preferred Stock, when issued pursuant to the terms of the
Preferred Stock, will be validly issued, fully paid and nonassessable, and will
be free of any Liens caused or created by the Company, except as set forth in
the Stockholders' Agreement and the Restated Certificate.
1.23 Subsidiaries. The Company owns directly or indirectly all of the
------------
outstanding shares of Capital Stock of each of its Subsidiaries, free and clear
of any Liens, except Liens granted
-15-
<PAGE>
to the lenders pursuant to the Credit Documents. Set forth on Schedule 5.8 is a
------------
complete list of its direct and indirect Subsidiaries indicating the
jurisdictions in which each such Subsidiary is organized or qualified to conduct
business.
1.24 Offering of Securities.
----------------------
(1) None of the Company or any Person acting on its behalf has
offered the Securities or any similar equity securities of the Company for sale
to, or solicited any offers to buy Securities or any similar equity securities
of the Company from, any Person, other than the Cash Equity Investors and a
limited number of other "accredited investors" (as defined in Rule 501(a) under
the Securities Act).
(2) Assuming the accuracy of the representations and warranties of
the Cash Equity Investors, the Management Stockholders and the Independent
Directors contained in Section 4.8, the offering and sale of Securities under
this Agreement to the Cash Equity Investors, the Management Stockholders and the
Independent Directors complies with all applicable requirements of Federal and
state securities Laws.
1.25 Small Business Matters. Neither the Company nor any Subsidiary:
----------------------
(a) presently engages in, and none of them shall hereafter engage in, any
activities, or (b) shall use directly or indirectly the proceeds from the sale
of the Securities for any purpose, which, in either case, a SBIC is prohibited
from engaging in or providing funds for by the SBIC Regulations (including Title
13, Code of Federal Regulations, Section 107.720).
ARTICLE VI
COVENANTS
---------
1.26 Consummation of Transactions. Each party shall use all
----------------------------
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things necessary, proper or advisable and
consistent with applicable Law to carry out all of its respective obligations
under this Agreement and to consummate the Transactions, which efforts shall
include, without limitation, the following:
(1) The parties shall use all commercially reasonable efforts to
cause the Closing to occur and the Transactions to be consummated in accordance
with the terms hereof, and, without limiting the generality of the foregoing, to
obtain all necessary Consents including, without limitation, the approval of
this Agreement and the Transactions by all Governmental Authorities and
agencies, including the FCC, applicable to the execution, delivery and
performance of this Agreement or the consummation of the Transactions, and to
make all filings with and to give all notices to third parties which may be
necessary or reasonably required in order for the parties to consummate the
Transactions.
-16-
<PAGE>
(2) Each party shall furnish to the other parties all information
concerning such party and its Affiliates reasonably required for inclusion in
any application or filing to be made by the Company or any other party in
connection with the Transactions or otherwise to determine compliance with
applicable FCC Law.
(3) Upon the request of any other party, each party shall forthwith
execute and deliver, or cause to be executed and delivered, such further
instruments of assignment, transfer, conveyance, endorsement, direction or
authorization and other documents as may reasonably be requested by such party
in order to effectuate the purposes of this Agreement.
Nothing in this Agreement shall be construed to require the parties to
consummate the Closing if any regulatory approval would require that it (i)
divest or hold separate any of its assets existing as of the date hereof other
than as contemplated by this Agreement or (ii) otherwise take or commit to take
any action that limits its freedom of action in any material respect with
respect to any of its businesses, product lines or assets.
1.27 [INTENTIONALLY OMITTED]
1.28 [INTENTIONALLY OMITTED]
1.29 [INTENTIONALLY OMITTED]
1.30 Use of Proceeds. The Company shall use the proceeds of the sale
---------------
of Securities only for the purpose described in Section 2.4.
1.31 SBIC Regulatory Provisions.
--------------------------
(1) The Company shall notify each SBIC Holder as soon as practicable
(and, in any event, not later than 15 days) prior to taking any action after
which the number of record holders of the Company's voting stock would be
increased from fewer than 50 to 50 or more, and the Company shall notify each
SBIC Holder of any other action or occurrence after which the number of record
holders of the Company's voting stock was increased (or would increase) from
fewer than 50 to 50 or more, as soon as practicable after the Company becomes
aware that such other action or occurrence has occurred or is proposed to occur.
(2) Within 75 days after the Closing, the Company shall deliver to
each SBIC Holder a written statement certified by the Company's president or
chief financial officer describing in reasonable detail the use of the proceeds
of the sale of Securities hereunder by the Company and its Subsidiaries. In
addition to any other rights granted hereunder, the Company shall grant each
SBIC Holder and the United States Small Business Administration (the "SBA")
---
access to the Company's records for the purpose of verifying the use of such
proceeds to the extent required pursuant to SBIC Regulations.
-17-
<PAGE>
(3) Promptly after the end of each fiscal year (but in any event
prior to February 28 of each year), the Company shall deliver to each SBIC
Holder a written assessment of the economic impact of each SBIC Holder's
investment in the Company, specifying the full-time equivalent jobs created or
retained in connection with the investment, the impact of the investment on the
revenues and profits of the business and on taxes paid by the business and its
employees.
1.32 Regulatory Compliance Cooperation. In the event that any SBIC
---------------------------------
Holder reasonably determines that it has a Regulatory Problem, to the extent
reasonably necessary, such SBIC Holder shall have the right to transfer its
Securities (and any shares of Common Stock issued upon conversion thereof) to
another Person without regard to any restrictions on transfer set forth in this
Agreement or in Section 4.1(c) of the Stockholders' Agreement and without
--------------
complying with the provisions of Section 4.3 of the Stockholders' Agreement, but
-----------
subject to the other provisions of the Stockholders' Agreement and all
applicable Laws, including without limitation federal and state securities Law
restrictions, and the Company shall take all such actions as are reasonably
requested by such SBIC Holder in order to (a) effectuate and facilitate such
transfer by such SBIC Holder of any Securities of the Company then held by such
SBIC Holder to such Person, (b) permit such SBIC Holder (or any of its
Affiliates) to exchange all or any portion of voting Securities then held by it
on a share-for-share basis for shares of a class of non-voting Securities of the
Company, which non-voting Securities shall be identical in all respects to such
voting Securities, except that such non-voting Securities (or Common Stock, as
applicable) shall be non-voting and shall be convertible into voting Securities
(or Common Stock, as applicable) on such terms as are requested by such SBIC
Holder in light of regulatory considerations then prevailing, (c) continue and
preserve the respective allocation of the voting interests with respect to the
Company arising out of the SBIC Holder's ownership of voting Securities and/or
provided for in the Stockholders' Agreement before the transfers and amendments
referred to in this Section (including entering into such additional agreements
as are reasonably requested by such SBIC Holder to permit any Person(s)
designated by such SBIC Holder) to exercise any voting power which is
relinquished by such SBIC Holder and (d) amend this Agreement, the Restated
Certificate, and any other related documents, agreements or instruments to
effectuate and reflect the foregoing. The parties to this Agreement agree to
vote their Securities in favor of such amendments and actions.
1.33 Related Agreement Amendments. Certain of the parties hereto
----------------------------
(and/or certain of their respective Affiliates) are (or, with respect to the
Resale Agreement, will be) parties to the Related Agreements. It is the
intention of the parties hereto that, upon consummation of the Transactions,
each Related Agreement shall be amended and/or restated as necessary (the
"Related Agreement Amendments") to give effect to, among other things, (a) the
----------------------------
additional Licenses acquired by the Company upon the Closing and (b) the
Securities issued to the Cash Equity Investors, the Management Stockholders and
the Independent Directors at the Closing, it being agreed that the rights and
obligations of the parties under the Related Agreements pertaining to the
Licenses and securities thereunder shall pertain also to the Licenses and
Securities hereunder. The parties agree to use their respective best efforts to
effectuate any and all such amendments at the Closing.
-18-
<PAGE>
1.34 Offering of Securities. None of the Company or any Person acting
----------------------
on its behalf will, directly or indirectly, take any action which might subject
the offering, issuance or sale of the Securities to the registration and
prospectus delivery requirements of Section 5 of the Securities Act.
1.35 Waiver of Preemptive Rights. With respect to the Transactions
---------------------------
and the issuance of the shares of Series C Preferred Stock, Series D Preferred
Stock and Common Stock hereunder, each of the Cash Equity Investors and the
Management Stockholders hereby waives (a) the notice requirements set forth in
Section 7.2 (b) of the Stockholders' Agreement and (b) its preemptive rights
- ---------------
that are afforded such party in Section 7.2 of the Stockholders Agreement.
-----------
ARTICLE VII
CLOSING CONDITIONS
------------------
1.36 Conditions to Obligations of All Parties. With respect to the
----------------------------------------
consummation of the Transactions, the obligation of each of the parties to
consummate the Transactions contemplated to occur at the Closing shall be
conditioned on the following, unless waived by each of the parties at or prior
to the Closing:
(1) Any applicable waiting period under the HSR Act shall have
expired or been terminated.
(2) The Consent of the FCC to any License Transfer shall have been
obtained pursuant to a Final Order, free of any conditions materially adverse to
the Company or any of the Cash Equity Investors. For the purposes of this
paragraph, "Final Order" means an action or decision that has been granted by
-----------
the FCC as to which (i) no request for a stay or similar request is pending, no
stay is in effect, the action or decision has not been vacated, reversed, set
aside, annulled or suspended and any deadline for filing such request that may
be designated by statute or regulation has passed, (ii) no petition for
rehearing or reconsideration or application for review is pending and the time
for the filing of any such petition or application has passed, (iii) the FCC
does not have the action or decision under reconsideration on its own motion and
the time within which it may effect such reconsideration has passed and (iv) no
appeal is pending including other administrative or judicial review, or in
effect and any deadline for filing any such appeal that may be designated by
statute or rule has passed.
(3) All Consents by any Governmental Authority (other than the
Consents referred to in paragraphs (a) and (b) above) or third parties required
to permit the consummation of the Transactions, the failure to obtain or make
which would be reasonably expected to have a Material Adverse Effect on the
Company or any of the Cash Equity Investors or materially adversely affect the
Transactions or its ability to perform its obligations under the Related
Agreements, shall have been obtained or made.
-19-
<PAGE>
(4) No preliminary or permanent injunction or other order, decree or
ruling issued by a Governmental Authority, nor any statute, rule, regulation or
executive order promulgated or enacted by any Governmental Authority, shall be
in effect that would (i) impose material limitations on the ability of any party
to consummate the Transactions or (ii) impair in any material respect the
operation of the Company.
1.37 Conditions to the Obligations of the Company. With respect to
--------------------------------------------
the consummation of the Transactions, the obligation of the Company to
consummate the Transactions shall be further conditioned upon the satisfaction
or fulfillment, at or prior to such Closing, of the following conditions, unless
waived by the Company at or prior to the Closing:
(1) The representations and warranties of each of the Cash Equity
Investors contained herein shall be true and correct in all material respects
(except for representations and warranties that are qualified as to materiality,
which shall be true and correct), in each case when made and at and as of the
Closing (except for representations and warranties made as of a specified date,
which shall be true and correct as of such date) with the same force and effect
as though made at and as of such time, except for inaccuracies in respect of the
representations and warranties set forth in Sections 4.3 and 4.5 (disregarding
--------------------
any qualifications as to materiality contained therein) that in the aggregate
would not be reasonably expected to have a Material Adverse Effect on the
Company or materially adversely affect the Transactions or its ability to
perform its obligations hereunder.
(2) Each Cash Equity Investor shall have performed in all material
respects all agreements contained herein required to be performed by it at or
before the Closing.
(3) An officer of each of the Cash Equity Investors shall have
delivered to the Company a certificate, dated the Closing Date, certifying as to
the fulfillment of the conditions set forth in paragraphs (a) and (b) above as
to such Cash Equity Investor.
(4) Each of the Related Agreement Amendments shall have been
executed and delivered by the parties thereto (other than the Company) and shall
be in full force and effect.
(5) The Company shall have received any Consent of the lenders that
may be required pursuant to the terms of the Credit Agreement.
(6) All corporate and other proceedings of each of the Cash Equity
Investors, and all documents and instruments incident thereto, shall be
reasonably satisfactory in form and substance to the Company, and each of the
Cash Equity Investors shall have delivered to the Company all such receipts,
documents, instruments and certificates, in form and substance reasonably
satisfactory to the Company, which the Company shall have reasonably requested
in order to consummate the Transactions.
-20-
<PAGE>
1.38 [INTENTIONALLY OMITTED]
1.39 Conditions to the Obligations of the Cash Equity Investors. The
----------------------------------------------------------
obligation of each Cash Equity Investor to consummate the Transactions shall be
further conditioned upon the satisfaction or fulfillment, at or prior to the
Closing, of the following conditions, unless waived by such Cash Equity Investor
at or prior to the Closing:
(1) The representations and warranties of each of the Company, each
other Cash Equity Investor, each Management Stockholder and each Independent
Director contained herein shall be true and correct in all material respects
(except for representations and warranties that are qualified as to materiality,
which shall be true and correct), in each case when made and at and as of such
Closing (except for representations and warranties made as of a specified date,
which shall be true and correct as of such date) with the same force and effect
as though made at and as of such time, except for inaccuracies in respect of the
representations and warranties set forth in Sections 4.3, 4.5, 5.3 and 5.5
---------------------
(disregarding any qualifications as to materiality contained therein) that in
the aggregate would not be reasonably expected to have a Material Adverse Effect
on the Company or materially adversely affect the Transactions or its ability to
perform its obligations hereunder.
(2) Each of the Company, each other Cash Equity Investor, each
Management Stockholder and each Independent Director shall have performed in all
material respects all agreements contained herein required to be performed by it
at or before the Closing.
(3) Each Management Stockholder, each Independent Director, and an
officer of each of the Company and each other Cash Equity Investor shall have
delivered to such Cash Equity Investor a certificate, dated the Closing Date,
certifying as to the fulfillment of the conditions set forth in paragraphs (a)
and (b) above as to itself.
(4) Such Cash Equity Investor shall have been furnished with an
Opinion of Counsel to each other Cash Equity Investor and the Company, each
dated the Closing Date.
(5) Each of the Related Agreement Amendments shall have been
executed and delivered by the parties thereto (other than the Cash Equity
Investors) and shall be in full force and effect.
(6) All corporate and other proceedings of each other Cash Equity
Investor and the Company in connection with the Transactions, and all documents
and instruments incident thereto, shall be reasonably satisfactory in form and
substance to such Cash Equity Investor, and each other Cash Equity Investor and
the Company shall have delivered to such Cash Equity Investor all such receipts,
documents, instruments and certificates, in form and substance reasonably
satisfactory to such Cash Equity Investor, which such Cash Equity Investor shall
have reasonably requested in order to consummate the Transactions.
-21-
<PAGE>
(7) For each SBIC Holder, the Company shall have prepared the Size
Status Declaration on Form 480, the Assurance of Compliance for
Nondiscrimination on Form 652 and the Portfolio Financing Report on Form 1031
(Parts A and B) (collectively, the "SBA Compliance Documents"), the Company
------------------------
shall have duly executed and delivered the Forms 480 and 652 to each SBIC
Holder, and all of the information set forth in the SBA Compliance Documents
shall be true and correct in all respects. The Company shall have delivered a
list, after giving effect to the Transactions, of: (i) the name of each of the
Company's directors, (ii) the name and title of each of the Company's officers
and (iii) the name of each of the Company's stockholders and the number and
class of shares held by each stockholder.
ARTICLE VIII
SURVIVAL AND INDEMNIFICATION
----------------------------
1.40 Survival. The representations and warranties made in this
--------
Agreement shall survive the Closing until the second anniversary thereof and
shall thereupon expire together with any right to indemnification in respect
thereof (except to the extent a written notice asserting a claim for breach of
any such representation or warranty and describing such claim in reasonable
detail shall have been given prior to such date to the party which made such
representation or warranty). The covenants and agreements contained herein to be
performed or complied with prior to the Closing shall expire at the Closing. The
covenants and agreements contained in this Agreement to be performed or complied
with after the Closing shall survive the Closing; provided that the right to
indemnification pursuant to this Article VIII in respect of a breach of a
------------
representation or warranty shall expire on the second anniversary of the Closing
(except to the extent written notice asserting a claim thereunder and describing
such claim in reasonable detail shall have been given prior to such date to the
party from whom such indemnification is sought). After the Closing, the sole and
exclusive remedy of the parties for any breach or inaccuracy of any
representation or warranty contained in this Agreement, or any other claim
(whether or not alleging a breach of this Agreement) that arises out of the
facts and circumstances constituting such breach or inaccuracy, shall be the
indemnity provided in this Article VIII.
------------
1.41 [INTENTIONALLY OMITTED]
1.42 Indemnification by the Cash Equity Investors. Each Cash Equity
--------------------------------------------
Investor, severally and not jointly, shall indemnify and hold harmless each of
the other Cash Equity Investors, the Company, each Management Stockholder, each
Independent Director and their respective Affiliates, and the shareholders,
members, managers, officers, employees, agents and/or the legal representatives
of any of them (each, a "Section 8.3 Indemnified Party"), against all Losses
-----------------------------
incurred by him or it in connection with the investigation, defense, or
disposition of any action, suit or other proceeding in which any Section 8.3
Indemnified Party may be involved or with which he or it may be threatened that
arises out of or results from (a) any representation or warranty of such Cash
Equity Investor contained in this Agreement being untrue in any material respect
as of the date on which it was made or (b) any material default by such Cash
Equity Investor or any of its Affiliates in the
-22-
<PAGE>
performance of their respective obligations under this Agreement, except to the
extent (but only to the extent) any such Losses arise out of or result from the
gross negligence or willful misconduct of such Section 8.3 Indemnified Party or
its Affiliates.
1.43 Indemnification by the Company. The Company shall indemnify and
------------------------------
hold harmless each Cash Equity Investor, each Management Stockholder, each
Independent Director and their respective Affiliates, and the shareholders,
members, managers, officers, employees, agents and/or the legal representatives
of any of them (each, a "Section 8.4 Indemnified Party"), against all Losses
-----------------------------
incurred by him or it in connection with the investigation, defense, or
disposition of any action, suit or other proceeding in which any Section 8.4
Indemnified Party may be involved or with which he or it may be threatened that
arises out of or results from (a) any representation or warranty of the Company
contained in this Agreement being untrue in any material respect as of the date
on which it was made or (b) any material default by the Company or any of its
Affiliates in the performance of their respective obligations under this
Agreement, except to the extent (but only to the extent) any such Losses arise
out of or result from the gross negligence or willful misconduct of such Section
8.4 Indemnified Party or its Affiliates.
1.44 Indemnification by the Management Stockholders. Each Management
----------------------------------------------
Stockholder, severally and not jointly, shall indemnify and hold harmless each
of the Cash Equity Investors, the Company, the Independent Directors, the other
Management Stockholders and their respective Affiliates, and the shareholders,
members, managers, officers, employees, agents and/or the legal representatives
of any of them (each, a "Section 8.5 Indemnified Party"), against all Losses
-----------------------------
incurred by him or it in connection with the investigation, defense, or
disposition of any action, suit or other proceeding in which any Section 8.5
Indemnified Party may be involved or with which he or it may be threatened that
arises out of or results from (a) any representation or warranty of such
Management Stockholder contained in this Agreement being untrue in any material
respect as of the date on which it was made or (b) any material default by such
Management Stockholder or any of its Affiliates in the performance of their
respective obligations under this Agreement, except to the extent (but only to
the extent) any such Losses arise out of or result from the gross negligence or
willful misconduct of such Section 8.5 Indemnified Party or its Affiliates.
1.45 Indemnification by the Independent Directors. Each Independent
--------------------------------------------
Director, severally and not jointly, shall indemnify and hold harmless each of
the Cash Equity Investors, the Company, any other Independent Director, the
Management Stockholders and their respective Affiliates, and the shareholders,
members, managers, officers, employees, agents and/or the legal representatives
of any of them (each, a "Section 8.6 Indemnified Party"), against all Losses
-----------------------------
incurred by him or it in connection with the investigation, defense, or
disposition of any action, suit or other proceeding in which any Section 8.6
Indemnified Party may be involved or with which he or it may be threatened that
arises out of or results from (a) any representation or warranty of such
Independent Director contained in this Agreement being untrue in any material
respect as of the date on which it was made or (b) any material default by such
Independent Director or any of its Affiliates in the performance of their
respective obligations under this Agreement, except to the extent (but only to
-23-
<PAGE>
the extent) any such Losses arise out of or result from the gross negligence or
willful misconduct of such Section 8.6 Indemnified Party or its Affiliates.
1.46 Procedures.
----------
(1) The terms of this Section 8.7 shall apply to any claim (a
-----------
"Claim") for indemnification under the terms of Sections 8.3, 8.4, 8.5 or 8.6.
-----------------------------
The Section 8.3 Indemnified Party, Section 8.4 Indemnified Party, Section 8.5
Indemnified Party or Section 8.6 Indemnified Party (each, an "Indemnified
- -----------------
Party"), as the case may be, shall give prompt written notice of such Claim to
the indemnifying party (the "Idemnifying Party") under the applicable Section,
-----------------
which party may assume the defense thereof, provided that any delay or failure
to so notify the Indemnifying Party shall relieve the Indemnifying Party of its
obligations hereunder only to the extent, if at all, that it is materially
prejudiced by reason of such delay or failure. The Indemnified Party shall have
the right to approve any counsel selected by the Indemnifying Party and to
approve the terms of any proposed settlement, such approval not to be
unreasonably delayed or withheld (unless such settlement provides only, as to
the Indemnified Party, the payment of money damages actually paid by the
Indemnifying Party and a complete release of the Indemnified Party in respect of
the claim in question). Notwithstanding any of the foregoing to the contrary,
the provisions of this Article VIII shall not be construed so as to provide for
the indemnification of any Indemnified Party for any liability to the extent
(but only to the extent) that such indemnification would be in violation of
applicable Law or that such liability may not be waived, modified or limited
under applicable Law, but shall be construed so as to effectuate the provisions
of this Article VIII to the fullest extent permitted by Law.
(2) In the event that the Indemnifying Party undertakes the defense
of any Claim, the Indemnifying Party will keep the Indemnified Party advised as
to all material developments in connection with such Claim, including, but not
limited to, promptly furnishing the Indemnified Party with copies of all
material documents filed or served in connection therewith.
(3) In the event that the Indemnifying Party fails to assume the defense
of any Claim within ten Business Days after receiving written notice thereof,
the Indemnified Party shall have the right, subject to the Indemnifying Party's
right to assume the defense pursuant to the provisions of this Article VIII, to
------------
undertake the defense, compromise or settlement of such Claim for the account of
the Indemnifying Party. Unless and until the Indemnifying Party assumes the
defense of any Claim, the Indemnifying Party shall advance to the Indemnified
Party any of its reasonable attorneys= fees and other costs and expenses
incurred in connection with the defense of any such action or proceeding. Each
Indemnified Party shall agree in writing prior to any such advancement that, in
the event he or it receives any such advance, such Indemnified Party shall
reimburse the Indemnifying Party for such fees, costs and expenses to the extent
that it shall be determined that he or it was not entitled to indemnification
under this Article VIII.
------------
(4) In no event shall an Indemnifying Party be required to pay in
connection with any Claim for more than one firm of counsel (and local counsel)
for each of the following groups
-24-
<PAGE>
of Indemnified Parties: (i) the Cash Equity Investors, their respective
Affiliates and the shareholders, members, managers, officers, employees, agents
and/or the legal representatives of any of them; and (ii) the Management
Stockholders, the Independent Directors, the Company, its Affiliates and the
shareholders, members, managers, officers, employees, agents and/or the legal
representatives of any of them.
1.47 Registration Rights. Notwithstanding anything to the contrary in
-------------------
this Article VIII, the indemnification and contribution provisions set forth in
------------
Sections 5(e) and 5(f) of the Stockholders' Agreement shall govern any claim
- ----------------------
made with respect to the registration statements filed pursuant to Section 5 of
---------
the Stockholders' Agreement or sales made thereunder.
1.48 Limit on Indemnity. So long as the Company does not conduct any
------------------
business or engage in any activities other than those described in the first
sentence of the definition of "Business" (as such term is defined in the
Stockholders' Agreement), each party waives its right to indemnification under
this Article VIII or any other right to assert any claim arising from any
------------
inaccuracy in the Company's representations and warranties set forth in Section
5.10 or the violation by the Company of the covenant set forth in Section 6.6(d)
--------------
to the extent such Section relates to ineligible or prohibited activities of
SBICs.
ARTICLE IX
TERMINATION
-----------
1.49 Termination. This Agreement may be terminated, without further
-----------
obligation of any party, except as set forth herein, at any time prior to the
Closing Date:
(1) by mutual written consent of the parties;
(2) by any party (other than any Management Stockholder or any
Independent Director) by written notice to the other parties, if the Closing
shall not have occurred on or before the date that is 10 months after the date
hereof, provided that the party electing to exercise such right is not otherwise
in breach of its obligations under this Agreement; or
(3) by any party by written notice to the other parties, if the
consummation of the Transactions shall be prohibited by a final, non-appealable
order, decree or injunction of a court of competent jurisdiction.
1.50 Effect of Termination. (a) In the event of a termination of this
---------------------
Agreement, no party hereto shall have any liability or further obligation to any
other party to this Agreement except as set forth in paragraph (b) below, and
except that nothing herein will relieve any party from liability for any breach
by such party of this Agreement.
-25-
<PAGE>
(1) In the event of a termination of this Agreement pursuant to
Section 9.1, all provisions of this Agreement shall terminate, except Section
- ----------- -------
6.2, and Articles VIII and X.
- --- -------------------
(2) Whether or not the Closing occurs, except as otherwise expressly
provided in this Agreement, all costs and expenses incurred in connection with
this Agreement and the Transactions shall be paid by the party incurring such
expenses.
ARTICLE X
MISCELLANEOUS PROVISIONS
------------------------
1.51 Amendment and Modification. This Agreement may be amended,
modified or supplemented only by written agreement of each of the parties.
1.52 Waiver of Compliance; Consents. Any failure of any of the
------------------------------
parties to comply with any obligation, covenant, agreement or condition herein
may be waived by the party or parties entitled to the benefits thereof only by a
written instrument signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirement for a waiver of
compliance as set forth in this Section 10.2.
------------
1.53 Notices. All notices or other communications hereunder shall be
-------
in writing and shall be given (and shall be deemed to have been duly given upon
receipt) by delivery in person, by facsimile transmission, or by overnight
courier or registered or certified mail (return receipt requested), postage
prepaid, with an acknowledgment of receipt signed by the addressee or an
authorized representative thereof, addressed as follows (or to such other
address for a party as shall be specified by like notice; provided that notice
of a change of address shall be effective only upon receipt thereof):
-26-
<PAGE>
If to a Cash Equity Investor, to its address set forth on Schedule I.
----------
With a copy to:
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Attention: Mark S. Wojciechowski
Facsimile: (212) 262-1910
If to the Company or any Management Stockholder or Independent
Director, to it or him/her:
c/o Triton Management Company, Inc.
375 Technology Drive
Malvern, PA 19355
Attention: Michael E. Kalogris
Steven R. Skinner
Facsimile: (610) 993-2683
With a copy to:
Kleinbard Bell & Brecker LLP
1900 Market Street, Suite 700
Philadelphia, PA 19103
Attention: Howard J. Davis
Facsimile: (215) 568-0140
And with a copy to each other party sent to the addresses set forth in
this Section 10.3.
------------
1.54 Expenses. The Company agrees to pay, and save the Cash Equity
--------
Investors harmless against, the reasonable fees and disbursements of counsel to
each of the Cash Equity Investors in connection with the preparation,
negotiation, execution and delivery of this Agreement, the instruments and
documents executed pursuant hereto or thereto or in connection herewith or
therewith, and the consummation the Transactions; provided, however, that as a
condition to the Company's foregoing obligation, counsel for the Cash Equity
Investors shall be directed to, and shall, deliver to the Company on a monthly
basis detailed invoices for legal services rendered during such month.
1.55 Parties in Interest; Assignment. This Agreement is binding
-------------------------------
upon and is solely for the benefit of the parties hereto and their respective
permitted successors, legal representatives and permitted assigns. None of the
Company or any Cash Equity Investor may assign its rights and
-27-
<PAGE>
obligations hereunder without the prior written consent of each of the other
parties, except (a) either Morgan Entity may assign its rights and obligations
hereunder to the other without any prior consent and (b) CB Capital Investors,
L.P. shall have the right to assign to one or more of its Affiliates, any and
all rights and obligations of C.B. Capital Investors, L.P. under this Agreement
(provided that such assignee shall have assumed in writing all the obligations
of C.B. Capital Investors, L.P. hereunder and no such assignment shall relieve
C.B. Capital Investors, L.P. of its obligations hereunder).
1.56 Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the Laws of the State of New York without giving
effect to the conflicts of Law principles thereof. The parties hereto hereby
irrevocably and unconditionally consent to submit to the non-exclusive
jurisdiction of the courts of the State Of New York and of the United States of
America located in the County of New York, New York (the "New York Courts") for
---------------
any litigation arising out of or relating to this Agreement and the
Transactions, waive any objection to the laying of venue of any such litigation
in the New York Courts and agrees not to plead or claim in any New York Court
that such litigation brought therein has been brought in an inconvenient forum.
1.57 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
1.58 Interpretation. The article and section headings contained in
--------------
this Agreement are for convenience of reference only, are not part of the
agreement of the parties and shall not affect in any way the meaning or
interpretation of this Agreement. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine or neuter, singular or plural, as
the identity of the antecedent Person or Person may require.
1.59 Entire Agreement. This Agreement, including the exhibits and
----------------
schedules and the certificates and instruments delivered
pursuant to the terms of this Agreement, embodies the entire agreement and
understanding of the parties hereto in respect of the Transactions. There are no
restrictions, promises, representations, warranties, covenants or undertakings,
other than those expressly set forth or referred to herein or therein. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such Transactions.
1.60 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any New York Courts.
1.61 Remedies Cumulative. All rights, powers and remedies provided
-------------------
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not
-28-
<PAGE>
alternative, and the exercise or beginning of the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party.
[signature pages follow]
* * *
-29-
<PAGE>
[SIGNATURE PAGES TO NORFOLK PREFERRED STOCK PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
Company:
TRITON PCS HOLDINGS, INC.
By:_______________________________________
Name:
Title:
AT&T PCS:
AT&T PCS WIRELESS, INC.
By:______________________________________
Name:
Title:
Cash Equity Investors:
CB CAPITAL INVESTORS, L.P.
By: CB Capital Investors, Inc.,
its general partner
By:_______________________________________
Name:
Title:
J.P. MORGAN INVESTMENT CORPORATION
By:_______________________________________
Name:
Title:
SIXTY WALL STREET SBIC FUND, L.P.
By: Sixty Wall Street SBIC Corporation
its general partner
By:________________________________________
Name:
Title:
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
PRIVATE EQUITY INVESTORS III, L.P.
By: Rohit M. Desai Associates III, L.L.C.,
its general partner
By:_______________________________________
Name:
Title:
EQUITY-LINKED INVESTORS-II
By: Rohit M. Desai Associates-II,
its general partner
By:_______________________________________
Name:
Title:
TORONTO DOMINION CAPITAL (U.S.A.), INC.
By:_______________________________________
Name:
Title:
FIRST UNION CAPITAL PARTNERS, INC.
By:_______________________________________
Name:
Title:
DAG-TRITON PCS, L.P.
By: Duff Ackerman Goodrich, LLC,
its general partner
By:_______________________________________
Name:
Title:
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
Management Stockholders:
___________________________________________
Michael E. Kalogris
___________________________________________
Steven R. Skinner
___________________________________________
David D. Clark
___________________________________________
Clyde Smith
___________________________________________
David Standig
___________________________________________
Michael Mears
___________________________________________
Michael E. Kalogris, as Trustee under
Amended and Restated Common Stock Trust
Agreement for Management Employees and
Independent Directors dated June 26, 1998
Independent Directors:
<PAGE>
___________________________________________
Scott Anderson
___________________________________________
John Beletic
<PAGE>
SCHEDULE I
Cash Equity Investors
<TABLE>
<CAPTION>
Aggregate Norfolk Number of Norfolk
Contribution Shares
----------------- -----------------
<S> <C> <C>
CB Capital Investors, L.P. $2,169,183 21,691.83
JP Morgan Capital Investment Corporation 0 0.00
Sixty Wall Street SBIC Fund, L.P. 0 0.00
Private Equity Investors III, L.P. 1,251,164 12,511.64
Equity-Linked Investors-II 1,251,164 12,511.64
Toronto Dominion Capital (U.S.A.) Inc. 625,574 6,255.74
First Union Capital Partners, Inc. 9,584,273 95,842.73
DAG-Triton PCS, L.P. 1,637,293 16,372.93
---------- ---------
Total $16,518,651 165,186.51
</TABLE>
<PAGE>
SCHEDULE I (cont.)
ADDRESS FOR NOTICES
-------------------
CB Capital Investors, L.P.
380 Madison Avenue, 12th Floor
New York, NY 10017
Attn: Arnie Chavkin
Tel: (212) 622-3100
Fax: (212) 622-3101
J.P. Morgan Investment Corporation
101 California Street, 38th Floor
San Francisco, CA 94111
Attn: John Watkins
Tel: (415) 954-3200
Fax: (415) 954-4737
Sixty Wall Street SBIC Fund, L.P.
101 California Street, 38th Floor
San Francisco, CA 94111
Attn: John Watkins
Tel: (415) 954-3200
Fax: (415) 954-4737
Private Equity Investors III, L.P.
540 Madison Avenue, 36th Floor
New York, NY 10022
Attn: Damon Ball
Tel: (212) 838-9191
Fax: (212) 838-9807
Equity-Linked Investors-II
540 Madison Avenue, 36th Floor
New York, NY 10022
Attn: Damon Ball
Tel: (212) 838-9191
Fax: (212) 838-9807
Toronto Dominion Capital (U.S.A.), Inc.
31 West 52nd Street
New York, NY 10019
Attn: Brian Rich
Tel: (212) 468-0740
Fax: (212) 974-0429
Toronto Dominion Capital (U.S.A.), Inc.
909 Fannin
Suite 1700
Houston, TX 77010
Attn: Martha Gariepy
Tel: (713) 653-8225
Fax: (713) 652-2647
First Union Capital Partners, Inc.
One First Union Center
301 South College Street / 5th Floor
Charlotte, NC 28288-0732
Attn: Watts Hamrick
Tel: (704) 374-4791
Fax: (704) 374-6711
DAG-Triton PCS, L.P.
Two Embarcadero Center
Suite 2930
San Francisco, CA 94111
Attn: John Duff
Tel: (415) 788-2755
Fax: (415) 788-7311
<PAGE>
SCHEDULE II
Management Stockholders
<TABLE>
<CAPTION>
Number of Norfolk
Shares
-----------------
<S> <C>
Michael E. Kalogris 13,333.33
Steven R. Skinner 10,000.00
David D. Clark 1,000.00
Clyde Smith 533.33
David Standig 500.00
Michael Mears 333.33
Michael E. Kalogris, as
Trustee under Amended and
Restated Common Stock
Trust Agreement for
Management Employees and
Independent Directors
dated June 26, 1998 7,393.16
---------
Total 33,093.15
</TABLE>
<PAGE>
SCHEDULE III
Independent Directors
<TABLE>
<CAPTION>
Number of Norfolk
Shares
-----------------
<S> <C>
Scott Anderson 120.09
John Beletic 120.09
------
Total 240.18
</TABLE>
<PAGE>
SCHEDULE 4.2
Cash Equity Investor Consents
-----------------------------
The execution, delivery and performance of the Agreement will or may
require the following consents, approvals and reviews:
1. The Federal Communications Commission
2. The Federal Trade Commission/Department of Justice
3. Various Governmental Authorities with respect to Franchise Laws
<PAGE>
SCHEDULE 4.4
Cash Equity Investor Attributable Interests
-------------------------------------------
None.
<PAGE>
SCHEDULE 5.2
Company Consents
----------------
The execution, delivery and performance of the Agreement will or may
require the following consents, approvals and reviews:
1. The Federal Communications Commission
2. The Federal Trade Commission/Department of Justice
3. Various Governmental Authorities with respect to Franchise Laws
4. The lenders pursuant to the terms of the Credit Agreement
<PAGE>
SCHEDULE 5.6(a)
Equity Ownership
----------------
<TABLE>
<CAPTION>
Shares
Stockholders Owned
- ------------------------------------------------------
<S> <C>
Series A Preferred Stock:
- ------------------------
AT&T Wireless PCS, Inc. 732,371.00
Total Series A 732,371.00
Series C Preferred Stock:
- ------------------------
CB Capital Investors, L.P. 511,818.79
J.P. Morgan Investment
Corporation 445,206.00
Sixty Wall Street SBIC
Fund, L.P. 23,907.00
Private Equity Investors III, L.P. 246,243.67
Equity-Linked Investors-II 246,243.67
Toronto Dominion Capital
(USA) Inc. 123,122.44
First Union Capital Partners, Inc. 81,543.21
Duff Ackerman Goodrich &
Associates, L.P. 64,415.22
Michael E. Kalogris 5,000.00
Steven R. Skinner 2,500.00
Total Series C 1,750,000.00
</TABLE>
<PAGE>
SCHEDULE 5.6(a) (cont.)
<TABLE>
<CAPTION>
Series D Preferred Stock:
- ------------------------
<S> <C>
AT&T Wireless PCS, Inc. 366,131.00
Total Series D 366,131.00
Common Stock:
- ------------
Michael E. Kalogris 94,050.27
Steven R. Skinner 70,537.70
David D. Clark 7,053.77
Clyde Smith 3,762.01
Patricia Gallagher 1,410.76
David Standig 3,526.89
Michael Mears 2,351.26
Scott Anderson 847.11
John Beletic 847.11
Michael E. Kalogris, as Trustee
under Amended and Restated
Common Stock Trust
Agreement for Management
Employees and Independent
Directors dated June 26, 1998 50,738.80
Total Common 235,125.68
</TABLE>
<PAGE>
SCHEDULE 5.6(b)
Obligations to Issue Capital Stock
----------------------------------
1. Pursuant to the terms of the Restated Certificate, the Series A
Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock,
the Company may be required under certain circumstances contained therein to
issue shares of Preferred Stock or Common Stock, as the case may be, upon
conversion thereof.
<PAGE>
SCHEDULE 5.8
COMPANY SUBSIDIARIES
--------------------
<TABLE>
<CAPTION>
State of Foreign
Subsidiary Organization Qualification
----------------------------------- ------------ --------------
<S> <C> <C>
1. Triton PCS, Inc. DE None
2. Triton Management Company, Inc. DE PA, VA, SC, NC
3. Triton PCS Holdings Company L.L.C. DE None
4. Triton PCS Property Company L.L.C. DE VA, SC, NC, GA
5. Triton PCS License Company L.L.C. DE None
6. Triton PCS Equipment Company L.L.C. DE VA, SC, NC, GA
7. Triton PCS Operating Company L.L.C. DE VA, SC, NC, GA
</TABLE>
<PAGE>
EXHIBIT 10.17
AMENDMENT NO. 1
TO
AT&T WIRELESS SERVICES
NETWORK MEMBERSHIP LICENSE AGREEMENT
AMENDMENT NO. 1 TO NETWORK MEMBERSHIP LICENSE AGREEMENT ("Amendment
No.1") dated as of December 31, 1998, by and between AT&T Corp., a New York
-----------
corporation, with offices located at 32 Avenue of the Americas, New York 10013,
for itself and its affiliated companies, including AT&T Wireless Services, Inc.
(collectively "Licensor"), and Triton PCS Operating Company L.L.C., a Delaware
limited liability company, with offices located at 101 Lindenwood Drive, Suite
125, Malvern, PA 19355 ("Licensee"). Certain capitalized terms used herein and
not otherwise defined have the meaning assigned to such term in the License
Agreement referred to below.
WHEREAS, Licensor and Licensee are parties to that certain Network
Membership License Agreement, dated as of February 4, 1998 (the"License
Agreement"), pursuant to which Licensor agreed to license and allow Licensee to
use the Licensed Marks in the Licensed Territory on the terms set forth in the
License Agreement;
WHEREAS, Licensee and an Affiliate of Licensor are parties to that
certain Asset Purchase Agreement, dated as of the date hereof (the "Asset
Purchase Agreement"), pursuant to which, among other things, Licensee has
acquired from such Affiliate of Licensor a portion of the A Block PCS License
for the Norfolk, Virginia BTA owned by such Affiliate of Licensor covering such
market, on the terms set forth therein; and
WHEREAS, pursuant to the Asset Purchase Agreement it was agreed, and
Licensee and Licensor desire, that the term "Licensed Territory" as used in the
License Agreement be amended to include the Norfolk, Virginia BTA, on the terms
and conditions set forth in this Amendment No. 1.
NOW THEREFORE, in consideration of the mutual promises and covenants
herein contained and for other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. Amendment. Schedule C to the License Agreement is hereby amended
---------
to include the following:
<PAGE>
"VI. From Richmond MTA" BTA Market Designator
----------------- ---------------------
Norfolk - Virginia Beach - Newport
News-Hampton, VA B324"
2. Severability of Provisions. Any provision of this Amendment No. 1
--------------------------
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or remaining provisions hereof or affecting the validity
or enforceability of such provision in any other jurisdiction.
3. Agreement to Remain in Full Force and Effect. This Amendment No.
--------------------------------------------
1 shall be deemed to be an amendment to the License Agreement. All references
to the License Agreement in any other agreements or documents shall on and after
the date hereof be deemed to refer to the License Agreement as amended hereby.
Except as amended hereby, the License Agreement shall remain in full force and
effect and is hereby ratified, adopted and confirmed in all respects.
4. Heading. The headings in this Amendment No. 1 are inserted for
-------
convenience and identification only and are not intended to describe, interpret,
define or limit the scope, extent or intent of this Amendment No. 1 or any
provision thereof.
5. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same Agreement.
6. Applicable Law; Jurisdiction. The construction, performance and
----------------------------
interpretation of this Agreement shall be governed by the U.S. Trademark Act, 15
U.S.C. 1051 et seq., and the internal, substantive laws of the State of New
York, without regard to its principles of conflicts of law; provided that if the
foregoing laws should be modified during the term hereof in such a way as to
adversely affect the original intent of the parties, the parties will negotiate
in good faith to amend this Amendment No. 1 to effectuate their original intent
as closely as possible.
-2-
<PAGE>
Executed as of the date first written above.
AT&T CORP. TRITON PCS OPERATING COMPANY
L.L.C.
By Triton Management Company, Inc., its
manager
By: /s/ [SIGNATURE ILLEGIBLE]^^
---------------------------------
Name: Signature Illegible By: /s/ [SIGNATURE ILLEGIBLE]^^
__________________________________
Title: Assistant Secretary Name:
Authorized Signatory Title:
-3-
<PAGE>
EXHIBIT 10.18
AMENDMENT NO. 2
TO
AT&T WIRELESS SERVICES
NETWORK MEMBERSHIP LICENSE AGREEMENT
AMENDMENT NO. 2 TO NETWORK MEMBERSHIP LICENSE AGREEMENT ("Amendment
No. 2") dated as of June 8, 1999, by and between AT&T Corp., a New York
corporation, with offices located at 32 Avenue of the Americas, New York, New
York 10013, for itself and its affiliated companies, including AT&T Wireless
Services, Inc. (collectively, "Licensor"), and Triton PCS Operating Company
L.L.C., a Delaware limited liability company, with offices located at 375
Technology Drive, Malvern, PA 19355 ("Licensee"). Certain capitalized terms used
herein and not otherwise defined have the meaning assigned to such term in the
License Agreement referred to below.
WHEREAS, Licensee and Licensor are parties to that certain Network
Membership License Agreement, dated as of February 4, 1998 (as amended, and
including the terms and conditions of the letter from Mary Hawkins-Key to Andrew
Price, dated October 20,1998, the "License Agreement"), pursuant to which
Licensor agreed to license and allow Licensee to use the Licensed Marks in the
Licensed Territory on the terms set forth in the License Agreement;
WHEREAS, Licensor and certain affiliates of Licensee are parties to
that certain License Exchange and Acquisition Agreement, dated as of June 8,
1999 (the "License Exchange and Acquisition Agreement"), pursuant to which,
among other things, (i) Licensor will acquire from an affiliate of Licensee a
portion of the A Block PCS License for the Washington-Baltimore MTA covering the
Cumberland, MD BTA and the Hagerstown, MD-Chambersburg, PA-Martinsburg, WV BTA
(collectively, the "Hagerstown\Cumberland Markets"), and, in exchange therefor,
such affiliate of Licensee will acquire from Licensor a portion of the A Block
PCS License for the Atlanta, GA MTA covering the Athens, GA BTA (the "Athens
Market"), and (ii) an affiliate of Licensee will acquire from Licensor a portion
of the A Block PCS License for the Atlanta, GA MTA covering each of Bryan
County, GA, Chatham County, GA, Effingham County, GA and Liberty County, GA
within the Atlanta, GA MTA (such counties, together with the Athens Market, are
hereinafter referred to as the "Additional Markets"), on the terms set forth
therein;
WHEREAS, pursuant to the License Exchange and Acquisition Agreement it
was agreed, and Licensee and Licensor desire, that the term "Licensed Territory"
as used in the License Agreement be amended to, among other things, include the
Additional Markets and
<PAGE>
delete the Hagerstown\Cumberland Markets, on the terms and conditions set forth
in this Amendment No. 2.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein and in the License Exchange and Acquisition Agreement and for
other good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged, the parties hereby agree as follows:
1. Amendment. Schedule C to the License Agreement is hereby amended
---------
and restated in its entirety as set forth in Schedule I hereto.
2. Severability of Provisions. Any provision of this Amendment No.
--------------------------
2 which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or remaining provisions hereof or affecting the validity
or enforceability of such provision in any other jurisdiction.
3. Agreement to Remain in Full Force and Effect. This Amendment No.
--------------------------------------------
2 shall be deemed to be an amendment to the License Agreement. All references
to the License Agreement in any other agreements or documents shall on and after
the date hereof be deemed to refer to the License Agreement as amended hereby.
Except as amended hereby, the License Agreement shall remain in full force and
effect and is hereby ratified, adopted and confirmed in all respects.
4. Heading. The headings in this Amendment No. 2 are inserted for
-------
convenience and identification only and are not intended to describe, interpret,
define or limit the scope, extent or intent of this Amendment No. 2 or any
provision thereof.
5. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same Agreement.
6. Applicable Law; Jurisdiction. The construction, performance and
----------------------------
interpretation of this Agreement shall be governed by the U.S. Trademark Act, 15
U.S.C. 1051 et seq., and the internal, substantive laws of the State of New
York, without regard to its principles of conflicts of law; provided that if the
foregoing laws should be modified during the term hereof in such a way as to
adversely affect the original intent of the parties, the parties will negotiate
in good faith to amend this Amendment No. 2 to effectuate their original intent
as closely as possible.
-2-
<PAGE>
Executed as of the date first written above.
AT&T CORP. TRITON PCS OPERATING COMPANY
L.L.C.
By: Triton Management Company, Inc., its
By: /s/ [SIGNATURE ILLEGIBLE]^^ manager
---------------------------
Name: SIGNATURE ILLEGIBLE
Title: Authorized Signatory By: /s/ David D. Clark
---------------------------------
Name: David D. Clark
Title: Senior Vice President &
Chief Financial Officer
-3-
<PAGE>
Schedule I
to Amendment No. 2
to License Agreement
SCHEDULE C
LICENSED TERRITORY
------------------
I. From Washington MTA BTA Market Designator
Charlottesville, VA B075
Fredericksburg, VA B156
Harrisonburg, VA B183
Winchester, VA B479
II. From Richmond MTA
Danville, VA B104
Lynchburg, VA B266
Martinsville, VA B284
Norfolk-Virginia Beach, Newport News,
Hampton, VA B324
Richmond, VA B374
Roanoke, VA B376
Staunton-Waynesboro, VA B430
III. From Knoxville MTA
Kingsport, Johnson City, TN-Bristol VA B229
Middlesboro, TN B295
IV. From Atlanta MTA
Augusta, GA B026
Savannah, GA (Beaufort, Hampton, Jasper,
Bryan, Effingham, Chatham and Liberty Counties) B410
Athens, GA B022
V. From Charlotte MTA
Anderson, SC B016
Ashville-Hendersonville, NC B020
Charleston, SC B072
Columbia, SC B091
Fayetteville-Lumberton, NC B141
Florence, SC B147
Goldsboro-Kinston, NC B165
Greenville-Spartanburg, SC B177
<PAGE>
Greenville-Washington, NC B176
Greenwood, SC B178
Hickory-Lenoir-Morgantan, NC B189
Jacksonville, NC B214
Myrtle Beach, SC B312
New Bern, NC B316
Orangeburg, SC B335
Roanoke Rapids, NC B377
Rocky Mount-Wilson, NC B382
Sumter, SC B436
Wilmington, NC B478
2
<PAGE>
EXHIBIT 10.20
AMENDMENT NO. 1
TO
STOCKHOLDERS' AGREEMENT
AMENDMENT NO. 1 TO STOCKHOLDERS' AGREEMENT ("Amendment No.1") dated as
of December 31, 1998, by and among AT&T WIRELESS PCS INC., a Delaware
corporation (together with its Affiliated Successors (as hereinafter defined),
"AT&T PCS"), the investors listed under the heading "Cash Equity Investors" on
the signature pages hereto (individually, each a "Cash Equity Investor" and,
collectively, with any of its Affiliated Successors, the "Cash Equity
Investors"), the individuals listed under the heading "Management Stockholders"
on the signature pages hereto (individually, each a "Management Stockholder"
and, collectively, the "Management Stockholders") and TRITON PCS HOLDINGS, INC.,
a Delaware corporation (the "Company"). Certain capitalized terms used herein
and not otherwise defined have the meaning assigned to such term in the
Stockholders' Agreement referred to below.
WHEREAS, each of the parties hereto (other than the Company) are
stockholders of the Company;
WHEREAS, the parties hereto are parties to that certain Stockholders'
Agreement, dated as of February 4, 1998 (the "Stockholders' Agreement"),
pursuant to which, among other things, the parties hereto entered into certain
agreements regarding the operation of the Company's business;
WHEREAS, AT&T PCS and the Company are parties to that certain Asset
Purchase Agreement, dated as of the date hereof, (the "Asset Purchase
Agreement") pursuant to which, among other things, the Company has acquired from
AT&T PCS, a portion of the A Block PCS License for the Norfolk, Virginia BTA
owned by AT&T PCS covering such market, on the term set forth thereon;
WHEREAS, pursuant to the Asset Purchase Agreement it was agreed, and
the Company and AT&T PCS desire, that the Stockholders' Agreement be amended to
provide that (i) the term "PCS Territory" as used in the Stockholders' Agreement
include the Norfolk, Virginia BTA, (ii) Schedule V to the Stockholders'
Agreement include the build-out plan for the Norfolk, Virginia BTA, and (iii)
Section 8.6(a) (Exclusivity) to the Stockholders' Agreement be amended and
restated as set forth on Exhibit 7.3(d) to the Asset Purchase Agreement.
NOW THEREFORE, in consideration of the mutual promises and covenants
herein contained and for other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
<PAGE>
1. Amendments.
----------
(a) Schedule VI to the Stockholders' Agreement is hereby amended and
restated in its entirety as set forth on Schedule 1 attached hereto.
(b) Schedule V to the Stockholders' Agreement, "Minimum Build-Out
Plan", shall be amended to include the Minimum Build-Out Plan for the Norfolk,
VA BTA as set forth in Schedule 2 to this Amendment No. 1.
(c) Section 8.6(a) of the Stockholders' Agreement is hereby amended
and restated in its entirety as set forth in Schedule 3 attached hereto.
2. Severability of Provisions. Any provision of this Amendment No.
--------------------------
1 which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or remaining provisions hereof or affecting the validity
or enforceability of such provision in any other jurisdiction.
3. Agreements to Remain in Full Force and Effect. This Amendment No.
---------------------------------------------
1 shall be deemed to be an amendment to the Stockholders' Agreement. All
references to the Stockholders' Agreement in any other agreements or documents
shall on and after the date hereof be deemed to refer to the Stockholders'
Agreement as amended hereby. Except as amended hereby, the Stockholders'
Agreement shall remain in full force and effect and is hereby ratified, adopted
and confirmed in all respects.
4. Heading. The headings in this Amendment No. 1 are inserted for
-------
convenience and identification only and are not intended to describe, interpret,
define or limit the scope, extent or intent of this Amendment No. 1 or any
provision thereof.
5. Counterparts. This Amendment No. 1 may be executed in
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.
6. Governing Law. This Amendment No. 1 shall be governed and
-------------
construed in accordance with the laws of the State of Delaware.
[signature pages follow]
-2-
<PAGE>
IN WITNESS WHEREOF, each of the parties has executed or consent this
Agreement be executed by its duly authorized officers as of the date first
written above.
AT&T WIRELESS PCS INC.
By: ________________________________
Name:
Title:
TRITON PCS HOLDINGS, INC.
By: /s/ [SIGNATURE ILLEGIBLE]^^
---------------------------------
Name:
Title:
CASH EQUITY INVESTORS:
CB CAPITAL INVESTORS, L.P.
By: CP Capital Investors, Inc., its general partner
By: /s/ [SIGNATURE ILLEGIBLE]^^
---------------------------------
Name: Arnold [ILLEGIBLE]^^
Title: Vice-President
J.P. MORGAN INVESTMENT CORPORATION
By: /s/ John W. Watkins
---------------------------------
Name: John Watkins
Title: Managing Director
-3-
<PAGE>
SIXTY WALL STREET SBIC FUND, L.P.
By: Sixty Wall Street SBIC Corporation, its general partner
By: /s/ John W. Watkins
---------------------------------------
Name: John Watkins
Title: Managing Director
PRIVATE EQUITY INVESTORS III, L.P.
By: Rohit M. Desai Associates, III, L.L.C., its general partner
By:_______________________________________
Name:
Title:
EQUITY-LINKED INVESTORS-II
By Rohit M. Desai Associates-II, its general partner
By:_______________________________________
Name:
Title:
TORONTO DOMINION CAPITAL (USA), INC.
By:_______________________________________
Name:
Title:
-4-
<PAGE>
FIRST UNION CAPITAL PARTNERS, INC.
By: /s/ [SIGNATURE ILLEGIBLE]^^
------------------------------------
Name: [SIGNATURE ILLEGIBLE]^^
Title: S V P
DAG-TRITON PCS, L.P.
By: Duff Ackerman Goodrich, L.L.C., its general partner
By: /s/ John M. Duff Jr.
------------------------------------
Name: John M. Duff Jr.
Title: Managing Member
MANAGEMENT STOCKHOLDERS:
MICHAEL E. KALOGRIS
/s/ Michael E. Kalogris
---------------------------------------
STEVEN R. SKINNER
/s/ Steven R. Skinner
---------------------------------------
DAVID D. CLARK
/s/ David D. Clark
---------------------------------------
CLYDE SMITH
/s/ Clyde Smith
---------------------------------------
-5-
<PAGE>
PATRICIA GALLAGHER
_______________________________________
DAVID STANDIG
/s/ David L. Standig
---------------------------------------
MICHAEL MEARS
/s/ Michael C. Mears
---------------------------------------
MICHAEL E. KALOGRIS, AS TRUSTEE
UNDER AMENDED AND RESTATED COMMON
STOCK TRUST AGREEMENT FOR MANAGEMENT
EMPLOYEES AND INDEPENDENT DIRECTORS
DATED JUNE 26, 1998
/s/ Michael E. Kalogris
---------------------------------------
SCOTT ANDERSON
/s/ Scott Anderson
---------------------------------------
JOHN BELETIC
/s/ John Beletic
---------------------------------------
-6-
<PAGE>
SCHEDULE I
SCHEDULE VI
PCS TERRITORY
-------------
I. From Washington MTA BTA Market Designator
Charlottesville, VA B075
Cumberland, MD B100
Fredericksburg B156
Harrisonburg, VA B183
Hagerstown, MD-Chambersburg
PA-Martinsburg, WV B179
Winchester, VA B479
II. From Richmond MTA
Danville, VA B104
Lynchburg, VA B266
Martinsville, VA B284
Norfolk-Virginia Beach, Newport News
Hampton, VA B324
Richmond, VA B374
Roanoke, VA B376
Staunton-Waynesboro, VA B430
III. From Knoxville MTA
Kingsport, Johnson City, TN-Bristol VA B229
Middlesboro, TN B295
IV. From Atlanta MTA
Augusta, GA B026
Savannah, GA (Beaufort, Hampton)
and Jasper Counties) B410
V. From Charlotte MTA
Anderson, SC B016
Ashville-Hendersonville, NC B020
Charleston, SC B072
Columbia, SC B091
Fayetteville-Lumbertan, NC B141
Florence, SC B147
Goldsboro-Kinston, NC B165
Greenville-Spartanburg, SC B177
Greenville-Washington, NC B176
<PAGE>
Greenwood, SC B178
Hickory-Lenoir-Morgantan, NC B189
Jacksonville, NC B214
Myrtle Beach, SC B312
New Bern, NC B316
Orangeburg, SC B335
Roanoke Rapids, NC B377
Rocky Mount-Wilson, NC B382
Sumter, SC B436
Wilmington, NC B478
<PAGE>
Schedule 2
TRITON COMMUNICATIONS
MINIMUM BUILD-OUT SCHEDULE
NORFOLK, VIRGINIA BTA
____ millions pops/1/ (80% of total pops) within 5 years of the closing of
the Securities Purchase Agreement, with such minimum build-out bench marks
within such five year period as shall be mutually agreed to by AT&T PCS and the
Company.
_______________________
/1/ The number of pops will equal 80% of the total pops in the Norfolk,
Virginia BTA.
<PAGE>
SCHEDULE 3 TO AMENDMENT NO. 1
TO STOCKHOLDERS' AGREEMENT
8.6 Exclusivity.
-----------
(a) None of the Stockholders or their respective Affiliates will
provide or resell, or act as the agent for any Person offering, within the
Territory, Company Communications Services except that, AT&T PCS and its
Affiliates may (i) resell, or act as the Company's agent for, Company
Communications Services provided by the Company in accordance with the Resale
Agreement (or any other agreement between AT&T PCS and its Affiliates, on the
one hand, and the Company, on the other hand), including bundling any such
Company Communications Services with other telecommunications services marketed,
offered and provided or resold by such Person, (ii) provide or resell wireless
telecommunications services to or from specific locations (such as buildings or
office complexes), even if the subscriber equipment used in connection with such
service may be capable of routine movement within a limited area (such as a
building or office complex), and even if such subscriber equipment may be
capable of obtaining other telecommunications services beyond such limited area
(which other services may include routine movement beyond such limited area) and
hand-off between the service to such specific locations and such other
telecommunications services; provided, however, that if AT&T PCS or any of its
Affiliates sells such mobile wireless subscriber equipment such equipment shall
be capable of providing (but not necessarily on an exclusive basis) Company
Communications Services and (iii) resell Company Communications Services
provided by a Person other than the Company in any geographical area within the
Territory in which the Company has not placed a Company System into commercial
service (it being understood that in the event that AT&T PCS or any of its
Affiliates that is reselling Company Communication Services of a Person other
than the Company in a geographic area within the Territory at the time the
Company places a portion of a Company System including such geographic area into
commercial service, AT&T PCS or its Affiliates, as applicable, shall terminate
such resale arrangement with respect to such geographic areas within thirty (30)
days of the date such portion of a Company System is placed in commercial
service). AT&T PCS agrees to provide the Company with not less than sixty (60)
days' prior notice of AT&T PCS's intention to engage in any resale activities
described in clause (iii) hereof to provide the Company with the opportunity to
discuss such proposed resale activities with AT&T PCS, such notice to include
(x) a reasonable description of such resale activities (including, without
limitation, the identity, if known by AT&T PCS at such time, of the Person AT&T
PCS intends to engage to provide such Company Communications Services) and (y)
AT&T PCS's confirmation that only dual band/dual mode phones shall be used in
connection with such resale activities. AT&T PCS further agrees that upon a
Company System being placed into commercial operation in any such geographic
area within the Territory it will transfer all of its subscribers in such
geographic area to the Company System either directly to the Company or on the
terms and subject to the conditions contained in the Resale Agreement. In
connection with any such transfer, AT&T PCS will use its best efforts to
facilitate such transfer, including cooperating with the Company regarding the
form(s) of notice to be sent to such subscribers informing them of such
transfer. To the extent the "other telecommunications services" referred to in
clause (ii) of the immediately preceding sentence constitute Company
Communications Services, neither AT&T
<PAGE>
PCS nor any of its Affiliates may provide or resell, or act as agent for any
Person offering, such "other telecommunications services" except in accordance
with the terms of clause (i) of the immediately preceding sentence. Nothing
herein shall be construed to limit in any respect any advertising and
promotional and similar activities by AT&T PCS or its Affiliates or any Cash
Equity Investor or any of its Affiliates.
<PAGE>
EXHIBIT 10.21
AMENDMENT NO. 2
TO
STOCKHOLDERS' AGREEMENT
AMENDMENT NO. 2 TO STOCKHOLDERS' AGREEMENT ("Amendment No. 2") dated
as of June 8, 1999, by and among AT&T WIRELESS PCS INC., a Delaware corporation
(together with its Affiliated Successors (as hereinafter defined), "AT&T PCS"),
the investors listed under the heading "Cash Equity Investors" on the signature
pages hereto (individually, each a "Cash Equity Investor" and, collectively,
with any of their respective Affiliated Successors, the "Cash Equity
Investors"), the individuals listed under the heading "Management Stockholders"
on the signature pages hereto (individually, each a "Management Stockholder"
and, collectively, the "Management Stockholders") and TRITON PCS HOLDINGS, INC.,
a Delaware corporation (the "Company"). Certain capitalized terms used herein
and not otherwise defined have the meaning assigned to such term in the
Stockholders' Agreement referred to below.
WHEREAS, each of the parties hereto (other than the Company) are
Stockholders of the Company;
WHEREAS, the parties hereto are parties to that certain Stockholders'
Agreement, dated as of February 4, 1998 (as amended, the "Stockholders'
Agreement"), pursuant to which, among other things, the parties hereto entered
into certain agreements regarding the operation of the Company's business;
WHEREAS, AT&T PCS, the Company and Triton PCS License Company L.L.C.,
Delaware limited liability company and an indirect wholly-owned subsidiary of
the Company ("Triton License Company"), are parties to that certain License
Exchange and Acquisition Agreement, dated as of June 8, 1999 (the "License
Exchange and Acquisition Agreement"), pursuant to which, among other things,
effective upon the closing of the transactions contemplated thereby (the
"License Exchange and Acquisition Closing"), (i) AT&T PCS will acquire from
Triton License Company a portion of the A Block PCS License for the Washington-
Baltimore MTA covering the Cumberland, MD BTA and the Hagerstown, MD-
Chambersburg, PA-Martinsburg, WV BTA (collectively, the "Hagerstown\Cumberland
Markets"), and, in exchange therefor, Triton License Company will acquire from
AT&T PCS a portion of the A Block PCS License for the Atlanta, GA MTA covering
the Athens, GA BTA (the "Athens Market"), and (ii) the Company will acquire from
AT&T PCS a portion of the A Block PCS License for the Atlanta, GA MTA covering
each of Bryan County, GA, Chatham County, GA, Effingham County, GA and Liberty
County, GA within the Atlanta, GA MTA (such counties, together with the Athens
Market, are hereinafter referred to as the "Additional Markets"), on the terms
set forth therein;
<PAGE>
WHEREAS, pursuant to the License Exchange and Acquisition Agreement it
was agreed, and the Company and AT&T PCS desire, that, effective upon the
License Exchange and Acquisition Closing, the Stockholders' Agreement be amended
to provide that (i) the terms "Business" and "PCS Territory", each as used in
the Stockholders Agreement, be amended to, among other things, include the
Additional Markets and delete the Hagerstown/Cumberland Markets; and (ii)
Schedule V to the Stockholders' Agreement include the build-out plan for the
Additional Markets and delete the portion of the build-out plan relating to the
Hagerstown/ Cumberland Markets (collectively, the "License Exchange and
Acquisition Amendments"); and
WHEREAS, the Stockholders desire to clarify certain other provisions
of the Stockholders' Agreement.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein and in the License Exchange and Acquisition Agreement and for
other good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged, the parties hereby agree as follows:
1. Amendments. (a) From and after the Amendment Effectiveness Date
----------
(as hereinafter defined):
(i) Section 3.1(d) of the Stockholders' Agreement shall be
amended and restated in its entirety as follows:
"(d) one (1) individual nominated by AT&T PCS pursuant to the
Restated Certificate in its capacity as holder of Series A Preferred
Stock (the "Series A Preferred Director") so long as it has the right
to nominate one director in accordance with the Restated Certificate";
(ii) The second sentence immediately following clause (d) of
Section 3.1 of the Stockholders' Agreement shall be amended and
restated in its entirety as follows:
"In the event that AT&T PCS shall cease to be entitled to
nominate the Series A Preferred Director, such director shall resign
(or the other directors or Stockholders shall remove such director)
from the Board of Directors and the remaining directors shall take
such action so that the number of directors constituting the entire
Board of Directors shall be reduced accordingly.";
(iii) The last sentence of the penultimate paragraph of Section
3.1 of the Stockholders' Agreement shall be amended and restated
in its entirety as follows:
-2-
<PAGE>
"In addition, so long as AT&T PCS has the right to nominate one
director in accordance with the Restated Certificate, up to two (2)
Regional Directors (in regions overlapping with or in geographic
proximity to the Territory) shall have the right to attend each
meeting of the Board of Directors as an observer.";
(iv) The following Section 3.11 shall be added to the
Stockholders' Agreement in its entirety:
"3.11. Series A Preferred Director. For so long as AT&T PCS
---------------------------
shall have the right to nominate a Series A Preferred Director to the
Board of Directors in accordance with the Restated Certificate, each
of the Stockholders hereby agrees that it will vote all of the shares
of Series C Preferred Stock and Common Stock owned or held of record
by it (whether now owned or hereafter acquired), in person or by
proxy, to cause the election of any such Series A Preferred Director
so nominated by AT&T PCS to serve on the Board of Directors and such
obligation of the Stockholders to cause the election of any such
Series A Preferred Director shall continue until the termination of
this Agreement in accordance with Section 12.3."
(v) Clause (a) of the definition of "Business" contained in
Section 1 of the Stockholders' Agreement is hereby amended and
restated as follows:
"(a) owning, constructing and operating systems to provide
Company Communications Services on frequencies licensed to the Company
for Commercial Mobile Radio Services pursuant to the Licenses
described on Schedule XII;"
(vi) Schedule 1 hereto is hereby added to the Stockholders'
Agreement in its entirety as Schedule XII thereto; and
(b) From and after the later to occur of (x) the Amendment
Effectiveness Date, and (y) the date of the License Exchange and Acquisition
Closing, without any further action on the part of the parties hereto, the
License Exchange and Acquisition Amendments shall be effective and in full force
and effect as set forth below:
(i) Schedule V to the Stockholders' Agreement, "Minimum Build-
Out Plan", shall be amended and restated in its entirety as set
forth on Schedule 2 hereto; and
(ii) Schedule VI to the Stockholders' Agreement, "PCS Territory",
is hereby amended and restated in its entirety as set forth on
Schedule 3 hereto:
-3-
<PAGE>
(iii) Schedule XII to the Stockholders' Agreement is hereby
amended as follows:
(A) To include the following PCS License:
"4. The 20 MHz PCS License covering the Athens, GA BTA
within the Atlanta, GA MTA and each of Bryan County, GA,
Effingham County, GA, Chatham County, GA and Liberty County, GA
within the Atlanta, GA MTA acquired by the Company pursuant to
the License Exchange and Acquisition Agreement dated as of June
8, 1999 among AT&T PCS, the Company and Triton PCS License
Company L.L.C."; and
(B) Item 1 of Schedule XII to the Stockholders' Agreement is hereby
amended and restated in its entirety as follows:
"1. The AT&T PCS Contributed Licenses; provided, that, the AT&T
Contributed PCS Licenses shall not include any portion of such Licenses covering
the Hagerstown, MD-Chambersburg, PA-Martinsburg, WV BTA or the Cumberland, MD
BTA".
2. Amendment Effectiveness Date. This Amendment No. 2 shall be
----------------------------
effective on the date that a counterpart hereof shall have been executed by each
of the Company, AT&T PCS, holders of 66 2/3% of the Common Stock Beneficially
Owned by the Cash Equity Investors and holders of 60.1% of the Common Stock
Beneficially Owned by the Management Stockholders (the "Amendment Effectiveness
Date").
3. Representation and Warranties. (a) Each of the Company, as to
-----------------------------
itself, each Cash Equity Investors, as to itself, and AT&T PCS, as to itself,
represents and warrants, as applicable, to each of the other parties as follows:
(i) It is a corporation, limited liability company, general
partnership or limited partnership, duly organized, validly
existing and in good standing under the laws of its jurisdiction
of organization and has the requisite power and authority to own,
lease and operate its properties and to carry on its business as
now being conducted.
(ii) It has the requisite power, authority and capacity to
execute, deliver and perform this Amendment No. 2.
(iii) The execution and delivery of this Amendment No. 2 by it
have been duly and validly authorized by its Board of Directors
(or equivalent body) and no other proceedings on its part which
have not been taken (including,
-4-
<PAGE>
without limitation, approval of its stockholders, partners or
members, as applicable) are necessary to authorize this Amendment
No. 2.
(iv) This Amendment No. 2 has been duly executed and delivered
by it and constitutes its valid and binding obligation,
enforceable against it in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally and may be subject to
general principles of equity.
(v) The execution, delivery and performance by it of this
Amendment No. 2 will not (A) conflict with, or result in a breach
or violation of, any provision of its organizational documents;
(B) constitute, with or without the giving of notice or passage
of time or both, a breach, violation or default, create a Lien,
or give rise to any right of termination, modification,
cancellation, prepayment or acceleration, under (x) any Law or
License, or (y) any note, bond, mortgage, indenture, lease,
agreement or other instrument, in each case which is applicable
to or binding upon it or any of its assets; or (c) require any
Consent, or the approval of its board of directors, general
partner, stockholders or similar constituent bodies, as the case
may be (which approvals have been obtained), except in each case,
where such breach, violation, default, Lien, right, or the
failure to obtain or give such Consent would not have a material
adverse effect on it or its ability to perform its obligations
hereunder.
(vi) There is no action, proceeding or investigation pending or,
to its knowledge, threatened against it or any of its properties
or assets that would be reasonably expected to have a material
adverse effect on its ability to enter into this Amendment No. 2
or to fulfill its obligations hereunder.
(b) Each Management Stockholder represents and warrants, as to
itself, to each of the other parties as follows:
(i) He or she has the requisite capacity to execute, deliver
and perform this Amendment No. 2.
(ii) This Amendment No. 2 has been duly executed and delivered
by him or her and constitutes his or her valid and binding
obligation, enforceable against him or her in accordance with its
terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or
-5-
<PAGE>
other similar laws affecting or relating to enforcement of
creditors' rights generally and may be subject to general
principles of equity.
(iii) The execution, delivery and performance by him or her of
this Amendment No. 2 will not require any Consent, except in each
case, where the failure to obtain or give such Consent would not
have a material adverse effect on his or her ability to perform
its or his obligations hereunder.
(iv) There is no action, proceeding or investigation pending
or, to the knowledge of him or her, threatened against him or her
or any of his or her properties or assets that would be
reasonably expected to have a material adverse effect on his or
her ability to enter into this Amendment No. 2 or to fulfill his
or her respective obligations hereunder.
4. Severability of Provisions. Any provision of this Amendment No.
--------------------------
2 which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or remaining provisions hereof or affecting the validity
or enforceability of such provision in any other jurisdiction.
5. Agreements to Remain in Full Force and Effect. This Amendment
---------------------------------------------
No. 2 shall be deemed to be an amendment to the Stockholders' Agreement. All
references to the Stockholders' Agreement in any other agreements or documents
shall on and after the date hereof be deemed to refer to the Stockholders'
Agreement as amended hereby. Except as amended hereby, the Stockholders'
Agreement shall remain in full force and effect and is hereby ratified, adopted
and confirmed in all respects.
6. Heading. The headings in this Amendment No. 2 are inserted for
-------
convenience and identification only and are not intended to describe, interpret,
define or limit the scope, extent or intent of this Amendment No. 2 or any
provision thereof.
7. Counterparts. This Amendment No. 2 may be executed in
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.
8. Governing Law. This Amendment No. 2 shall be governed and
-------------
construed in accordance with the laws of the State of Delaware.
[signature pages follow]
-6-
<PAGE>
IN WITNESS WHEREOF, each of the parties has executed or consent this
Agreement be executed by its duly authorized officers as of the date first
written above.
AT&T WIRELESS PCS INC.
By: /s/ W. Hogue
------------------------------------------------
Name: William W. Hogue
Title: Senior Vice President
TRITON PCS HOLDINGS, INC.
By: /s/ David D. Clark
-------------------------------------------------
Name: David D. Clark
Title: SR V.P & CFO
CASH EQUITY INVESTORS:
CB CAPITAL INVESTORS, L.P.
By: CP Capital Investors, Inc., its general partner
By: /s/ [SIGNATURE ILLEGIBLE]^^
-------------------------------------------------
Name:
Title:
J.P. MORGAN INVESTMENT CORPORATION
By: /s/ J. W. Watkins
-------------------------------------------------
Name: John W. Watkins
Title: MD
<PAGE>
SIXTY WALL STREET SBIC FUND, L.P.
By: Sixty Wall Street SBIC Corporation,
its general partner
By: /s/ J. W. Watkins
------------------------------------------------
Name: John W. Watkins
Title: MD
PRIVATE EQUITY INVESTORS III, L.P.
By: Rohit M. Desai Associates, III, L.L.C.,
its general partner
By: /s/ [SIGNATURE ILLEGIBLE]^^
-------------------------------------------------
Name:
Title:
EQUITY-LINKED INVESTORS-II
By: Rohit M. Desai Associates-II,
its general partner
By: /s/ [SIGNATURE ILLEGIBLE]^^
-------------------------------------------------
Name:
Title:
TORONTO DOMINION CAPITAL (USA), INC.
By: /s/ [SIGNATURE ILLEGIBLE]^^
-------------------------------------------------
Name: Christopher J. ILLEGIBLE
Title: Vice President
<PAGE>
FIRST UNION CAPITAL PARTNERS, INC.
By: /s/ Pearle Landry
-------------------------------------------------
Name: Pearle Landry
Title: Vice President
DAG-TRITON PCS, L.P.
By: Duff Ackerman Goodrich, L.L.C.,
its general partner
By: /s/ John M. Duff Jr.
-------------------------------------------------
Name: John M. Duff Jr.
Title: Managing Director
MANAGEMENT STOCKHOLDERS:
MICHAEL E. KALOGRIS
/s/ M. E. Kalogris
----------------------------------------------------
STEVEN R. SKINNER
/s/ Steven R. Skinner
----------------------------------------------------
DAVID D. CLARK
/s/ David D. Clark
----------------------------------------------------
CLYDE SMITH
/s/ Clyde Smith
----------------------------------------------------
<PAGE>
PATRICIA GALLAGHER
____________________________________________________
DAVID STANDIG
By: Michael E. Kalogris pursuant to Irrevocable
-------------------------------------------
Proxy dated March 26, 1999
--------------------------
/s/ M. E. Kalogris
----------------------------------------------------
MICHAEL MEARS
/s/ Michael Mears
----------------------------------------------------
MICHAEL E. KALOGRIS, AS TRUSTEE UNDER AMENDED AND
RESTATED COMMON STOCK TRUST AGREEMENT FOR MANAGEMENT
EMPLOYEES AND INDEPENDENT DIRECTORS DATED JUNE 26,
1998
/s/ M. E. Kalogris
----------------------------------------------------
SCOTT ANDERSON
/s/ Scott Anderson
----------------------------------------------------
JOHN BELETIC
/s/ John Beletic
----------------------------------------------------
<PAGE>
Schedule 1
to Amendment No. 2
to Stockholders' Agreement
SCHEDULE XII TO STOCKHOLDERS' AGREEMENT
Licenses included in clause (a) of the definition of "Business":
1. AT&T PCS Contributed Licenses
2. The Permitted Cellular Licenses
3. The 20 MHz PCS License for the Norfolk, VA BTA acquired by the Company
pursuant to the Asset Purchase Agreement dated as of August 20, 1998
between AT&T PCS and the Company
<PAGE>
Schedule 2 to
Amendment No. 2
to Stockholders' Agreement
SCHEDULE V TO STOCKHOLDERS' AGREEMENT
TRITON COMMUNICATIONS
A. GENERAL MINIMUM BUILDOUT PLAN/1/
PHASE I 4.4 million pops (40% total pops) within 2 years of closing of
the Securities Purchase Agreement.
11 cities with 3.4 million pops
Buildout core metro area and suburbs.
Greenville, South Carolina
Spartanburg, South Carolina
Richmond, Virginia
Petersburg, Virginia
Charlottesville, Virginia
Columbia, South Carolina
Florence, South Carolina
Charleston, South Carolina
Anderson, South Carolina
Augusta, Georgia
Roanoke, Virginia
_________________________
/1/ This Section A constitutes the minimum buildout plan for the PCS
Territory; provided, that this Section A shall only cover the
minimum build out for that portion of the PCS Territory for which a
separate minimum buildout plan is not specified in this Schedule V,
as amended from time to time. All percentages of pops for any
portion of the PCS Territory required to be covered under this
Section A shall be measured separately, in accordance with this
Section A, and shall exclude any pops required to be covered
pursuant to any minimum buildout plan specified for any other
portion of the PCS Territory in this Schedule V, as amended from
time to time.
<PAGE>
Over 600 miles of interstate and other primary and key
secondary roads with an additional 1.0 million pops.
I-95 Charleston to Savannah
I-85 Atlanta to Charlotte borders
I-95 Richmond to Fredericksburg
I-64 Charlottesville to Williamsburg
I-26/385 Greenville - Spartanburg to Charleston
I-77 Columbia to Rockhill
I-20 Atlanta border (Augusta) to Florence
PHASE II Additional 2.2 million pops (20% total pops) within 3-1/2
years of closing of the Securities Purchase Agreement.
Key secondary cities and connecting highway corridors as
defined by marketing and competitive situation.
PHASE III Final 1.8 million pops (17% total pops) within 5 years of
closing of the Securities Purchase Agreement.
B. MINIMUM BUILD-OUT PLAN FOR NORFOLK, VIRGINIA BTA/2/
1.4 million pops (80% of total pops) in the Norfolk, VA BTA
within 5 years of the closing of the Securities Purchase Agreement, with
such minimum build-out bench marks within such five year period as shall
be mutually agreed to by AT&T PCS and the Company.
________________________
/2/ All percentages of pops for the Norfolk, Virginia BTA required to
be covered under this Section B shall be measured only with respect
to the Norfolk, VA BTA, in accordance with Section B.
-2-
<PAGE>
C. MINIMUM BUILDOUT PLAN FOR ATHENS, GA BTA AND EACH OF BRYAN COUNTY, GA,
CHATHAM COUNTY, GA, EFFINGHAM COUNTY, GA AND LIBERTY COUNTY, GA WITHIN THE
ATLANTA MTA, COLLECTIVELY/3/
PHASE I 206,000 pops (40% total pops) within 2 years of closing of the
Securities Purchase Agreement.
PHASE II Additional 103,000 pops (20% total pops) within 3-1/2 years of
closing of Securities Purchase Agreement.
PHASE III Final 104,000 pops (20% total pops) within 5 years of closing of
Securities Purchase Agreement.
_______________________
/3/ All percentages of pops for the Athens, GA BTA and each of Bryan
County, GA, Chatham County, GA, Effingham County, GA and Liberty
County, GA within the Atlanta MTA required to be covered under this
Section C shall be measured only with respect to the Athens, GA BTA
and such counties, in accordance with this Section C.
-3-
<PAGE>
Schedule 3 to
Amendment No. 2
to Stockholders' Agreement
SCHEDULE VI
PCS TERRITORY
-------------
I. From Washington MTA BTA Market Designator
Charlottesville, VA B075
Fredericksburg, VA B156
Harrisonburg, VA B183
Winchester, VA B479
II. From Richmond MTA
Danville, VA B104
Lynchburg, VA B266
Martinsville, VA B284
Norfolk-Virginia Beach, Newport News,
Hampton, VA B324
Richmond, VA B374
Roanoke, VA B376
Staunton-Waynesboro, VA B430
III. From Knoxville MTA
Kingsport, Johnson City, TN-Bristol VA B229
Middlesboro, TN B295
IV. From Atlanta MTA
Augusta, GA B026
Savannah, GA (Beaufort, Hampton, Jasper,
Bryan, Effingham, Chatham and Liberty Counties) B410
Athens, GA B022
V. From Charlotte MTA
Anderson, SC B016
Ashville-Hendersonville, NC B020
Charleston, SC B072
Columbia, SC B091
<PAGE>
Fayetteville-Lumberton, NC B141
Florence, SC B147
Goldsboro-Kinston, NC B165
Greenville-Spartanburg, SC B177
Greenville-Washington, NC B176
Greenwood, SC B178
Hickory-Lenoir-Morgantan, NC B189
Jacksonville, NC B214
Myrtle Beach, SC B312
New Bern, NC B316
Orangeburg, SC B335
Roanoke Rapids, NC B377
Rocky Mount-Wilson, NC B382
Sumter, SC B436
Wilmington, NC B478
-2-
<PAGE>
EXHIBIT 10.24
AMENDMENT NO. 1
TO
INTERCARRIER ROAMER SERVICE AGREEMENT
AMENDMENT NO. 1 TO INTERCARRIER ROAMER SERVICE AGREEMENT ("Amendment
No.1") dated as of December 31, 1998, by and between AT&T Wireless Services,
Inc., a Delaware corporation, on behalf of itself and its Affiliates (as
hereinafter defined) (individually and collectively, "AT&T") for the markets
listed on Schedule 1 to the Roamer Agreement (as hereinafter defined), and
Triton PCS Operating Company L.L.C., a Delaware limited liability company, on
behalf of itself and its Affiliates (individually and collectively, the
"Company") for the markets listed on Schedule 2 to the Roamer Agreement. Certain
capitalized terms used herein and not otherwise defined have the meaning
assigned to such term in the Roamer Agreement.
WHEREAS, AT&T and the Company are party to that certain Intercarrier
Roamer Service Agreement, dated as of February 4, 1998 (the "Roamer Agreement"),
pursuant to which each of AT&T and the Company made arrangements to facilitate
the provision of voice and voice-related mobile wireless radio telephone service
to the customers of the other Party, while such customers are using the wireless
radio telephone facilities of such Party, and set forth certain roaming charges
in respect thereof;
WHEREAS, an Affiliate of AT&T and the Company are parties to that
certain Asset Purchase Agreement, dated as of the date hereof (the "Asset
Purchase Agreement"), pursuant to which, among other things, the Company has
acquired from such Affiliate of AT&T a portion of the A Block PCS License for
the Norfolk, Virginia BTA owned by such Affiliate of AT&T covering such market;
and
WHEREAS, pursuant to the Asset Purchase Agreement, it was agreed, and
AT&T and the Company desire, that Schedules 1 and 2 to the Roamer Agreement be
amended to include the Norfolk, Virginia BTA and Exhibit A to the Roamer
Agreement be amended to set forth the roaming charges in respect of the Norfolk,
Virginia BTA, on terms set forth therein.
NOW THEREFORE, in consideration of the mutual promises and covenants
herein contained and for other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. Amendment. (a) Schedule 1 to the Roamer Agreement is hereby
---------
amended to include:
V. From Richmond MTA BTA Market Designation
----------------- ----------------------
<PAGE>
Norfolk-Virginia Beach-Newport
News-Hampton, VA B324"
(b) Schedule 2 to the Roamer Agreement is hereby amended to include:
V. From Richmond MTA BTA Market Designation
----------------- ----------------------
Norfolk-Virginia Beach-Newport
News-Hampton, VA B324"
(c) Exhibit A to the Roamer Agreement is hereby amended to include
Schedule A attached hereto.
2. Severability of Provisions. Any provision of this Amendment No.
--------------------------
1 which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or remaining provisions hereof or affecting the validity
or enforceability of such provision in any other jurisdiction.
3. Agreement to Remain in Full Force and Effect. This Amendment No.
--------------------------------------------
1 shall be deemed to be an amendment to the Roamer Agreement. All references to
the Roamer Agreement in any other agreements or documents shall on and after the
date hereof be deemed to refer to the Roamer Agreement as amended hereby.
Except as amended hereby, the Roamer Agreement shall remain in full force and
effect and is hereby ratified, adopted and confirmed in all respects.
4. Heading. The headings in this Amendment No. 1 are inserted for
-------
convenience and identification only and are not intended to describe, interpret,
define or limit the scope, extent or intent of this Amendment No. 1 or any
provision thereof.
5. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same Agreement.
6. Governing Law. The laws of the State of New York, except those
-------------
pertaining to choice of law, arbitration of disputes and those pertaining to the
time limits for bringing an action that conflicts within the terms of the
Dispute Resolution provision set forth in Section 14.6 of the Roamer Agreement,
shall govern all other substantive matters pertaining to the interpretation and
enforcement and the other terms of this Amendment No. 1 with respect to any
Dispute.
-2-
<PAGE>
Executed as of the date first written above.
AT&T WIRELESS SERVICES, INC. TRITON PCS OPERATING COMPANY
L.L.C.
By Triton Management Company, Inc., its
By: /s/ [SIGNATURE ILLEGIBLE]^^ Manager
---------------------------------
Name:
Title: By: /s/ [SIGNATURE ILLEGIBLE]^^
-----------------------------------
Name:
Title:
-3-
<PAGE>
Schedule I
To Amendment No. 1
EXHIBIT A
SERVICE CHARGES APPLICABLE TO THE NORFOLK BTA
Service rates
- -------------
The lower of (x) $.25 per minute and (y) the Applicable Home Rate of AT&T,
or such other rate as shall be agreed by the Parties. For purposes hereof,
AT&T's "Applicable Home Rate" shall be determined once each calendar year (and
shall be effective for such entire calendar year).
Notwithstanding the foregoing, the Service rate charged by Triton for
Service in the Norfolk BTA shall be reasonably competitive, taking into account
price, coverage and quality, with the rates charged for comparable
telecommunications services by the alternative carriers in such geographic
areas, disregarding any carriers that do not service a material number of
customers in such geographic area, and, if it is not so competitive, such
Service Rates shall be reduced with respect to the applicable geographic area to
a reasonably competitive rate.
Toll charges
- ------------
InterLATA
- ---------
1st Yr: $.10 per minute
2nd Yr: $.08 per minute
3rd Yr: $.08 per minute
4th - 20th Yr: $.08 per minute or such other rate as the
Parties negotiate from time to time in light of
cost adjustments.
IntraLATA
- ---------
1st Yr - 3rd Yr: $.02 per minute
4th - 20th Yr: $.02 per minute or such other rate as the
Parties negotiate from time to time in light of
cost adjustments.
-4-
<PAGE>
EXHIBIT 10.25
AMENDMENT NO. 2
TO
INTERCARRIER ROAMER SERVICE AGREEMENT
AMENDMENT NO. 2 TO INTERCARRIER ROAMER SERVICE AGREEMENT ("Amendment
No. 2") dated as of June 8, 1999, by and between AT&T Wireless Services, Inc., a
Delaware corporation, on behalf of itself and its Affiliates (as hereinafter
defined) (individually and collectively, "AT&T") for the markets listed on
Schedule 1 to the Roamer Agreement (as hereinafter defined), and Triton PCS
Operating Company L.L.C., a Delaware limited liability company, on behalf of
itself and its Affiliates (individually and collectively, the "Company") for the
markets listed on Schedule 2 to the Roamer Agreement. Certain capitalized terms
used herein and not otherwise defined have the meaning assigned to such term in
the Roamer Agreement.
WHEREAS, AT&T and the Company are party to that certain Intercarrier
Roamer Service Agreement, dated as of February 4, 1998, as amended (the "Roamer
Agreement"), pursuant to which each of AT&T and the Company made arrangements to
facilitate the provision of voice and voice-related mobile wireless radio
telephone service to the customers of the other Party, while such customers are
using the wireless radio telephone facilities of such Party, and set forth
certain roaming charges in respect thereof;
WHEREAS AT&T Wireless PCS Inc. (an Affiliate of AT&T, "AT&T PCS"),
Triton PCS License Company L.L.C.(an Affiliate of the Company, "Triton License
Company") and Triton PCS Holdings, Inc. (an Affiliate of the Company) are
parties to that certain License Exchange and Acquisition Agreement, dated as of
June 8, 1999 (the "License Exchange and Acquisition Agreement"), pursuant to
which (i) AT&T PCS will acquire from Triton License Company a portion of the A
Block PCS License for the Washington-Baltimore MTA covering the Cumberland, MD
BTA and the Hagerstown, MD-Chambersburg, PA-Martinsburg, WV BTA (collectively,
the "Hagerstown\Cumberland Markets"), and, in exchange therefor, Triton License
Company will acquire from AT&T PCS a portion of the A Block PCS License for the
Atlanta, GA MTA covering the Athens, GA BTA (the "Athens Market"), and (ii)
Triton License Company will acquire from AT&T PCS a portion of the A Block PCS
License for the Atlanta, GA MTA covering each of Bryan County, GA, Chatham
County, GA, Effingham County, GA and Liberty County, GA within the Atlanta, GA
BTA (such counties, together with the Athens Markets, are hereinafter referred
to as the "Additional Markets"), on the terms set forth therein;
WHEREAS, pursuant to the License Exchange and Acquisition Agreement it
was agreed, and AT&T and the Company desire, that Schedule 2 to the Roamer
Agreement be amended to, among other things, include the Additional Markets and
delete the
<PAGE>
Hagerstown\Cumberland Markets, and Exhibit A to the Roamer Agreement be amended
to set forth the roaming charges in respect of the Additional Markets, on terms
set forth therein.
NOW THEREFORE, in consideration of the mutual promises and covenants
herein contained and for other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. Amendments. (a) Schedule 1 to the Roamer Agreement is hereby
----------
amended and restated in its entirety as set forth on Attachment A hereto.
(b) Schedule 2 to the Roamer Agreement is hereby amended and restated
in its entirety as set forth on Attachment B hereto.
(c) Exhibit A to the Roamer Agreement is hereby amended to include
Attachment C attached hereto.
2. Severability of Provisions. Any provision of this Amendment No.
--------------------------
2 which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or remaining provisions hereof or affecting the validity
or enforceability of such provision in any other jurisdiction.
3. Agreement to Remain in Full Force and Effect. This Amendment No.
--------------------------------------------
2 shall be deemed to be an amendment to the Roamer Agreement. All references to
the Roamer Agreement in any other agreements or documents shall on and after the
date hereof be deemed to refer to the Roamer Agreement as amended hereby.
Except as amended hereby, the Roamer Agreement shall remain in full force and
effect and is hereby ratified, adopted and confirmed in all respects.
4. Heading. The headings in this Amendment No. 2 are inserted for
-------
convenience and identification only and are not intended to describe, interpret,
define or limit the scope, extent or intent of this Amendment No. 2 or any
provision thereof.
5. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same Agreement.
6. Governing Law. The laws of the State of New York, except those
-------------
pertaining to choice of law, arbitration of disputes and those pertaining to the
time limits for bringing an action that conflicts within the terms of the
Dispute Resolution provision set forth in Section 14.6 of the Roamer Agreement,
shall govern all other substantive matters pertaining to the interpretation and
enforcement and the other terms of this Amendment No. 2 with respect to any
Dispute.
-2-
<PAGE>
Executed as of the date first written above.
AT&T WIRELESS SERVICES, INC. TRITON PCS OPERATING COMPANY
L.L.C.
By Triton Management Company, Inc., its
By: /s/ W. Hogue Manager
----------------------------
Name: William W. Hogue
Title: Senior Vice President By: /s/ David D. Clark
----------------------------------
Name: David D. Clark
Title: SR V.P. & CFO
<PAGE>
Schedule 1 / Attachment A
AT&T Wireless Markets
<TABLE>
<CAPTION>
STATE MKT$ MARKET OPERATING ENTITY SID/BID
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALASKA 187 Anchorage Cellular Alaska Partnership 251
316 Alaska - 2 RSA Wasillia AT&T Wireless Services of Alaska, Inc. 30921,1019
CALIF. 2 Los Angeles Los Angeles Cellular Telephone Company 27
35 Sacamento AT&T Wireless Services of California, Inc. 129
74 Fresno AT&T Wireless Services of California, Inc. 153
347 California - 12 RSA AT&T Wireless Services of California, Inc. 153
107 Stockton AT&T Wireless Services of California, Inc. 233
338 California - 3 RSA AT&T Wireless Services of California, Inc. 233
215 Chico AT&T Wireless Services of California, Inc. 311
254 Redding Redding Cellular Partnership 513
124 Santa Barbara Santa Barbara Cellular Systems, Ltd. 531
73 Oxnard-Ventura AT&T Wireless Services of California, Inc. 30085
142 Modesto AT&T Wireless Services of California, Inc. 30857
343 California - 3 RSA AT&T Wireless Services of California, Inc. 30859
274 Yuba City Yuba City Cellular Telephone Company 30861
150 Visalia Visalia Cellular Telephone Company 30883
CONNECTICUT 357 CT - 1(Litchfield) Litchfield Acquisitions Corporation 1101
COLO. 19 Denver AT&T Wireless Services of Colorado, Inc. 45
117 Colorado Springs AT&T Wireless Services of Colorado, Inc. 30743
210 Fort Collins Fort Collins-Loveland Cellular Telephone Co. 30747
243 Greeley Greeley Cellular Telephone Company 30751
350 Colorado - 3 RSA (Vail/Grand Junction) AT&T Wireless Services of Colorado, Inc. 30989
FLORIDA 72 West Palm Beach AT&T Wireless Services of Florida, Inc. 37
114 Lakeland AT&T Wireless Services of Florida, Inc. 37
361 FL-2 Glades Talcom, Inc. 37
51 Jacksonville AT&T Wireless Services of Florida, Inc. 75
60 Orlando AT&T Wireless Services of Florida, Inc. 175
148 Daytona Beach AT&T Wireless Services of Florida, Inc. 325
245 Ceala Ceala Cellular Telephone Company, Inc. 30063
363 FL-4 Cirus - Brooksville AT&T Wireless Services of Florida, Inc. 30261
22 Tamoa AT&T Wireless Services of Florida, Inc. 30283
167 Sarasota Sarasota Cellular Telephone Company 30849
137 Melbourne Melbourne Cellular Telephone Company 30851
211 Brandenton Brandenton Cellular Partnership 30853
12 Miami, Key West AT&T Wireless Services of Florida, Inc. 37,30277
208 Fort Pierce, Vero Beach, Sebastian AT&T Wireless Services of Florida, Inc. 7,30261,30309
364 FL-5 Flagler (A2) Talcom, Inc.
370 FL-11 AT&T Wireless Services of Florida, Inc.
HAWAII 386 Hawaii - 2 RSA (Maui) AT&T Wireless Services of Hawaii, Inc. 1159
IDAHO 190 Boise Boise City Cellular Partnership 259
391 Idaho - 4 RSA (Elmore) AT&T Wireless Services of Idaho, Inc. 30393
LOUISIANA 100 Shreveport First Cellular Group of Shreveport, Inc. 229
219 Monroe Monroe Cellular, Inc. 483
455 LA - 2 Monroe Cellular, Inc.
455 LA - 3 First Cellular Group of Shreveport, Inc.
MINN. 15 Minneapolis AT&T Wireless Services of Minnesota, Inc. 23
264 Rochester, Austin Rochester CellTelCo. 30233,25321
198 St. Cloud St. Cloud Cellular Telephone Company, Inc. 30235
MISSOURI 183 Springfield MC Cellular Corporation, Inc. 559
239 Joplin MC Cellular Corporation, Inc. 30069
517 Missouri - 14 RSA (Monet) Auburn Television Group, Inc. 30071
NEVADA 93 Las Vegas AT&T Wireless Services of Nevada, Inc. 211
</TABLE>
1
<PAGE>
Schedule 1 / Attachment A
AT&T Wireless Markets
<TABLE>
<CAPTION>
STATE MKT # MARKET OPERATING ENTITY SID/BID
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
171 Reno Reno Cellular Telephone Company 515
545 Nevada - J RSA (Carson City) AT&T Wireless Services of Nevada, Inc. 30855
NEW JERSEY 550 Hunterton (NJ-1) NJ-Z Cellular, Inc. 1487
NEW YORK 1 New York Cellular Telephone Company 25
OKLA. 57 Tulsa AT&T Wireless Services of Tulsa, Inc. 111
45 Oklahoma City Midwest Cellular Telephone Ltd Ptsp 169
260 Lawton, OK OK-5 Cellular, Inc. 425
600 OK-5 OK-5 Cellular, Inc. 1585
598 OK-3 Grant OK-3 Cellular, Inc. 30919
599 OK-4 Nowata AT&T Wireless Services, Inc
OHIO 199 Steuoenville/Weston Motang Cellular Inc. 30317
199 Wintersville, St Clairsville Motang Cellular Inc. 30501, 30889
OREGON 30 Portland AT&T Wireless Services of Oregon, Inc. 61
135 Eugene AT&T Wireless Services of Oregon, Inc. 51
607 Hood River AT&T Wireless Services of Oregon, Inc. 1601
607 Oregon 2 - The Dalles AT&T Wireless Services of Oregon, Inc. 30293
229 Medford Medford Cellular Telephone Company, Inc. 20887
148 Salem Salem Cellular Telephone Company 30889
607 Oregon 2 - Madras AT&T Wireless Services of Oregon, Inc. 31011
609 Oregon 4 - Lincoln Point Communications 30111
PENN. 143 Jennstown, Somerset McCaw Communications of Johnstown, Inc. 30051, 20971
13 Pittsburgh Pittsburgh Cellular Telephone Company 39
TEXAS 9 Dallas Metroplex Telephone Company 33
75 Austin Texas Cellular Telephone Company Ltd Partnership 107
33 San Antonio AT&T Wireless Services of San Antonio, Inc. 151
160 Killeen-Temple Texas Cellular Telephone Company Ltd Partnership 409
237 Tyler Northeast Texas Cellular Telephone Company 579
194 Waes Texas Cellular Telephone Company Ltd Partnership 587
233 Wienna Falls, TX Wienna Falls CellTelCo 595
662 TX - 11 Cherokee Northeast Texas Cellular Telephone Company 1711
657 TX - 5 Jack McCaw Communications of Gainesville, TX., Inc. 30287
208 Longview-Marshall Longview Cellular, Inc. 30473
240 Texarkana Texarkana Cellular Partnership 30475
292 Sherman-Denison Texas Cellular Telephone Company Ltd Partnership 30635
651 TX - 10 Navarro AT&T Wireless Services, Inc. 09, 30953, 30969
666 Lampassas/Johnson City 30773, 30843
UTAH 39 Salt Lake City AT&T Wireless Services of Utah, Inc. 91
673 Utah - 1 RSA (Box Elder) AT&T Wireless Services of Utah, Inc. 91
159 Provo Provo Cellular Telephone Company 30871
WASH. 20 Seattle AT&T Wireless Services of Washington, Inc. 47
82 Tacoma AT&T Wireless Services of Washington, Inc. 47
109 Spokane Spokane Cellular Telephone Company 231
20 Kindano AT&T Wireless Services of Washington, Inc. 26345
191 Yakima Yakima Cellular Telephone Company 30227
214 Tri Cities WA AT&T Wireless Services of Washington, Inc. 30229
697 WA - 5 Ellensburg / Moses Lakes AT&T Wireless Services of Washington, Inc. 30231
698 WA - 6 Longview WA AT&T Wireless Services of Washington, Inc. 30243
698 WA - 6 Chenatis AT&T Wireless Services of Washington, Inc. 30837
212 Bremeton Bremeton Cellular Telephone Company 30873
242 Olympia Olympia Cellular Telephone Company, Inc. 30875
270 Bellingham Betlingham Cellular Partnership 30877
693 WA - 1 Calallam AT&T Wireless Services of Washington, Inc.
699 Skamarus Pueblo Cellular Communications, Inc.
WEST VA. 178 Wheeling Whetting Cellular Telephone Company 30059
</TABLE>
ATTACHMENT A. ALL 2
<PAGE>
Schedule 1/Attachment A
AT&T Wireless Markets
<TABLE>
<CAPTION>
STATE MKT # MARKET OPERATING ENTITY SID/BID
- --------------------------------------------------------------------------------------------------------
AT&T Wireless TOMA Digital PCS Markets-1900 MHZ Properties
<S> <C> <C> <C> <C>
MO11 Atlanta, GA Albany-Tifton AT&T Wireless PCS, Inc. 4101
MO11 Atlanta, GA Athens AT&T Wireless PCS, Inc. 4101
MO11 Atlanta, GA Atlanta AT&T Wireless PCS, Inc. 4101
MO11 Atlanta, GA Atlanta Tritel, Inc. 4101
MO11 Atlanta, GA Chattanooga, TN Tritel, Inc. 4101
MO11 Atlanta, GA Cleveland, TN Tritel, Inc. 4101
MO11 Atlanta, GA Colombus, TN AT&T Wireless PCS, Inc. 4101
MO11 Atlanta, GA Datten, GA Tritel, Inc. 4101
MO11 Atlanta, GA Gainesville, GA AT&T Wireless PCS, Inc. 4101
MO11 Atlanta, GA La Grange, GA Tritel, Inc. 4101
MO11 Atlanta, GA Macon-Warner Robbins AT&T Wireless PCS, Inc. 4101
MO11 Atlanta, GA Opeika-Auburn, AL Tritel, Inc. 4101
MO11 Atlanta, GA Rome GA Tritel, Inc. 4101
MO11 Atlanta, GA Savannah, GA AT&T Wireless PCS, Inc. 4101
MO29 Birmingham, AL Florence, AL Tritel, Inc. Tao
MO29 Birmingham, AL Annison,AL Tritel, Inc. Tao
MO29 Birmingham, AL Gadsden Tritel, Inc. Tao
MO29 Birmingham, AL Serna, AL Tritel, Inc. Tao
MO29 Birmingham, AL Dothan_Enterprise, AL Tritel, Inc. Tao
MO29 Birmingham, AL Montgomery, AL Tritel, Inc. Tao
MO29 Birmingham, AL Birmingham, AL Tritel, Inc. Tao
MO29 Birmingham, AL Decatur, AL Tritel, Inc. Tao
MO29 Birmingham, AL Florence, AL Tritel, Inc. Tao
MO29 Birmingham, AL Huntsville Tritel, Inc. Tao
MO29 Birmingham, AL Tuscaloosa, AL Tritel, Inc. Tao
MCC8 Boston, MA Boston AT&T Wireless PCS, Inc. 4105
MC08 Boston, MA Boston, MA AT&T Wireless PCS, Inc. 4105
MO08 Boston, MA Boston, MA AT&T Wireless PCS, Inc. 4105
MO08 Boston, MA Bestori, MA Telecorp PCS, Inc. 4201
MC08 Boston, MA Hyannis, MA Telecorp PCS, Inc. 4201
MO08 Boston, MA Keene AT&T Wireless PCS, Inc. 4105
MC08 Boston, MA Lecannon-Claremont AT&T Wireless PCS, Inc. 4105
MO08 Boston, MA Lewiston-Auburn AT&T Wireless PCS, Inc. 4105
MC08 Boston, MA Manchester, NH Telecorp PCS, Inc. 4201
MO08 Boston, MA Portsfield AT&T Wireless PCS, Inc. 4105
MC08 Boston, MA Portland-Brunswick AT&T Wireless PCS, Inc. 4105
MO08 Boston, MA Presque Isle AT&T Wireless PCS, Inc. 4105
MC08 Boston, MA Providence-Pawtucker AT&T Wireless PCS, Inc. 4105
MC08 Boston, MA Sonningfield-Hotyoka AT&T Wireless PCS, Inc. 4105
MO08 Boston, MA Watervile-Augusta AT&T Wireless PCS, Inc. 4105
MO08 Boston, MA Worchester, MA AT&T Wireless PCS, Inc. 4105
MO08 Boston, MA Worchester, MA Telecorp, PCS Inc. 4201
MO35 Buffalo, NY Buffalo-Niagra Falls AT&T Wireless PCS, Inc. 4108
MO08 Charlotte, NC Charlotte AT&T Wireless PCS, Inc. 4109
MO08 Charlotte, NC Bunington AT&T Wireless PCS, Inc. 4109
MO08 Charlotte, NC Charlotte-Gastonai AT&T Wireless PCS, Inc. 4109
MO08 Charlotte, NC Greensboro-Winston-Salem AT&T Wireless PCS, Inc. 40117
MO08 Charlotte, NC Raleigh-Durham AT&T Wireless PCS, Inc. 40237
MO08 Charlotte, NC Rock Hill AT&T Wireless PCS, Inc. 40119
MO03 Chicago, IL Chicago AT&T Wireless PCS, Inc. 4111
MO03 Cincinnati, OH Beckley AT&T Wireless PCS, Inc. 4113
MO18 Cincinnati, OH Bluefield AT&T Wireless PCS, Inc. 4113
MO18 Cincinnati, OH Charleston AT&T Wireless PCS, Inc. 4113
</TABLE>
3
<PAGE>
Schedule 1 / Attachment A
AT&T Wierless Markets
<TABLE>
<CAPTION>
STATE MKT # MARKET OPERATING ENTITY SID/BID
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
M018 Cincinnati, OH Cincinnati CINCINNATI BELL WIRELESS, LLC 4113
M018 Cincinnati, OH Dayton-Springfield CINCINNATI BELL WIRELESS, LLC 4113
M018 Cincinnati, OH Huntington AT&T Wireless PCS, Inc. 4113
M018 Cincinnati, OH Logan AT&T Wireless PCS, Inc. 4113
M018 Cincinnati, OH Portsmouth AT&T Wireless PCS, Inc. 4113
M018 Cincinnati, OH Williamson AT&T Wireless PCS, Inc. 4113
M016 Cleveland, OH Cleveland-Akron AT&T Wireless PCS, of Cleveland, LLC 4116
M038 Columbus, OH Columbus AT&T Wireless PCS, Inc. 4117
M005 Detriot, MI Detroit AT&T Wireless PCS, Inc. 4125
M039 El Paso, TX El Paso AT&T Wireless PCS, Inc. 4129
B034 Beaumont, TX Beaumont, TX Telecom PCS, Inc. 5758
M0 Knoxville, TN Knoxville Tritel, Inc. 4141
M040 Little Rock AR El Dorado, AR Telecom PCS, Inc. 5758
M040 Little Rock AR Fayettville, AR Telecom PCS, Inc. 5758
M040 Little Rock AR Fort Smith, AR Telecom PCS, Inc. 5758
M040 Little Rock AR Harrison, AR Telecom PCS, Inc. 5758
M040 Little Rock AR Hot Springs, AR Telecom PCS, Inc. 5758
M040 Little Rock AR Jonesboro-Paragould,AR Telecom PCS, Inc. 5758
M040 Little Rock AR Little Rock, AR Telecom PCS, Inc. 5758
M040 Little Rock AR Pine Bluff, AR Telecom PCS, Inc. 5758
M040 Little Rock AR Russellville, AR Telecom PCS, Inc. 5758
M025 Louisville, KY Bowling Green, KY Tritel, Inc. 4147
M025 Louisville, KY Coron, KY Tritel, Inc. 4147
M025 Louisville, KY Evansville, KY Telecom PCS, Inc. 4147
M025 Louisville, KY Lexington, KY Tritel, Inc. 4147
M025 Louisville, KY Louisville, KY Tritel, Inc. 4147
M025 Louisville, KY Madisonville, KY Tritel, Inc. 4147
M025 Louisville, KY Owensboro, KY Tritel, Inc. 4147
M025 Louisville, KY Paducah, KY Telecom PCS, Inc. 4147
M025 Louisville, KY Somerset, KY Tritel, Inc. 4147
M028 Memphis, TN Blytheville, AR Telecom PCS, Inc. 5826
M028 Memphis, TN Columbus-Starkville, MS Tritel, Inc. TBD
M028 Memphis, TN Dyersburg, TN Telecom PCS, Inc. 5829
M028 Memphis, TN Greenville-Greenwood, MS Tritel, Inc. TBD
M028 Memphis, TN Jackson, MS Tritel, Inc. TBD
M028 Memphis, TN Jackson, TN Telecom PCS, Inc. 5828
M028 Memphis, TN Memphis, TN Tritel, Inc. TBD
M028 Memphis, TN Memphis, TN Telecom PCS, Inc. 5829
M028 Memphis, TN Menden, MS Tritel, Inc. TBD
M028 Memphis, TN Natrez, MS Tritel, Inc. TBD
M028 Memphis, TN Tupelo-Corinth, MS Tritel, Inc. TBD
M028 Memphis, TN Vicksburg, MS Tritel, Inc. TBD
M043 Nashville, TN Clarksville-Hopkinsville, TN/KY Tritel, Inc. 4158
M043 Nashville, TN Cooksville, TN Tritel, Inc. 4158
M043 Nashville, TN Nashville Tritel, Inc. 4158
M017 New Orleans, LA Baton Rouge, LA Telecom PCS, Inc. 5888
M017 New Orleans, LA Hammond, LA Telecom PCS, Inc. 5888
M017 New Orleans, LA Lafayette-New Iberia, LA Telecom PCS, Inc. 5888
M017 New Orleans, LA Laurel, MS Tritel, Inc. TBD
M017 New Orleans, LA Mobile, AL Telecom PCS, Inc. TBD
M017 New Orleans, LA New Orleans, LA Telecom PCS, Inc. 5888
M017 New Orleans, LA McComb, MS Tritel, Inc. TBD
M017 New Orleans, LA Hathesburg, MS Telecom PCS, Inc. TBD
</TABLE>
<PAGE>
Schedule 1 / Attachment A
AT&T Wireless Markets
<TABLE>
<CAPTION>
STATE MKT # MARKET OPERATING ENTITY SID/DIB
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
M045 Omaha, NE Omaha AT&T Wireless PCS, Inc. 4165
M009 Philadelphia, PA Philadelphia AT&T Wireless PCS, of Philadelphia, LLC 4157
M027 Phoenix, AZ Phoenix AT&T Wireless PCS, Inc. 4159
M023 Richmond, VA Richmond VA AT&T Wireless PCS, Inc. 4177
M023 Richmond, VA Danville, VA AT&T Wireless PCS, Inc. 4177
M023 Richmond, VA Lynchburg, VA AT&T Wireless PCS, Inc. 4177
M023 Richmond, VA Mannsville, VA AT&T Wireless PCS, Inc. 4177
M023 Richmond, VA Roanoke, VA AT&T Wireless PCS, Inc. 4177
M023 Richmond, VA Staunton-Waynesboro, VA AT&T Wireless PCS, Inc. 4177
M025 Puerto Rico San Juan AT&T Wireless PCS, Inc. 4175
M019 St. Louis, MO Springfield, MO AT&T Wireless PCS, Inc. 4189
M019 St. Louis, MO St. Louis, MO AT&T Wireless PCS, Inc. 4189
M019 St. Louis, MO Cape Giradeau-Sikerston, MO Telecorp, PCS, Inc. 4189
M019 St. Louis, MO Cartondale-Marion, IL Telecorp, PCS, Inc. 4189
M019 St. Louis, MO Columbia, MO Telecorp, PCS, Inc. 4189
M019 St. Louis, MO Jefferson City, MO Telecorp, PCS, Inc. 4189
M019 St. Louis, MO Kirksville, MO Telecorp, PCS, Inc. 4189
M019 St. Louis, MO Mount Vernon-Centralia, IL Telecorp, PCS, Inc. 4189
M019 St. Louis, MO Poplar Bluff, MO Telecorp, PCS, Inc. 4189
M019 St. Louis, MO Quincy-Hannibal, IL/MO Telecorp, PCS, Inc. 4189
M019 St. Louis, MO Rolta, MO Telecorp, PCS, Inc. 4189
M019 St. Louis, MO Springfield, MO Telecorp, PCS, Inc. 4189
M019 St. Louis, MO West Plains, MO Telecorp, PCS, Inc. 4189
M010 Washington, DC Baltimore AT&T Wireless PCS, Inc. 4196
M010 Washington, DC Satisbury AT&T Wireless PCS, Inc. 4196
M010 Washington, DC Washington AT&T Wireless PCS, Inc. 4196
M040 Wichita, XS Wichita AT&T Wireless PCS, Inc. 4197
Joint Venture Markets
KANSAS 179 Topeka AirTouch Cellular of Kansas City, Inc. 30057
89 Wichita AT&T Wireless Services, Inc. 165
24 **Kansas City CMT Partner 59
301 Lawrence CMT Partner 30049
MISSOURI 275 St. Joseph St.Joseph C?/TelCo 30055
</TABLE>
Markets Managed by AWS on behalf of other carriers - not in included in AWS
negotiated rates.
STATE MKT # MARKET
- -----------------------------------------------------
Colorado 351 Canon City CO.
Idaho 388 Coeur D'Alene, ID
Maryland 457 Deep Creek, MD
Oregon 606 Newburg, OR
Oregon 606 Astoria, OR
Texas 658 Greenville TX
Texas 660 San Saba TX
California 345 Sierra
California 346 El Dorado CA
California 340 San Luis Obispo CA
Louisiana 454 Ruston LA
Utah 674 Utah 2 (Morgan Park City)
ATTACHMENT A, ALL
<PAGE>
Attachment B
to Amendment no. 2
to Roamer Agreement
SCHEDULE 2
TRITON MARKETS
--------------
I. From Washington MTA BTA Market Designator
Charlottesville, VA B075
Fredericksburg, VA B156
Harrisonburg, VA B183
Winchester, VA B479
II. From Richmond MTA
Danville, VA B104
Lynchburg, VA B266
Martinsville, VA B284
Norfolk-Virginia Beach, Newport News,
Hampton, VA B324
Richmond, VA B374
Roanoke, VA B376
Staunton-Waynesboro, VA B430
III. From Knoxville MTA
Kingsport, Johnson City, TN-Bristol VA B229
Middlesboro, TN B295
IV. From Atlanta MTA
Augusta, GA B026
Savannah, GA (Beaufort, Hampton, Jasper,
Bryan, Effingham, Chatham and Liberty Counties) B410
Athens, GA B022
V. From Charlotte MTA
Anderson, SC B016
Ashville-Hendersonville, NC B020
Charleston, SC B072
Columbia, SC B091
Fayetteville-Lumberton, NC B141
Florence, SC B147
Goldsboro-Kinston, NC B165
Greenville-Spartanburg, SC B177
<PAGE>
Greenville-Washington, NC B176
Greenwood, SC B178
Hickory-Lenoir-Morgantan, NC B189
Jacksonville, NC B214
Myrtle Beach, SC B312
New Bern, NC B316
Orangeburg, SC B335
Roanoke Rapids, NC B377
Rocky Mount-Wilson, NC B382
Sumter, SC B436
Wilmington, NC B478
2
<PAGE>
Attachment C
to Amendment no. 2
to Roamer Agreement
EXHIBIT A
SERVICE CHARGES APPLICABLE TO THE ATHENS, GA, BTA AND EACH OF BRYAN COUNTY,
GA, CHATHAM COUNTY, GA, EFFINGHAM COUNTY, GA AND LIBERTY COUNTY, GA WITHIN THE
ATLANTA, GA BTA
Service rates
- -------------
The lower of (x) $.25 per minute and (y) the Applicable Home Rate of
AT&T, or such other rate as shall be agreed by the Parties. For purposes
hereof, AT&T's "Applicable Home Rate" shall be determined once each calendar
year (and shall be effective for such entire calendar year).
Notwithstanding the foregoing, the Service rate charged by Triton for
Service in the Athens, GA BTA and each of Bryan County, GA, Effingham County,
GA, Chatham County, GA and Liberty County, GA within the Atlanta, GA MTA shall
be reasonably competitive, taking into account price, coverage and quality, with
the rates charged for comparable telecommunications services by the alternative
carriers in such geographic areas, disregarding any carriers that do not service
a material number of customers in such geographic area, and, if it is not so
competitive, such Service Rates shall be reduced with respect to the applicable
geographic area to a reasonably competitive rate.
Toll charges
- ------------
InterLATA
- ---------
1st Yr: $.10 per minute
2nd Yr: $.08 per minute
3rd Yr: $.08 per minute
4th - 20th Yr: $.08 per minute or such other rate as the Parties negotiate
from time to time in light of cost adjustments.
IntraLATA
- ---------
1st Yr - 3rd Yr: $.02 per minute
4th - 20th Yr: $.02 per minute or such other rate as the Parties negotiate
from time to time in light of cost adjustments.
<PAGE>
EXHIBIT 10.41
ASSET PURCHASE AGREEMENT
between
AT&T WIRELESS PCS INC.
and
TRITON PCS HOLDINGS, INC.
Dated as of August 20, 1998
<PAGE>
ASSET PURCHASE AGREEMENT
------------------------
ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of August 20,
---------
1998, between AT&T WIRELESS PCS INC., a Delaware corporation ("AT&T PCS"), and
--------
TRITON PCS HOLDINGS, INC., a Delaware corporation (the "Company").
-------
WHEREAS, AT&T PCS has been granted the PCS License described on
Schedule I (the "PCS License");
-----------
WHEREAS, AT&T PCS and Triton PCS Operating Company, L.L.C., a Delaware
limited liability company and Subsidiary (as hereinafter defined) of the Company
("Triton Operating Co."), have entered into a certain Construction and Operating
Agreement dated July 31, 1998 (the "Management Agreement") pursuant to which
Triton Operating Co. will manage and operate the System during the period prior
to Closing (as hereinafter defined);
WHEREAS, AT&T PCS wishes to sell to the Company, and the Company
wishes to acquire from AT&T PCS, the AT&T PCS Contributed License (as
hereinafter defined) and certain of the assets of AT&T PCS used in the operation
of the System (as hereinafter defined), all on the terms and subject to the
conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and the mutual
representations, warranties, covenants, conditions and agreements hereinafter
set forth, the parties agree as follows:
ARTICLE I
DEFINITIONS
-----------
For purposes of this Agreement:
"Affiliate" means, with respect to any Person, any other Person that
---------
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with that Person. For purposes of this
definition, "control" (including the terms "controlling" and "controlled") means
------- ----------- ----------
the power to direct or cause the direction of the management and policies of a
Person, directly or indirectly, whether through the ownership of securities or
partnership or other ownership interests, by contract or otherwise, provided
that the Company and Triton Operating Co. shall not be deemed to control AT&T
PCS by reason of the Management Agreement or otherwise.
"Assigned Agreements" has the meaning set forth in Section 2.1(d).
-------------------
"Assumed Liabilities" has the meaning set forth in Section 2.4.
-------------------
"AT&T PCS" has the meaning set forth in the preamble.
--------
1
<PAGE>
"AT&T PCS Contributed License" has the meaning set forth in Section
----------------------------
2.1.
"AT&T PCS Material Adverse Effect" means a material adverse effect on
--------------------------------
the AT&T PCS Contributed License or the Purchased Assets, taken as a whole, or
on the Transactions.
"AT&T PCS Retained License" has the meaning set forth in Section 2.1.
-------------------------
"Business Day" means any day other than a Saturday, Sunday or a legal
------------
holiday in New York, New York or any other day on which commercial banks in New
York, New York are authorized by law or governmental decree to close.
"BTA" means the unit of division (of which there are four hundred
---
ninety-three (493)) for the United States of America, devised by Rand McNally
based upon geography, population and other factors, which units form the basis
for the auction by the FCC of a portion of the Licenses for PCS Systems for
Basic Trading Areas, as defined by the FCC.
"Cash Purchase Price" has the meaning set forth in Section 2.3.
-------------------
"Claim" has the meaning set forth in Section 8.4.
-----
"Closing" has the meaning set forth in Section 3.1.
-------
"Closing Date" has the meaning set forth in Section 3.1.
------------
"Company" has the meaning set forth in the preamble.
-------
"Company Material Adverse Effect" means a material adverse effect on
-------------------------------
the business, financial condition, assets, liabilities or results of operations,
taken as a whole, of the Company or on the AT&T PCS Contributed License or the
Purchased Assets, taken as a whole, or on the Transactions.
"Company Plan" has the meaning set forth in Section 4.5(d).
------------
"Confidential Information" means any and all information regarding the
------------------------
business, finances, operations, products, services and customers of the Person
specified and its Affiliates, in written or oral form or in any other medium.
"Consents" means all consents and approvals of Governmental
--------
Authorities or other third parties necessary to authorize, approve or permit the
parties hereto to consummate the Transactions and for the Company to operate its
business after the Closing Date as currently contemplated.
"Continuing Employees" has the meaning set forth in Section 4.5(a).
--------------------
2
<PAGE>
"Designated Purchaser" has the meaning set forth in Section 10.4.
--------------------
"Employee" has the meaning set forth in Section 4.5(a).
--------
"Environmental Law" means any of the following: the Resource
-----------------
Conservation Recovery Act, the Comprehensive Environmental Responsibility
Compensation and Liability Act, the Superfund Amendments and Reauthorization
Act, the Toxic Substances Control Act, the Hazardous Materials Transportation
Act, the Clean Air Act, the Clean Water Act, and other similar Federal and state
and local laws, as amended, together with all regulations issued or promulgated
thereunder, relating to pollution, the protection of the environment or the
health and safety of workers or the general public.
"Excluded Liabilities" has the meaning set forth in Section 2.4(a).
--------------------
"Excluded Periods" has the meaning set forth in Section 2.4(a).
----------------
"FCC" means the Federal Communications Commission or similar
---
regulatory authority established in replacement thereof.
"FCC Law" means the Communications Act of 1934, as amended, including
-------
as amended by the Telecommunications Act of 1996, and the rules, regulations and
policies promulgated thereunder.
"Final Order" has the meaning set forth in Section 7.1(b).
-----------
"Governmental Authority" means a Federal, state or local court,
----------------------
legislature, governmental agency, commission or regulatory or administrative
authority or instrumentality.
"Hazardous Material" shall mean anything defined as a "hazardous
------------------
substance," "hazardous material," "hazardous waste," "pollutant," "contaminant,"
"toxic substance" or other similar item in any Environmental Law.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
-------
1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnified Party" has the meaning set forth in Section 8.4.
-----------------
"Indemnifying Party" has the meaning set forth in Section 8.4.
------------------
"Independent Accountant" means Arthur Andersen LLP.
----------------------
3
<PAGE>
"Law" means applicable common law and any statute, ordinance, code or
---
other law, rule, permit, permit condition, regulation, order, decree, technical
or other standard, requirement or procedure enacted, adopted, promulgated,
applied or followed by any Governmental Authority.
"License" means a license, permit, certificate of authority, waiver,
-------
approval, certificate of public convenience and necessity, registration or other
authorization, consent or clearance to construct or operate a facility,
including any emissions, discharges or releases therefrom, or to transact an
activity or business, to construct a tower or to use an asset or process, in
each case issued or granted by a Governmental Authority.
"License Transfer" has the meaning set forth in Section 3.2(a).
----------------
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
----
charge, security interest, right of first refusal or right of others therein, or
encumbrance of any nature whatsoever in respect of such asset.
"Losses" has the meaning set forth in Section 8.2.
------
"Management Agreement" has the meaning set forth in the recital
--------------------
clauses.
"Material Agreements" means those Assigned Agreements designated to be
-------------------
material on Exhibit 2.1(d) and as to which AT&T PCS shall be required to obtain
the consent of the other party thereto to the assignment of such Assigned
Agreement to the Company.
"MTA" means the unit of division (of which there are fifty-one (51))
---
for the United States of America, devised by Rand McNally based upon geography,
population and other factors, which units form the basis for the auction by the
FCC of a portion of the Licenses for PCS Systems for Major Trading Areas, as
defined by the FCC.
"New York Courts" has the meaning set forth in Section 10.6.
---------------
"Person" means an individual, corporation, partnership, limited
------
liability company, association, joint stock company, Governmental Authority,
business trust, unincorporated organization, or other legal entity.
"PCS" means Personal Communications Services, which is the term to
---
describe the services that may be provided as a result of obtaining the AT&T PCS
Contributed License under FCC Law.
"Potentially Rejected Sites" has the meaning set forth in Section
--------------------------
7.2(g).
"Purchase Price" has the meaning set forth in Section 2.3.
--------------
4
<PAGE>
"Purchased Assets" means the assets described in Section 2.1.
----------------
"Representatives" has the meaning set forth in Section 4.2(a).
---------------
"Search Results" has the meaning set forth in Section 4.10.
--------------
"Section 8.2 Indemnified Party" has the meaning set forth in Section
-----------------------------
8.2.
"Section 8.3 Indemnified Party" has the meaning set forth in Section
-----------------------------
8.3.
"Securities" means the shares of Series D Preferred Stock being issued
----------
hereunder, together with any shares of Common Stock of the Company issued upon
conversion of shares of Series D Preferred Stock.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Series D Preferred Stock" has the meaning set forth in Section 2.3.
------------------------
"Stockholders Agreement" means the Stockholders Agreement of the
----------------------
Company, dated as of February 4, 1998, as the same may be amended, modified or
supplemented in accordance with the terms thereof.
"Subsidiary" shall mean, with respect to any Person, a corporation or
----------
other entity of which 50% or more of the voting power or the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
"System" means the wireless PCS telecommunications system constructed
------
by AT&T PCS in the Norfolk, Virginia BTA.
"System Cell Sites" has the meaning set forth in Section 4.11.
-----------------
"Third-Party Proposal" has the meaning set forth in Section 4.9.
--------------------
"Transactions" means the transactions contemplated by this Agreement.
------------
"Triton Operating Co." has the meaning set forth in the recital
--------------------
clauses.
When a reference is made in this Agreement to an Article or a Section, such
reference shall be to an Article or a Section of this Agreement unless otherwise
indicated. Unless the context otherwise requires, the terms defined hereunder
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. 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
5
<PAGE>
shall be deemed to include the neuter, masculine and feminine genders whenever
necessary or appropriate. Whenever the word "herein" or "hereof" is used in this
Agreement, it shall be deemed to refer to this Agreement and not to a particular
Section of this Agreement unless expressly stated otherwise.
ARTICLE II
PURCHASE AND SALE OF ASSETS; PAYMENT OF CONSIDERATION;
------------------------------------------------------
CERTAIN RESTRICTIONS ON TRANSFER
--------------------------------
2.1 Purchase and Sale of Purchased Assets. Upon the terms and subject
-------------------------------------
to the conditions hereof and in reliance upon the representations, warranties,
covenants and agreements herein contained: (a) AT&T PCS shall partition and
disaggregate the PCS License to create, as more particularly described on
Exhibit 2.1, (i) a License (the "AT&T PCS Contributed License") providing in the
----------------------------
aggregate the right to use 20 MHz of authorized frequencies to provide broadband
PCS services throughout the entirety of the Norfolk, Virginia BTA, and (ii) a
License (the "AT&T PCS Retained License") providing in the aggregate the right
-------------------------
to use the balance of the authorized frequencies under the PCS License to
provide broadband PCS services throughout the entirety of the Norfolk-Richmond,
Virginia MTA (which right shall be exercised by AT&T PCS in accordance with the
Stockholders Agreement), and (b) at the Closing, AT&T PCS shall sell, transfer,
assign, convey and deliver to the Company (or one or more Designated
Purchasers), free and clear of all Liens (other than those arising under any of
the obligations being assumed by the Company pursuant to Section 2.4), and the
Company shall purchase, acquire and accept from AT&T PCS, the AT&T PCS
Contributed License. In addition to the AT&T PCS Contributed License, upon the
terms and subject to the conditions hereof and in reliance upon the
representations, warranties, covenants and agreements herein contained, at the
Closing, AT&T PCS shall sell, transfer, assign, convey and deliver to the
Company (or one or more Designated Purchasers), free and clear of all Liens
(other than Liens securing the Assumed Liabilities), and the Company shall
purchase, acquire and accept from AT&T PCS, the following assets of AT&T PCS
used in the operation of the System as the same exist at the Closing Date
(together with the AT&T PCS Contributed License, the "Purchased Assets"):
(a) the fixed assets of AT&T PCS listed on Exhibit 2.1(a)
(consisting of real property, buildings and improvements to real property,
furniture, furnishings, fixtures, leasehold improvements, office or other
equipment, vehicles, machinery and equipment, switches, cell site equipment,
electrical power units, antennas, transmission lines, microwave equipment, tools
and computer hardware and software listed on Exhibit 2.1(a)) or acquired after
the date hereof for use exclusively in the operation of the System;
(b) supplies of AT&T PCS held for use exclusively in the operation
of the System;
6
<PAGE>
(c) all prepaid property taxes, prepaid rent, prepaid freight and
other prepaid expenses, deposits and deferred charges of AT&T PCS relating to
the operation of the System;
(d) all rights and benefits under all leases, contracts and other
agreements listed on Exhibit 2.1(d) (the "Assigned Agreements") or entered into
after the date hereof and prior to the Closing Date in accordance with Section
4.3(c) or the Management Agreement;
(e) any operating data, books and records, customer and subscriber
lists and credit information, engineering data, drawings and advertising and
promotional materials, suppliers= lists, manuals, blueprints, employee payroll
and benefit records, economic, demographic and other studies and construction
reports relating exclusively to the System. AT&T PCS may make and retain, or
the Company will furnish to AT&T PCS, copies of such records as reasonably
required by AT&T PCS; and
(f) all other assets used by AT&T PCS exclusively in the business
relating to the System.
The Purchased Assets constitute all of the assets of AT&T PCS which are
used exclusively in the operation of the System and not used by AT&T PCS in any
other of its operations.
2.2 Excluded Assets. Notwithstanding anything to the contrary herein
---------------
contained, there is hereby expressly excluded from the Purchased Assets the
following:
(a) all cash on hand or in banks;
(b) all trade accounts receivable, miscellaneous accounts
receivable, intercompany receivables, claims receivable and notes receivable,
whether relating to the System or otherwise;
(c) subject to the Network Membership License Agreement (as such
term is defined in the Stockholders Agreement), all patents, trade secrets,
inventions, trademarks, service marks, trade names, logos, slogans, copyrights
and mask works (including all registrations and applications for registration of
any of the foregoing), and all other intellectual property rights of any nature
whatsoever of AT&T PCS or its Affiliates, including without limitation any and
all rights to the name and mark "AT&T," any name or mark which incorporates
"AT&T" and any variations, derivations and combinations thereof, whether
relating to the System or otherwise;
(d) AT&T PCS's right to receive payment under the various Cost
Sharing Agreements between AT&T PCS and SprintCom, Inc. relating to co-location
by SprintCom, Inc. of communications equipment at the cell sites leased from the
Virginia Department of Transportation set forth on Exhibit 2.2(d).
(e) all assets of any kind or nature, whether tangible or
intangible, which are not specified herein or are used by AT&T PCS in any of its
operations other than the System; and
7
<PAGE>
(f) the AT&T PCS Retained License.
2.3 Payment of Consideration. Upon the terms and subject to the
------------------------
conditions hereof and in reliance upon the representations, warranties,
covenants and agreements herein contained, at the Closing, in consideration of
the assignment of the Purchased Assets, the Company shall (i) pay to AT&T PCS by
wire transfer of immediately available funds the amount of Ninety One Million
Five Hundred Eighteen Thousand Six Hundred Fifty One ($91,518,651) Dollars (the
"Cash Purchase Price") (subject to adjustment pursuant to Section 2.4(b) and, in
-------------------
the event that the System Cell Sites shall not have been completed on or prior
to the Closing Date, Section 4.11), (ii) issue and deliver to AT&T PCS
134,813.49 shares of Series D Preferred Stock, par value $0.01 per share
("Series D Preferred Stock"), of the Company and (iii) assume the Assumed
- --------------------------
Liabilities in accordance with Section 2.4 (the Cash Purchase Price, the Series
D Preferred Stock and the assumption of the Assumed Liabilities are collectively
referred to herein as the "Purchase Price").
--------------
II.4 Assumption of Obligations.
-------------------------
(a) On and as of the Closing Date, the Company (or, if applicable,
the Company and any Designated Purchasers, jointly and severally) shall assume
and agree to discharge and perform, when due, the following liabilities and
obligations of AT&T PCS (collectively, the "Assumed Liabilities"): (i) those
-------------------
liabilities and obligations accruing, arising out of or relating to events or
occurrences on or after the date of execution of the Management Agreement under
the Assigned Agreements; and (ii) any and all obligations and liabilities
accruing, arising out of or relating to events or occurrences on or after the
date of execution of the Management Agreement relating to or arising out of the
ownership (after the Closing), use or operation of the System or any of the
Purchased Assets (other than those liabilities and obligations arising out of
(A) a breach by AT&T PCS of this Agreement or the Management Agreement or (B)
any negligence or willful misconduct by AT&T PCS on or after the date of
execution of the Management Agreement or (C) matters relating to the System for
which the Company does not have management responsibility under the Management
Agreement (e.g. employee benefit plans for the System's employees)); provided
that if during any period prior to Closing the Management Agreement is not in
effect (each, an "Excluded Period"), the Assumed Liabilities shall not include
items described in clauses (i) and (ii) above that accrue, arise out of or
relate to events or occurrences during the Excluded Periods. Except for the
Assumed Liabilities, neither the Company nor any of its Affiliates shall assume
or in any way undertake to pay, perform, satisfy or discharge any liabilities
and obligations of AT&T PCS, and AT&T PCS agrees to pay and satisfy when due any
liabilities and obligations relating to or arising out of the ownership, use or
operation of the System or any of the Purchased Assets other than the Assumed
Liabilities (collectively, the "Excluded Liabilities").
--------------------
(b) All payments made by AT&T PCS, and all obligations arising,
under the Assigned Agreements shall be prorated as of the Closing Date, and the
amounts thereof allocable or attributable to periods ending prior to the Closing
Date shall be for the account of AT&T PCS and amounts thereof allocable or
attributable to periods commencing on and after the Closing Date shall be for
the account of the Company. For purposes of this Section 2.4(b), AT&T PCS and
the
8
<PAGE>
Company agree that amounts expended by AT&T PCS pursuant to Assigned Agreements
with (x) the Virginia Department of Transportation and (y) the Commonwealth of
Virginia, in each case in respect of construction and other related costs that
are credited against AT&T PCS's rental obligations for periods on or after the
Closing Date under leases entered into or to be entered into pursuant to such
Assigned Agreements, shall constitute payments made by AT&T PCS that are subject
to proration pursuant to this Section 2.4(b); provided that such obligation of
the Company to reimburse AT&T PCS in respect of amounts allocable to periods
after the Closing Date pursuant to Assigned Agreements with the Virginia
Department of Transportation shall not exceed $2,600,000. A preliminary schedule
of all adjustments pursuant to this Section 2.4(b) shall be prepared by AT&T PCS
and delivered to the Company at least ten (10) Business Days prior to the
Closing Date. The Company and its representatives will be provided with
supporting documentation used in the preparation thereof by AT&T PCS. The
Company shall have a period of five (5) Business Days to review such preliminary
schedule and supporting documentation and provide AT&T PCS with written notice
of any objections or corrections thereto that the Company may have. An initial
adjustment to the Cash Purchase Price based upon the aggregate amount of
undisputed adjustments on the preliminary schedule shall be made at the Closing.
A final schedule of such adjustments (including the disputed adjustments) shall
be prepared jointly by the Company and AT&T PCS on or prior to the twentieth
(20th) Business Day following the Closing Date. In the absence of mutual
agreement regarding such final schedule within such twenty (20) day period, the
parties shall engage the Independent Accountant to determine the amount of the
adjustment to be made pursuant to this Section 2.4(b). The determination of the
Independent Accountant shall be final, binding and conclusive on the parties
hereto, and the fees and expenses of the Independent Accountant shall be borne
equally by the parties. A final adjustment to the Cash Purchase Price based upon
such final schedule and payment of the net amount thereof to which AT&T PCS or
the Company shall be entitled under this Section 2.4(b) shall be made on the
twentieth (20th) Business Day following the Closing Date, or upon the
determination of the Independent Accountant, as the case may be. In connection
with the final calculation of any such adjustment, each party shall give to the
other party and its agents and representatives (including its independent
auditors and attorneys) and the Independent Accountant, reasonable access,
during normal business hours and upon reasonable notice, to the records, books,
contracts and documents reasonably requested by such other party or the
Independent Accountant for such purpose, furnish such other party and the
Independent Accountant, with all such information as such other party or the
Independent Accountant may reasonably request for such purpose and cause its
appropriate officers, employees, consultants, agents, accountants and attorneys
to cooperate with such attorneys and representatives and the Independent
Accountant in connection therewith.
2.5 No Expansion of Third-Party Rights. The assumption by the Company
----------------------------------
(or, if applicable, the Company and any Designated Purchasers) of the Assumed
Liabilities, and the transfer thereof by AT&T PCS to the Company, shall in no
way expand the rights or remedies of any third party against the Company (and,
if applicable, such Designated Purchasers) as compared to the rights and
remedies that such third party would have had against AT&T PCS had the Company
(and, if applicable, such Designated Purchasers) not assumed the Assumed
Liabilities. Without limiting the
9
<PAGE>
generality of the preceding sentence, the assumption by the Company (and, if
applicable, such Designated Purchasers) of the Assumed Liabilities shall not
create any third-party beneficiary rights.
2.6 Payment of Certain Expenses. The Company agrees, in the event the
---------------------------
Transactions are consummated, to pay, and save AT&T PCS harmless against, the
reasonable and documented fees and disbursements of AT&T PCS's counsel, up to a
maximum of $50,000 in the aggregate, in connection with (i) the preparation,
negotiation, execution and delivery of this Agreement, the instruments and
documents executed pursuant hereto or in connection herewith, and (ii) the
consummation of the Transactions, including, without limitation, all legal fees
and related expenses incurred in connection with the preparation and filing of
applications on Form 490 with the FCC necessary to effect the License Transfer.
2.7 Restrictive Legends. Each certificate representing Securities
-------------------
(including the Securities originally issued hereunder or delivered upon
conversion of the Series D Preferred Stock, or delivered in substitution or
exchange for any of the foregoing) will bear a legend reading substantially as
follows until such Securities have been sold pursuant to an effective
registration statement under the Securities Act, Rule 144 under the Securities
Act, or an opinion of counsel reasonably satisfactory in form and substance to
the Company and otherwise in full compliance with any other applicable
restrictions on transfer, including those contained in this Agreement and the
Stockholders Agreement:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE 'ACT'), OR UNDER ANY STATE SECURITIES OR 'BLUE SKY' LAWS. SAID
SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF, UNLESS AND UNTIL REGISTERED UNDER THE ACT AND THE RULES
AND REGULATIONS THEREUNDER AND ALL APPLICABLE STATE SECURITIES OR 'BLUE SKY'
LAWS OR EXEMPTED THEREFROM UNDER THE ACT AND ALL APPLICABLE STATE SECURITIES OR
'BLUE SKY' LAWS."
2.8 Allocation of Purchase Price. On or prior to the Closing Date, the
----------------------------
Company and AT&T PCS shall mutually agree upon the allocation of the Purchase
Price among the Purchased Assets. The parties agree that such allocation shall
be made based upon the relative fair market values of the Purchased Assets as of
the Closing Date. In the absence of mutual agreement within such period, the
parties shall submit promptly the determination of such allocation to
Independent Accountant who will be engaged by the parties to allocate the
Purchase Price among the Purchased Assets based upon their relative fair market
values as of the Closing Date. The determination of the Independent Accountant
shall be final, binding and conclusive on the parties hereto, and the fees and
expenses of the Independent Accountant shall be borne equally by the parties.
The Company and AT&T PCS agree to file all tax returns and reports, including
Internal Revenue Service Form 8594, in accordance with such allocation and not
to take any position inconsistent therewith unless required to do so pursuant to
a "determination" as such term is defined in Section 1313 of the Code.
10
<PAGE>
ARTICLE III
CLOSING
-------
3.1 Time and Place of Closing . Upon the terms and subject to the
-------------------------
conditions hereof, the closing of the Transactions (the "Closing") shall take
-------
place at the offices of Rubin Baum Levin Constant & Friedman, 30 Rockefeller
Plaza, New York, New York, at 10:00 a.m. local time on the twelfth Business Day
following the date of receipt of the last Consent required by subsections (a)
through (c) of Section 7.1, or at such other place and/or time and/or on such
other date as the parties may agree or as may be necessary to permit the
fulfillment or waiver of the conditions set forth in Article VII (the "Closing
-------
Date"). The Closing shall be deemed to have occurred as of 12:01 a.m. on the
- ----
Closing Date.
3.2 Closing Actions and Deliveries. Upon the terms and subject to the
------------------------------
satisfaction or waiver by the appropriate party, if applicable, of the
conditions set forth in Article VII, to effect the purchase and sale of the
Purchased Assets and the issuance of the Securities in consideration therefor,
the parties shall on the Closing Date take the following actions:
(a) Assignment of License. AT&T PCS shall execute and deliver to
---------------------
the Company one or more instruments of assignment, substantially in the form of
Exhibit 3.2(a), sufficient to assign to the Company (or any Designated
Purchasers) the AT&T PCS Contributed License (such assignment being herein
referred to as the "License Transfer").
----------------
(b) Assignment of Purchased Assets. AT&T PCS shall execute and
------------------------------
deliver to the Company one or more bills of sale or instruments of assignment,
substantially in the form of Exhibit 3.2(b), sufficient to assign to the Company
(or any Designated Purchasers) the Purchased Assets.
(c) Delivery of Cash Purchase Price. The Company shall deliver to
-------------------------------
AT&T PCS the Cash Purchase Price, as adjusted in accordance with Sections 2.4(b)
and 4.11, by wire transfer of immediately available funds.
(d) Delivery of Series D Preferred Stock. The Company shall
------------------------------------
deliver to AT&T PCS stock certificates, duly executed by authorized signatories
of the Company, representing the shares of Series D Preferred Stock to be issued
to AT&T PCS in accordance with the terms of Section 2.3.
(e) Assumption of Obligations. The Company shall execute and
-------------------------
deliver to AT&T PCS an instrument of assumption, substantially in the form of
Exhibit 3.2(e), in respect of the obligations to be assumed by the Company
pursuant to Section 2.4(a).
(f) Other Deliveries.
----------------
(i) AT&T PCS shall execute and deliver or cause to be
executed and delivered to the Company the following additional documents:
11
<PAGE>
(A) original or copies of all Assigned Agreements to
the extent not previously provided to the Company;
(B) the opinion of Rubin Baum Levin Constant &
Friedman, dated the Closing Date, addressed to the Company (and its lenders, if
applicable) and substantially in the form of Exhibit 3.2(f)(i)(B);
(C) the opinion of Young & Jatlow, dated the Closing
Date, addressed to the Company (and its lenders, if applicable) and
substantially in the form of Exhibit 3.2(f)(i)(C);
(D) a certificate of an officer of AT&T PCS, dated the
Closing Date, certifying as to the fulfillment of the conditions set forth in
Sections 7.2(a) and 7.2(b) and that all of the conditions precedent to the
obligations of AT&T PCS hereunder have been waived by AT&T PCS or satisfied;
(E) a certificate of an officer of AT&T PCS, dated the
Closing Date, certifying as to (I) the resolutions adopted by AT&T PCS duly
authorizing the execution, delivery and performance of this Agreement by AT&T
PCS and the execution and delivery by AT&T PCS of all instruments and documents
contemplated hereby and (II) the signatures of the Persons who have been
authorized to execute and deliver this Agreement on behalf of AT&T PCS and any
other agreement executed or to be executed in connection herewith;
(F) A good standing certificate of AT&T PCS from the
Secretary of State of Delaware, dated no earlier than 30 days prior to the
Closing;
(G) The Search Results, as set forth in Section 4.10,
together with all releases, satisfaction pieces and UCC-3 Termination Statements
required to release the Liens on the Purchased Assets shown in the Search
Results (other than Liens securing the Assumed Liabilities).
(H) updated versions of Exhibits 2.1(a) and 2.1(d)
reflecting all acquisitions of Purchased Assets by AT&T PCS since the date
hereof;
(I) all required consents to the assignments of the
Material Agreements (containing, with respect to the real property leases
included in the Material Agreements, appropriate estoppel representations in
form and substance reasonably satisfactory to the Company); and
(J) all such other documents and instruments as the
Company or its counsel may reasonably request in order to consummate the
Transactions.
12
<PAGE>
(ii) The Company shall execute and deliver or cause to be
executed and delivered to AT&T PCS the following additional documents:
(A) the opinion of Kleinbard, Bell & Brecker LLP, dated
the Closing Date, addressed to AT&T PCS and substantially in the form of Exhibit
3.2(f)(ii)(A);
(B) the opinion of Latham & Watkins, dated the Closing
Date, addressed to AT&T PCS and substantially in the form of Exhibit
3.2(f)(ii)(B);
(C) a certificate of an officer of the Company, dated
the Closing Date, certifying as to the fulfillment of the conditions set forth
in Sections 7.3(a) and 7.3(b) and that all of the conditions precedent to the
obligations of the Company hereunder have been waived by the Company or
satisfied;
(D) a certificate of an officer of the Company, dated
the Closing Date, certifying as to (I) the resolutions adopted by the Company
duly authorizing the execution, delivery and performance of this Agreement by
the Company and the execution and delivery by the Company of all instruments and
documents contemplated hereby and (II) the signatures of the Persons who have
been authorized to execute and deliver this Agreement on behalf of the Company
and any other agreement executed or to be executed in connection herewith;
(E) A good standing certificate of the Company from the
Secretary of State of Delaware, dated no earlier than 30 days prior to the
Closing; and
(F) all such other documents and instruments as AT&T
PCS or its counsel may reasonably request in order to consummate the
Transactions.
3.3 Closing Costs; Taxes and Fees. The Company shall pay or cause to be
-----------------------------
paid at the Closing or, if due prior to the Closing or thereafter, promptly when
due: (i) all gross receipts taxes, transfer taxes, sales taxes, stamp taxes, and
any other taxes, but excluding any Federal, State or local income taxes payable
in connection with the transfer of the Purchased Assets; and (ii) one fee under
the HSR Act relating to the Transactions hereunder. AT&T PCS shall pay or cause
to be paid at the Closing, or if due prior to the closing or thereafter,
promptly when due, any additional fee under the HSR Act that may be required to
consummate the Transactions.
ARTICLE IV
COVENANTS
---------
4.1 Consummation of Transactions. Each party shall use all commercially
----------------------------
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable and consistent with
applicable law to carry out all of their respective obligations under this
Agreement to consummate the Transactions, which efforts shall include the
following:
13
<PAGE>
(a) The parties shall use all commercially reasonable efforts to
cause the Closing to occur and the Transactions to be consummated in accordance
with the terms hereof, and, without limiting the generality of the foregoing, to
obtain all necessary Consents including the approval of this Agreement and the
Transactions by all Governmental Authorities and agencies, including the FCC,
and to make all filings with and to give all notices to third parties which may
be necessary or reasonably required in order for the parties to consummate the
Transactions.
(b) Each party shall furnish to the other party all information
concerning such party and its Affiliates reasonably required for inclusion in
any application or filing to be made by AT&T PCS or the Company or any other
party in connection with the Transactions or otherwise to comply with applicable
FCC Law.
(c) Upon the request of the other party, each party shall forthwith
execute and deliver, or cause to be executed and delivered, such further
instruments of assignment, transfer, conveyance, endorsement, direction or
authorization and other documents as may reasonably be requested by such party
in order to effectuate the purposes of this Agreement.
(d) Each party covenants and agrees from and after the execution
and delivery of this Agreement to and including the Closing Date as follows:
(i) It is understood that the Closing is subject to prior
approval of the FCC and may be subject to the prior approval of one or more
state regulatory commissions. The parties shall use their best efforts to file
with the FCC and any relevant state agency or agencies, as soon as practicable
following the date hereof and in no event later than ten (10) Business Days from
the date hereof, a joint application requesting the approval of the transfer of
the Purchased Assets to the Company, or its designee. Each of the parties hereto
shall diligently take or cooperate in the taking of all steps which are
necessary or appropriate to expedite the prosecution and favorable consideration
of such applications. The parties covenant and agree to undertake all actions
reasonably requested by the FCC or other regulatory authority and to file such
material as shall be necessary or required to obtain any necessary waivers or
other authority from the FCC or such state agency or agencies in connection with
the foregoing applications.
(ii) Within fifteen (15) Business Days of the date of
execution hereof, the parties shall file, or cause to be filed, with the Federal
Trade Commission and the Antitrust Division of the Department of Justice any and
all reports or notifications which are required to be filed under the HSR Act or
other Law.
4.2 Confidentiality.
---------------
(a) Each party shall, and shall cause each of its Affiliates, and
its and their respective shareholders, members, managers, directors, officers,
employees and agents (collectively, "Representatives") to, keep secret and
---------------
retain in strictest confidence any and all Confidential Information relating to
any other party that it receives in connection with the negotiation or
14
<PAGE>
performance of this Agreement, and shall not disclose such Confidential
Information, and shall cause its Representatives not to disclose such
Confidential Information, to anyone except the receiving party's Affiliates and
Representatives and any other Person that agrees in writing to keep in
confidence all Confidential Information in accordance with the terms of this
Section 4.2. Until the Closing, each party agrees to use Confidential
Information received from another party only to pursue such Transactions, but
not for any other purpose. All tangible embodiments of Confidential Information
furnished pursuant to this Agreement shall be returned promptly to the party to
whom it belongs upon request by such party.
(b) The obligations set forth in Section 4.2(a) shall be
inoperative with respect to Confidential Information that (i) is or becomes
generally available to the public other than as a result of disclosure by the
receiving party or its Representatives, (ii) was available to the receiving
party on a non-confidential basis prior to its disclosure to the receiving
party, or (iii) becomes available to the receiving party on a non-confidential
basis from a source other than the providing party or its agents, provided, that
such source is not known by the receiving party to be bound by a confidentiality
agreement with the providing party or the providing party's agents. In addition,
from and after the Closing the obligations set forth in Section 4.2(a) shall not
apply to the Company with respect to Confidential Information relating to the
System or the Purchased Assets.
(c) To the fullest extent permitted by law, if a party or any of
its Affiliates or Representatives breaches, or threatens to commit a breach of,
this Section 4.2, the party whose Confidential Information shall be disclosed,
or threatened to be disclosed, shall have the right and remedy to have this
Section 4.2 specifically enforced by any court having jurisdiction, it being
acknowledged and agreed that money damages will not provide an adequate remedy
to such party. Nothing in this Section 4.2 shall be construed to limit the right
of any party to collect money damages in the event of breach of this Section
4.2.
(d) Anything else in this Agreement notwithstanding, each party
shall have the right to disclose any information, including Confidential
Information of the other party or such other party's Affiliates: (i) to the
other party and its Affiliates or Representatives; (ii) as otherwise required by
Law, including securities laws; provided, that any such disclosure shall be as
limited in scope as possible and shall be made only after giving the other party
as much notice as practicable of such required disclosure and an opportunity to
contest such disclosure if possible; (iii) as required by its existing or
potential lending sources (such lending sources to acknowledge that any such
Confidential Information disclosed to them is subject to the provisions hereof);
(iv) as required to enforce its rights under this Agreement; or (v) as required
to obtain the Consents specified in Sections 7.1(a) through (c).
4.3 Covenants of AT&T PCS. From and after the execution and delivery
---------------------
of this Agreement to and including the Closing Date, AT&T PCS shall:
15
<PAGE>
(a) Comply with all applicable Laws relating to the PCS License and
the Purchased Assets or their use except to the extent that such failure to
comply would not have an AT&T PCS Material Adverse Effect;
(b) Use its reasonable best efforts to maintain the PCS License in
full force and effect;
(c) Without the Company's prior written consent, such consent not
to be unreasonably withheld, delayed or conditioned, not (i) sell, transfer,
assign or dispose of, or offer to, or enter into any agreement, arrangement or
understanding to, sell, transfer, assign or dispose of any of the Purchased
Assets or any interest therein, or negotiate therefor, or (ii) create, incur or
suffer to exist any Lien of any nature whatsoever relating to any of the
Purchased Assets or any interest therein (other than Liens securing the Assumed
Liabilities or Liens which will be terminated and released prior to Closing); or
(iii) enter into any contract or agreement relating exclusively to the Purchased
Assets or the System (it being understood that any such agreement entered into
between the date hereof and the Closing Date with the Company's prior written
consent shall constitute an Assigned Agreement) other than those which are
terminable by AT&T PCS without penalty or any liability at the Closing;
(d) Give to the Company and its agents and representatives
(including its independent auditors and attorneys) reasonable access (such
access not to interfere unreasonably with the operation of the System or with
any other operations of AT&T PCS) during normal business hours and upon
reasonable notice, to the Purchased Assets and the employees of the System, and
to records, books, contracts and documents relating to the Purchased Assets or
the System, furnish the Company with all such information concerning the
Purchased Assets or the System as the Company may reasonably request and cause
the appropriate officers, employees, consultants, agents, accountants and
attorneys of AT&T PCS to cooperate with such attorneys and representatives in
connection with such review and examination;
(e) Deliver to the Company copies of all environmental assessment
reports, if any, it has in its possession covering any real property at or on
which any of the Purchased Assets is located or that is leased pursuant to an
Assigned Agreement;
(f) AT&T PCS shall use commercially reasonable efforts to preserve
the Purchased Assets intact and, from time to time, to make all reasonably
necessary repairs thereto;
(g) Give written notice to the Company promptly upon the
commencement of, or upon obtaining knowledge of any facts that would give rise
to a threat of, any claim, action or proceeding commenced against or relating to
(other than proceedings affecting the PCS or wireless communications services
industry generally) the Purchased Assets or their use, and which would
reasonably be expected to have an AT&T PCS Material Adverse Effect;
16
<PAGE>
(h) Promptly after obtaining knowledge of the occurrence of, or the
impending or threatened occurrence of, any event which would cause or constitute
a material breach of any of its warranties, representations, covenants or
agreements contained in this Agreement, or which would reasonably be expected to
have an AT&T PCS Material Adverse Effect, give notice in writing of such event
or occurrence or impending or threatened event or occurrence (provided, that
such disclosure shall not be deemed to cure any violation or breach of any such
representation, warranty, covenant, agreement or provision), to the Company and
use commercially reasonable efforts to prevent or to promptly remedy such
breach;
(i) Cause the Company to be advised promptly in writing of (i) any
event, condition or state of facts known to it, which has had or would
reasonably be expected to have an AT&T PCS Material Adverse Effect, or
materially adversely affect the Purchased Assets (taken as a whole) or their use
(other than proceedings affecting the PCS or wireless communications services
industry generally), (ii) any claim, action or proceeding which seeks to enjoin
the consummation of the Transactions and (iii) any event, occurrence,
transaction or other item that would have been required to have been disclosed
on any Exhibit or Schedule delivered hereunder, had such event, occurrence,
transaction or item existed on the date hereof;
(j) Conduct the business of the System only in the ordinary course
and in this regard use its diligent efforts to preserve the Purchased Assets
intact;
(k) use commercially reasonable efforts to preserve its
relationships with all parties to the Assigned Agreements and to perform in all
material respects all of its obligations under the Assigned Agreements according
to the terms and conditions thereof (it being understood and agreed by the
parties that AT&T PCS, in accordance with the Management Agreement, is seeking
to amend the terms of the Assigned Agreements with the Virginia Department of
Transportation to, among other things, increase the amount of rent credits to
which AT&T PCS is entitled thereunder);
(l) maintain true, correct and complete books and records relating
to the System; and
(m) not fail to pay when due any liability or obligations that, if
unpaid, would become a Lien upon any of the Purchased Assets.
4.4 Covenants of the Company. From and after the execution and
------------------------
delivery of this Agreement to and including the Closing Date, the Company shall:
(a) Comply with all applicable Laws, including all such Laws
relating to the PCS License and the Purchased Assets or their use except to the
extent that such failure to comply would not have a Company Material Adverse
Effect;
(b) Comply with the terms of the Stockholders Agreement;
17
<PAGE>
(c) Give written notice to AT&T PCS promptly upon the commencement
of, or upon obtaining knowledge of any facts that would give rise to a threat
of, any claim, action or proceeding commenced against or relating to (other than
proceedings affecting the PCS or wireless communications services industry
generally) it, its properties or assets, and which would reasonably be expected
to have a Company Material Adverse Effect;
(d) Promptly after obtaining knowledge of the occurrence of, or the
impending or threatened occurrence of, any event which would cause or constitute
a material breach of any of its warranties, representations, covenants or
agreements contained in this Agreement or which would reasonably be expected to
have a Company Material Adverse Effect, give notice in writing of such event or
occurrence or impending or threatened event or occurrence (provided, that such
disclosure shall not be deemed to cure any violation or breach of any such
representation, warranty, covenant, agreement or provision), to AT&T PCS and use
commercially reasonable efforts to prevent or to promptly remedy such breach;
and
(e) Cause AT&T PCS to be advised promptly in writing of (i) any
event, condition or state of facts known to it, which has had or would
reasonably be expected to have a Company Material Adverse Effect (other than
proceedings affecting the PCS or wireless communications services industry
generally), (ii) any claim, action or proceeding which seeks to enjoin the
consummation of the Transactions and (iii) any event, occurrence, transaction or
other item that would have been required to have been disclosed on any Exhibit
or Schedule delivered hereunder, had such event, occurrence, transaction or item
existed on the date hereof.
4.5 Employees.
---------
(a) Except as set forth on Exhibit 4.5 or as otherwise agreed by
the Company and AT&T PCS, on or before thirty (30) days prior to the Closing
Date, the Company shall offer each of the employees of AT&T PCS rendering
services exclusively to the System employment with the Company after the Closing
Date on terms consistent with the Company's standard policies (each such
employee other than any person that the Company and AT&T PCS agrees shall not be
so offered employment by the Company, an "Employee"). Notwithstanding the
foregoing, the Company shall offer each Employee comparable employment, whereby
the Employee's duties and responsibilities are not significantly reduced, the
Employee's base pay is not reduced by more than 10%, and the Employee is not
transferred to a new facility located more than 50 miles from such Employee's
current work site, except that the Company shall, as a condition of such offer
of employment, be permitted to require any Employee to relocate to the Richmond,
Virginia area. Upon reasonable notice, AT&T PCS shall provide the Company with
access to the Employees during normal business hours throughout the period from
the date hereof through the Closing Date, for the purpose of interviewing such
employees, negotiating with the Employees regarding their salary and other terms
of employment, and providing transition training for those employees continuing
in employment after the Closing Date ("Continuing Employees"). AT&T PCS agrees
to use all reasonable efforts to assist the Company in employing the Employees
and, in this regard, to terminate the Employees on or prior to the Closing Date.
Upon such termination, AT&T PCS shall pay each Employee all
18
<PAGE>
amounts due and owing such Employee in respect of salary or benefits (including
severance benefits, if any) relating to the Employee's employment by AT&T PCS.
AT&T PCS waives any claims against the Company or any Employee arising from such
employment of the Continuing Employees of the Company (including arising from
any employment agreement or noncompetition agreement). Nothing contained in this
Agreement shall confer upon any Employee any right with respect to continued
employment by AT&T PCS or the Company. No provision of this Agreement shall
create any third-party rights in any Employee, or any beneficiary or dependent
thereof, with respect to the compensation, terms and conditions of employment
and benefits that may be provided to such Employee by the Company or under any
employee benefit plan that the Company may maintain.
(b) All expenses covered under any medical, dental, vision,
prescription drug, disability, travel accident, accidental death and
dismemberment, and life insurance plans of the Company and which are incurred by
Continuing Employees and their dependents on or after the Closing Date,
including any expenses attributable to facts or conditions existing on or before
the Closing Date, are the responsibility of the Company and shall be paid
directly by the Company or its insurance carrier to such Continuing Employees
and dependents. The Company shall be responsible for any medical, dental or life
insurance coverage under the terms of the Company's plans (if any) due to any
Continuing Employees and their dependents who retire after the Closing Date. The
Company shall fulfill the obligations under continuation coverage rules of the
Consolidation Omnibus Budget Reconciliation Act (COBRA) with respect to a
"qualifying event" within the meaning of Section 4980B(f) of the Internal
Revenue Code of 1986, as amended (the "Code") or Section 603 of the Employee
Retirement Income Security Act of 1974, as amended, occurring on or after the
Closing Date with respect to any Continuing Employees and their dependents. All
short-term, long-term and extended disability benefits under the terms of the
Company's plans (if any) payable to Continuing Employees and their dependents
who become disabled on or after the Closing Date shall be the responsibility of
the Company and shall be paid directly by the Company or its insurance carrier
to such Continuing Employees and their dependents.
(c) Effective as of the Closing Date, the Company shall (to the
extent permitted under the provisions of the Company's group health plan) cause
all Continuing Employees and their dependents to be eligible to participate in a
group health plan and shall waive any minimum eligibility period of employment
for coverage and any preexisting condition requirement and provide credit
towards the payment of any deductible for any Continuing Employees and their
dependents with respect to such plan.
(d) As soon as practicable after the Closing Date, the Company shall
(to the extent permitted under the Company Plan) cause each Continuing Employee
to be eligible to participate in a defined contribution plan qualified under
Code Section 401(a) and 401(k) (the "Company Plan"). The Company shall (to the
extent permitted under the Company Plan) cause each Continuing Employee to be
granted credit for service with AT&T PCS or any affiliate thereof for purposes
of eligibility and vesting in the Company Plan.
19
<PAGE>
(e) An amount in cash equal to the aggregate value of account
balances in the AT&T Wireless Service 401(k) Retirement Plan attributable to
Continuing Employees, which account balances shall include any employer matching
contributions in respect of employee contributions made prior to the Closing
Date and shall be valued, to the extent administratively feasible, so as to
include earnings and losses to a date not more than 30 days prior to the date of
transfer, will (to the extent permitted under the Company Plan) be transferred
to the Company's Plan, along with corresponding liabilities to pay benefits.
After the aforesaid transfer of account balances, the payment of benefits under
the Company Plan for Continuing Employees shall be the sole responsibility of
the Company, and the Company acknowledges and warrants that AT&T PCS and its
affiliates shall have no responsibility therefor.
4.6 Bulk Sales. Each of the parties hereto waives the obligation of the
----------
other party under the provisions of any "Bulk Sales" laws of the Uniform
Commercial Code as in effect in any state having jurisdiction over AT&T PCS or
the Transactions.
4.7 Assignment of Assigned Agreements. To the extent that any of the
---------------------------------
Assigned Agreements being assigned pursuant hereto is not assignable without the
consent of another Person and such Consent has not been obtained on or prior to
the Closing Date, this Agreement shall not constitute an assignment or attempted
assignment of such Assigned Agreement if such assignment or attempted assignment
would constitute a breach thereof. AT&T PCS agrees to use commercially
reasonable efforts to obtain (i) the Consent of such other Person to an
assignment in all cases in which Consent is required or (ii) novation agreements
to Assigned Agreements not so assignable. If such Consent or novation is not
obtained, AT&T PCS agrees to cooperate with the Company to provide for the
Company, to the extent permitted under the terms of such Assigned Agreement, the
benefits under such Assigned Agreement, including enforcement of any and all
rights of AT&T PCS against the other Person that is a party thereto arising out
of the cancellation by such other Person or otherwise.
4.8 Title; Risk of Loss. Legal title and risk of loss with respect to the
-------------------
Purchased Assets shall not pass to the Company until the Purchased Assets are
transferred at Closing.
4.9 Non-Solicitation.
----------------
(a) From the date hereof until the Closing Date, AT&T PCS (and any of
AT&T PCS's officers, directors, partners, employees, representatives or agents)
will not solicit, initiate, encourage or participate in negotiations in any
manner with respect to, or furnish or cause or permit to be furnished any
information to any Person (other than to the Company or the Company's
representatives) in connection with, any inquiry or offer for any purchase or
sale of any Purchased Asset or the System (collectively, a "Third-Party
-----------
Proposal"). During such period, AT&T PCS shall promptly inform the Company of
- --------
the occurrence of a Third-Party Proposal and the terms thereof (including the
identity of the prospective soliciting party).
20
<PAGE>
(b) If AT&T PCS (or any of AT&T PCS's officers, directors, partners,
employees, representatives or agents) breaches or threatens to commit a breach
of any of the provisions of this section, the Company shall have the right (in
addition to any other rights and remedies available to the Company at law or in
equity) to equitable relief (including injunctions) against such breach or
threatened breach, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable harm to the Company and that money
damages would not be an adequate remedy to the Company. AT&T PCS agrees that it
will not seek, and hereby waives any requirement for, the securing or posting of
a bond or proving actual damages in connection with the Company's seeking or
obtaining such relief.
4.10 Lien Searches. At least ten (10) days prior to the Closing, AT&T
-------------
PCS shall deliver to the Company Uniform Commercial Code, federal tax lien,
bankruptcy and judgment search reports issued by the Offices of the Secretary of
State of all applicable jurisdictions and all applicable local offices with
respect to the System and the Purchased Assets (the "Search Results"). If the
--------------
Search Results reveal that any Liens on the Purchased Assets exist (other than
Liens securing the Assumed Liabilities), AT&T PCS shall use commercially
reasonable efforts to have such Liens removed as of the Closing.
4.11 Completion of Construction. AT&T PCS has advised the Company that
--------------------------
it intends to construct 108 cell sites as described on Exhibit 4.11 (the "System
------
Cell Sites"). Such Exhibit 4.11 sets forth that portion of the construction of
- ----------
the System Cell Sites that has not been completed as of the date of the
Management Agreement and the budgeted cost of such completion. Subject to the
Management Agreement, AT&T PCS covenants and agrees to use its commercially
reasonable efforts to complete such construction on or prior to the Closing
Date; provided, that (i) AT&T PCS shall not be obligated to complete such
construction (it being understood and agreed by the Company that the completion
of such construction shall not be a condition to Closing hereunder), and (ii)
except as set forth in the next succeeding sentence, the Company shall have no
rights of any nature whatsoever against AT&T PCS arising from any failure on the
part of AT&T PCS to complete such construction. In the event that AT&T PCS has
not completed such construction on or prior to the Closing Date, the Company
shall receive at the Closing a credit against the Cash Purchase Price in respect
of each item not completed in an amount equal to the budgeted cost for such item
on Exhibit 4.11. In the event that the Management Agreement shall have been
terminated, at least ten (10) Business Days prior to the Closing Date, AT&T PCS
shall deliver to the Company a certificate, signed by an authorized
representative, setting forth the status of such construction and with respect
to any portion of such construction that has not been completed, the
corresponding amount by which the Cash Purchase Price shall be reduced. The
Company shall have a period of five (5) Business Days to review such certificate
and provide AT&T PCS with written notice of any objections or corrections
thereto that the Company may have. An initial adjustment to the Cash Purchase
Price based upon the undisputed items shown on such certificate shall be made at
Closing. To the extent that disputed items exist, a final adjustment to the
Cash Purchase Price shall be determined jointly by the Company and AT&T PCS on
or prior to the twentieth (20/th/) Business Day following the Closing Date. In
the absence of mutual agreement regarding such final adjustment within such
twenty (20) day period, the parties shall engage the Independent Accountant to
determine the amount
21
<PAGE>
of the adjustment to be made pursuant to this Section 4.11. The determination of
the Independent Accountant shall be final, binding and conclusive on the parties
hereto, and the fees and expenses of the Independent Accountant shall be borne
equally by the parties. Notwithstanding anything to the contrary contained
herein, in the event that the Management Agreement shall be in effect on the
Closing Date, AT&T PCS shall have no obligation to credit against the Cash
Purchase Price any such cost of construction that has not been completed on or
prior to the Closing Date; it being understood that in such event nothing
contained herein shall affect the obligations of AT&T PCS to the Company
pursuant to the Management Agreement with respect to such cost of completion of
such construction.
4.12 FCC Construction Requirement. The Company and AT&T PCS hereby agree
----------------------------
that the Company shall assume and be obligated to satisfy the construction
requirements set forth in 47 C.F.R. 24.203 with respect to the AT&T PCS Retained
License and the AT&T PCS Contributed License.
4.13 Environmental Due Diligence. The Company shall have conducted an
---------------------------
environmental due diligence investigation of the Purchased Assets and the
System, the results of which investigation shall be reasonably satisfactory to
the Company, it being understood that such investigation shall include: (i)
reviewing all Phase I environmental assessments prepared prior to the date
hereof on behalf of AT&T PCS for the parcels of real property subject to leases
included in the Assigned Agreements; and (ii) conducting and reviewing Phase I
environmental assessments for parcels of real property subject to leases
included in the Assigned Agreements for which such assessments have not been
performed prior to the date hereof. In the event the Company is not reasonably
satisfied with the results of its environmental due diligence investigation with
respect to any such parcel, the Company shall provide AT&T PCS with written
notice of such dissatisfaction no later than 30 days after the date hereof,
which written notice shall set forth in reasonable detail the parcels as to
which the Company is not reasonably satisfied and the reasons therefor (the
"Potentially Rejected Sites"). In the event there are five (5) or fewer
--------------------------
Potentially Rejected Sites, the Closing shall take place in accordance with the
terms hereof with no reduction in the Purchase Price, and (i) with respect to
each Potentially Registered Site the Company shall have the right at the
Company's sole cost and expense to deinstall and remove all Purchased Assets
located at any Potentially Rejected Site, (ii) Section 4.11 shall not be
applicable to any Potentially Rejected Site as to which such right shall be
exercised, and (iii) any Assigned Agreements relating to a Potentially Rejected
Site as to which such right shall be exercised shall be excluded from the
Purchased Assets and shall not be assigned to the Company pursuant to Section
2.1(d) and the liabilities arising thereunder shall not be Assumed Liabilities
pursuant to Section 2.4(a). The Company shall exercise such right by written
notice thereof given at least ten (10) Business Days prior to the Closing Date.
In the event there are more than five (5) Potentially Rejected Sites, the
Company may elect by written notice provided to AT&T PCS no later than 30 days
after the date hereof to terminate this Agreement in accordance with Article IX;
provided, however, that such 30 day period may be extended by the Company, by
- -------- -------
written notice given to AT&T PCS, for such period not to exceed 30 days, as
shall be necessary to investigate any potential environmental liability relating
to any Potentially Rejected Site. In the event that the Company elects to
deinstall and remove any
22
<PAGE>
Purchased Assets located at any Potentially Rejected Site in accordance with
this Section 4.13, and this Agreement shall thereafter be terminated without the
Closing having occurred, the Company shall at its sole cost and expense
reinstall and restore all Purchased Assets to their prior locations.
Notwithstanding anything to the contrary contained herein, AT&T PCS shall not be
deemed to be in breach of any representation or warranty contained in this
Agreement, or have any indemnification obligation relating thereto, in respect
of any matter of which the Company acquires knowledge during the course of its
environmental due diligence investigation of the Purchased Assets. As used in
this Section 4.13, the term "knowledge" refers to actual and not constructive
knowledge of the Company. Notwithstanding the foregoing, in the event that the
Company shall have placed the System into commercial operation while the
Management Agreement shall be in effect, the Company shall have no right to
terminate this Agreement pursuant to this Section 4.13.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF AT&T PCS
------------------------------------------
AT&T PCS represents and warrants to the Company as follows:
5.1 Organization, Power and Authority.
---------------------------------
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of Delaware and has the requisite power and authority to
own, lease and operate the Purchased Assets and to carry on its business
relating to the System as now being conducted.
(b) It has the requisite power and authority to execute, deliver and
perform this Agreement and each other instrument, document, certificate and
agreement required or contemplated to be executed, delivered and performed by it
hereunder and thereunder to which it is or will be a party.
(c) It is duly qualified to do business in each jurisdiction where
the Purchased Assets are used or the nature of its activities conducted in the
operation of the System makes such qualification necessary other than any such
jurisdiction in which the failure to be so qualified would not have an AT&T PCS
Material Adverse Effect.
(d) The execution and delivery of this Agreement by it and the
consummation of the Transactions by it have been duly and validly authorized by
its Board of Directors and no other proceedings on its part which have not been
taken (including approval of its stockholders, partners or members) are
necessary to authorize this Agreement or to consummate the Transactions.
(e) This Agreement has been duly executed and delivered by it and
constitutes its valid and binding obligation, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting
23
<PAGE>
or relating to enforcement of creditors' rights generally or may be subject to
general principles of equity.
5.2 Consents; No Conflicts. Neither the execution, delivery and
----------------------
performance by it of this Agreement nor the consummation of the Transactions
will (a) conflict with, or result in a breach or violation of, any provision of
its organizational documents; (b) constitute, with or without the giving of
notice or passage of time or both, a breach, violation or default, create a Lien
on any of the Purchased Assets, or give rise to any right of termination,
modification, cancellation, prepayment or acceleration, under (i) any Law or the
PCS License or (ii) any note, bond, mortgage, indenture, lease, agreement or
other instrument, in each case which is applicable to or binding upon it or any
of its assets; or (c) require any Consent, other than those set forth on Exhibit
5.2, except in the case of clauses (a) and (b), where such breach, violation,
default, Lien or right would not have an AT&T PCS Material Adverse Effect. To
its knowledge, there is no fact relating to it or its Affiliates that would be
reasonably expected to prevent it from consummating the Transactions or
disqualify the Company from obtaining the Consents (including the Consent of the
FCC) required in order to consummate the License Transfer as provided for in
this Agreement.
5.3 Litigation. There is no action, proceeding or investigation pending
----------
or, to its knowledge, threatened against it or any of its properties or assets
that would be reasonably expected to have a material adverse effect on its
ability to consummate the Transactions or to fulfill its obligations under this
Agreement, or which seeks to prevent or challenge the Transactions.
5.4 FCC Compliance. To its knowledge, it is in compliance with all
--------------
eligibility rules issued by the FCC to hold broadband PCS Licenses, including
FCC rules on foreign ownership and the CMRS spectrum cap. To its knowledge, the
fact that it will own the interest in the Company contemplated by this Agreement
will not cause the Company or its wholly owned Subsidiaries to be ineligible
under FCC rules to hold PCS Licenses in general or the AT&T PCS Contributed
License.
5.5 Brokers. It has not employed any broker, finder or investment banker
-------
and has not incurred and will not incur any liability for any brokerage fees,
commissions or finder's fees in connection with the Transactions.
5.6 Stockholders Agreement. From and after February 4, 1998, through and
----------------------
including the Closing Date, AT&T PCS has performed all covenants and agreements
required to be performed by it pursuant to the Stockholders Agreement.
5.7 License. It is the authorized legal holder, free and clear of any
-------
Liens, of the PCS License, evidence of which is attached to Schedule I. The PCS
License is, and on the Closing Date the AT&T PCS Contributed License will be,
valid and in full force and effect. Except for proceedings affecting the PCS or
wireless communications services industry generally, there is not pending, nor
to the knowledge of AT&T PCS, threatened against AT&T PCS or against the PCS
License, any application, action, petition, objection or other pleading, or any
proceeding with the FCC which questions or contests the validity of, or seeks
the revocation, nonrenewal or suspension
24
<PAGE>
of, the PCS License, which seeks the imposition of any modification or amendment
with respect thereto, or which adversely affects the ability of the Company to
employ the AT&T PCS Contributed License in its business after the Closing Date.
The PCS License is not subject to any conditions other than those appearing on
the face of the PCS License itself and those imposed by FCC Law.
5.8 No Distribution. It is acquiring the Securities to be acquired by it
---------------
hereunder for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof (other than in compliance with the
Stockholders Agreement and the Securities Act and all applicable state
securities laws).
5.9 Investor Acknowledgments.
------------------------
(a) It is an "accredited investor" as defined in Regulation D of the
Securities Act. Its representatives have been provided an opportunity to ask
questions of, and have received answers thereto from, the Company and its
representatives regarding the terms and conditions of its acquisition of
Securities, and the Company and its proposed business generally, and have
obtained all additional information requested by it to verify the accuracy of
all information furnished to it in connection with such purchase. It is an
existing stockholder of the Company, owning on the date hereof 732,371 shares of
the Company's Series A Preferred Stock, par value $0.01 per share, and 366,131
shares of the Company's Series D Preferred Stock.
(b) It has such knowledge and experience in financial and business
affairs that it is capable of evaluating the merits and risks of acquiring the
Securities it is acquiring hereunder.
(c) It is not relying on and acknowledges that no representation is
being made by the Company or any of its officers, employees, Affiliates, agents
or representatives, except for representations and warranties expressly set
forth in this Agreement (including the Exhibits and Schedule attached hereto),
and, in particular, it is not relying on, and acknowledges that no
representation is being made in respect of, (i) any projections, estimates or
budgets delivered to or made available to it of future revenues, expenses or
expenditures, or future results of operations and (ii) any other information or
documents delivered or made available to it or its representatives, except for
representations and warranties expressly set forth in this Agreement (including
the Exhibits and Schedule attached hereto) and such information and documents
obtained by it as a stockholder of the Company and through its representative
who serves as a member of the Company's board of directors.
(d) In deciding to invest in the Company, it has relied exclusively
on the representations and warranties expressly set forth in this Agreement,
investigations made by itself and its representatives and its and such
representatives' knowledge of the industry in which AT&T PCS and the Company
operate. Based solely on such representations and warranties and such
investigations and knowledge and such information obtained by AT&T PCS by virtue
of its status as a stockholder of the Company and through its representative who
serves as a member of the
25
<PAGE>
Company's board of directors, it has determined that the Securities it is
acquiring are a suitable investment for it.
5.10 Title to Purchased Assets. AT&T PCS has good and marketable title
-------------------------
to, or a valid and enforceable leasehold interest in, all of the Purchased
Assets, free and clear of all Liens except (only with respect to Purchased
Assets other than the AT&T PCS Contributed License) for Liens for taxes,
assessments, governmental charges or levies which are not due and delinquent or
which hereafter can be paid without penalty, and except for warehousemen's,
mechanics', carriers', landlords', repairmen's, or other similar Liens arising
in the ordinary course of business (none of which, either singly or in the
aggregate, is material). The Purchased Assets do not include fee simple title
to any parcel of real property.
5.11 Employees. Exhibit 5.11 contains a list setting forth as of the date
---------
hereof the name and current annual salary and other compensation payable by
AT&T PCS to each Employee, and the profit sharing, bonus or other form of
additional compensation paid or payable by AT&T PCS to or for the benefit of
each such Employee for the current fiscal year. There are no agreements,
arrangements or understandings that would restrict the ability of the Company to
terminate the employment of any or all of the Employees for any lawful reason or
for no reason at all, without penalty or liability. All Employees are employees
at will. AT&T PCS has withheld all amounts required by law or agreement to be
withheld by it from the wages, salaries and other payments to Employees and is
not liable for any arrears of wages or any taxes for failure to comply with any
of the foregoing. There is no pending action, suit, claim, arbitration, or other
legal or administrative proceedings against AT&T PCS by or with respect to any
Employee.
5.12 Contracts.
---------
(a) Exhibit 2.1(d) contains a list of all Assigned Agreements
existing at the date hereof.
(b) AT&T PCS has performed and will, up to the Closing Date, perform
in all material respects all obligations required to be performed by it under
all Assigned Agreements.
(c) Each of the Assigned Agreements has been, and each Assigned
Agreement entered into after the date hereof as permitted by Section 4.3(c) will
be, lawfully entered into and is or will be valid and in full force and effect
and is or will be enforceable in accordance with its terms for the period stated
in such Assigned Agreement. There are no currently threatened cancellations of,
nor are there any outstanding disputes or material defaults under, any Assigned
Agreement. AT&T PCS will not modify, amend or waive any provisions of any
Assigned Agreement in a manner that would materially adversely affect the
Purchased Assets or terminate any Assigned Agreement prior to the Closing other
than in the ordinary course of business and with the prior written consent of
the Company, which consent will not be unreasonably withheld.
26
<PAGE>
5.13 Equipment. The items of equipment set forth on Exhibit 2.1(a) are
---------
in good working condition (reasonable wear and tear excepted) and are useable
for the purposes for which intended. To AT&T PCS's knowledge, AT&T PCS has
maintained such equipment in accordance with all warranties provided by the
vendors or manufacturers thereof.
5.14 Environmental Matters. There has been no manufacture, refining,
---------------------
storage, disposal or treatment of Hazardous Substances by AT&T PCS (or, except
as disclosed in any Phase I environmental assessment with respect to any parcel
of real property at which any Purchased Assets are located, to the knowledge of
AT&T PCS, its predecessors in interest) at or from any real property (x) on
which any of the Purchased Assets is located, or (y) that is leased pursuant to
an Assigned Agreement, in violation of any Environmental Laws or which would
require remedial action under any Environmental Law. During its ownership or
occupancy of such real property, AT&T PCS has not received with respect to any
such real property any (i) notice of any such violation with respect to any
Hazardous Substance at or on any of such real property, (ii) notice from any
governmental agency that it, or any present or former owner, lessee or operator
of such real property is a potentially responsible party for cleanup liability
with respect to the emission, discharge or release of any Hazardous Substance or
for any other matter arising under the Environmental Laws or in any litigation,
administrative proceeding, finding, order, citation, notice, investigation or
complaint under any Environmental Law, or (iii) notice of violation, citation,
complaint, request for information, order, directive, compliance schedule,
notice of claim, proceeding or litigation from any party concerning the
compliance of AT&T PCS with any Environmental Law. As used in this Section 5.14,
the term "knowledge" refers to actual and not constructive knowledge and is not
intended to impose upon AT&T PCS any duty to investigate the condition of any
real property.
5.15 Compliance With Laws. With respect to the System and the Purchased
--------------------
Assets, AT&T PCS is in, and has operated in, compliance with all applicable
Laws, including all FCC Laws, Environmental Laws and Laws relating to taxes,
except for noncompliance that, individually or in the aggregate, has not and
would not reasonably be expected to have an AT&T PCS Material Adverse Effect.
AT&T PCS has not received notice to the effect that, or otherwise been advised
that, it is not in compliance with any Laws with respect to the System or the
Purchased Assets, and AT&T PCS has not taken any action or failed to take any
action that is a violation of any such Laws with respect to the System or the
Purchased Assets, except for actions or failures to take action that,
individually or in the aggregate, have not and would not reasonably be expected
to have an AT&T PCS Material Adverse Effect.
5.16 Books and Records. All financial, business and accounting books,
-----------------
ledgers, accounts and official and other records relating to the System and the
Purchased have been properly and accurately kept and completed in all material
respects, and there are no material inaccuracies or discrepancies contained or
reflected therein.
5.17 FCC Construction Requirements. Each of the System Cell Sites that
-----------------------------
shall have been constructed by AT&T PCS prior to Closing has been built in
conformance in all material respects with FCC Law, including the technical
requirements of Subpart E of Part 24 of the FCC rules and regulations, and
operates, or shall operate, in conformance in all material respects with FCC
Law.
27
<PAGE>
The System would, if in commercial service on the date of this Agreement,
satisfy the five-year construction milestone set forth in 47 CFR 24.203(a) by
providing coverage to 545,100 POPs within the Norfolk, Virginia BTA.
5.18 Incursion Sites. Exhibit 5.18 identifies each System Cell site for
---------------
which the predicted or measured median field strength exceeds 47dBuV/m at the
boundary of the Norfolk, Virginia BTA.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to AT&T PCS as follows:
6.1 Organization, Power and Authority.
---------------------------------
(a) Each of the Company and each of its Subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of Delaware
and has the requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as now being conducted and proposed
to be conducted.
(b) It has the requisite power and authority to execute, deliver and
perform this Agreement, and each other instrument, document, certificate and
agreement required or contemplated to be executed, delivered and performed by it
hereunder and thereunder to which it is or will be a party.
(c) The Company and each of its Subsidiaries is duly qualified to do
business in each jurisdiction where the character of its properties owned or
held under lease or the nature of its activities makes such qualification
necessary other than any such jurisdiction in which the failure to be so
qualified would not have a Company Material Adverse Effect.
(d) The execution and delivery of this Agreement by the Company and
the consummation of the Transactions by it have been duly and validly authorized
by its Board of Directors and no other proceedings on its part which have not
been taken (including approval of its shareholders) are necessary to authorize
this Agreement or to consummate the Transactions.
(e) This Agreement has been duly executed and delivered by the
Company and constitutes its valid and binding obligation, enforceable against it
in accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to enforcement of creditors' rights generally or may be subject to general
principles of equity.
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<PAGE>
(f) As of the Closing, after giving effect to the Transactions, the
Company is not in breach of any obligation under this Agreement or the
Stockholders Agreement.
6.2 Consents; No Conflicts. Neither the execution, delivery and
----------------------
performance by the Company of this Agreement nor the consummation of the
Transactions will (a) conflict with, or result in a breach or violation of, any
provision of its organizational documents; (b) constitute, with or without the
giving of notice or passage of time or both, a breach, violation or default,
create a Lien on its assets, or give rise to any right of termination,
modification, cancellation, prepayment or acceleration, under (i) any Law, or
(ii) any note, bond, mortgage, indenture, lease, agreement or other instrument,
in each case which is applicable to or binding upon it or any of its assets; or
(c) require any Consent on its part, other than those set forth on Exhibit 6.2
or the approval of its Board of Directors, except in the case of clauses (a) and
(b) where such breach, violation, default, Lien or right would not have a
Company Material Adverse Effect. To its knowledge, there is no fact relating to
it or its Affiliates that would be reasonably expected to prevent it from
consummating the Transactions or performing its obligations under this Agreement
or disqualify the Company from obtaining the Consents (including the Consent of
the FCC) required in order to consummate the License Transfer as provided for in
this Agreement.
6.3 Litigation. There is no action, proceeding or investigation pending
----------
or, to the Company's knowledge, threatened against it or any of its properties
or assets that would have a material adverse effect on its ability to consummate
the Transactions or to fulfill its obligations under this Agreement, or to
operate its business after the Closing Date, or which seeks to prevent or
challenge the Transactions. There is no judgment, decree, injunction, rule or
order outstanding against the Company which would limit in any material respect
its ability to operate its business in the manner currently contemplated.
6.4 FCC Compliance. It complies, and after giving effect to the
--------------
consummation of the Transactions will comply, with all eligibility rules issued
by the FCC to hold broadband PCS Licenses, including FCC rules on foreign
ownership and the CMRS spectrum cap.
6.5 Brokers. The Company has not employed any broker, finder or
-------
investment banker and has not incurred and will not incur any liability for any
brokerage fees, commissions or finder's fees in connection with the
Transactions.
6.6 Stockholders Agreement. From and after February 4, 1998, through
----------------------
and including the Closing Date, the Stockholders Agreement has been in full
force and effect, the Company has performed all covenants and agreements
required to be performed by it pursuant to the Stockholders Agreement.
6.7 Shares. The Series D Preferred Stock being issued to AT&T PCS
------
hereunder, when issued pursuant to the terms of this Agreement, will be duly
authorized, validly issued, fully paid and non-assessable, and will be free of
any Liens caused or created by the Company, except as set forth in the
Stockholders Agreement and the Certificate of Incorporation of the Company. The
shares of Common Stock issued upon conversion of the Series D Preferred Stock,
when issued pursuant to the terms of the Series D Preferred Stock, will be
validly issued, fully paid and non-assessable, and
29
<PAGE>
be free of any Liens caused or created by the Company, except as set forth in
the Stockholders Agreement and the Certificate of Incorporation of the Company.
6.8 No Additional Representations. The Company is not relying on and
-----------------------------
acknowledges that no representation or warranty is being made by AT&T PCS or any
of its officers, employees, Affiliates, agents or representatives, except for
representations and warranties expressly set forth in this Agreement (including
the Exhibits and Schedule attached hereto), and, in particular, it is not
relying on, and acknowledges that no representation or warranty is being made in
respect of, (i) any projections, estimates or budgets delivered to or made
available to them of future revenues, expenses or expenditures, or future
results of operations of the System and (ii) any other information or documents
delivered or made available to it or its representatives, except for
representations and warranties expressly set forth in this Agreement (including
the Exhibits and Schedule attached hereto).
6.9 Compliance With Laws. The Company is in, and has operated in,
--------------------
compliance with all applicable Laws, except for noncompliance that, individually
or in the aggregate, has not and would not reasonably be expected to have a
Company Material Adverse Effect. The Company has not received notice to the
effect that, or otherwise been advised that, it is not in compliance with any
Laws, and the Company has not taken any action or failed to take any action that
is a violation of any such Laws, except for actions or failures to take action
that, individually or in the aggregate, have not and would not reasonably be
expected to have a Company Material Adverse Effect.
6.1 No Material Adverse Effect. Since the formation of the Company,
--------------------------
there has been no Company Material Adverse Effect.
ARTICLE VII
CLOSING CONDITIONS
------------------
7.1 Conditions to Obligations of All Parties. The obligation of each of
----------------------------------------
the parties to consummate the Transactions contemplated to occur at the Closing
shall be conditioned on the following, unless waived by each of the parties:
(a) Any applicable waiting period under the HSR Act shall have
expired or been terminated.
(b) The Consent of the FCC to the License Transfer shall have been
obtained pursuant to a Final Order, free of any conditions materially adverse to
the Company or AT&T PCS, other than those applicable to the PCS or wireless
communications services industry generally. For the purposes of this paragraph,
"Final Order" means an action or decision that has been granted by the FCC as to
-----------
which (i) no request for a stay or similar request is pending, no stay is in
effect, the action or decision has not been vacated, reversed, set aside,
annulled or suspended and any deadline for filing such request that may be
designated by statute or regulation has passed, (ii) no petition for
30
<PAGE>
rehearing or reconsideration or application for review is pending and the time
for the filing of any such petition or application has passed, (iii) the FCC
does not have the action or decision under reconsideration on its own motion and
the time within which it may effect such reconsideration has passed and (iv) no
appeal is pending, including other administrative or judicial review, or in
effect and any deadline for filing any such appeal that may be designated by
statute or rule has passed.
(c) All Consents by any Governmental Authority (other than the
Consents referred to in paragraphs (a) and (b) above) required to permit the
consummation of the Transactions shall have been obtained, except where the
failure to obtain such Consents would not be reasonably expected to have an AT&T
PCS Material Adverse Effect or a Company Material Adverse Effect or to
materially adversely affect the Transactions or the ability of AT&T PCS or the
Company to perform its obligations under this Agreement.
(d) No preliminary or permanent injunction or other order, decree or
ruling issued by a Governmental Authority, nor any statute, rule, regulation or
executive order promulgated or enacted by any Governmental Authority, shall be
in effect that would (i) impose material limitations on the ability of any party
to consummate the Transactions or prohibit such consummation, or (ii) impair in
any material respect the operations of the Company.
(e) The terms " Licensed Territory" as used in the Network Membership
License Agreement (as defined in the Stockholders Agreement) and "Territory" as
used in the Stockholders Agreement, and Schedule 2 to the Roaming Agreement (as
defined in the Stockholders Agreement) shall have been appropriately amended to
include the Norfolk, Virginia BTA and the parties shall make such other
conforming changes to the terms of such agreements as shall be necessary to
reflect the acquisition by the Company of the Purchased Assets and to otherwise
extend the benefits of such agreements to the System and the Purchased Assets
and, in addition, Exhibit A to the Roaming Agreement shall have been amended to
provide that roaming charges in the Norfolk, Virginia BTA shall be calculated as
set forth on Exhibit 7.1(e) hereto.
7.2 Conditions to Obligations of the Company. The obligation of the
----------------------------------------
Company to consummate the Transactions contemplated to occur at the Closing
shall be further conditioned upon the satisfaction or fulfillment, at or prior
to the Closing, of the following conditions unless waived by the Company:
(a) The representations and warranties of AT&T PCS contained herein
shall be true and correct in all material respects, in each case when made and
at and as of the Closing (except (i) for representations made as of a specified
date, which shall be true and correct as of such date, and (ii) for
representations and warranties that are qualified as to materiality which shall
be true and correct in all respects) with the same force and effect as though
made at and as of such time, except (x) for inaccuracies in respect of the
representations and warranties set forth in Section 5.3 and the third sentence
of Section 5.7 (disregarding any qualifications as to materiality contained
therein) that in the aggregate would not be reasonably expected to have an AT&T
PCS Material Adverse Effect or would not adversely affect AT&T PCS's ability to
perform its obligations under this Agreement
31
<PAGE>
and (y) for inaccuracies in respect of the representations and warranties set
forth in Sections 5.10 through 5.16 to the extent that such inaccuracies are
caused by acts or omissions (which omissions relate to matters for which the
Company has responsibility under the Management Agreement) of the Company during
the period that the Company is managing the System under the Management
Agreement.
(b) AT&T PCS shall have performed in all material respects all
agreements contained herein required to be performed by it at or before the
Closing.
(c) AT&T PCS shall have delivered to the Company the documents
required pursuant to Section 3.2(f)(i).
(d) Since the date hereof, neither the Purchased Assets nor the
System shall have been adversely affected in any material way by, or sustained
any material loss, whether or not insured, as a result of, any fire, flood,
lightning, explosion or other calamity or casualty, which shall not have been
repaired in all material respects by AT&T PCS, and no condemnation proceedings
affecting any material portion of the Purchased Assets or the System shall have
been commenced.
(e) Releases, duly executed by the appropriate parties (other than
with respect to Assumed Liabilities), releasing each of the Liens upon the
Purchased Assets, each in form and substance reasonably satisfactory to the
Company, shall have been obtained.
7.3 Conditions to the Obligations of AT&T PCS. The obligation of AT&T PCS
-----------------------------------------
to consummate the Transactions contemplated to occur at the Closing shall be
further conditioned upon the satisfaction or fulfillment, at or prior to the
Closing, of the following conditions, unless waived by AT&T PCS:
(a) The representations and warranties of the Company contained
herein shall be true and correct in all material respects, in each case when
made and at and as of the Closing (except for representations and warranties
made as of a specified date, which shall be true and correct as of such date and
except for representations and warranties that are qualified as to materiality
which shall be true and correct in all respects) with the same force and effect
as though made at and as of such time, except for inaccuracies in respect of the
representations and warranties set forth in Section 6.3 (disregarding any
qualifications as to materiality contained therein) that in the aggregate would
not be reasonably expected to have a Company Material Adverse Effect or would
not adversely affect the Company's ability to perform its obligations under this
Agreement.
(b) The Company shall have performed in all material respects all
agreements contained herein required to be performed by it at or before the
Closing.
(c) The Company shall have delivered to AT&T PCS the documents
required pursuant to Section 3.2(f)(ii).
32
<PAGE>
(d) Section 8.6(a) of the Stockholders Agreement shall have been
amended as set forth on Exhibit 7.3(d) hereto.
ARTICLE VII
SURVIVAL AND INDEMNIFICATION
----------------------------
8.1 Survival. Except for the representations and warranties contained in
--------
Sections 5.1(a), (b), (d) and (e), 5.10 and 6.1(a), (b), (d) and (e) (which
shall survive the Closing, without regard to any investigation made by any of
the parties hereto, until the expiration of the applicable statute of
limitations relating thereto), the representations and warranties made in this
Agreement shall survive the Closing without regard to any investigation made by
any of the parties hereto until the second anniversary thereof and shall
thereupon expire together with any right to indemnification in respect thereof
(except to the extent a written notice asserting a claim for breach of any such
representation or warranty and describing such claim in reasonable detail shall
have been given prior to the expiration of the applicable survival period to the
party which made such representation or warranty). The covenants and agreements
contained herein to be performed or complied with prior to the Closing shall
expire at the Closing. The covenants and agreements contained in this Agreement
to be performed or complied with after the Closing shall survive the Closing;
provided, that the right to indemnification pursuant to this Article VIII in
respect of a breach of a representation or warranty shall expire upon the
application of the applicable survival period (except to the extent written
notice asserting a claim thereunder and describing such claim in reasonable
detail shall have been given prior to such expiration to the party from whom
such indemnification is sought). After the Closing, the sole and exclusive
remedy of the parties for any breach or inaccuracy of any representation or
warranty contained in this Agreement, or any other claim (whether or not
alleging a breach of this Agreement) that arises out of the facts and
circumstances constituting such breach or inaccuracy, shall be the indemnity
provided in this Article VIII.
8.2 Indemnification by AT&T PCS. AT&T PCS shall indemnify and hold
---------------------------
harmless the Company and its Affiliates, and the shareholders, members,
managers, officers, employees, agents and/or the legal representatives of any of
them (each, a "Section 8.2 Indemnified Party"), against all liabilities and
-----------------------------
expenses (collectively, "Losses") incurred by any Section 8.2 Indemnified Party
------
(including, without limitation, amounts paid in satisfaction of judgments, in
compromise, as fines and penalties, and as counsel fees and Losses incurred in
connection with the investigation, defense, or disposition of any action, suit
or other proceeding in which any Section 8.2 Indemnified Party may be involved
or with which any Section 8.2 Indemnified Party may be threatened (whether
arising out of or relating to matters asserted by third parties against a
Section 8.2 Indemnified Party or incurred or sustained by such party in the
absence of a third-party claim), that arise out of or result from (a) any
representation or warranty of AT&T PCS contained in this Agreement being untrue,
including, without limitation Section 5.14 or (b) any default by AT&T PCS or any
of its Affiliates in the performance of their respective obligations under this
Agreement (including its obligation to discharge the Excluded Liabilities),
except to the extent (but only to the extent) any such Losses arise out of or
result from the gross negligence or willful misconduct of such Section 8.2
Indemnified
33
<PAGE>
Party or its Affiliates; provided, that the aggregate liability of AT&T PCS to
indemnify Section 8.2 Indemnified Parties against Losses arising out of or
resulting from (x) any representation or warranty of AT&T PCS contained in this
Agreement being untrue, or (y) any default by AT&T PCS or any of its Affiliates
in the performance of their respective obligations under this Agreement shall
(except, in the case of clause (y), to the extent (but only to the extent) any
such Losses arise out of or result from the gross negligence or willful
misconduct of AT&T PCS) be limited to $30,000,000; provided further, that such
$30,000,000 limitation shall not apply to the obligation of AT&T PCS to
indemnify the Section 8.2 Indemnified Parties against Losses arising out of the
Excluded Liabilities.
8.3 Indemnification by the Company. The Company shall indemnify and hold
------------------------------
harmless AT&T PCS and its Affiliates, and the shareholders, members, managers,
officers, employees, agents and/or the legal representatives of any of them
(each, a "Section 8.3 Indemnified Party"), against all Losses incurred by any
-----------------------------
Section 8.3 Indemnified Party (including, without limitation, amounts paid in
satisfaction of judgments, in compromise, as fines and penalties, and as counsel
fees and Losses incurred in connection with the investigation, defense, or
disposition of any action, suit or other proceeding in which any Section 8.3
Indemnified Party may be involved or with which any Section 8.3 Indemnified
Party may be threatened (whether arising out of or relating to matters asserted
by third parties against a Section 8.3 Indemnified Party or incurred or
sustained by such party in the absence of a third party claim) that arise out of
or result from (a) any representation or warranty of the Company contained in
this Agreement being untrue or (b) any material default by the Company or any of
its Affiliates in the performance of their respective obligations under this
Agreement (including its obligation to discharge the Assumed Liabilities),
except to the extent (but only to the extent) any such Losses arise out of or
result from the gross negligence or willful misconduct of such Section 8.3
Indemnified Party or its Affiliates; provided, that the aggregate liability of
the Company to indemnify Section 8.3 Indemnified Parties against Losses arising
out of or resulting from (x) any representation or warranty of the Company
contained in this Agreement being untrue, or (y) any default by the Company or
any of its Affiliates in the performance of their respective obligations under
this Agreement shall (except, in the case of clause (y), to the extent (but only
to the extent) any such Losses arise out of or result from the gross negligence
or willful misconduct of the Company) be limited to $30,000,000; provided
further, that such $30,000,000 limitation shall not apply to the obligation of
the Company to pay the Purchase Price or to indemnify the Section 8.3
Indemnified Parties against Losses arising out of the Assumed Liabilities.
8.4 Procedures.
----------
(a) The terms of this Section 8.4 shall apply to any claim (a "Claim")
-----
for indemnification under the terms of Sections 8.2 or 8.3. The Section 8.2
Indemnified Party or Section 8.3 Indemnified Party (each, an "Indemnified
-----------
Party"), as the case may be, shall give prompt written notice of such Claim to
the indemnifying party (the "Indemnifying Party") under the applicable Section,
------------------
which party may assume the defense thereof, provided, that any delay or failure
to so notify the Indemnifying Party shall relieve the Indemnifying Party of its
obligations hereunder only to the extent, if at all, that it is materially
prejudiced by reason of such delay or failure. The Indemnified Party shall have
the right to approve any counsel selected by the Indemnifying Party and to
approve
34
<PAGE>
the terms of any proposed settlement, such approvals not to be unreasonably
delayed or withheld (unless, in the case of approval of a proposed settlement,
such settlement provides only, as to the Indemnified Party, the payment of money
damages actually paid by the Indemnifying Party and a complete release of the
Indemnified Party in respect of the claim in question). Notwithstanding any of
the foregoing to the contrary, the provisions of this Article VIII shall not be
construed so as to provide for the indemnification of any Indemnified Party for
any liability to the extent (but only to the extent) that such indemnification
would be in violation of applicable law or that such liability may not be
waived, modified or limited under applicable law, but shall be construed so as
to effectuate the provisions of this Article VIII to the fullest extent
permitted by law.
(b) In the event that the Indemnifying Party undertakes the defense
of any Claim, the Indemnifying Party will keep the Indemnified Party advised as
to all material developments in connection with such Claim, including promptly
furnishing the Indemnified Party with copies of all material documents filed or
served in connection therewith.
(c) In the event that the Indemnifying Party fails to assume the
defense of any Claim within thirty (30) days after receiving written notice
thereof, the Indemnified Party shall have the right, subject to the Indemnifying
Party's right to assume the defense pursuant to the provisions of this Article
VIII, to undertake the defense, compromise or settlement of such Claim for the
account of the Indemnifying Party. Unless and until the Indemnified Party
assumes the defense of any Claim, the Indemnifying Party shall advance to the
Indemnified Party any of its reasonable attorneys' fees and other costs and
expenses incurred in connection with the defense of any such action or
proceeding. Each Indemnified Party shall agree in writing prior to any such
advancement that, in the event he or it receives any such advance, such
Indemnified Party shall reimburse the Indemnifying Party for such fees, costs
and expenses to the extent that it shall be determined that he or it was not
entitled to indemnification under this Article VIII.
(d) In no event shall an Indemnifying Party be required to pay in
connection with any Claim for more than one firm of counsel (and local counsel)
for each of the following groups of Indemnified Parties: (i) AT&T PCS, its
Affiliates, and the shareholders, members, managers, officers, employees, agents
and/or the legal representatives of any of them; and (ii) the Company and its
Affiliates, and the shareholders, members, managers, officers, employees, agents
and/or the legal representatives of any of them.
ARTICLE IX
TERMINATION
-----------
9.1 Termination. In addition to any other rights of termination set forth
-----------
herein, this Agreement may be terminated, and the Transactions abandoned,
without further obligation of any party, except as set forth herein, at any time
prior to the Closing Date:
(a) by mutual written consent of the parties;
35
<PAGE>
(b) by any party by written notice to the other party, if the Closing
shall not have occurred on or before the date that is one year after the date
hereof, provided, that the party electing to exercise such right is not
otherwise in breach of its obligations under this Agreement;
(c) by any party by written notice to the other party, if the
consummation of the Transactions shall be prohibited by a final, non-appealable
order, decree or injunction of a court of competent jurisdiction; or
(d) by the Company in accordance with Section 4.13.
9.2 Effect of Termination
---------------------
(a) In the event of a termination of this Agreement, no party hereto
shall have any liability or further obligation to any other party to this
Agreement, except as set forth in paragraph (b) below, and except that nothing
herein will relieve any party from liability for any breach by such party of
this Agreement.
(b) In the event of a termination of this Agreement pursuant to
Section 9.1, all provisions of this Agreement shall terminate, except Section
4.2 and Articles VIII and X, except that nothing herein will relieve any party
from liability for any breach of this Agreement.
(c) Whether or not the Closing occurs, all costs and expenses
incurred in connection with this Agreement and the Transactions shall be paid by
the party incurring such expenses, except as otherwise provided in Section 2.6.
ARTICLE X
MISCELLANEOUS PROVISIONS
------------------------
10.1 Amendment and Modification. This Agreement may be amended, modified
--------------------------
or supplemented only by written agreement of each of the parties.
10.2 Waiver of Compliance; Consents. Any failure of any of the parties
------------------------------
to comply with any obligation, covenant, agreement or condition herein may be
waived by the party or parties entitled to the benefits thereof only by a
written instrument signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirement for a waiver of
compliance as set forth in this Section 10.2.
36
<PAGE>
10.3 Notices. All notices or other communications hereunder shall be in
-------
writing and shall be given (and shall be deemed to have been duly given upon
receipt) by delivery in person against receipt, by facsimile transmission with
confirmation of receipt, or by registered or certified mail (return receipt
requested), postage prepaid, with an acknowledgment of receipt signed by the
addressee or an authorized representative thereof, addressed as follows (or to
such other address for a party as shall be specified by like notice; provided,
that notice of a change of address shall be effective only upon receipt
thereof):
If to AT&T PCS, to it at:
c/o AT&T Wireless Services, Inc.
5000 Carillon Point
Kirkland, WA 98033
Attn: William H. Hague, Esq.
Facsimile: (425) 828-8451
With a copy to:
Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza
New York, NY 10112
Attn: Gregg S. Lerner, Esq.
Facsimile: (212) 698-7825
If to the Company, to it at:
Triton PCS Holdings, Inc.
c/o Triton Communications
101 Lindenwood Drive, Suite 125
Malvern, PA 19355
Attn: Michael E. Kalogris
Facsimile: (610) 993-2683
With a copy to:
Kleinbard, Bell & Brecker LLP
1900 Market Suite, Suite 700
Philadelphia, PA 19103
Attn: Howard J. Davis, Esq.
Facsimile: (215) 568-0140
37
<PAGE>
10.4 Designated Purchasers. It is understood and agreed between the
---------------------
parties that the Company may cause one or more of its direct or indirect wholly
owned Subsidiaries (each a "Designated Purchaser") to purchase all or part of
--------------------
the Purchased Assets hereunder; provided, that notwithstanding any such
designation, the Company shall remain fully liable for all of its obligations
and those of the Designated Purchaser hereunder.
10.5 Parties in Interest; Assignment. This Agreement is binding upon
-------------------------------
and is solely for the benefit of the parties hereto and their respective
permitted successors, legal representatives and permitted assigns. Neither party
may assign its rights and obligations hereunder without the prior written
consent of the other party.
10.6 Applicable Law. This Agreement shall be governed by and construed
--------------
in accordance with the laws of the State of New York without giving effect to
the conflicts of law principles thereof. The parties hereto hereby irrevocably
and unconditionally consent to submit to the non-exclusive jurisdiction of the
courts of the State of New York and of the United States of America located in
the County of New York, New York (the "New York Courts") for any litigation
---------------
arising out of or relating to this Agreement and the Transactions, waive any
objection to the laying of venue of any such litigation in the New York Courts
and agrees not to plead or claim in any New York Court that such litigation
brought therein has been brought in an inconvenient forum.
10.7 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument. Facsimile signatures on
this Agreement shall be deemed to be original signatures for all purposes.
10.8 Interpretation. The article and section headings contained in this
--------------
Agreement are for convenience of reference only, are not part of the agreement
of the parties and shall not affect in any way the meaning or interpretation of
this Agreement.
10.9 Entire Agreement. This Agreement, including the Exhibits and
----------------
Schedule hereto and the certificates and instruments delivered pursuant to the
terms of this Agreement, embody the entire agreement and understanding of the
parties hereto in respect of the Transactions. There are no restrictions,
promises, representations, warranties, covenants or undertakings, other than
those expressly set forth or referred to herein or in the Stockholders
Agreement. This Agreement supersedes all prior agreements and understandings
between the parties with respect to the Transactions.
10.10 Publicity. So long as this Agreement is in effect, the parties
---------
agree to consult with each other in issuing any press release or otherwise
making any public statement with respect to the Transactions, and no party shall
issue any press release or make any such public statement prior to such
consultation, except as may be required by Law. No press release or other public
statement by a party shall disclose any of the financial terms of the
Transactions without the prior consent of the
38
<PAGE>
other party, except as may be required by Law. A breach of the provisions of
this Section 10.10 by a party shall not give rise to any right to terminate this
Agreement.
10.11 Specific Performance. The parties hereto agree that irreparable
--------------------
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any New York Courts.
10.12 Remedies Cumulative. All rights, powers and remedies provided under
-------------------
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise or beginning of the
exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
10.13 Books and Records. Each party agrees that it will cooperate with
-----------------
and make available to the other party, during normal business hours, all books
and records relating to the Purchased Assets, the System, information and
employees (without substantial disruption of employment) retained and remaining
in existence after the Closing that are necessary or useful in connection with
any inquiry, audit, investigation or dispute, any litigation or investigation or
any other matter requiring any such books and records, information or employees
for any reasonable business purpose.
10.14 Severability. Any provision of this Agreement that is prohibited
------------
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. If any court determines
that any covenant or any part of any covenant is invalid or unenforceable, such
covenant shall be enforced to the extent permitted by such court, and all other
covenants shall not thereby be affected and shall be given full effect, without
regard to the invalid portions.
10.15 Beneficiaries of Agreement. The representations, warranties,
--------------------------
covenants and agreements expressed in this Agreement are for the sole benefit of
the other parties hereto and the Section 8.2 Indemnified Parties and Section 8.3
Indemnified Parties and are not intended to benefit, and may not be relied upon
or enforced by, any other party as a third party beneficiary or otherwise.
39
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
TRITON PCS HOLDINGS, INC.
By: ______________________________
Name:
Title:
AT&T WIRELESS PCS INC.
By: ______________________________
Name:
Title:
40
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
DEFINITIONS.............................................................. 1
ARTICLE II
PURCHASE AND SALE OF ASSETS; PAYMENT OF CONSIDERATION;
CERTAIN RESTRICTIONS ON TRANSFER........................................ 6
2.1 Purchase and Sale of Purchased Assets........................... 6
2.2 Excluded Assets................................................. 7
2.3 Payment of Consideration........................................ 8
2.4 Assumption of Obligations....................................... 8
2.5 No Expansion of Third-Party Rights.............................. 9
2.6 Payment of Certain Expenses..................................... 10
2.7 Restrictive Legends............................................. 10
2.8 Allocation of Purchase Price.................................... 10
ARTICLE III
CLOSING................................................................. 10
3.1 Time and Place of Closing....................................... 11
3.2 Closing Actions and Deliveries.................................. 11
3.3 Closing Costs; Taxes and Fees................................... 13
ARTICLE IV
COVENANTS............................................................... 13
4.1 Consummation of Transactions.................................... 13
4.2 Confidentiality................................................. 14
4.3 Covenants of AT&T PCS........................................... 15
4.4 Covenants of the Company........................................ 17
4.5 Employees....................................................... 18
4.6 Bulk Sales...................................................... 20
4.7 Assignment of Assigned Agreements............................... 20
4.8 Title; Risk of Loss............................................. 20
4.9 Non-Solicitation................................................ 20
4.10 Lien Searches................................................... 21
4.11 Completion of Construction...................................... 21
4.12 FCC Construction Requirement.................................... 22
4.13 Environmental Due Diligence..................................... 22
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF AT&T PCS............................ 23
5.1 Organization, Power and Authority............................ 23
5.2 Consents; No Conflicts....................................... 23
5.3 Litigation................................................... 24
5.4 FCC Compliance............................................... 24
5.5 Brokers...................................................... 24
5.6 Stockholders Agreement....................................... 24
5.7 License...................................................... 24
5.8 No Distribution.............................................. 24
5.9 Investor Acknowledgments..................................... 25
5.10 Title to Purchased Assets.................................... 25
5.11 Employees.................................................... 26
5.12 Contracts.................................................... 26
5.13 Equipment.................................................... 26
5.14 Environmental Matters........................................ 26
5.15 Compliance With Laws......................................... 27
5.16 Books and Records............................................ 27
5.17 FCC Construction Requirements................................ 27
5.18 ............................................................. 27
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................... 28
6.1 Organization, Power and Authority............................ 28
6.2 Consents; No Conflicts....................................... 28
6.3 Litigation................................................... 29
6.4 FCC Compliance............................................... 29
6.5 Brokers...................................................... 29
6.6 Stockholders Agreement....................................... 29
6.7 Shares....................................................... 29
6.8 No Additional Representations................................ 29
6.9 Compliance With Laws......................................... 30
6.10 No Material Adverse Effect................................... 30
ARTICLE VII
CLOSING CONDITIONS.................................................... 30
7.1 Conditions to Obligations of All Parties...................... 30
7.2 Conditions to Obligations of the Company...................... 31
7.3 Conditions to the Obligations of AT&T PCS..................... 32
ARTICLE VIII
SURVIVAL AND INDEMNIFICATION.......................................... 32
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
8.1 Survival...................................................... 32
8.2 Indemnification by AT&T PCS................................... 33
8.3 Indemnification by the Company................................ 34
8.4 Procedures.................................................... 34
ARTICLE IX
TERMINATION............................................................ 35
9.1 Termination................................................... 35
9.2 Effect of Termination......................................... 36
ARTICLE X
MISCELLANEOUS PROVISIONS............................................... 36
10.1 Amendment and Modification.................................... 36
10.2 Waiver of Compliance; Consents................................ 36
10.3 Notices....................................................... 36
10.4 Designated Purchasers......................................... 37
10.5 Parties in Interest; Assignment............................... 37
10.6 Applicable Law................................................ 38
10.7 Counterparts.................................................. 38
10.8 Interpretation................................................ 38
10.9 Entire Agreement.............................................. 38
10.10 Publicity..................................................... 38
10.11 Specific Performance.......................................... 38
10.12 Remedies Cumulative........................................... 38
10.13 Books and Records............................................. 39
10.14 Severability.................................................. 39
10.15 Beneficiaries of Agreement.................................... 39
</TABLE>
iii
<PAGE>
Exhibit 10.46
TRITON PCS HOLDINGS, INC.
EMPLOYEE STOCK PURCHASE PLAN
The purpose of this Plan is to attract and retain qualified employees to
promote the business of Triton PCS Holdings, Inc., a Delaware corporation (the
"Corporation"), by providing its employees with an opportunity to purchase
shares of its Class A Common Stock. This Plan is intended to meet the
requirements for an "employee stock purchase plan" under Code Section 423 and is
to be interpreted and applied consistent with those requirements.
1. Definitions
-----------
"Beneficiary" shall have the meaning set forth in Section 23.
----------
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Compensation" shall mean the total annual salary or rate of pay paid by
the Corporation or its Subsidiaries to an Eligible Employee, including incentive
compensation, but not including: (a) reimbursement for educational expenses of
the Participant, (b) any imputed income relating to dependent care or life
insurance benefits provided by the employer, (c) reimbursement for relocation
expenses, (d) any disability payments made by a third-party and (e) car
allowances, all as determined in the sole discretion of the Stock Plan
Committee.
"Corporation" shall mean Triton PCS Holdings, Inc.
"Eligible Employee" shall have the meaning set forth in Section 4.
---------
"Exercise Date" shall mean with respect to any Option offering, the last
day of the Offering Period.
"Fair Market Value" shall mean the closing price of the Corporation's
Shares on NASDAQ on the trading day immediately preceding the date of
determination or such other price as may be determined by the Stock Plan
Committee in its sole discretion.
"Grant Date" shall mean the first business day of each Offering Period.
"Offering Period" shall mean the six (6) month period beginning on the date
determined by the Stock Plan Committee for the issuance of Options.
"Option" shall mean a right granted to an Eligible Employee by the Stock
Plan Committee pursuant to the Plan to purchase Shares in an Offering Period.
"Participant" shall mean an Eligible Employee who elects to participate in
the Plan pursuant to Section 6.
---------
"Plan" shall mean the Triton PCS Holdings, Inc. Employee Stock Purchase
Plan as set forth herein and as may be amended from time to time.
"Plan Year" shall mean the twelve (12) month period commencing January 1
and ending December 31 of each year.
<PAGE>
"Shares" shall mean shares of the Class A Common Stock, par value $0.01 per
share, of the Corporation.
"Stock Plan Committee" shall mean the committee appointed by the Board of
Directors of the Corporation to administer this Plan.
"Subsidiary" shall mean a subsidiary of the Corporation within the meaning
of Section 424(f) of the Code and the regulations promulgated thereunder which
has been designated by the Stock Plan Committee as a participating employer in
this Plan.
2. Administration. The Plan shall be administered by the Stock Plan
--------------
Committee. The Stock Plan Committee shall have the sole and discretionary
authority to make rules and regulations for the administration of the Plan and
to interpret the Plan. The Stock Plan Committee's interpretations and decisions
with regard thereto shall be final, binding and conclusive on all interested
parties. No member of the Stock Plan Committee shall participate in any decision
respecting his or her interest as a Participant in the Plan (other than a
decision respecting the interest of a group of similarly situated Plan
Participants which includes the Stock Plan Committee member).
3. Stock Subject to the Plan. The Corporation hereby reserves and makes
-------------------------
available for purchase under the Plan _____________ Shares. In the event any
Option granted under the Plan is canceled or expires unexercised, the number of
Shares no longer subject to such Option shall automatically become available for
new awards under the Plan.
4. Eligible Employees. All employees of the Corporation or any of its
------------------
participating Subsidiaries who have been employed by the Corporation or a
participating Subsidiary for at least three months as of the applicable Grant
Date shall be eligible to participate in the Plan, except employees: (i) whose
customary employment is less than twenty (20) hours per week or not more than
five (5) months in any calendar year, or (ii) who immediately after the Grant
Date, would own five percent (5%) or more of the total combined voting power or
value of all classes of stock of the Corporation or any Subsidiary. For
purposes of the preceding sentence, the rules of Sections 423(b)(3) and 424(d)
of the Code shall apply in determining the employee's percentage of stock
ownership. Any employee satisfying all of the foregoing criteria shall be
referred to herein as an "Eligible Employee".
5. Offerings. On each Grant Date, the Stock Plan Committee shall grant
---------
each Eligible Employee an Option to purchase Shares under the Plan.
6. Participation. An Eligible Employee on the Grant Date may become a
-------------
Participant in such offering by completing any election and payroll deduction
forms deemed appropriate by the Stock Plan Committee.
7. Payment. A Participant shall pay for any Shares by completing a
-------
payroll deduction authorization form and forwarding it to the payroll
department. The form will authorize a regular payroll deduction from the
Participant's Compensation for the purpose of purchasing Shares, commencing as
of the beginning of the Offering Period to which such
-2-
<PAGE>
election applies. Notwithstanding the foregoing, in the event a Participant is
on a leave of absence that qualifies as a family or medical leave under
applicable personnel policies of the Corporation during any payroll period, he
may arrange to pay directly to the Corporation any installment due for the
payroll period. A Participant may not change his payroll deduction during any
Offering Period but may cancel his payroll deduction in accordance with Section
-------
8.
- -
8. Cancellation. A Participant may, at any time and for any reason,
------------
cancel his payroll deduction authorization and permanently withdraw the balance
accumulated in the Participant's payroll deduction account (without any interest
thereon). Any cancellation shall be in writing and must be received by the
Stock Plan Committee prior to the Exercise Date. Upon cancellation, the
Participant shall cease to participate in the Plan for the remainder of the
Offering Period.
9. Options.
-------
(a) Each Eligible Employee as of the Grant Date will be granted an
Option to purchase a number of Shares determined in accordance with a uniform
formula and in an amount not to exceed ten percent (10%) percent of his
Compensation divided by the purchase price for each Share. Such limit shall be
applied in a manner determined by the Stock Plan Committee, in its sole
discretion. No Eligible Employee may be granted an Option which permits him
during any one calendar year to purchase Shares under the Plan, and any other
stock purchase plan of the Corporation or its Subsidiaries, which exceed in
value $10,000, as annually adjusted by the Stock Plan Committee, in its sole
discretion, except for increases in the cost of living (provided, in no event
shall it exceed in value $25,000 based on the Fair Market Value of the Shares on
the Grant Date of the Option).
(b) The purchase price for each Share purchased under the Plan shall
be determined at the discretion of the Stock Plan Committee, but shall not be
less than the lesser of: (i) eighty-five percent (85%) of the Fair Market Value
at the Grant Date or (ii) eighty-five percent (85%) of the Fair Market Value at
the Exercise Date; provided, in no event shall the purchase price be less than
the par value of such Shares.
(c) Unless an employee previously has withdrawn from the Plan, a
Participant will be deemed to have exercised his right to purchase Shares as of
the Exercise Date. The number of Shares purchased by the Participant shall be
equal to the whole number of Shares that may be purchased under the Option with
the total amount withheld from the Participant's Compensation under the Plan
that has not been refunded to the Participant. Upon the exercise of any Option,
the payroll deduction funds relating to such Options shall be applied to the
purchase price. Any balance remaining in a Participant's payroll deduction
account after Shares have been purchased on the Exercise Date shall be rolled
forward and applied to the next succeeding Offering Period or, if the
Participant so elects, refunded to the Participant without interest. Any
Options not exercised as of the Exercise Date shall be forfeited.
10. Registration of Certificates. Share certificates (or other evidence
----------------------------
of ownership) shall be issued as soon as practicable after each Exercise Date
and may be registered only in the name of the Participant, or, if the
Participant so indicates on his election form, in joint tenancy
-3-
<PAGE>
with a member of the Participant's family, with right of survivorship. A
Participant who is a resident of a jurisdiction which does not recognize such a
joint tenancy may have certificates registered in the Participant's name as
tenant in common or as community property with a member of the Participant's
family, without right of survivorship.
11. Rights as a Stockholder. None of the rights or privileges of a
-----------------------
stockholder of the Corporation shall exist with respect to Options issued under
the Plan unless and until Shares have been purchased on behalf of the
Participant and stock certificates (or other evidence of ownership) have been
issued.
12. Rights on Resignation or Termination of Employment. In the event of a
--------------------------------------------------
Participant's resignation or termination of employment for any reason, including
by reason of retirement, death or disability, such Participant's Option shall be
canceled and his payroll deductions, if any, shall be refunded without interest
as soon as administratively practicable following the cancellation of such
Option.
13. Rights Not Transferable. A Participant shall not assign, sell,
-----------------------
encumber, transfer or otherwise dispose of any rights or interests under the
Plan. Any attempted disposition in violation of the preceding sentence shall be
null and void. Any Option hereunder must be exercised by the Participant during
his lifetime.
14. Application of Funds. All payroll deduction contributions held by the
--------------------
Corporation under the Plan may be used for any corporate purpose prior to its
application to the purchase price for an Option.
15. Adjustment in Case of Changes Affecting the Corporation's Stock. In
---------------------------------------------------------------
the event of any stock dividend, stock split, recapitalization, reorganization,
merger, consolidation, split-up, combination or exchange of shares, or any
purchase of Shares at a price substantially below fair market value, or of any
similar change affecting the capital structure of the Corporation, the number
and kind of Shares available for awards under the Plan shall be appropriately
adjusted, consistent with such change, in such manner as the Stock Plan
Committee in its sole discretion may deem equitable to prevent substantial
dilution or enlargement of the rights granted to, or available for, the
Participants hereunder. The Stock Plan Committee shall give notice to each
Participant of any adjustment made pursuant to this Section, and such adjustment
shall be effective and binding for all purposes of the Plan.
16. Amendment or Termination of the Plan. The Board of Directors may at
------------------------------------
any time, and from time to time, retroactively or prospectively, amend the Plan
in any respect, except that, without the approval of a majority of the Shares of
stock of the Corporation then issued and outstanding and entitled to vote, no
amendment shall be made (i) increasing or decreasing the number of Shares
authorized for the Plan under Section 3 (other than as provided in Section 15),
--------- ----------
(ii) decreasing the minimum purchase price per Share, or (iii) withdrawing the
administration of the Plan from the Stock Plan Committee. Notwithstanding the
foregoing, in no event shall any amendment be effective to the extent it
adversely affects in any material respect any Option previously issued under the
Plan, unless the Participant holding such Option consents in writing
-4-
<PAGE>
thereto. This Plan and all rights of employees under any offering hereunder
shall terminate at any time, at the discretion of the Board of Directors.
17. Plan Shares Purchases. The Stock Plan Committee may purchase
---------------------
outstanding Shares on behalf of the Plan, upon such terms as the Stock Plan
Committee may approve, or may cause the Corporation to issue authorized but
unissued Shares, for delivery under the Plan.
18. Governing Law. The Plan shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware, without reference to the
principles of conflicts of law thereof. The Plan is intended to qualify under
Section 423 of the Code and shall be interpreted accordingly.
19. No Liability of Stock Plan Committee Members. No member of the Stock
--------------------------------------------
Plan Committee shall be personally liable (i) by reason of any contract or other
instrument executed by such member or by his authorized agent in his capacity as
a member of the Stock Plan Committee, or (ii) for any mistake of judgment made
as a Member of the Stock Plan Committee, in good faith and in belief that it was
in the best interests of the Corporation, and the Corporation shall indemnify
and hold harmless each employee, officer and director of the Corporation and its
Subsidiaries to whom any duty or power relating to the administration or
interpretation of the Plan may be allocated or delegated, against any cost or
reasonable expense (including counsel fees) or liability (including any sum paid
in settlement of a claim with the approval of the Board of Directors of the
Corporation) arising out of any act or omission to act in connection with the
Plan unless arising out of such person's fraud or bad faith. The
indemnification provided for in this Section 19 shall be in addition to any
----------
rights of indemnification such individual has as a director or officer pursuant
to law, or under the Corporation's certificate of incorporation or by-laws.
20. Successor Corporation. The obligations of the Corporation under the
---------------------
Plan shall be binding upon the successor corporation or organization resulting
from the merger, consolidation or other reorganization of the Corporation.
21. Withholding. As a precondition to the delivery of any Shares, the
-----------
Corporation or, if applicable, the Participant's employer shall have the right
and power to deduct or withhold or require a Participant to remit an amount
sufficient to satisfy federal, state and local taxes, domestic or foreign, that
are required by law or regulation to be withheld upon the exercise of any Option
or upon the sale of any Shares that are required by law or regulation to be
withheld. In the alternative, the Stock Plan Committee, in its discretion, may
either permit the Participant to provide irrevocable instructions to a broker to
sell such Shares from the Participant's Option as are necessary to satisfy any
tax withholding obligation and to promptly remit such sale proceeds to the
Corporation or have withheld from the Participant's Option such Shares as are
necessary to satisfy any tax withholding obligation.
22. Notice of Premature Disposition. A Participant or former Participant
-------------------------------
who disposes of Shares acquired under the Plan within (i) two years of the Grant
Date of the Options by which such Shares were acquired, or (ii) twelve months of
the date of transfer of Shares to him upon exercise of an Option, shall notify,
in writing, the Treasurer of the Corporation of such
-5-
<PAGE>
disposition and shall make appropriate arrangements for satisfying income and
payroll tax withholding requirements.
23. Beneficiary. A Participant may file a written designation of a
-----------
beneficiary (a "Beneficiary") who is to receive any Shares and/or payment under
the Plan in the event of the Participant's death. Such designation may be
changed by the Participant at any time by written notice to the Director of
Compensation and Benefits of the Corporation, but to be effective such notice
must be received prior to the Participant's death. In the event a Participant
dies without designating a Beneficiary, or if the designated Beneficiary
predeceases the Participant, the Participant's spouse shall be his Beneficiary,
or in the absence of a spouse, the Participant's estate shall be his
Beneficiary.
24. Corporation's Payment of Expenses Related to the Plan. The
-----------------------------------------------------
Corporation will bear all expenses incurred in administering the Plan, including
expenses of issuing Shares provided hereunder.
25. Plan and Rights to Purchase Common Stock Not to Confer Rights with
------------------------------------------------------------------
Respect to Continuance of Employment. The Plan and any right to purchase Shares
- ------------------------------------
under the Plan shall not confer upon any employee any right with respect to
continuance of employment by the Corporation or a Subsidiary and shall not
restrict or interfere in any way with the right of the Corporation or a
Subsidiary to terminate his employment at any time.
26. Participating Subsidiary. The Stock Plan Committee shall set forth a
------------------------
procedure for a Subsidiary to be designated a participating employer hereunder.
27. Gender and Number; Captions. Whenever used in the Plan, the masculine
---------------------------
gender shall include the feminine, and the singular shall include the plural,
unless the context indicates otherwise. The captions preceding the Sections of
the Plan have been inserted solely as a matter of convenience and in no way
define or limit the scope or intent of any provisions of the Plan.
28. Effective Date. The Plan is effective as of the date the initial
--------------
public offering of Shares is consummated and is subject to approval by the
stockholders of the Corporation.
[END OF PLAN]
-6-
<PAGE>
Exhibit 16.1
September 21,1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Ladies and Gentlemen:
We were previously principal accountants for Triton PCS Holdings, Inc. and,
under the date of March 8, 1999, we reported on the consolidated financial
statements of Triton PCS Holdings, Inc. and subsidiaries as of December 31, 1997
and 1998 and for the period from March 6, 1997 (inception) to December 31, 1997
and for year ended December 31,1998. On July 16, 1999, our appointment as
principal accountants was terminated. We have read Triton PCS Holdings, Inc.'s
statements included under the caption "Change in Accountants" included in the
Company's Registration Statement on Form S-1 (Registration Statement No. 333-
85149), and we agree with such statements, except that we are not in a position
to agree or disagree with Triton PCS Holdings Inc.'s statement that the change
was approved by the Board of Directors of the Company nor are we in a position
to agree or disagree with Triton PCS Holdings, Inc.'s statement that
PricewaterhouseCoopers LLP was not consulted on any items which involved
accounting principles of the form of an audit opinion to be issued on the
Company's financial statements.
Very truly yours,
/s/ KPMG LLP
KPMG LLP
<PAGE>
Exhibit 23.2
Consent of Independent Auditors
The Board of Directors
Triton PCS Holdings, Inc.
The audits referred to in our report dated March 8, 1999, included the related
financial statement schedule as of December 31, 1998 and for the year ended
December 31, 1998 and the period from March 6, 1997 (inception) to December 31,
1997. This financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement schedule based on our audits. In our opinion, such financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.
We consent to the use of our reports included herein and to the reference to our
firm under the heading "Experts" in the prospectus.
/s/ KPMG LLP
------------
KPMG LLP
Philadelphia, Pennsylvania
September 21, 1999
<PAGE>
Exhibit 23.3
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the use of our report
dated March 20, 1998 on the financial statements of Vanguard Cellular Systems of
South Carolina, Inc. (and to all references to our Firm) included in or made a
part of this Registration Statement.
/s/ Arthur Andersen LLP
------------------------
Arthur Andersen LLP
Greensboro, North Carolina
September 21, 1999
