Exhibit 10.27
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SECURITIES PURCHASE AGREEMENT
by and among
AT&T WIRELESS PCS INC.,
TWR CELLULAR, INC.,
CASH EQUITY INVESTORS,
MERCURY PCS, LLC,
MERCURY PCS II, LLC,
MANAGEMENT STOCKHOLDERS
and
TRITEL, INC.
Dated as of May 20, 1998
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, dated as of May 20, 1998, by and among
AT&T Wireless PCS Inc., a Delaware corporation ("AT&T PCS"), TWR Cellular, Inc.,
a Maryland corporation ("TWR") the investors referred to on Schedule I
(individually, an "Initial Cash Equity Investor" and, collectively, the "Initial
Cash Equity Investors"), Mercury PCS, LLC, a Mississippi limited liability
company ("Mercury I"), Mercury PCS II, LLC, a Mississippi limited liability
company ("Mercury II"), the individuals listed on Schedule II (individually, a
"Management Stockholder" and, collectively, the "Management Stockholders") and
Tritel, Inc., a Delaware corporation (the "Company"). AT&T PCS, TWR, the Cash
Equity Investors, Mercury I and Mercury II are sometimes referred to herein,
individually, as a "Purchaser" and, collectively, as the "Purchasers."
WHEREAS, AT&T PCS has been granted the PCS licenses described on
Schedule III (the "AT&T PCS Licenses") and TWR holds the PCS licenses described
on Schedule III (the "TWR Licenses");
WHEREAS, Mercury I and Mercury II have been granted the PCS licenses
described on Schedule IV (the "Mercury Licenses") and Mercury I has, pursuant to
the Central Alabama Agreement, agreed to acquire the PCS license described on
Schedule V (the "Alabama License");
WHEREAS, the Management Stockholders organized the Company by the
filing of a Certificate of Incorporation (the "Original Certificate"), and as of
the date hereof the Management Stockholders are the record and beneficial owners
of all of the issued and outstanding capital stock of the Company;
WHEREAS, the Management Stockholders have extensive experience and
expertise in the wireless telecommunications industry and have organized the
Company in order to construct and operate a mobile wireless telecommunications
system in the territory (the "Company Territory") described on Schedule VI;
WHEREAS, each of the Purchasers wishes to acquire securities of the
Company in consideration of contributions of cash and/or other property to the
capital of the Company, and the Company wishes to accept such contributions and
issue securities to each of the Purchasers, all on the terms and subject to the
conditions herein set forth; and
WHEREAS, the parties wish to amend and restate the Original
Certificate in its entirety in order to reflect, among other things, the
authorization of the securities being issued hereunder, and the parties wish to
enter into certain agreements relating to the parties' rights and obligations in
connection with the Company;
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
As used herein, the following terms have the following meanings (unless
indicated otherwise, all Section and Article references are to Sections and
Articles in this Agreement, and all Schedule and Exhibit references are to
Schedules and Exhibits to this Agreement):
"Additional Offering" has the meaning set forth in Section 6.13.
"Additional Purchaser" has the meaning set forth in Section 6.13.
"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 I under the heading
"Aggregate Commitment."
"Alabama License" has the meaning set forth in the second recital.
"Alabama License Transfer" means the assignment by Central Alabama of
the Alabama License pursuant to the terms of the Central Alabama Agreement.
"Assumed Mercury Debt" has the meaning set forth in Section 2.8.
"AT&T Contributed Licenses" has the meaning set forth in Section 2.1.
"AT&T License Transfer" has the meaning set forth in Section 3.2(a).
"AT&T Party" means AT&T PCS, TWR and each Affiliate of AT&T PCS that is
a party to any of the Related Agreements.
"AT&T PCS" has the meaning set forth in the preamble.
"AT&T PCS Licenses" has the meaning set forth in the first recital.
"AT&T Retained Licenses" has the meaning set forth in Section 2.1.
"Bridge Loan Agreement" means the agreement between Mercury I and
Lucent, dated as of October 31, 1997, to provide a credit facility having
aggregate commitments of at
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least $15 million, as the same may be amended, modified or supplemented in
accordance with the terms thereof.
"Bridge Loan Documents" means the Bridge Loan 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.
"Cash Equity Borrower" means Mercury I, Mercury II and each Cash Equity
Investor that is a borrower under a Cash Equity Loan Agreement.
"Cash Equity Loan Agreements" means the agreements among each Cash
Equity Borrower, on the one hand, and the lenders referred to therein, on the
other hand, to be dated as of the Closing Date, to provide loans to Cash Equity
Borrowers in the aggregate amount of $75 million, as the same may be amended,
modified or supplemented in accordance with the terms thereof.
"Cash Equity Loan Documents" means the Cash Equity Loan Agreements 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.
"Cash Equity Investor" means an Initial Cash Equity Investor and, from
and after the date it executes a counterpart of this Agreement in accordance
with the terms of Section 6.13, any Additional Purchaser.
"Cash Equity Investor Contributions" means the Aggregate Commitments,
the Initial Capital Contributions and the Unfunded Commitments, in each case of
the Cash Equity Investors.
"Central Alabama" means Central Alabama Partnership, L.P. 132.
"Central Alabama Agreement" means the Asset Purchase Agreement, dated
as of March 4, 1998, among Mercury I, Central Alabama and the other parties
named therein.
"Central Alabama FCC Debt" has the meaning set forth in Section 2.8, as
the same is reduced in accordance with Section 6.14.
"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.
"Claim" has the meaning set forth in Section 8.6(a).
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"Closing" has the meaning set forth in Section 3.1.
"Closing Date" has the meaning set forth in Section 3.1.
"Closing Price" shall mean, with respect to each share of any class or
series of capital stock for any day, (i) the last reported sale price regular
way or, in case no such sale takes place on such day, the average of the closing
bid and asked prices regular way, in either case as reported on the principal
national securities exchange on which such class or series of capital stock is
listed or admitted for trading or (ii) if such class or series of capital stock
is not listed or admitted for trading on any national securities exchange, the
last reported sale price or, in case no such sale takes place on such day, the
average of the highest reported bid and the lowest reported asked quotation for
such class or series of capital stock, in either case as reported on NASDAQ or a
similar service if NASDAQ is no longer reporting such information.
"Committed Pre-Closing Construction" means construction of facilities
in the Knoxville, Louisville and Nashville BTAs, including cell sites, radio
base stations and other equipment which, when activated and connected to a
switch, will provide PCS service that satisfies the build-out requirements for
MTAs including such BTAs set forth in 47 CFR Section 24.203.
"Common Stock" means, collectively, Voting Preference Stock, the
Tracked Common Stock, the Voting Common Stock and the Non-Voting Common Stock.
"Company" has the meaning set forth in the preamble.
"Company Territory" has the meaning set forth in the fourth recital.
"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.
"Contributed Mercury Assets" has the meaning set forth in Section 2.3.
"Contributions" means, collectively, the AT&T Contributed Licenses, the
Alabama License, the Mercury Licenses, the Contributed Mercury Assets and the
Cash Equity Investor Contributions.
"Credit Agreement" means the agreement among the Company, the lenders
and the agents referred to therein, and any other parties who become lenders or
agents thereunder, to be dated as of the Closing Date, to provide a credit
facility having aggregate commitments of at
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least $525 million, as the same may be amended, modified or supplemented in
accordance with the terms thereof.
"Credit Documents" means the Credit Agreement and all agreements,
instruments and documents executed and delivered pursuant thereto, as the same
may from time to time be amended, modified or supplemented in accordance with
the terms thereof.
"Employees" has the meaning set forth in Section 6.11.
"Employment Agreements" means the Employment Agreements between each
Management Stockholder and an additional senior executive to be identified prior
to the Closing, which additional senior executive shall be reasonably
satisfactory to the Management Stockholders, AT&T and Cash Equity Investors
representing 66-2/3% of the Aggregate Commitment of all Cash Equity Investors,
on the one hand, and the Company, on the other hand, in substantially the form
of Exhibit O, each to be dated as of the Closing Date, as the same may be
amended, modified or supplemented in accordance with the terms thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"Escrowed Cash" has the meaning set forth in Section 8.9.
"Escrow Holder" has the meaning set forth in Section 8.9.
"Escrowed Shares" means (i) collectively, 14,426,885 and 3,834,995
shares of Series C Preferred Stock issued to Mercury I and Mercury II,
respectively, pursuant to Section 2.5(b), and (ii) with respect to any Mercury
Investor Indemnitor, any such shares that are thereafter distributed or
transferred to such Mercury Investor Indemnitor, and in each case any securities
into which such shares are converted or exchanged.
"FCC" means the Federal Communications Commission or similar regulatory
authority established in replacement thereof.
"FCC Debt" means the indebtedness of Mercury I and Mercury II to the
United States Department of the Treasury, in the aggregate principal amount of
$73,348,800, together with accrued but unpaid interest thereon, incurred in
connection with its acquisition of Mercury Licenses, as the same is reduced in
accordance with Section 6.14.
"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.
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"Florida Licenses" means the "Mercury Licenses," as such term is
defined in the Option Agreement.
"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 8.6(a).
"Indemnifying Party" has the meaning set forth in Section 8.6(a).
"Initial Cash Contribution" means, with respect to each Cash Equity
Investor, the amount set forth opposite its name on Schedule I under the heading
"Initial Cash Contribution."
"Initial Cash Equity Investor" has the meaning set forth in the
preamble.
"Law" means applicable common law and any statute, ordinance, code or
other law, rule, permit, permit condition, regulation, order, decree, technical
or other standard, requirement or procedure enacted, adopted, promulgated,
applied or followed by any Governmental Authority.
"License" means a license, permit, certificate of authority, waiver,
approval, certificate of public convenience and necessity, registration or other
authorization, consent or clearance 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.
"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" means Lucent Technologies, Inc.
"Management Agreement" means the Management Agreement between the
Company and Tritel Management, LLC, in substantially the form of Exhibit A, to
be dated as of the Closing Date, as the same may be amended, modified or
supplemented in accordance with the terms thereof.
"Management Stockholder" has the meaning set forth in the preamble.
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"Market Price" shall mean, with respect to each share of any class or
series of capital stock for any day, (i) the average of the daily Closing Prices
for the ten consecutive trading days commencing 15 days before the day in
question or (ii) if on such date the shares of such class or series of capital
stock are not listed or admitted for trading on any national securities exchange
and are not quoted on NASDAQ or any similar service, the cash amount that a
willing buyer would pay a willing seller (neither acting under compulsion) in an
arm's-length transaction without time constraints per share of such class or
series of capital stock as of such date, viewing the Company on a going concern
basis, as determined in good faith by the Board of Directors, whose
determination shall be conclusive; provided that, in determining such cash
amount, the following shall be ignored: (x) any contract or legal limitation in
respect of such shares, including transfer, voting and other rights, (y) the
"minority interest" or "control" status of such shares, and (z) any illiquidity
arising by contract in respect of such shares and any voting rights or control
rights amongst the stockholders; provided, further, that at the request of
holders of a majority of the Escrowed Shares originally issued, the
determination of Market Price as of the final Reconciliation Date for purposes
of Article VIII shall be made, at the Company's expense, by an investment
banking firm of nationally recognized standing selected by the Company.
"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.
"Mercury I" has the meaning set forth in the preamble.
"Mercury II" has the meaning set forth in the preamble.
"Mercury License Transfer" has the meaning set forth in Section 3.2(c).
"Mercury Licenses" has the meaning set forth in the second recital.
"Mercury Investors" means the Persons that beneficially own, directly
or indirectly, equity interests in Mercury I and/or Mercury II on the date
hereof and that are set forth on Schedule VIII.
"Mercury Investor Indemnitor" has the meaning set forth in Section
6.10(b).
"NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotations System.
"Network Membership License Agreement" means the Network Membership
License Agreement between the Company and AT&T Corp., in substantially the form
of Exhibit B, to be dated as of the Closing Date, as the same may be amended,
modified or supplemented in accordance with the terms thereof.
"New York Courts" has the meaning set forth in Section 10.6.
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"Non-Voting Common Stock" means the Company's Class B Non-Voting Common
Stock, par value $.01 per share.
"Old Common Stock" has the meaning set forth in Section 5.5(b).
"Old Mercury Expenses" means legal fees and related disbursements,
fines, settlements and judgments, in each case documented in reasonable detail,
payable by Mercury I or Mercury II in connection with the matters described on
Schedule 4.7 or 5.3(a).
"Old Mercury Note" means the promissory note, in the form set forth as
Exhibit P, evidencing the advances made by the Company to Mercury I and Mercury
II pursuant to Section 8.10.
"Old Mercury Stockholders" means, collectively, Mercury I, Mercury II
and the Mercury Investor Indemnitors, in each case in their capacity as holders
of Escrowed Shares.
"Option Agreement" means the Option Agreement, dated as of the Closing
Date, between the Company and Mercury II, pursuant to which the Company has an
option to acquire the Florida Licenses, in substantially the form of Exhibit N,
as the same may be amended, modified or supplemented in accordance with the
terms thereof.
"Original Certificate" has the meaning set forth in the fourth recital.
"Percentage Share" means, with respect to any Old Mercury Stockholder,
the percentage set forth opposite its name on Schedule VIII.
"Permitted Expenditures" means expenditures of the nature and up to the
amount set forth on Schedule 1.1.; provided, that such expenditures shall be for
general working capital or assets, properties or rights that are necessary or
advisable, in the good faith determination of the Company, in order to
facilitate the construction of PCS systems in the geographic areas within the
Company Territory.
"Permitted Liens" means (i) Liens arising in favor of sellers or
lessors for indebtedness and obligations incurred to purchase or lease fixed or
capital assets, provided that such liens secure only the indebtedness and
obligations created thereunder and are limited to the assets purchased or leased
pursuant thereto and the proceeds thereof; (ii) mechanic's and workmen's liens;
and (iii) statutory landlord liens.
"Person" means an individual, corporation, partnership, limited
liability company, association, joint stock company, Governmental Authority,
business trust, unincorporated organization, or other legal entity.
"POPs" means, with respect to any licensed area, the residents of such
area based on the most recent publication by Equifax Marketing Decision Systems,
Inc.
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"Preferred Stock" means the shares of Series A Preferred Stock, Series
C Preferred Stock, and Series D Preferred Stock being issued hereunder.
"Purchaser" has the meaning set forth in the preamble.
"Reconciliation Date" means the earliest to occur of (i) the fifth
anniversary of the Closing Date, (ii) the date of consummation of any merger,
combination or consolidation of the Company or any Subsidiary with or into any
other entity (regardless of whether the Company or such Subsidiary is the
surviving entity in any such transaction), if, after giving effect to such
transaction, Cash Equity Investors beneficially own less than 33% of the Common
Stock on a fully diluted basis, (iii) the date of consummation of any sale or
disposition of all or substantially all of the Company's assets and (iv) the
liquidation, dissolution or winding up of the Company; provided, that with
respect to any Mercury Investor Indemnitor, the Reconciliation Date means the
earlier to occur of (A) any of the foregoing or (B) any date after the second
anniversary of the Closing Date on which (x) there shall have been a settlement
or other final disposition in accordance with the applicable terms of Article
VIII of all of the matters listed on Schedule 4.7 and 5.3(a) and all other
matters in respect of which any Section 8.5 Indemnified Party has given timely
notice of a Section 8.5 Loss and (y) such Mercury Investor Indemnitor has
satisfied his or its Percentage Share of any Section 8.5 Losses in respect of
which a Section 8.5 Notice has been given in accordance with the proviso to the
last sentence of Section 8.5.
"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 Employment Agreements, Management
Agreement, Network Membership License Agreement, Option Agreement, Resale
Agreement, Roaming Agreement, Stockholders Agreement, the Old Mercury Note (and
the pledge agreement and other documents referred to therein), and the consent
of even date herewith of the members of each of Mercury I and Mercury II.
"Representatives" has the meaning set forth in Section 6.2(a).
"Resale Agreement" means the Resale Agreement between the Company and
AT&T Wireless Services, Inc., or an Affiliate thereof, in substantially the form
of Exhibit C, as the same may be amended, modified or supplemented in accordance
with the terms thereof.
"Restated Bylaws" means the Amended and Restated Bylaws of the Company,
in the form of Exhibit D, to be adopted as of the Closing Date, as the same may
be amended, modified or supplemented in accordance with the terms thereof.
"Restated Certificate" means the Amended and Restated Certificate of
Incorporation of the Company, in the form of Exhibit E, to be filed with the
office of the
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Secretary of State of the State of Delaware on the Closing Date, as the same may
be amended, modified or supplemented in accordance with the terms thereof.
"Roaming Agreement" means the Intercarrier Roamer Service Agreement
between the Company and AT&T Wireless Services, Inc., in substantially the form
of Exhibit F, to be dated as of the Closing Date, as the same may be amended,
modified or supplemented in accordance with the terms thereof.
"SBA" has the meaning set forth in Section 6.6(b).
"SBA Compliance Documents" has the meaning set forth in 7.3(c).
"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 Purchaser 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.
"Section 8.5 Indemnified Party" has the meaning set forth in Section
8.5.
"Section 8.5 Losses" has the meaning set forth in Section 8.5.
"Securities" means the shares of Preferred Stock and Common 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.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred Stock" has the meaning set forth in Section 2.5.
"Series C Preferred Stock" has the meaning set forth in Section 2.5.
"Series D Preferred Stock" has the meaning set forth in Section 2.5.
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"Solvent" means, when used with respect to any Person, that at the time
of determination: (a) the fair market value of its assets is in excess of the
total amount of its liabilities (including, without limitation, contingent
liabilities), (b) the present fair saleable value of its assets is greater than
its probable liability for its existing debts as such debts become absolute and
mature, (c) it is then able and expects to be able to pay its indebtedness
(including without limitation, contingent indebtedness and other commitments) as
they mature, and (d) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
"Southern Farm" means Southern Farm Bureau Life Insurance Company.
"Stockholders Agreement" means the Stockholders Agreement, by and among
the Company, AT&T PCS, the Cash Equity Investors and the Management
Stockholders, as stockholders, in substantially the form of Exhibit G, to be
dated as of the Closing Date, 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.
"Tracked Common Stock" means, collectively, the Class C Common Stock
and the Class D Common Stock.
"Transactions" means the transactions contemplated by this Agreement
and the Related Agreements.
"Transfer Taxes" has the meaning set forth in Section 3.3.
"Transferred Employees" has the meaning set forth in Section 6.11.
"TWR" has the meaning set forth in the preamble.
"TWR Licenses" has the meaning set forth in the first recital.
"Unfunded Commitment" has the meaning set forth in Section 2.2.
"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.
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ARTICLE II
CONTRIBUTIONS; PURCHASE AND SALE
OF SECURITIES; CERTAIN RESTRICTIONS ON TRANSFER
2.1 AT&T PCS and TWR Contributions. Upon the terms and subject to the
conditions hereof and in reliance upon the representations, warranties and
agreements herein contained: (a) AT&T PCS and TWR (as applicable) shall
partition and/or disaggregate each AT&T PCS License and TWR License to create,
as more particularly described on Schedule 2.1, (i) Licenses (the "AT&T
Contributed Licenses") providing in the aggregate the right to use 20 MHz of
authorized frequencies within the geographic area covered by the AT&T
Contributed Licenses, and (ii) Licenses (the "AT&T Retained Licenses") providing
in the aggregate the right to use the balance of the authorized frequencies
within such geographic area and the right to use the authorized frequencies
outside of such geographic area (but within the geographic area covered by the
AT&T PCS Licenses), and (b) at the Closing, AT&T PCS and TWR (as applicable)
shall contribute the AT&T Contributed Licenses to the capital of the Company (or
one or more wholly owned Subsidiaries of the Company designated by the Company).
2.2 Cash Equity Investor 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 I (or such
earlier dates as may be established in accordance with the terms of the
Stockholders Agreement); provided that, in all events, (i) the aggregate amount
of the Initial Cash Contributions plus the additional capital contributions
actually made by Cash Equity Investors during the period commencing on the date
of formation of the Company and ending on December 31, 1998 shall be no less
than the Company's "operating losses," determined in accordance with generally
accepted accounting principles, for such period and (ii) the aggregate amount of
the Initial Cash Contributions plus the additional capital contributions
actually made by Cash Equity Investors during the period commencing on the date
of formation of the Company and ending on December 31, 1999 shall be no less
than the Company's "operating losses," determined in accordance with generally
accepted accounting principles, for such period.
The obligation of each Cash Equity Investor to make such additional
cash contributions in respect of its Aggregate Commitment in accordance with
this Section 2.2 and Section 3.10 of the Stockholders Agreement is sometimes
referred to herein as the "Unfunded Commitment." Nothing herein (including
without limitation, the proviso to Section 2.2 (a)) 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.
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(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 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).
2.3 Mercury Contributions. Upon the terms and subject to the conditions
hereof and in reliance upon the representations, warranties and agreements
herein contained, at the Closing, each of Mercury I and Mercury II shall
contribute to the capital of the Company (or one or more wholly owned
Subsidiaries of the Company designated by the Company) the contracts and other
assets described on Schedule 2.3 (the "Contributed Mercury Assets") and the
Mercury Licenses and (if the Central Alabama Agreement shall not have been
assigned to the Company pursuant to Section 6.16) the Alabama License owned by
it.
2.4 INTENTIONALLY OMITTED.
2.5 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 Contributions, the Company shall issue, sell and deliver to the Purchasers
the following securities:
(a) to each of AT&T PCS and TWR, the number of shares set forth
opposite its name on Schedule VII of the following: (i) the Company's Series A
Convertible Preferred Stock, par value $.01 per share (the "Series A Preferred
Stock"), the terms of which are set forth in the Restated Certificate; and (ii)
the Company's Series D Preferred Stock, par value $.01 per share (the "Series D
Preferred Stock"), the terms of which are set forth in the Restated Certificate;
and
(b) to each Cash Equity Investor, Mercury I and Mercury II, the number
of shares set forth opposite its name on Schedule VII of 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.
Schedule VII also sets forth the shares of Common Stock, Voting Preference Stock
and Tracked Common Stock to be issued to the Management Stockholders pursuant to
Section 3.2(e).
2.6 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
13
legend reading substantially as follows until such Securities have been sold
pursuant to an effective registration statement under the Securities Act, Rule
144 under the Securities Act, or an opinion of counsel reasonably satisfactory
in form and substance to the Company and otherwise in full compliance with any
other applicable restrictions on transfer, including those contained in this
Agreement and the Stockholders Agreement:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE `ACT'), OR UNDER ANY STATE SECURITIES OR `BLUE SKY' LAWS. SAID
SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF, UNLESS AND UNTIL REGISTERED UNDER THE ACT AND THE
RULES AND REGULATIONS THEREUNDER AND ALL APPLICABLE STATE SECURITIES OR
`BLUE SKY' LAWS OR EXEMPTED THEREFROM UNDER THE ACT AND ALL APPLICABLE STATE
SECURITIES OR `BLUE SKY' LAWS."
2.7 Use of Proceeds. The Company shall use the net cash proceeds of its
sale of Securities hereunder solely (i) for capital and other expenditures
relating to the conduct of the Business (as defined in the Stockholders
Agreement) by the Company and its Subsidiaries, (ii) to repay the indebtedness
of each of Mercury I and Mercury II to the United States Department of the
Treasury and the other Assumed Mercury Debt, in each case pursuant to the terms
thereof, (iii) to pay fees and expenses incurred in connection with the
Transactions, and (iv) to fund borrowings under the Old Mercury Note.
2.8 Assumption of Mercury Indebtedness. Upon the terms and subject to
the conditions hereof and in reliance upon the representations, warranties and
agreements herein contained, on and as of the Closing Date, the Company shall
accept and assume the FCC Debt, the indebtedness to the United States Department
of the Treasury incurred in connection with the acquisition of the Alabama
License by Central Alabama (the "Central Alabama FCC Debt"), the indebtedness of
Mercury I and Mercury II pursuant to the Bridge Loan Documents and the other
indebtedness and liabilities described on Schedule 2.8 (collectively, the
"Assumed Mercury Debt"). The outstanding principal amount of each item of
Assumed Mercury Indebtedness, together with accrued and unpaid interest (if
any), as of March 31, 1998 is set forth on Schedule 2.8.
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
14
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").
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:
(a) AT&T PCS Contributions. Each of AT&T PCS and TWR shall execute and
deliver to the Company one or more instruments of assignment, substantially in
the form of Exhibit M, sufficient to assign the AT&T Contributed Licenses to the
Company (or one or more wholly owned Subsidiaries of the Company designated by
the Company) (such assignments being herein collectively referred to as the
"AT&T License Transfer").
(b) 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 I.
(c) Mercury Contributions. Mercury I and Mercury II shall execute and
deliver to the Company (or the applicable Subsidiary), (i) one or more
instruments of assignment, substantially in the form of Exhibit M, sufficient to
assign the Mercury Licenses and (if the Central Alabama Agreement shall not have
been assigned to the Company pursuant to Section 6.16) the Alabama License to
the Company (or one or more wholly owned Subsidiaries of the Company designated
by the Company) (such assignments being herein collectively referred to as the
"Mercury License Transfer"), and (ii) an Assignment and ▇▇▇▇ of Sale, in form
reasonably acceptable to the Company, and such other good and sufficient
instruments of conveyance, transfer and assignment as shall be necessary or
appropriate to transfer to and vest in the Company (or the applicable
Subsidiary) the Contributed Mercury Assets with warranties of title consistent
with this Agreement.
(d) Assumption and Reimbursement of Indebtedness. The Company shall (i)
execute and deliver to each of Mercury I and Mercury II an instrument of
assumption, in form and substance reasonably satisfactory to Mercury I and
Mercury II, in respect of the indebtedness to be assumed by the Company pursuant
to Section 2.8 and (ii) pay to each of Mercury I and Mercury II an amount equal
to interest actually paid by such Person on such indebtedness through the
Closing Date as evidenced by documentation reasonably satisfactory to the
Company.
(e) Management Stockholder Equity. At or prior to the Closing, each
Management Stockholder shall exchange all of his or her Old Common Stock (which
shall be surrendered to the Company for cancellation) for the shares of Voting
Preference Stock, Voting Common Stock and Class C Common Stock set forth on
Schedule VII, and a senior executive to
15
be identified prior to Closing shall subscribe for the shares of Voting Common
Stock set forth on Schedule VII.
(f) Delivery of Securities. The Company shall deliver: (i) to each of
AT&T PCS and TWR, certificates, duly executed by authorized signatories of the
Company, representing the shares of Series A Preferred Stock and Series D
Preferred Stock to be issued to AT&T PCS and TWR in accordance with Section 2.5;
(ii) to each Cash Equity Investor, and to each of Mercury I and Mercury II,
certificates, duly executed by authorized signatories of the Company,
representing the shares of Series C Preferred Stock to be issued to each of them
in accordance with the terms of Section 2.5; and (iii) to each Management
Stockholder, certificates, duly executed by authorized signatories of the
Company, representing the shares of Common Stock to be issued to each of them in
accordance with the terms of Section 3.2(e).
(g) Restated Certificate. Duly authorized officers of the Company shall
execute the Restated Certificate and cause it to be filed with the office of the
Secretary of State of the State of Delaware.
(h) 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 or the Related Agreements 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 Payment of Transfer Taxes. The Company shall pay or cause to be
paid at the Closing or, if due thereafter, promptly when due, all gross receipts
taxes, gains taxes (including, without limitation, real property gains tax or
other similar taxes), transfer taxes, sales taxes, stamp taxes, and any other
taxes, but excluding any Federal, State or local income taxes (collectively,
"Transfer Taxes"), payable in connection with the transfer of the Contributions.
ARTICLE IV
REPRESENTATIONS OF ALL PARTIES
Each of AT&T PCS and TWR (as to itself and each other AT&T Party), each
other Purchaser (as to itself), each of Mercury I and Mercury II (severally as
to itself), each Management Stockholder (severally as to himself, and jointly
and severally as to the Company, Mercury I and Mercury II, except that the
representations and warranties as to the Company set forth in (x) Section 4.5
are not being made by the Management Stockholders and (y) Sections 4.6 and 4.8
are being made by the Management Stockholders only as of the date hereof and not
as of the Closing Date), and the Company (as to itself and each of its
Subsidiaries), represents and warrants to each of the other parties that:
4.1 Organization and Standing. It is a corporation, limited liability
company, general partnership or limited partnership, duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization
and has the requisite power and authority to
16
own, lease and operate its properties and to carry on its business as now being
conducted. 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 this Agreement and the Related Agreements. TWR is an
indirect wholly owned Subsidiary of AT&T Corp.
4.2 Power and Authority. It has the requisite power and authority (or,
in the case of the Management Stockholders, legal capacity) to execute, deliver
and perform this Agreement, each of the Related Agreements 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.
4.3 Due Authorization. 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 Agreements 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.
4.4 Enforceability. This Agreement has been duly executed and delivered
by it and constitutes its valid and binding obligation, and each of the Related
Agreements 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, in each case 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.
4.5 No Breach. As of the Closing, after giving effect to the
Transactions, it is not in breach of any obligation under this Agreement or any
of the Related Agreements.
4.6 Consents; No Conflicts. Neither the execution, delivery and
performance by it of this Agreement or the Related Agreements 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 4.6, 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 4.6) or the approval
of its board of directors, general partner, stockholders or similar constituent
bodies, as the case may be (other than any such approvals that have been
obtained), except in each case, where such breach, violation, default, Lien,
right, or the failure to obtain or give such
17
Consent would not have a Material Adverse Effect on it or materially adversely
affect the Transactions or its ability to perform its obligations under the
Related Agreements. To its knowledge, except as set forth on Schedule 4.6, 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 or disqualify the Company from obtaining the
Consents (including without limitation, FCC Consent) required in order to
consummate the AT&T License Transfer and the Mercury License Transfer as
provided for in this Agreement.
4.7 Litigation. Except as set forth on Schedule 4.7, there is no action
(including court 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, which seeks
to prevent or challenge the Transactions, or which seeks to have an adverse
effect on the Company or its wholly owned Subsidiaries.
4.8 FCC Compliance. It complies with all eligibility rules issued by
the FCC to hold broadband PCS licenses, including without limitation, FCC rules
on foreign ownership and the CMRS spectrum cap. The fact that it owns the
interest in the Company contemplated by this Agreement and the Related
Agreements will not cause the Company or its wholly owned Subsidiaries to be
ineligible under FCC rules to hold PCS licenses in general or the licenses to be
held by the Company's wholly owned Subsidiaries.
4.9 Brokers. Except for fees in the aggregate amount of $6,502,500 (as
such amount may be increased up to $375,000 in connection with an Additional
Offering) payable by the Company to the Persons set forth on Schedule 4.9, all
of which will be paid by the Company concurrently with the Closing, 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.
ARTICLE V
REPRESENTATIONS OF CERTAIN PARTIES
5.1 No Distribution, Etc. Each of the Purchasers and the Management
Stockholders represents and warrants as to itself that:
(a) No Distribution. It is acquiring the Securities to be purchased by
it hereunder for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof (other than in compliance with the
Securities Act and all applicable state securities laws).
(b) Investor Acknowledgments. (i) 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
18
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.
(ii) 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.
(iii) It is not relying on and acknowledges that no representation is
being made by any other Purchaser, the Company or any of its officers,
employees, Affiliates, agents or representatives, or any Management Stockholder,
except for representations and warranties expressly set forth in this Agreement
and the Related Agreements, and, in particular, it is not relying on, and
acknowledges that no representation is being made in respect of, (x) any
projections, estimates or budgets delivered to or made available to them of
future revenues, expenses or expenditures, or future results of operations and
(y) any other information or documents delivered or made available to it or its
representatives, except for representations and warranties expressly set forth
in this Agreement and the Related Agreements.
(iv) In deciding to invest in the Company, it has relied exclusively on
the representations and warranties expressly set forth in this Agreement and the
Related Agreements and the investigations made by itself and its representatives
and its and such representatives' knowledge of the industry in which the Company
proposes to operate. Based solely on such representations and warranties and
such investigations and knowledge, it has determined that the Securities it is
acquiring are a suitable investment for it.
5.2 AT&T PCS and TWR Licenses. (a) AT&T PCS represents and warrants
that it is the authorized legal holder, free and clear of any Liens, of the AT&T
PCS Licenses, evidence of which is attached to Schedule III. The AT&T PCS
Licenses are, and on the Closing Date each of the AT&T PCS Licenses will be,
valid and in full force and effect. Except for proceedings affecting the PCS or
wireless communications services industry generally, including investigations by
governmental agencies of bidding practices of bidders in the FCC auctions of PCS
spectrum, there is not pending, nor to the knowledge of AT&T PCS, threatened
against AT&T PCS or against the AT&T PCS Licenses, any application, action
(including court action), petition, objection or other pleading, or any
proceeding with the FCC which questions or contests the validity of, or seeks
the revocation, non-renewal or suspension of, any of the AT&T PCS Licenses,
which seeks the imposition of any modification or amendment with respect
thereto, or which adversely affects the ability of the Company to employ the
AT&T Contributed Licenses in its business after the Closing Date. The AT&T PCS
Licenses are not subject to any conditions other than those appearing on the
face of the Licenses themselves and those imposed by FCC Law.
(b) TWR represents and warrants that it is the authorized legal holder,
free and clear of any Liens, of the TWR Licenses, evidence of which is attached
to Schedule III. The TWR Licenses are, and on the Closing Date each of the TWR
Licenses will be, valid and in full force and effect. Except for proceedings
affecting the PCS or wireless communications services
19
industry generally, including investigations by governmental agencies of bidding
practices of bidders in the FCC auctions of PCS spectrum, there is not pending,
nor to the knowledge of TWR, threatened against TWR or against the TWR Licenses,
any application, action (including court action), petition, objection or other
pleading, or any proceeding with the FCC which questions or contests the
validity of, or seeks the revocation, non-renewal or suspension of, any of the
TWR Licenses, which seeks the imposition of any modification or amendment with
respect thereto, or which adversely affects the ability of the Company to employ
the AT&T Contributed Licenses in its business after the Closing Date. The TWR
Licenses are not subject to any conditions other than those appearing on the
face of the Licenses themselves and those imposed by FCC Law.
5.3 Mercury Matters. Mercury I, Mercury II and the Management
Stockholders represent and warrant, jointly and severally, that:
(a) Mercury Licenses. Each of Mercury I and Mercury II is the
authorized legal holder, free and clear of any Liens (other than Liens securing
the FCC Debt or Liens in favor of Southern Farm and Lucent that will be released
at or prior to Closing), of the Mercury Licenses set forth opposite its name on
Schedule V, true and correct copies of which are attached thereto. The Mercury
Licenses are, and on the Closing Date each of the Mercury Licenses will be,
valid and in full force and effect. Except as set forth on Schedule 5.3(a) and
for proceedings affecting the PCS or wireless communications services industry
generally, including investigations by governmental agencies of bidding
practices of bidders in the FCC auctions of PCS spectrum, there is not pending,
nor to its the knowledge, threatened against Mercury I, Mercury II or the
Mercury Licenses, any application, action (including court action), petition,
objection or other pleading, or any proceeding with the FCC which questions or
contests the validity of, or seeks the revocation, non-renewal or suspension of,
any of the Mercury Licenses, which seeks the imposition of any modification or
amendment with respect thereto, or which adversely affects the ability of the
Company to employ the Mercury Licenses in its business after the Closing Date or
seeks the payment of a fine, sanction, penalty, damages or contribution in
connection with the use of any Mercury License. The Mercury Licenses are not
subject to any conditions other than those appearing on the face of the Licenses
themselves and those imposed by FCC Law.
(b) Mercury Entities. Each item of Assumed Mercury Debt being assumed
by the Company is a bona fide obligation of Mercury I or Mercury II and the
amount set forth opposite each item on Schedule 2.8 is the outstanding amount of
principal and accrued and unpaid interest thereon as of March 31, 1998. Each of
Mercury I and Mercury II is Solvent after giving effect to the consummation of
the Transactions, including the Mercury License Transfer.
(c) Sources and Uses of Cash. The cash flow statements of each of
Mercury I and Mercury II set forth on Schedule 5.3(c) accurately reflect the
sources and uses of cash relating to the Mercury Licenses and the Contributed
Mercury Assets. At least $14 million of cash equity contributions to Mercury I
and/or Mercury II and the proceeds of all Assumed Mercury Debt has been applied
to Permitted Expenditures.
20
(d) Title and Transferability. Mercury I or Mercury II, as applicable,
has, and upon the delivery of the transfer documents pursuant to Section
3.2(c)(ii), the Company (or the applicable Subsidiary) will have, good and
marketable title to, each of the Contributed Mercury Assets free and clear of
any Liens (other than Liens in favor of Southern Farm and Lucent that will be
released at or prior to Closing). Neither the execution, delivery and
performance by Mercury I or Mercury II of this Agreement nor the contribution of
the Contributed Mercury Assets or the assumption by the Company (or the
applicable Subsidiary) of the Assumed Mercury Debt will (a) 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 any note, bond, mortgage,
indenture, lease, agreement or other instrument, in each case which is
applicable to or binding upon it or any of the Contributed Mercury Assets or
Assumed Mercury Debt; or (b) require any Consent (other than those set forth on
Schedule 4.6) or the approval of its board of directors, general partner,
stockholders or similar constituent bodies, as the case may be (other than any
such approvals that have been obtained). The members of Mercury I that have
executed and delivered the unanimous consent of members dated as of the date
hereof, authorizing the consummation of the Transactions by Mercury I, are all
of the members of Mercury I, and, except for the equity interests owned by such
members, there are not on the date hereof nor will there be on or as of the
Closing Date, before giving effect to the Transactions, any outstanding equity
interests in Mercury I, or any existing options, warrants, calls, subscriptions,
or other rights, or other agreements or commitments, obligating Mercury I to
issue, transfer or sell any equity interests of Mercury I except for the Central
Alabama Agreement. The members of Mercury II that have executed and delivered
the unanimous consent of members dated as of the date hereof, authorizing the
consummation of the Transactions by Mercury II, are all of the members of
Mercury II, and, except for (i) the equity interests owned by such members, (ii)
convertible debt held by Southern Farm, (iii) the transactions contemplated by
Section 6.10, there are not on the date hereof nor will there be on or as of the
Closing Date, before giving effect to the Transactions, any outstanding equity
interests in Mercury II, or any existing options, warrants, calls,
subscriptions, or other rights, or other agreements or commitments, obligating
Mercury II to issue, transfer or sell any equity interests of Mercury II.
(e) Litigation. Except as set forth on Schedule 4.7, there is no action
(including court 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 transfer of the Contributed Mercury Assets, which seeks to prevent or
challenge such transfer, or which seeks to have an adverse effect on the
Contributed Mercury Assets.
(f) Projections. All financial projections furnished to the Cash Equity
Investors were based upon assumptions reasonably believed by Mercury I, Mercury
II or the Management Stockholders, as applicable, to be reasonable and fair as
of the date the projections were prepared in the context of history and current
and reasonably foreseeable business conditions of the Company. There is no fact
which Mercury I, Mercury II or the Management Stockholders, as applicable, has
not disclosed to the Cash Equity Investors in writing and of which any of its
21
officers, directors or executive employees is aware (other than general economic
conditions) and which has had or would reasonably be expected to have a material
adverse effect upon the existing or expected financial condition, operating
results, assets, businesses, customer or supplier relations, employee relations
or prospects of the Company.
5.4 Capital Commitment. (i) Each Cash Equity Investor represents and
warrants that it 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 Cash Equity Investor Contributions in
accordance with the terms of Section 2.2.
(ii) Each Cash Equity Borrower represents and warrants as follows:
(A) It intends to borrow pursuant to a Cash Equity Loan Agreement the
amount set forth opposite its name on Schedule 5.4.
(B) Prior to the Closing, it shall have delivered to each of the other
parties a true and correct copy of the Cash Equity Loan Documents to which it is
a party, together with all amendments and modifications thereto. Such documents
(including the exhibits and schedules thereto) shall comprise a full and
complete copy of all agreements between the parties thereto with respect to the
subject matter thereof and transactions related thereto, and there shall be no
agreements or understandings, oral or written, or side agreements not contained
therein that relate to or modify the substance thereof.
(C) As of the Closing Date, the Cash Equity Loan Documents to which it
is a party shall have been duly authorized by all necessary corporate action on
the part of such Cash Equity Borrower, shall have been validly executed and
delivered by such Cash Equity Borrower and shall be the legal, valid and binding
obligation of such Cash Equity Borrower, enforceable 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.
As of the Closing Date, the Cash Equity Loan Documents to which it is a party
shall be in full force and effect as to such Cash Equity Borrower, none of the
provisions thereof shall have been waived by any party thereto, and no "Default"
or "Event of Default" (as such terms are defined in the Cash Equity Loan
Agreements) shall have occurred and be continuing as to such Cash Equity
Borrower.
1.5 Representations as to the Company. The Company and (except for the
representations and warranties set forth in paragraphs (b)(ii), (c), (f)(ii)(B)
and (h) below) the Management Stockholders represent and warrant, jointly and
severally, and each Management Stockholder represents and warrants as to
himself, severally and not jointly, that:
(a) Newly Formed Company. The Company was organized on April 23, 1998,
and, since its organization has at no time carried on any activities or incurred
any liabilities or obligations other than in connection with its organization
and with the consummation of the Transactions.
22
(b) Capitalization. (i) As of the date hereof and as of the Closing
Date, before giving effect to the filing of the Restated Certificate, the
authorized capital stock of the Company consists of 30 shares of common stock,
par value $.01 per share ("Old Common Stock"), of which 30 shares are issued and
outstanding, have been validly issued and are fully paid and non-assessable. As
of the date hereof and as of the Closing Date, before giving effect to the
Transactions, each of the Management Stockholders owns beneficially and of
record ten shares of Old Common Stock, free and clear of any Liens. There are
not on the date hereof nor will there be on or as of the Closing Date, before
giving effect to the Transactions, 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.
(ii) As of the Closing Date, after giving effect to the filing of the
Restated Certificate, the authorized capital stock of the Company will consist
of 775,000 shares of Voting Common Stock, 775,000 shares of Non-Voting Common
Stock, nine shares of Voting Preference Stock, 10,000 shares of Class C Common
Stock, 30,000 shares of Class D Common Stock, 200,000 shares of Series A
Preferred Stock, 275,000 shares of Series B Preferred Stock, 470,000 shares of
Series C Preferred Stock, and 80,000 shares of Series D Preferred Stock. As of
the Closing Date, after giving effect to the Transactions, there will be issued
and outstanding the shares of Preferred Stock and Common Stock set forth on
Schedule VII. 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 VII. 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, except pursuant to the conversion rights of the
outstanding Preferred Stock and Common Stock and the restricted stock plan
referred to in Section 6.10.
(c) Securities. The shares of Preferred Stock and Common Stock being
issued to the Purchasers hereunder, when issued and paid for pursuant to the
terms of this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will be free of any Liens caused or created by the Company,
except as set forth in the Stockholders Agreement and the Restated Certificate.
The shares of Common Stock or Preferred Stock, as the case may be, issued upon
conversion of the Preferred Stock and the Common Stock (other than the Voting
Preference Stock), when issued pursuant to the terms thereof, will be validly
issued, fully paid and nonassessable, and will be free of any Liens caused or
created by the Company, except as set forth in the Stockholders Agreement and
the Restated Certificate.
(d) No Undisclosed Liabilities; Subsidiaries. As of the date hereof and
as of the Closing Date, before giving effect to the Transactions, the Company
has no indebtedness or liability of any nature whatsoever, absolute or
contingent, liquidated or unliquidated, except indebtedness incurred on or after
the date hereof under the Bridge Loan Agreement and liabilities incurred by the
Company in the ordinary course of business in connection with Permitted
Expenditures. The Company owns all of the outstanding shares of capital stock of
each of its Subsidiaries, free and clear of any Liens, except Liens securing the
FCC Debt and Liens granted
23
to the lenders pursuant to the Credit Documents and the Bridge Loan Documents.
Prior to the Closing Date, the Company shall furnish to each of the Purchasers a
complete list of its direct and indirect Subsidiaries indicating the
jurisdictions in which each such Subsidiary is organized or qualified to conduct
business.
(e) Offering of Securities; Subsequent Offering. (i) None of the
Company, any Management Stockholder 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 Purchasers and a limited number
of other "accredited investors" (as defined in Rule 501(a) under the Securities
Act).
(ii) None of the Company, any Management Stockholder 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.
(iii) Assuming the accuracy of the representations and warranties of
the Purchasers contained in Sections 5.1(a) and (b), each of the offering and
sale of Securities under this Agreement to AT&T PCS, TWR, Mercury I, Mercury II
and the Initial Cash Equity Investors and the offering and sale of Securities to
the Additional Purchasers pursuant to the Additional Offering complies or will
comply with all applicable requirements of Federal and state securities laws.
The Additional Offering and the issuance and sale of shares of Series C
Preferred Stock pursuant thereto are transactions exempt from the registration
requirements of Section 5 of the Securities Act.
(iv) The offering documents, certificates, statements and other
materials furnished to any Additional Purchaser by or on behalf of the Company
will not contain any untrue statement of a material fact or omit a material fact
necessary in order to make the statements contained therein, in light of the
circumstance under which they were made, not misleading.
(f) Credit and Bridge Loan Documents; Cash Equity Loan Commitment. (i)
(A) Prior to the date hereof, the Company has delivered to each of the
Purchasers a true and correct copy of a commitment letter, dated May 20, 1998,
from TD Securities (USA) Inc., relating to a proposed $525 million senior
secured credit facility. Such commitment letter has been executed and delivered
by the financial institutions referred to above and the Company, is in full
force and effect and, as of the date hereof, such commitment letter has not been
modified or withdrawn. Prior to the date hereof, the Company has delivered to
each of the Purchasers a true and correct copy of the Bridge Loan Documents
together with all amendments and modifications thereto. Such documents
(including the exhibits and schedules thereto) shall comprise a full and
complete copy of all agreements between the parties thereto with respect to the
subject matter thereof and transactions related thereto, and there shall be no
agreements or understandings, oral or written, or side agreements not contained
therein that relate to or modify the substance thereof.
24
(B) As of the date hereof, the Bridge Loan Documents have been duly
authorized by all necessary corporate action on the part of the Company, have
been validly executed and delivered by the Company and are the legal, valid and
binding obligation of the Company, enforceable 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.
As of the Closing Date, the Bridge Loan Documents are in full force and effect,
none of the provisions thereof have been waived by any party thereto, and no
"Default" or "Event of Default" (as such terms are defined in the Bridge Loan
Agreement) shall have occurred and be continuing.
(ii) (A) Prior to the Closing, the Company shall have delivered to each
of the Purchasers a true and correct copy of each of the Credit Documents,
together with all amendments and modifications thereto. Such documents
(including the exhibits and schedules thereto) shall comprise a full and
complete copy of all agreements between the parties thereto with respect to the
subject matter thereof and transactions related thereto, and there shall be no
agreements or understandings, oral or written, or side agreements not contained
therein that relate to or modify the substance thereof.
(B) As of the Closing Date, the Credit Documents shall have been duly
authorized by all necessary corporate action on the part of the Company, shall
have been validly executed and delivered by the Company and shall be the legal,
valid and binding obligation of the Company, enforceable 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.
As of the Closing Date, the Credit Documents shall be in full force and effect,
none of the provisions thereof shall have been waived by any party thereto, and
no "Default" or "Event of Default" (as such terms are defined in the Credit
Agreement) shall have occurred and be continuing.
(iii) Prior to the date hereof, it has delivered to each of the other
parties a true and correct copy of a commitment letter, dated May 1, 1998, from
the lender(s) referred to therein, relating to a proposed $75 million loan to
the Cash Equity Borrowers. Such commitment letter has been executed and
delivered by such lender(s) and the Company, is in full force and effect and, as
of the date hereof, has not been modified or withdrawn.
(g) Minimum Build-Out Plan. The Company's Minimum Build-Out Plan in
respect of the construction of a PCS system in the Company Territory is attached
as Schedule 5.5(g). Completion of the Minimum Build-Out Plan in accordance with
such Schedule will meet all applicable FCC requirements in respect of system
build-out, including those set forth in 47 CFR ss. 24.203.
(h) Small Business Matters. The Company, together with its "affiliates"
(as that term is defined in Title 13, Code of Federal Regulations, Section
121.103), is a "Small Business" and a "Smaller Business", in each case within
the meaning of the SBIC Act and the regulations
25
thereunder, including Title 13, Code of Federal Regulations, Sections 107.50,
107.700, 107.710 and 121.301(c). The information regarding the Company and its
Affiliates set forth in the Small Business Administration Form 480, Form 652 and
Parts A and B of Form 1031 delivered at the Closing is accurate and complete.
Copies of such forms shall have been completed and executed by the Company and
delivered to each Purchaser which is an SBIC at the Closing together with a
written statement of the Company regarding its planned use of the proceeds from
the sale of the Securities. 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).
(i) Litigation. There is no judgment, decree, injunction, rule or order
outstanding against the Company or any of its Subsidiaries which would limit in
any material respect the ability of the Company or any of its Subsidiaries to
operate their respective business in the manner currently contemplated.
(j) FCC Compliance. The Management Stockholders, in aggregate, satisfy
the financial requirements established by the FCC in 47 CFR ss. 24.720(b)(2) for
a "very small business."
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, without limitation, the approval of
this Agreement and the Transactions by all Governmental Authorities and
agencies, including the FCC and any Consents necessary or advisable in the
reasonable judgment of AT&T PCS in connection with franchise laws applicable to
the execution, delivery and performance of this Agreement and the Related
Agreements or the consummation of the Transactions, and to make all filings with
and to give all notices to third parties which may be necessary or reasonably
required in order for the parties to consummate the Transactions.
(b) Each party shall furnish to the other parties all information
concerning such party and its Affiliates reasonably required for inclusion in
any application or filing to be made
26
by AT&T PCS, TWR or the Company or any other party in connection with the
Transactions or otherwise to determine compliance with applicable FCC Rules.
(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.
(d) Each party shall use all commercially reasonable efforts to modify
the structure of the Transactions in such a manner that no franchise laws shall
be applicable to the relationship between AT&T PCS or TWR (or their respective
Affiliates) and the Company; provided that, no party shall be obligated to agree
to any modification that adversely affects such party. The Company acknowledges
that (i) the Company and AT&T PCS, TWR and their respective Affiliates do not
intend to create a franchise or business opportunity relationship; (ii) the
wireless telephones ("Telephones") if any, purchased by the Company from AT&T
PCS and its Affiliates and minutes for mobile wireless radiotelephonic service
("Minutes") purchased by the Company under the terms of the Roaming Agreement
are being sold at bona fide wholesale prices; (iii) the Company is not required
by this Agreement or the Related Agreements or as a matter of practical
necessity to purchase more than a reasonable quantity of Telephones or Minutes;
and (iv) none of AT&T PCS, TWR or any of their respective Affiliates has made
any representation to the Company that (A) the Company or its equity holders
will earn, or are likely to earn, a gross or net profit, (B) AT&T PCS, TWR or
any of their respective Affiliates has knowledge of the market that the Company
will operate in or that the market demand will enable the Company to earn a
profit, (C) there is a guaranteed market for the Company, or (D) AT&T PCS, TWR
or any of their respective Affiliates will provide the Company with locations or
assist the Company in finding locations for use or operation of its business.
The Company has been informed at least seven days prior to the execution of this
Agreement that AT&T PCS's and TWR's principal business address is, and AT&T
PCS's and TWR's agent for service of process is, c/o AT&T Corp., ▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
Nothing in this Agreement shall be construed to require the parties to
consummate the Closing if any regulatory approval would require that it (i)
divest or hold separate any of its assets existing as of the date hereof other
than as contemplated by this Agreement and the Related Agreements or (ii)
otherwise take or commit to take any action that limits its freedom of action in
any material respect with respect to any of its businesses, product lines or
assets.
27
6.2 Confidentiality.
(a) Each party shall, and shall cause each of its Affiliates, and its
and their respective shareholders, members, managers, directors, officers,
employees and agents (collectively, "Representatives") to, keep secret and
retain in strictest confidence any and all Confidential Information relating to
any other party that it receives in connection with the negotiation or
performance of this Agreement, and shall not disclose such Confidential
Information, and shall cause its Representatives not to disclose such
Confidential Information, to anyone except the receiving party's Affiliates and
Representatives and any other Person that agrees in writing to keep in
confidence all Confidential Information in accordance with the terms of this
Section 6.2. Until the Closing, each party agrees to use Confidential
Information received from another party only (i) to evaluate its interest in
pursuing the Transactions and (ii) to pursue such Transactions, but not for any
other purpose. All Confidential Information furnished pursuant to this Agreement
shall be returned promptly to the party to whom it belongs upon request by such
party. Upon the Closing, the provisions of this Section 6.2 shall terminate and
the obligations of the parties in respect of Confidential Information shall be
governed by Section 7.12 of the Stockholders Agreement.
(b) The obligations set forth in Section 6.2(a) shall be inoperative
with respect to Confidential Information that (i) is or becomes generally
available to the public other than as a result of disclosure by the receiving
party or its Representatives, (ii) was available to the receiving party on a
non-confidential basis prior to its disclosure to the receiving party, or (iii)
becomes available to the receiving party on a non-confidential basis from a
source other than the providing party or its agents, provided that such source
is not known by the receiving party to be bound by a confidentiality agreement
with the providing party or the providing party's agents.
(c) To the fullest extent permitted by law, if a party or any of its
Affiliates or Representatives breaches, or threatens to commit a breach of, this
Section 6.2, the party whose Confidential Information shall be disclosed, or
threatened to be disclosed, shall have the right and remedy to have this Section
6.2 specifically enforced by any court having jurisdiction, it being
acknowledged and agreed that money damages will not provide an adequate remedy
to such party. Nothing in this Section 6.2 shall be construed to limit the right
of any party to collect money damages in the event of breach of this Section
6.2.
(d) Anything else in this Agreement or the Related Agreements
notwithstanding, each party shall have the right to disclose any information,
including Confidential Information of the other party or such other party's
Affiliates, in any filing with any regulatory agency, court or other authority
or any disclosure to a trustee of public debt of a party to the extent that the
disclosing party determines in good faith that it is required by Law, regulation
or the terms of such debt to do so, provided that any such disclosure shall be
as limited in scope as possible and shall be made only after giving the other
party as much notice as practicable of such required disclosure and an
opportunity to contest such disclosure if possible.
28
6.3 Retained Licenses. AT&T PCS, TWR and their respective Affiliates
may use the AT&T Retained Licenses, and may market and sell to their customers
or others any services that use such Licenses permitted under applicable Laws,
in each case as it may determine, and may otherwise deal with and permit others
to deal with the AT&T Retained Licenses, except from and after the Closing Date
to the extent otherwise expressly agreed by any AT&T Party in any of the Related
Agreements.
6.4 No Further Commitment. The Cash Equity Investors and the Management
Stockholders have arranged for the Company to obtain financing under this
Agreement and will use all reasonable efforts to arrange for financing under the
Credit Agreement. It is anticipated that the Company, in consultation and
cooperation with the Cash Equity Investors, will have responsibility for
arranging for all of the additional debt and equity financing required by the
Company. Further, the Management Stockholders, in their capacity as officers and
employees of the Company, shall be responsible for conducting the day-to-day
operations of the Company, all under the control and supervision of the
Company's Board of Directors. In connection with the execution and delivery of
this Agreement, each of the Purchasers is agreeing to acquire Securities of the
Company and each of the Purchasers and certain of their respective Affiliates
are agreeing to enter into the Related Agreements to which each of them is a
party. The parties acknowledge and agree that, except to the extent expressly
set forth in this Agreement and such Related Agreements, none of AT&T PCS, TWR
or any of their respective Affiliates has any legal, contractual or other
obligation to acquire debt or equity securities of the Company, provide or
arrange for debt or equity financing required by the Company, provide services
to or otherwise assist the Company in connection with the conduct of its
business or in any other manner, refrain from exercising its rights under this
Agreement and the Related Agreements (including, without limitation, the right
to terminate the Network Membership License Agreement in accordance with its
terms) or refrain from competing, directly or indirectly, with businesses
conducted by the Company. Nothing herein shall be construed to relieve any
Person of its express contractual obligations under this Agreement and the
Related Agreements or from any common law obligation of good faith relating to
its performance of such contractual obligations.
6.5 Use of Proceeds. The Company shall use the proceeds of the sale of
Securities only for the purposes described in Section 2.7 and in the written
statement referred to in Section 5.5(g).
6.6 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.
29
(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.
(d) During the one-year period commencing on the Closing Date, the
Company shall not engage in any activity which constitutes an ineligible
business activity (within the meaning of the SBIC Regulations as in effect on
the date hereof).
6.7 Regulatory Compliance Cooperation. In the event that any SBIC
Holder reasonably determines that it has a Regulatory Problem, to the extent
reasonably necessary, such SBIC Holder shall have the right to transfer its
Securities (and any shares of Common Stock issued upon conversion thereof) to
another Person without regard to any restrictions on transfer set forth in this
Agreement or in Section 4.1(c) of the Stockholders Agreement and without
complying with the provisions of Section 4.3 of the Stockholders Agreement, but
subject to the other provisions of the Stockholders Agreement and 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.
30
6.8 Certain Covenants. From and after the execution and delivery of
this Agreement to and including the Closing Date, each of AT&T PCS and TWR (as
to themselves and the AT&T Contributed Licenses), and Mercury I and Mercury II
(as to themselves, and the Mercury Licenses and Florida Licenses owned by them
and the Central Alabama Agreement) and each Management Stockholder (as to
himself, Mercury I and Mercury II and the Mercury Licenses and Florida Licenses
and the Central Alabama Agreement) shall:
(a) Comply in all material respects with all applicable Laws, including
all such Laws relating to the AT&T Contributed Licenses and the Mercury Licenses
and Florida Licenses, as the case may be, or their use;
(b) Use commercially reasonable efforts to maintain the AT&T
Contributed Licenses and the Mercury Licenses and Florida Licenses, as the case
may be, in full force and effect;
(c) Not (i) sell, transfer, assign or dispose of, or offer to, or enter
into any agreement, arrangement or understanding to, sell, transfer, assign or
dispose of any of the AT&T Contributed Licenses or the Mercury Licenses and
Florida Licenses, as the case may be, or any interest therein, or negotiate
therefor, or (ii) create, incur or suffer to exist any Lien (except for Liens
securing the FCC Debt, Liens in favor of Southern Farm and Lucent that will be
released at or prior to Closing and Liens securing debt incurred pursuant to the
Bridge Loan Agreement) of any nature whatsoever relating to any of the AT&T
Contributed Licenses or the Mercury Licenses or Florida Licenses, as the case
may be, or any interest therein. Without limiting the foregoing, none of AT&T
PCS, TWR, Mercury I, Mercury II or the Management Stockholders shall, and the
Management Stockholders shall cause Mercury I and Mercury II not to, incur any
material obligation or liability, absolute or contingent, relating to or
affecting the AT&T Contributed Licenses or the Mercury Licenses or Florida
Licenses, as the case may be, or their use;
(d) Give written notice to the other parties promptly upon the
commencement of, or upon obtaining knowledge of any facts that would give rise
to a threat of, any claim, action or proceeding commenced against or relating to
(i) it, its properties or assets, including the AT&T Contributed Licenses or the
Mercury Licenses or Florida Licenses, as the case may be, or their use, and
which could have a Material Adverse Effect on it or materially adversely affect
the Transactions, or (ii) the AT&T Contributed Licenses or the Mercury Licenses
or Florida Licenses, as the case may be, or their use;
(e) Promptly after obtaining knowledge of the occurrence of, or the
impending or threatened occurrence of, any event which could cause or constitute
a material breach of any of its warranties, representations, covenants or
agreements contained in this Agreement, give notice in writing of such event, or
occurrence or impending or threatened event or occurrence, to the other parties
and use commercially reasonable efforts to prevent or to promptly remedy such
breach;
31
(f) Cause the other parties to be advised promptly in writing of (i)
any event, condition or state of facts known to it, which has had or could have
a Material Adverse Effect on it, or materially adversely affect the AT&T
Contributed Licenses or the Mercury Licenses or Florida Licenses, as the case
may be, their use, or the Transactions (other than proceedings affecting the PCS
or wireless communications services industry generally), or (ii) any claim,
action or proceeding which seeks to enjoin the consummation of the Transactions;
and
(g) Not amend, modify or supplement, or waive any rights under or
conditions to the Central Alabama Agreement, except pursuant to Section 6.16 or
with the prior written consent of AT&T PCS and Cash Equity Investors
representing 66-% of the Aggregate Commitment of all Cash Equity
Investors.
From and after the execution and delivery of this Agreement to and including the
Closing Date, Tritel shall not engage or agree to engage in any of the
transactions or actions referred to in Section 3.6(b) of the Stockholders
Agreement, except pursuant to Section 6.13, to the extent necessary to
consummate the Contributions or satisfy the conditions set forth in Article VII
or with the prior written consent of AT&T PCS and Cash Equity Investors
representing 66-2/3% of the Aggregate Commitment of all Cash Equity Investors.
6.9 Restricted Stock Plan. Prior to the Closing, the Company shall
establish a restricted stock plan, in form and substance satisfactory to Cash
Equity Investors representing 66-2/3% of the Aggregate Commitment of all Cash
Equity Investors, AT&T PCS and the Management Stockholders, which will provide,
among other things, that (a) shares of Voting Common Stock issued thereunder
will be subject to the vesting provisions and repurchase rights described in
Section 7 of and Schedule III to the Employment Agreement, (b) all of the shares
issued under the plan shall be allocated to Company employees on the Closing
Date, (c) any shares that are repurchased by the Company under the terms of the
plan shall be available for re-allocation to Company employees, and (d) any
shares that are not re-allocated to Company employees on the fifth anniversary
of the Closing Date shall be re-allocated to the Management Stockholders ratably
in accordance with the number of shares of Voting Common Stock being issued to
each of them hereunder.
6.10 Certain Mercury Transactions. (a) Prior to or concurrently with
the Closing, Mercury I, Mercury II and their securityholders will consummate the
transactions contemplated by the agreement, dated May 20, 1998, among such
Persons, copies of which have been furnished to the parties hereto.
(b) Prior to the Reconciliation Date, neither Mercury I nor Mercury II
shall distribute or otherwise Transfer (as defined in the Stockholders
Agreement) any Escrowed Shares or any other shares of Preferred Stock purchased
hereunder (or shares of Common Stock issued upon conversion of the Preferred
Stock) except: (I) a Transfer from one to the other; (II) in accordance with
Section 8.9(f), or (III) to a Mercury Investor that (x) elects by written notice
to Mercury I or Mercury II, as the case may be, copies of which notice shall be
furnished to the other parties, to receive its Escrowed Shares and/or other
shares and (y) executes and
32
delivers to the other parties thereto a counterpart to each of the Stockholders
Agreement and the agreement among the Cash Equity Investors attached as Schedule
X to the Stockholders Agreement. By delivering such notice and accepting any
such Escrowed Shares or other shares, each Mercury Investor: (i) shall become a
"Mercury Investor Indemnitor" hereunder, (ii) agrees and acknowledges that such
Escrowed Shares continue to be subject to the provisions of this Agreement,
(iii) makes (as to itself as of the date of such distribution or transfer) the
representations set forth in Section 5.1, and (iv) agrees and acknowledges that
it shall succeed to the rights of Mercury I and/or Mercury II, as applicable,
hereunder, in respect of the shares distributed to it.
(c) Mercury I shall not amend the commitment letter of the lender
relating to the Cash Equity Loan Agreements without the prior written consent of
each of the Cash Equity Borrowers party hereto. The Company and Mercury I shall
use their best efforts to substantially comply with the terms of the Supply
Agreement dated October 31, 1997, between Mercury and the lender under the Cash
Equity Loan Agreements.
6.11 Certain Employees. (a) Effective immediately prior to the Closing,
MSM, Inc. shall (i) terminate (x) the employment of all of its active employees
other than those employees based in the cellular markets managed by MSM, Inc. on
the date hereof (the "Employees"), and (y) all employment agreements and other
employment arrangements with the Employees to which it is a party; and (ii) use
all reasonable efforts to cause all of the Employees to make available their
employment services to the Company and its Subsidiaries. Prior to the Closing,
the Company shall (or shall cause one its Subsidiaries to) make offers of
employment, effective as of the Closing Date and contingent upon the Closing, to
all of the Employees on terms and conditions which shall be in the Company's
exclusive discretion, except that such offers shall be at the same wage or
salary levels as currently in effect at MSM, Inc. The Employees who accept such
offers of employment effective as of the Closing Date shall be referred to
herein as the "Transferred Employees." Effective upon the Closing, MSM, Inc.
hereby irrevocably waives any and all confidentiality obligations relating to
the Contributions being made by Mercury which any Employee has to MSM, Inc. or
any of its Affiliates for the exclusive benefit of the Company and its
Subsidiaries.
(b) MSM, Inc. shall retain, and neither the Company nor any of its
Subsidiaries shall assume, any liabilities or obligations of MSM, Inc. or any of
its Affiliates relating to the Employees, any retired former Employees or any
other employees of MSM, Inc. or any of their employee benefits. From and after
the Closing, MSM, Inc. shall remain solely responsible for any and all benefit
liabilities in respect of the Employees, including the Transferred Employees and
their beneficiaries and dependents, relating to or arising in connection with or
as a result of (i) the employment or the actual or constructive termination of
employment of any such Employee by MSM, Inc. (including, without limitation, in
connection with the consummation of the transactions contemplated by this
Agreement), (ii) the participation in or accrual of benefits or compensation
under, or the failure to participate in or to accrue compensation or benefits
under, any "employee benefit plan," as defined in Section 3(3) of ERISA, or any
other employee or retiree benefit or compensation plan, program, practice,
policy or arrangement of MSM, Inc.
33
or (iii) accrued but unpaid salaries, wages, or other compensation or payroll
items (including, without limitation, bonus, incentive and deferred compensation
but excluding ordinary accrued vacation, sick day and personal day compensation,
which shall be assumed by the Company). Without limiting the foregoing, MSM,
Inc. shall remain solely responsible for any and all benefit liabilities to or
in respect of the Transferred Employees or their beneficiaries or dependents
relating to or arising in connection with any claims, whether such claims are
asserted before, on or after the Closing Date, for life, disability, accidental
death or dismemberment, supplemental unemployment compensation, medical, dental,
hospitalization, other health or other welfare or fringe benefits or expense
reimbursements which claims relate to or are based upon an occurrence on or
before the Closing Date (including claims for continuing treatment in respect of
any illness, accident, disability, condition or confinement which occurs or
commences on or before the Closing Date).
(c) The Management Stockholders shall cause MSM, Inc. to perform its
obligations under this Section.
6.12 Pre-Closing Build-Out
(a) Promptly following the date hereof the Company shall commence, and
no later than 90 days after the date hereof the Company shall complete, the
Committed Pre-Closing Construction. All assets, properties or rights acquired in
order to complete the Committed Pre-Closing Construction shall be (i) necessary
or advisable, in the good faith determination of the Company, in order to
facilitate the construction of PCS systems in the applicable geographical area
following the Closing and (ii) assignable to AT&T PCS or TWR or its designee(s),
free and clear of Liens (other than Permitted Liens) and without penalty or cost
to effect such assignment other than penalties or costs that individually or in
the aggregate are not material in amount.
(b) If this Agreement is terminated in accordance with the terms hereof
prior to the Closing, if and to the extent requested by AT&T PCS or TWR, the
Company shall assign to AT&T PCS or TWR or its designee(s), free and clear of
all Liens (other than Permitted Liens), all of the Company's assets, properties
and rights relating to the Committed Pre-Closing Construction. In consideration
of such assignment, AT&T PCS, TWR or such designee shall reimburse the Company
in cash for its out-of-pocket costs paid to third parties (not to exceed
$5,000,000 in the aggregate), plus the Company's overhead expenses (not to
exceed $500,000 in the aggregate), in each case incurred in connection with the
Pre-Closing Construction.
6.13 Additional Cash Equity Investors.
(a) The Company shall offer (the "Additional Offering") to issue and
sell up to 10,000 shares of Series C Preferred Stock to up to fifteen additional
accredited investors reasonably acceptable to AT&T PCS and Cash Equity Investors
representing 66-2/3% of the Aggregate Commitment of all Cash Equity Investors.
The Company shall use its best efforts to complete the Additional Offering no
later than 60 days after the date hereof. The sale of Series C Preferred Stock
pursuant to the Additional Offering shall be on the terms and subject to the
34
conditions of this Agreement applicable to the Cash Equity Investors, as the
same are modified and supplemented by the terms of this Section 6.13.
(b) Any offeree in the Additional Offering may commit to purchase no
less than 2,500 shares of Series C Preferred Stock by executing a counterpart of
this Agreement (together with any other materials the Company may require in
connection with the Additional Offering) and delivering the same to the Company
no later than the expiration date of the Additional Offering. Any offeree
electing to purchase shares pursuant to the Additional Offering is sometimes
referred to herein, individually, as an "Additional Purchaser" and,
collectively, as the "Additional Purchasers".
(c) Commitments to purchase shares of Series C Preferred Stock by
Additional Purchasers shall not reduce or otherwise affect the Aggregate
Commitment, Initial Cash Contribution and Unfunded Commitment of, and the number
of shares of Series C Preferred Stock to be purchased by, the Initial Cash
Equity Investors, except in connection with a reallocation among the Cash Equity
Borrowers as contemplated by Schedule VII.
(d) In the event that Additional Purchasers commit to purchase shares
of Series C Preferred Stock, the Company shall furnish to the Purchasers,
promptly (and in any event within five days) following the expiration date of
the Subsequent Offering: (i) an amended form of Schedule I, reflecting the
commitments of the Additional Purchasers and (ii) copies of all documents
executed and delivered by the Additional Purchasers in connection with such
Offering. From and after the date of such delivery, all references in this
Agreement to Schedule I shall be deemed to refer to such amended form of
Schedule I.
(e) At the Closing, each Additional Purchaser shall contribute to the
capital of the Company an amount equal to its Initial Cash Contribution and
shall fulfill all other obligations applicable to Cash Equity Investors.
(f) In the event that, after giving effect to the Additional Offering,
the aggregate amount of the Aggregate Commitment of all Cash Equity Investors is
less than $158 million, then, notwithstanding anything in this Agreement to the
contrary, neither the Company nor its Subsidiaries shall expend any funds in
connection with the construction or operation of a mobile communication system
in the ▇▇▇▇▇▇, MS, Laurel, MS, Dothan-Enterprise, AL and Florence, AL BTAs,
except (i) up to $2 million for the construction of a "highway build" in such
territory, or (ii) with the prior written consent of each of AT&T PCS and Cash
Equity Investors representing 66-2/3% of the Aggregate Commitment of all Cash
Equity Investors.
6.14 Return of Spectrum. No later than two business days prior to the
deadline to elect the "disaggregation option" referred to below, as the same may
be extended by the FCC, Mercury I shall have elected, and caused Central Alabama
to elect, the "disaggregation option" pursuant to the FCC's Order on
Reconsideration of the Second Report and Order, FCC 98-46 (released March 24,
1998), with respect to the C-Block Mercury Licenses and the Alabama License,
and, as a result thereof, the aggregate amount of the FCC Debt assumed by the
35
Company at the Closing pursuant to Section 2.8 shall be reduced by $33.365
million and the aggregate amount of the Central Alabama FCC Debt shall be
reduced by $6.342 million.
6.15 Option Agreement. Upon the expiration of the six-month period
commencing on the date hereof, (i) if the Closing shall not have occurred, the
Option Agreement shall not be entered into at Closing and shall no longer be a
Related Agreement hereunder and (ii) if the Closing shall have occurred, the
Company shall terminate the Option Agreement (and, if applicable, the License
Acquisition Agreement contemplated thereby), in each case if the Company shall
have failed to obtain the written consent of AT&T PCS, which may be granted or
withheld in its sole discretion. At the Closing, in the event that the Option
Agreement is not executed, the Company will pay Mercury II an amount equal to
interest on indebtedness to the United States Department of the Treasury
attributable to the Florida Licenses accrued from the date hereof through the
date that AT&T PCS notifies the Company that AT&T PCS does not consent to the
execution of the Option Agreement (or, in the absence of such notice, 30 days
after such consent is requested in writing by the Company).
6.16 Central Alabama Agreement. Mercury I shall use its best efforts to
cause the Central Alabama Agreement to be amended, on substantially the terms
set forth on Schedule 6.16, within 30 days after the date hereof pursuant to
documentation in form and substance satisfactory to AT&T PCS and Cash Equity
Investors representing 66-2/3% of the Aggregate Commitment of all Cash Equity
Investors. Such amendment shall provide, among other things, that (i) Central
Alabama and each of its partners (if any) to whom shares of Series C Preferred
Stock are distributed on the Closing Date shall, on the Closing Date, and each
partner of Central Alabama to whom shares of Series C Preferred Stock are
distributed thereafter shall, on the date of such distribution, execute and
deliver to the other parties thereto a counterpart to each of the Stockholders
Agreement and the agreement among the Cash Equity Investors attached as Schedule
X to the Stockholders Agreement and (ii) by accepting shares of Series C
Preferred Stock, Central Alabama and each of its partners to whom shares of
Series C Preferred Stock are distributed makes (as to itself as of the Closing
Date or other date of distribution) the representations set forth in Section
5.1. At the request of the Company, Mercury I shall assign all of its right,
title and interest in and to the Central Alabama Agreement to the Company
pursuant to documentation in form and substance satisfactory to AT&T PCS and
Cash Equity Investors representing 66-2/3% of the Aggregate Commitment of all
Cash Equity Investors.
ARTICLE VII
CLOSING CONDITIONS
7.1 Conditions to Obligations of All Parties. The obligation of each of
the parties to consummate the Transactions contemplated to occur at the Closing
shall be conditioned on the following, unless waived by each of the parties:
(a) Any applicable waiting period under the HSR Act shall have expired
or been terminated.
36
(b) The Consent of the FCC to each of the AT&T License Transfer, the
Alabama License Transfer and the Mercury License Transfer shall have been
obtained pursuant to a Final Order, free of any conditions materially adverse to
the Company or any of the Purchasers. For the purposes of this paragraph, "Final
Order" means an action or decision that has been granted by the FCC as to which
(i) no request for a stay or similar request is pending, no stay is in effect,
the action or decision has not been vacated, reversed, set aside, annulled or
suspended and any deadline for filing such request that may be designated by
statute or regulation has passed, (ii) no petition for rehearing or
reconsideration or application for review is pending and the time for the filing
of any such petition or application has passed, (iii) the FCC does not have the
action or decision under reconsideration on its own motion and the time within
which it may effect such reconsideration has passed and (iv) no appeal is
pending including other administrative or judicial review, or in effect and any
deadline for filing any such appeal that may be designated by statute or rule
has passed; provided however that, the Consent of the FCC to the Mercury License
Transfer shall be deemed to be a Final Order notwithstanding the pendency of any
of the proceedings set forth on Schedules 4.7 or 5.3(a), or any appeals
therefrom, so long as such proceedings or appeals would not be reasonably
expected, individually or in the aggregate, to result in the revocation,
non-renewal or suspension of, or an adverse effect on the ability of the Company
to employ, the Mercury Licenses.
(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
Purchasers 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.
7.2 Conditions to Obligations of Each Party. The obligation of each
party (the "receiving party") 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 receiving party:
(a) The representations and warranties of each party other than the
receiving party contained herein and in the Related Agreements 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 4.7, Section
37
5.5(i), and the third sentence of each of Sections 5.2 and 5.3(a) (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 its ability to perform its obligations under the Related Agreements
or to materially adversely affect the Transactions.
(b) Each party other than the receiving party shall have performed in
all material respects all agreements contained herein or in the Related
Agreements required to be performed by it at or before the Closing.
(c) An officer of each party other than the receiving party shall have
delivered to the receiving party 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) Each party other than the receiving party shall have furnished the
receiving party with one or more opinions of counsel to the party furnishing the
opinion(s), each dated the Closing Date, in substantially the forms of Exhibits
H-1 through K-2, as applicable.
(e) Each of the Related Agreements shall have been executed and
delivered by the parties thereto (other than the receiving party) and shall be
in full force and effect.
(f) Each Cash Equity Investor (other than the receiving party) shall
have executed and delivered to the Company a Pledge Agreement, substantially in
the form of Exhibit L.
(g) All corporate and other proceedings of each party other than the
receiving party in connection with the AT&T License Transfer, the Mercury
License Transfer and the other Transactions, and all documents and instruments
incident thereto, shall be reasonably satisfactory in form and substance to the
receiving party, and each party other than the receiving party shall have
delivered to the receiving party such receipts, documents, instruments and
certificates, in form and substance reasonably satisfactory to the receiving
party, which the receiving party shall have reasonably requested.
7.3 Conditions to the Obligations of the Purchasers. The obligation of
each Purchaser 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
Purchaser:
(a) The terms, conditions and provisions of the Credit Documents shall
be satisfactory to such Purchaser in all material respects, including without
limitation provisions relating to principal amounts, rates of interest, terms of
mandatory and permitted prepayments, prepayment charges (if any), fees and
expenses, representations and warranties, affirmative and negative covenants,
conditions to disbursements of loan funds, defaults and remedies therefor, and
collateral, it being acknowledged that such terms, conditions and provisions
shall be deemed to be satisfactory to such Purchaser if they are in the
aggregate at least as favorable to the Company as the terms of the commitment
letter referred to in Section 5.5(f). The disbursements of loan funds
contemplated by the Credit Agreement to occur on the Closing Date shall be made
38
in accordance with the terms thereof concurrently with the Closing and such
Purchaser shall have received such evidence thereof as it may request.
(b) On the Closing Date, counsel to each Purchaser 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.
(c) 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 name of each of the Company's
stockholders and the number and class of shares held by each stockholder.
(d) The closing of the Alabama License Transfer, and the other
transactions contemplated in the Central Alabama Agreement, shall have been
consummated in accordance with the terms of the Central Alabama Agreement, and
such Purchaser shall have received such evidence thereof as it may request, and
Mercury I's rights under the Central Alabama Agreement shall have been assigned
to the Company pursuant to documentation satisfactory in form and substance to
the Purchasers.
ARTICLE VIII
SURVIVAL AND INDEMNIFICATION
8.1 Survival. The representations and warranties made in this Agreement
shall survive the Closing until the second anniversary thereof and shall
thereupon expire together with any right to indemnification in respect thereof
(except to the extent a written notice asserting a claim for breach of any such
representation or warranty and describing such claim in reasonable detail shall
have been given prior to such date to the party which made such representation
or warranty). The covenants and agreements contained herein to be performed or
complied with prior to the Closing shall expire at the Closing. The covenants
and agreements contained in this Agreement to be performed or complied with
after the Closing shall survive the Closing; provided that the right to
indemnification pursuant to this Article VIII in respect of a breach of a
representation or warranty shall expire on the second anniversary of the Closing
(except to the extent written notice asserting a claim thereunder and describing
such claim in reasonable detail shall have been given prior to such date to the
party from whom such indemnification is sought). After the Closing, the sole and
exclusive remedy of the parties for any breach or inaccuracy of any
representation or warranty contained in this Agreement, or any other claim
(whether or not
39
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 Purchasers. Each Purchaser and each Mercury
Investor Indemnitor, severally and not jointly, shall indemnify and hold
harmless each other Purchaser, each other Mercury Investor Indemnitor, the
Company, each Management Stockholder 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 any and all losses, damages, costs, expenses or liabilities, including
any amounts paid in satisfaction of judgments, in compromise, as fines and
penalties, and as counsel fees 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 (collectively, "Losses"), in each case that arises out of
or results from (a) any representation or warranty of such indemnifying party
contained in this Agreement or any Related 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 and any Related Agreement, except to
the extent (but only to the extent) any such Losses arise out of or result from
the gross negligence or willful misconduct of such Section 8.2 Indemnified Party
or its Affiliates.
8.3 Indemnification by the Management Stockholders. Each Management
Stockholder, severally and not jointly, shall indemnify and hold harmless each
Purchaser 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 that
arises out of or results from (a) any representation or warranty of such
Management Stockholder contained in this Agreement or any Related 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 and any Related 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
or any Related Agreement, (y) any material default by such Management
Stockholder in the performance of his obligations under this Agreement or any
Related 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 of the Company 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.
40
8.4 Indemnification by the Company. The Company shall indemnify and
hold harmless each of the Purchasers and their respective Affiliates, and the
shareholders, members, managers, officers, employees, agents and/or the legal
representatives of any of them (each, a "Section 8.4 Indemnified Party"),
against all Losses incurred by him or it in connection with the investigation,
defense, or disposition of any action, suit or other proceeding in which any
Section 8.4 Indemnified Party may be involved or with which he or it may be
threatened that arises out of or results from (a) any representation or warranty
of the Company contained in this Agreement or any Related 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 and any Related 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.
8.5 Indemnification by Mercury I, Mercury II, the Management
Stockholders and the Mercury Investor Indemnitors. Mercury I, Mercury II and the
Management Stockholders, jointly and severally, and each Mercury Investor
Indemnitor, solely to the extent of its Percentage Share of any Section 8.5
Losses, shall indemnify and hold harmless AT&T PCS, TWR, the Cash Equity
Investors 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 8.5 Indemnified Party"),
against any and all losses, damages, costs, expenses or liabilities, including
any amounts paid in satisfaction of judgments, in compromise, as fines and
penalties, any counsel fees incurred by him or it in connection with the
investigation, defense, or disposition of any action, suit or other proceeding
in which any Section 8.5 Indemnified Party may be involved or with which he or
it may be threatened (collectively, "Section 8.5 Losses"), in each case that
arises out of or results from (i) any representation or warranty of Mercury I
and Mercury II contained in Articles IV and V being untrue in any material
respect as of the date on which it was made or (ii) any of the matters referred
to on Schedules 4.7 or 5.3(a), except to the extent (but only to the extent) any
such Section 8.5 Losses arise out of or result from the gross negligence or
willful misconduct of such Section 8.5 Indemnified Party or its Affiliates;
provided that (x) the aggregate liability of each Management Stockholder to
indemnify Section 8.5 Indemnified Parties against Section 8.5 Losses shall be
limited to the shares of Common Stock of the Company then held by such
Management Stockholder, and Section 8.5 Indemnified Parties seeking
indemnification against any Management Stockholder for such Section 8.5 Losses
hereunder shall not have recourse to any other assets of such Management
Stockholder and (y) the aggregate liability of each Mercury Investor Indemnitor
to indemnify Section 8.5 Indemnified Parties against Section 8.5 Losses shall be
limited to his or its Escrowed Shares, and Section 8.5 Indemnified Parties
seeking indemnification against any Mercury Investor Indemnitor for Section 8.5
Losses hereunder shall not have recourse to any other assets of such Mercury
Investor Indemnitor. Notwithstanding anything herein to the contrary, no Section
8.5 Indemnified Party shall require any Mercury Investor Indemnitor to satisfy
any Section 8.5 Losses earlier than the Reconciliation Date; provided that any
Mercury Investor Indemnitor may satisfy its obligation in respect of any Section
8.5 Losses by making a cash payment to the applicable Section 8.5 Indemnified
Party equal to its Percentage Share of such Section 8.5 Indemnified Loss, plus
an amount equal to
41
interest thereon at the rate of 10% per annum, compounded annually, from the
date a notice (the "Section 8.5 Notice") specifying the amount of such Section
8.5 Loss is given by the applicable Section 8.5 Indemnified Party to the Old
Mercury Stockholders.
8.6 Procedures.
(a) The terms of this Section 8.6 shall apply to any claim (a "Claim")
for indemnification under the terms of Sections 8.2, 8.3, 8.4 or 8.5. The
Section 8.2 Indemnified Party, Section 8.3 Indemnified Party, Section 8.4
Indemnified Party or Section 8.5 Indemnified Party (each, an "Indemnified
Party"), as the case may be, shall give prompt written notice of such Claim to
the indemnifying party (the "Indemnifying Party") under the applicable Section,
which party may assume the defense thereof, provided that any delay or failure
to so notify the Indemnifying Party shall relieve the Indemnifying Party of its
obligations hereunder only to the extent, if at all, that it is materially
prejudiced by reason of such delay or failure. The Indemnified Party shall have
the right to approve any counsel selected by the Indemnifying Party and to
approve the terms of any proposed settlement, such approval not to be
unreasonably delayed or withheld (unless such settlement provides only, as to
the Indemnified Party, the payment of money damages actually paid by the
Indemnifying Party and a complete release of the Indemnified Party in respect of
the claim in question). Notwithstanding any of the foregoing to the contrary,
the provisions of this Article 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 any Claim within ten business days after receiving written notice
thereof, the Indemnified Party shall have the right, subject to the Indemnifying
Party's right to assume the defense pursuant to the provisions of this Article
VIII, to undertake the defense, compromise or settlement of such Claim for the
account of the Indemnifying Party. Unless and until the Indemnifying Party
assumes the defense of any Claim, the Indemnifying Party shall advance to the
Indemnified Party any of its reasonable attorneys' fees and other costs and
expenses incurred in connection with the defense of any such action or
proceeding. Each Indemnified Party shall agree in writing prior to any such
advancement that, in the event he or it receives any such advance, such
Indemnified Party shall reimburse the Indemnifying Party for such fees, costs
and expenses to the extent that it shall be determined that he or it was not
entitled to indemnification under this Article VIII.
(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
42
of Indemnified Parties: (i) AT&T PCS, TWR, their respective Affiliates, and the
shareholders, members, managers, officers, employees, agents and/or the legal
representatives of any of them; (ii) the Cash Equity Investors, their respective
Affiliates, and the shareholders, members, managers, officers, employees, agents
and/or the legal representatives of any of them; (iii) Mercury I and Mercury II,
their respective Affiliates, and the shareholders, members, managers, officers,
employees, agents and/or the legal representatives of any of them; (iv) the
Company, their respective Affiliates, and the shareholders, members, managers,
officers, employees, agents and/or the legal representatives of any of them; and
(v) the Management Stockholders and/or the legal representatives of any of them.
8.7 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.
8.8 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) for any claim arising
solely from any inaccuracy in the Company's representations and warranties set
forth in the last sentence of Section 5.5(h) or the violation by the Company of
the covenant set forth in Section 6.6(d) to the extent such Section relates to
ineligible or prohibited activities of SBICs.
8.9 Escrow and Reconciliation.
(a) The certificates representing all of the Escrowed Shares shall be
held in escrow by the Secretary of the Company as escrow holder (the "Escrow
Holder"), together with related stock powers executed in blank by the record
owners thereof. The Escrow Holder shall also hold in escrow the cash proceeds
("Escrowed Cash") from sales of Escrowed Shares permitted by paragraph (f)
below. The Escrow Holder shall not permit the transfer of such shares on the
books of the Company except in accordance with this Agreement and the
Stockholders Agreement, provided that the Escrow Holder shall be entitled to
rely upon written directions of the Board of Directors of the Company. The
Escrow Holder shall have no personal liability for any act or omission hereunder
while acting in good faith in the exercise of his own judgment. The Company
agrees to indemnify and hold Escrow Holder free and harmless from and against
any and all losses, costs, damages, liabilities or expenses, including counsel
fees to which Escrow Holder may be put or which he may incur by reason of or in
connection with the escrow arrangement hereunder.
(b) On or promptly following the Reconciliation Date, the Escrow Holder
shall distribute the Escrowed Shares and Escrowed Cash then beneficially owned
by each of the Old Mercury Stockholders as follows (subject to the terms of
paragraph (g) below):
(i) first, to the Company, an amount of Escrowed Cash of such Old
Mercury Stockholder equal to such Old Mercury Stockholder's Percentage Share of
the outstanding
43
principal amount of the Old Mercury Note, plus accrued and unpaid interest
thereon and, if necessary, a number of Escrowed Shares of such Old Mercury
Stockholder having an aggregate Market Price equal to the balance of such Old
Mercury Stockholder's Percentage Share of the outstanding principal amount of
the Old Mercury Note, plus accrued and unpaid interest thereon;
(ii) second, to the Company and each other Section 8.5 Indemnified
Party (pro rata in proportion to their respective Section 8.5 Losses), an amount
of Escrowed Cash of such Old Mercury Stockholder equal to such Old Mercury
Stockholder's Percentage Share of the Section 8.5 Losses, plus an amount equal
to interest thereon at the rate of 10% per annum, compounded annually, from the
date of the applicable Section 8.5 Notice through the Reconciliation Date, and,
if necessary, a number of Escrowed Shares of such Old Mercury Stockholder having
an aggregate Market Price equal to the balance of such Old Mercury Investor's
Percentage Share of the Section 8.5 Losses, plus an amount equal to interest
thereon at the rate of 10% per annum, compounded annually, from the date of the
applicable Section 8.5 Notice through the Reconciliation Date; provided that no
Escrowed Shares or Escrowed Cash of any Old Mercury Stockholder shall be
distributed pursuant to this clause (ii) of Section 8.9(b) with respect to any
Section 8.5 Loss, if such Old Mercury Stockholder shall have theretofore
satisfied its obligation in respect of such Section 8.5 Loss in accordance with
the proviso to the last sentence of Section 8.5; and
(iii) third, to such Old Mercury Stockholder, the balance of his or its
Escrowed Shares and Escrowed Cash.
The distribution of the Escrowed Shares contemplated in this Section
8.9(b) shall be deferred to the extent necessary to determine the Market Price
of the Escrowed Shares.
(c) Promptly following the Reconciliation Date, the Escrow Holder shall
(i) if no Escrowed Shares are distributable pursuant to paragraph (i) or (ii) of
Section 8.9(b), deliver the certificates representing the Escrowed Shares to the
Old Mercury Stockholders, and (ii) if any Escrowed Shares are distributable
pursuant to paragraphs (i) or (ii) of Section 8.9(b), (x) cancel the
certificates held by the Escrow Holder representing Escrowed Shares, (y) cause
new certificates to be issued representing the number of Escrowed Shares
distributable to the Company or any other Section 8.5 Indemnified Party pursuant
to paragraphs (i) and (ii) of Section 8.9(b), which certificates the Escrow
Holder shall deliver to the Company or such other Section 8.5 Indemnified Party
(as applicable), and (y) cause new certificates to be issued representing the
balance of the Escrowed Shares, which certificates shall be distributed to such
Old Mercury Stockholder.
(d) Subject to the terms hereof, each Old Mercury Stockholder shall
have all the rights of a stockholder with respect to the Escrowed Shares while
they are held in escrow, including, without limitation, the right to vote the
Escrowed Shares and receive any cash dividends declared thereon. If, from time
to time, there is (i) any stock dividend, stock split or other change in the
Escrowed Shares or (ii) any merger or sale of all or substantially all of the
assets or other acquisition of the Company, all new, substituted or additional
securities to which
44
such Old Mercury Stockholder is entitled by reason of his ownership of the
Escrowed Shares shall be immediately subject to this escrow, deposited with the
Escrow Holder and included thereafter as "Escrowed Shares" for purposes of this
Agreement.
(e) Legends. The share certificates evidencing the Escrowed Shares
shall be endorsed with the following legend (in addition to any legend required
to be placed thereon by Section 2.6, applicable federal or state securities laws
or the Stockholders Agreement).
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF THE SECURITIES PURCHASE AGREEMENT DATED AS
OF MAY 20, 1998, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY, WHICH PROVIDES, AMONG OTHER THINGS, FOR RESTRICTIONS ON
TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE."
(f) Until the Reconciliation Date, no Mercury Investor Indemnitor shall
Transfer (as such term is defined in the Stockholders Agreement) any of his or
its Escrowed Shares; provided that, subject to the restrictions on transfer
contained in the Stockholders Agreement, after the IPO Date (as defined in the
Stockholders Agreement) and notwithstanding the provisions of Section 6.10(b),
any Old Mercury Stockholder may sell any or all of his Escrowed Shares for cash
at the Market Price so long as the gross cash proceeds thereof are deposited
with the Escrow Holder, who shall at the request of such Old Mercury Stockholder
invest such funds in Treasury obligations or other cash equivalents that mature
not later than the fifth anniversary of the date hereof, to be held in escrow by
the Escrow Holder, and not to be released, except in accordance with the
foregoing provisions.
(g) Notwithstanding anything herein to the contrary, 100% of the
obligations of all Old Mercury Stockholders to be satisfied by distributions of
Escrowed Cash and/or Escrowed Shares pursuant to Section 8.9(b)(i) or (ii) shall
be satisfied, on the Reconciliation Date (as defined in clauses (i) through (iv)
of the definition thereof, without regard to the proviso to such definition),
first, out of any Escrowed Cash, and second, out of any Escrowed Shares held by
Mercury II, until all of such Escrowed Cash and Escrowed Shares shall have been
distributed.
8.10 Advances. The Company hereby irrevocably and unconditionally
commits, from time to time, upon ten business days' notice from Mercury I or
Mercury II, to make advances to Mercury I and Mercury II against Old Mercury
Expenses payable by Mercury I and Mercury II, which advances shall be evidenced
by the Old Mercury Note.
45
ARTICLE IX
TERMINATION
9.1 Termination. This Agreement may be terminated, and the transactions
contemplated hereby abandoned, without further obligation of any party (except
as set forth herein), at any time prior to the Closing Date:
(a) by mutual written consent of the parties;
(b) by any party by written notice to the other parties, if the Closing
shall not have occurred on or before the date that is nine months after the date
hereof, provided that the party electing to exercise such right is not otherwise
in breach of its obligations under this Agreement; or
(c) by any party by written notice to the other 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.
(b) In the event of a termination of this Agreement pursuant to Section
9.1, all provisions of this Agreement shall terminate, except Sections 6.2 and
6.12(b) and Articles VIII and X.
(c) 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
46
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, by facsimile transmission, or by registered or
certified mail (return receipt requested), postage prepaid, with an
acknowledgment of receipt signed by the addressee or an authorized
representative thereof, addressed as follows (or to such other address for a
party as shall be specified by like notice; provided that notice of a change of
address shall be effective only upon receipt thereof):
If to AT&T PCS or TWR:
c/o AT&T Wireless Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
47
With a copy to:
AT&T Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Constant & ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to a Cash Equity Investor, to its address set forth on Schedule I.
With a copy to:
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Mercury I or Mercury II, to:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Young, Williams, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.A.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
48
If to a Management Stockholder, to him in care of the Company.
If to the Company:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
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 Purchasers harmless against, the reasonable
fees and disbursements of counsel to each of the Purchasers in connection with
the preparation, negotiation, execution and delivery of this Agreement, the
Related Agreements, the Credit Documents, 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, in the case of the
Section 6.10(b), the Mercury Investor Indemnitors) and their respective
permitted successors, legal representatives and permitted assigns. None of AT&T
PCS, TWR, the Company, any Cash Equity Investor, Mercury I, Mercury II or any
Management Stockholder 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 I (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;
(b) AT&T PCS and TWR shall have the right to assign to AT&T Corp., or
to one or more direct or indirect wholly owned Subsidiaries of AT&T Corp., any
and all rights and obligations of AT&T PCS or TWR, as the case may be, under
this Agreement, provided, that such assignee shall have assumed in writing all
the obligations of AT&T PCS or TWR, as the case may be, hereunder and no such
assignment shall relieve AT&T PCS of its obligations hereunder; and
(c) 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
49
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 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. All pronouns and any variations thereof shall be deemed to refer
to the masculine, feminine or neuter, singular or plural, as the identity of the
antecedent Person or Person may require.
10.9 Entire Agreement. This Agreement and the Related Agreements,
including the exhibits and schedules hereto and thereto and the certificates and
instruments delivered pursuant to the terms of this Agreement and the Related
Agreements, embody the entire agreement and understanding of the parties hereto
in respect of the Transactions. There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein or the Related Agreements. This
Agreement and the Related Agreements supersede 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, and no party shall
issue any press release or make any other public statement regarding the
Transactions prior to the Closing without the prior consent of the other
parties, in each case 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.
50
10.11 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any New York Courts.
10.12 Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise or beginning of
the exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
10.13 Authorized Agent of AT&T PCS. AT&T PCS hereby authorizes Wireless
PCS, Inc. as its agent, with full power to execute, in the name of and on behalf
of AT&T PCS, the Related Agreements to which AT&T PCS is a party and any and all
other documents that AT&T PCS is required to execute and deliver in connection
with the Closing, and to give and receive all notices, requests, consents,
amendments, demands and other communications to or from AT&T PCS hereunder or
thereunder. Each party hereto (other than AT&T PCS) shall be entitled to rely on
the full power and authority of Wireless PCS, Inc. to act on behalf of AT&T PCS
in accordance with this Section 10.13. Nothing contained in this Section 10.13
shall relieve AT&T PCS from complying with its obligations under this Agreement
or any of the Related Agreements to which it is a party.
* * *
51
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
TRITEL, INC.
By:
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
Title: President
AT&T WIRELESS PCS INC.
By:
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President
TWR CELLULAR, INC.
By:
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President
S-1
Cash Equity Investors:
TORONTO DOMINION
INVESTMENTS, INC.
By:
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
ENTERGY WIRELESS COMPANY
By:
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive
Officer
GENERAL ELECTRIC CAPITAL CORPORATION
By:
--------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Managing Director
S-2
WASHINGTON NATIONAL INSURANCE COMPANY
By:
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President
and Chief Financial Officer
UNITED PRESIDENTIAL LIFE
INSURANCE COMPANY
By:
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President
and Chief Financial Officer
S-3
DRESDNER KLEINWORT ▇▇▇▇▇▇ PRIVATE EQUITY
PARTNERS LP
BY: DRESDNER KLEINWORT ▇▇▇▇▇▇ PRIVATE
EQUITY MANAGERS LLC, AS ITS GENERAL
PARTNER
By:
--------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Authorized Signatory
S-4
TRIUNE PCS, LLC
BY: TRIUNE CAPITAL, LP, AS GENERAL
PARTNER
BY: TRIUNE INC., AS GENERAL PARTNER
By:
--------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
S-5
DC INVESTMENT PARTNERS
EXCHANGE FUND, L.P.
BY: __________________,
ITS GENERAL PARTNER
By:
--------------------------------------
Name:
Title:
FCA VENTURE PARTNERS I, L.P.
BY: __________________,
ITS GENERAL PARTNER
By:
--------------------------------------
Name:
Title:
▇▇▇▇▇▇▇ ASSOCIATES, LLC
BY: __________________,
ITS MANAGING MEMBER
By:
--------------------------------------
Name:
Title:
S-6
MERCURY PCS, LLC
BY: MSM, INC.,
ITS MANAGER
By:
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
Title: President
MERCURY PCS II, LLC
BY: MSM, INC.,
ITS MANAGER
By:
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
Title: President
-----------------------------------------
Management Stockholders:
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
---------------------------------
▇.▇. ▇▇▇▇▇▇, ▇▇.
-----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
S-7
TRILLIUM PCS, LLC
By:
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
Title: Manager
S-8
THE MANUFACTURERS' LIFE INSURANCE COMPANY
(U.S.A.)
By:
--------------------------------------
Name:
Title:
S-9
SCHEDULE I
CASH EQUITY INVESTORS
---------------------
SECOND
AGGREGATE INITIAL CASH FUNDING
CASH EQUITY INVESTORS COMMITMENT CONTRIBUTION 9/30/99
--------------------- ---------- ------------ -------
Washington National Insurance Company $25,000,000 $16,666,667 $8,333,333
United Presidential Life Insurance Company 25,000,000 16,666,667 8,333,333
Trillium PCS, LLC 2,284,341 1,522,894 761,447
Dresdner Kleinwort ▇▇▇▇▇▇ Private
Equity Partners LP 34,265,111 22,843,407 11,421,704
Entergy Wireless Corporation 20,000,000 13,333,333 6,666,667
Triune, Inc. 18,274,726 12,183,150 6,091,576
Toronto Dominion Investments, Inc. 5,000,000 3,333,333 1,666,667
General Electric Capital Corporation 2,500,000 1,666,667 833,333
DC Investment Partners Exchange Fund, LP 1,142,170 761,447 380,723
FCA Venture Partners I, LP 571,085 380,723 190,362
▇▇▇▇▇▇▇ Associates, LLC 114,217 76,145 38,072
Mercury PCS II, LLC 3,811,154 3,811,154 -0-
Mercury PCS, LLC 14,337,196 14,337,196 -0-
--------------- --------------- --------------
TOTAL $152,300,000 $107,582,783 $44,717,217
SCHEDULE II
MANAGEMENT STOCKHOLDERS
-----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇ 2.83%
▇.▇. ▇▇▇▇▇▇, ▇▇. 2.83%
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. 2.83%
TBD 1.50%
SCHEDULE III
[SEE ATTACHED]
SCHEDULE IV
MERCURY PCS I LICENSES
----------------------
--------------------------------------------------------------------------------
MARKET NUMBER FREQUENCY BLOCK LICENSE DESCRIPTION
--------------------------------------------------------------------------------
017 C Anniston, AL
--------------------------------------------------------------------------------
044 C Birmingham, AL
--------------------------------------------------------------------------------
108 C Decatur, AL
--------------------------------------------------------------------------------
158 C Gadsden, AL
--------------------------------------------------------------------------------
198 C Huntsville, AL
--------------------------------------------------------------------------------
450 C Tuscaloosa, AL
--------------------------------------------------------------------------------
MERCURY PCS II LICENSES
-----------------------
--------------------------------------------------------------------------------
MARKET NUMBER FREQUENCY BLOCK LICENSE DESCRIPTION
--------------------------------------------------------------------------------
042 F Biloxi, MS
--------------------------------------------------------------------------------
▇▇▇ ▇ ▇▇▇▇▇, ▇▇
--------------------------------------------------------------------------------
▇▇▇ ▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇▇, ▇▇
--------------------------------------------------------------------------------
▇▇▇ ▇ ▇▇▇▇▇▇▇▇, ▇▇
--------------------------------------------------------------------------------
▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇
--------------------------------------------------------------------------------
▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇
--------------------------------------------------------------------------------
▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇
--------------------------------------------------------------------------------
▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇
--------------------------------------------------------------------------------
▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇
--------------------------------------------------------------------------------
▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇
--------------------------------------------------------------------------------
▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇
--------------------------------------------------------------------------------
License certificates for the following licenses issued to Mercury II have not
yet been received by Mercury II due to clerical errors in FCC debt documentation
furnished by the FCC which is being corrected by FCC administrative personnel in
cooperation with Mercury II's FCC counsel:
BTA# Name
---- ----
▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇
SCHEDULE V
ALABAMA LICENSE
---------------
--------------------------------------------------------------------------------
MARKET NUMBER FREQUENCY BLOCK LICENSE DESCRIPTION
--------------------------------------------------------------------------------
305 C Montgomery, AL
--------------------------------------------------------------------------------
SCHEDULE VI
COMPANY TERRITORY*
------------------
I. From Atlanta MTA BTA Market Designator
---------------- ---------------------
▇▇▇▇▇▇▇ County, GA **
▇▇▇▇▇▇▇▇ County, GA **
Opelika-Auburn, AL ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇, ▇▇ 384
II. From Knoxville MTA
------------------
Knoxville, TN 232
III. From Louisville-Lexington-Evansville MTA
----------------------------------------
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇▇, ▇▇ 052
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ 273
IV. From Memphis-Jackson MTA
------------------------
▇▇▇▇▇▇▇▇▇▇ County, MS ***
Jackson, MS 210
Tupelo-Corinth, MS 449
Greenville-Greenwood, MS ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ 455
--------------------
* The Company Territory is more particularly described in the FCC applications
filed in connection with the transfer of FCC PCS Licenses to the Company.
** ▇▇▇▇▇▇ County and ▇▇▇▇▇▇▇▇ County are both located within the Atlanta BTA
(B024).
*** ▇▇▇▇▇▇▇▇▇▇ County is located within the Memphis BTA (B290).
V. From Nashville MTA
------------------
Nashville, TN ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇-▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ 083
Cookeville, TN 096
VI. From Birmingham MTA
-------------------
Anniston, AL 017
Birmingham, AL 044
Decatur, AL ▇▇▇
▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ 146
Gladsden, AL ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇. ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
--------------------
▇▇▇▇▇▇-▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ 186
Laurel, MS 246
McComb-Brookhaven, MS 269
Mobile, AL 302
SCHEDULE VII
SECURITIES TO BE ISSUED
-----------------------
[See Attached]
SCHEDULE VIII
Mercury Investors Percentage Share
----------------- ----------------
Southern Farm Bureau Life Insurance Company 58.740986%
M3, LLC 10.855584%
▇▇▇▇▇▇▇ Communications, LLC 7.795751%
DC Investment Partners Exchange Fund, L.P. 1.948938%
FCA Venture Partners I, L.P. 0.974469%
▇▇▇▇▇▇▇ Associates, LLC 0.194894%
Mercury PCS, Investors, LLC 19.489378%
100%
SCHEDULE 1.1
PERMITTED EXPENDITURES
----------------------
SIX MONTH OPERATING BUDGET
BEGINNING MAY 1, 19981
Civil Construction & Materials $4,250,000
Site Acquisition 3,475,000
RF Engineering 4,400,000
Plant Operating Expense 5,700,000
Sales & Marketing 2,200,000
General & Administrative 5,600,000
License Note Interest 2,875,000
-----------
TOTAL $28,500,000
GENERAL & ADMINISTRATIVE DETAIL
-------------------------------
Billing Vendor Start-Up Costs $1,400,000
Accounting and Other Software Costs 1,200,000
Computers/Office Equipment 750,000
Employee Salaries and Overhead 1,654,333
G&A Travel 300,000
G&A Legal/Accounting 300,000
-----------
$5,604,333
---------------
* Figures recited herein are subject to overages of up to 25%.
SCHEDULE 2.1
DESCRIPTION OF AT&T
CONTRIBUTED AND RETAINED LICENSES
---------------------------------
[See attached]
SCHEDULE 2.3
CONTRIBUTED MERCURY ASSETS
--------------------------
Contributed Mercury Assets shall mean all right, title and interest to all the
properties and assets related to the contributed licenses of every kind
(tangible and intangible) belonging to, owned or otherwise held by Mercury I and
Mercury II (except for those licenses owned by Mercury II which are being
retained and intercompany loans between Mercury I and Mercury II), including,
but not limited to:
(a) all tangible personal property;
(b) all accounts, notes and other receivables;
(c) cash and cash equivalents;
(d) all leases, subleases and rights thereunder;
(e) all agreements, contracts, security interests;
(f) approvals, permits, licenses, orders and similar right
obtained from governmental agencies which are assignable;
(g) books, records, specifications, promotional materials,
studies and reports; and
(h) intangibles.
SCHEDULE 2.8
ASSUMED MERCURY DEBT
AS OF MARCH 31, 1998*
---------------------
Lucent bridge loan 5,000,000.00
FCC debt on C Block 63,890,000.00**
FCC debt on F Block 9,458,000.00
Accrued interest on FCC debt 6,713,000.00
Accrued interest on N/P to Lucent 183,000.00
Central Alabama FCC debt 12,144,000.00**
The Company will also assume all trade liabilities, payroll related
liabilities and other obligations incurred in the normal course of the business.
--------------
* The liabilities assumed at Closing will be adjusted to reflect actual
liability balances outstanding on that date.
** This reflects 100% of the C Block debt. This amount will be reduced per FCC
regulations when part of the spectrum is returned.
SCHEDULE 4.6
MERCURY CONSENTS
----------------
The execution, delivery and performance of the Agreement will or may
require the following consents, approvals and reviews:
1. The Federal Communications Commission.
Matters which could prevent Mercury from consummating the transactions
contemplated by this Agreement include:
A. Amarillo Celltelco and High Plains Wireless L.P. v. ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇, ▇.▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Jr., Mercury Southern,
LLC and Mercury PCS II, LLC; No. 83, 268-A in the ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
in and for Potter County, Texas.
B. Applications for Review filed by High Plains Wireless, L.P.: In re
Application of Mercury PCS II, LLC for Facilities in the Broadband
Personal Communications Services in the D, E and F Blocks, Federal
Communications Commission File Numbers 00114CWL97, et al.
C. United States Department of Justice, Antitrust Division, Washington,
D.C.; ▇▇▇▇▇▇▇ ▇▇▇ ▇▇, ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇.
COMPANY CONSENTS
The execution, delivery and performance of the Agreement will or may
require the following consents, approvals and reviews:
1. The Federal Communications Commission.
SCHEDULE 4.7
LITIGATION
----------
See Items 1(A-C) under "Mercury Consents" on Schedule 4.6.
SCHEDULE 4.9
BROKER'S FEES
-------------
Amsterdam Pacific LLC $ 2,375,000
TD Securities (USA) Inc. $ 3,507,500
▇▇▇▇ ▇▇▇▇▇▇ $ 120,000
Conseco Private Capital Group, Inc. $ 500,000
------------
$ 6,502,500
SCHEDULE 5.3(A)
PROCEEDINGS AFFECTING MERCURY LICENSES
--------------------------------------
See Items 1(A-C) under "Mercury Consents" on Schedule 4.6.
SCHEDULE 5.3(C)
MERCURY I AND MERCURY II
CASH FLOW STATEMENTS
--------------------
Mercury PCS and
Mercury PCS II
-----------------
Sources of cash:
Equity $ 14,400,000.00
-----------------
Lucent loan $ 5,000,000.00
Net Sources: $ 19,400,000.00
Uses of Cash:
FCC deposits $ 12,137,000.00
C Block interest $ 1,400,000.00
Deferred financing costs $ 1,137,000.00
Litigation Costs $ 950,000.00
Other operating costs $ 3,102,000.00
-----------------
Net uses: $ 18,726,000.00
Cash as of March 31, 1998 $ 674,000.00
=================
SCHEDULE 5.4
CASH EQUITY LOANS
-----------------
$ AMOUNT OF CASH
CASH EQUITY INVESTORS EQUITY LOAN
--------------------- -----------
Washington National Insurance Company United $12,500, 000
Presidential Life Insurance Company 12,500,000
Trillium PCS, LLC 1,284,341
Dresdner Kleinwort ▇▇▇▇▇▇ Private Equity Partners LP 19,265,111
Triune PCS, Inc. 10,274,726
Mercury PCS, LLC 14,337,197
Mercury PCS II, LLC 3,811,154
DC Investment Partners Exchange Fund, LP 642,170
FCA Venture Partners I, LP 321,085
▇▇▇▇▇▇▇ Associates LLC 64,217
SCHEDULE 5.5(G)
MINIMUM BUILDOUT PLAN
---------------------
BUILDOUT SCHEDULE-YEAR 1
------------------------
ATLANTA MTA
-----------
Cities: Chattanooga, Tennessee
Cleveland, Tennessee
Dalton, Georgia
Interstates/State Highways:
Portion of I-75 South from Chattanooga
Portion of I-75 North from Chattanooga
Portion of I-24 West from Chattanooga
Portion of I-59 South from Chattanooga
BIRMINGHAM MTA
--------------
Cities: Huntsville, Alabama
Decatur, Alabama
Interstates/State Highways:
Portion of I-65 South from Decatur
Portion of I-65 North from Decatur
MEMPHIS/JACKSON MTA
-------------------
Cities: Jackson, Mississippi
Vicksburg, Mississippi
Interstates/State Highways:
Portion of I-20 West from Jackson
Portion of I-20 East from Jackson
Portion of I-55 South from Jackson
Portion of I-55 North from Jackson
Portion of Highway 49 South from Jackson
BUILDOUT SCHEDULE - YEAR 1, CONTINUED
-------------------------------------
KNOXVILLE MTA
-------------
Cities: Knoxville, Tennessee
Interstates/State Highways:
Portion of I-40 West from Knoxville
Portion of I-40 East from Knoxville
Portion of I-75 North from Knoxville
NASHVILLE MTA
-------------
Cities: Nashville, Tennessee
Interstates/State Highways:
Portion of I-40 East from Nashville,
Portion of I-40 West from Nashville
Portion of I-24 East from Nashville
Portion of I-24 West from Nashville
Portion of I-65 North from Nashville
Portion of I-65 South from Nashville
The buildout of the above referenced cities, interstates and state
highways represents the deployment of a wireless service network which
will be capable of providing a radio frequency signal level sufficient
to adequately service an estimated 2,954,700 pops within the license
area. The estimated pops recited hereinabove for the buildout during
year 1 represents 21.7% of the estimated total pops contained under the
terms of this agreement.
BUILDOUT SCHEDULE - YEAR 2
--------------------------
BIRMINGHAM MTA
--------------
Cities: Birmingham, Alabama
Montgomery, Alabama
Tuscaloosa, Alabama
Anniston, Alabama
Interstates/State Highways:
Portion of I-20 East from Birmingham
Portion of I-20 West from Birmingham
Portion of Highway 280 East from Birmingham
Portion of I-59 North from Birmingham
Portion of I-65 South from Montgomery
Portion of I-65 North from Montgomery
Portion of Highway 231 South from Montgomery
Portion of Highway 80 West from Montgomery
Portion of I-20 East from Tuscaloosa
Portion of I-20 West from Tuscaloosa
Portion of I-20 East from Anniston
Portion of I-20 West from Anniston
LOUISVILLE MTA
--------------
Cities: Louisville, Kentucky
Lexington, Kentucky
Interstates/State Highways:
Portion of I-64 East from Louisville
Portion of I-64 West from Louisville
Portion of I-65 South from Louisville
Portion of I-65 North from Louisville
Portion of I-71 North from Louisville
Portion of I-75 North from Lexington
Portion of I-75 South from Lexington
Portion of I-64 East from Lexington
Portion of I-64 West from Lexington
BUILDOUT SCHEDULE - YEAR 2, CONTINUED
-------------------------------------
MEMPHIS/JACKSON MTA
-------------------
Cities: Hattiesburg, Mississippi
Meridian, Mississippi
Tupelo, Mississippi
Interstates/State Highways:
Portion of Highway 49 North from Hattiesburg
Portion of Highway 49 South from Hattiesburg
Portion of Highway 98 East from Hattiesburg
Portion of I-59 South from Hattiesburg
Portion of I-59 North from Hattiesburg
Portion of I-20 East from Meridian
Portion of I-20 West from Meridian
Portion of I-59 South from Meridian
NASHVILLE MTA
-------------
Cities: Clarksville, Tennessee
Hopkinsville, Kentucky
Interstates/State Highways:
Portion of I-24 East from Clarksville
Portion of ▇-▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
---------------
Cities: Mobile, Alabama
Interstates/State Highways:
Portion of I-65 North from Mobile
Portion of I-10 East from Mobile
Portion of I-10 West from Mobile
Portion of Highway 98 West from Mobile
BUILDOUT SCHEDULE - YEAR 2, CONTINUED
-------------------------------------
The buildout of the above referenced cities, interstates and state
highways represents the deployment of a wireless service network which
will be capable of providing a radio frequency signal level sufficient
to adequately service an estimated 3,882,900 pops within the license
area. The estimated pops recited hereinabove for the buildout during
year 2 represents 28.6% of the estimated total pops contained under the
terms of this agreement.
The estimated pops recited herein for the buildout for years 1 and 2
will constitute an estimated aggregate total of 6,837,600 pops within
the license area at the completion of the year 2 buildout or 50.3% of
the estimated total pops contained under the terms of this agreement.
BUILDOUT SCHEDULE - YEAR 3
--------------------------
BIRMINGHAM MTA
--------------
Cities: Gadsden, Alabama
Dothan, Alabama
Florence, Alabama
Interstates/State Highways:
Portion of I-59 North from Gadsden
Portion of I-59 South from Gadsden
Portion of Highway 231 North from Dothan
LOUISVILLE MTA
--------------
Cities: Owensboro, Kentucky
Bowling Green, Kentucky
Glasgow, Kentucky
Madisonville, Kentucky
Corbin, Kentucky
Interstates/State Highways:
Portion of Audubon Parkway West from Owensboro
Portion of Western Kentucky Parkway East from Madisonville
Portion of Pennyrile Parkway North from Madisonville
Portion of Pennyrile Parkway South from Madisonville
Portion of I-65 North from Elizabethtown
Portion of I-65 South from Elizabethtown
Portion of I-75 North from Corbin
Portion of I-75 South from Corbin
NASHVILLE MTA
-------------
Cities: Cookeville, Tennessee
Columbia, Tennessee
Interstates/State Highways:
Portion of I-40 East from Cookeville
Portion of I-40 West from Cookeville
Portion of I-65 North from Columbia
Portion of I-65 South from Columbia
BUILDOUT SCHEDULE - YEAR 3, CONTINUED
-------------------------------------
MEMPHIS/JACKSON MTA
-------------------
Cities: Columbus, Mississippi
Starkville, Mississippi
Greenville, Mississippi
Greenwood, Mississippi
Interstates/State Highways:
Portion of Highway 82 East from Columbus
Portion of Highway 82 West from Columbus
Portion of Highway 82 East from Starkville
NEW ORLEANS MTA
---------------
Cities: Gulfport, Mississippi
Biloxi, Mississippi
Pascagoula, Mississippi
Brookhaven, Mississippi
McComb, Mississippi
Laurel, Mississippi
Interstates/State Highways:
Portion of Highway 49 North from Gulfport
Portion of I-10 West from Gulfport
Portion of I-10 East from Gulfport
Portion of I-10 West from Biloxi
Portion of I-10 East from Biloxi
Portion of I-10 West from Pascagoula
Portion of I-10 East from Pascagoula
Portion of I-55 North from Brookhaven
Portion of I-55 South from Brookhaven
Portion of I-55 North from McComb
Portion of I-55 South from McComb
Portion of I-59 North from Laurel
Portion of I-59 South from Laurel
BUILDOUT SCHEDULE - YEAR 3, CONTINUED
-------------------------------------
The buildout of the above referenced cities, interstates and state
highways represents the deployment of a wireless service network which
will be capable of providing a radio frequency signal level sufficient
to adequately service an estimated 1,484,700 pops within the license
area. The estimated pops recited hereinabove for the buildout during
year 3 represents 10.9% of the estimated total pops contained under the
terms of this agreement.
The estimated pops recited herein for the buildout for years 1, 2 and 3
will constitute an estimated aggregate total of 8,322,300 pops within
the license area at the completion of the year 3 buildout or 61.2% of
the estimated total pops contained under the terms of this agreement.
BUILDOUT SCHEDULE - YEAR 4
--------------------------
Cities: Corinth, Mississippi
Natchez, Mississippi
Rome, Georgia
Selma, Alabama
Demopilis, Alabama
Opelika, Alabama
Auburn, Alabama
LaGrange, Georgia
Interstates/State Highways:
Additional portions of all interstates and highways listed
under years 1 and 2 buildout.
The buildout of the above referenced cities, interstates and state
highways, and expansion of existing cities listed in the buildout for
years 1 through 3, represents the deployment of a wireless service
network which will be capable of providing a radio frequency signal
level sufficient to adequately service an estimated 1,196,670 pops
within the license area. The estimated pops recited hereinabove for the
buildout during year 4 represents 8.8% of the estimated total pops
contained under the terms of this agreement.
The estimated pops recited herein for the buildout for years 1, 2, 3 and
4 will constitute an estimated aggregate total of 9,518,970 pops within
the license area at the completion of the year 4 buildout or 70.0% of
the estimated total pops contained under the terms of this agreement.
BUILDOUT SCHEDULE - YEAR 5
--------------------------
Cities: The buildout for year 5 will encompass expansion of all
cities, where applicable, launched in the buildout for
years 1 through 4.
Interstates/State Highways:
Additional portions of all interstates and highways listed
under year 3 buildout.
The buildout of the above referenced cities, interstates and state
highways, and expansion of existing cities listed in the buildout for
years 1 through 4, represents the deployment of a wireless service
network which will be capable of providing a radio frequency signal
level sufficient to adequately service an estimated 1,359,853 pops
within the license area. The estimated pops recited hereinabove for the
buildout during year 5 represents 10% of the estimated total pops
contained under the terms of this agreement.
The estimated pops recited herein for the buildout for years 1, 2, 3, 4
and 5 will constitute an estimated aggregate total of 10,878,823 pops
within the license area at the completion of the year 4 buildout or
80.0% of the estimated total pops contained under the terms of this
agreement.
SCHEDULE 6.16
CENTRAL ALABAMA AGREEMENT AMENDMENT TERMS
-----------------------------------------
Terms not otherwise defined herein shall have the meanings ascribed to
them in the Central Alabama Agreement. The amendment to the Central Alabama
Agreement to be executed shall effect the following:
FIXED PURCHASE PRICE The Purchase Price for the Purchased Assets
shall be fixed at $3,014,450, of which
$2,601,950 shall be paid in the form of the
issuance of equity of Mercury I (or Series C
Preferred Stock of the Company, if
applicable) and the $412,500 Cash Premium
shall be paid in cash. The Purchase Price is
based on Central Alabama's paid in capital
as of May 15, 1998 (adjusted to reflect
agreed modifications as shown on the detail
attached hereto). To the extent that Central
Alabama's paid in capital (with the same
modifications referred to above) exceeds
$2,601,950 as of the Closing Date (as
defined in the Central Alabama Agreement),
Mercury I or the Company, as applicable,
shall pay a cash purchase price adjustment
to Central Alabama equal to any excess.
However, no increase in Central Alabama's
paid in capital shall be taken into account
unless the Purchaser shall have approved the
contribution of additional equity or any
other transaction which would affect the
level of Central Alabama's paid in capital.
To the extent that Central Alabama's paid in
capital (with the same modifications
referred to above) is less than $2,601,950
as of the Closing Date (as defined in the
Central Alabama Agreement), the Cash Premium
portion of the Purchase Price shall be
reduced by an amount equal to the
difference. If the difference exceeds the
Cash Premium, the amount of equity of
Mercury I (or Series C Preferred Stock of
the Company, if applicable) to be issued to
Central Alabama shall be reduced
accordingly.
C-BLOCK SPECTRUM
DISAGGREGATION Central Alabama shall commit to elect the
"disaggregation option" pursuant to the
FCC's Order on Reconsideration of the Second
Report and Order, FCC 98-46 (released March
24, 1998), with respect to its C-Block BTA
B305 Montgomery, Alabama license no later
than two business days prior to the deadline
established by the FCC to make
such election. This shall be an
unconditional commitment and Mercury I and
the Company shall be held harmless from any
claims or expense arising from or relating
to this election.
RESALE The rights granted to the Partners to resell
PCS services of Mercury I or the Company, as
applicable, shall be modified to: (i) be
limited to the specific geographic areas
designated for each partner as listed on the
attachment hereto; (ii) delete the "most
favored nation" terms provision; (iii) limit
the right to resell to the current Partners
and prohibit the assignment of the right to
resell; and (iv) provide that as to each
Partner, the right to resell shall terminate
on any change of control of each Partner.
Further, the right shall terminate in the
event any such right is deemed to conflict
with the exclusivity provisions of the
Stockholders' Agreement.
EXECUTION OF STOCKHOLDERS'
AGREEMENT Central Alabama and each of its partners (if
any) to whom shares of Series C Preferred
Stock or other securities of the Company are
distributed on the Closing Date shall, on
the Closing Date, and each partner of
Central Alabama to whom shares of Series C
Preferred Stock or other securities of the
Company are distributed thereafter shall, on
the date of such distribution, execute and
deliver to the other parties thereto a
counterpart to each of the Stockholders'
Agreement and the agreement among the Cash
Equity Investors attached as Schedule X to
the Stockholders' Agreement. Central Alabama
and each of its partners to whom shares of
Series C Preferred Stock or other securities
of the Company are distributed makes (as to
itself as of the Closing Date or other date
of distribution) the representations set
forth in Section 5.1 of the Stockholders'
Agreement.
CONTRACTS The lease of office space and the Executive
Employment Agreement dated October 1, 1996,
between Central Alabama and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ shall not form a part of the
Purchased Assets and neither Mercury I nor
the Company shall assume any liabilities
thereunder.
ASSIGNMENT At the request of the Company, Mercury I
shall be permitted to assign all of its
right, title and interest in and to the
Central Alabama Agreement to the Company,
either prior to or following the Closing, in
form and substance satisfactory to the
Company, AT&T PCS and the Cash Equity
Investors.
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE I
DEFINITIONS
ARTICLE II
CONTRIBUTIONS; PURCHASE AND SALE
OF SECURITIES; CERTAIN RESTRICTIONS ON TRANSFER
2.1 AT&T PCS and TWR Contributions............................................11
2.2 Cash Equity Investor Contributions........................................12
2.3 Mercury Contributions.....................................................13
2.4 INTENTIONALLY OMITTED.....................................................13
2.5 Purchase and Sale of Securities at Closing................................13
2.6 Restrictive Legends.......................................................13
2.7 Use of Proceeds...........................................................14
2.8 Assumption of Mercury Indebtedness........................................14
ARTICLE III
CLOSING
3.1 Time and Place of Closing.................................................14
3.2 Closing Actions and Deliveries............................................14
3.3 Payment of Transfer Taxes.................................................16
ARTICLE IV
REPRESENTATIONS OF ALL PARTIES
4.1 Organization and Standing.................................................16
4.2 Power and Authority.......................................................16
4.3 Due Authorization.........................................................17
4.4 Enforceability............................................................17
4.5 No Breach.................................................................17
4.6 Consents; No Conflicts....................................................17
4.7 Litigation................................................................17
4.8 FCC Compliance............................................................18
4.9 Brokers...................................................................18
ARTICLE V
REPRESENTATIONS OF CERTAIN PARTIES
i
5.1 No Distribution, Etc......................................................18
5.2 AT&T PCS and TWR Licenses.................................................19
5.3 Mercury Matters...........................................................19
5.4 Capital Commitment........................................................21
5.5 Representations as to the Company.........................................22
ARTICLE VI
COVENANTS
6.1 Consummation of Transactions..............................................26
6.2 Confidentiality...........................................................28
6.3 Retained Licenses.........................................................28
6.4 No Further Commitment.....................................................29
6.5 Use of Proceeds...........................................................29
6.6 SBIC Regulatory Provisions................................................29
6.7 Regulatory Compliance Cooperation.........................................30
6.8 Certain Covenants.........................................................30
6.9 Restricted Stock Plan.....................................................32
6.10 Certain Mercury Transactions.............................................32
6.11 Certain Employees........................................................33
6.12 Pre-Closing Build-Out....................................................34
6.13 Additional Cash Equity Investors.........................................34
6.14 Return of Spectrum.......................................................35
6.15 Option Agreement.........................................................35
6.16 Central Alabama Agreement................................................36
ARTICLE VII
CLOSING CONDITIONS
7.1 Conditions to Obligations of All Parties..................................36
7.2 Conditions to Obligations of Each Party...................................37
7.3 Conditions to the Obligations of the Purchasers...........................38
ARTICLE VIII
SURVIVAL AND INDEMNIFICATION
8.1 Survival..................................................................39
8.2 Indemnification by Purchasers.............................................39
8.3 Indemnification by the Management Stockholders............................40
8.4 Indemnification by the Company............................................40
8.5 Indemnification by Mercury I, Mercury II, the Management
Stockholders and the Mercury Investor Indemnitors.........................40
8.5 Percentage Share of any Section 8.........................................41
ii
8.6 Procedures................................................................41
8.7 Registration Rights.......................................................42
8.8 Limit on Indemnity........................................................42
8.9 Escrow and Reconciliation.................................................43
8.10 Advances.................................................................45
ARTICLE IX
TERMINATION
9.1 Termination...............................................................45
9.2 Effect of Termination.....................................................45
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Amendment and Modification...............................................46
10.2 Waiver of Compliance; Consents...........................................46
10.3 Notices..................................................................46
10.4 Expenses.................................................................48
10.5 Parties in Interest; Assignment..........................................48
10.6 Applicable Law...........................................................49
10.7 Counterparts.............................................................49
10.8 Interpretation...........................................................49
10.9 Entire Agreement.........................................................49
10.10 Publicity...............................................................49
10.11 Specific Performance....................................................49
10.12 Remedies Cumulative.....................................................50
10.13 Authorized Agent of AT&T PCS............................................50
SCHEDULES
Schedule I -- Cash Equity Investors and Commitments
Schedule II -- Management Stockholders
Schedule III -- AT&T PCS and TWR Licenses
Schedule IV -- Mercury Licenses
Schedule V -- Alabama License
Schedule VI -- Company Territory
Schedule VII -- Securities Issued at Closing
Schedule VIII -- Mercury Investors and Percentage Shares
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Schedule 1.1 -- Permitted Expenditures
Schedule 2.1 -- Description of AT&T PCS Contributed and Retained Licenses
Schedule 2.3 -- Contributed Mercury Assets
Schedule 2.8 -- Assumed Mercury Debt
Schedule 4.6 -- Consents
Schedule 4.7 -- Litigation
Schedule 4.9 -- Broker's Fees
Schedule 5.3(a) -- Proceedings Affecting Mercury Licenses
Schedule 5.3(c) -- Mercury I and Mercury II Cash Flow Statements
Schedule 5.4 -- Cash Equity Loans
Schedule 5.5(g) -- Minimum Build-Out Plan
Schedule 6.16 -- Terms of Central Alabama Agreement Amendment
EXHIBITS
Exhibit A -- Form of Management Agreement
Exhibit B -- Form of Network Membership License Agreement
Exhibit C -- Form of Resale Agreement
Exhibit D -- Form of Restated Bylaws
Exhibit E -- Form of Restated Certificate
Exhibit F -- Form of Roaming Agreement
Exhibit G -- Form of Stockholders Agreement
Exhibit H-1 -- Form of Opinion of Counsel to AT&T PCS
Exhibit H-2 -- Form of Opinion of FCC Counsel to AT&T PCS
Exhibit I -- Form of Opinion of Counsel to Cash Equity Investors
Exhibit J-1 -- Form of Opinion of Counsel to Mercury Entities
Exhibit J-2 -- Form of Opinion of FCC Counsel to Mercury Entities
Exhibit K-1 -- Form of Opinion of Counsel to Company and Management
Stockholders
Exhibit K-2 -- Form of Opinion of FCC Counsel to Company and Management
Stockholders
Exhibit L -- Form of Pledge Agreement
Exhibit M -- Form of Assignment
Exhibit N -- Form of Option Agreement
Exhibit O -- Form of Employment Agreement
Exhibit P -- Form of Old Mercury Note