-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C3m1hF4cW3eQzB3gCJ7d2/vomqEs24r195k83oMMC1TW2oWnEHBKJO2Qpmj/wWoE I+rNe8mqMQ5jkodeAZ+HEQ== /in/edgar/work/20000811/0000905148-00-001601/0000905148-00-001601.txt : 20000921 0000905148-00-001601.hdr.sgml : 20000921 ACCESSION NUMBER: 0000905148-00-001601 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRITEL INC CENTRAL INDEX KEY: 0001088383 STANDARD INDUSTRIAL CLASSIFICATION: [4812 ] IRS NUMBER: 640896417 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-28435 FILM NUMBER: 693925 BUSINESS ADDRESS: STREET 1: 111 E CAPITOL ST STREET 2: SUITE 500 CITY: JACKSON STATE: MS ZIP: 39201 BUSINESS PHONE: 6039292606 MAIL ADDRESS: STREET 1: 1080 RIVER OAKS DRIVE STREET 2: SUITE B 100 CITY: JACKSON STATE: MS ZIP: 39208 10-Q 1 0001.txt T:\EDGAR\GOLDEN\TRITEL10-Q.TXT FORM 10-Q. - Quarterly Report Under Section 23 or 15(d) of the Securities Exchange Act of 1934 FORM 10-Q-QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2000 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File No. TRITEL, INC (Exact name of registrant as specified in its charter) Delaware 64-0896417 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 111 E. Capitol Street, Suite 500 Jackson, MS 39201 (Address of Principal Executive Offices) (601) 914-8000 (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No[ ] On August 10, 2000, there were 97,855,175 shares of class A voting common stock, 2,927,120 shares of class B non-voting common stock, 1,380,448 shares of class C common stock, 4,962,804 shares of class D common stock and 6 shares of voting preference common stock outstanding. Form 10-Q Tritel, Inc. Quarter Ended June 30, 2000 Table of Contents Page PART I. FINANCIAL INFORMATION Item 1. Tritel, Inc. Financial Statements (Unaudited): Condensed Consolidated Balance Sheets- December 31, 1999 and June 30, 2000 ...........................2 Condensed Consolidated Statements of Operations- Three and Six Month Periods Ended June 30, 1999 and June 30, 2000..................................................3 Condensed Consolidated Statements of Cash Flows- Three and Six Month Periods Ended June 30, 1999 and June 30, 2000..................................................4 Notes to Condensed Consolidated Financial Statements...........5 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition.........................13 Item 3. Quantitative and Qualitative Disclosures About Market Risk......20 PART II. OTHER INFORMATION Item 1. Legal Proceedings...............................................22 Item 4 Submission Of Matters To A Vote Of Security Holders.............22 Item 5. Other Information...............................................22 Item 6. Exhibits And Reports On Form 8-K................................22 Signature Page ........................................................... 24 PART I -- FINANCIAL INFORMATION Item 1. Financial Statements
TRITEL, INC. Condensed Consolidated Balance Sheets December 31, 1999 and June 30, 2000 (unaudited) (amounts in thousands, except share data) December 31, June 30, 1999 2000 --------------- ------------------ Assets (unaudited) Current assets: Cash and cash equivalents $ 609,269 350,573 Accounts receivable, net 5,040 14,325 Inventory 8,957 20,512 Prepaid expenses and other current assets 7,298 9,974 ------------- -------------- Total current assets 630,564 395,384 Restricted cash 6,594 5,487 Property and equipment, net 262,343 415,651 Federal Communications Commission licensing costs, net 201,946 202,894 Intangible assets, net 59,508 56,646 Other assets 35,407 33,689 ------------- -------------- Total assets $ 1,196,362 1,109,751 ============= ============== Liabilities and Stockholders' Equity Current liabilities: Current maturities of long-term debt $ 923 974 Accounts payable and accrued liabilities 113,324 114,974 ------------- -------------- Total current liabilities 114,247 115,948 ------------- -------------- Non-current liabilities: Long-term debt 557,716 571,464 Deferred income taxes and other liabilities 37,367 37,856 ------------- -------------- Total non-current liabilities 595,083 609,320 ------------- -------------- Total liabilities 709,330 725,268 ------------- -------------- Series A 10% redeemable convertible preferred stock 99,586 104,119 ------------- -------------- Stockholders' equity: Preferred stock, authorized 3,100,000 shares: Series D, outstanding 46,374 shares in 1999 and 2000 46,374 46,374 Common stock issued and outstanding at June 30, 2000 Class A Voting - 97,840,722 shares; Class B Non-voting - 2,927,120 shares; Class C - 1,380,448; Class D - 4,962,804 shares, Voting Preference -- 6 shares 1,071 1,071 Additional paid in capital 611,277 748,432 Deferred compensation - (74,450) Accumulated deficit (271,276) (441,063) ------------- -------------- Total stockholders' equity 387,446 280,364 ------------- -------------- Total liabilities, redeemable preferred stock and stockholders' equity $ 1,196,362 1,109,751 ============= ============== See Notes to Condensed Consolidated Financial Statements.
TRITEL, INC. Condensed Consolidated Statements of Operations (Unaudited) For the Three and Six Month Periods Ended June 30, 1999 and 2000 (amounts in thousands, except per share data) Three months ended Six months ended June 30, June 30, ------------------------------ -------------------------------- 1999 2000 1999 2000 ------------ ---------------- ------------- ----------------- Revenues $ - 25,808 - 41,307 -------- ---------- -------- ---------- Operating expenses: Cost of service and equipment - 15,409 - 29,111 Technical operations 1,990 11,795 3,946 21,987 General and administrative 4,314 17,097 7,204 26,425 Sales and marketing 1,708 16,464 2,724 28,603 Stock-based compensation - (46,186) - 62,111 Depreciation and amortization 1,865 14,324 3,474 24,875 -------- ---------- -------- ---------- Total operating expenses 9,877 28,903 17,348 193,112 -------- ---------- -------- ---------- Operating loss (9,877) (3,095) (17,348) (151,805) Interest income 4,205 7,224 5,332 15,892 Financing cost - - (2,230) - Interest expense (5,104) (16,056) (5,104) (30,416) -------- ---------- -------- ---------- Loss before income taxes (10,776) (11,927) (19,350) (166,329) Income tax benefit 4,121 570 6,448 1,076 -------- ---------- -------- ---------- Net loss (6,655) (11,357) (12,902) (165,253) Series A preferred dividend (2,261) (2,267) (4,347) (4,534) requirement -------- ---------- -------- ---------- Net loss available to common stockholders $ (8,916) (13,624) (17,249) (169,787) ======== ========== ======== ========== Basic and diluted net loss per common share $ (2.94) (.12) (5.68) (1.43) ======== ========== ======== ========== See Notes to Condensed Consolidated Financial Statements.
TRITEL, INC. Condensed Consolidated Statements of Cash Flows (Unaudited) For the Three and Six Month Periods Ended June 30, 1999 and 2000 (amounts in thousands) Three months ended Six months ended June 30, June 30, ------------------------------- ----------------------------- 1999 2000 1999 2000 ------------- --------------- ------------ --------------- Cash flows from operating activities: Net loss $ (6,655) (11,357) (12,902) (165,253) Adjustments to reconcile net loss to net cash used in operating activities: Financing costs - - 2,230 - Depreciation and amortization 1,865 14,324 3,474 24,875 Stock-based compensation - (46,186) - 62,111 Accretion of discount on debt and amortization of debt issuance costs - 7,233 - 13,705 Deferred income tax benefit (4,121) (570) (6,448) (1,076) Provision for bad debts - 362 - 550 Changes in operating assets and liabilities: Accounts receivable - (5,979) - (9,835) Inventory - (3,352) - (10,805) Accounts payable and accrued expenses 4,811 14,028 3,171 3,094 Change in other assets and liabilities (2,115) (1,683) (3,941) (2,384) --------- --------- --------- ---------- Net cash used in operating activities (6,215) (33,180) (14,416) (85,018) --------- --------- -------- ---------- Cash flows from investing activities: Capital expenditures (22,329) (98,632) (44,687) (171,798) Advance under notes receivable (50) - (7,550) - Capitalized interest on network construction and FCC licensing (2,181) (999) (5,896) (2,805) costs (Increase) decrease in restricted cash 436 - (7,957) 1,107 Other (325) 554 (325) (129) ---------- --------- --------- ---------- Net cash used in investing activities (24,449) (99,077) (66,415) (173,625) --------- --------- -------- ---------- Cash flows from financing activities: Proceeds from (repayments of) long-term debt 200,240 (234) 400,240 (449) Repayments of notes payable - - (22,100) - Payment of debt issuance costs and other deferred charges (9,272) - (36,473) (198) Payment of stock issuance costs - (132) - (195) Proceeds from vendor discount - - 15,000 - Issuance of preferred stock - - 113,623 - Proceeds from exercise of stock options - 737 - 789 --------- --------- -------- ---------- Net cash provided by (used in) financing activities 190,968 371 470,290 (53) --------- --------- -------- ---------- Net increase (decrease) in cash and cash equivalents 160,304 (131,886) 389,459 (258,696) Cash and cash equivalents at beginning of period 230,001 482,459 846 609,269 --------- --------- -------- ---------- Cash and cash equivalents at end of period $ 390,305 350,573 390,305 350,573 ========= ========= ======== ========== See Notes to Condensed Consolidated Financial Statements.
Tritel, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Organization Tritel, Inc. ("Tritel") was formed on April 23, 1998 by the controlling members of Airwave Communications LLC and Digital PCS, LLC, our predecessor companies, to develop PCS markets in the south-central United States. On January 7, 1999, our predecessor companies transferred substantially all of their assets and liabilities at historical cost to Tritel in exchange for 18,262 shares of series C preferred stock in Tritel. The controlling members of our predecessor companies control Tritel. Tritel continued the activities of our predecessor companies and, for accounting purposes, this transaction was accounted for as a reorganization of the predecessor company into a C corporation and a name change to Tritel. Tritel and the predecessor company, together with Tritel's subsidiaries, are referred to collectively as "the Company." 2. Merger with Telecorp PCS On February 28, 2000, Tritel and TeleCorp PCS, Inc. announced the signing of a definitive agreement and plan of reorganization and contribution, called the Merger Agreement, for an all stock, tax-free merger, called the Merger. The Merger Agreement provides for the creation of a new entity to be called TeleCorp PCS, Inc. Tritel and TeleCorp will merge into subsidiaries of the new entity. Under the Merger Agreement, each share of Tritel class A voting common stock will be converted into the right to receive 0.76 shares of the new entity's class A common stock. This exchange ratio is fixed regardless of future stock price movement. Tritel and TeleCorp shareholders approved the Merger on August 8, 2000. The Merger is still subject to regulatory approval. 3. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in financial statements presented in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the condensed consolidated financial statements include all adjustments, consisting of normal recurring items, necessary to fairly present the results of operations, financial position and cash flows for the periods presented. The results of operations for an interim period are not necessarily indicative of the results of operations that may be expected for the complete fiscal year. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 1999 included in the Company's Annual Report to Shareholders on Form 10-K. 4. Supplemental Cash Flow Information
Six months ended June 30, -------------------------------- 1999 2000 ------------- --------------- (Amounts in Thousands) Supplementary Information: Cash paid for interest, net of amounts capitalized $ 5,104 16,711 ======= ======== Significant non-cash investing and financing activities: Capitalized interest and discount on debt $ 455 2,301 ======= ======== Capital expenditures included in accounts payable $ - 80,469 ======= ========
5. Stock Option Plan and Other Restricted Stock Awards We have issued a total of 12,362,380 shares of our class A voting and class C common stock to members of our management, primarily in connection with the formation of the joint venture with AT&T Wireless Services. These shares are subject to vesting and are currently held in escrow. These shares are also subject to individual repurchase agreements with each employee, which collectively were considered a "variable stock plan" under generally accepted accounting principles. These individual repurchase agreements were modified to remove the provision that required the employees to surrender a portion of their vested shares. The effective date of this modification, which occurred in June 2000, became the measurement date upon which the value of the awards was fixed. Future stock price movement will not result in charges that differ from this amount. The stock-based compensation for the current quarter was a benefit of $46.2 million and was an expense of $62.1 million for the six months ended June 30, 2000. The Company will recognize additional non-cash compensation expense related to these shares for the period from 2000 to 2004 of approximately $74.5 million. 6. Recently Issued Accounting Standards In June 1998, the Financial Accounting Standards Board ("FASB") issued Financial Accounting Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, ("FAS133"). FAS133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. FAS133 will significantly change the accounting treatment of derivative instruments and, depending upon the underlying risk management strategy, these accounting changes could affect future earnings, assets, liabilities, and shareholders' equity. The Company is closely monitoring the deliberations of the FASB's derivative implementation task force. With the issuance of Financial Accounting Statement No. 137, Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133, which delayed the effective date of FAS133, the Company will be required to adopt FAS133 on January 1, 2001. Presently, the Company has not yet quantified the impact that the adoption will have on the consolidated financial statements of the Company. In December 1999, the SEC issued Staff Accounting Bulletin Number 101, "Revenue Recognition in Financial Statements" ("SAB 101"). The guidelines in SAB 101 must be adopted during the fourth quarter of 2000. The Company does not expect the adoption of these guidelines to have a material impact on its consolidated financial statements. 7. Condensed Consolidating Financial Statements The following condensed consolidating financial statements as of December 31, 1999 and June 30, 2000 and for the three and six month periods ended June 30, 1999 and 2000 are presented for Tritel, Tritel PCS, those subsidiaries of Tritel PCS who serve as guarantors and those subsidiaries who do not serve as guarantors of the senior subordinated discount notes.
Condensed Consolidating Balance Sheet As of December 31, 1999 (Amounts in thousands) Tritel, Tritel PCS, Guarantor NonGuarantor Consolidated Inc. Inc. Subsidiaries Subsidiaries Eliminations Tritel, Inc. ----------------------------------------------------------------------------- Current assets: Cash and cash equivalents $ - 613,999 (4,730) - - 609,269 Other current assets 2,462 1,407 17,426 - - 21,295 Intercompany receivables 1,799 210,673 - - (212,472) - -------- ------- ------- ------- ------- ------- Total current assets 4,261 826,079 12,696 - (212,472) 630,564 Restricted cash - 6,594 - - - 6,594 Property and equipment, net - - 262,343 - - 262,343 Licenses and other intangibles 59,508 - - 201,946 - 261,454 Investment in subsidiaries 445,301 73,286 - - (518,587) - Other long term assets - 62,633 82 - (27,308) 35,407 -------- ------- ------- ------- ------- ------- Total assets $ 509,070 968,592 272,121 201,946 (758,367) 1,196,362 =========== ======= ======= ======= ======= ========= Current liabilities: Accounts payable, accrued expenses and other current liabilities $ 29 1,240 111,257 1,721 - 114,247 Intercompany payables - - 196,950 15,522 (212,472) - -------- ------- ------- ------- ------- ------- Total current liabilities 29 1,240 308,207 17,243 (212,472) 114,247 Non-current liabilities: Long-term debt - 516,734 27,121 40,982 (27,121) 557,716 Deferred income taxes and 22,009 5,318 (20,024) 30,251 (187) 37,367 other -------- ------- ------- ------- ------- ------- Total liabilities 22,038 523,292 315,304 88,476 (239,780) 709,330 Series A redeemable convertible preferred stock 99,586 - - - - 99,586 -------- ------- ------- ------- ------- ------- Stockholders' equity (deficit) 387,446 445,300 (40,183) 113,470 (518,587) 387,446 -------- ------- ------- ------- ------- ------- Total liabilities and equity $ 509,070 968,592 272,121 201,946 (758,367) 1,196,362 =========== ======= ======= ======= ======= =========
Condensed Consolidating Balance Sheet As of June 30, 2000 (Amounts in thousands) Tritel, Tritel PCS, Guarantor NonGuarantor Consolidated Inc. Inc. Subsidiaries Subsidiaries Eliminations Tritel, Inc. ------------------------------------------------------------------------------ Current assets: Cash and cash equivalents $ - 358,085 (7,512) - - 350,573 Other current assets 3,756 2,000 39,055 - - 44,811 Intercompany receivables - 449,808 - - (449,808) - ------------------------------------------------------------------------------ Total current assets 3,756 809,893 31,543 - (449,808) 395,384 Restricted cash - 5,487 - - - 5,487 Property and equipment, net - - 415,651 - - 415,651 Licenses and other intangibles 56,646 - - 202,894 - 259,540 Investment in subsidiaries 348,281 (12,476) - - (335,805) - Other long term assets - 75,976 410 - (42,697) 33,689 ------------------------------------------------------------------------------ Total assets $ 408,683 878,880 447,604 202,894 (828,310) 1,109,751 ============================================================================== Current liabilities: Accounts payable, accrued expenses and other current liabilities $ 2,010 1,003 111,355 1,580 - 115,948 Intercompany payables 177 - 432,417 17,214 (449,808) - ------------------------------------------------------------------------------ Total current liabilities 2,187 1,003 543,772 18,794 (449,808) 115,948 Non-current liabilities: Long-term debt - 530,497 42,409 40,967 (42,409) 571,464 Deferred income taxes and 22,013 (901) (13,213) 30,245 (288) 37,856 other liabilities ------------------------------------------------------------------------------ Total liabilities 24,200 530,599 572,968 90,006 (492,505) 725,268 ------------------------------------------------------------------------------ Series A redeemable convertible preferred stock 104,119 - - - - 104,119 ------------------------------------------------------------------------------ Stockholders' equity (deficit) 280,364 348,281 (125,364) 112,888 (335,805) 280,364 ------------------------------------------------------------------------------ Total liabilities and equity $ 408,683 878,880 447,604 202,894 (828,310) 1,109,751 ==============================================================================
Condensed Consolidating Statement of Operations For the Three Months Ended June 30, 1999 Tritel, Tritel PCS, Guarantor NonGuarantor Consolidated Inc. Inc. Subsidiaries Subsidiaries Eliminations Tritel, Inc. (Amounts in thousands) ------------------------------------------------------------------------------ Revenues $ - - - - - - ------------------------------------------------------------------------------ Operating Expenses Cost of services and equipment - - - - - - Technical operations - - 1,900 - - 1,990 General and administrative 2 44 4,266 2 - 4,314 Sales and marketing - - 1,708 - - 1,708 Depreciation and amortization 1,849 (384) 400 - - 1,865 ------------------------------------------------------------------------------ Total operating expenses 1,851 (340) 8,364 2 - 9,877 Operating loss (1,851) 340 (8,364) (2) - (9,877) Interest income 39 4,121 45 - - 4,205 Interest expense - (5,104) - - - (5,104) ------------------------------------------------------------------------------ Income (loss) before income taxes (1,812) (643) (8,319) (2) - (10,776) Income tax benefit (expense) 693 246 3,182 - - 4,121 ------------------------------------------------------------------------------ Net loss $ (1,119) (397) (5,137) (2) - (6,655) ==============================================================================
Condensed Consolidating Statement of Operations For the Three Months Ended June 30, 2000 Tritel, Tritel PCS, Guarantor NonGuarantor Consolidated (Amounts in thousands) Inc. Inc. Subsidiaries Subsidiaries Eliminations Tritel, Inc. ----------------------------------------------------------------------------- Revenues $ - - 25,808 2,150 (2,150) 25,808 ------------------------------------------------------------------------------ Operating Expenses Cost of services and equipment - - 15,409 - - 15,409 Technical operations - - 11,795 - - 11,795 General and administrative 2,048 - 17,199 - (2,150) 17,097 Sales and marketing - - 16,464 - - 16,464 Stock-based compensation (46,186) - - - - (46,186) Depreciation and amortization 1,431 - 11,866 1,027 - 14,324 ------------------------------------------------------------------------------ Total operating expenses (42,707) - 72,733 1,027 (2,150) 28,903 ------------------------------------------------------------------------------ Operating income (loss) 42,707 - (46,925) 1,123 - (3,095) Interest income 87 7,824 111 - (798) 7,224 Interest expense - (14,992) (806) (1,056) 798 (16,056) ------------------------------------------------------------------------------ Income (loss) before income taxes 42,794 (7,168) (47,620) 67 - (11,927) Income tax benefit (30) 72 529 (1) - 570 ------------------------------------------------------------------------------ Net loss $ 42,764 (7,096) (47,091) 66 - (11,357) ==============================================================================
Condensed Consolidating Statement of Operations For the Six Months Ended June 30, 1999 Tritel, Tritel PCS, Guarantor NonGuarantor Consolidated (Amounts in thousands) Inc. Inc. Subsidiaries Subsidiaries Eliminations Tritel, Inc. ------------------------------------------------------------------------------ Revenues $ - - - - - - ------------------------------------------------------------------------------ Operating Expenses Plant - - 3,946 - - 3,946 General and administrative 2 44 7,156 2 - 7,204 Sales and marketing - - 2,724 - - 2,724 Depreciation and amortization 2,829 - 645 - - 3,474 ------------------------------------------------------------------------------ 2,831 44 14,471 2 - 17,348 Operating loss (2,831) (44) (14,471) (2) - (17,348) Interest income 77 5,174 81 - - 5,332 Financing cost - - (2,230) - - (2,230) Interest expense - (5,104) - - - (5,104) ------------------------------------------------------------------------------ Income (loss) before income taxes (2,754) 26 (16,620) (2) - (19,350) Income tax benefit (expense) 954 (10) 5,504 - - 6,448 ------------------------------------------------------------------------------ Net income (loss) $ (1,800) 16 (11,116) (2) - (12,902) ==============================================================================
Condensed Consolidating Statement of Operations For the Six Months Ended June 30, 2000 Tritel, Tritel PCS, Guarantor NonGuarantor Consolidated (Amounts in thousands) Inc. Inc. Subsidiaries Subsidiaries Eliminations Tritel, Inc. ------------------------------------------------------------------------------ Revenues $ - - 41,307 3,459 (3,459) 41,307 ------------------------------------------------------------------------------ Operating Expenses Cost of services and equipment - - 29,111 - - 29,111 Technical operations - - 21,987 - - 21,987 General and administrative 3,050 - 26,834 - (3,459) 26,425 Sales and marketing - - 28,603 - - 28,603 Stock-based compensation 62,111 - - - - 62,111 Depreciation and amortization 2,861 - 20,171 1,843 - 24,875 ------------------------------------------------------------------------------ Total operating expenses 68,022 - 126,706 1,843 (3,459) 193,112 ------------------------------------------------------------------------------ Operating income (loss) (68,022) - (85,399) 1,616 - (151,805) Interest income 152 16,831 342 - (1,433) 15,892 Interest expense - (28,199) (1,447) (2,203) 1,433 (30,416) ------------------------------------------------------------------------------ Income (loss) before income (67,870) (11,368) (86,504) (587) - (166,329) taxes Income tax benefit (4) 112 962 6 - 1,076 ------------------------------------------------------------------------------ Net loss $ (67,874) (11,256) (85,542) (581) - (165,253) ==============================================================================
Condensed Consolidating Statement of Cash Flows For the Three Months Ended June 30, 1999 Tritel, Tritel PCS, Guarantor NonGuarantor Consolidated (Amounts in thousands) Inc. Inc. Subsidiaries Subsidiaries Eliminations Tritel, Inc. ------------------------------------------------------------------------------ Net cash provided by (used in) operating activities $ (34) (1,027) (5,154) - - (6,215) ------------------------------------------------------------------------------ Cash flows from investing activities: Capital expenditures - - (22,329) - - (22,329) Advance under notes receivable - - (50) - - (50) Capitalized interest on debt - - (1,382) (799) - (2,181) Decrease in restricted cash - 436 - - - 436 Investment in subsidiaries (69,386) 69,386 - - - - Other (325) - - - - (325) ------------------------------------------------------------------------------ Net cash provided by (used in) investing activities: (69,711) 69,822 (23,761) (799) - (24,449) ------------------------------------------------------------------------------ Cash flows from financing activities: Proceeds from long term debt - 200,240 - - - 200,240 Payment of debt issuance costs and other - (9,272) - - - (9,272) deferred charges Intercompany (80,255) 47,964 31,492 799 - - receivable/payable ------------------------------------------------------------------------------ Net cash provided by financing (80,255) 238,932 31,492 799 - 190,968 activities: ------------------------------------------------------------------------------ Net increase (decrease) in restricted cash, cash and (150,000) 307,727 2,577 - - 160,304 cash equivalents Cash and cash equivalents at beginning of period 150,000 78,003 1,998 - - 230,001 ------------------------------------------------------------------------------ Cash and cash equivalents at end of period $ $ - 385,730 4,575 - - 390,305 ==============================================================================
Condensed Consolidating Statement of Cash Flows For the Three Months Ended June 30, 2000 Tritel, Tritel PCS, Guarantor NonGuarantor Consolidated (Amounts in thousands) Inc. Inc. Subsidiaries Subsidiaries Eliminations Tritel, Inc. ------------------------------------------------------------------------------ Net cash provided by (used in) operating activities $ (801) (84) (32,295) - - (33,180) ------------------------------------------------------------------------------ Cash flows from investing activities: Capital expenditures - - (98,632) - - (98,632) Capitalized interest on debt - - (814) (185) - (999) Decrease in other assets - 539 15 - - 554 ------------------------------------------------------------------------------ Net cash provided by (used in) investing activities: - 539 (99,431) (185) - (99,077) ------------------------------------------------------------------------------ Cash flows from financing activities: Repayment of long term debt - - - (234) - (234) Intercompany receivable/payable 196 (114,563) 113,948 419 - - Payment of stock issuance costs (132) - - - - (132) Proceeds from exercise of stock optons 737 - - - - 737 ------------------------------------------------------------------------------ Net cash provided by (used in) financing activities: 801 (114,563) 113,948 185 - 371 ------------------------------------------------------------------------------ Net increase (decrease) in restricted cash, cash and cash equivalents - (114,108) (17,778) - - (131,886) Cash and cash equivalents at beginning of period - 472,193 10,266 - - 482,459 ------------------------------------------------------------------------------ Cash and cash equivalents at end of period - 358,085 (7,512) - - 350,573 ==============================================================================
Condensed Consolidating Statement of Cash Flows For the Six Months Ended June 30, 1999 Tritel, Tritel PCS, Guarantor NonGuarantor Consolidated (Amounts in thousands) Inc. Inc. Subsidiaries Subsidiaries Eliminations Tritel, Inc. ------------------------------------------------------------------------------ Net cash provided by (used in) operating activities $ (94) 880 (14,946) (256) - (14,416) ------------------------------------------------------------------------------ Cash flows from investing activities: Capital expenditures - - (44,687) - - (44,687) Advance under notes receivable - (7,500) (50) - - (7,550) Capitalized interest on network - - (4,271) (1,625) - (5,896) construction and FCC licensing costs Investment in subsidiaries (69,386) 69,386 - - - - Increase in restricted cash - (7,957) - - - (7,957) Other (325) - - - - (325) ------------------------------------------------------------------------------ Net cash provided by (used in) investing activities: (69,711) 53,929 (49,008) (1,625) - (66,415) ------------------------------------------------------------------------------ Cash flows from financing activities: Proceeds from long term debt - 400,240 - - - 400,240 Repayments of notes payable (22,100) - - - - (22,100) Payment of debt issuance costs and other (22,198) (14,275) - - - (36,473) deferred charges Intercompany 480 (70,044) 67,683 1,881 - - receivable/payable Proceeds from vendor discount - 15,000 - - - 15,000 Issuance of preferred stock 113,623 - - - - 113,623 ------------------------------------------------------------------------------ Net cash provided by financing 69,805 330,921 67,683 1,881 - 470,290 activities: ------------------------------------------------------------------------------ Net increase in cash and cash - 385,730 3,729 - - 389,459 equivalents Cash and cash equivalents at beginning of period - - 846 - - 846 ------------------------------------------------------------------------------ Cash and cash equivalents at $ - 385,730 4,575 - - 390,305 end of period ==============================================================================
Condensed Consolidating Statement of Cash Flows For the Six Months Ended June 30, 2000 Tritel, Tritel PCS, Guarantor NonGuarantor Consolidated (Amounts in thousands) Inc. Inc. Subsidiaries Subsidiaries Eliminations Tritel, Inc. ------------------------------------------------------------------------------ Net cash provided by (used in) operating activities $ (2,209) 1,379 (84,188) - - (85,018) ----------------------------------------------------------------------------- Cash flows from investing activities: Capital expenditures - - (171,798) - - (171,798) Capitalized interest on debt - - (1,533) (1,272) - (2,805) Decrease in restricted cash - 1,107 - - - 1,107 Decrease in other assets - - (129) - - (129) ----------------------------------------------------------------------------- Net cash provided by (used in) investing activities: - 1,107 (173,460) (1,272) - (173,625) ----------------------------------------------------------------------------- Cash flows from financing activities: Repayment of long term debt - - - (449) - (449) Payment of debt issuance costs and other - (198) - - - (198) deferred charges Intercompany 1,615 (258,202) 254,866 1,721 - - receivable/payable Payment of stock issuance (195) - - - - (195) costs Proceeds from exercise of 789 - - - - 789 stock options --------------------------------------------------------------------------- Net cash provided by (used in) financing activities: 2,209 (258,400) 254,866 1,272 - (53) --------------------------------------------------------------------------- Net increase (decrease) in restricted cash, cash and - (255,914) (2,782) - - (258,696) cash equivalents Cash and cash equivalents at beginning of period - 613,999 (4,730) - - 609,269 --------------------------------------------------------------------------- Cash and cash equivalents at $ - 358,085 (7,512) - - 350,573 end of period ===========================================================================
Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and notes thereto, which are included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. Forward Looking Statements; Cautionary Statements Statements in this report expressing our expectations and beliefs of the Company regarding our future results or performance are forward-looking statements that involve a number of risks and uncertainties. In particular, certain statements contained in this Management's Discussion and Analysis of Financial Condition and Results of Operations which are not historical facts constitute "forward-looking statements." Our actual future results may differ significantly from those stated in any forward-looking statements. Factors that may cause or contribute to such differences include, but are not limited to, risks discussed in our Registration Statement on Form S-1 (Reg. No. 333-91207) and from time to time in our other filings with the Securities and Exchange Commission, including, without limitation, the following: (1) we depend on our agreements with AT&T for our success, and under certain circumstances AT&T could terminate its exclusive relationship with us and our use of the AT&T brand name and logo, (2) we may not be able to manage the construction of our network or the growth of our business successfully, (3) we have substantial existing debt, and may incur substantial additional debt, that we may be unable to service, (4) we may not be able to obtain the additional financing we may need to complete our network and fund operating losses, (5) we have many competitors that have substantial coverage of our licensed areas, (6) difficulties in obtaining infrastructure equipment or sites may affect our ability to construct our network and meet our development requirements, (7) potential acquisitions may require us to incur substantial additional debt and integrate new technologies, operations and services, which may be costly and time consuming, (8) we may experience a high rate of customer turnover, (9) our association with the other SunCom companies may harm our reputation if consumers react unfavorably to them, (10) we depend upon consultants and contractors for our network services, (11) we may become subject to new health and safety regulations, which may result in a decrease in demand for our services, (12) changes in our licenses or other governmental action or regulation could affect how we do business, (13) we could lose our PCS licenses or incur financial penalties if the Federal Communications Commission determines we are not a very small business or if we do not meet the Federal Communications Commission's minimum construction requirements, (14) the technologies that we use may become obsolete, which would limit our ability to compete effectively, and (15) we may incur operating costs due to fraud. In addition, new factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, we cannot assess the impact of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statements. As a result of the foregoing and other factors, we may experience material fluctuations in future operating results on a quarterly or annual basis which could materially and adversely affect our business, financial condition, operating results and stock price. We specifically decline any obligation to publicly release the result of any revisions that may be made to forward- looking statements to reflect anticipated or unanticipated events or circumstances occurring after the date of such statement. General We are an AT&T Wireless Services affiliate with licenses to provide PCS services to approximately 14.0 million people in contiguous markets in the south-central United States. In January 1999, we entered into our affiliation agreement with AT&T Wireless Services, our largest equity shareholder with 21.6% ownership of our company. We have also joined with two other AT&T Wireless Services affiliates to operate under a common regional brand name, SunCom. We provide our PCS services as a member of the AT&T Wireless Network, serving as the preferred roaming provider to AT&T Wireless Services' digital customers in virtually all of our markets and co-branding our services with the AT&T and SunCom brands and logos. For periods prior to the fourth quarter of 1999, we were a development stage company. We have incurred significant expenditures in conjunction with our organization and financing, PCS license acquisitions, hiring key personnel and the design and construction of our PCS network facilities. We have commenced commercial PCS services in 25 markets as of June 30, 2000. We expect to have commenced commercial PCS service in all of our major population and business centers by the end of 2000. The timing of launch in individual markets will be determined by various factors, principally the success of our site acquisition program, zoning and microwave relocation activities, equipment delivery schedules and local market and competitive considerations. We provided service to approximately 84% of the population in our license area at June 30, 2000 and expect to provide service to over 98% by the end of 2000. Thereafter, we will evaluate further coverage expansion on a market-by-market basis. We launched commercial service in our first markets in September 1999. As of June 30, 2000, Tritel had successfully launched commercial service in the following markets throughout our coverage areas: Biloxi/Gulfport/ Huntsville, AL Nashville, TN Pascagoula, MS Mobile, AL Dalton, GA Hattiesburg, MS Montgomery, AL Bowling Green KY Jackson, MS Opelika-Auburn, AL Corbin, KY Meridian, MS Tuscaloosa, AL Lexington, KY Vicksburg, MS Chattanooga, TN Louisville, KY Anniston, AL Cleveland, TN Madisonville, KY Birmingham, AL Cookeville, TN Clarksville, TN- Decatur, AL Knoxville, TN Hopkinsville, KY The extent to which we are able to generate operating revenues and earnings will be dependent on a number of business factors, including successfully deploying the PCS network and attaining profitable levels of market demand for our products and services. Results of Operations Revenues. Revenues for the three and six months ended June 30, 2000, were $25.8 million and $41.3 million, respectively. We did not recognize any revenues during the three or six months ended June 30, 1999. Revenues consist primarily of revenues derived from service to our customers, roaming services provided to customers of other carriers, and the sale of handsets and accessories. As of June 30, 2000, we had approximately 104,400 subscribers throughout our service area. Our average revenue per unit (ARPU) including service and feature revenue as well as airtime and incollect roaming, but excluding outcollect roaming charges, was $59 for the second quarter of 2000 and $56 for the six months ended June 30, 2000 as compared to $45 in December 1999. We expect ARPU to continue to increase as we target business customers, realize the results from our successful implementation of a national accounts program, focus on value added features and provide incentives to our sales force for selling higher priced rate plans. We anticipate continued strong growth during the remainder of the year in revenue and subscribers as we continue to expand our operations in our licensed areas. We expect to launch substantially all of our remaining markets during 2000. We expect roaming revenues to increase during 2000 as we expand our coverage areas as well as complete our first full year of operations in the markets that became operational during 1999. Operating Expenses Cost of services and equipment was $15.4 million and $29.1 million for the three and six months ended June 30, 2000, respectively. Cost of services and equipment includes primarily the cost of equipment sold to customers, costs paid to other carriers for roaming services and wireline access and long-distance costs from customer use on our system. We did not incur any cost of services and equipment for the three and six months ended June 30, 1999. The increase in these costs, which are expected to continue to increase during 2000 and in future periods, is the result of new subscribers added to the system and increased usage of our system. Technical operations expenses were $2.0 million and $11.8 million for the quarter ended June 30, 1999 and 2000, respectively, and were $3.9 million and $22.0 million for the six months ended June 30, 1999 and 2000, respectively. These expenses include primarily the cost of engineering and operating staff devoted to the oversight of the design, implementation and monitoring of our network, cell site lease expense, and charges incurred to connect our network to other carriers. These costs increased in 2000 as compared to 1999 as a result of our network expansion and increased customer base. We expect the majority of our future technical operations expenses will consist of costs relating to operating the network, including the cost of interconnection to wireline and other wireless networks, cell site lease costs, network personnel and repair and maintenance. We expect these costs to continue to increase during 2000 and in future periods as we expand our coverage areas and incur a full year of operational expenses. Our general and administrative expense includes customer service, billing, information technology, finance, accounting, human resources and legal services. General and administrative expenses increased from $4.3 million for the second quarter of 1999 to $17.1 million for the second quarter of 2000, and increased from $7.2 million for the six month period ended June 30, 1999, to $26.4 million for the six month period ended June 30, 2000. The increase was due primarily to increased staffing in various departments, including information technology, billing, customer care, accounting, human resources and other administrative functions, incurred in connection with the expansion of our network and customer base, costs related to the modification of restricted stock agreements in the second quarter, and costs related to the pending merger with Telecorp PCS. We expect general and administrative expenses to continue to increase during 2000 and in future periods as we continue to launch additional markets and provide customer support functions to a larger customer base. Costs related to the merger with Telecorp PCS are expensed as incurred. Our sales and marketing expense includes salaries and benefits, commissions, advertising and promotions, retail distribution, and sales training. Sales and marketing expenses increased from $1.7 million for the three months ended June 30, 1999, to $16.5 million for the same period in 2000 and from $2.7 million for the first half of 1999 to $28.6 million for the same period in 2000. The increase was primarily associated with the salary and benefits for sales and marketing personnel, market deployment, including planning and leasing of sales offices and retail store locations and advertising costs related to market launches. We expect selling and marketing costs to continue to increase during 2000 and in future periods primarily related to sales commissions, ongoing advertising and promotions in our existing markets and promotional events and advertising incurred in connection with market launches. Stock Based Compensation. We have issued a total of 12,362,380 shares of our class A voting and class C common stock to members of our management, primarily in connection with the formation of the joint venture with AT&T Wireless Services. These shares are subject to vesting and are currently held in escrow. These shares are also subject to individual repurchase agreements with each employee, which collectively were considered a "variable stock plan" under generally accepted accounting principles. These individual repurchase agreements were modified to remove the provision that required the employees to surrender a portion of their vested shares. The effective date of this modification, which occurred in June 2000, became the measurement date upon which the value of the awards was fixed. Future stock price movement will not result in charges that differ from this amount. The stock-based compensation for the current quarter was a benefit of $46.2 million and was an expense of $62.1 million for the six months ended June 30, 2000. The Company will recognize additional non-cash compensation expense related to these shares for the period from 2000 to 2004 of approximately $74.5 million. Depreciation and amortization expenses were $1.9 million for the three month period ended June 30, 1999, as compared to $14.3 million for the three month period ended June 30, 2000, and were $3.5 million for the six month period ended June 30, 1999, as compared to $24.9 million for the six month period ended June 30, 2000. The increases relate primarily to the depreciation of network system equipment placed into service as our markets are launched as well as depreciation of computer hardware, software, furniture, fixtures, and office equipment. Depreciation and amortization expenses are expected to increase during the remainder of 2000 and in future periods as we complete the construction of our network as well as recognize a full year of depreciation expense on our network assets placed in service during 1999. Non-Operating Income and Expense Interest income was $4.2 million for the second quarter of 1999 as compared to $7.2 million for the second quarter of 2000 and was $5.3 million for the first half of 1999 as compared to $15.9 million for the first half of 2000. These increases in 2000 as compared to 1999 were primarily a result of interest earned on our investment of advances under our bank facility of $300.0 million, proceeds from the sale of senior subordinated discount notes of approximately $200.2 million and proceeds from the sale of common stock in our initial public offering of approximately $242.5 million. Our short-term cash investments consist primarily of U.S. Government securities and highly rated commercial paper with a dollar-weighted average maturity of 90 days or less. Financing costs were $2.2 million for the six months ended June 30, 1999. These costs were associated with the January 1999 conversion by Digital PCS of debt due to an investor to equity in Airwave Communications. Interest expense was $5.1 million for the second quarter of 1999 as compared to $16.1 million in the second quarter of 2000. Interest expense was $5.1 million for the first half of 1999 as compared to $30.4 million for the first half of 2000. There was no interest expense for the first quarter of 1999 because all interest costs were capitalized in connection with the construction of the network. Interest expense consisted of interest incurred related to borrowing under our bank credit facility and the Federal Communications Commission debt and discount accretion on the senior subordinated discount notes issued in May 1999. Interest expense is net of the amount capitalized for the purpose of completing the network buildout. For the quarters ended June 30, 1999 and 2000, we recorded a deferred income tax benefit of $4.1 million and $570,000, respectively. The deferred income tax benefit recorded for the first six months of 1999 and 2000 was $6.4 million and $1.1 million, respectively. The valuation allowance for the gross deferred tax asset at June 30, 2000 was $36.9 million. No valuation allowance was considered necessary for the remaining gross deferred tax asset of $12.3 million, principally due to the existence of a deferred tax liability which was recorded upon the closing of the AT&T transaction on January 7, 1999. Liquidity and Capital Resources The buildout of our network and the marketing and distribution of our products and services will require substantial capital. We currently estimate that our capital requirements, including capital expenditures, the cost of acquiring licenses, working capital, debt service requirements and anticipated operating losses, for the period from inception through the end of 2001, and assuming substantial completion of our network buildout, will total approximately $1.4 billion. We believe the proceeds from the initial public offering completed in December 1999, together with the proceeds from our sale of senior subordinated discount notes, the financing made available to us by the Federal Communications Commission, borrowings under our bank credit facility and the equity investments we have received, will provide us with sufficient funds to build out our existing network as planned and fund operating losses until we complete our planned network buildout and generate positive cash flow. Our January 7, 1999, loan agreement provides a senior bank facility with a group of lenders for an aggregate amount of $550 million of senior secured credit. Up to $10 million of the facility may be used for letters of credit. We estimate that the $550 million bank facility will be drawn through the end of 2001 for capital requirements. The terms of the bank facility will permit us, subject to certain terms and conditions, including compliance with certain leverage ratios and satisfaction of buildout and subscriber milestones, to draw up to $550 million to finance working capital requirements, capital expenditures or other corporate purposes. As of June 30, 2000, we had $300 million outstanding under the bank facility and could have borrowed up to a total of approximately $550 million pursuant to the terms of the bank facility. Management estimates that capital expenditures associated with the buildout will total approximately $706.6 million from inception through the end of 2001, including a commitment to purchase a minimum of $300 million in equipment and services from Ericsson of which approximately $195.6 million had been purchased through June 30, 2000. Costs associated with the network buildout include switches, software, base stations, towers and antennae, radiofrequency engineering, cell site acquisition and construction, and microwave relocation. The actual funds required to build out our network may vary materially from these estimates, and additional funds could be required in the event of significant departures from the current business plan, unforeseen delays, cost overruns, unanticipated expenses, regulatory expenses, engineering design changes and other technological risks. We have incurred approximately $432.1 million in capital expenditures through June 30, 2000, including $171.8 million in the first half of 2000. We estimate that cash interest and fees through 2001 will total approximately $147.6 million, including debt issuance costs related to the bank credit facility and the senior subordinated discount notes. This amount represents interest and fees on the senior bank facility and interest on the financing from the U.S. Government for the C and F-Block licenses. Cash interest will not be paid on the senior subordinated discount notes until 2004. We incurred approximately $19.5 million in cash interest and fees during the first half of 2000 of which approximately $2.8 million was capitalized. We estimate that working capital requirements during the period from inception through 2001 will total $314.4 million. This amount represents the costs related to initiating, marketing, operating and managing our PCS network. Our ability to meet our capital requirements without additional financing is subject to our ability to construct our network and obtain customers in accordance with our plans and assumptions and a number of other risks and uncertainties. The development of our network may not be completed as projected and we may not be able to generate positive cash flow. If any of our projections are incorrect, we may not be able to meet our projected capital requirements. On February 28, 2000, the Company announced an agreement to merge with Telecorp PCS, Inc. This merger is expected to take place during the last quarter of 2000 and is a tax-free exchange of stock. The Company does not expect the merger to have any material effect on its current plans related to network buildout. Our bank credit facility agreement prohibits the merger of Tritel with any other parties, except with or among its subsidiaries. Unless a consent or amendment is obtained, the proposed merger with TeleCorp would violate the merger provision and the change of control provision. We are actively seeking an amendment to the bank credit facility or consent from our lenders concerning the merger and change of control provisions. Digital PCS holds licenses covering 2.0 million people in Florida and southern Georgia. These markets include the cities of Pensacola, Tallahassee and Panama City, Florida. As part of our formation, we received from Digital PCS an option to purchase these licenses for approximately 1.4 million shares of our class A voting common stock (reflecting the conversion of series C preferred stock and the stock split of our class A voting common stock in December 1999) and our assumption of approximately $11.8 million of Federal Communications Commission debt. In May 1999, we exercised this option, and on March 29, 2000, the Federal Communications Commission approved the transfer of licenses to us. This transfer is expected to be completed prior to December 31, 2000. We have committed to sell these licenses to Panther Wireless LLC for the assumption of all outstanding Federal Communications Commission debt on the licenses and cash in the amount equal to 110% of the sum of (i) the amount payable to the Federal Communications Commission in respect of the licenses minus the amount of Federal Communications Commission debt assumed, plus (ii) the aggregate amount of interest paid on the Federal Communications Commission debt by us and Digital PCS. Merger with TeleCorp PCS, Inc. On February 28, 2000, Tritel and TeleCorp PCS, Inc. announced the signing of a definitive agreement and plan of reorganization and contribution, called the Merger Agreement, for an all stock, tax-free merger, called the Merger. The Merger Agreement provides for the creation of a new entity to be called TeleCorp PCS, Inc. Tritel and TeleCorp will merge with subsidiaries of the new entity. Under the Merger Agreement, Tritel's class A voting common stock will be converted into the right to receive 0.76 shares of the new entity's class A voting common stock per share of Tritel Inc.'s common stock. This exchange ratio is fixed regardless of future stock price movement. Tritel and Telecorp shareholders approved the Merger on August 8, 2000. The Merger is still subject to regulatory approval. It is expected that the Merger will be completed in the last quarter of 2000. Pending License Acquisition On March 23, 1999, the Federal Communications Commission commenced a re-auction of the C-, D-, E- and F-Block licenses that had been returned to the Federal Communications Commission under a Federal Communications Commission restructuring order or that had been forfeited for noncompliance with Federal Communications Commission rules or for default under the related Federal Communications Commission financing. Before the re-auction, we loaned $7.5 million to ABC Wireless LLC ("ABC Wireless"), an entity formed to participate in the C-Block re-auction as a "very small business" under applicable Federal Communications Commission rules, to partially fund its participation in the re-auction. In the re-auction, ABC Wireless was successful in bidding for an additional 15 to 30 MHz of spectrum covering a total of 5.7 million people, all of which are already covered by Tritel's existing licenses. Nashville and Chattanooga are the largest cities covered by the additional licenses. The total bid price for these additional licenses was $7.8 million. Tritel's purchase of licenses from ABC Wireless would be subject to, among other things, the consent of AT&T Wireless Services. As a result of the re-auction and our contractual rights to purchase from ABC Wireless PCS licenses, we could, depending upon Federal Communications Commission interpretations of the spectrum cap rules, hold an attributable interest in Commercial Mobile Radio Service, or CMRS, spectrum in excess of applicable limit in several cities in our markets. Current Federal Communications Commission rules limit PCS licensees and certain PCS investors in PCS licensees from having an attributable interest in more than 45 MHz of CMRS spectrum (or 55 MHz where there is an overlap between a PCS service area and rural cellular service area) in any given geographic area. In order to exceed the applicable spectrum limit, we and certain investors, including AT&T Wireless Services, must obtain the consent of the Federal Communications Commission. The parties have sought the necessary interpretations and consents in the context of the Telecorp/Tritel merger application. There is no assurance that the Federal Communications Commission will give its consent and seeking such consent could delay the processing of the required applications to assign the licenses from ABC Wireless to us. We believe the Federal Communications Commission will approve the disaggregation of spectrum from the ABC Wireless licenses and transfer to us portions of the licenses so we will be in compliance with the CMRS spectrum cap rules. Quantitative and Qualitative Disclosure about Market Risk We are exposed to market risk from changes in interest rates that could impact results of operations. We manage interest rates through a combination of fixed and variable rate debt. We have entered into interest rate swap agreements as a risk management tool, not for speculative purposes. At June 30, 2000, we had $300 million of Term A and Term B Notes under our bank facility, which carried an average interest rate of 10.89%; $372 million of the original 12.75% senior subordinated discount notes, due 2009; $38.0 million of 7%, discounted to yield 10%, debt to the Federal Communications Commission, due in quarterly installments from 2003 to 2006; and $9.0 million of 6 1/8%, discounted to yield 10%, debt to the Federal Communications Commission, due in quarterly installments from 2000 to 2008. Our senior subordinated discount notes and Federal Communications Commission debt have fixed interest rates and as a result we are less sensitive to market rate fluctuations. However, our Term A and Term B Notes outstanding and other amounts available to us under our bank facility agreement are variable interest rate. Beginning in May 1999, we entered into interest rate swap agreements with notional amounts totaling $200 million to manage our interest rate risk under the bank facility. The swap agreements establish a fixed effective rate of 9.05% on $200.0 million of the current balance outstanding under the bank facility through the earlier of March 31, 2002 or the date on which we achieve operating cash flow breakeven. Market risk, due to potential fluctuations in interest rates, is inherent in swap agreements. The following table provides information about our market risk exposure associated with changing interest rates on our fixed rate debt at maturity value of the debt (dollars in millions):
Expected Maturity --------------------------------------------------------------- 2000 2001 2002 2003 2004 Thereafter Total ---- ---- ---- ---- ---- ---------- ----- Face value of long-term fixed rate debt $0.4 $1.0 $1.1 $9.7 $10.4 $396.4 $419.0 Average interest rate 6.1% 6.1% 6.1% 6.9% 6.9% 12.4% --
Collectively, our fixed rate debt has a carrying value and a fair value of $272.4 million and $291.2 million at June 30, 2000, respectively. The fair value of our fixed rate debt has been estimated using an incremental borrowing rate of 10.5% based on the market value of our senior subordinated discount notes. We are also exposed to the impact of interest rate changes on our short-term cash investments, consisting primarily of U.S. government securities and highly rated commercial paper with a dollar weighted average maturity of 90 days or less. As with all investments, these short-term investments carry a degree of interest rate risk. We are not exposed to fluctuations in currency exchange rates since our operations are entirely within the United States. PART II -- OTHER INFORMATION Item 1. Legal Proceedings The Company is subject to various claims arising in the ordinary course of business and is a party to various legal proceedings that constitute ordinary routine litigation incidental to the Company's business. In the opinion of management, all such matters in the aggregate are not expected to have a material adverse effect on the Company. The Company is a party to routine filings and customary regulatory proceedings with the Federal Communications Commission relating to its operations. Item 4. Submission Of Matters To A Vote Of Security Holders The Company's 2000 Annual Meeting of Stockholders was held on May 25, 2000. At the 2000 Annual Meeting, stockholders voted on the election of directors, an amendment to the Company's 1999 Stock Option Plan and the ratification of KPMG LLP as independent auditors to the Company for the year 2000. William M. Mounger, II, Ann K. Hall, David A. Jones, Jr., and Kevin J. Shepherd were elected directors of the Company for a term expiring in 2003. This term will expire earlier upon the completion of the pending merger with Telecorp PCS, Inc. Total votes of 9,000,581 were cast in favor of the election of Mr. Mounger, and total votes of 9,095,460 were cast in favor of the election of Ms. Hall, Mr. Jones, and Mr. Shepherd. Total votes of 95,160 were cast in opposition to the election of Mr. Mounger and total votes of 282 were cast in opposition to the election of Ms. Hall, Mr. Jones, and Mr. Shepherd. The stockholders approved an amendment to the Company's 1999 Stock Option Plan with 8,906,842 votes in favor of the amendment, 188,591 votes against the amendment and 308 being withheld. The stockholders ratified the appointment of KPMG LLP as independent auditors to the Company for the year 2000 by a vote of 9,095,337 for, 300 against and 104 withheld. Item 5. Other Information None Item 6. Exhibits And Reports On Form 8-K (a) Exhibits Exhibit Number Description ------- ----------- 2.1.1 Amendment No. 1 to the Agreement and Plan of Reorganization and Contribution, dated May 4, 2000 (incorporated by reference to the Registration Statement on Form S-4 of Telecorp-Tritel Holding Company filed with the Commission on May 20, 2000). 2.1.2 Amendment No. 2 to the Agreement and Plan of Reorganization and Contribution, dated June 12, 2000 (incorporated by reference to the Registration Statement on Form S-4 of Telecorp-Tritel Holding Company filed with the Commission on June 20, 2000). 10.1 Form of Amended and Restated Restricted Stock Agreement (incorporated by reference to the Registration Statement on Form S-4 of Telecorp-Tritel Holding Company filed with the Commission on June 20, 2000). 10.2.1 Amended and Restated Employment Agreement, by and between Tritel, Inc., and William M. Mounger, II, dated effective as of June 9, 2000. 10.2.2 Amended and Restated Employment Agreement, by and between Tritel, Inc., and E.B. Martin, Jr., dated effective as of June 9, 2000. 10.2.3 Amended and Restated Employment Agreement, by and between Tritel, Inc., and William S. Arnett, dated effective as of June 1, 2000. 10.3 Amended and Restated 1999 Stock Option Plan. 27 Financial Data Schedule. (b) Reports on Form 8-K None SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TRITEL, INC. Date: August 11, 2000 /s/ E. B. Martin, Jr. ------------------------------------ E. B. Martin, Jr. Executive Vice President and Chief Financial Officer /s/ Karlen Turbeville ------------------------------------- Karlen Turbeville Senior Vice President - Finance (Chief Accounting Officer) EX-10.1.1 2 0002.txt EMPLOYMENT AGREEMENT MOUNGER EXHIBIT 10.1.1 AMENDED AND RESTATED EMPLOYMENT AGREEMENT AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated effective June 9, 2000, by and between TRITEL, INC., a Delaware corporation (the "Company"), and WILLIAM M. MOUNGER, II ("Executive"). Capitalized terms used herein but not otherwise defined herein shall have the meanings given to such terms in the Stockholders Agreement of the Company, dated January 7, 1999, as amended, modified or supplemented in accordance with the terms thereof (the "Stockholders Agreement"). W I T N E S S E T H: WHEREAS, the Company employed Executive pursuant to an Employment Agreement executed by the Company and Executive embodying the terms of such employment dated January 7, 1999 (the "Original Agreement"); WHEREAS, the Company and Executive desire to continue such employment pursuant to terms and conditions varying from those set forth in the Original Agreement; WHEREAS, E. B. Martin, Jr. and Executive (collectively, the "Senior Executives") own all of the ownership interests in Tritel Management, LLC, a Mississippi limited liability company ("Manager"); WHEREAS, the Senior Executives have caused the Manager to enter into a Management Agreement with the Company, dated January 7, 1999 (the "Management Agreement"), pursuant to which the Manager has agreed, among other things, to manage the business of the Company; WHEREAS, pursuant to Section 3.2(e) of the Securities Purchase Agreement, dated as of May 20, 1998 (the "Securities Purchase Agreement"), Executive has become the record and beneficial owner of 5,961.36 shares (pre-split) of the Company's Class A Voting Common Stock, par value $.01 per share ("Class A Common Stock") and 1,725.56 shares (pre-split) of the Company's Class C Common Stock, par value $.01 per share (the "Class C Common Stock"; collectively, the "Restricted Shares"); WHEREAS, in order to induce the Purchasers referred to in the Securities Purchase Agreement to purchase the securities issued by the Company thereunder, Executive desires to grant to the Company the repurchase rights with respect to the Restricted Shares as referred to in Section 7; and WHEREAS, the Company desires to accept the grant of such repurchase rights. WHEREAS, on or about December 13, 1999, the Company effected a 400 to 1 stock split (the "Stock Split") of its Class A Voting Common Stock and Class C Common Stock so that the number of Restricted Shares subject to the Original Agreement was increased to 2,384,544 Class A Common Stock shares and 690,224 Class C Common Stock shares; and WHEREAS, the Company and Executive desire to amend and restate the Original Agreement to modify the Company's repurchase rights relating to the Restricted Shares, to provide for acceleration of vesting upon certain events and certain other matters, all in accordance with the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the mutual covenants herein contained, the Company and Executive, intending to be legally bound, hereby amend and restate the Original Agreement in its entirety and agree as follows: 1. Employment. a. Agreement to Employ. Upon the terms and subject to the conditions of this Agreement, the Company hereby employs Executive, and Executive hereby accepts employment by the Company. b. Employment Period. The term of Executive's employment shall be for a period of five (5) years commencing on January 7, 1999 (the "Commencement Date") and continuing until January 1, 2004 (the "Expiration Date") unless this Agreement shall have been earlier terminated in accordance with Section 5 (the "Employment Period"). 2. Position and Duties. During the Employment Period, Executive shall serve as Chairman of the Board and Chief Executive Officer of the Company and be responsible for the duties set forth on Schedule I, reporting directly to the Company's President. During the Employment Period, except as set forth herein, Executive shall devote his entire business time to the services required of him hereunder, except for vacation time, personal time and reasonable periods of absence due to sickness, personal injury or other disability. Nothing contained herein shall preclude Executive from devoting reasonable periods of time to (i) the activities described on Schedule II; (ii) serving on a board of directors of a charitable, trade or other similar organization; or (iii) serving on other boards of directors with the consent of the Board of Directors (excluding the Senior Executives who are members of the Company's Board of Directors), in each such case, so long as such activities do not interfere with the performance of Executive's duties hereunder. 3. Compensation. a. Base Salary. The Company shall pay Executive an annual salary of $225,000. Upon the first anniversary of the Commencement Date, and annually thereafter, the Compensation Committee of the Board of Directors shall review Executive's base salary in light of the performance of Executive and the Company, and may, in its discretion, increase (but not decrease) such base salary by an amount it determines to be appropriate. Executive's annual base salary payable hereunder, as it may be increased from time to time, is referred to herein as "Base Salary". The Company shall pay Executive his Base Salary in equal monthly installments, or in such other installments as the parties may mutually agree. b. Annual Bonus. For each calendar year or part thereof during the Employment Period, Executive shall be eligible to receive an annual bonus (an "Annual Bonus") equal to up to 50% of his Base Salary based upon the achievement of certain objectives determined by the Compensation Committee of the Board of Directors for such calendar year, payable within thirty (30) days after certification of the Company's financial statements for such year. 4. Benefits, Perquisites and Expenses. a. Benefit Plans. During the Employment Period, Executive shall be eligible to participate in any welfare benefit plan sponsored or maintained by the Company, including, without limitation, any group life, hospitalization, medical, dental, health, accident or disability insurance or similar plan or program of the Company, in each case, whether now existing or established hereafter, to the extent that Executive is eligible to participate in any such plan under the generally applicable provisions thereof. b. Perquisites. Executive shall be entitled to up to four weeks paid vacation annually in accordance with the Company's policies and practices. Executive shall also be entitled to receive such perquisites as are generally provided to other senior officers of the Company in accordance with the policies and practices of the Company. c. Business Expenses. The Company shall pay or reimburse Executive for all reasonable expenses incurred or paid by Executive in performance of Executive's duties hereunder, upon presentation of expense statements or vouchers and such other information as the Company may reasonably require. d. Indemnification. The Company shall, to the maximum extent permitted by applicable law, the Company's certificate of incorporation or its bylaws, indemnify Executive and hold Executive harmless from and against any claim, loss or cause of action arising from or out of Executive's performance as an officer, director or employee of the Company or any of its subsidiaries or in any other capacity, including serving as a fiduciary, in which Executive serves at the request of the Company. If any claim is asserted hereunder for which Executive reasonably believes in good faith he is entitled to be indemnified, the Company shall pay Executive's reasonable legal expenses (or cause such expenses to be paid), as may be reasonably required but no less frequently than on a quarterly basis, provided that Executive shall reimburse the Company for such amounts, plus simple interest thereon at the 90-day United States Treasury Bill rate as in effect from time to time, compounded annually, if Executive shall be found by a final, non-appealable order of a court of competent jurisdiction not to be entitled to indemnification. The indemnification obligations of the Company in this paragraph shall survive any termination of this Agreement. e. Directors and Officers Liability Insurance. The Company has obtained, and shall use all commercially reasonable efforts to maintain, directors and officers liability insurance coverage covering Executive in amounts customary for similarly situated companies in the telecommunications industry. 5. Termination of Employment. a. Early Termination of the Employment Period. This Agreement may be terminated in any of the following manners: i. Executive may, upon 30 days' prior written notice to the Company, voluntarily terminate employment with the Company at any time at the sole discretion of Executive (a "Voluntary Termination"); ii. Executive may, upon written notice to the Company, terminate employment with the Company at any time for "Good Reason" (as defined in Section 5(g)) it being agreed that any such termination, although effected by Executive shall not constitute a Voluntary Termination; iii. Executive's employment may, upon written notice to Executive, be terminated by the Company at any time for Cause (as defined in Section 5(f)); iv. This Agreement shall terminate automatically upon Executive's death; v. The Company may, upon written notice to Executive, terminate this Agreement upon Executive's Disability. As used herein, the term "Disability" shall mean a determination that Executive suffers from illness or other physical or mental impairment that prevents Executive from substantially performing his duties for a period of 90 days during any six-month period during the Employment Period or for 180 days during any 12-month period during the Employment Period. The determination of whether (and, if appropriate, when) a Disability has occurred shall be made by a majority of the Board of Directors of the Company (excluding the Senior Executives that are directors of the Company); vi. The Company may terminate this Agreement immediately in the event of a material breach of the Management Agreement by Manager (as determined by a majority vote of the Board of Directors (excluding the Senior Executives that are directors of the Company)), which has not been cured within thirty (30) days following notice thereof from the Company, or the failure of the Company to meet any of the objectives set forth on Schedule III-A to this Agreement; or vii. The Company may terminate this Agreement immediately in the event of the failure of the Company to meet any of the objectives set forth in Schedule III-B to this Agreement. b. Benefits Payable Upon Termination. i. Following the end of the Employment Period pursuant to any manner described in Section 5(a) or for any other reason, the Company shall pay to Executive (or, in the event of his death, his surviving spouse, if any, or his estate): (A) any Base Salary earned, but unpaid, for services rendered to the Company on or prior to the date on which the Employment Period ended, and (B) amounts which are vested or which Executive is otherwise entitled to receive under the terms of or in accordance with any plan, policy, practice or program of, or any contract or agreement with, the Company at or subsequent to the date the Employment Period ends without regard to the performance by Executive of further services or the resolution of a contingency. ii. Following the end of the Employment Period other than pursuant to a termination described in Sections 5(a)(i), (iii) or (vii) (in respect of which Executive shall not be entitled to any payments under this Section 5(b)(ii)), Executive shall be entitled to receive the lesser of (x) his Base Salary, and (y) the balance of his Base Salary through the Expiration Date. In the event that the Employment Period shall end pursuant to a termination by Executive pursuant to Section 5(a)(ii) or a termination by the Company pursuant to Section 5(a)(vi), the Executive shall also be entitled to receive the Annual Bonus (if earned in accordance with Section 3(b) of this Agreement). The amount of the Annual Bonus shall be determined as follows: (I) In the event that the date of termination is on or prior to June 30 of any applicable calendar year, the amount of the Annual Bonus shall be equal to a pro rata portion (based upon the actual number of days during such calendar year that this Agreement shall have been in effect) of the Annual Bonus payable in respect of such year (determined based upon the achievement by the Company of the objectives for all of such calendar year). (II) In the event that the date of termination is after June 30 of any applicable calendar year, the amount of the Annual Bonus shall be equal to the Annual Bonus payable in respect of such year (determined based upon the achievement by the Company of the objectives for all of such calendar year). c. Timing of Payments. i. Amounts payable pursuant to Section 5(b)(i)(A) and, except as provided below upon termination of the Management Agreement, payments of Base Salary pursuant to Section 5(b)(ii) shall be payable monthly in monthly installments in arrears commencing on the last day of the month following the end of the Employment Period. In the event that Executive's employment shall be terminated pursuant to Section 5(a)(ii) or (vi), the Annual Bonus payable pursuant to Section 5(b)(ii) shall, except as provided below upon termination of the Management Agreement, be paid 30 days after the certification of the Company's financial statements for such year. In the event that the Management Agreement is terminated concurrently with the termination of this Agreement (A) the Annual Bonus (if earned in accordance with Section 3(b) of this Agreement) shall be payable on the later to occur of (x) 30 days after the certification of the Company's financial statements for such year, and (y) the last day of the month after which (a) a New Provider (as defined in the Management Agreement) shall be retained by the Company in accordance with Section 5(e)(i)of the Management Agreement, and (b) the Senior Executives shall have nominated a Successor Control Group (as defined in the Management Agreement) acceptable to the Board of Directors in its sole discretion (excluding the Senior Executives that are directors of the Company) in accordance with Section 5(e)(ii) of the Management Agreement, and (B) the Base Salary payable pursuant to Section 5(b)(ii) shall be payable monthly in monthly installments on the last day of the month after which (I) a New Provider shall be retained by the Company in accordance with Section 5(e)(i) of the Management Agreement and (II) the Senior Executives shall have nominated a Successor Control Group reasonably acceptable to the Board of Directors in its sole discretion (excluding the Senior Executives that are directors of the Company) in accordance with Section 5(e)(ii) of the Management Agreement. ii. Vested benefits referred to in clause (B) of Section 5(b)(i) shall be payable in accordance with the terms of the plan, policy, practice, program, contract or agreement under which such benefits have accrued. d. The Company shall be entitled to set off against the amounts payable to the Executive following the termination of this Agreement pursuant to Section 5(b)(ii), any amounts earned by either Executive in other employment after the termination of this Agreement; provided, however, that Executive shall not be required, as a condition to the receipt of such payment pursuant to Section 5(b)(ii), to seek such other employment. e. Continuing Obligations. After receipt of written notice of termination, but prior to the effective date of such termination, Executive shall continue to perform his duties under this Agreement unless specifically instructed to discontinue such performance. In the event of termination, Executive and the Company shall remain liable for their respective obligations accrued under this Agreement prior to the effective date of termination. f. Definition of Cause. For purposes of this Agreement, "Cause" means only: i. Executive's indictment or conviction of a felony; ii. Fraud, misappropriation or embezzlement by Executive against the Company or any subsidiary or affiliate of the Company; or iii. Executive's willful misconduct or gross negligence in connection with his employment hereunder which has materially adversely affected the Company, monetarily or otherwise, as determined by a majority vote of the Board of Directors of the Company (excluding Executive and other Company executives that are directors of the Company). g. Definition of Good Reason. For purposes of this Agreement "Good Reason" means any of the following: i. The Company fails to make any payment when due pursuant to Section 3 within thirty (30) days following Executive's written notice to the Company of such failure; ii. A material breach of this Agreement by the Company (other than a payment default) which has not been cured within thirty (30) days following notice thereof from the Company; iii. Executive is demoted or removed from his/her respective offices or there is a material diminishment of Executive's responsibilities, duties or status which diminishment is not rescinded within 30 days after the date of receipt by the Board of Directors of the Company of Executive's written notice referring to this provision and describing such diminishment; or iv. The Company relocates its principal offices without Executive's consent to a location more than 50 miles from the principal offices of the Company in Jackson, Mississippi. 6. Noncompetition and Confidentiality a. Noncompetition. During the Employment Period and for one year thereafter, Executive shall not, without the consent of the Company, assist or become associated with any person or entity, whether as a principal, partner, employee, consultant or shareholder (other than as a holder of not in excess of 5% of the outstanding voting shares of any publicly traded company) that is actively engaged in the business of providing mobile wireless telecommunications services in the Territory (as defined in the Company's Stockholders' Agreement); provided, however, that in the event the Employment Period is terminated (x) by Executive pursuant to Section 5(a)(ii) or by the Company pursuant to Section 5(a)(vi) Executive shall have no obligations pursuant to this Section 6(a), and (y) by the Company pursuant to Section 5(a)(vii) such one-year period shall be three (3) months, subject to the right of the Company, upon written notice given to Executive, to extend such three (3) month period on a month-to-month basis for up to an additional nine (9) month period on the condition that the Company pays to Executive his Base Salary during such three (3) month period and for any such additional period that the Company elects to extend Executive's obligations pursuant to this Section 6(a). b. Confidentiality. Without the prior written consent of the Company, except to the extent required by an order of a court having competent jurisdiction or under subpoena from a governmental body or agency, Executive shall not disclose any trade secrets, customer lists, drawings, designs, information regarding product development, marketing plans, sales plans, manufacturing plans, management organization (including data and other information relating to members of the Board of Directors and management), operating policies and manuals, business plans, financial records, packaging design or other financial, commercial, business or technical information relating to the Company or any of its subsidiaries or affiliates (collectively, "Confidential Information"), to any third person, unless such Confidential Information has been previously disclosed to the public by the Company or is in the public domain (other than by reason of Executive's breach of this Paragraph 6(b)), except that Executive may disclose Confidential Information to the extent advisable in his sole discretion in connection with (i) the performance of Executive's duties hereunder, or (ii) the issuance of Company securities, or (iii) obtaining financing for the Company, or (iv) the enforcement of Executive's rights under this Agreement, or (v) any disclosures that may be required by law, including securities laws. c. Inventions. Executive hereby sells, transfers and assigns to the Company all of the right, title and interest of Executive in and to all inventions, ideas, disclosures and improvements, whether patented or unpatented, and copyrightable material, made or conceived by Executive, solely or jointly, or in whole or in part, during the Employment Term which (i) relate to methods, apparatus, designs, products, processes or devices sold, leased, used or under construction or development by the Company or any subsidiary or affiliate or (ii) otherwise relate to or pertain to the business, functions or operations of the Company or any subsidiary or affiliate, or (iii) arise (wholly or partly) from the efforts of Executive during the Employment Period. Executive shall communicate promptly and disclose to the Company, in such form as the Company reasonably requests, all information, details and data pertaining to the aforementioned inventions, ideas, disclosures and improvements; and, whether during the Employment Period or thereafter, Executive shall execute and deliver to the Company (at the Company's sole cost and expense) such formal transfers and assignments and such other papers and documents as may be required of Executive to permit the Company to file and prosecute the patent applications and, as to copyrightable material, to obtain copyright thereon. d. Company Property. Promptly following Executive's termination of employment, Executive shall return to the Company all property of the Company, and all copies thereof in Executive's possession or under his control, and all tangible embodiments of Confidential Information in Executive's possession in whatever media such Confidential Information is maintained. e. Non-Solicitation of Employees. During the Employment Period and for one year thereafter, Executive will not directly or indirectly induce any employee of the Company or any of its subsidiaries or affiliates to terminate employment with such entity, and will not directly or indirectly, either individually or as owner, agent, employee, consultant or otherwise, employ or offer employment to any person who is or was employed by the Company or a subsidiary thereof, unless such person shall have ceased to be employed by such entity for a period of at least six months; provided, however, that nothing contained in this Agreement shall prevent Executive from engaging in a general solicitation for employment that is not directed at employees of the Company or any of its subsidiaries or affiliates. f. Injunctive Relief with Respect to Covenants. Executive acknowledges and agrees that the covenants and obligations of Executive with respect to noncompetition, inventions, confidentiality and Company property contained in this Section 6 relate to special, unique and extraordinary matters and that a violation of any of the terms of such covenants and obligations will cause the Company irreparable injury for which adequate remedies are not available at law. Therefore, Executive agrees that the Company shall be entitled to an injunction, restraining order, or such other equitable relief as a court of competent jurisdiction may deem necessary or appropriate to restrain Executive from committing any violation of the covenants and obligations contained in this Paragraph 6. These injunctive remedies are cumulative and are in addition to any other rights and remedies the Company may have at law or in equity. 7. Vesting and Repurchase of Unvested Shares, Etc. a. General. Executive by his acceptance of the Restricted Share certificates bearing the legend set forth in paragraph (e) below, agrees that the Restricted Shares shall be subject to repurchase by the Company at the Repurchase Price in accordance with the terms of this Section 7. As used in this Section 7, the following terms have the following meanings: i. "Automatic Repurchase Event" means (x) the termination of Executive's employment pursuant to this Agreement or any agreement supplementing, amending or extending this Agreement, (y) the seventh (7th) anniversary of the Commencement Date. ii. "Base Shares" means 2,384,544 shares of Class A Common Stock and 690,224 shares of Class C Common Stock. iii. "Change in Control" means a change in control of the Company, which will be deemed to have occurred if: (I) any "person" as such term is used in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof except that such term shall not include (A) the Company or any of its subsidiaries, (B) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its affiliates, (C) an underwriter temporarily holding securities pursuant to an offering of such securities, (D) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of Common Shares, or (E) any person or group as used in Rule 13d-1(b) under the Exchange Act, is or becomes the Beneficial Owner, as such term is defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such person any securities acquired directly from the Company or its affiliates other than in connection with the acquisition by the Company or its affiliates of a business) representing 50% or more of the combined voting power of the Company's then outstanding securities; (II) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board, and any new director (other than (A) a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (I), (III), or (IV) of this Section 7(a)(iii) or (B) a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof; (III) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, at least 75% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person (as defined above) is or becomes the beneficial owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such person any securities acquired directly from the Company or its affiliates other than in connection with the acquisition by the Company or its affiliates of a business) representing 25% or more of the combined voting power of the Company's then outstanding securities; or (IV) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets (or any transaction having a similar effect) other than a sale or disposition by the Company of all or substantially all of the Company's assets to an entity, at least 75% of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale. Notwithstanding the foregoing, no change in voting power triggered solely by the holders of shares of Voting Preference Stock of the Company beginning to vote as a class with holders of Class A Voting Common Stock of the Company shall be deemed a Change in Control under this Agreement. ii. "Equity Kicker Shares" means a number of Restricted Shares equal to 819,940 shares of Class A Common Stock. iii. "Fully Diluted Basis" means, with respect to the shares of Common Stock outstanding, all of the shares of Common Stock then outstanding (regardless of whether subject to repurchase), plus (without duplication) all the shares of Common Stock issuable upon the exercise of outstanding options or convertible securities (excluding the Company's Series A Preferred Stock, $.01 par value); provided, that for the purpose of calculating the number of shares of Common Stock outstanding on a Fully Diluted Basis in order to determine whether the Internal Rate of Return pursuant to Section 7(b)(ii) equals (A) more than 25% but less than 35%, none of the Equity Kicker Shares shall be deemed to be outstanding, and (B) more than 35%, one-half of the Equity Kicker Shares shall be deemed to be outstanding. iv. "Market Price" means in the case of an Automatic Repurchase Event (A) specified in clause (x) of the definition thereof the average closing price of the Class A Common Stock during the ten (10) trading days prior to such date of termination, or (B) specified in clause (y) of the definition thereof, the average closing price of the Class A Common Stock during the ten (10) trading days prior to such seventh (7th) anniversary of the Commencement Date. In the case of a Trigger Notice, "Market Price" means the average closing price of the Class A Common Stock during the ten (10) trading days prior to such Trigger Date. vii. "Precipitating Event" means (i) a diminution in the Executive's position, duties, authority, title or responsibilities with respect to his or her employment by the Company or (ii) the relocation of the Executive's principal place of performance more than fifty (50) miles from his or her principal place of performance on the Commencement Date. vii. "Repurchase Price" means $.000025 per share. ix. "Trigger Date" means the date of delivery to the Company by Executive of a Trigger Notice that refers to Equity Kicker Shares. x. "Trigger Notice" means a notice given by Executive with respect to a specified number of Equity Kicker Shares to determine the number of Triggered Shares. b. Repurchase of Base Shares and Equity Kicker Shares. i. Repurchase of Base Shares upon Automatic Repurchase Event. Upon an Automatic Repurchase Event, Executive shall sell to the Company, and the Company shall purchase from Executive, the aggregate of (I) all Base Shares that shall not have vested in accordance with Schedule IV, plus (II) the number of Restricted Shares subject to repurchase pursuant to Section 7(b)(v). Notwithstanding the provisions of Schedule IV or any other provision of this Agreement, all Base Shares shall fully vest and shall not be subject to repurchase upon the occurrence of any of the following: (x) a Change in Control, provided that Executive remains in continuous service with the Company or any Subsidiary until the effective date of such Change in Control; (y) if Executive's employment with the Company and all Subsidiaries is terminated (a) by reason of his or her death or Disability or (b) by the Company and all Subsidiaries for any reason other than (A) Cause (whether in connection with the TeleCorp Merger or otherwise), or (B) pursuant to Section 5(a)(vii); or (z) a Precipitating Event. Executive's employment with the Company (or a Subsidiary of the Company) shall not be required to terminate as a condition to such acceleration of vesting upon a Precipitating Event. ii. Repurchase of Equity Kicker Shares upon Automatic Repurchase Event. Upon any Automatic Repurchase Event, Executive shall sell to the Company, and the Company shall purchase from Executive, the aggregate of (I) the percentage of Executive's Equity Kicker Shares set forth opposite the Internal Rate of Return realized by the Cash Equity Investors as set forth on the chart below as of the date of the Automatic Repurchase Event: Internal Rate of Return Percentage of Realized by Cash Equity Equity Kicker Shares to be Investors Repurchased ------------------------------------ --------------------------- Less than 25% 100% 25% or more but less than 35% 50% 35% or more 0% , plus (II) the number of Restricted Shares subject to repurchase pursuant to Section 7(b)(v) that are not repurchased pursuant to clause (i) above. Notwithstanding the above or any other provision of this Agreement, all Equity Kicker Shares that have not yet vested shall fully vest and shall not be subject to repurchase upon the occurrence of any of the following: (x) a Change in Control, provided that Executive remains in continuous service with the Company or any Subsidiary until the effective date of such Change in Control; (y) if the Executive's employment with the Company and all Subsidiaries is terminated (a) by reason of his or her death or Disability or (b) by the Company and all Subsidiaries for any reason other than (A) Cause (whether in connection with the TeleCorp Merger or otherwise) or (B) pursuant to Section 5(a)(vii); or (z) a Precipitating Event. Executive's employment with the Company (or a Subsidiary of the Company) shall not be required to terminate as a condition to such acceleration of vesting upon a Precipitating Event. iii. Internal Rate of Return Determination. For the purpose of this Section 7, the Cash Equity Investors will be deemed to have "realized an Internal Rate of Return" of any percentage specified, as of any date, when (i) the aggregate amount of all distributions (but not including proceeds from sales of Common Stock) actually made in respect of the Cash Equity Investors' Common Stock, plus an amount equal to interest thereon at the rate of 10% per annum, compounded annually, from the date each such distribution is made to and including the date of the calculation, plus the product of the Market Price multiplied by the number of shares of Common Stock beneficially owned by the Cash Equity Investors on the date hereof (as adjusted for stock splits, stock dividends and similar changes in capitalization), is equal to (ii) the aggregate amount of all capital contributions made by the Cash Equity Investors, plus an amount equal to interest thereon at such percentage per annum, compounded annually, from the date each such capital contribution is made to and including such date of calculation. iv. Vesting on Trigger Notice. Executive may elect, by delivery of a Trigger Notice with respect to a number of Equity Kicker Shares specified in such Trigger Notice, to determine the number of Equity Kicker Shares that are vested and not subject to repurchase under Section 7(b)(ii). The Internal Rate of Return (determined as specified in Section 7(b)(iii)) shall be determined as of the Trigger Date and those Equity Kicker Shares that would not be subject to repurchase under the chart set forth in Section 7(b)(ii) above shall be deemed vested and not subject to repurchase from and after the Trigger Date. v. Additional Repurchase Rights of the Company. (1) Anything to the contrary contained herein notwithstanding, in the event this Agreement is terminated by the Company pursuant to Section 5(a)(iii), Executive shall sell to the Company, and the Company shall repurchase from Executive, all of the Restricted Shares (whether or not vested) provided, however, this Section 7(b)(v)(1) shall cease to be effective upon a Change in Control. (2) In the event that the Management Agreement is terminated and the Manager does not approve a "New Provider" (as such term is defined in the Management Agreement) within five (5) business days of notice of such New Provider's nomination by the Board of Directors, in accordance with Section 5(e)(i) of the Management Agreement, then for each successive thirty (30) day period or portion thereof following such five (5) business day period that a New Provider shall not have been approved by the Manager, Executive shall sell to the Company 50% of the Restricted Shares then owned by Executive (after giving effect to all other repurchases pursuant to this Section 7). (3) In the event that Executive and the other Senior Executives do not nominate a Successor Control Group reasonably acceptable to the Board of Directors of the Company in its sole discretion (excluding the Senior Executives that are directors of the Company) in accordance with such Section 5(e)(ii) of the Management Agreement within the five (5) business day period set forth in the first sentence of Section 5(e)(ii) of the Management Agreement, then for each successive 30 day period or portion thereof that Executive and the other Senior Executives shall not have nominated a Successor Control Group reasonably acceptable to the Board of Directors of the Company in its sole discretion (excluding the Senior Executives that are directors of the Company), the Executive shall sell to the Company after the expiration of each 30 day period, in addition to and after giving effect to all other repurchases by the Company of Restricted Shares pursuant to this Section 7 (including Section 7(b)(v)(2)), an additional 50% of the Restricted Shares then owned by Executive. c. Purchase Price; Closing of Repurchase; Assignment of Repurchase Right. Any repurchase pursuant to this Section 7 shall be for the Repurchase Price. The closing of a purchase and sale of Repurchased Shares shall take place on a date mutually agreed by Executive and the Company, but in no event later than 20 days after (i) the date that employment of Executive shall have terminated or, in the case of a repurchase pursuant to Sections 7(b)(v), the end of any 30-day period referred to in Section 7(b)(v), or (ii) in the case of Automatic Repurchase Event other than termination of employment of Executive, the occurrence of the applicable event. At such closing, the Company shall deliver to the Executive a check in the amount of the aggregate Repurchase Price and, upon delivery thereof, the Company shall become the legal and beneficial owner of the Restricted Shares and all rights and interests therein or relating thereto, and the Company shall have the right to retain and transfer to its own name such shares being repurchased by the Company. Whenever the Company shall have the right to repurchase Restricted Shares hereunder, the Company may designate and assign one or more employees, officers, directors or shareholders of the Company or other persons or organizations to exercise all or a party of the Company's repurchase rights under this Agreement and purchase all or a part of such Shares. d. Escrow of Shares. The Certificate(s) representing all Restricted Shares shall be held by the Secretary of the Company as escrow holder (the "Escrow Holder"), along with a stock power executed by the Executive in blank. The Escrow Holder is hereby directed to permit transfer of such shares only in accordance with this Agreement and the Stockholders Agreement. In the event further instructions are desired by the Escrow Holder, he shall be entitled to rely upon written directions of the Board of Directors of the Company (excluding any Senior Executive that is a director of the Company). The Escrow Holder shall have no 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. If the Company or any assignee repurchases any of the Restricted Shares pursuant to this Section 7, the Escrow Holder, upon receipt of written notice of such repurchase from the proposed transferee, shall take all steps necessary to accomplish such repurchase. From time to time, upon Executive's request, Escrow Holder shall: (i) cancel the certificate(s) held by the Escrow Holder and representing Restricted Shares, (ii) cause new certificate(s) to be issued representing the number of Restricted Shares no longer subject to repurchase pursuant paragraphs (i), (ii) and (iii) of Section 7(b), which certificate(s) the Escrow Holder shall deliver to Executive, and (iii) cause new certificate(s) to be issued representing the balance of the Restricted Shares, which certificate(s) shall be held in escrow by the Escrow Holder in accordance with the provisions of this Section 7(d). Subject to the terms hereof, Executive shall have all the rights of stockholder with respect to the Restricted Shares while they are held in escrow, including without limitation, the right to vote the Restricted Shares and receive any cash dividends declared thereon. If, from time to time during the term of the Company's repurchase right, there is (i) any stock dividend, stock split or other change in the Restricted Shares, or (ii) any merger or sale of all or substantially all of the assets or other acquisition of the Company, any and all new, substituted or additional securities to which such Executive is entitled by reason of his ownership of the Restricted Shares shall be immediately subject to this escrow, deposited with the Escrow Holder and included thereafter as "Restricted Shares" for purposes of this Agreement and the Company's repurchase right. e. Legends. The share certificates evidencing the Restricted Shares shall be endorsed with the following legend (in addition to any legend required to be placed thereon by applicable federal or state securities laws or the Company's Stockholders Agreement): THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND AN AFFILIATE OF THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY, WHICH PROVIDES, AMONG OTHER THINGS, FOR THE REPURCHASE BY THE COMPANY OF THE SHARES REPRESENTED BY THIS CERTIFICATE. 8. No Conflict With Prior Agreements; Due Authorization. a. Executive represents to the Company that neither Executive's execution of this Agreement or commencement of employment hereunder nor the performance of Executive's duties hereunder conflicts with any contractual commitment on Executive's part to any third party. The Company represents to Executive that it is fully authorized and empowered by action of the Company's Board of Directors to enter into this Agreement and that performance of its obligations under this Agreement will not violate any agreement between it and any other person, firm or other entity. b. Nothing herein shall be construed to require Executive to use or disclose any information that he is prohibited from using or disclosing as a result of legal or contractual obligations. 9. Miscellaneous a. Survival. Sections 4(d), 5, 6, 7 and 9 shall survive the termination hereof. b. Binding Effect. This Agreement shall be binding on the Company and any person or entity which succeeds to the interest of the Company (regardless of whether such succession occurs by operation of law) by reason of the sale of all or a portion the Company's stock, a merger, consolidation, or reorganization involving the Company or a sale of the assets of the business of the Company (or portion thereof) in which Executive performs a majority of his services. This Agreement shall also inure to the benefit of Executive's heirs, executors, administrators and legal representatives. c. Assignment. Except as provided under Section 9(b), neither this Agreement nor any of the rights or obligations hereunder shall be assigned or delegated by any party hereto without the prior written consent of the other party, except that the Company may delegate to any of its direct or indirect wholly owned subsidiaries its obligations to provide compensation and benefits hereunder; provided no such delegation shall relieve the Company of its obligations hereunder. d. Entire Agreement. This Agreement, together with the Schedules attached hereto, constitutes the entire agreement between the parties hereto with respect to the matters referred to herein, and no other agreement, oral or otherwise, shall be binding between the parties unless it is in writing and signed by the party against whom enforcement is sought. There are no promises, representations, inducements or statements between the parties other than those that are expressly contained herein. Executive acknowledges that he is entering into this Agreement of his own free will and accord, and with no duress, that he has been represented and fully advised by competent counsel in entering into this Agreement, that he has read it and that he understands it and its legal consequences. No parol or other evidence may be admitted to alter, modify or construe this Agreement, which may be altered, modified or amended only by a writing signed by the parties hereto. e. Severability; Reformation. In the event that one or more of the provisions of this Agreement shall become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby. In the event that any of Sections 6(a), (b) or (c) is not enforceable in accordance with its terms, Executive and the Company agree that such Section shall be reformed to make such Section enforceable in a manner which provides the Company the maximum rights permitted at law. f. Waiver. Waiver by any party hereto of any breach or default by the other party of any of the terms of this Agreement shall not operate as a waiver of any other breach or default, whether similar to or different from the breach or default waived. No waiver of any provision of this Agreement shall be implied from any course of dealing between the parties hereto or from any failure by either party hereto to assert its or his rights hereunder on any occasion or series of occasions. g. Notices. Any notice required or desired to be delivered under this Agreement shall be in writing and shall be delivered personally against receipt, by courier service or by registered mail, return receipt requested, and shall be effective upon actual receipt by the party to which such notice shall be directed, and shall be addressed as follows (or to such other address as the party entitled to notice shall hereafter designate in accordance with the terms hereof): If to the Company, to the attention of its Board of Directors at the Company's principal executive offices with a copy to: Tritel, Inc. 111 East Capitol Street, Suite 500 Jackson, Mississippi 39201 Attention: General Counsel If to Executive: William M. Mounger, II 4781 East Massena Drive Jackson, MS 39211 h. Headings. Headings to paragraphs in this Agreement are for the convenience of the parties only and are not intended to be part of or to affect the meaning or interpretation hereof. i. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. j. Withholding. Any payments provided for herein shall be reduced by any amounts required to be withheld by the Company from time to time under applicable Federal, State or local income or employment tax laws or similar statutes or other provisions of law then in effect. k. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York. l. Resolution of Disputes. All disputes, controversies and claims arising in connection with this Agreement that are not settled by agreement between the parties shall be finally settled under the Commercial Arbitration Rules of the American Arbitration Association ("AAA") in effect from time to time. A single arbitrator shall be appointed by agreement between the parties or, failing such agreement, by AAA. The arbitrator may grant any remedy that (s)he deems just and equitable within the scope of this Agreement, including specific performance. The award of the arbitrator shall be final and binding and judgment thereon may be entered in any court having jurisdiction. The costs and expenses (including reasonable attorney's fees) of the prevailing party shall be borne and paid by the party that the arbitrator determines is the non-prevailing party. IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and Executive has hereunto set his hand as of the day and year first above written. TRITEL, INC. By: _________________________________ Name: Title: EXECUTIVE: ------------------------------------- WILLIAM M. MOUNGER, II SCHEDULE I Duties As Chief Executive Officer of the Company, Executive is responsible for the overall direction of the business and for achieving maximum return on invested capital. Executive shall also coordinate the efforts of the senior executives and work with them to develop current and long-range objectives, policies and procedures for the Company. Executive shall represent the Company to customers, the financial community, and the general public. Additionally, Executive shall have supervision over, and the responsibility for, the day-to-day management, finances and operations of the Company, with all of the powers and authority typically exercised by a chief executive officer of a company, including, without limitation, the authority to hire and dismiss employees, to select agents, representatives and consultants, to determine the prices of services provided and products sold by the Company, and to determine the Company's methods of operation and financial strategies. SCHEDULE II Permitted Activities 1. Executive is an officer, director and shareholder of Alaska-3 Cellular Corporation. This privately held company is a member and the manager of Alaska-3 Cellular, LLC (a manager managed limited liability company), which owns the Alaska-3 RSA cellular license ("AK-3"). MSM, Inc. currently provides management services to this market pursuant to a management agreement. Executive is an officer, director and shareholder of MSM, Inc. d/b/a "Mercury Communications Company." Pursuant to existing management agreements, this privately held entity currently provides management services for the owners of the AK-3, Arkansas-11 and Illinois-9 RSA cellular licenses. It also serves as manager of Mercury PCS, LLC, Mercury PCS II, LLC and Mercury Southern, LLC (all are manager managed limited liability companies). Executive is also a party to a management agreement with Mercury PCS, LLC and Mercury PCS II, LLC whereby he is required to provide certain management and supervisory services to those entities. The above-referenced cellular markets and the PCS licenses owned by Mercury PCS II, LLC are currently being offered for sale. Executive shall be permitted to engage in the management of the above-referenced cellular markets, assist in the sale of them, assist in the sale of the above-referenced PCS licenses and engage in other activities relating to the winding up and liquidation of such businesses (including without limitation managing and directing the defense or pursuit of any litigation or administrative proceedings involving the above-referenced entities or assets (collectively, the "Litigation")) for a period of up to 24 months from the date of this Agreement, provided, however, that the 24 month time limitation shall not apply to managing and directing the defense or pursuit of the Litigation. 2. Executive is an officer, director and shareholder of Mercury Wireless Management, Inc. ("MWM"). This privately held company currently manages and markets tower sites and communications facilities and systems for the City of Jackson, Mississippi and certain other private parties. Executive shall be permitted to continue to engage in such activities for the parties for whom MWM is rendering services on the date of the Securities Purchase Agreement, but only with respect to facilities and systems managed on such date, provided they do not interfere with the performance of his duties under this Agreement. 3. Executive is an officer, director and shareholder of Mercury International Ventures, Inc. This privately held company has pursued international telecommunications licenses. Executive shall be permitted to continue to engage in activities relating to the pursuit of any licenses which Executive has pursued prior to the date of the Securities Purchase Agreement provided such activities do not interfere with the performance of his duties under this Agreement. 4. Executive was a Deposit Guaranty Corp. Advisory Board Member. This bank holding company merged with First American Corporation of Nashville, Tennessee effective May 1, 1998 and Executive is permitted to serve on the corresponding Advisory Board of First American Corporation or its Deposit Guaranty Division. SCHEDULE III-A Objectives [TO BE ESTABLISHED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS] SCHEDULE III-B Objectives 1. The Company shall fail to satisfy the construction requirements set forth in 47CFR 24.203 with respect to any FCC License owned by the Company or any Subsidiary. 2. The Company shall fail to construct, or cause its Subsidiaries to construct, Company Systems covering the Territory in accordance with the Minimum Build-Out Plan. 3. The Company shall fail to comply with the covenant relating to the TDMA Quality Standards set forth in Section 8.3 of the Stockholders Agreement. 4. The Company shall fail by a factor of more than 15% to meet, as of the end of any fiscal quarter set forth on the attached budget as modified from time to time by the Board of Directors, the applicable budgeted amount with respect to (x) capital expenditures per covered POP, (y) earnings before interest, taxes, depreciation and amortizations, or (z) minimum revenues. 5. The Company shall fail to comply with the terms of any representation, warranty, covenant or agreement contained in the Credit Documents (as such term is defined in the Securities Purchase Agreement) or in any other agreement or instrument pursuant to which the Company has incurred indebtedness for borrowed money in the principal amount of $25,000,000 or more, which failure to comply results in an event of default thereunder (unless such failure to comply has been waived or cured within the applicable cure period). SCHEDULE IV Vesting Schedule Vesting Date Event Percent of Base Shares ------------------ ----------------------- Commencement Date 20% Second Anniversary 15% Third Anniversary 15% Fourth Anniversary 15% Fifth Anniversary 15% Completion of Year 1 and Year 2 of Minimum Build-Out Plan 10% Completion of Year 3 of Minimum Build-Out Plan 10% --- Total 100% Base Shares that are shares of Class C Common Stock shall vest prior to the vesting of any shares of Class A Common Stock. Accelerated Vesting o Upon termination of the Employment Agreement by the Company pursuant to Section 5(a)(vii) of this Agreement, the Base Shares that would have vested on the immediately following Anniversary Date of such termination shall vest. EX-10.1.2 3 0003.txt EMPLOYMENT AGREEMENT MARTIN EXHIBIT 10.1.2 AMENDED AND RESTATED EMPLOYMENT AGREEMENT AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated effective June 9, 2000, by and between TRITEL, INC., a Delaware corporation (the "Company"), and E.B. MARTIN, JR. ("Executive"). Capitalized terms used herein but not otherwise defined herein shall have the meanings given to such terms in the Stockholders Agreement of the Company, dated January 7, 1999, as amended, modified or supplemented in accordance with the terms thereof (the "Stockholders Agreement"). W I T N E S S E T H: WHEREAS, the Company employed Executive pursuant to an Employment Agreement executed by the Company and Executive embodying the terms of such employment dated January 7, 1999 (the "Original Agreement"); WHEREAS, the Company and Executive desire to continue such employment pursuant to terms and conditions varying from those set forth in the Original Agreement; WHEREAS, William M. Mounger, II and Executive (collectively, the "Senior Executives") own all of the ownership interests in Tritel Management, LLC, a Mississippi limited liability company ("Manager"); WHEREAS, the Senior Executives have caused the Manager to enter into a Management Agreement with the Company, dated January 7, 1999 (the "Management Agreement"), pursuant to which the Manager has agreed, among other things, to manage the business of the Company; WHEREAS, pursuant to Section 3.2(e) of the Securities Purchase Agreement, dated as of May 20, 1998 (the "Securities Purchase Agreement"), Executive has become the record and beneficial owner of 5,961.36 shares (pre-split) of the Company's Class A Voting Common Stock, par value $.01 per share ("Class A Common Stock") and 1,725.56 shares (pre-split) of the Company's Class C Common Stock, par value $.01 per share (the "Class C Common Stock"; collectively, the "Restricted Shares"); WHEREAS, in order to induce the Purchasers referred to in the Securities Purchase Agreement to purchase the securities issued by the Company thereunder, Executive desires to grant to the Company the repurchase rights with respect to the Restricted Shares as referred to in Section 7; and WHEREAS, the Company desires to accept the grant of such repurchase rights. WHEREAS, on or about December 13, 1999, the Company effected a 400 to 1 stock split (the "Stock Split") of its Class A Voting Common Stock and Class C Common Stock so that the number of Restricted Shares subject to the Original Agreement was increased to 2,384,544 Class A Common Stock shares and 690,224 Class C Common Stock shares; and WHEREAS, the Company and Executive desire to amend and restate the Original Agreement to modify the Company's repurchase rights relating to the Restricted Shares, to provide for acceleration of vesting upon certain events and certain other matters, all in accordance with the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the mutual covenants herein contained, the Company and Executive, intending to be legally bound, hereby amend and restate the Original Agreement in its entirety and agree as follows: 1. Employment. a. Agreement to Employ. Upon the terms and subject to the conditions of this Agreement, the Company hereby employs Executive, and Executive hereby accepts employment by the Company. b. Employment Period. The term of Executive's employment shall be for a period of five (5) years commencing on January 7, 1999 (the "Commencement Date") and continuing until January 1, 2004 (the "Expiration Date") unless this Agreement shall have been earlier terminated in accordance with Section 5 (the "Employment Period"). 2. Position and Duties. During the Employment Period, Executive shall serve as Executive Vice President/Chief Financial Officer and Treasurer of the Company and be responsible for the duties set forth on Schedule I, reporting directly to the Company's President. During the Employment Period, except as set forth herein, Executive shall devote his entire business time to the services required of him hereunder, except for vacation time, personal time and reasonable periods of absence due to sickness, personal injury or other disability. Nothing contained herein shall preclude Executive from devoting reasonable periods of time to (i) the activities described on Schedule II; (ii) serving on a board of directors of a charitable, trade or other similar organization; or (iii) serving on other boards of directors with the consent of the Board of Directors (excluding the Senior Executives who are members of the Company's Board of Directors), in each such case, so long as such activities do not interfere with the performance of Executive's duties hereunder. 3. Compensation. a. Base Salary. The Company shall pay Executive an annual salary of $225,000. Upon the first anniversary of the Commencement Date, and annually thereafter, the Compensation Committee of the Board of Directors shall review Executive's base salary in light of the performance of Executive and the Company, and may, in its discretion, increase (but not decrease) such base salary by an amount it determines to be appropriate. Executive's annual base salary payable hereunder, as it may be increased from time to time, is referred to herein as "Base Salary". The Company shall pay Executive his Base Salary in equal monthly installments, or in such other installments as the parties may mutually agree. b. Annual Bonus. For each calendar year or part thereof during the Employment Period, Executive shall be eligible to receive an annual bonus (an "Annual Bonus") equal to up to 50% of his Base Salary based upon the achievement of certain objectives determined by the Compensation Committee of the Board of Directors for such calendar year, payable within thirty (30) days after certification of the Company's financial statements for such year. 4. Benefits, Perquisites and Expenses. a. Benefit Plans. During the Employment Period, Executive shall be eligible to participate in any welfare benefit plan sponsored or maintained by the Company, including, without limitation, any group life, hospitalization, medical, dental, health, accident or disability insurance or similar plan or program of the Company, in each case, whether now existing or established hereafter, to the extent that Executive is eligible to participate in any such plan under the generally applicable provisions thereof. b. Perquisites. Executive shall be entitled to up to four weeks paid vacation annually in accordance with the Company's policies and practices. Executive shall also be entitled to receive such perquisites as are generally provided to other senior officers of the Company in accordance with the policies and practices of the Company. c. Business Expenses. The Company shall pay or reimburse Executive for all reasonable expenses incurred or paid by Executive in performance of Executive's duties hereunder, upon presentation of expense statements or vouchers and such other information as the Company may reasonably require. d. Indemnification. The Company shall, to the maximum extent permitted by applicable law, the Company's certificate of incorporation or its bylaws, indemnify Executive and hold Executive harmless from and against any claim, loss or cause of action arising from or out of Executive's performance as an officer, director or employee of the Company or any of its subsidiaries or in any other capacity, including serving as a fiduciary, in which Executive serves at the request of the Company. If any claim is asserted hereunder for which Executive reasonably believes in good faith he is entitled to be indemnified, the Company shall pay Executive's reasonable legal expenses (or cause such expenses to be paid), as may be reasonably required but no less frequently than on a quarterly basis, provided that Executive shall reimburse the Company for such amounts, plus simple interest thereon at the 90-day United States Treasury Bill rate as in effect from time to time, compounded annually, if Executive shall be found by a final, non-appealable order of a court of competent jurisdiction not to be entitled to indemnification. The indemnification obligations of the Company in this paragraph shall survive any termination of this Agreement. e. Directors and Officers Liability Insurance. The Company has obtained, and shall use all commercially reasonable efforts to maintain, directors and officers liability insurance coverage covering Executive in amounts customary for similarly situated companies in the telecommunications industry. 5. Termination of Employment. a. Early Termination of the Employment Period. This Agreement may be terminated in any of the following manners: i. Executive may, upon 30 days' prior written notice to the Company, voluntarily terminate employment with the Company at any time at the sole discretion of Executive (a "Voluntary Termination"); ii. Executive may, upon written notice to the Company, terminate employment with the Company at any time for "Good Reason" (as defined in Section 5(g)) it being agreed that any such termination, although effected by Executive shall not constitute a Voluntary Termination; iii. Executive's employment may, upon written notice to Executive, be terminated by the Company at any time for Cause (as defined in Section 5(f)); iv. This Agreement shall terminate automatically upon Executive's death; v. The Company may, upon written notice to Executive, terminate this Agreement upon Executive's Disability. As used herein, the term "Disability" shall mean a determination that Executive suffers from illness or other physical or mental impairment that prevents Executive from substantially performing his duties for a period of 90 days during any six-month period during the Employment Period or for 180 days during any 12-month period during the Employment Period. The determination of whether (and, if appropriate, when) a Disability has occurred shall be made by a majority of the Board of Directors of the Company (excluding the Senior Executives that are directors of the Company); vi. The Company may terminate this Agreement immediately in the event of a material breach of the Management Agreement by Manager (as determined by a majority vote of the Board of Directors (excluding the Senior Executives that are directors of the Company)), which has not been cured within thirty (30) days following notice thereof from the Company, or the failure of the Company to meet any of the objectives set forth on Schedule III-A to this Agreement; or vii. The Company may terminate this Agreement immediately in the event of the failure of the Company to meet any of the objectives set forth in Schedule III-B to this Agreement. b. Benefits Payable Upon Termination. i. Following the end of the Employment Period pursuant to any manner described in Section 5(a) or for any other reason, the Company shall pay to Executive (or, in the event of his death, his surviving spouse, if any, or his estate): (A) any Base Salary earned, but unpaid, for services rendered to the Company on or prior to the date on which the Employment Period ended, and (B) amounts which are vested or which Executive is otherwise entitled to receive under the terms of or in accordance with any plan, policy, practice or program of, or any contract or agreement with, the Company at or subsequent to the date the Employment Period ends without regard to the performance by Executive of further services or the resolution of a contingency. ii. Following the end of the Employment Period other than pursuant to a termination described in Sections 5(a)(i), (iii) or (vii) (in respect of which Executive shall not be entitled to any payments under this Section 5(b)(ii)), Executive shall be entitled to receive the lesser of (x) his Base Salary, and (y) the balance of his Base Salary through the Expiration Date. In the event that the Employment Period shall end pursuant to a termination by Executive pursuant to Section 5(a)(ii) or a termination by the Company pursuant to Section 5(a)(vi), the Executive shall also be entitled to receive the Annual Bonus (if earned in accordance with Section 3(b) of this Agreement). The amount of the Annual Bonus shall be determined as follows: (I) In the event that the date of termination is on or prior to June 30 of any applicable calendar year, the amount of the Annual Bonus shall be equal to a pro rata portion (based upon the actual number of days during such calendar year that this Agreement shall have been in effect) of the Annual Bonus payable in respect of such year (determined based upon the achievement by the Company of the objectives for all of such calendar year). (II) In the event that the date of termination is after June 30 of any applicable calendar year, the amount of the Annual Bonus shall be equal to the Annual Bonus payable in respect of such year (determined based upon the achievement by the Company of the objectives for all of such calendar year). c. Timing of Payments. i. Amounts payable pursuant to Section 5(b)(i)(A) and, except as provided below upon termination of the Management Agreement, payments of Base Salary pursuant to Section 5(b)(ii) shall be payable monthly in monthly installments in arrears commencing on the last day of the month following the end of the Employment Period. In the event that Executive's employment shall be terminated pursuant to Section 5(a)(ii) or (vi), the Annual Bonus payable pursuant to Section 5(b)(ii) shall, except as provided below upon termination of the Management Agreement, be paid 30 days after the certification of the Company's financial statements for such year. In the event that the Management Agreement is terminated concurrently with the termination of this Agreement (A) the Annual Bonus (if earned in accordance with Section 3(b) of this Agreement) shall be payable on the later to occur of (x) 30 days after the certification of the Company's financial statements for such year, and (y) the last day of the month after which (a) a New Provider (as defined in the Management Agreement) shall be retained by the Company in accordance with Section 5(e)(i)of the Management Agreement, and (b) the Senior Executives shall have nominated a Successor Control Group (as defined in the Management Agreement) acceptable to the Board of Directors in its sole discretion (excluding the Senior Executives that are directors of the Company) in accordance with Section 5(e)(ii) of the Management Agreement, and (B) the Base Salary payable pursuant to Section 5(b)(ii) shall be payable monthly in monthly installments on the last day of the month after which (I) a New Provider shall be retained by the Company in accordance with Section 5(e)(i) of the Management Agreement and (II) the Senior Executives shall have nominated a Successor Control Group reasonably acceptable to the Board of Directors in its sole discretion (excluding the Senior Executives that are directors of the Company) in accordance with Section 5(e)(ii) of the Management Agreement. ii. Vested benefits referred to in clause (B) of Section 5(b)(i) shall be payable in accordance with the terms of the plan, policy, practice, program, contract or agreement under which such benefits have accrued. d. The Company shall be entitled to set off against the amounts payable to the Executive following the termination of this Agreement pursuant to Section 5(b)(ii), any amounts earned by either Executive in other employment after the termination of this Agreement; provided, however, that Executive shall not be required, as a condition to the receipt of such payment pursuant to Section 5(b)(ii), to seek such other employment. e. Continuing Obligations. After receipt of written notice of termination, but prior to the effective date of such termination, Executive shall continue to perform his duties under this Agreement unless specifically instructed to discontinue such performance. In the event of termination, Executive and the Company shall remain liable for their respective obligations accrued under this Agreement prior to the effective date of termination. f. Definition of Cause. For purposes of this Agreement, "Cause" means only: i. Executive's indictment or conviction of a felony; ii. Fraud, misappropriation or embezzlement by Executive against the Company or any subsidiary or affiliate of the Company; or iii. Executive's willful misconduct or gross negligence in connection with his employment hereunder which has materially adversely affected the Company, monetarily or otherwise, as determined by a majority vote of the Board of Directors of the Company (excluding Executive and other Company executives that are directors of the Company). g. Definition of Good Reason. For purposes of this Agreement "Good Reason" means any of the following: i. The Company fails to make any payment when due pursuant to Section 3 within thirty (30) days following Executive's written notice to the Company of such failure; ii. A material breach of this Agreement by the Company (other than a payment default) which has not been cured within thirty (30) days following notice thereof from the Company; iii. Executive is demoted or removed from his/her respective offices or there is a material diminishment of Executive's responsibilities, duties or status which diminishment is not rescinded within 30 days after the date of receipt by the Board of Directors of the Company of Executive's written notice referring to this provision and describing such diminishment; or iv. The Company relocates its principal offices without Executive's consent to a location more than 50 miles from the principal offices of the Company in Jackson, Mississippi. 6. Noncompetition and Confidentiality a. Noncompetition. During the Employment Period and for one year thereafter, Executive shall not, without the consent of the Company, assist or become associated with any person or entity, whether as a principal, partner, employee, consultant or shareholder (other than as a holder of not in excess of 5% of the outstanding voting shares of any publicly traded company) that is actively engaged in the business of providing mobile wireless telecommunications services in the Territory (as defined in the Company's Stockholders' Agreement); provided, however, that in the event the Employment Period is terminated (x) by Executive pursuant to Section 5(a)(ii) or by the Company pursuant to Section 5(a)(vi) Executive shall have no obligations pursuant to this Section 6(a), and (y) by the Company pursuant to Section 5(a)(vii) such one-year period shall be three (3) months, subject to the right of the Company, upon written notice given to Executive, to extend such three (3) month period on a month-to-month basis for up to an additional nine (9) month period on the condition that the Company pays to Executive his Base Salary during such three (3) month period and for any such additional period that the Company elects to extend Executive's obligations pursuant to this Section 6(a). b. Confidentiality. Without the prior written consent of the Company, except to the extent required by an order of a court having competent jurisdiction or under subpoena from a governmental body or agency, Executive shall not disclose any trade secrets, customer lists, drawings, designs, information regarding product development, marketing plans, sales plans, manufacturing plans, management organization (including data and other information relating to members of the Board of Directors and management), operating policies and manuals, business plans, financial records, packaging design or other financial, commercial, business or technical information relating to the Company or any of its subsidiaries or affiliates (collectively, "Confidential Information"), to any third person, unless such Confidential Information has been previously disclosed to the public by the Company or is in the public domain (other than by reason of Executive's breach of this Paragraph 6(b)), except that Executive may disclose Confidential Information to the extent advisable in his sole discretion in connection with (i) the performance of Executive's duties hereunder, or (ii) the issuance of Company securities, or (iii) obtaining financing for the Company, or (iv) the enforcement of Executive's rights under this Agreement, or (v) any disclosures that may be required by law, including securities laws. c. Inventions. Executive hereby sells, transfers and assigns to the Company all of the right, title and interest of Executive in and to all inventions, ideas, disclosures and improvements, whether patented or unpatented, and copyrightable material, made or conceived by Executive, solely or jointly, or in whole or in part, during the Employment Term which (i) relate to methods, apparatus, designs, products, processes or devices sold, leased, used or under construction or development by the Company or any subsidiary or affiliate or (ii) otherwise relate to or pertain to the business, functions or operations of the Company or any subsidiary or affiliate, or (iii) arise (wholly or partly) from the efforts of Executive during the Employment Period. Executive shall communicate promptly and disclose to the Company, in such form as the Company reasonably requests, all information, details and data pertaining to the aforementioned inventions, ideas, disclosures and improvements; and, whether during the Employment Period or thereafter, Executive shall execute and deliver to the Company (at the Company's sole cost and expense) such formal transfers and assignments and such other papers and documents as may be required of Executive to permit the Company to file and prosecute the patent applications and, as to copyrightable material, to obtain copyright thereon. d. Company Property. Promptly following Executive's termination of employment, Executive shall return to the Company all property of the Company, and all copies thereof in Executive's possession or under his control, and all tangible embodiments of Confidential Information in Executive's possession in whatever media such Confidential Information is maintained. e. Non-Solicitation of Employees. During the Employment Period and for one year thereafter, Executive will not directly or indirectly induce any employee of the Company or any of its subsidiaries or affiliates to terminate employment with such entity, and will not directly or indirectly, either individually or as owner, agent, employee, consultant or otherwise, employ or offer employment to any person who is or was employed by the Company or a subsidiary thereof, unless such person shall have ceased to be employed by such entity for a period of at least six months; provided, however, that nothing contained in this Agreement shall prevent Executive from engaging in a general solicitation for employment that is not directed at employees of the Company or any of its subsidiaries or affiliates. f. Injunctive Relief with Respect to Covenants. Executive acknowledges and agrees that the covenants and obligations of Executive with respect to noncompetition, inventions, confidentiality and Company property contained in this Section 6 relate to special, unique and extraordinary matters and that a violation of any of the terms of such covenants and obligations will cause the Company irreparable injury for which adequate remedies are not available at law. Therefore, Executive agrees that the Company shall be entitled to an injunction, restraining order, or such other equitable relief as a court of competent jurisdiction may deem necessary or appropriate to restrain Executive from committing any violation of the covenants and obligations contained in this Paragraph 6. These injunctive remedies are cumulative and are in addition to any other rights and remedies the Company may have at law or in equity. 7. Vesting and Repurchase of Unvested Shares, Etc. a. General. Executive by his acceptance of the Restricted Share certificates bearing the legend set forth in paragraph (e) below, agrees that the Restricted Shares shall be subject to repurchase by the Company at the Repurchase Price in accordance with the terms of this Section 7. As used in this Section 7, the following terms have the following meanings: i. "Automatic Repurchase Event" means (x) the termination of Executive's employment pursuant to this Agreement or any agreement supplementing, amending or extending this Agreement, (y) the seventh (7th) anniversary of the Commencement Date. ii. "Base Shares" means 2,384,544 shares of Class A Common Stock and 690,224 shares of Class C Common Stock. iii. "Change in Control" means a change in control of the Company, which will be deemed to have occurred if: (I) any "person" as such term is used in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof except that such term shall not include (A) the Company or any of its subsidiaries, (B) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its affiliates, (C) an underwriter temporarily holding securities pursuant to an offering of such securities, (D) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of Common Shares, or (E) any person or group as used in Rule 13d-1(b) under the Exchange Act, is or becomes the Beneficial Owner, as such term is defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such person any securities acquired directly from the Company or its affiliates other than in connection with the acquisition by the Company or its affiliates of a business) representing 50% or more of the combined voting power of the Company's then outstanding securities; (II) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board, and any new director (other than (A) a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (I), (III), or (IV) of this Section 7(a)(iii) or (B) a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof; (III) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, at least 75% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person (as defined above) is or becomes the beneficial owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such person any securities acquired directly from the Company or its affiliates other than in connection with the acquisition by the Company or its affiliates of a business) representing 25% or more of the combined voting power of the Company's then outstanding securities; or (IV) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets (or any transaction having a similar effect) other than a sale or disposition by the Company of all or substantially all of the Company's assets to an entity, at least 75% of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale. Notwithstanding the foregoing, no change in voting power triggered solely by the holders of shares of Voting Preference Stock of the Company beginning to vote as a class with holders of Class A Voting Common Stock of the Company shall be deemed a Change in Control under this Agreement. iv. "Equity Kicker Shares" means a number of Restricted Shares equal to 819,940 shares of Class A Common Stock. v. "Fully Diluted Basis" means, with respect to the shares of Common Stock outstanding, all of the shares of Common Stock then outstanding (regardless of whether subject to repurchase), plus (without duplication) all the shares of Common Stock issuable upon the exercise of outstanding options or convertible securities (excluding the Company's Series A Preferred Stock, $.01 par value); provided, that for the purpose of calculating the number of shares of Common Stock outstanding on a Fully Diluted Basis in order to determine whether the Internal Rate of Return pursuant to Section 7(b)(ii) equals (A) more than 25% but less than 35%, none of the Equity Kicker Shares shall be deemed to be outstanding, and (B) more than 35%, one-half of the Equity Kicker Shares shall be deemed to be outstanding. vi. "Market Price" means in the case of an Automatic Repurchase Event (A) specified in clause (x) of the definition thereof the average closing price of the Class A Common Stock during the ten (10) trading days prior to such date of termination, or (B) specified in clause (y) of the definition thereof, the average closing price of the Class A Common Stock during the ten (10) trading days prior to such seventh (7th) anniversary of the Commencement Date. In the case of a Trigger Notice, "Market Price" means the average closing price of the Class A Common Stock during the ten (10) trading days prior to such Trigger Date. vii. "Precipitating Event" means (i) a diminution in the Executive's position, duties, authority, title or responsibilities with respect to his or her employment by the Company or (ii) the relocation of the Executive's principal place of performance more than fifty (50) miles from his or her principal place of performance on the Commencement Date. vii. "Repurchase Price" means $.000025 per share. ix. "Trigger Date" means the date of delivery to the Company by Executive of a Trigger Notice that refers to Equity Kicker Shares. x. "Trigger Notice" means a notice given by Executive with respect to a specified number of Equity Kicker Shares to determine the number of Triggered Shares. b. Repurchase of Base Shares and Equity Kicker Shares. i. Repurchase of Base Shares upon Automatic Repurchase Event. Upon an Automatic Repurchase Event, Executive shall sell to the Company, and the Company shall purchase from Executive, the aggregate of (I) all Base Shares that shall not have vested in accordance with Schedule IV, plus (II) the number of Restricted Shares subject to repurchase pursuant to Section 7(b)(v). Notwithstanding the provisions of Schedule IV or any other provision of this Agreement, all Base Shares shall fully vest and shall not be subject to repurchase upon the occurrence of any of the following: (x) a Change in Control, provided that Executive remains in continuous service with the Company or any Subsidiary until the effective date of such Change in Control; (y) if Executive's employment with the Company and all Subsidiaries is terminated (a) by reason of his or her death or Disability or (b) by the Company and all Subsidiaries for any reason other than (A) Cause (whether in connection with the TeleCorp Merger or otherwise), or (B) pursuant to Section 5(a)(vii); or (z) a Precipitating Event. Executive's employment with the Company (or a Subsidiary of the Company) shall not be required to terminate as a condition to such acceleration of vesting upon a Precipitating Event. ii. Repurchase of Equity Kicker Shares upon Automatic Repurchase Event. Upon any Automatic Repurchase Event, Executive shall sell to the Company, and the Company shall purchase from Executive, the aggregate of (I) the percentage of Executive's Equity Kicker Shares set forth opposite the Internal Rate of Return realized by the Cash Equity Investors as set forth on the chart below as of the date of the Automatic Repurchase Event: Internal Rate of Return Percentage of Realized by Cash Equity Equity Kicker Shares to be Investors Repurchased ----------------------------------- ---------------------------- Less than 25% 100% 25% or more but less than 35% 50% 35% or more 0% ----------------------------------- ---------------------------- , plus (II) the number of Restricted Shares subject to repurchase pursuant to Section 7(b)(v) that are not repurchased pursuant to clause (i) above. Notwithstanding the above or any other provision of this Agreement, all Equity Kicker Shares that have not yet vested shall fully vest and shall not be subject to repurchase upon the occurrence of any of the following: (x) a Change in Control, provided that Executive remains in continuous service with the Company or any Subsidiary until the effective date of such Change in Control; (y) if the Executive's employment with the Company and all Subsidiaries is terminated (a) by reason of his or her death or Disability or (b) by the Company and all Subsidiaries for any reason other than (A) Cause (whether in connection with the TeleCorp Merger or otherwise) or (B) pursuant to Section 5(a)(vii); or (z) a Precipitating Event. Executive's employment with the Company (or a Subsidiary of the Company) shall not be required to terminate as a condition to such acceleration of vesting upon a Precipitating Event. iii. Internal Rate of Return Determination. For the purpose of this Section 7, the Cash Equity Investors will be deemed to have "realized an Internal Rate of Return" of any percentage specified, as of any date, when (i) the aggregate amount of all distributions (but not including proceeds from sales of Common Stock) actually made in respect of the Cash Equity Investors' Common Stock, plus an amount equal to interest thereon at the rate of 10% per annum, compounded annually, from the date each such distribution is made to and including the date of the calculation, plus the product of the Market Price multiplied by the number of shares of Common Stock beneficially owned by the Cash Equity Investors on the date hereof (as adjusted for stock splits, stock dividends and similar changes in capitalization), is equal to (ii) the aggregate amount of all capital contributions made by the Cash Equity Investors, plus an amount equal to interest thereon at such percentage per annum, compounded annually, from the date each such capital contribution is made to and including such date of calculation. iv. Vesting on Trigger Notice. Executive may elect, by delivery of a Trigger Notice with respect to a number of Equity Kicker Shares specified in such Trigger Notice, to determine the number of Equity Kicker Shares that are vested and not subject to repurchase under Section 7(b)(ii). The Internal Rate of Return (determined as specified in Section 7(b)(iii)) shall be determined as of the Trigger Date and those Equity Kicker Shares that would not be subject to repurchase under the chart set forth in Section 7(b)(ii) above shall be deemed vested and not subject to repurchase from and after the Trigger Date. v. Additional Repurchase Rights of the Company. (1) Anything to the contrary contained herein notwithstanding, in the event this Agreement is terminated by the Company pursuant to Section 5(a)(iii), Executive shall sell to the Company, and the Company shall repurchase from Executive, all of the Restricted Shares (whether or not vested) provided, however, this Section 7(b)(v)(1) shall cease to be effective upon a Change in Control. (2) In the event that the Management Agreement is terminated and the Manager does not approve a "New Provider" (as such term is defined in the Management Agreement) within five (5) business days of notice of such New Provider's nomination by the Board of Directors, in accordance with Section 5(e)(i) of the Management Agreement, then for each successive thirty (30) day period or portion thereof following such five (5) business day period that a New Provider shall not have been approved by the Manager, Executive shall sell to the Company 50% of the Restricted Shares then owned by Executive (after giving effect to all other repurchases pursuant to this Section 7). (3) In the event that Executive and the other Senior Executives do not nominate a Successor Control Group reasonably acceptable to the Board of Directors of the Company in its sole discretion (excluding the Senior Executives that are directors of the Company) in accordance with such Section 5(e)(ii) of the Management Agreement within the five (5) business day period set forth in the first sentence of Section 5(e)(ii) of the Management Agreement, then for each successive 30 day period or portion thereof that Executive and the other Senior Executives shall not have nominated a Successor Control Group reasonably acceptable to the Board of Directors of the Company in its sole discretion (excluding the Senior Executives that are directors of the Company), the Executive shall sell to the Company after the expiration of each 30 day period, in addition to and after giving effect to all other repurchases by the Company of Restricted Shares pursuant to this Section 7 (including Section 7(b)(v)(2)), an additional 50% of the Restricted Shares then owned by Executive. c. Purchase Price; Closing of Repurchase; Assignment of Repurchase Right. Any repurchase pursuant to this Section 7 shall be for the Repurchase Price. The closing of a purchase and sale of Repurchased Shares shall take place on a date mutually agreed by Executive and the Company, but in no event later than 20 days after (i) the date that employment of Executive shall have terminated or, in the case of a repurchase pursuant to Sections 7(b)(v), the end of any 30-day period referred to in Section 7(b)(v), or (ii) in the case of Automatic Repurchase Event other than termination of employment of Executive, the occurrence of the applicable event. At such closing, the Company shall deliver to the Executive a check in the amount of the aggregate Repurchase Price and, upon delivery thereof, the Company shall become the legal and beneficial owner of the Restricted Shares and all rights and interests therein or relating thereto, and the Company shall have the right to retain and transfer to its own name such shares being repurchased by the Company. Whenever the Company shall have the right to repurchase Restricted Shares hereunder, the Company may designate and assign one or more employees, officers, directors or shareholders of the Company or other persons or organizations to exercise all or a party of the Company's repurchase rights under this Agreement and purchase all or a part of such Shares. d. Escrow of Shares. The Certificate(s) representing all Restricted Shares shall be held by the Secretary of the Company as escrow holder (the "Escrow Holder"), along with a stock power executed by the Executive in blank. The Escrow Holder is hereby directed to permit transfer of such shares only in accordance with this Agreement and the Stockholders Agreement. In the event further instructions are desired by the Escrow Holder, he shall be entitled to rely upon written directions of the Board of Directors of the Company (excluding any Senior Executive that is a director of the Company). The Escrow Holder shall have no 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. If the Company or any assignee repurchases any of the Restricted Shares pursuant to this Section 7, the Escrow Holder, upon receipt of written notice of such repurchase from the proposed transferee, shall take all steps necessary to accomplish such repurchase. From time to time, upon Executive's request, Escrow Holder shall: (i) cancel the certificate(s) held by the Escrow Holder and representing Restricted Shares, (ii) cause new certificate(s) to be issued representing the number of Restricted Shares no longer subject to repurchase pursuant paragraphs (i), (ii) and (iii) of Section 7(b), which certificate(s) the Escrow Holder shall deliver to Executive, and (iii) cause new certificate(s) to be issued representing the balance of the Restricted Shares, which certificate(s) shall be held in escrow by the Escrow Holder in accordance with the provisions of this Section 7(d). Subject to the terms hereof, Executive shall have all the rights of stockholder with respect to the Restricted Shares while they are held in escrow, including without limitation, the right to vote the Restricted Shares and receive any cash dividends declared thereon. If, from time to time during the term of the Company's repurchase right, there is (i) any stock dividend, stock split or other change in the Restricted Shares, or (ii) any merger or sale of all or substantially all of the assets or other acquisition of the Company, any and all new, substituted or additional securities to which such Executive is entitled by reason of his ownership of the Restricted Shares shall be immediately subject to this escrow, deposited with the Escrow Holder and included thereafter as "Restricted Shares" for purposes of this Agreement and the Company's repurchase right. e. Legends. The share certificates evidencing the Restricted Shares shall be endorsed with the following legend (in addition to any legend required to be placed thereon by applicable federal or state securities laws or the Company's Stockholders Agreement): THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND AN AFFILIATE OF THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY, WHICH PROVIDES, AMONG OTHER THINGS, FOR THE REPURCHASE BY THE COMPANY OF THE SHARES REPRESENTED BY THIS CERTIFICATE. 8. No Conflict With Prior Agreements; Due Authorization. a. Executive represents to the Company that neither Executive's execution of this Agreement or commencement of employment hereunder nor the performance of Executive's duties hereunder conflicts with any contractual commitment on Executive's part to any third party. The Company represents to Executive that it is fully authorized and empowered by action of the Company's Board of Directors to enter into this Agreement and that performance of its obligations under this Agreement will not violate any agreement between it and any other person, firm or other entity. b. Nothing herein shall be construed to require Executive to use or disclose any information that he is prohibited from using or disclosing as a result of legal or contractual obligations. 9. Miscellaneous a. Survival. Sections 4(d), 5, 6, 7 and 9 shall survive the termination hereof. b. Binding Effect. This Agreement shall be binding on the Company and any person or entity which succeeds to the interest of the Company (regardless of whether such succession occurs by operation of law) by reason of the sale of all or a portion the Company's stock, a merger, consolidation, or reorganization involving the Company or a sale of the assets of the business of the Company (or portion thereof) in which Executive performs a majority of his services. This Agreement shall also inure to the benefit of Executive's heirs, executors, administrators and legal representatives. c. Assignment. Except as provided under Section 9(b), neither this Agreement nor any of the rights or obligations hereunder shall be assigned or delegated by any party hereto without the prior written consent of the other party, except that the Company may delegate to any of its direct or indirect wholly owned subsidiaries its obligations to provide compensation and benefits hereunder; provided no such delegation shall relieve the Company of its obligations hereunder. d. Entire Agreement. This Agreement, together with the Schedules attached hereto, constitutes the entire agreement between the parties hereto with respect to the matters referred to herein, and no other agreement, oral or otherwise, shall be binding between the parties unless it is in writing and signed by the party against whom enforcement is sought. There are no promises, representations, inducements or statements between the parties other than those that are expressly contained herein. Executive acknowledges that he is entering into this Agreement of his own free will and accord, and with no duress, that he has been represented and fully advised by competent counsel in entering into this Agreement, that he has read it and that he understands it and its legal consequences. No parol or other evidence may be admitted to alter, modify or construe this Agreement, which may be altered, modified or amended only by a writing signed by the parties hereto. e. Severability; Reformation. In the event that one or more of the provisions of this Agreement shall become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby. In the event that any of Sections 6(a), (b) or (c) is not enforceable in accordance with its terms, Executive and the Company agree that such Section shall be reformed to make such Section enforceable in a manner which provides the Company the maximum rights permitted at law. f. Waiver. Waiver by any party hereto of any breach or default by the other party of any of the terms of this Agreement shall not operate as a waiver of any other breach or default, whether similar to or different from the breach or default waived. No waiver of any provision of this Agreement shall be implied from any course of dealing between the parties hereto or from any failure by either party hereto to assert its or his rights hereunder on any occasion or series of occasions. g. Notices. Any notice required or desired to be delivered under this Agreement shall be in writing and shall be delivered personally against receipt, by courier service or by registered mail, return receipt requested, and shall be effective upon actual receipt by the party to which such notice shall be directed, and shall be addressed as follows (or to such other address as the party entitled to notice shall hereafter designate in accordance with the terms hereof): If to the Company, to the attention of its Board of Directors at the Company's principal executive offices with a copy to: Tritel, Inc. 111 East Capitol Street, Suite 500 Jackson, Mississippi 39201 Attention: General Counsel If to Executive: E.B. Martin, Jr. 222 Ridge Drive Jackson, Mississippi 39216 h. Headings. Headings to paragraphs in this Agreement are for the convenience of the parties only and are not intended to be part of or to affect the meaning or interpretation hereof. i. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. j. Withholding. Any payments provided for herein shall be reduced by any amounts required to be withheld by the Company from time to time under applicable Federal, State or local income or employment tax laws or similar statutes or other provisions of law then in effect. k. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York. l. Resolution of Disputes. All disputes, controversies and claims arising in connection with this Agreement that are not settled by agreement between the parties shall be finally settled under the Commercial Arbitration Rules of the American Arbitration Association ("AAA") in effect from time to time. A single arbitrator shall be appointed by agreement between the parties or, failing such agreement, by AAA. The arbitrator may grant any remedy that (s)he deems just and equitable within the scope of this Agreement, including specific performance. The award of the arbitrator shall be final and binding and judgment thereon may be entered in any court having jurisdiction. The costs and expenses (including reasonable attorney's fees) of the prevailing party shall be borne and paid by the party that the arbitrator determines is the non-prevailing party. IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and Executive has hereunto set his hand as of the day and year first above written. TRITEL, INC. By: _________________________________ Name: Title: EXECUTIVE: ------------------------------------- E.B. MARTIN, JR. SCHEDULE I Duties As Chief Financial Officer of the Company, Executive shall maintain responsibility for day-to-day financial operations of the Company, as directed by the President, Chief Executive Officer and Board of Directors of the Company. SCHEDULE II Permitted Activities 1. Executive is an officer, director and shareholder of Alaska-3 Cellular Corporation. This privately held company is a member and the manager of Alaska-3 Cellular, LLC (a manager managed limited liability company), which owns the Alaska-3 RSA cellular license ("AK-3"). MSM, Inc. currently provides management services to this market pursuant to a management agreement. Executive is an officer, director and shareholder of MSM, Inc. d/b/a "Mercury Communications Company." Pursuant to existing management agreements, this privately held entity currently provides management services for the owners of the AK-3, Arkansas-11 and Illinois-9 RSA cellular licenses. It also serves as manager of Mercury PCS, LLC, Mercury PCS II, LLC and Mercury Southern, LLC (all are manager managed limited liability companies). Executive is also a party to a management agreement with Mercury PCS, LLC and Mercury PCS II, LLC whereby he is required to provide certain management and supervisory services to those entities. The above-referenced cellular markets and the PCS licenses owned by Mercury PCS II, LLC are currently being offered for sale. Executive shall be permitted to engage in the management of the above-referenced cellular markets, assist in the sale of them, assist in the sale of the above-referenced PCS licenses and engage in other activities relating to the winding up and liquidation of such businesses (including without limitation managing and directing the defense or pursuit of any litigation or administrative proceedings involving the above-referenced entities or assets (collectively, the "Litigation")) for a period of up to 24 months from the Commencement Date, provided, however, that the 24 month time limitation shall not apply to managing and directing the defense or pursuit of the Litigation. 2. Executive is an officer, director and shareholder of Mercury Wireless Management, Inc. ("MWM"). This privately held company currently manages and markets tower sites and communications facilities and systems for the City of Jackson, Mississippi and certain other private parties. Executive shall be permitted to continue to engage in such activities for the parties for whom MWM is rendering services on the date of the Securities Purchase Agreement, but only with respect to facilities and systems managed on such date, provided they do not interfere with the performance of his duties under this Agreement. 3. Executive is an officer, director and shareholder of Mercury International Ventures, Inc. This privately held company has pursued international telecommunications licenses. Executive shall be permitted to continue to engage in activities relating to the pursuit of any licenses which Executive has pursued prior to the date of the Securities Purchase Agreement provided such activities do not interfere with the performance of his duties under this Agreement. 4. Executive is a shareholder of Young, Williams, Henderson, Fuselier & Associates, Ltd. This is a law firm under common control with Young, Williams, Henderson & Fuselier, P.A. Its practice is currently limited to engaging in child support enforcement engagements with various governmental agencies. None of its revenues are derived from any billings to the Company or its affiliates that are represented by Young, Williams, Henderson & Fuselier, P.A. Executive shall be permitted to continue his affiliation with the above law firm in such limited capacity provided such affiliation does not interfere with the performance of his duties under this Agreement. SCHEDULE III-A Objectives [TO BE ESTABLISHED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS] SCHEDULE III-B Objectives 1. The Company shall fail to satisfy the construction requirements set forth in 47CFR 24.203 with respect to any FCC License owned by the Company or any Subsidiary. 2. The Company shall fail to construct, or cause its Subsidiaries to construct, Company Systems covering the Territory in accordance with the Minimum Build-Out Plan. 3. The Company shall fail to comply with the covenant relating to the TDMA Quality Standards set forth in Section 8.3 of the Stockholders Agreement. 4. The Company shall fail by a factor of more than 15% to meet, as of the end of any fiscal quarter set forth on the attached budget as modified from time to time by the Board of Directors, the applicable budgeted amount with respect to (x) capital expenditures per covered POP, (y) earnings before interest, taxes, depreciation and amortizations, or (z) minimum revenues. 5. The Company shall fail to comply with the terms of any representation, warranty, covenant or agreement contained in the Credit Documents (as such term is defined in the Securities Purchase Agreement) or in any other agreement or instrument pursuant to which the Company has incurred indebtedness for borrowed money in the principal amount of $25,000,000 or more, which failure to comply results in an event of default thereunder (unless such failure to comply has been waived or cured within the applicable cure period). SCHEDULE IV Vesting Schedule Vesting Date Event Percent of Base Shares ------------------ ----------------------- Commencement Date 20% Second Anniversary 15% Third Anniversary 15% Fourth Anniversary 15% Fifth Anniversary 15% Completion of Year 1 and Year 2 of Minimum Build-Out Plan 10% Completion of Year 3 of Minimum Build-Out Plan 10% --- Total 100% Base Shares that are shares of Class C Common Stock shall vest prior to the vesting of any shares of Class A Common Stock. Accelerated Vesting o Upon termination of the Employment Agreement by the Company pursuant to Section 5(a)(vii) of this Agreement, the Base Shares that would have vested on the immediately following Anniversary Date of such termination shall vest. EX-10.2.3 4 0004.txt EMPLOYMENT AGREEMENT ARNETT EXHIBIT 10.2.3 AMENDED AND RESTATED EMPLOYMENT AGREEMENT AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated effective June 1, 2000 (the "Agreement"), by and between TRITEL, INC., a Delaware corporation (the "Company"), and WILLIAM S. ARNETT ("Executive"). Capitalized terms used herein but not otherwise defined herein shall have the meanings given to such terms in the Stockholders Agreement of the Company, dated January 7, 1999, as amended, modified or supplemented in accordance with the terms thereof (the "Stockholders Agreement"). W I T N E S S E T H: WHEREAS, the Company employed Executive pursuant to an Employment Agreement executed by the Company and Executive embodying the terms of such employment dated January 7, 1999 (the "Original Agreement"); WHEREAS, the Company and Executive desire to continue such employment pursuant to terms and conditions varying from those set forth in the Original Agreement; WHEREAS, concurrently with the execution and delivery of the Original Agreement, Executive purchased 4,069.54 shares of the Company's Class A Voting Common Stock, par value $.01 per share (the "Restricted Shares"); WHEREAS, in order to induce the Purchasers referred to in the Securities Purchase Agreement, dated as of May 20, 1998, to purchase the securities issued by the Company thereunder, Executive desires to grant to the Company the repurchase rights with respect to the Restricted Shares as referred to in Section 7; WHEREAS, the Company desires to accept the grant of such repurchase rights; WHEREAS, on or about December 13, 1999, the Company effected a 400 to 1 stock split (the "Stock Split") of its Class A Voting Common Stock so that the number of Restricted Shares subject to the Original Agreement was increased to 1,627,816; and WHEREAS, the Company and Executive desire to amend and restate the Original Agreement to modify the Company's repurchase rights relating to the Restricted Shares, to provide for acceleration of vesting upon certain events and certain other matters, all in accordance with the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the mutual covenants herein contained, the Company and Executive, intending to be legally bound, hereby amend and restate the Original Agreement in its entirety and agree as follows: 1. Employment. a. Agreement to Employ. Upon the terms and subject to the conditions of this Agreement, the Company hereby employs Executive, and Executive hereby accepts employment by the Company. b. Employment Period. The term of Executive's employment shall be for a period of five (5) years commencing on January 7, 1999 (the "Commencement Date") and continuing until the day after the fifth (5th) anniversary of the Commencement Date (the "Expiration Date") unless this Agreement shall have been earlier terminated in accordance with Section 5 (the "Employment Period"). 2. Position and Duties. During the Employment Period, Executive shall serve as the President of the Company and be responsible for the duties set forth on Schedule I, reporting directly to the Chief Executive Officer. All of the Company's other officers (other than the Company's officers holding day-to-day primary responsibility for Business Development (including strategic transactions) and External Affairs) shall report directly to the Executive. During the Employment Period, except as set forth herein, Executive shall devote his entire business time to the services required of him hereunder, except for vacation time, personal time and reasonable periods of absence due to sickness, personal injury or other disability. Nothing contained herein shall preclude Executive from devoting reasonable periods of time to (i) the activities described on Schedule II; (ii) serving on a board of directors of a charitable, trade or other similar organization; or (iii) serving on other boards of directors with the consent of the Board of Directors, in each such case, so long as such activities do not interfere with the performance of Executive's duties hereunder. 3. Compensation. a. Base Salary. The Company shall pay Executive an annual salary of $225,000. Upon the first anniversary of the Commencement Date, and annually thereafter, the Compensation Committee of the Board of Directors shall review Executive's base salary in light of the performance of Executive and the Company, and may, in its discretion, increase (but not decrease) such base salary by an amount it determines to be appropriate. Executive's annual base salary payable hereunder, as it may be increased from time to time, is referred to herein as "Base Salary". The Company shall pay Executive his Base Salary in equal monthly installments, or in such other installments as the parties may mutually agree. b. Annual Bonus. For each calendar year or part thereof during the Employment Period, Executive shall be eligible to receive an annual bonus (an "Annual Bonus") equal to up to 50% of his Base Salary based upon the achievement of certain objectives determined by the Compensation Committee of the Board of Directors for such calendar year, payable within thirty (30) days after certification of the Company's financial statements for such year. 4. Benefits, Perquisites and Expenses. a. Benefit Plans. During the Employment Period, Executive shall be eligible to participate in any welfare benefit plan sponsored or maintained by the Company, including, without limitation, any group life, hospitalization, medical, dental, health, accident or disability insurance or similar plan or program of the Company, in each case, whether now existing or established hereafter, to the extent that Executive is eligible to participate in any such plan under the generally applicable provisions thereof. b. Perquisites. Executive shall be entitled to up to four weeks paid vacation annually in accordance with the Company's policies and practices. Executive shall also be entitled to receive such perquisites as are generally provided to other senior officers of the Company in accordance with the policies and practices of the Company. c. Business Expenses. The Company shall pay or reimburse Executive for all reasonable expenses incurred or paid by Executive in performance of Executive's duties hereunder, upon presentation of expense statements or vouchers and such other information as the Company may reasonably require. d. Indemnification. The Company shall, to the maximum extent permitted by applicable law, the Company's certificate of incorporation or its bylaws, indemnify Executive and hold Executive harmless from and against any claim, loss or cause of action arising from or out of Executive's performance as an officer, director or employee of the Company or any of its subsidiaries or in any other capacity, including serving as a fiduciary, in which Executive serves at the request of the Company. If any claim is asserted hereunder for which Executive reasonably believes in good faith he is entitled to be indemnified, the Company shall pay Executive's reasonable legal expenses (or cause such expenses to be paid), as may be reasonably required but no less frequently than on a quarterly basis, provided that Executive shall reimburse the Company for such amounts, plus simple interest thereon at the 90-day United States Treasury Bill rate as in effect from time to time, compounded annually, if Executive shall be found by a final, non-appealable order of a court of competent jurisdiction not to be entitled to indemnification. The indemnification obligations of the Company in this paragraph shall survive any termination of this Agreement. e. Directors and Officers Liability Insurance. The Company has obtained, and shall use all commercially reasonable efforts to maintain, directors and officers liability insurance coverage covering Executive in amounts customary for similarly situated companies in the telecommunications industry. f. Relocation and Temporary Living Expenses. The Company shall pay or reimburse Executive for relocation and temporary living expenses on the terms and conditions set forth in Schedule III. In connection with Executive's purchase of a residence in the Jackson, Mississippi area the Company agrees, if requested by Executive, to lend Executive up to the principal amount of Fifty Thousand ($50,000) Dollars, such loan to be without interest and to mature on the earlier of (x) the five (5) year anniversary of the date of such loan, and (y) the last day of the month in which the Employment Period ends. The Company's obligation to make such loan shall be conditioned upon Executive's execution of a promissory note containing terms and conditions (including a right of set off) as shall be reasonably acceptable to the Company. 5. Termination of Employment. a. Early Termination of the Employment Period. This Agreement may be terminated in any of the following manners: i. Executive may, upon 30 days' prior written notice to the Company, voluntarily terminate employment with the Company at any time at the sole discretion of Executive (a "Voluntary Termination"); ii. Executive may, upon written notice to the Company, terminate employment with the Company at any time for "Good Reason" (as defined in Section 5(g)) it being agreed that any such termination, although effected by Executive shall not constitute a Voluntary Termination; iii. Executive's employment may, upon written notice to Executive, be terminated by the Company at any time for Cause (as defined in Section 5(f)); iv. This Agreement shall terminate automatically upon Executive's death; v. The Company may, upon written notice to Executive, terminate this Agreement upon Executive's Disability. As used herein, the term "Disability" shall mean a determination that Executive suffers from illness or other physical or mental impairment that prevents Executive from substantially performing his duties for a period of 90 days during any six-month period during the Employment Period or for 180 days during any 12-month period during the Employment Period. The determination of whether (and, if appropriate, when) a Disability has occurred shall be made by a majority of the Board of Directors of the Company (excluding the Senior Executives that are directors of the Company); vi. Executive's employment may, upon written notice to Executive, be terminated by the Company at any time without Cause; or vii. The Company may terminate this Agreement immediately in the event of the failure of the Company to meet any of the objectives set forth in Schedule IV to this Agreement. b. Benefits Payable Upon Termination. i. Following the end of the Employment Period pursuant to any manner described in Section 5(a) or for any other reason, the Company shall pay to Executive (or, in the event of his death, his surviving spouse, if any, or his estate): (A) any Base Salary earned, but unpaid, for services rendered to the Company on or prior to the date on which the Employment Period ended, and (B) amounts which are vested or which Executive is otherwise entitled to receive under the terms of or in accordance with any plan, policy, practice or program of, or any contract or agreement with, the Company at or subsequent to the date the Employment Period ends without regard to the performance by Executive of further services or the resolution of a contingency. ii. Following the end of the Employment Period other than pursuant to a termination described in Sections 5(a)(i) or (iii) (in respect of which Executive shall not be entitled to any payments under this Section 5(b)(ii)), Executive shall continue to be entitled to receive his Base Salary: (x) if the termination date is on or before the first anniversary of the Commencement Date, for the 18-month period following the end of the Employment Period, and (y) if the termination date is after such first anniversary, for the 24-month period following the end of the Employment Period or, if shorter, the period ending on the Expiration Date. In the event that the Employment Period shall end pursuant to a termination by Executive pursuant to Section 5(a)(ii) or a termination by the Company pursuant to Section 5(a)(vi), the Executive shall also be entitled to receive the Annual Bonus (if earned in accordance with Section 3(b) of this Agreement). The amount of the Annual Bonus shall be determined as follows: (I) In the event that the date of termination is on or prior to June 30 of any applicable calendar year, the amount of the Annual Bonus shall be equal to a pro rata portion (based upon the actual number of days during such calendar year that this Agreement shall have been in effect) of the Annual Bonus payable in respect of such year (determined based upon the achievement by the Company of the objectives for all of such calendar year). (II) In the event that the date of termination is after June 30 of any applicable calendar year, the amount of the Annual Bonus shall be equal to the Annual Bonus payable in respect of such year (determined based upon the achievement by the Company of the objectives for all of such calendar year). c. Timing of Payments. i. Amounts payable pursuant to Section 5(b)(i)(A) shall be payable on the last day of the month following the end of the Employment Period. Payments of Base Salary pursuant to Section 5(b)(ii) shall be payable as follows: (x) Twenty Five Thousand ($25,000) Dollars on the last day of the month following the end of the Employment Period, and (y) the balance in monthly installments in arrears in an amount equal to (x) the number of months of Base Salary which Executive is entitled to receive pursuant to Section 5(b)(ii) times the Base Salary minus Twenty Five Thousand ($25,000) Dollars, divided by (y) the number of months of Base Salary which Executive is entitled to receive pursuant to Section 5(b)(ii), commencing on the last day of the month following the month in which the Employment Period shall have ended. In the event that Executive's employment shall be terminated pursuant to Section 5(a)(ii) or (vi), the Annual Bonus payable pursuant to Section 5(b)(ii) shall be paid 30 days after the certification of the Company's financial statements for such year. ii. Vested benefits referred to in clause (B) of Section 5(b)(i) shall be payable in accordance with the terms of the plan, policy, practice, program, contract or agreement under which such benefits have accrued. d. The Company shall be entitled to set off against the amounts payable to the Executive following the termination of this Agreement pursuant to Section 5(b)(ii), any amounts earned by either Executive in other employment (excluding amounts earned in connection with the activities described on Schedule II) after the termination of this Agreement; provided, however, that Executive shall not be required, as a condition to the receipt of such payment pursuant to Section 5(b)(ii), to seek such other employment. e. Continuing Obligations. After receipt of written notice of termination, but prior to the effective date of such termination, Executive shall continue to perform his duties under this Agreement unless specifically instructed to discontinue such performance. In the event of termination, Executive and the Company shall remain liable for their respective obligations accrued under this Agreement prior to the effective date of termination. f. Definition of Cause. For purposes of this Agreement, "Cause" means only: i. Executive's indictment or conviction of a felony; ii. Fraud, misappropriation or embezzlement by Executive against the Company or any subsidiary or affiliate of the Company; iii. Executive's willful misconduct or gross negligence in connection with his employment hereunder which has materially adversely affected the Company, monetarily or otherwise, as determined by a majority vote of the Board of Directors of the Company (excluding Executive and other Company executives that are directors of the Company); or iv. Executive shall not have transferred his domicile and principal residence from the Knoxville, Tennessee area to the Jackson, Mississippi area before August 15, 1999. g. Definition of Good Reason. For purposes of this Agreement "Good Reason" means any of the following: i. The Company fails to make any payment when due pursuant to Section 3 within thirty (30) days following Executive's written notice to the Company of such failure; ii. A material breach of this Agreement by the Company (other than a payment default) which has not been cured within thirty (30) days following notice thereof from the Company; iii. Executive is demoted or removed from his/her respective offices or there is a material diminishment of Executive's responsibilities, duties or status which diminishment is not rescinded within 30 days after the date of receipt by the Board of Directors of the Company of Executive's written notice referring to this provision and describing such diminishment; or iv. The Company relocates its principal offices without Executive's consent to a location more than 50 miles from the principal offices of the Company in Jackson, Mississippi. 6. Noncompetition and Confidentiality a. Noncompetition. During the Employment Period and for one year thereafter, Executive shall not, without the consent of the Company, assist or become associated with any person or entity, whether as a principal, partner, employee, consultant or shareholder (other than as a holder of not in excess of 5% of the outstanding voting shares of any publicly traded company) that is actively engaged in the business of providing mobile wireless telecommunications services in the Territory (as defined in the Company's Stockholders' Agreement); provided, however, that in the event the Employment Period is terminated by Executive pursuant to Section 5(a)(ii) or by the Company pursuant to Section 5(a)(vi) Executive shall have no obligations pursuant to this Section 6(a) and provided further that this Section 6(a) shall not apply to activities described on Schedule II. b. Confidentiality. Without the prior written consent of the Company, except to the extent required by an order of a court having competent jurisdiction or under subpoena from a governmental body or agency, Executive shall not disclose any trade secrets, customer lists, drawings, designs, information regarding product development, marketing plans, sales plans, manufacturing plans, management organization (including data and other information relating to members of the Board of Directors and management), operating policies and manuals, business plans, financial records, packaging design or other financial, commercial, business or technical information relating to the Company or any of its subsidiaries or affiliates (collectively, "Confidential Information"), to any third person, unless such Confidential Information has been previously disclosed to the public by the Company or is in the public domain (other than by reason of Executive's breach of this Paragraph 6(b)), except that Executive may disclose Confidential Information to the extent advisable in his sole discretion in connection with (i) the performance of Executive's duties hereunder, or (ii) the issuance of Company securities, or (iii) obtaining financing for the Company, or (iv) the enforcement of Executive's rights under this Agreement, or (v) any disclosures that may be required by law, including securities laws. c. Inventions. Executive hereby sells, transfers and assigns to the Company all of the right, title and interest of Executive in and to all inventions, ideas, disclosures and improvements, whether patented or unpatented, and copyrightable material, made or conceived by Executive, solely or jointly, or in whole or in part, during the Employment Term which (i) relate to methods, apparatus, designs, products, processes or devices sold, leased, used or under construction or development by the Company or any subsidiary or affiliate or (ii) otherwise relate to or pertain to the business, functions or operations of the Company or any subsidiary or affiliate, or (iii) arise (wholly or partly) from the efforts of Executive during the Employment Period. Executive shall communicate promptly and disclose to the Company, in such form as the Company reasonably requests, all information, details and data pertaining to the aforementioned inventions, ideas, disclosures and improvements; and, whether during the Employment Period or thereafter, Executive shall execute and deliver to the Company (at the Company's sole cost and expense) such formal transfers and assignments and such other papers and documents as may be required of Executive to permit the Company to file and prosecute the patent applications and, as to copyrightable material, to obtain copyright thereon. d. Company Property. Promptly following Executive's termination of employment, Executive shall return to the Company all property of the Company, and all copies thereof in Executive's possession or under his control, and all tangible embodiments of Confidential Information in Executive's possession in whatever media such Confidential Information is maintained. e. Non-Solicitation of Employees. During the Employment Period and for one year thereafter, Executive will not directly or indirectly induce any employee of the Company or any of its subsidiaries or affiliates to terminate employment with such entity, and will not directly or indirectly, either individually or as owner, agent, employee, consultant or otherwise, employ or offer employment to any person who is or was employed by the Company or a subsidiary thereof, unless such person shall have ceased to be employed by such entity for a period of at least six months; provided, however, that (x) nothing contained in this Agreement shall prevent Executive from engaging in a general solicitation for employment that is not directed at employees of the Company or any of its subsidiaries or affiliates, and (y) this Section 6(e) shall not apply to any individual listed on Schedule VI in the event such individual shall become employed by the Company. f. Injunctive Relief with Respect to Covenants. Executive acknowledges and agrees that the covenants and obligations of Executive with respect to noncompetition, inventions, confidentiality and Company property contained in this Section 6 relate to special, unique and extraordinary matters and that a violation of any of the terms of such covenants and obligations will cause the Company irreparable injury for which adequate remedies are not available at law. Therefore, Executive agrees that the Company shall be entitled to an injunction, restraining order, or such other equitable relief as a court of competent jurisdiction may deem necessary or appropriate to restrain Executive from committing any violation of the covenants and obligations contained in this Paragraph 6. These injunctive remedies are cumulative and are in addition to any other rights and remedies the Company may have at law or in equity. 7. Vesting and Repurchase of Unvested Shares, Etc. a. General. Executive by his acceptance of the Restricted Share certificates bearing the legend set forth in paragraph (e) below, agrees that the Restricted Shares shall be subject to repurchase by the Company at the Repurchase Price in accordance with the terms of this Section 7. As used in this Section 7, the following terms have the following meanings: i. "Automatic Repurchase Event" means (x) the termination of Executive's employment pursuant to this Agreement or any agreement supplementing, amending or extending this Agreement or (y) the seventh (7th) anniversary of the Commencement Date. ii. "Base Shares" means 1,193,732 shares of Class A Common Stock (which number gives effect to the Stock Split). iii. "Change in Control" means a change in control of the Company, which will be deemed to have occurred if: (I) any "person" as such term is used in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof except that such term shall not include (A) the Company or any of its subsidiaries, (B) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its affiliates, (C) an underwriter temporarily holding securities pursuant to an offering of such securities, (D) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of Common Shares, or (E) any person or group as used in Rule 13d-1(b) under the Exchange Act, is or becomes the Beneficial Owner, as such term is defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such person any securities acquired directly from the Company or its affiliates other than in connection with the acquisition by the Company or its affiliates of a business) representing 50% or more of the combined voting power of the Company's then outstanding securities; (II) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board, and any new director (other than (A) a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (I), (III), or (IV) of this Section 7(a)(iii) or (B) a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof; (III) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, at least 75% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person (as defined above) is or becomes the beneficial owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such person any securities acquired directly from the Company or its affiliates other than in connection with the acquisition by the Company or its affiliates of a business) representing 25% or more of the combined voting power of the Company's then outstanding securities; or (IV) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets (or any transaction having a similar effect) other than a sale or disposition by the Company of all or substantially all of the Company's assets to an entity, at least 75% of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale. Notwithstanding the foregoing, no change in voting power triggered solely by the holders of shares of Voting Preference Stock of the Company beginning to vote as a class with holders of Class A Voting Common Stock of the Company shall be deemed a Change in Control under this Agreement. iv. "Equity Kicker Shares" means a number of Restricted Shares equal to 434,084 shares of Class A Common Stock (which number gives effect to the Stock Split). v. "Fully Diluted Basis" means, with respect to the shares of Common Stock outstanding, all of the shares of Common Stock then outstanding (regardless of whether subject to repurchase), plus (without duplication) all the shares of Common Stock issuable upon the exercise of outstanding options or convertible securities (excluding the Company's Series A Preferred Stock, $.01 par value); provided, that for the purpose of calculating the number of shares of Common Stock outstanding on a Fully Diluted Basis in order to determine whether the Internal Rate of Return pursuant to Section 7(b)(ii) equals (A) more than 25% but less than 35%, none of the Equity Kicker Shares shall be deemed to be outstanding, and (B) more than 35%, one-half of the Equity Kicker Shares shall be deemed to be outstanding. vi. "Market Price" means in the case of an Automatic Repurchase Event (A) specified in clause (x) of the definition thereof, the average closing price of the Class A Common Stock during the ten (10) trading days prior to such date of termination, or (B) specified in clause (y) of the definition thereof, the average closing price of the Class A Common Stock during the ten (10) trading days prior to such seventh (7th) anniversary of the Commencement Date. In the case of a Trigger Notice, "Market Price" means the average closing price of the Class A Common Stock during the ten (10) trading days prior to the Trigger Date. vii. "Precipitating Event" means (i) a diminution in the Executive's position, duties, authority, title or responsibilities with respect to his or her employment by the Company or (ii) the relocation of the Executive's principal place of performance more than fifty (50) miles from his or her principal place of performance on the Commencement Date. viii. "Repurchase Price" means $.000025 per share. ix. "Trigger Date" means the date of delivery to the Company by Executive of a Trigger Notice that refers to Equity Kicker Shares. x. "Trigger Notice" means a notice given by Executive with respect to a specified number of Equity Kicker Shares to determine how many Equity Kicker Shares have vested. b. Repurchase of Base Shares and Equity Kicker Shares. i. Repurchase of Base Shares upon Automatic Repurchase Event. Upon an Automatic Repurchase Event, Executive shall sell to the Company, and the Company shall purchase from Executive, the aggregate of (I) all Base Shares that shall not have vested in accordance with Schedule V, plus (II) the number of Restricted Shares subject to repurchase pursuant to Sections 7(b)(v). Notwithstanding the provisions of Schedule V or any other provision of this Agreement, all Base Shares shall fully vest and shall not be subject to repurchase upon the occurrence of any of the following: (x) a Change in Control, provided that Executive remains in continuous service with the Company or any Subsidiary until the effective date of such Change in Control; (y) if Executive's employment with the Company and all Subsidiaries is terminated (a) by reason of his or her death or Disability or (b) by the Company and all Subsidiaries for any reason other than (A) Cause (whether in connection with the TeleCorp Merger or otherwise), or (B) pursuant to Section 5(a)(vii); or (z) a Precipitating Event. Executive's employment with the Company (or a Subsidiary of the Company) shall not be required to terminate as a condition to such acceleration of vesting upon a Precipitating Event. ii. Repurchase of Equity Kicker Shares upon Automatic Repurchase Event. Upon any Automatic Repurchase Event, Executive shall sell to the Company, and the Company shall purchase from Executive, the aggregate of (I) the percentage of Executive's Equity Kicker Shares set forth opposite the Internal Rate of Return realized by the Cash Equity Investors as set forth on the chart below as of the date of the Automatic Repurchase Event: Internal Rate of Return Percentage of Equity Realized by Cash Equity Kicker Shares to be Investors Repurchased ------------ ----------- Less than 25% 100% 25% or more but less than 35% 50% 35% or more 0% plus (II) the number of Restricted Shares subject to repurchase pursuant to Sections 7(b)(v) that are not repurchased pursuant to clause (i) above. Notwithstanding the above or any other provision of this Agreement, all Equity Kicker Shares that have not yet vested shall fully vest and shall not be subject to repurchase upon the occurrence of any of the following: (x) a Change in Control, provided that Executive remains in continuous service with the Company or any Subsidiary until the effective date of such Change in Control; (y) if the Executive's employment with the Company and all Subsidiaries is terminated (a) by reason of his or her death or Disability or (b) by the Company and all Subsidiaries for any reason other than (A) Cause (whether in connection with the TeleCorp Merger or otherwise) or (B) pursuant to Section 5(a)(vii); or (z) a Precipitating Event. Executive's employment with the Company (or a Subsidiary of the Company) shall not be required to terminate as a condition to such acceleration of vesting upon a Precipitating Event. iii. Internal Rate of Return Determination. For the purpose of this Section 7, the Cash Equity Investors will be deemed to have "realized an Internal Rate of Return" of any percentage specified, as of any date, when (i) the aggregate amount of all distributions (but not including proceeds from sales of Common Stock) actually made in respect of the Cash Equity Investors' Common Stock, plus an amount equal to interest thereon at the rate of 10% per annum, compounded annually, from the date each such distribution is made to and including the date of the calculation, plus the product of the Market Price multiplied by the number of shares of Common Stock beneficially owned by the Cash Equity Investors on the Commencement Date (as adjusted for stock splits, stock dividends and similar changes in capitalization), is equal to (ii) the aggregate amount of all capital contributions made by the Cash Equity Investors, plus an amount equal to interest thereon at such percentage per annum, compounded annually, from the date each such capital contribution is made to and including such date of calculation. iv. Vesting on Trigger Notice. Executive may elect, by delivery of a Trigger Notice with respect to a number of Equity Kicker Shares specified in such Trigger Notice, to determine the number of Equity Kicker Shares that are vested and not subject to repurchase under Section 7(b)(ii). The Internal Rate of Return (determined as specified in Section 7(b)(iii)) shall be determined as of the Trigger Date and those Equity Kicker Shares that would not be subject to repurchase under the chart set forth in Section 7(b)(ii) above shall be deemed vested and not subject to repurchase from and after the Trigger Date. v. Additional Repurchase Rights of the Company. (1) Anything to the contrary contained herein notwithstanding, in the event Executive's employment is terminated by the Company pursuant to Section 5(a)(iii), Executive shall sell to the Company, and the Company shall repurchase from Executive, all of the Restricted Shares (whether or not vested), provided, however, this Section 7(b)(v)(1) shall cease to be effective upon a Change in Control. (2) Anything to the contrary contained herein notwithstanding, in the event that Executive's employment is terminated by Executive pursuant to Section 5(a)(i) during the period commencing on the first anniversary of the Commencement Date and ending on the fourth anniversary of the Commencement Date, Executive shall sell to the Company, and the Company shall repurchase from the Executive, in addition to any other Restricted Shares repurchased pursuant to this Section 7, a number of Restricted Shares equal to 10% of all Restricted Shares (whether or not vested), provided, however, this Section 7(b)(v)(2) shall cease to be effective upon a Change in Control. c. Purchase Price; Closing of Repurchase; Assignment of Repurchase Right. Any repurchase pursuant to this Section 7 shall be for the Repurchase Price. The closing of a purchase and sale of Repurchased Shares shall take place on a date mutually agreed by Executive and the Company, but in no event later than 20 days after (i) the date that employment of Executive shall have terminated or (ii) in the case of Automatic Repurchase Event other than termination of employment of Executive, the occurrence of the applicable event. At such closing, the Company shall deliver to the Executive a check in the amount of the aggregate Repurchase Price and, upon delivery thereof, the Company shall become the legal and beneficial owner of the Restricted Shares and all rights and interests therein or relating thereto, and the Company shall have the right to retain and transfer to its own name such shares being repurchased by the Company. Whenever the Company shall have the right to repurchase Restricted Shares hereunder, the Company may designate and assign one or more employees, officers, directors or shareholders of the Company or other persons or organizations to exercise all or a party of the Company's repurchase rights under this Agreement and purchase all or a part of such Shares. d. Escrow of Shares. The Certificate(s) representing all Restricted Shares shall be held by the Secretary of the Company as escrow holder (the "Escrow Holder"), along with a stock power executed by the Executive in blank. The Escrow Holder is hereby directed to permit transfer of such shares only in accordance with this Agreement and the Stockholders Agreement. In the event further instructions are desired by the Escrow Holder, he shall be entitled to rely upon written directions of the Board of Directors of the Company (excluding any Senior Executive that is a director of the Company). The Escrow Holder shall have no 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. If the Company or any assignee repurchases any of the Restricted Shares pursuant to Section 7(b), the Escrow Holder, upon receipt of written notice of such repurchase from the proposed transferee, shall take all steps necessary to accomplish such repurchase. From time to time, upon Executive's request, Escrow Holder shall: (i) cancel the certificate(s) held by the Escrow Holder and representing Restricted Shares, (ii) cause new certificate(s) to be issued representing the number of Restricted Shares no longer subject to repurchase pursuant to paragraphs (i), (ii) and (iii) of Section 7(b), which certificate(s) the Escrow Holder shall deliver to Executive, and (iii) cause new certificate(s) to be issued representing the balance of the Restricted Shares, which certificate(s) shall be held in escrow by the Escrow Holder in accordance with the provisions of this Section 7(d). Subject to the terms hereof, Executive shall have all the rights of stockholder with respect to the Restricted Shares while they are held in escrow, including without limitation, the right to vote the Restricted Shares and receive any cash dividends declared thereon. If, from time to time during the term of the Company's repurchase right, there is (i) any stock dividend, stock split or other change in the Restricted Shares, or (ii) any merger or sale of all or substantially all of the assets or other acquisition of the Company, any and all new, substituted or additional securities to which such Executive is entitled by reason of his ownership of the Restricted Shares shall be immediately subject to this escrow, deposited with the Escrow Holder and included thereafter as "Restricted Shares" for purposes of this Agreement and the Company's repurchase right. e. Legends. The share certificates evidencing the Restricted Shares shall be endorsed with the following legend (in addition to any legend required to be placed thereon by applicable federal or state securities laws or the Company's Stockholders Agreement): THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN EMPLOYMENT AGREEMENT BETWEEN THE COMPANY AND AN AFFILIATE OF THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY, WHICH PROVIDES, AMONG OTHER THINGS, FOR THE REPURCHASE BY THE COMPANY OF THE SHARES REPRESENTED BY THIS CERTIFICATE. 8. No Conflict With Prior Agreements; Due Authorization. a. Executive represents to the Company that neither Executive's execution of this Agreement or commencement of employment hereunder nor the performance of Executive's duties hereunder conflicts with any contractual commitment on Executive's part to any third party. The Company represents to Executive that it is fully authorized and empowered by action of the Company's Board of Directors to enter into this Agreement and that performance of its obligations under this Agreement will not violate any agreement between it and any other person, firm or other entity. b. Nothing herein shall be construed to require Executive to use or disclose any information that he is prohibited from using or disclosing as a result of legal or contractual obligations. 9. Miscellaneous a. Survival. Sections 4(d), 5, 6, 7 and 9 shall survive the termination hereof. b. Binding Effect. This Agreement shall be binding on the Company and any person or entity which succeeds to the interest of the Company (regardless of whether such succession occurs by operation of law) by reason of the sale of all or a portion the Company's stock, a merger, consolidation, or reorganization involving the Company or a sale of the assets of the business of the Company (or portion thereof) in which Executive performs a majority of his services. This Agreement shall also inure to the benefit of Executive's heirs, executors, administrators and legal representatives. c. Assignment. Except as provided under Section 9(b), neither this Agreement nor any of the rights or obligations hereunder shall be assigned or delegated by any party hereto without the prior written consent of the other party. d. Entire Agreement. This Agreement, together with the Schedules attached hereto, constitutes the entire agreement between the parties hereto with respect to the matters referred to herein, and no other agreement, oral or otherwise, shall be binding between the parties unless it is in writing and signed by the party against whom enforcement is sought. There are no promises, representations, inducements or statements between the parties other than those that are expressly contained herein. Executive acknowledges that he is entering into this Agreement of his own free will and accord, and with no duress, that he has been represented and fully advised by competent counsel in entering into this Agreement, that he has read it and that he understands it and its legal consequences. No parol or other evidence may be admitted to alter, modify or construe this Agreement, which may be altered, modified or amended only by a writing signed by the parties hereto. e. Severability; Reformation. In the event that one or more of the provisions of this Agreement shall become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby. In the event that any of Sections 6(a), (b) or (c) is not enforceable in accordance with its terms, Executive and the Company agree that such Section shall be reformed to make such Section enforceable in a manner which provides the Company the maximum rights permitted at law. f. Waiver. Waiver by any party hereto of any breach or default by the other party of any of the terms of this Agreement shall not operate as a waiver of any other breach or default, whether similar to or different from the breach or default waived. No waiver of any provision of this Agreement shall be implied from any course of dealing between the parties hereto or from any failure by either party hereto to assert its or his rights hereunder on any occasion or series of occasions. g. Notices. Any notice required or desired to be delivered under this Agreement shall be in writing and shall be delivered personally against receipt, by courier service or by registered mail, return receipt requested, and shall be effective upon actual receipt by the party to which such notice shall be directed, and shall be addressed as follows (or to such other address as the party entitled to notice shall hereafter designate in accordance with the terms hereof): If to the Company, to the attention of its Board of Directors at the Company's principal executive offices with a copy to: Tritel, Inc. 111 East Capitol Street, Suite 500 Jackson, Mississippi 39201 Attention: General Counsel If to Executive: William S. Arnett 124 Ingleside Road Madison, Mississippi 39110 h. Headings. Headings to paragraphs in this Agreement are for the convenience of the parties only and are not intended to be part of or to affect the meaning or interpretation hereof. i. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. j. Withholding. Any payments provided for herein shall be reduced by any amounts required to be withheld by the Company from time to time under applicable Federal, State or local income or employment tax laws or similar statutes or other provisions of law then in effect. k. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York. l. Resolution of Disputes. All disputes, controversies and claims arising in connection with this Agreement that are not settled by agreement between the parties shall be finally settled under the Commercial Arbitration Rules of the American Arbitration Association ("AAA") in effect from time to time. A single arbitrator shall be appointed by agreement between the parties or, failing such agreement, by AAA. The arbitrator may grant any remedy that (s)he deems just and equitable within the scope of this Agreement, including specific performance. The award of the arbitrator shall be final and binding and judgment thereon may be entered in any court having jurisdiction. The costs and expenses (including reasonable attorney's fees) of the prevailing party shall be borne and paid by the party that the arbitrator determines is the non-prevailing party. IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and Executive has hereunto set his hand as of the day and year first above written. TRITEL, INC. By: ___________________________ Name: Title: EXECUTIVE: ------------------------------ William S. Arnett SCHEDULE I Duties As President of the Company, Executive shall maintain supervision over, and responsibility for, the aspects of day-to-day operations of the Company typically exercised by a president, all as directed by the Chief Executive Officer and Board of Directors of the Company. SCHEDULE II Permitted Activities 1. Flying A Ranch, LLC This is Executive's working ranch, consisting of several parcels of real estate located in East Tennessee. In addition to breeding horses and cattle, the ranch is also in the business of producing rodeos, clinics, and leasing cattle. Executive shall be permitted to continue to engage in such activities provided such activities do not interfere with the performance of his duties under this Agreement. 2. Flying A Towers, LLC Executive is actively engaged in the business of constructing, operating, and maintaining towers and leasing antenna space thereon for the telecommunications industry. Flying A Towers, LLC is the actual management company, and owns two towers. The other towers, several options for ground leases, and certain other assets are held by individual investment companies: Flying A Towers, Inc. Flying A Towers Investment Co1, LLC Flying A Towers Investment Co2, LLC Flying A Towers Investment Co3, LLC Flying A Towers Investment Co4, LLC Flying A Towers Investment Co5, LLC Flying A Towers Investment Co6, LLC 3. Gallaher View, Inc. This corporation was formed in 1991 to acquire, subdivide, and sell a parcel of real property adjacent to Executive's principal residence. The project is substantially complete. Executive shall be permitted to continue to engage in such activities for the parties for whom he is rendering (or such entities are rendering) services on the Commencement Date, but only with respect to facilities built or operated on the Commencement Date, or built on existing ground leases, provided such activities do not interfere with the performance of his duties under this Agreement. SCHEDULE III Relocation and Temporary Living Expenses Relocation and temporary living expenses shall include the reasonable cost of a furnished house or apartment together with telephone, utilities, and other reasonably necessary expenses until such time as Executive is located in a permanent residence. Subsumed in relocation and temporary living expenses shall also be coach fare air travel to and from Knoxville, Tennessee; Jackson, Mississippi; reasonable rental car costs and expenses (or reimbursement for reasonable costs and expenses of the use of a car provided by Executive). All such expenses shall be "grossed up" so as to cover the expenses described herein as well as to compensate for the income tax effects of the provision of these amounts. A gross up formula and examples are described below: Computation of gross up for travel and relocation expenses: V = Value of expenses received G = Amount of the gross up R = The applicable tax rate X = Total amount deemed received as income X = V+G G = (R)(X) Example - If Arnett receives Travel and Relocation expenses valued at $20,000 and the applicable tax rate is 39%, then the computation is as follows: X = 20,000 + G X = 20,000 + .39(X) X - .39(X) = 20,000 .61(X) = 20,000 .61(X) = 20,000 - ------ ------ .61 .61 X = 20,000 ------ .61 X = 32,786.89 Arnett receives $32,786.89 as the amount of his travel/relocation expenses grossed up for tax purposes. Solving the other way the computations are as follows: G = (R)(X) G = .39(20,000 + G) G = 7,800 + .39(G) G - .39(G) = 7,800 .61(G) = 7,800 .61(G) = 7,800 - ------ ----- .61 .61 G = 7,800 ----- .61 G = 12,786.89 X = 20,000 + 12,786.89 X = 32,786.89 To prove that these amounts are correct the computation can be done longhand by multiplying the 20,000 received by 39% and then multiplying each successive amount by the 39% tax that is due in addition. This yields the following: Tax Due Amount Received - -------- --------------- Payment = 20,000 20,000(.39) = 7,800 7,800(.39) = 3,042 3,042(.39) = 1,186.38 1,186.38(.39) = 462.69 462.69(.39) = 180.45 180.45(.39) = 70.37 70.37(.39) = 27.45 27.45(.39) = 10.70 10.70(.39) = 4.17 4.17(.39) = 1.63 1.63(.39) = .64 .64(.39) = .25 .25(.39) = .10 .10(.39) = .04 .04(.39) = .01 --------- TOTAL = 32,786.88 (the difference of .01 is due to rounding the numbers off to the nearest cent). SCHEDULE IV Objectives 1. The Company shall fail to satisfy the construction requirements set forth in 47CFR 24.203 with respect to any FCC License owned by the Company or any Subsidiary. 2. The Company shall fail to construct, or cause its Subsidiaries to construct, Company Systems covering the Territory in accordance with the Minimum Build-Out Plan. 3. The Company shall fail to comply with the covenant relating to the TDMA Quality Standards set forth in Section 8.3 of the Stockholders Agreement. 4. The Company shall fail by a factor of more than 15% to meet, as of the end of any fiscal quarter set forth on the attached budget as modified from time to time by the Board of Directors, the applicable budgeted amount with respect to (x) capital expenditures per covered POP, (y) earnings before interest, taxes, depreciation and amortizations, or (z) minimum revenues. 5. The Company shall fail to comply with the terms of any representation, warranty, covenant or agreement contained in the Credit Documents (as such term is defined in the Securities Purchase Agreement) or in any other agreement or instrument pursuant to which the Company has incurred indebtedness for borrowed money in the principal amount of $25,000,000 or more, which failure to comply results in an event of default thereunder (unless such failure to comply has been waived or cured within the applicable cure period). SCHEDULE V Vesting Schedule ---------------- Vesting Date Event Percent of Base Shares ------------------ ----------------------- First Anniversary 20% Second Anniversary 15% Third Anniversary 15% Fourth Anniversary 15% Fifth Anniversary 15% Completion of Year 1 and Year 2 of Minimum Build-Out Plan 10% Completion of Year 3 of Minimum Build-Out Plan 10% --- Total 100% Accelerated Vesting o Upon termination of Executive's employment by the Company pursuant to Section 5(a)(vii) of this Agreement, the Base Shares that would have vested on the immediately following Anniversary Date of such termination shall vest. SCHEDULE VI List of Employees Kathy Craft Bruce Edwards Robert Kelly Joe Phillip Chris Paolucci EX-10.3 5 0005.txt AMENDED AND RESTATED 1999 STOCK OPTION PLAN EXHIBIT 10.3 AMENDED AND RESTATED TRITEL, INC. 1999 STOCK OPTION PLAN 1. Purpose. The purpose of this Plan is to attract and retain qualified officers, directors and other key employees of, and consultants to, Tritel, Inc. (the "Company") and its Subsidiaries and to provide such persons with appropriate incentives. The Company adopted the Plan effective as of January 7, 1999, and has subsequently amended and restated the Plan. Unless extended by amendment in accordance with the terms of the Plan, no Option Rights, Appreciation Rights, Restricted Shares or Deferred Shares will be granted hereunder after the tenth anniversary of such effective date. 2. Definitions. As used in this Plan, "Appreciation Right" means a right granted pursuant to Section 5 of this Plan, including a Free-standing Appreciation Right and a Tandem Appreciation Right. "Base Price" means the price to be used as the basis for determining the Spread upon the exercise of a Free-standing Appreciation Right. "Board" means the Board of Directors of the Company. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Committee" means the Compensation Committee of the Board of Directors, as described in Section 13(a) of this Plan, or, in the absence of a Compensation Committee, the full Board. "Common Shares" means (i) shares of the Class A Common Stock, par value $.01 per share, of the Company and (ii) any security into which Common Shares may be converted by reason of any transaction or event of the type referred to in Section 9 of this Plan. "Date of Grant" means the date specified by the Committee on which a grant of Option Rights or Appreciation Rights or a grant or sale of Restricted Shares or Deferred Shares shall become effective, which shall not be earlier than the date on which the Committee takes action with respect thereto. "Deferral Period" means the period of time during which Deferred Shares are subject to deferral limitations under Section 7 of this Plan. "Deferred Shares" means an award pursuant to Section 7 of this Plan of the right to receive Common Shares at the end of a specified Deferral Period. "Free-standing Appreciation Right" means an Appreciation Right granted pursuant to Section 5 of this Plan that is not granted in tandem with an Option Right or similar right. "Incentive Stock Option" means an Option Right that is intended to qualify as an "incentive stock option" under Section 422 of the Code or any successor provision thereto. "Market Value per Share" means the fair market value of the Common Shares as determined by the Committee from time to time. "Nonqualified Option" means an Option Right that is not intended to qualify as an Incentive Stock Option. "Optionee" means the person so designated in an agreement evidencing an outstanding Option Right. "Option Price" means the purchase price payable upon the exercise of an Option Right. "Option Right" means the right to purchase Common Shares from the Company upon the exercise of a Nonqualified Option or an Incentive Stock Option granted pursuant to Section 4 of this Plan. "Participant" means a person who is selected by the Committee to receive benefits under this Plan and (i) is at that time an officer, director or other key employee of, or a consultant to, the Company or any Subsidiary or (ii) has agreed to commence serving in any such capacity. "Reload Option Rights" means additional Option Rights automatically granted to an Optionee upon the exercise of Option Rights pursuant to Section 4(f) of this Plan. "Restricted Shares" means Common Shares granted or sold pursuant to Section 6 of this Plan as to which neither the substantial risk of forfeiture nor the restriction on transfer referred to in Section 6 hereof has expired. "Rule 16b-3" means Rule 16b-3, as promulgated and amended from time to time by the Securities and Exchange Commission under the Securities Exchange Act of 1934, or any successor rule to the same effect. "Spread" means, in the case of a Free-standing Appreciation Right, the amount by which the Market Value per Share on the date when the Appreciation Right is exercised exceeds the Base Price specified therein or, in the case of a Tandem Appreciation Right, the amount by which the Market Value per Share on the date when the Appreciation Right is exercised exceeds the Option Price specified in the related Option Right. "Subsidiary" means a corporation, partnership, joint venture, unincorporated association or other entity in which the Company has a direct or indirect ownership or other equity interest; provided, however, that for purposes of determining whether any person may be a Participant for purposes of any grant of Incentive Stock Options, "Subsidiary" means any corporation in which the Company owns or controls directly or indirectly more than 50% of the total combined voting power represented by all classes of stock issued by such corporation at the time of the grant. "Tandem Appreciation Right" means an Appreciation Right granted pursuant to Section 5 of this Plan that is granted in tandem with an Option Right or any similar right granted under any other plan of the Company. "10% Shareholder" means an individual who, at the time an Option Right is granted, owns stock possessing more than 10% of the total combined voting power of all classes of stock issued by the Company or by any parent or subsidiary corporation, within the meaning of Section 422(b)(6) of the Code or any successor provision thereto. 3. Shares Available under the Plan. (a) Subject to adjustment as provided in Section 9 of this Plan, the number of Common Shares which may be (i) issued or transferred upon the exercise of Option Rights or Appreciation Rights, or (ii) awarded as Restricted Shares and released from substantial risk of forfeiture thereof or Deferred Shares, shall not in the aggregate exceed 10,462,400 Common Shares, which may be Common Shares of original issuance or Common Shares held in treasury or a combination thereof. For the purposes of this Section 3(a): (i) Upon payment in cash of the benefit provided by any award granted under this Plan, any Common Shares that were covered by that award shall again be available for issuance or transfer hereunder; and (ii) Upon the full or partial payment of any Option Price by the transfer to the Company of Common Shares or upon satisfaction of tax withholding obligations in connection with any such exercise or any other payment made or benefit realized under this Plan by the transfer or relinquishment of Common Shares, there shall be deemed to have been issued or transferred under this Plan only the net number of Common Shares actually issued or transferred by the Company less the number of Common Shares so transferred or relinquished. (b) Notwithstanding anything in Section 3(a) hereof, or elsewhere in this Plan, to the contrary, the aggregate number of Common Shares actually issued or transferred by the Company upon the exercise of the Incentive Stock Options shall not exceed the total number of Common Shares first specified in Section 3(a) hereof. (c) Notwithstanding any other provision of this Plan to the contrary, no Participant shall be granted Option Rights and Appreciation Rights, in the aggregate, for more than 500,000 Common Shares during any two calendar years, subject to adjustment as provided in Section 9 of this Plan. (d) Notwithstanding any other provision of this Plan to the contrary, no Participant shall be granted Deferred Shares, in the aggregate, for more than 500,000 Common Shares during any two calendar years, subject to adjustment as provided in Section 9 of this Plan. 4. Option Rights. The Committee may from time to time authorize grants to Participants of options to purchase Common Shares upon such terms and conditions as the Committee may determine in accordance with the following provisions: (a) Each grant shall specify the number of Common Shares to which it pertains. (b) Each grant shall specify an Option Price per Common Share. In the case of any grant of Nonqualified Options, the Option Price per Common Share may not be less than the lesser of (i) 75% of the Market Value per Share on the Date of Grant or (ii) $23.61 per Common Share. In the case of any grant of Incentive Stock Options, such Option Price per Common Share may not be less than 100% of the Market Value per Share on the Date of Grant (110% of the Market Value per Share on the Date of Grant in the case of a grant to a 10% Shareholder). (c) Each grant shall specify the form of consideration to be paid in satisfaction of the Option Price and the manner of payment of such consideration, which may include (i) cash in the form of currency or check or other cash equivalent acceptable to the Company, (ii) nonforfeitable, unrestricted Common Shares, which are already owned by the Optionee, (iii) any other legal consideration that the Committee may deem appropriate, including without limitation any form of consideration authorized under Section 4(d) below, on such basis as the Committee may determine in accordance with this Plan and (iv) any combination of the foregoing. (d) Any grant of a Nonqualified Option may provide that payment of the Option Price may also be made in whole or in part in the form of Restricted Shares or other Common Shares that are subject to a risk of forfeiture or restrictions on transfer. Unless otherwise determined by the Committee on or after the Date of Grant, whenever any Option Price is paid in whole or in part by means of any of the forms of consideration specified in this Section 4(d), the Common Shares received by the Optionee upon the exercise of the Nonqualified Option shall be subject to the same risks of forfeiture or restrictions on transfer as those that applied to the consideration surrendered by the Optionee; provided, however, that such risks of forfeiture and restrictions on transfer shall apply only to the same number of Common Shares received by the Optionee as applied to the forfeitable or restricted Common Shares surrendered by the Optionee. (e) Any grant may, if there is then a public market for the Common Shares, provide for deferred payment of the Option Price from the proceeds of sale through a broker of some or all of the Common Shares to which the exercise relates. (f) Any grant may provide for the automatic grant to the Optionee of Reload Option Rights upon the exercise of Option Rights, including Reload Option Rights, for Common Shares or any other noncash consideration authorized under Sections 4(c) and (d) above; provided, however, that the term of any Reload Option Right shall not extend beyond the term of the Option Right originally exercised. (g) Successive grants may be made to the same Optionee regardless of whether any Option Rights previously granted to the Optionee remain unexercised. (h) Each grant shall specify the period or periods of continuous employment, or continuous engagement of the consulting services, of the Optionee by the Company or any Subsidiary that are necessary and/or the individual or aggregate performance criteria that must be satisfied before the Option Rights or installments thereof shall become exercisable, and any grant may provide for the earlier exercise of the Option Rights in the event of a change in control of the Company or other similar transaction or event. Notwithstanding the foregoing, in the case of any grant of Incentive Stock Options, the aggregate Market Value per Share on the Date of Grant of the Common Shares subject to such Incentive Stock Options (and all other incentive stock options granted by the Company or any parent or subsidiary corporation) that are exercisable for the first time by the Optionee during any calendar year shall not exceed $100,000. (i) Option Rights granted pursuant to this Section 4 may be Nonqualified Options or Incentive Stock Options or combinations thereof. (j) Any grant of an Option Right may provide for the payment to the Optionee of dividend equivalents thereon in cash or Common Shares on a current, deferred or contingent basis, or the Committee may provide that any dividend equivalents shall be credited against the Option Price. (k) No Option Right granted pursuant to this Section 4 may be exercised more than 10 years from the Date of Grant. In the case of any Incentive Stock Option granted to a 10% Shareholder, such Incentive Stock Option may not be exercised more than five years from the Date of Grant. (l) Each grant shall be evidenced by an agreement, which shall be executed on behalf of the Company by any designated officer thereof and delivered to and accepted by the Optionee and shall contain such terms and provisions as the Committee may determine consistent with this Plan. 5. Appreciation Rights. The Committee may also authorize grants to Participants of Appreciation Rights. An Appreciation Right shall be a right of the Participant to receive from the Company an amount, which shall be determined by the Committee and shall be expressed as a percentage (not exceeding 100%) of the Spread at the time of the exercise of an Appreciation Right. Any grant of Appreciation Rights under this Plan shall be upon such terms and conditions as the Committee may determine in accordance with the following provisions: (a) Any grant may specify that the amount payable upon the exercise of an Appreciation Right may be paid by the Company in cash, Common Shares or any combination thereof and may (i) either grant to the Participant or reserve to the Committee the right to elect among those alternatives or (ii) preclude the right of the Participant to receive and the Company to issue Common Shares or other equity securities in lieu of cash. (b) Any grant may specify that the amount payable upon the exercise of an Appreciation Right shall not exceed a maximum specified by the Committee on the Date of Grant. (c) Each grant shall specify (i) the period or periods of continuous employment, or continuous engagement of the consulting services, of the Optionee by the Company or any Subsidiary that are necessary and/or the individual or aggregate performance criteria that must be satisfied before the Appreciation Rights or installments thereof shall become exercisable and (ii) permissible dates or periods on or during which Appreciation Rights shall be exercisable. (d) Any grant may specify that an Appreciation Right may be exercised only in the event of a change in control of the Company or other similar transaction or event. (e) Any grant may provide for the payment to the Participant of dividend equivalents thereon in cash or Common Shares on a current, deferred or contingent basis. (f) Each grant shall be evidenced by an agreement, which shall be executed on behalf of the Company by any designated officer thereof and delivered to and accepted by the Optionee and shall describe the subject Appreciation Rights, identify any related Option Rights, state that the Appreciation Rights are subject to all of the terms and conditions of this Plan and contain such other terms and provisions as the Committee may determine consistent with this Plan. (g) Regarding Tandem Appreciation Rights only: Each grant shall provide that a Tandem Appreciation Right may be exercised only (i) at a time when the related Option Right (or any similar right granted under any other plan of the Company) is also exercisable and the Spread is positive and (ii) by surrender of the related Option Right (or such other right) for cancellation. (h) Regarding Free-standing Appreciation Rights only: (i) Each grant shall specify in respect of each Free-standing Appreciation Right a Base Price per Common Share, which shall be equal to or greater than the Market Value per Share on the Date of Grant; (ii) Successive grants may be made to the same Participant regardless of whether any Free-standing Appreciation Rights previously granted to the Participant remain unexercised; and (iii) No Free-standing Appreciation Right granted under this Plan may be exercised more than 10 years from the Date of Grant. 6. Restricted Shares. The Committee may also authorize grants or sales to Participants of Restricted Shares upon such terms and conditions as the Committee may determine in accordance with the following provisions: (a) Each grant or sale shall constitute an immediate transfer of the ownership of Common Shares to the Participant in consideration of the performance of services, entitling such Participant to dividend, voting and other ownership rights, subject to the substantial risk of forfeiture and restrictions on transfer hereinafter referred to. (b) Each grant or sale may be made without additional consideration from the Participant or in consideration of a payment by the Participant that is less than the Market Value per Share on the Date of Grant. (c) Each grant or sale shall provide that the Restricted Shares covered thereby shall be subject to a "substantial risk of forfeiture" within the meaning of Section 83 of the Code for a period to be determined by the Committee on the Date of Grant, and any grant or sale may provide for the earlier termination of such period in the event of a change in control of the Company or other similar transaction or event. (d) Each grant or sale shall provide that, during the period for which such substantial risk of forfeiture is to continue, the transferability of the Restricted Shares shall be prohibited or restricted in the manner and to the extent prescribed by the Committee on the Date of Grant. Such restrictions may include without limitation rights of repurchase or first refusal in the Company or provisions subjecting the Restricted Shares to a continuing substantial risk of forfeiture in the hands of any transferee. (e) Any grant or sale may require that any or all dividends or other distributions paid on the Restricted Shares during the period of such restrictions be automatically sequestered and reinvested on an immediate or deferred basis in additional Common Shares, which may be subject to the same restrictions as the underlying award or such other restrictions as the Committee may determine. (f) Each grant or sale shall be evidenced by an agreement, which shall be executed on behalf of the Company by any designated officer thereof and delivered to and accepted by the Participant and shall contain such terms and provisions as the Committee may determine consistent with this Plan. Unless otherwise directed by the Committee, all certificates representing Restricted Shares, together with a stock power that shall be endorsed in blank by the Participant with respect to the Restricted Shares, shall be held in custody by the Company until all restrictions thereon lapse. 7. Deferred Shares. The Committee may also authorize grants or sales of Deferred Shares to Participants upon such terms and conditions as the Committee may determine in accordance with the following provisions: (a) Each grant or sale shall constitute the agreement by the Company to issue or transfer Common Shares to the Participant in the future in consideration of the performance of services, subject to the fulfillment during the Deferral Period of such conditions as the Committee may specify. (b) Each grant or sale may be made without additional consideration from the Participant or in consideration of a payment by the Participant that is less than the Market Value per Share on the Date of Grant. (c) Each grant or sale shall provide that the Deferred Shares covered thereby shall be subject to a Deferral Period, which shall be fixed by the Committee on the Date of Grant, and any grant or sale may provide for the earlier termination of the Deferral Period in the event of a change in control of the Company or other similar transaction or event. (d) During the Deferral Period, the Participant shall not have any right to transfer any rights under the subject award, shall not have any rights of ownership in the Deferred Shares and shall not have any right to vote the Deferred Shares, but the Committee may on or after the Date of Grant authorize the payment of dividend equivalents on the Deferred Shares in cash or additional Common Shares on a current, deferred or contingent basis. (e) Each grant or sale shall be evidenced by an agreement, which shall be executed on behalf of the Company by any designated officer thereof and delivered to and accepted by the Participant and shall contain such terms and provisions as the Committee may determine consistent with this Plan. 8. Transferability. (a) No Incentive Stock Option granted under this Plan may be transferred by a Participant, except by will or the laws of descent and distribution. Except as otherwise provided in the agreement evidencing such option or right, no Nonqualified Option or Appreciation Right granted under this Plan may be transferred by a Participant, except (i) by will or the laws of descent and distribution, (ii) to one or more members of the Participant's immediate family, or (iii) to a trust established for the benefit of the Participant and/or one or more members of the Participant's immediate family. Option Rights and Appreciation Rights granted under this Plan may not be exercised during a Participant's lifetime except by (i) the Participant, (ii) a transferee of the Participant described in the preceding sentence, or (iii) in the event of the legal incapacity of the Participant or any such transferee, by the guardian or legal representative of the Participant or such transferee (as applicable) acting in a fiduciary capacity on behalf thereof under state law and court supervision. (b) Any grant made under this Plan may provide that all or any part of the Common Shares that are to be issued or transferred by the Company upon the exercise of Option Rights or Appreciation Rights or upon the termination of the Deferral Period applicable to Deferred Shares, or are no longer subject to the substantial risk of forfeiture and restrictions on transfer referred to in Section 6 of this Plan, shall be subject to further restrictions upon transfer. 9. Adjustments. (a) The Committee may make or provide for such adjustments in the number of Common Shares covered by outstanding Option Rights, Appreciation Rights and Deferred Shares granted hereunder, the Option Prices per Common Share or Base Prices per Common Share applicable to any such Option Rights and Appreciation Rights, and the kind of shares (including shares of another issuer) covered thereby, as the Committee may in good faith determine to be equitably required in order to prevent dilution or expansion of the rights of Participants that otherwise would result from (i) any stock dividend, stock split, combination of shares, recapitalization or similar change in the capital structure of the Company or (ii) any merger, consolidation, spin-off, spin-out, split-off, split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance of warrants or other rights to purchase securities or any other corporate transaction or event having an effect similar to any of the foregoing. In the event of any such transaction or event, the Committee may provide in substitution for any or all outstanding awards under this Plan such alternative consideration as it may in good faith determine to be equitable under the circumstances and may require in connection therewith the surrender of all awards so replaced. Moreover, the Committee may on or after the Date of Grant provide in the agreement evidencing any award under this Plan that the holder of the award may elect to receive an equivalent award in respect of securities of the surviving entity of any merger, consolidation or other transaction or event having a similar effect, or the Committee may provide that the holder will automatically be entitled to receive such an equivalent award. The Committee may also make or provide for such adjustments in the maximum numbers of Common Shares specified in Section 3 of this Plan as the Committee may in good faith determine to be appropriate in order to reflect any transaction or event described in this Section 9. (b) If another corporation is merged into the Company or the Company otherwise acquires another corporation, the Committee may elect to assume under this Plan any or all outstanding stock options or other awards granted by such corporation under any stock option or other plan adopted by it prior to such acquisition. Such assumptions shall be on such terms and conditions as the Committee may determine; provided, however, that the awards as so assumed do not contain any terms, conditions or rights that are inconsistent with the terms of this Plan. Unless otherwise determined by the Committee, such awards shall not be taken into account for purposes of the limitations contained in Section 3 of this Plan. 10. Fractional Shares. The Company shall not be required to issue any fractional Common Shares pursuant to this Plan. The Committee may provide for the elimination of fractions or for the settlement thereof in cash. 11. Withholding Taxes. To the extent that the Company is required to withhold federal, state, local or foreign taxes in connection with any payment made or benefit realized by a Participant or other person under this Plan, and the amounts available to the Company for the withholding are insufficient, it shall be a condition to the receipt of any such payment or the realization of any such benefit that the Participant or such other person make arrangements satisfactory to the Company for payment of the balance of any taxes required to be withheld. At the discretion of the Committee, any such arrangements may without limitation include voluntary or mandatory relinquishment of a portion of any such payment or benefit or the surrender of outstanding Common Shares. The Company and any Participant or such other person may also make similar arrangements with respect to the payment of any taxes with respect to which withholding is not required. 12. Certain Terminations of Employment or Consulting Services, Hardship, and Approved Leaves of Absence. Notwithstanding any other provision of this Plan to the contrary, in the event of termination of employment or consulting services by reason of death, disability, normal retirement, early retirement with the consent of the Company, termination of employment or consulting services to enter public or military service with the consent of the Company or leave of absence approved by the Company, or in the event of hardship or other special circumstances, of a Participant who holds an Option Right or Appreciation Right that is not immediately and fully exercisable, any Restricted Shares as to which the substantial risk of forfeiture or the prohibition or restriction on transfer has not lapsed, any Deferred Shares as to which the Deferral Period is not complete, or any Common Shares that are subject to any transfer restriction pursuant to Section 8(b) of this Plan, the Committee may take any action that it deems to be equitable under the circumstances or in the best interests of the Company, including without limitation waiving or modifying any limitation or requirement with respect to any award under this Plan. 13. Administration of the Plan. (a) This Plan shall be administered by the Compensation Committee of the Board, which shall be composed of not less than two members of the Board, or, in the absence of a Compensation Committee, by the full Board. At any time that awards under the Plan are subject to Rule 16b-3, each member of the Compensation Committee shall be a "non-employee director" within the meaning of such Rule. In addition, at any time that the Company is subject to Section 162(m) of the Code, each member of the Compensation Committee shall be an "outside director" within the meaning of such Section. A majority of the Committee shall constitute a quorum, and the acts of the members of the Committee who are present at any meeting thereof at which a quorum is present, or acts unanimously approved by the members of the Committee in writing, shall be the acts of the Committee. Notwithstanding the foregoing, the Committee may delegate to the President and/or the Chief Executive Officer of the Company (or the delegate of either or both such officers) its rights, duties and responsibilities under the Plan with respect to Participants who are not subject to Rule 16b-3 and Section 162(m) of the Code, subject to applicable law and such terms and conditions as the Committee may impose. (b) The interpretation and construction by the Committee of any provision of this Plan or any agreement, notification or document evidencing the grant of Option Rights, Appreciation Rights, Restricted Shares or Deferred Shares, and any determination by the Committee pursuant to any provision of this Plan or any such agreement, notification or document, shall be final and conclusive. No member of the Committee shall be liable for any such action taken or determination made in good faith. 14. Amendments and Other Matters. (a) This Plan may be amended from time to time by the Committee; provided, however, that except as expressly authorized by this Plan, no such amendment shall cause this Plan to cease to satisfy any applicable condition of Rule 16b-3 or cause any award under the Plan to cease to qualify for any applicable exception under Section 162(m) of the Code, without the further approval of the stockholders of the Company. (b) With the concurrence of the affected Participant, the Committee may cancel any agreement evidencing Option Rights or any other award granted under this Plan. In the event of any such cancellation, the Committee may authorize the granting of new Option Rights or other awards hereunder, which may or may not cover the same number of Common Shares as had been covered by the cancelled Option Rights or other award, at such Option Price, in such manner and subject to such other terms, conditions and discretion as would have been permitted under this Plan had the cancelled Option Rights or other award not been granted. (c) The Committee may condition the grant of any award or combination of awards authorized under this Plan on the surrender or deferral by the Participant of his or her right to receive a cash bonus or other compensation otherwise payable by the Company or a Subsidiary to the Participant. (d) This Plan shall not confer upon any Participant any right with respect to continuance of employment or other service with the Company or any Subsidiary and shall not interfere in any way with any right that the Company or any Subsidiary would otherwise have to terminate any Participant's employment or other service at any time. (e) To the extent that any provision of this Plan would prevent any Option Right that was intended to qualify as an Incentive Stock Option from so qualifying, any such provision shall be null and void with respect to any such Option Right; provided, however, that any such provision shall remain in effect with respect to other Option Rights, and there shall be no further effect on any provision of this Plan. (f) Any award that may be made pursuant to an amendment to this Plan that shall have been adopted without the approval of the stockholders of the Company shall be null and void if it is subsequently determined that such approval was required under the terms of the Plan or applicable law. (g) Unless otherwise determined by the Committee, this Plan is intended to comply with Rule 16b-3 at all times that awards hereunder are subject to such Rule. EX-27 6 0006.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE TRITEL, INC. AND PREDECESSOR COMPANIES FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0001088383 TRITEL, INC. 1 U.S. DOLLARS 6-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 1 350,573 0 14,704 (379) 20,512 395,384 442,766 (27,115) 1,109,751 115,948 571,464 104,119 46,374 1,071 232,919 1,109,751 41,307 41,307 17,317 17,317 175,245 550 (30,416) (166,329) (1,076) (165,253) 0 0 0 (165,253) (1.43) (1.43)
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