EX-99 9 a11-26exhibit15.txt EXHIBIT 15 VARIABLE PREPAID FORWARD TRANSACTION FIRST UNION LOGO Date: November 16, 2001 To: CTIHC, INC. ("Seller" or "Counterparty") Address: Conseco, Inc. 11825 N. Pennsylvania Street Carmel, IN 46032 Attention: Mr. James Adams Telephone: (317) 817-6166 Facsimile: (317) 817-2161 From: FIRST UNION SECURITIES, INC. as Agent of First Union National Bank (the "Agent") First Union Reference Numbers: 90602/90603/90605 Dear Sir: We hereby confirm the terms of the Transaction described below between Seller and First Union National Bank ("First Union") entered into on the Trade Date specified below. This communication constitutes a "Confirmation" as referred to in the Master Agreement specified below. This Confirmation is subject to, and incorporates, the 2000 ISDA Definitions (including the June 2000 Annex thereto) (the "2000 Definitions") and the 1996 ISDA Equity Derivatives Definitions (the "Equity Definitions", and together with the 2000 Definitions, the "Definitions"), in each case as published by the International Swaps and Derivatives Association, Inc. ("ISDA"), except that, for purposes of this Confirmation, all references to "Swap Transactions" in the 2000 Definitions will be deemed also to be references to "Transactions". In the event of any inconsistency between the 2000 Definitions and the Equity Definitions, the Equity Definitions will govern. In the event of any inconsistency between either set of Definitions and this Confirmation, this Confirmation will prevail. For purposes of the Equity Definitions, this Transaction shall be deemed to be a Share Option Transaction with an Exercise Date equal to a Valuation Date. This Confirmation supplements, forms part of, and is subject to, the ISDA Master Agreement between First Union and Seller dated as of November 14, 2001, as amended and supplemented from time to time (the "Master Agreement"). All provisions contained or incorporated by reference in the Master Agreement will govern this Confirmation except as expressly modified below. The terms of the Transaction to which this Confirmation relates are as follows: General Terms: -------------- Trade Date: November 15, 2001 Seller: CTIHC, Inc. Buyer: First Union 1 Shares: The Class A common stock of TeleCorp PCS, Inc. (the "Issuer"); CUSIP #879300101; Ticker Symbol: "TLCP" Number of Shares: 1,147,057 Floor Price: The Initial Price Cap Price: USD 21.9174 [162.50 % of the Initial Price] Prepaid Percentage: 78% of the Initial Price Purchase Price: USD 12,067,415.87 [Initial Price, multiplied by Number of Shares, multiplied by Prepaid Percentage]. Purchase Price Payment Date: Three (3) Currency Business Days following Trade Date. Exchange: Nasdaq NMS Related Exchange(s): Each principal exchange or quotation system on which options contracts on the Shares trade. Clearance System: DTC Early Unwind: The Early Unwind Date shall be any Currency Business Day designated by First Union as the Early Unwind Date by notice given to Counterparty on or before that Currency Business Day provided that an Early Unwind Event shall be continuing on the date of such notice. "Early Unwind Event" means that at any time after thirty (30) days has elapsed from and excluding the Trade Date of this Transaction, First Union reasonably determines that the "Rebate Rate" is less than the "Federal Funds Rate" plus fifteen (15) basis points per annum (the "Assumed Rebate Rate"); provided however, that such event shall not entitle First Union to unwind this Transaction if during the continuance of such event, either (a) Counterparty shall pay to First Union the "Excess Cost Amount" on the last Business Day of each calendar month; or (b) Counterparty shall consent to the rehypothecation of the number of Shares requested by First Union which are pledged to First Union pursuant to the terms of the Pledge Agreement. "Federal Funds Rate" means the Federal Funds (Effective) rate published in N.Y. Federal Reserve Statistical Release H.15(519) for that day (or if that day is not a New York Business Day, then for the next preceding New York Business Day). "Excess Cost Amount" means an amount calculated equal to the Assumed Rebate Rate minus the "Rebate Rate" multiplied by the Notional Amount, calculated monthly on an Actual/360 basis. "Rebate Rate" means the aggregate fee or rebate, computed monthly, that First Union is paid by each lender for any collateral held by such lender in connection with First Union's hedge for this Transaction. 2 "Notional Amount" means, as of the last Exchange Business Day of each month, the average number of shares borrowed by First Union to hedge this Transaction multiplied by the average market price over such month, each as determined by First Union. If an Early Unwind Date is designated hereunder, this Transaction shall be terminated as if an Additional Termination Event had occurred under the Master Agreement with this Transaction as the sole "Affected Transaction" and with two Affected Parties. The Early Termination Date shall be the Early Unwind Date. Valuation: ---------- Initial Price: USD 13.4876 Valuation Time: The close of regular trading on the Exchange, without regard to extended trading hours. Valuation Dates: Each of the ten (10) Exchange Business Days during the ten (10) Exchange Business Day period ending on and including November 15, 2006. Final Price: With respect to each Valuation Date, the average execution price at which First Union executes the unwind of its hedge relating to the Applicable Number of Shares. Relevant Price: The last traded price per Share on the Exchange determined by the Calculation Agent at the Valuation Time on the applicable Valuation Date. Settlement Terms: ----------------- Physical Settlement: ------------------- Physical Settlement: Physical Settlement shall apply unless the Seller exercises its Cash Settlement Option, including Seller's provision of the written notice required pursuant to "Cash Settlement Option" below. Seller will deliver to Buyer the Applicable Number of Shares to be Delivered on each Settlement Date (rounded down to the nearest whole number of Shares), unless Seller elects the Cash Settlement Option, in which case Seller will pay the Cash Settlement Amount on the applicable Cash Settlement Payment Date in lieu of delivering Shares. Delivery of the Applicable Number of Shares will be made on the relevant Settlement Date through the Clearance System at the accounts specified herein. Number of Shares to be Notwithstanding Section 6.3 of the Delivered: Equity Definitions, Number of Shares to be Delivered shall mean the number of Shares determined by the Calculation Agent as of each Valuation Date equal to: 3 (a) if the Relevant Price is less than or equal to the Floor Price: the Applicable Number of Shares, (b) if the Relevant Price is greater than the Floor Price but less than the Cap Price: the Applicable Number of Shares MULTIPLIED BY the Floor Price DIVIDED BY the Relevant Price, and (c) if the Relevant Price is equal to or greater than the Cap Price: the Applicable Number of Shares, MULTIPLIED BY (x) the sum of (i) the Floor Price and (ii) the amount by which the Final Price exceeds the Cap Price, DIVIDED BY (y) the Relevant Price. Where, "Applicable Number of Shares" for any Valuation Date means 110,000 Shares, except on the final Valuation Date, Applicable Number of Shares means 157,057 Shares. Settlement Dates: Three (3) Exchange Business Days following each Valuation Date. Failure to Deliver: Inapplicable. Cash Settlement: --------------- Cash Settlement Option: Seller will have the right to cash settle the Transaction on each Cash Settlement Payment Date for an amount equal to the applicable Cash Settlement Amount; provided that Seller shall have delivered to Buyer written notice of Seller's intention to cash settle the Transaction during the Cash Settlement Option Period. If elected, Cash Settlement must be applicable to all Valuation Dates. Cash Settlement Option From and including the tenth Exchange Period: Business Day prior to the initial Valuation Date to and including the Exchange Business Day immediately preceding the initial Valuation Date. Cash Settlement Amount: The product, expressed in U.S. dollars (USD), determined as of each Valuation Date, of (a) the Final Price, multiplied by (b) the Applicable Number of Shares to be Delivered. Cash Settlement Payment Three (3) Exchange Business Days after Dates: each Valuation Date. 4 Dividends: If a Record Date in respect of the --------- Shares occurs on any date from and including the Effective Date to but excluding the final Settlement Date or the final Cash Settlement Date, as the case may be, on the date on which a Dividend Amount is paid by the Issuer to holders of record of the Shares the Seller shall pay to the Buyer the Dividend Payment whether or not such date occurs after the final Settlement Date or the final Cash Settlement Date, as the case may be. "Dividend Payment" means an amount determined, in the Calculation Agent's good faith discretion, as follows: the per share Dividend Amount multiplied by "X" where X is determined as of the ex-dividend date. "X" means the number of Shares determined by the Calculation Agent by taking (a) the Number of Shares and (b) the number of Shares covered by any financial instruments relating to the Shares (including, but not limited to, options and futures contracts) that include in the amount paid (which shall include any adjustment to such instrument in lieu of any such payment) by First Union pursuant to that instrument, an amount reflective of the Dividend Amount on the Shares and which collectively form First Union's delta hedge position relating to this Transaction as of the ex-dividend date; provided, however, that X shall not exceed the Number of Shares. Notwithstanding the foregoing, upon 10 Business Days' prior notice (which may be written or oral), so long as an Early Unwind Date has not been designated, the Seller may request that, in lieu of any such payment by Seller with respect to a Dividend, such Dividend be treated as a Potential Adjustment Event under the Equity Definitions. Dividend Amount: An amount equal to any per share cash dividend payable on the Shares (other than any cash dividend under Sections 9.1 (e)(i) or 9.1. (e)(ii) of the Equity Definitions). Record Date: The date on which the issuer of the Shares determines the holders of record of the Shares with respect to any Dividend Amount. Additional Termination Event: Conseco, Inc.'s (the "Parent") Standard ----------------------------- & Poor's Senior Unsecured Debt Rating falls to or below B-. Adjustments: ------------ Method of Adjustment: Calculation Agent Adjustment For the purposes of Section 9.1(e)(iii) of the Equity Definitions, a "Dividend Amount" shall not constitute an extraordinary dividend unless the Seller elects to treat such Dividend as a Potential Adjustment Event. 5 For the purposes of Section 9.1(c) of the Equity Definitions, (i) references to "Strike Price" shall be deemed to be references to the "Floor Price" and the "Cap Price" and (ii) references to "Number of Options" shall be deemed to be references to "Number of Shares." Extraordinary Events: For the purposes of Section 9.7 of the Equity Definitions, references to an "option" therein shall be deemed to be references to a "forward". Consequences of Merger Events: (a) Share-for-Share: Alternative Obligation; for the avoidance of doubt if the merger of AT&T Wireless Services Inc. with the Issuer is consummated pursuant to the terms of the Agreement and Plan of Merger by and among AT&T Wireless Services, Inc., TL Acquisition Corp. and Telecorp PCS, Inc. dated as of October 7, 2001 (the "Merger Agreement") then such merger shall only result in an adjustment of the Number of Shares, Floor Price and Cap Price by the Calculation Agent on the conversion ratio set forth in the Merger Agreement. (b) Share-for-Other: Cancellation and Payment (c) Share-for-Combined: Alternative Obligation shall apply to the portion of the Transaction representing the portion of the consideration for the relevant shares consisting of New Shares and Cancellation and Payment shall apply to that portion of the consideration for the relevant shares consisting of Other Consideration. Nationalization or Insolvency: Cancellation and Payment Modifications to Article 9: The Equity Definitions are amended in the following manner: (a) Section 9.7(b)(iii) is amended by inserting "Merger Date" in lieu of "Option Value Event," and (b) Section 9.2(b) is amended by inserting "the closing date of the related merger." in lieu of the language beginning "the date" and ending ".". Business Day Convention: Following Seller's Notice Details: CTIHC, Inc. 11825 N. Pennsylvania Street Carmel, IN 46032 Telephone No.: (317) 817-6166 Facsimile No.: (317) 817-2161 Attention: Mr. James Adams Buyer's Notice Details: First Union Securities, Inc. 301 South College Street Charlotte, NC 28288-0601 Facsimile No.: 704-383-9139 Telephone No.: 704-383-5433 Attention: Equity Derivatives 6 Seller Payment Instructions: To be provided by Seller Buyer Payment Instructions: First Union National Bank Capital Markets Attention: Derivatives Desk Fed. ABA No. 053000219 Re: Equity Derivatives Calculation Agent: First Union, unless an Event of Default ------------------ has occurred and is continuing with respect to First Union, in which case both parties will negotiate in good faith and appoint a mutually acceptable independent leading dealer in derivatives in the relevant market as Calculation Agent, whose fees and expenses, if any, shall be met equally by both parties. All determinations by the Calculation Agent are subject to agreement by the parties. If the parties are unable to agree on a particular calculation, another mutually acceptable Calculation Agent which is an independent leading dealer in derivatives in the relevant market will be appointed. If the parties are unable to agree on a substitute Calculation Agent, each of parties shall elect an independent leading dealer in derivatives in the relevant market and such dealers shall agree on a third party, who shall be deemed to be the substitute Calculation Agent. The Calculation Agent shall act at all times in good faith and in a commercially reasonable manner. First Union Settlements: Chelo Stavish ------------------------ Equity Derivatives Operations Tel: (704) 383-6438 Fax: (704) 383-9139 Governing Law: This Confirmation will be governed by ------------- and construed in accordance with the laws of the State of New York (without reference to its choice of laws doctrine). 7 Additional Representations, Warranties and Covenants: Insider: Counterparty represents, warrants and covenants that Counterparty (a) is not currently an Insider and (b) will not be an Insider at any time during the term of this Transaction. "Insider" means (i) a person who is an officer, director of the Issuer or a beneficial owner of more than 10% of any class of equity securities of the Issuer required to file reports pursuant to Section 16(a) of the Securities Exchange Act and (ii) a person who is an "Affiliate" (as defined in Rule 144) of the Issuer. Transaction Covenants: Counterparty represents and warrants that the Number of Shares to be Delivered Shares will be freely salable by or on behalf of Counterparty under the Securities Act and not subject to resale restrictions under Rule 144, Rule 145 of the Securities Act or otherwise. In addition to the representation and agreement in Section 6.8 of the Equity Definitions, for the avoidance of doubt the Seller represents and agrees that, physical delivery of the Shares to First Union and any sale by First Union will not violate or conflict with any law applicable to such Shares, or any contractual obligation or restriction applicable to such Shares and that all required notices to third parties have been given including an opinion of counsel to the transfer agent for the Shares for removing legends relating to the Stockholders' Agreement (as defined below) and securities laws and any required consents or approvals from third parties have been obtained and no third party will have any rights with respect to the Shares delivered to First Union and for the avoidance of doubt, such Shares will not be subject to the terms of the Stockholders' Agreement (the "Stockholders' Agreement") by and among AT&T Wireless PCS, LLC, the Cash Equity Investors, the Management Stockholders, the Other Stockholders (in each case, as defined therein) and Telecorp PCS, Inc., dated as of November 13, 2000, as amended by Amendment No. 1 to the Stockholders' Agreement, dated October 7, 2001, as amended, supplemented or otherwise modified or the Investors Stockholders' Agreement by and among Telecorp PCS, Inc. and the Stockholders named therein, dated as of February 28, 2000, as amended, supplemented or otherwise modified or the Voting Agreement by and among Telecorp PCS, LLC and the shareholders listed therein, dated October 7, 2001, as amended, supplemented or otherwise modified. Seller agrees to deliver to First Union on or before the Purchase Price Payment Date, the Pledged Shares registered in the name of First Union and bearing no restrictive legends other than the legend referring to restrictions under the federal and state securities laws. 8 Each party represents and warrants that, in effecting the Transaction hereunder, it is not in possession of any material non-public information with respect to the Issuer that, under the U.S. federal securities laws, it would have to disclose in advance to a party effecting a purchase or sale of the Shares. Each party represents and warrants that it is an "eligible contract participant" as defined in Commodity Futures Modernization Act of 2000. Master Agreement Settlement For purposes of determining the Amount: Settlement Amount with respect to this Transaction under Section 6(e) of the Master Agreement, "Second Method" and "Market Quotation" shall apply. Terms relating to the Agent: --------------------------- (a) The Agent is registered as a broker-dealer with the U.S. Securities and Exchange Commission and the National Association of Securities Dealers, is acting hereunder for and on behalf of First Union solely in its capacity as agent for First Union pursuant to instructions from First Union, and is not and will not be acting as the Seller's agent, broker, advisor or fiduciary in any respect under or in connection with this Transaction. (b) In addition to acting as First Union's agent in executing this Transaction, the Agent is authorized from time to time to give written payment and/or delivery instructions to the Seller directing it to make its payments and/or deliveries under this Transaction to an account of the Agent for remittance to First Union (or its designee), and for that purpose any such payment or delivery by the Seller to the Agent shall be treated as a payment or delivery to First Union. (c) Except as otherwise provided herein, any and all notices, demands, or communications of any kind transmitted in writing by either First Union or the Seller under or in connection with this Transaction, including without limitation, any option exercise notice, will be transmitted exclusively by such party to the other party through the Agent at the following address: First Union Securities, Inc. 301 South College Street Charlotte, NC 28288-0601 Facsimile No.: 704-383-9139 Telephone No.: 704-383-5433 Attention: Equity Derivatives Notwithstanding the foregoing, any such notice, demand or communication by Seller shall be deemed to have been given to First Union when it is so given to the Agent, and any such notice, demand or communication to Seller shall not be deemed to have been given until it is given to Seller. (d) The Agent shall have no responsibility or liability to First Union or the Seller for or arising from (i) any failure by either First Union or the Seller to perform any of their respective obligations under or in connection with this Transaction, (ii) the collection or enforcement of any such obligations, or (iii) the exercise of any of the rights and remedies of either First Union or the Seller under or in connection with this Transaction. Each of First Union and the Seller agrees to proceed solely against the other to collect or enforce any such obligations, and the Agent shall have no liability in respect of this Transaction except for its gross negligence or willful misconduct in performing its duties as the agent of First Union. 9 (e) Upon written request, the Agent will furnish to First Union and the Seller the date and time of the execution of this Transaction and a statement as to the source and amount of any remuneration received or to be received by the Agent in connection with this Transaction. Please confirm that the foregoing correctly sets forth the terms of our agreement by executing a copy of this Confirmation and returning it to us by fax at (212) 891-5042 (Attention: Gregory Klass, by telephone contact (212) 909-0951). Very truly yours, FIRST UNION SECURITIES, INC., FIRST UNION NATIONAL BANK acting solely in its capacity as Agent By: First Union Securities, Inc., of First Union National Bank acting solely in its capacity as its Agent By: /s/ Steven Gray By: /s/ Mary Louise Guttmann ------------------------------ ------------------------------ Name: Steven Gray Name: Mary Louise Guttmann Title: Vice President and Title: Senior Vice President Assistant General and Assistant General Counsel Counsel Accepted and confirmed as of the date first above written: CTIHC, INC. By: /s/ William T. Devanney, Jr. ------------------------------ Name: William T. Devanney, Jr. Title: Senior Vice President, Corporate Taxes 10