EXHIBIT 10.11
================================================================================
PUERTO RICO STOCK PURCHASE AGREEMENT
by and among
CASH EQUITY INVESTORS,
MANAGEMENT STOCKHOLDERS,
PUERTO RICO ACQUISITION CORP.,
and
TELECORP PCS, INC.
Dated as of March 30, 1999
===============================================================================
Exhibit 10.11.
Table of Contents: to Annex
Draft 02/16/99
TABLE OF CONTENTS
-----------------
Page
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE.........................2
SECTION 1.1 Terms Incorporated by Reference............................2
SECTION 1.2 Additional Definitions.....................................2
SECTION 1.3 Other Definitions..........................................7
ARTICLE II THE NOTES.........................................................8
SECTION 2.1 Terms of Series E Notes....................................8
SECTION 2.2 Execution and Authentication..............................10
ARTICLE III PREPAYMENTS AND MANDATORY REDEMPTIONS...........................10
SECTION 3.1 Optional Prepayments......................................10
SECTION 3.2 Premium...................................................11
SECTION 3.3 Mandatory Redemption of Series E Notes....................11
SECTION 3.4 Optional Redemption Upon Equity Issuance..................12
SECTION 3.5 Acquisition of Notes......................................12
ARTICLE IV SUPPLEMENTARY COVENANTS..........................................12
SECTION 4.1 Limitation on Transactions with Affiliates................12
SECTION 4.2 Limitation on Incurrence of Indebtedness..................13
SECTION 4.3 Limitation on Restricted Payments.........................15
SECTION 4.4 Payment of Taxes and Other Claims.........................18
SECTION 4.5 Notice of Defaults........................................19
SECTION 4.6 Maintenance of Properties.................................19
SECTION 4.7 Compliance Certificate....................................19
SECTION 4.8 Provision of Financial Information........................20
SECTION 4.9 Waiver of Stay, Extension or Usury Laws...................20
SECTION 4.10 Limitation on Layered Debt................................20
SECTION 4.11 Limitation on Restrictions Affecting Restricted
Subsidiaries.............................................21
SECTION 4.12 Limitation on Liens.......................................21
SECTION 4.13 Subsidiary Guarantees.....................................22
SECTION 4.14 Limitation on Activities of the Company and the
Restricted Subsidiaries..................................23
SECTION 4.15 Amendments to Agreements..................................23
ARTICLE V EVENTS OF DEFAULT.................................................23
SECTION 5.1 Events of Default.........................................23
ARTICLE VI SUBORDINATION....................................................24
SECTION 6.1 Series E Notes Subordinate to Senior Debt.................24
SECTION 6.2 Payment of Proceeds Upon Dissolution, Etc.................24
SECTION 6.3 No Payment When Designated Senior Debt in Default.........26
SECTION 6.4 Acceleration of Series E Notes............................27
SECTION 6.5 Payment Permitted If No Default...........................28
SECTION 6.6 Obligation of Company Unconditional.......................28
SECTION 6.7 Subrogation To Rights of Holders of Senior Debt...........28
SECTION 6.8 Provisions Solely To Define Relative Rights...............29
SECTION 6.9 No Waiver of Subordination Provisions.....................29
SECTION 6.10 Reliance On Judicial Order or Certificate of Liquidating
Agent....................................................30
SECTION 6.11 Notice to Trustee.........................................30
SECTION 6.12 Trustee's Relation to Senior Debt.........................31
SECTION 6.13 Series E Note Holders Authorize Trustee to Effectuate
Subordination............................................31
SECTION 6.14 This Article Not to Prevent Event of Default..............31
SECTION 6.15 Trustee's Compensation Not Prejudiced.....................32
SECTION 6.16 Subordination Provisions Not Applicable to Money Held in
Trust for Holders of Series E Notes; Payments May Be
Paid prior to Dissolution................................32
ARTICLE VII TAX MATTERS.....................................................32
SECTION 7.1 Taxes.....................................................32
ARTICLE VIII THE TRUSTEE...............................................35
SECTION 8.1 Trustee's Disclaimer......................................35
ARTICLE IX GUARANTEE........................................................36
SECTION 9.1 Unconditional Guarantee...................................36
SECTION 9.2 Severability..............................................36
SECTION 9.3 Release of a Guarantor....................................37
SECTION 9.4 Limitation of Guarantor's Liability.......................37
SECTION 9.5 Contribution..............................................37
SECTION 9.6 Execution of Guarantee....................................38
SECTION 9.7 Subordination of Subrogation and Other Rights.............38
ARTICLE X SUBORDINATION OF GUARANTEE........................................38
SECTION 10.1 Guarantee Obligations Subordinated to Designated Senior
Debt.....................................................38
SECTION 10.2 Payment of Proceeds Upon Dissolution, Etc.................39
SECTION 10.3 No Payment When Designated Senior Debt in Default.........40
SECTION 10.4 Acceleration of Series E Notes............................42
SECTION 10.5 Payments Permitted If No Default..........................42
SECTION 10.6 Obligations of Guarantors Unconditional...................42
SECTION 10.7 Subrogation To Rights of Holders of Designated Senior
Debt.....................................................43
SECTION 10.8 Provisions Solely to Define Relative Rights...............43
SECTION 10.9 No Waiver of Subordination Provisions.....................44
SECTION 10.10 Reliance On Judicial Order or Certificate of Liquidating
Agent....................................................44
SECTION 10.11 Notice to Trustee.........................................45
SECTION 10.12 Trustee's Relation to Designated Senior Debt..............45
SECTION 10.13 Series E Note Holders Authorize Trustee to Effectuate
Subordination............................................46
SECTION 10.14 This Article Not to Prevent Event of Default..............46
SECTION 10.15 Trustee's Compensation Not Prejudiced.....................46
SECTION 10.16 Subordination Provisions Not Applicable to Money Held in
Trust for Holders of Series E Notes; Payments May Be
Paid prior to Dissolution................................46
ARTICLE XI MISCELLANEOUS....................................................47
SECTION 11.1 Reference to Indenture....................................47
SECTION 11.2 Benefits of Indenture.....................................47
SECTION 11.3 Amendments Only With Consent of the Holders...............47
SECTION 11.4 Governing Law.............................................48
SECTION 11.5 Successors................................................48
SECTION 11.6 Counterparts..............................................48
PUERTO RICO STOCK PURCHASE AGREEMENT
------------------------------------
PUERTO RICO STOCK PURCHASE AGREEMENT, dated as of March 30, 1999, by and
among the investors referred to on Schedule I (individually, a "Cash Equity
-----------
Investor" and, collectively, the "Cash Equity Investors"), the individuals
-------- ---------------------
listed on Schedule II (individually, a "Management Stockholder" and, together,
----------------------
the "Management Stockholders"), Puerto Rico Acquisition Corp., a Delaware
-----------------------
corporation ("Acquisition Corp.") and TeleCorp PCS, Inc., a Delaware corporation
-----------------
(the "Company").
-------
W I T N E S S E T H :
-------------------
WHEREAS, the Cash Equity Investors and the Management Stockholders are
stockholders of the Company;
WHEREAS, the Management Stockholders are also the sole stockholders of
Acquisition Corp.;
WHEREAS, AT&T Wireless PCS, Inc., a Delaware corporation ("AT&T PCS"),
--------
and Acquisition Corp. entered into a letter of intent, dated September, 1998,
setting forth the terms upon which Acquisition Corp. would acquire from AT&T PCS
a portion of the A Block PCS License for the San ▇▇▇▇ MTA, including 20 MHz of
the 30 MHz of the PCS licenses owned by AT&T PCS covering such market, together
with certain other rights and assets;
WHEREAS, contemporaneously with the closing hereunder, the Management
Stockholders will enter into a stock-for-stock exchange whereby the Management
Stockholders will transfer all of the stock of Acquisition Corp. to the
Company's direct wholly-owned subsidiary, TeleCorp Communications, Inc.
("Communications"), in exchange for shares of the Company's voting common stock
as set forth on Schedule III (b) (the "Stock Exchange"), thus causing
Acquisition Corp. to become a direct wholly-owned subsidiary of Communications
and facilitating the Company's obtaining the rights under the letter of intent
referenced in the preceding paragraph;
WHEREAS, simultaneously herewith, the Company and AT&T PCS are
executing an Asset Purchase Agreement, dated of even date herewith (the
"Acquisition Agreement"), pursuant to which the Company and/or one or more of
---------------------
its direct or indirect wholly-owned Subsidiaries shall acquire from AT&T PCS
such portion of the A Block PCS License for the San ▇▇▇▇ MTA, including 20 MHz
of the 30 MHz of the PCS licenses owned by AT&T PCS covering such market,
together with certain other rights and assets set forth in the Acquisition
Agreement (the "AT&T PCS License");
----------------
WHEREAS, in connection with the consummation of the transactions
contemplated by the Acquisition Agreement, (a) each of the Cash Equity Investors
wishes to purchase additional securities of the Company in consideration of
contributions of cash to the capital of the Company, (b) the Company wishes to
accept such contributions and issue additional securities to each of the Cash
Equity Investors all on the terms and subject to the conditions herein set forth
and (c) the Company and the Cash Equity Investors wish to provide
an opportunity for the Cash Equity Investors to purchase their pro rata share of
the Series E Notes.
WHEREAS, the transactions contemplated hereby will be consummated
simultaneously with the consummation of the transactions contemplated by the
Acquisition Agreement; and
NOW, THEREFORE, in consideration of the promises and the mutual
representations, warranties, covenants, conditions and agreements hereinafter
set forth, the parties agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement:
"Acquisition Corp." has the meaning set forth in the preamble.
-----------------
"Acquisition Agreement" has the meaning set forth in the recitals.
---------------------
"Affiliate" means, with respect to any Person, any other Person that
---------
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with that Person. For purposes of this
definition, "control" (including the terms "controlling" and "controlled") means
------- ----------- ----------
the power to direct or cause the direction of the management and policies of a
Person, directly or indirectly, whether through the ownership of securities or
partnership or other ownership interests, by contract or otherwise.
"Aggregate Commitment" means, with respect to each Cash Equity
--------------------
Investor, the amount set forth opposite its name on Schedule III(a) under the
heading "Aggregate Commitment."
"Agreement" means this Puerto Rico Stock Purchase Agreement, as the
---------
same may be amended, modified or supplemented in accordance with the terms
hereof.
"AT&T PCS" has the meaning set forth in the preamble.
--------
"AT&T PCS License" has the meaning set forth in the recitals.
----------------
"Base Indenture" has the meaning set forth in Section 6.8.
--------------
"Business Day" means any day other than a Saturday, Sunday or a legal
------------
holiday in New York, New York or any other day on which commercial banks in New
York, New York are authorized by law or governmental decree to close.
-2-
"Capital Stock" means any and all shares, interests, participations or
-------------
other equivalents (however designated) of capital stock of a corporation, and
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants, rights or options to purchase or
subscribe for any of the foregoing or any warrants, rights or options to
purchase or subscribe for any such warrants, rights or options.
"Cash Equity Investor" has the meaning set forth in the preamble.
--------------------
"Claim" has the meaning set forth in Section 8.5(a).
-----
"Class C Common Stock" means the Class C Common Stock, par value $.01
--------------------
per share, of the Company.
"Class D Common Stock" means the Class D Common Stock, par value $.01
--------------------
per share, of the Company.
"Closing" has the meaning set forth in Section 3.1.
-------
"Closing Date" has the meaning set forth in Section 3.1.
------------
"Common Stock" means, collectively, Voting Preference Stock, the
------------
Tracked Common Stock, the Voting Common Stock and the Non-Voting Common Stock.
"Communications" has the meaning set forth in the recitals.
--------------
"Company" has the meaning set forth in the preamble.
-------
"Contributions" means the Aggregate Commitments, the Initial Capital
-------------
Contributions and the additional cash contributions in respect of Unfunded
Commitments, in each case, of the Cash Equity Investors.
"Confidential Information" means any and all information regarding the
------------------------
business, finances, operations, products, services and customers of the Person
specified and its Affiliates, in written or oral form or in any other medium.
"Consents" means all consents and approvals of Governmental
--------
Authorities or other third parties necessary to authorize, approve or permit the
parties hereto to consummate the Transactions and for the Company to operate its
business after the Closing Date as currently contemplated.
"Credit Agreement" means the agreement among the Company, the lenders
----------------
and the agents referred to therein, as of July 17, 1998, providing a credit
facility having aggregate commitments of $525 million, as the same may be
amended, modified or supplemented in accordance with the terms thereof.
-3-
"Credit Documents" means the Credit Agreement and all agreements,
----------------
instruments and documents executed and delivered pursuant thereto, as the same
may from time to time be amended, modified or supplemented in accordance with
the terms thereof.
"Excluded Stock" shall mean with respect to each Management
--------------
Stockholder, the number of shares of Preferred Stock and Common Stock set forth
opposite his name on Schedule II; provided, however, that if a Management
--------
Stockholder Transfers (as such term is defined in the Stockholders' Agreement)
any shares of Preferred Stock and Common Stock (other than to satisfy his
indemnification obligations hereunder) the number of Excluded Shares held by
such Management Stockholder shall be reduced by the number of shares of Common
Stock so Transferred.
"FCC" means the Federal Communications Commission or similar
---
regulatory authority established in replacement thereof.
"FCC Law" means the Communications Act of 1934, as amended, including
-------
as amended by the Telecommunications Act of 1996, and the rules, regulations and
policies promulgated thereunder.
"Final Order" has the meaning set forth in Section 7.1(b).
-----------
"Financing" has the meaning set forth in the SBIC Regulations.
---------
"Governmental Authority" means a Federal, state or local court,
----------------------
legislature, governmental agency (including, without limitation, the United
States Department of Justice), commission or regulatory or administrative
authority or instrumentality.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
-------
1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnified Party" has the meaning set forth in Section 8.5(a).
-----------------
"Indemnifying Party" has the meaning set forth in Section 8.5(a).
------------------
"Initial Cash Contribution" means, with respect to each Cash Equity
-------------------------
Investor, the amount set forth opposite its name on Schedule III(a) under the
heading "Initial Cash Contribution."
"Joint Venture Notes" has the meaning set forth in the Acquisition
-------------------
Agreement.
"Law" means applicable common law and any statute, ordinance, code or
---
other law, rule, permit, permit condition, regulation, order, decree, technical
or other standard, requirement or procedure enacted, adopted, promulgated,
applied or followed by any Governmental Authority.
-4-
"Lenders" has the meaning set forth in Section 10.5.
-------
"License" means a license, permit, certificate of authority, waiver,
-------
approval, certificate of public convenience and necessity, registration or other
authorization, consent or clearance to construct or operate a facility,
including any emissions, discharges or releases therefrom, or to transact an
activity or business, to construct a tower or to use an asset or process, in
each case issued or granted by a Governmental Authority.
"License Transfer" means the assignment of any License requiring the
----------------
Consent of the FCC or any equivalent state Governmental Authority.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
----
charge, security interest, right of first refusal or right of others therein, or
encumbrance of any nature whatsoever in respect of such asset.
"Losses" has the meaning set forth in Section 8.2.
------
"Lucent Notes" has the meaning set forth in Section 6.8.
------------
"Management Agreement" means the Management Agreement between the
--------------------
Company and TeleCorp Management Corp., dated July 17, 1998, as the same may be
amended, modified or supplemented in accordance with the terms thereof.
"Management Stockholders" has the meaning set forth in the preamble.
-----------------------
"Material Adverse Effect" means a material adverse effect on the
-----------------------
business, financial condition, assets, liabilities or results of operations or
prospects of the Person specified.
"New York Courts" has the meaning set forth in Section 10.6.
---------------
"Non-Voting Common Stock" means the Company's Class B Non-Voting
-----------------------
Common Stock, par value $.01 per share.
"Opinion of Counsel" or "Opinion of Special FCC Counsel" means, with
------------------ ------------------------------
respect to any Person, a legal opinion of such Person's counsel substantially
in the form and substance of the legal opinion rendered on behalf of such Person
in connection with the consummation on July 17, 1998 of the transactions
contemplated by the Securities Purchase Agreement.
"Person" means an individual, corporation, partnership, limited
------
liability company, association, joint stock company, Governmental Authority,
business trust, unincorporated organization, or other legal entity.
"Pledge Agreements" means the Pledge Agreements between the Company
-----------------
and each Cash Equity Investor, in substantially the form of Exhibit A, to be
dated as of the Closing
-5-
Date, as the same may be amended, modified or supplemented in accordance with
the terms thereof.
"Preferred Stock" means the shares of Series A Preferred Stock, Series
---------------
B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock and Senior Common Stock.
"Regulatory Problem" means, with respect to any SBIC Holder providing
------------------
Financing under this Agreement, any set of facts or circumstances wherein it has
been asserted by any governmental regulatory agency (or any SBIC Holder
reasonably believes in good faith that there is a substantial risk of such
assertion) that such SBIC Holder and its Affiliates are not entitled to hold, or
exercise any significant right with respect to, the Securities.
"Related Agreements" means the Management Agreement and Stockholders'
------------------
Agreement.
"Related Agreement Amendments" has the meaning set forth in Section
----------------------------
6.8.
"Restated Certificate" means the Second Amended and Restated
--------------------
Certificate of Incorporation of the Company, dated as of the Closing Date.
"SBA" has the meaning set forth in Section 6.5(b).
---
"SBA Compliance Documents" has the meaning set forth in 7.4(g).
------------------------
"SBIC" means a small business investment company licensed under the
----
SBIC Act.
"SBIC Act" means the Small Business Investment Company Act of 1958, as
--------
amended.
"SBIC Holder" means each Cash Equity Investor that is an SBIC.
-----------
"SBIC Regulations" means the SBIC Act and the regulations issued
----------------
thereunder as set forth in 13 CFR 107 and 121, as amended.
"Section 8.2 Indemnified Party" has the meaning set forth in Section
-----------------------------
8.2.
"Section 8.3 Indemnified Party" has the meaning set forth in Section
-----------------------------
8.3.
"Section 8.4 Indemnified Party" has the meaning set forth in Section
-----------------------------
8.4.
"Securities" means the shares of Preferred Stock being issued
----------
hereunder, together with any shares of Preferred Stock or Common Stock issued
upon conversion of or delivered in substitution or exchange for any of the
foregoing.
-6-
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Securities Purchase Agreement" means the Securities Purchase
-----------------------------
Agreement dated as of January 23, 1998, by and among the Company, AT&T PCS, the
Cash Equity Investors and the other parties named therein.
"Senior Common Stock" means the Senior Common Stock, par value $.01
-------------------
per share, of the Company.
"Series A Preferred Stock" has the meaning set forth in Section 2.2.
------------------------
"Series B Preferred Stock" means the Series B Preferred Stock, par
------------------------
value $.01 per share, of the Company.
"Series C Preferred Stock" has the meaning set forth in Section 2.2.
------------------------
"Series D Notes" has the meaning set forth in the Acquisition
--------------
Agreement.
"Series D Preferred Stock" has the meaning set forth in Section 2.2.
------------------------
"Series E Notes" means Series E Senior Subordinated Notes
--------------
substantially in the form attached hereto as Exhibit B issued by the Company
pursuant to an Indenture substantially in the form attached hereto as Exhibit C,
which Notes are pari passu with the Series D Notes and are convertible into
shares of Series C Preferred Stock and Voting Common Stock.
"Series E Preferred Stock" has the meaning set forth in Section
------------------------
2.1(c).
"Series F Preferred Stock" has the meaning set forth in Section 2.2.
------------------------
"Stock Exchange" has the meaning set forth in the recitals.
--------------
"Stockholders' Agreement" means the Stockholders' Agreement, by and
-----------------------
among the Company, AT&T PCS, the Cash Equity Investors, and the other parties
named therein, as stockholders, as the same may be amended, modified or
supplemented in accordance with the terms thereof.
"Subsidiary" shall mean, with respect to any Person, a corporation or
----------
other entity of which 50% or more of the voting power or the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
"Summary of Principal Terms" has the meaning set forth in Section
--------------------------
10.15.
"Tracked Common Stock" means, collectively, the Class C Common Stock
--------------------
and the Class D Common Stock.
"Transactions" means the transactions contemplated by this Agreement.
------------
-7-
"Unfunded Commitment" has the meaning set forth in Section 2.1
-------------------
"Voting Common Stock" means the Class A Voting Common Stock, par value
-------------------
$.01 per share, of the Company.
"Voting Preference Stock" means the Voting Preference Stock, par value
-----------------------
$.01 per share, of the Company.
When a reference is made in this Agreement to an Article or a Section,
such reference shall be to an Article or a Section of this Agreement unless
otherwise indicated. Unless the context otherwise requires, the terms defined
hereunder shall have the meanings therein specified for all purposes of this
Agreement, applicable to both the singular and plural forms of any of the terms
defined herein. Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." The use of a gender herein shall be deemed to include the
neuter, masculine and feminine genders whenever necessary or appropriate.
Whenever the word "herein" or "hereof" is used in this Agreement, it shall be
deemed to refer to this Agreement and not to a particular Section of this
Agreement unless expressly stated otherwise.
ARTICLE II
CONTRIBUTIONS; PURCHASE AND SALE
--------------------------------
OF SECURITIES; CERTAIN RESTRICTIONS ON TRANSFER
-----------------------------------------------
2.1. Cash Equity Investor and Management Stockholder Contributions. (a)
-------------------------------------------------------------
Upon the terms and subject to the conditions hereof and in reliance upon the
representations, warranties and agreements herein contained: (i) effective upon
the Closing, each Cash Equity Investor hereby irrevocably commits, severally and
not jointly, to contribute to the capital of the Company an amount equal to its
Aggregate Commitment, and (ii) at the Closing, each Cash Equity Investor shall
contribute to the capital of the Company an amount equal to its Initial Cash
Contribution and the Company shall accept such capital contribution. Each Cash
Equity Investor shall contribute to the capital of the Company an additional
amount equal to the excess of its Aggregate Commitment over its Initial Cash
Contribution in the amounts and on the dates specified on Schedule III(a) (or
such earlier dates as may be established in accordance with the terms of the
Stockholders' Agreement).
The obligation of each Cash Equity Investor to make such additional
cash contributions in respect of its Aggregate Commitment in accordance with
this Section 2.1 is sometimes referred to herein as the "Unfunded Commitment."
-------------------
Nothing herein shall be construed to require any Cash Equity Investor to make
contributions in an aggregate amount in excess of its Aggregate Commitment or
later than the third anniversary of the Closing Date.
(b) Each Cash Equity Investor acknowledges and agrees that, if the
Closing occurs, its obligation to make capital contributions to the Company
after the Closing Date in
-8-
respect of its Unfunded Commitment constitutes an
irrevocable and unconditional obligation, and shall not be subject to
counterclaim, set-off, deduction or defense, or to abatement, suspension,
deferment, diminution or reduction for any reason whatsoever. By way of
amplification, and not in limitation of the foregoing, each Cash Equity Investor
further acknowledges and agrees to fulfill its obligations in respect of its
Unfunded Commitment regardless of any claims it may have against any other
Person (whether or not related to the Transactions) and regardless of the
existence or non-existence of any facts or circumstances (whether or not such
facts and circumstances existed on the date hereof or the Closing Date or were
then known by it). Each Cash Equity Investor further agrees to execute and
deliver a Pledge Agreement pursuant to which each such Cash Equity Investor
agrees to pledge the securities acquired in accordance with Section 2.2,
together with the securities acquired pursuant to the Securities Purchase
Agreement, as security for its obligations to make capital contributions to the
Company in respect of its Unfunded Commitment and as security for its
obligations to make capital contributions to the Company in respect of its
Unfunded Commitment (as such term is defined in the Securities Purchase
Agreement).
(c) Upon the terms and subject to the conditions hereof and in
reliance upon the representations, warranties and agreements herein contained,
at the Closing, each Management Stockholder shall contribute to the capital of
the Company the amount set forth opposite his name on Schedule III(b) and the
Company shall accept such capital contribution in consideration of the shares of
the Company's Series E Preferred Stock, par value $.01 per share (the "Series E
--------
Preferred Stock").
---------------
2.2. Purchase and Sale of Securities at Closing. Upon the terms and subject
------------------------------------------
to the conditions hereof and in reliance upon the representations, warranties
and agreements herein contained, at the Closing, in consideration of the
Transactions, the Company shall issue, sell and deliver the following
securities:
(a) to the Cash Equity Investors, the number of shares set forth
opposite its name on Schedule III of the following: (i) the Company's
Series C Preferred Stock, par value $.01 per share, (the "Series C
Preferred Stock"), the terms of which are set forth in the Restated
Certificate, and (ii) Voting Common Stock; and
(b) to the Management Stockholders, the number of shares set forth
opposite his name on Schedule III(b) of the Company's Series E Preferred
Stock, the terms of which are set forth in the Restated Certificate.
2.3. Management Stockholder Contribution. Upon the terms and subject to the
-----------------------------------
conditions hereof and in reliance upon the representations, warranties and
agreements herein contained, at the Closing, the Management Stockholders shall
contribute to the capital of Communications all their right, title and interest
in the issued and outstanding capital stock of Acquisition Corp. in
consideration of the Company's Voting Common Stock set forth in Schedule III(b).
-9-
2.4. Management Benefit Plan. On or prior to the Closing, the Company shall
-----------------------
amend its 1998 Restricted Stock Plan to include an additional 2,937.62 shares of
Voting Common Stock, 1,292.55 shares of which shall be designated as
Extraordinary Event Shares (as defined in such Plan), and an additional 1,580.19
shares of Series E Preferred Stock. The Company's Compensation Committee shall
grant restricted shares pursuant to such Plan to the Company's employees, other
than the Management Stockholders. The Company may utilize any unissued shares
under the Plan to fund an employee stock option plan for the general benefit of
the Company's employees, other than the Management Stockholders.
2.5. Restrictive Legends. Each certificate representing Securities
-------------------
(including Securities originally issued hereunder or delivered upon conversion
of the Preferred Stock or Common Stock, or delivered in substitution or exchange
for any of the foregoing) will bear a legend, in addition to any legends
required by the Stockholders' Agreement or otherwise required by Law, reading
substantially as follows until such Securities have been sold pursuant to an
effective registration statement under the Securities Act, Rule 144 under the
Securities Act, or an opinion of counsel reasonably satisfactory in form and
substance to the Company and otherwise in full compliance with any other
applicable restrictions on transfer, including those contained in this Agreement
and the Stockholders' Agreement:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE `ACT'), OR UNDER ANY STATE SECURITIES OR `BLUE SKY' LAWS.
SAID SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF, UNLESS AND UNTIL REGISTERED UNDER
THE ACT AND THE RULES AND REGULATIONS THEREUNDER AND ALL APPLICABLE STATE
SECURITIES OR `BLUE SKY' LAWS OR EXEMPTED THEREFROM UNDER THE ACT AND ALL
APPLICABLE STATE SECURITIES OR `BLUE SKY' LAWS."
2.6. Participation in Note Purchase. In the event that AT&T PCS elects to
------------------------------
eliminate the Joint Venture Notes from the consideration under the Acquisition
Agreement and receive additional Series D Notes pursuant to the terms and
conditions of Section 2.2 of the Acquisition Agreement, then at any time up to
fifteen days prior to the later of the closing of the Acquisition Agreement or
May 15, 1999, one or more of the Cash Equity Investors may elect to fund
additional cash into the Company by purchasing their pro-rata share of the
Series E Notes based on their percentage ownership of the Company immediately
prior to such closing (such pro rata rights to be calculated on the basis that
AT&T PCS and its Affiliates and the Cash Equity Investors are the sole
beneficial owners of the Company's common equity and beneficially own the
percentages of the Company's common equity set forth on Schedule IV hereto) (the
"Purchase Right"); provided, however, that no Series E Notes will be issued
unless Series D Notes are then outstanding; and provided, further, that if any
Cash Equity Investor does not elect to purchase its pro rata share of the Series
E Notes, then any or all of the other Cash Equity
-10-
Investors shall have the right to purchase that percentage of the principal
amount of the Series E Notes as to which the Purchase Right shall have not been
exercised (an "Additional Purchase Right") equal to a fraction, the numerator of
which is the percentage of the Company's common equity beneficially owned by the
Cash Equity Investor (as set forth on Schedule IV hereto) so exercising such
Additional Purchase Right and the denominator of which is the percentage of the
Company's common equity beneficially owned by all Cash Equity Investors so
exercising such Additional Purchase Right and AT&T PCS and its Affiliates (in
each case as set forth on Schedule IV hereto). The foregoing procedure shall be
repeated until all Series E Notes as to which Cash Equity Investors shall have a
Purchase Right or an Additional Purchase Right shall have been so exercised by
such Cash Equity Investors. Any and all preemptive rights afforded by Section
7.2 of the Stockholders' Agreement to the Cash Equity Investors with regard to
the transactions set forth in the Acquisition Agreement are hereby waived by
them. In the event that the Cash Equity Investors elect to purchase Series E
Notes pursuant to this Section 2.6 after the closing of the Acquisition
Agreement, then the Company shall redeem a corresponding amount of Series D
Notes from AT&T PCS at par value, plus accrued interest. The Series E Notes
issued pursuant to this paragraph 2.6 shall be dated the date of the Series D
Notes, shall bear interest from such date, and shall be issued for a price equal
to the then principal amount, plus interest accrued from such date.
2.7. Use of Proceeds. The Company shall use the net cash proceeds of its
---------------
sale of Securities hereunder solely for consummation of the transactions
contemplated by the Acquisition Agreement and to pay fees and expenses incurred
in connection with the Transactions. Proceeds from the sale of Series E Notes
to Cash Equity Investors pursuant to Section 2.6 prior to the closing under the
Acquisition Agreement, if any, shall be paid to AT&T PCS as consideration under
the Acquisition Agreement.
ARTICLE III
CLOSING
3.1. Time and Place of Closing. Upon the terms and subject to the conditions
-------------------------
hereof, the closing of the Transactions (the "Closing") shall take place at the
offices of ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00
a.m. local time on the twelfth Business Day following the date of receipt of the
last Consent required by subsections (a) through (c) of Section 7.1, or at such
other place and/or time and/or on such other date as the parties may agree or as
may be necessary to permit the fulfillment or waiver of the conditions set forth
in Article VII (the "Closing Date"). The Closing shall be deemed to have
------------
occurred as of 12:01 a.m. on the Closing Date.
3.2. Closing Actions and Deliveries. Upon the terms and subject to the
------------------------------
satisfaction or waiver by the appropriate parties, if applicable, of the
conditions set forth in Article VII, to effect the purchase and sale of the
Securities and consummate the other Transactions, the parties shall on the
Closing Date take the following actions:
-11-
(a) Cash Equity Investor Contributions. Each Cash Equity Investor
----------------------------------
shall deliver to the Company by wire transfer of immediately available funds to
the account designated by the Company on or prior to the Closing Date an
amount equal to its Initial Cash Contribution, as set forth on Schedule
III(a).
(b) Delivery of Securities. The Company shall deliver to (i) each
----------------------
Cash Equity Investor, certificates, duly executed by authorized signatories of
the Company, representing the shares of Series C Preferred Stock and Voting
Common Stock to be issued to each of them in accordance with the terms of
Section 2.2(a) and (ii) each Management Stockholder certificates, duly executed
by authorized signatories of the Company, representing the shares of Series E
Preferred Stock and Voting Common Stock to be issued to each of them in
accordance with the terms of Sections 2.2(b) and 2.3.
(c) Delivery of Acquisition Corp. Each Management Stockholder shall
----------------------------
execute and deliver to Communications one or more stock certificates, together
with stock powers duly executed in blank, representing all of the equity
interests in Acquisition Corp.
(d) Deliveries Under Acquisition Agreement. The closing under the
--------------------------------------
Acquisition Agreement shall occur prior to, or contemporaneously with, the
Closing.
(e) Other Deliveries. The parties shall execute and deliver or
----------------
cause to be executed and delivered all other documents, instruments, opinions
and certificates contemplated by this Agreement to be delivered at the Closing
or necessary and appropriate in order to consummate the Transactions
contemplated to be consummated on the Closing Date.
3.3. Closing Costs; Taxes and Fees. The Company shall pay or cause to be
-----------------------------
paid at the Closing or, if due prior to the Closing or thereafter, promptly when
due, all transfer taxes (including sales taxes, gross receipts taxes, stamp
taxes, and other taxes) payable solely as a result of a transfer of the
Contributions pursuant to this Agreement, but excluding any federal, state,
local or other jurisdictional income taxes (or franchise, excise, gross receipts
or other taxes that are generally imposed on a party on a periodic basis as a
result of a party's status, presence, conduct of business, holding of assets,
income, revenues, activities or other items).
-12-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASERS AND MANAGEMENT STOCKHOLDERS
Each of the Cash Equity Investors (as to itself), the Management
Stockholders (as to himself, and solely with respect to the representations
contained in Sections 4.1(b), 4.1(e), 4.1(f) , 4.7 and 4.8), represents and
warrants to the Company and each of the other parties as follows:
4.1. Organization, Power and Authority.
(a) Each Cash Equity Investor is a corporation, general
partnership or limited partnership, duly organized, validly existing and in good
standing under the Laws of its jurisdiction of organization and has the
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted.
(b) It has the requisite power and authority to execute, deliver
and perform this Agreement, each of the Related Agreements Amendments to which
it is a party and each other instrument, document, certificate and agreement
required or contemplated to be executed, delivered and performed by it hereunder
and thereunder to which it is or will be a party.
(c) It is duly qualified to do business in each jurisdiction
where the character of its properties owned or held under lease or the nature of
its activities makes such qualification necessary other than any such
jurisdiction in which the failure to be so qualified would not have a Material
Adverse Effect on it or materially adversely affect the Transactions or its
ability to perform its obligations under the Related Agreements.
(d) The execution and delivery of this Agreement by it and the
consummation of the Transactions by it, including, without limitation, the
execution and delivery of the Related Agreement Amendments to which it is a
party, have been duly and validly authorized by its Board of Directors (or
equivalent body) and no other proceedings on its part which have not been taken
(including, without limitation, approval of its stockholders, partners or
members) are necessary to authorize this Agreement or to consummate the
Transactions.
(e) This Agreement has been duly executed and delivered by it and
constitutes its valid and binding obligation, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar Laws affecting or relating
to enforcement of creditors' rights generally and may be subject to general
principles of equity. Each of the Related Agreement Amendments to which it is a
party shall be duly executed and delivered by it at (or prior to) the Closing
and, upon such execution and delivery, shall constitute its valid and binding
obligation, enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
-13-
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally and may be subject to general principles of equity.
(f) As of the Closing Date, after giving effect to the
Transactions, it is not in breach of any obligation under this Agreement or any
of the Related Agreements.
4.2. Consents; No Conflicts. Neither the execution, delivery and
----------------------
performance by it of this Agreement or the Related Agreement Amendments to which
it is a party nor the consummation of the Transactions will (a) conflict with,
or result in a breach or violation of, any provision of its organizational
documents; (b) subject to obtaining the Consents set forth on Schedule 4.2,
constitute, with or without the giving of notice or passage of time or both, a
breach, violation or default, create a Lien, or give rise to any right of
termination, modification, cancellation, prepayment or acceleration, under (i)
any Law or License or (ii) any note, bond, mortgage, indenture, lease, agreement
or other instrument, in each case which is applicable to or binding upon it or
any of its assets; or (c) require any Consent, other than those set forth on
Schedule 4.2 or the approval of its board of directors, general partner,
stockholders or similar constituent bodies, as the case may be (which approvals
have been obtained), except in each case, where such breach, violation, default,
Lien, right, or the failure to obtain or give such Consent would not have a
Material Adverse Effect on it or materially adversely affect the Transactions or
its ability to perform its obligations under the Related Agreements and the
Related Agreement Amendments. To its knowledge, there is no fact relating to it
or its Affiliates that would be reasonably expected to prevent it from
consummating the Transactions or performing its obligations under the Related
Agreements and the Related Agreement Amendments or disqualify the Company from
obtaining the Consents (including without limitation, FCC Consent) required in
order to consummate the transfer of the PCS License for the San ▇▇▇▇ MTA to the
Company pursuant to the Acquisition Agreement.
4.3. Litigation. There is no action, proceeding or investigation
----------
pending or, to its knowledge, threatened against it or any of its properties or
assets that would be reasonably expected to have an adverse effect on its
ability to consummate the Transactions to which it is a party or to fulfill its
obligations under this Agreement or any of the Related Agreements to which it is
a party, or which seeks to prevent or challenge the Transactions.
4.4. FCC Compliance. It complies with all eligibility rules issued by the
--------------
FCC to hold broadband PCS Licenses, including without limitation, FCC rules on
foreign ownership. Set forth opposite its name on Schedule 4.4 are all
"attributable" interests (within the meaning of Section 20.6 of the FCC's Rules)
that it holds in CMRS licenses that overlap the territory covered by the AT&T
PCS License.
4.5. Brokers. It has not employed any broker, finder or investment
-------
banker or incurred any liability for any brokerage fees, commissions or finder's
fees in connection with the Transactions.
-14-
4.6. Capital Commitment. Each Cash Equity Investor has, and will have
------------------
on the Closing Date and on any subsequent date on which it is obligated to make
a capital contribution, cash available to it in an amount sufficient to make its
respective Contributions in accordance with the terms of Section 2.1.
4.7. No Distribution. It is acquiring the Securities to be acquired by it
---------------
hereunder for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof (other than in compliance with the
Stockholders' Agreement and the Securities Act and all applicable state
securities laws).
4.8. Investor Acknowledgments. (a) It is an "accredited investor" as
------------------------
defined in Regulation D of the Securities Act. Its representatives have been
provided an opportunity to ask questions of, and have received answers thereto
from, the Company and its representatives regarding the terms and conditions of
its purchase of Securities, and the Company and its proposed business generally,
and have obtained all additional information requested by it to verify the
accuracy of all information furnished to it in connection with such purchase.
(b) It has such knowledge and experience in financial and business
affairs that it is capable of evaluating the merits and risks of purchasing the
Securities it is purchasing hereunder.
(c) It is not relying on and acknowledges that no representation
is being made by any other Cash Equity Investor, the Company or any of its
officers, employees, Affiliates, agents or representatives, except for
representations and warranties expressly set forth in this Agreement, and, in
particular, it is not relying on, and acknowledges that no representation is
being made in respect of, (x) any projections, estimates or budgets delivered to
or made available to them of future revenues, expenses or expenditures, or
future results of operations and (y) any other information or documents
delivered or made available to it or its representatives, except for
representations and warranties expressly set forth in this Agreement, the
Related Agreements and the Related Agreement Amendments and such information and
documents obtained by it as a stockholder of the Company and through its
representatives who serve as members of the Company's board of directors, as the
case may be.
(d) In deciding to invest in the Company, it has relied
exclusively on the representations and warranties expressly set forth in this
Agreement, and the investigations made by itself and its representatives and its
and such representatives' knowledge of the industry in which the Company
proposes to operate. Based solely on such representations and warranties and
such investigations and knowledge and such information obtained by him or it by
virtue of his or its status as a stockholder of the Company, and through its
representatives who serve as members of the Company's board of directors, as the
case may be, it has determined that the Securities it is acquiring are a
suitable investment for it.
-15-
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND ACQUISITION CORP.
The Company represents and warrants severally (except that it is not
making the representation and warranty set forth in Section 5.6(c)) as to the
Company and its Subsidiaries, and Acquisition Corp. represents and warrants
severally (except that it is not making the representations and warranties set
forth in Sections 5.4, 5.6(a), (b), 5.7, 5.8, 5.9 and 5.10) to the Cash Equity
Investors as follows:
5.1. Organization, Power and Authority. (a) Each of the Company and
---------------------------------
each of its Subsidiaries that is a corporation, and Acquisition Corp. is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted and as proposed to be conducted. Each of the
Company's Subsidiaries that is a limited liability company or a limited
partnership is a limited liability company or a limited partnership, as the case
may be, duly formed, validly existing and in good standing under the laws of the
jurisdiction of formation and has the requisite limited liability company or a
limited partnership, as the case may be, power and authority to own, lease and
operate its properties and to carry on its business as now being conducted and
as proposed to be conducted.
(b) It has the requisite power, authority and/or legal capacity to
execute, deliver and perform this Agreement, each of the Related Agreement
Amendments to which it is a party and each other instrument, document,
certificate and agreement required or contemplated to be executed, delivered and
performed by it hereunder and thereunder to which it is or will be a party.
(c) Each of the Company and each of its Subsidiaries and
Acquisition Corp. is duly qualified to do business in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary other than any such jurisdiction
in which the failure to be so qualified would not have a Material Adverse Effect
on it or materially adversely affect the Transactions or its ability to perform
its obligations under the Related Agreements.
(d) The execution and delivery of this Agreement and the
consummation of the Transactions by it, including the execution and delivery of
the Related Agreement Amendments to which it is a party, have been duly and
validly authorized by its Board of Directors and shareholders and, except for
the filing of an amendment to the Company's Restated Certificate with the office
of the Secretary of State of Delaware, no other proceedings which have not been
taken are necessary to authorize this Agreement or to consummate the
Transactions.
-16-
(e) This Agreement has been duly executed and delivered by it and
constitutes the valid and binding obligation of it, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar Laws affecting or relating
to enforcement of creditors' rights generally and may be subject to general
principles of equity. Each of the Related Agreement Amendments to which it is a
party shall be duly executed and delivered by it at (or prior to) the Closing
and, upon such execution and delivery, shall constitute the valid and binding
obligation of it, enforceable against it in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting or relating to enforcement of creditors' rights
generally and may be subject to general principles of equity.
(f) As of the Closing, after giving effect to the Transactions, it
is not in breach of any obligation under this Agreement, any Related Agreement
or any of the Credit Documents.
5.2. Consents; No Conflicts. Neither the execution, delivery and
----------------------
performance of this Agreement and the Related Agreement Amendments to which it
is a party nor the consummation of the Transactions will (a) conflict with, or
result in a breach or violation of, any provision of its organizational
documents; (b) subject to obtaining the Consents set forth on Schedule 5.2,
constitute, with or without the giving of notice or passage of time or both, a
breach, violation or default, create a Lien, or give rise to any right of
termination, modification, cancellation, prepayment or acceleration, under (i)
any Law or License, or (ii) any note, bond, mortgage, indenture, lease,
agreement or other instrument, in each case which is applicable to or binding
upon it or any of its assets; or (c) require any Consent, other than those set
forth on Schedule 5.2 or the approval of its Board of Directors or its
stockholders (which approval has been obtained), except in each case where such
breach, violation, default, Lien, right, or the failure to obtain or give such
Consent would not have a Material Adverse Effect on it or materially adversely
affect the Transactions, its ability to perform its obligations under the
Related Agreements and the Related Agreement Amendments or the operation of its
business after the Closing Date. To its knowledge, there is no fact relating to
it or its Affiliates that would be reasonably expected to prevent it from
consummating the Transactions or performing its obligations under this
Agreement, the Related Agreements and the Related Agreement Amendments or
disqualify it from obtaining the Consents (including FCC Consent) required in
order to consummate the transfer of the PCS License for the San ▇▇▇▇ MTA to the
Company pursuant to the Acquisition Agreement.
5.3. Litigation. There is no action, proceeding or investigation pending
----------
or, to its knowledge, threatened against it or any of its properties or assets
that would have an adverse effect on its ability to consummate the Transactions
to which it is a party or to fulfill its obligations under this Agreement or any
of the Related Agreements to which it is a party, or to operate its business
after the Closing Date, or which seeks to prevent or challenge the Transactions.
There is no judgment, decree, injunction, rule or order outstanding against it
which would limit in any material respect its ability to operate its business in
the manner currently contemplated.
-17-
5.4. FCC Compliance. The Company complies, and after giving effect to the
--------------
Transactions will comply, with all eligibility rules issued by the FCC to hold
broadband PCS Licenses, including FCC rules on foreign ownership and the CMRS
spectrum cap.
5.5. Brokers. It has not employed any broker, finder or investment banker
-------
or incurred any liability for any brokerage fees, commissions or finder's fees
in connection with the Transactions, except that the Company engaged Chase
Securities Inc., whose fee of $2 million will be paid by the Company at the
Closing.
5.6. Capitalization. (a) As of the date hereof, the authorized capital
--------------
stock of the Company consists of 700,000 shares of Voting Common Stock, 700,000
shares of Non-Voting Common Stock, ten shares of Voting Preference Stock, 1,000
shares of Class C Common Stock, 3,000 shares of Class D Common Stock, 70,000
shares of Series A Preferred Stock, 140,000 shares of Series B Preferred Stock,
140,000 shares of Series C Preferred Stock, 35,000 shares of Series D Preferred
Stock, 20,000 shares of Series E Preferred Stock, 35,000 shares of Series F
Preferred Stock and 70,000 shares of Senior Common Stock. As of the Closing
Date, after giving effect to the filing of the Restated Certificate and the
Transactions there will be issued and outstanding the shares of Preferred Stock
and Common Stock set forth on Schedule IV. The record and beneficial owners of
such outstanding shares of Common Stock and Preferred Stock, as of the Closing
Date, after giving effect to the Transactions, are set forth on Schedule IV.
(b) Except as set forth on Schedule 5.6, on the Closing Date,
after giving effect to the Transactions, there will not be any existing options,
warrants, calls, subscriptions, or other rights, or other agreements or
commitments, obligating the Company to issue, transfer or sell any shares of
capital stock of the Company.
(c) As of the date hereof, the authorized capital stock of
Acquisition Corp. consists of 15,000 shares of Common Stock, of which 1,000
shares are issued and outstanding to, and beneficially owned by, the Management
Stockholders. There are no existing options, warrants, calls, subscriptions, or
other rights or other agreements or commitments, obligating Acquisition Corp. to
issue, transfer or sell any shares of its capital stock.
5.7. Shares. The shares of Preferred Stock and Common Stock being
------
issued to the Cash Equity Investors hereunder, when issued and paid for pursuant
to the terms of this Agreement and after giving effect to the filing of the
Restated Certificate, will be duly authorized, validly issued, fully paid and
non-assessable, and will be free of any Liens caused or created by the Company,
except as set forth in the Stockholders' Agreement and the Restated Certificate.
The shares of Common Stock or Preferred Stock, as the case may be, issued upon
conversion of the Preferred Stock and the Common Stock issued on the Closing
Date, or upon conversion thereof after the Closing Date, when issued pursuant to
the terms thereof, will be validly issued, fully paid and non-assessable, and
will be free of any Liens caused or created by the Company, except as set forth
in the Stockholders' Agreement and the Restated Certificate.
-18-
5.8. Offering of Securities. (a) None of the Company or any Person acting
----------------------
on its behalf has offered the Securities or any similar equity securities of the
Company for sale to, or solicited any offers to buy Securities or any similar
equity securities of the Company from, any Person, other than the Cash Equity
Investors and a limited number of other "accredited investors" (as defined in
Rule 501(a) under the Securities Act).
(b) None of the Company or any Person acting on its behalf will,
directly or indirectly, take any action which might subject the offering,
issuance or sale of the Securities to the registration and prospectus delivery
requirements of Section 5 of the Securities Act.
(c) Assuming the accuracy of the representations and warranties of
the Cash Equity Investors contained in Section 4.8, each of the offering and
sale of Securities under this Agreement to the Cash Equity Investors complies
with all applicable requirements of Federal and state securities laws.
5.9. Subsidiaries. The Company owns directly or indirectly all of the
------------
outstanding shares of Capital Stock of each of its Subsidiaries, free and clear
of any Liens, except Liens granted to the lenders pursuant to the Credit
Documents. Set forth on Schedule 5.9 is a complete list of its direct and
indirect Subsidiaries indicating the jurisdictions in which each such Subsidiary
is organized or qualified to conduct business.
5.10. Small Business Matters. Neither the Company nor any Subsidiary: (i)
----------------------
presently engages in, and none of them shall hereafter engage in, any
activities, or (ii) shall use directly or indirectly the proceeds from the sale
of the Securities for any purpose, which, in either case, a SBIC is prohibited
from engaging in or providing funds for by the SBIC Act and the regulations
thereunder (including Title 13, Code of Federal Regulations, Section 107.720).
ARTICLE VI
COVENANTS
6.1. Consummation of Transactions. Each party shall use all commercially
----------------------------
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable and consistent with
applicable law to carry out all of their respective obligations under this
Agreement and the Related Agreements and to consummate the Transactions, which
efforts shall include, without limitation, the following:
(a) The parties shall use all commercially reasonable efforts to
cause the Closing to occur and the Transactions to be consummated in accordance
with the terms hereof, and, without limiting the generality of the foregoing, to
obtain all necessary Consents including the approval of this Agreement and the
Transactions by all Governmental Authorities and agencies, including the FCC
delivery and performance of this Agreement and the Related Agreements or the
consummation of the Transactions, and to make all filings with and to give all
notices to third
-19-
parties which may be necessary or reasonably required in order for the parties
to consummate the Transactions.
(b) Each party shall furnish to the other parties all information
concerning such party and its Affiliates reasonably required for inclusion in
any application or filing to be made by the Company or any other party in
connection with the Transactions or otherwise to determine compliance with
applicable FCC Law.
(c) Upon the request of any other party, each party shall forthwith
execute and deliver, or cause to be executed and delivered, such further
instruments of assignment, transfer, conveyance, endorsement, direction or
authorization and other documents as may reasonably be requested by such party
in order to effectuate the purposes of this Agreement and the Related
Agreements.
6.2. Use of Proceeds. The Company shall use the proceeds of the sale of
---------------
Securities only for the purposes described in Section 2.7.
6.3. SBIC Regulatory Provisions. (a) The Company shall notify each SBIC
--------------------------
Holder as soon as practicable (and, in any event, not later than 15 days) prior
to taking any action after which the number of record holders of the Company's
voting stock would be increased from fewer than 50 to 50 or more, and the
Company shall notify each SBIC Holder of any other action or occurrence after
which the number of record holders of the Company's voting stock was increased
(or would increase) from fewer than 50 to 50 or more, as soon as practicable
after the Company becomes aware that such other action or occurrence has
occurred or is proposed to occur.
(b) Within 75 days after the Closing, the Company shall deliver to
each SBIC Holder a written statement certified by the Company's president or
chief financial officer describing in reasonable detail the use of the proceeds
of the sale of Securities hereunder by the Company and its Subsidiaries. In
addition to any other rights granted hereunder, the Company shall grant each
SBIC Holder and the United States Small Business Administration (the "SBA")
access to the Company's records for the purpose of verifying the use of such
proceeds to the extent required pursuant to SBIC Regulations.
(c) Promptly after the end of each fiscal year (but in any event
prior to February 28 of each year), the Company shall deliver to each SBIC
Holder a written assessment of the economic impact of each SBIC Holder's
investment in the Company, specifying the full-time equivalent jobs created or
retained in connection with the investment, the impact of the investment on the
revenues and profits of the business and on taxes paid by the business and its
employees.
6.4. Regulatory Compliance Cooperation. In the event that any SBIC Holder
---------------------------------
reasonably determines that it has a Regulatory Problem, to the extent reasonably
necessary, such SBIC Holder shall have the right to transfer its Securities (and
any shares of Common Stock issued
-20-
upon conversion thereof) to another Person without regard to any restrictions on
transfer set forth in this Agreement or in Section 4.1(c) of the Stockholders'
Agreement and without complying with the provisions of Section 4.3 of the
Stockholders' Agreement, but subject to the other provisions of the
Stockholders' Agreement and federal and state securities law restrictions, and
the Company shall take all such actions as are reasonably requested by such SBIC
Holder in order to (i) effectuate and facilitate such transfer by such SBIC
Holder of any Securities of the Company then held by such SBIC Holder to such
Person, (ii) permit such SBIC Holder (or any of its Affiliates) to exchange all
or any portion of voting Securities then held by it on a share-for-share basis
for shares of a class of non-voting Securities of the Company, which non-voting
Securities shall be identical in all respects to such voting Securities, except
that such non-voting Securities (or Common Stock, as applicable) shall be non-
voting and shall be convertible into voting Securities (or Common Stock, as
applicable) on such terms as are requested by such SBIC Holder in light of
regulatory considerations then prevailing, (iii) continue and preserve the
respective allocation of the voting interests with respect to the Company
arising out of the SBIC Holder's ownership of voting Securities and/or provided
for in the Stockholders' Agreement before the transfers and amendments referred
to in this Section (including entering into such additional agreements as are
reasonably requested by such SBIC Holder to permit any Person(s) designated by
such SBIC Holder) to exercise any voting power which is relinquished by such
SBIC Holder and (iv) amend this Agreement, the Restated Certificate, and any
other related documents, agreements or instruments to effectuate and reflect the
foregoing. The parties to this Agreement agree to vote their Securities in favor
of such amendments and actions.
6.5. Related Agreement Amendments; Amendments to Restated Certificate.
----------------------------------------------------------------
Certain of the parties hereto (and/or certain of their respective Affiliates)
are (or, with respect to the Resale Agreement, will be) parties to the Related
Agreements. It is the intention of the parties hereto that, upon consummation
of each of the Transactions, each Related Agreement shall be amended and/or
restated as necessary (the "Related Agreement Amendments") to give effect to,
----------------------------
among other things, (a) the AT&T PCS License acquired by the Company upon the
closing of the Acquisition Agreement; (b) the Securities issued to the Cash
Equity Investors at the Closing, and (c) the execution of the agreements
contemplated by the Acquisition Agreement it being agreed that except as
otherwise set forth in the Related Agreement Amendments, the agreements
contemplated by the Acquisition Agreement, the rights and obligations of the
parties under the Related Agreements pertaining to the Licenses and securities
thereunder shall pertain also to the Licenses and Securities hereunder. The
Related Agreement Amendments shall include, without limitation, amendments to
the term "Territory" as used in the Stockholders' Agreement, the San ▇▇▇▇ MTA
and the Minimum Build-out Plan attached as Schedule V to the Stockholders'
Agreement shall be amended as more fully described in the Acquisition Agreement
to include the minimum build-out requirements for the San ▇▇▇▇ MTA, it being
further understood that the parties shall make such other conforming changes to
the terms of such agreements as shall be necessary to reflect the acquisition by
the Company of the Purchased Assets (as defined in the Acquisition Agreement)
and to otherwise extend the benefits of such agreements to the Purchased Assets.
It is also the intention of the parties hereto that the Restated Certificate
shall be amended as necessary (e.g., to increase the number of authorized shares
of Capital Stock) to
-21-
give effect to, among other things, the Securities issued at the Closing. The
parties agree to use their respective best efforts to effectuate any and all
such amendments at any such Closing.
6.6. Offering of Securities. None of the Company or any Person acting
----------------------
on its behalf will, directly or indirectly, take any action which might subject
the offering, license or sale of the Securities to the registration and
prospectus delivery requirements of Section 5 of the Securities Act.
6.7. Waiver of Preemptive Rights. With respect to the Transactions and the
---------------------------
issuance of the shares of Series A Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock and Series F Preferred Stock
hereunder, each of the Cash Equity Investors hereby waives (a) the notice
requirements set forth in Section 7.2(b) of the Stockholders' Agreement and (b)
its preemptive rights that are afforded such party in Section 7.2 of the
Stockholders' Agreement.
6.8. Base Indenture. The base indenture (the "Base Indenture") pursuant to
--------------
which the Company shall issue any Series D Notes, any Series E Notes and any
series of notes in favor of Lucent Technologies, Inc. (the "Lucent Notes") shall
be substantially in the form of Exhibit D hereto.
6.9. Supplemental Indentures. The supplemental indentures to the Base
-----------------------
Indenture pursuant to which the Company shall issue any Series D Notes and any
Lucent Notes shall be substantially in the form of Exhibit E and Exhibit F,
respectively.
ARTICLE VII
CLOSING CONDITIONS
7.1. Conditions to Obligations of All Parties. The obligation of each of
----------------------------------------
the parties to consummate the Transactions contemplated to occur at the Closing
shall be conditioned on the following, unless waived by each of the parties at
or prior to Closing:
(a) Any applicable waiting period under the HSR Act shall have
expired or been terminated.
(b) The Consent of the FCC to the transfer of the PCS License for
the San ▇▇▇▇ MTA to the Company pursuant to the Acquisition Agreement shall have
been obtained pursuant to a Final Order, free of any conditions materially
adverse to the Company or any of the Cash Equity Investors other than those
applicable to the PCS or wireless communications services generally. For the
purposes of this paragraph, "Final Order" means an action or decision
-----------
that has been granted by the FCC as to which (i) no request for a stay or
similar request is pending, no stay is in effect, the action or decision has not
been vacated, reversed, set aside, annulled or suspended and any deadline for
filing such request that may be designated by statute or regulation has passed,
(ii) no petition for rehearing or reconsideration or application for review is
-22-
pending and the time for the filing of any such petition or application has
passed, (iii) the FCC does not have the action or decision under reconsideration
on its own motion and the time within which it may effect such reconsideration
has passed and (iv) no appeal is pending including other administrative or
judicial review, or in effect and any deadline for filing any such appeal that
may be designated by statute or rule has passed.
(c) All Consents by any Governmental Authority (other than the
Consents referred to in paragraphs (a) and (b) above) required to permit the
consummation of the Transactions, the failure to obtain or make which would be
reasonably expected to have a Material Adverse Effect on the Company or any of
the Cash Equity Investors or to materially adversely affect the Transactions or
its ability to perform its obligations under the Related Agreements shall have
been obtained or made.
(d) No preliminary or permanent injunction or other order, decree
or ruling issued by a Governmental Authority, nor any statute, rule, regulation
or executive order promulgated or enacted by any Governmental Authority, shall
be in effect that would (i) impose material limitations on the ability of any
party to consummate the Transactions or prohibit such consummation, or (ii)
impair in any material respect the operation of the Company.
(e) The closing under the Acquisition Agreement shall occur prior
to, or contemporaneously with, the Closing.
(f) The Stock Exchange shall occur contemporaneously with the
Closing.
(g) The Restated Certificate shall have been filed with the Delaware
Secretary of State.
(h) Each Cash Equity Investor shall have executed and delivered to
the Company a Pledge Agreement.
(i) Each Stockholder (as such term is defined in the Stockholders'
Agreement) who is not a Cash Equity Investor hereunder shall have delivered a
waiver of the pre-emptive rights afforded to such Stockholder pursuant to
Section 7.2(b) of the Stockholders' Agreement, in form and substance
substantially similar to Section 6.10.
7.2. Conditions to Obligations of the Company. The obligation of the
----------------------------------------
Company to consummate the Transactions contemplated to occur at the Closing
shall be further conditioned upon the satisfaction or fulfillment, at or prior
to the Closing, of the following conditions by each of the other parties, unless
waived by the Company at or prior to the Closing:
(a) The representations and warranties of each of the Cash Equity
Investors contained herein shall be true and correct in all material respects
(except for representations and warranties that are qualified as to materiality,
which shall be true and correct), in each case when made and at and as of the
Closing (except for representations and warranties made as of a specified date,
which shall be true and correct as of such date) with the same force and effect
as
-23-
though made at and as of such time, except for inaccuracies in respect of the
representations and warranties set forth in Section 4.3, (disregarding any
qualifications as to materiality contained therein) that in the aggregate would
not be reasonably expected to have a Material Adverse Effect on the Company or
to materially adversely affect the Transactions.
(b) Each Cash Equity Investor shall have performed in all material
respects all agreements contained herein or required to be performed by it at or
before the Closing.
(c) An officer of each of the Cash Equity Investors shall have
delivered to the Company a certificate, dated the Closing Date, certifying as to
the fulfillment of the conditions set forth in paragraphs (a) and (b) above as
to the party delivering such certificate.
(d) The Company shall have been furnished with an Opinion of Counsel
to each Cash Equity Investor each dated the Closing Date.
(e) The Company shall have received any consent of the lenders that
may be required pursuant to the terms of the Credit Agreement.
(f) Each of the Related Agreement Amendments shall have been executed
and delivered by the parties thereto (other than the Company) and shall be in
full force and effect.
(g) All corporate and other proceedings of each of the Cash Equity
Investors in connection with the Transactions, and all documents and instruments
incident thereto, shall be reasonably satisfactory in form and substance to the
Company, and each of the Cash Equity Investors shall have delivered to the
Company such receipts, documents, instruments and certificates, in form and
substance reasonably satisfactory to the Company which the Company shall have
reasonably requested in order to consummate the Transactions.
7.3. Conditions to the Obligations of the Cash Equity Investors. The
----------------------------------------------------------
obligation of each Cash Equity Investor to consummate the Transactions
contemplated to occur at the Closing shall be further conditioned upon the
satisfaction or fulfillment, at or prior to the Closing, of the following
conditions, unless waived by each such Cash Equity Investor at or prior to the
Closing:
(a) The representations and warranties of each of the Company,
Acquisition Corp. each other Cash Equity Investor and each Management
Stockholder contained herein shall be true and correct in all material respects
(except for representations and warranties that are qualified as to materiality,
which shall be true and correct), in each case when made and at and as of the
Closing (except for representations and warranties made as of a specified date,
which shall be true and correct as of such date) with the same force and effect
as though made at and as of such time, except for inaccuracies in respect of the
representations and warranties set forth in Section 4.3 and the first sentence
of Section 5.3, (disregarding any qualifications as to materiality contained
therein) that in the aggregate would not be reasonably expected to have a
Material Adverse Effect on the Company or to materially adversely affect the
Transactions.
-24-
(b) Each of the Company, Acquisition Corp., each other Cash Equity
Investor and each Management Stockholder shall have performed in all material
respects all agreements contained herein or required to be performed by it at or
before the Closing.
(c) Each Management Stockholder, an officer of each of the Company,
Acquisition Corp., and each other Cash Equity Investor shall have delivered to
such Cash Equity Investor a certificate, dated the Closing Date, certifying as
to the fulfillment of the conditions set forth in paragraphs (a) and (b) above
as to the party delivering such certificate.
(d) Such Cash Equity Investor shall have been furnished with an
Opinion of Counsel, to each of each other Cash Equity Investor and the Company
each dated the Closing Date.
(e) Each of the Related Agreement Amendments shall have been executed
and delivered by the parties thereto (other than the Cash Equity Investors) and
shall be in full force and effect.
(f) The Base Indenture pursuant to which the Company shall issue any
Series D Notes, any Series E Notes and any Lucent Notes shall be substantially
in the form of Exhibit D.
(g) The supplement indentures to the Base Indenture pursuant to which
the Company shall issue any Series D Notes, and any Lucent Notes shall be
substantially in the form of Exhibit E and F, respectively.
(h) All corporate and other proceedings of each other Cash Equity
Investor, the Company and Acquisition Corp. in connection with the Transactions,
and all documents and instruments incident thereto, shall be reasonably
satisfactory in form and substance to such Cash Equity Investor, and each other
Cash Equity Investor, the Company and Acquisition Corp. shall have delivered to
such Cash Equity Investor all such receipts, documents, instruments and
certificates, in form and substance reasonably satisfactory to such Cash Equity
Investor, which such Cash Equity Investor shall have reasonably requested in
order to consummate the Transactions.
(i) On the Closing Date, counsel to each Cash Equity Investor shall
have received the legal fees and expenses required to be paid or reimbursed by
the Company as provided in Section 10.4 for statements rendered on or prior to
the Closing Date.
(j) For each SBIC Holder, the Company shall have prepared the Size
Status Declaration on Form 480, the Assurance of Compliance for
Nondiscrimination on Form 652 and the Portfolio Financing Report on Form 1031
(Parts A and B) (collectively, the "SBA Compliance Documents"), the Company
------------------------
shall have duly executed and delivered the Forms 480 and 652 to each SBIC
Holder, and all of the information set forth in the SBA Compliance Documents
shall be true and correct in all respects. The Company shall have delivered a
list, after giving effect to the transactions contemplated by this Agreement,
of: (a) the name of each of the Company's directors, (b) the name and title of
each of the Company's officers and (c) the
-25-
name of each of the Company's stockholders and the number and class of shares
held by each stockholder.
ARTICLE VIII
SURVIVAL AND INDEMNIFICATION
8.1. Survival. Except for the representations and warranties contained in
--------
Sections 4.1(a), (b), (d) and (e), and 5.1(a), (b), (d) and (e) (which shall
survive the Closing, without regard to any investigation made by any of the
parties hereto, until the expiration of the applicable statute of limitations
relating thereto), the representations and warranties made in this Agreement
shall survive the Closing without regard to any investigation made by any of the
parties hereto until the second anniversary thereof and shall thereupon expire
together with any right to indemnification in respect thereof (except to the
extent a written notice asserting a claim for breach of any such representation
or warranty and describing such claim in reasonable detail shall have been given
prior to the expiration of the applicable survival period to the party which
made such representation or warranty). The covenants and agreements contained
herein to be performed or complied with prior to the Closing shall expire at the
Closing. The covenants and agreements contained in this Agreement to be
performed or complied with after the Closing shall survive the Closing; provided
that the right to indemnification pursuant to this Article VIII in respect of a
breach of a representation or warranty shall expire upon the application of the
applicable survival period of the Closing (except to the extent written notice
asserting a claim thereunder and describing such claim in reasonable detail
shall have been given prior to such expiration to the party from whom such
indemnification is sought). After the Closing, the sole and exclusive remedy of
the parties for any breach or inaccuracy of any representation or warranty
contained in this Agreement, or any other claim (whether or not alleging a
breach of this Agreement) that arises out of the facts and circumstances
constituting such breach or inaccuracy, shall be the indemnity provided in this
Article VIII.
8.2. Indemnification by the Cash Equity Investors. Each Cash Equity
--------------------------------------------
Investor shall indemnify and hold harmless each other Cash Equity Investor, each
Management Stockholder and the Company and their respective Affiliates, and the
shareholders, members, managers, officers, employees, agents and/or the legal
representatives of any of them (each, a "Section 8.2 Indemnified Party"),
-----------------------------
against all liabilities and expenses (including amounts paid in satisfaction of
judgments, in compromise, as fines and penalties, and as counsel fees)
(collectively, "Losses") incurred by him or it in connection with the
------
investigation, defense, or disposition of any action, suit or other proceeding
in which any Section 8.2 Indemnified Party may be involved or with which he or
it may be threatened (whether arising out of or relating to matters asserted by
third parties against a Section 8.2 Indemnified Party or incurred or sustained
by such party in the absence of a third-party claim), that arises out of or
results from (a) any representation or warranty of such indemnifying party
contained in this Agreement being untrue in any material respect as of the date
on which it was made or (b) any material default by such indemnifying party or
any of its Affiliates in the performance of their respective obligations under
this Agreement, except to the extent (but only to the extent) any such Losses
arise out of or result
-26-
from the gross negligence or willful misconduct of such Section 8.2 Indemnified
Party or its Affiliates.
8.3. Indemnification by the Management Stockholders. Each Management
----------------------------------------------
Stockholder, severally and not jointly, shall indemnify and hold harmless each
Cash Equity Investor and the Company and their respective Affiliates, and the
shareholders, members, managers, officers, employees, agents and/or the legal
representatives of any of them (each, a "Section 8.3 Indemnified Party"),
-----------------------------
against all Losses incurred by him or it in connection with the investigation,
defense, or disposition of any action, suit or other proceeding in which any
Section 8.3 Indemnified Party may be involved or with which he or it may be
threatened (whether arising out of or relating to matters asserted by third
parties against a Section 8.3 Indemnified Party or incurred or sustained by such
party in the absence of a third-party claim), that arises out of or results from
(a) any representation or warranty of such Management Stockholder contained in
this Agreement being untrue in any material respect as of the date on which it
was made or (b) any material default by such Management Stockholder in the
performance of his obligations under this Agreement, except to the extent (but
only to the extent) any such Losses arise out of or result from the gross
negligence or willful misconduct of such Section 8.3 Indemnified Party or its
Affiliates; provided that the aggregate liability of each Management Stockholder
to indemnify Section 8.3 Indemnified Parties against Losses arising out of or
resulting from (x) the untruth in any material respect of any representation or
warranty as to the Company made by such Management Stockholder in this
Agreement, (y) any material default by such Management Stockholder in the
performance of his obligations under this Agreement, shall (except, in the case
of clause (y), to the extent (but only to the extent) any such Losses arise out
of or result from the gross negligence or willful misconduct of such Management
Stockholder) be limited to the shares of Common Stock and Preferred Stock of
the Company (other than any Excluded Stock) then held by such Management
Stockholder, and Section 8.3 Indemnified Parties seeking indemnification against
any Management Stockholder for such Losses hereunder shall not have recourse to
any other assets of such Management Stockholder.
8.4. Indemnification by the Company. The Company shall indemnify and hold
------------------------------
harmless each of the Cash Equity Investors and their respective Affiliates, and
the shareholders, members, managers, officers, employees, agents and/or the
legal representatives of any of them (each, a "Section 8.4 Indemnified Party"),
-----------------------------
against all Losses incurred by him or it in connection with the investigation,
defense, or disposition of any action, suit or other proceeding in which any
Section 8.4 Indemnified Party may be involved or with which he or it may be
threatened (whether arising out of or relating to matters asserted by third
parties against a Section 8.4 Indemnified Party or incurred or sustained by such
party in the absence of a third-party claim), that arises out of or results from
(a) any representation or warranty of the Company contained in this Agreement
being untrue in any material respect as of the date on which it was made or (b)
any material default by the Company or any of its Affiliates in the performance
of their respective obligations under this Agreement, except to the extent (but
only to the extent) any such Losses arise out of or result from the gross
negligence or willful misconduct of such Section 8.4 Indemnified Party or its
Affiliates.
-27-
8.5. Procedures.
(a) The terms of this Section 8.5 shall apply to any claim (a
"Claim") for indemnification under the terms of Sections 8.2, 8.3 or 8.4. The
-----
Section 8.2 Indemnified Party, Section 8.3 Indemnified Party or Section 8.4
Indemnified Party (each, an "Indemnified Party"), as the case may be, shall
-----------------
give prompt written notice of such Claim to the indemnifying party (the
"Indemnifying Party") under the applicable Section, which party may assume
-------------------
the defense thereof, provided that any delay or failure to so notify the
Indemnifying Party shall relieve the Indemnifying Party of its obligations
hereunder only to the extent, if at all, that it is materially prejudiced by
reason of such delay or failure. The Indemnified Party shall have the right to
approve any counsel selected by the Indemnifying Party and to approve the terms
of any proposed settlement, such approval not to be unreasonably delayed or
withheld (unless, in the case of approval of a proposed settlement, such
settlement provides only, as to the Indemnified Party, the payment of money
damages actually paid by the Indemnifying Party and a complete release of the
Indemnified Party in respect of the claim in question). Notwithstanding any of
the foregoing to the contrary, the provisions of this Article VIII shall not be
construed so as to provide for the indemnification of any Indemnified Party for
any liability to the extent (but only to the extent) that such indemnification
would be in violation of applicable law or that such liability may not be
waived, modified or limited under applicable law, but shall be construed so as
to effectuate the provisions of this Article VIII to the fullest extent
permitted by law.
(b) In the event that the Indemnifying Party undertakes the defense of
any Claim, the Indemnifying Party will keep the Indemnified Party advised as to
all material developments in connection with such Claim, including, but not
limited to, promptly furnishing the Indemnified Party with copies of all
material documents filed or served in connection therewith.
(c) In the event that the Indemnifying Party fails to assume the
defense of Claim within ten business days after receiving written notice
thereof, the Indemnified Party shall have the right, subject to the Indemnifying
Party's right to assume the defense pursuant to the provisions of this Article
VIII, to undertake the defense, compromise or settlement of such Claim for the
account of the Indemnifying Party. Unless and until the Indemnified Party
assumes the defense of any Claim, the Indemnifying Party shall advance to the
Indemnified Party any of its reasonable attorneys' fees and other costs and
expenses incurred in connection with the defense of any such action or
proceeding. Each Indemnified Party shall agree in writing prior to any such
advancement that, in the event he or it receives any such advance, such
Indemnified Party shall reimburse the Indemnifying Party for such fees, costs
and expenses to the extent that it shall be determined that he or it was not
entitled to indemnification under this Article VIII.
(d) In no event shall an Indemnifying Party be required to pay in
connection with any Claim for more than one firm of counsel (and local counsel)
for each of the following groups of Indemnified Parties: (i) the Cash Equity
Investors, their respective Affiliates, and the shareholders, members, managers,
officers, employees, agents and/or the legal representatives of any of them; and
(ii) the Company and the Management Stockholders, its respective Affiliates,
-28-
and the shareholders, members, managers, officers, employees, agents and/or the
legal representatives of any of them.
8.6. Registration Rights. Notwithstanding anything to the contrary
-------------------
in this Article VIII, the indemnification and contribution provisions set forth
in Sections 5(e) and 5(f) of the Stockholders' Agreement shall govern any claim
made with respect to the registration statements filed pursuant to Section 5 of
the Stockholders' Agreement or sales made thereunder.
8.7. Limit on Indemnity. So long as the Company does not conduct any
------------------
business or engage in any activities other than those described in the first
sentence of the definition of "Business" (as such term is defined in the
Stockholders' Agreement), each party waives its right to indemnification under
this Article VIII or any other right to assert any claim arising from any
inaccuracy in the Company's representations and warranties set forth in the
first and last sentence of Section 5.9 or the violation by the Company of the
covenant set forth in Section 6.5(d) to the extent such Section relates to
ineligible or prohibited activities of SBICs.
ARTICLE IX
TERMINATION
9.1. Termination. In addition to any other rights of termination set forth
-----------
herein, this Agreement may be terminated, and the Transactions abandoned,
without further obligation of any party (except as set forth herein), at any
time prior to the Closing Date:
(a) by mutual written consent of the parties;
(b) by any party (other than a Management Stockholder) by written
notice to the other parties, if the Closing shall not have occurred on or before
the date that is six months after the date hereof, provided that the party
electing to exercise such right is not otherwise in breach of its obligations
under this Agreement; or
(c) by any party by written notice to the other parties, if the
consummation of the Transactions shall be prohibited by a final, non-appealable
order, decree or injunction of a court of competent jurisdiction.
9.2. Effect of Termination. (a) In the event of a termination of this
---------------------
Agreement, no party hereto shall have any liability or further obligation to any
other party to this Agreement, except as set forth in paragraph (b) below, and
except that nothing herein will relieve any party from liability for any breach
by such party of this Agreement.
(a) In the event of a termination of this Agreement pursuant to
Section 9.1, all provisions of this Agreement shall terminate, except Articles
VIII and X.
-29-
(b) Whether or not the Closing occurs, except as otherwise expressly
provided in this Agreement, all costs and expenses incurred in connection with
this Agreement and the Transactions shall be paid by the party incurring such
expenses.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1. Amendment and Modification. This Agreement may be amended, modified
--------------------------
or supplemented only by written agreement of each of the parties.
10.2. Waiver of Compliance; Consents. Any failure of any of the parties to
------------------------------
comply with any obligation, covenant, agreement or condition herein may be
waived by the party or parties entitled to the benefits thereof only by a
written instrument signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirement for a waiver of
compliance as set forth in this Section 10.2.
10.3. Notices. All notices or other communications hereunder shall be in
-------
writing and shall be given (and shall be deemed to have been duly given upon
receipt) by delivery in person against receipt, by facsimile transmission with
confirmation of receipt, or by registered or certified mail (return receipt
requested), postage prepaid, with an acknowledgment of receipt signed by the
addressee or an authorized representative thereof, addressed as follows (or to
such other address for a party as shall be specified by like notice; provided
that notice of a change of address shall be effective only upon receipt
thereof):
If to a Cash Equity Investor, to its address set forth on Schedule I.
With a copy to:
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to a Management Stockholder, to him in care of the Company.
With a copy to:
TeleCorp PCS, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
-30-
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company or Acquisition Corp., to it:
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to each other party sent to the addresses set forth in this
Section 10.3.
10.4. Expenses. The Company agrees, in the event the Transactions are
--------
consummated, to pay, and save the Cash Equity Investors harmless against, the
reasonable fees and disbursements of one corporate counsel and one FCC counsel
of the Cash Equity Investors in the aggregate in connection with the
preparation, negotiation, execution and delivery of this Agreement, the Related
Agreement Amendments, the instruments and documents executed pursuant hereto or
thereto or in connection herewith or therewith, and the consummation of the
Transactions.
10.5. Parties in Interest; Assignment. This Agreement is binding upon and
-------------------------------
is solely for the benefit of the parties hereto and their respective permitted
successors, legal representatives and permitted assigns. Neither the Company nor
any Cash Equity Investor may assign its rights and obligations hereunder without
the prior written consent of each of the other parties; provided, that: (a) the
Company shall have the right to assign its rights under this Agreement to the
lenders (the "Lenders") named in the Credit Agreement, as security pursuant to
-------
the terms of the Credit Documents, it being understood that as a result of any
such assignment to the Lenders, after an event of default under the Credit
Agreement and the expiration of any applicable grace and cure periods
thereunder, the Lenders shall have the right, on behalf of the Company, to
enforce the obligation of each Cash Equity Investor to make capital
contributions to the Company in the amounts and on the dates specified on
Schedule III(a) (or such earlier dates as may be established in accordance with
the terms of the Stockholders' Agreement) and that, in connection with any such
assignment to the Lenders, the Lenders shall not assume any obligations of the
Company hereunder; and (b) any Cash Equity Investor may assign its rights and
obligations hereunder with the prior written consent of AT&T PCS, such consent
not to be unreasonably withheld, and any Cash Equity Investor may assign its
rights and obligations hereunder to any Affiliate, provided, that such assignee
shall have assumed in writing all the obligations of such Cash Equity Investor
hereunder and no such assignment shall relieve such Cash Equity Investor of its
obligations hereunder
10.6. Applicable Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of New York without giving effect to the
conflicts of law principles thereof. The parties hereto hereby irrevocably and
unconditionally consent to submit to the non-exclusive jurisdiction of the
courts of the State of New York and of the United States
-31-
of America located in the County of New York, New York (the "New York Courts")
---------------
for any litigation arising out of or relating to this Agreement and the
Transactions, waive any objection to the laying of venue of any such litigation
in the New York Courts and agrees not to plead or claim in any New York Court
that such litigation brought therein has been brought in an inconvenient forum.
10.7. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
10.8. Interpretation. The article and section headings contained in this
--------------
Agreement are for convenience of reference only, are not part of the agreement
of the parties and shall not affect in any way the meaning or interpretation of
this Agreement.
10.9. Entire Agreement. This Agreement, including the exhibits and schedules
----------------
hereto and thereto and the certificates and instruments delivered pursuant to
the terms of this Agreement, embody the entire agreement and understanding of
the parties hereto in respect of the Transactions. There are no restrictions,
promises, representations, warranties, covenants or undertakings, other than
those expressly set forth or referred to herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
Transactions.
10.10. Publicity. So long as this Agreement is in effect, the parties agree
---------
to consult with each other in issuing any press release or otherwise making any
public statement with respect to the Transactions, and no party shall issue any
press release or make any such public statement prior to such consultation,
except as may be required by Law. No press release or other public statement by
the parties hereto shall disclose any of the financial terms of the Transactions
without the prior consent of the other parties, except as may be required by
Law. A breach of the provisions of this Section 10.10 by a party shall not give
rise to any right to terminate this Agreement.
10.11. Specific Performance. The parties hereto agree that irreparable
--------------------
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any New York Courts.
10.12. Remedies Cumulative. All rights, powers and remedies provided under
-------------------
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise or beginning of the
exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
-32-
10.13. Severability. Any provision of this Agreement that is prohibited or
------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. If any court determines that any covenant or any part of
any covenant is invalid or unenforceable, such covenant shall be enforced to the
extent permitted by such court, and all other covenants shall not thereby be
affected and shall be given full effect, without regard to the invalid portions.
10.14. Beneficiaries of Agreement. The representations, warranties,
--------------------------
covenants and agreements expressed in this Agreement are for the sole benefit of
the other parties hereto and the Section 8.2 Indemnified Parties, Section 8.3
Indemnified Parties and Section 8.4 Indemnified Parties and are not intended to
benefit, and may not be relied upon or enforced by, any other party as a third
party beneficiary or otherwise.
10.15. F Block Joint Ventures. In the event that AT&T PCS elects to receive
----------------------
Joint Venture Notes as consideration pursuant to the Acquisition Agreement, then
the Cash Equity Investors hereby agree (i) to the terms and conditions of the
Summary of Principal Terms attached hereto as Exhibit D regarding a joint
venture involving certain companies holding F-Block licenses, and (ii) to
consummate such transaction as contemplated therein. The parties hereby further
agree that references in the Summary of Principal Terms to "TeleCorp Notes" also
means Series E Notes.
10.16. Stock Valuation. The parties hereby agree that the per share value
---------------
attributable as of the date hereof to the Voting Common Stock, the Series C
Preferred Stock and the Series E Preferred Stock is $1.00, $999.00 and $.01,
respectively.
-33-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
TELECORP PCS, INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President
PUERTO RICO ACQUISITION CORP.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
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: President
-34-
NORTHWOOD CAPITAL PARTNERS LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
MEDIA/COMMUNICATIONS INVESTORS LIMITED
PARTNERSHIP
By: M/C Investors General Partner - J. Inc.,
a general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title:
MEDIA/COMMUNICATIONS PARTNERS III LIMITED
PARTNERSHIP
By: M/CP III L.L.C.
its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Manager
EQUITY-LINKED INVESTORS-II
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇ ASSOCIATES-II,
Its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Attorney-in-Fact
-35-
PRIVATE EQUITY INVESTORS III, L.P.
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇ ASSOCIATES III, LLC,
Its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Attorney-in-Fact
▇▇▇▇ COMMUNICATIONS PARTNERS, L.P.
By: HCP Investments, L.P.,
Its general partner
By: ▇▇▇▇ Partners, LLC,
Its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
Manager
HCP CAPITAL FUND, L.P.
By: ▇▇▇▇▇ ▇. ▇▇▇▇ & Co.,
Its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
Chairman
-36-
WHITNEY EQUITY PARTNERS, L.P.
By: ▇.▇. ▇▇▇▇▇▇▇ & Co.,
Its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
Title:
▇.▇. ▇▇▇▇▇▇▇ III, L.P.
By: ▇.▇. ▇▇▇▇▇▇▇ & Co.,
Its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
Title:
WHITNEY STRATEGIC PARTNERS III, L.P.
By: ▇.▇. ▇▇▇▇▇▇▇ & Co.,
Its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
Title:
TORONTO DOMINION INVESTMENTS INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
-37-
ONELIBERTY FUND IV, L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: General Partner
Management Stockholders:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
-38-
SCHEDULE I
Cash Equity Investors
---------------------
Notice Addresses
----------------
CB Capital Investors, L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Equity-Linked Investors-II
Private Equity Investors III, L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇ Communications Partners, L.P.
HCP Capital Fund, L.P.
One Galleria Tower
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Whitney Equity Partners, L.P.
J.H. Whitney III, ▇.▇.
▇▇▇▇▇▇▇ Strategic Partners III, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Media/Communications Investors Limited Partnership
Media/Communications Partners III Limited Partnership
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
One Liberty Fund IV, L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Northwood Ventures LLC
Northwood Capital Partners LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Toronto Dominion Investments Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(with a copy to)
Toronto Dominion Investments, Inc.
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULE II
Management Stockholders
-----------------------
Excluded Stock
--------------
Management Stockholders
-----------------------
Excluded Stock ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Common Stock
Class A Common Stock 11,206.93 6,795.88
Class C Common Stock 341.24 211.56
Class D Common Stock 9.26 2.06
Voting Preference Stock 5 5
--------- --------
Common Stock Total: 11,562.43 7,014.50
Preferred Stock
Series C Preferred Stock 450 100
Series E Preferred Stock 8729.40 5426.38
--------- --------
Preferred Stock Total: 9,179.40 5,526.38
SCHEDULE III
Equity Issued to Cash Equity Investors
--------------------------------------
See Attached Chart: TeleCorp PCS, Inc. Puerto Rico Transaction Cash Equity
Commitment and Share Allocation.
TeleCorp PCS Inc.
Puerto Rico Transaction
Cash Equity Commitment and Share Allocation
Baseline Commitment Preferred Common Common Common Total
Cash Equity Holder (dollars) Series C Series A Tracking C Tracking D Common
------------------ ------------------- --------- -------- ---------- ---------- --------
Chase 9,785,100 9,785.10 9,785.10 - - 9,785.10
▇▇▇▇▇
Equity-Linked Investors-II 4,892,550 4,892.55 4,892.55 - - 4,892.55
Private Equity Investors III, L.P. 4,892,550 4,892.55 4,892.55 - - 4,892.55
-------------- ------------- ----------- ----------- ---------- ----------
Total ▇▇▇▇▇ 9,785,100 9,785.10 9,785.10 - - 9,785.10
▇▇▇▇
▇▇▇▇ Communications Partners, L.P. 6,723,900 6,723.90 6,723.90 - - 6,723.90
HCP Capital Fund, L.P. 615,000 615.00 615.00 - - 615.00
-------------- ------------- ----------- ---------- ---------- ----------
Total ▇▇▇▇ 7,338,900 7,338.90 7,338.90 - - 7,338.90
▇▇ ▇▇▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇▇ III LP 4,180,258 4,180.26 4,180.26 - - 4,180.26
Whitney Equity Partners, LP 1,834,710 1,834.71 1,834.71 - - 1,834.71
Whitney Strategic Partners, III LP 100,732 100.73 100.73 _ - 100.73
-------------- ------------ ----------- ----------- ---------- ----------
Total ▇▇ ▇▇▇▇▇▇▇ 6,115,700 6,115.70 6,115.70 _ - 6,115.70
Entergy - - - - - -
M/C Partners
M/C Partners III Limited Partnership 3,522,624 3,522.62 3,522.62 _ - 3,522.62
M/C Investors Limited Partnership 146,776 146.78 146.78 - - 146.78
-------------- ------------ ----------- ---------- ----------- ----------
Total M/C Partners 3,669,400 3,669.40 3,669.40 - - 3,669.40
One Liberty
One Liberty Fund 1,210,869 1,210.87 1,210.87 - - 1,210.87
Gilde International 12,231 12.23 12.23 - - 12.23
-------------- ------------ ----------- ---------- ----------- ----------
Total One Liberty 1,223,100 1,223.10 1,223.10 - - 1,223.10
TD 1,223,100 1,223.10 1,223.10 - - 1,223.10
Northwood
Northwood Ventures LLC 727,770 727.77 727.77 - - 727.77
Northwood Capital Partners LLC 128,430 128.43 128.43 - - 128.43
-------------- ---------- ---------- ---------- ----------- ----------
Total Northwood 856,200 856.20 856.20 - - 856.20
------------------------------------------------------------------------------------------------------------------------------------
Total Cash Equity 39,996,600 39,996.60 39,996.60 - - 39,996.60
------------------------------------------------------------------------------------------------------------------------------------
Common
Cash Equity Holder Percent of Total
------------------ -------------------
Chase 24.46%
▇▇▇▇▇
Equity-Linked Investors-II 12.23%
Private Equity Investors III, L.P. 12.23%
-----------
Total ▇▇▇▇▇ 24.46%
▇▇▇▇
▇▇▇▇ Communications Partners, L.P. 16.61%
HCP Capital Fund, L.P. 1.54%
-----------
Total ▇▇▇▇ 18.35%
▇▇ ▇▇▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇▇ III LP 10.45%
Whitney Equity Partners, LP 4.59%
Whitney Strategic Partners, III LP 0.25%
-----------
Total ▇▇ ▇▇▇▇▇▇▇ 15.29%
Entergy 0.00%
M/C Partners
M/C Partners III Limited Partnership 8.81%
M/C Investors Limited Partnership 0.37%
----------
Total M/C Partners 9.17%
One Liberty
One Liberty Fund 3.03%
Gilde International 0.03%
-----------
Total One Liberty 3.06%
TD 3.06%
Northwood
Northwood Ventures LLC 1.82%
Northwood Capital Partners LLC 0.32%
-----------
Total Northwood 2.14%
---------------------------------------------------------
Total Cash Equity 100.00%
---------------------------------------------------------
SCHEDULE III(a)
Cash Equity Investors Funding Schedule
--------------------------------------
See Attached Chart: TeleCorp PCS, Inc. Puerto Rico Transaction Cash Equity
Funding Schedule.
TeleCorp Pcs Inc.
Puerto Rico Transaction
Cash Equity Funding Schedule
Initial Cash 2nd Equity Draw 3rd Equity Draw 4th Equity Draw Aggregate
Cash Equity Holder Contribution (12/15/99) (3/2001) (3/2002) Commitment
------------------ ------------------- --------------- --------------- --------------- ----------
Chase 2,935,530 1,467,770 2,690,900 2,690,900 9,785,100
▇▇▇▇▇
Equity-Linked Investors-II 1,467,765 733,885 1,345,450 1,345,450 4,892,550
Private Equity Investors III, L.P. 1,467,765 733,885 1,345,450 1,345,450 4,892,550
----------------- --------------- --------------- -------------- ----------
Total ▇▇▇▇▇ 2,935,530 1,467,770 2,690,900 2,690,900 9,785,100
▇▇▇▇
▇▇▇▇ Communications Partners, L.P. 2,017,170 1,008,590 1,849,070 1,849,070 6,723,900
HCP Capital Fund, L.P. 184,500 92,250 169,125 169,125 615,000
----------------- -------------- --------------- -------------- ----------
Total ▇▇▇▇ 2,201,670 1,100,840 2,018,195 2,018,195 7,338,900
▇▇ ▇▇▇▇▇▇▇
▇.▇ ▇▇▇▇▇▇▇ III LP 1,254,007 627,040 1,149,570 1,149,570 4,180,258
Whitney Equity Partners, LP 550,413 275,210 504,544 504,544 1,834,710
Whitney Strategic Partners, III LP 30,220 15,110 27,701 27,701 100,732
----------------- -------------- --------------- -------------- ----------
Total ▇▇ ▇▇▇▇▇▇▇ 1,834,710 917,360 1,681,815 1,681,815 6,115,700
Entergy - - - - -
M/C Partners
M/C Partners III Limited Partnership 1,056,787 528,390 968,723 968,723 3,522,624
M/C Investors Limited Partnership 44,033 22,020 40,362 40,362 146,776
----------------- --------------- --------------- -------------- ----------
Total M/C Partners 1,100,820 550,410 1,009,085 1,009,085 3,669,400
One Liberty
One Liberty Fund 363,261 181,635 332,987 332,987 1,210,869
Gilde International 3,669 1,835 3,363 3,363 12,231
----------------- -------------- --------------- -------------- ----------
Total One Liberty 366,930 183,470 336,350 336,350 1,223,100
TD
Northwood
Northwood Ventures LLC 218,331 109,170 200,135 200,135 727,770
Northwood Capital Partners LLC 38,529 19,260 35,321 35,321 128,430
----------------- -------------- --------------- -------------- ----------
Total Northwood 256,860 128,430 235,455 235,455 856,200
------------------------------------------------------------------------------------------------------------------------------------
Total Cash Equity 11,998,980 5,999,520.00 10,999,050.00 10,999,050 39,996,600
------------------------------------------------------------------------------------------------------------------------------------
SCHEDULE III(b)
Equity Issued to Management Stockholders
----------------------------------------
----------------------------------------------------------------------------------------------------------
Name Total Voting Common Stock Series E Preferred Stock Extraordinary Event Shares
-------------------- ------------------------- --------------------------- ----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 3,260.75 2,505.73 652.15
----------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 2,026.95 1,557.62 405.39
----------------------------------------------------------------------------------------------------------
Management Stockholders Funding Commitment
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ $25.06
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ $15.58
SCHEDULE IV
Capitalization
--------------
See Attached.
TeleCorp PCS Inc.
Capitalization Table
As of 5/25/1999
---------------------------------------------------------------------------------
Preferred Stock
---------------------------------------------------------------------------------
Total
Dollars Senior
Committed Series A Series B Series C Series D Series E Series F Common
------------------------------------------------------------------------------------------------
Cash Equity
-----------
Chase 40,015,650 - - 40,015.66 - - - -
▇▇▇▇▇ 40,015,652 - - 40,015.66 - - - -
▇▇▇▇ 30,011,649 - - 30,011.65 - - - -
▇▇ ▇▇▇▇▇▇▇ 25,009,539 - - 25,009.54 - - - -
Entergy 14,435,968 - - 14,435.97 - - - -
M/C Partners 15,006,156 - - 15,006.16 - - - -
One Liberty 5,002,015 - - 5,002.01 - - - -
TD 4,926,095 - - 4,926.09 - - - -
Northwood 3,501,077 - - 3,501.08 - - - -
Total Management 550,000 - - 550.00 - - - -
Total 178,473,801 178,473.82
--------------------------------------------------------------------------------------------------------------------------------
License Equity
--------------
One Liberty Fund III LP 1,531,425 - - 1,531.43 - - - -
Gilde Investment Fund BV 15,469 - - 15.46 - - - -
Northwood Ventures LLC 928,136 - - 928.14 - - - -
Northwood Capital Partners LLC 232,034 - - 232.03 - - - -
CB Capital Investors, LP 1,160,171 - - 1,160.17 - - - -
TeleCorp Investment Corp., LLC 1,160,171 - - 1,160.18 - - - -
M/C Partners III LP 1,113,768 - - 1,113.77 - - - -
M/C Investors LP 46,403 - - 46.40 - - - -
Entergy 1,160,171 - - 1,160.17 - - - -
Total 7,347,748 7,347.75
--------------------------------------------------------------------------------------------------------------------------------
New License Equity
------------------
AT&T 45,974,850 30,649.90 - - 15,740.93 - 15,324.95 -
TRW 54,109,369 36,072.91 - - 18,526.04 - 18,036.46 -
AT&T Puerto Rico 41,000,043 30,750.03 - - 10,250.01 - 10,000.00 -
----------- ------------- --------- ---------
Subtotal AT&T 141,084,262 97,472.84 - - 44,516.98 - 43,361.41 -
Mercury / Digital PCS 2,332,545 - - 2,332.55 - - - -
▇. ▇▇▇▇▇ - - - - - 11,235.13 - -
▇. ▇▇▇▇▇▇▇▇ - - - - - 6,984.00 - -
Total Other Management - - - - - 7,085.22 - -
Total 143,416,807 97,472.84 - 2,332.55 44,516.98 25,304.34 43,361.41 -
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Total Equity 329,238,356 97,472.84 - 188,154.12 44,516.98 25,304.34 43,361.41 -
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Common
-----------------------------------------------------------------------------------
Voting Percent
Series A Series B Tracking C Tracking D Preference Total * of Total
-------------------------------------------------------------------------------------
Cash Equity
-----------
Chase 38,602.66 - 87.10 571.78 - 39,261.54 14.87%
▇▇▇▇▇ 38,602.66 - 87.10 571.78 - 39,261.54 14.87%
▇▇▇▇ 28,951.91 - 65.32 428.84 - 29,446.07 11.15%
▇▇ ▇▇▇▇▇▇▇ 24,126.42 - 54.44 357.37 - 24,538.23 9.29%
Entergy 13,729.47 - - 329.44 - 14,058.91 5.32%
M/C Partners 14,476.28 - 32.66 214.42 - 14,723.36 5.58%
One Liberty 4,825.39 - 10.89 71.47 - 4,907.75 1.86%
TD 4,749.47 - 10.89 71.47 - 4,831.83 1.83%
Northwood 3,377.44 - 7.62 50.03 - 3,435.09 1.30%
Total Management 522.02 - 1.72 11.32 - 535.06 0.20%
Total 171,963.72 357.74 2,677.92 174,999.38 66.27%
-------------------------------------------------------------------------------------------------------------------------------
License Equity
--------------
One Liberty Fund III LP 1,336.43 - 2.18 14.31 - 1,352.92 0.51%
Gilde Investment Fund BV 13.49 - 0.02 0.14 - 13.65 0.01%
Northwood Ventures LLC 913.80 - 1.49 9.79 - 925.08 0.35%
Northwood Capital Partners LLC 228.45 - 0.37 2.45 - 231.27 0.09%
CB Capital Investors, LP 1,142.25 - 1.86 12.23 - 1,156.34 0.44%
TeleCorp Investment Corp., LLC 1,142.25 - 1.86 12.23 - 1,156.34 0.44%
M/C Partners III LP 45.69 - 0.07 0.49 - 46.25 0.02%
M/C Investors LP 1,096.55 - 1.79 11.74 - 1,110.08 0.42%
Entergy 1,142.25 - - 14.09 - 1,156.34 0.44%
Total 7,061.16 9.64 77.47 7,148.27 2.71%
-------------------------------------------------------------------------------------------------------------------------------
New License Equity
-------------------
AT&T - - - - - 15,324.95 5.80%
TRW - - - - - 18,036.46 6.83%
AT&T Puerto Rico - - - - - 10,000.00 3.79%
----------
Subtotal AT&T 43,361.41 16.42%
Mercury / Digital PCS 2,269.23 - - - - 2,269.23 0.86%
▇. ▇▇▇▇▇ 14,040.57 - 339.83 - 5.00 14,380.40 5.45%
▇. ▇▇▇▇▇▇▇▇ 8,727.92 - 211.25 - 5.00 8,939.17 3.39%
Total Other Management 12,955.33 - - - - 12,955.33 4.91%
Total 37,993.05 - 551.08 - 10.00 81,905.54 31.02%
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
Total Equity 217,017.93 - 918.46 2,755.39 10.00 264,053.19 100.00%
-------------------------------------------------------------------------------------------------------------------------------
* Total Shares = all classes of Common Shares plus Series F Preferred
SCHEDULE 4.2
Cash Equity Investor Consents
-----------------------------
The execution, delivery and performance of the Agreement will or may
require the following consents, approvals and reviews:
1. The Federal Communications Commission.
2. The Federal Trade Commission/Department of Justice.
3. Various Governmental Authorities with respect to Franchise Laws.
SCHEDULE 4.4
Attributable Interests
----------------------
Chase Capital Partners: ▇▇▇▇▇▇ ▇. ▇▇▇▇, an outside director on the Board of
----------------------
Directors of Chase Manhattan Corporation, an affiliated
entity of CB Capital Investors, L.P., also serves on
the Board of Directors of Sprint Corporation.
SCHEDULE 5.2
Company Consents
----------------
The execution, delivery and performance of the Agreement will or may
equire the following consents, approvals and reviews:
1. The Federal Communications Commission.
2. The Federal Trade Commission/Department of Justice.
3. Various Governmental Authorities with respect to Franchise Laws.
SCHEDULE 5.6
Outstanding Options, Warrants, etc.
-----------------------------------
1. Upon the closing of the transaction contemplated by the License Acquisition
Agreement by and between Wireless 2000, Inc. ("Wireless") and the Company,
dated as of December 2, 1998 (the "Wireless Acquisition Agreement"), the
Company shall ssue to Wireless: (i) five hundred forty-five and 20/100
(545.20) shares of Series C Preferred Stock, par value $.01 per share, and
(ii) five hundred thirty nd 40/100 (530.40) shares of Class A Voting Common
Stock, par value $.01 per share, of the Company.
2. Upon the closing of the transaction contemplated by the License Acquisition
Agreement by and between Mercury PCS II, LLC ("Mercury") and the Company,
dated as of May 15, 1998 (the "Mercury Acquisition Agreement"), the Company
shall issue to Mercury: (i) two thousand three hundred thirty-two and 55/100
(2,332.50) shares of Series C Preferred Stock, par value $.01 per share, and
(ii) two thousand two hundred sixty-nine and 23/100 (2,269.23) shares of
Class A Voting Common Stock, par value $.01 per share, of the Company and
shall issue additional shares of Series C Preferred Stock and Class A Voting
Common Stock to the Cash Equity Investors as set forth on Schedule V of the
Securities Purchase Agreement, setting forth Share Allocation With
Supplemental Allocation.
3. The Company may issue Series E Notes to certain existing shareholders of the
Company in connection with the transactions set forth in the Summary of
Principal Terms.
SCHEDULE 5.9
Subsidiaries
------------
Subsidiary Name State of Qualified in:
Incorporation
-----------------------------------------------------------------------------------------
1. TeleCorp Communications, Inc. DE AR, DC, IL, IN, LA, MA,
MO, MS, NH, TN, TX, VA
-----------------------------------------------------------------------------------------
2. TeleCorp Holding Corp., Inc. DE LA, MA, NH, TN, TX, VA(1)
-----------------------------------------------------------------------------------------
3. TeleCorp Limited Holdings, Inc. DE AR, DC, IL, MA, MS
-----------------------------------------------------------------------------------------
4. TeleCorp Realty Holdings, Inc. DE None
-----------------------------------------------------------------------------------------
5. TeleCorp PCS, L.L.C.
(Sole Member is: TeleCorp PCS, Inc.) DE None
-----------------------------------------------------------------------------------------
6. TeleCorp Realty, L.L.C. DE AR, DC, IL, LA, MA, MO,
(Managing Member is: TeleCorp MS, NH, TN, TX
Communications, Inc.)
-----------------------------------------------------------------------------------------
7. TeleCorp Equipment Leasing, L.P. DE AR, DC, IL, IN, LA, MA,
(General Partner is: TeleCorp Limited MO, MS, NH, TN, TX
Holdings, Inc.)
-----------------------------------------------------------------------------------------
--------------------------
(1) TeleCorp Holding Corp will be withdrawn from each of the states in which it
is qualified (except Delaware) upon the filing of the company's tax returns for
the year ended December 31, 1998.
Exhibit A
Form of
-------
Amended and Restated Pledge Agreement
-------------------------------------
AMENDED AND RESTATED PLEDGE AGREEMENT, dated ______________, 1999,
made by __________ ("Pledgor") to TeleCorp PCS, Inc., a Delaware corporation
-------
("Pledgee"). Capitalized terms used and not defined herein shall have the
-------
meaning set forth in the Stock Purchase Agreement (defined below).
WHEREAS, Pledgor and Pledgee entered into a Pledge Agreement dated
July 17, 1998 (the "Pledge Agreement");
WHEREAS, Pledgor has entered into a Stock Purchase Agreement with
Pledgee and certain other investors identified therein, dated as ___________,
1999 (the "Stock Purchase Agreement"), pursuant to which Pledgor has agreed,
among other things, to make additional cash contributions to the Company in an
amount equal to the excess of its Aggregate Commitment over its Initial Cash
Contribution paid at Closing (the "Puerto Rico Unfunded Commitment") on the
terms and subject to the conditions thereof;
WHEREAS, simultaneously with the execution of the Pledge Agreement,
Pledgor entered into a Securities Purchase Agreement pursuant to which Pledgor
agreed, among other things, to make Cash Equity Investor Contributions (as
defined in the Securities Purchase Agreement) to the Company on the terms and
subject to the conditions thereof;
WHEREAS, Pledgor is the owner of ___________ shares of Series C
Preferred Stock, par value $0.01 per share, _________ shares of Class A Common
Stock, par value $0.01 per share, _________ shares of Class C Common Stock, par
value $.01 per share, and _________ shares of Class D Common Stock, par value
$.01 per share, of the Company and, upon the Supplemental Closing, shall acquire
additional shares of such Series C Preferred Stock and Common Stock
(collectively, the "Pledged Shares");
--------------
WHEREAS, the Pledgee has required, as a condition to its execution and
delivery of the Stock Purchase Agreement and its consummation of the
transactions contemplated thereby, that Pledgor enter into this Amended and
Restated Pledge Agreement in order to secure Pledgor's obligation to: (i) make
capital contributions to the Company in respect of its Puerto Rico Unfunded
Commitment in accordance with the terms of Section 2.1 of the Stock Purchase
Agreement and (ii) make Cash Equity Investor Contributions in accordance with
the terms of Section 2.2 of the Securities Purchase Agreement and Section 3.10
of the Stockholders' Agreement ((i) and (ii) collectively referred to herein as
the "Unfunded Commitment Obligations");
-------------------------------
-15-
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, Pledgor hereby agrees with Pledgee that the Pledge Agreement is
hereby amended and restated as follows:
SECTION 1. Pledge. Pledgor hereby pledges to Pledgee, and grants to
------
Pledgee a security interest in the following, whether now owned or hereafter
acquired (the "Collateral"):
(a) The Pledged Shares and the certificates representing the Pledged
Shares, and all dividends, cash, instruments, securities and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged
Shares; and
(b) All proceeds of any and all of the foregoing Collateral (including,
without limitation, proceeds that constitute property of the types
described above).
SECTION 2. Security for Obligations. This Agreement secures the
------------------------
Unfunded Commitment Obligations and all Pledgor's obligations under, in respect
of or in connection with this Agreement (all such obligations being referred to
hereinafter, together with the Unfunded Commitment Obligations, as the
"Obligations"). Without limiting the generality of the foregoing, this Agreement
secures the payment of all amounts that constitute part of the Obligations and
would be owned by Pledgor to Pledgee under the Stock Purchase Agreement,
Securities Purchase Agreement or Stockholders' Agreement but for the fact that
they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving Pledgor.
SECTION 3. Delivery of Collateral. All certificates or instruments
----------------------
representing or evidencing the Collateral shall be delivered to and held by or
on behalf of Pledgee pursuant hereto and shall be in suitable form for transfer
by delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to Pledgee. Pledgee
shall have the right, at any time in its discretion and without notice to
Pledgor, to transfer to or to register in the name of Pledgee or any of its
nominees any or all of the Collateral, subject only to the rights specified in
Section 6(a); provided, that notwithstanding the foregoing, until any transfer
--------
of beneficial ownership with respect to the Collateral pursuant to any exercise
of remedies under Section 11, Pledgor shall continue to be the beneficial owner
of the Collateral. In addition, Pledgee shall have the right at any time to
exchange certificates or instruments representing or evidencing Collateral for
certificates or instruments of smaller or larger denominations.
SECTION 4. Representations and Warranties. Pledgor represents and
------------------------------
warrants as follows:
(a) Pledgor is the legal and beneficial owner of the presently existing
Collateral free and clear of any Lien except for the security interest
created by this Agreement and Liens created by the Stockholders'
Agreement.
-16-
(b) The pledge of the Pledged Shares pursuant to this Agreement, together
with the delivery of the Pledged Shares pursuant to Section 3, creates
a valid ad perfected first priority security interest in the presently
existing Collateral, securing the payment of the Obligations.
(c) No consent of any other Person and no authorization, approval, or other
action by, and no notice to or filing with, any Governmental Authority
is required (i) for the pledge by Pledgor of the Collateral pursuant to
this Agreement or for the execution, delivery or performance of this
Agreement by Pledgor, (ii) for the perfection or maintenance of the
security interest created hereby (including the first priority nature
of such security interest) or (iii) for the exercise by Pledgee of the
voting or other rights provided for in this Agreement or the remedies
in respect of the Collateral pursuant to this Agreement (except (x) as
may be required in connection with any disposition of any portion of
the Pledged Shares by laws affecting the offering and sale of
securities generally, (y) that the consent, authorization or approval
of the FCC may be required if the exercise of rights or remedies by
Pledgee hereunder would result in a voluntary or involuntary assignment
of or transfer of control of a License and (z) for the filing of
financing statements pursuant to the Code (as defined below) with
respect to Collateral).
SECTION 5. Further Assurances. Pledgor agrees that at any time and
------------------
from time to time, at the expense of Pledgor, Pledgor will promptly execute and
deliver all further instruments and documents, and take all further action, that
may be necessary, or that Pledgee may reasonably request, in order to perfect
and protect any security interest granted or purported to be granted hereby or
to enable Pledgee to exercise and enforce its rights and remedies hereunder with
respect to any Collateral, including, without limitation, all action specified
in Section 13.
SECTION 6. Voting Rights; Dividends; Etc.
-----------------------------
(a) Unless and until Pledgor shall fail to pay in full within 35 days of
the due date any of the Unfunded Commitment Obligations:
(i) Pledgor shall be entitled to exercise or refrain from exercising
any and all voting and other consensual rights pertaining to
the Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement or the
Stockholders' Agreement.
(ii) Pledgor shall be entitled to receive and retain any and all
dividends and interest, cash, instruments and other property
paid in respect of the Collateral, provided that any and all
--------
(1) dividends and interest paid or payable other than in cash in
-17-
respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in
exchange for, any Collateral,
(2) dividends and other distributions paid or payable in cash in
respect of any Collateral in connection with a partial
or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in-
surplus, and
(3) cash paid, payable or otherwise distributed in respect of
principal of, or in redemption of, or in exchange for,
any Collateral,
shall be, and shall be forthwith delivered to Pledgee to hold as, Collateral and
shall, if received by Pledgor, be received in trust for the benefit of Pledgee,
be segregated from the other property or funds of Pledgor, and be forthwith
delivered to Pledgee as Collateral in the same form as so received (with any
necessary endorsement or assignment).
(b) In the event that Pledgor shall fail to pay in full within 35 days of
the due date any of the Unfunded Commitment Obligations:
(i) All rights of Pledgor to exercise or refrain from exercising the
voting and other consensual rights which it would otherwise be
entitled to exercise pursuant to Section 6(a)(i), and to
receive the dividends, interest, cash, instruments and other
property which it would otherwise be authorized to receive and
retain pursuant to Section 6(a)(ii), shall cease, and all such
rights shall thereupon become vested in Pledgee who shall
thereupon have the sole right to exercise or refrain from
exercising such voting and other consensual rights and to
receive and hold as Collateral such dividends and interest
payments.
(ii) All dividends ad interest payments that are received by Pledgor
contrary to Section 6(b)(i) shall be received in trust for the
benefit of Pledgee, shall be segregated from other funds of
Pledgor and shall be forthwith paid over to Pledgee as
Collateral in the same form as so received (with any necessary
endorsements or assignment).
(c) Pledgor shall execute and deliver (or cause to be executed and
delivered) to Pledgee all such proxies and other instruments as
Pledgee may reasonably request for the purpose of enabling Pledgee to
exercise the voting and other rights which it is entitled to exercise
pursuant to Section 5(b)(i) above and to receive the dividends or
interest payments that it is authorized to receive and retain pursuant
to Sections 6(a)(ii) and 6(b)(ii) .
-18-
SECTION 7. Transfer Restriction. Pledgor shall not Transfer (as such
--------------------
term is defined in the Stockholders' Agreement) any Pledged Shares or other
Collateral to any Person, unless this Pledge Agreement remains in effect with
respect to all of the Collateral (if any) other than the Collateral being
Transferred and concurrently with such Transfer the transferee pledges all of
the transferred Collateral in favor of the Company pursuant to a pledge
agreement in the form of this Pledge Agreement. The Pledgee shall release the
security interest created by this Agreement to the extent necessary in order to
facilitate any Transfer complying with the terms of this Section 7.
SECTION 8. Pledgee Appointed Attorney-in-Fact. If at any time the
----------------------------------
Pledgor shall fail to pay in full within 35 days of the due date any of its
Unfunded Commitment Obligations, Pledgee shall automatically and without further
action become Pledgor's attorney-in-fact, with full authority in the place an
stead of Pledgor and in the name of Pledgor or otherwise, from time to time in
Pledgee's discretion to take any action and to execute any instrument which
Pledgee may deem necessary or advisable to accomplish the purposes of this
Agreement (subject to the rights of Pledgor under Section 6), including, without
limitation, to receive, endorse and collect all instruments made payable to
Pledgor representing any dividend, interest payment or other distribution in
respect of the Collateral or any part thereof and to give full discharge for the
same.
SECTION 9. Pledgee May Perform. If Pledgor fails to perform any
-------------------
agreement contained herein, Pledgee may itself perform, or cause performance of,
such agreement, and the expenses of Pledgee incurred in connection therewith
shall be payable by Pledgor under Section 12.
SECTION 10. Pledgee's Duties. The powers conferred on Pledgee
----------------
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the reasonable
care in the custody and preservation of any Collateral in its possession and the
accounting for monies and other instruments and property actually received by it
hereunder, Pledgee shall have not duty as to any Collateral, as to ascertaining
or taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relative to any Collateral, whether or not Pledgee has
or is deemed to have knowledge of such matters, or as to the taking of any
necessary steps to preserve rights against any parties or any other rights
pertaining to any Collateral. Pledgee shall be deemed to have exercised
reasonable care in the custody and preservation of any Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which Pledgee accords its own property.
SECTION 11. Remedies Upon Default. In the event that Pledgor shall fail
---------------------
to pay in full within 35 days of the due date any of its Obligations:
(a) Pledgee may exercise in respect of the Collateral, in addition to other
rights and remedies provided for herein or otherwise available to it,
all the rights and remedies of a secured party on default under the
Uniform Commercial Code in effect in the State of New York at that time
(the "Code") (whether or not the Code applies to the affected
----
Collateral), and
-19-
may also, without notice except as specified below, sell the Collateral
or any part thereof in one or more parcels at public or private sale,
at any exchange, broker's board or at any of Pledgee's offices or
elsewhere, for cash, on credit or for future delivery, and upon such
other terms as Pledgee may deem commercially reasonable. Pledgor agrees
that, to the extent notice of sale shall be required by law, at least
ten days' notice to Pledgor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute
reasonable notification. Pledgee shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given.
Pledgee may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was
so adjourned.
(b) Any cash held by Pledgee as Collateral and all cash proceeds received
by Pledgee in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral may, in the
discretion of Pledgee, be held by Pledgee as collateral for, and/or
then or at any time thereafter be applied (after payment of any amounts
payable to Pledgee pursuant to Section 12) in whole or in part by
Pledgee against, all or any part of the Obligations then due. Any
surplus of such cash or cash proceeds held by Pledgee and remaining
after payment in full of all the Obligations shall be paid over to
Pledgor.
SECTION 12. Interest and Expenses. In the event that Pledgor shall
---------------------
fail to pay in full within 35 days of the due date any of the Unfunded
Commitment Obligations, it will upon demand pay to Pledgee (a) in respect of the
period commencing on the date of such payment default and ending on the date its
Unfunded Commitment Obligations equals zero, interest (computed on the basis of
a 360-day year of twelve 30-day months) on the aggregate amount of its Unfunded
Commitment Obligations at a fluctuating rate per annum equal to the Company's
borrowing rate under the Credit Agreement, plus four percent (4%), provided that
in no event shall the Pledgor be obligated to pay interest in excess of the
maximum interest rate permitted under applicable law, and (b) the amount of all
reasonable expenses, including the reasonable fees and expenses of its counsel
and of any experts and agents, that Pledgee may incur in connection with (i) the
administration of this Agreement, (ii) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of Pledgee hereunder or
(iv) the failure by Pledgor to perform or observe any of the provisions hereof.
SECTION 13. Amendments, Etc. No amendment or waiver of any provision
---------------
of this Agreement, and no consent to any departure by Pledgor here from, shall
in any event be effective unless the same shall be in writing and signed by
Pledgee and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
-20-
SECTION 14. Notices. All notices and other communications provided for
-------
hereunder shall be in writing and shall be delivered by hand, by nationally
recognized overnight courier or by facsimile transmission, in each case to the
address for the recipient specified in the Stock Purchase Agreement. All such
notices and other communications shall be effective upon delivery or upon
facsimile transmission, when confirmed by return facsimile transmission.
SECTION 15. Continuing Security Interest
----------------------------
(a) This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the date
Pledgor's Unfunded Commitment equals zero, or, if Pledgor shall have
failed to pay in full when due any of the Unfunded Commitment
Obligations, the later of such date and the date it has paid in full in
cash all of the Obligations, (b) be binding upon Pledgor, it successors
and assigns, and (c) inure, together with the rights and remedies of
Pledgee hereunder, to the benefit of, and be enforceable by, Pledgee and
its successors.
(b) Pledgee agrees to release the Collateral upon deposit by Pledgor into a
cash collateral account in favor of Pledgee, the terms of which cash
collateral account shall be acceptable to Pledgee in its sole
discretion, the aggregate amount of the cash equal to Pledgor's
remaining Unfunded Commitment Obligations.
SECTION 16. Release and Termination. Upon the date the amount of
-----------------------
Pledgor's Unfunded Commitment Obligations equals zero, or, if Pledgor shall have
failed to pay in full when due any of the Unfunded Commitment Obligations, the
later of such date and the date it has paid in full in cash all of the
Obligations, the security interest granted hereby shall terminate and all rights
to the Collateral shall revert to Pledgor. Upon any such termination, Pledgee
will, at Pledgor's expense release to Pledgor all Collateral then held by it and
execute and deliver to Pledgor such documents as Pledgor shall reasonably
request to evidence such termination.
SECTION 17. Governing Law; Terms. This Agreement shall be governed
--------------------
by, and construed in accordance with, the laws of the State of New York, except
as required by mandatory provisions of law and except to the extent that the
validity or perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular Collateral are governed by the laws of a
jurisdiction other than the State of New York. Unless otherwise defined herein
or in the Stock Purchase Agreement, terms defined in Article 9 of the Code are
used herein as therein defined.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
-21-
IN WITNESS WHEREOF, Pledgor has caused this Agreement to be duly
executed and delivered by its officers thereunto duly authorized as of the date
first above written.
[NAME]
By: _________________________
Name:
Title:
Agreed and Accepted:
TELECORP PCS, INC.
By: _________________________
Name:
Title:
Exhibit B
Form of Series E Note
---------------------
See Attachment hereto.
DRAFT 03/03/99
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION
OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH NOTE, PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE
HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS
THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE), ONLY (A) TO THE
COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E)
TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE NOTE FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION
WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE CERTIFICATION
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM AND, IN THE CASE OF THE
FOREGOING CLAUSE (D), A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE
OTHER SIDE OF THIS SECURITY COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
ISSUER AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
THIS NOTE MAY NOT BE TRANSFERRED, OTHER THAN TO AN INSTITUTIONAL HOLDER,
PRIOR TO THE EARLIER OF 6 MONTHS AFTER THE CONSUMMATION OF THE COMPANY'S INITIAL
HIGH YIELD OFFERING AND SEPTEMBER 30, 2000.
TELECORP PCS, INC.
___% Senior Subordinated Notes due _______, Series E
[CUSIP No.]: ________
No. __________ $
TELECORP PCS, INC., a Delaware corporation (the "Company," which term
includes any successor corporation), for value received, promises to pay to
______________ or registered assigns the principal sum of Dollars
($ ), on the earlier of (i) the final maturity date of the Company's
initial Qualifying High Yield Offering and (ii) December 30, 2009.
Interest Payment Dates: on each six month and annual anniversary of the Issue
Date, commencing on ____, 1999.
Reference is made to the further provisions of this Note contained herein,
which will for all purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officer.
TELECORP PCS, INC.
By: __________________________
Name:
Title:
By:___________________________
Name:
Title:
Dated: _______
This is one of the ___% Senior Subordinated Notes due _____, Series E,
described in the within-mentioned Indenture.
Dated: _______
[__________________,]
as Trustee
By:______________________________
Authorized Signatory
(REVERSE OF NOTE)
TELECORP PCS, INC.
__% Senior Subordinated Notes due _____, Series E
1. INTEREST.
TELECORP PCS, INC. promises to pay interest on the principal amount of
this Note at the rate per annum set forth in Section 2.01(b) of the Third
Supplemental Indenture (as defined below). Cash interest on the Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the Issue Date. The Company will pay interest in
cash semi-annually in arrears on each Interest Payment Date, commencing on _____
___, 2004; provided, that any interest accrued prior thereto due and owing on
--------
any Interest Payment Date and, if payment in cash shall thereafter be prohibited
by the terms of the Senior Credit Facilities, interest accrued thereafter, may
be paid by issuance of a _____% Senior Subordinated Note due _______, Series E
substantially in the form of this Note in the principal amount of such accrued
interest. Interest will be computed on the basis of a 360-day year of twelve
30-day months.
The Company shall pay interest on overdue principal from time to time on
demand and on overdue installments of interest (without regard to any applicable
grace periods) to the extent lawful from time to time on demand, in each case at
the rate equal to 2% per annum in excess of the rate of interest otherwise
payable under the Third Supplemental Indenture.
2. METHOD OF PAYMENT.
The Company shall pay interest on the Notes (except defaulted interest) to
the persons who are the registered Holders at the close of business on the
business day immediately preceding the Interest Payment Date even if the Notes
are canceled on registration of transfer or registration of exchange after such
business day. Holders must surrender the Notes to a Paying Agent to collect
principal payments. The Company shall pay principal and interest in money of the
United States that at the time of payment is 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 (provided that the Paying Agent
shall have received wire instructions on or prior to the relevant Interest
Payment Date), or interest by check payable in such U.S. Legal Tender. The
Company may deliver any such interest payment to the Paying Agent or to a Holder
at the Holder's registered address.
3. PAYING AGENT AND REGISTRAR.
Initially, the Trustee will act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar without notice to the Holders. The
Company may, subject to certain exceptions, act as Paying Agent and Registrar.
4. INDENTURE.
The Company issued the Notes under an Indenture, dated as of ________ ___,
1999 (the "Base Indenture"), between the Company and the Trustee as
supplemented by a Third Supplemental Indenture, dated as of _______ ___, 1999
(the "Third Supplemental Indenture"), among the Company and the Trustee (the
Base Indenture and the Third Supplemental Indenture are referred to herein as
the "Indenture"). Capitalized terms herein are used as defined in the Indenture
unless otherwise defined herein. This Note is one of a duly authorized issue of
notes of the Company designated as its ___% Senior Subordinated Notes due
______, Series E (such Series E Notes being referred to herein as the "Notes"),
which may be issued under the Indenture. The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) (the "TIA"), as in
effect on the date of the Indenture (except as otherwise indicated in the
Indenture) until such time as the Indenture is qualified under the TIA, and
thereafter as in effect on the date on which the Indenture is qualified under
the TIA. Notwithstanding anything to the contrary herein, the Notes are subject
to all such terms, and holders of Notes are referred to the Indenture and the
TIA for a statement of them. The Notes are general unsecured obligations of the
Company.
Payment on the Notes is guaranteed (each a "Guarantee") on a subordinated basis,
jointly and severally, by each Restricted Subsidiary of the Company (each, a
"Guarantor") that guarantees the Notes pursuant to the terms of the Indenture.
5. SUBORDINATION.
The Notes are subordinated in right of payment to the Senior Debt of the
Company to the extent and in the manner provided in the Indenture. Each Holder
of a Note, by accepting a Note, agrees to such subordination, authorizes the
Trustee to give effect to such subordination and appoints the Trustee as
attorney-in-fact for such purpose.
6. OPTIONAL REDEMPTION.
The Company has the right (but not the obligation) to effect optional
redemption of the Notes pursuant to Section 3.01 of the Third Supplemental
Indenture and has the right (but not the obligation) to repurchase up to 35% of
the aggregate principal amount of the Notes, subject to the conditions set forth
in Section 3.04 of the Third Supplemental Indenture. If any Note is to be
redeemed in part only, the notice of redemption that relates to such Note shall
state the portion of the principal amount thereof to be redeemed. A new Note in
a principal amount equal to the unredeemed portion thereof will be issued in the
name of the Holder thereof upon cancellation of the original Note. On and after
the Redemption Date, interest will cease to accrue on Notes or portions thereof
called for redemption so long as the Company has deposited with the Paying Agent
for the Notes funds in satisfaction of the redemption price pursuant to the
Indenture and the Paying Agent is not prohibited from paying such funds to the
Holders pursuant to the terms of the Indenture.
7. CHANGE OF CONTROL OFFER.
Following the occurrence of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Company shall, within 30
days after the Change of Control Date, make an Offer to Purchase all Notes then
outstanding at a purchase price in cash equal to 101% of the aggregate principal
amount thereof, plus accrued and unpaid interest thereon, if any, to the
Purchase Date (subject to the right of Holders to receive interest due on the
relevant Interest Payment Date).
8. LIMITATION ON DISPOSITION OF ASSETS.
The Company is, subject to certain conditions and certain exceptions,
obligated to make an Offer to Purchase Notes at a purchase price equal to 100%
of the principal amount thereof, plus accrued and unpaid interest thereon, if
any, to the Purchase Date (subject to the right of Holders to receive interest
due on the relevant Interest Payment Date) with the proceeds of certain Asset
Dispositions as set forth in Section 4.05 of the Base Indenture.
9. DENOMINATIONS; TRANSFER; EXCHANGE.
The Notes are in registered form, without coupons, in denominations of
[$______] and integral multiples of [$______]. A Holder shall register the
transfer or exchange of Notes in accordance with the Indenture. The Registrar
may require a Holder, among other things, to furnish appropriate endorsements
and transfer documents and to pay certain transfer taxes or similar governmental
charges payable in connection therewith as permitted by the Indenture. The
Registrar need not register the transfer of or exchange any Notes or portions
thereof selected for redemption, except the unredeemed portion of any Note being
redeemed in part.
10. PERSONS DEEMED OWNERS.
The registered Holder of a Note shall be treated as the owner of it for all
purposes.
11. UNCLAIMED FUNDS.
If funds for the payment of principal or interest remain unclaimed for two
years, the Trustee and the Paying Agent will repay the funds to the Company at
their written request. After that, all liability of the Trustee and such Paying
Agent with respect to such funds shall cease.
12. LEGAL DEFEASANCE AND COVENANT DEFEASANCE.
The Company and the Guarantors may be discharged from their obligations
under the Indenture, the Guarantees and the Notes, except for certain provisions
thereof, and may be discharged from obligations to comply with certain covenants
contained in the Indenture, the Guarantees and the Notes, in each case, upon
satisfaction of certain conditions specified in the Indenture.
13. AMENDMENT; SUPPLEMENT; WAIVER.
Subject to certain exceptions, the Indenture, the Guarantees and the Notes
may be amended or supplemented with the written consent of the Holders of at
least a majority in aggregate principal amount of the Notes of all series 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 Notes then outstanding; provided that if there
--------
shall be notes of more than one series outstanding and if the proposed action to
be taken will materially adversely affect the rights of holders of Notes of one
or more of such series, then the consent only of Holders of a majority in
aggregate principal amount (or, if provided in the Supplemental Indentures with
respect to more than one series of the Notes, Holders of not less than a
majority in aggregate principal amount of the Notes issued under such multiple
series) of outstanding Notes of each series so affected shall be required.
Without notice to or consent of any Holder, the parties thereto may amend or
supplement the Indenture, the Guarantees and the Notes to, among other things,
cure any ambiguity, defect or inconsistency, provide for uncertificated Notes in
addition to or in place of certificated Notes or comply with any requirements of
the SEC in connection with the qualification of the Indenture under the TIA, or
make any other change that does not materially adversely affect the rights of
any Holder of a Note.
14. RESTRICTIVE COVENANTS.
The Indenture contains certain covenants that, among other things, limit
the ability of the Company and the Restricted Subsidiaries to make restricted
payments, to incur indebtedness, to create liens, to sell assets, to permit
restrictions on dividends and other payments by Restricted Subsidiaries to the
Company, to consolidate, merge or sell all or substantially all its assets and
to engage in transactions with affiliates. The limitations are subject to a
number of important qualifications and exceptions. The Company must report
quarterly to the Trustee on compliance with such limitations.
15. DEFAULTS AND REMEDIES.
If an Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in aggregate principal amount of Notes then outstanding may
declare all the Notes to be due and payable immediately in the manner and with
the effect provided in the Indenture. Holders of Notes may not enforce the
Indenture, the Guarantees or the Notes except as provided in the Indenture. The
Trustee is not obligated to enforce the Indenture, the Guarantees or the Notes
unless it has received an indemnity reasonably satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a
majority in aggregate principal amount of the Notes then outstanding to direct
the Trustee in its exercise of any trust or power. The Trustee may withhold
from Holders of Notes notice of certain continuing Defaults or Events of Default
if it determines that withholding notice is in their interest.
16. TRUSTEE DEALINGS WITH COMPANY.
The Trustee under the Indenture, in its individual or any other capacity,
may become the owner or pledgee of Notes and may otherwise deal with the
Company, the Guarantors, their respective Subsidiaries or their respective
Affiliates as if it were not the Trustee.
17. NO RECOURSE AGAINST OTHERS.
No director, officer, employee, incorporator or stockholder of the Company
or any Guarantor, as such, shall have any liability for any obligations of the
Company or any Guarantor under the Notes or the Guarantees, as the case may be,
or the Indenture or for any claim based on, in respect of, or by reason of,
such obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes and the Guarantees.
18. AUTHENTICATION.
This Note shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on this Note.
19. ABBREVIATIONS AND DEFINED TERMS.
Customary abbreviations may be used in the name of a Holder of a Note 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). ).
20. RESTRICTION ON REMARKETING.
This Note may not be transferred, other than to an Institutional Holder,
prior to the earlier of 6 months after the consummation of the Company's initial
High Yield Offering and September 30, 2000.
21. [CUSIP NUMBERS.]
[Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes as a convenience to the Holders of the Notes. No
representation is made as to the accuracy of such numbers as printed on the
Notes and reliance may be placed only on the other identification numbers
printed hereon.]
22. GOVERNING LAW.
The laws of the State of New York shall govern the Indenture and this Note
without regard to principles of conflicts of laws to the extent that the
application of the laws of another jurisdiction would be required thereby.
23. CONFLICT.
In the event of an express and irreconcilable conflict between this Note
and the Indenture, the terms of the Indenture shall govern.
[FORM OF NOTATION ON NOTE RELATING TO GUARANTEE]
SENIOR SUBORDINATED GUARANTEE
The Guarantor(s) (as defined in the Third Supplemental Indenture referred
to in the Note upon which this notation is endorsed) hereby, jointly and
severally, unconditionally guarantee on a senior subordinated basis (such
guarantee by each Guarantor being referred to herein as the "Guarantee") the due
and punctual payment of the principal of, premium, if any, and interest on the
Notes, whether at maturity, by acceleration or otherwise, the due and punctual
payment of interest on the overdue principal, premium and interest, if any, on
the Notes, and the due and punctual performance of all other obligations of the
Company to the Holders or the Trustee, all in accordance with the terms set
forth in Article 9 of the Third Supplemental Indenture.
The obligations of each Guarantor to the Holders and to the Trustee
pursuant to the Guarantee, the Indenture and the Third Supplemental Indenture
are expressly set forth, and are expressly subordinated and subject in right of
payment to the prior payment in full of all Designated Senior Debt, to the
extent and in the manner provided in Article 10 of the Third Supplemental
Indenture, and reference is hereby made to such Third Supplemental Indenture for
the precise terms of the Guarantee therein made.
The Guarantee shall not be valid or obligatory for any purpose until the
certificate of authentication on the Notes upon which the Guarantee is noted
shall have been executed by the Trustee under the Indenture by the manual
signature of one or more of its authorized officers.
This Guarantee shall be governed by and construed in accordance with the
laws of the State of New York without regard to principles of conflicts of law.
This Guarantee is subject to release upon the terms set forth in the Third
Supplemental Indenture.
[GUARANTORS]
By:__________________________
Name:
Title:
Exhibit C
Form of Series E Note Indenture
-------------------------------
See Attachment hereto.
TABLE OF CONTENTS
ARTICLE I DEFINITIONS....................................................................... 2
ARTICLE II CONTRIBUTIONS; PURCHASE AND SALE OF SECURITIES; CERTAIN RESTRICTIONS ON TRANSFER.. 8
2.1. Cash Equity Investor and Management Stockholder Contributions..................... 8
2.2. Purchase and Sale of Securities at Closing........................................ 9
2.3. Management Stockholder Contribution............................................... 9
2.4. Management Benefit Plan........................................................... 9
2.5. Restrictive Legends............................................................... 9
2.6. Participation in Note Purchase.................................................... 10
2.7. Use of Proceeds................................................................... 10
ARTICLE III CLOSING........................................................................... 10
3.1. Time and Place of Closing......................................................... 11
3.2. Closing Actions and Deliveries.................................................... 11
3.3. Closing Costs; Taxes and Fees..................................................... 11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASERS AND MANAGEMENT STOCKHOLDERS.......... 12
4.1. Organization, Power and Authority................................................. 12
4.2. Consents; No Conflicts............................................................ 13
4.3. Litigation........................................................................ 13
4.4. FCC Compliance.................................................................... 13
4.5. Brokers........................................................................... 13
4.6. Capital Commitment................................................................ 13
4.7. No Distribution................................................................... 13
4.8. Investor Acknowledgments.......................................................... 14
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND ACQUISITION CORP................ 15
5.1. Organization, Power and Authority................................................. 15
5.2. Consents; No Conflicts............................................................ 16
5.3. Litigation........................................................................ 16
5.4. FCC Compliance.................................................................... 16
5.5. Brokers........................................................................... 16
i
5.6. Capitalization.................................................................... 17
5.7. Shares............................................................................ 17
5.8. Offering of Securities............................................................ 17
5.9. Subsidiaries...................................................................... 18
5.10. Small Business Matters............................................................ 18
ARTICLE VI COVENANTS......................................................................... 18
6.1. Consummation of Transactions...................................................... 18
6.2. Use of Proceeds................................................................... 19
6.3. SBIC Regulatory Provisions........................................................ 19
6.4. Regulatory Compliance Cooperation................................................. 19
6.5. Related Agreement Amendments; Amendments to Restated Certificate.................. 20
6.6. Offering of Securities............................................................ 20
6.7. Waiver of Preemptive Rights....................................................... 20
ARTICLE VII CLOSING CONDITIONS................................................................ 20
7.1. Conditions to Obligations of All Parties.......................................... 20
7.2. Conditions to Obligations of the Company.......................................... 22
7.3. Conditions to the Obligations of the Cash Equity Investors........................ 22
ARTICLE VIII SURVIVAL AND INDEMNIFICATION...................................................... 24
8.1. Survival.......................................................................... 24
8.2. Indemnification by the Cash Equity Investors...................................... 24
8.3. Indemnification by the Management Stockholders.................................... 24
8.4. Indemnification by the Company.................................................... 25
8.5. Procedures........................................................................ 25
8.6. Registration Rights............................................................... 26
8.7. Limit on Indemnity................................................................ 26
ARTICLE IX TERMINATION....................................................................... 27
9.1. Termination....................................................................... 27
9.2. Effect of Termination............................................................. 27
ARTICLE X MISCELLANEOUS PROVISIONS.......................................................... 27
10.1. Amendment and Modification........................................................ 27
10.2. Waiver of Compliance; Consents.................................................... 27
10.3. Notices........................................................................... 28
ii
10.4. Expenses.......................................................................... 28
10.5. Parties in Interest; Assignment................................................... 29
10.6. Applicable Law.................................................................... 29
10.7. Counterparts...................................................................... 29
10.8. Interpretation.................................................................... 29
10.9. Entire Agreement.................................................................. 29
10.10. Publicity......................................................................... 30
10.11. Specific Performance.............................................................. 30
10.12. Remedies Cumulative............................................................... 30
10.13. Severability...................................................................... 30
10.14. Beneficiaries of Agreement........................................................ 30
10.15. F Block Joint Ventures............................................................ 30
iii
SCHEDULES
Schedule I - Cash Equity Investors
Schedule II - Management Stockholders
Schedule III - Equity Issued to Cash Equity Investors
Schedule III(a) - Cash Equity Investors Funding Schedule
Schedule III(b) - Equity Issued to, and Funding Commitment of, Management Stockholders
Schedule IV - Capitalization
Schedule 4.2 - Cash Equity Investor Consents
Schedule 4.4 - Attributable Interests
Schedule 5.2 - Company Consents
Schedule 5.6 - Outstanding Options, Warrants, etc.
Schedule 5.9 - Subsidiaries
EXHIBITS
Exhibit A - Form of Pledge Agreement
Exhibit B - Form of Series E Note
Exhibit C - Form of Series E Note Indenture
Exhibit D - Summary of Principal Terms
Draft 3/3/99
================================================================================
THIRD
SUPPLEMENTAL INDENTURE
TELECORP PCS, INC.
To
________________________, Trustee
Dated as of _____________, 1999
SERIES E NOTES,
Supplemental to Indenture Dated as of _____________, 1999
================================================================================
CONFIDENTIAL -- FOR DISCUSSION PURPOSES ONLY
-------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE............................................. 2
SECTION 1.1 Terms Incorporated by Reference........................................................ 2
SECTION 1.2 Additional Definitions................................................................. 2
SECTION 1.3 Other Definitions...................................................................... 7
ARTICLE II THE NOTES.............................................................................. 8
SECTION 2.1 Terms of Series E Notes................................................................ 8
SECTION 2.2 Execution and Authentication........................................................... 10
ARTICLE III PREPAYMENTS AND MANDATORY REDEMPTIONS.................................................. 10
SECTION 3.1 Optional Prepayments................................................................... 10
SECTION 3.2 Premium................................................................................ 11
SECTION 3.3 Mandatory Redemption of Series E Notes................................................. 11
SECTION 3.4 Optional Redemption Upon Equity Issuance............................................... 12
SECTION 3.5 Acquisition of Notes................................................................... 12
ARTICLE IV SUPPLEMENTARY COVENANTS................................................................ 12
SECTION 4.1 Limitation on Transactions with Affiliates............................................. 12
SECTION 4.2 Limitation on Incurrence of Indebtedness............................................... 13
SECTION 4.3 Limitation on Restricted Payments...................................................... 15
SECTION 4.4 Payment of Taxes and Other Claims...................................................... 18
SECTION 4.5 Notice of Defaults..................................................................... 19
SECTION 4.6 Maintenance of Properties.............................................................. 19
SECTION 4.7 Compliance Certificate................................................................. 19
SECTION 4.8 Provision of Financial Information..................................................... 20
SECTION 4.9 Waiver of Stay, Extension or Usury Laws................................................ 20
SECTION 4.10 Limitation on Layered Debt............................................................. 20
SECTION 4.11 Limitation on Restrictions Affecting Restricted Subsidiaries........................... 21
CONFIDENTIAL -- FOR DISCUSSION PURPOSES ONLY
--------------------------------------------------------------------------------
SECTION 4.12 Limitation on Liens.................................................................... 21
SECTION 4.13 Subsidiary Guarantees.................................................................. 22
SECTION 4.14 Limitation on Activities of the Company and the Restricted Subsidiaries................ 23
SECTION 4.15 Amendments to Agreements............................................................... 23
ARTICLE V EVENTS OF DEFAULT...................................................................... 23
SECTION 5.1 Events of Default...................................................................... 23
ARTICLE VI SUBORDINATION.......................................................................... 24
SECTION 6.1 Series E Notes Subordinate to Senior Debt.............................................. 24
SECTION 6.2 Payment of Proceeds Upon Dissolution, Etc.............................................. 24
SECTION 6.3 No Payment When Designated Senior Debt in Default...................................... 26
SECTION 6.4 Acceleration of Series E Notes......................................................... 27
SECTION 6.5 Payment Permitted If No Default........................................................ 28
SECTION 6.6 Obligation of Company Unconditional.................................................... 28
SECTION 6.7 Subrogation To Rights of Holders of Senior Debt........................................ 28
SECTION 6.8 Provisions Solely To Define Relative Rights............................................ 29
SECTION 6.9 No Waiver of Subordination Provisions.................................................. 29
SECTION 6.10 Reliance On Judicial Order or Certificate of Liquidating Agent......................... 30
SECTION 6.11 Notice to Trustee...................................................................... 30
SECTION 6.12 Trustee's Relation to Senior Debt...................................................... 31
SECTION 6.13 Series E Note Holders Authorize Trustee to Effectuate Subordination.................... 31
SECTION 6.14 This Article Not to Prevent Event of Default........................................... 31
SECTION 6.15 Trustee's Compensation Not Prejudiced.................................................. 32
SECTION 6.16 Subordination Provisions Not Applicable to Money Held in Trust for Holders of Series E
Notes; Payments May Be Paid prior to Dissolution....................................... 32
ARTICLE VII TAX MATTERS............................................................................ 32
SECTION 7.1 Taxes.................................................................................. 32
CONFIDENTIAL -- FOR DISCUSSION PURPOSES ONLY
--------------------------------------------------------------------------------
ARTICLE VIII THE TRUSTEE............................................................................ 35
SECTION 8.1 Trustee's Disclaimer................................................................... 35
ARTICLE IX GUARANTEE.............................................................................. 36
SECTION 9.1 Unconditional Guarantee................................................................ 36
SECTION 9.2 Severability........................................................................... 36
SECTION 9.3 Release of a Guarantor................................................................. 37
SECTION 9.4 Limitation of Guarantor's Liability.................................................... 37
SECTION 9.5 Contribution........................................................................... 37
SECTION 9.6 Execution of Guarantee................................................................. 38
SECTION 9.7 Subordination of Subrogation and Other Rights.......................................... 38
ARTICLE X SUBORDINATION OF GUARANTEE............................................................. 38
SECTION 10.1 Guarantee Obligations Subordinated to Designated Senior Debt........................... 38
SECTION 10.2 Payment of Proceeds Upon Dissolution, Etc.............................................. 39
SECTION 10.3 No Payment When Designated Senior Debt in Default...................................... 40
SECTION 10.4 Acceleration of Series E Notes......................................................... 42
SECTION 10.5 Payments Permitted If No Default....................................................... 42
SECTION 10.6 Obligations of Guarantors Unconditional................................................ 42
SECTION 10.7 Subrogation To Rights of Holders of Designated Senior Debt............................. 43
SECTION 10.8 Provisions Solely to Define Relative Rights............................................ 43
SECTION 10.9 No Waiver of Subordination Provisions.................................................. 44
SECTION 10.10 Reliance On Judicial Order or Certificate of Liquidating Agent......................... 44
SECTION 10.11 Notice to Trustee...................................................................... 45
SECTION 10.12 Trustee's Relation to Designated Senior Debt........................................... 45
SECTION 10.13 Series E Note Holders Authorize Trustee to Effectuate Subordination.................... 46
SECTION 10.14 This Article Not to Prevent Event of Default........................................... 46
SECTION 10.15 Trustee's Compensation Not Prejudiced.................................................. 46
CONFIDENTIAL -- FOR DISCUSSION PURPOSES ONLY
--------------------------------------------------------------------------------
SECTION 10.16 Subordination Provisions Not Applicable to Money Held in Trust for Holders of Series E
Notes; Payments May Be Paid prior to Dissolution....................................... 46
ARTICLE XI MISCELLANEOUS.......................................................................... 47
SECTION 11.1 Reference to Indenture................................................................. 47
SECTION 11.2 Benefits of Indenture.................................................................. 47
SECTION 11.3 Amendments Only With Consent of the Holders............................................ 47
SECTION 11.4 Governing Law.......................................................................... 48
SECTION 11.5 Successors............................................................................. 48
SECTION 11.6 Counterparts........................................................................... 48
THIRD SUPPLEMENTAL INDENTURE
THIS THIRD SUPPLEMENTAL INDENTURE, dated as of , 1999 (the
-----------
"Supplemental Indenture"), between TELECORP PCS, INC., a Delaware corporation
(the "Company"), and as Trustee (the "Trustee").
-----------------
WITNESSETH
WHEREAS, the Company will issue under its Indenture, dated as of ,
---------
1999 (the "Indenture"), Notes which Notes may be created and established from
time to time in one or more series; and
WHEREAS, the Company desires to create a new series of senior subordinated
Notes (the "Series E Notes") to be issued under the Indenture pursuant to this
Supplemental Indenture, and to set forth herein the forms, the maturity dates,
interest rates, terms of subordination, optional and mandatory redemption,
certain additional covenants and Events of Default (in addition to the covenants
and Events of Default contained in the Indenture); and
WHEREAS, the execution, delivery and performance of this Supplemental
Indenture (including all the agreements herein contained) have been in all
respects duly authorized, and all acts and things have been done and performed
which are necessary to make this Supplemental Indenture, when duly executed and
delivered, a valid, binding and legal instrument in accordance with its terms
and for the purposes herein expressed;
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Terms Incorporated by Reference.
Except for the terms defined in this Supplemental Indenture, all
capitalized terms used in this Supplemental Indenture have the respective
meanings set forth in the Indenture.
SECTION 1.2 Additional Definitions.
"Acquired Indebtedness" means, with respect to any specified
Person, Indebtedness of another Person (i) existing at the time such
other Person becomes a Restricted Subsidiary or (ii) Indebtedness
secured by a Lien encumbering any asset acquired by such specific
Person.
"Additional Series E Notes" means any additional Series E Notes
issued by the Company in lieu of payments of cash interest on the
Series E Notes.
1
"Annualized Pro Forma Consolidated Operating Cash Flow" means
Consolidated Cash Flow for the latest two full fiscal quarters for which
consolidated financial statements of the Company are available
multiplied by two. For purposes of calculating "Consolidated Cash Flow"
for any period for purposes of this definition only, (i) any Subsidiary
of the Company that is a Restricted Subsidiary on the date of the
transaction giving rise to the need to calculate "Annualized Pro Forma
Consolidated Operating Cash Flow" (the "Transaction Date") shall be
deemed to have been a Restricted Subsidiary at all times during such
period and (ii) any Subsidiary of the Company that is not a Restricted
Subsidiary on the Transaction Date shall be deemed not to have been a
Restricted Subsidiary at any time during such period. In addition to and
without limitation of the foregoing, for purposes of this definition
only, "Consolidated Cash Flow" shall be calculated after giving effect
on a pro forma basis for the applicable period, without duplication, to
any Asset Dispositions or Asset Acquisitions (including, without
limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of the Company or one of the Restricted
Subsidiaries (including any Person that becomes a Restricted Subsidiary
as a result of an Asset Acquisition) incurring, assuming or otherwise
being liable for Acquired Indebtedness) occurring during the period
commencing on the first day of such two fiscal quarter period to and
including the Transaction Date (the "Reference Period"), as if such
Asset Disposition or Asset Acquisition occurred on the first day of the
Reference Period.
"Asset Acquisition" means (i) any purchase or other acquisition
(by means of transfer of cash or other property to others or payment for
property or services for the account or use of others, or otherwise) of
Equity Interests of any Person by the Company or any Restricted
Subsidiary, in either case, pursuant to which such Person shall become a
Restricted Subsidiary or shall be merged with or into the Company or any
Restricted Subsidiary or (ii) any acquisition by the Company or any
Restricted Subsidiary of the property or assets of any Person which
constitute all or substantially all of an operating unit or line of
business of such Person.
"Asset Disposition" means, in lieu of the definition thereof
contained in the Indenture, any sale, transfer or other disposition
(including, without limitation, by merger, consolidation or sale-and-
leaseback transaction) of (i) shares of Capital Stock of a Subsidiary of
the Company (other than directors' qualifying shares), (ii) any FCC
License for the provision of wireless telecommunications services held
by the Company or any Restricted Subsidiary (whether by sale of Capital
Stock or otherwise) or (iii) property or assets of the Company or any
Subsidiary of the Company; provided , that an Asset Disposition shall
not include (a) any sale, transfer or other disposition of shares of
Capital Stock, property or assets by a Restricted Subsidiary to the
Company or to any other Restricted Subsidiary or by the Company to any
Restricted Subsidiary, (b) any sale, transfer or other disposition of
defaulted receivables for collection or any sale, transfer or other
disposition of property or assets in the ordinary course of business,
(c) any sale, transfer or other disposition that does not (together with
all related sales, transfers or dispositions) involve aggregate
consideration in excess of $5.0 million, (d) any Permitted
2
Sale-Leaseback, (e) any exchange of FCC PCS Licenses and any License
Related Assets in connection therewith; provided that (1) such exchange
shall be for a comparable number of POPs, (2) such exchange shall have
been approved by the Board of Directors of the Company as being in the
best interest of the Company and the Trustee shall have received a
certified copy of such approval, (3) such exchange shall be for PCS
Licenses held on the date of such exchange by AT&T PCS or a Person
associated with or introduced by AT&T PCS, and (4) the PCS Licenses
acquired in such exchange shall relate to BTAs or MTA's included within
the Territory (as each such term is defined in the Stockholders'
Agreement dated as of July 17, 1998, as amended, among AT&T PCS, the
Company and the other parties thereto), (f) the sale, lease, conveyance
or disposition or other transfer of all or substantially all the assets
of the Company as permitted under Article 5 or (g) any disposition that
constitutes a Change of Control.
"AT&T Entity" means AT&T PCS and its Affiliates.
"AT&T Holder" means a Holder that is an AT&T Entity.
"AT&T PCS" means AT&T Wireless PCS, Inc., a Delaware
corporation.
"Average Life" means, as of the date of determination, with
respect to any Indebtedness for borrowed money or Preferred Stock, the
quotient obtained by dividing (i) the sum of the product obtained by
multiplying (a) the number of years from the date of determination to
the date of each successive scheduled principal or liquidation value
payment of such Indebtedness or Preferred Stock, respectively, by (b)
the amount of such principal or liquidation value payments, by (ii) the
sum of all such principal or liquidation value payments.
"Class A Common Stock" means Class A Voting Common Stock, par
value $0.01 per share, of the Company.
"Common Stock" means common stock, par value $0.01 per share,
of the Company.
"Communications Act" means the Communications Act of 1934, and
any similar or successor Federal statute, and the rules and regulations
and published policies of the FCC thereunder, as the same may be in
effect from time to time.
"Consolidated Cash Flow" of any Person means, for any period,
the Consolidated Net Income of such Person for such period (i) increased
(to the extent Consolidated Net Income for such period has been reduced
thereby) by the sum of (without duplication) (a) Consolidated Interest
Expense of such Person for such period, plus (b) Consolidated Income Tax
Expense of such Person for such period, plus (c) the consolidated
depreciation and amortization expense of such Person and its Restricted
Subsidiaries for such period, plus (d) any other non-cash charges of
such Person and its Restricted Subsidiaries for such period except for
any non-cash charges that represent accruals of, or
3
reserves for, cash disbursements to be made in any future accounting
period and (ii) decreased (to the extent Consolidated Interest Expense
for such period has been increased thereby) by any non-cash gains from
Asset Dispositions.
"Consolidated Income Tax Expense" of any Person means, for any
period, the consolidated provision for income taxes of such Person and
its Restricted Subsidiaries for such period calculated on a consolidated
basis in accordance with GAAP.
"Consolidated Interest Expense" for any Person means, for any
period the sum of (without duplication) (i) the consolidated interest
expense included in a consolidated income statement (without deduction
of interest or finance charge income) of such Person and its Restricted
Subsidiaries for such period calculated on a consolidated basis in
accordance with GAAP (including, without limitation, (a) any
amortization of debt discount, (b) the net costs under any Hedging
Agreement (other than interest rate cap or collar or other similar
arrangement), (c) all capitalized interest, (d) the interest portion of
any deferred payment obligation and (e) all amortization of any
premiums, fees and expenses payable in connection with the incurrence of
any Indebtedness, plus (ii) the interest component of Capital Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by such
Person and its Restricted Subsidiaries during such period as determined
on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" of any Person means, for any period,
the consolidated net income (or loss) of such Person and its Restricted
Subsidiaries for such period determined on a consolidated basis in
accordance with GAAP; provided, that there shall be excluded therefrom
(a) the net income (or loss) of any other Person acquired by such Person
or its Restricted Subsidiary in a pooling-of-interests transaction for
any period prior to the date of such transaction, (b) the net income
(but not loss) of any Restricted Subsidiary of such Person which is
subject to restrictions which prevent or limit the payment of dividends
or the making of distributions to such Person to the extent of such
restrictions (regardless of any waiver thereof) except to the extent of
the amount of dividends or other distributions representing such
Person's proportionate share of such Restricted Subsidiary's net income
for such period which amount is actually paid, in cash, to such Person
by such Restricted Subsidiary during such period, (c) the net income of
any Person that is not a Restricted Subsidiary of such Person, except to
the extent of the amount of dividends or other distributions
representing such Person's proportionate share of such other Person's
net income for such period actually paid in cash to such Person by such
other Person during such period, (d) gains or losses (other than for
purposes of calculating Consolidated Net Income under Section 4.05(a)(3)
of the Indenture) on Asset Dispositions by such Person or its Restricted
Subsidiaries, (e) all extraordinary gains or losses as determined in
accordance with GAAP and (f) in the case of a successor to such Person
by consolidation or merger or as a transferee of such Person's assets,
any earnings (or losses) of the successor corporation prior to such
consolidation, merger or transfer of assets.
4
"Designated Senior Debt" means (i) so long as any Indebtedness
under one or more Senior Credit Facilities is outstanding or any lender
has any commitment to extend credit to the Company thereunder, the
Senior Debt incurred under any such Credit Facility and (ii) so long as
any other Senior Debt is outstanding, such Senior Debt if, at the time
of initial issuance, it has an aggregate outstanding principal amount in
excess of $25.0 million and such Senior Debt has been so designated as
Designated Senior Debt by the Board of the Company at the time of
initial issuance in a resolution delivered to the Trustee.
"Excluded Cash Proceeds" means the net cash proceeds received
by the Company subsequent to the Issue Date from capital contributions
in respect of Qualified Stock of the Company or from the issue or sale
(other than to a Restricted Subsidiary) of Qualified Stock of the
Company to the extent such proceeds, pursuant to the Note Purchase
Agreement, are required to be applied to repay the Series A Notes.
"Expiration Event" means any of the following: (a) the
occurrence of the "IPO Date" as defined in the Stockholders Agreement
dated as of July 17, 1998 among AT&T PCS, the cash equity investors
named therein, the management stockholders named therein and the
Company, (b) a Change of Control or (c) the consummation of a Qualifying
High Yield Offering.
"High Yield Offering" means an offering, either in a registered
public offering or a private placement, of notes, bonds or other
securities that are pari passu or subordinated to the Notes but shall
not include any Senior Credit Facility, the Series A Notes, the Series B
Notes or any Notes issued under the Indenture.
"Guarantor" means (i) each Restricted Subsidiary that, on any
Issue Date, is a direct or indirect obligor under, or in respect of, any
Senior Debt and (ii) each Restricted Subsidiary that executes this
Supplemental Indenture as a Guarantor, in each case, until such
Restricted Subsidiary is released from its Guarantee.
"Institutional Entity" means the management stockholders party
to the Puerto Rico Stock Purchase Agreement dated as of April , 1999
----
among such management stockholders, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
Puerto Rico Acquisition Corp. and the Company, and their respective
Affiliates.
"Institutional Holder" means a Holder that is an Institutional
Entity.
"Issue Date" means , 1999, the issue date of the
---------------
Series E Notes initially issued hereunder.
"Maturity Date" means the earlier of (i) the final maturity
date of the Company's initial Qualifying High Yield Offering and (ii)
[[ insert date six months earlier than Series C maturity]].
-------------
5
"MTA" means a Major Trading Area as defined in 47 C.F.R. 24.202,
as amended from time to time.
"Net Debt Proceeds" with respect to any High Yield Offering by
the Company or any Subsidiary, the excess of: (a) the gross cash
proceeds received by the Company or such Subsidiary from such offering,
over (b) all reasonable fees and expenses incurred in connection with
such offering (including customary underwriting commissions or discounts
and legal, investment banking, brokerage and accounting, trustee fees
and other professional fees, sales commission and disbursements) which
have not been paid to Affiliates of the Company in connection therewith.
"Note Purchase Agreement" means the Amended and Restated Note
Purchase Agreement dated , 1999 between the Company and Lucent.
---------
"Public Sale" means any underwritten public offering, made on a
primary basis pursuant to a registration statement filed with, and
declared effective by, the SEC in accordance with the Securities Act.
"Qualified Stock" means any Capital Stock of the Company other
than Disqualified Stock.
"Qualifying High Yield Offering" means a High Yield Offering
that results in Net Debt Proceeds to the Company of at least
$100,000,000.
"Series C Notes" means the Series C Notes of the Company in an
initial aggregate principal account not to exceed $65,000,000 which
Notes are to be issued pursuant to the Indenture.
"Series C Preferred Stock" means Series C Preferred Stock, par
value $0.01 per share, of the Company.
"Series D Notes" means the Series D Notes of the Company in an
initial aggregate principal not to exceed $[ ] which Notes
-------------
are to be issued pursuant to the Indenture.
"Series E Guarantee" means the guarantee of the Series E Notes
by each Guarantor under this Supplemental Indenture.
"Series E Guarantor" means (i) each Restricted Subsidiary that,
on an Issue Date, is a direct or indirect obligor under, or in respect
of, one or more of the Senior Credit Facilities and (ii) each
Restricted Subsidiary that pursuant to the terms of this Supplemental
Indenture executes a further supplement as a Guarantor, in each case,
until such Restricted Subsidiary is released from its guarantee.
"Total Consolidated Indebtedness" means, at any date of
determination, an amount equal to (i) the accreted value of all
Indebtedness, in the case of any Indebtedness
6
isued with original issue discount, plus (ii) the principal amount of
all Indebtedness, in the case of any other Indebtedness, of the Company
and the Restricted Subsidiaries outstanding as of the date of
determination.
"Total Invested Capital" means, at any date of determination,
the sum of, without duplication, (i) the total amount of equity
contributed to the Company as of the initial Issue Date (as set forth on
the , audited consolidated balance sheet of the
---------------------
Company), plus (ii) irrevocable binding commitments to purchase Capital
Stock (other than Disqualified Stock) existing as of such Issue Date,
plus (iii) the aggregate net cash proceeds received by the Company from
capital contributions or the issuance or sale of Capital Stock (other
than Disqualified Stock but including Capital Stock issued upon the
conversion of convertible Indebtedness or from the exercise of options,
warrants or rights to purchase Capital Stock (other than Disqualified
Stock)) subsequent to the Issue Date, other than to a Restricted
Subsidiary; provided, such aggregate net cash proceeds received pursuant
to this clause (iii) shall exclude any amounts included as commitments
to purchase Capital Stock in the preceding clause (ii), plus (iv) the
aggregate net cash proceeds received by the Company or any Restricted
Subsidiary from the sale, disposition or repayment of any Investment
made after the Issue Date and constituting a Restricted Payment in an
amount equal to the lesser of (a) the return of capital with respect to
such Investment and (b) the initial amount of such Investment, in either
case, less the cost of the disposition of such Investment, plus (v) an
amount equal to the consolidated net Investment on such date of the
Company and/or any of the Restricted Subsidiaries in any Subsidiary that
has been designated as an Unrestricted Subsidiary after the Issue Date
upon its redesignation as a Restricted Subsidiary in accordance with
Section 4.06 of the Indenture, plus (vi) Total Consolidated
Indebtedness, minus (vii) the aggregate amount of all Restricted
Payments (including any Designation Amount, but other than a Restricted
Payment of the type referred to in Section 4.03(b)(iii)(b)) declared or
made on or after the Issue Date.
"Triton Bonds" means the 11% Senior Subordinated Discount Notes
due 2008 issued by Triton PCS, Inc. pursuant to the Indenture dated as
of May 4, 1998 among Triton PCS, Inc., the guarantors thereto and PNC
Bank, National Association, as trustee.
"Vendor" means Lucent in its capacity as such under the
Procurement Contract.
"Vendor Credit Arrangement" means any Indebtedness (including,
without limitation, Indebtedness under any credit facility entered into
with any vendor or supplier or any financial institution acting on
behalf of such vendor or supplier); provided that the net proceeds of
such Indebtedness are utilized solely for the purpose of financing the
cost (including, without limitation, the cost of design, development,
site acquisition, construction, integration, handset manufacture or
acquisition or microwave relocation) of assets used or usable in a
Permitted Business (including, without limitation, through the
acquisition of Capital Stock of an entity engaged in a Permitted
Business).
7
"Yield" means, in respect of any bond, as of any date of
determination, the average yield to maturity on such bond (computed on a
bond equivalent basis and utilizing the last quoted sale price for each
day or, if no sales occur on such date, the last quoted sales price from
the immediately preceding day) for the 30 consecutive days immediately
prior to such date of determination.
SECTION 1.3 Other Definitions.
Defined in:
Term Section
"Administrative Agent" 6.03
"Cash Equity Investors" 4.15
"Event of Default" 5.01
"Funding Guarantor" 9.05
"Guarantee Payment" 10.02
"Guarantee Payment Blockage Period" 10.03
"Indenture" Recitals
"Management Stockholders" 4.15
"Participant" 7.01
"Payment Blockage Period" 6.03
"Proceeding" 6.02
"Related Party" 4.01
"Restricted Payments" 4.03
"Securities Payment" 6.02
"Senior Nonmonetary Default" 6.03
"Senior Payment 6.03
"Series E Notes" Recitals
"Purchase Agreement" Recitals
"Supplemental Indenture" Recitals
"Transferee" 7.01
ARTICLE II
THE NOTES
SECTION 2.1 Terms of Series E Notes.
(a) There are hereby created and established the Series E
Notes to be issued in the initial aggregate principal
amount of $ and maturing on the Maturity Date.
---------
(b) The Company may issue at any time, and, subject to the
terms and conditions set forth herein, the Trustee shall
authenticate Series E Notes. The Series E Notes shall have
the following terms:
8
(i) The Series E Notes shall bear interest through and
including October 31, 1999 at an initial rate per
annum, determined two Business Days before the
initial issuance, equal to the lesser of (a) 12% and
(b) the Yield on the Triton Bonds; provided that
from and after the earlier of (x) November 1, 1999
and (y) the date of an Expiration Event, the Series
E Notes shall bear interest at a rate per annum
equal to 7%. The rate of interest borne by the
Series C Notes as determined pursuant to the terms
of this clause (i) is referred to as the "Series E
Coupon Rate."
(ii) The Series E Notes are subject to redemption and
repurchase by the Company in accordance with the
terms of the Indenture and in Article 3 hereof.
(iii) The Series E Notes are entitled to the protections
of the covenants contained in the Indenture and in
Article 4 hereof and are subject to the provisions
pertaining to Events of Default contained in the
Indenture and in Article 5 hereof.
(iv) The Series E Notes shall be issuable in fully
registered form, without coupons, in denominations
of $ and integral multiples of $
---------- ----------
in excess thereof.
(v) The Series E Notes shall be dated as described in
Section 2.02 of the Indenture, except that the
Series E Notes first issued shall be dated as of
the Issue Date.
(vi) The Company shall pay in full the outstanding
aggregate principal amount of the Series E Notes,
together with any accrued interest and other amounts
with respect to such Series E Notes, no later than
the Maturity Date.
(vii) Interest on the Series E Notes shall be paid in
arrears in cash on the six-month and annual
anniversary of the Issuance Date; provided that (A)
interest on the Series E Notes on or prior to the
fifth annual anniversary of the Issuance Date may be
paid in Additional Series E Notes and (B) thereafter
Interest on the Series E Notes shall be paid in
arrears in cash, provided that if such payment in
cash shall be prohibited under the terms of the
Company's Senior Credit Facilities, payment shall be
in Additional Series E Notes. The Company shall pay
interest (including post-petition interest in any
proceeding under any Bankruptcy Law whether or not a
claim for post-petition
9
interest is allowed in such proceeding) on overdue
principal, premium, if any, and interest (whether at
stated maturity, by notice of prepayment, by
acceleration or otherwise) at the rate equal to 2%
per annum in excess of the rate of interest
otherwise payable under this Supplemental Indenture,
in each case, to the extent lawful. Interest shall
be computed on the basis of a 360-day year and
twelve 30-day months. In computing interest on the
Series E Notes, the date of the making of the Series
E Notes shall be included and the date of payment
shall be excluded.
(viii) For purposes of Section 2.10 of the Indenture,
Series E Notes owned by any Affiliate of the Company
shall be considered as though not outstanding except
that for purposes of determining whether the Trustee
shall be protected in relying on any direction,
waiver or contract, only Notes that a Trustee knows
are so owned shall be so considered.
(ix) Payment of principal, premium, if any, and interest
on the Series E Notes will be made in lawful money
of the United States of America as at the time of
payment is legal tender for the payment of private
and public debt. Payment of principal of and
premium, if any, on the Series E Notes will be made
upon surrender thereof at the office or agency of
the Company maintained for that purpose in the City
and State of New York, and principal and interest
may be paid by check mailed to the address of the
Holder as such address appears in the records of the
Registrar as of the applicable record date or upon
written request made prior to the applicable record
date by a Holder in an aggregate principal amount in
excess of $ , payments in respect of such
----------
Series E Notes shall be made by wire transfer;
provided, that in the case of redemption or
repurchase the Company may designate such other
offices or agencies at which Series E Notes subject
to such redemption or repurchase may be surrendered
for payment.
(c) The Series E Notes shall be substantially in the form of
Exhibit A which Exhibit shall be a part of this
Supplemental Indenture.
(d) The Series E Notes may not be transferred, except to an
Institutional Holder, on or prior to December 31, 2000.
Upon the transfer of any Series E Note to any Person that
is not an
10
Institutional Holder, the conversion privilege of
such Series E Note shall terminate.
(e) For all purposes of any provision of the Indenture or this
Supplemental Indenture that contemplates action to be taken
by the Holders of Notes of any Series (including without
limitation any action or consent referred to in Article 6
or Article 9 of the Indenture), the Series E Notes and the
Series D Notes taken together shall be treated as a single
Series.
SECTION 2.2 Execution and Authentication.
(a) The Series E Notes shall be executed and authenticated
pursuant to Section 2.03 of the Indenture.
SECTION 2.3 Conversion Privilege.
The initial Holder or a permitted transferee of such Holder that is an
Institutional Holder may convert the Series E Notes held by it into units
("Units") comprised of shares of Class A Common Stock and Series C Preferred
Stock as follows. The Series E Notes may not be converted on or before October
31, 1999 and may not be converted after the occurrence of an Expiration Event.
On any day that is both (x) after October 31, 1999 and (y) before the occurrence
of an Expiration Event, an Institutional Holder may convert the Series E Notes
then held by it, in an amount equal to all (or any part of the principal thereof
that is an integral multiple of $100,000) of the Series E Notes owned by such
Holder, into a number of fully paid and non-assessable shares of Class A Common
Stock and Series C Preferred Stock determined as set forth below. The conversion
privilege shall terminate permanently (a) as to all Series E Notes upon the
occurrence of an Expiration Event and (b) as to a particular Series E Note upon
any transfer of such Note to any Person that is not an Institutional Holder.
(a) Number of Shares of Class A Common Stock and Series C
Preferred Stock Issuable Upon Conversion. Each Unit shall
consist of 1 share of Class A Common Stock and 1 share of
Series C Preferred Stock. The number of Units to be issued
upon any conversion of Series E Notes shall be equal to (i)
the principal amount of Series E Notes to be converted,
divided by (ii) $1,200.
(b) Fractional Shares. No fractional shares of Class A
Common Stock or Series C Preferred Stock shall be issued
upon conversion of Series E Notes. In lieu of any
fractional share to which the Holder would otherwise be
entitled after determination of the aggregate full number
of shares of Class A Common Stock and Series C Preferred
Stock issuable in respect of the principal amount of Series
E Notes then being converted, the Company shall pay cash
equal to such fraction multiplied by the Liquidation
Preference of the shares of Class A Common Stock or Series
C Preferred Stock,
11
as the case may be, to which the Holder
would otherwise be entitled.
(c) Mechanics of Conversion. In order for a Holder of Series
E Notes to convert such Series E Notes into Units, such
Holder of Series E Notes shall surrender his or its Note(s)
in the aggregate principal amount to be converted to the
Company at the office of the [Trustee], together with
written notice that such Holder elects to convert the
aggregate principal amount of Series E Notes specified in
such notice. The date of receipt of such Note(s) and notice
by the Company at such office shall be the "Conversion
Date". If required by the Company, Series E Notes
surrendered for conversion shall be endorsed or accompanied
by a written instrument or instruments of transfer, in form
satisfactory to the Company, duly executed by the Holder or
his or its attorney duly authorized in writing. As soon as
practicable after the Conversion Date and the surrender of
the Series E Notes(s), the Company shall issue and deliver
to such Holder, at its address as it appears on the books
of the Registrar, one or more certificates for the number
of shares of Class A Common Stock and Series C Preferred
Stock, respectively, issuable upon such conversion in
accordance with the provisions hereof.
(d) Reservation of Shares. The Company shall, at all times
when the Series E Notes shall be outstanding, reserve and
keep available out of its authorized but unissued stock,
for the purpose of effecting the conversion of the Series E
Notes, such number of its duly authorized shares of Class A
Common Stock and Series C Preferred Stock as shall from
time to time be sufficient to effect the conversion of all
outstanding Series E Notes. Before taking any action which
would cause Class A Common Stock or Series C Preferred
Stock, upon the conversion of Series E Notes, to be issued
below the then par value of the shares of Class A Common
Stock or Series C Preferred Stock, as the case may be, the
Company will take any corporate action that may, in the
opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and non-
assessable shares of Class A Common Stock and Series C
Preferred Stock to the Holders of Series E Notes.
(e) Interest. Accrued and unpaid interest on the Series E
Notes shall be convertible in the same manner as principal.
(f) Termination of Rights. All Series E Notes that shall be
subject to conversion as herein provided, and which have
not been surrendered prior to the Conversion Date, shall no
longer be
12
deemed to be outstanding and all rights with
respect to such Series E Notes, including the rights, if
any, to receive notices, shall immediately cease and
terminate on the Conversion Date, except only the right of
the Holders thereof to receive payment of any accrued and
unpaid interest thereon. On and as of the Conversion Date,
the shares of Class A Common Stock and Series C Preferred
Stock issuable upon such conversion shall be deemed to be
outstanding, and the holder thereof shall be entitled to
exercise and enjoy all rights with respect to such shares
of Class A Common Stock and Series C Preferred Stock,
including the rights, if any, to receive notices and to
vote.
(g) No Conversion Charge or Tax. The issuance and delivery of
certificates for shares of Class A Common Stock and Series
C Preferred Stock upon the conversion of Series E Notes
shall be made without charge to the Holder of Series E
Notes for any issue or transfer tax, or other incidental
expense in respect of the issuance or delivery of such
certificates or the securities represented thereby, all of
which taxes and expenses shall be paid by the Company.
(h) Reorganization, Reclassification and Merger Adjustment.
If there occurs any capital reorganization or any
reclassification of Class A Common Stock or Series C
Preferred Stock, the consolidation or merger of the Company
with or into another Person (other than a consolidation or
merger of the Company in which the Company is the
continuing corporation and that does not result in any
reclassification or change of outstanding shares of its
Class A Common Stock) or the sale or conveyance of all or
substantially all of the assets of the Company to another
Person, then each Series E Note shall thereafter be
convertible into the same kind and amounts of securities
(including shares of stock) or other assets, or both, that
were issuable or distributable to the holders of
outstanding Class A Common Stock or Series C Preferred
Stock, as the case may be, upon such reorganization,
reclassification, consolidation, merger, sale or
conveyance, in respect of that number of shares of Class A
Common Stock or Series C Preferred Stock, as the case may
be, into which such principal amount of Series E Notes
might have been converted immediately prior to such
reorganization, reclassification, consolidation, merger,
sale or conveyance; and, in any such case, appropriate
adjustments (as determined in good faith by the Board of
Directors of the Company), whose determination shall be
conclusive) shall be made to assure that the provisions set
forth herein shall thereafter be applicable, as nearly as
reasonably may be practicable, in
13
relation to any securities or other assets thereafter
deliverable upon the conversion of the Series E Notes.
(i) Notice of Adjustment. Whenever the securities or other
property deliverable upon the conversion of the Series E
Notes shall be adjusted pursuant to the provisions hereof,
the Company shall promptly give written notice thereof to
each Holder of Series E Notes at such Holder's address as
it appears on the transfer books of the Registrar and shall
forthwith file, at its principal executive office and with
the Trustee, a certificate, signed by the Chairman of the
Board, President or one of the Vice Presidents of the
Company, and by its Chief Financial Officer, Treasurer or
one of its Assistant Treasurers, stating the securities or
other property deliverable per $100,000 in principal amount
of Series E Notes calculated to the nearest cent or to the
nearest one-hundredth of a share and setting forth in
reasonable detail the method of calculation and the facts
requiring such adjustment and upon which such calculation
is based. Each adjustment shall remain in effect until a
subsequent adjustment hereunder is required.
(j) Notice of Certain Events. In case the Company shall
propose at any time or from time to time (i) to declare or
pay any dividend payable in stock of any class to the
holders of Common Stock, Class A Common Stock or Series C
Preferred Stock or to make any other distribution to the
holders of Common Stock, Class A Common Stock or Series C
Preferred Stock, (ii) to offer to the holders of Common
Stock, Class A Common Stock or Series C Preferred Stock
rights or warrants to subscribe for or to purchase any
additional shares of Common Stock or shares of stock of any
class or any other securities, rights or options, (iii) to
effect any reclassification of its Common Stock, Class A
Common Stock or Series C Preferred Stock, (iv) to effect
any consolidation, merger or sale, transfer or other
disposition of all or substantially all of the property,
assets or business of the Company which would, if
consummated, adjust the conversion ratio specified in
paragraph (a) above or the securities issuable upon
conversion of Series E Notes, or (v) to effect the
liquidation, dissolution or winding up of the Company,
then, in each such case, the Company shall mail to each
Holder, at such Holder's address as it appears on the
transfer books of the Registrar, a written notice of such
proposed action, which shall specify (A) the date on which
a record is to be taken for the purpose of such dividend or
distribution of rights or warrants or, if a record is not
to be taken, the date as of which the holders of shares of
Common Stock, Class A Common Stock or Series C Preferred
Stock, as the case may be, of record to be entitled to such
dividend or distribution of rights or warrants are to
14
be determined, or (B) the date on which such
reclassification, consolidation, merger, sale, conveyance,
dissolution, liquidation or winding up is expected to
become effective, and such notice shall be so given as
promptly as possible but in any event at least ten Business
Days prior to the applicable record, determination or
effective date, specified in such notice.
ARTICLE III
PREPAYMENTS AND MANDATORY REDEMPTIONS
SECTION 3.1 Optional Prepayments.
The Company, at its option, upon notice as provided in Section 3.03 of
the Indenture, may redeem at any time, in whole or in part (in a minimum amount
of $10,000,000 and in integral multiples of $1,000,000 in excess thereof),
without premium, any or all of the Series E Notes.
SECTION 3.2 Mandatory Redemption of Series E Notes.
In the event that the Company receives the Net Debt Proceeds from a
Qualifying High Yield Offering, the Company shall first apply such proceeds to
redeem the Series E Notes and the Series D Notes held by Institutional Holders
and AT&T Holders, respectively, together with any accrued interest thereon. The
Company shall give prompt written notice of the receipt of any Net Debt Proceeds
(which notice shall in any event be within 10 days after such receipt) to any
Institutional Holder holding Series E Notes by facsimile transmission (and shall
confirm such notice by prompt telephonic advice to an investment officer of each
such Holder) or by registered mail. Such notice shall state that on a date
specified therein (which date shall not be less than 15 days after the date of
such notice) the Company, upon receipt of the outstanding Series E Notes, shall
redeem Series E Notes held by Institutional Holders in an aggregate principal
amount equal to the Net Debt Proceeds. Any notice from the Company to redeem any
of the Series E Notes pursuant to this Section 3.02 shall be accompanied by an
Officers' Certificate certifying that the conditions of this Section 3.02 have
been fulfilled and shall otherwise satisfy the requirements of Section 3.03 of
the Indenture. On the date specified in the Company's notice, the Company, upon
receipt of an outstanding Series E Note, shall redeem such portion of such
Series E Note together with accrued interest thereon and shall promptly mail to
the Holder of such Series E Note the redemption payment therefor and a new
Series E Note in a principal amount equal to the excess of the principal amount
of the Series E Note submitted in connection with such redemption over the
principal amount of such Series E Note so redeemed.
15
ARTICLE IV
SUPPLEMENTARY COVENANTS
SECTION 4.1 Limitation on Transactions with Affiliates.
The Company will not, and will not cause or permit any Restricted
Subsidiary to, directly or indirectly, conduct any business or enter into, renew
or extend any transaction with any of their respective Affiliates or any
beneficial holder of 10% or more of any class of Capital Stock of the Company,
including, without limitation, the purchase, sale, lease or exchange of
property, the rendering of any service, or the making of any guarantee, loan,
advance or Investment, either directly or indirectly, unless the terms of such
transaction are at least as favorable as the terms that could be obtained at
such time by the Company or such Restricted Subsidiary, as the case may be, in a
comparable transaction made on an arms'-length basis with a Person that is not
such an Affiliate; provided, that (x) in any transaction involving aggregate
consideration in excess of $10.0 million, the Company shall deliver an Officers'
Certificate to the Trustee stating that the Board of Directors have determined,
in their good faith judgment, that the terms of such transaction are at least as
favorable as the terms that could be obtained by the Company or such Restricted
Subsidiary, as the case may be, in a comparable transaction made on an arms'-
length basis between unaffiliated parties and (y) if the aggregate consideration
is in excess of $25.0 million, the Company shall also deliver to the Trustee,
prior to the consummation of the transaction, the favorable written opinion of a
nationally recognized accounting, appraisal or investment banking firm as to the
fairness of the transaction to Holders, from a financial point of view (it being
understood that no such opinion shall be required in connection with (1) the
Puerto Rico Transaction or (2) any acquisition of PCS Licenses from AT&T PCS or
a Person associated with or introduced by AT&T PCS, which transaction has been
approved by a majority of the Company's Directors other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇ or Directors appointed by AT&T PCS and which relates to PCS
Licenses for BTAs or MTA's included within the Territory (as each such term is
defined in the Stockholders' Agreement dated as of July 17, 1998, as amended,
among AT&T PCS, the Company and the other parties thereto)).
Notwithstanding the foregoing, the restrictions set forth in this Section
4.01 shall not apply to (i) transactions between or among the Company and/or any
Restricted Subsidiaries, (ii) any Restricted Payment or Permitted Investments
permitted by Section 4.03, (iii) directors' fees, indemnification and similar
arrangements, officers' indemnification, employee stock option plans, restricted
stock plans or employee benefit plans and employee salaries and bonuses paid or
created in the ordinary course of business, (iv) any other agreement in effect
on the Issue Date, as the same shall be amended from time to time; provided that
any material amendment shall be required to comply with the provisions of the
preceding paragraph of this Section 4.01, (v) transactions with AT&T or any of
its Affiliates relating to marketing of telecommunications services, providing
any voice and voice related mobile wireless radio telephone services and using
certain intellectual property of AT&T on terms that are no less favorable (when
taken as a whole) to the Company or such Restricted Subsidiary, as applicable,
than those available from unaffiliated third parties, (vi) transactions
involving the leasing or sharing or other use by the Company or any Restricted
Subsidiary of communications network facilities (including, without limitation,
cable or fiber lines, equipment or transmission capacity) of any Affiliate of
the Company or any beneficial holder of 10% or more of any class of Capital
Stock of the Company (such Affiliate or holder being a "Related Party") on terms
that are no less favorable (when taken
16
as a whole) to the Company or such Restricted Subsidiary, as applicable, than
those available from such Related Party to unaffiliated third parties, (vii)
transactions involving the provision of personal communications services by a
Related Party in the ordinary course of its business to the Company or any
Restricted Subsidiary, or by the Company or any Restricted Subsidiary to a
Related Party, on terms that are no less favorable (when taken as a whole) to
the Company or such Restricted Subsidiary, as applicable, than those available
from such Related Party to unaffiliated third parties, (viii) any sales agency
agreements pursuant to which an Affiliate has the right to market any or all the
products or services of the Company or any Restricted Subsidiary, and (ix)
customary commercial banking, investment banking, underwriting, placement agent
or financial advisory fees paid in connection with services rendered to the
Company and its Subsidiaries in the ordinary course.
SECTION 4.2 Limitation on Incurrence of Indebtedness.
The Company shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly, incur any Indebtedness (including
Acquired Indebtedness), except:
(i) Indebtedness of the Company, if immediately after giving
effect to the incurrence of such Indebtedness and the
receipt and application of the net proceeds thereof
(including, without limitation, the application or use of
the net proceeds therefrom to repay Indebtedness, to
consummate an Asset Acquisition or to make any Restricted
Payment), (a) in the case of any incurrence of Indebtedness
on or after September 30, 2002 only, the ratio of (x) Total
Consolidated Indebtedness to (y) Annualized Pro Forma
Consolidated Operating Cash Flow would be less than (i)
30.0 to 1.0, if the Indebtedness is to be incurred on or
after September 30, 2002 and prior to December 31, 2002, or
(ii) 24.0 to 1.0, if the Indebtedness is to be incurred on
or after December 31, 2002 and prior to December 31, 2003,
or (iii) 10.25.0 to 1.0, if the Indebtedness is to be
incurred on or after December 31, 2003 and prior to
December 31, 2004, or (iv) 5.5 to 1.0, if the Indebtedness
is to be incurred on or after December 31, 2004, or (b) in
the case of any incurrence of Indebtedness prior to March
31, 2005 only, Total Consolidated Indebtedness would be
equal to or less than 75% of Total Invested Capital ;
(ii) Indebtedness of the Company and the Restricted
Subsidiaries incurred under one or more Senior Credit
Facilities in an aggregate amount at any one time
outstanding not to exceed $600 million in the aggregate for
all such Senior Credit Facilities;
17
(iii) Indebtedness of the Company and its Restricted
Subsidiaries outstanding from time to time pursuant to any
Vendor Credit Arrangement;
(iv) Indebtedness owed by the Company to any Restricted
Subsidiary or Indebtedness owed by a Restricted Subsidiary
to the Company or another Restricted Subsidiary; provided,
that upon either (x) the transfer or other disposition by
such Restricted Subsidiary or the Company of any
Indebtedness so permitted under this clause (iv) to a
Person other than the Company or another Restricted
Subsidiary or (y) the issuance (other than directors'
qualifying shares), sale, transfer or other disposition of
shares of Capital Stock or other ownership interests
(including by consolidation or merger) of such Restricted
Subsidiary to a Person other than the Company or another
such Restricted Subsidiary, the exception provided by this
clause (iv) shall no longer be applicable to such
Indebtedness and such Indebtedness shall be deemed to have
been incurred at the time of any such issuance, sale,
transfer or other disposition, as the case may be;
(v) Indebtedness of the Company or any Restricted Subsidiary
under any Hedging Agreement to the extent entered into to
protect the Company or such Restricted Subsidiary from
fluctuations in interest rates on any other Indebtedness
permitted under the Indenture (including the Notes) and not
for speculative purposes;
(vi) Indebtedness incurred to refinance any Indebtedness
incurred under the prior clause (i) or (iii) above, the
Notes or the Guarantees; provided, that (x) such
Indebtedness does not exceed the principal amount (or
accreted value, if less) of the Indebtedness so refinanced
plus the amount of any premium required to be paid in
connection with such refinancing pursuant to the terms of
the Indebtedness being refinanced or the amount of any
premium reasonably determined by the issuer of such
Indebtedness as necessary to accomplish such refinancing by
means of a tender offer, exchange offer, or privately
negotiated repurchase, plus the expenses of such issuer
reasonably incurred in connection therewith and (y)(1) in
the case of any refinancing of Indebtedness that is pari
passu with the Series E Notes, such refinancing
Indebtedness is made pari passu with or subordinate in
right of payment to the Series E Notes, and, in the case of
any refinancing of Indebtedness that is
18
subordinate in right of payment to the Notes, such
refinancing Indebtedness is subordinate in right of payment
to the Notes on terms no less favorable to the Holders than
those contained in the Indebtedness being refinanced, (2)
in either case, the refinancing Indebtedness by its terms,
or by the terms of any agreement or instrument pursuant to
which such Indebtedness is issued, does not have an Average
Life that is less than the remaining Average Life of the
Indebtedness being refinanced and (3) any Indebtedness
incurred to refinance any Indebtedness is incurred by the
obligor on the Indebtedness being refinanced or by the
Company;
(vii) Capital Lease Obligations of the Company or any Restricted
Subsidiary with respect to the leasing by the Company or
any Restricted Subsidiary of tower sites and equipment that
is a fixture thereto; provided, that the aggregate
principal amount of Capital Lease Obligations at any time
outstanding shall not exceed the sum of (x) the aggregate
principal amount of Capital Lease Obligations then
outstanding under the Permitted Sale-Leaseback and (y) $25
million;
(viii) Indebtedness of the Company or any Restricted Subsidiary
consisting of a guarantee of Indebtedness of the Company or
a Restricted Subsidiary of the Company that was permitted
to be incurred by another provision of this Section 4.02;
(ix) FCC Debt in an aggregate principal amount not to exceed
$40 million at any time outstanding plus the FCC Debt
incurred in connection with the Mercury Acquisition and
the Wireless 2000 Acquisition;
(x) Indebtedness of the Company or any Restricted Subsidiary
in respect of statutory obligations, performance, surety
or appeal bonds or other obligations of a like nature
incurred in the ordinary course of business; and
(xi) Indebtedness of the Company not otherwise permitted to be
incurred pursuant to clauses (i) through (x) above which,
together with any other outstanding Indebtedness incurred
pursuant to this clause (xi), has an aggregate principal
amount not in excess of $75 million at any time
outstanding. Indebtedness of a person existing at the time
such person becomes a Restricted Subsidiary or which is
19
secured by a Lien on an asset acquired by the Company or a
Restricted Subsidiary (whether or not such Indebtedness is
assumed by the acquiring person) shall be deemed incurred
at the time the person becomes a Restricted Subsidiary or
at the time of the asset acquisition, as the case may be.
For purposes of determining compliance with this Section 4.02, in the event that
an item of Indebtedness meets the criteria of more than one of the categories of
Indebtedness permitted pursuant to clauses (i) through (x) above, the Company
shall, in its sole discretion, be permitted to classify such item of
Indebtedness in any manner that complies with this Section 4.04 and may from
time to time reclassify such item of Indebtedness in any manner that would
comply with this Section 4.04 at the time of such reclassification. Accrual of
interest and the accretion of accreted value will not be deemed to be an
incurrence of Indebtedness for purposes of this Section 4.04.
SECTION 4.3 Limitation on Restricted Payments.
(a) The Company shall not, and shall not cause or permit any
Restricted Subsidiary to, directly or indirectly, on or
prior to , 2002.
------------
(i) declare or pay any dividend, or make any distribution
of any kind or character (whether in cash, property or
securities), in respect of any class of Capital Stock
of the Company excluding, any dividends or
distributions payable solely in shares of Qualified
Stock of the Company or in options, warrants or other
rights to acquire Qualified Stock of the Company,
(ii) purchase, redeem or otherwise acquire or retire for
value any shares of Capital Stock of the Company, any
options, warrants or rights to purchase or acquire such
shares or any securities convertible or exchangeable
into such shares (other than any such shares of Capital
Stock, options, warrants, rights or securities that are
owned by the Company or a Restricted Subsidiary),
(iii) make any Investment (other than Permitted Investments)
in any Person, other than the Company or a Restricted
Subsidiary, or
(iv) redeem, defease, repurchase, retire or otherwise
acquire or retire for value, prior to its scheduled
maturity, repayment or any sinking fund payment,
Subordinated Indebtedness (each of the transactions
described in clauses (i) through
20
(iv) (other than any exception to any such clause)
being a "Restricted Payment");
and at any time after , 2002, the Company will not, and will not
-----------
cause or permit any Restricted Subsidiary to, directly or indirectly, make a
Restricted Payment if, at the time thereof:
(1) a Default or an Event of Default shall have occurred and be
continuing at the time of or after giving effect to such
Restricted Payment,
(2) immediately after giving effect to such Restricted Payment,
the Company could not incur at least $1.00 of additional
Indebtedness pursuant to Section 4.02(i), and
(3) immediately after giving effect to such Restricted Payment,
the aggregate amount of all Restricted Payments declared or
made on or after the Issue Date (including any Designation
Amount) exceeds the sum (without duplication) of: (i) the
amount of (x) the Consolidated Cash Flow of the Company after
[ , 2002,] through the end of the latest full fiscal
-----------
quarter for which consolidated financial statements of the
Company are available preceding the date of such Restricted
Payment (treated as a single accounting period) less (y) 150%
of the cumulative Consolidated Interest Expense of the Company
after [ , 2002,] through the end of the latest full
-----------
fiscal quarter for which consolidated financial statements of
the Company are available preceding the date of such
Restricted Payment (treated as a single accounting period),
plus (ii) the aggregate net cash proceeds (other than Excluded
Cash Proceeds) received by the Company as a capital
contribution in respect of Qualified Stock or from the
proceeds of a sale of Qualified Stock made after the Issue
Date (excluding in each case (x) the proceeds from a sale of
Qualified Stock to a Restricted Subsidiary and (y) the
proceeds from a sale, other than from a Public Sale, of
Qualified Stock the proceeds of which are applied to
optionally redeem Notes on or prior to , ), plus
--------- ----
(iii) the aggregate net cash proceeds received by the Company
or any Restricted Subsidiary from the sale or disposition
(other than to the Company or a Restricted
21
Subsidiary) or repayment (other than by the Company or a
Restricted Subsidiary) of any Investment made after the Issue
Date and constituting a Restricted Payment in an amount equal
to the lesser of (x) the return of capital with respect to
such Investment and (y) the initial amount of such Investment,
in either case, less the cost of disposition of such
Investment, plus (iv) an amount equal to the consolidated net
Investment (including any support provided or liability
assumed by the Company or any Restricted Subsidiary pursuant
to the penultimate paragraph of Section 4.06 of the Indenture)
on the date of Revocation made by the Company and/or any of
the Restricted Subsidiaries in any Subsidiary that has been
designated as an Unrestricted Subsidiary after the Issue Date
upon its redesignation as a Restricted Subsidiary in
accordance with Section 4.06 of the Indenture. For purposes of
the preceding clause (ii), the value of the aggregate net cash
proceeds received by the Company from, or as a capital
contribution in connection with, the issuance of Qualified
Stock either upon the conversion of convertible Indebtedness
of the Company or any of its Restricted Subsidiaries or in
exchange for outstanding Indebtedness of the Company or any of
its Restricted Subsidiaries or upon the exercise of options,
warrants or rights will be the net cash proceeds received by
the Company or any of its Restricted Subsidiaries upon the
issuance of such Indebtedness, options, warrants or rights
plus the incremental amount received by the Company or any of
its Restricted Subsidiaries upon the conversions, exchange or
exercise thereof. For purposes of the preceding clause (iv),
the value of the consolidated net Investment on the date of
Revocation shall be equal to the Fair Value of the aggregate
amount of the Company's and/or any Restricted Subsidiary's
Investments in such Subsidiary on the applicable date of
Designation.
For purposes of determining the amount expended for Restricted Payments, cash
distributed shall be valued at the face amount thereof and property other than
cash shall be valued at its Fair Value on the date such Restricted Payment is
made by the Company or a Restricted Subsidiary, as the case may be.
22
(b) The foregoing provisions will not prohibit any of the
following:
(i) the payment of any dividend or distribution within
sixty (60) days after the date of declaration thereof,
if at such date of declaration such payment would
comply with the provisions of the Indenture and the
Supplemental Indenture;
(ii) so long as no Default or Event of Default shall have
occurred and be continuing, the purchase, redemption,
retirement or other acquisition of any Capital Stock of
the Company out of the net cash proceeds of the
substantially concurrent capital contribution to the
Company in connection with Qualified Stock or out of
the net cash proceeds received by the Company from the
substantially concurrent issue or sale (other than to a
Restricted Subsidiary) of Qualified Stock; provided
that (x) any such net cash proceeds shall be excluded
from Section 4.03(a)(3)(ii), (y) such proceeds do not
constitute Excluded Cash Proceeds and (z) such
proceeds, if from a sale other than a Public Sale are
not applied to optionally redeem Notes on or prior to
, 2002;
--------
(iii) so long as no Default or Event of Default shall have
occurred and be continuing, the purchase, redemption,
retirement, defeasance or other acquisition of
Subordinated Indebtedness of the Company made by
exchange for or conversion into, or out of the net cash
proceeds received by the Company, or out of a capital
contribution to the Company in connection with a
concurrent issue and sale (other than to a Restricted
Subsidiary) of (a) Qualified Stock (provided that (x)
any such net cash proceeds are excluded from Section
4.03(a)(3)(ii), (y) such proceeds do not constitute
Excluded Cash Proceeds and (z) such proceeds, if from a
sale other than a Public Sale, are not applied to
optionally redeem Notes on or prior to , 2002) or
-----
(b) other Subordinated Indebtedness of the Company that
has an Average Life equal to or greater than the
Average Life of the Subordinated Indebtedness being
purchased, redeemed, retired, defeased or otherwise
acquired;
(iv) so long as no Default or Event of Default shall have
occurred and be continuing, the making of a direct or
indirect Investment constituting a Restricted Payment
in an amount not to exceed the amount of the proceeds
of a
23
concurrent capital contribution in respect of
Qualified Stock or from the issue or sale (other than
to a Restricted Subsidiary) of Qualified Stock of the
Company; provided that (x) any such net cash proceeds
are excluded from Section 4.03(a)(3)(ii) and (y) such
proceeds do not constitute Excluded Cash Proceeds and
(z) such proceeds, if from a sale other than a High
Yield Offering are not applied to optionally redeem
Notes on or prior to , 2002; or
------
(v) so long as no Default or Event of Default has occurred
and is continuing, dividends or distributions by the
Company to repurchase, redeem, acquire or retire for
value any Capital Stock of the Company, held by any
member of management of the Company or any of its
Subsidiaries pursuant to any management equity
subscription agreement, stock option agreement,
restricted stock option or other similar agreement;
provided that (x) the aggregate amount of such
dividends or distributions shall not exceed $5.0
million in any twelve-month period and (y) any unused
amount in any twelve-month period may be carried
forward to one or more future periods.
Restricted Payments made pursuant to clauses (i) and (v) of the immediately
preceding paragraph (b) shall be included in making the determination of
available amounts under Section 4.03(a)(3) and Restricted Payments made pursuant
to (ii), (iii) and (iv) of the immediately preceding paragraph (b) shall not be
included in making the determination of available amounts under Section
4.03(a)(3).
SECTION 4.4 Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, all material taxes, assessments and
governmental charges levied or imposed upon the Company or any of its
Subsidiaries or upon the income, profits or property of the Company or any of
its Subsidiaries; provided, that the Company shall not be required to pay or
discharge any claim whose amount, applicability or validity is being contested
in good faith by appropriate proceedings or where the failure to effect such
payment is not adverse in any material respect to the Holders.
SECTION 4.5 Notice of Defaults.
Within five (5) days after becoming aware of any Default, if such
Default is then continuing, the Company shall promptly deliver an Officers'
Certificate to the Trustee specifying the details of such Default and the action
which the Company proposes to take with respect thereto.
24
SECTION 4.6 Maintenance of Properties.
The Company shall cause all material properties owned by or leased to
it or any of its Subsidiaries and used or useful in the conduct of its business
or the business of any of its Subsidiaries to be maintained and kept in normal
condition, repair and working order and supplied with all necessary equipment
and shall cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may
be necessary, so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, that nothing in
this Section 4.06 shall prevent the Company or any of its Subsidiaries from
discontinuing the use, operation or maintenance of any of such properties, or
disposing of any of them, if such discontinuance or disposal is, in the judgment
of the Board of Directors or of the board of directors of the Subsidiary
concerned, or of an officer (or other agent employed by the Company or of any of
its Subsidiaries) of the Company or such Subsidiary having managerial
responsibility for any such property, desirable in the conduct of the business
of the Company or any of its Subsidiaries, and if such discontinuance or
disposal is not adverse in any material respect to the Holders.
SECTION 4.7 Compliance Certificate.
The Company shall deliver to the Trustee within 45 days after the end
of each of the first three fiscal quarters of the Company and within 90 days
after the close of each fiscal year a certificate signed by the principal
executive officer, principal financial officer or principal accounting officer
stating that a review of the activities of the Company has been made under the
supervision of the signing officers with a view to determining whether a Default
or Event of Default has occurred and whether or not the signers know of any
Default by the Company that occurred during such fiscal quarter or fiscal year.
If they do know of such a Default, the certificate shall describe all such
Defaults, their status and the action the Company is taking or proposes to take
with respect thereto. The first certificate to be delivered by the Company
pursuant to this Section 4.07 shall be for the fiscal quarter ending
, 1999.
------------
SECTION 4.8 Provision of Financial Information.
Whether or not required by the rules and regulations of the SEC, so
long as any Series E Notes are outstanding, the Company will furnish to the
Holders of Series E Notes (i) all quarterly and annual financial information
that would be required to be contained in a filing with the SEC on Forms 10-Q
and 10-K if the Company were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" that describes the financial condition and results of operations of
the Company and its consolidated Subsidiaries and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants, and (ii) all current reports that would be required to be filed
with the SEC on Form 8-K if the Company were required to file such reports, in
each case within the time period specified in the SEC's rules and regulations;
provided that no such information or reports shall be required prior to the
earlier to occur of (x) September 30, 2000 and (y) completion by the Company of
a High Yield Offering, and provided further that until such information and
reports are required to be furnished, the Company shall provide the Holders of
the Series E Notes with the same information and reports (at the same times and
with the same
25
frequency) as the Company provides such information and reports to
the Administrative Agent and the group of banks, under the Senior Credit
Facility.
SECTION 4.9 Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that
it shall 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 and/or interest on the Series E Notes as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of the Indenture and this
Supplemental 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 shall not hinder, delay or impede the execution of any power
herein granted to the Trustee, but shall suffer and permit the execution of
every such power as though no such law had been enacted.
SECTION 4.10 Limitation on Layered Debt.
The Company will not (i) directly or indirectly, incur any Indebtedness
that by its terms would expressly rank senior in right of payment to the Notes
and rank subordinate in right of payment to any other Indebtedness of the
Company and (ii) cause or permit any Series E Guarantor to, and no Series E
Guarantor will, directly or indirectly, incur any Indebtedness that by its terms
would expressly rank senior in right of payment to the Series E Guarantee of
such Series E Guarantor and rank subordinate in right of payment to any other
Indebtedness of such Series E Guarantor; provided, that no Indebtedness shall be
deemed to be subordinated solely by virtue of being unsecured. The Company will
not issue any Indebtedness (other than in a High Yield Offering) which by its
terms provides for, or the holders of which would have the right to demand or
participate in, any registration of such Indebtedness or exchange of such
Indebtedness for any other Indebtedness of the Company that is registered under
the Securities Act unless the Company shall have provided equivalent rights to
the Holders.
SECTION 4.11 Limitation on Restrictions Affecting Restricted
Subsidiaries.
The Company shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or suffer to
exist any consensual encumbrance or restriction of any kind on the ability of
any Restricted Subsidiary to (i) pay, directly or indirectly, dividends, in cash
or otherwise, or make any other distributions in respect of its Capital Stock or
pay any Indebtedness or other obligation owed to the Company or any other
Restricted Subsidiary, (ii) make any Investment in the Company or any other
Restricted Subsidiary or (iii) transfer any of its property or assets to the
Company or any other Restricted Subsidiary, except for such encumbrances or
restrictions existing under or by reason of (a) any agreement in effect on the
Issue Date as any such agreement is in effect on such date, (b) any Senior
Credit Facilities, (c) any agreement relating to any Indebtedness incurred by
such Restricted Subsidiary prior to the date on which such Restricted Subsidiary
was acquired by the Company and outstanding on such date and not incurred in
anticipation or contemplation of becoming a Restricted Subsidiary; provided,
that such encumbrance or restriction shall not apply
26
to any property or assets of the Company or any Restricted Subsidiary other than
such Restricted Subsidiary, (d) customary provisions contained in an agreement
which has been entered into for the sale or disposition of all or substantially
all the Capital Stock or assets of a Restricted Subsidiary; provided, that such
encumbrance or restriction is applicable only to such Restricted Subsidiary or
its property and assets, (e) any agreement effecting a refinancing or amendment
of Indebtedness incurred pursuant to any agreement referred to in clause (a)
above; provided, that the provisions contained in such refinancing or amendment
agreement relating to such encumbrance or restriction are no more restrictive in
any material respect than the provisions contained in the agreement that is the
subject thereof in the reasonable judgment of the Board of Directors of the
Company, (f) the Indenture, (g) applicable law or any applicable rule,
regulation or order, (h) customary provisions restricting subletting or
assignment of any lease governing any leasehold interest of any Restricted
Subsidiary, (i) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the type referred to in clause
(iii) of this Section 4.11; (j) restrictions of the type referred to in clause
(iii) of this Section 4.11 contained in security agreements securing
Indebtedness of a Restricted Subsidiary to the extent that such Liens were
otherwise incurred in accordance with Section 4.12 and restrict the transfer of
property subject to such agreements; or (k) customary provisions in joint
venture agreements and other similar agreements entered into in the ordinary
course of business.
SECTION 4.12 Limitation on Liens.
The Company shall not, and shall not cause or permit any Restricted
Subsidiary to directly or indirectly, create, cause, incur or suffer to exist
any Lien on or with respect to any Capital Stock or any property or assets of
the Company or such Restricted Subsidiary owned on the Issue Date or thereafter
created or acquired to secure any Indebtedness, without making, or causing such
Restricted Subsidiary to make, effective provision for securing the Series E
Notes and all other amounts due under the Indenture equally and ratably with
such Indebtedness or, in the event such Indebtedness is Subordinated
Indebtedness, prior to such Indebtedness, as to such property or assets for so
long as such Indebtedness shall be so secured.
The foregoing restrictions shall not apply to (i) Liens existing on
the Issue Date securing Indebtedness existing on the Issue Date; (ii) Liens
securing Senior Debt (including Liens securing Indebtedness under any Senior
Credit Facilities) and any guarantees thereof to the extent that the
Indebtedness secured thereby is permitted to be incurred under Section 4.02;
(iii) Liens securing only the Series E Notes and the Guarantees, if any; (iv)
Liens in favor of the Company or any Guarantor; (v) Liens to secure Indebtedness
incurred in connection with Vendor Credit Agreements; (vi) Liens on property
existing immediately prior to the time of acquisition thereof (and not created
in connection with or in anticipation or contemplation of the financing of such
acquisition); (vii) Liens on property of a Person existing at the time such
Person is acquired or merged with or into or consolidated with the Company or
any such Restricted Subsidiary (and not created in connection with or in
anticipation or contemplation thereof); (viii) Liens to secure the performance
of statutory obligations, surety or appeal bonds or bid or performance bonds, or
landlords', carriers', warehousemen's, mechanics', suppliers', materialmen's or
other similar Liens, in any case incurred in the ordinary course of business and
with respect to amounts not yet delinquent or being contested in good faith by
appropriate
27
process of law, if a reserve or other appropriate provision, if any, as is
required by GAAP shall have been made therefor; (ix) Liens for taxes,
assessments or governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded; provided that any reserve or other
appropriate provision that shall be required in conformity with GAAP shall have
been made therefor; (x) restrictions on the transfer of assets contained in any
FCC License or any other telecommunications license or imposed by the
Communications Act or comparable state legislation enacted after the date
hereof; (xi) Liens in favor of the FCC or the United States Treasury to secure
FCC Debt permitted under Section 4.02(ix); provided such Liens are limited to
the FCC Licenses subject to such Debt; (xii) liens to secure Indebtedness
incurred to refinance, in whole or in part, any Indebtedness secured by Liens
referred to in the foregoing clauses (i)-(xi) so long as such Liens do not
extend to any additional category of property and the principal amount of
Indebtedness so secured is not increased except for the amount of any premium
required to be paid in connection with such refinancing pursuant to the terms of
the Indebtedness refinanced or the amount of any premium reasonably determined
by the Company as necessary to accomplish such refinancing by means of a tender
offer, exchange offer or privately negotiated repurchase, plus the expenses of
the issuer of such Indebtedness reasonably incurred in connection with such
refinancing; and (xiii) Liens in favor of the Trustee as provided for in the
Indenture on money or property held or collected by the Trustee in its capacity
as Trustee.
SECTION 4.13 Subsidiary Guarantees.
The Company shall not permit any Subsidiary (other than any Special
Purpose Subsidiary, as defined in the Credit Facility) to become a direct or
indirect obligor under, or in respect of, any Senior Credit Facilities without
causing such Subsidiary to become a Guarantor. Any such Subsidiary shall (a)
execute and deliver a supplemental indenture in form and substance reasonably
satisfactory to the Trustee and in compliance with the requirements, if any, of
the Senior Credit Facility pursuant to which such Subsidiary shall
unconditionally guarantee all the Company's obligations under the Series E Notes
and the Indenture and (b) deliver to the Trustee an Opinion of Counsel that such
supplemental indenture has been duly authorized, executed and delivered by such
Subsidiary and constitutes a valid and legally binding and enforceable
obligation of such Subsidiary (subject, in the case of enforceability, to
customary bankruptcy, insolvency, fraudulent conveyance, general principles of
equity and similar exceptions).
The Company may, at its option, cause any of its Subsidiaries to be a
Guarantor.
SECTION 4.14 Limitation on Activities of the Company and the Restricted
Subsidiaries.
The Company shall not, and shall not permit any Restricted Subsidiary
to, engage in any business other than a Permitted Business, except to such
extent as is not material to the Company and its Restricted Subsidiaries, taken
as a whole.
SECTION 4.15 Amendments to Agreements.
28
The Company shall not amend, modify or waive, or refrain from
enforcing, any provision of (i) the Securities Purchase Agreement in any manner
that would materially alter the obligations of the Cash Equity Investors or the
Management Stockholders (as each such term is defined in the Securities Purchase
Agreement) thereunder to provide additional equity capital to the Company until
such time as the Company has received subsequent to the Issue Date, net cash
proceeds from capital contributions, or sales, in respect of Qualified Stock of
the Company equal to at least [$72,499,990]; (ii) the Puerto Rico Stock Purchase
Agreement in any manner that would materially alter the obligations of the
investors thereunder to provide at least $39.996 million of additional equity
for the development of the San ▇▇▇▇ MTA within [3 years] after the closing of
such transaction; (iii) the Asset Purchase Agreement in any manner that would
adversely affect the rights of the Company thereunder in any material respect;
and (iv) the Related Agreements and the Related Agreement Amendments (each as
defined in the Asset Purchase Agreement) in any manner that would affect the
rights of the Company thereunder in any material respect. whole.
SECTION 4.16 Limitation on Pari Passu Debt.
The Company shall not incur any Indebtedness, other than the Series D
Notes, that ranks pari passu with the Series E Notes.
SECTION 4.17 Limitation on Optional Redemptions of Series C Notes.
The Company shall not optionally prepay or optionally redeem any
amount of Series C Notes until the Series E Notes shall have been redeemed in
full, it being understood that this limitation shall not apply to any mandatory
redemption or prepayment of the Series C Notes.
ARTICLE V
EVENTS OF DEFAULT
[Reserved.]
ARTICLE VI
SUBORDINATION
SECTION 6.1 Series E Notes Subordinate to Senior Debt.
The Company covenants and agrees, and the Trustee and each Holder of a
Series E Note, by its acceptance thereof, likewise covenants and agrees, that,
to the extent and in the manner hereinafter set forth in this Article 6, the
payment of the principal of, premium, if any, and interest on each and all the
Series E Notes and the repurchase, redemption or other retirement of the Series
E Notes is hereby expressly made subordinate and subject in right of
29
payment to the prior payment in full in cash or cash equivalents or, as
acceptable to the holders of Senior Debt, in any other manner, of all Senior
Debt in the manner set forth in this Article 6. The terms of this Article 6 are
for the benefit of, and shall be enforceable directly by, each holder of Senior
Debt, and each holder of Senior Debt whether now outstanding or hereafter
created, incurred, assumed or guaranteed shall be deemed to have acquired such
Senior Debt in reliance upon the covenants and provisions contained herein.
SECTION 6.2 Payment of Proceeds Upon Dissolution, Etc.
Upon any payment or distribution of assets of the Company to creditors
upon any liquidation, dissolution, winding-up, reorganization, assignment for
the benefit of creditors, marshaling of assets or liabilities or any bankruptcy,
reorganization, receivership, insolvency or similar proceedings of the Company
or its property, whether voluntary or involuntary (each such event, if any,
herein sometimes referred to as a "Proceeding"):
(a) The holders of Senior Debt shall receive payment in full in
cash or cash equivalents or, as acceptable to the holders of
Senior Debt, in any other manner, of all amounts due on or to
become due on or in respect of all Senior Debt (including any
interest accruing thereon after the commencement of any such
Proceeding, whether or not allowed as a claim against the
Company in such Proceeding) or provision shall be made for
such payment in a manner acceptable to such holders before
the Trustee or the Holders of the Series E Notes are entitled
to receive any payment or distribution whether by setoff,
exercising contractual or statutory rights or otherwise and
whether in the form of cash, stock or property or otherwise
(excluding any payment or distribution described in the last
paragraph of Section 6.02(b)), on account of the principal
of, premium, if any, interest on or any other obligation
owing in respect of the Series E Notes or on account of any
purchase, redemption or other acquisition of Series E Notes
by the Company (all such payments, distributions, purchases,
redemptions and acquisitions, whether or not in connection
with a Proceeding (but excluding any payment or distribution
described in the last paragraph of Section 6.02(b)), being
herein referred to, individually and collectively, as a
"Securities Payment"); and
(b) Any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities,
by set-off or otherwise, to which the Trustee or the Holders
of the Series E Notes would be entitled but for the
provisions of this Article 6, shall be paid by the Company or
the liquidating trustee or agent or other Person making such
payment or distribution, whether a trustee in bankruptcy, a
receiver or liquidating trustee or otherwise, directly to the
holders of Senior Debt or their representatives or trustees
under any credit agreement, indenture or other agreement
30
under which any such Senior Debt may have been issued,
ratably according to the aggregate amounts remaining unpaid
on account of the Senior Debt held or represented by each, to
the extent necessary to make payment in full in cash or cash
equivalents or, as acceptable to the holders of Senior Debt,
in any other manner, of all Senior Debt remaining unpaid,
after giving effect to any concurrent payment or distribution
to the holders of such Senior Debt.
In the event that, notwithstanding the foregoing provisions of this
section, the Trustee or the Holder of any Series E Notes shall have received in
connection with any Proceeding any Securities Payment before all Senior Debt is
paid in full or payment thereof is provided for in cash or cash equivalents,
then and in such event such Securities Payment shall be held in trust for the
benefit of and paid over or delivered forthwith to the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee, agent or other Person making
payment or distribution of assets of the Company for application to the payment
of all Senior Debt remaining unpaid, to the extent necessary to make payment in
full in cash or cash equivalents or, as acceptable to the holders of the Senior
Debt, in any other manner, of all Senior Debt remaining unpaid after giving
effect to any concurrent payment to or for the holders of Senior Debt.
For purposes of this Article 6 only, the words "payment or
distribution" or "any payment or distribution of any kind or character, whether
in cash, property or securities" shall not be deemed to include a payment or
distribution of stock or securities of the Company provided for by a plan of
reorganization or readjustment authorized by an order or decree of a court of
competent jurisdiction in a reorganization proceeding under any applicable
bankruptcy law or of any other corporation provided for by such plan of
reorganization or readjustment, which stock or securities are subordinated in
right of payment to all then outstanding Senior Debt to substantially the same
extent, or to a greater extent than, the Series E Notes are so subordinated as
provided in this Article 6. The consolidation of the Company with, or the
merger of the Company into, another Person or the liquidation or dissolution of
the Company following the conveyance, transfer or lease of all or substantially
all of its properties and assets to another Person and so long as permitted
under the terms of the Senior Debt shall not be deemed a Proceeding for the
purposes of this section if the Person formed by such consolidation or into
which the Company is merged or the Person which acquires by conveyance, transfer
or lease such properties and assets, as the case may be, shall, as a part of
such consolidation, merger, conveyance, transfer or lease, comply with the
conditions set forth in Article 6.
(c) To the extent any payment of Senior Debt (whether by or on
behalf of the Company, as proceeds of security or enforcement
of any right of setoff or otherwise) is declared to be
fraudulent or preferential, set aside or required to be paid
to any receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar Person under any bankruptcy,
insolvency, receivership, fraudulent conveyance or similar
law, then if such payment is recovered by, or paid over to,
such receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar Person, the Senior Debt or part
31
thereof originally intended to be satisfied shall be deemed
to be reinstated and outstanding as if such payment had not
occurred.
SECTION 6.3 No Payment When Designated Senior Debt in Default.
In the event that any Senior Payment Default shall have occurred and
be continuing, then no Securities Payment whether by setoff, exercising
contractual or statutory rights or otherwise and whether in the form of cash,
stock or property or otherwise shall be made, unless and until such Senior
Payment Default shall have been cured or waived in writing or shall have ceased
to exist or all amounts then due and payable in respect of such Designated
Senior Debt (including, without limitation, amounts that have become and remain
due by acceleration) shall have been paid in full in cash. "Senior Payment
Default" means any default in the payment of the principal of, premium, if any,
or interest on any Designated Senior Debt when due, whether at the stated
maturity of any such payment or by declaration of acceleration, call for
redemption, notice of the exercise of an option to require such repayment,
mandatory payment or prepayment or otherwise.
In the event that any Senior Nonmonetary Default shall have occurred
and be continuing, then, upon the receipt by the Company of written notice of
such Senior Nonmonetary Default from the administrative agent under the Credit
Facility (the "Administrative Agent") to which such Senior Nonmonetary Default
relates or, if no loans or other amounts are then outstanding under the Credit
Facility or any renewal, extension or refunding thereof, and the Credit Facility
and any such renewal, extension or refunding have been terminated, upon receipt
of such notice by or on behalf of any other holder or holders of Designated
Senior Debt in an aggregate amount in excess of $25,000,000, no Securities
Payment shall be made whether by setoff, exercising contractual or statutory
rights or otherwise and whether in the form of cash, stock or property or
otherwise during the period (the "Payment Blockage Period") commencing on the
date of such receipt by the Company of such written notice and ending on the
earlier of (a) the date, if any, on which the Designated Senior Debt to which
such Senior Nonmonetary Default relates is discharged or such Senior Nonmonetary
Default shall have been cured or waived in writing or shall have ceased to exist
and any acceleration of Designated Senior Debt to which such Senior Nonmonetary
Default relates shall have been rescinded or annulled and (b) the 179th day
after the date of receipt of such written notice. No more than one Payment
Blockage Period may be commenced with respect to the Series E Notes during any
period of 360 consecutive days and there shall be a period of at least 181
consecutive days in each period of 360 consecutive days when no Payment Blockage
Period is in effect. Following the commencement of any Payment Blockage Period,
the holders of Designated Senior Debt shall be precluded from commencing a
subsequent Payment Blockage Period until the conditions set forth in the
preceding sentence shall have been satisfied. For all purposes of this
paragraph, no Senior Nonmonetary Default that existed and was continuing on the
date of commencement of any Payment Blockage Period with respect to the
Designated Senior Debt initiating such Payment Blockage Period shall be, or may
be made, the basis for the commencement of a subsequent Payment Blockage Period
by any holder of Designated Senior Debt or any representative or trustee under
any indenture under which any such Designated Senior Debt may have been issued
unless such Senior Nonmonetary Default shall have been cured for a period of not
less than 90 consecutive days. "Senior Nonmonetary Default" means any default
(other than
32
a Senior Payment Default), under the terms of any instrument or agreement
pursuant to which any Senior Debt is outstanding, permitting one or more holders
of such Designated Senior Debt or any representative or trustee under any
indenture under which any such Designated Senior Debt may have been issued to
declare such Designated Senior Debt due and payable prior to the date on which
it would otherwise become due and payable.
In the event that, notwithstanding the foregoing, the Company shall
make any Securities Payment to any holder prohibited by the foregoing provisions
of this Section 6.03, then in such event such Securities Payment shall be held
in trust and paid over and delivered forthwith to the representatives or trustee
under any indenture under which any such Designated Senior Debt may have been
issued ratably according to the aggregate amounts remaining unpaid on account of
the Designated Senior Debt held or represented by under the Designated Senior
Debt or, if there is no such representative or trustee with respect to such
Designated Senior Debt, to the holders of such Designated Senior Debt.
The provisions of this Section 6.03 shall not apply to any Securities
Payment with respect to which Section 6.02 hereof would be applicable.
SECTION 6.4 Acceleration of Series E Notes.
If an Event of Default shall have occurred and be continuing (other
than an Event of Default pursuant to paragraphs (ix) and (x) of Section 6.01 of
the Indenture), the Trustee shall give the holders of the Designated Senior Debt
not less than 30 days prior written notice before accelerating the Series E
Notes which notice shall state it is a "Notice of Intent to Accelerate". Upon
such declaration, the holders of Designated Senior Debt outstanding at the time
the Series E Notes so become due and payable shall be entitled to receive
payment in full in cash, cash equivalents or, as acceptable to the holders of
the Designated Senior Debt, in any other manner on all amounts due or to become
due on or in respect of such Designated Senior Debt, before the Company may
make, and before any Holder of the Series E Notes is entitled to receive, any
payment or distribution of assets of the Company of any kind or character,
whether in cash, securities or other property on account of any Series E Notes.
All payments in respect of the Subordinated Debt postponed under this Section
6.04 shall be immediately due and payable upon the termination of such
postponement; the remittance in full of such payments by the Company in
accordance with the terms of the this Supplemental Indenture and the acceptance
thereof by the Holders of the Series E Notes shall be deemed to constitute a
cure by the Company and a waiver by the Holders of the Series E Notes of any
Event of Default that existed immediately prior to such remittance and
acceptance to the extent that such Event of Default existed solely as a
consequence of the previous non-payment of such postponed payments during such
period of postponement.
SECTION 6.5 Payment Permitted If No Default.
Nothing contained in this Article 6 or elsewhere in this Supplemental
Indenture or in any of the Series E Notes shall prevent the Company, at any time
except during the pendency of any Proceeding referred to in Section 6.02 or
under the conditions described in Section 6.03, from making Securities Payments
in accordance with the terms of this Supplemental Indenture.
33
Nothing in this Article 6 shall have any effect on the right of the Trustee (on
behalf of the Holders) or the Holders to accelerate the maturity of the Series E
Notes upon the occurrence of an Event of Default, but, in that event, no payment
may be made in violation of the provisions of this Article 6 with respect to the
Series E Notes. If payment of the Series E Notes is accelerated because of an
Event of Default, the Company shall promptly notify the holders of the Senior
Debt (or their representatives) of such acceleration.
SECTION 6.6 Obligation of Company Unconditional.
Nothing contained in this Article 6 or elsewhere in this Supplemental
Indenture or in the Series E Notes is intended to or shall impair, as among the
Company and the Holders of the Series E Notes, the obligation of the Company,
which is absolute and unconditional, to pay to the Holders of the Series E Notes
the principal of, premium, if any, and interest on the Series E Notes 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 of the Series E
Notes and creditors of the Company other than the holders of the Senior Debt,
nor shall anything herein or therein prevent any Holder or the Trustee on their
behalf from exercising all remedies otherwise permitted by applicable law upon
default under this Supplemental Indenture, subject to the rights, if any, under
this Article 6 of the holders of the Senior Debt in respect of cash, property or
securities of the Company received upon the exercise of any such remedy.
Without limiting the generality of the foregoing, nothing contained in
this Article 6 shall restrict the right of the Trustee or the Holders of the
Series E Notes to take any action to declare the Series E Notes to be due and
payable prior to their stated maturity pursuant to Section 5.01 or to pursue any
rights or remedies hereunder; provided, however, that all Senior Debt then due
and payable shall first be paid in full before the Holders or the Trustee are
entitled to receive any direct or indirect payment from the Company of principal
of or interest on the Series E Notes.
SECTION 6.7 Subrogation To Rights of Holders of Senior Debt.
Subject to the payment in full in cash or cash equivalents, or as
acceptable to the holders of Senior Debt, in any other manner, of all Senior
Debt, the Trustee and the Holders of the Series E Notes shall be subrogated to
the rights of the holders of such Senior Debt to receive payments and
distributions of cash, property and securities applicable to the Senior Debt
until the principal of, premium, if any, and interest on the Series E Notes
shall be paid in full. For purposes of such subrogation, no payments or
distributions to the holders of the Senior Debt of any cash, property or
securities to which the Trustee and the Holders of the Series E Notes would be
entitled except for the provisions of this Article 6, and no payments pursuant
to the provisions of this Article 6 to the holders of Senior Debt by Holders of
the Series E Notes, shall, as among the Company, its creditors other than
holders of Senior Debt and the Holders of the Series E Notes, be deemed to be a
payment or distribution by the Company to or on account of the Senior Debt.
SECTION 6.8 Provisions Solely To Define Relative Rights.
34
The provisions of this Article 6 are and are intended solely for the
purpose of defining the relative rights of the Trustee and the Holders of the
Series E Notes on the one hand and the holders of Senior Debt on the other hand.
Nothing contained in this Article 6 or elsewhere in this Supplemental Indenture
or in the Series E Notes is intended to or shall (a) impair, as among the
Company, its creditors other than holders of Senior Debt and the Trustee and the
Holders of the Series E Notes, the obligation of the Company, which is absolute
and unconditional (and which, subject to the rights under this Article 6 of the
holders of Senior Debt, is intended to rank equally with all other general
obligations of the Company), to pay to the Trustee for the Holders of the Series
E Notes the principal of, premium, if any, and interest on the Series E Notes as
and when the same shall become due and payable in accordance with their terms;
or (b) affect the relative rights against the Company of the Trustee, the
Holders of the Series E Notes and creditors of the Company other than the
holders of Senior Debt; or (c) prevent the Trustee or any Holder of any Series E
Note from exercising all remedies otherwise permitted by applicable law upon
default under this Supplemental Indenture, subject to this Article 6, including
the rights, if any, under this Article 6 of the holders of Senior Debt to
receive cash, property and securities otherwise payable or deliverable to such
holder or, under the conditions specified in Section 6.03, to prevent any
payment prohibited by such section or enforce their rights pursuant to the
penultimate paragraph in Article 6.
SECTION 6.9 No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Debt to enforce
the subordination provisions provided herein 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, provisions and covenants of this
Supplemental Indenture, regardless of any knowledge thereof that any such holder
may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt may, at any time and from time to time, without the
consent of or notice to the Holders of the Series E Notes, without incurring
responsibility to the Holders of the Series E Notes and without impairing or
releasing the subordination provided in this Article 6 or the obligations
hereunder of the Trustee or Holders of the Series E Notes to the holders of
Senior Debt, do any one or more of the following: (a) change the manner, place
or terms of payment or extend the time of payment of, or renew, refinance or
alter, any Senior Debt, or otherwise amend or supplement in any manner any
Senior Debt or any instrument evidencing the same or any agreement under which
such Senior Debt is outstanding; (b) permit the Company to borrow, repay and
then reborrow any or all the Senior Debt; (c) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing Senior
Debt; (d) release any Person liable in any manner for the collection of Senior
Debt; (e) exercise or refrain from exercising any rights against the Company and
any other Person; and (f) apply any sums received by such holders to Senior
Debt.
SECTION 6.10 Reliance On Judicial Order or Certificate of Liquidating
Agent.
35
Upon any payment or distribution of assets of the Company referred to
in this Article 6, the Trustee and the Holders of the Series E Notes shall be
entitled to rely upon any order or decree entered by any court of competent
jurisdiction in which such Proceeding is pending, or a certificate of the
receiver, trustee in bankruptcy, liquidation trustee, custodian, assignee for
the benefit of creditors, agent or other Person making such payment or
distribution, delivered to the Trustee or to the Holders for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Debt, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article 6; provided that the foregoing shall apply
only if such court has been apprised of the provisions of this Article 6.
SECTION 6.11 Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Series E Notes pursuant to the provisions of
this Article 6. Failure to give such notice to the Trustee shall not affect the
subordination of the Series E Notes to Senior Debt. The Trustee shall not be
charged with knowledge of the existence of any default or event of default with
respect to any Senior Debt or of any other facts which would prohibit the making
of any payment to or by the Trustee unless and until the Trustee shall have
received notice in writing to that effect signed by an officer of the Company,
or by a holder of any Senior Debt or trustee or agent therefor; and prior to the
receipt of any such written notice, the Trustee shall, subject to Article 7 of
the Indenture, be entitled to assume that no such facts exist; provided,
however, that if the Trustee shall not have received the notice provided for in
this Section 6.11 at least three Business Days prior to the date upon which by
the terms of this Supplemental Indenture any moneys shall become payable for any
purpose (including, without limitation, the payment of the principal of,
premium, if any, or interest on any Series E Note), then, regardless of anything
herein to the contrary, the Trustee shall have full power and authority to
receive any moneys from the Company 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 prior date. Nothing
contained in this Section 6.11 shall limit the right of the holders of Senior
Debt to recover payments as contemplated by Article 6. The Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself or itself to be a holder of any Senior Debt (or a trustee
on behalf of, or other representative of, such holder) to establish that such
notice has been given by a holder of such Senior Debt or a trustee or
representative on behalf of any such holder.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of any
Senior Debt to participate in any payment or distribution pursuant to this
Article 6, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of such Senior Debt held
by such Person, the extent to which such Person is entitled to participate in
such payment or distribution and any other facts pertinent to the rights of such
Person under this Article 6, and if such evidence is not furnished, the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
36
SECTION 6.12 Trustee's Relation to Senior Debt.
The Trustee shall be entitled to all the rights set forth in this
Article 6 with respect to any Senior Debt which may at any time be held by it in
its individual or any other capacity to the same extent as any other holder of
such Senior Debt, and nothing in this Indenture shall deprive the Trustee of any
of its rights as such holder.
With respect to the holders of any Senior Debt, the Trustee undertakes
to perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article 6, and no implied covenants or
obligations with respect to the holders of such Senior Debt shall be read into
this Supplemental Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of any Senior Debt (except as
provided in Section 6.02(b)). The Trustee shall not be charged with knowledge
of the existence of any Senior Debt or of any facts that would prohibit any
payment hereunder unless the Trustee shall have received written notice to that
effect at the address of the Trustee set forth in Section 11.01 of the
Indenture.
SECTION 6.13 Series E Note Holders Authorize Trustee to Effectuate
Subordination.
Each Holder of Series E Notes by its acceptance of such Series E Notes
authorizes and expressly directs the Trustee on its behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article 6, and appoints the Trustee its attorney-in-fact for such purposes,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency, receivership,
reorganization or similar proceedings or upon an assignment for the benefit of
creditors or otherwise) tending towards liquidation of the business and assets
of the Company, the filing of a claim for the unpaid balance of its Series E
Notes in the form required in those proceedings.
SECTION 6.14 This Article Not to Prevent Event of Default.
The failure to make a payment on account of principal of, premium, if
any or interest on the Series E Notes by reason of any provision of this Article
6 shall not be construed as preventing the occurrence of an Event of Default
specified in Section 6.01(i), (ii) or (iii) of the Indenture.
SECTION 6.15 Trustee's Compensation Not Prejudiced.
Nothing in this Article 6 shall apply to amount due to the Trustee
pursuant to other sections in this Supplemental Indenture or in the Indenture.
SECTION 6.16 Subordination Provisions Not Applicable to Money Held in
Trust for Holders of Series E Notes; Payments May Be Paid prior to Dissolution.
All money and United States Government Securities deposited in trust
with the Trustee pursuant to and in accordance with Article 8 of the Indenture
shall be for the sole benefit of the Holders of the Series E Notes and shall not
be subject to this Article 6.
37
Nothing contained in this Article or elsewhere in this Supplemental
Indenture shall prevent (i) the Company, except under the conditions described
in Section 6.03, from making payments of principal of and interest on the Series
E Notes, or from depositing with the Trustee any moneys for such payments or
from effecting a termination of the Company's and each Guarantor's obligations
under the Series E Notes and this Supplemental Indenture as provided in Article
8 of the Indenture, or (ii) the application by the Trustee of any moneys
deposited with it for the purposed of making such payments of principal of,
premium, if any, and interest on the Series E Notes, to the Holders entitled
thereto unless at least three Business Days prior to the date upon which such
payment becomes due and payable, the Trustee shall have received the written
notice provided for in Section 6.11.
ARTICLE VII
TAX MATTERS
SECTION 7.1 Taxes.
(a) All payments made by the Company under this Supplemental
Indenture and the Series E Notes shall be made free and clear
of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority, excluding
net income taxes and franchise or overall gross receipts
taxes imposed on any holder (or any transferee permitted
under Section 2.15 of the Indenture (a "Transferee")) as a
result of a present or former connection between such holder
(or Transferee) and the jurisdiction of the Governmental
Authority imposing such tax or any political subdivision or
taxing authority thereof or therein (other than any such
connection arising solely from such holder (or Transferee)
having executed, delivered or performed its obligations or
received a payment under, or enforced, this Agreement or the
Notes). If any such non-excluded taxes, levies, imposts,
duties, charges, fees, deductions or withholdings ("Non-
Excluded Taxes") are required to be withheld from any amounts
payable to any holder (or Transferee) hereunder or under the
Series E Notes, the amounts so payable to such holder (or
Transferee) shall be increased to the extent necessary to
yield to such holder (or Transferee) (after payment of all
Non-Excluded Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in
this Supplemental Indenture and the Series E Notes; provided
that the Company shall not be required to increase any such
amounts payable to any holder (or Transferee) that is not
organized under the laws of the United States of America or a
state thereof if such holder (or Transferee) fails to comply
with the requirements
38
of paragraph (b) of this section. Whenever any Non-Excluded
Taxes are payable by the Company, as promptly as possible
thereafter, the Company shall send to such holder (or
Transferee) a certified copy of an original official receipt
received by the Company showing payment thereof. If the
Company fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to the holder
(or Transferee) the required receipts or other required
documentary evidence, the Company shall indemnify such holder
or (Transferee) for any incremental taxes, interest or
penalties that may become payable by any holder or
(Transferee) as a result of any such failure. The covenants
in this section shall survive the termination of the
Indenture, the Supplemental Indenture and the payment of the
Series E Notes and payment of the obligations hereunder and
thereunder.
(b) Each holder (or Transferee) of any Notes shall:
(i) in the case of a holder (or Transferee) that is a
"bank" under Section 881(c)(3)(A) of the Code;
(1) on or before the date on which the first payment
becomes payable to it hereunder or under any Note
(or in the case of a Person who acquires a
participating interest in any of the Series E Notes
(a "Participant"), on or before the date such
Participant becomes a Participant hereunder)
deliver to the Company (1) in the case of a holder
(or Transferee) that is not incorporated under the
laws of the United States or any State thereof, two
duly completed copies of United States Internal
Revenue Service Form 1001 or 4224, or successor
applicable form, as the case may be, and an
Internal Revenue Service Form W-8 or W-9, or
successor applicable form, as the case may be, and
(2) in the case of any other holder (or
Transferee), an Internal Revenue Service Form W-9,
or successor applicable form;
(2) deliver to the Company two further copies of any
such form or certification on or before the date
that any such form or certification expires or
becomes obsolete and after the occurrence of any
event requiring a change in the most recent form
previously delivered by it to the Company, and
39
(3) obtain such extensions of time for filing and
timely complete and deliver such forms or
certifications as may reasonably be requested by
the Company;
(ii) in the case of a holder (or Transferee) that is not a
"bank" under Section 881(c)(3)(A) of the Code:
(1) on or before the date on which the first payment
becomes payable to it hereunder or under any Note
(or, in the case of a Participant, on or before the
date such Participant becomes a Participant
hereunder) deliver to the Company (1) in the case
of a holder (or Transferee) that is not organized
under the laws of the United States or any state
thereof, (I) a statement under penalties of perjury
that such holder (or Transferee) (x) is not a
"bank" under Section 881(c)(3)(A) of the Code, is
not subject to regulatory or other legal
requirements as a bank in any jurisdiction, and has
not been treated as a bank for purposes of any tax,
securities law or other filing or submission made
to any Governmental Authority, any application made
to a rating agency or qualification for any
exemption from tax, securities law or other legal
requirements, (y) is not a 10-percent shareholder
of the Company within the meaning of Section
881(c)(3)(B) of the Code and (z) is not a
controlled foreign corporation receiving interest
from a related person within the meaning of Section
881(c)(3)(C) of the Code and (II) a properly
completed and duly executed Internal Revenue
Service Form W-8 or applicable successor form, and
where applicable, an Internal Revenue Form W-9 or
applicable successor form, and (2) in the case of
any other holder (or Transferee), an Internal
Revenue Service Form W-9 or successor applicable
form.
(2) deliver to the Company two further properly
completed and duly executed copies of said form or
certification or any successor applicable form or
certification on or before the date that any such
form or certification expires or becomes obsolete
or after the occurrence of any event requiring a
change in the most recent form or certification
previously delivered by it to the Company or upon
the request of the Company; and
40
(3) obtain such extensions of time for filing and
timely complete and deliver such forms or
certifications as may be reasonably requested by
the Company;
unless in any such case any change in treaty, law or regulation has occurred
subsequent to the date such holder (or Transferee) became a party to this
Agreement (or, in the case of a Participant, the date such Participant became a
Participant hereunder) which renders all such forms inapplicable or which would
prevent such holder from properly completing and executing any such form with
respect to it and such holder (or Transferee) so advises the Company in writing
no later than 15 calendar days before any payment hereunder or under any Note is
due. Each such holder (and each Transferee) shall certify (i) in the case of a
Form 1001 or 4224 or in the case of a holder providing certification pursuant to
Section 7.01(b)(ii), that it is entitled to receive payments under this
Agreement without deduction or withholding of any United States federal income
taxes and (ii) in the case of a Form W-8 or W-9 delivered pursuant to Section
7.01(b), that it is entitled to an exemption from United States backup
withholding tax. Each Person that shall become a holder or a Participant shall,
upon the effectiveness of the related transfer, provide all of the forms and
statements required pursuant to this section; provided that, in the case of a
Participant, such Participant shall furnish all such required forms and
statements to the holder from which the related participation shall have been
purchased.
(c) Notwithstanding the foregoing paragraphs (a) and (b) of this
Section 7.01, the Company shall only be required to pay any
additional amounts to any holder (or Transferee) in respect
of any amounts pursuant to such paragraph (a) if such holder
(or Transferee), in addition to complying with the
requirements of paragraph (b), shall have taken such other
steps as such holder or Transferee may determine in the
exercise of its business judgment (utilizing criteria it
determines to be appropriate) are reasonably available to it
under applicable laws and any applicable tax treaty or
convention to obtain an exemption from, or reduction (to the
lowest applicable rate) of, such tax (it being understood
that no holder shall be required to take any action that it
concludes could subject it to heightened audit scrutiny or
extend the period that such holder's tax returns remain open
for review by any taxing authority).
(d) Any claim by a holder (or Transferee) for payment from the
Company of any amounts under this Section 7.01 shall be made
within ninety (90) days after such holder (or Transferee)
determines the exact amount of any such claim.
ARTICLE VIII
THE TRUSTEE
SECTION 8.1 Trustee's Disclaimer.
41
The Trustee shall not be responsible in any manner whatsoever for or
in respect of the validity or sufficiency of this Supplemental Indenture or the
due execution hereof by the Company, or for or in respect of the recitals and
statements contained herein, all of which recitals and statements are made
solely by the Company.
Except as herein otherwise provided, no duties, responsibilities or
liabilities are assumed, or shall be construed to be assumed, by the Trustee by
reason of this Supplemental Indenture other than as set forth in the Indenture,
and this Supplemental Indenture is executed and accepted on behalf of the
Trustee, subject to all the terms and conditions set forth in the Indenture, as
fully to all intents as if the same were set forth at length herein.
ARTICLE IX
GUARANTEE
SECTION 9.1 Unconditional Guarantee.
Each Guarantor who becomes a party to this Supplemental Indenture
hereby unconditionally, jointly and severally, guarantees to each Holder of a
Series E Note authenticated and delivered by the Trustee and to the Trustee and
its successors and assigns that: the principal of, premium, if any, and interest
on the Series E Notes will be promptly paid in full when due, subject to any
applicable grace period, whether at maturity, by acceleration or otherwise, and
interest on the overdue principal and interest on any overdue interest on the
Series E Notes and all other obligations of the Company to the Holders or the
Trustee hereunder or under the Indenture or the Series E Notes will be promptly
paid in full or performed, all in accordance with the terms hereof and thereof;
subject, however, to the limitations set forth in Section 9.04. Each such
Guarantor hereby agrees that its obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Series E
Notes, the Indenture or this Supplemental Indenture, the absence of any action
to enforce the same, any waiver or consent by any Holder of the Series E Notes
with respect to any provisions hereof or thereof, the recovery of any judgment
against the Company, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
Guarantor. Each such 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 demands whatsoever and covenants that the Guarantee will
not be discharged except by complete performance of the obligations contained in
the Series E Notes, the Indenture, this Supplemental Indenture, and such
Guarantee.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company, any Guarantor or any custodian, trustee, liquidator or
other similar official acting in relation to the Company or any Guarantor, any
amount paid by the Company or any Guarantor to the Trustee or such Holder, this
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. Each Guarantor further agrees that, as between each
Guarantor, on the one hand, and the Holders and the Trustee, on the other hand,
(x) the maturity of the obligations guaranteed hereby may be accelerated as
provided in Article Six of the Indenture for the purpose of this Guarantee,
notwithstanding any stay, injunction or other
42
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such obligations
as provided in Article 6 of the Indenture, such obligations (whether or not due
and payable) shall forthwith become due and payable by each Guarantor for the
purpose of this Guarantee.
43
SECTION 9.2 Severability.
In case any provision of this Guarantee shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 9.3 Release of a Guarantor.
If the Series E Notes are defeased in accordance with Section 8.02 of
the Indenture, or if all of the Capital Stock of any Guarantor is sold
(including by issuance or otherwise) by the Company or any of its Subsidiaries
in a transaction constituting an Asset Disposition (or which, but for the
provisions of clause (c) of the definition of such term, would constitute an
Asset Disposition), and, if required by this Supplemental Indenture, (x) the Net
Available Proceeds from such Asset Disposition are used in accordance with
Section 4.05 of the Indenture or (y) the Company delivers to the Trustee an
Officer's Certificate covenanting that the Net Available Proceeds from such
Asset Disposition will be used in accordance with Section 4.05 of the Indenture
and within the time limits specified thereon, then such Guarantor shall be
released and discharged from all obligations under this Article 9 upon such use
in the case of clause (x) or upon such delivery in the case of clause (y). The
Trustee shall, at the sole cost and expense of the Company and upon receipt at
the reasonable request of the Trustee of an Opinion of Counsel that the
provisions of this Section 9.03 have been complied with, deliver an appropriate
instrument evidencing such release upon receipt of a request by the Company
accompanied by an Officers' Certificate certifying as to the compliance with
this Section 9.03, any Guarantor not so released remains liable for the full
amount of principal of (premium, if any) hereunder as provided in this Article
9.
Any Subsidiary of the Company that ceases to be a direct or indirect
obligor (including as guarantor) under, or in respect of all Senior Credit
Facilities shall be released from its Guarantee upon delivery of an Officers'
Certificate to the Trustee certifying to such effect.
SECTION 9.4 Limitation of Guarantor's Liability.
Each Guarantor, and by its acceptance hereof each Holder and the
Trustee, 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 title 11 of the United States
Code, as amended, the Uniform Fraudulent Conveyance Act or any similar U.S.
Federal or state or other applicable law. To effectuate the foregoing
intention, the Holders and such 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 its Guarantee or pursuant to Section
9.05, result in the obligations of such Guarantor under the Guarantee not
constituting such fraudulent transfer or conveyance.
SECTION 9.5 Contribution.
44
In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that in the event any payment or
distribution is made by any 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 net assets of each Guarantor
(including the Funding Guarantor), determined in accordance with GAAP, subject
to Section 9.04, for all payments, damages and expenses incurred by that Funding
Guarantor in discharging the Company's obligations with respect to the Series E
Notes or any other Guarantor's obligations with respect to the Guarantee.
SECTION 9.6 Execution of Guarantee.
To further evidence its Guarantee to the Holders, any Guarantor
required to Guarantee the Series E Notes pursuant to Section 4.13 shall execute
the endorsement of Guarantee in substantially the form set forth in Exhibit A
hereto, which endorsement shall be delivered to each Holder to be attached to
each Series E Note. Each such Guarantor hereby agrees that its Guarantee set
forth in Section 9.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Series E Note a notation of such Guarantee. Each
such Guarantee shall be signed on behalf of each Guarantor by its chairman of
the board, its president or one of its vice presidents prior to the
authentication of the Series E Note on which it is endorsed, and the delivery of
such Series E Note by the Trustee, after the authentication thereof hereunder,
shall constitute due delivery of such Guarantee on behalf of such Guarantor.
Such signature upon the Guarantee may be manual or facsimile signature of such
officer and may be imprinted or otherwise reproduced on the Guarantee, and in
case such officer who shall have signed the Guarantee shall cease to be such
officer before the Series E Note on which such Guarantee is endorsed shall have
been authenticated and delivered by the Trustee or disposed of by the Company,
such Series E Note nevertheless may be authenticated and delivered or disposed
of as though the Person who signed the Guarantee had not ceased to be such
officer of the Guarantor.
SECTION 9.7 Subordination of Subrogation and Other Rights.
Each Guarantor hereby covenants and agrees that any claim against the
Company that arises from the payment, performance or endorsement of such
Guarantor's obligations under its Guarantee or this Supplemental Indenture,
including, without limitation, any right of subrogation, is expressly made
subordinate to and subject in right of payment to the prior payment in full in
cash or cash equivalents or, as acceptable to the Holders of the Series E Notes,
in any other manner, of all outstanding Series E Notes in accordance with the
provisions provided therefor in this Supplemental Indenture.
45
ARTICLE X
SUBORDINATION OF GUARANTEE
SECTION 10.1 Guarantee Obligations Subordinated to Senior Debt.
Each Guarantor covenants and agrees, and the Trustee and each Holder
of the Series E Notes by its acceptance thereof, likewise covenants and agrees,
that, to the extent and in the manner hereinafter set forth in this Section
10.01, the Guarantees shall be issued subject to the provisions of this Article
10; and each Person holding any Series E Note, whether upon original issue or
upon transfer, assignment or exchange thereof, accepts and agrees that all
payments of the principal of, premium, if any, and interest on the Series E
Notes pursuant to the Guarantee made by or on behalf of any Guarantor is
expressly hereby made subordinate and subject in right of payment to the prior
payment in full in cash or cash equivalents or, as acceptable to the holders of
Senior Debt in any other manner, of all Senior Debt in the manner set forth in
this Article 10. The terms of this Article 10 are for the benefit of, and shall
be enforceable directly by, each holder of Senior Debt, and each holder of
Senior Debt whether how outstanding or hereafter created, incurred, assumed or
guaranteed shall be deemed to have acquired such Senior Debt in reliance upon
the covenants and provisions contained herein.
SECTION 10.2 Payment of Proceeds Upon Dissolution, Etc.
Upon any payment or distribution of assets of any Guarantor to
creditors upon any Proceeding:
(a) The holders of Senior Debt shall receive payment in full in
cash or cash equivalents or, as acceptable to the holders of
Senior Debt, in any other manner, of all amounts due on or to
become due on or in respect of all Senior Debt (including any
interest accruing thereon after the commencement of any such
Proceeding, whether or not allowed as a claim against such
Guarantor in such Proceeding) or provision shall be made for
such payment in a manner acceptable to such holders before
any payment or distribution may be made to the Trustee or the
Holders of the Series E Notes by, or on behalf of, any
Guarantor, whether by setoff, exercising contractual or
statutory rights or otherwise and whether in the form of
cash, stock or property or otherwise (excluding any payment
or distribution described in the last paragraph of Section
10.02(b)), on account of the principal of, premium, if any,
interest on or any other obligation owing in respect of the
Series E Notes (all such payments, distributions, purchases,
redemptions and acquisitions, whether or not in connection
with a Proceeding (but excluding any payment or distribution
described in the last paragraph of Section 10.02(b)), being
herein referred to, individually and collectively, as a
"Guarantee Payment"); and
46
(b) Any payment or distribution of assets of any Guarantor of any
kind or character, whether in cash, property or securities,
by set-off or otherwise, to which the Trustee or the Holders
of the Series E Notes would be entitled but for the
provisions of this Article 10, shall be paid by the Guarantor
or the liquidating trustee or agent or other Person making
such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or otherwise,
directly to the holders of Senior Debt or their
representatives or trustees under any credit agreement,
indenture or other agreement under which any such Senior Debt
may have been issued, ratably according to the aggregate
amounts remaining unpaid on account of the Senior Debt held
or represented by each, to the extent necessary to make
payment in full in cash or cash equivalents or, as acceptable
to the holders of Senior Debt, in any other manner, of all
Senior Debt remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of such
Senior Debt.
In the event that, notwithstanding the foregoing provisions of this
section, the Trustee or the Holder of any Series E Notes shall have received in
connection with any Proceeding any Guarantee Payment before all Senior Debt is
paid in full or payment thereof is provided for in cash or cash equivalents,
then and in such event such Guarantee Payment shall be held in trust for the
benefit of and paid over or delivered forthwith to the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee, agent or other Person making
payment or distribution of assets of such Guarantor for application to the
payment of all Senior Debt remaining unpaid, to the extent necessary to make
payment in full in cash or cash equivalents or, as acceptable to the holders of
the Senior Debt, in any other manner, of all Senior Debt remaining unpaid after
giving effect to any concurrent payment to or for the holders of Senior Debt.
For purposes of this Article 10 only, the words "payment or
distribution" or "any payment or distribution of any kind or character, whether
in cash, property or securities" shall not be deemed to include a payment or
distribution of stock or securities of any Guarantor provided for by a plan of
reorganization or readjustment authorized by an order or decree of a court of
competent jurisdiction in a reorganization proceeding under any applicable
bankruptcy law or of any other corporation provided for by such plan of
reorganization or readjustment, which stock or securities are subordinated in
right of payment to all then outstanding Senior Debt to substantially the same
extent, or to a greater extent than, any payment by such Guarantor of the
principal of, premium, if any, or interest on the Series E Notes are so
subordinated as provided in this Article 10. The consolidation of any Guarantor
with, or the merger of any Guarantor into, another Person or the liquidation or
dissolution of any Guarantor following the conveyance, transfer or lease of all
or substantially all of its properties and assets to another Person and so long
as permitted under the terms of the Senior Debt shall not be deemed a Proceeding
for the purposes of this section if the Person formed by such consolidation or
into which any Guarantor is merged or the Person which acquires by conveyance,
transfer or lease
47
such properties and assets, as the case may be, shall, as a part of such
consolidation, merger, conveyance, transfer or lease, comply with the conditions
set forth in Article 10.
(c) To the extent any payment of Senior Debt (whether by or on
behalf of any Guarantor, as proceeds of security or
enforcement of any right of setoff or otherwise) is declared
to be fraudulent or preferential, set aside or required to be
paid to any receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person under any bankruptcy,
insolvency, receivership, fraudulent conveyance or similar
law, then if such payment is recovered by, or paid over to,
such receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar Person, the Senior Debt or part
thereof originally intended to be satisfied shall be deemed
to be reinstated and outstanding as if such payment had not
occurred.
SECTION 10.3 No Payment When Designated Senior Debt in Default.
In the event that any Senior Payment Default shall have occurred and
be continuing, then no Guarantee Payment whether by setoff, exercising
contractual or statutory rights or otherwise and whether in the form of cash,
stock or property or otherwise shall be made, unless and until such Senior
Payment Default shall have been cured or waived in writing or shall have ceased
to exist or all amounts then due and payable in respect of such Designated
Senior Debt (including, without limitation, amounts that have become and remain
due by acceleration) shall have been paid in full in cash.
In the event that any Senior Nonmonetary Default shall have occurred
and be continuing, then, upon the receipt by such Guarantor of written notice of
such Senior Nonmonetary Default from the Administrative Agent to which such
Senior Nonmonetary Default relates or, if no loans or other amounts are then
outstanding under the Credit Facility or any renewal, extension or refunding
thereof, and the Credit Facility and any such renewal, extension or refunding
have been terminated, upon receipt of such notice by or on behalf of any other
holder or holders of Designated Senior Debt in an aggregate amount in excess of
$25,000,000, no Guarantee Payment shall be made whether by setoff, exercising
contractual or statutory rights or otherwise and whether in the form of cash,
stock or property or otherwise during the period (the "Guarantee Payment
Blockage Period") commencing on the date of such receipt by such Guarantor of
such written notice and ending on the earlier of (a) the date, if any, on which
the Designated Senior Debt to which such Senior Nonmonetary Default relates is
discharged or such Senior Nonmonetary Default shall have been cured or waived in
writing or shall have ceased to exist and any acceleration of Designated Senior
Debt to which such Senior Nonmonetary Default relates shall have been rescinded
or annulled and (b) the 179th day after the date of receipt of such written
notice. No more than one Guarantee Payment Blockage Period may be commenced
with respect to the Series E Notes during any period of 360 consecutive days and
there shall be a period of at least 181 consecutive days in each period of 360
consecutive days when no Guarantee Payment Blockage Period is in effect.
Following the commencement of any Guarantee Payment Blockage Period, the holders
of Designated Senior Debt shall be precluded from commencing a subsequent
Guarantee Payment Blockage Period
48
until the conditions set forth in the preceding sentence shall have been
satisfied. For all purposes of this paragraph, no Senior Nonmonetary Default
that existed and was continuing on the date of commencement of any Guarantee
Payment Blockage Period with respect to the Designated Senior Debt initiating
such Guarantee Payment Blockage Period shall be, or may be made, the basis for
the commencement of a subsequent Guarantee Payment Blockage Period by any holder
of Designated Senior Debt or any representative or trustee under any indenture
under which any such Designated Senior Debt may have been issued unless such
Senior Nonmonetary Default shall have been cured for a period of not less than
90 consecutive days.
In the event that, notwithstanding the foregoing, any Guarantor shall
make any Guarantee Payment to any Holder prohibited by the foregoing provisions
of this Section 10.03, then in such event such Guarantee Payment shall be held
in trust and paid over and delivered forthwith to the representatives or trustee
under any indenture under which any such Designated Senior Debt may have been
issued ratably according to the aggregate amounts remaining unpaid on account of
the Designated Senior Debt held or represented by under the Designated Senior
Debt or, if there is no such representative or trustee with respect to such
Designated Senior Debt, to the holders of such Designated Senior Debt.
The provisions of this Section 10.03 shall not apply to any Guarantee
Payment with respect to which Section 10.02 hereof would be applicable.
SECTION 10.4 Acceleration of Series E Notes.
If an Event of Default shall have occurred and be continuing (other
than an Event of Default pursuant to paragraphs (ix) and (x) of Section 6.01 of
the Indenture), the Trustee shall give the holders of the Designated Senior Debt
not less than 30 days prior written notice before accelerating the Series E
Notes (which notice shall state it is a "Notice of Intent to Accelerate") and
before demanding payment from any Guarantor pursuant to its Guarantee. Upon such
declaration, the holders of Designated Senior Debt outstanding at the time the
Series E Notes so becomes due and payable shall be entitled to receive payment
in full in cash, cash equivalents or, as acceptable to the holders of the
Designated Senior Debt, in any other manner on all amounts due or to become due
on or in respect of such Designated Senior Debt, before any Guarantor may make,
and before any Holder of the Series E Notes is entitled to receive, any payment
or distribution of assets of any Guarantor of any kind or character, whether in
cash, securities or other property on account of any principal of, premium, if
any, and interest on the Series E Notes. All payments in respect of the
Subordinated Debt postponed under this Section 10.04 shall be immediately due
and payable upon the termination of such postponement; the remittance in full of
such payments by any Guarantor in accordance with the terms of the this
Supplemental Indenture and the acceptance thereof by the Holders of the Series E
Notes shall be deemed to constitute a cure by the Guarantor and a waiver by the
Holders of the Series E Notes of any Event of Default that existed immediately
prior to such remittance and acceptance to the extent that such Event of Default
existed solely as a consequence of the previous non-payment of such postponed
payments during such period of postponement.
SECTION 10.5 Payments Permitted If No Default
49
Nothing contained in this Article 10 or elsewhere in this Supplemental
Indenture or in any of the Series E Notes shall prevent any Guarantor, at any
time except during the pendency of any Proceeding referred to Section 10.02 or
under the conditions described in Section 10.03, from making Guarantee Payments
in accordance with the terms of this Supplemental Indenture, or from depositing
with the Trustee any moneys for such Guarantee Payments, or the application by
the Trustee of any moneys deposited with it for the purpose of making payments
of principal of, premium, if any, and interest on the Series E Notes in
accordance with the terms of this Supplemental Indenture. Nothing in this
Article 10 shall have any effect on the right of the Trustee (on behalf of the
Holders) or the Holders to accelerate the maturity of the Series E Notes upon
the occurrence of an Event of Default, but, in that event, no payment may be
made in violation of the provisions of this Article 10 with respect to the
Series E Notes. If payment of the Series E Notes is accelerated because of an
Event of Default, the Guarantors shall promptly notify the holders of the Senior
Debt (or their representatives) of such acceleration.
SECTION 10.6 Obligations of Guarantors Unconditional.
Nothing contained in this Article 10 or elsewhere in this Supplemental
Indenture or in the Series E Notes is intended to or shall impair, as among the
Guarantors and the Holders of the Series E Notes, the obligation of each
Guarantor, which is absolute and unconditional, to pay to the Holders of the
Series E Notes the principal of, premium, if any, and interest on the Series E
Notes as and when the same shall become due and payable in accordance with the
terms of the Guarantee, or is intended to or shall affect the relative rights of
the Holders of the Series E Notes and creditors of any Guarantor other than the
holders of the Senior Debt, nor shall anything herein or therein prevent any
Holder or the Trustee on their behalf from exercising all remedies otherwise
permitted by applicable law upon default under this Supplemental Indenture,
subject to the rights, if any, under this Article 10 of the holders of the
Senior Debt in respect of cash, property or securities of any Guarantor received
upon the exercise of any such remedy.
Without limiting the generality of the foregoing, nothing contained in
this Article 10 shall restrict the right of the Trustee or the Holders of the
Series E Notes of the Series E Notes to take any action to declare the Series E
Notes to be due and payable prior to their stated maturity pursuant to Section
5.01 or to pursue any rights or remedies hereunder; provided, however, that all
Senior Debt then due and payable shall first be paid in full before the Holders
or the Trustee are entitled to receive any direct or indirect payment from such
Guarantor of principal of or interest on the Series E Notes pursuant to such
Guarantor's Guarantee.
SECTION 10.7 Subrogation To Rights of Holders of Senior Debt.
Subject to the payment in full in cash or cash equivalents, or as
acceptable to the holders of Senior Debt, in any other manner, of all Senior
Debt, the Trustee and the Holders of the Series E Notes shall be subrogated to
the rights of the holders of such Senior Debt to receive payments and
distributions of cash, property and securities applicable to the Senior Debt
until the principal of, premium, if any, and interest on the Series E Notes
shall be paid in full. For purposes of such subrogation, no payments or
distributions to the holders of the Senior Debt of any cash, property or
securities to which the Trustee and the Holders of the Series E Notes would
50
be entitled except for the provisions of this Article 10, and no payments
pursuant to the provisions of this Article 10 to the holders of Senior Debt by
Holders of the Series E Notes, shall, as among any Guarantor, its creditors
other than holders of Senior Debt and the Holders of the Series E Notes, be
deemed to be a payment or distribution by such Guarantor to or on account of the
Senior Debt.
SECTION 10.8 Provisions Solely to Define Relative Rights.
The provisions of this Article 10 are and are intended solely for the
purpose of defining the relative rights of the Trustee and the Holders of the
Series E Notes on the one hand and the holders of Senior Debt on the other hand.
Nothing contained in this Article 10 or elsewhere in this Supplemental Indenture
or in the Series E Notes or in any Guarantee is intended to or shall (a) impair,
as among the Guarantors, its creditors other than holders of Senior Debt and the
Trustee and the Holders of the Series E Notes, the obligation of each Guarantor,
which is absolute and unconditional (and which, subject to the rights under this
Article 10 of the holders of Senior Debt, is intended to rank equally with all
other general obligations of such Guarantor), to pay to the Trustee for the
Holders of the Series E Notes the principal of, premium, if any, and interest on
the Series E Notes as and when the same shall become due and payable in
accordance with the terms of each Guarantor's Guarantee; (b) affect the relative
rights against any Guarantor of the Trustee, the Holders of the Series E Notes
and the creditors of such Guarantor other than the holders of Senior Debt; or
(c) prevent the Trustee on behalf of the Holders or any Holder of any Series E
Note from exercising all remedies otherwise permitted by applicable law upon
default under this Supplemental Indenture, subject to this Article 10, including
the rights, if any, under this Article 10 of the holders of Senior Debt to
receive cash, property or and securities otherwise payable or deliverable to
such holder or, under the conditions specified in Section 10.03, to prevent any
payment prohibited by such section or enforce their rights pursuant to the
penultimate paragraph in Article 10.
SECTION 10.9 No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Debt to enforce
subordination as provided herein shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of any Guarantor or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance by
any Guarantor with the terms, provisions and covenants of this Supplemental
Indenture, regardless of any knowledge thereof which any such holder may have
or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt may, at any time and from time to time, without the
consent of or notice to the Holders of the Series E Notes, without incurring
responsibility to the Holders of the Series E Notes and without impairing or
releasing the subordination provided in this Article 10 or the obligations
hereunder of the Trustee or Holders of the Series E Notes to the holders of
Senior Debt, do any one or more of the following: (a) change the manner, place
or terms of payment or
51
extend the time of payment of, or renew, refinance or alter, any Senior Debt, or
otherwise amend or supplement in any manner any Senior Debt or any instrument
evidencing the same or any agreement under which such Senior Debt is
outstanding; (b) permit any Guarantor to borrow, repay and then reborrow any or
all the Senior Debt; (c) sell, exchange, release or otherwise deal with any
property pledged, mortgaged or otherwise securing Senior Debt; (d) release any
Person liable in any manner for the collection of Senior Debt; (e) exercise or
refrain from exercising any rights against any Guarantor and any other Person;
and (f) apply any sums received by such holders to Senior Debt.
SECTION 10.10 Reliance On Judicial Order or Certificate of Liquidating
Agent.
Upon any payment or distribution of assets of any Guarantor referred
to in this Article 10, the Trustee and the Holders of the Series E Notes shall
be entitled to rely upon any order or decree entered by any court of competent
jurisdiction in which such Proceeding is pending, or a certificate of the
receiver, trustee in bankruptcy, liquidation trustee, custodian, assignee for
the benefit of creditors, agent or other Person making such payment or
distribution, delivered to the Trustee or to the Holders for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Debt, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article 10; provided that the foregoing shall apply
only if such court has been apprised of the provisions of this Article 10.
SECTION 10.11 Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any
fact known to the Company or such Guarantor which would prohibit the making of
any payment to or by the Trustee in respect of the Series E Notes pursuant to
the provisions of this Article 10. Failure to give such notice to the Trustee
shall not affect the subordination of the Series E Notes to Senior Debt. The
Trustee shall not be charged with knowledge of the existence of any default or
event of default with respect to any Senior Debt or of any other facts which
would prohibit the making of any payment to or by the Trustee unless and until
the Trustee shall have received notice in writing to that effect signed by an
officer of the Company, or by a holder of any Senior Debt or trustee or agent
therefor; and prior to the receipt of any such written notice, the Trustee
shall, subject to Article 7 of the Indenture, be entitled to assume that no such
facts exist; provided, however, that if the Trustee shall not have received the
notice provided for in this Section 10.10 at least three Business Days prior to
the date upon which by the terms of this Supplemental Indenture any moneys shall
become payable for any purpose (including, without limitation, the payment of
the principal of, premium, if any, or interest on any Series E Note), then,
regardless of anything herein to the contrary, the Trustee shall have full power
and authority to receive any moneys from any Guarantor 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 prior date.
Nothing contained in this Section 10.10 shall limit the right of the holders of
Senior Debt to recover payments as contemplated by Article 10. The Trustee
shall be entitled to rely on the delivery to it of a written notice by a Person
representing himself or itself to be a holder of any Senior Debt (or a trustee
on behalf of, or other representative of, such holder) to
52
establish that such notice has been given by a holder of such Senior Debt or a
trustee or representative on behalf of any such holder.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of any
Senior Debt to participate in any payment or distribution pursuant to this
Article 10, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of such Senior Debt held
by such Person, the extent to which such Person is entitled to participate in
such payment or distribution and any other facts pertinent to the rights of such
Person under this Article 10, and if such evidence is not furnished, the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
SECTION 10.12 Trustee's Relation to Senior Debt.
The Trustee shall be entitled to all the rights set forth in this
Article 10 with respect to any Senior Debt which may at any time be held by it
in its individual or any other capacity to the same extent as any other holder
of such Senior Debt, and nothing in this Indenture shall deprive the Trustee of
any of its rights as such holder.
With respect to the holders of any Senior Debt, the Trustee undertakes
to perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of such Senior Debt shall be read into
this Supplemental Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of any Senior Debt (except as
provided in Section 10.02(b)). The Trustee shall not be charged with knowledge
of the existence of any Senior Debt or of any facts that would prohibit any
payment hereunder unless the Trustee shall have received written notice to that
effect at the address of the Trustee set forth in Section 11.01 of the
Indenture.
SECTION 10.13 Series E Note Holders Authorize Trustee to Effectuate
Subordination.
Each Holder of Series E Notes by its acceptance of such Series E Notes
authorizes and expressly directs the Trustee on its behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article 10, and appoints the Trustee its attorney-in-fact for such
purposes, including, in the event of any dissolution, winding up, liquidation
or reorganization of any Guarantor (whether in bankruptcy, insolvency,
receivership, reorganization or similar proceedings or upon an assignment for
the benefit of creditors or otherwise) tending towards liquidation of the
business and assets of such Guarantor, the filing of a claim for the unpaid
balance of its Series E Notes in the form required in those proceedings.
SECTION 10.14 This Article Not to Prevent Event of Default.
The failure to make a payment on account of principal of, premium, if
any, or interest on the Series E Notes by reason of any provision of this
Article 10 shall not be construed as preventing the occurrence of an Event of
Default specified in Section 6.01(i), (ii) or (iii) of the Indenture.
53
SECTION 10.15 Trustee's Compensation Not Prejudiced.
Nothing in this Article 10 shall apply to amounts due to the Trustee
pursuant to other sections in this Supplemental Indenture or in the Indenture.
54
SECTION 10.16 Subordination Provisions Not Applicable to Money Held
in Trust for Holders of Series E Notes; Payments May Be Paid prior to
Dissolution.
All money and United States Government Securities deposited in trust
with the Trustee pursuant to and in accordance with Article 8 of the Indenture
of the Indenture shall be for the sole benefit of the Holders of the Series E
Notes and shall not be subject to this Article 10.
Nothing contained in this Article or elsewhere in this Supplemental
Indenture shall prevent (i) the Company, except under the conditions described
in Section 10.03, from making payments of principal of and interest on the
Series E Notes, or from depositing with the Trustee any moneys for such payments
or from effecting a termination of the Guarantors' obligations under the Series
E Notes and this Supplemental Indenture as provided in Article 8 of the
Indenture, or (ii) the application by the Trustee of any moneys deposited with
it for the purposed of making such payments of principal of, premium, if any,
and interest on the Series E Notes, to the Holders entitled thereto unless at
least three Business Days prior to the date upon which such payment becomes due
and payable, the Trustee shall have received the written notice provided for in
Section 10.11.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Reference to Indenture.
Except insofar as otherwise expressly provided herein, all the
provisions, definitions, terms and conditions of the Indenture, as it may from
time to time be amended, shall be deemed to be incorporated in and made a part
of this Supplemental Indenture; and the Indenture as supplemented by this
Supplemental Indenture is in all respects ratified and confirmed; and the
Indenture, as amended, and this Supplemental Indenture shall be read, taken and
construed as one and the same instrument.
SECTION 11.2 Benefits of Indenture.
Nothing in this Supplemental Indenture is intended, or shall be
construed, to give to any Person, other than the parties hereto and the Holders
issued under the Indenture, any legal or equitable right, remedy or claim under
or in respect of this Supplemental Indenture, or under any covenant, condition
or provision herein contained, all the covenants, conditions and, provisions of
this Supplemental Indenture being intended to be, and being, for the sole and
exclusive benefit of the parties hereto and of the Holders issued and to be
issued under the Indenture and this Supplemental Indenture.
55
SECTION 11.3 Amendments Only With Consent of the Holders.
Notwithstanding Section 9.01 of the Indenture, without the consent of
each Holder of a Series E Note affected, an amendment, waiver or Supplemental
Indenture may not (with respect to any Series E Note held by a non-consenting
Holder):
(a) release any Guarantor from any of its obligations under its
Guarantee of the Series E Notes other than in accordance with
this Supplemental Indenture; or
(b) modify the ranking or priority of the Series E Notes or the
Guarantees, or modify the definition of Senior Debt or
Designated Senior Debt or amend or modify the subordination
provisions in the Supplemental Indenture in any manner
adverse to the Holders.
SECTION 11.4 Governing Law.
This Supplemental Indenture and the Series E Notes issued hereunder
shall be governed by and interpreted and construed in accordance with the laws
of the State of New York (without giving effect to any choice of law principles
of such state other than Section 5-1401 of the General Obligations Law.
SECTION 11.5 Successors.
All covenants, stipulations and agreements of the Company in this
Supplemental Indenture and the Series E Notes shall bind its successors and
assigns. All agreements of the Trustee in this Supplemental Indenture shall
bind its successor.
SECTION 11.6 Counterparts.
This Supplemental Indenture may be executed in any number of
counterparts, and each of such counterparts when so executed shall be deemed to
be an original, but all such counterparts shall together constitute by one and
the same instrument.
56
IN WITNESS WHEREOF, TELECORP PCS., INC. has caused this supplemental
Indenture to be executed by its [Chairman of the Board, Chief Executive Officer
or one of its Vice Presidents], and duly attested by its [Secretary or one of
its Assistant Secretaries], and has caused the
--------------------------------
same to be executed by one of its [Vice Presidents or Assistant Vice Presidents]
and its corporate seal to be hereunto affixed, and duly attested by one of its
[Assistant Secretaries], as of the day and year first above written.
TELECORP PCS, INC.
_________________________________
Name:
Title:
[TRUSTEE]
_________________________________
Name:
Title:
▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇
SS:
COUNTY OF NEW YORK
On the day of [ , ] before me personally came
---- --------- ---- --------,
to me known, who, being by me duly sworn, did depose and say that he resides in
; that he/she is the of TeleCorp PCS, Inc.,
-------------- --------------------
a Delaware corporation, the corporation described in and which executed the
foregoing instrument; and that he/she signed his/her name thereto by authority
of the board of directors of said corporation.
▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇
SS:
COUNTY OF NEW YORK
On the day of [ , ], before me personally came
---- --------- ---- ----------,
to me known, who, being by me duly sworn, did depose and say that he/she
resides in ; that he/she is an [ ] of
--------------- ----------------- ---------,
a banking corporation organized under the laws of , the
----------------------
corporation described in and which executed the foregoing instrument, that
he/she knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by authority of the
board of directors of said corporation, and that he/she signed his/her name
thereto by like authority.
CONFIDENTIAL - FOR DISCUSSION PURPOSES ONLY
-------------------------------------------
EXHIBIT D
Summary of Principal Terms
See attached.
CONFIDENTIAL - FOR DISCUSSION PURPOSES ONLY
-------------------------------------------
AT&T WIRELESS/VENTO AND ▇▇▇▇▇▇▇▇
F Block Joint Ventures
Summary of Principal Terms
General
Parties AT&T Wireless Services, Inc. and/or one or more affiliates
("AT&T"), each of the entities (each, a "License Entity") that
owns one or more of the F Block licenses referred to below,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Management Group"),
TeleCorp PCS, Inc. ("TeleCorp"), the ▇▇▇▇▇▇▇▇ ▇▇▇▇ Equity
Investors (the "TeleCorp Investors"), and the non-Management
Group equity holders in the License Entities (the "Non-Management
Equity Holders").
Structure Each of the Houston, San Diego, Melbourne - Titusville, Orlando
and Tampa - St. Petersburg - Clearwater F Block licenses (each,
an "F Block License") are held by a separate entity (each, a
"License Entity" and collectively the "License Entities"). Each
of the five entities will be independent of each other, but will
have substantially identical ownership and governance, as set
forth below.
Acquisition of San Diego License and Non-Management Equity Holders'
Interests/Puerto Rico Transaction
AT&T Loan AT&T makes a loan (the "AT&T Loan") to the Management Group in an
amount equal to 100% of the cash required to pay the purchase
price of the San Diego F Block License, plus the aggregate amount
of legal fees and other expenses (approximately $225,000)
TeleCorp incurred directly related to such acquisition. The
Management Group will secure the AT&T Loan with a pledge of all
of the capital stock of the San Diego License Entity.
CONFIDENTIAL - FOR DISCUSSION PURPOSES ONLY
-------------------------------------------
Capitalization
of the San Diego
License Entity Concurrently with the consummation of the AT&T Loan, the
Management Group will contribute to the capital of the San
Diego License Entity all the proceeds of such loan.
Use of AT&T
Loan Proceeds Concurrently with the capitalization of the San Diego License
Entity, the San Diego License Entity will use the Management
Group capital contribution to pay the purchase price of the
San Diego F Block License and related expenses.
Exchange of Note
for Interests Concurrently with the closing of the acquisition by TeleCorp of
AT&T's PCS license covering Puerto Rico, TeleCorp will acquire
100% of the Non-Management Equity Holders' equity interests in
the License Entities (the "Non-Management Equity Interests") in
exchange for TeleCorp promissory notes in the aggregate
principal amount, in the case of each of the F Block Licenses,
set forth on Schedule A, or approximately $26 million in the
aggregate (the "Non-Management Equity Interests Purchase
Price"). The TeleCorp notes will be of the same tenor as those
being issued to AT&T in partial consideration for AT&T's Puerto
Rico PCS license.
TeleCorp Notes The principal terms of the TeleCorp notes are:
-- Initial interest rate, equivalent to Lucent Series C, 12%
per annum
-- Hold period: October 31, 1999
-- Interest rate after hold period: 7%
-- Convert (if the holder is AT&T, to Series A Preferred, or
Series D and F Preferred, at AT&T's option, or if the holder is
an Investor, to Series C Preferred and Series A Common) at a
price of 20% premium to par or $1,200/unit
-- Senior to Lucent Series C on maturity, redemption priority
and repayment
-- Mandatory repayment or conversion on qualifying IPO or high
yield offering
-- Other terms equivalent to Lucent Series C, except conversion
rights are forfeited on transfer
66
CONFIDENTIAL - FOR DISCUSSION PURPOSES ONLY
-------------------------------------------
Sale of Interests
to License Entity Concurrently with the exchange referred to in the "Exchange
of Notes for Interests" section, TeleCorp will assign to
each License Entity (other than San Diego License Entity)
the applicable Non-Management Equity Interests (i.e., the
interests TeleCorp has acquired in the Houston License
Entity will be assigned to Houston License Entity, etc.).
In consideration therefor, each License Entity (other than
San Diego License Entity) will issue to TeleCorp promissory
notes (the "JV Notes"), on terms reasonably acceptable to
AT&T, in the aggregate principal amount, in the case of
each License Entity, set forth on Schedule A, or
approximately $26 million in the aggregate.
Puerto Rico
Consideration As a portion of the consideration payable by TeleCorp to
AT&T for the Puerto Rico license, TeleCorp will deliver to
AT&T the JV Notes.
Timing The closing of the AT&T Loan and the Management Group
capital contribution to the San Diego License Entity will
occur concurrently with the acquisition of the San Diego F
Block License by the San Diego License Entity, and is not
conditioned on the consummation of the Puerto Rico
acquisition and the transactions described herein (but see
"Alternative Arrangement" below). The closing of the Puerto
Rico acquisition and the exchanges described above
involving the Non-Management Equity Interests, the TeleCorp
notes and the JV Notes will all occur concurrently with the
closing of the joint venture contributions described in
this term sheet.
Alternative
Arrangements Anything in this Term Sheet to the contrary
notwithstanding, at any time on or before the closing of
the Puerto Rico transaction, AT&T shall have the right to
restructure the Transactions by (a) canceling the
transactions set forth in "Exchange of Notes for Interests"
and "Sale of Interests to License Entity," and (b) revising
the "Puerto Rico Consideration" by eliminating the JV
Notes, and increasing the amount of the TeleCorp Notes to
$36 million.
67
CONFIDENTIAL - FOR DISCUSSION PURPOSES ONLY
-------------------------------------------
In the event that the Puerto Rico transaction is not
restructured as set forth in the immediately preceding
paragraph and fails to close, (a) AT&T will lend to the
License Entities an amount equal to the Non-Management
Equity Interests Purchase Price in exchange for the JV
notes, (b) the License Entities will acquire for cash, and
the Non-Management Equity Holders will sell to the License
Entities, the Non-Management Equity Interests.
License Entity Capitalization and Management Structure
Capitalization There will be two classes of interests in the License
Entities: voting (which have no economic rights) and non-
voting (which represent all of the economic interests in the
License Entities) The Management Group shall have 75% of the
voting interests and 51% of the non-voting interests of each
License Entity, and AT&T shall have 25% of the voting
interests, and 49% of the non-voting interests of each
License Entity.
Board AT&T will have the right to designate two directors, and
each member of the Management Group will be a director. The
Management Group (or its successor) will have the right to
designate one additional director, provided such third
director is independent of the Management Group and
reasonably acceptable to AT&T. The initial members of the
Board will be mutually agreed upon.
Voting Rights A list of significant matters will require an 80%
supermajority approval by the Board of License Entity (this
list will include, but not be limited to, all matters for
which TeleCorp requires a supermajority approval).
Management Fee In consideration of their services, the Management Group
will be paid an annual fee equal to $150,000 (prorated for
any partial year) in the aggregate for all License Entities
(irrespective of the number of License Entities, and to be
divided among the License Entities in a mutually acceptable
manner).
Replacement of
Management
68
CONFIDENTIAL - FOR DISCUSSION PURPOSES ONLY
-------------------------------------------
Group In the event that agreed upon performance benchmarks or
other objective requirements are not satisfied (such
benchmarks and or requirements to be reasonably acceptable
to AT&T), the Management Group will be required to assign to
substitute control group, reasonably acceptable to a
majority of the License Entity directors (excluding the
members of the Management Group), all of the Management
Group's voting interests. In the event of replacement, the
Management Group will, at AT&T's option, either retain its
non-voting stock, transfer that stock to its replacement for
either cash in an amount equal to the then current value of
its put (discussed below) and/or an instrument with the same
economic features as the put (so that the Management Group's
return will not be worsened as the result of such transfer).
AT&T Assistance AT&T agrees to, at the request of the Board, negotiate in
good faith a management agreement pursuant to which AT&T
would build and manage a system that satisfied the
applicable FCC license requirements.
Funding At the request of the Board, AT&T agrees to fund, on terms
acceptable to it, the operating expenses of the License
Entity (including without limitation the Management Put, the
build out costs described in the immediately preceding
paragraph, the management fees, and the interest on the FCC
debt).
AT&T Liquidity Anything to the contrary in the AT&T Loan notwithstanding,
the Management Group agrees that if at any time AT&T
requests repayment of the AT&T Loan and/or the JV notes, the
Management Group will use its best efforts to take all
commercially reasonable steps to raise funds to do so.
69
Right of First
Negotiation In order to induce AT&T to extend the AT&T Loan, and in
consideration of the JV Notes and the commitments AT&T has
made to the License Entities hereunder, the Management Group
hereby agrees with AT&T that it will in good faith negotiate
with AT&T a mutually acceptable transaction (an "F Block
Transaction") relating to the F Block Licenses, and, until
both parties agree in writing that they are no longer
interested in entering into an F Block Transaction, the
Management group will not enter into an agreement or
arrangement with any person or entity relating to any
alliance, sale or other transaction involving the F Block PCS
Licenses, or solicit, initiate or engage in any discussion
with respect to any such licenses.
Indemnification Each License Entity will provide customary indemnification
for its directors and officers (including the Management
Group), including without limitation indemnifying them
against director liability arising from AT&T's failure to
fund License Entity's capital requirements (provided the
Management Group and AT&T agree on acceptable terms for such
funding) and AT&T's provision of management services. AT&T
will assure performance by License Entity of its
indemnification obligations.
Management Put The Management Group will have the right to put to AT&T its
interest in each License Entity for a sum of cash equal to,
for each License Entity, the amount set forth on Schedule B
($[4] million in the aggregate), plus 6% per annum (and,
during the period, if any, following replacement of the
Management Group, 10% per annum), compounded annually. The
put will be exercisable (in whole but not in part) only
during the one-year period following the earliest date that
exercise of the put would not violate FCC rules or trigger
any penalties (the Management Group shall receive written
notice of this date), provided that to the extent permitted
by FCC rules without triggering any penalty, each member of
the Management Group may put $400,000 of its F Block Tracking
Interests during the one-year period commencing December 31,
1999 (at AT&T's option, it may fund the redemption of the
Management Group's interest, in lieu of the put).
70
CONFIDENTIAL - FOR DISCUSSION PURPOSES ONLY
-------------------------------------------
Transfer
Restrictions The Management Group may not transfer, pledge or otherwise
dispose of all or any portion of its License Entity interests
prior to the ninth anniversary of the closing.
* * * * *
71
CONFIDENTIAL - FOR DISCUSSION PURPOSES ONLY
-------------------------------------------
SCHEDULE A
F Block License Aggregate Principal Amount of Notes
--------------- -----------------------------------
Houston
San Diego* -0-
Melbourne
Orlando
Tampa
TOTAL $[26,000,000]
-----------------
* The Non-Management Equity Holders do not hold an equity interest in the
San Diego License Entity. Accordingly, no San Diego JV Notes will be issued and
the formation of San Diego License Entity is not subject to the consummation of
the other F Block transactions or the Puerto Rico transaction.
72
SCHEDULE B
License Entity Value of Management Group Equity Interest
-------------- -----------------------------------------
Houston
San Diego
Melbourne
Orlando
Tampa
TOTAL [$4,000,000]
73
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Note to:
___________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
(Print or type name, address and zip code and social security or tax ID number
of assigned)
and irrevocably appoint , agent to
__________________________
transfer this Note 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 Note)
Signature Guarantee:
________________________________________________
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934.
74
FORM OF CERTIFICATE OF TRANSFER
TeleCorp PCS, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[Name and Address of Registrar
Re: __% Senior Subordinated Discount Notes due _____, Series E
Reference is hereby made to the Indenture, dated as of _______, 1999 (the
"Base Indenture"), between TeleCorp PCS, Inc. (the "Company") and ____________,
as trustee (the "Trustee") as supplemented by a Third Supplemental Indenture,
dated as of _________, 1999 (the "Third Supplemental Indenture") among the
Company and the Trustee (the Base Indenture and the Third Supplemental Indenture
are referred to herein as the "Indenture"). Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
____________, (the "Transferor") owns and proposes to transfer the Note[s]
specified in Annex A hereto in the principal amount at maturity of $__________
in such Note[s] (the "Transfer'), to _________ (the "Transferee"), as further
specified in Annex A hereto. This Certificate is accompanied by one or more
certificates aggregating at least the principal amount at maturity of the Notes
proposed to be transferred. The Transferor hereby certifies that:
Check and complete if Transferee will take delivery of a Note pursuant to Rule
144A or Regulation S.
One or more of the events specified in the Indenture have occurred and the
Transfer is being effected in compliance with the transfer restrictions
applicable to Notes bearing the Private Placement Legend and pursuant to and in
accordance with the United States Securities Act of 1933 (the "Securities Act"),
and accordingly the Transferor hereby further certifies that (check one):
(a) such Transfer is being effected pursuant to and in accordance with Rule
144A under the Securities Act and the Transferor certifies to that the Transfer
is being effected pursuant to and in accordance with Rule 144A and, accordingly,
the Transferor hereby further certifies that the Notes are being transferred to
a Person that the Transferor reasonably believes is purchasing the Notes for one
or more accounts with respect to which such Person exercises sole investment
discretion, and such Person and each such account is a "qualified institutional
buyer" within the meaning of Rule 144A in a transaction meeting the requirements
of Rule 144A and such Transfer is in compliance with a applicable blue sky
securities laws of any state of the United States. Upon consummation of the
proposed Transfer in accordance with the terms of the
Indenture, the transferred Note will be subject to the restrictions on transfer
enumerated in the Private Placement Legend and in the Indenture and the
Securities Act ; or
(b) such Transfer is being effected pursuant to an in accordance with Rule
904 under the Securities Act and the Transferor that the Transfer is being
effected pursuant to and in accordance with Rule 904 and, accordingly, the
Transferor hereby further certifies that (i) the Transfer is not being made to a
person in the United States and (x) at the time the buy order was originated,
the Transferee was outside the United States or such Transferor and any Person
acting on its behalf reasonably believed and believes that the Transferee was
outside the United States or (y) the transaction was executed in, on or through
the facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 904(b) of Regulation
S under the Securities Act and (iii) the transaction is not part of a plan or
scheme to evade the registration requirements of the Securities Act. Upon
consummation of the proposed transfer in accordance with the terms of the
Indenture, the Note will be subject to the restrictions on Transfer enumerated
in the private placement legend printed on any global Series E Note issued under
Regulation S and in the Third Supplemental Indenture and the Securities Act.
This certificate and the statements contained herein are made for your benefit
and the benefit of the Company.
Dated:
[Insert Name of Transferor]
By:
Name:
Title: