EXHIBIT 10.20.1
Execution Copy
AGREEMENT, dated as of July 17,1998, by and among AT&T Wireless PCS Inc., a
Delaware corporation ("AT&T PCS"), TWR Cellular, Inc., a Maryland corporation
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("TWR"), the Cash Equity Investors, the TeleCorp Investors, the Management
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Stockholders and TeleCorp PCS, Inc., a Delaware corporation (the "Company" and,
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together with AT&T PCS, TWR, the Cash Equity Investors, the TeleCorp Investors,
and the Management Stockholders, the "Parties'). AT&T PCS, TWR, the Cash Equity
Investors, and the TeleCorp Investors are sometimes referred to herein as the
"Purchasers." Capitalized terms used but not defined herein shall have the
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meanings given to such terms in the Securities Purchase Agreement referred to
below.
WHEREAS, the Parties have entered into a Securities Purchase Agreement,
dated as of January 23, 1998 (the "Securities Purchase Agreement"), pursuant to
-----------------------------
which the Purchasers acquired certain securities of the Company in consideration
of contributions of cash and/or other property to the capital of the Company;
WHEREAS, the Company is proposing to enter into agreements contemplating
the acquisition by a subsidiary of the Company of the San Diego F-Block PCS
License and the issuance of shares of capital stock of the Company in
consideration therefor (the "San Diego Transactions"), all on the terms set
forth in agreements substantially in the form of drafts which have been
furnished to the Purchasers and their respective counsel;
WHEREAS, concurrently with the execution hereof, AT&T Wireless Services,
Inc., a Delaware corporation, and the Company have entered into a Letter of
Intent relating to the San Diego F-Block PCS License proposed to be acquired;
and
WHEREAS, the Parties are entering into this Agreement in order to set forth
their understandings with respect to the matters contemplated hereby;
NOW, THEREFORE, in consideration of the premises and the mutual promises
and covenants herein contained, the parties agree as follows:
1. Consent. The Purchasers hereby consent to the consummation of the San
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Diego Transactions by the Company and its subsidiaries.
2. Amendment of Certain Agreements. The Parties hereby agree that
-------------------------------
immediately upon the consummation of the San Diego Transactions, the terms (i)
"Company Territory", as used in the Securities Purchase Agreement; (ii)
-----------------
"Licensed Territory", as used in the Network Membership License Agreement; (iii)
"Territory", as used in the Stockholders' Agreement; and (iv) "TeleCorp Service
---------
Area" as used in the Roaming Agreement, shall be amended to include the San
Diego BTA (as such term is defined in the Roaming Agreement). Notwithstanding
the foregoing, the Company shall not commence build-out activities with respect
to the San Diego
PCS System until the Company has adopted a build-out schedule with respect to
such system and obtained additional financing sufficient to finance such build-
out without affecting the Company's build-out plans for its other markets, which
build-out schedule and the terms and amount of which additional financing are
reasonably satisfactory to AT&T PCS and Cash Equity Investors representing 66-
2/3% of the Aggregate Commitment of all Cash Equity Investors.
3. Amendment of Schedules I and V of the Purchase Agreement-, Schedule I
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of the Stockholders Agreement.
-----------------------------
(i) The Purchase Agreement is hereby amended by deleting page one
of Schedule I thereto with respect to the Aggregate Commitment without the
Supplemental Commitment in its entirety and replacing it with Schedule I annexed
hereto, which reflects all modifications and additions to the proposed
contributions of the Cash Equity Investors in respect of such Aggregate
Commitment to the capital of the Company which have been made since the
execution of the Purchase Agreement. Page two of Schedule I to the Purchase
Agreement with respect to the Supplemental Commitment shall remain in full force
and effect. In consideration of the Supplemental Commitment of $5 million, the
Company will issue units comprised of one share of Series C Preferred and one
share of Class A Common at the price of $ 1,000.00 per unit.
(ii) The Purchase Agreement is hereby amended by deleting Schedule V
thereto in its entirety and replacing it with Schedule V annexed hereto, which
reflects the amendment set forth in Section 5 hereof and all other modifications
and additions to the proposed capitalization of the Company which have been made
since the execution of the Purchase Agreement.
(iii) The Stockholders' Agreement is hereby amended by naming and
including in Schedule I thereto ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇.
4. Amendment of Section 6. 10 of Purchase Agreement. The Purchase
------------------------------------------------
Agreement is hereby amended by deleting Section 6. 10 therefrom in its entirety.
5. Consideration to AT&T PCS and TWR. Notwithstanding the terms of the
---------------------------------
Purchase Agreement, including without limitation Section 2.5(a) thereof, at the
Closing AT&T PCS and TWR shall receive no shares of Class D Common Stock and, in
lieu thereof, shall receive the number of shares of Series F Preferred Stock set
forth opposite their names on Schedule V thereto, as amended by this Agreement.
6. Legal Structure. Attached hereto as Exhibit A is an accurate and
---------------
complete legal structure chart depicting the ownership of the Company's
subsidiaries, the states in which such subsidiaries were formed and any and all
foreign qualifications to conduct business they possess.
7. Credit Agreement. Attached hereto as Exhibit B are accurate and
----------------
complete copies of the Credit Agreement and all other Credit Documents.
8. TeleCorp Financial Statements. Attached hereto as Exhibit C are the
-----------------------------
updated financial statements of TeleCorp for the year ended December 31, 1997.
-2-
9. Pre-Closing and Bridge Notes. The Company represents and warrants to
----------------------------
the Purchasers that Schedule I attached hereto sets forth, with respect to each
Cash Equity Investor: (i) the Initial Cash Contribution of each such investor,
(ii) the principal amount of its advances in respect of the Pre-Closing Notes,
(iii) the principal amount of its advances in respect of the Bridge Notes, plus
interest accrued thereon through January 23, 1998 and (iv) the net Initial Cash
Contributions to be made by each Cash Equity Investor at Closing, which shall
equal each such investor's Initial Cash Contribution less the amounts described
in subsections (ii) and (iii) of this Section 9.
10. Termination of Agreements. Effective on the date hereof, each of the
-------------------------
TeleCorp Investors and the Management Stockholders, on behalf of themselves and
their Affiliates (other than the Company and its subsidiaries), agree that all
agreements or understandings (other than the Purchase Agreement and the
agreements entered into in connection therewith) to which both (a) TeleCorp is a
party (or is otherwise entitled to any benefits, as a third party beneficiary or
otherwise) and (b) such TeleCorp Investor or Management Stockholder (or an
Affiliate thereof) is a party (or is otherwise entitled to any benefits, as a
third party beneficiary or other-wise), are terminated and of no further force
or effect.
11. Company Operations. It is contemplated that certain of the
------------------
Transactions and the business that the Company proposes to engage in will be
conducted through subsidiaries of the Company. The Purchasers consent to such
subsidiary's participation in such Transactions and business on the conditions
that (i) the subsidiary shall at all times be a directly or indirectly wholly-
owned subsidiary of the Company, and (ii) the Company shall at all times cause
such subsidiary to perform the subsidiary's obligations thereby without any
further actions required of the parties thereto.
12. Management Stockholders Agreements. By execution of this Agreement,
----------------------------------
the Purchasers hereby agree to be bound by the obligations in, and entitled to
the benefits of, each of the several stockholders agreements among the Company,
the Purchasers and each Company employee party thereto, all with the same effect
as if the Purchasers had executed and delivered each such agreement.
13. Interexchange Services. AT&T Wireless Services, Inc. has offered to
----------------------
enter into an agreement with the Company with respect to the provision of
interexchange services to the Company and its subsidiaries, the price and other
terms of which agreement shall be substantially as set forth in the Draft Voice
Contract and Pricing it has previously furnished to the Company.
14. Allocation. It is agreed that the value attributable as of the date
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hereof to the Series E Preferred Stock and Class A Common Stock is $0.01 and
$1.00, respectively.
15. Reissuance of Stock Certificates. With respect to certificates
--------------------------------
representing shares of Preferred Stock and Common Stock issued at the Closing to
Cash Equity Investors that are also TeleCorp Investors, the Company covenants
that promptly following the Closing each such certificate shall be cancelled
and, in lieu thereof, the Company will issue two new certificates, one
representing the shares issued to such Person in its capacity as a Cash Equity
Investor, and the other representing the shares issued to such Person in its
capacity as a TeleCorp Investor. The
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Company shall retain possession of each such certificate issued to a Person in
its capacity as a Cash Equity Investor, together with a stock power in respect
of the shares represented by such certificate, all in accordance with the terms
of such Cash Equity Investor's Pledge Agreement. The Company shall deliver each
such certificate issued to a Person in its capacity as a TeleCorp Investor as
directed by such Investor.
16. Miscellaneous. This Agreement embodies the entire agreement and
-------------
understanding of the Parties relating to the subject matter hereof and
supersedes all prior agreements and understandings relating to such subject
matter. This Agreement may not be amended, changed, supplemented, waived or
otherwise modified except by an instrument in writing signed by each Party
against whom enforcement is sought. This Agreement shall be binding upon and
shall inure to the benefit of each Party and their permitted successors and
assigns. Each Party will execute and deliver such further documents and take
such further actions as the other Parties may reasonably request consistent with
the provisions hereof in order to effect the intent and purposes of this
Agreement. The parties hereto hereby irrevocably and unconditionally consent to
submit to the non-exclusive jurisdiction of the courts of the State of New York
and of the United States of America located in the County of New York, New York
(the "New York Courts") for any litigation arising out of or relating to this
---------------
Agreement and the Transactions, waive any objection to the laying of venue of
any such litigation in the New York Courts and agrees not to plead or claim in
any New York Court that such litigation brought therein has been brought in an
inconvenient forum. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other Jurisdiction. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument.
-4-
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
TELECORP PCS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: CEO
--------------------------
AT&T WIRELESS PCS INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Vice President & CEO
-------------------------
TWR CELLULAR, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Vice President & CEO
-------------------------
-5-
Cash Equity Investors:
CB CAPITAL INVESTORS, L.P.
By: CB Capital Investors, Inc., its general
partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Title: General Partner
---------------------------
NORTHWOOD VENTURES LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Title: Manager
----------------------------
NORTHWOOD CAPITAL PARTNERS LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Title: Manager
---------------------------
ONELIBERTY FUND III, L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
-----------------------------
Title: General Partner
---------------------------
ONELIBERTY FUND IV, L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
-----------------------------
Title: General Partner
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MEDIA./COMMUNICATIONS INVESTORS LIMITED
PARTNERSHIP
By: M/C Investors General Partner - J. Inc.,
general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
MEDIA/COMMUNICATIONS PARTNERS III LIMITED
PARTNERSHIP
By: M/C III L.L.C., its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Manager
EQUITY-LINKED INVESTORS-II
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇ ASSOCIATES-II,
its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Title: Executive Vice President
----------------------------
PRIVATE EQUITY INVESTORS M, L.P.
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇ ASSOCIATES-II,
its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Title: Executive Vice President
----------------------------
-7-
▇▇▇▇ COMMUNICATIONS PARTNERS, L.P.
By: HCP Investments, L.P., its general
partner
By: ▇▇▇▇ Ptrs, LLC, its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Manager
HCP CAPITAL FUND, L.P.
By: ▇▇▇▇▇ ▇. ▇▇▇▇ & Co., its General
Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chairman
ENTERGY TECHNOLOGY HOLDING COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Title: Vice President
----------------------------
TORONTO DOMINION INVESTMENTS INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Title: Vice President
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-8-
WHITNEY EQUITY PARTNERS. L.P.
By: ▇.▇. ▇▇▇▇▇▇▇ Equity Partners. L.L.C.
its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: Member
▇.▇. ▇▇▇▇▇▇▇ III, L.P.
By: ▇.▇. ▇▇▇▇▇▇▇ Equity Partners III,
L.L.C.. its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: Member
WHITNEY STRATEGIC PARTNERS III. L.P.
By: ▇.▇. ▇▇▇▇▇▇▇ Equity Partners III,
L.L.C.. its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: Member
-9-
TeleCorp Investors:
CB CAPITAL INVESTORS, L.P.
By: CB Capital Investors, Inc., its general
partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Title: General Partner
----------------------------
NORTHWOOD VENTURES LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Title: Manager
----------------------------
NORTHWOOD CAPITAL PARTNERS LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Title: Manager
----------------------------
ONE LIBERTY FUND III, L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
Title: General Partner
----------------------------
ONE LIBERTY FUND IV, L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
Title: General Partner
----------------------------
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MEDIA./COMMUNICATIONS INVESTORS LIMITED
PARTNERSHIP
By: M/C Investors General Partner - J. Inc.,
general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
MEDIA/COMMUNICATIONS PARTNERS III LIMITED
PARTNERSHIP
By: M/C III L.L.C., its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Manager
ENTERGY TECHNOLOGY HOLDING COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
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GILDE INTERNATIONAL, B.V.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
-------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
-----------------------------
Title: Attorney in Fact
----------------------------
-▇▇-
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ CORP., LLC
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
Title: ____________________________
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MANAGEMENT STOCKHOLDERS
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
-14-
Schedule V
Share Allocation Without Supplemental Allocation(a)
AT&T Does Not Receive Tracking
Preferred Stock
------------------ ---------------------------------------------------------------------------
Total Dollars Series A Series B Series C Series D Series E Series F Senior
Committed Common
------------------ ---------------------------------------------------------------------------
Cash Equity
Chase $ 27,782,016 0.00 0.00 27,782.02 0.00 0.00 0.00 0.00
▇▇▇▇▇ 27,782,016 0.00 0.00 27,782.02 0.00 0.00 0.00 0.00
▇▇▇▇ 20,836.512 0.00 0.00 20,836.51 0.00 0.00 0.00 0.00
JH 17,363,760 0.00 0.00 17,363.76 0.00 0.00 0.00 0.00
Entergy 13,891,008 0.00 0.00 13,891.01 0.00 0.00 0.00 0.00
M/C 10,418,256 0.00 0.00 10,418.26 0.00 0.00 0.00 0.00
One Liberty 3,472,752 0.00 0.00 3,472.75 0.00 0.00 0.00 0.00
TD 3,472,752 0.00 0.00 3,472.75 0.00 0.00 0.00 0.00
Northwood 2,430,926 0.00 0.00 2,430.93 0.00 0.00 0.00 0.00
▇▇▇▇▇▇ ▇▇▇▇▇ 450,000 0.00 0.00 450.00 0.00 0.00 0.00 0.00
▇▇▇ ▇▇▇▇▇▇▇▇ 100,000 0.00 0.00 100.00 0.00 0.00 0.00 0.00
------------------ ---------------------------------------------------------------------------
Total Cash Equity 128,000,000 0.00 0.00 128,000,000 0.00 0.00 0.00 0.00
Supplemental 0 0.00 0.00 0.00 0.00 0.00 0.00 0.00
TeleCorp Licenses
One Liberty Fund 1,531,433 0.00 0.00 1,531.43 0.00 0.00 0.00 0.00
Gilde International 15,461 0.00 0.00 15.46 0.00 0.00 0.00 0.00
Northwood Ventures 928,137 0.00 0.00 928.14 0.00 0.00 0.00 0.00
Northwood Capital Partners 232,034 0.00 0.00 232.03 0.00 0.00 0.00 0.00
CB Capital Investors LP 1,160,171 0.00 0.00 1,160.17 0.00 0.00 0.00 0.00
TeleCorp Investment Corp., LLC 1,160,171 0.00 0.00 1,160.17 0.00 0.00 0.00 0.00
M/C Investors 46,403 0.00 0.00 46.40 0.00 0.00 0.00 0.00
M/C Partners 1,113,768 0.00 0.00 1,113.77 0.00 0.00 0.00 0.00
Entergy Technology 1,160,171 0.00 0.00 1,160.17 0.00 0.00 0.00 0.00
------------------ ----------------------------------------------------------------------------
SubTotal 7,347,748 0.00 0.00 7,347.75 0.00 0.00 0.00 0.00
AT&T 45,974,850 30,649.90 0.00 0.00 15,740.93 0.00 15,324.95 0.00
TRW 54,109,369 36,072.91 0.00 0.00 18,526.04 0.00 18,036.46 0.00
Mercury Licenses 0 0.00 0.00 0.00 0.00 0.00 0.00 0.00
▇▇▇▇▇▇ ▇▇▇▇▇ 0 0.00 0.00 0.00 0.00 8,729.40 0.00 0.00
▇▇▇ ▇▇▇▇▇▇▇▇ 0 0.00 0.00 0.00 0.00 5,426.38 0.00 0.00
▇. ▇▇▇▇▇▇ 0 0.00 0.00 0.00 0.00 2,287.21 0.00 0.00
▇. ▇▇▇▇▇▇ 0 0.00 0.00 0.00 0.00 714.34 0.00 0.00
A. Price 0 0.00 0.00 0.00 0.00 714.34 0.00 0.00
▇. ▇▇▇▇▇ 0 0.00 0.00 0.00 0.00 127.80 0.00 0.00
D. Chaplain 0 0.00 0.00 0.00 0.00 127.80 0.00 0.00
▇. ▇▇▇▇▇▇▇ 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00
▇. ▇▇▇▇▇▇▇ 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00
▇. ▇▇▇▇▇▇▇▇ 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00
▇. ▇▇▇▇▇▇▇ 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00
▇. ▇▇▇▇▇▇ 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00
▇. ▇▇▇▇▇▇▇ 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00
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Total $235,431,967 66,722.81 0.00 135,347.75 34,266.97 19,660.81 33,361.41 0.00
================== ===========================================================================
Common
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Series A Series B Tracking C Tracking D Voting Total Percent of Total
Preference
--------------------------------------------------------------------------------------------
Cash Equity
Chase 26,369.02 0.00 87.10 571.78 0.00 27,027.90 14.00%
▇▇▇▇▇ 26,369.02 0.00 87.10 571.78 0.00 27,027.90 14.00%
▇▇▇▇ 19,776.77 0.00 65.32 428.84 0.00 20,270.93 10.50%
JH 16,480.64 0.00 54.44 357.37 0.00 16,892.44 8.75%
Entergy 13,184.51 0.00 0.00 329.44 0.00 13,513.95 7.00%
M/C 9,888.38 0.00 32.66 214.42 0.00 10,135.46 5.25%
One Liberty 3,296.13 0.00 10.89 71.47 0.00 3,378.49 1.75%
TD 3,296.13 0.00 10.89 71.47 0.00 3,378.49 1.75%
Northwood 2,307.29 0.00 7.62 50.03 0.00 2,364.94 1.22%
▇▇▇▇▇▇ ▇▇▇▇▇ 427.11 0.00 1.41 9.26 0.00 437.79 0.23%
▇▇▇ ▇▇▇▇▇▇▇▇ 94.91 0.00 0.31 2.06 0.00 97.29 0.05%
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Total Cash Equity 121,489.91 0.00 357.73 2,677.93 0.00 124,525.57 64.49%
Supplemental 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
TeleCorp Licenses
One Liberty Fund 1,336.43 0.00 2.18 14.31 0.00 1,352.92 0.70%
Gilde International 13.49 0.00 0.02 0.14 0.00 13.66 0.01%
Northwood Ventures 913.80 0.00 1.49 9.79 0.00 925.08 0.48%
Northwood Capital Partners 228.45 0.00 0.37 2.45 0.00 231.27 0.12%
CB Capital Investors LP 1,142.25 0.00 1.86 12.23 0.00 1,156.34 0.60%
TeleCorp Investment Corp., LLC 1,142.25 0.00 1.86 12.23 0.00 1,156.34 0.60%
M/C Investors 45.69 0.00 0.07 0.49 0.00 46.26 0.02%
M/C Partners 1,096.55 0.00 1.79 11.74 0.00 1,110.09 0.57%
Entergy Technology 1,142.25 0.00 0.00 14.09 0.00 1,156.34 0.60%
--------------------------------------------------------------------------------------------
SubTotal 7,061.16 0.00 9.65 77.48 0.00 7,148.30 3.70%
AT&T 0.00 0.00 0.00 0.00 0.00 15,324.95 7.94%
TRW 0.00 0.00 0.00 0.00 0.00 18,036.46 9.34%
Mercury Licenses 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
▇▇▇▇▇▇ ▇▇▇▇▇ 10,779.82 0.00 339.83 0.00 5.00 11,119.65 5.76%
▇▇▇ ▇▇▇▇▇▇▇▇ 6,700.97 0.00 211.25 0.00 5.00 6,912.22 3.58%
▇. ▇▇▇▇▇▇ 3,459.45 0.00 0.00 0.00 0.00 3,459.45 1.79%
▇. ▇▇▇▇▇▇ 1,455.91 0.00 0.00 0.00 0.00 1,455.91 0.75%
A. Price 1,455.91 0.00 0.00 0.00 0.00 1,455.91 0.75%
▇. ▇▇▇▇▇ 260.46 0.00 0.00 0.00 0.00 260.46 0.13%
D. Chaplain 260.46 0.00 0.00 0.00 0.00 260.46 0.13%
▇. ▇▇▇▇▇▇▇ 520.92 0.00 0.00 0.00 0.00 520.92 0.27%
▇. ▇▇▇▇▇▇▇ 520.92 0.00 0.00 0.00 0.00 520.92 0.27%
▇. ▇▇▇▇▇▇▇▇ 520.92 0.00 0.00 0.00 0.00 520.92 0.27%
▇. ▇▇▇▇▇▇▇ 520.92 0.00 0.00 0.00 0.00 520.92 0.27%
▇. ▇▇▇▇▇▇ 520.92 0.00 0.00 0.00 0.00 520.92 0.27%
▇. ▇▇▇▇▇▇▇ 520.92 0.00 0.00 0.00 0.00 520.92 0.27%
--------------------------------------------------------------------------------------------
Total 156,049.57 0.00 918.47 2,755.39 10.00 193,084.85 100.00%
============================================================================================
(a) Management has received shares predicated on the occurrence of the
supplemental allocation. If the supplemental allocation does not occur, shares
will be repurchased from management such that management receives 14.00% of the
fully-diluted equity.
(b) Assumes that management meets certain return hurdles and that all
management warrants are issued.
15
Schedule V
Share Allocation With Supplemental Allocation
AT&T Does Not Receive Tracking
Preferred Stock
------------------- --------------------------------------------------------------------------
Total Dollars Series A Series B Series C Series D Series E Series F Senior
Committed Common
------------------- --------------------------------------------------------------------------
Cash Equity
Chase $ 27,782,016 0.00 0.00 27,782.02 0.00 0.00 0.00 0.00
▇▇▇▇▇ 27,782,016 0.00 0.00 27,782.02 0.00 0.00 0.00 0.00
▇▇▇▇ 20,836,512 0.00 0.00 20,836.51 0.00 0.00 0.00 0.00
JH 17,363,760 0.00 0.00 17,363.76 0.00 0.00 0.00 0.00
Entergy 13,891,008 0.00 0.00 13,891.01 0.00 0.00 0.00 0.00
M/C 10,418,256 0.00 0.00 10,418.26 0.00 0.00 0.00 0.00
One Liberty 3,472,752 0.00 0.00 3,472.75 0.00 0.00 0.00 0.00
TD 3,472,752 0.00 0.00 3,472.75 0.00 0.00 0.00 0.00
Northwood 2,430,926 0.00 0.00 2,430.93 0.00 0.00 0.00 0.00
▇▇▇▇▇▇ ▇▇▇▇▇ 450,000 0.00 0.00 450.00 0.00 0.00 0.00 0.00
▇▇▇ ▇▇▇▇▇▇▇▇ 100,000 0.00 0.00 100.00 0.00 0.00 0.00 0.00
------------------- --------------------------------------------------------------------------
Total Cash Equity 128,000,000 0.00 0.00 128,000,000 0.00 0.00 0.00 0.00
Supplemental 5,000,000 0.00 0.00 5,000.00 0.00 0.00 0.00 0.00
TeleCorp Licenses
One Liberty Fund 1,531,433 0.00 0.00 1,531.43 0.00 0.00 0.00 0.00
Gilde International 15,461 0.00 0.00 15.46 0.00 0.00 0.00 0.00
Northwood Ventures 928,137 0.00 0.00 928.14 0.00 0.00 0.00 0.00
Northwood Capital Partners 232,034 0.00 0.00 232.03 0.00 0.00 0.00 0.00
CB Capital Investors LP 1,160,171 0.00 0.00 1,160.17 0.00 0.00 0.00 0.00
TeleCorp Investment Corp., LLC 1,160,171 0.00 0.00 1,160.17 0.00 0.00 0.00 0.00
M/C Investors 46,403 0.00 0.00 46.40 0.00 0.00 0.00 0.00
M/C Partners 1,113,768 0.00 0.00 1,113.77 0.00 0.00 0.00 0.00
Entergy Technology 1,160,171 0.00 0.00 1,160.17 0.00 0.00 0.00 0.00
------------------- --------------------------------------------------------------------------
SubTotal 7,347,748 0.00 0.00 7,347.75 0.00 0.00 0.00 0.00
AT&T 45,974,850 30,649.90 0.00 0.00 15,740.93 0.00 15,324.95 0.00
TRW 54,109,369 36,072.91 0.00 0.00 18,526.04 0.00 18,036.46 0.00
Mercury Licenses 2,332,545 0.00 0.00 2,332.55 0.00 0.00 0.00 0.00
▇▇▇▇▇▇ ▇▇▇▇▇ 0 0.00 0.00 0.00 0.00 8,729.40 0.00 0.00
▇▇▇ ▇▇▇▇▇▇▇▇ 0 0.00 0.00 0.00 0.00 5,426.38 0.00 0.00
▇. ▇▇▇▇▇▇ 0 0.00 0.00 0.00 0.00 2,287.21 0.00 0.00
▇. ▇▇▇▇▇▇ 0 0.00 0.00 0.00 0.00 714.34 0.00 0.00
A. Price 0 0.00 0.00 0.00 0.00 714.34 0.00 0.00
▇. ▇▇▇▇▇ 0 0.00 0.00 0.00 0.00 127.80 0.00 0.00
D. Chaplain 0 0.00 0.00 0.00 0.00 127.80 0.00 0.00
▇. ▇▇▇▇▇▇▇ 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00
▇. ▇▇▇▇▇▇▇ 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00
▇. ▇▇▇▇▇▇▇▇ 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00
▇. ▇▇▇▇▇▇▇ 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00
▇. ▇▇▇▇▇▇ 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00
▇. ▇▇▇▇▇▇▇ 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00
------------------- --------------------------------------------------------------------------
Total $242,764,512 66,722.81 0.00 142,680.29 34,266.97 19,660.81 33,361.41 0.00
------------------- --------------------------------------------------------------------------
Common
-----------------------------------------------------------------------------------------
Series A Series B Tracking C Tracking D Voting Total Percent of Total
Preference
-------------------------------------------------------------------------------------------
Cash Equity
Chase 26,369.02 0.00 87.10 571.78 0.00 27,027.90 13.49%
▇▇▇▇▇ 26,369.02 0.00 87.10 571.78 0.00 27,027.90 13.49%
▇▇▇▇ 19,776.77 0.00 65.32 428.84 0.00 20,270.93 10.12%
JH 16,480.64 0.00 54.44 357.37 0.00 16,892.44 8.43%
Entergy 13,184.51 0.00 0.00 329.44 0.00 13,513.95 6.75%
M/C 9,888.38 0.00 32.66 214.42 0.00 10,135.46 5.06%
One Liberty 3,296.13 0.00 10.89 71.47 0.00 3,378.49 1.69%
TD 3,296.13 0.00 10.89 71.47 0.00 3,378.49 1.69%
Northwood 2,307.29 0.00 7.62 50.03 0.00 2,364.94 1.18%
▇▇▇▇▇▇ ▇▇▇▇▇ 427.11 0.00 1.41 9.26 0.00 437.79 0.22%
▇▇▇ ▇▇▇▇▇▇▇▇ 94.91 0.00 0.31 2.06 0.00 97.29 0.05%
-------------------------------------------------------------------------------------------
Total Cash Equity 121,489.91 0.00 357.73 2,677.93 0.00 124,525.57 62.15%
Supplemental 5,000.00 0.00 0.00 0.00 0.00 5,000.00 2.50%
TeleCorp Licenses
One Liberty Fund 1,336.43 0.00 2.18 14.31 0.00 1,352.92 0.68%
Gilde International 13.49 0.00 0.02 0.14 0.00 13.66 0.01%
Northwood Ventures 913.80 0.00 1.49 9.79 0.00 925.08 0.46%
Northwood Capital Partners 228.45 0.00 0.37 2.45 0.00 231.27 0.12%
CB Capital Investors LP 1,142.25 0.00 1.86 12.23 0.00 1,156.34 0.58%
TeleCorp Investment Corp., LLC 1,142.25 0.00 1.86 12.23 0.00 1,156.34 0.58%
M/C Investors 45.69 0.00 0.07 0.49 0.00 46.26 0.02%
M/C Partners 1,096.55 0.00 1.79 11.74 0.00 1,110.09 0.55%
Entergy Technology 1,142.25 0.00 0.00 14.09 0.00 1,156.34 0.58%
-------------------------------------------------------------------------------------------
SubTotal 7,061.16 0.00 9.65 77.48 0.00 7,148.30 3.57%
AT&T 0.00 0.00 0.00 0.00 0.00 15,324.95 7.65%
TRW 0.00 0.00 0.00 0.00 0.00 18,036.46 9.00%
Mercury Licenses 2,269.23 0.00 0.00 0.00 0.00 2,269.23 1.13%
▇▇▇▇▇▇ ▇▇▇▇▇ 10,799.82 0.00 339.83 0.00 5.00 11,119.65 5.55%
▇▇▇ ▇▇▇▇▇▇▇▇ 6,700.97 0.00 211.25 0.00 5.00 6,912.22 3.45%
▇. ▇▇▇▇▇▇ 3,459.45 0.00 0.00 0.00 0.00 3,459.45 1.73%
▇. ▇▇▇▇▇▇ 1,455.91 0.00 0.00 0.00 0.00 1,455.91 0.73%
A. Price 1,455.91 0.00 0.00 0.00 0.00 1,455.91 0.73%
▇. ▇▇▇▇▇ 260.46 0.00 0.00 0.00 0.00 260.46 0.13%
D. Chaplain 260.46 0.00 0.00 0.00 0.00 260.46 0.13%
▇. ▇▇▇▇▇▇▇ 520.92 0.00 0.00 0.00 0.00 520.92 0.26%
▇. ▇▇▇▇▇▇▇ 520.92 0.00 0.00 0.00 0.00 520.92 0.26%
▇. ▇▇▇▇▇▇▇▇ 520.92 0.00 0.00 0.00 0.00 520.92 0.26%
▇. ▇▇▇▇▇▇▇ 520.92 0.00 0.00 0.00 0.00 520.92 0.26%
▇. ▇▇▇▇▇▇ 520.92 0.00 0.00 0.00 0.00 520.92 0.26%
▇. ▇▇▇▇▇▇▇ 520.92 0.00 0.00 0.00 0.00 520.92 0.26%
-------------------------------------------------------------------------------------------
Total 163,318.80 0.00 918.47 2,755.39 10.00 200,354.08 100.00%
-------------------------------------------------------------------------------------------
Cash Equity 64.65%
Original THC .37%
AT&T 16.63%
Mercury .13%
(a) Assumes that management meets certain return hurdles and that all
management warrants are issued.
16
TELECORP HOLDING CORP., INC.
FINANCIAL STATEMENTS
for the years ended December 31, 1996 and 1997
AND
REPORT THEREON
17
Report-of Independent Accountants
---------------------------------
To the Board of Directors and Shareholders
TeleCorp PCS Inc, and Predecessor Company:
In our opinion, the accompanying balance sheets and the related
statements of operations, changes in shareholders' equity (deficit) and cash
flows present fairly, in all material respects, the financial position of
TeleCorp Holding Corp. Inc., at December 31, 1996 and 1997, and the results of
operations and its cash flows for the period July 29, 1996 (inception) to
December 31, 1996, the year ended December 31, 1997, and the period July 29,
1996 (inception) to December 31, 1997, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based an our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
McLean, Virginia
July 15, 1998
18
TELECORP HOLDING CORP., INC.
(A Development Stage Enterprise)
BALANCE SHEETS
ASSETS
December 31,
1996 1997
---- ----
Current assets:
Cash and cash equivalents $ 51,646 $ 2,566,685
Other current assets 21,877 73,468
---------- -----------
Total current assets 73,523 2,640,153
Property and equipment, net 829 3,609,274
PCS licenses - 10,018,375
Intangible assets - -
FCC deposit 7,500,000 -
Other assets _____ 26,673
---------- -----------
Total assets 7,574,352 $16,294,476
LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)
Current liabilities:
Accounts payable 98,570 $ 3,202,295
Notes payable 488,750 2,808,500
Notes payable to affiliates - 2,072,573
Due to affiliates - 824,164
Accrued interest 389.079
----------- -----------
Total current liabilities 597.320 9,296,611
U.S. Government financing - 7,727,322
Lucent vendor Series A bonds - -
Senior credit facility - -
Other liabilities - -
Total liabilities 597,320 17,023,933
---------- -----------
Mandatorily redeemable preferred stock:
Series A, mandatorily redeemable 10% cumulative preferred 7,788,969 4,144,340
stock, no par value, 5,000 shares authorized, 750 and 367,
shares issued and outstanding, respectively (liquidation
preference of $4,144,340 as of December 31, 1997)
Commitments and contingencies
Shareholders' equity (deficit):
Class A common stock, no par value. 125,000 shares authorized; 2,000 856
12,500 and 4,834 shares issued and outstanding, respectively
Class B common stock, no par value, 175,000 shares authorized; - -
5,104 and 1,974 shares issued and outstanding, respectively
The accompanying notes are an integral part
of these financial statements
19
Class C common stock, no par value, 175,000 shares authorized; - -
25,520 and 12,527 shares issued and outstanding, respectively.
Deficit accumulated during development stage (813,927) (4,874.654)
---------- -----------
Total shareholders' equity (deficit) (811,927) (4,873,798)
---------- -----------
Total liabilities and shareholders' equity (deficit) $7,574,352 $16,294,475
The accompanying notes are an integral part
of these financial statements
20
TELECORP HOLDING CORP.. INC.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
_________________
For the period July 29, Cumulative for the period
1996 (inception) to For the year ended July 28, 1995 (inception)
December 31, 1996 December 31, 1997 to December 31, 1997
-----------------------------------------------------------------------------------
Revenue $ - $ - $ -
---------- ----------- -----------
Expenses:
Selling and Marketing 9,747 304,062 313,809
General and administrative 515,221 2,647,660 3,162,881
--------- ----------- -----------
Total operating expenses 524,968 2,951,722 3,476,690
-----------------------------------------------------------------------------------
Other (income) expense:
Interest income - (12,914) (12,914)
Interest expense - 396,362 396,362
-----------------------------------------------------------------------------------
Net loss $(524,968) $(3,335,170) $(3,860,138)
===================================================================================
The accompanying notes are an integral part
of these financial statements
21
TELECORP HOLDING CORP., INC.
(A Development Stage Enterprise)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
Deficit
accumu-lated
Class A Class B Class C during the
Common Common Common develop-ment
Stock Stock Stock stage
----- ----- -----
Shares Amount Shares Amount Shares Amount Total
Initial capitalization 8,750 $ 2,000 - - - -$ $ - $ 2,000
Issuance of common
stock 3,750 - 5,104 - 25,250 - - -
Accretion of preferred
stock dividends - - - - - - (288,959) (288,959)
Net loss - - - - - - (524,968) (524,968)
-----------------------------------------------------------------------------------
Balance, December 31,
1996 12,500 2,000 5,104 - 25,520 - (813,927) (811,927)
Issuance of common
stock - - - - 6,875 - - -
Accretion of preferred
stock dividends - - - - - - (725,557) (725,527)
Redemption of equity
interests (7,666) (1,144) (3,130) - (19,868) - - (1,144)
Net loss - - - - - - (3,335,170) (3,335,170)
Balance, December 31,
1997 4,834 $ 856 1,974 -$ 12,527 -$ $(4,874,654) $(4,873,798)
===================================================================================
The accompanying notes are an integral part
of these financial statements.
22
TELECORP HOLDING CORP., INC.
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
For the period July For the year ended Cumulative for the
29, 1996 (inception) December 31, 1997 period July 29, 1996 to
to December 31, 1996 December 31, 1997
----------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
----------------------------------------------------------------------------------------------------------------------
Net loss $ (524,968) $(3,335,170) $(3,860,138)
----------------------------------------------------------------------------------------------------------------------
Adjustment to reconcile net loss to
net cash used in operating activities:
----------------------------------------------------------------------------------------------------------------------
Depreciation expense 75 10,625 10,700
----------------------------------------------------------------------------------------------------------------------
Non-cash capitalized interest - (131,397) (131,397)
----------------------------------------------------------------------------------------------------------------------
Amortization of discount on notes
payable - 134,040 134,040
----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash flow from
operating activities resulting from
changes in assets and liabilities
----------------------------------------------------------------------------------------------------------------------
Other current assets (21,877) (51,591) (73,468)
----------------------------------------------------------------------------------------------------------------------
Other assets - (26,673) (26,673)
----------------------------------------------------------------------------------------------------------------------
Accounts payable 98,570 618,889 717,459
----------------------------------------------------------------------------------------------------------------------
Accrued interest - 389,079 389,079
----------------------------------------------------------------------------------------------------------------------
Other liabilities - - -
----------------------------------------------------------------------------------------------------------------------
Current microwave relocation
obligation - - -
----------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities (448,200) (2,392,198) (2,840,398)
----------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
----------------------------------------------------------------------------------------------------------------------
Expenditures for property and equipment (904) (1,134,234) (1,135,138)
----------------------------------------------------------------------------------------------------------------------
Deposit on PCS licenses (7,500,000) - (7,500,000)
----------------------------------------------------------------------------------------------------------------------
Partial refund of deposit on PCS - 1,561,702 1,561,702
licenses
----------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by (7,500,904) 427,468 (7,073,436)
investing activities
----------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part
of these financial statements.
23
-----------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
-----------------------------------------------------------------------------------------------------------------------------
Proceeds from sale of Series A 7,500,000 1,500,000 9,000,000
preferred stock
-----------------------------------------------------------------------------------------------------------------------------
Proceeds from sale of common stock 2,000 - 2,000
-----------------------------------------------------------------------------------------------------------------------------
Proceeds from issuance of notes payable 498,750 2,808,500 3,307,250
-----------------------------------------------------------------------------------------------------------------------------
Net increase in amounts payable to - 171,269 171,269
affiliates
-----------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing 8,000,750 4,479,769 12,480,519
activities
-----------------------------------------------------------------------------------------------------------------------------
Net increase in cash and cash 51,646 2,515,039 2,566,685
equivalents
-----------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at the - 51,645 -
beginning of period
-----------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at the end of $ 51,646 $ 2,566,685 $ 2,566,685
period
-----------------------------------------------------------------------------------------------------------------------------
Supplemental disclosure of non-cash $ - $ 2,484,836 $ 2,484,836
investing and financing activities:
Network under development
and microwave relocation
costs financed through
accounts payable
-----------------------------------------------------------------------------------------------------------------------------
U.S. Government financing $ - $ 9,192,938 $ 9,192,938
-----------------------------------------------------------------------------------------------------------------------------
Discount on U.S. Government financing $ - $ 1,599,656 $ 1,599,656
-----------------------------------------------------------------------------------------------------------------------------
Conversion of notes payable to $ - $ 498,750 $ 498,750
shareholders into preferred stock
-----------------------------------------------------------------------------------------------------------------------------
Accretion of preferred stock dividends $ 288,958 $ 725,557 $ 1,014,516
-----------------------------------------------------------------------------------------------------------------------------
Redemption of equity interests $ - $ 6,368,926 $ 6,368,926
-----------------------------------------------------------------------------------------------------------------------------
Distribution of net assets to $ - $ 3,644,602 $ 3,644,602
affiliates
------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part
of these financial statements
24
1. Organization
TeleCorp Holding Corp,. Inc., (the Company) was incorporated
in the State of Delaware on July 29, 1996 (date of inception). The
Company intends to design, build, own and operate broadband Personal
Communications Services (PCS) in its licensed regions. The Company
participated in the Federal Communications Commissions' (FCC) Auction
of F Block PCS licenses (the Auction) in April 1997 and successfully
obtained licenses in the New Orleans, Memphis, Beaumont, Little Rock,
Houston, Tampa, Melbourne and Orlando Basic Trading Areas (BTAs). The
Company qualifies as a Designated Entity and Very Small Business under
Part 24 of the rules of the FCC applicable to broadband PCS.
In April 1997, the Company and its shareholders agreed to
the transfer of PCS licenses for the Houston, Tampa, Melbourne and
Orlando BTAs to form newly-formed entities created by the Company's
existing shareholder group: THC of Houston, Inc.; THC of Tampa, Inc.;
THC of Melbourne, Inc.; and THC of Orlando, Inc. pending final FCC
approval which occurred in August of 1997. These licenses were
transferred along with the related operating assets and liabilities of
these entities in exchange for investment units consisting of Class A,
B and C common stock and Series A preferred stock. Concurrently, the
Company distributed the investment units, on a pro rata basis, in a
partial stock redemption to the Company's existing shareholder group.
As a result of this distribution, the Company no longer retains any
ownership equity interest in the newly formed entities. Because the
above transaction was non-monetary in nature and occurred between
entities with the same shareholder group, the transaction was
accounted for at historical cost.
2. Summary of Significant Accounting Policies
Development Stage Company
-------------------------
The Company's activities to date principally have been
planning and participation in the Auction, initiating research and
development, conducting market research, securing capital and
developing its proposed service and network. Accordingly, the
Company's financial statements are presented as a development stage
enterprise, as prescribed by Statement of Financial Accounting
Standards No. 7, "Accounting and Reporting by Development Stage
Enterprises." Since the Auction, the Company has been relying on the
borrowing of funds and
25
the issuance of common and preferred stock rather than recurring
revenues, for its primary sources of cash flow.
Use of Estimates
----------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities on
the date of the financial statements and the reported amounts of
expenses during the reporting period. Actual results could differ
from those estimates.
Concentration of Credit Risk
----------------------------
Financial instruments that potentially subject the Company
to concentrations of credit risk consist principally of cash and cash
equivalents. The Company has invested its excess cash in a money
market account with a commercial bank. The underlying assets of the
fund collateralize these investments. The money market account
invests in U.S. Government securities. The Company has not
experienced any losses on its cash and cash equivalents.
Cash Equivalents
----------------
The Company considers all highly liquid instruments with an
original maturity of three months or less to be cash equivalents.
Licenses and Microwave Relocation
---------------------------------
As a condition of each PCS license, the FCC requires each
license-holder to relocate existing microwave users (Incumbents)
within the awarded spectrum to microwave frequencies of equal
strength. Microwave relocation costs will include the actual and
estimated costs incurred to relocate the Incumbents microwave links
affecting the Company's licensed frequencies an dare presented in the
financial statements at the estimated value of the project cost.
PCS licenses also include costs incurred, including
capitalized interest related to the U.S. Government financing, to
acquire FCC licenses on frequency block F in the 1850-1990 MHz radio
frequency band. Interest
26
capitalization begins when the activities necessary to get the PCS
network ready for its intended use are in progress. For the year ended
December 31, 1997, the Company capitalized $131,397 of interest cost.
The PCS licenses are issued conditionally for ten years.
Historically, the FCC has granted license renewals providing the
licensees have complied with applicable rules, policies and the
Communications Act of 1934, as amended. The Company believes it had
complied with and intends to continue to comply with these rules and
policies.
The Company will amortize the cost of the PCS licenses and
microwave relocation costs on a straight-line basis over 40 years at
the time PCS services commence, which is expected to be in early 1999
for certain BTAs.
Property and Equipment and Network Under Development
----------------------------------------------------
Property and equipment are recorded at cost and depreciated
on the straight-line method over three to ten years based upon
estimated useful lives.
Network under development, includes all costs of
engineering, cell site acquisition, site development, capitalized
interest and other development costs being incurred, to ready the PCS
network for use. Network under development will be depreciated over
its estimated useful life.
Long-Lived Assets
-----------------
The Company periodically evaluates the recoverability of the
carrying value of the property and equipment, network under
development, intangible assets and PCS licenses. The Company considers
historical performance and anticipated future results in its
evaluation of potential impairment. Accordingly, when indicators of
impairment are present, the Company evaluates the carrying value of
these assets in relation to the operating performance of the business
and future and undiscounted cash flows expected to result from the use
of these assets. Impairment losses are recognized when the sum of
expected future cash flows are less than the assets' carrying value.
No such impairment losses have been recognized to date.
Income Taxes
------------
27
The Company accounts for income taxes in accordance with the
liability method. Deferred income taxes are recognized for tax
consequences in future years for differences between the tax bases of
assets and liabilities and their financial reporting amounts at each
year-end, based on enacted laws and statutory tax rates applicable to
the periods in which the differences are expected to affect taxable
income. Valuation allowances are established when necessary, to
reduce net deferred tax assets to the amount expected to be realized.
The provision for income taxes consists of the current tax provision
and the change during the period in deferred tax assets and
liabilities.
28
NOTES TO FINANCIAL STATEMENTS
Start-Up and Advertising Costs
------------------------------
Start-up and advertising costs are expensed as incurred.
3. Property and Equipment
Property and equipment consists of the following as of
December 31,
1996 1997
---------------------------------
Network under development $ - $3,269,793
Computer and office equipment 904 328,875
Furniture and fixtures - 21,306
---------------------------------
904 3,619,974
Accumulated depreciation (75) (10,700)
---------------------------------
$ 829 $3,609,274
=================================
4. Notes Payable
Notes payable consists of the following as of December 31,
1996 1997
----------------------------------
U.S. Government financing $ - $ 9,192,938
Less: discount on U.S. - (1,465,616)
Government financing
----------------------------------
$ - $ 7,727,322
==================================
Notes payable to shareholders $498,750 $ 2,808,500
==================================
29
U.S. Government Financing
-------------------------
In 1996, the Company placed $7,500,000 on deposit with the
FCC in order to bid on F Block broadband PCS licenses. The funding for
the deposit was obtained from the issuance of common and preferred
stock in August 1996 (see Note 5). In April 1997, the Company's
application for the PCS licenses was approved. The Company made a down
payment of $5,942,835 using the funds from the FCC deposit and issued
promissory notes to the FCC for $23,771,342. The balance of the
Company's deposit of $1,557,165 was refunded in April 1997. The terms
of the notes include: interest rate of 6.25% quarterly interest
payments which commence in July 1998 for the two years thereafter,
then quarterly principal and interest payments for the remaining 8
years. The notes were discounted using managements best estimate of
the prevailing market interest: rate of 10.25%. The promissory notes
are collateralized by the underlying PCS licenses.
---------------
In August 1997 upon final approval by the FCC, certain of
the PCS licenses with a cost of $15,678,814 and related US Government
financing in the amount of $12,034,212 were transferred to four newly-
formed entities created by the Company's existing shareholder group
(See Notes 1 and 8).
Notes Payable to Shareholders
-----------------------------
In July 1996, the Company issued $498,750 of subordinated
promissory notes to two shareholders. The notes bear interest at a
rate of 10%, compounded semi-annually; and are dull in full in, July
2OO2. In April 1997, these notes were converted into 50 shares of
Series A preferred stock (See Note 5).
In December 1997, the Company issued various promissory
notes to shareholders. The notes bear interest at a rate of 6.00% and
are due in full in July 1998. The notes were discounted using
management's best estimate of the prevailing market interest rate of
10.25%. The effect on the 1997 financial statement of discounting
these notes was not material. The notes payable are collateralized by
all of the Company's assets.
Maturities of all notes payable (undiscounted) as of December 31,
1997 are as follows:
Amount
------
1998 $ 2,808,500
1999 450,719
30
2000 944,470
2001 1,004,898
2002 1,069,191
Thereafter 5,723,660
-----------
$12,001,438
-----------
5. Shareholders' Equity
Preferred Stock
---------------
The Series A preferred stock has a cumulative annual
dividend right equal to 10% of the sum of the Series A preferred stock
plus all accrued and unpaid dividends compounded annually. In the
event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of the Series A preferred stock
shall be entitled to receive, prior and in preference to any
distribution of any assets of the Company to the holders of Class A, B
and C common stock, an amount of $10,000 per share plus all accrued
and unpaid dividends. The Company shall have the right to call all or
any shares of the Series A preferred stock at anytime for $10,000 per
share plus all accrued and unpaid dividends. At any time after August
31, 2002 each holder of Series A preferred stock may elect, by written
notice to the Company, to redeem a specified number of shares at a
price equal to $10,000 per share plus all accrued and unpaid
dividends. Since the Series A preferred stock is mandatorily
redeemable at the option of the holder, the Company accretes the 10%
dividend right. For the period ended December 31, 1996 and for the
year ended December 31, 1997 the cumulative accretion of preferred
stock dividends was $288,959 and $1,014,516, respectively. Activity
related to the preferred stock for the period July 29, 1996
(inception) to December 31, 1996 and the year ended December 31, 1997
is as follows:
Series A Preferred Stock
------------------------
Shares Amount
-----------------------------------
Issuance of preferred stock 750 $ 7,500,000
Accretion of preferred stock dividends - 288,959
-----------------------------------
Balance, December 31, 1996 750 7,788,959
Issuance of preferred stock 150 1,500,000
Conversion of promissory note to preferred stock 50 498,750
Accretion of preferred stock dividends - 725,557
Redemption of equity interests (583) (6,368,926)
-----------------------------------
Balance, December 31,1997 367 4,144,340
===================================
31
Common Stock
------------
Each class of common stock shall have equal dividend and liquidation rights
subject to the rights and preferences of the holders of the preferred stock.
Dividends may be declared and paid on the common stock from funds legally
available as and when determined by the Board of Directors. The Class A common
stock shall have 5,010,000 voting rights, the Class B common stock shall have no
voting rights and the Class C common stock shall have 4,990,000 voting rights.
Each holder of Class C common stock shall be entitled at any time to convert any
and all of the shares into the same number of shares of Class B common stock
upon the occurrence of certain defined regulatory events. Each holder of Class
B common stock shall be entitled at any time to convert any or all of the shares
into the same number of shares of Class C common stock upon a conversion event,
as defined. Because the Series A preferred stock contains preferences that are
significantly more than the Company's net worth, only nominal or no value has
been ascribed to the common stock.
Control Group Options
---------------------
In order to maintain its Designated Entity status, the Company has reserved for
issuance options to purchase shares of Class A common stock for each holder of
Class A common stock pro rata to their respective holdings, in connection with
future sales of the Company's common stock, in such amount as necessary for
management to hold not less than 60% of such Class A common stock (except that
after the third anniversary of the grant of the PCS licenses management's
ownership may be reduced to 40%). The options will be exercisable at any time
within 10 years from the date of grant at an exercise price equal to the price
per share of the common stock the issuance of which triggers such options. As
of December 31, 1997, no options have been granted.
6. Income Taxes
The tax effect of the temporary difference that gives rise to significant
portions of the deferred tax assets as of December 31, 1996 and 1997,
respectively, are as follows:
1996 1997
---- ----
Capitalized organization costs $ 199,500 $ 1,267,400
--------- -----------
199,500 1,267,400
Less valuation allowance (199,500) (1,267,400)
--------- -----------
32
$ $
=========== ==========
Capitalized organization costs include expenses incurred, in the
organization and start-up of the Company. For federal income tax purposes,
these costs will be amortized over five years once active business operations
commence.
33
7. Commitments
The Company has operating leases primarily related to the rental of
office space. As of December 31, 1997, the aggregate minimum rental commitments
under noncancelable operating leases are as follows:
1998 $219,411
1999 222,916
2000 231,832
--------
Total $674,159
========
Rental expense, which is recorded ratably over the lease terms, was
approximately $2,000 and $157,000 for the period ending December 31, 1996 and
the year ended December 31, 1997, respectively.
Upon commencement of operations, the Company expects to pay Incumbents
approximately $25,415,000 for equipment and installation costs in connection
with the microwave relocation services.
8. Related Parties
The Company utilizes the services of a law firm in which the President
of the Company is also a partner. The Company paid the law firm approximately
$110,000 and $250,000 for the period ended December 31, 1996 and for the year
ended December 31, 1997, respectively, for legal services. As of December 31,
1996 and 1997, the Company owed the law firm $0 and $70,464, respectively.
Subsequent to year-end, the individual resigned from the law firm.
The Company receives site acquisition, construction management,
program management, microwave relocation, and engineering services pursuant to a
Master Service Agreement with Entel Technologies, Inc. (Entel). The Chief
Executive Officer and the President of the Company are shareholders and the
Chief Executive Officer is a senior officer of Entel. Fees for the above
services are as follows: $12,000 per site for site acquisition services, $7,000
per site for construction management services, $9,000 per site for program
management and $1,100,000 for microwave relocation services. The microwave
relocation services obligation is recorded on the balance sheet as of January
21, 1998 since clearing has been initiated. Fees for engineering services are
based upon Entel's customary hourly rates. For the period ended December 31,
1996 and for the year ended December 31, 1997, the Company paid $30,829 and
34
$440,375, respectively, to Entel for these services. As of December 31. 1996
and 1997, the Company owed Entel $57,478 and $170,596, respectively. In
addition, Entel processes the payroll for all of the Company's employees for
which the Company does not incur a fee. No amounts have been expensed for
payroll processing services provided by Entel because they are not estimable.
Subsequent to year end, the Chief Executive Officer and President sold 100% of
their interests in Entel.
As of December 31, 1997, the Company had notes payable to affiliates
of $2,072,573. The notes represent the difference of the recorded historical
costs of the assets, liabilities and equity interests distributed to THC
Houston, Inc.; THC of Tampa, Inc.; THC of Melbourne, Inc.; and THC of Orlando,
Inc. (see Note 1), and were originally comprised of the following:
Due (to) from
- amount
--------------
PCS licenses $ 15,678,814
U.S. Government financing $(12,034,212)
Equity interests (6,370,070)
------------
Total $ (2,725,468)
============
In connection with the transfer of the PCS licenses, US Government
financing and equity interests, the Company reduced the notes payable to
affiliates by $652,895, which represents certain costs incurred by the Company
on behalf of the affiliates for the year ended December 31, 1997 pursuant to
Transfer Agreements and Management Agreements. Therefore, as of December 31,
1997, the combined amounts owed to THC Houston, Inc., THC Tampa, Inc., THC
Melbourne, Inc, and THC Orlando, Inc. was $2,072,573. These amounts were
converted to notes payable due on demand bearing interest at the prime rate.
35
As of December 31, 1997, the Company had amounts payable of $824,164
to TeleCorp WCS, Inc. (WCS), a newly formed entity created by the Company's
existing shareholder group in 1997. The amount payable to WCS represents
$1,200,000 of funds received by the Company on behalf of WCS related to Wireless
communications Service licenses owned by WCS reduced by expenses and other
payments owed by WCS to the Company.
9. Subsequent events
Commitments
-----------
In March 1998, the Company entered into it short term sublease
agreement for office space through December 31, 1998. The terms of the agreement
include a security deposit of $33,500 and monthly rent, payable in advance, of
$33,500 per month. The security deposit is to be held in a non-interest bearing
account, and returned 30 days after sublease termination.
In June 1998 the Company entered into a 10 year operating lease for
office space. The terms of the agreement require the Company to obtain a letter
of credit for $1,200,000, which may be reduced by 20% at the end of each year.
The Company is responsible for its proportionate share of property taxes and
operating expenses. Base rent increases on from 2% to 6% annually, as defined
by the lease agreement.
In 1998, the Company entered into several 10 year operating lease
agreements for Multiple Switching Centers (MSC). The terms of the leases
require the Company to obtain letters of credit ranging from S100,000 to
$300,000 and base rent increases in year 6 from 10% to 15%. The combined
monthly payments for these leases is approximately $26,500.
The Company entered into numerous operating leases for cell sites
subsequent to year end. Lease terms range from 3 to 10 years. Most of the
leases provide the Company with renewal options and generally require the
Company to pay for utilities, taxes, insurance and maintenance costs, in
addition to base rent which generally increase 3% to 5% per annum after the
first year. Generally, these leases commence upon installation of
36
equipment, accordingly, most leases have not commenced. As of July 15, 1998
future minimum lease commitments of commenced leases total $6,042,000.
Financing
---------
During the six month period ended June 30, 1998, the Company borrowed
approximately $22,500,000 in the form of promissory notes from existing and
prospective shareholders to satisfy the working capital needs of the Company.
The promissory notes bear interest at the rate of 6.25% per annum compounded
quarterly and are payable in one lump sum on August 31, 1998. These funds are
creditable against the $128,000,000 cash commitment in connection with the
proposed AT&T Transaction described below.
AT&T Transaction
----------------
In January 1998, the Company shareholders entered into a strategic
venture with TeleCorp PCS, Inc. (the Venture), AT&T Corporation and its
affiliates (AT&T), and various other venture capital investors (VC Investors)
for the purpose of providing broadband PCS services in the New Orleans, Houston,
Louisville, St. Louis, Little Rock, Memphis and Boston PCS major trading areas
(MTA). In exchange for an ownership interest in the Venture: (1) the Company's
shareholders will contribute 100% of their ownership interests in the Company,
(ii) AT&T will contribute PCS licenses in the aforementioned MTAs, the use of
the AT&T service marks and a roaming agreement, and (iii) the VC Investors will
commit to contribute $128,000,000 in cash. The ownership interests will be
comprised of various classes of voting and non-voting common stock various
series of preferred stock and common tracking stock. As a result of the above
transaction, the Company will become a wholly-owned subsidiary of the Venture.
The effective date of the Venture is anticipated to be July 15, 1998.
The Company is finalizing an independent appraisal of the value of the
AT&T PCS contributed licenses which will be amortized over 40 years once
wireless service is ready to commence along with an appraisal for the use of the
AT&T service marks, an intercarrier roaming agreement and a exclusivity
arrangement.
Lucent Agreements
-----------------
In May 1998, the Venture entered into a supply agreement with Lucent
Technologies, Inc. (Lucent) whereby the Venture has agreed to purchase from
Lucent radio, switching and network equipment and services up to $285,000,000
for the construction of its PCS networks over a five year period commencing in
1998. The Venture may defer payment on all Lucent equipment and services
purchased by the Venture until the earlier of September
37
30,1998 or the initial closing of a senior credit facility. In addition, Lucent
has agreed to provide $40,000,000 of extended payment terms in the form of a
line-of-credit for purchase of Lucent equipment and services. Interest and
principal will be due at maturity with mandatory redemption of all balances upon
the earlier of a senior debt closing or September 30,1998.
The Venture will have the ability to issue to Lucent increasing rate
8.5% Series A and 10.0% Series B Junior. Subordinated Bonds (the Bonds), with an
aggregate face value of $95,000,000, subject to adjustment up to $160,000,000
based upon the occurrence of certain defined events, pursuant to a May 1998 note
purchase agreement. The Bonds will be subject to a final maturity no later than
January 2012, subject to an earlier maturity date upon the occurrence of certain
defined events.
Lucent's commitment to provide financing is conditioned upon the
occurrence of certain events, including but not limited to the Venture's ability
to obtain a commitment for a senior credit facility of at least $525,000,000,
the closing of the supply agreement, the transfer of certain PCS licenses by
AT&T Wireless PCS, Inc. to the Venture and the receipt of at least $128,000,000
of equity commitments from investors. In June 1998, the Venture borrowed
$10,000,00 of the 8.5% Series A Junior Subordinated Bonds.
Senior Secured Credit Facilities
--------------------------------
The Venture is currently negotiating with Chase Securities, Inc., TD Securities
USA, and Bankers Trust Company to provide up to S525,000,000 of senior secured
credit facilities (the Facilities) to the Venture. Proceeds of the Facilities
will be used to fund capital expenditures related to the construction of the
Venture's PCS System; acquisitions of PCS sites, certain AT&T PCS licenses and
working capital. The Facilities will consist of three tranches in the form of a
$150,000,000 Revolving Credit Note, a $150,000,000 Term Loan A, and a
$225,000,000 Term Loan B.
The initial interest rate on the Revolving Credit Note and Term Loan A
will be LIBOR plus 275 basis points. The interest rate on the Term Loan B will
be fixed at LIBOR plus 325 basis points. The initial commitment fee on the
available, but unused, portion of the Facilities will be 125 basis points. The
commitment fee will decrease based on usage under the Revolving Credit and Term
Loan A. If the Venture issues high-yield subordinated debentures of at least
$220,000,000 within 12 months of closing the Facilities, the spreads applicable
to the Facilities will be reduced 25 basis points.
38
In addition, borrowing under the Facilities will be subject to a
maximum Senior Debt to Total Capital, as defined, ratio of 50%, provided that if
(i) all unfunded commitments have been contributed in full in cash and (ii)
minimum covered POPs meet or exceed 60% of the aggregate number of POPs within
the Licensed Area, then the ratio increases to 55%. Upon completion of a high
yield issuance of at least $220 million, the Facilities will be subject to a
maximum Total Debt to Total Capital ratio of 70%. Once certain specified
operating benchmarks are achieved, the Facilities will be fully available
without regard to the Total Debt to Total Capital Ratio.
The Term Loan A and B will be amortized in quarterly installments of
principal commencing approximately four years after the closing date;
commitments under the Revolving Credit will automatically reduce in quarterly
installments of principal commencing approximately six and one half years after
the closing date. Commencing with the year ended December 31,2001, 50% of the
Venture's excess cash flow will be applied ratably to reduce commitments under
the Revolving Credit and to prepay portions of Term Loan A and Term Loan B.
All obligations of the Venture under the Facilities will be unconditionally
and irrevocably guaranteed by each of its existing and subsequently acquired
domestic subsidiaries. The Facilities will be secured by substantially all the
assets of the Venture, including (i) a first priority pledge of all the capital
stock held by the Venture or any subsidiary of the Venture and (ii) perfected
first priority security interest in, and mortgages on, all tangible and
intangible assets of the Venture and its subsidiaries. Venture's equity
subscription agreements and the contracts associated therewith will also be
assigned as security to the Lenders. The closing of the Facilities is pending
the closing of the AT&T Transaction.
Acquisitions
------------
On May 15, 1999, the Venture signed an agreement to acquire four additional
F Block PCS licenses in the Baton Rouge, Houma, ▇▇▇▇▇▇▇ and Lafayette, Louisiana
BTAs from Mercury PCS II, L.L.C., an AT&T affiliate for estimated total
consideration of $6,400,000. The total consideration is comprised of 2,332
shares of Series C Preferred Stock and 2,269 shares of Class A Voting Common
Stock with an estimated value of $2,300,000 and the assumption of FCC debt of
$4,100,000. The final closing of this transaction is pending approval by the
FCC. In addition, upon the final closing of this acquisition, the VC Investors
will contribute an additional $5,000,000 of capital to the Venture in exchange
for preferred and common stock.
39
CORRECTION TO AGREEMENT
This Correction to Agreement entered into as of July 17, 1998 (this
"Correction') is by and among AT&T Wireless PCS Inc., a Delaware corporation
("AT&T PCS"), TWR Cellular, Inc., a Maryland corporation ("TWR"), the Cash
--------- ---
Equity Investors, the TeleCorp Investors, the Management Stockholders and
TeleCorp PCS, Inc., a Delaware corporation (the "Company" and, together with
-------
AT&T PCS, TWR, the Cash Equity Investors, the TeleCorp Investors, and the
Management Stockholders, the "Parties"). AT&T PCS, TWR, the Cash Equity
Investors and TeleCorp Investors are sometimes referred to herein as the
"Purchasers". Capitalized terms used but not defined herein shall have the
----------
meanings given to such terms in the Closing Agreement defined below.
WHEREAS, the Parties entered into that certain Securities Purchase
Agreement, dated as of January 23, 1998 (the "Securities Purchase Agreement"),
-----------------------------
pursuant to which the Purchasers acquired certain securities of the Company in
consideration of contributions of cash and/or other property to the capital of
the Company;
WHEREAS, the Parties entered into that certain Agreement, dated as of
July 17, 1998 (the "Closing Agreement"), whereby Section 3 of the Closing
-----------------
Agreement amended the Securities Purchase Agreement by deleting Schedule V
thereto in its entirety and replacing it with Schedule V annexed to the Closing
Agreement ("Schedule V");
----------
WHEREAS, the Parties have determined that Schedule V is incorrect in
certain respects; and
WHEREAS, the Parties wish to correct Schedule V as set forth below.
NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants herein contained, the Parties agree as follows:
1. Correction to Schedule V. The Parties acknowledge and agree that
------------------------
Schedule V is hereby corrected, as of July 17, 1998, by deleting Schedule V in
its entirety and replacing it with Schedule V annexed hereto.
2. No Other Corrections; Full Force and Effect. Except as expressly
-------------------------------------------
corrected in Section I above, all other terms and conditions of the Closing
Agreement shall remain in full force and effect.
40
3. Miscellaneous. This Correction embodies the entire agreement and
-------------
understanding of the Parties relating to the subject matter hereof and
supersedes all prior agreements and understandings relating to such subject
matter. This Correction may not be amended, changed, supplemented, waived or
other-wise modified except by an instrument in writing signed by each Party
against whom enforcement is sought. This Correction shall be binding upon and
shall inure to the benefit of each Party and their permitted successors and
assigns. Each Party will execute and deliver such further documents and take
such further actions as the other Parties may reasonably request consistent with
the provisions hereof in order to effect the intent and purposes of this
Correction. The Parties hereby irrevocably and unconditionally consent to
submit to the non-exclusive jurisdiction of the courts of the State of New York
and of the United States of America located in the County of New York, New York,
(the "New York Courts") for any litigation arising out of or relating to this
---------------
Correction, waive any objection to the laying of venue of any such litigation in
the New York Courts and agree not to plead or claim in any New York Court that
such litigation brought therein has been brought in an inconvenient forum. Any
provision of this Correction, which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition, or unenforceability without invalidating the remaining
provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. This Correction may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument.
IN WITNESS WHEREOF, the undersigned have executed this Correction as
of the date first above written.
TELECORP PCS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: CEO
AT&T WIRELESS PCS INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Senior Vice President
TWR CELLULAR INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: General Partner
41
Cash Equity Investors:
CB CAPITAL INVESTORS, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. Hannnon
Its: General Partner
NORTHWOOD VENTURES LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: President
NORTHWOOD CAPITAL PARTNERS LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: President
ONELIBERTY FUND III, L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Its: General Partner
ONELIBERTY FUND IV, L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Its: General Partner
42
▇▇▇▇ COMMUNICATIONS PARTNERS, L.P.,
By: HCP Investments, L.P.,
its general partner
By: ▇▇▇▇ Partners, LLC,
its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Its: Manager
HCP CAPITAL FUND, L.P.
By: ▇▇▇▇▇ ▇. ▇▇▇▇ & Co.,
Its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Its: Manager
ENTERGY TECHNOLOGY HOLDING COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Vice President
TORONTO DOMINION INVESTMENTS INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Vice President
43
WHITNEY EQUITY PARTNERS., L.P.
By: ▇.▇. ▇▇▇▇▇▇▇ Equity Partners L.L.C.,
Its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇
------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇
Its:
▇.▇. ▇▇▇▇▇▇▇ III, L.P.
By: ▇.▇. ▇▇▇▇▇▇▇ Equity Partners III, L.L.C.,
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇
Title:
WHITNEY STRATEGIC PARTNERS III, L.P.
By: ▇.▇. ▇▇▇▇▇▇▇ Equity Partners III, L.L.C.,
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇
---------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇
Its:
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CB CAPITAL INVESTORS, L.P.
By: CB Capital Investors, Inc.,
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Vice President
NORTHWOOD VENTURES LLC
By: /s/ ▇.▇. ▇▇▇▇▇▇
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Name: ▇.▇. ▇▇▇▇▇▇
Its: President
NORTHWOOD CAPITAL PARTNERS LLC
By: /s/ ▇.▇. ▇▇▇▇▇▇
---------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: President
ONE LIBERTY FUND III, L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇.
--------------------------
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Its: General Partner
ONELIBERTY FUND III, L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Its: General Partner
MEDIA./COMMUNICATIONS INVESTORS
LIMITED PARTNERSHIP
By: M/C Investors General Partner - J. Inc.,
a general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Its: President
MEDIA/COMMUNICATIONS PARTNERS III
LIMITED PARTNERSHIP
By: M/C III L.L.C.
its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Its: Manager
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ENTERGY TECHNOLOGY HOLDING COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Vice President
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GILDE INTERNATIONAL B.V.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
Its: Attorney-in-Fact
TELECORP INVESTMENT CORP., LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: CEO
MANAGEMENT STOCKHOLDERS:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------
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ENTERGY TECHNOLOGY HOLDING COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Vice President
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