<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 22, 1998
REGISTRATION NO. 333-57363
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-1/S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 4812 13-3956940
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
PRICE COMMUNICATIONS CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
NEW YORK 4833 13-2991700
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
------------------------------
45 ROCKEFELLER PLAZA
NEW YORK, NY 10020
(212) 757-5600
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
ROBERT PRICE
PRICE COMMUNICATIONS CORPORATION
45 ROCKEFELLER PLAZA
NEW YORK, NY 10020
(212) 757-5600
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C> <C>
RICHARD D. TRUESDELL, JR. MICHAEL E. MICHETTI
DAVIS POLK & WARDWELL CAHILL GORDON & REINDEL
450 LEXINGTON AVENUE 80 PINE STREET
NEW YORK, NEW YORK 10017 NEW YORK, NEW YORK 10005
(212) 450-4000 (212) 701-3000
</TABLE>
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the 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, please 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, please 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 number of the earliest 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. / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Senior Exchangeable Payable-in-Kind Notes
due 2008.................................. $200,000,000(2) 100% $200,000,000 $59,000(3)
Common Stock, par value $0.01 per share..... (4) (4) (5) (5)
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee.
(2) Plus such additional principal amount of Notes which may be issued in lieu
of cash interest payments.
(3) Of which $44,250 has been paid previously and $14,750 is being paid
herewith.
(4) Plus such additional indeterminate number of shares as may become issuable
upon exchange of the Notes being registered hereunder by means of adjustment
of the exchange price.
(5) Pursuant to Rule 457(i) under the Securities Act of 1933 there is no filing
fee with respect to the shares of Common Stock issuable upon exchange of the
Notes because no additional consideration will be received in connection
with the exercise of the exchange privilege.
------------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PROSPECTUS
Subject to Completion, dated July , 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO THE REGISTRATION STATEMENT OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY
SUCH STATE.
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC.
$200,000,000
SENIOR EXCHANGEABLE PAYABLE-IN-KIND NOTES DUE 2008
EXCHANGEABLE FOR SHARES OF COMMON STOCK OF PRICE COMMUNICATIONS CORPORATION
---------------------
The Senior Exchangeable Payable-in-Kind Notes due 2008 (the "Notes") are
being offered by Price Communications Cellular Holdings, Inc. ("Holdings" or the
"Company"), a wholly owned indirect subsidiary of Price Communications
Corporation ("PCC"). The Notes will mature on August 15, 2008. The Notes will
initially bear interest at a rate of % per annum, payable semi-annually in
arrears on each February 15 and August 15, commencing February 15, 1999. Such
interest rate will be permanently reduced by 0.50% once cash interest begins to
accrue on the Notes. Cash interest will begin to accrue on the Notes on February
15, 2003; PROVIDED that at any time prior to February 15, 2003, the Company may
make an election on any interest payment date to commence the accrual of cash
interest from and after such interest payment date, in which case, cash interest
will be payable on each interest payment date thereafter. Interest payable on
any interest payment date prior to the earlier of February 15, 2003 and the
Company's election to commence the accrual of cash interest shall be payable
through the issuance of additional Notes (valued at 100% of the principal amount
thereof). The Notes will be redeemable at the option of Holdings, in whole or in
part, at any time on or after August 15, 2003 in cash at the redemption prices
set forth herein, plus accrued and unpaid interest, if any, thereon to the
redemption date.
The Notes are subject to a special mandatory redemption on August , 1998
at a cash price equal to 101% of the principal amount thereof together with
accrued and unpaid interest to the date of redemption if all of the Company's
13 1/2% Senior Secured Discount Notes due 2007 have not been redeemed prior
thereto.
In the event the daily high price of shares of common stock, $0.01 par
value, of PCC ("PCC Shares") equals or exceeds 115% of the Exchange Price (as
defined below) for ten out of 15 consecutive Trading Days (as defined below),
each outstanding Note will be mandatorily exchanged on the fifth Trading Day
immediately succeeding such tenth Trading Day (unless the Company shall have
elected on or prior to the second Trading Day immediately succeeding such tenth
Trading Day to permanently terminate the mandatory exchange provisions of the
Notes) into PCC Shares (subject to adjustment for certain events) per
$1,000 aggregate principal amount of Notes (initially equivalent to a price of
$ per share (the "Exchange Price")).
The Notes will not be subject to any sinking fund requirement. Upon the
occurrence of a Change of Control (as defined below), Holdings will be required
to make an offer to repurchase the Notes at a cash price equal to 101% of the
principal amount thereof, together with accrued and unpaid interest, if any, to
the date of repurchase. See "Description of Notes--Redemption" and "--Certain
Covenants--Repurchase of Notes at the Option of the Holder Upon a Change of
Control".
The Notes will be general obligations of Holdings ranking senior to all
subordinated indebtedness of Holdings and PARI PASSU in right of payment to all
other existing and future senior unsecured indebtedness of Holdings. The Notes
will be effectively subordinated to all liabilities of Holdings's subsidiaries.
At March 31, 1998, on a pro forma basis after giving effect to the issuance and
sale of the Notes and the application of the net proceeds therefrom and to the
PCW Offering (as defined below), Holdings, on a consolidated basis, would have
had outstanding approximately $900.0 million of Indebtedness (as defined below),
and Holdings' subsidiaries would have had outstanding $750.0 million of
Indebtedness, and $362.7 million of deferred taxes and other liabilities.
Prior to this Offering, there has been no public market for the Notes.
Holdings does not currently intend to list the Notes on any securities exchange
or to seek approval for quotation through any automated quotation system. There
can be no assurance that an active public market for the Notes will develop. On
July , 1998, the last reported sale price for the PCC Shares on the American
Stock Exchange was $ per share.
------------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 14 HEREOF FOR CERTAIN INFORMATION THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE NOTES.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
DISCOUNTS PROCEEDS TO
PRICE TO PUBLIC AND COMMISSIONS(1) COMPANY(2)(3)
<S> <C> <C> <C>
Per Note........................................ % % %
Total........................................... $ $ $
</TABLE>
(1) Plus accrued interest, if any, from the date of issuance.
(2) Holdings and PCC have agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses payable by Holdings, estimated at $625,000.
------------------------------
The Notes are being offered by the Underwriters, subject to prior sale,
when, as and if delivered to and accepted by the Underwriters and subject to
various prior conditions including the right to reject orders in whole or in
part. It is expected that delivery of the Notes will be made in New York, New
York on or about , 1998.
------------------------------
GLEACHER NATWEST INTERNATIONAL DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
--------------------------
BEAR, STEARNS & CO. INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
WASSERSTEIN PERELLA SECURITIES, INC.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY, SUBJECT TO LEGAL AND
REGULATORY RESTRICTIONS, ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR
OTHERWISE AFFECT THE PRICE OF THE SECURITIES, SPECIFICALLY, THE UNDERWRITERS MAY
OVERALLOT IN CONNECTION WITH THE OFFERING, AND MAY BID FOR AND PURCHASE
SECURITIES IN THE OPEN MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "PLAN
OF DISTRIBUTION."
AVAILABLE INFORMATION
Holdings and PCC have filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1/S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
for the registration of the Notes and PCC Shares offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement, certain
items of which are contained in exhibits and schedules to the Registration
Statement as permitted by the rules and regulations of the Commission. For
further information with respect to Holdings, PCC, the Notes and the PCC Shares,
reference is made to the Registration Statement, including the exhibits thereto,
and the financial statements and notes filed as a part thereof. Statements made
in this Prospectus concerning the contents of any contract, agreement or other
document referred to herein are not necessarily complete. With respect to each
such contract, agreement or other document filed with the Commission as an
exhibit, reference is made to the exhibit for a more complete description of the
matter involved, and each such statement shall be deemed qualified in its
entirety by such reference.
Holdings and PCC are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, file reports, proxy statements and other information with
the Commission. The reports, proxy statements and other information filed by
Holdings and PCC with the Commission may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549. The Commission maintains a Web
site that contains reports, proxy and information statements and other
information at http://www.sec.gov. PCC's Common Stock is listed on the American
Stock Exchange (the "AMEX") under the symbol "PR". Reports, proxy statements and
other information filed by PCC may be inspected at the offices of the AMEX at 86
Trinity Place, New York, NY 10006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
PCC hereby incorporates in this Prospectus by reference thereto and makes a
part hereof the following documents, heretofore filed with the Commission
pursuant to the Exchange Act: (i) PCC's Annual Report on Form 10-K for the year
ended December 31, 1997; (ii) PCC's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1998.
All documents filed by PCC pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of this Prospectus and prior to
termination of the Offering shall be deemed to be incorporated in the Prospectus
by reference and to be a part hereof from the respective dates of the filing of
such documents. Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which also is, or is
deemed to be, incorporated by reference herein, modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
PCC hereby undertakes to provide without charge to each person to whom a
copy of this Prospectus has been delivered, upon written or oral request of any
such person, a copy of any and all of the documents referred to above which have
been or may be incorporated in this Prospectus by reference, other than
2
<PAGE>
exhibits to such documents which are not specifically incorporated by reference
into such documents. Requests for such copies should be directed to Kim
Pressman, Executive Vice President and Chief Financial Officer, Price
Communications Corporation, 45 Rockefeller Plaza, New York, New York 10020,
telephone (212) 757-5600.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus contains statements which constitute forward looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Those statements appear in a number of places in this Prospectus and
include statements regarding the intent, belief or current expectations of PCC
and Holdings, their directors or their officers primarily with respect to the
future operating performance of PCC and Holdings. Prospective purchasers of the
Notes are cautioned that any such forward looking statements are not guarantees
of future performance and may involve risks and uncertainties, and that actual
results may differ from those in the forward looking statements as a result of
factors, many of which are outside the control of PCC and Holdings. The
accompanying information contained in this Prospectus, including, without
limitation, the information set forth below and the information under the
heading "Management's Discussion and Analysis of Financial Condition and Results
of Operations," identifies important factors that could cause such differences.
FOR CALIFORNIA RESIDENTS
WITH RESPECT TO SALES OF THE SENIOR EXCHANGEABLE PAYABLE-IN-KIND NOTES DUE
2008 (THE "NOTES") BEING OFFERED HEREBY TO CALIFORNIA RESIDENTS, SUCH NOTES MAY
BE SOLD ONLY TO: (1) "ACCREDITED INVESTORS" WITHIN THE MEANING OF REGULATION D
UNDER THE SECURITES ACT OF 1933, (2) BANKS, SAVINGS AND LOAN ASSOCIATIONS, TRUST
COMPANIES, INSURANCE COMPANIES, INVESTMENT COMPAINES REGISTERED UNDER THE
INVESTMENT COMPANY ACT OF 1940, PENSION AND PROFIT-SHARING TRUSTS, CORPORATIONS
OR OTHER ENTITIES WHICH, TOGETHER WITH THE CORPORATION'S OR OTHER ENTITY'S
AFFILIATES, HAVE A NET WORTH ON A CONSOLIDATED BASIS ACCORDING TO THEIR MOST
RECENT REGULARLY PREPARED FINANCIAL STATEMENTS (WHICH SHALL HAVE BEEN REVIEWED,
BUT NOT NECESSARILY AUDITED, BY OUTSIDE ACCOUNTANTS) OF NOT LESS THAN
$14,000,000 AND SUBSIDIARIES OF THE FOREGOING, (3) ANY PERSON (OTHER THAN A
PERSON FORMED FOR THE SOLE PURPOSE OF PURCHASING THE NOTES BEING OFFERED HEREBY)
WHO PURCHASES AT LEAST $1,000,000 AGGREGATE AMOUNT OF THE NOTES BEING OFFERED
HEREBY OR (4) ANY PERSON WHO (A) HAS AN INCOME OF $65,000 AND A NET WORTH OF
$250,000, OR (B) HAS A NET WORTH OF $500,000 (IN EACH CASE, EXCLUDING HOME, HOME
FURNISHINGS AND PERSONAL AUTOMOBILES).
3
<PAGE>
(This page intentionally left blank.)
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION (INCLUDING THE FINANCIAL STATEMENTS AND THE NOTES THERETO) INCLUDED
ELSEWHERE IN THIS PROSPECTUS. EACH PROSPECTIVE INVESTOR IS URGED TO READ THIS
PROSPECTUS IN ITS ENTIRETY. UNLESS OTHERWISE INDICATED, ALL REFERENCES HEREIN TO
"HOLDINGS" REFER TO PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND ALL
REFERENCES HEREIN TO THE "COMPANY" REFER TO HOLDINGS AND ITS SUBSIDIARIES AND
THEIR RESPECTIVE PREDECESSORS. ALL REFERENCES HEREIN TO "PCC" REFER TO PRICE
COMMUNICATIONS CORPORATION AND, UNLESS THE CONTEXT REQUIRES OTHERWISE, ITS
SUBSIDIARIES. REFERENCES HEREIN TO THE "ACQUISITION" REFER TO THE ACQUISITION BY
PRICE COMMUNICATIONS WIRELESS, INC. ("PCW"), A WHOLLY OWNED DIRECT SUBSIDIARY OF
HOLDINGS, OF PALMER WIRELESS, INC. ("PALMER") AND THE RELATED SALE OF THE FORT
MYERS AND GEORGIA-1 SYSTEMS OF PALMER, AS DESCRIBED BELOW UNDER "THE PALMER
ACQUISITION." AS USED IN THIS PROSPECTUS, THE TERMS "PCW" AND "PALMER" INCLUDE
THEIR RESPECTIVE SUBSIDIARIES AND PREDECESSORS. EXCEPT FOR HISTORICAL FINANCIAL
INFORMATION AND UNLESS OTHERWISE INDICATED, ALL INFORMATION PRESENTED BELOW
RELATING TO THE COMPANY, PCC AND PCW INCLUDING POPS AND NET POPS (EACH AS
DEFINED) AND THE SYSTEMS, GIVES EFFECT TO THE CONSUMMATION OF THE ACQUISITION
(INCLUDING THE SALE OF THE FORT MYERS AND GEORGIA-1 SYSTEMS). ALL INFORMATION
RELATING TO PCC SHARES HAS BEEN ADJUSTED TO GIVE EFFECT TO STOCK SPLITS.
THE COMPANY
The Company is currently engaged in the construction, development,
management and operation of cellular telephone systems in the southeastern
United States. At March 31, 1998, the Company provided cellular telephone
service to 326,721 subscribers in Georgia, Alabama, Florida and South Carolina
in a total of 16 licensed service areas composed of eight Metropolitan
Statistical Areas ("MSAs") and eight Rural Service Areas ("RSAs"), with an
aggregate estimated population of 3.3 million. The Company sells its cellular
telephone service as well as a full line of cellular products and accessories,
including pagers, principally through its network of retail stores. The Company
markets all of its products and services under the nationally recognized service
mark CELLULARONE-Registered Trademark-.
OPERATIONS
The Company has developed its business through the acquisition and
integration of cellular telephone systems, clustering multiple systems in order
to provide broad areas of uninterrupted service and achieve certain economies of
scale, including centralized marketing and administrative functions as well as
multi-system capital expenditures. The Company devotes considerable attention to
engineering, maintenance and improvement of its cellular telephone systems in an
effort to deliver high-quality service to its subscribers and to implement new
technologies as soon as economically practicable. Through its participation in
the North American Cellular Network ("NACN"), the Company is able to offer
ten-digit dialing access to its subscribers when they travel outside the
Company's service areas, providing them with convenient roaming access
throughout large areas of the United States, Canada, Mexico and Puerto Rico
served by other NACN participants. By marketing its products and services under
the CELLULARONE-Registered Trademark- name, the Company also enjoys the benefits
of association with a nationally recognized service mark.
The Company's cellular telephone systems serve contiguous licensed service
areas in Georgia, Alabama and South Carolina. The Company also has a cellular
service area in Panama City, Florida. The following table sets forth as of March
31, 1998, with respect to each service area in which the Company owns a cellular
telephone system, the estimated population, the Company's beneficial ownership
percentage, the Net Pops (as defined) and the date of initial operation of such
system by Palmer or a predecessor operator.
5
<PAGE>
<TABLE>
<CAPTION>
ESTIMATED OWNERSHIP DATE SYSTEM
SERVICE AREA(1) POPULATION(2) PERCENTAGE NET POPS OPERATIONAL
- ------------------------------------------------------------ ------------ ----------- ---------- -------------
<S> <C> <C> <C> <C>
Albany, GA.................................................. 118,527 86.5% 102,526 4/88
Augusta, GA................................................. 439,116 100.0 439,116 4/87
Columbus, GA................................................ 254,150 85.2 216,518 11/88
Macon, GA................................................... 313,686 99.2 311,234 12/88
Savannah, GA................................................ 283,978 98.5 279,718 3/88
Georgia-6 RSA............................................... 199,516 96.3 192,134 4/93
Georgia-7 RSA............................................... 134,376 100.0 134,376 10/91
Georgia-8 RSA............................................... 157,451 100.0 157,451 10/91
Georgia-9 RSA............................................... 119,410 100.0 119,410 9/92
Georgia-10 RSA.............................................. 149,699 100.0 149,699 10/91
Georgia-12 RSA.............................................. 211,799 100.0 211,799 10/91
Georgia-13 RSA.............................................. 147,392 86.5 127,494 10/90
Dothan, AL.................................................. 136,160 94.6 128,807 2/89
Montgomery, AL.............................................. 318,371 92.8 295,430 8/88
Alabama-8, RSA.............................................. 171,993 100.0 171,993 7/93
<CAPTION>
------------ ----------
<S> <C> <C> <C> <C>
Subtotal.................................................... 3,155,624 3,037,705
<CAPTION>
------------ ----------
<S> <C> <C> <C> <C>
Panama City, FL............................................. 146,018 78.4 114,493 9/88
<CAPTION>
------------ ----------
<S> <C> <C> <C> <C>
Total....................................................... 3,301,642 3,152,198
<CAPTION>
------------ ----------
------------ ----------
</TABLE>
- ------------------------
(1) Does not include the Alabama-5 RSA and South Carolina-7 RSA where the
Company has interim operating authority ("IOA"). IOA is granted for an area
to a license holder in an adjacent area when there are no license holders in
such area. The Company has no subscribers in the South Carolina-7 RSA, but
instead provides roaming access to its own subscribers and others when they
travel in this service area, utilizing its existing cell sites. Construction
permits were granted to third parties ("Permittees") for the Alabama-5 RSA
and South Carolina-7 RSA. The Permittees are required to complete
construction of their respective RSA within 18 months. After completing
construction, a Permittee may give the Company thirty days prior written
notice, at which point the Company would be required to sell all of its
subscribers of its other systems who reside within the boundaries of the
markets to the Permittee at cost. The Company, along with others, is
currently in negotiations to purchase the Alabama-5 RSA and the South
Carolina-7 RSA. No assurance can be given, however, that the Company will be
successful in consummating such purchase.
(2) Based on population estimates for 1997 from the spring 1998 edition of The
Wireless Communication Industry published by Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ") (the "DLJ Pop Book").
COMPANY STRATEGY
The Company's four strategic objectives are to: (1) expand its revenue base
by increasing penetration in existing service areas and encouraging greater
usage among its existing customers; (2) provide high-quality customer service to
create and maintain customer loyalty; (3) enhance performance by aggressively
pursuing opportunities to increase operating efficiencies; and (4) expand its
regional cellular communications presence by selectively acquiring additional
interests in cellular telephone systems (including minority interests).
Specifically, the Company strives to achieve these objectives through
implementation of the following:
AGGRESSIVE, DIRECT MARKETING. The Company employs a two-tier direct sales
force. A retail sales force handles walk-in traffic at the Company's 37 retail
outlets, and a targeted sales staff solicits certain industry and government
subscribers. The Company's management believes that its internal sales force is
far more likely than independent agents to successfully select and screen new
subscribers and select pricing plans that realistically match subscriber means
and needs and to personally keep in contact with new customers.
6
<PAGE>
FLEXIBLE, VALUE-ORIENTED PRICING PLANS. The Company provides a range of
pricing plans, each of which includes a monthly access fee and, in most cases, a
bundle of "free" minutes. Additional home rate minutes are charged at rates
ranging from $0.05 per minute to $1.25 per minute depending on the customer's
usage plan and the time of day. In addition, the Company offers wide area home
rate roaming in the Company's systems and low flat rate roaming in a six state
region in the southeastern United States.
The Company believes that its bundled minute offerings will encourage
greater customer usage. By bundling the number of minutes a customer can use for
one flat rate, subscribers perceive greater value in their cellular service and
become less usage sensitive, i.e., they can increase their cellular phone usage
without seeing large corresponding increases in their cellular bill.
CONTINUALLY ADOPTING STATE OF THE ART SYSTEM DESIGN. The Company's network
allows the delivery of full personal communication services ("PCS")
functionality to its digital cellular customers, including primarily caller ID,
short message paging and extended battery life. The Company's network provides
for "seamless handoff" between digital cellular and PCS operators that, like the
Company, employ Time Division Multiple Access ("TDMA") technology, one of three
industry standards and the one employed by AT&T, SBC and others; i.e, the
Company's customers may leave the Company's service area and enter an area
serviced by a PCS provider using TDMA technology without noticing the
difference, and vice versa. The Company believes this innovation will allow the
Company to be the roaming partner of choice for such PCS operators. The Company
has a favorable agreement with AT&T with respect to PCS roaming and expects that
other PCS operators may choose, like AT&T, to concentrate PCS buildout in urban
centers rather than the more rural areas in which the Company concentrates.
FOCUSING ON CUSTOMER SERVICE. Customer service is an essential element of
the Company's marketing and operating philosophy. The Company is committed to
attracting new subscribers and retaining existing subscribers by providing
consistently high-quality customer service. In each of its cellular service
areas, the Company maintains a local staff, including a market manager, customer
service representatives, technical and engineering staff, sales representatives
and installation and repair facilities. Each cellular service area handles its
own customer-related functions such as credit evaluations, customer evaluations,
account adjustments and rate plan changes. In addition, subscribers are able to
report cellular telephone service or account problems 24 hours a day. To ensure
high-quality service, Cellular One Group authorizes a third-party marketing
research firm to perform customer satisfaction surveys of each of its licensees.
Licensees must achieve a minimum satisfaction level in order to continue using
the CELLULARONE-Registered Trademark- service mark. The Company has repeatedly
ranked number one in certain customer satisfaction categories among all Cellular
One operators (#1 MSA in its category in 1997, 1996, 1995, 1993, and 1992; #1
RSA in its category in 1995).
AGGRESSIVE COST CONTROL EFFORTS. The Company believes that its monthly
operating costs per subscriber rank among the lowest in the industry. The
Company's management attributes this competitive advantage to a variety of
factors, including the efficiencies associated with its direct sales force,
extensive use of in-house technical and engineering staff, and maintenance of
aggressive fraud control procedures, as well as general efforts to reduce
corporate general and administrative expenses. The Company has also realized
substantial savings on its interconnection charges from landline carriers by
using its own microwave and fiber optic network to connect cellular switching
equipment to cell sites without the use of landline carriers.
The Company was incorporated in the State of Delaware in 1997. The address
of the Company is 45 Rockefeller Plaza, New York, New York 10020. The Company's
phone number is (212) 757-5600.
7
<PAGE>
PRICE COMMUNICATIONS CORPORATION
PCC has historically been a nationwide communications company owning and
then disposing of a number of television, radio, newspaper, cellular telephone
and other communications and related properties. PCC's business strategy is to
acquire communications properties at prices PCC considers attractive, finance
such properties on terms satisfactory to PCC, manage such properties in
accordance with its operating strategy and dispose of them if and when PCC
determines such dispositions to be in its best interests. Prior to 1997 PCC
owned a number of television, radio, newspaper and other media and related
properties which were disposed of pursuant to PCC's long-standing policy of
buying and selling media properties at times deemed advantageous by PCC's Board
of Directors. On October 6, 1997, PCW acquired Palmer in the Acquisition, as
described below. PCC is currently engaged through PCW in the construction,
development, management and operation of cellular telephone systems in the
southeastern United States.
PCC was organized in New York in 1979 and began active operations in 1981.
Its principal executive offices are located at 45 Rockefeller Plaza, New York,
New York 10020, and its telephone number is (212) 757-5600.
THE PALMER ACQUISITION
Prior to the Merger described below, Holdings had no assets, liabilities or
operations other than the proceeds from the issuance of the 13 1/2% Holdings
Notes (as such term is defined below) and liabilities with respect thereto.
On May 23, 1997, PCC, PCW and Palmer entered into an Agreement and Plan of
Merger (the "Merger Agreement"). The Merger Agreement provided, among other
things, for the merger of PCW with and into Palmer with Palmer as the surviving
corporation (the "Merger"). On October 6, 1997, the Merger was consummated and
Palmer changed its name to "Price Communications Wireless, Inc." Pursuant to the
Merger Agreement, PCC acquired each issued and outstanding share of common stock
of Palmer for a purchase price of $17.50 per share in cash and purchased
outstanding options and rights under employee and director stock purchase plans
for an aggregate price of $486.4 million. In addition, as a result of the
Merger, PCW assumed all outstanding indebtedness of Palmer of approximately
$378.0 million ("Palmer Existing Indebtedness"), making the aggregate purchase
price for Palmer (including transaction fees and expenses) approximately $880.0
million. PCW refinanced all of the Palmer Existing Indebtedness concurrently
with the consummation of the Merger.
PCW entered into an agreement (the "Fort Myers Sale Agreement") to sell
Palmer's Fort Myers, Florida MSA covering approximately 382,000 Pops for $168.0
million (the "Fort Myers Sale"). On October 6, 1997, the Fort Myers Sale was
consummated, and generated proceeds to the Company of approximately $166.0
million. The proceeds of the Fort Myers Sale were used to fund a portion of the
acquisition of Palmer.
On October 21, 1997, PCC and PCW entered into an Asset Purchase Agreement
with MJ Cellular Company, L.L.C. (the "Georgia Sale Agreement") which provided
for the sale by PCW, for approximately $25.0 million, of substantially all of
the assets of the non-wireline cellular telephone system serving the Georgia-l
Whitfield RSA ("Georgia-1"), including the FCC licenses to operate Georgia-1
(the "Georgia-1 Sale"). The sale of the assets of Georgia-1 was consummated on
December 30, 1997 and generated proceeds to the Company of approximately $24.2
million. A portion of the proceeds from the Georgia Sale were used to retire a
portion of the debt used to fund the acquisition of Palmer. The Merger, the Fort
Myers Sale and the Georgia-1 Sale are collectively referred to as the
"Acquisition."
In order to fund the Acquisition and pay related fees and expenses, PCW
issued $175.0 million aggregate principal amount of 11 3/4% Senior Subordinated
Notes due 2007 (the "11 3/4% PCW Notes") and entered into a syndicated senior
loan facility providing for term loan borrowings in the aggregate principal
8
<PAGE>
amount of $325.0 million and revolving loan borrowings of $200.0 million (the
"Credit Facility"). On October 6, 1997, PCW borrowed all term loans available
thereunder and approximately $120.0 million of revolving loans. The Credit
Facility was retired on June 16, 1998 with the net proceeds from the PCW
Offering (as defined below).
The Acquisition was also funded in part through a $44.0 million equity
contribution from PCC (the "PCC Equity Contribution") which was in the form of
cash and common stock of Palmer. Approximately $46.5 million of the purchase
price for the Acquisition was raised out of the proceeds from the issuance and
sale for $80.0 million (the "Holdings Offering") by Holdings of units consisting
of $153.4 million principal amount at maturity of 13 1/2% Senior Secured
Discount Notes due 2007 of Holdings (the "13 1/2% Holdings Notes") and warrants
(the "Warrants") to purchase shares of PCC common stock, par value $.01 per
share (the "PCC Shares").
The Company has the right to redeem all or part of the 13 1/2% Holdings
Notes on or after August 1, 1998 at a redemption price equal to 120% of the
accreted value thereof, including accrued and unpaid interest, if the closing
price of the PCC Shares equals or exceeds certain specified prices for the ten
consecutive trading days prior to the redemption date ($7.68 per share during
the period from August 1, 1998 to July 31, 1999). The Notes are subject to a
special mandatory redemption on August , 1998 at a cash price equal to 101%
of the principal amount thereof together with accrued and unpaid interest to the
date of redemption if all of the 13 1/2% Holdings Notes have not been redeemed
prior thereto. See "Use of Proceeds."
RECENT DEVELOPMENTS
On June 16, 1998, PCW issued (the "PCW Offering") $525.0 million aggregate
principal amount of 9 1/8% Senior Secured Notes due 2006 (the "PCW Secured
Notes," and, together with the 11 3/4% PCW Notes, the "PCW Notes"). See
"Description of the PCW Secured Notes." The net proceeds from the PCW Offering
were used to retire the Credit Facility.
9
<PAGE>
THE OFFERING
The following summary description of the Notes is qualified in its entirety
by the more detailed information set forth under the caption "Description of
Notes" contained elsewhere in this Prospectus.
<TABLE>
<S> <C>
Issuer....................................... Price Communications Cellular Holdings, Inc.
Notes Offered................................ $200,000,000 aggregate principal amount of
Senior Exchangeable Payable-in-Kind Notes due
2008 (the "Notes").
Use of Proceeds.............................. The net proceeds from the Offering are
estimated to be approximately $194.5 million,
after deducting estimated fees and expenses.
The Company intends to use $109.2 million of
the net proceeds to redeem the 13 1/2%
Holdings Notes and the remaining $85.3
million for general corporate purposes,
including acquisitions. See "Use of
Proceeds."
Maturity Date................................ August 15, 2008.
Interest; PIK................................ Interest is payable semi-annually in arrears
on each February 15 and August 15 (the
"Interest Payment Dates"), commencing
February 15, 1999. The Notes will initially
bear interest at a rate of % per annum.
Such interest rate will be permanently
reduced by 0.50% once cash interest begins to
accrue on the Notes. Cash interest will begin
to accrue on the Notes on February 15, 2003;
PROVIDED that at any time prior to February
15, 2003, the Company may make an election on
any interest payment date to commence the
accrual of cash interest from and after such
interest payment date, in which case, cash
interest will be payable on each interest
payment date thereafter. Interest payable on
any interest payment date prior to the
earlier of February 15, 2003 and the
Company's election to commence the accrual of
cash interest shall be payable through the
issuance of additional Notes (valued at 100%
of the principal amount thereof). There can
be no assurances that the Company will not
make an election to pay cash interest and
thereby permanently reduce the interest rate
shortly after consummation of this Offering.
Special Mandatory Redemption................. The Notes are subject to a special mandatory
redemption on August , 1998 at a cash
price equal to 101% of the principal amount
thereof together with accrued and unpaid
interest to the date of redemption if all of
the 13 1/2% Holdings Notes have not been
redeemed prior thereto. See "Description of
Notes--Special Mandatory Redemption."
Mandatory Exchange........................... In the event the daily high price of PCC
Shares equals or exceeds 115% of the Exchange
Price for 10 out of 15 consecutive Trading
Days, each outstanding Note will be
mandatorily exchanged on the fifth Trading
Day immediately succeeding such
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
10th Trading Day (unless the Company shall
have elected on or prior to the second
Trading Day immediately succeeding such 10th
Trading Day to permanently terminate the
mandatory exchange provisions of the Notes)
into PCC Shares (subject to adjustment
for certain events) per $1,000 principal
amount of Notes (initially equivalent to a
price of $ per share (the "Exchange
Price")).
Sinking Fund................................. None.
Optional Redemption.......................... The Notes will be redeemable in whole or in
part at the option of the Company, at any
time on or after August 15, 2003, at the
redemption prices set forth herein, plus
accrued and unpaid interest, if any, to the
date of redemption. See "Description of Notes
-- Optional Redemption."
Ranking...................................... The Notes will be general obligations of
Holdings and rank PARI PASSU in right of
payment to all other existing and future
senior unsecured Indebtedness of Holdings.
The Notes will be effectively subordinated to
all liabilities of Holdings' subsidiaries. As
of March 31, 1998, on a PRO FORMA basis after
giving effect to the PCW Offering and the
issuance and sale of the Notes and the
application of the estimated net proceeds
therefrom, Holdings, on a consolidated basis,
would have had approximately $900.0 million
of Indebtedness. At March 31, 1998, on a PRO
FORMA basis as described above, Holdings'
subsidiaries would have had outstanding
$750.0 million of Indebtedness and $362.7
million of deferred taxes and other
liabilities.
Change of Control............................ Upon the occurrence of a Change of Control
(as defined below), each Holder of Notes will
have the right, subject to certain
limitations, to require the Company to
repurchase such holder's Notes at 101% of the
principal amount thereof, plus accrued and
unpaid interest thereon, if any, to the
repurchase date.
Certain Covenants............................ The Indenture (as defined below) imposes
certain limitations on the ability of the
Company and its subsidiaries to, among other
things, incur Indebtedness (as defined), make
Restricted Payments (as defined), effect
certain Asset Sales (as defined), enter into
certain transactions with Related Persons (as
defined), merge or consolidate with any other
person or transfer all or substantially all
of their properties and assets. See
"Description of Notes--Certain Covenants."
</TABLE>
RISK FACTORS
See "Risk Factors" for a discussion of certain factors that should be
considered in connection with an investment in the Notes.
11
<PAGE>
SUMMARY HISTORICAL AND UNAUDITED PRO FORMA
FINANCIAL AND OPERATING DATA
The following table sets forth summary historical data for the Company and
its predecessor, Palmer and the unaudited pro forma and financial data for the
Company for the periods and as of the dates indicated. The unaudited pro forma
data is not designed to represent and does not represent what the Company's
financial position or results of operations actually would have been had the
transactions described herein under "Unaudited Pro Forma Condensed Consolidated
Financial Statements" been completed as of the date or at the beginning of the
periods indicated, or to project the Company's financial position or results of
operations at any future date or for any future period. The following data
should be read in conjunction with "Selected Consolidated Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Unaudited Pro Forma Condensed Consolidated Financial Statements"
and the consolidated financial statements and notes thereto of the Company
included elsewhere herein and the consolidated financial statements and notes
thereto of PCC Incorporated by reference herein.
The following table also sets forth certain summary operating data for
Palmer and the Company as of the dates and for the periods indicated.
<TABLE>
<CAPTION>
COMPANY PALMER COMPANY PALMER
------------------------- --------- ---------------------------- -------------------------
PERIOD FROM
(UNAUDITED)
--------------------------------------------------- YEAR
MAY 29 ENDED
THREE MONTHS ENDED MARCH 31, PRO FORMA (INCEPTION) NINE MONTHS DECEMBER
------------------------------------ YEAR ENDED THROUGH ENDED 31,
PRO FORMA DECEMBER 31, DECEMBER 31, SEPTEMBER 30, ---------
1998(1) 1998 1997 1997(1) 1997(2) 1997(3) 1996
-------------- --------- --------- ------------- ------------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
INCOME STATEMENT DATA:
Revenue:
Service..................... $ 40,684 $ 40,684 $ 42,220 $ 152,854 $ 41,365 $ 134,123 $ 151,119
Equipment sales and
installation.............. 2,591 2,591 2,463 8,615 2,348 7,613 8,624
-------------- --------- --------- ------------- ------------- -------------- ---------
Total revenue............. 43,275 43,275 44,683 161,469 43,713 141,736 159,743
-------------- --------- --------- ------------- ------------- -------------- ---------
Engineering, technical and
other direct expenses....... 6,751 6,751 7,430 24,884 5,978 23,301 28,717
Cost of equipment............. 5,496 5,496 5,807 18,269 5,259 16,112 17,944
Selling, general and
administrative expenses..... 11,717 11,717 13,360 50,423 12,805 41,014 46,892
Depreciation and
amortization................ 11,928 11,928 8,281 42,962 11,055 25,498 25,013
-------------- --------- --------- ------------- ------------- -------------- ---------
Operating income.............. 7,383 7,383 9,805 24,931 8,616 35,811 41,177
Other income (expense):
Interest, net............... (22,230) (17,285) (7,872) (93,517) (22,198) (24,467) (31,462)
Other, net.................. (37) (37) 71 222 15 208 (429)
-------------- --------- --------- ------------- ------------- -------------- ---------
Total other expense....... (22,267) (17,322) (7,801) (93,295) (22,183) (24,259) (31,891)
Minority interest share of
(income) loss............... (460) (460) (331) (1,724) (414) (1,310) (1,880)
Income tax expense
(benefit)................... (5,670) (3,828) 496 (26,078) (5,129) 4,153 2,724
-------------- --------- --------- ------------- ------------- -------------- ---------
Net income (loss)............. $ (9,674) $ (6,571) $ 1,177 $ (44,010) $ (8,852) $ 6,089 $ 4,682
-------------- --------- --------- ------------- ------------- -------------- ---------
-------------- --------- --------- ------------- ------------- -------------- ---------
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue:
Service..................... $ 96,686 $ 61,021 $ 35,173
Equipment sales and
installation.............. 8,220 7,958 6,285
--------- --------- ---------
Total revenue............. 104,906 68,979 41,458
--------- --------- ---------
Engineering, technical and
other direct expenses....... 18,184 12,776 7,343
Cost of equipment............. 14,146 11,546 7,379
Selling, general and
administrative expenses..... 30,990 19,757 13,886
Depreciation and
amortization................ 15,004 9,817 10,689
--------- --------- ---------
Operating income.............. 26,582 15,083 2,161
Other income (expense):
Interest, net............... (21,213) (12,715) (9,006)
Other, net.................. (687) (70) (590)
--------- --------- ---------
Total other expense....... (21,900) (12,785) (9,596)
Minority interest share of
(income) loss............... (1,078) (636) 83
Income tax expense
(benefit)................... 2,650 0 0
--------- --------- ---------
Net income (loss)............. $ 954 $ 1,662 $ (7,352)
--------- --------- ---------
--------- --------- ---------
</TABLE>
- ------------------------
(1) Pro forma adjustments give effect to the following transactions as if each
had occurred on January 1, 1997: (i) the Acquisition (including the sale of
the Fort Myers and Georgia-1 systems) and related financings, (ii) the
issuance and sale of the Secured PCW Notes in the PCW Offering and
application of the net proceeds therefrom and (iii) the issuance and sale of
the Notes in the Offering and application of the net proceeds therefrom. See
"Unaudited Pro Forma Condensed Consolidated Financial Statements" and "The
Palmer Acquisition."
(2) Includes results of operations after the Acquisition (the period October 1,
1997 through December 31, 1997).
(3) Includes revenue of $24,720, total expenses of $16,354 (including
depreciation and amortization of $2,581) and operating income of $8,366 for
the Fort Myers and Georgia-1 markets sold during 1997.
12
<PAGE>
<TABLE>
<CAPTION>
COMPANY PALMER COMPANY PALMER
------------------------ --------- ---------------------------- -------------------------
FOR THE
PERIOD
UNAUDITED
-------------------------------------------------- YEAR
MAY 29 ENDED
THREE MONTHS ENDED MARCH 31, PRO FORMA (INCEPTION) NINE MONTHS DECEMBER
----------------------------------- YEAR ENDED THROUGH ENDED 31,
PRO FORMA DECEMBER 31, DECEMBER 31, SEPTEMBER 30, ---------
1998(1) 1998 1997 1997(1) 1997(2) 1997(3) 1996
----------- ----------- --------- ------------- ------------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PERCENTAGES AND SUBSCRIBER STATISTICS AND DATA)
OTHER DATA:
Capital expenditures......... $ 704 $ 704 $ 16,987 $ 55,256 $ 14,499 $ 40,757 $ 41,445
Operating income before
depreciation and
amortization ("EBITDA").... $ 19,311 $ 19,311 $ 18,086 $ 67,893 $ 19,671 $ 61,309 $ 66,190
EBITDA margin on service
revenue.................... 47.5% 47.5% 42.8% 44.4% 47.6% 45.7% 43.8%
Penetration(4)............... 9.90% 9.90% 7.94% 9.40% 9.40% 8.60% 7.45%
Subscribers at end of
period(5).................. 326,721 326,721 310,823 309,606 309,606 337,345 279,816
Cost to add a gross
subscriber(6).............. $ 223 $ 223 $ 234 $ 220 $ 188 $ 231 $ 216
Cost to add a net
subscriber(6).............. $ 440 $ 440 $ 440 $ 461 $ 370 $ 514 $ 407
Average monthly service
revenue per
subscriber(7).............. $ 43.18 $ 43.18 $ 47.70 $ 46.24 $ 47.47 $ 47.52 $ 52.20
Average monthly churn(8)..... 1.75% 1.75% 1.87% 1.88% 1.84% 1.89% 1.84%
BALANCE SHEET DATA (AT END OF
PERIOD):
Cash......................... $ 182,544 $ 7,823 $ 2,091 $ 27,926 $ 27,926 $ 3,581 $ 1,698
Working capital (deficit).... 172,783 (4,867) 2,282 3,080 3,080 7,011 296
Property, plant and
equipment, net............. 147,003 147,003 148,121 151,141 151,141 161,351 132,438
Licenses, other intangibles
and other assets, net...... 937,348 930,822 411,314 937,986 937,986 406,828 387,067
Total assets................. 1,245,532 1,112,785 589,566 1,144,479 1,144,479 599,815 549,942
Total long-term debt......... 899,974 600,900 378,698 613,000 613,000 378,000 343,662
Stockholder's equity
(deficit).................. (4,082) 28,592 166,107 35,163 35,163 172,018 164,930
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
OTHER DATA:
Capital expenditures......... $ 36,564 $ 22,541 $ 13,304
Operating income before
depreciation and
amortization ("EBITDA").... $ 41,586 $ 24,900 $ 12,850
EBITDA margin on service
revenue.................... 43.0% 40.8% 36.5%
Penetration(4)............... 6.41% 4.58% 3.48%
Subscribers at end of
period(5).................. 211,985 117,224 65,761
Cost to add a gross
subscriber(6).............. $ 183 $ 178 $ 156
Cost to add a net
subscriber(6).............. $ 276 $ 247 $ 203
Average monthly service
revenue per
subscriber(7).............. $ 56.68 $ 60.02 $ 62.69
Average monthly churn(8)..... 1.55% 1.55% 1.37%
BALANCE SHEET DATA (AT END OF
PERIOD):
Cash......................... $ 3,436 $ 2,998 $ 1,670
Working capital (deficit).... (1,435) 2,490 799
Property, plant and
equipment, net............. 100,936 51,884 23,918
Licenses, other intangibles
and other assets, net...... 332,850 199,265 114,955
Total assets................. 462,871 273,020 150,054
Total long-term debt......... 350,441 245,609 131,361
Stockholder's equity
(deficit).................. 74,553 4,915 3,244
</TABLE>
- ------------------------
(4) Determined by dividing the aggregate number of subscribers by the estimated
population.
(5) Each billable telephone number in service represents one subscriber. The
number of subscribers in the historical operating data of Palmer includes
subscribers in the Fort Myers and Georgia-1 markets which were sold in
connection with the Acquisition.
(6) Determined for a period by dividing (i) all costs of sales and marketing,
including salaries, commissions and employee benefits and all expenses
incurred by sales and marketing personnel, agent commissions, credit
reference expenses, losses on cellular telephone sales, rental expenses
allocated to retail operations, net installation expenses and other
miscellaneous sales and marketing charges, by (ii) the gross or net
subscribers (as applicable) added during such period.
(7) Determined for a period by dividing (i) the sum of the access, airtime,
roaming, long distance, features, connection, disconnection and other
revenues for such period by (ii) the average number of subscribers for such
period, divided by the number of months in such period.
(8) Determined for a period by dividing total subscribers discontinuing service
by the average number of subscribers for such period and dividing that
result by the number of months in such period.
13
<PAGE>
RISK FACTORS
In addition to the other matters described in this Prospectus, each
prospective purchaser of the Notes should consider the specific factors set
forth below.
LEVERAGE, LIQUIDITY AND ABILITY TO MEET REQUIRED DEBT SERVICE
On a pro forma basis, after giving effect to the Offering and the PCW
Offering, in each case, including the application of the net proceeds therefrom,
and the Acquisition and related financing, the Company's ratio of EBITDA to cash
interest expense (excluding non-cash interest related to the Notes and
amortization of deferred debt financing costs) would have been 1.00 to 1.00 for
the year ended December 31, 1997 and 1.14 to 1.00 for the three months ended
March 31, 1998. The Company's high degree of leverage could limit significantly
its ability to make acquisitions, withstand competitive pressures or adverse
economic conditions, obtain necessary financing or take advantage of business
opportunities that may arise.
The Company used the net proceeds of the PCW Offering to retire the Credit
Facility. Accordingly, the Company has no credit facility in place and currently
does not intend to enter into a new credit facility. In addition, borrowings
under a new credit facility may be subject to significant conditions, including
compliance with certain financial ratios and the absence of any material adverse
change. In addition, the Company intends to pursue opportunities to acquire
additional cellular telephone systems which, if successful, will require the
Company to issue or obtain additional equity or debt financing to fund such
acquisitions. There can be no assurances as to the availability or terms of any
such financing or that the terms of the Notes, the PCW Notes or any credit
facility will not restrict or prohibit any such debt financing.
The Company's ability to meet its debt service requirements, including those
represented by the Notes, will require significant and sustained growth in the
Company's cash flow. In addition, the Company expects to fund its growth
strategy from cash from operations. There can be no assurance that the Company
will be successful in improving its cash flow by a sufficient magnitude or in a
timely manner or in raising additional equity or debt financing to enable the
Company to meet its debt service requirements or to sustain its growth strategy.
There can be no assurances that the Company would be successful in procuring any
such financing. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources."
LIMITATIONS ON ACCESS TO CASH FLOW OF SUBSIDIARIES; HOLDING COMPANY STRUCTURE
Holdings is a holding company, and its ability to pay interest on the Notes
is dependent upon the receipt of dividends from its direct and indirect
subsidiaries or of contributions from its parent, PCC. Holdings does not have,
and may not in the future have, any assets other than the common stock of PCW.
PCW is a party to an indenture related to the PCW Notes (the "PCW Indenture")
and an indenture related to the PCW Secured Notes (the "Secured PCW Indenture,"
and, together with the 11 3/4% PCW Indenture, the "PCW Indentures"), each of
which imposes substantial restrictions on PCW's ability to pay dividends to
Holdings. In addition, any credit agreement to which PCW may become a party may
impose similar restrictions. Any payment of dividends will be subject to the
satisfaction of certain financial conditions set forth in the PCW Indentures and
any future credit facility. The ability of PCW to comply with the PCW Indentures
may be affected by events that are beyond the control of Holdings. The breach of
any such conditions could result in a default under the PCW Indentures, and in
the event of any such default, the holders of the PCW Notes could elect to
accelerate the maturity of all the PCW Notes. If the maturity of the PCW Notes
were to be accelerated, all such outstanding debt would be required to be paid
in full before PCW would be permitted to distribute any assets or cash to
Holdings. In certain circumstances, it is possible that holders of PCW Notes
would have the right to require PCW to repurchase the PCW Notes while holders of
the Notes would not have a similar right to require the Company to repurchase
the Notes. There can be no assurance that the assets of the Company would be
sufficient to repay all of such outstanding debt and to meet its obligations
under the Notes. Future borrowings by PCW can be expected to contain
restrictions or prohibitions on the payment of dividends by such subsidiaries to
14
<PAGE>
Holdings. In addition, under Delaware law, a subsidiary of a company is
permitted to pay dividends on its capital stock only out of its surplus or, in
the event that it has no surplus, out of its net profits for the year in which a
dividend is declared or for the immediately preceding fiscal year. Surplus is
defined as the excess of a company's total assets over the sum of its total
liabilities plus the par value of its outstanding capital stock. In order to pay
dividends in cash, PCW must have surplus or net profits equal to the full amount
of the cash dividend at the time such dividend is declared. In determining PCW's
ability to pay dividends, Delaware law permits the Board of Directors of PCW to
revalue its assets and liabilities from time to time to their fair market values
in order to create surplus. The Company cannot predict what the value of its
subsidiaries' assets or the amount of their liabilities will be in the future
and, accordingly, there can be no assurance that the Company will be able to pay
its debt service obligations on the Notes.
As a result of Holdings' status as a holding company, the holders of the
Notes are structurally junior to all creditors of Holdings' subsidiaries, except
to the extent that Holdings is itself recognized as a creditor of any such
subsidiary, in which case the claims of Holdings would still be subordinate to
any security in the assets of such subsidiary and any indebtedness of such
subsidiary senior to that held by Holdings. In the event of insolvency,
liquidation, reorganization, dissolution or other winding-up of Holdings'
subsidiaries, Holdings will not receive any funds available to pay to creditors
of the subsidiaries. As of March 31, 1998, on a pro forma basis, Holdings'
subsidiaries would have had outstanding $750.0 million of indebtedness, and
$362.7 million of deferred taxes and other liabilities.
POSSIBLE INABILITY TO PURCHASE NOTES UPON A CHANGE OF CONTROL OR ASSET SALE;
POSSIBLE EFFECT OF A CHANGE OF CONTROL
Upon a Change of Control, each holder of Notes will have the right to
require the Company to repurchase all outstanding Notes held by such holder.
However, there can be no assurance that sufficient funds will be available at
the time of any Change of Control to make any required repurchases of Notes
tendered, especially after giving effect to provisions of the PCW Indentures
which require repayment or repurchase, as the case may be, upon such a Change of
Control. Similarly, there can be no assurance that, upon the occurrence of an
Asset Sale which requires prepayment under the Indenture, the Company will have
sufficient funds available to satisfy such obligation after giving effect to
required prepayments under the PCW Indentures and as a result of an Asset Sale.
In certain circumstances, it is possible that holders of PCW Notes would have
the right to require PCW to repurchase the PCW Notes while holders of the Notes
would not have a similar right to require the Company to repurchase the Notes.
See "Description of Notes--Optional Redemption."
ORIGINAL ISSUE DISCOUNT
As a result of the Company's option to issue additional Notes in lieu of
cash interest payments, the Notes will be considered to be issued at an original
issue discount from what will be deemed to be their principal amount at
maturity. Consequently, purchasers of the Notes may be required to include
amounts in gross income for federal income tax purposes in advance of receipt of
the cash payments to which the income is attributable. See "Certain Federal
Income Tax Consequences" for a more detailed discussion of the federal income
tax consequences to the purchasers of the Notes resulting from the purchase,
ownership or disposition thereof.
MANDATORY EXCHANGE
Although the Trading Price must equal or exceed 115% of the Exchange Price
for ten out of 15 consecutive Trading Days in order for the Notes to be
mandatorily exchanged for PCC Shares, there can be no assurances as to the
trading price of the PCC Shares on the Exchange Date or thereafter or as to the
amount any Holder may realize upon any disposition thereof.
15
<PAGE>
NET LOSSES
On a pro forma basis after giving effect to the Offering and the PCW
Offering, in each case, including the application of the net proceeds therefrom,
and the Acquisition and related financing, the Company would have incurred
accounting net losses of approximately $44.0 million for the year ended December
31, 1997 and $9.7 million for the three months ended March 31, 1998. There can
be no assurance that the Company's future operations will generate sufficient
cash flow to pay its obligations. The Company expects to incur accounting net
losses for several years. See "Selected Consolidated Financial Data" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
COMPETITION
Although current policies of the FCC authorize only two licensees to operate
cellular telephone systems in each cellular market, there is, and the Company
expects there will continue to be, competition from various wireless technology
licensees authorized to serve each market in which the Company operates, as well
as from resellers of cellular service. Competition for subscribers between the
two cellular licensees in each market is based principally upon the services and
enhancements offered, the technical quality of the cellular telephone system,
customer service, system coverage and capacity and price. The Company competes
with a wireline licensee in each of its cellular markets, some of which are
larger and have access to more substantial capital resources than the Company.
The Company also faces competition from other existing communications
technologies such as conventional mobile telephone service, specialized mobile
radio ("SMR") and enhanced specialized mobile radio ("ESMR") systems, paging
services and, to a limited extent, satellite systems for mobile communications.
ESMR is a digital transmission system providing for "cellular-like"
communications service. The Company also faces limited competition from and may
in the future face increased competition from PCS. Broadband PCS involves a
network of small, low-powered transceivers placed throughout a neighborhood,
business complex, community or metropolitan area to provide customers with
mobile and portable voice and data communications. PCS may be capable of
offering, and PCS operators claim to offer additional services not offered by
cellular providers. PCS subscribers could have dedicated personal telephone
numbers and communicate using small digital radio handsets carried in a pocket
or purse. There can be no assurances that the Company will be able to provide
nor that it will choose to pursue, depending on the economics thereof, all such
services and features. The FCC has also completed or announced plans for
auctions in wireless services such as narrowband PCS, local multipoint
multichannel distribution service ("LMDS"), interactive video distribution
service ("IVDS"), wireless communications service ("WCS") and general wireless
communications service ("GWCS") spectrum. Some of this spectrum might be used
for services competitive in some manner with cellular service. The Company
cannot predict the effect of these proceedings and auctions on the Company's
business. However, the Company currently believes that traditional tested
cellular is economically proven unlike many of these other technologies and
therefore does not intend to pursue such other technologies.
Although the Company believes that the technology, financing and engineering
of these other technologies is not as advanced as their publicity would suggest,
there can be no assurance that one or more of the technologies currently
utilized by the Company in its business will not become obsolete at some time in
the future. See "Business of the Company--Competition."
The Company also faces competition from "resellers." The FCC requires all
cellular 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.
POTENTIAL FOR REGULATORY CHANGES AND NEED FOR REGULATORY APPROVALS
The licensing, construction, operation, acquisition, assignment and transfer
of cellular telephone systems, as well as the number of licensees permitted in
each market, are regulated by the FCC. Changes
16
<PAGE>
in the regulation of cellular activities could have a material adverse effect on
the Company's operations. In addition, all cellular licenses in the United
States are granted for an initial term of up to 10 years and are subject to
renewal. The Company's cellular licenses expire in the following years with
respect to the following number of service areas: 1998 (three); 2000 (two); 2001
(four); 2002 (two); 2006 (one); and 2007 (four). While the Company believes that
each of these licenses will be renewed based upon FCC rules establishing a
renewal expectancy in favor of licensees that have complied with their
regulatory obligations during the relevant license period, there can be no
assurance that all of the Company's licenses will be renewed in due course. In
the event that a license is not renewed, the Company would no longer have the
right to operate in the relevant service area. The non-renewal of licenses could
have a material adverse effect on the Company's results of operations. See
"Business of the Company--Regulation."
FLUCTUATIONS IN MARKET VALUE OF LICENSES
A substantial portion of the Company's assets consists of its interests in
cellular licenses. The assignment of interests in such licenses is subject to
prior FCC approval and may also be subject to contractual restrictions, future
competition and the relative supply and demand for radio spectrum. The future
value of the Company's interests in its cellular licenses will depend
significantly upon the success of the Company's business. While there is a
current market for the Company's licenses, such a market may not exist in the
future or the values obtainable may be significantly lower than at present. As a
consequence, in the event of the liquidation or sale of the Company's assets,
there can be no assurance that the proceeds would be sufficient to pay the
Company's obligations, and a significant reduction in the value of the licenses
could require a charge to the Company's results of operations.
RELIANCE ON USE OF THIRD-PARTY SERVICE MARK
The Company currently uses the registered service mark
CELLULARONE-Registered Trademark- to market its services. The Company's use of
this service mark is, and has historically been, governed by separate five-year
contracts between the Company and Cellular One Group, the owner of the service
mark, for each of the markets in which the Company operates. Such contracts
currently in effect expire at different times, ranging from April 18, 1999 to
June 9, 2003. If for some reason beyond the Company's control, the name
CELLULARONE-Registered Trademark- were to suffer diminished marketing appeal,
the Company's ability both to attract new subscribers and retain existing
subscribers could be materially affected. AT&T Wireless Services, Inc., which
has been the single largest user of the CELLULARONE-Registered Trademark-
service mark, has significantly reduced its use of the service mark as a primary
service mark, as has Centennial Cellular. There can be no assurance that such
reduction in use by any of such parties will not have an adverse effect on the
marketing appeal of the brand name.
DEPENDENCE ON KEY PERSONNEL
The Company's affairs are managed by a small number of key management and
operating personnel, the loss of whom could have an adverse impact on the
Company. The success of the Company's operations and expansion strategy depends
on its ability to retain and to expand its staff of qualified personnel in the
future.
RADIO FREQUENCY EMISSION CONCERNS
Media reports have suggested that certain radio frequency ("RF") emissions
from portable cellular telephones may be linked to certain types of cancer. In
addition, recently a limited number of lawsuits have been brought, not involving
the Company, alleging a connection between cellular telephone use and certain
types of cancer. Concerns over RF emissions and interference may have the effect
of discouraging the use of cellular telephones, which could have an adverse
effect upon the Company's business. As required by the Telecom Act, in August
1996, the FCC adopted new guidelines and methods for evaluating RF emissions
from radio equipment, including cellular telephones. While the new guidelines
impose more restrictive standards on RF emissions from low power devices such as
portable cellular telephones, the
17
<PAGE>
Company believes that all cellular telephones currently marketed and in use
comply with the new standards.
The Company carries $4.0 million in general liability insurance and $25.0
million in umbrella liability coverage. This insurance would cover (subject to
coverage limits) any liability suits with respect to human exposure to radio
frequency emissions.
FRAUDULENT CONVEYANCE STATUTES
Various laws enacted for the protection of creditors may apply to the
Company's incurrence of indebtedness and other obligations in connection with
the Acquisition, including the issuance of the Notes. If a court were to find in
a lawsuit by an unpaid creditor or representative of creditors of the Company
that the Company did not receive fair consideration or reasonably equivalent
value for incurring such indebtedness or obligation and, at the time of such
incurrence, the Company (i) was insolvent; (ii) was rendered insolvent by reason
of such incurrence; (iii) was engaged in a business or transaction for which the
assets remaining in the Company constituted unreasonably small capital; or (iv)
intended to incur or believed it would incur obligations beyond its ability to
pay such obligations as they mature, such court, subject to applicable statutes
of limitation, could determine to invalidate, in whole or in part, such
indebtedness and obligations as fraudulent conveyances or subordinate such
indebtedness and obligations to existing or future creditors of the Company.
The measure of insolvency for purposes of the foregoing will vary depending
on the law of the jurisdiction which is being applied. Generally, however, the
Company would be considered insolvent at a particular time if the sum of its
debts was then greater than all of its property at a fair valuation or if the
present fair saleable value of its assets was then less than the amount that
would be required to pay its probable liabilities on its existing debts as they
became absolute and matured. On the basis of its historical financial
information, its recent operating history as discussed in "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
other factors, the Company's management believes that, after giving effect to
indebtedness incurred in connection with the Offering, the Company will not be
rendered insolvent, it will have sufficient capital for the businesses in which
it was not engaged and it will be able to pay its debts as they mature; however,
management has not obtained any independent opinion regarding such issues. There
can be no assurance as to what standard a court would apply in making such
determinations.
EQUIPMENT FAILURE; NATURAL DISASTER
Although the Company carries "business interruption" insurance, a major
equipment failure or a natural disaster affecting any one of the Company's
central switching offices or certain of its cell sites could have a significant
adverse effect on the Company's operations.
LACK OF PUBLIC MARKET
The Notes are new securities for which there currently is no market. The
Company does not intend to apply for listing of the Notes on any securities
exchange or for quotation through the National Association of Securities Dealers
Automated Quotation System. There can be no assurance that an active trading
market for the Notes will develop. If a trading market develops for the Notes,
future trading prices of such securities will depend on many factors, including
prevailing interest rates, the Company's results of operations and financial
condition and the market for similar securities.
YEAR 2000
The Company and its consultants have reviewed the possible effect of the
Year 2000 on the computer systems currently in use, including the software that
is an integral part of the Company's switches and the related billing
information. Preliminary estimates indicate that the costs for Year 2000
compliance will be less than $2 million; however, the Company is unable to
predict whether its third-party billing provider or its principal sources of
puchased or leased cellular equipment have made sufficient modifications to
address the potential problems of the Year 2000 software shortcomings on their
computer systems. Any additional costs of this nature, to the extent they are
passed on to the Company or affect or delay the Company's business, bill
collection or cellular equipment installation, could have a material adverse
effect upon the Company's business or results of operations.
18
<PAGE>
THE PALMER ACQUISITION
Prior to the Merger described below, Holdings had no assets, liabilities or
operations other than the proceeds from the issuance of the 13 1/2% Holdings
Notes and liabilities with respect thereto.
On May 23, 1997, PCC, PCW and Palmer entered into the Merger Agreement. The
Merger Agreement provided, among other things, for the Merger of PCW with and
into Palmer with Palmer as the surviving corporation. On October 6, 1997, the
Merger was consummated and Palmer changed its name to "Price Communications
Wireless, Inc." Pursuant to the Merger Agreement, PCC acquired each issued and
outstanding share of common stock of Palmer for a purchase price of $17.50 per
share in cash and purchased outstanding options and rights under employee and
director stock purchase plans for an aggregate price of $486.4 million. In
addition, as a result of the Merger, PCW assumed all outstanding indebtedness of
Palmer of approximately $378.0 million ("Palmer Existing Indebtedness"), making
the aggregate purchase price for Palmer (including transaction fees and
expenses) approximately $880.0 million. PCW refinanced all of the Palmer
Existing Indebtedness concurrently with the consummation of the Merger.
PCW entered into the Fort Myers Sale Agreement to sell Palmer's Fort Myers,
Florida MSA covering approximately 382,000 Pops for $168.0 million. On October
6, 1997, the Fort Myers Sale was consummated, and generated proceeds to the
Company of approximately $166.0 million. The proceeds of the Fort Myers Sale
were used to fund a portion of the acquisition of Palmer.
On October 21, 1997, PCC and PCW entered into the Georgia Sale Agreement
which provided for the sale by PCW, for approximately $25.0 million, of
substantially all of the assets of the non-wireline cellular telephone system
serving the Georgia-l RSA, including the FCC licenses to operate Georgia-1. The
sale of the assets of Georgia-1 was consummated on December 30, 1997 and
generated proceeds to the Company of approximately $24.2 million. A portion of
the proceeds from the Georgia Sale were used to retire a portion of the debt
used to fund the acquisition of Palmer.
In order to fund the Acquisition and pay related fees and expenses, PCW
issued $175.0 million aggregate principal amount of 11 3/4% PCW Notes and
entered into a syndicated senior loan facility providing for term loan
borrowings in the aggregate principal amount of $325.0 million and revolving
loan borrowings of $200.0 million (the "Credit Facility"). On October 6, 1997,
PCW borrowed all term loans available thereunder and approximately $120.0
million of revolving loans. The Credit Facility was retired on June 16, 1998
with the net proceeds from the PCW Offering.
The Acquisition was also funded in part through a $44.0 million equity
contribution from PCC which was in the form of cash and common stock of Palmer.
Approximately $46.5 million of the purchase price for the Acquisition was raised
out of the proceeds from the issuance and sale for $80.0 million of units
consisting of $153.4 million principal amount at maturity of the 13 1/2%
Holdings Notes and Warrants to purchase PCC Shares. See "Description of the
13 1/2% Holdings Notes."
The Company has the right to redeem all or part of the 13 1/2% Holding Notes
on or after August 1, 1998 at a redemption price equal to 120% of the accreted
value thereof, including accrued and unpaid interest, if the closing price of
the PCC Shares equals or exceeds certain specified prices for the ten
consecutive trading days prior to the redemption date ($7.68 per share during
the period from August 1, 1998 to July 31, 1999). The Notes are subject to a
special mandatory redemption on August , 1998 at a cash price equal to 101% of
the principal amount thereof together with accrued and unpaid interest to the
date of redemption if all of the 13 1/2% Holdings Notes have not been redeemed
prior thereto. See "Use of Proceeds."
19
<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of the Notes, after deducting expenses of the
Offering, are estimated to be approximately $146.0 million. $109.2 million of
the net proceeds (based upon the accreted value as of August 1, 1998 and the 20%
redemption premium) will be used by the Company to redeem all of the outstanding
13 1/2% Holdings Notes on August 1, 1998. The remaining $36.8 million of net
proceeds will be used for general corporate purposes, including acquisitions.
The 13 1/2% Holdings Notes were issued in connection with the acquisition of
Palmer. See "The Palmer Acquisition." The remaining $29.5 million of net
proceeds from the issuance of the 13 1/2% Holdings Notes were dividended to PCC
and used to repurchase outstanding shares of PCC preferred stock and warrants to
purchase PCC Shares. The 13 1/2% Holdings Notes mature on August 1, 2007 and
were issued at a discount which represents a yield to maturity of 13 1/2% per
annum. Holdings has the right to redeem all or part of the 13 1/2% Notes on or
after August 1, 1998 at a redemption price equal to 120% of the accreted value
thereof, including accrued and unpaid interest, if any, if the closing price of
the PCC Shares equals or exceeds certain specified prices for the ten
consecutive trading days prior to the redemption date ($7.68 per share during
the period from August 1, 1998 to July 31, 1999). The Notes are subject to a
special mandatory redemption on August , 1998 at a cash price equal to 101% of
the principal amount thereof together with accrued and unpaid interest to the
date of redemption if all of the 13 1/2% Holdings Notes have not been redeemed
prior thereto. See "Description of the 13 1/2% Holdings Notes."
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization of
the Company as of March 31, 1998 and as adjusted to reflect the Offering and the
PCW Offering, in each case, including the application of the net proceeds
therefrom. This table should be read in conjunction with the consolidated
financial statements of the Company, including the notes thereto, the "Unaudited
Pro Forma Condensed Consolidated Financial Statements" and notes thereto,
included elsewhere herein, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "The Palmer Acquisition," as well as
the financial statements and notes thereto of PCC which are incorporated by
reference herein.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1998
-----------------------
ACTUAL AS ADJUSTED
---------- -----------
<S> <C> <C>
(IN THOUSANDS)
Cash..................................................................................... $ 7,823 $ 182,544
---------- -----------
---------- -----------
Long-term debt (including current portion):
Borrowings outstanding under Credit Facility........................................... 425,900 --
9 1/8% Senior Secured Notes due 2006................................................... -- 525,000
11 3/4% PCW Notes due 2007............................................................. 175,000 175,000
Senior Exchangeable Payable-in-Kind Notes due 2008..................................... -- 200,000
13 1/2% Senior Secured Discount Notes due 2007......................................... 83,000 --
---------- -----------
Total long-term debt................................................................. 683,900 900,000
Stockholder's equity:
Common Stock, $0.01 par value per share, 100 shares authorized, issued and outstanding
actual and pro forma................................................................. -- --
Additional paid-in capital............................................................. 44,015 44,015
Accumulated deficit.................................................................... (15,423) (48,097)
---------- -----------
Total stockholder's equity (deficit)................................................. 28,592 (4,082)
---------- -----------
Total capitalization................................................................. $ 712,492 $ 845,918
---------- -----------
---------- -----------
</TABLE>
20
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated balance sheet of
PCC and Holdings as of March 31, 1998 gives effect to the Offering and the PCW
Offering as if the Offerings had occurred on such date. The unaudited pro forma
condensed consolidated statements of operations for the year ended December 31,
1997 and the three month period ended March 31, 1998 of PCC and Holdings give
effect to the following transactions as if they occurred at the beginning of the
relevant period:
(i) The Acquisition of Palmer. On October 6, 1997, Holdings acquired
Palmer, with Palmer as the surviving corporation. Pursuant to the Merger
Agreement, PCC acquired each issued and outstanding share of common stock of
Palmer for a purchase price of $17.50 per share in cash and purchased
outstanding options and rights under employee and director stock purchase
plans for an aggregate price of $486.4 million. In addition, the Company
assumed the Palmer Existing Indebtedness. As a result, the aggregate
purchase price was approximately $880.0 million. See "The Palmer
Acquisition." The Acquisition was recorded pursuant to the purchase method
of accounting. The excess of cost over the fair value of Palmer's assets and
liabilities has been allocated to the FCC licenses. Certain of the acquired
assets related to the Fort Myers and Georgia operations were sold pursuant
to the Fort Myers and Georgia-1 Sales. See "The Palmer Acquisition." These
assets have been assigned values based on the net proceeds from such sales.
(ii) The Fort Myers Sale (the proceeds of which were used to pay a
portion of the Palmer Existing Indebtedness). On October 6, the Fort Myers
Sale was consummated and generated proceeds of approximately $166.0 million.
(iii) The Georgia-1 Sale. On December 30, 1997, the Company sold
substantially all of the assets used or useful in the operation of the
non-wireline cellular telephone system serving Georgia-1. A portion of the
$25.0 million in proceeds was used to retire a portion of the debt used to
fund the acquisition of Palmer.
(iv) The following transactions represent the proceeds raised for the
acquisition of Palmer:
1. The issuance and sale by PCW of the 11 3/4% PCW Notes.
2. The financing of PCW under the Credit Facility, which provides
for term loan borrowings in the aggregate principal amount of $325.0
million and revolving loan borrowings of $200.0 million. On October 6,
1997, PCW borrowed all term loans available thereunder and approximately
$120.0 million of revolving loans. In June 1998, PCW used the net
proceeds of the PCW Offering to retire amounts outstanding under the
Credit Facility.
3. The issuance and sale by Holdings of 153,400 Units in the
Holdings Offering. The Units consisted of $153.4 million in aggregate
principal amount at maturity of the 13 1/2% Holdings Notes, together with
Warrants to purchase 1,030,656 shares of PCC Shares.
4. The PCC Equity Contribution, a $44.0 million contribution from
PCC in the form of cash and common stock of Palmer, was contributed by
PCC to fund a portion of the acquisition of Palmer.
(v) The sale of the PCW Secured Notes in the PCW Offering, at an
interest rate of 9 1/8%, including application of approximately $426.6
million of the net proceeds to retire the outstanding indebtedness under the
Credit Facility, including accrued interest, which amounts were outstanding
as of March 31, 1998.
(vi) The sale of the Notes in the Offering, at an assumed interest rate
of 11%.
(vii) The repayment of the 13 1/2% Holdings Notes.
21
<PAGE>
The unaudited pro forma condensed consolidated financial statements have
been prepared by management of PCC and Holdings. The unaudited pro forma data is
not designed to represent and does not represent what the results of operations
or financial position of PCC and Holdings would have been had the above
transactions been completed on or as of the dates assumed, and are not intended
to project results of operations of PCC and Holdings for any future period or as
of any future date. The unaudited pro forma condensed consolidated financial
statements should be read in conjunction with the audited and unaudited
consolidated financial statements and notes of PCC and Holdings, included
elsewhere in this Prospectus.
22
<PAGE>
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
ADJUSTMENTS FOR ADJUSTMENTS FOR PRO FORMA
PCC PCW OFFERING THE OFFERING PCC
------------ --------------- --------------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................... $ 8,629 81,421(a) $ 93,300(g) $ 183,350
Accounts receivable, net............................ 18,478 18,478
Investment Securities:
Available-for-sale securities....................... 33,512 33,512
Inventory........................................... 2,005 2,005
Deferred income taxes............................... 4,807 4,807
Prepaid expenses and other current assets........... 2,234 2,234
------------ --------------- --------------- ------------
Total current assets................................ 69,665 81,421 93,300 244,386
Property, plant and equipment, net.................. 147,112 147,112
Cellular licenses, net.............................. 911,923 911,923
Other intangible assets (net) and other assets...... 23,866 4,802(b) 474(i) 29,142
------------ --------------- --------------- ------------
Total assets........................................ $ 1,152,566 $ 86,223 $ 93,774 $ 1,332,563
------------ --------------- --------------- ------------
------------ --------------- --------------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses............... $ 40,238 $ (679)(d) $ 39,559
Current portion of long-term debt................... 2,250 (2,250)(c) --
Other current liabilities........................... 4,578 4,578
------------ --------------- --------------- ------------
Total current liabilities........................... 47,066 (2,929) 44,137
Long-term debt...................................... 681,624 101,350(e) 117,000(j) 899,974
Accrued income taxes long-term...................... 48,571 48,571
Deferred taxes (1).................................. 306,359 306,359
Other long-term liabilities......................... 7,812 7,812
------------ --------------- --------------- ------------
Total liabilities................................... 1,091,432 98,421 117,000 1,306,853
Redeemable preferred stock.......................... 35 35
Stockholders' equity................................ 61,099 (12,198)(f) (23,226)(l) 25,675
------------ --------------- --------------- ------------
Total liabilities and stockholders' equity.......... $ 1,152,566 $ 86,223 $ 93,774 $ 1,332,563
------------ --------------- --------------- ------------
------------ --------------- --------------- ------------
</TABLE>
- ------------------------
(l) This accounting line represents the future tax consequences, if any,
attributable to the currently reported differences between the financial
statement carrying amounts of existing assets and their tax bases. These
assets (largely intangibles) will be amortized by the Company and offset
against this deferred tax balance without any cash consequences. This amount
less the amortization would become due only if the assets are sold by the
Company in a taxable transaction.
23
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
ADJUSTMENTS FOR ADJUSTMENTS FOR PRO FORMA
COMPANY PCW OFFERING THE OFFERING COMPANY
------------ --------------- --------------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................... $ 7,823 81,421(a) $ 93,300(g) $ 182,544
Accounts receivable, net............................ 18,477 18,477
Inventory........................................... 2,005 2,005
Deferred income taxes............................... 4,807 4,807
Prepaid expenses and other current assets........... 1,848 1,848
------------ --------------- --------------- ------------
Total current assets................................ 34,960 81,421 93,300 209,681
Property, plant and equipment, net.................. 147,003 147,003
Cellular licenses, net.............................. 911,923 911,923
Other intangible assets (net) and other assets...... 18,899 4,802(b) 3,224(h) 26,925
------------ --------------- --------------- ------------
Total assets........................................ $ 1,112,785 $ 86,223 $ 96,524 $ 1,295,532
------------ --------------- --------------- ------------
------------ --------------- --------------- ------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued expenses............... $ 32,999 (679)(d) $ $ 32,320
Current portion of long-term debt................... 2,250 (2,250)(c) --
Other current liabilities........................... 4,578 4,578
------------ --------------- --------------- ------------
Total current liabilities........................... 39,827 (2,929) 36,898
Long-term debt...................................... 681,624 101,350(e) 117,000(j) 899,974
Accrued income taxes long-term...................... 48,571 48,571
Deferred taxes (1).................................. 306,359 306,359
Other long-term liabilities......................... 7,812 7,812
------------ --------------- --------------- ------------
Total liabilities................................... 1,084,193 98,421 117,000 1,299,614
Stockholder's equity (deficit)...................... 28,592 (12,198)(f) (20,476)(k) (4,082)
------------ --------------- --------------- ------------
Total liabilities and stockholder's equity
(deficit)......................................... $ 1,112,785 $ 86,223 $ 96,524 $ 1,295,532
------------ --------------- --------------- ------------
------------ --------------- --------------- ------------
</TABLE>
- ------------------------
(1) This accounting line represents the future tax consequences, if any,
attributable to the currently reported differences between the financial
statement carrying amounts of existing assets and their tax bases. These
assets (largely intangibles) will be amortized by the Company and offset
against this deferred tax balance without any cash consequences. This amount
less the amortization would become due only if the assets are sold by the
Company in a taxable transaction.
24
<PAGE>
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
For purposes of determining the pro forma effect of the transactions
described above on the condensed consolidated balance sheet of Holdings and PCC
as of March 31, 1998, the following adjustments have been made:
<TABLE>
<S> <C> <C>
(A) CASH AND CASH EQUIVALENTS
Proceeds from the PCW 9 1/8% Senior Secured Notes due 2006................... $ 525,000
Cash used to pay estimated transaction fees and expenses..................... (17,000)
Cash used to pay accrued interest on Credit Facility......................... (679)
Cash used to retire outstanding indebtedness under the Credit Facility,
including current portion.................................................. (425,900)
---------
$ 81,421
---------
---------
(B) OTHER INTANGIBLE AND OTHER ASSETS, NET
Write-off of unamortized deferred finance fees related to Credit Facility.... $ (10,198)
Estimated fees and expenses related to the PCW Offering...................... 15,000
---------
$ 4,802
---------
---------
(C) CURRENT PORTION OF LONG-TERM DEBT
Payment of current portion of long-term debt from proceeds of the PCW
Offering................................................................... $ (2,250)
---------
---------
(D) OTHER CURRENT LIABILITIES
Payment of accrued interest on Credit Facility from proceeds of the PCW
Offering................................................................... $ (679)
---------
---------
(E) LONG-TERM DEBT
The PCW 9 1/8% Senior Secured Notes due 2006................................. $ 525,000
Repayment of Credit Facility................................................. (423,650)
---------
$ 101,350
---------
---------
(F) STOCKHOLDER'S EQUITY
Write-off of existing unamortized deferred financing fees related to the
Credit Facility............................................................ $ (10,198)
Expenses related to cancellation of interest swap and cap contracts.......... (2,000)
---------
$ (12,198)
---------
---------
(G) CASH AND CASH EQUIVALENTS
Proceeds from 11.0% Senior Exchangeable PIK Notes due 2008................... $ 200,000
Repayment of 13 1/2% Holdings Notes as of March 31, 1998..................... (83,000)
Cash used to pay 20% premium on redemption of 13 1/2% Holdings Notes. The
premium is based upon the accreted value of the 13 1/2% Holdings Notes at
August 1, 1998 (approximately $91.0 million), the earliest date permitted
for redemption............................................................. (18,200)
Cash used to pay estimated transaction fees and expenses..................... (5,500)
---------
$ 93,300
---------
---------
(H) OTHER INTANGIBLE ASSETS, NET - HOLDINGS
Estimated fees and expenses in connection with the offering.................. $ 5,500
Write-off of existing unamortized deferred financing fees related to the
13 1/2% Holdings Notes..................................................... (2,276)
---------
$ 3,224
---------
---------
</TABLE>
25
<PAGE>
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<S> <C> <C>
(I) OTHER INTANGIBLE ASSETS, NET - PCC
Write-off of existing unamortized deferred financing fees related to the
13 1/2% Holdings Notes on books of PCC..................................... $ (2,750)
Holdings' Other Intangible Assets (Note h)................................... 3,224
---------
$ 474
---------
---------
(J) LONG-TERM DEBT
Senior Exchangeable PIK Notes due 2008....................................... $ 200,000
Repayment of 13 1/2% Holdings Notes.......................................... (83,000)
---------
$ 117,000
---------
---------
(K) STOCKHOLDER'S EQUITY - HOLDINGS
Write-off of existing unamortized deferred financing fees related to the
13 1/2% Holdings Notes..................................................... $ (2,276)
20% premium on redemption of 13 1/2% Holdings Notes (based upon accreted
value as of August 1, 1998)................................................ (18,200)
---------
$ (20,476)
---------
---------
(L) STOCKHOLDERS' EQUITY - PCC
Write-off of existing unamortized deferred financing fees related to the
13 1/2% Holdings Notes on books of PCC..................................... $ (2,750)
Holdings' stockholder's equity (Note k)...................................... (20,476)
---------
$ (23,226)
---------
---------
</TABLE>
26
<PAGE>
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
ADJUSTMENTS ADJUSTMENTS
FOR THE FOR THE
FORT MYERS ACQUISITION
FORT MYERS SALE AND AND THE
SALE AND GEORGIA-1 RELATED PALMER AS
PALMER(1) GEORGIA-1 SALE(2) SALE FINANCING ADJUSTED
--------- ----------------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Revenues........................... $141,736 $23,980 $ $ $117,756
Cost and expenses:
Cost of cellular service/operating
expenses......................... 23,301 4,395 18,906
Cost of equipment.................. 16,112 3,102 13,010
Selling, general and
administrative................... 41,014 5,836 2,440(a) 37,618
Depreciation and amortization...... 25,498 2,521 8,930(c) 31,907
--------- ------- ----------- ------------ -----------
Operating income (loss)............ 35,811 8,126 (2,440) (8,930) 16,315
Other income (expense):
Interest income (expense) (net).... (24,467) 332 (23,375)(d) (48,174)
Other, net......................... 208 1 207
--------- ------- ----------- ------------ -----------
Total other income (expense)....... (24,259) 333 (23,375) (47,967)
Minority interest share of
income........................... (1,310) (1,310)
--------- ------- ----------- ------------ -----------
Income (loss) before income tax
expense.......................... 10,242 8,459 (2,440) (32,305) (32,962)
Income tax expense (benefit)(4).... 4,153 3,430 (988) (b) (11,958)(e) (12,223)
--------- ------- ----------- ------------ -----------
Net income (loss).................. $ 6,089 $ 5,029 $(1,452) $(20,347) $(20,739)
--------- ------- ----------- ------------ -----------
--------- ------- ----------- ------------ -----------
Per share data:
Basic and diluted (loss) earnings
per share........................
Weighted average shares
outstanding......................
Deficiency of earnings to fixed
charges..........................
<CAPTION>
PRO FORMA
ADJUSTMENT PRO FORMA
FOR THE ADJUSTMENT
PCW FOR THE PRO FORMA
PCC(3) OFFERING OFFERING PCC
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues........................... $ 43,713 $ $ $ 161,469
Cost and expenses:
Cost of cellular service/operating
expenses......................... 5,978 24,884
Cost of equipment.................. 5,259 18,269
Selling, general and
administrative................... 16,750 54,368
Depreciation and amortization...... 11,107 43,014
---------- ---------- ---------- ----------
Operating income (loss)............ 4,619 20,934
Other income (expense):
Interest income (expense) (net).... (20,063) (12,341)(f) (10,804)(h) (91,382 )
Other, net......................... 1400 -- 1,607
---------- ---------- ---------- ----------
Total other income (expense)....... (18,663) (12,341) (10,804) (89,775 )
Minority interest share of
income........................... (414) -- (1,724 )
---------- ---------- ---------- ----------
Income (loss) before income tax
expense.......................... (14,458) (12,341) (10,804) (70,565 )
Income tax expense (benefit)(4).... (5,509) (4,653)(i) (4,073)(i) (26,458 )
---------- ---------- ---------- ----------
Net income (loss).................. $ (8,949) $ (7,688) $ (6,731) $ (44,107 )
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Per share data:
Basic and diluted (loss) earnings
per share........................ $ (.91) $ (4.49 )
---------- ----------
---------- ----------
Weighted average shares
outstanding...................... 9,812,905 9,812,905
---------- ----------
---------- ----------
Deficiency of earnings to fixed
charges.......................... $ (44,107 )
----------
----------
</TABLE>
- ------------------------
(1) Includes the results and operations of Palmer for the nine months ended
September 30, 1997. The Company purchased Palmer on October 6, 1997.
(2) Represents the elimination of the operating results of the Fort Myers and
Georgia-1 operations for the nine months ended September 30, 1997. These
operations were sold in the fourth quarter of 1997. The amounts are net of
the operating results for one month of the GA-13 RSA operations acquired by
Palmer on January 31, 1997.
(3) Includes the results of operations after the Acquisition (the period October
1, 1997 through December 31, 1997).
(4) Calculated using an effective tax rate of approximately 38%.
27
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
ADJUSTMENTS ADJUSTMENTS
FOR THE FOR THE
FORT MYERS ACQUISITION
FORT MYERS SALE AND AND THE
SALE AND GEORGIA-1 RELATED PALMER AS
PALMER(1) GEORGIA-1 SALE(2) SALE FINANCING ADJUSTED
--------- ----------------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Revenues........................... $141,736 $23,980 $ $ $117,756
Cost and expenses:
Cost of cellular service/ operating
expenses......................... 23,301 4,395 18,906
Cost of equipment.................. 16,112 3,102 13,010
Selling, general and
administrative................... 41,014 5,836 2,440(a) 37,618
Depreciation and amortization...... 25,498 2,521 8,930(c) 31,907
--------- ------- ----------- ------------ -----------
Operating income (loss)............ 35,811 8,126 (2,440) (8,930) 16,315
Other income (expense):
Interest income (expense) (net).... (24,467) 332 (23,375)(d) (48,174)
Other, net......................... 208 1 207
--------- ------- ----------- ------------ -----------
Total other income (expense)....... (24,259) 333 (23,375) (47,967)
Minority interest share of
income........................... (1,310) (1,310)
--------- ------- ----------- ------------ -----------
Income (loss) before income tax
expense.......................... 10,242 8,459 (2,440) (32,305) (32,962)
Income tax expense (benefit)(4).... 4,153 3,430 (988) (b) (11,958)(e) (12,223)
--------- ------- ----------- ------------ -----------
Net income (loss).................. $ 6,089 $ 5,029 $(1,452) $(20,347) $(20,739)
--------- ------- ----------- ------------ -----------
--------- ------- ----------- ------------ -----------
Deficiency of earnings to fixed
charges..........................
<CAPTION>
PRO FORMA
ADJUSTMENT PRO FORMA
FOR THE ADJUSTMENT
PCW FOR THE PRO FORMA
HOLDINGS(3) OFFERING OFFERING HOLDINGS
----------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Revenues........................... $ 43,713 $ $ $161,469
Cost and expenses:
Cost of cellular service/ operating
expenses......................... 5,978 24,884
Cost of equipment.................. 5,259 18,269
Selling, general and
administrative................... 12,805 50,423
Depreciation and amortization...... 11,055 42,962
----------- ---------- ---------- ---------
Operating income (loss)............ 8,616 24,931
Other income (expense):
Interest income (expense) (net).... (22,198) (12,341)(f) (10,804)(h) (93,517)
Other, net......................... 15 -- 222
----------- ---------- ---------- ---------
Total other income (expense)....... (22,183) (12,341) (10,804) (93,295)
Minority interest share of
income........................... (414) -- (1,724)
----------- ---------- ---------- ---------
Income (loss) before income tax
expense.......................... (13,981) (12,341) (10,804) (70,088)
Income tax expense (benefit)(4).... (5,129) (4,653)(g) (4,073)(i) (26,078)
----------- ---------- ---------- ---------
Net income (loss).................. $ (8,852) $ (7,688) $ (6,731) $(44,010)
----------- ---------- ---------- ---------
----------- ---------- ---------- ---------
Deficiency of earnings to fixed
charges.......................... $(44,010)
---------
---------
</TABLE>
- ------------------------
(1) Includes the results and operations of Palmer for the nine months ended
September 30, 1997. The Company purchased Palmer on October 6, 1997.
(2) Represents the elimination of the operating results of the Fort Myers and
Georgia-1 operations for the nine months ended September 30, 1997. These
operations were sold in the fourth quarter of 1997. The amounts are net of
the operating results for one month of the GA-13 RSA operations acquired by
Palmer on January 31, 1997.
(3) Include the results of operations after the Acquisition (the period October
1, 1997 through December 31, 1997).
(4) Calculated using an effective tax rate of approximately 38%.
28
<PAGE>
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENT PRO FORMA
FOR THE ADJUSTMENT
PCW FOR THE PRO FORMA
PCC OFFERING OFFERING PCC
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues................................................. $ 43,275 $ $ $ 43,275
Cost and expenses:
Cost of cellular service/operating expenses.............. 6,751 6,751
Cost of equipment........................................ 5,496 5,496
Selling, general and administrative...................... 12,341 12,341
Depreciation and amortization............................ 12,017 12,017
---------- ----------- ----------- -----------
Operating income (loss).................................. 6,670 6,670
Other income (expense):
Interest expense (net)................................... (17,254) (2,331)(f) (2,614)(h) (22,199)
Other, net............................................... 183 -- 183
---------- ----------- ----------- -----------
Total other income (expense)............................. (17,071) (2,331) (2,614) (22,016)
Minority interest share of income........................ (460) -- (460)
---------- ----------- ----------- -----------
Income (loss) before income tax expense.................. (10,861) (2,331) (2,614) (15,806)
Income tax expense (benefit)............................. (4,016) (856)(g) (986)(i) (5,858)
---------- ----------- ----------- -----------
Net income (loss)........................................ $ (6,845) $ (1,475) $ (1,628) $ (9,948)
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
Deficiency of earnings to fixed charges.................. $ (9,948)
-----------
-----------
</TABLE>
29
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENT PRO FORMA
FOR THE ADJUSTMENT
PCW FOR THE PRO FORMA
HOLDINGS OFFERING OFFERING HOLDINGS
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues................................................... $ 43,275 $ $ $ 43,275
Cost and expenses:
Cost of cellular service/operating expenses................ 6,751 6,751
Cost of equipment.......................................... 5,496 5,496
Selling, general and administrative........................ 11,717 11,717
Depreciation and amortization.............................. 11,928 11,928
----------- ----------- ----------- ----------
Operating income (loss).................................... 7,383 7,383
Other income (expense):
Interest expense (net)..................................... (17,285) (2,331)(f) (2,614)(h) (22,230)
Other, net................................................. (37) -- (37)
----------- ----------- ----------- ----------
Total other income (expense)............................... (17,322) (2,331) (2,614) (22,267)
Minority interest share of income.......................... (460) -- (460)
----------- ----------- ----------- ----------
Income (loss) before income tax expense.................... (10,399) (2,331) (2,614) (15,344)
Income tax expense (benefit)............................... (3,828) (856)(g) (986)(i) (5,670)
----------- ----------- ----------- ----------
Net income (loss).......................................... $ (6,571) $ (1,475) $ (1,628) $ (9,674)
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
Deficiency of earnings to fixed charges.................... $ (9,674)
----------
----------
</TABLE>
30
<PAGE>
PRICE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
For purposes of determining the pro forma effect of the transactions
described above on the condensed consolidated statements of operations of PCC
and Holdings for the three months ended March 31, 1998 and the year ended
December 31, 1997, the following adjustments have been made:
<TABLE>
<CAPTION>
FOR THE
PERIOD
ENDED FOR THE YEAR
MARCH 31, ENDED
1998 DECEMBER 31, 1997
------------- -----------------
<S> <C> <C> <C>
(a) SELLING, GENERAL AND ADMINISTRATIVE
Represents a portion of the operating expenses charged to Fort Myers and
Georgia-1 operations by Palmer which might not be eliminated upon the
Fort Myers Sale and the Georgia-1 Sale................................. $ -- $ 2,440
------------- --------
------------- --------
(b) INCOME TAX BENEFIT
Represents the tax impact of the adjustment to selling general and
administrative expenses indicated above $ -- $ (988)
------------- --------
------------- --------
(c) DEPRECIATION AND AMORTIZATION
Represents the excess of the purchase price over the historical cost of
the assets acquired allocated to FCC licenses and amortized over 40
years for nine months.................................................. $ -- $ 8,930
------------- --------
------------- --------
(d) INTEREST EXPENSE, NET
Interest expense on $425 million of Indebtedness under the Credit
Facility at an assumed interest rate of 8 1/2% per annum............... $ -- $ 36,125
Interest expense on $175 million of the 11 3/4% PCW Notes at an interest
rate of 11 3/4% per annum.............................................. -- 20,563
Interest expense on $80 million of the 13 1/2% Holdings Notes at an
interest rate of 13 1/2%............................................... -- 10,617
Interest expense related to the accretion of 13 1/2% Holdings Notes due
to Warrant value*...................................................... -- 579
Represents current amortization expense related to deferred debt
financing costs........................................................ -- 2,156
Elimination of previously recorded interest expense for Palmer (9
months)................................................................ -- (24,467)
Elimination of previously recorded interest expense for the Company
(3 months)............................................................. (22,198)
------------- --------
$ -- $ 23,375
------------- --------
------------- --------
(e) INCOME TAX EXPENSE (BENEFIT)
To record deferred tax benefit resulting from the amortization of the
acquired FCC licenses and the additional benefit arising from the pro
forma adjustments...................................................... $ -- $ (11,958)
------------- --------
------------- --------
(f) INTEREST EXPENSE, NET
To record interest for the PCW Offering at an interest rate of 9 1/8%.... $ 11,977 $ 47,906
Less interest previously reflected as pro forma adjustment related to the
Credit Facility........................................................ (9,786) (36,125)
------------- --------
Net adjustment related to the PCW Offering............................... 2,191 11,781
To record additional amortization of deferred financing costs associated
with the PCW Offering.................................................. 140 560
------------- --------
$ 2,331 $ 12,341
------------- --------
------------- --------
(g) INCOME TAX EXPENSE (BENEFIT)
To record tax benefit arising from the pro forma adjustments regarding
the PCW Offering....................................................... $ (856) $ (4,653)
------------- --------
------------- --------
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
FOR THE
PERIOD
ENDED FOR THE YEAR
MARCH 31, ENDED
1998 DECEMBER 31, 1997
------------- -----------------
(h) INTEREST EXPENSE, NET
<S> <C> <C> <C>
To record interest for the Offering at an assumed interest rate of
11.0%**................................................................ $ 5,500 $ 22,000
Less interest previously reflected as a pro forma adjustment related to
the 13 1/2% Holdings Notes including interest attributable to the
Warrant value.......................................................... -- (11,196)
Interest included in actual results related to the 13 1/2% Holdings Notes
including interest attributable to the warrant value................... (2,886) --
------------- --------
2,614 10,804
Difference in amortization of deferred financing charges between actual
amount and pro forma amount is not significant......................... -- --
------------- --------
$ 2,614 $ 10,804
------------- --------
------------- --------
(i) INCOME TAX EXPENSE (BENEFIT)
To record tax benefit arising from the pro forma adjustments regarding
the Offering........................................................... $ (986) $ (4,073)
------------- --------
------------- --------
</TABLE>
- ------------------------
* Represents the accretion over 10 years of the 13 1/2% Holdings Notes
resulting from the allocation of proceeds of the Holdings Offering between
the 13 1/2% Holdings Notes and the Warrants.
** An 1/8% change in the interest rate will increase or decrease the interest
expense per annum on the Notes by $250.
32
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected financial data for the period May 29, 1997
(inception) through December 31, 1997 have been derived from the audited
consolidated financial statements of the Company and the selected consolidated
financial data for each of the four years ended December 31, 1996 and for the
nine months ended September 30, 1997 have been derived from the audited
consolidated financial statements of the Company's predecessor, Palmer. The
unaudited selected consolidated results of operations of Palmer and of the
Company for the three months ended March 31, 1997 and 1998, respectively, are
unaudited and not necessarily indicative of the Company's results of operations
for the full year. The unaudited condensed consolidated financial data reflects
all adjustments (consisting of normal, recurring adjustments) which are, in the
opinion of management, necessary for a fair summary of Palmer's or the Company's
financial position, results of operations and cash flows for and as of the end
of the periods presented.
The following data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Company's Consolidated Financial Statements and Notes thereto, included
elsewhere herein.
<TABLE>
<CAPTION>
COMPANY PALMER PALMER
----------- --------- COMPANY ----------------------------------------------
-------------
PERIOD FROM
(UNAUDITED)
----------------------
MAY 29, 1997
THREE MONTHS ENDED (INCEPTION) NINE
MARCH 31, THROUGH MONTHS ENDED YEAR ENDED DECEMBER 31,
---------------------- DECEMBER 31, SEPTEMBER 30, -------------------------------
1998 1997 1997(1) 1997(2) 1996 1995 1994
----------- --------- ------------- ------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PERCENTAGES AND SUBSCRIBER STATISTICS AND DATA)
INCOME STATEMENT DATA:
Revenue:
Service..................................... $ 40,684 $ 42,220 $ 41,365 $ 134,123 $ 151,119 $ 96,686 $ 61,021
Equipment sales and installation............ 2,591 2,463 2,348 7,613 8,624 8,220 7,958
----------- --------- ------------- ------------- --------- --------- ---------
Total revenue........................... 43,275 44,683 43,713 141,736 159,743 104,906 68,979
Engineering, technical and other direct
expenses.................................. 6,751 7,430 5,978 23,301 28,717 18,184 12,776
Cost of equipment........................... 5,496 5,807 5,259 16,112 17,944 14,146 11,546
Selling, general and administrative
expenses.................................. 11,717 13,360 12,805 41,014 46,892 30,990 19,757
Depreciation and amortization............... 11,928 8,281 11,055 25,498 25,013 15,004 9,817
----------- --------- ------------- ------------- --------- --------- ---------
Operating income............................ 7,383 9,805 8,616 35,811 41,177 26,582 15,083
Other income (expense):
Interest, net............................... (17,285) (7,872) (22,198) (24,467) (31,462) (21,213) (12,715)
Other, net.................................. (37) 71 15 208 (429) (687) (70)
----------- --------- ------------- ------------- --------- --------- ---------
Total other expense......................... (17,322) (7,801) 22,183 (24,259) (31,891) (21,900) (12,785)
Minority interest share of (income) loss.... (460) (331) (414) (1,310) (1,880) (1,078) (636)
Income tax expense (benefit)................ (3,828) 496 (5,129) 4,153 2,724 2,650 0
----------- --------- ------------- ------------- --------- --------- ---------
Net income (loss)........................... $ (6,571) $ 1,177 $ (8,852) $ 6,089 $ 4,682 $ 954 $ 1,662
----------- --------- ------------- ------------- --------- --------- ---------
----------- --------- ------------- ------------- --------- --------- ---------
OTHER DATA:
Capital expenditures........................ $ 704 $ 16,987 $ 14,449 $ 40,757 $ 41,445 $ 36,564 $ 22,541
EBITDA...................................... $ 19,311 $ 18,086 $ 19,671 $ 61,309 $ 66,190 $ 41,586 $ 24,900
EBITDA margin on service revenue............ 47.5% 42.8% 47.6% 45.7% 43.8% 43.0% 40.8%
Penetration(3).............................. 9.9% 7.94% 9.4% 8.60% 7.45% 6.51% 4.58%
Subscribers at end of period(4)............. 326,721 310,823 309,606 337,345 279,816 211,985 117,224
Cost to add a gross subscriber(5)........... $ 223 $ 234 $ 188 $ 231 $ 216 $ 183 $ 178
Cost to add a net subscriber(5)............. $ 440 $ 476 $ 370 $ 514 $ 407 $ 276 $ 247
Average monthly service revenue per
subscriber(6)............................. $ 43.18 $ 47.70 $ 47.47 $ 47.52 $ 52.20 $ 56.68 $ 60.02
Average monthly churn(7).................... 1.75% 1.87% 1.84% 1.89% 1.84% 1.55% 1.55%
Ratio of earnings to fixed charges(8)....... N/A 1.34x N/A 1.45x 1.28x 1.21x 1.17x
<CAPTION>
1993
---------
<S> <C>
INCOME STATEMENT DATA:
Revenue:
Service..................................... $ 35,173
Equipment sales and installation............ 6,285
---------
Total revenue........................... 41,458
Engineering, technical and other direct
expenses.................................. 7,343
Cost of equipment........................... 7,379
Selling, general and administrative
expenses.................................. 13,886
Depreciation and amortization............... 10,689
---------
Operating income............................ 2,161
Other income (expense):
Interest, net............................... (9,006)
Other, net.................................. (590)
---------
Total other expense......................... (9,596)
Minority interest share of (income) loss.... 83
Income tax expense (benefit)................ 0
---------
Net income (loss)........................... $ (7,352)
---------
---------
OTHER DATA:
Capital expenditures........................ $ 13,304
EBITDA...................................... $ 12,850
EBITDA margin on service revenue............ 36.5%
Penetration(3).............................. 3.48%
Subscribers at end of period(4)............. 65,761
Cost to add a gross subscriber(5)........... $
Cost to add a net subscriber(5)............. $ 203
Average monthly service revenue per
subscriber(6)............................. $ 62.69
Average monthly churn(7).................... 1.37%
Ratio of earnings to fixed charges(8)....... N/A
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
COMPANY PALMER PALMER
----------- --------- COMPANY ----------------------------------------------
-------------
PERIOD FROM
(UNAUDITED)
----------------------
MAY 29, 1997
THREE MONTHS ENDED (INCEPTION) NINE
MARCH 31, THROUGH MONTHS ENDED YEAR ENDED DECEMBER 31,
---------------------- DECEMBER 31, SEPTEMBER 30, -------------------------------
1998 1997 1997(1) 1997(2) 1996 1995 1994
----------- --------- ------------- ------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
BALANCE SHEET DATA:
Cash................................. $ 7,823 $ 2,091 $ 27,926 $ 3,581 $ 1,698 $ 3,436 $ 2,998
Working capital (deficit)............ (4,867) 2,282 3,080 7,011 296 (1,435) 2,490
Property, plant and equipment, net... 147,003 148,121 151,141 161,351 132,438 100,936 51,884
Licenses, other intangibles and other
assets, net........................ 930,822 411,314 937,986 406,828 387,067 332,850 199,265
Total assets......................... 1,112,785 589,566 1,144,479 599,815 549,942 462,871 273,020
Total debt........................... 600,900 378,698 613,000 378,000 343,662 350,441 245,609
Stockholder's equity................. 28,592 166,107 35,163 172,018 164,930 74,553 4,915
<CAPTION>
1993
---------
<S> <C>
BALANCE SHEET DATA:
Cash................................. $ 1,670
Working capital (deficit)............ 799
Property, plant and equipment, net... 23,918
Licenses, other intangibles and other
assets, net........................ 114,955
Total assets......................... 150,054
Total debt........................... 131,361
Stockholder's equity................. 3,244
</TABLE>
- ------------------------
(1) Includes results of operations for the period October 1, 1997 through
December 31, 1997.
(2) Includes revenue of $24,720, total expenses of $16,354 (including
depreciation and amortization of $2,581) and operating income of $8,366 for
the Fort Myers and Georgia-1 markets sold during 1997.
(3) Determined by dividing the aggregate number of subscribers by the estimated
population.
(4) Each billable telephone number in service represents one subscriber. The
number of subscribers in the historical operating data of Palmer includes
subscribers in the Fort Myers and Georgia-1 markets which were sold in
connection with the Acquisition.
(5) Determined for a period by dividing (i) all costs of sales and marketing,
including salaries, commissions and employee benefits and all expenses
incurred by sales and marketing personnel, agent commissions, credit
reference expenses, losses on cellular telephone sales, rental expenses
allocated to retail operations, net installation expenses and other
miscellaneous sales and marketing charges, by (ii) the gross or net
subscribers (as applicable) added during such period.
(6) Determined for a period by dividing (i) the sum of the access, airtime,
roaming, long distance, features, connection, disconnection and other
revenues for such period by (ii) the average number of subscribers for such
period, divided by the number of months in such period.
(7) Determined for a period by dividing total subscribers discontinuing service
by the average number of subscribers for such period and dividing that
result by the number of months in such period.
(8) The ratio of earnings to fixed charges is determined by dividing the sum of
earnings before extraordinary items and accounting changes, interest
expense, taxes and a portion of rent expense representative of interest by
the sum of interest expense and a portion of rent expense representative of
interest. The ratio of earnings to fixed charges is not meaningful for
periods that result in a deficit. For the period May 29, 1997 through
December 31, 1997 and the three months ended March 31, 1998, the deficit of
earnings to fixed charges was approximately $8,852 and $6,571, respectively.
34
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion is intended to facilitate an understanding and
assessment of significant changes and trends related to the financial condition
and results of operations of the Company. This discussion should be read in
conjunction with the Company's Consolidated Financial Statements and related
Notes thereto. References to the Company where appropriate also include PCW's
predecessor, Palmer.
Results for the Company for the years ended December 31, 1995 and December
31, 1996 are based solely on the historical operations of Palmer prior to the
Merger. The discussion for the year ended December 31, 1997 is based upon the
operating results of Palmer through September 30, 1997 and the operating results
of the Company from October 1, 1997 to December 31, 1997. The audited financial
statements of the Company do not include such combined financial statements as
this would not be in conformity with GAAP.
OVERVIEW
Holdings, a wholly-owned subsidiary of PCC, was incorporated on May 29, 1997
in connection with the purchase of Palmer.
On May 23, 1997, PCC, PCW and Palmer entered the Merger Agreement. The
Merger Agreement provided, among other things, for the merger of PCW with and
into Palmer with Palmer as the surviving corporation. In October, 1997, the
Merger was consummated and Palmer changed its name to "Price Communications
Wireless, Inc." Pursuant to the Merger Agreement, PCC acquired each issued and
outstanding share of common stock of Palmer for a purchase price of $17.50 per
share in cash and purchased outstanding options and rights under employee and
direct stock purchase plans for an aggregate price of $486.4 million. In
addition, as a result of the Merger, PCW assumed all outstanding indebtedness of
Palmer of approximately $378.0 million. As a result, the aggregate purchase
price for Palmer (including transaction fees and expenses) was approximately
$880.0 million. PCW refinanced all of the Palmer Existing Indebtedness
concurrently with the consummation of the Merger.
In October 1997, the Fort Myers Sale, which covered approximately 382,000
Pops for $168.0 million was consummated, and generated proceeds to the Company
of approximately $166.0 million. The proceeds of the Fort Myers Sale were used
to fund a portion of the acquisition of Palmer. Accordingly, no gain or loss was
recognized on the Fort Myers Sale.
On October 21, 1997, PCC and PCW entered the "Georgia Sale Agreement" which
provided for the sale by PCW, for $25.0 million, of substantially all of the
assets of the non-wireline cellular telephone system serving Georgia-1,
including the FCC licenses to operate Georgia-1. The sale of the assets of
Georgia-1 was consummated on December 30, 1997 for $24.2 million. A portion of
the proceeds from the Georgia Sale were used to retire a portion of the debt
used to fund the acquisition of Palmer. Accordingly, no gain or loss was
recognized on the Georgia-1 Sale.
In order to fund the Acquisition and pay related fees and expenses, in July
1997, PCW issued $175.0 million aggregate principal amount of the 11 3/4% PCW
Notes and entered into a syndicated senior loan facility providing for term loan
borrowings in the aggregate principal amount of $325.0 million and revolving
loan borrowings of $200.0 million. On October 6, 1997, PCW borrowed all term
loans available thereunder and approximately $120.0 million of revolving loans.
The Credit Facility was retired on June 16, 1998 with the net proceeds from the
PCW Offering.
The acquisition of Palmer was also funded in part through a $44.0 million
equity contribution from PCC which was in the form of cash and common stock of
Palmer. An additional amount of the purchase price for the Acquisition was
raised out of the proceeds from the issuance and sale for $80.0 million of units
consisting of $153.4 million principal amount at maturity of the 13 1/2%
Holdings Notes and Warrants.
35
<PAGE>
The Company intends to use a portion of the net proceeds of the Offering to
redeem the 13 1/2% Holding Notes. See "Use of Proceeds."
The Company is engaged in the construction, development, management and
operation of cellular telephone systems in the southeastern United States. As of
March 31, 1998, the Company provided cellular telephone service to 326,721
subscribers in Georgia, Alabama, Florida and South Carolina in a total of 16
licensed service areas, composed of eight MSA's and eight RSA's with an
aggregate estimated population of 3.3 million. The Company sells its cellular
telephone service as well as a full line of cellular products and accessories
principally through its network of retail stores. The Company markets all of its
products and services under the nationally-recognized service mark
CELLULARONE-Registered Trademark-.
MARKET OWNERSHIP
The following is a summary of the Company's ownership interest in the
cellular telephone system in each licensed service area to which the Company
provided service at March 31, 1998 and December 31, 1997.
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
CELLULAR SERVICE AREA 1998 1997
- ---------------------------------------------------------------------------------------- ----------- ---------------
<S> <C> <C>
Albany, GA.............................................................................. 86.5% 86.5%
Augusta, GA............................................................................. 100.0 100.0
Columbus, GA............................................................................ 85.2 85.2
Macon, GA............................................................................... 99.2 99.2
Savannah, GA............................................................................ 98.5 98.5
Georgia-1 RSA........................................................................... N/A 100.0
Georgia-6 RSA........................................................................... 96.3 96.3
Georgia-7 RSA........................................................................... 100.0 100.0
Georgia-8 RSA........................................................................... 100.0 100.0
Georgia-9 RSA........................................................................... 100.0 100.0
Georgia-10 RSA.......................................................................... 100.0 100.0
Georgia-12 RSA.......................................................................... 100.0 100.0
Georgia-13 RSA.......................................................................... 86.5 N/A
Alabama-8 RSA........................................................................... 100.0 100.0
Dothan, AL.............................................................................. 94.6 94.6
Montgomery, AL.......................................................................... 92.8 92.8
Fort Myers, FL.......................................................................... N/A 99.0
Panama City, FL......................................................................... 78.4 77.9
</TABLE>
On February 1, 1997, one of the Company's majority-owned subsidiaries
acquired the assets of and the license to operate the non-wireline cellular
telephone system serving Georgia RSA Market No. 383, otherwise known as
Georgia-13 RSA, for a total purchase price of $31.5 million, subject to certain
adjustments.
On October 6, 1997, as part of the Acquisition of Palmer by the Company, the
Fort Myers MSA was sold for approximately $168.0 million.
On December 30, 1997, the Company sold the assets of and license to operate
the non-wireline cellular telephone system serving Georgia RSA Market No. 371,
otherwise known as Georgia-1 RSA for a total price of $24.2 million, subject to
certain adjustments.
36
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth for the Company, for the periods indicated,
the percentage which certain amounts bear to total revenue.
<TABLE>
<CAPTION>
COMPANY PALMER PALMER
----------- ----------- COMPANY -------------------------------------
---------------
MAY 29, 1997
THREE MONTHS ENDED
(INCEPTION) NINE MONTHS YEAR ENDED
MARCH 31, THROUGH ENDED DECEMBER 31,
------------------------ DECEMBER 31, SEPTEMBER 30, --------------------
1998 1997 1997 1997 1996 1995
----------- ----------- --------------- --------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
REVENUE:
Service................................... 94.0% 94.5% 94.6% 94.6% 94.6% 92.2%
Equipment sales and installation.......... 6.0 5.5 5.4 5.4 5.4 7.8
----------- ----- ----- ----- --------- ---------
Total Revenue........................... 100.0 100.0 100.0 100.0 100.0 100.0
OPERATING EXPENSES:
Engineering, technical and other direct:
Engineering and technical(1).............. 8.4 7.9 7.2 8.0 7.9 7.6
Other direct costs of services(2)......... 7.2 8.7 6.5 8.4 10.1 9.7
Cost of equipment(3)...................... 12.7 13.0 12.0 11.4 11.2 13.5
SELLING, GENERAL AND ADMINISTRATIVE:
Selling and marketing(4).................. 9.8 8.6 8.9 8.4 8.6 8.7
Customer service(5)....................... 6.7 6.7 6.2 6.3 5.9 6.0
General and administrative(6)............. 10.6 14.6 14.2 14.2 14.9 14.9
Depreciation and amortization............. 27.5 18.5 25.3 18.0 15.7 14.3
----------- ----- ----- ----- --------- ---------
Total Operating Expenses:................. 82.9 78.0 80.3 74.7 74.3 74.7
----------- ----- ----- ----- --------- ---------
Operating income............................ 17.1% 22.0% 19.7% 25.3% 25.7% 25.3%
----------- ----- ----- ----- --------- ---------
EBITDA...................................... 44.6% 40.5% 45.0% 43.3% 41.4% 39.6%
</TABLE>
- ------------------------
(1) Consists of costs of cellular telephone network, including inter-trunk
costs, span-line costs, cell site repairs and maintenance, cell site
utilities, cell site rent, engineers' salaries and benefits and other
operational costs.
(2) Consists of net costs of subscriber roaming, costs of long distance, costs
of interconnection with wireline telephone companies and other costs of
services.
(3) Consists primarily of the costs of the cellular telephones and accessories
sold.
(4) Consists primarily of salaries and benefits of sales and marketing
personnel, employee and agent commissions, and advertising and promotional
expenses.
(5) Consists primarily of salaries and benefits of customer service personnel
and costs of printing and mailing billings generated in-house.
(6) Includes salaries and benefits of general and administrative personnel and
other overhead expenses.
QUARTER ENDED MARCH 31, 1998 COMPARED TO QUARTER ENDED MARCH 31, 1997
REVENUE. Service revenues totaled $40.7 million for the first quarter of
1998, a decrease of 3.6% from $42.2 million for the first quarter of 1997. The
decrease is primarily attributable to service revenues of the cellular telephone
systems sold in the Fort Myers Sale and the Georgia Sale which totaled $7.4
million in the first quarter of 1997. This was partially offset by an increase
in the average number of subscribers to
37
<PAGE>
314,068 in the first quarter 1998 from 295,320 in 1997. The average number of
subscribers attributable to the Fort Myers Sale and Georgia Sale was 37,362 in
the first quarter of 1997.
Average monthly revenue per subscriber decreased 9.5% to $43.18 for the
first quarter of 1998 from $47.70 for the first quarter of 1997. This is in part
due to the trend, common in the cellular telephone industry, where, on average,
new subscribers are using less airtime than existing subscribers. Therefore,
service revenues generally do not increase proportionately with the increase in
subscribers. In addition, the decline reflects more competitive rate plans
introduced into the Company's markets.
Equipment sales and installation revenue, which consists primarily of
cellular subscriber equipment sales, increased by 5.2% to $2.6 million for the
first quarter of 1998 compared to $2.5 million for the first quarter of 1997.
The increase is partially due to a 3.3% increase in gross subscriber activations
in the first quarter of 1998 compared to 1997. As a percentage of revenue,
equipment sales and installation revenue increased to 6.0% in the first quarter
of 1998 from 5.5% in the first quarter of 1997.
OPERATING EXPENSES. Engineering and technical expenses increased by 3.0% to
$3.6 million for the first quarter of 1998 from $3.5 million in the first
quarter of 1997, due primarily to the increase in subscribers. As a percentage
of revenue, engineering and technical expenses increased to 8.4% for the first
quarter of 1998 from 7.9% for the first quarter of 1997 primarily because
centralized engineering is being spread over a smaller number of markets than
last year, a result of the Fort Myers Sale and Georgia Sale. Engineering and
technical expenses attributable to the cellular telephone systems sold in the
Fort Myers Sale and Georgia Sale totaled $0.4 million for the first quarter of
1997.
Other direct costs of service decreased to $3.1 million for the first
quarter of 1998 from $3.9 million for the first quarter of 1997 reflecting the
decrease in interconnection costs as a result of the Company's renegotiation of
interconnection agreements with the local exchange carriers ("LECs") in most of
the Company's markets. As a percentage of revenue, these costs of service
declined to 7.2% from 8.7%, reflecting improved interconnection agreements with
LECs, as well as efficiencies gained from the growing subscriber base. Other
direct costs of service attributable to the cellular telephone systems sold in
the Fort Myers Sale and Georgia Sale totaled $1.2 million for the first quarter
of 1997.
The cost of equipment decreased 5.4% to $5.5 million for the first quarter
of 1998 from $5.8 million for the first quarter of 1997, due primarily to
reductions of equipment costs by manufacturers. Equipment sales resulted in
losses of $2.9 million in 1998 versus $3.3 million in 1997 primarily as a result
of reduced equipment costs and slightly better retail margins. The Company sells
equipment below its costs in an effort to address market competition and improve
market share. Cost of equipment attributable to the cellular telephone systems
sold in the Fort Myers Sale and Georgia Sale totaled $0.9 million for the first
quarter of 1997.
Selling, general and administrative expenses decreased 12.3% to $11.7
million in the first quarter of 1998 from $13.4 million in the first quarter of
1997. These expenses are comprised of (i) sales and marketing costs, (ii)
customer service costs and (iii) general and administrative expenses.
Sales and marketing costs increased 10.5% to $4.2 million for the first
quarter of 1998 from $3.8 million for the same period in 1997. This increase is
primarily due to the 3.3% increase in gross subscriber activations and the costs
to acquire them, including advertising and commissions. As a percentage of total
revenue, sales and marketing costs increased to 9.8% for the first quarter of
1998 compared to 8.6% for the first quarter of 1997. The Company's cost to add a
gross subscriber, including loss on telephone sales, decreased to $223 for the
first quarter of 1998 from $235 for the first quarter of 1997. This decrease in
cost to add a net subscriber was caused primarily by decreased losses from the
Company's sales of cellular telephones. Sales and marketing expenses
attributable to the cellular telephone systems sold in the Fort Myers Sale and
Georgia Sale totaled $0.4 million for the first quarter of 1997.
Customer service costs decreased 3.3% to $2.9 million for the first quarter
of 1998 from $3.0 million for the first quarter of 1997. As a percentage of
revenue, customer service costs remained flat at 6.7% for
38
<PAGE>
the first quarter of both 1998 and 1997. Customer service expenses attributable
to the cellular telephone systems sold in the Fort Myers Sale and Georgia Sale
totaled $0.3 million for the first quarter of 1997.
General and administrative expenditures decreased 29.2% to $4.6 million for
the first quarter of 1998 from $6.5 million for the first quarter of 1997, due
primarily to expense savings and reorganization efforts. General and
administrative expenses decreased as a percentage of revenue to 10.6% in the
first quarter of 1998 from 14.6% in the first quarter of 1997. As the Company
continues to add more subscribers, and generates associated revenue, general and
administrative expenses should decrease as a percentage of total revenues. There
can be no assurance, however, that this forward-looking statement will not
differ materially from actual results due to unforeseen general and
administrative expenses and other factors. General and administrative expenses
attributable to the cellular telephone systems sold in the Fort Myers Sale and
Georgia Sale totaled $0.6 million for the first quarter of 1997.
Depreciation and amortization increased 44.0% to $11.9 million for the first
quarter of 1998 from $8.3 million for the first quarter of 1997. This increase
was primarily due to the depreciation and amortization associated with the new
carrying value of assets as a result of the "push down" of the purchase price of
the Acquisition to the Company. As a percentage of revenue, depreciation and
amortization increased to 27.6% for the first quarter of 1998 compared to 18.5%
for the first quarter of 1997. Depreciation and amortization attributable to the
cellular telephone systems sold in the Fort Myers Sale and Georgia Sale totaled
$0.7 million for the first quarter of 1997.
Operating income decreased 24.7% to $7.4 million in the first quarter of
1998, from $9.8 million for the first quarter of 1997. This decrease in
operating results is attributable primarily to the increase in depreciation and
amortization expense.
NET INTEREST EXPENSE, INCOME TAXES AND NET INCOME. Net interest expense
increased 119.6% to $17.3 million for the first quarter of 1998 from $7.9
million in the first quarter of 1997 primarily due to rate increases and
additional borrowings incurred as a result of the Acquisition.
Income tax benefit was $3.8 million in the first quarter of 1998
representing utilization of the net operating losses carried back against
previous earnings. Income tax expense was $0.5 million in the first quarter of
1997 based on earnings.
Net loss for the first quarter of 1998 was $6.6 million compared to net
income of $1.2 million for the first quarter of 1997. The decrease in net income
is primarily attributable to increases in interest expense and depreciation and
amortization partially offset by the income tax benefit.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
REVENUE. Service revenues totaled $175.5 million for 1997, an increase of
16.1% over $151.1 million for 1996. This increase was due to a 29.8% increase in
the average number of subscribers to 313,042 for 1997 versus 241,255 for 1996.
The increase in subscribers is the result of internal growth, which the Company
attributes primarily to its strong sales and marketing efforts, and the recent
acquisitions. In addition to the subscriber base growth, service revenues also
increased because of a 35.3% increase in outcollect roaming revenues.
Average monthly revenue per subscriber decreased 10.5% to $46.72 for 1997
from $52.20 for 1996. This is due to a common trend in the cellular telephone
industry, where on average, new customers use less airtime than existing
subscribers. Therefore, service revenues generally do not increase
proportionately with the increase in subscribers. In addition, the decline
reflects more competitive rate plans introduced into the Company's markets.
Equipment sales and installation revenue, which consists primarily of
cellular subscriber equipment sales, increased to $10.0 million for 1997 from
$8.6 million for 1996. As a percentage of total cellular
39
<PAGE>
revenue, equipment sales and installation revenue remained flat at 5.4% for both
1997 and 1996, reflecting the increased recurring revenue base as well as lower
cellular equipment prices charged to customers.
OPERATING EXPENSES. Engineering and technical expenses increased by 16.0%
to $14.6 million for 1997 from $12.6 million in 1996, due primarily to the
increase in subscribers and in cell site locations. As a percentage of revenue,
engineering and technical expenses remained flat at 7.9% for both 1997 and 1996.
This reflects the increased fixed costs associated with additional cell sites
constructed. As revenue grows the Company expects engineering and technical
expenses to decrease as a percentage of revenue due to its large component of
fixed costs. There can be no assurance, however, that this forward-looking
statement will not differ materially from actual results due to unforeseen
engineering and technical expenses.
Other direct costs of services declined to $14.7 million for 1997 from $16.1
million in 1996. As a percentage of revenue, other direct costs of service
decreased to 7.9% in 1997 from 10.1% in 1996, reflecting the decrease in
interconnection costs as a result of the Company's renegotiation of
interconnection agreements with the LECs in most of the Company's markets,
offset somewhat by more competitive roaming rates for Company's customer roaming
in adjacent areas.
The cost of equipment increased 19.1% to $21.4 million for 1997 from $17.9
million for 1996, due primarily to the increase in gross subscriber activations.
Equipment sales resulted in losses of $11.4 million in 1997 versus $9.3 million
in 1996. The Company sells equipment below its costs in an effort to address
market competition and improve market share. The Company sold more telephones
below cost in 1997 than in 1996.
Selling, general and administrative expenses increased 14.8% to $53.8
million in 1997 from $46.9 million in 1996. These expenses are comprised of (i)
sales and marketing costs, (ii) customer service costs and (iii) general and
administrative expenses.
Sales and marketing costs increased 15.5% to $15.8 million for 1997 from
$13.7 million for 1996. This increase is primarily due to a 13.5% increase in
gross subscriber activations and the costs to acquire them and higher
advertising costs in response to market competition. As a percentage of total
revenue, sales and marketing costs decreased to 8.5% for 1997 compared to 8.6%
for 1996. The Company's cost to add a net subscriber, including loss on
telephone sales, increased to $469 for 1997 from $407 for 1996 due primarily to
increased losses from the Company's sales of cellular telephones and an increase
in commissions
Customer service costs increased 23.6% to $11.7 million for 1997 from $9.4
million for 1996. As a percentage of revenue, customer service costs increased
to 6.3% for 1997 from 5.9% for 1996. The increase was due primarily to an
increase in license and maintenance costs for the Company's billing systems.
General and administrative expenditures increased 10.8% to $26.3 million for
1997 from $23.8 million for 1996. General and administrative expenses decreased
as a percentage of total revenue to 14.2% in 1997 from 14.9% in 1996. As the
Company continues to add more subscribers, and generates associated revenue,
general and administrative expenses should continue to decrease as a percentage
of total revenues. There can be no assurance, however, that this forward-looking
statement will not differ materially from actual results due to unforeseen
general and administrative expenses and other factors.
Depreciation and amortization increased 46.1% to $36.6 million for 1997 from
$25.0 million for 1996. This increase was primarily due to the depreciation and
amortization associated with the new carrying value of assets as a result of the
"push down" of the purchase price of the Acquisition to the Company, recent
acquisitions and additional capital expenditures. As a percentage of revenue,
depreciation and amortization increased to 19.7% from 15.7% for 1997 compared to
1996.
Operating income increased 7.9% to $44.4 million in 1997, from $41.2 million
for 1996. This improvement in operating results is attributable primarily to
increases in revenue which exceeded increases in operating expenses.
40
<PAGE>
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
REVENUE. Service revenues totaled $151.1 million for 1996, an increase of
$54.4 million or 56.3% over $96.7 million for 1995. This increase was primarily
due to a 69.7% increase in the average number of subscribers to 241,255 in 1996
from 142,147 in 1995. The increase in subscribers is the result of internal
growth, which the Company attributes primarily to its strong sales and marketing
efforts, and recent acquisitions. The GTE Acquisition accounted for 41,163
subscribers at December 31, 1996. Service revenue attributable to the cellular
telephone systems acquired in the GTE Acquisition totaled $24.6 million for 1996
as compared to $2.0 million for the one month ended December 31, 1995.
Average monthly revenue per subscriber decreased to $52.20 for 1996 from
$56.68 for 1995. This decrease occurred because, on average, new subscribers use
less airtime and generate less revenue per subscriber than existing subscribers
as is customary in the cellular telephone industry. Therefore, airtime usage and
service revenue did not increase in proportion to the increase in subscribers.
In addition, the Company entered into revised roaming agreements with certain of
its neighboring carriers. These agreements provide for reciprocal lower roaming
rates per minute of use, resulting in lower roaming revenue for the Company, but
offset by lower direct costs of services when the Company's subscribers were
roaming on these neighboring systems.
Equipment sales and installation revenue, which consists primarily of
cellular subscriber equipment sales, increased to $8.6 million for 1996 from
$8.2 million for 1995, a 4.9% increase, primarily due to the increase in gross
subscriber activations, partially offset by lower cellular phone prices. While
equipment sales and installation revenue increased slightly for 1996 from 1995,
it decreased as a percentage of total cellular revenue to 5.4% for 1996 from
7.8% for 1995, reflecting the increased recurring annual revenue base as well as
lower cellular equipment prices charged to customers. Equipment sales and
installation revenue attributable to the cellular telephone systems acquired in
the GTE Acquisition totaled $1.0 million for 1996 as compared to $0.1 million
for the one month ended December 31. 1995.
OPERATING EXPENSES. Engineering and technical expenses increased by 57.5%
to $12.6 million for 1996 from $8.0 million for 1995, due primarily to the 32.0%
increase in the number of subscribers. As a percentage of revenue, engineering
and technical expenses increased to 7.9% in 1996 from 7.6% for 1995 due to
additional costs incurred for the recent acquisitions and recurring costs
associated with the Company's system development and expansion. Such development
is done for the purpose of increasing capacity and improving coverage.
Engineering and technical expenses attributable to the cellular telephone
systems acquired in the GTE Acquisition totaled $2.8 million for 1996 as
compared to $0.2 million for the one month ended December 31, 1995.
Other direct costs of services increased 58.3% to $16.1 million for 1996
from $10.2 million for 1995. As a percentage of revenue, other direct costs of
services increased to 10.1% for 1996 from 9.7% for 1995. This increase in other
direct costs of services as a percentage of revenue was due primarily to the
Company subsidizing more roaming costs for competitive reasons. Other direct
costs of service attributable to the cellular telephone systems acquired in the
GTE Acquisition totaled $1.6 million for 1996 as compared to $0.2 million for
the one month ended December 31, 1995.
Cost of equipment increased 26.8% to $17.9 million for 1996 from $14.1
million for 1995, due primarily to the increase in gross subscriber activations
for the same period. Equipment sales resulted in losses of $9.3 million in 1996
versus $5.9 million in 1995. The Company sells equipment below its costs in an
effort to address market competition and improve market share. The Company sold
more telephones below cost in 1996 than in 1995. The cost of equipment
attributable to the cellular telephone systems acquired in the GTE Acquisition
totaled $3.1 million for 1996 as compared to $0.2 million for the one month
ended December 31, 1995.
41
<PAGE>
Selling, general and administrative expenses increased 51.3% to $46.9
million in 1996 from $31.0 million in 1995. These expenses are comprised of (i)
sales and marketing costs, (ii) customer service costs and (iii) general and
administrative expenses.
Sales and marketing costs increased 50.2% to $13.7 million for 1996 from
$9.1 million for 1995. This increase is primarily due to the 28.1% increase in
gross subscriber activations and the resulting increase in costs to acquire
them. As a percentage of total revenue, sales and marketing costs remained
relatively flat at 8.6% for 1996 and 8.7% for 1995. The Company's cost to add a
net subscriber, including losses on telephone sales, increased to $407 in 1996
from $276 in 1995. This increase in cost to add a net subscriber was caused
primarily by additional advertising and fixed marketing overhead associated with
the systems acquired in the GTE Acquisition, which are not yet generating the
offsetting gains in net subscribers. In addition, there were increased losses
from the Company's sales of cellular telephones. Sales and marketing costs
attributable to the cellular telephone systems acquired in the GTE Acquisition
totaled $2.8 million in 1996 as compared to $0.2 million for the one month ended
December 31, 1995.
Customer service costs increased 49.9% to $9.4 million for 1996 from $6.3
million for 1995. As a percentage of revenue, customer service costs remained
relatively flat at 5.9% and 6.0% for 1996 and 1995, respectively. Customer
service costs attributable to the cellular telephone systems acquired in the GTE
Acquisition totaled $1.9 million in 1996 as compared to $0.2 million in for the
one month ended December 31, 1995.
General and administrative expenses increased 52.5% to $23.8 million for
1996 from $15.6 million for 1995 and remained flat as a percentage of revenue at
14.9% for 1996 and 1995. As the Company continues to add more subscribers and
generate associated revenue, general and administrative expenses should decrease
as a percentage of total revenues. There can be no assurance, however, that this
forward-looking statement will not differ materially from actual results due to
unforeseen general and administrative expenses and other factors. The general
and administrative costs attributable to the cellular telephone systems acquired
in the GTE Acquisition totaled $3.4 million for 1996 as compared to $0.4 million
for the one month ended December 31, 1995.
Depreciation and amortization increased 66.7% to $25.0 million for 1996 from
$15.0 million for 1995. This increase is primarily due to the depreciation and
amortization associated with recent acquisitions and additional capital
expenditures. Depreciation and amortization attributable to the cellular
telephone systems acquired in the GTE Acquisition totaled $6.2 million for 1996
as compared to $0.5 million for the one month ended December 31, 1995.
Operating income for 1996 increased 54.9% to $41.2 million, an increase of
$14.6 million over operating income for 1995. This improvement in operating
results is attributable primarily to increases in revenue which exceeded
increases in operating expenses. Operating income attributable to the cellular
telephone systems acquired in the GTE Acquisition totaled $3.8 million for 1996
as compared to $0.2 million for the one month ended December 31, 1995.
NET INTEREST EXPENSE, INCOME TAXES, AND NET INCOME
Net interest expense increased 48.3% to $46.7 million for 1997 from $31.5
million for 1996 primarily due to rate increases and additional borrowings
incurred as a result of the recent Merger. For 1996, net interest expense
increased 48.3% to $31.5 million from $21.2 million for 1995 due primarily to
debt incurred for acquisitions and amortization of deferred financing fees
related to the Predecessor credit agreement.
Income tax benefit was $976,000 in 1997 compared to income tax expense of
$2.7 million in 1996 and 1995. The $2.7 million income tax expense in 1995 was a
non-recurring deferred income tax charge related to the difference between the
financial statement and income tax return based on certain assets and
liabilities of Palmer Cellular Partnership. See Note 6 to the Company's
Consolidated Financial Statements.
42
<PAGE>
Net loss for 1997 was $2.8 million compared to net income in 1996 of $4.7
million. The loss was due to increased interest and amortization incurred as a
result of the Merger. Net income for 1996 was $4.7 million, compared to net
income of $1.0 million for 1995. The increase in net income is primarily
attributable to increases in revenue which exceeded increases in operating
expenses.
LIQUIDITY AND CAPITAL RESOURCES
The Company's long-term capital requirements consist of funds for capital
expenditures, acquisitions and debt service. Historically, the Company has met
its capital requirements primarily through equity contributions, bank debt, and,
to a lesser extent, operating cash flow.
In the year ended December 31, 1997 the Company spent approximately $55.3
million on capital expenditures of which $3.5 million related to properties
which were sold and approximately $6 million in capital expenditures related to
purchases of equipment for cell sites to be completed in 1998. The Company
expects to spend approximately $16 million and $18 million for capital
expenditures for the years ended December 31, 1998 and 1999, respectively. The
Company expects to use net cash provided by operating activities to fund such
capital expenditures.
PCW used the net proceeds of the PCW Offering to retire outstanding
indebtedness under the Credit Facility, including accrued interest. As a result,
the Company has no ability to borrow funds under the Credit Facility. The
Company currently does not intend to enter into a new credit facility.
In July 1997, PCW issued $175 million of the 11 3/4% PCW Notes with interest
payable semi-annually commencing January 15, 1998. The 11 3/4% PCW Notes contain
covenants that restrict the payment of dividends, incurrence of debt and sale of
assets. See "Description of the 11 3/4% PCW Notes."
In August 1997 Holdings issued 153,400 units, consisting of Notes and
Warrants, in exchange for $80 million. The 13 1/2% Holdings Notes accrete at a
rate of 13.5% compounded semi-annually, to an aggregate principal amount of
approximately $153.4 million by August 1, 2002. Cash interest will not commence
to accrue on the 13 1/2% Holdings Notes prior to August 2, 2002. Commencing on
February 1, 2003, cash interest on the 13 1/2% Holdings Notes will be payable at
a rate of 13.5% per annum, payable semi-annually. The 13 1/2% Holdings Notes are
redeemable at the option of Holdings, in whole or in part, at any time after
August 1, 1998 in cash at the redemption price as defined, plus accrued and
unpaid interest, if any, thereon to the redemption date; provided that the
trading price of the PCC Shares shall equal or exceed certain levels. The
13 1/2% Holdings Notes mature on August 1, 2007 and contain covenants that
restrict payment of dividends, incurrence of debt and sale of assets. The
Company intends to use a portion of the net proceeds of the Offering to redeem
the 13 1/2% Holdings Notes. See "Use of Proceeds" and "Description of 13 1/2%
Holdings Notes."
In June 1998, PCW issued $525 million aggregate principal amount of the PCW
Secured Notes with interest payable semi-annually on June 15 and December 15 of
each year. The PCW Secured Notes contain certain covenants that restrict the
payment of dividends, incurrence of debt and sale of assets. See "Description of
the PCW Secured Notes."
On a pro forma basis, after giving effect to the Offering and PCW Offering,
in each case, including the application of the net proceeds therefrom, and the
Acquisition and related financing, the Company's ratio of EBITDA to cash
interest expense (excluding non-cash interest related to the the Notes and
amortization of deferred debt financing costs) would have been 1.00 to 1.00 for
the year ended December 31, 1997 and 1.14 to 1.00 for the three months ended
March 31, 1998.
ACCOUNTING POLICIES
For financial reporting purposes, the Company reports 100% of revenues and
expenses for the markets for which it provides cellular telephone service.
However, in several of its markets, the Company holds less than 100% of the
equity ownership. The minority stockholders' and partners' share of income or
43
<PAGE>
losses in those markets are reflected in the consolidated financial statements
as "minority interest share of (income) loss", except for losses in excess of
their capital accounts and cash call provisions which are not eliminated in
consolidation. For financial reporting purposes, the Company consolidates each
subsidiary and partnership in which it has a controlling interest (greater than
50%). From 1992 through March 31, 1998, the Company had controlling interests in
each of its subsidiaries and partnerships.
YEAR 2000 IMPACT
The Company has studied the impact of the year 2000 on its operational and
financial systems, and has developed estimates of costs of implementing changes
or upgrades where necessary. Preliminary estimates indicate that these costs
will be less than $2 million. However, the Company is unable to predict all of
the implications of the year 2000 issue as it relates to its suppliers and other
entities. It is anticipated that a substantial portion of the costs will be
incurred in the next two years and will be expensed as incurred.
INFLATION
The Company believes that inflation affects its business no more than it
generally affects other similar businesses.
44
<PAGE>
BUSINESS OF THE COMPANY
GENERAL
The Company is currently engaged in the construction, development,
management and operation of cellular telephone systems in the southeastern
United States. At March 31, 1998, the Company provided cellular telephone
service to 326,721 subscribers in Georgia, Alabama, Florida and South Carolina
in a total of 16 licensed service areas composed of eight MSAs and eight RSAs,
with an aggregate estimated population of 3.3 million. The Company sells its
cellular telephone service as well as a full line of cellular products and
accessories, including pagers, principally through its network of retail stores.
The Company markets all of its products and services under the nationally
recognized service mark CELLULARONE-Registered Trademark-.
The Company has developed its business through the acquisition and
integration of cellular telephone systems, clustering multiple systems in order
to provide broad areas of uninterrupted service and achieve certain economies of
scale, including centralized marketing and administrative functions as well as
multi-system capital expenditures. The Company devotes considerable attention to
engineering, maintenance and improvement of its cellular telephone systems in an
effort to deliver high-quality service to its subscribers and to implement new
technologies as soon as economically practicable. Through its participation in
the NACN, the Company is able to offer ten-digit dialing access to its
subscribers when they travel outside the Company's service areas, providing them
with convenient roaming access throughout large areas of the United States,
Canada, Mexico and Puerto Rico served by other NACN participants. By marketing
its products and services under the CELLULARONE-Registered Trademark- name, the
Company also enjoys the benefits of association with a nationally recognized
service mark.
MARKETS AND SYSTEMS
The Company's cellular telephone systems serve contiguous licensed service
areas in Georgia, Alabama and South Carolina. The Company also has a cellular
service area in Panama City, Florida. The following table sets forth as of March
31, 1998, with respect to each service area in which the Company owns a cellular
telephone system, the estimated population, the Company's beneficial ownership
percentage, the Net Pops and the date of initial operation of such system by
Palmer or a predecessor operator.
<TABLE>
<CAPTION>
ESTIMATED OWNERSHIP DATE SYSTEM
CELLULAR SERVICE AREA (1) POPULATION (2) PERCENTAGE NET POPS OPERATIONAL
- ------------------------------------------------ ----------------- --------------- ---------- -----------------
<S> <C> <C> <C> <C>
Albany, GA...................................... 118,527 86.5% 102,526 4/88
Augusta, GA..................................... 439,116 100.0 439,116 4/87
Columbus, GA.................................... 254,150 85.2 216,518 11/88
Macon, GA....................................... 313,686 99.2 311,234 12/88
Savannah, GA.................................... 283,978 98.5 279,718 3/88
Georgia-6 RSA................................... 199,516 96.3 192,134 4/93
Georgia-7 RSA................................... 134,376 100.0 134,376 10/91
Georgia-8 RSA................................... 157,451 100.0 157,451 10/91
Georgia-9 RSA................................... 119,410 100.0 119,410 9/92
Georgia-10 RSA.................................. 149,699 100.0 149,699 10/91
Georgia-12 RSA.................................. 211,799 100.0 211,799 10/91
Georgia-13 RSA.................................. 147,392 86.5 127,494 10/90
Dothan, AL...................................... 136,160 94.6 128,807 2/89
Montgomery, AL.................................. 318,371 92.8 295,430 8/88
Alabama-8, RSA.................................. 171,993 100.0 171,993 7/93
----------------- ----------
Subtotal........................................ 3,155,624 3,037,705
----------------- ----------
Panama City, FL................................. 146,018 78.4 114,493 9/88
----------------- ----------
Total........................................... 3,301,642 3,152,198
----------------- ----------
----------------- ----------
</TABLE>
45
<PAGE>
- ------------------------
(1) Does not include the Alabama-5 RSA and South Carolina-7 RSA where the
Company has IOA. IOA is granted for an area to a license holder in an
adjacent area when there are no license holders in such area. The Company
has no subscribers in the South Carolina-7 RSA, but instead provides roaming
access to its own subscribers and others when they travel in this service
area, utilizing its existing cell sites. Construction permits were granted
to Permittees for the Alabama-5 RSA and South Carolina-7 RSA. The Permittees
are required to complete construction of their respective RSA within 18
months. After completing construction, a Permittee may give the Company
thirty days prior written notice, at which point the Company would be
required to sell all of its subscribers of its other systems who reside
within the boundaries of the markets to the Permittee at cost.
(2) Based on population estimates for 1997 from the Spring 1998 edition of the
DLJ Pop Book.
GEORGIA/ALABAMA
In 1988, the Company acquired controlling interests in the licenses to
operate cellular telephone systems in the four MSAs (Montgomery and Dothan,
Alabama and Columbus and Albany, Georgia) that make up the core of its
Georgia/Alabama cluster. Since 1989, the Company has continued to increase its
presence in this market by acquiring additional cellular service areas. The
Augusta, Georgia MSA includes Aiken County in South Carolina. In the aggregate,
these markets (excluding the Alabama-5 RSA and South Carolina-7 RSA where the
Company has only an IOA) now cover a contiguous service area of approximately
38,000 square miles that includes Montgomery, the state capital of Alabama,
prominent resort destinations in Jekyll Island, St. Simons Island and Sea
Island, Georgia, and over 710 miles of interstate highway, including most of
I-95 from Savannah, Georgia to Jacksonville, Florida. The Company collects
substantial roaming revenue from cellular telephone subscribers from other
systems traveling in these markets from nearby population centers such as
Atlanta and Birmingham, as well as from vacation and business traffic in the
southeastern United States. Due in part to the favorable labor environment,
moderate weather and relatively low cost of land, during the last several years
there has been an influx of new manufacturing plants in this market. As of March
31, 1998 the Company utilized 207 cell sites in this cluster (including three
cell sites in Alabama-5 RSA).
PANAMA CITY
The Company acquired control of the non-wireline cellular license for the
Panama City, Florida market in 1991. The Company collects substantial roaming
revenue in this market from subscribers from other systems who visit Panama
City, a popular spring and summer vacation destination. As of March 31, 1998,
the Company utilized 13 cell sites in this market.
OPERATIONS
GENERAL
The Company has concentrated its efforts on creating an integrated network
of cellular telephone systems in the southeastern United States, principally to
date in Georgia, Alabama, Florida and South Carolina. At March 31, 1998, the
Company provided cellular telephone service to 326,721 subscribers in a total of
16 licensed service areas composed of eight MSAs and eight RSAs. The Company
also participates in the NACN, a nationwide consortium of nonwireline cellular
telephone companies, with the goal of providing seamless regional and national
cellular telephone service to its subscribers. Participation in the NACN allows
ten-digit dialing access to the Company's subscribers when they travel outside
the Company's service areas, providing them with convenient call delivery
throughout large areas of the United States, Canada, Mexico and Puerto Rico
served by other NACN participants.
46
<PAGE>
The following table sets forth information, at the dates indicated after
giving effect to the Acquisition, regarding the Company's subscribers,
penetration rate, cost to add a net subscriber, cost to add a gross subscriber,
average monthly churn rate and average monthly service revenue per subscriber.
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED YEAR ENDED DECEMBER 31,
MARCH 31, -----------------------------------------------------
1998 1997 1996 1995 1994 1993
----------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Subscribers at end of period(1).................. 326,721 309,606 243,204 187,870 99,626 54,382
Penetration at end of period(2).................. 9.90% 9.40% 7.73% 6.41% 4.54% 3.57%
Cost to add a gross subscriber(3)................ $ 223 $ 220 $ 216 $ 183 $ 178 $ 156
Cost to add a net subscriber(3).................. $ 440 $ 461 $ 436 $ 275 $ 247 $ 198
Average monthly churn(4)......................... 1.75% 1.88% 1.89% 1.51% 1.54% 1.32%
Average monthly service revenue per
subscriber(5).................................. $ 43.18 $ 46.24 $ 50.23 $ 53.80 $ 56.54 $ 56.70
</TABLE>
- ------------------------
(1) Each billable telephone number in service represents one subscriber. Amounts
at December 31, 1993 include 2,576 subscribers in the Alabama-7 RSA where
the Company had interim operating authority through July 1994.
(2) Determined by dividing the aggregate number of subscribers by the estimated
population.
(3) Determined for the periods, by dividing (i) all costs of sales and
marketing, including salaries, commissions and employee benefits and all
expenses incurred by sales and marketing personnel, agent commissions,
credit reference expenses, losses on cellular telephone sales, rental
expenses allocated to retail operations, net installation expenses and other
miscellaneous sales and marketing charges for such period including fees
paid for use of the CELLULARONE-Registered Trademark- service mark, by (ii)
the gross or net, as applicable, subscribers added during such period.
(4) Determined for the periods by dividing total subscribers discontinuing
service by the average number of subscribers for such period, and divided by
the number of months in the relevant period.
(5) Determined for the periods by dividing the (i) sum of the access, airtime,
roaming, long distance, features, connection, disconnection and other
revenues for such period by (ii) the average number of subscribers for such
period, divided by the number of months in the relevant period.
SUBSCRIBERS AND SYSTEM USAGE
The Company's subscribers have increased from 17,148 at January 1, 1992 to
326,721 at March 31, 1998. Reductions in the cost of cellular telephone services
and equipment at the retail level have led to an increase in cellular telephone
usage by general consumers for non-business purposes. As a result, the Company
believes that there is an opportunity for significant growth in each of its
existing service areas. The Company will continue to broaden its subscriber base
for basic cellular telephone services as well as to increase its offering of
customized services. The sale of custom calling features typically results in
increased usage of cellular telephones by subscribers, thereby further enhancing
revenues. In 1997, cellular telephone service revenues represented 94.6% of the
Company's total revenues, with equipment sales and installation representing the
balance. For the quarter ended March 31, 1998, cellular telephone service
revenues represented 94.0% of the Company's total revenues.
MARKETING
The Company's marketing strategy is designed to generate continued net
subscriber growth by focusing on subscribers who are likely to generate lower
than average deactivations and delinquent accounts, while simultaneously
maintaining a low cost of adding net subscribers. Management has implemented its
marketing strategy by training and compensating its sales force in a manner
designed to stress the importance of high penetration levels and minimum costs
per net subscriber addition. The Company's sales staff has a two-tier structure.
A retail sales force handles walk-in traffic, and a targeted
47
<PAGE>
sales staff solicits certain industries and government subscribers. The Company
believes its use of an internal sales force keeps marketing costs low, both
because commissions are lower and because subscriber retention is higher than if
it used independent agents. The Company believes its cost to add a net
subscriber will continue to be among the lowest in the cellular telephone
industry, principally because of its in-house direct sales and marketing staff.
The Company also maintains an after-sale telemarketing program implemented
through its sales force and a telemarketing service specializing in cellular
customer services. This program not only enhances customer loyalty, but also
increases add-on sales and customer referrals. The telemarketing program allows
the sales staff to check customer satisfaction as well as to offer additional
calling features, such as voicemail, call waiting and call forwarding.
The Company's sales force works principally out of retail stores in which
the Company offers its cellular products and services. As of March 31, 1998, the
Company maintained 34 retail stores and 4 offices. Retail stores, which range in
size up to 11,000 square feet are fully equipped to handle customer service and
the sale of cellular services, telephones and accessories. Eight of the newer
and larger stores are promoted by the Company as "Superstores," seven of which
are located in the Company's Georgia/ Alabama service areas, and one in the
Panama City, Florida service area. Each Superstore has an authorized warranty
repair center and provides cellular telephone installation and maintenance
services. Most of the Company's larger markets currently have at least one
Superstore. In addition, to enhance convenience for its customers, the Company
has begun to open smaller stores in locations such as shopping malls. The
Company's stores provide subscriber-friendly retail environments--extended
hours, a large selection of phones and accessories, an expert sales staff, and
convenient locations--which make the sales process quick and easy for the
subscriber.
The Company markets all of its products and services under the name
CELLULARONE-Registered Trademark-. The national advertising campaign conducted
by Cellular One Group enhances the Company's advertising exposure at a fraction
of what could be achieved by the Company alone. The Company also obtains
substantial marketing benefits from the name recognition associated with this
widely used service mark, both with existing subscribers traveling outside the
Company's service areas and with potential new subscribers moving into the
Company's service areas. In addition, travelers who subscribe to
CELLULARONE-Registered Trademark- service in other markets may be more likely to
use the Company's service when they travel in the Company's service areas.
Cellular telephones of non-wireline subscribers are either programmed to select
the non-wireline carrier (such as the Company) when roaming, unless the
non-wireline carrier in the roaming area is not yet operational, or the
subscriber dials a special code or has a cellular telephone equipped with an
"A/B" (non-wireline/wireline) switch and selects the wireline carrier.
Through its membership in NACN and other special networking arrangements,
the Company provides extended regional and national service to its subscribers,
thereby allowing them to make and receive calls while in other cellular service
areas without dialing special access codes. This service distinguishes the
Company's call delivery features from those of many of its competitors.
PRODUCTS AND SERVICES
In addition to providing high-quality cellular telephone service in each of
its markets, the Company also offers various custom-calling features such as
voicemail, call forwarding, call waiting, three-way conference calling and no
answer and busy transfer. Several rate plans are presented to prospective
subscribers so that they may choose the plan that will best fit their expected
calling needs. Generally, these rate plans include a high user plan, a medium
user plan, a basic plan and an economy plan. Most rate plans combine a fixed
monthly access fee, per minute usage charges and additional charges for
custom-calling features in a package that offers value to the subscriber while
enhancing airtime use and revenues for the Company. In general, rate plans which
include a higher monthly access fee typically include a lower usage rate per
minute. An ongoing review of equipment and service pricing is maintained to
ensure the
48
<PAGE>
Company's competitiveness. As appropriate, revisions to pricing of service plans
and equipment are made to meet the demands of the local marketplace. In
addition, the Company has recently added paging as an accessory to its offered
services.
The following table sets forth a breakdown of the Company's revenues after
giving effect to the Fort Myers and Georgia-1 Sales from the sale of its
services and equipment for the periods indicated.
<TABLE>
<CAPTION>
COMPANY PALMER
---------------------------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
THREE MONTHS OCTOBER 1, NINE MONTHS
ENDED 1997 THROUGH ENDED FOR THE YEAR ENDED DECEMBER 31,
MARCH 31, DECEMBER 31, SEPTEMBER 30, -------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------------- ------------- ------------- ---------- --------- --------- ---------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Service revenue:
Access and usage(1)............ $ 31,853 $ 31,786 $ 89,339 $ 105,006 $ 61,607 $ 37,063 $ 20,324
Roaming(2)..................... 5,505 5,691 14,447 13,099 11,157 5,844 3,075
Long distance(3)............... 2,155 2,014 5,949 6,632 3,634 2,218 1,309
Other(4)....................... 1,171 891 2,061 2,596 2,585 2,745 1,230
------------- ------------- ------------- ---------- --------- --------- ---------
Total service revenue...... 40,684 40,382 111,796 127,333 78,983 47,870 25,938
Equipment sales and installation
(5)............................ 2,591 2,308 6,242 7,027 6,830 6,381 5,238
------------- ------------- ------------- ---------- --------- --------- ---------
Total...................... $ 43,275 $ 42,690 $ 118,038 $ 134,360 $ 85,813 $ 54,251 $ 31,176
------------- ------------- ------------- ---------- --------- --------- ---------
------------- ------------- ------------- ---------- --------- --------- ---------
</TABLE>
- ------------------------
(1) Access and usage revenues include monthly access fees for providing service
and usage fees based on per minute usage rates.
(2) Roaming revenues are fees charged for providing services to subscribers of
other systems when such subscribers or "roamers" place or receive a
telephone call within one of the Company's service areas.
(3) Long distance revenue is derived from long distance telephone calls placed
by the Company's subscribers.
(4) Other revenue includes, among other things, connect fees charged to
subscribers for initial activation on the cellular telephone system and fees
for feature services such as voicemail, call forwarding and call waiting.
(5) Equipment sales and installation revenue includes revenue derived from the
sale of cellular telephones and fees for the installation of such
telephones.
Reciprocal roaming agreements between each of the Company's cellular
telephone systems and the cellular telephone systems of other operators allow
their respective subscribers to place calls in most cellular service areas
throughout the country. Roamers are charged usage fees which are generally
higher than a given cellular telephone system's regular usage fees, thereby
resulting in a higher profit margin on roaming revenue. Roaming revenue is a
substantial source of incremental revenue for the Company. For 1997, roaming
revenues accounted for 13.2% of the Company's service revenues and 12.5% of the
Company's total revenue. For the quarter ended March 31, 1998, roaming revenues
accounted for 13.5% of the Company's service revenues and 12.2% of the Company's
total revenue. This level of roaming revenue is due in part to the fact that the
Company's market in Panama City, Florida is a regional shopping and vacation
destination and a number of the Company's cellular telephone systems in the
Georgia and Alabama market are located along major interstate travel corridors.
In order to develop the market for cellular telephone service, the Company
provides retail distribution of cellular telephones and maintains inventories of
cellular telephones. The Company negotiates volume discounts for the purchase of
cellular telephones and, in many cases, passes such discounts on to its
customers. The Company believes that earning an operating profit on the sale of
cellular telephones is of secondary importance to offering cellular telephones
at competitive prices to potential subscribers. To
49
<PAGE>
respond to competition and to enhance subscriber growth, Palmer has historically
sold cellular telephones below cost.
The Company is currently developing several new services which it believes
will provide additional revenue sources. Packet-switching technology uses the
intervals between voice traffic on cellular channels to send packets of data
instead of tying up dedicated cellular channels, allowing data to be transmitted
more quickly and efficiently. The packets of information, which may be
transmitted using several different channels, are subsequently reassembled and
directed to the correct party at the receiving end. It is expected that the
development of this technology will make it possible for cellular carriers to
offer a broad range of cost-effective wireless data services, including
facsimile and electronic mail transmissions, point-of-sale credit
authorizations, package tracking, remote meter reading, alarm monitoring and
communications between laptop computer units and local area computer networks or
other computer databases. During 1997 Palmer began the use of microcells.
Microcells are low powered transmitters, typically constructed on a pole or the
roof of a building, which provide reduced radius service within a specific area,
such as large office buildings, underground facilities or areas shielded by
topographical obstructions. Microcell service could be used, for instance, to
provide wireless service within an office environment that was also integrated
with wireless service to the home.
CUSTOMER SERVICE
The Company is committed to attracting new subscribers and retaining
existing subscribers by providing consistently high-quality customer service. In
each of its cellular service areas, the Company maintains a local staff,
including a market manager, customer service representatives, technical and
engineering staff, sales representatives and installation and repair facilities.
Each cellular service area handles its own customer-related functions such as
customer activations, account adjustments and rate plan changes. Local offices
and installation and repair facilities enable the Company to better service
customers, schedule installations and repairs and monitor the technical quality
of the cellular service areas.
In addition, subscribers are able to report cellular telephone service or
account problems to the Company 24 hours a day. Through the use of sophisticated
monitoring equipment, technicians at the Company's headquarters are able to
monitor the technical performance of its service areas.
To ensure high-quality customer service, the Cellular One Group authorizes a
third-party marketing research firm to perform customer satisfaction surveys of
each of its licensees. Licensees must achieve a minimum customer satisfaction
level in order to be permitted to continue using the
CELLULARONE-Registered Trademark- service mark. In 1997, the Company was awarded
the #1 MSA in certain categories in CELLULARONE-Registered Trademark-'s National
Customer Satisfaction Survey. The Company has held number one rankings in
certain categories in five out of the last six years. The Company believes it
has achieved this first place ranking through effective implementation of its
direct sales and customer service support strategy.
The Company has implemented a new software package to combat cellular
telephone service fraud. This new software system can detect counterfeit
cellular telephones while they are being operated and enables the Company to
terminate service to the fraudulent user of the counterfeit cellular telephone.
The Company also helps protect itself from fraud with pre-call customer
validation and subscriber profiles specifically designed to combat the
fraudulent use of subscriber accounts.
NETWORKS
The Company strives to provide its subscribers with virtually seamless
coverage throughout its cellular service market areas, thereby permitting
subscribers to travel freely within this region and have their calls and custom
calling features, such as voicemail, call waiting and call forwarding, follow
them automatically without having to notify callers of their location or to rely
on special access codes. The Company has been able to offer virtually seamless
coverage by implementing a switch interconnection plan to mobile telephone
switching offices ("MTSO") located in adjoining markets. The Company's equipment
is built by
50
<PAGE>
NORTEL, formerly Northern Telecom, Inc. ("NTI"), and interconnection between
MTSOs has been achieved using NTI's internal software and hardware.
Through its participation in NACN since 1992 and other special networking
arrangements, the Company has pursued its goal of offering seamless regional and
national cellular service to its subscribers. NACN is the largest wireless
telephone network system in the world--linking non-wireline cellular operators
throughout the United States and Canada. Membership in NACN has aided the
Company in integrating its cellular telephone systems within its region and has
permitted the Company to offer cellular telephone service to its subscribers
throughout a large portion of the United States, Canada, Mexico and Puerto Rico.
NACN has provided the Company with a number of distinct advantages: (i) lower
costs for roaming verification; (ii) increased roaming revenue; (iii) more
efficient roaming service; and (iv) integration of Palmer's markets with over
4,600 cities in more than 40 states in the United States, Canada, Mexico and
Puerto Rico.
SYSTEM DEVELOPMENT AND EXPANSION
The Company develops its service areas by adding channels to existing cell
sites and by building new cell sites. Such development is done for the purpose
of increasing capacity and improving coverage in direct response to projected
subscriber demand. Projected subscriber demand is calculated for each cellular
service area on a cell by cell basis. These projections involve a traffic
analysis of usage by existing subscribers and an estimation of the number of
additional subscribers in each such area. In calculating projected subscriber
demand, the Company builds into its design assumptions a maximum call "blockage"
rate of 2.0% (percentage of calls that are not connected on first attempt at
peak usage time during the day).
The following table sets forth, by market, at the dates indicated, the
number of the Company's operational cell sites (including cell sites where the
Company has interim operating authority).
<TABLE>
<CAPTION>
AT DECEMBER 31,
AT MARCH 31, -------------------------------------
1998 1997 1996 1995
--------------- ----- ----- -----
<S> <C> <C> <C> <C>
Georgia/Alabama.................................................. 207 207 181 121
Panama City, FL.................................................. 13 12 11 9
--- --- --- ---
Total............................................................ 220 219 192 130
--- --- --- ---
--- --- --- ---
<CAPTION>
1994 1993
----- -----
<S> <C> <C>
Georgia/Alabama.................................................. 70 39
Panama City, FL.................................................. 7 7
-- --
Total............................................................ 77 46
-- --
-- --
</TABLE>
The Company estimates that in 1997 the capacity of its existing cellular
telephone systems increased 30%. During 1997, the Company spent $55.3 million of
which $3.5 million related to properties which were sold and approximately $6.0
million related to purchases of equipment for cell sites to be completed in 1998
and, based on projected growth in subscriber demand, expects to spend
approximately $16 million in 1998 in order to build out its cellular service
areas, install an additional microwave network and implement certain digital
radio technology. The Company constructed 27 new cell sites in 1997 and
increased capacity in many of its other systems and plans to construct 30
additional cell sites with respect to its existing cellular systems during 1998
to meet projected subscriber demand and improve the quality of service. Cell
site expansion is expected to enable the Company to continue to add subscribers,
enhance use of its cellular telephone systems by existing subscribers, increase
services used by subscribers of other cellular telephone systems due to the
larger geographic area covered by the cellular telephone network and further
enhance the overall efficiency of the network. The Company believes that the
increased cellular telephone coverage will have a positive effect on market
penetration and subscriber usage.
Microwave networks enable the Company to connect switching equipment and
cell sites without making use of local landline telephone carriers, thereby
reducing or eliminating fees paid to landline carriers. During 1996, the Company
spent $1.0 million to build additional microwave connections. In addition, in
1996 the Company spent $2.6 million to build a fiber optic network between
Dothan, Alabama
51
<PAGE>
and Panama City, Florida. The installation of this network resulted in savings
to the Company from a reduction in fees paid to telephone companies for landline
charges, as well as giving the Company the ability to lease out a significant
portion of capacity.
DIGITAL CELLULAR TECHNOLOGY
Over the next decade, it is expected that cellular telephones will gradually
convert from analog to digital technology. This conversion is due in part to
capacity constraints in many of the largest cellular markets, such as Los
Angeles, New York and Chicago. As carriers reach limited capacity levels,
certain calls may be unable to be completed, especially during peak hours.
Digital technology increases system capacity and offers other advantages over
analog technology, including improved overall average signal quality, improved
call security, potentially lower incremental costs for additional subscribers
and the ability to provide data transmission services. The exact timing and
overall costs of such conversion from analog to digital are not yet known.
The Company began offering TDMA standard digital service, one of three
standards for digital service, during 1997. This digital network allows the
Company to offer advanced cellular features and services such as caller-ID,
short message paging and extended battery life. The Company is adding digital
channels to the network incrementally based on the relative demand for digital
and analog channels. Where cell sites are at full capacity, analog channels are
being removed and redeployed to expand capacity elsewhere within the network and
replaced in such cell sites by digital channels. The implementation of digital
cellular technology over a period of several years will involve modest
incremental expenditures for switch software and possible significant cost
reductions as a result of reduced purchases of radio channels and a reduced
requirement to split existing cells. However, the extent of any implementation
of digital radio channels and the amount of any cost savings ultimately to be
derived therefrom will depend primarily on subscriber demand. In the ordinary
course of business, equipment upgrades at the cell sites have involved
purchasing dual mode radios capable of using both analog and digital technology.
The benefits of digital radio channels can only be achieved if subscribers
purchase cellular telephones that are capable of transmitting and receiving
digital signals. Currently, such telephones are more costly than analog
telephones. The widespread use of digital cellular telephones is likely to occur
only over a substantial period of time and there can be no assurance that this
technology will replace analog cellular telephones. In addition, since most of
the Company's existing subscribers currently have cellular telephones that
exclusively utilize analog technology, it will be necessary to continue to
support, and if necessary increase, the number of analog radio channels within
the network for many years.
52
<PAGE>
ACQUISITIONS
The Company will continue to evaluate expansion through acquisitions of both
(i) contiguous cellular properties and other strategically located RSAs and
small to mid-sized MSAs and (ii) minority interests in its existing cellular
properties. In evaluating acquisition targets, the Company considers, among
other things, demographic factors, including population size and density,
geographic proximity to existing service areas, traffic patterns, cell site
coverage and required capital expenditures.
Palmer entered the cellular telephone business in 1987, when it constructed
a cellular telephone system for the Fort Myers, Florida MSA. Palmer acquired
control of this system in March 1988 and rapidly expanded its cellular telephone
holdings, acquiring control of the non-wireline cellular licenses for the
Columbus and Albany, Georgia and Dothan and Montgomery, Alabama MSAs in 1988.
In 1991, Palmer acquired control of the non-wireline cellular license for
the Panama City, Florida MSA. In 1992 and 1993, Palmer acquired two non-wireline
cellular licenses for RSAs contiguous to Palmer's MSAs in Georgia and Alabama:
the Georgia-9 RSA in June 1992 and the Alabama-8 RSA in April 1993. The
Georgia-9 RSA acquisition added the geographic territory between the Columbus,
Macon and Albany, Georgia MSAs to Palmer's service area coverage. The Alabama-8
RSA expanded Palmer's service areas around three MSAs served by Palmer, covering
a substantial portion of the geographic territory between the Montgomery,
Alabama, Columbus, Georgia and Dothan, Alabama MSAs and the Georgia-9 RSA. In
1993, Palmer also increased its majority position in its MSAs in Albany, Georgia
and in Dothan and Montgomery, Alabama, through the purchase of certain minority
interests for an aggregate purchase price of $2.9 million.
During 1994, Palmer continued to acquire minority interests in six of its
MSAs for an aggregate purchase price of $3.1 million. Also, on October 31, 1994,
Palmer acquired the cellular telephone systems of Southeast Georgia Cellular
Limited Partnership ("SGC") and Georgia 12 Cellular Limited Partnership
("Georgia 12" and together with SGC, the "Georgia Partnerships") for an
aggregate purchase price of $91.7 million (the "Georgia Acquisition"). The
assets acquired by Palmer from SGC included the non-wireline cellular telephone
systems for the Georgia-7 RSA, Georgia-8 RSA and Georgia-10 RSA. The assets
acquired by Palmer from Georgia 12 included the non-wireline cellular telephone
system located in the Georgia-12 RSA. The cellular telephone systems in the
acquired RSAs serve a geographic territory in southeast Georgia that is adjacent
to Palmer's Georgia-9 RSA and Macon, Georgia MSA.
In December 1995, Palmer acquired interests in cellular telephone systems by
purchasing Georgia Metronet, Inc. ("GMI") and Augusta Metronet, Inc. ("AMI" and
together with GMI, the "GTE Companies") for an aggregate purchase price of
$158.4 million (the "GTE Acquisition"). The assets acquired by Palmer in the GTE
Acquisition included the non-wireline cellular telephone system located in the
Savannah MSA and Augusta MSA, respectively. The cellular telephone systems in
the newly-acquired MSAs serve a geographic territory in eastern Georgia and a
portion of South Carolina that is adjacent to Palmer's existing markets in the
Georgia-8 RSA and Georgia-12 RSA. In addition, Palmer also acquired the interim
operating authority to provide cellular service to the southern portions of the
South Carolina-7 RSA, which serves a geographic territory that is adjacent to
Palmer's existing markets in the Georgia-8 RSA as well as the Savannah, and
Augusta, Georgia MSAs. In addition, during 1995, Palmer acquired additional
minority interests in six of its MSAs for an aggregate purchase price of $2.0
million.
On June 20, 1996, Palmer acquired the cellular telephone system of Georgia-1
for an aggregate purchase price of $31.6 million. The cellular telephone system
in the acquired RSA serves a geographic territory of northwest Georgia between
Chattanooga and Atlanta. Georgia-1 was sold in October 1997 in connection with
the Acquisition.
On July 5, 1996, two of Palmer's majority-owned subsidiaries acquired the
cellular telephone system of Horizon Cellular Telephone Company of Spalding,
L.P. ("Horizon") for an aggregate purchase price of $36.0 million. The assets
acquired by Palmer from Horizon include the cellular telephone system in the
Georgia-6 RSA. The cellular telephone system in the acquired RSA serves a
geographic territory of west central Georgia adjacent to Palmer's Macon and
Columbus, Georgia MSAs.
53
<PAGE>
On January 31, 1997, a majority-owned subsidiary of Palmer acquired the
cellular telephone system serving the Georgia-13 RSA from Mobile Communications
Systems L.P. for a total purchase price of $31.5 million. The cellular telephone
system in the acquired RSA serves a geographic territory of southwest Georgia
adjacent to Palmer's Albany, Georgia and Dothan, Alabama MSAs.
COMPETITION
The cellular telephone service industry in the United States is highly
competitive. Cellular telephone systems compete principally on the basis of
services and enhancements offered, the technical quality of the cellular system,
customer service, coverage capacity and price of service and equipment.
Currently, the Company's primary competition in each of its service areas is the
other cellular licensee--the wireline carrier. The table below lists the
wireline competitor in each of the Company's existing service areas:
<TABLE>
<CAPTION>
MARKET WIRELINE COMPETITOR
- ----------------------------------------------- ---------------------------------------------
<S> <C>
Albany, GA..................................... ALLTEL
Augusta, GA.................................... ALLTEL
Columbus, GA................................... Public Service Cellular
Macon, GA...................................... BellSouth
Savannah, GA................................... ALLTEL
Georgia-6 RSA.................................. BellSouth and Intercel (1)
Georgia-7 RSA.................................. Cellular Plus (2) and BellSouth (1)
Georgia-8 RSA.................................. ALLTEL
Georgia-9 RSA.................................. ALLTEL and Public Service Cellular (1)
Georgia-10 RSA................................. Cellular Plus (2) and ALLTEL (1)
Georgia-12 RSA................................. ALLTEL
Georgia-13 RSA................................. ALLTEL
Dothan, AL..................................... BellSouth
Montgomery, AL................................. ALLTEL
Alabama-8 RSA.................................. ALLTEL
Panama City, FL................................ 360 DEG. Communications Company (2)
</TABLE>
- ------------------------
(1) The wireline service area has been subdivided into two service areas by the
purchasers of the authorization for the RSA.
(2) Currently under contract to be acquired by ALLTEL.
The Company also faces limited competition from and may in the future face
increased competition from broadband PCS. Broadband PCS involves a network of
small, low-powered transceivers placed throughout a neighborhood, business
complex, community or metropolitan area to provide customers with mobile and
portable voice and data communications. PCS subscribers communicate using
digital radio handsets.
The FCC allocated 120 MHZ of spectrum for licensed broadband PCS. The
allocations for licensed PCS services are split into six blocks of frequencies--
blocks "A" and "B" being two 30 MHZ allocations for each of the 51 Major Trading
Areas ("MTAs") throughout the United States; block "C" being one 30 MHZ
allocation in each of 493 Basic Trading Areas ("BTAs") in the United States; and
blocks "D," "E" and "F" being three 10 MHZ allocations in each of the BTAs. The
FCC has concluded the auction of all broadband PCS frequency blocks.
The Company also faces competition from other existing communications
technologies such as conventional mobile telephone service, SMR and ESMR systems
and paging services.
In addition, the FCC has licensed operators to provide mobile satellite
service in which transmissions from mobile units to satellites would augment or
replace transmissions to land-based stations. Although such a system is designed
primarily to serve remote areas and is subject to transmission delays inherent
in
54
<PAGE>
satellite communications, a mobile satellite system could augment or replace
communications with segments of land-based cellular systems. Based on current
technologies, however, satellite transmission services are not expected to be
competitively priced with cellular telephone services.
In order to grow and compete effectively in the wireless market, the Company
plans to follow a strategy of increasing its bundled minute offerings. By
increasing the number of minutes a customer can use for one flat rate,
subscribers perceive greater value in their cellular service and become less
usage sensitive, i.e., they can increase their cellular phone usage without
seeing large corresponding increases in their cellular bill. These factors
translate into more satisfied customers, greater customer usage and lower churn
among existing subscribers. The perceived greater value also increases the
number of potential customers in the marketplace. The Company believes that this
strategy will enable it to increase its share of the wireless market.
SERVICE MARKS
CELLULARONE-Registered Trademark- is a registered service mark with the U.S.
Patent and Trademark Office. The service mark is owned by Cellular One Group, a
Delaware general partnership of Cellular One Marketing, Inc., a subsidiary of
Southwestern Bell Mobile Systems, Inc., together with Cellular One Development,
Inc., a subsidiary of AT&T and Vanguard Cellular Systems, Inc. The Company uses
the CELLULARONE-Registered Trademark- service mark to identify and promote its
cellular telephone service pursuant to licensing agreements with Cellular One
Group. In 1997, the Company paid $303,000 in licensing and advertising fees
under these agreements. See "Risk Factors--Reliance on Use of Third-Party
Service Mark."
DESCRIPTION OF CELLULAR ONE AGREEMENTS
The Company is currently party to sixteen license agreements with Cellular
One Group, which cover separate cellular telephone system areas. The terms of
each agreement (each, a "Cellular One Agreement" and collectively, the "Cellular
One Agreements") are substantially identical. Pursuant to each Cellular One
Agreement, Cellular One Group has granted a license to use the
"CELLULARONE-Registered Trademark-" mark (the "Mark") in its FCC-licensed
territory (the "Licensed Territory") to promote its cellular telephone service.
Cellular One Group has agreed not to license such Mark in connection with
cellular telephone service to any other cellular telephone service provider in
such territory during the term of the agreement. Cellular One Group may,
however, license the Mark to other persons in such territory in connection with
cellular telephone equipment and other products and services other than the type
licensed by the Company.
In connection with each Cellular One Agreement, the Company has agreed to
pay an annual licensing fee equal to $0.02 per person in the Licensed Territory
based on the total population of the market, subject to a minimum payment of
$3,000, and, in certain circumstances, will pay an annual advertising fee not in
excess of $0.05 per person in the Licensed Territory.
Each Cellular One Agreement has a term of five years and is renewable,
subject to the conditions described herein, at the option of the Company for
three additional five-year terms subject to provision of advanced written notice
by the Company. In connection with any renewal, the Company must execute
Cellular One Group's then-current form of license renewal agreement, which form
may contain provisions materially different than those in the Cellular One
Agreement.
Cellular One Group may terminate the Cellular One Agreements at any time
without written notice to the Company upon certain events, including bankruptcy,
insolvency and dissolution of the Company.
In addition, Cellular One Group may terminate the Cellular One Agreements at
any time, without giving the Company an opportunity to cure the event giving
rise to Cellular One Group's right of termination subject to delivery of written
notice (i) if the Company, while on probation pursuant to a Cellular One
Agreement, fails to achieve 85% customer satisfaction (or such higher percentage
established by Cellular One Group) for a prescribed amount of time, (ii) if the
Company fails to achieve 65% customer satisfaction in any survey other than an
initial customer satisfaction survey by Cellular One
55
<PAGE>
Group, (iii) if any principal stockholder or officer of the Company is convicted
of a felony, fraud or other crime that Cellular One Group believes is reasonably
likely to have an adverse effect on the Mark, (iv) if a threat or danger to
public health or safety results from the operation of the Company's cellular
telephone business, (v) if the Company violates certain undertakings in the
Cellular One Agreement, including limitations on assignment and confidentiality
restrictions, (vi) if the Company knowingly submits false reports or information
to Cellular One Group or any other entity conducting a customer satisfaction
survey or (vii) if the Company contests in any proceeding the validity or
registration of, or Cellular One Group's ownership of, the Mark. The Company's
customer satisfaction ratings have consistently far exceeded the minimum
requirements of such Agreements.
Finally, after notice of a default to the Company, Cellular One Group may
terminate the Cellular One Agreements if the Company does not cure the default
within a specified period of time because it (i) fails to pay any amounts
thereunder when due or fails to submit information required to be provided
pursuant to the Cellular One Agreement when due or makes a false statement in
connection therewith, (ii) fails to operate its business in conformity with FCC
directives, technical industry standards and other standards specified from time
to time by Cellular One Group, (iii) misuses, makes unauthorized use of or
materially impairs the goodwill of the Mark, (iv) engages in any business under
a name that is confusingly similar to the Mark, or (v) permits a continued
violation of any law or regulation applicable to it, in each case subject to a
thirty-day cure period.
The Cellular One Agreements are terminable by the Company at any time
subject to 120 days' written notice.
The Company has agreed to indemnify Cellular One Group and its employees and
affiliates, including its constituent partners, against all claims arising from
the operation of its cellular phone business and the costs, including attorneys
fees, of defending against them.
REGULATION
As a provider of cellular telephone services, the Company is subject to
extensive regulation by the federal government.
The licensing, construction, operation, acquisition and transfer of cellular
telephone systems in the United States are regulated by the FCC pursuant to the
Communications Act of 1934, as amended (the "Communications Act"). The FCC has
promulgated rules governing the construction and operation of cellular telephone
systems and licensing and technical standards for the provision of cellular
telephone service ("FCC Rules"). For cellular licensing purposes, the United
States is divided into MSAs and RSAs. In each market, the frequencies allocated
for cellular telephone use are divided into two equal blocks designated as Block
A and Block B. Block A licenses were initially reserved for non-wireline
companies, such as the Company, while Block B licenses were initially reserved
for entities affiliated with a local wireline telephone company. Under current
FCC Rules, a Block A or Block B license may be transferred with FCC approval
without restriction as to wireline affiliation, but generally, no entity may own
any substantial interest in both systems in any one MSA or RSA. The FCC may
prohibit or impose conditions on sales or transfers of licenses.
Initial operating licenses are generally granted for terms of up to 10
years, renewable upon application to the FCC. Licenses may be revoked and
license renewal applications denied for cause after appropriate notice and
hearing. The Company's cellular licenses expire in the following years with
respect to the following number of service areas: 1998 (three); 2000 (two); 2001
(four); 2002 (two); 2006 (one); and 2007 (four). The FCC has issued a decision
confirming that current licensees will be granted a renewal expectancy if they
have complied with their obligations under the Communications Act during their
license terms and provided substantial public service. A potential challenger
will bear a heavy burden to demonstrate that a license should not be renewed if
the licensee's performance merits a renewal expectancy. The Company believes
that the licenses controlled by the Company will be renewed in a timely manner.
However, in the event that a license is not renewed, the Company would no longer
have the right
56
<PAGE>
to operate in the relevant service area. A non-renewal of licenses that are
currently pending would have a material adverse effect on the Company's result
of operations.
Under FCC rules, each cellular licensee was given the exclusive right to
construct one of two cellular telephone systems within the licensee's MSA or RSA
during the initial five-year period of its authorization. At the end of such
five-year period, other persons are permitted to apply to serve areas within the
licensed market that are not served by the licensee and current FCC Rules
provide that competing applications for these "unserved areas" are to be
resolved through the auction process. The Company has no material unserved areas
in any of its cellular telephone systems that have been licensed for more than
five years.
The Company also regularly applies for FCC authority to use additional
frequencies, to modify the technical parameters of existing licenses, to expand
its service territory and to provide new services. The Communications Act
requires prior FCC approval for acquisitions by the Company of other cellular
telephone systems licensed by the FCC and transfers by the Company of a
controlling interest in any of its licenses or construction permits, or any
rights thereunder. Although there can be no assurance that any future requests
for approval or applications filed by the Company will be approved or acted upon
in a timely manner by the FCC, based upon its experience to date, the Company
has no reason to believe such requests or applications would not be approved or
granted in due course.
The Communications Act prohibits the holding of a common carrier license
(such as the Company's cellular licenses) by a corporation of which more than
20% of the capital stock is owned directly or beneficially by aliens. Where a
corporation such as the Company controls another entity that holds an FCC
license, such corporation may not have more than 25% of its capital stock owned
directly or beneficially by aliens, in each case, if the FCC finds that the
public interest would be served by such prohibitions. Failure to comply with
these requirements may result in the FCC issuing an order to the Company
requiring divestiture of alien ownership to bring the Company into compliance
with the Communications Act. In addition, fines or a denial of renewal, or
revocation of the license are possible.
From time to time, legislation which could potentially affect the Company,
either beneficially or adversely, may be proposed by federal and state
legislators. On February 8, 1996, the Telecommunications Act of 1996 (the
"Telecom Act") was signed into law, revising the Communications Act to eliminate
unnecessary regulation and to increase competition among providers of
communications services. The Company cannot predict the future impact of this or
other legislation on its operations.
The major provisions of the Telecom Act potentially affecting the Company
are as follows:
INTERCONNECTION. The Telecom Act requires state public utilities
commissions and/or the FCC to implement policies that mandate cost-based
reciprocal compensation between cellular carriers and LECs for interconnection
services.
On August 8, 1996, the FCC released its First Report and Order in the matter
of Implementation of the Local Competition Provisions in the Telecommunications
Act of 1996 ("FCC Order") establishing the rules for the costing and
provisioning of interconnection services and the offering of unbundled network
elements by incumbent local exchange carriers. The FCC Order established
procedures for the Company's renegotiation of interconnection agreements with
the incumbent local exchange carrier in each of the Company's markets. LECs and
state regulators filed appeals of the FCC Order, which were consolidated in the
US Court of Appeals for the Eighth Circuit (the "Eighth Circuit"). The Eighth
Circuit in 1996 and 1997 vacated and stayed the effective date of pricing and
other portions of the rules established in the FCC Order. In 1998, the United
States Supreme Court agreed to hear an appeal of the Eighth Circuit's decisions
and a decision of the Court is expected later this year.
The Company has renegotiated certain interconnection agreements with LECs in
most of the Company's markets. These negotiations have resulted in a substantial
decrease in interconnection expenses incurred by the Company.
FACILITIES SITING FOR PERSONAL WIRELESS SERVICES. The siting and
construction of cellular transmitter towers, antennas and equipment shelters are
often subject to state or local zoning, land use and other regulation.
57
<PAGE>
Such regulation may require zoning, environmental and building permit approvals
or other state or local certification.
The Telecom Act provides that state and local authority over the placement,
construction and modification of personal wireless services (including cellular
and other commercial mobile radio services and unlicensed wireless services)
shall not prohibit or have the effect of prohibiting personal wireless services
or unreasonably discriminate among providers of functionally equivalent
services. In addition, local authorities must act on requests made for siting in
a reasonable period of time and any decision to deny must be in writing and
supported by substantial evidence. Appeals of zoning decisions that fail to
comply with the provisions of the Telecom Act can be made on an expedited basis
to a court of competent jurisdiction, which can be either federal district or
state court. The Company anticipates that, as a result of the Telecom Act, it
will more readily receive local zoning approval for proposed cellular base
stations. In addition, the Telecom Act codified the Presidential memorandum on
the use of federal lands for siting wireless facilities by requiring the
President or his designee to establish procedures whereby federal agencies will
make available their properties, rights of ways and other easements at a fair
and reasonable price for service dependent upon federal spectrum.
Environmental effect of radio frequency emissions. The Telecom Act provides
that state and local authorities cannot regulate personal wireless facilities
based on the environmental effects of radio frequency emissions if those
facilities comply with the federal standard.
UNIVERSAL SERVICE. The Telecom Act also provides that all communications
carriers providing interstate communications services, including cellular
carriers, must contribute to the federal universal service support mechanisms
being established by the FCC. Carrier payments to the universal service fund are
based on end-user interstate telecommunications revenues multiplied by a
universal service contribution percentage proposed by the fund administrator and
adopted by the FCC. Certain of the universal service costs may be passed through
to customers. The FCC first implemented this provision of the Telecom Act in a
"Report and Order" released May 8, 1997 in the matter of "Federal-State Joint
Board on Universal Service," which also provides that any cellular carrier is
potentially eligible to receive universal service support.
The Communications Act preempts state and local regulation of the entry of,
or the rates charged by, any provider of cellular service.
EMPLOYEES
At March 31, 1998, the Company had 582 full-time employees, none of whom is
represented by a labor organization. Management considers its relations with
employees to be good.
PROPERTIES
For each market served by the Company's operations, the Company maintains at
least one sales or administrative office and operates a number of cell
transmitter and antenna sites. As of March 31, 1998, the Company had
approximately 33 leases for retail stores used in conjunction with its
operations and three leases for administrative offices and owned one retail
store. The Company also had approximately 145 leases to accommodate cell
transmitters and antennas as of March 31, 1998.
LEGAL PROCEEDINGS
The Company is not currently involved in any pending legal proceedings
likely to have a material adverse impact on the Company.
In May 1998, a complaint in respect of a class action lawsuit was filed in
Lee County, Florida against the Company and Cellular One, Inc. alleging certain
causes of action in connection with the Company's practice of "rounding up" its
billing to the nearest minute. The Company believes that such practice is
customary among cellular service providers. Although the Company believes that
its position will prevail, it does not believe that such lawsuit, if determined
adversely to the Company, would have a material adverse effect on its business,
financial condition or results of operations.
58
<PAGE>
BUSINESS OF PRICE COMMUNICATIONS CORPORATION
PCC has historically been a nationwide communications company owning and
then disposing of a number of television, radio, newspaper, cellular telephone
and other communications and related properties. PCC's business strategy is to
acquire communications properties at prices PCC considers attractive, finance
such properties on terms satisfactory to PCC, manage such properties in
accordance with its operating strategy and dispose of them if and when PCC
determines such dispositions to be in its best interests. Prior to 1997 PCC
owned a number of television, radio, newspaper and other media and related
properties which were disposed of pursuant to PCC's long-standing policy of
buying and selling media properties at times deemed advantageous by PCC's Board
of Directors. On October 6, 1997, PCW acquired Palmer in the Acquisition.
PCC is currently engaged through PCW in the construction, development,
management and operation of cellular telephone systems in the southeastern
United States.
PCC was organized in New York in 1979 and began active operations in 1981.
Its principal executive offices are located at 45 Rockefeller Plaza, New York,
New York 10020, and its telephone number is (212) 757-5600.
59
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
director and executive officers of PCC, of Holdings and of PCW.
<TABLE>
<CAPTION>
NAME AGE OFFICE
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Robert Price......................................... 65 Director, President, Chief Executive Officer and
Treasurer of PCC, Director of Holdings
Kim I. Pressman...................................... 41 Executive Vice President, Secretary and Chief
Financial Officer of PCC and Holdings
William J. Ryan...................................... 66 Chairman of the Board of PCW (1)
M. Wayne Wisehart.................................... 52 President and Chief Executive Officer of PCW (1)
Jeffrey L. Green..................................... 36 Vice President--Finance and Chief Financial Officer
of PCW
Victor M. Landau..................................... 58 Vice President--Technical Operations of PCW(1)
K. Patrick Meehan.................................... 40 Vice President-General Counsel and Secretary of PCW
</TABLE>
- ------------------------
(1) The positions of Messrs. Ryan, Wisehart and Landau were effective April 1,
1998. Prior to their promotions to such positions, Mr. Ryan served as
President and Chief Executive Officer of PCW, Mr. Wisehart served as
Executive Vice President, Treasurer and Chief Financial Officer of PCW and
Mr. Landau served as Director of Property Management/Site Acquisitions of
PCW.
EXECUTIVE OFFICERS
The following is a biographical summary of the experience of the executive
officers and directors of the PCC, and the executive officers of PCW named above
(each of whom served as an executive officer and director of Palmer prior to its
acquisition by PCW).
ROBERT PRICE has served concurrently as a Director and the Chief Executive
Officer, President and Treasurer of PCC since 1979, and has been a Director of
Holdings and PCW since 1997. Mr. Price was a Director of PriCellular from 1990
until June 1998. Mr. Price was the President and Assistant Treasurer of
PriCellular from 1990 until May 1997 and served as Chairman of PriCellular from
May 1997 until June 1998. Mr. Price, an attorney, is a former General Partner of
Lazard Freres & Co. He has served as an Assistant United States Attorney,
practiced law in New York and served as Deputy Mayor of New York City. In the
early sixties, Mr. Price served as President and Director of Atlantic States
Industries, a corporation owning weekly newspapers and four radio stations.
After leaving public office, Mr. Price became Executive Vice President of The
Dreyfus Corporation and an Investment Officer of The Dreyfus Fund. In 1972 he
joined Lazard Freres & Co. Mr. Price has served as a Director of Holly Sugar
Corporation, Atlantic States Industries, The Dreyfus Corporation, Graphic
Scanning Corp. and Lane Bryant, Inc., and is currently a member of The Council
on Foreign Relations. Mr. Price serves as the Representative of the Majority
Leader and President Pro Tem of the New York Senate and as a member of the Board
of Directors of the Municipal Assistance Corporation for The City of New York
and as a Member of the Board of Trustees of the City University of New York. Mr.
Price is also a Director and President of TLM Corporation.
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<PAGE>
KIM I. PRESSMAN, a Certified Public Accountant, is a graduate of Indiana
University and holds an M.B.A. from New York University. Before assuming her
present office as Executive Vice President and Secretary of PCC in October 1994
(in which she served until August 1997 and again from December 1997 to the
present), and as Chief Financial Officer of PCC in May 1998, Ms. Pressman was
Vice President and Treasurer of PCC from November 1987 to December 1989, and
Senior Vice President of PCC from January 1990 to September 1994. She was also
Secretary of PCC from July 1989 to February 1990. Ms. Pressman was Vice
President--Broadcasting and Vice President, Controller, and Assistant Treasurer
of PCC from 1984 to October 1987. Prior to joining PCC in 1984, Ms. Pressman was
employed for three years by Peat, Marwick, Mitchell & Co., a national certified
public accounting firm, and for more than three years thereafter was Supervisor,
Accounting Policies for International Paper Company and then Manager, Accounting
Operations for Corinthian Broadcasting of Dun & Bradstreet Company, a large
group owner of broadcasting stations. Ms. Pressman is a Director, Executive Vice
President and Secretary of PriCellular Corporation. Ms. Pressman has served as
Executive Vice President, Secretary and Chief Financial Officer of Holdings
since May 4, 1998.
WILLIAM J. RYAN, Chairman of the Board of PCW since April 1, 1998, served as
Chief Executive Officer and President of Palmer from 1984 until its acquisition
by PCW on October 6, 1997, and served in such capacities with PCW until April 1,
1998. Mr. Ryan was Chief Operating Officer and President of Palmer from 1982 to
1984. Mr. Ryan has over 40 years of communications and telecommunications
experience. He joined Palmer in 1970 following that company's acquisition of
certain radio and cable properties which Mr. Ryan had partially owned and
operated since 1955. In his capacity as Chief Executive Officer, Mr. Ryan has
successfully led the Company through 18 acquisitions of cellular telephone
systems. Mr. Ryan is a director of the Cellular Telecommunications Industry
Association, the founding chairman of Cable Television Advertising Bureau, Inc.
and a former president of the Florida Cable Association, the Florida
Broadcasters Association and the Southern Cable Association.
M. WAYNE WISEHART, President and Chief Executive Officer of PCW since April
1, 1998, served as Chief Financial Officer of Palmer from 1982 until its
acquisition by PCW on October 6, 1997, and served in such capacity with PCW
until April 1, 1998. He was promoted to Treasurer of Palmer in 1983 and to Vice
President in 1987. Mr. Wisehart has over 21 years of communications and
telecommunications experience. In his capacity as Chief Financial Officer of
Palmer, he was instrumental in the financial management and direction of the
Company. Prior to joining Palmer, Mr. Wisehart served as Treasurer of the Des
Moines Register & Tribune Company of Des Moines, Iowa, for approximately five
years. He began his career in 1972 with Peat, Marwick, Mitchell & Co. in St.
Louis, Missouri, where he became a Certified Public Accountant. Mr. Wisehart
then served as a tax specialist for three years with General Dynamics
Corporation in St. Louis, Missouri.
JEFFREY L. GREEN has been with PCW and its predecessor, Palmer since 1995.
Before assuming his current office as Vice President--Finance, and Chief
Financial Officer in March 1998, Mr. Green served as the Director of Corporate
Planning. While at the Company he has been extensively involved in strategic
planning, investor relations and company acquisitions. Prior to joining PCW, Mr.
Green spent five years with Forsch/Evanite Fiber Corporation, a leveraged buyout
firm, and six years at Arthur Andersen & Company, a national public accounting
firm. Mr. Green is a Certified Public Accountant and is a graduate of Miami
University.
VICTOR M. LANDAU has been with PCW and its predecessor, Palmer since 1984.
Before assuming his current role as Vice President--Technical Operations in
April 1998, Mr. Landau was the Director of Property Management/Site Acquisitions
from 1993 to 1998. From 1987 to 1993, Mr. Landau worked as the Technical
Operations Broadcast Division. Prior to joining the Company, Mr. Landau worked
as the Chief Engineer for the Collins Radio division of Rockwell International
from 1973-1975, and as a radio engineering consultant for E.H. Munn from
1977-1984. Mr. Landau attended Jacksonville University and the Milwaukee School
of Engineering.
K. PATRICK MEEHAN served as General Counsel and Assistant Secretary of
Palmer Communications, Inc. ("PCI"), from 1991 to March of 1995 when PCI was
acquired by Palmer. He continued in the same
61
<PAGE>
capacities with Palmer until its acquisition by PCW on October 6, 1997. Mr.
Meehan currently serves as Vice President--General Counsel and Secretary of PCW.
As an attorney with the law firm of Leibowitz & Spencer in Miami, Florida, from
1985 to May 1991, Mr. Meehan represented clients before the FCC and handled
corporate transactions involving broadcast, paging and cellular telephone
companies. He is a 1985 graduate of the Columbus School of Law and The Institute
for Communications Law Studies at The Catholic University of America in
Washington, D.C. Mr. Meehan is a member of the Florida Bar, the District of
Columbia Bar and the American Bar Association.
DIRECTOR COMPENSATION
Directors of Holdings are not paid fees.
EXECUTIVE COMPENSATION
The following table sets forth certain summary information concerning the
compensation paid to the executive officers of PCW for the three years ended
December 31, 1997.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
---------------
ANNUAL COMPENSATION SECURITIES
----------------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTION (3) COMPENSATION($)
- ---------------------------------------------- --------- ----------- ----------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
William J. Ryan, Chairman of the Board (1).... 1997 370,769 212,500 195,313 30,991(4)
1996 339,731 34,000 0 31,422
1995 331,651 119,880 130,000(9) 55,356
M. Wayne Wisehart, President and Chief
Executive Officer of PCW(2)................. 1997 186,635 57,000 146,406 18,873(5)
1996 152,211 15,250 0 23,559
1995 145,256 34,800 75,000(9) 33,417
Jeffrey L. Green, Vice President--Finance and
Chief Financial Officer..................... 1997 91,692 55,750 39,063 7,490(6)
1996 78,848 11,250 0 8,381
1995 64,327 0 10,000(9) 51,019
Victor M. Landau, Vice President--Technical
Operations.................................. 1997 77,033 41,120 19,531 7,931(7)
1996 73,365 8,400 0 8,220
1995 69,824 11,375 0 7,919
K. Patrick Meehan, Vice President--General
Counsel and Secretary....................... 1997 147,115 54,500 58,594 9,237(8)
1996 124,423 12,500 0 19,386
1995 109,936 26,400 65,000(9) 15,108
Jim Fredrickson, Vice
President--Engineering...................... 1997 113,462 91,125 97,656 6,092(10)
1996 99,438 10,248 0 7,200
1995 85,115 14,400 50,000(9) 7,173
Steve Carlson, Vice President--Operations..... 1997 112,788 104,812 78,125 7,966(11)
1996 94,615 18,910 0 7,930
1995 82,105 21,780 40,000(9) 8,038
</TABLE>
- ------------------------
(1) Prior to his promotion to such position effective April 1, 1998 Mr. Ryan
served as President and Chief Executive Officer of PCW.
(2) Prior to his promotion to such position effective April 1, 1998, Mr.
Wisehart served as Executive Vice President, Treasurer and Chief Financial
Officer of PCW.
(3) Gives effect to five-for-four stock splits of the Company's Common Stock in
the form of stock dividends, paid on December 23, 1997, April 1, 1998 and
April 30, 1998.
(4) Includes the following: auto allowance of $6,943 (including insurance and
license), financial services of $3,755, tax services of $1,975 and club dues
of $5,291.
(5) Includes the following: auto allowance of $6,774 (including insurance and
license), financial services of $1,375, club dues of $6,106 and medical
reimbursements of $4,619.
(6) Includes the following: auto allowance of $6,404 (including insurance and
license) and medical re-imbursements of $1,086.
(7) Includes the following: auto allowance of $7,931 (including insurance and
license).
(8) Includes the following: auto allowance of $7,042 (including insurance and
license), tax services of $275, medical re-imbursements of $1,283 and club
dues of $637.
(9) These options were granted by Palmer.
(10) Includes the following: auto allowance of $6,092.
(11) Includes the following: auto allowance of $7,966 (including insurance).
62
<PAGE>
STOCK OPTIONS
The following table reflects the number of options for shares of PCC's
Common Stock subject to options granted under PCC's 1992 Long Term Incentive
Plan (the "LTIP") during the year ended December 31, 1997 to the named executive
officers of PCW.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZED VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATED FOR OPTION
UNDERLYING GRANTED TO TERM(3)
OPTIONS EMPLOYEES IN EXERCISE ------------------------------
NAME GRANTED(1)(2) FISCAL YEAR PRICE(2) EXPIRATION DATE 5% 10%
- --------------------------------- ------------- --------------- ----------- ----------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
William J. Ryan (4).............. 195,313 12.7% $4.67 10/09 $573,622 $1,453,671
M. Wayne Wisehart................ 146,406 9.5% 4.67 10/09 429,985 1,089,667
Jeffrey L. Green................. 39,063 2.5% 4.67 10/09 114,725 290,737
Victor M. Landau................. 19,531 1.3% 5.37 12/09 66,959 167,154
K. Patrick Meehan................ 58,594 3.8% 4.67 10/09 172,087 436,102
Jim Fredrickson.................. 97,656 6.4% 4.67 10/09 286,810 726,832
Steve Carlson.................... 78,125 5.1% 4.67 10/09 229,448 581,467
</TABLE>
- ------------------------------
(1) Upon the occurrence of a "change in control" of PCC, as defined in the LTIP,
PCC's Stock Option and Compensation Committee may, in its discretion,
provide for the purchase of any then outstanding options by PCC or a
designated subsidiary for an amount of cash equal to the excess of (i) the
product of the "change in control price" (as defined below) and the number
of shares of the PCC Common Stock subject to the options over (ii) the
aggregate exercise price of such options. The change in control price means
the higher of (i) the higher price per share of the PCC Common Stock paid in
any transaction related to a change in control of PCC and (ii) the highest
"fair market value" as defined in the LTIP, of the PCC Common Stock at any
time during the 60-day period preceding the change in control.
(2) Number of options and exercise price give effect to five-for-four stock
splits, in the form of stock dividends, paid on December 23, 1997, April 1,
1998 and April 30, 1998.
(3) In order to realize these potential values, the closing price of the PCC
Common Stock on October 7, 2009 would have to be $7.61 and $12.11 per share
and on December 4, 2009 would have to be $8.80 and $13.93 per share,
respectively.
(4) Mr. Ryan's options terminated unexercised on April 1, 1998. See
"--Employment Agreements."
The following table reflects the number of stock options held by the named
executive officers of the Company on December 31, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
SHARES OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR IN-THE- MONEY OPTIONS AT
SHARES END(1) FISCAL YEAR END
ACQUIRED ON VALUE -------------------------- --------------------------
EXERCISE(1) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William J. Ryan (2)............ -- -- -- 195,313 -- $154,204
M. Wayne Wisehart.............. -- -- -- 146,406 -- 118,589
Jeffrey L. Green............... -- -- -- 39,065 -- 31,641
Victor M. Landau............... -- -- -- 19,531 -- 2,148
K. Patrick Meehan.............. 58,596 47,461
Jim Fredrickson................ -- -- -- 97,656 -- 79,097
Steve Carlson.................. -- -- -- 78,125 -- 63,278
</TABLE>
- ------------------------------
(1) Numbers of shares gives effect to five-for-four stock splits, in the form of
stock dividends, paid on December 23, 1997, April 1, 1998 and April 30,
1998.
(2) Mr. Ryan's options terminated unexercised on April 1, 1998. See
"--Employment Agreements."
63
<PAGE>
EMPLOYMENT AGREEMENTS
In 1997, PCW entered into an employment agreement with Mr. Ryan (the "Ryan
Agreement") for a term ending on December 31, 1999. The base salary rate per
annum under the Ryan Agreement for 1997 was $500,000, plus an annual bonus based
upon PCW's financial performance commencing in 1998. In connection with Mr.
Ryan's desire to serve as Chairman of the Board of the Company commencing
effective April 1, 1998, Mr. Ryan and PCW agreed that (i) Mr. Ryan will serve as
Chairman of the Board until December 31, 1998; (ii) in lieu of the other
compensation and benefits under the Ryan Agreement, Mr. Ryan received on April
1, 1998 a single lump sum payment of $875,000 and will participate in the
Company's Bonus Plan for 1998; and (iii) all options for the Company's Common
Stock held by Mr. Ryan be terminated.
In 1997, PCW entered into an employment agreement with Mr. Wisehart (the
"Wisehart Agreement") for an initial term ending on December 31, 1999. The
Wisehart Agreement has an automatic one-year renewal on each anniversary date
thereof. The base salary rate per annum under the Wisehart Agreement for 1997
was $300,000, plus an annual bonus based upon PCW's financial performance.
Pursuant to the Wisehart Agreement, when William J. Ryan ceased to be President
of PCW upon his promotion to Chairman of the Board of PCW, Mr. Wisehart assumed
the position of President for an annual base salary of $500,000, plus an annual
bonus based on PCW's financial performance. The Wisehart Agreement specifies
that if Mr. Wisehart is terminated by PCW other than for Cause (as defined
therein), disability or death or if Mr. Wisehart terminates the agreement for
Good Reason (as defined therein), PCW will pay to Mr. Wisehart the full base
salary and benefits which would otherwise have been paid to Mr. Wisehart, as
well as a pro-rated bonus, for two years after the date of termination (to be
paid at the time such payments are due).
In 1997, PCW entered into an employment agreement with Mr. Green (the "Green
Agreement") for an initial term ending on December 31, 1998. The Green Agreement
has an automatic one-year renewal on each anniversary date thereof. The base
salary rate per annum under the Green Agreement for 1997 was $113,000. A
separate agreement also provides for an annual bonus based on PCW's financial
performance. The Green Agreement specifies that if Mr. Green is terminated by
PCW other than for Cause (as defined therein), disability or death or if Mr.
Green terminates the agreement for Good Reason (as defined therein), PCW will
pay to Mr. Green the full base salary and benefits which would otherwise have
been paid to Mr. Green, as well as pro-rated bonus, through the first
anniversary of the date of termination (to be paid at the time such payments are
due).
Jim Fredrickson was terminated as of May 1, 1998 and Steve Carlson was
terminated as of April 15, 1998. Pursuant to their employment agreements, each
of Mr. Fredrickson and Mr. Carlson is entitled to severance payments, including
regular salary over the twelve months subsequent to their respective
terminations.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires directors and executive officers
of PCC to file with the Commission initial reports of ownership and reports of
changes in ownership of securities of PCC. Directors and executive officers are
required by Commission regulation to furnish PCC with copies of all Section
16(a) forms that they file. To PCC's knowledge, based solely on review of the
copies of such reports furnished to PCC and written representations that no
other reports were required, all Section 16(a) filing requirements applicable to
directors and executive officers were timely satisfied during the fiscal year
ended December 31, 1997.
64
<PAGE>
PRINCIPAL STOCKHOLDER
All of Holdings' issued and outstanding capital stock is owned indirectly by
PCC.
DESCRIPTION OF THE 13 1/2% HOLDINGS NOTES
The Company issued the 13 1/2% Notes on August 11, 1997 pursuant to an
indenture (the "13 1/2% Holdings Indenture") as part of an offering of Units
consisting of the 13 1/2% Holdings Notes and warrants to purchase PCC Shares.
The 13 1/2% Holdings Notes are senior obligations of Holdings and rank PARI
PASSU in right of payment with all existing and future senior Indebtedness of
Holdings and rank senior in right of payment to all future subordinated
Indebtedness of Holdings.
The issue price of the 13 1/2% Holdings Notes represents a yield to maturity
of 13 1/2% from August 7, 1997. The 13 1/2% Holdings Notes accrete at a rate of
13 1/2%, compounded semiannually, to an aggregate principal amount at maturity
of approximately $153.4 million by August 1, 2002. Cash interest will not
commence to accrue on the 13 1/2% Holdings Notes prior to August 2, 2002.
Commencing on February 1, 2003, cash interest on the 13 1/2% Notes will be
payable, at a rate of 13 1/2% per annum, semi-annually in arrears on each
February 1 and August 1. The 13 1/2% Holdings Notes are redeemable at the option
of Holdings, in whole or in part, at any time on or after August 1, 2002 in cash
at the redemption prices set forth below, plus accrued and unpaid interest, if
any, thereon to the redemption date:
<TABLE>
<CAPTION>
REDEMPTION
<S> <C>
YEAR PRICE
- ------------------------------------------------------------- -----------
2002......................................................... 106.750%
2003......................................................... 104.500%
2004......................................................... 102.250%
2005 and thereafter.......................................... 100.000%
</TABLE>
On or after August 1, 1998, the Company has the right to redeem all or any
part of the 13 1/2% Holdings Notes in cash at 120.000% of the Accreted Value (as
defined in the 13 1/2% Holdings Indenture) thereof, including accrued and unpaid
interest, if any, to the applicable redemption date (subject to the right of
holders of record on the relevant regular record date to receive interest due on
an interest payment date that is on or prior to the redemption date) if redeemed
during the 12-month period beginning August 1 of the years indicated below;
provided that redemptions may be made only if the closing price of PCC Shares
equals or exceeds the prices set forth below for ten consecutive trading days
prior to the redemption date in each period:
<TABLE>
<CAPTION>
PCC
<S> <C>
STOCK
YEAR PRICE
- ----------------------------------------------------------------- ---------
1998............................................................. $ 7.68
1999............................................................. $ 10.24
2000............................................................. $ 12.80
2001............................................................. $ 15.36
</TABLE>
The 13 1/2% Holdings Notes are unconditionally guaranteed (the "13 1/2%
Holdings Guarantee") by Price Communications Cellular, Inc. ("PCCI"), Holdings'
direct parent and the direct wholly owned subsidiary of PCC. The 13 1/2%
Holdings Guarantee is secured by a lien on and security interest in all of the
issued and outstanding capital stock of Holdings. PCCI is required to own 100%
of the common stock of Holdings.
Upon the occurrence of a Change of Control (as defined) each holder of the
13 1/2% Holdings Notes will have the right, subject to certain limitations, to
require the Company to repurchase such holder's 13 1/2% Holdings Notes at 101%
of the Accreted Value (as defined) thereof, plus accrued and unpaid interest
thereon, if any, to the repurchase date.
65
<PAGE>
The 13 1/2% Holdings Indenture contains covenants which are substantially
similar to those in the Indenture relating to the Notes and which impose certain
limitations on the ability of the Company and its subsidiaries to, among other
things, incur Indebtedness (as defined), make Restricted Payments (as defined),
effect certain Asset Sales (as defined), enter into certain transactions with
Related Persons (as defined), and merge or consolidate with any other person or
transfer all or substantially all of their properties and assets.
DESCRIPTION OF THE 11 3/4% PCW NOTES
PCW issued the 11 3/4% PCW Notes on July 10, 1997 pursuant to an indenture
(the "11 3/4% PCW Indenture"). The 11 3/4% PCW Notes are general unsecured
obligations of PCW and subordinated in right of payment to all existing and
future senior Indebtedness of PCW and rank PARI PASSU in right of payment to all
future senior subordinated Indebtedness of PCW and rank senior to all
subordinated indebtedness of PCW.
Commencing on January 15, 1998, cash interest on the 11 3/4% PCW Notes
became payable, at a rate of 11 3/4% per annum, semi-annually in arrears on each
January 15 and July 15. The 11 3/4% PCW Notes are redeemable at the option of
Holdings, in whole or in part, at any time on or after July 15, 2002 in cash at
the redemption prices set forth below, plus accrued and unpaid interest, if any,
thereon to the redemption date:
<TABLE>
<CAPTION>
REDEMPTION
<S> <C>
YEAR PRICE
- ------------------------------------------------------------- -----------
2002......................................................... 105.875%
2003......................................................... 104.406%
2004......................................................... 102.938%
2005......................................................... 101.469%
2006 and thereafter.......................................... 100.000%
</TABLE>
The 11 3/4% PCW Indenture contains covenants which are substantially similar
to those in the Indenture relating to the Notes and which impose certain
limitations on the ability of PCW and its subsidiaries to, among other things,
incur Indebtedness (as defined), make Restricted Payments (as defined), effect
certain Asset Sales (as defined), enter into certain transactions with Related
Persons (as defined), and merge or consolidate with any other person or transfer
all or substantially all of their properties and assets.
On November 14, 1997, in order to satisfy certain obligations of the Company
under the Registration Rights Agreement dated July 10, 1997, among the Company
and other signatories thereto, the Company offered to exchange registered $1,000
principal amount of 11 3/4% Series B Senior Subordinated Notes due 2007 (the
"Series B 11 3/4% PCW Notes") for each $1,000 principal amount of the issued and
outstanding 11 3/4% PCW Notes. The terms of the Series B 11 3/4% PCW Notes are
identical in all respect to the original 11 3/4% PCW Notes, except that the
offer of the Series B 11 3/4% PCW Notes were registered under the Securities Act
of 1933, as amended.
66
<PAGE>
DESCRIPTION OF THE SENIOR SECURED PCW NOTES
PCW issued the Secured PCW Notes on June 16, 1998 pursuant to an indenture
(the "Secured PCW Indenture"). The Secured PCW Notes are senior obligations of
PCW and rank (i) senior in right of payment to all subordinated Indebtedness of
PCW and (ii) effectively senior in right of payment to all unsecured
Indebtedness of PCW to the extent of the value of the Collateral (as defined in
the Secured PCW Indenture) available for the payment of the Secured PCW Notes.
Commencing December 15, 1998, cash interest on the Secured PCW Notes will be
payable, at 9 1/8% per annum, semi-annually in arrears on each June 15 and
December 15.
The Secured PCW Notes are guaranteed (the "Guarantees") by certain of PCW's
subsidiaries (the "Guarantors") and the Secured PCW Notes and the Guarantees are
secured by (a) the capital stock of certain subsidiaries (the "Securing
Subsidiaries") owned by PCW or any Guarantors and certain other assets of the
Securing Subsidiaries as can be perfected by the filing of a UCC-1 financing
statement with filing offices in the relevant jurisdictions and (b) certain cash
collateral and eligible investments from time to time pledged by PCW the
Guarantors.
The Secured PCW Notes are redeemable at the option of PCW, at any time on or
after June 15, 2002 in cash at the redemption prices set forth below, plus
accrued and unpaid interest, if any, thereon to the redemption date:
<TABLE>
<CAPTION>
REDEMPTION
<S> <C>
YEAR PRICE
- --------------------------------------------------------------------------------- -----------
2002............................................................................. 104.56250%
2003............................................................................. 102.28125%
2004 and thereafter.............................................................. 100.00000%
</TABLE>
The Secured PCW Indenture contains covenants which impose certain
limitations on the ability of PCW and its subsidiaries to, among other things,
incur Indebtedness (as defined), make Restricted Payments (as defined), effect
certain Asset Sales (as defined), enter into certain transactions with Related
Persons (as defined), and merge or consolidate with any other person or transfer
all or substantially all of their properties and assets.
The PCW Offering has not been registered under the Securities Act. However,
PCW is under an obligation to use its reasonable best efforts to cause a
registration statement to be declared effective with respect to an offer to
exchange the Secured PCW Notes within 150 days of the original issuance of the
Secured PCW Notes. If (i) such registration statement has not been declared
effective within such 150-day period, (ii) PCW has not consummated the exchange
offer within 180 days after the original issuance of the Secured PCW Notes or
(iii) a Shelf Registration Statement (as defined) is filed and declared
effective but thereafter ceases to be effective without being succeeded by an
additional Registration Statement filed and declared effective, then in such
case, PCW will be required to pay liquidated damages to the holders of the
Secured PCW Notes.
67
<PAGE>
DESCRIPTION OF NOTES
GENERAL
The Notes will be issued under an Indenture, dated as of July 31, 1998 (the
"Indenture"), by and between Holdings and Bank of Montreal Trust Company, as
trustee (the "Trustee"). The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the TIA. The
following summaries of certain provisions of the Indenture are summaries only,
do not purport to be complete and are qualified in their entirety by reference
to all of the provisions of those documents. Unless the context otherwise
requires, all references to "Holdings" in this section refer to Price
Communications Cellular Holdings, Inc. only and not its subsidiaries.
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned to them in the Indenture. Wherever particular provisions of the
Indenture are referred to in this summary, such provisions are incorporated by
reference as a part of the statements made and such statements are qualified in
their entirety by such reference.
The Notes will be general obligations of Holdings ranking senior to all
subordinated Indebtedness of Holdings and PARI PASSU in right of payment to all
other existing and future senior unsecured Indebtedness of Holdings. As of March
31, 1998, on a PRO FORMA basis after giving effect to the Offering and the PCW
Offering, in each case, including the application of the net proceeds therefrom.
Holdings, on a consolidated basis, would have had outstanding approximately
$900.0 million of Indebtedness. Holdings is a holding company and, therefore,
the Notes will be effectively subordinated to all liabilities (including trade
payables) of Holdings' subsidiaries (including the PCW Notes). At March 31,
1998, on a PRO FORMA basis as described above, Holdings' subsidiaries would have
had outstanding approximately $750.0 million of Indebtedness, including
Indebtedness under the PCW Notes, and $362.7 million of deferred taxes and other
liabilities. The Notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 and integral multiples thereof.
The Notes will mature on August 15, 2008. Each Note will bear interest
initially at the rate of % per annum from the date of issuance, or from
the most recent date to which interest has been paid or provided for, and will
be payable semiannually on February 15 and August 15 of each year, commencing on
February 15, 1999 (each an "Interest Payment Date"), to holders of record at the
close of business on the February 1 or August 1 immediately preceding the
Interest Payment Date (each a "Regular Record Date"). The interest rate on the
Notes will be permanently reduced by 0.50% once cash interest begins to accrue
on the Notes. Cash interest will begin to accrue on the Notes on February 15,
2003; PROVIDED that at any time prior to February 15, 2003, the Company may make
an election on any interest payment date to commence the accrual of cash
interest from and after such interest payment date, in which case, cash interest
will be payable on each interest payment date thereafter. Interest payable on
any interest payment date prior to the earlier of February 15, 2003 and the
Company's election to commence the accrual of cash interest shall be payable
through the issuance of additional Notes (valued at 100% of the principal amount
thereof). Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months. There can be no assurances that the Company will not make
an election to pay cash interest and thereby permanently reduce the interest
rate shortly after consummation of this Offering.
The Indenture will not contain provisions which would afford Holders of the
Notes protection in the event of a decline in Holdings' credit quality resulting
from highly leveraged or other similar transactions involving Holdings.
Subject to the covenants described below, the Company may issue additional
notes under the Indenture having the same terms in all respects as the Notes (or
in all respects except for the payment of interest on the Notes (i) scheduled
and paid prior to the date of issuance of such notes or (ii) payable on the
first Interst Payment Date following such date of issuance). The Notes offered
hereby and any such additional notes would be treated as a single class for all
purposes under the Indenture.
68
<PAGE>
Principal of, premium, if any, and interest on the Notes will be payable,
and, subject to the following provisions, the Notes may be presented for
registration of transfer or exchange, at the office or agency of Holdings
maintained for such purpose, which office or agency shall be maintained in the
Borough of Manhattan, The City of New York. At the option of Holdings, payment
of interest may be made by check mailed to the Holders of the Notes at the
addresses set forth upon the registry books of Holdings. No service charge will
be made for any registration of transfer or exchange of Notes, but Holdings may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. Until otherwise designated by Holdings,
Holdings' office or agency will be the corporate trust office of the Trustee
presently located at 88 Pine Street, 19th floor, New York, NY 10005.
Because Holdings conducts its operations through its subsidiaries, Holdings'
ability to meet its cash obligations is dependent upon the ability of its
subsidiaries to make cash distributions to Holdings. Furthermore, any right of
Holdings to receive the assets of any of its subsidiaries upon any such
subsidiary's liquidation (and the consequent right of the Holders of the Notes
to participate in the distribution of the proceeds of those assets) effectively
will be subordinated by operation of law to the claims of such subsidiary's
creditors (including trade creditors), except to the extent that Holdings is
itself recognized as a creditor of such subsidiary, in which case the claims of
Holdings would still be subordinate to any indebtedness of such subsidiary
senior in right of payment to that held by Holdings. In the event of the
liquidation, bankruptcy, reorganization, insolvency, receivership or similar
proceeding or any assignment for the benefit of the creditors of Holdings or a
marshalling of assets or liabilities of Holdings, Holders of the Notes may
receive ratably less than other such creditors or interest holders.
SINKING FUND
There will be no sinking fund payments for the Notes.
RANKING
The Notes will be general obligations of Holdings ranking senior to all
subordinated indebtedness of Holdings and PARI PASSU in right of payment to all
other existing and future senior unsecured Indebtedness of Holdings. The Notes
will be effectively subordinated to all liabilities of Holdings' subsidiaries.
As of March 31, 1998 on, a PRO FORMA basis after giving effect to the Offering
and the PCW Offering, in each case, including the application of the net
proceeds therefrom, Holdings, on a consolidated basis, would have had
outstanding approximately $850.0 million of Indebtedness. At March 31, 1998, on
a pro forma basis as described above, Holdings' subsidiaries would have had
outstanding approximately $700.0 million of Indebtedness, including Indebtedness
under the PCW Notes and $362.7 million of deferred taxes and other liabilities.
NEGATIVE PLEDGE
Holdings will not be permitted to pledge the stock of PCW or the stock of
any Restricted Subsidiary that owns common stock of PCW except pursuant to the
Credit Facility. Holdings will be required to own, directly or indirectly, 100%
of the common stock of PCW.
OPTIONAL REDEMPTION
Except as described under "Mandatory Exchange" and "Special Mandatory
Redemption" below, Holdings will not have the right to redeem any Notes prior to
August 15, 2003. On or after August 15, 2003, Holdings will have the right to
redeem all or any part of the Notes in cash at the redemption prices (expressed
as a percentage of the aggregate principal amount thereof) set forth below, in
each case including accrued and unpaid interest, if any, to the applicable
Redemption Date (subject to the right of Holders of record on the relevant
Regular Record Date to receive interest due on an Interest Payment
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Date that is on or prior to the Redemption Date) if redeemed during the 12-month
period beginning August 15 of the years indicated below:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- ---------------------------------------------------------------------------- ----------------
<S> <C>
2003........................................................................ %
2004........................................................................ %
2005........................................................................ %
2006 and thereafter......................................................... 100.000%
</TABLE>
In the case of a partial redemption, the Trustee shall select the Notes or
portion thereof for redemption on a PRO RATA basis or in such other manner as it
deems appropriate and fair. The Notes may be redeemed in part in multiples of
$1,000 only.
Subject to the following, notice of any redemption will be sent, by
first-class mail, at least 30 days and not more than 60 days prior to the date
fixed for redemption to the Holder of each Note to be redeemed to such Holder's
last address as then shown upon the books of the Registrar. Any notice which
relates to a Note to be redeemed in part only must state the portion of the
principal amount to be redeemed and must state that on and after the date fixed
for redemption, upon surrender of such Note, a new Note or Notes in a principal
amount equal to the unredeemed portion thereof will be issued. On and after the
date fixed for redemption, interest will cease to accrue on the portions of the
Notes called for redemption.
SPECIAL MANDATORY REDEMPTION
All (but not less than all) of the Notes shall be redeemed on August ,
1998 at a cash price equal to 101% of the principal amount thereof together with
accrued and unpaid interest to the date of redemption if all of the 13 1/2%
Holdings Notes have not been redeemed prior thereto, without any notice of
redemption.
MANDATORY EXCHANGE
In the event the Trading Price equals or exceeds 115% of the Exchange Price
for ten out of 15 consecutive Trading Days, each outstanding Note will be
mandatorily exchanged on the fifth Trading Day (the "Exchange Date") immediately
succeeding such tenth Trading Day (unless Holdings shall have elected on or
prior to the second Trading Day immediately succeeding such tenth Trading Day to
permanently terminate the mandatory exchange provisions of the Notes) into
PCC Shares (as defined in the Indenture) (subject to adjustment for certain
events) per $1,000 principal amount of Notes (initially equivalent to a price of
$ per share (the "Exchange Price")).
Subject to the following paragraph, on and after the Exchange Date, interest
will cease to accrue on the Notes. Each holder will be obligated to surrender
its Notes at the specified office of the Exchange Agent and PCC will be
obligated to issue the PCC Shares exchangeable therefor (the "Exchange Shares").
Such exchange will be effected through the facilities of The Depository Trust
Company ("DTC"), with each Holder being deemed to have automatically tendered
its Notes for exchange on the Exchange Date in accordance with applicable DTC
procedures. In the event the Exchange Date occurs on any date after a Regular
Record Date and on or before the next succeeding Interest Payment Date, Notes
surrendered for exchange must be accompanied by payment in next day funds of an
amount equal to the interest thereon, if any, which the registered Holder on
such Regular Record Date is to receive. Except as described in the preceding
sentence, no interest will be payable by the Company on the Notes with respect
to any Interest Payment Date subsequent to the Exchange Date. Each Holder's
automatic exchange will be subject to the delivery of the PCC Shares to the
Paying Agent prior to the Exchange Date.
Exchange of the Notes into the Exchange Shares shall be subject to
compliance with any reporting requirements or approvals established by the
Commission as may be amended, supplemented or superseded from time to time. In
the event that the mandatory exchange of Notes into PCC Shares on the Exchange
Date is prohibited by law, Holdings shall give notice thereof to the Trustee and
the Paying Agent and the Notes shall remain outstanding and the exchange shall
not occur until the first Trading Day thereafter when both (i) such exchange is
no longer prohibited by applicable law and (ii) the Trading Price equalled or
exceeded 115% of the Exchange Price for ten out of the 15 consecutive Trading
Days immediately preceding such Trading Day.
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GENERAL
The Exchange Price will be subject to adjustment in certain events,
including: (i) dividends (and other distributions) payable on any class of PCC's
capital stock in PCC Shares, (ii) the issuance to all holders of PCC Shares of
rights, options or warrants, or negotiable obligations, debentures or securities
convertible into PCC Shares or exercisable or exchangeable therefor, in each
case, entitling them to subscribe for or purchase or exchange for PCC Shares at
less than the current market price per PCC Share (as determined pursuant to the
Indenture), (iii) subdivisions, combinations and reclassifications of PCC
Shares, (iv) dividends or distributions to all holders of PCC Shares of any
shares of Capital Stock of PCC (other than shares of PCC Shares of any class) or
capital stock of PCC's subsidiaries or evidence of indebtedness of Holdings or
assets (including cash and securities, but excluding those dividends, rights,
options, warrants and distributions referred to above) and (v) mergers,
consolidations, reorganizations or spin-offs. No adjustments to the Exchange
Price will be required to be made until cumulative adjustments amount to 1% or
more of the Exchange Price as last adjusted and any adjustment below 1% will be
carried forward.
In the event that PCC shall distribute rights, options or warrants (other
than those referred to in (ii) in the preceding paragraph) ("Rights") PRO RATA
to holders of PCC Shares, so long as any such Rights have not expired or been
redeemed, the Holder of any Note surrendered for exchange will be entitled to
receive upon exchange, in addition to the Exchange Shares, a number of Rights to
be determined as follows: (i) if such exchange occurs on or prior to the date
for the distribution to the holders of Rights of separate certificates
evidencing such rights (the "Distribution Date"), the same number of Rights to
which a holder of a number of shares of PCC Shares equal to the number of
Exchange Shares is entitled at the time of such exchange in accordance with the
terms and provisions of and applicable to the Rights and (ii) if such exchange
occurs after such Distribution Date, the same number of Rights to which a holder
of the number of shares of PCC Shares into which such Note was exchangeable
immediately prior to such Distribution Date would have been entitled on such
Distribution Date in accordance with the terms and provisions of and applicable
to the Rights. The Exchange Price will not be subject to adjustments on account
of any declaration, distribution or exercise of such Rights.
On exchange of a Note, a Holder will not receive any cash payment
representing an accrued discount or premium payment. PCC's delivery to such
Holder of the Exchange Shares (or cash adjustment, as described below) into
which the Note is exchangeable will be deemed to satisfy Holdings' obligation to
pay the principal amount and any accrued discount or premium attributable to the
period from the Issue Date to the date of exchange.
Fractional PCC Shares are not to be issued upon exchange, but, in lieu
thereof, PCC will pay a cash adjustment based upon the market price of the PCC
Shares.
Bank of Montreal Trust Company will act as paying and exchange agents (the
"Exchange Agent") for the Notes. PCC will notify the Exchange Agent of all the
exchange price adjustments made as described above and a copy of such
calculation shall be maintained at the Exchange Agent's office.
CERTAIN COVENANTS
REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF CONTROL
The Indenture will provide that in the event that a Change of Control has
occurred, each Holder will have the right, at such Holder's option, pursuant to
an irrevocable and unconditional offer by Holdings (the "Change of Control
Offer"), to require Holdings to repurchase all or any part (equal to $1,000
principal amount or an integral multiple thereof) of such Holder's Notes, on a
date (the "Change of Control Purchase Date") that is no later than 45 Business
Days after the occurrence of such Change of Control at a cash price (the "Change
of Control Purchase Price") equal to 101% of the principal amount thereof,
together with any accrued and unpaid interest to the Change of Control Purchase
Date. The Change of Control Offer shall be made within 20 Business Days
following a Change of Control and shall
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remain open for 20 Business Days following its commencement (the "Change of
Control Offer Period"). Upon expiration of the Change of Control Offer Period,
Holdings shall purchase all Notes properly tendered in response to the Change of
Control Offer.
On or before the Change of Control Purchase Date, Holdings will (i) accept
for payment Notes or portions thereof properly tendered pursuant to the Change
of Control Offer, (ii) deposit with the Paying Agent cash sufficient to pay the
Change of Control Purchase Price (together with accrued and unpaid interest) of
all Notes so tendered and (iii) deliver to the Trustee Notes so accepted
together with an Officers' Certificate listing the Notes or portions thereof
being purchased by Holdings. The Paying Agent promptly will deliver to the
Holders of Notes so accepted payment in an amount equal to the Change of Control
Purchase Price (together with any accrued and unpaid interest), and the Trustee
will promptly authenticate and mail or deliver to such Holders a new Note equal
in principal amount to any unpurchased portion of the Note surrendered. Any
Notes not so accepted will be promptly mailed or delivered by Holdings to the
Holder thereof. Holdings will announce publicly the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Purchase
Date.
The Change of Control purchase feature of the Notes may make more difficult
or discourage a takeover of Holdings or its Parent, and, thus, the removal of
incumbent management. The Change of Control purchase feature resulted from
negotiations between Holdings and the Underwriters and is not the result of any
intention on the part of Holdings or its Parent or their management to
discourage the acquisition of Holdings or its Parent.
Any Change of Control Offer will be made in compliance with all applicable
laws, rules and regulations, including, if applicable, Regulation 14E under the
Exchange Act and the rules thereunder and all other applicable Federal and state
securities laws and Holdings may modify a Change of Control Offer to the extent
necessary to effect such compliance.
LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS
The Indenture will provide that after the Issue Date Holdings will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly,
issue, create, incur, assume, guarantee or otherwise directly or indirectly
become liable for (including as a result of an acquisition), or otherwise become
responsible for, contingently or otherwise (individually or collectively, to
"Incur" or, as appropriate, an "Incurrence"), any Indebtedness. Neither the
accrual of interest (including the issuance of "pay in kind" securities or
similar instruments in respect of such accrued interest) pursuant to the terms
of Indebtedness Incurred in compliance with this covenant, nor the accretion of
original issue discount, nor the mere extension of the maturity of any
Indebtedness shall be deemed to be an Incurrence of Indebtedness.
Notwithstanding the foregoing, if there exists no Default or Event of
Default immediately prior and subsequent thereto, (x) Holdings may Incur
Indebtedness if Holdings' Annualized Operating Cash Flow Ratio, after giving
effect to the Incurrence of such Indebtedness, would have been less than 8.5 to
1 and (y) any Restricted Subsidiary may Incur Indebtedness if such Restricted
Subsidiary's Annualized Operating Cash Flow Ratio, after giving effect to the
Incurrence of such Indebtedness, would have been less than 8.0 to 1.
In addition, if there exists no Default or Event of Default immediately
prior and subsequent thereto, the foregoing limitations will not apply to the
Incurrence of (i) Indebtedness by Holdings or any of its Restricted Subsidiaries
constituting Existing Indebtedness, reduced by repayments of and permanent
reductions in commitments in satisfaction of the Net Cash Proceeds application
requirement set forth under "Limitation on Asset Sales and Sales of Subsidiary
Stock" below and by repayments and permanent reductions in amounts outstanding
pursuant to scheduled amortizations and mandatory prepayments in accordance with
the terms thereof, (ii) Indebtedness, in an aggregate principal amount not in
excess of $525,000,000, permitted under the Credit Facility, reduced by (a)
repayments of and permanent reductions in commitments in satisfaction of the Net
Cash Proceeds application requirement set forth in the
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"Limitation on Asset Sales and Sales of Subsidiary Stock" covenant and (b) an
amount equal to the sum of (A) the outstanding principal amount of the PCW
Secured Notes and (B) the aggregate amount of Indebtedness Incurred pursuant to
clause (x) below to refinance the PCW Secured Notes or the Credit Facility so
long as such amounts Incurred pursuant to clause (x) remain outstanding;
provided that, if there exists a Default or an Event of Default immediately
prior or subsequent thereto, Holdings and its Restricted Subsidiaries may Incur
Indebtedness pursuant to this clause (ii) so long as the proceeds from such
Incurrence are not used, directly or indirectly, to pay any amounts owing in
respect of any Indebtedness, including, without limitation, principal, interest
and commitment fees, other than with respect to the Notes, (iii) Indebtedness of
Holdings evidenced by the Notes, (iv) (A) Permitted Acquisition Indebtedness of
Holdings or any Restricted Subsidiaries that satisfies the provisions of clause
(x) of the definition thereof or (B) Permitted Acquisition Indebtedness of any
Restricted Subsidiary that satisfies the provisions of clause (y) of the
definition thereof, (v) Indebtedness between Holdings and any Restricted
Subsidiary of Holdings or between Restricted Subsidiaries of Holdings; PROVIDED,
HOWEVER, that, in the case of Indebtedness of Holdings, such obligations shall
be unsecured and subordinated in all respects to the Holders' rights pursuant to
the Notes, and the date of any event that causes a Restricted Subsidiary no
longer to be a Restricted Subsidiary shall be an Incurrence date with respect to
such Indebtedness, (vi) Capitalized Lease Obligations and Purchase Money
Indebtedness in an aggregate amount or aggregate principal amount, as the case
may be, outstanding at any time not to exceed in the aggregate $15,000,000,
(vii) Indebtedness of Holdings or any Restricted Subsidiary arising from
agreements providing for indemnification, adjustment of purchase price or
similar obligations, or from guarantees or letters of credit, surety bonds or
performance bonds securing any obligations of Holdings or its Restricted
Subsidiaries pursuant to such agreements, in any case Incurred in connection
with the disposition of any business, assets or Restricted Subsidiary of
Holdings to the extent none of the foregoing results in the obligation to repay
an obligation for money borrowed by any Person and are limited in aggregate
amount to no greater than 10% of the fair market value of such business, assets
or Restricted Subsidiary so disposed of, (viii) Indebtedness of Holdings or any
Restricted Subsidiary under standby letters of credit or reimbursement
obligations with respect thereto issued in the ordinary course of business and
consistent with industry practices limited in aggregate amount to $5,000,000 at
any one time outstanding, (ix) Indebtedness of Holdings or any Restricted
Subsidiary (other than Indebtedness permitted by the first paragraph hereof or
clauses (i) through (viii) or (x) hereof) not to exceed $100,000,000 at any one
time outstanding and (x) Refinancing Indebtedness Incurred to extend, renew,
replace or refund Indebtedness permitted under the first paragraph hereof or
clauses (i) (as so reduced in amount), (ii) (as so reduced in amount), (iii),
(iv) and (x) of this paragraph.
For purposes of determining compliance with this covenant, in the event that
an item of Indebtedness meets the criteria of more than one of the categories
described above or is entitled to be incurred pursuant to the second paragraph
of the covenant described above, Holdings shall, in its sole discretion,
classify such item of Indebtedness in any manner that complies with the covenant
described above and such item of Indebtedness will be treated as having been
incurred pursuant to only one of such clauses or pursuant to the second
paragraph above. In addition, Holdings may, at any time, change the
classification of an item of Indebtedness (or any portion thereof) to any other
clause or to the second paragraph hereof, provided that Holdings would be
permitted to Incur such item of Indebtedness (or such portion thereof) pursuant
to such other clause or the second paragraph hereof, as the case may be, at such
time of reclassification.
Indebtedness of any Person that is not a Restricted Subsidiary of Holdings
(or that is a Non-Recourse Restricted Subsidiary designated to be a Restricted
Subsidiary, but no longer a Non-Recourse Restricted Subsidiary), which
Indebtedness is outstanding at the time such Person becomes such a Restricted
Subsidiary of Holdings or is merged with or into or consolidated with Holdings
or a Restricted Subsidiary of Holdings shall be deemed to have been Incurred, as
the case may be, at the time such Person becomes such a Restricted Subsidiary of
Holdings, or is merged with or into or consolidated with Holdings or a
Restricted Subsidiary of Holdings.
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LIMITATION ON RESTRICTED PAYMENTS
The Indenture will provide that after the Issue Date Holdings will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly,
make any Restricted Payment, if, immediately prior or after giving effect
thereto (a) a Default or an Event of Default would exist, (b) Holdings'
Annualized Operating Cash Flow Ratio for the Reference Period would exceed 8.5
to 1, or (c) the aggregate amount of all Restricted Payments made by Holdings
and its Restricted Subsidiaries, including such proposed Restricted Payment (if
not made in cash, then the fair market value of any property used therefor, as
determined in good faith by the Board of Directors) from and after the Issue
Date and on or prior to the date of such Restricted Payment, shall exceed the
sum of (i) the amount determined by subtracting (x) 2.0 times the aggregate
Consolidated Interest Expense of Holdings for the period (taken as one
accounting period) from the Issue Date to the last day of the last full fiscal
quarter prior to the date of the proposed Restricted Payment (the "Computation
Period") from (y) Operating Cash Flow of Holdings for the Computation Period,
plus (ii) the aggregate Net Proceeds received by Holdings from (x) Equity
Offerings (other than to a Subsidiary of Holdings) after the Issue Date and on
or prior to the date of such Restricted Payment or (y) Capital Contributions to
the Company after the Issue Date, PLUS (iii) to the extent not otherwise
included in clauses (i) or (ii), above, an amount equal to the net reduction in
Investments in Unrestricted Subsidiaries resulting from payments of dividends,
repayment of loans or advances, or other transfers of assets, in each case to
Holdings or any Wholly Owned Restricted Subsidiary of Holdings from Unrestricted
Subsidiaries, or from redesignations of Unrestricted Subsidiaries as Restricted
Subsidiaries (valued in each case as provided in the definition of
"Investments"), not to exceed, in the case of any Unrestricted Subsidiary, the
amount of Investments previously made by Holdings and any Restricted Subsidiary
in such Unrestricted Subsidiary.
Notwithstanding the foregoing paragraph, the provisions set forth in clause
(b) or (c) of the immediately preceding paragraph will not prohibit (i) the use
of an aggregate of $15,000,000 to be used for Restricted Payments not otherwise
permitted by this "Limitation on Restricted Payments" covenant, and (ii) any
dividend, distribution or other payment by any Restricted Subsidiary on shares
of its Capital Stock that is paid pro rata to all holders of such Capital Stock,
and notwithstanding the foregoing paragraph, the provisions set forth in clause
(a), (b) or (c) of the immediately preceding paragraph will not prohibit (x) the
payment of any dividend within 60 days after the date of its declaration if such
dividend could have been made on the date of its declaration in compliance with
the foregoing provisions, or (y) the redemption, defeasance, repurchase or other
acquisition or retirement of any Indebtedness or Capital Stock of Holdings or
its Restricted Subsidiaries either in exchange for or out of the Net Proceeds of
a substantially concurrent Equity Offering (in the case of any redemption,
defeasance, repurchase or other acquisition or retirement of any Junior
Indebtedness or Capital Stock of Holdings or its Restricted Subsidiaries and
other than to a Subsidiary of Holdings) or sale of Junior Indebtedness (in the
case of any redemption, defeasance, repurchase or other acquisition or
retirement of any Indebtedness of Holdings or its Restricted Subsidiaries) of
Holdings.
In determining the aggregate amount expended for Restricted Payments in
accordance with clause (c) of the first paragraph of this description of the
"Limitations on Restricted Payments" covenant, 100% of the amounts expended
under clauses (i), (ii), (x) and (y) of the immediately preceding paragraph
shall be included as Restricted Payments from and after the Issue Date.
LIMITATION ON RESTRICTING SUBSIDIARY DIVIDENDS
The Indenture will provide that Holdings will not, and will not permit any
of its Restricted Subsidiaries to, with respect to securities issued directly
thereby or with respect to which they are obligors, directly or indirectly,
create, assume or suffer to exist any consensual encumbrance or restriction on
the ability of any Restricted Subsidiary of Holdings to pay dividends or make
other distributions on the Capital Stock of any Restricted Subsidiary of
Holdings or pay or satisfy any obligation to Holdings or any of its Restricted
Subsidiaries or otherwise transfer assets or make or pay loans or advances to
Holdings or any of its
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Restricted Subsidiaries, except encumbrances and restrictions existing under (i)
any Indebtedness permitted by the Indenture to be incurred by any Restricted
Subsidiary, (ii) the indentures governing the Notes and the PCW Notes, (iii) any
Existing Indebtedness, (iv) the Credit Facility, (v) any applicable law or any
governmental or administrative regulation or order, (vi) Refinancing
Indebtedness permitted under the Indenture, PROVIDED, HOWEVER, that the
restrictions contained in the instruments governing such Refinancing
Indebtedness are no more restrictive in the aggregate than those contained in
the instruments governing the Indebtedness (in the good faith judgment of
Holdings' Board of Directors) being refinanced immediately prior to such
refinancing, (vii) restrictions with respect solely to a Restricted Subsidiary
of Holdings imposed pursuant to a binding agreement which has been entered into
for the sale or disposition of all or substantially all of the Capital Stock or
assets of such Restricted Subsidiary, PROVIDED, HOWEVER, that such restrictions
apply solely to the Capital Stock or assets (in the good faith judgment of
Holdings' Board of Directors) being sold of such Restricted Subsidiary, (viii)
restrictions contained in any agreement relating to the financing of the
acquisition of a Person or property, business or assets after the Issue Date
which are not applicable to any Person or property, business or assets other
than the Person or property so acquired and which either (A) were not put in
place in anticipation of or in connection with such acquisition or (B)
constituted Permitted Acquisition Indebtedness of a Person satisfying the
provisions of clause (y) of the definition thereof or (ix) any agreement (other
than those referred to in clause (viii)) of a Person acquired by Holdings or a
Restricted Subsidiary of Holdings, which restrictions existed at the time of
acquisition and were not put in place in anticipation of or in connection with
such acquisition. Notwithstanding the foregoing, neither (a) customary
provisions restricting subletting or assignment of any lease entered into the
ordinary course of business, consistent with past practices nor (b) Permitted
Liens, shall in and of themselves be considered a restriction on the ability of
the applicable Restricted Subsidiary to transfer such agreement or assets, as
the case may be.
LIMITATION ON TRANSACTIONS WITH RELATED PERSONS
The Indenture will provide that, after the Issue Date, Holdings will not,
and will not permit any of its Restricted Subsidiaries to, enter into any
contract, agreement, arrangement or transaction with any Related Person (each a
"Related Person Transaction"), or any series of Related Person Transactions,
except for transactions made in good faith, the terms of which are (i) fair and
reasonable to Holdings or such Subsidiary, as the case may be, and (ii) are at
least as favorable as the terms which could be obtained by Holdings or such
Subsidiary, as the case may be in a comparable transaction made on an arm's
length basis with Persons who are not Related Persons.
Without limiting the foregoing, (a) any Related Person Transaction or series
of Related Person Transactions with an aggregate value in excess of $1,000,000
must first be approved by a majority of the Board of Directors of Holdings who
are disinterested in the subject matter of the transaction pursuant to a Board
Resolution and (b) with respect to any Related Person Transaction or series of
Related Person Transactions with an aggregate value in excess of $5,000,000,
Holdings must first obtain a favorable written opinion from an independent
financial advisor of national reputation as to the fairness from a financial
point of view of such transaction to Holdings or such Subsidiary, as the case
may be.
Notwithstanding the foregoing, the following shall not constitute Related
Person Transactions: (i) reasonable and customary payments on behalf of
directors, officers or employees of Holdings or any of its Restricted
Subsidiaries, or in reimbursement of reasonable and customary payments or
reasonable and customary expenditures made or incurred by such Persons as
directors, officers or employees, (ii) any contract, agreement, arrangement or
transaction solely between or among Holdings and any of its Restricted
Subsidiaries or between or among Restricted Subsidiaries of Holdings, (iii) any
Restricted Payment not prohibited by the "--Limitation on Restricted Payments"
above, (iv) any loan or advance by Holdings or a Restricted Subsidiary to
employees of Holdings or a Restricted Subsidiary in the ordinary course of
business, in an aggregate amount at any one time outstanding not to exceed
$500,000 and (v) any payment pursuant to a tax sharing agreement between
Holdings and any other Person with which Holdings
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is required or permitted to file a consolidated tax return or with which
Holdings is or could be part of a consolidated group for tax purposes, which
payments are not in excess of the tax liabilities attributable solely to
Holdings and its Restricted Subsidiaries (as a consolidated group).
LIMITATION ON ASSET SALES AND SALES OF SUBSIDIARY STOCK
The Indenture will provide that after the Issue Date Holdings will not, and
will not permit any of its Restricted Subsidiaries to, in one or a series of
related transactions, convey, sell, transfer, assign or otherwise dispose of,
directly or indirectly, any of its property, businesses or assets, including by
merger or consolidation, and including any sale or other transfer or issuance of
any Capital Stock of any Restricted Subsidiary of Holdings whether by Holdings
or a Restricted Subsidiary (any such transaction an "Asset Sale"), unless
(1) (a) within 360 days after the date of such Asset Sale, an amount equal
to the Net Cash Proceeds therefrom (the "Asset Sale Offer Amount") is applied to
the optional redemption of the Notes in accordance with the terms of the
Indenture and other Indebtedness of Holdings ranking on a parity with the Notes
from time to time outstanding with similar provisions requiring Holdings to make
an offer to purchase or to redeem such Indebtedness with the proceeds from asset
sales, PRO RATA in proportion to the respective principal amounts (or accreted
values in the case of Indebtedness issued with an original issue discount) of
the Notes and such other Indebtedness then outstanding or to the repurchase of
the Notes and such other Indebtedness pursuant to an irrevocable, unconditional
offer (PRO RATA in proportion to the respective principal amounts (or accreted
values in the case of Indebtedness issued with an original issue discount) of
the Notes and such other Indebtedness then outstanding) (the "Asset Sale Offer")
to repurchase such Indebtedness at a purchase price in cash (the "Asset Sale
Offer Price") of 100% of the principal amount thereof (or accreted value in the
case of Indebtedness issued with an original issue discount) plus, in each case,
accrued interest to the date of payment, made within 330 days of such Asset
Sale, or (b) within 330 days of such Asset Sale, the Asset Sale Offer Amount is
(i) invested (or committed, pursuant to a binding commitment subject only to
reasonable, customary closing conditions, to be invested, and in fact is so
invested, within an additional 90 days) in assets and property (other than
notes, obligations or securities), which in the good faith reasonable judgment
of the Board of Directors of Holdings are of a type used in a Related Business,
or Capital Stock of a Person (which, if such Person becomes a Subsidiary of
Holdings by virtue of such Asset Sale, shall initially be designated a
Restricted Subsidiary) all or substantially all of whose assets and property (in
the good faith reasonable judgment of the Board of Directors of Holdings) are of
a type used in a Related Business (PROVIDED, HOWEVER, that, with respect to such
Capital Stock, all of the requirements of the last proviso of clause (v) of the
following paragraph shall have been satisfied), or (ii) used to retire
permanently any Senior Indebtedness of Holdings or any Indebtedness of a
Restricted Subsidiary (other than a Non-Recourse Restricted Subsidiary);
(2) with respect to any transaction or related series of transactions of
securities, property or assets with an aggregate fair market value in excess of
$1,000,000, at least 75% of the value of consideration for the assets disposed
of in such Asset Sale (excluding (a) Senior Indebtedness (and any Refinancing
Indebtedness issued to refinance any such Indebtedness) or Indebtedness of any
Restricted Subsidiary assumed by a transferee which assumption permanently
reduces the amount of Indebtedness outstanding on the Issue Date and permitted
to have been Incurred pursuant to "--Limitation on Incurrence of Additional
Indebtedness" (including that in the case of a revolver or similar arrangement
that makes credit available, such commitment is permanently reduced by such
amount), (b) Purchase Money Indebtedness secured exclusively by the assets
subject to such Asset Sale which is assumed by a transferee and (c) marketable
securities that are promptly converted into cash or Cash Equivalents) consists
of cash or Cash Equivalents, PROVIDED, HOWEVER, that any cash or Cash
Equivalents received within 12 months following any such Asset Sale upon
conversion of any property or assets (other than in the form of cash or Cash
Equivalents) received in consideration of such Asset Sale shall be applied
promptly in the manner required of Net Cash Proceeds of any such Asset Sale as
set forth above;
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(3) no Default or Event of Default shall occur or be continuing after giving
effect to, on a PRO FORMA basis, such Asset Sale, unless such Asset Sale is in
consideration solely of cash or Cash Equivalents and such consideration is
applied immediately to the permanent reduction of the principal amount of
Indebtedness outstanding pursuant to other Senior Indebtedness of Holdings or
Indebtedness of any Restricted Subsidiary, and
(4) the Board of Directors of Holdings determines in good faith that
Holdings or such Restricted Subsidiary, as applicable, would receive fair market
value in consideration of such Asset Sale.
The Indenture will provide that an Asset Sale Offer may be deferred until
the accumulated Net Cash Proceeds from Asset Sales not applied to the uses set
forth in (1) (b) above exceeds $5,000,000 and that each Asset Sale Offer shall
remain open for 20 Business Days following its commencement and no longer,
except as otherwise required by applicable law (the "Asset Sale Offer Period").
Upon expiration of the Asset Sale Offer Period, Holdings shall apply the Asset
Sale Offer Amount, plus an amount equal to accrued interest, to the purchase of
all Indebtedness properly tendered (on a PRO RATA basis as described above if
the Asset Sale Offer Amount is insufficient to purchase all Indebtedness so
tendered) at the Asset Sale Offer Price (together with accrued interest).
Notwithstanding the foregoing provisions of the second preceding paragraph:
(i) Holdings and its Restricted Subsidiaries may, in the ordinary course
of business, convey, sell, lease, transfer, assign or otherwise dispose of
assets acquired and held for resale in the ordinary course of business;
(ii) Holdings and its Restricted Subsidiaries may convey, sell, lease,
transfer, assign or otherwise dispose of assets pursuant to and in
accordance with "--Limitation on Merger, Sale or Consolidation";
(iii) Holdings and its Restricted Subsidiaries may sell or dispose of
damaged, worn out or other obsolete property in the ordinary course of
business so long as such property is no longer necessary for the proper
conduct of the business of Holdings or such Restricted Subsidiary, as
applicable;
(iv) Holdings and its Restricted Subsidiaries may convey, sell, lease,
transfer, assign or otherwise dispose of assets to Holdings or any of its
Restricted Subsidiaries; and
(v) Holdings and its Restricted Subsidiaries may, in the ordinary course
of business (or, if otherwise than in the ordinary course of business, upon
receipt of a favorable written opinion by an independent financial advisor
of national reputation as to the fairness from a financial point of view to
Holdings or such Restricted Subsidiary of the proposed transaction),
exchange all or a portion of its property, businesses or assets for
property, businesses or assets which are, or Capital Stock of a Person all
or substantially all of whose assets are, of a type used in a Related
Business (provided that such Person shall initially be designated a
Restricted Subsidiary if such Person becomes a Subsidiary of Holdings by
virtue of such Asset Sale), or a combination of any such property,
businesses or assets, or Capital Stock of such a Person and cash or Cash
Equivalents; PROVIDED, HOWEVER, that (a) there shall not exist immediately
prior or subsequent thereto a Default or an Event of Default, (b) a majority
of the independent directors of the Board of Directors of Holdings shall
have approved a Board Resolution that such exchange is fair to Holdings or
such Restricted Subsidiary, as the case may be, and (c) any cash or Cash
Equivalents received pursuant to any such exchange shall be applied in the
manner applicable to Net Cash Proceeds from an Asset Sale as set forth
pursuant to the provisions of the immediately preceding paragraph of this
covenant; and PROVIDED, FURTHER, that any Capital Stock of a Person received
in an Asset Sale pursuant to this clause (v) shall be owned directly by
Holdings or a Restricted Subsidiary and, when combined with the Capital
Stock of such Person already owned by Holdings and its Restricted
Subsidiaries, shall constitute a majority of the voting power and Capital
Stock of such Person, unless (A) (I) Holdings has received a binding
commitment from such Person (or the direct or indirect parent of such
Person) that such Person (or the direct or indirect parent of
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such Person) will distribute to Holdings in cash an amount equal to
Holdings's Annualized Operating Cash Flow (determined as of the date of such
Asset Sale) attributable to the property, business or assets of Holdings and
its Restricted Subsidiaries exchanged in connection with such Asset Sale
during each consecutive 12-month period subsequent to such Asset Sale
(unless and until Holdings shall have sold all of such Capital Stock,
provided that the provisions of clause (B) below, if applicable, shall have
been satisfied), (II) immediately after such Asset Sale the aggregate number
of Net Pops of the Cellular Systems wireless communications systems in which
Holdings or any of its Restricted Subsidiaries has ownership interests
("Company Systems") that are owned directly by a Person or Persons a
majority of whose voting power and Capital Stock is owned directly or
indirectly by Holdings is no less than 80% of the aggregate number of Net
Pops of Company Systems immediately prior to such Asset Sale and (III) upon
consummation of such Asset Sale, on a PRO FORMA basis, the ratio of such
Person's Annualized Operating Cash Flow to the product of Consolidated
Interest Expense for the Reference Period multiplied by four (but excluding
from Consolidated Interest Expense all amounts that are not required to be
paid in cash on a current basis) shall be at least 1.0 to 1, or (B) in the
case of Capital Stock of a Person that is not a Subsidiary of Holdings owned
by Holdings or a Restricted Subsidiary that is exchanged (the "Exchanged
Capital Stock") for Capital Stock of another Person all or substantially all
of whose assets are of a type used in a Related Business, either (i) the
Exchanged Capital Stock shall not have been acquired prior to such Asset
Sale in reliance upon clause (A) of this proviso or (ii) the requirements of
subclauses (A) (I) (based on the original guaranteed cash flow) and (A)
(III) shall be satisfied with respect to any Capital Stock acquired in
consideration of the Exchanged Capital Stock.
Restricted Payments that are made in compliance with, and are counted
against amounts available to be made as Restricted Payments pursuant to clause
(c) of "--Limitation on Restricted Payments" above, without giving effect to
clause (i) of the second paragraph thereof, shall not be deemed to be Asset
Sales.
Any Asset Sale Offer shall be made in compliance with all applicable laws,
rules, and regulations, including, if applicable, Regulation 14E of the Exchange
Act and the rules and regulations thereunder and all other applicable Federal
and state securities laws.
LIMITATION ON LIENS
The Indenture will provide that Holdings will not and will not permit any
Restricted Subsidiary, directly or indirectly, to Incur or suffer to exist any
Lien upon any of its property or assets, whether now owned or hereafter acquired
other than Permitted Liens unless contemporaneously therewith effective
provision is made to secure the Notes equally and ratably with such Indebtedness
with a Lien on the same properties and assets securing such Indebtedness for so
long as such Indebtedness is secured by such Lien.
LIMITATION ON STATUS AS INVESTMENT COMPANY
The Indenture will prohibit Holdings and its Restricted Subsidiaries from
becoming "investment companies" (as that term is defined in the Investment
Company Act of 1940, as amended), or from otherwise becoming subject to
regulation under the Investment Company Act.
LIMITATION ON MERGER, SALE OR CONSOLIDATION
The Indenture will provide that Holdings will not consolidate with or merge
with or into another Person, or sell, lease, convey, transfer or otherwise
dispose of all or substantially all of its and its Restricted Subsidiaries'
assets (computed on a consolidated basis), whether in a single transaction or a
series of related transactions, to another Person or group of affiliated
Persons, unless (i) either (A) Holdings is the continuing entity or (B) the
resulting, surviving or transferee entity is a corporation organized under the
laws of the United States, any state thereof or the District of Columbia and
expressly assumes by supplemental indenture all of the obligations of Holdings
in connection with the Notes and the Indenture
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PROVIDED, HOWEVER, that in the case of a sale, lease, conveyance, transfer or
other disposition of all or substantially all of Holdings' and its Restricted
Subsidiaries' assets, the provisions of this clause (i)(B) need not be met if
all of the consideration in respect of such transaction is received by Holdings
and its Restricted Subsidiaries (other than any Non-Recourse Restricted
Subsidiary); (ii) no Default or Event of Default shall exist or shall occur
immediately after giving effect on a PRO FORMA basis to such transaction; (iii)
(A) immediately after giving effect to such transaction on a PRO FORMA basis,
the consolidated resulting surviving or transferee entity (or, in the case
contemplated by the proviso to clause (i)(B), Holdings) would immediately
thereafter be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Annualized Operating Cash Flow Ratio provision set forth in the
second paragraph of "--Limitation on Incurrence of Additional Indebtedness"
above or (B), if the requirement of clause (A) is not satisfied, (x) any
Indebtedness of the resulting surviving or transferee entity (or, in the case
contemplated by the proviso to clause (i)(B), Holdings) in excess of the amount
of Holdings' Indebtedness immediately prior to such transaction is Permitted
Acquisition Indebtedness and (y) the requirement of clause (A) is not satisfied
solely due to the Incurrence of such Permitted Acquisition Indebtedness; and
(iv) Holdings shall have delivered to the Trustee an Officers' Certificate and
an opinion of counsel, if applicable, confirming compliance with the
requirements of this covenant.
Upon any consolidation or merger or any transfer of all or substantially all
of the assets of Holdings in accordance with the foregoing, the successor
corporation formed by such consolidation or into which Holdings is merged or to
which such transfer is made, shall (other than as provided in the proviso to
clause (i)(B) of the preceding paragraph) succeed to, and be substituted for,
and may exercise every right and power of, Holdings under the Indenture with the
same effect as if such successor corporation had been named therein as Holdings,
and Holdings shall be released from the obligations under the Notes and the
Indenture.
LIMITATION ON LINES OF BUSINESS
The Indenture will provide that neither Holdings nor any of its Restricted
Subsidiaries shall directly or indirectly engage in any line or lines of
business activity other than that which, in the reasonable, good faith judgment
of the Board of Directors of Holdings, is a Related Business.
RESTRICTION ON SALE AND ISSUANCE OF SUBSIDIARY STOCK
The Indenture will provide that Holdings will not sell, and will not permit
any of its Restricted Subsidiaries to issue or sell, any shares of Capital Stock
of any Restricted Subsidiary of Holdings to any Person other than Holdings or a
Wholly Owned Restricted Subsidiary of Holdings, except for shares of common
stock with no preferences or special rights or privileges and with no redemption
or prepayment provisions ("Special Rights"); PROVIDED, HOWEVER, that, in the
case of a Restricted Subsidiary that is a partnership or joint venture
partnership (a "Restricted Partnership"), Holdings or any of its Restricted
Subsidiaries may sell or such Restricted Partnership may issue or sell Capital
Stock of such Restricted Partnership with Special Rights no more favorable than
those held by Holdings or such Restricted Subsidiary in such Restricted
Partnership.
REPORTS
The Indenture will provide that whether or not Holdings is subject to the
reporting requirements of Section 13 or 15 (d) of the Exchange Act, Holdings
shall deliver to the Trustee and to each Holder, within 15 days after it is or
would have been required to file such with the Commission, annual and quarterly
financial statements substantially equivalent to financial statements that would
have been included in reports filed with the Commission, if Holdings were
subject to the requirements of Section 13 or 15(d) of the Exchange Act,
including, with respect to annual information only, a report thereon by
Holdings' certified independent public accountants as such would be required in
such reports to the Commission,
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and in each case, together with a management's discussion and analysis of
financial condition and results of operations which would be so required.
EVENTS OF DEFAULT AND REMEDIES
The Indenture will define an Event of Default as (i) the failure by Holdings
to pay any installment of interest on the Notes as and when the same becomes due
and payable and the continuance of any such failure for 30 days, (ii) the
failure by Holdings to pay all or any part of the principal, or premium, if any,
on the Notes when and as the same becomes due and payable at maturity,
redemption, by acceleration or otherwise, including, without limitation, payment
of the Change of Control Purchase Price or the Asset Sale Offer Price, (iii) the
failure by Holdings to observe or perform any other covenant or agreement
contained in the Notes or the Indenture and, subject to certain exceptions, the
continuance of such failure for a period of 30 days after written notice is
given to Holdings by the Trustee or to Holdings and the Trustee by the Holders
of at least 25% in aggregate principal amount of the Notes outstanding, (iv)
certain events of bankruptcy, insolvency or reorganization in respect of
Holdings or any of its Significant Restricted Subsidiaries, (v) the failure to
pay at final stated maturity (giving effect to any applicable grace periods and
any extensions thereof) the principal amount of any Indebtedness of Holdings or
any Restricted Subsidiary of Holdings or the acceleration of the final stated
maturity of any Indebtedness if the aggregate principal amount of such
Indebtedness, together with the principal amount of any other such Indebtedness
in default for failure to pay principal at final maturity or which has been
accelerated, aggregates $15,000,000 or more at any time, and (vi) final
unsatisfied judgments not covered by insurance aggregating in excess of
$5,000,000, at any one time rendered against Holdings or any of its Restricted
Subsidiaries and not stayed, bonded or discharged within 60 days.
The Indenture provides that the Trustee thereunder shall, within 90 days
after the occurrence of any Default or Event of Default, give the Holders notice
of all uncured Defaults or Events of Default thereunder known to it; PROVIDED,
HOWEVER, that, except in the case of an Event of Default in payment with respect
to such Notes the Trustee shall be protected in withholding such notice if and
so long as a committee of its trust officers in good faith determines that the
withholding of such notice is in the interest of the Holders.
If an Event of Default occurs and is continuing (other than an Event of
Default specified in clause (iv) above relating to Holdings or any Significant
Restricted Subsidiary), then in every such case, unless the principal amount of
all of the Notes shall have already become due and payable, either the Trustee
or the Holders of 25% in aggregate principal amount of the Notes then
outstanding, by notice in writing to Holdings (and to the Trustee if given by
Holders) (an "Acceleration Notice"), may declare the aggregate principal amount
and accrued interest thereon, if applicable, to be due and payable and the same
(i) shall become immediately due and payable or (ii) if there are any amounts
outstanding under the Credit Facility and Holdings has guaranteed the repayment
of principal and interest on the Credit Facility, shall become immediately due
and payable upon the first to occur of an acceleration under the Credit Facility
or five business days after receipt by Holdings and the representative of the
holders of the Indebtedness under the Credit Facility of the Acceleration
Notice, but only if such Event of Default is then continuing. If an Event of
Default specified in clause (iv) above relating to Holdings or any Significant
Restricted Subsidiary occurs, the principal and accrued interest, if applicable,
thereon will be immediately due and payable on all outstanding Notes without any
declaration or other act on the part of Trustee or the Holders. The Holders of a
majority in aggregate principal amount of Notes generally are authorized to
rescind such acceleration if all existing Events of Default, other than the
non-payment of the principal amount of, premium, if any, and interest on the
Notes which have become due solely by such acceleration, have been cured or
waived.
The Indenture will provide that in the event of a declaration of
acceleration of the Notes because an Event of Default has occurred and is
continuing as a result of the acceleration of any Indebtedness described in
clause (v) of the first paragraph under "--Events of Default and Remedies," the
declaration of acceleration of the Notes shall be automatically annulled if the
holders of all Indebtedness described in
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clause (v) (without any payment of any holders of any such Indebtedness) have
rescinded the declaration of acceleration in respect of such Indebtedness within
30 days of the date of such declaration and if (i) the annulment of the
acceleration of the Notes would not conflict with any judgment or decree of a
court of competent jurisdiction and (ii) all Events of Default, except
nonpayment of principal or interest on the Notes that became due solely because
of the acceleration of the Notes, have been cured or waived.
The Holders of a majority in aggregate principal amount of the Notes at the
time outstanding may waive on behalf of all the Holders any default, except a
default in the payment of the principal of or interest on any Note not yet
cured, or a default with respect to any covenant or provision which cannot be
modified or amended without the consent of the Holder of each outstanding Note
affected. Subject to the provisions of the Indenture relating to the duties of
the Trustee, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request, order or direction of any
of the Holders, unless such Holders have offered to the Trustee reasonable
security or indemnity. Subject to all provisions of the Indenture and applicable
law, the Holders of a majority in aggregate principal amount of the Notes at the
time outstanding will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Indenture will provide that Holdings may, at its option and at any time,
elect to have its obligations discharged with respect to the outstanding Notes
("Legal Defeasance"). Such Legal Defeasance means that Holdings shall be deemed
to have paid and discharged the entire indebtedness represented, and the
Indenture shall cease to be of further effect as to all outstanding Notes,
except as to (i) rights of Holders to receive payments in respect of the
principal of, premium, if any, and interest on such Notes when such payments are
due from the trust funds; (ii) Holdings's obligations with respect to such Notes
concerning issuing temporary Notes, registration of Notes, mutilated, destroyed,
lost or stolen Notes, and the maintenance of an office or agency for payment and
money for security payments held in trust; (iii) the rights, powers, trust,
duties, and immunities of the Trustee, and Holdings's obligations in connection
therewith; and (iv) the Legal Defeasance provisions of the Indenture. In
addition, Holdings may, at its option and at any time, elect to have the
obligations of Holdings released with respect to certain covenants that are
described in the Indenture ("Covenant Defeasance") and thereafter any omission
to comply with such obligations shall not constitute a Default or Event of
Default with respect to the Notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
Holdings must irrevocably deposit with the Trustee, in trust, for the benefit of
the holders of the Notes, U.S. Legal Tender, non-callable government securities
or a combination thereof, in such amounts as will be sufficient, in the opinion
of a nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on such Notes on the stated date for
payment thereof or on the applicable Redemption Date of such principal or
installment of principal of, premium, if any, or interest on such Notes, and the
holders of Notes must have a valid, perfected, exclusive security interest in
such trust; (ii) in the case of Legal Defeasance, Holdings shall have delivered
to the Trustee an opinion of counsel in the United States reasonably acceptable
to the Trustee confirming that (A) Holdings has received from, or there has been
published by the Internal Revenue Service, a ruling or (B) since the date of the
Indenture, there has been a change in the applicable Federal income tax law, in
each case to the effect that, and based thereon such opinion of counsel shall
confirm that, the holders of such Notes will not recognize income, gain or loss
for Federal income tax purposes as a result of such Legal Defeasance, and will
be subject to Federal income tax in the same amount, in the same manner and at
the same times as would have been the case if such Legal Defeasance had not
occurred; (iii) in the case of Covenant Defeasance, Holdings shall
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have delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to such Trustee confirming that the holders of such Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred; (iv) no Default or Event
of Default (other than a Default or Event of Default resulting from the
borrowing of funds to be applied to such deposit or such deposit) shall have
occurred and be continuing on the date of such deposit, or insofar as Events of
Default from bankruptcy or insolvency events are concerned, at any time in the
period ending on the 91st day after the date of deposit; (v) such Legal
Defeasance or Covenant Defeasance shall not result in a breach or violation of,
or constitute a default under any other material agreement or instrument to
which Holdings or any of its Subsidiaries is a party or by which Holdings or any
of its Subsidiaries is bound; (vi) Holdings shall have delivered to the Trustee
an Officers' Certificate stating that the deposit was not made by Holdings with
the intent of preferring the Holders of such Notes over any other creditors of
Holdings or with the intent of defeating, hindering, delaying or defrauding any
other creditors of Holdings or others; and (vii) Holdings shall have delivered
to the Trustee an Officers' Certificate stating that all conditions precedent
provided for or relating to the Legal Defeasance or the Covenant Defeasance have
been complied with.
AMENDMENTS AND SUPPLEMENTS
The Indenture will contain provisions permitting Holdings and the Trustee to
enter into a supplemental indenture for certain limited purposes without the
consent of the Holders. With the consent of the Holders of not less than a
majority in aggregate principal amount of the Notes at the time outstanding,
Holdings and the Trustee are permitted to amend or supplement the Indenture or
any supplemental indenture or modify the rights of the Holders; PROVIDED,
HOWEVER, that no such modification may, without the consent of each Holder
affected thereby: (i) change the Stated Maturity of any Note, or reduce the
principal amount thereof or the rate (or extend the time for payment) of
interest thereon or any premium payable upon the redemption thereof, or change
the place of payment where, or the coin or currency in which, any Note or any
premium or the interest thereon is payable, [or impair the right to institute
suit for the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption Date),] or
reduce the Change of Control Purchase Price, or the Asset Sale Offer Price or
alter the redemption provisions or the mandatory exchange provisions or the
provisions (including related definitions) of the "Repurchase of Notes at the
Option of the Holder Upon a Change of Control" covenant in each case in a manner
adverse to the Holders, or (ii) reduce the percentage in principal amount of the
outstanding Notes, the consent of whose Holders is required for any such
amendment, supplemental indenture or waiver provided for in the Indenture, or
(iii) modify any of the waiver provisions, except to increase any required
percentage or to provide that certain other provisions of the Indenture cannot
be modified or waived without the consent of the Holder of each outstanding Note
affected thereby. With the consent of Holders of two-thirds of the outstanding
aggregate principal amount of the Notes, Holdings and the Trustee are permitted
to change the Change of Control Purchase Date and the Asset Sale Offer Period.
NO PERSONAL LIABILITY OF PARTNERS, STOCKHOLDERS, OFFICERS, DIRECTORS
The Indenture will provide that no direct or indirect stockholder, employee,
officer or director, as such, past, present or future of Holdings or any
successor entity shall have any personal liability in respect of the obligations
of Holdings under the Indenture or the Notes by reason of his or its status as
such stockholder, employee, officer or director.
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CERTAIN DEFINITIONS
Set forth below is a summary of certain defined terms to be contained in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"AFFILIATE" means, with respect to any specified Person, (i) any other
Person directly or indirectly controlling or controlled by, or under direct or
indirect common control with, such specified Person or (ii) any officer,
director, or controlling stockholder of such other Person. For purposes of this
definition, the term "control" means the power to direct the management and
policies of a Person, directly or through one or more intermediaries, whether
through the ownership of voting securities, by contract, or otherwise, or
without limiting the foregoing, the beneficial ownership of 10% or more of the
voting power of the voting common equity of such Person (on a fully diluted
basis) or of warrants or other rights to acquire such equity (whether or not
presently exercisable).
"ANNUALIZED OPERATING CASH FLOW" on any date, means with respect to any
Person the Operating Cash Flow for the Reference Period multiplied by four.
"ANNUALIZED OPERATING CASH FLOW RATIO" on any date (the "Transaction Date")
means, with respect to any Person and its Subsidiaries, the ratio of (i)
consolidated Indebtedness of such Person and its Subsidiaries on the Transaction
Date (after giving pro forma effect to the Incurrence of any Indebtedness on
such Transaction Date) divided by (ii) the aggregate amount of Annualized
Operating Cash Flow of such Person (determined on a pro forma basis after giving
effect to all acquisitions or dispositions of businesses made by such Person and
its Subsidiaries from the beginning of the Reference Period through the
Transaction Date as if such acquisition or disposition had occurred at the
beginning of such Reference Period); provided that for purposes of such
computation, in calculating Annualized Operating Cash Flow and consolidated
Indebtedness, (a) the transaction giving rise to the need to calculate the
Annualized Operating Cash Flow Ratio will be assumed to have occurred (on a pro
forma basis) on the first day of the Reference Period; (b) the Incurrence of any
Indebtedness during the Reference Period or subsequent thereto and on or prior
to the Transaction Date (and the application of the proceeds therefrom to the
extent used to retire Indebtedness or to acquire businesses) will be assumed to
have occurred (on a pro forma basis) on the first day of such Reference Period;
(c) Consolidated Interest Expense attributable to any Indebtedness (whether
existing or being incurred) bearing a floating interest rate shall be computed
as if the rate in effect on the Transaction Date had been the applicable rate
for the entire period; and (d) all members of the consolidated group of such
Person on the Transaction Date that were acquired during the Reference Period or
thereafter and on or prior to the Transaction Date shall be deemed to be members
of the consolidated group of such Person for the entire Reference Period. When
the foregoing definition is used in connection with Holdings and its Restricted
Subsidiaries, references to a Person and its Subsidiaries in the foregoing
definition shall be deemed to refer to Holdings and its Restricted Subsidiaries
and when used in connection with any Restricted Subsidiary and its Subsidiaries
shall be deemed to refer to such Restricted Subsidiary and its Subsidiaries that
are Restricted Subsidiaries.
"ASSET SALE" has the meaning set forth under "--Certain
Covenants--Limitation on Asset Sales and Sales of Subsidiary Stock" above.
"ASSET SALE OFFER" has the meaning set forth under "--Certain
Covenants--Limitation on Asset Sales and Sales of Subsidiary Stock" above.
"ASSET SALE OFFER PERIOD" has the meaning set forth under "--Certain
Covenants--Limitation on Asset Sales and Sales of Subsidiary Stock" above.
"ASSET SALE OFFER PRICE" has the meaning set forth under "--Certain
Covenants--Limitation on Asset Sales and Sales of Subsidiary Stock" above.
"BUSINESS DAY" means a day that is not a Legal Holiday.
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"CAPITAL STOCK" means, with respect to any Person, any capital stock of such
Person and shares, interests, participations or other ownership interests
(however designated) of any Person and any rights (other than debt securities
convertible into capital stock), warrants and options to purchase any of the
foregoing, including (without limitation) each class of common stock and
preferred stock of such Person if such Person is a corporation and each general
and limited partnership interest of such Person if such Person is a partnership.
"CAPITALIZED LEASE OBLIGATIONS" means obligations under a lease that are
required to be capitalized for financial reporting purposes in accordance with
GAAP, and the amount of Indebtedness represented by such obligations shall be
the capitalized amount of such obligations, as determined in accordance with
GAAP.
"CASH EQUIVALENTS" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) in each case maturing within
one year after the date of acquisition, (ii) time deposits and certificates of
deposit and commercial paper issued by the parent corporation of any domestic
commercial bank of recognized standing having capital and surplus in excess of
$500 million and commercial paper issued by others rated at least A-2 or the
equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody's,
Inc. and in each case maturing within one year after the date of acquisition and
(iii) investments in money market funds substantially all of whose assets
comprise securities of the types described in clauses (i) and (ii) above.
"CELLULAR SYSTEM" means a domestic public cellular mobile radio
telecommunications system.
"CHANGE OF CONTROL" means (i) other than any transaction in which the
resulting transferee Person need not assume the Notes as provided in the proviso
to clause (i)(b) of "--Certain Covenants-- Limitation on Merger, Sale or
Consolidation" above, any sale, transfer or other conveyance, whether direct or
indirect, of a majority of the fair market value of the assets of Holdings or
Parent, on a consolidated basis, in one transaction or a series of related
transactions, if, immediately after giving effect to such transaction, any
"person" or "group" (as such terms are used for purposes of Sections 13(d) and
14(d) of the Exchange Act, whether or not applicable), other than an Excluded
Person or Excluded Group is or becomes the "beneficial owner" (as such term is
used in Rule 13d-3 promulgated pursuant to the Exchange Act), directly or
indirectly, of more than 50% of the equity of the transferee, (ii) any person or
"group" (as such terms are used for purposes of Sections 13(d) and 14(d) of the
Exchange Act, whether or not applicable), other than an Excluded Person or
Excluded Group, is or becomes the "beneficial owner" (as such term is used in
Rule 13d-3 promulgated pursuant to the Exchange Act), directly or indirectly, of
more than 50% of the equity of Holdings or Parent then outstanding normally
entitled to vote in elections of directors, or (iii) during any period of 12
consecutive months after the Issue Date, individuals who at the beginning of any
such 12-month period constituted the Board of Directors of Holdings or Parent
(together with any new directors whose election by such Board or whose
nomination for election by the shareholders of Holdings or Parent was approved
by a vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of Holdings or Parent then in office.
"CHANGE OF CONTROL OFFER" has the meaning set forth under "--Certain
Covenants -- Repurchase of Notes at the Option of the Holder upon a Change of
Control" above.
"CHANGE OF CONTROL OFFER PERIOD" has the meaning set forth under "--Certain
Covenants -- Repurchase of Notes at the Option of the Holder upon a Change of
Control" above.
"CHANGE OF CONTROL PURCHASE PRICE" has the meaning set forth under
"--Certain Covenants -- Repurchase of Notes at the Option of the Holder upon a
Change of Control" above.
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"CHANGE OF CONTROL PUT DATE" means the earlier of (a) the third Business Day
prior to the Change of Control Purchase Date and (b) the third Business Day
following the expiration of the Change of Control Offer.
"COMPANY SYSTEMS" has the meaning set forth under "--Certain Covenants --
Limitation on Asset Sales and Sales of Subsidiary Stock" above.
"COMPUTATION PERIOD" has the meaning set forth under "--Certain Covenants --
Limitation on Restricted Payments" above.
"CONSOLIDATED INTEREST EXPENSE" of any Person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of (a) interest expensed or capitalized, paid, accrued, or scheduled
to be paid or accrued (including, in accordance with the following sentence,
interest attributable to the Capitalized Lease Obligations) of such Person and
its consolidated Subsidiaries during such period, including (i) original issue
discount and non-cash interest payments or accruals on any Indebtedness, (ii)
the interest portion of all deferred payment obligations, and (iii) all
commissions, discounts and other fees and charges owed with respect to bankers'
acceptances and letters of credit financings and currency and Interest Swap and
Hedging Obligations, in each case to the extent attributable to such period, and
(b) the amount of dividends accrued or payable by such Person or any of its
consolidated Subsidiaries in respect of Preferred Stock (other than by
Restricted Subsidiaries of such Person to such Person or such Person's Wholly
Owned Subsidiaries). For purposes of this definition, (x) interest on a
Capitalized Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by Holdings to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP and (y) interest expense
attributable to any Indebtedness represented by the guaranty by such Person or a
Subsidiary of such Person of an obligation of another Person shall be deemed to
be the interest expense attributable to the Indebtedness guaranteed. When the
foregoing definition is used in connection with Holdings and its Restricted
Subsidiaries, references to a Person and its Subsidiaries in the foregoing
definition shall be deemed to refer to Holdings and its Restricted Subsidiaries
and when used in connection with any Restricted Subsidiary and its Subsidiaries
shall be deemed to refer to such Restricted Subsidiary and its Subsidiaries that
are Restricted Subsidiaries.
"CONSOLIDATED NET INCOME" of any Person for any period means the net income
(or loss) of such Person and its consolidated Subsidiaries for such period,
determined (on a consolidated basis) in accordance with GAAP, adjusted to
exclude (only to the extent included in computing such net income (or loss) and
without duplication) (i) all extraordinary gains and losses and gains and losses
that are nonrecurring (including as a result of Asset Sales outside the ordinary
course of business), (ii) the net income, if positive, of any Person, that is
not a Subsidiary in which such Person or any of its Subsidiaries has an
interest, except to the extent of the amount of dividends or distributions
actually paid to such Person or a Subsidiary of such Person that both (x) are
actually paid in cash to such Person or a Subsidiary of such Person during such
period and (y) when taken together with all other dividends and distributions
paid during such period in cash to such Person or a Subsidiary of such Person,
are not in excess of such Person's pro rata share of such other Person's
aggregate net income earned during such period, and (iii) except as provided in
the definition of "Annualized Operating Cash Flow Ratio," the net income (or
loss) of any Subsidiary acquired in a pooling of interests transaction for any
period prior to the date of such acquisition. When the foregoing definition is
used in connection with Holdings and its Restricted Subsidiaries, references to
a Person and its Subsidiaries in the foregoing definition shall be deemed to
refer to Holdings and its Restricted Subsidiaries and when used in connection
with any Restricted Subsidiary and its Subsidiaries shall be deemed to refer to
such Restricted Subsidiary and its Subsidiaries that are Restricted
Subsidiaries.
"COVENANT DEFEASANCE" has the meaning set forth under "--Legal Defeasance
and Covenant Defeasance" above.
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"CREDIT FACILITY" means, at any time of determination, any credit agreement
or indenture designated by Holdings to be the "Credit Facility," together with
the related documents thereto (including, without limitation, any guarantee
agreements and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring or adding
Restricted Subsidiaries of Holdings as additional borrowers or guarantors
thereunder) all or any portion of the Indebtedness under such agreement or any
successor or replacement agreement and whether by the same or any other agent,
lender or group of lenders.
"CURRENCY AGREEMENT" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect against
fluctuation in currency values.
"DEFAULT" means any event or condition that is, or after notice or passage
of time or both would be, an Event of Default.
"DISQUALIFIED CAPITAL STOCK" means, with respect to any Person, Capital
Stock of such Person that, by its terms or by the terms of any security into
which it is convertible, exercisable or exchangeable, is, or upon the happening
of any event or the passage of time would be, required to be redeemed or
repurchased (including at the option of the holder thereof) by such Person or
any of its Subsidiaries, in whole or in part, on or prior to the Stated Maturity
of the Notes; PROVIDED, HOWEVER, that Capital Stock will not be deemed to be
Disqualified Capital Stock if it may only be so redeemed or repurchased solely
in consideration of Qualified Capital Stock of Holdings or Parent.
"DLJ POP BOOK" means The Wireless Communications Industry survey published
by Donaldson, Lufkin & Jenrette Securities Corporation.
"EQUITY OFFERING" means with respect to any Person, the sale or offering of
any Capital Stock of such Person that is not Disqualified Capital Stock.
"EXCHANGE CAPITAL STOCK" has the meaning set forth under "--Certain
Covenants--Limitation on Asset Sales and Sales of Subsidiary Stock" above.
"EXCLUDED GROUP" means a "group" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) that includes one or more Excluded Persons; PROVIDED,
HOWEVER, that the voting power of the Capital Stock of Holdings or Parent
"beneficially owned" (as such term is used in Rule 13d-3 promulgated under the
Exchange Act) by such Excluded Persons (without attribution to such Excluded
Persons of the ownership by other members of the "group") represents a majority
of the voting power of the Capital Stock "beneficially owned" (as such term is
used in Rule 13d-3 promulgated under the Exchange Act) by such group.
"EXCLUDED PERSON" means Robert Price, Parent (so long as not controlled by
anyone other than Robert Price) and any Affiliate of any of the foregoing that
is wholly owned by any of the foregoing.
"EXISTING INDEBTEDNESS" means Indebtedness of Holdings and its Subsidiaries
in existence and outstanding on the Issue Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board ("FASB") or, if FASB ceases to exist,
any successor thereto; PROVIDED, HOWEVER, that for purposes of determining
compliance with covenants in the Indenture, "GAAP" means such generally accepted
accounting principles as in effect as of the Issue Date.
"HOLDER" means a Person in whose name a Note is registered. The Holder of a
Note will be treated as the owner of such Note for all purposes.
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"INCUR" has the meaning set forth under "--Certain Covenants -- Limitation
on Incurrence of Additional Indebtedness" above.
"INDEBTEDNESS" of any Person means, without duplication, (a) all liabilities
and obligations, contingent or otherwise, of such Person, (i) in respect of
borrowed money (whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof), (ii) evidenced by bonds,
notes, debentures or similar instruments, (iii) representing the balance
deferred and unpaid of the purchase price of any property or services, except
(other than accounts, payable or other obligations to trade creditors which have
remained unpaid for greater than 90 days past their original due date or to
financial institutions, which obligations are not being contested in good faith
and for which appropriate reserves have been established) those incurred in the
ordinary course of its business that would constitute ordinarily a trade payable
to trade creditors, (iv) evidenced by bankers' acceptances or similar
instruments issued or accepted by banks, (v) for the payment of money relating
to a Capitalized Lease Obligation, or (vi) evidenced by a letter of credit or a
reimbursement obligation of such Person with respect to any letter of credit;
(b) all obligations of such Person under Interest Swap and Hedging Obligations;
(c) all liabilities of others of the kind described in the preceding clauses (a)
or (b) that such Person has guaranteed or that is otherwise its legal liability
or which are secured by any assets or property of such Person and all
obligations to purchase, redeem or acquire any Capital Stock; (d) all
Disqualified Capital Stock of such Person and all Preferred Stock of such
Person's Subsidiaries; and (e) any and all deferrals, renewals, extensions,
refinancing and refundings (whether direct or indirect) of, or amendments,
modifications or supplements to, any liability of the kind described in any of
the preceding clauses (a), (b), (c), or (d) or this clause (e), whether or not
between or among the same parties; provided that the outstanding principal
amount at any date of any Indebtedness issued with original issue discount is
the face amount of such Indebtedness less the remaining unamortized portion of
the original issue discount of such Indebtedness at such date.
"INTEREST SWAP AND HEDGING OBLIGATIONS" means any obligations of any Person
pursuant to any interest rate swaps, caps, collars and similar arrangements
providing protection against fluctuations in interest rates. For purposes of the
Indenture, the amount of such obligations shall be the amount determined in
respect thereof as of the end of the then most recently ended fiscal quarter of
such Person, based on the assumption that such obligation had terminated at the
end of such fiscal quarter, and in making such determination, if any agreement
relating to such obligation provides for the netting of amounts payable by and
to such Person thereunder or if any such agreement provides for the simultaneous
payment of amounts by and to such Person, then in each such case, the amount of
such obligations shall be the net amount so determined, plus any premium due
upon default by such Person.
"INVESTMENT" by any Person in any other Person means (without duplication)
(a) the acquisition (whether by purchase, merger, consolidation or otherwise) by
such Person (whether for cash, property, services, securities or otherwise) of
Capital Stock, bonds, notes, debentures, partnership or other ownership
interests or other securities of such other Person or any agreement to make any
such acquisition; (b) the making by such Person of any deposit with, or advance,
loan or other extension of credit to, such other Person (including the purchase
of property from another Person subject to an understanding or agreement,
contingent or otherwise, to resell such property to such other Person) or any
commitment to make any such advance, loan or extension; (c) the entering into by
such Person of any guarantee of, or other contingent obligation with respect to,
Indebtedness or other liability of such other Person; (d) the making of any
capital contribution by such Person to such other Person; and (e) the
designation by the Board of Directors of Holdings of any Person to be an
Unrestricted Subsidiary. For purposes of the "Limitation on Restricted Payments"
covenant, (i) "Investment" shall include and be valued at the fair market value
of the net assets of any Restricted Subsidiary at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary and shall exclude the fair
market value of the net assets of any Unrestricted Subsidiary at the time that
such Unrestricted Subsidiary is designated a Restricted Subsidiary and (ii) the
amount of any Investment shall be the fair market value of such Investment plus
the fair market value of all additional Investments by Holdings or any of its
Restricted Subsidiaries at the time any
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such Investment is made; provided that, for purposes of this sentence, the fair
market value of net assets in excess of $5,000,000 shall be as determined by an
independent appraiser of national reputation.
"ISSUE DATE" means the time and date of the first issuance of the Notes
under the Indenture.
"JUNIOR INDEBTEDNESS" means Indebtedness of Holdings that (i) requires no
payment of principal prior to or on the date on which all principal of and
interest on the Notes is paid in full and (ii) is subordinate and junior in
right of payment to the Notes in all respects.
"LEGAL DEFEASANCE" has the meaning set forth under "--Legal Defeasance and
Covenant Defeasance" above.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking
institutions in New York, New York are authorized or obligated by law or
executive order to close.
"LIEN" means any mortgage, lien, pledge, charge, security interest, or other
encumbrance of any kind, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement and any lease deemed to constitute a security interest and any option
or other agreement to give any security interest).
"MATURITY DATE" means, when used with respect to any Note, the date
specified on such Note as the fixed date on which the final installment of
principal of such Note is due and payable (in the absence of any acceleration
thereof pursuant to the provisions of the Indenture regarding acceleration of
Indebtedness or any Change of Control Offer, Proceeds Purchase Offer or Asset
Sale Offer).
"MOODY'S" means Moody's Investors Service, Inc.
"NET CASH PROCEEDS" means the aggregate amount of cash and Cash Equivalents
received by Holdings and its Restricted Subsidiaries in respect of an Asset Sale
(including upon the conversion to cash and Cash Equivalents of (A) any note or
installment receivable at any time, or (B) any other property as and when any
cash and Cash Equivalents are received in respect of any property received in an
Asset Sale but only to the extent such cash and Cash Equivalents are received
within one year after such Asset Sale), less the sum of (i) all reasonable
out-of-pocket fees, commissions and other expenses incurred in connection with
such Asset Sale, including the amount (estimated in good faith by the Board of
Directors of Holdings) of income, franchise, sales and other applicable taxes
required to be paid by Holdings or any Restricted Subsidiary of Holdings in
connection with such Asset Sale and (ii) the aggregate amount of cash so
received which is used to retire any existing Indebtedness of Holdings ranking
on a parity with the Notes or Indebtedness of its Restricted Subsidiaries, as
the case may be, which is required to be repaid in connection with such Asset
Sale or is secured by a Lien on the property or assets of Holdings or any of its
Restricted Subsidiaries, as the case may be.
"NET POPS"' of any Person with respect to any Cellular System means the Pops
of the MSA or RSA served by such Cellular System multiplied by the direct and/or
indirect percentage interest of such Person in the entity licensed or designated
to receive an authorization by the Federal Communications Commission to
construct or operate a Cellular System in that MSA or RSA.
"NET PROCEEDS" means the aggregate net proceeds (including the fair market
value of non-cash proceeds constituting equipment or other assets of a type
generally used in a Related Business in an amount reasonably determined by the
Board of Directors of Holdings for amounts less than or equal to $5,000,000 and
by a financial advisor or appraiser of national reputation for equal or greater
amounts) received by a Person from the sale of Qualified Capital Stock (other
than to a Subsidiary of such Person) after payment of out-of-pocket expenses,
commissions and discounts incurred in connection therewith.
"NON-RECOURSE RESTRICTED SUBSIDIARY" has the meaning specified in the
definition of "Permitted Acquistion Indebtedness."
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"OBLIGATION" means any principal, premium, interest (including interest
accruing subsequent to a bankruptcy or other similar proceeding whether or not
such interest is an allowed claim enforceable against Holdings in a bankruptcy
case under Federal bankruptcy law), penalties, fees, indemnifications,
reimbursements, damages and other liabilities payable pursuant to the terms of
the documentation governing any Indebtedness.
"OPERATING CASH FLOW" of any Person means (a), with respect to any period,
the Consolidated Net Income of such Person for such period, plus (b) the sum,
without duplication (and only to the extent such amounts are deducted from net
revenues in determining such Consolidated Net Income), of (i) the provisions for
income taxes for such period for such Person and its consolidated Subsidiaries,
(ii) depreciation, amortization and other non-cash charges of such Person and
its consolidated Subsidiaries and (iii) Consolidated Interest Expense of such
Person for such period, determined, in each case, on a consolidated basis for
such Person and its consolidated Subsidiaries in accordance with GAAP, less (c)
the amount of all cash payments made during such period by such Person and its
Subsidiaries to the extent such payments relate to non-cash charges that were
added back in determining Operating Cash Flow for such period or for any prior
period. When the foregoing definition is used in connection with Holdings and
its Restricted Subsidiaries, references to a Person and its Subsidiaries in the
foregoing definition shall be deemed to refer to Holdings and its Restricted
Subsidiaries and when used in connection with any Restricted Subsidiary and its
Subsidiaries shall be deemed to refer to such Restricted Subsidiary and its
Subsidiaries that are Restricted Subsidiaries.
"PARENT" shall mean PCC or any directly or indirectly wholly owned
subsidiary of PCC that directly or indirectly wholly owns Holdings.
"PCC" means Price Communications Corporation, a New York corporation, and
its successors and assigns.
"PERMITTED ACQUISITION INDEBTEDNESS" means, with respect to any Person,
Indebtedness Incurred in connection with the acquisition of property, businesses
or assets which, or Capital Stock of a Person all or substantially all of whose
assets, are of a type generally used in a Related Business; provided that, in
the case of Holdings or its Restricted Subsidiaries, as applicable, (x) (i)
Holdings' or any of its Restricted Subsidiaries', as the case may be, Annualized
Operating Cash Flow Ratio, after giving effect to such acquisition and such
Incurrence on a pro forma basis, is no greater than such ratio prior to giving
pro forma effect to such acquisition and such Incurrence, (ii) Holdings' or such
Restricted Subsidiary's, as the case may be, consolidated Indebtedness, divided
by the Net Pops of Holdings or such Restricted Subsidiary, as the case may be,
and its Restricted Subsidiaries, in each case giving pro forma effect to the
acquisition and such Incurrence, does not exceed $175, and (iii) after giving
effect to such acquisition and such Incurrence the acquired property, businesses
or assets or such Capital Stock is owned directly by Holdings or such Restricted
Subsidiary, as the case may be, or a Wholly Owned Restricted Subsidiary thereof
or (y) (i) under the terms of such Indebtedness and pursuant to applicable law,
no recourse could be had for the payment of principal, interest or premium with
respect to such Indebtedness or for any claim based thereon against Holdings or
any Restricted Subsidiary of Holdings other than the obligor of such
Indebtedness and its Subsidiaries or any of their property or assets other than
the Capital Stock of such obligor or its Subsidiaries, (ii) the obligor of such
Indebtedness shall have, immediately after giving effect to such acquisition and
such Incurrence on a pro forma basis, a ratio of Annualized Operating Cash Flow
as of the date of the acquisition to the product of Consolidated Interest
Expense for the Reference Period multiplied by four (but excluding from
Consolidated Interest Expense all amounts that are not required to be paid in
cash on a current basis) of at least 1.0 to 1, (iii) since the Issue Date no
Permitted Investment (other than as permitted by clause (viii) of the definition
of "Permitted Investment" below) shall have been made in such obligor or its
Subsidiaries and (iv) immediately subsequent to the Incurrence of such
Indebtedness, the obligor thereof shall be a Restricted Subsidiary and shall
have been designated by Holdings (as evidenced by an Officers' Certificate
delivered promptly to the Trustee) to be a "Non-Recourse Restricted Subsidiary."
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"PERMITTED INVESTMENT" means (i) Investments in Cash Equivalents; (ii)
Investments in Holdings or a Restricted Subsidiary (other than a Non-Recourse
Restricted Subsidiary); (iii) Investments in a Person substantially all of whose
assets are of a type generally used in a Related Business (an "Acquired Person")
if, as a result of such Investments, (A) the Acquired Person immediately
thereupon becomes a Restricted Subsidiary (other than a Non-Recourse Restricted
Subsidiary) or (B) the Acquired Person immediately thereupon either (1) is
merged or consolidated with or into Holdings or any of its Restricted
Subsidiaries (other than a Non-Recourse Restricted Subsidiary) and the surviving
Person is Holdings or a Restricted Subsidiary (other than a Non-Recourse
Restricted Subsidiary) or (2) transfers or conveys all or substantially all of
its assets to, or is liquidated into, Holdings or any of its Restricted
Subsidiaries (other than a Non-Recourse Restricted Subsidiary); (iv) Investments
in accounts and notes receivable acquired in the ordinary course of business;
(v) any securities received in connection with an Asset Sale (other than those
of a Non-Recourse Restricted Subsidiary) and any investment with the Net Cash
Proceeds from any Asset Sale in Capital Stock of a Person, all or substantially
all of whose assets are of a type used in a Related Business, that complies with
the "Limitation on Asset Sales and Sales of Subsidiary Stock" covenant; (vi) any
guarantee issued by a Restricted Subsidiary Incurred in compliance with the
Indenture; (vii) advances and prepayments for asset purchases in the ordinary
course of business in a Related Business of Holdings or a Restricted Subsidiary;
(viii) Investments in Non-Recourse Restricted Subsidiaries with the proceeds of
contributions irrevocably and unconditionally received without restriction by
Holdings from Parent; and (ix) customary loans or advances made in the ordinary
course of business to officers, directors or employees of Holdings or any of its
Restricted Subsidiaries for travel, entertainment, and moving and other
relocation expenses.
"PERMITTED LIEN" means (a) Liens existing on the Issue Date; (b) Liens
imposed by governmental authorities for taxes, assessments or other charges not
yet subject to penalty or which are being contested in good faith and by
appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of Holdings in accordance with GAAP; (c) statutory liens
of carriers, warehousemen, mechanics, materialmen, landlords, repairmen or other
like Liens arising by operation of law in the ordinary course of business;
PROVIDED, HOWEVER, that (i) the underlying obligations are not overdue for a
period of more than 30 days, and (ii) such Liens are being contested in good
faith and by appropriate proceedings and adequate reserves with respect thereto
are maintained on the books of Holdings in accordance with GAAP; (d) Liens
securing the performance of bids, trade contracts (other than borrowed money),
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature Incurred in the ordinary course of business;
(e) easements, rights-of-way, zoning, similar restrictions and other similar
encumbrances or title defects which, singly or in the aggregate, do not in any
case materially detract from the value of the property, subject thereto (as such
property is used by Holdings or any of its Restricted Subsidiaries) or interfere
with the ordinary conduct of the business of Holdings or any of its Restricted
Subsidiaries; (f) Liens arising by operation of law in connection with
judgments, only to the extent, for an amount and for a period not resulting in
an Event of Default with respect thereto; (g) pledges or deposits made in the
ordinary course of business in connection with worker's compensation,
unemployment insurance and other types of social security legislation; (h) Liens
in favor of the Trustee arising under the Indenture; (i) Liens securing
Permitted Acquisition Indebtedness, which either (A) were not Incurred or issued
in anticipation of such acquisition or (B) secure Permitted Acquisition
Indebtedness meeting the requirements set forth in clause (y) of the definition
thereof; (j) Liens securing pari passu Indebtedness or Indebtedness of a
Restricted Subsidiary that was incurred in accordance with the "Limitation on
Incurrence of Additional Indebtedness" covenant; (k) Liens securing Indebtedness
of a Person existing at the time such Person becomes a Restricted Subsidiary or
is merged with or into Holdings or a Restricted Subsidiary, provided that such
Liens were in existence prior to the date of such acquisition, merger or
consolidation, were not incurred in anticipation thereof, and do not extend to
any other assets; (1) Liens arising from Purchase Money Indebtedness permitted
under the Indenture; (m) Liens securing Refinancing Indebtedness Incurred to
refinance any Indebtedness that was previously so secured in a manner no more
adverse to the Holders of the Notes than the terms of the Liens securing such
refinanced
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Indebtedness; and (n) Liens in favor of Holdings or a Wholly Owned Restricted
Subsidiary (other than a Non-Recourse Restricted Subsidiary).
"PERSON" means any corporation, individual, joint stock company, joint
venture, partnership, unincorporated association, governmental regulatory
entity, country, state or political subdivision thereof, trust, municipality or
other entity.
"POPS" means, as of any date of determination, the greater of the estimate
of the population of a Metropolitan Statistical Area ("MSA") or Rural Service
Area ("RSA") derived from (i) the most recent Donnelly Market Service and (ii)
the most recent DLJ Pop Book; PROVIDED, HOWEVER, that (x) if such statistics are
no longer printed in either the Donnelly Market Service or the DLJ Pop Book, or
either such source is no longer published, the then currently published source
of the two containing such information shall be used; (y) if such statistics are
no longer printed in either such source, or both sources are no longer
published, the statistics in the most recent Rand McNally Commercial Atlas shall
be used; and (z) if such statistics are no longer printed in the Rand McNally
Commercial Atlas or the Rand McNally Commercial Atlas is no longer published,
another nationally recognized source of such information shall be used.
"PREFERRED STOCK" means Capital Stock, other than common stock of an issuer
having no preferences or privileges as to the payment of dividends or the
distribution of the issuer's assets over any other class of such issuer's
Capital Stock.
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness of Holdings or its
Restricted Subsidiaries Incurred in connection with the purchase of property or
assets for the business of Holdings or its Restricted Subsidiaries, provided
that the recourse of the lenders with respect to such Indebtedness is limited
solely to the property or assets so purchased without further recourse to either
Holdings or any of its Restricted Subsidiaries.
"QUALIFIED CAPITAL STOCK" means any Capital Stock of a Person that is not
Disqualified Capital Stock.
"RECORD DATE" means the Record Date specified on the Notes whether or not
such Record Date is a Business Day.
"REDEMPTION DATE" when used with respect to any Note to be redeemed means
the date fixed for such redemption pursuant to the Indenture and the Note.
"REDEMPTION PRICE" when used with respect to any Note to be redeemed, means
the redemption price for such redemption pursuant to Article 3 of the Indenture
and Paragraph 5 in the form of Note, which shall include, without duplication,
in each case, any accrued and unpaid interest to the Redemption Date.
"REFERENCE PERIOD" with regard to any Person means the last full fiscal
quarter of such Person for which financial information (which Holdings shall use
its best efforts to compile in a timely manner) in respect thereof is available
ended on or immediately preceding any date upon which any determination is to be
made pursuant to the terms of the Notes or the Indenture.
"REFINANCING INDEBTEDNESS" means Indebtedness or Disqualified Capital Stock
(a) issued in exchange for, or the proceeds from the issuance and sale of which
are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are, collectively, a "Refinancing") any
Indebtedness or Disqualified Capital Stock in a principal amount or, in the case
of Disqualified Capital Stock, liquidation preference (or if such Indebtedness
or Disqualified Capital Stock does not require cash payments prior to maturity
or is otherwise issued at a discount, the original issue price of such
Indebtedness or Disqualified Capital Stock), not to exceed the sum of (x) the
lesser of (i) the principal amount or, in the case of Disqualified Capital
Stock, liquidation preference, of the Indebtedness or Disqualified Capital Stock
so Refinanced and (ii) if such Indebtedness being Refinanced was issued with an
original issue discount, the accreted value thereof (as determined in accordance
with GAAP) at the time of such Refinancing, (y) the amount of any premium
required to be
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paid in connection with such refinancing pursuant to the terms of such
Indebtedness and (z) all other customary fees and expenses of Holdings or such
Restricted Subsidiary reasonably Incurred in connection with such refinancing;
provided that (A) Refinancing Indebtedness issued by any Restricted Subsidiary
of Holdings shall only be used to Refinance outstanding Indebtedness or
Disqualified Capital Stock of such Restricted Subsidiary, (B) Refinancing
Indebtedness shall (x) not have a Weighted Average Life shorter than the
Indebtedness or Disqualified Capital Stock to be so refinanced at the time of
such Refinancing and (y) in all respects, be no less subordinated or junior, if
applicable, to the rights of Holders than was the Indebtedness or Disqualified
Capital Stock to be refinanced and (C) such Refinancing Indebtedness shall have
no installments of principal (or redemption payment) scheduled to come due
earlier than the scheduled maturity of any installment of principal (or
redemption payment) of the Indebtedness or Disqualified Capital Stock to be so
refinanced which was scheduled to come due prior to the Stated Maturity.
"REGISTRAR" means the office or agency in the Borough of Manhattan, The City
of New York, where the Notes may be presented for registration of transfer or
for exchange.
"RELATED BUSINESS" means any business directly related to the ownership,
development, operation, and acquisition of wireless cellular communications
systems.
"RELATED PERSON" means, with respect to any Person, (i) any Affiliate of
such Person or any spouse, immediate family member, or other relative who has
the same principal residence of any Affiliate of such Person and (ii) any trust
in which any Person described in clause (i) above has a beneficial interest.
"RELATED PERSON TRANSACTION" has the meaning set forth under "--Certain
Covenants -- Limitation on Transactions with Related Persons" above.
"RESTRICTED PARTNERSHIP" has the meaning set forth under "--Certain
Covenants -- Restriction on Sale and Issuance of Subsidiary Stock" above.
"RESTRICTED PAYMENT" means, with respect to any Person, (i) any dividend or
other distribution on shares of Capital Stock of such Person, its Parent, or any
Subsidiary of such Person, (ii) any payment on account of the purchase,
redemption or other acquisition or retirement for value, or any payment in
respect of any amendment (in anticipation of or in connection with any such
retirement, acquisition or defeasance) in whole or in part, of any shares of
Capital Stock of such Person, its Parent, or any Subsidiary of such Person held
by Persons other than such Person or any of its Restricted Subsidiaries (other
than any Non-Recourse Restricted Subsidiary), (iii) any defeasance, redemption,
repurchase or other acquisition or retirement for value, or any payment in
respect of any amendment (in anticipation of or in connection with any such
retirement, acquisition or defeasance) in whole or in part, of any Indebtedness
of Holdings (other than the scheduled repayment thereof at maturity and any
mandatory redemption or mandatory repurchase thereof pursuant to the terms
thereof) by such Person or a Subsidiary of such Person that is subordinate in
right of payment to, or ranks PARI PASSU (other than the Notes) with, the Notes
(other than in exchange for Refinancing Indebtedness permitted to be Incurred
under the Indenture and except for any such defeasance, redemption, repurchase,
other acquisition or payment in respect of Indebtedness held by any Restricted
Subsidiary) and (iv) any Investment (other than a Permitted Investment);
PROVIDED, HOWEVER, that the term "Restricted Payment" does not include (i) any
dividend, distribution or other payment on shares of Capital Stock of Holdings
or any Restricted Subsidiary solely in shares of Qualified Capital Stock, and
(ii) any dividend, distribution or other payment to Holdings, or any dividend to
any of its Restricted Subsidiaries (other than any Non-Recourse Restricted
Subsidiary), by any of its Subsidiaries, and (iii) the purchase, redemption or
other acquisition or retirement for value of shares of Capital Stock of any
Restricted Subsidiary (other than Non-Recourse Restricted Subsidiaries) held by
Persons other than Holdings or any of its Restricted Subsidiaries.
"RESTRICTED SUBSIDIARY" means any Subsidiary of Holdings which at the time
of determination is not an Unrestricted Subsidiary. The Board of Directors of
Holdings may designate any Unrestricted Subsidiary to
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be a Restricted Subsidiary only if, immediately before and after giving effect
to such designation, there would exist no Default or Event of Default and
Holdings could incur at least $1.00 of Indebtedness pursuant to the Annualized
Operating Cash Flow Ratio test of the "Limitation on Incurrence of Additional
Indebtedness" covenant, on a pro forma basis taking into account such
designation.
"S&P" means Standard & Poor's Corporation.
"SENIOR INDEBTEDNESS" means any Indebtedness of Holdings, including the
Notes, other than Indebtedness of Holdings as to which the instrument creating
or evidencing the same, or pursuant to which the same is outstanding, provides
that such Indebtedness shall be subordinated or junior in right of payment to
the Notes.
"SIGNIFICANT RESTRICTED SUBSIDIARY" means one or more Restricted
Subsidiaries having an aggregate net book value of assets in excess of 5% of the
net book value of the assets of Holdings and its Restricted Subsidiaries on a
consolidated basis.
"SPECIAL RIGHTS" has the meaning set forth under "--Certain Covenants --
Restriction on Sale and Issuance of Subsidiary Stock" above.
"STATED MATURITY" means the date fixed for the payment of any principal or
premium pursuant to the Indenture and the Notes, including the Maturity Date,
upon redemption, acceleration, Asset Sale Offer, Change of Control Offer or
otherwise.
"SUBSIDIARY" with respect to any Person, means (i) a corporation at least
fifty percent of whose Capital Stock with voting power, under ordinary
circumstances to elect directors is at the time, directly or indirectly, owned
by such Person, by such Person and one or more Subsidiaries of such Person or by
one or more Subsidiaries of such Person, or (ii) a partnership in which such
Person or a Subsidiary of such Person is, at the time, a general partner of such
partnership, or (iii) any Person in which such Person, one or more Subsidiaries
of such Person, or such Person and one or more Subsidiaries of such Person,
directly or indirectly, at the date of determination thereof has (x) at least a
fifty percent ownership interest or (y) the power to elect or direct the
election of the directors or other governing body of such Person.
"TIA" means the Trust Indenture Act of 1939, as amended from time to time.
"TRADING DAY" means a Business Day other than a day on which trading on the
American Stock Exchange (or such other nationally recognized exchange or
automated quotation system on which the PCC Shares are then traded) generally is
not being conducted.
"TRADING PRICE" means, on any Trading Day, the highest price at which PCC
Shares are quoted on the American Stock Exchange or such other nationally
recognized exchange or automated quotation system on which the PCC Shares are
then traded.
"TRUSTEE" means Bank of Montreal Trust Company or any successor appointed
pursuant to the terms of the Indenture.
"UNRESTRICTED SUBSIDIARY" shall mean any Subsidiary of Holdings that, at the
time of determination, shall be an Unrestricted Subsidiary (as designated by the
Board of Directors of Holdings, as provided below). The Board of Directors of
Holdings may designate any Subsidiary of Holdings (including any newly acquired
or newly formed Subsidiary at or prior to the time it is so formed or acquired)
to be an Unrestricted Subsidiary so long as (a) no Default or Event of Default
is existing or will occur as a consequence thereof, (b) such Subsidiary does not
own any Capital Stock of, or own or hold any Lien on any property or asset of,
Holdings or any Restricted Subsidiary that is not a Subsidiary of the Subsidiary
to be so designated and (c) such Subsidiary and each of its Subsidiaries has not
at the time of designation, and does not, thereafter, create, incur, issue,
assume, guarantee, or otherwise become directly or indirectly liable with
respect to any Indebtedness pursuant to which the lender has recourse to any
property or assets of Holdings or any of its Restricted Subsidiaries (except
that such Subsidiary and its Subsidiaries may
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guarantee the Notes); provided that either (A) the Subsidiary to be so
designated has total assets of $1,000 or less or (B) if such Subsidiary has
assets greater than $1,000, that such designation would be permitted under the
"Limitation on Restricted Payments" covenant. Each such designation shall be
evidenced by filing with the Trustee a certified copy of the resolution giving
effect to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions.
"VOTING STOCK" means Capital Stock of Holdings having generally the right to
vote in the election of a majority of the directors of Holdings or having
generally the right to vote with respect to the organizational matters of
Holdings.
"WEIGHTED AVERAGE LIFE" means, as of the date of determination, with respect
to any debt instrument, the quotient obtained by dividing (i) the sum of the
products of the numbers of years from the date of determination to the dates of
each successive scheduled principal payment of such debt instrument multiplied
by the amount of each such respective principal payment by (ii) the sum of all
such principal payments.
"WHOLLY OWNED" means, with respect to a Subsidiary of Holdings, (i) a
Subsidiary that is a corporation, of which not less than 99% of the Capital
Stock (except for directors' qualifying shares or certain minority interests
owned by other Persons solely due to local law requirements that there be more
than one stockholder, but which interest is not in excess of what is required
for such purpose) is owned directly by such Person or through one or more other
Wholly Owned Subsidiaries of such Person, or (ii) any entity other than a
corporation in which such Person, directly or indirectly, owns not less than 99%
of the Capital Stock of such entity.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth below, the Notes will initially be issued in the form of
one or more registered notes in global form (the "Global Notes"). Each Global
Note will be deposited on the date of the closing of the sale of the Notes (the
"Closing Date") with, or on behalf of, the Depository Trust Company (the
"Depository") and registered in the name of Cede & Co., as nominee of the
Depository.
The Depository has advised Holdings that it is a limited-purpose trust
company that was created to hold securities for its participating organizations
(collectively, the "Participants") and to facilitate the clearance and
settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. The Depository's
Participants include securities brokers and dealers (including the
Underwriters), banks and trust companies, clearing corporations and certain
other organizations. Access to the Depository's system is also available to
other entities such as banks, brokers, dealers and trust companies
(collectively, the "Indirect Participants") that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly.
The Company expects that pursuant to procedures established by the
Depository (i) upon deposit of the Global Notes, the Depository will credit the
accounts of Participants designated by the Underwriters with an interest in the
Global Note and (ii) ownership of the Notes will be shown on, and the transfer
of ownership thereof will be effected only through, records maintained by the
Depository (with respect to the interests of Participants), the Participants and
the Indirect Participants. The laws of some states require that certain Persons
take physical delivery in definitive form of securities that they own and that
security interests in negotiable instruments can only be perfected by delivery
of certificates representing the instruments. Consequently, the ability to
transfer Notes or to pledge the Notes as collateral will be limited to such
extent.
So long as the Depository or its nominee is the registered owner of a Global
Note, the Depository or such nominee, as the case may be, will be considered the
sole owner or holder of the Notes represented by the Global Note for all
purposes under the Indenture. Except as provided below, the owners of beneficial
interests in a Global Note will not be entitled to have Notes represented by
such Global Note registered in
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their names, will not receive or be entitled to receive physical delivery of
Certificated Securities, and will not be considered the owners or holders
thereof under the Indenture for any purpose, including with respect to the
giving of any directions, instructions or approvals to the Trustee thereunder.
As a result, the ability of a Person having a beneficial interest in Notes
represented by a Global Note to pledge such interest to Persons or entities that
do not participate in the Depository's system or to otherwise take actions with
respect to such interest, may be affected by the lack of a physical certificate
evidencing such interest.
Accordingly, each Person owning a beneficial interest in a Global Note must
rely on the procedures of the Depository and, if such Person is not a
Participant or an Indirect Participant, on the procedures of the Participant
through which such Person owns its interest, to exercise any rights of a holder
under the Indenture or such Global Note. Holdings understands that under
existing industry practice, in the event Holdings requests any action of the
Holders or a Person that is an owner of a beneficial interest in a Global Note
desires to take any action that the Depository, as the holder of such Global
Note, is entitled to take, the Depository would authorize the Participants to
take such action and the Participants would authorize Persons owning through
such participants to take such action or would otherwise act upon the
instruction of such Persons. Neither Holdings nor the Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of Notes by the Depository, or for maintaining,
supervising or reviewing any records of the Depository relating to such Notes.
Payments with respect to the principal of, premium, if any, and interest of
any Notes represented by a Global Note registered in the name of the Depository
or its nominee on the applicable record date will be payable by the Trustee to
or at the direction of the Depository or its nominee in its capacity as the
registered Holder of the Global Note representing such Notes under the
Indenture. Under the terms of the Indenture, Holdings and the Trustee may treat
the Persons in whose names the Notes, including the Global Notes, are registered
as the owners thereof for the purpose of receiving such payments and for any and
all other purposes whatsoever. Consequently, neither Holdings nor the Trustee
has or will have any responsibility or liability for the payment of such amounts
to beneficial owners of Notes (including principal, premium, if any, and
interest), or to immediately credit the accounts of the relevant Participants
with such payment, in amounts proportionate to their respective holdings in
principal amount of beneficial interest in the Global Note as shown on the
records of the Depository. Payment by the Participants and the Indirect
Participants to the beneficial owners of Notes will be governed by standing
instruction and customary practice and will be the responsibility of the
Participants or the Indirect Participants.
CERTIFICATED SECURITIES
If (i) Holdings notifies the Trustee in writing that the Depository is no
longer willing or able to act as a depository and Holdings is unable to locate a
qualified successor within 90 days or (ii) Holdings, at its option, notifies the
Trustee in writing that it elects to cause the issuance of Notes in definitive
form under the Indenture ("Certificated Securities"), then, upon surrender by
the Depository of its Global Note, Certificated Securities will be issued to
each Person that the Depository identifies as the beneficial owner of the Notes
represented by the Global Note. In addition, subject to certain conditions, any
Person having a beneficial interest in a Global Note may, upon request to the
Trustee, exchange such beneficial interest for Certificated Securities. Upon any
such issuance, the Trustee is required to register such Certificated Securities
in the name of, and cause the same to be delivered to, such Person or Persons
(or the nominee of any thereof).
Neither Holdings nor the Trustee shall be liable for any delay by the
Depository or any Participant or Indirect Participant in identifying the
beneficial owners of the related Notes and each such Person may conclusively
rely on, and shall be protected in relying on, instructions from the Depository
for all purposes (including with respect to the registration and delivery, and
the respective principal amounts, of the Notes to be issued).
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DESCRIPTION OF CAPITAL STOCK
GENERAL
The Notes are exchangeable for shares of PCC Shares. The authorized capital
stock of PCC consists of 60,000,000 shares of PCC Shares, par value $0.01 per
share, of which 11,027,276 are currently outstanding and held of record by
holders other than PCC and 18,907,801 shares of preferred stock (the "Preferred
Stock"), par value $0.01 per share, issuable in series, of which no shares are
currently outstanding. The following is a summary of certain of the rights and
privileges pertaining to PCC Shares. For a full description of PCC's capital
stock, reference is made to PCC's Amended and Restated Certificate of
Incorporation currently in effect, a copy of which is on file with the
Commission.
COMMON STOCK
VOTING RIGHTS
The holders of PCC Shares are entitled to one vote per share at every
meeting of the shareholders of PCC. There is no provision for cumulative voting
with respect to the election of directors. Accordingly, the holders of more than
50% of the shares of PCC Shares can, if they choose to do so, elect the Board of
Directors of PCC and determine most matters on which stockholders are entitled
to vote.
DIVIDEND RIGHTS
Subject to the preferential rights of holders of outstanding shares of
Preferred Stock, holders of PCC Shares are entitled to share ratably in any
dividends that might be declared and paid by the Board of Directors of PCC out
of funds legally available therefor.
LIQUIDATION RIGHTS
In the event of any liquidation, dissolution or winding up of the affairs of
PCC, voluntary or involuntary, the holders of the shares of PCC Shares are
entitled to share ratably in the net assets of PCC legally available for
distribution after payment of liabilities, subject to the rights of the holders
of outstanding shares of Preferred Stock. Holders of PCC Shares have no
conversion, redemption or preemptive rights.
PREFERRED STOCK
PCC's Amended and Restated Certificate of Incorporation provides that the
Board of Directors of PCC has the authority, without further action by the
holders of the outstanding PCC Shares, to issue up to 18,907,801 shares of
Preferred Stock from time to time in one or more series, and to fix the terms of
any such series, including voting powers, designations, preferences and
relative, participating, optional or other special rights. The Board of
Directors of PCC has authorized the issuance of 728,133 shares of Series A
Preferred Stock and 364,066 shares of Series B Preferred Stock. Each share of
Series A and B Preferred Stock is entitled to receive 1% of the dividends and
liquidation distributions payable with respect to a share of PCC Shares. Each
share of Series A Preferred Stock is entitled to one vote per share and each
share of Series B Preferred Stock is entitled to one vote per share.
SECTION 912 OF THE BUSINESS CORPORATION LAW OF THE STATE OF NEW YORK
PCC is a New York corporation and is subject to Section 912 of the Business
Corporation Law of the State of New York. Section 912 prohibits a company from
entering into a business combination (E.G., a merger, consolidation, sale of 10%
or more of a company's assets, or issuance of securities with an aggregate
market value of 5% or more of the aggregate market value of all of the company's
outstanding capital stock) with a beneficial owner of 20% or more of a company's
securities (a "20% shareholder") for a period of five years following the date
such beneficial owner became a 20% shareholder (the "stock
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acquisition date"), unless, among other things, such business combination or the
purchase of stock resulting in the 20% shareholder's beneficial ownership was
approved by the company's board of directors prior to the stock acquisition date
or the business combination is approved by the affirmative vote of the holders
of a majority of the outstanding voting stock exclusive of the stock
beneficially owned by the 20% shareholder. The applicability of this provision
to PCC may discourage unsolicited takeover bids by third parties.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
UNITED STATES FEDERAL INCOME TAXATION
This summary addresses certain material U.S. federal income tax consequences
to holders who are initial holders of the Notes, who purchase the Notes at the
issue price, and who will hold the Notes as capital assets within the meaning of
Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code"). This
summary is based on the Code, administrative pronouncements, judicial decisions,
and existing Treasury Regulations, all as currently in effect, any of which may
be changed subsequent to the date of this Prospectus, thereby potentially
affecting the tax consequences described herein. This summary does not address
all aspects of the U.S. federal income taxation that may be relevant to a
particular holder in light of its individual circumstances or to certain types
of holders subject to special treatment under the U.S. federal income tax laws
(E.G., certain financial institutions, insurance companies, tax-exempt
organizations, dealers in options or securities, or persons who hold positions
other than the Note such that the Note is treated as being a part of a hedging
transaction, straddle, conversion or other integrated transaction). As the law
applicable to the U.S. federal income taxation of exchangeable debt instruments
such as the Notes is technical and complex, the discussion below necessarily
represents only a general summary. Moreover, the effect of any applicable state,
local or foreign tax laws is not discussed.
As used herein, the term "Holder" means a beneficial owner of a Note that
is, for U.S. federal income tax purposes, (i) a citizen or resident of the U.S.,
(ii) a corporation or other entity created or organized under the laws of the
U.S. or any political subdivision thereof, or (iii) an estate or trust the
income of which is subject to U.S. federal income taxation regardless of its
source.
PAYMENT OF INTEREST
A Note that is issued for an amount less than its stated redemption price at
maturity will generally be considered to have been issued at an original issue
discount for federal income tax purposes (an "original Issue Discount Note").
The "issue price" of a Note will equal the first price to the public (not
including bond houses, brokers or similar persons or organizations acting in the
capacity of underwriters, placement agents or wholesalers) at which a
substantial amount of the Notes is sold for money. The stated redemption price
at maturity of a Note will equal the sum of all payments required under the Note
other than payments of "qualified stated interest". "Qualified stated interest"
is stated interest unconditionally payable as a series of payments in cash or
property (other than debt instruments of the issuer) at least annually during
the entire term of the Note and equal to the outstanding principal balance of
the Note multiplied by a single fixed rate of interest. As a result of the
Issuer's right to pay interest by issuing additional Notes in lieu of cash for
the first five years, none of the interest payable over the entire term of the
Note will be qualified stated interest. Instead, the Holders of Notes will be
required to include original issue discount in income for federal income tax
purposes as it accrues, in accordance with a constant yield method based on a
compounding of interest, before the receipt of cash payments, (or the issuance
of additional Notes) attributable to such income and assuming for this purpose
an amount that will be payable at %. However, the receipt of actual cash
interest payments or of additional Notes in lieu of such payments will not
result in an additional income inclusion.
Holders will generally include a constant amount of original discount in
each annual accrual period. On any Interest payment Date on which the Issuer
elects to exercise its option to pay in kind, the Note
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should be deemed to be reissued (solely for purposes of determining the amount
of OID on the Note) with an issue price equal to the adjusted issue price on the
Note immediately prior thereto and a stated redemption price at maturity plus
the amount of interest which will accrue thereon at [ ] for the remaining
term of the Note. However, since there is no authority on point, the Internal
Revenue Service (the "IRS") may assert a position that requires a Holder to
include a greater amount in income immediately.
SALE, EXCHANGE OR RETIREMENT OF THE NOTES
A Holder's tax basis for determining gain or loss on the sale or other
disposition of a Note will generally equal the holder's initial investment in a
Note, increased by the amount accrued OID includible in such holder's gross
income and both (i) reduced by the amount of cash payments on the Notes, if any;
and (ii) allocated proportionately among the original Notes and any additional
notes received in lieu of cash interest payments. As a result, in general, a
Holder's tax basis in the original Notes will remain equal to the Holder's
initial investment in such Notes and the Holder's basis in any additional Notes
received in lieu of cash interest will be approximately equal to the face amount
of such additional Notes. Upon the sale, exchange including an exchange of a
Note into PCC Shares or retirement of a Note, a holder will recognize gain or
loss equal to the difference between the amount realized on the sale or other
disposition of the Note and the holder's tax basis in such Note. Gain or loss
realized on the sale, exchange or retirement of a Note will generally be capital
gain or loss.
TAX BASIS AND HOLDING PERIOD OF THE PCC SHARES
Holders that receive PCC Shares upon exchange of a Note will have an initial
tax basis equal to the fair market value of such PCC Shares on the date of such
exchange. The holding period for such PCC Shares will begin on the day following
the date of exchange.
Dividends, if any, paid on the PCC Shares generally will be includible in
the income of a Holder who has exchanged its Notes for PCC Shares as ordinary
income to the extent of PCC's current or accumulated earnings and profits.
BACKUP WITHHOLDING AND INFORMATION REPORTING
A Holder of a Unit may be subject to information reporting and to backup
withholding at a rate of 31 percent of the amounts paid (or property delivered)
to the Holder, unless such Holder provides proof of an applicable exemption or a
correct taxpayer identification number, and otherwise complies with applicable
requirements of the backup withholding rules. The amounts withheld under the
backup withholding rules are not an additional tax and may be refunded, or
credited against the Holder's U.S. federal income tax liability, provided the
required information is furnished to the IRS.
DUE TO THE COMPLEXITY OF THE RULES GOVERNING EXCHANGEABLE DEBT INSTRUMENTS
SUCH AS THE NOTES, PROSPECTIVE PURCHASERS ARE STRONGLY URGED TO CONSULT THEIR
TAX ADVISORS REGARDING THE FEDERAL INCOME TAX CONSEQUENCES OF AN INVESTMENT IN
NOTES, INCLUDING, IN PARTICULAR, THE EXTENT TO WHICH THEIR INDIVIDUAL
CIRCUMSTANCES MAY AFFECT THE GENERAL RESULTS OUTLINED ABOVE, AS WELL AS THE
EFFECT OF THE TAX LAWS OF ANY LOCAL, STATE, OR FOREIGN TAXING JURISDICTION.
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UNDERWRITING
Subject to the terms and conditions of an Underwriting Agreement by and
among Holdings and the institutions named below (the "Underwriters") dated July
22, 1998 (the "Underwriting Agreement"), the Underwriters have agreed to
purchase from Holdings, severally and not jointly, and Holdings has agreed to
sell to the Underwriters the principal amount of the Notes set forth opposite
its name below.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
NAME NOTES
- -------------------------------------------------------------------------------------------------- --------------
<S> <C>
NatWest Capital Markets Limited...................................................................
Donaldson, Lufkin & Jenrette Securities Corporation...............................................
Bear, Stearns & Co. Inc. .........................................................................
NationsBanc Montgomery Securities LLC.............................................................
Wasserstein Perella Securities, Inc. .............................................................
--------------
Total......................................................................................... $ 200,000,000
--------------
--------------
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
to pay for and accept delivery of the Notes are subject to certain conditions
precedent, and that the Underwriters are severally committed to take and pay for
all the Notes, if any are taken. Holdings has agreed in the Underwriting
Agreement to indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act, and to contribute to payments the
Underwriters may be required to make in respect thereof.
The Underwriters propose to offer the Notes in part directly to the public
at the initial public offering price set forth on the cover page of this
Prospectus and in part to certain securities dealers at such price less a
concession of % of the principal amount of the Notes. The Underwriters may
allow, and such dealers may reallow, a concession not to exceed % of the
principal amount of the Notes to certain brokers and dealers. After the Notes
are released for sale to the public, the offering price and other selling terms
may from time to time be varied by the Underwriters.
Prior to the Offering, there has been no active market for the Notes. None
of the Notes will be listed on any stock exchange or quotation system.
The Underwriters represented and agreed that they have (i) not offered or
sold and will not offer or sell any Notes to persons in the United Kingdom prior
to admission of the Notes as applicable, to listing in accordance with Part IV
of the Financial Services Act of 1986 (the "Financial Services Act"), except to
persons whose ordinary activities involve them in acquiring, holding, managing
or disposing of investments (as principal or agent) for purpose of their
business or otherwise in circumstances which have not resulted and will not
result in an offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulation 1995 or the Financial Services Act, (ii)
complied and will comply with all applicable provisions of the Financial
Services Act with respect to anything done by them in relation to the Notes in,
from or otherwise involving the United Kingdom, and (iii) only issued or passed
on, and will only issue or pass on, in the United Kingdom any document received
by them in connection with the issue of the Notes other than any document which
consists of or any part of listing particulars, supplementary listing
particulars or any other document required or permitted to be published by
listing particulars, supplementary listing particulars or any other document
required or permitted to be published by listing rules under Part IV of the
Financial Services Act, to a person who is of a kind described in Article 11(3)
of the Financial Services Act of 1986 (Investment Advertisements) (Exemptions)
Order 1996 or is a person to whom the document may otherwise lawfully be issued
or passed on.
In connection with the Offering, certain persons participating in the
Offering may engage in transactions that stabilize, maintain, or otherwise
affect the price of the Notes. Specifically, the Underwriters may, subject to
legal and regulatory restrictions, bid for and purchase Notes in the open market
to stabilize the price of the Notes. The Underwriters may also overallot the
Offering, crediting a syndicate short position, and may bid for and purchase
Notes in the open market to cover the syndicate short position. In addition, the
Underwriters may bid for and purchase the Notes in market making transactions
and impose penalty bids. These activities may stabilize or maintain the market
price of the Notes above
99
<PAGE>
market levels that may otherwise prevail. The Underwriters are not required to
engage in these activities, and may commence or end these activities at any
time.
In the ordinary course of its business, the Underwriters and certain of
their affiliates have engaged, and may in the future engage, in investment
banking or transactions of a financial nature with Holdings or PCC, including
the provision of certain advisory services and the making of loans to Holdings
or PCC and their affiliates for which they receive customary fees.
LEGAL MATTERS
The validity of the Notes offered hereby will be passed upon for the Company
by Davis Polk & Wardwell, New York, New York. Certain legal matters in
connection with the Notes offered hereby will be passed upon for the
Underwriters by Cahill Gordon & Reindel (a partnership including a professional
corporation), New York, New York.
INDEPENDENT ACCOUNTANTS
The consolidated financial statements and schedule of PCC, as of and for the
years ending December 31, 1997, 1996 and 1995 incorporated by reference herein,
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are incorporated herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
The consolidated financial statements and schedule of Price Communications
Cellular Holdings, Inc., as of December 31, 1997 and for the period May 29, 1997
through December 31, 1997 and the consolidated statements of operations,
stockholders' equity and cash flows of Palmer Wireless, Inc. for the nine months
ended September 30, 1997, included herein, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are incorporated herein in reliance upon the authority of said firm
as experts in accounting and auditing in giving said reports.
The consolidated balance sheet of Price Communications Cellular Holdings,
Inc. and subsidiaries (a holding company whose sole investment represents Price
Communications Wireless, Inc., formerly Palmer Wireless, Inc.) as of December
31, 1996, and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the years in the two year period ended
December 31, 1996, have been included herein, and the consolidated balance sheet
of Palmer Wireless, Inc. and subsidiaries as of December 31, 1996 and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the years in the two year period ended December 31, 1996, have
been incorporated by reference herein, in reliance upon the reports of KPMG Peat
Marwick LLP, independent certified public accountants, appearing elsewhere and
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
CERTAIN TERMS
Interests in cellular markets that are licensed by the FCC are commonly
measured on the basis of the population of the market served, with each person
in the market area referred to as a "Pop." The number of Pops or Net Pops owned
is not necessarily indicative of the number of subscribers or potential
subscribers. As used in this Offering Memorandum, unless otherwise indicated,
the term "Pops" means the estimate of the population of a MSA or RSA as derived
from the most recent DLJ Pop Book or if such statistics are no longer printed in
the DLJ Pop Book or the DLJ Pop Book is no longer published, the most recent
Rand McNally Commercial Atlas or if such statistics are no longer printed in the
Rand McNally Commercial Atlas or the Rand McNally Commercial Atlas is no longer
published, such other nationally recognized source of such information. The term
"Net Pops" means the Pops of the MSA or RSA served by such System multiplied by
the direct and/or indirect percentage interest of such Person in the entity
licensed or designated to receive an authorization by the Federal Communications
Commission to construct or operate a System in that MSA or RSA. MSAs and RSAs
are also referred to as "markets." The term "wireline" license refers to the
license for any market initially awarded to a company or group that was
affiliated with a local landline telephone carrier in the market, and the term
"non-wireline" license refers to the license for any market that was initially
awarded to a company, individual or group not affiliated with any landline
carrier. The term "System" means an FCC-licensed cellular telephone system. The
term "CTIA" means the Cellular Telecommunications Industry Association.
100
<PAGE>
INDEX TO FINANCIAL STATEMENTS
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC.
<TABLE>
<S> <C>
Auditors' Reports.................................................................... F-2
Consolidated Balance Sheets at December 31, 1997 and 1996............................ F-4
Consolidated Statements of Operations for the Years ended December 31, 1997, 1996 and
1995............................................................................... F-5
Consolidated Statements of Cash Flows for the Years ended December 31, 1997, 1996 and
1995............................................................................... F-6
Consolidated Statements of Stockholders' Equity for the Years ended December 31,
1997, 1996 and 1995................................................................ F-8
Notes to Consolidated Financial Statements........................................... F-9
Condensed Consolidated Balance Sheets at December 31, 1997 and March 31, 1998........ F-25
Condensed Consolidated Statements of Operations for the three months ended March 31,
1997 and 1998...................................................................... F-26
Condensed Consolidated Statements of Stockholders' Equity............................ F-27
Condensed Consolidated Statements of Cash Flows for the three months ended March 31,
1997 and 1998...................................................................... F-28
Notes to Condensed Consolidated Financial Statements................................. F-29
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Price Communications Cellular Holdings, Inc.:
We have audited the accompanying consolidated balance sheet of Price
Communications Cellular Holdings, Inc. (a Delaware corporation,) and
subsidiaries as of December 31, 1997, and the related consolidated statements of
operations, stockholders' equity and cash flows for the period May 29, 1997
through December 31, 1997 (post acquisition basis). We have also audited the
accompanying consolidated statements of operations, stockholder's equity, and
cash flows of Price Communications Wireless, Inc. (a Delaware Corporation,
formerly Palmer Wireless, Inc.) and subsidiaries for the nine month period ended
September 30, 1997 (pre-acquisition basis). 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 Price Communications
Cellular Holdings, Inc. and subsidiaries as of December 31, 1997 and the results
of their operations and their cash flows for the periods May 29, 1997 to
December 31, 1997 (post-acquisition basis) and the results of operations and
cash flows of Price Communications Wireless, Inc. and subsidiaries for the
period January 1, 1997 to September 30, 1997 (pre-acquisition basis) in
conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
New York, New York
March 17, 1998
F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of Price
Communications Cellular Holdings, Inc.:
We have audited the accompanying consolidated balance sheet of Price
Communications Cellular Holdings, Inc. and subsidiaries (a holding company whose
sole investment represents Price Communications Wireless, Inc., formerly Palmer
Wireless, Inc.) as of December 31, 1996, and the related consolidated statements
of operations, stockholders' equity and cash flows for each of the years in the
two-year period ended December 31, 1996. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Price
Communications Cellular Holdings, Inc. and subsidiaries as of December 31, 1996
and the results of their operations and their cash flows for each of the years
in the two-year period ended December 31, 1996 in conformity with generally
accepted accounting principles.
/S/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Des Moines, Iowa
January 30, 1997
F-3
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (NOTE 1)
($ IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
DECEMBER 31, DECEMBER 31,
1996 1997
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................................................... $ 1,698 $ 27,926
Trade accounts receivable, net of allowance for doubtful accounts of $1,791 in 1996
and $818 in 1997 18,784 15,940
Receivable from other cellular carriers............................................ 1,706 3,902
Prepaid expenses and deposits...................................................... 2,313 902
Inventory.......................................................................... 5,106 1,280
Deferred income taxes.............................................................. 830 5,402
------------- ------------
Total current assets............................................................. 30,437 55,352
Property and equipment:
Land and improvements.............................................................. 5,238 6,438
Buildings and improvements......................................................... 7,685 8,561
Equipment, communication systems, and furnishings.................................. 166,735 140,381
------------- ------------
179,658 155,380
Less accumulated depreciation and amortization..................................... 47,220 4,239
------------- ------------
Net property and equipment....................................................... 132,438 151,141
Licenses and goodwill, net of accumulated amortization of $30,188 in 1996 and $6,016
in 1997............................................................................ 375,808 918,488
Other intangible assets and other assets, at cost less accumulated amortization of
$7,311 in 1996 and $818 in 1997.................................................... 11,259 19,498
------------- ------------
Total assets..................................................................... $ 549,942 $1,144,479
------------- ------------
------------- ------------
LIABILITIES AND EQUITY
Current liabilities:
Current installments of long-term debt............................................. $ 5,296 $ 2,812
Notes payable...................................................................... 1,366 --
Payable to Price Communications Corporation........................................ -- 2,328
Accounts payable................................................................... 10,394 13,059
Accrued interest payable........................................................... 2,341 11,361
Accrued salaries and employee benefits............................................. 2,432 2,324
Other accrued liabilities.......................................................... 3,626 16,031
Deferred revenue................................................................... 3,929 3,755
Customer deposits.................................................................. 757 602
------------- ------------
Total current liabilities........................................................ 30,141 52,272
Long-term debt, excluding current installments....................................... 337,000 690,300
Accrued income taxes--long term...................................................... -- 50,491
Deferred income taxes................................................................ 11,500 308,901
Minority interests................................................................... 6,371 7,352
Commitments and contingencies........................................................ -- --
Stockholders' equity
Preferred stock par value $.01 per share; 10,000,000 shares authorized; none
issued........................................................................... -- --
Class A Common Stock par value $.01 per share; 73,000,000 shares authorized in
1996; 11,119,681 shares issued in 1996 including shares in treasury and Class B
Common Stock par value $.01 per share; 18,000,000 shares authorized in 1996;
17,293,578 shares issued in 1996................................................. 284 --
Class A Common Stock par value $.01 per share; 3,000 shares authorized in 1997; 100
shares issued in 1997............................................................ -- --
Additional paid-in capital......................................................... 166,975 44,015
Retained earnings (accumulated deficit)............................................ 6,535 (8,852)
------------- ------------
173,794 35,163
Less Class A Common stock in treasury at cost--600,000 shares in 1996.............. 8,864 --
------------- ------------
Total stockholders' equity....................................................... 164,930 35,163
------------- ------------
Total liabilities and stockholders' equity....................................... $ 549,942 $1,144,479
------------- ------------
------------- ------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------------
COMPANY
FOR THE YEAR ENDED --------------------
DECEMBER 31, FOR THE NINE FOR THE PERIOD
---------------------- MONTHS ENDED MAY 29, 1997 THROUGH
1995 1996 SEPTEMBER 30, 1997 DECEMBER 31, 1997(A)
---------- ---------- ------------------ --------------------
<S> <C> <C> <C> <C>
Revenue:
Service...................................... $ 96,686 $ 151,119 $ 134,123 $ 41,365
Equipment sales and installation............. 8,220 8,624 7,613 2,348
---------- ---------- -------- -------
Total revenue.............................. 104,906 159,743 141,736 43,713
---------- ---------- -------- -------
Operating expenses:
Engineering, technical and other direct...... 18,184 28,717 23,301 5,978
Cost of equipment............................ 14,146 17,944 16,112 5,259
Selling, general and administrative.......... 30,990 46,892 41,014 12,805
Depreciation and amortization................ 15,004 25,013 25,498 11,055
---------- ---------- -------- -------
Total operating expenses................... 78,324 118,566 105,925 35,097
Operating income........................... 26,582 41,177 35,811 8,616
---------- ---------- -------- -------
Other income (expense):
Interest income.............................. 211 62 30 2,195
Interest expense............................. (21,424) (31,524) (24,497) (24,393)
---------- ---------- -------- -------
Interest expense, net...................... (21,213) (31,462) (24,467) (22,198)
Other (expense) income, net.................. (687) (429) 208 15
---------- ---------- -------- -------
Total other expense........................ (21,900) (31,891) (24,259) (22,183)
---------- ---------- -------- -------
Income (loss) before minority interest
share of income and income taxes......... 4,682 9,286 11,552 (13,567)
Minority interest share of income.............. 1,078 1,880 1,310 414
---------- ---------- -------- -------
Income (loss) before income tax expense
(benefit)................................ 3,604 7,406 10,242 (13,981)
Income tax expense (benefit)................... 2,650 2,724 4,153 (5,129)
---------- ---------- -------- -------
Net income (loss).......................... $ 954 $ 4,682 $ 6,089 $ (8,852)
---------- ---------- -------- -------
---------- ---------- -------- -------
</TABLE>
- ------------------------
(a) Includes results of operations only for the period October 1, 1997 through
December 31, 1997 (see Note 1).
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
----------------------------------- -----------------
FOR THE PERIOD
FOR THE YEAR ENDED FOR THE NINE MAY 29, 1997
DECEMBER 31, MONTHS ENDED THROUGH
-------------------- SEPTEMBER 30, DECEMBER 31,
1995 1996 1997 1997
--------- --------- ------------- -----------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)....................................... $ 954 $ 4,682 $ 6,089 $ (8,852)
--------- --------- ------------- -----------------
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization......................... 15,004 25,013 25,498 11,055
Minority interest share of income..................... 1,078 1,880 1,310 414
Deferred income taxes................................. 2,650 1,855 3,939 (2,454)
Interest deferred and added to long-term debt......... 607 355 -- 4,400
Payment of deferred interest.......................... -- (1,080) (1,514) --
Changes in current assets and liabilities:
(Increase) decrease in trade accounts receivable...... (2,741) (1,561) 473 124
Decrease (increase) in inventory...................... 4,076 (2,595) 2,800 458
Increase (decrease) in accounts payable............... 2,623 (841) (1,390) 3,598
(Decrease) increase in accrued interest payable....... (14) (167) (374) 9,394
Increase (decrease) in accrued salaries and employee
benefits............................................ 241 165 251 (341)
Increase (decrease) in other accrued liabilities...... 583 (507) 2,049 (4,529)
Increase (decrease) in deferred revenue............... 658 912 4 (1,046)
(Decrease) increase in customer deposits.............. (53) 134 (94) 15
(Decrease) increase in accrued income tax-long-term... -- -- -- (2,675)
Other................................................. 1,994 1,885 (250) 1,752
--------- --------- ------------- -----------------
Total adjustments................................... 26,706 25,448 32,702 20,165
--------- --------- ------------- -----------------
Net cash provided by operating activities........... 27,660 30,130 38,791 11,313
--------- --------- ------------- -----------------
Cash flows from investing activities:
Capital expenditures.................................. (36,564) (41,445) (40,757) (14,499)
Increase in other intangible assets and other
assets.............................................. (310) (2,180) (778) --
Proceeds from sales of property and equipment......... 38 5 201 --
Acquisition of Predecessor net assets................. -- -- -- (497,856)
Purchase of cellular systems.......................... (158,397) (67,588) (31,469) --
Proceeds from sales of cellular systems............... -- -- -- 193,799
Collection of purchase price adjustment............... -- 2,452 -- --
Purchases of minority interests....................... (1,543) (1,854) (956) (794)
Distributions to minority interests................... -- -- -- (1,680)
--------- --------- ------------- -----------------
Net cash used in investing activities................. (196,776) (110,610) (73,759) (321,030)
--------- --------- ------------- -----------------
--------- --------- ------------- -----------------
Cash flows from financing activities:
Advance from Price Communications Corporation......... -- -- -- 2,328
Payment on advances from Palmer Communications
Incorporated........................................ (1,650) -- -- --
Increase (decrease) in short term notes payable....... -- 1,366 (1,366) --
Repayment of long-term debt........................... (65,125) (108,319) (3,782) (385,000)
Proceeds from long-term debt.......................... 171,000 100,000 41,000 695,712
Payment of debt issuance costs........................ (4,803) -- -- (19,412)
Public offering proceeds, net......................... 71,144 95,000 -- --
Issuance of common stock.............................. -- -- -- 44,015
Proceeds from stock options exercised................. 285 95 999 --
Payment of deferred offering costs.................... (1,297) (826) -- --
Purchase of treasury stock............................ -- (8,864) -- --
Proceeds from sales under stock purchase plans........ -- 290 -- --
--------- --------- ------------- -----------------
Net cash provided by financing activities........... 169,554 78,742 36,851 337,643
--------- --------- ------------- -----------------
Net (decrease) increase in cash and cash
equivalents....................................... 438 (1,738) 1,883 27,926
Cash and cash equivalents at the beginning of period...... 2,998 3,436 1,698 --
--------- --------- ------------- -----------------
Cash and cash equivalents at the end of period............ $ 3,436 $ 1,698 $ 3,581 $ 27,926
--------- --------- ------------- -----------------
--------- --------- ------------- -----------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
($ IN THOUSANDS)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
During 1995, the Predecessor committed to purchase certain minority
interests in 1996. This commitment totaling $451 was accrued in 1995 and paid in
1996.
During 1996, the Predecessor increased the purchase obligations related to
the final purchase price adjustment for the controlling interest in a
non-wireline cellular telephone system purchased in 1991. This increase amounted
to $899 and resulted in an increase in licenses.
Acquisitions of non-wireline cellular telephone systems in 1995, 1996 and
1997:
<TABLE>
<CAPTION>
PREDECESSOR
-----------------------------------------
FOR THE YEAR ENDED
DECEMBER 31, FOR THE NINE
--------------------- MONTHS ENDED
1995 1996 SEPTEMBER 30, 1997
---------- --------- ------------------
<S> <C> <C> <C>
Cash payment........................................................... $ 158,397 $ 67,588 $ 31,469
---------- --------- -------
---------- --------- -------
Allocated to:
Fixed assets......................................................... $ 22,846 $ 5,678 $ 3,197
Licenses and goodwill................................................ 136,940 61,433 27,738
Deferred income taxes................................................ (6,165) -- --
Current assets and liabilities, net.................................. 4,776 477 534
---------- --------- -------
$ 158,397 $ 67,588 $ 31,469
---------- --------- -------
---------- --------- -------
</TABLE>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
PREDECESSOR
---------------------------------------- COMPANY
-----------------
FOR THE YEAR ENDED FOR THE PERIOD
DECEMBER 31, FOR THE NINE MAY 29, 1997
-------------------- MONTHS ENDED THROUGH
1995 1996 SEPTEMBER 30, 1997 DECEMBER 31, 1997
--------- --------- ------------------ -----------------
<S> <C> <C> <C> <C>
Income taxes paid (received), net.................... $ -- $ 1,591 $ (736) $ (40)
--------- --------- ------- ------
--------- --------- ------- ------
Interest paid........................................ $ 18,435 $ 29,733 $ 25,102 $ 9,924
--------- --------- ------- ------
--------- --------- ------- ------
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
($ IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR
----------------------
<S> <C> <C> <C> <C> <C>
COMMON STOCK COMMON STOCK
CLASS A CLASS B ADDITIONAL
---------------------- ---------------------- PAID-IN
SHARES AMOUNT SHARES AMOUNT CAPITAL
--------- ----------- --------- ----------- -----------
Balances at December 31, 1994.............................. 706,422 $ 7 17,293,578 $ 173 $ 4,902
Partnership loss before business combination............... -- -- -- -- (1,066)
Public offering, net of issuance costs of $8,114........... 5,369,350 54 -- -- 68,345
Exercise of stock options.................................. 20,000 -- -- -- 285
Net income................................................. -- -- -- -- --
--------- ----------- --------- ----- -----------
Balances at December 31, 1995.............................. 6,095,772 61 17,293,578 173 72,466
Public offering, net of issuance costs of $5,826........... 5,000,000 50 -- -- 94,124
Exercise of stock options.................................. 6,666 -- -- -- 95
Employee and non-employee director stock purchase plans.... 17,243 -- -- -- 290
Treasury shares purchased.................................. -- -- -- -- --
Net income................................................. -- -- -- -- --
--------- ----------- --------- ----- -----------
Balances at December 31, 1996.............................. 11,119,681 111 17,293,578 173 166,975
Exercise of stock options.................................. 70,000 1 -- -- 998
Net income................................................. -- -- -- -- --
--------- ----------- --------- ----- -----------
Balances at September 30, 1997............................. 11,189,681 $ 112 17,293,578 $ 173 $ 167,973
--------- ----------- --------- ----- -----------
--------- ----------- --------- ----- -----------
</TABLE>
<TABLE>
<CAPTION>
TREASURY STOCK TOTAL
RETAINED -------------------- STOCKHOLDERS'
EARNINGS SHARES AMOUNT EQUITY
--------- --------- --------- ------------
<S> <C> <C> <C> <C>
Balances at December 31, 1994...................................... $ (167) -- $ -- $ 4,915
Partnership loss before business combination....................... -- -- -- (1,066)
Public offering, net of issuance costs of $8,114................... -- -- -- 68,399
Exercise of stock options.......................................... -- -- -- 285
Net income......................................................... 2,020 -- -- 2,020
--------- --------- --------- ------------
Balances at December 31, 1995...................................... 1,853 -- -- 74,553
Public offering, net of issuance costs of $5,826................... -- -- -- 94,174
Exercise of stock options.......................................... -- -- -- 95
Employee and non-employee director stock purchase plans............ -- -- -- 290
Treasury shares purchased.......................................... -- 600,000 (8,864) (8,864)
Net income......................................................... 4,682 -- -- 4,682
--------- --------- --------- ------------
Balances at December 31, 1996...................................... 6,535 600,000 (8,864) 164,930
Exercise of stock options.......................................... -- -- -- 999
Net income......................................................... 6,089 -- -- 6,089
--------- --------- --------- ------------
Balances at September 30, 1997..................................... $ 12,624 600,000 $ (8,864) $ 172,018
--------- --------- --------- ------------
--------- --------- --------- ------------
</TABLE>
<TABLE>
<CAPTION>
COMPANY
------------------------
<S> <C> <C> <C> <C> <C>
COMMON STOCK
CLASS A ADDITIONAL TOTAL
------------------------ PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT EQUITY
----------- ----------- ----------- ------------ ------------
Balances at May 29, 1997............................... -- $ -- $ -- $ -- $ --
Capital contribution................................... 100 -- 44,015 -- 44,015
Net loss............................................... -- -- -- (8,852) (8,852)
--- --- ----------- ------------ ------------
Balances at December 31, 1997.......................... 100 $ -- $ 44,015 $ (8,852) $ 35,163
--- --- ----------- ------------ ------------
--- --- ----------- ------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-8
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND ACQUISITION
Price Communications Cellular Holdings, Inc. ("Holdings" or the "Company"),
a wholly-owned subsidiary of Price Communications Cellular, Inc., a wholly-owned
subsidiary of Price Communications Corporation ("PCC"), was incorporated on May
29, 1997 in connection with the purchase of Palmer Wireless, Inc. and
subsidiaries ("Palmer" or the "Predecessor").
In May, 1997, PCC, Price Communications Wireless, Inc. ("PCW"), a wholly
owned subsidiary of Holdings and Palmer entered into an Agreement and Plan of
Merger (the "Merger Agreement"). The Merger Agreement provided, among other
things, for the merger of PCW with and into Palmer with Palmer as the surviving
corporation (the "Merger"). In October, 1997, the Merger was consummated and
Palmer changed its name to "Price Communications Wireless, Inc." Pursuant to the
Merger Agreement, PCC acquired each issued and outstanding share of common stock
of Palmer for a purchase price of $17.50 per share in cash and purchased
outstanding options and rights under employee and direct stock purchase plans
for an aggregate price of approximately $486,400. In addition, as a result of
the Merger, PCW assumed all outstanding indebtedness of Palmer of approximately
$378,000. Therefore, the aggregate purchase price for Palmer (including
transaction fees and expenses) was approximately $880,000. PCW refinanced all of
the Palmer Existing Indebtedness concurrently with the consummation of the
Merger.
In June, 1997, PCW entered into an agreement to sell Palmer's Fort Myers,
Florida MSA as part of the financing of the Merger (the "Fort Myers Sale"). In
October, 1997, the Fort Myers Sale was consummated, and generated proceeds to
the Company of approximately $166,000. The proceeds of the Fort Myers Sale were
used to fund a portion of the acquisition of Palmer. Accordingly, no gain or
loss was recognized on the Fort Myers Sale.
Also in connection with the Merger, on October 21, 1997, PCC and PCW entered
into an Asset Purchase Agreement with MJ Cellular Company, L.L.C. (the "Georgia
Sale Agreement") which provided for the sale by PCW of substantially all of the
assets used in the operation of the non-wireline cellular telephone system
serving the Georgia-1-Whitfield Rural Service Area ("Georgia-1"), including the
FCC licenses to operate Georgia-1 (the "Georgia Sale"). The sale of the assets
of Georgia-1 was consummated on December 30, 1997 for $24,200. In January, 1998
the proceeds from the Georgia Sale were used to retire a portion of the debt
used to fund the Palmer acquisition. Accordingly, no gain or loss was recognized
on the Georgia Sale.
In order to fund the Merger and pay related fees and expenses, in July,
1997, PCW issued $175,000 aggregate principal amount of 11 3/4% Senior
Subordinated Notes due 2007 and entered into a syndicated senior loan facility
providing for term loan borrowings in the aggregate principal amount of
approximately $325,000 and revolving loan borrowings of $200,000. In October,
1997, PCW borrowed all term loans available thereunder and approximately
$120,000 of revolving loans. DLJ Capital Funding, Inc. provided and syndicated
the New Credit Facility. See Notes 5(a) and 5(b).
The remaining acquisition price of Palmer was funded through a $44,015
equity contribution of PCC and $75,712 of borrowings of Holdings (See Note
5(c)).
F-9
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
BASIS OF PRESENTATION
For financial reporting purposes, PCW revalued its assets and liabilities as
of October 1, 1997 to reflect the price paid by PCC to acquire 100% of its
Common Stock, a process generally referred to as "push down" the accounting. The
consolidated financial statements as of December 31, 1997 and for the period May
29, 1997 through December 31, 1997 reflect a preliminary allocation of the
purchase price to the assets acquired and liabilities assumed. Additional
purchase liabilities recorded include approximately $6,464 for severance and
related costs and $4,051 for costs associated with the shutdown of certain
acquired facilities. See Note 3, Other Accrued Liabilities, for amounts
outstanding as of December 31, 1997. The preliminary allocation of the purchase
price resulted in licenses of approximately $924,504 on the balance sheet, which
are being amortized on a straight-line basis over a period of 40 years.
The consolidated financial statements through September 30, 1997 reflect the
historical cost of its assets and liabilities and results of operations and are
referred to as the "Predecessor" consolidated financial statements. Accordingly,
the accompanying financial statements of the Predecessor and the Company are not
comparable in all material respects since those financial statements report
financial position, results of operations, and cash flows of these two separate
entities.
PRO FORMA INFORMATION
The following unaudited pro forma condensed consolidated financial
information was prepared assuming (i) the Predecessor was acquired on January 1,
1996, (ii) the acquisitions of the licenses had occurred on January 1, 1996 (See
Note 4), and (iii) and the Ft. Myers Sale and Georgia Sale occurred on January
1, 1996.
Proforma information is presented for comparative purposes only and does not
purport to be indicative of the results which would have been achieved had this
acquisition occurred as of January 1, 1996, nor does it purport to be indicative
of results that may be achieved in the future.
<TABLE>
<CAPTION>
UNAUDITED
YEAR ENDED DECEMBER 31
----------------------
<S> <C> <C>
1996 1997
---------- ----------
Total Revenue...................................................... $ 145,643 $ 161,468
---------- ----------
Loss Before Income Taxes........................................... $ (54,529) $ (51,532)
---------- ----------
Net Loss........................................................... $ (48,895) $ (43,911)
---------- ----------
</TABLE>
CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
the Company and its subsidiaries after the elimination of significant
intercompany accounts and transactions.
The Predecessor was a Delaware corporation and was incorporated on December
15, 1993 to effect an initial public offering of its Class A Common Stock. At
December 31, 1996, Palmer Communications Incorporated ("PCI") owned 61 percent
of the Predecessor's outstanding stock and had 75 percent of its voting rights
and therefore the Predecessor was a subsidiary of PCI.
F-10
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
On March 21, 1995 and April 18, 1995, the Predecessor issued 5,000,000 and
369,350 shares respectively, of Class A Common Stock in an initial public
offering (the "Offering") for net proceeds of $68,399. In connection with the
Offering, on March 21, 1995, the Predecessor issued 704,755 shares of Class A
Common Stock and 17,288,578 shares of Class B Common Stock in exchange for 100
percent of the Partnership interests of Palmer Cellular Partnership (the
"Exchange"). The assets and liabilities received in the Exchange were recorded
at their historical cost to Palmer Cellular Partnership and not revalued at fair
value on the date of transfer. Since the Exchange was between related parties it
was accounted for in a manner similar to a pooling of interests.
Losses in subsidiaries, attributable to minority stockholders and partners,
in excess of their capital accounts and cash capital call provisions are not
eliminated in consolidation.
OPERATIONS
The Company has majority ownership in corporations and partnerships which
operate the non-wireline cellular telephone systems in eight Metropolitan
Statistical Areas ("MSA") in three states: Florida (one), Georgia (five) and
Alabama (two). The Company's ownership percentages in these entities range from
approximately 78 percent to 100 percent. The Company owns directly and operates
eight non-wireline cellular telephone systems in Rural Service Areas in Georgia
(seven) and Alabama (one).
The Predecessor had majority ownership in corporations and partnerships
which operated the non-wireline cellular telephone systems in nine MSA's in
three states: Florida (two), Georgia (five) and Alabama (two). The Predecessor's
ownership percentages in these entities ranged from approximately 78 percent to
100 percent. The Predecessor owned directly and operated eight non-wireline
cellular telephone systems in RSA's in Georgia (seven) and Alabama (one).
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 amounts reported in the financial statements and
accompanying notes. Actual results could differ from these estimates.
CASH AND CASH EQUIVALENTS
For purposes of the statements of cash flows the Company and the Predecessor
consider cash and repurchase agreements with a maturity of three months or less
to be cash equivalents.
INVENTORY
Inventory consisting primarily of cellular telephones and telephone parts is
stated at the lower of cost or market. Cost is determined using the first-in,
first-out (FIFO) method.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. The cost of additions and
improvements are capitalized while maintenance and repairs are charged to
expense when incurred. Depreciation is provided principally
F-11
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
by the straight-line method over the estimated useful lives, ranging from 5 to
20 years for buildings and improvements and 5 to 10 years for equipment,
communications systems and furnishings.
ACQUISITIONS AND LICENSES
The cost of acquired companies is allocated first to the identifiable
assets, including licenses, based on the fair market value of such assets at the
date of acquisition (as determined by independent appraisers or management). The
excess of the total consideration over the amounts assigned to identifiable
assets is recorded as goodwill. Licenses and goodwill are being amortized on a
straight-line basis over a 40-year period.
Subsequent to the acquisition of the licenses, the Company continually
evaluates whether later events and circumstances have occurred that indicate the
remaining estimated useful life of licenses may warrant revision or that the
remaining balance of the license rights may not be recoverable. The Company
utilizes projected undiscounted cash flows over the remaining life of the
licenses and sales of comparable businesses to evaluate the recorded value of
licenses. The assessment of the recoverability of the remaining balance of the
license rights will be impacted if projected cash flows are not achieved.
OTHER INTANGIBLE ASSETS
Other intangibles consist principally of deferred financing costs and other
items. These costs are being amortized by the interest or straight-line method
over their respective useful lives, which range from 5 to 10 years.
INCOME TAXES
The Company and the Predecessor account for income taxes under the asset and
liability method of accounting for deferred income taxes. Under the asset and
liability method, deferred 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 and operating loss carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
INTEREST RATE SWAP AGREEMENTS
The differential to be paid or received in connection with interest rate
swap agreements is accrued as interest rates change and is recognized over the
life of the agreements.
REVENUE RECOGNITION
Service revenue includes local subscriber revenue and outcollect roaming
revenue.
Local subscriber revenue is earned by providing access to the cellular
network ("access revenue") or, as applicable, for usage of the cellular network
("airtime revenue"). Access revenue is billed one month in advance and is
recognized when earned. Airtime revenue is recognized when the service is
rendered.
F-12
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Outcollect roaming revenue represents revenue earned for usage of its
cellular network by subscribers of other cellular carriers. Outcollect roaming
revenue is recognized when the services are rendered.
Equipment sales and installation revenues are recognized upon delivery to
the customer or installation of the equipment.
OPERATING EXPENSES--ENGINEERING, TECHNICAL AND OTHER DIRECT
Engineering, technical and other direct operating expenses represent certain
costs of providing cellular telephone service to customers. These costs include
incollect roaming expense. Incollect roaming expense is the result of
subscribers using cellular networks of other cellular carriers. Incollect
roaming revenue is netted against the incollect roaming expense to determine net
incollect roaming expense.
STOCK OPTION PLANS
Prior to January 1, 1996, the Predecessor accounted for its stock option
plans in accordance with the provisions of Accounting Principles Board ("APB")
Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations. As such, compensation expense would be recorded on the date of
grant only if the current market price of the underlying stock exceeded the
exercise price. On January 1, 1996, the Predecessor adopted Statement of
Financial Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based
Compensation, which permits entities to recognize as expense over the vesting
period the fair value of all stock-based awards on the date of grant.
Alternatively, SFAS No. 123 also allows entities to continue to apply the
provisions of APB Opinion No. 25 and provide pro forma net income and pro forma
earnings per share disclosures for employee stock option grants made in 1995 and
future years as if the fair-value-based method defined in SFAS No. 123 had been
applied. The Predecessor elected to continue to apply the provisions of APB
Opinion No. 25 and provide the pro forma disclosure provisions of SFAS No. 123.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value estimates, methods and assumptions used to estimate the fair
value of financial instruments are set forth below:
For cash and cash equivalents, trade accounts receivable, receivable from
other cellular carriers, notes payable, accounts payable and accrued expenses,
the carrying amount approximates the estimated fair value due to the short-term
nature of those instruments.
F-13
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Rates currently available for long-term debt with similar terms and
remaining maturities are used to discount the future cash flows to estimate the
fair value for long-term debt. Note 5 presents the fair value for long-term debt
and the related interest rate cap and swap agreements.
Fair value estimates are made as of a specific point in time, based upon the
relevant market information about the financial instruments. Because no market
exists for a majority of the financial instruments, fair value estimates are
based on judgments regarding current economic conditions and other factors.
These estimates are subjective in nature and involve uncertainties and matters
of judgment and, therefore, cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.
(2) TRADE ACCOUNTS RECEIVABLE
The Company and the Predecessor grant credit to its
customers. Substantially all of the customers are residents of the local areas
served. Generally, service is discontinued to customers whose accounts are 60
days past due.
The activity in the Predecessor's and the Company's allowance for doubtful
accounts for the years ended December 31, 1995, and 1996, the nine months ended
September 30, 1997 and the period from October 1, 1997 through December 31, 1997
consisted of the following:
<TABLE>
<CAPTION>
ALLOWANCE AT
BALANCE AT CHARGED DATES OF DEDUCTIONS,
BEGINNING TO ACQUISITIONS NET OF BALANCE ATEND
OF PERIOD EXPENSES (DISPOSITIONS) RECOVERIES OF PERIOD
----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Predecessor
Year ended December 31, 1995............................ $ 1,567 $ 2,078 $ 432 $ (2,197) $ 1,880
----------- ----------- ------ ----------- ------
----------- ----------- ------ ----------- ------
Predecessor
Year ended December 31, 1996............................ $ 1,880 $ 3,946 $ 1,270 $ (5,305) $ 1,791
----------- ----------- ------ ----------- ------
----------- ----------- ------ ----------- ------
Predecessor
Nine months ended September 30, 1997.................... $ 1,791 $ 3,614 $ 147 $ (4,212) $ 1,340
----------- ----------- ------ ----------- ------
----------- ----------- ------ ----------- ------
Company
Period from May 29, 1997 through December 31, 1997...... $ 1,340 $ 1,202 $ (206) $ (1,518) $ 818
----------- ----------- ------ ----------- ------
----------- ----------- ------ ----------- ------
</TABLE>
(3) OTHER ACCRUED LIABILITIES
Other accrued liabilities at December 31, 1996 and 1997 consisted of the
following:
<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
Accrued telecommunications expenses...................................... $ 892 $ 2,176
Accrued local taxes...................................................... 913 888
Accrued severance payments............................................... -- 6,155
Accrued shutdown costs of certain facilities............................. -- 3,818
Miscellaneous accruals................................................... 1,821 2,994
--------- ---------
$ 3,626 $ 16,031
--------- ---------
--------- ---------
</TABLE>
F-14
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(4) ACQUISITIONS AND PURCHASE OF LICENSES
On December 1, 1995, the Predecessor purchased all of the outstanding stock
of Augusta Metronet, Inc. and Georgia Metronet, Inc., which own either directly
(or in the case of Georgia Metronet, Inc., through its 97.9 percent interest in
the Savannah Cellular Limited Partnership) the licenses to operate the
non-wireline cellular telephone systems in the Savannah and Augusta, Georgia
MSAs, respectively, for an aggregate purchase price of $158,397. The acquisition
was accounted for by the purchase method of accounting. In connection with this
acquisition, $136,940 of the purchase price was allocated to licenses and
goodwill.
On June 20, 1996, the Predecessor acquired the assets of and the license to
operate the non-wireline cellular telephone system serving the Georgia-1 RSA for
an aggregate purchase price of $31,616. The acquisition was accounted for by the
purchase method of accounting. In connection with the acquisition, $27,942 of
the purchase price was allocated to licenses.
On July 5, 1996, two of the Predecessor's majority-owned subsidiaries
acquired the assets of and the license to operate the non-wireline cellular
telephone system serving the Georgia-6 RSA for an aggregate purchase price of
$35,972. The acquisition was accounted for by the purchase method of accounting.
In connection with the acquisition, $33,491 of the purchase price was allocated
to licenses.
On January 31, 1997, a majority-owned subsidiary of the Predecessor acquired
the assets of and the license to operate the non-wireline cellular telephone
system serving the Georgia-13 RSA for an aggregate purchase price of $31,486.
The acquisition was accounted for by the purchase method of accounting. In
connection with the acquisition, $27,650 of the purchase price was allocated to
licenses.
See Note 1 for presentation of pro forma information.
(5) NOTES PAYABLE AND LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
----------- ----------
<S> <C> <C>
DECEMBER 31
-----------------------
<CAPTION>
1996 1997
----------- ----------
<S> <C> <C>
Credit agreement...................................................................... $ 337,000(d) $ 438,000(a)
11.75% Senior Subordinated Notes...................................................... -- 175,000(b)
13.5% Senior Secured Discount Notes................................................... -- 80,112(c)
Purchase obligations.................................................................. 5,296(e) --
----------- ----------
342,296 693,112
Less current installments............................................................. 5,296 2,812
----------- ----------
Long-term debt, excluding current installments........................................ $ 337,000 $ 690,300
----------- ----------
----------- ----------
</TABLE>
F-15
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(5) NOTES PAYABLE AND LONG-TERM DEBT (CONTINUED)
- ------------------------
(a) In October 1997, PCW entered into a credit agreement ("Credit Agreement")
with a syndicate of banks, financial institutions and other "accredited
investors" providing for loans of up to $525,000. The Credit Agreement
includes a $325,000 term loan facility and a $200,000 revolving credit
facility. The term loan facility is comprised of tranche A loans of up to
$100,000, which will mature on September 30, 2005, and tranche B term loans
of up to $225,000, which will mature on September 30, 2006. The revolving
credit facility will terminate on September 30, 2006. The Credit Agreement
bears interest at the alternate base rate, as defined in the Credit
Agreement, as the reserve adjusted Euro-Dollar rate plus, in each case,
applicable margins of (i) in the case of tranche A term loans and revolving
loans (x) 2.5% for Euro-Dollar rate loans and (y) 1.5% for base rate loans
and (ii) in the case of tranche B term loans (x) 2.75 for Euro-Dollar rate
loans and (y) 1.75% for base rate loans. As of December 31, 1997, the Credit
Agreement was bearing interest at 8.5% for the tranche A loan and revolving
credit facility and 8.7% for the tranche B loan. The Credit Agreement
contains restrictions on the subsidiary's ability to engage in certain
activities, including limitations on incurring additional indebtedness,
liens and investments, payment of dividends and the sale of assets. Holdings
is a guarantor of the Credit Agreement. As of December 31, 1997 $87,000 of
the revolving credit facility was unused and available for borrowings.
(b) In July 1997, PCW issued $175,000 of 11.75% Senior Subordinated Notes
("11.75% Notes") due July 15, 2007 with interest payable semi-annually
commencing January 15, 1998. The 11.75% Notes contain covenants that
restrict the payment of dividends, incurrence of debt and sale of assets.
The carrying value of the 11.75% Notes approximates fair value as of
December 31, 1997.
(c) In August, 1997, Holdings issued 153,400 units, consisting of Notes and
warrants of PCC (the "Warrants"), in exchange for $80,000. The Notes accrete
at a rate of 13.5%, compounded semi-annually, to an aggregate principal
amount of approximately $153.4 million by August 1, 2002. Cash interest will
not commence to accrue on the Notes prior to August 2, 2002. Commencing on
February 1, 2003, cash interest on the Notes will be payable at a rate of
13.5% per annum, payable semi-annually. The Notes will be redeemable at the
option of Holdings, in whole or in part, at any time after August 1, 1998 in
cash at the redemption price as defined, plus accrued and unpaid interest,
if any, thereon to the redemption date; provided that the trading price of
the common stock of PCC shall equal or exceed certain levels. The Notes
mature on August 1, 2007 and contain covenants that restrict payments of
dividends, incurrence of debt and sale of assets. The Warrants have been
assigned a value of $4,288, which amount is accounted for as original issue
discount, resulting in an effective interest rate of approximately 14.13%
per annum. The fair value of the Notes was estimated as $80,112 as of
December 31, 1997.
(d) On December 1, 1995, the Predecessor entered into an amended and restated
credit agreement with 21 banks which provided for a revolving line of credit
of up to $500,000, subject to certain limitations through June 30, 2004.
Interest was payable at variable rates and under various interest rate
options. The interest rate at December 31, 1996 ranged from 7.42 to 8.88
percent before the affect of the interest rate swap and cap agreements
outlined below. The credit agreement also provided for a commitment fee of
.5 percent per year on any unused amounts of the credit agreement. Amounts
outstanding were secured by the assets of the Predecessor.
F-16
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(5) NOTES PAYABLE AND LONG-TERM DEBT (CONTINUED)
The credit agreement provided for various compliance covenants and
restrictions, including items related to mergers or acquisition
transactions, the declaration or payment of dividends or other payments to
stockholders, capital expenditures and maintenance of certain financial
ratios. At December 31, 1996 the Predecessor was in compliance with all but
one financial ratio covenant. This covenant was based on operating results
for the year ended December 31, 1996. The Predecessor obtained a waiver of
the noncompliance with this 1996 financial ratio covenant. In connection
with the acquisition of the Predecessor (see Note 1), the Predecessor credit
agreement was refinanced.
(e) In connection with the purchase of controlling interest in a non-wireline
cellular telephone system in 1991, the Predecessor incurred certain purchase
obligations. The obligations were retired in July 1996 and January 1997.
PCW has entered into interest rate swap and cap agreements to reduce the
impact of changes in interest rates on its floating rate debt and thus were
entered into for purposes other than trading. At December 31, 1997, PCW had
outstanding seven interest rate swap agreements and one interest rate cap
agreement having a total notional value of $370,000. These interest rate swap
and cap agreements effectively change PCW's interest rate exposure on a
quarterly basis on $370,000 of outstanding debt. The cap and swap agreements are
summarized as follows:
<TABLE>
<CAPTION>
MAXIMUM NOTIONAL
TYPE OF AGREEMENT MATURITY LIBOR VALUE
- -------------------------------------------------- ------------------ ------------- ----------
<S> <C> <C> <C>
Pay Later Cap (1)................................. Jan. 12, 1998 8.5% $ 20,000
Participating Swap (2)............................ Aug. 10, 1998 5.98% 15,000
Swap.............................................. Aug. 6, 1999 6.36% 25,000
Swap.............................................. Oct. 21, 1999 5.92% 185,000
Swap.............................................. Aug. 7, 2000 6.09% 50,000
Swap.............................................. Aug. 21, 2000 6.11% 25,000
Swap.............................................. Oct. 10, 2000 6.10% 25,000
Swap.............................................. Oct. 11, 2000 5.99% 25,000
----------
$ 370,000
----------
----------
</TABLE>
- ------------------------
(1) When the three-month LIBOR rate is 8.5 percent or higher PCW receives a
quarterly payment of $98.
(2) When the six-month LIBOR is less than 5.98 percent PCW participates in 45
percent of the difference.
The market value of the swap and cap agreements above, which has not been
reflected in the consolidated financial statements as of December 31, 1997, is a
loss of $1,076.
PCW is exposed to interest rate risk in the event of nonperformance by the
other party to the interest rate swap and cap agreements. However, PCW does not
anticipate nonperformance by any of the banks.
F-17
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ IN THOUSANDS)
(5) NOTES PAYABLE AND LONG-TERM DEBT (CONTINUED)
The aggregate maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, AMOUNT
- ------------------------------------------------------------------------------------------------------ ----------
<S> <C>
1998.................................................................................................. $ 2,812
1999.................................................................................................. 4,750
2000.................................................................................................. 12,875
2001.................................................................................................. 15,375
2002.................................................................................................. 17,875
Thereafter............................................................................................ 639,425
----------
$ 693,112
----------
----------
</TABLE>
(6) INCOME TAXES
Components of income tax expense (benefit) consist of the following:
<TABLE>
<CAPTION>
FEDERAL STATE TOTAL
--------- --------- ---------
<S> <C> <C> <C>
Predecessor:
Year ended December 31, 1995:
Current......................................................................... $ -- $ -- $ --
--------- --------- ---------
Deferred........................................................................ 2,550 100 2,650
--------- --------- ---------
$ 2,550 $ 100 $ 2,650
--------- --------- ---------
--------- --------- ---------
Predecessor:
Year ended December 31, 1996:
Current......................................................................... $ -- $ 869 $ 869
Deferred........................................................................ 1,795 60 1,855
--------- --------- ---------
$ 1,795 $ 929 $ 2,724
--------- --------- ---------
--------- --------- ---------
Predecessor:
Period ended September 30, 1997
Current......................................................................... $ -- $ 214 $ 214
Deferred........................................................................ 3,553 386 3,939
--------- --------- ---------
$ 3,553 $ 600 $ 4,153
--------- --------- ---------
--------- --------- ---------
Company:
Period ended December 31, 1997
Current......................................................................... $ (2,244) $ (432) $ (2,676)
Deferred........................................................................ (2,116) (337) (2,453)
--------- --------- ---------
$ (4,360) $ (769) $ (5,129)
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-18
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ IN THOUSANDS)
(6) INCOME TAXES (CONTINUED)
The consolidated effective tax rate differs from the statutory United States
federal tax rate for the following reasons and by the following percentages:
<TABLE>
<CAPTION>
PREDECESSOR
---------------------------------------
COMPANY
YEAR ENDED NINE MONTHS ---------------
DECEMBER 31, ENDED PERIOD ENDED
-------------------- SEPTEMBER 30, DECEMBER 31,
1995 1996 1997 1997
--------- --------- ----------------- ---------------
<S> <C> <C> <C> <C>
Statutory United States federal tax rate.......................... 34.0% 34.0% 34.0% (34.0)%
Partnership loss prior to corporate status........................ 10.1 -- -- --
License amortization not deductible for tax....................... 7.7 32.5 -- --
Net operating loss carryforwards.................................. (59.0) (42.8) -- --
State taxes....................................................... -- 8.3 6.0 (3.6)
Recognition of deferred taxes related to the difference between
financial statement and income tax bases of certain assets and
liabilities in connection with the Exchange..................... 73.5% -- -- --
Non deductible interest expense................................... -- -- -- 1.1
Other............................................................. 7.2 4.8 1.0 (0.2)
--------- --------- --- -----
Consolidated effective tax rate................................... 73.5% 36.8% 41.0% (36.7)%
--------- --------- --- -----
--------- --------- --- -----
</TABLE>
In 1997, the Predecessor recorded additional deferred tax liability and a
corresponding increase in licenses for timing differences attributable to
pre-1997 acquisitions. The components of the deferred income tax assets and
liabilities are as follows:
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
1996 1997
----------- -----------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts......................................................... $ 609 $ 327
Inventory reserve....................................................................... -- 144
Deferred revenue........................................................................ -- 400
Nondeductible accruals.................................................................. 221 6,495
Net operating loss carryforwards........................................................ 4,100 3,560
Valuation allowance..................................................................... -- (3,560)
----------- -----------
Total deferred tax assets............................................................... $ 4,930 $ 7,366
----------- -----------
Deferred tax liabilities:
Accumulated depreciation................................................................ (7,415) (8,559)
Licenses................................................................................ (8,185) (302,306)
----------- -----------
Total deferred tax liabilities.......................................................... (15,600) (310,865)
----------- -----------
Deferred tax liability, net............................................................. $ (10,670) $ (303,499)
----------- -----------
----------- -----------
</TABLE>
F-19
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(6) INCOME TAXES (CONTINUED)
The net operating loss carryforwards totaled approximately $8,900 at
December 31, 1997 and expire in amounts ranging from approximately $300 to
$1,100 through 2012. For these carryforwards of approximately $12,350
utilization of these carryforwards is limited to the subsidiary that generated
the carryforwards, unless the Company utilizes alternative tax planning
strategies.
(7) COMMON STOCK AND STOCK PLANS
During 1994, the Predecessor amended its certificate of incorporation to
increase the number of authorized shares of common stock from 60,000,000 to
91,000,000 and to provide for Class A Common and Class B Common Stock. The Class
A Common Stock has one vote per share. The Class B Common Stock, which may be
owned only by PCI or certain successors of PCI and of which no shares may be
issued subsequent to the Offering, has five votes per share, provided, however,
that, so long as any Class A Common Stock is issued and outstanding, at no time
will the total outstanding Class B Common Stock have the right to cast votes
having more than 75 percent of the total voting power of the common stock in the
aggregate. Shares of Class B Common Stock shall be converted into Class A Common
Stock on a share-for share basis: (i) at any time at the option of the holder;
(ii) immediately upon the transfer of shares of Class B Common Stock to any
holder other than a successor of PCI; (iii) immediately if the shares of Class B
Common Stock held by PCI or its successors constitute 33 percent or less of the
outstanding shares of the Predecessor; (iv) at the end of 20 years from original
issuance of those shares of Class B Common Stock; or (v) if more than 50 percent
of the equity interests in PCI become beneficially owned by persons other than:
(i) beneficial owners of PCI as of December 29, 1994 ("Current PCI Beneficial
Owners"); (ii) affiliates of Current PCI Beneficial Owners; (iii) heirs or
devisees of any individual Current PCI Beneficial Owners, successors of any
corporation or partnership which is a Current PCI Beneficial Owner and
beneficiaries of any trust which is a Current PCI Beneficial Owner; and (iv) any
relative, spouse or relative of a spouse of any Current PCI Beneficial Owner.
The Predecessor adopted a Stock Option Plan in connection with the Offering,
under which options for an aggregate of 1,600,000 shares of Class A Common Stock
are available for grants to key employees. The Predecessor also adopted a
Director's Stock Option Plan in connection with the Offering, under which
options for an aggregate of 300,000 shares of Class A Common Stock are available
for grants to directors who are not officers or employees of the Predecessor.
Stock options under both plans are granted with an exercise price equal to the
stock's fair value at the date of grant. The stock options granted under the
Stock Option Plan have 10-year terms and vest and become exercisable ratably
over three years from the date of grant. The stock options granted under the
Director's Stock Option Plan are vested and become fully exercisable upon the
date of the grant. At December 31, 1996, there were options with respect to
693,334 and 45,000 shares of Class A Common Stock outstanding under the Stock
Option Plan and the Director's Stock Option Plan, respectively. At December 31,
1996, there were 880,000 and 255,000 additional shares available for grant under
the Stock Option Plan and the Director's Stock Option Plan, respectively.
The Predecessor applies APB Opinion No. 25 in accounting for its Stock
Option Plan and Director's Stock Option Plan ("the Plans") and accordingly, no
compensation cost has been recognized for its stock options in the consolidated
financial statements. Had the Predecessor determined compensation cost based on
the fair value at the grant date for its stock options under SFAS No. 123, the
Predecessor's net
F-20
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(7) COMMON STOCK AND STOCK PLANS (CONTINUED)
income (loss) and net income (loss) per share would have been reduced to the pro
forma amounts indicated below:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1995 DECEMBER 31, 1996 SEPTEMBER 30, 1997
------------------- ----------------- -------------------
<S> <C> <C> <C>
Net income-as reported................................. $ 954 $ 4,682 $ 6,089
Net (loss) income-pro forma............................ $ (777) $ 2,850 $ 4,753
</TABLE>
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the weighted-average assumptions as
follows: dividend yield of 0.0%; expected volatility of 101%; risk-free interest
rate of 5.5%; and expected lives of five years.
Stock option activity during the periods indicated is as follows:
<TABLE>
<CAPTION>
($'S NOT IN
THOUSANDS)
NUMBER WEIGHTED AVERAGE
OF SHARES EXERCISE PRICE
----------- ---------------------
<S> <C> <C>
Balance December 31, 1994....................................................... -- --
Granted....................................................................... 692,500 $ 14.25
Exercised..................................................................... (20,000) 14.25
-----------
Balance December 31, 1995....................................................... 672,500 14.25
Granted....................................................................... 72,500 17.25
Exercised..................................................................... (6,666) 14.25
-----------
Balance December 31, 1996....................................................... 738,334 14.54
Exercised..................................................................... (70,000) 14.25
-----------
Balance September 30, 1997...................................................... 668,334 14.60
-----------
-----------
</TABLE>
At December 31, 1996, the range of exercise prices and weighted-average
remaining contractual life of outstanding options was $14.25--$17.25 ($'s not in
thousands) and 8.3 years, respectively.
At December 31, 1996, the number of options exercisable was 250,000, and the
weighted average exercise price of those options was $14.34 ($'s not in
thousands).
In connection with the acquisition of Palmer, the Company retired all of the
options of Palmer that were outstanding.
The Predecessor adopted a stock purchase plan for employees (the "Employee
Stock Purchase Plan") and a stock purchase plan for non-employee directors (the
"Non-Employee Director Stock Purchase Plan"). Under the Employee Stock Purchase
Plan, 160,000 shares of Class A Common Stock are available for purchase by
eligible employees of the Predecessor or any of its subsidiaries. Under the
Non-Employee Director Stock Purchase Plan, 25,000 shares of Class A Common Stock
are available for purchase by non-employee directors of the Predecessor. The
purchase price of each share of Class A Common Stock purchased under the
Employee Stock Purchase Plan or the Non-Employee Director Stock Purchase Plan
will be the lesser of 90 percent of the fair market value of the Class A Common
Stock on the first trading day of the plan year or on the last day of such plan
year; provided, however, that in no event shall the
F-21
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(7) COMMON STOCK AND STOCK PLANS (CONTINUED)
purchase price be less than the par value of the stock. Both plans will
terminate in 2005, unless terminated at an earlier date by the board of
directors. During the year ended December 31, 1996, 15,541 shares were issued
under the Employee Stock Purchase Plan and 1,702 shares were issued under the
Non-Employee Director Stock Purchase Plan at a purchase price of $16.85 ($'s not
in thousands). Compensation cost computed under the provisions of SFAS No. 123
related to the shares issued under the Employee Stock Purchase Plan and the
Non-Employee Director Stock Purchase Plan is immaterial to the consolidated
financial statements.
(8) RELATED PARTY TRANSACTIONS
On January 1, 1997 the Predecessor purchased a building and certain towers
from PCI for $6,243. These assets were previously leased from PCI.
Concurrently with the Offering and the Exchange, the Predecessor and PCI
entered into both a transitional management and administrative services
agreement and a computer services agreement that extended each December 31 for
additional one-year periods unless and until either party notified the other.
The fees from these arrangements amounted to a total of $492, $534 and $88 for
the years ended December 31, 1995 and 1996 and the nine months ended September
30, 1997, respectively, and are include as a reduction of selling, general and
administrative expenses.
Concurrently with the Offering and the Exchange, the Predecessor and PCI
entered into a tax consulting agreement that extended each December 31 for
additional one-year periods unless and until either party notified the other.
The fees for tax consulting services amounted to a total of $84, $120 and $97
for the years ended December 31, 1995 and 1996 and the nine months ended
September 30, 1997, respectively, and are included in selling, general and
administrative expenses.
PCI has a 401(k) plan with a noncontributory retirement feature and a
matching provision for employees who meet length of service and other
requirements. The Predecessor participated in this plan and was allocated 401(k)
retirement and matching expense of $493, $696 and $544 for the years ended
December 31, 1995, and 1996 and the nine months ended September 30, 1997,
respectively.
(9) COMMITMENTS AND CONTINGENCIES
LEASES
PCW occupies certain buildings and uses certain tower sites, cell sites and
equipment under noncancelable operating leases which expire through 2013.
F-22
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(9) COMMITMENTS AND CONTINGENCIES (CONTINUED)
Future minimum lease payments under noncancelable operating leases as of are
as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31:
- -----------------------------------------------------------------------------------
<S> <C>
1998............................................................................... $ 2,950
1999............................................................................... 2,535
2000............................................................................... 1,981
2001............................................................................... 1,305
2002............................................................................... 843
Later years through 2013........................................................... 1,491
---------
Total minimum lease payments..................................................... $ 11,105
---------
---------
</TABLE>
Rental expense for the Predecessor was $2,487, $3,551, and $3,123 for the
years ended December 31, 1995, 1996 and the nine months ended September 30,
1997, respectively of which $269 and $278 was paid to related parties for 1995
and 1996, respectively. Rental expense for the Company was $806 for the period
from May 29, 1997 to December 31, 1997.
CONTINGENCIES
The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's consolidated financial statements.
F-23
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(10) SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
----------- ----------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
Total Revenue...................................... $ 36,950(a) $ 40,031(a) $41,171(a) $ 41,591 $ 159,743
----------- ----------- ----------- --------- ----------
----------- ----------- ----------- --------- ----------
Operating Income................................... $ 8,514 $ 11,281 $ 11,977 $ 9,405 $ 41,177
----------- ----------- ----------- --------- ----------
----------- ----------- ----------- --------- ----------
Net Income (Loss).................................. $ 76 $ 1,684 $ 2,976 $ (54) $ 4,682
----------- ----------- ----------- --------- ----------
----------- ----------- ----------- --------- ----------
</TABLE>
<TABLE>
<CAPTION>
COMPANY
-----------------
PREDECESSOR FOR THE PERIOD
------------------------------- MAY 29,1997
FIRST SECOND THIRD THROUGH
QUARTER QUARTER QUARTER DECEMBER 31, 1997
--------- --------- --------- -----------------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1997
Total Revenue................................................. $ 44,683 $ 48,545 $ 48,508 $ 43,713
--------- --------- --------- -------
--------- --------- --------- -------
Operating Income.............................................. $ 9,805 $ 13,022 $ 12,984 $ 8,616
--------- --------- --------- -------
--------- --------- --------- -------
Net Income (Loss)............................................. $ 1,177 $ 2,523 $ 2,389 $ (8,852)
--------- --------- --------- -------
--------- --------- --------- -------
</TABLE>
- ------------------------
(a) Certain reclassifications were made to conform to the fourth quarter
presentation.
(b) The decrease in revenue and operating income in the fourth quarter is a
result of customer acquisition costs, including advertising, commissions and
phone discounts, related to Holiday sales (consistent with prior years), the
Fort Myers Sale, and amortization of the additional license recorded in the
merger. The net loss is due to these reasons as well as the interest expense
on debt incurred to fund the Acquisition (see Note 1).
F-24
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
($ IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents.......................................................... $ 7,823 $ 27,926
Trade accounts receivable, net of allowance for doubtful accounts.................. 16,441 15,940
Receivable from other cellular carriers............................................ 2,036 3,902
Deferred income taxes.............................................................. 4,807 5,402
Prepaid expenses and deposits...................................................... 1,848 902
Inventory.......................................................................... 2,005 1,280
------------ ------------
Total current assets............................................................. 34,960 55,352
Net property and equipment........................................................... 147,003 151,141
Licenses, net of amortization........................................................ 911,923 918,488
Other intangible assets and other assets, at cost less accumulated amortization...... 18,899 19,498
------------ ------------
$ 1,112,785 $1,144,479
------------ ------------
------------ ------------
Liabilities and Equity
Current liabilities:
Current installments of long-term debt............................................. $ 2,250 $ 2,812
Payable to Price Communications Corporation........................................ 658 2,328
Accounts payable................................................................... 8,791 13,059
Accrued interest payable........................................................... 5,285 11,361
Accrued salaries and employee benefits............................................. 2,028 2,324
Other accrued liabilities.......................................................... 16,237 16,031
Deferred revenue................................................................... 3,839 3,755
Customer deposits.................................................................. 739 602
------------ ------------
Total current liabilities........................................................ 39,827 52,272
Long-term debt, excluding current installments....................................... 681,624 690,300
Accrued income taxes--long term...................................................... 48,571 50,491
Deferred income taxes................................................................ 306,359 308,901
Minority interests................................................................... 7,812 7,352
Commitments and contingencies........................................................ -- --
Stockholder's equity................................................................. 28,592 35,163
------------ ------------
$ 1,112,785 $1,144,479
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-25
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
COMPANY PREDECESSOR
----------- -----------
<S> <C> <C>
FOR THE THREE MONTHS
ENDED MARCH 31,
------------------------
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Revenue:
Service................................................................................. $ 40,684 $ 42,220
Equipment sales and installation........................................................ 2,591 2,463
----------- -----------
Total revenue......................................................................... 43,275 44,683
----------- -----------
Operating expenses:
Engineering, technical and other direct................................................. 6,751 7,430
Cost of equipment....................................................................... 5,496 5,807
Selling, general and administrative..................................................... 11,717 13,360
Depreciation and amortization........................................................... 11,928 8,281
----------- -----------
Total operating expenses.............................................................. 35,892 34,878
----------- -----------
Operating income...................................................................... 7,383 9,805
----------- -----------
Other income (expense):
Interest expense, net................................................................... (17,285) (7,872)
Other income (expense), net............................................................. (37) 71
----------- -----------
Total other expense................................................................... (17,322) (7,801)
----------- -----------
Income (loss) before minority interest share of income and income taxes............... (9,939) 2,004
Minority interest share of income......................................................... (460) (331)
----------- -----------
Income (loss) before income taxes..................................................... (10,399) 1,673
Income tax (expense) benefit.............................................................. 3,828 (496)
----------- -----------
Net income (loss)..................................................................... $ (6,571) $ 1,177
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-26
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
($ IN THOUSANDS)
<TABLE>
<CAPTION>
CLASS A
COMMON STOCK ADDITIONAL TOTAL
------------------------ PAID-IN RETAINED STOCKHOLDER'S
SHARES AMOUNT CAPITAL EARNINGS EQUITY
----------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Balances at May 29, 1997................................. -- $ -- $ -- $ -- $ --
Capital contribution..................................... 100 -- 44,015 -- 44,015
Net loss................................................. -- -- -- (8,852) (8,852)
--- --- ----------- ---------- ------------
Balances at December 31, 1997............................ 100 -- 44,015 (8,852) 35,163
Net loss................................................. -- -- -- (6,571) (6,571)
--- --- ----------- ---------- ------------
Balances at March 31, 1998............................... 100 $ -- $ 44,015 $ (15,423) $ 28,592
--- --- ----------- ---------- ------------
--- --- ----------- ---------- ------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-27
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
-----------------------
COMPANY PREDECESSOR
---------- -----------
<S> <C> <C>
1998 1997
---------- -----------
Cash flows from operating activities:
Net income (loss)...................................................................... $ (6,571) $ 1,177
---------- -----------
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating
activities:
Depreciation and amortization........................................................ 11,928 8,281
Minority interest share of income.................................................... 460 331
Deferred income taxes................................................................ (1,947) 496
Loss on disposal of property......................................................... 37 5
Interest deferred and added to long-term debt........................................ 2,886 --
Payment of deferred interest......................................................... -- (1,514)
Decrease (increase) in trade accounts receivable..................................... (501) 1,730
Decrease (increase) in inventory..................................................... (725) 1,223
Increase (decrease) in accounts payable and accrued expenses......................... (6,278) 1,252
Decrease in accrued interest payable................................................. (6,076) --
Change in other accounts............................................................. 1,182 (651)
---------- -----------
Total adjustments.................................................................. 966 11,153
---------- -----------
Net cash provided by (used in) operating activities................................ (5,605) 12,330
---------- -----------
Cash flows from investing activities:
Capital expenditures................................................................... (704) (16,987)
Proceeds from sales of property and equipment.......................................... -- 12
Purchase of cellular systems........................................................... -- (31,096)
Purchases of minority interests........................................................ -- (368)
Increase in other intangible assets and other assets................................... -- (48)
---------- -----------
Net cash used in investing activities.............................................. (704) (48,487)
---------- -----------
Cash flows from financing activities:
Increase in short-term notes payable................................................... -- 1,332
Repayment of long-term debt............................................................ (12,124) (3,782)
Repayment of advances from Price Communications Corporation............................ (1,670) --
Proceeds from long-term debt........................................................... -- 39,000
---------- -----------
Net cash provided by (used in) financing activities................................ (13,794) 36,550
---------- -----------
Net increase (decrease) in cash and cash equivalents............................... (20,103) 393
Cash and cash equivalents at the beginning of period..................................... 27,926 1,698
---------- -----------
Cash and cash equivalents at the end of period........................................... $ 7,823 $ 2,091
---------- -----------
---------- -----------
Supplemental disclosure of cash flow information:
Income taxes (received) paid, net...................................................... $ 63 $ (648)
---------- -----------
---------- -----------
Interest paid.......................................................................... $ 20,577 $ 8,615
---------- -----------
---------- -----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-28
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ IN THOUSANDS)
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND ACQUISITION
Price Communications Cellular Holdings, Inc. ("Holdings" or the "Company"),
a wholly-owned subsidiary of Price Communications Cellular, Inc., a wholly-owned
subsidiary of Price Communications Corporation ("PCC"), was incorporated on May
29, 1997 in connection with the purchase of Palmer Wireless, Inc. and
subsidiaries ("Palmer" or the "Predecessor").
In May, 1997, PCC, Price Communications Wireless, Inc. ("PCW"), a wholly
owned subsidiary of Holdings and Palmer entered into an Agreement and Plan of
Merger (the "Merger Agreement"). The Merger Agreement provided, among other
things, for the merger of PCW with and into Palmer with Palmer as the surviving
corporation (the "Merger"). In October, 1997, the Merger was consummated and
Palmer changed its name to "Price Communications Wireless, Inc."
In June, 1997, PCW entered into an agreement to sell Palmer's Fort Myers,
Florida MSA as part of the financing of the merger (the "Fort Myers Sale"). In
October, 1997, the Fort Myers Sale was consummated, and generated proceeds to
the Company of approximately $166,000. The proceeds of the Fort Myers Sale were
used to fund a portion of the acquisition of Palmer. Accordingly, no gain or
loss was recognized on the Fort Myers Sale.
Also in connection with the merger, on October 21, 1997, PCC and PCW entered
into an Asset Purchase Agreement with MJ Cellular Company, L.L.C. (the "Georgia
Sale Agreement") which provided for the sale by PCW of substantially all of the
assets used in the operation of the non-wireline cellular telephone system
serving the Georgia-1-Whitfield Rural Service Area ("Georgia-1"), including the
FCC licenses to operate Georgia-1 (the "Georgia Sale"). The sale of the assets
of Georgia-1 was consummated on December 30, 1997 for $24,200. In January, 1998
the proceeds from the Georgia Sale were used to retire a portion of the debt
used to fund the Palmer acquisition. Accordingly, no gain or loss was recognized
on the Georgia Sale.
BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements of Price
Communications Cellular Holdings, Inc. and subsidiaries (the "Company") have
been prepared without audit pursuant to Rule 10-01 of Regulation S-X of the
Securities and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financials. In the opinion of management, all adjustments (none of
which were other than normal recurring items) considered necessary for a fair
presentation have been included. The results of operations for the interim
periods reported are not necessarily indicative of results to be expected for
the year.
For financial reporting purposes, PCW revalued its assets and liabilities as
of October 1, 1997 to reflect the price paid by PCC to acquire 100% of its
Common Stock, a process generally referred to as "push down" accounting.
The Company's condensed consolidated Statement of Operations and Statement
of Cash Flows for the first quarter 1997 reflect its historical results of
operations and are referred to as the "Predecessor" condensed consolidated
financial statements. Accordingly, the accompanying financial statements of the
F-29
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Predecessor and the Company are not comparable in all material respects since
those financial statements report results of operations and cash flows of these
two separate entities.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1997 Statement of Operations
and Statement of Cash Flows to conform to the 1998 presentation.
F-30
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OFFERED HEREBY BY ANYONE IN ANY
JURISDICTION IN WHICH, SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary.............................. 5
Risk Factors.................................... 14
The Palmer Acquisition.......................... 19
Use of Proceeds................................. 20
Capitalization.................................. 20
Unaudited Pro Forma Condensed Consolidated
Financial Statements.......................... 21
Selected Consolidated Financial Data............ 33
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 35
Business of the Company......................... 45
Business of Price Communications Corporation.... 59
Management...................................... 60
Principal Stockholder........................... 65
Description of the 13 1/2% Holdings Notes....... 65
Description of the 11 3/4% PCW Notes............ 66
Description of the Senior Secured PCW Notes..... 67
Description of Notes............................ 68
Description of Capital Stock.................... 96
Certain Federal Income Tax Consequences......... 97
Underwriting.................................... 99
Legal Matters................................... 100
Independent Accountants......................... 100
Certain Terms................................... 100
Index to Financial Statements................... F-1
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with the issuance and distribution of
the securities being registered, other than underwriting compensation, are:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee............... $ 44,250
NASD Filing Fee................................................... $ 15,500
Printing and Engraving Expenses................................... $ 75,000
Legal Fees and Expenses........................................... $ 150,000
Accounting Fees and Expenses...................................... $ 50,000
Listing Fees...................................................... $ 15,000
Rating Agency Fees and Expenses................................... $ 10,000
Miscellaneous..................................................... $ 262,250
---------
Total............................................................. $ 625,000
---------
---------
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Reference is made to Section 102(b)(7) of the Delaware General Corporation
Law (the "DGCL"), which enables a corporation in its original certificate of
incorporation or an amendment thereto to eliminate or limit the personal
liability of a director for violations of the director's fiduciary duty, except
(i) for any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) pursuant to Section
174 of the DGCL (providing for liability of directors for the unlawful payment
of dividends or unlawful stock purchases or redemptions) or (iv) for any
transaction from which a director derived an improper personal benefit.
Section 145 of the DGCL empowers the Company to indemnify, subject to the
standards set forth therein, any person in connection with any action, suit or
proceeding brought before or threatened by reason of the fact that the person
was a director, officer, employee or agent of such company, or is or was serving
as such with respect to another entity at the request of such company. The DGCL
also provides that the Company may purchase insurance on behalf of any such
director, officer, employee or agent.
Section 721 of the New York Business Corporation Law provides that the
indemnification and advancement of expenses of directors and officers may be
provided by the certificate of incorporation or by-laws of a corporation, or
when authorized by the certificate of incorporation or by-laws, a resolution of
shareholders, a resolution of directors or an agreement providing for
indemnification (except in cases where a judgment or other final adjudication
establishes that such acts were committed in bad faith or were the result of
active or deliberate dishonesty and were material to the cause of action so
adjudicated or that he personally gained in fact a financial profit or other
advantage to which he was not legally entitled.
Section 722 of the New York Business Corporation Law provides that a
corporation may indemnify any person, made, or threatened to be made, a party of
an action or proceeding other than one by or in the right of the corporation to
procure a judgment in its favor, whether civil or criminal, including an action
by or in the right of any other corporation, partnership, joint venture, trust,
employee benefit plan or other entity which any director or officer of the
corporation served in any capacity at the request of the corporation, by reason
of the fact that he was a director or officer of the corporation, or served such
other corporation, partnership, joint venture, trust, employee benefit plan or
other entity in any other capacity, against judgments, fines, amounts paid in
settlement and reasonable expenses if such director or officer acted, in good
faith, for a purpose which he reasonably believed to be in, or in the case of
service for any
II-1
<PAGE>
other corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, not opposed to, the best interests of the corporation and, in
criminal acts or proceedings, in addition, had no reasonable cause to believe
that his conduct was unlawful.
Section 722 of the New York Business Corporation Law also states that a
corporation may indemnify any person made, or threatened to be made, a party to
an action by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director or officer of the
corporation or any other corporation, partnership, joint venture, trust,
employee benefit plan or other entity at the request of the corporation, against
amounts paid in settlement and reasonable expenses actually and necessarily
incurred by him in connection with the defense or settlement of such action, or
in connection with an appeal therein if such director or officer acted, in good
faith, for a purpose which he reasonably believed to be in, or in the case of
service for any other corporation, partnership, joint venture, employee benefit
plan or other entity, not opposed to, the best interests of the corporation,
except that no indemnification shall be made in respect to a threatened or
pending action which is settled or otherwise disposed of, or any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation, unless the court determines the person is fairly and reasonably
entitled to indemnity for such portion of the settlement amount and expenses as
the court deems proper.
Section 726 of the New York Business Corporation Law provides that a
corporation shall have the power to purchase and maintain insurance for
indemnification of directors and officers. However, no insurance may provide for
any payment, other than cost of defense, to or on behalf of any director or
officer for a judgment or a final adjudication adverse to the insured director
or officer if (i) a judgment or other final adjudication establishes that his
acts of active and deliberate dishonesty were material to the cause of action
adjudicated or that he personally gained a financial profit or other advantage
to which he was not legally entitled or (ii) if prohibited under the insurance
law of New York.
Section 724 of the New York Business corporation Law provides that
indemnification shall be awarded by a court to the extent authorized under
Sections 722 and 723(a) of the New York Business Corporation Law notwithstanding
the failure of a corporation to provide indemnification, and despite any
contrary resolution of the board or of the shareholders.
The Certificate of Incorporation and By-laws of PCC and Holdings exonerate
directors of PCC and Holdings from personal liability to PCC or Holdings, as the
case may be, and their respective stockholders, for monetary damages for breach
of the fiduciary duty of care as a director, but it does not eliminate or limit
liability for any breach of the directors' duty of loyalty for acts or omissions
not in good faith or which involve intentional misconduct or knowing violations
of law, for any improper declaration of dividends or for any transaction from
which the directors derived an improper personal benefit. The Certificate of
Incorporation does not eliminate a stockholder's right to seek nonmonetary,
equitable remedies, such as an injunction or rescission, to redress an action
taken by the directors. However, as a practical matter, equitable remedies may
not be available in all situations, and there may be instances in which no
effective remedy is available.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
On August 1, 1997, the Company issued units consisting of $153.4 million
principal amount at maturity of 13 1/2% Senior Secured Discount Notes due 2007
and warrants to purchase shares of PCC Common Stock, par value $.01 per share in
an unregistered offering in reliance on Section 4(2) of the Securities Act of
1933, as amended. These notes were the object of a registered exchange offer on
February 17, 1998 for registered, but otherwise identical, notes.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits (see index to exhibits at E-1)
II-2
<PAGE>
ITEM 17. UNDERTAKINGS
(a) PCC hereby undertakes that, for purposes of determining any liability
under the Securities Act of 1933, each filing of PCC's annual report pursuant to
Section 13(a) of 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA FIDE offering
thereof.
(b) PCC hereby undertakes to deliver or cause to be delivered with the
prospectus, to each person to whom the prospectus is sent or given, the latest
annual report, to security holders that is incorporated by reference in the
prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3
or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim
financial information required to be presented by Article 3 of Regulation S-X is
not set forth in the prospectus, to deliver, or cause to be delivered to each
person to whom the prospectus is sent or given, the latest quarterly report that
is specifically incorporated by reference in the prospectus to provide such
interim financial information.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrants pursuant to the foregoing provisions, or otherwise, the
registrants have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrants 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 whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
(d) The undersigned registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrants in reliance upon rule 430A and
contained in a form of prospectus filed by the registrants pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
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 of 1933, 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 that
time shall be deemed to be the initial BONA FIDE offering thereof."
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on this Amendment to Form S-1 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of New York, New York, on July 21, 1998.
<TABLE>
<S> <C> <C>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC.
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER AND TREASURER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement on Form S-1 has been signed by the following persons
in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Director, President, Chief
/s/ ROBERT PRICE Executive Officer and
- ------------------------------ Treasurer (Principal July 21, 1998
Robert Price Executive Officer)
Executive Vice-President,
Secretary and Chief
* Financial Officer
- ------------------------------ (Principal Financial July 21, 1998
Kim I. Pressman Officer and Accounting
Officer)
*By: /s/ ROBERT PRICE
------------------------
Robert Price
ATTORNEY-IN-FACT
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on this Amendment to Form S-3 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of New York, New York, on July 21, 1998.
<TABLE>
<S> <C> <C>
PRICE COMMUNICATIONS CORPORATION
By: /s/ ROBERT PRICE
-----------------------------------------
Robert Price
DIRECTOR, PRESIDENT, CHIEF EXECUTIVE
OFFICER AND TREASURER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement on Form S-3 has been signed by the following persons
in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Director, President, Chief
/s/ ROBERT PRICE Executive Officer and
- ------------------------------ Treasurer (Principal July 21, 1998
Robert Price Executive Officer)
Executive Vice-President,
Secretary and Chief
* Financial Officer
- ------------------------------ (Principal Financial July 21, 1998
Kim I. Pressman Officer and Accounting
Officer)
*
- ------------------------------ Director July 21, 1998
George E. Cadgene
*
- ------------------------------ Director July 21, 1998
Robert F. Ellsworth
*By: /s/ ROBERT PRICE
------------------------
Robert Price
ATTORNEY-IN-FACT
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
1.1 Underwriting Agreement
2.1 The Merger Agreement*
3.1 Certificate of Incorporation of Holdings, as amended*
3.2 By-laws of Holdings*
4.1 Indenture to Senior Exchangeable PIK Notes due 2008 among Holdings, PCC and Trustee (including form
of Note)
4.2 Indenture to 9 1/8% Senior Secured Notes due 2006 among PCW, each of the Guarantors and Bank of
Montreal Trust Company, as Trustee
4.3 Indenture to 11 3/4% Senior Subordinated Notes due 2007 between PCW and Bank of Montreal Trust
Company, as Trustee
5.1 Opinion of Davis Polk & Wardwell regarding the validity of the Notes and PCC Shares
10.1 Credit Agreement dated as of September 30, 1997 among Holdings, PCW, the lenders listed therein, DLJ
Capital Funding, Inc., as syndication agent and Bank of Montreal, Chicago branch, as administrative
agent*
10.2 Fort Myers Sale Agreement*
10.3 Georgia Sale Agreement*
10.4 Wisehart Employment Agreement*
10.5 Meehan Employment Agreement*
10.6 Green Employment Agreement
10.7 Ryan Employment Agreement
12.1 Statement re: Computation of Ratio of Earnings to Fixed Charges
21.1 Subsidiaries of the Company*
23.1 Consent of KPMG Peat Marwick LLP relating to the financial statements of Palmer
23.2 Consent of Arthur Andersen LLP
23.3 Consent of Davis Polk & Wardwell (see exhibit 5.1)
24.1 Power of attorney for the Company+
24.2 Power of attorney for PCC+
25.1 Statement of Eligibility of Trustee with respect to the Senior Exchangeable PIK Notes due 2008 of
Holdings*
</TABLE>
- ------------------------
* Incorporated by reference to Registration No. 333-41227 filed by Holdings
with the Commission
+ Already filed.
(1) To be filed by amendment.
(2) See Page II-5
(3) See Page II-6
E-1
<PAGE>
Exhibit 1.1
$150,000,000
[ ]% Senior Exchangeable Payable-in-Kind Notes due 2008
of
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC.
UNDERWRITING AGREEMENT
July [ ], 1998
NATWEST CAPITAL MARKETS LIMITED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
BEAR, STEARNS & CO. INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
WASSERSTEIN PERELLA SECURITIES, INC.
c/o NatWest Capital Markets Limited,
As Representative of the Underwriters,
660 Madison Avenue
New York, New York 10021
Ladies & Gentlemen:
Price Communications Cellular Holdings, Inc., a [New York] corporation
(the "COMPANY"), proposes to issue and sell (the "OFFERING") to NatWest Capital
Markets Limited (the "REPRESENTATIVE"), Donaldson, Lufkin & Jenrette Securities
Corporation, Bear, Stearns & Co. Inc., NationsBanc Montgomery Securities LLC and
Wasserstein Perella Securities, Inc. (each, an "UNDERWRITER") an aggregate of
$150,000,000 principal amount of [ ]% Senior Exchangeable Payable-in-Kind
Notes due 2008 (the "NOTES") subject to the terms and conditions set forth
herein. The Notes are exchangeable into shares (the "EXCHANGE SHARES") of
common stock, par value $[.01] per share (the "PCC SHARES"), of Price
Communication Corporation ("PCC," and together with the Company, the "ISSUERS"),
at an exchange price of $[ ]. The Notes are to be issued pursuant to the
provisions of an indenture (the "INDENTURE") to be dated as of [ ], 1998
(the "CLOSING DATE") by and among the Company, PCC and Bank of Montreal Trust
Company, as trustee (the "TRUSTEE").
<PAGE>
-2-
The Company understands that the Underwriters propose to make a public
offering of the Notes as soon as they deem advisable after this Agreement has
been executed and delivered. This underwriting agreement, the Notes and the
Indenture are hereinafter sometimes referred to collectively as the "OPERATIVE
DOCUMENTS."
1. AGREEMENTS TO SELL AND PURCHASE. On the basis of the
representations and warranties contained in this underwriting agreement,
hereinafter referred to as the "AGREEMENT," and subject to its terms and
conditions, the Company agrees to issue and sell to you, and each of the
Underwriters, severally but not jointly, agrees to purchase from the Company,
the Notes in the respective principal amount set forth opposite its name on
SCHEDULE I hereto. The aggregate purchase price for the Notes shall be $[ ]
(the "PURCHASE PRICE").
2. DELIVERY AND PAYMENT. Delivery to the Underwriters of and
payment for the Notes shall be made at 10:00 A.M., New York City time, on the
Closing Date, at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New
York, New York 10017. The Closing Date and the location of delivery of and the
form of payment for the Notes may be varied by agreement between you and the
Company.
One or more of the Notes in definitive form, registered in the name of
Cede & Co., as nominee of The Depository Trust Company ("DTC"), having an
aggregate principal amount equal to $150,000,000, shall be delivered by the
Company to you (or as you may direct), against payment by you of the Purchase
Price therefor by wire transfer in immediately available funds to such accounts
with such financial institutions as the Company may direct.
3. REPRESENTATIONS AND WARRANTIES. The Issuers represent and
warrant jointly and severally to each of you that:
(i) The Issuers have filed with the Securities and Exchange
Commission (the "COMMISSION") a registration statement on Form S-1/S-3 (No.
333-57363) covering the registration of the Notes and the Exchange Shares
under the Securities Act of 1933, as amended (the "1933 ACT"), including
the related preliminary prospectus or prospectuses. Promptly after
execution and delivery of this Agreement, the Company will either (i)
prepare and file a prospectus in accordance with the provisions of Rule
430A ("RULE 430A") of the rules and regulations under the 1933 Act (the
"1933 ACT REGULATIONS") and paragraph (b) of Rule 424 ("RULE 424(B)") of
the 1933 Act Regulations or (ii) if the Issuers have elected to rely upon
Rule 434 ("RULE 434") of the 1933 Act Regulations, prepare and file a term
sheet (a "TERM SHEET") in accordance with the provisions of Rule 434 and
Rule 424(b). The information included in any such prospectus or in any
such Term Sheet, as the case may be, that was omitted from such
registration statement at the time it became effective but that is deemed
to be part of
<PAGE>
-3-
such registration statement at the time it became effective (a) pursuant to
paragraph (b) of Rule 430A is referred to as "RULE 430A INFORMATION" or (b)
pursuant to paragraph (d) of Rule 434 is referred to as "RULE 434
INFORMATION." Any prospectus that omitted, as applicable, the Rule 430A
Information or the Rule 434 Information that was used after such
effectiveness and prior to the execution and delivery of this Agreement is
herein called a "PRELIMINARY PROSPECTUS." Such registration statement,
including the exhibits thereto and schedules thereto, at the time it became
effective and including the Rule 430A Information and the Rule 434
Information, as applicable, is herein called the "REGISTRATION STATEMENT."
Any registration statement filed pursuant to Rule 462(b) of the 1933 Act
Regulations is herein referred to as the "RULE 462(B) REGISTRATION
STATEMENT," and after such filing the term "Registration Statement" shall
include the Rule 462(b) Registration Statement. The final prospectus in
the form first furnished to the Underwriters for use in connection with the
offering of the Notes is herein called the "PROSPECTUS." If Rule 434 is
relied on, the term "Prospectus" shall refer to the preliminary Prospectus
dated June 19, 1998, together with the applicable Term Sheet and all
references in this Agreement to the date of such Prospectus shall mean the
date of the applicable Term Sheet. For purposes of this Agreement, all
references to the Registration Statement, any Preliminary Prospectus, the
Prospectus or any Term Sheet or any amendment or supplement to any of the
foregoing shall be deemed to include the copy filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system
("EDGAR").
(ii) The Commission has not issued any order preventing or suspending
the use of the Prospectus or the Preliminary Prospectus. Copies of the
Registration Statement and amendments and of each related Preliminary
Prospectus have been delivered to the Underwriters. If the Registration
Statement has not become effective, a further amendment to the Registration
Statement, including a form of final prospectus, necessary to permit the
Registration Statement to become effective will be filed promptly by the
Issuers with the Commission.
At the respective times the Registration Statement and any
post-effective amendments thereto were filed with the Commission or become
effective and at the Closing Date, the Registration Statement and any
amendments and supplements thereto complied and will comply in all material
respects with the requirements of the 1933 Act and the 1933 Act Regulations
and did not and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading. Neither the Prospectus nor any
amendments or supplements thereto, at the time the Prospectus or any
amendments or supplements thereto were issued and at the Closing Date,
included or will include an untrue statement of a material fact or omitted
or will omit to state a
<PAGE>
-4-
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. If
Rule 434 is used, the Issuers will comply with the requirements of Rule 434
and the Prospectus shall not be "materially different," as such term is
used in Rule 434, from the prospectus included in the Registration
Statement at the time it becomes effective. The representations and
warranties in this subsection shall not apply to statements in or omissions
from the Registration Statement or the Prospectus made in reliance upon and
in conformity with information furnished to the Issuers in writing by or on
behalf of any Underwriter through the Representative expressly for use in
the Registration Statement or the Prospectus. For all purposes of this
Agreement, the cover page of the Prospectus and the section of the
Prospectus entitled "Underwriting" and the identification of counsel for
the Underwriters in the section of the Prospectus entitled "Legal Matters"
constitute the only information relating to any Underwriter furnished in
writing to the Issuers by the Underwriters specifically for inclusion in
the Preliminary Prospectus, the Registration Statement or the Prospectus.
The Issuers have not distributed any offering material in connection with
the offering or sale of the Notes other than the Registration Statement,
the Preliminary Prospectus, the Prospectus or any other materials, if any,
permitted by the 1933 Act.
Each Preliminary Prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the requirements of the 1933 Act and
the 1933 Act Regulations and each Preliminary Prospectus and the Prospectus
delivered to the Underwriters for use in connection with this offering was
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation
S-T.
(iii) Each of the Company, PCC and each of their respective
subsidiaries (A) has been duly organized, (B) is validly existing as a
corporation or limited or general partnership in good standing under the
laws of its respective jurisdiction of organization, (C) has all requisite
corporate or partnership power and authority (x) to carry on its business
as is currently being conducted and as described in the Registration
Statement and (y) to own, lease and operate its properties, and (D) is duly
qualified and in good standing as a foreign corporation authorized to do
business in the jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where
the failure to be so qualified would not, singly or in the aggregate, have
a Material Adverse Effect (as defined in Section 3(xii) below).
<PAGE>
-5-
(iv) The entities listed on Schedule A hereto are the only
subsidiaries, direct or indirect, of the Company and PCC (other than
subsidiaries with immaterial amounts of assets). The Company and PCC own,
and as of the Closing Date, the Company and PCC will own, directly or
indirectly through other subsidiaries, the percentages of the outstanding
capital stock or other securities evidencing equity ownership of such
subsidiaries indicated on Schedule A hereto, and all of such securities
have been duly authorized, validly issued, are fully paid and nonassessable
and were not issued in violation of any preemptive or similar rights; and
as of the Closing Date the Company and PCC will own, directly or
indirectly, the assets, properties and interests disclosed in the
Prospectus as owned by the Company or PCC free and clear of any security
interest, claim, lien, limitation on voting rights or encumbrance other
than as is set forth in the Prospectus. There are no outstanding
subscriptions, rights, warrants, calls, commitments of sale or options to
acquire, or instruments convertible into or exchangeable for, any such
shares of capital stock or other equity interest of such subsidiaries,
except as disclosed in the Prospectus.
(v) Each of the Issuers and its subsidiaries, as applicable, has all
requisite corporate power and authority to execute, deliver and perform its
obligations under each Operative Document to which it is a party and, in
each case, to consummate the transactions contemplated hereby and thereby,
including, without limitation, the corporate power and authority to issue,
sell and deliver the Notes as provided herein and therein.
(vi) This Agreement has been duly and validly authorized, executed and
delivered by each of the Issuers and is a valid and binding agreement of
each of the Issuers.
(vii) The Indenture has been duly and validly authorized by each
of the Issuers. The Indenture meets the requirements for qualification
under the Trust Indenture Act, and when duly executed and delivered by the
parties thereto, will be valid and binding obligation of each of the
Issuers, enforceable against each of the Issuers in accordance with its
terms, except (i) as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights and remedies generally and (ii) as to general principles of equity,
regardless of whether enforcement is sought in a proceeding at law or in
equity. The Indenture, when executed and delivered, will conform to the
description thereof in the Prospectus.
(viii) The Notes have been duly and validly authorized for issuance
and sale to you by the Company and PCC pursuant to this Agreement and, when
issued and authenticated in accordance with the terms of the Indenture and
delivered against payment therefor in accordance with the terms hereof,
will be valid and binding obliga-
<PAGE>
-6-
tions of the Company and PCC, enforceable against the Company and PCC in
accordance with their terms and entitled to the benefits of the Indenture,
except (i) as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights and
remedies generally and (ii) as to general principles of equity, regardless
of whether enforcement is sought in a proceeding at law or in equity. The
Notes, when issued, authenticated and delivered, will conform to the
description thereof in the Prospectus.
(ix) The PCC Shares (including, if and when issued, the Exchange
Shares) conform (or in the case of the Exchange Shares, will conform) to
all statements relating thereto contained in the Prospectus and such
description conforms to the rights set forth in the instruments defining
the same.
(x) None of the Company, PCC or any of their subsidiaries is in
violation of its respective charter, bylaws or other organizational
document or is in default in the performance of any bond, debenture, note,
indenture, mortgage, deed of trust, license or other agreement or
instrument to which it is a party or by which it is bound or to which any
of its properties is subject, or is in violation of any law, statute, rule,
regulation, judgment or court decree applicable to it or its assets or
properties, except for any such defaults or violations which, singly or in
the aggregate, would not have a Material Adverse Effect (as defined below).
There exists no condition that, with notice, the passage of time or
otherwise, would constitute a default under any such document or
instrument, except for any such defaults or violations which, singly or in
the aggregate, would not have a Material Adverse Effect.
(xi) The execution, delivery and performance by the Issuers of this
Agreement and by each of the Issuers and their subsidiaries, as applicable,
of the other Operative Documents (except as set forth in the Prospectus) to
which they are parties, the issuance and sale of the Notes and the exchange
of the Notes for the Exchange Shares as contemplated by this Agreement and
the Prospectus, the repayment of the existing 131/2% Senior Secured Notes
of the Company and the consummation of the transactions contemplated hereby
and thereby will not violate, conflict with or constitute a breach of any
of the terms or provisions of, or a default under (or an event that with
notice or the lapse of time, or both, would constitute a default), or
require consent under, or result in the imposition of a lien or encumbrance
on any properties of the Issuers or any of their subsidiaries or an
acceleration of indebtedness pursuant to, (i) the charter or bylaws of the
Issuers or any of their subsidiaries, (ii) any bond, debenture, note,
indenture, mortgage, deed of trust, license or other agreement or
instrument to which either of the Issuers or any of their subsidiaries is a
party or by which any of them or their property is or may be bound, (iii)
any statute, rule or regulation applicable to either of the Issuers or any
of their subsidiaries, or (iv) any judgment, order or
<PAGE>
-7-
decree of any court or governmental agency or authority having jurisdiction
over either of the Issuers or any of their subsidiaries. Except as
required by the Federal Communications Commission ("FCC") as disclosed in
the Prospectus, no consent, approval, authorization or order of, or filing,
registration, qualification, license or permit of or with, any court or
governmental agency, body or administrative agency is required for the
execution, delivery and performance of this Agreement and the other
Operative Documents (except as set forth in the Prospectus) by either of
the Issuers or, as applicable, any of their subsidiaries and the
consummation of the transactions contemplated hereby and thereby, except
such as have been obtained and made under the 1933 Act, the Trust Indenture
Act, and state securities or Blue Sky laws and regulations or such as may
be required by the National Association of Securities Dealers, Inc. (the
"NASD"). No consents or waivers from any other person are required for the
execution, delivery and performance of this Agreement and the other
Operative Documents (except as set forth in the Prospectus) by either of
the Issuers or, as applicable, any of their subsidiaries and the
consummation of the transactions contemplated hereby and thereby, other
than such consents and waivers as have been obtained.
(xii) There is (i) no action, suit or proceeding before or by any
court, arbitrator or governmental agency, body or official, domestic or
foreign, now pending or, to the best knowledge of the Issuers, threatened
or contemplated to which either of the Issuers or any of their subsidiaries
is a party or to which the business or property of the Issuers or any of
their subsidiaries is subject, (ii) no statute, rule, regulation or order
that has been enacted, adopted or issued by any governmental agency or that
has been proposed by any governmental body or (iii) no injunction,
restraining order or order of any nature by a federal or state court or
foreign court of competent jurisdiction to which either of the Issuers or
any of their subsidiaries is subject issued that, in the case of clauses
(i), (ii) and (iii) above, (x) might, singly or in the aggregate, result in
a material adverse effect on the properties, business, results of
operations, condition (financial or otherwise) or prospects of the Company,
PCC and their subsidiaries, taken as a whole (a "MATERIAL ADVERSE
EFFECT"), (y) would interfere with or adversely affect the issuance of the
Notes or Exchange Shares or (z) in any manner draw into question the
validity of any Operative Document.
(xiii) To cooperate with you and your counsel in connection with
the registration of the Notes for offer and sale by the Underwriters and by
dealers under the securities of Blue Sky laws of such jurisdictions as you
may request, to continue such registration in effect so long as required
for the completion of the sale of the Notes and to file such consents to
service of process or other documents as may be necessary in order to
effect such registration; PROVIDED, HOWEVER, that the Underwriters shall
not be required in connection therewith to register or qualify as a foreign
corporation where
<PAGE>
-8-
they are not now so qualified or to take any action that would subject them
to service of process in suits or taxation in any jurisdiction where they
are not now so subject.
(xiv) To the best knowledge of the Issuers, no action has been
taken and no statute, rule or regulation or order has been enacted, adopted
or issued by any governmental agency that prevents the issuance of the
Notes or Exchange Shares; to the best knowledge of the Issuers, no
injunction, restraining order or order of any nature by a federal or state
court of competent jurisdiction has been issued that prevents the issuance
of the Notes or Exchange Shares or suspends the sale of the Notes in any
jurisdiction referred to in Section 3(xiii) hereof; and to the best
knowledge of the Issuers, no action, suit or proceeding is pending against
either of the Issuers or any of their subsidiaries before any court or
arbitrator or any governmental body, agency or official which, if adversely
determined, would prohibit the issuance of the Notes or Exchange Shares or
invalidate any Operative Document; and every request of the Issuers by any
securities authority or agency of any jurisdiction for additional
information has been complied with in all material respects.
(xv) To the best of their knowledge, none of the Company, PCC or any
of their respective subsidiaries has violated any federal, state or local
law relating to discrimination in hiring, promotion or pay of employees.
(xvi) To the best of their knowledge, none of the Company, PCC or
any of their respective subsidiaries has violated any environmental, safety
or similar law or regulation applicable to it or its business or property
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("ENVIRONMENTAL LAWS"), lacks any permit, license or other approval
required of it under applicable Environmental Laws or is violating any term
or condition of such permit, license or approval which might result in a
Material Adverse Effect.
(xvii) Each of the Issuers and their respective subsidiaries has
(i) good and marketable title to all of the properties and assets described
in the Prospectus as owned by it, free and clear of all liens, charges,
encumbrances and restrictions, except such as are described in the
Prospectus or as would not have a Material Adverse Effect, (ii) peaceful
and undisturbed possession under all leases to which it is party as lessee,
(iii) all licenses, certificates, permits, authorizations, approvals,
franchises and other rights from, and has made all declarations and filings
with, all federal, state and local authorities (including the FCC), all
self-regulatory authorities and all courts and other tribunals necessary to
engage in the business currently conducted by it in the manner described in
the Prospectus (each an "AUTHORIZATION"), except where failure to hold such
Authorizations would not have a Material Adverse Effect, and (iv) no reason
to
<PAGE>
-9-
believe that any governmental body or agency is considering limiting,
suspending or revoking any such Authorization, except as described in the
Prospectus. All such Authorizations are valid and in full force and effect
and each of the Issuers and their respective subsidiaries is in compliance
in all respects with the terms and conditions of all such Authorizations
and with the rules and regulations of the regulatory authorities having
jurisdiction with respect thereto, except as would not have a Material
Adverse Effect. All leases to which each of the Issuers or any of their
respective subsidiaries is a party are valid and binding and no default by
either of the Issuers or any of their respective subsidiaries has occurred
and is continuing thereunder, except such as are described in the
Prospectus or as would not have a Material Adverse Effect, and no material
defaults by the landlord are existing under any such lease. Neither of the
Issuers has any reason to believe that the FCC licenses with respect to the
cellular systems identified in the Prospectus as owned and operated by
either of the Issuers or their subsidiaries (the "SYSTEMS") will not be
renewed for a full term when such FCC licenses are due for renewal. To the
Issuers' knowledge, none of such FCC licenses are subject to any conditions
outside of the ordinary course.
(xviii) Except as otherwise disclosed in the Prospectus, each of the
Company, PCC and their subsidiaries owns or possesses all patents, patent
rights, licenses, inventions, copyrights, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and trade
names, in each case to the extent disclosed in the Prospectus as being
material to the business of each of the Issuers or their subsidiaries
(collectively, the "INTELLECTUAL PROPERTY"), presently employed by it in
connection with the businesses now operated by it, and neither the Company,
PCC nor any of their subsidiaries has received any notice of infringement
of or conflict with asserted rights of others with respect to any of the
foregoing. The use of such Intellectual Property in connection with the
business and operations of the Issuers and their subsidiaries does not
infringe on the rights of any person.
(xix) All tax returns required to be filed by the Issuers or any
of their subsidiaries, in all jurisdictions, have been so filed. All
taxes, including withholding taxes, penalties and interest, assessments,
fees and other charges due or claimed to be due from such entities or that
are due and payable, have been paid, other than those being contested in
good faith and for which adequate reserves have been provided in accordance
with generally accepted accounting principles or those currently payable
without penalty or interest. None of the Issuers or any of their
subsidiaries knows of any material proposed additional tax assessments
against it.
<PAGE>
-10-
(xx) Neither the Company, PCC nor any of their subsidiaries is an
"investment company" within the meaning of the Investment Company Act of
1940, as amended (the "INVESTMENT COMPANY ACT").
(xxi) There are no holders of securities of the Issuers who, by
reason of the execution by the Issuers of any Operative Document to which
it is a party or the consummation of the transactions contemplated hereby
and thereby (including the registration, issuance and delivery of the Notes
and Exchange Shares), have the right (that has not been waived) to request
or demand that either of the Issuers register securities held by them under
the 1933 Act or analogous foreign laws and regulations.
(xxii) The authorized, issued and outstanding capital stock of each
of the Company and its subsidiaries has been duly and validly authorized
and issued, is fully paid and nonassessable and was not issued in violation
of any preemptive or similar rights. The Company and its subsidiaries had,
at March 31, 1998, an authorized and outstanding capitalization as set
forth under the heading "Actual" in the section entitled "Capitalization"
in the Prospectus.
(xxiii) The shares of issued and outstanding capital stock of PCC
have been duly authorized and validly issued and are fully paid and
nonassessable; none of the outstanding shares of capital stock of PCC was
issued in violation of the preemptive or other similar rights of any
securityholder of PCC.
(xxiv) The Exchange Shares, if and when issued in accordance with
the terms specified in the Indenture and the Notes, upon such issuance will
be duly authorized, validly issued, fully paid and nonassessable and will
not be subject to any preemptive or similar right. No holder of Exchange
Shares will be subject to personal liability by reason of being such a
holder. Except as set forth in the Prospectus, PCC does not have
outstanding any options to purchase, or any rights or warrants to subscribe
for, or any securities or obligations convertible into, or any contracts or
commitments to issue or sell, any PCC Shares. PCC has a sufficient number
of authorized but unissued shares of Common Stock to enable PCC to issue,
without further stockholder action, all the Exchange Shares (in the case of
events giving rise to a mandatory exchange pursuant to the terms of the
Indenture and the Notes).
(xxv) Each certificate signed by any officer of the Company or PCC
and delivered to the Underwriters or counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company or PCC, as
applicable, to each Underwriter as to the matters covered thereby.
<PAGE>
-11-
(xxvi) Each of the Issuers and their respective subsidiaries
maintains a system of internal accounting controls sufficient to provide
reasonable assurance that: (i) transactions are executed in accordance
with management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect
thereto.
(xxvii) Subsequent to the respective dates as of which information
is given in the Prospectus and up to the Closing Date, except as set forth
in the Prospectus, (A) neither the Company, PCC nor any of their respective
subsidiaries has (x) incurred any liabilities or obligations, direct or
contingent, which are material to the Company, PCC and their respective
subsidiaries, taken as a whole, or (y) entered into any transaction not in
the ordinary course of business, (B) there has not been, singly or in the
aggregate, any material adverse change, or any development which may
reasonably be expected to involve a material adverse change, in the
properties, business, results of operations, condition (financial or
otherwise) or prospects of the Company, PCC and their subsidiaries, taken
as a whole (a "MATERIAL ADVERSE CHANGE"), and (C) there have not been
dividends or distributions of any kind declared, paid or made by PCC on any
class of its capital stock.
(xxviii) Neither the Company, nor PCC, nor any agent thereof acting
on the behalf of either of the Issuers (other than the Underwriters, to the
extent applicable) has taken, and none of them will take, any action that
might cause this Agreement or the issuance or sale of the Notes to violate
Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or
Regulation X (12 C.F.R. Part 224) of the Board of Governors of the Federal
Reserve System.
(xxix) Each firm of accountants that has certified or shall certify
the financial statements and supporting schedules included or to be
included as part of the Registration Statement and the Prospectus are, to
the best of the Company's and PCC's knowledge, independent public
accountants with respect to the Issuers and their subsidiaries as required
by the 1933 Act for financial statements included in a registration
statement on Form S-1 or Form S-3. The consolidated historical statements
fairly present the consolidated financial conditions and results of
operations of the Company, PCC and their subsidiaries at the respective
dates and for the respective periods indicated, in accordance with
generally accepted accounting principles consistently applied throughout
such periods. The pro forma financial statements have been prepared on a
basis consistent with such historical statements, except for the pro forma
adjustments
<PAGE>
-12-
specified therein, and give effect to assumptions made on a reasonable
basis and present fairly the historical and proposed transactions
contemplated by the Preliminary Prospectus, the Prospectus, this Agreement
and the other Operative Documents. Other financial and statistical
information and data included in the Prospectus, historical and pro forma,
are accurately presented and prepared on a basis consistent with such
financial statements and the books and records of each of the Issuers and
their subsidiaries.
(xxx) Immediately prior and subsequent to the Issue Date, the
present fair saleable value of the assets of the Company will not exceed
the amount that will be required to be paid on or in respect of the
existing debts and other liabilities (including contingent liabilities) of
the Company as they become absolute and matured. The assets of the
Company, upon the issuance of the Notes, will not constitute unreasonably
small capital to carry out its business as now conducted, including the
capital needs of the Company, taking into account the projected capital
requirements and the capital availability of the Company. The Company does
not intend to, nor does it believe that it will, incur debts beyond its
ability to pay such debts as they mature.
(xxxi) There are no contracts, agreements or understandings between
the Company, PCC or any of their subsidiaries and any person that would
give rise to a valid claim against the Company, PCC, any of their
subsidiaries or any Underwriter for a brokerage commission, finder's fee or
like payment in connection with the issuance, purchase and sale of the
Notes. There are no contracts or documents which are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits thereto which have not been so described and filed as required.
(xxxii) The Issuers acknowledge that the Underwriters and, for
purposes of the opinions to be delivered to the Underwriters pursuant to
Section 6 hereof, counsel to the Issuers and counsel to the Underwriters
will rely upon the accuracy and truth of the foregoing representations and
hereby consent to such reliance.
4. AGREEMENTS OF THE ISSUERS. The Issuers agree, jointly and
severally, with each of you as follows:
(a) The Issuers will use their best efforts to cause the Registration
Statement to become effective and will notify the Underwriters immediately,
and confirm the notice in writing, (i) when any post-effective amendment to
the Registration Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (ii) of the
receipt of any comments from the Commission, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment
or supplement to the Prospectus or for additional information, (iv) of the
issuance by the Commission of any stop order suspending the ef-
<PAGE>
-13-
fectiveness of the Registration Statement or of any order preventing or
suspending the use of any Preliminary Prospectus, or of the suspension of
the qualification of the Notes for offering or sale in any jurisdiction, or
of the initiation or threatening of any proceedings for any of such
purposes and (v) of the happening of any event described in Section 4(e)
that in the judgment of the Issuers makes it necessary to amend or
supplement the Prospectus or Registration Statement. The Issuers will
promptly effect the filings necessary pursuant to Rule 424(b) and will take
such steps as it deems necessary to ascertain promptly whether the form of
prospectus transmitted for filing under Rule 424(b) was received for filing
by the Commission and, in the event that it was not, it will promptly file
such prospectus. The Issuers will make every reasonable effort to prevent
the issuance of any stop order and, if any stop order is issued, to obtain
the lifting thereof at the earliest possible moment. If necessary, the
Issuers, subject to Section 5(b), will comply with the requirements of Rule
430A or Rule 434, as applicable.
(b) The Issuers will give the Underwriters notice of its intention to
file or prepare any amendment to the Registration Statement (including any
filing under Rule 462(b)), any Term Sheet or any amendment, supplement or
revision to either the prospectus included in the Registration Statement at
the time it became effective or to the Prospectus, will furnish the
Underwriters with copies of any such documents a reasonable amount of time
prior to such proposed filing or use, as the case may be, and will not file
or use any such document to which the Underwriters or counsel for the
Underwriters shall reasonably object within ten business days after being
furnished such documents.
(c) The Issuers have furnished or will deliver to the Underwriters
and counsel for the Underwriters, without charge, copies of the
Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein)
and signed copies of all consents and certificates of experts, and will
also deliver to the Underwriters, without charge, a conformed copy of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits) for each of the Underwriters. The copies of the
Registration Statement and each amendment thereto furnished to the
Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.
(d) The Issuers has delivered to each Underwriter, without charge, as
many copies of each Preliminary Prospectus as such Underwriter reasonably
requested, and the Company hereby consents to the use of such copies for
purposes permitted by the 1933 Act. The Company will furnish to each
Underwriter, without charge, during the period when the Prospectus is
required to be delivered under the 1933 Act or the Secu-
<PAGE>
-14-
rities Exchange Act of 1934, as amended (the "1934 ACT"), such number of
copies of the Prospectus (as amended or supplemented) as such Underwriter
may reasonably request. The Prospectus and any amendments or supplements
thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(e) The Issuers will comply with the 1933 Act and the 1933 Act
Regulations so as to permit the completion of the distribution of the Notes
as contemplated in this Agreement and the Prospectus. If at any time when
a Prospectus is required by the 1933 Act to be delivered in connection with
sales of the Notes, any event shall occur or condition shall exist as a
result of which it is necessary, in the reasonable opinion of counsel for
the Underwriters or for the Issuers, to amend the Registration Statement or
amend or supplement the Prospectus in order that the Prospectus will not
include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the reasonable
opinion of any such counsel, at any such time to amend the Registration
Statement or amend or supplement the Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act Regulations, the Issuers will
promptly prepare and file with the Commission, subject to Section 4(b),
such amendment or supplement as may be necessary to correct such statement
or omission or to make the Registration Statement or the Prospectus comply
with such requirements, and the Issuers will furnish to the Underwriters
such number of copies of such amendment or supplement as the Underwriters
may reasonably request.
(f) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement becomes effective or is terminated, to
pay all costs, expenses, fees and taxes incident to and in connection with:
(i) the printing, filing and distribution of the Preliminary Prospectus and
the Prospectus (including financial statements and exhibits) and all
amendments and supplements thereto, (ii) the preparation (including,
without limitation, word processing and duplication costs) and delivery of
all preliminary and final Blue Sky memoranda, (iii) the issuance and
delivery by the Issuers of the Notes, (iv) the qualification of the Notes
for offer and sale under the securities or Blue Sky laws of the several
states (including, without limitation, the reasonable fees and
disbursements of your counsel relating to such registration or
qualification), (v) furnishing such copies of the Preliminary Prospectus
and the Prospectus and all amendments and supplements thereto as may be
reasonably requested for use in connection with offers and sales of the
Notes, (vi) the preparation of certificates for the Notes (including,
without limitation, printing and engraving thereof), (vii) the fees,
<PAGE>
-15-
disbursements and expenses of the Issuers' counsel and accountants and the
Trustee for the Notes, (viii) any filings required to be made by the
Underwriters with the NASD, and the fees, disbursements and other charges
of counsel for the Underwriters in connection therewith, and (ix) the
performance by the Issuers of their other obligations under this Agreement.
(g) To use their best efforts to do and perform all things required
or necessary to be done and performed under this Agreement by the Issuers
prior to the Closing Date.
(h) To use the proceeds from the sale of the Notes in the manner
described in the Prospectus under the caption "Use of Proceeds."
(i) Not to claim voluntarily, and to resist actively any attempts to
claim, the benefit of any usury laws against the holders of any Notes.
(j) The Company will not, without the prior written consent of the
Underwriters, contract to sell or announce or make any offering, sale or
other disposition of any debt securities of the Company having a maturity
greater than one year during the period beginning from the date of this
Agreement and continuing through the Closing Date.
(k) The Issuers, during the period when the Prospectus is required to
be delivered under the 1933 Act or the 1934 Act, will file all documents
required to be filed with the Commission pursuant to the 1934 Act and rules
and regulations of the Commission thereunder within the time periods
referred to therein.
5. INDEMNIFICATION. (a) The Issuers agree, jointly and severally,
to indemnify and hold harmless (i) each of the Underwriters and (ii) each
person, if any, who controls (within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act) any of the Underwriters (any of the persons
referred to in this clause (ii) being hereinafter referred to as a "CONTROLLING
PERSON"), and (iii) the respective officers, directors, partners, employees,
representatives and agents of any of the Underwriters or any controlling person
(any person referred to in clause (i), (ii) or (iii) may hereinafter be referred
to as an "INDEMNIFIED PERSON"), from and against any and all losses, claims,
damages, liabilities and judgments caused by any untrue statement or alleged
untrue statement of a material fact contained in the Preliminary Prospectus or
the Prospectus (as amended or supplemented if the Issuers shall have furnished
any amendments or supplements thereto), including Rule 430A Information or Rule
434 Information, or caused by any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or judgments are caused by any such untrue
<PAGE>
-16-
statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished in writing to the Issuers by
or on behalf of any Underwriter expressly for use therein; PROVIDED that the
foregoing indemnity with respect to any Preliminary Prospectus shall not inure
to the benefit of any Indemnified Person from whom the person asserting such
losses, claims, damages, liabilities and judgments purchased securities if such
untrue statement or omission or alleged untrue statement or omission made in
such Preliminary Prospectus is eliminated or remedied in the Prospectus and a
copy of the Prospectus shall not have been furnished to such person in a timely
manner due to the wrongful action or wrongful inaction of any Underwriter.
(b) In case any action shall be brought against any Indemnified
Person, based upon the Preliminary Prospectus or the Prospectus or any amendment
or supplement thereto and with respect to which indemnity may be sought against
any of the Issuers, such Indemnified Person shall promptly notify the Issuers in
writing and the Issuers shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to such Indemnified Person and
payment of all fees and expenses. Any Indemnified Person shall have the right
to employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person, unless (i) the employment of such counsel shall have
been specifically authorized in writing by any of the Issuers, (ii) the Issuers
shall have failed to assume the defense and employ counsel or (iii) the named
parties to any such action (including any impleaded parties) include both such
Indemnified Person and any of the Issuers and such Indemnified Person shall have
been advised by counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the Issuers
(in which case the Issuers shall not have the right to assume the defense of
such action on behalf of such Indemnified Person, it being understood, however,
that the Issuers shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all such Indemnified Persons, which firm
shall be designated in writing by NatWest Capital Markets Limited, and that all
such fees and expenses shall be reimbursed as they are incurred. The Issuers
shall not be liable for any settlement of any such action effected without their
written consent but if settled with the written consent of the Issuers, the
Issuers agree to indemnify and hold harmless any Indemnified Person from and
against any loss or liability by reason of such settlement. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
<PAGE>
-17-
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless each of the Issuers, their directors, their officers and any
person controlling any of the Issuers within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act, to the same extent as the foregoing
indemnity from the Issuers to each Indemnified Person but only with reference to
information relating to such Indemnified Person furnished in writing by or on
behalf of such Indemnified Person expressly for use in the Preliminary
Prospectus or Prospectus. In case any action shall be brought against any of
the Issuers, any of their directors, any such officer or any person controlling
any of the Issuers based on the Preliminary Prospectus or Prospectus and in
respect of which indemnity may be sought against any of the Underwriters, such
Underwriter shall have the rights and duties given to the Issuers (except that
if the Issuers shall have assumed the defense thereof, such Underwriter shall
not be required to do so, but may employ separate counsel therein and
participate in the defense thereof but the fees and expenses of such counsel
shall be at the expense of such Underwriter), and the Issuers, their directors,
any such officer and any person controlling any of the Issuers shall have the
rights and duties given to the Underwriters by Section 5(b) hereof.
(d) If the indemnification provided for in this Section 5 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Issuers on the one hand and each
Underwriter on the other hand from the offering of the Notes or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Issuers and
each Underwriter in connection with the statements or omissions which resulted
in such losses, claims, damages, liabilities or judgments, as well as any other
relevant equitable considerations. The relative benefits received by the
Issuers on the one hand and each Underwriter on the other shall be deemed to be
in the same proportion as the total net proceeds from the Offering (before
deducting expenses) received by the Issuers, and the total discounts received by
each Underwriter, bear to the total price to investors of the Notes, in each
case as set forth in the table on the cover page of the Prospectus. The
relative fault of the Issuers on the one hand and each Underwriter on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the Issuers or such Underwriter and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Issuers and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 5(d) were determined by pro
rata allocation (even if the
<PAGE>
-18-
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities
or judgments referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 5, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total discounts received by it in
connection with the sale of the Notes pursuant to this Agreement exceeds the
amount of any damages which such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section 5(d) are
several in proportion to the respective amount of Notes purchased by each of the
Underwriters hereunder and not joint.
6. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters under this Agreement are subject to the
satisfaction of each of the following conditions:
(a) Notification that the Registration Statement has become effective
shall be received by the Underwriters not later than 5:00 p.m., New York
City time, on the date of this Agreement or at such later date and time as
shall be consented to in writing by the Representatives and all filings
required by Rule 424 and Rule 430A shall have been made.
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or threatened by the Commission, (ii) no order
suspending the effectiveness of the Registration Statement or the
qualification or registration of the Notes of the Exchange Shares under the
securities or Blue Sky laws of any jurisdiction shall be in effect and no
proceeding for such purpose shall be pending before or threatened or
contemplated by the Commission or the authorities of any such jurisdiction,
(iii) any request for additional information on the part of the staff of
the Commission or any such authorities shall have been complied with to the
satisfaction of the staff of the Commission or such authorities, (iv) after
the date hereof no amendment or supplement to the Registration Statement or
the Prospectus shall have been filed unless a copy thereof was first
submitted to the Underwriters and the Underwriters did not object thereto
in good faith within a reasonable period of time, and (v) the Underwriters
shall have received certificates, dated the Closing Date and signed by the
Chairman of the Board of Directors
<PAGE>
-19-
of the Company or the Chief Executive Officer of the Company and the Chief
Financial Officer of the Company (who may, as to proceedings threatened or
contemplated, rely upon the best of their information and belief), to the
effect of clauses (i), (ii) and (iii).
(c) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental
agency which would, as of the Closing Date, prevent the issuance or sale of
any of the Notes; no action, suit or proceeding shall be pending against
or, to the knowledge of the Issuers, threatened against, the Company, PCC
or any of their subsidiaries before any court or arbitrator or any
governmental body, agency or official in which there is a reasonable
possibility of an adverse decision that would prohibit, interfere with or
adversely affect the issuance or sale of the Notes or would have a Material
Adverse Effect, in any manner draw into question the validity of any
Operative Document; and no stop order, injunction, restraining order, or
order of any nature preventing the use of the Prospectus, or any amendment
or supplement thereto, or any order asserting that any of the transactions
contemplated by this Agreement are subject to the registration requirements
of the 1933 Act shall have been issued.
(d) Since the dates as of which information is given in the
Prospectus, (i) there shall not have been any material change, or any
development that is reasonably likely to result in a material change, in
the capital stock or the long-term debt, or material increase in the
short-term debt, of the Issuers or their subsidiaries, taken as a whole,
from that set forth in the Prospectus, (ii) no dividend or distribution of
any kind shall have been declared, paid or made by any of the Issuers on
any class of its capital stock, and (iii) neither the Issuers nor any of
their subsidiaries shall have incurred any liabilities or obligations,
direct or contingent, that are material, individually or in the aggregate,
to the Issuers and their subsidiaries, taken as a whole, and that are
required to be disclosed on a balance sheet in accordance with generally
accepted accounting principles and are not disclosed on the latest balance
sheet included in the Prospectus. Since the date hereof and since the
dates as of which information is given in the Prospectus, there shall not
have been any Material Adverse Change.
(e) You shall have received certificates, dated the Closing Date,
signed by (i) the President or any Vice President of the Company and PCC
and (ii) a principal financial or accounting officer of the Company and PCC
confirming, as of the Closing Date, the matters set forth in paragraphs
(a), (b), (c), (d), (l) and (m).
(f) You shall have received on the Closing Date an opinion
(satisfactory to you and your counsel), dated the Closing Date, of Davis
Polk & Wardwell, outside counsel to the Issuers, to the effect that:
<PAGE>
-20-
(i) The Company and PCC have duly and validly authorized,
executed and delivered this Agreement.
(ii) The Company and PCC have duly and validly authorized,
executed and delivered the Indenture, and (assuming the due
authorization, execution and delivery thereof by the Trustee) the
Indenture is the valid and binding obligation of the Company and PCC,
enforceable against both the Company and PCC in accordance with its
terms, except (i) as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or
similar laws affecting creditors' rights and remedies generally, (ii)
as to general principles of equity, regardless of whether enforcement
is sought in a proceeding at law or in equity, and (iii) to the extent
that a waiver of rights under any usury law may be unenforceable. In
rendering such opinion, such counsel may state that it expresses no
opinion as to the applicability (and, if applicable, the effect) of
Section 548 of the United States Bankruptcy Code or any comparable
provision of state law to the questions addressed therein or on the
conclusions with respect thereto.
(iii) The Notes have been duly and validly authorized for
issuance and sale to you by the Issuers pursuant to this Agreement
and, when issued and authenticated in accordance with the terms of the
Indenture and delivered against payment therefor in accordance with
the terms hereof, will be the valid and binding obligations of each of
the Issuers, enforceable against each of the Issuers in accordance
with their terms and entitled to the benefits of the Indenture, except
(i) as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws
affecting creditors' rights and remedies generally, (ii) as to general
principles of equity, regardless of whether enforcement is sought in a
proceeding at law or in equity, and (iii) to the extent that a waiver
of rights under any usury laws may be unenforceable.
(iv) The Indenture has been duly qualified under the Trust
Indenture Act.
(v) Upon issuance and delivery of the Notes in accordance
with this Agreement and the Indenture, the Notes shall be exchangeable
for Exchange Shares in accordance with the terms of the Notes and the
Indenture; and the Exchange Shares issuable upon exchange of the Notes
have been duly authorized and reserved for issuance and, when issued
and delivered pursuant to the terms of the Indenture, will be duly
authorized, validly issued, fully paid and non-assessable and will not
be subject to any preemptive or similar right. No
<PAGE>
-21-
holder of Exchange Shares will be subject to personal liability by
reason of being such a holder. Except as set forth in the Prospectus,
PCC does not have outstanding any options to purchase, or any rights
or warrants to subscribe for, or any securities or obligations
convertible into, or any contracts or commitments to issue or sell,
any PCC Shares.
(vi) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933
Act; any required filing of the Prospectus pursuant to Rule 424(b) has
been made in the manner and within the time period required by Rule
424(b); and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement or any Rule
462(b) Registration Statement has been issued under the 1933 Act and
no proceedings for that purpose have been instituted or are pending or
threatened by the Commission.
(vii) The Registration Statement, including any Rule 462(b)
Registration Statement, any Rule 430A Information or Rule 434
Information, as applicable, the Prospectus and each amendment or
supplement to the Registration Statement and the Prospectus as of
their respective effective or issue dates (other than the financial
statements and supporting schedules included therein or omitted
therefrom, as to which such counsel need not express any opinion)
complied as to form in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations.
(viii) The form of certificate used to evidence the Exchange
Shares, if any, will comply in all material respects with all
applicable statutory requirements, with any applicable requirements of
the charter and by-laws of the Company.
(ix) To the best of such counsel's knowledge, there are no
federal or New York statutes or regulations that are required to be
described in the Prospectus that are not described as required.
(x) To the best of such counsel's knowledge, there are no
contracts, licenses, agreements, leases or documents of a character
which are required to be filed as exhibits to the Registration
Statement or to be summarized or described in the Prospectus which
have not been so filed, summarized or described.
<PAGE>
-22-
(xi) Each of this Agreement, the Notes and the Indenture
conforms as to legal matters in all material respects to the
description thereof in the Prospectus.
(xii) The execution, delivery and performance by the Issuers of
this Agreement and the Indenture and the issuance and sale of the
Notes and the Exchange Shares as contemplated by the Prospectus and
this Agreement and the repayment of the 131/2% Senior Secured Notes of
the Company will not violate, conflict with or constitute a breach of
any of the terms or provisions of, or a default under (or an event
that with notice or the lapse of time, or both, would constitute a
default), or require consent under, or result in the imposition of a
lien or encumbrance on any properties of the Issuers or any of their
respective material subsidiaries, or an acceleration of indebtedness
pursuant to, (i) the charter or bylaws of the Company, except any such
violation, conflict, breach or default that has been waived or consent
that has been obtained, (ii) any bond, debenture, note, indenture,
mortgage, deed of trust, license or other agreement or instrument to
which the Issuers or any of their respective material subsidiaries is
a party or by which any of them or their property is or may be bound,
which is set forth in SCHEDULE II hereto, (iii) to such counsel's
knowledge, any statute, rule or regulation applicable to the Issuers
or any of their respective material subsidiaries or any of their
assets or properties, except such as may be required under state
securities or Blue Sky laws and regulations or by the NASD, or (iv) to
such counsel's knowledge, any judgment, order or decree of any court
or governmental agency or authority having jurisdiction over the
Issuers any of their respective material subsidiaries or their assets
or properties. No consent, approval, authorization or order of, or
filing, registration, qualification, license or permit of or with, any
court or governmental agency, body or administrative agency is
required for the execution, delivery and performance of this
Agreement, the Indenture, the Notes or the Exchange Sharesby the
Issuers, except such as have been obtained (subject to clause (ix),
above, and assuming reliance by such counsel on the accuracy of the
representations referred to therein), such as may be required under
state securities or Blue Sky laws and regulations or such as may be
required by the NASD.
(xiii) To the best knowledge of such counsel, no action has been
taken and no statute, rule or regulation or order has been enacted,
adopted or issued by any governmental agency that prevents the
issuance of the Notes; no injunction, restraining order or order of
any nature by a federal or state court of competent jurisdiction has
been issued that prevents the issuance of the Notes; and no action,
suit or proceeding is pending against or affecting or, to the best
<PAGE>
-23-
knowledge of such counsel, threatened against, the Company or PCC or
any of their respective subsidiaries before any court or arbitrator or
any governmental body, agency or official which, if adversely
determined, would prohibit the issuance of the Notes.
(xiv) The Prospectus, as of its date, and each amendment or
supplement prepared by the Issuers, if any, thereto, as of its date
(except for the financial statements, including the notes thereto, and
supporting schedules and other financial, statistical, and accounting
data included therein or omitted therefrom, as to which no opinion
need be expressed), comply as to form in all material respects with
the requirements of the 1933 Act.
In rendering the foregoing opinions, Davis Polk & Wardwell may state
that they are not expressing any opinions as to any laws relating
specifically to the communications industry.
In addition, Davis Polk & Wardwell shall state that it has generally
reviewed and discussed with certain officers and other representatives of
the Issuers, representatives of the independent public accountants for the
Issuers, your representatives and your counsel in connection with the
preparation of the Registration Statement and the Prospectus and the
statements contained therein and, although such counsel has not
independently verified the accuracy, completeness or fairness of such
statements (except as indicated above), such counsel advises you that, on
the basis of the foregoing, (i) the Registration Statement and the
Prospectus (other than the financial statements and other financial data
contained therein or omitted therefrom, as to which such counsel need not
comment) appear on their face to be appropriately responsive in all
material respects to the requirements of the 1933 Act and the applicable
rules and regulations of the Commission thereunder; (ii) no facts came to
its attention that caused it to believe that (a) the Registration Statement
(other than the financial statements and other financial data contained
therein or omitted therefrom, as to which such counsel need not comment),
at the time it became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or (b)
the Prospectus (other than the financial statements and other financial
data contained therein or omitted therefrom, as to which such counsel need
not comment), as of its date or the Closing Date, contained or contain an
untrue statement of a material fact or omitted or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
The opinions of such counsel described in this subsection shall be
rendered to you at the request of the Issuers and shall so state therein.
<PAGE>
-24-
(g) You shall have received on the Closing Date an opinion
(satisfactory to you and your counsel), dated the Closing Date of Davis
Wright Tremaine LLP, counsel for the Issuers with respect to FCC and
related matters to the effect that:
(i) Those statements in the Preliminary Prospectus and the
Prospectus that describe provisions of the Communications Act of 1934,
as amended (the "COMMUNICATIONS ACT"), and the rules, regulations and
published orders, policies and decisions of the FCC ("FCC RULES") are
accurate descriptions in all material respects.
(ii) The execution, delivery and performance of the
obligations by the Issuers under the Operative Documents are not and
will not be contrary to the Communications Act, or to the terms of any
System license, will not result in any violation of the FCC Rules,
will not cause any forfeiture or impairment of any FCC license of any
of the Systems, and will not require any consent, approval or
authorization of the FCC.
(iii) To such counsel's knowledge, after such counsel's
inquiry, the Issuers and each of their subsidiaries validly holds all
FCC licenses necessary for the operation of the Systems (and any
associated microwave links) in the manner in which they are described
as being conducted in the Prospectus (for purposes of this opinion
only, the "FCC LICENSES"). The FCC Licenses are in full force and
effect, and are not subject to any conditions outside the ordinary
course (except as set forth in an exhibit to such opinion).
(iv) Except as may be disclosed in an exhibit to such opinion,
all applicable administrative and judicial appeal, review and
reconsideration periods relating to the grant of the FCC Licenses have
expired without our being served with any timely filing of any such
appeal, review, request or reconsideration petition, and without the
FCC having instituted review or reconsideration of the grant of any of
the FCC Licenses on its own motion.
(v) To such counsel's knowledge, after such counsel's
inquiry, each of the Issuers and their subsidiaries has filed with the
FCC all necessary and material reports, documents, instruments,
information and applications required to be filed pursuant to the
FCC's rules, regulations and requests, other than those the failure of
which to so file could reasonably be expected to, singly or in the
aggregate, have a Material Adverse Effect. To such counsel's
knowledge, after such counsel's inquiry, no notice has been issued by
the FCC which could permit, or after notice or lapse of time or both
could permit, revocation or termination of any of the FCC Licenses
prior to the expiration dates thereof
<PAGE>
-25-
or which could result in any other material impairment of any of the
Issuers' and each of their subsidiaries' rights thereunder.
(vi) To such counsel's knowledge, after such counsel's inquiry
but without field investigation, each of the Systems is operating in
compliance in all material respects with the Communications Act and
the FCC Rules. To such counsel's knowledge, after such counsel's
inquiry, there is not issued, outstanding or pending any notice of
violation, notice of apparent liability, order to show cause, material
complaint or investigation by or before the FCC which could reasonably
be expected to, singly or in the aggregate, have a Material Adverse
Effect, nor does such counsel have reason to believe, subject to the
Issuers' and their subsidiaries' continued regulatory compliance, that
the FCC Licenses will not be renewed for a full term when they are due
for renewal.
The opinions of such counsel described in this subsection shall be
rendered to you at the request of the Issuers and shall so state therein.
(h) You shall have received an opinion, dated the Closing Date, of
Cahill Gordon & Reindel ("CAHILL"), your counsel, in form and substance
reasonably satisfactory to you, covering such matters as are customarily
covered in such opinions. In rendering the foregoing opinion, Cahill may
state that they are not expressing any opinions as to any laws relating
specifically to the communications industry.
(i) At the time this Agreement is executed and delivered by the
Issuers and on the Closing Date, you shall have received letters,
substantially in the form previously approved by you, from Arthur Andersen
LLP and KPMG Peat Marwick LLP with respect to the financial statements and
certain financial information contained in the Prospectus.
(j) Cahill shall have been furnished with such documents and
opinions, in addition to those set forth above, as they may reasonably
require for the purpose of enabling them to review or pass upon the matters
referred to in this Section 6 and in order to evidence the accuracy,
completeness or satisfaction in all material respects of any of the
representations, warranties or conditions herein contained.
(k) Prior to the Closing Date, the Issuers shall have furnished to
you such further information, certificates and documents as you may
reasonably request.
(l) The Issuers and the Trustee shall have entered into the Indenture
and you shall have received counterparts, conformed as executed, thereof.
<PAGE>
-26-
(m) The rights, property and assets disclosed in the Prospectus as
being owned or exercisable, directly or indirectly, by the Issuers shall be
so owned and exercisable by the Issuers on the Closing Date.
(n) The NASD shall have confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
All opinions, certificates, letters and other documents required by
this Section 6 to be delivered by the Issuers will be in compliance with the
provisions hereof only if they are reasonably satisfactory in form and substance
to you. The Issuers will furnish the Underwriters with such conformed copies of
such opinions, certificates, letters and other documents as they shall
reasonably request.
7. DEFAULTS. If, on the Closing Date, any of the Underwriters shall
fail or refuse to purchase Notes that it has agreed to purchase hereunder on
such date and the aggregate principal amount of such Notes that such defaulting
Underwriter agreed but failed or refused to purchase does not exceed 10% of the
total principal amount of such Notes that all of the Underwriters are obligated
to purchase on such Closing Date, the non-defaulting Underwriters shall be
obligated to purchase the amount of such Notes that such defaulting Underwriter
agreed but failed or refused to purchase. If, on the Closing Date, any of the
Underwriters shall fail or refuse to purchase Notes in an aggregate principal
amount that exceeds 10% of such total principal amount and arrangements
satisfactory to the other Underwriters and the Issuers for the purchase of such
Notes are not made within 48 hours after such default, this Agreement shall
terminate without liability on the part of the non-defaulting Underwriters or
the Issuers, except as otherwise provided in Section 8. In any such case that
does not result in termination of this Agreement, the Underwriters or the
Issuers may postpone the Closing Date for not longer than seven (7) days, in
order that the required changes, if any, in the Prospectus or any other
documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve a defaulting Underwriter from liability in respect
of any default by any such Underwriter under this Agreement.
8. EFFECTIVE DATE OF AGREEMENT AND TERMINATION. This Agreement
shall become effective upon the execution and delivery hereof.
This Agreement may be terminated at any time on or prior to the
Closing Date by you by notice to the Issuers if any of the following has
occurred: (i) subsequent to the date information is provided in the Prospectus,
any Material Adverse Change which, in your judgment, materially impairs the
investment quality of the Notes, (ii) any outbreak or escalation of hostilities
or other national or international calamity or crisis or material adverse change
in the financial markets of the United States or elsewhere, or any other
substantial na-
<PAGE>
-27-
tional or international calamity or emergency if the effect of such outbreak,
escalation, calamity, crisis, material adverse change or emergency would, in
your judgment, make it impracticable or inadvisable to market the Notes or to
enforce contracts for the sale of the Notes, (iii) any suspension or limitation
of trading generally in securities on the New York Stock Exchange or in the
over-the-counter markets or any setting of minimum prices for trading on such
exchange or markets, (iv) any declaration of a general banking moratorium by
either federal or New York authorities, (v) the taking of any action by any
federal, state or local government or agency in respect of its monetary or
fiscal affairs that in your judgment has a material adverse effect on the
financial markets in the United States, and would, in your judgment, make it
impracticable or inadvisable to market the Notes or to enforce contracts for the
sale of any of the Notes, (vi) the enactment, publication, decree, or other
promulgation of any federal or state statute, regulation, rule or order of any
court or other governmental authority which, in your judgment, would have a
Material Adverse Effect, or (vii) any securities of any Parent, the Issuers or
any of their subsidiaries shall have been downgraded or placed on any "watch
list" for possible downgrading by any nationally recognized statistical rating
organization.
The indemnities and contribution provisions and the other agreements,
representations and warranties of the Issuers, their respective officers and
directors and of the Underwriters set forth in or made pursuant to this
Agreement shall remain operative and in full force and effect, and will survive
delivery of and payment for the Notes, regardless of (i) any investigation, or
statement as to the results thereof, made by or on behalf of any of the
Underwriters or by or on behalf of the Issuers, the officers or directors of any
of the Issuers or any controlling person of any of the Issuers, (ii) acceptance
of the Notes and payment for them hereunder and (iii) termination of this
Agreement.
If this Agreement shall be terminated by the Underwriters pursuant to
clause (i) or (vii) of the second paragraph of this Section 8 or because of the
failure or refusal on the part of the Issuers to comply with the terms or to
fulfill any of the conditions of this Agreement, the Issuers agree to reimburse
you for all reasonable out-of-pocket expenses (including the fees and
disbursements of counsel) incurred by you. Notwithstanding any termination of
this Agreement, the Issuers shall be liable for all expenses which it has agreed
to pay pursuant to Section 4(f) hereof.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, PCC, the
Underwriters, any Indemnified Person referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The terms "successors and assigns" shall not include a purchaser of
any of the Notes from any of the Underwriters merely because of such purchase.
<PAGE>
-28-
9. MISCELLANEOUS. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (a) if to the Company, Price
Communications Cellular Holdings, Inc., 45 Rockefeller Plaza, Suite 3201, New
York, New York 10020, Attention: President, with a copy to Davis Polk &
Wardwell, 450 Lexington Avenue, New York, New York 10017, Attention: Richard D.
Truesdell, Jr., Esq., and (b) if to the Underwriters, c/o Gleacher NatWest
International, 660 Madison Avenue, New York, New York 10021, Attention: Mary
Price, with copies to Donaldson, Lufkin & Jenrette Securities Corporation, 600
California Street, Suite 1800, San Francisco, California 94108-2704, Attention:
Thomas M. Benninger; Bear, Stearns & Co. Inc., 245 Park Avenue, New York, New
York 10167, Attention: Robert Nabholz; NationsBanc Montgomery Securities LLC, 9
West 57th Street, New York, New York 10019, Attention: Steve Yanis; and
Wasserstein Perella Securities, Inc., 31 West 52nd Street, New York, New York
10019, Attention: Frederic M. Seegal; and with a copy to Cahill Gordon &
Reindel, 80 Pine Street, 17th Floor, New York, New York 10005, Attention:
Michael E. Michetti, Esq., or in any case to such other address as the person to
be notified may have requested in writing.
9. This Agreement shall be governed and construed in accordance with
the internal laws of the State of New York as applied to contracts made and
performed in such state, without regard to principles of conflicts of law. This
Agreement may be signed in various counterparts which together shall constitute
one and the same instrument.
[Signature Pages Follow]
<PAGE>
-29-
Please confirm that the foregoing correctly sets forth the Agreement
among the Company, PCC and the Underwriters.
Very truly yours,
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC.
By:
-----------------------------
Name:
Title:
PRICE COMMUNICATIONS CORPORATION
By:
-----------------------------
Name:
Title:
<PAGE>
-30-
Accepted and agreed to as of the date first above written:
NATWEST CAPITAL MARKETS LIMITED,
on behalf of and as Representative
of the Underwriters
By:
------------------------------
Name:
Title:
<PAGE>
SCHEDULE A
SUBSIDIARIES EQUITY OWNERSHIP
- ------------ ----------------
[add all PCC subsidiaries]
ALBANY CELLULAR PARTNERS
COLUMBUS CELLULAR TELEPHONE COMPANY
MACON CELLULAR TELEPHONE SYSTEMS LIMITED PARTNERSHIP
SAVANNAH CELLULAR LIMITED
PARTNERSHIP
PANAMA CITY CELLULAR TELEPHONE COMPANY, LTD.
PANHANDLE CELLULAR PARTNERSHIP
PALMER COMMUNICATIONS, INC.
PALMER WIRELESS HOLDINGS, INC.
PRICE COMMUNICATIONS WIRELESS II, INC.
PRICE COMMUNICATIONS WIRELESS III, INC.
PRICE COMMUNICATIONS WIRELESS IV, INC.
PRICE COMMUNICATIONS WIRELESS V, INC.
PRICE COMMUNICATIONS WIRELESS VI, INC.
PRICE COMMUNICATIONS WIRELESS VII, INC.
PRICE COMMUNICATIONS WIRELESS VIII, INC.
PRICE COMMUNICATIONS WIRELESS IX, INC.
CEI COMMUNICATIONS, INC.
CELLULAR DYNAMICS TELEPHONE COMPANY
CELLULAR SYSTEMS OF SOUTHEAST ALABAMA, INC.
DOTHAN CELLULAR TELEPHONE COMPANY, INC.
MONTGOMERY CELLULAR HOLDING CO., INC.
MONTGOMERY CELLULAR TELEPHONE COMPANY, INC.
PANAMA CITY COMMUNICATIONS, INC.
<PAGE>
SCHEDULE I
PRINCIPAL AMOUNT
----------------
NatWest Capital Markets Limited $[ ]
Donaldson, Lufkin & Jenrette Securities Corporation [ ]
Bear, Stearns & Co. Inc. [ ]
NationsBanc Montgomery Securities LLC [ ]
Wasserstein Perella Securities, Inc. [ ]
-------------
TOTAL $150,000,000
<PAGE>
SCHEDULE II
Any bond, debenture, note, indenture, mortgage, deed of trust, license
or other agreement or instrument to which the Company or any of their material
subsidiaries is a party or by which any of them or their property is or may be
bound, which is effective and which is included or incorporated by reference as
an exhibit to the Company's annual report on Form 10K for the year ended
December 31, 1997, or quarterly report on Form 10Q for the quarter ended March
31, 1998.
<PAGE>
Exhibit 4.1
================================================================================
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC.,
as Issuer of the Notes,
PRICE COMMUNICATIONS CORPORATION,
as Issuer of the Common Stock
and
BANK OF MONTREAL TRUST COMPANY,
as Trustee
----------------------
INDENTURE
Dated as of [ ], 1998
----------------------
$[ ]
[ ]% Senior Exchangeable Payable-in-Kind Notes due 2008
(Exchangeable for Shares of Common Stock of Price Communications
Corporation)
================================================================================
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
Trust Indenture Act Indenture
Section Section
------- -------
<S> <C>
310(a)(1)................................................... 7.10
(a)(2)................................................... 7.10
(a)(3)................................................... N.A.
(a)(4)................................................... N.A.
(a)(5)................................................... 7.10
(b)...................................................... 7.10
(c)...................................................... N.A.
311(a)...................................................... 7.11
(b)...................................................... 7.11
(c)...................................................... N.A.
312(a)...................................................... 2.05
(b)...................................................... 12.03
(c)...................................................... 12.03
313(a)...................................................... 7.06
(b)...................................................... 7.06
(c)...................................................... 7.06
(d)...................................................... 7.06
314(a)(1)................................................... 4.09
(a)(2)................................................... N.A.
(a)(3)................................................... 4.09
(a)(4)................................................... 4.08
(b)...................................................... 10.03
(c)(1)................................................... 12.04
(c)(2)................................................... 12.04
(c)(3)................................................... N.A.
(d)...................................................... 10.06
(e)...................................................... 12.05
(f)...................................................... N.A.
315(a)...................................................... 7.01
(b)...................................................... 7.05
(c)...................................................... 7.01
(d)...................................................... 7.01
(e)...................................................... 6.13
316(a)(1)(A)................................................ 6.11
(a)(1)(B)................................................ 6.12
(a)(2)................................................... N.A.
(b)...................................................... 6.08
(c)...................................................... N.A.
317(a)(1)................................................... 6.03
</TABLE>
- ----------
"N.A." means "Not Applicable."
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of this Indenture.
<PAGE>
CROSS-REFERENCE TABLE
(continued)
<TABLE>
<CAPTION>
Trust Indenture Act Indenture
Section Section
------- -------
<S> <C>
(a)(2)...................................................... 6.04
(b)...................................................... 2.04
318(a)...................................................... 12.01
(b)...................................................... N.A.
(c)...................................................... N.A.
</TABLE>
- ----------
"N.A." means "Not Applicable."
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of this Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C>
SECTION 1.01. Definitions................................................1
SECTION 1.02. Incorporation by Reference of the Trust Indenture
Act.....................................................21
SECTION 1.03. Rules of Construction.....................................21
</TABLE>
<TABLE>
<CAPTION>
ARTICLE 2
THE SECURITIES
<S> <C>
SECTION 2.01. Form and Dating...........................................22
SECTION 2.02. Execution and Authentication..............................23
SECTION 2.03. Registrar and Paying Agent................................23
SECTION 2.04. Paying Agent to Hold Assets in Trust......................24
SECTION 2.05. Securityholder Lists......................................24
SECTION 2.06. Transfer and Exchange.....................................25
SECTION 2.07. Replacement Securities....................................27
SECTION 2.08. Outstanding Securities....................................27
SECTION 2.09. Treasury Securities.......................................28
SECTION 2.10. Temporary Securities......................................28
SECTION 2.11. Cancellation..............................................28
SECTION 2.12. Defaulted Interest........................................29
</TABLE>
<TABLE>
<CAPTION>
ARTICLE 3
REDEMPTION
<S> <C>
SECTION 3.01. Optional Redemption.......................................30
SECTION 3.02. Notices to Trustee........................................30
SECTION 3.03. Selection of Securities to Be Redeemed....................31
SECTION 3.04. Notice of Redemption......................................31
SECTION 3.05. Effect of Notice of Redemption............................32
SECTION 3.06. Deposit of Redemption Price...............................32
SECTION 3.07. Securities Redeemed in Part...............................33
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARTICLE 4
COVENANTS
<S> <C>
SECTION 4.01. [Reserved]................................................33
SECTION 4.02. Payment of Securities.....................................33
SECTION 4.03. Maintenance of Office or Agency...........................33
SECTION 4.04. Limitation on Restricted Payments.........................34
SECTION 4.05. Corporate Existence.......................................35
SECTION 4.06. Payment of Taxes and Other Claims.........................36
SECTION 4.07. Maintenance of Properties and Insurance...................36
SECTION 4.08. Compliance Certificate; Notice of Default.................36
SECTION 4.09. Reports...................................................37
SECTION 4.10. Limitation on Status as Investment Company................37
SECTION 4.11. Limitation on Transactions with Related Persons...........37
SECTION 4.12. Limitation on Incurrence of Additional
Indebtedness............................................38
SECTION 4.13. Limitations on Restricting Subsidiary Dividends...........41
SECTION 4.14. Limitations on Liens......................................42
SECTION 4.15. Limitation on Asset Sales and Sales of Subsidiary
Stock...................................................42
SECTION 4.16. Waiver of Stay, Extension or Usury Laws...................48
SECTION 4.17. [Reserved]................................................49
SECTION 4.18. Limitation on Lines of Business...........................49
SECTION 4.19. Restriction on Sale and Issuance of Subsidiary
Stock...................................................49
SECTION 4.20. Limitation on Pledged Shares..............................49
</TABLE>
<TABLE>
<CAPTION>
ARTICLE 5
SUCCESSOR CORPORATION
<S> <C>
SECTION 5.01. Limitation on Merger, Sale or Consolidation...............49
SECTION 5.02. Successor Corporation Substituted.........................50
</TABLE>
<TABLE>
<CAPTION>
ARTICLE 6
EVENTS OF DEFAULT AND REMEDIES
<S> <C>
SECTION 6.01. Events of Default.........................................51
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SECTION 6.02. Acceleration of Maturity Date; Rescission and
Annulment...............................................52
SECTION 6.03. Collection of Indebtedness and Suits for
Enforcement by Trustee..................................54
SECTION 6.04. Trustee May File Proofs of Claim..........................55
SECTION 6.05. Trustee May Enforce Claims Without Possession of
Securities..............................................55
SECTION 6.06. Priorities................................................56
SECTION 6.07. Limitation on Suits.......................................56
SECTION 6.08. Unconditional Right of Holders to Receive
Principal, Premium and Interest.........................57
SECTION 6.09. Rights and Remedies Cumulative............................57
SECTION 6.10. Delay or Omission Not Waiver..............................57
SECTION 6.11. Control by Holders........................................57
SECTION 6.12. Waiver of Past Default....................................58
SECTION 6.13. Undertaking for Costs.....................................58
SECTION 6.14. Restoration of Rights and Remedies........................59
</TABLE>
<TABLE>
<CAPTION>
ARTICLE 7
TRUSTEE
<S> <C>
SECTION 7.01. Duties of Trustee.........................................59
SECTION 7.02. Rights of Trustee.........................................60
SECTION 7.03. Individual Rights of Trustee..............................61
SECTION 7.04. Trustee's Disclaimer......................................61
SECTION 7.05. Notice of Default.........................................61
SECTION 7.06. Reports by Trustee to Holders.............................62
SECTION 7.07. Compensation and Indemnity................................62
SECTION 7.08. Replacement of Trustee....................................63
SECTION 7.09. Successor Trustee by Merger, Etc..........................64
SECTION 7.10. Eligibility; Disqualification.............................64
SECTION 7.11. Preferential Collection of Claims Against Company.........64
</TABLE>
<TABLE>
<CAPTION>
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
<S> <C>
SECTION 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance..............................................64
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SECTION 8.02. Legal Defeasance and Discharge............................64
SECTION 8.03. Covenant Defeasance.......................................65
SECTION 8.04. Conditions to Legal or Covenant Defeasance................65
SECTION 8.05. Deposited U.S. Legal Tender Equivalents and U.S.
Government Obligations to Be Held in Trust;
Other Miscellaneous Provisions..........................67
SECTION 8.06. Repayment to the Company..................................67
SECTION 8.07. Reinstatement.............................................68
</TABLE>
<TABLE>
<CAPTION>
ARTICLE 9
AMENDMENTS, SUPPLEMENTS AND WAIVERS
<S> <C>
SECTION 9.01. Supplemental Indentures Without Consent of Holders........68
SECTION 9.02. Amendments, Supplemental Indentures and Waivers
with Consent of Holders.................................69
SECTION 9.03. Compliance with TIA.......................................70
SECTION 9.04. Revocation and Effect of Consents.........................70
SECTION 9.05. Notation on or Exchange of Securities.....................71
SECTION 9.06. Trustee to Sign Amendments, Etc...........................71
</TABLE>
<TABLE>
<CAPTION>
ARTICLE 10
EXCHANGE OF SECURITIES
<S> <C>
SECTION 10.01. Mandatory Exchange........................................72
SECTION 10.02. Exchange Procedures.......................................72
SECTION 10.03. Compliance with Law.......................................72
SECTION 10.04. Adjustment of Exchange Price..............................72
SECTION 10.05. No Adjustment.............................................76
SECTION 10.06. Adjustment for Tax Purposes...............................76
SECTION 10.07. Notice of Adjustment......................................76
SECTION 10.08. Notice of Certain Transactions............................76
SECTION 10.09. Trustee's Disclaimer......................................77
SECTION 10.10. Fractional Shares.........................................77
SECTION 10.11. Taxes on Exchange.........................................77
SECTION 10.12. Satisfaction of Obligations under Securities..............77
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARTICLE 11
RIGHT TO REQUIRE REPURCHASE
<S> <C>
SECTION 11.01. Repurchase of Securities at Option of the Holder
upon a Change of Control................................78
</TABLE>
<TABLE>
<CAPTION>
ARTICLE 12
MISCELLANEOUS
<S> <C>
SECTION 12.01. TIA Controls..............................................80
SECTION 12.02. Notices...................................................80
SECTION 12.03. Communications by Holders with Other Holders..............82
SECTION 12.04. Certificate and Opinion as to Conditions Precedent........82
SECTION 12.05. Statements Required in Certificate or Opinion.............82
SECTION 12.06. Rules by Trustee, Paying Agent, Registrar.................82
SECTION 12.07. Legal Holidays............................................83
SECTION 12.08. Governing Law.............................................83
SECTION 12.09. No Adverse Interpretation of Other Agreements.............83
SECTION 12.10. No Recourse Against Others................................83
SECTION 12.11. Successors................................................84
SECTION 12.12. Duplicate Originals.......................................84
SECTION 12.13. Severability..............................................84
SECTION 12.14. Table of Contents, Headings, Etc..........................84
</TABLE>
Exhibit A Form of Security
<PAGE>
INDENTURE, dated as of [ ], 1998 by and among Price Communications
Cellular Holdings, Inc., a [New York] corporation (the "Company"), Price
Communications Corporation ("PCC"), a [New York] corporation, and Bank of
Montreal Trust Company, a New York banking corporation (the "Trustee").
Each party hereto agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Company's [
]% Senior Exchangeable Payable-in-Kind Notes due 2008:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acceptance Amount" shall have the meaning specified in Section
4.15.
"Accumulated Amount" shall have the meaning specified in Section
4.15.
"Acquired Person" shall have the meaning specified in the definition
of "Permitted Investment".
"Affiliate" means, with respect to any specified Person, (i) any
other Person directly or indirectly controlling or controlled by, or under
direct or indirect common control with, such specified Person or (ii) any
officer, director, or controlling stockholder of such other Person. For purposes
of this definition, the term "control" means the power to direct the management
and policies of a Person, directly or through one or more intermediaries,
whether through the ownership of voting securities, by contract, or otherwise,
or without limiting the foregoing, the beneficial ownership of 10% or more of
the voting power of the voting common equity of such Person (on a fully diluted
basis) or of warrants or other rights to acquire such equity (whether or not
presently exercisable).
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Annualized Operating Cash Flow" on any date means, with respect to
any Person, the Operating Cash Flow for the Reference Period multiplied by four.
"Annualized Operating Cash Flow Ratio" on any date (the "Transaction
Date") means, with respect to any Person and its Subsidiaries, the ratio of (i)
consolidated Indebtedness of such Person and its Subsidiaries on the Transaction
Date (after giving pro forma effect
<PAGE>
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to the Incurrence of any Indebtedness on such Transaction Date) divided by (ii)
the aggregate amount of Annualized Operating Cash Flow of such Person
(determined on a pro forma basis after giving effect to all acquisitions or
dispositions of businesses made by such Person and its Subsidiaries from the
beginning of the Reference Period through the Transaction Date as if such
acquisition or disposition had occurred at the beginning of such Reference
Period); provided that for purposes of such computation, in calculating
Annualized Operating Cash Flow and consolidated Indebtedness, (a) the
transaction giving rise to the need to calculate the Annualized Operating Cash
Flow Ratio will be assumed to have occurred (on a pro forma basis) on the first
day of the Reference Period; (b) the Incurrence of any Indebtedness during the
Reference Period or subsequent thereto and on or prior to the Transaction Date
(and the application of the proceeds therefrom to the extent used to retire
Indebtedness or to acquire businesses) will be assumed to have occurred (on a
pro forma basis) on the first day of such Reference Period; (c) Consolidated
Interest Expense attributable to any Indebtedness (whether existing or being
incurred) bearing a floating interest rate shall be computed as if the rate in
effect on the Transaction Date had been the applicable rate for the entire
period; and (d) all members of the consolidated group of such Person on the
Transaction Date that were acquired during the Reference Period or thereafter
and on or prior to the Transaction Date shall be deemed to be members of the
consolidated group of such Person for the entire Reference Period. When the
foregoing definition is used in connection with the Company and its Restricted
Subsidiaries, references to a Person and its Subsidiaries in the foregoing
definition shall be deemed to refer to the Company and its Restricted
Subsidiaries and when used in connection with any Restricted Subsidiary and its
Subsidiaries shall be deemed to refer to such Restricted Subsidiary and its
Subsidiaries that are Restricted Subsidiaries.
"Asset Sale" shall have the meaning specified in Section 4.15.
"Asset Sale Offer" shall have the meaning specified in Section 4.15.
"Asset Sale Offer Amount" shall have the meaning specified in
Section 4.15.
"Asset Sale Offer Period" shall have the meaning specified in
Section 4.15.
"Asset Sale Offer Price" shall have the meaning specified in Section
4.15.
"Asset Sale Purchase Date" shall have the meaning specified in
Section 4.15.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar Federal,
state or foreign law for the relief of debtors.
"Board of Directors" means, with respect to any Person, the Board of
Directors of such Person or any committee of the Board of Directors of such
Person authorized, with
<PAGE>
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respect to any particular matter, to exercise the power of the Board of
Directors of such Person.
"Board Resolution" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"Business Day" means a day that is not a Legal Holiday.
"Capitalized Lease Obligations" means obligations under a lease that
are required to be capitalized for financial reporting purposes in accordance
with GAAP, and the amount of Indebtedness represented by such obligations shall
be the capitalized amount of such obligations, as determined in accordance with
GAAP.
"Capital Stock" means, with respect to any Person, any capital stock
of such Person and shares, interests, participations or other ownership
interests (however designated) of any Person and any rights (other than debt
securities convertible into capital stock), warrants and options to purchase any
of the foregoing, including (without limitation) each class of common stock and
preferred stock of such Person if such Person is a corporation and each general
and limited partnership interest of such Person if such Person is a partnership.
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit to the United
States of America is pledged in support thereof) in each case maturing within
one year after the date of acquisition, (ii) time deposits and certificates of
deposit and commercial paper issued by the parent corporation of any domestic
commercial bank of recognized standing having capital and surplus in excess of
$500 million and commercial paper issued by others rated at least A-2 or the
equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody's
and in each case maturing within one year after the date of acquisition and
(iii) investments in money market funds substantially all of whose assets
comprise securities of the types described in clauses (i) and (ii) above.
"Cellular System" means a domestic public cellular mobile radio
telecommunications system
"Change of Control" means (i) other than any transaction in which
the resulting transferee Person need not assume the Securities as provided in
the proviso to clause (i)(b) of Section 5.01, any sale, transfer or other
conveyance, whether direct or indirect, of a majority of the fair market value
of the assets of the Company or Parent, on a consolidated basis, in one
transaction or a series of related transactions, if, immediately after giving
effect to such transaction, any "person" or "group" (as such terms are used for
purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not
applicable), other than an Excluded Person or Ex-
<PAGE>
-4-
cluded Group, is or becomes the "beneficial owner" (as such term is used in Rule
13d-3 promulgated pursuant to the Exchange Act), directly or indirectly, of more
than 50% of the equity of the transferee, (ii) any person or "group" (as such
terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act,
whether or not applicable), other than an Excluded Person or Excluded Group, is
or becomes the "beneficial owner" (as such term is used in Rule 13d-3
promulgated pursuant to the Exchange Act), directly or indirectly, of more than
50% of the equity of the Company or Parent then outstanding normally entitled to
vote in elections of directors, or (iii) during any period of 12 consecutive
months after the Issue Date, individuals who at the beginning of any such
12-month period constituted the Board of Directors of the Company or Parent
(together with any new directors whose election by such Board or whose
nomination for election by the shareholders of the Company or Parent was
approved by a vote of a majority of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company or Parent then in office.
"Change of Control Offer" shall have the meaning specified in
Section 11.01.
"Change of Control Offer Period" shall have the meaning specified in
Section 11.01.
"Change of Control Purchase Date" shall have the meaning specified
in Section 11.01.
"Change of Control Purchase Price" shall have the meaning specified
in Section 11.01.
"Change of Control Put Date" shall have the meaning specified in
Section 11.01.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor statute.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture, and thereafter means such
successor.
"Company Systems" shall have the meaning specified in Section 4.15.
"Computation Period" shall have the meaning specified in Section
4.04.
"Consolidated Interest Expense" of any Person means, for any period,
the aggregate amount (without duplication and determined in each case in
accordance with GAAP)
<PAGE>
-5-
of (i) interest expensed or capitalized, paid, accrued, or scheduled to be paid
or accrued (including, in accordance with the following sentence, interest
attributable to the Capitalized Lease Obligations) of such Person and its
consolidated Subsidiaries during such period, including (a) original issue
discount and non-cash interest payments or accruals on any Indebtedness, (b) the
interest portion of all deferred payment obligations, and (c) all commissions,
discounts and other fees and charges owed with respect to bankers' acceptances
and letters of credit financings and currency and Interest Swap and Hedging
Obligations, in each case to the extent attributable to such period, and (ii)
the amount of dividends accrued or payable by such Person or any of its
consolidated Subsidiaries in respect of Preferred Stock (other than by
Restricted Subsidiaries of such Person to such Person or such Person's Wholly
Owned Subsidiaries). For purposes of this definition, (x) interest on a
Capitalized Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by the Company to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP and (y) interest expense
attributable to any Indebtedness represented by the guaranty by such Person or a
Subsidiary of such Person of an obligation of another Person shall be deemed to
be the interest expense attributable to the Indebtedness guaranteed. When the
foregoing definition is used in connection with the Company and its Restricted
Subsidiaries, references to a Person and its Subsidiaries in the foregoing
definition shall be deemed to refer to the Company and its Restricted
Subsidiaries and when used in connection with any Restricted Subsidiary and its
Subsidiaries shall be deemed to refer to such Restricted Subsidiary and its
Subsidiaries that are Restricted Subsidiaries.
"Consolidated Net Income" of any Person for any period means the net
income (or loss) of such Person and its consolidated Subsidiaries for such
period, determined (on a consolidated basis) in accordance with GAAP, adjusted
to exclude (only to the extent included in computing such net income (or loss)
and without duplication) (i) all extraordinary gains and losses and gains and
losses that are nonrecurring (including as a result of Asset Sales outside the
ordinary course of business), (ii) the net income, if positive, of any Person
that is not a Subsidiary in which such Person or any of its Subsidiaries has an
interest, except to the extent of the amount of dividends or distributions
actually paid to such Person or a Subsidiary of such Person that both (a) are
actually paid in cash to such Person or a Subsidiary of such Person during such
period and (b) when taken together with all other dividends and distributions
paid during such period in cash to such Person or a Subsidiary of such Person,
are not in excess of such Person's pro rata share of such other Person's
aggregate net income earned during such period, and (iii) except as provided in
the definition of "Annualized Operating Cash Flow Ratio", the net income (or
loss) of any Subsidiary acquired in a pooling of interests transaction for any
period prior to the date of such acquisition. When the foregoing definition is
used in connection with the Company and its Restricted Subsidiaries, references
to a Person and its Subsidiaries in the foregoing definition shall be deemed to
refer to the Company and its Restricted Subsidiaries and when used in connection
with any Restricted
<PAGE>
-6-
Subsidiary and its Subsidiaries shall be deemed to refer to such Restricted
Subsidiary and its Subsidiaries that are Restricted Subsidiaries.
"Corporate Trust Office" means the principal office of the Trustee
at which at any particular time its corporate trust business shall be
administered, which address as of the date hereof is 88 Pine Street, 19th Floor,
New York, New York 10005.
"Credit Facility" means, at any time of determination, any credit
agreement or indenture designated by the Company to be the "Credit Facility,"
together with the related documents thereto (including, without limitation, any
guarantee agreements and security documents), in each case as such agreements
may be amended (including any amendment and restatement thereof), supplemented
or otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring or adding
Restricted Subsidiaries of the Company as additional borrowers or guarantors
thereunder) all or any portion of the Indebtedness under such agreement or any
successor or replacement agreement and whether by the same or any other agent,
lender or group of lenders.
"Covenant Defeasance" shall have the meaning specified in Section
8.03.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect
against fluctuation in currency values.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event or condition that is, or after notice or
passage of time or both would be, an Event of Default.
"Defaulted Interest" shall have the meaning specified in Section
2.12.
"Definitive Securities" means Securities that are in the form of
Security attached hereto as Exhibit A that do not include the information called
for by footnote 1 thereof.
"Depository" means, with respect to the Securities issuable or
issued in whole or in part in global form, the Person specified in Section 2.03
as the Depository with respect to the Securities, until a successor shall have
been appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depository" shall mean or include such successor.
"Discount Rights" shall have the meaning specified in Section 10.04.
<PAGE>
-7-
"Disqualified Capital Stock" means, with respect to any Person,
Capital Stock of such Person that, by its terms or by the terms of any security
into which it is convertible, exercisable or exchangeable, is, or upon the
happening of any event or the passage of time would be, required to be redeemed
or repurchased (including at the option of the holder thereof) by such Person or
any of its Subsidiaries, in whole or in part, on or prior to the Stated Maturity
of the Notes; provided, however, that Capital Stock will not be deemed to be
Disqualified Capital Stock if it may only be so redeemed or repurchased solely
in consideration of Qualified Capital Stock of the Company or Parent.
"Distribution Date" shall have the meaning specified in Section
10.04.
"DLJ Pop Book" means The Wireless Communications Industry survey
published by Donaldson, Lufkin & Jenrette Securities Corporation.
"DTC" shall have the meaning specified in Section 2.03.
"Equity Offering" means with respect to any Person, the sale or
offering of any Capital Stock of such Person that is not Disqualified Capital
Stock.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute.
"Event of Default" shall have the meaning specified in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, from time to time, and the rules and regulations promulgated by the SEC
thereunder, and any successor statute.
"Exchange Capital Stock" shall have the meaning specified in Section
4.15.
"Exchange Price" shall have the meaning specified in Section 10.01.
"Exchange Shares" shall have the meaning specified in Section 10.02.
"Excluded Group" means a "group" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) that includes one or more Excluded Persons;
provided, however, that the voting power of the Capital Stock of the Company or
Parent "beneficially owned" (as such term is used in Rule 13d-3 promulgated
under the Exchange Act) by such Excluded Persons (without attribution to such
Excluded Persons of the ownership by other members of the "group") represents a
majority of the voting power of the Capital Stock "beneficially owned" (as such
term is used in Rule 13d-3 promulgated under the Exchange Act) by such group.
<PAGE>
-8-
"Excluded Person" means Robert Price, Parent (so long as not
controlled by anyone other than Robert Price) and any Affiliate of any of the
foregoing that is wholly owned by any of the foregoing.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries in existence and outstanding on the Issue Date.
"Final Put Date" shall have the meaning specified in Section 4.15.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board ("FASB") or, if FASB
ceases to exist, any successor thereto; provided, however, that for purposes of
determining compliance with covenants in this Indenture, "GAAP" means such
generally accepted accounting principles as in effect as of the Issue Date.
"Global Security" means a Security that contains the paragraph
referred to in footnote 1 to the form of Security attached hereto as Exhibit A.
"Holder" or "Securityholder" means a Person in whose name a Security
is registered. The Holder of a Security will be treated as the owner of such
Security for all purposes.
"Incur" shall have the meaning specified in Section 4.12.
"Indebtedness" of any Person means, without duplication, (i) all
liabilities and obligations, contingent or otherwise, of such Person, (a) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), (b) evidenced
by bonds, notes, debentures or similar instruments, (c) representing the balance
deferred and unpaid of the purchase price of any property or services, except
(other than accounts payable or other obligations to trade creditors which have
remained unpaid for greater than 90 days past their original due date or to
financial institutions, which obligations are not being contested in good faith
and for which appropriate reserves have been established) those incurred in the
ordinary course of its business that would constitute ordinarily a trade payable
to trade creditors, (d) evidenced by bankers' acceptances or similar instruments
issued or accepted by banks, (e) for the payment of money relating to a
Capitalized Lease Obligation, or (f) evidenced by a letter of credit or a
reimbursement obligation of such Person with respect to any letter of credit;
(ii) all obligations of such Person under Interest Swap and Hedging Obligations;
(iii) all liabilities of others of the kind described in the preceding clauses
(i) or (ii) that such Person has guaranteed or that is otherwise its legal
liability or which are secured by any assets or property of such Person and all
obligations to
<PAGE>
-9-
purchase, redeem or acquire any Capital Stock; (iv) all Disqualified Capital
Stock of such Person and all Preferred Stock of such Person's Subsidiaries; and
(v) any and all deferrals, renewals, extensions, refinancing and refundings
(whether direct or indirect) of, or amendments, modifications or supplements to,
any liability of the kind described in any of the preceding clauses (i), (ii),
(iii), or (iv) or this clause (v), whether or not between or among the same
parties; provided that the outstanding principal amount at any date of any
Indebtedness issued with original issue discount is the face amount of such
Indebtedness less the remaining unamortized portion of the original issue
discount of such Indebtedness at such date.
"Indenture" means this Indenture, as amended or supplemented from
time to time in accordance with the terms hereof.
"Interest Payment Date" means the stated due date of an installment
of interest on the Securities.
"Interest Swap and Hedging Obligations" means any obligations of any
Person pursuant to any interest rate swaps, caps, collars and similar
arrangements providing protection against fluctuations in interest rates. For
purposes of this Indenture, the amount of such obligations shall be the amount
determined in respect thereof as of the end of the then most recently ended
fiscal quarter of such Person, based on the assumption that such obligation had
terminated at the end of such fiscal quarter, and in making such determination,
if any agreement relating to such obligation provides for the netting of amounts
payable by and to such Person thereunder or if any such agreement provides for
the simultaneous payment of amounts by and to such Person, then in each such
case, the amount of such obligations shall be the net amount so determined, plus
any premium due upon default by such Person.
"Investment" by any Person in any other Person means (without
duplication) (i) the acquisition (whether by purchase, merger, consolidation or
otherwise) by such Person (whether for cash, property, services, securities or
otherwise) of Capital Stock, bonds, notes, debentures, partnership or other
ownership interests or other securities of such other Person or any agreement to
make any such acquisition; (ii) the making by such Person of any deposit with,
or advance, loan or other extension of credit to, such other Person (including
the purchase of property from another Person subject to an understanding or
agreement, contingent or otherwise, to resell such property to such other
Person) or any commitment to make any such advance, loan or extension; (iii) the
entering into by such Person of any guarantee of, or other contingent obligation
with respect to, Indebtedness or other liability of such other Person; (iv) the
making of any capital contribution by such Person to such other Person; and (v)
the designation by the Board of Directors of the Company of any Person to be an
Unrestricted Subsidiary. For purposes of Section 4.04, (x) "Investment" shall
include and be valued at the fair market value of the net assets of any
Restricted Subsidiary at the time that such Restricted Subsidiary is designated
an Unrestricted Subsidiary and shall exclude the fair market value of
<PAGE>
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the net assets of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary and (y) the amount of any
Investment shall be the fair market value of such Investment plus the fair
market value of all additional Investments by the Company or any of its
Restricted Subsidiaries at the time any such Investment is made; provided, that,
for purposes of this sentence, the fair market value of net assets in excess of
$5,000,000 shall be as determined by an independent appraiser of national
reputation.
"Issue Date" means the time and date of the first issuance of the
Securities under this Indenture.
"Junior Indebtedness" means Indebtedness of the Company that (i)
requires no payment of principal prior to or on the date on which all principal
of and interest on the Securities is paid in full and (ii) is subordinate and
junior in right of payment to the Securities in all respects.
"Legal Defeasance" shall have the meaning specified in Section 8.02.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in New York, New York are authorized or obligated by law or
executive order to close.
"Lien" means any mortgage, lien, pledge, charge, security interest,
or other encumbrance of any kind, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement and any lease deemed to constitute a security interest and
any option or other agreement to give any security interest).
"Maturity Date" means, when used with respect to any Security, the
date specified on such Security as the fixed date on which the final installment
of principal of such Security is due and payable (in the absence of any
acceleration thereof pursuant to the provisions of this Indenture regarding
acceleration of Indebtedness or any Change of Control Offer, Proceeds Purchase
Offer or Asset Sale Offer).
"Minimum Accumulation Date" shall have the meaning specified in
Section 4.21.
"Moody's" means Moody's Investors Service, Inc.
"MSA" shall have the meaning specified in the definition of "Pops".
"Net Cash Proceeds" means the aggregate amount of cash and Cash
Equivalents received by the Company and its Restricted Subsidiaries in respect
of an Asset Sale (including upon the conversion to cash and Cash Equivalents of
(A) any note or installment
<PAGE>
-11-
receivable at any time, or (B) any other property as and when any cash and Cash
Equivalents are received in respect of any property received in an Asset Sale
but only to the extent such cash and Cash Equivalents are received within one
year after such Asset Sale), less the sum of (i) all reasonable out-of-pocket
fees, commissions and other expenses incurred in connection with such Asset
Sale, including the amount (estimated in good faith by the Board of Directors of
the Company) of income, franchise, sales and other applicable taxes required to
be paid by the Company or any Restricted Subsidiary of the Company in connection
with such Asset Sale and (ii) the aggregate amount of cash so received which is
used to retire any existing Indebtedness of the Company ranking on a parity with
the Securities or Indebtedness of its Restricted Subsidiaries, as the case may
be, which is required to be repaid in connection with such Asset Sale or is
secured by a Lien on the property or assets of the Company or any of its
Restricted Subsidiaries, as the case may be.
"Net Pops" of any Person with respect to any Cellular System means
the Pops of the MSA or RSA served by such Cellular System multiplied by the
direct and/or indirect percentage interest of such Person in the entity licensed
or designated to receive an authorization by the Federal Communications
Commission to construct or operate a Cellular System in that MSA or RSA.
"Net Proceeds" means the aggregate net proceeds (including the fair
market value of non-cash proceeds constituting equipment or other assets of a
type generally used in a Related Business, in an amount reasonably determined by
the Board of Directors of the Company for amounts less than or equal to
$5,000,000 and by a financial advisor or appraiser of national reputation for
equal or greater amounts) received by a Person from the sale of Qualified
Capital Stock (other than to a Subsidiary of such Person) after payment of
out-of-pocket expenses, commissions and discounts incurred in connection
therewith.
"Non-Recourse Restricted Subsidiary" shall have the meaning
specified in the definition of "Permitted Acquisition Indebtedness".
"Obligation" means any principal, premium, interest (including
interest accruing subsequent to a bankruptcy or other similar proceeding whether
or not such interest is an allowed claim enforceable against the Company in a
bankruptcy case under Federal bankruptcy law), penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable pursuant
to the terms of the documentation governing any Indebtedness.
"Officer" means, with respect to the Company, the Chief Executive
Officer, the President, any Vice President, the Chief Financial Officer, the
Treasurer, the Controller, or the Secretary of the Company.
<PAGE>
-12-
"Officers' Certificate" means, with respect to the Company or any
Parent, a certificate signed by two Officers or by an Officer and an Assistant
Secretary of the Company or such Parent, respectively, and otherwise complying
with the requirements of Sections 12.04 and 12.05.
"Operating Cash Flow" of any Person means (i) with respect to any
period, the Consolidated Net Income of such Person for such period, plus (ii)
the sum, without duplication (and only to the extent such amounts are deducted
from net revenues in determining such Consolidated Net Income), of (a) the
provisions for income taxes for such period for such Person and its consolidated
Subsidiaries, (b) depreciation, amortization and other non-cash charges of such
Person and its consolidated Subsidiaries and (c) Consolidated Interest Expense
of such Person for such period, determined, in each case, on a consolidated
basis for such Person and its consolidated Subsidiaries in accordance with GAAP,
less (iii) the amount of all cash payments made during such period by such
Person and its Subsidiaries to the extent such payments relate to non-cash
charges that were added back in determining Operating Cash Flow for such period
or for any prior period. When the foregoing definition is used in connection
with the Company and its Restricted Subsidiaries, references to a Person and its
Subsidiaries in the foregoing definition shall be deemed to refer to the Company
and its Restricted Subsidiaries and when used in connection with any Restricted
Subsidiary and its Subsidiaries shall be deemed to refer to such Restricted
Subsidiary and its Subsidiaries that are Restricted Subsidiaries.
"Opinion of Counsel" means a written opinion from legal counsel who
is reasonably acceptable to the Trustee complying with the requirements of
Sections 12.04 and 12.05.
"Parent" means PCC or any directly or indirectly wholly owned
subsidiary of PCC that directly or indirectly wholly owns the Company.
"Paying Agent" shall have the meaning specified in Section 2.03.
"PCC" means Price Communications Corporation, a [New York]
corporation, and its successors and assigns.
"PCC Shares" means shares of the common stock, par value $0.01, of
PCC.
"Permitted Acquisition Indebtedness" means, with respect to any
Person, Indebtedness Incurred in connection with the acquisition of property,
businesses or assets which, or Capital Stock of a Person all or substantially
all of whose assets, are of a type generally used in a Related Business;
provided, that, in the case of the Company or its Restricted Subsidiaries, as
applicable, (x) (i) the Company's or any of its Restricted Subsidiaries', as the
<PAGE>
-13-
case may be, Annualized Operating Cash Flow Ratio, after giving effect to such
acquisition and such Incurrence on a pro forma basis, is no greater than such
ratio prior to giving pro forma effect to such acquisition and such Incurrence;
(ii) the Company's or such Restricted Subsidiary's, as the case may be,
consolidated Indebtedness, divided by the Net Pops of the Company or such
Restricted Subsidiary, as the case may be, and its Restricted Subsidiaries, in
each case giving pro forma effect to the acquisition and such Incurrence, does
not exceed $175; and (iii) after giving effect to such acquisition and such
Incurrence the acquired property, businesses or assets or such Capital Stock is
owned directly by the Company or such Restricted Subsidiary, as the case may be,
or a Wholly Owned Restricted Subsidiary thereof or (y) (i) under the terms of
such Indebtedness and pursuant to applicable law, no recourse could be had for
the payment of principal, interest or premium with respect to such Indebtedness
or for any claim based thereon against the Company or any Restricted Subsidiary
of the Company other than the obligor of such Indebtedness and its Subsidiaries
or any of their property or assets other than the Capital Stock of such obligor
or its Subsidiaries, (ii) the obligor of such Indebtedness shall have,
immediately after giving effect to such acquisition and such Incurrence on a pro
forma basis, a ratio of Annualized Operating Cash Flow as of the date of the
acquisition to the product of Consolidated Interest Expense for the Reference
Period multiplied by four (but excluding from Consolidated Interest Expense all
amounts that are not required to be paid in cash on a current basis) of at least
1.0 to 1, (iii) since the Issue Date no Permitted Investment (other than as
permitted by clause (viii) of the definition of "Permitted Investment" below)
shall have been made in such obligor or its Subsidiaries and (iv) immediately
subsequent to the Incurrence of such Indebtedness, the obligor thereof shall be
a Restricted Subsidiary and shall have been designated by the Company (as
evidenced by an Officers' Certificate delivered promptly to the Trustee) to be a
"Non-Recourse Restricted Subsidiary".
"Permitted Investment" means (i) Investments in Cash Equivalents;
(ii) Investments in the Company or a Restricted Subsidiary (other than a
Non-Recourse Restricted Subsidiary); (iii) Investments in a Person substantially
all of whose assets are of a type generally used in a Related Business (an
"Acquired Person") if, as a result of such Investments, (A) the Acquired Person
immediately thereupon becomes a Restricted Subsidiary (other than a Non-Recourse
Restricted Subsidiary) or (B) the Acquired Person immediately thereupon either
(1) is merged or consolidated with or into the Company or any of its Restricted
Subsidiaries (other than a Non-Recourse Restricted Subsidiary) and the surviving
Person is the Company or a Restricted Subsidiary (other than a Non-Recourse
Restricted Subsidiary) or (2) transfers or conveys all or substantially all of
its assets to, or is liquidated into, the Company or any of its Restricted
Subsidiaries (other than a Non-Recourse Restricted Subsidiary); (iv) Investments
in accounts and notes receivable acquired in the ordinary course of business;
(v) any securities received in connection with an Asset Sale (other than those
of a Non-Recourse Restricted Subsidiary) and any investment with the Net Cash
Proceeds from
<PAGE>
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any Asset Sale in Capital Stock of a Person, all or substantially all of whose
assets are of a type used in a Related Business, that complies with Section
4.15; (vi) any guarantee issued by a Restricted Subsidiary in respect of
Indebtedness of a Restricted Subsidiary Incurred in compliance with this
Indenture; (vii) advances and prepayments for asset purchases in the ordinary
course of business in a Related Business of the Company or a Restricted
Subsidiary; (viii) Investments in Non-Recourse Restricted Subsidiaries with the
proceeds of contributions irrevocably and unconditionally received without
restriction by the Company from Parent; and (ix) customary loans or advances
made in the ordinary course of business to officers, directors or employees of
the Company or any of its Restricted Subsidiaries for travel, entertainment, and
moving and other relocation expenses.
"Permitted Lien" means (a) Liens existing on the Issue Date; (b)
Liens imposed by governmental authorities for taxes, assessments or other
charges not yet subject to penalty or which are being contested in good faith
and by appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the Company in accordance with GAAP; (c) statutory
liens of carriers, warehousemen, mechanics, materialmen, landlords, repairmen or
other like Liens arising by operation of law in the ordinary course of business;
provided, however, that (i) the underlying obligations are not overdue for a
period of more than 30 days, and (ii) such Liens are being contested in good
faith and by appropriate proceedings and adequate reserves with respect thereto
are maintained on the books of the Company in accordance with GAAP; (d) Liens
securing the performance of bids, trade contracts (other than borrowed money),
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature Incurred in the ordinary course of business;
(e) easements, rights-of-way, zoning, similar restrictions and other similar
encumbrances or title defects which, singly or in the aggregate, do not in any
case materially detract from the value of the property subject thereto (as such
property is used by the Company or any of its Restricted Subsidiaries) or
interfere with the ordinary conduct of the business of the Company or any of its
Restricted Subsidiaries; (f) Liens arising by operation of law in connection
with judgments, only to the extent, for an amount and for a period not resulting
in an Event of Default with respect thereto; (g) pledges or deposits made in the
ordinary course of business in connection with worker's compensation,
unemployment insurance and other types of social security legislation; (h) Liens
in favor of the Trustee arising under this Indenture; (i) Liens securing
Permitted Acquisition Indebtedness, which either (A) were not Incurred or issued
in anticipation of such acquisition or (B) secure Permitted Acquisition
Indebtedness meeting the requirements set forth in clause (y) of the definition
thereof; (j) Liens securing pari passu Indebtedness or Indebtedness of a
Restricted Subsidiary that was incurred in accordance with Section 4.12; (k)
Liens securing Indebtedness of a Person existing at the time such Person becomes
a Restricted Subsidiary or is merged with or into the Company or a Restricted
Subsidiary; provided, however, that such Liens were in existence prior to the
date of such acquisition, merger or consolidation, were not incurred in
anticipation thereof, and do not extend to any
<PAGE>
-15-
other assets; (l) Liens arising from Purchase Money Indebtedness permitted under
this Indenture; (m) Liens securing Refinancing Indebtedness Incurred to
refinance any Indebtedness that was previously so secured in a manner no more
adverse to the Holders than the terms of the Liens securing such refinanced
Indebtedness; and (n) Liens in favor of the Company or a Wholly Owned Restricted
Subsidiary (other than a Non-Recourse Restricted Subsidiary).
"Person" means any corporation, individual, joint stock company,
joint venture, partnership, unincorporated association, governmental regulatory
entity, country, state or political subdivision thereof, trust, municipality or
other entity.
"Pops" means, as of any date of determination, the greater of the
estimate of the population of a Metropolitan Statistical Area ("MSA") or Rural
Service Area ("RSA") derived from (i) the most recent Donnelly Market Service
and (ii) the most recent DLJ Pop Book; provided, however, that (x) if such
statistics are no longer printed in either the Donnelly Market Service or the
DLJ Pop Book, or either such source is no longer published, the then currently
published source of the two containing such information shall be used; (y) if
such statistics are no longer printed in either such source, or both sources are
no longer published, the statistics in the most recent Rand McNally Commercial
Atlas shall be used; and (z) if such statistics are no longer printed in the
Rand McNally Commercial Atlas or the Rand McNally Commercial Atlas is no longer
published, another nationally recognized source of such information shall be
used.
"Preferred Stock" means Capital Stock, other than common stock of an
issuer having no preferences or privileges as to the payment of dividends or the
distribution of the issuer's assets over any other class of such issuer's
Capital Stock.
"principal" of any Indebtedness means the principal of such
Indebtedness plus, without duplication, applicable premium, if any, on such
Indebtedness.
"property" means any right or interest in or to property or assets
of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Prospectus" means that certain Prospectus, dated [ ], 1998,
relating to the issuance and sale of the Securities to the Underwriters.
"Purchase Money Indebtedness" means Indebtedness of the Company or
its Restricted Subsidiaries Incurred in connection with the purchase of property
or assets for the business of the Company or its Restricted Subsidiaries,
provided that the recourse of the lenders with respect to such Indebtedness is
limited solely to the property or assets so purchased without further recourse
to either the Company or any of its Restricted Subsidiaries.
<PAGE>
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"Qualified Capital Stock" means any Capital Stock of a Person that
is not Disqualified Capital Stock.
"Record Date" means a Record Date specified in the Securities
whether or not such Record Date is a Business Day.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to Article 3 of this
Indenture and Paragraph 5 in the form of Security.
"Redemption Price," when used with respect to any Security to be
redeemed, means the redemption price for such redemption pursuant to Article 3
of this Indenture and Paragraph 5 in the form of Security, which shall include,
without duplication, in each case, any accrued and unpaid interest to the
Redemption Date.
"Reference Period" with regard to any Person means the last full
fiscal quarter of such Person for which financial information (which the Company
shall use its best efforts to compile in a timely manner) in respect thereof is
available ended on or immediately preceding any date upon which any
determination is to be made pursuant to the terms of the Securities or this
Indenture.
"Refinancing Indebtedness" means Indebtedness or Disqualified
Capital Stock (a) issued in exchange for, or the proceeds from the issuance and
sale of which are used substantially concurrently to repay, redeem, defease,
refund, refinance, discharge or otherwise retire for value, in whole or in part,
or (b) constituting an amendment, modification or supplement to, or a deferral
or renewal of ((a) and (b) above are, collectively, a "Refinancing") any
Indebtedness or Disqualified Capital Stock in a principal amount or, in the case
of Disqualified Capital Stock, liquidation preference (or if such Indebtedness
or Disqualified Capital Stock does not require cash payments prior to maturity
or is otherwise issued at a discount, the original issue price of such
Indebtedness or Disqualified Capital Stock), not to exceed the sum of (x) the
lesser of (i) the principal amount or, in the case of Disqualified Capital
Stock, liquidation preference of the Indebtedness or Disqualified Capital Stock
so Refinanced and (ii) if such Indebtedness being Refinanced was issued with an
original issue discount, the accreted value thereof (as determined in accordance
with GAAP) at the time of such Refinancing, (y) the amount of any premium
required to be paid in connection with such refinancing pursuant to the terms of
such Indebtedness and (z) all other customary fees and expenses of the Company
or such Restricted Subsidiary reasonably Incurred in connection with such
refinancing; provided, however that (A) Refinancing Indebtedness issued by any
Restricted Subsidiary of the Company shall only be used to Refinance outstanding
Indebtedness or Disqualified Capital Stock of such Restricted Subsidiary, (B)
Refinancing Indebtedness shall (x) not have a Weighted Average Life shorter than
the Indebtedness or Disqualified Capital Stock to
<PAGE>
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be so refinanced at the time of such Refinancing and (y) in all respects, be no
less subordinated or junior, if applicable, to the rights of Holders than was
the Indebtedness or Disqualified Capital Stock to be refinanced and (C) such
Refinancing Indebtedness shall have no installments of principal (or redemption
payment) scheduled to come due earlier than the scheduled maturity of any
installment of principal (or redemption payment) of the Indebtedness or
Disqualified Capital Stock to be so refinanced which was scheduled to come due
prior to the Stated Maturity.
"Registrar" means the office or agency in the Borough of Manhattan,
The City of New York, where the Securities may be presented for registration of
transfer or for exchange.
"Related Business" means any business directly related to the
ownership, development, operation, and acquisition of wireless cellular
communications systems.
"Related Person" means, with respect to any Person, (i) any
Affiliate of such Person or any spouse, immediate family member, or other
relative who has the same principal residence of any Affiliate of such Person
and (ii) any trust in which any Person described in clause (i) above has a
beneficial interest.
"Related Person Transaction" shall have the meaning specified in
Section 4.11.
"Restricted Partnership" shall have the meaning specified in Section
4.19.
"Restricted Payment" means, with respect to any Person, (i) any
dividend or other distribution on shares of Capital Stock of such Person, its
Parent, or any Subsidiary of such Person, (ii) any payment on account of the
purchase, redemption or other acquisition or retirement for value, or any
payment in respect of any amendment (in anticipation of or in connection with
any such retirement, acquisition or defeasance) in whole or in part, of any
shares of Capital Stock of such Person, its Parent, or any Subsidiary of such
Person held by Persons other than such Person or any of its Restricted
Subsidiaries (other than any Non-Recourse Restricted Subsidiary), (iii) any
defeasance, redemption, repurchase or other acquisition or retirement for value,
or any payment in respect of any amendment (in anticipation of or in connection
with any such retirement, acquisition or defeasance) in whole or in part, of any
Indebtedness of the Company (other than the scheduled repayment thereof at
maturity and any mandatory redemption or mandatory repurchase thereof pursuant
to the terms thereof) by such Person or a Subsidiary of such Person that is
subordinate in right of payment to, or ranks pari passu (other than the
Securities) with, the Securities (other than in exchange for Refinancing
Indebtedness permitted to be Incurred under this Indenture and except for any
such defeasance, redemption, repurchase, other acquisition or payment in respect
of Indebtedness held by any Restricted Subsidiary) and (iv) any Investment
(other than a Permitted In-
<PAGE>
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vestment); provided, however, that the term "Restricted Payment" does not
include (i) any dividend, distribution or other payment on shares of Capital
Stock of the Company or any Restricted Subsidiary solely in shares of Qualified
Capital Stock, (ii) any dividend, distribution or other payment to the Company,
or any dividend to any of its Restricted Subsidiaries (other than any
Non-Recourse Restricted Subsidiary), by any of its Subsidiaries, and (iii) the
purchase, redemption or other acquisition or retirement for value of shares of
Capital Stock of any Restricted Subsidiary (other than Non-Recourse Restricted
Subsidiaries) held by Persons other than the Company or any of its Restricted
Subsidiaries.
"Restricted Subsidiary" means any Subsidiary of the Company which at
the time of determination is not an Unrestricted Subsidiary. The Board of
Directors of the Company may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary only if, immediately before and after giving effect to
such designation, there would exist no Default or Event of Default and the
Company could incur at least $1.00 of Indebtedness pursuant to the Annualized
Operating Cash Flow Ratio test of the second paragraph of Section 4.12, on a pro
forma basis taking into account such designation.
"RSA" shall have the meaning specified in the definition of "Pops".
"S&P" means Standard & Poor's Ratings Services, a Division of The
McGraw-Hill Companies, Inc.
"SEC" means the Securities and Exchange Commission.
"Securities" means the $150.0 million of [ ]% Senior Exchangeable
Payable-in-Kind Notes due 2008 of the Company issued pursuant to this Indenture.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and the rules and regulations of the SEC promulgated thereunder,
and any successor statute.
"Securities Custodian" means the Trustee, as custodian for the
Depository with respect to the Securities in global form, or any successor
entity thereto.
"Senior Indebtedness" means any Indebtedness of the Company,
including the Securities, other than Indebtedness of the Company as to which the
instrument creating or evidencing the same, or pursuant to which the same is
outstanding, provides that such Indebtedness shall be subordinated or junior in
right of payment to the Securities.
"Significant Restricted Subsidiary" at any date of measurement,
means one or more Restricted Subsidiaries having an aggregate net book value of
assets in excess of 5% of
<PAGE>
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the net book value of the assets of the Company and its Restricted Subsidiaries
on a consolidated basis.
"Special Rights" shall have the meaning specified in Section 4.19.
"Stated Maturity" means the date fixed for the payment of any
principal or premium pursuant to this Indenture and the Securities, including
the Maturity Date, upon redemption, acceleration, Asset Sale Offer, Proceeds
Purchase Offer, Change of Control Offer or otherwise.
"Subsidiary" with respect to any Person, means (i) a corporation at
least fifty percent of whose Capital Stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by such Person and one or more Subsidiaries of such Person or by
one or more Subsidiaries of such Person, or (ii) a partnership in which such
Person or a Subsidiary of such Person is, at the time, a general partner of such
partnership, or (iii) any Person in which such Person, one or more Subsidiaries
of such Person, or such Person and one or more Subsidiaries of such Person,
directly or indirectly, at the date of determination thereof has (x) at least a
fifty percent ownership interest or (y) the power to elect or direct the
election of the directors or other governing body of such Person.
"TIA" means the Trust Indenture Act of 1939, as amended from time to
time.
"Trading Day" means a Business Day other than a day on which trading
on the American Stock Exchange (or such other nationally recognized exchange or
automated quotation system on which the PCC Shares are then traded) generally is
not being conducted.
"Trading Price" means, on any Trading Day, the highest price at
which PCC Shares are quoted on the American Stock Exchange or such other
nationally recognized exchange or automated quotation system on which the PCC
Shares are then traded.
"Trustee" means Bank of Montreal Trust Company or any successor
appointed pursuant to the terms of this Indenture.
"Trust Officer" means any officer within the corporate trust
division (or any successor group) of the Trustee or any other officer of the
Trustee customarily performing functions similar to those performed by the
Persons who at that time shall be such officers, and also means, with respect to
a particular corporate trust matter, any other officer of the Trustee to whom
such trust matter is referred because of his knowledge of and familiarity with
the particular subject.
<PAGE>
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"Underwriters" means NatWest Capital Markets Limited, Donaldson,
Lufkin & Jenrette Securities Corporation, Bear, Stearns & Co. Inc., NationsBanc
Montgomery Securities LLC, and Wasserstein Perella Securities, Inc.
"Underwriting Agreement" means that certain Underwriting Agreement
dated [ ], 1998 by and among the Company and the Underwriters, as such
agreement may be amended, modified or supplemented from time to time in
accordance with the terms thereof.
"Unrestricted Subsidiary" means any Subsidiary of the Company that,
at the time of determination, shall be an Unrestricted Subsidiary (as designated
by the Board of Directors of the Company, as provided below). The Board of
Directors of the Company may designate any Subsidiary of the Company (including
any newly acquired or newly formed Subsidiary at or prior to the time it is so
formed or acquired) to be an Unrestricted Subsidiary so long as (i) no Default
or Event of Default is existing or will occur as a consequence thereof, (ii)
such Subsidiary does not own any Capital Stock of, or own or hold any Lien on
any property or asset of, the Company or any Restricted Subsidiary that is not a
Subsidiary of the Subsidiary to be so designated, and (iii) such Subsidiary and
each of its Subsidiaries has not at the time of designation, and does not
thereafter, create, incur, issue, assume, guarantee, or otherwise become
directly or indirectly liable with respect to any Indebtedness pursuant to which
the lender has recourse to any property or assets of the Company or any of its
Restricted Subsidiaries (except that such Subsidiary and its Subsidiaries may
guarantee the Securities); provided, that either (A) the Subsidiary to be so
designated has total assets of $1,000 or less or (B) if such Subsidiary has
assets greater than $1,000, that such designation would be permitted under
Section 4.04. Each such designation shall be evidenced by filing with the
Trustee a certified copy of the resolution giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
foregoing conditions.
"U.S. Government Obligations" means direct non-callable obligations
of, or noncallable obligations guaranteed by, the United States of America for
the payment of which obligation or guarantee the full faith and credit of the
United States of America is pledged.
"U.S. Legal Tender Equivalents" means securities issued or directly
and fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof with a maturity of 90 days or less (provided that the
full faith and credit of the United States of America is pledged in support
thereof).
"Voting Stock" means Capital Stock of the Company having generally
the right to vote in the election of a majority of the directors of the Company
or having generally the right to vote with respect to the organizational matters
of the Company.
<PAGE>
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"Weighted Average Life" means, as of the date of determination, with
respect to any debt instrument, the quotient obtained by dividing (i) the sum of
the products of the numbers of years from the date of determination to the dates
of each successive scheduled principal payment of such debt instrument
multiplied by the amount of each such respective principal payment by (ii) the
sum of all such principal payments.
"Wholly Owned" means, with respect to a Subsidiary of the Company,
(i) a Subsidiary that is a corporation, of which not less than 99% of the
Capital Stock (except for directors' qualifying shares or certain minority
interests owned by other Persons solely due to local law requirements that there
be more than one stockholder, but which interest is not in excess of what is
required for such purpose) is owned directly by such Person or through one or
more other Wholly Owned Subsidiaries of such Person, or (ii) any entity other
than a corporation in which such Person, directly or indirectly, owns not less
than 99% of the Capital Stock of such entity.
SECTION 1.02. Incorporation by Reference of the Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, such provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture securityholder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any
other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them thereby.
SECTION 1.03. Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
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(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular;
(5) provisions apply to successive events and transactions;
(6) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or
other subdivision;
(7) references to Sections or Articles means reference to such
Section or Article in this Indenture, unless stated otherwise; and
(8) whenever in this Indenture or the Securities it is provided that
the principal amount with respect to a Security shall be paid, such
provision shall be deemed to require (whether or not so expressly stated)
the simultaneous payment of any accrued and unpaid interest to the date of
payment on such Security payable pursuant to paragraph 1 of the
Securities.
ARTICLE 2
THE SECURITIES
SECTION 2.01. Form and Dating. The Securities and the Trustee's
certificate of authentication in respect thereof shall be substantially in the
form of Exhibit A hereto, which Exhibit is part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule or usage. The Company shall approve the form of the Securities and
any notation, legend or endorsement on them. Any such notations, legends or
endorsements not contained in the form of Security attached as Exhibit A hereto
shall be delivered in writing to the Trustee. Each Security shall be dated the
date of its authentication.
The terms and provisions contained in the forms of Securities shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
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SECTION 2.02. Execution and Authentication. Each Security shall be
signed by at least one Officer for the Company by manual or facsimile signature.
The Company's seal may be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security was an officer at the
time of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless and the
Company shall nevertheless be bound by the terms of the Securities and this
Indenture.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security but
such signature shall be conclusive evidence that the Security has been
authenticated pursuant to the terms of this Indenture.
The Trustee shall authenticate Securities from time to time for
original issue in the aggregate principal amount of up to $150,000,000 upon a
written order of the Company in the form of an Officers' Certificate. The
Officers' Certificate shall specify the amount of Securities to be authenticated
and the date on which the Securities are to be authenticated. The terms of any
additional Securities shall be the same in all respects as the initial
Securities (or in all respects except for the payment of interest (i) scheduled
and paid prior to the date of issuance of such Securities or (ii) payable on the
first Interest Payment Date following such date of issuance). The initial
Securities and any additional Securities issued under the Indenture shall be
treated as a single class for all purposes of the Indenture. The aggregate
principal amount of Securities outstanding at any time may not exceed $[ ],
except as provided in Section 2.07. Upon the written order of the Company in the
form of an Officers' Certificate, the Trustee shall authenticate Securities in
substitution of Securities originally issued to reflect any name change of the
Company.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company, any Affiliate of the Company,
or any of their respective Subsidiaries.
Securities shall be issuable only in fully registered form, without
coupons, in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. Registrar and Paying Agent. The Company shall maintain
an office or agency in the Borough of Manhattan, The City of New York, where
Securities
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may be presented for registration of transfer or for exchange (the "Registrar")
and an office or agency where Securities may be presented for payment (the
"Paying Agent") and where notices and demands to or upon the Company in respect
of the Securities may be served. The Company may act as Registrar or Paying
Agent, except that, for the purposes of Articles 3, 8, 10, 11, Section 4.15 and
as otherwise specified in this Indenture, neither the Company nor any Affiliate
of the Company shall act as Paying Agent. The Registrar shall keep a register of
the Securities and of their transfer and exchange. The Company may have one or
more co-Registrars and one or more additional Paying Agents. The term "Paying
Agent" includes any additional Paying Agent. The Company hereby initially
appoints the Trustee as Registrar and Paying Agent, and the Trustee hereby
agrees so to act.
The Company shall enter into an appropriate written agency agreement
with any Agent not a party to this Indenture, which agreement shall implement
the provisions of this Indenture that relate to such Agent. The Company shall
promptly notify the Trustee in writing of the name and address of any such
Agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee
shall act as such.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depository with respect to the Global Securities.
The Company initially appoints the Trustee to act as Securities
Custodian with respect to the Global Securities.
SECTION 2.04. Paying Agent To Hold Assets in Trust. The Company
shall require each Paying Agent other than the Trustee to agree in writing that
each Paying Agent shall hold in trust for the benefit of the Holders or the
Trustee all assets held by the Paying Agent for the payment of principal of,
premium, if any, or interest on, the Securities (whether such assets have been
distributed to it by the Company or any other obligor on the Securities), and
shall notify the Trustee in writing of any Default in making any such payment.
If either of the Company or a Subsidiary of the Company acts as Paying Agent, it
shall segregate such assets and hold them as a separate trust fund for the
benefit of the Holders or the Trustee. The Company at any time may require a
Paying Agent to distribute all assets held by it to the Trustee and account for
any assets disbursed, and the Trustee may at any time during the continuance of
any payment Default, upon written request to a Paying Agent, require such Paying
Agent to distribute all assets held by it to the Trustee and to account for any
assets distributed. Upon distribution to the Trustee of all assets that shall
have been delivered by the Company to the Paying Agent, the Paying Agent (if
other than the Company) shall have no further liability for such assets.
SECTION 2.05. Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and
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addresses of Holders and shall otherwise comply with TIA ss. 312(a). If the
Trustee is not the Registrar, the Company shall furnish to the Trustee on or
before the third Business Day preceding each Interest Payment Date and at such
other times as the Trustee may request in writing a list in such form and as of
such date as the Trustee reasonably may require of the names and addresses of
Holders.
SECTION 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Definitive Securities. When Definitive
Securities are presented to the Registrar or a co-Registrar with a request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal principal
amount of Definitive Securities of other authorized denominations,
the Registrar or co-Registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Securities surrendered for transfer or
exchange shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar or
co-Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing.
(b) Transfer and Exchange of Global Securities. The transfer and
exchange of Global Securities or beneficial interests therein shall be effected
through the Depository, in accordance with this Indenture (including the
restrictions on transfer set forth herein) and the procedures of the Depository
therefor.
(c) Transfer of a Beneficial Interest in a Global Security for a
Definitive Security.
(i) Upon receipt by the Trustee of written instructions or such
other form of instructions as is customary for the Depository from the
Depository or its nominee on behalf of any Person having a beneficial
interest in a Global Security, if such beneficial interest is being
transferred to the Person designated by the Depository as being the
beneficial owner, a certification from such person to that effect (in
substantially the form set forth on the reverse of the Security) will be
required and the Trustee or the Securities Custodian, at the direction of
the Trustee, will cause, in accordance with the standing instructions and
procedures existing between the Depository and the Securities Custodian,
the aggregate principal amount of the Global Security to be reduced and,
following such reduction, the Company will execute and, upon receipt of an
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authentication order in the form of an Officers' Certificate, the Trustee
will authenticate and deliver to the transferee a Definitive Security.
(ii) Definitive Securities issued in exchange for a beneficial
interest in a Global Security pursuant to this Section 2.06(d) shall be
registered in such names and in such authorized denominations as the
Depository, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall
deliver such Definitive Securities to the persons in whose names such
Securities are so registered.
(d) Restrictions on Transfer and Exchange of Global Securities.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.06), a Global Security
may not be transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(e) Authentication of Definitive Securities in Absence of
Depository. If at any time:
(i) the Depository for the Securities notifies the Company that the
Depository is unwilling or unable to continue as Depository for the Global
Securities and a successor Depository for the Global Securities is not
appointed by the Company within 90 days after delivery of such notice; or
(ii) the Company, in its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Definitive Securities
under this Indenture,
then the Company will execute, and the Trustee, upon receipt of an Officers'
Certificate requesting the authentication and delivery of Definitive Securities,
will authenticate and deliver Definitive Securities, in an aggregate principal
amount equal to the principal amount of the Global Securities, in exchange for
such Global Securities.
(f) Cancellation and/or Adjustment of Global Security. At such time
as all beneficial interests in a Global Security have either been exchanged for
Definitive Securities, redeemed, repurchased or canceled, such Global Security
shall be returned to or retained and canceled by the Trustee. At any time prior
to such cancellation, if any beneficial interest in a Global Security is
exchanged for Definitive Securities, redeemed, repurchased or canceled, the
principal amount of Securities represented by such Global Security shall be
reduced and an endorsement shall be made on such Global Security, by the Trustee
or the Securities Custodian, at the direction of the Trustee, to reflect such
reduction.
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(g) Obligations with Respect to Transfers and Exchanges of
Definitive Securities.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Definitive Securities and
Global Securities at the Registrar's or co-Registrar's request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax, assessments, or similar governmental
charge payable in connection therewith (other than any such transfer
taxes, assessments, or similar governmental charge payable upon exchanges
or transfers pursuant to Section 2.02 (fourth paragraph), 2.10, 3.07,
4.15(8), 9.05, or 11.01 (final paragraph)).
(iii) The Registrar or co-Registrar shall not be required to
register the transfer of or exchange of (a) any Definitive Security
selected for redemption in whole or in part pursuant to Article 3, except
the unredeemed portion of any Definitive Security being redeemed in part,
or (b) any Security for a period beginning 15 Business Days before the
mailing of a notice of an offer to repurchase pursuant to Article 11 or
Section 4.15 hereof or the mailing of a notice of redemption of Securities
pursuant to Article 3 hereof and ending at the close of business on the
day of such mailing.
SECTION 2.07. Replacement Securities. If a mutilated Security is
surrendered to the Trustee or if the Holder of a Security claims and submits an
affidavit or other evidence, satisfactory to the Trustee, to the Trustee to the
effect that the Security has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Security if
the Trustee's requirements are met. If required by the Trustee or the Company,
such Holder must provide an indemnity bond or other indemnity, sufficient in the
judgment of both the Company and the Trustee, to protect the Company, the
Trustee or any Agent from any loss which any of them may suffer if a Security is
replaced. The Company may charge such Holder for its reasonable, out-of-pocket
expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.08. Outstanding Securities. Securities outstanding at any
time are all the Securities that have been authenticated by the Trustee
(including any Security represented by a Global Security) except those canceled
by it, those delivered to it for cancellation, those reductions in the interest
in a Global Security effected by the Trustee hereunder and those described in
this Section 2.08 as not outstanding. A Security does not
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cease to be outstanding because the Company or an Affiliate of the Company holds
the Security, except as provided in Section 2.09.
If a Security is replaced pursuant to Section 2.07 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be outstanding
upon surrender of such Security and replacement thereof pursuant to Section
2.07.
If on a Redemption Date or the Maturity Date the Paying Agent (other
than the Company or an Affiliate of a Company) holds cash sufficient to pay all
of the principal and interest due on the Securities payable on that date and
payment of the Securities called for redemption or payable on such Maturity Date
is not otherwise prohibited pursuant to this Indenture, then on and after that
date such Securities cease to be outstanding and interest on them ceases to
accrue.
SECTION 2.09. Treasury Securities. In determining whether the
Holders of the required principal amount of Securities have concurred in any
direction, amendment, supplement, waiver or consent, Securities owned by the
Company or Affiliates of the Company shall be disregarded, except that, for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, amendment, supplement, waiver or consent, only Securities that
the Trustee knows are so owned shall be disregarded.
SECTION 2.10. Temporary Securities. Until Definitive Securities are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
Definitive Securities but may have variations that the Company reasonably and in
good faith considers appropriate for temporary Securities. Without unreasonable
delay, the Company shall prepare and the Trustee shall authenticate Definitive
Securities in exchange for temporary Securities. Until so exchanged, the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as permanent Securities authenticated and delivered
hereunder.
SECTION 2.11. Cancellation. The Company at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for transfer,
exchange or payment. The Trustee, or at the direction of the Trustee, the
Registrar or the Paying Agent (other than the Company or an Affiliate of the
Company), and no one else, shall cancel and, at the written direction of the
Company, shall dispose of all Securities surrendered for transfer, exchange,
payment or cancellation. Subject to Section 2.07, the Company may not issue new
Securities to replace Securities that have been paid or delivered to the Trustee
for cancellation. No Securities shall be authenticated in lieu of or in exchange
for any Securities canceled as
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provided in this Section 2.11, except as expressly permitted in the form of
Securities and as permitted by this Indenture.
SECTION 2.12. Defaulted Interest. Interest on any Security which is
payable, and is punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the person in whose name that Security (or one or more
predecessor Securities) is registered at the close of business on Record Date
for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date plus, to the extent
lawful, any interest payable on the defaulted interest (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered holder on the
relevant Record Date, and such Defaulted Interest may be paid by the Company, at
its election in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the persons in whose names the Securities (or their respective
predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each Security and the date of the proposed parent, and at the same time
the Company shall deposit with the Trustee an amount of cash equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such cash when deposited to be
held in trust for the benefit of the persons entitled to such Defaulted
Interest as provided in this clause (1). Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to the date of
the proposed payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall promptly
notify the Company of such Special Record Date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder at his address as it appears
in the Security register not less than 10 days prior to such Special
Record Date. Notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the persons in whose names the
Securities (or their respective predecessor Securities) are registered on
such Special Record Date and shall no longer be payable pursuant to the
following clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange
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on which the Securities may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Company to the
Trustee of the proposed payment pursuant to this clause, such manner shall
be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Security shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
ARTICLE 3
REDEMPTION
SECTION 3.01. Optional Redemption. Redemption of Securities, as
permitted by any provision of this Indenture, shall be made in accordance with
such provision and this Article 3. Except as described in Article 10 of this
Indenture, the Company will not have the right to redeem any Securities prior to
August 15, 2003. On or after August 15, 2003, the Company will have the right to
redeem all or any part of the Securities in cash at the Redemption Prices
specified in the form of Security attached as Exhibit A set forth therein under
the caption "Redemption," in each case, including accrued and unpaid interest,
if any, to the applicable Redemption Date (subject to the right of Holders of
record on the relevant Regular Record Date to receive interest due on an
Interest Payment Date that is on or prior to the Redemption Date).
SECTION 3.02. Notices to Trustee. If the Company elects or is
required to redeem Securities pursuant to Paragraph 5 of the Securities, it
shall notify the Trustee in writing of the Redemption Date and the principal
amount of Securities to be redeemed and whether it wants the Trustee to give
notice of redemption to the Holders.
If the Company elects to reduce the principal amount of Securities
to be redeemed pursuant to Paragraph 5 of the Securities by crediting against
any such redemption Securities it has not previously delivered to the Trustee
for cancellation, it shall so notify the Trustee of the amount of the reduction
and deliver such Securities with such notice.
The Company shall give each notice to the Trustee provided for in
this Section 3.02 with respect to any optional redemption pursuant to Section
3.01 at least 45 days before the Redemption Date (unless a shorter notice shall
be satisfactory to the Trustee). Any
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such notice may be canceled at any time prior to notice of such redemption being
mailed to any Holder and shall thereby be void and of no effect.
SECTION 3.03. Selection of Securities To Be Redeemed. If less than
all of the Securities are to be redeemed pursuant to Paragraph 5(a) thereof, the
Trustee shall select the Securities to be redeemed on a pro rata basis or by
such other method as the Trustee shall determine to be fair and appropriate and
in such manner as complies with any applicable Depository, legal and stock
exchange requirements.
The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption and shall promptly notify the Company
in writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities in denominations of $1,000 may be redeemed only in whole.
The Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
SECTION 3.04. Notice of Redemption. At least 30 days but not more
than 60 days before a Redemption Date, the Company shall mail a notice of
redemption by first class mail, postage prepaid, to the Trustee and each Holder
whose Securities are to be redeemed to such Holder's last address as then shown
upon the books of the Registrar. At the Company's request, the Trustee shall
give the notice of redemption in the Company's name and at the Company's
expense. Each notice for redemption shall identify the Securities to be redeemed
and shall state:
(a) the Redemption Date;
(b) the Redemption Price, including the amount of accrued and unpaid
interest, if any, to be paid upon such redemption;
(c) the name, address and telephone number of the Paying Agent;
(d) that Securities called for redemption must be surrendered to the
Paying Agent at the address specified in such notice to collect the
Redemption Price;
(e) that, unless (i) with respect to a redemption pursuant to
Paragraph 5(a) of the Securities, the Company defaults in its obligation
to deposit cash with the Paying Agent in accordance with Section 3.06
hereof or (ii) such redemption payment is prohibited pursuant to Article
12 hereof or other laws, the interest on securities (or portion thereof)
called for redemption ceases to accrue on and after the Redemption Date
and
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the only remaining right of the Holders of such Securities is to receive
payment of the Redemption Price, as the case may be, including any accrued
and unpaid interest to the Redemption Date, upon surrender to the Paying
Agent of the Securities called for redemption and to be redeemed;
(f) if any Security is being redeemed in part, the portion of the
principal amount, equal to $1,000 or any integral multiple thereof, of
such Security to be redeemed and that, on or after the Redemption Date,
and upon surrender of such Security, a new Security or Securities in a
principal amount equal to the unredeemed portion thereof will be issued;
(g) if less than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of such Securities to
be redeemed and the aggregate principal amount of Securities to be
outstanding after such partial redemption;
(h) the CUSIP number of the Securities to be redeemed; and
(i) that the notice is being sent pursuant to this Section 3.04 and
pursuant to the optional redemption provisions of Paragraph 5(a) of the
Securities or the special redemption provisions of Paragraph 5(b) of the
Securities, as the case may be.
SECTION 3.05. Effect of Notice of Redemption. Once notice of
redemption is mailed in accordance with Section 3.04, Securities called for
redemption become due and payable on the Redemption Date and at the Redemption
Price including any accrued and unpaid interest to the Redemption Date, if any.
Upon surrender to the Trustee or Paying Agent, such Securities called for
redemption shall be paid at the Redemption Price, including interest, if any,
accrued and unpaid to the Redemption Date; provided that if the Redemption Date
is after a regular Record Date and on or prior to the Interest Payment Date, the
accrued interest shall be payable to the Holder of the redeemed Securities
registered on the relevant Record Date; and provided, further, that if a
Redemption Date is a Legal Holiday payment shall be made on the next succeeding
Business Day and no interest shall accrue for the period from such Redemption
Date to such succeeding Business Day.
SECTION 3.06. Deposit of Redemption Price. On or prior to any
Redemption Date, the Company shall deposit with the Paying Agent (other than the
Company or an Affiliate of the Company) cash sufficient to pay the Redemption
Price of, including any accrued and unpaid interest on, all Securities to be
redeemed on such Redemption Date (other than Securities or portions thereof
called for redemption on that date that have been delivered by the Company to
the Trustee for cancellation). The Paying Agent shall promptly return to
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the Company any cash so deposited which is not required for that purpose upon
the written request of the Company.
If the Company complies with the other provisions of this Article 3
and payment of the Securities called for redemption is not prohibited under this
Indenture, interest on the Securities to be redeemed will cease to accrue on the
applicable Redemption Date, whether or not such Securities are presented for
payment. Notwithstanding anything herein to the contrary, if any Security
surrendered for redemption in the manner provided in the Securities shall not be
so paid upon surrender for redemption because of the failure of the Company to
comply with the preceding paragraph, interest shall continue to accrue and be
paid from the Redemption Date until such payment is made on the unpaid
principal, and, to the extent lawful, on any interest not paid on such unpaid
principal, in each case at the rate and in the manner provided in Section 4.02
hereof and the Securities.
SECTION 3.07. Securities Redeemed in Part. Upon surrender of a
Security that is to be redeemed in part, the Company shall execute and the
Trustee shall authenticate and deliver to the Holder, without service charge to
the Holder, a new Security or Securities equal in principal amount to the
unredeemed portion of the Security surrendered.
ARTICLE 4
COVENANTS
SECTION 4.01. [Reserved]
SECTION 4.02. Payment of Securities. The Company shall pay the
principal of and interest on the Securities on the dates and in the manner
provided in the Securities. An installment of principal of or interest on the
Securities shall be considered paid on the date it is due if the Trustee or
Paying Agent (other than the Company or an Affiliate of the Company) holds for
the benefit of the Holders, on or before 10:00 a.m. New York City time on that
date, cash deposited and designated for and sufficient to pay the installment.
The Company shall pay interest on overdue principal and on overdue
installments of interest at the rate specified in the Securities compounded
semi-annually, to the extent lawful.
SECTION 4.03. Maintenance of Office or Agency. The Company shall
maintain in the Borough of Manhattan, The City of New York, an office or agency
where Securities may be presented or surrendered for payment, where Securities
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the
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Company in respect of the Securities and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the address of the Trustee set
forth in Section 12.02.
The Company may also, from time to time, designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York, for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency. The
Company hereby initially designates the Corporate Trust Office of the Trustee as
such office.
SECTION 4.04. Limitation on Restricted Payments. After the Issue
Date, the Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, make any Restricted Payment, if,
immediately prior or after giving effect thereto:
(a) a Default or an Event of Default would exist;
(b) the Company's Annualized Operating Cash Flow Ratio for the
Reference Period would exceed 8.5 to 1; or
(c) the aggregate amount of all Restricted Payments made by the
Company and its Restricted Subsidiaries, including such proposed
Restricted Payment (if not made in cash, then the fair market value of any
property used therefor, as determined in good faith by the Board of
Directors) from and after the Issue Date and on or prior to the date of
such Restricted Payment, shall exceed the sum of (i) the amount determined
by subtracting (x) 2.0 times the aggregate Consolidated Interest Expense
of the Company for the period (taken as one accounting period) from the
Issue Date to the last day of the last full fiscal quarter prior to the
date of the proposed Restricted Payment (the "Computation Period") from
(y) Operating Cash Flow of the Company for the Computation Period, plus
(ii) the aggregate Net Proceeds received by the Company from (x) Equity
Offerings (other than to a Subsidiary of the Company) after the Issue Date
and on or prior to the date of such Restricted Payment or (y) Capital
Contributions to the Company after the Issue Date, plus (iii) to the
extent not otherwise included in clauses (i) or (ii), above, an amount
equal to the net reduction in Investments in Unrestricted Subsidiaries
resulting from payments of dividends, repayment of loans or advances, or
other transfers of assets, in each case to the Company or any Wholly
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Owned Restricted Subsidiary of the Company from Unrestricted Subsidiaries,
or from redesignations of Unrestricted Subsidiaries as Restricted
Subsidiaries (valued in each case as provided in the definition of
"Investments"), not to exceed, in the case of any Unrestricted Subsidiary,
the amount of Investments previously made by the Company and any
Restricted Subsidiary in such Unrestricted Subsidiary.
Notwithstanding the foregoing paragraph, the provisions set forth in
clauses (b) and (c) thereof will not prohibit (i) the use of an aggregate of
$15,000,000 to be used for Restricted Payments not otherwise permitted by this
Section 4.04 and (ii) any dividend, distribution or other payment by any
Restricted Subsidiary on shares of its Capital Stock that is paid pro rata to
all holders of such Capital Stock, and notwithstanding the foregoing paragraph,
the provisions set forth in clauses (a), (b) and (c) thereof will not prohibit
(x) the payment of any dividend within 60 days after the date of its declaration
if such dividend could have been made on the date of its declaration in
compliance with the foregoing provisions, or (y) the redemption, defeasance,
repurchase or other acquisition or retirement of any Indebtedness or Capital
Stock of the Company or its Restricted Subsidiaries either in exchange for or
out of the Net Proceeds of a substantially concurrent Equity Offering (in the
case of any redemption, defeasance, repurchase or other acquisition or
retirement of any Junior Indebtedness or Capital Stock of the Company or its
Restricted Subsidiaries and other than to a Subsidiary of the Company) or sale
of Junior Indebtedness (in the case of any redemption, defeasance, repurchase or
other acquisition or retirement of any Indebtedness of the Company or its
Restricted Subsidiaries) of the Company.
In determining the aggregate amount expended for Restricted Payments
in accordance with clause (c) of the first paragraph of this Section 4.04, 100%
of the amounts expended under clauses (i), (ii), (x) and (y) of the immediately
preceding paragraph shall be included as Restricted Payments from and after the
Issue Date.
SECTION 4.05. Corporate Existence. Subject to Article 5, the Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and the corporate or other existence of
each of its Restricted Subsidiaries in accordance with the respective
organizational documents of each of them and the rights (charter and statutory)
and corporate franchises of the Company and each of the Company's Restricted
Subsidiaries; provided, however, that the Company shall not be required to
preserve, with respect to itself, any right or franchise, and with respect to
any Restricted Subsidiaries of the Company, any such existence, right or
franchise, if (a) the Board of Directors of the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
such entity and (b) the loss thereof is not disadvantageous in any material
respect to the Holders.
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SECTION 4.06. Payment of Taxes and Other Claims. Except with respect
to immaterial items, the Company shall, and shall cause each of its Restricted
Subsidiaries to, pay or discharge or cause to be paid or discharged, before the
same shall become delinquent, (i) all taxes, assessments and governmental
charges (including withholding taxes and any penalties, interest and additions
to taxes) levied or imposed upon the Company or any of its Restricted
Subsidiaries or any of their respective properties and assets and (ii) all
lawful claims, whether for labor, materials, supplies, services or anything
else, which have become due and payable and which by law have or may become a
Lien upon the property and assets of the Company or any of its Restricted
Subsidiaries; provided, however, that the Company shall not be required to pay
or discharge or cause to be paid or discharged any such tax, assessment, charge
or claim whose amount, applicability or validity is being contested in good
faith by appropriate proceedings and for which disputed amounts adequate
reserves have been established in accordance with GAAP.
SECTION 4.07. Maintenance of Properties and Insurance. The Company
shall cause all material properties used or useful to the conduct of its
business and the business of each of its Restricted Subsidiaries to be
maintained and kept in good condition, repair and working order (reasonable wear
and tear excepted) and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in its reasonable
judgment may be necessary, so that the business carried on in connection
therewith may be properly conducted at all times; provided, however, that
nothing in this Section 4.07 shall prevent the Company from discontinuing any
operation or maintenance of any of such properties, or disposing of any of them,
if such discontinuance or disposal is (a) in the judgment of the Board of
Directors of the Company, desirable in the conduct of the business of such
entity and (b) not disadvantageous in any material respect to the Holders.
The Company shall provide, or cause to be provided, for itself and
each of its Restricted Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds that, in the reasonable,
good faith opinion of the Company is adequate and appropriate for the conduct of
the business of the Company and such Restricted Subsidiaries in a prudent
manner, with (except for self-insurance) reputable insurers or with the
government of the United States of America or an agency or instrumentality
thereof, in such amounts, with such deductibles, and by such methods as shall be
customary, in the reasonable, good faith opinion of the Board of Directors of
the Company and adequate and appropriate for the conduct of the business of the
Company and such Restricted Subsidiaries in a prudent manner for entities
similarly situated in the industry, unless failure to provide such insurance
(together with all other such failures) would not have a material adverse effect
on the financial condition or results of operations of the Company or such
Restricted Subsidiary.
SECTION 4.08. Compliance Certificate; Notice of Default. The Company
shall deliver to the Trustee within 120 days after the end of its fiscal year an
Officers'
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Certificate complying with ss. 314(a)(4) of the TIA and stating that a review of
its activities and the activities of its Subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers with a
view to determining whether the Company has kept, observed, performed and
fulfilled their obligations under this Indenture and further stating, as to each
such officer signing such certificate, whether the signer knows of any failure
by the Company or any Subsidiary of the Company to comply with any conditions or
covenants in this Indenture and, if such signer does know of such a failure to
comply, the certificate shall describe such failure with particularity. The
Officers' Certificate shall also notify the Trustee should the relevant fiscal
year end on any date other than the current fiscal year end date.
The Company shall, so long as any of the Securities are outstanding,
deliver to the Trustee, promptly upon becoming aware of any Default, Event of
Default or fact which would prohibit the making of any payment to or by the
Trustee in respect of the Securities, an Officers' Certificate specifying such
Default, Event of Default or fact and what action the Company is taking or
proposes to take with respect thereto. The Trustee shall not be deemed to have
knowledge of any Default, any Event of Default or any such fact unless one of
its trust officers receives notice thereof from the Company or any of the
Holders.
SECTION 4.09. Reports. Whether or not the Company is subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
shall deliver to the Trustee and to each Holder, within 15 days after it is or
would have been required to file such with the SEC, annual and quarterly
financial statements substantially equivalent to financial statements that would
have been included in reports filed with the SEC, if the Company was subject to
the requirements of Section 13 or 15(d) of the Exchange Act, including, with
respect to annual information only, a report thereon by the Company's certified
independent public accountants as such would be required in such reports to the
SEC, and in each case, together with a management's discussion and analysis of
financial condition and results of operations which would be so required.
SECTION 4.10. Limitation on Status as Investment Company. The
Company shall not become, nor shall it permit any of its Restricted Subsidiaries
to become, an "investment company" (as that term is defined in the Investment
Company Act of 1940, as amended), or otherwise become subject to regulation
under the Investment Company Act.
SECTION 4.11. Limitation on Transactions with Related Persons. After
the Issue Date, the Company will not, and will not permit any of its Restricted
Subsidiaries to, enter into any contract, agreement, arrangement or transaction
with any Related Person (each a "Related Person Transaction"), or any series of
Related Person Transactions, except for transactions made in good faith, the
terms of which are (i) fair and reasonable to the Company or such Subsidiary, as
the case may be, and (ii) at least as favorable as the terms which could be
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obtained by the Company or such Subsidiary, as the case may be, in a comparable
transaction made on an arm's length basis with Persons who are not Related
Persons.
Without limiting the foregoing, (a) any Related Person Transaction
or series of Related Person Transactions with an aggregate value in excess of
$1,000,000 must first be approved by a majority of the Board of Directors of the
Company who are disinterested in the subject matter of the transaction pursuant
to a Board Resolution, and (b) with respect to any Related Person Transaction or
series of Related Person Transactions with an aggregate value in excess of
$5,000,000, the Company must first obtain a favorable written opinion from an
independent financial advisor of national reputation as to the fairness from a
financial point of view of such transaction to the Company or such Subsidiary,
as the case may be.
Notwithstanding the foregoing, the following shall not constitute
Related Person Transactions: (i) reasonable and customary payments on behalf of
directors, officers or employees of the Company or any of its Restricted
Subsidiaries, or in reimbursement of reasonable and customary payments or
reasonable and customary expenditures made or incurred by such Persons as
directors, officers or employees, (ii) any contract, agreement, arrangement or
transaction solely between or among the Company and any of its Restricted
Subsidiaries or between or among Restricted Subsidiaries of the Company, (iii)
any Restricted Payment not prohibited by Section 4.04, (iv) any loan or advance
by the Company or a Restricted Subsidiary to employees of the Company or a
Restricted Subsidiary in the ordinary course of business, in an aggregate amount
at any one time outstanding not to exceed $500,000, and (v) any payment pursuant
to a tax-sharing agreement between the Company and any other Person with which
the Company is required or permitted to file a consolidated tax return or with
which the Company is or could be part of a consolidated group for tax purposes,
which payments are not in excess of the tax liabilities attributable solely to
the Company and its Restricted Subsidiaries (as a consolidated group).
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness.
After the Issue Date, the Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, issue, create, incur,
assume, guarantee or otherwise directly or indirectly become liable for
(including as a result of an acquisition), or otherwise become responsible for,
contingently or otherwise (individually or collectively, to "Incur" or, as
appropriate, an "Incurrence"), any Indebtedness. Neither the accrual of interest
(including the issuance of "pay in kind" securities or similar instruments in
respect of such accrued interest) pursuant to the terms of Indebtedness Incurred
in compliance with this covenant, nor the accretion of original issue discount,
nor the mere extension of the maturity of any Indebtedness shall be deemed to be
an Incurrence of Indebtedness.
Notwithstanding the foregoing, if there exists no Default or Event
of Default immediately prior and subsequent thereto, (x) the Company may Incur
Indebtedness if, after
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giving effect to the Incurrence of such Indebtedness, the Company's Annualized
Operating Cash Flow Ratio would have been less than 8.5 to 1 and (y) any
Restricted Subsidiary may Incur Indebtedness if such Restricted Subsidiary's
Annualized Operating Cash Flow Ratio, after giving effect to the Incurrence of
such Indebtedness, would have been less than 8.0 to 1.
In addition, if there exists no Default or Event of Default
immediately prior and subsequent thereto, the foregoing limitations will not
apply to the Incurrence of:
(i) Indebtedness by the Company or any of its Restricted
Subsidiaries constituting Existing Indebtedness, reduced by repayments of
and permanent reductions in commitments in satisfaction of the Net Cash
Proceeds application requirement under Section 4.15 and by repayments and
permanent reductions in amounts outstanding pursuant to scheduled
amortizations and mandatory prepayments in accordance with the terms
thereof;
(ii) Indebtedness, in an aggregate principal amount not in excess of
$525,000,000, permitted under the Credit Facility, reduced by (a)
repayments of and permanent reductions in commitments in satisfaction of
the Net Cash Proceeds application requirement set forth in Section 4.15
and (b) an amount equal to the sum of (A) the outstanding principal amount
of the PCW Secured Notes and (B) the aggregate amount of Indebtedness
Incurred pursuant to clause (x) below to refinance the PCW Secured Notes
or the Credit Facility so long as such amounts Incurred pursuant to clause
(x) remain outstanding; provided that, if there exists a Default or an
Event of Default immediately prior or subsequent thereto, the Company and
its Restricted Subsidiaries may Incur Indebtedness pursuant to this clause
(ii) so long as the proceeds from such Incurrence are not used, directly
or indirectly, to pay any amounts owing in respect of any Indebtedness,
including, without limitation, principal, interest and commitment fees,
other than with respect to the Securities;
(iii) Indebtedness of the Company evidenced by the Securities;
(iv) (a) Permitted Acquisition Indebtedness of the Company or any
Restricted Subsidiaries that satisfies the provisions of clause (x) of the
definition thereof or (b) Permitted Acquisition Indebtedness of any
Restricted Subsidiary that satisfies the provisions of clause (y) of the
definition thereof;
(v) Indebtedness between the Company and any Restricted Subsidiary
of the Company or between Restricted Subsidiaries of the Company;
provided, however, that, in the case of Indebtedness of the Company, such
obligations shall be unsecured and subordinated in all respects to the
Holders' rights pursuant to the Securities, and
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the date of any event that causes a Restricted Subsidiary no longer to be
a Restricted Subsidiary shall be an Incurrence Date with respect to such
Indebtedness;
(vi) Capitalized Lease Obligations and Purchase Money Indebtedness
in an aggregate amount or aggregate principal amount, as the case may be,
outstanding at any time not to exceed in the aggregate $15,000,000;
(vii) Indebtedness of the Company or any Restricted Subsidiary
arising from agreements providing for indemnification, adjustment of
purchase price or similar obligations, or from guarantees or letters of
credit, surety bonds or performance bonds securing any obligations of the
Company or its Restricted Subsidiaries pursuant to such agreements, in any
case Incurred in connection with the disposition of any business, assets
or Restricted Subsidiary of the Company to the extent none of the
foregoing results in the obligation to repay an obligation for money
borrowed by any Person and are limited in aggregate amount to no greater
than 10% of the fair market value of such business, assets or Restricted
Subsidiary so disposed of;
(viii) Indebtedness of the Company or any Restricted Subsidiary
under standby letters of credit or reimbursement obligations with respect
thereto issued in the ordinary course of business and consistent with
industry practices limited in aggregate amount to $5,000,000 at any one
time outstanding;
(ix) Indebtedness of the Company or any Restricted Subsidiary (other
than Indebtedness permitted by the first paragraph of this Section 4.12 or
clause (i) through (viii) or (x) of this Section 4.12) not to exceed
$100,000,000 at any one time outstanding; and
(x) Refinancing Indebtedness Incurred to extend, renew, replace or
refund Indebtedness permitted under the first paragraph of this Section
4.12 or clauses (i) (as so reduced in amount), (ii) (as so reduced in
amount), (iii), (iv) and (x) of this paragraph.
For purposes of determining compliance with this Section 4.12, in
the event that an item of Indebtedness meets the criteria of more than one of
the categories described above or is entitled to be incurred pursuant to the
second paragraph of this Section 4.12, the Company shall, in its sole
discretion, classify such item of Indebtedness in any manner that complies with
this Section 4.12 and such item of Indebtedness will be treated as having been
incurred pursuant to only one of such clauses or pursuant to the second
paragraph of this Section 4.12. In addition, the Company may, at any time,
change the classification of an item of Indebtedness (or any portion thereof) to
any other clause or to the second paragraph of this Section, provided that the
Company would be permitted to Incur such item of Indebtedness
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(or such portion thereof) pursuant to such other clause or the second paragraph
of this Section 4.12, as the case may be, at such time of reclassification.
Indebtedness of any Person that is not a Restricted Subsidiary of
the Company (or that is a Non-Recourse Restricted Subsidiary designated to be a
Restricted Subsidiary, but no longer a Non-Recourse Restricted Subsidiary),
which Indebtedness is outstanding at the time such Person becomes such a
Restricted Subsidiary of the Company or is merged with or into or consolidated
with the Company or a Restricted Subsidiary of the Company shall be deemed to
have been Incurred, as the case may be, at the time such Person becomes such a
Restricted Subsidiary of the Company, or is merged with or into or consolidated
with the Company or a Restricted Subsidiary of the Company.
SECTION 4.13. Limitations on Restricting Subsidiary Dividends. The
Company will not, and will not permit any of its Restricted Subsidiaries to,
with respect to securities issued directly thereby or with respect to which they
are obligors, directly or indirectly, create, assume or suffer to exist any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary of the Company to pay dividends or make other distributions on the
Capital Stock of any Restricted Subsidiary of the Company or pay or satisfy any
obligation to the Company or any of its Restricted Subsidiaries or otherwise
transfer assets or make or pay loans or advances to the Company or any of its
Restricted Subsidiaries, except encumbrances and restrictions existing under
(i) any Indebtedness permitted by this Indenture to be incurred by
any Restricted Subsidiary;
(ii) this Indenture and the Indenture governing the PCW Notes.
(iii) any Existing Indebtedness;
(iv) the Credit Facility;
(v) any applicable law or any governmental or administrative
regulation or order;
(vi) Refinancing Indebtedness permitted under this Indenture;
provided, however, that the restrictions contained in the instruments
governing such Refinancing Indebtedness are no more restrictive in the
aggregate than those contained in the instruments governing the
Indebtedness (in the good faith judgment of the Company's Board of
Directors) being refinanced immediately prior to such refinancing;
(vii) restrictions with respect solely to a Restricted Subsidiary of
the Company imposed pursuant to a binding agreement which has been entered
into for the sale
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or disposition of all or substantially all of the Capital Stock or assets
of such Restricted Subsidiary; provided, however, that such restrictions
apply solely to the Capital Stock or assets (in the good faith judgment of
the Company's Board of Directors) being sold of such Restricted
Subsidiary;
(viii) restrictions contained in any agreement relating to the
financing of the acquisition of a Person or property, business or assets
after the Issue Date which are not applicable to any Person or property,
business or assets other than the Person or property so acquired and which
either (A) were not put in place in anticipation of or in connection with
such acquisition or (B) constituted Permitted Acquisition Indebtedness of
a Person satisfying the provisions of clause (y) of the definition
thereof; or
(ix) any agreement (other than those referred to in clause (viii))
of a Person acquired by the Company or a Restricted Subsidiary of the
Company, which restrictions existed at the time of acquisition and were
not put in place in anticipation of or in connection with such
acquisition.
Notwithstanding the foregoing, neither (a) customary provisions
restricting subletting or assignment of any lease entered into the ordinary
course of business, consistent with past practices nor (b) Permitted Liens shall
in and of themselves be considered a restriction on the ability of the
applicable Restricted Subsidiary to transfer such agreement or assets, as the
case may be.
SECTION 4.14. Limitations on Liens. The Company will not and will
not permit any Restricted Subsidiary, directly or indirectly, to Incur or suffer
to exist any Lien upon any of its property or assets, whether now owned or
hereafter acquired, other than Permitted Liens unless contemporaneously
therewith effective provision is made to secure the Securities equally and
ratably with such Indebtedness with a Lien on the same properties and assets
securing such Indebtedness for so long as such Indebtedness is secured by such
lien.
SECTION 4.15. Limitation on Asset Sales and Sales of Subsidiary
Stock. After the Issue Date, the Company will not, and will not permit any of
its Restricted Subsidiaries to, in one or a series of related transactions,
convey, sell, transfer, assign or otherwise dispose of, directly or indirectly,
any of its property, businesses or assets, including by merger or consolidation,
and including any sale or other transfer or issuance of any Capital Stock of any
Restricted Subsidiary of the Company, whether by the Company or a Restricted
Subsidiary (any such transaction an "Asset Sale"), unless
(1) (a) within 360 days after the date of such Asset Sale, an amount
equal to the Net Cash Proceeds therefrom (the "Asset Sale Offer Amount")
is applied to the optional redemption of the Securities in accordance with
the terms of Section 3.01 of
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this Indenture and other Indebtedness of the Company ranking on a parity
with the Securities from time to time outstanding with similar provisions
requiring the Company to make an offer to purchase or to redeem such
Indebtedness with the proceeds from asset sales, pro rata in proportion to
the respective principal amounts (or accreted values in the case of
Indebtedness issued with an original issue discount) of the Securities and
such other Indebtedness then outstanding or to the repurchase of the
Securities and such other Indebtedness pursuant to an irrevocable,
unconditional offer (pro rata in proportion to the respective principal
amounts (or accreted values in the case of Indebtedness issued with an
original issue discount) of the Securities and such other Indebtedness
then outstanding) (the "Asset Sale Offer") to repurchase such Indebtedness
at a purchase price in cash (the "Asset Sale Offer Price") of 100% of the
principal amount thereof (or accreted value in the case of Indebtedness
issued with an original issue discount) plus, in each case, accrued
interest to the date of payment, made within 330 days of such Asset Sale,
or (b) within 330 days of such Asset Sale, the Asset Sale Offer Amount is
(i) invested (or committed, pursuant to a binding commitment subject only
to reasonable, customary closing conditions, to be invested, and in fact
is so invested, within an additional 90 days) in assets and property
(other than notes, obligations or securities), which in the good faith
reasonable judgment of the Board of Directors of the Company are of a type
used in a Related Business, or Capital Stock of a Person (which, if such
Person becomes a Subsidiary of the Company by virtue of such Asset Sale,
shall initially be designated a Restricted Subsidiary) all or
substantially all of whose assets and property (in the good faith
reasonable judgment of the Board of Directors of the Company) are of a
type used in a Related Business (provided, however, that, with respect to
such Capital Stock, all of the requirements of the last proviso of clause
(v) of the following paragraph shall have been satisfied), or (ii) used to
retire permanently any Senior Indebtedness of the Company or any
Indebtedness of a Restricted Subsidiary (other than a Non-Recourse
Restricted Subsidiary);
(2) with respect to any transaction or related series of
transactions of securities, property or assets with an aggregate fair
market value in excess of $1,000,000, at least 75% of the value of
consideration for the assets disposed of in such Asset Sale (excluding (a)
Senior Indebtedness (and any Refinancing Indebtedness issued to refinance
any such Indebtedness) or Indebtedness of any Restricted Subsidiary
assumed by a transferee which assumption permanently reduces the amount of
Indebtedness outstanding on the Issue Date and permitted to have been
Incurred pursuant to Section 4.12 (including that in the case of a
revolver or similar arrangement that makes credit available, such
commitment is permanently reduced by such amount), (b) Purchase Money
Indebtedness secured exclusively by the assets subject to such Asset Sale
which is assumed by a transferee and (c) marketable securities that are
promptly converted into cash or Cash Equivalents) consists of cash or Cash
Equiva-
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lents; provided, however, that any cash or Cash Equivalents received
within 12 months following any such Asset Sale upon conversion of any
property or assets (other than in the form of cash or Cash Equivalents)
received in consideration of such Asset Sale shall be applied promptly in
the manner required of Net Cash Proceeds of any such Asset Sale as set
forth above;
(3) no Default or Event of Default shall occur or be continuing
after giving effect to, on a pro forma basis, such Asset Sale, unless such
Asset Sale is in consideration solely of cash or Cash Equivalents and such
consideration is applied immediately to the permanent reduction of the
principal amount of Indebtedness outstanding pursuant to Senior
Indebtedness of the Company or Indebtedness of any Restricted Subsidiary;
and
(4) the Board of Directors of the Company determines in good faith
that the Company or such Restricted Subsidiary, as applicable, would
receive fair market value in consideration of such Asset Sale.
An Asset Sale Offer may be deferred until the accumulated Net Cash
Proceeds from Asset Sales not applied to the uses set forth in (1)(b) of this
Section 4.15 exceeds $5,000,000. Each Asset Sale Offer shall remain open for 20
Business Days following its commencement and no longer, except as otherwise
required by applicable law (the "Asset Sale Offer Period"). Upon expiration of
the Asset Sale Offer Period, the Company shall apply the Asset Sale Offer
Amount, plus an amount equal to accrued interest, to the purchase of all
Indebtedness properly tendered (on a pro rata basis as described above if the
Asset Sale Offer Amount is insufficient to purchase all Indebtedness so
tendered) at the Asset Sale Offer Price (together with accrued interest).
Notwithstanding the foregoing provisions of the second preceding
paragraph:
(i) the Company and its Restricted Subsidiaries may, in the ordinary
course of business, convey, sell, lease, transfer, assign or otherwise
dispose of assets acquired and held for resale in the ordinary course of
business;
(ii) the Company and its Restricted Subsidiaries may convey, sell,
lease, transfer, assign or otherwise dispose of assets pursuant to and in
accordance with Article 5;
(iii) the Company and its Restricted Subsidiaries may sell or
dispose of damaged, worn out or other obsolete property in the ordinary
course of business so long as such property is no longer necessary for the
proper conduct of the business of the Company or such Restricted
Subsidiary, as applicable;
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(iv) the Company and its Restricted Subsidiaries may convey, sell,
lease, transfer, assign or otherwise dispose of assets to the Company or
any of its Restricted Subsidiaries; and
(v) the Company and its Restricted Subsidiaries may, in the ordinary
course of business (or, if otherwise than in the ordinary course of
business, upon receipt of a favorable written opinion by an independent
financial advisor of national reputation as to the fairness from a
financial point of view to the Company or such Restricted Subsidiary of
the proposed transaction), exchange all or a portion of its property,
businesses or assets for property, businesses or assets which are, or
Capital Stock of a Person all or substantially all of whose assets are, of
a type used in a Related Business (provided that such Person shall
initially be designated a Restricted Subsidiary if such Person becomes a
Subsidiary of the Company by virtue of such Asset Sale), or a combination
of any such property, businesses or assets, or Capital Stock of such a
Person and cash or Cash Equivalents; provided, however, that (a) there
shall not exist immediately prior or subsequent thereto a Default or an
Event of Default; (b) a majority of the independent directors of the Board
of Directors of the Company shall have approved a Board Resolution that
such exchange is fair to the Company or such Restricted Subsidiary, as the
case may be; and (c) any cash or Cash Equivalents received pursuant to any
such exchange shall be applied in the manner applicable to Net Cash
Proceeds from an Asset Sale as set forth pursuant to the provisions of the
immediately preceding paragraph of this Section 4.15; and provided,
further, that any Capital Stock of a Person received in an Asset Sale
pursuant to this clause (v) shall be owned directly by the Company or a
Restricted Subsidiary and, when combined with the Capital Stock of such
Person already owned by the Company and its Restricted Subsidiaries, shall
constitute a majority of the voting power and Capital Stock of such
Person, unless (A) (I) the Company has received a binding commitment from
such Person (or the direct or indirect parent of such Person) that such
Person (or the direct or indirect parent of such Person) will distribute
to the Company in cash an amount equal to the Company's Annualized
Operating Cash Flow (determined as of the date of such Asset Sale)
attributable to the property, business or assets of the Company and its
Restricted Subsidiaries exchanged in connection with such Asset Sale
during each consecutive 12-month period subsequent to such Asset Sale
(unless and until the Company shall have sold all of such Capital Stock,
provided that the provisions of clause (B) below, if applicable, shall
have been satisfied), (II) immediately after such Asset Sale the aggregate
number of Net Pops of the Cellular Systems wireless communications systems
in which the Company or any of its Restricted Subsidiaries has ownership
interests ("Company Systems") that are owned directly by a Person or
Persons a majority of whose voting power and Capital Stock is owned
directly or indirectly by the Company is no less than 80% of the aggregate
number of Net Pops of
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Company Systems immediately prior to such Asset Sale and (III) upon
consummation of such Asset Sale, on a pro forma basis, the ratio of such
Person's Annualized Operating Cash Flow to the product of Consolidated
Interest Expense for the Reference Period multiplied by four (but
excluding from Consolidated Interest Expense all amounts that are not
required to be paid in cash on a current basis) shall be at least 1.0 to
1, or (B) in the case of Capital Stock of a Person that is not a
Subsidiary of the Company owned by the Company or a Restricted Subsidiary
that is exchanged (the "Exchanged Capital Stock") for Capital Stock of
another Person all or substantially all of whose assets are of a type used
in a Related Business, either (i) the Exchanged Capital Stock shall not
have been acquired prior to such Asset Sale in reliance upon clause (A) of
this proviso or (ii) the requirements of subclauses (A) (I) (based on the
original guaranteed cash flow) and (A) (III) shall be satisfied with
respect to any Capital Stock acquired in consideration of the Exchanged
Capital Stock.
Restricted Payments that are made in compliance with, and are
counted against amounts available to be made as Restricted Payments pursuant to
clause (c) of Section 4.04, without giving effect to clause (i) of the second
paragraph thereof, shall not be deemed to be Asset Sales.
Any Asset Sale Offer shall be made in compliance with all applicable
laws, rules, and regulations, including, if applicable, Regulation 14E of the
Exchange Act and the rules and regulations thereunder and all other applicable
Federal and state securities laws.
The Company shall accumulate all Net Cash Proceeds and the aggregate
amount of such accumulated Net Cash Proceeds not used for the purposes permitted
and within the time provided by clause (1)(b) of the first paragraph of this
Section 4.15 is referred to as the "Accumulated Amount."
For purposes of this Section 4.15, "Minimum Accumulation Date" means
each date on which the Accumulated Amount exceeds $5,000,000. Not later than 10
Business Days after each Minimum Accumulation Date, the Company will commence an
Asset Sale Offer, which shall be consummated on a date (the "Asset Sale Purchase
Date") which shall be no later than 40 Business Days after the Minimum
Accumulation Date related thereto. Notice of an Asset Sale Offer will be sent 20
Business Days prior to the close of business on the earlier of (a) the third
Business Day prior to the Asset Sale Purchase Date and (b) the third Business
Day following the expiration of the Asset Sale Offer (such earlier date being
the "Final Put Date"), by first-class mail, by the Company to each Holder at its
registered address, with a copy to the Trustee. The notice to the Holders will
contain all information, instructions and materials required by applicable law
or otherwise material to such Holders' decision to tender Securities pursuant to
the Asset Sale Offer. The notice to Holders, which (to the extent consistent
with this Indenture) shall govern the terms of the Asset Sale Offer, shall
state:
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(1) that the Asset Sale Offer is being made pursuant to such notice
and this Section 4.15;
(2) the Asset Sale Offer Amount, the Asset Sale Offer Price
(including the amount of accrued and unpaid interest), the Final Put Date,
and the Asset Sale Purchase Date, which Asset Sale Purchase Date shall be
on or prior to 40 Business Days following the Minimum Accumulation Date;
(3) that any Security or portion thereof not tendered or accepted
for payment will continue to accrue interest;
(4) that, unless the Company defaults in depositing cash with the
Paying Agent in accordance with the penultimate paragraph of this Section
4.15 or such payment is otherwise prevented, any Security, or portion
thereof, accepted for payment pursuant to the Asset Sale Offer shall cease
to accrue interest after the Asset Sale Purchase Date;
(5) that Holders electing to have a Security, or portion thereof
purchased pursuant to an Asset Sale Offer will be required to surrender
the Security, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Security completed, to the Paying Agent (which may
not for purposes of this Section 4.15, notwithstanding anything in this
Indenture to the contrary, be the Company or any Affiliate of the Company)
at the address specified in the notice prior to the close of business on
the Final Put Date;
(6) that Holders will be entitled to withdraw their elections, in
whole or in part, if the Paying Agent (which may not for purposes of this
Section, notwithstanding any other provision of this Indenture, be the
Company or any Affiliate of the Company) receives, up to the close of
business on the Final Put Date, a telegram, telex, facsimile transmission
or letter setting forth the name of the Holder, the principal amount of
the Securities the Holder is withdrawing and a statement that such Holder
is withdrawing his election to have such principal amount of Securities
purchased;
(7) that if Indebtedness in a principal amount in excess of the
principal amount of Securities to be acquired pursuant to the Asset Sale
Offer is tendered and not withdrawn, the Company shall purchase
Indebtedness on a pro rata basis in proportion to the respective principal
amounts (or accreted values in the case of Indebtedness issued with an
original issue discount) thereof (with such adjustments as may be deemed
appropriate by the Company so that only Securities in denominations of
$1,000 or integral multiples of $1,000 shall be acquired);
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(8) that Holders whose Securities were purchased only in part will
be issued new Securities equal in principal amount to the unpurchased
portion of the Securities surrendered; and
(9) a brief description of the circumstances and relevant facts
regarding such Asset Sales.
Any such Asset Sale Offer shall comply with all applicable
provisions of applicable Federal and state laws, rules and regulations,
including those regulating tender offers, if applicable, and any provisions of
this Indenture that conflict with such laws shall be deemed to be superseded by
the provisions of such laws.
On or before an Asset Sale Purchase Date, the Company shall (i)
accept for payment Securities or portions thereof properly tendered and not
properly withdrawn pursuant to the Asset Sale Offer on or before the Final Put
Date (on a pro rata basis if required pursuant to paragraph (7) hereof), (ii)
deposit with the Paying Agent cash sufficient to pay the Asset Sale Offer Price
for all Securities or portions thereof so tendered and accepted and (iii)
deliver to the Trustee Securities so accepted together with an Officers'
Certificate stating the Securities or portions thereof being purchased by the
Company. The Paying Agent shall on each Asset Sale Purchase Date mail or deliver
to Holders of securities so accepted payment in an amount equal to the Asset
Sale Offer Price for such Securities, and the Trustee shall promptly
authenticate and mail or deliver to such Holders a new Security equal in
principal amount to any unpurchased portion of the Security surrendered. Any
Security not so accepted shall be promptly mailed or delivered by the Company to
the Holder thereof.
If the amount required to acquire all Indebtedness properly tendered
by Holders pursuant to the Asset Sale Offer (the "Acceptance Amount") made
pursuant to this Section 4.15 is less than the Asset Sale Offer Amount, the
excess of the Asset Sale Offer Amount over the Acceptance Amount may be used by
the Company for general corporate purposes without restriction, unless otherwise
restricted by the other provisions of this Indenture. Upon consummation of an
Asset Sale offer made in accordance with the terms of this Indenture, the
Accumulated Amount will be reduced to zero irrespective of the amount of
Indebtedness tendered pursuant to the Asset Sale Offer.
SECTION 4.16. Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay or extension law or any usury law or other law which
would prohibit or forgive the Company from paying all or any portion of the
principal of, premium of, or interest on the Securities as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
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lawfully do so) the Company hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
SECTION 4.17. [Reserved].
SECTION 4.18. Limitation on Lines of Business. The Company shall
not, nor shall it permit any of its Restricted Subsidiaries to, engage directly
or indirectly in any line or lines of business activity other than that which,
in the reasonable, good faith judgment of the Board of Directors of the Company,
is a Related Business.
SECTION 4.19. Restriction on Sale and Issuance of Subsidiary Stock.
The Company will not sell, and will not permit any of its Restricted
Subsidiaries to issue or sell, any shares of Capital Stock of any Restricted
Subsidiary of the Company to any Person other than the Company or a Wholly Owned
Restricted Subsidiary of the Company, except for shares of common stock with no
preferences or special rights or privileges and with no redemption or prepayment
provisions ("Special Rights"); provided, however, that, in the case of a
Restricted Subsidiary that is a partnership or joint venture partnership (a
"Restricted Partnership") the Company or any of its Restricted Subsidiaries may
sell or such Restricted Partnership may issue or sell Capital Stock of such
Restricted Partnership with Special Rights no more favorable than those held by
the Company or such Restricted Subsidiary in such Restricted Partnership.
SECTION 4.20. Limitation on Pledged Shares. The Company shall not be
permitted to pledge the stock of Price Communications Wireless, Inc. ("PCW") or
the stock of any Restricted Subsidiary that owns common stock of PCW except
pursuant to the Credit Facility. The Company is required to own, directly or
indirectly, 100% of the common stock of PCW.
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01. Limitation on Merger, Sale or Consolidation. The
Company will not consolidate with or merge with or into another Person, or sell,
lease, convey, transfer or otherwise dispose of all or substantially all of its
and its Restricted Subsidiaries' assets (computed on a consolidated basis),
whether in a single transaction or a series of related transactions, to another
Person or group of affiliated Persons, unless
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(i) either (a) the Company is the continuing entity or (b) the
resulting surviving or transferee entity is a corporation organized under
the laws of the United States, any state thereof or the District of
Columbia and expressly assumes by supplemental indenture all of the
obligations of the Company in connection with the Securities and this
Indenture; provided, however, that in the case of a sale, lease,
conveyance, transfer or other disposition of all or substantially all of
the Company's and its Restricted Subsidiaries' assets, the provisions of
this clause (i)(b) need not be met if all of the consideration in respect
of such transaction is received by the Company and its Restricted
Subsidiaries (other than any Non-Recourse Restricted Subsidiary);
(ii) no Default or Event of Default shall exist or shall occur
immediately after giving effect on a pro forma basis to such transaction;
(iii) (a) immediately after giving pro forma effect to such
transaction, the consolidated resulting surviving or transferee entity
(or, in the case contemplated by the proviso to clause (i)(b), the
Company) would immediately thereafter be permitted to incur at least $1.00
of additional Indebtedness pursuant to the Annualized Operating Cash Flow
Ratio provision set forth in the second paragraph of Section 4.12 or (b),
if the requirement of clause (a) is not satisfied, (x) any Indebtedness of
the resulting surviving or transferee entity (or, in the case contemplated
by the proviso to clause (i)(b), the Company) in excess of the amount of
the Company's Indebtedness immediately prior to such transaction is
Permitted Acquisition Indebtedness and (y) the requirement of clause (a)
is not satisfied solely due to the Incurrence of such Permitted
Acquisition Indebtedness; and
(iv) the Company shall have delivered to the Trustee an Officers'
Certificate and an opinion of counsel, if applicable, confirming
compliance with the requirements of this Section 5.01.
SECTION 5.02. Successor Corporation Substituted. Upon any
consolidation or merger or any transfer of all or substantially all of the
assets of the Company in accordance with the foregoing, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such transfer is made, shall (other than as provided in the proviso to
clause (i)(b) of the preceding paragraph) succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture with
the same effect as if such successor corporation had been named therein as the
Company, and the Company shall be released from the obligations under the
Securities and this Indenture.
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ARTICLE 6
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.01. Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be caused voluntarily or involuntarily or
effected, without limitation, by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) the failure by the Company to pay any installment of interest on
the Securities as and when the same becomes due and payable and the
continuance of any such failure for 30 days;
(b) the failure by the Company to pay all or any part of the
principal, or premium, if any, on the Securities when and as the same
becomes due and payable at maturity, redemption, by acceleration or
otherwise, including, without limitation, payment of the Change of Control
Purchase Price or the Asset Sale Offer Price;
(c) the failure by the Company to observe or perform any other
covenant or agreement contained in the Securities or this Indenture and,
subject to certain exceptions, the continuance of such failure for a
period of 30 days after written notice is given to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least 25%
in aggregate principal amount of the Securities outstanding;
(d) a decree, judgment, or order by a court of competent
jurisdiction shall have been entered adjudging the Company or any of its
Significant Restricted Subsidiaries as bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization of the Company or any
of its Significant Restricted Subsidiaries under any bankruptcy or similar
law, and such decree or order shall have continued undischarged and
unstayed for a period of 60 days; or a decree or order of a court of
competent jurisdiction over the appointment of a receiver, liquidator,
trustee, or assignee in bankruptcy or insolvency of the Company, any of
its Significant Restricted Subsidiaries, or of the property of any such
Person, or for the winding up or liquidation of the affairs of any such
Person, shall have been entered, and such decree, judgment, or order shall
have remained in force undischarged and unstayed for a period of 60 days;
(e) the Company or any of its Significant Restricted Subsidiaries
shall institute proceedings to be adjudicated a voluntary bankrupt, or
shall consent to the filing of a bankruptcy proceeding against it, or
shall file a petition or answer or consent seeking
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reorganization under any bankruptcy or similar law or similar statute, or
shall consent to the filing of any such petition, or shall consent to the
appointment of a Custodian in bankruptcy or insolvency of it or any of its
assets or property, or shall make a general assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts
generally as they become due, or shall, within the meaning of any
Bankruptcy Law, become insolvent, fails generally to pay its debts as they
become due, or takes any corporate action in furtherance of or to
facilitate, conditionally or otherwise, any of the foregoing;
(f) the failure to pay at final stated maturity (giving effect to
any applicable grace periods and any extensions thereof) the principal
amount of any Indebtedness of the Company or any Restricted Subsidiary of
the Company or the acceleration of the final stated maturity of any
Indebtedness if the aggregate principal amount of such Indebtedness,
together with the principal amount of any other such Indebtedness in
default for failure to pay principal at final maturity or which has been
accelerated, aggregates $15,000,000 or more at any time; and
(g) final unsatisfied judgments not covered by insurance aggregating
in excess of $5,000,000, at any one time rendered against the Company or
any of the Company's Restricted Subsidiaries and not stayed, bonded or
discharged within 60 days.
If a Default occurs and is continuing, the Trustee must, within 90
days after the occurrence of any Default or Event of Default, give to the
Holders notice of all uncured Defaults or Events of Default thereunder known to
it; provided, however, that, except in the case of an Event of Default in
payment with respect to such Securities the Trustee shall be protected in
withholding such notice if and so long as a committee of its trust officers in
good faith determines that the withholding of such notice is in the interest of
the Holders.
SECTION 6.02. Acceleration of Maturity Date; Rescission and
Annulment. If an Event of Default occurs and is continuing (other than an Event
of Default specified in clause (d) or (e) of Section 6.01 relating to the
Company or any Significant Restricted Subsidiary), then in every such case,
unless the principal amount of all of the Securities shall have already become
due and payable, either the Trustee or the Holders of 25% in aggregate principal
amount of the Securities then outstanding, by notice in writing to the Company
(and to the Trustee if given by Holders) (an "Acceleration Notice") may declare
all the aggregate principal amount and accrued interest thereon, if applicable,
to be due and payable and the same (i) shall become immediately due and payable
or (ii) if there are any amounts outstanding under the Credit Facility and the
Company has guaranteed the repayment of principal and interest on the Credit
Facility, shall become immediately due and payable upon the first to occur of an
acceleration under the Credit Facility or five business days after receipt by
the Company and the representative of the holders of the Indebtedness under the
Credit Facility of the
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Acceleration Notice, but only if such Event of Default is then continuing. If an
Event of Default specified in clause (d) or (e) of Section 6.01, relating to the
Company or any Significant Restricted Subsidiary, occurs, the principal and
accrued interest, if applicable, thereon will be immediately due and payable on
all outstanding Securities without any declaration or other act on the part of
Trustee or the Holders.
At any time after such a declaration of acceleration has been made
and before a judgment or decree for payment of the money due has been obtained
by the Trustee as hereinafter provided in this Article 6, the Holders of a
majority in aggregate principal amount of then-outstanding Securities, by
written notice to the Company and the Trustee, may rescind, on behalf of all
Holders, any such declaration of acceleration if:
(1) the Company has paid or deposited with the Trustee cash
sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal of (and premium, if any, applicable to any
Securities which would become due otherwise than by such
declaration of acceleration, and interest thereon at the
rate borne by the Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the
Securities,
(D) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and
(2) all Events of Default, other than the non-payment of the
principal amount of, premium, if any, and interest on Securities which
have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 6.12, including, if applicable, any
Event of Default relating to the covenants contained in Section 11.01.
Notwithstanding the previous sentence of this Section 6.02, no waiver shall be
effective against any Holder for any Event of Default or event which with notice
or lapse of time or both would be an Event of Default with respect to any
covenant or provision which cannot be modified or amended without the consent of
the Holder of each outstanding Security affected thereby, unless all such
affected Holders agree, in writing, to waive such Event of Default or
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other event. No such waiver shall cure or waive any subsequent Default or impair
any right consequent thereon.
In the event of a declaration of acceleration of the Securities
because an Event of Default has occurred and is continuing as a result of the
acceleration of any Indebtedness described in Section 6.01(f), the declaration
of acceleration of the Securities shall be automatically annulled if the holders
of all Indebtedness described in Section 6.01 (f) (without any payment of any
holders of any such Indebtedness) have rescinded the declaration of acceleration
in respect of such Indebtedness within 30 days of the date of such declaration
and if (i) the annulment of the acceleration of the Securities would not
conflict with any judgment or decree of a court of competent jurisdiction and
(ii) all Events of Default, except nonpayment of principal interest on the
Securities that became due solely because of the acceleration of the Securities,
have been cured or waived.
SECTION 6.03. Collection of Indebtedness and Suits for Enforcement
by Trustee. The Company covenants that if an Event of Default in payment of
principal, premium, or interest specified in clause (a) or (b) of Section 6.01
occurs and is continuing, the Company shall, upon demand of the Trustee, pay to
it, for the benefit of the Holders of such Securities, the whole amount then due
and payable on such Securities for principal, premium (if any) and interest,
and, to the extent that payment of such interest shall be legally enforceable,
interest on any overdue principal (and premium, if any) and on any overdue
interest, at the rate borne by the Securities, and, in addition thereto, such
further amount as shall be sufficient to cover the reasonable costs and expenses
of collection, including Compensation to, and expenses, disbursements and
advances of, the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust in favor of the
Holders, may institute a judicial proceeding for the collection of the sums so
due and unpaid, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Company or any other obligor upon the
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein or therein, or to enforce any other proper
remedy.
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SECTION 6.04. Trustee May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Securities or
the property of the Company or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal of the Securities shall then be
due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Company
for the payment of overdue principal or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise to take any and all
actions under the TIA, including
(1) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the
Securities and to file such other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agent and counsel) and of the Holders allowed
in such judicial proceeding, and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any Custodian in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment, or composition affecting the securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 6.05. Trustee May Enforce Claims Without Possession of
Securities. All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust in favor of the Holders, and any
recovery of judgment shall, after provision for the payment of compensation to,
and expenses, disbursements and advances of the Trustee, its agents and counsel,
be for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.
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SECTION 6.06. Priorities. Any money collected by the Trustee
pursuant to this Article 6 shall be applied in the following order, at the date
or dates fixed by the Trustee and, in case of the distribution of such money on
account of principal, premium (if any) or interest, upon presentation of the
Securities and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due pursuant to
Section 7.07;
SECOND: To the Holders in payment of the amounts then due and unpaid
for principal of, premium (if any) and interest on, the Securities in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Securities for principal, premium
(if any) and interest, respectively; and
THIRD: To whomsoever may be lawfully entitled thereto, the
remainder, if any.
SECTION 6.07. Limitation on Suits. No Holder of any Security shall
have any right to order or direct the Trustee to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless
(A) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(B) the Holders of not less than 25% in principal amount of
then-outstanding Securities shall have made written request to the Trustee
to institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(C) such Holder or Holders have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities to be
incurred or reasonably probable to be incurred in compliance with such
request;
(D) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(E) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the outstanding Securities;
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it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 6.08. Unconditional Right of Holders to Receive Principal,
Premium and Interest. Notwithstanding any other provision of this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of, and premium (if any) and
accrued interest on, such Security on the Maturity Date of such payments as
expressed in such Security (in the case of redemption, the Redemption Price on
the applicable Redemption Date, in the case of a Change of Control Payment, on
the applicable Change of Control Payment Date, and, in the case of an Asset Sale
Offer, the Asset Sale Offer Price on the Asset Sale Purchase Date) and to
institute suit for the enforcement of any such payment after such respective
dates, and such rights shall not be impaired without the consent of such Holder.
SECTION 6.09. Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities in Section 2.07, no right or remedy herein conferred
upon or reserved to the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 6.10. Delay or Omission Not Waiver. No delay or omission by
the Trustee or by any Holder of any Security to exercise any right or remedy
arising upon any Event of Default shall impair the exercise of any such right or
remedy or constitute a waiver of any such Event of Default. Every right and
remedy given by this Article 6 or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
SECTION 6.11. Control by Holders. The Holder or Holders of a
majority in aggregate principal amount of then outstanding Securities will have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee or exercising any trust or power conferred
upon the Trustee, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
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(2) the Trustee shall not determine that the action so directed
would be unjustly prejudicial to the Holders not taking part in such
direction, and
(3) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 6.12. Waiver of Past Default. Subject to Section 6.08, the
Holder or Holders of not less than a majority in aggregate principal amount of
the outstanding Securities may, on behalf of all Holders, prior to the
declaration of the acceleration of the maturity of the Securities, waive any
past default hereunder and its consequences, except a default
(A) in the payment of the principal of, or interest on, any Security
as specified in clauses (a) and (b) of Section 6.01, or
(B) in respect of a covenant or provision hereof which, under
Article 9, cannot be modified or amended without the consent of the Holder
of each outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair the exercise of any right arising therefrom.
SECTION 6.13. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Security by his acceptance thereof shall he deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted to be taken by it
as Trustee, the filing by any party litigant in such suit of an undertaking to
pay the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section 6.13 shall not apply to any suit instituted by the Company, to any suit
instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 100% in aggregate principal amount
of the outstanding Securities, or to any suit instituted by any Holder for
enforcement of the payment of principal of, or premium (if any) or interest on,
any Security on or after the Maturity Date expressed in such Security
(including, in the case of redemption, on or after the Redemption Date).
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SECTION 6.14. Restoration of Rights and Remedies. If the Trustee or
any Holder has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then
and in every case, subject to any determination in such proceeding, the Company,
the Trustee and the Holders shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
ARTICLE 7
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this
Indenture and covenants and agrees to perform the same, as herein expressed.
SECTION 7.01. Duties of Trustee. (a) If a Default or an Event of
Default has occurred and is continuing, the Trustee shall exercise such of the
rights and powers vested in it by this Indenture and use the same degree of care
and skill in their exercise as a prudent Person would exercise or use under the
circumstances in the conduct of his own affairs.
(b) Except during the continuance of a Default or an Event of
Default:
(1) The Trustee need perform only those duties as are specifically
set forth in this Indenture and no others, and no covenants or obligations
shall be implied in or read into this Indenture which are adverse to the
Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section 7.01.
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(2) The Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.11.
(d) No provision of this Indenture shall require the trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any action
under this Indenture or at the request, order or direction of the Holders or in
the exercise of any of its rights or powers if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c), (d) and (f) of this Section
7.01.
(f) The Trustee shall not be liable for interest on any assets
received by it except as the Trustee may agree in writing with the Company.
Assets held in trust by the Trustee need not be segregated from other assets
except to the extent required by law.
SECTION 7.02. Rights of Trustee. Subject to Section 7.01:
(a) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate or an Opinion of
Counsel, which shall conform to Sections 12.04 and 12.05. The Trustee
shall not be liable for any action it takes or omits to take in good faith
in reliance on such certificate or advice of counsel.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee will not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its
rights or powers conferred upon it by this Indenture.
(e) The Trustee will not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, re-
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quest, direction, consent, order, bond, debenture, or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.
(f) The Trustee will be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders, pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby.
(g) Unless otherwise specifically provided for in this Indenture,
any demand, request, direction or notice from the Company shall be
sufficient if signed by an Officer of the Company.
(h) The Trustee shall have no duty to inquire as to the performance
of the covenants in Article 4 hereof. In addition, the Trustee shall not
be deemed to have knowledge of any Default or Event of Default except (i)
any Event of Default occurring pursuant to Sections 6.01(a), 6.01(b) and
4.02, or (ii) any Default or Event of Default of which the Trustee shall
have received written notification or obtained actual knowledge.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or any of the Company's Subsidiaries, or
their respective Affiliates with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee makes no
representation as to the validity or adequacy of this Indenture or the
Securities and it shall not be accountable for the Company's use of the proceeds
from the Securities, and it shall not be responsible for any statement in the
Securities, other than the Trustee's certificate of authentication, or the use
or application of any funds received by a Paying Agent other than the Trustee.
SECTION 7.05. Notice of Default. If a Default or an Event of Default
occurs and is continuing and if it is known to the Trustee, the Trustee shall
mail to each Securityholder notice of the uncured Default or Event of Default
within 90 days after such Default or Event of Default occurs. Except in the case
of a Default or an Event of Default in payment of principal (or premium, if any)
of, or interest on, any Security (including the payment of the Change of Control
Purchase Price on the Change of Control Payment Date, the payment of the
Redemption Price on the Redemption Date and the payment of the Offer Price on
the Purchase Date), the Trustee may withhold the notice if and so long as a
Trust
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Officer in good faith determines that withholding the notice is in the interest
of the Securityholders.
SECTION 7.06. Reports by Trustee to Holders. Within 60 days after
each December 15 beginning with the December 15 following the date of this
Indenture, the Trustee shall, if required by law, mail to each Securityholder a
brief report dated as of such December 15 that complies with TIA ss. 313(a). The
Trustee also shall comply with TIA ss. 313(b) and ss. 313(c).
The Company shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or automatic quotation system.
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Company and filed with the SEC and each stock exchange,
if any, on which the Securities are listed, in accordance with and to the extent
required by TIA ss. 313(d).
SECTION 7.07. Compensation and Indemnity. The Company agrees to pay
to the Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable disbursements, expenses and advances incurred or made
by it. Such expenses shall include the reasonable compensation, disbursements
and expenses of the Trustee's agents, accountants, experts and counsel.
The Company agrees to indemnify the Trustee (in its capacity as
Trustee) and each of its officers, directors, attorneys-in-fact and agents for,
and hold it harmless against, any claim, demand, expense (including but not
limited to reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel), loss or liability incurred by it without negligence or bad
faith on its part, arising out of or in connection with the administration of
this trust and its rights or duties hereunder including the reasonable costs and
expenses of defending itself against any claim or liability in connection with
the exercise or performance of any of its powers or duties hereunder. The
Trustee shall notify the Company promptly of any claim asserted against the
Trustee for which it may seek indemnity. The Company shall defend the claim and
the Trustee shall provide reasonable cooperation at the Company's expense in the
defense. The Trustee may have separate counsel and the Company shall pay the
reasonable fees and expenses of such counsel; provided that the Company will not
be required to pay such fees and expenses if they assume the Trustee's defense
and there is no conflict of interest between the Company and the Trustee in
connection with such defense. The Company need not pay for any settlement made
without their written consent. The Company need not reimburse any expense or
indemnify against any loss or liability to the extent incurred by the Trustee
through its negligence, bad faith or willful misconduct.
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To secure the Company's payment obligations in this Section 7.07,
the Trustee shall have a lien prior to the Securities on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay principal and premium, if any, of or interest on particular
Securities.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(e) or (f) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Company's obligations under this Section 7.07 and any lien
arising hereunder shall survive the resignation or removal of the Trustee, the
discharge of the Company's obligations pursuant to Article 8 of this Indenture
and any rejection or termination of this Indenture under any Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign by so
notifying the Company in writing. The Holder or Holders of a majority in
principal amount of the outstanding Securities may remove the Trustee by so
notifying the Company and the Trustee in writing and may appoint a successor
trustee with the Company's consent. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver, Custodian, or other public officer takes charge of
the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holder or
Holders of a majority in principal amount of the Securities may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that
and provided that all sums owing to the Trustee provided for in Section 7.07
have been paid, the retiring Trustee shall transfer all property held by it as
trustee to the successor Trustee, subject to the lien provided in Section 7.07,
the resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. A successor Trustee shall mail notice of its
succession to each Holder.
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If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holder or Holders of at least 10% in principal amount of the outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustees pursuant to this Section
7.08, the Company's obligations under Section 7.07 all continue for the benefit
of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation, the resulting,
surviving or transferee corporation without any further act shall, if such
resulting, surviving or transferee corporation is otherwise eligible hereunder,
be the successor Trustee.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at
all times satisfy the requirements of TIA ss. 310(a)(1), (2) and (5). The
Trustee shall have a combined capital and surplus of at least $10,000,000 as set
forth in its most recent published annual report of condition. The Trustee shall
comply with TIA ss. 310(b).
SECTION 7.11. Preferential Collection of Claims Against Company. The
Trustee, in its capacity as Trustee hereunder, shall comply with TIA ss. 311(a),
excluding any creditor relationship listed in TIA ss. 311(b). A Trustee who has
resigned or been removed shall be subject to TIA ss. 311(a) to the extent
indicated.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance. The Company may, at its option and at any time, elect to have
Section 8.02 or Section 8.03 applied to all outstanding Securities upon
compliance with the conditions set forth below in this Article 8.
SECTION 8.02. Legal Defeasance and Discharge. Upon the Company's
exercise under Section 8.01 of the option applicable to this Section 8.02, the
Company shall be deemed to have been discharged from its obligations with
respect to all outstanding
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Securities on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, such Legal Defeasance means
that the Company shall be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Securities, which shall thereafter
be deemed to be "outstanding" only for the purposes of Section 8.05 and the
other Sections of this Indenture referred to in (a) and (b) below, and this
Indenture shall cease to be of further effect as to all outstanding Securities
(and the Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of outstanding Securities to receive solely from the trust fund
described in Section 8.04, and as more fully set forth in such Section 8.04,
payments in respect of the principal of, premium, if any, and interest on such
Securities when such payments are due, (b) the Company's obligations with
respect to such Securities under Sections 2.04, 2.06, 2.07, 2.10 and 4.03, (c)
the rights, powers, trusts, duties and immunities of the Trustee hereunder and
the Company's obligations in connection therewith and (d) this Article 8.
Subject to compliance with this Article 8, the Company may exercise its option
under this Section 8.02 notwithstanding the prior exercise of its option under
Section 8.03 with respect to the Securities.
SECTION 8.03. Covenant Defeasance. Upon the Company's exercise under
Section 8.01 of the option applicable to this Section 8.03, the Company shall be
released from its obligations under the covenants contained in Sections 4.04,
4.06, 4.07, 4.08, 4.09, 4.11, 4.12, 4.13, 4.14, 4.15, 4.18, 4.19, 4.20, 4.21,
Article 5 (other than the obligation of any successor to assume the obligations
of the Company hereunder) and Article 11 with respect to the outstanding
Securities on and after the date the conditions set forth below are satisfied
(hereinafter, "Covenant Defeasance"), and the Securities shall thereafter be
deemed not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder. For this purpose, such Covenant Defeasance
means that, with respect to the outstanding Securities, the Company need not
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein or in any other
document, but, except as specified above, the remainder of this Indenture and
such Securities shall be unaffected thereby.
SECTION 8.04. Conditions to Legal or Covenant Defeasance. The
following shall be the conditions to the application of either Section 8.02 or
Section 8.03 to the outstanding Securities:
(a) The Company must irrevocably deposit or caused to be deposited
with the Trustee (or another trustee satisfying the requirements of
Section 7.10 who shall agree
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to comply with the provisions of this Article 8 applicable to it) as trust
funds in trust for the purpose of making the following payments,
specifically pledged as security for, and dedicated solely to, the benefit
of the Holders of such Securities, (a) U.S. Legal Tender, or (b)
non-callable government securities, or (c) a combination thereof, in such
amounts, as in each case will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed in
a written certification thereof delivered to the Trustee, to pay and
discharge and which shall be applied by the Trustee (or other qualifying
trustee) to pay and discharge (i) the principal of, premium, if any, and
interest on the outstanding Securities on the Stated Maturity or on the
applicable Redemption Date, as the case may be, of such principal or
installment of principal, premium, if any, or interest and the Holders of
Securities shall have a valid, perfected, exclusive security interest in
the assets of such trust; provided that the Trustee shall have been
irrevocably instructed to apply such cash and the proceeds of such U.S.
Government Obligations or U.S. Legal Tender Equivalents to said payments
with respect to the Securities;
(b) In the case of an election under Section 8.02, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (i) the Company has
received from, or there has been published by, the Internal Revenue
Service a ruling or (ii) since the date hereof, there as been a change in
the applicable Federal income tax law, in either case to the effect that,
and based thereon such opinion shall confirm that, the Holders of the
outstanding Securities will not recognize income, gain or loss for Federal
income tax purposes as a result of such Legal Defeasance and will be
subject to Federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Legal Defeasance had
not occurred;
(c) In the case of an election under Section 8.03, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to such Trustee confirming that the Holders of the
outstanding Securities will not recognize income gain or loss for Federal
income tax purposes as a result of such Covenant Defeasance and will be
subject to Federal income tax in the same amount, in the same manner and
at the same times as would have been the case if such Covenant Defeasance
had not occurred;
(d) No Default or Event of Default (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such
deposit or such deposit) shall have occurred and be continuing on the date
of such deposit or, insofar as Section 6.01(e) or 6.01(f) is concerned, at
any time during the period ending on the 91st day after the date of such
deposit (it being understood that this condition is a condition subsequent
which shall not be deemed satisfied until the expiration of such period,
but
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in the case of Covenant Defeasance, the covenants which are defeased under
Section 8.03 will cease to be in effect unless an Event of Default under
Section 6.01(e) or 6.01(f) occurs during such period);
(e) Such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of or constitute a default under any other material
agreement or instrument to which the Company or any of its Subsidiaries is
a party or by which any of them is bound;
(f) In the case of an election under either Section 8.02 or 8.03,
the Company shall have delivered to the Trustee an Officers' Certificate
stating that the deposit made by the Company pursuant to its election
under Section 8.02 or 8.03 was not made by the Company with the intent of
preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding creditors of the
Company or others; and
(g) The Company shall have delivered to the Trustee an Officers'
Certificate stating that all conditions precedent provided for or relating
to either the Legal Defeasance under Section 8.02 or the Covenant
Defeasance under Section 8.03 (as the case may be) have been complied with
as contemplated by this Section 8.04.
SECTION 8.05. Deposited U.S. Legal Tender Equivalents and U.S.
Government Obligations to Be Held in Trust; Other Miscellaneous Provisions.
Subject to Section 8.06, all cash, U.S. Legal Tender Equivalents and U.S.
Government Obligations (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 in respect of the outstanding
Securities shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Securities and this Indenture, to the payment, either
directly or through any Paying Agent as the Trustee may determine, to the
Holders of such Securities of all sums due and to become due thereon in respect
of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law.
SECTION 8.06. Repayment to the Company. Subject to any applicable
escheat or abandoned property laws, any money deposited with the Trustee or any
Paying Agent, or then held by the Company, in trust for the payment, of the
principal of, premium, if any, or interest on any Security and remaining
unclaimed for two years after such principal, and premium, if any, or interest
has become due and payable shall be paid to the Company on its request; and the
Holder of such Security shall thereafter look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money shall thereupon cease.
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SECTION 8.07. Reinstatement. If the Trustee or Paying Agent is
unable to apply any cash, U.S. Legal Tender Equivalents or U.S. Government
Obligations in accordance with Section 8.02 or 8.03, as the case may be, by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.02 or
8.03 until such time as the Trustee or Paying Agent is permitted to apply such
money in accordance with Sections 8.02 and 8.03, as the case may be; provided,
however, that, if the Company makes any payment of principal of, premium, if
any, or interest on any Security following the reinstatement of its obligations,
the Company shall be subrogated to the rights of the Holders of such Securities
to receive such payment from the cash held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holder, the Company, when authorized by Board
Resolutions, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes:
(1) to cure any ambiguity, defect, or inconsistency, or to make any
other provisions with respect to matters or questions arising under this
Indenture which shall not be inconsistent with the provisions of this
Indenture, provided such action pursuant to this clause (1) shall not
adversely affect the interests of any Holder in any respect;
(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power conferred upon the Company
herein or to make any other change hereto or thereto that does not
adversely affect the rights of any Holder, provided that the Company has
delivered to the Trustee an Opinion of Counsel stating that such change
does not adversely affect the rights of any Holder;
(3) to provide for collateral or guarantors for the Securities;
(4) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the obligations of the Company,
herein and in the Securities in accordance with Article 5; or
(5) to comply with the TIA.
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SECTION 9.02. Amendments, Supplemental Indentures and Waivers with
Consent of Holders. Subject to Section 6.08, with the consent of the Holders of
not less than a majority in aggregate principal amount of then outstanding
Securities, by written act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by Board Resolutions, and the Trustee may
amend or supplement this Indenture or the Securities or enter into an indenture
or indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
the Securities or of modifying in any manner the rights of the Holders under
this Indenture or the Securities. Subject to Section 6.08, the Holder or Holders
of not less than a majority in principal amount of then outstanding Securities
may waive compliance by the Company with any provision of this Indenture or the
Securities. Notwithstanding any of the above, however, no such amendment,
supplemental indenture or waiver shall, without the consent of each Holder
affected thereby:
(1) reduce the percentage of principal amount of Securities whose
Holders must consent to an amendment, supplement, supplemental indenture
or waiver of any provision of this Indenture or the Securities;
(2) reduce the rate or extend the time for payment of interest on
any Security or any premium payable upon the redemption thereof;
(3) reduce the principal amount of any Security, the Change of
Control Purchase Price, the Asset Sale Offer Price or the Redemption
Price;
(4) change the Stated Maturity of any Security;
(5) alter the redemption provisions of Article 3 or paragraph 5 of
the Securities or mandatory exchange provisions or the provisions
(including related definitions) of Article 11, in any case, in a manner
adverse to any Holder;
(6) make any changes in Section 6.08, 6.12 or this Section 9.02
except to increase any required percentage or to provide that certain
other provisions of this Indenture cannot be modified without the consent
of each Holder affected thereby;
(7) make the Principal of, or the interest on, any Security payable
with anything or in any manner other than as provided for in this
Indenture (including changing the place of payment where, or the coin or
currency in which, any Security or any premium or the interest thereon is
payable and the Securities as in effect on the date hereof); or
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(8) make the Securities subordinated in right of payment to any
extent or under any circumstances to any other indebtedness.
With the consent of Holders of 66 2/3% of the outstanding aggregate
principal amount of the Securities, the Company and the Trustee may change the
Change of Control Purchase Date or the Asset Sale Offer Period.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture or
waiver.
After an amendment, supplement or waiver under this Section 9.02 or
Section 9.04 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under this
Article 9, the Company may, but shall not be obligated to, offer to any Holder
who consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or waiver.
SECTION 9.03. Compliance with TIA. Every amendment, waiver or
supplement of this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.04. Revocation and Effect of Consents. Until an amendment,
waiver or supplement becomes effective, a consent to it by a Holder is a
continuing consent by the Holder and every subsequent Holder of a Security or
portion of a Security that evidences the same debt as the consenting Holder's
Security, even if notation of the consent is not made on any Security. However,
any such Holder or subsequent Holder may revoke the consent as to his Security
or portion of his Security by written notice to the Company or the Person
designated by the Company as the Person to whom consents should be sent if such
revocation is received by the Company or such Person before the date on which
the Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Securities have consented (and not theretofore
revoked such consent) to the amendment, supplement or waiver.
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The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be the date so fixed by the
Company notwithstanding the provisions of the TIA. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those Persons who were Holders at such record date, and only those Persons (or
their duly designated proxies), shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (8) of Section 9.02, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; provided that any such waiver
shall not impair or affect the right of any Holder to receive payment of
principal and premium of and interest on a Security, on or after the respective
dates set for such amounts to become due and payable expressed in such Security,
or to bring suit for the enforcement of any such payment on or after such
respective dates.
SECTION 9.05. Notation on or Exchange of Securities. If an
amendment, supplement or waiver changes the terms of a Security, the Trustee may
require the Holder of the Security to deliver it to the Trustee or require the
Holder to put an appropriate notation on the Security. The Trustee may place an
appropriate notation on the Security about the changed terms and return it to
the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Any failure to make
the appropriate notation or to issue a new Security shall not affect the
validity of such amendment, supplement or waiver.
SECTION 9.06. Trustee To Sign Amendments, Etc. The Trustee shall
execute any amendment, supplement or waiver authorized pursuant to this Article
9; provided that the Trustee may, but shall not be obligated to, execute any
such amendment, supplement or waiver which affects the Trustee's own rights,
duties or immunities under this Indenture. The Trustee shall be entitled to
receive, and shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of any amendment, supplement or waiver authorized
pursuant to this Article 9 is authorized or permitted by this Indenture.
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ARTICLE 10
EXCHANGE OF SECURITIES
SECTION 10.01. Mandatory Exchange. In the event the Trading Price
equals or exceeds 115% of the Exchange Price for ten out of 15 consecutive
Trading Days, each outstanding Security will be mandatorily exchanged on the
fifth Trading Day (the "Exchange Date") immediately succeeding such tenth
Trading Day (unless the Company shall have elected on or prior to the second
Trading Day immediately succeeding such tenth Trading Day to permanently
terminate the mandatory exchange provisions of the Securities) into [ ] PCC
Shares (subject to adjustment for certain events) per $1,000 principal amount of
Securities (initially equivalent to a price of $[ ] per share (the "Exchange
Price")).
SECTION 10.02. Exchange Procedures. Subject to Section 10.03, on and
after the Exchange Date, interest will cease to accrue on the Securities. Each
Holder will be obligated to surrender its Securities at the specified office of
the Exchange Agent and PCC will be obligated to issue the PCC Shares
exchangeable therefor (the "Exchange Shares"). Such exchange will be effected
through the facilities of DTC, with each Holder being deemed to have
automatically tendered its Securities for exchange on the Exchange Date in
accordance with applicable DTC procedures. Each Holder's automatic exchange will
be subject to the delivery of the Exchange Shares to the Paying Agent prior to
the Exchange Date.
SECTION 10.03. Compliance with Law. Exchange of the Securities into
the PCC Shares shall be subject to compliance with any reporting requirements or
approvals established by the Commission as the same may be amended, supplemented
or superseded from time to time. In the event that the mandatory exchange of
Securities into PCC Shares on the Exchange Date is prohibited by law, the
Company shall give notice thereof to the Trustee and the Paying Agent, and the
Securities shall remain outstanding and the exchange shall not occur until the
first Trading Day thereafter when both (i) such exchange is no longer prohibited
by applicable law and (ii) the Trading Price equaled or exceeded 115% of the
Exchange Price for ten out of the 15 consecutive Trading Days immediately
preceding such Trading Day (subject to the limitations set forth in Section
10.01).
SECTION 10.04. Adjustment of Exchange Price. The Exchange Price
shall be adjusted from time to time by the Company as follows:
(a) In case PCC shall (i) pay a dividend in PCC Shares to all
holders of any class of capital stock of PCC, (ii) make a distribution in
PCC Shares to all holders of any class of capital stock of PCC, (iii)
subdivide its outstanding PCC Shares into a
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greater number of shares, (iv) combine its outstanding PCC Shares into a smaller
number of shares or (v) reclassify its outstanding PCC Shares, the Exchange
Price in effect immediately prior thereto shall be adjusted so that the Holder
of any Security thereafter surrendered for exchange shall be entitled to receive
that number of PCC Shares which it would have owned had such Security been
exchanged immediately prior to the happening of such event. Any adjustment made
pursuant to this subsection (a) shall become effective immediately after the
record date in the case of a dividend in shares or distribution and shall become
effective immediately after the effective date in the case of subdivision or
combination.
(b) In case PCC shall issue to all holders of PCC Shares rights, options
or warrants or negotiable instruments, debentures or securities convertible into
PCC Shares or exchangeable therefor (collectively, "Discount Rights"), in each
case, entitling such holders (for a period commencing no earlier than the record
date described below and expiring not more than 60 days after such record date)
to subscribe for or purchase or exchange for PCC Shares at a price per share
less than the current market price per PCC Shares (as determined in accordance
with subsection (e) of this Section 10.04) at the record date for the
determination of shareholders entitled to receive such Discount Rights, the
Exchange Price in effect immediately prior thereto shall be adjusted so that the
same shall equal the price determined by multiplying the Exchange Price in
effect immediately prior to such record date by a fraction of which the
numerator shall be the number of PCC Shares outstanding on such record date,
plus the number of shares which the aggregate offering price of the total number
of PCC Shares so offered (or the aggregate Exchange Price of the convertible
securities so offered) would purchase at such current market price, and of which
the denominator shall be the number of PCC Shares outstanding on such record
date plus the number of additional PCC Shares offered (or into which the
exchangeable or convertible securities so offered are exchangeable or
convertible). Such adjustment shall be made successively whenever any Discount
Rights are issued, and shall become effective immediately after such record
date. If at the end of the period during which such Discount Rights are
exercisable not all Discount Rights shall have been exercised, the adjusted
Exchange Price shall be immediately readjusted to what it would have been based
upon the number of additional PCC Shares actually issued (or the number of PCC
Shares issuable upon exchange or conversion of exchangeable or convertible
securities actually issued).
(c) In case PCC shall distribute to all or substantially all holders of
PCC Shares any shares of capital stock of PCC (other than PCC Shares) or capital
stock of PCC's subsidiaries or evidences of indebtedness of the Company or
assets (including cash and securities but excluding those rights, dividends,
options, warrants and distri-
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butions referred to in (a) and (b) of this Section 10.04), Exchange Price shall
be adjusted so that the same shall equal the price determined by multiplying the
Exchange Price in effect immediately prior to the date of such distribution by a
fraction of which the numerator shall be the current market price per PCC Share
(as defined in subsection (d) of this Section 10.04) on the record date
mentioned below less the fair market value on such record date (as determined by
the Board of Directors, whose determination shall be conclusive evidence of such
fair market value) of the portion of the capital stock, evidences of
indebtedness or other assets so distributed or of such rights or warrants
applicable to one PCC Share (determined on the basis of the number of PCC Shares
outstanding on the record date), and of which the denominator shall be the
current market price per share (as defined in subsection (d) of this Section
10.04) of the PCC Shares on such record date. Such adjustment shall become
effective immediately after the record date for the determination of
shareholders entitled to receive such distribution.
In the event that PCC shall distribute rights, options or warrants (other
than those referred to in subsection (b) of this Section 10.04) ("Rights") pro
rata to holders of PCC Shares, so long as such Rights have not expired or been
redeemed, the Holder of any Security surrendered for exchange will be entitled
to receive upon exchange, in addition to the Exchange Shares, a number of Rights
to be determined as follows: (i) if such exchange occurs on or prior to the date
for the distribution to the holders of Rights of separate certificates
evidencing such Rights (the "Distribution Date"), the same number of Rights to
which a holder of a number of shares of PCC Shares equal to the number of
Exchange Shares is entitled at the time of such exchange in accordance with the
terms and provisions of and applicable to the Rights and (ii) if such exchange
occurs after the Distribution Date, the same number of Rights to which a holder
of the number of shares of PCC Shares into which such Security was exchangeable
immediately prior to the Distribution Date would have been entitled on the
Distribution Date in accordance with the terms and provisions of and applicable
to the Rights. The Exchange Price will not be subject to adjustments on account
of any declaration, distribution or exercise of such Rights.
(d) In case either of the following shall occur: (a) any consolidation or
merger to which PCC is a party other than a merger in which PCC is the
continuing corporation and which does not result in any reclassification of, or
change (other than a change in name, or in par value, or from par value to no
par value, or from no par value to par value, or as a result of a subdivision or
combination) in, outstanding PCC Shares; or (b) any spin-off or reorganization
of all or substantially all of the property and assets of PCC, then the Exchange
Price in effect immediately before such action shall be adjusted so that the
Holders, upon exchange of Securities immediately fol-
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lowing such event, shall be entitled to receive the kind and amount of property
they would have owned or been entitled to receive upon or by reason of such
event if the Securities had been exchanged immediately before such event. Such
adjustment shall become effective retroactively immediately after the effective
date of such consolidation, merger, reorganization or spin-off.
(e) For the purpose of any computation under subsections (b) and (c) of
this Section 10.04, the current market price per PCC Share on any date shall be
deemed to be the average of the daily closing prices for the 30 consecutive
Trading Days commencing 45 Trading Days before the record date with respect to
distributions, issuances or other events requiring such computation under
subsection (b) or (c) of this Section 10.04. The closing price for each day
shall be the last reported sales price or, in case no such reported sale takes
place on such date, the average of the reported closing bid and asked prices in
either case on the American Stock Exchange or such other nationally recognized
exchange or automated quotation system on which the PCC Shares are then traded
or, if not listed or admitted to trading on any national securities exchange,
the closing sales price of the PCC Shares as quoted by NASDAQ or, in case no
reported sale takes place, the average of the closing bid and asked prices as
quoted by NASDAQ or any comparable system or, if the PCC Shares are not quoted
on NASDAQ or any comparable system, the closing sales price or, in case no
reported sale takes place, the average of the closing bid and asked prices, as
furnished by any two members of the National Association of Securities Dealers,
Inc. selected from time to time by PCC for that purpose. If no such prices are
available, the current market price per share shall be the fair value of a PCC
Share as determined in good faith by the Board of Directors of PCC.
(f) In any case in which this Section 10.04 shall require that an
adjustment be made following a record date established for purposes of this
Section 10.04, the Company may elect to defer (but only until five Business Days
following the filing by the Company with the Trustee of the certificate
described in Section 10.07) issuing to the Holder of any Security exchanged
after such record date the PCC Shares issuable upon such exchange over and above
the PCC Shares issuable upon such exchange only on the basis of the Exchange
Price prior to adjustment; and, in lieu of the shares the issuance of which is
so deferred, the Company shall issue or cause its transfer agents to issue due
bills or other appropriate evidence prepared by the Company of the right to
receive such shares. If any distribution in respect of which an adjustment to
the Exchange Price is required to be made as of the record date or effective
date therefor is not thereafter made or paid by the Company for any reason, the
Exchange Price shall be readjusted to the Exchange Price which would then be in
effect if such record date had not been fixed or such effective date had not
occurred.
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SECTION 10.05. No Adjustment. No adjustment in the Exchange Price
shall be required until the cumulative adjustments amount to 1% or more of the
Exchange Price as last adjusted; provided, however, that any adjustments which
by reason of this Section 10.05 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Article 10 shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be.
No adjustment need be made for a transaction referred to in Section
10.04 if all Holders are entitled to participate in the transaction on a basis
and with notice that the Board of Directors of PCC determines to be fair and
appropriate in light of the basis and notice on which holders of PCC Shares
participate in the transaction. The Company shall give notice to the Trustee of
any such determination.
No adjustment need be made for rights to purchase PCC Shares or
issuances of PCC Shares pursuant to a plan for reinvestment of dividends or
interest.
To the extent that the Securities become convertible into the right
to receive cash, no adjustment need be made thereafter as to the cash. Interest
will not accrue on the cash.
SECTION 10.06. Adjustment for Tax Purposes. The Company shall be
entitled to make such reductions in the Exchange Price, in addition to those
required by Section 10.04, as it in its discretion it shall determine to be
advisable in order that any stock dividends, subdivisions of shares,
distributions of rights to purchase stock or securities or distributions of
securities convertible into or exchangeable for stock hereafter made by PCC to
its shareholders shall not be taxable.
SECTION 10.07. Notice of Adjustment. Whenever the Exchange Price is
adjusted, the Company shall promptly mail to the Holders a notice of the
adjustment and file with the Trustee an Officers' Certificate briefly stating
the facts requiring the adjustment and the manner of computing it.
SECTION 10.08. Notice of Certain Transactions. In the event that:
(1) the Company of PCC takes any action which would require an
adjustment in the Exchange Price;
(2) the Company of PCC consolidates or merges with, or transfers all
or substantially all of its property and assets to, another corporation
and shareholders of the Company or PCC, as the case may be, must approve
the transaction; or
(3) there is a dissolution or liquidation of the Company or PCC,
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the Company shall mail to the Holders and file with the Trustee a notice
stating the proposed record or effective date, as the case may be. The
Company shall mail the notice at least ten days before such date. Failure
to mail such notice or any defect therein shall not affect the validity of
any transaction referred to in clause (1), (2) or (3) of this Section
10.08.
SECTION 10.09. Trustee's Disclaimer. The Trustee shall have no duty
to determine when an adjustment under this Article 10 should be made, how it
should be made or what such adjustment should be, but may accept as conclusive
evidence of that fact or the correctness of any such adjustment, and shall be
protected in relying upon, an Officers' Certificate including the Officers'
Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 10.07. The Trustee makes no representation as to the
validity or value of any securities or assets issued upon conversion of
Securities, and the Trustee shall not be responsible for the Company's or PCC's
failure to comply with any provisions of this Article 10.
SECTION 10.10. Fractional Shares. PCC will not issue fractional PCC
Shares upon conversion of Securities. In lieu thereof, the Company will pay a
cash adjustment based upon the market price of the PCC Shares.
SECTION 10.11. Taxes on Exchange. The Company shall pay any
documentary, stamp or similar issue or transfer tax due on the issue of PCC
Shares upon such exchange. However, the Holder shall pay any such tax which is
due because the Holder requests the shares to be issued in a name other than the
Holder's name. The Exchange Agent may refuse to deliver the certificate
representing the Exchange Shares in a name other than the Holder's name until
the Exchange Agent receives a sum sufficient to pay any tax which will be due
because the Exchange Shares are to be issued in a name other than the Holder's
name. Nothing herein shall preclude any tax withholding required by law or
regulation.
SECTION 10.12. Satisfaction of Obligations under Securities. On
exchange of a Security, a Holder will not receive any cash payment representing
an accrued discount or premium payment. PCC's delivery to such Holder of the
Exchange Shares (or cash adjustment pursuant to Section 10.10) into which the
Security is exchangeable will be deemed to satisfy the Company's obligation to
pay the principal amount and any accrued discount or premium attributable to the
period from the Issue Date to the date of exchange.
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ARTICLE 11
RIGHT TO REQUIRE REPURCHASE
SECTION 11.01. Repurchase of Securities at Option of the Holder upon
a Change of Control. (a) In the event that a Change of Control occurs, each
Holder will have the right, at such Holder's option, to require the Company to
repurchase all or any part of such Holder's Securities (provided that the
principal amount of such securities at stated maturity must be $1,000 or an
integral multiple thereof) pursuant to an unconditional, irrevocable offer by
the Company (the "Change of Control Offer") on a date that is no later than 45
Business Days after the occurrence of such Change of Control (the "Change of
Control Purchase Date"), at a cash price (the "Change of Control Purchase
Price") equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to and including the Change of Control Purchase Date.
(b) In the event that pursuant to this Section 11.01 the Company
shall be required to commence a Change of Control Offer, the Company shall
follow the procedures set forth in this Section 11.01 as follows:
(1) the Change of Control Offer shall commence within 20 Business
Days following the Change of Control date;
(2) the Change of Control Offer shall remain open for 20 Business
Days, except to the extent that a longer period is required by applicable
law (the "Change of Control Offer Period");
(3) upon the expiration of a Change of Control Offer Period, the
Company shall purchase all of the properly tendered and not properly
withdrawn Securities in response to the Change of Control Offer;
(4) the Company shall provide the Trustee with notice of the Change
of Control Offer at least five Business Days before the commencement of
any Change of Control Offer; and
(5) on or before the commencement of any Change of Control Offer,
the Company or the Trustee (upon the request and at the expense of the
Company) shall send, by first-class mail, a notice to each of the
Securityholders, which (to the extent consistent with this Indenture)
shall govern the terms of the Change of Control Offer and shall state:
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(i) that the Change of Control Offer is being made pursuant to
such notice and this Section 11.01 and that all Securities, or
portions thereof, tendered will be accepted for payment;
(ii) the Change of Control Purchase Price (including the
amount of accrued and unpaid interest), the Change of Control
Purchase Date and the Change of Control Put Date (as defined below);
(iii) that any Security, or portion thereof, not tendered or
accepted for payment will continue to accrue interest;
(iv) that, unless the Company defaults in depositing cash with
the Paying Agent in accordance with the last paragraph of this
clause (b) or such payment is prevented, any Security, or portion
thereof, accepted for payment pursuant to the Change of Control
Offer shall cease to accrue interest after the Change of Control
Purchase Date;
(v) that Holders electing to have a Security, or portion
thereof, purchased pursuant to a Change of Control Offer will be
required to surrender the Security, with the form entitled "Option
of Holder to Elect Purchase" on the reverse of the Security
completed, to the Paying Agent (which may not for purposes of this
Section 11.01, notwithstanding anything in this Indenture to the
contrary, be the Company or any Affiliate of the Company) at the
address specified in the notice prior to the close of business on
the earlier of (a) the third Business Day prior to the Change of
Control Purchase Date and (b) the third Business Day following the
expiration of the Change of Control Offer (such earlier date being
the "Change of Control Put Date");
(vi) that Holders will be entitled to withdraw their election,
in whole or in part, if the Paying Agent (which may not for purposes
of this Section 11.01, notwithstanding anything in this Indenture to
the contrary, be the Company or any Affiliate of the Company)
receives, up to the close of business on the Change of Control Put
Date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Securities
the Holder is withdrawing and a statement that such Holder is
withdrawing his election to have such principal amount of Securities
purchased; and
(vii) a brief description of the events resulting in such
Change of Control.
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Any such Change of Control Offer shall comply with all applicable
provisions of Federal and state securities laws, rules and regulations,
including those regulating tender offers, if applicable, and any provisions of
this Indenture which conflict with such laws shall be deemed to be superseded by
the provisions of such laws.
On or before the Change of Control Purchase Date, the Company will
(i) accept for payment Securities or portions thereof properly tendered and not
properly withdrawn pursuant to the Change of Control Offer, (ii) deposit with
the Paying Agent cash sufficient to pay the Change of Control Purchase Price
(including accrued and unpaid interest) for all Securities or portions thereof
so tendered and (iii) deliver to the Trustee Securities so accepted together
with an Officers' Certificate listing the Securities or portions thereof being
purchased by the Company. The Paying Agent will on the Change of Control
Purchase Date promptly deliver to Holders of Securities so accepted payment in
an amount equal to the Change of Control Purchase Price for such Securities,
together with any accrued but unpaid interest, and the Trustee shall promptly
authenticate and mail or deliver to such Holders a new Security equal in
principal amount to any unpurchased portion of the Security surrendered. Any
Securities not so accepted shall be promptly mailed or delivered by the Company
to the Holder thereof. The Company will announce publicly the results of the
Change of Control Offer on or as soon as practicable after the Change of Control
Purchase Date.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. TIA Controls. If any provision of this Indenture
limits, qualifies, or conflicts with the duties imposed by operation of the TIA,
the imposed duties, upon qualification of this Indenture under the TIA, shall
control.
SECTION 12.02. Notices. Any notices or other communications to the
Company, PCC or the Trustee required or permitted hereunder shall be in writing,
and shall be sufficiently given if made by hand delivery, by telex, by
telecopier or registered or certified mail, postage prepaid, return receipt
requested, addressed as follows:
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if to the Company:
Price Communications Cellular Holdings, Inc.
45 Rockefeller Plaza
New York, New York 10020
Attention: Chief Financial Officer
Telecopy: (212) 397-3755
if to PCC:
Price Communications Corporation
45 Rockefeller Plaza
New York, New York 10020
Attention: Chief Financial Officer
Telecopy: (212) 397-3755
if to the Trustee:
Bank of Montreal Trust Company
88 Pine Street
19th Floor
New York, New York 10005
Attention: Corporate Trust Department
Telecopy: (212) 701-7698
Any party by notice to each other party may designate additional or
different addresses as shall be furnished in writing by such party. Any notice
or communication to any party shall be deemed to have been given or made as of
the date so delivered, if personally delivered; when answered back, if telexed;
when receipt is acknowledged, if telecopied; and five Business Days after
mailing if sent by registered or certified mail, postage prepaid (except that a
notice of change of address shall not be deemed to have been given until
actually received by the addressee).
Any notice or communication mailed to a Holder shall be mailed to
him by first class mail or other equivalent means at his address as it appears
on the registration books of the Registrar and shall be sufficiently given to
him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
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SECTION 12.03. Communications by Holders with Other Holders. Holders
may communicate pursuant to TIA ss. 312(b) with other Holders with respect to
their rights under this Indenture or the Securities. The Company, PCC, the
Trustee, the Registrar and any other Person shall have the protection of TIA ss.
312(c).
SECTION 12.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company or PCC to the Trustee to take any
action under this Indenture, such Person shall furnish to the Trustee:
(1) an Officers' Certificate (in form and substance reasonably
satisfactory to the Trustee) stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an opinion of Counsel (in form and substance reasonably
Satisfactory to the Trustee) stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 12.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall include:
(1) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of each such
Person, such condition or covenant has been complied with; provided,
however, that with respect to matters of fact an Opinion of Counsel may
rely on an Officers' Certificate or certificates of public officials.
SECTION 12.06. Rules by Trustee, Paying Agent, Registrar. The
Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Paying Agent or Registrar may make reasonable rules for its
functions.
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SECTION 12.07. Legal Holidays. If a payment date is a Legal Holiday
at such place, payment may be made at such place on the next succeeding day that
is not a Legal Holiday, and no interest shall accrue for the intervening period.
SECTION 12.08. Governing Law. THIS INDENTURE AND THE SECURITIES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW
YORK. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK
STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY
FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN
RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
INDENTURE AND THE SECURITIES, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID
COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY
DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF THE TRUSTEE OR ANY SECURITYHOLDER TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
SECTION 12.09. No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or any of its respective Subsidiaries. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.
SECTION 12.10. No Recourse Against Others. No direct or indirect
stockholder, employee, director or officer, as such, past, present or future of
the Company or of PCC or any successor entity shall have any personal liability
in respect of the obligations of the Company or PCC under the Securities or this
Indenture by reason of his or its status as such stockholder, employee, director
or officer. Each Holder by accepting a Security waives and releases all such
liability. Such waiver an release are part of he consideration for the issuance
of the Securities.
<PAGE>
-84-
SECTION 12.11. Successors. All agreements of the Company and PCC in
this Indenture and the Securities shall their respective successors. All
agreements of the Trustee in this Indenture shall bind its successor.
SECTION 12.12. Duplicate Originals. All parties may sign any number
of copies or counterparts of this Indenture. Each signed copy or counterpart
shall be an original, but all of them together shall represent the same
agreement.
SECTION 12.13. Severability. In case any one or more of the
provisions in this Indenture or in the Securities shall be held invalid, illegal
or unenforceable, in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions shall not in any way be affected or impaired thereby, it being
intended that all of the provisions hereof shall be enforceable to the full
extent permitted by law.
SECTION 12.14. Table of Contents, Headings, Etc. The Table of
Contents, Cross-Reference Table and headings of the Articles and the Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part hereof and shall in no way modify or restrict any of the
terms or provisions hereof.
[Signature Pages Follow]
<PAGE>
S-1
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.
PRICE COMMUNICATIONS CELLULAR HOLDINGS,
INC., a [New York] corporation
By:
------------------------------------
Name:
Title:
PRICE COMMUNICATIONS CORPORATION,
a [New York] corporation
By:
------------------------------------
Name:
Title:
<PAGE>
S-2
BANK OF MONTREAL TRUST
COMPANY, as Trustee
By:
------------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
{FORM OF SECURITY}
[__]% SENIOR EXCHANGEABLE PAYABLE-IN-KIND NOTE
DUE 2008
No.
CUSIP No.
Price Communications Cellular Holdings, Inc., a [New York]
corporation (hereinafter called the "Company," which term includes any
successors under the Indenture hereinafter referred to), for value received,
hereby promises to pay to CEDE & CO., or registered assigns, the principal sum
of $_________ Dollars, on August 15, 2008.
Interest Payment Dates: February 15 and August 15 of each year;
commencing February 15, 1999.
Record Dates: February 1 and August 1 immediately preceding the
Interest Payment Date.
Reference is made to the further provisions of this Security on the
reverse side, which will, for all purposes, have the same effect as if set forth
at this place.
IN WITNESS WHEREOF, the Company has caused this Instrument to be
duly executed.
Dated:
PRICE COMMUNICATIONS CELLULAR
HOLDINGS, INC., a [New York] corporation
By: __________________________
Name:
Title:
PRICE COMMUNICATIONS CORPORATION,
a [New York] corporation
By: __________________________
Name:
Title:
A-1
<PAGE>
{FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION}
This is one of the Securities described in the within-mentioned
Indenture.
Bank of Montreal Trust Company,
as Trustee
By: __________________________
Authorized Signatory
Dated:
A-2
<PAGE>
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC.
[__]% Senior Exchangeable Payable-in-Kind Note due 2008
Unless and until it is exchanged in whole or in part for Securities
in definitive form, this Security may not be transferred except as a whole by
the Depository to a nominee of the Depository or by a nominee of the Depository
to the Depository or another nominee of the Depository or by the Depository or
any such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation, ("DTC"), to the Company
or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.(1)
1. Interest.
Price Communications Cellular Holdings, Inc., a [New York]
corporation (hereinafter called the "Company," which term includes any
successors under the Indenture hereinafter referred to), promises to pay
interest on the principal amount of this Security at the rate and in the manner
specified below. Interest will accrue at [ ]% per annum from [ ], 1998,
or from the most recent date to which interest has been paid or provided for,
and will be payable semi-annually on August 15 and February 15 of each year,
commencing February 15, 1999, or if any such day is not a Business Day on the
next succeeding Business Day (each an "Interest Payment Date") to Holders of
record of the Securities at the close of business on the immediately preceding
August 1 or February 1 (the "Record Date"), whether or not a Business Day. The
interest rate on the Securities will be permanently reduced by 0.50% once cash
interest begins to accrue on the Securities. Cash interest will begin to accrue
on the Securities on February 15, 2003; provided that at any time prior to
February 15, 2003, the Company may make an election on any Interest Payment Date
to commence the accrual of cash interest from and after such Interest Payment
Date, in which case, cash interest will be payable on each Interest Payment Date
thereafter. Prior to February 15, 2003, the Company
- ----------
(1) This paragraph should only be added if the Security is issued in global
form.
A-3
<PAGE>
shall notify the Trustee in writing of its election to pay interest on this
Security in cash not less than 10 nor more than 45 days prior to the Record Date
for the first Interest Payment Date on which cash interest will be paid.
Interest payable on any Interest Payment Date prior to the earlier of February
15, 2003 and the Company's election to commence the accrual of cash interest
shall be payable through the issuance of additional Securities (valued at 100%
of the principal amount thereof). Additional Securities shall be governed by,
and entitled to the benefits of, the Indenture and shall be subject to the terms
of the Indenture and shall be subject to the same terms (including the rate of
interest from time to time payable thereon) as this Security (except, as the
case may be, with respect to the issuance date and the aggregate principal
amount). Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months. Interest shall accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
issuance. To the extent lawful, the Company shall pay interest on overdue
principal at the rate of the then applicable interest rate on the Securities; it
shall pay interest on overdue installments of interest (without regard to any
applicable grace periods) at the same rate to the extent lawful.
2. Method of Payment.
The Company shall pay interest on the Securities (except defaulted
interest) to the Persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date. Holders must
surrender Securities to a Paying Agent to collect principal payments. Except as
provided below, the Company shall pay principal and cash interest in such coin
or currency of the United States of America as at the time of payment shall be
legal tender for payment of public and private debts ("U.S. Legal Tender").
However, the Company may pay principal and cash interest by wire transfer of
Federal funds, or interest by its check payable in such U.S. Legal Tender. The
Company may deliver any such interest payment to the Paying Agent or the Company
may mail any such interest payment to a Holder at the Holder's registered
address.
3. Paying Agent and Registrar.
Initially, Bank of Montreal Trust Company (the "Trustee") will act
as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or co-Registrar without notice to Holders. The Company or any of its
Subsidiaries may, subject to certain exceptions, act as Paying Agent, Registrar
or co-Registrar.
4. Indenture.
The Company issued the Securities under an Indenture, dated as of
[ ], 1998 (the "Indenture"), among the Company, PCC and the Trustee.
Capitalized terms herein are used as defined in the Indenture unless otherwise
defined herein. The terms of the Securi-
A-4
<PAGE>
ties include those stated in the Indenture and those made part of the Indenture
by reference to the TIA. The Securities are subject to all such terms, and
Holders of Securities are referred to the Indenture and the TIA for a statement
of them. The Securities are general obligations of the Company limited in
aggregate principal amount to $[ ].
5. Redemption.
Except as set forth below, the Company will not have the right to
redeem any Securities prior to August 15, 2003. On or after August 15, 2003, the
Company will have the right to redeem all or any part of the Securities in cash
at the redemption prices (expressed as a percentage of the aggregate principal
amount thereof) set forth below, in each case including accrued and unpaid
interest, if any, to the applicable Redemption Date (subject to the right of
Holders of record on the relevant regular Record Date to receive interest due on
an Interest Payment Date that is on or prior to the Redemption Date) if redeemed
during the 12-month period beginning August 15 of the years indicated below:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2003 [ ]%
2004 [ ]%
2005 [ ]%
2006 and thereafter 100.00000%
</TABLE>
In the case of a partial redemption, the Trustee shall select the
Securities or portion thereof for redemption on a pro rata basis or in such
other manner as it deems appropriate and fair. The Securities may be redeemed in
part in multiples of $1,000 only.
Any such redemption will comply with Article 3 of the Indenture.
6. Notice of Redemption.
Notice of redemption will be sent by first class mail, at least 30
days and not more than 60 days prior to a Redemption Date, to the Holder of each
Security to be redeemed at such Holder's last address as then shown upon the
registry books of the Registrar.
Any notice which relates to a Security to be redeemed in part only
must state the portion of the principal amount to be redeemed and must state
that on and after the date fixed for redemption, upon surrender of such
Security, a new Security or Securities in a principal amount equal to the
unredeemed portion thereof will be issued. On and after the date
A-5
<PAGE>
fixed for redemption, interest will cease to accrue on the portions of the
Securities called for redemption.
7. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder may register
the transfer of, or exchange Securities in accordance with, the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption prior to 15 days after the
notice of redemption.
8. Mandatory Exchange.
In the event the Trading Price equals or exceeds 115% of the
Exchange Price for 10 out of 15 consecutive Trading Days, this Security will be
mandatorily exchanged on the fifth Trading Day (the "Exchange Date") immediately
succeeding such tenth Trading Day (unless the Company shall have elected on or
prior to the second Trading Day immediately succeeding such tenth Trading Day to
permanently terminate the mandatory exchange provisions of this Security) into
PCC Shares (subject to adjustment for certain events) per $1,000 principal
amount of this Security (initially equivalent to a price of $ per share (the
"Exchange Price")).
Subject to the following paragraph, on and after the Exchange Date,
interest will cease to accrue on this Security. The Holder will be obligated to
surrender this Security at the specified office of the Exchange Agent and PCC
will be obligated to issue the Exchange Shares. Such exchange will be effected
through the facilities of DTC, with the Holder being deemed to have
automatically tendered this Security for exchange on the Exchange Date in
accordance with applicable DTC procedures. The automatic exchange will be
subject to the delivery of the Exchange Shares to the Paying Agent prior to the
Exchange Date.
In the event that PCC shall distribute rights, options or warrants
(other than Discount Rights) ("Rights") pro rata to holders of PCC Shares, so
long as any such Rights have not expired or been redeemed, the Holder of this
Security when it is surrendered for exchange will be entitled to receive upon
exchange, in addition to the Exchange Shares, a number of Rights to be
determined as follows: (i) if such exchange occurs on or prior to the date for
the distribution to the holders of Rights of separate certificates evidencing
such rights (the "Distribution Date"), the same number of Rights to which a
holder of a number of shares of PCC Shares equal to the number of Exchange
Shares is entitled at the time of such exchange in accordance with the terms and
provisions of and applicable to the Rights, and (ii) if such
A-6
<PAGE>
exchange occurs after such Distribution Date, the same number of Rights to which
a holder of the number of shares of PCC Shares into which such Security was
exchangeable immediately prior to such Distribution Date would have been
entitled on such Distribution Date in accordance with the terms and provisions
of and applicable to the Rights. The Exchange Price will not be subject to
adjustments on account of any declaration, distribution or exercise of such
Rights.
On exchange of this Security, the Holder will not receive any cash
payment representing an accrued discount or premium payment. PCC's delivery to
the Holder of the Exchange Shares (or cash adjustment, as described below) into
which this Security is exchangeable will be deemed to satisfy the Company's
obligation to pay the principal amount and any accrued discount or premium
attributable to the period from the Issue Date to the date of exchange.
Fractional PCC Shares are not to be issued upon exchange, but, in
lieu thereof, PCC will pay a cash adjustment based upon the market price of the
PCC Shares.
9. Persons Deemed Owners.
The registered Holder of a Security may be treated as the owner of
it for all purposes.
10. Unclaimed Money.
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee and the Paying Agent(s) will pay the money back to
the Company at its written request. After that, all liability of the Trustee and
such Paying Agent(s) with respect to such money shall cease.
11. Discharge Prior to Redemption or Maturity.
Except as set forth in the Indenture, if the Company irrevocably
deposits with the Trustee, in trust, for the benefit of the Holders, cash, U.S.
Legal Tender Equivalents, U.S. Government Obligations or a combination thereof,
in such amounts as will be sufficient in the opinion of a nationally recognized
firm of independent public accountants selected by the Trustee, to pay the
principal of, premium, if any, and interest on the Securities to redemption or
maturity and comply with the other provisions of the Indenture relating thereto,
the Company will be discharged from certain provisions of the Indenture and the
Securities (including the financial covenants, but excluding their obligation to
pay the principal of and interest on the Securities). Upon satisfaction of
certain additional conditions set forth in the Indenture,
A-7
<PAGE>
the Company may elect to have its obligations discharged with respect to
outstanding Securities.
12. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities may
be amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount of the Securities then outstanding, and
any existing Default or Event of Default or compliance with any provision may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the Securities then outstanding. Without notice to or consent of any
Holder, the parties thereto may amend or supplement the Indenture or the
Securities to, among other things, cure any ambiguity, defect or inconsistency,
or make any other change that does not adversely affect the rights of any Holder
of a Security.
13. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries to, among other things, incur additional
Indebtedness, pay dividends or make certain other restricted payments, enter
into certain transactions with Affiliates, incur Liens, sell assets, merge or
consolidate with any other Person or transfer (by lease, assignment or
otherwise) substantially all of the properties and assets of the Company. The
limitations are subject to a number of important qualifications and exceptions.
The Company must periodically report to the Trustee on compliance with such
limitations.
14. Ranking.
Payment of principal, premium, if any, and interest on the
Securities is (i) senior in the right of payment to all subordinated
Indebtedness of the Company and (ii) pari passu in right of payment to all other
existing and future senior unsecured Indebtedness of the Company.
15. Repurchase at Option of Holder.
(a) If there is a Change of Control, the Company shall be required
to offer to purchase on the Change of Control Payment Date all outstanding
Securities at a purchase price equal to 101% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the Change of Control Payment Date.
Holders of Securities will receive a Change of Control Offer from the Company
prior to any related Change of Control Payment Date and may elect to have such
Securities purchased by completing the form entitled "Option of Holder to Elect
Purchase" appearing below.
A-8
<PAGE>
(b) The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries to sell assets. In the event the
proceeds from a permitted Asset Sale exceed certain amounts, as specified in the
Indenture, the Company will be required either to reinvest the proceeds of such
Asset Sale as described in the Indenture or to make an offer to purchase each
Holder's Securities at 100% of the principal amount thereof, plus accrued
interest, if any, to the purchase date.
16. Successors.
When a successor assumes all the obligations of its predecessor
under the Securities and the Indenture, the predecessor will be released from
those obligations.
17. Defaults and Remedies.
If an Event of Default occurs and is continuing (other than as Event
of Default relating to certain events of bankruptcy, insolvency or
reorganization), then in every such case, unless the principal of all of the
Securities shall have already become due and payable, either the Trustee or the
Holders of 25% in aggregate principal amount of Securities then outstanding may
declare all the Securities to be due and payable immediately in the manner and
with the effect provided in the Indenture. The Holders of Securities may not
enforce the Indenture or the Securities except as provided in the Indenture. The
Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Securities. Subject to certain limitations, Holders of a
majority in aggregate principal amount of the Securities then outstanding may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of Securities notice of any continuing Default or Event of
Default (except a Default in payment of principal or interest), if it determines
that withholding notice is in their interest.
18. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
19. No Recourse Against Others.
No direct or indirect stockholder, employee, director, or officer,
as such, past, present or future, of the Company or any successor corporation
shall have any personal liability in respect of the obligations of the Company
under the securities or the Indenture by reason of his or its status as such
stockholder, employee, director, or officer. The Holder of this
A-9
<PAGE>
Security by accepting this Security waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of this
Security.
20. Authentication.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this
Security.
21. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
Capitalized terms used in this Security but not defined herein have
the meanings ascribed to such terms in the Indenture.
22. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
A-10
<PAGE>
{FORM OF} ASSIGNMENT
I or we assign this Security to
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of assignee
________________________________________________________________________________
and irrevocably appoint _________ agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
Date: _______________ Signed:_______________________________
________________________________________________________________________________
(Sign exactly as name appears on the other side of this Security)
A-11
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.15 or Article 11 of the Indenture, check the appropriate
box:
{_} Section 4.15 {_} Article 11
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.15 or Article 11 of the Indenture, as the case
may be, state the principal amount you want to be purchased: $_____________
Date:_________________ Signature:___________________________________
(Sign exactly as your name appears
on the other side of this security)
A-12
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES(2)
The following exchanges of a part of this Global Security for
Definitive Securities have been made:
<TABLE>
<CAPTION>
Amount of Amount of
decrease in increase in Principal Amount
Principal Principal of this Global Secu- Signature of
Amount of Amount of rity following such authorized officer of
Date of Ex- this Global this Global decrease (or in- Trustee or Securities
change Security Security crease) Custodian
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
- ----------
(2) This schedule should only be added if the Security is issued in global
form.
A-13
<PAGE>
================================================================================
PRICE COMMUNICATIONS WIRELESS, INC.,
as Issuer,
THE GUARANTORS
party hereto from time to time,
and
BANK OF MONTREAL TRUST COMPANY,
---------------------------
as Trustee
INDENTURE
---------------------------
Dated as of June 16, 1998
$1,000,000,000
9-1/8% Senior Secured Notes due 2006
================================================================================
<PAGE>
CROSS-REFERENCE TABLE
Trust Indenture Act Indenture
Section Section
- ------------------- ---------
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.03
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.03
313(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.09
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.09
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.08
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.03
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.04
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.06
(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.05
(f). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13
316(a)(1)(A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
(a)(1)(B). . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.03
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
318(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.01
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
- ------------------------
N.A. means "Not Applicable"
Note: This Cross Reference Table shall not, for any purpose, be deemed to be a
part of the Indenuture.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.02. Incorporation by Reference of the Trust Indenture Act . . . . 25
SECTION 1.03. Rules of Construction . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 2
THE SECURITIES
SECTION 2.01. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.02. Execution and Authentication. . . . . . . . . . . . . . . . . 27
SECTION 2.03. Registrar and Paying Agent. . . . . . . . . . . . . . . . . . 28
SECTION 2.04. Paying Agent to Hold Assets in Trust. . . . . . . . . . . . . 29
SECTION 2.05. Securityholder Lists. . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.06. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.07. Replacement Securities. . . . . . . . . . . . . . . . . . . . 37
SECTION 2.08. Outstanding Securities. . . . . . . . . . . . . . . . . . . . 38
SECTION 2.09. Treasury Securities . . . . . . . . . . . . . . . . . . . . . 38
SECTION 2.10. Temporary Securities. . . . . . . . . . . . . . . . . . . . . 38
SECTION 2.11. Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 2.12. Defaulted Interest. . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 3
REDEMPTION
SECTION 3.01. Optional Redemption . . . . . . . . . . . . . . . . . . . . . 41
SECTION 3.02. Notices to Trustee. . . . . . . . . . . . . . . . . . . . . . 42
SECTION 3.03. Selection of Securities to Be Redeemed. . . . . . . . . . . . 42
SECTION 3.04. Notice of Redemption. . . . . . . . . . . . . . . . . . . . . 43
SECTION 3.05. Effect of Notice of Redemption. . . . . . . . . . . . . . . . 44
SECTION 3.06. Deposit of Redemption Price . . . . . . . . . . . . . . . . . 45
SECTION 3.07. Securities Redeemed in Part . . . . . . . . . . . . . . . . . 45
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ARTICLE 4
COVENANTS
SECTION 4.01. Limitation on Sale and Leaseback Transactions . . . . . . . . 45
SECTION 4.02. Payment of Securities . . . . . . . . . . . . . . . . . . . . 46
SECTION 4.03. Maintenance of Office or Agency . . . . . . . . . . . . . . . 46
SECTION 4.04. Limitation on Restricted Payments . . . . . . . . . . . . . . 47
SECTION 4.05. Corporate Existence . . . . . . . . . . . . . . . . . . . . . 48
SECTION 4.06. Payment of Taxes and Other Claims . . . . . . . . . . . . . . 49
SECTION 4.07. Maintenance of Properties and Insurance . . . . . . . . . . . 49
SECTION 4.08. Compliance Certificate; Notice of Default . . . . . . . . . . 50
SECTION 4.09. Reports; Rule 144A Information Requirement. . . . . . . . . . 50
SECTION 4.10. Limitation on Status as Investment Company. . . . . . . . . . 51
SECTION 4.11. Limitation on Transactions with Related Persons . . . . . . . 51
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness . . . . . 52
SECTION 4.13. Limitations on Restricting Subsidiary Dividends . . . . . . . 55
SECTION 4.14. Limitations on Liens; Impairment of Security Interest . . . . 56
SECTION 4.15. Limitation on Asset Sales and Sales of Subsidiary Stock . . . 57
SECTION 4.16. Waiver of Stay, Extension or Usury Laws . . . . . . . . . . . 64
SECTION 4.17. [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 4.18. Limitation on Lines of Business . . . . . . . . . . . . . . . 64
SECTION 4.19. Restriction on Sale and Issuance of Subsidiary Stock. . . . . 64
SECTION 4.20. Limitation on Guarantees. . . . . . . . . . . . . . . . . . . 65
SECTION 4.21. Minimum Coverage Ratio. . . . . . . . . . . . . . . . . . . . 65
SECTION 4.22. Separate Account. . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01. Limitation on Merger, Sale or Consolidation . . . . . . . . . 66
SECTION 5.02. Successor Corporation Substituted . . . . . . . . . . . . . . 68
ARTICLE 6
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 6.02. Acceleration of Maturity Date; Rescission and Annulment . . . 70
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SECTION 6.03. Collection of Indebtedness and Suits for Enforcement
by Trustee . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 6.04. Trustee May File Proofs of Claim. . . . . . . . . . . . . . . 73
SECTION 6.05. Trustee May Enforce Claims Without Possession of Securities . 74
SECTION 6.06. Priorities. . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 6.07. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . 74
SECTION 6.08. Unconditional Right of Holders to Receive Principal,
Premium and Interest . . . . . . . . . . . . . . . . . . 75
SECTION 6.09. Rights and Remedies Cumulative. . . . . . . . . . . . . . . . 76
SECTION 6.10. Delay or Omission Not Waiver. . . . . . . . . . . . . . . . . 76
SECTION 6.11. Control by Holders. . . . . . . . . . . . . . . . . . . . . . 76
SECTION 6.12. Waiver of Past Default. . . . . . . . . . . . . . . . . . . . 77
SECTION 6.13. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . 77
SECTION 6.14. Restoration of Rights and Remedies. . . . . . . . . . . . . . 78
ARTICLE 7
TRUSTEE
SECTION 7.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 7.02. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 7.03. Individual Rights of Trustee. . . . . . . . . . . . . . . . . 81
SECTION 7.04. Trustee's Disclaimer. . . . . . . . . . . . . . . . . . . . . 81
SECTION 7.05. Notice of Default . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 7.06. Reports by Trustee to Holders . . . . . . . . . . . . . . . . 82
SECTION 7.07. Compensation and Indemnity. . . . . . . . . . . . . . . . . . 83
SECTION 7.08. Replacement of Trustee. . . . . . . . . . . . . . . . . . . . 84
SECTION 7.09. Successor Trustee by Merger, Etc. . . . . . . . . . . . . . . 85
SECTION 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . 85
SECTION 7.11. Preferential Collection of Claims Against Company . . . . . . 85
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. Option to Effect Legal Defeasance or Covenant Defeasance. . . 86
SECTION 8.02. Legal Defeasance and Discharge. . . . . . . . . . . . . . . . 86
SECTION 8.03. Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . 87
SECTION 8.04. Conditions to Legal or Covenant Defeasance. . . . . . . . . . 87
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SECTION 8.05. Deposited U.S. Legal Tender Equivalents and U.S. Government
Obligations to Be Held in Trust; Other Miscellaneous
Provisions . . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 8.06. Repayment to the Company. . . . . . . . . . . . . . . . . . . 89
SECTION 8.07. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . 90
ARTICLE 9
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Supplemental Indentures Without Consent of Holders. . . . . . 90
SECTION 9.02. Amendments, Supplemental Indentures and Waivers with
Consent of Holders . . . . . . . . . . . . . . . . . . . 91
SECTION 9.03. Compliance with TIA . . . . . . . . . . . . . . . . . . . . . 93
SECTION 9.04. Revocation and Effect of Consents . . . . . . . . . . . . . . 93
SECTION 9.05. Notation on or Exchange of Securities . . . . . . . . . . . . 94
SECTION 9.06. Trustee to Sign Amendments, Etc.. . . . . . . . . . . . . . . 95
ARTICLE 10
COLLATERAL AND SECURITY
SECTION 10.01. Security. . . . . . . . . . . . . . . . . . . . . . . . . . . 95
SECTION 10.02. Security Documents. . . . . . . . . . . . . . . . . . . . . . 95
SECTION 10.03. Recording and Opinions. . . . . . . . . . . . . . . . . . . . 96
SECTION 10.04. Reserved. . . . . . . . . . . . . . . . . . . . . . . . . . . 97
SECTION 10.05. Release of Collateral . . . . . . . . . . . . . . . . . . . . 97
SECTION 10.06. Certificates of the Company . . . . . . . . . . . . . . . . . 98
SECTION 10.07. Authorization of Actions To Be Taken by the Trustee
Under the Security Documents . . . . . . . . . . . . . . 98
SECTION 10.08. Authorization of Receipt of Funds by the Trustee Under the
Collateral Documents . . . . . . . . . . . . . . . . . . 98
ARTICLE 11
RIGHT TO REQUIRE REPURCHASE
SECTION 11.01. Repurchase of Securities at Option of the Holder
upon a Change of Control . . . . . . . . . . . . . . . . 99
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ARTICLE 12
GUARANTEE OF SECURITIES
SECTION 12.01. Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . 102
SECTION 12.02. Execution and Delivery of Guarantee . . . . . . . . . . . . . 104
SECTION 12.03. Guarantee Unconditional, Etc. . . . . . . . . . . . . . . . . 104
SECTION 12.04. Limitation of Guarantor's Liability . . . . . . . . . . . . . 105
SECTION 12.05. Contribution. . . . . . . . . . . . . . . . . . . . . . . . . 106
SECTION 12.06. Release . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
SECTION 12.07. Additional Guarantors . . . . . . . . . . . . . . . . . . . . 106
SECTION 12.08. Successors and Assigns. . . . . . . . . . . . . . . . . . . . 107
SECTION 12.09. Waiver of Stay, Extension or Usury Laws . . . . . . . . . . . 107
SECTION 12.10. No Personal Liability of Partners, Stockholders,
Officers, Directors. . . . . . . . . . . . . . . . . . . 107
ARTICLE 13
MISCELLANEOUS
SECTION 13.01. TIA Controls. . . . . . . . . . . . . . . . . . . . . . . . . 108
SECTION 13.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
SECTION 13.03. Communications by Holders with Other Holders. . . . . . . . . 109
SECTION 13.04. Certificate and Opinion as to Conditions Precedent. . . . . . 109
SECTION 13.05. Statements Required in Certificate or Opinion . . . . . . . . 110
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar . . . . . . . . . . 110
SECTION 13.07. Legal Holidays. . . . . . . . . . . . . . . . . . . . . . . . 110
SECTION 13.08. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 110
SECTION 13.09. No Adverse Interpretation of Other Agreements . . . . . . . . 111
SECTION 13.10. No Recourse Against Others. . . . . . . . . . . . . . . . . . 111
SECTION 13.11. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . 112
SECTION 13.12. Duplicate Originals . . . . . . . . . . . . . . . . . . . . . 112
SECTION 13.13. Severability. . . . . . . . . . . . . . . . . . . . . . . . . 112
SECTION 13.14. Table of Contents, Headings, Etc. . . . . . . . . . . . . . . 112
SECTION 13.15. Qualification of Indenture. . . . . . . . . . . . . . . . . . 112
SECTION 13.16. Registration Rights . . . . . . . . . . . . . . . . . . . . . 113
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Exhibit A Form of Security
Exhibit B Form of Guarantee
Exhibit C Form of Certificate to Be Delivered in Connection with Transfers
to Non-QIB Accredited Investors
Exhibit D Form of Certificate to Be Delivered in Connection with Transfers
Pursuant to Regulation S
Exhibit E Form of Security Agreement
Exhibit F Form of Intercreditor Agreement
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<PAGE>
INDENTURE, dated as of June 16, 1998 between Price Communications
Wireless, Inc., a Delaware corporation (the "COMPANY"), the Guarantors party
hereto from time to time, and Bank of Montreal Trust Company, a New York banking
corporation (the "TRUSTEE").
Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Company's
9-1/8% Series A Senior Secured Notes due 2006 and the 9-1/8% Series B Senior
Secured Notes due 2006 which may be exchanged for the 9-1/8% Series A Senior
Secured Notes due 2006:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"ACCEPTANCE AMOUNT" shall have the meaning specified in Section 4.15.
"ACCUMULATED AMOUNT" shall have the meaning specified in Section 4.15.
"ACQUIRED PERSON" shall have the meaning specified in the definition
of "Permitted Investment."
"AFFILIATE" means, with respect to any specified Person, (i) any other
Person directly or indirectly controlling or controlled by, or under direct or
indirect common control with, such specified Person or (ii) any officer,
director, or controlling stockholder of such other Person. For purposes of this
definition, the term "control" means (a) the power to direct the management and
policies of a Person, directly or through one or more intermediaries, whether
through the ownership of voting securities, by contract, or otherwise, or
without limiting the foregoing, the beneficial ownership of 10% or more of the
voting power of the voting common equity of such Person (on a fully diluted
basis) or of warrants or other rights to acquire such equity (whether or not
presently exercisable).
"AGENT" means any Registrar, Paying Agent or co-Registrar.
"ANNUALIZED OPERATING CASH FLOW" on any date means, with respect to
any Person, the Operating Cash Flow for the Reference Period multiplied by four.
"ANNUALIZED OPERATING CASH FLOW RATIO" on any date (the "TRANSACTION
DATE") means, with respect to any Person and its Subsidiaries, the ratio of (i)
consolidated Indebted-
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ness of such Person and its Subsidiaries on the Transaction Date (after giving
PRO FORMA effect to the Incurrence of any Indebtedness on such Transaction Date)
divided by (ii) the aggregate amount of Annualized Operating Cash Flow of such
Person (determined on a PRO FORMA basis after giving effect to all acquisitions
or dispositions of businesses made by such Person and its Subsidiaries from the
beginning of the Reference Period through the Transaction Date as if such
acquisition or disposition had occurred at the beginning of such Reference
Period); PROVIDED that for purposes of such computation, in calculating
Annualized Operating Cash Flow and consolidated Indebtedness, (a) the
transaction giving rise to the need to calculate the Annualized Operating Cash
Flow Ratio will be assumed to have occurred (on a PRO FORMA basis) on the first
day of the Reference Period; (b) the Incurrence of any Indebtedness during the
Reference Period or subsequent thereto and on or prior to the Transaction Date
(and the application of the proceeds therefrom to the extent used to retire
Indebtedness or to acquire businesses) will be assumed to have occurred (on a
PRO FORMA basis) on the first day of such Reference Period; (c) Consolidated
Interest Expense attributable to any Indebtedness (whether existing or being
incurred) bearing a floating interest rate shall be computed as if the rate in
effect on the Transaction Date had been the applicable rate for the entire
period; (d) all members of the consolidated group of such Person on the
Transaction Date that were acquired during the Reference Period or thereafter
and on or prior to the Transaction Date shall be deemed to be members of the
consolidated group of such Person for the entire Reference Period; and (e)
consolidated Indebtedness shall include any Indebtedness constituting Permitted
Parent Securities to the extent that the aggregate outstanding amount thereof
exceeds $153.4 million; PROVIDED, HOWEVER, that with respect to any such
Indebtedness, the amount thereof included pursuant to this clause (e) as of any
date shall be limited to the proportion of such Indebtedness, if any, that is
equal to the proportion of the interest on such Indebtedness that as of the most
recent interest payment date in respect thereof was paid with cash distributed
by the Company pursuant to clause (ii) of the second paragraph of Section 4.04.
When the foregoing definition is used in connection with the Company and its
Restricted Subsidiaries, references to a Person and its Subsidiaries in the
foregoing definition shall be deemed to refer to the Company and its Restricted
Subsidiaries.
"APPLICABLE PREMIUM" means, with respect to a Security at any
Redemption Date, the greater of (i) 1.0% of the principal amount of such
Security and (ii) the excess of (A) the present value at such time of (1) the
redemption price of such Security at June 15, 2002 (such redemption price being
described in Section 3.01), PLUS (2) all remaining required interest payments
(excluding accrued but unpaid interest) due on such Security through June 15,
2002, computed using a discount rate equal to the Treasury Rate plus 50 basis
points, over (B) the then outstanding principal amount of such Security.
"ASSET SALE" shall have the meaning specified in Section 4.15.
"ASSET SALE OFFER" shall have the meaning specified in Section 4.15.
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"ASSET SALE OFFER AMOUNT" shall have the meaning specified in Section
4.15.
"ASSET SALE OFFER PERIOD" shall have the meaning specified in Section
4.15.
"ASSET SALE OFFER PRICE" shall have the meaning specified in Section
4.15.
"ASSET SALE PURCHASE DATE" shall have the meaning specified in Section
4.15.
"ATTRIBUTABLE DEBT" in respect of a Sale and Leaseback Transaction
means, as of the time of determination, the present value (discounted at the
interest rate borne by the Securities, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale and Leaseback Transaction (including any period for
which such lease has been extended).
"BANKRUPTCY LAW" means Title 11, U.S. Code, or any similar Federal,
state or foreign law for the relief of debtors.
"BOARD OF DIRECTORS" means, with respect to any Person, the Board of
Directors of such Person or any committee of the Board of Directors of such
Person authorized, with respect to any particular matter, to exercise the power
of the Board of Directors of such Person.
"BOARD RESOLUTION" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"BUSINESS DAY" means a day that is not a Legal Holiday.
"CAPITALIZED LEASE OBLIGATIONS" means obligations under a lease that
are required to be capitalized for financial reporting purposes in accordance
with GAAP, and the amount of Indebtedness represented by such obligations shall
be the capitalized amount of such obligations, as determined in accordance with
GAAP.
"CAPITAL STOCK" means, with respect to any Person, any capital stock
of such Person and shares, interests, participations or other ownership
interests (however designated) of any Person and any rights (other than debt
securities convertible into capital stock), warrants and options to purchase any
of the foregoing, including (without limitation) each class of common stock and
preferred stock of such Person if such Person is a corporation and each general
and limited partnership interest of such Person if such Person is a partnership.
"CASH EQUIVALENTS" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit to the United
States of America is pledged in support thereof) in
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each case maturing within one year after the date of acquisition, (ii) time
deposits and certificates of deposit and commercial paper issued by the parent
corporation of any domestic commercial bank of recognized standing having
capital and surplus in excess of $500 million and commercial paper issued by
others rated at least A-2 or the equivalent thereof by S&P or at least P-2 or
the equivalent thereof by Moody's and in each case maturing within one year
after the date of acquisition and (iii) investments in money market funds
substantially all of whose assets comprise securities of the types described in
clauses (i) and (ii) above.
"CELLULAR SYSTEM" shall have the meaning specified in Section 4.21.
"CHANGE OF CONTROL" means (i) other than any transaction in which the
resulting transferee Person need not assume the Securities as provided in the
proviso to clause (i)(b) of Section 5.01, any sale, transfer or other
conveyance, whether direct or indirect, of a majority of the fair market value
of the assets of the Company or Parent, on a consolidated basis, in one
transaction or a series of related transactions, if, immediately after giving
effect to such transaction, any "person" or "group" (as such terms are used for
purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not
applicable), other than an Excluded Person or Excluded Group, is or becomes the
"beneficial owner" (as such term is used in Rule 13d-3 promulgated pursuant to
the Exchange Act), directly or indirectly, of more than 50% of the equity of the
transferee, (ii) any person or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable), other
than an Excluded Person or Excluded Group, is or becomes the "beneficial owner"
(as such term is used in Rule 13d-3 promulgated pursuant to the Exchange Act),
directly or indirectly, of more than 50% of the equity of the Company or Parent
then outstanding normally entitled to vote in elections of directors, or (iii)
during any period of 12 consecutive months after the Issue Date, individuals who
at the beginning of any such 12-month period constituted the Board of Directors
of the Company or Parent (together with any new directors whose election by such
Board or whose nomination for election by the shareholders of the Company or
Parent was approved by a vote of a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute at least a majority of the Board of Directors of the
Company or Parent then in office.
"CHANGE OF CONTROL OFFER" shall have the meaning specified in Section
11.01.
"CHANGE OF CONTROL OFFER PERIOD" shall have the meaning specified in
Section 11.01.
"CHANGE OF CONTROL PURCHASE DATE" shall have the meaning specified in
Section 11.01.
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"CHANGE OF CONTROL PURCHASE PRICE" shall have the meaning specified in
Section 11.01.
"CHANGE OF CONTROL PUT DATE" shall have the meaning specified in
Section 11.01.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor statute.
"COLLATERAL" shall have the meaning specified in the Security
Agreement.
"COLLATERAL ACCOUNT" means an account maintained with the Trustee or
with any financial institution into which cash collateral and Eligible
Investments securing the Securities are deposited pursuant to the terms of the
Security Agreement.
"COLLATERAL POOL" shall have the meaning specified in Section 4.21.
"COMPANY" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture, and thereafter means such
successor.
"COMPANY SYSTEMS" shall have the meaning specified in Section 4.15.
"COMPUTATION PERIOD" shall have the meaning specified in Section 4.04.
"CONSOLIDATED INTEREST EXPENSE" of any Person means, for any period,
the aggregate amount (without duplication and determined in each case in
accordance with GAAP) of (i) interest expensed or capitalized, paid, accrued, or
scheduled to be paid or accrued (including, in accordance with the following
sentence, interest attributable to the Capitalized Lease Obligations) of such
Person and its consolidated Subsidiaries during such period, including (a)
original issue discount and non-cash interest payments or accruals on any
Indebtedness, (b) the interest portion of all deferred payment obligations, and
(c) all commissions, discounts and other fees and charges owed with respect to
bankers' acceptances and letters of credit financings and currency and Interest
Swap and Hedging Obligations, in each case to the extent attributable to such
period, and (ii) the amount of dividends accrued or payable by such Person or
any of its consolidated Subsidiaries in respect of Preferred Stock (other than
by Restricted Subsidiaries of such Person to such Person or such Person's Wholly
Owned Subsidiaries). For purposes of this definition, (x) interest on a
Capitalized Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by the Company to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP and (y) interest expense
attributable to any Indebtedness represented by the guaranty by such Person or a
Subsidiary of such Person of an obligation of another Person shall be deemed to
be the interest expense attributable to the Indebtedness guaranteed. When the
foregoing definition is used
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in connection with the Company and its Restricted Subsidiaries, references to a
Person and its Subsidiaries in the foregoing definition shall be deemed to refer
to the Company and its Restricted Subsidiaries.
"CONSOLIDATED NET INCOME" of any Person for any period means the net
income (or loss) of such Person and its consolidated Subsidiaries for such
period, determined (on a consolidated basis) in accordance with GAAP, adjusted
to exclude (only to the extent included in computing such net income (or loss)
and without duplication) (i) all extraordinary gains and losses and gains and
losses that are nonrecurring (including as a result of Asset Sales outside the
ordinary course of business), (ii) the net income, if positive, of any Person
that is not a Subsidiary in which such Person or any of its Subsidiaries has an
interest, except to the extent of the amount of dividends or distributions
actually paid to such Person or a Subsidiary of such Person that both (a) are
actually paid in cash to such Person or a Subsidiary of such Person during such
period and (b) when taken together with all other dividends and distributions
paid during such period in cash to such Person or a Subsidiary of such Person,
are not in excess of such Person's PRO RATA share of such other Person's
aggregate net income earned during such period, (iii), except as provided in the
definition of "Annualized Operating Cash Flow Ratio" above, the net income (or
loss) of any Subsidiary acquired in a pooling of interests transaction for any
period prior to the date of such acquisition and (iv) the net income, if
positive, of any Subsidiary of such Person (other than a Non-Recourse Restricted
Subsidiary) to the extent that the declaration or payment of dividends or
similar distributions is not at the time permitted by operation of the terms of
its charter or any agreement or instrument applicable to such Subsidiary. When
the foregoing definition is used in connection with the Company and its
Restricted Subsidiaries, references to a Person and its Subsidiaries in the
foregoing definition shall be deemed to refer to the Company and its Restricted
Subsidiaries.
"CORPORATE TRUST OFFICE" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered,
which address as of the date hereof is 88 Pine Street, 19th Floor, New York, New
York 10005.
"COVENANT DEFEASANCE" shall have the meaning specified in Section
8.03.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"DEFAULT" means any event or condition that is, or after notice or
passage of time or both would be, an Event of Default.
"DEFAULTED INTEREST" shall have the meaning specified in Section 2.12.
<PAGE>
-7-
"DEFINITIVE SECURITIES" means Securities that are in the form of
Security attached hereto as EXHIBIT A that do not include the information called
for by footnotes 1 and 3 thereof.
"DEPOSITORY" means, with respect to the Securities issuable or issued
in whole or in part in global form, the Person specified in Section 2.03 as the
Depository with respect to the Securities, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depository" shall mean or include such successor.
"DISQUALIFIED CAPITAL STOCK" means, with respect to any Person,
Capital Stock of such Person that, by its terms or by the terms of any security
into which it is convertible, exercisable or exchangeable, is, or upon the
happening of any event or the passage of time would be, required to be redeemed
or repurchased (including at the option of the holder thereof) by such Person or
any of its Subsidiaries, in whole or in part, on or prior to the Stated
Maturity; PROVIDED, HOWEVER, that Capital Stock will not be deemed to be
Disqualified Capital Stock if it may only be so redeemed or repurchased solely
in consideration of Qualified Capital Stock of the Company or Parent.
"DLJ POP BOOK" means The Wireless Communications Industry survey
published by Donaldson, Lufkin & Jenrette Securities Corporation.
"DTC" shall have the meaning specified in Section 2.03.
"ELIGIBLE INVESTMENTS" means (a) direct obligations of the United
States of America, or of any agency thereof, or obligations guaranteed as to
principal and interest by the United States of America, or by any agency
thereof, in either case maturing not more than one year from the date of
acquisition thereof by such Person; (b) time deposits, certificates of deposit
or bankers' acceptances (including eurodollar deposits) issued by any bank or
trust company organized under the laws of the United States of America or any
state thereof and having capital, surplus and undivided profits of at least $500
million and a deposit rating of investment grade; (c) commercial paper rated A-1
or better by S&P or P-1 or better by Moody's maturing not more than 180 days
from the date of acquisition thereof by such Person; (d) repurchase obligations
with a term of not more than 30 days for underlying securities of the types
described in clause (a) above entered into with a bank meeting the
qualifications described in clause (b) above; (e) securities with maturities of
six months or less from the date of acquisition issued or fully guaranteed by
any state, commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least A by S&P
or A by Moody's; or (f) money market mutual funds that invest primarily in the
foregoing items.
<PAGE>
-8-
"EQUITY OFFERING" means with respect to any Person, the sale or
offering of any Capital Stock of such Person that is not Disqualified Capital
Stock.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"EVENT OF DEFAULT" shall have the meaning specified in Section 6.01.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
from time to time, and the rules and regulations promulgated by the SEC
thereunder, and any successor statute.
"EXCHANGE CAPITAL STOCK" shall have the meaning specified in Section
4.15.
"EXCHANGE SECURITIES" means 9-1/8% Series B Senior Secured Notes due
2006 to be issued pursuant to this Indenture in connection with the offer to
exchange Exchange Securities for the Initial Securities or for additional 9-1/8%
Series A Secured Notes due 2006 issued pursuant to this Indenture that may be
made by the Company pursuant to the Registration Rights Agreement or otherwise.
"EXCLUDED GROUP" means a "group" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) that includes one or more Excluded Persons;
PROVIDED, HOWEVER, that the voting power of the Capital Stock of the Company or
Parent "beneficially owned" (as such term is used in Rule 13d-3 promulgated
under the Exchange Act) by such Excluded Persons (without attribution to such
Excluded Persons of the ownership by other members of the "group") represents a
majority of the voting power of the Capital Stock "beneficially owned" (as such
term is used in Rule 13d-3 promulgated under the Exchange Act) by such group.
"EXCLUDED PERSON" means Robert Price, Parent (so long as not
controlled by anyone other than Robert Price) and any Affiliate of any of the
foregoing that is wholly owned by any of the foregoing.
"EXISTING INDEBTEDNESS" means Indebtedness of the Company and its
Subsidiaries in existence and outstanding on the Issue Date.
"FINAL PUT DATE" shall have the meaning specified in Section 4.15.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board ("FASB") or, if FASB ceases to exist,
any successor thereto; PROVIDED, HOW-
<PAGE>
-9-
EVER, that for purposes of determining compliance with covenants in this
Indenture, "GAAP" means such generally accepted accounting principles as in
effect as of the Issue Date.
"GLOBAL SECURITY" means a Security that contains the paragraph
referred to in footnote 1 and the additional schedule referred to in footnote 3
to the form of Security attached hereto as EXHIBIT A.
"GUARANTEE" shall have the meaning specified in Section 12.01.
"GUARANTORS" means each Restricted Subsidiary of the Company (other
than a Non-Recourse Restricted Subsidiary) that has executed and delivered the
Indenture or a supplement thereto to become a Guarantor, and "Guarantor" means
any of them.
"HOLDER" or "SECURITYHOLDER" means a Person in whose name a Security
is registered. The Holder of a Security will be treated as the owner of such
Security for all purposes.
"HOLDINGS" means Price Communications Cellular Holdings, Inc., a
Delaware corporation, and its successors and assigns.
"INCUR" shall have the meaning specified in Section 4.12.
"INDEBTEDNESS" of any Person means, without duplication, (i) all
liabilities and obligations, contingent or otherwise, of such Person, (a) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), (b) evidenced
by bonds, notes, debentures or similar instruments, (c) representing the balance
deferred and unpaid of the purchase price of any property or services, except
(other than accounts payable or other obligations to trade creditors which have
remained unpaid for more than 90 days past their original due date or to
financial institutions, which obligations are not being contested in good faith
and for which appropriate reserves have not been established) those Incurred in
the ordinary course of its business that would constitute ordinarily a trade
payable to trade creditors, (d) evidenced by bankers' acceptances or similar
instruments issued or accepted by banks, (e) for the payment of money relating
to a Capitalized Lease Obligation, or (f) evidenced by a letter of credit or a
reimbursement obligation of such Person with respect to any letter of credit;
(ii) all obligations of such Person under Interest Swap and Hedging Obligations;
(iii) all liabilities of others of the kind described in the preceding clauses
(i) or (ii) that such Person has guaranteed or that is otherwise its legal
liability or which are secured by any assets or property of such Person and all
obligations to purchase, redeem or acquire any Capital Stock; (iv) all
Disqualified Capital Stock of such Person and all Preferred Stock of such
Person's Subsidiaries; and (v) any and all deferrals, renewals, extensions,
refinancing and refundings (whether direct or indirect) of, or amendments,
<PAGE>
-10-
modifications or supplements to, any liability of the kind described in any of
the preceding clauses (i), (ii), (iii), or (iv) or this clause (v), whether or
not between or among the same parties; provided that the outstanding principal
amount at any date of any Indebtedness issued with original issue discount is
the face amount of such Indebtedness less the remaining unamortized portion of
the original issue discount of such Indebtedness at such date.
"INDENTURE" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.
"INITIAL PURCHASERS" means NatWest Capital Markets Limited, Donaldson,
Lufkin & Jenrette Securities Corporation, Nesbitt Burns Securities Inc., and
Wasserstein Perella Securities, Inc.
"INITIAL SECURITIES" means the $525.0 million of 9-1/8% Series A
Senior Secured Notes due 2006 issued pursuant to this Indenture.
"INTERCREDITOR AGREEMENT" means an intercreditor agreement
substantially in the form of Exhibit F hereto.
"INTEREST PAYMENT DATE" means the stated due date of an installment of
interest on the Securities.
"INTEREST SWAP AND HEDGING OBLIGATIONS" means any obligations of any
Person pursuant to any interest rate swaps, caps, collars and similar
arrangements providing protection against fluctuations in interest rates. For
purposes of this Indenture, the amount of such obligations shall be the amount
determined in respect thereof as of the end of the then most recently ended
fiscal quarter of such Person, based on the assumption that such obligation had
terminated at the end of such fiscal quarter, and in making such determination,
if any agreement relating to such obligation provides for the netting of amounts
payable by and to such Person thereunder or if any such agreement provides for
the simultaneous payment of amounts by and to such Person, then in each such
case, the amount of such obligations shall be the net amount so determined, plus
any premium due upon default by such Person.
"INVESTMENT" by any Person in any other Person means (without
duplication) (i) the acquisition (whether by purchase, merger, consolidation or
otherwise) by such Person (whether for cash, property, services, securities or
otherwise) of Capital Stock, bonds, notes, debentures, partnership or other
ownership interests or other securities of such other Person or any agreement to
make any such acquisition; (ii) the making by such Person of any deposit with,
or advance, loan or other extension of credit to, such other Person (including
the purchase of property from another Person subject to an understanding or
agreement, contingent or otherwise, to resell such property to such other
Person) or any commitment to make any
<PAGE>
-11-
such advance, loan or extension; (iii) the entering into by such Person of any
guarantee of, or other contingent obligation with respect to, Indebtedness or
other liability of such other Person; (iv) the making of any capital
contribution by such Person to such other Person; and (v) the designation by the
Board of Directors of the Company of any Person to be an Unrestricted
Subsidiary. For purposes of Section 4.04, (x) "Investment" shall include and be
valued at the fair market value of the net assets of any Restricted Subsidiary
at the time that such Restricted Subsidiary is designated an Unrestricted
Subsidiary and shall exclude the fair market value of the net assets of any
Unrestricted Subsidiary at the time that such Unrestricted Subsidiary is
designated a Restricted Subsidiary and (y) the amount of any Investment shall be
the fair market value of such Investment plus the fair market value of all
additional Investments by the Company or any of its Restricted Subsidiaries at
the time any such Investment is made; PROVIDED, HOWEVER that, for purposes of
this sentence, the fair market value of net assets in excess of $5,000,000 shall
be as determined by an independent appraiser of national reputation.
"ISSUE DATE" means the time and date of the first issuance of the
Securities under this Indenture.
"JUNIOR INDEBTEDNESS" means Indebtedness of the Company that (i)
requires no payment of principal prior to or on the date on which all principal
of and interest on the Securities is paid in full and (ii) is subordinate and
junior in right of payment to the Securities in all respects.
"LEGAL DEFEASANCE" shall have the meaning specified in Section 8.02.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking
institutions in New York, New York are authorized or obligated by law or
executive order to close.
"LIEN" means any mortgage, lien, pledge, charge, security interest, or
other encumbrance of any kind, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement and any lease deemed to constitute a security interest and
any option or other agreement to give any security interest).
"MATURITY DATE" means, when used with respect to any Security, the
date specified on such Security as the fixed date on which the final installment
of principal of such Security is due and payable (in the absence of any
acceleration thereof pursuant to the provisions of this Indenture regarding
acceleration of Indebtedness or any Change of Control Offer, Proceeds Purchase
Offer or Asset Sale Offer).
"MINIMUM ACCUMULATION DATE" shall have the meaning specified in
Section 4.21.
<PAGE>
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"MINIMUM COLLATERAL VALUE" shall have the meaning specified in Section
4.21.
"MOODY'S" means Moody's Investors Service, Inc.
"MSA" shall have the meaning specified in the definition of "Pops".
"NET CASH PROCEEDS" means the aggregate amount of cash and Cash
Equivalents received by the Company and its Restricted Subsidiaries in respect
of an Asset Sale (including upon the conversion to cash and Cash Equivalents of
(A) any note or installment receivable at any time, or (B) any other property as
and when any cash and Cash Equivalents are received in respect of any property
received in an Asset Sale but only to the extent such cash and Cash Equivalents
are received within one year after such Asset Sale), less the sum of (i) all
reasonable out-of-pocket fees, commissions and other expenses incurred in
connection with such Asset Sale, including the amount (estimated in good faith
by the Board of Directors of the Company) of income, franchise, sales and other
applicable taxes required to be paid by the Company or any Restricted Subsidiary
of the Company in connection with such Asset Sale and (ii) the aggregate amount
of cash so received which is used to retire any existing Senior Indebtedness of
the Company or Indebtedness of its Restricted Subsidiaries, as the case may be,
which is required to be repaid in connection with such Asset Sale or is secured
by a Lien on the property or assets of the Company or any of its Restricted
Subsidiaries, as the case may be; PROVIDED, HOWEVER, that the provisions of this
clause (ii) shall not permit any non-PRO RATA application of the proceeds of any
Asset Sale to Permitted Pari Passu Secured Indebtedness to the disadvantage of
the Securities.
"NET POPS" of any Person with respect to any Cellular System means the
Pops of the MSA or RSA served by such Cellular System multiplied by the direct
and/or indirect percentage interest of such Person in the entity licensed or
designated to receive an authorization by the Federal Communications Commission
to construct or operate a Cellular System in that MSA or RSA.
"NET PROCEEDS" means the aggregate net proceeds (including the fair
market value of non-cash proceeds constituting equipment or other assets of a
type generally used in a Related Business, in an amount reasonably determined by
the Board of Directors of the Company for amounts less than or equal to
$5,000,000 and by a financial advisor or appraiser of national reputation for
greater amounts) received by a Person from any Equity Offering (other than to a
Subsidiary of such Person) after payment of out-of-pocket expenses, commissions
and discounts incurred in connection therewith.
"NON-RECOURSE RESTRICTED SUBSIDIARY" shall have the meaning specified
in the definition of "Permitted Acquisition Indebtedness".
<PAGE>
-13-
"OBLIGATION" means any principal, premium, interest (including
interest accruing subsequent to a bankruptcy or other similar proceeding whether
or not such interest is an allowed claim enforceable against the Company in a
bankruptcy case under Federal bankruptcy law), penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable pursuant
to the terms of the documentation governing any Indebtedness.
"OFFERING MEMORANDUM" means that certain Offering Memorandum of the
Company, dated June 9, 1998 relating to the original issuance and sale of the
Initial Securities to the Initial Purchasers.
"OFFICER" means, with respect to the Company, the Chief Executive
Officer, the President, any Vice President, the Chief Financial Officer, the
Treasurer, the Controller, or the Secretary of the Company.
"OFFICERS' CERTIFICATE" means, with respect to the Company or any
Parent, a certificate signed by two Officers or by an Officer and an Assistant
Secretary of the Company or such Parent, respectively, and otherwise complying
with the requirements of Sections 13.04 and 13.05.
"OPERATING CASH FLOW" of any Person means (i) with respect to any
period, the Consolidated Net Income of such Person for such period, plus (ii)
the sum, without duplication (and only to the extent such amounts are deducted
from net revenues in determining such Consolidated Net Income), of (a) the
provisions for income taxes for such period for such Person and its consolidated
Subsidiaries, (b) depreciation, amortization and other non-cash charges of such
Person and its consolidated Subsidiaries and (c) Consolidated Interest Expense
of such Person for such period, determined, in each case, on a consolidated
basis for such Person and its consolidated Subsidiaries in accordance with GAAP,
less (iii) the amount of all cash payments made during such period by such
Person and its Subsidiaries to the extent such payments relate to non-cash
charges that were added back in determining Operating Cash Flow for such period
or for any prior period. When the foregoing definition is used in connection
with the Company and its Restricted Subsidiaries, references to a Person and its
Subsidiaries in the foregoing definition shall be deemed to refer to the Company
and its Restricted Subsidiaries.
"OPINION OF COUNSEL" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee complying with the requirements of Sections
13.04 and 13.05.
"PARENT" means PCC or any direct or indirect Wholly Owned Subsidiary
of PCC that directly or indirectly wholly owns the Company.
<PAGE>
-14-
"PARENT INDENTURE" means the indenture dated as of August 7, 1997, by
and between Holdings and Bank of Montreal Trust Company, as trustee, under which
the Parent Notes were issued.
"PARENT NOTES" means the 13-1/2% Senior Secured Discount Notes due
2007 of Holdings.
"PAYING AGENT" shall have the meaning specified in Section 2.03.
"PCC" means Price Communications Corporation, a New York corporation,
and its successors and assigns.
"PERMITTED ACQUISITION INDEBTEDNESS" means, with respect to any
Person, Indebtedness Incurred in connection with the acquisition of property,
businesses or assets which, or Capital Stock of a Person all or substantially
all of whose assets, are of a type generally used in a Related Business;
PROVIDED, HOWEVER, that, in the case of the Company or its Restricted
Subsidiaries, as applicable, (x) (i) the Company's Annualized Operating Cash
Flow Ratio, after giving effect to such acquisition and such Incurrence on a PRO
FORMA basis, is no greater than such ratio prior to giving PRO FORMA effect to
such acquisition and such Incurrence; (ii) the Company's consolidated
Indebtedness, divided by the Net Pops of the Company and its Restricted
Subsidiaries, in each case giving PRO FORMA effect to the acquisition and such
Incurrence, does not exceed $175; and (iii) after giving effect to such
acquisition and such Incurrence the acquired property, businesses or assets or
such Capital Stock is owned directly by the Company or a Wholly Owned Restricted
Subsidiary of the Company or (y) (i) under the terms of such Indebtedness and
pursuant to applicable law, no recourse could be had for the payment of
principal, interest or premium with respect to such Indebtedness or for any
claim based thereon against the Company or any Restricted Subsidiary of the
Company other than the obligor of such Indebtedness and its Subsidiaries or any
of their property or assets other than the Capital Stock of such obligor or its
Subsidiaries, (ii) the obligor of such Indebtedness shall have, immediately
after giving effect to such acquisition and such Incurrence on a PRO FORMA
basis, a ratio of Annualized Operating Cash Flow as of the date of such
acquisition and Incurrence to the product of Consolidated Interest Expense for
the Reference Period multiplied by four (but excluding from Consolidated
Interest Expense all amounts that are not required to be paid in cash on a
current basis) of at least 1.0 to 1, (iii) since the Issue Date no Permitted
Investment (other than as permitted by clause (viii) of the definition of
"Permitted Investment" below) shall have been made in such obligor or its
Subsidiaries and (iv) immediately subsequent to the Incurrence of such
Indebtedness, the obligor thereof shall be a Restricted Subsidiary and shall
have been designated by the Company (as evidenced by an Officers' Certificate
delivered promptly to the Trustee) to be a "Non-Recourse Restricted Subsidiary".
<PAGE>
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"PERMITTED INVESTMENT" means (i) Investments in Cash Equivalents; (ii)
Investments in the Company or a Restricted Subsidiary (other than a Non-Recourse
Restricted Subsidiary); (iii) Investments in a Person substantially all of whose
assets are of a type generally used in a Related Business (an "ACQUIRED PERSON")
if, as a result of such Investments, (a) the Acquired Person immediately
thereupon becomes a Restricted Subsidiary (other than a Non-Recourse Restricted
Subsidiary) or (b) the Acquired Person immediately thereupon either (1) is
merged or consolidated with or into the Company or any of its Restricted
Subsidiaries (other than a Non-Recourse Restricted Subsidiary) and the surviving
Person is the Company or a Restricted Subsidiary (other than a Non-Recourse
Restricted Subsidiary) or (2) transfers or conveys all or substantially all of
its assets to, or is liquidated into, the Company or any of its Restricted
Subsidiaries (other than a Non-Recourse Restricted Subsidiary); (iv) Investments
in accounts and notes receivable acquired in the ordinary course of business;
(v) any securities received in connection with an Asset Sale (other than those
of a Non-Recourse Restricted Subsidiary) and any investment with the Net Cash
Proceeds from any Asset Sale in Capital Stock of a Person, all or substantially
all of whose assets are of a type used in a Related Business, that complies with
Section 4.15; (vi) any guarantee issued by a Restricted Subsidiary Incurred in
compliance with this Indenture; (vii) advances and prepayments for asset
purchases in the ordinary course of business in a Related Business of the
Company or a Restricted Subsidiary; (viii) Investments in Non-Recourse
Restricted Subsidiaries with the proceeds of contributions irrevocably and
unconditionally received without restriction by the Company from any Parent; and
(ix) customary loans or advances made in the ordinary course of business to
officers, directors or employees of the Company or any of its Restricted
Subsidiaries for travel, entertainment, and moving and other relocation
expenses.
"PERMITTED LIEN" means (a) Liens existing on the Issue Date; (b) Liens
imposed by governmental authorities for taxes, assessments or other charges not
yet subject to penalty or which are being contested in good faith and by
appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the Company in accordance with GAAP; (c) statutory
liens of carriers, warehousemen, mechanics, materialmen, landlords, repairmen or
other like Liens arising by operation of law in the ordinary course of business;
PROVIDED, HOWEVER, that (i) the underlying obligations are not overdue for a
period of more than 30 days, and (ii) such Liens are being contested in good
faith and by appropriate proceedings and adequate reserves with respect thereto
are maintained on the books of the Company in accordance with GAAP; (d) Liens
securing the performance of bids, trade contracts (other than borrowed money),
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature Incurred in the ordinary course of business;
(e) easements, rights-of-way, zoning, similar restrictions and other similar
encumbrances or title defects which, singly or in the aggregate, do not in any
case materially detract from the value of the property subject thereto (as such
property is used by the Company or any of its Restricted Subsidiaries) or
interfere with the ordinary conduct of the business of the Company
<PAGE>
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or any of its Restricted Subsidiaries; (f) Liens arising by operation of law in
connection with judgments, only to the extent, for an amount and for a period
not resulting in an Event of Default with respect thereto; (g) pledges or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security
legislation; (h) Liens in favor of the Trustee arising under this Indenture; (i)
Liens securing Permitted Acquisition Indebtedness, which either (A) were not
Incurred or issued in anticipation of such acquisition or (B) secure Permitted
Acquisition Indebtedness meeting the requirements set forth in clause (y) of the
definition thereof; (j) Liens securing Indebtedness of a Person existing at the
time such Person becomes a Restricted Subsidiary or is merged with or into the
Company or a Restricted Subsidiary; PROVIDED, HOWEVER, that such Liens were in
existence prior to the date of such acquisition, merger or consolidation, were
not incurred in anticipation thereof, and do not extend to any other assets; (k)
Liens arising from Purchase Money Indebtedness permitted under this Indenture;
(l) Liens securing Refinancing Indebtedness Incurred to refinance any
Indebtedness that was previously so secured in a manner no more adverse to the
Holders than the terms of the Liens securing such refinanced Indebtedness; (m)
Liens in favor of the Company or a Wholly Owned Restricted Subsidiary (other
than a Non-Recourse Restricted Subsidiary); (n) Liens securing any Permitted
Pari Passu Secured Indebtedness Incurred in accordance with the provisions of
Section 4.12; PROVIDED, HOWEVER, that (A) the aggregate principal amount of the
Secured Indebtedness as of the date of issuance of such series of Permitted Pari
Passu Secured Indebtedness on a PRO FORMA basis is less than or equal to the
Minimum Collateral Value, (B) the indenture and the related documents for each
such series of Permitted Pari Passu Secured Indebtedness contain provisions with
respect to releases of Collateral that are substantially similar to and no more
restrictive on the Company than the provisions of this Indenture and the
Security Agreement and (C) the trustee for the holders of each series of
Permitted Pari Passu Secured Indebtedness executes and delivers a joinder
supplement to the Intercreditor Agreement; and (o) Liens on assets other than
the Collateral securing Indebtedness (other than Junior Indebtedness) permitted
to be incurred under Section 4.12.
"PERMITTED PARENT SECURITIES" means (i) the Parent Notes, (ii) any
refinancing of the Parent Notes that has a first scheduled cash interest payment
due and payable no earlier than the due date of the first scheduled cash
interest payment of the Indebtedness being refinanced as of the Issue Date and
(iii) any other Indebtedness of Holdings or Parent Incurred after the Issue
Date; PROVIDED, HOWEVER, that (a) the gross proceeds of such Indebtedness do not
exceed $100 million in the aggregate, (b) such Indebtedness has a first
scheduled cash interest payment due and payable no earlier that the due date of
the first scheduled cash interest payment of the Indebtedness described in
clauses (i) or (ii) above and (c) the net proceeds of such Indebtedness are
contributed to the Company or its Restricted Subsidiaries and applied in a
manner permitted by this Indenture. For purposes of this definition, the term
"first scheduled cash interest payment" shall not include any payment date on
which the Issuer (i) may
<PAGE>
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elect to pay interest in cash or (ii) is required to pay interest in cash as a
result of such election.
"PERMITTED PARI PASSU SECURED INDEBTEDNESS" means Indebtedness of the
Company or any Guarantor Incurred by the issuance of notes, which may (but need
not) be issued under this Indenture (subject to the limitations therein) as one
or more series of additional Securities and/or the related Guarantees; PROVIDED,
HOWEVER, that such Indebtedness shall not mature or have any mandatory
redemption or required prepayment dates (other than a mandatory offer to
repurchase upon the occurrence of a change of control or asset sale) prior to
the final stated maturity date of the Securities and may be fixed rate or
floating rate obligations. The Permitted Pari Passu Secured Indebtedness will
constitute senior Indebtedness of the Company or any Guarantor PARI PASSU with
the Securities and the related Guarantees. The Permitted Pari Passu Secured
Indebtedness may be secured by a first priority Lien on the Collateral PARI
PASSU with the Lien for the benefit of the Holders if (i) the Secured
Indebtedness as of the date of issuance of such series of Permitted Pari Passu
Secured Indebtedness on a PRO FORMA basis is less than or equal to the Minimum
Collateral Value, (ii) the indenture and the related documents for each such
series of Permitted Pari Passu Secured Indebtedness contains provisions with
respect to releases of Collateral that are substantially similar to and no more
restrictive on the Company than the provisions of this Indenture and the
Security Agreement and (iii) the trustee for the holders of each series of
Permitted Pari Passu Secured Indebtedness executes and delivers a joinder
supplement to the Intercreditor Agreement.
"PERSON" means any corporation, individual, joint stock company, joint
venture, partnership, unincorporated association, governmental regulatory
entity, country, state or political subdivision thereof, trust, municipality or
other entity.
"POPS" means, as of any date of determination, the greater of the
estimate of the population of a Metropolitan Statistical Area ("MSA") or Rural
Service Area ("RSA") derived from (i) the most recent Donnelly Market Service
and (ii) the most recent DLJ Pop Book; PROVIDED, HOWEVER, that (x) if such
statistics are no longer printed in either the Donnelly Market Service or the
DLJ Pop Book, or either such source is no longer published, the then currently
published source of the two containing such information shall be used; (y) if
such statistics are no longer printed in either such source, or both sources are
no longer published, the statistics in the most recent Rand McNally Commercial
Atlas shall be used; and (z) if such statistics are no longer printed in the
Rand McNally Commercial Atlas or the Rand McNally Commercial Atlas is no longer
published, another nationally recognized source of such information shall be
used.
"PREFERRED STOCK" means Capital Stock, other than common stock of an
issuer having no preferences or privileges as to the payment of dividends or the
distribution of the issuer's assets over any other class of such issuer's
Capital Stock.
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"PRINCIPAL" of any Indebtedness means the principal of such
Indebtedness plus, without duplication, applicable premium, if any, on such
Indebtedness.
"PROPERTY" means any right or interest in or to property or assets of
any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"PURCHASE AGREEMENT" means that certain Purchase Agreement dated June
8, 1998 by and among the Company, the Guarantors as of the Issue Date and the
Initial Purchasers, as such agreement may be amended, modified or supplemented
from time to time in accordance with the terms thereof.
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness of the Company or its
Restricted Subsidiaries Incurred in connection with the purchase of property or
assets for the business of the Company or its Restricted Subsidiaries, provided
that the recourse of the lenders with respect to such Indebtedness is limited
solely to the property or assets so purchased without further recourse to either
the Company or any of its Restricted Subsidiaries.
"QUALIFIED CAPITAL STOCK" means any Capital Stock of a Person that is
not Disqualified Capital Stock.
"RECORD DATE" means a Record Date specified in the Securities whether
or not such Record Date is a Business Day.
"REDEMPTION DATE," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to Article 3 of this
Indenture and Paragraph 5 in the form of Security.
"REDEMPTION PRICE," when used with respect to any Security to be
redeemed, means the redemption price for such redemption pursuant to Article 3
of this Indenture and Paragraph 5 in the form of Security, which shall include,
without duplication, in each case, any accrued and unpaid interest to the
Redemption Date.
"REFERENCE PERIOD" with regard to any Person means the last full
fiscal quarter of such Person for which financial information (which the Company
shall use its best efforts to compile in a timely manner) in respect thereof is
available ended on or immediately preceding any date upon which any
determination is to be made pursuant to the terms of the Securities or this
Indenture.
"REFINANCING INDEBTEDNESS" means Indebtedness or Disqualified Capital
Stock (a) issued in exchange for, or the proceeds from the issuance and sale of
which are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or (b)
constituting an amendment, modification or sup-
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plement to, or a deferral or renewal of ((a) and (b) above are, collectively, a
"REFINANCING") any Indebtedness or Disqualified Capital Stock in a principal
amount or, in the case of Disqualified Capital Stock, liquidation preference (or
if such Indebtedness or Disqualified Capital Stock does not require cash
payments prior to maturity or is otherwise issued at a discount, the original
issue price of such Indebtedness or Disqualified Capital Stock), not to exceed
the sum of (x) the lesser of (i) the principal amount or, in the case of
Disqualified Capital Stock, liquidation preference of the Indebtedness or
Disqualified Capital Stock so Refinanced and (ii) if such Indebtedness being
Refinanced was issued with an original issue discount, the accreted value
thereof (as determined in accordance with GAAP) at the time of such Refinancing,
(y) the amount of any premium required to be paid in connection with such
refinancing pursuant to the terms of such Indebtedness and (z) all other
customary fees and expenses of the Company or such Restricted Subsidiary
reasonably Incurred in connection with such refinancing; PROVIDED, HOWEVER that
(A) Refinancing Indebtedness issued by any Restricted Subsidiary of the Company
shall only be used to Refinance outstanding Indebtedness or Disqualified Capital
Stock of such Restricted Subsidiary, (B) Refinancing Indebtedness shall (x) not
have a Weighted Average Life shorter than the Indebtedness or Disqualified
Capital Stock to be so refinanced at the time of such Refinancing and (y) in all
respects, be no less subordinated or junior, if applicable, to the rights of
Holders than was the Indebtedness or Disqualified Capital Stock to be refinanced
and (C) such Refinancing Indebtedness shall have no installments of principal
(or redemption payment) scheduled to come due earlier than the scheduled
maturity of any installment of principal (or redemption payment) of the
Indebtedness or Disqualified Capital Stock to be so refinanced which was
scheduled to come due prior to the Stated Maturity.
"REGISTRAR" means the office or agency in the Borough of Manhattan,
The City of New York, where the Securities may be presented for registration of
transfer or for exchange.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement dated June 16, 1998, by and among the Company, the Guarantors as of
the Issue Date and the Initial Purchasers, as such agreement may be amended,
modified or supplemented from time to time in accordance with the terms thereof.
"RELATED BUSINESS" means any business directly related to the
ownership, development, operation, and acquisition of wireless cellular
communications systems.
"RELATED PERSON" means, with respect to any Person, (i) any Affiliate
of such Person or any spouse, immediate family member, or other relative who has
the same principal residence of any Affiliate of such Person and (ii) any trust
in which any Person described in clause (i) above has a beneficial interest.
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"RELATED PERSON TRANSACTION" shall have the meaning specified in
Section 4.11.
"RESTRICTED PARTNERSHIP" shall have the meaning specified in Section
4.19.
"RESTRICTED PAYMENT" means, with respect to any Person, (i) any
dividend or other distribution on shares of Capital Stock of such Person, its
Parent, or any Subsidiary of such Person, (ii) any payment on account of the
purchase, redemption or other acquisition or retirement for value, or any
payment in respect of any amendment (in anticipation of or in connection with
any such retirement, acquisition or defeasance) in whole or in part, of any
shares of Capital Stock of such Person, its Parent, or any Subsidiary of such
Person held by Persons other than such Person or any of its Restricted
Subsidiaries (other than any Non-Recourse Restricted Subsidiary), (iii) any
defeasance, redemption, repurchase or other acquisition or retirement for value,
or any payment in respect of any amendment (in anticipation of or in connection
with any such retirement, acquisition or defeasance) in whole or in part, of any
Indebtedness of the Company (other than the scheduled repayment thereof at
maturity and any mandatory redemption or mandatory repurchase thereof pursuant
to the terms thereof) by such Person or a Subsidiary of such Person that is
subordinate in right of payment to, or ranks PARI PASSU (other than the
Securities) with, the Securities (other than in exchange for Refinancing
Indebtedness permitted to be Incurred under this Indenture and except for any
such defeasance, redemption, repurchase, other acquisition or payment in respect
of Indebtedness held by any Restricted Subsidiary) and (iv) any Investment
(other than a Permitted Investment); PROVIDED, HOWEVER, that the term
"Restricted Payment" does not include (i) any dividend, distribution or other
payment on shares of Capital Stock of the Company or any Restricted Subsidiary
solely in shares of Qualified Capital Stock, (ii) any dividend, distribution or
other payment to the Company, or any dividend to any of its Restricted
Subsidiaries (other than any Non-Recourse Restricted Subsidiary), by any of its
Subsidiaries, and (iii) the purchase, redemption or other acquisition or
retirement for value of shares of Capital Stock of any Restricted Subsidiary
(other than Non-Recourse Restricted Subsidiaries) held by Persons other than the
Company or any of its Restricted Subsidiaries.
"RESTRICTED SUBSIDIARY" means any Subsidiary of the Company which at
the time of determination is not an Unrestricted Subsidiary. The Board of
Directors of the Company may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary only if, immediately before and after giving effect to
such designation, there would exist no Default or Event of Default and the
Company could Incur at least $1.00 of Indebtedness pursuant to the Annualized
Operating Cash Flow Ratio test of the second paragraph of Section 4.12, on a PRO
FORMA basis taking into account such designation.
"RSA" shall have the meaning specified in the definition of "Pops".
<PAGE>
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"S&P" means Standard & Poor's Ratings Services, a Division of The
McGraw-Hill Companies, Inc.
"SEC" means the Securities and Exchange Commission.
"SALE AND LEASEBACK TRANSACTION" means any direct or indirect
arrangement with any Person or to which any such Person is a party providing for
the leasing to the Company or a Restricted Subsidiary of any property, whether
owned by the Company or any Restricted Subsidiary at the Issue Date or later
acquired, which has been or is to be sold or transferred by the Company or such
Restricted Subsidiary to such Person or to any other Person from whom funds have
been or are to be advanced by such Person on the security of such property.
"SECURED INDEBTEDNESS" shall have the meaning specified in Section
4.21.
"SECURITIES" means, collectively, (A) the Initial Securities and, when
and if issued as provided in the Registration Rights Agreement, the Exchange
Securities issued upon valid surrender of such Initial Securities in exchange
therefor and (B) any additional securities issued hereunder (and any Exchange
Securities issued upon valid surrender of such additional securities in exchange
therefor) that is Permitted Pari Passu Secured Indebtedness.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, and the rules and regulations of the SEC promulgated thereunder,
and any successor statute.
"SECURITIES CUSTODIAN" means the Trustee, as custodian for the
Depository with respect to the Securities in global form, or any successor
entity thereto.
"SECURITY AGREEMENT" means the Security Agreement dated June 16, 1998,
by and among the Company, the Guarantors as of the Issue Date, and the Initial
Purchasers, as such agreement may be amended, modified or supplemented from time
to time in accordance with the terms thereof.
"SECURITY DOCUMENTS" means the Security Agreement, the Intercreditor
Agreement and any other document from time to time entered into by the Company
or any Guarantor to pledge Collateral to the Trustee for its benefit and the
benefit of the Holders.
"SENIOR INDEBTEDNESS" means any Indebtedness of the Company or any
Restricted Subsidiary including the Securities, other than Indebtedness of the
Company or any Restricted Subsidiary as to which the instrument creating or
evidencing the same, or pursuant to which the same is outstanding, provides that
such Indebtedness shall be subordinated or junior in right of payment to the
Securities or the Guarantees, as applicable.
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"SENIOR SUBORDINATED NOTES" means the Company's 11-3/4% Senior
Subordinated Notes due 2007.
"SENIOR SUBORDINATED NOTES INDENTURE" means the indenture dated as of
July 10, 1997, by and between the Company and Bank of Montreal Trust Company, as
trustee, under which the Senior Subordinated Notes were issued.
"SIGNIFICANT RESTRICTED SUBSIDIARY" at any date of measurement, means
one or more Restricted Subsidiaries having an aggregate net book value of assets
in excess of 5% of the net book value of the assets of the Company and its
Restricted Subsidiaries on a consolidated basis.
"SPECIAL RIGHTS" shall have the meaning specified in Section 4.19.
"STATED MATURITY" means the date fixed for the payment of any
principal or premium pursuant to this Indenture and the Securities, including
the Maturity Date, upon redemption, acceleration, Asset Sale Offer, Change of
Control Offer or otherwise.
"SUBSIDIARY" with respect to any Person, means (i) a corporation at
least fifty percent of whose Capital Stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by such Person and one or more Subsidiaries of such Person or by
one or more Subsidiaries of such Person, or (ii) a partnership in which such
Person or a Subsidiary of such Person is, at the time, a general partner of such
partnership, or (iii) any Person in which such Person, one or more Subsidiaries
of such Person, or such Person and one or more Subsidiaries of such Person,
directly or indirectly, at the date of determination thereof has (x) at least a
fifty percent ownership interest or (y) the power to elect or direct the
election of the directors or other governing body of such Person.
"TIA" means the Trust Indenture Act of 1939, as amended from time to
time.
"TRANSFER RESTRICTED SECURITY" means a Security, unless or until it
has been (i) disposed of in a transaction effectively registered under the
Securities Act or (ii) distributed to the public pursuant to Rule 144 (or any
similar provision then in force) under the Securities Act; PROVIDED that in no
case shall an Exchange Security issued in accordance with this Indenture and the
terms and provisions of the Registration Rights Agreement be a Transfer
Restricted Security.
"TREASURY RATE" means the yield to maturity at the time of computation
of United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519) which
has become publicly available at least two Business Days prior to the Redemption
Date (or, if such Statistical Release is
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no longer published, any publicly available source of similar market data)) most
nearly equal to the period from the Redemption Date to June 15, 2002; PROVIDED,
HOWEVER, that if the period from the Redemption Date to June 15, 2002 is not
equal to the constant maturity of a United States Treasury security for which a
weekly average yield is given, the Treasury Rate shall be obtained by linear
interpolation calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from the Redemption Date to June 15, 2002 is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"TRUSTEE" means Bank of Montreal Trust Company or any successor
appointed pursuant to the terms of this Indenture.
"TRUST OFFICER" means any officer within the corporate trust division
(or any successor group) of the Trustee or any other officer of the Trustee
customarily performing functions similar to those performed by the Persons who
at that time shall be such officers, and also means, with respect to a
particular corporate trust matter, any other officer of the Trustee to whom such
trust matter is referred because of his knowledge of and familiarity with the
particular subject.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Company that, at
the time of determination, shall be an Unrestricted Subsidiary (as designated by
the Board of Directors of the Company, as provided below). The Board of
Directors of the Company may designate any Subsidiary of the Company (including
any newly acquired or newly formed Subsidiary at or prior to the time it is so
formed or acquired) to be an Unrestricted Subsidiary so long as (i) no Default
or Event of Default is existing or will occur as a consequence thereof, (ii)
such Subsidiary does not own any Capital Stock of, or own or hold any Lien on
any property or asset of, the Company or any Restricted Subsidiary that is not a
Subsidiary of the Subsidiary to be so designated, (iii) such Subsidiary and each
of its Subsidiaries has not at the time of designation, and does not thereafter,
create, incur, issue, assume, guarantee, or otherwise become directly or
indirectly liable with respect to any Indebtedness pursuant to which the lender
has recourse to any property or assets of the Company or any of its Restricted
Subsidiaries (except that such Subsidiary and its Subsidiaries may guarantee the
Securities), and (iv) such Subsidiary is at the time of designation also
designated as an unrestricted subsidiary pursuant to the Senior Subordinated
Notes Indenture and the Parent Indenture; PROVIDED, HOWEVER, that either (A) the
Subsidiary to be so designated has total assets of $1,000 or less or (B) if such
Subsidiary has assets greater than $1,000, that such designation would be
permitted under Section 4.04. Any Subsidiary of the Company that is designated
on the Issue Date as an unrestricted subsidiary pursuant to the Senior
Subordinated Notes Indenture and the Parent Indenture shall be designated to be
an Unrestricted Subsidiary. Each such designation shall be evidenced by filing
with the Trustee a certified copy of the resolution giving effect to
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such designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions.
"U.S. GOVERNMENT OBLIGATIONS" means direct non-callable obligations
of, or noncallable obligations guaranteed by, the United States of America for
the payment of which obligation or guarantee the full faith and credit of the
United States of America is pledged.
"U.S. LEGAL TENDER EQUIVALENTS" means securities issued or directly
and fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof with a maturity of 90 days or less (provided that the
full faith and credit of the United States of America is pledged in support
thereof).
"WEIGHTED AVERAGE LIFE" means, as of the date of determination, with
respect to any debt instrument, the quotient obtained by dividing (i) the sum of
the products of the numbers of years from the date of determination to the dates
of each successive scheduled principal payment of such debt instrument
multiplied by the amount of each such respective principal payment by (ii) the
sum of all such principal payments.
"WHOLLY OWNED" means, with respect to a Subsidiary of the Company, (i)
a Subsidiary that is a corporation, of which not less than 99% of the Capital
Stock (except for directors' qualifying shares or certain minority interests
owned by other Persons solely due to local law requirements that there be more
than one stockholder, but which interest is not in excess of what is required
for such purpose) is owned directly by such Person or through one or more other
Wholly Owned Subsidiaries of such Person, or (ii) any entity other than a
corporation in which such Person, directly or indirectly, owns not less than 99%
of the Capital Stock of such entity.
SECTION 1.02. INCORPORATION BY REFERENCE OF THE TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, such provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture securityholder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
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"obligor" on the indenture securities means the Company and any other
obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them thereby.
SECTION 1.03. RULES OF CONSTRUCTION. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the plural
include the singular;
(5) provisions apply to successive events and transactions;
(6) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or
other subdivision;
(7) references to Sections or Articles means reference to such
Section or Article in this Indenture, unless stated otherwise; and
(8) whenever in this Indenture or the Securities it is provided that
the principal amount with respect to a Security shall be paid, such
provision shall be deemed to require (whether or not so expressly stated)
the simultaneous payment of any accrued and unpaid interest to the date of
payment on such Security payable pursuant to paragraph 1 of the Securities.
ARTICLE 2
THE SECURITIES
SECTION 2.01. FORM AND DATING. The Securities and the Trustee's
certificate of authentication in respect thereof shall be substantially in the
form of EXHIBIT A hereto, which Exhibit is part of this Indenture. The
Securities may have notations, legends or
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endorsements required by law, stock exchange rule or usage. The Company shall
approve the form of the Securities and any notation, legend or endorsement on
them. Any such notations, legends or endorsements not contained in the form of
Security attached as EXHIBIT A hereto shall be delivered in writing to the
Trustee. Each Security shall be dated the date of its authentication.
The terms and provisions contained in the forms of Securities shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
SECTION 2.02. EXECUTION AND AUTHENTICATION. Each Security shall be
signed by at least one Officer for the Company by manual or facsimile signature.
The Company's seal may be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security was an officer at the
time of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless and the
Company shall nevertheless be bound by the terms of the Securities and this
Indenture.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security but
such signature shall be conclusive evidence that the Security has been
authenticated pursuant to the terms of this Indenture.
The Trustee shall authenticate Securities from time to time for
original issue in the aggregate principal amount of up to $1,000,000,000 and
shall authenticate Exchange Securities for original issue in the aggregate
principal amount of up to $1,000,000,000, in each case upon a written order of
the Company in the form of an Officers' Certificate; PROVIDED that such Exchange
Securities shall be issuable only upon the valid surrender for cancellation of
Securities of a like aggregate principal amount. The Officers' Certificate
shall specify the amount of Securities to be authenticated and the date on which
the Securities are to be authenticated. The terms of such Securities shall be
the same in all respects as the Initial Securities (or in all respects except
for the payment of interest (i) scheduled and paid prior to the date of issuance
of such Securities or (ii) payable on the first Interest Payment Date following
such date of issuance). The Initial Securities and any additional Securities
issued under the Indenture shall be treated as a single class for all purposes
of the Indenture. The aggregate principal amount of Securities outstanding at
any time may not exceed $1,000,000,000, except as provided in Section 2.07. Upon
the written order of the Company in the form of an Offi-
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cers' Certificate, the Trustee shall authenticate Securities in substitution of
Securities originally issued to reflect any name change of the Company.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company, any Affiliate of the Company,
or any of their respective Subsidiaries.
Securities shall be issuable only in fully registered form, without
coupons, in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. REGISTRAR AND PAYING AGENT. The Company shall maintain
an office or agency in the Borough of Manhattan, The City of New York, where
Securities may be presented for registration of transfer or for exchange (the
"Registrar") and an office or agency where Securities may be presented for
payment ("PAYING AGENT") and where notices and demands to or upon the Company in
respect of the Securities may be served. The Company may act as Registrar or
Paying Agent, except that, for the purposes of Articles 3, 8, 10, 11, Section
4.15 and as otherwise specified in this Indenture, neither the Company nor any
Affiliate of the Company shall act as Paying Agent. The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company may
have one or more co-Registrars and one or more additional Paying Agents. The
term "Paying Agent" includes any additional Paying Agent. The Company hereby
initially appoints the Trustee as Registrar and Paying Agent, and the Trustee
hereby agrees so to act.
The Company shall enter into an appropriate written agency agreement
with any Agent not a party to this Indenture, which agreement shall implement
the provisions of this Indenture that relate to such Agent. The Company shall
promptly notify the Trustee in writing of the name and address of any such
Agent. If the Company fails to maintain a Registrar or Paying Agent, the
Trustee shall act as such.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depository with respect to the Global Securities.
The Company initially appoints the Trustee to act as Securities
Custodian with respect to the Global Securities.
SECTION 2.04. PAYING AGENT TO HOLD ASSETS IN TRUST. The Company
shall require each Paying Agent other than the Trustee to agree in writing that
each Paying Agent shall hold in trust for the benefit of the Holders or the
Trustee all assets held by the Paying
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Agent for the payment of principal of, premium, if any, or interest on, the
Securities (whether such assets have been distributed to it by the Company or
any other obligor on the Securities), and shall notify the Trustee in writing of
any Default in making any such payment. If either of the Company or a
Subsidiary of the Company acts as Paying Agent, it shall segregate such assets
and hold them as a separate trust fund for the benefit of the Holders or the
Trustee. The Company at any time may require a Paying Agent to distribute all
assets held by it to the Trustee and account for any assets disbursed and the
Trustee may at any time during the continuance of any payment Default, upon
written request to a Paying Agent, require such Paying Agent to distribute all
assets held by it to the Trustee and to account for any assets distributed.
Upon distribution to the Trustee of all assets that shall have been delivered by
the Company to the Paying Agent, the Paying Agent (if other than the Company)
shall have no further liability for such assets.
SECTION 2.05. SECURITYHOLDER LISTS. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Holders and shall otherwise comply with TIA
Section 312(a). If the Trustee is not the Registrar, the Company shall furnish
to the Trustee on or before the third Business Day preceding each Interest
Payment Date and at such other times as the Trustee may request in writing a
list in such form and as of such date as the Trustee reasonably may require of
the names and addresses of Holders.
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Definitive Securities. When Definitive
Securities are presented to the Registrar or a co-Registrar with a request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal principal
amount of Definitive Securities of other authorized denominations,
the Registrar or co-Registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
PROVIDED, HOWEVER, that the Definitive Securities surrendered for transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar
or co-Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing; and
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(ii) in the case of Transfer Restricted Securities that are Definitive
Securities, shall be accompanied by the following additional information
and documents, as applicable:
(A) if such Transfer Restricted Securities are being delivered
to the Registrar by a Holder for registration in the name of such
Holder, without transfer, a certification from such Holder to that
effect (in substantially the form set forth on the reverse of the
Security); or
(B) if such Transfer Restricted Security is being transferred to
a "qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities Act,
a certification to that effect (in substantially the form set forth on
the reverse of the Security); or
(C) if such Transfer Restricted Security is being transferred
pursuant to any exemption from registration in accordance with
Regulation S under the Securities Act, a certification to that effect
(in substantially the form set forth on the reverse of the Security);
or
(D) if such Transfer Restricted Security is being transferred to
an institutional investor that is an "accredited investor" within the
meaning of Rule 501(a)(1),(2),(3) or (7) under the Securities Act
which delivers a certificate in the form of EXHIBIT B to this
Indenture to the Trustee; or
(E) if such Transfer Restricted Security is being transferred in
reliance on another exemption from the registration requirements of
the Securities Act, a certification to that effect (in substantially
the form set forth on the reverse of the Security) accompanied by a
customary opinion of counsel substantially to the effect that such
transfer may be effected in reliance upon such exemption.
(b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE SECURITY FOR A
BENEFICIAL INTEREST IN A GLOBAL SECURITY. A Definitive Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee
of a Definitive Security, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Trustee, together with:
(i) if such Definitive Security is a Transfer Restricted Security,
certification, substantially in the form set forth on the reverse of the
Security, that such Definitive Security is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities Act; and
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(ii) whether or not such Definitive Security is a Transfer Restricted
Security, written instructions directing the Trustee to make, or to direct
the Securities Custodian to make, an endorsement on the Global Security to
reflect an increase in the aggregate principal amount of the Securities
represented by the Global Security,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Securities Custodian, the
aggregate principal amount of Securities represented by the Global Security to
be increased accordingly. If no Global Securities are then outstanding, the
Company shall issue and the Trustee shall authenticate a new Global Security in
the appropriate principal amount.
(c) TRANSFER AND EXCHANGE OF GLOBAL SECURITIES. The transfer and
exchange of Global Securities or beneficial interests therein shall be effected
through the Depository, in accordance with this Indenture (including the
restrictions on transfer set forth herein) and the procedures of the Depository
therefor.
(d) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL SECURITY FOR A
DEFINITIVE SECURITY.
(i) Upon receipt by the Trustee of written instructions or such other
form of instructions as is customary for the Depository from the Depository
or its nominee on behalf of any Person having a beneficial interest in a
Global Security and upon receipt by the Trustee of a written order or such
other form of instructions as is customary for the Depository or the Person
designated by the Depository as having such a beneficial interest in a
Transfer Restricted Security only, the following additional information and
documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being transferred to the
Person designated by the Depository as being the beneficial owner, a
certification from such person to that effect (in substantially the
form set forth on the reverse of the Security); or
(B) if such beneficial interest is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities Act,
a certification to that effect from the transferor (in substantially
the form set forth on the reverse of the Security); or
(C) if such beneficial interest is being transferred pursuant to
any exemption from registration in accordance with Regulation S under
the Securities
<PAGE>
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Act, a certification to that effect (in substantially the form set
forth on the reverse of the Security); or
(D) if such Transfer Restricted Security is being transferred to
an institutional investor that is an "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act
which delivers a certificate in the form of EXHIBIT B to this
Indenture to the Trustee; or
(E) if such beneficial interest is being transferred in reliance
on another exemption from the registration requirements of the
Securities Act, a certification to that effect from the transferee or
transferor (in substantially the form set forth on the reverse of the
Security) accompanied by a customary opinion of counsel substantially
to the effect that such transfer may be effected in reliance upon such
exemption,
then the Trustee or the Securities Custodian, at the direction of the Trustee,
will cause, in accordance with the standing instructions and procedures existing
between the Depository and the Securities Custodian, the aggregate principal
amount of the Global Security to be reduced and, following such reduction, the
Company will execute and, upon receipt of an authentication order in the form of
an Officers' Certificate, the Trustee will authenticate and deliver to the
transferee a Definitive Security.
(ii) Definitive Securities issued in exchange for a beneficial
interest in a Global Security pursuant to this Section 2.06(d) shall be
registered in such names and in such authorized denominations as the
Depository, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall
deliver such Definitive Securities to the persons in whose names such
Securities are so registered.
(e) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL SECURITIES.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.06), a Global Security
may not be transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(f) AUTHENTICATION OF DEFINITIVE SECURITIES IN ABSENCE OF DEPOSITORY.
If at any time:
(i) the Depository for the Securities notifies the Company that the
Depository is unwilling or unable to continue as Depository for the Global
Securities and
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a successor Depository for the Global Securities is not appointed by the
Company within 90 days after delivery of such notice; or
(ii) the Company, in its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Definitive Securities under
this Indenture,
then the Company will execute, and the Trustee, upon receipt of an Officers'
Certificate requesting the authentication and delivery of Definitive Securities,
will authenticate and deliver Definitive Securities, in an aggregate principal
amount equal to the principal amount of the Global Securities, in exchange for
such Global Securities.
(g) LEGENDS.
(i) Except as permitted by the following paragraph (ii), each
Security certificate evidencing the Global Securities and the Definitive
Securities (and all Securities issued in exchange therefor or substitution
thereof) shall bear a legend in substantially the following form:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION
D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR")
OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD
REFERRED TO IN RULE 144(K) UNDER THE SECURITIES ACT AS IN EFFECT ON
THE DATE OF THE TRANSFER OF THIS NOTE WITH RESPECT TO SUCH TRANSFER,
RESALE OR OTHERWISE, TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR
ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE
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WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES
TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
THE TRUSTEE) AND IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
PRINCIPAL AMOUNT OF NOTES AT THE TIME OF TRANSFER OF LESS THAN
$250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE
WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER
OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR PURCHASING
PURSUANT TO CLAUSE (2)(C) ABOVE, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION
<PAGE>
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S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE
IN VIOLATION OF THE FOREGOING RESTRICTIONS.
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global
Security) pursuant to Rule 144 under the Securities Act or an effective
registration statement under the Securities Act:
(A) in the case of any Transfer Restricted Security that is a
Definitive Security, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for a Definitive Security
that does not bear the legend set forth above and rescind any
restriction on the transfer of such Transfer Restricted Security in
the case of a Rule 144 Transfer, after delivery of a customary opinion
of counsel; and
(B) any such Transfer Restricted Security represented by a
Global Security shall not be subject to the provisions set forth in
(i) above (such sales or transfers being subject only to the
provisions of Section 2.06(c) hereof); provided, however, that with
respect to any request for an exchange of a Transfer Restricted
Security that is represented by a Global Security for a Definitive
Security that does not bear a legend, which request is made in
reliance upon Rule 144, the Holder thereof shall certify in writing
(to be accompanied by a customary opinion of counsel) to the Registrar
that such request is being made pursuant to Rule 144 (such
certification to be substantially in the form set forth on the reverse
of the Security).
(h) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL SECURITY. At such time
as all beneficial interests in a Global Security have either been exchanged for
Definitive Securities, redeemed, repurchased or cancelled, such Global Security
shall be returned to or retained and cancelled by the Trustee. At any time
prior to such cancellation, if any beneficial interest in a Global Security is
exchanged for Definitive Securities, redeemed, repurchased or canceled, the
principal amount of Securities represented by such Global Security shall be
reduced and an endorsement shall be made on such Global Security, by the Trustee
or the Securities Custodian, at the direction of the Trustee, to reflect such
reduction.
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(i) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF DEFINITIVE
SECURITIES.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Definitive Securities and
Global Securities at the Registrar's or co-Registrar's request.
(ii) No service charge shall be made for any registration of transfer
or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax, assessments, or similar governmental charge payable
in connection therewith (other than any such transfer taxes, assessments,
or similar governmental charge payable upon exchanges or transfers pursuant
to Section 2.02 (fourth paragraph), 2.10, 3.07, 4.15(8), 9.05, or 11.01
(final paragraph)).
(iii) The Registrar or co-Registrar shall not be required to register
the transfer of or exchange of (a) any Definitive Security selected for
redemption in whole or in part pursuant to Article 3, except the unredeemed
portion of any Definitive Security being redeemed in part, or (b) any
Security for a period beginning 15 Business Days before the mailing of a
notice of an offer to repurchase pursuant to Article 11 or Section 4.15
hereof or the mailing of a notice of redemption of Securities pursuant to
Article 3 hereof and ending at the close of business on the day of such
mailing.
SECTION 2.07. REPLACEMENT SECURITIES. If a mutilated Security is
surrendered to the Trustee or if the Holder of a Security claims and submits an
affidavit or other evidence, satisfactory to the Trustee, to the Trustee to the
effect that the Security has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Security if
the Trustee's requirements are met. If required by the Trustee or the Company,
such Holder must provide an indemnity bond or other indemnity, sufficient in the
judgment of both the Company and the Trustee, to protect the Company, the
Trustee or any Agent from any loss which any of them may suffer if a Security is
replaced. The Company may charge such Holder for its reasonable, out-of-pocket
expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company.
SECTION 2.08. OUTSTANDING SECURITIES. Securities outstanding at any
time are all the Securities that have been authenticated by the Trustee
(including any Security represented by a Global Security) except those cancelled
by it, those delivered to it for cancellation, those reductions in the interest
in a Global Security effected by the Trustee hereunder and those described in
this Section 2.08 as not outstanding. A Security does not cease to be
outstanding because the Company or an Affiliate of the Company holds the
Security, except as provided in Section 2.09.
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If a Security is replaced pursuant to Section 2.07 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be outstanding
upon surrender of such Security and replacement thereof pursuant to Section
2.07.
If on a Redemption Date or the Maturity Date the Paying Agent (other
than the Company or an Affiliate of a Company) holds cash sufficient to pay all
of the principal and interest due on the Securities payable on that date and
payment of the Securities called for redemption or payable on such Maturity Date
is not otherwise prohibited pursuant to this Indenture, then on and after that
date such Securities cease to be outstanding and interest on them ceases to
accrue.
SECTION 2.09. TREASURY SECURITIES. In determining whether the
Holders of the required principal amount of Securities have concurred in any
direction, amendment, supplement, waiver or consent, Securities owned by the
Company or Affiliates of the Company shall be disregarded, except that, for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, amendment, supplement, waiver or consent, only Securities that
the Trustee knows are so owned shall be disregarded.
SECTION 2.10. TEMPORARY SECURITIES. Until definitive Securities are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form
of Definitive Securities but may have variations that the Company reasonably and
in good faith considers appropriate for temporary Securities. Without
unreasonable delay, the Company shal1 prepare and the Trustee shall authenticate
Definitive Securities in exchange for temporary Securities. Until so exchanged,
the temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as permanent Securities authenticated and delivered
hereunder.
SECTION 2.11. CANCELLATION. The Company at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for transfer,
exchange or payment. The Trustee, or at the direction of the Trustee, the
Registrar or the Paying Agent (other than the Company or an Affiliate of the
Company), and no one else, shall cancel and, at the written direction of the
Company, shall dispose of all Securities surrendered for transfer, exchange,
payment or cancellation. Subject to Section 2.07, the Company may not issue new
Securities to replace Securities that have been paid or delivered to the Trustee
for cancellation. No Securities shall be authenticated in lieu of or in
exchange for any Securities cancelled as provided in this Section 2.11, except
as expressly permitted in the form of Securities and as permitted by this
Indenture.
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SECTION 2.12. DEFAULTED INTEREST. Interest on any Security which is
payable, and is punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the person in whose name that Security (or one or more
predecessor Securities) is registered at the close of business on Record Date
for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date plus, to the extent
lawful, any interest payable on the defaulted interest (herein called "DEFAULTED
INTEREST") shall forthwith cease to be payable to the registered holder on the
relevant Record Date, and such Defaulted Interest may be paid by the Company, at
its election in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the persons in whose names the Securities (or their respective
predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall
be fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Security and the date of the proposed parent, and at the same time the
Company shall deposit with the Trustee an amount of cash equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such cash when deposited to be
held in trust for the benefit of the persons entitled to such Defaulted
Interest as provided in this clause (1). Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify
the Company of such Special Record Date and, in the name and at the expense
of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder at his address as it appears in
the Security register not less than 10 days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the persons in whose names the
Securities (or their respective predecessor Securities) are registered on
such Special Record Date and shall no longer be payable pursuant to the
following clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed
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payment pursuant to this clause, such manner shall be deemed practicable by
the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Security shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
ARTICLE 3
REDEMPTION
SECTION 3.01. OPTIONAL REDEMPTION.
(a) RIGHT OF REDEMPTION. Redemption of Securities, as permitted by
any provision of this Indenture, shall be made in accordance with such provision
and this Article 3. Except as provided below, the Company will not have the
right to redeem any Securities prior to June 15, 2002. On or after June 15,
2002, the Company will have the right to redeem all or any part of the
Securities in cash at the Redemption Prices specified in the form of Security
attached as EXHIBIT A set forth therein under the caption "Redemption," in each
case, including accrued and unpaid interest, if any, to the applicable
Redemption Date (subject to the right of Holders of record on the relevant
regular Record Date to receive interest due on an Interest Payment Date that is
on or prior to the Redemption Date).
Notwithstanding the foregoing paragraph, prior to June 15, 2002, in
the event that the Company or any Parent consummates one or more Equity
Offerings, other than in any circumstances resulting in, or as a series of
transactions that result in, directly or indirectly, a Change of Control, on or
before the third anniversary of the Issue Date, the Company may at its option,
use all or a portion of the cash received by it or contributed to it from such
Equity Offerings to redeem up to 35% of the originally issued aggregate
principal amount of the Securities at a cash redemption price equal to 109.125%
of the principal amount of the Securities so redeemed, plus accrued and unpaid
interest thereon, if any, to the Redemption Date; PROVIDED, HOWEVER, that (x) at
least 65% of the original aggregate principal amount of the Securities remains
outstanding thereafter (excluding any Securities owned by the Company or any of
its Affiliates), and (y) any such net cash proceeds of such Equity Offering by
any Parent to be used for such a redemption shall be contributed to the Company
in an amount in cash sufficient to redeem the Securities to be redeemed at the
then current redemption price. Notice of any such redemption must be given
within 60 days after the date of the last Equity Offering the proceeds of which
are to be so contributed.
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(b) CHANGE OF CONTROL REDEMPTION. Notwithstanding subsection (a) of
this Section 3.01, at any time on or prior to June 15, 2002, the Securities may
also be redeemed as a whole at the option of the Company upon the occurrence of
a Change of Control (but in no event more than 90 days after the occurrence of
such Change of Control) at a redemption price equal to 100% of the principal
amount thereof, plus the Applicable Premium as of, and accrued but unpaid
interest, if any, to, the Redemption Date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date).
SECTION 3.02. NOTICES TO TRUSTEE. If the Company elects or is
required to redeem Securities pursuant to Paragraph 5 of the Securities, it
shall notify the Trustee in writing of the Redemption Date and the principal
amount of Securities to be redeemed and whether it wants the Trustee to give
notice of redemption to the Holders.
If the Company elects to reduce the principal amount of Securities to
be redeemed pursuant to Paragraph 5 of the Securities by crediting against any
such redemption Securities it has not previously delivered to the Trustee for
cancellation, it shall so notify the Trustee of the amount of the reduction and
deliver such Securities with such notice, provided that no Securities received
by the Company in exchange for Exchange Securities may be made the basis for
such credit.
The Company shall give each notice to the Trustee provided for in this
Section 3.02 with respect to any optional redemption pursuant to Section 3.01(a)
at least 45 days before the Redemption Date (unless a shorter notice shall be
satisfactory to the Trustee). Any such notice may be cancelled at any time
prior to notice of such redemption being mailed to any Holder and shall thereby
be void and of no effect.
SECTION 3.03. SELECTION OF SECURITIES TO BE REDEEMED. If less than
all of the Securities are to be redeemed pursuant to Paragraph 5(a) thereof, the
Trustee shall select the Securities to be redeemed on a pro rata basis or by
such other method as the Trustee shall determine to be fair and appropriate and
in such manner as complies with any applicable Depository, legal and stock
exchange requirements.
The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption and shall promptly notify the Company
in writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities in denominations of $1,000 may be redeemed only in whole.
The Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
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SECTION 3.04. NOTICE OF REDEMPTION. At least 30 days but not more
than 60 days before a Redemption Date, the Company shall mail a notice of
redemption by first class mail, postage prepaid, to the Trustee and each Holder
whose Securities are to be redeemed to such Holder's last address as then shown
upon the books of the Registrar. At the Company's request, the Trustee shall
give the notice of redemption in the Company's name and at the Company's
expense. Each notice for redemption shall identify the Securities to be
redeemed and shall state:
(a) the Redemption Date;
(b) the Redemption Price, including the amount of accrued and unpaid
interest, if any, to be paid upon such redemption;
(c) the name, address and telephone number of the Paying Agent;
(d) that Securities called for redemption must be surrendered to the
Paying Agent at the address specified in such notice to collect the
Redemption Price;
(e) that, unless (i) with respect to a redemption pursuant to
Paragraph 5(a) of the Securities, the Company defaults in its obligation to
deposit cash with the Paying Agent in accordance with Section 3.06 hereof
or (ii) such redemption payment is prohibited pursuant to Article 12 hereof
or other laws, the interest on securities (or portion thereof) called for
redemption ceases to accrue on and after the Redemption Date and the only
remaining right of the Holders of such Securities is to receive payment of
the Redemption Price, as the case may be, including any accrued and unpaid
interest to the Redemption Date, upon surrender to the Paying Agent of the
Securities called for redemption and to be redeemed;
(f) if any Security is being redeemed in part, the portion of the
principal amount, equal to $1,000 or any integral multiple thereof, of such
Security to be redeemed and that, on or after the Redemption Date, and upon
surrender of such Security, a new Security or Securities in a principal
amount equal to the unredeemed portion thereof will be issued;
(g) if less than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of such Securities to
be redeemed and the aggregate principal amount of Securities to be
outstanding after such partial redemption;
(h) the CUSIP number of the Securities to be redeemed; and
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(i) that the notice is being sent pursuant to this Section 3.04 and
pursuant to the optional redemption provisions of Paragraph 5(a) of the
Securities or the special redemption provisions of Paragraph 5(b) of the
Securities, as the case may be.
SECTION 3.05. EFFECT OF NOTICE OF REDEMPTION. Once notice of
redemption is mailed in accordance with Section 3.04, Securities called for
redemption become due and payable on the Redemption Date and at the Redemption
Price including any accrued and unpaid interest to the Redemption Date, if any.
Upon surrender to the Trustee or Paying Agent, such Securities called for
redemption shall be paid at the Redemption Price, including interest, if any,
accrued and unpaid to the Redemption Date; PROVIDED that if the Redemption Date
is after a regular Record Date and on or prior to the Interest Payment Date, the
accrued interest shall be payable to the Holder of the redeemed Securities
registered on the relevant Record Date; and PROVIDED, FURTHER, that if a
Redemption Date is a Legal Holiday payment shall be made on the next succeeding
Business Day and no interest shall accrue for the period from such Redemption
Date to such succeeding Business Day.
SECTION 3.06. DEPOSIT OF REDEMPTION PRICE. On or prior to any
Redemption Date, the Company shall deposit with the Paying Agent (other than the
Company or an Affiliate of the Company) cash sufficient to pay the Redemption
Price of, including any accrued and unpaid interest on, all Securities to be
redeemed on such Redemption Date (other than Securities or portions thereof
called for redemption on that date that have been delivered by the Company to
the Trustee for cancellation). The Paying Agent shall promptly return to the
Company any cash so deposited which is not required for that purpose upon the
written request of the Company.
If the Company complies with the other provisions of this Article 3
and payment of the Securities called for redemption is not prohibited under this
Indenture, interest on the Securities to be redeemed will cease to accrue on the
applicable Redemption Date, whether or not such Securities are presented for
payment. Notwithstanding anything herein to the contrary, if any Security
surrendered for redemption in the manner provided in the Securities shall not be
so paid upon surrender for redemption because of the failure of the Company to
comply with the preceding paragraph, interest shall continue to accrue and be
paid from the Redemption Date until such payment is made on the unpaid
principal, and, to the extent lawful, on any interest not paid on such unpaid
principal, in each case at the rate and in the manner provided in Section 4.02
hereof and the Securities.
SECTION 3.07. SECURITIES REDEEMED IN PART. Upon surrender of a
Security that is to be redeemed in part, the Company shall execute and the
Trustee shall authenticate and deliver to the Holder, without service charge to
the Holder, a new Security or Securities equal in principal amount to the
unredeemed portion of the Security surrendered.
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ARTICLE 4
COVENANTS
SECTION 4.01. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS. The
Company will not, and will not permit any Restricted Subsidiary to, enter into
any Sale and Leaseback Transaction; PROVIDED, HOWEVER, that the Company may
enter into a Sale and Leaseback Transaction if (i) the Company could have (a)
Incurred Indebtedness (other than Indebtedness described in the third paragraph
(other than clause (vi) thereof) of Section 4.12) in an amount equal to the
Attributable Debt relating to such Sale and Leaseback Transaction in compliance
with Section 4.12 and (b) Incurred a Lien to secure such Indebtedness in
compliance with the Section 4.14, (ii) the gross cash proceeds of such Sale and
Leaseback Transaction are at least equal to the fair market value (as determined
in good faith by the Board of Directors of the Company and set forth in an
Officers' Certificate delivered to the Trustee) of the property that is the
subject of such Sale and Leaseback Transaction and (iii) the transfer of assets
in such Sale and Leaseback Transaction is permitted by, and the Company applies
the proceeds of such transaction in compliance with, the provisions of Section
4.15.
SECTION 4.02. PAYMENT OF SECURITIES. The Company shall pay the
principal of and interest on the Securities on the dates and in the manner
provided in the Securities. An installment of principal of or interest on the
Securities shall be considered paid on the date it is due if the Trustee or
Paying Agent (other than the Company or an Affiliate of the Company) holds for
the benefit of the Holders, on or before 10:00 a.m. New York City time on that
date, cash deposited and designated for and sufficient to pay the installment.
The Company shall pay interest on overdue principal and on overdue
installments of interest at the rate specified in the Securities compounded
semi-annually, to the extent lawful.
SECTION 4.03. MAINTENANCE OF OFFICE OR AGENCY. The Company shall
maintain in the Borough of Manhattan, The City of New York, an office or agency
where Securities may be presented or surrendered for payment, where Securities
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Company shall give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
address of the Trustee set forth in Section 13.02.
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The Company may also, from time to time, designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
PROVIDED, HOWEVER, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York, for such purposes. The Company
shall give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or agency.
The Company hereby initially designates the Corporate Trust Office of the
Trustee as such office.
SECTION 4.04. LIMITATION ON RESTRICTED PAYMENTS. After the Issue
Date, the Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, make any Restricted Payment, if,
immediately prior or after giving effect thereto:
(a) a Default or an Event of Default would exist;
(b) the Company's Annualized Operating Cash Flow Ratio for the
Reference Period would exceed 8.5 to 1; or
(c) the aggregate amount of all Restricted Payments made by the
Company and its Restricted Subsidiaries, including such proposed Restricted
Payment (if not made in cash, then the fair market value of any property
used therefor, as determined in good faith by the Board of Directors of the
Company) from and after the Issue Date and on or prior to the date of such
Restricted Payment, shall exceed the sum of (i) the amount determined by
subtracting (x) 2.0 times the aggregate Consolidated Interest Expense of
the Company for the period (taken as one accounting period) from the Issue
Date to the last day of the last full fiscal quarter prior to the date of
the proposed Restricted Payment (the "COMPUTATION PERIOD") from (y)
Operating Cash Flow of the Company for the Computation Period, PLUS (ii)
the aggregate Net Proceeds received by the Company from (x) Equity
Offerings (other than to a Subsidiary of the Company) after the Issue Date
and on or prior to the date of such Restricted Payment or (y) capital
contributions to the Company after the Issue Date, PLUS (iii) to the extent
not otherwise included in clauses (i) or (ii), above, an amount equal to
the net reduction in Investments in Unrestricted Subsidiaries resulting
from payments of dividends, repayment of loans or advances, or other
transfers of assets, in each case to the Company or any Wholly Owned
Restricted Subsidiary of the Company from Unrestricted Subsidiaries, or
from redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries
(valued in each case as provided in the definition of "Investments"), not
to exceed, in the case of any Unrestricted Subsidiary, the amount of
Investments previously made by the Company and any Restricted Subsidiary in
such Unrestricted Subsidiary.
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Notwithstanding the foregoing paragraph, the provisions set forth in
clauses (b) and (c) thereof will not prohibit (i) the use of an aggregate of
$10,000,000 to be used for Restricted Payments not otherwise permitted by this
Section 4.04, (ii) the distribution of amounts to Holdings sufficient to pay the
scheduled interest or dividends, as applicable, owed by Holdings on the
Permitted Parent Securities as such interest or dividends become due and payable
so long as Holdings (or any other direct or indirect Wholly Owned Subsidiary of
PCC) is the direct Parent of the Company owning 100% of the Capital Stock of the
Company and (iii) any dividend, distribution or other payment by any Restricted
Subsidiary on shares of its Capital Stock that is paid PRO RATA to all holders
of such Capital Stock, and notwithstanding the foregoing paragraph, the
provisions set forth in clauses (a), (b) and (c) thereof will not prohibit (x)
the payment of any dividend within 60 days after the date of its declaration if
such dividend could have been made on the date of its declaration in compliance
with the foregoing provisions, or (y) the redemption, defeasance, repurchase or
other acquisition or retirement of any Indebtedness or Capital Stock of the
Company or its Restricted Subsidiaries either in exchange for or out of the Net
Proceeds of any substantially concurrent Equity Offering (in the case of any
redemption, defeasance, repurchase or other acquisition or retirement of any
Junior Indebtedness or Capital Stock of the Company or its Restricted
Subsidiaries and other than to a Subsidiary of the Company) or sale of Junior
Indebtedness (in the case of any redemption, defeasance, repurchase or other
acquisition or retirement of any Indebtedness of the Company or its Restricted
Subsidiaries) of the Company.
In determining the aggregate amount expended for Restricted Payments
in accordance with clause (c) of the first paragraph of this Section 4.04, 100%
of the amounts expended under clauses (i) through (iii) and (x) and (y) of the
immediately preceding paragraph shall be included as Restricted Payments from
and after the Issue Date.
SECTION 4.05. CORPORATE EXISTENCE. Subject to Article 5, the Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and the corporate or other existence of
each of its Restricted Subsidiaries in accordance with the respective
organizational documents of each of them and the rights (charter and statutory)
and corporate franchises of the Company and each of the Company's Restricted
Subsidiaries; PROVIDED, HOWEVER, that the Company shall not be required to
preserve, with respect to itself, any right or franchise, and with respect to
any Restricted Subsidiaries of the Company, any such existence, right or
franchise, if (a) the Board of Directors of the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
such entity and (b) the loss thereof is not disadvantageous in any material
respect to the Holders.
SECTION 4.06. PAYMENT OF TAXES AND OTHER CLAIMS. Except with respect
to immaterial items, the Company shall, and shall cause each of its Restricted
Subsidiaries to, pay or discharge or cause to be paid or discharged, before the
same shall become delinquent,
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(i) all taxes, assessments and governmental charges (including withholding taxes
and any penalties, interest and additions to taxes) levied or imposed upon the
Company or any of its Restricted Subsidiaries or any of their respective
properties and assets and (ii) all lawful claims, whether for labor, materials,
supplies, services or anything else, which have become due and payable and which
by law have or may become a Lien upon the property and assets of the Company or
any of its Restricted Subsidiaries; PROVIDED, HOWEVER, that the Company shall
not be required to pay or discharge or cause to be paid or discharged any such
tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings and for which disputed
amounts adequate reserves have been established in accordance with GAAP.
SECTION 4.07. MAINTENANCE OF PROPERTIES AND INSURANCE. The Company
shall cause all material properties used or useful to the conduct of its
business and the business of each of its Restricted Subsidiaries to be
maintained and kept in good condition, repair and working order (reasonable wear
and tear excepted) and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in its reasonable
judgment may be necessary, so that the business carried on in connection
therewith may be properly conducted at all times; PROVIDED, HOWEVER, that
nothing in this Section 4.07 shall prevent the Company from discontinuing any
operation or maintenance of any of such properties, or disposing of any of them,
if such discontinuance or disposal is (a) in the judgment of the Board of
Directors of the Company, desirable in the conduct of the business of such
entity and (b) not disadvantageous in any material respect to the Holders.
The Company shall provide, or cause to be provided, for itself and
each of its Restricted Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds that, in the reasonable,
good faith opinion of the Company is adequate and appropriate for the conduct of
the business of the Company and such Restricted Subsidiaries in a prudent
manner, with (except for self-insurance) reputable insurers or with the
government of the United States of America or an agency or instrumentality
thereof, in such amounts, with such deductibles, and by such methods as shall be
customary, in the reasonable, good faith opinion of the Board of Directors of
the Company and adequate and appropriate for the conduct of the business of the
Company and such Restricted Subsidiaries in a prudent manner for entities
similarly situated in the industry, unless failure to provide such insurance
(together with all other such failures) would not have a material adverse effect
on the financial condition or results of operations of the Company or such
Restricted Subsidiary. The Company shall provide, or cause to be provided, the
insurance required under the Security Documents.
SECTION 4.08. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT. The Company
shall deliver to the Trustee within 120 days after the end of its fiscal year an
Officers' Certificate complying with Section 314(a)(4) of the TIA and stating
that a review of its activities
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and the activities of its Subsidiaries during the preceding fiscal year has been
made under the supervision of the signing Officers with a view to determining
whether the Company has kept, observed, performed and fulfilled their
obligations under this Indenture and further stating, as to each such officer
signing such certificate, whether the signer knows of any failure by the Company
or any Subsidiary of the Company to comply with any conditions or covenants in
this Indenture and, if such signer does know of such a failure to comply, the
certificate shall describe such failure with particularity. The Officers'
Certificate shall also notify the Trustee should the relevant fiscal year end on
any date other than the current fiscal year end date.
The Company shall, so long as any of the Securities are outstanding,
deliver to the Trustee, promptly upon becoming aware of any Default, Event of
Default or fact which would prohibit the making of any payment to or by the
Trustee in respect of the Securities, an Officers' Certificate specifying such
Default, Event of Default or fact and what action the Company is taking or
proposes to take with respect thereto. The Trustee shall not be deemed to have
knowledge of any Default, any Event of Default or any such fact unless one of
its trust officers receives notice thereof from the Company or any of the
Holders.
SECTION 4.09. REPORTS; RULE 144A INFORMATION REQUIREMENT. Whether or
not the Company is subject to the reporting requirements of Section 13 or 15 (d)
of the Exchange Act, the Company shall deliver to the Trustee and to each
Holder, within 15 days after it is or would have been required to file such with
the SEC, annual and quarterly financial statements substantially equivalent to
financial statements that would have been included in reports filed with the
SEC, if the Company was subject to the requirements of Section 13 or 15(d) of
the Exchange Act, including, with respect to annual information only, a report
thereon by the Company's certified independent public accountants as such would
be required in such reports to the SEC, and in each case, together with a
management's discussion and analysis of financial condition and results of
operations which would be so required. In addition, for so long as any
Securities remain outstanding, the Company will furnish to the Holders and to
securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act, and, to any beneficial holder of the Securities, if not
obtainable from the SEC, information of the type that would be filed with the
SEC pursuant to the foregoing provisions, upon the request of any such holder.
SECTION 4.10. LIMITATION ON STATUS AS INVESTMENT COMPANY. The
Company shall not become, nor shall it permit any of its Restricted Subsidiaries
to become, an "investment company" (as that term is defined in the Investment
Company Act of 1940, as amended), or otherwise become subject to regulation
under the Investment Company Act.
SECTION 4.11. LIMITATION ON TRANSACTIONS WITH RELATED PERSONS. After
the Issue Date, the Company will not, and will not permit any of its Restricted
Subsidiaries to, enter
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into any contract, agreement, arrangement or transaction with any Related Person
(each a "RELATED PERSON TRANSACTION"), or any series of Related Person
Transactions, except for transactions made in good faith, the terms of which are
(i) fair and reasonable to the Company or such Subsidiary, as the case may be,
and (ii) at least as favorable as the terms that could be obtained by the
Company or such Subsidiary, as the case may be, in a comparable transaction made
on an arm's length basis with Persons who are not Related Persons.
Without limiting the foregoing, (a) any Related Person Transaction or
series of Related Person Transactions with an aggregate value in excess of
$1,000,000 must first be approved by a majority of the Board of Directors of the
Company who are disinterested in the subject matter of the transaction pursuant
to a Board Resolution, and (b) with respect to any Related Person Transaction or
series of Related Person Transactions with an aggregate value in excess of
$5,000,000, the Company must first obtain a favorable written opinion from an
independent financial advisor of national reputation as to the fairness from a
financial point of view of such transaction to the Company or such Subsidiary,
as the case may be.
Notwithstanding the foregoing, the following shall not constitute
Related Person Transactions: (i) reasonable and customary payments on behalf of
directors, officers or employees of the Company or any of its Restricted
Subsidiaries, or in reimbursement of reasonable and customary payments or
reasonable and customary expenditures made or Incurred by such Persons, as
directors, officers or employees, (ii) any contract, agreement, arrangement or
transaction solely between or among the Company and any of its Restricted
Subsidiaries or between or among Restricted Subsidiaries of the Company, (iii)
any Restricted Payment not prohibited by Section 4.04, (iv) any loan or advance
by the Company or a Restricted Subsidiary to employees of the Company or a
Restricted Subsidiary in the ordinary course of business, in an aggregate amount
at any one time outstanding not to exceed $500,000, and (v) any payment pursuant
to a tax-sharing agreement between the Company and any other Person with which
the Company is required or permitted to file a consolidated tax return or with
which the Company is or could be part of a consolidated group for tax purposes,
which payments are not in excess of the tax liabilities attributable solely to
the Company and its Restricted Subsidiaries (as a consolidated group).
SECTION 4.12. LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS.
After the Issue Date, the Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, issue, create, incur,
assume, guarantee or otherwise directly or indirectly become liable for
(including as a result of an acquisition), or otherwise become responsible for,
contingently or otherwise (individually or collectively, to "INCUR" or, as
appropriate, an "INCURRENCE"), any Indebtedness. Neither the accrual of interest
(including the issuance of "pay in kind" securities or similar instruments in
respect of such accrued interest) pursuant to the terms of Indebtedness Incurred
in compliance with this covenant, nor the accretion of original
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issue discount, nor the mere extension of the maturity of any Indebtedness shall
be deemed to be an Incurrence of Indebtedness.
Notwithstanding the foregoing, if there exists no Default or Event of
Default immediately prior and subsequent thereto, the Company may Incur
Indebtedness if, after giving effect to the Incurrence of such Indebtedness, the
Company's Annualized Operating Cash Flow Ratio would have been less than 8.0 to
1.
In addition, if there exists no Default or Event of Default
immediately prior and subsequent thereto, the foregoing limitations will not
apply to the Incurrence of:
(i) Indebtedness by the Company or any of its Restricted Subsidiaries
constituting Existing Indebtedness, reduced by repayments of and permanent
reductions in commitments in satisfaction of the Net Cash Proceeds
application requirement under Section 4.15 and by repayments and permanent
reductions in amounts outstanding pursuant to scheduled amortization and
mandatory prepayments in accordance with the terms thereof;
(ii) unsecured Indebtedness Incurred by the Company or any Guarantor
in an aggregate principal amount outstanding at any time not to exceed
$100,000,000 reduced by amounts Incurred pursuant to clause (x) below, so
long as such amounts Incurred pursuant to clause (x) remain outstanding;
(iii) Indebtedness Incurred by the Company evidenced by the Initial
Securities and the Exchange Securities therefor and the guarantees thereof
by Restricted Subsidiaries;
(iv) (a) Permitted Acquisition Indebtedness by the Company that
satisfies the provisions of clause (x) of the definition thereof or (b)
Permitted Acquisition Indebtedness by any Restricted Subsidiary that
satisfies the provisions of clause (y) of the definition thereof;
(v) Indebtedness between the Company and any Restricted Subsidiary of
the Company or between Restricted Subsidiaries of the Company; PROVIDED,
HOWEVER, that, in the case of Indebtedness of the Company, such obligations
shall be unsecured and subordinated in all respects to the Holders' rights
pursuant to the Securities, and the date of any event that causes a
Restricted Subsidiary no longer to be a Restricted Subsidiary shall be an
Incurrence Date with respect to such Indebtedness;
(vi) Capitalized Lease Obligations and Purchase Money Indebtedness in
an aggregate amount or aggregate principal amount, as the case may be,
outstanding at
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any time not to exceed in the aggregate $15,000,000; PROVIDED, HOWEVER,
that in the case of Purchase Money Indebtedness, such Indebtedness shall
not constitute less than 75% nor more than 100% of the cost (determined in
accordance with GAAP) to the Company or such Restricted Subsidiary of the
property purchased or leased with the proceeds thereof;
(vii) Indebtedness of the Company or any Restricted Subsidiary arising
from agreements providing for indemnification, adjustment of purchase price
or similar obligations, or from guarantees or letters of credit, surety
bonds or performance bonds securing any obligations of the Company or its
Restricted Subsidiaries pursuant to such agreements, in any case Incurred
in connection with the disposition of any business, assets or Restricted
Subsidiary of the Company to the extent none of the foregoing results in
the obligation to repay an obligation for money borrowed by any Person and
are limited in aggregate amount to no greater than 10% of the fair market
value of such business, assets or Restricted Subsidiary so disposed of;
(viii) any guarantee by any Restricted Subsidiary of any Indebtedness
Incurred in compliance with Section 4.20;
(ix) Indebtedness of the Company or any Restricted Subsidiary under
standby letters of credit or reimbursement obligations with respect thereto
issued in the ordinary course of business and consistent with industry
practices limited in aggregate amount to $5,000,000 at any one time
outstanding; and
(x) Refinancing Indebtedness Incurred to extend, renew, replace or
refund Indebtedness permitted under clauses (i) (as so reduced in amount),
(ii) (as so reduced in amount), (iii), (iv) and (x) of this paragraph.
For purposes of determining compliance with this Section 4.12, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories described above or is entitled to be incurred pursuant to the second
paragraph of this Section 4.12, the Company shall, in its sole discretion,
classify such item of Indebtedness in any manner that complies with this Section
4.12 and such item of Indebtedness will be treated as having been incurred
pursuant to only one of such clauses or pursuant to the second paragraph of this
Section 4.12. In addition, the Company may, at any time, change the
classification of an item of Indebtedness (or any portion thereof) to any other
clause or to the second paragraph of this Section, provided that the Company
would be permitted to incur such item of Indebtedness (or such portion thereof)
pursuant to such other clause or the second paragraph of this Section, as the
case may be, at such time of reclassification.
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Indebtedness of any Person that is not a Restricted Subsidiary of the
Company (or that is a Non-Recourse Restricted Subsidiary designated to be a
Restricted Subsidiary, but no longer a Non-Recourse Restricted Subsidiary),
which Indebtedness is outstanding at the time such Person becomes such a
Restricted Subsidiary of the Company or is merged with or into or consolidated
with the Company or a Restricted Subsidiary of the Company shall be deemed to
have been Incurred, as the case may be, at the time such Person becomes such a
Restricted Subsidiary of the Company, or is merged with or into or consolidated
with the Company or a Restricted Subsidiary of the Company.
SECTION 4.13. LIMITATIONS ON RESTRICTING SUBSIDIARY DIVIDENDS. The
Company will not, and will not permit any of its Restricted Subsidiaries to,
with respect to securities issued directly thereby or with respect to which they
are obligors, directly or indirectly, create, assume or suffer to exist any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary of the Company to pay dividends or make other distributions on the
Capital Stock of any Restricted Subsidiary of the Company or pay or satisfy any
obligation to the Company or any of its Restricted Subsidiaries or otherwise
transfer assets or make or pay loans or advances to the Company or any of its
Restricted Subsidiaries, except encumbrances and restrictions existing under
(i) this Indenture, the Securities and any Permitted Pari Passu
Secured Indebtedness;
(ii) any Existing Indebtedness;
(iii) any applicable law or any governmental or administrative
regulation or order;
(iv) Refinancing Indebtedness permitted under this Indenture;
PROVIDED, HOWEVER, that the restrictions contained in the instruments
governing such Refinancing Indebtedness are no more restrictive in the
aggregate than those contained in the instruments governing the
Indebtedness (in the good faith judgment of the Company's Board of
Directors) being refinanced immediately prior to such refinancing;
(v) restrictions with respect solely to a Restricted Subsidiary of
the Company imposed pursuant to a binding agreement which has been entered
into for the sale or disposition of all or substantially all of the Capital
Stock or assets of such Restricted Subsidiary; PROVIDED, HOWEVER, that such
restrictions apply solely to the Capital Stock or assets (in the good faith
judgment of the Company's Board of Directors) being sold of such Restricted
Subsidiary;
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(vi) restrictions contained in any agreement relating to the financing
of the acquisition of a Person or property, business or assets, after the
Issue Date which are not applicable to any Person or property, business or
assets, other than the Person or property so acquired and which either (a)
were not put in place in anticipation of or in connection with such
acquisition or (b) constituted Permitted Acquisition Indebtedness of a
Person satisfying the provisions of clause (y) of the definition thereof;
or
(vii) any agreement (other than those referred to in clause (vi)) of a
Person acquired by the Company or a Restricted Subsidiary of the Company,
which restrictions existed at the time of acquisition and were not put in
place in anticipation of or in connection with such acquisition.
Notwithstanding the foregoing, neither (A) customary provisions
restricting subletting or assignment of any lease entered into the ordinary
course of business, consistent with past practices nor (B) Permitted Liens shall
in and of themselves be considered a restriction on the ability of the
applicable Restricted Subsidiary to transfer such agreement or assets, as the
case may be.
SECTION 4.14. LIMITATIONS ON LIENS; IMPAIRMENT OF SECURITY INTEREST.
The Company will not and will not permit any Restricted Subsidiary, directly or
indirectly, to Incur or suffer to exist any Lien upon any of its property or
assets, whether now owned or hereafter acquired, other than Permitted Liens.
Neither the Company nor any of its Restricted Subsidiaries will take
or omit to take any action which action or omission would have the result of
adversely affecting or impairing the security interest in favor of the Trustee,
on behalf of itself and the Holders, with respect to the Collateral. Neither
the Company nor any of its Restricted Subsidiaries will enter into any agreement
or instrument that by its terms requires the proceeds received from any sale of
Collateral to be applied to repay, redeem, defease or otherwise acquire or
retire any Indebtedness of any Person, other than pursuant to this Indenture,
the Securities and the Security Documents.
SECTION 4.15. LIMITATION ON ASSET SALES AND SALES OF SUBSIDIARY
STOCK. After the Issue Date, the Company will not, and will not permit any of
its Restricted Subsidiaries to, in one or a series of related transactions,
convey, sell, transfer, assign or otherwise dispose of, directly or indirectly,
any of its property, businesses or assets, including by merger or consolidation,
and including any sale or other transfer or issuance of any Capital Stock of any
Restricted Subsidiary of the Company, whether by the Company or a Restricted
Subsidiary (any such transaction an "ASSET SALE"), unless
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(1) (a) within 360 days after the date of such Asset Sale, an amount
equal to the Net Cash Proceeds therefrom (the "ASSET SALE OFFER AMOUNT") is
applied to the optional redemption of the Securities in accordance with the
terms of Section 3.01 and other Senior Indebtedness of the Company
(including any Permitted Pari Passu Secured Indebtedness) from time to time
outstanding with similar provisions requiring the Company to make an offer
to purchase or to redeem such Indebtedness with the proceeds from asset
sales, PRO RATA in proportion to the respective principal amounts (or
accreted values in the case of Indebtedness issued with an original issue
discount) of the Securities and such other Indebtedness then outstanding or
to the repurchase of the Securities and such other Indebtedness pursuant to
an irrevocable, unconditional offer (PRO RATA in proportion to the
respective principal amounts (or accreted values in the case of
Indebtedness issued with an original issue discount) of the Securities and
such other Indebtedness then outstanding) (the "ASSET SALE OFFER") to
repurchase such Indebtedness at a purchase price (the "ASSET SALE OFFER
PRICE") of 100% of the principal amount of Securities to be repurchased or
redeemed in the case of the Securities or 100% of the principal amount of
such other Indebtedness to be repurchased or redeemed (or accreted value in
the case of Indebtedness issued with an original issue discount) plus, in
each case, accrued interest to the date of payment, made within 330 days of
such Asset Sale, or (b) within 330 days of such Asset Sale, the Asset Sale
Offer Amount is (i) invested (or committed, pursuant to a binding
commitment subject only to reasonable, customary closing conditions, to be
invested, and in fact is so invested, within an additional 90 days) in
assets and property (other than notes, obligations or securities), which in
the good faith reasonable judgment of the Board of Directors of the Company
are of a type used in a Related Business, or Capital Stock of a Person
(which, if such Person becomes a Subsidiary of the Company by virtue of
such Asset Sale, shall initially be designated a Restricted Subsidiary) all
or substantially all of whose assets and property (in the good faith
reasonable judgment of the Board of Directors of the Company) are of a type
used in a Related Business (PROVIDED, HOWEVER, that, with respect to such
Capital Stock, all of the requirements of the last proviso of clause (v) of
the following paragraph shall have been satisfied), or (ii) used to retire
permanently any Senior Indebtedness of the Company or any Restricted
Subsidiary (other than a Non-Recourse Restricted Subsidiary);
(2) with respect to any transaction or related series of transactions
of securities, property or assets with an aggregate fair market value in
excess of $1,000,000, at least 75% of the value of consideration for the
assets disposed of in such Asset Sale (excluding (a) Indebtedness (other
than Indebtedness which by its terms is subordinated to the Securities)
(and any Refinancing Indebtedness issued to refinance any such
Indebtedness) or the Indebtedness of any Restricted Subsidiary assumed by a
transferee which assumption permanently reduces the amount of Indebtedness
out-
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standing on the Issue Date and permitted to have been Incurred pursuant to
Section 4.12 (including that in the case of a revolver or similar
arrangement that makes credit available, such commitment is permanently
reduced by such amount), (b) Purchase Money Indebtedness secured
exclusively by the assets subject to such Asset Sale which is assumed by a
transferee and (c) marketable securities that are promptly converted into
cash or Cash Equivalents) consists of cash or Cash Equivalents; PROVIDED,
HOWEVER, that any cash or Cash Equivalents received within 12 months
following any such Asset Sale upon conversion of any property or assets
(other than in the form of cash or Cash Equivalents) received in
consideration of such Asset Sale shall be applied promptly in the manner
required of Net Cash Proceeds of any such Asset Sale as set forth above,
and the other conditions to such release of Collateral, if applicable, are
satisfied;
(3) no Default or Event of Default shall occur or be continuing after
giving effect to, on a PRO FORMA basis, such Asset Sale, unless such Asset
Sale is in consideration solely of cash or Cash Equivalents and such
consideration is applied immediately to the permanent reduction of the
principal amount of Indebtedness outstanding pursuant to Senior
Indebtedness of the Company or any Restricted Subsidiary;
(4) the Board of Directors of the Company determines in good faith
that the Company or such Restricted Subsidiary, as applicable, would
receive fair market value in consideration of such Asset Sale; and
(5) immediately after giving PRO FORMA effect to such Asset Sale, the
Company would be in compliance with the provisions of Section 4.21.
Each Asset Sale Offer shall remain open for 20 Business Days following
its commencement and no longer, except as otherwise required by applicable law
(the "ASSET SALE OFFER PERIOD"). Upon expiration of the Asset Sale Offer
Period, the Company shall apply the Asset Sale Offer Amount, plus an amount
equal to accrued interest, to the purchase of all Indebtedness properly tendered
(on a PRO RATA basis as described above if the Asset Sale Offer Amount is
insufficient to purchase all Indebtedness so tendered) at the Asset Sale Offer
Price (together with accrued interest).
Notwithstanding the foregoing provisions of the second preceding
paragraph:
(i) the Company and its Restricted Subsidiaries may, in the ordinary
course of business, convey, sell, lease, transfer, assign or otherwise
dispose of assets acquired and held for resale in the ordinary course of
business;
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(ii) the Company and its Restricted Subsidiaries may convey, sell,
lease, transfer, assign or otherwise dispose of assets pursuant to and in
accordance with Article 5;
(iii) the Company and its Restricted Subsidiaries may sell or dispose
of damaged, worn out or other obsolete property in the ordinary course of
business so long as such property is no longer necessary for the proper
conduct of the business of the Company or such Restricted Subsidiary, as
applicable;
(iv) the Company and its Restricted Subsidiaries may convey, sell,
lease, transfer, assign or otherwise dispose of assets (other than FCC
licenses) to the Company or any of its Restricted Subsidiaries other than
to any Non-Recourse Restricted Subsidiary if, with respect to any such
conveyance, sale, lease, transfer, assignment or other disposition to any
Restricted Subsidiary that is not a Guarantor or the stock of which has not
been pledged pursuant to the Security Agreement, immediately after giving
PRO FORMA effect thereto the Company would be in compliance with the
provisions of Section 4.21; and
(v) the Company and its Restricted Subsidiaries may, in the
ordinary course of business (or, if otherwise than in the ordinary course
of business, upon receipt of a favorable written opinion by an independent
financial advisor of national reputation as to the fairness from a
financial point of view to the Company or such Restricted Subsidiary of the
proposed transaction), exchange all or a portion of its property,
businesses or assets for property, businesses or assets which are, or
Capital Stock of a Person all or substantially all of whose assets are, of
a type used in a Related Business (provided that such Person shall
initially be designated a Restricted Subsidiary if such Person becomes a
Subsidiary of the Company by virtue of such Asset Sale), or a combination
of any such property, businesses or assets, or Capital Stock of such a
Person and cash or Cash Equivalents; PROVIDED, HOWEVER, that (a) there
shall not exist immediately prior or subsequent thereto a Default or an
Event of Default; (b) a majority of the independent directors of the Board
of Directors of the Company shall have approved a Board Resolution that
such exchange is fair to the Company or such Restricted Subsidiary, as the
case may be; (c) any cash or Cash Equivalents received pursuant to any such
exchange shall be applied in the manner applicable to Net Cash Proceeds
from an Asset Sale as set forth pursuant to the provisions of the
immediately preceding paragraph of this Section 4.15; (d) immediately after
giving PRO FORMA effect thereto, the Company would be in compliance with
the provisions of Section 4.21; and (e) any Capital Stock of a Person
received in an Asset Sale pursuant to this clause (v) shall be owned
directly by the Company or a Restricted Subsidiary, and, when combined with
the Capital Stock of such Person already owned by the Company and its
Restricted Subsidiaries, shall constitute a majority of the voting power
and Capital
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Stock of such Person, unless (A) (I) the Company has received a binding
commitment from such Person (or the direct or indirect parent of such
Person) that such Person (or the direct or indirect parent of such Person)
will distribute to the Company in cash an amount equal to the Company's
Annualized Operating Cash Flow (determined as of the date of such Asset
Sale) attributable to the property, business or assets of the Company and
its Restricted Subsidiaries exchanged in connection with such Asset Sale
during each consecutive 12-month period subsequent to such Asset Sale
(unless and until the Company shall have sold all of such Capital Stock,
provided that the provisions of clause (B) below, if applicable, shall have
been satisfied), (II) immediately after such Asset Sale the aggregate
number of Net Pops of the Cellular Systems in which the Company or any of
its Restricted Subsidiaries has ownership interests ("COMPANY SYSTEMS")
that are owned directly by a Person or Persons a majority of whose voting
power and Capital Stock is owned directly or indirectly by the Company is
no less than 80% of the aggregate number of Net Pops of Company Systems
immediately prior to such Asset Sale and (III) upon consummation of such
Asset Sale, on a PRO FORMA basis, the ratio of such Person's Annualized
Operating Cash Flow to the product of Consolidated Interest Expense for the
Reference Period multiplied by four (but excluding from Consolidated
Interest Expense all amounts that are not required to be paid in cash on a
current basis) shall be at least 1.0 to 1, or (B) in the case of Capital
Stock of a Person that is not a Subsidiary of the Company owned by the
Company or a Restricted Subsidiary that is exchanged (the "EXCHANGED
CAPITAL STOCK") for Capital Stock of another Person all or substantially
all of whose assets are of a type used in a Related Business, either (i)
the Exchanged Capital Stock shall not have been acquired prior to such
Asset Sale in reliance upon clause (A) of this proviso or (ii) the
requirements of subclauses (A) (I) (based on the original guaranteed cash
flow) and (A) (III) shall be satisfied with respect to any Capital Stock
acquired in consideration of the Exchanged Capital Stock.
Restricted Payments that are made in compliance with, and are counted
against amounts available to be made as Restricted Payments pursuant to clause
(c) of Section 4.04, without giving effect to clause (i) of the second paragraph
thereof, shall not be deemed to be Asset Sales.
Any Asset Sale Offer shall be made in compliance with all applicable
laws, rules, and regulations, including, if applicable, Regulation 14E of the
Exchange Act and the rules and regulations thereunder and all other applicable
Federal and state securities laws.
The Company shall accumulate all Net Cash Proceeds and the aggregate
amount of such accumulated Net Cash Proceeds not used for the purposes permitted
and within the time provided by clause (1)(b) of the first paragraph of this
Section 4.15 is referred to as the "ACCUMULATED AMOUNT."
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For purposes of this Section 4.15, "MINIMUM ACCUMULATION DATE" means
each date on which the Accumulated Amount exceeds $5,000,000. Not later than 10
Business Days after each Minimum Accumulation Date, the Company will commence an
Asset Sale Offer, which shall be consummated on a date (the "ASSET SALE PURCHASE
DATE") which shall be no later than 40 Business Days after the Minimum
Accumulation Date related thereto. Notice of an Asset Sale Offer will be sent
20 Business Days prior to the close of business on the earlier of (a) the third
Business Day prior to the Asset Sale Purchase Date and (b) the third Business
Day following the expiration of the Asset Sale Offer (such earlier date being
the "FINAL PUT DATE"), by first-class mail, by the Company to each Holder at its
registered address, with a copy to the Trustee. The notice to the Holders will
contain all information, instructions and materials required by applicable law
or otherwise material to such Holders' decision to tender Securities pursuant to
the Asset Sale Offer. The notice to Holders, which (to the extent consistent
with this Indenture) shall govern the terms of the Asset Sale Offer, shall
state:
(1) that the Asset Sale Offer is being made pursuant to such notice
and this Section 4.15;
(2) the Asset Sale Offer Amount, the Asset Sale Offer Price
(including the amount of accrued and unpaid interest), the Final Put Date,
and the Asset Sale Purchase Date, which Asset Sale Purchase Date shall be
on or prior to 40 Business Days following the Minimum Accumulation Date;
(3) that any Security or portion thereof not tendered or accepted for
payment will continue to accrue interest;
(4) that, unless the Company defaults in depositing cash with the
Paying Agent in accordance with the penultimate paragraph of this Section
4.15 or such payment is otherwise prevented, any Security, or portion
thereof, accepted for payment pursuant to the Asset Sale Offer shall cease
to accrue interest after the Asset Sale Purchase Date;
(5) that Holders electing to have a Security, or portion thereof
purchased pursuant to an Asset Sale Offer will be required to surrender the
Security, with the form entitled "Option of Holder to Elect Purchase" on
the reverse of the Security completed, to the Paying Agent (which may not
for purposes of this Section 4.15, notwithstanding anything in this
Indenture to the contrary, be the Company or any Affiliate of the Company)
at the address specified in the notice prior to the close of business on
the Final Put Date;
(6) that Holders will be entitled to withdraw their elections, in
whole or in part, if the Paying Agent (which may not for purposes of this
Section, notwithstanding
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any other provision of this Indenture, be the Company or any Affiliate of
the Company) receives, up to the close of business on the Final Put Date, a
telegram, telex, facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Securities the Holder is
withdrawing and a statement that such Holder is withdrawing his election to
have such principal amount of Securities purchased;
(7) that if Indebtedness in a principal amount in excess of the
principal amount of Securities to be acquired pursuant to the Asset Sale
Offer is tendered and not withdrawn, the Company shall purchase
Indebtedness on a pro rata basis in proportion to the respective principal
amounts (or accreted values in the case of Indebtedness issued with an
original issue discount) thereof (with such adjustments as may be deemed
appropriate by the Company so that only Securities in denominations of
$1,000 or integral multiples of $1,000 shall be acquired);
(8) that Holders whose Securities were purchased only in part will be
issued new Securities equal in principal amount to the unpurchased portion
of the Securities surrendered; and
(9) a brief description of the circumstances and relevant facts
regarding such Asset Sales.
Any such Asset Sale Offer shall comply with all applicable provisions
of applicable Federal and state laws, rules and regulations, including those
regulating tender offers, if applicable, and any provisions of this Indenture
that conflict with such laws shall be deemed to be superseded by the provisions
of such laws.
On or before an Asset Sale Purchase Date, the Company shall (i) accept
for payment Securities or portions thereof properly tendered and not properly
withdrawn pursuant to the Asset Sale Offer on or before the Final Put Date (on a
pro rata basis if required pursuant to paragraph (7) hereof), (ii) deposit with
the Paying Agent cash sufficient to pay the Asset Sale Offer Price for all
Securities or portions thereof so tendered and accepted and (iii) deliver to the
Trustee Securities so accepted together with an Officers' Certificate stating
the Securities or portions thereof being purchased by the Company. The Paying
Agent shall on each Asset Sale Purchase Date mail or deliver to Holders of
securities so accepted payment in an amount equal to the Asset Sale Offer Price
for such Securities, and the Trustee shall promptly authenticate and mail or
deliver to such Holders a new Security equal in principal amount to any
unpurchased portion of the Security surrendered. Any Security not so accepted
shall be promptly mailed or delivered by the Company to the Holder thereof.
If the amount required to acquire all Indebtedness properly tendered
by Holders pursuant to the Asset Sale Offer (the "ACCEPTANCE AMOUNT") made
pursuant to this Section
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4.15 is less than the Asset Sale Offer Amount, the excess of the Asset Sale
Offer Amount over the Acceptance Amount may be used by the Company for general
corporate purposes without restriction, unless otherwise restricted by the other
provisions of this Indenture. Upon consummation of an Asset Sale offer made in
accordance with the terms of this Indenture, the Accumulated Amount will be
reduced to zero irrespective of the amount of Indebtedness tendered pursuant to
the Asset Sale Offer.
SECTION 4.16. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay or extension law or any usury law or other law which
would prohibit or forgive the Company from paying all or any portion of the
principal of, premium of, or interest on the Securities as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
SECTION 4.17. [RESERVED].
SECTION 4.18. LIMITATION ON LINES OF BUSINESS. The Company shall
not, nor shall it permit any of its Restricted Subsidiaries to, engage directly
or indirectly in any line or lines of business activity other than that which,
in the reasonable, good faith judgment of the Board of Directors of the Company,
is a Related Business.
SECTION 4.19. RESTRICTION ON SALE AND ISSUANCE OF SUBSIDIARY STOCK.
The Company will not sell, and will not permit any of its Restricted
Subsidiaries to issue or sell, any shares of Capital Stock of any Restricted
Subsidiary of the Company to any Person other than the Company or a Wholly Owned
Restricted Subsidiary of the Company, except for shares of common stock with no
preferences or special rights or privileges and with no redemption or prepayment
provisions ("SPECIAL RIGHTS"); PROVIDED, HOWEVER, that, in the case of a
Restricted Subsidiary that is a partnership or joint venture partnership (a
"RESTRICTED PARTNERSHIP") the Company or any of its Restricted Subsidiaries may
sell or such Restricted Partnership may issue or sell Capital Stock of such
Restricted Partnership with Special Rights no more favorable than those held by
the Company or such Restricted Subsidiary in such Restricted Partnership.
SECTION 4.20. LIMITATION ON GUARANTEES. The Company will not permit
any of its Restricted Subsidiaries that is not a Guarantor to guarantee the
payment of any Indebtedness of the Company unless such Restricted Subsidiary (i)
executes and delivers a
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supplemental indenture in a form reasonably satisfactory to the Trustee pursuant
to which such Restricted Subsidiary shall unconditionally guarantee all of the
Company's obligations under the Securities and this Indenture on the terms set
forth in Article 12 of this Indenture and (ii) delivers to the Trustee an
opinion of counsel that such supplemental indenture has been duly authorized,
executed and delivered by such Restricted Subsidiary and constitutes a legal,
valid, binding and enforceable obligation of such Restricted Subsidiary subject
to customary exceptions. Thereafter, such Restricted Subsidiary shall be a
Guarantor for all purposes of this Indenture unless and until its Guarantee is
released in accordance with this Indenture.
SECTION 4.21. MINIMUM COVERAGE RATIO. So long as any of the
Securities remain outstanding, neither the Company nor any of its Restricted
Subsidiaries may make any Asset Sale (other than any Asset Sale described in
clauses (i), (ii) or (iii) of the second paragraph of Section 4.15) or issue any
Permitted Pari Passu Secured Indebtedness that is secured by the Collateral
unless immediately after giving effect to any such Asset Sale or issuance, on a
PRO FORMA basis, the sum of the aggregate principal amount of the Securities
plus the aggregate principal amount (or the aggregate accreted amount in the
case of Permitted Pari Passu Secured Indebtedness, if any, with an original
issue discount) of any Permitted Pari Passu Secured Indebtedness that is secured
by the Collateral then outstanding (such sum, the "SECURED INDEBTEDNESS") shall
be less than or equal to the sum of (i) the aggregate amount of cash collateral
and Eligible Investments held in the Collateral Account and (ii) the product of
(a) the aggregate number of Net Pops of the MSAs and RSAs in the Collateral Pool
and (b) $175 (the sum of the items described in clauses (i) and (ii), the
"MINIMUM COLLATERAL VALUE").
The term "COLLATERAL POOL" shall mean as of any date each MSA or RSA
for which the Company or any Guarantor (other than a Non-Recourse Restricted
Subsidiary) has obtained a license from the FCC to operate a domestic public
cellular mobile radio telecommunications system (each, a "CELLULAR SYSTEM");
PROVIDED, HOWEVER, that (a) to the extent that a Lien thereon can be perfected
solely by filing a financing statement in the applicable jurisdictions, the
Company has granted to the Trustee pursuant to the Security Agreement as of the
Issue Date and not released a perfected Lien (subject to any Permitted Liens) on
all of its property located in such MSA or RSA and (b) in the event that such
license has been granted to a Guarantor (other than a Non-Recourse Restricted
Subsidiary), (1) the Company and such Guarantor, as applicable, have granted to
the Trustee pursuant to the Security Agreement and not released a perfected Lien
(subject to any Permitted Liens) on all of the issued and outstanding shares of
Capital Stock of such Guarantor owned by the Company or any of the Restricted
Subsidiaries, and (2) to the extent that a Lien thereon can be perfected solely
by filing a financing statement in the applicable jurisdictions, such Guarantor
has granted to the Trustee pursuant to the Security Agreement and not released a
perfected Lien (subject to any Permitted Liens) on all of its property and
assets located in such MSA or RSA in each case to the
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extent contemplated by the Security Agreement; provided that there shall be
excluded from the Collateral Pool any MSA or RSA for which the FCC license to
operate a Cellular System was acquired by the Company or a Guarantor after the
Issue Date and for which the average annual per capita income was less than
$15,000 at the time of such acquisition (as most recently reported at the time
of acquisition by the applicable source cited in the definition of "Pops").
SECTION 4.22. SEPARATE ACCOUNT. On the Issue Date, the Company will
deposit $80,000,000 of cash into a separate account (which may but need not be
the Collateral Account), which amount may only be used by the Company (i) for
acquisitions or (ii) to purchase, redeem or otherwise acquire or retire for
value or make any payment of principal, interest or premium in respect of the
Securities or any Permitted Pari Passu Secured Indebtedness.
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01. LIMITATION ON MERGER, SALE OR CONSOLIDATION. The
Company will not consolidate with or merge with or into another Person, or sell,
lease, convey, transfer or otherwise dispose of all or substantially all of its
and its Restricted Subsidiaries' assets (computed on a consolidated basis),
whether in a single transaction or a series of related transactions, to another
Person or group of affiliated Persons, unless
(i) either (a) the Company is the continuing entity or (b) the
resulting surviving or transferee entity is a corporation organized under
the laws of the United States, any state thereof or the District of
Columbia and expressly assumes by supplemental indenture all of the
obligations of the Company in connection with the Securities, this
Indenture and the Security Documents; PROVIDED, HOWEVER, that in the case
of a sale, lease, conveyance, transfer or other disposition of all or
substantially all of the Company's and its Restricted Subsidiaries' assets,
the provisions of this clause (i)(b) need not be met if all of the
consideration in respect of such transaction is received by the Company and
its Restricted Subsidiaries (other than any Non-Recourse Restricted
Subsidiary);
(ii) no Default or Event of Default shall exist or shall occur
immediately after giving effect on a PRO FORMA basis to such transaction;
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(iii) (a) immediately after giving PRO FORMA effect to such
transaction, the consolidated resulting surviving or transferee entity (or,
in the case contemplated by the proviso to clause (i)(b), the Company)
would immediately thereafter be permitted to Incur at least $1.00 of
additional Indebtedness pursuant to the Annualized Operating Cash Flow
Ratio provision set forth in the second paragraph of Section 4.12 or (b),
if the requirement of clause (a) is not satisfied, (x) any Indebtedness of
the resulting surviving or transferee entity (or, in the case contemplated
by the proviso to clause (i)(b), the Company) in excess of the amount of
the Company's Indebtedness immediately prior to such transaction is
Permitted Acquisition Indebtedness and (y) the requirement of clause (a) is
not satisfied solely due to the Incurrence of such Permitted Acquisition
Indebtedness;
(iv) immediately after giving PRO FORMA effect thereto the Secured
Indebtedness of the consolidated resulting surviving or transferee entity
(or, in the case contemplated by the proviso to clause (i)(b), of the
Company) would either (x) not exceed the Minimum Collateral Value of the
consolidated resulting surviving or transferee entity (or, in the case
contemplated by the proviso to clause (i)(b), of the Company) or (y) not
exceed such Minimum Collateral Value by an amount greater than the Secured
Indebtedness of the Company exceeded the Minimum Collateral Value of the
Company and its Restricted Subsidiaries immediately prior to such
transaction; and
(v) the Company shall have delivered to the Trustee an Officers'
Certificate and an opinion of counsel, if applicable, confirming compliance
with the requirements of this Section 5.01.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED. Upon any
consolidation or merger or any transfer of all or substantially all of the
assets of the Company in accordance with the foregoing, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such transfer is made, shall (other than as provided in the proviso to
clause (i)(b) of the preceding paragraph) succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture with
the same effect as if such successor corporation had been named therein as the
Company, and the Company shall be released from the obligations under the
Securities and this Indenture.
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ARTICLE 6
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT. "EVENT OF DEFAULT," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be caused voluntarily or involuntarily or
effected, without limitation, by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) the failure by the Company to pay any installment of interest on
the Securities as and when the same becomes due and payable and the
continuance of any such failure for 30 days;
(b) the failure by the Company to pay all or any part of the
principal, or premium, if any, on the Securities when and as the same
become due and payable at maturity, redemption, by acceleration or
otherwise, including, without limitation, payment of the Change of Control
Purchase Price or the Asset Sale Offer Price;
(c) the failure by the Company or any Guarantor to observe or perform
any other covenant or agreement contained in the Securities or this
Indenture and, subject to certain exceptions, the continuance of such
failure for a period of 30 days after written notice is given to the
Company by the Trustee or to the Company and the Trustee by the Holders of
at least 25% in aggregate principal amount of the Securities outstanding;
(d) a decree, judgment, or order by a court of competent jurisdiction
shall have been entered adjudging the Company or any of its Significant
Restricted Subsidiaries as bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization of the Company or any of its
Significant Restricted Subsidiaries under any bankruptcy or similar law,
and such decree or order shall have continued undischarged and unstayed for
a period of 60 days; or a decree or order of a court of competent
jurisdiction over the appointment of a receiver, liquidator, trustee, or
assignee in bankruptcy or insolvency of the Company, any of its Significant
Restricted Subsidiaries, or of the property of any such Person, or for the
winding up or liquidation of the affairs of any such Person, shall have
been entered, and such decree, judgment, or order shall have remained in
force undischarged and unstayed for a period of 60 days;
(e) the Company or any of its Significant Restricted Subsidiaries
shall institute proceedings to be adjudicated a voluntary bankrupt, or
shall consent to the filing of a
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bankruptcy proceeding against it, or shall file a petition or answer or
consent seeking reorganization under any bankruptcy or similar law or
similar statute, or shall consent to the filing of any such petition, or
shall consent to the appointment of a Custodian in bankruptcy or insolvency
of it or any of its assets or property, or shall make a general assignment
for the benefit of creditors, or shall admit in writing its inability to
pay its debts generally as they become due, or shall, within the meaning of
any Bankruptcy Law, become insolvent, fails generally to pay its debts as
they become due, or takes any corporate action in furtherance of or to
facilitate, conditionally or otherwise, any of the foregoing;
(f) the failure to pay at final stated maturity (giving effect to any
applicable grace periods and any extensions thereof) the principal amount
of any Indebtedness of the Company or any Restricted Subsidiary of the
Company or the acceleration of the final stated maturity of any
Indebtedness if the aggregate principal amount of such Indebtedness,
together with the principal amount of any other such Indebtedness in
default for failure to pay principal at final maturity or which has been
accelerated, aggregates $15,000,000 or more at any time, except that such
dollar amount shall not apply to any Permitted Pari Passu Secured
Indebtedness that is secured by the Collateral;
(g) final unsatisfied judgments not covered by insurance aggregating
in excess of $5,000,000, at any one time rendered against the Company or
any of the Company's Restricted Subsidiaries and not stayed, bonded or
discharged within 60 days;
(h) the failure of any Guarantee to be in full force and effect or
declaration of any Guarantee to be null and void and unenforceable or
finding of any Guarantee to be invalid or denial by any Guarantor of its
liability under its Guarantee (other than by reason of release of such
Guarantor in accordance with the terms of this Indenture); or
(i) the failure of any of the Security Documents to be in full force
and effect or to give the Trustee the Liens, rights, powers and privileges
purported to be created thereby.
If a Default occurs and is continuing, the Trustee must, within 90
days after the occurrence of such default, give to the Holders notice of such
default.
SECTION 6.02. ACCELERATION OF MATURITY DATE; RESCISSION AND
ANNULMENT. If an Event of Default occurs and is continuing (other than an Event
of Default specified in clause (d) or (e) of Section 6.01 relating to the
Company or any Significant Restricted Subsidiary), then in every such case,
unless the principal of all of the Securities shall have already become due and
payable, either the Trustee or the Holders of 25% in aggregate principal amount
of the Securities then outstanding, by notice in writing to the Company (and to
the
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Trustee if given by Holders) may declare all principal and accrued interest
thereon to be due and payable and the same shall become immediately due and
payable. If an Event of Default specified in clause (d) or (e) of Section 6.01,
relating to the Company or any Significant Restricted Subsidiary, occurs, all
principal and accrued interest thereon will be immediately due and payable on
all outstanding Securities without any declaration or other act on the part of
Trustee or the Holders.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter provided in this Article 6, the Holders of a majority
in aggregate principal amount of then-outstanding Securities, by written notice
to the Company and the Trustee, may rescind, on behalf of all Holders, any such
declaration of acceleration if:
(1) the Company has paid or deposited with the Trustee cash
sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal of (and premium, if any, applicable to any
Securities which would become due otherwise than by such declaration
of acceleration, and interest thereon at the rate borne by the
Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Securities,
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and
(2) all Events of Default, other than the non-payment of the
principal of, premium, if any, and interest on Securities which have become
due solely by such declaration of acceleration, have been cured or waived
as provided in Section 6.12, including, if applicable, any Event of Default
relating to the covenants contained in Section 11.01.
Notwithstanding the previous sentence of this Section 6.02, no waiver shall be
effective against any Holder for any Event of Default or event which with notice
or lapse of time or both would be an Event of Default with respect to any
covenant or provision which cannot be modified or amended without the consent of
the Holder of each outstanding Security affected thereby, unless all such
affected Holders agree, in writing, to waive such Event of Default or
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other event. No such waiver shall cure or waive any subsequent Default or
impair any right consequent thereon.
In the event of a declaration of acceleration of the Securities
because an Event of Default has occurred and is continuing as a result of the
acceleration of any Indebtedness described in Section 6.01(f), the declaration
of acceleration of the Securities shall be automatically annulled if the holders
of all Indebtedness described in Section 6.01 (f) (without any payment to any
holders of any such Indebtedness) have rescinded the declaration of acceleration
in respect of such Indebtedness within 30 days of the date of such declaration
and if (i) the annulment of the acceleration of the Securities would not
conflict with any judgment or decree of a court of competent jurisdiction and
(ii) all Events of Default, except nonpayment of principal interest on the
Securities that became due solely because of the acceleration of the Securities,
have been cured or waived.
SECTION 6.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE. The Company covenants that if an Event of Default in payment of
principal, premium, or interest specified in clause (a) or (b) of Section 6.01
occurs and is continuing, the Company shall, upon demand of the Trustee, pay to
it, for the benefit of the Holders of such Securities, the whole amount then due
and payable on such Securities for principal, premium (if any) and interest,
and, to the extent that payment of such interest shall be legally enforceable,
interest on any overdue principal (and premium, if any) and on any overdue
interest, at the rate borne by the Securities, and, in addition thereto, such
further amount as shall be sufficient to cover the reasonable costs and expenses
of collection, including Compensation to, and expenses, disbursements and
advances of, the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust in favor of the
Holders, may institute a judicial proceeding for the collection of the sums so
due and unpaid, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Company or any other obligor upon the
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or the Security
Documents or in aid of the exercise of any power granted herein or therein, or
to enforce any other proper remedy.
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Each Holder, by accepting a Security, acknowledges that the exercise
of remedies by the Trustee with respect to the Collateral is subject to the
terms and conditions of the Security Documents and the proceeds received upon
realization of the Collateral shall be applied by the Trustee in accordance with
the provisions of the Intercreditor Agreement.
SECTION 6.04. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Securities or
the property of the Company or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal of the Securities shall then be
due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Company
for the payment of overdue principal or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise to take any and all
actions under the TIA, including
(1) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Securities
and to file such other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agent and counsel) and of the Holders allowed in such judicial
proceeding, and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any Custodian in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment, or composition affecting the securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 6.05. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
SECURITIES. All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust in favor of the Holders, and any
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recovery of judgment shall, after provision for the payment of compensation to,
and expenses, disbursements and advances of the Trustee, its agents and counsel,
be for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.
SECTION 6.06. PRIORITIES. Any money collected by the Trustee
pursuant to this Article 6 shall be applied in the following order, at the date
or dates fixed by the Trustee and, in case of the distribution of such money on
account of principal, premium (if any) or interest, upon presentation of the
Securities and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due pursuant to
Section 7.07;
SECOND: To the Holders in payment of the amounts then due and unpaid
for principal of, premium (if any) and interest on, the Securities in
respect of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal, premium (if any)
and interest, respectively; and
THIRD: To whomsoever may be lawfully entitled thereto, the remainder,
if any.
SECTION 6.07. LIMITATION ON SUITS. No Holder of any Security shall
have any right to order or direct the Trustee to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless
(A) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(B) the Holders of not less than 25% in principal amount of
then-outstanding Securities shall have made written request to the Trustee
to institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(C) such Holder or Holders have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities to be
incurred or reasonably probable to be incurred in compliance with such
request;
(D) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
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(E) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 6.08. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST. Notwithstanding any other provision of this Indenture,
the Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of, and premium (if any) and
accrued interest on, such Security on the Maturity Date of such payments as
expressed in such Security (in the case of redemption, the Redemption Price on
the applicable Redemption Date, in the case of a Change of Control Payment, on
the applicable Change of Control Payment Date, and, in the case of an Asset Sale
Offer, the Asset Sale Offer Price on the Asset Sale Purchase Date) and to
institute suit for the enforcement of any such payment after such respective
dates, and such rights shall not be impaired without the consent of such Holder.
SECTION 6.09. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities in Section 2.07, no right or remedy herein conferred
upon or reserved to the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 6.10. DELAY OR OMISSION NOT WAIVER. No delay or omission by
the Trustee or by any Holder of any Security to exercise any right or remedy
arising upon any Event of Default shall impair the exercise of any such right or
remedy or constitute a waiver of any such Event of Default. Every right and
remedy given by this Article 6 or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
SECTION 6.11. CONTROL BY HOLDERS. The Holder or Holders of a
majority in aggregate principal amount of then outstanding Securities will have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee or exercising any trust or power conferred
upon the Trustee, provided that
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(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee shall not determine that the action so directed would
be unjustly prejudicial to the Holders not taking part in such direction,
and
(3) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 6.12. WAIVER OF PAST DEFAULT. Subject to Section 6.08, the
Holder or Holders of not less than a majority in aggregate principal amount of
the outstanding Securities may, on behalf of all Holders, prior to the
declaration of the acceleration of the maturity of the Securities, waive any
past default hereunder and its consequences, except a default
(A) in the payment of the principal of, or interest on, any Security
as specified in clauses (a) and (b) of Section 6.01, or
(B) in respect of a covenant or provision hereof which, under Article
9, cannot be modified or amended without the consent of the Holder of a
greater specified percentage of the aggregate principal amount of the Notes
then outstanding without the consent of such greater percentage.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair the exercise of any right arising therefrom.
SECTION 6.13. UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each Holder of any Security by his acceptance thereof shall he deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted to be taken by it
as Trustee, the filing by any party litigant in such suit of an undertaking to
pay the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section 6.13 shall not apply to any suit instituted by the Company, to any suit
instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 100% in aggregate principal amount
of the outstanding Securities, or to any suit instituted by any Holder for
enforcement of the payment of principal of, or premium (if any) or interest on,
any Security on or after the Maturity Date
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expressed in such Security (including, in the case of redemption, on or after
the Redemption Date).
SECTION 6.14. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or
any Holder has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then
and in every case, subject to any determination in such proceeding, the Company,
the Trustee and the Holders shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
ARTICLE 7
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this Indenture
and covenants and agrees to perform the same, as herein expressed.
SECTION 7.01. DUTIES OF TRUSTEE. (a) If a Default or an Event of
Default has occurred and is continuing, the Trustee shall exercise such of the
rights and powers vested in it by this Indenture and use the same degree of care
and skill in their exercise as a prudent Person would exercise or use under the
circumstances in the conduct of his own affairs.
(b) Except during the continuance of a Default or an Event of
Default:
(1) The Trustee need perform only those duties as are specifically
set forth in this Indenture and no others, and no covenants or obligations
shall be implied in or read into this Indenture which are adverse to the
Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
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(1) This paragraph does not limit the effect of paragraph (b) of this
Section 7.01.
(2) The Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.11.
(d) No provision of this Indenture shall require the trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any action
under this Indenture or at the request, order or direction of the Holders or in
the exercise of any of its rights or powers if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c), (d) and (f) of this Section
7.01.
(f) The Trustee shall not be liable for interest on any assets
received by it except as the Trustee may agree in writing with the Company.
Assets held in trust by the Trustee need not be segregated from other assets
except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE. Subject to Section 7.01:
(a) The Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate or an Opinion of
Counsel, which shall conform to Sections 13.04 and 13.05. The Trustee
shall not be liable for any action it takes or omits to take in good faith
in reliance on such certificate or advice of counsel.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee will not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its
rights or powers conferred upon it by this Indenture.
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(e) The Trustee will not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters
as it may see fit.
(f) The Trustee will be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders, pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may
be incurred therein or thereby.
(g) Unless otherwise specifically provided for in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient
if signed by an Officer of the Company.
(h) The Trustee shall have no duty to inquire as to the performance
of the covenants in Article 4 hereof. In addition, the Trustee shall not
be deemed to have knowledge of any Default or Event of Default except (i)
any Event of Default occurring pursuant to Sections 6.01(a), 6.01(b) and
4.02, or (ii) any Default or Event of Default of which the Trustee shall
have received written notification or obtained actual knowledge.
(i) Subject to Section 9.02 hereof, the Trustee may (but shall not be
obligated to), without the consent of the Holders, give any consent, waiver
or approval required under the Security Documents or by the terms hereof
with respect to the Collateral, but shall not without the consent of the
Holders of not less than a majority in aggregate principal amount of the
Securities at the time outstanding (i) give any consent, waiver or approval
or (ii) agree to any amendment or modification of the Security Documents,
in each case, that shall have a material adverse effect on the interests of
any Holder. The Trustee shall be entitled to request and conclusively rely
on an Opinion of Counsel with respect to whether any consent, waiver,
approval, amendment or modification shall have a material adverse effect on
the interests of any Holder.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or any of the Company's Subsidiaries, or
their respective Affiliates with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
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SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee makes no
representation as to the validity or adequacy of this Indenture or the
Securities and it shall not be accountable for the Company's use of the proceeds
from the Securities, and it shall not be responsible for any statement in the
Securities, other than the Trustee's certificate of authentication, or the use
or application of any funds received by a Paying Agent other than the Trustee.
The Trustee shall not be responsible for and makes no representation
as to the value or condition of the Collateral or any part thereof, or as to the
title of the Company or its Restricted Subsidiaries thereto, or as to the
security afforded thereby or hereby, or as to the validity or genuineness of any
Collateral pledged and deposited with the Trustee. The Trustee makes no
representations with respect to the effectiveness or adequacy of the Security
Documents, or the validity or perfection, if any, of Liens granted under this
Indenture or the Security Documents. The Trustee shall not be responsible for
independently ascertaining or maintaining such validity or perfection, if any,
and shall be fully protected in relying upon certificates and opinions delivered
to it in accordance with the terms of this Indenture or the Security Documents.
SECTION 7.05. NOTICE OF DEFAULT. If a Default or an Event of Default
occurs and is continuing and if it is known to the Trustee, the Trustee shall
mail to each Securityholder notice of the uncured Default or Event of Default
within 90 days after such Default or Event of Default occurs. Except in the
case of a Default or an Event of Default in payment of principal (or premium, if
any) of, or interest on, any Security (including the payment of the Change of
Control Purchase Price on the Change of Control Payment Date, the payment of the
Redemption Price on the Redemption Date and the payment of the Offer Price on
the Purchase Date), the Trustee may withhold the notice if and so long as a
Trust Officer in good faith determines that withholding the notice is in the
interest of the Securityholders.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS. Within 60 days after
each December 15 beginning with the December 15 following the date of this
Indenture, the Trustee shall, if required by law, mail to each Securityholder a
brief report dated as of such December 15 that complies with TIA Section 313(a).
The Trustee also shall comply with TIA Section 313(b) and Section 313(c).
The Company shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or automatic quotation system.
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Company and filed with the SEC and each stock exchange,
if any, on which the Securities are listed, in accordance with and to the extent
required by TIA Section 313(d).
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SECTION 7.07. COMPENSATION AND INDEMNITY. The Company agrees to pay
to the Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable disbursements, expenses and advances incurred or made
by it. Such expenses shall include the reasonable compensation, disbursements
and expenses of the Trustee's agents, accountants, experts and counsel.
The Company agrees to indemnify the Trustee (in its capacity as
Trustee) and each of its officers, directors, attorneys-in-fact and agents for,
and hold it harmless against, any claim, demand, expense (including but not
limited to reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel), loss or liability incurred by it without negligence or bad
faith on its part, arising out of or in connection with the administration of
this trust and its rights or duties hereunder and under the Security Documents
including the reasonable costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder and under the Security Documents. The Trustee shall
notify the Company promptly of any claim asserted against the Trustee for which
it may seek indemnity. The Company shall defend the claim and the Trustee shall
provide reasonable cooperation at the Company's expense in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel; provided that the Company will not be required to
pay such fees and expenses if they assume the Trustee's defense and there is no
conflict of interest between the Company and the Trustee in connection with such
defense. The Company need not pay for any settlement made without their written
consent. The Company need not reimburse any expense or indemnify against any
loss or liability to the extent incurred by the Trustee through its negligence,
bad faith or willful misconduct.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Securities on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay principal and premium, if any, of or interest on particular
Securities, including, without limitation, assets held in the Collateral
Account.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(e) or (f) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Company's obligations under this Section 7.07 and any lien arising
hereunder shall survive the resignation or removal of the Trustee, the discharge
of the Company's obligations pursuant to Article 8 of this Indenture and any
rejection or termination of this Indenture under any Bankruptcy Law.
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SECTION 7.08. REPLACEMENT OF TRUSTEE. The Trustee may resign by so
notifying the Company in writing. The Holder or Holders of a majority in
principal amount of the outstanding Securities may remove the Trustee by so
notifying the Company and the Trustee in writing and may appoint a successor
trustee with the Company's consent. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver, Custodian, or other public officer takes charge of
the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holder
or Holders of a majority in principal amount of the Securities may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that
and provided that all sums owing to the Trustee provided for in Section 7.07
have been paid, the retiring Trustee shall transfer all property held by it as
trustee (including the Collateral Account) to the successor Trustee, subject to
the lien provided in Section 7.07, the resignation or removal of the retiring
Trustee shall become effective, and the successor Trustee shall have all the
rights, powers and duties of the Trustee under this Indenture. A successor
Trustee shall mail notice of its succession to each Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holder or Holders of at least 10% in principal amount of the outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustees pursuant to this Section
7.08, the Company's obligations under Section 7.07 all continue for the benefit
of the retiring Trustee.
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SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation, the resulting,
surviving or transferee corporation without any further act shall, if such
resulting, surviving or transferee corporation is otherwise eligible hereunder,
be the successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. The Trustee shall at
all times satisfy the requirements of TIA Section 310(a)(1), (2) and (5). The
Trustee shall have a combined capital and surplus of at least $10,000,000 as set
forth in its most recent published annual report of condition. The Trustee
shall comply with TIA Section 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The
Trustee, in its capacity as Trustee hereunder and in its capacity as Collateral
Agent under the Security Documents, shall comply with TIA Section 311(a),
excluding any creditor relationship listed in TIA Section 311(b). A Trustee who
has resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT
DEFEASANCE. The Company may, at its option and at any time, elect to have
Section 8.02 or Section 8.03 applied to al1 outstanding Securities and Security
Documents upon compliance with the conditions set forth below in this Article 8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE. Upon the Company's
exercise under Section 8.01 of the option applicable to this Section 8.02, the
Company and the Guarantors shall be deemed to have been discharged from their
obligations with respect to all outstanding Securities and Security Documents on
the date the conditions set forth below are satisfied (hereinafter, "LEGAL
DEFEASANCE"). For this purpose, such Legal Defeasance means that the Company
shall be deemed to have paid and discharged the entire Indebtedness represented
by the outstanding Securities, which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 8.05 and the other Sections of
this Indenture referred to in (a) and (b) below, and this Indenture, Guarantees
and Security Documents shall cease to be of further effect (and the Trustee, on
demand of and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Securities to receive solely from the trust fund described in
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Section 8.04, and as more fully set forth in such Section 8.04, payments in
respect of the principal of, premium, if any, and interest on such Securities
when such payments are due, (b) the Company's obligations with respect to such
Securities under Sections 2.04, 2.06, 2.07, 2.10 and 4.03, (c) the rights,
powers, trusts, duties and immunities of the Trustee hereunder and the Company's
obligations in connection therewith and (d) this Article 8. Subject to
compliance with this Article 8, the Company may exercise its option under this
Section 8.02 notwithstanding the prior exercise of its option under Section 8.03
with respect to the Securities.
SECTION 8.03. COVENANT DEFEASANCE. Upon the Company's exercise under
Section 8.01 of the option applicable to this Section 8.03, the Company shall be
released from its obligations under the covenants contained in Sections 4.04,
4.06, 4.07, 4.08, 4.09, 4.11, 4.12, 4.13, 4.14, 4.15, 4.18, 4.19, 4.20, 4.21,
Article 5 (other than the obligation of any successor to assume the obligations
of the Company hereunder) and Article 11 with respect to the outstanding
Securities on and after the date the conditions set forth below are satisfied
(hereinafter, "COVENANT DEFEASANCE"), and the Securities shall thereafter be
deemed not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder. For this purpose, such Covenant Defeasance
means that, with respect to the outstanding Securities, the Company need not
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein or in any other
document, but, except as specified above, the remainder of this Indenture and
such Securities shall be unaffected thereby.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE. The
following shall be the conditions to the application of either Section 8.02 or
Section 8.03 to the outstanding Securities:
(a) The Company must irrevocably deposit or caused to be deposited
with the Trustee (or another trustee satisfying the requirements of Section
7.10 who shall agree to comply with the provisions of this Article 8
applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Securities, (a) U.S. Legal
Tender, or (b) non-callable government securities, or (c) a combination
thereof, in such amounts, as in each case will be sufficient, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to
pay and discharge and which shall be applied by the Trustee (or other
qualifying trustee) to pay and discharge (i) the principal of, premium, if
any, and interest on the outstanding Securities on the Stated Maturity or
on
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the applicable Redemption Date, as the case may be, of such principal or
installment of principal, premium, if any, or interest and the Holders of
Securities shall have a valid, perfected, exclusive security interest in
the assets of such trust; provided that the Trustee shall have been
irrevocably instructed to apply such cash and the proceeds of such U.S.
Government Obligations or U.S. Legal Tender Equivalents to said payments
with respect to the Securities;
(b) In the case of an election under Section 8.02, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (i) the Company has
received from, or there has been published by, the Internal Revenue Service
a ruling or (ii) since the date hereof, there as been a change in the
applicable Federal income tax law, in either case to the effect that, and
based thereon such opinion shall confirm that, the Holders of the
outstanding Securities will not recognize income, gain or loss for Federal
income tax purposes as a result of such Legal Defeasance and will be
subject to Federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Legal Defeasance had
not occurred;
(c) In the case of an election under Section 8.03, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to such Trustee confirming that the Holders of the
outstanding Securities will not recognize income gain or loss for Federal
income tax purposes as a result of such Covenant Defeasance and will be
subject to Federal income tax in the same amount, in the same manner and at
the same times as would have been the case if such Covenant Defeasance had
not occurred;
(d) No Default or Event of Default (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such deposit
or such deposit) shall have occurred and be continuing on the date of such
deposit or, insofar as Section 6.01(e) or 6.01(f) is concerned, at any time
during the period ending on the 91st day after the date of such deposit (it
being understood that this condition is a condition subsequent which shall
not be deemed satisfied until the expiration of such period, but in the
case of Covenant Defeasance, the covenants which are defeased under Section
8.03 will cease to be in effect unless an Event of Default under Section
6.01(e) or 6.01(f) occurs during such period);
(e) Such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of or constitute a default under any other material
agreement or instrument to which the Company or any of its Subsidiaries is
a party or by which any of them is bound;
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(f) In the case of an election under either Section 8.02 or 8.03, the
Company shall have delivered to the Trustee an Officers' Certificate
stating that the deposit made by the Company pursuant to its election under
Section 8.02 or 8.03 was not made by the Company with the intent of
preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding creditors of the
Company or others; and
(g) The Company shall have delivered to the Trustee an Officers'
Certificate stating that all conditions precedent provided for or relating
to either the Legal Defeasance under Section 8.02 or the Covenant
Defeasance under Section 8.03 (as the case may be) have been complied with
as contemplated by this Section 8.04.
SECTION 8.05. DEPOSITED U.S. LEGAL TENDER EQUIVALENTS AND U.S.
GOVERNMENT OBLIGATIONS TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06, all cash, U.S. Legal Tender Equivalents and U.S.
Government Obligations (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "TRUSTEE") pursuant to Section 8.04 in respect of the outstanding
Securities shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Securities and this Indenture, to the payment, either
directly or through any Paying Agent as the Trustee may determine, to the
Holders of such Securities of all sums due and to become due thereon in respect
of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law.
SECTION 8.06. REPAYMENT TO THE COMPANY. Subject to any applicable
escheat or abandoned property laws, any money deposited with the Trustee or any
Paying Agent, or then held by the Company, in trust for the payment, of the
principal of, premium, if any, or interest on any Security and remaining
unclaimed for two years after such principal, and premium, if any, or interest
has become due and payable shall be paid to the Company on its request; and the
Holder of such Security shall thereafter look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money shall thereupon cease.
SECTION 8.07. REINSTATEMENT. If the Trustee or Paying Agent is
unable to apply any cash, U.S. Legal Tender Equivalents or U.S. Government
Obligations in accordance with Section 8.02 or 8.03, as the case may be, by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.02 or
8.03 until such time as the Trustee or Paying Agent is permitted to apply such
money in accordance with Sections 8.02 and 8.03, as the case may be; provided,
however, that, if the Company makes any
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payment of principal of, premium, if any, or interest on any Security following
the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Securities to receive such payment from the cash
held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holder, the Company and the Guarantors, when
authorized by Board Resolutions, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to cure any ambiguity, defect, or inconsistency, or to make any
other provisions with respect to matters or questions arising under this
Indenture which shall not be inconsistent with the provisions of this
Indenture, provided such action pursuant to this clause (1) shall not
adversely affect the interests of any Holder in any respect;
(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power conferred upon the Company
herein or in the Security Documents or to make any other change hereto or
thereto that does not adversely affect the rights of any Holder, provided
that the Company has delivered to the Trustee an Opinion of Counsel stating
that such change does not adversely affect the rights of any Holder;
(3) to provide for additional collateral or guarantors for the
Securities;
(4) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the obligations of the Company,
herein and in the Securities in accordance with Article 5;
(5) to comply with the TIA; or
(6) to provide for the issuance and authorization of the Exchange
Securities.
SECTION 9.02. AMENDMENTS, SUPPLEMENTAL INDENTURES AND WAIVERS WITH
CONSENT OF HOLDERS. Subject to Section 6.08, with the consent of the Holders of
not less than a majority in aggregate principal amount of then outstanding
Securities, by written act of said
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Holders delivered to the Company and the Trustee, the Company and the
Guarantors, when authorized by Board Resolutions, and the Trustee may amend or
supplement this Indenture or the Securities or enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
the Securities or of modifying in any manner the rights of the Holders under
this Indenture or the Securities. Subject to Section 6.08, the Holder or
Holders of not less than a majority in principal amount of then outstanding
Securities may waive compliance by the Company with any provision of this
Indenture or the Securities. Notwithstanding any of the above, however, no such
amendment, supplemental indenture or waiver shall, without the consent of each
Holder affected thereby:
(1) reduce the percentage of principal amount of Securities whose
Holders must consent to an amendment, supplement, supplemental indenture or
waiver of any provision of this Indenture or the Securities;
(2) reduce the rate or extend the time for payment of interest on any
Security or any premium payable upon the redemption thereof;
(3) reduce the principal amount of any Security, the Change of
Control Purchase Price, the Asset Sale Offer Price or the Redemption Price;
(4) change the Stated Maturity of any Security;
(5) alter the redemption provisions of Article 3 or paragraph 5 of
the Securities or the terms or provisions (or the definitions related
thereto) of Article 11, in any case, in a manner adverse to any Holder;
(6) make any changes in Section 6.08, 6.12 or this Section 9.02
except to increase any required percentage or to provide that certain other
provisions of this Indenture cannot be modified without the consent of each
Holder affected thereby;
(7) make the Principal of, or the interest on, any Security payable
with anything or in any manner other than as provided for in this Indenture
(including changing the place of payment where, or the coin or currency in
which, any Security or any premium or the interest thereon is payable and
the Securities as in effect on the date hereof); or
(8) make the Securities subordinated in right of payment to any
extent or under any circumstances to any other indebtedness.
With the consent of Holders of 66 2/3% of the aggregate principal
amount of the Securities at the time outstanding, the Company and the Trustee
may change the Change
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of Control Purchase Date and the Asset Sale Offer Period. In addition, no such
amendment, supplemental indenture or waiver shall permit (x) a release of
Collateral (not otherwise permitted under the Security Documents) that relates
to more than 25% of the fair market value (as determined in good faith by the
Company's Board of Directors) of the Collateral at the date of release, without
the consent of the Holders of 66 2/3% of the aggregate principal amount of the
Securities then outstanding or (y) a release (not otherwise permitted under the
Security Documents) of all or substantially all of the Collateral or any
amendment of or modification to this Indenture or the Security Documents that
has the substantial effect thereof without the consent of Holders of 75% of the
aggregate principal amount of Securities then outstanding.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture or
waiver.
After an amendment, supplement or waiver under this Section 9.02 or
Section 9.04 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under this
Article 9, the Company may, but shall not be obligated to, offer to any Holder
who consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or waiver.
SECTION 9.03. COMPLIANCE WITH TIA. Every amendment, waiver or
supplement of this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS. Until an amendment,
waiver or supplement becomes effective, a consent to it by a Holder is a
continuing consent by the Holder and every subsequent Holder of a Security or
portion of a Security that evidences the same debt as the consenting Holder's
Security, even if notation of the consent is not made on any Security. However,
any such Holder or subsequent Holder may revoke the consent as to his Security
or portion of his Security by written notice to the Company or the Person
designated by the Company as the Person to whom consents should be sent if such
revocation is received by the Company or such Person before the date on which
the Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of
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Securities have consented (and not theretofore revoked such consent) to the
amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be the date so fixed by the
Company notwithstanding the provisions of the TIA. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those Persons who were Holders at such record date, and only those Persons (or
their duly designated proxies), shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (8) of Section 9.02, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; provided that any such waiver
shall not impair or affect the right of any Holder to receive payment of
principal and premium of and interest on a Security, on or after the respective
dates set for such amounts to become due and payable expressed in such Security,
or to bring suit for the enforcement of any such payment on or after such
respective dates.
SECTION 9.05. NOTATION ON OR EXCHANGE OF SECURITIES. If an
amendment, supplement or waiver changes the terms of a Security, the Trustee may
require the Holder of the Security to deliver it to the Trustee or require the
Holder to put an appropriate notation on the Security. The Trustee may place an
appropriate notation on the Security about the changed terms and return it to
the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Any failure to
make the appropriate notation or to issue a new Security shall not affect the
validity of such amendment, supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee shall
execute any amendment, supplement or waiver authorized pursuant to this Article
9; provided that the Trustee may, but shall not be obligated to, execute any
such amendment, supplement or waiver which affects the Trustee's own rights,
duties or immunities under this Indenture. The Trustee shall be entitled to
receive, and shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of any amendment, supplement or waiver authorized
pursuant to this Article 9 is authorized or permitted by this Indenture.
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ARTICLE 10
COLLATERAL AND SECURITY
SECTION 10.01. SECURITY. The Securities will be secured by the
Collateral as and to the extent provided in the Security Agreement. Upon the
acceleration of the maturity of the Securities as provided in Article 6, the
Trustee shall foreclose upon the Collateral as provided in the Security
Documents.
The Lien in favor of the Trustee with respect to substantially all of
the Collateral will be perfected to the extent contemplated by the Security
Agreement on the Issue Date or the date of acquisition thereof by the Company or
the applicable Guarantor.
SECTION 10.02. SECURITY DOCUMENTS. The due and punctual payment of
the principal of, premium, if any, and interest on the Securities when and as
the same shall be due and payable, whether on an interest payment date, at
maturity, by acceleration, repurchase, redemption or otherwise, and interest on
the overdue principal of and interest (to the extent permitted by law), if any,
on the Securities and performance of all other Obligations of the Company and
the Guarantors to the Securityholders or the Trustee under this Indenture, the
Securities and the Guarantees, according to the terms hereunder or thereunder,
shall be secured as provided in the Security Documents. Each Securityholder, by
its acceptance of a Security, consents and agrees to the terms of the Security
Documents (including, without limitation, the provisions providing for
foreclosure and release of Collateral) as the same may be in effect or may be
amended from time to time in accordance with the terms thereof and hereof and
authorizes and directs the Trustee as collateral agent to enter into each of the
Security Documents and to perform its respective obligations and exercise its
respective rights thereunder in accordance therewith.
Anything in the Security Documents to the contrary notwithstanding,
none of the Company or any Guarantor will be required to grant Liens on any
property acquired after the Securities are issued if such Lien on such property
is expressly prohibited from being pledged pursuant to another contractual
obligations binding on any such Person, such prohibition was not incurred by
such Person with the intent of negating the requirements of this Section 10.02,
and such Person, after using reasonable efforts, has been unable to terminate or
modify such prohibition in order to permit such pledge and such property is not
pledged to any other Person.
SECTION 10.03. RECORDING AND OPINIONS. (a) The Company shall furnish
to the Trustee, promptly after the execution and delivery of this Indenture or
any Security Documents , other than the Intercreditor Agreement, executed and
delivered after the date of
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this Indenture, an Opinion of Counsel either (i) stating that, in the opinion of
such counsel, all action has been taken with respect to the recording,
registering and filing of this Indenture, the Security Documents, financing
statements or other instruments necessary to make effective the Liens intended
to be created by the Security Documents, and reciting the details of such action
or (ii) stating that, in the opinion of such counsel, no such action is
necessary to make such Liens effective.
(b) The Company shall furnish to the Trustee, within three months
after each anniversary of the date of this Indenture, an Opinion of Counsel,
dated as of such date, stating either that (i) in the opinion of such counsel,
all action has been taken with respect to the recording, registering, filing,
re-recording, re-registering and refiling of all supplemental indentures,
financing statements, continuation statements or other instruments of further
assurance as is necessary to maintain the Liens to the extent required by the
Security Documents and reciting the details of such action or (ii) in the
opinion of such counsel, no such action is necessary to maintain such Liens.
SECTION 10.04. Reserved.
SECTION 10.05. RELEASE OF COLLATERAL. (a) Subject to subsection (c)
of this Section 10.05 and Section 10.06, Collateral may be released from the
Lien and security interest created by the Security Documents at any time or from
time to time at the sole cost and expense of the Company (x) upon payment in
full of the Securities in accordance with the terms thereof and of this
Indenture and all other Obligations of the Company and the Guarantors then due
and owing under this Indenture, the Securities, the Guarantees and the Security
Documents, including any defeasance pursuant to Article 8 and (y) as otherwise
expressly permitted by the Security Documents. In addition, the Lien and
security interests created by the Security Documents in any asset shall
terminate and be released immediately without any further action upon the
disposition of such asset in any transaction permitted under the Indenture.
Upon compliance with the above provisions and the provisions of Section 13.04
hereof, the Trustee shall execute, deliver or acknowledge any necessary or
proper instruments or termination, satisfaction or release provided by or on
behalf of the Company to evidence the release of any Collateral permitted to be
released pursuant to this Indenture or the Security Documents.
(b) Each other release of Collateral must comply with Section 9.02.
(c) At any time when a Default or Event of Default shall have
occurred and be continuing and the maturity of the Securities shall have been
accelerated (whether by declaration or otherwise) and the Trustee shall have
delivered a notice of acceleration to the Company, no release of Collateral
pursuant hereto shall be effective as against the Securities.
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(d) No purchaser or grantee of any property or rights purporting to
be released herefrom shall be bound to ascertain the authority of the Trustee to
execute the release or to inquire as to the existence of any conditions herein
prescribed for the exercise of such authority; nor shall any purchaser or
grantee of any property or rights permitted by this Indenture to be sold or
otherwise disposed of by the Company and the Subsidiary Guarantors be under any
obligation to ascertain or inquire into the authority of the Company or any
Subsidiary Guarantor to make such sale or other disposition.
SECTION 10.06. CERTIFICATES OF THE COMPANY. To the extent applicable,
the Company and the Guarantors shall comply with (a) TIA Section 314(b),
relating to Opinions of Counsel regarding the Lien of the Security Documents and
(b) TIA Section 314(d), relating to the release of Collateral from the Lien of
the Security Documents and Officers' Certificates or other documents regarding
fair value of the Collateral. Any certificate or opinion required by TIA
Section 314(d) may be made by an Officer of or an engineer, appraiser or other
expert employed by the Company or any other obligor upon the Securities, as
applicable, to the extent permitted by TIA Section 314(d).
SECTION 10.07. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE
UNDER THE SECURITY DOCUMENTS. The Trustee may, in its sole discretion and
without the consent of the Securityholders, on behalf of the Securityholders,
take all actions it deems necessary or appropriate in order to (a) enforce any
of the terms of the Security Documents and (b) collect and receive any and all
amounts payable in respect of the Obligations of the Company and the Guarantors
hereunder. The Trustee shall have the power to institute and to maintain such
suits and proceedings (subject to the terms of the Intercreditor Agreement) as
it may deem expedient to prevent any impairment of the Collateral by any acts
that may be unlawful or in violation of the Security Documents or this
Indenture, and such suits and proceedings as the Trustee may deem expedient to
preserve or protect its interest and the interests of the Securityholders in the
Collateral (including power to institute and maintain suits or proceedings to
restrain the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitutional or otherwise
invalid if the enforcement of, or compliance with, such enactment, rule or order
would impair the security interest hereunder or be prejudicial to the interests
of the Securityholders or of the Trustee).
SECTION 10.08. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER
THE COLLATERAL DOCUMENTS. The Trustee is authorized to receive any funds for
the benefit of the Securityholders distributed under the Security Documents, and
to make further distributions of such funds to the Securityholders according to
the provisions of this Indenture and the Security Documents.
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ARTICLE 11
RIGHT TO REQUIRE REPURCHASE
SECTION 11.01. REPURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON A
CHANGE OF CONTROL. (a) In the event that a Change of Control occurs, unless
the Company has elected to redeem all of the Securities upon the occurrence of a
Change of Control as set forth in Article 3, each Holder will have the right, at
such Holder's option, to require the Company to repurchase all or any part of
such Holder's Securities (provided that the principal amount of such securities
at stated maturity must be $1,000 or an integral multiple thereof) pursuant to
an unconditional, irrevocable offer by the Company (the "CHANGE OF CONTROL
OFFER") on a date that is no later than 45 Business Days after the occurrence of
such Change of Control (the "CHANGE OF CONTROL PURCHASE DATE"), at a cash price
(the "CHANGE OF CONTROL PURCHASE PRICE") equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest, if any, to and
including the Change of Control Purchase Date.
(b) In the event that pursuant to this Section 11.01 the Company
shall be required to commence a Change of Control Offer, the Company shall
follow the procedures set forth in this Section 11.01 as follows:
(1) the Change of Control Offer shall commence within 20 Business
Days following the Change of Control date;
(2) the Change of Control Offer shall remain open for 20 Business
Days, except to the extent that a longer period is required by applicable
law (the "CHANGE OF CONTROL OFFER PERIOD");
(3) upon the expiration of a Change of Control Offer Period, the
Company shall purchase all of the properly tendered and not properly
withdrawn Securities in response to the Change of Control Offer;
(4) the Company shall provide the Trustee with notice of the Change
of Control Offer at least five Business Days before the commencement of any
Change of Control Offer; and
(5) on or before the commencement of any Change of Control Offer, the
Company or the Trustee (upon the request and at the expense of the Company)
shall send, by first-class mail, a notice to each of the Securityholders,
which (to the extent consistent with this Indenture) shall govern the terms
of the Change of Control Offer and shall state:
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(i) that the Change of Control Offer is being made pursuant to such
notice and this Section 11.01 and that all Securities, or portions thereof,
tendered will be accepted for payment;
(ii) the Change of Control Purchase Price (including the amount of
accrued and unpaid interest), the Change of Control Purchase Date and the
Change of Control Put Date (as defined below);
(iii) that any Security, or portion thereof, not tendered or accepted
for payment will continue to accrue interest;
(iv) that, unless the Company defaults in depositing cash with the
Paying Agent in accordance with the last paragraph of this clause (b) or
such payment is prevented, any Security, or portion thereof, accepted for
payment pursuant to the Change of Control Offer shall cease to accrue
interest after the Change of Control Purchase Date;
(v) that Holders electing to have a Security, or portion thereof,
purchased pursuant to a Change of Control Offer will be required to
surrender the Security, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Security completed, to the Paying Agent
(which may not for purposes of this Section 11.01, notwithstanding anything
in this Indenture to the contrary, be the Company or any Affiliate of the
Company) at the address specified in the notice prior to the close of
business on the earlier of (a) the third Business Day prior to the Change
of Control Purchase Date and (b) the third Business Day following the
expiration of the Change of Control Offer (such earlier date being the
"CHANGE OF CONTROL PUT DATE");
(vi) that Holders will be entitled to withdraw their election, in
whole or in part, if the Paying Agent (which may not for purposes of this
Section 11.01, notwithstanding anything in this Indenture to the contrary,
be the Company or any Affiliate of the Company) receives, up to the close
of business on the Change of Control Put Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Securities the Holder is withdrawing and a statement that
such Holder is withdrawing his election to have such principal amount of
Securities purchased; and
(vii) a brief description of the events resulting in such Change of
Control.
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Any such Change of Control Offer shall comply with all applicable
provisions of Federal and state securities laws, rules and regulations,
including those regulating tender offers, if applicable, and any provisions of
this Indenture which conflict with such laws shall be deemed to be superseded by
the provisions of such laws.
On or before the Change of Control Purchase Date, the Company will (i)
accept for payment Securities or portions thereof properly tendered and not
properly withdrawn pursuant to the Change of Control Offer, (ii) deposit with
the Paying Agent cash sufficient to pay the Change of Control Purchase Price
(including accrued and unpaid interest) for all Securities or portions thereof
so tendered and (iii) deliver to the Trustee Securities so accepted together
with an Officers' Certificate listing the Securities or portions thereof being
purchased by the Company. The Paying Agent will on the Change of Control
Purchase Date promptly deliver to Holders of Securities so accepted payment in
an amount equal to the Change of Control Purchase Price for such Securities,
together with any accrued but unpaid interest, and the Trustee shall promptly
authenticate and mail or deliver to such Holders a new Security equal in
principal amount to any unpurchased portion of the Security surrendered. Any
Securities not so accepted shall be promptly mailed or delivered by the Company
to the Holder thereof. The Company will announce publicly the results of the
Change of Control Offer on or as soon as practicable after the Change of Control
Purchase Date.
ARTICLE 12
GUARANTEE OF SECURITIES
SECTION 12.01. GUARANTEE. (a) Each Guarantor, jointly and severally,
irrevocably and unconditionally, guarantees, as a primary obligor and not as a
surety, to each Holder of a Security now or hereafter authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the
Securities or the obligations of the Company hereunder or thereunder, (i) the
due and punctual payment of the principal, premium, if any, interest (including
post-petition interest in any proceeding under any Bankruptcy Law whether or not
an allowed claim in such proceeding) on overdue principal, premium, if any, and
interest, if lawful on such Security, and (ii) all other monetary Obligations
payable by the Company under this Indenture (including under Section 7.07
hereof) and the Securities (all of the foregoing being hereinafter collectively
called the "GUARANTEES"), when and as the same shall become due and payable,
whether by acceleration thereof, call for redemption or otherwise (including
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code), in accordance with the terms of any such
Security and of this Indenture, subject, however, in the case of (i) and (ii)
above, to the limitations set forth in Section 9.04
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hereof. The Guarantees will rank pari passu with all other senior indebtedness
of each Guarantor and senior in right of payment to all subordinated
indebtedness of each Guarantor. Each Guarantor hereby agrees that its
Obligations hereunder shall be absolute and unconditional, irrespective of, and
shall be unaffected by, any failure to enforce the provisions of any such
Security or this Indenture, any waiver, modification or indulgence granted to
the Company with respect thereto, the recovery of any judgment against the
Company, any action to enforce the same, by the Securityholders or the Trustee,
the recovery of any judgment against the Company, any action to enforce the
same, or any other circumstances which may otherwise constitute a legal or
equitable discharge of a surety or guarantor. Each Guarantor hereby waives
diligence, presentment, filing of claims with a court in the event of a merger
or bankruptcy of the Company, any right to require a proceeding first against
the Company, the benefit of discussion, protest or notice with respect to any
such Security or the Indebtedness evidenced thereby and all demands whatsoever,
and covenants that its Guarantee shall not be discharged as to any such Security
except by payment in full of the principal thereof, premium, if any, and all
accrued interest thereon.
(b) Each Guarantor further agrees that its Guarantee herein
constitutes a guarantee of payment, performance and compliance when due (and not
a guarantee of collection) and waives any right to require that any resort be
had by any Securityholder or the Trustee to any security held for payment of the
Guarantees.
(c) Each Guarantor agrees that it shall not be entitled to, and
hereby irrevocably waives, any right of subrogation in relation to the
Securityholders or the Trustee in respect of any Guarantee. Each Guarantor
further agrees that, as between such Guarantor, on the one hand, and the
Securityholders and the Trustee, on the other hand, (x) the maturity of the
Guarantee may be accelerated as provided in Article 6 for the purposes of such
Guarantor's Guarantee herein, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Guarantees, and (y)
in the event of any Declaration of Acceleration of such Guarantees as provided
in Article 6 hereof, such Guarantees (whether or not due and payable) shall
forthwith become due and payable by such Guarantor for the purpose of this
Article 12.
(d) Each Guarantor also agrees to pay any and all costs and expenses
(including reasonable attorneys' fees) incurred by the Trustee or any
Securityholder in enforcing any rights under this Article 12.
(e) Each Guarantor also agrees that, as the Securities, the
Guarantees will be secured pursuant to Article 10.
(f) Each Guarantor agrees to become a party to the Collateral
Documents whereby the Guarantees will be secured in the manner set forth in such
Security Documents.
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(g) The Guarantee set forth in this Article 12 shall not be valid or
become obligatory for any purpose with respect to a Security until the
certificate of authentication on such Security shall have been signed by or on
behalf of the Trustee.
SECTION 12.02. EXECUTION AND DELIVERY OF GUARANTEE. (a) To evidence
each Guarantor's Guarantee set forth in this Article 12, each Guarantor hereby
agrees that a notation of such Guarantee (the form of which is attached hereto
as Exhibit B) shall be attached to each Security authenticated and delivered by
the Trustee.
(b) This Indenture shall be executed on behalf of each Guarantor, and
an Officer of each Guarantor shall sign the notation of the Guarantee on the
Security, by manual or facsimile signature. If an Officer whose signature is on
this Indenture or the notation of Guarantee no longer holds that office at the
time the Trustee authenticates the Security on which the Guarantee is endorsed,
the Guarantee shall be valid nevertheless. Each Guarantor hereby agrees that
the Guarantee set forth in Section 12.01 hereof shall remain in full force and
effect notwithstanding any failure to endorse on each Security a notation of the
Guarantee.
(c) The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Guarantee
set forth in this Indenture on behalf of each Guarantor.
SECTION 12.03. GUARANTEE UNCONDITIONAL, ETC. Upon failure of payment
when due of any Guarantee for whatever reason, each Guarantor will be obligated
to pay the same immediately. Each Guarantor hereby agrees that its obligations
hereunder shall be continuing, absolute and unconditional, irrespective of: the
recovery of any judgment against the Company or any Guarantor; any extension,
renewal, settlement, compromise, waiver or release in respect of any obligation
of the Company under this Indenture or any Security, by operation of law or
otherwise; any modification or amendment of or supplement to this Indenture or
any Security; any change in the corporate existence, structure or ownership of
the company, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting the Company or its assets or any resulting release or
discharge of any obligation of the Company contained in this Indenture or any
Security; the existence or any claim, set-off or other rights which any
Guarantor may have at any time against the Company, the Trustee, any
Securityholder or any other Person, whether in connection herewith or any
unrelated transactions; PROVIDED, that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory counterclaim; any
invalidity or unenforceability relating to or against the Company for any reason
of this Indenture or any Security, or any provision of applicable law or
regulation purporting to prohibit the payment by the Company of the principal,
premium, if any, or interest on any Security or any other Guarantee; or any
other act or omission to act or delay of any kind by the Company, the Trustee,
any Securityholder or any other Person or any other circumstance whatsoever
which might, but for the provisions of
<PAGE>
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this paragraph, constitute a legal or equitable discharge of the Guarantors'
obligations hereunder. Each Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demand whatsoever and covenants that this
Guarantee will not be discharge except by the complete performance of the
obligations contained in the Securities, this Indenture and in this Article 12.
Each Guarantor's obligations hereunder shall remain in full force and effect
until this Indenture shall have terminated and the principal of and interest on
the Securities and all other Guarantees shall have been paid in full. If at any
time any payment of the principal of or interest on any Security or any other
payment in respect of any Guarantee is rescinded or must be otherwise restored
or returned upon the insolvency, bankruptcy or reorganization of the Company or
otherwise, each Guarantor's obligations hereunder with respect to such payment
shall be reinstated as though such payment had been due but not made at such
time, and this Article 12, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Guarantor irrevocably waives any and
all rights to which it may be entitled, by operation of the law or otherwise,
upon making any payment hereunder to be subrogated to the rights of the payee
against the Company with respect to such payment or otherwise to be reimbursed,
indemnified or exonerated by the Company in respect thereof.
SECTION 12.04. LIMITATION OF GUARANTOR'S LIABILITY. Each Guarantor,
and by its acceptance of a Security, each Securityholder, hereby confirms that
it is the intention of all such parties that the guarantee by such Guarantor
pursuant to its Guarantee not constitute a fraudulent transfer or conveyance for
purposes of the Bankruptcy Law, Federal and state fraudulent conveyance laws or
other legal principles. To effectuate the foregoing intention, the
Securityholders and each Guarantor hereby irrevocably agree that the obligations
of such Guarantor under the Guarantee shall be limited to the maximum amount as
will, after giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collections from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Guarantee or pursuant to Section 12.05 hereof, result in
the obligations of such Guarantor under the Guarantee not constituting such
fraudulent transfer or conveyance under federal or state law.
SECTION 12.05. CONTRIBUTION. In order to provide for just and
equitable contribution amount the Guarantors, the Guarantors agree, INTER SE,
that in the event any payment or distribution is made by a Guarantor (a "FUNDING
GUARANTOR") under the Guarantee, such Funding Guarantor shall be entitled to a
contribution from all other Guarantors in a pro rata amount based on the
Adjusted Net Assets of each Guarantor (including the Funding Guarantor) for all
payments, damages and expenses incurred by that Funding Guarantor in discharging
the Company's obligations with respect to the Securities or any other
Guarantor's obligations with respect to the Guarantees.
<PAGE>
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SECTION 12.06. RELEASE. Upon the sale, exchange or other transfer of
all of the outstanding Capital Stock, or all or substantially all of the assets,
of a Guarantor owned by the Company or by any other Restricted Subsidiary (other
than a Non-Recourse Restricted Subsidiary) to a Person that is not an Affiliate
of the Company, which is otherwise in compliance with this Indenture, the
Guarantee of such Guarantor shall be automatically and unconditionally released
and discharged without any further action required on the part of the Trustee or
any Securityholder. The Trustee shall execute an appropriate instrument
prepared by the Company evidencing such release upon receipt of a request by the
Company accompanied by an Officers' Certificate certifying as to the compliance
with this Section 12.06. Any Guarantor not so released remains liable for the
full amount of principal, premium, if any, and interest on the Securities as
provided in this Article 12.
SECTION 12.07. ADDITIONAL GUARANTORS. Any Person that was not a
Guarantor on the date of this Indenture may become a Guarantor by executing and
delivering to the Trustee (a) a supplemental indenture in form and substance
satisfactory to the Trustee, which subjects such Person to the provisions of
this Indenture as a Guarantor and (b) an Opinion of Counsel to the effect that
such supplemental indenture has been duly authorized and executed by such Person
and constitutes the legal, valid, binding and enforceable obligation of such
Person (subject to such customary exceptions concerning creditors' rights and
equitable principles as may be acceptable to the Trustee in its discretion).
The Guarantee of each Person described in this Section 12.07 shall apply to all
Securities theretofore executed and delivered, notwithstanding any failure of
such Securities to contain a notation of such Guarantee thereon.
SECTION 12.08. SUCCESSORS AND ASSIGNS. This Article 12 shall be
binding upon each Guarantor and its successors and assigns and shall inure to
the benefit of the successors and assigns of the Trustee and the Securityholders
and, in the event of any transfer or assignment of rights by any Securityholder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Securities shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions of this
Indenture.
SECTION 12.09. WAIVER OF STAY, EXTENSION OR USURY LAWS. Each
Guarantor covenants (to the extent that it may lawfully do so) that it will not
at any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or other law
that would prohibit or forgive each such Guarantor from performing its Guarantee
as contemplated herein, wherever enacted, now or at any time hereafter in force,
or which may affect the covenants or the performance of this Indenture; and (to
the extent that it may lawfully do so) each Guarantor hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not hinder,
delay or
<PAGE>
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impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
SECTION 12.10. NO PERSONAL LIABILITY OF PARTNERS, STOCKHOLDERS,
OFFICERS, DIRECTORS. No direct or indirect stockholder, partner, employee,
officer or director, as such, past, present or future of any Guarantor or any
successor entity shall have any personal liability in respect of the obligations
of any Guarantor or any successor entity under this Agreement by reason of his
or its status as such stockholder, partner, employee, officer or director.
ARTICLE 13
MISCELLANEOUS
SECTION 13.01. TIA CONTROLS. If any provision of this Indenture
limits, qualifies, or conflicts with the duties imposed by operation of the TIA,
the imposed duties, upon qualification of this Indenture under the TIA, shall
control.
SECTION 13.02. NOTICES. Any notices or other communications to the
Company or the Trustee required or permitted hereunder shall be in writing, and
shall be sufficiently given if made by hand delivery, by telex, by telecopier or
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
if to the Company:
Price Communications Wireless, Inc.
45 Rockefeller Plaza
New York, New York 10020
Attention: Chief Financial Officer
Telecopy: (212) 397-3755
if to the Trustee:
Bank of Montreal Trust Company
88 Pine Street
19th Floor
New York, New York 10005
Attention: Corporate Trust Department
Telecopy: (212) 701-7698
<PAGE>
-95-
Any party by notice to each other party may designate additional or
different addresses as shall be furnished in writing by such party. Any notice
or communication to any party shall be deemed to have been given or made as of
the date so delivered, if personally delivered; when answered back, if telexed;
when receipt is acknowledged, if telecopied; and five Business Days after
mailing if sent by registered or certified mail, postage prepaid (except that a
notice of change of address shall not be deemed to have been given until
actually received by the addressee).
Any notice or communication mailed to a Securityholder shall be mailed
to him by first class mail or other equivalent means at his address as it
appears on the registration books of the Registrar and shall be sufficiently
given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 13.03. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any other Person shall
have the protection of TIA Section 312(c).
SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take any action
under this Indenture, such Person shall furnish to the Trustee:
(1) an Officers' Certificate (in form and substance reasonably
satisfactory to the Trustee) stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an opinion of Counsel (in form and substance reasonably
Satisfactory to the Trustee) stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall include:
<PAGE>
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(1) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of each such
Person, such condition or covenant has been complied with; provided,
however, that with respect to matters of fact an Opinion of Counsel may
rely on an Officers' Certificate or certificates of public officials.
SECTION 13.06. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR. The Trustee
may make reasonable rules for action by or at a meeting of Securityholders. The
Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 13.07. LEGAL HOLIDAYS. If a payment date is a Legal Holiday
at such place, payment may be made at such place on the next succeeding day that
is not a Legal Holiday, and no interest shall accrue for the intervening period.
SECTION 13.08. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK.
THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND
THE SECURITIES, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.
THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT
<PAGE>
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FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY
SECURITYHOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER
JURISDICTION.
SECTION 13.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or any of its respective Subsidiaries. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.
SECTION 13.10. NO RECOURSE AGAINST OTHERS. No direct or indirect
employee, stockholder, director or officer, as such, past, present or future of
the Company, or any successor entity, shall have any personal liability in
respect of the obligations of the Company under the Securities or this indenture
by reason of his or its status as such stockholder, employee director or
officer. Each Securityholder by accepting a Security waives and releases all
such liability. Such waiver an release are part of he consideration for the
issuance of the Securities.
SECTION 13.11. SUCCESSORS. All agreements of the Company in this
Indenture and the Securities shall bind its successor. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 13.12. DUPLICATE ORIGINALS. All parties may sign any number
of copies or counterparts of this Indenture. Each signed copy or counterpart
shall be an original, but all of them together shall represent the same
agreement.
SECTION 13.13. SEVERABILITY. In case any one or more of the
provisions in this Indenture or in the Securities shall be held invalid, illegal
or unenforceable, in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions shall not in any way be affected or impaired thereby, it being
intended that all of the provisions hereof shall be enforceable to the full
extent permitted by law.
SECTION 13.14. TABLE OF CONTENTS, HEADINGS, ETC. The Table of
Contents, Cross-Reference Table and headings of the Articles and the Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part hereof and shall in no way modify or restrict any of the
terms or provisions hereof.
SECTION 13.15. QUALIFICATION OF INDENTURE. The Company shall qualify
this Indenture under the TIA in accordance with the terms and conditions of the
Registration Rights Agreement and shall pay all costs and expenses (including
attorneys' fees for the
<PAGE>
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Company and the Trustee) incurred in connection therewith, including, but not
limited to, costs and expenses of qualification of the Indenture and the
Securities and printing this Indenture and the Securities. The Trustee shall be
entitled to receive from the Company any such Officers' Certificates, Opinions
of Counsel or other documentation as it may reasonably request in connection
with any such qualification of this Indenture under the TIA.
SECTION 13.16. REGISTRATION RIGHTS. Certain Holders of the Securities
are entitled to certain registration rights with respect to such Securities
pursuant to, and subject to the terms of, the Registration Rights Agreement.
[Signature Pages Follow]
<PAGE>
S-1
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.
PRICE COMMUNICATIONS WIRELESS,
INC., a Delaware corporation
By:
-------------------------------
Name:
Title:
ALBANY CELLULAR PARTNERS
By: Palmer Wireless Holdings, Inc., its
managing partner
By:
-------------------------------
Name:
Title:
COLUMBUS CELLULAR TELEPHONE COMPANY
By: Palmer Wireless Holdings, Inc., its
managing partner
By:
-------------------------------
Name:
Title:
<PAGE>
S-2
MACON CELLULAR TELEPHONE SYSTEMS
LIMITED PARTNERSHIP
By: CEI Communications, Inc., its
general partner
By:
-------------------------------
Name:
Title:
SAVANNAH CELLULAR LIMITED
PARTNERSHIP
By: Palmer Wireless Holdings, Inc., its
general partner
By:
-------------------------------
Name:
Title:
PANAMA CITY CELLULAR TELEPHONE
COMPANY, LTD.
By: Panama City Communications, Inc.,
its general partner
By:
-------------------------------
Name:
Title:
<PAGE>
S-3
PANHANDLE CELLULAR PARTNERSHIP
By: Palmer Wireless Holdings, Inc., its
managing partner
By:
-------------------------------
Name:
Title:
PALMER WIRELESS HOLDINGS, INC.
PRICE COMMUNICATIONS WIRELESS II, INC.
PRICE COMMUNICATIONS WIRELESS III, INC.
PRICE COMMUNICATIONS WIRELESS IV, INC.
PRICE COMMUNICATIONS WIRELESS V, INC.
PRICE COMMUNICATIONS WIRELESS VI, INC.
PRICE COMMUNICATIONS WIRELESS VII, INC.
PRICE COMMUNICATIONS WIRELESS VIII, INC.
PRICE COMMUNICATIONS WIRELESS IX, INC.
CEI COMMUNICATIONS, INC.
CELLULAR DYNAMICS TELEPHONE COMPANY
CELLULAR SYSTEMS OF SOUTHEAST ALABAMA, INC.
DOTHAN CELLULAR TELEPHONE COMPANY, INC.
MONTGOMERY CELLULAR HOLDING CO., INC.
MONTGOMERY CELLULAR TELEPHONE COMPANY, INC.
PANAMA CITY COMMUNICATIONS, INC.
By:
-------------------------------
Name:
Title:
<PAGE>
S-4
Accepted and agreed to as of the date
first above written:
NATWEST CAPITAL MARKETS LIMITED,
on behalf of and as Representative
of the Purchasers
By:
--------------------------------
Name:
Title:
<PAGE>
BANK OF MONTREAL TRUST COMPANY, Trustee
By:
-----------------------------
Name:
Title:
<PAGE>
EXHIBIT A
{FORM OF SECURITY}
9-1/8% SERIES {A/B} SENIOR SECURED NOTE DUE 2006
No.
CUSIP No.
Price Communications Wireless, Inc., a Delaware corporation
(hereinafter called the "Company," which term includes any successors under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to CEDE & CO., or registered assigns, the principal sum of $_________ Dollars,
on December 15, 2006.
Interest Payment Dates: December 15 and June 15 of each year;
commencing December 15, 1998.
Record Dates: December 1 and June 1.
Reference is made to the further provisions of this Security on the
reverse side, which will, for all purposes, have the same effect as if set forth
at this place.
IN WITNESS WHEREOF, the Company has caused this Instrument to be duly
executed.
Dated:
PRICE COMMUNICATIONS WIRELESS, INC.,
a Delaware corporation
By:
---------------------------
Name:
Title:
A-1
<PAGE>
{FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION}
This is one of the Securities described in the within-mentioned
Indenture.
Bank of Montreal Trust Company,
as Trustee
By:
-----------------------------
Authorized Signatory
Dated:
A-2
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC.
9-1/8% Series {A/B} Senior Secured Note due 2006
Unless and until it is exchanged in whole or in part for Securities in
definitive form, this Security may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation, ("DTC"),
to the Company or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.(1)
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, UNITED
STATES PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B)
IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2),
(3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL
ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES
ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO IN RULE
144(K) UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS
NOTE WITH RESPECT TO SUCH TRANSFER, RESALE OR OTHERWISE, TRANSFER THIS NOTE
EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED
STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS
ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER
- -----------------------------
(1) This paragraph should only be added if the Security is issued in global
form.
A-3
<PAGE>
CAN BE OBTAINED FROM THE TRUSTEE) AND IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF NOTES AT THE TIME OF TRANSFER OF LESS THAN
$250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS
IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME
PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON
THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS
CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR PURCHASING PURSUANT TO CLAUSE (2)(C) ABOVE, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "UNITED STATES PERSON" HAVE THE MEANINGS GIVEN
TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE
IN VIOLATION OF THE FOREGOING RESTRICTIONS
1. Interest.
Price Communications Wireless, Inc., a Delaware corporation
(hereinafter called the "Company," which term includes any successors under the
Indenture hereinafter referred to), promises to pay interest on the principal
amount of this Security at the rate and in the manner specified below. Interest
will accrue at 9-1/8% per annum and will be payable semi-annually in cash on
each December 15 and June 15, commencing December 15, 1998, or if any such day
is not a Business Day on the next succeeding Business Day (each an "Interest
Payment Date") to Holders of record of the Securities at the close of business
on the immediately preceding December 1 or June 1, whether or not a Business
Day. Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months. Interest shall accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
issuance. To the extent lawful, the Company shall pay interest on overdue
principal at the rate of the then applicable interest rate on the Securities; it
shall pay interest on overdue installments of interest (without regard to any
applicable grace periods) at the same rate to the extent lawful.
A-4
<PAGE>
2. Method of Payment.
The Company shall pay interest on the Securities (except defaulted
interest) to the Persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date. Holders
must surrender Securities to a Paying Agent to collect principal payments.
Except as provided below, the Company shall pay principal and interest in such
coin or currency of the United States of America as at the time of payment shall
be legal tender for payment of public and private debts ("U.S. Legal Tender").
However, the Company may pay principal and interest by wire transfer of Federal
funds, or interest by its check payable in such U.S. Legal Tender. The Company
may deliver any such interest payment to the Paying Agent or the Company may
mail any such interest payment to a Holder at the Holder's registered address.
3. Paying Agent and Registrar.
Initially, Bank of Montreal Trust Company (the "Trustee") will act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-Registrar without notice to Note Holders. The Company or any of its
Subsidiaries may, subject to certain exceptions, act as Paying Agent, Registrar
or co-Registrar.
4. Indenture.
The Company issued the Securities under an Indenture, dated as of June
16, 1998 (the "Indenture"), between the Company, the Guarantors and the Trustee.
Capitalized terms herein are used as defined in the Indenture unless otherwise
defined herein. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act, as in effect on the date of the Indenture. The Securities are
subject to all such terms, and Holders of Securities are referred to the
Indenture and said Act for a statement of them. The Securities are secured
obligations of the Company limited in aggregate principal amount to
$1,000,000,000.
5. Redemption.
(a) Except as set forth below, the Company will not have the right to
redeem any Securities prior to June 15, 2002. On or after June 15, 2002, the
Company will have the right to redeem all or any part of the Securities in cash
at the redemption prices (expressed as a percentage of the aggregate principal
amount thereof) set forth below, in each case including accrued and unpaid
interest, if any, to the applicable Redemption Date (subject to the right of
Holders of record on the relevant regular Record Date to receive interest due on
an Interest Payment Date that is on or prior to the Redemption Date) if redeemed
during the 12-month period beginning June 15 of the years indicated below:
A-5
<PAGE>
Year Redemption Price
---- ----------------
2002 104.56250%
2003 102.28125%
2004 and thereafter 100.00000%
Notwithstanding the optional redemption provisions described in the
preceding paragraph (a), prior to June 15, 2002, in the event that the Company
or any Parent consummates one or more Equity Offerings, other than in an
circumstances resulting in, or as part of a series of transactions resulting in,
directly or indirectly, a Change of Control, on or before the third anniversary
of the date of the issuance of the Securities, the Company may at its option,
use all or a portion of the cash received by it or contributed to it from such
offerings to redeem up to 35% of the originally issued aggregate principal
amount of the Securities at a cash redemption price equal to 109.125% of the
principal amount of the Securities so redeemed, plus accrued and unpaid interest
thereon, if any, to the Redemption Date; PROVIDED that (x) at least 65% of the
original aggregate principal amount of the Notes remains outstanding thereafter
(excluding any Securities owned by the Company or any of its Affiliates), and
(y) any such net cash proceeds of such Equity Offering by any Parent to be used
for such a redemption shall be contributed to the Company in an amount in cash
sufficient to redeem the Securities to be redeemed at the then current
redemption price. Notice of any such redemption must be given within 60 days
after the date of the last Equity Offering the proceeds of which are to be so
contributed.
In the case of a partial redemption, the Trustee shall select the
Securities or portions thereof for redemption on a pro rata basis or in such
other manner as it deems appropriate and fair. The Securities may be redeemed
in part in multiples of $1,000 only.
The Securities will not have the benefit of a sinking fund.
Any such redemption will comply with Article 3 of the Indenture.
(b) In addition, notwithstanding the optional redemption provisions
described above, at any time on or prior to June 15, 2002, the Securities may
also be redeemed as a whole at the option of the Company upon the occurrence of
a Change of Control (but in no event more than 90 days after the occurrence of
such Change of Control) at a redemption price equal to 100% of the principal
amount thereof, plus the Applicable Premium as of, and accrued but unpaid
interest, if any, to, the Redemption Date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date).
A-6
<PAGE>
6. Notice of Redemption.
Notice of redemption will be sent by first class mail, at least 30
days and not more than 60 days prior to a Redemption Date, to the Holder of each
Security to be redeemed at such Holder's last address as then shown upon the
registry books of the Registrar.
Any notice which relates to a Security to be redeemed in part only
must state the portion of the principal amount to be redeemed and must state
that on and after the date fixed for redemption, upon surrender of such
Security, a new Security or Securities in a principal amount equal to the
unredeemed portion thereof will be issued. On and after the date fixed for
redemption, interest will cease to accrue on the portions of the Securities
called for redemption.
7. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder may register
the transfer of, or exchange Securities in accordance with, the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption prior to 15 days after the
notice of redemption.
8. Persons Deemed Owners.
The registered Holder of a Security may be treated as the owner of it
for all purposes.
9. Unclaimed Money.
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee and the Paying Agent(s) will pay the money back to
the Company at its written request. After that, all liability of the Trustee
and such Paying Agent(s) with respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity.
Except as set forth in the Indenture, if the Company irrevocably
deposits with the Trustee, in trust, for the benefit of the Holders, cash, U.S.
Legal Tender Equivalents, U.S. Government Obligations or a combination thereof,
in such amounts as will be sufficient in the opinion of a nationally recognized
firm of independent public accountants selected by the Trustee, to pay the
principal of, premium, if any, and interest on the Securities to redemption or
maturity and comply with the other provisions of the Indenture relating thereto,
the Company will be discharged from certain provisions of the Indenture and the
Securities (including
A-7
<PAGE>
the financial covenants, but excluding their obligation to pay the principal of
and interest on the Securities). Upon satisfaction of certain additional
conditions set forth in the Indenture, the Company may elect to have its
obligations discharged with respect to outstanding Securities.
11. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities may be
amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount of the Securities then outstanding, and
any existing Default or Event of Default or compliance with any provision may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the Securities then outstanding. Without notice to or consent of any
Holder, the parties thereto may amend or supplement the Indenture or the
Securities to, among other things, cure any ambiguity, defect or inconsistency,
or make any other change that does not adversely affect the rights of any Holder
of a Security.
12. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries to, among other things, incur additional
Indebtedness, pay dividends or make certain other restricted payments, enter
into certain transactions with Affiliates, incur Liens, sell assets, merge or
consolidate with any other Person or transfer (by lease, assignment or
otherwise) substantially all of the properties and assets of the Company. The
limitations are subject to a number of important qualifications and exceptions.
The Company must periodically report to the Trustee on compliance with such
limitations.
13. Ranking.
Payment of principal, premium, if any, and interest on the Securities
is (i) senior in the right of payment to all subordinated Indebtedness of the
Company and (ii) effectively senior in right of payment to all unsecured
Indebtedness of the Company to the extent of the value of the Collateral (as
defined in the Indenture) available for payment of the Securities.
14. Repurchase at Option of Holder.
(a) If there is a Change of Control, unless the Company has elected
to redeem all of the Securities as set forth under Section 3.01(b) of the
Indenture, the Company shall be required to offer to purchase on the Change of
Control Payment Date all outstanding Securities at a purchase price equal to
101% of the aggregate principal amount thereof, plus accrued and unpaid
interest, if any, to the Change of Control Payment Date. Holders of Securities
will receive a Change of Control Offer from the Company prior to any related
Change of Control Payment Date and may elect to have such Securities purchased
by completing the form entitled "Option of Holder to Elect Purchase" appearing
below.
A-8
<PAGE>
(b) The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries to sell assets. In the event the
proceeds from a permitted Asset Sale exceed certain amounts, as specified in the
Indenture, the Company will be required either to reinvest the proceeds of such
Asset Sale as described in the Indenture or to make an offer to purchase each
Holder's Securities at 100% of the principal amount thereof, plus accrued
interest, if any, to the purchase date.
15. Successors.
When a successor assumes all the obligations of its predecessor under
the Securities and the Indenture, the predecessor will be released from those
obligations.
16. Defaults and Remedies.
If an Event of Default occurs and is continuing (other than as Event
of Default relating to certain events of bankruptcy, insolvency or
reorganization), then in every such case, unless the principal of all of the
Securities shall have already become due and payable, either the Trustee or the
Holders of 25% in aggregate principal amount of Securities then outstanding may
declare all the Securities to be due and payable immediately in the manner and
with the effect provided in the Indenture. The Holders of Securities may not
enforce the Indenture or the Securities except as provided in the Indenture.
The Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Securities. Subject to certain limitations, Holders of a
majority in aggregate principal amount of the Securities then outstanding may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of Securities notice of any continuing Default or Event of
Default (except a Default in payment of principal or interest), if it determines
that withholding notice is in their interest.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No stockholder, director, officer or employee, as such, past, present
or future, of the Company or any successor corporation shall have any personal
liability in respect of the obligations of the Company under the securities or
the Indenture by reason of his or its status as such stockholder, director,
officer or employee. Each Holder of a Security by accepting a Security waives
and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Securities.
A-9
<PAGE>
19. Authentication.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this
Security.
20. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
22. Additional Rights of Holders of Transfer Restricted Securities.
In addition to the rights provided to Holders of Securities under the
Indenture, Holders of Securities shall have all the rights set forth in the
Registration Rights Agreement.
A-10
<PAGE>
[FORM OF] ASSIGNMENT
I or we assign this Security to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of assignee
- --------------------------------------------------------------------------------
and irrevocably appoint _________ agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
Date: Signed:
----------------------- ----------------------------------
- --------------------------------------------------------------------------------
(Sign exactly as name appears on the other side of this Security)
A-11
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.15 or Article 11 of the Indenture, check the appropriate
box:
(_) Section 4.15 (_) Article 11
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.15 or Article 11 of the Indenture, as the case
may be, state the principal amount you want to be purchased: $_____________
Date: Signature:
------------------------ -------------------------------
(Sign exactly as your name appears
on the other side of this security)
A-12
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES(2)
The following exchanges of a part of this Global Security for
Definitive Securities have been made:
<TABLE>
<CAPTION>
Amount of Amount of
decrease in increase in
Principal Principal Principal Amount Signature of
Amount of Amount of of this Global Security authorized officer
Date of this Global this Global following such of Trustee or
Exchange Security Security decrease (or increase) Securities Custodian
- -------- ----------- ----------- ----------------------- --------------------
<S> <C> <C> <C> <C>
</TABLE>
- -------------------------------
(2) This schedule should be added if the Security is issued in global form.
A-13
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF SECURITIES(3)
Re: 9-1/8% SERIES A SENIOR SECURED NOTES DUE 2006 OF PRICE COMMUNICATIONS
WIRELESS, INC.
This Certificate relates to $ principal amount of
Securities held in (4)__________ book-entry or (4)__________ definitive form by
(the "Transferor").
1. The Transferor:*
(_) (a) has requested the Trustee by written order to deliver in exchange or
its beneficial interest in the Global Security held by the Depository a Security
or Securities in definitive, registered form of authorized denominations and an
aggregate principal amount equal to its beneficial interest in such Global
Security (or the portion thereof indicated above); or
(_) (b) has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
2. In connection with any such request prior to the date which is
two years after the later of the issuance of this Security (or any predecessor
Security) and the sale hereof by an Affiliate (as defined in Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act")) of the Company
(computed in accordance with paragraph (d) of Rule 144 under the Securities Act)
or by a Transferor that was at the date of such transfer or during the three
months preceding such date of transfer an Affiliate of the Company, and in
respect of each such Security, the Transferor does hereby certify that
Transferor is familiar with the Indenture relating to the above-captioned
Securities and as provided in Section 2.06 of such Indenture, the transfer of
this Security does not require registration under the Securities Act because:*
(_) (a) Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.06(a)(ii)(A) or Section
2.06(d)(i)(A) of the Indenture).
(_) (b) Such Security is being transferred to a person who the Transferor
reasonably believes is a "qualified institutional buyer" (as defined in Rule
144A under the Securities Act) purchasing for its own account or for the account
of a qualified institutional buyer over which it exercises sole investment
discretion that is aware that the transfer is being made in reliance on
- -------------------------------
(3) The following should be included only for Initial Securities.
(4) Check applicable box.
A-14
<PAGE>
Rule 144A (in satisfaction of Section 2.06(a)(ii)(B), Section 2.06(b)(i) or
Section 2.06(d)(i)(B) of the Indenture).
(_) (c) Such Security is being transferred pursuant to an exemption from
registration in accordance with Regulation S under the Securities Act (in
satisfaction of Section 2.06(a)(ii)(C) or Section 2.06(d)(i)(C) of the
Indenture).
(_) (d) Such Security is being transferred to an institutional investor that
is an "accredited investor" within the meaning of Rule 501(a)(1),(2),(3) or (7)
under the Securities Act which delivers a certificate in the form of Exhibit B
to the Indenture to the Trustee (in satisfaction of Section 2.06(a)(ii)(D) or
Section 2.06(d)(i)(D) of the Indenture).
(_) (e) Such Security is being transferred in reliance on and in compliance
with another exemption from the registration requirements of the Securities Act.
An Opinion of Counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate (in
satisfaction of Section 2.06(a)(ii)(E) or Section 2.06(d)(i)(E) of the
Indenture).
----------------------------------------
(INSERT NAME OF TRANSFEROR)
By:
-------------------------------------
Date:
-------------------
3. Affiliation with the Company {check if applicable}
(_) (a) The undersigned represents and warrants that it is, or at some time
during which it held this Security was, an Affiliate of the Company.
(b) If 3(a) above is checked and if the undersigned was not an Affiliate
of the Company at all time during which it held this Security, indicate the
periods during which the undersigned was an Affiliate of the Company:
__________________________.
(c) If 3(a) above is checked and if the Transferee will not pay the full
purchase price for the transfer of this Security on or prior to the date of
transfer, indicate when such purchase price will be paid:
__________________________.
A-15
<PAGE>
TO BE COMPLETED BY TRANSFEREE IF 2(b) ABOVE IS CHECKED AND THE TRANSFEROR IS NOT
A QUALIFIED INSTITUTIONAL BUYER:
The undersigned represents and warrants that it is a "qualified
institutional buyer" as defined in Rule 144A under the Securities Act of 1933,
as amended, and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information.
Dated:
------------------------- ----------------------------------------
NOTICE: To be executed by an officer.
TO BE COMPLETED BY TRANSFEREE IF 2(c) ABOVE IS CHECKED:
The undersigned represents and warrants that it is not a "U.S. Person"
(as defined in Regulation S under the Securities Act of 1933, as amended).
Dated:
------------------------- ----------------------------------------
NOTICE: To be executed by an officer.
If none of the boxes under Section 2 of this certificate is checked or if any of
the above representations required to be made by the Transferee is not made, the
Registrar shall not be obligated to register this Security in the name of any
person other than the Holder hereof.
THE UNDERSIGNED HEREBY AGREES THAT, UNLESS THE BOX ABOVE UNDER ITEM 3(a) IS
CHECKED, THE UNDERSIGNED SHALL BE DEEMED TO HAVE REPRESENTED THAT IT IS NOT NOR
HAS IT BEEN AT ANY TIME DURING WHICH IT HELD THIS SECURITY AN AFFILIATE, AS
DEFINED IN RULE 144 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OF THE
COMPANY.
Dated:
------------------------- ----------------------------------------
NOTICE: The signature of the Holder to
this assignment must correspond with the
name as written upon the face of this
Security particular, without alteration
or enlargement or any change whatsoever.
A-16
<PAGE>
EXHIBIT B
[FORM OF GUARANTEE]
For value received, the undersigned hereby fully and unconditionally
guarantees to the Holder of this Security the cash payments, in U.S. dollars, of
principal of, premium, if any, and interest on, this Security in the amounts and
at the time when due and interest on the overdue principal, premium, if any, and
interest, if any, on this Security, if lawful, and the payment or performance of
all other obligations of the Company under the Indenture or the Securities, to
the Holder of this Security and the Trustee, all in accordance with and subject
to the terms and limitations of this Security, Article Twelve of the Indenture
and this Guarantee. This Guarantee will become effective in accordance with
Article Twelve of the Indenture and its terms shall be evidenced therein. The
validity and enforceability of any Guarantee shall not be affected by the fact
that it is not affixed to any particular Security. Capitalized terms used but
not defined herein shall have the meanings ascribed to them in the Indenture
dated as of June 16, 1998, by and among Price Communications Wireless, Inc.,
each of the Guarantors party thereto, the undersigned and Bank of Montreal Trust
Company, as Trustee, as amended or supplemented (the "Indenture").
The obligations of the undersigned to the Holders of Securities and to
the Trustee pursuant to the Guarantee and the Indenture are expressly set forth
in Article Twelve of the Indenture and reference is hereby made to the Indenture
for the precise terms of the Guarantee and all of the other provisions of the
Indenture to which this Guarantee relates.
No direct or indirect stockholder, partner, employee, officer or
director, as such, past, present or future of any Guarantor or any successor
entity shall have any personal liability in respect of the obligations of any
Guarantor or any successor entity under this Agreement by reason of his or its
status as such stockholders, partner, employee, officer or director.
THIS NOTE GUARANTEE WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. THE GUARANTOR HEREUNDER AGREES TO SUBMIT TO THE NON-EXCLUSIVE
JURISDICTION OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THE INDENTURE, THE NOTES OR THIS NOTE GUARANTEE.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
B-1
<PAGE>
IN WITNESS WHEREOF, the undersigned Guarantor has caused this
Guarantee to be duly executed.
Dated:
[NAME OF GUARANTOR]
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
B-2
<PAGE>
EXHIBIT C
[Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors]
Bank of Montreal Trust Company
88 Pine Street
19th Floor
New York, New York 10005
Attention: Corporate Trust Department
Re: Price Communications Wireless, Inc.
9-1/8% Senior Secured Notes due 2006
------------------------------------
Ladies and Gentlemen:
In connection with our proposed purchase of 9-1/89% Senior Secured
Notes due 2006 (the "Securities") of Price Communications Wireless, Inc. (the
"Company"), we confirm that:
1. We have received a copy of the Offering Memorandum (the "Offering
Memorandum"), dated June 16, 1998 relating to the Securities and such other
information as we deem necessary in order to make our investment decision. We
acknowledge that we have read and agreed to the matters stated on pages (i),
(ii), (iii), and (iv) of the Offering Memorandum and in the section entitled
"Transfer Restrictions on the Notes" of the Offering Memorandum including the
restrictions on duplication and circulation of the Offering Memorandum.
2. We understand that any subsequent transfer of the Securities is
subject to certain restrictions and conditions set forth in the Indenture
relating to the Securities (as described in the Offering Memorandum) and the
undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Securities except in compliance with, such restrictions and
conditions and the Securities Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Securities have not
been registered under the Securities Act, and that the Securities may not be
offered or sold except as permitted in the following sentence. We agree, on our
own behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell or otherwise transfer any Securities prior to the
date which is two years after the original issuance of the Securities, we will
do so only (i) to the Company or any of its subsidiaries, (ii) inside the United
States in accordance with Rule 144A under the Securities Act to a "qualified
institutional
C-1
<PAGE>
buyer" (as defined in Rule 144A under the Securities Act), (iii) inside the
United States to an institutional "accredited investor" (as defined below) that,
prior to such transfer, furnishes (or has furnished on its behalf by a U.S.
broker-dealer) to the Trustee (as defined in the Indenture relating to the
Securities), a signed letter containing certain representations and agreements
relating to the restrictions on transfer of the Securities, (iv) outside the
United States in accordance with Rule 904 of Regulation S under the Securities
Act, (v) pursuant to the exemption from registration provided by Rule 144 under
the Securities Act (if available), or (vi) pursuant to an effective registration
statement under the Securities Act, and we further agree to provide to any
person purchasing any of the Securities from us a notice advising such purchaser
that resales of the Securities are restricted as stated herein.
4. We are not acquiring the Securities for or on behalf of, and will
not transfer the Securities to, any pension or welfare plan (as described in
Section 3 of the Employee Retirement Income Security Act of 1974), except as
permitted in the section entitled "Transfer Restrictions on the Notes" of the
Offering Memorandum.
5. We understand that, on any proposed resale of any Securities, we
will be required to furnish to the Trustee and the Company such certification,
legal opinions and other information as the Trustee and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Securities purchased by us will
bear a legend to the foregoing effect.
6. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Securities, and we
and any accounts for which we are acting are each able to bear the economic risk
of our or their investment, as the case may be.
7. We are acquiring the Securities purchased by us for our account or
for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
C-2
<PAGE>
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
By:
----------------------------------
Name:
C-3
<PAGE>
EXHIBIT D
[Form of Certificate to Be
Delivered in Connection with
Transfers Pursuant to Regulation S]
Bank of Montreal Trust Company
88 Pine Street
19th Floor
New York, New York 10005
Attention: Corporate Trust Department
Re: Price Communications Wireless, Inc.
(the "Company") 9 1/8% Senior Secured
Notes due 2006 (the "Securities")
-------------------------------------
Ladies and Gentlemen:
In connection with our proposed sale of $_________ aggregate principal
amount of the Securities, we confirm that such sale has been effected pursuant
to and in accordance with Regulation S under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a Person in the
United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the Securities.
D-1
<PAGE>
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
------------------------------------
Authorized Signature
D-2
<PAGE>
EXHIBIT E
[Form of Security Agreement]
E-1
<PAGE>
EXHIBIT F
[Form of Increditor Agreement]
F-1
<PAGE>
Exhibit 4.3
================================================================================
PRICE COMMUNICATIONS WIRELESS, INC.,
Issuer,
and
BANK OF MONTREAL TRUST COMPANY,
Trustee
-------------------
INDENTURE
Dated as of July 10, 1997
-------------------
$175,000,000
11 3/4% Senior Subordinated Notes due 2007
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions....................................................1
SECTION 1.02. Incorporation by Reference of TIA.............................25
SECTION 1.03. Rules of Construction.........................................25
ARTICLE 2
THE SECURITIES
SECTION 2.01. Form and Dating...............................................26
SECTION 2.02. Execution and Authentication..................................26
SECTION 2.03. Registrar and Paying Agent....................................27
SECTION 2.04. Paying Agent to Hold Assets in Trust..........................28
SECTION 2.05. Securityholder Lists..........................................29
SECTION 2.06. Transfer and Exchange.........................................29
SECTION 2.07. Replacement Securities........................................36
SECTION 2.08. Outstanding Securities........................................36
SECTION 2.09. Treasury Securities...........................................37
SECTION 2.10. Temporary Securities..........................................37
SECTION 2.11. Cancellation..................................................37
SECTION 2.12. Defaulted Interest............................................38
ARTICLE 3
REDEMPTION
SECTION 3.01. Redemption....................................................39
SECTION 3.02. Notices to Trustee............................................40
SECTION 3.03. Selection of Securities to Be Redeemed........................40
SECTION 3.04. Notice of Redemption..........................................41
SECTION 3.05. Effect of Notice of Redemption................................42
SECTION 3.06. Deposit of Redemption Price...................................42
SECTION 3.07. Securities Redeemed in Part...................................43
ARTICLE 4
COVENANTS
SECTION 4.01. Transactions Not Subject to Covenants.........................43
SECTION 4.02. Payment of Securities.........................................45
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SECTION 4.03. Maintenance of Office or Agency...............................45
SECTION 4.04. Limitation on Restricted Payments.............................46
SECTION 4.05. Corporate Existence...........................................47
SECTION 4.06. Payment of Taxes and Other Claims.............................47
SECTION 4.07. Maintenance of Properties and Insurance.......................48
SECTION 4.08. Compliance Certificate; Notice of Default.....................48
SECTION 4.09. Reports.......................................................49
SECTION 4.10. Limitation on Status as Investment Company....................49
SECTION 4.11. Limitation on Transactions with Related Persons...............49
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness...........50
SECTION 4.13. Limitations on Restricting Subsidiary Dividends...............52
SECTION 4.14. Limitations on Layering of Indebtedness; Liens................53
SECTION 4.15. Limitation on Asset Sales and Sales of Subsidiary Stock.......54
SECTION 4.16. Waiver of Stay, Extension or Usury Laws.......................60
SECTION 4.17. Rule 144A Information Requirement.............................61
SECTION 4.18. Limitation on Lines of Business...............................61
SECTION 4.19. Restriction on Sale and Issuance of Subsidiary Stock..........61
SECTION 4.20. Deposit of Proceeds with Trustee Pending Consummation
of the Merger.................................................61
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01. Limitation on Merger, Sale or Consolidation...................62
SECTION 5.02. Successor Corporation Substituted.............................63
ARTICLE 6
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.............................................63
SECTION 6.02. Acceleration of Maturity Date; Rescission and Annulment.......65
SECTION 6.03. Collection of Indebtedness and Suits for Enforcement by
Trustee.......................................................67
SECTION 6.04. Trustee May File Proofs of Claim..............................67
SECTION 6.05. Trustee May Enforce Claims Without Possession of
Securities....................................................68
SECTION 6.06. Priorities....................................................69
SECTION 6.07. Limitation on Suits...........................................69
SECTION 6.08. Unconditional Right of Holders to Receive Principal,
Premium and Interest..........................................70
ii
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SECTION 6.09. Rights and Remedies Cumulative................................70
SECTION 6.10. Delay or Omission Not Waiver..................................70
SECTION 6.11. Control by Holders............................................71
SECTION 6.12. Waiver of past Default........................................71
SECTION 6.13. Undertaking for Costs.........................................71
SECTION 6.14. Restoration of Rights and Remedies............................72
ARTICLE 7
TRUSTEE
SECTION 7.01. Duties of Trustee.............................................72
SECTION 7.02. Rights of Trustee.............................................73
SECTION 7.03. Individual Rights of Trustee..................................75
SECTION 7.04. Trustee's Disclaimer..........................................75
SECTION 7.05. Notice of Default.............................................75
SECTION 7.06. Reports by Trustee to Holders.................................75
SECTION 7.07. Compensation and Indemnity....................................75
SECTION 7.08. Replacement of Trustee........................................77
SECTION 7.09. Successor Trustee by Merger, Etc..............................78
SECTION 7.10. Eligibility; Disqualification.................................78
SECTION 7.11. Preferential Collection of Claims Against Company.............78
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance....................................................78
SECTION 8.02. Legal Defeasance and Discharge................................78
SECTION 8.03. Covenant Defeasance...........................................79
SECTION 8.04. Conditions to Legal or Covenant Defeasance....................79
SECTION 8.05. Deposited U.S. Legal Tender Equivalents and U.S.
Government Obligations to be Held in Trust; Other
Miscellaneous Provisions......................................81
SECTION 8.06. Repayment to the Company......................................81
SECTION 8.07. Reinstatement.................................................82
ARTICLE 9
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Supplemental Indentures Without Consent of Holders............82
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SECTION 9.02. Amendments, Supplemental Indentures and Waivers with
Consent of Holders.............................................83
SECTION 9.03. Compliance with TIA............................................85
SECTION 9.04. Revocation and Effect of Consents..............................85
SECTION 9.05. Notation on or Exchange of Securities..........................86
SECTION 9.06. Trustee to Sign Amendments, Etc................................86
ARTICLE 10
COLLATERAL ACCOUNT AND RELEASES
SECTION 10.01. Collateral Account............................................86
SECTION 10.02. Eligible Investments..........................................87
SECTION 10.03. Release of Collateral.........................................88
ARTICLE 11
RIGHT TO REQUIRE REPURCHASE
SECTION 11.01. Repurchase of Securities at Option of the Holder Upon a
Change of Control.............................................88
ARTICLE 12
SUBORDINATION
SECTION 12.01. Securities Subordinated to Senior Indebtedness................91
SECTION 12.02. No Payment on Securities in Certain Circumstances.............92
SECTION 12.03. Securities Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorganization....94
SECTION 12.04. Securityholders to Be Subrogated to Rights of Holders of
Senior Indebtedness...........................................95
SECTION 12.05. Obligations of the Company Unconditional......................96
SECTION 12.06. Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice.............................................96
SECTION 12.07. Application by Trustee of Assets Deposited with It............97
SECTION 12.08. Subordination Rights Not Impaired by Acts or Omissions
of the Company or Holders of Senior Indebtedness..............97
SECTION 12.09. Securityholders Authorize Trustee to Effectuate
Subordination of Securities...................................97
SECTION 12.10. Right of Trustee to Hold Senior Indebtedness..................98
SECTION 12.11. Article Not to Prevent Events of Default.....................98
SECTION 12.12. No Fiduciary Duty of Trustee to Holders of Senior
Indebtedness..................................................98
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ARTICLE 13
MISCELLANEOUS
PAGE
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SECTION 13.01. TIA Controls..................................................99
SECTION 13.02. Notices.......................................................99
SECTION 13.03. Communications by Holders with Other Holders.................100
SECTION 13.04. Certificate and Opinion as to Conditions Precedent...........100
SECTION 13.05. Statements Required in Certificate or Opinion................100
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar....................101
SECTION 13.07. Legal Holidays...............................................101
SECTION 13.08. Governing Law................................................101
SECTION 13.09. No Adverse Interpretation of Other Agreements................102
SECTION 13.10. No Recourse Against Others...................................102
SECTION 13.11. Successors...................................................102
SECTION 13.12. Duplicate Originals..........................................102
SECTION 13.13. Severability.................................................102
SECTION 13.14. Table of Contents, Headings, Etc.............................103
SECTION 13.15. Qualification of Indenture...................................103
SECTION 13.16. Registration Rights..........................................103
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INDENTURE, dated as of July 10, 1997 between Price Communications
Wireless, Inc., a Delaware corporation (the "Company") and Bank of Montreal
Trust Company, a New York banking corporation (the "Trustee").
Each party hereto agrees as follows for the benefit of each other party
and for the equal and ratable benefit of the Holders of the Company's 11 3/4%
Series A Senior Subordinated Notes due 2007 and the 11 3/4% Series B Senior
Subordinated Notes due 2007 which may be exchanged for the 11 3/4% Series A
Senior Subordinated Notes due 2007:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acceleration Notice" shall have the meaning specified in Section 6.02.
"Acceptance Amount" shall have the meaning specified in Section 4.15.
"Accumulated Amount" shall have the meaning specified in Section 4.15.
"Acquired Person" shall have the meaning as set forth in the definition of
"Permitted Investment."
"Affiliate" means, with respect to any specified Person, (i) any other
Person directly or indirectly controlling or controlled by, or under direct or
indirect common control with, such specified Person or (ii) any officer,
director, or controlling stockholder of such other Person. For purposes of this
definition, the term "control" means (a) the power to direct the management and
policies of a Person, directly or through one or more intermediaries, whether
through the ownership of voting securities, by contract, or otherwise, or (b)
without limiting the foregoing, the beneficial ownership of 10% or more of the
voting power of the voting common equity of such Person (on a fully diluted
basis) or of warrants or other rights to acquire such equity (whether or not
presently exercisable).
"Agent" means any Registrar, Paying Agent or co-Registrar.
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"Annualized Operating Cash Flow" on any date means, with respect to any
Person, the Operating Cash Flow of such Person for the Reference Period
multiplied by four.
"Annualized Operating Cash Flow Ratio" on any date (the "Transaction
Date") means, with respect to any Person and its Subsidiaries, the ratio of (i)
consolidated Indebtedness of such Person and its Subsidiaries on the Transaction
Date (after giving pro forma effect to the Incurrence of such Indebtedness)
divided by (ii) the aggregate amount of Annualized Operating Cash Flow of such
Person (determined on a pro forma basis after giving effect to all acquisitions
or dispositions of businesses made by such Person and its Subsidiaries from the
beginning of the Reference Period through the Transaction Date as if such
acquisition or disposition had occurred at the beginning of such Reference
Period); provided that for purposes of such computation, in calculating
Annualized Operating Cash Flow and consolidated Indebtedness, (a) the
transaction giving rise to the need to calculate the Annualized Operating Cash
Flow Ratio will be assumed to have occurred (on a pro forma basis) on the first
day of the Reference Period; (b) the incurrence of any Indebtedness during the
Reference Period or subsequent thereto and on or prior to the Transaction Date
(and the application of the proceeds therefrom to the extent used to retire
Indebtedness or to acquire businesses) will be assumed to have occurred (on a
pro forma basis) on the first day of such Reference Period; (c) Consolidated
Interest Expense attributable to any Indebtedness (whether existing or being
incurred) bearing a floating interest rate shall be computed as if the rate in
effect on the Transaction Date had been the applicable rate for the entire
period; and (d) all members of the consolidated group of such Person on the
Transaction Date that were acquired during the Reference Period shall be deemed
to be members of the consolidated group of such Person for the entire Reference
Period. When the foregoing definition is used in connection with the Company and
its Restricted Subsidiaries, references to a Person and its Subsidiaries in the
foregoing definition shall be deemed to refer to the Company and its Restricted
Subsidiaries.
"Asset Sale" shall have the meaning specified in Section 4.15.
"Asset Sale Offer" shall have the meaning specified in Section 4.15.
"Asset Sale Offer Amount" shall have the meaning specified in Section
4.15.
"Asset Sale Offer Price" shall have the meaning specified in Section 4.15.
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"Asset Sale Purchase Date" shall have the meaning specified in Section
4.15.
"Bank" shall have the meaning specified in Section 10.01.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar Federal, state
or foreign law for the relief of debtors.
"Board of Directors" means, with respect to any Person, the Board of
Directors of such Person or any committee of the Board of Directors of such
Person authorized, with respect to any particular matter, to exercise the power
of the Board of Directors of such Person.
"Board Resolution" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"Business Day" means a day that is not a Legal Holiday.
"Capitalized Lease Obligations" means obligations under a lease that are
required to be capitalized for financial reporting purposes in accordance with
GAAP, and the amount of Indebtedness represented by such obligations shall be
the capitalized amount of such obligations, as determined in accordance with
GAAP.
"Capital Stock" means, with respect to any Person, any capital stock of
such Person and shares, interests, participations or other ownership interests
(however designated) of any Person and any rights (other than debt securities
convertible into capital stock), warrants and options to purchase any of the
foregoing, including (without limitation) each class of common stock and
preferred stock of such Person if such Person is a corporation and each general
and limited partnership interest of such Person if such Person is a partnership.
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) in each case maturing within
one year after the date of acquisition, (ii) time deposits and certificates of
deposit and commercial paper issued by the parent corporation of any domestic
commercial bank of recognized standing having capital and surplus in excess of
$500 million and commercial paper issued by others rated at least A-2 or the
equivalent thereof by Standard & Poor's Corporation or at least P-2 or the
equivalent thereof by Moody's Investors Service, Inc. and in each case maturing
within one year after the date of acquisition and (iii) investments in money
market funds substantially
3
<PAGE>
all of whose assets comprise securities of the types described in clauses (i)
and (ii) above.
"Change of Control" means (i) any sale, transfer or other conveyance,
whether direct or indirect, of a majority of the fair market value of the assets
of the Company or Parent, on a consolidated basis, in one transaction or a
series of related transactions, if, immediately after giving effect to such
transaction, any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable), other
than an Excluded Person or Excluded Group, is or becomes the "beneficial owner"
(as such term is used in Rule 13d-3 promulgated pursuant to the Exchange Act),
directly or indirectly, of more than 50% of the total equity of the transferee,
(ii) any "person" or "group" (as such terms are used for purposes of Sections
13(d) and 14(d) of the Exchange Act, whether or not applicable), other than an
Excluded Person or Excluded Group, is or becomes the "beneficial owner" (as such
term is used in Rule 13d-3 promulgated pursuant to the Exchange Act), directly
or indirectly, of more than 50% of the total equity in the aggregate of all
classes of Capital Stock of the Company or Parent then outstanding normally
entitled to vote in elections of directors, or (iii) during any period of 12
consecutive months after the Issue Date, individuals who at the beginning of any
such 12-month period constituted the Board of Directors of the Company or Parent
(together with any new directors whose election by such Board or whose
nomination for election by the shareholders of the Company or Parent was
approved by a vote of a majority of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company or Parent then in office.
"Change of Control Offer" shall have the meaning specified in Section
11.01.
"Change of Control Offer Period" shall have the meaning specified in
Section 11.01.
"Change of Control Purchase Date" shall have the meaning specified in
Section 11.01.
"Change of Control Purchase Price" shall have the meaning specified in
Section 11.01.
"Change of Control Put Date" shall have the meaning specified in
Section 11.01.
4
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"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all cash and Treasury Bills, and any proceeds thereof,
which are from time to time held in the Collateral Account.
"Collateral Account" means the trust account created and maintained
pursuant to Section 10.01.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to the Indenture, and thereafter means such
successor.
"Company Systems" shall have the meaning specified in Section 4.15.
"Consolidated Interest Expense" of any Person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of (a) interest expensed or capitalized, paid, accrued, or scheduled
to be paid or accrued (including, in accordance with the following sentence,
interest attributable to the Capitalized Lease Obligations) of such Person and
its consolidated Subsidiaries during such period, including (i) original issue
discount and non-cash interest payments or accruals on any Indebtedness, (ii)
the interest portion of all deferred payment obligations, and (iii) all
commissions, discounts and other fees and charges owed with respect to bankers'
acceptances and letters of credit financings and currency and Interest Swap and
Hedging Obligations, in each case to the extent attributable to such period, and
(b) the amount of dividends accrued or payable by such Person or any of its
consolidated Subsidiaries in respect of Preferred Stock (other than by
Restricted Subsidiaries of such Person to such Person or such Person's Wholly
Owned Subsidiaries). For purposes of this definition, (x) interest on a
Capitalized Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by the Company to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP and (y) interest expense
attributable to any Indebtedness represented by the guaranty by such Person or a
Subsidiary of such Person of an obligation of another Person shall be deemed to
be the interest expense attributable to the Indebtedness guaranteed. When the
foregoing definition is used in connection with the Company and its Restricted
Subsidiaries, references to a Person and its Subsidiaries in the foregoing
definition shall be deemed to refer to the Company and its Restricted
Subsidiaries.
"Consolidated Net Income" of any Person for any period means the net
income (or loss) of such Person and its consolidated Subsidiaries for such
period, determined (on a consolidated basis) in accordance with GAAP, adjusted
to exclude (only to the extent included in computing such net income (or loss)
and
5
<PAGE>
without duplication) (i) all extraordinary gains and losses and gains and losses
that are nonrecurring (including as a result of Asset Sales outside the ordinary
course of business), (ii) the net income, if positive, of any Person, that is
not a Subsidiary in which such Person or any of its Subsidiaries has an
interest, except to the extent of the amount of dividends or distributions
actually paid to such Person or a Subsidiary of such Person that both (x) are
actually paid in cash to such Person or a Subsidiary of such Person during such
period and (y) when taken together with all other dividends and distributions
paid during such period in cash to such Person or a Subsidiary of such Person,
are not in excess of such Person's pro rata share of such other Person's
aggregate net income earned during such period, (iii), except as provided in the
definition of "Annualized Operating Cash Flow Ratio," the net income (or loss)
of any Subsidiary acquired in a pooling of interests transaction for any period
prior to the date of such acquisition and (iv) the net income, if positive, of
any Subsidiary of such Person to the extent that the declaration or payment of
dividends or similar distributions is not at the time permitted by operation of
the terms of its charter or any agreement or instrument applicable to such
Subsidiary. When the foregoing definition is used in connection with the Company
and its Restricted Subsidiaries, references to a Person and its Subsidiaries in
the foregoing definition shall be deemed to refer to the Company and its
Restricted Subsidiaries.
"Contiguous" means, when used in connection with any existing RSA or MSA
of the Company or its Subsidiaries, a wireless cellular communications system,
any part of which exists within 50 miles of such RSA or MSA.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered,
which address as of the date hereof is located at 77 Water Street, New York, New
York 10005.
"Covenant Defeasance" shall have the meaning specified in Section 8.03.
"Credit Agreement" means a credit agreement entered into by the Company
and a syndicate of banks, financial institutions and other "accredited
investors" (as defined in Regulation D under the Securities Act); led by
Donaldson, Lufkin & Jenrette Securities Corporation, as arranger, and DLJ
Capital Funding, as syndication agent, or any other senior loan facility
syndicated by DLJ Capital Funding in lieu thereof, together with the related
documents thereto (including, without limitation, any guarantee agreements and
security documents), in each case as such agreements may be amended (including
any amendment and restatement thereof), supplemented or otherwise modified from
time to time (including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring or adding Restricted Subsidiaries of the
Issuer
6
<PAGE>
as additional borrowers or guarantors thereunder) and all or any portion of the
Indebtedness under such agreement or any successor or replacement agreement
whether by the same or any other agent, lender or group of lenders. There can
only be one such credit facility or loan agreement designated to be the "Credit
Agreement" at any one time. Any Indebtedness Incurred pursuant to the second
paragraph of Section 4.12 may be Incurred pursuant to the terms of the Credit
Agreement, provided that such Indebtedness so Incurred shall be deemed to have
been Incurred pursuant to the Credit Agreement for all purposes of the Indenture
other than with respect to Section 4.12 and clause (3) of the first paragraph of
Section 4.15.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect against
fluctuation in currency values.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event or condition that is, or after notice or passage
of time or both would be, an Event of Default.
"Defaulted Interest" shall have the meaning specified in Section 2.12.
"Definitive Securities" means Securities that are in the form of Security
attached hereto as Exhibit A that do not include the information called for by
footnotes 1 and 3 thereof.
"Depository" means, with respect to the Securities issuable or issued in
whole or in part in global form, the person specified in Section 2.03 as the
Depository with respect to the Securities, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depository" shall mean or include such successor.
"Designated Senior Indebtedness" means, so long as it is in effect, the
Credit Agreement and, thereafter, any Senior Indebtedness designated by the
Company to be "Designated Senior Indebtedness."
"Disqualified Capital Stock" means, with respect to any Person, Capital
Stock of such Person that, by its terms or by the terms of any security into
which it is convertible, exercisable or exchangeable, is, or upon the happening
of any event or the passage of time would be, required to be redeemed or
repurchased (including at the option of the holder thereof) by such Person or
any of its Subsidiaries, in whole or in part, on or prior to the Stated Maturity
of the
7
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Securities; provided that Capital Stock will not be deemed to be Disqualified
Capital Stock if it may only be so redeemed or repurchased solely in
consideration of Qualified Capital Stock of the Company or Parent.
"Eligible Investments" mean United States Treasury Bills maturing no later
than the Business Day preceding December 31, 1997.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"Event of Default" shall have the meaning specified in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the SEC thereunder.
"Exchanged Capital Stock" shall have the meaning specified in Section
4.15.
"Exchange Securities" means the 11 3/4% Series B Senior Subordinated Notes
due 2007 to be issued pursuant to this Indenture in connection with the offer to
exchange Exchange Securities for the Initial Securities that may be made by the
Company pursuant to the Registration Rights Agreement.
"Excluded Group" means a "group" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act) that includes one or more Excluded Persons;
provided that the voting power of the Capital Stock of the Company or Parent
"beneficially owned" (as such term is used in Rule 13d-3 promulgated under the
Exchange Act) by such Excluded Persons (without attribution to such Excluded
Persons of the ownership by other members of the "group") represents a majority
of the voting power of the Capital Stock "beneficially owned" (as such term is
used in Rule 13d-3 promulgated under the Exchange Act) by such "group."
"Excluded Person" means members of the Price Family who owned Capital
Stock of Parent on the Issue Date and any Affiliate of any of the foregoing that
is wholly owned by one of the foregoing.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries in existence and outstanding on the Issue Date.
"Final Put Date" shall have the meaning specified in Section 4.15.
8
<PAGE>
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board ("FASB") or, if FASB ceases to exist,
any successor thereto; provided, however, that for purposes of determining
compliance with covenants in the Indenture, "GAAP" means such generally accepted
accounting principles as in effect as of the Issue Date.
"Global Security" means a Security that contains the paragraph referred to
in footnote 1 and the additional schedule referred to in footnote 3 to the form
of Security attached hereto as Exhibit A.
"Holder" or "Securityholder" means a Person in whose name a Security is
registered. The Holder of a Security will be treated as the owner of such
Security for all purposes.
"Holdings" means Price Communications Cellular Holdings, Inc., the direct
parent of the Company, and a subsidiary of Price Communications Corporation.
"Holdings Securities" means preferred stock or debt securities issued by
Holdings prior to the Merger.
"Incur" shall have the meaning specified in Section 4.12.
"Indebtedness" of any Person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of such Person, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), (ii) evidenced
by bonds, notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any property or services,
except (other than accounts payable or other obligations to trade creditors
which have remained unpaid for greater than 90 days past their original due date
or to financial institutions, which obligations are not being contested in good
faith and for which appropriate reserves have not been established) those
incurred in the ordinary course of its business that would constitute ordinarily
a trade payable to trade creditors, (iv) evidenced by bankers' acceptances or
similar instruments issued or accepted by banks, (v) for the payment of money
relating to a Capitalized Lease Obligation, or (vi) evidenced by a letter of
credit or a reimbursement obligation of such Person with respect to any letter
of credit; (b) all obligations of such Person under Interest Swap and Hedging
Obligations; (c) all liabilities of others of the kind described in the
preceding clauses (a) or (b) that such Person has guaranteed or that is
otherwise its legal liability or which are secured by any assets or
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property of such Person and all obligations to purchase, redeem or acquire any
Capital Stock; (d) all Disqualified Capital Stock of such Person and all
Preferred Stock of such Person's Subsidiaries; and (e) any and all deferrals,
renewals, extensions, refinancing and refundings (whether direct or indirect)
of, or amendments, modifications or supplements to, any liability of the kind
described in any of the preceding clauses (a), (b), (c), or (d) or this clause
(e), whether or not between or among the same parties; provided that the
outstanding principal amount at any date of any Indebtedness issued with
original issue discount is the face amount of such Indebtedness less the
remaining unamortized portion of the original issue discount of such
Indebtedness at such date.
"Indenture" means this Indenture, as amended or supplemented from time to
time in accordance with the terms hereof.
"Initial Purchasers" means Donaldson, Lufkin & Jenrette Securities
Corporation, Wasserstein Perella Securities, Inc., NatWest Capital Markets
Limited, Lehman Brothers Inc. and PaineWebber Incorporated.
"Initial Securities" means the 11 3/4% Series A Senior Subordinated Notes
due 2007, as supplemented from time to time in accordance with the terms hereof,
issued pursuant to this Indenture.
"Interest Payment Date" means the stated due date of an installment of
interest on the Securities.
"Interest Swap and Hedging Obligations" means any obligations of any
Person pursuant to any interest rate swaps, caps, collars and similar
arrangements providing protection against fluctuations in interest rates. For
purposes of this Agreement, the amount of such obligations shall be the amount
determined in respect thereof as of the end of the then most recently ended
fiscal quarter of such Person, based on the assumption that such obligation had
terminated at the end of such fiscal quarter, and in making such determination,
if any agreement relating to such obligation provides for the netting of amounts
payable by and to such Person thereunder or if any such agreement provides for
the simultaneous payment of amounts by and to such Person, then in each such
case, the amount of such obligations shall be the net amount so determined, plus
any premium due upon default by such Person.
"Investment" by any Person in any other Person means (without duplication)
(a) the acquisition (whether by purchase, merger, consolidation or otherwise) by
such Person (whether for cash, property, services, securities or otherwise) of
capital stock, bonds, notes, debentures, partnership or other ownership
interests or other securities of such other Person or any agreement to
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make any such acquisition; (b) the making by such Person of any deposit with, or
advance, loan or other extension of credit to, such other Person (including the
purchase of property from another Person subject to an understanding or
agreement, contingent or otherwise, to resell such property to such other
Person) or any commitment to make any such advance, loan or extension; (c) the
entering into by such Person of any guarantee of, or other contingent obligation
with respect to, Indebtedness or other liability of such other Person; (d) the
making of any capital contribution by such Person to such other Person; and (e)
the designation by the Board of Directors of the Company of any Person to be an
Unrestricted Subsidiary. For purposes of Section 4.04, (i) "Investment" shall
include and be valued at the fair market value of the net assets of any
Restricted Subsidiary at the time that such Restricted Subsidiary is designated
an Unrestricted Subsidiary and shall exclude the fair market value of the net
assets of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary and (ii) the amount of any
Investment shall be the fair market value of such Investment plus the fair
market value of all additional Investments by the Company or any of its
Restricted Subsidiaries at the time any such Investment is made; provided that,
for purposes of this sentence, the fair market value of net assets in excess of
$5,000,000 shall be as determined by an independent appraiser of national
reputation.
"Issue Date" means the time and date of the first issuance of the
Securities under the Indenture.
"Junior Indebtedness" means Indebtedness of the Company that (i) requires
no payment of principal prior to or on the date on which all principal of and
interest on the Securities is paid in full and (ii) is subordinate and junior in
right of payment to the Securities in all respects.
"Junior Securities" of any Person means securities (including Capital
Stock but excluding Disqualified Capital Stock) issued by such Person to a
Holder on account of the Securities that (i) has a Weighted Average Life and
maturity or mandatory redemption obligation, if any, longer than, or occurring
after the final maturity date of, all Designated Senior Indebtedness of such
Person outstanding on the date of issuance of such Junior Securities, (ii) by
their terms or by law are subordinated to Designated Senior Indebtedness of such
Person outstanding on the date of issuance of such Junior Securities at least to
the same extent as the Securities and (iii) are not secured by any assets or
property of the Company or any of its Subsidiaries. As used herein, "Designated
Senior Indebtedness of such Person outstanding on the date of issuance of such
Junior Securities" shall include securities issued in connection with a
reorganization pursuant to the bankruptcy laws of any jurisdiction to Persons
which held "Designated Senior Indebtedness" in such reorganization proceeding.
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"Legal Defeasance" shall have the meaning specified in Section 8.02.
"Legal Holiday" shall have the meaning specified in Section 13.07.
"Lien" means any mortgage, lien, pledge, charge, security interest, or
other encumbrance of any kind, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement and any lease deemed to constitute a security interest and
any option or other agreement to give any security interest).
"Maturity Date" means, when used with respect to any Security, the date
specified on such Security as the fixed date on which the final installment of
principal of such Security is due and payable (in the absence of any
acceleration thereof pursuant to the provisions of the Indenture regarding
acceleration of Indebtedness or any Change of Control Offer or Asset Sale
Offer).
"Merger" means the merger of the Company with and into Palmer pursuant to
the Merger Agreement.
"Merger Agreement" means the agreement and plan of merger dated as of May
23, 1997, among PCC, the Company and Palmer.
"Merger Date" means the time and date of the consummation of the Merger.
"MSA" shall have the meaning specified in the definition of "Pops."
"Minimum Accumulation Date" shall have the meaning specified in Section
4.15.
"Net Offering Proceeds" shall have the meaning specified in Section 4.20.
"Net Cash Proceeds" means the aggregate amount of cash and Cash
Equivalents received by the Company and its Restricted Subsidiaries in respect
of an Asset Sale (including upon the conversion to cash and Cash Equivalents of
(A) any note or installment receivable at any time, or (B) any other property as
and when any cash and Cash Equivalents are received in respect of any property
received in an Asset Sale but only to the extent such cash and Cash Equivalents
are received within one year after such Asset Sale), less the sum of (i) all
reasonable out-of-pocket fees, commissions and other expenses incurred in
connection with such Asset Sale, including the amount (estimated in good faith
by the Board of Directors of the Company) of income, franchise, sales and other
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applicable taxes required to be paid by the Company or any Restricted Subsidiary
of the Company in connection with such Asset Sale and (ii) the aggregate amount
of cash so received which is used to retire any existing Senior Indebtedness of
the Company or Indebtedness of its Restricted Subsidiaries, as the case may be,
which is required to be repaid in connection with such Asset Sale or is secured
by a Lien on the property or assets of the Company or any of its Restricted
Subsidiaries, as the case may be.
"Net Pops" of any Person with respect to any cellular telephone system
means the Pops of the MSA or RSA served by such system multiplied by the direct
and/or indirect percentage interest of such Person in the entity licensed or
designated to receive an authorization by the Federal Communications Commission
to construct or operate a system in that MSA or RSA.
"Net Proceeds" means the aggregate net proceeds (including the fair market
value of non-cash proceeds constituting equipment or other assets of a type
generally used in a Related Business an amount reasonably determined by the
Board of Directors of the Company for amounts under $5,000,000 and by a
financial advisor or appraiser of national reputation for equal or greater
amounts) received by a Person from the sale of Qualified Capital Stock (other
than to a Subsidiary of such Person) after payment of out-of-pocket expenses,
commissions and discounts incurred in connection therewith.
"Non-Recourse Restricted Subsidiary" shall have the meaning specified in
the definition of "Permitted Acquisition Indebtedness."
"Notice of Default" shall have the meaning specified in Section 6.01(c).
"Obligation" means any principal, premium, interest (including interest
accruing subsequent to a bankruptcy or other similar proceeding whether or not
such interest is an allowed claim enforceable against the Company in a
bankruptcy case under Federal bankruptcy law), penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable pursuant
to the terms of the documentation governing any Indebtedness.
"Offering Memorandum" means that certain Offering Memorandum of the
Company, dated July 2, 1997 relating to the original issuance and sale of the
Initial Securities to the Initial Purchasers.
"Officer" means, with respect to the Company, the Chief Executive Officer,
the President, any Vice President, the Chief Financial Officer, the Treasurer,
the Controller, or the Secretary of the Company.
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"Officers' Certificate" means, with respect to the Company or the Parent,
a certificate signed by two Officers or by an Officer and an Assistant Secretary
of the Company or the Parent, respectively, and otherwise complying with the
requirements of Sections 13.04 and 13.05.
"Operating Cash Flow" of any Person means (a) with respect to any period,
the Consolidated Net Income of such Person for such period, plus (b) the sum,
without duplication (and only to the extent such amounts are deducted from net
revenues in determining such Consolidated Net Income), of (i) the provisions for
income taxes for such period for such Person and its consolidated Subsidiaries,
(ii) depreciation, amortization and other non-cash charges of such Person and
its consolidated Subsidiaries and (iii) Consolidated Interest Expense of such
Person for such period, determined, in each case, on a consolidated basis for
such Person and its consolidated Subsidiaries in accordance with GAAP, less (c)
the amount of all cash payments made during such period by such Person and its
Subsidiaries to the extent such payments relate to non-cash charges that were
added back in determining Operating Cash Flow for such period or for any prior
period. When the foregoing definition is used in connection with the Company and
its Restricted Subsidiaries, references to a Person and its Subsidiaries in the
foregoing definition shall be deemed to refer to the Company and its Restricted
Subsidiaries.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee complying with the requirements of Sections
13.04 and 13.05.
"Palmer" means Palmer Wireless, Inc., a Delaware corporation.
"Parent" shall mean PCC or any directly or indirectly wholly owned
subsidiary of PCC that directly or indirectly wholly owns the Company until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Paying Agent" shall have the meaning specified in Section 2.03.
"Payment Blockage Period" shall have the meaning specified in Section
12.02.
"Payment Default" shall have the meaning specified in Section 12.02.
"Payment Notice" shall have the meaning specified in Section 12.02.
"PCC" means Price Communications Corporation, a New York corporation.
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"PCC Equity Contribution" means the $128.3 million equity contribution
from PCC or a Subsidiary of PCC which is a Parent of the Company in the form of
cash or common stock of Palmer to the Company in accordance with the terms
thereof described in the Offering Memorandum.
"Permitted Acquisition Indebtedness" means, with respect to any Person,
Indebtedness Incurred in connection with the acquisition of property, businesses
or assets which, or Capital Stock of a Person all or substantially all of whose
assets, are of a type generally used in a Related Business; provided that, in
the case of the Company or its Restricted Subsidiaries, as applicable, (x)(i)
the Company's Annualized Operating Cash Flow Ratio, after giving effect to such
acquisition and such Incurrence on a pro forma basis, is no greater than such
ratio prior to giving pro forma effect to such acquisition and such Incurrence,
(ii) the Company's consolidated Senior Indebtedness, divided by the Net Pops of
the Company and its Restricted Subsidiaries, in each case giving pro forma
effect to the acquisition and such Incurrence, does not exceed $120, (iii) the
Company's consolidated Indebtedness divided by the Net Pops of the Company and
its Restricted Subsidiaries does not exceed $160 as a result of the acquisition
and such Incurrence and (iv) after giving effect to such acquisition and such
Incurrence the acquired property, businesses or assets or such Capital Stock is
owned directly by the Company or a Wholly Owned Restricted Subsidiary of the
Company, or (y)(i) under the terms of such Indebtedness and pursuant to
applicable law, no recourse could be had for the payment of principal, interest
or premium with respect to such Indebtedness or for any claim based thereon
against the Company or any Person that constituted a Restricted Subsidiary
immediately prior to the consummation of such acquisition or any of their
property or assets, (ii) the obligor of such Indebtedness shall have,
immediately after giving effect to such acquisition and such Incurrence on a pro
forma basis, a ratio of Annualized Operating Cash Flow as of the date of the
acquisition to the product of Consolidated Interest Expense for the Reference
Period multiplied by four (but excluding from Consolidated Interest Expense all
amounts that are not required to be paid in cash on a current basis) of at least
1 to 1 and (iii) immediately subsequent to the Incurrence of such Indebtedness,
the obligor thereof shall be a Restricted Subsidiary and shall have been
designated by the Company (as evidenced by an Officers' Certificate delivered
promptly to the Trustee) to be a "Non-Recourse Restricted Subsidiary."
"Permitted Investment" means (i) Investments in Cash Equivalents; (ii)
Investments in the Company or a Restricted Subsidiary (other than a Non-Recourse
Restricted Subsidiary); (iii) Investments in a Person substantially all of whose
assets are of a type generally used in a Related Business (an "Acquired Person")
if, as a result of such Investments, (A) the Acquired Person immediately
thereupon becomes a Restricted Subsidiary (other than a Non-Recourse Restricted
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Subsidiary) or (B) the Acquired Person immediately thereupon either (1) is
merged or consolidated with or into the Company or any of its Restricted
Subsidiaries (other than a Non-Recourse Restricted Subsidiary) and the surviving
Person is the Company or a Restricted Subsidiary (other than a Non-Recourse
Restricted Subsidiary) or (2) transfers or conveys all or substantially all of
its assets to, or is liquidated into, the Company or any of its Restricted
Subsidiaries (other than a Non-Recourse Restricted Subsidiary); (iv) Investments
in accounts and notes receivable acquired in the ordinary course of business;
(v) any securities received in connection with an Asset Sale (other than those
of a Non-Recourse Restricted Subsidiary) and any Investment with the Net Cash
Proceeds from any Asset Sale in Capital Stock of a Person, all or substantially
all of whose assets are of a type used in a Related Business, that complies with
Section 4.15; (vi) any guarantee issued by a Restricted Subsidiary in respect of
Senior Indebtedness Incurred in compliance with the Indenture; (vii) advances
and prepayments for asset purchases in the ordinary course of business in a
Related Business of the Company or a Restricted Subsidiary; (viii) Investments
in Non-Recourse Restricted Subsidiaries with the proceeds of contributions
irrevocably and unconditionally received without restriction by the Company from
Parent; and (ix) customary loans or advances made in the ordinary course of
business to officers, directors or employees of the Company or any of its
Restricted Subsidiaries for travel, entertainment, and moving and other
relocation expenses.
"Permitted Lien" means (a) Liens existing on the Issue Date; (b) Liens
imposed by governmental authorities for taxes, assessments or other charges not
yet subject to penalty or which are being contested in good faith and by
appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the Company in accordance with GAAP; (c) statutory
liens of carriers, warehousemen, mechanics, materialmen, landlords, repairmen or
other like Liens arising by operation of law in the ordinary course of business,
provided that (i) the underlying obligations are not overdue for a period of
more than 30 days, and (ii) such Liens are being contested in good faith and by
appropriate proceedings and adequate reserves with respect thereto are
maintained on the books of the Company in accordance with GAAP; (d) Liens
securing the performance of bids, trade contracts (other than borrowed money),
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of business;
(e) easements, rights-of-way, zoning, similar restrictions and other similar
encumbrances or title defects which, singly or in the aggregate, do not in any
case materially detract from the value of the property, subject thereto (as such
property is used by the Company or any of its Restricted Subsidiaries) or
interfere with the ordinary conduct of the business of the Company or any of its
Restricted Subsidiaries; (f) Liens arising by operation of law in connection
with judgments, only to the extent, for an amount and for a period not resulting
in an Event of
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Default with respect thereto; (g) pledges or deposits made in the ordinary
course of business in connection with worker's compensation, unemployment
insurance and other types of social security legislation; (h) Liens in favor of
the Trustee arising under the Indenture; (i) Liens securing Permitted
Acquisition Indebtedness, which either (A) were not incurred or issued in
anticipation of such acquisition or (B) secure Permitted Acquisition
Indebtedness meeting the requirements set forth in clause (y) of the definition
thereof; (j) Liens securing Senior Indebtedness that was incurred in accordance
with Section 4.12; (k) Liens securing Indebtedness of a Person existing at the
time such Person becomes a Restricted Subsidiary or is merged with or into the
Company or a Restricted Subsidiary, provided that such Liens were in existence
prior to the date of such acquisition, merger or consolidation, were not
incurred in anticipation thereof, and do not extend to any other assets; (l)
Liens arising from Purchase Money Indebtedness permitted under the Indenture;
(m) Liens securing Refinancing Indebtedness Incurred to refinance any
Indebtedness that was previously so secured in a manner no more adverse to the
Holders of the Securities than the terms of the Liens securing such refinanced
Indebtedness; and (n) Liens in favor of the Company or a Wholly Owned Restricted
Subsidiary.
"Person" means any corporation, individual, joint stock company, joint
venture, partnership, unincorporated association, governmental regulatory
entity, country, state or political subdivision thereof, trust, municipality or
other entity.
"Pops" means the estimate of the population of a Metropolitan Statistical
Area ("MSA") or Rural Service Area ("RSA") as derived from the most recent
Donnelly Market Service or if such statistics are no longer printed in the
Donnelly Market Service or the Donnelly Market Service is no longer published,
the most recent Rand McNally Commercial Atlas or if such statistics are no
longer printed in the Rand McNally Commercial Atlas or the Rand McNally
Commercial Atlas is no longer published, such other nationally recognized source
of such information.
"Preferred Stock" means Capital Stock, other than common stock of an
issuer having no preferences or privileges as to the payment of dividends or the
distribution of the issuer's assets over any other class of such issuer's
Capital Stock.
"Price Family" means Robert Price, an individual, and members of his
family who, as of the Issue Date, beneficially owned Capital Stock of Parent.
"principal" of any Indebtedness means the principal of such Indebtedness
plus, without duplication, applicable premium, if any, on such Indebtedness.
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"property" means any right or interest in or to property or assets of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Purchase Agreement" means that certain Purchase Agreement dated July 3,
1997 by and among the Company, PCC and the Initial Purchasers, as such agreement
may be amended, modified or supplemented from time to time in accordance with
the terms thereof.
"Purchase Money Indebtedness" means Indebtedness of the Company or its
Restricted Subsidiaries Incurred in connection with the purchase of property or
assets for the business of the Company or its Restricted Subsidiaries, provided
that the recourse of the lenders with respect to such Indebtedness is limited
solely to the property or assets so purchased without further recourse to either
the Company or any of its Restricted Subsidiaries.
"Qualified Capital Stock" means any Capital Stock of a Person that is not
Disqualified Capital Stock.
"Record Date" means a Record Date specified in the Securities whether or
not such Record Date is a Business Day.
"Redemption Date," when used with respect to any Security to be redeemed,
means the date fixed for such redemption (including the Special Redemption Date)
pursuant to Article 3 of this Indenture and Paragraph 5 in the form of Security.
"Redemption Price," when used with respect to any Security to be redeemed,
means the redemption price for such redemption pursuant to Article 3 of this
Indenture and Paragraph 5 in the form of Security, which shall include, without
duplication, in each case, any accrued and unpaid interest to the Redemption
Date.
"Reference Period" with regard to any Person means the last full fiscal
quarter of such Person for which financial information (which the Company shall
use its best efforts to compile in a timely manner) in respect thereof is
available ended on or immediately preceding any date upon which any
determination is to be made pursuant to the terms of the Securities or the
Indenture.
"Refinancing Indebtedness" means Indebtedness or Disqualified Capital
Stock (a) issued in exchange for, or the proceeds from the issuance and sale of
which are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or (b)
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constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
Indebtedness or Disqualified Capital Stock in a principal amount or, in the case
of Disqualified Capital Stock, liquidation preference (or, if such Indebtedness
or Disqualified Capital Stock does not require cash payments prior to maturity
or is otherwise issued at a discount, the original issue price of such
Indebtedness or Disqualified Capital Stock), not to exceed the sum of (x) the
lesser of (i) the principal amount or, in the case of Disqualified Capital
Stock, liquidation preference, of the Indebtedness or Disqualified Capital Stock
so Refinanced and (ii) if such Indebtedness being Refinanced was issued with an
original issue discount, the accreted value thereof (as determined in accordance
with GAAP) at the time of such Refinancing, (y) the amount of any premium
required to be paid in connection with such refinancing pursuant to the terms of
such Indebtedness and (z) all other customary fees and expenses of the Company
or such Restricted Subsidiary reasonably incurred in connection with such
refinancing; provided that (A) Refinancing Indebtedness issued by any Restricted
Subsidiary of the Company shall only be used to Refinance outstanding
Indebtedness or Disqualified Capital Stock of such Restricted Subsidiary, (B)
Refinancing Indebtedness shall (x) not have a Weighted Average Life shorter than
the Indebtedness or Disqualified Capital Stock to be so refinanced at the time
of such Refinancing and (y) in all respects, be no less subordinated or junior,
if applicable, to the rights of Holders of the Securities than was the
Indebtedness or Disqualified Capital Stock to be refinanced and (C) such
Refinancing Indebtedness shall have no installments of principal (or redemption
payment) scheduled to come due earlier than the scheduled maturity of any
installment of principal (or redemption payment) of the Indebtedness or
Disqualified Capital Stock to be so refinanced which was scheduled to come due
prior to the Stated Maturity of the Securities.
"Registrar" shall have the meaning specified in Section 2.03.
"Registration Rights Agreement" means the Registration Rights Agreement
dated July 10, 1997 by and among the Initial Purchasers and the Company, as such
agreement may be amended, modified or supplemented from time to time in
accordance with the terms thereof.
"Related Business" means any business directly related to the ownership,
development, operation, and acquisition of wireless cellular communications
systems.
"Related Person" means, with respect to any Person, (i) any Affiliate of
such Person or any spouse, immediate family member, or other relative who has
the same principal residence of any Affiliate of such Person and (ii) any trust
in which any Person described in clause (i) above has a beneficial interest.
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"Restricted Partnership" shall have the meaning specified in Section 4.19.
"Restricted Payment" means, with respect to any Person, (i) any dividend
or other distribution on shares of Capital Stock of such Person, its Parent, or
any Subsidiary of such Person by such Person or any Subsidiary of such Person,
(ii) any payment on account of the purchase, redemption or other acquisition or
retirement for value, or any payment in respect of any amendment (in
anticipation of or in connection with any such retirement, acquisition or
defeasance) in whole or in part, of any shares of Capital Stock of such Person,
its Parent or any Subsidiary of such Person held by Persons other than such
Person or any of its Restricted Subsidiaries, (iii) any defeasance, redemption,
repurchase or other acquisition or retirement for value, or any payment in
respect of any amendment (in anticipation of or in connection with any such
retirement, acquisition or defeasance) in whole or in part, of any Indebtedness
of the Company (other than the scheduled repayment thereof at maturity and any
mandatory redemption or mandatory repurchase thereof pursuant to the terms
thereof) by such Person or a Subsidiary of such Person that is subordinate in
right of payment to, or ranks pari passu (other than the Securities) with, the
Securities (other than in exchange for Refinancing Indebtedness permitted to be
Incurred under the Indenture and except for any such defeasance, redemption,
repurchase, other acquisition or payment in respect of Indebtedness held by any
Restricted Subsidiary) and (iv) any Investment (other than a Permitted
Investment); provided, however, that the term "Restricted Payment" does not
include (i) any dividend, distribution or other payment on shares of Capital
Stock of the Company or any Restricted Subsidiary solely in shares of Qualified
Capital Stock, (ii) any dividend, distribution or other payment to the Company,
or any dividend to any of its Restricted Subsidiaries, by any of its
Subsidiaries, (iii) the purchase, redemption or other acquisition or retirement
for value of shares of Capital Stock of any Restricted Subsidiary (other than
Non-Recourse Restricted Subsidiaries) held by Persons other than the Company or
any of its Restricted Subsidiaries, (iv) payments to satisfy obligations to pay
statutory appraisal rights resulting from the Merger and any settlement in
respect thereof to security holders of Palmer, (v) fees and expenses incurred in
connection with the Merger and (vi) cash payments in respect of purchases of
options and rights for shares of Palmer common stock issued pursuant to Palmer's
1995 Stock Option Plan, 1995 Directors' Stock Option Plan, 1995 Employee Stock
Purchase Plan and 1995 Non-Employee Director Stock Purchase Plan.
"Restricted Security" means a Security, unless or until it has been (i)
disposed of in a transaction effectively registered under the Securities Act or
(ii) distributed to the public pursuant to Rule 144 (or any similar provision
then in force) under the Securities Act; provided that in no case shall an
Exchange
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Security issued in accordance with this Indenture and the terms and provisions
of the Registration Rights Agreement be a Restricted Security.
"Restricted Subsidiary" means any Subsidiary of the Company which at the
time of determination is not an Unrestricted Subsidiary. The Board of Directors
of the Company may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary only if, immediately before and after giving effect to such
designation, there would exist no Default or Event of Default and the Company
could incur at least $1.00 of Indebtedness pursuant to the Annualized Operating
Cash Flow Ratio test of Section 4.12, on a pro forma basis, taking into account
such designation.
"RSA" shall have the meaning specified in the definition of "Pops."
"SEC" means the Securities and Exchange Commission.
"Securities" means, collectively, the Initial Securities and, when and if
issued as provided in the Registration Rights Agreement, the Exchange
Securities.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Securities Custodian" means the Trustee, as custodian for the Depositary
with respect to the Securities in global form, or any successor entity thereto.
"Senior Indebtedness" means all Indebtedness of the Company (including,
with respect to the Credit Agreement, all Obligations) including interest
thereon, whether outstanding on the Issue Date or thereafter issued, unless the
instrument under which such Indebtedness is incurred expressly provides that it
is on a parity with or subordinated in right of payment to the Securities.
Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness
shall not include (a) Indebtedness that is expressly subordinated or junior in
right of payment to any Indebtedness of the Company, (b) Indebtedness
represented by Disqualified Capital Stock, (c) any liability for federal, state,
local or other taxes owed or owing by the Company, (d) Indebtedness of the
Company to any Subsidiary of the Company or any Affiliate of the Company (other
than Purchase Money Indebtedness constituting at least 75% but not more than
100% of the cost of wireless cellular communication system equipment and other
related fixed assets, Incurred in compliance with Section 4.12), (e) trade
payables and (f) Indebtedness to the extent incurred in violation of the
Indenture.
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"Significant Restricted Subsidiary" means one or more Restricted
Subsidiaries having an aggregate net book value of assets in excess of 5% of the
net book value of the assets of the Company and its Restricted Subsidiaries on a
consolidated basis.
"Special Record Date" for payment of any Defaulted Interest means a date
fixed by the Trustee pursuant to Section 2.12.
"Special Redemption" shall have the meaning specified in Section 3.01.
"Special Redemption Amount" shall have the meaning specified in Section
4.20.
"Special Redemption Date" shall have the meaning specified in Section
3.01.
"Special Rights" shall have the meaning specified in Section 4.19.
"Stated Maturity" means the date fixed for the payment of any principal or
premium pursuant to the Indenture and the Securities, including the Maturity
Date, upon redemption, acceleration, Asset Sale Offer, Change of Control Offer
or otherwise.
"Subsidiary" with respect to any Person, means (i) a corporation at least
fifty percent of whose Capital Stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by such Person and one or more Subsidiaries of such Person or by
one or more Subsidiaries of such Person, or (ii) a partnership in which such
Person or a Subsidiary of such Person is, at the time, a general partner of such
partnership, or (iii) any Person in which such Person, one or more Subsidiaries
of such Person, or such Person and one or more Subsidiaries of such Person,
directly or indirectly, at the date of determination thereof has (x) at least a
fifty percent ownership interest or (y) the power to elect or direct the
election of the directors or other governing body of such Person.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code ss.ss.
77aaa-77bbbb) as in effect on the date of the execution of this Indenture.
"Transfer Restricted Securities" means Securities that bear or are
required to bear the legend set forth in Section 2.06 hereof.
"Treasury Bills" means (a) book-entry United States Treasury bills (i)
held in a Participant's Securities Account (as defined in 31 C.F.R. ss.357.2)
with
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the Federal Reserve Bank of New York pursuant to the Treasury/Reserve Automated
Debt Entry System and (ii) maturing no later than the Business Day preceding
December 31, 1997 and (b) securities entitlements in respect of United States
Treasury bills referred to in (a) above.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Trust Officer" means any officer within the corporate trust division (or
any successor group) of the Trustee or any other officer of the Trustee
customarily performing functions similar to those performed by the Persons who
at that time shall be such officers, and also means, with respect to a
particular corporate trust matter, any other officer of the Trustee to whom such
trust matter is referred because of his knowledge of and familiarity with the
particular subject.
"Unrestricted Subsidiary" shall mean any Subsidiary of the Company that,
at the time of determination, shall be an Unrestricted Subsidiary (as designated
by the Board of Directors of the Company, as provided below). The Board of
Directors of the Company may designate any Subsidiary of the Company (including
any newly acquired or newly formed Subsidiary at or prior to the time it is so
formed or acquired) to be an Unrestricted Subsidiary if (a) no Default or Event
of Default is existing or will occur as a consequence thereof, (b) such
Subsidiary does not own any Capital Stock of, or own or hold any Lien on any
property or asset of, the Company or any Restricted Subsidiary that is not a
Subsidiary of the Subsidiary to be so designated and (c) such Subsidiary and
each of its Subsidiaries has not at the time of designation, and does not
thereafter, create, incur, issue, assume, guarantee, or otherwise become
directly or indirectly liable with respect to any Indebtedness pursuant to which
the lender has recourse to any property or assets of the Company or any of its
Restricted Subsidiaries (except that such Subsidiary and its Subsidiaries may
guarantee the Securities); provided that either (A) the Subsidiary to be so
designated has total assets of $1,000 or less or (B) if such Subsidiary has
assets greater than $1,000, that such designation would be permitted pursuant to
Section 4.04. Each such designation shall be evidenced by filing with the
Trustee a certified copy of the resolution giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
foregoing conditions.
"U.S. Government Obligations" means direct non-callable obligations of, or
noncallable obligations guaranteed by, the United States of America for the
payment of which obligation or guarantee the full faith and credit of the United
States of America is pledged.
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"U.S. Legal Tender Equivalents" means securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof with a maturity of 90 days or less (provided that the
full faith and credit of the United States of America is pledged in support
thereof).
"Voting Stock" means Capital Stock of the Company having generally the
right to vote in the election of a majority of the directors of the Company or
having generally the right to vote with respect to the organizational matters of
the Company.
"Weighted Average Life" means, as of the date of determination, with
respect to any debt instrument, the quotient obtained by dividing (i) the sum of
the products of the numbers of years from the date of determination to the dates
of each successive scheduled principal payment of such debt instrument
multiplied by the amount of each such respective principal payment by (ii) the
sum of all such principal payments.
"Wholly Owned" means, with respect to a Subsidiary of the Company, (i) a
Subsidiary that is a corporation, of which not less than 99% of the Capital
Stock (except for directors' qualifying shares or certain minority interests
owned by other Persons solely due to local law requirements that there be more
than one stockholder, but which interest is not in excess of what is required
for such purpose) is owned directly by such Person or through one or more other
Wholly Owned Subsidiaries of such Person, or (ii) any entity other than a
corporation in which such Person, directly or indirectly, owns not less than 99%
of the Capital Stock of such entity.
SECTION 1.02. Incorporation by Reference of TIA. Whenever this Indenture
refers to a provision of the TIA, such provision is incorporated by reference in
and made a part of this Indenture. The following TIA terms used in this
Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture securityholder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
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"obligor" on the indenture securities means the Company and any
other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them thereby.
SECTION 1.03. Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular;
(5) provisions apply to successive events and transactions;
(6) "herein," "hereof" and other words of similar import refer
to this Indenture as a whole and not to any particular Article,
Section or other subdivision;
(7) references to Sections or Articles means reference to such
Section or Article in this Indenture, unless stated otherwise; and
(8) whenever in this Indenture or the Securities it is
provided that the principal amount with respect to a Security shall
be paid, such provision shall be deemed to require (whether or not
so expressly stated) the simultaneous payment of any accrued and
unpaid interest to the date of payment on such Security payable
pursuant to paragraph 1 of the Securities.
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ARTICLE 2
THE SECURITIES
SECTION 2.01. Form and Dating. The Securities and the Trustee's
certificate of authentication in respect thereof shall be substantially in the
form of Exhibit A hereto, which Exhibit is part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule or usage. The Company shall approve the form of the Securities and
any notation, legend or endorsement on them. Any such notations, legends or
endorsements not contained in the form of Security attached as Exhibit A hereto
shall be delivered in writing to the Trustee. Each Security shall be dated the
date of its authentication.
The terms and provisions contained in the forms of Securities shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
SECTION 2.02. Execution and Authentication. Each Security shall be signed
by at least one Officer for the Company by manual or facsimile signature. The
Company's seal may be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security was an Officer at the time
of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless and the
Company shall nevertheless be bound by the terms of the Securities and this
Indenture.
A Security shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Security but such
signature shall be conclusive evidence that the Security has been authenticated
pursuant to the terms of this Indenture.
The Trustee shall authenticate Initial Securities for original issue in
the aggregate principal amount of up to $175,000,000 and shall authenticate
Exchange Securities for original issue in the aggregate principal amount of up
to $175,000,000, in each case upon a written order of the Company in the form of
an Officers' Certificate; provided that such Exchange Securities shall be
issuable only upon the valid surrender for cancellation of Initial Securities of
a like aggregate principal amount in accordance with the Registration Rights
Agreement. The Officers' Certificate shall specify the amount of Securities to
be
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authenticated and the date on which the Securities are to be authenticated. The
aggregate principal amount of Securities outstanding at any time may not exceed
$175,000,000, except as provided in Section 2.07. Upon the written order of the
Company in the form of an Officers' Certificate, the Trustee shall authenticate
Securities in substitution of Securities originally issued to reflect any name
change of the Company.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Securities. Unless otherwise provided in the appointment, an
authenticating agent may authenticate Securities whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with the Company, any Affiliate of the Company, or any of their
respective Subsidiaries.
Securities shall be issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. Registrar and Paying Agent. The Company shall maintain an
office or agency in the Borough of Manhattan, The City of New York, where
Securities may be presented for registration of transfer or for exchange
("Registrar") and an office or agency where Securities may be presented for
payment ("Paying Agent") and where notices and demands to or upon the Company in
respect of the Securities may be served. The Company may act as Registrar or
Paying Agent, except that, for the purposes of Articles 3, 8, 10, 11, Section
4.15 and as otherwise specified in the Indenture, neither the Company nor any
Affiliate of the Company shall act as Paying Agent. The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company may
have one or more co-Registrars and one or more additional Paying Agents. The
term "Paying Agent" includes any additional Paying Agent. The Company hereby
initially appoints the Trustee as Registrar and Paying Agent, and the Trustee
hereby agrees so to act.
The Company shall enter into an appropriate written agency agreement with
any Agent not a party to this Indenture, which agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall
promptly notify the Trustee in writing of the name and address of any such
Agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee
shall act as such.
The Company initially appoints The Depository Trust Company ("DTC") to act
as Depository with respect to the Global Securities.
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The Company initially appoints the Trustee to act as Securities Custodian
with respect to the Global Securities.
SECTION 2.04. Paying Agent to Hold Assets in Trust. The Company shall
require each Paying Agent other than the Trustee to agree in writing that each
Paying Agent shall hold in trust for the benefit of the Holders or the Trustee
all assets held by the Paying Agent for the payment of principal of, premium, if
any, or interest on, the Securities (whether such assets have been distributed
to it by the Company or any other obligor on the Securities), and shall notify
the Trustee in writing of any Default in making any such payment. If either of
the Company or a Subsidiary of the Company acts as Paying Agent, it shall
segregate such assets and hold them as a separate trust fund for the benefit of
the Holders or the Trustee. The Company at any time may require a Paying Agent
to distribute all assets held by it to the Trustee and account for any assets
disbursed and the Trustee may at any time during the continuance of any payment
Default, upon written request to a Paying Agent, require such Paying Agent to
distribute all assets held by it to the Trustee and to account for any assets
distributed. Upon distribution to the Trustee of all assets that shall have been
delivered by the Company to the Paying Agent, the Paying Agent (if other than
the Company) shall have no further liability for such assets.
SECTION 2.05. Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Holders. If the Trustee is not the Registrar, the
Company shall furnish to the Trustee on or before the third Business Day
preceding each Interest Payment Date and at such other times as the Trustee may
request in writing a list in such form and as of such date as the Trustee
reasonably may require of the names and addresses of Holders.
SECTION 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Definitive Securities. When Definitive
Securities are presented to the Registrar or a co-Registrar with a request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal principal
amount of Definitive Securities of other authorized denominations,
the Registrar or co-Registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Securities surrendered for transfer or
exchange:
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(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar
or co-Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing; and
(ii) in the case of Transfer Restricted Securities that are
Definitive Securities, shall be accompanied by the following additional
information and documents, as applicable:
(A) if such Transfer Restricted Securities are being delivered
to the Registrar by a Holder for registration in the name of such
Holder, without transfer, a certification from such Holder to that
effect (in substantially the form set forth on the reverse of the
Security); or
(B) if such Transfer Restricted Security is being transferred
to a "qualified institutional buyer" (as defined in Rule 144A under
the Securities Act) in accordance with Rule 144A under the
Securities Act, a certification to that effect (in substantially the
form set forth on the reverse of the Security); or
(C) if such Transfer Restricted Security is being transferred
pursuant to any exemption from registration in accordance with
Regulation S under the Securities Act, a certification to that
effect (in substantially the form set forth on the reverse of the
Security); or
(D) if such Transfer Restricted Security is being transferred
to an institutional investor that is an "accredited investor" within
the meaning of Rule 501(a)(1),(2),(3) or (7) under the Securities
Act which delivers a certificate in the form of Exhibit B to the
Indenture to the Trustee; or
(E) if such Transfer Restricted Security is being transferred
in reliance on another exemption from the registration requirements
of the Securities Act, a certification to that effect (in
substantially the form set forth on the reverse of the Security)
accompanied by a customary opinion of counsel substantially to the
effect that such transfer may be effected in reliance upon such
exemption.
(b) Restrictions on Transfer of a Definitive Security for a Beneficial
Interest in a Global Security. A Definitive Security may not be exchanged for a
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beneficial interest in a Global Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Definitive
Security, duly endorsed or accompanied by appropriate instruments of transfer,
in form satisfactory to the Trustee, together with:
(i) if such Definitive Security is a Transfer Restricted Security,
certification, substantially in the form set forth on the reverse of the
Security, that such Definitive Security is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities Act; and
(ii) whether or not such Definitive Security is a Transfer
Restricted Security, written instructions directing the Trustee to make,
or to direct the Securities Custodian to make, an endorsement on the
Global Security to reflect an increase in the aggregate principal amount
of the Securities represented by the Global Security,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Securities Custodian, the
aggregate principal amount of Securities represented by the Global Security to
be increased accordingly. If no Global Securities are then outstanding, the
Company shall issue and the Trustee shall authenticate a new Global Security in
the appropriate principal amount.
(c) Transfer and Exchange of Global Securities. The transfer and exchange
of Global Securities or beneficial interests therein shall be effected through
the Depository, in accordance with this Indenture (including the restrictions on
transfer set forth herein) and the procedures of the Depository therefor.
(d) Transfer of a Beneficial Interest in a Global Security for a
Definitive Security.
(i) Upon receipt by the Trustee of written instructions or such
other form of instructions as is customary for the Depository from the
Depository or its nominee on behalf of any Person having a beneficial
interest in a Global Security and upon receipt by the Trustee of a written
order or such other form of instructions as is customary for the
Depository or the Person designated by the Depository as having such a
beneficial interest in a Transfer Restricted Security only, the following
additional information and documents (all of which may be submitted by
facsimile):
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(A) if such beneficial interest is being transferred to the
Person designated by the Depository as being the beneficial owner, a
certification from such person to that effect (in substantially the
form set forth on the reverse of the Security); or
(B) if such beneficial interest is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities
Act, a certification to that effect from the transferor (in
substantially the form set forth on the reverse of the Security); or
(C) if such beneficial interest is being transferred pursuant
to any exemption from registration in accordance with Regulation S
under the Securities Act, a certification to that effect (in
substantially the form set forth on the reverse of the Security); or
(D) if such Transfer Restricted Security is being transferred
to an institutional investor that is an "accredited investor" within
the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities
Act which delivers a certificate in the form of Exhibit B to the
Indenture to the Trustee; or
(E) if such beneficial interest is being transferred in
reliance on another exemption from the registration requirements of
the Securities Act, a certification to that effect from the
transferee or transferor (in substantially the form set forth on the
reverse of the Security) accompanied by a customary opinion of
counsel substantially to the effect that such transfer may be
effected in reliance upon such exemption,
then the Trustee or the Securities Custodian, at the direction of the Trustee,
will cause, in accordance with the standing instructions and procedures existing
between the Depository and the Securities Custodian, the aggregate principal
amount of the Global Security to be reduced and, following such reduction, the
Company will execute and, upon receipt of an authentication order in the form of
an Officers' Certificate, the Trustee will authenticate and deliver to the
transferee a Definitive Security.
(ii) Definitive Securities issued in exchange for a beneficial
interest in a Global Security pursuant to this Section 2.06(d) shall be
registered in such names and in such authorized denominations as the
Depository, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall
deliver such
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Definitive Securities to the persons in whose names such Securities are so
registered.
(e) Restrictions on Transfer and Exchange of Global Securities.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.06), a Global Security
may not be transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(f) Authentication of Definitive Securities in Absence of Depository. If
at any time:
(i) the Depository for the Securities notifies the Company that the
Depository is unwilling or unable to continue as Depository for the Global
Securities and a successor Depository for the Global Securities is not
appointed by the Company within 90 days after delivery of such notice; or
(ii) the Company, in its sole discretion, notifies the Trustee in
writing that they elect to cause the issuance of Definitive Securities
under this Indenture,
then the Company will execute, and the Trustee, upon receipt of an Officers'
Certificate requesting the authentication and delivery of Definitive Securities,
will authenticate and deliver Definitive Securities, in an aggregate principal
amount equal to the principal amount of the Global Securities, in exchange for
such Global Securities.
(g) Legends
(i) Except as permitted by the following paragraph (ii), each
Security certificate evidencing the Global Securities and the Definitive
Securities (and all Securities issued in exchange therefor or substitution
thereof) shall bear a legend in substantially the following form:
THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT
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OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A
BENEFICIAL INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) (A "QIB"), OR (B) IT IS NOT A
U.S. PERSON, IS NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR
BENEFIT OF A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE TIME
PERIOD REFERRED TO UNDER RULE 144(k) (TAKING INTO ACCOUNT THE
PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF
APPLICABLE) UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE
OF THE TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER
THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF,
(B) TO A PERSON WHOM THE HOLDER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE, AND BASED UPON AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY), (E) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED
UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) AND, IN
EACH CASE, IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS
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LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY RULE 902 OF REGULATIONS UNDER THE SECURITIES ACT. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE
TO REGISTER A TRANSFER OF THIS NOTE IN VIOLATION OF THE
FOREGOING RESTRICTIONS.
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global
Security) pursuant to Rule 144 under the Act or an effective registration
statement under the Act:
(A) in the case of any Transfer Restricted Security that is a
Definitive Security, the Registrar shall permit the Holder thereof
to exchange such Transfer Restricted Security for a Definitive
Security that does not bear the legend set forth above and rescind
any restriction on the transfer of such Transfer Restricted Security
in the case of a Rule 144 Transfer, after delivery of a customary
opinion of counsel; and
(B) any such Transfer Restricted Security represented by a
Global Security shall not be subject to the provisions set forth in
(i) above (such sales or transfers being subject only to the
provisions of Section 2.06(c) hereof); provided, however, that with
respect to any request for an exchange of a Transfer Restricted
Security that is represented by a Global Security for a Definitive
Security that does not bear a legend, which request is made in
reliance upon Rule 144, the Holder thereof shall certify in writing
(to be accompanied by a customary opinion of counsel) to the
Registrar that such request is being made pursuant to Rule 144 (such
certification to be substantially in the form set forth on the
reverse of the Security).
(h) Cancellation and/or Adjustment of Global Security. At such time as all
beneficial interests in a Global Security have either been exchanged for
Definitive Securities, redeemed, repurchased or cancelled, such Global Security
shall be returned to or retained and cancelled by the Trustee. At any time prior
to such cancellation, if any beneficial interest in a Global Security is
exchanged for Definitive Securities, redeemed, repurchased or cancelled, the
principal amount of Securities represented by such Global Security shall be
reduced and an
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endorsement shall be made on such Global Security, by the Trustee or the
Securities Custodian, at the direction of the Trustee, to reflect such
reduction.
(i) Obligations with respect to Transfers and Exchanges of Definitive
Securities.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Definitive Securities and
Global Securities at the Registrar's or co-Registrar's request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax, assessments, or similar governmental
charge payable in connection therewith (other than any such transfer
taxes, assessments, or similar governmental charge payable upon exchanges
or transfers pursuant to Section 2.02 (fourth paragraph), 2.10, 3.07,
4.15(8), 9.05, or 11.01 (final paragraph)).
(iii) The Registrar or co-Registrar shall not be required to
register the transfer of or exchange of (a) any Definitive Security
selected for redemption in whole or in part pursuant to Article 3, except
the unredeemed portion of any Definitive Security being redeemed in part,
or (b) any Security for a period beginning 15 Business Days before the
mailing of a notice of an offer to repurchase pursuant to Article 11 or
Section 4.15 hereof or the mailing of a notice of redemption of Securities
pursuant to Article 3 hereof and ending at the close of business on the
day of such mailing.
SECTION 2.07. Replacement Securities. If a mutilated Security is
surrendered to the Trustee or if the Holder of a Security claims and submits an
affidavit or other evidence, satisfactory to the Trustee, to the Trustee to the
effect that the Security has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Security if
the Trustee's requirements are met. If required by the Trustee or the Company,
such Holder must provide an indemnity bond or other indemnity, sufficient in the
judgment of both the Company and the Trustee, to protect the Company, the
Trustee or any Agent from any loss which any of them may suffer if a Security is
replaced. The Company may charge such Holder for its reasonable, out-of-pocket
expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company.
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SECTION 2.08. Outstanding Securities. Securities outstanding at any time
are all the Securities that have been authenticated by the Trustee (including
any Security represented by a Global Security) except those cancelled by it,
those delivered to it for cancellation, those reductions in the interest in a
Global Security effected by the Trustee hereunder and those described in this
Section 2.08 as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security, except as
provided in Section 2.09.
If a Security is replaced pursuant to Section 2.07 (other than a mutilated
Security surrendered for replacement), it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Security is held by
a bona fide purchaser. A mutilated Security ceases to be outstanding upon
surrender of such Security and replacement thereof pursuant to Section 2.07.
If on a Redemption Date or the Maturity Date the Paying Agent (other than
the Company or an Affiliate of a Company) holds cash sufficient to pay all of
the principal and interest due on the Securities payable on that date and
payment of the Securities called for redemption or payable on such Maturity Date
is not otherwise prohibited pursuant to this Indenture, then on and after that
date such Securities cease to be outstanding and interest on them ceases to
accrue.
SECTION 2.09. Treasury Securities. In determining whether the Holders of
the required principal amount of Securities have concurred in any direction,
amendment, supplement, waiver or consent, Securities owned by the Company or
Affiliates of the Company shall be disregarded, except that, for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, amendment, supplement, waiver or consent, only Securities that the
Trustee knows are so owned shall be disregarded.
SECTION 2.10. Temporary Securities. Until definitive Securities are ready
for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company reasonably and in
good faith considers appropriate for temporary Securities. Without unreasonable
delay, the Company shall prepare and the Trustee shall authenticate definitive
Securities in exchange for temporary Securities. Until so exchanged, the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as permanent Securities authenticated and delivered
hereunder.
SECTION 2.11. Cancellation. The Company at any time may deliver Securities
to the Trustee for cancellation. The Registrar and the Paying Agent shall
forward to the Trustee any Securities surrendered to them for transfer,
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exchange or payment. The Trustee, or at the direction of the Trustee, the
Registrar or the Paying Agent (other than the Company or an Affiliate of the
Company), and no one else, shall cancel and, at the written direction of the
Company, shall dispose of all Securities surrendered for transfer, exchange,
payment or cancellation. Subject to Section 2.07, the Company may not issue new
Securities to replace Securities that have been paid or delivered to the Trustee
for cancellation. No Securities shall be authenticated in lieu of or in exchange
for any Securities cancelled as provided in this Section 2.11, except as
expressly permitted in the form of Securities and as permitted by this
Indenture.
SECTION 2.12. Defaulted Interest. Interest on any Security which is
payable, and is punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the person in whose name that Security (or one or more
predecessor Securities) is registered at the close of business on Record Date
for such interest.
Any interest on any Security which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date plus, to the extent lawful,
any interest payable on the defaulted interest (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered holder on the
relevant Record Date, and such Defaulted Interest may be paid by the Company, at
its election in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any
Defaulted Interest to the persons in whose names the
Securities (or their respective predecessor Securities)
are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest,
which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each
Security and the date of the proposed payment, and at
the same time the Company shall deposit with the Trustee
an amount of cash equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for
such deposit prior to the date of the proposed payment,
such cash when deposited to be held in trust for the
benefit of the persons entitled to such Defaulted
Interest as provided in this clause (1). Thereupon the
Trustee shall fix a Special Record Date for the payment
of such Defaulted Interest which shall be not more than
15 days and not less than 10 days prior to the date of
the proposed payment and not less than 10 days after the
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receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company
of such Special Record Date and, in the name and at the
expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the
Special Record Date therefor to be mailed, first-class
postage prepaid, to each Holder at his address as it
appears in the Security register not less than 10 days
prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the
Special Record Date therefor having been mailed as
aforesaid, such Defaulted Interest shall be paid to the
persons in whose names the Securities (or their
respective predecessor Securities) are registered on
such Special Record Date and shall no longer be payable
pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent
with the requirements of any securities exchange on
which the Securities may be listed, and upon such notice
as may be required by such exchange, if, after notice
given by the Company to the Trustee of the proposed
payment pursuant to this clause, such manner shall be
deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Security shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
ARTICLE 3
REDEMPTION
SECTION 3.01. Redemption.
(a) Right of Redemption. Redemption of Securities, as permitted by any
provision of this Indenture, shall be made in accordance with such provision and
this Article 3. The Company will not have the right to redeem any Securities
prior to July 15, 2002. On or after July 15, 2002, the Company will have the
right to redeem all or any part of the Securities at the Redemption Prices
specified in the
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form of Security attached as Exhibit A set forth therein under the caption
"Redemption," in each case, including accrued and unpaid interest, if any, to
the applicable Redemption Date (subject to the right of Holders of record on the
relevant regular Record Date to receive interest due on an Interest Payment Date
that is on or prior to the Redemption Date).
Notwithstanding the foregoing paragraph (a), prior to July 10, 2002, in
the event that the Company or Parent consummates one or more offerings of their
Qualified Capital Stock on or before the third anniversary of the date of the
issuance of the Securities, the Company may at its option, use all or a portion
of the cash contributed to it from such offerings to redeem up to 35% of the
original aggregate principal amount of the Securities at a cash redemption price
equal to 111.75% of the principal amount of the Securities plus accrued and
unpaid interest thereon, if any, to the redemption date; provided that at least
65% of the original aggregate principal amount of the Securities remains
outstanding thereafter.
(b) Special Redemption. Notwithstanding paragraph (a) of this section, if
(i) the Merger is not consummated on or before December 31, 1997 or (ii) if it
appears, in the sole judgment of the Company evidenced by a Board Resolution,
that the Merger will not be consummated by December 31, 1997, the Company shall
redeem the Securities (the "Special Redemption") on, or at any time prior to,
December 31, 1997 at a redemption price of 101% of the principal amount of the
Securities plus accrued interest to the date of the Special Redemption (the
"Special Redemption Date").
SECTION 3.02. Notices to Trustee. If the Company elects or is required to
redeem Securities pursuant to Paragraph 5 of the Securities, it shall notify the
Trustee in writing of the Redemption Date and the principal amount of Securities
to be redeemed and whether it wants the Trustee to give notice of redemption to
the Holders.
If the Company elects to reduce the principal amount of Securities to be
redeemed pursuant to Paragraph 5 of the Securities by crediting against any such
redemption Securities it has not previously delivered to the Trustee for
cancellation, it shall so notify the Trustee of the amount of the reduction and
deliver such Securities with such notice, provided that no Initial Securities
received by the Company in exchange for Exchange Securities may be made the
basis for such credit.
The Company shall give each notice to the Trustee provided for in this
Section 3.02 with respect to any optional redemption pursuant to Section 3.01(a)
at least 45 days before the Redemption Date (unless a shorter notice shall be
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satisfactory to the Trustee). Any such notice may be cancelled at any time prior
to notice of such redemption being mailed to any Holder and shall thereby be
void and of no effect.
SECTION 3.03. Selection of Securities to Be Redeemed.
If less than all of the Securities are to be redeemed pursuant to
Paragraph 5(a) thereof, the Trustee shall select the Securities to be redeemed
on a pro rata basis, by lot, or by such other method as the Trustee shall
determine to be fair and appropriate and in such manner as complies with any
applicable Depositary, legal and stock exchange requirements.
The Trustee shall make the selection from the Securities outstanding and
not previously called for redemption and shall promptly notify the Company in
writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities in denominations of $1,000 may be redeemed only in whole.
The Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
SECTION 3.04. Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date other
than the Special Redemption Date, the Company shall mail a notice of redemption
by first class mail, postage prepaid, to the Trustee and each Holder whose
Securities are to be redeemed. In the event of the Special Redemption, the
Company shall mail by first class mail, postage prepaid, a notice of redemption
to the Trustee and each Holder at least 5 Business Days before the Special
Redemption Date. At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. Each notice for
redemption shall identify the Securities to be redeemed and shall state:
(a) the Redemption Date;
(b) the Redemption Price, including the amount of accrued and unpaid
interest, if any, to be paid upon such redemption;
(c) the name, address and telephone number of the Paying Agent;
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(d) that Securities called for redemption must be surrendered to the
Paying Agent at the address specified in such notice to collect the Redemption
Price;
(e) that, unless (i) with respect to a redemption pursuant to Paragraph
5(a) of the Securities, the Company defaults in its obligation to deposit cash
with the Paying Agent in accordance with Section 3.06 hereof or (ii) such
redemption payment is prohibited pursuant to Article 12 hereof or other laws,
the interest on Securities (or portion thereof) called for redemption ceases to
accrue on and after the Redemption Date and the only remaining right of the
Holders of such Securities is to receive payment of the Redemption Price, as the
case may be, including any accrued and unpaid interest to the Redemption Date,
upon surrender to the Paying Agent of the Securities called for redemption and
to be redeemed;
(f) if any Security is being redeemed in part, the portion of the
principal amount, equal to $1,000 or any integral multiple thereof, of such
Security to be redeemed and that, after the Redemption Date, and upon surrender
of such Security, a new Security or Securities in aggregate principal amount
equal to the unre deemed portion thereof will be issued;
(g) if less than all the Securities are to be redeemed, the identification
of the particular Securities (or portion thereof) to be redeemed, as well as the
aggregate principal amount of such Securities to be redeemed and the aggregate
principal amount of Securities to be outstanding after such partial redemption;
(h) the CUSIP number of the Securities to be redeemed; and
(i) that the notice is being sent pursuant to this Section 3.04 and
pursuant to the optional redemption provisions of Paragraph 5(a) of the
Securities or the special redemption provisions of Paragraph 5(b) of the
Securities, as the case may be.
SECTION 3.05. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.04,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price including any accrued and unpaid interest to the
Redemption Date, if any. Upon surrender to the Trustee or Paying Agent, such
Securities called for redemption shall be paid at the Redemption Price,
including interest, if any, accrued and unpaid to the Redemption Date; provided
that if the Redemption Date is after a regular Record Date and on or prior to
the Interest Payment Date, the accrued interest shall be payable to the Holder
of the redeemed Securities registered on the relevant Record Date; and provided,
further, that if a
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Redemption Date is a Legal Holiday, payment shall be made on the next succeeding
Business Day and no interest shall accrue for the period from such Redemption
Date to such succeeding Business Day.
SECTION 3.06. Deposit of Redemption Price. On or prior to any Redemption
Date, other than a Special Redemption Date, the Company shall deposit with the
Paying Agent (other than the Company or an Affiliate of the Company) cash
sufficient to pay the Redemption Price of, including any accrued and unpaid
interest on, all Securities to be redeemed on such Redemption Date (other than
Securities or portions thereof called for redemption on that date that have been
delivered by the Company to the Trustee for cancellation). The Paying Agent
shall promptly return to the Company any cash so deposited which is not required
for that purpose upon the written request of the Company.
One Business Day prior to the Special Redemption Date, the Trustee shall
withdraw Treasury Bills and proceeds from the Collateral Account, sell such
Treasury Bills and deliver to the Paying Agent on behalf of the Company an
amount equal to the Redemption Price, and the Paying Agent shall on behalf of
the Company apply that amount to redeem the Securities on the Special Redemption
Date as provided by Section 3.01.
If the Company complies with the preceding paragraph and the other
provisions of this Article 3 and payment of the Securities called for redemption
is not prohibited under this Indenture, interest on the Securities to be
redeemed will cease to accrue on the applicable Redemption Date, whether or not
such Securities are presented for payment. Notwithstanding anything herein to
the contrary, if any Security surrendered for redemption in the manner provided
in the Securities shall not be so paid upon surrender for redemption because of
the failure of the Company to comply with the preceding paragraph, interest
shall continue to accrue and be paid from the Redemption Date until such payment
is made on the unpaid principal, and, to the extent lawful, on any interest not
paid on such unpaid principal, in each case at the rate and in the manner
provided in Section 4.02 hereof and the Securities.
SECTION 3.07. Securities Redeemed in Part. Upon surrender of a Security
that is to be redeemed in part, the Company shall execute and the Trustee shall
authenticate and deliver to the Holder, without service charge to the Holder, a
new Security or Securities equal in principal amount to the unredeemed portion
of the Security surrendered.
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ARTICLE 4
COVENANTS
SECTION 4.01. Transactions Not Subject to Covenants. Notwithstanding
anything to the contrary in this Indenture, the following transactions shall not
be prohibited by this Indenture (regardless of the form or substance of the
transaction or series of transactions effecting the same):
(a) the Merger, including, without limitation, (i) payments made by the
Company to fund (x) the cash consideration payable in the Merger (including,
whether or not required by the Merger Agreement, pursuant to statutory appraisal
rights and any settlement thereof) to security holders of Palmer and (y) fees
and expenses of the Company incurred in connection with the Merger, (ii) the
Incurrence, as a result of the Merger, of any Indebtedness of Palmer or any
subsidiary of Palmer, which Indebtedness was in existence immediately prior to
the Merger and not incurred in contemplation thereof, (iii) the assumption or
the suffering to exist of any consensual encumbrance or restriction on the
ability of Palmer or any Subsidiary thereof to pay dividends or make other
distributions on the Capital Stock of any Subsidiary or to pay or satisfy any
obligation to Palmer or any of its Subsidiaries or to otherwise transfer assets
or make or pay loans or advances to Palmer or any of its Subsidiaries, which
encumbrance or restriction was contained in an instrument that was in effect
immediately prior to the Merger and not put into place in contemplation thereof
and (iv) the Incurrence or the suffering to exist of any Lien upon any of the
property or assets of Palmer or any of its Subsidiaries which Liens were in
existence immediately prior to the effectiveness of the Merger and not imposed
in contemplation thereof; and
(b) any transaction involving FMT Ltd. or any subsidiary of FMT Ltd. or
any of their assets or the Company's partnership interest in FMT Ltd. (each
"FMT-Related Assets") provided that, in the case of this clause (b), no such
transaction shall (i) in and of itself cause or result in an increase in the
consolidated Indebtedness of the Company and its Restricted Subsidiaries on and
after the 45th day after the Merger Date from that existing immediately prior to
such transaction, (ii) cause or result in the sale of any asset of the Company
other than FMT-Related Assets, (iii) cause or result in the imposition of any
Lien on any property or assets of the Company or any of its Restricted
Subsidiaries other than solely upon an FMT-Related Asset, (iv) cause or result
in the imposition of any encumbrance or restriction on the ability of any
Restricted Subsidiary of the Company (other than FMT Ltd. or any Subsidiary
thereof) to pay dividends or make other distributions on the Capital Stock of
any Restricted Subsidiary of the Company or pay or satisfy any obligation to the
Company or any of its Restricted Subsidiaries or otherwise transfer assets or
make or pay loans or advances to the
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Company or any of its Restricted Subsidiaries, (v) cause or result in any
dividend or distribution by the Company or any Investment in any Person except a
Restricted Subsidiary or a Subsidiary of FMT Ltd., (vi) cause or result in the
Incurrence of any Indebtedness of the Company ranking senior to the Notes but
junior to any Senior Indebtedness; provided, however, that prior to the 45th day
after the Merger Date the Company's consolidated Indebtedness may increase as a
result of such transaction by no more than $169 million (plus accrued interest
thereon). Notwithstanding the foregoing provisions of this Section 4.01, neither
the Company nor any of its Restricted Subsidiaries (other than FMT Ltd. or any
of its Subsidiaries) shall make any Investment in FMT Ltd. or any of its
Subsidiaries. In addition, the Merger shall not constitute a Change of Control
and no transaction described in Section 4.01(b) shall be taken into account in
any calculation under Section 4.04.
SECTION 4.02. Payment of Securities. The Company shall pay the principal
of and interest on the Securities on the dates and in the manner provided in the
Securities. An installment of principal of or interest on the Securities shall
be considered paid on the date it is due if the Trustee or Paying Agent (other
than the Company or an Affiliate of the Company) holds for the benefit of the
Holders, on or before 10:00 a.m. New York City time on that date, cash deposited
and designated for and sufficient to pay the installment.
The Company shall pay interest on overdue principal and on overdue
installments of interest at the rate specified in the Securities compounded
semi-annually, to the extent lawful.
SECTION 4.03. Maintenance of Office or Agency. The Company shall maintain
in the Borough of Manhattan, The City of New York, an office or agency where
Securities may be presented or surrendered for payment, where Securities may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served. The Company shall give prompt written notice to the Trustee of
the location, and any change in the location, of such office or agency. If at
any time the Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
address of the Trustee set forth in Section 13.02.
The Company may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the
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Borough of Manhattan, The City of New York, for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency. The
Company hereby initially designates the Corporate Trust Office of the Trustee as
such office.
SECTION 4.04. Limitation on Restricted Payments. The Company shall not,
and shall not permit any of its Restricted Subsidiaries to, directly or
indirectly after the Issue Date, make any Restricted Payment, if, immediately
prior or after giving effect thereto (a) a Default or an Event of Default would
exist, (b) the Company's Annualized Operating Cash Flow Ratio for the Reference
Period would exceed 8.5 to 1, or (c) the aggregate amount of all Restricted
Payments made by the Company and its Restricted Subsidiaries, including such
proposed Restricted Payment (if not made in cash, then the fair market value of
any property used therefor, as determined in good faith by the Board of
Directors) from and after the Issue Date and on or prior to the date of such
Restricted Payment, shall exceed the sum of (i) the amount determined by
subtracting (x) 2.0 times the aggregate Consolidated Interest Expense of the
Company for the period (taken as one accounting period) from the Issue Date to
the last day of the last full fiscal quarter prior to the date of the proposed
Restricted Payment (the "Computation Period") from (y) Operating Cash Flow of
the Company for the Computation Period, plus (ii) the aggregate Net Proceeds
(other than with respect to the PCC Equity Contribution) received by the Company
from the sale (other than to a Subsidiary of the Company) of its Qualified
Capital Stock after the Issue Date and on or prior to the date of such
Restricted Payment, plus (iii) to the extent not otherwise included in clause
(i) or (ii), above, an amount equal to the net reduction in Investments in
Unrestricted Subsidiaries resulting from payments of dividends, repayments of
loans or advances, or other transfers of assets, in each case to the Company or
any Wholly Owned Restricted Subsidiary of the Company from Unrestricted
Subsidiaries, or from redesignations of Unrestricted Subsidiaries as Restricted
Subsidiaries (valued in each case as provided in the definition of
"Investments"), not to exceed, in the case of any Unrestricted Subsidiary, the
amount of Investments previously made by the Company and any Restricted
Subsidiary in such Unrestricted Subsidiary.
Notwithstanding the foregoing, the provisions set forth in clause (b) or
(c) of the immediately preceding paragraph will not prohibit (i) the use of an
aggregate of $10,000,000 for Restricted Payments not otherwise permitted by this
Section 4.04, (ii) the distribution of amounts to Holdings sufficient to pay the
scheduled interest or dividends, as applicable, owed by Holdings on the Holdings
Securities as such interest or dividends become due and payable and so long as
(A) Holdings is the direct Parent of the Company owning 100% of the capital
stock of the Company, and (B) such Holdings Securities contain no scheduled
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requirement for the payment of cash interest or dividends, as applicable, until
at least five years from the date of their original issuance and (iii) any
dividend, distribution or other payment by any Restricted Subsidiary on shares
of its Capital Stock that is paid pro rata to all holders of such Capital Stock,
and notwithstanding the foregoing paragraph, the provisions set forth in clause
(a), (b) or (c) of the immediately preceding paragraph will not prohibit (iv)
the payment of any dividend within 60 days after the date of its declaration if
such dividend could have been made on the date of its declaration in compliance
with the foregoing provisions, or (v) the redemption, defeasance, repurchase or
other acquisition or retirement of any Indebtedness or Capital Stock of the
Company or its Restricted Subsidiaries either in exchange for or out of the Net
Proceeds of the substantially concurrent sale (other than to a Subsidiary of the
Company) of Qualified Capital Stock (in the case of any redemption, defeasance,
repurchase or other acquisition or retirement of any Junior Indebtedness or
Capital Stock of the Company or its Restricted Subsidiaries) or Junior
Indebtedness (in the case of any redemption, defeasance, repurchase or other
acquisition or retirement of any Indebtedness of the Company or its Restricted
Subsidiaries) of the Company.
In determining the aggregate amount expended for Restricted Payments in
accordance with clause (c) of the first paragraph of this Section 4.04, 100% of
the amounts expended under clauses (i) through (v) of the immediately preceding
paragraph shall be deducted.
None of the transactions described in Section 4.01(b) above, shall be
taken into account in any calculation under this Section 4.04.
SECTION 4.05. Corporate Existence. Subject to Article 5, the Company shall
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence and the corporate or other existence of each
of its Restricted Subsidiaries in accordance with the respective organizational
documents of each of them and the rights (charter and statutory) and corporate
franchises of the Company and each of the Company's Restricted Subsidiaries;
provided, however, that the Company shall not be required to preserve, with
respect to itself, any right or franchise, and with respect to any Restricted
Subsidiaries of the Company, any such existence, right or franchise, if (a) the
Board of Directors of the Company shall determine that the preservation thereof
is no longer desirable in the conduct of the business of such entity and (b) the
loss thereof is not disadvantageous in any material respect to the Holders.
SECTION 4.06. Payment of Taxes and Other Claims. Except with respect to
immaterial items, the Company shall, and shall cause each of its Restricted
Subsidiaries to, pay or discharge or cause to be paid or discharged, before the
same shall become delinquent, (i) all taxes, assessments and governmental
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charges (including withholding taxes and any penalties, interest and additions
to taxes) levied or imposed upon the Company or any of its Restricted
Subsidiaries or any of their respective properties and assets and (ii) all
lawful claims, whether for labor, materials, supplies, services or anything
else, which have become due and payable and which by law have or may become a
Lien upon the property and assets of the Company or any of its Restricted
Subsidiaries; provided, however, that the Company shall not be required to pay
or discharge or cause to be paid or discharged any such tax, assessment, charge
or claim whose amount, applicability or validity is being contested in good
faith by appropriate proceedings and for which disputed amounts adequate
reserves have been established in accordance with GAAP.
SECTION 4.07. Maintenance of Properties and Insurance. The Company shall
cause all material properties used or useful to the conduct of its business and
the business of each of its Restricted Subsidiaries to be maintained and kept in
good condition, repair and working order (reasonable wear and tear excepted) and
shall cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in its reasonable judgment may be
necessary, so that the business carried on in connection therewith may be
properly conducted at all times; provided, however, that nothing in this Section
4.07 shall prevent the Company from discontinuing any operation or maintenance
of any of such properties, or disposing of any of them, if such discontinuance
or disposal is (a), in the judgment of the Board of Directors of the Company,
desirable in the conduct of the business of such entity and (b) not
disadvantageous in any material respect to the Holders.
The Company shall provide, or cause to be provided, for itself and each of
its Restricted Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds that, in the reasonable, good faith opinion
of the Company is adequate and appropriate for the conduct of the business of
the Company and such Restricted Subsidiaries in a prudent manner, with (except
for self-insurance) reputable insurers or with the government of the United
States of America or an agency or instrumentality thereof, in such amounts, with
such deductibles, and by such methods as shall be customary, in the reasonable,
good faith opinion of the Company and adequate and appropriate for the conduct
of the business of the Company and such Restricted Subsidiaries in a prudent
manner for entities similarly situated in the industry, unless failure to
provide such insurance (together with all other such failures) would not have a
material adverse effect on the financial condition or results of operations of
the Company or such Restricted Subsidiary.
SECTION 4.08. Compliance Certificate; Notice of Default. The Company shall
deliver to the Trustee within 120 days after the end of its fiscal year an
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Officers' Certificate complying with Section 314(a)(4) of the TIA and stating
that a review of its activities and the activities of its Subsidiaries during
the preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled their obligations under this Indenture and further
stating, as to each such Officer signing such certificate, whether or not the
signer knows of any failure by the Company or any Subsidiary of the Company to
comply with any conditions or covenants in this Indenture and, if such signor
does know of such a failure to comply, the certificate shall describe such
failure with particularity. The Officers' Certificate shall also notify the
Trustee should the relevant fiscal year end on any date other than the current
fiscal year end date.
The Company shall, so long as any of the Securities are outstanding,
deliver to the Trustee, promptly upon becoming aware of any Default, Event of
Default or fact which would prohibit the making of any payment to or by the
Trustee in respect of the Securities, an Officers' Certificate specifying such
Default, Event of Default or fact and what action the Company is taking or
proposes to take with respect thereto. The Trustee shall not be deemed to have
knowledge of any Default, any Event of Default or any such fact unless one of
its Trust Officers receives notice thereof from the Company or any of the
Holders.
SECTION 4.09. Reports. Whether or not the Company is subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
shall deliver to the Trustee and to each Holder and to prospective purchasers of
Securities identified to the Company by an Initial Purchaser, within 15 days
after it files or would have been required to file such with the SEC, annual and
quarterly financial statements substantially equivalent to financial statements
that the Company would have been required to file with the SEC if the Company
were subject to the requirements of Section 13 or 15(d) of the Exchange Act,
including, with respect to annual information only, a report thereon by the
Company's certified independent public accountants as such would be required in
such reports to the SEC, and, in each case, together with a management's
discussion and analysis of financial condition and results of operations which
would be so required.
SECTION 4.10. Limitation on Status as Investment Company. The Company
shall not become, nor shall it permit any of its Restricted Subsidiaries to
become an "investment company" (as that term is defined in the Investment
Company Act of 1940, as amended), or otherwise become subject to regulation
under the Investment Company Act.
SECTION 4.11. Limitation on Transactions with Related Persons. The Company
will not, and will not permit any of its Restricted Subsidiaries or
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Unrestricted Subsidiaries to, after the Issue Date, enter into any contract,
agreement, arrangement or transaction with any Related Person (each a "Related
Person Transaction"), or any series of Related Person Transactions, except for
transactions made in good faith, the terms of which are (i) fair and reasonable
to the Company or such Subsidiary, as the case may be, and (ii) are at least as
favorable as the terms which could be obtained by the Company or such
Subsidiary, as the case may be, in a comparable transaction made on an arm's
length basis with Persons who are not Related Persons.
Without limiting the foregoing, (a) any Related Person Transaction or
series of Related Person Transactions with an aggregate value in excess of
$1,000,000 must first be approved by a majority of the Board of Directors of the
Company who are disinterested in the subject matter of the transaction pursuant
to a Board Resolution, and (b) with respect to any Related Person Transaction or
series of Related Person Transactions with an aggregate value in excess of
$5,000,000, the Company must first obtain a favorable written opinion from an
independent financial advisor of national reputation as to the fairness from a
financial point of view of such transaction to the Company or such Subsidiary,
as the case may be.
Notwithstanding the foregoing, the following shall not constitute Related
Person Transactions: (i) reasonable and customary payments on behalf of
directors, officers or employees of the Company or any of its Restricted
Subsidiaries, or in reimbursement of reasonable and customary payments or
reasonable and customary expenditures made or incurred by such Persons as
directors, officers or employees, (ii) any contract, agreement, arrangement, or
transaction solely between or among the Company and any of its Restricted
Subsidiaries or between or among Restricted Subsidiaries of the Company, (iii)
any Restricted Payment of the type described by clauses (i) and (ii) of the
definition thereof made to all stockholders on a pro rata basis and not
prohibited by Section 4.04, (iv) any loan or advance by the Company or a
Restricted Subsidiary to employees of the Company or a Restricted Subsidiary in
the ordinary course of business, in an aggregate amount at any one time
outstanding not to exceed $500,000 and (v) any payment pursuant to a tax-sharing
agreement between the Company and any other Person with which the Company is
required or permitted to file a consolidated tax return or with which the
Company is or could be part of a consolidated group for tax purposes, which
payments are not in excess of the tax liabilities attributable solely to the
Company and its Restricted Subsidiaries (as a consolidated group).
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness. The
Company will not, and will not permit any of its Restricted Subsidiaries to,
after the Issue Date, directly or indirectly, issue, create, incur, assume,
guarantee or
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otherwise directly or indirectly become liable for (including as a result of an
acquisition), or otherwise become responsible for, contingently or otherwise
(individually or collectively, to "Incur" or, as appropriate, an "Incurrence"),
any Indebtedness. Neither the accrual of interest (including the issuance of
"pay in kind" securities or similar instruments in respect of such accrued
interest) pursuant to the terms of Indebtedness Incurred in compliance with this
covenant, nor the accretion of original issue discount, nor the mere extension
of the maturity of any Indebtedness shall be deemed to be an Incurrence of
Indebtedness.
Notwithstanding the foregoing, if there exists no Default or Event of
Default immediately prior and subsequent thereto, the Company may incur
Indebtedness if the Company's Annualized Operating Cash Flow Ratio, after giving
effect to the Incurrence of such Indebtedness, would have been less than 8 to 1.
In addition, if there exists no Default or Event of Default immediately
prior and subsequent thereto, the foregoing limitations will not apply to the
Incurrence of (i) Indebtedness by the Company or any of its Restricted
Subsidiaries constituting Existing Indebtedness, reduced by repayments of and
permanent reductions in commitments in satisfaction of the Net Cash Proceeds
application requirement set forth in Section 4.15 and by repayments and
permanent reductions in amounts outstanding pursuant to scheduled amortizations
and mandatory prepayments in accordance with the terms thereof, (ii)
Indebtedness, in an aggregate principal amount not in excess of $525,000,000,
permitted under the Credit Agreement, reduced by (a) repayments of and permanent
reductions in commitments in satisfaction of the Net Cash Proceeds application
requirement set forth in Section 4.15 and (b) an amount equal to the aggregate
amount of Indebtedness Incurred pursuant to clause (x), below, so long as such
amounts Incurred pursuant to clause (x) remain outstanding; provided that, if
there exists a Default or an Event of Default immediately prior or subsequent
thereto, the Company and its Restricted Subsidiaries may Incur Indebtedness
pursuant to this clause (ii) so long as the proceeds from such Incurrence are
not used directly to pay any amounts owing in respect of any Indebtedness,
including, without limitation, principal, interest and commitment fees, other
than with respect to the Notes and the Holdings Securities, (iii) Indebtedness
of the Company evidenced by the Securities, (iv)(A) Permitted Acquisition
Indebtedness by the Company that satisfies the provisions of clause (x) of the
definition thereof or (B) Permitted Acquisition Indebtedness by any Restricted
Subsidiary that satisfies the provisions of clause (y) of the definition
thereof, (v) Indebtedness between the Company and any Restricted Subsidiary of
the Company or between Restricted Subsidiaries of the Company, provided that, in
the case of Indebtedness of the Company, such obligations shall be unsecured and
subordinated in all respects to the Holders' rights pursuant to the Securities,
and the date of any event that causes
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a Restricted Subsidiary no longer to be a Restricted Subsidiary shall be an
Incurrence Date with respect to such Indebtedness, (vi) Capitalized Lease
Obligations and Purchase Money Indebtedness in an aggregate amount or aggregate
principal amount, as the case may be, outstanding at any time not to exceed in
the aggregate $15,000,000, provided that in the case of Purchase Money Indebt
edness, such Indebtedness shall not constitute less than 75% nor more than 100%
of the cost (determined in accordance with GAAP) to the Company or such
Restricted Subsidiary of the property purchased or leased with the proceeds
thereof, (vii) Indebtedness of the Company or any Restricted Subsidiary arising
from agreements providing for indemnification, adjustment of purchase price or
similar obligations, or from guarantees or letters of credit, surety bonds or
performance bonds securing any obligations of the Company or its Restricted
Subsidiaries pursuant to such agreements, in any case Incurred in connection
with the disposition of any business, assets or Restricted Subsidiary of the
Company to the extent none of the foregoing results in the obligation to repay
an obligation for money borrowed by any Person and are limited in aggregate
amount to no greater than 10% of the fair market value of such business, assets
or Restricted Subsidiary so disposed of, (viii) any guarantee by any Restricted
Subsidiary of any Senior Indebtedness Incurred in compliance with this Section
4.12, (ix) Indebtedness of the Company or any Restricted Subsidiary under
standby letters of credit or reim bursement obligations with respect thereto
issued in the ordinary course of busi ness and consistent with industry
practices limited in aggregate amount to $5,000,000 at any one time outstanding,
(x) Indebtedness of the Company (other than Indebtedness permitted by clauses
(i) through (ix) or (xi) hereof) not to exceed $100,000,000 at any one time
outstanding and (xi) Refinancing Indebted ness Incurred to extend, renew,
replace or refund Indebtedness permitted under clauses (i) (as so reduced in
amount), (ii) (as so reduced in amount), (iii), (iv) and (xi) of this paragraph.
Indebtedness of any Person that is not a Restricted Subsidiary of the
Company (or that is a Non-Recourse Restricted Subsidiary designated to be a
Restricted Subsidiary, but no longer a Non-Recourse Restricted Subsidiary),
which Indebtedness is outstanding at the time such Person becomes such a
Restricted Subsidiary of the Company or is merged with or into or consolidated
with the Company or a Restricted Subsidiary of the Company shall be deemed to
have been Incurred, as the case may be, at the time such Person becomes such a
Restricted Subsidiary of the Company, or is merged with or into or consolidated
with the Company or a Restricted Subsidiary of the Company.
SECTION 4.13. Limitations on Restricting Subsidiary Dividends. The Company
will not, and will not permit any of its Restricted Subsidiaries to, with
respect to securities issued directly thereby or with respect to which they are
obligors, directly or indirectly, create, assume or suffer to exist any
consensual
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encumbrance or restriction on the ability of any Restricted Subsidiary of the
Company to pay dividends or make other distributions on the Capital Stock of any
Restricted Subsidiary of the Company or pay or satisfy any obligation to the
Company or any of its Restricted Subsidiaries or otherwise transfer assets or
make or pay loans or advances to the Company or any of its Restricted
Subsidiaries, except encumbrances and restrictions existing under (i) the
Indenture and the Securities, (ii) any Existing Indebtedness, (iii) the Credit
Agreement, (iv) any applicable law or any governmental or administrative
regulation or order, (v) Refinancing Indebtedness permitted under the Indenture,
provided that the restrictions contained in the instruments governing such
Refinancing Indebtedness are no more restrictive in the aggregate than those
contained in the instruments governing the Indebtedness being refinanced
immediately prior to such refinancing, (vi) restrictions with respect solely to
a Restricted Subsidiary of the Company imposed pursuant to a binding agreement
which has been entered into for the sale or disposition of all or substantially
all of the Capital Stock or assets of such Restricted Subsidiary, provided such
restrictions apply solely to the Capital Stock or assets being sold of such
Restricted Subsidiary, (vii) restrictions contained in any agreement relating to
the financing of the acquisition of a Person or real or tangible personal
property after the Issue Date which are not applicable to any Person or
property, other than the Person or property so acquired and which either (A)
were not put in place in anticipation of or in connection with such acquisition
or (B) constituted Permitted Acquisition Indebtedness of a Person satisfying the
provisions of clause (y) of the definition thereof or (viii) any agreement
(other than those referred to in clause (vii)) of a Person acquired by the
Company or a Restricted Subsidiary of the Company, which restrictions existed at
the time of acquisition and were not put in place in anticipation of or in
connection with such acquisition. Notwithstanding the foregoing, neither (a)
customary provisions restricting subletting or assignment of any lease entered
into the ordinary course of business, consistent with past practices nor (b)
Liens on assets securing Senior Indebtedness, shall in and of themselves be
considered a restriction on the ability of the applicable Restricted Subsidiary
to transfer such agreement or assets, as the case may be.
SECTION 4.14. Limitations on Layering of Indebtedness; Liens. The Company
will not incur or suffer to exist any Indebtedness that is subordinate in right
of payment to any other Indebtedness of the Company, unless, by its terms, such
Indebtedness is subordinate in right of payment to, or ranks pari passu with,
the Securities. The Company will not and will not permit any Restricted
Subsidiary to, directly or indirectly, Incur, or suffer to exist any Lien (other
than Permitted Liens) upon any of its property or assets, whether now owned or
hereafter acquired.
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SECTION 4.15. Limitation on Asset Sales and Sales of Subsidiary Stock.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, after the Issue Date, in one or a series of related
transactions, convey, sell, transfer, assign or otherwise dispose of, directly
or indirectly, any of its property, businesses or assets, including by merger or
consolidation, and including any sale or other transfer or issuance of any
Capital Stock of any Restricted Subsidiary of the Company, whether by the
Company or a Restricted Subsidiary (an "Asset Sale"), unless (1)(a) within 360
days after the date of such Asset Sale, an amount equal to the Net Cash Proceeds
therefrom (the "Asset Sale Offer Amount") are applied to the optional redemption
of the Securities in accordance with the terms of Article 3 of this Indenture
and Paragraph 5(a) of the Securities and other Indebtedness of the Company
ranking on a parity with the Securities from time to time outstanding with
similar provisions requiring the Company to make an offer to purchase or to
redeem such Indebtedness with the proceeds from asset sales, pro rata in
proportion to the respective principal amounts (or accreted values in the case
of Indebtedness issued with an original issue discount) of the Securities and
such other Indebtedness then outstanding or to the repurchase of the Securities
and such other Indebtedness pursuant to an irrevocable, unconditional offer (pro
rata in proportion to the respective principal amounts (or accreted values in
the case of Indebtedness issued with an original issue discount) of the
Securities and such other Indebtedness then outstanding) (the "Asset Sale
Offer") to repurchase such Indebtedness at a purchase price (the "Asset Sale
Offer Price") of 100% of the principal amount thereof in the case of the
Securities or 100% of the principal amount of such other Indebtedness (or
accreted value in the case of Indebtedness issued with an original issue
discount) plus, in each case, accrued interest to the date of payment made
within 330 days of such Asset Sale, or (b) within 330 days of such Asset Sale,
the Asset Sale Offer Amount is (i) invested (or committed, pursuant to a binding
commitment subject only to reasonable, customary closing conditions, to be
invested, and in fact is so invested, within an additional 90 days) in tangible
assets and property (other than notes, obligations or securities), which in the
good faith reasonable judgment of the Board of Directors of the Company are of a
type used in a Related Business, or Capital Stock of a Person (which, if such
Person becomes a Subsidiary of the Company by virtue of such Asset Sale, shall
initially be designated a Restricted Subsidiary) all or substantially all of
whose assets and property (in the good faith reasonable judgment of the Board of
Directors of the Company) are of a type used in a Related Business (provided
that, with respect to such Capital Stock, all of the requirements of the last
proviso of clause (v) of the following paragraph shall have been satisfied) or
(ii) used to retire permanently Senior Indebtedness or Indebtedness of a
Restricted Subsidiary, (2) with respect to any transaction or related series of
transactions of securities, property or assets with an aggregate fair
market value in excess of $1,000,000, at least 75% of the value of consideration
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for the assets disposed of in such Asset Sale (excluding (a) Senior Indebtedness
(and any Refinancing Indebtedness issued to refinance any such Indebtedness) or
the Indebtedness of any Restricted Subsidiary assumed by a transferee which
assumption permanently reduces the amount of Indebtedness outstanding on the
Issue Date and permitted to have been Incurred pursuant to Section 4.12
(including that in the case of a revolver or similar arrangement that makes
credit available, such commitment is permanently reduced by such amount), (b)
Pur chase Money Indebtedness secured exclusively by the assets subject to such
Asset Sale which is assumed by a transferee and (c) marketable securities that
are promptly converted into cash or Cash Equivalents) consists of cash or Cash
Equivalents, provided that any cash or Cash Equivalents received within 12
months following any such Asset Sale upon conversion of any property or assets
(other than in the form of cash or Cash Equivalents) received in consideration
of such Asset Sale shall be applied promptly in the manner required of Net Cash
Proceeds of any such Asset Sale as set forth above, (3) no Default or Event of
De fault shall occur or be continuing after giving effect to, on a pro forma
basis, such Asset Sale, unless such Asset Sale is in consideration solely of
cash or Cash Equivalents and such consideration is applied immediately to the
permanent reduction of the principal amount of Indebtedness outstanding pursuant
to the Credit Agreement, and (4) the Board of Directors of the Company
determines in good faith that the Company or such Restricted Subsidiary, as
applicable, would receive fair market value in consideration of such Asset Sale.
An Asset Sale Offer may be deferred until the accumulated Net Cash
Proceeds from Asset Sales not applied to the uses set forth in (1)(b) above
exceeds $5,000,000 and each Asset Sale Offer shall remain open for 20 Business
Days following its commencement and no longer, except as otherwise required by
applicable law (the "Asset Sale Offer Period"). Upon expiration of the Asset
Sale Offer Period, the Company shall apply the Asset Sale Offer Amount, plus an
amount equal to accrued interest to the purchase of all Indebtedness properly
tendered (on a pro rata basis as described above if the Asset Sale Offer Amount
is insufficient to purchase all Indebtedness so tendered) at the Asset Sale
Offer Price (together with accrued interest).
Notwithstanding the foregoing provisions of the prior paragraph:
(i) the Company and its Restricted Subsidiaries may, in the ordinary
course of business, convey, sell, lease, transfer, assign or otherwise
dispose of assets acquired and held for resale in the ordinary course of
business;
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(ii) the Company and its Restricted Subsidiaries may convey, sell,
lease, transfer, assign or otherwise dispose of assets pursuant to and in
accordance with Section 5.01;
(iii) the Company and its Restricted Subsidiaries may sell or
dispose of damaged, worn out or other obsolete property in the ordinary
course of business so long as such property is no longer necessary for the
proper conduct of the business of the Company or such Restricted
Subsidiary, as applicable;
(iv) the Company and its Restricted Subsidiaries may convey, sell,
lease, transfer, assign or otherwise dispose of assets to the Company or
any of its Restricted Subsidiaries; and
(v) the Company and its Restricted Subsidiaries may, in the ordinary
course of business (or, if otherwise than in the ordinary course of
business, upon receipt of a favorable written opinion by an independent
financial advisor of national reputation as to the fairness from a
financial point of view to the Company or such Restricted Subsidiary of
the proposed transaction), exchange all or a portion of its property,
businesses or assets for property, businesses or assets which, or Capital
Stock of a Person all or substantially all of whose assets, are of a type
used in a Related Business (provided that such Person shall initially be
designated a Restricted Subsidiary if such Person becomes a Subsidiary of
the Company by virtue of such Asset Sale), or a combination of any such
property, businesses, or assets, or Capital Stock of such a Person and
cash or Cash Equivalents; provided that (i) there shall not exist
immediately prior or subsequent thereto a Default or an Event of Default,
(ii) a majority of the independent directors of the Board of Directors of
the Company shall have approved a resolution of the Board of Directors
that such exchange is fair to the Company or such Restricted Subsidiary,
as the case may be, and (iii) any cash or Cash Equivalents received
pursuant to any such exchange shall be applied in the manner applicable to
Net Cash Proceeds from an Asset Sale as set forth pursuant to the
provisions of the immediately preceding paragraph of this covenant; and
provided, further, that any Capital Stock of a Person received in an Asset
Sale pursuant to this clause (v) shall be owned directly by the Company or
a Restricted Subsidiary and, when combined with the Capital Stock of such
Person already owned by the Company and its Restricted Subsidiaries, shall
constitute a majority of the voting power and Capital Stock of such
Person, unless (A)(i) the Company has received a binding commitment from
such Person (or the direct or indirect parent of such Person) that such
Person (or the direct or indirect parent of such Person) will distribute
to
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the Company in cash an amount equal to the Company's Annualized Operating
Cash Flow (determined as of the date of such Asset Sale) attributable to
the property, business, or assets of the Company and its Restricted
Subsidiaries exchanged in connection with such Asset Sale during each
consecutive 12-month period subsequent to such Asset Sale (unless and
until the Company shall have sold all of such Capital Stock, provided that
the provisions of clause (B) below, if applicable, shall have been
satisfied), (ii) immediately after such Asset Sale the aggregate number of
Net Pops of the wireless communications systems in which the Company or
any of its Restricted Subsidiaries has ownership interests ("Company
Systems") that are owned directly by a Person or Persons a majority of
whose voting power and Capital Stock is owned directly or indirectly by
the Company is no less than 80% of the aggregate number of Net Pops of
Company Systems immediately prior to such Asset Sale and (iii) upon
consummation of such Asset Sale, on a pro forma basis, the ratio of such
Person's Annualized Operating Cash Flow to the product of Consolidated
Interest Expense for the Reference Period multiplied by four (but
excluding from Consolidated Interest Expense all amounts that are not
required to be paid in cash on a current basis) shall be at least 1 to 1,
or (B) in the case of Capital Stock of a Person that is not a Subsidiary
of the Company owned by the Company or a Restricted Subsidiary that is
exchanged (the "Exchanged Capital Stock") for Capital Stock of another
Person all or substantially all of whose assets are of a type used in a
Related Business, either (i) the Exchanged Capital Stock shall not have
been acquired prior to such Asset Sale in reliance upon clause (A) of this
proviso or (ii) the requirements of subclauses (A)(i) (based on the
original guaranteed cash flow) and (A)(iii) shall be satisfied with
respect to any Capital Stock acquired in consideration of the Exchanged
Capital Stock.
Restricted Payments that are made in compliance with, and are counted
against amounts available to be made as Restricted Payments pursuant to clause
(c) of Section 4.04, without giving effect to clause (i) of the second paragraph
thereof, shall not be deemed to be Asset Sales.
The Company shall accumulate all Net Cash Proceeds and the aggregate
amount of such accumulated Net Cash Proceeds not used for the purposes permitted
and within the time provided by this Section 4.15 is referred to as the
"Accumulated Amount."
For purposes of this Section 4.15, "Minimum Accumulation Date" means each
date on which the Accumulated Amount exceeds $5,000,000. Not later than
10 Business Days after each Minimum Accumulation Date, the Company will commence
an Asset Sale Offer to the Holders and holders of other Indebtedness
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of the Company ranking pari passu in right of payment with the Securities from
time to time outstanding with similar provisions requiring the Company to make
an offer to purchase or to redeem such Indebtedness with the proceeds from asset
sales to purchase, on a pro rata basis in proportion to the respective principal
amounts (or accreted values in the case of Indebtedness issued with an original
issue discount) of the Securities and such other Indebtedness then outstanding,
for cash, Securities and such other Indebtedness that will have an aggregate
principal amount (and accreted value, as applicable) (the "Asset Sale Offer
Amount") on the purchase date equal to the Accumulated Amount, at a purchase
price equal to the Asset Sale Offer Price, plus accrued but unpaid interest, if
any, to, and including, the date of purchase (the "Asset Sale Purchase Date"),
which date shall be no later than 30 Business Days after the first date on which
the Asset Sale Offer is required to be made. Notice of an Asset Sale Offer will
be sent 20 Business Days prior to the close of business on the earlier of (a)
the third Business Day prior to the Asset Sale Purchase Date and (b) the third
Business Day following the expiration of the Asset Sale Offer (such earlier date
being the "Final Put Date"), by first-class mail, by the Company to each Holder
at its registered address, with a copy to the Trustee. The notice to the Holders
will contain all information, instructions and materials required by applicable
law or otherwise material to such Holders' decision to tender Securities
pursuant to the Asset Sale Offer. The notice to Holders, which (to the extent
consistent with the Indenture) shall govern the terms of the Asset Sale Offer,
shall state:
(1) that the Asset Sale Offer is being made pursuant to
such notice and this Section 4.15;
(2) the Asset Sale Offer Amount, the Asset Sale Offer
Price (including the amount of accrued and unpaid interest),
the Final Put Date, and the Asset Sale Purchase Date, which
Asset Sale Purchase Date shall be on or prior to 40 Business
Days following the Minimum Accumulation Date;
(3) that any Security or portion thereof not tendered or
accepted for payment will continue to accrue interest;
(4) that, unless the Company defaults in depositing cash
with the Paying Agent in accordance with the penultimate
paragraph of this Section 4.15 or such payment is otherwise
prevented, any Security, or portion thereof, accepted for
payment pursuant to the Asset Sale
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Offer shall cease to accrue interest after the Asset Sale
Purchase Date;
(5) that Holders electing to have a Security, or portion
thereof, purchased pursuant to an Asset Sale Offer will be
required to surrender the Security, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the
Security completed, to the Paying Agent (which may not for
purposes of this Section 4.15, notwithstanding anything this
Indenture to the contrary, be the Company or any Affiliate of
the Company) at the address specified in the notice prior to
the close of business on the Final Put Date;
(6) that Holders will be entitled to withdraw their
elections, in whole or in part, if the Paying Agent (which may
not for purposes of this Section, notwithstanding any other
provision of this Indenture, be the Company or any Affiliate
of the Company) receives, up to the close of business on the
Final Put Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal
amount of the Securities the Holder is withdrawing and a
statement that such Holder is withdrawing his election to have
such principal amount of Securities purchased;
(7) that if Indebtedness in a principal amount in excess
of the principal amount of Securities to be acquired pursuant
to the Asset Sale Offer is tendered and not withdrawn, the
Company shall purchase Indebtedness on a pro rata basis in
proportion to the respective principal amounts (or accreted
values in the case of Indebtedness issued with an original
issue discount) thereof (with such adjustments as may be
deemed appropriate by the Company so that only Securities in
denominations of $1,000 or integral multiples of $1,000 shall
be acquired);
(8) that Holders whose Securities were purchased only in
part will be issued new Securities equal in principal amount
to the unpurchased portion of the Securities surrendered; and
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(9) a brief description of the circumstances and
relevant facts regarding such Asset Sales.
Any such Asset Sale Offer shall comply with all applicable provisions of
applicable Federal and state laws, rules and regulations, including those
regulating tender offers, if applicable, and any provisions of this Indenture
that conflict with such laws shall be deemed to be superseded by the provisions
of such laws.
On or before an Asset Sale Purchase Date, the Company shall (i) accept for
payment Securities or portions thereof properly tendered and not properly
withdrawn pursuant to the Asset Sale Offer on or before the Final Put Date (on a
pro rata basis if required pursuant to paragraph (7) hereof), (ii) deposit with
the Paying Agent cash sufficient to pay the Asset Sale Offer Price for all
Securities or portions thereof so tendered and accepted and (iii) deliver to the
Trustee Securities so accepted together with an Officers' Certificate stating
the Securities or portions thereof being purchased by the Company. The Paying
Agent shall on each Asset Sale Purchase Date mail or deliver to Holders of
Securities so accepted payment in an amount equal to the Asset Sale Offer Price
for such Securities, and the Trustee shall promptly authenticate and mail or
deliver to such Holders a new Security equal in principal amount to any
unpurchased portion of the Security surrendered. Any Security not so accepted
shall be promptly mailed or delivered by the Company to the Holder thereof.
If the amount required to acquire all Indebtedness properly tendered by
Holders pursuant to the Asset Sale Offer (the "Acceptance Amount") made pursuant
to this Section 4.15 is less than the Asset Sale Offer Amount, the excess of the
Asset Sale Offer Amount over the Acceptance Amount may be used by the Company
for general corporate purposes without restriction, unless otherwise restricted
by the other provisions of the Indenture. Upon consummation of any Asset Sale
Offer made in accordance with the terms of the Indenture, the Accumulated Amount
will be reduced to zero irrespective of the amount of Indebtedness tendered
pursuant to the Asset Sale Offer.
SECTION 4.16. Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay or extension law or any usury law or other law which
would prohibit or forgive the Company from paying all or any portion of the
principal of, premium of, or interest on the Securities as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution
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of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
SECTION 4.17. Rule 144A Information Requirement. The Company shall furnish
to the Holders of the Securities and prospective purchasers of Securities
designated by the Holders of Transfer Restricted Securities, upon their request,
the information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act until such time as the Company either concluded an offer to
exchange the Exchange Securities for the Initial Securities or a registration
statement relating to resales of the Securities has become effective under the
Securities Act. The Company shall also furnish such information during the
pendency of any suspension of effectiveness of the resale registration
statement.
SECTION 4.18. Limitation on Lines of Business. The Company shall not, nor
shall it permit any of its Restricted Subsidiaries to, directly or indirectly
engage in any line or lines of business activity other than that which, in the
reasonable, good faith judgment of the Board of Directors of the Company, is a
Related Business.
SECTION 4.19. Restriction on Sale and Issuance of Subsidiary Stock. The
Company will not sell, and will not permit any of its Restricted Subsidiaries to
issue or sell, any shares of Capital Stock of any Restricted Subsidiary of the
Company to any Person other than the Company or a Wholly Owned Restricted
Subsidiary of the Company, except for shares of common stock with no preferences
or special rights or privileges and with no redemption or prepayment provisions
("Special Rights"); provided that, in the case of a Restricted Subsidiary that
is a partnership or joint venture partnership (a "Restricted Partnership") the
Company or any of its Restricted Subsidiaries may sell or such Restricted
Partnership may issue or sell Capital Stock of such Restricted Partnership with
Special Rights no more favorable than those held by the Company or such
Restricted Subsidiary in such Restricted Partnership.
SECTION 4.20. Deposit of Proceeds with Trustee Pending Consummation of the
Merger.
On the Issue Date, the Company shall pay to the Trustee for deposit in the
Collateral Account the net proceeds from the issuance of the Securities (the
"Net Offering Proceeds") and such additional amount as, when added to the Net
Offering Proceeds, equals $186,517,187.50, representing 101% of the aggregate
principal amount of the Securities plus the interest that would accrue up to and
including December 31, 1997 were all $175,000,000 aggregate principal amount of
the Securities to be outstanding from the Issue Date to such date (the "Special
Redemption Amount"), as set forth in Article 10.
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ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01. Limitation on Merger, Sale or ConsolidaThen. (a) Company
will not consolidate with or merge with or into another Person or sell, lease,
convey, transfer or otherwise dispose of all or substantially all of its assets
(computed on a consolidated basis), whether in a single transaction or a series
of related transactions, to another Person or group of affiliated Persons,
unless (i) either (a) the Company is the continuing entity or (b) the resulting,
surviving or transferee entity is a corporation organized under the laws of the
United States, any state thereof or the District of Columbia and expressly
assumes by supplemental indenture all of the obligations of the Company in
connection with the Securities and the Indenture; (ii) no Default or Event of
Default shall exist or shall occur immediately after giving effect on a pro
forma basis to such transaction; (iii) (A) immediately after giving effect to
such transaction on a pro forma basis, the consolidated resulting, surviving or
transferee entity would immediately thereafter be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Annualized Operating Cash Flow
Ratio provision set forth in the second paragraph of Section 4.12 or (B), if the
requirement of clause (A) is not satisfied, (x) any Indebtedness of the
resulting surviving or transferee entity in excess of the amount of the
Company's Indebtedness immediately prior to such transaction is Permitted
Acquisition Indebtedness and (y) the requirement of clause (A) is not satisfied
solely due to the Incurrence of such Permitted Acquisition Indebtedness; and
(iv) the Company shall have delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, if applicable, confirming compliance with the
requirements of this Section 5.01.
(b) For purposes of clause (a), the sale, lease, conveyance, assignment,
transfer, or other disposition of all or substantially all of the properties and
assets of one or more Restricted Subsidiaries of the Company, which properties
and assets, if held by the Company instead of such Restricted Subsidiaries,
would constitute all or substantially all of the properties and assets of the
Company on a consolidated basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
SECTION 5.02. Successor Corporation Substituted. Upon any consolidation or
merger or any transfer of all or substantially all of the assets of the Company
in accordance with the foregoing, the successor corporation formed by such
consolidation or into which the Company is merged or to which such transfer is
made, shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under the Indenture with the same effect as if such
successor corporation had been named therein as the Company, and when a
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successor corporation duly assumes all of the obligations of the Company
pursuant hereto and pursuant to the Securities, the predecessor shall be
released from such obligations.
ARTICLE 6
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
"Event of Default," wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
caused voluntarily or involuntarily or effected, without limitation, by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) failure to pay any installment of interest on the Securities as and
when the same becomes due and payable, and the continuance of such failure for a
period of 30 days;
(b) failure to pay all or any part of the principal of, or premium, if
any, on the Securities when and as the same becomes due and payable at maturity,
redemption, by acceleration, or otherwise, including, without limitation,
payment of the Change of Control Purchase Price in accordance with Article 11 or
the Asset Sale Offer Price in accordance with Section 4.15;
(c) failure by the Company to observe or perform any covenant, agreement
or warranty contained in the Securities or this Indenture (other than a default
in the performance of any covenant, agreement or warranty which is specifically
dealt with elsewhere in this Section 6.01), or failure by the Company to cause
each Unrestricted Subsidiary to comply with clause (c) of the definition of
"Unrestricted Subsidiary," and continuance of such failure for a period of 30
days after (subject to the following paragraph) there has been given, by
registered or certified mail, to the Company by the Trustee, or to the Company
and the Trustee by Holders of at least 25% in aggregate principal amount of the
outstanding Securities, a written notice specifying such default or breach,
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder;
(d) the failure to pay at final stated maturity (giving effect to any
applicable grace periods and any extensions thereof) the principal amount of any
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Indebtedness of the Company or any Restricted Subsidiary of the Company or the
acceleration of the final stated maturity of any Indebtedness if the aggregate
principal amount of such Indebtedness together with the principal amount of any
other such Indebtedness in default for failure to pay principal at final
maturity or which has been accelerated, aggregates $15,000,000 or more at any
time;
(e) a decree, judgment, or order by a court of competent jurisdiction
shall have been entered adjudging the Company or any of its Significant
Restricted Subsidiaries as bankrupt or insolvent, or approving as properly filed
a petition seeking reorganization of the Company or any of its Significant
Restricted Subsidiaries under any bankruptcy or similar law, and such decree or
order shall have continued undischarged and unstayed for a period of 60 days; or
a decree or order of a court of competent jurisdiction over the appointment of a
receiver, liquidator, trustee, or assignee in bankruptcy or insolvency of the
Company, any of its Significant Restricted Subsidiaries, or of the property of
any such Person, or for the winding up or liquidation of the affairs of any such
Person, shall have been entered, and such decree, judgment, or order shall have
remained in force undischarged and unstayed for a period of 60 days;
(f) the Company or any of its Significant Restricted Subsidiaries shall
institute proceedings to be adjudicated a voluntary bankrupt, or shall consent
to the filing of a bankruptcy proceeding against it, or shall file a petition or
answer or consent seeking reorganization under any bankruptcy or similar law or
similar statute, or shall consent to the filing of any such petition, or shall
consent to the appointment of a Custodian, receiver, liquidator, trustee, or
assignee in bankruptcy or insolvency of it or any of its assets or property, or
shall make a general assignment for the benefit of creditors, or shall admit in
writing its inability to pay its debts generally as they become due, or shall,
within the meaning of any Bankruptcy Law, become insolvent, fails generally to
pay its debts as they become due, or takes any corporate action in furtherance
of or to facilitate, conditionally or otherwise, any of the foregoing; or
(g) final unsatisfied judgments not covered by insurance, or the issuance
of any warrant of attachment against any portion of the property or assets of
the Company or any of its Restricted Subsidiaries, aggregating in excess of
$5,000,000 at any one time rendered against the Company or any of its Restricted
Subsidiaries and not stayed, bonded or discharged for a period (during which
execution shall not be effectively stayed) of 60 days (or, in the case of any
such final judgment which provides for payment over time, which shall so remain
unstayed, unbonded or undischarged beyond any applicable payment date provided
therein).
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If a Default occurs and is continuing, the Trustee must, within 90 days
after the occurrence of such default, give to the Holders notice of such
default.
SECTION 6.02. Acceleration of Maturity Date; Rescission and Annulment. If
an Event of Default (other than an Event of Default specified in Section 6.01(e)
or (f) relating to the Company or any of its Restricted Subsidiaries) occurs and
is continuing, then, and in every such case, unless the principal of all of the
Securities shall have already become due and payable, either the Trustee or the
Holders of not less than 25% in aggregate principal amount of then outstanding
Securities, by notice in writing to the Company (and to the Trustee if given by
Holders) (an "Acceleration Notice"), may declare all of the principal of the
Securities (or the Change of Control Purchase Price if the Event of Default
includes failure to pay the Change of Control Purchase Price), determined as set
forth below, including in each case accrued interest thereon, to be due and
payable and the same (i) shall become immediately due and payable or (ii) if
there are any amounts outstanding under the Credit Agreement and the Company has
guaranteed the repayment of principal and interest on the Credit Agreement,
shall become immediately due and payable upon the first to occur of an
acceleration under the Credit Agreement or five business days after receipt by
the Company and the representative of the holders of the Indebtedness under the
Credit Agreement of the Acceleration Notice, but only if such Event of Default
is then continuing. If an Event of Default specified in Section 6.01(e) or (f)
relating to the Company or any Significant Restricted Subsidiary occurs, all
principal (or the Change of Control Purchase Price, as applicable) and accrued
interest thereon will be immediately due and payable on all outstanding
Securities without any declaration or other act on the part of Trustee or the
Holders.
At any time after such a declaration of acceleration being made and before
a judgment or decree for payment of the money due has been obtained by the
Trustee as hereinafter provided in this Article 6, the Holders of a majority in
aggregate principal amount of then outstanding Securities, by written notice to
the Company and the Trustee, may rescind, on behalf of all Holders, any such
declaration of acceleration if:
(1) the Company has paid or deposited with the Trustee
cash sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal of (and premium, if any,
applicable to) any Securities which would become due
otherwise than by such declaration of
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acceleration, and interest thereon at the rate borne by
the Securities,
(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate borne
by the Securities,
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents
and counsel, and
(2) all Events of Default, other than the non-payment of
the principal of, premium, if any, and interest on Securities
which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section
6.12, including, if applicable, any Event of Default relating
to the covenants contained in Section 11.01.
Notwithstanding the previous sentence of this Section 6.02, no waiver shall be
effective against any Holder for any Event of Default or event which with notice
or lapse of time or both would be an Event of Default with respect to any
covenant or provision which cannot be modified or amended without the consent of
the Holder of each outstanding Security affected thereby, unless all such
affected Holders agree, in writing, to waive such Event of Default or other
event. No such waiver shall cure or waive any subsequent default or impair any
right consequent thereon.
In the event of a declaration of acceleration of the Securities because an
Event of Default has occurred and is continuing as a result of the acceleration
of any Indebtedness described in Section 6.01(d), the declaration of
acceleration of the Securities shall be automatically annulled if the holders of
all Indebtedness described in Section 6.01(d) (without any payment of any
holders of any such Indebtedness) have rescinded the declaration of acceleration
in respect of such Indebtedness within 30 days of the date of such declaration
and if (i) the annulment of the acceleration of the Securities would not
conflict with any judgment or decree of a court of competent jurisdiction and
(ii) all Events of Default, except nonpayment of principal or interest on the
Securities that became due solely because of the acceleration of the Securities,
have been cured or waived.
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SECTION 6.03. Collection of Indebtedness and Suits for Enforcement by
Trustee. The Company covenants that if an Event of Default in payment of
principal, premium, or interest specified in clause (a) or (b) of Section 6.01
occurs and is continuing, the Company shall, upon demand of the Trustee, pay to
it, for the benefit of the Holders of such Securities, the whole amount then due
and payable on such Securities for principal, premium (if any) and interest,
and, to the extent that payment of such interest shall be legally enforceable,
interest on any overdue principal (and premium, if any) and on any overdue
interest, at the rate borne by the Securities, and, in addition thereto, such
further amount as shall be sufficient to cover the reasonable costs and expenses
of collection, including compensation to, and expenses, disbursements and
advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust in favor of the
Holders, may institute a judicial proceeding for the collection of the sums so
due and unpaid, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Company or any other obligor upon the
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 6.04. Trustee May File Proofs of Claim. In case of the pendency of
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company or any other obligor upon the Securities or the property of the
Company or of such other obligor or their creditors, the Trustee (irrespective
of whether the principal of the Securities shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand on the Company for the payment of overdue
principal or interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise to take any and all actions under the TIA, including
(1) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid
in respect of the Securities and to file such other
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papers or documents as may be necessary or advisable in order
to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances
of the Trustee, its agent and counsel) and of the Holders
allowed in such judicial proceeding, and
(2) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute
the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment, or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 6.05. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may be
prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust in favor of the Holders, and any recovery of
judgment shall, after provision for the payment of compensation to, and
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.
SECTION 6.06. Priorities. Any money collected by the Trustee pursuant to
this Article 6 shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such money on account
of principal, premium (if any) or interest, upon presentation of the Securities
and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
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FIRST: To the Trustee in payment of all amounts due pursuant to Section
7.07;
SECOND: To the Holders in payment of the amounts then due and unpaid for
principal of, premium (if any) and interest on, the Securities in respect of
which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due and
payable on such Securities for principal, premium (if any) and interest,
respectively; and
THIRD: To whomsoever may be lawfully entitled thereto, the remainder, if
any.
SECTION 6.07. Limitation on Suits. No Holder of any Security shall have
any right to order or direct the Trustee to institute any proceeding, judicial
or otherwise, with respect to this Indenture, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless
(A) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(B) the Holders of not less than 25% in principal amount of
then outstanding Securities shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;
(C) such Holder or Holders have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities to be incurred or reasonably probable to be incurred in
compliance with such request;
(D) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(E) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders
of a majority in principal amount of the outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to
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enforce any right under this Indenture, except in the manner herein provided and
for the equal and ratable benefit of all the Holders.
SECTION 6.08. Unconditional Right of Holders to Receive Principal, Premium
and Interest. Notwithstanding any other provision of this Indenture, the Holder
of any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of, and premium (if any) and accrued interest
on, such Security on the Maturity Date of such payments as expressed in such
Security (in the case of redemption, the Redemption Price on the applicable
Redemption Date, in the case of the Change of Control Payment, on the applicable
Change of Control Payment Date, and, in the case of an Asset Sale Offer, the
Asset Sale Offer Price on the Asset Sale Purchase Date) and to institute suit
for the enforcement of any such payment after such respective dates, and such
rights shall not be impaired without the consent of such Holder.
SECTION 6.09. Rights and Remedies Cumulative. Except as otherwise provided
with respect to the replacement or payment of mutilated, destroyed, lost or
stolen Securities in Section 2.07, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
SECTION 6.10. Delay or Omission Not Waiver. No delay or omission by the
Trustee or by any Holder of any Security to exercise any right or remedy arising
upon any Event of Default shall impair the exercise of any such right or remedy
or constitute a waiver of any such Event of Default. Every right and remedy
given by this Article 6 or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
SECTION 6.11. Control by Holders. The Holder or Holders of a majority in
aggregate principal amount of then outstanding Securities will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred upon the
Trustee, provided that
(1) such direction shall not be in conflict with any
rule of law or with this Indenture,
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(2) the Trustee shall not determine that the action so
directed would be unjustly prejudicial to the Holders not
taking part in such direction, and
(3) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction.
SECTION 6.12. Waiver of past Default. Subject to Section 6.08, the Holder
or Holders of not less than a majority in aggregate principal amount of the
outstanding Securities may, on behalf of all Holders, prior to the declaration
of the acceleration of the maturity of the Securities, waive any past default
hereunder and its consequences, except a default
(A) in the payment of the principal of, premium, if any, or
interest on, any Security as specified in clauses (a) and (b) of
Section 6.01, or
(B) in respect of a covenant or provision hereof which, under
Article 9, cannot be modified or amended without the consent of the
Holder of each outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair the exercise of any right arising therefrom.
SECTION 6.13. Undertaking for Costs. All parties to this Indenture agree,
and each Holder of any Security by his acceptance thereof shall be deemed to
have agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken, suffered or omitted to be taken by it as
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section 6.13 shall not apply to any suit instituted by the Company, to any suit
instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in aggregate principal amount of
the outstanding Securities, or to any suit instituted by any Holder for
enforcement of the payment of principal of, or premium (if any) or interest on,
any Security on or after the Maturity Date
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expressed in such Security (including, in the case of redemption, on or after
the Redemption Date).
SECTION 6.14. Restoration of Rights and Remedies. If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or abandoned for any reason,
or has been determined adversely to the Trustee or to such Holder, then and in
every case, subject to any determination in such proceeding, the Company, the
Trustee and the Holders shall be restored severally and respectively to their
former positions hereunder and thereafter all rights and remedies of the Trustee
and the Holders shall continue as though no such proceeding had been instituted.
ARTICLE 7
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this Indenture and
covenants and agrees to perform the same, as herein expressed.
SECTION 7.01. Duties of Trustee (a) If a Default or an Event of Default
has occurred and is continuing, the Trustee shall exercise such of the rights
and powers vested in it by this Indenture and use the same degree of care and
skill in their exercise as a prudent Person would exercise or use under the
circumstances in the conduct of his own affairs.
(b) Except during the continuance of a Default or an Event of Default:
(1) The Trustee need perform only those duties as are specifically
set forth in this Indenture and no others, and no covenants or obligations
shall be implied in or read into this Indenture which are adverse to the
Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
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(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section 7.01.
(2) The Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.11.
(d) No provision of this Indenture shall require the trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder or to take or omit to take any action under this
Indenture or at the request, order or direction of the Holders or in the
exercise of any of its rights or powers if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c), (d) and (f) of this Section
7.01.
(f) The Trustee shall not be liable for interest on any assets received by
it except as the Trustee may agree in writing with the Company. Assets held in
trust by the Trustee need not be segregated from other assets except to the
extent required by law.
SECTION 7.02. Rights of Trustee. Subject to Section 7.01:
(a) The Trustee may rely on any document believed by it to be genuine and
to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult with
counsel and may require an Officers' Certificate or an Opinion of Counsel, which
shall conform to Sections 13.04 and 13.05. The Trustee shall not be liable for
any action it takes or omits to take in good faith in reliance on such
certificate or advice of counsel.
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(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee will not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers conferred upon it by this Indenture.
(e) The Trustee will not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, notice, request, direction, consent, order, bond, debenture, or other
paper or document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.
(f) The Trustee will be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request, order or direction of
any of the Holders, pursuant to the provisions of this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein or
thereby.
(g) Unless otherwise specifically provided for in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(h) The Trustee shall have no duty to inquire as to the performance of the
covenants in Article 4 hereof. In addition, the Trustee shall not be deemed to
have knowledge of any Default or Event of Default except (i) any Event of
Default occurring pursuant to Sections 6.01(a), 6.01(b) and 4.02, or (ii) any
Default or Event of Default of which the Trustee shall have received written
notification or obtained actual knowledge.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its individual
or any other capacity may become the owner or pledgee of Securities and may
otherwise deal with the Company or any of the Company's Subsidiaries, or their
respective Affiliates with the same rights it would have if it were not Trustee.
Any Agent may do the same with like rights. However, the Trustee must comply
with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee makes no representation as
to the validity or adequacy of this Indenture or the Securities and it shall not
be accountable for the Company's use of the proceeds from the Securities, and it
shall not be responsible for any statement in the Securities, other
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than the Trustee's certificate of authentication, or the use or application of
any funds received by a Paying Agent other than the Trustee.
SECTION 7.05. Notice of Default. If a Default or an Event of Default
occurs and is continuing and if it is known to the Trustee, the Trustee shall
mail to each Securityholder notice of the uncured Default or Event of Default
within 90 days after such Default or Event of Default occurs. Except in the case
of a Default or an Event of Default in payment of principal (or premium, if any)
of, or interest on, any Security (including the payment of the Change of Control
Purchase Price on the Change of Control Payment Date, the payment of the
Redemption Price on the Redemption Date and the payment of the Offer Price on
the Purchase Date), the Trustee may withhold the notice if and so long as a
Trust Officer in good faith determines that withholding the notice is in the
interest of the Securityholders.
SECTION 7.06. Reports by Trustee to Holders. Within 60 days after each
February 15 beginning with the February 15 following the date of this Indenture,
the Trustee shall, if required by law, mail to each Securityholder a brief
report dated as of such February 15 that complies with TIA ss. 313(a). The
Trustee also shall comply with TIA ss.ss. 313(b) and 313(c).
The Company shall promptly notify the Trustee in writing if the Securities
become listed on any stock exchange or automatic quotation system.
A copy of each report at the time of its mailing to Securityholders shall
be mailed to the Company and filed with the SEC and each stock exchange, if any,
on which the Securities are listed.
SECTION 7.07. Compensation and Indemnity. The Company agrees to pay to the
Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable disbursements, expenses and advances incurred or made
by it. Such expenses shall include the reasonable compensation, disbursements
and expenses of the Trustee's agents, accountants, experts and counsel.
The Company agrees to indemnify the Trustee (in its capacity as Trustee)
and each of its officers, directors, attorneys-in-fact and agents for, and hold
it harmless against, any claim, demand, expense (including but not limited to
reasonable compensation, disbursements and expenses of the Trustee's agents and
counsel), loss or liability incurred by it without negligence or bad faith on
its part, arising out of or in connection with the administration of this trust
and its rights or duties hereunder including the reasonable costs and expenses
of defending itself
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against any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder. The Trustee shall notify the Company
promptly of any claim asserted against the Trustee for which it may seek
indemnity. The Company shall defend the claim and the Trustee shall provide
reasonable cooperation at the Company's expense in the defense. The Trustee may
have separate counsel and the Company shall pay the reasonable fees and expenses
of such counsel; provided that the Company will not be required to pay such fees
and expenses if they assume the Trustee's defense and there is no conflict of
interest between the Company and the Trustee in connection with such defense.
The Company need not pay for any settlement made without their written consent.
The Company need not reimburse any expense or indemnify against any loss or
liability to the extent incurred by the Trustee through its negligence, bad
faith or willful misconduct.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Securities on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay principal and premium, if any, of or interest on particular
Securities, including, without limitation, assets held in the Collateral
Account.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(e) or (f) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Company's obligations under this Section 7.07 and any lien arising
hereunder shall survive the resignation or removal of the Trustee, the discharge
of the Company's obligations pursuant to Article 8 of this Indenture and any
rejection or termination of this Indenture under any Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign by so
notifying the Company in writing. The Holder or Holders of a majority in
principal amount of the outstanding Securities may remove the Trustee by so
notifying the Company and the Trustee in writing and may appoint a successor
trustee with the Company's consent. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver, Custodian, or other public officer takes charge of the
Trustee or its property; or
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(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holder or
Holders of a majority in principal amount of the Securities may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Immediately after that and provided
that all sums owing to the trustee provided for in Section 7.07 have been paid,
the retiring Trustee shall transfer all property held by it as trustee
(including the Collateral Account) to the successor Trustee, subject to the lien
provided in Section 7.07, the resignation or removal of the retiring Trustee
shall become effective, and the successor Trustee shall have all the rights,
powers and duties of the Trustee under this Indenture. A successor Trustee shall
mail notice of its succession to each Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holder or Holders of at least 10% in principal amount of the outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08,
the Company's obligations under Section 7.07 shall continue for the benefit of
the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation, the resulting,
surviving or transferee corporation without any further act shall, if such
resulting, surviving or transferee corporation is otherwise eligible hereunder,
be the successor Trustee.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at all
times satisfy the requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee
shall have a combined capital and surplus of at least $10,000,000 as set forth
in its most recent published annual report of condition. The Trustee shall
comply with TIA ss. 310(b).
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SECTION 7.11. Preferential Collection of Claims Against Company. The
Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship
listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be
subject to TIA ss. 311(a) to the extent indicated.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at its option at any time, elect to have Section 8.02 or
Section 8.03 applied to all outstanding Securities upon compliance with the
conditions set forth below in this Article 8.
SECTION 8.02. Legal Defeasance and Discharge. Upon the Company's exercise
under Section 8.01 of the option applicable to this Section 8.02, the Company
shall be deemed to have been discharged from its obligations with respect to all
outstanding Securities on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, such Legal Defeasance means
that the Company shall be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Securities, which shall thereafter
be deemed to be "outstanding" only for the purposes of Section 8.05 and the
other Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Securities and this Indenture
(and the Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of outstanding Securities to receive solely from the trust fund
described in Section 8.04, and as more fully set forth in such Section 8.04,
payments in respect of the principal of, premium, if any, and interest on such
Securities when such payments are due, (b) the Company's obligations with
respect to such Securities under Sections 2.04, 2.06, 2.07, 2.10 and 4.03, (c)
the rights, powers, trusts, duties and immunities of the Trustee hereunder and
the Company's obligations in connection therewith and (d) this Article 8.
Subject to compliance with this Article 8, the Company may exercise its option
under this Section 8.02 notwithstanding the prior exercise of its option under
Section 8.03 with respect to the Securities.
SECTION 8.03. Covenant Defeasance. Upon the Company's exercise under
Section 8.01 of the option applicable to this Section 8.03, the Company shall be
released from its obligations under the covenants contained in Sections
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4.04, 4.06, 4.07, 4.08, 4.09, 4.11, 4.12, 4.13, 4.14, 4.15, 4.18, 4.19 and
Article 5 (other than the obligation of any successor to assume the obligations
of the Company hereunder) with respect to the outstanding Securities on and
after the date the conditions set forth below are satisfied (hereinafter,
"Covenant Defeasance"), and the Securities shall thereafter be deemed not
"outstanding" for the purposes of any direction, waiver, consent or declaration
or act of Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all other purposes
hereunder. For this purpose, such Covenant Defeasance means that, with respect
to the outstanding Securities, the Company need not comply with and shall have
no liability in respect of any term, condition or limitation set forth in any
such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document, but, except as
specified above, the remainder of this Indenture and such Securities shall be
unaffected thereby.
SECTION 8.04. Conditions to Legal or Covenant Defeasance. The following
shall be the conditions to the application of either Section 8.02 or Section
8.03 to the outstanding Securities:
(a) The Company shall irrevocably have deposited or caused to be deposited
with the Trustee (or another trustee satisfying the requirements of Section 7.10
who shall agree to comply with the provisions of this Article 8 applicable to
it) as trust funds in trust for the purpose of making the following payments,
specifically pledged as security for, and dedicated solely to, the benefit of
the Holders of such Securities, (a) cash, or (b) U.S. Government Obligations or
U.S. Legal Tender Equivalents, or (c) a combination thereof, in such amounts, as
in each case will be sufficient, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge and which shall be applied by the
Trustee (or other qualifying trustee) to pay and discharge (i) the principal of,
premium, if any, and interest on the outstanding Securities on the Stated
Maturity or on the applicable Redemption Date, as the case may be, of such
principal or installment of principal, premium, if any, or interest and the
Holders of Securities shall have a valid, perfected, exclusive security interest
in the assets of such trust; provided that the Trustee shall have been
irrevocably instructed to apply such cash and the proceeds of such U.S.
Government Obligations or U.S. Legal Tender Equivalents to said payments with
respect to the Securities;
(b) In the case of an election under Section 8.02, the Company shall have
delivered to the Trustee an Opinion of Counsel in the United States reasonably
satisfactory to the Trustee confirming that (i) the Company has
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received from, or there has been published by, the Internal Revenue Service a
ruling or (ii) since the date hereof, there has been a change in the applicable
Federal income tax law, in either case to the effect that, and based thereon
such opinion shall confirm that, the Holders of the outstanding Securities will
not recognize income, gain or loss for Federal income tax purposes as a result
of such Legal Defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred;
(c) In the case of an election under Section 8.03, the Company shall have
delivered to the Trustee an Opinion of Counsel in the United States reasonably
acceptable to such Trustee confirming that the Holders of the outstanding
Securities will not recognize income, gain or loss for Federal income tax
purposes as a result of such Covenant Defeasance and will be subject to Federal
income tax in the same amount, in the same manner and at the same times as would
have been the case if such Covenant Defeasance had not occurred;
(d) No Default or Event of Default with respect to the Securities shall
have occurred and be continuing on the date of such deposit or, in so far as
Section 6.01(e) or 6.01(f) is concerned, at any time during the period ending on
the 91st day after the date of such deposit (it being understood that this
condition is a condition subsequent which shall not be deemed satisfied until
the expiration of such period, but in the case of Covenant Defeasance, the
covenants which are defeased under Section 8.03 will cease to be in effect
unless an Event of Default under Section 6.01(e) or 6.01(f) occurs during such
period);
(e) Such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under this Indenture or any
other material agreement or instrument to which the Company or any of the
Company's Subsidiaries is a party or by which any of them is bound;
(f) In the case of an election under either Section 8.02 or 8.03, the
Company shall have delivered to the Trustee an Officers' Certificate stating
that the deposit made by the Company pursuant to its election under Section 8.02
or 8.03 was not made by the Company with the intent of preferring the Holders
over any other creditors of the Company or with the intent of defeating,
hindering, delaying or defrauding creditors of the Company or others; and
(g) The Company shall have delivered to the Trustee an Officers'
Certificate stating that all conditions precedent provided for or relating to
either the Legal Defeasance under Section or the Covenant Defeasance under
Section 8.03 (as the case may be) have been complied with as contemplated by
this Section 8.04.
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SECTION 8.05. Deposited U.S. Legal Tender Equivalents and U.S. Government
Obligations to be Held in Trust; Other Miscellaneous Provisions. Subject to
Section 8.06, all cash, U.S. Legal Tender Equivalents and U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 in respect of the outstanding Securities
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Securities and this Indenture, to the payment, either
directly or through any Paying Agent as the Trustee may determine, to the
Holders of such Securities of all sums due and to become due thereon in respect
of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law.
SECTION 8.06. Repayment to the Company. Subject to any applicable escheat
or abandoned property laws, any money deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of the principal
of, premium, if any, or interest on any Security and remaining unclaimed for two
years after such principal, and premium, if any, or interest has become due and
payable shall be paid to the Company on its request; and the Holder of such
Security shall thereafter look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money
shall thereupon cease.
SECTION 8.07. Reinstatement. If the Trustee or Paying Agent is unable to
apply any cash, U.S. Legal Tender Equivalents or U.S. Government Obligations in
accordance with Section 8.02 or 8.03, as the case may be, by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the Company's obligations under
this Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.02 or 8.03 until such time as the
Trustee or Paying Agent is permitted to apply such money in accordance with
Sections 8.02 and 8.03, as the case may be; provided, however, that, if the
Company makes any payment of principal of, premium, if any, or interest on any
Security following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the cash held by the Trustee or Paying Agent.
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ARTICLE 9
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Supplemental Indentures Without Consent of Holders. Without
the consent of any Holder, the Company, when authorized by Board Resolutions,
and the Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any of
the following purposes:
(1) to cure any ambiguity, defect, or inconsistency, or
to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be
inconsistent with the provisions of this Indenture, provided
such action pursuant to this clause (1) shall not adversely
affect the interests of any Holder in any respect;
(2) to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power
herein conferred upon the Company or to make any other change
that does not adversely affect the rights of any Holder,
provided that the Company has delivered to the Trustee an
Opinion of Counsel stating that such change does not adversely
affect the rights of any Holder;
(3) to provide for collateral or guarantors for the
Securities;
(4) to evidence the succession of another Person to the
Company, and the assumption by any such successor of the
obligations of the Company, herein and in the Securities in
accordance with Article 5;
(5) to comply with the TIA; or
(6) to provide for the issuance and authorization of the
Exchange Securities.
SECTION 9.02. Amendments, Supplemental Indentures and Waivers with Consent
of Holders. Subject to Section 6.08, with the consent of the Holders of not less
than a majority in aggregate principal amount of then outstanding Securities, by
written act of said Holders delivered to the Company and the
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Trustee, the Company, when authorized by Board Resolutions, and the Trustee may
amend or supplement this Indenture or the Securities or enter into an indenture
or indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
the Securities or of modifying in any manner the rights of the Holders under
this Indenture or the Securities. Subject to Section 6.08, the Holder or Holders
of not less than a majority, in principal amount of then outstanding Securities
may waive compliance by the Company with any provision of this Indenture or the
Securities. Notwithstanding any of the above, however, no such amendment,
supplemental indenture or waiver shall, without the consent of the Holder of
each outstanding Security affected thereby:
(1) reduce the percentage of principal amount of
Securities whose Holders must consent to an amendment,
supplement or waiver of any provision of this Indenture or the
Securities;
(2) reduce the rate or extend the time for payment of
interest on any Security;
(3) reduce the principal amount of any Security, the
Change of Control Purchase Price, the Asset Sale Offer Price
or the Redemption Price;
(4) change the Stated Maturity of any Security;
(5) alter the security provisions of Section 4.20 or the
redemption provisions of Article 3 or paragraph 5 of the
Securities or the terms or provisions of Section 4.15 or the
terms or provisions of Article 11, in any case, in a manner
adverse to any Holder;
(6) make any changes in the provisions concerning
waivers of Defaults or Events of Default by Holders of the
Securities or the rights of Holders to recover the principal
or premium of, interest on, or redemption payment with respect
to, any Security, including without limitation any changes in
Section 6.08, 6.12 or this third sentence of this Section
9.02;
(7) make the principal of, or the interest on, any
Security payable with anything or in any manner other than as
provided for in this Indenture (including changing
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the place of payment where, or the coin or currency in which,
any Security or any premium or the interest thereon is
payable) and the Securities as in effect on the date hereof;
or
(8) make the Securities subordinated in right of payment
to any extent or under any circumstances to any other
indebtedness.
With the consent of Holders of two-thirds of the outstanding aggregate
principal amount of the Securities, the Company and the Trustee may change the
Change of Control Purchase Date and the Asset Sale Offer Period.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02 becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture or waiver.
After an amendment, supplement or waiver under this Section 9.02 or
Section 9.4 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under this Article
9, the Company may, but shall not be obligated to, offer to any Holder who
consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or waiver.
SECTION 9.03. Compliance with TIA. Every amendment, waiver or supplement
of this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents. Until an amendment,
waiver or supplement becomes effective, a consent to it by a Holder is a
continuing consent by the Holder and every subsequent Holder of a Security or
portion of a Security that evidences the same debt as the consenting Holder's
Security, even if notation of the consent is not made on any Security. However,
any such Holder or subsequent Holder may revoke the consent as to his Security
or portion of his Security by written notice to the Company or the Person
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designated by the Company as the Person to whom consents should be sent if such
revocation is received by the Company or such Person before the date on which
the Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Securities have consented (and not theretofore
revoked such consent) to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be the date so fixed by the
Company notwithstanding the provisions of the TIA. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those Persons who were Holders at such record date, and only those Persons (or
their duly designated proxies), shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.
After an amendment, supplement or waiver becomes effective, it shall bind
every Securityholder, unless it makes a change described in any of clauses (1)
through (8) of Section 9.02, in which case, the amendment, supplement or waiver
shall bind only each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security; provided that any such waiver shall
not impair or affect the right of any Holder to receive payment of principal and
premium of and interest on a Security, on or after the respective dates set for
such amounts to become due and payable expressed in such Security, or to bring
suit for the enforcement of any such payment on or after such respective dates.
SECTION 9.05. Notation on or Exchange of Securities. If an amendment,
supplement or waiver changes the terms of a Security, the Trustee may require
the Holder of the Security to deliver it to the Trustee or require the Holder to
put an appropriate notation on the Security. The Trustee may place an
appropriate notation on the Security about the changed terms and return it to
the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Any failure to make
the appropriate notation or to issue a new Security shall not affect the
validity of such amendment, supplement or waiver.
SECTION 9.06. Trustee to Sign Amendments, Etc. The Trustee shall execute
any amendment, supplement or waiver authorized pursuant to this Article 9;
provided that the Trustee may, but shall not be obligated to, execute any such
amendment, supplement or waiver which affects the Trustee's own rights, duties
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or immunities under this Indenture. The Trustee shall be entitled to receive,
and shall be fully protected in relying upon, an Opinion of Counsel stating that
the execution of any amendment, supplement or waiver authorized pursuant to this
Article 9 is authorized or permitted by this Indenture.
ARTICLE 10
COLLATERAL ACCOUNT AND RELEASES
SECTION 10.01. Collateral Account.
(a) Prior to the Issue Date of the Securities, the Trustee shall open with
Harris Trust and Savings Bank (the "Bank") and shall require the Bank to
establish on its books and maintain, a trust account (the "Collateral Account")
into which the Trustee shall deposit the Special Redemption Amount when received
from the Company pursuant to Section 4.20. In order to secure the full and
punctual payment of the Securities in accordance with the terms hereof (but
subject to the provisions of this Article 10 governing release of funds held in
the Collateral Account), the Company hereby grants to the Trustee a continuing
security interest in and to all of its right, title and interest in and to the
Collateral Account, all cash deposited therein and the Treasury Bills held
therein pursuant to Section 10.02 and all proceeds of any of the foregoing,
whether now existing or hereafter acquired or arising. The Collateral Account
shall relate solely to the Securities and the Collateral securing the
Securities, and funds in such account shall not be commingled with any other
moneys or properties, tangible or intangible. All payments to be made from time
to time by the Trustee to the Holders of Securities out of funds in the
Collateral Account as payment of the Redemption Price in connection with a
Special Redemption shall be made by the Trustee as Paying Agent. All moneys
deposited from time to time in the Collateral Account pursuant to this Indenture
shall be held by the Trustee in trust hereunder as Collateral as herein
provided. Any payments of principal of or interest on, or proceeds from the sale
of, Treasury Bills held in the Collateral Account shall be credited and
deposited into the Collateral Account. The Collateral Account shall be titled
"Bank of Montreal Trust Company, Trustee for benefit of holders of securities of
Price Communications Wireless, Inc., under an Indenture dated July 10, 1997
Collateral Account."
(b) The Collateral Account shall be maintained with the Bank until release
by the Trustee contemporaneously with the earliest of (i), (ii) or (iii) of this
subparagraph (b) to occur: (i)(A) the closing of the Merger, (B) the borrowing
by the Company of an aggregate of at least $325.0 million pursuant to
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the Credit Agreement and (C) the receipt by the Company of the PCC Equity
Contribution, and (D) receipt by the Trustee of an order from the Company
requesting that the Trustee release the Collateral to the order of the Company;
or (ii) the Business Day prior to the Special Redemption Date or (iii) the date
of which no Securities remain outstanding.
SECTION 10.02. Eligible Investments. Upon order from the Company, the
Trustee shall invest any funds in the Collateral Account in Treasury Bills,
provided that;
(a) any such investment and the proceeds therefrom are held through the
Collateral Account, and
(b) concurrently with making such investment, the Trustee ensures that
(i) the Bank credits the Treasury Bills to the Collateral Account
and (ii) the Bank causes a corresponding position to be credited to
its securities account (A) at the Federal Reserve Bank of New York
or (B) at a securities intermediary (as defined in 31 C.F.R
ss.357.2) that has a Participant's Securities Account with the
Federal Reserve Bank of New York and also credited to such
Participant's Securities Account, in each case pursuant to Treasury
Regulations and the New York Uniform Commercial Code (the "UCC"), to
the extent such laws are applicable.
The Trustee shall not be liable for any loss incurred on any funds
invested in Treasury Bills pursuant to the provisions of this Section 10.02.
SECTION 10.03. Release of Collateral.
Upon order from the Company to the Trustee pursuant to clause (i) of
Section 10.01(b), all properties in the Collateral Account shall be released to
the Company and the security interests in the Collateral created under Section
10.01 shall terminate; and upon the Special Redemption, the Trustee shall apply
all funds in the Collateral Account (i) first, to pay the Redemption Price on
the Special Redemption Date in respect of the Special Redemption and (ii)
immediately after the Special Redemption Date, to return any remaining funds in
the Collateral Account to the Company. The Trustee, when required by the
provisions of the foregoing sentence, shall execute instruments to release the
Collateral from the lien of this Indenture, or convey the Trustee's interest in
the same, in a manner and under circumstances which are not inconsistent with
the provisions of this Indenture, and shall have the power to effect any sale of
the Treasury Bills or any portion thereof at such time. The Trustee shall not be
liable for any loss incurred upon the sale of Treasury Bills prior to maturity
in
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accordance with this Section and Section 3.06. No party relying upon an
instrument executed by the Trustee as provided in this Article 10 shall be bound
to ascertain the Trustee's authority, inquire into the satisfaction of any
conditions precedent or see to the application of any moneys.
ARTICLE 11
RIGHT TO REQUIRE REPURCHASE
SECTION 11.01. Repurchase of Securities at Option of the Holder Upon a
Change of Control.
(a) In the event that a Change of Control occurs, each Holder will have
the right, at such Holder's option, to require the Company to repurchase all or
any part of such Holder's Securities (provided that the principal amount of such
Securities at stated maturity must be $1,000 or an integral multiple thereof)
pursuant to an unconditional, irrevocable offer by the Company (the "Change of
Control Offer") on a date that is no later than 45 Business Days after the
occurrence of such Change of Control (the "Change of Control Purchase Date"), at
a cash price (the "Change of Control Purchase Price") equal to 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest, if any, to
and including the Change of Control Purchase Date.
(b) Prior to the commencement of a Change of Control Offer, but in any
event within 30 days following any Change of Control, the Company covenants to,
if at such time the terms of the Credit Agreement require repayment upon a
Change of Control, (i) repay in full and terminate all commitments and
Indebtedness under the Credit Agreement or, (ii)(A) offer to repay in full and
terminate all commitments and Indebtedness under the Credit Agreement and (B)
repay the Indebtedness owed to each such lender that has accepted such offer or
(iii) obtain the requisite consents under the Credit Agreement to waive the
provisions of this sentence. The Company's failure to comply with the preceding
sentence shall constitute an Event of Default described in Section 6.01(c) and
not in Section 6.01(b).
(c) In the event that, pursuant to this Section 11.01, the Company shall
be required to commence a Change of Control Offer, the Company shall follow the
procedures set forth in this Section 11.01 as follows:
(1) the Change of Control Offer shall commence within 20 Business
Days following the Change of Control date;
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(2) the Change of Control Offer shall remain open for 20 Business
Days, except to the extent that a longer period is required by applicable
law (the "Change of Control Offer Period");
(3) upon the expiration of a Change of Control Offer Period, the
Company shall purchase all of the properly tendered and not properly
withdrawn Securities in response to the Change of Control Offer;
(4) the Company shall provide the Trustee with notice of the Change
of Control Offer at least 5 Business Days before the commencement of any
Change of Control Offer; and
(5) on or before the commencement of any Change of Control Offer,
the Company or the Trustee (upon the request and at the expense of the
Company) shall send, by first-class mail, a notice to each of the
Securityholders, which (to the extent consistent with this Indenture)
shall govern the terms of the Change of Control Offer and shall state:
(i) that the Change of Control Offer is being made pursuant to such
notice and this Section 11.01 and that all Securities, or portions
thereof, tendered will be accepted for payment;
(ii) the Change of Control Purchase Price (including the amount of
accrued and unpaid interest), the Change of Control Purchase Date and the
Change of Control Put Date (as defined below);
(iii) that any Security, or portion thereof, not tendered or
accepted for payment will continue to accrue interest;
(iv) that, unless the Company defaults in depositing cash with the
Paying Agent in accordance with the last paragraph of this clause (b) or
such payment is prevented, any Security, or portion thereof, accepted for
payment pursuant to the Change of Control Offer shall cease to accrue
interest after the Change of Control Purchase Date;
(v) that Holders electing to have a Security, or portion thereof,
purchased pursuant to a Change of Control Offer will be required to
surrender the Security, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Security completed, to the Paying Agent
(which may not for purposes of this Section 11.01, notwithstanding
anything in this Indenture to the contrary, be the Company or any
Affiliate of the Company) at the address specified in the notice prior to
the close of
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business on the earlier of (a) the third Business Day prior to the Change
of Control Purchase Date and (b) the third Business Day following the
expiration of the Change of Control Offer (such earlier date being the
"Change of Control Put Date");
(vi) that Holders will be entitled to withdraw their election, in
whole or in part, if the Paying Agent (which may not for purposes of this
Section 11.01, notwithstanding anything in this Indenture to the contrary,
be the Company or any Affiliate of the Company) receives, up to the close
of business on the Change of Control Put Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Securities the Holder is withdrawing and a
statement that such Holder is withdrawing his election to have such
principal amount of Securities purchased; and
(vii) a brief description of the events resulting in such Change of
Control.
Any such Change of Control Offer shall comply with all applicable
provisions of Federal and state securities laws, rules and regulations,
including those regulating tender offers, if applicable, and any provisions of
this Indenture which conflict with such laws shall be deemed to be superseded by
the provisions of such laws.
On or before the Change of Control Purchase Date, the Company will (i)
accept for payment Securities or portions thereof properly tendered and not
properly withdrawn pursuant to the Change of Control Offer, (ii) deposit with
the Paying Agent cash sufficient to pay the Change of Control Purchase Price
(including accrued and unpaid interest) for all Securities or portions thereof
so tendered and (iii) deliver to the Trustee Securities so accepted together
with an Officers' Certificate listing the Securities or portions thereof being
purchased by the Company. The Paying Agent will on the Change of Control
Purchase Date promptly deliver to Holders of Securities so accepted payment in
an amount equal to the Change of Control Purchase Price for such Securities,
together with any accrued but unpaid interest, and the Trustee shall promptly
authenticate and mail or deliver to such Holders a new Security equal in
principal amount to any unpurchased portion of the Security surrendered. Any
Securities not so accepted shall be promptly mailed or delivered by the Company
to the Holder thereof. The Company will announce publicly the results of the
Change of Control Offer on or as soon as practicable after the Change of Control
Purchase Date.
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ARTICLE 12
SUBORDINATION
SECTION 12.01. Securities Subordinated to Senior Indebtedness.
The Company and each Holder, by its acceptance of Securities, agree that
(a) the payment of the principal of and interest on the Securities and (b) any
other payment in respect of the Securities, including on account of the
acquisition or redemption of the Securities by the Company (including, without
limitation, pursuant to Section 4.15 or 11.01) is subordinated, to the extent
and in the manner provided in this Article 12, to the prior payment of Senior
Indebtedness of the Company and that these subordination provisions are for the
benefit of the holders of Senior Indebtedness. Notwithstanding anything
contained in this Article 12, no payments to any holders of Senior Indebtedness
shall be made out of investments or proceeds held in the Collateral Account,
which shall be applied solely as provided in Article 10 hereof.
This Article 12 shall constitute a continuing offer to all Persons who, in
reliance upon such provisions, become holders of, or continue to hold, Senior
Indebtedness, and such provisions are made for the benefit of the holders of
Senior Indebtedness, and such holders are made obligees hereunder and any one or
more of them may enforce such provisions.
SECTION 12.02. No Payment on Securities in Certain Circumstances.
(a) No payment may be made by or on behalf of the Company on account of the
principal of, premium, if any, or interest on the Securities (including any
repurchases of Securities) or on account of any other monetary obligation for
the payment of money due on the Securities, including the redemption provisions
of the Securities, for cash or property (other than Junior Securities issued in
connection with a reorganization pursuant to the Bankruptcy Laws of any
jurisdiction), (i) upon the maturity of any Senior Indebtedness by lapse of
time, acceleration (unless waived) or otherwise, unless and until all principal
of, premium, if any, and interest (and with respect to the Credit Agreement, any
other Obligations) on such Senior Indebtedness are first paid in full in cash or
Cash Equivalents (or, with respect to Senior Indebtedness other than the Credit
Agreement, such payment is duly provided for), or otherwise to the extent such
holders expressly acknowledge satisfaction of amounts due by settlement other
than in cash or Cash Equivalents, or (ii) in the event of default in the payment
of any principal of, premium, if any, or interest on Senior Indebtedness of the
Company when it becomes due and payable, whether at maturity or at a date fixed
for prepayment or by declaration or otherwise (a "Payment De-
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fault"), unless and until such Payment Default has been cured or waived or
otherwise has ceased to exist.
(b) Upon (i) the happening of an event of default (other than a Payment
Default) that permits the holders of Senior Indebtedness (or a trustee or agent
on behalf of such holders) to declare such Senior Indebtedness to be due and
payable and (ii) written notice of such event of default given to the Trustee by
the holders (or a trustee, agent or other representative of such holders) of an
aggregate of at least $25 million principal amount outstanding of any Designated
Senior Indebtedness (a "Payment Notice"), then, unless and until such event of
default has been cured or waived or otherwise has ceased to exist, no payment
may be made by or on behalf of the Company on account of the principal of,
premium, if any, or interest on the Securities, or to repurchase any of the
Securities, or on account of any other obligation for the payment of money in
respect of the Securities, including the redemption provisions of the
Securities, in any such case (other than payments made with Junior Securities
issued in connection with a reorganization pursuant to the Bankruptcy Laws of
any jurisdiction). Notwithstanding the foregoing, unless the Senior Indebtedness
in respect of which such event of default exists has been declared due and
payable in its entirety within 179 days after the Payment Notice is delivered as
set forth above (the "Payment Blockage Period") and such declaration has not
been rescinded or waived, at the end of the Payment Blockage Period, the Company
shall be required, unless the provisions described in Section 12.02(a) are then
applicable, to pay all sums not paid to the Holders of the Securities during the
Payment Blockage Period, due to the foregoing prohibitions and to resume all
other payments as and when due on the Securities. Any number of Payment Notices
may be given; provided, however, that (i) not more than one Payment Notice shall
be given within a period of any 360 consecutive days, and (ii) no default that
existed upon the date of such Pay ment Notice or the commencement of such
Payment Blockage Period (whether or not such event of default relates to the
same issue of Senior Indebtedness) shall be made the basis for the commencement
of any other Payment Blockage Period (it being acknowledged that any subsequent
action, or any breach of any financial covenant for a period commencing after
the expiration of such Payment Blockage Period that, in either case, would give
rise to a new event of default, even though it is a breach pursuant to any
provision under which a prior event of default previously existed, shall
constitute a new event of default for this purpose).
(c) In furtherance of the provisions of Section 12.01, in the event that,
notwithstanding the foregoing provisions of this Section 12.02, any payment or
distribution of assets of the Company (other than Junior Securities issued in
connection with a reorganization pursuant to the Bankruptcy Laws of any
jurisdiction) shall be received by the Trustee or the Holders at a time when
such
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payment or distribution is prohibited by the foregoing provisions, such payment
or distribution shall be held in trust for the benefit of the holders of such
Senior Indebtedness, and shall be paid or delivered by the Trustee or such
Holders, as the case may be, to the holders of such Senior Indebtedness
remaining unpaid (or, with respect to Senior Indebtedness other than the Credit
Agreement, unprovided for) or to their representative or representatives, or to
the trustee or trustees under any indenture pursuant to which any instruments
evidencing any of such Senior Indebt edness may have been issued, ratably
according to the aggregate principal amounts remaining unpaid on account of such
Senior Indebtedness held or represented by each, for application to the payment
of all such Senior Indebtedness remaining unpaid, to the extent necessary to
pay (or, with respect to Senior Indebtedness other than the Credit Agreement to
provide for the payment) of all such Senior Indebt edness in full, or otherwise
to the extent holders expressly acknowledge satisfaction of amounts due after
giving effect to any concurrent payment or distri bution to the holders of such
Senior Indebtedness.
SECTION 12.03. Securities Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorganization.
Upon any distribution of assets of the Company upon any dissolution,
winding up, total or partial liquidation or reorganization of the Company,
whether voluntary or involuntary, in bankruptcy, insolvency, receivership or
similar proceeding or upon assignment for the benefit of creditors or any
marshalling of assets or liabilities:
(a) the holders of all Senior Indebtedness of the Company will first be
entitled to receive payment in full in cash or Cash Equivalents (or, with
respect to Senior Indebtedness other than the Credit Agreement to have such
payment duly provided for), or with respect to any holder, otherwise to the
extent such holders expressly acknowledge satisfaction of amounts due in
settlement other than in cash or Cash Equivalents (it being acknowledged that
approval of a plan of reorganization in a bankruptcy proceeding shall not
constitute satisfaction of amounts due in settlement), before the Holders are
entitled to receive any payment on account of the principal of, premium, if any,
and interest on the Securities (other than Junior Securities issued in
connection with a reorganization pursuant to the Bankruptcy Laws of any
jurisdiction);
(b) any payment or distribution of assets of the Company of any kind or
character from any source, whether in cash, property or securities (other than
with Junior Securities issued in connection with a reorganization pursuant to
the Bankruptcy Laws of any jurisdiction) to which the Holders or the Trustee on
behalf of the Holders would be entitled, except for the provisions of this
Article 12, will be paid by the liquidating trustee or agent or other Person
making such a
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payment or distribution directly to the holders of such Senior Indebtedness or
their representative to the extent necessary to make payment in full on all such
Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character from any source,
whether in cash, property or securities (excluding payments made with Junior
Securities issued in connection with a reorganization pursuant to the Bankruptcy
Laws of any jurisdiction), shall be received by the Trustee or the Holders or
any Paying Agent (or, if the Company is acting as its own Paying Agent, money
for any such payment or distribution shall be segregated or held in trust) on
account of any principal, premium, interest, or other obligation for the payment
of money in respect of the Securities, before all Senior Indebtedness of the
Company is paid in full in cash or Cash Equivalents, such payment or
distribution (subject to the provisions of Section 12.07) shall be received and
held in trust by the Trustee or such Holder or Paying Agent for the benefit of
the holders of such Senior Indebtedness, or their respective representatives,
ratably according to the respective amounts of such Senior Indebtedness held or
represented by each, to the extent necessary to make payment as provided herein
of all such Senior Indebtedness remaining unpaid after giving effect to all
concurrent payments and distributions and all provisions therefor to or for the
holders of such Senior Indebtedness, but only to the extent that as to any
holder of such Senior Indebtedness, as promptly as practical fol lowing notice
from the Trustee to the holders of such Senior Indebtedness that such prohibited
payment has been received by the Trustee, Holder(s) or Paying Agent (or has been
segregated as provided above), such holder (or a representative therefor)
notifies the Trustee of the amounts then due and owing on such Senior
Indebtedness, if any, held by such holder and only the amounts specified in such
notices to the Trustee shall be paid to the holders of such Senior Indebtedness.
SECTION 12.04. Securityholders to Be Subrogated to Rights of Holders of
Senior Indebtedness.
Subject to the payment in full in cash or Cash Equivalents of all Senior
Indebtedness as provided herein, the Holders of Securities shall be subrogated
to the rights of the holders of such Senior Indebtedness to receive payments or
distributions of assets of the Company applicable to the Senior Indebtedness
until all amounts owing on the Securities shall be paid in full, and for the
purpose of such subrogation no such payments or distributions to the holders of
such Senior Indebtedness by or on behalf of the Company, or by or on behalf of
the Holders by virtue of this Article 12, which otherwise would have been made
to the Holders shall, as between the Company and the Holders, be deemed to be
pay-
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ment by the Company or on account of such Senior Indebtedness, it being
understood that the provisions of this Article 12 are and are intended solely
for the purpose of defining the relative rights of the Holders, on the one hand,
and the holders of such Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders would otherwise have
been entitled but for the provisions of this Article 12 shall have been applied,
pursuant to the provisions of this Article 12, to the payment of amounts payable
under Senior Indebtedness of the Company, then the Holders shall be entitled to
receive from the holders of such Senior Indebtedness any payments or
distributions received by such holders of Senior Indebtedness in excess of the
amount sufficient to pay all amounts payable under or in respect of such Senior
Indebtedness in full in cash or Cash Equivalents.
SECTION 12.05. Obligations of the Company Unconditional.
Nothing contained in this Article 12 or elsewhere in this Indenture or in
the Securities is intended to or shall impair, as between the Company and the
Holders, the obligation of each such Person, which is absolute and
unconditional, to pay to the Holders the principal of, premium, if any, and
interest on the Securities as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders and creditors of the Company other than the holders of the
Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or
any Holder from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article 12, of the holders of Senior Indebtedness in re spect of cash, property
or securities of the Company received upon the exercise of any such remedy.
Notwithstanding anything to the contrary in this Article 12 or elsewhere in this
Indenture or in the Securities, upon any distribution of assets of the Company
referred to in this Article 12, the Trustee, subject to the provisions of
Sections 7.01 and 7.02, and the Holders shall be entitled to rely upon any order
or decree made by any court of competent jurisdiction in which such dissolution,
winding up, liquidation or reorganization proceedings are pending, or a
certificate of the liquidating trustee or agent or other Person making any
distribution to the Trustee or to the Holders for the purpose of ascertaining
the Persons entitled to participate in such distribution, the holders of the
Senior Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 12 so long as such court has been
apprised of the provisions of, or the order, decree or certificate makes
reference to, the provisions of this Article 12. Nothing in this Section 12.05
shall apply to the claims of, or payments to, the Trustee under or pursuant to
Section 7.07.
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SECTION 12.06. Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice.
The Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee unless and until a Trust Officer of the Trustee or any Paying Agent
shall have received, no later than one Business Day prior to such payment,
written notice thereof from the Company or from one or more holders of Senior
Indebtedness or from any representative therefor and, prior to the receipt of
any such written notice, the Trustee, subject to the provisions of Sections 7.01
and 7.02, shall be entitled in all respects conclusively to assume that no such
fact exists.
SECTION 12.07. Application by Trustee of Assets Deposited with It.
Amounts deposited in trust with the Trustee pursuant to and in accordance
with Article 8 shall be for the sole benefit of the Holders and shall not be
subject to the subordination provisions of this Article 12. Otherwise, any
deposit of assets with the Trustee or the Paying Agent (whether or not in trust)
for the payment of principal of or interest on any Securities shall be subject
to the provisions of Sections 12.01, 12.02, 12.03 and 12.04; provided, that, if
prior to one Business Day preceding the date on which by the terms of this
Indenture any such assets may become distributable for any purpose (including
without limitation, the payment of either principal of or interest on any
Security) the Trustee or such Paying Agent shall not have received with respect
to such assets the written notice provided for in Section 12.06, then the
Trustee or such Paying Agent shall have full power and authority to receive such
assets and to apply the same to the purpose for which they were received, and
shall not be affected by any notice to the contrary which may be received by it
on or after such date.
SECTION 12.08. Subordination Rights Not Impaired by Acts or Omissions of
the Company or Holders of Senior Indebtedness.
No right of any present or future holders of any Senior Indebtedness to
enforce subordination provisions contained in this Article 12 shall at any time
in any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms of this Indenture,
regardless of any knowledge thereof which any such holder may have or be
otherwise charged with. The holders of Senior Indebtedness may extend, renew,
modify or amend the terms of the Senior Indebtedness or any security therefor
and release, sell or ex change such security and otherwise deal freely with the
Company, all
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without affecting the liabilities and obligations of the parties to this
Indenture or the Holders.
SECTION 12.09. Securityholders Authorize Trustee to Effectuate
Subordination of Securities.
Each Holder of the Securities by his acceptance thereof authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provisions contained in
this Article 12 and to protect the rights of the Holders pursuant to this
Indenture, and appoints the Trustee his attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors or any other
marshalling of assets and liabilities of the Company), the immediate filing of
a claim for the unpaid balance of his Securities in the form required in said
proceedings and cause said claim to be approved. If the Trustee does not file a
proper claim or proof of debt in the form required in such proceeding prior to
30 days before the expiration of the time to file such claim or claims, then the
holders of the Senior Indebtedness or their representative are or is hereby
authorized to have the right to file and are or is hereby authorized to file an
appropriate claim for and on behalf of the Holders of said Securities. Nothing
herein contained shall be deemed to authorize the Trustee or the holders of
Senior Indebtedness or their representative to authorize or consent to or accept
or adopt on behalf of any Securityholder any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or the rights of
any Holder thereof, or to authorize the Trustee or the holders of Senior
Indebtedness or their representative to vote in respect of the claim of any
Securityholder in any such proceeding.
SECTION 12.10. Right of Trustee to Hold Senior Indebtedness.
The Trustee shall be entitled to all of the rights set forth in this
Article 12 in respect of any Senior Indebtedness at any time held by it to the
same extent as any other holder of Senior Indebtedness, and nothing in this
Indenture shall be construed to deprive the Trustee of any of its rights as such
holder.
SECTION 12.11. Article 12 Not to Prevent Events of Default.
The failure to make a payment on account of principal of, premium, if any,
or interest or any other monetary obligation for the payment of money on the
Securities by reason of any provision of this Article 12 shall not be construed
as preventing the occurrence of a Default or an Event of Default under Section
6.01 or in any way prevent the Trustee or the Holders from exercising any right
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hereunder, subject to the rights, if any, under this Article of the holders of
Senior Indebtedness in respect of cash, property, securities or other assets
received upon the exercise of any such right.
SECTION 12.12. No Fiduciary Duty of Trustee to Holders of Senior
Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the holders
of Senior Indebtedness, and shall not be liable to any such holders (other than
for its willful misconduct or negligence) if it shall in good faith mistakenly
pay over or distribute to the Holders of Securities or the Company or any other
Person, cash, property or securities to which any holders of Senior Indebtedness
shall be entitled by virtue of this Article 12 or otherwise. Nothing in this
Section 12.12 shall affect the obligation of any other such Person to hold such
payment for the benefit of, and to pay such payment over to, the holders of
Senior Indebtedness or their representative.
ARTICLE 13
MISCELLANEOUS
SECTION 13.01. TIA Controls. If any provision of this Indenture limits,
qualifies, or conflicts with the duties imposed by operation of the TIA, the
imposed duties, upon qualification of this Indenture under the TIA, shall
control.
SECTION 13.02. Notices. Any notices or other communications to the Company
or the Trustee required or permitted hereunder shall be in writing, and shall be
sufficiently given if made by hand delivery, by telex, by telecopier or
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
if to the Company:
Price Communications Wireless, Inc.
45 Rockefeller Plaza
New York, New York 10020
Attention: Chief Financial Officer
Telecopy: (212) 397-3755
if to the Trustee:
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Bank of Montreal Trust Company
77 Water Street
4th Floor
New York, New York 10005
Attention: Corporate Trust Department
Telecopy: (212) 701-7684
Any party by notice to each other party may designate additional or
different addresses as shall be furnished in writing by such party. Any notice
or communication to any party shall be deemed to have been given or made as of
the date so delivered, if personally delivered; when answered back, if telexed;
when receipt is acknowledged, if telecopied; and five Business Days after
mailing if sent by registered or certified mail, postage prepaid (except that a
notice of change of address shall not be deemed to have been given until
actually received by the addressee).
Any notice or communication mailed to a Securityholder shall be mailed to
him by first class mail or other equivalent means at his address as it appears
on the registration books of the Registrar and shall be sufficiently given to
him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 13.03. Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any other Person shall
have the protection of TIA ss. 312(c).
SECTION 13.04. Certificate and Opinion as to Conditions Precedent. Upon
any request or application by the Company to the Trustee to take any action
under this Indenture, such Person shall furnish to the Trustee:
(1) an Officers' Certificate (in form and substance
reasonably satisfactory to the Trustee) stating that, in the
opinion of the signers, all conditions precedent, if any,
provided for in this Indenture relating to the proposed action
have been complied with; and
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(2) an Opinion of Counsel (in form and substance
reasonably satisfactory to the Trustee) stating that, in the
opinion of such counsel, all such conditions precedent have
been complied with.
SECTION 13.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall include:
(1) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he
has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of
each such Person, such condition or covenant has been complied
with; provided, however, that with respect to matters of fact
an Opinion of Counsel may rely on an Officers' Certificate or
certificates of public officials.
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar. The Trustee may
make reasonable rules for action by or at a meeting of Securityholders. The
Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 13.07. Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday
or a day on which banking institutions in New York, New York are authorized or
obligated by law or executive order to close. If a payment date is a Legal
Holiday at such place, payment may be made at such place on the next succeeding
day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
SECTION 13.08. Governing Law. THIS INDENTURE AND THE SECURITIES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS
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APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK. THE
COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND
THE SECURITIES, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.
THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF THE TRUSTEE OR ANY SECURITYHOLDER TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE COMPANY IN ANY OTHER JURISDICTION.
SECTION 13.09. No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or any of its respective Subsidiaries. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.
SECTION 13.10. No Recourse Against Others. No direct or indirect employee,
stockholder, director or officer, as such, past, present or future of the
Company, or any successor entity, shall have any personal liability in respect
of the obligations of the Company under the Securities or this Indenture by
reason of his or its status as such stockholder, employee, director or officer.
Each Securityholder by accepting a Security waives and releases all such
liability. Such waiver and release are part of the consideration for the
issuance of the Securities.
SECTION 13.11. Successors. All agreements of the Company in this Indenture
and the Securities shall bind its successor. All agreements of the Trustee in
this Indenture shall bind its successor.
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SECTION 13.12. Duplicate Originals. All parties may sign any number of
copies or counterparts of this Indenture. Each signed copy or counterpart shall
be an original, but all of them together shall represent the same agreement.
SECTION 13.13. Severability. In case any one or more of the provisions in
this Indenture or in the Securities shall be held invalid, illegal or
unenforceable, in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions shall not in any way be affected or impaired thereby, it being
intended that all of the provisions hereof shall be enforceable to the full
extent permitted by law.
SECTION 13.14. Table of Contents, Headings, Etc. The Table of Contents,
Cross-Reference Table and headings of the Articles and the Sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof and shall in no way modify or restrict any of the terms
or provisions hereof.
SECTION 13.15. Qualification of Indenture. The Company shall qualify this
Indenture under the TIA in accordance with the terms and conditions of the
Registration Rights Agreement and shall pay all costs and expenses (including
attorneys' fees for the Company and the Trustee) incurred in connection
therewith, including, but not limited to, costs and expenses of qualification of
the Indenture and the Securities and printing this Indenture and the Securities.
The Trustee shall be entitled to receive from the Company any such Officers'
Certificates, Opinions of Counsel or other documentation as it may reasonably
request in connection with any such qualification of this Indenture under the
TIA.
SECTION 13.16. Registration Rights. Certain Holders of the Securities are
entitled to certain registration rights with respect to such Securities pursuant
to, and subject to the terms of, the Registration Rights Agreement.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date first written above.
PRICE COMMUNICATIONS WIRELESS,
INC., a Delaware corporation
By:
------------------------------------------
Name:
Title:
Attest:
----------------------
Secretary
BANK OF MONTREAL TRUST
COMPANY, Trustee
By:
------------------------------------------
Name:
Title:
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Exhibit A
[FORM OF SECURITY]
11 3/4% SERIES [A/B] SENIOR SUBORDINATED NOTE DUE 2007
No.
CUSIP No.
Price Communications Wireless, Inc., a Delaware corporation (hereinafter
called the "Company," which term includes any successors under the Indenture
hereinafter referred to), for value received, hereby promises to pay to Cede &
Co., or registered assigns, the principal sum of $___________ Dollars, on July
15, 2007.
Interest Payment Dates: January 15 and July 15; commencing January 15,
1998.
Record Dates: January 1 and July 1
Reference is made to the further provisions of this Security on the
reverse side, which will, for all purposes, have the same effect as if set forth
at this place.
IN WITNESS WHEREOF, the Company has caused this Instrument to be duly
executed.
Dated:
PRICE COMMUNICATIONS WIRELESS,
INC., a Delaware corporation
By:
------------------------------------------
Name:
Title:
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[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within-mentioned Indenture.
[Name of Trustee]
as Trustee
By:
------------------------------------------
Authorized Signatory
Dated:
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<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC.
11 3/4% Series [A/B] Senior Subordinated Note due 2007
Unless and until it is exchanged in whole or in part for Securities in
definitive form, this Security may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation, ("DTC"), to the Company
or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.(1)
THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY, MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN
THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), OR (B) IT
IS NOT A U.S. PERSON, IS NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR BENEFIT OF A
U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN
THE TIME PERIOD REFERRED TO UNDER RULE 144(k) (TAKING INTO ACCOUNT THE
PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE
SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR
OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY
THEREOF, (B) TO A PERSON WHOM THE HOLDER REASONABLY BELIEVES IS A QIB PURCHASING
FOR ITS OWN
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(1) This paragraph should only be added if the Security is issued in
global form.
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ACCOUNT OR FOR THE ACCOUNT OF A QIB IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION
FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE,
AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY), (E) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (F) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY)
AND, IN EACH CASE, IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, AND (3)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST
HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON"
HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATIONS UNDER THE SECURITIES
ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER A TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.(2)
1. Interest.
Price Communications Wireless, Inc., a Delaware corporation (hereinafter
called the "Company," which term includes any successors under the Indenture
hereinafter referred to), promises to pay interest on the principal amount of
this Security at the rate and in the manner specified below. Interest will
accrue at 11 3/4% per annum and will be payable semi-annually in cash on each
January 15 and July 15, commencing January 15, 1998, or if any such day is not a
Business Day on the next succeeding Business Day (each an "Interest Payment
Date") to Holders of record of the Securities at the close of business on the
immediately preceding January 1 or July 1, whether or not a Business Day.
Interest will be computed on the basis of a 360-day year consisting of twelve
30-day months. Interest shall accrue from the most recent date to which interest
has been paid or, if no interest has been paid, from the date of issuance. To
the extent lawful, the Company shall pay interest on overdue principal at the
rate of the then applicable interest rate on the Securities; it shall pay
interest on overdue installments of interest (without regard to any applicable
grace periods) at the same rate to the extent lawful.
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(2) This paragraph should be included only for the Initial Securities.
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2. Method of Payment.
The Company shall pay interest on the Securities (except defaulted
interest) to the Persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date. Holders must
surrender Securities to a Paying Agent to collect principal payments. Except as
provided below, the Company shall pay principal and interest in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for payment of public and private debts ("U.S. Legal Tender").
However, the Company may pay principal and interest by wire transfer of Federal
funds, or interest by its check payable in such U.S. Legal Tender. The Company
may deliver any such interest payment to the Paying Agent or the Company may
mail any such interest payment to a Holder at the Holder's registered address.
3. Paying Agent and Registrar.
Initially, Bank of Montreal Trust Company (the "Trustee") will act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-Registrar without notice to the Holders. The Company or any of its
Subsidiaries may, subject to certain exceptions, act as Paying Agent, Registrar
or co-Registrar.
4. Indenture.
The Company issued the Securities under an Indenture, dated as of July 10,
1997 (the "Indenture"), between the Company and the Trustee. Capitalized terms
herein are used as defined in the Indenture unless otherwise defined herein. The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act, as in effect on
the date of the Indenture. The Securities are subject to all such terms, and
Holders of Securities are referred to the Indenture and said Act for a statement
of them. The Securities are general unsecured obligations of the Company limited
in aggregate principal amount to $175,000,000.
5. Redemption. (a) The Company will not have the right to redeem any
Securities prior to July 15, 2002. On or after July 15, 2002, the Company will
have the right to redeem all or any part of the Securities in cash at the
redemption prices (expressed as a percentage of the aggregate principal amount
thereof) set forth below, in each case including accrued and unpaid interest, if
any, to the applicable Redemption Date (subject to the right of Holders of
record on the relevant Regular Record Date to receive interest due on an
Interest Payment Date that is on or prior to the Redemption Date) if redeemed
during the 12-month period beginning July 15 of the years indicated below:
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Year Redemption Price
---- ----------------
2002 105.875%
2003 104.406%
2004 102.938%
2005 101.469%
2006 and thereafter 100.000%
Notwithstanding the optional redemption provisions described in the
preceding paragraph (a), prior to July 10, 2002, in the event that the Company
or Parent consummates one or more offerings of their Qualified Capital Stock on
or before the third anniversary of the date of the issuance of the Securities,
the Company may at its option, use all or a portion of the cash contributed to
it from such offerings to redeem up to 35% of the original aggregate principal
amount of the Securities at a cash redemption price equal to 111.75% of the
principal amount of the Securities, plus accrued and unpaid interest thereon, if
any, to the redemption date; provided that at least $113,750,000 aggregate
principal amount of Securities remains outstanding thereafter.
In the case of a partial redemption, the Trustee shall select the
Securities or portions thereof for redemption on a pro rata basis or in such
other manner as it deems appropriate and fair. The Securities may be redeemed in
part in multiples of $1,000 only.
The Securities will not have the benefit of a sinking fund.
Any such redemption will comply with Article III of the Indenture.
(b) The Securities must be redeemed (the "Special Redemption") on, or at
any time prior to, December 31, 1997 at a redemption price of 101% of the
principal amount of the Securities, plus accrued interest to the date of the
Special Redemption, if the Merger is not consummated on or before December 31,
1997 or if it appears, in the sole judgment of the Company, that the Merger will
not be consummated by December 31, 1997.
6. Notice of Redemption.
Notice of redemption will be sent by first class mail, at least 30 days
and not more than 60 days prior to a Redemption Date other than the Special
Redemption Date, and with respect to the Special Redemption Date, not less than
5 business days prior to the Special Redemption Date, to the Holder of each
Security to be redeemed at such Holder's last address as then shown upon the
registry books of the Registrar.
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<PAGE>
Any notice which relates to a Security to be redeemed in part only must
state the portion of the principal amount to be redeemed and must state that on
and after the date fixed for redemption, upon surrender of such Security, a new
Security or Securities in a principal amount equal to the unredeemed portion
thereof will be issued. On and after the date fixed for redemption, interest
will cease to accrue on the portions of the Securities called for redemption.
7. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in denominations
of $1,000 and integral multiples of $1,000. A Holder may register the transfer
of, or exchange Securities in accordance with, the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer of or exchange any
Securities selected for redemption prior to 15 days after the notice of
redemption.
8. Persons Deemed Owners.
The registered Holder of a Security may be treated as the owner of it for
all purposes.
9. Unclaimed Money.
If money for the payment of principal or interest remains unclaimed for
two years, the Trustee and the Paying Agent(s) will pay the money back to the
Company at its written request. After that, all liability of the Trustee and
such Paying Agent(s) with respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity.
Except as set forth in the Indenture, if the Company irrevocably deposits
with the Trustee, in trust, for the benefit of the Holders, cash, U.S. Legal
Tender Equivalents, U.S. Government Obligations or a combination thereof, in
such amounts as will be sufficient in the opinion of a nationally recognized
firm of independent public accountants selected by the Trustee, to pay the
principal of, premium, if any, and interest on the Securities to redemption or
maturity and comply with the other provisions of the Indenture relating thereto,
the Company will be discharged from certain provisions of the Indenture and the
Securities (including the financial covenants, but excluding their obligation to
pay the principal of and interest on the Securities). Upon satisfaction of
certain additional conditions set forth in the Indenture, the Company may elect
to have its obligations discharged with respect to outstanding Securities.
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<PAGE>
11. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities may be
amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount of the Securities then outstanding, and
any existing Default or Event of Default or compliance with any provision may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the Securities then outstanding. Without notice to or consent of any
Holder, the parties thereto may amend or supplement the Indenture or the
Securities to, among other things, cure any ambiguity, defect or inconsistency,
or make any other change that does not adversely affect the rights of any Holder
of a Security.
12. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the Company
and its Restricted Subsidiaries to, among other things, incur additional
Indebtedness and Disqualified Capital Stock, pay dividends or make certain other
restricted payments, enter into certain transactions with Affiliates, incur
Liens, sell assets, merge or consolidate with any other Person or transfer (by
lease, assignment or otherwise) substantially all of the properties and assets
of the Company. The limitations are subject to a number of important
qualifications and exceptions. The Company must periodically report to the
Trustee on compliance with such limitations.
13. Ranking.
Payment of principal, premium, if any, and interest on the Securities is
subordinated, in the manner and to the extent set forth in the Indenture, to the
prior payment in full of all Senior Indebtedness.
14. Repurchase at Option of Holder.
(a) If there is a Change of Control, the Company shall be required to
offer to purchase on the Change of Control Payment Date all outstanding
Securities at a purchase price equal to 101% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the Change of Control Payment Date.
Holders of Securities will receive a Change of Control Offer from the Company
prior to any related Change of Control Payment Date and may elect to have such
Securities purchased by completing the form entitled "Option of Holder to Elect
Purchase" appearing below.
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<PAGE>
(b) The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries to sell assets. In the event the
proceeds from a permitted Asset Sale exceed certain amounts, as specified in the
Indenture, the Company will be required either to reinvest the proceeds of such
Asset Sale as described in the Indenture or to make an offer to purchase each
Holder's Securities at 100% of the principal amount thereof, plus accrued
interest, if any, to the purchase date.
15. Successors.
When a successor assumes all the obligations of its predecessor under the
Securities and the Indenture, the predecessor will be released from those
obligations.
16. Defaults and Remedies.
If an Event of Default occurs and is continuing (other than as Event of
Default relating to certain events of bankruptcy, insolvency or reorganization),
then in every such case, unless the principal of all of the Securities shall
have already become due and payable, either the Trustee or the Holders of 25% in
aggregate principal amount of Securities then outstanding may declare all the
Securities to be due and payable immediately in the manner and with the effect
provided in the Indenture. The Holders of Securities may not enforce the
Indenture or the Securities except as provided in the Indenture. The Trustee may
require indemnity satisfactory to it before it enforces the Indenture or the
Securities. Subject to certain limitations, Holders of a majority in aggregate
principal amount of the Securities then outstanding may direct the Trustee in
its exercise of any trust or power. The Trustee may withhold from Holders of
Securities notice of any continuing Default or Event of Default (except a
Default in payment of principal or interest), if it determines that withholding
notice is in their interest.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other capacity,
may make loans to, accept deposits from, and perform services for the Company or
its Affiliates, and may otherwise deal with the Company or its Affiliates as if
it were not the Trustee.
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<PAGE>
18. No Recourse Against Others.
No stockholder, director, officer or employee, as such, past, present or
future, of the Company or any successor corporation shall have any personal
liability in respect of the obligations of the Company under the Securities or
the Indenture by reason of his or its status as such stockholder, director,
officer or employee. Each Holder of a Security by accepting a Security waives
and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Securities.
19. Authentication.
This Security shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on the other side of this Security.
20. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a Security
or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
22. Additional Rights of Holders of Transfer Restricted Securities.
In addition to the rights provided to Holders of Securities under the
Indenture, Holders of Securities shall have all the rights set forth in the
Registration Rights Agreement.
A-10
<PAGE>
[FORM OF] ASSIGNMENT
I or we assign this Security to
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of assignee
________________________________________________________________________________
and irrevocably appoint __________ agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
Date:_________________________ Signed:_________________________________________
________________________________________________________________________________
(Sign exactly as name appears on the other side of this Security)
A-11
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.15 or Article 11 of the Indenture, check the appropriate
box:
|_| Section 4.15 |_| Article XI
If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 4.15 or Article XI of the Indenture, as the case may
be, state the principal amount you want to be purchased: $________
Date:_______________________ Signature:________________________________________
(Sign exactly as your name appears on
the other side of this Security)
A-12
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES3
The following exchanges of a part of this Global Security for
Definitive Securities have been made:
<TABLE>
<CAPTION>
Amount of
decrease in Amount of Principal Amount Signature of
Principal increase in of this Global authorized officer
Amount Principal Amount Security following of Trustee or
Date of of this Global of this Global such decrease (or Securities
Exchange Security Security increase) Custodian
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
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(3) This schedule should only be added if the Security is issued in global
form.
A-13
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF SECURITIES(4)
Re: 11 3/4% SERIES A SENIOR SUBORDINATED NOTES DUE 2007 OF PRICE
COMMUNICATIONS WIRELESS, INC.
This Certificate relates to $______ principal amount of Securities held in
*_____ book-entry or * ______ definitive form by _____ (the "Transferor").
1. The Transferor:*
|_| (a) has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Security held by the Depository a Security
or Securities in definitive, registered form of authorized denominations and an
aggregate principal amount equal to its beneficial interest in such Global
Security (or the portion thereof indicated above); or
|_| (b) has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
2. In connection with any such request prior to the date which is two
years after the later of the issuance of this Security (or any predecessor
Security) and the sale hereof by an Affiliate (as defined in Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act")) of the Company
(computed in accordance with paragraph (d) of Rule 144 under the Securities Act)
or by a Transferor that was at the date of such transfer or during the three
months preceding such date of transfer an Affiliate of the Company, and in
respect of each such Security, the Transferor does hereby certify that
Transferor is familiar with the Indenture relating to the above-captioned
Securities and as provided in Section 2.06 of such Indenture, the transfer of
this Security does not require registration under the Securities Act because:*
|_| (a) Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.06(a)(ii)(A) or Section
2.06(d)(i)(A) of the Indenture).
|__| (b) Such Security is being transferred to a person who the Transferor
reasonably believes is a "qualified institutional buyer" (as defined in Rule
144A under the Securities Act) purchasing for its own account or for the account
of a qualified institutional buyer over which it exercises sole investment
discretion that is aware that the transfer is being made in reliance on Rule
144A (in satisfaction
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(4) The following should be included only for Initial Securities.
*Check applicable box.
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<PAGE>
of Section 2.06(a)(ii)(B), Section 2.06(b)(i) or Section 2.06(d)(i)(B) of the
Indenture).
|_| (c) Such Security is being transferred pursuant to an exemption from
registration in accordance with Regulation S under the Securities Act (in
satisfaction of Section 2.06(a)(ii)(C) or Section 2.06(d)(i)(C) of the
Indenture).
|_| (d) Such Security is being transferred to an institutional investor that is
an "accredited investor" within the meaning of Rule 501(a)(1),(2),(3) or (7)
under the Securities Act which delivers a certificate in the form of Exhibit B
to the Indenture to the Trustee (in satisfaction of Section 2.06(a)(ii)(D) or
Section 2.06(d)(i)(D) of the Indenture).
|_| (e) Such Security is being transferred in reliance on and in compliance with
another exemption from the registration requirements of the Securities Act. An
Opinion of Counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate (in
satisfaction of Section 2.06(a)(ii)(E) or Section 2.06(d)(i)(E) of the
Indenture).
----------------------------------
[INSERT NAME OF TRANSFEROR]
By:
-------------------------------
Date:
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3. Affiliation with the Company [check if applicable]
[ ] (a) The undersigned represents and warrants that it is, or at some time
during which it held this Security was, an Affiliate of the Company.
(b) If 3(a) above is checked and if the undersigned was not an Affiliate
of the Company at all times during which it held this Security,
indicate the periods during which the undersigned was an Affiliate
of the Company:
--------------------------------.
(c) If 3(a) above is checked and if the Transferee will not pay the full
purchase price for the transfer of this Security on or prior to the
date of transfer indicate when such purchase price will be paid:
--------------------------------.
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TO BE COMPLETED BY TRANSFEREE IF 2(b) ABOVE IS CHECKED AND THE TRANSFEROR IS NOT
A QUALIFIED INSTITUTIONAL BUYER:
The undersigned represents and warrants that it is a "qualified
institutional buyer" as defined in Rule 144A under the Securities Act of 1933,
as amended, and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information.
Dated:
--------------------------------- ---------------------------------------
NOTICE: To be executed by an officer.
TO BE COMPLETED BY TRANSFEREE IF 2(c) ABOVE IS CHECKED:
The undersigned represents and warrants that it is not a "U.S. Person"
(as defined in Regulation S under the Securities Act of 1933, as amended).
Dated:
--------------------------------- ---------------------------------------
NOTICE: To be executed by an officer.
If none of the boxes under Section 2 of this certificate is checked or if any of
the above representations required to be made by the Transferee is not made, the
Registrar shall not be obligated to register this Security in the name of any
person other than the Holder hereof.
THE UNDERSIGNED HEREBY AGREES THAT, UNLESS THE BOX ABOVE UNDER ITEM 3(a) IS
CHECKED, THE UNDERSIGNED SHALL BE DEEMED TO HAVE REPRESENTED THAT IT IS NOT NOR
HAS IT BEEN AT ANY TIME DURING WHICH IT HELD THIS SECURITY AN AFFILIATE, AS
DEFINED IN RULE 144 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OF THE
COMPANY.
Dated:
----------------------- -----------------------------------------------
NOTICE: The signature of the Holder to
this assignment must correspond with the
name as written upon the face of this
Security particular, without alteration or
enlargement or any change whatsoever..
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<PAGE>
EXHIBIT B
Bank of Montreal Trust Company
Dear Sirs:
In connection with our proposed purchase of $_______ principal amount of
11 3/4% Senior Subordinated Notes due 2007 (the "Notes") of Price Communications
Wireless, Inc. (the "Issuer"), we confirm that:
1. We acknowledge that we have been informed that the Notes were
originally issued and sold to purchasers who have received a copy of the
Offering Memorandum dated July 2, 1997, relating to the Notes and understand
that the Notes have not been, and will not be, registered under the Securities
Act of 1933, as amended (the "Securities Act") and may not be sold except as
permitted in the following sentence. We agree, on our own behalf and on behalf
of any accounts for which we are acting as hereinafter stated, that if we should
sell, pledge or otherwise transfer any Notes prior to the second anniversary of
the later of the original issuance of the Notes or the sale thereof by the
Issuer or an affiliate (within the meaning of Rule 144 under the Securities Act
or any successor rule thereto, an "Affiliate") of the Issuer (computed in
accordance with paragraph (d) of Rule 144 under the Securities Act) or if we are
at the proposed date of such transfer or were during the three months preceding
such proposed date of transfer an Affiliate of the Issuer, we will do so in
compliance with any applicable state securities or "Blue Sky" laws and only (A)
to Issuer, (B) in accordance with Rule 144A under the Securities Act (as
indicated by the box checked by the transferor on the form of assignment on the
reverse of the Note), (C) pursuant to any exemption from registration in
accordance with Regulation S under the Securities Act (as indicated by the box
checked by the transferor on the form of assignment on the reverse of the Note),
(D) to an institutional investor that is an "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act which
delivers a certificate in the form hereof to the trustee under the Indenture
dated as of July 10, 1997 between Issuer and Bank of Montreal Trust Company, as
trustee (the "Indenture Trustee"), or (E) pursuant to any other applicable
exemption under the securities laws, and we further agree, in the capacities
stated above, to provide to any person purchasing any of the Notes from us a
notice advising such purchaser that resales of the Notes are restricted as
stated herein.
In addition, we understand that, upon any proposed resale of any Note
prior to the second anniversary of the later of the original issuance of such
Note (or any predecessor Note thereof) or the sale of such Note (or any
predecessor Note thereof) by Issuer or an Affiliate of Issuer (computed in
accordance with paragraph (d) of Rule 144 under the Securities Act) or if we are
at the proposed date of such transfer or were during the three months preceding
such proposed
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date of transfer an Affiliate of the Issuer, we will be required to furnish to
the Indenture Trustee, such certification and other information (including,
without limitation, an opinion of counsel) as the Indenture Trustee, or Issuer
may reasonably require to confirm that the proposed sale complies with the
foregoing restrictions. We further understand that certificates evidencing Notes
purchased by us will bear a legend to the foregoing effect until the second
anniversary of the later of the original issuance of the Notes (or any
predecessor Notes thereof) or the sale thereof by Issuer or an Affiliate of
Issuer (computed in accordance with paragraph (d) of Rule 144 under the
Securities Act) and for so long as we are or during the preceding three months
have been an Affiliate of the Issuer.
2. We are an institutional investor and an "accredited investor" (within
the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Notes, and
we and any account for which we are acting are each able to bear the economic
risk of our or its investment and can afford the complete loss of such
investment.
3. We are acquiring the Notes purchased by us for our own account or for
one or more accounts (each of which is an institutional "accredited investor")
as to each of which we exercise sole investment discretion and for each of which
we are acquiring not less than $250,000 aggregate principal amount of Notes.
4. We have received such information as we deem necessary in order to make
our investment decision.
You and the Issuer are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
[Purchaser]
By:
---------------------------------------------
Name:
Title:
B-2
<PAGE>
Exhibit 5.1
[LETTERHEAD OF DPW]
July 22, 1998
Price Communications Cellular Holdings, Inc.
45 Rockefeller Plaza
Suite 3200
New York, New York 10020
Price Communications Corporation
45 Rockefeller Plaza
Suite 3200
New York, New York 10020
Ladies and Gentlemen:
We have acted as counsel to Price Communications Cellular Holdings, Inc.
(the "Company") and Price Communications Corporation ("PCC") in connection with
their Registration Statement on Form S-1/S-3 (the "Registration Statement")
filed with the Securities and Exchange Commission pursuant to the Securities Act
of 1933, as amended, for the registration of the sale by the Company of up to
$200,000,000 aggregate principal amount of Senior Exchangeable Payable-in-Kind
Notes due 2008 (the "Notes"). The Notes are mandatorily exchangeable, pursuant
to their terms, into shares (the "PCC Shares") of common stock par value $0.01
per share (the "Common Stock") of PCC. The Notes are to be issued pursuant to an
Indenture (the "Indenture") to be entered into between the Company, PCC and the
Bank of Montreal Trust Company, as Trustee (the "Trustee").
We have examined originals or copies, certified or otherwise identified to
our satisfaction, of such documents, corporate records, certificates of public
officials and other instruments as we have deemed necessary for the purposes of
rendering this opinion.
<PAGE>
Price Communications Cellular Holdings, Inc.
Price Communications Corporation 2 July 22, 1998
On the basis of the foregoing, we are of the opinion that:
1. When the Indenture to be entered into in connection with the issuance of
the Notes has been duly authorized, executed and delivered by the Company and
the Trustee, and such Notes have been duly authorized, executed, authenticated,
issued and delivered in accordance with the Indenture and the underwriting
agreement relating thereto, such Notes will constitute a valid and binding
obligation of the Company, enforceable in accordance with their terms, except as
(a) the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or similar laws now or
hereinafter in effect relating to or affecting the enforcement of creditors'
rights generally, (b) the availability of equitable remedies may be limited by
equitable principles of general applicability (regardless of whether considered
in a proceeding at law or in equity) and (c) to the extent that a waiver of
rights under any usury law may be unenforceable.
2. When the shares of Common Stock have been duly authorized, issued and
delivered upon exchange of the Notes in accordance with the terms of the Notes
and the Indenture, such shares of Common Stock will be validly issued, fully
paid and non-assessable.
In connection with the opinions expressed above, we have assumed that, at
or prior to the time of the delivery of any Notes, (i) the Board of Directors of
the Company and PCC shall have duly established the terms of the Notes and duly
authorized the issuance and sale of such Notes and such authorization shall not
have been modified or rescinded; (ii) the Registration Statement shall have been
declared effective and such effectiveness shall not have been terminated or
rescinded; and (iii) there shall not have occurred any change in law affecting
the validity or enforceability of the Notes. We have also assumed that none of
the terms of any Notes to be established subsequent to the date hereof, nor the
issuance and delivery of such Notes, nor the compliance by the Company or PCC
with the terms of such Notes will violate any applicable law or will result in a
violation of any provision of any instrument or agreement then binding upon the
Company or PCC, or any restriction imposed by any court or governmental body
having jurisdiction over the Company or PCC.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York, the federal laws of the
<PAGE>
Price Communications Cellular Holdings, Inc.
Price Communications Corporation 3 July 22, 1998
United States of America and the General Corporation Law of the State of
Delaware.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In addition, we consent to the reference to us under the
caption "Legal Matters" in the prospectus.
This opinion is rendered solely to you in connection with the above matter.
This opinion may not be relied upon by you for any other purpose or relied upon
by or furnished to any other person without our prior written consent.
Very truly yours,
/s/ Davis Polk & Wardwell
<PAGE>
EXHIBIT 10.6
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("AGREEMENT") is entered into as of this 2 day of
September, 1997, by and between Price Communications Wireless, Inc. ("COMPANY"),
a Delaware corporation formerly known as Price Communications Cellular Merger
Corp. and Jeffrey L. Green (the "EXECUTIVE").
1. EMPLOYMENT. On the terms and conditions set forth in this Agreement,
the Company shall employ Executive and Executive shall be employed by the
Company for the term set forth in Section 2 hereof and in the position and with
the duties set forth in Section 3 hereof. Upon the date of commencement of this
Agreement, that certain Severance Agreement between Palmer Wireless, Inc. and
Executive dated March 28, 1997 shall be hereby automatically terminated and
superseded and replaced in its entirety by this Agreement.
2. TERM. The term of this Agreement shall commence on the Effective Time
of the Merger (as defined in paragraph 11 hereof) and end on December 31, 1998,
provided that the term of this Agreement shall be extended automatically for
additional one (1) year periods on December 31 of each year ("YEAR END")
commencing on December 31, 1998 and each subsequent Year End, unless and until
either party provides written notice to the other party, in accordance with
Section 9 hereof, not less than ninety (90) days prior to such Year End that
such party is terminating this Agreement, which termination shall be effective
as of such Year End, or until sooner terminated as hereinafter set forth.
3. POSITION AND DUTIES. The Executive shall serve as Director
Analysis/Planning of the Company, with such duties and responsibilities as the
Chief Executive Officer of Company may from time to time determine and assign to
the Executive. The Executive shall devote the Executive's reasonable best
efforts and substantially full business time to the performance of the
Executive's duties and the advancement of the business and affairs of the
Company.
4. PLACE OF PERFORMANCE. In connection with the Executive's employment by
the Company, the Executive shall be based at the principal executive offices of
the Company, which the Company retains the right to change in its discretion.
<PAGE>
5. COMPENSATION AND RELATED MATTERS.
5(a) BASE SALARY. The Company shall pay to the Executive an annual
base salary (the "BASE SALARY") at the rate of $113,000 per year, payable in
biweekly or other such installments consistent with the Company's payroll
procedures.
5(b) STOCK OPTIONS. At or promptly after the Effective Time, the
Company shall cause to be granted to the Executive options to purchase 20,000
shares of Common Stock of PCC (the "OPTIONS") under the Price Communications
Corporation 1992 Long Term Incentive Plan (the "OPTION PLAN"). The exercise
price shall be the Fair Market Value, as defined in the 0ption Plan, on the
business day of the Effective Time. The Options shall become exercisable one
year from the Effective Time.
5(c) OTHER BENEFITS. The Executive shall be entitled to participate
in such plans and to receive such fringe benefits that are offered by the
Company.
6. NON-COMPETITION.
6(a) NON-COMPETITION. The Executive covenants and agrees that the
Executive will not, during the Executive's employment hereunder and for a period
of one (1) year thereafter (to the extent, permitted by law), at any time and in
any state or other jurisdiction which the Company or any of its affiliates is
engaged or has reasonably firm plans to engage in business, (i) compete with the
Company or any of its affiliates on behalf of the Executive or any third party,
(ii) participate as a director, agent, representative, stockholder or partner or
have any direct or indirect financial interest in any enterprise which engages
in the cellular business or any other business in which the Company or any of
its affiliates is engage; or (iii) participate as an employee or officer in any
enterprise in which Executive's responsibility relates to the cellular business
or any other business in which the Company or any of its affiliates is engaged.
The ownership by Executive of less than five percent (5%) of the outstanding
stock of any corporation listed on a national securities exchange conducting any
such business shall not be deemed a violation of this section 8(a).
6(b) INJUNCTIVE RELIEF. In the event the restrictions against
engaging in a competitive activity contained in Section 6(a) hereof shall be
determined by any court of competent jurisdiction to be unenforceable by reason
of their extending for too great a period of time or over too great a
geographical area or by reason of their being too extensive in any other
respect, Section 6(a) hereof shall be interpreted to extend only over the
maximum period of time for
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<PAGE>
which it may be enforceable and to the maximum extent in all other respects as
to which it may be enforceable, all as determined by such court in such action.
7. TERMINATION.
7(a) DEATH. The Executive's employment hereunder shall terminate upon
the Executive's death.
7(b) BY THE COMPANY. The Company may terminate Executive's employment
hereunder under the following circumstances:
(i) If the Executive shall have been unable to perform all of
the Executive's duties hereunder by reason of illness, physical or mental
disability or other similar incapacity, which inability shall continue for more
than three (3) consecutive months, the Company may terminate the Executive's
employment hereunder.
(ii) The Company may terminate the Executive's employment
hereunder for "Cause". For purposes of this Agreement "Cause" shall mean (A)
willful refusal by the Executive to follow a written order of the Board of
Directors, (B) the Executive's willful engagement in conduct materially
injurious to the Company or any of its affiliates, (C) dishonesty of a material
nature that relates to the performance of the Executive's duties under this
Agreement, (D) the Executive's conviction for any felony involving moral
turpitude, or (E) unreasonable neglect or refusal on the part of the Executive
to perform the Executive's reasonably assigned duties and obligations hereunder
(unless significantly changed without Executive's consent). In addition, the
Company may terminate the Executive's employment for "Cause" if the normal
business operations of the company are rendered commercially impractical as a
consequence of an act of God, accident, fire labor controversy, riot or civil
commotion, act of public enemy, law, enactment, rule, order, or act of
government or governmental instrumentality, failure of facilities, or other
cause of a similar or dissimilar nature that is not reasonably within the
control of the Company or which the Company could not, by reasonable diligence,
have avoided.
7(c) BY THE EXECUTIVE. The Executive may terminate the Executive's
employment with "Good Reason". For the purposes of this Agreement, "Good Reason"
shall mean (i) the Company's failure to perform or observe any of the material
terms or provisions of this Agreement, and the continued failure of the Company
to cure such default within thirty (30) days after written demand for
performance has been given to the Company by the Executive, which demand shall
describe specifically the nature of such alleged failure to
3
<PAGE>
perform or observe such material terms or provisions; or (b) a material
reduction in the scope of the Executive's responsibilities and duties.
7(d) NOTICE OF TERMINATION. Any termination of the Executive's
employment, by the Company or the Executive (other that pursuant to Section 7(a)
hereof) shall be communicated by written "Notice of Termination" to the other
party hereto in accordance with Section 9 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon, if any, and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination the Executive's employment under the provision
so indicated.
7(e) DATE OF TERMINATION. For the purposes of this Agreement, the
"Date of Termination" shall mean (i) if the Executive's employment is terminated
by the Executive's death, the date of the Executive's death, (ii) if the
Executive's employment is terminated pursuant to Section 7(b)(i) hereof, thirty
(30) days after Notice of Termination, provided that the Executive shall not
have returned to the performance of the Executive's duties on a full-time basis
during such 30-day period; (iii) if the Executive's employment is terminated
pursuant to Section 7(b)(ii) or 7(c) hereof, the date specified in the Notice of
Termination which shall be no later than 30 days after the giving of such Notice
of Termination or such later date as may be mutually agreed to by the Executive
and Company; (iv) if the Executive's employment is terminated pursuant to notice
under Section 2 hereof, the Year End upon which termination is effective; and
(v) if the Executive's employment is terminated for any other reason, the date
on which Notice of Termination is given.
(8) COMPENSATION UPON TERMINATION.
8(a) If the Executive's employment is terminated by the Executive's
death, the Company shall pay to Executive's estate or as may be directed by the
legal representatives of such estate, the Executive's full Base Salary through
Date of Termination and all other accrued and unpaid amounts, if any, to which
Executive is entitled as of the Date of Termination in connection with any
fringe benefits under any plan or program of the Company pursuant to Section
5(c) hereof, at the time such payments are due, and the Company shall have no
further obligations to the Executive under this Agreement.
8(b) If the Company terminates the Executive's employment pursuant to
Section 7(b)(i) hereof, the Company shall pay the Executive the Executive's full
Base Salary through the Date of Termination and all other accrued and unpaid
amounts, if any, to which the Executive is entitled as of the
4
<PAGE>
Date of Termination in connection with any fringe benefits under any plan or
program of the Company pursuant to section 5(c) hereof, at the time such
payments are due, and the Company shall have no further obligations to the
Executive under this Agreement; PROVIDED that payments so made to the Executive
during any period that the Executive is unable to perform all of the Executive's
duties hereunder by reason of illness, physical or mental illness or other
similar incapacity shall be reduced by the sum of the amounts, if any, payable
to the Executive at or prior to the time of any such payment under disability
benefit plans of the Company and which amounts were not previously applied to
reduce any such payment.
8(c) If the Company terminates the Executive's employment for Cause
as provided in Section 7(b)(ii) hereof, or if the Company or the Executive
terminates this Agreement under Section 2 hereof, the Company shall pay the
Executive the Executive's full Base salary through the Date Of Termination and
all other accrued and unpaid amounts, if any, to which Executive is entitled as
of the Date of Termination in connection with any fringe benefits under any plan
or program of the Company pursuant to Section 5(c) hereof, at the time such
payments are due, and the company shall have no further obligations to the
Executive under this Agreement.
8(d) If the Executive terminates the Executive's employment other
than for Good Reason, the Company shall pay the Executive the Executive's full
Base Salary through the Date of Termination and all other accrued and unpaid
amounts, if any, to which Executive is entitled as of the Date of Termination in
connection with any fringe benefits under any plan or program of the Company
pursuant to Section 5(c) hereof, at the time such payments are due, and the
Company shall have no further obligations to the Executive under this Agreement.
8(e) If the Company terminates the Executive's employment other than
for Cause, disability or death and other than pursuant to Section 2 hereof or
the Executive terminates the Executive's employment for Good Reason as provided
in Section 7(c)(i) or (ii) hereof, the Company shall pay the Executive (A) the
Executive's full Base Salary through the date of Termination and all other
accrued and unpaid amounts, if any to which Executive is entitled as of the Date
of Termination in connection with any fringe benefits under any plan or program
of the Company pursuant to Section 5(c) hereof at the time such payments are
due, and (B) the full Base Salary and any other amounts that would have been
payable to Executive under Section 5(c) hereof from the Date of Termination
through the first anniversary of the Date of Termination (of benefits comparable
in value to the benefits provided under Section 5(c)).
5
<PAGE>
9. NOTICES. All notices, demands, requests or other communications
required or permitted to be given or made hereunder shall be in writing and
shall be delivered, telecopied or mailed by first class registered or certified
mail, postage prepaid, addressed as follows:
9(a) If to the Company;
Price Communications Wireless, Inc.
c/o Price Communication Corporation
45 Rockefeller Plaza
Suite 2800 [struck out] 3200 [handwritten]
New York, New York 10020
Telecopy: (212) 397-3755
Attn: Robert Price
9(b) If to Executive:
Mr. Jeff Green
12800 University Drive, Ste. 500
Fort Myers, FL 33907-5337
or to such other address as may be designated by either party in a notice to the
other. Each notice, demand, request or other communication that shall be given
or made in the manner described above shall be deemed sufficiently given or made
for all purposes three (3) days after it is deposited in the U.S. mail, postage
prepaid, or at such time as it is delivered to the addressee (with return
receipt, the delivery receipt, the telecopy confirmation, the answer back or the
affidavit of messenger being deemed conclusive evidence of such delivery) or at
such time as delivery is refused by the addressee upon presentation.
10. SURVIVAL. It is the express intention and agreement of the parties
hereto that the provisions of Section 6 hereof shall survive the termination of
employment of the Executive. In addition, all obligations of the Company to make
payments hereunder shall survive any termination of this Agreement on the terms
and conditions set forth herein.
11. BINDING EFFECT. The effectiveness of this Agreement shall be subject
to and conditioned upon the consummation of the merger, pursuant to which the
Company shall merge with and into Palmer Wireless, Inc. ("MERGER"), and this
Agreement shall be of no force and effect if the Merger shall fail to be
consummated for any reason. Subject to any provisions hereof restricting
assignment, this Agreement shall be binding upon the parties hereto and shall
inure to the benefit of the parties and their respective heirs, devisees
executors,
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<PAGE>
administrators, legal representatives, successors and assigns. This Agreement
may not be assigned by the Executive, and shall not inure to the benefit of or
be enforceable by any person or entity other that as aforesaid including without
limitation any employee of the Company.
12. GOVERNING LAW. This Agreement, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto, shall be governed
by and construed in accordance with the laws of the State of Florida (but not
including the choice of law rules thereof).
13. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each shall be an original and all of which shall be deemed to
constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement, or
have caused this Agreement to be duly executed on their behalf, as of the day
and year first herein above written.
PRICE COMMUNICATIONS WIRELESS, INC.
By:
---------------------------
Name: Robert Price
Title: President
THE EXECUTIVE
---------------------------
Jeffrey L. Green
7
<PAGE>
EXHIBIT 10.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("AGREEMENT") is entered into as of this 8th day
of July, 1997, by and between Price Communications Wireless, Inc. ("PCW"), a
Delaware corporation formerly known as Price Communications Cellular Merger
Corp., and William J. Ryan (the "EXECUTIVE").
WHEREAS, Palmer Wireless, Inc., a Delaware corporation (the "COMPANY"), and
the Executive are parties to an Amended Employment Agreement dated as of March
21, 1995 (the "PALMER AGREEMENT") pursuant to which the Executive has been
employed as Chief Executive Officer and President of the Company;
WHEREAS, PCW, Price Communications Corporation ("PCC"), the parent
corporation of PCW, and the Company are parties to an Agreement and Plan of
Merger dated as of May 23, 1997 (the "MERGER AGREEMENT") pursuant to which PCW
shall merge (the "MERGER") with and into the Company, and the Company, which
concurrently with or subsequent to the Merger will change its name to Price
Communications Wireless, Inc., shall be the surviving corporation;
WHEREAS, as a result of the Merger, the Company shall succeed to and become
fully benefitted and bound by all of the rights and obligations of PCW,
including without limitation this Employment Agreement;
WHEREAS, simultaneously with, and conditioned upon the occurrence of, the
Effective Time of the Merger under the Merger Agreement, the Palmer Agreement
shall be hereby automatically terminated and superseded and replaced in its
entirety by this Agreement, and the Company shall employ the Executive and the
Executive shall be employed by the Company from and after the Effective Time, on
the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto agree as
follows:
1. EMPLOYMENT. On the terms and conditions set forth in this Agreement,
the Company shall employ the Executive and the Executive shall be
<PAGE>
employed by the Company for the term act forth in Section 2 hereof and in the
position and with the duties set forth in Section 3 hereof.
2. TERM. The term of this Agreement shall commence on the Effective Time
of the Merger, and end on December 31, 1999 (the "EXPIRATION DATE"), unless
sooner terminated by either party as hereinafter set forth, PROVIDED, that the
parties may at any time agree that the Company will continue to engage the
Executive as consultant for a period of one (1) year after December 31, 1999
during which period the Company shall pay to the Executive an annual salary
equal to 50% of the Base Salary (as hereinafter denied) and during which period
the Executive shall be entitled to participate in such plans and to receive such
fringe benefits as are set forth in EXHIBIT A attached hereto and made a part
hereof.
3. POSITION AND DUTIES. The Executive shall serve as Chief Executive
Officer and President of the Company, with such duties and responsibilities as
the board of directors of PCC (the "BOARD") and/or the Chief Executive Officer
of PCC may from time to time determine and assign to the Executive. The
Executive shall devote the Executive's reasonable best efforts and substantially
full business time to the performance of the Executive's duties and the
advancement of the business and affairs of the Company.
4. PLACE OF PERFORMANCE. In connection with the Executive's employment
by the Company, the Executive shall be based at the principal executive offices
of the Company, which the Company retains the right to change in its discretion,
or such other place as the Company and the Executive mutually agree, except for
required travel on Company business.
5. COMPENSATION
5(a) BASE SALARY. The Company shall pay to the Executive an annual
base salary (the "BASE SALARY") at the rate of $500,000 per year. The Base
Salary shall be payable biweekly or in such other installments as shall be
consistent with the Company's payroll procedures.
5(b) LUMP SUM PAYMENT. In consideration of the termination of the
Palmer Agreement and in full discharge of all liabilities and obligations
of the Company thereunder, the Company shall pay to the Executive a single
lump sum payment of $1,403,835 at the Effective Time.
5(c) STOCK OPTIONS. At or promptly after the Effective Time, the
Company shall cause to be granted to the Executive options to purchase
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<PAGE>
one hundred thousand (100,000) shares of Common Stock of PCC (the
"OPTIONS") under the Price Communications Corporation 1992 Long Term
Incentive Plan (the "OPTION PLAN"). The exercise price per share of the
Options shall be the Fair Market Value, as such term is defined in the
Option Plan, of such share on the business day before the Effective
Time. The Option shall become exercisable one year from the Effective
Time. The agreement under which the Options are granted shall include
anti-dilution protections typical for employee stock options in the
event of any stock dividend or distribution, stock split or reverse
stock split, split-up, combination or exchange of shares,
recapitalization or similar change affecting the Common Stock of PCC.
5(d) TERMS. In the event that the Company's 1998 EBITDA (as such
terms is defined in Exhibit B hereto) exceeds by at least $1,000,000 is
projected EBITDA target for such year of $81,500,000 (the "CASH FLOW
TARGET"), PROVIDED that the Board shall make equitable adjustment
("ADJUSTMENTS") in good faith in such Cash Flow Target in the event that
the Company sells or purchases material properties during such year, the
Executive and other key employees of the Company (collectively, the "BONUS
POOL") shall be entitled to receive a bonus as follows:
(i) FIRST TRANCHE. If 1998 EBITDA exceeds the Cash Flow
Target, subject to any Adjustments, by at least $1,000,000, the Bonus
Pool shall be entitled to receive a total cash bonus equal to 221/2%
of the excess (up to an excess amount of $1,000,000) of 1998 EBITDA
above $81,500,000, 5% of which shall be payable to the Executive and
171/2% of which shall be payable to such other key employees of the
Company as the Executive shall determine after consultation with the
Chief Executive Officer of PCC.
(ii) SECOND TRANCHE. If 1998 EBIDTA exceeds the Cash Flow
Target, subject to any Adjustments, by at least $2,000,000, the Bonus
Pool shall be entitled to receive a total cash bonus equal to 271/2%
of the excess (up to an excess amount of $1,000,000) of 1998 EBITDA
above $82,500,000, 5% of which shall be payable to the Executive and
221/2% of which shall be payable to such other key employees of the
Company as the Executive shall determine after consultation with the
Chief Executive Officer of PCC.
(iii) THIRD TRANCHE. If 1998 EBITDA exceeds the Cash Flow
Target, subject to any Adjustments, by at least $3,000,000, the Bonus
Pool shall be entitled to receive a total cash bonus equal to 321/2%
of the excess (up to an excess amount of $1,000,000) of
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<PAGE>
1998 EBITDA above $83,500,000, 5% of which shall be payable to the
Executive and 271/2% of which shall be payable to such other key
employees of the Company as the Executive shall determine after
consultation with the Chief Executive Officer of PCC.
(iv) FOURTH TRANCHE. If the 1998 EBITDA exceeds the Cash
Flow Target, subject to any Adjustments, by at least $4,000,000 the
Bonus Pool shall be entitled to receive a total cash bonus equal to
371/2% of the excess of 1998 EBITDA above $84,500,000, 5% of which
shall be payable to the Executive and 321/2% of which shall be payable
to such other key employees of the Company as the Executive shall
determine after consultation with the Chief Executive Office of PCC.
The Company's 1998 EBITDA shall be determined by the Company's regularly
employed independent certified public accountants, the determination of which
shall be conclusive and binding upon the Company and the Executive.
The Company and the Executive intend to agree upon an appropriate bonus
plan for 1999 prior to the end of the 1998.
(e) OTHER BENEFITS. The Executive shall be entitled to participate
in such plans and to receive such fringe benefits as are set forth in
EXHIBIT A attached hereto and made a part hereof.
(f) VACATION; HOLIDAYS. The Executive shall be entitled to all
public holidays observed by the Company and vacation days in accordance
with the applicable vacation policies for senior executives of the Company,
which shall be taken at a reasonable time or times.
(g) WITHHOLDING TAXES AND OTHER DEDUCTIONS. To the extent required
by law, the Company shall withhold from any payments due Executive under
this Agreement any applicable federal, state or local taxes and such other
deductions as are prescribed by law or Company policy.
6. EXPENSES. The Company shall reimburse the Executive for all
reasonable expenses incurred by the Executive (in accordance with the policies
and procedures in effect for senior executives for the Company) in connection
with the Executive's services under this Agreement. The Executive shall account
to the Company for such expenses in accordance with policies and procedures
established by the Company.
7. CONFIDENTIAL INFORMATION.
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7(a) The Executive covenants and agrees that the Executive will not
ever, without the prior written consent of the Board or a person authorized
by the Board, publish or disclose to any unaffiliated third party or use
for the Executive's personal benefit or advantage any confidential
information with respect to any of the Company's or any of its affiliates
products, services, subscribers, marketing techniques, methods or future
plans disclosed to the Executive as a result of the Executive's employment
with the Company, to the extent such information has heretofore remained
confidential (except for unauthorized disclosures) and except as otherwise
ordered by a court of competent jurisdiction.
7(b) The Executive acknowledges that the restrictions contained in
Section 7(a) hereof are reasonable and necessary, in view of the nature of
the Company's business, in order to protect the legitimate interests of the
Company, and that any violation thereof would result in irreparable injury
to the Company. Therefore, the Executive agrees that in the event of a
breach of threatened breach by the Executive of the provisions of Section
7(a) hereof, the Company shall be entitled to obtain from any court of
competent jurisdiction, preliminary or permanent injunctive relief
restraining the Executive from disclosing or using any such confidential
information. Nothing herein shall be construed as prohibiting the Company
from pursuing any other remedies available to its for such breach or
threatened breach, including, without limitation, recovery of damages from
the Executive.
7(c) The Executive shall deliver promptly to the Company on
termination of employment, or at any other time the Company may so request,
all confidential memoranda, notes, records, reports and other documents
(and all copies thereof) relating to the Company's and its affiliates'
businesses which the Executive obtained while employed by, or otherwise
serving or acting on behalf of, the Company or which the Executive may then
posses or have under his or her control.
8. NON-COMPETITION.
8(a) NON-COMPETITION. The Executive covenants and agrees that the
Executive will not, during the Executive's employment hereunder and for a
period of one (1) year thereafter (to the extent permitted by law), at any
time and in any state or other jurisdiction in which the Company or any of
its affiliates is engaged or has reasonably firm place to engage in
business, (i) compete with the Company or any of its affiliates on behalf
of the Executive or any third party; (ii) participate as a director, agent,
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representative, stockholder or partner or have any direct or indirect
financial interest in any enterprise which engages in the cellular business
or any other business in which the Company or any of its affiliates is
engaged; or (iii) participate as an employee or officer in any enterprise
in which the Executive's responsibility relates to the cellular business or
any other business in which the Company or any of its affiliates is
engaged. The ownership by the Executive of less than five percent (5%) of
the outstanding stock of any corporation listed on a national securities
exchange conducting any such business shall not be deemed a violation of
this Section 8(a).
8(b) INJUNCTIVE RELIEF. In the event the restrictions against
engaging in a competitive activity contained in Section 8(a) hereof shall
be determined by any court of competent jurisdiction to be unenforceable by
reason of their extending for too great a period of time or over too great
a geographical area or by reason of their being too extensive in any other
respect, Section 8(a) hereof shall be interpreted to extend only over the
maximum period of time for which it may be enforceable and over the maximum
geographical area as to which it may be enforceable and to the maximum
extent in all other respects as to which it may be enforceable, all as
determined by such court in such action.
8(c) NON-SOLICITATION. The Executive covenants and agrees that the
Executive will not, during the Executive's employment hereunder and for a
period of one (1) year thereafter induce or attempt to induce any employee
of the Company or any of the Company's affiliates to render services for
any other person, firm, or corporation.
9. TERMINATION OF EMPLOYMENT.
9(a) DEATH. The Executive's employment hereunder shall terminate
upon the Executive's death.
9(b) BY THE COMPANY. The Company may terminate the Executive's
employment hereunder under the following circumstances:
(i) If the Executive shall have been unable to perform all
of the Executive's duties hereunder by reason of illness, physical or
mental disability or other similar incapacity, which inability shall
continue for more than three (3) consecutive months, the Company's may
terminate the Executive's employment hereunder.
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(ii) The Company may terminate the Executive's employment
hereunder for "Cause." For purposes of this Agreement, "Cause" shall
mean (A) willful refusal by the Executive to follow a written order of
the Board of Directors, (B) the Executive's willful engagement in
conduct materially injurious to the Company or any of its affiliates,
(C) dishonesty of a material nature that relates to the performance of
the Executive's duties under this Agreement, (D) the Executive's
conviction for any felony involving moral turpitude, or (E)
unreasonable neglect or refusal on the part of the Executive to
perform the Executive's reasonably assigned duties and obligations
hereunder (unless significantly changed without Executive's consent).
In addition, the Company may terminate the Executive's employment for
"Cause" if the normal business operations of the Company are rendered
commercially impractical as a consequences of an act of God, accident,
fire, labor controversy, riot or civil commotion, act of public enemy,
law, enactment, rule, order, or any act of government or governmental
instrumentality, failure of facilities, or other cause of a similar or
dissimilar nature that is not reasonably within the control of the
Company or which the Company could not, by reasonable diligence, have
avoid.
9(c) BY THE EXECUTIVE. The Executive may terminate the Executive's
employment hereunder for "Good Reason." For purposes of this Agreement,
"Good Reason" shall mean (i) the Company's failure to perform or observe
any of the material terms or provisions of this Agreement, and the
continued failure of the Company to cure such default within thirty (30)
days after written demand for performance has been given to the Company by
the Executive, which demand shall describe specifically the nature of such
alleged failure to perform or observe such material forms or provisions;
(ii) a material reduction in the scope of the Executive's responsibilities
and duties; (iii) any relocation of the Executive not consented to by the
Executive so that the Executive is not based in the State of Georgia or in
(or within 50 miles of) the licensed service areas currently served by
Palmer Wireless, Inc.; or (iv) any termination by the Executive in the
Executive's sole discretion within one (1) year after the date of a Change
in Control (as hereinafter defined) of PCC or the Company. For purposes of
this Agreement, a "Change in Control" of PCC or the Company shall be deemed
to have occurred if after the Effective Time (A) any "person" (as such term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT")), other than (i) a wholly-owned subsidiary
of PCC; (ii) any person currently a "beneficial owner" (as defined in Rule
13d-3 under
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the Exchange Act) of PCC's securities; or (iii) (x) members of the Price
family who own capital stock of PCC on the date hereof, any affiliate of
any such family member that is wholly-owned directly or indirectly by any
such family member, or any "group" (as such terms is used in Section 13(d)
of the Exchange Act) that includes one or more of such family members or
affiliates, or (y) PriCellular Corporation, becomes, after the date hereof,
the beneficial owner, directly or indirectly, or securities of PCC
representing fifty (50%) percent or more of the combined voting power of
PCC's then outstanding securities; (B) during any two (2) year period,
individuals who at the beginning of such period constitute the Board,
including for this purpose any new director whose election resulted from a
vacancy on the Board caused by the resignation, mandatory retirement,
death, or disability of a director and was approved by a vote of at least
two-thirds (2/3rds) of the directors then still in office who were
directors at the beginning of the period, cause for any reason to
constitute a majority thereof; (C) PCC consummates a merger or
consolidation of PCC with or into another corporation (other than a
corporation described in clause (ii) or (iii) of clause (A) above), the
result of which is that the stockholders of PCC immediately prior to the
consummation of such merger or consolidation own less than sixty (60%)
percent of the combined voting power of the securities of the corporation
surviving or resulting from the merger or consolidation or of a corporation
owning, directly or indirectly, one hundred (100%) percent of the total
equity of such surviving or resulting corporation; (D) the sale in one or a
series of transactions of all or substantially all of the assets of PCC
other than to an equity described in clause (ii) or (iii) of clause (A)
above or an entity of which the stockholders of PCC immediately prior to
the consummation of such sale own directly or indirectly sixty (60%)
percent or more of the combined voting power of the securities therefore;
or (E) any one transaction, or series of transactions, the result of which
is that the Company or substantially all of the assets of the Company are
owned by an entity or entities not owned or controlled directly or
indirectly by PCC, by any entity described in clause (ii) or (iii) of
clause (A) above, or by an entity of which the stockholders of PCC
immediately prior to the completion of such transactions own directly or
indirectly sixty (60%) percent of more of the combined voting power of the
securities thereof.
9(d) MUTUAL TERMINATION RIGHT. The Executive may terminate the
Executive's employment hereunder, or the Company may terminate the
Executive's employment hereunder, in the event of the failure of the
Company to achieve the Cash Flow Target for 1998, subject to any
Adjustments.
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9(e) NOTICE OF TERMINATION. Any termination of the Executive's
employment by the Company or the Executive (other than pursuant to Section
9(a) hereof) shall be communicated by written "Notice of Termination" to
the other party hereto in accordance with Section 11 hereof. For purposes
of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement relied
upon, if any, and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
9(f) DATE OF TERMINATION. For purposes of this Agreement, the "Date
of Termination" shall mean (i) if the Executive's employment is terminated
by the Executive's death, the date of the Executive's death; (ii) if the
Executive's employment is terminated pursuant to Section 9(b)(i) hereof,
thirty (30) days after Notice of Termination, provided that the Executive
shall not have returned to the performance of the Executive's duties on a
full-time basis during such 30-day period; (iii) if the Executive's
employment is terminated pursuant to Section 9(b)(ii) , 9(c) or 9(d)
hereof, the date specified in the Notice of Termination; and (iv) if the
Executive's employment is terminated for any reason, the date on which
Notice of Termination is given.
10. COMMUNICATION UPON TERMINATION.
10(a) If the Executive's employment is terminated by the Executive's
death, the Company shall pay to the Executive's estate, or as may be
directed by the legal representatives of such estate, the Executive's full
Base Salary through the Date of Termination and all other accrued and
unpaid amounts, if any, to which the Executive is entitled as of the Date
of Termination in connection with any fringe benefits under any plan or
program of the Company pursuant to Section 5(a) hereof, at the time such
payments are due, and the Company shall have no further obligations to the
Executive under this Agreement.
10(b) If the Company terminates the Executive's employment pursuant
to Section 9(b)(i) hereof, the Company shall pay the Executive the
Executive's full Base Salary through the Date of Termination and all other
accrued and unpaid amounts, if any, to which the Executive is entitled as
of the Date of Termination in connection with any fringe benefits under any
plan or program of the Company pursuant to Section 5(c) hereof at the time
such payments are due, and the Company shall have no further obligations to
the Executive under this Agreement; PROVIDED that payments so made to the
Executive during any period that the
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Executive is unable to perform all of the Executive's duties hereunder by
reason of illness, physical or mental illness or other similar incapacity
shall be reduced by the sum of the amounts, if any, payable to the
Executive at or prior to the time of any such payment under disability
benefit plans of the Company and which amounts were not previously applied
to reduce any such payment.
10(c) If the Company terminates the Executive's employment for Cause
as provided in Section 9(b)(ii) hereof, or if the Company or the Executive
terminates this Agreement under Section 9(d) hereof, the Company shall pay
the Executive the Executive's full Base Salary through the Date of
Termination and all other accrued and unpaid amounts, if any, to which
Executive is entitled as of the Date of Termination in connection with any
fringe benefits under any plan or program of the Company pursuant to
Section 5(c) hereof at the time such payments are due, and the Company
shall have no further obligations to the Executive under this Agreement.
10(d) If the Executive terminates the Executive's employment other
than for Good Reason, the Company shall pay the Executive the Executive's
full Base Salary through the Date of Termination and all other accrued and
unpaid amounts, if any, to which Executive is entitled as of the Date of
Termination in connection with any fringe benefits under any plan or
program of the Company pursuant to Section 5(a) hereof at the time such
payments are due, and the Company shall have no further obligations to the
Executive under this Agreement.
10(e) If the Company terminates the Executive's employment other than
for Cause, disability or death and other pursuant to Section 9(d) hereof,
or the Executive terminates the Executive's employment for Good Reason as
provided in Section 9(c)(i), (ii), (iii) or (iv) hereof, the Company shall
pay the Executive (A) the Executive's full Base Salary through the Date of
Termination and all other accrued and unpaid amounts, if any, to which the
Executive is entitled as of the Date of Termination in connection with any
fringe benefits under any plan or program of the Company pursuant to
Section 5(e) hereof at the time such payments are due; and (B) the full
Base Salary through the Expiration Date, any other amounts that would have
been payable to the Executive under Section 5(c) hereof from the Date of
Termination through the Expiration Date (or benefits comparable in value to
the benefits provided under Section 5(e)), and any bonus amount provided in
the next sentence hereof, at the time such payments would otherwise have
been due in accordance with the Company's normal payroll practices, and the
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Company shall have no further obligations to the Executive under this
Agreement. For purposes of clause (B) of this paragraph, the Executive
will be considered to be entitled pursuant to this Section 10(e) to a bonus
amount equal to the cash bonus, if any, payable to the Executive pursuant
to Section 5(d) hereof in respect of the Company's fiscal year during which
the Executive's Date of Termination occurs determined by multiplying the
amount of such bonus by a fraction of the numerator of which is the number
of days elapsed in such fiscal year prior to such Date of Termination and
the denominator of which is 365.
10(f) MITIGATION. The Executive shall not be required to mitigate
amounts payable pursuant to Section 10 hereof by seeking other employment
PROVIDED, HOWEVER, that the Company's obligation to continue to provide the
Executive with fringe benefits pursuant to Section 10(e) above shall cease
if the Executive becomes eligible to participate in fringe benefits
substantially similar to those provided for in this Agreement as a result
of the Executive's subsequent employment during the period that the
Executive is entitled to such fringe benefits.
11. NOTICES. All notices, demands, request or other communications
required or permitted to be given or made hereunder shall be in writing and
shall be delivered, telecopied or mailed by first class registered or certified
mail, postage prepaid, addressed as follow:
(a) If to the Company:
Price Communications Wireless, Inc.
c/o Price Communications Corporation
45 Rockefeller Plaza
Suite 2300
New York, NY 10020
Telecopy: (212) 397-3755
Attention: Robert Price
(b) If to the Executive:
William J. Ryan
12800 University Drive
Ft. Myers, Florida 33907-5333
Telecopy: (813) 433-8213
or to such other address as may be designated by either party in a notice to the
other. Each notice, demand, request or other communication that shall be given
or
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made in the manner described above shall be deemed sufficiently given or made
for all purposes three (3) days after it is deposited in the U.S. mail, postage
prepaid, or at such time as it is delivered to the addressee (with the return
receipt, the delivery receipt, the telecopy confirmation, the answer back or the
affidavit of the messenger being deemed conclusive evidence of such delivery) or
at such time as delivery is refused by the addressee upon presentation.
12. SEVERABILITY. The invalidity or inenforceability of any one or more
provisions of this Agreement shall not affect the validity or enforceability of
the other provisions of this Agreement, which shall remain in full force and
effect.
13. SURVIVAL. It is the express intention and agreement of the parties
hereto that the provisions of Sections 7 and 8 hereof shall survive the
termination of employment of the Executive. In addition, all obligations of the
Company to make payments hereunder shall survive any termination of this
Agreement on the terms and conditions set forth herein.
14. ASSIGNMENT. The rights and obligations of the parties to this
Agreement shall not be assignable, except that the rights and obligations of the
Company hereunder shall be assignable in connection with any subsequent merger,
consolidation, sale of all or substantially all of the assets of the Company or
similar reorganization of a successor corporation.
15. BINDING EFFECT. The effectiveness of this Agreement shall be subject
to and conditioned upon the consummation of the Merger, and this Agreement shall
be of no force and effect if the Merger shall fail to be consummated for any
reason. Subject to any provisions hereof restricting assignment, this Agreement
shall be binding upon the parties hereto and shall inure to the benefit of the
parties and their respective heirs, divisors, executors, administrators, legal
representatives, successors and assigns. The Agreement may not be assigned by
the Executive, and shall not inure to the benefit of or be enforceable by any
person or entity other than as aforesaid, including without limitation any
employee of the Company or member of the "Bonus Pool" referred to above. The
parties recognize that PCC is currently studying a possible reorganization
whereby PCC may become a wholly-owned subsidiary of a newly organized holding
company with stockholders consisting of the stockholders of PCC immediately
prior to such reorganization together with certain stockholders of Palmer
Wireless, Inc.; references herein to PCC shall be deemed to be to any such
holding company from and after the consummation of any such reorganization.
16. AMENDMENT; WAIVER. This Agreement shall not be amended, altered or
modified except by an instrument in writing duly executed by the parties hereto.
Neither the waiver by either of the parties hereto of a breach of or a
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default under any of the provisions of this Agreement, nor the failure of either
of the parties, on one or more occasions, to enforce any of the provisions of
this Agreement or to exercise any right or privileges hereunder, shall
thereafter be construed as a waiver of any subsequent breach or default of a
similar nature, or as a waiver of any such provisions, rights or privileges
hereunder.
17. HEADINGS. Section and subsection headings contained in this Agreement
are inserted for convenience of reference only, shall not be deemed to be a part
of this Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
18. GOVERNING LAW. This Agreement, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto, shall be governed
by and construed in accordance with the laws of the State of Florida (but not
including the choices of law rules thereof).
19. ENTIRE AGREEMENT. The Agreement constitutes the entire agreement
between the parties respecting the employment of Executive by the Company, there
being no representations, warranties or commitments except as set forth herein.
20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which shall be
deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement, or
have caused this Agreement to be duly executed on their behalf, as of the day
and year first herein above written.
PRICE COMMUNICATIONS WIRELESS, INC.
By:
---------------------------
Name: Robert Price
Title: President
THE EXECUTIVE
------------------------------
William J. Ryan
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Exhibit A
FRINGE BENEFITS
1. Medical, dental, vision and prescription insurance
a. Family coverage. Claim payment daily.
b. Executive expense reimbursement by Company of all deductibles and
non-insured items. Paid quarterly.
2. $50,000 Term life policy - monthly premium
3. Long-term care insurance - monthly premium
a. Coverage-$1,000 per month for three years
4. Disability insurance protection-monthly premium
a. Short-term: 60% of Gross Salary. Benefits payable weekly for
maximum of 24 weeks.
b. Long-term: 60% of Gross Salary after short-term benefits expire.
Payable monthly until return to work, reach 65 or dies.
5. 401-K
a. Defer up to 10% of Base Salary
b. Company match of 50% up to 6% of Base Salary. Paid quarterly.
c. Annual payment by Company of 7% of Base Salary as a retirement
benefit. Annual payment.
6. Auto Allowance $6,000 annually. Paid bi-weekly.
7. Reimbursement of annual tax services and financial planning services.
Annual payment.
8. Automobile registration and automobile insurance reimbursement.
9. Semi-annual payment. Club dues. Paid quarterly.
10. Free cellular mobile and portable service (demos).
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EXHIBIT 12.1
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
1996 1995 1994
Fixed Charges
<S> <C> <C> <C>
Interest Expense $31,462 $21,213 $12,715
Portion of Rent Expense
Representative of Interest 1,172 821 531
----- --- ---
Total Fixed Charges $32,634 $22,034 $13,246
------ ------ ------
------ ------ ------
Earnings
Income from Operations Before
Minority Interest and Taxes 9,286 4,682 2,298
Fixed Charges Above 32,634 22,034 13,246
------ ------ ------
Total Earnings 41,920 26,716 15,544
------ ------ ------
------ ------ ------
Ratio of Earnings to Fixed Charges 1.28x 1.21x 1.17x
</TABLE>
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Price Communications Cellular Holdings, Inc.:
We consent to the inclusion of our report dated January 30, 1997, with respect
to the consolidated balance sheet of Price Communications Cellular Holdings,
Inc. and subsidiaries (a holding company whose sole investment represents Price
Communications Wireless, Inc., formerly Palmer Wireless, Inc.) as of December
31, 1996, and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the years in the two-year period ended
December 31, 1996, and the incorporation by reference of our report dated
January 30, 1997, with respect to the consolidated balance sheet of Palmer
Wireless, Inc. and subsidiaries as of December 31, 1996 and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the years in the two-year period ended December 31, 1996, which reports
appear and are incorporated by reference, respectively, in the form Form S-1/S-3
of Price Communications Cellular Holdings, Inc. and Price Communications
Corporation and to the reference to our firm under the heading "Independent
Accountants" in the Prospectus.
KPMG Peat Marwick LLP
Des Moines, Iowa
July 22, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report included in this registration statement and to the incorporation by
reference in this registration statement of our report dated March 17, 1998
included in Price Communication Cellular Holdings Inc.'s and Price Communication
Corporation's respective Form 10-K's for the year ended December 31, 1997 and to
all references to our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
New York, New York
July 22, 1998
