-----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, DvvVNtW6ATvHamc9nkuI72qCNtSgPv0iNYvTLikcQhpK83EogNdhYpwBOUPntbFd BqUkRiJoGU5isOrXzxTaMg== 0000950109-99-002226.txt : 19990623 0000950109-99-002226.hdr.sgml : 19990623 ACCESSION NUMBER: 0000950109-99-002226 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 45 FILED AS OF DATE: 19990622 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TELECORP PCS INC CENTRAL INDEX KEY: 0001089341 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 541872248 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-81313 FILM NUMBER: 99650373 BUSINESS ADDRESS: STREET 1: 1010 N GLEBE ROAD STREET 2: SUITE 800 CITY: ARLINGTON STATE: VA ZIP: 22201 BUSINESS PHONE: 7032361100 MAIL ADDRESS: STREET 1: 1010 N GLEBE ROAD STREET 2: SUITE 800 CITY: ARLINGTON STATE: VA ZIP: 22201 S-4 1 PROXY/PROSPECTUS As filed with the Securities and Exchange Commission on June 22, 1999 Registration No. 333-[_________] - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ______________ FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ______________ TELECORP PCS, INC. (Exact name of Registrant as specified in its charter) Delaware 4812 54-1872248 (State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer of incorporation or organization) Classification Code Number) Identification No.)
______________ 1010 N. Glebe Road Suite 800 Arlington, VA 22201 (703) 236-1100 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ______________ Thomas H. Sullivan, P.C. Executive Vice President and Chief Financial Officer TeleCorp PCS, Inc. 1010 N. Glebe Road, Suite 800 Arlington, VA 22201 (703) 236-1122 (Name, address, including zip code, and telephone number, including area code, of agent for service) ______________ Copies to: Dov T. Schwell, Esq. McDermott, Will & Emery 50 Rockefeller Plaza New York, NY 10020 (212) 547-5400 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [_] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to be Proposed Maximum Offering Proposed Maximum Aggregate Amount of Registered Amount to be Registered Price Per Unit Offering Price Registration Fee - ----------------------------------------------------------------------------------------------------------------------------------- 11 5/8% Senior $575,000,000 56.98% $327,635,000 $91,082.53 Subordinated Discount Notes due 2009 - -----------------------------------------------------------------------------------------------------------------------------------
The proposed maximum offering price per unit and the proposed maximum aggregate offering price are estimated solely for the purpose of calculating the registration fee. ___________________________________ The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. EXPLANATORY NOTE This registration statement contains a prospectus relating to the offer (the "Exchange Offer") for all outstanding 11 5/8% Senior Subordinated Discount Notes due 2009 of TeleCorp PCS, Inc. in exchange for 11 5/8% Senior Subordinated Discount Notes due 2009. In addition, this registration statement contains a prospectus relating to certain market-making activities with respect to the Exchange Notes which may, from time to time, be carried out by Chase Securities Inc. The two prospectuses will be identical in all material respects except for the front cover page, the Plan of Distribution section and the back cover page and except for the fact that the market-making prospectus will not contain the information in the Prospectus Summary relating to the Exchange Offer, the information under the caption "The Exchange Offer" and "Certain U.S. Federal Tax Considerations--Exchange Offer" will be deleted and certain conforming changes will be made to delete references to the Exchange Offer. The prospectus for the Exchange Offer follows immediately after this Explanatory Note. Following such prospectus are the form of alternative cover page, Plan of Distribution section and back cover page for the market-making prospectus and alternative pages, sections and provisions covering conforming changes. -ii- THIS PROSPECTUS, DATED JUNE 22, 1999, IS SUBJECT TO COMPLETION AND AMENDMENT PROSPECTUS TELECORP PCS, INC. OFFER TO EXCHANGE ALL OF OUR OUTSTANDING AND UNREGISTERED 11 5/8% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2009 FOR OUR REGISTERED 11 5/8% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2009 We hereby offer upon the terms and conditions described in this prospectus and the accompanying Letter of Transmittal (which together constitute the "Exchange Offer") to exchange all of our outstanding and unregistered 11 5/8% Senior Subordinated Discount Notes due 2009 ("Old Notes") for our registered 11 5/8% Senior Subordinated Discount Notes due 2009 ("Exchange Notes"). The Old Notes were issued on April 23, 1999 and, as of the date of this prospectus, an aggregate principal amount at maturity of $575.0 million is outstanding. The terms of the Exchange Notes are substantially the same as the terms of the Old Notes except that the Exchange Notes will be registered under the Securities Act of 1933, as amended, and the Exchange Notes will not contain certain transfer restrictions, registration rights and terms providing for an increase in the interest rate on the Old Notes under certain events relating to registration of the Exchange Notes. The Exchange Notes will evidence the same debt as the Old Notes and will be issued under, and entitled to the same benefits of, the indenture governing the Old Notes. We are making the Exchange Offer in order to satisfy certain contractual obligations. The Exchange Notes and the Old Notes are sometimes collectively referred to as the "Notes." YOU SHOULD CAREFULLY REVIEW THE RISK FACTORS BEGINNING ON PAGE 13 OF THIS PROSPECTUS. Our offer to exchange the Old Notes for Exchange Notes will be open until 5:00 p.m., New York City time, on , 1999, unless we extend the offer. You should carefully review the procedures for tendering the Old Notes beginning on page 51 of this prospectus. If you fail to tender your Old Notes, you will continue to hold unregistered securities and your ability to transfer them could be adversely affected. INFORMATION ABOUT THE EXCHANGE NOTES Maturity Change of Control . The Notes will mature on April 15, . If we experience a change of 2009, unless previously redeemed. control, you may require us to purchase the Notes. Interest and Accretion Security and Ranking . We issued the Old Notes at a . The Notes are not secured by any discount to their principal collateral. amount at maturity. . The Notes are subordinate to all . The Notes will accrete in value of our existing and future senior until April 15, 2004 at a debt. rate of 11 5/8% compounded semi- . The Notes rank equally with all annually. of our other senior subordinated debt. . We will pay interest semiannually on April 15 and October 15 of each year . The Notes rank senior to all of beginning October 15, 2004. our existing and future subordinated debt. Redemption . We may redeem some or all of the Guarantees Notes at any time after . If we fail to make payments on April 15, 2004. the Notes, our guarantor subsidiaries must make them . We also may redeem up to 35% of instead. These guaranties will the aggregate principal amount be senior subordinated at maturity of the Notes using obligations of our guarantor the proceeds of certain equity subsidiaries. Not all of our offerings completed before subsidiaries will be April 15, 2002. guaranteeing our payments on the . See page 82 for the redemption prices. Notes. PORTAL . The Old Notes have been designated for trading in the PORTAL market. Neither the SEC nor any state securities commission has approved or disapproved of the Notes, or determined that this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is , 1999. -iii- We will not receive any proceeds from the Exchange Offer. We will bear the expenses of the Exchange Offer. We are not using any underwriters in connection with the Exchange Offer. See "The Exchange Offer." Each broker-dealer that receives Exchange Notes for its own account in the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. A broker-dealer may use this prospectus, as it may be amended or supplemented from time to time, in connection with resales of Exchange Notes received in exchange for Old Notes where such broker-dealer acquired such Old Notes as a result of market-making activities or other trading activities. For a period of 180 days after the expiration date of the Exchange Offer, we will make this prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." This prospectus incorporates important business and financial information about us that we have not included in or delivered with the prospectus. This information is free, and you may write to or call us to obtain this information. Contact us at: TeleCorp PCS, Inc., 1010 N. Glebe Road, Suite 800, Arlington, VA 22201; telephone (703) 236-1100; Attention: Thomas H. Sullivan. To timely deliver such information to you, we much receive your request no later than five business days before you must decide whether to exchange the Notes, which is , 1999. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS All statements contained in this prospectus, as well as statements made in press releases and oral statements that may be made by us or any of our officers, directors or employees acting on our behalf, that are not statements of historical fact, including, but not limited to, statements regarding our current business strategy, future operations, technical capabilities, construction plan and schedule, commercial operations schedule, funding needs, prospective acquisitions or joint ventures, financing sources, pricing, future regulatory approvals, markets, size of markets for wireless communications services, financial position, estimated revenues, projected costs, prospects, plans and objectives of management, as well as information concerning expected actions of third parties, such as equipment suppliers, service providers and roaming partners, and expected characteristics of competing systems, are based upon current expectations and constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause our actual results to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. Among the factors that could cause actual results to differ materially are the following: the availability of sufficient capital to finance our business plan on terms satisfactory to us; competitive factors; changes in labor, equipment and capital costs; our ability to obtain necessary regulatory approvals; technological changes; our ability to comply with the indenture governing the Notes and the terms of our other credit agreements; future acquisitions or strategic partnerships; general business and economic conditions; and other factors described under the heading "Risk Factors." We caution readers not to place undue reliance on any forward-looking statements. In addition to statements that explicitly describe such risks and uncertainties, readers are urged to consider statements that include the terms "believes," "belief," "expects," "plans," "anticipates," "intends," "estimates," "projects" or the like to be uncertain and forward-looking. We have no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Although we believe that the expectations underlying the forward-looking statements are reasonable, we cannot assure that such expectations will prove to be correct. We disclose important factors that could cause our actual results to differ materially from our expectations ("cautionary statements") under the heading "Risk Factors" and elsewhere in the prospectus. The cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf. -iv- PROSPECTUS SUMMARY The following summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that you should consider before exchanging the Notes. You should carefully read this entire prospectus, including "Risk Factors," which describes important factors that could affect us. Unless otherwise specifically indicated, "TeleCorp," "we," "our" and "us" refer to TeleCorp PCS, Inc. and its consolidated subsidiaries, references to "AT&T" mean AT&T Corp. and its direct and indirect wholly-owned subsidiaries, references to the "FCC" mean the Federal Communications Commission, references to "Pops" mean the Paul Kagan Associates, Inc. ("Kagan") estimate of the 1998 population of a geographic area, and references to "PCS" mean personal communications services. Except as otherwise indicated, all information in this prospectus gives effect to: the offering of the Old Notes and the application of the net proceeds of such offering; the acquisition of licenses and related assets in Puerto Rico and Louisiana and our receipt of additional equity commitments in connection with such acquisition and the funding of a portion of these commitments; the acquisition of additional spectrum through participation in the FCC's reauction of C-Block licenses, receipt of additional equity commitments in connection with such acquisition; and the funding of a portion of these commitments (the "Transactions"). The FCC declared us the highest bidder in the reauction on April 20, 1999. The offering of the Old Notes occurred on April 23, 1999, the acquisition of certain licenses in Puerto Rico occurred on May 25, 1999, and the acquisition of certain licenses in Louisiana occurred on April 20, 1999, and June 2, 1999. The March 31, 1999 historical financial information in this prospectus does not reflect such transactions. References to our domestic markets and Pops mean our markets and Pops in the continental United States and not in Puerto Rico or the U.S. Virgin Islands. We define certain other terms used in this prospectus in the Glossary of Defined Terms. TeleCorp We intend to become a leading provider of digital wireless communications services in targeted markets in the south-central and northeast United States and in Puerto Rico. We are the exclusive provider of facilities-based mobile wireless communications services for AT&T in our markets. TeleCorp was founded in 1996 by Gerald T. Vento, Thomas H. Sullivan and certain private equity investors to acquire strategic PCS licenses. In 1998, we entered into a venture with AT&T in which AT&T contributed certain PCS licenses to us in exchange for an equity interest in our company. In addition, we have the right to use the AT&T brand name and logo together with our own brand name and logo, giving equal emphasis to each. We are AT&T's preferred roaming partner in our markets and receive preferred long distance rates from AT&T. Our PCS licenses cover approximately 16.0 million Pops, including those in the major population centers of New Orleans and Baton Rouge, Louisiana, Memphis, Tennessee, Little Rock, Arkansas, Manchester, Concord and Nashua, New Hampshire, Worcester, Massachusetts and San Juan, Puerto Rico, as well as vacation destinations such as Puerto Rico, the U.S. Virgin Islands, Cape Cod and Martha's Vineyard. Our markets have attractive economic and demographic characteristics and are experiencing strong growth in use of wireless services. These markets, which attract over 24 million visitors per year, are major roaming markets for AT&T's customers. We have successfully launched our services in 14 markets, including all of our major domestic markets. Our launched network covers approximately 40% of our domestic licensed Pops, and by year-end 1999 we expect our network will cover approximately 50% of our total licensed Pops. We have a strong distribution presence in our launched markets with 22 company-owned stores and more than 140 retail outlets where customers can buy our services. Additionally, we market our services through business-to-business representatives, telemarketing and the Internet. Our goal is to provide our customers with simple, easy-to-use wireless services with coverage across the nation, superior call quality, personalized customer care and competitive pricing in the markets we serve. We believe that, as an AT&T affiliate, we will attract customers through the national brand and coast-to-coast roaming provided by AT&T and its roaming partners. We have also entered into an agreement with Triton PCS and Tritel Communications, two other companies similarly affiliated with AT&T, to adopt SunCom as a common regional brand that is co-branded with AT&T, giving equal emphasis to each. We and the other SunCom companies are establishing the SunCom brand as a basis for building a strong regional presence with a service area covering approximately 43.0 million Pops. -1- Strategic Alliance with AT&T To rapidly develop its PCS markets, AT&T has focused on constructing its own network in selected cities and has entered into agreements with certain independent wireless operators, such as us and other affiliates, to construct and operate PCS networks in other markets. Our strategic alliance with AT&T provides us with many business, operational and marketing advantages, including: . Brand. We market our wireless services to our customers giving equal emphasis to the SunCom and AT&T brand names and logos. Our market research indicates that association with the AT&T brand name significantly increases the likelihood that potential customers will purchase our wireless communications services. . Exclusivity. We are AT&T's exclusive provider of facilities-based mobile wireless communications services in our covered markets, and we participate with AT&T in national programs. We will also work with AT&T to provide wireless services bundled with other communications services, such as their P-Net (Personal Network) program. We have entered into an agreement whereby AT&T provides long distance services to us at preferred rates. . Roaming. We are the preferred roaming partner for AT&T's digital customers who roam into our covered markets. We expect to benefit from growth in roaming traffic as AT&T's customers take advantage of its "Digital One Rate" plans while traveling in our markets. AT&T has recently experienced significant growth in roaming traffic in our markets. With the use of advanced tri-mode handsets, which transition between PCS and cellular frequencies, our customers have access to coast- to-coast coverage through our agreements with AT&T, which provide us with the benefits of AT&T's roaming agreements with third party carriers. These agreements, together with AT&T's wireless network, cover approximately 98% of the U.S. population, including in-region roaming coverage in all of our covered markets. We believe this coast-to-coast coverage provides a significant advantage over PCS competitors in our markets, and it allows us to offer competitive pricing plans similar to AT&T's Digital One Rate plans. . Products and Services. We receive preferred terms on certain products and services, including handsets, infrastructure equipment and back office support from companies who provide these products and services to AT&T. For example, we have arrangements with Lucent Technologies, Ericsson and Nokia to supply us with handsets, mobile telephone equipment, software and services at preferred prices. . Marketing. We benefit from AT&T's nationwide marketing and advertising campaigns, including the success of AT&T's Digital One Rate plans in the marketing of our own national SunRate plans. In addition, we are working with AT&T's national sales representatives to jointly market our wireless services to AT&T corporate customers located in our markets. Competitive Strengths In addition to the advantages provided by our strategic alliance with AT&T, we have the following competitive strengths: Attractive Market Footprint. Our markets have favorable demographic characteristics for wireless communications services, and we believe our markets are strategically important to AT&T's nationwide footprint. . Our markets include major population and business centers and vacation destinations. . We believe our markets, along with those of the other SunCom companies, are important to AT&T's national wireless strategy, particularly the success of its Digital One Rate plans, because they represent significant AT&T roaming markets. . According to Kagan, the average population density in our markets is approximately 38% above the national average. Relatively high population density allows us to cover more people with a lower level of network infrastructure investment. -2- Active Commercial Operations. Since late December 1998, we have successfully launched our services in 14 of our markets, including all of our major domestic markets. . We cover approximately 4.7 million Pops in our launched markets, which represent approximately 40% of our licensed domestic Pops. . We have 22 company-owned stores and over 140 retail outlets where customers can buy our services, such as Office Depot, Staples, Best Buy and Office Max. . We have established the SunCom brand name and logo which we use with equal emphasis with the AT&T brand name and logo in our marketing efforts. We and the other SunCom companies are reinforcing SunCom as a strong local brand with television, radio, and print advertisements in all our launched markets. . We developed our marketing strategy based upon extensive research in our markets and created service packages designed to meet prospective customers' needs. We offer easy-to-understand rate plans and extensive coverage areas. We also offer flexible pricing options such as pooled rate plans, pre-pay plans and our national SunRate plans. Strong Capital Base. We have committed capital of approximately $1.3 billion, consisting of the following: . up to $525.0 million of borrowings under our senior credit facilities provided by a syndicate of banks led by The Chase Manhattan Bank, TD Securities (USA) Inc. and Bankers Trust Company; . approximately $327.6 million of gross proceeds from the offering of the Old Notes; . $55.0 million of vendor financing provided by Lucent, with up to an additional $65.0 million available for the development of new markets; . $205.3 million of irrevocable equity commitments from AT&T and entities managed by Chase Capital Partners, Desai Capital Management Incorporated, Hoak Capital Corporation, J.H. Whitney & Co., M/C Partners, Entergy Corporation, Northwood Ventures LLC, One Liberty Ventures LLC and Toronto Dominion Capital (USA) Inc.; and . $148.0 million of equity issued in exchange for licenses contributed to us and related agreements. Superior Technology. We chose to build our network using TDMA technology. TDMA is the technology used by AT&T, and therefore our network is compatible with AT&T's and other TDMA networks. . TDMA technology allows enhanced features and services relative to analog cellular service, including extended battery life, integrated voicemail, paging, fax and e-mail delivery, enhanced voice privacy and short- messaging capability. . Investment in TDMA product development has led to the development of an advanced generation of handsets capable of delivering stand-by battery life of up to 14 days. We believe that wireless users place great value on the convenience and reliability afforded by this technological advance. . TDMA provides high network quality and in-building penetration. . TDMA provides network capacity at least three times greater than existing analog cellular networks, which results in operating cost advantages. . Two of the top three wireless communications companies in the United States, based on number of customers, use TDMA technology. The increased volume of TDMA users has driven down handset prices and has increased the importance of TDMA as an industry standard. Experienced and Incentivized Management. We have a management team with a high level of experience in the wireless communications industry. Our 14 member senior management team has an average of ten years of experience with wireless leaders such as AT&T, Bell Atlantic, BellSouth, SBC Communications, ALLTEL and Sprint PCS(R). -3- . Mr. Vento, our co-founder, Chief Executive Officer and Chairman of our Board of Directors, has 20 years of experience in communications and previously served as Chief Executive Officer of Sprint Spectrum(TM)/APC, leading the development of the first PCS network launched in North America. . Mr. Sullivan, our co-founder, Executive Vice President and Chief Financial Officer, is experienced in the wireless industry, having formerly served as President of TeleCorp Holding, our predecessor company, and co-head of the telecommunications law practice at McDermott, Will & Emery. . Julie Dobson, our Chief Operating Officer, has extensive operating experience in the telecommunications industry, including 18 years at Bell Atlantic, most recently as President of the New York region of Bell Atlantic Mobile Systems. . Our senior management team has substantial experience developing PCS networks in several markets using the three competing PCS technology standards of TDMA, CDMA and GSM. . Our senior management team owns approximately 14% of our common stock. Business Strategy Our formula for success is to focus on providing our customers with superior coast-to-coast and in-market coverage, enhanced value at low cost, quality customer care and superior network clarity. Provide Superior Coast-to-Coast and In-Market Coverage. Our market research indicates that scope and quality of coverage are extremely important to customers in their choice of a wireless service provider. We have designed extensive local calling areas, and we offer coast-to-coast coverage through our arrangements with AT&T and its roaming partners. Our network covers those areas where people are most likely to take advantage of wireless coverage, such as suburbs, metropolitan areas and vacation locations: the places where they live, work, and play. Through the use of tri-mode handsets, we offer our customers a large in-market footprint and coast-to-coast roaming, providing them with reliable, quality service. Provide Enhanced Value at Low Cost. We offer our customers advanced services and features at competitive prices. Our pricing plans are designed to promote the use of wireless services by enhancing the value of our services to our customers. We include usage enhancing features such as call waiting, three-way conference calling, and short message service in our basic packages. We market our service with a simple, all-in-one focus: digital phone, pager and voice mail. We offer our customers affordable, simple calling plans, and we take advantage of the coast-to-coast reach of AT&T and its roaming partners. In May 1998, AT&T introduced Digital One Rate, a suite of rate plans that has caused a redefinition of local service areas in the U.S. wireless marketplace. These simplified rate plans allow a customer to purchase a large "bucket" of minutes per month for a low fixed price. These minutes can generally be used throughout the United States without paying additional roaming fees or long distance charges. Our national SunRate plans are similar to AT&T's Digital One Rate plans. We believe we can offer competitive services because of the cost advantages provided by our agreements with AT&T and the other SunCom companies, the cost-effective characteristics of TDMA and our centralized administrative functions and efficient distribution. Deliver Quality Customer Care. We believe that superior customer service is a critical element in attracting and retaining customers. Our marketing strategy is designed to meet the needs of four primary market segments: corporate accounts, current wireless users, those with the intent to purchase wireless service within six months and pre-paid subscribers. We serve our customers from our state-of-the-art facility in Memphis, Tennessee, which houses our customer service, collections and anti-fraud personnel. Convergys, a leading provider of outsourced call center services, provides backup call center support and bilingual customer service from two facilities in Florida. We have implemented a "one call resolution" approach to customer care through the use of customer support tools such as an advanced diagnostic mechanism and access to online reference information. We are developing a state-of-the-art data warehouse to provide timely access to critical business information that can be used to provide customers with desired services, such as real-time billing and automated notification of remaining account balances. Our pre-paid users hear a "whispered" announcement of time remaining in their account before each call they place, which allows them to control usage and reduce balance inquiries to customer service. In addition, we emphasize proactive and timely customer service, including welcome packages and anniversary calls. Our Internet site provides our customers with access to new service information giving us an additional source of contact with our customers. Finally, we support our customer care initiatives through employee compensation plans based on subscriber quotas and retention. Offer Superior Network Clarity. We are committed to making the capital investment required to develop a superior network. We intend to invest approximately $50 per covered Pop for the construction of our network, which we believe will ensure consistent quality performance and result in a high level of customer satisfaction. Our capital investment is designed to provide a -4- highly reliable network as measured by performance factors such as percentage of call completion and number of dropped calls. We maintain a state-of-the-art network operations center and, to ensure continuous monitoring and maintenance of our network, we have a disaster recovery plan. Recent Developments We participated in the FCC's reauction of C-Block licenses for additional spectrum through Viper Wireless, a subsidiary formed for this purpose. On April 20, 1999, the FCC announced that the reauction ended, and Viper Wireless was the high bidder for 15 MHz licenses in New Orleans, Houma and Alexandria, Louisiana, San Juan, Puerto Rico and Jackson, Tennessee. Viper Wireless was also the high bidder for a 30 MHz license in Beaumont, Texas. AT&T and certain of our cash equity investors have committed an aggregate of approximately $32.3 million in exchange for additional shares of our preferred and common stock in the event Viper Wireless is ultimately awarded these licenses. AT&T and the investors funded approximately $6.5 million of their commitment on May 14, 1999, and approximately $25.8 million will be funded when we make payments to the FCC with respect to these licenses, or if the FCC does not refund amounts we paid to them as deposits in connection with the reauction within 180 days of the date of deposit. On June 3, 1999, a petition was filed by certain secured creditors of DCR PCS, Inc. and Pocket Communications Inc. against the application of Viper Wireless for the Houma and New Orleans licenses. The petition seeks deferral of the grant of these licenses to Viper Wireless until an appeal by the secured creditors of DCR PCS and Pocket Communications has been resolved or, in the alternative, a condition noting that a pre-existing claim to the licenses may exist if the secured creditors of DCR PCS and Pocket Communications are successful in that appeal. The appeal seeks review of the bankruptcy court's ruling concerning DCR PCS and Pocket Communications permitting DCR PCS to file its election notice, which ultimately resulted in the return of these licenses to the FCC, over the objection of the secured creditors of DCR PCS and Pocket Communications. Viper Wireless filed an opposition to the petition on June 15, 1999. TeleCorp Holding owns 85% of Viper Wireless, and Mr. Vento and Mr. Sullivan together own the remaining 15%. Mr. Vento and Mr. Sullivan together have voting control over Viper Wireless. On April 20, 1999, we completed the acquisition of 10 MHz F-Block PCS licenses covering the Baton Rouge, Houma, Hammond and Lafayette, Louisiana BTAs from Digital PCS. As consideration for these licenses, we issued to Digital PCS $2.3 million of our common and preferred stock, paid Digital PCS approximately $0.3 million in reimbursement of interest paid on U.S. government debt related to the license and assumed $4.1 million of debt owed to the U.S. government related to these licenses. This debt is shown on our balance sheet net of a discount of $0.7 million reflecting the below market interest rate on the debt. These licenses cover approximately 1.6 million Pops, including 1.2 million Pops in Baton Rouge and Lafayette covered by licenses we already owned. These licenses also cover areas contiguous to our existing licensed area, including travel corridors, which provide us with opportunities to expand our covered area. On May 25, 1999, we completed the acquisition of a 20 MHz A-Block PCS license and related assets covering the San Juan MTA from AT&T. On May 24, 1999, we sold to AT&T $40.0 million of our preferred stock. On May 25, 1999, we purchased the license and related assets from AT&T for $95.0 million in cash. In addition, we reimbursed AT&T $3.2 million for microwave relocation and $1.5 million for other expenses it incurred in connection with the acquisition. This license covers approximately 4.0 million Pops in Puerto Rico and the U.S. Virgin Islands. On June 2, 1999, we completed the acquisition of 15 MHz C-Block PCS licenses covering the Alexandria, Lake Charles and Monroe, Louisiana BTAs from Wireless 2000. As consideration for these licenses, we issued to Wireless 2000 approximately $0.4 million of common and preferred stock, paid Wireless 2000 $0.2 million for its costs for microwave relocation related to the Monroe license, $0.4 million in reimbursement of interest paid on government debt related to the license and assumed $7.4 million of debt owed to the U.S. government related to these licenses. This debt is shown on our balance sheet net of a discount of $1.3 million reflecting the below market interest rate on the debt. These licenses cover approximately 0.8 million Pops. These licenses also cover areas contiguous to our existing licensed area, including travel corridors, which provide us with opportunities to expand our covered area. We have no present intention to develop the markets covered by the Alexandria and Monroe licenses. Our agreements with AT&T were extended to cover these markets upon the closing of the Louisiana and Puerto Rico acquisitions, except for a portion of the Monroe BTA. Network Development and Financing Plan We began commercial operations in December 1998, and we have launched our services in each of our major domestic markets. Our network now covers approximately 40% of our domestic licensed Pops. We expect to launch our Puerto Rico market during the third quarter of 1999. -5- We estimate that our total capital requirements from our inception until our network is substantially built out will be approximately $1.2 billion. These requirements include license acquisition costs, capital expenditures for the network construction, operating cash flow losses and other working capital costs, debt service and closing fees and expenses. These requirements have been, and will be, funded by a variety of sources, including cash equity, the net proceeds from the offering of the Old Notes, vendor financing and borrowings under our senior credit facilities. Substantially all of our operations are conducted through TeleCorp Communications, Inc. and its subsidiaries. Mr. Vento and Mr. Sullivan provide supervisory managerial services under a management agreement between TeleCorp and TeleCorp Management Corp. We are a Delaware corporation and our principal executive offices are at 1010 N. Glebe Road, Suite 800, Arlington, Virginia 22201. The telephone number at our executive offices is (703) 236-1100. We maintain a website at http://www.suncom1.com. -6- THE EXCHANGE OFFER The Exchange Offer...... We are offering to exchange $1,000 principal amount of the Exchange Notes for each $1,000 principal amount of the Old Notes. As of the date hereof, $575.0 million aggregate principal amount at maturity of the Old Notes are outstanding. The terms of the Exchange Notes are substantially the same as the terms of the Old Notes except that the Exchange Notes will be registered under the Securities Act of 1933, as amended, and the Exchange Notes will not contain certain transfer restrictions, registration rights and terms providing for us to pay liquidated damages to holders of the Old Notes under certain events relating to registration of the Exchange Notes. Based on interpretations by the staff of the SEC, as set forth in no-action letters issued to certain third parties unrelated to us in other transactions, we believe that Exchange Notes issued in the Exchange Offer in exchange for Old Notes may be offered for resale, resold or otherwise transferred by holders of such Exchange Notes, other than any holder which is our "affiliate" within the meaning of Rule 405 under the Securities Act, or a broker-dealer who purchased Old Notes directly from us to resell under Rule 144A or any other available exemption promulgated under the Securities Act, without compliance with the registration and prospectus delivery requirements of the Securities Act, so long as such Exchange Notes are acquired in the ordinary course of the business of such holders and such holders have no arrangement with any person to engage in a distribution of Exchange Notes. However, the SEC has not considered the Exchange Offer in the context of a no-action letter and we cannot be sure that the staff of the SEC would make a similar determination with respect to the Exchange Offer as in such other circumstances. Further, each holder, other than a broker-dealer, must acknowledge that it is not engaged in, and does not intend to engage in, a distribution of the Exchange Notes and has no arrangement or understanding to participate in a distribution of Exchange Notes. Each broker-dealer that receives the Exchange Notes for its own account in the Exchange Offer must acknowledge that it will comply with the prospectus delivery requirements of the Securities Act in connection with any resale of such Exchange Notes. Broker-dealers who acquired Old Notes directly from us and not as a result of market-making activities or other trading activities may not rely on the staff's interpretations discussed above or participate in the Exchange Offer and must comply with the prospectus delivery requirements of the Securities Act in order to resell the Old Notes. Expiration Date......... The Exchange Offer will expire at 5:00 p.m., New York City time, , 1999, or such later date and time to which we extend it. Withdrawal.............. The tender of the Old Notes in the Exchange Offer may be withdrawn at any time prior to 5:00 p.m., New York City time, on , 1999, or such later date and time to which we extend the offer. We will return any Old Notes that we do not accept for exchange for any reason without expense to the tendering holder of such Notes as soon as practicable after the Exchange Offer expires or terminates. Accrued Interest on the Exchange Notes and the Old Notes............... Interest on the Exchange Notes will accrue from the date we issued the Old Notes (April 23, 1999) for which the Exchange Notes are exchanged until April 15, 2004, at which time they will have an aggregate principal amount of $575,000,000. At that time, cash interest on the Notes will become payable on April 15 and October 15 of each year, beginning on October 15, 2004. We will pay no interest on the Old Notes tendered and accepted for exchange. Conditions to the Exchange Offer.......... The Exchange Offer is subject to certain customary conditions, certain of which we may waive. See "The Exchange Offer - Certain Conditions to the Exchange Offer" beginning on page 54. -7- Procedures for Tendering Old Notes................... Each holder of the Old Notes wishing to accept the Exchange Offer must complete, sign and date a Letter of Transmittal in accordance with the instructions contained in the Letter of Transmittal and in this prospectus, and mail or otherwise deliver that Letter of Transmittal, together with the Old Notes and any other required documentation, to the exchange agent at the address set forth in this prospectus and registration statement. Holders may sign and mail copies of the Letter of Transmittal. Persons holding the Old Notes through the Depository Trust Company (DTC) and wishing to accept the Exchange Offer must do so under DTC's Automated Tender Offer Program, by which each tendering participant will agree to be bound by the Letter of Transmittal. By executing or agreeing to be bound by the Letter of Transmittal, each holder will represent to us that, among other things, (1) the Exchange Notes acquired in the Exchange Offer are being obtained in the ordinary course of business of the person receiving such Exchange Notes, whether or not such person is the registered holder of the Old Notes, (2) that if such holder is a broker-dealer registered under the Exchange Act or is participating in the Exchange Offer for the purposes of distributing the Exchange Notes, such holder will comply with the registration and prospectus delivery requirements of the Securities Act in connection with a resale of such holder's Exchange Notes and cannot rely on the position of the staff of the SEC set forth in no-action letters (see "The Exchange Offer--Purpose and Effects"), (3) such holder understands that a resale described in clause (2) above and any resales of the Exchange Notes obtained by such holder in exchange for the Old Notes acquired by such holder directly from us should be covered by an effective registration statement containing the seller securityholder information required by Item 507 or Item 508, as applicable, of Regulation S-K of the SEC, (4) the holder does not have any arrangement or understanding with any person to participate in the distribution of the Exchange Notes and (5) the holder is not our "affiliate," as defined in Rule 405 under the Securities Act. Holders who tender their Old Notes in the Exchange Offer with the intention of participating in a distribution of the Exchange Notes will not be able to rely on the no-action letters described under the heading "The Exchange Offer" above. If the holder is a broker-dealer that will receive Exchange Notes for its own account in exchange for Old Notes that such broker-dealer acquired as a result of market-making activities or other trading activities, such holder will be required to acknowledge in the Letter of Transmittal that such holder will deliver a prospectus in connection with any resale of such Exchange Notes; however, by so acknowledging and by delivering a prospectus, such holder will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. See "The Exchange Offer--Procedures for Tendering Old Notes." We will accept for exchange any and all Old Notes which are properly tendered (and not withdrawn) in the Exchange Offer prior to 5:00 p.m., New York City time, on , 1999. The Exchange Notes issued in the Exchange Offer will be delivered promptly following the expiration date. See "The Exchange Offer--Terms of the Exchange Offer" beginning on page 50. Special Procedures for Beneficial Owners........... Any beneficial owner whose Old Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender such Old Notes in the Exchange Offer should contact such registered holder promptly and instruct such registered holder to tender on such beneficial owner's behalf. If such beneficial owner wishes to tender on such owner's own behalf, such owner must, prior to completing and executing a Letter of Transmittal and delivering such owner's Old Notes, either make appropriate arrangements to register ownership of the Old Notes in such owner's name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time and may not be able to be completed prior to the Expiration Date. See "The Exchange Offer--Procedures for Tendering Old Notes." -8- Guaranteed Delivery Procedures.................. Holders of the Old Notes who wish to tender their Old Notes and whose Old Notes are not immediately available or who cannot deliver their Old Notes, a Letter of Transmittal or any other documentation required by a Letter of Transmittal to the exchange agent prior to the Expiration Date must tender their Old Notes according to the guaranteed delivery procedures set forth under "The Exchange Offer--Guaranteed Delivery Procedures." Exchange Agent.............. Bankers Trust Company is serving as exchange agent in connection with the Exchange Offer. U.S. Federal Tax Considerations.............. The exchange of the Old Notes for the Exchange Notes in the Exchange Offer should not constitute a sale or an exchange for U.S. federal income tax purposes. See "Certain U.S. Federal Tax Considerations--Exchange Offer" beginning on page 117. Effect of Not Tendering..... The Old Notes that are not tendered or that are tendered but not accepted will, following the completion of the Exchange Offer, continue to be subject to the existing restrictions upon transfer. Under certain circumstances, we may register the Old Notes under a shelf registration statement. Use of Proceeds............. We will not receive any cash from the exchange of the Old Notes in the Exchange Offer. -9- THE NOTES Issuer.................. TeleCorp PCS, Inc. Securities Offered...... $575,000,000 aggregate principal amount at maturity of 11 5/8% Senior Subordinated Discount Notes due 2009. Maturity Date........... April 15, 2009. Interest and Accretion.. The Notes will accrete in value until April 15, 2004, compounded semi-annually. At that time, cash interest on the Notes will accrue and become payable on April 15 and October 15 of each year, beginning on October 15, 2004. The yield to maturity of the Notes is 11 5/8% (computed on a semi-annual bond-equivalent basis) calculated from April 23, 1999. Original Issue Discount. We issued the Notes with "original issue discount" for U.S. federal income tax purposes. When computing gross income for U.S. federal income tax purposes, a holder of the Notes will be required to include in gross income a portion of the "original issue discount" for each day during each taxable year in which any Notes are held, even though no cash interest payments on the Notes will be made prior to October 15, 2004. The "original issue discount" will be equal to the difference between the sum of all cash payments (whether denominated as interest or principal) to be made on the Notes and the issue price of the Notes. See "Certain U.S. Federal Tax Considerations--Tax Consequences to U.S. Holders." Optional Redemption..... On or after April 15, 2004, we may redeem some or all of the Notes at the redemption prices set forth under "Description of the Notes--Optional Redemption," together with accrued and unpaid interest, if any, to the date of redemption. Before April 15, 2002, we may redeem up to 35% of the aggregate principal amount at maturity of the Notes with the net cash proceeds of certain equity offerings at a redemption price equal to 111 5/8% of the accreted value of the Notes as of the date of redemption, provided that at least 65% of the aggregate principal amount at maturity of the Notes remains outstanding immediately after the redemption. See "Description of the Notes--Optional Redemption." Change of Control....... If we experience a change of control, you will have the right to require us to repurchase your Notes at a price equal to 101% of either the accreted value or the principal amount at maturity of the Notes, as applicable, together with accrued and unpaid interest, if any, to the date of repurchase. See "Description of the Notes--Change of Control." Subsidiary Guarantees... The Notes are fully and unconditionally guaranteed on an unsecured, senior subordinated basis by TeleCorp Communications. Certain of our future subsidiaries that incur debt will fully and unconditionally guarantee the Notes on an unsecured, senior subordinated basis. If we fail to make payments on the Notes, our guarantor subsidiaries must make them instead. Each of our guarantor subsidiaries also guarantees our senior credit facilities and are jointly and severally liable on a senior basis with us for all obligations thereunder. Not all of our subsidiaries guarantee payments on the Notes. All obligations under our senior credit facilities are secured by pledges of all the capital stock of all our subsidiaries and security interests in, or liens on, substantially all of our other tangible and intangible assets and the tangible and intangible assets of our subsidiaries. See "Description of the Notes--Subsidiary Guarantees," "--Certain Covenants" and "Certain Indebtedness--Senior Credit Facilities." -10- Ranking................. The Notes and the subsidiary guarantees are unsecured and: . subordinate in right of payment to all of our and our guarantor subsidiaries' existing and future senior debt (including our and our guarantor subsidiaries' obligations under our senior credit facilities); . equal in right of payment with any of our and our guarantor subsidiaries' future senior subordinated debt; and . senior in right of payment to all of our and our guarantor subsidiaries' subordinated debt. Assuming the Transactions had been completed on March 31, 1999, (1) our outstanding senior debt would have been approximately $225.0 million (excluding unused commitments under our senior credit facilities and additional senior indebtedness of our subsidiaries), (2) we would have had no senior subordinated debt other than the Notes and (3) our outstanding subordinated debt would have been approximately $40.5 million, including $0.5 million of interest that was paid-in- kind, plus $0.3 million of additional accrued interest. In addition, (1) the outstanding senior debt of our guarantor subsidiary would have been approximately $225.0 million (consisting entirely of a guarantee of our borrowings under our senior credit facilities), (2) our subsidiary guarantor would have had no senior subordinated debt other than the guarantee of the Notes and (3) our subsidiary guarantor would have had no subordinated debt. Our subsidiaries who do not guarantee the Notes would have had a total of approximately $242.5 million of senior debt, consisting of approximately $20.7 million of debt owed to the U.S. government related to our licenses and approximately $225.0 million consisting of guarantees of our borrowing under our senior credit facilities. The U.S. government debt is shown on our balance sheet net of discounts of $3.2 million reflecting the below market interest rates on the debt. These subsidiaries would have had no senior subordinated debt or subordinated debt. The total liabilities of these subsidiaries would have been approximately $320.8 million, consisting of debt owed to the U.S. government related to our licenses in the approximate amount of $20.7 million, trade payables in the approximate amount of $24.8 million, accrued and other expenses in the approximate amount of $4.1 million and intercompany amounts payable in the approximate amount $274.4 million. The U.S. government debt is shown on our balance sheet net of discounts of $3.2 million reflecting the below market interest rates on the debt. See "Description of Notes-- Ranking." Restrictive Covenants... We issued the Old Notes, and will issue the Exchange Notes, under an indenture with Bankers Trust Company, as trustee. The indenture restricts, among other things, our ability and the ability of certain of our subsidiaries to: . incur debt; . layer debt; . pay dividends on or redeem capital stock; . make certain investments or redeem certain subordinated debt; . make certain dispositions of assets; . engage in transactions with affiliates; . engage in certain business activities; and . engage in mergers, consolidations and certain sales of assets. -11- The indenture governing the Notes also limits our ability to permit restrictions on the ability of certain of our subsidiaries to pay dividends or make certain other distributions. For more details, see "Description of the Notes-- Certain Covenants" and "--Merger, Consolidation and Certain Sales of Assets." Risk Factors You should consider carefully all of the information set forth in this prospectus and, in particular, you should evaluate the specific factors under "Risk Factors" beginning on the next page before exchanging the Notes. -12- RISK FACTORS You should consider carefully the following factors and the other information in this prospectus before exchanging the Notes. We are a new company, and we may not be able to manage the construction of our network or the growth of our business successfully. We began our operations in December 1998 by servicing roaming customers in certain of our Louisiana markets, and we began offering our wireless services in each of our major domestic markets in the first quarter of 1999. As our business expands, we will have to construct, test and deploy additional portions of our network, enhance our financial, operational and administrative systems, hire, train, integrate and manage additional employees and retain qualified personnel. Our financial performance will depend on our ability to manage the construction of our network and the successful growth of our business. If management is unable to direct our development effectively, including by failing to implement adequate systems and controls in a timely manner or by failing to retain qualified employees, we could be materially adversely affected. See "--The FCC may not finally grant our additional licenses," "--Our success depends upon our relationship with AT&T and its success," "--We may not be able to acquire the sites necessary to complete our network," "--We may have difficulty in obtaining infrastructure equipment," "Business--Network Development" and "Management." We continue to incur significant operating losses, and we may not be able to generate positive cash flow from our operations in the future. We incurred cumulative operating losses through March 31, 1999 of approximately $85.3 million. We expect to continue to incur significant operating losses and to generate negative cash flow from operating activities for at least the next several years while we continue to construct our network and develop our customer base. Our ability to eliminate operating losses and to generate positive cash flow from operations in the future will depend upon a variety of factors, many of which we cannot control. These factors include: . the cost of constructing our network; . changes in technology; . changes in governmental regulations; . the level of demand for wireless communications services; . the product offerings, pricing strategies and other competitive factors of our competitors; and . general economic conditions. If we are unable to implement our business plan successfully, we may not be able to eliminate operating losses, generate positive cash flow or achieve or sustain profitability, which would materially adversely affect us and our ability to make payments on the Notes. See "--The FCC may not finally grant our additional licenses," "--Our success depends upon our relationship with AT&T and its success," "--We may not be able to acquire the sites necessary to complete our network," "--We may have difficulty in obtaining infrastructure equipment," and "Management's Discussion and Analysis of Financial Condition and Results of Operations." We have substantial debt which we may not be able to service. We have a substantial amount of debt. As of March 31, 1999, after giving effect to the Transactions, our outstanding debt would have been approximately $610.9 million, consisting of (1) approximately $225.0 million of borrowings under our senior credit facilities and $20.7 million of debt owed to the U.S. government related to our licenses, which debt is shown on our balance sheet net of discounts of $3.2 million reflecting the below market interest rates on the debt, (2) approximately $327.6 million in accreted value of the Notes and (3) approximately $40.5 million, including $0.5 million of interest that was paid in kind, of junior subordinated notes, plus $0.3 million of additional accrued interest, issued to Lucent in connection with the vendor financing provided by Lucent. In addition, Lucent has committed to purchase up to an additional $80.0 million of junior subordinated notes in connection with our development of new markets. We may incur additional debt in the future. The indenture governing the Notes permits us to incur additional debt, subject to certain limitations. Our senior credit facilities provide for total borrowings in the amount of up to -13- $525.0 million, and, in certain circumstances, for additional borrowings in the amount of up to $75.0 million. As of March 31, 1999, after giving effect to the Transactions, the vendor financing provided by Lucent provided for us to issue up to an additional $15.0 million aggregate principal amount of notes based upon our current markets and an additional $65.0 million if we develop new markets. See "Certain Indebtedness" and "Description of the Notes." The substantial amount of our debt will have a number of important consequences for our operations, including: . we may not have sufficient funds to pay interest on, and principal of, our debt (including the Notes); . if payments on any debt owed to the U.S. government are not made when due, the FCC may: . impose substantial financial penalties; . reclaim and reauction the related licenses, and impose a significant financial penalty in respect of each license that is reclaimed and reauctioned; . deny renewal of any other licenses; and . pursue other enforcement measures; . we will have to dedicate a substantial portion of any cash flow from operations to the payment of interest on, and principal of, our debt, which will reduce funds available for other purposes; . we may not be able to obtain additional financing for capital requirements, capital expenditures, working capital requirements and other corporate purposes; . some of our debt, including borrowings under our senior credit facilities, will be at variable rates of interest, which could result in higher interest expense in the event of increases in interest rates; . pledges of the capital stock of our subsidiaries and liens on substantially all of our other assets and the assets of such subsidiaries secure the debt incurred under our senior credit facilities and this debt matures prior to the maturity of the Notes; and . our ability to adjust to changing market conditions and to withstand competitive pressures could be limited, and we may be vulnerable to additional risk in the event of a downturn in general economic conditions or our business. See "--We could lose our F-Block and C-Block licenses if we fail to meet financial and other tests," "--Government regulation, changes in our licenses or other governmental action could adversely affect us," "Business--Government Regulation" and "Certain Indebtedness." Our ability to make payments on our debt, including the Notes, depends upon our future operating performance, which is subject to general economic and competitive conditions and to financial, business and other factors, many of which we cannot control. If our cash flow from operating activities is insufficient, we may take certain actions, including delaying or reducing capital expenditures, attempting to restructure or refinance our debt, selling assets or operations or seeking additional equity capital. We may be unable to take any of these actions on satisfactory terms or in a timely manner. Further, any of these actions may not be sufficient to allow us to service our debt obligations. Our existing debt agreements limit our ability to take certain of these actions. The indenture governing the Notes contains similar restrictions. See "--Our debt instruments could restrict our business plans." Our failure to earn enough to pay our debts or to successfully undertake any of these actions could, among other things, materially adversely affect the market value of the Notes. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources," "Certain Indebtedness" and "Description of the Notes." We may need additional financing to complete our network and fund operating losses. We will make significant capital expenditures to finish the designing, building, testing and deployment of our network. We estimate that the proceeds from the offering of the Old Notes, together with the proceeds from sales of our equity securities, borrowings under our senior credit facilities and the vendor financing provided by Lucent, and internally generated cash, will be sufficient to: -14- . fund the planned construction of our network; . fund operating losses; and . satisfy debt service requirements through December 31, 2002. See "Use of Proceeds" and "Business--Network Development." The actual expenditures necessary to achieve these goals may differ significantly from our estimates. We would have to obtain additional financing, if: . any of our sources of capital are unavailable or insufficient; . we significantly depart from our business plan; . we experience unexpected delays or cost overruns in the construction of our network; . we have increases in operating costs; . changes in technology or governmental regulations create unanticipated costs; or . we acquire additional licenses. We cannot predict whether any additional financing will be available, the terms on which any additional financing would be available or whether our existing debt agreements will allow additional financing. If we cannot obtain additional financing when needed, we will have to delay, modify or abandon some of our plans to construct the remainder of our network. We have sold $205.3 million of equity securities. As of March 31, 1999, we had received payments of $55.5 million in payment for such securities. The remaining $149.8 million (including $32.3 million of commitments to reimburse us for costs incurred in connection with the FCC's reauction of C-Block licenses) has been irrevocably committed and will be paid within three years. If we do not receive the proceeds from sales of our equity securities in a timely manner, our ability to complete construction of our network, successfully implement our business plan and capitalize on opportunities for growth could be materially adversely affected. The FCC may not finally grant our additional licenses. We participated in the FCC's reauction of C-Block and other licenses for additional spectrum through Viper Wireless. On April 20, 1999, the FCC announced that the reauction ended, and Viper Wireless was the high bidder for additional spectrum in New Orleans, Houma and Alexandria, Louisiana, San Juan, Puerto Rico, Jackson, Tennessee and Beaumont, Texas. On June 3, 1999, a petition was filed by certain secured creditors of DCR PCS and Pocket Communications against the application of Viper Wireless for the Houma and New Orleans licenses. The petition seeks deferral of the grant of these licenses to Viper Wireless until an appeal by the secured creditors of DCR PCS and Pocket Communications has been resolved or, in the alternative, a condition noting that a pre-existing claim to the licenses may exist if the secured creditors of DCR PCS and Pocket Communications are successful in that appeal. The appeal seeks review of the bankruptcy court's ruling concerning DCR PCS and Pocket Communications permitting DCR PCS to file its election notice, which ultimately resulted in the return of these licenses to the FCC, over the objection of the secured creditors of DCR PCS and Pocket Communications. Viper Wireless filed an opposition to the petition on June 15, 1999. If we transfer these licenses to TeleCorp Holding Corp., Inc., our wholly owned subsidiary, we would need FCC approval to do so. Accordingly, we cannot be certain that we will consummate this transaction. See "Summary--Recent Developments." Our success depends upon our relationship with AT&T and its success. We have entered into a number of agreements with AT&T, including: . a license agreement, which allows us to market our services using equal emphasis co-branding with the AT&T brand name and logo until July 2003 (which will be automatically renewed for a period of five years unless we or AT&T elects not to renew the agreement); . a stockholders' agreement, which provides, among other things, that we will be AT&T's exclusive facilities-based provider of mobile wireless services in our covered areas until July 2009; -15- . an intercarrier roamer service agreement, which allows us and AT&T to grant our respective customers the right to roam on the other's network until July 2018 (if we or AT&T do not previously terminate the agreement after July 2008); . a roaming administration service agreement, which allows us to grant to our customers the right to roam on networks operated by companies who have entered into roaming agreements with AT&T to the extent provided in, and subject to the terms of, such agreements, for two years; and . a long distance agreement, which allows us to purchase long distance services at preferred rates. In certain situations, AT&T may withdraw from these agreements with us. If we experience a change in control, AT&T may terminate the license agreement, the stockholders' agreement and the long distance agreement. If AT&T combines with certain other businesses, AT&T may terminate the license agreement or the exclusive provider provisions of the stockholders' agreement for that portion of our coverage area in which the acquired company provided wireless services. Currently, only Sprint Corporation, SBC Communications, Bell Atlantic and Bell South satisfy the criteria regarding the other business in respect of which a combination would permit the termination of the exclusive provider provisions of the stockholders' agreement. If we fail to meet certain construction, quality or feature set requirements, AT&T may terminate the exclusive provider provisions of the stockholders' agreement. Upon 180 days' prior notice, both we and AT&T may terminate the roaming administration service agreement. See "Certain Relationships and Related Transactions--AT&T Agreements." If the rights to use the AT&T brand name and logo and related rights granted to us under the license agreement were revoked or otherwise became unavailable, or if any of the agreements we have entered into with AT&T were not renewed or were terminated, we could be materially adversely affected. We use our relationship with AT&T to obtain the infrastructure equipment and handsets that we use in the construction and operation of our network on preferred terms from the vendors who supply AT&T. See "--We may have difficulty obtaining infrastructure equipment." Any disruption in our relationship with AT&T could have a material adverse effect on our ability to obtain the infrastructure equipment that we use in our network or on our relationship with our vendors. We currently depend upon AT&T's systems to activate our subscribers over-the- air. If this service were not available to us, it could materially adversely affect our ability to activate our subscribers. Our success highly depends upon our relationship with AT&T and its success as a provider of wireless communications services. AT&T and the other SunCom companies are subject, to varying degrees, to the same risks that affect us, and we cannot be sure that AT&T and these companies will succeed in developing their wireless businesses. Any such failures could materially adversely affect us. See "--We face significant competition" and "Business--Competition." The agreements we have entered into with AT&T contain requirements regarding the construction of our network, and, in many instances, these requirements are more stringent than those imposed by the FCC. Failure to meet their requirements could result in termination of certain exclusivity provisions contained in our agreements with AT&T. The construction of the remainder of our network involves risks of unanticipated costs and delays. We will need to complete timely the construction of additional phases of our network to meet such requirements. We may not be able to acquire the sites necessary to complete our network. We must lease or otherwise acquire rights to use sites for the location of base station transmitter equipment and obtain zoning variances and other governmental approvals to complete the construction of our network and to provide wireless communications services to customers in our licensed areas. In addition to the sites used in the areas where we currently offer service, we have leased 149 sites that will be developed in later phases of construction of our network. Local zoning ordinances restrict our ability to site and construct antennas, and such ordinances may prevent us from successfully completing the buildout of our network. If we encounter significant difficulties in leasing or otherwise acquiring rights to sites for the location of base station transmitter equipment, we may need to alter the design of our network, which could materially adversely affect our ability to complete construction of our network in a timely manner. We may have difficulty in obtaining infrastructure equipment. The demand for the equipment that we require to construct our network is considerable and manufacturers of this equipment could have substantial backlogs of orders. Accordingly, the lead time for the delivery of this equipment may be long. Some of our competitors purchase large quantities of communications equipment and may have established relationships with the manufacturers of this equipment. Consequently, they may receive priority in the delivery of this equipment. Our agreements with -16- vendors contain penalties if vendors do not deliver the equipment according to schedule. Nevertheless, the vendors may fail to deliver the equipment to us in a timely manner. If we do not receive the equipment in a timely manner, we may be unable to provide wireless communications services comparable to those of our competitors. In addition, we may be unable to satisfy the requirements regarding the construction of our network contained in FCC regulations or our agreements with AT&T. If we fail to construct our network in a timely manner, we could limit our ability to compete effectively, lose our licenses or breach our agreements with AT&T, which, in turn, could materially adversely affect us. See "--Our success depends upon our relationship with AT&T and its success," "-- Government regulation, changes in our licenses or other governmental action could adversely affect us," "--We could lose our F-Block and C-Block licenses if we fail to meet financial and other tests," "Business--Network Development," "-- Government Regulation" and "Certain Relationships and Related Transactions--AT&T Agreements." The interests of our stockholders may conflict with the interests of the holders of the Notes. Under the stockholders' agreement between us and AT&T, AT&T has the right to elect two of the 13 members of our Board. All of our directors and officers owe a fiduciary duty to holders of our equity interests, including AT&T. Directors and officers of a company generally do not owe a fiduciary duty to holders of debt securities, such as the Notes, and they may not act in the best interests of the holders of the Notes. In addition, our interests may conflict with those of AT&T, and we and AT&T may not resolve any such conflict in our favor. Potential acquisitions may require us to incur additional debt and integrate new technologies, operations and services. We may pursue additional strategic acquisitions of licenses and facilities to enhance our business, operations and financial results and to expand our commercial operations. To consummate future acquisitions, we may incur additional debt. In addition, the acquisition of additional licenses and facilities involves a number of significant risks, including the difficulties associated with the integration of new technologies, operations and services with existing technologies, operations and services and the diversion of management's attention from other business concerns. Accordingly, future acquisitions could materially adversely affect us. The construction of a network and the beginning of commercial operations in any new area will be subject to the same risks that affect the construction of our network and the beginning of commercial operations in our current markets. See "--We may need additional financing to complete our network and fund operating losses" and "--Our success depends upon our relationship with AT&T and its success," "--We may not be able to acquire the sites necessary to complete our network" and "--We may have difficulty in obtaining infrastructure equipment." We face significant competition. Competition in the wireless communications services industry is intense. Many of our competitors have substantially greater financial, technological, marketing and sales and distribution resources than we do. In addition, competitors who entered the wireless communications services market before us may have a significant "time-to-market" advantage over us. As a new entrant in the market, we may have to engage in significant and prolonged discounting to attract customers, which would materially adversely affect our business. In addition, some of our competitors may market other services, such as traditional landline telephone service, cable television access and access to the Internet, together with their wireless communications services. We may not be able to compete successfully with competitors who have substantially greater resources or a significant "time-to-market" advantage or who offer more services than we do. We compete in our markets with virtually every major U.S. cellular and PCS company. Some of these competitors have achieved substantial coverage in portions of our licensed areas. Certain of our competitors have more extensive coverage within our licensed areas than we provide and also have broader regional coverage. In addition, the FCC reauctioned C-Block licenses in substantially all of our markets, and, to the extent we did not acquire these licenses, we may face additional competitors in our markets. We compete with companies that use other communications technologies, including paging (and digital two-way paging), ESMR and domestic and global mobile satellite service. In addition, we expect that, in the future, providers of wireless communications services will compete more directly with providers of traditional landline telephone services, energy companies, utility companies and cable operators who expand their services to offer communications services. Finally, we may compete in the future with companies who offer new technologies. See "--Changes in technology and customer demands could adversely affect us." Our ability to compete successfully will depend, in part, upon our ability to anticipate and respond to various competitive factors affecting the industry, including the introduction of new services, changes in consumer preferences, demographic trends, economic conditions and competitors' pricing strategies, all of which could adversely affect our profitability. In addition, the -17- future level of demand for wireless communications services is uncertain. See "Business--The Wireless Communications Industry" and "--Competition." We depend upon consultants and contractors who could fail to perform their obligations. We have retained Lucent and other consultants and contractors to assist in the design and engineering of our systems, construct cell sites, switch facilities and towers, assist in leasing or otherwise acquiring rights to use sites for the location of cell sites, deploy our network and install, maintain and support our information technology systems. See "Certain Relationships and Related Transactions--Other Related Party Transactions." Although we believe that other vendors can perform the services that such consultants and contractors provide, the failure by any of these consultants or contractors to fulfill its contractual obligations could materially adversely affect our ability to complete the construction of our network in a timely manner, which could materially adversely affect us. See "--Our success depends upon our relationship with AT&T and its success," "--We may not be able to acquire the sites necessary to complete our network" and "--We may have difficulty in obtaining infrastructure equipment." Our success depends upon our ability to attract and retain senior management. Our success depends upon the services of the members of our senior management team, particularly Mr. Vento, Mr. Sullivan and Ms. Dobson, and their ability to implement our business plan and manage our business. The loss of the services of one or more of these individuals could materially adversely affect us. We do not carry life insurance on any of our senior management. See "--We depend on a management agreement with TeleCorp Management" and "Certain Relationships and Related Transactions--Management Agreement." We depend on a management agreement with TeleCorp Management. Under the management agreement with TeleCorp Management, TeleCorp Management provides management services to us regarding the design, development and operation of our network. We depend upon TeleCorp Management to perform its obligations under the management agreement. TeleCorp Management, which is wholly owned by Mr. Vento and Mr. Sullivan, had no operating history before it began providing services to us. The management agreement terminates: . upon thirty days' notice from TeleCorp Management; . upon our or our stockholders removing Mr. Vento or Mr. Sullivan as a director of TeleCorp; . if we do not pay TeleCorp Management; . if we become bankrupt; or . on July 17, 2003, unless renewed. If the management agreement is terminated, our success and our ability to comply with the rules regarding our F-Block and C-Block licenses could be materially adversely affected. See "--Government regulation, changes in our licenses and other governmental action could adversely affect us," "We could lose our F-Block and C-Block licenses if we fail to meet financial and other tests," "Business--Government Regulation" and "Management--Management Agreement." Members of our management own interests in companies that might conflict with our interests. Members of our management, including Mr. Vento and Mr. Sullivan, own interests in companies that hold licenses to provide wireless communications services in areas outside of our licensed areas and may acquire interests in companies that hold licenses to provide wireless communications services in the future. Although we do not expect that these companies will provide services that compete with our services, our interests may conflict with the interests of these companies and any conflicts may not be resolved in our favor. Government regulation, changes in our licenses or other governmental action could adversely affect us. Congress, the FCC, state and local regulatory agencies and the courts directly and indirectly regulate wireless communications networks and the networks with which they interconnect. The FCC, in conjunction with the Federal Aviation Administration, regulates the marking and lighting of towers, including those used in wireless communications networks. Congress, the FCC, the Federal Aviation Administration, state and local regulatory authorities or the courts may adopt new -18- regulations, amend existing regulations, alter the administration of existing regulations or take other actions that materially adversely affect us. Our licenses to provide wireless communications services, which are our principal assets, have terms of ten years. Each of our licenses may be renewed upon expiration of its term for a period of ten years. All of the licenses, however, are subject to revocation by the FCC at any time "for cause," which includes the failure to comply with the terms of the licenses, the failure to remain qualified under applicable FCC rules to hold the licenses, certain violations of FCC regulations and malfeasance and other misconduct. We cannot ensure that our licenses will be renewed upon expiration of their terms. Further, our licenses could be modified in a way that materially adversely affects us. The nonrenewal or loss of any of our licenses would materially adversely affect us. Additionally, the threat of nonrenewal or loss of any of our licenses could materially adversely affect the market value of the Notes. See "Business--Government Regulation." TeleCorp Holding participated in the FCC's auction of F-Block licenses as a "very small business," and TeleCorp Holding must remain a "very small business" for at least five years to comply with applicable rules of the FCC. TeleCorp Holding will also acquire certain C-Block licenses in connection with the Louisiana acquisitions, which are subject to the same regulations. See "--We could lose our F-Block and C-Block licenses if we fail to meet financial and other tests." If TeleCorp Holding were found to be in violation of these rules, the FCC could impose substantial financial and regulatory penalties upon us and TeleCorp Holding, such as a fine, revocation of our PCS licenses, acceleration of installment payment obligations or retroactive loss of bidding credits. For example, the FCC could require that TeleCorp Holding repay all debt owed to the U.S. government in respect of the award of our F-Block and C-Block licenses, restrict or revoke TeleCorp Holding's F-Block and C-Block licenses or refuse to grant similar licenses to us in the future. See "Business--Government Regulation." The imposition of any of these financial or regulatory penalties could materially adversely affect us. In addition, TeleCorp Holding owes substantial debt to the U.S. government in respect of the award of certain F-Block and C-Block licenses. If interest on, and principal of, any of this debt is not paid when due, or if any default, after any applicable grace periods expire, on the payment of amounts owed under this debt occurs, the FCC may: . impose substantial financial penalties; . reclaim and reauction the related licenses, and impose a significant financial penalty in respect of each license that is reclaimed and reauctioned; . deny renewal of other licenses; or . pursue other enforcement measures. See "--We could lose our F-Block and C-Block licenses if we fail to meet financial and other tests." If the FCC were to take any of these actions, then we could be materially adversely affected. See "Certain Indebtedness--Government Debt." Spectrum is the range of electromagnetic frequencies available for use. The FCC has made additional PCS spectrum available through a reauction of certain C- Block and other licenses returned to, or repossessed by, the FCC. We participated in this reauction for additional spectrum through Viper Wireless. On April 20, 1999, the FCC announced that the reauction ended, and Viper Wireless was the higher bidder for additional spectrum in New Orleans, Houma and Alexandria, Louisiana, San Juan, Puerto Rico, Jackson, Tennessee and Beaumont, Texas. On June 3, 1999, a petition was filed by certain secured creditors of DCR PCS and Pocket Communications against the application of Viper Wireless for the Houma and New Orleans licenses. The petition seeks deferral of the grant of these licenses to Viper Wireless until an appeal, by the secured creditors of DCR PCS and Pocket Communications has been resolved or in the alternative, a condition noting that a pre-existing claim to the licenses may exist if the secured creditors are successful in that appeal. The appeal seeks review of the bankruptcy court's ruling concerning DCR PCS and Pocket Communications permitting DCR PCS to file its election notice, which ultimately resulted in the return of these licenses to the FCC, over the objection of the secured creditors of DCR PCS and Pocket Communications. Viper Wireless filed an opposition to the petition on June 15, 1999. All these licenses are C-Block licenses and are subject to the same restrictions as our current C-Block licenses. To the extent such licenses are not finally granted to us, we may face additional competitors in our markets. In the future, the FCC may auction additional spectrum, including 36 MHz of spectrum near the cellular band in the year 2000. -19- We could lose our F-Block and C-Block licenses if we fail to meet financial and other tests. TeleCorp Holding participated in the FCC's auction of F-Block licenses as a "very small business," and TeleCorp Holding must remain a "very small business" for at least five years to comply with applicable rules of the FCC. TeleCorp Holding will also acquire certain C-Block businesses in connection with the Louisiana acquisitions, which are subject to the same regulations. Viper Wireless participated in the FCC's reauction of C-Block licenses as a "very small business," and Viper Wireless is subject to the same regulations. The FCC combines the gross revenues and assets of the applicant or licensee and the applicant's or licensee's "financial affiliates" to determine whether an applicant or a licensee qualifies as a "very small business." An entity may be a "financial affiliate" of an applicant or licensee as a result of common investments, contractual relationships, joint venture agreements, voting trusts, stock ownership, ownership of stock options or convertible securities, agreements to merge or familial relationships. In addition, the FCC may consider an entity with which an applicant or licensee has formed a "joint venture," as defined by the FCC, to be a "financial affiliate" of the applicant or licensee under certain circumstances. Holders of an ownership interest in an applicant or licensee below certain thresholds are "passive" investors, and such holders are not "financial affiliates" of the applicant or licensee. Moreover, the FCC will not attribute to an applicant or licensee the gross revenues and assets of an entity that makes a bona fide loan to the applicant or licensee unless such entity is otherwise an affiliate of the applicant or if the FCC treats the loan as an equity investment. The FCC also requires applicants and licensees with certain ownership structures, such as ours, to cause certain investors who have certain financial qualifications to form a "control group." Such a control group must: . hold not less than 25% of the applicant's or licensee's equity on a fully diluted basis; . hold a majority of the applicant's or licensee's total voting stock; and . have both actual and legal control of the applicant or licensee. We believe that our capital structure and our ownership structure allow us to maintain our status as a "very small business" and to satisfy the FCC's requirements regarding the presence of a "control group." The FCC reviewed our capital and ownership structures, as well as the filings required in connection with the formation of the venture between us and AT&T, as part of our application for our F-Block licenses. The FCC has granted all our F-Block licenses to us by "final order" and has not taken any action to challenge our capital structure or ownership structure under the rules applicable to "very small businesses," the rules of "financial affiliation" or the rules relating to the presence of a "control group." The FCC or another party may challenge our capital or ownership structure under any of these rules in the future, and our capital structure or ownership structure, our relationship with AT&T, our financial affiliations with other entities or the loans from Lucent may be found to violate these rules. If we were found to be in violation of these rules, the FCC could impose substantial penalties upon us or TeleCorp Holding, such as a fine, revocation of our PCS licenses, acceleration of installment payment obligations or retroactive loss of bidding credits. For example, the FCC could require that TeleCorp Holding repay all debt owed to the U.S. government in respect of the award of certain F-Block and C-Block licenses to TeleCorp Holding, restrict or revoke our F-Block and C-Block licenses or refuse to grant similar licenses to us in the future. See "--Government regulation, changes in our licenses and other governmental action could adversely affect us" and "Business--Government Regulation." The imposition of any of these financial or regulatory penalties could materially adversely affect us. The FCC has adopted regulations that require companies who have acquired licenses to provide wireless communications services to meet certain minimum requirements regarding the construction of their networks. For example, licensees of 30 MHz Blocks (such as the A-Block, B-Block and C-Block) are required to offer a signal level that provides adequate service to at least one- third of the population in their licensed area within five years of receipt of the license, and to at least two-thirds of such population within ten years of receipt of the license. Licensees of 10 MHz Blocks (such as the D-Block, E-Block and F-Block) are required to offer a signal level that provides adequate service to at least one-quarter of the population in their licensed area within five years of receipt of the license, or to show substantial service in the licensed area within five years of receipt of the license. The FCC has ruled that disaggregated 15 MHz licenses such as those acquired in the FCC's reauction of C-Block and other licenses are subject to the same build-out requirements as 10 MHz Blocks. See "--Government regulation, changes in our licenses or other governmental action could adversely affect us" and "Business--Government Regulation." The FCC could fine us or revoke our licenses if we do not meet such requirements. After giving effect to final grant of the Viper Wireless licenses, we will own A-Block, B-Block, C-Block, D-Block and F-Block licenses. A fine or the revocation of any of our licenses could materially adversely affect us. Changes in technology and customer demands could adversely affect us. We use the TDMA technology standard in our network. Other digital technologies, such as CDMA and GSM, may have significant advantages over TDMA. If the marketplace demands the advantages of other digital technologies or if alternative -20- technologies emerge in the marketplace, we may need to purchase and install equipment necessary to allow migration from TDMA to these technologies or change our choice of technology to compete in the marketplace. We may not be able to purchase and install successfully the equipment necessary to allow for migration to a new or different technology or to adopt a new or different technology at an acceptable cost, if at all. The wireless communications services industry is experiencing rapid technological change, evidenced by the pace of digital upgrades in existing analog systems, evolution of industry standards, ongoing improvements in the capacity and quality of digital technology, decrease in the time needed for new products to come to market and enhancements and changes in the requirements and preferences of consumers. In addition, industry groups are in the process of developing standards for the next generation of wireless services. While we believe that TDMA users will be able to migrate to the next generation systems, this may not be the case. We will need to develop and implement new technologies to increase our service offering and cost effectiveness to remain competitive. The development and implementation of new technologies is highly complex and uncertain, and we may experience delays in developing or implementing new technologies. If we are unable to develop and implement new technologies, we may not be able to compete effectively. An inability to develop and implement new technologies to meet customer demands and to compete effectively could materially adversely affect us. We expect to incur operating costs due to fraud. Based upon the experiences of other providers of wireless communications services, we expect to incur costs as a result of the unauthorized use of our network. These costs include the capital and administrative costs associated with detecting, monitoring and reducing the incidence of fraud and the costs associated with payments to other providers of wireless communications services for "unbillable" fraudulent roaming on their networks. If we are unsuccessful in our efforts to control the unauthorized use of our network, or if we experience unanticipated types of fraud, our business could be materially adversely affected. Use of hand-held phones may pose health and safety risks. Media reports have suggested that certain radio frequency emissions from wireless handsets may be linked to certain health concerns, including the incidence of cancer. Data gathered in studies performed by manufacturers of wireless communications equipment dispute these media reports. Further, a major industry trade association and certain governmental agencies have stated publicly that the use of wireless handsets does not pose any undue health risks. Nevertheless, concerns regarding radio frequency emissions could have the effect of discouraging the use of wireless handsets, which could materially adversely affect us. The FCC recently revised the rules specifying the methods to be used in evaluating radio frequency emissions from radio equipment, including wireless handsets. The hand-held digital telephones that we offer to our customers comply with the standards adopted under the new rules. These handsets may not comply with any rules adopted by the FCC in the future. The failure of these handsets to remain in compliance with applicable FCC rules and standards could materially adversely affect us. Recent studies have shown that hand-held digital telephones interfere with certain medical devices, including hearing aids and pacemakers. The University of Oklahoma Center for the Study of Wireless Electromagnetic Compatibility, together with industry trade associations and other interested parties, are currently studying the extent of, and possible solutions to, this interference. If these studies demonstrate significant interference or create public concern about interference, the results of such studies could materially adversely affect us. Measures that would (1) require "hands free" use of cellular phones while operating motor vehicles, (2) ban cellular phone use while driving, (3) limit the length of calls while driving or (4) require people to pull to the side of the road to use cellular phones while driving, have been proposed or are being considered in 12 state legislatures. Three states have passed legislation concerning cellular phones while driving. California requires rental cars with cell phones to include written operating instructions concerning safe use. Florida permits cellular phone use as long as the motorist has one ear free to hear surrounding sound. Massachusetts allows cellular phone use as long as it does not interfere with the safe operation of the vehicle and as long as the motorist keeps one hand on the steering wheel at all times. In addition, certain commissions and municipalities have passed restrictions on cellular phone use while driving. In New York, New York, the New York City Taxi and Limousine Commission approved a regulation that bans taxi drivers from dialing and talking while driving and requires taxi drivers to pull over to the curb and be legally parked before using cellular phones. In Brooklyn, Ohio, it is a misdemeanor to use a cellular phone while driving unless both hands are on the steering wheel. We cannot predict the success of the proposed laws concerning car phone use or the effect on use of cellular phones as a result of the publicity surrounding or passage of such laws. In addition, more restrictive measures or measures aimed at wireless services companies as opposed to users may be proposed or passed in state legislatures in the future. The passage or proliferation of such legislation could materially adversely affect us. -21- The Notes are subordinate to other debt that encumbers our assets. The right to payment on the Notes is subordinate to all of our existing and future senior debt. Similarly, each subsidiary guarantee of the Notes is subordinate to all existing and future senior debt of the applicable guarantor. In the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding with respect to us or any guarantor, our or such guarantor's assets will be available to pay obligations on the Notes or the applicable guarantee only after all outstanding senior debt of such party has been paid in full. There may not be sufficient assets remaining to make payments on amounts due on any or all of the Notes then outstanding or any subsidiary guarantee. In addition, under certain circumstances, an event of a default in the payment of certain senior debt will prohibit us and the guarantors of the Notes from paying the Notes or the guarantees of the Notes. As of March 31, 1999, after giving effect to the Transactions: . our outstanding senior debt would have been approximately $225.0 million (excluding unused commitments under our senior credit facilities and additional senior indebtedness for our subsidiaries); and . the outstanding senior debt of our subsidiary guarantor would have been approximately $225.0 million (consisting entirely of guarantees of borrowings under our senior credit facilities, but excluding unused commitments thereunder). In addition, certain of our subsidiaries will not guarantee the Notes. In the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding with respect to any of these subsidiaries, the assets of these subsidiaries will be available to pay obligations on the Notes only after all outstanding liabilities of such subsidiaries has been paid in full. As of March 31, 1999, after giving effect to the Transactions, the total liabilities of these subsidiaries would have been approximately $320.8 million, consisting of debt owed to the U.S. government related to our licenses in the approximate amount of $20.7 million, trade payables in the approximate amount of $24.8 million, accrued and other expenses in the approximate amount of $4.1 million and intercompany amounts payable in the approximate amount of $274.4 million. The U.S. government debt is shown on our balance sheet net of discounts of $3.2 million reflecting the below market interest rates on the debt. Although the indenture governing the Notes limits the amount of debt we and certain of our subsidiaries may incur, the amount of such debt could be substantial and could be senior debt. See "Description of the Notes." The Notes and the guarantees of the Notes are unsecured. Thus, the Notes and the guarantees of the Notes rank junior in right of payment to any of our secured debt or the secured debt of the guarantors of the Notes to the extent of the value of the assets securing such debt. Such debt includes debt incurred under our senior credit facilities, which is secured by liens on substantially all of our assets and those of our subsidiaries. If an event of default were to occur under our senior credit facilities, the lenders could foreclose on such collateral regardless of any default with respect to the Notes. Such assets would first be used to repay in full all amounts outstanding under our senior credit facilities. The use in the wireless communications services business of our licenses and the infrastructure equipment used in our network creates the value of such assets. These assets are highly specialized and, taken individually, have limited marketability. Consequently, in the event the lenders under our senior credit facilities foreclose on the collateral securing our debt, these assets are likely to be sold as an entirety. The need to obtain FCC approval and comply with applicable governmental regulations could reduce the value obtained for these assets. We depend upon our subsidiaries for funds necessary to make payments on the Notes. We conduct almost all of our operations through our subsidiaries. As a result, we depend upon dividends from our subsidiaries for the funds necessary to make payments on the Notes. The indenture governing the Notes limits restrictions on the ability of certain of our subsidiaries to pay dividends or make certain other distributions. Nonetheless, our senior credit facilities restrict the ability of these subsidiaries to pay dividends or make other distributions. In addition, there can be no assurance that any such dividends or distributions will be adequate to allow us to make payments on the Notes. Federal and state statutes allow courts, under specific circumstances, to void the Notes and the guarantees of the Notes. Although guarantees of the Notes provide the holders of the Notes with a direct claim against the assets of the applicable guarantor, creditors of a bankrupt guarantor may challenge such guarantee. If such a challenge were upheld, then the applicable guarantee would be invalid and unenforceable. Without the benefit of any guarantees, holders of the Notes would be junior to all creditors, including trade creditors, of our subsidiaries. As of March 31, 1999, after giving effect to the Transactions, the total liabilities of our subsidiaries who do not guarantee the Notes would have been approximately $320.8 million, consisting of debt owed to the U.S. government related to our licenses in the approximate amount of $20.7 million, trade payables in the approximate amount of $24.8 million, accrued and -22- other expenses in the approximate amount of $4.1 million and intercompany amounts payable in the approximate amount of $274.4 million. The U.S. government debt is shown on our balance sheet net of discounts of $3.2 million reflecting the below market interest rates on the debt. The creditors of a bankrupt guarantor could challenge a guarantee on the grounds that the guarantee constituted a "fraudulent conveyance" under bankruptcy law. If a court were to rule that a guarantor: . incurred a guarantee to delay, hinder or defraud present or future creditors; . received less than reasonably equivalent value or fair consideration for incurring the guarantee; and . at the time of incurring the guarantee, the guarantor: . was insolvent or rendered insolvent by reason of the guarantee; . was engaged, or about to engage, in a business or transaction for which its remaining unencumbered assets were unreasonably small; or . intended to, or believed it would, incur debts greater than it could pay as they become due then the court could void the obligations under the guarantee or subordinate the guarantee to other debt of such guarantor or take other action detrimental to the holders of the Notes. In addition, any of the guarantees of the Notes could be subject to the claim that, since such guarantee was incurred for our benefit and only indirectly for the benefit of our subsidiary that provided the guarantee, the obligations of the applicable guarantor were incurred for less than fair consideration. Our debt instruments could restrict our business plans. The indenture governing the Notes restricts our ability and the ability of certain of our subsidiaries to engage in certain transactions. In addition, our senior credit facilities require us to maintain certain ratios, including leverage ratios, an interest coverage ratio and a fixed charges ratio, and to satisfy certain tests, including tests relating to minimum covered Pops, minimum number of subscribers to our services and minimum aggregate service revenue per subscriber. The vendor financing provided by Lucent also restricts our ability and the ability of our subsidiaries to do the following: . create liens; . make certain payments, including payments of dividends and distributions in respect of capital stock; . consolidate, merge and sell assets; . engage in certain transactions with affiliates; and . fundamentally change our business. See "Description of the Notes--Certain Covenants," "Certain Indebtedness-- Senior Credit Facilities" and "--Vendor Financing." The restrictions contained in the indenture governing the Notes, and the restrictions contained in our senior credit facilities and the vendor financing provided by Lucent, may limit our ability to implement our business plan, finance future operations, respond to changing business and economic conditions, secure additional financing, if needed, and engage in opportunistic transactions. Moreover, we may not satisfy the financial ratios and tests under our senior credit facilities due to events that are beyond our control. The failure to satisfy any of the financial ratios and tests could result in a default under our senior credit facilities. Following a default under our senior credit facilities, the lenders could declare all amounts outstanding to be immediately due and payable. If we could not repay such amounts, the lenders could foreclose on the collateral granted to them to secure such indebtedness. See "--The Notes are subordinate to other debt that encumbers our assets." If the lenders accelerated the indebtedness outstanding under our senior credit facilities, there can be no assurance that we could repay such indebtedness, and there can be no assurance that we could pay amounts due in respect of our other indebtedness with our remaining assets, including the Notes. See "Certain Indebtedness--Senior Credit Facilities" and "Description of the Notes--Ranking." -23- Holders of the Notes may face tax and bankruptcy concerns. We issued the Notes at a substantial discount from their principal amount at maturity. Original issue discount (i.e., the difference between the "stated redemption price at maturity" of the Notes, including all cash payments of principal and interest, and the "issue price" of the Notes) accrues from the original issue date of the Notes and will be included in a holder's gross income for federal income tax purposes before the holder receives the cash payment of such interest. See "Certain U.S. Federal Tax Considerations--Tax Consequences to U.S. Holders." U.S. federal income tax law may postpone or limit our deduction of interest or original issue discount. See "Certain U.S. Federal Tax Considerations--Applicable High Yield Discount Obligations." U.S. federal income tax law limits the use of corporate net operating loss carryforwards following certain ownership changes in a corporation which may limit our ability to use the net operating loss carryforwards we have experienced or acquired to date to reduce future tax liabilities. If a bankruptcy case were commenced by or against us under the U.S. Bankruptcy Code, the claim of a holder of the Notes with respect to the principal amount of such Notes may be limited to an amount equal to the sum of the initial offering price and that portion of the original issue discount that is not deemed to constitute "unmatured interest" for purposes of the U.S. Bankruptcy Code. Any original issue discount that had not amortized as of the date of any such bankruptcy filing could constitute "unmatured interest" for purposes of the U.S. Bankruptcy Code. To the extent that the U.S. Bankruptcy Code differs from the Internal Revenue Code in determining the method of amortization of original issue discount, a holder of the Notes may recognize taxable gain or loss upon payment of such holder's claim in bankruptcy. We may not be able to satisfy our obligations owed to the holders of the Notes upon a change of control. Upon the occurrence of a "change of control" as defined in the indenture governing the Notes, each holder of the Notes will have the right to require us to repurchase such holder's Notes at a price equal to 101% of the accreted value of such Notes or the principal amount at maturity, as applicable, together with accrued and unpaid interest to the date of repurchase. Certain events which would constitute a change of control under the indenture governing the Notes would also constitute a default under our senior credit facilities. In addition, our senior credit facilities effectively prevent the repurchase of the Notes by us in the event of our change of control unless all amounts outstanding under our senior credit facilities are repaid in full. Our failure to repurchase the Notes would be a default under the indenture governing the Notes, which would be a default under our senior credit facilities. The inability to repay all indebtedness outstanding under our senior credit facilities upon acceleration would also be a default under the indenture governing the Notes. Any default under our senior credit facilities or the indenture governing the Notes would materially adversely affect our business, operations and financial results as well as the market price of the Notes. In the event of a change of control, we may not have sufficient assets to satisfy all obligations under our senior credit facilities and the indenture governing the Notes. Any debt we incur in the future may also prohibit certain events or transactions that would constitute a change of control under the indenture governing the Notes. See "Certain Indebtedness--Senior Credit Facilities" and "Description of the Notes-- Change of Control." We may enter into transactions, including acquisitions, refinancings or recapitalizations, or highly leveraged transactions, that do not constitute a change of control under the indenture governing the Notes. Any of these transactions may result in an increase in our debt or otherwise affect our capital structure, harm our credit ratings or have a material adverse affect on holders of the Notes. See "Description of the Notes--Change of Control." This prospectus contains forward-looking statements that may be incorrect. All statements in this prospectus that are not statements of historical facts are forward-looking statements. Forward-looking statements concern our strategy, future operations, technical capabilities, construction plan and schedule, commercial operations schedule, funding needs, prospective acquisitions or joint ventures, financing sources, pricing, future regulatory approvals, markets, size of markets for wireless communications services, financial position, estimated revenues, projected costs, prospects, plans and objectives of management, as well as information concerning expected actions of third parties such as equipment suppliers, service providers and roaming partners, and expected characteristics of competing systems. Although we believe that the expectations underlying such forward-looking statements are reasonable, forward-looking statements are inherently speculative, and they may be incorrect. Our business, operations and financial results may differ materially from the expectations expressed or implied in the forward-looking statements in this prospectus. You should consider carefully the factors described in this section and the other information in this prospectus before deciding to exchange the Notes. The information set forth under "Business--Network Development," other than historical information, the statements in this prospectus regarding the years during which we expect to continue to incur significant operating losses and to generate negative cash flow from operating activities and the statements in this prospectus regarding our anticipated capital needs are forward-looking statements based upon a number of specific assumptions. These assumptions include the following: -24- . we will not incur any unanticipated costs in the construction of our network; . we will be able to compete successfully in each of our markets; . demand for our services will meet wireless communications industry projections; . our network will satisfy the requirements set forth in our agreements with AT&T and support the services we expect to provide; . the capacity of our network will be sufficient to meet the level of service reflected in our business plan; . we will be successful in working with AT&T and the other SunCom companies, as well as with other providers of wireless communications services and roaming partners, to ensure effective marketing of our network and the services we intend to offer; . there will be no change in any governmental regulation or the administration of existing governmental regulations that requires a material change in the operation of our business; and . there will be no change in any of our material contracts that adversely affects us. Although we believe that these assumptions are reasonable, they may be incorrect. If one or more of these assumptions is incorrect, our business, operations and financial results may differ materially from the expectations, expressed or implied, in the forward-looking statements in this prospectus. If holders fail to exchange the Old Notes for the Exchange Notes, it may weaken the market for the unexchanged Old Notes, as well as for the Exchange Notes. We will issue the Exchange Notes in exchange for the Old Notes, only after timely receipt by the Exchange Agent of such Old Notes, a properly completed and duly executed Letter of Transmittal and all other required documentation. Holders of the Old Notes desiring to tender such Old Notes in exchange for the Exchange Notes should allow sufficient time to ensure timely delivery. Neither we nor the Exchange Agent is under any duty to notify holders of defects or irregularities with respect to tenders of the Old Notes for exchange. The Old Notes that are not tendered or are tendered but not accepted will, following consummation of the Exchange Offer, continue to be subject to the existing restrictions upon transfer. In addition, any holder of the Old Notes who tenders in the Exchange Offer to distribute the Exchange Notes must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. Each broker-dealer that receives the Exchange Notes for its own account in exchange for the Old Notes, where such broker-dealer acquired such Old Notes as a result of market-making activities or any other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. To the extent that the Old Notes are tendered and accepted in the Exchange Offer, the trading market for untendered and tendered but unaccepted Old Notes could be adversely affected due to the limited amount, or "float," of the Old Notes that are expected to remain outstanding following the Exchange Offer. Generally, a lower "float" of a security could result in less demand to purchase such security and could result in lower prices for such security. For the same reasons, to the extent that a large amount of the Old Notes are not tendered or are tendered and not accepted in the Exchange Offer, the trading market for the Exchange Notes could be adversely affected. See "The Exchange Offer" and "Plan of Distribution." There is no public market for the Notes and there are restrictions on the resale of the Notes. As of the date hereof, the only registered holder of the Old Notes is Cede & Co., as its nominee. We believe that, as of the date hereof, such holder is not our "affiliate," as such term is defined in Rule 405 under the Securities Act. Prior to the private offering of the Old Notes, there had been no market for the Notes. We cannot ensure that there will be a liquid trading market for the Notes, or any market at all. We do not intend to list the Exchange Notes on any securities exchange, but the Old Notes have been designated for trading in the PORTAL Market. The Exchange Notes are new securities with no established trading market. The Exchange Notes may trade at a discount from their initial offering price, depending upon prevailing interest rates, the market for similar securities, our performance and other factors. Chase Securities Inc. ("CSI"), one of the initial purchasers of the Old Notes, has told us that they intend to make a market in the Exchange Notes, as well as the Old Notes, as the law permits. CSI is not obligated to make a market, and may discontinue any such activities at any time without notice. In addition, CSI may limit any market- making activities during the Exchange Offer and the pendency of the Shelf Registration Statement, as defined in the -25- "The Exchange Offer-Terms of the Exchange Offer." We cannot ensure that an active market for the Notes will develop. See "The Exchange Offer" and "Plan of Distribution." -26- USE OF PROCEEDS We will not receive proceeds from the Exchange Offer. The net proceeds from the offering of the Old Notes, after deducting the initial purchasers' discounts and estimated fees and expenses payable by us, were approximately $317.0 million. We used $40.0 million of the net proceeds to repay vendor financing from Lucent. We intend to use the remaining net proceeds from the offering of the Old Notes, together with proceeds from sales of our equity securities, borrowings under our senior credit facilities, other vendor financing provided by Lucent and internally generated cash, to fund capital expenditures, acquisitions of PCS licenses, operating losses and other working capital requirements. See "Business--Network Development" and "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources." -27- CAPITALIZATION The following table sets forth as of March 31, 1999 (1) our historical capitalization and (2) our capitalization giving pro forma effect to the Transactions, derived from our unaudited pro forma balance sheet included elsewhere in this prospectus. This table should be read in conjunction with "Selected Historical and Pro Forma Consolidated Financial Information," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our Consolidated Financial Statements and the notes to such documents included elsewhere in this prospectus.
As of March 31, 1999 --------------------------- Actual Pro Forma ------------ ------------- (dollars in millions) Cash and cash equivalents.................................................................. $ 11.2 $ 230.0 -------- --------- Debt: Government license obligations (a)...................................................... $ 8.0 $ 17.5 Senior credit facilities (b)............................................................ 225.0 225.0 Senior subordinated Notes (c)........................................................... -- 327.6 Vendor financing (d).................................................................... 60.9 40.8 Total debt.......................................................................... 293.9 610.9 -------- --------- Mandatorily redeemable preferred stock (e)................................................. 245.1 362.6 Preferred stock subscriptions receivable and other items (f)............................ (72.4) (149.8) -------- --------- Mandatorily redeemable preferred stock, net......................................... 172.7 212.8 Stockholders' deficit (g).................................................................. (99.5) (99.4) -------- --------- Total capitalization....................................................................... $367.1 $ 724.3 ======== =========
______________ (a) Includes government license obligations in the amount of $9.5 million related to the F-Block licenses and the C-Block licenses we have acquired as part of the Transactions. This debt is shown on our balance sheet net of discounts of $2.0 million reflecting the below market interest rate on the debt. (b) Our senior credit facilities provide up to $525.0 million of term loan and revolving credit financing. As of March 31, 1999, we had drawn $225.0 million under our senior credit facilities. See "Certain Indebtedness-- Senior Credit Facilities." (c) Represents the gross proceeds of $327.6 million from the sale of 11 5/8% Senior Subordinated Discount Notes due 2009 on April 23, 1999, excluding offering expenses and the repayment of Lucent Series B Notes. (d) As of March 31, 1999, the total amount of Series A and Series B notes outstanding, including $0.5 million of interest paid-in-kind, was $40.5 million, plus $0.3 million of additional accrued interest, and $20.1 million, respectively. In addition, Lucent purchased $20.0 million of Series B junior subordinated notes in April 1999. The full amount of such Series B notes were repaid with the proceeds of the offering of the old Notes. In connection with the acquisition of licenses and related assets from AT&T in Puerto Rico, Lucent has committed to purchase $15.0 million of additional junior subordinated notes. Lucent has also committed to purchase up to an additional $65.0 million of such notes in connection with our development of new markets. See "Certain Indebtedness--Vendor Financing." (e) Represents mandatorily redeemable preferred stock issued or to be issued to AT&T, Chase Capital Partners, Desai Capital Management Incorporated, Hoak Capital Corporation, J.H. Whitney III, L.P., M/C Partners, Entergy Corporation, Northwood Ventures, LLC, One Liberty Ventures, LLC, Toronto Dominion Capital (USA), Wireless 2000, Digital PCS and stockholders of TeleCorp Holding. (f) Preferred stock subscriptions receivable and other items is comprised of the following:
As of March 31, 1999 --------------------------------- Actual Pro Forma --------------- ---------------- Deferred Compensation........................................................... $ (11,078) $ (304,514) Treasury Stock.................................................................. (12) (12) Preferred Stock subscriptions receivable........................................ (72,413,769) (149,499,135) ------------- -------------- $(72,424,859) $(149,803,661) ============= ==============
-28- (g) Stockholders' deficit is comprised of the following:
As of March 31, 1999 --------------------------------- Actual Pro Forma --------------------------------- Series F preferred stock................................................ $ 333 $ 482 Common stock............................................................ 1,597 2,431 Additional paid-in capital.............................................. 187,498 433,908 Deferred compensation................................................... (5,306) (25,015) Common stock subscriptions receivable................................... (86,221) (283,455) Treasury stock.......................................................... (26) (26) Accumulated deficit..................................................... (99,562,287) (99,562,287) ------------- ------------ $(99,464,412) $(99,433,962) ============= ============
-29- SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL INFORMATION The selected historical consolidated financial information presented below as of March 31, 1999, for the period from inception on July 29, 1996 to December 31, 1996, for the years ended December 31, 1997 and 1998, and for the three months ended March 31, 1998 and 1999, has been derived from our and our predecessor's consolidated financial statements and the related notes included elsewhere in this prospectus. The unaudited pro forma per share statement of operations data and any other data for the period from inception on July 29, 1996 to December 31, 1996, for the years ended December 31, 1997 and 1998, and for the three months ended March 31, 1998 and 1999, and the unaudited pro forma balance sheet data as of March 31, 1999, are derived from the unaudited pro forma financial data included elsewhere in this prospectus, and give effect to the Transactions, as if they had occurred on March 31, 1999. The unaudited pro forma financial data presented do not purport to represent what our results of operations and financial condition actually would have been or what our operations in any future period would be if the Transactions had occurred on the date assumed. The selected historical and pro forma data below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our and our predecessor's audited and unaudited consolidated financial statements and notes to such statements and our unaudited pro forma balance sheet and notes to such balance sheet included elsewhere in this prospectus.
For the period July 29, For the year ended For the three month 1996 (inception) to For the year ended December 31, period ended December 31, 1996 December 31, 1997 1998 March 31, 1998 (unaudited) ----------------------- ------------------- ------------------- ------------------- Statements of Operations Data: Service revenue......................... $ - $ - $ - $ - Equipment revenue....................... - - - - Roaming revenue......................... - - 29,231 - -------------- ---------------- ---------------- -------------- Total revenue........................... $ - $ - $ 29,231 - -------------- ---------------- ---------------- -------------- Operating expense: Cost of revenue........................ - - - - Operations and development............. - - 9,772,485 - Selling and marketing.................. 9,747 304,062 6,324,666 369,392 General and administrative............. 515,146 2,637,035 26,239,119 2,246,456 Depreciation and amortization.......... 75 10,625 1,583,864 39,129 -------------- ---------------- ---------------- -------------- Total operating expense............. 524,968 2,951,722 43,920,134 2,654,977 -------------- ---------------- ---------------- ------------- Operating loss...................... (524,968) (2,951,722) (43,890,903) (2,654,977) Other (income) expense: Interest expense....................... - 396,362 11,934,263 132,400 Interest income........................ - (12,914) (4,697,233) (42,256) Other expense.......................... - - 27,347 - -------------- ---------------- ---------------- ------------- Net loss............................ $ (524,968) $ (3,335,170) $ (51,155,280) $ (2,745,121) Accretion of mandatorily redeemable preferred stock $ (288,959) $ (725,557) $ (8,566,922) $ (103,608) -------------- ---------------- ---------------- ------------- Net loss attributable to common equity $ (813,927) $ (4,060,727) $ (59,722,202) $ (2,848,729) ============== ================ ================ ============= Other Data: Ratio of earnings to fixed charges (a).. - - - - For the three month period ended March 31, 1999 (unaudited) --------------------- Statements of Operations Data: Service revenue................................. $ 507,285 Equipment revenue............................... 1,815,224 Roaming revenue................................. 1,940,317 --------------- Total Revenue................................... $ 4,262,826 --------------- Operating expense: Cost of revenue................................ 2,829,448 Operations and development..................... 7,352,578 Selling and marketing.......................... 8,040,922 General and administrative..................... 10,278,338 Depreciation and amortization.................. 3,052,980 --------------- Total operating expense..................... 31,554,266 --------------- Operating loss.............................. (27,291,440) Other (income) expense: Interest expense............................... 3,715,129 Interest income................................ (741,429) Other expense.................................. 70,187 --------------- Net loss.................................... $ (30,335,327) Accretion of mandatorily redeemable preferred stock $ (4,630,104) --------------- Net loss attributable to common equity $ (34,965,431) =============== Other Data: Ratio of earnings to fixed charges (a).......... -
As of March 31, 1999 --------------------------------- Actual Pro Forma --------------- --------------- Balance Sheet Data: Cash and cash equivalents................................................. $ 11,210,696 $ 230,047,360 Property and equipment, net............................................... 262,653,787 270,653,787 PCS licenses and microwave relocation costs............................... 117,531,516 235,142,756 Intangible assets -AT&T Agreements, net................................... 25,369,334 42,679,334 Total assets.............................................................. 457,903,537 815,173,777 Total debts............................................................... 293,889,463 610,978,893 Mandatorily redeemable preferred stock.................................... 245,131,494 362,660,656 Mandatorily redeemable preferred stock, net (b)(c)........................ 172,706,635 212,856,995 Total stockholders' deficit............................................... $ (99,464,412) $ (99,433,962)
(a) The ratio of earnings to fixed charges is computed by dividing fixed charges into income before taxes plus fixed charges. Fixed charges include interest expense and that portion of rental expense (one-third) attributable to the interest factor. On this basis, earnings before fixed charges for the period ended December 31, 1996, for the years ended December 31, 1997 and 1998 and for the three months ended March 31, 1998 and 1999 were not adequate to cover fixed charges by $525,635, $3,915,262, $66,208,919, $3,136,577 and $36,612,156, respectively. (b) Net of treasury stock, deferred compensation and preferred stock subscription receivable of $12, $11,078, and $72,413,769 respectively, as of March 31, 1999. (c) Net of treasury stock, deferred compensation and preferred stock subscription receivable of $12, $304,514, and $149,499,135, respectively, as of March 31, 1999 on a pro forma basis. -30- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview History TeleCorp Holding was incorporated on July 29, 1996 to participate in the FCC's auction of F-Block PCS licenses in April 1997 as a "designated entity" and "very small business," as defined by the FCC. TeleCorp Holding obtained PCS licenses in the New Orleans, Memphis, Beaumont and Little Rock BTAs, and certain other licenses that were subsequently transferred to unrelated entities. TeleCorp PCS, Inc. was incorporated on November 14, 1997 by the controlling stockholders of TeleCorp Holding. In January 1998, we entered into a venture with AT&T under which AT&T contributed certain PCS licenses to us in exchange for an equity interest in TeleCorp and sold additional PCS licenses to us for $21.0 million. In July 1998, we received final FCC approval for the venture and, in connection with the consummation of the venture, we entered into exclusivity, licensing, roaming and long distance agreements. We are AT&T's exclusive provider of facilities-based mobile wireless communications services in our licensed markets and we use the AT&T brand name and logo together with the SunCom name and logo, giving equal emphasis to each. In addition, TeleCorp Holding became a wholly owned subsidiary of TeleCorp. In the first quarter of 1999, we commenced commercial operations in each of our major domestic markets, after having launched our New Orleans market for roaming services in late December 1998. Accordingly, for periods prior to 1999 we were a development stage company. We plan to launch our service in our Puerto Rico markets during the third quarter of 1999. We recently acquired 10 MHz F-Block PCS licenses covering the Baton Rouge, Houma, Hammond and Lafayette, Louisiana BTAs from Digital PCS, for $2.3 million of our common and preferred stock and the assumption of $4.1 million of debt owed to the U.S. government related to these licenses. The debt is shown on our balance sheet net of a discount of $0.7 million reflecting the below market interest rate on the debt. We also recently acquired a 20 MHz PCS license and related assets covering the San Juan MTA from AT&T. On May 24, 1999, we sold to AT&T $40.0 million of our preferred stock. On May 25, 1999, we purchased the license and related assets from AT&T for $95.0 million in cash. In addition, we reimbursed AT&T $3.2 million for microwave relocation and $1.5 million for other expenses it incurred in connection with such acquisition. In addition, we recently acquired 15 MHz C-Block PCS licenses covering the Alexandria, Lake Charles and Monroe, Louisiana BTAs from Wireless 2000, for approximately $0.4 million of common and preferred stock, the assumption of $7.4 million of debt owed to the U.S. government related to these licenses, $0.2 million in cash in connection with microwave relocation and $0.4 million in reimbursement of interest paid on government debt related to the license. The U.S. government debt is shown net of a discount of $1.3 million reflecting the below market interest rate on the debt. From time to time, we may enter into discussions regarding the acquisition of other PCS licenses, including swapping our licenses for those of other PCS license holders. We participated in the FCC's reauction of C-Block and other licenses for additional spectrum through Viper Wireless. On April 20, 1999, the FCC announced that the reauction ended, and Viper Wireless was the high bidder for additional spectrum in New Orleans, Houma and Alexandria, Louisiana, San Juan, Puerto Rico, Jackson, Tennessee and Beaumont, Texas. On June 3, 1999, a petition was filed by certain secured creditors of DCR PCS and Pocket Communications against the application of Viper Wireless for the Houma and New Orleans licenses. The petition seeks deferral of the grant of these licenses to Viper Wireless until an appeal by the secured creditors of DCR PCS and Pocket Communications has been resolved or, in the alternative, a condition noting that a pre-existing claim to the licenses may exist if the secured creditors of DCR PCS and Pocket Communications are successful in that appeal. The appeal seeks review of the bankruptcy court's ruling concerning DCR PCS and Pocket Communications permitting DCR PCS to file its election notice, which ultimately resulted in the return of these licenses to the FCC, over the objection of the secured creditors of DCR PCS and Pocket Communications. Viper Wireless filed an opposition to the petition on June 15, 1999. At present, TeleCorp Holding owns 85% of Viper Wireless, and Mr. Vento and Mr. Sullivan together own the remaining 15%. Mr. Vento and Mr. Sullivan together have voting control over Viper Wireless. AT&T and certain of our cash equity investors have committed an aggregate of up to $32.3 million in exchange for additional shares of our preferred and common stock. Revenue We derive our revenue from: -31- . Service. We sell wireless personal communications services. The various types of service revenue associated with wireless communications service for our subscribers include monthly recurring charges and monthly non-recurring airtime charges for local, long distance and roaming airtime used in excess of pre-subscribed usage. Our customers' roaming charges are rate plan dependent, based on the number of pooled minutes included in their plans. Service revenue also includes monthly non-recurring airtime usage associated with our prepaid subscribers and non-recurring activation and de-activation service charges. . Equipment. We sell wireless personal communications handsets and accessories that are used by our customers in connection with our wireless services. . Roaming. We charge monthly non-recurring outcollect fees for other wireless companies' customers using our network facilities to place and receive wireless services. Cost of Revenue Equipment. We purchase personal communications handsets and accessories from third party vendors to resell to our customers for use in connection with our services. The cost of handsets is inherently higher than the resale price to the customer. We record the excess cost as a sales and marketing operational expense. We do not manufacture any of this equipment. Incollect Fees. We pay fees to other wireless communications companies based on airtime usage of our customers on other communications networks. Clearinghouse Fees. We pay fees to a third party clearinghouse for processing our call data records and performing monthly inter-carrier financial settlements for all roaming incollect and outcollect charges. Variable Interconnect. We pay monthly non-recurring charges associated with interconnection with other carriers' networks. These fees are based on minutes of use by our customers. Variable Long Distance. We pay monthly non-recurring usage charges to other communications companies for long distance service provided to our customers. These variable charges are based on our subscribers' usage, applied at pre- negotiated rates with the other carriers. Operating Expense Operations and development. Our operations and development expense includes all employee-based charges, including engineering operations and support, field technicians, network implementation support, product development, and engineering management. This expense also includes monthly recurring charges directly associated with the maintenance of network facilities and equipment. Selling and marketing. Our selling and marketing expense includes all employee based charges, including brand management, external communications, retail distribution, sales training, direct, indirect, third party and telemarketing support. In addition to employee based charges, we also record the excess cost of handsets over the resale price as a cost of selling and marketing. We distribute our products and services through direct and indirect sales efforts, agents and telemarketing. Our direct sales and marketing efforts focus on attracting and retaining small, medium and large business customers in our target markets. We sell through company owned retail stores, indirect sales partners, third party agents and resellers in an effort to efficiently increase our consumer based subscribers. General and administrative. Our general and administrative expense includes all employee based charges, including customer support, billing, information technology, finance, accounting and legal services. Certain functions, such as customer support, billing, finance, accounting and legal services are likely to remain centralized in order to achieve economies of scale. Depreciation and amortization. Depreciation of property and equipment is computed using the straight-line method, generally over three to ten years, based upon estimated useful lives. Leasehold improvements are amortized over the lesser of the useful lives of the assets or the term of the lease. Network development costs incurred to ready our network for use are capitalized. Amortization of network development costs begins when the network equipment is ready for its intended use and will be amortized over its estimated useful life ranging from five to ten years. Capital expenditures. Our principal capital requirements for deployment of our wireless network include installation of digital equipment and, to a lesser extent, site development work. -32- Interest Income (Expense). Interest income is earned primarily on our cash and cash equivalents. Interest expense through March 31, 1999 consists of interest due on our senior credit facilities, vendor financing, and debt owed to the U.S. government related to our licenses. Results of Operations Three Months ended March 31, 1999 Compared to Three Months ended March 31, 1998 For the three months ended March 31, 1999, service revenue was approximately $0.5 million, equipment revenue totaled approximately $1.8 million and roaming revenue exceeded $1.9 million. We began offering wireless services in each of our major domestic markets in the first quarter of 1999 and a large portion of our revenue resulted from servicing AT&T's roaming customers in these markets. We generated no revenue for the three months ended March 31, 1998. Cost of revenue, consisting mainly of cost of equipment and incollect expense, for the three months ended March 31, 1999 was approximately $2.8 million. We did not generate any such cost for the three months ended March 31, 1998. Operations and development expense for the three months ended March 31, 1999 was approximately $7.4 million. This expense was primarily related to the engineering and operating staff required to implement and operate our network. There was no operations and development expense for the three months ended March 31, 1998. Selling and marketing expense for the three months ended March 31, 1999 was approximately $8.0 million, as compared to approximately $0.4 million for the three months ended March 31, 1998. This increase was due to salary and benefits for sales and marketing staff, as well as market research. The increase in sales and marketing expense is mainly due to commencing services in our domestic markets during the three months ended March 31, 1999. General and administrative expense for the three months ended March 31, 1999 was approximately $10.3 million, as compared to approximately $2.2 million for the three months ended March 31, 1998. The increase was due to the development and growth of infrastructure and staffing related to information technology, customer care and other administrative functions incurred in conjunction with the commercial launch of our markets during the three months ended March 31, 1999. Depreciation and amortization expense for the three months ended March 31, 1999 was approximately $3.1 million, as compared to approximately $39,000 for the three months ended March 31, 1998. This expense was related to depreciation of our fixed assets, as well as the initiation of amortization on PCS licenses and AT&T agreements upon the commercial launch of our domestic markets. Interest expense, net of interest income, for the three months ended March 31, 1999 was approximately $3.0 million, as compared to approximately $90,000 for the quarter ended March 31, 1998. This increase in interest expenses was related to borrowings under our senior credit facilities of $225.0 million and the issuance of $60.0 million aggregate principal amount of notes under the vendor financing provided by Lucent. Year ended December 31, 1998 Compared to Year ended December 31, 1997 Revenue for the year ended December 31, 1998 was $29,231. This revenue resulted from servicing AT&T's roaming customers in certain of our Louisiana markets. We began offering wireless services in each of our major domestic markets in the first quarter of 1999. We generated no revenue for the year ended 1997. Operations and development expense for the year ended December 31, 1998 was approximately $9.8 million. This expense was primarily related to an increase in engineering and operating staff devoted to the implementation of future operations of our network. There was no operations and development expense for the year ended December 31, 1997. Selling and marketing expenses for the year ended December 31, 1998 was approximately $6.3 million, as compared to approximately $0.3 million for the year ended December 31, 1997. This increase was due to salary and benefits for sales and marketing staff as well as market research. The year-over-year increase was due to the increase in corporate and regional sales and marketing staff in order to prepare for domestic market launches in the first quarter of 1999. General and administrative expense for the year ended December 31, 1998 was approximately $26.2 million, as compared to approximately $2.6 million for the year ended December 31, 1997. The year-over-year increase was due to the development and growth of infrastructure and staffing related to information technology, customer care and other administrative functions incurred in the preparation for commercial launch of our markets in the first quarter of 1999. -33- Depreciation and amortization expense for the year ended December 31, 1998 was approximately $1.6 million, as compared to approximately $11,000 for the year ended December 31, 1997. This expense was related to depreciation of furniture, fixtures and office equipment, as well as the initiation of amortization on certain AT&T agreements. Interest expense, net of interest income, for the year ended December 31, 1998 was approximately $7.2 million, as compared to approximately $0.4 million for the year ended December 31, 1997. This interest expense was related to certain notes payable to shareholders and affiliates. This increase in interest expense was related to borrowings under the senior credit facilities of $225.0 million and the issuance of $10.0 million aggregate principal amount of notes under the vendor financing provided by Lucent. From July 29, 1996 (inception) to December 31, 1996 Selling and marketing expense and general and administrative expense for the period from July 29, 1996 (inception) to December 31, 1996 was approximately $0.5 million, which were associated with salary, benefits and expenses of administrative personnel, as well as legal and other costs associated with the formation of TeleCorp. Liquidity and Capital Resources Since inception, our activities have consisted principally of hiring a management team, raising capital, negotiating strategic business relationships, planning and participating in the PCS auction, initiating research and development, conducting market research and developing our wireless services offering and network. We have been relying on the proceeds from borrowings and issuances of capital stock, rather than revenues, for our primary sources of cash flow. We began commercial operations in December 1998 and began earning recurring revenues by the end of the first quarter of 1999. Cash and cash equivalents totaled $11.2 million at March 31, 1999, as compared to $111.7 million at December 31, 1998. This decrease was the result of incoming cash provided by financing activities of $53.5 million, offset by $21.5 million of cash used in operating activities and $132.5 million of cash used in network development and investing activities. During the three months ended March 31,1999, we increased long-term debt by $50.0 million and received $3.5 million of preferred stock subscriptions. Capital expenditures required to develop and construct our network totaled $114.7 million and we were required to deposit $17.8 million with the FCC for PCS licenses during the three months ended March 31, 1999. Cash used in operating activities of $21.5 million for the three months ended March 31, 1999 resulted from a net loss of $30.3 million that was partially offset by non-cash charges of $3.9 million and changes in assets and liabilities of $4.9 million. From inception through June 1998, our primary source of financing was certain notes issued to our stockholders. In July 1996, we issued $0.5 million of subordinated promissory notes to our stockholders. We converted these notes into 50 shares of our Series A Preferred Stock in April 1997. In December 1997, we issued various promissory notes to our stockholders. We converted these notes into mandatorily redeemable preferred stock. From January 1 to June 30, 1998, we borrowed approximately $22.5 million in the form of promissory notes to existing and prospective stockholders to satisfy working capital needs. We converted these notes into equity of TeleCorp in July 1998 in connection with the consummation of the venture with AT&T. In connection with consummation of the venture with AT&T, we received unconditional and irrevocable equity commitments from our stockholders in the aggregate amount of $128.0 million in return for the issuance of preferred and common stock. As of March 31, 1999, approximately $55.5 million of such equity commitments had been funded. The remaining equity commitments will be funded in an installment of $36.3 million in July 2000 and $36.2 million in July 2001. We received additional irrevocable equity commitments from our stockholders in the aggregate amount of $5.0 million in return for the issuance of preferred and common stock in connection with the Digital PCS acquisition. Our stockholders funded $2.2 million of these equity commitments on April 30, 1999, and will fund $1.4 million in each of July 2000 and July 2001. We have received additional irrevocable equity commitments from our stockholders in the aggregate amount of approximately $40.0 million in return for the issuance of preferred and common stock in connection with the Puerto Rico acquisition. We received $12.0 million of these commitments on May 24, 1999, and $6.0 million will be funded in December 1999 and $11.0 million will be funded on each of May 24, 2000 and May 24, 2001. We also received irrevocable equity commitments from our stockholders in the amount of approximately $32.3 million in connection with Viper Wireless' participation in the FCC's reauction of C-Block licenses. We received approximately $6.5 million of these equity commitments on May 14, 1999, and the remaining approximately $25.8 million will be available when we make payments to the FCC with respect to these licenses or if the FCC does not refund amounts we paid to them as deposits in connection with the reauction within 180 days of the date of the deposit. In aggregate we have obtained $205.3 million of equity commitments. -34- In July 1998, we entered into senior credit facilities with a group of lenders for an aggregate amount of $525.0 million. Our senior credit facilities provide for (1) a $150.0 million senior secured term loan that matures in January 2007, (2) a $225.0 million senior secured term loan that matures in January 2008, (3) a $150.0 million senior secured revolving credit facility that matures in January 2007, and (4) an uncommitted $75.0 million senior secured term loan in the form of an expansion facility. We must repay the term loans in quarterly installments, beginning in September 2002, and the commitments to make loans under the revolving credit facility are automatically and permanently reduced beginning in April 2005. As of March 31, 1999, $225.0 million had been drawn under the senior credit facilities. See "Certain Indebtedness--Senior Credit Facilities." In May 1998, we entered into a vendor procurement contract with Lucent, under which we agreed to purchase radio, switching and related equipment and services for the development of our network. Lucent agreed to provide us with $80.0 million of junior subordinated vendor financing. This $80.0 million consisted of $40.0 million aggregate principal amount of Increasing Rate Series A notes due 2012 (the "Series A Notes") and $40.0 million aggregate principal amount of Increasing Rate Series B notes due 2012 (the "Series B Notes"). As of March 31, 1999, we had outstanding approximately $40.5 million of the Series A Notes, including $0.5 million of Series A Notes issued as payment in kind, plus $0.3 million of additional accrued interest. The $40.5 million principal amount of Series A Notes is subject to mandatory prepayment on a dollar for dollar basis out of the proceeds of future equity offerings in excess of $130.0 million. Lucent has agreed to make available up to an additional $80.0 million of junior subordinated vendor financing in amounts of up to 30% of the value of equipment, software and services provided by Lucent in connection with any additional markets we acquire. Any notes purchased under this facility would be divided equally between Series A and Series B Notes. As a result of the markets acquired in connection with the Puerto Rico acquisition, we have $15.0 million of availability under this facility, consisting of $7.5 million of Series A Notes and $7.5 million of Series B Notes. The terms of these Series A and Series B Notes are identical to the terms of the original Series A and Series B Notes, with the exception of their maturities. These notes will mature 6 months after the maturity of the Notes. In the event we acquire any new markets, we would have up to an additional $65.0 million available to us under this facility. See "Certain Indebtedness--Vendor Financing." Pro forma for the Transactions as of March 31, 1999, we would have had approximately $20.7 million of debt owed to the U.S. government related to our C-Block and F-Block licenses. This debt is shown on our balance sheet net of discounts of $3.2 million reflecting the below market interest rates on the debt. We assumed $4.1 million of debt to the U.S. government in connection with the Digital PCS acquisition. The debt is shown on our balance sheet net of a discount of $0.7 million reflecting the below market interest rate on the debt. In addition, we assumed $7.4 million of debt to the U.S. government in connection with the Wireless 2000 acquisition. This debt is shown on our balance sheet net of a discount of $1.3 million reflecting the below market interest rate on the debt. Total capital expenditures were approximately $194.7 million for 1998. The continued construction of our network and the marketing and distribution of wireless communications products and services will require substantial additional capital. We will incur significant amounts of debt to implement our business plan and will therefore be highly leveraged. We estimate that our total capital requirements from our inception until December 31, 2002 will be approximately $1.2 billion. These requirements include license acquisition costs, capital expenditures for network construction, operating cash flow losses and other working capital costs, debt service and closing fees and expenses. Capital expenditures from inception to March 31, 1999 were approximately $265.5 million. We estimate that capital expenditures will total approximately $159.4 million for the year ended December 31, 1999. We believe that the capital raised to date, which includes proceeds from the offering of the Old Notes and the funding of the irrevocable equity commitments from our stockholders will be sufficient to meet our projected capital requirements through December 31, 2002. Our ability to meet our capital requirements 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 including those discussed under the heading "Risk Factors." There can be no assurance that the build out of our network will be completed as projected or that we will 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. Quantitative and Qualitative Disclosure About Market Risk We are not exposed to fluctuations in currency exchange rates since all of our services are invoiced in U.S. dollars. We are exposed to the impact of interest rate changes on our short-term cash investments, consisting of U.S. Treasury obligations and certain other investments in respect of institutions with the highest credit ratings, all of which have maturities of three months or less. These short term investments carry a degree of interest rate risk. We believe that the impact of a 10% increase or decline in interest rates would not be material to our investment income. -35- We use interest rate swaps to hedge the effects of fluctuations in interest rates on our senior credit facilities. These transactions meet the requirements for hedge accounting, including designation and correlation. These interest rate swaps are managed in accordance with our policies and procedures. We do not enter into these transactions for trading purposes. The resulting gains or losses, measured by quoted market prices, are accounted for as part of the transactions being hedged, except that losses not expected to be recovered upon the completion of hedged transactions are expensed. Gains or losses associated with interest rate swaps are computed as the difference between the interest expense per the amount hedged using the fixed rate compared to a floating rate over the term of the swap agreement. As of March 31, 1999, we have entered into six interest rate swap agreements with various counterparties totaling a notional amount of $225.0 million to convert our variable rate debt to fixed rate debt. The interest rate swaps had no material impact on our consolidated financial statements as of and for the year ended December 31, 1998 or the three month period ended March 31, 1999. Year 2000 The year-2000 issue is the result of computer programs being written using two digits, rather than four digits, to define the applicable year. Programs that have time-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a major system failure or miscalculations, including an inability to process transactions, send invoices or engage in similar normal business activities. Due to our reliance on computer hardware and software, telecommunications and related service industries are highly susceptible to the year-2000 issue. Over the past two years, as we purchased the various components that comprise our internal information technology systems, we received representations from our vendors that such components were year-2000 compliant. We have begun the process of evaluating our information technology systems to verify the accuracy of the representations made by our vendors. Our costs to date have been immaterial, and we anticipate that our total costs in evaluating our information technology system will not exceed $5.0 million, including costs to build the necessary redundancy into our systems. We expect to complete such evaluation by the end of the third quarter of 1999. Our non-information technology systems may also be susceptible to the year- 2000 issues. In particular, our network switches contain embedded components that are date sensitive. We have received assurances from Lucent that all our network hardware purchased from them is year-2000 compliant. The failure of our network switches would have a material adverse effect on our business. We are also dependent upon the ability of AT&T, AT&T's roaming partners and EDS to ensure that their software and equipment are year-2000 compliant. We rely on AT&T to provide our customers with over-the-air activation and roaming. We rely on EDS to provide clearinghouse services. There can be no guarantee that their systems will be year-2000 compliant on a timely basis or that their systems will be compatible with our systems. This could have a material adverse effect on our business. -36- BUSINESS We intend to become a leading provider of digital wireless communications services in targeted markets in the south-central and northeast United States and in Puerto Rico. We are the exclusive provider of facilities-based mobile wireless communications services for AT&T in our markets. TeleCorp was founded in 1996 by Gerald T. Vento, Thomas H. Sullivan and certain private equity investors to acquire strategic PCS licenses. In 1998, we entered into a venture with AT&T in which AT&T contributed certain PCS licenses to us in exchange for an equity interest in our company. In addition, we have the right to use the AT&T brand name and logo together with our own brand name and logo, giving equal emphasis to each. We are AT&T's preferred roaming partner in our markets and receive preferred long distance rates from AT&T. Our PCS licenses cover approximately 16.0 million Pops, including those in the major population centers of New Orleans and Baton Rouge, Louisiana, Memphis, Tennessee, Little Rock, Arkansas, Manchester, Concord and Nashua, New Hampshire, Worcester, Massachusetts and San Juan, Puerto Rico, as well as vacation destinations such as Puerto Rico, the U.S. Virgin Islands, Cape Cod and Martha's Vineyard. Our markets have attractive economic and demographic characteristics and are experiencing strong growth in use of wireless services. These markets, which attract over 24 million visitors per year, are major roaming markets for AT&T's customers. We have successfully launched our services in 14 markets, including all of our major domestic markets. Our launched network covers approximately 40% of our domestic licensed Pops, and by year-end 1999 we expect our network will cover approximately 50% of our total licensed Pops. In December 1998, we began servicing roaming customers in certain of our Louisiana markets and we carried more than 4.2 million minutes in the first 60 days of operation in those markets. We have a strong distribution presence in our launched markets with 22 company-owned stores and more than 140 retail outlets where customers can buy our services. Additionally, we market our services through business-to-business representatives, telemarketing and the Internet. Our goal is to provide our customers with simple, easy-to-use wireless services with coverage across the nation, superior call quality, personalized customer care and competitive pricing in the markets we serve. We believe that, as an AT&T affiliate, we will attract customers through the national brand and coast-to-coast roaming provided by AT&T and its roaming partners. We have also entered into an agreement with Triton PCS and Tritel Communications, two other companies similarly affiliated with AT&T, to adopt SunCom as a common regional brand that is co-branded with AT&T, giving equal emphasis to each. We and the other SunCom companies are establishing the SunCom brand as a basis for building a strong regional presence with a service area covering approximately 43.0 million Pops. -37- Market Overview We hold or will acquire BTA licenses within the following eight MTAs:
Markets 1998 Pops Spectrum - ------- --------- -------- (in thousands) (in MHz) New Orleans, Louisiana New Orleans.............................................................................. 1,402 35 Baton Rouge.............................................................................. 676 20 Lafayette................................................................................ 531 20 Lake Charles............................................................................. 279 15 Houma.................................................................................... 272 25 Hammond.................................................................................. 107 10 -------- Total................................................................................ 3,267 Memphis, Tennessee Memphis.................................................................................. 1,493 30 Jackson.................................................................................. 276 35 Dyersburg................................................................................ 116 20 Blytheville, AR.......................................................................... 70 20 -------- Total................................................................................ 1,955 Little Rock, Arkansas Little Rock.............................................................................. 926 30 Fort Smith............................................................................... 312 20 Fayetteville............................................................................. 291 20 Jonesboro................................................................................ 174 20 Pine Bluff............................................................................... 148 20 Hot Springs.............................................................................. 133 20 El Dorado................................................................................ 103 20 Russellville............................................................................. 95 20 Harrison................................................................................. 88 20 -------- Total................................................................................ 2,270 Boston, Massachusetts Worcester, MA............................................................................ 727 20 Manchester, NH........................................................................... 584 20 Boston, MA (a)........................................................................... 383 20 Hyannis, MA.............................................................................. 231 20 -------- Total................................................................................ 1,925 San Juan, Puerto Rico Puerto Rico/San Juan..................................................................... 2,719 35 Mayaguez Aguadilla....................................................................... 1,089 20 Virgin Islands........................................................................... 106 20 -------- Total................................................................................ 3,914 St. Louis, Missouri Springfield (b).......................................................................... 283 20 Carbondale, IL........................................................................... 216 20 Columbia................................................................................. 209 20 Cape Giradeau............................................................................ 189 20 Quincy................................................................................... 181 20 Jefferson City........................................................................... 156 20 Poplar Bluff............................................................................. 155 20 Mt. Vernon, IL........................................................................... 121 20 Rolla.................................................................................... 98 20 West Plains.............................................................................. 76 20 Kirksville............................................................................... 56 20 -------- Total................................................................................ 1,740 Houston, Texas Beaumont................................................................................. 459 40 -------- Total................................................................................ 459 Louisville, Kentucky Evansville, Indiana...................................................................... 518 20 -------- Total................................................................................ 518 ======== Total Pops........................................................................... 16,048
_____________ Source: The 1998 PCS Atlas & Databook, Kagan, 1990 U.S. Census. (a) Rockingham and Stafford counties only. (b) Camden, Cedar, Dallas, Douglas, Hickory, Laclede, Polk, Stone, Taney, Texas, Webster and Wright counties only. In addition, we hold or will hold licenses for the following BTAs: Alexandria, Louisiana (209,000 Pops), Monroe, Louisiana (335,000 Pops) and Paducah, Kentucky (231,000 Pops). We do not presently intend to develop markets covered by these additional licenses. -38- The average population density of our markets is approximately 38% greater than the national average. Services and Features We provide an array of wireless communications services and features through our network. Wireless Mobility. Our primary service is wireless mobility, featuring tri- mode handsets, enhanced voice clarity, improved protection from eavesdropping and a broad feature set. Our basic wireless service offering includes caller ID, three-way conference calling, call waiting, voicemail, paging and short- messaging. Feature-Rich Handsets. As part of our basic service offering, we provide easy-to-use, interactive menu-driven handsets that can be activated over the air. These handsets primarily feature word prompts and easy-to-use menus rather than numeric codes to operate handset functions. These handsets allow mobile access to Internet services and will have the ability to interact with personal computers. Advanced Tri-Mode Handsets. Through the use of tri-mode handsets, which are compatible with PCS, digital cellular and analog cellular frequencies and service modes, we offer customers coast-to-coast roaming across a variety of wireless networks. Tri-mode handsets incorporate a roaming database (which can be updated over the air) that controls roaming preferences, typically completing calls using the best available system (from both quality and cost perspectives). We offer our customers use of technologically advanced Nokia and Ericsson handsets. Extended Battery Life. Tri-mode handsets offer significantly extended battery life over earlier technologies, providing up to 14 days of stand-by battery life. Handsets operating on a digital system are capable of "sleep-mode" while turned on but not in use, thus improving efficiency and extending battery life. We expect that this feature will increase usage, especially for incoming calls, as users will be able to leave the phone on for significantly longer periods. The use of tri-mode handsets further extends battery life by using a digital system for roaming when in areas covered by digital systems. Improved Voice Quality. We believe the version of TDMA we are using offers significantly improved voice quality, more powerful error correction, less susceptibility to call fading and enhanced interference rejection, which results in fewer dropped calls, compared to earlier versions of TDMA. Voice Privacy and Call Security. Digital technology is inherently more secure than analog technologies. This security provides increased voice privacy for our customer and enhanced fraud protection. Paging and Short-Messaging. Our network has the capability to send and receive pages and short text messages. These services allow customers to use less expensive forms of wireless communications when conversation is not necessary. We offer short-messaging as a bundled service on select packages and as an extra feature available to all customers. Pre-Paid Services. We offer our customers the option to subscribe for a pre- paid service which enables them to better monitor and control their usage. Pre- pay customers are able to use services within our licensed areas and to access all of AT&T's wireless network as well as those of its participating roaming partners who have compatible equipment. We provide an expansive feature set to our pre-pay customers, including caller ID and call waiting, and we market the pre-paid services to a broad segment of customers. Wireless In-Building Services. As the use of wireless devices becomes more widespread, consumers increasingly are demanding wireless services which extend into office buildings, subways, airports, shopping centers and private homes. We use "micro-cellular" technology to offer corporate users full in-building coverage and four-digit wireless office dialing. In addition, we are working with a number of hardware and software suppliers to develop next generation full-scale wireless office services including wireless PBX and wireless local area network services, which will enable users to use wireless handsets both inside and outside of the office. Data and Internet Services. Because of the quality of digital signal transmission, wireless communications systems are suitable for the transmission of wireless data services such as weather reports, sports summaries, fax services, access to stock quote services, monitoring of alarm systems and remote Internet access. Marketing Strategy Our marketing strategy has been developed on the basis of extensive market research in each of our markets. This research indicates that limited coverage of existing wireless systems, relatively high cost, inconsistent performance and overall confusion -39- about wireless services drive subscriber dissatisfaction and reduce the attractiveness of wireless services for potential new subscribers. We believe that our affiliation with the AT&T brand name and the distinctive advantages of our TDMA network, combined with simplified, attractive pricing plans, will allow us to capture significant market share from existing analog cellular providers in our markets and to attract new wireless users. We are focusing our marketing efforts on four primary market segments: corporate accounts, current cellular users, individuals with the intent to purchase a wireless product within six months and pre-paid subscribers. For each segment, we are creating a specific marketing program including a service package, pricing plan and promotional strategy. Management believes that targeted service offerings will increase customer loyalty and satisfaction, thereby reducing customer turnover. Brand We have formed Affiliate License Co. with Triton PCS and Tritel Communications, other companies similarly affiliated with AT&T, to adopt a common regional brand, SunCom. Each of the SunCom companies owns one-third of Affiliate License Co., which owns the SunCom name. We and the other SunCom companies license the SunCom name from Affiliate License Co. We market our wireless services as "SunCom, Member of the AT&T Wireless Network" and use the globally recognized AT&T brand name and logo in equal size and prominence with the SunCom brand name and logo. The use of the AT&T brand reinforces an association with reliability and quality. We and the other SunCom companies are establishing the SunCom brand as a strong local presence with a service area covering approximately 43 million Pops. We enjoy preferred pricing on equipment, handset packaging and distribution by virtue of our affiliation with AT&T and the other SunCom companies. We hope to achieve additional production and packaging economies of scale by working with the other SunCom companies. See "Risk Factors--Our success depends upon our relationship with AT&T and its success," "Certain Relationships and Related Transactions--AT&T Agreements" and "--Other Related Party Transactions." Pricing Our pricing plans are competitive and straightforward, offering large buckets of minutes, large local calling areas and usage enhancing features. We offer distinctive pricing plans tailored for each of our market segments. One way we differentiate ourselves from existing wireless competitors is through our pricing policies. We offer pricing plans designed to encourage customers to enter into long term service contract plans. We also offer shared minute pools, which are available for businesses and families who have multiple wireless users who want to share the bucket of minutes. In May 1998, AT&T introduced "Digital One Rate," a suite of rate plans that has caused a redefinition of the concept of local service area in the U.S. wireless marketplace. These rate plans include large buckets of minutes which can be used locally, or practically anywhere in the United States, on AT&T's wireless network and through AT&T's extensive network of roaming agreements. These plans also bundle long distance and roaming charges. Subscribers can make calls to or from most locations in the United States and pay no additional roaming fees or long distance charges. The Digital One Rate and other flat rate plans are also causing a shift in calling patterns in the wireless industry. Although these plans are too new to predict the long-range effect on consumer behavior, it appears that usage, and in particular long distance usage, has risen since the introduction of these plans. We offer our customers our national SunRate plans, which allow them to make calls practically anywhere in the United States without paying additional roaming or long distance charges. By contrast, competing flat rate plans generally restrict flat rate usage to such competitors' owned networks. By virtue of our roaming arrangements with AT&T and its roaming partners, we believe we can offer a competitive national rate plan. We believe the pre-paid subscriber segment represents a large market opportunity, and we offer pricing plans that will drive growth in this category. Pre-pay plans provide an opportunity for individuals whose credit profiles would not otherwise allow them access to wireless communications to take advantage of our services. In addition, our pre-pay plans provide an attractive alternative for families and business users to control the usage of family members or employees. We offer our pre-paid subscribers the same digital services and features available to other customer segments. Typical pre-pay plans of competitors, by contrast, provide low quality handsets and limited services and features. Bundling and Affinity Marketing We may bundle our wireless communications services with other communications services, including discounted long distance services, through strategic alliances and resale agreements with AT&T and others. We also may offer service options in partnership with local business and affinity marketing groups. Examples of these arrangements include offering wireless services with utility services, banking services, cable television, Internet access or alarm monitoring services in conjunction with local information services. Such offerings provide the customer access to information, such as account status, weather and traffic reports, stock quotes, sports scores and text messages from any location. -40- Customer Care We are committed to building strong customer relationships by providing customers with service that exceeds expectations. We serve our customers from our state-of-the-art facility in Memphis, Tennessee, which houses our customer service, collections and anti-fraud personnel. Convergys provides backup call center support and bilingual customer service from two facilities in Florida. We have implemented a "one call resolution" approach to customer service through the use of customer support tools, including access to online reference information. In addition, we emphasize proactive and timely customer service, including welcome packages and anniversary calls. We support our customer service initiatives through employee compensation plans based on subscriber quotas and retention. We use innovative service features to improve customer satisfaction and reduce the cost of service delivery. For example, pre-paid users hear a "whispered" announcement of time remaining in their account before each call, which allows them to control usage and reduces balance inquiries to customer service. We intend to expand our web-based services to include online account specific information that allows customers to check billing, modify service or otherwise manage their accounts. We are developing a state-of-the-art data warehouse to provide timely access to critical business information that can be used to provide customers with desired services, such as real-time billing and automated notification of remaining account balances. We also intend to use the data warehouse to cross- link billing, marketing and customer care systems to collect customer profile and usage information. This information provides the tools necessary to increase revenue by analyzing channel and product profitability and reduces customer acquisition costs by more effectively implementing marketing strategies. Advertising We believe that the most successful marketing strategy is to establish a strong local presence in each of our markets. We are directing our media and promotional efforts at the community level with advertisements in local publications and sponsorship of local and regional events. We combine our local efforts with mass market strategies and tactics to build the SunCom and AT&T brands locally. Our media efforts include television, radio, newspaper, magazine, outdoor and Internet advertisements to promote our brand. In addition, we use newspaper and radio advertising and our web page to promote specific product offerings and direct marketing programs for targeted audiences. Sales and Distribution We use a mix of sales and distribution channels, including a network of company stores, nationally recognized retailers, a direct sales force for corporate accounts and direct marketing channels such as telesales, neighborhood sales and online sales. We work with AT&T's sales channels to cooperatively exchange leads and develop new business. We are taking advantage of over-the-air activation features intrinsic to digital technology to separate activation of service from the sale of the phone. By separating activation and sale, we are able to ensure that knowledgeable staff is communicating with customers. This allows for better informed customers at the point of activation, with basic training in the use of their handsets and appropriate expectations for their wireless service provider. We believe that having better informed customers will lead to reduced customer turnover. In addition, the separation of activation and sale of handsets reduces the overall cost of the retail sales channel, because retailers have less involvement and therefore lower sales commissions. Company Stores We make extensive use of company stores for the distribution and sale of our handsets and services. Management believes that company stores offer a considerable competitive advantage by providing a strong local presence, which is required to achieve high penetration in suburban and rural areas. We also believe that company stores offer one of the lowest customer acquisition costs among our different distribution channels. Sales representatives in company stores receive in-depth training to allow them to explain wireless communications services simply and clearly. Company stores have three different formats: flagship stores, express stores and kiosks. Our flagship stores are located in the principal retail district in each market. Express stores are a smaller retail format located in secondary markets. Kiosks are being deployed to maximize our retail presence in each market and to take advantage of high traffic areas, such as shopping malls and airports. We have opened 22 company- owned stores. Retail Outlets We have negotiated distribution agreements with national and regional mass merchandisers and consumer electronics retailers, including Office Depot, Staples, Best Buy and Office Max. We currently have over 140 retail outlet locations where customers can purchase our services. These distributors are chosen based upon their ability to reach our target customers in our service area. Our separation of activation and sale of handsets reduces retailer involvement, which, in conjunction with the -41- desirability of the AT&T name, we believe, attracts retailers to our handsets. In some of these retail store locations, we are implementing a store-within-a- store concept, which uses visual merchandising to leverage the brand awareness created by both SunCom and AT&T advertising. The ease of distribution of shrink- wrapped handsets appeals to mass merchandisers who have altered their in-store merchandising to reflect the changing wireless marketplace. We support their dedication of valuable floor space to wireless communications products through a local team of retail merchandisers, attention-grabbing point of sale materials and consumer appeal. Direct Sales We focus our direct sales distribution channel on high-revenue, high- profitability corporate users. Our direct corporate sales force consists of dedicated professionals targeting the wireless decision maker within large corporations. We also benefit from AT&T's national corporate accounts sales force. AT&T, in conjunction with us, supports marketing of our services to AT&T's large national accounts located in certain of our service areas. We have formed regional advisory groups as an additional way to interface with corporate customers in our markets. These advisory groups are comprised of local business leaders, who are also wireless users or prospective users, and are designed to provide timely feedback regarding our proposed wireless offerings and establish a customer base prior to launch. See "--Marketing Strategy." Direct Marketing We use direct marketing efforts such as direct mail and telemarketing. These efforts are used to generate leads and stimulate prospects for our telemarketing department. Telesales allow us to maintain low selling costs and to "up sell" additional features or customized services. Website Our web page provides current information about us, our markets and our product offerings. We are also establishing an online store on our website. The web page conveys our marketing message and we expect it will generate customers through online purchasing. We deliver all information that is required to make a purchasing decision at our website. Customers are able to choose rate plans, features, handsets and accessories. The online store will provide a secure environment for transactions, and customers purchasing through the online store will experience a similar business process to that of customers purchasing service through other channels. Network Development We began commercial operations in December 1998 and have launched our services in each of our major domestic markets. Our network now covers approximately 40% of our domestic licensed Pops. We expect to launch our Puerto Rico market during the third quarter of 1999. Consistent with our strategy, we launched our services in each of our major domestic markets, which have attractive characteristics for a high volume of wireless communications usage, including metropolitan "downtown" areas, the surrounding suburbs, well-utilized commuting and travel corridors, and popular leisure and vacation destinations. Immediately upon launch, subscribers had access to coast-to-coast coverage through roaming arrangements with AT&T and its roaming partners (both within and outside our licensed areas). Within each market, geographic coverage will be based upon changes in wireless communications usage patterns, demographic changes within our licensed areas and our experiences in those markets. We intend to continue to meet our network development plan by using the expertise of vendors recognized in the industry for providing high quality services. Lucent is providing the necessary radio, switching and related equipment for construction of our network. In addition, a number of other experienced wireless vendors are assisting us in deploying our network. Handsets We purchase our handsets from Nokia and Ericsson at preferred prices through our affiliation with AT&T and the other SunCom companies. We also have entered into an arrangement with Brightpoint, a leading distributor for the wireless industry, for the packaging and distribution of our handsets. Network Construction We have leased over 640 cell sites, including 149 that will be developed in later phases of construction of our network, and we operate five mobile switches and four switching centers. We designed our network architecture to optimize the use of co- -42- location on existing sites which minimizes the construction of new towers and significantly reduces our need to obtain zoning approvals. Network Operations The effective operation of our network requires public switched interconnection and backhaul agreements with other communications providers, long distance interconnection, the implementation of roaming arrangements, the development of network monitoring systems and the implementation of information technology systems. Switched Interconnection/Backhaul Our network is connected to the public switched telephone network to facilitate the origination and termination of traffic between our network and both the local exchange and long distance carriers. We have signed agreements with numerous carriers, including, among others, BellSouth in New Orleans, Time Warner Telecom in Memphis, SBC Communications in Little Rock, Bell Atlantic in New England and Puerto Rico Telephone in Puerto Rico. Long Distance We have executed a wholesale long distance agreement with AT&T providing for preferred rates for long distance services. Roaming Through our arrangements with AT&T and via the use of tri-mode handsets, our customers have roaming capabilities on AT&T's wireless network. Further, we have the benefit of AT&T's roaming agreements with third party carriers at AT&T's preferred pricing, including in-region roaming agreements covering all of our launched service areas. Network Monitoring Systems Our network operations center provides around-the-clock monitoring and maintenance of our entire network. The network operations center is equipped with sophisticated electronics that constantly monitor the status of all base stations and switches and record network traffic. The network operations center provides continuous monitoring of system quality for blocked or dropped calls, call clarity and evidence of tampering, cloning or fraud. We designed our network operations center to oversee the interface between customer usage, data collected at switch facilities and our billing systems. Usage reports, feature activation and related billing items are managed on a timely and accurate basis. Our network operations center is located in the Memphis switch center, and we also have back-up network operations center capabilities in our Arlington, Virginia data center. Information Technology We operate management information systems to handle customer care, billing, network management and financial and administrative services. The systems focus on three primary areas: (1) network management, including service activation, pre-pay systems, traffic and usage monitoring, trouble management and operational support systems; (2) customer care, including billing systems and customer service and support systems; and (3) business systems, including financial, purchasing, human resources and other administrative systems. We have incorporated sophisticated network management and operations support systems to facilitate network fault detection, correction and management, performance and usage monitoring and security. System capabilities have been developed to allow over-the-air activation of handsets and implement fraud protection measures. We maintain stringent controls for both voluntary and involuntary deactivations. Subscriber disconnections initiated by us are minimized by (1) preactivation screening to identify any prior fraudulent or bad debt activity, (2) credit review and (3) call pattern profiling to identify where activation and termination policy adjustments are needed. We entered into a long-term software license, development and implementation agreement with LHS Communications Systems and CAP Gemini America to provide our billing system, and we have engaged a variety of industry leaders such as Lucent and Lightbridge to provide activation, fraud management and support systems. TDMA Digital Technology We have chosen digital TDMA technology for our network. TDMA allows for the use of advanced tri-mode handsets which allow for roaming across PCS and cellular frequencies, including both analog cellular and digital cellular. TDMA technology allows for enhanced services and features, such as short-messaging, extended battery life, added call security and improved voice quality. TDMA's hierarchical cell structure will enable us to enhance network coverage with lower incremental investment -43- (through the deployment of micro, as opposed to full-size, cell sites). This will enable us to offer customized billing options and to track billing information per individual cell site, which is practical for advanced wireless applications, such as wireless local loop and wireless office applications. In addition, TDMA technology allows for three times the capacity of analog systems. TDMA is the digital technology choice for two of the three largest wireless communications companies in the United States, AT&T and SBC Communications. TDMA served an estimated 19 million subscribers worldwide and 9 million subscribers in North America as of December 31, 1999, according to the Universal Wireless Communications Consortium ("UWCC"), an association of TDMA service providers and manufacturers. The increased volume of TDMA users has increased the probability of TDMA technology remaining an industry standard. TDMA equipment is available from leading telecommunications vendors, such as Lucent, Ericsson and Northern Telecom. See "Risk Factors--Changes in technology and customer demands could adversely affect us." Competition We believe subscribers choose a wireless communications service provider principally based upon network coverage, pricing, quality of service and customer care. We believe that we enjoy certain advantages over our competitors. We offer our customers coverage where they live, work and play and coast-to-coast coverage immediately upon launch through our relationship with AT&T and its roaming partners. Our pricing plans are competitive and straightforward, offering large buckets of minutes, large local calling areas with in-region roaming capabilities to supplement our network and usage- enhancing features. We believe that our TDMA digital technology provides better quality services and more enhanced features than analog cellular technology. Our digital network provides users with improved sound quality, enhanced security, prolonged battery life and increased data transfer capability over analog networks, and we believe that customers increasingly will choose digital service over analog service. We operate a state-of-the-art customer care facility designed to provide proactive customer service. Our marketing plan includes at least four customer contacts annually, including welcome calls, first bill calls and anniversary calls, and we follow a "one call resolution approach" to customer concerns. We market our wireless services to our customers giving equal emphasis to the SunCom and AT&T brand names and logos. Our market research indicates that association with the AT&T brand name reinforces reliability and quality and significantly increases the likelihood that potential customers will purchase our wireless communications services. We compete directly with at least two cellular providers and other PCS providers in each of our markets and against ESMR operations in certain of our markets. Most of these existing cellular providers have an infrastructure in place and have been operational for a number of years, with certain of these competitors having greater financial and technical resources than we do. Certain of these cellular operators may upgrade their networks to provide services comparable to those offered by us. We also compete with other PCS license holders in each of our markets. In New Orleans, we compete primarily against Radiofone and BellSouth for cellular services, Sprint PCS and PrimeCo Personal Communications for PCS services, and Nextel for ESMR. In Memphis, we compete with GTE, SBC Communications and BellSouth for cellular services, Powertel and Sprint PCS for PCS services and Nextel for ESMR. In Little Rock, we compete against ALLTEL and SBC Communications for cellular services and Sprint PCS for PCS services. In New England, we compete against SBC Communications, Bell Atlantic and U.S. Cellular for cellular services and Sprint PCS and Omnipoint Technologies for PCS services. In Puerto Rico, we compete principally against Puerto Rico Telephone Company and Cellular One for cellular services and Centennial Cellular for PCS services. Our ability to compete successfully will depend, in part, upon our ability to anticipate and respond to various competitive factors affecting the industry, including the introduction of new services, changes in consumer preferences, demographic trends, economic conditions and competitors' discount pricing strategies, all of which could adversely affect our operating margins. See "Risk Factors--Changes in technology and customer demands could adversely affect us." The Wireless Communications Industry Wireless communications systems use a variety of radio frequencies to transmit voice and data. The wireless communications industry includes one-way radio applications, such as paging or beeper services, and two-way radio applications, such as PCS, cellular telephone and ESMR. Each application is licensed and operates in a distinct radio frequency block. Since the introduction of commercial cellular in 1983, the wireless communications industry has experienced dramatic growth. The number of wireless subscribers has increased from an estimated 340,213 at the end of 1985 to over 69 million as of December 31, 1998, according to the Cellular Telecommunications Industry Association, an international association for the wireless industry. Kagan, an independent media and telecommunications association, estimates that the number of wireless users will increase to 142 million by 2003, with PCS users representing nearly 34% of total users, a significant increase over the approximately 11% of total users represented by PCS today. The following chart illustrates the annual growth in U.S. wireless communications customers (cellular, ESMR and PCS) through December 31, 1998: -44-
Year Ended December 31, -------------------------------------------------------------- 1992 1993 1994 1995 1996 1997 1998 ------- ------- ------- ------- ------- ------- ------- Wireless Industry Statistics/1/...................................... Total service revenues (in billions)................................. $ 7.8 $ 10.9 $ 14.2 $ 19.0 $ 23.6 $ 27.5 $ 33.1 Wireless subscribers at end of period (in millions).................. 11.0 16.0 24.1 33.8 44.0 55.3 69.2 Subscriber growth.................................................... 46.0% 45.1% 50.8% 40.0% 30.4% 25.6% 25.1% Average monthly wireless bill........................................ $68.68 $61.48 $56.21 $51.00 $47.70 $42.78 $39.43 Ending penetration................................................... 4.4% 6.2% 9.4 13.0% 16.3% 20.2% 25.0% Digital subscribers (in millions).................................... -- -- -- -- -- -- 18.3
Sources: Cellular Telecommunications Industry Association and Kagan. (1) Reflects domestic commercially operational cellular, ESMR and PCS providers. In the wireless communications industry, there are two principal services licensed by the FCC for transmitting voice and data signals: PCS and cellular. PCS is a term commonly used in the United States to refer to service carried over the 1850 MHz to 1990 MHz portion of the radio spectrum. Cellular is a term commonly used in the United States to refer to service carried over the 824 MHz to 893 MHz portion of the radio spectrum. Cellular service is the predominant form of wireless voice communications service available. Cellular systems were originally analog-based systems, although digital technology has been introduced in certain markets. PCS systems use digital technology. Analog technology currently has several limitations, including lack of privacy and limited capacity. Digital systems convert voice or data signals into a stream of digits that is compressed before transmission, enabling a single radio channel to carry multiple simultaneous signal transmissions. This enhanced capacity, along with improvements in digital signaling, allows digital-based wireless technologies to offer new and enhanced services, such as greater call privacy and robust data transmission features, including "mobile office" applications (facsimile, e-mail and wireless connections to computer/data networks, including the Internet). See "--Government Regulation" for a discussion of the FCC auction process and allocation of wireless licenses. Operation of Wireless Communications Systems Wireless communications system service areas, whether PCS or cellular, are divided into multiple cells. In both PCS and cellular systems, each cell contains a transmitter, a receiver and signaling equipment, which is known as a "cell site." The cell site is connected by microwave or landline telephone lines to a switch that uses computers to control the operation of the cellular communications system for the entire service area. The system controls the transfer of calls from cell site to cell site as a subscriber's handset travels, coordinates calls to and from handsets, allocates calls among the cell sites within the system and connects calls to the local landline telephone system or to a long distance telephone carrier. Wireless communications providers must establish interconnection agreements with local exchange carriers and inter- exchange carriers, thereby integrating their system with the existing landline communications system. Because the signal strength of a transmission between a handset and a cell site declines as the handset moves away from the cell site, the switching office and the cell site monitor the signal strength of calls in progress. When the signal strength of a call declines to a predetermined level, the switching office may hand-off the call to another cell site where the signal strength is stronger. If a handset leaves the service area of a PCS or cellular system, the call is disconnected unless there is a technical connection with the adjacent system. If there is a technical connection with the adjacent system, the customer may roam onto the adjacent system. Analog cellular handsets are functionally compatible with cellular systems in all markets in the United States. As a result, analog cellular handsets may be used wherever a subscriber is located, as long as a cellular system is operational in the area and either the service provider's system covers such area or a roaming arrangement exists with a provider covering such area. Although PCS and cellular systems utilize similar technologies and hardware, they operate on different frequencies and use different technical and network standards. With the introduction of tri-mode phones, it is now possible for users of one type of system to roam on a different type of system outside of their service area, and to hand-off calls from one type of system to another if the appropriate agreements are in place. Currently, PCS systems operate under one of three principal digital signal transmission technological standards that have been proposed by various operators and vendors for use in PCS systems: TDMA, CDMA or GSM. TDMA and GSM are both "time division-based" standards but are incompatible with each other and with CDMA. Accordingly, a subscriber of a system that utilizes TDMA technology is unable to use a TDMA handset when travelling in an area not served by TDMA-based PCS operators, unless the subscriber carries a dual-mode handset that permits the subscriber to use the analog or digital cellular system in that area and the appropriate agreements are in place. -45- With a tri-mode handset, a user can place or receive calls using (1) a PCS system using the technological standard with which such handset is compatible, (2) a digital cellular system using the corresponding technological standard or (3) an analog cellular system. If a PCS system operated by the service provider or covered by a roaming agreement is operating in the area, the call will be placed via such system. If there is no PCS system providing coverage, the call will be placed through a digital cellular system operating in the area and providing coverage to the user, and if no digital cellular system is providing coverage, the call will be connected over an analog cellular system providing coverage. Tri-mode handsets allow for a call in progress to be handed off to an adjacent system, whether the same mode or band or otherwise, without interruption if the appropriate agreements are in place. Prior generations of handsets would cut off the call when the handset left the coverage of one system and would require the customer to place the call again using the adjacent system. Government Regulation We are subject to substantial regulation by the FCC, state public utility commissions and, in some cases, local authorities. Our principal operations are classified as CMRS by the FCC, subject to regulation under Title II of the Communications Act of 1934 (the "Act") as a common carrier and subject to regulation under Title III of the Act as a radio licensee. The states are preempted from regulating our entry into and rates for CMRS offerings, but remain free to regulate other terms and conditions of our CMRS services and to regulate other intrastate offerings by us. Congress and the states regularly enact legislation, and the FCC, state commissions and local authorities regularly conduct rulemaking and adjudicatory proceedings that could have a material adverse effect on us and other similarly situated carriers. In addition, our nature as a regulated entity may adversely affect our ability to engage in, or rapidly consummate, certain transactions and may require us to expend additional resources in due diligence and filings related to FCC and other requirements, as compared to unregulated entities. FCC Common Carrier Regulation Under Title II Under Title II of the Act, we are: (1) required to offer service upon reasonable request; (2) prohibited from imposing unjust or unreasonable rates, terms or conditions of service; (3) proscribed from unjustly or unreasonably discriminating among customers; (4) required to reserve communications capacity for law enforcement surveillance operations and to make technical network changes to facilitate such surveillance; (5) required to make our services and products accessible to, and usable by, Americans with disabilities, if readily achievable; and (6) required to comply with limitations on our use of customer proprietary network information. We are entitled to certain benefits when negotiating interconnection arrangements with other communications carriers (such as resale, number portability and reciprocal compensation), but we are subject to those same requirements when other carriers seek to interconnect with our network. While the rates of common carriers are subject to the FCC's jurisdiction, the FCC forbears from requiring CMRS carriers to file tariffs for their services. Common carriers, including CMRS providers, are also prohibited under Sections 201 and 202 of the Act from unreasonably restricting the resale of their services and are required to offer unrestricted resale. There can be no assurance that the FCC will not choose to regulate common carriers more comprehensively, which could have an adverse effect on our operations. FCC Radio License Regulation Under Title III Among other things, Title III of the Act: . does not permit licenses to be granted or held by entities that have been subject to the denial of federal benefits; . requires us to seek prior approval from the FCC to transfer control of us or to assign our radio authorizations (including disaggregating sub- bands of our radio frequencies or partitioning geographic license areas), except in very limited circumstances; and . limits foreign ownership in certain radio licensees, including PCS providers. While we believe that we comply with Title III, any future violation of these limitations could result in license revocation, forfeiture and/or the forced restructuring of our ownership to comply with the rules, any of which could have a material adverse effect on us. The Title III restrictions could also materially adversely affect our ability to attract additional equity financing from certain entities. See "Risk Factors--Government regulation, changes in our licenses or other governmental action could adversely affect us." FCC CMRS Regulation The FCC rules and policies impose substantial regulations on CMRS providers. Among other regulations, broadband CMRS providers such as us: (1) incur costs as a result of required contributions to the Universal Service Fund, the Telecommunications -46- Relay Service, FCC regulatory fees, the administration of the North American Numbering Plan and other federal programs; (2) are prohibited from acquiring or holding an attributable interest in more than 45 MHz of combined broadband PCS, cellular or SMR spectrum in the same geographic area; (3) are required to provide "manual" roaming service to enable a customer of one provider to obtain service while roaming in another carrier's service area; (4) are required to route emergency calls to Public Safety Answering Points ("PSAPs") and provide PSAPs with certain enhanced 9-1-1 information regarding the called number and the location of the caller; and (5) will be required to begin to implement local number portability after March 31, 2000, under certain circumstances, which will allow subscribers to retain their telephone numbers when changing service providers. Any violation of the CMRS regulations could result in a revocation or forfeiture of our licenses that would have a material adverse effect on us. In addition, there can be no assurance that the FCC will not choose to regulate CMRS providers more comprehensively, which could have an adverse effect on our operations. FCC PCS Regulation We are subject to service-specific regulations under Part 24 of the FCC's rules. Among other things, Part 24 provides that PCS licensees, such as us, are granted licenses for a 10-year term, subject to renewal. Under these policies, we will be granted a renewal expectancy that would preclude the FCC from considering competing applications if we have (1) provided "substantial" performance, that is "sound, favorable and substantially above a level of mediocre service just minimally justifying renewal" and (2) substantially complied with FCC rules and policies and the Act. While we intend to structure our operations to secure a renewal expectancy, there can be no assurance that a renewal expectancy will be granted and, if the renewal expectancy is not granted, that our licenses will be renewed. Our failure to obtain renewal of our licenses would have a material adverse effect on our operations. Part 24 also contains regulations governing the transmission characteristics of PCS handsets and base stations and other technical requirements. PCS licensees are required to comply with limits intended to ensure that such operations do not interfere with radio services in other markets or in other spectrum bands and to ensure emissions from mobile transmitters do not cause adverse health effects. We are also subject to minimum construction requirements that will require us to deploy facilities with service coverage of a particular amount of the population of our licensed area within specified time periods. See "Risk Factors--We could lose our F-Block and C-Block licenses if we fail to meet financial and other tests." While we intend to comply with all PCS regulations in effect, any violation of the PCS regulations could result in a revocation or forfeiture that would have a material adverse effect on us. In addition, there can be no assurance that the FCC will not choose to regulate PCS licensees more comprehensively, which could have an adverse effect on our operations. Relocation of Fixed Microwave Licensees Because PCS carriers are utilizing spectrum occupied by existing microwave licensees, the FCC has adopted special regulations governing the relocation of incumbent systems and cost-sharing among licensees that pay to relocate microwave incumbents. Relocation usually requires a PCS operator to compensate an incumbent for the costs of system modifications and new equipment required to move the incumbent to new spectrum, including possible "premium" costs for early relocation to alternate spectrum. The transition plan allows most microwave users to operate in the PCS spectrum for a one-year voluntary negotiation and an additional one-year mandatory negotiation period following the issuance of the PCS license. These periods are longer for public safety entities. We have entered into all necessary agreements for microwave relocation. There can be no assurance, however, that relocated licenses will not exercise their rights to move back to their original sites in the event the new sites are inadequate. Any delay in the relocation of microwave users to other spectrum also may affect adversely our ability to operate our network. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." FCC and Federal Aviation Administration Facilities Regulation Because we will acquire antenna sites for use in our network, we will become subject to FCC and Federal Aviation Administration regulations governing registration of towers, the marking and lighting of certain structures and regulations governing compliance with the National Environmental Policy Act of 1969, which requires carriers to assess the impact of their operations on the environment, including the health effects of radio frequency radiation on humans. FCC Designated Entity and Small Business Regulation TeleCorp Holding was the winning bidder for four licenses in the auction of F- Block licenses. With respect to those licenses, and additional C-Block and F- Block licenses acquired through later auctions and transactions, we (1) believe we qualify as a "very small business" (as defined) and as Entrepreneurs (as defined), and (2) intend to diligently pursue and maintain our qualification as a "very small business" and as Entrepreneur in a manner intended to ensure compliance with the applicable FCC rules. We rely on representations of our investors to determine our compliance with the FCC's rules applicable to C-Block and F- -47- Block licenses. There can be no assurance, however, that our investors or we will continue to satisfy these requirements during the term of any PCS license granted to TeleCorp Holding or TeleCorp PCS, LLC, our wholly owned subsidiary, or that we will be able successfully to implement divestiture or other mechanisms included in our corporate charter that are designed to ensure compliance with FCC rules. Any non-compliance with the FCC "very small business" and Entrepreneurs rules could subject us to penalties, including a fine, revocation of our PCS licenses, acceleration of installment payment obligations or retroactive loss of bidding credits. See "Risk Factors--We have substantial debt which we may not be able to service," "--Government regulation, changes in our licenses or other governmental action could adversely affect us" and "--We could lose our F-Block and C-Block licenses if we fail to meet financial and other tests." Entrepreneurs. In order to hold a C-Block and F-Block license, an entity and its affiliates must have had less than $125 million in average gross revenues in the last two years and less than $500 million in total assets at the time it filed its application to acquire the C-Block or F-Block licenses (such qualifying entity, an "Entrepreneur"). In calculating revenues and assets for such purposes, the FCC includes the gross revenues and total assets of our affiliates, those entities that hold attributable interests in us and the affiliates of such entities. However, the revenues and assets of certain affiliates are not attributable to the licensee if the licensee maintains an organizational structure that satisfies certain Control Group Requirements (as defined). For at least five years after the initial licensing of a C-Block or F- Block license, a licensee must continue to meet the control group requirements to continue to qualify for the installment payment program and must continue to meet the "very small business" requirements to continue to qualify for the bidding credits received in the auction. Very Small Business. We are also structured under the FCC's rules to qualify as a "very small business." A "very small business" is an entity that, together with its affiliates and entities that hold interests in the applicant and their affiliates, has average annual gross revenues of not more than $15 million for the previous three calendar years. As a result of our classification as a "very small business," we were eligible for both a 25% bidding credit and for a preferential installment payment program. In the more recent reauction, Viper Wireless qualified as a "very small business," eligible for the same bidding credit, but the FCC ceased to provide installment payment financing. Control Group Requirements. To avoid attribution of the revenues and assets of certain investors, we are required to maintain a conforming control group and to limit the amount of equity held by such entities on a fully-diluted basis. These requirements mandate that the Control Group, among other things, have and maintain both actual (de facto) and legal (de jure) control of the licensee. Under these control group requirements, (1) an established group of investors meeting certain financial qualifications must own at least three-fifths of the control group's equity (i.e., 15% of the licensee's overall equity) on a fully- diluted basis and at least 50.1% of the voting power in the licensee entity and (2) additional members of the control group must hold, on a fully-diluted basis, the remaining 10% equity interest in the licensee entity. Additional Members may be non-controlling institutional investors, including most venture capital firms. A C-Block or F-Block licensee must have met the requirements at the time it filed its application to acquire such licenses and must continue to meet the requirements for five years following the date that a C-Block or F-Block license is granted. Commencing the fourth year of the license term, the FCC rules (1) eliminate the requirement that Additional Members hold the 10% equity interest and (2) allow the Qualifying Investors to reduce the minimum required equity interest from 15% to 10%. If the FCC were to determine that we did not comply with the regulations, we would be required to attribute the revenues of additional stockholders, which would likely cause the loss of our status both as an Entrepreneur and a "very small business." Loss of such status would have a materially adverse effect on us. FCC C-Block and F-Block Transfer Restrictions. During the first five years of their license terms, C-Block and F-Block PCS licensees may only transfer or assign their license, or any partitioned or disaggregated portion of, to other qualified Entrepreneurs. Such acquiring entities would take over the license, or any portion of the license, subject to separately established installment payment obligations. After five years, licenses are transferable to Entrepreneurs and non-Entrepreneurs alike, subject to unjust enrichment penalties. If transfer occurs during years six through ten of the initial license term to a company that does not qualify for the same level of auction preferences as the transferor, such a sale would be subject to immediate payment of the outstanding balance of the government installment payment debt and payment of any unjust enrichment assessments as a condition of transfer. The FCC has also initiated transfer disclosure regulations that require licensees who transfer control of or assign a PCS license within the first three years to file associated contracts for sale, option agreements, management agreements or other documents disclosing the total consideration that the applicant would receive in return for the transfer or assignment of its license(s). If the FCC determines that a transferor or assignor is being "unjustly enriched" by a proposed sale or transfer of a license, it may condition its approval of the transaction on payment of money to the U.S. Treasury, accelerate installment payments or require repayment of bidding credits. -48- State and Local Regulation The FCC permits the states to regulate terms and conditions of our CMRS services other than rates and entry and may regulate all aspects of our intrastate toll services. State jurisdiction also extends to regulating the intrastate portion of services offered by local exchange carriers, and therefore the rates we must pay to acquire certain critical facilities from other common carriers. The FCC also delegates authority to the states to administer numbering resources, subject to federal oversight, and have other responsibilities that impact the nature and profitability of our operations, including the ability to specify cost-recovery mechanisms for network modifications to support enhanced 9-1-1 services. States and localities also regulate construction of new antenna site facilities and are responsible for zoning and developmental regulations that can materially impact our timely acquisition of sites critical to our radio network. The states and localities regularly conduct legislative, rulemaking and adjudicatory proceedings on matters within their jurisdiction that could have a material adverse effect on us and other similarly situated carriers. States may petition the FCC to expand their jurisdiction over CMRS rates and entry under certain conditions. There can be no assurance that a state in which we operate will not attempt to engage in more comprehensive regulation of our operations, which could increase the costs of providing service and materially affect our ability to operate in that state. Intellectual Property The AT&T and globe design logo is a service mark registered with the U.S. Patent and Trademark Office. AT&T owns the service mark. We use the AT&T and globe design logo, on a royalty free basis, with equal emphasis on our SunCom brand and logo, solely within our licensed area in connection with marketing, offering and providing certain licensed services to end-users and resellers. Our license agreement with AT&T grants us the right and license to use certain licensed marks on certain permitted mobile phones. This license agreement contains numerous restrictions with respect to the use and modification of certain licensed marks. See "Certain Relationships and Related Transactions-- AT&T Agreements." We, Triton PCS and Tritel Communications have adopted a common brand, SunCom, that is co-branded with equal emphasis with the AT&T brand name and logo. Each of the SunCom companies owns one-third of Affiliate License Co., which owns the SunCom name. We and the other SunCom companies license the SunCom name from Affiliate License Co. We use such brand to market, offer and provide services to end-users and resellers. See "--Marketing Strategy," "Certain Relationships and Related Transactions--Other Related Party Transactions." Triton PCS recently paid $975,000 to settle a potential dispute regarding prior use of a version of the SunCom brand. In connection with this settlement, Triton PCS transferred the SunCom trademark to Affiliate License Co. for $650,000. Each of the other SunCom Companies agreed to pay $325,000 as a royalty fee to license such trademark from Affiliate License Co. Employees As of March 31, 1999, we employed approximately 515 people. None of our employees currently are represented by a union. We believe that our relations with our employees are good. Properties We lease space for our switches in New Orleans, Boston and Puerto Rico and for our network operators center, a switch and our customer care and data center in Memphis. Further, we lease space for our base station transmitter equipment, and we lease office space for our headquarters and regional offices. Legal Proceedings We are not a party to any lawsuit or proceeding which is likely, in the opinion of management, to have a material adverse effect on our financial position, results of operations and cash flows. We are a party to routine filings and customary regulatory proceedings with the FCC relating to our operations. -49- THE EXCHANGE OFFER Purpose and Effects The Exchange Offer is designed to provide to holders of the Old Notes an opportunity to acquire the Exchange Notes which, unlike the Old Notes, will be freely transferable at all times, provided that the holder is not our affiliate. The Old Notes were originally issued and sold on April 23, 1999 in the principal amount at maturity of $575.0 million in a transaction exempt from the registration requirements of the Securities Act. The Old Notes may not be reoffered, resold or transferred except under a registration statement filed with the SEC or unless an exemption from the registration requirements of the Securities Act is available. We are making the Exchange Offer in reliance on the position of the staff of the SEC as set forth in certain no-action letters addressed to other parties in other transactions. However, we have not sought our own no-action letter and there can be no assurance that the staff of the SEC would make a similar determination with respect to the Exchange Offer as in such other circumstances. Based upon these interpretations by the staff of the SEC, we believe that the Exchange Notes issued in the Exchange Offer in exchange for the Old Notes may be offered for resale, resold and otherwise transferred by a holder of the Exchange Notes other than by (1) a broker-dealer who purchased such Old Notes directly from us to resell under Rule 144A under the Securities Act or any other available exemption under the Securities Act or (2) a person that is our "affiliate," as defined in Rule 405 under the Securities Act, without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange Notes are acquired in the ordinary course of such holder's business and that such holder is not participating, and has no arrangement or understanding with any person to participate, in the distribution of such Exchange Notes. Holders of the Old Notes accepting the Exchange Offer for the purpose of participating in a distribution of the Exchange Notes may not rely on the position of the staff of the SEC as set forth in these no-action letters and would have to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the Exchange Notes. A resale in the United States by a holder of the Exchange Notes who is using the Exchange Offer to participate in the distribution of the Exchange Notes must be covered by a registration statement containing the selling securityholder information required by Item 507 of Regulation S-K under the Securities Act. The Exchange Notes will be freely transferable by the holders of such Notes, subject to the limitations described in the immediately preceding paragraph. The Exchange Notes will be identical in all respects, including interest rate, maturity, security, guaranty and restrictive covenants, to the Old Notes for which they may be exchanged in the Exchange Offer, except the Exchange Notes will not confer registration rights or bear penalty interest. Holders who do not exchange their Old Notes in the Exchange Offer will continue to hold the Old Notes which are subject to restrictions on transfer. Each broker-dealer that receives the Exchange Notes for its own account in exchange for the Old Notes, where such Old Notes were acquired by such broker- dealer as a result of market-making or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. See "Plan of Distribution." Terms of the Exchange Offer Promptly after the registration statement of which this prospectus constitutes a part has been declared effective, we will offer the Exchange Notes in exchange for surrender of the Old Notes. We will keep the Exchange Offer open for not less than 30 days (or longer if required by applicable law) after the date on which notice of the Exchange Offer is mailed to the registered holders of the Old Notes. For each $1,000 principal amount at maturity of the Old Notes validly tendered to us in the Exchange Offer and not withdrawn by the holder of such Old Notes, the holder of such Old Notes will receive $1,000 principal amount at maturity of the Exchange Notes. Interest on each Exchange Note will accrue from the date of the original issue of the Old Notes. The Exchange Notes evidence the same debt as the Old Notes and are issued under and entitled to the same benefits under the indenture governing the Notes as the Old Notes. In addition, the Exchange Notes and the Old Notes are treated as one series of securities under the indenture governing the Notes. In the event that (1) neither the registration statement of which this prospectus constitutes a part nor a Shelf Registration Statement, as defined in the Exchange and Registration Rights Agreement, with respect to the Old Notes is filed on or prior to the 60th day after the date of original issue of the Old Notes, (2) neither of such registration statements is declared effective by the SEC on or prior to the 180th day after the date of original issue of the Old Notes, or within 45 days after the publication of a change in applicable law or interpretation of law by the SEC's staff that would require us to file a Shelf Registration Statement (the "Effectiveness Target Date"), (3) we fail to consummate the Exchange Offer on or prior to the 210th day after the date of original issuance of the Old Notes, or (4) the Shelf Registration Statement is declared effective but thereafter ceases to be effective or usable in connection with resales of the Old Notes during the period specified in the Exchange and Registration -50- Rights Agreement (each such event referred to in clauses (1)through (4) above as a "Registration Default"), then we must pay liquidated damages to each holder of the Old Notes, during the period of one or more such Registration Defaults, in an amount equal to $0.192 per week per $1,000 of Accreted Value, as defined in the indenture governing the Notes, of the Old Notes held by such holder until the cure of all Registration Defaults. Such interest will be payable on the next scheduled interest payment date. As of April 23, 1999, $575.0 million aggregate principal amount at maturity of the Old Notes was outstanding. This prospectus and the Letter of Transmittal are being sent to all registered holders of the Old Notes. Tendering holders of the Old Notes will not be required to pay brokerage commissions or fees or, subject to the instructions in the Letter of Transmittal, transfer taxes with respect to the exchange of the Old Notes in the Exchange Offer. We will pay all charges and expenses, other than certain transfer taxes which may be imposed, in connection with the Exchange Offer. See "Transfer Taxes" below. Holders of the Old Notes do not have any appraisal or dissenters' rights under the Delaware General Corporation Law in connection with the Exchange Offer. Period for Tendering Old Notes Upon the terms and subject to the conditions set forth in this prospectus and in the accompanying Letter of Transmittal which together constitute the Exchange Offer, we will accept for exchange the Old Notes which are properly tendered on or prior to the Expiration Date and not withdrawn as permitted below. As used within the Exchange Offer, the term "Expiration Date" means 5:00 p.m., New York City time, on , 1999; PROVIDED, HOWEVER, that our obligation to accept the Old Notes for exchange in the Exchange Offer is subject to certain conditions set forth under "--Certain Conditions to the Exchange Offer" below. We expressly reserve the right, at any time or from time to time, to extend the period of time during which the Exchange Offer is open, and thereby delay acceptance of exchange of any Old Notes, by giving oral or written notice of such extension to the holders of such Old Notes as described below. During any such extension, all Old Notes previously tendered will remain subject to the Exchange Offer and we may accept them for exchange. Any Old Notes not accepted for exchange for any reason will be returned without expense to the tendering holder of such Old Notes as promptly as practicable after the expiration or termination of the Exchange Offer. We expressly reserve the right to amend or terminate the Exchange Offer, and not to accept for exchange any Old Notes not already accepted for exchange, upon the occurrence of any of the conditions specified below under "--Certain Conditions to the Exchange Offer." We will give oral or written notice of any extension, amendment, non-acceptance or termination to the holders of the Old Notes as promptly as practicable. We shall issue such notice, in the case of any extension, as a press release or other public announcement no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Procedures for Tendering Old Notes Except as set forth below, a holder of the Old Notes who wishes to tender the Old Notes for exchange in the Exchange Offer must send a properly completed and duly executed Letter of Transmittal, including all other documents required by such Letter of Transmittal, to Bankers Trust Company (the "Exchange Agent") at the address set forth below under "--Exchange Agent" on or prior to the Expiration Date. In addition, either (1) certificates for such Old Notes must be received by the Exchange Agent, or (2) a timely confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such Old Notes into the Exchange Agent's account at The Depository Trust Company (the "Book-Entry Transfer Facility") under the procedure for book-entry transfer described below, must be received by the Exchange Agent on or prior to the Expiration Date, or (3) the holder of the Old Notes must comply with the guaranteed delivery procedures described below. Each exchanging holder of the Old Notes will be required to represent in its Letter of Transmittal that such holder is acquiring the Exchange Notes in the ordinary course of business, is not engaged in, and does not intend to engage in, a distribution of the Exchange Notes and is not our affiliate or an affiliate of our subsidiary guarantors. THE METHOD OF DELIVERY OF THE OLD NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER OF THE OLD NOTES. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO US. -51- Each broker-dealer that receives the Exchange Notes for its own account in exchange for the Old Notes, where such Old Notes were acquired by such broker- dealer as a result of market-making or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. See "Plan of Distribution." Signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed unless the Old Notes surrendered for exchange in the Exchange Offer are tendered (1) by a registered holder of the Old Notes who has not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or (2) for the account of an Eligible Institution, as defined below. In the event that signatures on a Letter of Transmittal or a notice of withdrawal are required to be guaranteed, such guarantees must be made by a firm which is a member of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc. or by a commercial bank or trust company having an office or correspondent in the United States (collectively, "Eligible Institutions"). If the Old Notes are registered in the name of a person other than a signer of the Letter of Transmittal, the Old Notes surrendered for exchange must be endorsed by, or be accompanied by a written instrument or instruments of transfer or exchange, in satisfactory form as determined by us in our sole discretion, duly executed by the registered holder with the signature guaranteed by an Eligible Institution. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of the Old Notes tendered for exchange will be determined by us in our sole discretion, which determination shall be final and binding. We reserve the absolute right to reject any and all tenders of any particular Old Notes not properly tendered or to not accept any particular Old Notes which acceptance might, in our judgment or the judgment of our counsel, be unlawful. We also reserve the absolute right to waive any defects or irregularities or conditions of the Exchange Offer as to any particular Old Notes either before or after the Expiration Date. Our interpretation of the terms and conditions of the Exchange Offer either before or after the Expiration Date (including the Letter of Transmittal and the instructions) shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Old Notes for exchange must be cured within such reasonable period of time as we shall determine. None of us, the Exchange Agent nor any other person shall be under any duty to give notification of any defect or irregularity with respect to any tender of Old Notes for exchange, nor shall any of us incur any liability for failure to give such notification. Tenders of Old Notes received by the Exchange Agent that are not properly tendered and as to which the irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering holder, unless otherwise provided in the Letter of Transmittal, as soon as practicable following the Expiration Date. If the Letter of Transmittal is signed by a person or persons other than the registered holder or holders of the Old Notes, such Old Notes must be endorsed or accompanied by appropriate powers of attorney, in either case signed exactly as the name or names of the registered holder or holders that appear on the Old Notes. If the Letter of Transmittal or any Old Notes or powers of attorney are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by us, must submit to us proper evidence satisfactory to us of their authority to so act. In all cases, issuance of the Exchange Notes for the Old Notes that are accepted for exchange in the Exchange Offer will be made only after timely receipt by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry Confirmation of such Old Notes in the Exchange Agent's account at the Book-Entry Transfer Facility, a properly completed and duly executed Letter of Transmittal and all other required documents. If we do not accept any tendered Old Notes for any reason or the Old Notes are submitted for a greater principal amount than the holder of such Old Notes desires to exchange, we will return such unaccepted or non-exchanged Old Notes without expense to the tendering holder of such Old Notes as promptly as practicable after the Exchange Offer expires or terminates. In the case of Old Notes tendered by book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer Facility under the book-entry procedures described below, such non-exchanged Old Notes will be credited to an account maintained with such Book-Entry Transfer Facility as promptly as practicable after the termination of the Exchange Offer. Book-Entry Transfer The Exchange Agent will make a request to establish an account with respect to the Old Notes at the Book-Entry Transfer Facility for purposes of the Exchange Offer within two business days after the date of this prospectus, and any financial institution that is a participant in the Book-Entry Transfer Facility's systems may make book-entry delivery of the Old Notes by causing the Book-Entry Transfer Facility to transfer such Old Notes into the Exchange Agent's account at the Book-Entry Transfer Facility in accordance with such Book-Entry Transfer Facility's procedures for transfer. Although the Old Notes may be delivered through book-entry transfer at the Book-Entry Transfer Facility, the Letter of Transmittal, with any required signature guarantees and any other required documents, must, in any case, be sent to and received by the Exchange Agent at the address set -52- forth below under "--Exchange Agent" on or prior to the Expiration Date or the guaranteed delivery procedures described below must be complied with. Holders of Old Notes may use copies of the Letter of Transmittal. Acceptance of Old Notes for Exchange; Delivery of Exchange Notes Tenders of Old Notes will be accepted only in principal amounts at maturity of $1,000 and integral multiples of $1,000. Upon the terms and subject to the conditions of the Exchange Offer, we will accept all Old Notes validly tendered and not withdrawn promptly prior to 5:00 p.m. on the Expiration Date. We will deliver the Exchange Notes in exchange for the Old Notes promptly following acceptance of the Old Notes. For purposes of the Exchange Offer, we shall be deemed to have accepted validly tendered Old Notes when, as and if we have given oral or written notice to the Exchange Agent. The Exchange Agent will act as agent for the tendering holders of the Old Notes for the purposes of receiving the Exchange Notes. Under no circumstances will we or the Exchange Agent pay interest because of any delay in making such payment or delivery. Our acceptance for exchange of the Old Notes tendered in the Exchange Offer will constitute a binding agreement between the tendering holder and us upon the terms and subject to the conditions of the Exchange Offer. If any tendered Old Notes are not accepted for exchange because of an invalid tender, the occurrence of certain other events or otherwise, we will return any such unaccepted Old Notes, at our expense, to their tendering holder as promptly as practicable after the expiration or termination of the Exchange Offer. Guaranteed Delivery Procedures If a registered holder of the Old Notes desires to tender such Old Notes and such Old Notes are not immediately available, or time will not permit such holder's Old Notes or other required documents to reach the Exchange Agent before the Expiration Date, or the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected if (1) the tender is made through an Eligible Institution, (2) prior to the Expiration Date, the Exchange Agent receives from such Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by us, by facsimile transmission, mail or hand delivery, setting forth the name and address of the holder of the Old Notes, the certificate numbers of such Old Notes (except in the case of book-entry tenders) and the principal amount of the Old Notes tendered, stating that the tender is being made thereby and guaranteeing that, within three NYSE trading days after the Expiration Date, the Letter of Transmittal together with the certificates for all physically tendered Old Notes, in proper form for transfer, or a Book-Entry Confirmation, and any other documents required by the Letter of Transmittal will be deposited by the Eligible Institution with the Exchange Agent, and (3) such properly completed and executed Letter of Transmittal (or a copy thereof) together with the certificates for all physically tendered Old Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case may be, and all other documents required by the Letter of Transmittal, are received by the Exchange Agent within three NYSE trading days after the Expiration Date. Holders of Old Notes may use copies of the Letter of Transmittal. Withdrawal Rights You may withdraw your tender of the Old Notes at any time prior to 5:00 p.m. on the Expiration Date. For a withdrawal to be effective, the Exchange Agent must receive a written notice of withdrawal at the address set forth below under "--Exchange Agent." Any such notice of withdrawal must (1) specify the name of the person having tendered the Old Notes to be withdrawn, (2) identify the Old Notes to be withdrawn, including the certificate numbers and principal amount of such Old Notes (except in the case of book-entry tenders), (3) be signed by the holder of the Old Notes in the same manner as the original signature on the Letter of Transmittal by which such Old Notes are tendered or be accompanied by sufficient documents of transfer and (4) specify the name in which such Old Notes are registered, if different from that of the withdrawing holder. If certificates for the Old Notes have been delivered or otherwise identified to the Exchange Agent, then, prior to the release of such certificates, the withdrawing holder must also submit the certificate numbers of the particular certificates to be withdrawn and a signed notice of withdrawal with signatures guaranteed by an Eligible Institution unless such holder of the Old Notes is an Eligible Institution. If the Old Notes have been tendered for book-entry transfer as described above, any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Old Notes and otherwise comply with the procedures of such facility. We will determine all questions as to the validity, form and eligibility (including time of receipt) of such notices, and our determination shall be final and binding on all parties. Any Old Notes so withdrawn will be deemed not to have been validly tendered for exchange. Any Old Notes which have been tendered for exchange but which are not exchanged for any reason will be returned to the holder of such Old Notes without cost to such -53- holder as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. In the case of the Old Notes tendered by book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer Facility under the book-entry transfer procedures described above, such Old Notes will be credited to an account maintained with such Book-Entry Transfer Facility for the Old Notes. Properly withdrawn Old Notes may be retendered by following one of the procedures described under "--Procedures for Tendering Old Notes" above at any time on or prior to the Expiration Date. Certain Conditions to the Exchange Offer Despite any other provision of the Exchange Offer, we will not be required to accept for exchange, or to issue the Exchange Notes in exchange for, any Old Notes, and may terminate or amend the Exchange Offer, if at any time before the acceptance of such Old Notes for exchange or the exchange of the Exchange Notes for such Old Notes, any of the following events shall occur: (1) such acceptance or issuance would violate applicable law or any applicable interpretation of the staff of the SEC; (2) any action or proceeding by or before any court or governmental agency with respect to the Exchange Offer shall be instituted or pending which, in our sole judgment, might impair our ability to proceed with the Exchange Offer; or (3) any law, statute, rule or regulation shall have been proposed, adopted or enacted which, in our sole judgment, might materially impair our ability to proceed with the Exchange Offer. The foregoing conditions are for our sole benefit and we may assert them regardless of the circumstances giving rise to any such condition or we may waive them in whole or in part at any time and from time to time in our sole discretion. Our failure at any time to exercise any of our rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which we may assert at any time and from time to time. In addition, we will not accept for exchange any Old Notes tendered, and no Exchange Notes will be issued in exchange for any such Old Notes, if at such time any stop order shall be threatened or in effect with respect to the registration statement of which this prospectus constitutes a part or the qualification of the indenture governing the Notes under the Trust Indenture Act of 1939. Exchange Agent Bankers Trust Company has been appointed as the Exchange Agent for the Exchange Offer. All executed Letters of Transmittal should be directed to the Exchange Agent at the address set forth below. Questions and requests for assistance, requests for additional copies of the prospectus or the Letter of Transmittal and requests for Notices of Guaranteed Delivery should be directed to the Exchange Agent, addressed as follows: BANKERS TRUST COMPANY By Facsimile: By Mail: (212)669-0772 Bankers Trust Company Attention: Customer Service Corporate Trust and Agency Group Confirm by Telephone to: (212) 250-4730 Four Albany Street, 4th Floor New York, New York 10006 Attention: Corporate Trust Services By Hand before 4:30 p.m.: By Overnight Courier and By Hand after 4:30 p.m.: Bankers Trust Company Bankers Trust Company Corporate Trust and Agency Group Corporate Trust and Agency Group Four Albany Street, 4th Floor Four Albany Street, 4th Floor New York, New York 10006 New York, New York 10006 Attention: Anthony M. Nista, Assistant Treasurer Attention: Anthony M. Nista, Assistant Treasurer
-54- DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FAX TRANSMISSION OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. Fees and Expenses We will not make any payment to brokers, dealers, or others soliciting acceptances of the Exchange Offer. We will pay certain other expenses to be incurred in connection with the Exchange Offer, including the fees and expenses of the Exchange Agent, accounting and certain legal fees. Transfer Taxes Holders who tender their Old Notes for exchange will not be obligated to pay any transfer taxes in connection with such exchange, except that if a holder of the Old Notes instructs us to register the Exchange Notes in the name of, or requests that the Old Notes not tendered or not accepted in the Exchange Offer be returned to, a person other than the registered tendering holder, or if a transfer tax is imposed for any reason other than the exchange of the Old Notes in the Exchange Offer, the amount of any such transfer taxes, whether imposed on the registered holder of the Old Notes or any other person, will be the responsibility of the registered tendering holder. Consequences of Failure to Exchange The Old Notes of holders who do not exchange their Old Notes for the Exchange Notes in the Exchange Offer will continue to have restrictions on transfer since we issued the Old Notes under exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws. In general, the Old Notes may not be offered or sold, unless registered under the Securities Act, except under an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. We do not currently anticipate that we will register the Old Notes under the Securities Act. To the extent that the Old Notes are tendered in connection with the Exchange Offer, any trading market for the Old Notes not tendered in connection with the Exchange Offer could be adversely affected. The tender of the Old Notes in the Exchange Offer may have an adverse effect upon, and increase the volatility of, the market prices of the Old Notes due to a reduction in liquidity. Accounting Treatment The Exchange Notes will be recorded at the same carrying value as the Old Notes, as reflected in our accounting records on the date of the exchange. Accordingly, no gain or loss for accounting purposes will be recognized. The expenses of the Exchange Offer will be expensed over the term of the Exchange Notes. -55- MANAGEMENT Executive Officers and Directors The table below sets forth certain information regarding our directors and executive officers.
Name Age Position - ---- --- -------- Gerald T. Vento.................................... 52 Chief Executive Officer and Chairman Thomas H. Sullivan................................. 37 Executive Vice President, Chief Financial Officer and Director Julie Dobson....................................... 42 Vice President and Chief Operating Officer Michael R. Hannon.................................. 39 Director Scott Anderson..................................... 40 Director Rohit M. Desai..................................... 60 Director Gary Fuqua......................................... 48 Director James M. Hoak...................................... 55 Director Mary Hawkins Key................................... 48 Director William Kussell.................................... 40 Director William Laverack, Jr............................... 42 Director Joseph O' Donnell.................................. 57 Director Michael Schwartz................................... 34 Director James F. Wade...................................... 43 Director
Gerald T. Vento is the co-founder of TeleCorp and our predecessor company and has been Chief Executive Officer and a director since our inception. He has been Chairman of our Board since June 1999. From 1993 to 1995, Mr. Vento was Vice Chairman and Chief Executive Officer of Sprint Spectrum(TM)/American PCS. Under Mr. Vento's leadership, that partnership developed the first PCS network in the United States. Mr. Vento also served as managing partner in a joint venture with the Washington Post Company to build and operate the company's systems in the United Kingdom prior to its sale in 1993 to TCI/US West Communications. Mr. Vento has spent over twenty years in cable, telephone and wireless businesses. Mr. Vento was the founder and Managing General Partner for several communications companies, which he developed from inception, including wireless and cable television properties throughout the United States and Puerto Rico. Thomas H. Sullivan has been Executive Vice President and a director of TeleCorp since our inception, and Chief Financial Officer since March 1999. Mr. Sullivan served as President of TeleCorp Holding from 1996 to 1998 and has served as a senior executive and founder of several wireless and wireline companies for the past five years. From 1992 to 1998, Mr. Sullivan was a partner at McDermott, Will & Emery, where he served as co-head of its telecommunications practice and co-chairman of its corporate finance practice. In 11 years at McDermott, Will & Emery, he counseled several of the country's largest cellular and PCS operators including Sprint Spectrum(TM)/American PCS, L.P., Aerial Communications, NorthCoast Communications and Bell Atlantic Mobile in both financial and operational matters. Mr. Sullivan has served in varying capacities as consultant and/or senior advisor to several telecommunications start-ups. Mr. Sullivan is a director of Affiliate License Co. Julie Dobson has served as TeleCorp's Chief Operating Officer since July 1998. Prior to joining us, Ms. Dobson was President of Bell Atlantic Corporation Mobile Systems(TM) New York/New Jersey Metro Region. She was responsible for sales, marketing, customer service and the continued expansion of that company's wireless communications network in the region. She also oversaw more than 1,500 employees and an extensive retail store network in 22 counties in New York and northern and central New Jersey. Ms. Dobson had been with Bell Atlantic since 1980, when she began her career as an account executive in sales at Bell Atlantic-Pennsylvania, and has served in a variety of positions in sales, sales management and marketing over two decades. Michael R. Hannon has been a director of TeleCorp since July 1998. Mr. Hannon is a General Partner of Chase Capital Partners, a general partnership with approximately $7 billion under management and one of our equity investors. Chase Capital Partners invests in a wide variety of domestic and international private equity opportunities including management buyouts, growth equity and venture capital situations. Chase Capital Partners' sole limited partner is The Chase Manhattan Corporation, one of the largest bank holding companies in the United States with assets totaling over US $300 billion. Mr. Hannon is currently a director of Formus Communications, Entertainment Communications and Financial Equity Partners. Scott Anderson has served as a director of TeleCorp since July 1998. Since 1997, Mr. Anderson has served as Principal in Cedar Grove Partners, an investment and consulting/advisory partnership, and since 1998, as Principal in Cedar Grove Investments, a small "angel" capital investment fund. Mr. Anderson was an independent board member of PriCellular Corp from March 1997 through June 1998, when the company went private. He is a board member and advisory board member of Tegic, a -56- wireless technology licensing company, a board member of Tritel Communications, a board member of Triton PCS and a board member of Xypoint, a private E-911 service company. He was employed by McCaw Cellular Communications and AT&T from 1986 until 1997, where he last served as Senior Vice President of the Acquisitions and Development group. Rohit M. Desai has served as a director of TeleCorp since January 1998. He has been the Chairman, President and Chief Investment Officer of Desai Capital Management Incorporated, an equity investment firm with approximately $1 billion under management, since 1984. Desai Capital Management is the investment advisor to Equity-Linked Investors II and Private Equity Investors III, L.P., of which Mr. Desai is the managing general partner. Desai Capital Management invests in a variety of industries, including the media and telecommunications sectors. Mr. Desai currently sits on the board of The Rouse Company, a developer and owner of regional shopping centers and urban specialty retailing properties; Sunglass Hut International, a specialty retailer of sunglasses and watch stations in over 2,000 locations in the United States, United Kingdom, Australia and various other countries; Finlay Fine Jewelry Holdings, a retailer of fine jewelry in approximately 1,000 department stores in the United States, United Kingdom and France; and Independence Community Bankcorp, with headquarters in Brooklyn, New York. He is also a director of various other private companies including American Horizon and Penn National. Gary Fuqua has served as a director of TeleCorp since July 1998. Mr. Fuqua has managed corporate development activities at Entergy since 1998. In addition, Mr. Fuqua oversees Entergy's non-regulated domestic retail businesses, including District Energy, Entergy Security and Entergy's various telecommunications businesses. Before he joined Entergy, Mr. Fuqua served as a Vice President with Enron Ventures Corporation in London. He also founded and managed his own company prior to joining Enron in 1988. He is a member of Entergy Enterprises' board, and President of Entergy Technology Holdings. Mr. Fuqua is also a member of the board of Tritel Communications. James M. Hoak, Jr., has served as a director of TeleCorp since July 1998. Mr. Hoak has served as Chairman and a Principal of Hoak Capital Corporation, a private equity investment firm, since September 1991. He has also served as Chairman of HBW Holdings, an investment bank, since July 1996. He served as Chairman of Heritage Media Corporation, a broadcasting and marketing services firm, from its inception in August 1987 to its sale in August 1997. From February 1991 to January 1995, he served as Chairman and Chief Executive Officer of Crown Media, a cable television company. From 1971 to 1987, he served as President and Chief Executive Officer of Heritage Communications, a diversified communications company, and as its Chairman and Chief Executive Officer from August 1987 to December 1990. He is also a director of PanAmSat Corporation; Pier1 Imports; an d Texas Industries. Mary Hawkins Key has served as a director of TeleCorp since March 1999. She is Senior Vice President of Partnership Operations for AT&T. Partnership operations include AT&T's proportionate interests in active 850 MHz cellular markets (such as Bay Area Cellular Telephone), strategic alliances such as Rogers Cantel, and AT&T's equity participation in affiliated new PCS businesses which are members of the AT&T Wireless Network. Ms. Hawkins Key heads the multi-disciplinary team which provides guidance, consulting and assistance to partnership operations in virtually every area of the business. Ms. Hawkins Key joined AT&T's Messaging Division in 1995, and subsequently became Chief Operating Officer for the 1100 employee division. While in this role, Ms. Hawkins Key served as business leader of the team responsible for spinning off the Messaging business unit. Ms. Hawkins Key is on the board of Triton PCS and is a partner committee member for CMT Partners, the partnership which owns the Bay Area Cellular Telephone and Kansas City Cellular Telephone companies. William Kussell has served as a director of TeleCorp since July 1998. Mr. Kussell has served as President of Dunkin' Donuts marketing office since 1996, as well as Retail Concept Officer for Allied Domecq Retailing USA since 1997. In this role, Mr. Kussell leads the overall strategy for Dunkin' Donuts as well as oversees the development of the Baskin Robbins Brand. Mr. Kussell has over 13 years of brand building marketing experience within several industries, ranging from food to photography. He was Vice President of worldwide marketing for Reebok where he helped build Reebok's worldwide brand image and led the entry into the home fitness video and programming business. William Laverack, Jr. has served as a director of TeleCorp since January 1998. He has been a General Partner of J.H. Whitney, an investment firm focused on private equity and mezzanine capital investments, since May 1993. J.H. Whitney manages approximately $1 billion of capital and invests in several industry areas including communications. Prior to J.H. Whitney, he was with Gleacher & Co., Morgan Stanley, and J.P. Morgan. He is currently a director of Steel Dynamics, and several private companies including NBX, PRAECIS Pharmaceuticals, NeuroMetrix, Ariat International, and Qualitech Steel. Mr. Laverack is a graduate of Harvard College, B.A., and Harvard Business School, M.B.A. Joseph O'Donnell has served as a director of TeleCorp since July 1998. He is the former Chairman and Chief Executive Officer of two major advertising agencies: J. Walter Thompson Company Worldwide and Campbell-Mithum-Esty Advertising. In his twenty-five year career in the advertising business, he has had experience with the automotive, financial services, telecommunications and retail industries. Since leaving the agency business in 1991, Mr. O'Donnell has founded several -57- marketing and/or communication related businesses, principally Osgood, O'Donnell & Walsh LLC, a communications consulting company serving such companies as Equitable Insurance, Chase Manhattan Bank, PricewaterhouseCoopers, Ford and Teligent. Mr. O'Donnell also sits on the board of Unique Casual Restaurants. Michael Schwartz has served as a director of TeleCorp since November 1998. Mr. Schwartz joined AT&T in September of 1996. He is currently a Vice President in AT&T's Acquisitions and Development group. From September 1996 through September 1998, Mr. Schwartz was Vice President and Chief Counsel of AT&T's Messaging Division. Prior to joining AT&T, Mr. Schwartz was in private practice in the Seattle office of Graham & James. Mr. Schwartz holds a B.A., magna cum laude, in physics and a J.D., magna cum laude, from Harvard University. James F. Wade has served as a director of TeleCorp since July 1998. He is currently the Managing Partner of M/C Venture Partners, a $250 million private equity fund and has been a General Partner in a series of predecessor funds since 1987. M/C Venture Partners invests solely in the telecommunications and information technology sectors. Mr. Wade's investments have included several wireless telephony commitments throughout North America. Mr. Wade has been responsible for developing the firm's involvement in the telecommunications sectors, including cellular telephony, ESMR, PCS, CAPs, CLECs, domestic and international paging, and LMDS. Mr. Wade has been working with the management of TeleCorp and TeleCorp Holding since 1995 and is on the board of six other private companies. Mr. Wade graduated from the University of Notre Dame in 1978 with a B.B.A. in Finance and received an M.B.A. from Harvard Business School in 1982. Compensation of Directors It is not anticipated that the cash equity investors who are members of our Board or any committee of our Board will receive cash compensation for their service on our Board. Other non-employee members of our Board or its committees receive a quarterly stipend of $1,875, $1,000 for attending each Board or committee meeting and $500 for participating in each teleconference. It is anticipated that these directors may also receive stock options. All members of our Board or any committee of our Board, including members who are our employees, will be reimbursed for out-of-pocket expenses in connection with attendance at meetings. Committees of the Board of Directors Our bylaws, as amended, provide that our Board may establish committees to exercise certain powers delegated by our Board. Under that authority, our Board has established an executive committee, an audit committee and a compensation committee. Executive Compensation The following table contains information about the cash and other compensation that we paid in the 1998 fiscal year to Mr. Vento, our Chief Executive Officer, and the four other most highly paid executive officers: Summary Compensation Table
Long-Term Compensation ------------------------- Annual Compensation Awards ------------------------------------------- ------------------------- Other Annual Compensation Restricted Stock Name and Principal Position Salary($) Bonus($)(a) ($)(b) Awards($) - --------------------------------------------------------------------------------------------------------------- Gerald T. Vento $213,461(c) $157,500(d) $5,994(e) $0 Chief Executive Officer and Chairman Thomas H. Sullivan 206,931(f) 125,000(g) 106,637(h) 0 Executive Vice President and Chief Financial Officer Julie Dobson 114,423(i) 155,000 66,134(j) 127,238(k) Vice President and Chief Operating Officer Robert Dowski(l) 181,196(m) 101,251(n) 5,514(o) 40,640(p) Chief Financial Officer Steven Chandler 118,808(q) 45,000(r) 114,475(s) 14,541(t) General Manager
______________________________ -58- (a) Our employees are eligible for annual cash bonuses. Such bonuses are generally earned in the year prior to which they are paid based upon achievement of corporate and individual performance objectives; however certain bonuses are specified in employment agreements. The bonuses earned in 1997 were paid in 1998 and are not included in this table. The bonuses in the table were earned in 1998 and were paid in 1999. (b) Consists of amounts reimbursed for relocation expenses and any taxes that we paid on behalf of the executive for such reimbursement. (c) This amount consists of $111,538 that TeleCorp Management paid to Mr. Vento out of amounts we paid to TeleCorp Management under the Management Agreement and $101,923 that TeleCorp Holding paid to Mr. Vento. (d) This amount does not include $62,500 in bonus that TeleCorp Holding paid to Mr. Vento in 1998 earned in 1997. (e) This amount consists of $5,994 that we paid on behalf of Mr. Vento into our 401(k) plan. (f) This amount consists of $92,947 that TeleCorp Management paid to Mr. Sullivan out of amounts we paid to TeleCorp Management under the Management Agreement and $113,984 that TeleCorp Holding paid to Mr. Sullivan. (g) This amount does not include $51,500 that TeleCorp Holding paid to Mr. Sullivan in 1998 earned in 1997. (h) This amount consists of $103,637 in relocation expenses that TeleCorp Management paid to Mr. Sullivan out of amounts that we paid to TeleCorp Management under the Management Agreement and $3,000 that we paid on behalf of Mr. Sullivan in our 401(k) plan. (i) This amount consists of $114,423 that TeleCorp Communications paid to Ms. Dobson. (j) This amount consists of $66,134 in relocation expenses that TeleCorp Communications paid to Ms. Dobson. (k) Consists of 2,287.21 shares of Series E Preferred Stock, valued at $52 per share, and 3,459.45 shares of Class A Common Stock, valued at $2.40 per share, issued under our Restricted Stock Grant Plan on July 16, 1998. (l) Mr. Dowski ceased to be employed with us as of March 8, 1999, except for certain transition support. (m) This amount consists of $72,692 that TeleCorp Holding paid to Mr. Dowski and $108,504 that TeleCorp Communications paid to Mr. Dowski. (n) This amount does not include $9,803 that TeleCorp Holding paid to Mr. Dowski in 1998 earned in 1997. (o) This amount consists of $5,514 that we paid on behalf of Mr. Dowski into our 401(k) plan. (p) Consists of 714.340 shares of Series E Preferred Stock, valued at $52 per share, and 1,455.910 shares of Class A Common Stock, valued at $2.40 per share, issued under our Restricted Stock Grant Plan on July 16, 1998. On March 8, 1999, we repurchased 577.392 of Mr. Dowski's shares of Series E Preferred Stock and 1,316.462 of Mr. Dowski's shares of Class A Common Stock for a total of approximately $19, which is not reflected in the table. (q) This amount consists of $54,519 that TeleCorp Holding paid to Mr. Chandler and $64,288 that TeleCorp Communications paid to Mr. Chandler. (r) This amount does not include $7,228 that TeleCorp Holding paid to Mr. Chandler in 1998 earned in 1997 or $6,000 that TeleCorp Communications paid to Mr. Chandler in 1998 earned in 1997. (s) This amount consists of $111,995 in relocation expenses that TeleCorp Communications paid to Mr. Chandler and $2,480 that we paid on behalf of Mr. Chandler into our 401(k) plan. (t) Consists of 255.59 shares of Series E Preferred Stock and 520.92 shares of Class A Common Stock issued under our Restricted Stock Grant Plan on July 16, 1998. Restricted Stock Grant Plan We established the TeleCorp PCS, Inc. 1998 Restricted Stock Plan to award key employees shares of our Series E Preferred Stock and Class A Common Stock. Each award is subject to a five- or six-year vesting schedule that depends on such employee's date of hire, with unvested shares being redeemed by us for $0.01 per share upon termination of employment. The shares granted are subject to the same transfer restrictions and repurchase rights as our shares held by AT&T and other investors. See "Description of Capital Stock." As of March 31, 1999, 5,930 shares of Series E Preferred Stock and 10,322 shares of Class A Common Stock are outstanding under this plan. We repurchased an additional 1,155 shares of Series E Preferred Stock and 2,633 shares of Class A Common Stock from certain stockholders, which we had granted under this plan, and such repurchased shares are again available for grant under this plan. We intend to establish a non- qualified stock option plan for key employees and directors. -59- Management Agreement Under to the Management Agreement, TeleCorp Management, under our oversight, review and ultimate control and approval, assists us with: administrative services, such as accounting, payment of all bills and collection; operational services, such as engineering, maintenance and construction; marketing services, such as sales, advertising and promotion; regulatory services, such as tax compliance, FCC applications and regulatory filings; and general business services, such as supervising employees, budgeting and negotiating contracts. Mr. Vento and Mr. Sullivan own TeleCorp Management. TeleCorp Management has agreed to provide the services of Mr. Vento and Mr. Sullivan in connection with the performance of TeleCorp Management's obligations under the Management Agreement. Mr. Vento and Mr. Sullivan have agreed to devote their entire business time and attention to providing such services, provided that they may devote reasonable periods of time to certain enumerated activities. We reimburse TeleCorp Management for all out of pocket expenses it incurs for the retention of third parties on our behalf. We pay TeleCorp management fees of $550,000 per year, payable in monthly installments. The compensation we pay to TeleCorp Management also includes the potential for payments of bonuses. In 1998, we paid bonuses totaling approximately $285,000 to TeleCorp Management. The Management Agreement has a five-year term. We may terminate the Management Agreement immediately in the event of certain circumstances including (1) indictment of Mr. Vento or Mr. Sullivan for a felony, (2) a material breach which remains uncured after 30 days' written notice or (3) acceleration of any of our indebtedness over $25.0 million. TeleCorp Management may terminate the agreement voluntarily upon 30 days written notice to us. During the term of the Management Agreement, and under limited circumstances for a period following termination, TeleCorp Management, Mr. Vento and Mr. Sullivan are prohibited from assisting or becoming associated with any person or entity, other than as a holder of up to 5% of the outstanding voting shares of any publicly traded company, that is actively engaged in the business of providing mobile wireless communications services in our territory, and from employing any person who was employed by us unless that person was not employed by us for a period of at least six months. In addition, the Management Agreement provides for repurchase by us of the shares of our stock which Mr. Vento and Mr. Sullivan own, under certain circumstances. Employee Agreements On July 17, 1998, we entered into an employee agreement with Ms. Dobson, under which she serves as our Chief Operating Officer at a base annual salary of $250,000. Ms. Dobson is eligible under such employee agreement, at our Board's discretion, to receive an annual bonus in an amount up to 50% of her base annual salary. On July 17, 1998, we entered into an employee agreement with Mr. Chandler, under which he serves as our General Manager at a base annual salary of $145,000. Mr. Chandler is eligible under such employee agreement, at our Board's discretion, to receive an annual bonus in an amount up to 30% of his base annual salary. Both Ms. Dobson's and Mr. Chandler's employee agreements provide that they are employees-at-will. We will reimburse the reasonable expenses that the executives incur while performing their services under the employee agreements and the executives may participate in our employee benefit plans available to employees of comparable status and position. If an executive should die, we will pay any amounts that we owe such executive under the employee agreements accrued prior to such death to such executive's estate, heirs and beneficiaries. All family medical benefits under the employee agreements for the benefit of such executive will continue for six months after such death. Termination for cause is: . engaging in misconduct which has caused demonstrable and serious injury, financial or otherwise, to us or our reputation; . being convicted of a felony or misdemeanor as evidenced by a judgment, order or decree of a court of competent jurisdiction; -60- . failing to comply with our Board's directions, or neglecting or refusing to perform such executive's duties or responsibilities, unless changed significantly without such executive's consent; or . violating the employee agreement or Restricted Stock Grant Plan. If we terminate an executive for cause, or an executive voluntarily quits, we will pay such executive any amounts that we owe such executive accrued prior to such cessation of employment. If we terminate an executive other than for cause, we will pay such executive an amount equal to such executive's then annual base salary, at normal payroll intervals, as well as continue to cover such executive under our employee benefit plans for 12 months. Under the employee agreements, the executives are subject to confidentiality provisions, and have agreed, for one year after cessation of employment with us, to non-competition and non-solicitation provisions and to limit public statements concerning us. Separation Agreement On March 8, 1999, we entered into a separation agreement with Mr. Dowski. Under such separation agreement, we agreed to pay Mr. Dowski: . $17,500 per month for 12 months; . a lump sum of $105,000, representing a 1998 bonus; . a lump sum equal to earned but unpaid or unused vacation; . $4,300 as reimbursement for relocation expenses, including taxes payable by Mr. Dowski on such sum; and . a lump sum equal to outstanding travel and expense reimbursement. We also agreed to continue covering Mr. Dowski under our employee benefit plans for 12 months. We will continue to pay a duplicate housing relocation benefit to Mr. Dowski through July 1999. In addition, we repurchased 577.392 shares of Mr. Dowski's Series E Preferred Stock and 1,316.462 of Mr. Dowski's shares of Class A Common Stock for approximately $19 in accordance with his share grant agreement concerning such restricted stock. The separation agreement contained mutual releases by Mr. Dowski and us of the other. In addition, in such separation agreement, Mr. Dowski confirmed his confidentiality agreements with us, and his one-year non-competition, non- solicitation and limitation on public speaking agreements. -61- SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth, as of March 31, 1999, on a pro forma basis, after giving effect to the Transactions, the number of shares of each class of our voting stock beneficially owned by (a) each of our directors, (b) certain of our key executive officers, (c) each person known by us to beneficially own more than 5% of the outstanding shares of any class of our voting capital stock at such date and (d) all of our directors and executive officers of as a group (30 persons). As of such date, after giving pro forma effect to the Transactions, there were 97,473 shares of Series A Preferred Stock, 210,608 shares of Series C Preferred Stock, 49,417 shares of Series D Preferred Stock, 24,150 shares of Series E Preferred Stock, 48,261 shares of Series F Preferred Stock, 236,824 shares of Class A Common Stock, 919 shares of Class C Common Stock, 2,755 shares of Class D Common Stock and 10 shares of Voting Preference Stock, of TeleCorp outstanding. See "Description of Capital Stock." Except as otherwise indicated, the address for each stockholder is c/o TeleCorp, 1010 N. Glebe Road, Suite 800, Arlington, Virginia 22201.
Class A Voting Preference Common Stock (a) (b) Common Stock (a) (b) --------------------------- -------------------------- Number of Percentage Number of Percentage of Stockholder Shares of Class Shares Class - ----------- ------------ ------------ ------------ ------------ CB Capital Investors, L.P. (c)............................... 46,321 19.56% 0 0% Equity-Linked Investors -II (d).............................. 44,037 18.59 0 0 Hoak Communications Partners, L.P. (e)....................... 33,027 13.95 0 0 Whitney Equity Partners. L.P. (f)............................ 27,521 11.62 0 0 Entergy Technology Holding Company (g)....................... 14,872 6.28 0 0 Media/Communications Partners (h)............................ 17,658 7.46 0 0 AT&T Wireless PCS, Inc. (i).................................. 48,261 16.93 0 0 TWR Cellular, Inc. (i)....................................... 48,261 16.93 0 0 Gerald T. Vento (j).......................................... 14,478 6.11 5 50 Thomas H. Sullivan (k)....................................... 8,825 3.73 5 50 Michael R. Hannon (l)........................................ 0 0 0 0 Rohit M. Desai (m)........................................... 44,037 18.59 0 0 James M. Hoak (n)............................................ 33,027 13.95 0 0 William Laverack, Jr. (o).................................... 27,521 11.62 0 0 Gary Fuqua (p)............................................... 14,872 6.28 0 0 James F. Wade (q)............................................ 17,658 7.46 0 0 Scott Anderson............................................... 0 0 0 0 William Kussel............................................... 0 0 0 0 Joseph O'Donnell............................................. 0 0 0 0 Michael Schwartz (i)......................................... 48,261 16.93 0 0 Mary Hawkins Key (i)......................................... 48,261 16.93 0 0 Julie Dobson................................................. 3,459 1.46 0 0 Robert Dowski................................................ 139 * 0 0 Steven Chandler.............................................. 521 * 0 0 All directors and executive officers as a group (30 persons) (r)................................................. 218,674 76.70
- --------------- * Less than one percent. (a) In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended, for purposes of this table, a person is deemed to be the beneficial owner of any shares of Common Stock if such person has or shares voting power or investment power with respect to such Common Stock, or has the right to acquire beneficial ownership at any time within 60 days of the date of the table. As used here, "voting power" is the power to vote or direct the voting of shares and "investment power" is the power to dispose or direct the disposition of shares. (b) Under the terms of our restated certificate of incorporation, until the occurrence of certain events, and subject to specific rights granted to holders of other classes of our capital stock, the holders of Voting Preference Common Stock possess 50.1% of the voting power of all shares of our capital stock, and the holders of Class A Common Stock possess 49.9% of the voting power of all shares of our capital stock. If, under circumstances described under "Description of Capital Stock," we receive FCC approval for the Class A Common Stock and Voting Preference Common Stock to vote as a single class, the Class A Common Stock and the Voting Preference Common Stock will vote as a single class on all matters and be granted one vote per outstanding share. Holders of certain other classes of our capital stock have been granted voting rights regarding matters specifically affecting those classes. Finally, so long as AT&T continues to own not less than two- thirds of the shares of Series A Preferred Stock it owned on July 16, 1998, it will have the right to nominate two members of our Board (or one member following certain events). See "Description of Capital Stock." -62- (c) Includes shares held by TeleCorp Investment Corp., LLC. Does not include 91 shares of Class C Common Stock or 596 shares of Class D Common Stock held by such stockholders. Such shares, under certain circumstances, are convertible into shares of Class A Common Stock. See "Description of Capital Stock." Such shares may also be deemed to be beneficially owned by Mr. Hannon. Mr. Hannon disclaims beneficial ownership of all such shares. The address of the stockholders is 380 Madison Avenue, 12/th/ Floor, New York, New York 10017. (d) Includes shares held by Private Equity Investors III, L.P. Does not include 87 shares of Class C Common Stock or 572 shares of Class D Common Stock held by such stockholders. Such shares, under certain circumstances, are convertible into shares of Class A Common Stock. See "Description of Capital Stock." Such shares may also be deemed to be beneficially owned by Mr. Desai. Mr. Desai disclaims beneficial ownership of all such shares. The address of the stockholders is 540 Madison Avenue, 36/th/ Floor, New York, New York 10022. (e) Includes shares held by HCP Capital Fund, L.P. Does not include 65 shares of Class C Common Stock or 429 shares of Class D Common Stock held by such stockholders. Such shares, under certain circumstances, are convertible into shares of Class A Common Stock. See "Description of Capital Stock." Such shares may also be deemed to be beneficially owned by Mr. Hoak. The address of the stockholders is One Galleria Tower, 13355 Noel Road, Suite 1050, Dallas, Texas 75240. (f) Includes shares held by J.H. Whitney III, L.P. and Whitney Strategic Partners III, L.P. Does not include 54 shares of Class C Common Stock or 357 shares of Class D Common Stock held by such stockholders. Such shares, under certain circumstances, are convertible into shares of Class A Common Stock. See "Description of Capital Stock." Such shares may also be deemed to be beneficially owned by Mr. Laverack. The address of the stockholders is 177 Broad Street, 15/th/ Floor, Stamford, Connecticut 06901. (g) Such shares may also be deemed to be beneficially owned by Mr. Fuqua and Entergy Corporation. Does not include 344 shares of Class D Common Stock held by the stockholder. Such shares, under certain circumstances, are convertible into shares of Class A Common Stock. See "Description of Capital Stock." The address of the stockholder is Three Financial Centre, 900 South Shackleford Road, Suite 210, Little Rock, Arkansas 72211. (h) Consists of shares held by Media/Communications Partners III Limited Partnership and Media/Communications Investors Limited Partnership. Does not include 35 shares of Class C Common Stock or 227 shares of Class D Common Stock held by such stockholders. Such shares, under certain circumstances, are convertible into shares of Class A Common Stock. See "Description of Capital Stock." Such shares may also be deemed to be beneficially owned by Mr. Wade. The address of the stockholders is 75 State Street, Suite 2500, Boston, Massachusetts 02109. (i) Consists of 25,324.95 shares of Series F Preferred Stock held by AT&T Wireless PCS, 18,036.46 shares of Series F Preferred Stock held by TWR and 4,900 shares of Series F Preferred Stock issuable to AT&T Wireless PCS in connection with the Viper Wireless transaction. Such shares may also be deemed to be held by Mr. Schwartz, Ms. Hawkins Key and various AT&T affiliates. Mr. Schwartz and Ms. Hawkins Key disclaim beneficial ownership of all such shares. The address of the stockholders is c/o AT&T Wireless PCS, Inc., 7277 164th Avenue, N.E., Redmond, Washington 98052. (j) Does not include 341 shares of Class C Common Stock or 9 shares of Class D Common Stock held by such stockholder. Such shares, under certain circumstances, are convertible into shares of Class A Common Stock. See "Description of Capital Stock." (k) Does not include 212 shares of Class C Common Stock or 2 shares of Class D Common Stock held by such stockholder. Such shares, under certain circumstances, are convertible into shares of Class A Common Stock. See "Description of Capital Stock." (l) Does not include shares of our capital stock owned by CB Capital Investors, L.P. and TeleCorp Investment Corp., LLC, of which Mr. Hannon disclaims beneficial ownership. Mr. Hannon serves as Vice President of CB Capital Investors, L.P. Does not include 91 shares of Class C Common Stock or 596 shares of Class D Common Stock held by such stockholders. Such shares, under certain circumstances, are convertible into shares of Class A Common Stock. See "Description of Capital Stock." Mr. Hannon disclaims beneficial ownership of all of such shares. The address of the stockholder is c/o CB Capital Investors, L.P., 380 Madison Avenue, 12/th/ Floor, New York, New York 10017. (m) Consists of shares owned by Equity-Linked Investors-II and Private Equity Investors III, L.P. Mr. Desai serves as managing general partner of each of such stockholders. Does not include 87 shares of Class C Common Stock or 572 shares of Class D Common Stock held by such stockholders. Such shares, under certain circumstances, are convertible into shares of Class A Common Stock. See "Description of Capital Stock." Mr. Desai disclaims beneficial ownership of all such shares. The address of such stockholder is 540 Madison Avenue, 36th Floor, New York, New York 10022. (n) Consists of shares owned by Hoak Communications Partners, L.P. and HCP Capital Fund, L.P. Mr. Hoak serves as Principal and Chairman of the manager of such stockholders, shareholder of the manager and General Partner of Hoak Communications Partners, L.P. and limited partner and shareholder of the General Partner of HCP Capital Fund, L.P. Does not include 65 shares of Class C Common Stock or 429 shares of Class D Common Stock held by such stockholders. Such shares, under certain circumstances, are convertible into shares of Class A Common Stock. See "Description of Capital Stock." The address of such stockholders is c/o Hoak Communications Partners, L.P., One Galleria Tower, 13355 Noel Road, Suite 1050, Dallas, Texas 75240. (o) Consists of shares owned by Whitney Equity Partners, L.P., J.H. Whitney III, L.P. and Whitney Strategic Partners III, L.P. Mr. Laverack serves as Managing Member of J.H. Whitney Equity Partners, L.L.C., which is a General Partner in Whitney Equity Partners, L.P., Managing Member of J.H. Whitney Equity Partners III, L.L.C. which is a General Partner in J.H. Whitney III, L.P. and Whitney Strategic Partners III, L.P. Does not include 54 shares of Class C Common Stock or 357 shares of Class D Common Stock held by such stockholders. Such shares, under certain circumstances, are convertible into shares of Class A Common Stock. See "Description of Capital Stock." The address of such stockholders is c/o Whitney Equity Partners, L.P., 177 Broad Street, 15th Floor, Stamford, Connecticut 06901. (p) Consists of shares owned by Entergy Technology Holding Company. Mr. Fuqua serves as an officer of the corporate parent of such stockholder. Does not include 344 shares of Class D Common Stock held by Entergy. Such shares, under certain circumstances, are convertible into shares of Class A Common Stock. See "Description of Capital Stock." The address of such stockholder is c/o Entergy Technology Holding Company, Three Financial Centre, 900 Shackleford Road, Suite 210, Little Rock, Arkansas 72211. (q) Consists of shares owned by Media/Communications Investors Limited Partnership and Media/Communications Partners III Limited Partnership. Mr. Wade serves as President of M/C Investor General Partner-J, Inc., which is a General Partner in Media Communications Investors Limited Partnerships and Manager of M/C III, L.L.C., which is a General Partner in Media Communications Partners III Limited Partnership. Does not include 35 shares of Class C Common Stock or 227 shares of Class D Common Stock held by such stockholders. Such shares, under certain circumstances, are convertible into shares of -63- Class A Common Stock. See "Description of Capital Stock." The address of such stockholders is c/o Media/Communications Partners, 75 State Street, Suite 2500, Boston, Massachusetts 02109. (r) Includes shares held by members of management and certain of our cash equity investors that may be deemed to be beneficially owned by certain members of our Board. Certain of such members of our Board disclaim such beneficial ownership. The 14 members of our senior management team hold approximately 14% of our common stock. -64- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AT&T Agreements On January 23, 1998, we and AT&T announced the formation of a venture under which we are financing, constructing and operating a wireless communications network using the AT&T and SunCom brand names and logos together, giving equal emphasis to both. AT&T contributed licenses to us in exchange for an equity interest in us. The venture provides the basis for a strategic alliance between us and AT&T for the provision of wireless communications services in certain markets. The terms of the venture and the strategic alliance are set forth in a number of agreements, and summaries of these agreements are set forth below. These summaries are not complete and are qualified in their entirety by reference to the agreements. Copies of the agreements are attached as exhibits to the registration statement. Securities Purchase Agreement The Securities Purchase Agreement, dated as of January 23, 1998, as amended, among AT&T Wireless PCS Inc., TWR Cellular, Inc., CB Capital Investors, Inc., Desai Associates, Hoak Capital Corporation, J.H. Whitney & Co., Entergy Technology Holding Company, M/C Partners, One Liberty Fund III, L.P. and Toronto Dominion Investments, Inc. and Northwood Capital Partners (the "Cash Equity Investors"), the former stockholders of TeleCorp Holding (the "THC Stockholders" and together with the Cash Equity Investors, AT&T Wireless PCS and TWR Cellular, Inc., the "Purchasers"), Mr. Vento and Mr. Sullivan (the "Management Stockholders") and us provided for the transfer by AT&T Wireless PCS and TWR Cellular to us of certain PCS licenses providing, in the aggregate, the right to use 20 MHz of authorized frequencies within the areas covered by such licenses in exchange for shares of our Series A Preferred Stock, Series D Preferred Stock and Series F Preferred Stock. The Securities Purchase Agreement also provides for the contribution by the Cash Equity Investors of $128.0 million to us in exchange for shares of our Series C Preferred Stock, Class A Voting Common Stock and Class C Common Stock. In addition, the Securities Purchase Agreement provides that, upon the consummation by us of an acquisition of F-Block PCS licenses covering one million or more Pops (as defined in the Stockholders' Agreement described below), the Cash Equity Investors will contribute an additional $5.0 million to us in exchange for additional shares of our Series C Preferred Stock and Class A Common Stock. Certain of the contributions to be made by the Cash Equity Investors were made upon the consummation of the transactions contemplated by the Securities Purchase Agreement, which occurred on July 17, 1998, and the remainder of such contributions will be made over a three-year period. The obligations of each of the Cash Equity Investors to make its remaining contributions are (1) irrevocable and unconditional, and not subject to counterclaim, set-off, deduction or defense, or to abatement, suspension, deferment, diminution or reduction for any reason whatsoever, and (2) under a pledge agreement between each such Cash Equity Investor and us, secured by a pledge of all shares of our capital stock issued to such Cash Equity Investor under the Securities Purchase Agreement. See "Management Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources." Under the Securities Purchase Agreement, the THC Stockholders exchanged their shares of stock in TeleCorp Holding for shares of our Series C Preferred Stock, Class A Common Stock, Class C Common Stock and Class D Common Stock. Under the Securities Purchase Agreement, the Management Stockholders exchanged their shares of stock in TeleCorp Holding for shares of our Series E Preferred Stock, Class A Common Stock, Class C Common Stock and Class D Common Stock. Each of the Management Stockholders received five shares of our Voting Preference Stock in exchange for shares of stock we previously issued to them. Upon the closing of the transactions contemplated by the Securities Purchase Agreement, we also issued to certain other members of management shares of our Series E Preferred Stock and Class A Common Stock. Up to 35.71% of the Class A Common Stock issued to members of management are under our restricted stock plan. Shares issued under the restricted stock plan are subject to forfeiture according to a schedule if employment with us is terminated within six years after the closing of the Securities Purchase Agreement. Stockholders' Agreement General. The Stockholders' Agreement, dated as of July 17, 1998, among AT&T Wireless PCS, TWR Cellular, the Cash Equity Investors, the Management Stockholders and us provides for certain arrangements regarding our management and operations and for certain restrictions with respect to the sale, transfer or other disposition of our capital stock. Board of Directors. The Stockholders' Agreement provides that our Board shall initially consist of 13 directors and that any action of our Board be approved by the affirmative vote of a majority of our entire Board, except in certain circumstances where voting by certain classes of directors is required. The Stockholders' Agreement also provides that the members of our Board will initially be (1) three individuals selected by the Cash Equity Investors who own a majority of the Class A Common Stock, (2) -65- each of Mr. Vento and Mr. Sullivan, so long as each remains one of our officers and the Management Agreement remains in effect, (3) two individuals selected by AT&T Wireless PCS in its capacity as holder of the Series A Preferred Stock, so long as AT&T Wireless PCS and TWR Cellular own in the aggregate at least two- thirds of the number of shares of Series A Preferred Stock authorized on the date of our restated certificate of incorporation, (4) three individuals selected by the holders of the Voting Preference Stock, which three individuals are reasonably acceptable to the Cash Equity Investors who own a majority of the Class A Common Stock and (5) three individuals selected by the holders of the Voting Preference Stock, which three individuals are reasonably acceptable to the holders of a majority of the Class A Common Stock beneficially owned by the Cash Equity Investors and AT&T Wireless PCS. Exclusivity. The parties to the Stockholders' Agreement have agreed that, during the term of the Stockholders' Agreement, neither they nor any of their respective affiliates will provide or resell, or act as the agent for any person offering, within the areas covered by our licenses, mobile wireless communications services initiated or terminated using TDMA and frequencies licensed by the FCC (collectively, "Company Communications Services"), except that AT&T and its affiliates may (1) resell or act as agent for us in connection with the provision of Company Communications Services, (2) provide or resell wireless communications services to or from certain specific locations, provided that any equipment sold in connection with such service must be capable of providing Company Communication Services, and (3) resell Company Communications Services for another person in any area where we have not placed a system into commercial service. Additionally, with respect to certain markets identified in the Intercarrier Roamer Services Agreement with AT&T Wireless Services, Inc., each of us and AT&T Wireless PCS has agreed to cause our respective affiliates in their home carrier capacities to (1) program and direct the programming of customer equipment so that the other party, in its capacity as the serving carrier, is the preferred provider in such markets and (2) refrain from inducing any of its customers to change such programming. AT&T Wireless PCS has retained up to 10 MHz of authorized frequencies within the areas covered by our licenses for which we have a right of negotiation in the event of a proposed transfer. We and the other parties amended the Stockholders' Agreement to terminate the exclusivity provisions with regard to approximately 100,000 Pops that overlapped with the coverage area of licenses AT&T purchased from Vanguard Cellular. We have agreed with AT&T to exchange our licenses covering such Pops for licenses covering other Pops. Such exchanged Pops will be covered under the scope of our agreements with AT&T. Construction. The Stockholders' Agreement establishes a minimum construction plan for the construction of a PCS system in the areas covered by our licenses (the "Minimum Construction Plan"), which requires us to deploy service to (1) 20% of the total 1990 population of the area covered by our licenses (the "Total Population") by July 17, 1999 (focusing on designated areas of Memphis and New Orleans), (2) 40% of the Total Population by July 17, 2000 (focusing on designated areas of New England, Little Rock and Missouri and enhancing coverage in all markets), (3) 55% of the Total Population by July 17, 2001 (focusing on secondary cities and the important associated connecting highways), (4) 70% of the Total Population by July 17, 2002 (continuing to expand the secondary cities and enhancing coverage of the core areas) and (5) 75% of the Total Population by July 17, 2003 (focusing on adding capacity sites and filling in the remaining suburban areas). In addition to the Minimum Construction Plan, we are bound to several other operational obligations, including arranging for all necessary microwave relocation for our licenses and AT&T's retained licenses, ensuring compatibility of our systems with the majority of systems in Louisiana, Oklahoma, Minnesota, Illinois and Texas (excluding Houston), satisfying the FCC construction requirements in the areas covered by our licenses and AT&T's retained licenses, offering certain core service features with respect to our systems, causing our systems to comply with AT&T's TDMA quality standards and refraining from providing or reselling interexchange services other than interexchange services that constitute Company Communications Services or that are procured from AT&T. If we materially breach any of our operational obligations or if AT&T Wireless PCS and its affiliates decide to adopt a new technology standard, other than TDMA, in a majority of its markets and we decline to adopt such new technology, AT&T Wireless PCS may terminate its exclusivity obligations. Disqualifying Transaction. In the event of a merger, consolidation, asset acquisition or disposition or other business combination (a "Disqualifying Transaction") involving (1) AT&T and (2) a person that (A) derives annual revenues from communications businesses in excess of $5 billion, (B) derives less than one-third of its aggregate revenues from the provision of wireless communications and (C) owns FCC licenses to offer, and does offer, mobile wireless communications services serving more than 25% of the residents, as determined by Equifax Marketing Decision Systems Inc., within the areas covered by our licenses (such person, the "Other Party"), AT&T, upon written notice, may terminate certain of its exclusivity obligations in the portion of the areas covered by our licenses in which the Other Party owns an FCC license to offer CMRS (the "Overlap Territory"); provided, that, upon such termination, we have the right to cause AT&T, TWR Cellular, or any transferee that acquired any shares of Series A Preferred Stock, Series D Preferred Stock or Series F Preferred Stock owned by AT&T Wireless PCS on the date of the Stockholders' Agreement (and any shares of our common stock into which any such shares are converted) to exchange all or a proportionate share (based upon the overlap of the residents) of such stock into shares of Series B Preferred Stock. Once so converted, we may redeem such shares of Series B Preferred Stock at any time in accordance with our restated -66- certificate of incorporation. Currently, only Sprint, SBC Communications, Bell Atlantic and BellSouth satisfy the criteria for a business combination partner. Under certain circumstances, during the period commencing on the date of the announcement by AT&T of a Disqualifying Transaction and ending upon the later to occur of six months following the consummation of such transaction and the date, if any, by which AT&T is required under applicable law to dispose of any cellular system or any PCS system serving any of the St. Louis, Missouri, Louisville, Kentucky or Boston, Massachusetts BTAs (the "Subject Markets"), if AT&T proposes to sell, transfer or assign to any person that is not an affiliate of AT&T any PCS system owned and operated by AT&T Wireless PCS and its affiliates in any Subject Market, then AT&T will provide us with the opportunity to offer for sale jointly with AT&T for a 90-day period wireless communications services in the applicable Subject Markets and the portion of the areas covered by our licenses that are included in the MTA that includes such Subject Markets. Acquisition of Licenses. The Stockholders' Agreement provides that we may acquire any cellular license that our Board has determined is a demonstrably superior alternative to constructing a PCS system within the applicable portion of the areas covered by our licenses; provided, that: (1) a majority of the Pops covered by such license are within the areas covered by our licenses; (2) AT&T Wireless PCS and its affiliates do not own CMRS licenses in the area covered by such license; and (3) our ownership of such license will not cause AT&T Wireless PCS or any affiliate to be in breach of any law or contract. Vendor Discounts; Roaming Agreements. AT&T Wireless PCS has agreed, under the Stockholders' Agreement, that if requested by us, it will use all commercially reasonable efforts (1) to assist us in obtaining discounts from any AT&T Wireless PCS vendor with whom we are negotiating for the purchase of any infrastructure equipment or billing services and (2) to enable us to become a party to the roaming agreements between AT&T Wireless PCS and its affiliates and operators of other cellular and PCS systems. Resale Agreements. Under the Stockholders' Agreement, we, upon the request of AT&T Wireless PCS, will enter into resale agreements relating to the areas covered by our licenses. The rates, terms and conditions of service provided by us are to be at least as favorable (and to the extent permitted by applicable law, more favorable) to AT&T Wireless PCS, taken as a whole, as the rates, terms and conditions provided by us to other customers. Subsidiaries. The Stockholders' Agreement provides that all of our subsidiaries must be direct or indirect wholly owned subsidiaries. The Stockholders' Agreement also provides that, without the prior written consent of, or right of first offer to, AT&T Wireless PCS, we and our subsidiaries, subject to certain limited exceptions, may not effect any sale or disposition of a substantial portion of our assets or any of our subsidiaries or the liquidation, merger or consolidation of us or any of our subsidiaries until we meet certain minimum construction requirements. Restrictions on Transfer. The Stockholders' Agreement imposes certain restrictions with respect to the sale, transfer or other disposition of our capital stock, such as preemptive, drag along and tag along rights, and provides certain demand and piggyback registration rights. Amendments. Amendments to the Stockholders' Agreement require the written consent of holders of (1) a majority of the shares of the Class A Common Stock, including AT&T Wireless PCS, (2) two-thirds of the Class A Common Stock beneficially owned by the Cash Equity Investors and (3) two-thirds of the Class A Common Stock beneficially owned by the Management Stockholders. Termination. The Stockholders' Agreement will terminate upon the earliest to occur of (1) the receipt of the written consent of each such party, (2) July 17, 2009 and (3) under certain circumstances, the date on which a single stockholder beneficially owns all of the outstanding shares of Class A Common Stock. Network Membership License Agreement Under the Network Membership License Agreement dated as of July 17, 1998 (the "License Agreement") between AT&T and us, AT&T granted to us a royalty-free, non-transferable, non-sublicensable, non-exclusive, limited right and license to use certain licensed marks, including the logo containing the AT&T name and globe design, the expression "Member, AT&T Wireless Services Network" and AT&T colors, graphics and overall configurations (collectively, the "Licensed Marks"), solely in connection with certain licensed activities (the "Licensed Activities"). The Licensed Activities include (1) the provision to end-users and resellers, solely within the areas covered by our licenses, of Company Communications Services on frequencies licensed to us for CMRS provided in accordance with the agreements between us and AT&T (collectively, the "Licensed Services") and (2) marketing and offering the Licensed Services within the areas covered by our licenses with limited advertising -67- outside our licensed area. The License Agreement also grants to us the right and license to use Licensed Marks on specified mobile phones distributed to our end- users. Except in certain instances, AT&T has agreed not to grant to any other person a right or license to provide or resell, or act as agent for any person offering, Company Communications Services under the Licensed Marks. AT&T retains all rights of ownership in the Licensed Marks, including the rights to license or transfer, as well as the right to use the Licensed Marks in providing its services (subject to its exclusivity obligations) in both the areas covered by our licenses and all other areas. The License Agreement contains restrictions with respect to the use and modification of any of the Licensed Marks. Although we may develop our own marks, we may not use them together with the Licensed Marks without the prior approval of AT&T. Furthermore, we are obligated to use commercially reasonable efforts to cause all Licensed Services marketed and provided using the Licensed Marks to be of comparable quality to similar services marketed and provided by AT&T in areas that are comparable to the areas covered by our licenses, taking into account, among other things, the relative stage of development of the areas in which such services are being provided. The License Agreement also sets forth specific testing procedures to determine compliance with these standards and affords us with a grace period to cure any instances of noncompliance. Following the core period, we must cease using the Licensed Marks until we are in compliance with the standards or may be deemed to be in breach of the License Agreement. We may not assign, sublicense or transfer, by change of control or otherwise, any of our rights under the License Agreement; provided, however, that the License Agreement may be, and has been, assigned to our lenders under our senior credit facilities, and after the expiration of any applicable grace and cure periods under our senior credit facilities, such lenders may enforce our rights under the License Agreement and assign the License Agreement to any person with AT&T's consent. The initial term of the License Agreement is for a period of five years (the "Initial Term"), which will be automatically renewed for an additional five-year period if each party gives written notice to the other party of our election to renew the term of the License Agreement and neither party gives a notice of non- renewal. The License Agreement may be terminated by AT&T at any time in the event of a significant breach by us, including our misuse of any Licensed Marks, our licensing or assignment of any of our rights under the License Agreement, except as permitted by the terms of the License Agreement, our loss of the licenses acquired from AT&T, our failure to maintain AT&T's quality standards or a change in control of us. After the initial term, AT&T may also terminate the License Agreement in certain circumstances in connection with a Disqualifying Transaction. Upon closing of the Digital PCS acquisition, the License Agreement was automatically amended to include the Baton Rouge, Houma, Hammond and Lafayette, Louisiana BTAs under its scope. Upon closing of the Puerto Rico acquisition, the License Agreement was automatically amended to include the San Juan MTA under its scope. Upon the closing of the Wireless 2000 acquisition, the License Agreement was automatically amended to include the Alexandria, Lake Charles and certain counties under the Monroe, Louisiana BTAs under its scope. Intercarrier Roamer Service Agreement / Roaming Administration Service Agreement Under the Intercarrier Roamer Services Agreement dated as of July 17, 1998 between AT&T Wireless Services and certain of its affiliates (collectively, "AWS") and us, we have agreed with AWS that each of us, in our capacity as a serving provider, will provide wireless communications services for registered customers of the other party's customers while such customers are out of their home carrier's geographic area and in the geographic area where the serving provider holds a license or permit to construct and operate a wireless communications system and station. Each home carrier whose customers receive service from a serving provider will pay to the serving provider all of the serving provider's charges for wireless service and all of the applicable charges. Each serving provider's service charges per minute or partial minute for use for the first three years will be fixed at a declining rate. The Intercarrier Roamer Service Agreement has a term of 20 years, which is automatically renewed on a year-to-year basis unless terminated by either party upon 90 days' prior written notice after 10 years. The Intercarrier Roamer Service Agreement may be terminated earlier by either party in certain circumstances, including, after ten years, by either party upon 90 days' prior written notice. Neither party may assign or transfer its rights and obligations under the Intercarrier Roamer Service Agreement without the written consent of the other party, except to an affiliate or an assignee of its license. Under the Roaming Administrative Service Agreement dated as of July 17, 1998 between AWS and us, AWS has agreed to make available to us the benefits of the intercarrier roaming services agreements it has entered into with certain other wireless carriers, subject to the consent of such other wireless carriers and to our remaining a member in good standing of the North American Cellular Network. The Roaming Administrative Service Agreement has an initial term of two years, which is automatically renewed on a year-to-year basis unless terminated by either party upon 90 days' prior written notice. Either party -68- may terminate the Roaming Administrative Service Agreement for any reason at any time upon 180 days' prior written notice. Neither party may assign or transfer its rights and obligations under the Roaming Administrative Service Agreement without the written consent of the other party, except to an affiliate or an assignee of its license, except that AWS may subcontract its duties thereunder. Upon closing of the Digital PCS acquisition, the Intercarrier Roamer Service Agreement was automatically amended to include the Baton Rouge, Houma, Hammond and Lafayette BTAs under its scope. Upon closing of the Puerto Rico acquisition, the Intercarrier Roamer Service Agreement was automatically amended to include the San Juan MTA under its scope. Upon closing of the Wireless 2000 acquisition, the Intercarrier Roamer Service Agreement was automatically amended to include the Alexandria, Lake Charles and certain counties under the Monroe, Louisiana BTAs under its scope. Resale Agreement The Stockholders' Agreement provides that, from time to time, we will enter into a Resale Agreement with AT&T Wireless PCS or certain of its affiliates that provides that we grant to AWS the right to purchase and resell access to, and use of, our wireless services on a non-exclusive basis within a designated area. AWS will pay charges for any services that are resold, including usage, roaming, directory assistance and long distance charges, and taxes and tariffs, if any, according to a specified rate schedule. Each Resale Agreement will have an initial term of ten years that will be automatically renewed on a year-to-year basis unless terminated by either party upon 90 days' prior written notice. AWS will be able to terminate each Resale Agreement for any reason at any time upon 180 days' prior written notice. In addition, AT&T has agreed to extend the terms of any Resale Agreement to include the Baton Rouge, Houma, Hammond and Lafayette BTAs in connection with the Digital PCS acquisition, the San Juan MTA in connection with the Puerto Rico acquisition and the Alexandria, Lake Charles and certain counties under the Monroe, Louisiana BTAs in connection with the Wireless 2000 acquisition. Long Distance Agreement Under the Long Distance Agreement dated as of December 21, 1998 between AWS and us, we purchase interstate and intrastate long distance services from AWS at preferred rates which we resell to our customers. These preferred rates are contingent upon our continuing affiliation with AWS. The Long Distance Agreement requires that we meet a minimum traffic volume commitment during the term of the agreement, which may be up to three years. If we fail to meet such volume commitments, we must pay to AWS the difference between the expected fee based on the volume commitment and the fees based on actual volume. The long distance services we purchase from AWS may only be used in connection with (1) our commercial mobile radio services, (2) calls that originate on our network and (3) those commercial mobile radio services that share our switches. Puerto Rico License We acquired a 20 MHz A-Block PCS license and related assets covering the San Juan MTA from AT&T Wireless PCS on May 25, 1999. The San Juan MTA covers approximately 4 million Pops in Puerto Rico, as well as the U.S. Virgin Islands. Under a Preferred Stock Purchase Agreement, on May 24, 1999, we sold to AT&T $40.0 million of our preferred stock for cash. Under an Asset Purchase Agreement, on May 25, 1999, we purchased the license and related assets from AT&T for $95.0 million in cash. In addition, we reimbursed AT&T $3.2 million for microwave relocation and $1.5 million for other expenses it incurred in connection with the acquisition. Our agreements with AT&T were automatically amended to include the San Juan MTA under the scope of those agreements. Management Agreement As of July 17, 1998, we entered into the Management Agreement with TeleCorp Management, a company owned by Mr. Vento and Mr. Sullivan, for the provision of certain administrative, operational, marketing, regulatory and general business services by TeleCorp Management to us. TeleCorp Management receives an annual fee of approximately $0.5 million and reimbursement of out-of-pocket expenses from us, and is eligible for an annual bonus based upon achievement of certain objectives determined by the compensation committee of our Board. In addition, the Management Agreement provides that certain shares owned by Mr. Vento and Mr. Sullivan vest based upon meeting minimum construction requirements. Mr. Vento and Mr. Sullivan have agreed to devote substantially their entire business time and attention to the services provided under the Management Agreement. -69- The Management Agreement has a term of five years and may be terminated earlier by either party in certain circumstances, including by us in the event TeleCorp Management commits fraud, fails to maintain adequately our debt or one of the principals of TeleCorp Management is indicted for a felony, and by TeleCorp Management in the event Mr. Vento and Mr. Sullivan are removed from our Board, or are demoted or their duties are materially diminished. TeleCorp Management, Mr. Vento and Mr. Sullivan are subject to certain non-competition, non-solicitation and confidentiality provisions upon termination of the Management Agreement. In addition, we must repurchase certain of our shares owned by Mr. Vento and Mr. Sullivan in the event of termination. For the 1998 fiscal year, we paid approximately $0.5 million for management services and bonuses under the Management Agreement. See "Management--Management Agreement." Other Related Party Transactions Relationship with WFI/Entel Technologies and other Site Acquisition Service Providers We receive site acquisition, construction management, program management, microwave relocation and engineering services under a master services agreement with WFI/Entel Technologies. Payments under such agreement were approximately $30.7 million in the 1998 fiscal year. At the time of entering into the master services agreement, Mr. Vento was a senior officer, and he and Mr. Sullivan were the controlling stockholders, of WFI/Entel Technologies. In February 1998, they sold their interests in WFI/Entel Technologies. Relationship with Certain of the Initial Purchasers of the Notes in the Original Private Offering Net proceeds of the original private offering of the Notes to us were approximately $317.0 million, excluding our repayment of the Series B Notes to Lucent. CSI and its affiliates perform various investment banking and commercial banking services from time to time for us and our affiliates. CSI acted as our lead manager for our offering of the Old Notes. The Chase Manhattan Bank, an affiliate of CSI, is the agent bank and a lender under our senior credit facilities. Mr. Michael R. Hannon, a member of our Board, is a General Partner of Chase Capital Partners, an affiliate of CSI. In addition, affiliates of Chase Capital Partners own a portion of our common stock. For further information concerning these relationships, see "Management," "Securities Ownership of Certain Beneficial Owners and Management" and "Plan of Distribution." BT Alex. Brown Incorporated, one of the initial purchasers of the Old Notes, is an affiliate of Bankers Trust Company, the documentation agent and one of the lenders under our senior credit facilities for $525.0 million, as well as the trustee under the indenture governing the Notes and the Exchange Agent. We have also entered into certain other transactions with Bankers Trust Company. See "Plan of Distribution." Relationship with Tritel Communications We have common stockholders with Tritel Communications and may be deemed affiliates by virtue of such common ownership. Mr. Anderson and Mr. Fuqua, two of our directors, also serve as directors of Tritel Communications. See "Management." We have formed Affiliate License Co. with Tritel Communications and Triton PCS to adopt a common brand, SunCom, that is co-branded with AT&T on an equal emphasis basis. Under such agreement, we, Tritel Communications and Triton PCS each own one third of Affiliate License Co., the owner of the SunCom name. We and the other SunCom companies license the SunCom name from Affiliate License Co. Mr. Sullivan is a director of Affiliate License Co. Relationship with Triton PCS We have common stockholders with Triton PCS and may be deemed affiliates by virtue of such common ownership. Ms. Hawkins Key and Mr. Anderson, two of our directors, also serve as directors of Triton PCS. See "Management." We have formed Affiliate License Co. with Triton PCS and Tritel Communications to adopt a common brand, SunCom, that is co-branded with AT&T on an equal emphasis basis. Under such agreement, we, Triton PCS and Tritel Communications each own one third of Affiliate License Co., the owner of the SunCom name. We and the other SunCom companies license the SunCom name from Affiliate License Co. Triton PCS transferred its ownership of the SunCom name to Affiliate License Co. for approximately $0.6 million. Mr. Sullivan is a director of Affiliate License Co. Relationship with Other Entities TeleCorp Holding, our predecessor company, was incorporated on July 29, 1996 to participate in the FCC's auction of F-Block licenses in April 1997. TeleCorp Holding raised money from investors to develop any such licenses it obtained in such auction. TeleCorp Holding successfully obtained licenses in the New Orleans, Memphis, Beaumont, Little Rock, Houston, Tampa, Melbourne and Orlando BTAs. In August 1997, TeleCorp Holding transferred the Houston, Tampa, Melbourne and -70- Orlando BTAs to four newly-formed entities created by TeleCorp Holding's stockholders: THC of Houston; THC of Tampa; THC of Melbourne; and THC of Orlando; and issued notes in the aggregate amount of approximately $2.7 million to such entities to develop such licenses. TeleCorp Holding performed certain administrative and management services and paid costs on behalf of such entities for the year ended December 31, 1997, worth the aggregate amount of $0.7 million. In 1998, upon the closing of the agreements with AT&T TeleCorp Holding paid approximately $2.0 million to the entities as payment of the notes, offset by the approximately $0.7 million in services and costs. We, TeleCorp Holding, THC of Houston, THC of Tampa, THC of Melbourne, THC of Orlando, TeleCorp WCS and Telecorp LMDS have common stockholders in Mr. Sullivan and Mr. Vento. On May 5, 1997, TeleCorp Holding lent approximately $3.0 million to TeleCorp WCS, Inc. in exchange for interest-free notes from TeleCorp WCS. On May 5, 1997, TeleCorp Holding received equity investments in exchange for the right to receive (1) the notes from TeleCorp WCS, (2) any cash, notes or other assets received by TeleCorp Holding on behalf of the notes or (3) any capital stock into which the notes were converted. TeleCorp WCS repaid approximately $2.7 million of the notes with cash to TeleCorp Holding, and TeleCorp Holding forwarded such cash to the equity investors. TeleCorp WCS issued a note in the amount of approximately $0.3 million directly to the investors on behalf of the remaining $0.3 million outstanding under the notes. TeleCorp WCS converted such notes into capital stock issued to the investors. Mr. Sullivan and Mr. Vento are stockholders in us, TeleCorp Holding and TeleCorp WCS. Viper Wireless was formed to participate in the FCC's reauction of C-Block PCS licenses in most of our markets. TeleCorp Holding owns 85% of Viper Wireless, and Mr. Vento and Mr. Sullivan collectively own the remaining 15%. AT&T and certain of our cash equity investors have committed an aggregate of approximately $32.3 million in exchange for additional shares of our preferred and common stock if Viper Wireless is the successful bidder in the reauction. AT&T and the investors funded approximately $6.5 million of their commitment on May 14, 1999, and approximately $25.8 million will be funded when we make payments to the FCC with respect to these licenses, or if the FCC does not refund amounts we paid to them as deposits in connection with the reauction within 180 days of the date of deposit. The FCC has made additional PCS spectrum available through a reauction of certain C-Block and other licenses returned to, or repossessed by, the FCC. We participated in this for additional spectrum through Viper Wireless. On April 20, 1999, the FCC announced that the reauction ended, and Viper Wireless was the higher bidder for additional spectrum in New Orleans, Houma and Alexandria, Louisiana, San Juan, Puerto Rico, Jackson, Tennessee and Beaumont, Texas. On June 3, 1999, a petition was filed by certain secured creditors of DCR PCS and Pocket Communications against the application of Viper Wireless for the Houma and New Orleans licenses. The petition seeks deferral of the grant of these licenses to Viper Wireless until an appeal, by the secured creditors of DCR PCS and Pocket Communications has been resolved or in the alternative, a condition noting that a pre-existing claim to the licenses may exist if the secured creditors are successful in that appeal. The appeal seeks review of the bankruptcy court's ruling concerning DCR PCS and Pocket Communications permitting DCR PCS to file its election notice, which ultimately resulted in the return of these licenses to the FCC, over the objection of the secured creditors of DCR PCS and Pocket Communications. Viper Wireless filed an opposition to the petition on June 15, 1999. Relationship with Toronto Dominion Toronto Dominion Investments, a Cash Equity Investor, and TD Securities (USA), a lender under our senior credit facilities for $525.0 million, may be deemed to be under common control. Relationships with Stockholders From inception through June 1998, our primary source of financing was notes issued to our stockholders. In July 1996, we issued $0.5 million of subordinated promissory notes to our stockholders. These notes were converted into 50 shares of our Series A Preferred Stock in April 1997. In December 1997, we issued various promissory notes to our stockholders. These notes were converted into mandatorily redeemable preferred stock in July 1998. From January 1, 1998 to June 30, 1998, we borrowed approximately $22.5 million in the form of promissory notes to existing and prospective stockholders to satisfy working capital needs. These notes were converted into equity of TeleCorp in July 1998 in connection with the consummation of the venture with AT&T. Relationship with McDermott, Will & Emery We use the services of a law firm, McDermott, Will & Emery, to which Mr. Sullivan, our Executive Vice President, Chief Financial Officer and a member of our Board, is counsel. Prior to July 1998, Mr. Sullivan was a partner of McDermott, Will & Emery. For the 1998 fiscal year we paid McDermott, Will & Emery approximately $2.1 million. -71- CERTAIN INDEBTEDNESS Senior Credit Facilities On July 17, 1998 (the "Senior Credit Facilities Effective Date"), we entered into senior credit facilities for $525.0 million (the "Senior Credit Facilities") with certain lenders (the "Lenders"), including The Chase Manhattan Bank, as administrative agent and issuing bank, TD Securities (USA) Inc., as syndication agent, and Bankers Trust Company, as documentation agent (the credit agreement governing the Senior Credit Facilities, the "Senior Credit Agreement"). The Senior Credit Facilities provide for (1) a $150.0 million senior secured term loan (the "Tranche A Term Loan"), which matures in January 2007, (2) a $225.0 million senior secured term loan (the "Tranche B Term Loan," and together with the Tranche A Term Loan, the "Term Loans"), which matures in January 2008, (3) a $150.0 million senior secured revolving credit facility (the "Revolving Credit Facility," and together with the Term Loans, the "Senior Facilities"), which matures in January 2007 and (4) an uncommitted $75.0 million senior secured term loan in the form of an expansion facility (the "Expansion Facility," and together with the Senior Facilities, the "Facilities"), which will mature no sooner than January 2008. The Tranche A Term Loan must be repaid, beginning in September 2002, in 18 consecutive quarterly installments. The amount of each of the first six installments is $3.75 million. The amount of each of the next four installments is $9.4 million. The amount of each of the last eight installments is $11.25 million. The Tranche B Term Loan is required to be repaid, beginning in September 2002, in 22 consecutive quarterly installments. The amount of each of the first 18 installments is $0.6 million. The amount of each of the last four installments is $54.0 million. The commitment to make loans under the Revolving Credit Facility ("Revolving Credit Loans," and together with the Term Loans, the "Loans") automatically and permanently is reduced, beginning in April 2005 after the Senior Credit Facilities Effective Date, by virtue of eight consecutive quarterly reductions. The amount of each of the first four reductions is $12.5 million. The amount of each of the last four reductions is $25.0 million. We may select the rate at which interest accrues on all Loans. We may choose a "Eurodollar Loan," which accrues at LIBOR, multiplied by the ratio of which one is the numerator and one minus the aggregate of maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board of Governors of the Federal Reserve system that applies to the administrative agent regarding eurocurrency funding is the denominator, and added to the Applicable Margin. The "Applicable Margin" in the case of Eurodollar Loan means: . a rate between 1.25% and 2.75% per annum, depending upon our leverage ratio, with respect to the Tranche A Term Loan and the Revolving Credit Loans; and . 3.25% per annum, with respect to the Tranche B term loan. Alternatively, we may choose an "ABR Loan," which accrues at the higher of either the Administrative Agent's prime rate and the Federal Funds Effective Rate (as defined in the Senior Credit Agreement) plus 0.50% plus the Applicable Margin. "Applicable Margin" in the case of an ABR Loans means: . a rate between 0.25% and 1.75% per annum, depending on our leverage ratio with respect to the Tranche A Term Loan and the Revolving Credit Loans; and . 2.25% per annum, with respect to the Tranche B Term Loan. Interest on any overdue amounts will accrue at a rate per annum equal to 2.00% plus the rate otherwise applicable to such amounts. The terms of the Senior Credit Facilities require us to pay an annual commitment fee between 0.50% and 1.25%, depending on the percentage drawn, of the unused portion of the Revolving Credit Facility. The Tranche A Term Loan and Tranche B Term Loan are payable quarterly in arrears, and a separate agent's fee is payable to the administrative agent. The Senior Credit Facilities also require us to purchase an interest rate hedging contract covering an amount equal to at least 50% of the total amount of our outstanding indebtedness, excluding indebtedness which earns interest at a fixed rate. The Tranche A Term Loan automatically will be reduced to the extent its undrawn portion exceeds $50.0 million in July 2000 by the amount of such excess. The Term Loans will be prepaid, and commitments under the Revolving Credit Facility will be reduced, in an aggregate amount equal to: (1) 50% of the excess cash flow of each fiscal year commencing with the fiscal year ending December 31, 2001; -72- (2) 100% of the net proceeds of asset sales outside of the ordinary course of business, in excess of a $1.0 million annual threshold, or unused insurance proceeds; (3) 100% of the net cash proceeds of issuances of debt obligations (other than debt obligations permitted by the Senior Credit Agreement, including the issuance of the Notes); and (4) 100% of the net cash proceeds of issuances of equity securities (other than in connection with the Cash Equity); provided that the prepayments and reductions set forth under clauses (3) and (4) will not be required if, after giving effect to such issuance, (A) our leverage ratio would be less than 5.0 to 1.0 and (B) in the case of clause (4), we would be in pro forma compliance with each covenant contained in the Senior Credit Agreement. We may establish the Expansion Facility so long as, both before and after giving effect to it, no default exists under the Senior Credit Agreement and we are in pro forma compliance with each of the financial covenants contained in the Senior Credit Agreement. No Lender is required to participate in the Expansion Facility. Each of our existing and future domestic subsidiaries unconditionally guarantees all our obligations under the Senior Credit Facilities (the "Credit Facility Subsidiary Guarantees"). The Facilities and the Credit Facility Subsidiary Guarantees, and any related hedging contracts provided by the Lenders under the Senior Credit Facilities, are secured by substantially all of our assets and the assets of each of our existing and future domestic subsidiaries, including a first priority pledge of all of the capital stock held by us or any of our subsidiaries; provided that the pledge of shares of foreign subsidiaries will be limited to 65% of the outstanding shares of such foreign subsidiaries. Under the Senior Credit Facilities, no action may be taken against our licenses unless and until the requisite approval is obtained from the FCC. We have organized special purpose subsidiaries to hold our licenses, our real property and our equipment. Each such single purpose subsidiary is prohibited from incurring any liabilities or obligations other than: . the Credit Facility Subsidiary Guarantee issued by it; . obligations under the security agreement entered into by it in connection with the Senior Credit Facilities; . obligations resulting from regulatory requirements; or . taxes and liabilities incurred in the ordinary course of its business incident to its business or necessary to maintain its existence. The Senior Credit Agreement contains covenants customary for facilities similar to the Senior Credit Facilities, including covenants that restrict, among other things: . the incurrence of indebtedness and the issuance of certain equity securities; . the creation of liens; . sale and lease-back transactions, mergers, consolidations and liquidations; . certain investments, loans, guarantees, advances and acquisitions; . sales of assets; . hedging agreements; . certain payments, including the payment of dividends or distributions in respect of capital stock and prepayments of the Notes; . certain transactions with affiliates; . the entering into of certain restrictive agreements; and . the amendment of certain material agreements. The Senior Credit Agreement requires us to maintain certain ratios, including: -73- . a senior debt to capital ratio; . a senior debt to EBITDA ratio; . a total debt to EBITDA ratio; . an interest coverage ratio; and . a fixed charges ratio; and to satisfy certain tests, including tests relating to: . the minimum population covered by our network; . the minimum number of subscribers to our services; . the minimum aggregate service revenue per subscriber; and . limits on capital expenditures. In particular, we may not permit the following ratio to exceed 0.5 to 1.0: the numerator is senior debt and the denominator is the sum of (1) all of our indebtedness and the indebtedness of our subsidiaries which matures, in more than one year, whether, by its terms renewal or extension, plus (2) certain equity contributions, plus (3) commitments of the Cash Equity Investors to purchase shares of our capital stock under the Securities Purchase Agreement. The denominator is known as "Total Capital." However, if (1) the Cash Equity Investors have satisfied in full in cash all commitments to purchase shares of our capital stock under the Securities Purchase Agreement and (2) our network is substantially complete in markets that cover more than 60% of the aggregate number of residents within the areas that our licenses cover, the ratio of senior debt to Total Capital may exceed 0.5 to 1.00, but may not exceed 0.55 to 1.00. In the above contingency, the aggregate number of residents are as determined by the Donnelley Marketing Service Guide published in 1995. The Senior Credit Agreement also contains customary representations, warranties, indemnities, conditions precedent to borrowing and events of default. Borrowings under the Senior Credit Facilities are available to finance capital expenditures related to the construction of our network, the acquisition of related businesses, working capital needs and subscriber acquisition costs. Vendor Financing In May 1998, we entered into a vendor procurement contract (the "Procurement Contract") with Lucent, under which we agreed to purchase radio, switching and related equipment and services for the development of our network. In connection with the Procurement Contract, Lucent agreed to provide us with $80.0 million of junior subordinated vendor financing. In addition, Lucent has agreed to make available up to an additional $80.0 million of junior subordinated vendor financing in amounts up to 30% of the value of equipment, software and services provided by Lucent in connection with any additional markets we acquire (the "Vendor Expansion Facility"). We have $15.0 million of availability under the Vendor Expansion Facility agreement as a result of the Puerto Rico acquisition. The expiration date for any notes issued under the Vendor Expansion Facility is the date which is six months after the scheduled maturity of the Notes. Under a Note Purchase Agreement dated as of May 11, 1998 (the "Note Purchase Agreement"), between Lucent and us, we have issued to Lucent $40.0 million aggregate principal amount of Series A Notes due 2012. All proceeds from the sale of these notes are to be used to develop our network in certain designated areas. We had also issued to Lucent $40.0 million aggregate principal amount of Series B Notes due 2012. We repaid these notes with the proceeds from the offering of the Old Notes. Upon the consummation of the offering of the Old Notes, Lucent's commitment to provide us with $40.0 million of Series B notes terminated. We have a commitment from Lucent to purchase an additional $7.5 million of Series A Notes and $7.5 million of Series B Notes under to the Vendor Expansion Facility in connection with the Puerto Rico acquisition. The obligation of Lucent to purchase notes under the Vendor Expansion Facility is subject to a number of conditions, including the requirement that we have -74- received certain cash equity contributions in respect of each additional market and that we irrevocably commit to purchase one mobile switching center and 50 base stations for each additional market from Lucent. The original $40.0 million principal amount of the Series A Notes is due in 2012, but is subject to mandatory prepayment on a dollar for dollar basis out of the proceeds of future equity offerings in excess of $130.0 million (exclusive of the $5.0 million of equity to be contributed in connection with the Louisiana acquisitions). Any Series A Notes issued under the Vendor Expansion Facility will mature six months after the Notes, but will be subject to mandatory prepayment on a dollar for dollar basis out of the proceeds of future equity offerings in excess of $175.7 million (exclusive of all cash equity received in the Transactions). Any Series B Notes issued under the Vendor Expansion Facility will mature six months after the Notes, but in no event later than May 1, 2012, and will be subject to mandatory prepayment on a dollar for dollar basis out of the net proceeds of any future public or private offering or sale of debt securities (exclusive of borrowings under the Credit Agreement). The Series A Notes, including any Series A Notes issued under the Vendor Expansion Facility, will initially accrue interest at a rate of 8.5% per annum. If the Series A Notes are not redeemed in full on or prior to January 1, 2001, the rate will increase by 1.5% per annum on each January 1 thereafter, beginning January 1, 2002, provided that the maximum interest rate will not exceed 12 1/8% which is 50 basis points per annum over the initial yield on the Notes. Interest on the Series A Notes will be payable semi-annually, provided that prior to May 11, 2004, interest will be payable in additional Series A Notes and thereafter will be payable in cash, unless prohibited by the Senior Credit Facilities or the indenture governing the Notes. Any Series B Notes issued under the Vendor Expansion Facility will initially accrue interest at a rate of 10% per annum. If the Series B Notes are not redeemed in full on or prior to January 1, 2000, the rate will increase by 1.5% per annum on each January 1 thereafter beginning on January 1, 2001, provided that the maximum interest rate will not exceed 12 1/8% which is 50 basis points per annum over the initial yield on the Notes. Interest on the Series B Notes will be payable semi-annually, provided that prior to May 11, 2004, interest will be payable in additional Series B Notes and thereafter will be payable in cash unless prohibited by the terms of the Senior Credit Facilities or the indenture governing the Notes. Upon a change of control as defined by the Note Purchase Agreement, the Series A and Series B Notes must be repaid at their principal amount plus a premium. The Series A and Series B may not be prepaid, however, if prohibited by the terms of the Senior Credit Facilities, the indenture governing the Notes or other indebtedness that ranks senior to the Series A and Series B Notes. In the event a change of control occurs prior to May 1, 2002 in the case of the Series A Notes, or in the case of the Series B Notes, May 1, 2000, the Series A and Series B Notes may be prepaid in accordance with the optional prepayment provisions. Under the Note Purchase Agreement, Lucent may not engage in any remarketing efforts of the Series A or Series B Notes, or unused commitments relating to the Series A or Series B Notes, prior to January 23, 2000. If Lucent has not completed certain sales in respect of Series A or Series B Notes then outstanding prior to January 1, 2003, we must pay Lucent up to 3% of the then outstanding principal amount of all Series A and Series B Notes to defray any actual marketing distribution and other costs incurred by Lucent in connection with any such sales remarketing. The Series A Notes may be prepaid without payment of a premium at any time prior to May 1, 2002. In addition, the Series A note may be prepaid at any time after May 1, 2002 without payment of a premium to the extent Lucent or its affiliates have retained them. The Series B Notes may be prepaid without payment of a premium at any time prior to May 1, 2000. In addition, the Series B Notes may be prepaid at any time after May 1, 2000 without payment of a premium to the extent Lucent or its affiliates have retained them. If we are subject to any bankruptcy or related procedures or there is any default in the payment of our debt, including borrowings under the Senior Credit Facilities and the Notes, that ranks senior in right of payment to the Series A and Series B Notes, we will pay the senior debt in full before we make payments on the Series A and Series B Notes. If a non-payment default occurs with respect to any such debt, the holders of more than $25.0 million principal amount of such debt may declare a payment blockage period of up to 179 days. Events of default under the Note Purchase Agreement include, subject to certain cure periods: . the failure to pay principal or interest under such agreement when due; . violation of covenants; . inaccuracy of representations and warranties; -75- . cross-default for other indebtedness; . bankruptcy; . material judgments; and . termination of the Procurement Contract. Government Debt In connection with our purchase of our F-Block licenses, we issued to the FCC secured installment payment plan notes in an aggregate principal amount of $9.2 million (the "FCC Notes"). This debt is shown on our balance sheet net of a discount of $1.2 million reflecting the below market interest rate on the debt. The FCC Notes are due April 28, 2007, and bear interest at a rate of 6.25% per annum. In addition, we assumed $4.1 million in aggregate principal amount of additional secured installment payment plan notes in connection with the Digital PCS acquisition (the "Digital PCS Notes"). This debt is shown on our balance sheet net of a discount of $0.7 million reflecting the below market interest rate on the debt. The Digital PCS Notes are due August 21, 2007, and bear interest at a rate of 6.125% per annum. In connection with the Wireless 2000 acquisition, we assumed $7.4 million in aggregate principal amount of additional secured installment payment plan notes (the "Wireless 2000 Notes"). This debt is shown on our balance sheet net of a discount of $1.3 million reflecting the below market interest rate on the debt. The Wireless 2000 Notes are due September 17, 2006, and bear interest at a rate of 7.0% per annum. A security agreement secures the FCC Notes, Wireless 2000 Notes and Digital PCS Notes, which grants the FCC a first priority security interest in the license for which the applicable note was issued. In the event of a default under the FCC Notes, Wireless 2000 Notes or Digital PCS Notes, the FCC may revoke the licenses for which such defaulted notes were issued. -76- DESCRIPTION OF CAPITAL STOCK Our authorized capital stock, as set forth in our restated certificate of incorporation dated April 20, 1999, consists of: . 1,904,010 shares of common stock, par value $0.01 per share, consisting of: . 950,000 shares of Class A Common Stock . 950,000 shares of Class B Common Stock . 1,000 shares of Class C Common Stock . 3,000 shares of Class D Common Stock . 10 shares of Voting Preference Common Stock . 715,000 shares of preferred stock, par value $0.01 per share, consisting of: . 100,000 shares of Series A Preferred Stock . 200,000 shares of Series B Preferred Stock . 215,000 shares of Series C Preferred Stock . 50,000 shares of Series D Preferred Stock . 30,000 shares of Series E Preferred Stock . 50,000 shares of Series F Preferred Stock . 70,000 shares of Senior Common Stock As of May 31, 1999, and after giving pro forma effect to the Transactions, our outstanding capital stock consisted of: . 236,824 shares of Class A Common Stock . 919 shares of Class C Common Stock . 2,755 shares of Class D Common Stock . 10 shares of Voting Preference Common Stock . 97,473 shares of Series A Preferred Stock . 210,608 shares of Series C Preferred Stock . 49,417 shares of Series D Preferred Stock . 24,150 shares of Series E Preferred Stock . 48,261 shares of Series F Preferred Stock The following summaries of certain provisions of the common stock and the preferred stock are not complete and are subject to, and qualified in their entirety by, the provisions of our restated certificate of incorporation and bylaws. Subject to any required approval of holders of any shares of any class or series of preferred stock, our Board has the power, by resolution, to issue additional shares of preferred stock with such preferences, rights and designations as it shall determine. Voting Rights Subject to the rights of specific classes of stock to vote as a class on certain matters, the holders of the Class A Common Stock are entitled to 4,990,000 votes and the holders of Voting Preference Common Stock are entitled to 5,010,000 votes of all outstanding capital stock. No other class of capital stock has the right to vote on any matter except as required by law. In addition, for so long as AT&T and its affiliates continue to hold at least two- thirds of the shares of Series A Preferred Stock they held as of May 14, 1999, they will be entitled, but not obliged, to nominate two of our directors. After an initial public offering of our securities, or after the special voting rights of Voting Preference Common Stock are eliminated, they may nominate only one director. Our restated certificate of incorporation provides that, except where a class of capital stock has the right to vote as a class, a quorum shall be present so long as a majority of the outstanding Voting Preference Common Stock and shares representing at least 5,010,000 votes are present. When a class vote is required, a majority of such class must also be present. Further, any action not requiring a class vote may be approved by the affirmative vote of a majority of Voting Preference Common Stock present at any meeting where a quorum is present. -77- The holders of each class of preferred stock have the right to vote as a class on any measure to: . authorize or issue any shares senior to or on a parity with such class; . amend our restated certificate of incorporation to change any of the characteristics of such class; or . authorize or issue any security convertible into, exchangeable for or granting the right to purchase or otherwise receive any shares of stock senior to or on a parity with such class. The majority of each such class of preferred stock must affirmatively vote to act. Subject to any class voting requirements, shares of Common Stock representing at least two-thirds of the votes entitled to be cast for the election of our directors must affirmatively vote for any amendment, alteration or repeal of our certificate of incorporation or bylaws. If (1) we receive an opinion of regulatory counsel that Class A Common Stock and Voting Preference Common Stock can vote and be treated as a single class of stock for quorum purposes and have one vote per share, (2) not less than two-thirds of the outstanding Class A Common Stock affirmatively vote for such single class status, and (3) our Board has not determined that it is likely to be detrimental to us, we will seek the approval of the FCC to have Class A Common Stock and Voting Preference Common Stock vote and be treated together as a single class with one vote per share. Certain of our stockholders have entered into agreements (including the Stockholders' Agreement and the Investors Stockholders' Agreement dated as of July 17, 1998 among the Cash Equity Investors and the Management Stockholders) regarding the voting of their shares on certain matters, including the election of directors. See "Certain Relationships and Related Transactions--The AT&T Agreements--Stockholders Agreement." Conversion After July 17, 2006, holders of Series A Preferred Stock may convert their shares into shares of Class A Common Stock at a conversion rate equal to the liquidation preference of Series A Preferred Stock divided by the market price of Class A Common Stock. On the date of an initial public offering of our capital stock, we may convert shares of Series C Preferred Stock and Series E Preferred Stock into shares of Common Stock at a conversion rate equal to the liquidation preference of Series C Preferred Stock or Series E Preferred Stock, as applicable, divided by the initial public offering price. If we convert Series C Preferred Stock to shares of Common Stock on the date of an initial public offering of our capital stock, shares of Series D Preferred Stock will be automatically converted into shares of Senior Common Stock on that date at a rate equal to the liquidation preference of Series D Preferred Stock divided by the initial public offering price. At any time, holders of Series F Preferred Stock may convert each share into one share of Class A Common Stock or Class B Common Stock; provided, that, until the happening of certain events, the first 631.27 of such shares to be converted are convertible into shares of Class D Common Stock. If we convert Series C Preferred Stock into Common Stock upon an initial public offering of our capital stock, each share of Series F Preferred Stock will be automatically converted into one share of Senior Common Stock. At any time, holders of Senior Common Stock may convert each share into one share of Class A Common Stock or Class B Common Stock; provided, that, until the happening of certain events, the first 631.27 of such shares to be converted are convertible into shares of Class D Common Stock. At any time, holders of Class A Common Stock and Class B Common Stock may convert their shares into shares of the other class. If we receive an opinion of counsel that Class A Common Stock and Voting Preference Common Stock can vote and be treated as a single class of stock with one vote per share, then, unless our Board shall determine that it is likely to be detrimental to us, holders of Class C Common Stock and Class D Common Stock may convert their shares into shares of Class A Common Stock or Class B Common Stock. All conversions are subject to obtaining any required FCC approvals. -78- Redemption We have the right to redeem certain of our capital stock as follows: . Shares of Series A Preferred Stock: following 30 days after the 10th anniversary of issuance at the liquidation preference the Series A preferred Stock; . Shares of Series B Preferred Stock: at any time at the liquidation preference of the Series Preferred Stock; and . Shares of Series C Preferred Stock and Series D Preferred Stock: at any time at the liquidation preferences of Series C Preferred Stock and Series D Preferred Stock; provided, that if we redeem any shares of either Series C Preferred Stock or Series D Preferred Stock, we must redeem a proportionate number of shares of the other. In addition, the holders of certain classes of capital stock have the right to require us to redeem their shares as follows: . Holders of Series A Preferred Stock or Series B Preferred Stock: following the 30th day after the 20th anniversary of issuance at the liquidation preference of the Series A Preferred Stock or Series B Preferred Stock; and . Holders of Series C Preferred Stock, Series D Preferred Stock or Series E Preferred Stock: following the 30th day after the 20th anniversary of issuance at the liquidation preference therefor Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock. Neither we nor any holder of shares of any class of our capital stock may cause us to redeem our capital stock if, at such time: . we are insolvent or will be rendered insolvent by such redemption; or . law or any of our agreements prohibits such redemption. Further, our restated certificate of incorporation restricts our ability to redeem any shares of capital stock to the extent shares of capital stock ranking senior to or on a parity with such shares remain outstanding or dividends on such senior or parity shares have not been paid in full. Our restated certificate of incorporation also provides for our redemption of any shares of our capital stock that is held by stockholders whose holding of such shares, in the opinion of our Board, may result in the loss of, or failure to obtain the reinstatement of, any of our licenses or franchises. The Management Agreement provides for the redemption by us of certain shares of Class A Common Stock and Series E Preferred Stock held by Mr. Vento and Mr. Sullivan in certain circumstances. See "Management--Management Agreement." Ranking With respect to the payment of dividends and distributions upon our liquidation, dissolution or winding up, classes of our preferred stock ranks as follows:
- --------------------------------------------------------------------------------------------------------------------------------- Class of Stock Parity with Junior to Senior to - --------------------------------------------------------------------------------------------------------------------------------- Series A Preferred Series B Preferred None Series C Preferred Series D Preferred Series E Preferred Series F Preferred Senior Common Stock Common Stock - ---------------------------------------------------------------------------------------------------------------------------------
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- ---------------------------------------------------------------------------------------------------------------------------------- Class of Stock Parity with Junior to Senior to - ---------------------------------------------------------------------------------------------------------------------------------- Series B Preferred Series A Preferred None Series C Preferred Series D Preferred Series E Preferred Series F Preferred Senior Common Stock Common Stock - ---------------------------------------------------------------------------------------------------------------------------------- Series C Preferred Series D Preferred Series A Preferred and Series Series E Preferred (except when a statutory B Preferred Stock Series F Preferred liquidation ) Series D Preferred (only upon Senior Common Stock Common Stock (only with a statutory liquidation) Common Stock (only with respect to dividends) respect to dissolution, liquidation and winding up) - --------------------------------------------------------------------------------------------------------------------------------- Series D Preferred Series C preferred Series A Preferred Series C Preferred (except when a statutory Series B Preferred (only upon a statutory liquidation) liquidation) Common Stock (only with Series E Preferred respect to dividends) Series F Preferred Senior Common Stock Common Stock (only with respect to dissolution, liquidation and winding up) - --------------------------------------------------------------------------------------------------------------------------------- Series E Preferred Common Stock (only with Series A Preferred Series F Preferred respect to dividends) Series B Preferred Senior Common Stock Series C Preferred Common Stock Series D Preferred - --------------------------------------------------------------------------------------------------------------------------------- Series F Preferred Senior Common Stock Series A Preferred Common Stock Common Stock (except when a Series B Preferred (only upon a statutory statutory liquidation) Series C Preferred liquidation) Series D Preferred Series E Preferred - --------------------------------------------------------------------------------------------------------------------------------- Senior Common Stock Series F Preferred Series A Preferred Common Stock Series B Preferred Series C Preferred Series D Preferred Series E Preferred - ---------------------------------------------------------------------------------------------------------------------------------
Dividends The holders of Series A Preferred Stock and Series B Preferred Stock are entitled to receive annual dividends equal to 10% of the liquidation preference related to their shares; provided that so long as any shares of Series A Preferred Stock or Series B Preferred Stock are outstanding, no dividends may be paid on any shares of any class of capital stock ranking junior to Series A Preferred Stock or Series B Preferred Stock. Dividends accrue from the date of issuance of the shares and are payable quarterly, provided that we have the option to defer payments for up to ten and one-half years from the date of issuance. The holder of Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock and Senior Common Stock are entitled to dividends as declared by our Board. Subject to the rights of the holders of the Preferred Stock, our Board may declare dividends on the Common Stock; provided, that dividends on Class C Common Stock and Class D Common Stock may only be paid up to the amount by which funds legally available for such dividends exceed the excess of (1) fair market value of the assets of TeleCorp Holding less TeleCorp Holding's liabilities over (2) the aggregate par value of Class C Common Stock and Class D Common Stock, at our Board's discretion. Dividends may only be paid on the other classes of Common Stock up to the amount legally available after subtracting the maximum amount payable in respect of Class C Common Stock and Class D Common Stock, at our Board's discretion. We may not pay dividends on any shares of any class of our capital stock if, at such time: -80- . we are insolvent or will be rendered insolvent by such payments; or . law or any of our agreements prohibits such dividend payments. Further, our restated certificate of incorporation restricts our ability to pay any dividends on any class of capital stock to the extent shares of capital stock ranking senior to or on a parity with such class remain outstanding or dividends on such senior or parity shares have not been paid in full. Liquidation Preference The holders of Preferred Stock are entitled to certain preferences with respect to distributions upon our liquidation, dissolution or winding up as follows: . Holders of Series A Preferred Stock and Series B Preferred Stock are entitled to a preference per share equal to $1,000 plus accrued and unpaid dividends on such shares. . Holders of Series C Preferred Stock are entitled to a preference per share equal to the paid-in capital per share of Series C Preferred Stock together with interest on $1,000 from the date of issuance at a rate of 6% per annum, compounded quarterly, less the amount of any dividends paid on such share, plus accrued and unpaid dividends. . Holders of Series D Preferred Stock are entitled to a preference per share equal to $1,000 together with interest thereon from the date of issuance at rate of 6% per annum, compounded quarterly, less the amount of any dividends paid on such share, plus accrued and unpaid dividends. . Holders of Series E Preferred Stock are entitled to a preference per share equal to the amount of accrued and unpaid dividends on such share, together with interest on $1,000 from the date of issuance at a rate of 6% per annum, compounded quarterly, less the amount of any dividends declared and paid on such share. . Holders of Series F Preferred Stock are entitled to a preference equal to $.01 plus accrued and unpaid dividends on such shares. . Holders of Senior Common Stock are entitled to a preference per share equal to the liquidation preference associated with the shares of Series D Preferred Stock for all shares of Series D Preferred Stock converted into Senior Common Stock plus the liquidation preference associated with the shares of Series F Preferred Stock for all shares of Series F Preferred Stock converted into Senior Common Stock, divided by the number of shares of Senior Common Stock into which shares of Series D Preferred Stock and Series F Preferred Stock were converted. Following payment of all amounts payable to the holders of Preferred Stock upon our liquidation, dissolution or winding up, the holders of Class C Common Stock and Class D Common Stock shall be entitled to receive the fair market value of the assets of TeleCorp Holding less TeleCorp Holding's liabilities. The holders of the other classes of Common Stock shall be entitled to receive the remaining amounts available for distribution. Transfer Restriction Certain of our stockholders have entered into agreements that restrict transfer of their shares and provide for the happening of certain events, such as share conversions. See "Certain Relationships and Related Transactions--AT&T Agreements" and "--Management Agreement." Our restated certificate of incorporation provides that, upon the happening of certain events described in the Stockholders' Agreement, we have the right to exchange all or certain of the shares of Series A Preferred Stock, Series D Preferred Stock, Series F Preferred Stock, Senior Common Stock and Common Stock held by AT&T for an equal number of shares of Series B Preferred Stock. See "Certain Relationships and Related Transactions--AT&T Agreements." -81- DESCRIPTION OF THE NOTES General As used in this section entitled "Description of the Notes," the terms "we," "us" and "our" means TeleCorp PCS, Inc., a Delaware corporation, but does not include any of our subsidiaries. Capitalized terms used in this section and not otherwise defined have the meanings set forth under "--Certain Definitions." The Old Notes have been and the Exchange Notes will be, upon request, from us issued under the Indenture, dated as of April 23, 1999 (the "Indenture"), among us, TeleCorp Communications, as our subsidiary guarantor, and Bankers Trust Company, as Trustee (the "Trustee"), a copy of which is available. The following summary of certain provisions of the Indenture, the Old Notes and the Exchange Notes is not complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the Indenture, including the definitions of certain terms in and those terms made a part of the Indenture and the Notes by the TIA. Principal of, premium, if any, and interest on the Notes will be payable, and the Notes may be exchanged or transferred, at our office or agency in the Borough of Manhattan, The City of New York (which initially shall be the corporate trust office of the Trustee, at 4 Albany Street, New York, New York 10006), except that, at our option, payment of interest may be made by check mailed to the registered holders of the Notes at their registered addresses. The Notes are and will be issued only in fully registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000. No service charge will be made for any registration of transfer or exchange of Notes, but we may require payment of a sum sufficient to cover any transfer tax or other similar governmental charge payable in connection with such transfer or exchange. Terms of the Notes The Notes are our unsecured senior subordinated obligations, limited to $575 million aggregate principal amount at maturity, and will mature on April 15, 2009. Cash interest will not accrue or be payable on the Notes prior to April 15, 2004. Cash interest will accrue at the rate per annum shown on the front cover page of this prospectus from April 15, 2004, or from the most recent date to which interest has been paid or provided for, payable semiannually to holders of record at the close of business on the April 1 or October 1 immediately preceding the interest payment date on April 15 and October 15 of each year, commencing October 15, 2004. We will pay cash interest on overdue principal at 1% per annum in excess of such rate, and we will pay interest on overdue installments of cash interest at such higher rate to the extent lawful. Optional Redemption Except as set forth in the next paragraph, the Notes will not be redeemable at our option prior to April 15, 2004. After April 15, 2004, we may redeem the Notes, in whole or in part, on not less than 30, nor more than 60, days prior notice, at the following redemption prices (expressed as percentages of principal amount at maturity), plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest, if any, due on the relevant interest payment date), if redeemed during the 12-month period commencing on April 15 of the years set forth below: Year Redemption Price - ---- ---------------- 2004................................................ 105.813% 2005................................................ 103.875% 2006................................................ 101.938% 2007 and thereafter................................. 100.000% In addition, at any time and from time to time prior to April 15, 2002, we may redeem up to a maximum of 35% of the aggregate principal amount at maturity of the Notes with the proceeds of one or more Equity Offerings by us, at a redemption price equal to 111 5/8% of the Accreted Value on the redemption date; provided, however, that, after giving effect to any such redemption at least 65% of the aggregate principal amount at maturity of the Notes remains outstanding. In addition, any such redemption shall be made within 60 days of such Equity Offering upon not less than 30 nor more than 60 days notice mailed to each holder of Notes being redeemed and otherwise in accordance with the procedures set forth in the Indenture. -82- Selection In the case of any partial redemption, selection of the Notes for redemption will be made by the Trustee on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion shall deem to be fair and appropriate, although Notes in denominations of $1,000 or less will not be redeemed in part. If any Note is to be redeemed in part only, the notice of redemption relating to such Note shall state the portion of such Note to be redeemed. A new Note equal to the unredeemed portion of such Note will be issued in the name of the holder upon cancellation of the original Note. Ranking The Indebtedness evidenced by the Notes: . is our unsecured Senior Subordinated Indebtedness; . is subordinated in right of payment, as set forth in the Indenture, to all of our existing and future Senior Indebtedness; . is pari passu in right of payment with all of our existing and future Senior Subordinated Indebtedness; . is senior in right of payment to all of our existing and future Subordinated Indebtedness; and . is effectively subordinated to any of our Secured Indebtedness and any Senior Indebtedness of our Subsidiaries to the extent of the value of the assets securing such Indebtedness. The Notes are guaranteed by TeleCorp Communications, one of our Subsidiaries, and may in the future be guaranteed by certain other of our Subsidiaries that Incur Indebtedness. The Indebtedness evidenced by the subsidiary guarantees: . is unsecured Senior Subordinated Indebtedness of each of our subsidiary guarantors; . is subordinated in right of payment, as set forth in the Indenture, to all existing and future Senior Indebtedness of each subsidiary guarantor; . is pari passu in right of payment with all existing and future Senior Subordinated Indebtedness of each of our subsidiary guarantors; . is senior in right of payment to all existing and future Subordinated Indebtedness of each of our subsidiary guarantors; and . is effectively subordinated to any Secured Indebtedness of each of our subsidiary guarantors and their subsidiaries to the extent of the value of the assets securing such Indebtedness. Payment from the money or the proceeds of U.S. Government Obligations held in any defeasance trust described under "--Defeasance," however, is not subordinated to any Senior Indebtedness or subject to the restrictions described within this offer. We conduct substantially all of our operations through our Subsidiaries. Claims of creditors of such Subsidiaries, including trade creditors, and claims of preferred stockholders, if any, of such Subsidiaries generally will have priority with respect to the assets and earnings of such Subsidiaries over the claims of our creditors, including holders of the Notes. The Notes, therefore, are effectively subordinated to creditors, including trade creditors, and preferred stockholders, if any, of our Subsidiaries. As of March 31, 1999, on a pro forma basis after giving effect to the Transactions, the total liabilities of our Subsidiaries would have been approximately $512.1 million, including trade payables. Although the Indenture contains limitations on the Incurrence of Indebtedness by, and the issuance of preferred stock of, certain of our Subsidiaries, such limitations are subject to a number of significant qualifications. As of March 31, 1999, on a pro forma basis after giving effect to the Transactions: . with respect to us, -83- . our outstanding Senior Indebtedness would have been $225.0 million (exclusive of unused commitments under the Credit Agreement and additional senior indebtedness of our subsidiaries), all of which would have been Secured Indebtedness; . we would have had no outstanding Senior Subordinated Indebtedness other than the Notes; and . our outstanding Indebtedness that would have been subordinate or junior in right of payment to the Notes would have been $40.5 million, including $0.5 million of interest paid in kind; . with respect to our subsidiary guarantors, . the outstanding debt of our subsidiary guarantors would have been $225.0 million (consisting entirely of a guarantee of Indebtedness under the Credit Agreement); . our subsidiary guarantors would have had no Senior Subordinated Indebtedness outstanding other than the Subsidiary Guarantee; . our subsidiary guarantors would have had no outstanding Indebtedness that would be subordinate or junior in right of payment to the Subsidiary Guarantee; and . with respect to our Subsidiaries that will not guarantee the Notes, . the outstanding Indebtedness of the Subsidiaries that will not guarantee the Notes would have been $242.5 million, consisting of $20.7 million of FCC Debt, which is shown on our balance sheet net of discounts of $3.2 million reflecting the below market interest rates on the debt, and $225.0 million of guarantees of Indebtedness under the Credit Agreement; . our Subsidiaries that will not guarantee the Notes would have had total liabilities of $320.8 million, consisting of $20.7 million, of FCC Debt, $24.8 million of trade payables, $4.1 million of accrued and other expenses and $274.4 million of intercompany amounts payable. The FCC Debt is shown on our balance sheet net of discounts of $3.2 million reflecting the below market interest rates on the debt. Although the Indenture limits the amount of additional Indebtedness which we may Incur, under certain circumstances the amount of such Indebtedness could be substantial and, in any case, such Indebtedness may be Senior Indebtedness. See "--Certain Covenants--Limitation on Incurrence of Indebtedness." "Senior Indebtedness" means the principal of, premium (if any) and accrued and unpaid interest (including interest accruing on or after our filing of any petition in bankruptcy or for our reorganization, regardless of whether or not a claim for post-filing interest is allowed in such proceedings) on, and fees and other amounts owing in respect of Bank Indebtedness and all of our other Indebtedness, including FCC Debt, whether outstanding on the date of the Indenture or thereafter Incurred, unless in the instrument creating or evidencing the same or under which the same is outstanding it is provided that such obligations are not superior in right of payment to the Notes; provided, however, that Senior Indebtedness shall not include: . any of our obligations to any of our Subsidiaries; . any liability for federal, state, local or other taxes that we owe; . any accounts payable or other liability to trade creditors arising in the ordinary course of business (including guarantees of or instruments evidencing such liabilities); . any of our Indebtedness or obligations, and any accrued and unpaid interest in respect of such Indebtedness or obligations, that by its terms is subordinate or junior in any respect to any of our other Indebtedness or obligations, including any of our Senior Subordinated Indebtedness and any of our Subordinated Indebtedness; . any obligations with respect to any Capital Stock; or . any Indebtedness Incurred in violation of the Indenture. -84- "Senior Indebtedness" of any our subsidiary guarantors has a correlative meaning. Only Senior Indebtedness will rank senior to the Notes in accordance with the provisions of the Indenture. The Notes will in all respects rank pari passu with all of our other Senior Subordinated Indebtedness. We have agreed in the Indenture that we will not Incur, directly or indirectly, any Indebtedness which is subordinate or junior in ranking in any respect to Senior Indebtedness unless such Indebtedness is Senior Subordinated Indebtedness or is expressly subordinated in right of payment to Senior Subordinated Indebtedness. Unsecured Indebtedness is not deemed to be subordinate or junior to Secured Indebtedness merely because it is unsecured. We may not pay principal of, premium, if any, or interest on, the Notes or make any deposit under the provisions described under "--Defeasance" and may not otherwise repurchase, redeem or otherwise retire any Notes (collectively, "pay the Notes"), other than payments made with money or U.S. Government Obligations previously deposited in the defeasance trust described under "--Defeasance," if: (1) any Designated Senior Indebtedness is not paid when due; or (2) any other default on such Designated Senior Indebtedness occurs and the maturity of such Designated Senior Indebtedness is accelerated in accordance with its terms unless, in either case: (x) the default has been cured or waived and any such acceleration has been rescinded; or (y) such Designated Senior Indebtedness has been paid in full. We may pay the Notes without regard to the foregoing, however, if we and the Trustee receive written notice approving such payment from the Representative of the Designated Senior Indebtedness with respect to whichever of the events set forth in clause (1) or (2) of the immediately preceding sentence has occurred and is continuing. During the continuance of any default (other than a default described in clause (1) or (2) of the second preceding sentence) with respect to any Designated Senior Indebtedness under which the maturity may be accelerated immediately without further notice (except such notice as may be required to effect such acceleration) or upon the expiration of any applicable grace periods, we may not pay the Notes for a period (a "Payment Blockage Period") commencing upon the receipt by the Trustee (with a copy to us) of written notice (a "Blockage Notice") of such default from the Representative of such Designated Senior Indebtedness specifying an election to effect a Payment Blockage Period and ending 179 days thereafter (or earlier if such Payment Blockage Period is terminated: . by written notice to the Trustee and us from the Person or Persons who gave such Blockage Notice; . by repayment in full of such Designated Senior Indebtedness; or . because the default giving rise to such Blockage Notice is no longer continuing). Despite the provisions described in the immediately preceding sentence (but subject to the provisions contained in the first two sentences of this paragraph), unless the holders of such Designated Senior Indebtedness or the Representative of such holders have accelerated the maturity of such Designated Senior Indebtedness, we may resume payments on the Notes after the end of such Payment Blockage Period. Not more than one Blockage Notice may be given in any period of 360 consecutive days, irrespective of the number of defaults with respect to Designated Senior Indebtedness during such period. However, if any Blockage Notice within such 360-day period is given by or on behalf of any holders of Designated Senior Indebtedness other than the Bank Indebtedness, the Representative of the Bank Indebtedness may give another Blockage Notice within such period. In no event, however, may the total number of days during which any Payment Blockage Period or Payment Blockage Periods is or are in effect exceed 179 days in the aggregate during any period of 360 consecutive days. For purposes of this paragraph, no default or event of default that existed or was continuing on the date of the commencement of any Payment Blockage Period with respect to the Designated Senior Indebtedness initiating such Payment Blockage Period shall be, or be made, the basis of the commencement of a subsequent Payment Blockage Period by the Representative of such Designated Senior Indebtedness, whether or not within a period of 360 consecutive days, unless such default or event of default shall have been cured or waived for a period of not less than 90 consecutive days. -85- Upon any payment or distribution of our assets to creditors upon our total or partial liquidation or our total or partial dissolution or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to us or our property: . the holders of our Senior Indebtedness will be entitled to receive payment in full in cash of such Senior Indebtedness before Noteholders are entitled to receive any payment of principal of, or interest on, the Notes; and . until such Senior Indebtedness is paid in full, any payment or distribution to which Noteholders would be entitled but for the subordination provisions of the Indenture will be made to holders of such Senior Indebtedness as their interests may appear, except that Noteholders may receive shares of stock and any debt securities that are subordinated to such Senior Indebtedness and any securities exchanged for such Senior Indebtedness to at least the same extent as the Notes. If a distribution is made to Noteholders that, due to the subordination provisions of the Indenture, should not have been made to them, such Noteholders will be required to hold such distribution in trust for the holders of our Senior Indebtedness and pay it over to them as their interests may appear. If payment of the Notes is accelerated because of an Event of Default, we or the Trustee shall promptly notify the holders of the Designated Senior Indebtedness or their Representative of the acceleration. If any Designated Senior Indebtedness is outstanding, we may not pay the Notes until five Business Days after such holders or the Representative of the Designated Senior Indebtedness receive notice of such acceleration and, thereafter, may pay the Notes only if the subordination provisions of the Indenture otherwise permit payment at that time. By reason of the subordination provisions in the Indenture, in the event of insolvency, our creditors who are holders of our Senior Indebtedness may recover more, ratably, than the Noteholders. Our creditors who are not holders of our Senior Indebtedness or of our Senior Subordinated Indebtedness (including the Notes) may recover less, ratably, than holders of our Senior Indebtedness and may recover more, ratably, than the holders of our Subordinated Indebtedness. The subordination provisions in the Indenture will not apply to payments made with money or U.S. Government Obligations previously deposited in the defeasance trust described under "--Defeasance." Subsidiary Guarantees Our subsidiary guarantor and certain of our future subsidiaries, as described below, as primary obligors and not merely as sureties, jointly and severally, irrevocably and unconditionally guarantee on an unsecured senior subordinated basis the performance and full and punctual payment when due, whether at Stated Maturity, by acceleration or otherwise, of all of our obligations under the Indenture and the Notes, whether for payment of principal of, or interest on, or liquidated damages in respect of, the Notes, expenses, indemnification or otherwise (all such obligations guaranteed by the subsidiary guarantors being called the "Guaranteed Obligations") by executing a Subsidiary Guarantee. Our subsidiary guarantors agree to pay, in addition to the amount stated above, any and all costs and expenses, including reasonable counsel fees and expenses, incurred by the Trustee or the holders of Notes in enforcing any rights under the Subsidiary Guarantees. Each Subsidiary Guarantee is limited in amount to an amount not to exceed the maximum amount that can be guaranteed by the applicable subsidiary guarantor without rendering the Subsidiary Guarantee, as it relates to such subsidiary guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. We will cause each Restricted Subsidiary that Incurs Indebtedness to become a subsidiary guarantor; provided that we will not cause any Special Purpose Subsidiary to become a subsidiary guarantor unless such Special Purpose Subsidiary Incurs Indebtedness other than Indebtedness under the Credit Agreement (or any Refinancing Indebtedness Incurred to Refinance any such Indebtedness) or FCC Debt. See "--Certain Covenants--Future Subsidiary Guarantors." The obligations of each of our subsidiary guarantors under its Subsidiary Guarantee are senior subordinated obligations. As such, the rights of Noteholders to receive payment from our subsidiary guarantor under its Subsidiary Guarantee are subordinated in right of payment to the rights of holders of Senior Indebtedness of such subsidiary guarantor. The terms of the subordination provisions described under "--Ranking" with respect to our obligations under the Notes apply equally to each of our subsidiary guarantors and the obligations of such subsidiary guarantor under its Subsidiary Guarantee. Each Subsidiary Guarantee is a continuing guarantee and shall: . remain in full force and effect until payment in full of all the Guaranteed Obligations; -86- . be binding upon each of our subsidiary guarantors and its successors; and . inure to the benefit of and be enforceable by the Trustee, the holders of the Notes and their successors, transferees and assigns. The Indenture provides that upon the merger or consolidation of our subsidiary guarantors with or into any Person, other than us, any of our Subsidiaries or any of our Affiliates, in a transaction in which such subsidiary guarantor is not the surviving entity of such merger or consolidation, such subsidiary guarantor shall be released and discharged from its obligations under its Subsidiary Guarantee. The Indenture also provides that if we or any of our Subsidiaries sell all the Capital Stock of any of our subsidiary guarantors, including by issuance or otherwise, other than to us, to any of our Subsidiaries or to any of our Affiliates, in a transaction constituting an Asset Disposition (or which, but for the provisions of clause (3) of such term, would constitute an Asset Disposition) and: (1) the Net Available Proceeds from such Asset Disposition are used in accordance with the covenant described under "--Certain Covenants-- Limitation on Certain Asset Dispositions;" or (2) we deliver to the Trustee an Officers' Certificate to the effect that the Net Available Proceeds from such Asset Disposition will be used in accordance with the covenant described under "--Certain Covenants-- Limitation on Certain Asset Dispositions" within the time limits specified by such covenant, then such subsidiary guarantor shall be released and discharged from its obligations under its Subsidiary Guarantee upon such use, in the case of clause (1) above or upon such delivery, in the case of clause (2) above. In addition, any of our subsidiary guarantors that becomes our subsidiary guarantor as a consequence of its guarantee of certain Indebtedness permitted under the Indenture and that is released and discharged from such guarantee will be released and discharged from its Subsidiary Guarantee upon delivery of an Officers' Certificate certifying such release and discharge from such guarantee to the Trustee. Change of Control Upon the occurrence of any of the following events (each a "Change of Control"), each holder of Notes will have the right to require us to repurchase all or any part of such holder's Notes at a purchase price in cash equal to (1) 101% of the Accreted Value on the Purchase Date, if such date is on or before April 15, 2004, or (2) 101% of the principal amount at maturity, plus accrued and unpaid interest, if any, to the Purchase Date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if such date is after April 15, 2004: . any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than a Permitted Holder or Permitted Holders or a person or group controlled by a Permitted Holder or Permitted Holders, becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have "beneficial ownership" of all such securities that such person has the right to acquire within one year, upon the happening of an event or otherwise) directly or indirectly, of our securities representing 50% or more of the combined voting power of our then outstanding Voting Stock; . the following individuals cease for any reason to constitute more than a majority of the number of directors then serving on our Board: individuals who, on April 23, 1999, constituted our Board and any new director (other than 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 our directors) whose appointment or election by our Board or nomination for election by our stockholders was approved by the vote of at least two-thirds of the directors then still in office or whose appointment, election or nomination was previously so approved or recommended or made in accordance with the terms of the Stockholders' Agreement; or . our stockholders shall approve any Plan of Liquidation (whether or not otherwise in compliance with the provisions of the Indenture). Within 30 days following any Change of Control, we will be required to mail a notice to each holder of the Notes, with a copy to the Trustee (the "Change of Control Offer"), stating that we are commencing an Offer to Purchase all Old Notes at a purchase price in cash equal to (1) 101% of the Accreted Value on the Purchase Date, if such date is on or before April 15, 2004, or (2) 101% of the principal amount at maturity, plus accrued and unpaid interest, if any, to the Purchase Date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if such date is after April 15, 2004. -87- We will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by us and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer. We will be required to comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of the Notes under this covenant. To the extent that the provisions of any securities laws or regulations conflict with provisions of this covenant, we will be required to comply with the applicable securities laws and regulations and will not be deemed to have breached our obligations under this covenant by virtue of our compliance with such securities laws and regulations. If, at the time of a Change of Control, the terms of the Bank Indebtedness restrict or prohibit the repurchase of Notes under this covenant, then, prior to the mailing of the notice to holders of the Notes as provided in the immediately following paragraph, but in any event within 30 days following any Change of Control, we will be required to: . repay in full all Bank Indebtedness; or . obtain the requisite consent under the agreements governing such Bank Indebtedness to permit the repurchase of the Notes as required by this covenant. The Change of Control purchase feature is a result of negotiations between us and the initial purchasers of the Old Notes. We have no present intention to engage in a transaction involving a Change of Control, although it is possible that we may decide to do so in the future. Subject to the limitations described under "--Certain Covenants," we could, in the future, enter into certain transactions, including acquisitions, refinancings or other recapitalizations, that would not constitute a Change of Control under the Indenture, but that could increase the amount of Indebtedness outstanding at such time or otherwise affect our capital structure or credit ratings. Restrictions on our ability to Incur additional Indebtedness are contained in the covenant described under "Certain Covenants--Limitation on Incurrence of Indebtedness." Such restrictions may only be waived with the consent of the holders of a majority in principal amount at maturity of the Notes then outstanding. Except for the limitations contained in such covenants, however, the Indenture does not contain any covenants or provisions that may afford holders of the Notes protection in the event of a highly leveraged transaction. The occurrence of certain of the events that would constitute a Change of Control would constitute a default under the Credit Agreement. Our future Senior Indebtedness may also contain prohibitions of certain events which would constitute a Change of Control or require such Senior Indebtedness to be repurchased upon a Change of Control. Moreover, the exercise by holders of the Notes of their right to require us to repurchase the Notes could cause a default under such Senior Indebtedness, even if the Change of Control itself does not, due to the financial effect of such repurchase on us. Finally, our ability to pay cash to holders of the Notes upon a repurchase may be limited by our then existing financial resources. There can be no assurance that sufficient funds will be available when necessary to make any required repurchases. The provisions of the Indenture related to our obligation to make a Change of Control Offer as a result of a Change of Control may be waived or modified with the written consent of the holders of a majority in principal amount at maturity of the Notes. Certain Covenants The Indenture contains certain covenants including, among others, the following: Limitation on Incurrence of Indebtedness. The Indenture provides that we will not, and will not cause or permit any Restricted Subsidiary to, directly or indirectly, Incur any Indebtedness (including Acquired Indebtedness), except: (1) Indebtedness of us or any of our subsidiary guarantors if, immediately after giving effect to the Incurrence of such Indebtedness and the receipt and application of the net proceeds therefrom (including, without limitation, the application or use of the net proceeds therefrom to repay Indebtedness, consummate an Asset Acquisition or make any Restricted Payment): (a) the ratio of (x) Total Consolidated Indebtedness to (y) Annualized Pro Forma Consolidated Operating Cash Flow would be less than: 7.0 to 1.0, if the Indebtedness is to be Incurred prior to April 1, 2005; or 6.0 to 1.0 if the Indebtedness is to be Incurred on or after April 1, 2005; -88- or (b) in the case of any Incurrence of Indebtedness prior to April 1, 2005 only, Total Consolidated Indebtedness would be equal to or less than 75% of Total Invested Capital; (2) Bank Indebtedness of us and our Restricted Subsidiaries in an aggregate principal amount not to exceed $600 million; (3) Indebtedness of us and our Restricted Subsidiaries outstanding from time to time under any Vendor Credit Arrangement; (4) Indebtedness owed by us to any Restricted Subsidiary or Indebtedness owed by a Restricted Subsidiary to us or another Restricted Subsidiary; provided, however, that, upon either (a) the transfer or other disposition by such Restricted Subsidiary or us of any Indebtedness so permitted under this clause (4) to a Person other than us or another Restricted Subsidiary or (b) the issuance (other than of directors' qualifying shares), sale, transfer or other disposition of shares of Capital Stock or other ownership interests (including by consolidation or merger) of such Restricted Subsidiary to a Person other than us or another such Restricted Subsidiary, the exception provided by this clause (4) shall no longer be applicable to such Indebtedness and such Indebtedness shall be deemed to have been Incurred at the time of any such issuance, sale, transfer or other disposition, as the case may be; (5) Indebtedness of us or any Restricted Subsidiary under any Hedging Agreement to the extent entered into to protect us or such Restricted Subsidiary from fluctuations in interest rates on any other Indebtedness permitted under the Indenture (including the Notes), currency exchange rates or commodity prices and not for speculative purposes; (6) Refinancing Indebtedness Incurred to Refinance any Indebtedness Incurred under the prior clause (1) or (3) above, the Notes or the Subsidiary Guarantees; (7) Indebtedness of us under the Notes and Indebtedness of our subsidiary guarantors under the Subsidiary Guarantees, in each case Incurred in accordance with the Indenture; (8) Capital Lease Obligations of us or any Restricted Subsidiary in an aggregate principal amount not in excess of $25.0 million at any time outstanding; (9) FCC Debt assumed in connection with the Digital Acquisition or the Wireless 2000 Acquisition; (10) Indebtedness of us or any Restricted Subsidiary consisting of a guarantee of Indebtedness of us or a Restricted Subsidiary that was permitted to be Incurred by another provision of this covenant; (11) Indebtedness of us or any Restricted Subsidiary in respect of statutory obligations, performance, surety or appeal bonds or other obligations of a like nature Incurred in the ordinary course of business; (12) Indebtedness of a Restricted Subsidiary existing at the time we acquired such Restricted Subsidiary (other than Indebtedness Incurred in connection with, or in contemplation of, the transaction or series of related transactions in which we acquired such Restricted Subsidiary); provided, however, that on the date we acquired such Restricted Subsidiary, we would have been able to Incur $1.00 of additional Indebtedness under clause (1) above after giving effect to the Incurrence of such Indebtedness under this clause (12) and the acquisition of such Restricted Subsidiary and Refinancing Indebtedness Incurred by us or such Restricted Subsidiary in respect of Indebtedness Incurred by such Restricted Subsidiary under this clause (12); and (13) Indebtedness of us not otherwise permitted to be Incurred under clauses (1) through (12) above which, together with any other outstanding Indebtedness Incurred under this clause (13), has an aggregate principal amount not in excess of $75 million at any time outstanding. Indebtedness of a Person existing at the time such Person becomes a Restricted Subsidiary or which a Lien on an asset we or a Restricted Subsidiary acquired secures (whether or not such Indebtedness is assumed by the acquiring person) shall be deemed Incurred at the time the Person becomes a Restricted Subsidiary or at the time of the asset acquisition, as the case may be. For purposes of determining compliance with this covenant: -89- (1) if an item of Indebtedness meets the criteria of more than one of the categories of Indebtedness permitted under clauses (1) through (13) above, in our sole discretion, we may classify such item of Indebtedness in any manner that complies with this covenant and may from time to time reclassify such items of Indebtedness in any manner that would comply with this covenant at the time of such reclassification; (2) Indebtedness permitted by this covenant need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such provision and in part by one or more other provisions of this covenant permitting such Indebtedness; (3) if Indebtedness meets the criteria of more than one of the types of Indebtedness described in this covenant, in our sole discretion, we may classify such Indebtedness and only be required to include the amount of such Indebtedness in one of such clauses; and (4) accrual of interest (including interest paid-in-kind) and the accretion of accreted value will not be deemed to be an Incurrence of Indebtedness for purposes of this covenant. Despite any other provision of this covenant: (1) the maximum amount of Indebtedness that we or any Restricted Subsidiary may Incur under this covenant shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rates of currencies; and (2) Indebtedness Incurred under to the Credit Agreement prior to or on the date of the Indenture shall be treated as Incurred under clause (2) of the first paragraph of this covenant. Limitation on Layered Indebtedness. The Indenture provides that we will not: (1) directly or indirectly Incur any Indebtedness that by its terms would expressly rank senior in right of payment to the Notes and rank subordinate in right of payment to any of our other Indebtedness; or (2) cause or permit any of our subsidiary guarantors to, and none of our subsidiary guarantors will, directly or indirectly, Incur any Indebtedness that by its terms would expressly rank senior in right of payment to the Subsidiary Guarantee of such subsidiary guarantor and rank subordinate in right of payment to any other Indebtedness of such subsidiary guarantor; provided that no Indebtedness shall be deemed to be subordinated solely by virtue of being unsecured. Limitation on Restricted Payments. The Indenture provides that we will not, and will not cause or permit any Restricted Subsidiary to, directly or indirectly, on or prior to December 31, 2002: (1) declare or pay any dividend, or make any distribution of any kind or character, whether in cash, property or securities, in respect of any class of our Capital Stock, excluding any dividends or distributions payable solely in shares of our Qualified Stock or in options, warrants or other rights to acquire our Qualified Stock; (2) purchase, redeem or otherwise acquire or retire for value any shares of our Capital Stock, any options, warrants or rights to purchase or acquire such shares or any securities convertible or exchangeable into such shares, other than any such shares of Capital Stock, options, warrants, rights or securities that we or a Restricted Subsidiary own; (3) make any Investment, other than a Permitted Investment, in any Person other than us or a Restricted Subsidiary; or (4) redeem, defease, repurchase, retire or otherwise acquire or retire for value, prior to its scheduled maturity, repayment or any sinking fund payment, Subordinated Indebtedness or make any payment of interest or premium on, or distribution of any kind or character, whether in cash, property or securities, in respect of, the Series A Notes, excluding payments of interest or distributions payable solely in additional Series A Notes. Each of the transactions described in clauses (1) through (4), other than any exception to any such clause, is a "Restricted Payment." At any time after December 31, 2002, we will not, and will not cause or permit any Restricted Subsidiary to, directly or indirectly, make a Restricted Payment if, at the time of: -90- (A) a Default or an Event of Default shall have occurred and be continuing at the time of or after giving effect to such Restricted Payment; (B) immediately after giving effect to such Restricted Payment, we could not Incur at least $1.00 of additional Indebtedness under clause (1) of the covenant described under "--Limitation on Incurrence of Indebtedness;" and (C) immediately upon giving effect to such Restricted Payment, the aggregate amount of all Restricted Payments declared or made on or after April 23, 1999, including any Designation Amount, exceeds the sum, without duplication, of: (1) the amount of (x) our Consolidated Cash Flow after December 31, 2002, through the end of the latest full fiscal quarter for which our consolidated financial statements are available preceding the date of such Restricted Payment (treated as a single accounting period), less (y) 150% of our cumulative Consolidated Interest Expense after December 31, 2002, through the end of the latest full fiscal quarter for which our consolidated financial statements are available preceding the date of such Restricted Payment (treated as a single accounting period); plus (2) the aggregate net cash proceeds, other than Excluded Cash Proceeds, that we received as a capital contribution in respect of Qualified Stock or from the proceeds of a sale of Qualified Stock made after April 23, 1999, excluding in each case (x) the proceeds from a sale of Qualified Stock to a Restricted Subsidiary and (y) the proceeds from a sale of Qualified Stock to an employee stock ownership plan or other trust that we or any of our Subsidiaries established; plus (3) the aggregate net cash proceeds that we or any Restricted Subsidiary received from the sale, disposition or repayment, other than to us or a Restricted Subsidiary, of any Investment made after the date of the Indenture and constituting a Restricted Payment in an amount equal to the lesser of (x) the return of capital with respect to such Investment and (y) the initial amount of such Investment, in either case, less the cost of disposition of such Investment; plus (4) an amount equal to the consolidated Net Investment on the date of Revocation made by us and/or any Restricted Subsidiary in any of our Subsidiaries that has been designated as an Unrestricted Subsidiary after April 23, 1999 upon its redesignation as a Restricted Subsidiary in accordance with the covenant described under "--Limitation on Designations of Unrestricted Subsidiaries." For purposes of: (1) the preceding clause (C)(2), the value of the aggregate net cash proceeds that we received from, or as a capital contribution in connection with, the issuance of Qualified Stock either upon the conversion of our convertible Indebtedness or the convertible Indebtedness of any of our Restricted Subsidiaries or in exchange for our outstanding Indebtedness or the outstanding Indebtedness of any of our Restricted Subsidiaries or upon the exercise of options, warrants or rights will be the net cash proceeds that we or any Restricted Subsidiary received upon the issuance of such Indebtedness, options, warrants or rights, plus the incremental amount that we or any Restricted Subsidiary received upon the conversion, exchange or exercise; (2) the preceding clause (C)(4), the value of the consolidated Net Investment on the date of Revocation shall be equal to the Fair Market Value of the aggregate amount of our or any Restricted Subsidiary's Investments in such of our Subsidiaries on the applicable date of Designation; and (3) determining the amount expended for Restricted Payments, cash distributed shall be valued at the face amount and property other than cash shall be valued at its Fair Market Value on the date we make or a Restricted Subsidiary makes such Restricted Payment, as the case may be. The provisions of this covenant shall not prohibit: (1) the payment of any dividend or distribution within 60 days after the date of its declaration, if at the date of declaration the payment would comply with the provisions of the Indenture; (2) so long as no Default or Event of Default shall have occurred and be continuing, the purchase, redemption, retirement or other acquisition of any of our Capital Stock out of the net cash proceeds of the substantially concurrent capital contribution to us in connection with Qualified Stock or out of the net cash proceeds that we received from the substantially concurrent issue or sale, other than to a Restricted Subsidiary or to an employee stock ownership plan or -91- other trust that we or any of our Subsidiaries established, of Qualified Stock; provided that (a) any such net cash proceeds shall be excluded from clause (C)(2) of the second preceding paragraph and (b) such proceeds do not constitute Excluded Cash Proceeds; (3) so long as no Default or Event of Default shall have occurred and be continuing, the purchase, redemption, retirement, defeasance or other acquisition of our Subordinated Indebtedness made by exchange for or conversion into, or out of the net cash proceeds that we received, or out of a capital contribution to us in connection with a concurrent issue and sale, other than to a Restricted Subsidiary, of: . Qualified Stock, provided that . any such net cash proceeds are excluded from clause (C)(2) of the second preceding paragraph, . such proceeds do not constitute Excluded Cash Proceeds, and . such proceeds, if from a sale other than a Public Sale, are not applied to optionally redeem the Notes on or prior to April 15, 2002; or . other of our Subordinated Indebtedness that has an Average Life equal to or greater than the Average Life of the Subordinated Indebtedness being purchased, redeemed, retired, defeased or otherwise acquired and that is subordinated in right of payment to the Notes at least to the same extent as the Subordinated Indebtedness being purchased, redeemed, retired, defeased or otherwise acquired; (4) so long as no Default or Event of Default shall have occurred and be continuing, the making of a direct or indirect Investment constituting a Restricted Payment in an amount not to exceed the amount of the proceeds of a concurrent capital contribution in respect of Qualified Stock or from the issue or sale, other than to a Restricted Subsidiary, of our Qualified Stock; provided that (a) any such net cash proceeds are excluded from clause (C)(2) of the second preceding paragraph, (b) such proceeds do not constitute Excluded Cash Proceeds and (c) such proceeds, if from a sale other than a Public Sale, are not applied to optionally redeem the Notes on or prior to April 15, 2002; (5) so long as no Default or Event of Default shall have occurred and be continuing and so long as, immediately after giving effect to such Investment, we could incur at least $1.00 of additional Indebtedness under clause (1) of the covenant described under "--Limitation on Incurrence of Indebtedness," our making of a direct or indirect Investment constituting a Restricted Payment in any Person incorporated, formed or created to acquire one or more Qualified Licenses through participation in any auction or reauction of Licenses conducted by the FCC, in an amount not to exceed $50.0 million at any time outstanding; provided that . such Person shall qualify as an "entrepreneur" under the Communications Act in the case of any proposed acquisition of Qualified Licenses through participation in any auction or reauction of C-Block Licenses or F-Block Licenses conducted by the FCC; and . we shall have received, prior to making such Investment, from one or more Strategic Equity Investors, irrevocable, unconditional commitments to purchase our Qualified Stock, at the earliest to occur of: . the date that is 30 days after the date on which such Person acquires any such Qualified Licenses; . the date that is 30 days after the date on which such Person withdraws from such auction or reauction; . the date that is 30 days after the date the FCC terminates such auction or reauction; and . the date that is 180 days after the date on which any amounts were deposited by or on behalf of such Person in escrow with the FCC in connection with such proposed acquisition of Qualified Licenses; and . in an amount not less than the amount of such Investment, plus the amount of all fees, expenses and other costs incurred in connection with such participation ; provided further that if at any time the aggregate net cash proceeds that such Strategic Equity Investors pay to us shall exceed the amount of such Investment plus all fees, expenses and other costs incurred in connection with such participation (a) such commitments may terminate in accordance with their terms to the extent, but only to the extent, of -92- such excess and (b) we may rescind all or a portion of the payments made by the Strategic Equity Investors for such Qualified Stock and redeem all or a portion of such Qualified Stock in an amount not greater than such excess; provided further that: . the aggregate net proceeds that we receive upon the purchase by such Strategic Equity Investors of such Qualified Stock are excluded from clause (C)(2) of the second preceding paragraph unless such Person becomes a Restricted Subsidiary or merges, consolidates or amalgamates with or into, or transfers or conveys substantially all its assets to us or a Restricted Subsidiary, or liquidates into us or a Restricted Subsidiary; . such proceeds shall not constitute Excluded Cash Proceeds; and . such proceeds are not applied to optionally redeem the Notes prior to April 15, 2002; (6) so long as no Default or Event of Default shall have occurred and be continuing and so long as, immediately after giving effect to such Investment, we could Incur at least $1.00 of additional Indebtedness under clause (1) of the covenant described under "--Limitation on Incurrence of Indebtedness," our making of a direct or indirect Investment constituting a Restricted Payment in any Person engaged in a Permitted Business in an amount not to exceed $60 million at any time outstanding; provided that we shall have received, prior to making such Investment, from one or more Strategic Equity Investors, aggregate net cash proceeds from capital contributions or the issuance or sale of our Capital Stock, other than Disqualified Stock, but including Qualified Stock issued upon the conversion of convertible Indebtedness or upon the exercise of options, warrants or rights to purchase Qualified Stock, in an amount equal to the amount of such Investment plus the amount of all fees, expenses and other costs incurred in connection with such Investment (regardless of whether or not such Investment is consummated); provided further that: . the proceeds that we received as capital contributions from, or the purchase of our Capital Stock by, such Strategic Equity Investors are excluded from clause (C)(2) of the second preceding paragraph unless such Person becomes a Restricted Subsidiary or merges, consolidates or amalgamates with or into us or a Restricted Subsidiary, or transfers or conveys substantially all its assets to us or a Restricted Subsidiary, or liquidates into us or a Restricted Subsidiary; . such proceeds shall not constitute Excluded Cash Proceeds; and . such proceeds are not applied to optionally redeem the Notes prior to April 15, 2002; or (7) so long as no Default or Event of Default has occurred and is continuing, the repurchase, redemption, acquisition or retirement for value of any of our Capital Stock held by any member of our management or any of our Subsidiaries under any management equity subscription agreement, stock option agreement, restricted stock agreement or other similar agreement; provided that: . the aggregate amount of such dividends or distributions shall not exceed $4.0 million in any twelve-month period; . any unused amount in any twelve-month period may be carried forward to one or more future twelve-month periods; and . the aggregate of all unused amounts that may be carried forward to any future twelve-month period shall not exceed $16 million. Restricted Payments made under clauses (1) and (7) of the immediately preceding paragraph shall be included when determining available amounts under clause (C) of the third preceding paragraph, Restricted Payments made under clauses (5) and (6) of the immediately preceding paragraph shall be included when determining available amounts under clause (C) of the third preceding paragraph unless, after giving effect to such Investment, such Person becomes a Restricted Subsidiary or merges, consolidates or amalgamates with or into us or a Restricted Subsidiary, or transfers or conveys substantially all its assets to us or a Restricted Subsidiary, or liquidates into us or a Restricted Subsidiary and Restricted Payments made under to clauses (2), (3) and (4) of the immediately preceding paragraph shall not be included when determining available amounts under clause (C) of the third preceding paragraph. -93- Limitation on Restrictions Affecting Restricted Subsidiaries. The Indenture provides that we will not, and will not cause or permit any Restricted Subsidiary to, directly or indirectly, create or otherwise cause or suffer to exist any consensual encumbrances or restrictions of any kind on the ability of any Restricted Subsidiary to: (1) pay, directly or indirectly, dividends, in cash or otherwise, or make any other distributions in respect of its Capital Stock or pay any Indebtedness or other obligation owed to us or any other Restricted Subsidiary; (2) make any Investment in us or any other Restricted Subsidiary; or (3) transfer any of its property or assets to us or any other Restricted Subsidiary, except for such encumbrances or restrictions existing under or by reason of: (A) any agreement in effect on April 23, 1999 as in effect on such date; (B) any agreement relating to any Indebtedness Incurred by such Restricted Subsidiary prior to the date on which we acquired such Restricted Subsidiary and outstanding on such date and not Incurred in anticipation or contemplation of becoming a Restricted Subsidiary; provided, however, that such encumbrance or restriction shall not apply to any of our property or assets or any property or assets of any Restricted Subsidiary other than such Restricted Subsidiary; (C) customary provisions contained in an agreement which has been entered into for the sale or disposition of all or substantially all of the Capital Stock or assets of a Restricted Subsidiary; provided, however, that such encumbrance or restriction is applicable only to such Restricted Subsidiary or its property and assets; (D) any agreement effecting a Refinancing or amendment of Indebtedness Incurred under any agreement referred to in clause (A) or (B) above; provided, however, that the provisions contained in such Refinancing or amendment agreement relating to such encumbrance or restriction are no more restrictive in any material respect than the provisions contained in such agreement referred to in clause (A) or (B) above in the reasonable judgment of our Board; (E) the Indenture; (F) applicable law or any applicable rule, regulation or order; (G) customary provisions restricting subletting or assignment of any lease governing any leasehold interest of any Restricted Subsidiary; (H) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the type referred to in clause (3) of this covenant; and (I) restrictions of the type referred to in clause (3) of this covenant contained in security agreements securing Indebtedness of a Restricted Subsidiary to the extent that such Liens restrict the transfer of property subject to such agreements. Limitation on Certain Asset Dispositions. The Indenture provides that we will not, and will not cause or permit any Restricted Subsidiary to, directly or indirectly, make any Asset Disposition unless: (1) we or such Restricted Subsidiary, as the case may be, receives consideration for such Asset Disposition at least equal to the Fair Market Value of the assets sold or disposed of as determined by our Board in good faith and evidenced by a resolution of our Board filed with the Trustee; (2) other than in the case of a Permitted Asset Swap, not less than 75% of the consideration received by us or such Restricted Subsidiary from the disposition consists of: (A) cash or Cash Equivalents; (B) the assumption of our Indebtedness or Indebtedness of such Restricted Subsidiary, other than non-recourse Indebtedness or any Subordinated Indebtedness, or other obligations relating to such assets (accompanied by an irrevocable and unconditional release of us or such Restricted Subsidiary from all liability on the Indebtedness or other obligations assumed); or -94- (C) notes or other obligations that we or such Restricted Subsidiary received from such transferee or such Restricted Subsidiary convert into cash or Cash Equivalents concurrently with the receipt of such notes or other obligations (to the extent of the cash that we actually received); and (3) all Net Available Proceeds, less any amounts invested within 365 days of such Asset Disposition to acquire all or substantially all of the assets of, or a majority of the Voting Stock of, an entity primarily engaged in a Permitted Business, to make a capital expenditure or to acquire other long-term assets that are used or useful in a Permitted Business, are applied, on or prior to the 365th day after such Asset Disposition, unless and to the extent that we shall determine to make an Offer to Purchase, to the permanent reduction and prepayment of any of our Senior Indebtedness then outstanding, including a permanent reduction of the commitments in respect of such Senior Indebtedness. Any Net Available Proceeds from any Asset Disposition which is subject to the immediately preceding sentence that are not applied as provided in the immediately preceding sentence shall be used promptly after the expiration of the 365th day after such Asset Disposition, or earlier if we so elect, to make an Offer to Purchase Old Notes at a purchase price in cash equal to (a) 100% of the Accreted Value on the Purchase Date, if such Purchase Date is on or before April 15, 2004 and (b) 100% of the principal amount at maturity plus accrued and unpaid interest to the Purchase Date, if such Purchase Date is after April 15, 2004; provided, however, that if we elect or the terms of any other Senior Subordinated Indebtedness require, an offer may be made ratably to purchase the Notes and such other Senior Subordinated Indebtedness. Notwithstanding the foregoing, we may defer making any Offer to Purchase the Old Notes, and any offer to purchase other Senior Subordinated Indebtedness ratably, until there are aggregate unutilized Net Available Proceeds from Asset Dispositions otherwise subject to the two immediately preceding sentences equal to or in excess of $15.0 million, at which time the entire unutilized Net Available Proceeds from Asset Dispositions otherwise subject to the two immediately preceding sentences, and not just the amount in excess of $15.0 million, shall be applied as required under this paragraph. We may use any remaining Net Available Proceeds following the completion of the required Offer to Purchase and any offer to purchase other Senior Subordinated Indebtedness ratably for any other purpose, subject to the other provisions of the Indenture, and the amount of Net Available Proceeds then required to be otherwise applied in accordance with this covenant shall be reset to zero. These provisions will not apply to a transaction consummated in compliance with the provisions of the Indenture described under "--Merger, Consolidation and Certain Sales of Assets." Pending application as set forth above, the Net Available Proceeds of any Asset Disposition may be invested in cash or Cash Equivalents or used to reduce temporarily Indebtedness outstanding under any revolving credit agreement to which we are a party and under which we have Incurred Indebtedness. We must comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of the Notes under this covenant. To the extent that the provisions of any securities laws or regulations conflict with provisions of this covenant, we must comply with the applicable securities laws and regulations and will not be deemed to have breached our obligations under this covenant. Limitation on Transactions with Affiliates. The Indenture provides that we will not, and will not cause or permit any Restricted Subsidiary to, directly or indirectly, conduct any business or enter into, renew or extend any transaction with any of our or their respective Affiliates, including, without limitation, the purchase, sale, lease or exchange of property, the rendering of any service or the making of any guarantee, loan, advance or Investment, either directly or indirectly, unless the terms of such transaction are at least as favorable as the terms that could be obtained at such time by us or such Restricted Subsidiary, as the case may be, in a comparable transaction made on an arms- length basis with a Person that is not such an Affiliate; provided, however, that: (1) in any transaction involving aggregate consideration in excess of $10.0 million, we shall deliver an Officers' Certificate to the Trustee stating that a majority of the disinterested directors of our Board or the board of such Restricted Subsidiary, as the case may be, have determined, in their good faith judgment, that the terms of such transaction are at least as favorable as the terms that could be obtained by us or such Restricted Subsidiary, as the case may be, in a comparable transaction made on an arms-length basis between unaffiliated parties; and (2) if the aggregate consideration is in excess of $25.0 million, we shall also deliver to the Trustee, prior to the consummation of the transaction, the favorable written opinion of a nationally recognized accounting, appraisal or investment banking firm as to the fairness of the transaction to the holders of the Notes, from a financial point of view. Despite the foregoing, the restrictions set forth in this covenant shall not apply to: (1) transactions between or among us and/or any Restricted Subsidiaries; -95- (2) any Restricted Payment or Permitted Investment permitted by the covenant described under "--Limitation on Restricted Payments;" (3) directors' fees, indemnification and similar arrangements, officers' indemnification, employee stock option or employee benefit plans and employee salaries and bonuses paid or created in the ordinary course of business; (4) any other agreement in effect on the date of the Indenture, as the same shall be amended from time to time; provided that any material amendment shall be required to comply with the provisions of the immediately preceding paragraph; (5) the Acquisitions; (6) transactions with AT&T or any of its Affiliates relating to the marketing or provision of telecommunication services or related hardware, software or equipment on terms that are no less favorable, when taken as a whole, to us such Restricted Subsidiary, as applicable, than those available from unaffiliated third parties; (7) transactions involving the leasing or sharing or other use by us or any Restricted Subsidiary of communications network facilities (including, without limitation, cable or fiber lines, equipment or transmission capacity) of any of our Affiliates (such Affiliate being a "Related Party") on terms that are no less favorable when taken as a whole to us or such Restricted Subsidiary, as applicable, than those available from such Related Party to unaffiliated third parties; (8) transactions involving the provision of telecommunication services by a Related Party in the ordinary course of its business to us or any Restricted Subsidiary, or by us or any Restricted Subsidiary to a Related Party, on terms that are no less favorable when taken as a whole to us or such Restricted Subsidiary, as applicable, than those available from such Related Party to unaffiliated third parties; (9) any sales agency agreements under which an Affiliate has the right to market any or all of our products or services or the products or services of any of the Restricted Subsidiaries; (10) transactions involving the sale, transfer or other disposition of any shares of Capital Stock of any Marketing Affiliate; provided that such Marketing Affiliate is not engaged in any activity other than the registration, holding, maintenance or protection of trademarks and such related licensing; and (11) customary commercial banking, investment banking, underwriting, placement agent or financial advisory fees paid in connection with services rendered to us and our subsidiaries in the ordinary course. Limitation on our Activities and Activities of the Restricted Subsidiaries. The Indenture provides that we will not, and will not permit any Restricted Subsidiary to, engage in any business other than a Permitted Business, except to such extent as is not material to us and our Restricted Subsidiaries, taken as a whole. Amendments to Securities Purchase Agreement. The Indenture provides that we will not amend, modify or waive, or refrain from enforcing, any provision of the Securities Purchase Agreement in any manner that would cause the net cash proceeds from capital contributions or sales of our Qualified Stock under the Securities Purchase Agreement to be less than $128.0 million. Provision of Financial Information. The Indenture provides that, whether or not required by the rules and regulations of the SEC, so long as any Notes are outstanding, we will furnish to the holders of the Notes: (1) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if we were required to file such forms, including a section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes our financial condition and results of operations and that of our consolidated Subsidiaries and a report on such annual information only by our certified independent accountants; and (2) all current reports that would be required to be filed with the SEC on Form 8-K if we were required to file such reports, in each case within the time period specified in the SEC's rules and regulations. In addition, following the consummation of the Exchange Offer whether or not required by the rules and regulations of the SEC, we will file a copy of all such information and reports with the SEC for public availability within the time periods specified in the SEC's rules and regulations (unless the SEC will not accept such a filing) and make such information available to prospective investors upon request. In addition, the Company will, for so long as any Notes remain outstanding, furnish to the -96- holders of Notes, upon request, the information required to be delivered under Rule 144A(d)(4) of the Securities Act. The Company will also comply with Section 314(a) of the TIA. Limitation on Designations of Unrestricted Subsidiaries. The Indenture provides that we may designate any of our Subsidiaries (other than an Ineligible Subsidiary) as an "Unrestricted Subsidiary" under the Indenture (a "Designation") only if: (1) no Default or Event of Default shall have occurred and be continuing at the time of or after giving effect to such Designation; (2) we would be permitted under the Indenture to make an Investment at the time of Designation (assuming the effectiveness of such Designation) in an amount (the "Designation Amount") equal to the Fair Market Value of the aggregate amount of its Investments in such Subsidiary on such date; and (3) except in the case of any of our Subsidiaries in which an Investment is being made under, and as permitted by, the third paragraph of the covenant described under "--Limitation on Restricted Payments," we would be permitted to Incur $1.00 of additional Indebtedness under clause (1) of the covenant described under "--Limitation on Incurrence of Indebtedness" at the time of Designation (assuming the effectiveness of such Designation). In the event of any such Designation, we shall be deemed to have made an Investment constituting a Restricted Payment under the covenant described under "--Limitation on Restricted Payments" for all purposes of the Indenture in the Designation Amount. The Indenture further provides that we shall not, and shall not permit any Restricted Subsidiary to, at any time: (1) provide direct or indirect credit support for, or a guarantee of, any Indebtedness of any Unrestricted Subsidiary including of any undertaking, agreement or instrument evidencing such Indebtedness; (2) be directly or indirectly liable for any Indebtedness of any Unrestricted Subsidiary; or (3) be directly or indirectly liable for any Indebtedness which provides that the holder of such Indebtedness may upon notice, lapse of time or both declare a default on such Indebtedness or cause the payment be accelerated or payable prior to its final scheduled maturity upon the occurrence of a default with respect to any Indebtedness of any Unrestricted Subsidiary (including any right to take enforcement action against such Unrestricted Subsidiary), except, in the case of clause (1) or (2) above, to the extent permitted under the covenant described under "--Limitation on Restricted Payments." The Indenture further provides that we may revoke any Designation of a Subsidiary as an Unrestricted Subsidiary (a "Revocation"), whereupon such Subsidiary shall then constitute a Restricted Subsidiary, if no Default shall have occurred and be continuing at the time of and after giving effect to such Revocation. In the event of any such Revocation, we shall be deemed to continue to have a permanent Investment in an Unrestricted Subsidiary constituting a Restricted Payment under the covenant described under "--Limitation on Restricted Payments" for all purposes under the Indenture in a positive amount equal to: (1) the Fair Market Value of the aggregate amount of our Investments in such Subsidiary at the time of such Revocation; less (2) the portion proportionate to our equity interest in such Subsidiary of the Fair Market Value of the net assets of such Subsidiary at the time of such Revocation. All Designations and Revocations must be evidenced by a resolution of our Board delivered to the Trustee certifying compliance with the foregoing provisions. Future Subsidiary Guarantors. We will cause each Restricted Subsidiary that Incurs Indebtedness to become our subsidiary guarantor, and, if applicable, execute and deliver to the Trustee a supplemental indenture in the form set forth in the Indenture under which such Restricted Subsidiary will guarantee payment of the Notes; provided that we shall not cause any Special Purpose Subsidiary to become our subsidiary guarantor unless such Special Purpose Subsidiary Incurs Indebtedness other than Indebtedness in respect of the Credit Agreement, or any Refinancing Indebtedness Incurred to Refinance such Indebtedness, or FCC Debt. Each Subsidiary Guarantee will be limited to an amount not to exceed the maximum amount that can be guaranteed by that Restricted Subsidiary without rendering the Subsidiary Guarantee, as it relates to such Restricted Subsidiary, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. -97- Merger, Consolidation and Certain Sales of Assets We will not consolidate or merge with or into any Person, or sell, assign, lease, convey or otherwise dispose of, or cause or permit any Restricted Subsidiary to consolidate or merge with or into any Person, or to sell, assign, lease, convey or otherwise dispose of all or substantially all of our assets, determined on a consolidated basis for us and the Restricted Subsidiaries, whether as an entirety or substantially an entirety in one transaction or a series of related transactions, including by way of liquidation or dissolution, to any Person unless, in each such case: (1) the entity formed by or surviving any such consolidation or merger, if other than us or such Restricted Subsidiary, as the case may be, or to which such sale, assignment, lease, conveyance or other disposition shall have been made (the "Surviving Entity"), is a corporation organized and existing under the laws of the United States, any state of the United States or the District of Columbia; (2) the Surviving Entity assumes by supplemental indenture all of our obligations on the Notes and under the Indenture; (3) immediately after giving effect to such transaction and the use of any net proceeds from such transaction on a pro forma basis, we or the Surviving Entity, as the case may be, could Incur at least $1.00 of Indebtedness under clause (1) of the covenant described under "--Certain Covenants-- Limitation on Incurrence of Indebtedness;" (4) immediately after giving effect to such transaction and treating any Indebtedness which becomes our obligation or an obligation of any of our Restricted Subsidiaries as a result of such transactions as having been Incurred by us or such Restricted Subsidiary, as the case may be, at the time of the transaction, no Default or Event of Default shall have occurred and be continuing; (5) we deliver to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such merger, consolidation or sale of assets and such supplemental indenture, if any, comply with the Indenture; and (6) we deliver to the Trustee an Opinion of Counsel to the effect that holders of the Notes will not recognize income, gain or loss for federal income tax purposes as a result of such merger, consolidation or sale of assets and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such merger, sale or consolidation had not occurred. The provisions of this paragraph shall not apply to any merger of a Restricted Subsidiary with or into us or a Wholly Owned Subsidiary or the release of any of our subsidiary guarantors in accordance with the terms of its Subsidiary Guarantee and the Indenture in connection with any transaction complying with the provisions of covenant described under "--Certain Covenants--Limitation on Certain Asset Dispositions." The Indenture provides that we will not permit any of our subsidiary guarantors to consolidate or merge with or into any Person, or sell, assign, lease, convey or otherwise dispose of all or substantially all of such subsidiary guarantor's assets, whether as an entirety or substantially an entirety in one transaction or a series of related transactions, including by way of liquidation or dissolution, to any Person unless, in each such case: (1) the entity formed by or surviving any such consolidation or merger, if other than such subsidiary guarantor, or to which such sale, assignment, lease, conveyance or other disposition shall have been made, is a corporation organized and existing under the laws of the United States, any state of the United States or the District of Columbia; (2) such corporation assumes by supplemental indenture all of the obligations of our subsidiary guarantors, if any, under its Subsidiary Guarantee; (3) immediately after giving effect to such transaction and treating any Indebtedness which becomes an obligation of such subsidiary guarantor as a result of such transactions as having been Incurred by such subsidiary guarantor at the time of the transaction, no Default or Event of Default shall have occurred and be continuing; and (4) we deliver to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such merger, consolidation or sale of assets and such supplemental indenture, if any, comply with the Indenture. Defaults Each of the following events constitutes an Event of Default under the Indenture: -98- (1) a default in any payment of interest on any Note when due and payable, whether or not prohibited by the provisions described under "--Ranking," continued for 30 days; (2) a default in the payment of the Accreted Value or principal of any Note when due and payable at its Stated Maturity, upon required redemption or repurchase, upon declaration or otherwise, whether or not such payment is prohibited by the provisions described under "--Ranking;" (3) our failure to comply with its obligations under the covenant described under "--Merger, Consolidation and Certain Sales of Assets;" (4) our failure to comply for 30 days after notice with any of its obligations under the covenants described under "--Change of Control" or "--Certain Covenants" (in each case, other than a failure to purchase the Notes); (5) our failure to comply for 60 days after notice with its other agreements contained in the Indenture or the Notes; (6) our failure or the failure of any Significant Subsidiary to pay any Indebtedness within any applicable grace period after final maturity or the acceleration of any such Indebtedness by the holders of such Indebtedness because of a default if the total amount of such Indebtedness unpaid or accelerated exceeds $15.0 million or its foreign currency equivalent (the "cross acceleration provision") and such failure continues for 10 days after receipt of the notice specified in the Indenture; (7) certain events of bankruptcy, insolvency or reorganization of us or a Significant Subsidiary (the "bankruptcy provisions"); (8) the rendering of any final judgment or decree, not subject to appeal, for the payment of money in excess of $15.0 million or its foreign currency equivalent at the time it is entered against us or a Significant Subsidiary and is not discharged, waived or stayed if: (A) an enforcement proceeding thereon is commenced by any creditor; or (B) such judgment or decree remains outstanding for a period of 60 days following such judgment and is not discharged, waived or stayed (the "judgment default provision"); or (9) any Subsidiary Guarantee ceases to be in full force and effect (except as contemplated by the terms of the Indenture) or any of our subsidiary guarantors or Person acting by or on behalf of such subsidiary guarantor denies or disaffirms such subsidiary guarantor's obligations under the Indenture or any Subsidiary Guarantee and such Default continues for 10 days after receipt of the notice specified in the Indenture. The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or under any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body. However, a default under clauses (4), (5) or (8) will not constitute an Event of Default until the Trustee or the holders of at least 25% in aggregate principal amount at maturity of the Old Notes notify us of the default and we do not cure such default within the time specified in clauses (4), (5) or (8) after receipt of such notice. If an Event of Default (other than an Event of Default relating to certain events of our bankruptcy, insolvency or reorganization) occurs and is continuing, the Trustee or the holders of at least 25% in aggregate principal amount at maturity of the Old Notes by notice to us may accelerate the maturity of all the Notes. Upon such an acceleration, the Old Notes will become immediately due and payable. If an Event of Default relating to certain events of our bankruptcy, insolvency or reorganization occurs, the principal of and interest on all the Notes will become immediately due and payable without any declaration or other act on the part of the Trustee or the holders of the Notes. Under certain circumstances, the holders of a majority in aggregate principal amount at maturity of the Old Notes may rescind any such acceleration with respect to the Notes and its consequences. Subject to the provisions of the Indenture relating to the duties of the Trustee, in case an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the holders of the Notes unless such holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no holder of Notes may pursue any remedy with respect to the Indenture or the Notes unless: -99- (1) such holder has previously given the Trustee notice that an Event of Default is continuing; (2) holders of at least 25% in aggregate principal amount at maturity of the Old Notes have requested the Trustee in writing to pursue the remedy; (3) such holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense; (4) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity; and (5) the holders of a majority in aggregate principal amount at maturity of the Old Notes have not given the Trustee a direction inconsistent with such request within such 60-day period. Subject to certain restrictions, the holders of a majority in aggregate principal amount at maturity of the Old Notes are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other holder of Notes or that would involve the Trustee in personal liability. Prior to taking any action under the Indenture, the Trustee will be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. The Indenture provides that, if a Default occurs and is continuing and is known to the Trustee, the Trustee must mail to each holder of Notes notice of the Default within the earlier of 90 days after it occurs or 30 days after it is known to a Trust Officer or written notice of it is received by the Trustee. Except in the case of a Default in the payment of principal of, premium (if any) or interest on any Note (including payments under the redemption provisions of such Note), the Trustee may withhold notice if and so long as a committee of its Trust Officers in good faith determines that withholding notice is in the interests of the Noteholders. In addition, we will be required to deliver to the Trustee, within 120 days after the end of each fiscal year, a certificate indicating whether the signers know of any Default that occurred during the previous year. We will also be required to deliver to the Trustee, within 30 days after the occurrence of such event, written notice of any event which would constitute certain Events of Default, the status of any such event and the action we are taking or propose to take in respect of such event. Amendments and Waivers Subject to certain exceptions, the Indenture or the Notes may be amended with the written consent of the holders of a majority in aggregate principal amount at maturity of the Notes then outstanding, and any past default or compliance with any provisions may be waived with the consent of the holders of a majority in aggregate principal amount at maturity of the Notes then outstanding. However, without the consent of each holder of an outstanding Note affected, no amendment may, among other things: (1) reduce the amount of the Notes whose holders must consent to an amendment; (2) reduce the rate of, or extend the time for payment of, interest or any liquidated damages on any Note; (3) reduce the principal of, or extend the Stated Maturity of, any Note; (4) reduce the premium payable upon the redemption of any Note or change the time at which any Note may be redeemed as described under "--Optional Redemption;" (5) make any Note payable in money other than that stated in the Note; (6) make any change to the subordination provisions of the Indenture that adversely affects the rights of any holder of Notes; (7) impair the right of any holder of Notes to receive payment of principal of and interest or any liquidated damages on such holder's Notes on or after the due dates for such payment or to institute suit for the enforcement of any payment on or with respect to such holder's Notes; (8) make any change in the amendment provisions which require the consent of each holder of the Notes or in the waiver provisions; or -100- (9) modify the Subsidiary Guarantees in any manner adverse to the holders of the Notes. Without the consent of any holder of the Notes, we and the Trustee may amend the Indenture to: (1) cure any ambiguity, omission, defect or inconsistency; (2) provide for the assumption by a successor corporation of our obligations under the Indenture; (3) provide for uncertificated Notes in addition to, or in place of, certificated Notes (provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code); (4) make any change in the subordination provisions of the Indenture that would limit or terminate the benefits available to any holder of our Senior Indebtedness or any representative of such holder under such subordination provisions; (5) add additional guarantees with respect to the Notes; (6) secure the Notes; (7) add to our covenants for the benefit of the Noteholders; (8) surrender any right or power conferred upon us; (9) make any change that does not adversely affect the rights of any holder of the Notes; (10) provide for the issuance of the Exchange Notes or Private Exchange Notes, subject to the provisions of the Indenture; or (11) comply with any requirement of the SEC in connection with the qualification of the Indenture under the TIA. No amendment may be made to the subordination provisions of the Indenture, however, that adversely affects the rights of any holder of our Senior Indebtedness then outstanding unless the holders of such Senior Indebtedness, or any group or representative of such holders authorized to give a consent, consent to such change. The consent of the Noteholders will not be necessary under the Indenture to approve the particular form of any proposed amendment. It will be sufficient if such consent approves the substance of the proposed amendment. After an amendment under the Indenture becomes effective, we will be required to mail to Noteholders a notice briefly describing such amendment. However, the failure to give such notice to all Noteholders, or any defect in such notice, will not impair or affect the validity of the amendment. Transfer and Exchange A Noteholder may transfer or exchange Notes in accordance with the Indenture. Upon any transfer or exchange, the registrar and the Trustee may require a Noteholder, among other things, to furnish appropriate endorsements and transfer documents, and we may require a Noteholder to pay any taxes required by law or permitted by the Indenture. We will not be required to transfer or exchange any Note selected for redemption or to transfer or exchange any Note for a period of 15 days prior to a selection of Notes to be redeemed. The Notes will be issued in registered form, and the registered holder of a Note will be treated as the owner of such Note for all purposes. Defeasance We at any time may terminate all our obligations under the Indenture and the Notes ("legal defeasance"), except for certain obligations, including obligations: . relating to the defeasance trust; . to register the transfer or exchange of the Notes; . to replace mutilated, destroyed, lost or stolen Notes; and -101- . to maintain a registrar and paying agent in respect of the Notes. We at any time may terminate our obligations under: . the covenants described under "--Certain Covenants;" . the operation of the cross acceleration provision, the bankruptcy provisions with respect to Significant Subsidiaries and the judgment default provision described under "--Defaults;" . clauses (3), (4) and (5) set forth in the first paragraph under "-- Merger, Consolidation and Certain Sales of Assets" ("covenant defeasance"). In the event that we exercise our legal defeasance option or our covenant defeasance option, each of our subsidiary guarantors will be released from all of its obligations with respect to its Subsidiary Guarantee. We may exercise our legal defeasance option in spite of our prior exercise of our covenant defeasance option. If we exercise our legal defeasance option, payment of the Notes may not be accelerated because of an Event of Default with respect to our exercise of our legal defeasance option. If we exercise our covenant defeasance option, payment of the Notes may not be accelerated because of an Event of Default specified in clause (4), (6), (7) with respect only to Significant Subsidiaries, (8) with respect only to Significant Subsidiaries or (9) under "--Defaults" or because of our failure to comply with clause (3), (4) and (5) set forth in the first paragraph under "--Merger, Consolidation and Certain Sales of Assets." In order to exercise either defeasance option, we must irrevocably deposit in trust (the "defeasance trust") with the Trustee money or U.S. Government Obligations for the payment of principal, premium, if any, and interest on the Notes to redemption or maturity, as the case may be, and must comply with certain other conditions, including delivery to the Trustee of an Opinion of Counsel to the effect that holders of the Notes will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and defeasance and will be subject to federal income tax on the same amounts and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred and, in the case of legal defeasance only, such Opinion of Counsel must be based on a ruling of the Internal Revenue Service or other change in applicable federal income tax law. Concerning the Trustee Bankers Trust Company serves as the Trustee under the Indenture, and Bankers Trust Company has been appointed by the Company as Registrar and Paying Agent with regard to the Notes. Governing Law The Indenture provides that it and the Notes will be governed by, and construed in accordance with, the laws of the State of New York without giving effect to applicable principles of conflicts of law to the extent that the application of the law of another jurisdiction would be required thereby. Certain Definitions Set forth below is a summary of certain of the defined terms used in the Indenture, which is attached as an exhibit to the registration statement. "Accreted Value" means, as of any date of determination prior to April 15, 2004, the sum of: (1) the initial offering price of each Note; and (2) the portion of the excess of the principal amount of each Note over such initial offering price which we shall have amortized in accordance with GAAP through such date, such amount to be so amortized on a daily basis and compounded semiannually on each interest payment date at a rate of 11 5/8% per annum from the date of the Indenture through the date of determination computed on the basis of a 360-day year of twelve 30-day months. "Acquired Indebtedness" means, with respect to any Person, Indebtedness of such Person: -102- (1) existing at the time such Person becomes a Restricted Subsidiary; or (2) assumed in connection with the acquisition of assets from another Person, including Indebtedness Incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary or such acquisition, as the case may be. "Acquisitions" means the Digital Acquisition, the Puerto Rico Acquisition and the Wireless 2000 Acquisition. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, any specified Person. For purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Annualized Pro Forma Consolidated Operating Cash Flow" means Consolidated Cash Flow for the latest two full fiscal quarters for which our consolidated financial statements are available multiplied by two. For purposes of calculating "Consolidated Cash Flow" for any period for purposes of this definition only: (1) any of our Subsidiaries that is a Restricted Subsidiary on the date of the transaction giving rise to the need to calculate "Annualized Pro Forma Consolidated Operating Cash Flow" (the "Transaction Date") shall be deemed to have been a Restricted Subsidiary at all times during such period; and (2) any of our Subsidiaries that is not a Restricted Subsidiary on the Transaction Date shall be deemed not to have been a Restricted Subsidiary at any time during such period. In addition to and without limitation of the foregoing, for purposes of this definition only, "Consolidated Cash Flow" shall be calculated after giving effect on a pro forma basis for the applicable period to, without duplication, any Asset Dispositions or Asset Acquisitions, including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of our or one of the Restricted Subsidiaries, including any Person who becomes a Restricted Subsidiary as a result of the Asset Acquisition Incurring, assuming or otherwise being liable for Acquired Indebtedness, occurring during the period commencing on the first day of such two-fiscal-quarter period to and including the Transaction Date (the "Reference Period"), as if such Asset Sale or Asset Acquisition occurred on the first day of the Reference Period. "Asset Acquisition" means: (1) any purchase or other acquisition, by means of transfer of cash, Indebtedness or other property to others or payment for property or services for the account or use of others or otherwise, of Capital Stock of any Person by us or any Restricted Subsidiary, in either case, under which such Person shall become a Restricted Subsidiary or shall be merged with or into us or any Restricted Subsidiary; or (2) any acquisition by us or any Restricted Subsidiary of the property or assets of any Person which constitute all or substantially all of an operating unit or line of business of such Person. "Asset Disposition" means any sale, transfer or other disposition (including, without limitation, by merger, consolidation or Sale/Leaseback Transaction) of: (1) shares of Capital Stock of any of our Subsidiaries, other than directors' qualifying shares; (2) any License for the provision of wireless telecommunications services held by us or any Restricted Subsidiary, whether by sale of Capital Stock or otherwise; or (3) any other property or assets of ours or any of our Subsidiaries other than in the ordinary course of business; provided, however, that an Asset Disposition shall not include: (A) any sale, transfer or other disposition of shares of Capital Stock, property or assets by a Restricted Subsidiary to us or to any other Restricted Subsidiary or by us to any Restricted Subsidiary; (B) any sale, transfer or other disposition of defaulted receivables for collection; -103- (C) the sale, lease, conveyance or disposition or other transfer of all or substantially all of our assets as permitted under "--Covenants--Merger, Consolidation and Certain Sales of Assets;" (D) any disposition that constitutes a Change of Control; or (E) any sale, transfer or other disposition of shares of Capital Stock of any Marketing Affiliate; provided that such Marketing Affiliate is not engaged in any activity other than the registration, holding, maintenance or protection of trademarks and such related licensing; or (F) any sale, transfer or other disposition that does not, together with all related sales, transfers or dispositions, involve aggregate consideration in excess of $5.0 million. "AT&T Wireless" means AT&T Wireless PCS Inc., a Delaware corporation. "Average Life" means, as of the date of determination, with respect to any Indebtedness for borrowed money or Preferred Stock, the quotient obtained by dividing: (1) the sum of the products of the number of years from the date of determination to the dates of each successive scheduled principal or liquidation value payments of such Indebtedness or Preferred Stock, respectively, and the amount of such principal or liquidation value payments by (2) the sum of all such principal or liquidation value payments. "Bank Indebtedness" means any and all amounts payable under or in respect of the Credit Agreement and any Refinancing Indebtedness with respect to the Credit Agreement, as amended from time to time, including principal, premium, if any, interest, including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to us whether or not a claim for post- filing interest is allowed in such proceedings, fees, charges, expenses, reimbursement obligations, guarantees and all other amounts payable thereunder or in respect thereof. "board" of any Person means the board of directors, management committee or other governing body of such Person. "BTA" means a Basic Trading Area, as defined in 47 C.F.R. (S)24.202. "Business Day" means any date which is not a Legal Holiday. "C-Block License" means any License in the C block as set forth in parts 1 and 24 of Title 47 of the Code of Federal Regulations. "Capital Lease Obligations" of any Person means the obligations to pay rent or other amounts under a lease of, or other Indebtedness arrangements conveying the right to use, real or personal property of such Person which are required to be classified and accounted for as a capital lease or liability on the face of a balance sheet of such Person in accordance with GAAP. The amount of such obligations shall be the capitalized amount of such obligations in accordance with GAAP, and the Stated Maturity of such obligations shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. "Capital Stock" of any Person means any and all shares, interests, rights to purchase, warrants options, participations or other equivalents of or interests in, however, designated, of corporate stock or other equity participations, including partnership interests, whether general or limited, of such Person. "Cash Equity Investors" means CB Capital Investors, L.P., Equity-Linked Investors-II, Private Equity Investors III, L.P., Hoak Communications Partners, L.P., HCP Capital Fund, L.P., Whitney Equity Partners, L.P., J. H. Whitney III, L.P., Whitney Strategic Partners III, L.P., Entergy Technology Holding Company, Media/Communications Partners III Limited Partnership, Media/Communications Investors Limited Partnership, One Liberty Fund III, L.P., One Liberty Fund IV, L.P., Toronto Dominion Investments, Inc., Northwood Ventures LLC, Northwood Capital Partners LLC, Gerald Vento, Thomas Sullivan and Gilde International B.V. "Cash Equivalents" means: -104- (1) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of such acquisition; (2) investments in commercial paper maturing within 365 days from the date of such acquisition and having, at such date of acquisition, the highest credit rating obtainable from Standard & Poor's Corporation or from Moody's Investors Service; (3) investments in certificates of deposit, banker's acceptance and time deposits maturing within 365 days from the date of such acquisition issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any of its States which has a combined capital and surplus and undivided profits of not less than $500,000,000; (4) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (1) above and entered into with a financial institution satisfying the criteria described in clause (3) above; and (5) money market funds substantially all of whose assets comprise securities of the type described in clauses (1) through (3) above. "Code" means the Internal Revenue Code of 1986, as amended. "Common Stock" of any Person means Capital Stock of such Person that does not rank prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to shares of Capital Stock of any other class of such Person. "Communications Act" means the Communications Act of 1934, and any similar or successor Federal statute, and the rules and regulations and published policies of the FCC thereunder, all as amended and as the same may be in effect from time to time. "Consolidated Cash Flow" of any Person means, for any period, the Consolidated Net Income of such Person for such period: (1) increased, to the extent Consolidated Net Income for such period has been reduced thereby, by the sum of, without duplication" (A) Consolidated Interest Expense of such Person for such period; plus (B) Consolidated Income Tax Expense of such Person for such period; plus (C) the consolidated depreciation and amortization expense of such Person and its Restricted Subsidiaries for such period; plus (D) any other non-cash charges of such Person and its Restricted Subsidiaries for such period except for any non-cash charges that represent accruals of, or reserves for, cash disbursements to be made in any future accounting period; and (2) decreased, to the extent Consolidated Net Income for such period has been increased thereby, by any non-cash gains from Asset Dispositions. "Consolidated Income Tax Expense" of any Person means, for any period, the consolidated provision for income taxes of such Person and its Restricted Subsidiaries for such period calculated on a consolidated basis in accordance with GAAP. "Consolidated Interest Expense" for any Person means, for any period, without duplication: (1) the consolidated interest expense included in a consolidated income statement, without deduction of interest or finance charge income, of such Person and its Restricted Subsidiaries for such period calculated on a consolidated basis in accordance with GAAP, including, without limitation, (a) any amortization of debt discount, (b) the net costs under Hedging Agreements, (c) all capitalized interest, (d) the interest portion of any deferred payment obligation and (e) all amortization of any premiums, fees and expenses payable in connection with the Incurrence of any Indebtedness; plus -105- (2) the interest component of Capital Lease Obligations paid, accrued and/or scheduled to be paid or accrued, by such Person and its Restricted Subsidiaries during such period as determined on a consolidated basis in accordance with GAAP. "Consolidated Net Income" of any Person means for any period the consolidated net income (or loss) of such Person and its Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided, however, that there shall be excluded therefrom: (1) the net income or loss of any Person acquired by such Person or a Restricted Subsidiary of such Person in a pooling-of-interests transaction for any period prior to the date of such transaction; (2) the net income but not loss of any Restricted Subsidiary of such Person which is subject to restrictions which prevent or limit the payment of dividends or the making of distributions to such Person to the extent of such restrictions, regardless of any waiver; (3) the net income of any Person that is not a Restricted Subsidiary of such Person, except to the extent of the amount of dividends or other distributions representing such Person's proportionate share of such other Person's net income for such period actually paid in cash to such Person by such other Person during such period; (4) gains or losses, other than for purposes of calculating Consolidated Net Income under clause (c) of the first paragraph under "--Certain Covenants- -Limitation on Restricted Payments," on Asset Dispositions by such Person or its Restricted Subsidiaries; (5) all extraordinary gains, but not, other than for purposes of calculating Consolidated Net Income under clause (c) of the first paragraph under "-- Certain Covenants--Limitation on Restricted Payments," losses, determined in accordance with GAAP; and (6) in the case of a successor to such Person by consolidation or merger or as a transferee of such Person's assets, any earnings or losses of the successor corporation prior to such consolidation, merger or transfer of assets. "Credit Agreement" means the Credit Agreement dated as of July 17, 1998, as amended, waived or otherwise modified from time to time, among the Company, the financial institutions named in the Credit Agreement as lenders, The Chase Manhattan Bank, as Administrative Agent and Issuing Bank, TD Securities (USA) Inc., as Syndication Agent, and Bankers Trust Company, as Documentation Agent, except to the extent that any such amendment, waiver or other modification to the Credit Agreement would be prohibited by the terms of the Indenture, unless otherwise agreed to by the holders of at least a majority in aggregate principal amount at maturity of the Notes at the time outstanding. "Default" means any event that is, or after notice or lapse of time or both would become, an Event of Default. "Designated Senior Indebtedness of us" means: (1) so long as outstanding, Bank Indebtedness; and (2) so long as outstanding, any other Senior Indebtedness which has at the time of initial issuance an aggregate outstanding principal amount in excess of $25.0 million and which has been so designated as Designated Senior Indebtedness by our Board at the time of its initial issuance in a resolution delivered to the Trustee. "Designated Senior Indebtedness" of our subsidiary guarantors has a correlative meaning. "Designation" has the meaning set forth under "--Certain Covenants--Limitation on Designations of Unrestricted Subsidiaries." "Designation Amount" has the meaning set forth under "--Certain Covenants-- Limitation on Designations of Unrestricted Subsidiaries." "Digital Acquisition" means our purchase by us from Digital PCS of 10 MHz of F-Block Licenses for the Baton Rouge, Houma, Hammond and Lafayette, Louisiana BTAs together with related assets. "Digital PCS" means Digital PCS, L.L.C. -106- "Disqualified Stock" of any Person means any Capital Stock of such Person which, by its terms, or by the terms of any security into which it is convertible or for which it is exchangeable, or upon the happening of any event, matures or is mandatorily redeemable, under a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the first anniversary of the Stated Maturity of the Notes; provided, however, that any Capital Stock that would not constitute Disqualified Stock but for such provisions giving such holders the right to require such Person to repurchase or redeem such Capital Stock upon the occurrence of an "asset sale" or "change of control" occurring prior to the first anniversary of the Stated Maturity of the Notes shall not constitute Disqualified Stock if the "asset sale" or "change of control" provisions applicable to such Capital Stock are no more favorable to the holders of such Capital Stock than the provisions of the covenant described under "Change of Control." "Equipment Subsidiary" means TeleCorp Equipment Leasing L.P. and/or any other of our Wholly Owned Subsidiaries designated as an Equipment Subsidiary under the Credit Agreement. "Equity Offering" means any public or private sale of Qualified Stock that we make on a primary basis by the Company, including through the issuance or sale of Qualified Stock to one or more Strategic Equity Investors. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the SEC thereunder. "Exchange Notes" means, collectively, our debt securities that are identical in all material respects to the Notes, except for transfer restrictions relating to the Notes, issued in a like aggregate principal amount at maturity of the Notes originally issued under the Exchange and Registration Rights Agreement. "Exchange Offer" means a registered exchange offer for the Notes undertaken by us under the Exchange and Registration Rights Agreement. "Excluded Cash Proceeds" means the first $128 million of net cash proceeds received by us subsequent to the date of the Indenture from capital contributions in respect of our Qualified Stock or from the issue or sale, other than to a Restricted Subsidiary, of Qualified Stock. "F-Block License" means any License in the F block as set forth in parts 1 and 24 of Title 47 of the Code of Federal Regulations. "Fair Market Value" means, with respect to any asset or property, the price that could be negotiated in an arm's-length free market transaction, for cash, between a willing seller and a willing buyer, neither of which is under pressure or compulsion to complete the transaction. Unless otherwise specified in the Indenture, Fair Market Value shall be determined by our Board acting in good faith. "FCC" means the Federal Communications Commission, or any other similar or successor agency of the Federal government administering the Communications Act. "FCC Debt" means Indebtedness owed to the United States Treasury Department or the FCC that is incurred in connection with the acquisition of a License. "GAAP" means generally accepted accounting principles, consistently applied, as in effect from time to time in the United States of America, as set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as is approved by a significant segment of the accounting profession in the United States. "Hedging Agreement" means any interest rate, currency or commodity swap agreement, interest rate, currency or commodity future agreement, interest rate cap or collar agreement, interest rate, currency or commodity hedge agreement and any put, call or other agreement designed to protect against fluctuations in interest rates, currency exchange rates or commodity prices. "Holder" or "Noteholder" means the Person in whose name a Note is registered on the registrar's books. "Incur" means, with respect to any Indebtedness or other obligation of any Person, to create, issue, incur, including by conversion, exchange or otherwise, assume, guarantee or otherwise become liable in respect of such Indebtedness or other obligation or the recording, as required under GAAP or otherwise, of any such Indebtedness or other obligation on the balance sheet of such Person, and "Incurrence," "Incurred" and "Incurring" shall have meanings correlative to the foregoing. Indebtedness -107- of any Person or any of its Restricted Subsidiaries existing at the time such Person becomes a Restricted Subsidiary, or is merged into, or consolidates with, us or any Restricted Subsidiary, whether or not such Indebtedness was Incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary, or being merged into, or consolidated with, us or any Restricted Subsidiary, shall be deemed Incurred at the time any such Person becomes a Restricted Subsidiary or merges into, or consolidates with, us or any Restricted Subsidiary. "Indebtedness" means without duplication, with respect to any Person, whether recourse is to all or a portion of the assets of such Person and whether or not contingent: (1) every obligation of such Person for money borrowed; (2) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations Incurred in connection with the acquisition of property, assets or businesses; (3) every reimbursement obligation of such Person with respect to letters of credit, bankers' acceptances or similar facilities issued for the account of such Person; (4) every obligation of such Person issued or assumed as the deferred purchase price of property or services, but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business which are not overdue or which are being contested in good faith; (5) every Capital Lease Obligation of such Person; (6) every net obligation under Hedging Agreements or similar agreements of such Person; and (7) every obligation of the type referred to in clauses (1) through (6) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor, guarantor or otherwise. Indebtedness shall: (1) include the liquidation preference and any mandatory redemption payment obligations in respect of any of our Disqualified Stock and any Restricted Subsidiary and any Preferred Stock of any of our Subsidiaries; (2) never be calculated taking into account any cash and Cash Equivalents held by such Persons; (3) not include obligations arising from our agreements or agreement of a Restricted Subsidiary to provide for indemnification, adjustment of purchase price, earn-out or other similar obligations, in each case, Incurred or assumed in connection with the disposition of any business or assets of a Restricted Subsidiary. The amount of any Indebtedness outstanding as of any date shall be: (1) the accreted value of such indebtedness, in the case of any Indebtedness issued with original issue discount; (2) the principal amount of such indebtedness, in the case of any Indebtedness other than Indebtedness issued with original issue discount; and (3) the greater of the maximum repurchase or redemption price or liquidation preference of such indebtedness, in the case of any Disqualified Stock or Preferred Stock. "Ineligible Subsidiary" means: (1) any Special Purpose Subsidiary; (2) any of our subsidiary guarantors; (3) any of our Subsidiaries that, directly or indirectly, own any Capital Stock or Indebtedness of or own or hold any Lien on any property of, us or any of our other Subsidiaries that is not a Subsidiary of the Subsidiary to be so designated; and -108- (4) any of our Subsidiaries that, directly or indirectly, own any Capital Stock or Indebtedness of, or own or hold any Lien on any property of, any other Subsidiaries that is not eligible to be designated as an Unrestricted Subsidiary. "initial purchasers" means Chase Securities Inc., BT Alex. Brown Incorporated and Lehman Brothers Inc. "Investment" in any Person means any direct or indirect loan, advance, guarantee or other extension of credit or capital contribution to, by means of transfers of cash or other property to others or payments for property or services for the account or use of others or otherwise, or purchase or acquisition of Capital Stock, bonds, notes, debentures or other securities or evidence of Indebtedness issued by, any other Person. "Legal Holiday" means a Saturday, Sunday or other day on which banking institutions in the State of New York are authorized or required by law to close. "License" means any broadband Personal Communications Services license issued by the FCC in connection with the operation of a System. "License Subsidiary" means TeleCorp PCS, L.L.C. and THC and/or any of our other Wholly Owned Restricted Subsidiaries designated as a License Subsidiary under the Credit Agreement. "Lien" means, with respect to any property or assets, any mortgage or deed of trust, pledge, hypothecation, assignment, security interest, lien, charge, easement other than any easement not materially impairing usefulness or marketability, encumbrance, preference, priority or other security agreement with respect to such property or assets, including, without limitation, any conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing. "Lucent" means Lucent Technologies Inc., a Delaware corporation. "Lucent Note Purchase Agreement" means the Note Purchase Agreement dated as of May 11, 1998, between us and Lucent, as amended as of the date of the Indenture. "Management Stockholders" means Gerald Vento and Thomas Sullivan. "Marketing Affiliate" means any Person which engages in no activity other than the registration, holding, maintenance or protection of trademarks and such related licensing. "MTA" means a Major Trading Area, as defined in 47 C.F.R. (S)24.202. "Net Available Proceeds" from any Asset Disposition by any Person means cash or readily marketable Cash Equivalents received, including by way of sale or discounting of a note, installment receivable or other receivable, but excluding any other consideration received in the form of assumption by the acquiror of Indebtedness or other obligations relating to such properties or assets or received in any other non-cash form, from such Asset Disposition by such Person, including any cash received by way of deferred payment or upon the monetization or other disposition of any non-cash consideration, including notes or other securities received in connection with such Asset Disposition, net of: (1) all legal, title and recording tax expenses, commissions and other fees and expenses incurred and all federal, state, foreign and local taxes required to be accrued as a liability as a consequence of such Asset Disposition; (2) all payments made by such Person or any of its Restricted Subsidiaries on any Indebtedness which is secured by such assets in accordance with the terms of any Lien upon or with respect to such assets or which must, by the terms of such Lien, or in order to obtain a necessary consent to such Asset Disposition or by applicable law, be repaid out of the proceeds from such Asset Disposition; (3) all payments made with respect to liabilities associated with the assets which are the subject of the Asset Disposition, including, without limitation, trade payables and other accrued liabilities; (4) appropriate amounts to be provided by such Person or any Restricted Subsidiary, as the case may be, as a reserve in accordance with GAAP against any liabilities associated with such assets and retained by such Person or any such Restricted Subsidiary, as the case may be, after such Asset -109- Disposition, including, without limitation, liabilities under any indemnification obligations and severance and other employee termination costs associated with such Asset Disposition, until such time as such amounts are no longer reserved or such reserve is no longer necessary at which time any remaining amounts will become Net Available Proceeds to be allocated in accordance with the provisions of clause (3) of the covenant described under "--Certain Covenants-- Limitation on Certain Asset Dispositions"; and (5) all distributions and other payments made to minority interest holders in Restricted Subsidiaries of such Person or joint ventures as a result of such Asset Disposition. "Net Investment" means the excess of: (1) the aggregate amount of all Investments made in any Unrestricted Subsidiary or joint venture by us or any Restricted Subsidiary on or after the date of the Indenture, in the case of an Investment made other than in cash, the amount shall be the Fair Market Value of such Investment as determined in good faith by our Board or the board of such Restricted Subsidiary; over (2) the aggregate amount returned in cash on or with respect to such Investments whether through interest payments, principal payments, dividends or other distributions or payments; provided, however, that such payments or distributions shall not be, and have not been, included in clause (c) of the first paragraph described under "-- Certain Covenants--Limitation on Restricted Payments;" provided further that, with respect to all Investments made in any Unrestricted Subsidiary or joint venture, the amounts referred to in clause (1) above with respect to such Investments shall not exceed the aggregate amount of all such Investments made in such Unrestricted Subsidiary or joint venture. "Note" or "Notes" means any Note or Note issued under the Indenture, including any Exchange Note or Exchange Notes, or any Private Exchange Note or Private Exchange Notes, issued in exchange for any Note in connection with an Exchange Offer. "Noteholder" or "Holder" means the Person in whose name a Note is registered on the registrar's books. "Offer to Purchase" means a written offer (the "Offer") sent by us by first class mail, postage prepaid, to each holder of the Notes at such holder's address appearing in the register for the Notes on the date of the Offer offering to purchase up to (a) the Accreted Value of Notes, if such Offer is on or prior to April 15, 2004, or (b) the principal amount at maturity of the Notes, if such Offer is after April 15, 2004, specified in such Offer at the purchase price specified in such Offer as determined under the Indenture. Unless otherwise required by applicable law, the Offer shall specify an expiration date (the "Expiration Date") of the Offer to Purchase which shall be not less than 30 days nor more than 60 days after the date of such Offer and a settlement date (the "Purchase Date") for purchase of the Notes within five Business Days after the Expiration Date. We shall notify the Trustee at least 15 Business Days, or such shorter period as is acceptable to the Trustee, prior to the mailing of the Offer of our obligation to make an Offer to Purchase, and the Offer shall be mailed by us or, at our request, by the Trustee in our name and at our expense. The Offer shall contain all the information required by applicable law to be included in such Offer. The Offer shall contain all instructions and materials necessary to enable holders of the Notes to tender their Notes under the Offer to Purchase. The Offer shall also state: (1) the provision of the Indenture under which we make the Offer to Purchase; (2) the Expiration Date and the Purchase Date; (3) the aggregate principal amount at maturity of the Old Notes offered which we will purchase in the Offer to Purchase, including, if less than 100%, the manner by which such amount has been determined under a specified provision of the Indenture requiring the Offer to Purchase (the "Purchase Amount"); (4) the purchase price that we will pay for each $1,000 aggregate principal amount at maturity of Notes accepted for payment, as specified under the Indenture (the "Purchase Price"); (5) that such holder may tender all or any portion of the Notes registered in the name of such holder and that any portion of a Note tendered must be tendered in an integral multiple of $1,000 principal amount at maturity; (6) the place or places where the Notes are to be surrendered for tender in the Offer to Purchase; (7) that interest on any Note not tendered or tendered but which we do not purchase in the Offer to Purchase will continue to accrue; -110- (8) that on the Purchase Date the Purchase Price will become due and payable upon each Note being accepted for payment in the Offer to Purchase and that interest on such note shall cease to accrue on and after the Purchase Date; (9) that each holder electing to tender all or any portion of a Note under the Offer to Purchase will be required to surrender such Note at the place or places specified in the Offer prior to the close of business on the Expiration Date, such Note being, if we or the Trustee so require, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to us and the Trustee duly executed by, the holder of such Note or such holder's attorney duly authorized in writing; (10) that holders will be entitled to withdraw all or any portion of Notes tendered if we or our paying agent receive, not later than the close of business on the fifth Business Day next preceding the Expiration Date, a telegram, telex, facsimile transmission or letter setting forth the name of the holder, the principal amount at maturity of the Note the holder tendered, the certificate number of the Note the holder tendered and a statement that such holder is withdrawing all or a portion of such holder's tender; (11) that (a) if Notes in an aggregate principal amount at maturity less than or equal to the Purchase Amount are duly tendered and not withdrawn in the Offer to Purchase, we shall purchase all such Notes and (b) if Notes in an aggregate principal amount at maturity in excess of the Purchase Amount are tendered and not withdrawn in the Offer to Purchase, we shall purchase Notes having an aggregate principal amount at maturity equal to the Purchase Amount on a pro rata basis with such adjustments as may be deemed appropriate so that only Notes in denominations of $1,000 or integral multiples of $1,000 shall be purchased; and (12) that in the case of any holder whose Note is purchased only in part, we shall execute and the Trustee shall authenticate and deliver to the holder of such Note without service charge, a new Note or Notes, of any authorized denomination as requested by such holder, in an aggregate principal amount at maturity equal to and in exchange for the unpurchased portion of the Note so tendered. An Offer to Purchase shall be governed by and effected in accordance with the provisions above pertaining to any Offer. "Officer" means the Chief Executive Officer, the Executive Vice President, the Chief Financial Officer, the Chief Operating Officer, the President, any Vice President, the Treasurer or any Secretary of us or any of our Subsidiaries, as the case may be. "Officers' Certificate" means a certificate signed by two Officers. "Opinion of Counsel" means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to us or the Trustee. "Permitted Asset Swap" means any exchange of assets by us or a Restricted Subsidiary where we and/or our Restricted Subsidiaries receive consideration at least 75% of which consists of (1) cash, (2) assets that are used or useful in a Permitted Business or (3) any combination of such cash and such assets. "Permitted Business" means: (1) the delivery or distribution of telecommunications, voice, data or video services; (2) any business or activity reasonably related or ancillary to, including, without limitation, any business conducted by us or any Restricted Subsidiary on the date of the Indenture and the acquisition, holding or exploitation of any license relating to the delivery of the services described in clause (1) above; or (3) any other business or activity in which we and the Restricted Subsidiaries are expressly contemplated to be engaged under the provisions of our certificate of incorporation and by-laws in effect on the date of the Indenture. "Permitted Holder" means: (1) each of AT&T Wireless, TWR Cellular, the Cash Equity Investors, the Management Stockholders, Digital PCS, Wireless 2000 and any of their respective Affiliates and the respective successors by merger, consolidation, transfer or otherwise to all or substantially all of the respective businesses and assets of any of the foregoing; and -111- (2) any "person" or "group" as such terms are used in Sections 13(d) and 14(d) of the Exchange Act controlled by one or more persons identified in clause (1) above. "Permitted Investments" means: (1) Investments in Cash Equivalents; (2) Investments representing Capital Stock or obligations issued to us or any Restricted Subsidiary in the course of the good faith settlement of claims against any other Person or by reason of a composition or readjustment of debt or a reorganization of any debtor of us or any Restricted Subsidiary; (3) deposits including interest-bearing deposits, maintained in the ordinary course of business in banks; (4) any Investment in any Person; provided, however, that, after giving effect to such Investment, such Person is or becomes a Restricted Subsidiary or such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, us or a Restricted Subsidiary; (5) trade receivables and prepaid expenses, in each case arising in the ordinary course of business; provided, however, that such receivables and prepaid expenses would be recorded as assets of such Person in accordance with GAAP; (6) endorsements for collection or deposit in the ordinary course of business by such Person of bank drafts and similar negotiable instruments of such other Person received as payment for ordinary course of business trade receivables; (7) any interest rate agreements with an unaffiliated Person otherwise permitted by clause (5) or (6) under "--Certain Covenants--Limitation on Incurrence of Indebtedness;" (8) Investments received as consideration for an Asset Disposition in compliance with the provisions of the Indenture described under "-- Certain Covenants--Limitation on Certain Asset Dispositions;" (9) loans or advances to employees of us or any Restricted Subsidiary in the ordinary course of business in an aggregate amount not to exceed $5.0 million in the aggregate at any one time outstanding; (10) any Investment acquired by us or any of our Restricted Subsidiaries as a result of a foreclosure by us or any of our Restricted Subsidiaries or in connection with the settlement of any outstanding Indebtedness or trade payable; (11) loans and advances to officers, directors and employees for business- related travel expense, moving expense and other similar expenses, each incurred in the ordinary course of business; and (12) other Investments with each such Investment being valued as of the date made and without giving effect to subsequent changes in value in an aggregate amount not to exceed $7.5 million at any one time outstanding. "Person" means any individual, corporation, limited or general partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision. "Plan of Liquidation" means, with respect to any Person, a plan including by operation of law that provides for, contemplates, or the effectuation of which is preceded or accompanied by whether or not substantially contemporaneously: (1) the sale, lease, conveyance or other disposition of all or substantially all of the assets of such Person; and (2) the distribution of all or substantially all of the proceeds of such sale, lease, conveyance or other disposition and all or substantially all of the remaining assets of such Person to holders of Capital Stock of such Person. "Preferred Stock," as applied to the Capital Stock of any Person, means Capital Stock of such Person of any class or classes, however designated, that ranks prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to shares of Capital Stock of any other class of such Person. "principal" of a Note means the principal of the Note plus the premium, if any, payable on the Note which is due or overdue or is to become due at the relevant time. -112- "Private Exchange Notes" means, collectively, our debt securities that are identical in all material respects to the Exchange Notes, except for transfer restrictions relating to such Private Exchange Notes, that we issued under the same indenture as the Exchange Notes, simultaneously with the delivery of the Exchange Notes in the Exchange Offer to any Noteholder that holds any Notes acquired by it that have, or that are reasonably likely to be determined to have, the status of an unsold allotment in an initial distribution, or to any Noteholder that is not entitled to participate in the Exchange Offer, upon the request of any such holder, in exchange for a like aggregate principal amount of Notes held by such holder. "Public Sale" means any underwritten public offering, made on a primary basis under a registration statement filed with, and declared effective by, the SEC in accordance with the Securities Act. "Puerto Rico Acquisition" means the merger of Puerto Rico Acquisition Corp. into us and the purchase by us from AT&T Wireless of 20 MHz of A-Block Licenses covering the San Juan MTA together with related assets. "Qualified License" means, as of the date of determination, any License covering or adjacent to any geographical area in respect of which we or any Restricted Subsidiary owns, as of the Business Day immediately prior to such date of determination, at least one other License covering a substantial portion of such area. "Qualified Stock" means any of our Capital Stock other than Disqualified Stock. "Real Property Subsidiary" means TeleCorp Realty L.L.C., Puerto Rico Acquisition Corp. and/or any of our other Wholly Owned Subsidiaries that we designate as a Real Property Subsidiary under the Credit Agreement. "Refinance" means refinance, renew, extend, replace or refund; and "Refinancing" and "Refinanced" have correlative meanings. "Refinancing Indebtedness" means Indebtedness that is Incurred to refund, refinance, replace, renew, repay or extend, including under any defeasance or discharge mechanism, any of our Indebtedness or any Restricted Subsidiary existing on the date of the Indenture or Incurred in compliance with the Indenture, including our Indebtedness that Refinances Refinancing Indebtedness; provided, however, that: (1) the Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being Refinanced; (2) the Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being refinanced; (3) such Refinancing Indebtedness is Incurred in an aggregate principal amount, or if issued with original issue discount, an aggregate issue price, that is equal to or less than the aggregate principal amount, or if issued with original issue discount, the aggregate accreted value, then outstanding of the Indebtedness being Refinanced plus the amount of any premium required to be paid in connection with such Refinancing under the terms of the Indebtedness being Refinanced or the amount of any premium reasonably determined by the issuer of such Indebtedness as necessary to accomplish such Refinancing by means of a tender offer, exchange offer or privately negotiated repurchase, plus the expenses of such issuer reasonably incurred in connection with such Refinancing; and (4) if the Indebtedness being Refinanced is pari passu with the Notes, such Refinancing Indebtedness is made pari passu with, or subordinate in right of payment to, the Notes, and, if the Indebtedness being Refinanced is subordinate in right of payment to the Notes, such Refinancing Indebtedness is subordinate in right of payment to the Notes on terms no less favorable to the holders of Notes than those contained in the Indebtedness being Refinanced; provided further, however, that Refinancing Indebtedness shall not include: (A) Indebtedness of a Restricted Subsidiary that Refinances our Indebtedness; or (B) Our Indebtedness or Indebtedness of a Restricted Subsidiary that Refinances Indebtedness of an Unrestricted Subsidiary. "Restricted Subsidiary" means any of our Subsidiaries other than an Unrestricted Subsidiary. -113- "Revocation" has the meaning set forth under "--Certain Covenants-- Limitation on Designations of Unrestricted Subsidiaries." "Sale/Leaseback Transaction" means an arrangement relating to property owned on the date of the Indenture or acquired by us or a Restricted Subsidiary after the date of the Indenture that involves our or a Restricted Subsidiary's transferring of such property to a Person and our or such Restricted Subsidiary's leasing it from such Person, other than leases between us and a Wholly Owned Subsidiary or between Wholly Owned Subsidiaries. "Securities Act" means the Securities Act of 1933, as amended. "Securities Purchase Agreement" means the Securities Purchase Agreement dated January 23, 1998, among AT&T Wireless, TWR Cellular, the stockholders of THC, the Cash Equity Investors, the Management Stockholders and us, as the such agreement may be amended from time to time in accordance with the provisions of such agreement, so long as the terms of any such amendment are no less favorable to the Noteholders than the terms of the Securities Purchase Agreement in effect on the date of the Indenture. "Senior Subordinated Indebtedness" of us means the Notes and any of our other Indebtedness that specifically provides that such Indebtedness is to rank pari passu with the Notes in right of payment and is not subordinated by its terms in right of payment to any Indebtedness or any other of our obligations which is not Senior Indebtedness. "Senior Subordinated Indebtedness" of our subsidiary guarantors has a correlative meaning. "Series A Notes" means our Series A Notes purchased by Lucent under the Lucent Note Purchase Agreement. "Significant Subsidiary" means any Restricted Subsidiary that would be our "Significant Subsidiary" within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC. "Special Purpose Subsidiary" means any Equipment Subsidiary, License Subsidiary or Real Property Subsidiary. "Stated Maturity" means, with respect to any security, the date specified in such security as the fixed date on which the final payment of principal of such security is due and payable, including under any mandatory redemption provision, but excluding any provision providing for the repurchase of such security at the option of the holder of such security upon the happening of any contingency beyond the control of the issuer unless such contingency has occurred. "Stockholders' Agreement" means the Stockholders' Agreement dated as of July 17, 1998, among AT&T Wireless, TWR Cellular, the Cash Equity Investors, the Management Stockholders and us, as such agreement may be amended from time to time in accordance with the provisions of such agreement, so long as the terms of any such amendment are no less favorable to the Noteholders than the terms of the Stockholders' Agreement in effect on the date of the Indenture. "Strategic Equity Investor" means any of the Cash Equity Investors, any such Affiliate, any other Person engaged in a Permitted Business whose Total Equity Market Capitalization exceeds $500 million or any other Person who has at least $100 million total funds under management and who has issued an irrevocable, unconditional commitment to purchase our Qualified Stock for an aggregate purchase price that does not exceed 20% of the value of the funds under management by such Person. "Subordinated Indebtedness" means any of our Indebtedness or any Indebtedness of any of our subsidiary guarantors whether outstanding on the date of the Indenture or Incurred after such date, which is by its terms expressly subordinate or junior in right of payment to the Notes or the Subsidiary Guarantee of such subsidiary guarantor, as the case may be. "Subsidiary" of any Person means: (1) a corporation more than 50% of the outstanding Voting Stock of which is owned, directly or indirectly, by such Person or by one or more other Subsidiaries of such Person or by such Person and one or more other Subsidiaries of such Person; or (2) any other Person, other than a corporation, in which such Person, or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries of such Person, directly or indirectly, has at least a majority ownership and voting power relating to the policies, management and affairs of such Person. -114- "Subsidiary Guarantee" means each guarantee of the obligations with respect to the Notes issued by any of our Subsidiaries under the terms of the Indenture, each such Subsidiary Guarantee having subordination provisions equivalent to those contained in the Indenture with respect to the Notes and being substantially in the form prescribed in the Indenture. "System" means, as to any Person, assets constituting a radio communications system authorized under the rules for wireless communications services, including any license and the network, marketing, distribution, sales, customer interface and operations and functions relating to such license, owned and operated by such Person. "THC" means TeleCorp Holding Corp., Inc., a Delaware corporation and a Wholly Owned Subsidiary. "Total Consolidated Indebtedness" means, at any date of determination, an amount equal to: (1) the accreted value of all Indebtedness, in the case of any Indebtedness issued with original issue discount; plus (2) the principal amount of all Indebtedness, in the case of any other Indebtedness, of us and our Restricted Subsidiaries outstanding as of the date of determination; provided, however, that no amount owing by us or any of our Restricted Subsidiaries in respect of any Series A Notes outstanding as of the date of determination shall be included in the determination of Total Consolidated Indebtedness. "Total Equity Market Capitalization" of any Person means, as of any day of determination, the sum of (a) the product of (1) the aggregate number of outstanding primary shares of common stock of such Person on such day, which shall not include any options or warrants on, or securities convertible or exchangeable into, shares of common stock of such Person, multiplied by (2) the average closing price of such common stock listed on a national securities exchange or the Nasdaq National Market System over the 20 consecutive Business Days immediately preceding such day plus (b) the liquidation value of any outstanding shares of preferred stock of such Person on such day. "Total Invested Capital" means, as of any date of determination, the sum of, without duplication: (1) the total amount of equity contributed to us as of the date of the Indenture, as set forth on our December 31, 1998 consolidated balance sheet; plus (2) irrevocable, unconditional commitments from any Strategic Equity Investor to purchase our Capital Stock other than Disqualified Stock, within 36 months of the date of issuance of such commitment, but in any event not later than the Stated Maturity of the Notes; provided, however, that such commitments shall exclude commitments related to any Investment in any Person incorporated, formed or created for the purpose of acquiring one or more Qualified Licenses unless such Person shall become a Restricted Subsidiary; plus (3) the aggregate net cash proceeds received by us from capital contributions or the issuance or sale of our Capital Stock, other than Disqualified Stock, but including Qualified Stock issued upon the conversion of convertible Indebtedness or upon the exercise of options, warrants or rights to purchase Qualified Stock, subsequent to the date of the Indenture, other than issuances or sales of Capital Stock to a Restricted Subsidiary and other than capital contributions from, or issuances or sales of Capital Stock to, any Strategic Equity Investor in connection with (a) any Investment in any Person incorporated, formed or created for the purpose of acquiring one or more Qualified Licenses and (b) any Investment in any Person engaged in a Permitted Business, unless, in either case, such Person shall become a Restricted Subsidiary; provided, however, such aggregate net cash proceeds shall exclude any amounts included as commitments to purchase Capital Stock in the preceding clause (2); plus (4) the Fair Market Value of assets that are used or useful in a Permitted Business or of the Capital Stock of a Person engaged in a Permitted Business received by us as a capital contribution or in exchange for our Capital Stock, other than Disqualified Stock, subsequent to the date of the Indenture, other than (x) capital contributions from a Restricted Subsidiary or issuance or sales of our Capital Stock to a Restricted Subsidiary or (y) the proceeds from the sale of Qualified Stock to an employee stock ownership plan or other trust established by us or any of our subsidiaries; plus (5) the aggregate net cash proceeds received by us or any Restricted Subsidiary from the sale, disposition or repayment of any Investment made after the date of the Indenture and constituting a Restricted Payment in an amount equal to the lesser of (a) the return of capital with respect to such Investment and (b) the initial amount of such Investment, in either case, less the cost of the disposition of such Investment; plus -115- (6) an amount equal to the consolidated Net Investment of us and/or any of our Restricted Subsidiaries in any Subsidiary that has been designated as an Unrestricted Subsidiary after the date of the Indenture upon its redesignation as a Restricted Subsidiary in accordance with the covenant described under "--Certain Covenants--Limitation on Designations of Unrestricted Subsidiaries;" plus (7) cash proceeds from the sale to Lucent of the Series A Notes, less payments made by us or any of our Subsidiaries with respect to Series A Notes, other than payments of additional Series A Notes; plus (8) Total Consolidated Indebtedness; minus (9) the aggregate amount of all Restricted Payments including any Designation Amount, but other than a Restricted Payment of the type referred to in clause (3)(b) of the third paragraph of the covenant described under "--Certain Covenants--Limitations on Restricted Payments," declared or made on or after the date of the Indenture. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S)77aaa-77bbbb) as in effect on the date of the Indenture. "Trustee" means the party named as such in the Indenture until a successor replaces it and, after such replacement, means the successor. "Trust Officer" means the Chairman of the board of directors, the President or any other officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters. "TWR Cellular" means TWR Cellular, Inc., a Delaware corporation, and an Affiliate of AT&T Wireless. "Unrestricted Subsidiary" means (1) any of our Subsidiaries, other than an Ineligible Subsidiary, designated after the date of the Indenture as such under, and in compliance with, the covenant described under "--Certain Covenants-- Limitation on Designations of Unrestricted Subsidiaries" and (2) any Marketing Affiliate. Any such designation of any of our Subsidiaries may be revoked by a resolution of our Board delivered to the Trustee certifying compliance with such covenant, subject to the provisions of such covenant. "U.S. Government Obligations" means direct obligations, or certificates representing an ownership interest in such obligations, of the United States of America, including any agency or instrumentality of the United States of America, for the payment of which the full faith and credit of the United States of America is pledged and which are not callable or redeemable at the issuer's option. "Vendor Credit Arrangement" means any Indebtedness, including, without limitation, Indebtedness under any credit facility entered into with any vendor or supplier or any financial institution acting on behalf of such vendor or supplier; provided that the net proceeds of such Indebtedness are used solely for the purpose of financing the cost, including, without limitation, the cost of design, development, site acquisition, construction, integration, handset manufacture or acquisition or microwave relocation, of assets used or usable in a Permitted Business, including, without limitation, through the acquisition of Capital Stock of an entity engaged in a Permitted Business. "Voting Stock" of any Person means the Capital Stock of such Person which ordinarily has voting power for the election of directors, or Persons performing similar functions, of such Person, whether at all times or only so long as no senior class of securities has such voting power by reason of any contingency. "Wholly Owned Subsidiary" means a Restricted Subsidiary, all of the outstanding Capital Stock or other ownership interests of which, other than directors' qualifying shares, shall at the time be owned by us and/or by one or more Wholly Owned Subsidiaries. "Wireless 2000" means Wireless 2000, Inc. "Wireless 2000 Acquisition" means our purchase from Wireless 2000 of 15 MHz of C-Block Licenses for the Monroe, Alexandria and Lake Charles, Louisiana BTAs. -116- CERTAIN U.S. FEDERAL TAX CONSIDERATIONS The following is a discussion of certain material U.S. federal income and estate tax consequences of the acquisition, ownership, disposition and exchange of the Notes. Unless otherwise stated, this discussion is limited to the tax consequences to those persons who are initial purchasers of the Notes and who hold such Notes as capital assets within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code") (for purposes of this section, the "Holders"). The discussion does not purport to address specific tax consequences that may be relevant to particular persons, including, for example, financial institutions, broker-dealers, insurance companies, tax-exempt organizations, and persons in special situations, such as those who hold the Notes as part of a straddle, hedge, conversion transaction, or other integrated investment. In addition, this discussion does not address U.S. federal alternative minimum tax consequences or any aspect of state, local or foreign taxation. This discussion is based upon the Code, the Treasury regulations promulgated under, and administrative and judicial interpretations of such Code and regulations, all of which are subject to change, possibly on a retroactive basis. We have not sought and will not seek any rulings from the Internal Revenue Service (the "Service") with respect to the Notes. There can be no assurance that the Service will not take a different position concerning the tax consequences of the purchase, ownership or disposition of the Notes or that a court would not sustain the Service's position. For purposes of this discussion, a "U.S. Holder" means a Holder that, for U.S. federal income tax purposes, is (1) a U.S. citizen or resident, (2) a corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision, (3) an estate the income of which is subject to U.S. federal income taxation regardless of its source, or (4) a trust if (A) a U.S. court exercises primary jurisdiction over its administration and (B) one or more "United States persons" (as defined under Section 7701(a)(30) of the Code) has the authority to control all substantial decisions. A "Non-U.S. Holder" is any Holder other than a U.S. Holder. PROSPECTIVE PURCHASERS OF THE NOTES ARE URGED TO CONSULT THEIR TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES TO THEM OF ACQUIRING, OWNING, DISPOSING AND EXCHANGING OF THE NOTES, AS WELL AS THE APPLICATION OF STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS AND OF ANY CHANGE IN FEDERAL TAX LAW OR ADMINISTRATIVE OR JUDICIAL INTERPRETATION OF SUCH LAW SINCE THE DATE OF THIS PROSPECTUS. Exchange Offer The exchange of Exchange Notes for the Old Notes in the Exchange Offer should not be treated as an "exchange" for federal income tax purposes because the Exchange Notes will not be considered to differ materially in kind or extent from the Old Notes. As a result, there should be no federal income tax consequences to holders of the Old Notes exchanging the Old Notes for the Exchanges Notes in the Exchange Offer. No gain or loss should be realized by a holder upon receipt of an Exchange Note. The basis of the Exchange Notes would be the same as the adjusted basis of the Notes immediately before the exchange and the holding period of the Exchange Notes would include the holding period of the Notes. The Exchange Notes would be subject to the tax rules applicable to the Notes as described above, including with respect to the accrual and inclusion in income of OID. It is possible that the Service could take a different position concerning the exchange of Notes for Exchange Notes in the event of a Registration Default that results in the payment of liquidated damages with respect to the Notes. Holders are urged to consult their own tax advisors regarding the tax consequences of the Exchange Offer. Characterization of the Notes We will treat the Notes as indebtedness for U.S. federal income tax purposes, and the following discussion assumes that such treatment will be respected. Accordingly, under Section 385(c) of the Code, a Holder also will generally be required to treat the Notes as indebtedness. A Holder taking an inconsistent position must expressly disclose such fact in the Holder's return. Tax Consequences to U.S. Holders Original Issue Discount. The Notes will be treated as issued with original issue discount ("OID"). All U.S. Holders, regardless of their method of accounting for tax purposes, will be required to include OID in income as it accrues. Therefore, inclusion of the OID in gross income will occur in advance of the receipt of some or all of the related cash payments (whether labeled as interest or otherwise). OID will generally be treated as interest income to a U.S. Holder and will accrue on a constant yield-to-maturity basis over the life of the Notes, as discussed below. -117- The amount of OID with respect to a Note will be equal to the excess of the "stated redemption price at maturity" of such Note over its "issue price." The "stated redemption price at maturity" of a debt instrument generally includes all cash payments, including principal and interest, required to be made with respect to the debt instrument through its maturity, other than "qualified stated interest." "Qualified stated interest" is generally defined as stated interest that is unconditionally payable in cash or other property, other than debt instruments of the issuer, at least annually and at a single fixed rate that appropriately takes into account the lengths of intervals between payments. The stated interest on the Notes will not qualify as "qualified stated interest," and thus the "stated redemption price at maturity" of a Note will include all cash payments of principal and interest through maturity. The "issue price" of the Notes will be the first price at which a substantial portion are sold to investors, excluding bond houses, brokers, or similar persons acting as underwriters, placement agents, or wholesalers, for cash. Taxation of Original Issue Discount. The amount of OID accruing to and includible in income by a U.S. Holder of a Note will be the sum of the "daily portions" of OID with respect to such Note for each day during the taxable year or portion of such taxable year on which such Holder owns such Note ("accrued OID"). The daily portion is determined by allocating to each day in any "accrual period" a pro rata portion of the OID allocable to that accrual period. The accrual periods are periods of any length and may vary in length over the term of a Note, provided that each accrual period is no longer than one year and each scheduled payment of principal or interest occurs either on the final day or on the first day of an accrual period. The amount of OID accruing during any accrual period with respect to a Note will be equal to the product of (x) the "adjusted issue price" of such Note at the beginning of that accrual period and (y) the yield to maturity of such Note, taking into account the length of the accrual period. The "adjusted issue price" of a Note at the beginning of its first accrual period will be equal to its issue price. The "adjusted issue price" at the beginning of any subsequent accrual period will be equal to (1) the adjusted issue price at the beginning of the prior accrual period, plus (2) the amount of OID accrued during the prior accrual period, minus (3) any payments made on the Note during the prior accrual period. The "yield to maturity" of a Note is the discount rate that, when used in computing the present value of all principal and interest payments to be made on the Note, produces an amount equal to the issue price of the Note. OID allocable to a final accrual period is the difference between the amount payable at maturity and the adjusted issue price at the beginning of the final accrual period. If all accrual periods are of equal length, except for an initial short accrual period, the amount of OID allocable to the initial short accrual period may be computed under any reasonable method. We are required to report the amount of OID accrued on the Notes held of record by persons other than corporations and certain other Holders. See "-- Information Reporting and Backup Withholding." Because stated interest on the Notes is taken into account in the accrual of OID, a U.S. Holder will not be required to recognize any income upon receipt of interest payments on the Notes. The tax basis of a Note in the hands of a U.S. Holder will be increased by the amount of OID, if any, on the Note that is included in the U.S. Holder's income under these rules and will be decreased by the amount of any payments, whether stated as interest or principal, made with respect to the Note. Acquisition Premium. A subsequent U.S. Holder of a Note is generally subject to the rules for accruing OID described above. However, if such U.S. Holder's purchase price for the Note exceeds the adjusted issue price but is less than or equal to the sum of all amounts payable on the Note after the purchase date, the excess ("acquisition premium") is subject to special rules. Acquisition premium ratably offsets the amount of accrued OID otherwise includible in such U.S. Holder's taxable income, i.e., such U.S. Holder may reduce the daily portions of OID by a fraction, the numerator of which is the excess of such U.S. Holder's purchase price for the Note over the adjusted issue price, and the denominator of which is the excess of the sum of all amounts payable on the Note after the purchase date over the Note's adjusted issue price. As an alternative to reducing the amount of OID otherwise includible in income by this fraction, the U.S. Holder may elect to compute OID accruals by treating the purchase as a purchase at original issuance and applying the constant yield method described above under "Taxation of Original Issue Discount." Market Discount. Under the market discount rules of the Code, a U.S. Holder who purchases a Note at a "market discount" will generally be required to treat any gain recognized on the disposition of the Note as ordinary income to the extent of the lesser of such gain or the portion of the market discount that accrued during the period that the U.S. Holder held such Note. Market discount is generally defined as the amount by which a U.S. Holder's purchase price for a Note is less than the revised issue price of the Note on the date of purchase, subject to a statutory de minimis exception. A Note's revised issue price equals the sum of the issue price of the Note and the aggregate amount of the OID includible in the gross income of all Holders of such Note for periods before the acquisition of the Note by such Holder, likely reduced, although the Code does not expressly so provide, by any cash payment in respect of the Note. A U.S. Holder who acquires a Note at a market discount may be required to defer a portion of any interest expense that otherwise may be deductible on any indebtedness incurred or continued to purchase or carry such Note until the U.S. Holder disposes of the Note in a taxable transaction. -118- A U.S. Holder who has elected under applicable Code provisions to include market discount in income annually as such discount accrues will not, however, be required to treat any gain recognized as ordinary income or to defer any deductions for interest expense under these rules. A U.S. Holder's tax basis in a Note is increased by each accrual of amounts treated as market discount. This election to include market discount in income currently, once made, applies to all market discount obligations acquired on or after the first day of the taxable year to which the election applies and may not be revoked without the consent of the Service. Holders should consult their tax advisors as to the portion of any gain that would be taxable as ordinary income under these provisions and any other consequences of the market discount rules that may apply to them in particular. Election to Treat All Interest as Original Issue Discount. U.S. Holders may elect to include in gross income all amounts in the nature of interest that accrue on a Note, including any stated interest, acquisition discount, OID, market discount, de minimis OID, de minimis market discount and unstated interest, as adjusted by amortizable bond premium and acquisition premium, by using the constant yield method described above under "Taxation of Original Issue Discount." Such an election for a Note with amortizable bond premium results in a deemed election to amortize bond premium for all debt instruments owned and later acquired by the U.S. Holder with amortizable bond premium and may be revoked only with the permission of the Service. Similarly, such an election for a Note with market discount results in a deemed election to accrue market discount in income currently for such Note and for all other bonds acquired by the U.S. Holder with market discount on or after the first day of the taxable year to which such election first applies, and may be revoked only with permission of the Service. A U.S. Holder's tax basis in a Note is increased by each accrual of the amounts treated as OID under the constant yield election described in this paragraph. Change of Control. In the event of a change of control, the Holders will have the right to require us to purchase their Notes. The Treasury regulations provide that the right of Holders of the Notes to require redemption of the Notes upon the occurrence of a change of control will not affect the yield or maturity date of the Notes unless, based on all the facts and circumstances as of the issue date, it is more likely than not that a change of control giving rise to the redemption right will occur. We do not intend to treat this redemption provision of the Notes as affecting the computation of the yield to maturity of the Notes. Redemption of Notes. We may redeem the Notes at any time on or after a certain date, and, in certain circumstances, may redeem or repurchase all or a portion of the Notes any time prior to the maturity date. Under Treasury regulations, we are deemed to exercise any option to redeem if the exercise of such option would lower the yield of the debt instrument. We believe, and intend to take the position, that we will not be treated as having exercised an option to redeem under these rules. Sale, Redemption, Exchange or Retirement of the Notes. Upon the sale, redemption, exchange or retirement of the Notes, a U.S. Holder will recognize gain or loss equal to the difference between (1) the amount of cash and the fair market value of property received upon the sale, redemption, exchange or retirement and (2) the U.S. Holder's adjusted tax basis in the Notes. A U.S. Holder's adjusted tax basis in the Notes will generally be the U.S. Holder's cost therefor increased by the amount of OID previously accrued on the Notes through the sale, redemption, exchange or retirement date and decreased by the amount of all prior cash payments received with respect to the Notes. Gain or loss recognized by a U.S. Holder on the sale, redemption, exchange, or retirement of the Notes will be capital gain or loss, except to the extent it constitutes accrued but unrecognized market discount, and will be long-term capital gain or loss if the Notes have been held by the U.S. Holder for more than one year. U.S. Tax Consequences to Non-U.S. Holders For purposes of the following discussion, interest income, OID and gain on the sale, redemption, exchange or retirement of a Note will be U.S. trade or business income if such income or gain is effectively connected with a trade or business carried on by the Non-U.S. Holder within the United States. Interest and OID. In general, any interest or OID paid to a Non-U.S. Holder of a Note will not be subject to U.S. federal income tax if (1) the interest or OID is not U.S. trade or business income, and (2) as discussed below, the interest or OID qualifies as "portfolio interest." Interest or OID on the Notes generally will qualify as "portfolio interest" if (1) the Non-U.S. Holder does not actually or constructively own 10% or more of the total combined voting power of all classes of our stock entitled to vote, (2) the Non-U.S. Holder is not a controlled foreign corporation (as defined in the Code) with respect to which we are a "related person" within the meaning of the Code, and (3) either (A) the Non-U.S. Holder certifies to us or our agent under penalties of perjury that it is not a U.S. person and such certificate provides such Non-U.S. Holder's name and address, or (B) in the case of a Note held by a securities clearing organization, bank, or other financial institution that holds customers' securities in the ordinary course of its trade or business (a "financial institution"), the financial institution certifies to us or our agent under penalties of perjury that such -119- certificate has been received from the Non-U.S. Holder by it or by another financial institution and the financial institution furnishes the payor with a copy of the Non-U.S. Holder's certificate. Under recently finalized Treasury Regulations (the "Final Regulations"), the certification requirements described above may also be satisfied with other documentary evidence for interest paid after December 31, 1999, with respect to an offshore account or through certain foreign intermediaries. If the interest or OID neither qualifies as portfolio interest nor is treated as U.S. trade or business income, the gross amount of the payment generally will be subject to U.S. withholding tax at the rate of 30% unless such rate is reduced or eliminated by an applicable income tax treaty. U.S. trade or business income generally will be subject to U.S. federal income tax at regular rates in the same manner as if the Non-U.S. Holder were a U.S. Holder, and, in the case of a Non-U.S. Holder that is a corporation, such income, under certain circumstances, may be subject to an additional "branch profits tax" at a 30% rate or such lower rate as may be applicable under an income tax treaty, but such income generally will not be subject to the 30% withholding tax. To claim the benefit of a lower or zero withholding rate under an income tax treaty or to claim exemption from withholding because the income is U.S. trade or business income, the Non-U.S. Holder must provide the payor with a properly executed IRS Form 1001 or 4224, respectively or, in the case of payments after December 31, 1999, IRS Form W-8, prior to the payment of interest or OID. Sale, Exchange, Redemption, or Other Disposition of a Note. Any gain realized by a Non-U.S. Holder on the sale, redemption, exchange or other disposition of a Note generally will not be subject to U.S. federal income or withholding taxes unless (1) such gain is effectively connected with the conduct of a trade or business in the United States by the Non-U.S. Holder or (2) in the case of an individual, such Non-U.S. Holder is present in the United States for 183 days or more and certain other conditions are met. U.S. Federal Estate Tax. In general, notes held by an individual who is neither a citizen nor a resident of the United States for U.S. federal estate tax purposes at the time of such individual's death will not be subject to U.S. federal estate tax unless the income from such Notes was effectively connected with a U.S. trade or business of such individual or would not qualify as portfolio interest (as described above under "Tax Consequences to Non-U.S. Holders--Interest and OID"), without regard to the certification requirements, if received by such individual at the time of his or her death. Information Reporting and Backup Withholding We will be required to report annually to the IRS, and to each Holder of record, the amount of OID paid on the Notes, and the amount withheld for federal income taxes, if any, for each calendar year, except as to exempt Holders, generally, corporations, tax-exempt organizations, qualified pension and profit- sharing trusts, individual retirement accounts, or nonresident aliens who provide certification as to their status. Each Holder, other than Holders who are not subject to the reporting requirements, will be required to provide to us, under penalties of perjury, a certificate containing the Holder's name, address, correct federal taxpayer identification number and a statement that the Holder is not subject to backup withholding. Should a nonexempt Holder fail to provide the required certificate, we will be required to withhold 31% of the OID otherwise payable to the Holder and to remit the withheld amount to the Service as a credit against the Holder's federal income tax liability. In the case of payments of OID to Non-U.S. Holders, temporary Treasury regulations provide that the 31% backup withholding tax and certain information reporting will not apply to such payments with respect to which the requisite certification, as described above, for the exemption from the 30% withholding tax, has been received or an exemption has otherwise been established; provided that neither we nor our payment agent have actual knowledge that the Holder is a U.S. person or that the conditions of any other exemption are not in fact satisfied. Under temporary Treasury regulations, these information reporting and backup withholding requirements will apply, however, to the gross proceeds paid to a Non-U.S. Holder on the disposition of Notes by or through a U.S. office of a U.S. or foreign broker, unless the Holder certifies to the broker under penalties of perjury as to its name, address and status as a foreign person or the Holder otherwise establishes an exemption. Information reporting requirements will also apply to a payment of the proceeds of a disposition of Notes by or through a foreign office of a U.S. broker or foreign brokers with certain types of relationships to the United States unless such broker has documentary evidence in its file that the Holder is not a U.S. person, and such broker has no actual knowledge to the contrary, or the Holder establishes an exception; backup withholding will not apply to such payment, absent actual knowledge that the Holder is a U.S. Holder. Neither information reporting nor backup withholding generally will apply to a payment of the proceeds of a disposition of Notes by or through a foreign office of a foreign broker not subject to the previous sentence. The Treasury Department recently promulgated final regulations regarding the withholding and information reporting rules relating to Non-U.S. Holders discussed above. In general, the final regulations do not significantly alter the substantive withholding and information reporting requirements but rather unify current certification procedures and forms and clarify reliance standards. The final regulations are generally effective for payments made after December 31, 1999, subject to certain transition rules. Non-U.S. Holders should consult their own tax advisors with respect to the impact, if any, of the new final regulations. -120- Applicable High Yield Discount Obligations Section 163 of the Code provides that the yield with respect to certain "applicable high yield discount obligations" will be bifurcated into two elements: (1) an interest element that is deductible by the issuer only when paid (generally in cash) and (2) a disqualified portion, if any, as described below, for which the issuer receives no deduction (the "disqualified portion"). A U.S. Holder of an applicable high yield discount obligation must continue to include interest or OID on the obligation in income as it accrues. A corporate U.S. Holder of such obligation, however, is allowed to claim a dividends- received deduction for the part of the disqualified portion, if any, as described below, that would have been treated as a dividend had it been distributed to such Holder by the issuing corporation with respect to its stock. The deduction by us of OID on the Notes will be limited if the Notes constitute applicable high yield discount obligations. A Note will be an applicable high yield discount obligation if (1) its yield to maturity equals or exceeds the sum of (x) the long-term applicable federal rate for the month in which it was issued and (y) 5% and (2) the Note has significant OID. A Note will have significant OID if (1) the aggregate amount that would be included in gross income with respect to the Note for periods before the close of any accrual period that ends more than five years after the date of issue exceeds (2) the sum of (x) the aggregate amount of interest to be paid, generally in cash, under the Note before the close of such accrual period and (y) the product of the Note's issue price and its yield to maturity. If the Notes are applicable high yield discount obligations, the disqualified portion of OID will equal the lesser of (x) the amount of the OID on the Note and (y) the product of the total OID on the Notes and a fraction, the numerator of which is (a) the yield to maturity minus (b) the sum of 6% and the long-term applicable federal rate in effect for the month in which the Notes are issued, and the denominator of which is the yield to maturity. Corporate U.S. Holders generally will be eligible for the dividends- received deduction with respect to any disqualified portion of OID on a Note to the extent of our accumulated or current earnings and profits, if any. The availability of the dividends-received deduction is subject to a number of complex limitations. Although the issue is not totally clear, any amount qualifying as a dividend should not be subject to extraordinary dividend treatment under Section 1059 of the Code. Corporate U.S. Holders should consult their tax advisors concerning the availability of the dividends-received deduction. -121- BOOK-ENTRY; DELIVERY AND FORM The Exchange Notes are represented by a permanent global certificate in definitive, fully registered form (the "Global Note"). The Global Note is registered in the name of a nominee of DTC. Certain Book-Entry Procedures for the Global Notes The descriptions of the operations and procedures of DTC, Euroclear and Cedel set forth below are provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems, and are subject to change by them from time to time. Neither we nor any of the initial purchasers of the Old Notes takes any responsibility for these operations or procedures, and investors are urged to contact the relevant system or its participants directly to discuss these matters. DTC has advised us that it is (1) a limited purpose trust company organized under the laws of the State of New York, (2) a "banking organization" within the meaning of the New York Banking Law, (3) a member of the Federal Reserve System, (4) a "clearing corporation" within the meaning of the Uniform Commercial Code, as amended, and (5) a "clearing agency" registered under Section 17A of the Exchange Act. DTC was created to hold securities for its participants (collectively, the "Participants") and facilitates the clearance and settlement of securities transactions between Participants through electronic book-entry changes to the accounts of its Participants, thereby eliminating the need for physical transfer and delivery of certificates. DTC's Participants include securities brokers and dealers, including the initial purchasers, banks and trust companies, clearing corporations and certain other organizations. Indirect access to DTC's system is also available to other entities such as banks, brokers, dealers and trust companies (collectively, the "Indirect Participants") that clear through, or maintain a custodial relationship with a Participant, either directly or indirectly. Investors who are not Participants may beneficially own securities held by, or on behalf of DTC only through Participants or Indirect Participants. We expect that under procedures established by DTC, (1) upon deposit of each Global Note, DTC will credit the accounts of Participants designated by the initial purchasers of the Old Notes with an interest in the Global Note and (2) ownership of the Notes will be shown on, and the transfer of ownership of the Notes will be effected only through, records maintained by DTC, with respect to the interests of Participants and the records of Participants and the Indirect Participants (with respect to the interests of persons other than Participants). The laws of some jurisdictions may require that certain purchasers of securities take physical delivery of such securities in definitive form. Accordingly, the ability to transfer interests in the Notes represented by a Global Note to such persons may be limited. In addition, because DTC can act only on behalf of its Participants, who in turn act on behalf of persons who hold interests through Participants, the ability of a person having an interest in the Notes represented by a Global Note to pledge or transfer such interest to persons or entities that do not participate in DTC's system, or to otherwise take actions in respect of such interest, may be affected by the lack of a physical definitive security in respect of such interest. So long as DTC or its nominee is the registered owner of a Global Note, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the Notes represented by the Global Note for all purposes under the Indenture. Except as provided below, owners of beneficial interests in a Global Note will not be entitled to have the Notes represented by such Global Note registered in their names, will not receive or be entitled to receive physical delivery of Certificated Notes and will not be considered the owners or holders under the Indenture for any purpose, including with respect to the giving of any direction, instruction or approval to the Trustee. Accordingly, each holder owning a beneficial interest in a Global Note must rely on the procedures of DTC and, if such holder is not a Participant or an Indirect Participant, on the procedures of the Participant through which such holder owns its interest, to exercise any rights of a holder of the Notes under the Indenture or such Global Note. We understand that, under existing industry practice, if we request any action of holders of the Notes, or a holder that is an owner of a beneficial interest in a Global Note desires to take any action that DTC, as the holder of such Global Note, is entitled to take, DTC would authorize the Participants to take such action and the Participants would authorize holders owning through such Participants to take such action or would otherwise act upon the instruction of such holders. Neither we nor the Trustee will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, the Notes by DTC, or for maintaining, supervising or reviewing any records of DTC relating to such Notes. Payments with respect to the principal and interest, and premium, if any, and liquidated damages, if any, on any Notes represented by a Global Note registered in the name of DTC or its nominee on the applicable record date will be payable by the Trustee to, or at the direction of, DTC or its nominee in its capacity as the registered holder of the Global Note representing such Notes under the Indenture. Under the terms of the Indenture, we and the Trustee will be permitted to treat the persons in whose names the Notes, including the Global Notes, are registered as the owners of such Notes for the purpose of receiving payment thereon and for any and all other purposes whatsoever. Accordingly, neither we nor the Trustee have or will have any -122- responsibility or liability for the payment of such amounts to owners of beneficial interests in a Global Note (including principal, premium, if any, liquidated damages, if any, and interest). Payments by the Participants and the Indirect Participants to the owners of beneficial interests in a Global Note will be governed by standing instructions and customary industry practice, and will be the responsibility of the Participants or the Indirect Participants and DTC. Transfers between Participants in DTC will be effected in accordance with DTC's procedures and will be settled in same-day funds. Transfers between participants in Euroclear or Cedel will be effected in the ordinary way in accordance with their respective rules and operating procedures. Subject to compliance with the transfer restrictions applicable to the Notes, cross-market transfers between the Participants in DTC, on the one hand, and Euroclear or Cedel participants on the other hand, will be effected through DTC in accordance with DTC's rules on behalf of Euroclear or Cedel, as the case may be; however, such cross-market transactions will require delivery of instructions to Euroclear or Cedel, as the case may be, by the counterparty in such system in accordance with the rules and procedures, and within the established deadlines (Brussels time), of such system. Euroclear or Cedel, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its depositary to take action to effect final settlement on its behalf, by delivering or receiving interests in the relevant Global Notes in DTC and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear participants and Cedel participants may not deliver instructions directly to the depositaries for Euroclear or Cedel. Because of time zone differences, the securities account of a Euroclear or Cedel participant purchasing an interest in a Global Note from a Participant in DTC will be credited, and any such crediting will be reported to the relevant Euroclear or Cedel participant, during the securities settlement processing day, which must be a business day for Euroclear or Cedel, as the case may be, immediately following the settlement date of DTC. Cash received by Euroclear or Cedel as a result of sales of interests in a Global Note by or through a Euroclear or Cedel participant to a Participant in DTC will be received with value on the settlement date of DTC, but will be available in the relevant Euroclear or Cedel cash account only as of the business day for Euroclear or Cedel, as the case may be, following DTC's settlement date. Although DTC, Euroclear and Cedel have agreed to the foregoing procedures to facilitate transfers of interests in the Global Notes among participants in DTC, Euroclear and Cedel, they are under no obligation to perform or to continue to perform such procedures, and such procedures may be discontinued at any time. Neither we nor the Trustee will have any responsibility for the performance by DTC, Euroclear or Cedel, or their respective participants or indirect participants, of their respective obligations under the rules and procedures governing their operations. Certificated Notes If (1) we notify the Trustee in writing that DTC is no longer willing or able to act as a depositary, or DTC ceases to be registered as a clearing agency under the Exchange Act and a successor depositary is not appointed within 90 days of such notice or cessation, (2) we, at our option, notify the Trustee in writing that it elects to cause the issuance of the Notes in definitive form under the Indenture, or (3) upon the occurrence of certain other events as provided in the Indenture, then, upon surrender by DTC of the Global Notes, Certificated Notes will be issued to each person that DTC identifies as the beneficial owner of the Notes represented by the Global Notes. Upon any such issuance, the Trustee is required to register such Certificated Notes in the name of such person or persons, or the nominee of any such person, and cause the same to be delivered to such person. Neither we nor the Trustee shall be liable for any delay by DTC or any Participant or Indirect Participant in identifying the beneficial owners of the related Notes, and each such person may conclusively rely on, and shall be protected in relying on, instructions from DTC for all purposes, including with respect to the registration and delivery, and the respective principal amounts, of the Notes to be issued. -123- PLAN OF DISTRIBUTION Each broker-dealer that receives Exchange Notes for its own account in the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. A broker-dealer may use this prospectus, as it may be amended or supplemented from time to time, in connection with resales of Exchange Notes received in exchange for Old Notes where such broker-dealer acquired such Old Notes as a result of market-making activities or other trading activities. For a period of 180 days after the Expiration Date, we will make this prospectus, as amended or supplemented, available to any broker-dealer that requests such documents in the Letter of Transmittal, for use in connection with any such resale. In addition, until , 1999 (90 days after the date of this prospectus), all dealers effecting transactions in the Exchange Notes may be required to deliver a prospectus. Each holder of Old Notes participating in the Exchange Offer will, by execution of the Letter of Transmittal, represent to us that such holder is not engaged in nor intends to engage in a distribution of Exchange Notes. We will not receive any proceeds from any sale of Exchange Notes by broker- dealers. Exchange Notes received by broker-dealers for their own account in the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker- dealer or the purchasers of any such Exchange Notes. Any broker-dealer that resells Exchange Notes that were received by it for its own account in the Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of Exchange Notes and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of 180 days after the Expiration Date we will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. We have agreed to pay all expenses incident to the Exchange Offer (including the expenses of one counsel for the holders of the Notes) other than commissions or concessions of any brokers or dealers and will indemnify the holders of the Notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act. The Exchange Notes are new securities with no established trading market. We do not intend to list the Exchange Notes on any securities exchange, but the Old Notes have been designated for trading in the PORTAL market. We cannot assure you that a liquid market will develop for the Exchange Notes, that you will be able to sell your Exchange Notes at a particular time or that the prices that you receive when you sell will be favorable. Future trading prices of the Exchange Notes will depend on many factors, including our operating performance and financial condition, prevailing interest rates and the market for similar securities. LEGAL MATTERS Certain legal matters with regard to the validity of the Notes will be passed upon for us by McDermott, Will & Emery, New York, New York. Mr. Sullivan, our Executive Vice President, Chief Financial Officer and a member of our Board is counsel to McDermott, Will & Emery. Mr. Sullivan owns certain shares of our capital stock. EXPERTS The consolidated balance sheets as of December 31, 1997 and 1998, and the consolidated statements of operations, changes in stockholders' equity (deficit), and cash flows for the period July 29, 1996 (date of inception) to December 31, 1996, and for the years ended December 31, 1997 and 1998, included in this prospectus, have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in accounting and auditing. AVAILABLE INFORMATION We have filed with the SEC a registration statement on Form S-4 under the Securities Act with respect to the Exchange Notes here offered. As permitted by the rules and regulations of the SEC, this prospectus omits certain information, exhibits and undertakings contained in the registration statement. For further information with respect to us and the Exchange Notes, you should review the registration statement, including the exhibits and the financial statements to such registration statement, notes -124- and schedules filed as a part of such registration statement. As a result of the Exchange Offer, we will become subject to the informational requirements of the Exchange Act. The registration statement and the exhibits and schedules to such registration statement, as well as the periodic reports and other information filed with the SEC, may be inspected and copied at the Public Reference Section of the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, NW, Washington, DC 20549 and at the regional offices of the SEC located at 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such materials may be obtained from the Public Reference Section of the SEC, Room 1024, Judiciary Plaza, 450 Fifth Street, NW, Washington DC 20549, and its public reference facilities in New York, New York at the prescribed rates. You may obtain information as to the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a Web site at http://www.sec.gov that contains periodic reports, proxy and information statements and other information regarding registrants that file documents electronically with the SEC. Statements contained in this prospectus as to the contents of any contract or other document are not necessarily complete, and in each instance reference is made to the copy of such contract or document filed as an exhibit to the registration statement, each such statement being qualified in all respects by such reference. Under the indenture governing the Notes, we have agreed to file with the SEC and provide to the holders of the Notes annual reports and the information, documents and other reports which are specified in Section 13 and 15(d) of the Exchange Act. -125- GLOSSARY OF SELECTED TERMS ANALOG.................. A method of transmission where the wave form of the output signal is analogous to the wave form of the input signal. BANDWIDTH............... The number of bits of information which can move through a communications medium in a given amount of time; the capacity of a telecommunications network to carry voice, data and video information. BASE STATION............ A fixed site with network equipment that is used for radio frequency communications with mobile stations, and is part of a cell, or sector within a cell. BLOCK................... The distinct radio frequency block in which one-way radio applications, such as paging or beeper services, and two-way radio applications such as wireless communications, cellular telephone and ESMR networks, are licensed and operated. Blocks are categorized as A- , B- C-, D-, E- or F- Blocks. A- and B- Blocks are each PCS 30 MHz licenses covering an MTA. C- Block is a PCS 30 MHz license covering a BTA. D-, E- and F- Block are each PCS 10 MHz licenses covering a BTA. BTA..................... One of the 493 basic trading areas, which are smaller than MTAs, into which the licensing for broadband PCS has been divided based on the geographic divisions in the 1992 Rand McNally Commercial Atlas & Marketing Guide, as modified by the FCC. CALLER ID............... Caller identification. A service to telephone customers that allows each such customer to know the identity of incoming callers. CDMA.................... Code division multiple access. A digital spread- spectrum wireless technology which allows a large number of users to access a single frequency band that assigns a code to all speech bits, sends a scrambled transmission of the encoded speech over the air, and reassembles the speech to its original format. CELL SITE............... The location of a transmitting/receiving station serving a given geographic area in a cellular communications system. CELLULAR................ Domestic public cellular radio communications service authorized by the FCC in the 824-893 MHz band, in which each of two licensees per market employs 25 MHz of spectrum to provide wireless services. CMRS.................... Commercial mobile radio service. COVERED POPS............ The number of Pops in a defined area for whom a cellular signal is accessible. DIGITAL................. A method of storing, processing and transmitting information through the use of distinct electronic or optical pulses that represent the binary digits 0 and 1. Digital transmission and switching technologies employ a sequence of discrete, distinct pulses to represent information, as opposed to the continuously variable analog signal. Digital wireless networks use digital transmission. DUAL-MODE............... A wireless phone which is capable of operating on both digital and analog technologies. ESMR.................... Enhanced specialized mobile radio. A radio communications system that employs digital technology with multi-site configuration that permits frequency reuse, offering enhanced dispatch services to traditional analog SMR users. FREQUENCY............... The number of cycles per second, measured in hertz, of a periodic oscillation or wave in radio propagation. -126- GSM..................... Global system for mobile communications. The standard digital cellular telephone service in Europe and Japan, guided by a set of standards specifying the infrastructure for digital cellular service, including the radio interface (900 MHz), switching, signaling and intelligent network. HAND-OFF................ The act of transferring communication with a mobile unit from one base station to another. A hand-off transfers a call from the current base station to the new base station. A "soft" hand-off establishes communications with a new cell before terminating communications with the old cell. INTERCONNECTION......... Any variety of arrangements that permits the connection of communications equipment to a common carrier network such as a public switched telephone network, and which defines the terms of revenue-sharing. Terms of interconnection are either negotiated between the network operators or imposed by regulatory authorities. LICENSED POPS........... The number of Pops in the area covered by a license (cellular or PCS). MHZ..................... Megahertz. A unit of measurement of bandwidth in the radiowave spectrum. MICROWAVE RELOCATION.... The transferal of the business and public safety agencies which currently utilize radio spectrum within or adjacent to the spectrum allocated to PCS licensees by the FCC. MTA..................... One of the major trading areas into which the licensing for the A- and B-Blocks of broadband PCS spectrum has been divided based on the geographic divisions in the Rand McNally 1992 Commercial Atlas & Guide, as modified by the FCC. NOC..................... A network operations center from which a wireless communications network is monitored and maintained. PBX..................... Private branch exchange. POPS.................... A shorthand abbreviation for the population covered by a license or group of licenses. RESELLER................ A provider of PCS services that does not hold an FCC PCS license or own PCS facilities. The reseller purchases blocks of PCS numbers and capacity from a licensed carrier and resells service through its own distribution network to the public. Consequently, a reseller is both a customer of PCS licensee's services and a competitor of that licensee. ROAMING................. A service offered by mobile communications network operators which allows a subscriber to use his or her handset while in the service area of another carrier. Roaming requires an agreement between operators of different individual markets to permit customers of either operator to access the other's system. SMR..................... Specialized mobile radio. A two-way analog mobile radio telephone system typically used for dispatch services such as truck and taxi fleets. SPECTRUM................ The range of electromagnetic frequencies available for use for telecommunications services. SWITCH.................. A device that opens or closes circuits or selects the paths or circuits to be used for transmission of information. Switching is the process of interconnecting circuits to form a transmission path between users. -127- TDMA.................... Time division multiple access. A digital spread- spectrum technology which allocates a discrete amount of frequency bandwidth to each user to permit more than one simultaneous conversation on a single radio frequency channel. TRI-MODE................ A wireless phone which is capable of operating on either different digital protocols or both digital and analog technologies. WIRELESS LOCAL LOOP..... A system that eliminates the need for a wire (loop) connecting users to the public switched telephone network, which is used in conventional wired telephone systems, by transmitting voice messages over radio waves for the "last mile" connection between the location of the customer's telephone and a base station connected to the network equipment. -128- TELECORPS PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY INDEX Historical Financial Statements Page - ------------------------------- ---- Report of Independent Accountants F-2 Consolidated Balance Sheets F-3 Consolidated Statements of Operations F-4 Consolidated Statement of Changes in Stockholders' Equity (Deficit) F-5 Consolidated Statements of Cash Flows F-6 Notes to Consolidated Financial Statements F-8 Unaudited Pro forma Financial Statements - ---------------------------------------- Unaudited Pro Forma Condensed Consolidated Balance Sheet F-38 Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet F-40 F-1 Report of Independent Accountants --------------------------------- To the Board of Directors and Stockholders TeleCorp PCS Inc. and Subsidiaries and Predecessor Company: In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, changes in stockholders' equity (deficit) and cash flows present fairly, in all material respects, the financial position of TeleCorp PCS Inc. and Subsidiaries and Predecessor Company (the Company) at December 31, 1997 and 1998, and the consolidated results of their operations and their cash flows for the period July 29, 1996 (date of inception) to December 31, 1996, and for the years ended December 31, 1997 and 1998, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PricewaterhouseCoopers LLP McLean, Virginia March 8, 1999, except for the information in Note 15, for which the date is June 15, 1999 F-2 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY CONSOLIDATED BALANCE SHEETS ________ ASSETS
March 31, December 31 March 31, 1999 ------------------------------- 1999 pro forma Current assets: 1997 1998 (unaudited) (unaudited) ------------- -------------- -------------- --------------- Cash and cash equivalents $ 2,566,685 $ 111,732,841 $ 11,210,696 $ 230,047,360 Accounts receivable, net - - 3,657,709 3,657,709 Inventory - 778,235 7,701,032 7,701,032 Prepaid expenses - 2,185,444 2,471,605 2,471,605 Other current assets 73,468 1,218,263 157,249 157,249 ------------- -------------- -------------- -------------- Total current assets 2,640,153 115,914,783 25,198,291 244,034,955 Property and equipment, net 3,609,274 197,468,622 262,653,787 270,653,787 PCS licenses and microwave relocation costs, net 10,018,375 118,107,256 117,531,516 234,742,756 Intangible assets - AT&T agreements, net - 26,285,612 25,369,334 42,679,334 Deferred financing costs, net - 8,584,753 8,490,330 19,065,277 FCC deposit - - 17,818,549 - Other assets 26,673 283,006 841,730 3,597,668 ------------- ------------- -------------- -------------- Total assets $ 16,294,475 $ 466,644,032 $ 457,903,537 $ 814,773,777 ============= ============== ============== ============== LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable $ 3,202,295 $ 14,591,922 $ 28,247,873 $ 28,247,873 Accrued expenses 824,164 94,872,262 46,757,448 46,757,448 Microwave relocation obligation, current portion - 6,636,369 5,404,557 5,404,557 Long-term debt, current portion 4,881,073 - - - Accrued interest, current portion 389,079 4,490,553 4,154,008 4,154,008 ------------- -------------- -------------- --------------- Total current liabilities 9,296,611 120,591,106 84,563,886 84,563,886 Long-term debt 7,727,322 243,385,066 293,889,463 610,578,893 Microwave relocation obligation - 2,481,059 2,525,875 2,525,875 Accrued expenses - - 3,362,364 3,362,364 Deferred rent - 196,063 319,726 319,726 ------------- -------------- -------------- --------------- Total liabilities 17,023,933 366,653,294 384,661,314 701,350,744 ------------- -------------- -------------- --------------- Mandatorily redeemable preferred stock at carrying value, issued 367; 255,999; 256,206 (unaudited) and 382,803 (pro forma unaudited) shares, respectively, and outstanding, 367; 255,215; 254,845 (unaudited); and 381,648 (pro forma unaudited) shares, respectively, (liquidation preference $249,398,289 (unaudited) 4,144,340 240,408,879 245,131,494 362,660,656 as of March 31, 1999) Deferred compensation - (4,111) (11,078) (304,514) Treasury stock, none; 784; 1,155 (unaudited) and 1,155 (pro forma unaudited) shares, respectively, at cost - (8) (12) (12) Preferred stock subscriptions receivable - (75,914,054) (72,413,769) (149,499,135) ------------- -------------- -------------- --------------- Total mandatorily redeemable preferred stock, net 4,144,340 164,490,706 172,706,635 212,856,995 ------------- -------------- -------------- --------------- Commitments and contingencies Stockholders' equity (deficit): Series F preferred stock, par value $.01 per share, none, 33,361; 33,361 (unaudited) and 48,261 (pro forma unaudited) shares issued and outstanding, respectively (liquidation preference; $333 (unaudited) as of March 31, 1999) - 333 333 482 Common stock, par value $.01 per share, issued 19,335; 159,733; 159,733 (unaudited), and 243,141 (pro forma unaudited) shares, respectively, and outstanding 19,335; 157,946; 157,100 (unaudited) 856 1,597 1,597 2,431 and 240,508 (pro forma unaudited) shares, respectively Additional paid-in capital - 188,374 187,498 433,908 Deferred compensation - (7,177) (5,306) (25,015) Common stock subscriptions receivable - (86,221) (86,221) (283,455) Treasury stock, none; 1,787; 2,633 (unaudited) and 2,633 (pro forma unaudited) shares, respectively, at cost - (18) (26) (26) Accumulated deficit (4,874,654) (64,596,856) (99,562,287) (99,562,287) ------------- -------------- -------------- --------------- Total stockholders' equity (deficit) (4,873,798) (64,499,968) (99,464,412) (99,433,962) ------------- -------------- -------------- --------------- Total liabilities, mandatorily redeemable preferred stock and stockholders' equity (deficit) $ 16,294,475 $ 466,644,032 $ 457,903,537 $ 814,773,777 ============= ============== ============== ===============
The accompanying notes are an integral part of these consolidated financial statements. F-3 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS __________
For the period For the three For the three July 29, 1996 months months (date of For the year For the year ended ended inception) to ended ended March 31, March 31, December 31, December 31, December 31, 1998 1999 1996 1997 1998 (unaudited) (unaudited) -------------- ------------ ------------ ------------- ------------- Revenue: Service revenue $ - $ - $ - $ - $ 507,285 Equipment revenue - - - - 1,815,224 Roaming revenue - - 29,231 - 1,940,317 -------------- ------------ ------------ ------------- ------------- Total revenue $ - $ - $ 29,231 $ - $ 4,262,826 -------------- ------------ ------------ ------------- ------------- Operating expenses: Cost of revenue - - - - 2,829,448 Operations and development - - 9,772,485 - 7,352,578 Selling and marketing 9,747 304,062 6,324,666 369,392 8,040,922 General and administrative 515,146 2,637,035 26,239,119 2,246,456 10,278,338 Depreciation and amortization 75 10,625 1,583,864 39,129 3,052,980 -------------- ------------ ------------ ------------- ------------- Total operating expenses 524,968 2,951,722 43,920,134 2,654,977 31,554,266 -------------- ------------ ------------ ------------- ------------- Operating loss (524,968) (2,951,722) (43,890,903) (2,654,977) (27,291,440) Other (income) expense: Interest expense - 396,362 11,934,263 132,400 3,715,129 Interest income - (12,914) (4,697,233) (42,256) (741,429) Other expense - - 27,347 - 70,187 -------------- ------------ ------------ ------------- ------------- Net loss $ (524,968) $ (3,335,170) $(51,155,280) $ (2,745,121) $ (30,335,327) Accretion of mandatorily redeemable preferred stock (288,959) (725,557) (8,566,922) (103,608) (4,630,104) -------------- ------------ ------------ ------------- ------------- Net loss attributable to common equity $ (813,927) $ (4,060,727) $(59,722,202) $ (2,848,729) $ (34,965,431) ============== ============ ============ ============= =============
The accompanying notes are an integral part of these consolidated financial statements. F-4 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
Series F preferred stock Common stock Additional ---------------------- ----------------------- paid-in Shares Amount Shares Amount Capital -------- ------ -------- -------- ---------- Initial capitalization for cash - $ - 8,750 $ 2,000 $ - Issuance of common stock for cash - - 34,374 - - Accretion of mandatorily redeemable preferred stock - - - - - Net loss - - - - - -------- ------ -------- -------- ---------- Balance, December 31, 1996 - - 43,124 2,000 - Issuance of common stock for cash - - 6,875 - - Accretion of mandatorily redeemable preferred stock - - - - - Noncash redemption of equity interests - - (30,664) (1,144) - Net loss - - - - - -------- ------ -------- -------- ---------- Balance, December 31, 1997 - - 19,335 856 - Noncash redemption of equity interests - - (19,335) (856) - Issuance of preferred and common stock for cash, Licenses and AT&T Agreements 33,361 333 149,715 1,497 180,243 Accretion of mandatorily redeemable preferred stock - - - - - Noncash issuance of restricted stock to employees - - 10,018 100 9,918 Repurchase of common stock for cash - - - - (1,787) Amortization of deferred compensation - - - - - Net loss - - - - - -------- ------ -------- -------- ---------- Balance, December 31, 1998 33,361 333 159,733 1,597 188,374 Accretion of mandatorily redeemable preferred stock (unaudited) - - - - - Noncash issuance of restricted stock to employees (unaudited) - - - - 428 Amortization of deferred compensation (unaudited) - - - - - Repurchase of common stock for cash (unaudited) - - - - (1,304) Net loss (unaudited) - - - - - -------- ------ -------- -------- ---------- Balance, March 31, 1999 (unaudited) $ 33,361 $ 333 159,733 $ 1,597 $ 187,498 ======== ====== ======== ======== ========== Common stock Deferred subscriptions Treasury stock Accumulated -------------------------- Compensation receivable Shares Amount deficit ------------------------------ ------------ ----------- ------------ Initial capitalization for cash - - - - - Issuance of common stock for cash - - - - - Accretion of mandatorily redeemable preferred stock - - - - (228,959) Net loss - - - - (524,968) ------------ -------------- ------------ ----------- ------------- Balance, December 31, 1996 - - - - (813,927) Issuance of common stock for cash - - - - - Accretion of mandatorily redeemable preferred stock - - - - (725,557) Noncash redemption of equity interests - - - - - Net loss - - - - (3,335,170) ------------ -------------- ------------ ----------- ------------ Balance, December 31, 1997 - - - - (4,874,654) Noncash redemption of equity interests - - - - - Issuance of preferred and common stock for cash, Licenses and AT&T Agreements - (86,221) - - - Accretion of mandatorily redeemable preferred stock - - - - (8,566,922) Noncash issuance of restricted stock to employees (10,018) - - - - Repurchase of common stock for cash 1,787 - (1,787) (18) Amortization of deferred compensation 1,054 - - - - Net loss - - - - (51,155,280) ------------ -------------- ------------ ----------- ------------ Balance, December 31, 1998 (7,177) (86,221) (1,787) (18) (64,596,856) Accretion of mandatorily redeemable preferred stock (unaudited) - - - - (4,630,104) Noncash issuance of restricted stock to employees (unaudited) (433) - 471 5 - Amortization of deferred compensation (unuadited) 1,000 - - - - Repurchase of common stock for cash (unuadited) 1,304 - (1,317) (13) - Net loss (unaudited) - - - - (30,335,327) ------------ -------------- ------------ ----------- ------------ Balance, March 31, 1999 (unaudited) (5,306) $ (86,221) $ (2,633) $ (26) $(99,562,287) ============ ============== ============ =========== ============ Total ------------ Initial capitalization for cash $ 2,000 Issuance of common stock for cash - Accretion of mandatorily redeemable preferred stock (228,959) Net loss (524,968) ------------ Balance, December 31, 1996 (811,927) Issuance of common stock for cash - Accretion of mandatorily redeemable preferred stock (725,557) Noncash redemption of equity interests (1,144) Net loss (3,335,170) ------------ Balance, December 31, 1997 (4,873,798) Noncash redemption of equity interests (856) Issuance of preferred and common stock for cash, (8,566,922) Licenses and AT&T Agreements 95,852 Accretion of mandatorily redeemable preferred stock (8,566,922) Noncash issuance of restricted stock to - employees Repurchase of common stock for cash (18) Amortization of deferred compensation 1,054 Net loss (51,155,280) ------------ Balance, December 31, 1998 (64,499,968) Accretion of mandatorily redeemable preferred stock (unaudited) (4,630,104) Noncash issuance of restricted stock to employees (unaudited) - Amortization of deferred compensation (unaudited) 1,000 Repurchase of common stock for cash (unaudited) (13) Net loss (unaudited) (30,335,327) ------------ Balance, March 31, 1999 (unaudited) $(99,464,412) ============
The accompanying notes are an integral part of these consolidated financial statements. F-5 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS __________
For the period July 29, 1996 (date of For the year For the year inception) to Ended Ended December 31, December 31, December 31, 1996 1997 1998 --------------- -------------- -------------- Cash flows from operating activities: Net loss $ (524,968) $ (3,335,170) $ (51,155,280) Adjustment to reconcile net loss to net cash used in operating activities: Depreciation and amortization 75 10,625 1,583,864 Noncash compensation expense associated with the issuance of common stock and preferred stock - - 1,664 Noncash interest expense associated with Lucent Notes - - 460,400 Noncash general and administrative expense charge by - - 196,622 affiliates Amortization of deferred financing costs - - 524,924 Amortization of discount on notes payable - 134,040 197,344 Changes in cash flow from operations resulting from changes in assets and liabilities: Accounts receivable - - - Inventory - - (778,235) Prepaid expenses - - (2,185,444) Other current assets (21,877) (51,591) (1,144,795) Other assets - (26,673) (256,333) Accounts payable 98,570 618,889 11,389,627 Accrued expenses - - 9,145,111 Deferred rent - - 196,063 Accrued interest - 257,682 2,046,432 --------------- ------------- -------------- Net cash used in operating activities (448,200) (2,392,198) (29,778,036) --------------- ------------- -------------- Cash flows from investing activities: Expenditures for network under development, wireless network, property and equipment (904) (1,134,234) (107,542,189) Capitalized interest on network under development and wireless - - (227,000) network Expenditures for microwave relocation - - (3,339,410) Purchase of PCS licenses - - (21,000,000) Deposit on PCS licenses (7,500,000) - - Partial refund of deposit on PCS licenses - 1,561,702 - --------------- ------------- -------------- Net cash (used in) provided by investing activities (7,500,904) 427,468 (132,108,599) --------------- ------------- -------------- Cash flows from financing activities: Proceeds from sale of mandatorily redeemable preferred stock 7,500,000 1,500,000 26,661,420 Receipt of preferred stock subscription receivable - - - Direct issuance costs from sale of mandatorily redeemable preferred stock - - (1,027,694) Proceeds from sale of common stock 2,000 - 38,305 Proceeds from long-term debt 498,750 2,808,500 257,491,500 Purchases of treasury shares - - (26) Payments on notes payable - - (2,072,573) Payments of deferred financing costs - - (9,109,677) Net increase (decrease) in amounts due to affiliates - 171,269 (928,464) --------------- ------------- -------------- Net cash provided by financing activities 8,000,750 4,479,769 271,052,791 --------------- ------------- -------------- Net increase (decrease) in cash and cash equivalents 51,646 2,515,039 109,166,156 Cash and cash equivalents at the beginning of period - 51,646 2,566,685 --------------- ------------- -------------- Cash and cash equivalents at the end of period $ 51,646 $ 2,566,685 $ 111,732,841 =============== ============= ============== For the three For the three months ended months ended March 31, March 31, 1998 1999 (unaudited) (unaudited) --------------- ---------------- Cash flows from operating activities: Net loss $ (2,745,121) $ (30,335,327) Adjustment to reconcile net loss to net cash used in operating activities: Depreciation and amortization 39,129 3,051,280 Noncash compensation expense associated with the issuance of common stock and preferred stock - 86,547 Noncash interest expense associated with Lucent Notes - 448,676 Noncash general and administrative expense charge by - - affiliates Amortization of deferred financing costs - 250,241 Amortization of discount on notes payable 54,369 55,721 Changes in cash flow from operations resulting from changes in assets and liabilities: Accounts receivable - (3,057,672) Inventory - (6,922,797) Prepaid expenses (82,771) (286,161) Other current assets 26,280 1,061,014 Other assets (59,363) (558,724) Accounts payable 672,240 13,655,951 Accrued expenses - 2,675,664 Deferred rent 65,211 123,662 Accrued interest 77,556 (1,758,327) --------------- ----------------- Net cash used in operating activities (1,952,470) (21,510,252) --------------- ----------------- Cash flows from investing activities: Expenditures for network under development, wireless network, property and equipment (4,086,249) (112,233,615) Capitalized interest on network under development and wireless - (1,273,000) network Expenditures for microwave relocation (275,001) (1,186,995) Purchase of PCS licenses - - Deposit on PCS licenses - (17,818,549) Partial refund of deposit on PCS licenses - - --------------- ----------------- Net cash (used in) provided by investing activities (4,361,250) (132,512,159) --------------- ----------------- Cash flows from financing activities: Proceeds from sale of mandatorily redeemable preferred stock - - Receipt of preferred stock subscription receivable - 3,500,285 Direct issuance costs from sale of mandatorily redeemable preferred stock - - Proceeds from sale of common stock - - Proceeds from long-term debt 13,863,989 50,000,000 Purchases of treasury shares - (19) Payments on notes payable - - Payments of deferred financing costs - - Net increase (decrease) in amounts due to affiliates (480,253) - --------------- ----------------- Net cash provided by financing activities 13,383,736 53,500,266 --------------- ----------------- Net increase (decrease) in cash and cash equivalents 7,070,016 (100,522,145) Cash and cash equivalents at the beginning of period 2,566,685 111,732,841 --------------- ----------------- Cash and cash equivalents at the end of period $ 9,636,701 $ 11,210,696 =============== =================
The accompanying notes are an integral part of these consolidated financial statements. F-6 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) _______
For the period July 29, 1996 For the three (date of For the year For the year months ended inception) to ended ended March 31, December 31 December 31, December 31, 1999 1996 1997 1998 (unaudited) -------------- ------------ ------------- ------------- Supplemental disclosure of cash flow information: Cash paid for income taxes $ - $ - $ - $ - Cash paid for interest $ - $ - $ 9,785,829 $ - Supplemental disclosure of non-cash investing and financing activities: Network under development, wireless netowork and microwave relocation costs financed through accounts payable and accrued expenses $ - $ 2,484,836 $ 98,091,667 $ 824,999 Issuance of mandatorily redeemable preferred stock and preferred stock in exchange for PCS licenses and AT&T $ - $ - $ 100,900,000 $ - agreements Issuance of mandatorily redeemable preferred stock and common stock in exchange for stock subscriptions receivable $ - $ - $ 76,000,275 $ - U.S. Government financing of PCS licenses $ - $ 9,192,938 $ - $ - Discount on U.S. Government financing $ - $ 1,599,656 $ - $ - Conversion of notes payable to stockholders into preferred $ - $ 498,750 $ 25,300,000 $ - stock Accretion of preferred stock dividends $ 288,959 $ 725,557 $ 8,566,922 $ 103,608 Elimination of equity interests in Holding for equity interests in TeleCorp $ - $ - $ 4,369,680 $ - Redemption of equity interests $ - $ 6,368,926 $ - $ - Distribution of net assets to affiliates $ - $ 3,644,602 $ - $ - Capitalized interest $ - $ 131,397 $ 2,055,043 $ 198,009 For the three months ended March 31, 1998 (unaudited) ------------- Supplemental disclosure of cash flow information: Cash paid for income taxes $ - Cash paid for interest $ 4,201,963 Supplemental disclosure of non-cash investing and financing activities: Network under development, wireless netowork and microwave relocation costs financed through accounts payable and accrued expenses $ 8,043,467 Issuance of mandatorily redeemable preferred stock and preferred stock in exchange for PCS licenses and AT&T $ - agreements Issuance of mandatorily redeemable preferred stock and common stock in exchange for stock subscriptions receivable $ - U.S. Government financing of PCS licenses $ - Discount on U.S. Government financing $ - Conversion of notes payable to stockholders into preferred $ - stock Accretion of preferred stock dividends $ 4,630,104 Elimination of equity interests in Holding for equity interests in TeleCorp $ - Redemption of equity interests $ - Distribution of net assets to affiliates $ - Capitalized interest $ 1,421,782
The accompanying notes are an integral part of these consolidated financial statements. F-7 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS _____________ 1. Organization TeleCorp Holding Corp., Inc. (Holding) was incorporated in the State of Delaware on July 29, 1996 (date of inception). Holding was formed to participate in the Federal Communications Commission's (FCC) Auction of F- Block Personal Communications Services (PCS) licenses (the Auction) in April 1997. Holding successfully obtained licenses in the New Orleans, Memphis, Beaumont, Little Rock, Houston, Tampa, Melbourne and Orlando Basic Trading Areas (BTAs). Holding qualifies as a Designated Entity and Very Small Business under Part 24 of the rules of the FCC applicable to broadband PCS. In April 1997, Holding entered into an agreement to transfer the PCS licenses for the Houston, Tampa, Melbourne and Orlando BTAs to four newly- formed entities created by Holding's existing stockholder group: THC of Houston, Inc.; THC of Tampa, Inc.; THC of Melbourne, Inc.; and THC of Orlando, Inc. These licenses were transferred along with the related operating assets and liabilities in exchange for investment units consisting of Class A, B and C common stock and Series A preferred stock in August 1997. Concurrently, Holding distributed the investment units, on a pro rata basis, in a partial stock redemption to Holding's existing stockholder group. As a result of this distribution, Holding no longer retains any ownership equity interest in the newly-formed entities. Because the above transaction was non-monetary in nature and occurred between entities of the same stockholder group, the transaction was accounted for at historical cost. TeleCorp PCS, Inc. (TeleCorp) was incorporated in the State of Delaware on November 14, 1997 by the controlling stockholders of Holding. TeleCorp will be the exclusive provider of wireless mobility services in its licensed regions in connection with a strategic alliance with AT&T Corporation and its affiliates (collectively AT&T) (see Note 6). Upon finalization of the AT&T Transaction, Holding became a wholly-owned subsidiary of TeleCorp. 2. Summary of Significant Accounting Policies Basis of presentation Holding was formed to explore various business opportunities in the wireless telecommunications industry. TeleCorp was formed to continue the activity of Holding through its strategic alliance with AT&T. Since inception, Holding's and TeleCorp's activities have consisted principally of hiring a management team, raising capital, negotiating strategic business relationships and participating in the Auction. Consequently, for purposes of the accompanying financial statements, Holding has been treated as a "predecessor" entity. The Chief Executive Officer and President of Holding maintain the positions of Chief Executive Officer and Executive Vice President and Chief Financial Officer, respectively, of TeleCorp. In addition, these officers own a majority of the voting stock of TeleCorp and, prior to the finalization of the AT&T Transaction, owned a majority of the voting stock of Holding. As a result of this relationship, certain financing relationships and the similar nature of business activities, Holding and TeleCorp are considered companies under common control. Therefore, the accompanying financial statements incorporate the combined business activities of Holding and TeleCorp. Collectively, TeleCorp and Holding are referred to as the Company in the accompanying consolidated financial statements. Continued F-8 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ______________ Historical and pro forma loss per share, basic and diluted, have not been presented. Unaudited Interim Financial Information The unaudited consolidated balance sheet as of March 31, 1999, and the unaudited consolidated statements of operations, changes in stockholders' equity (deficit) and cash flows for the three months ended March 31, 1998 and 1999, and related footnotes have been prepared in accordance with generally accepted accounting principles for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles. In the opinion of management, all adjustments (consisting of only normal recurring accruals) considered necessary for the fair presentation have been included. Operating results for the three months ended March 31, 1999, are not necessarily indicative of results that may be expected for the year ending December 31, 1999. Unaudited Pro Forma Balance Sheet The unaudited pro forma balance sheet gives effect to certain license acquisitions and the issuance of high yield debt described in Note 15, which includes the Digital PCS, Viper Wireless, AT&T-Puerto Rico and Wireless 2000 transactions and the receipt of gross proceeds of $327,635,000 from the sale of $575,000,000 of Senior Subordinated Discount Notes due 2009 (the Notes) on April 23, 1999 as if they had occurred on March 31, 1999. Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. For the quarter ended March 31, 1999, the Company has consolidated the results of Viper Wireless, Inc. (see Note 15). Development Stage Company Prior to January 1, 1999, the Company's activities principally have been planning and participation in the Auction, initiating research and development, conducting market research, securing capital and developing its proposed service and network. Since the Auction, the Company has been relying on the borrowing of funds and the issuance of common and preferred stock rather than recurring revenues, for its primary sources of cash flow. Accordingly, the Company's financial statements for all periods prior to January 1, 1999 were presented as a development stage enterprise, as prescribed by Statement of Financial Accounting Standards No. 7, "Accounting and Reporting by Development Stage Enterprises." In the first quarter of 1999, the Company commenced operations in the New Orleans, Memphis and Little Rock BTA's and began providing wireless mobility services for its customers. As a result, the Company exited the development stage in the first quarter ended March 31, 1999. The Company incurred cumulative losses through December 31, 1998 of approximately $55,000,000. The Company expects to continue to incur significant operating losses and to generate negative cash flow from operating activities for at least the next several years while it constructs its network and develops its customer base. The Company's ability to eliminate operating losses and to generate positive cash flow from operations in the future will depend upon a variety of factors, many of which it is unable to control. These factors Continued F-9 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS _____________ include: (1) the cost of constructing its network, (2) changes in technology, (3) changes in governmental regulations, (4) the level of demand for wireless communications services, (5) the product offerings, pricing strategies and other competitive factors of the Company's competitors and (6) general economic conditions. If the Company is unable to implement its business plan successfully, it may not be able to eliminate operating losses, generate positive cash flow or achieve or sustain profitability which would materially adversely affect its business, operations and financial results as well as its ability to make payments on its debt obligations. Fair Value of Financial Instruments The Company believes that the carrying amount of its financial instruments approximate fair value. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents. The Company has invested its excess cash in overnight sweep accounts and U.S. Treasury obligations. The Company has not experienced any losses on its cash and cash equivalents. Cash Equivalents The Company considers all highly liquid instruments with a maturity from purchase date of three months or less to be cash equivalents. Cash equivalents consist of overnight sweep accounts and U.S. Treasury obligations. Revenue Recognition The Company earns revenue by providing wireless mobility services to both its subscribers and subscribers of other wireless carriers traveling in the Company's service area, as well as the sales of equipment and accessories. Wireless mobility services revenue consists of monthly access fees, airtime and long distance access revenue. Generally, access fees, airtime and long distance charges are billed monthly and are recognized when service is provided. Prepaid service revenue collected in advance, is recorded as deferred revenue and recognized as service is provided. As of March 31, 1999, deferred revenue was insignificant. Roaming revenue consist of the airtime and long distance charged to the subscribers of other wireless carriers for use of the Company's network while traveling in the Company's service area and are recognized when the service is rendered. Continued F-10 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS _____________ Equipment revenue is recognized upon delivery of the equipment to the customer and when future obligations are no longer significant. PCS Licenses and Microwave Relocation Costs PCS licenses include costs incurred, including capitalized interest related to the U.S. Government financing, to acquire FCC licenses in the 1850-1990 MHz radio frequency band. Interest capitalization on the U.S. Government financing began when the activities necessary to get the Company's network ready for its intended use were initiated. The PCS licenses are issued conditionally for ten years. Historically, the FCC has granted license renewals providing the licensees have complied with applicable rules, policies and the Communications Act of 1934, as amended. The Company believes it has complied with and intends to continue to comply with these rules and policies. As a condition of each PCS license, the FCC requires each license-holder to relocate existing microwave users (Incumbent) within the awarded spectrum to microwave frequencies of equal capacity. Microwave relocation costs include the actual and estimated costs incurred to relocate the Incumbent's microwave links affecting the Company's licensed frequencies and are presented in the financial statements at the estimated present value of the project cost, net of discount of $908,531 as of December 31, 1998. The microwave relocation costs were discounted using management's best estimate of the prevailing market interest rate at the time the relocation costs were incurred. PCS licenses, microwave relocation costs and capitalized interest consist of the following:
March 31, December 31, 1999 1997 1998 (unaudited) ------------- -------------- -------------- PCS licenses $ 9,886,978 $ 104,736,978 $ 104,736,978 Microwave relocation costs - 12,456,838 11,861,063 Capitalized interest 131,397 913,440 1,004,581 ------------- -------------- -------------- 10,018,375 118,107,256 117,602,622 Accumulated amortization - - (71,106) ------------- -------------- -------------- $ 10,018,375 $ 118,107,256 $ 117,531,516 ============= ============== ==============
The Company began amortizing the cost of the PCS licenses, microwave relocation costs, and capitalized interest in March 1999, when PCS services commenced in certain BTAs. Amortization is calculated using the straight- line method over 40 years. Continued F-11 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS _____________ Property and Equipment Property and equipment are recorded at cost and depreciation is computed using the straight-line method over the following estimated useful lives: Computer equipment 3 to 5 years Network under development and wireless network 5 to 10 years upon commencement of service Internal use software 3 years Furniture, fixtures and office 5 years equipment Leasehold improvements Lesser of useful life or lease term Expenditures for repairs and maintenance are charged to operations when incurred. Gains and losses from disposals, if any, are included in the statements of operations. Network under development includes all costs related to engineering, cell site acquisition, site development, interest expense and other development costs being incurred to ready the Company's network for use. Internal and external costs incurred to develop the Company's billing, network and financial systems during the application development stage are capitalized as internal use software. Training costs and all post implementation internal and external costs are expensed as incurred. Intangible assets - AT&T Agreements The AT&T Agreements consist of the fair value of various agreements with AT&T (see Note 6) exchanged for mandatorily redeemable preferred stock and Series F preferred stock. The AT&T Agreements are amortized on a straight- line basis over the related contractual terms, which range from three to ten years. Amortization on the AT&T Exclusivity Agreement, Long Distance Agreement and the Intercarrier Roamer Services Agreement began once wireless services were available to its customers. Amortization of the Network Membership License Agreement began on July 17, 1998, the date of the finalization of the AT&T Transaction. For the year ended December 31, 1998 and for the three months ended March 31, 1999, the Company recorded amortization expense of $772,497 and $916,278 (unaudited), respectively. Inventory Inventory consists of the following:
March 31, December 31, 1999 1997 1998 (unaudited) ------------ ---------- --------------- Handsets $ - 778,235 7,258,147 Accessories - - 442,885 ------------ ---------- ---------------- Total inventory $ - 778,235 7,701,032 ============ ========== ================
Continued F-12 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS _____________ Inventory is valued at the lower of cost or market and is recorded net of an allowance for obsolescence. No allowance for obsolescence has been recorded as of December 31, 1998 and March 31, 1999. Deferred Financing Costs In connection with entering into a credit facility with a group of commercial lenders (see Note 5), the Company incurred certain debt issuance costs. The Company has capitalized financing costs of $9,109,677 and $9,265,495 (unaudited), as of December 31, 1998 and March 31, 1999, respectively. The financing costs are being amortized using the straight line method over the term of the credit facility. For the year ended December 31, 1998 and for the three months ended March 31, 1999, the Company recorded interest expense related to the amortization of the deferred financing costs of $524,924 and $250,041 (unaudited), respectively. Long-Lived Assets The Company periodically evaluates the recoverability of the carrying value of property and equipment, network under development, wireless network, intangible assets, PCS licenses and microwave relocation costs. The Company considers historical performance and anticipated future results in its evaluation of potential impairment. Accordingly, when indicators of impairment are present, the Company evaluates the carrying value of these assets in relation to the operating performance of the business and future undiscounted cash flows expected to result from the use of these assets. Impairment losses are recognized when the sum of the present value of expected future cash flows are less than the assets' carrying value. No such impairment losses have been recognized to date. Income Taxes The Company accounts for income taxes in accordance with the liability method. Deferred income taxes are recognized for tax consequences in future years for differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end, based on enacted laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce net deferred tax assets to the amount expected to be realized. The provision for income taxes consists of the current tax provision and the change during the period in deferred tax assets and liabilities. Start-Up and Advertising Costs Start-up costs are expensed as incurred. The Company expenses production costs of print, radio and television advertisements and other advertising costs as such costs are incurred. Advertising expenses in selling and marketing for 1996, 1997, and 1998 were insignificant. Advertising expenses in selling and marketing were $2,540,146 (unaudited) for the three months ended March 31, 1999. Interest Rate Swaps The Company uses interest swaps to hedge the effects of fluctuations in interest rates from their Senior Credit Facility (see Note 5). These transactions meet the requirements for hedge accounting, including designation and correlation. The interest rate swaps are managed in accordance with the Company's policies and procedures. The Company does not enter into these transactions for trading purposes. The resulting gains or Continued F-13 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ______ losses, measured by quoted market prices, are accounted for as part of the transactions being hedged, except that losses not expected to be recovered upon the completion of hedged transactions are expensed. Gains or losses associated with interest rate swaps are computed as the difference between the interest expense per the amount hedged using the fixed rate compared to a floating rate over the term of the swap agreement. As of December 31, 1998, the Company has entered into six interest rate swap agreements with various commercial lenders totaling a notional amount of $225,000,000 to convert the Company's variable rate debt of LIBOR plus 3.25% to fixed rate debt. The interest rate swaps had no material impact on the consolidated financial statements as of and for the year ended December 31, 1998 and as of and for the three months ended March 31, 1999. Segment Reporting The Company presently operates in a single business segment as a provider of wireless mobility services in its licensed regions primarily in the south- central and northeastern United States. The Company operates in various MTAs including New Orleans, LA, Memphis, TN, Little Rock, AK, and Boston, MA. Recently Issued Accounting Standards In 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133). SFAS 133 is effective for all fiscal quarters of fiscal years beginning after June 15, 1999. The Company has not determined the effect of adopting this standard. Continued F-14 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ______ 3. Property and Equipment Property and equipment consists of the following:
March 31, December 31, 1999 1997 1998 (unaudited) -------------- ---------------- ---------------- Network under development $ 3,269,793 $ 170,885,628 $ 85,748,672 Wireless network - - 139,788,137 Computer equipment 328,875 10,115,063 11,369,207 Internal use software - 11,161,142 15,439,923 Leasehold improvements - 3,204,623 7,575,936 Furniture, fixtures and office equipment 21,306 2,924,233 5,613,613 -------------- ---------------- ---------------- 3,619,974 198,290,689 265,535,488 Accumulated depreciation (10,700) (822,067) (2,881,701) -------------- ---------------- ---------------- $ 3,609,274 $ 197,468,622 $ 262,653,787 ============== ================ =================
4. Accrued Expenses Accrued expenses consists of the following:
March 31, December 31, 1999 1997 1998 (unaudited) ------------- ------------ ---------------- Property and equipment $ - $ 85,634,829 $ 26,645,066 Sales taxes - - 11,405,831 Consulting services - 4,237,411 3,494,719 Bonuses and vacation - 2,386,317 1,684,330 Engineering - 676,893 1,378,472 Selling and marketing - 346,552 2,155,363 Other 824,164 1,187,367 2,406,431 Legal fees - 402,893 949,600 ------------- ------------ ---------------- 824,164 94,872,262 50,119,812 Less: current portion - - (3,362,364) ------------- ------------ ---------------- $ 824,164 $ 94,872,262 $ 46,757,448 ============= ============ ================
Continued F-15 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS _______ 5. Long-term Debt Long-term debt consists of the following:
March 31, December 31, 1999 1997 1998 (unaudited) ------------- -------------- ----------------- Senior credit facility $ - $ 225,000,000 $ 225,000,000 Lucent Series A notes - 10,460,400 40,815,926 Lucent Series B notes - - 20,093,150 U.S. Government financing 7,727,322 7,924,666 7,980,387 Notes payable to stockholders 2,808,500 - - Notes payable to affiliates 2,072,573 - - (see Note 12) ------------- -------------- ----------------- 12,608,395 243,385,066 293,889,463 Less: current portion (4,881,073) - - ------------- -------------- ----------------- $ 7,727,322 $ 243,385,066 $ 293,889,463 ============= ============== =================
Senior Credit Facility In July 1998, the Company entered into a credit facility (the Senior Credit Facility) with a group of commercial lenders, under which the Company may borrow up to $525,000,000, in the aggregate, consisting of (i) up to $150,000,000 in revolving loans (the Senior Revolving Credit Facility) with a maturity date of January 2007, (ii) a $150,000,000 term loan (the Tranche A Term Loan) with a maturity date of January 2007, and (iii) a $225,000,000 term loan (the Tranche B Term Loan) with a maturity date of January 2008. A total of $225,000,000 of indebtedness from the Tranche B Term Loan was outstanding as of December 31, 1998 and March 31, 1999 (unaudited). The Senior Credit Facility also provides for an uncommitted $75,000,000 senior term loan (the Expansion Facility) with a maturity date of January 2008. Beginning in September 2002, principal repayments will be made in 18 quarterly installments for the Tranche A Term Loan and 22 quarterly installments for the Tranche B Term Loan. Quarterly principal repayments for the Tranche A Term Loan are as follows: first six, $3,750,000; next four, $9,375,000; last eight, $11,250,000. Quarterly principal repayments for the Tranche B Term Loan are as follows: first 18, $562,500, last four, $53,718,750. Interest payments on the senior credit facility are made quarterly. The Senior Credit Facility contains a prepayment provision whereby certain amounts borrowed must be repaid upon the occurrence of certain specified events. The commitment to make loans under the Tranche A Term loan will terminate in July 2001, or earlier if elected by the Company. Beginning in April 2005, the commitment to make loans under the Senior Continued F-16 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS _______ Revolving Credit Facility will be permanently reduced on a quarterly basis through April 2007 as follows: first four reductions, $12,500,000; last four reductions $25,000,000. The unpaid principal on the Senior Revolving Credit Facility is due January 2007. In July 2000, if the undrawn portion of the Tranche A Term Loan exceeds $50,000,000 the amount of the Tranche A Term Loan will be automatically reduced by such excess. The interest rate applicable to the Senior Credit Facility is based on, at the Company's option, (i) LIBOR (Eurodollar Loans) plus the Applicable Margin, as defined, or (ii) the higher of the administrative agent's prime rate or the Federal Funds Effective Rate (ABR Loans), plus the Applicable Margin, as defined. The Applicable Margin for Eurodollar Loans will range from 125 to 325 basis points based upon certain events by the Company, as specified. The Applicable Margin for ABR Loans will range from 25 to 225 basis points based upon certain events by the Company, as specified. At December 31, 1998, the interest rate applicable to the Tranche B Term Loan was 8.75% and interest expense for the year ended December 31, 1998 was $9,210,187. For the three months ended March 31, 1999, interest expense on the Tranche B Term Loan was $3,732,196 (unaudited). The loans from the Senior Credit Facility are subject to an annual commitment fee which ranges from 0.50% to 1.25% of the available portion of the Tranche A Term Loan and the Senior Revolving Credit Facility. The Company has expensed $3,305,905 for the year ended December 31, 1998 related to these bank commitment fees. The Senior Credit Facility requires the Company to purchase interest rate hedging contracts covering amounts equal to at least 50% of the total amount of the outstanding indebtedness of the Company. As of December 31, 1998 and March 31, 1999, the Company hedged 100% of its outstanding indebtedness of $225,000,000 to take advantage of favorable interest rate swaps. Initially, borrowings under the Senior Credit Facility are subject to a maximum Senior Debt to Total Capital ratio, as defined, of 50%. This ratio is increased to 55% if certain specified operating benchmarks are achieved. In addition, the Company must comply with certain financial and operating covenants. The financial covenants include various debt to equity, debt to EBITDA, interest coverage, and fixed charge coverage ratios, as defined in the Senior Credit Facility. The operating covenants include minimum subscribers, minimum aggregate service revenue, minimum coverage of population and maximum capital expenditure thresholds. As of December 31, 1998 and March 31, 1999 (unaudited), the Company was in compliance with these covenants. The Company may utilize the Expansion Facility as long as the Company is not in default of the Senior Credit Facility and is in compliance with each of the financial covenants. However, none of the lenders are required to participate in the Expansion Facility. The Senior Credit Facility is collateralized by substantially all of the assets of the Company. In addition, the Senior Credit Facility has been guaranteed by the Company's subsidiaries and shall be guaranteed by subsequently acquired or organized domestic subsidiaries of the Company. Continued F-17 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS _______ Lucent Note Agreement In May 1998, the Company entered into a Note Purchase Agreement (the Lucent Note Agreement) with Lucent Technologies, Inc. (Lucent) which provides for the issuance of increasing rate 8.5% Series A (the Series A Notes) and 10.0% Series B (the Series B Notes) junior subordinated notes (the Subordinated Notes) with an aggregate face value of $80,000,000. The aggregate face value of the Subordinated Notes shall decrease dollar for dollar, upon the occurrence of certain events as defined in the Lucent Note Agreement. The proceeds of the Subordinated Notes are to be used to develop the Company's network in certain designated areas. As of December 31, 1998, the Company had $10,460,400 outstanding under the Series A Notes. As of March 31, 1999, the Company had $40,815,926 (unaudited) and $20,093,150 (unaudited) outstanding under the Series A Notes and Series B Notes, respectively. Subsequent to March 31, 1999, the Company repaid the entire amount outstanding under the Series B Notes with the proceeds received from the Notes (see Note 2). The Series A and Series B Notes will not amortize and will have a maturity date six months after the final maturity of the Company's high yield debt offering, but in no event later than May 1, 2012. The Series A Notes will have a mandatory redemption at par plus accrued interest from the proceeds of a subsequent equity offering to the extent the net proceeds exceed an amount identified in the Lucent Note Agreement. The Series B Notes will have a mandatory redemption at par, plus accrued interest from the proceeds of the Company's initial high yield debt offering to the extent the net proceeds of that offering exceed an amount identified in the Lucent Note Agreement. If the Series A Notes and Series B Notes are not redeemed in full by January 2001 and January 2000, respectively, the interest rate on each note will increase by 1.5% per annum on January 1. However, the interest rate applicable to the Subordinated Notes shall not exceed the lesser of (i) 12.5% per annum or (ii) if the Company completes a Qualifying High Yield Offering before May 2001 (in the case of the Series A Notes) or May 1, 2000 (in the case of the Series B Notes), the initial yield on such offering plus 0.5% per annum. Interest payable on the Series A Notes and the Series B Notes on or prior to May 11, 2004 shall be payable in additional Series A and Series B Notes. Thereafter, interest shall be paid in arrears in cash on each six month and yearly anniversary of the Series A and Series B closing date or, if cash interest payments are prohibited under the Senior Credit Facility and or the Qualifying High Yield Debt Offering, in additional shares of Series A and Series B Notes. As of December 31, 1998, interest accrued under the Series A Notes of $460,400 has been included in long-term debt. As of March 31, 1999, interest accrued under the Series A Notes and Series B Notes of $815,926 (unaudited) and $93,150 (unaudited), respectively, have been included in long-term debt. The Company may redeem the Subordinated Notes held by Lucent or any of its affiliates at any time. The Series A Notes that are not held by Lucent or any of its affiliates may be redeemed by the Company prior to May 2002 and after May 2007. The Series B Notes that are not held by Lucent or any of its affiliates may be redeemed by the Company prior to May 2000 and after May 2005. Any redemption after May 2007, in the case of the Series A Notes, and May 2005, in the case of the Series B Notes, shall be subject to an interest rate premium, as specified. All of the outstanding notes under the Lucent Note Agreement as of December 31, 1998 and March 31, 1999 are held by Lucent. The Company must comply with certain operating covenants. As of December 31, 1998 and March 31, 1999 (unaudited), the Company was in compliance with these operating covenants. Continued F-18 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS _______ In addition, Lucent has agreed to make available up to an additional $80,000,000 of junior subordinated vendor financing in amounts up to 30% of the value of the equipment, software and services provided by Lucent in connection with any additional markets the Company acquires, subject to certain conditions as specified (the Vendor Expansion Facility). The expiration date for any notes issued pursuant to the Vendor Expansion Facility is the date which is six months after the scheduled maturity of the Notes, subject to mandatory prepayment if certain future events occur. U.S. Government financing In 1996, the Company placed $7,500,000 on deposit with the FCC in order to bid on F Block broadband PCS licenses. In April 1997, the Company's application for the PCS licenses was approved. The Company made a down payment of $5,942,835 using the funds from the FCC deposit and issued promissory notes to the FCC for $23,771,342. The balance of the Company's deposit of $1,557,165 was refunded in April 1997. In April 1997, certain of the PCS licenses with a cost of $15,678,814 and related US. Government financing in the amount of $12,034,212, net of a discount of $2,544,192, was transferred to four newly-formed entities created by the Company's existing stockholder group (See Notes 1 and 12) in August 1997. The terms of the notes include: an interest rate of 6.25%, quarterly interest payments which commenced in July 1998 and continue for the one year thereafter, then quarterly principal and interest payments for the remaining 9 years. The promissory notes are collateralized by the underlying PCS licenses. The notes are net of a discount of $1,465,616, $1,268,272, and $1,212,552 (unaudited) as of December 31, 1997 and 1998 and March 31, 1999, respectively. The notes were discounted using management's best estimate of the prevailing market interest rate at the time of issuance of 10.25%. Notes payable to stockholders In July 1996, the Company issued $498,750 of subordinated promissory notes to two stockholders. The notes bore interest at a rate of 10%, compounded semi- annually, and were due in full in July 2002. In April 1997, these notes were converted into 50 shares of Series A preferred stock (See Note 7). In December 1997, the Company issued various promissory notes totaling $2,808,500 to stockholders. The notes bore interest at a rate of 6% and were converted into mandatorily redeemable preferred stock of the Company in July 1998. The notes were discounted using management's best estimate of the prevailing market interest rate at the time of issuance of 10.25%. The effect on the Company's 1997 financial statements of discounting these notes was not material. From January 1, 1998 to June 30, 1998, the Company borrowed approximately $22,491,500 in the form of promissory notes from existing and prospective stockholders to satisfy the working capital needs of the Company. The promissory notes bore interest at the rate of 6.25% per annum compounded quarterly and were payable in one lump sum on August 31, 1998. In July 1998, these notes were converted to mandatorily redeemable preferred stock of the Company (see Note 9) in connection with the AT&T Transaction. Continued F-19 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ___________ As of December 31, 1998, minimum required annual principal repayment (undiscounted) under all of the Company's outstanding debt obligations were as follows: 1999 $ - 2000 450,719 2001 944,470 2002 1,004,897 2003 1,631,691 Thereafter 291,070,238 -------------- $ 295,102,015 ============== 6. AT&T Transaction In January 1998, the Company entered into a Securities Purchase Agreement (the Securities Purchase Agreement) with AT&T Wireless PCS, Inc. and TWR Cellular, Inc. (both subsidiaries of AT&T Corporation and collectively referred to as AT&T PCS), the stockholders of Holding and various venture capital investment firms (the Cash Equity Investors). The Securities Purchase Agreement provides the Company will be a provider of wireless mobility services in its licensed regions utilizing the AT&T brand name. Upon the receipt of FCC approval in July 1998, the Company finalized the transaction contemplated in the Securities Purchase Agreement (the AT&T Transaction). In connection therewith, the Company issued mandatorily redeemable preferred stock, preferred stock and common stock and paid AT&T $21,000,000 in exchange for (i) 20 MHz PCS licenses with an independently appraised value of $94,850,000; (ii) certain operating agreements with AT&T for exclusivity, network membership, long distance and roaming with an independently appraised value of $27,050,000; (iii) 100% of the outstanding ownership interests in Holding, which includes 10 MHz PCS licenses; and (iv) a cash commitment from the Cash Equity Investors of $128,000,000 to be paid over a three year term (see Note 9) plus additional $5,000,000 upon the closing of the Digital PCS transaction (see Note 15). The general terms of the operating agreements with AT&T are summarized below: . AT&T Exclusivity: The Company will be AT&T's exclusive facilities-based provider of mobile wireless telecommunications services within the Company's BTAs for an initial ten year period. This agreement will automatically renew for a one-year term and then operate on a year-to-year basis unless one party terminates at least ninety (90) days prior to the end of any one- year term. The Company has determined the fair value of this agreement to be $11,870,000 based upon an independent appraisal and is amortizing this value over the initial 10 year term. Continued F-20 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS __________ . Network Membership License Agreement: The Network Membership License Agreement (the License Agreement) defines that AT&T will make available to the Company use of the AT&T logo and the right to refer to itself as a "Member of the AT&T Wireless Network" to market its PCS services. Through the use of these rights, the Company expects to participate in and benefit from AT&T promotional and marketing efforts. The License Agreement has an initial five-year term with a five-year renewal term if both the Company and AT&T elect to renew at least ninety 90 days prior to the expiration of the initial term. The Company has determined the fair value of this agreement to be $8,480,000 based upon an independent appraisal and is amortizing this value over the initial five year term. . Intercarrier Roamer Services Agreement: AT&T and the Company have entered into a twenty-year reciprocal roaming agreement provided that their customers who own tri-mode phones will roam on the other's mobile wireless systems. Thereafter, this agreement shall renew automatically on a year-to-year basis unless either the Company or AT&T terminates this agreement by written notice at least 90 days prior to the conclusion of the original or any subsequent term. After ten years, this agreement may be terminated by the Company or AT&T at any time upon 90 days prior written notice. AT&T also agrees to permit the Company to have outbound roaming on its network for twenty years at commercially reasonable rates to the extent commercially and technologically feasible. The outbound roaming agreement shall continue with automatic ten-year renewals subject to a one-year cancellation notice. . The Company has determined the value of this roaming agreement to be $3,500,000 based upon an independent appraisal and is amortizing this value over the initial 10 year term. . Long Distance Agreement: The long distance agreement provides that AT&T will be the exclusive provider for long distance services to the Company's customers within the Company's licensed regions for an initial three year period. The long distance agreement requires that the Company meet a minimum traffic volume commitment during the term of the agreement. If the Company fails to meet such volume commitments, the Company must pay to AT&T the difference between the expected fee based on the volume of the commitment and the fees based on actual volume. The Company had determined the fair value of this agreement to be $3,200,000 based upon an independent appraisal and is amortizing this value over the initial three year term. Continued F-21 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS _________ 7. Mandatorily Redeemable Preferred Stock and Stockholders' Equity (Deficit) Holding Holding's authorized capital stock consisted of 6,000 shares of no par value mandatorily redeemable Series A preferred stock, 125,000 shares of no par value Class A common stock, 175,000 shares of no par value Class B common stock and 175,000 shares of no par value Class C common stock. This capital stock was in existence during 1996, 1997, and through July 1998, the closing of the AT&T Transaction, at which time Holding became a wholly-owned subsidiary of the Company. Subsequent to the AT&T Transaction, the authorized and outstanding shares of Holding were cancelled and replaced with 1,000 authorized shares of common stock of which 100 shares were issued to the Company. TeleCorp Following the closing of the AT&T Transaction, the Company restated its Certificate of Incorporation. The Restated Certificate of Incorporation provides the Company with the authority to issue 1,914,010 shares of stock, consisting of the following:
Preferred Par Shares Par Shares Stock Value authorized Common Stock Value authorized ----------------- ---------- ----------- -------------- -------- ------------ Mandatorily redeemable Series A $ 0.01 70,000 Senior $ 0.01 70,000 Mandatorily redeemable Series B $ 0.01 140,000 Class A $ 0.01 700,000 Mandatorily redeemable Series C $ 0.01 140,000 Class B $ 0.01 700,000 Mandatorily redeemable Series D $ 0.01 35,000 Class C tracked $ 0.01 1,000 Mandatorily redeemable Series E $ 0.01 20,000 Class D tracked $ 0.01 3,000 Series F $ 0.01 35,000 Voting Preference $ 0.01 10 ----------- ------------ Total 440,000 Total 1,474,010 =========== ============
Continued F-22 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following schedules represents the transactions that took place with respect to Holding's Mandatorily redeemable preferred stock and common stock for the period from July 29, 1996 (date of inception) to December 31, 1998:
Series A preferred stock ----------------------------- Shares Amount --------- ---------------- Mandatorily redeemable preferred stock -------------------------------------- Initial capitalization for cash 750 $ 7,500,000 Accretion of preferred stock dividends - 288,959 --------- ---------------- Balance, December 31, 1996 750 7,788,959 Issuance of preferred stock for cash 150 1,500,000 Accretion of preferred stock dividends - 725,557 Conversion of promissory note to preferred stock 50 498,750 Noncash redemption of equity interests (see Note 12) (583) (6,368,926) --------- ---------------- Balance, December 31, 1997 367 4,144,340 Accretion of preferred stock dividends - 224,484 Recapitalization of Holding (367) (4,368,824) --------- ---------------- Balance, December 31, 1998 - $ - ========= ================
Class A Class B Class C common stock common stock common stock Common stock -------------------------------------------------------------------------------- Shares Amount Shares Amount Shares Amount Shares Amount Total ----------- -------- -------- -------- -------- -------- ------- -------- --------- Common stock ------------------------ Initial capitalization for cash 8,750 $ 2,000 - $ - 25,520 $ - - $ - $ 2,000 Issuance of common stock 3,750 - 5,104 - - - - - - ----------- -------- -------- -------- -------- -------- ------- -------- --------- Balance, December 31, 1996 12,500 2,000 5,104 - 25,520 - - - 2,000 Issuance of common stock for cash - - - - 6,875 - - - - Noncash redemption of equity interests (See Note 12) (7,666) (1,144) (3,130) - (19,868) - - - (1,144) ----------- -------- -------- -------- -------- -------- ------- -------- --------- Balance, December 31, 1997 4,834 856 1,974 - 12,527 - - 856 Recapitalization of Holding (4,834) (856) (1,974) - (12,527) - 100 - (856) Elimination of 100% of equity interests in Holding - - - - - - (100) - - ----------- -------- -------- -------- -------- -------- ------- -------- --------- Balance, December 31, 1998 - $ - - $ - - $ - - $ - $ - ----------- -------- -------- -------- -------- -------- ------- -------- ---------
Continued F-23 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ___________ The following schedule represents the transactions that took place with respect to TeleCorp's mandatorily redeemable preferred stock, Series F preferred stock and common stock for the period July 1998 to March 31, 1999:
Series A Series C preferred stock preferred stock -------------------------- -------------------------- Shares Amount Shares Amount ---------- ------------ ---------- ------------ Mandatorily redeemable preferred stock - -------------------------------------- Issuance of preferred stock to AT&T PCS for licenses and AT&T Agreements 66,723 $ 66,723,000 - $ - Issuance of preferred stock to Cash Equity Investors, net of issuance costs of $1,027,695 - - 128,000 126,847,780 Accretion of preferred stock dividends - 3,039,603 - 3,818,827 Noncash issuance of restricted stock - - - - Repurchase of restricted stock for cash - - - - Noncash issuance of preferred stock for equity of Holding - - 7,348 4,334,276 ---------- ------------ ---------- ------------ Balance, December 31, 1998 66,723 69,762,603 135,348 $135,000,883 Accretion of preferred stock dividends (unaudited) - 1,744,065 - 2,137,884 Noncash issuance of restricted stock (unaudited) - - - - Repurchase of restricted stock for cash (unaudited) - - - - ---------- ------------ ---------- ------------ Balance, March 31, 1999 (unaudited) 66,723 $ 71,506,668 135,348 $137,138,767 ========== ============ ========== ============ Series D Series E preferred stock preferred stock -------------------------- -------------------------- Shares Amount Shares Amount Total ---------- ------------ ---------- ------------ ------------- Mandatorily redeemable preferred stock - -------------------------------------- Issuance of preferred stock to AT&T PCS for licenses and AT&T Agreements 34,267 $ 34,143,639 - $ - $ 100,866,639 Issuance of preferred stock to Cash Equity Investors, net of issuance costs of $1,027,695 - - - - 126,847,780 Accretion of preferred stock dividends - 945,780 - 541,038 8,345,248 Noncash issuance of restricted stock - - 5,505 5,505 5,505 Repurchase of restricted stock for cash - - (784) (792) (792) Noncash issuance of preferred stock for equity of Holding - - 14,156 10,215 4,344,491 ---------- ------------ ---------- ------------ ------------- Balance, December 31, 1998 34,267 $ 35,089,419 18,877 $ 555,966 $ 240,408,871 Accretion of preferred stock dividends (unaudited) - 529,971 - 303,031 4,714,951 Noncash issuance of restricted stock (unaudited) - - 207 8,236 8,236 Repurchase of restricted stock for cash (unaudited) - - (577) (576) (576) ---------- ------------ ---------- ------------ ------------- Balance, March 31, 1999 (unaudited) 34,267 $ 35,619,390 18,507 $ 866,657 $ 245,131,482 ========== ============ ========== ============ =============
Series F Class A preferred stock Common stock -------------------------- -------------------------- Shares Amount Shares Amount ---------- ------------ ---------- ------------ Series F preferred and common stock - ----------------------------------- Issuance of common stock to Cash Equity Investors for cash - $ - 121,490 $ 1,214 Issuance of preferred stock to AT&T PCS for licenses and AT&T Agreements 33,361 333 - - Exchange of 100% of equity interests in Predecessor Company for equity in the Company - - 24,541 245 Noncash issuance of restricted stock - - 10,018 100 Repurchase of restricted stock for cash - - (1,787) - ---------- ------------ ---------- ------------ Balance, December 31, 1998 33,361 $ 333 154,262 $ 1,559 Noncash issuance of restricted stock (unaudited) - - 471 - Repurchase of restricted stock for cash (unaudited) - - (1,317) - ---------- ------------ ---------- ------------ Balance, March 31, 1999 (unaudited) 33,361 $ 333 153,416 $ 1,559 ========== ============ ========== ============ Class C tracked Class D tracked common stock common stock -------------------------- -------------------------- Shares Amount Shares Amount ---------- ------------ ---------- ------------ Series F preferred and common stock - ----------------------------------- Issuance of common stock to Cash Equity Investors for cash 358 $ 4 2,678 $ 27 Issuance of preferred stock to AT&T PCS for licenses and AT&T Agreements - - - - Exchange of 100% of equity interests in Predecessor Company for equity in the Company 561 6 77 1 Noncash issuance of restricted stock - - - - Repurchase of restricted stock for cash - - - - ---------- ------------ ---------- ------------ Balance, December 31, 1998 919 $ 10 2,755 $ 28 Noncash issuance of restricted stock (unaudited) - - - - Repurchase of restricted stock for cash (unaudited) - - - - ---------- ------------ ---------- ------------ Balance, March 31, 1999 (unaudited) 919 $ 10 2,755 $ 28 ========== ============ ========== ============ Voting Preference common stock -------------------------- Shares Amount Total ---------- ------------ ------------- Series F preferred and common stock - ----------------------------------- Issuance of common stock to Cash Equity Investors for cash - $ - $ 1,245 Issuance of preferred stock to AT&T PCS for licenses and AT&T Agreements - - 333 Exchange of 100% of equity interests in Predecessor Company for equity in the Company 10 252 Noncash issuance of restricted stock - - 100 Repurchase of restricted stock for cash - - ---------- ------------ ------------- Balance, December 31, 1998 10 $ - $ 1,930 Noncash issuance of restricted stock (unaudited) - - - Repurchase of restricted stock for cash (unaudited) - - - ---------- ------------ ------------- Balance, March 31, 1999 (unaudited) 10 $ - $ 1,930 ========== ============ =============
There are no issued or outstanding shares of Series B preferred stock, Senior common stock or Class B common stock as of March 31, 1999 (unaudited). Continued F-24 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ---------- The conversion features and conversion prices of the Company's issued stock are summarized below:
Convertible Security Convertible Into Conversion Price - ------------------------- ------------------------ ----------------------------------------- Series A preferred stock After July 2006, at The Series A conversion rate is equal the holders' option, to the liquidation preference of the into Class A common Series A preferred stock on the stock conversion date divided by the market price of the Class A common stock on the conversion date. Series C preferred stock At the option of the The liquidation preference of the Company at the IPO Series C preferred stock divided by date into either the IPO price. Class A or B common stock Series D and Series F If Series C preferred The liquidation preference divided by preferred stock stock is converted the IPO price. then automatically at the IPO date into Senior common stock Series E preferred stock At the option of the The liquidation preference of the Company at the IPO Series E preferred stock divided by date into either the IPO price. Class A or Class B common stock Series F preferred stock At the holders' One share of Series F preferred stock and Senior common stock option, into Class A, or Senior common stock for one share Class B or Class D of either Class A, Class B or Class D common stock, common stock. depending upon the occurrence of certain defined events Class A common stock At the holders' One share of Class B common stock for option into Class B one share of Class A common stock. common stock Class C tracked common Subject to FCC One share of Class A or Class B common stock constraints and Board stock for one share of Class C tracked approval, at the common stock. holders' option and by affirmative vote of at least 66 2/3% of Class A common stock into Class A or Class B common stock Class D tracked common Subject to FCC One share of Class A or Class B common stock constraints and Board stock for one share of Class D tracked approval, at the common stock. holders' option and by affirmative vote of at least 66 2/3% of Class A common stock into Class A or Class B common stock
Continued F-25 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ---------- The conversion features and conversion prices of the Company's issued stock are summarized below: Liquidation rights In the event of any liquidation, dissolution or winding up of the Company, as defined, the stockholders of the Company are entitled to liquidation preferences as follows:
Order of Distribution Stock Classification Distribution Preference --------------------- --------------------------- ---------------------------------------- First Series A and Series B $1,000 per share plus accrued and preferred stock unpaid dividends. Second Series C and Series D Series C: actual paid-in capital per preferred stock share plus accrued and unpaid dividends plus interest of 6% per annum on the actual paid-in capital, compounded quarterly, less amount of dividends declared and paid. Series D: $1,000 per share plus accrued and unpaid dividends plus an amount equal to interest on $1,000 per share at a rate of 6% per annum, compounded quarterly, less amount of dividends declared and paid. Third Series E preferred stock Accrued and unpaid dividends, plus an amount equal to interest on $1,000 per share at 6% per annum, compounded quarterly, less dividends declared and paid. Fourth Series F preferred stock Series F preferred: $0.01 per share and Senior common stock plus accrued and unpaid dividends. Senior common stock: The sum of the liquidation preference of each share of Series D and Series F preferred stock converted in Senior common stock divided by the aggregate number of shares of Senior common stock issued upon conversion of shares of Series D and Series F preferred stock
Dividends and voting rights The holders of the Series A and Series B preferred stock are entitled to cumulative quarterly cash dividends at an annual rate of 10% of the liquidation preference of the then outstanding shares. The holders of the remaining shares of preferred and common stock are entitled to dividends if and when declared. The Class A common stock has 4,990,000 voting rights and the Voting Preference common stock has 5,010,000 voting rights. For so long as AT&T holds at least two-thirds of the shares of Series A preferred stock, they shall be entitled, but not obliged, to nominate two of the Company's directors. The remaining shares of preferred and common stock shall have no voting rights, except as provided by law or in certain limited circumstances. Call and Redemption features Continued F-26 TELECORP PCS, INC. AND SUSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS _______________ The preferred stock is callable at the option of the Company at a price equal to the liquidation preference on the redemption date. The Series A preferred stock is callable thirty days after the 10th anniversary of the issuance of such shares. The Series B preferred stock is callable at any time. The Series C and Series D preferred stock are callable at any time, provided that the Series C and Series D Preferred Stock are called concurrently. The Series A, Series B, Series C, Series D and Series E preferred stock are redeemable thirty days after the 20th anniversary of the issuance of such shares at the option of the holder at a price equal to the liquidation preference on the redemption date. The Series F preferred stock is not redeemable. Pursuant to a Management Agreement, the Company may redeem certain shares of Class A common stock and Series E preferred stock held by the Company's Chief Executive Officer and Executive Vice President (the TMC officers). For the period from the finalization of the AT&T Transaction to December 31, 1998, the Company accreted $8,345,248 of dividends in connection with this redemption feature. Tracked common stock The Class C and Class D common stock have been designated as Tracked common stock. The holders of the Tracked common stock are entitled to a dividend, when available, equal to the excess of the fair value of the net assets of Holding over the aggregate par value of the outstanding shares of the Tracked common stock. After all other preferential liquidating distributions have been made, the holders of the Tracked common stock will be entitled to a liquidation preference equal to the excess of the fair value of the net assets of Holding. Participating stock The Series F preferred stock, the Senior common stock and the Class A and B common stock are participating stock, and the Board of Directors may not declare dividends on or redeem, purchase or otherwise acquire for consideration any shares of the Participating Stock, unless the Board of Directors makes such declaration or payment on the same terms with respect to all shares of participating stock, ratably in accordance with each class and series of participating stock then outstanding. 8. Restricted Stock Plan In July 1998, the Company adopted a Restricted Stock Plan (the Plan) to attract and retain key employees and to reward outstanding performance. Key employees selected by management may elect to become participants in the Plan by entering into an agreement which provides for issuance of fixed and variable units consisting of Series E mandatorily redeemable preferred stock and Class A common stock. The fixed units typically vest over a five or six year period. The variable units vest based upon certain events taking place, such as buildout milestones, Pop coverage and other events. Unvested shares are forfeited upon termination of employment. The shares issued under the Plan shall consist of units transferred to participants without payment as additional compensation for their services to the Company. The total number of units that may be awarded to key employees shall not exceed 5,505 units or a defined number of shares of Series E preferred stock and Class A common stock, respectively, as determined upon award. Any units not granted on or prior to July 17, 2003 shall be awarded to two officers of the Company. Each participant has voting, dividend and Continued F-27 TELECORP PCS, INC. AND SUSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS _______________ distribution rights with respect to all shares of both vested and unvested common stock. Prior to the Class A shares becoming publicly traded, the Company retains the right of first offer to buy the employees' vested shares at the offer price. After the Class A shares become publicly traded, the right of first offer will no longer exist for the Series E preferred shares. In addition the shares contain rights of inclusion and first negotiation. The Company may repurchase unvested shares, and under certain circumstances, vested shares of participants whose employment with the Company terminates. The repurchase price is equal to $0.01 per share. Some of the awards granted under the Plan are variable awards. When it is probable the future events will occur, the Company determines the fair value of the variable awards of the Series E preferred stock and Class A common stock, subject to a final measurement date upon the occurrence of defined events. Outstanding fixed awards and variable awards as of December 31, 1998 and March 31, 1999 (unaudited) for each class of stock are as follows:
March 31, December 31, 1999 1998 (unaudited) ------------------------------ Series E preferred stock: Fixed awards 3,664 3,411 Variable awards 1,057 939 ----------- ----------- Total Series E awards 4,721 4,350 =========== =========== Class A common stock: Fixed awards 3,728 3,493 Variable awards 4,503 3,892 ----------- --------------- Total Class A awards 8,231 7,385 =========== ===============
Compensation expense, related to the issuance of restricted stock to employees based on the estimated fair value of the preferred and common stock, was immaterial for the year ended December 31, 1998 and for the three months ended March 31, 1999. 9. Preferred and Common Stock Subscriptions Receivable In connection with the AT&T Transaction described in Note 6, the Company received a cash commitment of $128,000,000 from the Cash Equity Investors in exchange for Series C preferred stock and various classes of common stock. The Securities Purchase Agreement requires the Cash Equity Investors to fund their unconditional and irrevocable obligations in installments in accordance with the following schedule: Due Date Amount --------------------------------------- ------------- Initial closing (July 17, 1998) $ 39,375,005 December 31, 1998 16,125,005 Second anniversary of initial closing 36,250,005 Continued F-28 TELECORP PCS, INC. AND SUSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS _______________ Third anniversary of initial closing 36,249,985 ----------- $ 128,000,000 =========== The initial contributions were provided in the form of short-term interest bearing promissory notes (see Note 5). These notes were converted to mandatorily redeemable preferred and common stock of the Company as partial satisfaction of the $128,000,000 of committed contributions in connection with the closing of the AT&T Transaction. Through December 31, 1998, the Company received $51,999,725 of the above committed equity and received $3,500,285 in January 1999. The Company has recorded a preferred stock subscription receivable of $75,914,054 as of December 31, 1998 as a reduction to the mandatorily redeemable preferred stock and a common stock subscription receivable of $86,221 as of December 31, 1998 as a reduction to stockholders equity (deficit) for the unpaid commitment. 10. Income Taxes The tax effect of temporary differences which gives rise to significant portions of the deferred tax assets as of December 31, 1997 and 1998, respectively, are as follows: December 31, ----------------------------------- 1997 1998 --------------- ---------------- Capitalized start-up costs $ 1,321,340 $ 17,599,251 Net operating losses 145,710 3,634,809 Depreciation and amortization - 288,985 Deferred rent - 74,504 Capitalized interest - (917,107) Other (4,220) 174,952 -------------- --------------- 1,462,830 20,855,394 Less valuation allowance (1,462,830) (20,855,394) -------------- --------------- $ - $ - ============== =============== For federal income tax purposes, start-up costs will be amortized over five years once active business operations commence. There may be a limitation on the annual utilization of net operating losses and capitalized start-up costs as a result of certain ownership changes that have occurred since the Company's inception. The net operating losses start expiring in 2017. A valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. Based on the Company's financial results, management has concluded that a full valuation allowance for all of the Company's deferred tax assets is appropriate. 11. Commitments In May 1998, the Company entered into a vendor procurement contract (the Vendor Procurement Contract) with Lucent, pursuant to which the Company will purchase up to $285,000,000 of radio, switching and Continued F-29 TELECORP PCS, INC. AND SUSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS _______________ related equipment and services for the development of the Company's wireless communications network. Through December 31, 1998, the Company has purchased approximately $90,900,000 of equipment and services from Lucent. The Company has operating leases primarily related to retail store locations, distribution outlets, office space, and rent for the Company's network build-out. The terms of some of the leases include a reduction of rental payments and scheduled rent increases at specified intervals during the term of the leases. The Company is recognizing rent expense on a straight-line basis over the life of the lease, which establishes deferred rent on the balance sheet. As of December 31, 1998, the aggregate minimum rental commitments under noncancelable operating leases are as follows: 1999 $ 10,755,694 2000 10,752,666 2001 10,507,474 2002 10,369,758 2003 8,520,560 Thereafter 23,139,323 ------------- Total $ 74,045,475 ============= Rental expense, which is recorded ratably over the lease terms, was approximately $2,000, $157,000, and $3,193,000 for the period ended December 31, 1996 and for the years ended December 31, 1997 and 1998, respectively. The Company has entered into a series of agreements for software licenses, consulting, transition support and maintenance with various vendors. The total future commitments under the agreements is approximately $6,000,000 as of December 31, 1998. The Company has entered into letters of credit to facilitate local business activities. The Company is liable under the letters of credit for nonperformance of certain criteria under the individual contracts. The total amount of outstanding letters of credit was $1,425,000 at December 31, 1998. The outstanding letters of credit reduce the amount available to be drawn under the Senior Credit Facility (see Note 5). The Company is unaware of any events that would have resulted in nonperformance of a contract during the year ended December 31, 1998. 12. Related Parties The Company utilizes the services of a law firm in which the Executive Vice President and Chief Financial Officer of the Company was also a partner. The Company incurred expenses of approximately $110,000, $250,000, $2,123,000 and $747,198 (unaudited) for the period ended December 31, 1996, for the years ended December 31, 1997, 1998 and for the three months ended March 31, 1999, respectively, for legal services. As of December 31, 1997 and 1998 and March 31, 1999, the Company owed the law firm $70,464, $160,000 Continued F-30 TELECORP PCS, INC. AND SUSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS _______________ and $907,442 (unaudited), respectively. Subsequent to December 31, 1997, the individual resigned from the law firm but continues as special counsel. The Company receives site acquisition, construction management, program management, microwave relocation, and engineering services pursuant to a Master Services Agreement with WFI/Entel Technologies, Inc. (Entel). The Chief Executive Officer and Executive Vice President and Chief Financial Office of the Company were formerly stockholders and senior officers of Entel. Fees for the above services are as follows: $12,000 per site for site acquisition services, $7,000 per site for construction management services, $9,000 per site for program management and $1,100,000 for microwave relocation services for all of the Company's existing regions. Fees for engineering services are based upon Entel's customary hourly rates. For the period ended December 31, 1996 and for the years ended December 31, 1997 and 1998 and the three months ended March 31, 1999, the Company paid $30,829, $1,939,795, $30,719,865 and $22,331,512 (unaudited), respectively, to Entel for these services. As of December 31, 1997 and 1998 and March 31, 1999, the Company owed Entel $170,596, $21,177,516 and $20,000,620 (unaudited), respectively. Subsequent to December 31, 1997, the Chief Executive Officer and Executive Vice President and Chief Financial Officer sold 100% of their interests in Entel. As of December 31, 1997, the Company had notes payable to affiliates of $2,072,573. The notes represented the net of the recorded historical costs of the assets, liabilities and equity interests distributed to THC Houston, Inc.; THC of Tampa, Inc.; THC of Melbourne, Inc.; and THC of Orlando, Inc. (see Note 1), and were originally comprised of the following: Due from (to) Amount ---------------- PCS licenses $ 15,678,814 U.S. Government financing, net of discount (12,034,212) Equity interests (6,370,070) -------------- $ (2,725,468) ============== In connection with the transfer of the PCS licenses, U.S. Government financing and equity interests, the Company reduced the notes payable to affiliates by $652,895, which represented certain costs incurred by the Company on behalf of the affiliates for the year ended December 31, 1997 pursuant to Transfer Agreements and Management Agreements. The combined amounts owed THC Houston, Inc., THC Tampa, Inc., THC Melbourne, Inc., and THC Orlando, Inc. of $2,072,573 as of December 31, 1997 were repaid in full during 1998. As of December 31, 1998 and March 31, 1999, the combined amounts owed by the Company to THC Houston, Inc., THC Tampa, Inc., THC Melbourne, Inc., and THC Orlando, Inc. for various legal and administrative costs were $547,047 and $543,219 (unaudited), respectively. As of December 31, 1997, the Company had amounts payable of $824,164 to TeleCorp WCS, Inc. (WCS), an affiliate, formerly TeleCorp Management Corporation, Inc. The amount payable to WCS represented Continued F-31 TELECORP PCS, INC. AND SUSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS _______________ $1,200,000 of funds received by the Company on behalf of WCS related to wireless communications service licenses owned by WCS reduced by expenses and other payments owed by WCS to the Company. The entire balance due WCS as of December 31, 1997 was repaid during 1998 Pursuant to a Management Agreement, TeleCorp Management Corp. (TMC) provides assistance to the Company in the form of administrative, operational, marketing, regulatory and general business services. For these services, beginning in July 1998, the Company pays a management fee to TMC of $550,000 per year plus reimbursement of certain business expenses, payable in equal monthly installments, plus an annual bonus. The management agreement has a five-year term, but may be terminated by the Company upon the occurrence of certain defined events. TMC may terminate the agreement at any time with proper notice. The Officers of TMC own all of the ownership interest in TMC. For the year ended December 31, 1998, the Company paid approximately $250,000 to TMC for these services plus $282,500 in bonuses to TMC officers. For the quarter ended March 31, 1999, the Company paid approximately $168,000 (unaudited) to TMC for these services. The Company has entered into a Master Site Lease Agreement with American Towers Inc., a company partially owned by certain stockholders of the Company. Under this arrangement American Tower provides network site leases for PCS deployment. The Company has incurred $16,862 and $22,639 (unaudited) of expense for the year ended December 31, 1998 and the three months ended march 31, 1999, respectively. 13. Defined Contribution Plan During 1998, the Company established the TeleCorp Communications, Inc. 401(k) Plan (the 401(k) Plan), a defined contribution plan in which all employees over the age of 21 are immediately eligible to participate in the 401(k) Plan. TeleCorp Communications, Inc. is a wholly-owned subsidiary of the Company. Under the 401(k) Plan, participants may elect to withhold up to 15% of their annual compensation, limited to $160,000 of total compensation as adjusted for inflation. The Company may make a matching contribution based on a percentage of the participant's contributions. Participants vest in the Company's matching contributions as follows: 20% after one year; 60% after two years and 100% after three years. Total Company contributions to the 401(k) Plan were $505,495 and $275,268 (unaudited) for the year ended December 31, 1998 and for the three months ended March 31, 1999. Continued F-32 TELECORP PCS, INC. AND SUSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS _______________ 14. Subsidiary Guarantee In March 1999, the Board of Directors approved the issuance of Notes (see Note 15). The Notes will be fully and unconditionally guaranteed by TeleCorp Communications, Inc., one of the Company's wholly-owned subsidiaries. Summarized financial information of TeleCorp, TeleCorp Communications, Inc. and non-guarantor subsidiaries as of December 31, 1998 and March 31, 1999, and for the year ended December 31, 1998 and for the three months ended March 31, 1999 are as follows:
TeleCorp December 31,1998 Communications, - ----------------- Inc. - Guarantor Non-Guarantor TeleCorp Subsidiary Subsidiaries Eliminations Consolidated ------------------------------------------------------------------------------------------------- Balance sheet information: Current assets $ 372,761,282 $ 23,612,116 $ (1,381,050) $ (279,077,565) $ 115,914,783 Total assets 387,215,715 126,148,400 236,743,694 (283,463,777) 466,644,032 Current liabilities 4,004,914 149,535,035 246,128,722 (279,077,565) 120,591,106 Total liabilities 239,465,314 152,016,093 254,249,452 (279,077,565) 366,653,294 Total mandatorily redeemable preferred stock, net $ 164,490,706 $ - $ - $ - $ 164,490,706 Total stockholders' deficit $ (16,740,306) $ (25,867,693) $ (17,505,757) $ (4,386,212) $ (64,499,968) Statements of operation information: Revenue $ - $ 806,418 $ 260,509 $ (51,037,696) $ 29,231 Operating expenses 974,761 26,734,170 17,232,368 (1,021,165) 43,920,134 Net loss (8,491,946) $ (25,845,788) $ (16,801,015) $ (16,531) $ (51,155,280) TeleCorp March 31, 1999 Communications, (unaudited) Inc. - - -------------- Guarantor Non-Guarantor TeleCorp Subsidiary Subsidiaries Eliminations Consolidated ------------------------------------------------------------------------------------------------- Balance sheet information: Current assets $ 421,086,940 $ 11,656,431 $ 196,882 $ (407,741,962) $ 25,198,291 Total assets 438,147,052 143,554,804 288,384,417 (412,182,736) 457,903,537 Current liabilities 3,902,657 188,777,777 299,625,414 (407,741,962) 84,563,886 Total liabilities 289,811,751 191,303,651 311,287,874 (407,741,962) 384,661,314 Total mandatorily redeemable preferred stock, net $ 172,706,635 $ - $ - $ - $ 172,706,635
Continued F-33 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ________ Total stockholders' deficit $ (24,371,334) $ (42,748,847) $ (22,903,457) $ (4,440,774) $ (99,464,412) Statement of operations information: Revenue $ - $ 4,364,371 $ 485,215 $ (586,760) $ 4,262,826 Operating expenses 59,981 26,264,610 5,762,417 (532,742) 31,554,266 Net loss (3,000,301) $ (21,908,028) $ (5,372,980) $ (54,018) $ (30,335,327)
15. Subsequent Events In February 1999, Viper Wireless, Inc. (Viper), was formed to participate in the C-Block PCS license reauction for additional spectrum in most of the Company's markets. The Company currently owns 85% of Viper and the Company's Chief Executive Officer and Executive Vice President and Chief Financial Officer collectively own the remaining 15%. Mr. Vento and Mr. Sullivan together currently have voting control over Viper. Upon final award of licenses to Viper, the Company will solicit the approval of the FCC for the consolidation of Viper into the Company. Any such consolidation will be subject to a final FCC order approving the transaction. In April 1999, Viper participated in the FCC's reauction of C-Block licenses for additional spectrum. On April 15, 1999, the FCC announced the reauction ended, and Viper was the current high bidder for 15 MHz licenses in New Orleans, Houma and Alexandria, Louisiana, San Juan, Puerto Rico and Jackson, Tennessee. Viper was also the current high bidder for a 30 MHz licenses in Beaumont, Texas. The total auction price for these licenses is approximately $32,286,000 plus legal costs of $46,566. During the quarter ended March 31, 1999, the Company paid the FCC an initial deposit of $17,818,549 (unaudited) related to the reauction. Subsequent to March 31, 1999, the FCC refunded $11,361,351(unaudited) of the initial deposit. The finalization of this transaction is conditioned upon the receipt of final regulatory approval from the FCC, which is expected in the second half of 1999. The purchase price will be allocated to the licenses acquired, subject to adjustment, based upon their estimated fair value as follows: PCS licenses $ 32,286,000 Other intangible assets relating to legal costs 46,566 ------------- $ 32,332,566 ============= AT&T and certain of the Company's other stockholders have committed an aggregate of up to approximately $32,300,000 in exchange for additional shares of mandatorily redeemable preferred stock, Series F preferred stock and common stock in the event Viper is ultimately awarded these licenses. As part of this financing, the Company paid approximately $500,000 to an affiliate of a Cash Equity Investor in closing this transaction. In May 1999, AT&T and the certain Cash Equity Investors funded approximately $6,460,000 of their commitment, with the remaining $25,840,000 to be funded when the Company must make payments to the FCC with respect to these licenses, or if the FCC does not refund amounts the Company paid to the FCC as deposits in connection with the reauction within 180 days of the date of deposit. On June 3, 1999, a petition was filed by Continued F-34 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ________ certain collateralized creditors of DCR PCS, Inc. and Pocket Communications Inc. against the application of Viper for the Houma and New Orleans licenses. The petition seeks deferral of the grant of these licenses to Viper until an appeal by the collateralized creditors of DCR PCS, Inc. and Pocket Communications, Inc. has been resolved or, in the alternative, a condition noting that a pre-existing claim to the licenses may exist if the collateralized creditors of DCR PCS, Inc. and Pocket Communications are successful in that appeal. The appeal seeks review of the bankruptcy court's ruling concering DCR PCS, Inc. and Pocket Communications, Inc. permitting DCR PCS, Inc. to file its election notice, which ultimately resulted in the return of these licenses to the FCC, over the objection of the collateralized creditors of DCR PCS, Inc. and Pocket Communications, Inc. On June 15, 1999, Viper filed an opposition to the petition. Triton PCS, Inc. (Triton), Tritel Communications (Tritel), and the Company have adopted a common brand, SunCom, which is co-branded with equal emphasis with the AT&T brand name and logo. On April 16, 1999, Triton, Tritel and TeleCorp Communications, Inc. formed a new company, Affiliate License Co., L.L.C., to own, register and maintain the marks SunCom, SunCom Wireless and other SunCom and Sun formative marks (the SunCom Marks) and to license the SunCom marks to Triton, Tritel and the Company. Triton, Tritel and TeleCorp Communications, Inc. each have a 33% membership interest in Affiliate License Co., L.L.C. On April 16, 1999, Triton entered into an agreement, to settle a potential dispute regarding prior use of the SunCom brand. In connection with this settlement, Triton agreed to pay $975,000 to acquire the SunCom Marks which were contributed to Affiliate License Co., L.L.C. The Company paid $325,000 in royalty payments to reimburse Triton for the contributed SunCom Marks. On April 20, 1999, the Company completed the acquisition of 10 MHz PCS licenses covering the Baton Rouge, Houma, Hammond and Lafayette, Louisiana BTA's from Digital PCS, Inc. The total purchase price of $5,979,561 was comprised of $2,310,000 of mandatorily redeemable preferred stock and common stock of the Company, the assumption of U.S. Government financing with the FCC of $4,100,000, less a discount of $716,995, and $286,556 in cash as reimbursement to Digital PCS for interest due to the FCC incurred prior to close and legal costs. The terms of the notes include: interest rate of 6.25%, quarterly interest payments for a two year period and then quarterly principal and interest payments for the remaining 8 years. The promissory notes are collateralized by the underlying PCS licenses. The notes and related PCS licenses will be recorded net of a discount of $716,995 based on management's best estimate of the prevailing market interest rate at the time of the transaction. The purchase price has been preliminarily allocated to the assets acquired, subject to adjustment, based upon their estimated fair value as follows: PCS licenses $ 5,693,005 Other intangible assets relating to legal costs and reimbursement of FCC interest 286,556 ------------- $ 5,979,561 =============
In addition, the Cash Equity Investors will contribute $5,000,000 in exchange for mandatorily redeemable preferred stock and common stock over a two year period from the close of this transaction. On April 20, 1999, the Company restated its Certificate of Incorporation to increase the total authorized number of shares to the following: Continued F-35 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS _______________
Preferred Par Shares Par Shares Stock Value authorized Common Stock Value authorized ------------------------------- ---------- ------------- ----------------- ---------- ------------ Mandatorily redeemable Series A $ 0.01 100,000 Senior $ 0.01 70,000 Mandatorily redeemable Series B $ 0.01 200,000 Class A $ 0.01 950,000 Mandatorily redeemable Series C $ 0.01 215,000 Class B $ 0.01 950,000 Mandatorily redeemable Series D $ 0.01 50,000 Class C tracked $ 0.01 1,000 Mandatorily redeemable Series E $ 0.01 30,000 Class D tracked $ 0.01 3,000 Series F $ 0.01 50,000 Voting Preference $ 0.01 10 ----------- ----------- Total 645,000 Total 1,974,010 =========== ===========
On April 23, 1999, the Company completed the issuance and sale of 11 5/8% Senior Subordinated Discount Notes (the Notes) with an aggregate principal amount at maturity of $575,000,000. The Notes mature April 15, 2009, unless previously redeemed by the Company. The total gross proceeds from the sale of the Notes were $327,635,000. Offering expenses consisting of underwriting, printing, legal and accounting fees totaled $10,574,947. The Notes will increase to $575,000,000 through April 15, 2004 at a rate of 11 5/8% compounded semi-annually. As interest accrues, it will be added to the principal as an increase to interest expense and the carrying value of the Notes until April 15, 2004. The Company will begin paying interest semi- annually on April 15 and October 15 of each year beginning October 15, 2004. The Notes are not collateralized. The Notes are subordinate to all of the Company's existing and future senior debt and ranks equally with all other senior subordinated debt, and ranks senior to all of the Company's existing and future subordinated debt. The Notes are guaranteed by the Company's wholly owned subsidiary, TeleCorp Communications, Inc. On May 24, 1999, the Company sold mandatorily redeemable preferred stock and preferred stock to AT&T with an aggregate value of $40,000,000. Subsequently, on May 25, 1999, the Company acquired from AT&T 20 MHz PCS licenses covering the San Juan MTA, 27 constructed cell sites, a switching facility, leases for additional cell sites, the extension of the Network Membership License Agreement, Long Distance Agreement, Intercarrier Roamer Services Agreement and AT&T Exclusivity Agreement and the reimbursement of AT&T for microwave relocation costs, salary and lease payments (the Puerto Rico transaction) incurred prior to acquisition. In addition, the Company incurred legal fees of $500,000 related to this acquisition. The total purchase price of this asset acquisition was $99,672,877 in cash. The purchase price has been preliminarily allocated to the assets acquired, subject to adjustment, based upon their estimated fair value as follows: PCS licenses $ 69,690,000 Intangible assets - AT&T Agreements 17,310,000 Cell sites, site acquisition, switching facility assets, and other assets 8,000,000 Microwave relocation costs 3,200,000 Continued F-36 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS _______________ Other intangible assets relating to salary and lease reimbursement costs 1,472,877 -------------- $ 99,672,877 Legal fees $ 500,000 -------------- $ 100,172,877 ============== As a result of completing this transaction, the Company's available borrowings under the Lucent Note Agreement (see Note 6) increased by $15,000,000 ($7,500,000 of Series A and $7,500,000 of Series B) and certain Cash Equity Investors have committed $39,996,600 in cash in exchange for mandatorily redeemable preferred and common stock. As part of the financing, the Company paid $2,000,000 to a Cash Equity Investor upon closing the transaction. The Cash Equity Investors cash commitment of $39,996,600 will be funded over a three year period from the close of this transaction. In addition, certain employees, the Chief Executive Officer and the Executive Vice President and Chief Financial Officer of the Company were issued a total of 5,643 shares and 8,212 shares of mandatorily redeemable Series E preferred stock and Class A common stock, respectively. The value of these shares will be recorded as deferred compensation and amortized over the related vesting periods resulting in future compensation expense. On June 2, 1999 the Company acquired from Wireless 2000, Inc. 15 MHz PCS licenses in the Alexandria, Lake Charles and Monroe, Louisiana BTAs. The total purchase price of $7,192,174 was comprised of $370,810 of mandatorily redeemable preferred stock and common stock of the Company, the assumption of U.S. Government financing with the FCC of $7,449,190, less a discount of $1,277,765, and $649,939 in cash as reimbursement of microwave relocation costs and reimbursement of FCC interest and legal costs. The purchase price has been preliminarily allocated to the assets acquired, subject to adjustment, based upon their estimated fair value as follows: PCS licenses $ 6,542,235 Other intangible assets relating to legal and reimbursement of FCC interest 449,939 Microwave relocation costs 200,000 ------------- $ 7,192,174 ============= Continued F-37 Unaudited Pro Forma Balance Sheet --------------------------------- The following unaudited pro forma condensed consolidated balance sheet is based upon the historical consolidated financial statements of the Company. The unaudited pro forma adjustments are based upon available information and certain assumptions that management of the Company believes are reasonable. The unaudited pro forma condensed consolidated balance sheet as of March 31, 1999 has been prepared to illustrate the effects of the Transactions (Notes a, b, c, d and e) as if these Transactions had occurred as of March 31, 1999. The unaudited pro forma condensed consolidated balance sheet and accompanying notes thereto should be read in conjunction with the historical consolidated financial statements of the Company and the other financial information included elsewhere in this Prospectus. The unaudited pro forma condensed consolidated balance sheet does not purport to be indicative of what the Company's consolidated financial position would actually have been had the Transactions been completed on such date, or to project the Company's consolidated financial position for any future period. Continued F-38 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET as of March 31, 1999 _______
Puerto Digital Wireless Rico PCS 2000 Historical (a) (b) (c) -------------- --------------- -------------- ------------- Cash and cash equivalents $ 11,210,696 $ (62,172,877) $ (286,556) $ (649,939) Other current assets 13,987,595 - - - -------------- --------------- -------------- ------------- Total current assets 25,198,291 (62,172,877) (286,556) (649,939) Property and equipment, net 262,653,787 8,000,000 - - PCS licenses and microwave relocation costs 117,531,516 72,890,000 5,693,005 6,742,235 Intangible assets - AT&T agreements 25,369,334 17,310,000 - - Deferred financing costs, net 8,490,330 - - - FCC deposit 17,818,549 - - - Other assets 841,730 1,972,877 286,556 449,939 -------------- --------------- -------------- ------------- Total assets $ 457,903,537 $ 38,000,000 $ 5,693,005 $ 6,542,235 ============== =============== ============== ============= Total current liabilities 84,563,886 - - - -------------- --------------- -------------- ------------- Long-term debt 293,889,463 - 3,383,005 6,171,425 Other liabilities 6,207,965 - - - -------------- --------------- -------------- ------------- 384,661,314 - 3,383,005 6,171,425 -------------- --------------- -------------- ------------- Mandatorily redeemable preferred stock 245,131,494 40,269,666 2,304,266 369,864 - 37,894,524 4,987,239 - Deferred compensation (11,078) (293,436) - - Treasury stock, at cost (12) - - - Preferred stock subscriptions receivable (72,413,769) (39,894,524) (4,987,239) - -------------- --------------- -------------- ------------- Total mandatorily redeemable preferred stock 172,706,635 37,976,230 2,304,266 369,864 -------------- --------------- -------------- ------------- Series F preferred stock 333 100 - - Common stock 1,597 482 73 5 Additional paid-in capital 187,498 144,973 18,422 941 Deferred compensation (5,306) (19,709) - - Common stock subscriptions receivable (86,221) (102,076) (12,761) - Treasury stock, at cost (26) - - - Accumulated deficit (99,562,287) - - - -------------- --------------- -------------- ------------- Total stockholders equity (deficit) (99,464,412) 23,770 5,734 946 -------------- --------------- -------------- ------------- Total liabilities, mandatorily redeemable preferred stock and stockholders' equity (deficit) $ 457,903,537 $ 38,000,000 $ 5,693,005 $ 6,542,235 ============== =============== ============== ============= Offering Pro Viper Wireless (d) (e) Forma ------------------- -------------- --------------- Cash and cash equivalents $ (15,014,017) $ 296,960,053 $ 230,047,360 Other current assets - - 13,987,595 ------------------- -------------- --------------- Total current assets (15,014,017) 296,960,053 244,034,955 Property and equipment, net - - 270,653,787 PCS licenses and microwave relocation costs 32,286,000 - 235,142,756 Intangible assets - AT&T agreements - - 42,679,334 Deferred financing costs, net - 10,574,947 19,065,277 FCC deposit (17,818,549) - - Other assets 46,566 - 3,597,668 ------------------- -------------- --------------- Total assets $ (500,000) $ 307,535,000 $ 815,173,777 =================== ============== =============== Total current liabilities - - 84,563,886 ------------------- -------------- --------------- Long-term debt - 307,535,000 610,978,893 Other liabilities - - 6,207,965 ------------------- -------------- --------------- - 307,535,000 701,750,744 ------------------- -------------- --------------- Mandatorily redeemable preferred stock 31,703,603 - 362,660,656 - - Deferred compensation - - (304,514) Treasury stock, at cost - - (12) Preferred stock subscriptions receivable (32,203,603) - (149,499,135) ------------------- -------------- --------------- Total mandatorily redeemable preferred stock (500,000) - 212,856,995 ------------------- -------------- --------------- Series F preferred stock 49 - 482 Common stock 274 - 2,431 Additional paid-in capital 82,074 - 433,908 Deferred compensation - - (25,015) Common stock subscriptions receivable (82,397) - (283,455) Treasury stock, at cost - - (26) Accumulated deficit - - (99,562,287) ------------------- -------------- --------------- Total stockholders equity (deficit) - (99,433,962) ------------------- -------------- --------------- Total liabilities, mandatorily redeemable preferred stock and stockholders' equity (deficit) $ (500,000) $ 307,535,000 $ 815,173,777 =================== ============== ===============
The accompanying notes are an integral part of this unaudited pro forma condensed balance sheet. F-39 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET _____ (a) On May 24, 1999, the Company sold mandatorily redeemable preferred stock and preferred stock to AT&T with an aggregate value of $40,000,000. Subsequently, on May 25, 1999, the Company acquired from AT&T 20 MHz PCS licenses covering the San Juan MTA, 27 constructed cell sites, a switching facility, leases for additional cell sites, the extension of the Network Membership License Agreement, Long Distance Agreement, Intercarrier Roamer Services Agreement and AT&T Exclusivity Agreement and the reimbursement of AT&T for microwave relocation costs, salary and lease payments (the Puerto Rico transaction) incurred prior to acquisition. In addition, the Company incurred legal fees of $500,000 related to this acquisition. The total purchase price of this asset acquisition was $99,672,877 in cash. The purchase price has been preliminarily allocated to the assets acquired, subject to adjustment, based upon their estimated fair value as follows: PCS licenses $ 69,690,000 Intangible assets- AT&T Agreements 17,310,000 Cell sites, site acquisition, switching facility assets, and other assets 8,000,000 Microwave relocation costs 3,200,000 Other intangible assets relating to salary and lease reimbursement costs 1,972,877 -------------- $ 99,672,877 Legal fees 500,000 -------------- $ 100,172,877 ==============
As a result of completing this transaction, the Company's available borrowings under the Lucent Note Agreement (see Note 6) shall increase $15,000,000 ($7,500,000 of series A and $7,500,000 of series B) and certain Cash Equity Investors have committed $39,996,600 in cash in exchange for mandatorily redeemable preferred and common stock. As part of this financing, the Company paid $2,000,000 to a Cash Equity Investor upon closing this transaction. The Cash Equity Investors cash commitment of $39,996,600 will be funded over a three year period from the close of this transaction. In addition, certain employees, the Chief Executive Officer and the Executive Vice President and Chief Financial Officer of the Company will be issued a total of 5,643 shares and 8,212 shares of mandatorily redeemable Series E preferred stock and Class A common stock, respectively. The value of these shares will be recorded as deferred compensation and amortized over the related vesting periods resulting in future compensation expense. (b) On April 20, 1999, the Company completed the acquisition of 10 MHz PCS licenses covering the Baton Rouge, Houma, Hammond and Lafayette, Louisiana BTA's from Digital PCS, Inc. The total purchase price of $5,979,561, comprised of $2,310,000 of mandatorily redeemable preferred stock and common stock of the Company, the assumption of U.S. Government financing with the FCC of $4,100,000, less a discount of $716,995, and $286,556 in cash as reimbursement to Digital PCS for interest due to the FCC incurred prior to close and legal costs. The terms of the notes include: interest rate of 6.25%, quarterly interest payments for a two year period and then quarterly principal and interest payments for the remaining 8 years. The promissory notes are collateralized by the underlying PCS licenses. The notes and related PCS licenses will be recorded net of a discount of $716,995 based on management's best estimate of the prevailing market interest rate at the time of the transaction. The purchase price has been preliminarily allocated to the assets acquired, subject to adjustment, based upon their estimated fair value as follows: PCS licenses $ 5,693,005 Other intangible assets relating to legal costs and reimbursement of FCC interest 286,556
F-40 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET _____ -------------- $ 5,979,561 ============== In addition, the Cash Equity Investors will contribute $5,000,000 in exchange for mandatorily redeemable preferred stock and common stock over a two year period from the close of this transaction. (c) On June 2, 1999 the Company acquired from Wireless 2000, Inc. 15 MHz PCS licenses in the Alexandria, Lake Charles and Monroe, Louisiana BTAs. The total purchase price of $7,192,174, was comprised of $370,810 of mandatorily redeemable preferred stock and common stock of the Company, the assumption of U.S. Government financing with the FCC of $7,449,190, less a discount of $1,277,765 and $649,939 in cash as reimbursement of microwave relocation costs and reimbursement of FCC interest and legal costs. The purchase price has been preliminarily allocated to the assets acquired, subject to adjustment, based upon their estimated fair value as follows: PCS licenses $ 6,542,235 Other intangible assets relating to legal and reimbursement of FCC interest 449,939 Microwave relocation costs 200,000 ------------- $ 7,192,174 =============
(d) In February 1999, Viper was formed to participate in the C-Block PCS license reauction for additional spectrum in most of the Company's markets. The Company currently owns 85% of Viper and the Company's Chief Executive Officer and Executive Vice President and Chief Financial Officer collectively own the remaining 15%. Mr.Vento and Mr.Sullivan together currently have voting control over Viper. Upon final award of licenses to Viper, the Company will solicit the approval of the FCC for the consolidation of Viper into the Company. Any such consolidation will be subject to a final FCC order approving the transaction. In April 1999, Viper participated in the FCC's reauction of C-Block licenses for additional spectrum. On April 15, 1999, the FCC announced the reauction ended, and Viper was the current high bidder for 15 MHz licenses in New Orleans, Houma and Alexandria, Louisiana, San Juan, Puerto Rico and Jackson, Tennessee. Viper was also the current high bidder for a 30 MHz licenses in Beaumont, Texas. The total auction price for these licenses is approximately $32,286,000. During the quarter ended March 31, 1999, the Company paid the FCC an initial deposit of $17,818,549 related to the reauction. Subsequent to March 31, 1999, the FCC refunded $11,361,351 of the initial deposit. The finalization of this transaction is conditioned upon the receipt of final regulatory approval from the FCC, which is expected in the second half of 1999. The purchase price will be allocated to the licenses acquired, subject to adjustment, based upon their estimated fair value as follows: PCS licenses $ 32,286,000 Other intangible assets relating to legal costs 46,566 -------------- $ 32,332,566 ==============
AT&T and certain of the Company's other stockholders have committed an aggregate of up to approximately $32,300,000 in exchange for additional shares of mandatorily redeemable preferred stock, Series F preferred stock and common stock in the event Viper is ultimately awarded these licenses. As part of this financing, the Company paid $500,000 to an affliate of a Cash Equity Investor upon closing this transaction. In May 1999, AT&T and the certain Cash Equity Investors funded approximately $6,460,000 of their commitment, with the remaining $25,840,000 to be funded when the Company must make payments to the FCC with respect to these licenses, or if the FCC does not refund amounts the Company paid to the FCC as deposits in connection with the reauction within 180 days of the date of deposit. On June 3, 1999, a petition was filed by certain collateralized creditors of DCR PCS, Inc. and Pocket Communications Inc. against the application of Viper F-41 TELECORP PCS, INC. AND SUBSIDIARIES AND PREDECESSOR COMPANY NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET _____ for the Houma and New Orleans licenses. The petition seeks deferral of the grant of these licenses to Viper until an appeal by the collateralized creditors of DCR PCS, Inc. and Pocket Communications, Inc. has been resolved or, in the alternative, a condition noting that a pre-existing claim to the licenses may exist if the collateralized creditors of DCR PCS, Inc. and Pocket Communications are successful in that appeal. The appeal seeks review of the bankruptcy court's ruling concerning DCR PCS, Inc. and Pocket Communications, Inc. permitting DCR PCS, Inc. to file its election notice, which ultimately resulted in the return of these licenses to the FCC, over the objection of the collateralized creditors of DCR PCS, Inc. and Pocket Communications, Inc. On June 15, 1999, Viper filed an opposition to the petition. (e) Adjustments reflect the receipt of $296,960,053 of proceeds for the sale of the Notes, net of offering expenses of $10,574,947 and the repayment of the Lucent Series B Notes of approximately $20,100,000 outstanding as of March 31, 1999 (unaudited). F-42 ================================================================================ WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE ANY INFORMATION OR REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST NOT RELY ON ANY UNAUTHORIZED INFORMATION. THIS PROSPECTUS DOES NOT OFFER TO SELL OR BUY ANY SECURITIES IN ANY JURISDICTION WHERE IT IS UNLAWFUL. THE INFORMATION IN THIS PROSPECTUS IS CURRENT AS OF , 1999. TABLE OF CONTENTS Prospectus Summary.......................................................... 1 Risk Factors................................................................ 13 Use of Proceeds............................................................. 27 Capitalization.............................................................. 28 Selected Historical and Pro Forma Consolidated Financial Information...................................................... 30 Management's Discussion and Analysis of Financial Condition and Results of Operations.............................. 31 Business.................................................................... 37 The Exchange Offer.......................................................... 50 Management.................................................................. 56 Securities Ownership of Certain Beneficial Owners and Management............................................................. 62 Certain Relationships and Related Transactions.............................. 65 Certain Indebtedness........................................................ 72 Description of Capital Stock................................................ 77 Description of the Notes.................................................... 82 Certain U.S. Federal Tax Considerations..................................... 117 Book-Entry; Delivery and Form............................................... 122 Plan of Distribution........................................................ 124 Legal Matters............................................................... 124 Experts..................................................................... 124 Available Information....................................................... 124 Glossary of Selected Terms.................................................. 126 Index to Financial Statements............................................... F-1 UNTIL , 1999, ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOT PARTICIPATING IN THE EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS IN CONNECTION THEREWITH. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS. WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. TELECORP PCS, INC. 575,000,000 OFFER TO EXCHANGE ALL OF OUR OUTSTANDING AND UNREGISTERED 11 5/8% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2009 FOR OUR REGISTERED 11 5/8% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2009 ---------------------- PROSPECTUS ---------------------- , 1999 ================================================================================ [ALTERNATIVE PAGE] THIS PROSPECTUS, DATED JUNE __, 1999, IS SUBJECT TO COMPLETION AND AMENDMENT PROSPECTUS TELECORP PCS, INC. 11 5/8% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2009 YOU SHOULD CAREFULLY REVIEW THE RISK FACTORS BEGINNING ON PAGE __ OF THIS PROSPECTUS. INFORMATION ABOUT THE NOTES
Maturity Change of Control . The Notes will mature on April 15, 2009, . If we experience a change of control, you may require us to unless previously redeemed. purchase the Notes. Interest and Accretion Security and Ranking . We issued the Notes at a discount to their principal . The Notes are not secured by any collateral. amount at maturity. . The Notes are subordinate to all of our existing and future . The Notes will accrete in value until April 15, 2004 at a senior debt. rate of 11 5/8% compounded semi-annually. . The Notes rank equally with all of our other senior . We will pay interest semiannually on April 15 and October subordinated debt. 15 of each year beginning October 15, 2004. . The Notes rank senior to all of our existing and future subordinated debt. Redemption Guarantees . We may redeem some or all of the Notes at any time after . If we fail to make payments on the Notes, our guarantor April 15, 2004. subsidiaries must make them instead. These guaranties will be . We also may redeem up to 35% of the aggregate principal senior subordinated obligations of our guarantor subsidiaries. amount at maturity of the Notes using the proceeds of Not all of our subsidiaries will be guaranteeing our payments certain equity offerings completed before April 15, 2002. on the Notes. . See page __ for the redemption prices.
Neither the SEC nor any state securities commission has approved or disapproved of the Notes, or determined that this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Chase Securities Inc. ("CSI") may use this prospectus in connection with offers and sales of the Notes in market-making transactions at negotiated prices related to prevailing market prices at the time of sale. CSI may act as a principal or agent in such transactions. We will receive no portion of the proceeds of the sale of such Notes and will bear the expenses incident to their registration. For as long as a market-making prospectus is required to be delivered, the ability of CSI to make a market in the Notes may in part depend on our ability to maintain a current market-making prospectus. The date of this prospectus is , 1999. A-1 [ALTERNATIVE PAGE] SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS All statements contained in this prospectus, as well as statements made in press releases and oral statements that may be made by us or any of our officers, directors or employees acting on our behalf, that are not statements of historical fact, including, but not limited to, statements regarding our current business strategy, future operations, technical capabilities, construction plan and schedule, commercial operations schedule, funding needs, prospective acquisitions or joint ventures, financing sources, pricing, future regulatory approvals, markets, size of markets for wireless communications services, financial position, estimated revenues, projected costs, prospects, plans and objectives of management, as well as information concerning expected actions of third parties, such as equipment suppliers, service providers and roaming partners, and expected characteristics of competing systems, are based upon current expectations and constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause our actual results to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. Among the factors that could cause actual results to differ materially are the following: the availability of sufficient capital to finance our business plan on terms satisfactory to us; competitive factors; changes in labor, equipment and capital costs; our ability to obtain necessary regulatory approvals; technological changes; our ability to comply with the indenture governing the Notes and the terms of our other credit agreements; future acquisitions or strategic partnerships; general business and economic conditions; and other factors described under the heading "Risk Factors." We caution readers not to place undue reliance on any forward-looking statements. In addition to statements that explicitly describe such risks and uncertainties, readers are urged to consider statements that include the terms "believes," "belief," "expects," "plans," "anticipates," "intends," "estimates," "projects" or the like to be uncertain and forward-looking. We have no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Although we believe that the expectations underlying the forward-looking statements are reasonable, we cannot assure that such expectations will prove to be correct. We disclose important factors that could cause our actual results to differ materially from our expectations ("cautionary statements") under the heading "Risk Factors" and elsewhere in the prospectus. The cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf. A-2 [ALTERNATIVE PAGE] Risk Factors You should consider carefully all of the information set forth in this prospectus and, in particular, you should evaluate the specific factors under "Risk Factors" beginning on the next page before you invest in the Notes. A-3 [ALTERNATIVE PROVISIONS] [The following provisions replace the provisions under the same headings in the prospectus in the "Risk Factors" section.] RISK FACTORS We may need additional financing to complete our network and fund operating losses. We will make significant capital expenditures to finish the designing, building, testing and deployment of our network. We estimate that the proceeds from the original private offering of the Notes, together with the proceeds from sales of our equity securities, borrowings under our senior credit facilities and the vendor financing provided by Lucent, and internally generated cash, will be sufficient to: . fund the planned construction of our network; . fund operating losses; and . satisfy debt service requirements through December 31, 2002. See "Use of Proceeds" and "Business--Network Development." The actual expenditures necessary to achieve these goals may differ significantly from our estimates. We would have to obtain additional financing, if: . any of our sources of capital are unavailable or insufficient; . we significantly depart from our business plan; . we experience unexpected delays or cost overruns in the construction of our network; . we have increases in operating costs; . changes in technology or governmental regulations create unanticipated costs; or . we acquire additional licenses. We cannot predict whether any additional financing will be available, the terms on which any additional financing would be available or whether our existing debt agreements will allow additional financing. If we cannot obtain additional financing when needed, we will have to delay, modify or abandon some of our plans to construct the remainder of our network. We have sold $205.3 million of equity securities. As of March 31, 1999, we had received payments of $55.5 million in payment for such securities. The remaining $149.8 million (including $32.3 million of commitments to reimburse us for costs incurred in connection with the FCC's reauction of C-Block licenses) has been irrevocably committed and will be paid within three years. If we do not receive the proceeds from sales of our equity securities in a timely manner, our ability to complete construction of our network, successfully implement our business plan and capitalize on opportunities for growth could be materially adversely affected. This prospectus contains forward-looking statements that may be incorrect. All statements in this prospectus that are not statements of historical facts are forward-looking statements. Forward-looking statements concern our strategy, future operations, technical capabilities, construction plan and schedule, commercial operations schedule, funding needs, prospective acquisitions or joint ventures, financing sources, pricing, future regulatory approvals, markets, size of markets for wireless communications services, financial position, estimated revenues, projected costs, prospects, plans and objectives of management, as well as information concerning expected actions of third parties such as equipment suppliers, service providers and roaming partners, and expected characteristics of competing systems. Although we believe that the expectations underlying such forward-looking statements are reasonable, forward-looking statements are inherently speculative, and they may be incorrect. Our business, operations and financial results may differ materially from the expectations expressed or implied in the forward-looking statements in this prospectus. You should consider carefully the factors described in this section and the other information in this prospectus before you invest in the Notes. A-4 [ALTERNATIVE PROVISIONS] The information set forth under "Business--Network Development," other than historical information, the statements in this prospectus regarding the years during which we expect to continue to incur significant operating losses and to generate negative cash flow from operating activities and the statements in this prospectus regarding our anticipated capital needs are forward-looking statements based upon a number of specific assumptions. These assumptions include the following: . we will not incur any unanticipated costs in the construction of our network; . we will be able to compete successfully in each of our markets; . demand for our services will meet wireless communications industry projections; . our network will satisfy the requirements set forth in our agreements with AT&T and support the services we expect to provide; . the capacity of our network will be sufficient to meet the level of service reflected in our business plan; . we will be successful in working with AT&T and the other SunCom companies, as well as with other providers of wireless communications services and roaming partners, to ensure effective marketing of our network and the services we intend to offer; . there will be no change in any governmental regulation or the administration of existing governmental regulations that requires a material change in the operation of our business; and . there will be no change in any of our material contracts that adversely affects us. Although we believe that these assumptions are reasonable, they may be incorrect. If one or more of these assumptions is incorrect, our business, operations and financial results may differ materially from the expectations, expressed or implied, in the forward-looking statements in this prospectus. A market for unregistered Notes may weaken the market for the registered Notes, and vice versa. The existence of a market for registered Notes could adversely affect the market for unregistered Notes due to the limited amount, or "float," of the unregistered Notes that remain outstanding. Generally, a lower "float" of a security could result in less demand to purchase such security and could result in lower prices for such security. For the same reasons, the existence of a market for unregistered Notes could adversely affect the trading market for the registered Notes. There is no public market for the Notes and there are restrictions on the resale of the Notes. The Notes are new securities with no established trading market. We do not intend to list the Notes on any securities exchange. CSI, one of the initial purchasers of the Notes in the original private offering, has told us that they intend to make a market in the Notes, as the law permits. CSI is not obligated to make a market, and may discontinue any such activities at any time without notice. If CSI conducts any market-making activities, it may be required to deliver a market-making prospectus when effecting offers and sales of the Notes because affiliates of CSI beneficially own some of our capital stock. For so long as a market-making prospectus is required to be delivered, the ability of CSI to make a market in the Notes depends, in part, on our ability to maintain a current market-making prospectus. We cannot ensure that an active market for the Notes will develop. A-5 [ALTERNATIVE SECTION] USE OF PROCEEDS The net proceeds from the original private offering of the Notes, after deducting the initial purchasers' discounts and estimated fees and expenses payable by us, were approximately $317.0 million. We used $40.0 million of the net proceeds to repay vendor financing from Lucent. We intend to use the remaining net proceeds from the private offering of the Notes, together with proceeds from sales of our equity securities, borrowings under our senior credit facilities, other vendor financing provided by Lucent and internally generated cash, to fund capital expenditures, acquisitions of PCS licenses, operating losses and other working capital requirements. We did not receive proceeds from the exchange offer relating to the Notes, and will not receive any proceeds from market-making transactions by CSI. See "Business--Network Development" and "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources." A-6 [ALTERNATIVE PROVISIONS] [The following provisions replace the provisions under the same headings in the prospectus in the "Description of the Notes" section.] DESCRIPTION OF THE NOTES General As used in this section entitled "Description of the Notes," the terms "we," "us" and "our" means TeleCorp PCS, Inc., a Delaware corporation, but does not include any of our subsidiaries. Capitalized terms used in this section and not otherwise defined have the meanings set forth under "--Certain Definitions." The Notes have been issued under the Indenture, dated as of April 23, 1999 (the "Indenture"), among us, TeleCorp Communications, as our subsidiary guarantor, and Bankers Trust Company, as Trustee (the "Trustee"), a copy of which is available. The following summary of certain provisions of the Indenture and the Notes is not complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the Indenture, including the definitions of certain terms in and those terms made a part of the Indenture and the Notes by the TIA. Principal of, premium, if any, and interest on the Notes will be payable, and the Notes may be exchanged or transferred, at our office or agency in the Borough of Manhattan, The City of New York (which initially shall be the corporate trust office of the Trustee, at 4 Albany Street, New York, New York 10006), except that, at our option, payment of interest may be made by check mailed to the registered holders of the Notes at their registered addresses. The Notes are and will be issued only in fully registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000. No service charge will be made for any registration of transfer or exchange of Notes, but we may require payment of a sum sufficient to cover any transfer tax or other similar governmental charge payable in connection with such transfer or exchange. Certain Covenants Provision of Financial Information. The Indenture provides that, whether or not required by the rules and regulations of the SEC, so long as any Notes are outstanding, we will furnish to the holders of the Notes: (1) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if we were required to file such forms, including a section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes our financial condition and results of operations and that of our consolidated Subsidiaries and a report on such annual information only by our certified independent accountants; and (2) all current reports that would be required to be filed with the SEC on Form 8-K if we were required to file such reports, in each case within the time period specified in the SEC's rules and regulations. We will file a copy of all such information and reports with the SEC for public availability within the time periods specified in the SEC's rules and regulations (unless the SEC will not accept such a filing) and make such information available to prospective investors upon request. In addition, the Company will, for so long as any Notes remain outstanding, furnish to the holders of Notes, upon request, the information required to be delivered under Rule 144A(d)(4) of the Securities Act. The Company will also comply with Section 314(a) of the TIA. Amendments and Waivers Subject to certain exceptions, the Indenture or the Notes may be amended with the written consent of the holders of a majority in aggregate principal amount at maturity of the Notes then outstanding, and any past default or compliance with any provisions may be waived with the consent of the holders of a majority in aggregate principal amount at maturity of the Notes then outstanding. However, without the consent of each holder of an outstanding Note affected, no amendment may, among other things: (1) reduce the amount of the Notes whose holders must consent to an amendment; A-7 [ALTERNATIVE PROVISIONS] (2) reduce the rate of, or extend the time for payment of, interest or any liquidated damages on any Note; (3) reduce the principal of, or extend the Stated Maturity of, any Note; (4) reduce the premium payable upon the redemption of any Note or change the time at which any Note may be redeemed as described under "-- Optional Redemption;" (5) make any Note payable in money other than that stated in the Note; (6) make any change to the subordination provisions of the Indenture that adversely affects the rights of any holder of Notes; (7) impair the right of any holder of Notes to receive payment of principal of and interest or any liquidated damages on such holder's Notes on or after the due dates for such payment or to institute suit for the enforcement of any payment on or with respect to such holder's Notes; (8) make any change in the amendment provisions which requires the consent of each holder of the Notes or in the waiver provisions; or (9) modify the Subsidiary Guarantees in any manner adverse to the holders of the Notes. Without the consent of any holder of the Notes, we and the Trustee may amend the Indenture to: (1) cure any ambiguity, omission, defect or inconsistency; (2) provide for the assumption by a successor corporation of our obligations under the Indenture; (3) provide for uncertificated Notes in addition to, or in place of, certificated Notes (provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code); (4) make any change in the subordination provisions of the Indenture that would limit or terminate the benefits available to any holder of our Senior Indebtedness or any representative of such holder under such subordination provisions; (5) add additional guarantees with respect to the Notes; (6) secure the Notes; (7) add to our covenants for the benefit of the Noteholders; (8) surrender any right or power conferred upon us; (9) make any change that does not adversely affect the rights of any holder of the Notes; or (10) comply with any requirement of the SEC in connection with the qualification of the Indenture under the TIA. No amendment may be made to the subordination provisions of the Indenture, however, that adversely affects the rights of any holder of our Senior Indebtedness then outstanding unless the holders of such Senior Indebtedness, or any group or representative of such holders authorized to give a consent, consent to such change. The consent of the Noteholders will not be necessary under the Indenture to approve the particular form of any proposed amendment. It will be sufficient if such consent approves the substance of the proposed amendment. After an amendment under the Indenture becomes effective, we will be required to mail to Noteholders a notice briefly describing such amendment. However, the failure to give such notice to all Noteholders, or any defect in such notice, will not impair or affect the validity of the amendment. A-8 [ALTERNATIVE PROVISIONS] Certain Definitions Set forth below is a summary of certain of the defined terms used in the Indenture, which is attached as an exhibit to the registration statement. "Accreted Value" means, as of any date of determination prior to April 15, 2004, the sum of: (1) the initial offering price of each Note; and (2) the portion of the excess of the principal amount of each Note over such initial offering price which we shall have amortized in accordance with GAAP through such date, such amount to be so amortized on a daily basis and compounded semiannually on each interest payment date at a rate of 11 5/8% per annum from the date of the Indenture through the date of determination computed on the basis of a 360-day year of twelve 30-day months. "Acquired Indebtedness" means, with respect to any Person, Indebtedness of such Person: (1) existing at the time such Person becomes a Restricted Subsidiary; or (2) assumed in connection with the acquisition of assets from another Person, including Indebtedness Incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary or such acquisition, as the case may be. "Acquisitions" means the Digital Acquisition, the Puerto Rico Acquisition and the Wireless 2000 Acquisition. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, any specified Person. For purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Annualized Pro Forma Consolidated Operating Cash Flow" means Consolidated Cash Flow for the latest two full fiscal quarters for which our consolidated financial statements are available multiplied by two. For purposes of calculating "Consolidated Cash Flow" for any period for purposes of this definition only: (1) any of our Subsidiaries that is a Restricted Subsidiary on the date of the transaction giving rise to the need to calculate "Annualized Pro Forma Consolidated Operating Cash Flow" (the "Transaction Date") shall be deemed to have been a Restricted Subsidiary at all times during such period; and (2) any of our Subsidiaries that is not a Restricted Subsidiary on the Transaction Date shall be deemed not to have been a Restricted Subsidiary at any time during such period. In addition to and without limitation of the foregoing, for purposes of this definition only, "Consolidated Cash Flow" shall be calculated after giving effect on a pro forma basis for the applicable period to, without duplication, any Asset Dispositions or Asset Acquisitions, including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of our or one of the Restricted Subsidiaries, including any Person who becomes a Restricted Subsidiary as a result of the Asset Acquisition Incurring, assuming or otherwise being liable for Acquired Indebtedness, occurring during the period commencing on the first day of such two-fiscal-quarter period to and including the Transaction Date (the "Reference Period"), as if such Asset Sale or Asset Acquisition occurred on the first day of the Reference Period. "Asset Acquisition" means: (1) any purchase or other acquisition, by means of transfer of cash, Indebtedness or other property to others or payment for property or services for the account or use of others or otherwise, of Capital Stock of any Person by us or any Restricted Subsidiary, in either case, under which such Person shall become a Restricted Subsidiary or shall be merged with or into us or any Restricted Subsidiary; or (2) any acquisition by us or any Restricted Subsidiary of the property or assets of any Person which constitute all or substantially all of an operating unit or line of business of such Person. A-9 [ALTERNATIVE PROVISIONS] "Asset Disposition" means any sale, transfer or other disposition (including, without limitation, by merger, consolidation or Sale/Leaseback Transaction) of: (1) shares of Capital Stock of any of our Subsidiaries, other than directors' qualifying shares; (2) any License for the provision of wireless telecommunications services held by us or any Restricted Subsidiary, whether by sale of Capital Stock or otherwise; or (3) any other property or assets of ours or any of our Subsidiaries other than in the ordinary course of business; provided, however, that an Asset Disposition shall not include: (A) any sale, transfer or other disposition of shares of Capital Stock, property or assets by a Restricted Subsidiary to us or to any other Restricted Subsidiary or by us to any Restricted Subsidiary; (B) any sale, transfer or other disposition of defaulted receivables for collection; (C) the sale, lease, conveyance or disposition or other transfer of all or substantially all of our assets as permitted under "--Covenants-- Merger, Consolidation and Certain Sales of Assets;" (D) any disposition that constitutes a Change of Control; or (E) any sale, transfer or other disposition of shares of Capital Stock of any Marketing Affiliate; provided that such Marketing Affiliate is not engaged in any activity other than the registration, holding, maintenance or protection of trademarks and such related licensing; or (F) any sale, transfer or other disposition that does not, together with all related sales, transfers or dispositions, involve aggregate consideration in excess of $5.0 million. "AT&T Wireless" means AT&T Wireless PCS Inc., a Delaware corporation. "Average Life" means, as of the date of determination, with respect to any Indebtedness for borrowed money or Preferred Stock, the quotient obtained by dividing: (1) the sum of the products of the number of years from the date of determination to the dates of each successive scheduled principal or liquidation value payments of such Indebtedness or Preferred Stock, respectively, and the amount of such principal or liquidation value payments by (2) the sum of all such principal or liquidation value payments. "Bank Indebtedness" means any and all amounts payable under or in respect of the Credit Agreement and any Refinancing Indebtedness with respect to the Credit Agreement, as amended from time to time, including principal, premium, if any, interest, including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to us whether or not a claim for post-filing interest is allowed in such proceedings, fees, charges, expenses, reimbursement obligations, guarantees and all other amounts payable under or in respect of such Credit Agreement. "board" of any Person means the board of directors, management committee or other governing body of such Person. "BTA" means a Basic Trading Area, as defined in 47 C.F.R. (S)24.202. "Business Day" means any date which is not a Legal Holiday. "C-Block License" means any License in the C block as set forth in parts 1 and 24 of Title 47 of the Code of Federal Regulations. "Capital Lease Obligations" of any Person means the obligations to pay rent or other amounts under a lease of, or other Indebtedness arrangements conveying the right to use, real or personal property of such Person which are required to be classified and accounted for as a capital lease or liability on the face of a balance sheet of such Person in accordance with GAAP. The A-10 [ALTERNATIVE PROVISIONS] amount of such obligations shall be the capitalized amount of such obligations in accordance with GAAP, and the Stated Maturity of such obligations shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. "Capital Stock" of any Person means any and all shares, interests, rights to purchase, warrants options, participations or other equivalents of or interests in, however, designated, of corporate stock or other equity participations, including partnership interests, whether general or limited, of such Person. "Cash Equity Investors" means CB Capital Investors, L.P., Equity-Linked Investors-II, Private Equity Investors III, L.P., Hoak Communications Partners, L.P., HCP Capital Fund, L.P., Whitney Equity Partners, L.P., J. H. Whitney III, L.P., Whitney Strategic Partners III, L.P., Entergy Technology Holding Company, Media/Communications Partners III Limited Partnership, Media/Communications Investors Limited Partnership, One Liberty Fund III, L.P., One Liberty Fund IV, L.P., Toronto Dominion Investments, Inc., Northwood Ventures LLC, Northwood Capital Partners LLC, Gerald Vento, Thomas Sullivan and Gilde International B.V. "Cash Equivalents" means: (1) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of such acquisition; (2) investments in commercial paper maturing within 365 days from the date of such acquisition and having, at such date of acquisition, the highest credit rating obtainable from Standard & Poor's Corporation or from Moody's Investors Service; (3) investments in certificates of deposit, banker's acceptance and time deposits maturing within 365 days from the date of such acquisition issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any of its States which has a combined capital and surplus and undivided profits of not less than $500,000,000; (4) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (1) above and entered into with a financial institution satisfying the criteria described in clause (3) above; and (5) money market funds substantially all of whose assets comprise securities of the type described in clauses (1) through (3) above. "Code" means the Internal Revenue Code of 1986, as amended. "Common Stock" of any Person means Capital Stock of such Person that does not rank prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to shares of Capital Stock of any other class of such Person. "Communications Act" means the Communications Act of 1934, and any similar or successor Federal statute, and the rules and regulations and published policies of the FCC thereunder, all as amended and as the same may be in effect from time to time. "Consolidated Cash Flow" of any Person means, for any period, the Consolidated Net Income of such Person for such period: (1) increased, to the extent Consolidated Net Income for such period has been reduced thereby, by the sum of, without duplication" (A) Consolidated Interest Expense of such Person for such period; plus (B) Consolidated Income Tax Expense of such Person for such period; plus (C) the consolidated depreciation and amortization expense of such Person and its Restricted Subsidiaries for such period; plus A-11 [ALTERNATIVE PROVISIONS] (D) any other non-cash charges of such Person and its Restricted Subsidiaries for such period except for any non-cash charges that represent accruals of, or reserves for, cash disbursements to be made in any future accounting period; and (2) decreased, to the extent Consolidated Net Income for such period has been increased thereby, by any non-cash gains from Asset Dispositions. "Consolidated Income Tax Expense" of any Person means, for any period, the consolidated provision for income taxes of such Person and its Restricted Subsidiaries for such period calculated on a consolidated basis in accordance with GAAP. "Consolidated Interest Expense" for any Person means, for any period, without duplication: (1) the consolidated interest expense included in a consolidated income statement, without deduction of interest or finance charge income, of such Person and its Restricted Subsidiaries for such period calculated on a consolidated basis in accordance with GAAP, including, without limitation, (a) any amortization of debt discount, (b) the net costs under Hedging Agreements, (c) all capitalized interest, (d) the interest portion of any deferred payment obligation and (e) all amortization of any premiums, fees and expenses payable in connection with the Incurrence of any Indebtedness; plus (2) the interest component of Capital Lease Obligations paid, accrued and/or scheduled to be paid or accrued, by such Person and its Restricted Subsidiaries during such period as determined on a consolidated basis in accordance with GAAP. "Consolidated Net Income" of any Person means for any period the consolidated net income (or loss) of such Person and its Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided, however, that there shall be excluded therefrom: (1) the net income or loss of any Person acquired by such Person or a Restricted Subsidiary of such Person in a pooling-of-interests transaction for any period prior to the date of such transaction; (2) the net income but not loss of any Restricted Subsidiary of such Person which is subject to restrictions which prevent or limit the payment of dividends or the making of distributions to such Person to the extent of such restrictions, regardless of any waiver; (3) the net income of any Person that is not a Restricted Subsidiary of such Person, except to the extent of the amount of dividends or other distributions representing such Person's proportionate share of such other Person's net income for such period actually paid in cash to such Person by such other Person during such period; (4) gains or losses, other than for purposes of calculating Consolidated Net Income under clause (c) the first paragraph under "--Certain Covenants--Limitation on Restricted Payments," on Asset Dispositions by such Person or its Restricted Subsidiaries; (5) all extraordinary gains, but not, other than for purposes of calculating Consolidated Net Income under clause (c) of the first paragraph under "--Certain Covenants--Limitation on Restricted Payments," losses, determined in accordance with GAAP; and (6) in the case of a successor to such Person by consolidation or merger or as a transferee of such Person's assets, any earnings or losses of the successor corporation prior to such consolidation, merger or transfer of assets. "Credit Agreement" means the Credit Agreement dated as of July 17, 1998, as amended, waived or otherwise modified from time to time, among the Company, the financial institutions named in the Credit Agreement as lenders, The Chase Manhattan Bank, as Administrative Agent and Issuing Bank, TD Securities (USA) Inc., as Syndication Agent, and Bankers Trust Company, as Documentation Agent, except to the extent that any such amendment, waiver or other modification to the Credit Agreement would be prohibited by the terms of the Indenture, unless otherwise agreed to by the holders of at least a majority in aggregate principal amount at maturity of the Notes at the time outstanding. "Default" means any event that is, or after notice or lapse of time or both would become, an Event of Default. "Designated Senior Indebtedness of us" means: A-12 [ALTERNATIVE PROVISIONS] (1) so long as outstanding, Bank Indebtedness; and (2) so long as outstanding, any other Senior Indebtedness which has at the time of initial issuance an aggregate outstanding principal amount in excess of $25.0 million and which has been so designated as Designated Senior Indebtedness by our Board at the time of its initial issuance in a resolution delivered to the Trustee. "Designated Senior Indebtedness" of our subsidiary guarantors has a correlative meaning. "Designation" has the meaning set forth under "--Certain Covenants-- Limitation on Designations of Unrestricted Subsidiaries." "Designation Amount" has the meaning set forth under "--Certain Covenants-- Limitation on Designations of Unrestricted Subsidiaries." "Digital Acquisition" means our purchase by us from Digital PCS of 10 MHz of F-Block Licenses for the Baton Rouge, Houma, Hammond and Lafayette, Louisiana BTAs together with related assets. "Digital PCS" means Digital PCS, L.L.C. "Disqualified Stock" of any Person means any Capital Stock of such Person which, by its terms, or by the terms of any security into which it is convertible or for which it is exchangeable, or upon the happening of any event, matures or is mandatorily redeemable, under a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the first anniversary of the Stated Maturity of the Notes; provided, however, that any Capital Stock that would not constitute Disqualified Stock but for such provisions giving such holders the right to require such Person to repurchase or redeem such Capital Stock upon the occurrence of an "asset sale" or "change of control" occurring prior to the first anniversary of the Stated Maturity of the Notes shall not constitute Disqualified Stock if the "asset sale" or "change of control" provisions applicable to such Capital Stock are no more favorable to the holders of such Capital Stock than the provisions of the covenant described under "Change of Control." "Equipment Subsidiary" means TeleCorp Equipment Leasing L.P. and/or any other of our Wholly Owned Subsidiaries designated as an Equipment Subsidiary under the Credit Agreement. "Equity Offering" means any public or private sale of Qualified Stock that we make on a primary basis by the Company, including through the issuance or sale of Qualified Stock to one or more Strategic Equity Investors. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the SEC thereunder. "Excluded Cash Proceeds" means the first $128 million of net cash proceeds received by us subsequent to the date of the Indenture from capital contributions in respect of our Qualified Stock or from the issue or sale, other than to a Restricted Subsidiary, of Qualified Stock. "F-Block License" means any License in the F block as set forth in parts 1 and 24 of Title 47 of the Code of Federal Regulations. "Fair Market Value" means, with respect to any asset or property, the price that could be negotiated in an arm's-length free market transaction, for cash, between a willing seller and a willing buyer, neither of which is under pressure or compulsion to complete the transaction. Unless otherwise specified in the Indenture, Fair Market Value shall be determined by our Board acting in good faith. "FCC" means the Federal Communications Commission, or any other similar or successor agency of the Federal government administering the Communications Act. "FCC Debt" means Indebtedness owed to the United States Treasury Department or the FCC that is incurred in connection with the acquisition of a License. "GAAP" means generally accepted accounting principles, consistently applied, as in effect from time to time in the United States of America, as set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as is approved by a significant segment of the accounting profession in the United States. A-13 [ALTERNATIVE PROVISIONS] "Hedging Agreement" means any interest rate, currency or commodity swap agreement, interest rate, currency or commodity future agreement, interest rate cap or collar agreement, interest rate, currency or commodity hedge agreement and any put, call or other agreement designed to protect against fluctuations in interest rates, currency exchange rates or commodity prices. "Holder" or "Noteholder" means the Person in whose name a Note is registered on the registrar's books. "Incur" means, with respect to any Indebtedness or other obligation of any Person, to create, issue, incur, including by conversion, exchange or otherwise, assume, guarantee or otherwise become liable in respect of such Indebtedness or other obligation or the recording, as required under GAAP or otherwise, of any such Indebtedness or other obligation on the balance sheet of such Person, and "Incurrence," "Incurred" and "Incurring" shall have meanings correlative to the foregoing. Indebtedness of any Person or any of its Restricted Subsidiaries existing at the time such Person becomes a Restricted Subsidiary, or is merged into, or consolidates with, us or any Restricted Subsidiary, whether or not such Indebtedness was Incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary, or being merged into, or consolidated with, us or any Restricted Subsidiary, shall be deemed Incurred at the time any such Person becomes a Restricted Subsidiary or merges into, or consolidates with, us or any Restricted Subsidiary. "Indebtedness" means without duplication, with respect to any Person, whether recourse is to all or a portion of the assets of such Person and whether or not contingent: (1) every obligation of such Person for money borrowed; (2) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations Incurred in connection with the acquisition of property, assets or businesses; (3) every reimbursement obligation of such Person with respect to letters of credit, bankers' acceptances or similar facilities issued for the account of such Person; (4) every obligation of such Person issued or assumed as the deferred purchase price of property or services, but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business which are not overdue or which are being contested in good faith; (5) every Capital Lease Obligation of such Person; (6) every net obligation under Hedging Agreements or similar agreements of such Person; and (7) every obligation of the type referred to in clauses (1) through (6) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor, guarantor or otherwise. Indebtedness shall: (1) include the liquidation preference and any mandatory redemption payment obligations in respect of any of our Disqualified Stock and any Restricted Subsidiary and any Preferred Stock of any of our Subsidiaries; (2) never be calculated taking into account any cash and Cash Equivalents held by such Persons; (3) not include obligations arising from our agreements or agreement of a Restricted Subsidiary to provide for indemnification, adjustment of purchase price, earn-out or other similar obligations, in each case, Incurred or assumed in connection with the disposition of any business or assets of a Restricted Subsidiary. The amount of any Indebtedness outstanding as of any date shall be: (1) the accreted value of such indebtedness, in the case of any Indebtedness issued with original issue discount; (2) the principal amount of such indebtedness, in the case of any Indebtedness other than Indebtedness issued with original issue discount; and (3) the greater of the maximum repurchase or redemption price or liquidation preference of such indebtedness, in the case of any Disqualified Stock or Preferred Stock. A-14 [ALTERNATIVE PROVISIONS] "Ineligible Subsidiary" means: (1) any Special Purpose Subsidiary; (2) any of our subsidiary guarantors; (3) any of our Subsidiaries that, directly or indirectly, own any Capital Stock or Indebtedness of, or own or hold any Lien on any property of, us or any of our other Subsidiaries that is not a Subsidiary of the Subsidiary to be so designated; and (4) any of our Subsidiaries that, directly or indirectly, own any Capital Stock or Indebtedness of, or own or hold any Lien on any property of, any other Subsidiaries that is not eligible to be designated as an Unrestricted Subsidiary. "initial purchasers" means Chase Securities Inc., BT Alex. Brown Incorporated and Lehman Brothers Inc. "Investment" in any Person means any direct or indirect loan, advance, guarantee or other extension of credit or capital contribution to, by means of transfers of cash or other property to others or payments for property or services for the account or use of others or otherwise, or purchase or acquisition of Capital Stock, bonds, notes, debentures or other securities or evidence of Indebtedness issued by, any other Person. "Legal Holiday" means a Saturday, Sunday or other day on which banking institutions in the State of New York are authorized or required by law to close. "License" means any broadband Personal Communications Services license issued by the FCC in connection with the operation of a System. "License Subsidiary" means TeleCorp PCS, L.L.C. and THC and/or any of our other Wholly Owned Restricted Subsidiaries designated as a License Subsidiary under the Credit Agreement. "Lien" means, with respect to any property or assets, any mortgage or deed of trust, pledge, hypothecation, assignment, security interest, lien, charge, easement other than any easement not materially impairing usefulness or marketability, encumbrance, preference, priority or other security agreement with respect to such property or assets, including, without limitation, any conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing. "Lucent" means Lucent Technologies Inc., a Delaware corporation. "Lucent Note Purchase Agreement" means the Note Purchase Agreement dated as of May 11, 1998, between us and Lucent, as amended as of the date of the Indenture. "Management Stockholders" means Gerald Vento and Thomas Sullivan. "Marketing Affiliate" means any Person which engages in no activity other than the registration, holding, maintenance or protection of trademarks and such related licensing. "MTA" means a Major Trading Area, as defined in 47 C.F.R. (S)24.202. "Net Available Proceeds" from any Asset Disposition by any Person means cash or readily marketable Cash Equivalents received, including by way of sale or discounting of a note, installment receivable or other receivable, but excluding any other consideration received in the form of assumption by the acquiror of Indebtedness or other obligations relating to such properties or assets or received in any other non-cash form, from such Asset Disposition by such Person, including any cash received by way of deferred payment or upon the monetization or other disposition of any non-cash consideration, including notes or other securities received in connection with such Asset Disposition, net of: (1) all legal, title and recording tax expenses, commissions and other fees and expenses incurred and all federal, state, foreign and local taxes required to be accrued as a liability as a consequence of such Asset Disposition; (2) all payments made by such Person or any of its Restricted Subsidiaries on any Indebtedness which is secured by such assets in accordance with the terms of any Lien upon or with respect to such assets or which must, by the terms of such A-15 [ALTERNATIVE PROVISIONS] Lien, or in order to obtain a necessary consent to such Asset Disposition or by applicable law, be repaid out of the proceeds from such Asset Disposition; (3) all payments made with respect to liabilities associated with the assets which are the subject of the Asset Disposition, including, without limitation, trade payables and other accrued liabilities; (4) appropriate amounts to be provided by such Person or any Restricted Subsidiary, as the case may be, as a reserve in accordance with GAAP against any liabilities associated with such assets and retained by such Person or any Restricted Subsidiary, as the case may be, after such Asset Disposition, including, without limitation, liabilities under any indemnification obligations and severance and other employee termination costs associated with such Asset Disposition, until such time as such amounts are no longer reserved or such reserve is no longer necessary at which time any remaining amounts will become Net Available Proceeds to be allocated in accordance with the provisions of clause (3) of the covenant described under "--Certain Covenants-- Limitation on Certain Asset Dispositions"; and (5) all distributions and other payments made to minority interest holders in Restricted Subsidiaries of such Person or joint ventures as a result of such Asset Disposition. "Net Investment" means the excess of: (1) the aggregate amount of all Investments made in any Unrestricted Subsidiary or joint venture by us or any Restricted Subsidiary on or after the date of the Indenture, in the case of an Investment made other than in cash, the amount shall be the Fair Market Value of such Investment as determined in good faith by our Board or the board of such Restricted Subsidiary; over (2) the aggregate amount returned in cash on or with respect to such Investments whether through interest payments, principal payments, dividends or other distributions or payments; provided, however, that such payments or distributions shall not be, and have not been, included in clause (c) of the first paragraph described under "-- Certain Covenants--Limitation on Restricted Payments;" provided further that, with respect to all Investments made in any Unrestricted Subsidiary or joint venture, the amounts referred to in clause (1) above with respect to such Investments shall not exceed the aggregate amount of all such Investments made in such Unrestricted Subsidiary or joint venture. "Note" or "Notes" means any Note or Note issued under the Indenture. "Noteholder" or "Holder" means the Person in whose name a Note is registered on the registrar's books. "Offer to Purchase" means a written offer (the "Offer") sent by us by first class mail, postage prepaid, to each holder of the Notes at such holder's address appearing in the register for the Notes on the date of the Offer offering to purchase up to (a) the Accreted Value of Notes, if such Offer is on or prior to April 15, 2004, or (b) the principal amount at maturity of the Notes, if such Offer is after April 15, 2004, specified in such Offer at the purchase price specified in such Offer as determined under the Indenture. Unless otherwise required by applicable law, the Offer shall specify an expiration date (the "Expiration Date") of the Offer to Purchase which shall be not less than 30 days nor more than 60 days after the date of such Offer and a settlement date (the "Purchase Date") for purchase of the Notes within five Business Days after the Expiration Date. We shall notify the Trustee at least 15 Business Days, or such shorter period as is acceptable to the Trustee, prior to the mailing of the Offer of our obligation to make an Offer to Purchase, and the Offer shall be mailed by us or, at our request, by the Trustee in our name and at our expense. The Offer shall contain all the information required by applicable law to be included in such Offer. The Offer shall contain all instructions and materials necessary to enable holders of the Notes to tender their Notes under the Offer to Purchase. The Offer shall also state: (1) the provision of the Indenture under which we make the Offer to Purchase; (2) the Expiration Date and the Purchase Date; (3) the aggregate principal amount at maturity of the Old Notes offered which we will purchase in the Offer to Purchase, including, if less than 100%, the manner by which such amount has been determined under a specified provision of the Indenture requiring the Offer to Purchase (the "Purchase Amount"); (4) the purchase price that we will pay for each $1,000 aggregate principal amount at maturity of Notes accepted for payment, as specified under the Indenture (the "Purchase Price"); A-16 [ALTERNATIVE PROVISIONS] (5) that such holder may tender all or any portion of the Notes registered in the name of such holder and that any portion of a Note tendered must be tendered in an integral multiple of $1,000 principal amount at maturity; (6) the place or places where the Notes are to be surrendered for tender in the Offer to Purchase; (7) that interest on any Note not tendered or tendered but which we do not purchase in the Offer to Purchase will continue to accrue; (8) that on the Purchase Date the Purchase Price will become due and payable upon each Note being accepted for payment in the Offer to Purchase and that interest on such note shall cease to accrue on and after the Purchase Date; (9) that each holder electing to tender all or any portion of a Note under the Offer to Purchase will be required to surrender such Note at the place or places specified in the Offer prior to the close of business on the Expiration Date, such Note being, if we or the Trustee so require, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to us and the Trustee duly executed by, the holder of such Note or such holder's attorney duly authorized in writing; (10) that holders will be entitled to withdraw all or any portion of Notes tendered if we or our paying agent receive, not later than the close of business on the fifth Business Day next preceding the Expiration Date, a telegram, telex, facsimile transmission or letter setting forth the name of the holder, the principal amount at maturity of the Note the holder tendered, the certificate number of the Note the holder tendered and a statement that such holder is withdrawing all or a portion of such holder's tender; (11) that (a) if Notes in an aggregate principal amount at maturity less than or equal to the Purchase Amount are duly tendered and not withdrawn in the Offer to Purchase, we shall purchase all such Notes and (b) if Notes in an aggregate principal amount at maturity in excess of the Purchase Amount are tendered and not withdrawn in the Offer to Purchase, we shall purchase Notes having an aggregate principal amount at maturity equal to the Purchase Amount on a pro rata basis with such adjustments as may be deemed appropriate so that only Notes in denominations of $1,000 or integral multiples of $1,000 shall be purchased; and (12) that in the case of any holder whose Note is purchased only in part, we shall execute and the Trustee shall authenticate and deliver to the holder of such Note without service charge, a new Note or Notes, of any authorized denomination as requested by such holder, in an aggregate principal amount at maturity equal to and in exchange for the unpurchased portion of the Note so tendered. An Offer to Purchase shall be governed by and effected in accordance with the provisions above pertaining to any Offer. "Officer" means the Chief Executive Officer, the Executive Vice President, the Chief Financial Officer, the Chief Operating Officer, the President, any Vice President, the Treasurer or any Secretary of us or any of our Subsidiaries, as the case may be. "Officers' Certificate" means a certificate signed by two Officers. "Opinion of Counsel" means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to us or the Trustee. "Permitted Asset Swap" means any exchange of assets by us or a Restricted Subsidiary where we and/or our Restricted Subsidiaries receive consideration at least 75% of which consists of (1) cash, (2) assets that are used or useful in a Permitted Business or (3) any combination of such cash and such assets. "Permitted Business" means: (1) the delivery or distribution of telecommunications, voice, data or video services; (2) any business or activity reasonably related or ancillary to, including, without limitation, any business conducted by us or any Restricted Subsidiary on the date of the Indenture and the acquisition, holding or exploitation of any license relating to the delivery of the services described in clause (1) above; or (3) any other business or activity in which we and the Restricted Subsidiaries are expressly contemplated to be engaged under the provisions of our certificate of incorporation and by-laws in effect on the date of the Indenture. A-17 [ALTERNATIVE PROVISIONS] "Permitted Holder" means: (1) each of AT&T Wireless, TWR Cellular, the Cash Equity Investors, the Management Stockholders, Digital PCS, Wireless 2000 and any of their respective Affiliates and the respective successors by merger, consolidation, transfer or otherwise to all or substantially all of the respective businesses and assets of any of the foregoing; and (2) any "person" or "group" as such terms are used in Sections 13(d) and 14(d) of the Exchange Act controlled by one or more persons identified in clause (1) above. "Permitted Investments" means: (1) Investments in Cash Equivalents; (2) Investments representing Capital Stock or obligations issued to us or any Restricted Subsidiary in the course of the good faith settlement of claims against any other Person or by reason of a composition or readjustment of debt or a reorganization of any debtor of us or any Restricted Subsidiary; (3) deposits including interest-bearing deposits, maintained in the ordinary course of business in banks; (4) any Investment in any Person; provided, however, that, after giving effect to such Investment, such Person is or becomes a Restricted Subsidiary or such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, us or a Restricted Subsidiary; (5) trade receivables and prepaid expenses, in each case arising in the ordinary course of business; provided, however, that such receivables and prepaid expenses would be recorded as assets of such Person in accordance with GAAP; (6) endorsements for collection or deposit in the ordinary course of business by such Person of bank drafts and similar negotiable instruments of such other Person received as payment for ordinary course of business trade receivables; (7) any interest rate agreements with an unaffiliated Person otherwise permitted by clause (5) or (6) under "--Certain Covenants--Limitation on Incurrence of Indebtedness;" (8) Investments received as consideration for an Asset Disposition in compliance with the provisions of the Indenture described under "-- Certain Covenants--Limitation on Certain Asset Dispositions;" (9) loans or advances to employees of us or any Restricted Subsidiary in the ordinary course of business in an aggregate amount not to exceed $5.0 million in the aggregate at any one time outstanding; (10) any Investment acquired by us or any of our Restricted Subsidiaries as a result of a foreclosure by us or any of our Restricted Subsidiaries or in connection with the settlement of any outstanding Indebtedness or trade payable; (11) loans and advances to officers, directors and employees for business- related travel expense, moving expense and other similar expenses, each incurred in the ordinary course of business; and (12) other Investments with each such Investment being valued as of the date made and without giving effect to subsequent changes in value in an aggregate amount not to exceed $7.5 million at any one time outstanding. "Person" means any individual, corporation, limited or general partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision. "Plan of Liquidation" means, with respect to any Person, a plan including by operation of law that provides for, contemplates, or the effectuation of which is preceded or accompanied by whether or not substantially contemporaneously: (1) the sale, lease, conveyance or other disposition of all or substantially all of the assets of such Person; and (2) the distribution of all or substantially all of the proceeds of such sale, lease, conveyance or other disposition and all or substantially all of the remaining assets of such Person to holders of Capital Stock of such Person. A-18 [ALTERNATIVE PROVISIONS] "Preferred Stock," as applied to the Capital Stock of any Person, means Capital Stock of such Person of any class or classes, however designated, that ranks prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to shares of Capital Stock of any other class of such Person. "principal" of a Note means the principal of the Note plus the premium, if any, payable on the Note which is due or overdue or is to become due at the relevant time. "Public Sale" means any underwritten public offering, made on a primary basis under a registration statement filed with, and declared effective by, the SEC in accordance with the Securities Act. "Puerto Rico Acquisition" means the merger of Puerto Rico Acquisition Corp. into us and the purchase by us from AT&T Wireless of 20 MHz of A-Block Licenses covering the San Juan MTA together with related assets. "Qualified License" means, as of the date of determination, any License covering or adjacent to any geographical area in respect of which we or any Restricted Subsidiary owns, as of the Business Day immediately prior to such date of determination, at least one other License covering a substantial portion of such area. "Qualified Stock" means any of our Capital Stock other than Disqualified Stock. "Real Property Subsidiary" means TeleCorp Realty L.L.C., Puerto Rico Acquisition Corp. and/or any of our other Wholly Owned Subsidiaries that we designate as a Real Property Subsidiary under the Credit Agreement. "Refinance" means refinance, renew, extend, replace or refund; and "Refinancing" and "Refinanced" have correlative meanings. "Refinancing Indebtedness" means Indebtedness that is Incurred to refund, refinance, replace, renew, repay or extend, including under any defeasance or discharge mechanism, any of our Indebtedness or any Restricted Subsidiary existing on the date of the Indenture or Incurred in compliance with the Indenture, including our Indebtedness that Refinances Refinancing Indebtedness; provided, however, that: (1) the Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being Refinanced; (2) the Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being refinanced; (3) such Refinancing Indebtedness is Incurred in an aggregate principal amount, or if issued with original issue discount, an aggregate issue price, that is equal to or less than the aggregate principal amount, or if issued with original issue discount, the aggregate accreted value, then outstanding of the Indebtedness being Refinanced plus the amount of any premium required to be paid in connection with such Refinancing under the terms of the Indebtedness being Refinanced or the amount of any premium reasonably determined by the issuer of such Indebtedness as necessary to accomplish such Refinancing by means of a tender offer, exchange offer or privately negotiated repurchase, plus the expenses of such issuer reasonably incurred in connection with such Refinancing; and (4) if the Indebtedness being Refinanced is pari passu with the Notes, such Refinancing Indebtedness is made pari passu with, or subordinate in right of payment to, the Notes, and, if the Indebtedness being Refinanced is subordinate in right of payment to the Notes, such Refinancing Indebtedness is subordinate in right of payment to the Notes on terms no less favorable to the holders of Notes than those contained in the Indebtedness being Refinanced; provided further, however, that Refinancing Indebtedness shall not include : (A) Indebtedness of a Restricted Subsidiary that Refinances our Indebtedness; or (B) Our Indebtedness or Indebtedness of a Restricted Subsidiary that Refinances Indebtedness of an Unrestricted Subsidiary. "Restricted Subsidiary" means any of our Subsidiaries other than an Unrestricted Subsidiary. A-19 [ALTERNATIVE PROVISIONS] "Revocation" has the meaning set forth under "--Certain Covenants-- Limitation on Designations of Unrestricted Subsidiaries." "Sale/Leaseback Transaction" means an arrangement relating to property owned on the date of the Indenture or acquired by us or a Restricted Subsidiary after the date of the Indenture that involves our or a Restricted Subsidiary's transferring of such property to a Person and our or such Restricted Subsidiary's leasing it from such Person, other than leases between us and a Wholly Owned Subsidiary or between Wholly Owned Subsidiaries. "Securities Act" means the Securities Act of 1933, as amended. "Securities Purchase Agreement" means the Securities Purchase Agreement dated January 23, 1998, among AT&T Wireless, TWR Cellular, the stockholders of THC, the Cash Equity Investors, the Management Stockholders and us, as the such agreement may be amended from time to time in accordance with the provisions of such agreement, so long as the terms of any such amendment are no less favorable to the Noteholders than the terms of the Securities Purchase Agreement in effect on the date of the Indenture. "Senior Subordinated Indebtedness" of us means the Notes and any of our other Indebtedness that specifically provides that such Indebtedness is to rank pari passu with the Notes in right of payment and is not subordinated by its terms in right of payment to any Indebtedness or any other of our obligations which is not Senior Indebtedness. "Senior Subordinated Indebtedness" of our subsidiary guarantors has a correlative meaning. "Series A Notes" means our Series A Notes purchased by Lucent under the Lucent Note Purchase Agreement. "Significant Subsidiary" means any Restricted Subsidiary that would be our "Significant Subsidiary" within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC. "Special Purpose Subsidiary" means any Equipment Subsidiary, License Subsidiary or Real Property Subsidiary. "Stated Maturity" means, with respect to any security, the date specified in such security as the fixed date on which the final payment of principal of such security is due and payable, including under any mandatory redemption provision, but excluding any provision providing for the repurchase of such security at the option of the holder of such security upon the happening of any contingency beyond the control of the issuer unless such contingency has occurred. "Stockholders' Agreement" means the Stockholders' Agreement dated as of July 17, 1998, among AT&T Wireless, TWR Cellular, the Cash Equity Investors, the Management Stockholders and us, as such agreement may be amended from time to time in accordance with the provisions of such agreement, so long as the terms of any such amendment are no less favorable to the Noteholders than the terms of the Stockholders' Agreement in effect on the date of the Indenture. "Strategic Equity Investor" means any of the Cash Equity Investors, any such Affiliate, any other Person engaged in a Permitted Business whose Total Equity Market Capitalization exceeds $500 million or any other Person who has at least $100 million total funds under management and who has issued an irrevocable, unconditional commitment to purchase our Qualified Stock for an aggregate purchase price that does not exceed 20% of the value of the funds under management by such Person. "Subordinated Indebtedness" means any of our Indebtedness or any Indebtedness of any of our subsidiary guarantors whether outstanding on the date of the Indenture or Incurred after such date, which is by its terms expressly subordinate or junior in right of payment to the Notes or the Subsidiary Guarantee of such subsidiary guarantor, as the case may be. "Subsidiary" of any Person means: (1) a corporation more than 50% of the outstanding Voting Stock of which is owned, directly or indirectly, by such Person or by one or more other Subsidiaries of such Person or by such Person and one or more other Subsidiaries of such Person; or (2) any other Person, other than a corporation, in which such Person, or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries of such Person, directly or indirectly, has at least a majority ownership and voting power relating to the policies, management and affairs of such Person. A-20 [ALTERNATIVE PROVISIONS] "Subsidiary Guarantee" means each guarantee of the obligations with respect to the Notes issued by any of our Subsidiaries under the terms of the Indenture, each such Subsidiary Guarantee having subordination provisions equivalent to those contained in the Indenture with respect to the Notes and being substantially in the form prescribed in the Indenture. "System" means, as to any Person, assets constituting a radio communications system authorized under the rules for wireless communications services, including any license and the network, marketing, distribution, sales, customer interface and operations and functions relating to such license, owned and operated by such Person. "THC" means TeleCorp Holding Corp., Inc., a Delaware corporation and a Wholly Owned Subsidiary. "Total Consolidated Indebtedness" means, at any date of determination, an amount equal to: (1) the accreted value of all Indebtedness, in the case of any Indebtedness issued with original issue discount; plus (2) the principal amount of all Indebtedness, in the case of any other Indebtedness, of us and our Restricted Subsidiaries outstanding as of the date of determination; provided, however, that no amount owing by us or any of our Restricted Subsidiaries in respect of any Series A Notes outstanding as of the date of determination shall be included in the determination of Total Consolidated Indebtedness. "Total Equity Market Capitalization" of any Person means, as of any day of determination, the sum of (a) the product of (1) the aggregate number of outstanding primary shares of common stock of such Person on such day, which shall not include any options or warrants on, or securities convertible or exchangeable into, shares of common stock of such Person, multiplied by (2) the average closing price of such common stock listed on a national securities exchange or the Nasdaq National Market System over the 20 consecutive Business Days immediately preceding such day plus (b) the liquidation value of any outstanding shares of preferred stock of such Person on such day. "Total Invested Capital" means, as of any date of determination, the sum of, without duplication: (1) the total amount of equity contributed to us as of the date of the Indenture, as set forth on our December 31, 1998 consolidated balance sheet; plus (2) irrevocable, unconditional commitments from any Strategic Equity Investor to purchase our Capital Stock other than Disqualified Stock, within 36 months of the date of issuance of such commitment, but in any event not later than the Stated Maturity of the Notes; provided, however, that such commitments shall exclude commitments related to any Investment in any Person incorporated, formed or created for the purpose of acquiring one or more Qualified Licenses unless such Person shall become a Restricted Subsidiary; plus (3) the aggregate net cash proceeds received by us from capital contributions or the issuance or sale of our Capital Stock, other than Disqualified Stock, but including Qualified Stock issued upon the conversion of convertible Indebtedness or upon the exercise of options, warrants or rights to purchase Qualified Stock, subsequent to the date of the Indenture, other than issuances or sales of Capital Stock to a Restricted Subsidiary and other than capital contributions from, or issuances or sales of Capital Stock to, any Strategic Equity Investor in connection with (a) any Investment in any Person incorporated, formed or created for the purpose of acquiring one or more Qualified Licenses and (b) any Investment in any Person engaged in a Permitted Business, unless, in either case, such Person shall become a Restricted Subsidiary; provided, however, such aggregate net cash proceeds shall exclude any amounts included as commitments to purchase Capital Stock in the preceding clause (2); plus (4) the Fair Market Value of assets that are used or useful in a Permitted Business or of the Capital Stock of a Person engaged in a Permitted Business received by us as a capital contribution or in exchange for our Capital Stock, other than Disqualified Stock, subsequent to the date of the Indenture, other than (x) capital contributions from a Restricted Subsidiary or issuance or sales of our Capital Stock to a Restricted Subsidiary or (y) the proceeds from the sale of Qualified Stock to an employee stock ownership plan or other trust established by us or any of our subsidiaries; plus (5) the aggregate net cash proceeds received by us or any Restricted Subsidiary from the sale, disposition or repayment of any Investment made after the date of the Indenture and constituting a Restricted Payment in an amount equal to the lesser of (a) the return of capital with respect to such Investment and (b) the initial amount of such Investment, in either case, less the cost of the disposition of such Investment; plus A-21 [ALTERNATIVE PROVISIONS] (6) an amount equal to the consolidated Net Investment of us and/or any of our Restricted Subsidiaries in any Subsidiary that has been designated as an Unrestricted Subsidiary after the date of the Indenture upon its redesignation as a Restricted Subsidiary in accordance with the covenant described under "--Certain Covenants--Limitation on Designations of Unrestricted Subsidiaries;" plus (7) cash proceeds from the sale to Lucent of the Series A Notes, less payments made by us or any of our Subsidiaries with respect to Series A Notes, other than payments of additional Series A Notes; plus (8) Total Consolidated Indebtedness; minus (9) the aggregate amount of all Restricted Payments including any Designation Amount, but other than a Restricted Payment of the type referred to in clause (3)(b) of the third paragraph of the covenant described under "--Certain Covenants--Limitations on Restricted Payments," declared or made on or after the date of the Indenture. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S)77aaa-77bbbb) as in effect on the date of the Indenture. "Trustee" means the party named as such in the Indenture until a successor replaces it and, after such replacement, means the successor. "Trust Officer" means the Chairman of the board of directors, the President or any other officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters. "TWR Cellular" means TWR Cellular, Inc., a Delaware corporation, and an Affiliate of AT&T Wireless. "Unrestricted Subsidiary" means (1) any of our Subsidiaries, other than an Ineligible Subsidiary, designated after the date of the Indenture as such under, and in compliance with, the covenant described under "--Certain Covenants-- Limitation on Designations of Unrestricted Subsidiaries" and (2) any Marketing Affiliate. Any such designation of any of our Subsidiaries may be revoked by a resolution of our Board delivered to the Trustee certifying compliance with such covenant, subject to the provisions of such covenant. "U.S. Government Obligations" means direct obligations, or certificates representing an ownership interest in such obligations, of the United States of America, including any agency or instrumentality of the United States of America, for the payment of which the full faith and credit of the United States of America is pledged and which are not callable or redeemable at the issuer's option. "Vendor Credit Arrangement" means any Indebtedness, including, without limitation, Indebtedness under any credit facility entered into with any vendor or supplier or any financial institution acting on behalf of such vendor or supplier; provided that the net proceeds of such Indebtedness are used solely for the purpose of financing the cost, including, without limitation, the cost of design, development, site acquisition, construction, integration, handset manufacture or acquisition or microwave relocation, of assets used or usable in a Permitted Business, including, without limitation, through the acquisition of Capital Stock of an entity engaged in a Permitted Business. "Voting Stock" of any Person means the Capital Stock of such Person which ordinarily has voting power for the election of directors, or Persons performing similar functions, of such Person, whether at all times or only so long as no senior class of securities has such voting power by reason of any contingency. "Wholly Owned Subsidiary" means a Restricted Subsidiary, all of the outstanding Capital Stock or other ownership interests of which, other than directors' qualifying shares, shall at the time be owned by us and/or by one or more Wholly Owned Subsidiaries. "Wireless 2000" means Wireless 2000, Inc. "Wireless 2000 Acquisition" means our purchase from Wireless 2000 of 15 MHz of C-Block Licenses for the Monroe, Alexandria and Lake Charles, Louisiana BTAs. A-22 [ALTERNATIVE PROVISIONS] [The following provisions replace the provisions under the same headings in the prospectus in the "Book-Entry; Delivery and Form" section.] BOOK-ENTRY; DELIVERY AND FORM The Notes are represented by a permanent global certificate in definitive, fully registered form (the "Global Note"). The Global Note is registered in the name of a nominee of DTC. Certain Book-Entry Procedures for the Global Notes The descriptions of the operations and procedures of DTC, Euroclear and Cedel set forth below are provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems, and are subject to change by them from time to time. Neither we nor any of the initial purchasers of the Notes takes any responsibility for these operations or procedures, and investors are urged to contact the relevant system or its participants directly to discuss these matters. DTC has advised us that it is (1) a limited purpose trust company organized under the laws of the State of New York, (2) a "banking organization" within the meaning of the New York Banking Law, (3) a member of the Federal Reserve System, (4) a "clearing corporation" within the meaning of the Uniform Commercial Code, as amended, and (5) a "clearing agency" registered under Section 17A of the Exchange Act. DTC was created to hold securities for its participants (collectively, the "Participants") and facilitates the clearance and settlement of securities transactions between Participants through electronic book-entry changes to the accounts of its Participants, thereby eliminating the need for physical transfer and delivery of certificates. DTC's Participants include securities brokers and dealers, including the initial purchasers, banks and trust companies, clearing corporations and certain other organizations. Indirect access to DTC's system is also available to other entities such as banks, brokers, dealers and trust companies (collectively, the "Indirect Participants") that clear through, or maintain a custodial relationship with a Participant, either directly or indirectly. Investors who are not Participants may beneficially own securities held by, or on behalf of DTC only through Participants or Indirect Participants. We expect that under procedures established by DTC, (1) upon deposit of each Global Note, DTC will credit the accounts of Participants designated by the initial purchasers of the Notes in the original private offering with an interest in the Global Note and (2) ownership of the Notes will be shown on, and the transfer of ownership will be effected only through, records maintained by DTC, with respect to the interests of Participants and the records of Participants and the Indirect Participants (with respect to the interests of persons other than Participants). The laws of some jurisdictions may require that certain purchasers of securities take physical delivery of such securities in definitive form. Accordingly, the ability to transfer interests in the Notes represented by a Global Note to such persons may be limited. In addition, because DTC can act only on behalf of its Participants, who in turn act on behalf of persons who hold interests through Participants, the ability of a person having an interest in the Notes represented by a Global Note to pledge or transfer such interest to persons or entities that do not participate in DTC's system, or to otherwise take actions in respect of such interest, may be affected by the lack of a physical definitive security in respect of such interest. So long as DTC or its nominee is the registered owner of a Global Note, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the Notes represented by the Global Note for all purposes under the Indenture. Except as provided below, owners of beneficial interests in a Global Note will not be entitled to have the Notes represented by such Global Note registered in their names, will not receive or be entitled to receive physical delivery of Certificated Notes and will not be considered the owners or holders under the Indenture for any purpose, including with respect to the giving of any direction, instruction or approval to the Trustee. Accordingly, each holder owning a beneficial interest in a Global Note must rely on the procedures of DTC and, if such holder is not a Participant or an Indirect Participant, on the procedures of the Participant through which such holder owns its interest, to exercise any rights of a holder of the Notes under the Indenture or such Global Note. We understand that, under existing industry practice, if we request any action of holders of the Notes, or a holder that is an owner of a beneficial interest in a Global Note desires to take any action that DTC, as the holder of such Global Note, is entitled to take, DTC would authorize the Participants to take such action and the Participants would authorize holders owning through such Participants to take such action or would otherwise act upon the instruction of such holders. Neither we nor the Trustee will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, the Notes by DTC, or for maintaining, supervising or reviewing any records of DTC relating to such Notes. Payments with respect to the principal and interest, and premium, if any, and liquidated damages, if any, on any Notes represented by a Global Note registered in the name of DTC or its nominee on the applicable record date will be payable by the Trustee to, or at the direction of, DTC or its nominee in its capacity as the registered holder of the Global Note representing such A-23 [ALTERNATIVE PROVISIONS] Notes under the Indenture. Under the terms of the Indenture, we and the Trustee will be permitted to treat the persons in whose names the Notes, including the Global Notes, are registered as the owners of such Notes for the purpose of receiving payment thereon and for any and all other purposes whatsoever. Accordingly, neither we nor the Trustee have or will have any responsibility or liability for the payment of such amounts to owners of beneficial interests in a Global Note (including principal, premium, if any, liquidated damages, if any, and interest). Payments by the Participants and the Indirect Participants to the owners of beneficial interests in a Global Note will be governed by standing instructions and customary industry practice, and will be the responsibility of the Participants or the Indirect Participants and DTC. Transfers between Participants in DTC will be effected in accordance with DTC's procedures and will be settled in same-day funds. Transfers between participants in Euroclear or Cedel will be effected in the ordinary way in accordance with their respective rules and operating procedures. Subject to compliance with the transfer restrictions applicable to the Notes, cross-market transfers between the Participants in DTC, on the one hand, and Euroclear or Cedel participants on the other hand, will be effected through DTC in accordance with DTC's rules on behalf of Euroclear or Cedel, as the case may be; however, such cross-market transactions will require delivery of instructions to Euroclear or Cedel, as the case may be, by the counterparty in such system in accordance with the rules and procedures, and within the established deadlines (Brussels time), of such system. Euroclear or Cedel, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its depositary to take action to effect final settlement on its behalf, by delivering or receiving interests in the relevant Global Notes in DTC and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear participants and Cedel participants may not deliver instructions directly to the depositaries for Euroclear or Cedel. Because of time zone differences, the securities account of a Euroclear or Cedel participant purchasing an interest in a Global Note from a Participant in DTC will be credited, and any such crediting will be reported to the relevant Euroclear or Cedel participant, during the securities settlement processing day, which must be a business day for Euroclear or Cedel, as the case may be, immediately following the settlement date of DTC. Cash received by Euroclear or Cedel as a result of sales of interests in a Global Note by or through a Euroclear or Cedel participant to a Participant in DTC will be received with value on the settlement date of DTC, but will be available in the relevant Euroclear or Cedel cash account only as of the business day for Euroclear or Cedel, as the case may be, following DTC's settlement date. Although DTC, Euroclear and Cedel have agreed to the foregoing procedures to facilitate transfers of interests in the Global Notes among participants in DTC, Euroclear and Cedel, they are under no obligation to perform or to continue to perform such procedures, and such procedures may be discontinued at any time. Neither we nor the Trustee will have any responsibility for the performance by DTC, Euroclear or Cedel, or their respective participants or indirect participants, of their respective obligations under the rules and procedures governing their operations. Certificated Notes If (1) we notify the Trustee in writing that DTC is no longer willing or able to act as a depositary, or DTC ceases to be registered as a clearing agency under the Exchange Act and a successor depositary is not appointed within 90 days of such notice or cessation, (2) we, at our option, notify the Trustee in writing that it elects to cause the issuance of the Notes in definitive form under the Indenture, or (3) upon the occurrence of certain other events as provided in the Indenture, then, upon surrender by DTC of the Global Notes, Certificated Notes will be issued to each person that DTC identifies as the beneficial owner of the Notes represented by the Global Notes. Upon any such issuance, the Trustee is required to register such Certificated Notes in the name of such person or persons, or the nominee of any such person, and cause the same to be delivered to such person. Neither we nor the Trustee shall be liable for any delay by DTC or any Participant or Indirect Participant in identifying the beneficial owners of the related Notes, and each such person may conclusively rely on, and shall be protected in relying on, instructions from DTC for all purposes, including with respect to the registration and delivery, and the respective principal amounts, of the Notes to be issued. A-24 [ALTERNATIVE SECTION] PLAN OF DISTRIBUTION CSI may use this prospectus in connection with offers and sales of the Notes in market-making transactions at negotiated prices relating to prevailing market prices at the time of sale. CSI may act as principal or agent in such transaction. The Notes are new securities with no established trading market. We do not intend to list the Notes on any securities exchange. Any trading that does develop will occur on the over-the-counter market. CSI has advised us that it intends to make a market in the Notes, but it has no obligation to do so. CSI may discontinue any market-making at any time. We cannot assure you that a liquid market will develop for the Notes, that you will be able to sell your Notes at a particular time or that the prices that you receive when you sell will be favorable. Future trading prices of the Notes will depend on many factors, including our operating performance and financial condition, prevailing interest rates and the market for similar securities. CSI acted as an initial purchaser in connection with the initial private offering of the Notes, and received customary compensation in connection with such offering. CSI and its affiliates perform various investment banking and commercial banking services from time to time for us and our affiliates. The Chase Manhattan Bank, an affiliate of CSI, is the agent bank and a lender under our senior credit facilities. Mr. Michael R. Hannon, a member of our Board, is a General Partner of Chase Capital Partners, an affiliate of CSI. In addition, affiliates of Chase Capital Partners own a portion of our common stock. For further information concerning these relationships, see "Securities Ownership of Certain Beneficial Owners and Management." Although there are no agreements to do so, CSI, and others, may act as a broker or dealer in connection with the sale of Notes contemplated by this prospectus and may receive fees or commissions in connection with such sales. We have agreed to indemnify CSI against certain liabilities under the Securities Act or to contribute to payments that CSI may have to make in respect of such liabilities. A-25 [ALTERNATIVE SECTION] AVAILABLE INFORMATION We have filed with the SEC a registration statement on Form S-4 under the Securities Act with respect to the Notes. As permitted by the rules and regulations of the SEC, this prospectus omits certain information, exhibits and undertakings contained in the registration statement. For further information with respect to us and the Notes, you should review the registration statement, including the exhibits and the financial statements to such registration statement, notes and schedules filed as a part of the registration statement. The registration statement and the exhibits and schedules to such registration statement, as well as the periodic reports and other information filed with the SEC, may be inspected and copied at the Public Reference Section of the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, NW, Washington, DC 20549 and at the regional offices of the SEC located at 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such materials may be obtained from the Public Reference Section of the SEC, Room 1024, Judiciary Plaza, 450 Fifth Street, NW, Washington DC 20549, and its public reference facilities in New York, New York at the prescribed rates. You may obtain information as to the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a Web site at http://www.sec.gov that contains periodic reports, proxy and information statements and other information regarding registrants that file documents electronically with the SEC. Statements contained in this prospectus as to the contents of any contract or other document are not necessarily complete, and in each instance reference is made to the copy of such contract or document filed as an exhibit to the registration statement, each such statement being qualified in all respects by such reference. Under the indenture governing the Notes, we have agreed to file with the SEC and provide to the holders of the Notes annual reports and the information, documents and other reports which are specified in Section 13 and 15(d) of the Exchange Act. A-26 [ALTERNATIVE PAGE] WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE ANY INFORMATION OR REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST NOT RELY ON ANY UNAUTHORIZED INFORMATION. THIS PROSPECTUS DOES NOT OFFER TO SELL OR BUY ANY SECURITIES IN ANY JURISDICTION WHERE IT IS UNLAWFUL. THE INFORMATION IN THIS PROSPECTUS IS CURRENT AS OF , 1999. TABLE OF CONTENTS Prospectus Summary............................................................. 1 Risk Factors................................................................... Use of Proceeds................................................................ Capitalization................................................................. Selected Historical and Pro Forma Consolidated Financial Information............................................ Management's Discussion and Analysis of Financial Condition and Results of Operations.................................................................... Business....................................................................... Management..................................................................... Securities Ownership of Certain Beneficial Owners and Management............... Certain Relationships and Related Transactions................................. Certain Indebtedness........................................................... Description of Capital Stock................................................... Description of the Notes....................................................... Certain U.S. Federal Tax Considerations........................................ Book-Entry; Delivery and Form.................................................. Plan of Distribution........................................................... Legal Matters.................................................................. Experts........................................................................ Available Information.......................................................... Glossary of Selected Terms..................................................... Index to Financial Statements.................................................. F-1
UNTIL , 1999, ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES MAY BE REQUIRED TO DELIVER A PROSPECTUS IN CONNECTION THEREWITH. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS. WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. TELECORP PCS, INC. $575,000,000 11 5/8% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2009 ______________________ PROSPECTUS ______________________ , 1999 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 145 of the Delaware General Corporation Law ("DGCL") provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. Section 145 further provides that a corporation similarly may indemnify any such person serving in any such capacity who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor, against expenses actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Delaware Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. The provisions regarding indemnification and advancement of expenses under Section 145 of the DGCL shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, stockholders' or disinterested directors' vote or otherwise. Section 102(b)(7) of the DGCL permits a corporation to include in its certificate of incorporation a provision eliminating or limiting the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provision shall not eliminate or limit the liability of a director: (i) for any breach of the director's duty of loyalty to the corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) under Section 174 of the DGCL (relating to unlawful payment of dividends and unlawful stock purchase and redemption); or (iv) for any transaction from which the director derived an improper personal benefit. As permitted by Section 145(e) of the DGCL, our Third Amended and Restated Certificate of Incorporation and our Amended and Restated Bylaws provide that we shall indemnify our directors and officers, and, to the extent our Board at any time authorizes, incorporators, employees or agents, as such, to the fullest extent permitted by applicable law, and that expenses reasonably incurred by any officer or director or such other person entitled to indemnification in connection with a threatened or actual action or proceeding shall be advanced or promptly reimbursed by us in advance of the final disposition of such action or proceeding, provided that, if required to do so under the DGCL, we receive an undertaking by or on behalf of such officer or director or other person to repay such amount if and to the extent that it is ultimately determined by final judicial decision from which there is no further right of appeal that such officer or director or other person is not entitled to indemnification. Our Third Amended and Restated Certificate of Incorporation provides that such rights are not exclusive. ITEM 21. EXHIBITS AND FINANCIAL SCHEDULES. (a) The following exhibits are, unless indicated below, filed herewith. EXHIBIT INDEX Exhibit Number Description of Document - ------- ----------------------- 3.1 Third Amended and Restated Certificate of Incorporation, dated May 14, 1999, of TeleCorp PCS, Inc. 3.2 Amended and Restated Bylaws, dated July 17, 1998, of TeleCorp PCS, Inc. 4.1 Indenture, dated as of April 23, 1999, by and between Bankers Trust Company, as trustee, and TeleCorp PCS, Inc. relating to the 11 5/8% Senior Subordinated Discount Notes due 2009 II-1 EXHIBIT INDEX Exhibit Number Description of Document - ------- ----------------------- 5.1* Opinion of McDermott, Will & Emery regarding the legality of the securities being registered 10.1 Note Purchase Agreement by and between TeleCorp PCS, Inc. and Lucent Technologies, Inc., dated as of May 11, 1998 10.2 General Agreement for Purchase of PCS Systems and Services by and between TeleCorp PCS, Inc. and Lucent Technologies, Inc., dated as of May 12, 1998, as amended 10.3 Securities Purchase Agreement by and among TeleCorp PCS, Inc., AT&T Wireless PCS Inc, TWR Cellular, Inc. and certain Cash Equity Investors, TeleCorp Investors and Management Stockholders identified, dated as of January 23, 1998 10.4.1 Network Membership License Agreement by and among AT&T Corp., including AT&T Wireless Services, Inc., and TeleCorp PCS, Inc., dated as of July 17, 1998 10.4.2 Amendment No. 1 to Network Membership License Agreement, dated March 30, 1999 10.5.1 Management Agreement by and between TeleCorp Management Corp. and TeleCorp PCS, Inc., dated as of July 17, 1998 10.5.2 Amendment No. 1 to the Management Agreement between TeleCorp Management Corp. and TeleCorp PCS, Inc., dated as of May 25, 1999 10.6.1 Intercarrier Roamer Service Agreement by and between AT&T Wireless Services, Inc. and TeleCorp PCS, Inc., dated as of July 17, 1998 10.6.2 Amendment No. 1 to Intercarrier Roamer Service Agreement, dated May 25, 1999 10.7 Roaming Administration Service Agreement by and between AT&T Wireless Services, Inc. and TeleCorp PCS, Inc., dated as of July 17, 1998 10.8.1 Credit Agreement by and among TeleCorp PCS, Inc., the Lenders party to, and the Chase Manhattan Bank, as Administrative Agent and Issuing Bank, TD Securities (USA) Inc., as Syndication Agent, and Bankers Trust Company, as Documentation Agent, dated as of July 17, 1998 (the "Credit Agreement") 10.8.2 First Amendment, Consent, and Waiver to the Credit Agreement, dated as of December 18, 1998 10.8.3 Second Amendment and Waiver to the Credit Agreement, dated as of March 1, 1999 10.8.4 Third Amendment to the Credit Agreement, dated as of March 30, 1999 10.8.5 Fourth Amendment to the Credit Agreement, dated as of March 31, 1999 10.8.6 Fifth Amendment and Acceptance to the Credit Agreement, dated as of April 7, 1999 10.8.7 Sixth Amendment to the Credit Agreement, dated as of April 7, 1999 10.8.8 Seventh Amendment to the Credit Agreement, dated as of May 21, 1999 10.9 Stock Purchase Agreement by and among TeleCorp PCS, Inc., AT&T Wireless PCS, Inc. and certain Cash Equity Investors identified in, dated as of March 22, 1999 10.10 Stock Purchase Agreement by and among Viper Wireless, Inc., TeleCorp Holding Corp., Inc. and TeleCorp PCS, Inc., dated as of March 1, 1999 10.11 Puerto Rico Stock Purchase Agreement by and among TeleCorp PCS, Inc., Puerto Rico Acquisition Corp. and certain Management Stockholders and Cash Equity Investors, dated as of March 30, 1999 II-2 EXHIBIT INDEX Exhibit Number Description of Document - ------- ----------------------- 10.12 Letter of Agreement by and between AT&T Wireless Services, Inc. and TeleCorp Communications, Inc., dated as of December 21, 1998 10.13 Asset Purchase Agreement, dated May 25, 1999, by and between AT&T Wireless PCS Inc. and TeleCorp PCS, Inc. 10.14 Preferred Stock Purchase Agreement, dated May 24, 1999, by and between AT&T Wireless PCS Inc. and TeleCorp PCS, Inc. 10.15 License Acquisition Agreement, dated May 15, 1998, by and between Mercury PCS II, LLC and TeleCorp PCS, Inc. 10.16 License Acquisition Agreement, dated May 15, 1998, by and between Wireless 2000, Inc. and TeleCorp PCS, Inc. 10.17.1 Stockholders' Agreement, dated as of July 17, 1998, by and among AT&T Wireless PCS, Inc., TWR Cellular, Inc., Cash Equity Investors, Management Stockholders, and TeleCorp PCS, Inc. 10.17.2 Amendment No. 1 to the Stockholders' Agreement, dated March 30, 1999 10.18 Purchase Agreement, dated April 20, 1999, by and among Chase Securities Inc., BT Alex. Brown Incorporated, Lehman Brothers Inc., TeleCorp PCS, Inc. and TeleCorp Communications, Inc. 10.19 Exchange and Registration Rights Agreement, dated April 23, 1999, by and among Chase Securities Inc., BT Alex. Brown Incorporated, Lehman Brothers Inc., TeleCorp PCS, Inc. and TeleCorp Communications, Inc. 10.20 Agreement, dated as of July 17, 1998, by and among AT&T Wireless PCS Inc., TWR Cellular, Inc., the Cash Equity Investors, the TeleCorp Investors and the Management Stockholders. 10.21 Employee Agreement, dated as of July 17, 1998, by and between TeleCorp PCS, Inc. and Steven Chandler. 10.22 Share Grant Agreement, dated July 16, 1998, by and between TeleCorp PCS, Inc. and Steven Chandler. 10.23 Employee Agreement, dated as of July 17, 1998, by and between TeleCorp PCS, Inc. and Julie Dobson. 10.24 Share Grant Agreement, dated July 16, 1998, by and between TeleCorp PCS, Inc. and Julie Dobson. 10.25 Separation Agreement, dated as of March 8, 1999, by and among TeleCorp PCS, Inc., TeleCorp Communications, Inc. and Robert Dowski. 12.1 Statement re: computation of ratios. 21.1 Subsidiaries of TeleCorp PCS, Inc. 23.1* Consent of McDermott, Will & Emery (contained in Exhibit 5.1) 23.2 Consent of PricewaterhouseCoopers, LLP 24.1 Power of Attorney for TeleCorp PCS, Inc. (included on signature page) 25.1 Statement of Eligibility of Trustee on Form T-1 27.1 Financial Data Schedule 99.1* Letter of Transmittal 99.2* Notice of Guaranteed Delivery II-3 Exhibit Number Description of Document - ------- ----------------------- 99.3* Exchange Agent Agreement ________________ * To be filed by amendment. II-4 ITEM 22. UNDERTAKINGS. The undersigned registrant hereby undertakes: (a) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post- effective amendment) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. In spite of the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC under Rule 424(b) if , in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration. (b) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered, and the offering of such securities at that time shall be deemed to be the initial bona fide offering. (c) To respond to requests for information that is incorporated by reference into the prospectus under Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. (d) To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved, that was not the subject of and included in the registration statement when it became effective. (e) The undersigned registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other Items of the applicable form. (f) The registrant undertakes that every prospectus (i) that is filed under paragraph (c) immediately preceding, or (ii) that purposes to meet the requirements of section 10(a)(3) of the Securities Act of 1933 and is used in connection with an offering of securities subject to Rule 415, will be filed as part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effectiveness amendment shall be deemed to be a new registration statement relating to the securities offered here, and the offering of such securities at that time shall be deemed to the initial bona fide offering. (g) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant under the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling persons of the registrant in the successful defense of any action suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. II-5 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Arlington, State of Virginia, on June 22, 1999. TELECORP PCS, INC. By: /s/ Gerald T. Vento --------------------------------- Gerald T. Vento Chief Executive Officer POWER OF ATTORNEY TeleCorp PCS, Inc. and each person whose signature appears below constitutes and appoints Thomas H. Sullivan and Gerald T. Vento, and each of them, as true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution for each such person and in such person's name, in any and all capacities, (A) to sign all amendments (including pre-effective and post- effective amendments) to this registration statement (and any registration statement filed under Rule 462(b) of the Securities Act); (B) to file such amendments with all exhibits and other related documents with the Securities and Exchange Commission; and (C) to perform every act necessary in connection with (A) or (B); and (2) ratifies and confirms everything that such attorneys-in-fact and agents, or any or them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue of this appointment. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. June 21 , 1999 By: /s/ Gerald T. Vento - -------------- ----------------------------------------------- Gerald T. Vento Chief Executive Officer and Chairman (Principal Executive Officer) June 21 , 1999 By: /s/ Thomas H. Sullivan - -------------- ----------------------------------------------- Thomas H. Sullivan Executive Vice President, Chief Financial Officer and Director (Principal Financial and Accounting Officer) June 21 , 1999 By: /s/ Michael R. Hannon - -------------- ----------------------------------------------- Michael R. Hannon Director ______________, 1999 By:_______________________________________________ Scott Anderson Director ______________, 1999 By:_______________________________________________ Rohit M. Desai Director ______________, 1999 By:_______________________________________________ Gary S. Fuqua Director June 22 , 1999 By: /s/ James M. Hoak - -------------- ----------------------------------------------- James M. Hoak Director June 21 , 1999 By: /s/ Mary Hawkins-Key - -------------- ----------------------------------------------- Mary Hawkins-Key Director June 21 , 1999 By: /s/ William Kussell - -------------- ----------------------------------------------- William Kussell Director June 21 , 1999 By: /s/ William Laverack, Jr. - -------------- ----------------------------------------------- William Laverack, Jr. Director June 22 , 1999 By: /s/ Joseph O'Donnell - -------------- ----------------------------------------------- Joseph O'Donnell Director June 21 , 1999 By: /s/ Michael Schwartz - -------------- ----------------------------------------------- Michael Schwartz Director June 21 , 1999 By: /s/ James F. Wade - -------------- ----------------------------------------------- James F. Wade Director EXHIBIT INDEX Exhibit Number Description of Document - ------- ----------------------- 3.1 Third Amended and Restated Certificate of Incorporation, dated May 14, 1999, of TeleCorp PCS, Inc. 3.2 Amended and Restated Bylaws, dated July 17, 1998, of TeleCorp PCS, Inc. 4.1 Indenture, dated as of April 23, 1999, by and between Bankers Trust Company, as trustee, and TeleCorp PCS, Inc. relating to the 11 5/8% Senior Subordinated Discount Notes due 2009 5.1* Opinion of McDermott, Will & Emery regarding the legality of the securities being registered 10.1 Note Purchase Agreement by and between TeleCorp PCS, Inc. and Lucent Technologies, Inc., dated as of May 11, 1998 10.2 General Agreement for Purchase of PCS Systems and Services by and between TeleCorp PCS, Inc. and Lucent Technologies, Inc., dated as of May 12, 1998, as amended 10.3 Securities Purchase Agreement by and among TeleCorp PCS, Inc., AT&T Wireless PCS Inc, TWR Cellular, Inc. and certain Cash Equity Investors, TeleCorp Investors and Management Stockholders identified, dated as of January 23, 1998 10.4.1 Network Membership License Agreement by and among AT&T Corp., including AT&T Wireless Services, Inc., and TeleCorp PCS, Inc., dated as of July 17, 1998 10.4.2 Amendment No. 1 to Network Membership License Agreement, dated March 30, 1999 10.5.1 Management Agreement by and between TeleCorp Management Corp. and TeleCorp PCS, Inc., dated as of July 17, 1998 10.5.2 Amendment No. 1 to the Management Agreement between TeleCorp Management Corp. and TeleCorp PCS, Inc., dated as of May 25, 1999 10.6.1 Intercarrier Roamer Service Agreement by and between AT&T Wireless Services, Inc. and TeleCorp PCS, Inc., dated as of July 17, 1998 10.6.2 Amendment No. 1 to Intercarrier Roamer Service Agreement, dated May 25, 1999 10.7 Roaming Administration Service Agreement by and between AT&T Wireless Services, Inc. and TeleCorp PCS, Inc., dated as of July 17, 1998 10.8.1 Credit Agreement by and among TeleCorp PCS, Inc., the Lenders party to, and the Chase Manhattan Bank, as Administrative Agent and Issuing Bank, TD Securities (USA) Inc., as Syndication Agent, and Bankers Trust Company, as Documentation Agent, dated as of July 17, 1998 (the "Credit Agreement") 10.8.2 First Amendment, Consent, and Waiver to the Credit Agreement, dated as of December 18, 1998 10.8.3 Second Amendment and Waiver to the Credit Agreement, dated as of March 1, 1999 10.8.4 Third Amendment to the Credit Agreement, dated as of March 30, 1999 10.8.5 Fourth Amendment to the Credit Agreement, dated as of March 31, 1999 10.8.6 Fifth Amendment and Acceptance to the Credit Agreement, dated as of April 7, 1999 10.8.7 Sixth Amendment to the Credit Agreement, dated as of April 7, 1999 10.8.8 Seventh Amendment to the Credit Agreement, dated as of May 21, 1999 10.9 Stock Purchase Agreement by and among TeleCorp PCS, Inc., AT&T Wireless PCS, Inc. and certain Cash Equity Investors identified in, dated as of March 22, 1999 10.10 Stock Purchase Agreement by and among Viper Wireless, Inc., TeleCorp Holding Corp., Inc. and TeleCorp PCS, Inc., dated as of March 1, 1999 10.11 Puerto Rico Stock Purchase Agreement by and among TeleCorp PCS, Inc., Puerto Rico Acquisition Corp. and certain Management Stockholders and Cash Equity Investors, dated as of March 30, 1999 EXHIBIT INDEX Exhibit Number Description of Document - ------- ----------------------- 10.12 Letter of Agreement by and between AT&T Wireless Services, Inc. and TeleCorp Communications, Inc., dated as of December 21, 1998 10.13 Asset Purchase Agreement, dated May 25, 1999, by and between AT&T Wireless PCS Inc. and TeleCorp PCS, Inc. 10.14 Preferred Stock Purchase Agreement, dated May 24, 1999, by and between AT&T Wireless PCS Inc. and TeleCorp PCS, Inc. 10.15 License Acquisition Agreement, dated May 15, 1998, by and between Mercury PCS II, LLC and TeleCorp PCS, Inc. 10.16 License Acquisition Agreement, dated May 15, 1998, by and between Wireless 2000, Inc. and TeleCorp PCS, Inc. 10.17.1 Stockholders' Agreement, dated as of July 17, 1998, by and among AT&T Wireless PCS, Inc., TWR Cellular, Inc., Cash Equity Investors, Management Stockholders, and TeleCorp PCS, Inc. 10.17.2 Amendment No. 1 to the Stockholders' Agreement, dated March 30, 1999 10.18 Purchase Agreement, dated April 20, 1999, by and among Chase Securities Inc., BT Alex. Brown Incorporated, Lehman Brothers Inc., TeleCorp PCS, Inc. and TeleCorp Communications, Inc. 10.19 Exchange and Registration Rights Agreement, dated April 23, 1999, by and among Chase Securities Inc., BT Alex. Brown Incorporated, Lehman Brothers Inc., TeleCorp PCS, Inc. and TeleCorp Communications, Inc. 10.20 Agreement, dated as of July 17, 1998, by and among AT&T Wireless PCS Inc., TWR Cellular, Inc., the Cash Equity Investors, the TeleCorp Investors and the Management Stockholders. 10.21 Employee Agreement, dated as of July 17, 1998, by and between TeleCorp PCS, Inc. and Steven Chandler. 10.22 Share Grant Agreement, dated July 16, 1998, by and between TeleCorp PCS, Inc. and Steven Chandler. 10.23 Employee Agreement, dated as of July 17, 1998, by and between TeleCorp PCS, Inc. and Julie Dobson. 10.24 Share Grant Agreement, dated July 16, 1998, by and between TeleCorp PCS, Inc. and Julie Dobson. 10.25 Separation Agreement, dated as of March 8, 1999, by and among TeleCorp PCS, Inc., TeleCorp Communications, Inc. and Robert Dowski. 12.1 Statement re: computation of ratios. 21.1 Subsidiaries of TeleCorp PCS, Inc. 23.1* Consent of McDermott, Will & Emery (contained in Exhibit 5.1) 23.2 Consent of PricewaterhouseCoopers, LLP 24.1 Power of Attorney for TeleCorp PCS, Inc. (included on signature page) 25.1 Statement of Eligibility of Trustee on Form T-1 27.1 Financial Data Schedule 99.1* Letter of Transmittal 99.2* Notice of Guaranteed Delivery Exhibit Number Description of Document - ------- ----------------------- 99.3* Exchange Agent Agreement ________________ * To be filed by amendment. EX-3.1 2 THIRD AMENDED & RELATED CERTIFICATE OF INCORP. EXHIBIT 3.1.1 THIRD AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF TELECORP PCS, INC. TeleCorp PCS, Inc., a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows: FIRST: The name of the corporation is TeleCorp PCS, Inc. (the "Corporation"). The original Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on November 14, 1997 and was amended and restated pursuant to a Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware on July 16, 1998 and a Second Amended and Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware April 20, 1999 (the "Second Restated Certificate of Incorporation"). SECOND: This Third Amended and Restated Certificate of Incorporation (the "Restated Certificate of Incorporation") has been duly adopted in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware. THIRD: This Restated Certificate of Incorporation restates, integrates and amends the provisions of the Corporation's Second Restated Certificate of Incorporation, as follows: ARTICLE I The name of the Corporation shall be TeleCorp PCS, Inc. ARTICLE II The address of the Corporation's registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company. ARTICLE III The purpose of the Corporation is to engage in, carry on and conduct any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the "GCL"). --- ARTICLE IV 4.1 Classes of Stock. The total number of shares of all classes of stock ---------------- which the Corporation shall have authority to issue is 2,619,010, consisting of (a) 715,000 shares of preferred stock, par value $0.01 per share (the "Preferred --------- Stock"), consisting of 100,000 shares designated "Series A Convertible Preferred - ----- Stock" (the "Series A Preferred Stock"), 200,000 shares designated "Series B ------------------------ Preferred Stock" (the "Series B Preferred Stock"), 215,000 shares designated ------------------------ "Series C Preferred Stock" (the "Series C Preferred Stock"), 50,000 shares ------------------------ designated "Series D Preferred Stock" (the "Series D Preferred Stock"), 30,000 ------------------------ shares designated "Series E Preferred Stock" (the "Series E Preferred Stock"), ------------------------ 50,000 shares designated "Series F Preferred Stock" (the "Series F Preferred ------------------ Stock"), and 70,000 shares designated "Senior Common Stock" (the "Senior Common - ----- ------------- Stock"), and (b) 1,904,010 shares of common stock, par value $0.01 per share - ----- (the "Common Stock"), consisting of 950,000 shares designated "Class A Voting ------------ Common Stock" (the "Class A Common Stock"), 950,000 shares designated "Class B -------------------- Non-Voting Common Stock" (the "Class B Common Stock"), 1,000 shares designated -------------------- "Class C Common Stock" (the "Class C Common Stock"), 3,000 shares designated -------------------- "Class D Common Stock" (the "Class D Common Stock") and 10 shares designated -------------------- "Voting Preference Common Stock" (the "Voting Preference Common Stock"). ------------------------------ (Capitalized terms used herein and not otherwise defined shall have the meanings set forth in Section 4.14.) 4.2 Additional Series of Preferred Stock. (a) Subject to approval by holders of shares of any class or series of Preferred Stock to the extent such approval is required by its terms, the Board of Directors of the Corporation (the "Board of Directors") is hereby expressly ------------------ authorized, by resolution or resolutions, to provide, out of the unissued shares of Preferred Stock, for series of Preferred Stock in addition to the Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock, the Series E Preferred Stock, the Series F Preferred Stock and the Senior Common Stock. Before any shares of any such series are issued, the Board of Directors shall fix, and hereby is expressly empowered to fix, by resolutions, the following provisions of the shares thereof: (i) the designation of such series, the number of shares to constitute such series and the stated value thereof if different from the par value thereof; (ii) whether the shares of such series shall have voting rights, in addition to any voting rights provided by law, and, if so, the terms of such voting rights, which may be general or limited; (iii) the dividends, if any, payable on such series, whether any such dividends shall be cumulative, and, if so, from what dates, the conditions and dates upon which such dividends shall be payable, the preference or relation which such dividends shall bear to the dividends payable on any shares of stock of any other class or any other series of this class; (iv) whether the shares of such series shall be subject to redemption by the Corporation, and, if so, the times, prices and other conditions of such redemption; (v) the amount or amounts payable upon shares of such series upon, and the -2- rights of the holders of such series in, the voluntary or involuntary liquidation, dissolution or winding up, or upon any distribution of the assets, of the Corporation; (vi) whether the shares of such series shall be subject to the operation of a retirement or sinking fund and, if so, the extent to and manner in which any such retirement or sinking fund shall be applied to the purchase or redemption of the shares of such series for retirement or other corporate purposes and the terms and provisions relative to the operation thereof; (vii) whether the shares of such series shall be convertible into, or exchangeable for, shares of stock of any other class or any other series of this class or any other securities and, if so, the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting the same, and any other terms and conditions of conversion or exchange; (viii) the limitations and restrictions, if any, to be effective while any shares of such series are outstanding upon the payment of dividends or the making of other distributions on, and upon the purchase, redemption other acquisition by the Corporation of, the Common Stock or shares of stock of any other class or any other series of this class; (ix) the conditions or restrictions, if any, upon the creation of indebtedness of the Corporation or upon the issue of any additional stock, including additional shares of such series or of any other series of this class or of any other class; and (x) any other powers, preferences and relative, participating, optional and other special rights, and any qualifications, limitations and restrictions thereof. (b) The powers, preferences and relative, participating, optional and other special rights of each series of Preferred Stock, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding. All shares of any one series of Preferred Stock shall be identical in all respects with all other shares of such series, except that shares of any one series issued at different times may differ as to the dates from which dividends thereon shall be cumulative. (c) Shares of Preferred Stock of any series that have been redeemed (whether through the operation of a sinking fund or otherwise) or that, if convertible or exchangeable, have been converted into or exchanged for any other security shall have the status of authorized and unissued shares of Preferred Stock of the same series and may be reissued as a part of the series of which they were originally a part or may be reclassified and reissued as part of a new series of shares of Preferred Stock to be created by resolution or resolutions of the Board of Directors or as part of any other series of shares of Preferred Stock, all subject to the conditions or restrictions on issuance set forth in the resolution or resolutions adopted by the Board of Directors providing for the issue of any series of shares of Preferred Stock. -3- (d) Subject to the provisions of this Restated Certificate of Incorporation and except as otherwise provided by law, the stock of the Corporation, regardless of class, may be issued for such consideration and for such corporate purposes as the Board of Directors may from time to time determine. 4.3 Powers, Preferences and Rights of the Series A Preferred Stock. The -------------------------------------------------------------- powers, preferences and rights of the Series A Preferred Stock and the qualifications, limitations and restrictions thereof are as follows: (a) Ranking. The Series A Preferred Stock shall, with respect to the ------- payment of dividends and the distribution of assets on liquidation, dissolution or winding up, rank on a parity with the Series B Preferred Stock, and rank senior to Junior Stock. (b) Dividends and Distributions. --------------------------- (i) Dividends. The holders of shares of Series A Preferred Stock shall --------- be entitled to receive, as and when declared by the Board of Directors, out of funds legally available therefor, dividends on each outstanding share of Series A Preferred Stock, at an annual rate per share equal to ten percent (10%) of the Liquidation Preference, calculated on the basis of a 360-day year consisting of twelve 30-day months. Dividends shall be paid quarterly in arrears on the Dividend Payment Date commencing September 30, 1998 in the manner provided in paragraph (iii) below. (ii) Accrued Dividends, Record Date. Dividends payable pursuant to ------------------------------ paragraph (i) above shall begin to accrue and be cumulative from the date on which shares of Series A Preferred Stock are issued, and shall begin to accrue on a daily basis, in each case whether or not earned or declared. The Board of Directors may fix a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive payment of the dividends payable pursuant to paragraph (i) above, which record date shall not be more than 60 days prior to the Dividend Payment Date. (iii) Payment. All dividends shall be payable in cash. Until the 42nd ------- Dividend Payment Date, the Corporation shall have the option to defer payment of dividends on Series A Preferred Stock. Any dividend payments so deferred shall be payable on and not earlier than the 42nd Dividend Payment Date. (iv) Dividends Pro Rata. All dividends paid with respect to shares of ------------------ Series A Preferred Stock pursuant to this Section 4.3(b) shall be paid pro rata to the holders entitled thereto. In the event that the funds legally available therefor shall be insufficient for the payment of the entire amount of cash dividends payable at any Dividend Payment Date, subject to Section 4.3(c), such funds shall be allocated for the payment of dividends with respect to the shares of Series A Preferred Stock and Series B Preferred Stock pro rata based upon the Liquidation Preference of the outstanding shares. (c) Certain Restrictions. -------------------- (i) Notwithstanding the provisions of Sections 4.3(b), (e) and (f), cash -4- dividends on the Series A Preferred Stock may not be declared, paid or set apart for payment, nor may the Corporation redeem, purchase or otherwise acquire any shares of Series A Preferred Stock, if (A) the Corporation is not solvent or would be rendered insolvent thereby or (B) at such time the terms and provisions of any law or agreement of the Corporation, including any agreement relating to its indebtedness, specifically prohibit such declaration, payment or setting apart for payment or such redemption, purchase or other acquisition, or provide that such declaration, payment or setting apart for payment or such redemption, purchase or other acquisition would constitute a violation or breach thereof or a default thereunder. (ii) So long as shares of Series A Preferred Stock are outstanding or dividends payable on shares of Series A Preferred Stock have not been paid in full in cash, then the Corporation shall not declare or pay cash dividends on, or redeem, purchase or otherwise acquire for consideration, any shares of Common Stock or other shares of Junior Stock, except with the prior written consent of holders of a majority of the outstanding shares of Series A Preferred Stock, except that the Corporation may acquire, in accordance with the terms of any agreement between the Corporation and its employees, shares of Common Stock or Preferred Stock at a price not greater than the Market Price as of such date. (iii) The Corporation shall not permit any Subsidiary of the Corporation, or cause any other Person, to make any distribution with respect to, or purchase or otherwise acquire for consideration, any shares of capital stock of the Corporation, unless the Corporation could, pursuant to paragraph (ii) above, make such distribution or purchase or otherwise acquire such shares at such time and in such manner. (d) Voting Rights; Election of Directors. ------------------------------------ (i) The holders of shares of Series A Preferred Stock shall not have any right to vote on any matters to be voted on by the stockholders of the Corporation, except as otherwise provided in paragraphs (ii) and (iii) below or as provided by law, and the shares of Series A Preferred Stock shall not be included in determining the number of shares voting or entitled to vote on any such matters (other than the matters described in paragraphs (ii) and (iii) below or as otherwise required by law). (ii) Unless the consent or approval of a greater number of shares shall then be required by law, the affirmative vote of the holders of a majority of the outstanding shares of Series A Preferred Stock in person or by proxy, at each special and annual meeting of stockholders called for the purpose, or by written consent, shall be necessary to (A) authorize, increase the authorized number of shares of or issue (including on conversion or exchange of any convertible or exchangeable securities or by reclassification) any shares of any class or classes of Senior Stock or Parity Stock or any additional shares of Series A Preferred Stock, (B) authorize, adopt or approve each amendment to this Restated Certificate of Incorporation that would increase or decrease the par value of the shares of Series A Preferred Stock, alter or change the -5- powers, preferences or rights of the shares of Series A Preferred Stock or alter or change the powers, preferences or rights of any other capital stock of the Corporation if such alteration or change results in such capital stock being Senior Stock or Parity Stock, (C) amend, alter or repeal any provision of this Restated Certificate of Incorporation so as to affect the shares of Series A Preferred Stock adversely, or (D) authorize or issue any security convertible into, exchangeable for or evidencing the right to purchase or otherwise receive any shares of any class or classes of Senior Stock or Parity Stock. (iii) So long as the Initial Holders own in the aggregate at least two- thirds (2/3) of the number of shares of Series A Preferred Stock owned by it on the date hereof, holders of shares of Series A Preferred Stock shall have the exclusive right, voting separately as a single class, to nominate two directors of the Corporation or, at any time after the later of (x) the IPO Date or (y) the date on which shares of Class A Common Stock and Voting Preference Common Stock vote as a single class for all purposes, one director. The foregoing right to nominate two directors (or one director) may be exercised at any annual meeting of stockholders or a special meeting of stockholders or holders of Series A Preferred Stock held for such purpose or any adjournment thereof, or by the written consent, delivered to the Secretary of the Corporation, of the holders of a majority of the issued and outstanding shares of Series A Preferred Stock. Notwithstanding the foregoing, the Initial Holders shall have the right, exercisable at any time by written notice delivered to the Secretary of the Corporation, to surrender and cancel irrevocably such right to nominate two directors (or one director) of the Corporation. (e) Redemption at Option of the Corporation. The Corporation shall have --------------------------------------- the right to redeem shares of Series A Preferred Stock pursuant to the following provisions: (i) The Corporation shall not have any right to redeem shares of the Series A Preferred Stock prior to, with respect to any share of the Series A Preferred Stock, the 30th day after the tenth anniversary of the issuance of such share. Thereafter, subject to the restrictions in Section 4.3(c)(i), the Corporation shall have the right, at its sole option and election, to redeem the shares of the Series A Preferred Stock, in whole but not in part, at any time at a redemption price (the "Series A Redemption Price") per share equal to the ------------------------- Liquidation Preference as of the redemption date; (ii) Notice of any redemption of the Series A Preferred Stock shall be mailed at least ten, but not more than 60, days prior to the date fixed for redemption to each holder of Series A Preferred Stock to be redeemed, at such holder's address as it appears on the books of the Corporation. In order to facilitate the redemption of the Series A Preferred Stock, the Board of Directors may fix a record date for the determination of holders of Series A Preferred Stock to be redeemed, or may cause the transfer books of the Corporation to be closed for the transfer of the Series A Preferred Stock, not more than 60 days prior to the date fixed for such redemption; (iii) Within two Business Days after the redemption date specified in the notice given pursuant to paragraph (ii) above and the surrender of the certificate(s) representing shares of Series A Preferred Stock, the Corporation shall pay to the holder of the shares -6- being redeemed the Series A Redemption Price therefor. Such payment shall be made by wire transfer of immediately available funds to an account designated by such holder or by overnight delivery (by a nationally recognized courier) of a bank check to such holder's address as it appears on the books of the Corporation; and (iv) Effective upon the date of the notice given pursuant to paragraph (ii) above, notwithstanding that any certificate for such shares shall not have been surrendered for cancellation, the shares represented thereby shall no longer be deemed outstanding, the rights to receive dividends thereon shall cease to accrue from and after the date of redemption designated in the notice of redemption and all rights of the holders of the shares of the Series A Preferred Stock called for redemption shall cease and terminate, excepting only the right to receive the Series A Redemption Price therefor in accordance with paragraph (iii) above and the right to convert such shares into shares of Class A Common Stock until the close of business on the third Business Day preceding the redemption date, as provided in Section 4.3(i). (f) Redemption at Option of Holder. ------------------------------ (i) No holder of shares of Series A Preferred Stock shall have any right to require the Corporation to redeem any shares of Series A Preferred Stock prior to, with respect to any share of the Series A Preferred Stock, the 30th day after the twentieth anniversary of the issuance of such share. Thereafter, subject to the restrictions set forth in Section 4.3(c)(i), each holder of shares of Series A Preferred Stock shall have the right, at the sole option and election of such holder, to require the Corporation to redeem all (but not less than all) of the shares of Series A Preferred Stock owned by such holder at a price per share equal to the Series A Redemption Price; (ii) The holder of any shares of the Series A Preferred Stock may exercise such holder's right to require the Corporation to redeem such shares by surrendering for such purpose to the Corporation, at its principal office or at such other office or agency maintained by the Corporation for that purpose, certificates representing the shares of Series A Preferred Stock to be redeemed, accompanied by a written notice stating that such holder elects to require the Corporation to redeem all (but not less than all) of such shares in accordance with the provisions of this Section 4.3(f), which notice may specify an account for delivery of the Series A Redemption Price; (iii) Within two Business Days after the surrender of such certificates, the Corporation shall pay to the holder of the shares being redeemed the Series A Redemption Price therefor. Such payment shall be made by wire transfer of immediately available funds to an account designated by such holder or by overnight delivery (by a nationally recognized courier) of a bank check to such holder's address as it appears on the books of the Corporation; and (iv) Such redemptions shall be deemed to have been made at the close of business on the date of the receipt of such notice and of such surrender of the certificates representing the shares of the Series A Preferred Stock to be redeemed and the rights of -7- the holder thereof, except for the right to receive the Series A Redemption Price therefor in accordance herewith, shall cease on such date of receipt and surrender. (g) Reacquired Shares. Any shares of the Series A Preferred Stock ----------------- redeemed or purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued pursuant to Section 4.2(c) as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions or restrictions on issuance set forth herein. (h) Liquidation, Dissolution or Winding Up. -------------------------------------- (i) In the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary, before any distribution or payment to holders of Junior Stock, the holders of shares of Series A Preferred Stock shall be entitled to be paid an amount equal to the Liquidation Preference with respect to each share of Series A Preferred Stock. (ii) If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation available for distribution to the holders of Series A Preferred Stock shall be insufficient to permit payment in full to such holders of the sums which such holders are entitled to receive in such case, then all of the assets available for distribution to holders of the Series A Preferred Stock and Series B Preferred Stock shall be distributed among and paid to such holders ratably in proportion to the amounts that would be payable to such holders if such assets were sufficient to permit payment in full. (iii) Neither the consolidation or merger of the Corporation with or into any other Person nor the sale or other distribution to another Person of all or substantially all the assets, property or business of the Corporation, shall be deemed to be a liquidation, dissolution or winding up of the Corporation for purposes of this Section 4.3(h). (i) Conversion. ---------- (i) Stockholders' Right To Convert. No holder of shares of Series A ------------------------------ Preferred Stock shall have any right to convert any shares of Series A Preferred Stock into Class A Common Stock or any other securities of the Corporation prior to July 17, 2006. Thereafter, each share of Series A Preferred Stock held by the Initial Holders or a Qualified Transferee shall be convertible, at the sole option and election of the Initial Holders or Qualified Transferee, into fully paid and non-assessable shares of Class A Common Stock. (ii) Number of Shares of Class A Common Stock Issuable upon Conversion. ----------------------------------------------------------------- The number of shares of Class A Common Stock to be issued upon conversion of shares of Series A Preferred Stock pursuant to paragraph (i) above shall be equal to the product of (A) the Series A Conversion Rate as of the date of the applicable notice pursuant to -8- paragraph (iv) below, multiplied by (B) the number of shares of Series A Preferred Stock to be converted. (iii) Fractional Shares. Notwithstanding any other provision of this ----------------- Restated Certificate of Incorporation, the Corporation shall not be required to issue fractions of shares upon conversion of any shares of Series A Preferred Stock or to distribute certificates which evidence fractional shares. In lieu of fractional shares, the Corporation may pay therefor, at the time of any conversion of shares of Series A Preferred Stock as herein provided, an amount in cash equal to such fraction multiplied by the Market Price of a share of Class A Common Stock on such date. (iv) Mechanics of Conversion. The Initial Holders or Qualified Transferee ----------------------- may exercise its option to convert by surrendering for such purpose to the Corporation, at its principal office or such other office or agency maintained by the Corporation for that purpose, certificates representing the shares of Series A Preferred Stock to be converted, accompanied by a written notice, delivered in accordance with the terms of the Stockholders Agreement, stating that such holder elects to convert such shares in accordance with this Section 4.3(i). The date of receipt of such certificates and notice by the Corporation at such office shall be the conversion date (the "Series A Conversion Date"). ------------------------ If required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or his or its attorney duly authorized in writing. Within ten Business Days after the Series A Conversion Date (or, if at the time of such surrender the shares of Class A Common Stock are not listed or admitted for trading on any national securities exchange and are not quoted on NASDAQ or any similar service, within ten Business Days of the determination of the Market Price pursuant to the Appraisal Procedure), the Corporation shall issue to such holder a number of shares of Class A Common Stock into which such shares of Series A Preferred Stock are convertible pursuant to paragraph (ii) above. Certificates representing such shares of Class A Common Stock shall be delivered to such holder at such holder's address as it appears on the books of the Corporation. (v) Termination of Rights. All shares of Series A Preferred Stock which --------------------- shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares, including the rights, if any, to receive notices and to vote, shall immediately cease and terminate on the Series A Conversion Date, except only the right of the holders thereof to receive shares of Class A Common Stock in exchange therefor and payment of any declared and unpaid dividends thereon. (vi) No Conversion Charge or Tax. The issuance and delivery of --------------------------- certificates for shares of Class A Common Stock upon the conversion of shares of Series A Preferred Stock shall be made without charge to the holder of shares of Series A Preferred Stock for any issue or transfer tax, or other incidental expense in respect of the issuance or delivery of such certificates or the securities represented thereby, all of which taxes and expenses shall be paid by the Corporation. -9- (vii) Reorganization, Reclassification and Merger Adjustment. If there ------------------------------------------------------ occurs any capital reorganization or any reclassification of the Class A Common Stock of the Corporation, the consolidation or merger of the Corporation with or into another Person (other than a merger or consolidation of the Corporation in which the Corporation is the continuing corporation and which does not result in any reclassification or change of outstanding shares of its Class A Common Stock) or the sale or conveyance of all or substantially all of the assets of the Corporation to another Person, then each share of Series A Preferred Stock shall thereafter be convertible into the same kind and amounts of securities (including shares of stock) or other assets, or both, which were issuable or distributable to the holders of outstanding Class A Common Stock of the Corporation upon such reorganization, reclassification, consolidation, merger, sale or conveyance, in respect of that number of shares of Class A Common Stock into which such share of Series A Preferred Stock might have been converted immediately prior to such reorganization, reclassification, consolidation, merger, sale or conveyance; and, in any such case, appropriate adjustments (as determined in good faith by the Board of Directors of the Corporation, whose determination shall be conclusive) shall be made to assure that the provisions set forth herein shall thereafter be applicable, as nearly as reasonably may be practicable, in relation to any securities or other assets thereafter deliverable upon the conversion of the Series A Preferred Stock. (viii) Notice of Adjustment. Whenever the securities or other property -------------------- deliverable upon the conversion of the Series A Preferred Stock shall be adjusted pursuant to the provisions hereof, the Corporation shall promptly give written notice thereof to each holder of shares of Series A Preferred Stock at such holder's address as it appears on the transfer books of the Corporation and shall forthwith file, at its principal executive office and with any transfer agent or agents for the Series A Preferred Stock and the Class A Common Stock, a certificate, signed by the Chairman of the Board, President or one of the Vice Presidents of the Corporation, and by its Chief Financial Officer, Treasurer or one of its Assistant Treasurers, stating the securities or other property deliverable per share of Series A Preferred Stock calculated to the nearest cent or to the nearest one-hundredth of a share and setting forth in reasonable detail the method of calculation and the facts requiring such adjustment and upon which such calculation is based. Each adjustment shall remain in effect until a subsequent adjustment hereunder is required. (ix) Reservation of Class A Common Stock. The Corporation shall at all ----------------------------------- times reserve and keep available for issuance upon the conversion of the shares of Series A Preferred Stock the maximum number of its authorized but unissued shares of Class A Common Stock as is reasonably anticipated to be sufficient to permit the conversion of all outstanding shares of Series A Preferred Stock, and shall take all action required to increase the authorized number of shares of Class A Common Stock if at any time there shall be insufficient authorized but unissued shares of Class A Common Stock to permit such reservation or to permit the conversion of all outstanding shares of Series A Preferred Stock. (j) Qualified Transfer. If at any time an Initial Holders or Qualified ------------------ Transferee -10- desires to sell, transfer or otherwise dispose of shares of Series A Preferred Stock pursuant to a Qualified Transfer, it shall, with respect to each such proposed transfer, give written notice (a "Qualified Transfer Notice") to the ------------------------- Corporation at its principal executive office specifying up to ten prospective transferees. Upon receipt of such notice, the Corporation shall have ten days to give written notice to the Initial Holders or Qualified Transferee specifying its disapproval of (A) any or all of such prospective transferees if it has good reason for such disapproval and specifying such reason and (B) up to two of such prospective transferees with or without good reason. (k) Notice of Certain Events. In case the Corporation shall propose at ------------------------ any time or from time to time (i) to declare or pay any dividend payable in stock of any class to the holders of Common Stock or to make any other distribution to the holders of Common Stock, (ii) to offer to the holders of Common Stock rights or warrants to subscribe for or to purchase any additional shares of Common Stock or shares of stock of any class or any other securities, rights or options, (iii) to effect any reclassification of its Common Stock, (iv) to effect any consolidation, merger or sale, transfer or other disposition of all or substantially all of the property, assets or business of the Corporation which would, if consummated, adjust the Series A Conversion Rate or the securities issuable upon conversion of shares of Series A Preferred Stock, or (v) to effect the liquidation, dissolution or winding up of the Corporation, then, in each such case, the Corporation shall mail to each holder of shares of Series A Preferred Stock, at such holder's address as it appears on the transfer books of the Corporation, a written notice of such proposed action, which shall specify (A) the date on which a record is to be taken for the purpose of such dividend or distribution of rights or warrants or, if a record is not to be taken, the date as of which the holders of shares of Common Stock of record to be entitled to such dividend or distribution of rights or warrants are to be determined, or (B) the date on which such reclassification, consolidation, merger, sale, conveyance, dissolution, liquidation or winding up is expected to become effective, and such notice shall be so given as promptly as possible but in any event at least ten Business Days prior to the applicable record, determination or effective date, specified in such notice. (l) Certain Remedies. Any registered holder of shares of Series A ---------------- Preferred Stock shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Restated Certificate of Incorporation and to enforce specifically the terms and provisions of this Restated Certificate of Incorporation in any court of the United States or any state thereof having jurisdiction, this being in addition to any other remedy to which such holder may be entitled at law or in equity. 4.4 Powers, Preferences and Rights of the Series B Preferred Stock. The -------------------------------------------------------------- Series B Preferred Stock shall rank on a parity with the Series A Preferred Stock, and the powers, preferences and rights of the Series B Preferred Stock, and the qualifications, limitations, and restrictions thereof, shall be identical to those of the Series A Preferred Stock, except that (a) shares of Series B Preferred Stock shall not be, pursuant to the terms of Section 4.3(i) or otherwise, convertible into shares of Common Stock or any other security issued by the Corporation, (b) the Corporation may redeem shares of Series B Preferred Stock in accordance with the terms of Section 4.3(e) at any time without regard to whether the redemption date is -11- before, on or after the date referred to in Section 4.3(e)(i), (c) shares of Series B Preferred Stock may be issued by the Corporation in accordance with the terms of Section 4.12, (d) holders of Series B Preferred Stock shall not, pursuant to Section 4.3(d) or otherwise, have the right to elect any directors of the Corporation and (e) the words "Series B Preferred Stock" and "Series A Preferred Stock" shall be substituted for all references in Section 4.3 to Series A Preferred Stock and Series B Preferred Stock, respectively. 4.5 Powers, Preferences and Rights of the Series C Preferred Stock. The -------------------------------------------------------------- powers, preferences and rights of the Series C Preferred Stock and the qualifications, limitations and restrictions thereof are as follows: (a) Ranking. The Series C Preferred Stock shall rank (i) junior to the ------- Series A Preferred Stock and the Series B Preferred Stock with respect to the payment of dividends and the distribution of assets on liquidation, dissolution or winding up, (ii) junior to the Series D Preferred Stock with respect to the distribution of assets on a Statutory Liquidation, (iii) on a parity with the Series D Preferred Stock with respect to the distribution of assets on liquidation, dissolution or winding up (other than on a Statutory Liquidation), (iv) on a parity with the Series D Preferred Stock and the Common Stock with respect to the payment of dividends, and (v) senior to the Common Stock and any series or class of the Corporation's common or preferred stock, now or hereafter authorized (other than Series A Preferred Stock, Series B Preferred Stock or Series D Preferred Stock), with respect to the distribution of assets on liquidation, dissolution and winding up. (b) Dividends. Holders of Series C Preferred Stock shall be entitled to --------- dividends in cash or property when, as and if, declared by the Board of Directors of the Corporation; provided that, in no event shall dividends in -------- excess of the Liquidation Preference be declared or paid. So long as shares of Series C Preferred Stock are outstanding or dividends payable on shares of Series C Preferred Stock have not been paid in full in cash, the Corporation shall not declare or pay cash dividends on, or redeem, purchase or otherwise acquire for consideration, any shares of any class of common stock or series of preferred stock ranking junior to or on a parity with the Series C Preferred Stock, except that the Corporation may acquire, in accordance with the terms of any agreement between the Corporation and its employees, shares of Common Stock or Preferred Stock at a price not greater than the Market Price as of such date. The Corporation shall not declare or pay cash dividends on, or redeem, purchase or otherwise acquire for consideration, any shares of Series D Preferred Stock unless concurrently therewith the Corporation shall declare or pay cash dividends on, or redeem, purchase or otherwise acquire for consideration, as the case may be, shares of Series C Preferred Stock ratably in accordance with the number of shares of Series C Preferred Stock and Series D Preferred Stock then outstanding. (c) Liquidation Preference. (i) In the event of any liquidation, dissolution or winding up of the Corporation, the holders of Series C Preferred Stock shall be entitled to receive out of the -12- assets of the Corporation, whether such assets are capital or surplus of any nature, after payment is made to holders of all series of preferred stock ranking senior to the Series C Preferred Stock with respect to rights on liquidation, dissolution or winding up (including, in the case of a Statutory Liquidation, the Series D Preferred Stock), but before any payment shall be made or any assets distributed to the holders of Common Stock or any series of preferred stock ranking junior to the Series C Preferred Stock with respect to rights on liquidation, dissolution or winding up, an amount equal to the Liquidation Preference and no more. (ii) If upon any liquidation, dissolution or winding up of the Corporation the assets of the Corporation to be distributed are insufficient to permit the payment to all holders of Series C Preferred Stock and any other series of preferred stock ranking on a parity with Series C Preferred Stock with respect to rights on liquidation, dissolution or winding up (including, in the case of a liquidation, dissolution or winding up other than a Statutory Liquidation, the Series D Preferred Stock), to receive their full preferential amounts, the entire assets of the Corporation shall be distributed among the holders of Series C Preferred Stock and all such other series ratably in accordance with their respective Liquidation Preference. (iii) Neither the consolidation or merger of the Corporation with or into any other Person nor the sale or other distribution to another Person of all or substantially all the assets, property or business of the Corporation, shall be deemed to be a liquidation, dissolution or winding up of the Corporation for purposes of this Section 4.5(c). (d) Voting Rights. ------------- (i) The holders of shares of Series C Preferred Stock shall not have any right to vote on any matters to be voted on by the stockholders of the Corporation, except as otherwise provided in paragraph (ii) below or as provided by law, and the shares of Series C Preferred Stock shall not be included in determining the number of shares voting or entitled to vote on any such matters (other than the matters described in paragraph (ii) below or as otherwise required by law). (ii) The affirmative vote of holders of not less than a majority of Series C Preferred Stock shall be required to (A) authorize, increase the authorized number of shares of or issue (including on conversion or exchange of any convertible or exchangeable securities or by reclassification) any shares of any class or classes of stock ranking senior to or pari passu with the Series C Preferred Stock or any additional shares of Series C Preferred Stock, (B) authorize, adopt or approve each amendment to this Restated Certificate of Incorporation that would increase or decrease the par value of the shares of Series C Preferred Stock, alter or change the powers, preferences or rights of the shares of Series C Preferred Stock or alter or change the powers, preferences or rights of any other capital stock of the Corporation if such alteration or change results in such capital stock ranking senior to or pari passu with the Series C Preferred Stock, (C) amend, alter or repeal any provision of this Restated Certificate of Incorporation so as to affect the shares of Series C Preferred Stock adversely, or (D) authorize or issue any -13- security convertible into, exchangeable for or evidencing the right to purchase or otherwise receive any shares of any class or classes of stock senior to or pari passu with the Series C Preferred Stock. (e) Conversion. The shares of Series C Preferred Stock shall be ---------- convertible into shares of Common Stock as follows: (i) Optional Conversion. On the IPO Date, each share of Series C ------------------- Preferred Stock then outstanding shall be convertible, at the option of the Corporation, into the number of fully paid and non-assessable shares of Common Stock as is determined by dividing the Liquidation Preference of the Series C Preferred Stock as of the IPO Date by the IPO Price; provided, that the foregoing option, if exercised, shall be exercised with respect to all shares of Series C Preferred Stock then outstanding. (ii) Fractional Shares. No fractional shares of Common Stock shall be ----------------- issued upon conversion of shares of Series C Preferred Stock. In lieu of any fractional share to which the holder would otherwise be entitled after determination of the aggregate full number of shares of Common Stock issuable in respect of the Series C Preferred Stock then being converted, the Corporation shall pay cash equal to such fraction multiplied by the IPO Price. (iii) Mechanics of Conversion. All holders of record of shares of Series C ----------------------- Preferred Stock will be given at least 30 but not more than 60 days' prior written notice of the IPO Date and the place designated for conversion of all shares of Series C Preferred Stock pursuant to this Section 4.5(e). Such notice will be sent by first class or registered mail, postage prepaid, to each record holder of Series C Preferred Stock at such holder's address last shown on the records of the transfer agent for the Series C Preferred Stock (or the records of the Corporation if it serves as its own transfer agent). Within ten days after the date of such notice, each holder of shares of Series C Preferred Stock shall notify the Corporation as to whether it desires to receive shares of Class A Common Stock or Class B Common Stock. Any holder who fails to give such notice shall be deemed to have selected Class A Common Stock. On or before the IPO Date, each holder of shares of Series C Preferred Stock shall surrender his or its certificate(s) for all such shares to the Corporation at the place designated in such notice. If required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or his or its attorney duly authorized in writing. As soon as practicable after the IPO Date and the surrender of the certificate(s) representing shares of Series C Preferred Stock, the Corporation shall issue and deliver to such holder, or on his or its written order to his or its nominees, one or more certificates for the number of whole shares of Common Stock issuable upon such conversion in accordance with the provisions hereof, together with cash in lieu of fractional shares calculated in accordance with paragraph (ii) above. (iv) Reservation of Shares. The Corporation shall at all times when the ---------------------- Series C Preferred Stock shall be outstanding, reserve and keep available out of its authorized -14- but unissued stock, for the purpose of effecting the conversion of the Series C Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Series C Preferred Stock. Before taking any action which would cause Common Stock, upon the conversion of Series C Preferred Stock, to be issued below the then par value of the shares of Common Stock, the Corporation will take any corporate action that may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and non-assessable shares of Common Stock to the holders of Series C Preferred Stock. (v) Termination of Rights. All shares of Series C Preferred Stock which --------------------- are subject to conversion pursuant to this paragraph (e), which have not been surrendered prior to the IPO Date, shall no longer be deemed to be outstanding and all rights with respect to such shares, including the rights, if any, to receive notices and to vote, shall immediately cease and terminate on the IPO Date, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor. On and as of the IPO Date, the shares of Common Stock issuable upon such conversion shall be deemed to be outstanding, and the holder thereof shall be entitled to exercise and enjoy all rights with respect to such shares of Common Stock, including the rights, if any, to receive notices and to vote. Shares of Series C Preferred Stock converted into Common Stock will be restored to the status of authorized but unissued shares of preferred stock without designation as to series, and may thereafter be issued, whether or not designated as shares of Series C Preferred Stock. (vi) No Conversion Charge or Tax. The issuance and delivery of --------------------------- certificates for shares of Common Stock upon the conversion of shares of Series C Preferred Stock shall be made without charge to the holder of shares of Series C Preferred Stock for any issue or transfer tax, or other incidental expense in respect of the issuance or delivery of such certificates or the securities represented thereby, all of which taxes and expenses shall be paid by the Corporation. (vii) Reservation of Class A Common Stock. The Corporation shall at all ----------------------------------- times reserve and keep available for issuance upon the conversion of the shares of Series C Preferred Stock the maximum number of its authorized but unissued shares of Class A Common Stock as is reasonably anticipated to be sufficient to permit the conversion of all outstanding shares of Series C Preferred Stock, and shall take all action required to increase the authorized number of shares of Class A Common Stock if at any time there shall be insufficient authorized but unissued shares of Class A Common Stock to permit such reservation or to permit the conversion of all outstanding shares of Series C Preferred Stock. (f) Redemption at Option of the Corporation. The Corporation shall have --------------------------------------- the right to redeem shares of Series C Preferred Stock pursuant to the following provisions: (i) Subject to the restrictions set forth in Section 4.5(h)(i), the Corporation shall have the right, at its sole option and election, to redeem the shares of the Series C -15- Preferred Stock, in whole but not in part, at any time at a redemption price per share equal to the Liquidation Preference thereof as of the redemption date; provided, that concurrently with such redemption, the Corporation shall redeem the shares of Series D Preferred Stock, in whole and not in part, at a redemption price per share equal to the Liquidation Preference thereof as of the redemption date; provided, further, that if the funds legally available to the Corporation are insufficient to effect the redemption of the Series C Preferred Stock and the Series D Preferred Stock in full, such funds shall be allocated among the shares of Series C Preferred Stock and Series D Preferred Stock ratably in accordance with the number of shares of each Series outstanding as of the redemption date; (ii) Notice of any redemption of the Series C Preferred Stock and Series D Preferred Stock shall be mailed at least ten but not more than 60 days prior to the date fixed for redemption to each holder of Series C Preferred Stock and Series D Preferred Stock to be redeemed, at such holder's address as it appears on the books of the Corporation. In order to facilitate the redemption of the Series C Preferred Stock and Series D Preferred Stock, the Board of Directors may fix a record date for the determination of holders of Series C Preferred Stock and Series D Preferred Stock to be redeemed, or may cause the transfer books of the Corporation to be closed for the transfer of the Series C Preferred Stock and Series D Preferred Stock, not more than 60 days prior to the date fixed for such redemption; (iii) Within two Business Days after the redemption date specified in the notice given pursuant to paragraph (ii) above and the surrender of the certificate(s) representing shares of Series C Preferred Stock or Series D Preferred Stock, as the case may be, the Corporation shall pay to the holder of the shares being redeemed the Series C Redemption Price or the Series D Redemption Price therefor. Such payment shall be made by wire transfer of immediately available funds to an account designated by such holder or by overnight delivery (by a nationally recognized courier) of a bank check to such holder's address as it appears on the books of the Corporation; and (iv) Effective upon the date of the notice given pursuant to paragraph (ii) above, notwithstanding that any certificate for such shares shall not have been surrendered for cancellation, the shares represented thereby shall no longer be deemed outstanding, the rights to receive dividends thereon shall cease to accrue from and after the date of redemption designated in the notice of redemption and all rights of the holders of the shares of the Series C Preferred Stock or Series D Preferred Stock, as the case may be, called for redemption shall cease and terminate, excepting only the right to receive the Series C Redemption Price or the Series D Redemption Price therefor in accordance with paragraph (iii) above. (g) Redemption at Option of Holder. ------------------------------ (i) No holder of shares of Series C Preferred Stock shall have any right to require the Corporation to redeem any shares of Series C Preferred Stock prior to, with respect to any share of Series C Preferred Stock, the 30th day after the twentieth -16- anniversary of the issuance of such share. Thereafter, subject to the restrictions set forth in Section 4.5(h)(i), each holder of shares of Series C Preferred Stock shall have the right, at the sole option and election of such holder, to require the Corporation to redeem all (but not less than all) of the shares of Series C Preferred Stock owned by such holder at a price per share equal to the Series C Redemption Price; (ii) The holder of any shares of the Series C Preferred Stock may exercise such holder's right to require the Corporation to redeem such shares by surrendering for such purpose to the Corporation, at its principal office or at such other office or agency maintained by the Corporation for that purpose, certificates representing the shares of Series C Preferred Stock to be redeemed, accompanied by a written notice stating that such holder elects to require the Corporation to redeem all (but not less than all) of such shares in accordance with the provisions of this Section 4.5(g), which notice may specify an account for delivery of the Series C Redemption Price; (iii) Within two Business Days after the surrender of such certificates, the Corporation shall pay to the holder of the shares being redeemed the Series C Redemption Price therefor. Such payment shall be made by wire transfer of immediately available funds to an account designated by such holder or by overnight delivery (by a nationally recognized courier) of a bank check to such holder's address as it appears on the books of the Corporation; and (iv) Such redemptions shall be deemed to have been made at the close of business on the date of the receipt of such notice and of such surrender of the certificates representing the shares of the Series C Preferred Stock to be redeemed and the rights of the holder thereof, except for the right to receive the Series C Redemption Price therefor in accordance herewith, shall cease on such date of receipt and surrender. (h) Certain Restrictions. -------------------- (i) Notwithstanding the provisions of Sections 4.5(b), (e) or (f), cash dividends on the Series C Preferred Stock may not be declared, paid or set apart for payment, nor may the Corporation redeem, purchase or otherwise acquire any shares of Series C Preferred Stock, if (A) the Corporation is not solvent or would be rendered insolvent thereby or (B) at such time the terms and provisions of any law or agreement of the Corporation, including any agreement relating to its indebtedness, specifically prohibit such declaration, payment or setting apart for payment or such redemption, purchase or other acquisition, or provide that such declaration, payment or setting apart for payment or such redemption, purchase or other acquisition would constitute a violation or breach thereof or a default thereunder. (ii) So long as shares of Series C Preferred Stock are outstanding or dividends payable on shares of Series C Preferred Stock have not been paid in full in cash, the Corporation shall not declare or pay cash dividends on, or redeem, purchase or otherwise acquire for consideration, any shares of Common Stock or other shares of capital stock of the Corporation ranking junior to or on a parity basis with the Series C Preferred Stock, -17- except with the prior written consent of holders of a majority of the outstanding shares of Series C Preferred Stock, except that the Corporation may acquire, in accordance with the terms of any agreement between the Corporation and its employees, shares of Common Stock from its employees at a price equal to such employee's purchase price therefor without such consent. (iii) The Corporation shall not permit any Subsidiary of the Corporation, or cause any other Person, to make any distribution with respect to, or purchase or otherwise acquire for consideration, any shares of Common Stock or other shares of capital stock of the Corporation ranking junior to or on a parity basis with the Series C Preferred Stock unless the Corporation could, pursuant to paragraph (i) above, make such distribution or purchase or otherwise acquire such shares at such time and in such manner. 4.6 Powers, Preferences and Rights of the Series D Preferred Stock. -------------------------------------------------------------- (a) General. The powers, preferences and rights of the Series D ------- Preferred Stock, and the qualifications, limitations, and restrictions thereof, shall be identical to those of the Series C Preferred Stock, except that (i) the Series D Preferred Stock shall rank with respect to the other series and classes of capital stock of the Corporation as provided in paragraph (b) below, (ii) the Series D Preferred Stock shall not be convertible into Common Stock, but shall be convertible into Senior Common Stock as provided in paragraph (c) below, (iii) the shares of Series D Preferred Stock shall be subject to redemption, pro rata with the Series C Preferred Stock, in accordance with Section 4.5(f), and (iv) the words "Series D Preferred Stock" and "Series C Preferred Stock" shall be substituted for all references in Section 4.5 to Series C Preferred Stock and Series D Preferred Stock, respectively. (b) Ranking. The Series D Preferred Stock shall rank (i) junior to the ------- Series A Preferred Stock and the Series B Preferred Stock with respect to the payment of dividends and the distribution of assets on liquidation, dissolution or winding up, (ii) senior to the Series C Preferred Stock with respect to the distribution of assets on a Statutory Liquidation, (iii) on a parity with the Series C Preferred Stock with respect to the distribution of assets on liquidation, dissolution or winding up (other than on a Statutory Liquidation), (iv) on a parity with the Series C Preferred Stock and the Common Stock with respect to the payment of dividends, and (v) senior to the Common Stock and any series or class of the Corporation's common or preferred stock, now or hereafter authorized (other than Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock), with respect to the distribution of assets on liquidation, dissolution and winding up. (c) Conversion. In the event that the shares of Series C Preferred ---------- Stock are Stock are converted into shares of Common Stock in accordance with Section 4.5(e), the shares of Series D Preferred Stock shall be convertible into shares of Senior Common Stock as follows: (i) Automatic Conversion. On the IPO Date, each share of Series D -------------------- Preferred -18- Stock then outstanding shall automatically be converted into a number of fully paid and non-assessable shares of Senior Common Stock as is determined by dividing the Liquidation Preference of the Series D Preferred Stock as of the IPO Date by the IPO Price. (ii) Fractional Shares. No fractional shares of Senior Common Stock ----------------- shall be issued upon conversion of shares of Series D Preferred Stock. In lieu of any fractional share to which the holder would otherwise be entitled after determination of the aggregate full number of shares of Senior Common Stock issuable in respect of the Series D Preferred Stock then being converted, the Corporation shall pay cash equal to such fraction multiplied by the Liquidation Preference of the Series D Preferred Stock. (iii) Mechanics of Conversion. All holders of record of shares of Series D ----------------------- Preferred Stock will be given at least 30 but not more than 60 days' prior written notice of the IPO Date and the place designated for conversion of all shares of Series D Preferred Stock pursuant to this Section 4.6(c). Such notice will be sent by first class or registered mail, postage prepaid, to each record holder of Series D Preferred Stock at such holder's address last shown on the records of the transfer agent for the Series D Preferred Stock (or the records of the Corporation if it serves as its own transfer agent). On or before the IPO Date, each holder of shares of Series D Preferred Stock shall surrender his or its certificate(s) for all such shares to the Corporation at the place designated in such notice. If required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or his or its attorney duly authorized in writing. As soon as practicable after the IPO Date and the surrender of the certificate(s) representing shares of Series D Preferred Stock, the Corporation shall issue and deliver to such holder, or on his or its written order to his or its nominees, one or more certificates for the number of shares of Senior Common Stock issuable upon such conversion in accordance with the provisions hereof. (iv) Reservation of Shares. The Corporation shall at all times when the --------------------- Series D Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued stock, for the purpose of effecting the conversion of the Series D Preferred Stock, such number of its duly authorized shares of Senior Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Series D Preferred Stock. Before taking any action which would cause Senior Common Stock, upon the conversion of Series D Preferred Stock, to be issued below the then par value of the shares of Senior Common Stock, the Corporation will take any corporate action that may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and non-assessable shares of Senior Common Stock to the holders of Series D Preferred Stock. (v) Adjustments for Dividends. Upon any conversion of Series D Preferred ------------------------- Stock, no adjustment to the conversion ratio shall be made for declared and unpaid dividends on the Series D Preferred Stock surrendered for conversion or on the Senior Common Stock delivered upon conversion. -19- (vi) Termination of Rights. All shares of Series D Preferred Stock which --------------------- shall be subject to conversion as herein provided, which have not been so surrendered prior to the IPO Date, shall no longer be deemed to be outstanding and all rights with respect to such shares, including the rights, if any, to receive notices and to vote, shall immediately cease and terminate on the IPO Date, except only the right of the holders thereof to receive shares of Senior Common Stock in exchange therefor and payment of any declared and unpaid dividends thereon. On and as of the IPO Date, the shares of Senior Common Stock issuable upon such conversion shall be deemed to be outstanding, and the holder thereof shall be entitled to exercise and enjoy all rights with respect to such shares of Senior Common Stock, including the rights, if any, to receive notices and to vote. Shares of Series D Preferred Stock converted into Senior Common Stock will be restored to the status of authorized but unissued shares of preferred stock without designation as to series, and may thereafter be issued, whether or not designated as shares of Series D Preferred Stock. (vii) No Conversion Charge or Tax. The issuance and delivery of --------------------------- certificates for shares of Senior Common Stock upon the conversion of shares of Series D Preferred Stock shall be made without charge to the holder of shares of Series D Preferred Stock for any issue or transfer tax, or other incidental expense in respect of the issuance or delivery of such certificates or the securities represented thereby, all of which taxes and expenses shall be paid by the Corporation. 4.7 Powers, Preferences and Rights of the Series E Preferred Stock. The -------------------------------------------------------------- powers, preferences and rights of the Series E Preferred Stock, and the qualifications, limitations and restrictions thereof, shall be identical to those of the Series C Preferred Stock, except that (a) the Series E Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets on liquidation, dissolution or winding up, (i) junior to the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock and (ii) senior to the Series F Preferred Stock, Senior Common Stock and the Common Stock and any series or class of the Corporation's common or preferred stock, now or hereafter authorized (other than the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock), (b) the provisos to Section 4.5(f)(i) shall not apply to a redemption of the Series E Preferred Stock, and (c) the words "Series E Preferred Stock" and "Series C Preferred Stock" shall be substituted for all references in Section 4.5 to Series C Preferred Stock and Series E Preferred Stock, respectively. 4.8 Powers, Preferences and Rights of the Series F Preferred Stock. The -------------------------------------------------------------- powers, preferences and rights of the Series F Preferred Stock, and the qualifications, limitations and restrictions thereof are as follows: (a) Ranking. The Series F Preferred Stock shall rank (i) junior to the ------- Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and the Series E Preferred Stock with respect to the payment of dividends and the distribution of assets on liquidation, dissolution or winding up, (ii) on a parity with the Senior Common Stock with respect to the payment of dividends and the distribution of assets on liquidation, dissolution or winding up, (iii) on a parity with the -20- Common Stock with respect to the distribution of assets on liquidation, dissolution or winding up (other than on a Statutory Liquidation), (iv) senior to the Common Stock with respect to the distribution of assets on a Statutory Liquidation (v) on a parity with the Common Stock with respect to the payment of dividends, and (vi) senior to any series or class of the Corporation's common or preferred stock hereafter authorized (other than Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Senior Common Stock or Common Stock), with respect to the payment of dividends and the distribution of assets on liquidation, dissolution and winding up. (b) Dividends. Holders of Series F Preferred Stock shall be entitled to --------- dividends in cash or property when, as and if, declared by the Board of Directors of the Corporation. (c) Liquidation Preference. ---------------------- (i) In the event of any liquidation, dissolution or winding up of the Corporation, the holders of Series F Preferred Stock shall be entitled to receive out of the assets of the Corporation, whether such assets are capital or surplus of any nature, after payment is made to holders of all series of preferred stock ranking senior to the Series F Preferred Stock with respect to rights on liquidation, dissolution or winding up, but before any payment shall be made or any assets distributed to the holders of Common Stock or any series of preferred stock ranking junior to the Series F Preferred Stock with respect to rights on liquidation, dissolution or winding up, an amount equal to the Liquidation Preference and no more. (ii) If upon any liquidation, dissolution or winding up of the Corporation the assets of the Corporation to be distributed are insufficient to permit the payment to all holders of Series F Preferred Stock and any other series of preferred stock ranking on a parity with Series F Preferred Stock with respect to rights on liquidation, dissolution or winding up, to receive their full preferential amounts, the entire assets of the Corporation shall be distributed among the holders of Series F Preferred Stock and all such other series ratably in accordance with their respective Liquidation Preference. (iii) After payment to the holders of Series F Preferred Stock of the amounts set forth in paragraph (i) above, the entire remaining assets and funds of the Corporation legally available for distribution, if any, shall be distributed among the holders of the Participating Stock in proportion to the shares of Participating Stock then held by them as of the date of the liquidation, dissolution or winding up of the Corporation. (iv) Neither the consolidation or merger of the Corporation with or into any other Person nor the sale or other distribution to another Person of all or substantially all the assets, property or business of the Corporation, shall be deemed to be a liquidation, dissolution or winding up of the Corporation for purposes of this Section 4.8(c). -21- (d) Voting Rights. ------------- (i) The holders of shares of Series F Preferred Stock shall not have any right to vote on any matters to be voted on by the stockholders of the Corporation, except as otherwise provided in paragraph (ii) below or as provided by law, and the shares of Series F Preferred Stock shall not be included in determining the number of shares voting or entitled to vote on any such matters (other than the matters described in paragraph (ii) below or as otherwise required by law). (ii) The affirmative vote of holders of not less than a majority of Series F Preferred Stock shall be required to (A) authorize, increase the authorized number of shares of or issue (including on conversion or exchange of any convertible or exchangeable securities or by reclassification) any shares of any class or classes of stock ranking senior to or pari passu with the Series F Preferred Stock or any additional shares of Series F Preferred Stock, (B) authorize, adopt or approve each amendment to this Restated Certificate of Incorporation that would increase or decrease the par value of the shares of Series F Preferred Stock, alter or change the powers, preferences or rights of the shares of Series F Preferred Stock or alter or change the powers, preferences or rights of any other capital stock of the Corporation if such alteration or change results in such capital stock ranking senior to or pari passu with the Series F Preferred Stock, (C) amend, alter or repeal any provision of this Restated Certificate of Incorporation so as to affect the shares of Series F Preferred Stock adversely, or (D) authorize or issue any security convertible into, exchangeable for or evidencing the right to purchase or otherwise receive any shares of any class or classes of stock senior to or pari passu with the Series F Preferred Stock. (e) Conversion. The shares of Series F Preferred Stock shall be ---------- convertible into shares of Common Stock or Senior Common Stock as follows: (i) Optional Conversion. Each share of Series F Preferred Stock shall be ------------------- convertible, at the option of the holder thereof, at any time and from time to time, into one fully paid and non-assessable share of Non-Tracked Common Stock; provided that, unless and until the Tracked Common Stock shall be convertible into Class A Common Stock or Class B Common Stock in accordance with Section 4.10(e)(iii), each of the first 631.27 shares of Series F Preferred Stock converted pursuant to this paragraph shall be convertible into one fully paid and non-assessable share of Class D Common Stock. (ii) Automatic Conversion. In the event that the Series C Preferred Stock -------------------- is converted into Common Stock in accordance with Section 4.5(e), then on the IPO Date, each share of Series F Preferred Stock then outstanding shall automatically be converted into one fully paid and non-assessable share of Senior Common Stock. (iii) Mechanics of Optional Conversion. In order for a holder of Series F -------------------------------- Preferred Stock to convert such shares into shares of Common Stock, such holder shall surrender the certificate(s) for such shares of Series F Preferred Stock at the office of the transfer agent for the Series F Preferred Stock (or if the Corporation serves as its own -22- transfer agent, at the principal office of the Corporation), together with written notice that such holder elects to convert all or any number of the shares of the Series F Preferred Stock represented by such certificate(s). If required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or his or its attorney duly authorized in writing. The date of receipt of such certificates and notice by the transfer agent (or by the Corporation if the Corporation serves as its own transfer agent) shall be the conversion date (the "Optional Conversion Date"). The Corporation shall, within ten Business Days ------------------------ after the Optional Conversion Date, issue and deliver at such office to such holder of Series F Preferred Stock, or to his or its nominees, one or more certificates for the number of whole shares of Common Stock (and any shares of Series F Preferred Stock represented by the certificate delivered to the Corporation by the holder thereof that are not converted into Common Stock) issuable upon such conversion in accordance with the provisions hereof. (iv) Mechanics of Automatic Conversion. All holders of record of shares --------------------------------- of Series F Preferred Stock will be given at least 30 but not more than 60 days' prior written notice of the IPO Date and the place designated for conversion of all shares of Series F Preferred Stock pursuant to this Section 4.8(e). Such notice will be sent by first class or registered mail, postage prepaid, to each record holder of Series F Preferred Stock at such holder's address last shown on the records of the transfer agent for the Series F Preferred Stock (or the records of the Corporation if it serves as its own transfer agent). On or before the IPO Date, each holder of shares of Series F Preferred Stock shall surrender his or its certificate(s) for all such shares to the Corporation at the place designated in such notice. If required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or his or its attorney duly authorized in writing. As soon as practicable after the IPO Date and the surrender of the certificates representing shares of Series F Preferred Stock, the Corporation shall issue and deliver to such holder, or on his or its written order to his or its nominees, one or more certificates for the number of whole shares of Senior Common Stock issuable upon such conversion in accordance with the provisions hereof. (v) Reservation of Shares. The Corporation shall at all times when the --------------------- Series F Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued stock, for the purpose of effecting the conversion of the Series F Preferred Stock, such number of its duly authorized shares of Common Stock and Senior Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Series F Preferred Stock. Before taking any action which would cause Common Stock or Senior Common Stock, upon the conversion of Series F Preferred Stock, to be issued below the then par value of the shares of Common Stock or Senior Common Stock, as the case may be, the Corporation will take any corporate action that may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and non-assessable shares of Common Stock or Senior Common Stock, as the case may be, to the holders of Series F Preferred Stock. -23- (vi) Adjustments for Dividends. Upon any conversion of Series F Preferred ------------------------- Stock, no adjustment to the conversion ratio shall be made for declared and unpaid dividends on the Series F Preferred Stock surrendered for conversion or on the Common Stock or Senior Common Stock delivered upon conversion. (vii) Termination of Rights. All shares of Series F Preferred Stock which --------------------- shall have been surrendered for conversion as herein provided or, as to shares of Series F Preferred Stock which are subject to automatic conversion pursuant to paragraph (ii) above, which have not been so surrendered prior to the IPO Date, shall no longer be deemed to be outstanding and all rights with respect to such shares, including the rights, if any, to receive notices and to vote, shall immediately cease and terminate on the Optional Conversion Date or the IPO Date, as the case may be, except only the right of the holders thereof to receive shares of Common Stock or Senior Common Stock, as the case may be, in exchange therefor and payment of any declared and unpaid dividends thereon. On and as of the Optional Conversion Date or the IPO Date, the shares of Common Stock or Senior Common Stock, as the case may be, issuable upon such conversion shall be deemed to be outstanding, and the holder thereof shall be entitled to exercise and enjoy all rights with respect to such shares of Common Stock or Senior Common Stock, including the rights, if any, to receive notices and to vote. Shares of Series F Preferred Stock converted into Common Stock or Senior Common Stock will be restored to the status of authorized but unissued shares of Common Stock or preferred stock without designation as to class or series, and may thereafter be issued, whether or not designated as shares of Class A Common Stock or Series F Preferred Stock. (viii) No Conversion Charge or Tax. The issuance and delivery of --------------------------- certificates for shares of Common Stock or Senior Common Stock upon the conversion of shares of Series F Preferred Stock shall be made without charge to the holder of shares of Series F Preferred Stock for any issue or transfer tax, or other incidental expense in respect of the issuance or delivery of such certificates or the securities represented thereby, all of which taxes and expenses shall be paid by the Corporation. (ix) Reorganization, Reclassification and Merger Adjustment. If there ------------------------------------------------------ occurs any capital reorganization or any reclassification of the Common Stock of the Corporation, the consolidation or merger of the Corporation with or into another Person (other than a merger or consolidation of the Corporation in which the Corporation is the continuing corporation and which does not result in any reclassification or change of outstanding shares of its Common Stock) or the sale or conveyance of all or substantially all of the assets of the Corporation to another Person, then each share of Series F Preferred Stock shall thereafter be convertible into the same kind and amounts of securities (including shares of stock) or other assets, or both, which were issuable or distributable to the holders of outstanding Common Stock of the Corporation upon such reorganization, reclassification, consolidation, merger, sale or conveyance, in respect of that number of shares of Common Stock into which such share of Series F Preferred Stock might have been converted immediately prior to such reorganization, reclassification, consolidation, merger, sale or conveyance; and, in any such case, appropriate adjustments (as determined in good faith by the Board of Directors of the -24- Corporation, whose determination shall be conclusive) shall be made to assure that the provisions set forth herein shall thereafter be applicable, as nearly as reasonably may be practicable, in relation to any securities or other assets thereafter deliverable upon the conversion of the Series F Preferred Stock. (f) Certain Restrictions. -------------------- (i) Notwithstanding the provisions of Sections 4.8(b), cash dividends on the Series F Preferred Stock may not be declared, paid or set apart for payment, nor may the Corporation redeem, purchase or otherwise acquire any shares of Series F Preferred Stock, if (A) the Corporation is not solvent or would be rendered insolvent thereby or (B) at such time the terms and provisions of any law or agreement of the Corporation, including any agreement relating to its indebtedness, specifically prohibit such declaration, payment or setting apart for payment or such redemption, purchase or other acquisition, or provide that such declaration, payment or setting apart for payment or such redemption, purchase or other acquisition would constitute a violation or breach thereof or a default thereunder. (ii) The Corporation shall not permit any Subsidiary of the Corporation, or cause any other Person, to make any distribution with respect to, or purchase or otherwise acquire for consideration, any shares of Common Stock or other shares of capital stock of the Corporation ranking junior to or on a parity basis with the Series F Preferred Stock unless the Corporation could, pursuant to paragraph (i) above, make such distribution or purchase or otherwise acquire such shares at such time and in such manner. (g) Redemption. The Series F Preferred Stock is not redeemable. ---------- (h) Sinking Fund. There shall be no sinking fund for the payment of ------------ dividends or Liquidation Preferences on the Series F Preferred Stock. 4.9 Powers, Preferences and Rights of the Senior Common Stock. The --------------------------------------------------------- powers, preferences and rights of the Senior Common Stock, and the qualifications, limitations and restrictions thereof are as follows: (a) Ranking. The Senior Common Stock shall rank, with respect to the ------- payment of dividends and the distribution of assets on liquidation, dissolution or winding up, (i) junior to the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock, (ii) on a parity with the Series F Preferred Stock, and (iii) senior to the Common Stock and any series or class of the Corporation's common or preferred stock, now or hereafter authorized (other than the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock or Series F Preferred Stock). (b) Dividends. Holders of Senior Common Stock shall be entitled to --------- dividends in cash or property when, as and if, declared by the Board of Directors of the Corporation. -25- (c) Liquidation Preference. ---------------------- (i) In the event of any liquidation, dissolution or winding up of the Corporation, the holders of Senior Common Stock shall be entitled to receive out of the assets of the Corporation, whether such assets are capital or surplus of any nature, after payment is made to holders of all series of preferred stock ranking senior to the Senior Common Stock with respect to rights on liquidation, dissolution or winding up, but before any payment shall be made or any assets distributed to the holders of Common Stock or any series of preferred stock ranking junior to the Senior Common Stock with respect to rights on liquidation, dissolution or winding up, an amount equal to the Liquidation Preference and no more. (ii) If upon any liquidation, dissolution or winding up of the Corporation the assets of the Corporation to be distributed are insufficient to permit the payment to all holders of Senior Common Stock and any other series of preferred stock ranking on a parity with Senior Common Stock with respect to rights on liquidation, dissolution or winding up, to receive their full preferential amounts, the entire assets of the Corporation shall be distributed among the holders of Senior Common Stock and all such other series ratably in accordance with their respective Liquidation Preference. (iii) After payment to the holders of Senior Common Stock of the amounts set forth in paragraph (i) above, the entire remaining assets and funds of the Corporation legally available for distribution, if any, shall be distributed among the holders of the Participating Stock in proportion to the shares of Participating Stock then held by them as of the date of the liquidation, dissolution or winding up of the Corporation. (iv) Neither the consolidation or merger of the Corporation with or into any other Person nor the sale or other distribution to another Person of all or substantially all the assets, property or business of the Corporation, shall be deemed to be a liquidation, dissolution or winding up of the Corporation for purposes of this Section 4.9(c). (d) Voting Rights. ------------- (i) The holders of shares of Senior Common Stock shall not have any right to vote on any matters to be voted on by the stockholders of the Corporation, except as otherwise provided in paragraph (ii) below or as provided by law, and the shares of Senior Common Stock shall not be included in determining the number of shares voting or entitled to vote on any such matters (other than the matters described in paragraph (ii) below or as otherwise required by law). (ii) The affirmative vote of holders of not less than a majority of Senior Common Stock shall be required to (A) authorize, increase the authorized number of shares of or issue (including on conversion or exchange of any convertible or exchangeable securities or by reclassification) any shares of any class or classes of stock ranking senior to or pari passu with the Senior Common Stock or any additional shares of Senior Common Stock, (B) authorize, adopt or approve each amendment to this Restated -26- Certificate of Incorporation that would increase or decrease the par value of the shares of Senior Common Stock, alter or change the powers, preferences or rights of the shares of Senior Common Stock or alter or change the powers, preferences or rights of any other capital stock of the Corporation if such alteration or change results in such capital stock ranking senior to or pari passu with the Senior Common Stock, (C) amend, alter or repeal any provision of this Restated Certificate of Incorporation so as to affect the shares of Senior Common Stock adversely, or (D) authorize or issue any security convertible into, exchangeable for or evidencing the right to purchase or otherwise receive any shares of any class or classes of stock senior to or pari passu with the Senior Common Stock. (e) Conversion. The shares of Senior Common Stock shall be convertible ---------- into shares of Common Stock as follows: (i) Optional Conversion. Each share of Senior Common Stock shall be ------------------- convertible, at the option of the holder thereof, at any time and from time to time, into one fully paid and non-assessable share of Non-Tracked Common Stock; provided that, unless and until the Tracked Common Stock shall be convertible into Class A Common Stock or Class B Common Stock in accordance with Section 4.10(e)(iii), each of the first 631.27 shares of Senior Common Stock converted pursuant to this paragraph shall be convertible into one fully paid and non- assessable share of Class D Common Stock. (ii) Mechanics of Optional Conversion. In order for a holder of Senior -------------------------------- Common Stock to convert such shares into shares of Common Stock, such holder shall surrender the certificate(s) for such shares of Senior Common Stock at the office of the transfer agent for the Senior Common Stock (or if the Corporation serves as its own transfer agent, at the principal office of the Corporation), together with written notice that such holder elects to convert all or any number of the shares of the Senior Common Stock represented by such certificate(s). If required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or his or its attorney duly authorized in writing. The date of receipt of such certificates and notice by the transfer agent (or by the Corporation if the Corporation serves as its own transfer agent) shall be the conversion date. The Corporation shall, within ten Business Days after the conversion date, issue and deliver at such office to such holder of Senior Common Stock, or to his or its nominees, one or more certificates for the number of whole shares of Common Stock (and any shares of Senior Common Stock represented by the certificate delivered to the Corporation by the holder thereof that are not converted into Common Stock) issuable upon such conversion in accordance with the provisions hereof. (iii) Reservation of Shares. The Corporation shall at all times when the --------------------- Senior Common Stock shall be outstanding, reserve and keep available out of its authorized but unissued stock, for the purpose of effecting the conversion of the Senior Common Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Senior Common Stock. Before taking any action which would cause Common Stock, upon the conversion of -27- Senior Common Stock, to be issued below the then par value of the shares of Common Stock, the Corporation will take any corporate action that may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and non-assessable shares of Common Stock to the holders of Senior Common Stock. (iv) Adjustments for Dividends. Upon any conversion of Senior Common ------------------------- Stock, no adjustment to the conversion ratio shall be made for declared and unpaid dividends on the Senior Common Stock surrendered for conversion or on the Common Stock delivered upon conversion. (v) Termination of Rights. All shares of Senior Common Stock which shall --------------------- have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares, including the rights, if any, to receive notices and to vote, shall immediately cease and terminate on the conversion date, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor and payment of any declared and unpaid dividends thereon. On and as of the conversion date, the shares of Common Stock issuable upon such conversion shall be deemed to be outstanding, and the holder thereof shall be entitled to exercise and enjoy all rights with respect to such shares of Common Stock, including the rights, if any, to receive notices and to vote. Shares of Senior Common Stock converted into Common Stock will be restored to the status of authorized but unissued shares of preferred stock without designation as to series, and may thereafter be issued, whether or not designated as shares of Senior Common Stock. (vi) No Conversion Charge or Tax. The issuance and delivery of --------------------------- certificates for shares of Common Stock upon the conversion of shares of Senior Common Stock shall be made without charge to the holder of shares of Senior Common Stock for any issue or transfer tax, or other incidental expense in respect of the issuance or delivery of such certificates or the securities represented thereby, all of which taxes and expenses shall be paid by the Corporation. (vii) Reorganization, Reclassification and Merger Adjustment. If there ------------------------------------------------------ occurs any capital reorganization or any reclassification of the Common Stock of the Corporation, the consolidation or merger of the Corporation with or into another Person (other than a merger or consolidation of the Corporation in which the Corporation is the continuing corporation and which does not result in any reclassification or change of outstanding shares of its Common Stock) or the sale or conveyance of all or substantially all of the assets of the Corporation to another Person, then each share of Senior Common Stock shall thereafter be convertible into the same kind and amounts of securities (including shares of stock) or other assets, or both, which were issuable or distributable to the holders of outstanding Common Stock of the Corporation upon such reorganization, reclassification, consolidation, merger, sale or conveyance, in respect of that number of shares of Common Stock into which such share of Senior Common Stock might have been converted immediately prior to such reorganization, reclassification, consolidation, merger, sale or conveyance; and, in any such case, appropriate adjustments (as -28- determined in good faith by the Board of Directors of the Corporation, whose determination shall be conclusive) shall be made to assure that the provisions set forth herein shall thereafter be applicable, as nearly as reasonably may be practicable, in relation to any securities or other assets thereafter deliverable upon the conversion of the Senior Common Stock. 4.10 Common Stock. ------------ (a) General. Except as otherwise provided herein, all shares of Common ------- Stock issued and outstanding shall be identical, and shall entitle the holders thereof to the same rights, powers and privileges of stockholders under Delaware law. For purposes of this Section 4.10 (and the definitions relating thereto), the Class A Common Stock and the Class B Common Stock are herein collectively referred to as the "Non-Tracked Common Stock" and the Class C Common Stock and the Class D Common Stock are herein collectively referred to as the "Tracked Common Stock". (b) Dividends. Subject to Section 4.11(b) and the express terms of any --------- outstanding series of Preferred Stock, dividends may be paid in cash or otherwise with respect to each class of Common Stock out of the assets of the Corporation, upon the terms, and subject to the limitations, provided in this Section 4.10(b), as the Board of Directors may determine. (i) Dividends on the Non-Tracked Common Stock. Dividends on the ----------------------------------------- Non-Tracked Common Stock may be declared and paid only out of the excess of (A) the funds of the Corporation legally available therefor over (B) the Tracked Business Available Dividend Amount (the "Non-Tracked Business Available Dividend --------------------------------------- Amount"). - ------ (ii) Dividends on Tracked Common Stock. Dividends on the Tracked Common --------------------------------- Stock may be declared and paid only out of the lesser of (A) the funds of the Corporation legally available therefor and (B) the Tracked Business Available Dividend Amount. The Corporation shall not declare or pay cash dividends on, or redeem, purchase or otherwise acquire for consideration, any shares of Tracked Common Stock unless concurrently therewith the Corporation shall declare or pay cash dividends on, or redeem, purchase or otherwise acquire for consideration, as the case may be, on the same terms, all shares of Tracked Common Stock ratably in accordance with the number of shares of each class of Tracked Common Stock then outstanding. (iii) Discrimination in Dividends Among the Tracked and Non-Tracked Common -------------------------------------------------------------------- Stock. The Board of Directors may at any time, subject to the provisions of - ----- Sections 4.10(b)(i) and (ii) and Section 4.11, declare and pay dividends exclusively on the Non-Tracked Common Stock, exclusively on the Tracked Common Stock or on both such categories of Common Stock in equal or unequal amounts, notwithstanding the relative amounts of the Non-Tracked Business Available Dividend Amount and the Tracked Business Available Dividend Amount. -29- (c) Voting. ------ (i) The holders of shares of Common Stock shall be entitled to such voting rights as hereinafter provided, and shall be entitled to notice of any stockholders' meeting and to vote upon such matters as provided herein and in the by-laws of the Corporation, and as may be provided by law. Holders of any class of Common Stock shall not be entitled to cumulate their votes for any purpose. Except as otherwise required by law or provided herein, regardless of the number of shares of any class of Common Stock then outstanding, each class of Common Stock shall be entitled to the number of votes enumerated below and the number of votes or fractional votes to which each share of a particular class of Common Stock shall be entitled shall be the quotient determined by dividing the aggregate number of votes to which such class of Common Stock is entitled by the number of shares of such class of Common Stock then outstanding. Except as otherwise required by law or provided herein, the Class A Common Stock shall have 4,990,000 votes; the Class B Common Stock shall have no votes; the Class C Common Stock shall have no votes; the Class D Common Stock shall have no votes; and the Voting Preference Common Stock shall have 5,010,000 votes. (ii) A quorum for the transaction of business shall be present when a majority of the shares of Voting Preference Common Stock outstanding as of the record date are present and when shares of all classes of Common Stock with at least 5,010,000 votes are present, except that (x) with respect to actions requiring a majority vote of the Class A Common Stock, the presence of a majority of the outstanding shares of Class A Common Stock shall also be required for a quorum to be present, (y) with respect to actions requiring the vote of a majority vote of the Class C Common Stock, the presence of a majority of the outstanding shares of Class C Common Stock shall also be required for a quorum to be present and (z) with respect to actions requiring the vote of a majority vote of the Class D Common Stock, the presence of a majority of the outstanding shares of Class D Common Stock shall also be required for a quorum to be present. Except as otherwise required by law or provided herein, the majority vote of the Voting Preference Common Stock present at any meeting at which a quorum is present shall be sufficient to approve any action required to be approved by the holders of the Common Stock. (iii) In any matter requiring a separate class vote of holders of any class of Common Stock or a separate vote of two or more classes of Common Stock voting together as a single class, for the purposes of such a class vote, each share of Common Stock of such classes shall be entitled to one vote per share. (iv) In the event that the Corporation shall have received an opinion of regulatory counsel of nationally recognized standing to the effect that the rules, regulations or policies of the Federal Communications Commission (the "FCC") permit the Class A Common Stock and the Voting Preference Common Stock --- (x) to be voted as a single class on all matters, (y) to be treated as a single class for purposes of all quorum requirements and (z) to have one vote per share, then, unless the Board of Directors of the Corporation shall have determined, within 30 days after the date of receipt of such opinion, that obtaining the FCC consent described below would be reasonably expected -30- to have a significant detrimental effect on the Corporation, the Corporation shall, upon the affirmative vote of 66-2/3% or more of the Class A Common Stock, seek consent from the FCC to permit the Class A Common Stock and Voting Preference Common Stock to vote and act as a single class in the manner described above. From and after the date that such consent is obtained, the Class A Common Stock and the Voting Preference Common Stock shall be voted as a single class on all matters, shall be treated as a single class for purposes of all quorum requirements, and shall have one vote per share; provided, that the voting rights of the Class B Common Stock, Class C Common Stock and Class D Common Stock and the Preferred Stock shall remain unaffected. (v) The holders of shares of Class B Common Stock shall be entitled to vote as a separate class on any amendment, repeal or modification of any provision of this Restated Certificate of Incorporation that adversely affects the powers, preferences or special rights of the holders of the Class B Common Stock. (d) Dissolution, Liquidation or Winding Up. Upon the dissolution, liquidation -------------------------------------- or winding up of the Corporation, after any preferential amounts to be distributed to the holders of the Preferred Stock and any other class or series of stock having a preference over the Common Stock then outstanding have been paid or declared and funds sufficient for the payment thereof in full set apart for payment, (i) the holders of the Tracked Common Stock shall be entitled to receive pro rata the Tracked Business Available Liquidation Amount and (ii) the holders of the Non-Tracked Common Stock shall be entitled to receive pro rata the excess of (A) all the remaining assets of the Corporation available for distribution to its stockholders over (B) the Tracked Business Available Liquidation Amount. (e) Conversion. ---------- (i) Each share of Class B Common Stock may, at the option of the holder thereof, at any time, be converted into one fully paid and non-assessable share of Class A Common Stock. (ii) Each share of Class A Common Stock may, at the option of the holder thereof, at any time, be converted into one fully paid and non-assessable share of Class B Common Stock. (iii) In the event that the Corporation shall have received an opinion of regulatory counsel of nationally recognized standing to the effect that the rules, regulations or policies of the FCC permit the conversion of shares of Tracked Common Stock into Class A Common Stock or Class B Common Stock, then, unless the Board of Directors of the Corporation shall have determined, within 30 days after receipt of such opinion, that permitting such conversion would be reasonably expected to have a significant detrimental effect on the Corporation, shares of Class C Common Stock and Class D Common Stock shall, upon the affirmative vote of 66-2/3% or more of the Class -31- A Common Stock, be convertible as follows: (x) each share of Class C Common Stock may, at the option of the holder thereof, be converted into one fully paid and non-assessable share of Class A Common Stock or Class B Common Stock, and (y) each share of Class D Common Stock may, at the option of the holder thereof, be converted into one fully paid and non-assessable share of Class A Common Stock or Class B Common Stock. 4.11 Participating Stock. ------------------- (a) Changes in Capital Stock. The Corporation shall not effect any change in ------------------------ or reclassification of any class or series of the outstanding Participating Stock, whether through stock dividends, stock splits, reverse stock splits, combinations or otherwise, without the payment to the Corporation of any consideration therefor in money, services or property, unless concurrently therewith the Corporation shall effect a corresponding change in each other class and series of the outstanding Participating Stock. (b) Dividends and Distributions. The Corporation shall not declare or pay --------------------------- cash dividends on, or redeem, purchase or otherwise acquire for consideration, any shares of Participating Stock unless concurrently therewith the Corporation shall declare or pay cash dividends on, or redeem, purchase or otherwise acquire for consideration, as the case may be, on the same terms, all shares of Participating Stock ratably in accordance with the number of shares of each class and series of Participating Stock then outstanding. (c) Notices. Any written notice or communication by the Corporation to ------- holders of any class or series of Participating Stock shall be sent to all holders of Participating Stock. 4.12 Exchange of Capital Stock. Notwithstanding any other provision of this ------------------------- Restated Certificate of Incorporation to the contrary, in the event that AT&T Wireless PCS, Inc. terminates its obligations under Section 8.6 of the Stockholders Agreement pursuant to Section 8.8(c) thereof with respect to any Overlap Territory (as defined therein) (any such termination being referred to hereinafter as the "Exchange Event"), the following provisions shall apply: -------------- (a) Right to Exchange. The Corporation shall have the right, exercisable in ----------------- its sole discretion by written notice (the "Exchange Notice") given to the --------------- Initial Holders and Section 4.12 Transfers within 60 days after the Exchange Event, to: (i) require the Initial Holders and each Section 4.12 Transferee to exchange for an equivalent number of shares of Series B Preferred Stock either (A) all of the shares of Series A Preferred Stock then owned by the Initial Holders and each Section 4.12 Transferee or (B) a number of shares of Series A Preferred Stock then owned by each such holder equal to the product of (x) the number of shares of Series A Preferred Stock then owned by such holder multiplied by (y) a fraction, the numerator of which is equal to the number of POPs (as defined in the Stockholders Agreement) in the Overlap Territory and the denominator of which is equal to the total number of POPs in the -32- Territory (as defined in the Stockholders Agreement); and (ii) require the Initial Holders and each Section 4.12 Transferee to exchange, for a number of shares of Series B Preferred Stock determined in accordance with paragraph (b) below, either (A) all of the shares of Series D Preferred Stock, Series F Preferred Stock and Common Stock owned by the Initial Holder on the date hereof (or shares of Common Stock or Senior Common Stock into which such shares of Series D Preferred Stock, Series F Preferred Stock and Senior Common Stock shall have been converted) and that the Initial Holders or a Section 4.12 Transferee continues to own on the date of delivery of the Exchange Notice (any such shares of Series D Preferred Stock, Series F Preferred Stock or Common Stock being referred to hereinafter collectively as "Original -------- Shares") or (B) a number of Original Shares of Series D Preferred Stock, Series - ------ F Preferred Stock and Common Stock equal to the product of (x) the number of Original Shares of Series D Preferred Stock, Series F Preferred Stock, Senior Common Stock and Common Stock, as the case may be, then owned by each such holder, multiplied by (y) a fraction, the numerator of which is equal to the number of POPs in the Overlap Territory and the denominator of which is equal to the total number of POPs in the Territory; provided, that (x) if the Corporation exercises its right under clause (i)(A) of this paragraph (a), it shall be required to exercise its right under clause (ii)(A) of this paragraph (a), and vice-versa; and if the Corporation exercises its right under clause (i)(B) of this paragraph (a), it shall be required to exercise its right under clause (ii)(B) of this paragraph (a), and vice-versa and (y) the provisions of this Section 4.12(a) shall not apply to any Section 4.12 Transferee which is a Cash Equity Investor. (Shares of Series A Preferred Stock, Series D Preferred Stock, Series F Preferred Stock and Series G Preferred Stock (and shares of Common Stock and Senior Common Stock into which such shares shall have been converted) and shares of Common Stock subject to exchange pursuant to this Section 4.12 are hereinafter referred to collectively as "Exchange Shares.") --------------- (b) Number of Shares of Series B Preferred Stock Issuable in Exchange. The ----------------------------------------------------------------- number of shares of Series B Preferred Stock issuable in exchange for Original Shares pursuant to clause (ii) of paragraph (a) above shall be equal to the quotient of the aggregate purchase price paid by the Initial Holders for the Original Shares being exchanged, divided by $1,000. (c) Fractional Shares. Notwithstanding any other provision of this Restated ----------------- Certificate of Incorporation, the Corporation shall not be required to issue fractions of shares upon exchange of any Exchange Shares or to distribute certificates which evidence fractional shares. In lieu of fractional shares, the Corporation may pay therefor, at the time of any exchange of Exchange Shares as herein provided, an amount in cash equal to such fraction multiplied by the Market Price of a share of Common Stock on such date. (d) Mechanics of Exchange. The Exchange Notice shall specify the date fixed --------------------- for the exchange (the "Exchange Date"), which shall be at least ten but no more ------------- than 60 days following delivery of the Exchange Notice, and the place designated for exchange of the -33- Exchange Shares pursuant to this Section 4.12. Such notice will be sent by first class or registered mail, postage prepaid, to the Initial Holders and each Section 4.12 Transferee at such holder's address last shown on the records of the transfer agent for the Exchange Shares (or the records of the Corporation if it serves as its own transfer agent). On or before the Exchange Date, the Initial Holders and each Section 4.12 Transferee shall surrender its certificate or certificates for all such shares to the Corporation at the place designated in such notice. If required by the Corporation, certificates surrendered for exchange shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the Initial Holders and each Section 4.12 Transferee or its attorney duly authorized in writing. (e) Termination of Rights. On and after the Exchange Date (whether or not the --------------------- applicable certificates have theretofore been surrendered), all rights with respect to the Exchange Shares, including the rights, if any, to receive notices and to vote, will terminate, except only the rights of the Initial Holders and Section 4.12 Transferees to receive certificates for the number of shares of Series B Preferred Stock into which such Exchange Shares have been exchanged, upon surrender of its certificate or certificates therefor, and payment of any declared but unpaid dividends thereon (which shall accrue and be payable at the times and on the other terms applicable to such dividends when declared) and payment of any deferred dividends in respect of Series A Preferred Stock which shall be payable as set forth in Section 4.3(b)(iii). Within ten Business Days after the Exchange Date, the Corporation shall issue and deliver to the Initial Holders and each Section 4.12 Transferee, or on its written order to its nominees, a certificate or certificates for the number of whole shares of Series B Preferred Stock issuable upon such exchange in accordance with the provisions hereof, together with cash in lieu of fractional shares calculated in accordance with paragraph (c) of this Section 4.12. (f) Reservation of Shares. The Corporation shall at all times reserve and --------------------- keep available for issuance upon the exchange of Exchange Shares the maximum number of its authorized but unissued shares of Series B Preferred Stock as is reasonably anticipated to be sufficient to permit the exchange of all outstanding Exchange Shares, and shall take all action required to increase the authorized number of shares of Series B Preferred Stock if at any time there shall be insufficient authorized but unissued shares of Series B Preferred Stock to permit such reservation or to permit the exchange of all outstanding Exchange Shares. (g) Adjustments for Dividends. Upon any exchange of Exchange Shares, no ------------------------- adjustment to the rate of conversion shall be made for accrued and unpaid dividends (whether or not declared) on the Exchange Shares, as the case may be, surrendered for exchange or on the Series B Preferred Stock delivered upon exchange. (h) No Exchange Charge or Tax. The issuance and delivery of certificates for ------------------------- shares of Series B Preferred Stock upon the exchange of Exchange Shares shall be made without charge to the Initial Holder for any issue or transfer tax, or other incidental expense in respect of the issuance or delivery of such certificates or the securities represented thereby, all of which taxes and expenses shall be paid by the Corporation. -34- 4.13 Redemption of Capital Stock; FCC Approval. ----------------------------------------- (a) Redemption. Notwithstanding any other provision of this Restated ---------- Certificate of Incorporation to the contrary, outstanding shares of capital stock of the Corporation held by Disqualified Holders shall always be subject to redemption by the Corporation, by action of the Board of Directors, if, in the judgment of the Board of Directors, such action should be taken, pursuant to Section 151(b) of the GCL or any other applicable provision of law, to the extent necessary to prevent the loss or secure the reinstatement of any license or franchise from any governmental agency held by the Corporation or any of its subsidiaries to conduct any portion of the business of the Corporation or any of its subsidiaries, which license or franchise is conditioned upon some or all of the holders of the Corporation's stock possessing prescribed qualifications. The terms and conditions of such redemption shall be as follows: (i) the redemption price of the shares to be redeemed pursuant to this Section 4.13 shall be equal to the lesser of (x) the Market Price or (y) if such stock was purchased by such Disqualified Holder within one year of the Section 4.13 Redemption Date, such Disqualified Holder's purchase price for such shares; (ii) the redemption price of such shares may be paid in cash, Redemption Securities or any combination thereof; (iii) if less than all the shares held by Disqualified Holders are to be redeemed, the shares to be redeemed shall be selected in such manner as shall be determined by the Board of Directors, which may include selection first of the most recently purchased shares thereof, selection by lot or selection in any other manner determined by the Board of Directors; (iv) at least 30 days' written notice of the Section 4.13 Redemption Date shall be given to the record holders of the shares selected to be redeemed (unless waived in writing by any such holder); provided, however, that only 10 days' written notice of the Redemption Date shall be given to record holders if the cash or Redemption Securities necessary to effect the redemption shall have been deposited in trust for the benefit of such record holders and subject to immediate withdrawal by them upon surrender of the stock certificates for their shares to be redeemed; provided, further, that the record holders of the shares selected to be redeemed may transfer such shares prior to the Section 4.13 Redemption Date to any holder that is not a Disqualified Holder and, thereafter, for so long as such shares are not held by a Disqualified Holder, such shares shall not be subject to redemption by the Corporation; (v) from and after the Section 4.13 Redemption Date, any and all rights of whatever nature (including without limitation any rights to vote or participate in dividends declared on stock of the same class or series as such shares) with respect to the shares selected from redemption held by Disqualified Holders on the Section 4.13 Redemption Date shall cease and terminate and such Disqualified Holders thenceforth shall be entitled only to receive the cash or Redemption Securities payable upon -35- redemption; and (vi) such other terms and conditions as the Board of Directors shall determine. (b) FCC Approval. Notwithstanding anything herein to the contrary, if ------------ Federal Communications Commission or other regulatory approval is required to be obtained prior to the conversion of shares of any series or class of Preferred Stock or Common Stock, the holder thereof may nevertheless elect to convert any or all of its shares by written notice given to the Corporation in accordance with the applicable provision hereof, provided, that such conversion shall not become effective until the close of business on the date of the receipt of the last of any such approvals and of the surrender of the certificates representing the shares of the applicable Preferred Stock or Common Stock to be converted, and the rights of the holder thereof shall continue in full force and effect pending the receipt of all such approvals, except that, in the case of the Series A Preferred Stock, no dividends shall be payable in respect of the period following the Series A Conversion Date, unless the required approvals are not obtained and the conversion has not been effected within one year of the Series A Conversion Date and the applicable conversion notice is withdrawn, in which event the obligation to pay dividends from and after the Series A Conversion Date shall be payable in accordance with the terms of Section 4.3(b). 4.14 Definitions. For the purposes of this Restated Certificate of ----------- Incorporation, the following terms shall have the meanings indicated: "Affiliate" means, with respect to any Person, any other Person that --------- directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with that Person. For purposes of this definition, "control" (including the terms "controlling" and "controlled") means the power to direct or cause the direction of the management and policies of a Person, directly or indirectly, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise. "Appraisal Procedure" means the following procedure for determining the ------------------- Market Price, for the purpose of calculating the Series A Conversion Rate, in the event that the shares of Class A Common Stock are not listed or admitted for trading on any national securities exchange and are not quoted on NASDAQ or any similar service: (i) Two independent accounting or investment banking firms of nationally recognized standing (each, an "Appraiser"), one chosen by the Corporation and --------- one by the holders of a majority of the outstanding shares of Series A Preferred Stock, shall each determine and attempt to mutually agree upon, the Market Price. Each party shall deliver a notice to the other appointing its Appraiser within 15 days after the applicable notice and surrender pursuant to Section 4.3(iv). If either the Corporation or such holders fail to appoint an appraiser within such 15-day period, the Market Price shall be determined by the Appraiser that has been so appointed. (ii) If within 30 days after appointment of the two Appraisers they are unable -36- to agree upon the Market Price, an independent accounting or investment banking firm of nationally recognized standing shall within ten days thereafter be chosen to serve as a third Appraiser by the mutual consent of such first two Appraisers. The determination of the Market Price by the third Appraiser so appointed and chosen shall be made within 30 days after the selection of such third Appraiser. (iii) If three Appraisers shall be appointed and the determination of one Appraiser is disparate from the middle determination by more than twice the amount by which the other determination is disparate from the middle determination, then the determination of such Appraiser shall be excluded, the remaining two determinations shall be averaged, and such average shall be binding and conclusive on the Corporation and the holders of the Series A Preferred Stock; otherwise the average of all three determinations shall be binding and conclusive on the Corporation and the holders of the Series A Preferred Stock. (iv) In connection with any appraisal conducted pursuant to this Appraisal Procedure, the Appraiser shall adhere to the guidelines provided in the definition of "Market Price" set forth below, including the proviso thereto. (v) The fees and expenses of each Appraiser shall be borne by the Corporation. "Board of Directors" has the meaning specified in Section 4.2(a). ------------------ "Business Day" shall mean any day other than a Saturday, Sunday or ------------ other day on which commercial banks in the City of New York are authorized or required by law or executive order to close. "Class A Common Stock" has the meaning specified in Section 4.1. -------------------- "Class B Common Stock" has the meaning specified in Section 4.1. -------------------- "Class C Common Stock" has the meaning specified in Section 4.1. -------------------- "Class D Common Stock" has the meaning specified in Section 4.1. -------------------- "Closing Price" shall mean, with respect to each share of any class or ------------- series of capital stock for any day, (i) the last reported sale price regular way or, in case no such sale takes place on such day, the average of the closing bid and asked prices regular way, in either case as reported on the principal national securities exchange on which such class or series of capital stock is listed or admitted for trading or (ii) if such class or series of capital stock is not listed or admitted for trading on any national securities exchange, the last reported sale price or, in case no such sale takes place on such day, the average of the highest reported bid and the lowest reported asked quotation for such class or series of capital stock, in either case as reported on NASDAQ or a similar service if NASDAQ is no longer reporting such information. "Common Stock" has the meaning specified in Section 4.1. ------------ -37- "Disqualified Holder" shall mean any holder of shares of capital stock ------------------- of the Corporation whose holding of such stock, either individually or when taken together with the holding of shares of capital stock of the Corporation by any other holders, may result, in the judgment of the Board of Directors, in the loss of, or the failure to secure the reinstatement of, any license or franchise from any governmental agency held by the corporation or any of its subsidiaries or affiliates to conduct any portion of the business of the corporation or any of its subsidiaries or affiliates. "Dividend Payment Date" shall mean the last day of each March, June, --------------------- September and December, except that if any Dividend Payment Date is not a Business Day, then the next succeeding Business Day shall be the Dividend Payment Date. "Fully Diluted Basis" shall mean, with respect to the outstanding ------------------- shares of Common Stock, the number of shares of Common Stock outstanding assuming the conversion of all outstanding convertible securities (other than the Series A Preferred Stock) and the exercise of all outstanding warrants, options or other rights to subscribe for or purchase any shares of Common Stock. "Initial Holder" means AT&T Wireless PCS Inc., a Delaware corporation, -------------- TWR Cellular, Inc., a Delaware corporation, and/or any of their respective Affiliates that is a Subsidiary of AT&T Corp. "Invested Amount" means, as of any date with respect to each share of --------------- Series C Preferred Stock held by any stockholder, an amount equal to the quotient of (i) the aggregate paid-in capital actually paid with respect to all shares of Series C Preferred Stock held by such stockholder as of such date divided by (ii) the total number of shares of Series C Preferred Stock held by such stockholder. "IPO Date" shall mean the first date on which (a) the Common Stock -------- shall have been registered pursuant to an effective Registration Statement under the Securities Act of 1933, as amended, (b) the aggregate gross proceeds received by the Corporation in connection with such Registration Statement(s) equals or exceeds $20 million, and (c) the Common Stock shall be listed for trading on the New York Stock Exchange or the American Stock Exchange or authorized for trading on NASDAQ, including without limitation its National Market System. "IPO Price" shall mean the price per share at which shares of Common --------- Stock are offered to the public in the Corporation's initial public offering of Common Stock. "Junior Stock" shall mean, with respect to shares of Series A ------------ Preferred Stock or Series B Preferred Stock, any capital stock of the Corporation, including without limitation the Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock and the Common Stock, ranking junior to the Series A Preferred Stock or Series B Preferred Stock, as the case may be, with respect to dividends, distribution in liquidation or any other preference, right or power. -38- "Liquidation Preference" shall mean, as of any date, and subject to ---------------------- adjustment for subdivisions or combinations affecting the number of shares of the applicable series of Preferred Stock: (i) with respect to each share of Series A Preferred Stock and Series B Preferred Stock, $1,000 plus accrued and unpaid dividends thereon; (ii) with respect to each share of Series C Preferred Stock, the Invested Amount plus accrued and unpaid dividends on such share (if any), plus an amount equal to interest on the Invested Amount at the rate of six percent (6%) per annum, compounded quarterly, less the amount of dividends (if any) theretofore declared and paid in respect of such share; (iii) with respect to each share of Series D Preferred Stock, $1,000 plus accrued and unpaid dividends thereon (if any), plus an amount equal to interest on $1,000 at the rate of six percent (6%) per annum, compounded quarterly, from the date of issuance of such share to and including the date of the calculation, less the amount of dividends (if any) theretofore declared and paid in respect of such share; (iv) with respect to each share of Series E Preferred Stock, accrued and unpaid dividends thereon (if any), plus an amount equal to interest on $1,000 at the rate of six percent (6%) per annum, compounded quarterly, from the date of issuance of such share to and including the date of the calculation, less the amount of dividends (if any) theretofore declared and paid in respect of such share; (v) with respect to each share of Series F Preferred Stock, $.01 plus accrued and unpaid dividends thereon; and (vi) with respect to each share of Senior Common Stock, the quotient of (a) the sum of (i) the Liquidation Preference with respect to each share of Series D Preferred Stock, multiplied by the aggregate number of shares of Series D Preferred Stock converted into shares of Senior Common Stock in accordance with Section 4.6(c) and (ii) the Liquidation Preference with respect to each share of Series F Preferred Stock, multiplied by the aggregate number of shares of Series F Preferred Stock converted into shares of Senior Common Stock in accordance with Section 4.8(e)(ii), divided by the aggregate number of shares of Senior Common Stock issued upon conversion of shares of Series D Preferred Stock and Series F Preferred Stock. "Market Price" shall mean, with respect to each share of any class or ------------ series of capital stock for any day, (i) the average of the daily Closing Prices for the ten consecutive trading days commencing 15 days before the day in question or (ii) if on such date the shares of such class or series of capital stock are not listed or admitted for trading on any national securities exchange and are not quoted on NASDAQ or any similar service, the cash amount that a willing buyer would pay a willing seller (neither acting under compulsion) in an arm's-length transaction without time constraints per share of such class or series of capital stock as of such date, viewing the Corporation on a going concern basis, as determined (A) in the case of a -39- determination of "Market Price" for the purpose of calculating the Series A Conversion Rate, pursuant to the Appraisal Procedure and (B) in the case of a determination of Market Price for any other purpose, in good faith by the Board of Directors, whose determination shall be conclusive; provided that, in determining such cash amount, the following shall be ignored: (i) any contract or legal limitation in respect of shares of Common Stock or Preferred Stock, including transfer, voting and other rights, (ii) the "minority interest" or "control" status of shares of Common Stock into which shares of Series A Preferred Stock would be converted, and (iii) any illiquidity arising by contract in respect of the shares of Common Stock and any voting rights or control rights amongst the stockholders. "NASDAQ" shall mean the National Association of Securities Dealers ------ Automated Quotations System. "Non-Tracked Common Stock" has the meaning specified in Section ------------------------ 4.10(a). "Non-Tracked Business Available Dividend Amount" has the meaning ---------------------------------------------- specified in Section 4.10(b)(i). "Optional Conversion Date" has the meaning specified in 4.6(c)(iii). ------------------------ "Parity Stock" shall mean, with respect to shares of Series A ------------ Preferred Stock or Series B Preferred Stock, any capital stock of the Corporation ranking on a parity with the Series A Preferred Stock or Series B Preferred Stock, as the case may be, with respect to dividends, distribution in liquidation or any other preference, right or power. "Participating Stock" shall mean, collectively, the Series F Preferred ------------------- Stock, the Senior Common Stock and the Non-Tracked Common Stock. "Person" shall mean any individual, firm, corporation, partnership, ------ trust, incorporated or unincorporated association, joint venture, joint stock company, governmental agency or political subdivision thereof or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity. "Preferred Stock" has the meaning specified in Section 4.1. --------------- "Qualified Transfer" shall mean a sale, transfer or other disposition ------------------ of shares of Series A Preferred Stock to any prospective transferee specified in a Qualified Transfer Notice, other than a prospective transferee as to which the Corporation disapproves in accordance with the terms of the second sentence of Section 4.3(j), provided such sale, transfer or other disposition is made pursuant to a binding agreement entered into no later than 180 days after the applicable Qualified Transfer Notice is given. "Qualified Transferee" shall mean, with respect to any shares of -------------------- Series A Preferred Stock, (i) any Cash Equity Investor that acquired such shares pursuant to Section 4.2 of the Stockholders Agreement or (ii) any other holder that acquired such shares in a Qualified Transfer from an Initial Holders or Qualified Transferee. -40- "Qualified Transfer Notice" has the meaning specified in Section ------------------------- 4.3(i)(x). "Redemption Securities" shall mean any debt or equity securities of --------------------- the Corporation, any of its subsidiaries or affiliates or any other corporation, or any combination thereof, having such terms and conditions as shall be approved by the Board of Directors and which, together with any cash to be paid as part of the redemption price payable pursuant to Section 4.13, in the opinion of any nationally recognized investment banking firm selected by the Board of Directors (which may be a firm which provides investment banking, brokerage or other services to the Corporation), has a value, at the time notice of redemption is given pursuant to Section 4.13(d) at least equal to the price required to be paid pursuant to Section 4.13(a) (assuming, in the case of Redemption Securities to be publicly traded, that such Redemption Securities were fully distributed and subject only to normal trading activity). "Section 4.12 Transferee" shall mean any transferee of shares of ------------------------ Series A Preferred Stock, Series D Preferred Stock and Series F Preferred Stock issued to the Initial Holder on the date hereof (or any shares of Senior Common Stock or Common Stock into which any such shares are converted) that are acquired in a private transaction. "Section 4.13 Redemption Date" shall mean the date fixed by the Board ---------------------------- of Directors for the redemption of any shares of stock of the corporation pursuant to Section 4.13. "Senior Common Stock" has the meaning specified in Section 4.1. ------------------- "Senior Stock" shall mean, with respect to shares of Series A ------------ Preferred Stock or Series B Preferred Stock, as the case may be, any capital stock of the Corporation ranking senior to the Series A Preferred Stock or the Series B Preferred Stock, as the case may be, with respect to dividends, distribution in liquidation or any other preference, right or power. "Series A Conversion Date" has the meaning specified in Section ------------------------ 4.3(i)(iv). "Series A Conversion Rate" shall mean, as of any date of ------------------------ determination, a fraction in which the numerator is the Liquidation Preference of one share of Series A Preferred Stock as of such date, and the denominator is the Market Price of Class A Common Stock as of such date. "Series A Preferred Stock" has the meaning specified in Section 4.1. ------------------------ "Series A Redemption Price" has the meaning specified in Section ------------------------- 4.3(e)(i). "Series B Preferred Stock" has the meaning specified in Section 4.1. ------------------------ "Series C Preferred Stock" has the meaning specified in Section 4.1. ------------------------ "Series D Preferred Stock" has the meaning specified in Section 4.1. ------------------------ "Series E Preferred Stock" has the meaning specified in Section 4.1. ------------------------ -41- "Series F Preferred Stock" has the meaning specified in Section 4.1. ------------------------ "Statutory Liquidation" means the liquidation of the Corporation --------------------- pursuant to Section 275 of the GCL, as amended. "Stockholders Agreement" means the July 1998 Stockholders Agreement by ---------------------- and among the Corporation, the Initial Holders and the other stockholders of the Corporation named therein, as the same may be amended, modified or supplemented in accordance with the terms thereof, a copy of which is available for inspection by any stockholder at the principal executive offices of the Corporation. "Subsidiary" shall mean, with respect to any Person, a corporation or ---------- other entity of which 50% or more of the voting power of the voting equity securities or equity interest is owned, directly or indirectly, by such Person. "Tracked Business Available Dividend Amount" shall mean, on any date, ------------------------------------------ the excess (if any) of (i) the fair market value of the total assets of Tracked Subsidiary (including, without limitation, investments held by Tracked Subsidiary), less the total amount of the liabilities of Tracked Subsidiary, in each case as of such date determined in accordance with generally accepted accounting principles, over (ii) the aggregate par value of, or any greater amount determined in accordance with GCL to be capital in respect of, all outstanding shares of the Tracked Common Stock. "Tracked Business Available Liquidation Amount" shall mean, on any --------------------------------------------- date, the fair market value of the total assets of Tracked Subsidiary (including, without limitation, investments held by Tracked Subsidiary, less the total amount of the liabilities of Tracked Subsidiary, in each case as of such date determined in accordance with generally accepted accounting principles. "Tracked Common Stock" has the meaning specified in Section 4.10(a). -------------------- "Tracked Subsidiary" shall mean TeleCorp Holding Corp., Inc. ------------------ ARTICLE V Election of Directors need not be by written ballot. ARTICLE VI Subject to the separate class vote requirements relating to any class or series of Preferred Stock, the holders of shares of Common Stock representing at least two-thirds (2/3) of the votes entitled to be cast for the election of directors of the Corporation, voting together as a single class, in person or by proxy, at a special or annual meeting of stockholders called for the purpose, or by written consent, may amend, alter or repeal this Restated Certificate of Incorporation or the bylaws of the Corporation (the "Bylaws"). ------ -42- ARTICLE VII 7.1 Indemnification. Any person who was or is a party or is threatened to be --------------- made a party to any threatened, pending, or completed action, suit, or proceeding (a "Proceeding"), whether civil, criminal, administrative, or ---------- investigative (whether or not by or in the right of the Corporation), by reason of the fact that such person, or a person of whom such person is the legal representative, is or was a director, officer, incorporator, employee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, incorporator, employee, partner, trustee, or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise (an "Other Entity"), shall be entitled to be indemnified by the ------------ Corporation to the full extent then permitted by law against expenses (including counsel fees and disbursements), judgments, fines (including excise taxes assessed on a person with respect to an employee benefit plan), and amounts paid in settlement incurred by him in connection with such Proceeding. Persons who are not Directors or officers of the Corporation may be similarly indemnified in respect of service to the Corporation or to an Other Entity at the request of the Corporation to the extent the Board of Directors at any time specifies that such persons are entitled to the benefits of this Article VII. 7.2 Advancement of Expenses. The Corporation shall, from time to time, ----------------------- reimburse or advance to any Director or officer or other person entitled to indemnification hereunder the funds necessary for payment of expenses, including attorneys' fees and disbursements, incurred in connection with any Proceeding, in advance of the final disposition of such Proceeding; provided, however, that, if (and only if) required by the GCL, such expenses incurred by or on behalf of any Director or officer or other person may be paid in advance of the final disposition of a Proceeding only upon receipt by the Corporation of an undertaking, by or on behalf of such Director or officer (or other person indemnified hereunder), to repay any such amount so advanced if it shall ultimately be determined by final judicial decision from which there is no further right of appeal that such Director, officer or other person is not entitled to be indemnified for such expenses. 7.3 Rights Not Exclusive. The rights to indemnification and reimbursement or -------------------- advancement of expenses provided by, or granted pursuant to, this Article VII shall not be deemed exclusive of any other rights to which a person seeking indemnification or reimbursement or advancement of expenses may have or hereafter be entitled under any statute, this Restated Certificate of Incorporation, the Bylaws, any agreement, any vote of stockholders or disinterested Directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office. 7.4 Continuing Rights. The rights to indemnification and reimbursement or ----------------- advancement of expenses provided by, or granted pursuant to, this Article VII shall continue as to a person who has ceased to be a Director or officer (or other person indemnified hereunder), shall inure to the benefit of the executors, administrators, legatees and distributees of such person, and in either case, shall inure whether or not the claim asserted is based on matters which antedate the adoption of this Article VII. 7.5 Insurance. The Corporation shall have power to purchase and maintain --------- insurance on -43- behalf of any person who is or was a Director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation, as a director, officer, employee or agent of an Other Entity, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Article VII, the Bylaws or under Section 145 of the GCL or any other provision of law. 7.6 Contract Rights; No Repeal. The provisions of this Article VII shall be -------------------------- a contract between the Corporation, on the one hand, and each Director and officer who serves in such capacity at any time while this Article VII is in effect and any other person indemnified hereunder, on the other hand, pursuant to which the Corporation and each such Director, officer, or other person intend to be legally bound. No repeal or modification of this Article VII shall affect any rights or obligations with respect to any state of facts then or, heretofore or thereafter brought or threatened based in whole or in part upon any such state of facts. 7.7 Enforceability; Burden of Proof. The rights to indemnification and ------------------------------- reimbursement or advancement of expenses provided by, or granted pursuant to, this Article VII shall be enforceable by any person entitled to such indemnification or reimbursement or advancement of expenses in any court of competent jurisdiction. The burden of proving that such indemnification or reimbursement or advancement of expenses is not appropriate shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, its independent legal counsel and its stockholders) to have made a determination prior to the commencement of such action that such indemnification or reimbursement or advancement of expenses is proper in the circumstances nor an actual determination by the Corporation (including its Board of Directors, its independent legal counsel and its stockholders) that such person is not entitled to such indemnification or reimbursement or advancement of expenses shall constitute a defense to the action or create a presumption that such person is not so entitled. Such a person shall also be indemnified for any expenses incurred in connection with successfully establishing his or her right to such indemnification or reimbursement or advancement of expenses, in whole or in part, in any such Proceeding. 7.8 Service at the Request of the Corporation. Any Director or officer of ----------------------------------------- the Corporation serving in any capacity in (a) another corporation of which a majority of the shares entitled to vote in the election of its directors is held, directly or indirectly, by the Corporation or (b) any employee benefit plan of the Corporation or any corporation referred to in clause (a) shall be deemed to be doing so at the request of the Corporation. 7.9 Right to Be Covered by Applicable Law. Any person entitled to be ------------------------------------- indemnified or to reimbursement or advancement of expenses as a matter of right pursuant to this Article VII may elect to have the right to indemnification or reimbursement or advancement of expenses interpreted on the basis of the applicable law in effect at the time of the occurrence of the event or events giving rise to the applicable Proceeding, to the extent permitted by law, or on the basis of the applicable law in effect at the time such indemnification or reimbursement or advancement of expenses is sought. Such election shall be made, by a notice in writing to the Corporation, at the time indemnification or reimbursement or advancement of expenses is sought; provided, however, that if no such notice is given, the right to indemnification or reimbursement or -44- advancement of expenses shall be determined by the law in effect at the time indemnification or reimbursement or advancement of expenses is sought. ARTICLE VIII No Director of the Corporation shall be liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a Director, provided that this provision does not eliminate the liability of the Director (i) for any breach of the Director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the GCL or (iv) for any transaction from which the Director derived an improper personal benefit. For purposes of the prior sentence, the term "damages" shall, to the extent permitted by law, include without limitation, any judgment, fine, amount paid in settlement, penalty, punitive damages, excise or other tax assessed with respect to an employee benefit plan, or expense of any nature (including, without limitation, counsel fees and disbursements). Each person who serves as a Director of the Corporation while this Article VIII is in effect shall be deemed to be doing so in reliance on the provisions of this Article VIII, and neither the amendment or repeal of this Article VIII, nor the adoption of any provision of this Restated Certificate of Incorporation inconsistent with this Article VIII, shall apply to or have any effect on the liability or alleged liability of any Director of the Corporation for, arising out of, based upon, or in connection with any acts or omissions of such Director occurring prior to such amendment, repeal, or adoption of an inconsistent provision. The provisions of this Article VIII are cumulative and shall be in addition to and independent of any and all other limitations on or eliminations of the liabilities of Directors of the Corporation, as such, whether such limitations or eliminations arise under or are created by any law, rule, regulation, bylaw, agreement, vote of stockholders or disinterested Directors, or otherwise. IN WITNESS WHEREOF, the undersigned officer of the Corporation has executed this Third Amended and Restated Certificate of Incorporation this 14th day of May, 1999. /s/ Thomas Sullivan ------------------------------- Name: Thomas H. Sullivan Title: Executive Vice President -45- EX-3.2 3 AMENDED & RESTATED BYLAWS DATED JULY 17, 1998 EXHIBIT 3.2 ================================================================================ TeleCorp PCS, Inc. AMENDED AND RESTATED BYLAWS Adopted as of July 17, 1998 ================================================================================ AMENDED AND RESTATED BYLAWS TeleCorp PCS, Inc. ARTICLE 1. STOCKHOLDERS 1.1 Annual Meeting. The annual meeting of the stockholders of the -------------- Corporation for the election of directors and for the transaction of such other business as may properly come before such meeting shall be held at such place, either within or without the State of Delaware, at 9:00 A.M. on the second Wednesday of each April of each year (or, if such day is a legal holiday, then on the next succeeding business day), or at such other date and hour, as may be fixed from time to time by resolution of the Board of Directors and set forth in the notice or waiver of notice of the meeting. 1.2 Special Meetings. Special meetings of the stockholders may be ---------------- called at any time by the Chairman of the Board (or, in the event of his absence or disability, by the President), or by the Board of Directors. A special meeting shall be called by the Chairman of the Board (or, in the event of his absence or disability, by the President), or by the Secretary, immediately upon receipt of a written request therefor by stockholders holding in the aggregate not less than 10% of the outstanding shares of the Corporation at the time entitled to vote at any meeting of the stockholders. If such officers or the Board of Directors shall fail to call such meeting within 20 days after receipt of such request, any stockholder executing such request may call such meeting. Any such special meeting of the stockholders shall be held at such place, within or without the State of Delaware, as shall be specified in the notice or waiver of notice thereof. 1.3 Notice of Meetings; Waiver. The Secretary or any Assistant -------------------------- Secretary shall cause written notice of the place, date and hour of each meeting of the stockholders, and, in the case of a special meeting, the purpose or purposes for which such meeting is called, to be given personally or by mail, not less than ten nor more than 60 days before the date of the meeting, to each stockholder of record entitled to vote at such meeting. If such notice is mailed, it shall be deemed to have been given to a stockholder when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the record of stockholders of the Corporation, or, if he shall have filed with the Secretary a written request that notices to him be mailed to some other address, then directed to him at such other address. Such further notice shall be given as may be required by law. Whenever notice is required to be given to stockholders hereunder, a written waiver, signed by a stockholder, whether before or after the time stated therein, shall be deemed equivalent to notice. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in a written waiver of notice. The attendance of any stockholder at a meeting of stockholders shall constitute a waiver of notice of such meeting, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the ground that the meeting is not lawfully called or convened. 1.4 Quorum. Except as otherwise required by law or by the ------ Certificate of Incorporation, the presence in person or by proxy of the holders of record of a majority of the shares entitled to vote at a meeting of stockholders shall constitute a quorum for the transaction of business at such meeting. 1.5 Voting. Except as set forth in the Certificate of ------ Incorporation, if, pursuant to Section 5.5 of these Bylaws, a record date has been fixed, every holder of record of shares entitled to vote at a meeting of stockholders shall be entitled to one vote for each share outstanding in his name on the books of the Corporation at the close of business on such record date. If no record date has been fixed, then every holder of record of shares entitled to vote at a meeting of stockholders shall be entitled to one vote for each share of stock standing in his name on the books of the Corporation at the close of business on the day next preceding the day on which notice of the meeting is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. Except as otherwise required by law or by the Certificate of Incorporation, the vote of a majority of the shares represented in person or by proxy at any meeting at which a quorum is present shall be sufficient for the transaction of any business at such meeting. 1.6 Voting by Ballot. No vote of the stockholders need be taken by ---------------- written ballot or conducted by inspectors of election, unless otherwise required by law. Any vote which need not be taken by ballot may be conducted in any manner approved by the meeting. 1.7 Adjournment. If a quorum is not present at any meeting of the ----------- stockholders, the stockholders present in person or by proxy shall have the power to adjourn any such meeting from time to time until a quorum is present. Notice of any adjourned meeting of the stockholders of the Corporation need not be given if the place, date and hour thereof are announced at the meeting at which the adjournment is taken, provided, however, that if the adjournment is for more than 30 days, or if after the adjournment a new record date for the adjourned meeting is fixed pursuant to Section 5.5 of these Bylaws, a notice of the adjourned meeting, conforming to the requirements of Section 1.3 hereof, shall be given to each stockholder of record entitled to vote at such meeting. At any adjourned meeting at which a 2 quorum is present, any business may be transacted that might have been transacted on the original date of the meeting. 1.8 Proxies. Any stockholder entitled to vote at any meeting of ------- the stockholders or to express consent to or dissent from corporate action without a meeting may, by a written instrument signed by such stockholder or his attorney-in-fact, authorize another person or persons to vote at any such meeting and express such consent or dissent for him by proxy. No such proxy shall be voted or acted upon after the expiration of three years from the date of such proxy, unless such proxy provides for a longer period. Every proxy shall be revocable at the pleasure of the stockholder executing it, except in those cases where applicable law provides that a proxy shall be irrevocable. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or by filing another duly executed proxy bearing a later date with the Secretary. 1.9 Organization; Procedure. At every meeting of stockholders the ----------------------- presiding officer shall be the Chairman of the Board or, in the event of his absence or disability, the President or, in the event of his absence or disability, a presiding officer chosen by a majority of the stockholders present in person or by proxy. The Secretary, or in the event of his absence or disability, the Assistant Secretary, if any, or if there be no Assistant Secretary, in the absence of the Secretary, an appointee of the presiding officer, shall act as Secretary of the meeting. The order of business and all other matters of procedure at every meeting of stockholders may be determined by such presiding officer. 1.10 Consent of Stockholders in Lieu of Meeting. To the fullest ------------------------------------------ extent permitted by law, whenever the vote of the stockholders at a meeting thereof is required or permitted to be taken for or in connection with any corporate action, such action may be taken without a meeting, without prior notice and without a vote of stockholders, if the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted shall consent in writing to such corporate action being taken. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not so consented in writing. 3 ARTICLE 2. BOARD OF DIRECTORS 1.11 General Powers. Except as may otherwise be provided by law, -------------- by the Certificate of Incorporation or by these Bylaws, the property, affairs and business of the Corporation shall be managed by or under the direction of the Board of Directors and the Board of Directors may exercise all the powers of the Corporation. 1.12 Number and Term of Office. The number of Directors ------------------------- constituting the entire Board of Directors shall be thirteen, which number may be modified from time to time by resolution of the Board of Directors, but in no event shall the number of Directors be less than one. Each Director (whenever elected) shall hold office until his successor has been duly elected and qualified, or until his earlier death, resignation or removal. 1.13 Election of Directors. Except as set forth in the Certificate --------------------- of Incorporation and as otherwise provided in Sections 2.12 and 2.13 of these Bylaws, the Directors shall be elected at each annual meeting of the stockholders. If the annual meeting for the election of Directors is not held on the date designated therefor, the Directors shall cause the meeting to be held as soon thereafter as convenient. At each meeting of the stockholders for the election of Directors, provided a quorum is present, the Directors shall be elected by a plurality of the votes validly cast in such election. 1.14 Annual and Regular Meetings. The annual meeting of the Board --------------------------- of Directors for the purpose of electing officers and for the transaction of such other business as may come before the meeting shall be held as soon as possible following adjournment of the annual meeting of the stockholders at the place of such annual meeting of the stockholders. Notice of such annual meeting of the Board of Directors need not be given. The Board of Directors from time to time may by resolution provide for the holding of regular meetings and fix the place (which may be within or without the State of Delaware) and the date and hour of such meetings. Notice of regular meetings need not be given, provided, however, that if the Board of Directors shall fix or change the time or place of any regular meeting, notice of such action shall be mailed promptly, or sent by telegram, facsimile or cable, to each Director who shall not have been present at the meeting at which such action was taken, addressed to him at his usual place of business, or shall be delivered to him personally. Notice of such action need not be given to any Director who attends the first regular meeting after such action is taken without protesting the lack of notice to him, prior to or at the commencement of such meeting, or to any Director who submits a signed waiver of notice, whether before or after such meeting. 1.15 Special Meetings; Notice. Special meetings of the Board of ------------------------ Directors shall be held whenever called by the Chairman of the Board or, in the event of his absence or 4 disability, by the President, at such place (within or without the State of Delaware), date and hour as may be specified in the respective notices or waivers of notice of such meetings. Special meetings of the Board of Directors may be called on 24 hours' notice, if notice is given to each Director personally or by telephone or facsimile, or on five days' notice, if notice is mailed to each Director, addressed to him at his usual place of business. Notice of any special meeting need not be given to any Director who attends such meeting without protesting the lack of notice to him, prior to or at the commencement of such meeting, or to any Director who submits a signed waiver of notice, whether before or after such meeting, and any business may be transacted thereat. 1.16 Quorum; Voting. At all meetings of the Board of Directors, -------------- the presence of a majority of the total authorized number of Directors shall constitute a quorum for the transaction of business. Except as otherwise required by law or the Certificate of Incorporation, the vote of a majority of the Directors present at any meeting at which a quorum is present shall be the act of the Board of Directors. 1.17 Adjournment. A majority of the Directors present, whether or ----------- not a quorum is present, may adjourn any meeting of the Board of Directors to another time or place. No notice need be given of any adjourned meeting unless the time and place of the adjourned meeting are not announced at the time of adjournment, in which case notice conforming to the requirements of Section 2.5 shall be given to each Director. 1.18 Action Without a Meeting. Any action required or permitted to ------------------------ be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board of Directors consent thereto in writing, and such writing or writings are filed with the minutes of proceedings of the Board of Directors. 1.19 Regulations; Manner of Acting. To the extent consistent with ----------------------------- applicable law, the Certificate of Incorporation and these Bylaws, the Board of Directors may adopt such rules and regulations for the conduct of meetings of the Board of Directors and for the management of the property, affairs and business of the Corporation as the Board of Directors may deem appropriate. The Directors shall act only as a Board, and the individual Directors shall have no power as such. 1.20 Action by Telephonic Communications. Members of the Board of ----------------------------------- Directors may participate in a meeting of the Board of Directors by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this provision shall constitute presence in person at such meeting. 5 1.21 Resignation. Any Director may resign at any time by ----------- delivering a written notice of resignation, signed by such Director, to the Chairman of the Board, the President or the Secretary. Unless otherwise specified therein, such resignation shall take effect upon delivery. 1.22 Removal of Directors. Except as set forth in the Certificate -------------------- of Incorporation, any Director may be removed at any time, either for or without cause, upon the affirmative vote of the holders of a majority of the outstanding shares of stock of the Corporation entitled to vote for the election of such Director, cast at a special meeting of stockholders called for that purpose. Any vacancy in the Board of Directors caused by any such removal may be filled at such meeting by the stockholders entitled to vote for the election of the Director so removed. If such stockholders do not fill such vacancy at such meeting (or in the written instrument effecting such removal, if such removal was effected by consent without a meeting), such vacancy may be filled in the manner provided in Section 2.13 of these Bylaws. 1.23 Vacancies and Newly Created Directorships. Except as set ----------------------------------------- forth in the Certificate of Incorporation, if any vacancies shall occur in the Board of Directors, by reason of death, resignation, removal or otherwise, or if the authorized number of Directors shall be increased, the Directors then in office shall continue to act, and such vacancies and newly created directorships may be filled by a majority of the Directors then in office, although less than a quorum. A Director elected to fill a vacancy or a newly created directorship shall hold office until his successor has been elected and qualified or until his earlier death, resignation or removal. Any such vacancy or newly created directorship may also be filled at any time by vote of the stockholders. 1.24 Compensation. The amount, if any, which each Director shall ------------ be entitled to receive as compensation for his services as such shall be fixed from time to time by resolution of the Board of Directors. 1.25 Reliance on Accounts and Reports, etc. A member of the Board ------------------------------------- of Directors, or a member of any Committee designated by the Board of Directors, shall, in the performance of his duties, be fully protected in relying in good faith upon the records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of the Corporation's officers or employees, or Committees of the Board of Directors, or by any other person as to matters the member reasonably believes are within such other person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation, including without limitation independent certified public accountants and appraisers. 6 ARTICLE 3. EXECUTIVE COMMITTEE AND OTHER COMMITTEES 1.26 How Constituted. The Board of Directors may designate one or --------------- more Committees, including an Executive Committee, each such Committee to consist of such number of Directors as from time to time may be fixed by the Board of Directors. The Board of Directors may designate one or more directors as alternate members of any such Committee, who may replace any absent or disqualified member or members at any meeting of such Committee. In addition, unless the Board of Directors has so designated an alternate member of such Committee, in the absence or disqualification of a member of such Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Thereafter, members (and alternate members, if any) of each such Committee may be designated at the annual meeting of the Board of Directors. Any such Committee may be abolished or redesignated from time to time by the Board of Directors. Each member (and each alternate member) of any such Committee (whether designated at an annual meeting of the Board of Directors or to fill a vacancy or otherwise) shall hold office until his successor shall have been designated or until he shall cease to be a Director, or until his earlier death, resignation or removal. 1.27 Powers. Each Committee shall have and may exercise such ------ powers of the Board of Directors as may be provided by resolution of the Board, provided, that neither the Executive Committee nor any such other Committee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders, any action or matter expressly required by the General Corporation Law to be submitted to stockholders for approval or (ii) adopt, amend or repeal any of these Bylaws. Each Committee may be granted by the Board of Directors power to authorize the seal of the Corporation to be affixed to any or all papers which may require it. 1.28 Quorum; Voting. Except as may be otherwise provided in the -------------- resolution creating such Committee, at all meetings of any Committee the presence of members (or alternate members) constituting a majority of the total authorized membership of such Committee shall constitute a quorum for the transaction of business. The act of a majority of the members present at any meeting at which a quorum is present shall be the act of such Committee. 1.29 Action without a Meeting. Any action required or permitted to ------------------------ be taken at any meeting of any such Committee may be taken without a meeting, if all members of such Committee shall consent to such action in writing and such writing or writings are filed with the minutes of the proceedings of the Committee. 7 1.30 Regulations; Manner of Acting. Each such Committee may fix ----------------------------- its own rules of procedure and may meet at such place (within or without the State of Delaware), at such time and upon such notice, if any, as it shall determine from time to time. Each such Committee shall keep minutes of its proceedings and shall report such proceedings to the Board of Directors at the meeting of the Board of Directors next following any such proceeding. The members of any such Committee shall act only as a Committee, and the individual members of such Committee shall have no power as such. 1.31 Action by Telephonic Communications. Members of any Committee ----------------------------------- designated by the Board of Directors may participate in a meeting of such Committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this provision shall constitute presence in person at such meeting. 1.32 Resignation. Any member (and any alternate member) of any ----------- Committee may resign at any time by delivering a written notice of resignation, signed by such member, to the Chairman of the Board or the President. Unless otherwise specified therein, such resignation shall take effect upon delivery. 1.33 Removal. Any member (any alternate member) of any Committee ------- may be removed at any time, with or without cause, by resolution adopted by a majority of the whole Board of Directors. 1.34 Vacancies. If any vacancy shall occur in any Committee, by --------- reason of death, resignation, removal or otherwise, the remaining members (and any alternate members) shall continue to act, and any such vacancy may be filled by the Board of Directors or the remaining members of the Committee as provided in Section 3.1 hereof. ARTICLE 4. OFFICERS 1.35 Titles. The officers of the Corporation shall be chosen by ------ the Board of Directors and shall be a Chairman of the Board, the President, an Vice President/Chief Operating Officer, an Executive Vice President/General Counsel, one or more Vice Presidents, a Secretary and a Treasurer. The Board of Directors also may elect one or more Assistant Secretaries and Assistant Treasurers in such numbers as the Board of Directors may determine, and shall also elect a Chairman of the Board. Any number of offices may be held by the same person. No officer need be a Director of the Corporation. 8 1.36 Election. Unless otherwise determined by the Board of -------- Directors, the officers of the Corporation shall be elected by the Board of Directors at the annual meeting of the Board of Directors, and shall be elected to hold office until the next succeeding annual meeting of the Board of Directors. In the event of the failure to elect officers at such annual meeting, officers may be elected at any regular or special meeting of the Board of Directors. Each officer shall hold office until his successor has been elected and qualified, or until his earlier death, resignation or removal. 1.37 Salaries. The salaries of all officers of the Corporation -------- shall be fixed by the Board of Directors. 1.38 Removal and Resignation; Vacancies. Any officer may be ---------------------------------- removed with or without cause at any time by the Board of Directors. Any officer may resign at any time by delivering a written notice of resignation, signed by such officer, to the Board of Directors or the Chairman of the Board. Unless otherwise specified therein, such resignation shall take effect upon delivery. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise, shall be filled by the Board of Directors. 1.39 Authority and Duties. The officers of the Corporation shall -------------------- have such authority and shall exercise such powers and perform such duties as may be specified in these Bylaws, except that in any event each officer shall exercise such powers and perform such duties as may be required by law. 1.40 The Chairman of the Board. The Chairman of the Board shall ------------------------- preside at all meetings of the stockholders and directors. He shall also perform all duties and exercise all powers usually pertaining to the office of a Chairman of the Board of a corporation. He shall see that all orders and resolutions of the Board of Directors are carried into effect. The Chairman of the Board shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. 1.41 The President. The President shall be the chief executive ------------- officer of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. In the absence of the Chairman of the Board, the President shall preside at all meetings of the stockholders and directors. He shall manage and administer the Corporation's business and affairs and shall also perform all duties and exercise all powers usually pertaining to the office of a chief executive officer of a corporation. He shall have the authority to sign, in the name and on behalf of the Corporation, checks, orders, contracts, leases, notes, drafts and other documents and instruments in connection with the business of the Corporation and, together with the Secretary or an Assistant Secretary, conveyances of real estate and other documents and instruments to which the seal of the Corporation is affixed. He shall have the authority to cause the employment or appointment of such employees and agents of the Corporation as the conduct of the 9 business of the Corporation may require, to fix their compensation, and to remove or suspend any employee or agent elected or appointed by the Board of Directors. The President shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. 1.42 Vice President/Chief Operating Officer. The Vice -------------------------------------- President/Chief Operating Officer shall, subject to the direction of the Board of Directors and the President, perform all duties and exercise all powers usually pertaining to the office of a chief operating officer of a corporation. He shall have the authority to sign, in the name and on behalf of the Corporation, checks, orders, contracts, leases, notes, drafts and other documents and instruments in connection with the business of the Corporation and, together with the President, Secretary or an Assistant Secretary, conveyances of real estate and other documents and instruments to which the seal of the Corporation is affixed. He shall have the authority to cause the employment or appointment of such employees and agents of the Corporation as the conduct of the business of the Corporation may require, to fix their compensation, and to remove or suspend any employee or agent elected or appointed by the Board of Directors. The Vice President/Chief Operating Officer shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. 1.43 Executive Vice President/General Counsel. The Executive Vice ---------------------------------------- President/General Counsel shall, subject to the directions of the Board of Directors, have general control and supervision of legal and regulatory policies and operations of the Corporation. He shall also be the chief business development officer of the Corporation and in connection therewith shall perform all duties and exercise all powers usually pertaining to the office of a chief business development officer. He shall have the authority to sign, in the name and on behalf of the Corporation, checks, orders, contracts, leases, notes, drafts and other documents and instruments in connection with the business of the Corporation and, together with the Secretary or an Assistant Secretary, conveyances of real estate and other documents and instruments to which the seal of the Corporation is affixed. He shall have the authority to cause the employment or appointment of such employees and agents of the Corporation as the conduct of the business of the Corporation may require, to fix their compensation, and to remove or suspend any employee or agent elected or appointed by the Board of Directors, other than the President or Vice President/Chief Operating Officer. The Executive Vice President/General Counsel shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. 1.44 The Vice Presidents. Each Vice President shall perform such ------------------- duties and exercise such powers as may be assigned to him from time to time by the President. In the absence of the President, the duties of the President shall be performed and his powers may be exercised by such Vice President as shall be designated by the President, or failing such designation, such duties shall be performed and such powers may be exercised by each Vice 10 President in the order of their election to that office; subject in any case to review and superseding action by the President. 1.45 The Secretary. The Secretary shall have the following powers ------------- and duties: (1) He shall keep or cause to be kept a record of all the proceedings of the meetings of the stockholders and of the Board of Directors in books provided for that purpose. (2) He shall cause all notices to be duly given in accordance with the provisions of these Bylaws and as required by law. (3) Whenever any Committee shall be appointed pursuant to a resolution of the Board of Directors, he shall furnish a copy of such resolution to the members of such Committee. (4) He shall be the custodian of the records and of the seal of the Corporation and cause such seal (or a facsimile thereof) to be affixed to all certificates representing shares of the Corporation prior to the issuance thereof and to all instruments the execution of which on behalf of the Corporation under its seal shall have been duly authorized in accordance with these Bylaws, and when so affixed he may attest to same. (5) He shall properly maintain and file all books, reports, statements, certificates and all other documents and records required by law, the Certificate of Incorporation or these Bylaws. (6) He shall have charge of the stock books and ledgers of the Corporation and shall cause the stock and transfer books to be kept in such manner as to show at any time the number of shares of stock of the Corporation of each class issued and outstanding, the names (alphabetically arranged) and the addresses of the holders of record of such shares, the number of shares held by each holder and the date as of which each became such holder of record. (7) He shall sign (unless the Treasurer, an Assistant Treasurer or Assistant Secretary shall have signed) certificates representing shares of the Corporation the issuance of which shall have been authorized by the Board of Directors. (8) He shall perform, in general, all duties incident to the office of secretary and such other duties as may be specified in these Bylaws or as may be assigned to him from time to time by the Board of Directors or the President. 1.46 The Treasurer. The Treasurer shall be the chief financial ------------- officer of the corporation and shall have the following powers and duties: 11 (1) He shall have charge and supervision over and be responsible for the moneys, securities, receipts and disbursements of the Corporation, and shall keep or cause to be kept full and accurate records of all receipts of the Corporation. (2) He shall cause the moneys and other valuable effects of the Corporation to be deposited in the name and to the credit of the Corporation in such banks or trust companies or with such bankers or other depositaries as shall be selected in accordance with Section 8.5 of these Bylaws. (3) He shall cause moneys of the Corporation to be disbursed by checks or drafts (signed as provided in Section 8.6 of these Bylaws) upon the authorized depositories of the Corporation and cause to be taken and preserved proper vouchers for all moneys disbursed. (4) He shall render to the Board of Directors or the President, whenever requested, a statement of the financial condition of the Corporation and of all his transactions as Treasurer, and render a full financial report at the annual meeting of the stockholders, if called upon to do so. (5) He shall be empowered from time to time to require from all officers or agents of the Corporation reports or statements giving such information as he may desire with respect to any and all financial transactions of the Corporation. (6) He may sign (unless an Assistant Treasurer or the Secretary or an Assistant Secretary shall have signed) certificates representing stock of the Corporation the issuance of which shall have been authorized by the Board of Directors. (7) He shall perform, in general, all duties incident to the office of treasurer and such other duties as may be specified in these Bylaws or as may be assigned to him from time to time by the Board of Directors, or the President. 1.47 Additional Officers. The Board of Directors may appoint such ------------------- other officers and agents as it my deem appropriate, and such other officers and agents shall hold their offices for such terms and shall exercise such powers and perform such duties as may be determined from time to time by the Board of Directors. The Board of Directors from time to time may delegate to any officer or agent the power to appoint subordinate officers or agents and to prescribe their respective rights, terms of office, authorities and duties. Any such officer or agent may remove any such subordinate officer or agent appointed by him, with or without cause. 12 1.48 Security. The Board of Directors may direct that the -------- Corporation secure the fidelity of any or all of its officers or agents by bond or otherwise. ARTICLE 5. CAPITAL STOCK 1.49 Certificates of Stock, Uncertificated Shares. The shares of -------------------------------------------- the Corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution that some or all of any or all classes or series of the stock of the Corporation shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until each certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board of Directors, every holder of stock in the Corporation represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the Corporation, by the Chairman of the Board, President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, representing the number of shares registered in certificate form. Such certificate shall be in such form as the Board of Directors may determine, to the extent consistent with applicable law, the Certificate of Incorporation and these Bylaws. 1.50 Signatures; Facsimile. All of such signatures on the --------------------- certificate may be a facsimile, engraved or printed, to the extent permitted by law. In case any officer, transfer agent or registrar who has signed, or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. 1.51 Lost, Stolen or Destroyed Certificates. The Secretary of the -------------------------------------- Corporation may cause a new certificate of stock or uncertificated shares in place of any certificate therefor issued by the Corporation, alleged to have been lost, stolen or destroyed, upon delivery to the Secretary of an affidavit of the owner or owners of such certificate, or his or their legal representative setting forth such allegation. The Secretary may require the owner or owners of such lost, stolen or destroyed certificate, or his or their legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of any such new certificate or uncertificated shares. 1.52 Transfer of Stock. Upon surrender to the Corporation or the ----------------- transfer agent of the Corporation of a certificate for shares, duly endorsed or accompanied by appropriate evidence of succession, assignment or authority to transfer, the Corporation shall issue a new 13 certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Within a reasonable time after the transfer of uncertificated stock, the Corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Section 151, 156, 202(a) or 218(a) of the General Corporation Law. Subject to the provisions of the Certificate of Incorporation and these Bylaws, the Board of Directors may prescribe such additional rules and regulations as it may deem appropriate relating to the issue, transfer and registration of shares of the Corporation. 1.53 Record Date. In order to determine the stockholders entitled ----------- to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than 60 nor less than ten days before the date of such meeting, nor more than 60 days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting, provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. 1.54 Registered Stockholders. Prior to due surrender of a ----------------------- certificate for registration of transfer, the Corporation may treat the registered owner as the person exclusively entitled to receive dividends and other distributions, to vote, to receive notice and otherwise to exercise all the rights and powers of the owner of the shares represented by such certificate, and the Corporation shall not be bound to recognize any equitable or legal claim to or interest in such shares on the part of any other person, whether or not the Corporation shall have notice of such claim or interest. Whenever any transfer of shares shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer if, when the certificates are presented to the Corporation for transfer or uncertificated shares are requested to be transferred, both the transferor and transferee request the Corporation to do so. 1.55 Transfer Agent and Registrar. The Board of Directors may ---------------------------- appoint one or more transfer agents and registrars, and may require all certificates representing shares to bear the signature of any such transfer agents or registrars. ARTICLE 6. INDEMNIFICATION 14 1.56 Indemnification. The Corporation shall, to the fullest extent --------------- permitted by applicable law from time to time in effect, indemnify any and all persons who may serve or who have served at any time as Directors or officers of the Corporation, or who at the request of the Corporation may serve or at any time have served as Directors or officers of another corporation (including subsidiaries of the Corporation) or of any partnership, joint venture, trust or other enterprise, from and against any and all of the expenses, liabilities or other matters referred to in or covered by said law. Such indemnification shall continue as to a person who has ceased to be a Director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person. The Corporation may also indemnify any and all other persons whom it shall have power to indemnify under any applicable law from time to time in effect to the extent authorized by the Board of Directors and permitted by such law. The indemnification provided by this Article shall not be deemed exclusive of any other rights to which any person may be entitled under any provision of the Certificate of Incorporation, other Bylaw, agreement, vote of stockholders or disinterested Directors, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. 1.57 Definition. For purposes of this Article, the term ---------- "Corporation" shall include constituent corporations referred to in Subsection (h) of Section 145 of the General Corporation Law (or any similar provision of applicable law at the time in effect). ARTICLE 7. OFFICES 1.58 Registered Office. The registered office of the Corporation ----------------- in the State of Delaware shall be located at Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801, and the Corporation's registered agent shall be The Corporation Trust Company. 1.59 Other Offices. The Corporation may maintain offices or places ------------- of business at such other locations within or without the State of Delaware as the Board of Directors may from time to time determine or as the business of the Corporation may require. 15 ARTICLE 8. GENERAL PROVISIONS 1.60 Dividends. Subject to any applicable provisions of law and --------- the Certificate of Incorporation, dividends upon the shares of the Corporation may be declared by the Board of Directors at any regular or special meeting of the Board of Directors and any such dividend may be paid in cash, property, or shares of the Corporation. 1.61 Reserves. There may be set aside out of any funds of the -------- Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, thinks proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall think conducive to the interest of the Corporation, and the Board of Directors may similarly modify or abolish any such reserve. 1.62 Execution of Instruments. The President, any Executive Vice ------------------------ President, any Vice President, the Secretary or the Treasurer may enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation. The Board of Directors or the President may authorize any other officer or agent to enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation. Any such authorization may be general or limited to specific contracts or instruments. 1.63 Corporate Indebtedness. No loan shall be contracted on behalf ---------------------- of the Corporation, and no evidence of indebtedness shall be issued in its name, unless authorized by the Board of Directors. Such authorization may be general or confined to specific instances. Loans so authorized may be effected at any time for the Corporation from any bank, trust company or other institution, or from any firm, corporation or individual. All bonds, debentures, notes and other obligations or evidences of indebtedness of the Corporation issued for such loans shall be made, executed and delivered as the Board of Directors shall authorize. When so authorized by the Board of Directors, any part of or all the properties, including contract rights, assets, business or good will of the Corporation, whether then owned or thereafter acquired, may be mortgaged, pledged, hypothecated or conveyed or assigned in trust as security for the payment of such bonds, debentures, notes and other obligations or evidences of indebtedness of the Corporation, and of any interest thereon, by instruments executed and delivered in the name of the Corporation. 1.64 Deposits. Any funds of the Corporation may be deposited from -------- time to time in such banks, trust companies or other depositaries as may be determined by the Board of Directors or the President, or by such officers or agents as may be authorized by the Board of Directors or the President to make such determination. 16 1.65 Checks. All checks or demands for money and notes of the ------ Corporation shall be signed by such officer or officers or such agent or agents of the Corporation, and in such manner, as the Board of Directors, the Chairman of the Board, or the President from time to time may determine. 1.66 Sale, Transfer, etc. of Securities. To the extent authorized ---------------------------------- by the Board of Directors or by the President, any Vice President, the Secretary or the Treasurer, or any other officers designated by the Board of Directors, the Chairman of the Board, or the President may sell, transfer, endorse, and assign any shares of stock, bonds or other securities owned by or held in the name of the Corporation, and may make, execute and deliver in the name of the Corporation, under its corporate seal, any instruments that may be appropriate to effect any such sale, transfer, endorsement or assignment. 1.67 Voting as Stockholder. Unless otherwise determined by --------------------- resolution of the Board of Directors, the President or any Vice President shall have full power and authority on behalf of the Corporation to attend any meeting of stockholders of any corporation in which the Corporation may hold stock, and to act, vote (or execute proxies to vote) and exercise in person or by proxy all other rights, powers and privileges incident to the ownership of such stock. Such officers acting on behalf of the Corporation shall have full power and authority to execute any instrument expressing consent to or dissent from any action of any such corporation without a meeting. The Board of Directors may by resolution from time to time confer such power and authority upon any other person or persons. 1.68 Fiscal Year. The fiscal year of the Corporation shall ----------- commence on the first day of January of each year (except for the Corporation's first fiscal year which shall commence on the date of incorporation) and shall end in each case on December 31. 1.69 Seal. The seal of the Corporation shall be circular in form ---- and shall contain the name of the Corporation, the year of its incorporation and the words "Corporate Seal" and "Delaware". The form of such seal shall be subject to alteration by the Board of Directors. The seal may be used by causing it or a facsimile thereof to be impressed, affixed or reproduced, or may be used in any other lawful manner. 1.70 Books and Records. Except to the extent otherwise required by ----------------- law, the books and records of the Corporation shall be kept at such place or places within or without the State of Delaware as may be determined from time to time by the Board of Directors. 17 ARTICLE 9. AMENDMENT OF BYLAWS 1.71 Amendment. Except as set forth in the Certificate of --------- Incorporation, these Bylaws may be amended, altered or repealed at any regular or special meeting of the stockholders by the holders of shares of Common Stock representing at least two-thirds (2/3) of the votes entitled to be cast if, in the case of a special meeting only, notice of such amendment, alteration or repeal is contained in the notice or waiver of notice of such meeting. ARTICLE 10. CONSTRUCTION 1.72 Construction. In the event of any conflict between the ------------ provisions of these Bylaws as in effect from time to time and the provisions of the Certificate of Incorporation as in effect from time to time, the provisions of the Certificate of Incorporation shall be controlling. 18 TABLE OF CONTENTS -----------------
PAGE ---- ARTICLE 1 -- STOCKHOLDERS................................................ 1 1.1 Annual Meeting................................................ 1 1.2 Special Meetings.............................................. 1 1.3 Notice of Meetings; Waiver.................................... 1 1.4 Quorum........................................................ 2 1.5 Voting........................................................ 2 1.6 Voting by Ballot.............................................. 2 1.7 Adjournment................................................... 2 1.8 Proxies....................................................... 2 1.9 Organization; Procedure....................................... 3 1.10 Consent of Stockholders in Lieu of Meeting.................... 3 ARTICLE 2 -- BOARD OF DIRECTORS.......................................... 3 2.1 General Powers................................................ 3 2.2 Number and Term of Office..................................... 3 2.3 Election of Directors......................................... 3 2.4 Annual and Regular Meetings................................... 4 2.5 Special Meetings; Notice...................................... 4 2.6 Quorum; Voting................................................ 4 2.7 Adjournment................................................... 4 2.8 Action Without a Meeting...................................... 5 2.9 Regulations; Manner of Acting................................. 5 2.10 Action by Telephonic Communications........................... 5 2.11 Resignation................................................... 5 2.12 Removal of Directors.......................................... 5 2.13 Vacancies and Newly Created Directorships..................... 5 2.14 Compensation.................................................. 6 2.15 Reliance on Accounts and Reports, etc......................... 6 ARTICLE 3 -- EXECUTIVE COMMITTEE AND OTHER COMMITTEES.................... 6 3.1 How Constituted............................................... 6 3.2 Powers........................................................ 6 3.3 Quorum; Voting................................................ 7 3.4 Action without a Meeting...................................... 7 3.5 Regulations; Manner of Acting................................. 7 3.6 Action by Telephonic Communications........................... 7 3.7 Resignation................................................... 7
i 3.8 Removal....................................................... 7 3.9 Vacancies..................................................... 7 ARTICLE 4 -- OFFICERS.................................................... 8 4.1 Titles........................................................ 8 4.2 Election...................................................... 8 4.3 Salaries...................................................... 8 4.4 Removal and Resignation; Vacancies............................ 8 4.5 Authority and Duties.......................................... 8 4.6 The Chairman of the Board..................................... 8 4.7 The President................................................. 8 4.8 Vice President/Chief Operating Officer........................ 9 4.9 Executive Vice President/General Counsel...................... 9 4.10 The Vice Presidents........................................... 10 4.11 The Secretary................................................. 10 4.12 The Treasurer................................................. 11 4.13 Additional Officers........................................... 11 4.14 Security...................................................... 12 ARTICLE 5 -- CAPITAL STOCK............................................... 12 5.1 Certificates of Stock, Uncertificated Shares.................. 12 5.2 Signatures; Facsimile......................................... 12 5.3 Lost, Stolen or Destroyed Certificates........................ 12 5.4 Transfer of Stock............................................. 12 5.5 Record Date................................................... 13 5.6 Registered Stockholders....................................... 13 5.7 Transfer Agent and Registrar.................................. 13 ARTICLE 6 -- INDEMNIFICATION............................................. 13 6.1 Indemnification............................................... 13 6.2 Definition.................................................... 14 ARTICLE 7 -- OFFICES..................................................... 14 7.1 Registered Office............................................. 14 7.2 Other Offices................................................. 14 ARTICLE 8 -- GENERAL PROVISIONS.......................................... 14 8.1 Dividends..................................................... 14 8.2 Reserves...................................................... 14 8.3 Execution of Instruments...................................... 15 8.4 Corporate Indebtedness........................................ 15
ii 8.5 Deposits...................................................... 15 8.6 Checks........................................................ 15 8.7 Sale, Transfer, etc. of Securities............................ 15 8.8 Voting as Stockholder......................................... 15 8.9 Fiscal Year................................................... 16 8.10 Seal.......................................................... 16 8.11 Books and Records............................................. 16 ARTICLE 9 -- AMENDMENT OF BYLAWS......................................... 16 9.1 Amendment..................................................... 16 ARTICLE 10 -- CONSTRUCTION............................................... 16 10.1 Construction.................................................. 16
iii EX-4.1 4 INDENTURE EXHIBIT 4.1 ----------- EXECUTION COPY ================================================================================ TeleCorp PCS, Inc. 11 5/8% Senior Subordinated Discount Notes due 2009 ------------------------ INDENTURE Dated as of April 23, 1999 ------------------------ Bankers Trust Company, Trustee ================================================================================ INDENTURE dated as of April 23, 1999, among TeleCorp PCS, Inc., a Delaware corporation (the "Company"), TeleCorp Communications, Inc. (the "Subsidiary Guarantor") and Bankers Trust Company, a New York banking corporation, as trustee (the "Trustee"). Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of (i) the Company's 11 5/8% Senior Subordinated Discount Notes due 2009 issued on the date hereof (the "Initial Securities"), (ii) if and when issued as provided in the Registration Agreement (as defined in Appendix A hereto (the "Appendix")), the Company's 11 5/8% Senior Subordinated Discount Notes due 2009 issued in the Registered Exchange Offer (as defined in the Appendix) in exchange for any Initial Securities (the "Exchange Securities") and (iii) if and when issued as provided in the Registration Agreement, the Private Exchange Securities (as defined in the Appendix, and together with the Initial Securities and any Exchange Securities issued hereunder, the "Securities") issued in the Private Exchange (as defined in the Appendix). Except as otherwise provided herein, the Securities shall be limited to $575,000,000 in aggregate principal amount at maturity outstanding. 2 ARTICLE 1 Definitions and Incorporation by Reference ------------------------------------------ SECTION 1.01. Definitions. ------------ "Accreted Value" means, as of any date of determination prior to April 15, 2004, the sum of: (1) the initial offering price of each Security; and (2) the portion of the excess of the principal amount of each Security over such initial offering price which shall have been amortized by the Company in accordance with GAAP through such date, such amount to be so amortized on a daily basis and compounded semiannually on each interest payment date at a rate of 11 5/8% per annum from the date of the Indenture through the date of determination computed on the basis of a 360-day year of twelve 30-day months. "Acquired Indebtedness" means, with respect to any Person, Indebtedness of such Person: (1) existing at the time such Person becomes a Restricted Subsidiary; or (2) assumed in connection with the acquisition of assets from another Person, including Indebtedness Incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary or such acquisition, as the case may be. "Acquisitions" means the Digital Acquisition, the Puerto Rico Acquisition and the Wireless 2000 Acquisition. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, any specified Person. For purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Annualized Pro Forma Consolidated Operating Cash Flow" means Consolidated Cash Flow for the latest two full fiscal quarters for which consolidated financial statements of the Company are available multiplied by two. For purposes of calculating "Consolidated Cash Flow" for any period for purposes of this definition only: (1) any Subsidiary of the Company that is a Restricted Subsidiary on the date of the transaction giving rise to the need to calculate "Annualized Pro Forma Consolidated Operating Cash Flow" (the "Transaction Date") shall be deemed to have been a Restricted Subsidiary at all times during such period; and 3 (2) any Subsidiary of the Company that is not a Restricted Subsidiary on the Transaction Date shall be deemed not to have been a Restricted Subsidiary at any time during such period. In addition to and without limitation of the foregoing, for purposes of this definition only, "Consolidated Cash Flow" shall be calculated after giving effect on a pro forma basis for the applicable period to, without duplication, any Asset Dispositions or Asset Acquisitions (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of the Company or one of the Restricted Subsidiaries (including any Person who becomes a Restricted Subsidiary as a result of the Asset Acquisition) Incurring, assuming or otherwise being liable for Acquired Indebtedness) occurring during the period commencing on the first day of such two-fiscal-quarter period to and including the Transaction Date (the "Reference Period"), as if such Asset Sale or Asset Acquisition occurred on the first day of the Reference Period. "Asset Acquisition" means: (1) any purchase or other acquisition (by means of transfer of cash, Indebtedness or other property to others or payment for property or services for the account or use of others or otherwise) of Capital Stock of any Person by the Company or any Restricted Subsidiary, in either case, pursuant to which such Person shall become a Restricted Subsidiary or shall be merged with or into the Company or any Restricted Subsidiary; or (2) any acquisition by the Company or any Restricted Subsidiary of the property or assets of any Person which constitute all or substantially all of an operating unit or line of business of such Person. "Asset Disposition" means any sale, transfer or other disposition (including, without limitation, by merger, consolidation or Sale/Leaseback Transaction) of: (1) shares of Capital Stock of a Subsidiary of the Company (other than directors' qualifying shares); (2) any License for the provision of wireless telecommunications services held by the Company or any Restricted Subsidiary (whether by sale of Capital Stock or otherwise); or (3) any other property or assets of the Company or any Subsidiary of the Company other than in the ordinary course of business; provided, however, that an Asset Disposition shall not include: - -------- ------- (A) any sale, transfer or other disposition of shares of Capital Stock, property or assets by a Restricted Subsidiary to the Company or to any other Restricted Subsidiary or by the Company to any Restricted Subsidiary; (B) any sale, transfer or other disposition of defaulted receivables for collection; 4 (C) the sale, lease, conveyance or disposition or other transfer of all or substantially all of the assets of the Company as permitted under Article 5; (D) any disposition that constitutes a Change of Control; or (E) any sale, transfer or other disposition of shares of Capital Stock of any Marketing Affiliate; provided that such Marketing Affiliate is not -------- engaged in any activity other than the registration, holding, maintenance or protection of trademarks and the licensing thereof; or (F) any sale, transfer or other disposition that does not (together with all related sales, transfers or dispositions) involve aggregate consideration in excess of $5,000,000. "AT&T Wireless" means AT&T Wireless PCS Inc., a Delaware corporation. "Average Life" means, as of the date of determination, with respect to any Indebtedness for borrowed money or Preferred Stock, the quotient obtained by dividing: (1) the sum of the products of the number of years from the date of determination to the dates of each successive scheduled principal or liquidation value payments of such Indebtedness or Preferred Stock, respectively, and the amount of such principal or liquidation value payments by (2) the sum of all such principal or liquidation value payments. "Bank Indebtedness" means any and all amounts payable under or in respect of the Credit Agreement and any Refinancing Indebtedness with respect thereto, as amended from time to time, including principal, premium (if any), interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company whether or not a claim for post-filing interest is allowed in such proceedings), fees, charges, expenses, reimbursement obligations, guarantees and all other amounts payable thereunder or in respect thereof. "Bankruptcy Law" means Title 11, United States Code, or any similar ------------------ federal or state law for the relief of debtors. "board of directors" of any Person means the board of directors, management committee or other governing body of such Person. "BTA" means a Basic Trading Area, as defined in 47 C.F.R. (S)24.202. "Business Day" means any date which is not a Legal Holiday. "C-Block License" means any License in the C block as set forth in parts 1 and 24 of Title 47 of the Code of Federal Regulations. 5 "Capital Lease Obligations" of any Person means the obligations to pay rent or other amounts under a lease of (or other Indebtedness arrangements conveying the right to use) real or personal property of such Person which are required to be classified and accounted for as a capital lease or liability on the face of a balance sheet of such Person in accordance with GAAP. The amount of such obligations shall be the capitalized amount thereof in accordance with GAAP, and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. "Capital Stock" of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) of corporate stock or other equity participations, including partnership interests, whether general or limited, of such Person. "Cash Equity Investors" means CB Capital Investors, L.P., Equity- Linked Investors-II, Private Equity Investors III, L.P., Hoak Communications Partners, L.P., HCP Capital Fund, L.P., Whitney Equity Partners, L.P., J. H. Whitney III, L.P., Whitney Strategic Partners III, L.P., Entergy Technology Holding Company, Media/ Communications Partners III Limited Partnership, Media/Communications Investors Limited Partnership, One Liberty Fund III, L.P., One Liberty Fund IV, L.P., Toronto Dominion Investments, Inc., Northwood Ventures LLC, Northwood Capital Partners LLC, Gerald Vento, Thomas Sullivan and Gilde International B.V. "Cash Equivalents" means: (1) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof; (2) investments in commercial paper maturing within 365 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from Standard & Poor's Corporation or from Moody's Investors Service; (3) investments in certificates of deposit, banker's acceptance and time deposits maturing within 365 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000; (4) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (1) above and entered into with a financial institution satisfying the criteria described in clause (3) above; and (5) money market funds substantially all of whose assets comprise securities of the type described in clauses (1) through (3) above. 6 "Change of Control" means the assurance of any of the following events: (1) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than a Permitted Holder or Permitted Holders or a person or group controlled by a Permitted Holder or Permitted Holders, becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d- 5 under the Exchange Act, except that a person shall be deemed to have "beneficial ownership" of all such securities that such person has the right to acquire within one year, upon the happening of an event or otherwise) directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company's then outstanding Voting Stock; (2) the following individuals cease for any reason to constitute more than a majority of the number of directors then serving on the board of directors of the Company: individuals who, on the date of this Indenture, constitute the board of directors of the Company and any new director (other than 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 appointment or election by the board of directors of the Company or nomination for election by the Company's stockholders was approved by the vote of at least two-thirds of the directors then still in office or whose appointment, election or nomination was previously so approved or recommended or made in accordance with the terms of the Stockholders' Agreement; or (3) the stockholders of the Company shall approve any Plan of Liquidation (whether or not otherwise in compliance with the provisions of the Indenture). "Code" means the Internal Revenue Code of 1986, as amended. "Common Stock" of any Person means Capital Stock of such Person that does not rank prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to shares of Capital Stock of any other class of such Person. "Commission" means the Securities and Exchange Commission. "Communications Act" means the Communications Act of 1934, and any similar or successor Federal statute, and the rules and regulations and published policies of the FCC thereunder, all as amended and as the same may be in effect from time to time. "Company" means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor and, for purposes of any provision contained herein and required by the TIA, each other obligor on the indenture securities. 7 "Consolidated Cash Flow" of any Person means, for any period, the Consolidated Net Income of such Person for such period: (1) increased (to the extent Consolidated Net Income for such period has been reduced thereby) by the sum of (without duplication): (A) Consolidated Interest Expense of such Person for such period; plus (B) Consolidated Income Tax Expense of such Person for such period; plus (C) the consolidated depreciation and amortization expense of such Person and its Restricted Subsidiaries for such period; plus (D) any other non-cash charges of such Person and its Restricted Subsidiaries for such period except for any non-cash charges that represent accruals of, or reserves for, cash disbursements to be made in any future accounting period; and (2) decreased (to the extent Consolidated Net Income for such period has been increased thereby) by any non-cash gains from Asset Dispositions. "Consolidated Income Tax Expense" of any Person means, for any period, the consolidated provision for income taxes of such Person and its Restricted Subsidiaries for such period calculated on a consolidated basis in accordance with GAAP. "Consolidated Interest Expense" for any Person means, for any period, without duplication: (1) the consolidated interest expense included in a consolidated income statement (without deduction of interest or finance charge income) of such Person and its Restricted Subsidiaries for such period calculated on a consolidated basis in accordance with GAAP (including, without limitation, (a) any amortization of debt discount, (b) the net costs under Hedging Agreements, (c) all capitalized interest, (d) the interest portion of any deferred payment obligation and (e) all amortization of any premiums, fees and expenses payable in connection with the Incurrence of any Indebtedness); plus (2) the interest component of Capital Lease Obligations paid, accrued and/or scheduled to be paid or accrued, by such Person and its Restricted Subsidiaries during such period as determined on a consolidated basis in accordance with GAAP. 8 "Consolidated Net Income" of any Person means for any period the consolidated net income (or loss) of such Person and its Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided, however, that there shall be excluded therefrom: - -------- ------- (1) the net income (or loss) of any Person acquired by such Person or a Restricted Subsidiary of such Person in a pooling-of-interests transaction for any period prior to the date of such transaction; (2) the net income (but not loss) of any Restricted Subsidiary of such Person which is subject to restrictions which prevent or limit the payment of dividends or the making of distributions to such Person to the extent of such restrictions (regardless of any waiver thereof); (3) the net income of any Person that is not a Restricted Subsidiary of such Person, except to the extent of the amount of dividends or other distributions representing such Person's proportionate share of such other Person's net income for such period actually paid in cash to such Person by such other Person during such period; (4) gains or losses (other than for purposes of calculating Consolidated Net Income under clause (C) of paragraph (a) of Section 4.04) on Asset Dispositions by such Person or its Restricted Subsidiaries; (5) all extraordinary gains (but not, other than for purposes of calculating Consolidated Net Income under clause (C) of paragraph (a) under Section 4.04, losses) determined in accordance with GAAP; and (6) in the case of a successor to such Person by consolidation or merger or as a transferee of such Person's assets, any earnings (or losses) of the successor corporation prior to such consolidation, merger or transfer of assets. "Corporate Trust Office" means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of the execution of the Indenture is located at Four Albany Street, New York, New York 10006. Attention: Corporate Trust and Agency Group, or such other address as the Trustee may designate from time to time by notice to the Securityholders. "Credit Agreement" means the Credit Agreement dated as of July 17, 1998, as amended, waived or otherwise modified from time to time, among the Company, the financial institutions named therein as lenders, The Chase Manhattan Bank, as Administrative Agent and Issuing Bank, TD Securities (USA) Inc., as Syndication Agent, and Bankers Trust Company, as Documentation Agent (except to the extent that any such amendment, waiver or other modification thereto would be prohibited by the terms of this Indenture, unless otherwise agreed to by the holders of at least a majority in aggregate principal amount at maturity of the Securities at the time outstanding). 9 "Custodian" means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law. "Default" means any event that is, or after notice or lapse of time or both would become, an Event of Default. "Designated Senior Indebtedness" of the Company means: (1) so long as outstanding, Bank Indebtedness; and (2) so long as outstanding, any other Senior Indebtedness which has at the time of initial issuance an aggregate outstanding principal amount in excess of $25,000,000 and which has been so designated as Designated Senior Indebtedness by the board of directors of the Company at the time of its initial issuance in a resolution delivered to the Trustee. "Designated Senior Indebtedness" of a Subsidiary Guarantor has a correlative meaning. "Digital Acquisition" means the purchase by the Company from Digital PCS of 10 MHz of F-Block Licenses for the Baton Rouge, Houma, Hammond and Lafayette, Louisiana BTAs together with related assets. "Digital PCS" means Digital PCS, L.L.C. "Disqualified Stock" of any Person means any Capital Stock of such Person which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the first anniversary of the Stated Maturity of the Securities; provided, however, that any Capital Stock that would not -------- ------- constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person to repurchase or redeem such Capital Stock upon the occurrence of an "asset sale" or "change of control" occurring prior to the first anniversary of the Stated Maturity of the Securities shall not constitute Disqualified Stock if the "asset sale" or "change of control" provisions applicable to such Capital Stock are no more favorable to the holders of such Capital Stock than the provisions of Section 4.08. "Equipment Subsidiary" means TeleCorp Equipment Leasing L.P. and/or any other Wholly Owned Subsidiary of the Company designated as an Equipment Subsidiary under the Credit Agreement. "Equity Offering" means any public or private sale of Qualified Stock made on a primary basis by the Company, including through the issuance or sale of Qualified Stock to one or more Strategic Equity Investors. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the Commission thereunder. 10 "Exchange and Registration Rights Agreement" means the Exchange and Registration Rights Agreement, to be dated the date of this Indenture, among the Company, the Subsidiary Guarantor and the Initial Purchasers. "Exchange Securities" means, collectively, debt securities of the Company that are identical in all material respects to the Securities, except for transfer restrictions relating to the Securities, issued in a like aggregate principal amount at maturity of the Securities originally issued pursuant to the Exchange and Registration Rights Agreement. "Exchange Offer" means a registered exchange offer for the Securities undertaken by the Company pursuant to the Exchange and Registration Rights Agreement. "Excluded Cash Proceeds" means the first $128,000,000 of net cash proceeds received by the Company subsequent to the date of this Indenture from capital contributions in respect of Qualified Stock of the Company or from the issue or sale (other than to a Restricted Subsidiary) of Qualified Stock of the Company. "Expiration Date" means the expiration date with respect to any Offer to Purchase. "F-Block License" means any License in the F block as set forth in parts 1 and 24 of Title 47 of the Code of Federal Regulations. "Fair Market Value" means, with respect to any asset or property, the price that could be negotiated in an arm's-length free market transaction, for cash, between a willing seller and a willing buyer, neither of which is under pressure or compulsion to complete the transaction. Unless otherwise specified in this Indenture, Fair Market Value shall be determined by the board of directors of the Company acting in good faith. "FCC" means the Federal Communications Commission, or any other similar or successor agency of the Federal government administering the Communications Act. "FCC Debt" means Indebtedness owed to the United States Treasury Department or the FCC that is incurred in connection with the acquisition of a License. "GAAP" means generally accepted accounting principles, consistently applied, as in effect from time to time in the United States of America, as set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as is approved by a significant segment of the accounting profession in the United States. "Hedging Agreement" means any interest rate, currency or commodity swap agreement, interest rate, currency or commodity future agreement, interest rate cap or collar agreement, interest rate, currency or commodity hedge agreement and any put, call or other agreement designed to protect against fluctuations in interest rates, currency exchange rates or commodity prices. 11 "Holder" or "Securityholder" means the Person in whose name a Security is registered on the registrar's books. "Incur" means, with respect to any Indebtedness or other obligation of any Person, to create, issue, incur (including by conversion, exchange or otherwise), assume, guarantee or otherwise become liable in respect of such Indebtedness or other obligation or the recording, as required pursuant to GAAP or otherwise, of any such Indebtedness or other obligation on the balance sheet of such Person (and "Incurrence," "Incurred" and "Incurring" shall have meanings correlative to the foregoing). Indebtedness of any Person or any of its Restricted Subsidiaries existing at the time such Person becomes a Restricted Subsidiary (or is merged into, or consolidates with, the Company or any Restricted Subsidiary), whether or not such Indebtedness was Incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary (or being merged into, or consolidated with, the Company or any Restricted Subsidiary), shall be deemed Incurred at the time any such Person becomes a Restricted Subsidiary or merges into, or consolidates with, the Company or any Restricted Subsidiary. "Indebtedness" means (without duplication), with respect to any Person, whether recourse is to all or a portion of the assets of such Person and whether or not contingent: (1) every obligation of such Person for money borrowed; (2) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations Incurred in connection with the acquisition of property, assets or businesses; (3) every reimbursement obligation of such Person with respect to letters of credit, bankers' acceptances or similar facilities issued for the account of such Person; (4) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business which are not overdue or which are being contested in good faith); (5) every Capital Lease Obligation of such Person; (6) every net obligation under Hedging Agreements or similar agreements of such Person; and (7) every obligation of the type referred to in clauses (1) through (6) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor, guarantor or otherwise. 12 Indebtedness shall: (1) include the liquidation preference and any mandatory redemption payment obligations in respect of any Disqualified Stock of the Company and any Restricted Subsidiary and any Preferred Stock of a Subsidiary of the Company; (2) never be calculated taking into account any cash and Cash Equivalents held by such Persons; (3) not include obligations arising from agreements of the Company or a Restricted Subsidiary to provide for indemnification, adjustment of purchase price, earn-out or other similar obligations, in each case, Incurred or assumed in connection with the disposition of any business or assets of a Restricted Subsidiary. The amount of any Indebtedness outstanding as of any date shall be: (1) the accreted value thereof, in the case of any Indebtedness issued with original issue discount; (2) the principal amount thereof, in the case of any Indebtedness other than Indebtedness issued with original issue discount; and (3) the greater of the maximum repurchase or redemption price or liquidation preference thereof, in the case of any Disqualified Stock or Preferred Stock. "Indenture" means this Indenture as amended or supplemented from time to time. "Ineligible Subsidiary" means: (1) any Special Purpose Subsidiary; (2) any Subsidiary Guarantor; (3) any Subsidiary of the Company that, directly or indirectly, owns any Capital Stock or Indebtedness of, or owns or holds any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated; and (4) any Subsidiary of the Company that, directly or indirectly, owns any Capital Stock or Indebtedness of, or owns or holds any Lien on any property of, any other Subsidiary of the Company that is not eligible to be designated as an Unrestricted Subsidiary. "Initial Purchasers" means Chase Securities Inc., BT Alex. Brown Incorporated and Lehman Brothers Inc. 13 "Investment" in any Person means any direct or indirect loan, advance, guarantee or other extension of credit or capital contribution to (by means of transfers of cash or other property to others or payments for property or services for the account or use of others or otherwise), or purchase or acquisition of Capital Stock, bonds, notes, debentures or other securities or evidence of Indebtedness issued by, any other Person. "Initial Security" or "Initial Securities" means any Security or Securities issued on the date of the Indenture. "Issue Date" means the date on which the Securities are originally issued. "Legal Holiday" means a Saturday, Sunday or other day on which banking institutions in the State of New York are authorized or required by law to close. "License" means any broadband Personal Communications Services license issued by the FCC in connection with the operation of a System. "License Subsidiary" means TeleCorp PCS, L.L.C. and THC and/or any other Wholly Owned Restricted Subsidiary of the Company designated as a License Subsidiary under the Credit Agreement. "Lien" means, with respect to any property or assets, any mortgage or deed of trust, pledge, hypothecation, assignment, security interest, lien, charge, easement (other than any easement not materially impairing usefulness or marketability), encumbrance, preference, priority or other security agreement with respect to such property or assets (including, without limitation, any conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing). "liquidated damages" means any liquidated damages payable under a Registration Agreement. "Lucent" means Lucent Technologies Inc., a Delaware corporation. "Lucent Note Purchase Agreement" means the Note Purchase Agreement dated as of May 11, 1998, between the Company and Lucent, as amended as of the date of this Indenture. "Management Stockholders" means Gerald Vento and Thomas Sullivan. "Marketing Affiliate" means any Person which engages in no activity other than the registration, holding, maintenance or protection of trademarks and the licensing thereof. "MTA" means a Major Trading Area, as defined in 47 C.F.R. (S)24.202. 14 "Net Available Proceeds" from any Asset Disposition by any Person means cash or readily marketable Cash Equivalents received (including by way of sale or discounting of a note, installment receivable or other receivable, but excluding any other consideration received in the form of assumption by the acquiror of Indebtedness or other obligations relating to such properties or assets or received in any other non-cash form) therefrom by such Person, including any cash received by way of deferred payment or upon the monetization or other disposition of any non-cash consideration (including notes or other securities) received in connection with such Asset Disposition, net of (1) all legal, title and recording tax expenses, commissions and other fees and expenses incurred and all federal, state, foreign and local taxes required to be accrued as a liability as a consequence of such Asset Disposition; (2) all payments made by such Person or any of its Restricted Subsidiaries on any Indebtedness which is secured by such assets in accordance with the terms of any Lien upon or with respect to such assets or which must by the terms of such Lien, or in order to obtain a necessary consent to such Asset Disposition or by applicable law, be repaid out of the proceeds from such Asset Disposition; (3) all payments made with respect to liabilities associated with the assets which are the subject of the Asset Disposition, including, without limitation, trade payables and other accrued liabilities; (4) appropriate amounts to be provided by such Person or any Restricted Subsidiary thereof, as the case may be, as a reserve in accordance with GAAP against any liabilities associated with such assets and retained by such Person or any Restricted Subsidiary thereof, as the case may be, after such Asset Disposition, including, without limitation, liabilities under any indemnification obligations and severance and other employee termination costs associated with such Asset Disposition, until such time as such amounts are no longer reserved or such reserve is no longer necessary (at which time any remaining amounts will become Net Available Proceeds to be allocated in accordance with the provisions of clause (a)(3) of Section 4.06); and (5) all distributions and other payments made to minority interest holders in Restricted Subsidiaries of such Person or joint ventures as a result of such Asset Disposition. "Net Investment" means the excess of: (1) the aggregate amount of all Investments made in any Unrestricted Subsidiary or joint venture by the Company or any Restricted Subsidiary on or after the date of this Indenture (in the case of an Investment made other than in cash, the amount shall be the Fair Market Value of such Investment as determined in good faith by the Board of the Company or such Restricted Subsidiary); over (2) the aggregate amount returned in cash on or with respect to such Investments whether through interest payments, principal payments, dividends or other distributions 15 or payments; provided, however, that such payments or distributions shall -------- ------- not be (and have not been) included in clause (C) of the paragraph (a) of Section 4.04; provided further that, with respect to all Investments made -------- ------- in any Unrestricted Subsidiary or joint venture, the amounts referred to in clause (1) above with respect to such Investments shall not exceed the aggregate amount of all such Investments made in such Unrestricted Subsidiary or joint venture. "Offer" means any written offer sent by the Company that is the subject of an Offer to Purchase. "Offer to Purchase" means an Offer sent by first class mail, postage prepaid, to each holder of Securities at such holder's address appearing in the register for the Securities on the date of the Offer offering to purchase up to (a) the Accreted Value of Securities, if such Offer is on or prior to April 15, 2004, or (b) the principal amount at maturity of the Securities, if such Offer is after April 15, 2004, specified in such Offer at the purchase price specified in such Offer (as determined pursuant to this Indenture). Unless otherwise required by applicable law, the Offer shall specify an Expiration Date of the Offer to Purchase which shall be not less than 30 days nor more than 60 days after the date of such Offer and a Purchase Date for purchase of Securities within five Business Days after the Expiration Date. The Company shall notify the Trustee at least 15 Business Days (or such shorter period as is acceptable to the Trustee) prior to the mailing of the Offer of the Company's obligation to make an Offer to Purchase, and the Offer shall be mailed by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. The Offer shall contain all the information required by applicable law to be included therein. The Offer shall contain all instructions and materials necessary to enable holders of Securities to tender their Securities pursuant to the Offer to Purchase. The Offer shall also state: (1) the provision of this Indenture pursuant to which the Offer to Purchase is being made; (2) the Expiration Date and the Purchase Date; (3) the Purchase Amount; (4) the Purchase Price; (5) that such holder may tender all or any portion of the Securities registered in the name of such holder and that any portion of a Security tendered must be tendered in an integral multiple of $1,000 of principal amount at maturity; (6) the place or places where Securities are to be surrendered for tender pursuant to the Offer to Purchase; (7) that interest on any Security not tendered or tendered but not purchased by the Company pursuant to the Offer to Purchase will continue to accrue; 16 (8) that on the Purchase Date the Purchase Price will become due and payable upon each Security being accepted for payment pursuant to the Offer to Purchase and that interest thereon shall cease to accrue on and after the Purchase Date; (9) that each holder electing to tender all or any portion of a Security pursuant to the Offer to Purchase shall be required to surrender such Security at the place or places specified in the Offer prior to the close of business on the Expiration Date (such Security being, if the Company or the Trustee so requires, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the holder thereof or such holder's attorney duly authorized in writing); (10) that holders will be entitled to withdraw all or any portion of Securities tendered if the Company (or its paying agent) receives, not later than the close of business on the fifth Business Day next preceding the Expiration Date, a telegram, telex, facsimile transmission or letter setting forth the name of the holder, the principal amount at maturity of the Security the holder tendered, the certificate number of the Security the holder tendered and a statement that such holder is withdrawing all or a portion of such holder's tender; (11) that (a) if Securities in an aggregate principal amount at maturity less than or equal to the Purchase Amount are duly tendered and not withdrawn pursuant to the Offer to Purchase, the Company shall purchase all such Securities and (b) if Securities in an aggregate principal amount at maturity in excess of the Purchase Amount are tendered and not withdrawn pursuant to the Offer to Purchase, the Company shall purchase Securities having an aggregate principal amount at maturity equal to the Purchase Amount on a pro rata basis (with such adjustments as may be deemed --- ---- appropriate so that only Securities in denominations of $1,000 of principal amount at maturity or integral multiples thereof shall be purchased); and (12) that in the case of any holder whose Security is purchased only in part, the Company shall execute and the Trustee shall authenticate and deliver to the holder of such Security without service charge, a new Security or Securities, of any authorized denomination as requested by such holder, in an aggregate principal amount at maturity equal to and in exchange for the unpurchased portion of the Security so tendered. An Offer to Purchase shall be governed by and effected in accordance with the provisions above pertaining to any Offer. "Officer" means the Chief Executive Officer, the Executive Vice President, the Chief Financial Officer, the Chief Operating Officer, the President, any Vice President, the Treasurer or any Secretary of the Company or a Subsidiary of the Company, as the case may be. "Officers' Certificate" means a certificate signed by two Officers (other than both the Treasurer and the Secretary) and delivered to the Trustee. 17 "Opinion of Counsel" means a written opinion delivered to the Trustee from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee. "Permitted Asset Swap" means any exchange of assets by the Company or a Restricted Subsidiary where the Company and/or its Restricted Subsidiaries receive consideration at least 75% of which consists of (1) cash, (2) assets that are used or useful in a Permitted Business or (3) any combination thereof. "Permitted Business" means: (1) the delivery or distribution of telecommunications, voice, data or video services; (2) any business or activity reasonably related or ancillary thereto, including, without limitation, any business conducted by the Company or any Restricted Subsidiary on the date of this Indenture and the acquisition, holding or exploitation of any license relating to the delivery of the services described in clause (1) above; or (3) any other business or activity in which the Company (and the Restricted Subsidiaries) are expressly contemplated to be engaged pursuant to the provisions of the certificate of incorporation and by-laws of the Company as in effect on the date of this Indenture. "Permitted Holder" means: (1) each of AT&T Wireless, TWR Cellular, the Cash Equity Investors, the Management Stockholders, Digital PCS, Wireless 2000 and any of their respective Affiliates and the respective successors (by merger, consolidation, transfer or otherwise) to all or substantially all of the respective businesses and assets of any of the foregoing; and (2) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) controlled by one or more persons identified in clause (1) above. "Permitted Investments" means: (1) Investments in Cash Equivalents; (2) Investments representing Capital Stock or obligations issued to the Company or any Restricted Subsidiary in the course of the good faith settlement of claims against any other Person or by reason of a composition or readjustment of debt or a reorganization of any debtor of the Company or any Restricted Subsidiary; (3) deposits including interest-bearing deposits, maintained in the ordinary course of business in banks; 18 (4) any Investment in any Person; provided, however, that, after -------- ------- giving effect to such Investment, such Person is or becomes a Restricted Subsidiary or such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary; (5) trade receivables and prepaid expenses, in each case arising in the ordinary course of business; provided, however, that such receivables -------- ------- and prepaid expenses would be recorded as assets of such Person in accordance with GAAP; (6) endorsements for collection or deposit in the ordinary course of business by such Person of bank drafts and similar negotiable instruments of such other Person received as payment for ordinary course of business trade receivables; (7) any interest rate agreements with an unaffiliated Person otherwise permitted by clause (5) or (6) of paragraph (a) of Section 4.03; (8) Investments received as consideration for an Asset Disposition in compliance with the provisions of this Indenture described under Section 4.06; (9) loans or advances to employees of the Company or any Restricted Subsidiary in the ordinary course of business in an aggregate amount not to exceed $5,000,000 in the aggregate at any one time outstanding; (10) any Investment acquired by the Company or any of its Restricted Subsidiaries as a result of a foreclosure by the Company or any of its Restricted Subsidiaries or in connection with the settlement of any outstanding Indebtedness or trade payable; (11) loans and advances to officers, directors and employees for business-related travel expense, moving expense and other similar expenses, each incurred in the ordinary course of business; and (12) other Investments (with each such Investment being valued as of the date made and without giving effect to subsequent changes in value) in an aggregate amount not to exceed $7,500,000 at any one time outstanding. "Person" means any individual, corporation, limited or general partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Plan of Liquidation" means, with respect to any Person, a plan (including by operation of law) that provides for, contemplates, or the effectuation of which is preceded or accompanied by (whether or not substantially contemporaneously): (1) the sale, lease, conveyance or other disposition of all or substantially all of the assets of such Person; and 19 (2) the distribution of all or substantially all of the proceeds of such sale, lease, conveyance or other disposition and all or substantially all of the remaining assets of such Person to holders of Capital Stock of such Person. "Preferred Stock," as applied to the Capital Stock of any Person, means Capital Stock of such Person of any class or classes (however designated) that ranks prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to shares of Capital Stock of any other class of such Person. "principal" of a Security means the principal of the Security plus the premium, if any, payable on the Security which is due or overdue or is to become due at the relevant time. "Private Exchange Securities" means, collectively, debt securities of the Company that are identical in all material respects to the Exchange Securities, except for transfer restrictions relating to such Private Exchange Securities, issued by the Company (under the same indenture as the Exchange Securities) simultaneously with the delivery of the Exchange Securities in the Exchange Offer to any Securityholder that holds any Securities acquired by it that have, or that are reasonably likely to be determined to have, the status of an unsold allotment in an initial distribution, or to any Securityholder that is not entitled to participate in the Exchange Offer, upon the request of any such holder, in exchange for a like aggregate principal amount at maturity of Securities held by such holder. "Public Sale" means any underwritten public offering, made on a primary basis pursuant to a registration statement filed with, and declared effective by, the Commission in accordance with the Securities Act. "Puerto Rico Acquisition" means the merger of Puerto Rico Acquisition Corp. into the Company and the purchase by the Company from AT&T Wireless of 20 MHz of A-Block Licenses covering the San Juan MTA together with related assets. "Purchase Amount" means the aggregate principal amount at maturity of the outstanding Securities offered to be purchased by the Company pursuant to any Offer to Purchase (including, if less than 100%, the manner by which such amount has been determined pursuant to a specified provision of this Indenture requiring such Offer to Purchase). "Purchase Date" means the settlement date with respect to any Offer to Purchase. "Purchase Amount" means, with respect to any Offer to Purchase, the purchase price to be paid by the Company for each $1,000 aggregate principal amount at maturity of Securities accepted for payment (as specified pursuant to this Indenture). "Qualified License" means, as of the date of determination, any License covering or adjacent to any geographical area in respect of which the Company or any Restricted Subsidiary owns, as of the Business Day immediately prior to such date of determination, at least one other License covering a substantial portion of such area. 20 "Qualified Stock" means any Capital Stock of the Company other than Disqualified Stock. "Real Property Subsidiary" means TeleCorp Realty L.L.C., Puerto Rico Acquisition Corp. and/or any other Wholly Owned Subsidiary of the Company designated by the Company as a Real Property Subsidiary under the Credit Agreement. "Refinance" means refinance, renew, extend, replace or refund; and "Refinancing" and "Refinanced" have correlative meanings. "Refinancing Indebtedness" means Indebtedness that is Incurred to refund, refinance, replace, renew, repay or extend (including pursuant to any defeasance or discharge mechanism) any Indebtedness of the Company or any Restricted Subsidiary existing on the date of this Indenture or Incurred in compliance with this Indenture (including Indebtedness of the Company that Refinances Refinancing Indebtedness); provided, however, that: -------- ------- (1) the Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being Refinanced; (2) the Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being refinanced; (3) such Refinancing Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less than the aggregate principal amount (or if issued with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being Refinanced plus the amount of any premium required to be paid in connection with such Refinancing pursuant to the terms of the Indebtedness being Refinanced or the amount of any premium reasonably determined by the issuer of such Indebtedness as necessary to accomplish such Refinancing by means of a tender offer, exchange offer or privately negotiated repurchase, plus the expenses of such issuer reasonably incurred in connection therewith; and (4) if the Indebtedness being Refinanced is pari passu with the ---- ----- Securities, such Refinancing Indebtedness is made pari passu with, or ---- ----- subordinate in right of payment to, the Securities, and, if the Indebtedness being Refinanced is subordinate in right of payment to the Securities, such Refinancing Indebtedness is subordinate in right of payment to the Securities on terms no less favorable to the holders of Securities than those contained in the Indebtedness being Refinanced; provided further, however, that Refinancing Indebtedness shall not include - -------- ------- ------- (A) Indebtedness of a Restricted Subsidiary that Refinances Indebtedness of the Company; or 21 (B) Indebtedness of the Company or a Restricted Subsidiary that Refinances Indebtedness of an Unrestricted Subsidiary. "Representative" means the trustee, agent or representative (if any) for an issue of Senior Indebtedness. "Restricted Subsidiary" means any Subsidiary of the Company other than an Unrestricted Subsidiary. "Sale/Leaseback Transaction" means an arrangement relating to property owned on the date of this Indenture or thereafter acquired by the Company or a Restricted Subsidiary whereby the Company or a Restricted Subsidiary transfers such property to a Person and the Company or such Restricted Subsidiary leases it from such Person, other than leases between the Company and a Wholly Owned Subsidiary or between Wholly Owned Subsidiaries. "Secured Indebtedness" means any Indebtedness of the Company secured by a Lien. "Secured Indebtedness" of the Subsidiary Guarantor has a correlative meaning. "Securities Act" means the Securities Act of 1933, as amended. "Securities Purchase Agreement" means the Securities Purchase Agreement dated January 23, 1998, among AT&T Wireless, TWR Cellular, the stockholders of THC, the Cash Equity Investors, the Management Stockholders and the Company, as such agreement may be amended from time to time in accordance with the provisions of such agreement, so long as the terms of any such amendment are no less favorable to the Securityholders than the terms of the Securities Purchase Agreement in effect on the date of this Indenture. "Security" or "Securities" means any Security or Securities issued under this Indenture, including any Initial Security or Initial Securities or any Exchange Security or Exchange Securities or any Private Exchange Security or Private Exchange Securities issued in exchange therefor in connection with an Exchange Offer undertaken pursuant to the Exchange and Registration Rights Agreement. "Securityholder" or "Holder" means the Person in whose name a Security is registered on the registrar's books. "Senior Indebtedness" of the Company means the principal of, premium (if any) and accrued and unpaid interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization of the Company, regardless of whether or not a claim for post-filing interest is allowed in such proceedings) on, and fees and other amounts owing in respect of Bank Indebtedness and all other Indebtedness of the Company, including FCC Debt, whether outstanding on the date of this Indenture or thereafter Incurred, unless in the instrument creating or evidencing the same or pursuant to which the same is outstanding it is provided that such obligations are not superior in right of payment to the Securities; provided, however, that Senior Indebtedness shall not -------- ------- include: (1) any obligation of the Company to any Subsidiary of the Company; 22 (2) any liability for federal, state, local or other taxes owed or owing by the Company; (3) any accounts payable or other liability to trade creditors arising in the ordinary course of business (including guarantees thereof or instruments evidencing such liabilities); (4) any Indebtedness or obligation of the Company, and any accrued and unpaid interest in respect thereof, that by its terms is subordinate or junior in any respect to any other Indebtedness or obligation of the Company, including any Senior Subordinated Indebtedness of the Company and any Subordinated Indebtedness of the Company; (5) any obligations with respect to any Capital Stock; or (6) any Indebtedness Incurred in violation of this Indenture. "Senior Indebtedness" of any Subsidiary Guarantor has a correlative meaning. "Senior Subordinated Indebtedness" of the Company means the Securities and any other Indebtedness of the Company that specifically provides that such Indebtedness is to rank pari passu with the Securities in right of payment and ---- ----- is not subordinated by its terms in right of payment to any Indebtedness or other obligation of the Company which is not Senior Indebtedness. "Senior Subordinated Indebtedness" of a Subsidiary Guarantor has a correlative meaning. "Series A Notes" means the Series A Notes of the Company purchased by Lucent pursuant to the Lucent Note Purchase Agreement. "Significant Subsidiary" means any Restricted Subsidiary that would be a "Significant Subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the Commission. "Special Purpose Subsidiary" means any Equipment Subsidiary, License Subsidiary or Real Property Subsidiary. "Stated Maturity" means, with respect to any security, the date specified in such security as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency beyond the control of the issuer unless such contingency has occurred). "Stockholders' Agreement" means the Stockholders' Agreement dated as of July 17, 1998, among AT&T Wireless, TWR Cellular, the Cash Equity Investors, the Management Stockholders and the Company, as such agreement may be amended from time to time in accordance with the provisions of such agreement, so long as the terms of any such 23 amendment are no less favorable to the Securityholders than the terms of the Stockholders' Agreement in effect on the date of this Indenture. "Strategic Equity Investor" means any of the Cash Equity Investors, any Affiliate thereof, any other Person engaged in a Permitted Business whose Total Equity Market Capitalization exceeds $500,000,000 or any other Person who has at least $100,000,000 total funds under management and who has issued an irrevocable, unconditional commitment to purchase Qualified Stock of the Company for an aggregate purchase price that does not exceed 20% of the value of the funds under management by such Person. "Subordinated Indebtedness" means any Indebtedness of the Company or any Subsidiary Guarantor (whether outstanding on the date of this Indenture or thereafter Incurred) which is by its terms expressly subordinate or junior in right of payment to the Securities or the Subsidiary Guarantee of such Subsidiary Guarantor, as the case may be. "Subsidiary" of any Person means: (1) a corporation more than 50% of the outstanding Voting Stock of which is owned, directly or indirectly, by such Person or by one or more other Subsidiaries of such Person or by such Person and one or more other Subsidiaries thereof; or (2) any other Person (other than a corporation) in which such Person, or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, has at least a majority ownership and voting power relating to the policies, management and affairs thereof. "Subsidiary Guarantee" means each guarantee of the obligations with respect to the Securities issued by a Subsidiary of the Company pursuant to the terms of this Indenture, each such Subsidiary Guarantee having subordination provisions equivalent to those contained in this Indenture with respect to the Securities and being substantially in the form prescribed in this Indenture. "Subsidiary Guarantor" means any Subsidiary of the Company that has issued a Subsidiary Guarantee. "System" means, as to any Person, assets constituting a radio communications system authorized under the rules for wireless communications services (including any license and the network, marketing, distribution, sales, customer interface and operations and functions relating thereof) owned and operated by such Person. "THC" means TeleCorp Holding Corp., Inc., a Delaware corporation and a Wholly Owned Subsidiary. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa- ------ 77bbbb) as in effect on the date of this Indenture. 24 "Total Consolidated Indebtedness" means, at any date of determination, an amount equal to: (1) the accreted value of all Indebtedness, in the case of any Indebtedness issued with original issue discount; plus (2) the principal amount of all Indebtedness, in the case of any other Indebtedness, of the Company and its Restricted Subsidiaries outstanding as of the date of determination; provided, however, that no amount owing by the Company or any of -------- ------- its Restricted Subsidiaries in respect of any Series A Notes outstanding as of the date of determination shall be included in the determination of Total Consolidated Indebtedness. "Total Equity Market Capitalization" of any Person means, as of any day of determination, the sum of (a) the product of (1) the aggregate number of outstanding primary shares of common stock of such Person on such day (which shall not include any options or warrants on, or securities convertible or exchangeable into, shares of common stock of such Person) multiplied by (2) the average closing price of such common stock listed on a national securities exchange or the Nasdaq National Market System over the 20 consecutive Business Days immediately preceding such day plus (b) the liquidation value of any outstanding shares of preferred stock of such Person on such day. "Total Invested Capital" means, as of any date of determination, the sum of, without duplication: (1) the total amount of equity contributed to the Company as of the date of this Indenture (as set forth on the December 31, 1998 consolidated balance sheet of the Company); plus (2) irrevocable, unconditional commitments from any Strategic Equity Investor to purchase Capital Stock of the Company (other than Disqualified Stock) within 36 months of the date of issuance of such commitment, but in any event not later than the Stated Maturity of the Securities; provided, -------- however, that such commitments shall exclude commitments related to any ------- Investment in any Person incorporated, formed or created for the purpose of acquiring one or more Qualified Licenses unless such Person shall become a Restricted Subsidiary; plus (3) the aggregate net cash proceeds received by the Company from capital contributions or the issuance or sale of Capital Stock of the Company (other than Disqualified Stock, but including Qualified Stock issued upon the conversion of convertible Indebtedness or upon the exercise of options, warrants or rights to purchase Qualified Stock) subsequent to the date of this Indenture, other than issuances or sales of Capital Stock to a Restricted Subsidiary and other than capital contributions from, or issuances or sales of Capital Stock to, any Strategic Equity Investor in connection with (a) any Investment in any Person incorporated, formed or created for the purpose of acquiring one or more Qualified Licenses and (b) any Investment in any Person engaged 25 in a Permitted Business, unless, in either case, such Person shall become a Restricted Subsidiary; provided, however, such aggregate net cash proceeds -------- ------- shall exclude any amounts included as commitments to purchase Capital Stock in the preceding clause (2); plus (4) the Fair Market Value of assets that are used or useful in a Permitted Business or of the Capital Stock of a Person engaged in a Permitted Business received by the Company as a capital contribution or in exchange for Capital Stock of the Company (other than Disqualified Stock) subsequent to the date of this Indenture, other than (x) capital contributions from a Restricted Subsidiary or issuance or sales of Capital Stock of the Company to a Restricted Subsidiary or (y) the proceeds from the sale of Qualified Stock to an employee stock ownership plan or other trust established by the Company or any of its subsidiaries; plus (5) the aggregate net cash proceeds received by the Company or any Restricted Subsidiary from the sale, disposition or repayment of any Investment made after the date of this Indenture and constituting a Restricted Payment in an amount equal to the lesser of (a) the return of capital with respect to such Investment and (b) the initial amount of such Investment, in either case, less the cost of the disposition of such Investment; plus (6) an amount equal to the consolidated Net Investment of the Company and/or any of its Restricted Subsidiaries in any Subsidiary that has been designated as an Unrestricted Subsidiary after the date of this Indenture upon its redesignation as a Restricted Subsidiary in accordance with Section 4.13; plus (7) cash proceeds from the sale to Lucent of the Series A Notes (less payments made by the Company or any of its Subsidiaries with respect to Series A Notes (other than payments of additional Series A Notes)); plus (8) Total Consolidated Indebtedness; minus (9) the aggregate amount of all Restricted Payments (including any Designation Amount, but other than a Restricted Payment of the type referred to in clause (3)(b) of paragraph (c) of Section 4.04) declared or made on or after the date of this Indenture. "Trustee" means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor. "Trust Officer" means any officer within the Corporate Trust Office including any Vice President, Managing Director, Assistant Vice President, Secretary, Assistant Secretary, Treasurer or Assistant Treasurer or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer's knowledge and familiarity with the particular subject. "TWR Cellular" means TWR Cellular, Inc., a Delaware corporation, and an Affiliate of AT&T Wireless. 26 "Uniform Commercial Code" means the New York Uniform Commercial Code as in effect from time to time. "Unrestricted Subsidiary" means (1) any Subsidiary of the Company (other than an Ineligible Subsidiary) designated after the date of this Indenture as such pursuant to, and in compliance with, Section 4.13 and (2) any Marketing Affiliate. Any such designation of any Subsidiary of the Company may be revoked by a resolution of the board of directors of the Company delivered to the Trustee certifying compliance with Section 4.13, subject to the provisions of Section 4.13. "U.S. Government Obligations" means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable or redeemable at the issuer's option. "Vendor Credit Arrangement" means any Indebtedness (including, without limitation, Indebtedness under any credit facility entered into with any vendor or supplier or any financial institution acting on behalf of such vendor or supplier); provided that the net proceeds of such Indebtedness are utilized -------- solely for the purpose of financing the cost (including, without limitation, the cost of design, development, site acquisition, construction, integration, handset manufacture or acquisition or microwave relocation) of assets used or usable in a Permitted Business (including, without limitation, through the acquisition of Capital Stock of an entity engaged in a Permitted Business). "Voting Stock" of any Person means the Capital Stock of such Person which ordinarily has voting power for the election of directors (or Persons performing similar functions) of such Person, whether at all times or only so long as no senior class of securities has such voting power by reason of any contingency. "Wholly Owned Subsidiary" means a Restricted Subsidiary, all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by the Company and/or by one or more Wholly Owned Subsidiaries. "Wireless 2000" means Wireless 2000, Inc. "Wireless 2000 Acquisition" means the purchase by the Company from Wireless 2000 of 15 MHz of C-Block Licenses for the Monroe, Alexandria and Lake Charles Louisiana BTAs. 27 SECTION 1.02. Other Definitions. ------------------
Defined in Term Section ---- ----------------- "Blockage Notice"............................................. 10.03 "Change of Control Offer"..................................... 4.04(b) "covenant defeasance option".................................. 8.01(b) "cross acceleration provision"................................ 6.01 "Designation Amount".......................................... 4.13 "Event of Default"............................................ 6.01 "Guaranteed Obligations"...................................... 11.01 "judgment default provision".................................. 6.01 "legal defeasance option"..................................... 8.01(b) "Notice of Default"........................................... 6.01 "pay its guarantee"........................................... 12.03 "pay the Securities".......................................... 10.03 "Paying Agent"................................................ 2.03 "Payment Blockage Period"..................................... 10.03 "protected purchaser"......................................... 2.07 "Registrar"................................................... 2.03 "Revocation".................................................. 4.13 "Surviving Entity"............................................ 5.01(a)
SECTION 1.03. Incorporation by Reference of Trust Indenture Act. -------------------------------------------------- This Indenture is subject to the mandatory provisions of the TIA, which are incorporated by reference in and made a part of this Indenture. The following TIA terms have the following meanings: "indenture securities" means the Securities and the Subsidiary Guarantees. "indenture security holder" means a Holder or Securityholder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. "obligor" on the indenture securities means the Company, the Subsidiary Guarantors and any other obligor on the indenture securities. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions. 28 SECTION 1.04. Rules of Construction. Unless the context otherwise ---------------------- requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) "including" means including without limitation; (5) words in the singular include the plural and words in the plural include the singular; (6) unsecured Indebtedness shall not be deemed to be subordinate or junior to Secured Indebtedness merely by virtue of its nature as unsecured Indebtedness; (7) the principal amount of any noninterest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated such date prepared in accordance with GAAP; (8) the principal amount of any Preferred Stock shall be (i) the maximum liquidation value of such Preferred Stock or (ii) the maximum mandatory redemption or mandatory repurchase price with respect to such Preferred Stock, whichever is greater. ARTICLE 2 The Securities -------------- SECTION 2.01. Form and Dating. Provisions relating to the Initial ---------------- Securities, the Private Exchange Securities and the Exchange Securities are set forth in the Appendix, which is hereby incorporated in and expressly made a part of this Indenture. The (i) Initial Securities and the Trustee's certificate of authentication and (ii) Private Exchange Securities and the Trustee's certificate of authentication shall each be substantially in the form of Exhibit A hereto, which is hereby incorporated in and expressly made a part of this Indenture. The Exchange Securities and the Trustee's certificate of authentication shall each be substantially in the form of Exhibit B hereto, which is hereby incorporated in and expressly made a part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company or any Subsidiary Guarantor is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Company). Each Security shall be dated the date of its authentication. The Securities shall be issuable only in registered form without interest coupons and only in denominations of $1,000 of principal amount at maturity and integral multiples thereof. SECTION 2.02. Execution and Authentication. One or more Officers ----------------------------- shall sign the Securities for the Company by manual or facsimile signature. 29 If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenticates the Security, the Security shall be valid nevertheless. A Security shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Security. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture. The Trustee shall authenticate and make available for delivery Securities for original issue in an aggregate principal amount at maturity of $575,000,000 and otherwise as set forth in the Appendix. The Trustee may appoint an authenticating agent reasonably acceptable to the Company to authenticate the Securities. Any such appointment shall be evidenced by an instrument signed by a Trust Officer, a copy of which shall be furnished to the Company. Unless limited by the terms of such appointment, an authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as any Registrar, Paying Agent or agent for service of notices and demands. SECTION 2.03. Registrar and Paying Agent. The Company shall maintain --------------------------- an office or agency where Securities may be presented for registration of transfer or for exchange (the "Registrar") and an office or agency where Securities may be presented for payment (the "Paying Agent"). The Registrar shall keep a register of the Securities and of their transfer and exchange. The Company may have one or more co-registrars and one or more additional paying agents. The term "Paying Agent" includes any additional paying agent, and the term "Registrar" includes any co-registrars. The Company initially appoints the Trustee as (i) Registrar and Paying Agent in connection with the Securities and (ii) the Securities Custodian (as defined in the Appendix) with respect to the Global Securities (as defined in the Appendix). The Company shall enter into an appropriate agency agreement with any Registrar or Paying Agent not a party to this Indenture, which shall incorporate the terms of the TIA. Any such agreement shall implement the provisions of this Indenture that relate to such agent. The Company shall notify the Trustee of the name and address of any such agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.07. The Company or any of its domestically organized Wholly Owned Subsidiaries may act as Registrar or Paying Agent. The Company may remove any Registrar or Paying Agent upon written notice to such Registrar or Paying Agent and to the Trustee; provided, however, -------- ------- that no such removal shall become effective until (1) acceptance of an appointment by a successor as evidenced by an appropriate agreement entered into by the Company and such successor Registrar or Paying Agent, as the case may be, and delivered to the Trustee or (2) notification to the Trustee that the Company or the Trustee shall serve as Registrar or Paying Agent until the appointment of a successor in accordance with clause (1) above. The Registrar or Paying Agent may resign at any time upon written notice; provided, however, that the Trustee -------- ------- may resign as Registrar or Paying Agent only if the Trustee also resigns as Trustee in accordance with Section 7.08. 30 SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to each due ----------------------------------- date of the principal and interest on any Security, the Company shall deposit with the Paying Agent (or if the Company or a Subsidiary is acting as Paying Agent, segregate and hold in trust for the benefit of the Persons entitled thereto) a sum sufficient to pay such principal and interest then so becoming due. The Company shall require each Paying Agent (other than the Company or the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Securityholders or the Trustee all money held by the Paying Agent for the payment of principal of or interest on the Securities and shall notify the Trustee of any default by the Company in making any such payment. If the Company or a Subsidiary of the Company acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by the Paying Agent. Upon complying with this Section, the Paying Agent shall have no further liability for the money delivered to the Trustee. SECTION 2.05. Securityholder Lists. The Trustee shall preserve in as -------------------- current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders. If the Trustee is not the Registrar, the Company shall furnish, or cause the Registrar to furnish, to the Trustee, in writing at least five Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders. SECTION 2.06. Transfer and Exchange. The Securities shall be issued --------------------- in registered form and shall be transferable only upon the surrender of a Security for registration of transfer and in compliance with the Appendix. When a Security is presented to the Registrar with a request to register a transfer, the Registrar shall register the transfer as requested if the requirements of Section 8-401(a)(l) of the Uniform Commercial Code are met. When Securities are presented to the Registrar with a request to exchange them for an equal principal amount at maturity of Securities of other denominations, the Registrar shall make the exchange as requested if the same requirements are met. To permit registration of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Securities (in the form of Exhibit A or Exhibit B, as appropriate) at the Registrar's request. The Company may require payment of a sum sufficient to pay all taxes, assessments or other governmental charges in connection with any transfer or exchange pursuant to this Section 2.06. The Company shall not be required to make and the Registrar need not register transfers or exchanges of Securities selected for redemption (except, in the case of Securities to be redeemed in part, the portion thereof not to be redeemed) or any Securities for a period of 15 days before a selection of Securities to be redeemed. Prior to the due presentation for registration of transfer of any Security, the Company, any Subsidiary Guarantor, the Trustee, the Paying Agent and the Registrar may deem and treat the Person in whose name a Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of and interest, if any, on such Security and for all other purposes whatsoever, whether or not such Security is overdue, and none of the Company, any Subsidiary Guarantor, the Trustee, the Paying Agent, or the Registrar shall be affected by notice to the contrary. 31 Any Holder of a Global Security shall, by acceptance of such Global Security, agree that transfers of beneficial interest in such Global Security may be effected only through a book-entry system maintained by (i) the Holder of such Global Security (or its agent) or (ii) any Holder of a beneficial interest in such Global Security, and that ownership of a beneficial interest in such Global Security shall be required to be reflected in a book entry. All Securities issued upon any transfer or exchange pursuant to the terms of this Indenture will evidence the same debt and will be entitled to the same benefits under this Indenture as the Securities surrendered upon such transfer or exchange. SECTION 2.07. Replacement Securities. If a mutilated Security is ---------------------- surrendered to the Registrar or if the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Security if the requirements of Section 8-405 of the Uniform Commercial Code are met, such that the Holder (i) satisfies the Company and the Trustee within a reasonable time after such Holder has notice of such loss, destruction or wrongful taking and the Registrar does not register a transfer prior to receiving such notification, (ii) makes such request to the Company or the Trustee prior to the Security being acquired by a protected purchaser as defined in Section 8-303 of the Uniform Commercial Code (a "protected purchaser") and (iii) satisfies any other reasonable requirements of the Trustee. If required by the Company or the Trustee, such Holder shall furnish an indemnity bond sufficient in the judgment of the Company and the Trustee to protect the Company, the Trustee, the Paying Agent and the Registrar from any loss that any of them may suffer if a Security is replaced. The Company and the Trustee may charge the Holder for their expenses in replacing a Security. In the event any such mutilated, lost, destroyed or wrongfully taken Security has become or is about to become due and payable, the Company in its discretion may pay such Security instead of issuing a new Security in replacement thereof. Every replacement Security is an additional obligation of the Company. The provisions of this Section 2.07 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, lost, destroyed or wrongfully taken Securities. SECTION 2.08. Outstanding Securities. Securities outstanding at any ---------------------- time are all Securities authenticated by the Trustee except for those canceled by it, those delivered to it for cancelation and those described in this Section 2.08 as not outstanding. Subject to Section 13.06, a Security does not cease to be outstanding because the Company or an Affiliate of the Company holds the Security. If a Security is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Trustee and the Company receive proof satisfactory to them that the replaced Security is held by a protected purchaser. If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a redemption date or maturity date money sufficient to pay all principal and interest and liquidated damages payable on that date with respect to the Securities (or portions 32 thereof) to be redeemed or maturing, as the case may be, and the Paying Agent is not prohibited from paying such money to the Securityholders on that date pursuant to the terms of this Indenture, then on and after that date such Securities (or portions thereof) cease to be outstanding and interest on them ceases to accrue. SECTION 2.09. Temporary Securities. In the event that Definitive -------------------- Securities (as defined in the Appendix) are to be issued under the terms of this Indenture, until such Definitive Securities are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially in the form of Definitive Securities but may have variations that the Company considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate Definitive Securities and deliver them in exchange for temporary Securities upon surrender of such temporary Securities at the office or agency of the Company, without charge to the Holder. SECTION 2.10. Cancelation. The Company at any time may deliver ----------- Securities to the Trustee for cancelation. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Securities surrendered for registration of transfer, exchange, payment or cancelation and deliver canceled Securities to the Company pursuant to written direction by an Officer. The Company may not issue new Securities to replace Securities it has redeemed, paid or delivered to the Trustee for cancelation. The Trustee shall not authenticate Securities in place of canceled Securities other than pursuant to the terms of this Indenture. SECTION 2.11. Defaulted Interest. If the Company defaults in a ------------------ payment of interest on the Securities, the Company shall pay the defaulted interest (plus interest on such defaulted interest to the extent lawful) in any lawful manner. The Company may pay the defaulted interest to the Persons who are Securityholders on a subsequent special record date. The Company shall fix or cause to be fixed any such special record date and payment date to the reasonable satisfaction of the Trustee and shall promptly mail or cause to be mailed to each Securityholder a notice that states the special record date, the payment date and the amount of defaulted interest to be paid. SECTION 2.12. CUSIP Numbers. The Company in issuing the Securities ------------- may use CUSIP numbers (if then generally in use) and, if so, the Trustee shall use CUSIP numbers in notices of redemption solely as a convenience to Holders; provided, however, that any such notice may state that (i) none of the Company, - -------- ------- any Subsidiary Guarantor, the Trustee or the Paying Agent shall be responsible for selection or use of such CUSIP numbers, (ii) no representation is made as to the correctness of such CUSIP numbers either as printed on the Securities or as contained in any notice of a redemption and (iii) reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. 33 ARTICLE 3 Redemption ---------- SECTION 3.01. Notices to Trustee. If the Company elects to redeem ------------------ Securities pursuant to paragraph 5 of the Securities, it shall notify the Trustee in writing of the redemption date and the principal amount at maturity of Securities to be redeemed. The Company shall give each notice to the Trustee provided for in this Section 3.01 at least 60 days before the redemption date unless the Trustee consents to a shorter period. Such notice shall be accompanied by an Officers' Certificate (which Officers' Certificate shall comply with the requirements of Section 13.04(1) and 13.05) and an Opinion of Counsel (which Opinion of Counsel shall comply with the requirements of Section 13.04(2) and 13.05) from the Company to the effect that such redemption will comply with the conditions herein. If fewer than all the Securities are to be redeemed, the record date relating to such redemption shall be selected by the Company and given to the Trustee, which record date shall be not fewer than 15 days after the date of notice to the Trustee. Any such notice may be canceled at any time prior to notice of such redemption being mailed to any Holder and shall thereby be void and of no effect. SECTION 3.02. Selection of Securities To Be Redeemed. If fewer than -------------------------------------- all the Securities are to be redeemed, the Trustee shall select the Securities to be redeemed pro rata or by lot or by a method that complies with applicable --- ---- legal and securities exchange requirements, if any, and that the Trustee in its sole discretion shall deem to be fair and appropriate and in accordance with methods generally used at the time of selection by fiduciaries in similar circumstances. The Trustee shall make the selection from outstanding Securities not previously called for redemption. The Trustee may select for redemption portions of the principal amount at maturity of Securities that have denominations larger than $1,000. Securities and portions thereof the Trustee selects shall be in amounts of $1,000 of principal amount at maturity or a whole multiple of $1,000 thereof. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. The Trustee shall notify the Company promptly of the Securities or portions of Securities to be redeemed. SECTION 3.03. Notice of Redemption. At least 30 days but not more -------------------- than 60 days before a date for redemption of Securities, the Company shall mail a notice of redemption by first-class mail to each Holder of Securities to be redeemed at such Holder's registered address. The notice shall identify the Securities to be redeemed and shall state: (1) the redemption date; (2) the redemption price and the amount of accrued interest to the redemption date; (3) the name and address of the Paying Agent; 34 (4) that Securities called for redemption must be surrendered to the Paying Agent to collect the redemption price; (5) if fewer than all the outstanding Securities are to be redeemed, the certificate numbers of certificated securities and principal amounts at maturity of the particular Securities to be redeemed; (6) that, unless the Company defaults in making such redemption payment or the Paying Agent is prohibited from making such payment pursuant to the terms of this Indenture, interest on Securities (or portion thereof) called for redemption ceases to accrue on and after the redemption date; (7) the CUSIP number, if any, printed on the Securities being redeemed; and (8) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Securities. At the Company's written request, the Trustee shall give the notice of redemption in the Company's name and at the Company's expense. In such event, the Company shall provide the Trustee with the information required by this Section. SECTION 3.04. Effect of Notice of Redemption. Once notice of ------------------------------ redemption is mailed, Securities called for redemption become due and payable on the redemption date and at the redemption price stated in the notice. Upon surrender to the Paying Agent, such Securities shall be paid at the redemption price stated in the notice, plus accrued interest and liquidated damages, if any, to the redemption date; provided, however, that if the redemption date is -------- ------- after a regular record date and on or prior to the interest payment date, the accrued interest shall be payable to the Securityholder of the redeemed Securities registered on the relevant record date. Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder. SECTION 3.05. Deposit of Redemption Price. Prior to 10:00 a.m. on --------------------------- the redemption date, the Company shall deposit with the Paying Agent (or, if the Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust) money sufficient to pay the redemption price of and accrued interest and liquidated damages (if any) on all Securities to be redeemed on that date other than Securities or portions of Securities called for redemption that have been delivered by the Company to the Trustee for cancelation. On and after the redemption date, interest will cease to accrue on Securities or portions thereof called for redemption so long as the Company has deposited with the Paying Agent funds sufficient to pay the principal of, plus accrued and unpaid interest and liquidated damages (if any) on, the Securities to be redeemed. SECTION 3.06. Securities Redeemed in Part. Upon surrender of a --------------------------- Security that is redeemed in part, the Company shall execute and the Trustee shall authenticate for the Holder (at the Company's expense) a new Security equal in principal amount at maturity to the unredeemed portion of the Security surrendered. 35 ARTICLE 4 Covenants --------- SECTION 4.01. Payment of Securities. The Company shall promptly pay --------------------- the principal of and interest on the Securities on the dates and in the manner provided in the Securities and in this Indenture. Principal and interest shall be considered paid on the date due if on such date the Trustee or the Paying Agent holds in accordance with this Indenture money sufficient to pay all principal and interest then due and the Trustee or the Paying Agent, as the case may be, is not prohibited from paying such money to the Securityholders on that date pursuant to the terms of this Indenture. The Company shall pay interest on overdue principal at the rate specified therefor in the Securities, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. SECTION 4.02. Provision of Financial Information. (a) Whether or ---------------------------------- not required by the rules and regulations of the Commission, so long as any Securities are outstanding, the Company shall furnish to the holders of Securities: (1) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such forms, including a section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries and, with respect to annual information only, a report thereon by the Company's certified independent accountants; and (2) all current reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports, in each case within the time period specified in the Commission's rules and regulations; provided that no such information or reports shall be required to be furnished - -------- prior to the date on which the exchange offer registration statement is required by the terms of the Exchange and Registration Rights Agreement to be filed with the Commission. (b) Following the consummation of the Exchange Offer contemplated by the Exchange and Registration Rights Agreement, whether or not required by the rules and regulations of the Commission, the Company shall file a copy of all such information and reports with the Commission for public availability within the time periods specified in the Commission's rules and regulations (unless the Commission will not accept such a filing) and make such information available to prospective investors upon request. In addition, the Company shall, for so long as any Securities remain outstanding, furnish to the holders of Securities, upon request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. The Company shall also comply with Section 314(a) of the TIA. 36 SECTION 4.03. Limitation on Incurrence of Indebtedness. (a) The ----------------------------------------- Company shall not, and shall not cause or permit any Restricted Subsidiary to, directly or indirectly, Incur any Indebtedness (including Acquired Indebtedness), except: (1) Indebtedness of the Company or any Subsidiary Guarantor if, immediately after giving effect to the Incurrence of such Indebtedness and the receipt and application of the net proceeds therefrom (including, without limitation, the application or use of the net proceeds therefrom to repay Indebtedness, consummate an Asset Acquisition or make any Restricted Payment): (a) the ratio of (x) Total Consolidated Indebtedness to (y) Annualized Pro Forma Consolidated Operating Cash Flow would be less than: 7.0 to 1.0, if the Indebtedness is to be Incurred prior to April 1, 2005; or 6.0 to 1.0 if the Indebtedness is to be Incurred on or after April 1, 2005; or (b) in the case of any Incurrence of Indebtedness prior to April 1, 2005 only, Total Consolidated Indebtedness would be equal to or less than 75% of Total Invested Capital; (2) Bank Indebtedness of the Company and its Restricted Subsidiaries in an aggregate principal amount not to exceed $600,000,000; (3) Indebtedness of the Company and its Restricted Subsidiaries outstanding from time to time pursuant to any Vendor Credit Arrangement; (4) Indebtedness owed by the Company to any Restricted Subsidiary or Indebtedness owed by a Restricted Subsidiary to the Company or another Restricted Subsidiary; provided, however, that, upon either (a) the -------- ------- transfer or other disposition by such Restricted Subsidiary or the Company of any Indebtedness so permitted under this clause (4) to a Person other than the Company or another Restricted Subsidiary or (b) the issuance (other than of directors' qualifying shares), sale, transfer or other disposition of shares of Capital Stock or other ownership interests (including by consolidation or merger) of such Restricted Subsidiary to a Person other than the Company or another such Restricted Subsidiary, the exception provided by this clause (4) shall no longer be applicable to such Indebtedness and such Indebtedness shall be deemed to have been Incurred at the time of any such issuance, sale, transfer or other disposition, as the case may be; (5) Indebtedness of the Company or any Restricted Subsidiary under any Hedging Agreement to the extent entered into to protect the Company or such Restricted Subsidiary from fluctuations in interest rates on any other Indebtedness permitted under this Indenture (including the Securities), currency exchange rates or commodity prices and not for speculative purposes; (6) Refinancing Indebtedness Incurred to Refinance any Indebtedness Incurred under the prior clause (1) or (3) above, the Securities or the Subsidiary Guarantees; 37 (7) Indebtedness of the Company under the Securities and Indebtedness of the Subsidiary Guarantors under the Subsidiary Guarantees, in each case Incurred in accordance with this Indenture; (8) Capital Lease Obligations of the Company or any Restricted Subsidiary in an aggregate principal amount not in excess of $25,000,000 at any time outstanding; (9) FCC Debt assumed in connection with the Digital Acquisition or the Wireless 2000 Acquisition; (10) Indebtedness of the Company or any Restricted Subsidiary consisting of a guarantee of Indebtedness of the Company or a Restricted Subsidiary that was permitted to be Incurred by another provision of this Section 4.03; (11) Indebtedness of the Company or any Restricted Subsidiary in respect of statutory obligations, performance, surety or appeal bonds or other obligations of a like nature Incurred in the ordinary course of business; (12) Indebtedness of a Restricted Subsidiary existing at the time such Restricted Subsidiary was acquired by the Company (other than Indebtedness Incurred in connection with, or in contemplation of, the transaction or series of related transactions pursuant to which such Restricted Subsidiary was acquired by the Company); provided, however, that on the date such -------- ------- Restricted Subsidiary is acquired by the Company, the Company would have been able to Incur $1.00 of additional Indebtedness pursuant to clause (1) above after giving effect to the Incurrence of such Indebtedness pursuant to this clause (12) and the acquisition of such Restricted Subsidiary and Refinancing Indebtedness Incurred by the Company or such Restricted Subsidiary in respect of Indebtedness Incurred by such Restricted Subsidiary pursuant to this clause (12); and (13) Indebtedness of the Company not otherwise permitted to be Incurred pursuant to clauses (1) through (12) above which, together with any other outstanding Indebtedness Incurred pursuant to this clause (13), has an aggregate principal amount not in excess of $75,000,000 at any time outstanding. (b) Indebtedness of a Person existing at the time such Person becomes a Restricted Subsidiary or which is secured by a Lien on an asset acquired by the Company or a Restricted Subsidiary (whether or not such Indebtedness is assumed by the acquiring person) shall be deemed Incurred at the time the Person becomes a Restricted Subsidiary or at the time of the asset acquisition, as the case may be. (c) For purposes of determining compliance with this Section 4.03: (1) in the event that an item of Indebtedness meets the criteria of more than one of the categories of Indebtedness permitted pursuant to clauses (1) through (13) above, the Company shall, in its sole discretion, be permitted to classify such item of Indebtedness in any manner that complies with this Section 4.03 and may from time to time reclassify such items of Indebtedness in any manner that would comply with this Section 4.03 at the time of such reclassification; 38 (2) Indebtedness permitted by this Section 4.03 need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such provision and in part by one or more other provisions of this Section 4.03 permitting such Indebtedness; (3) in the event that Indebtedness meets the criteria of more than one of the types of Indebtedness described in this Section 4.03, the Company, in its sole discretion, shall classify such Indebtedness and only be required to include the amount of such Indebtedness in one of such clauses; and (4) accrual of interest (including interest paid-in-kind) and the accretion of accreted value shall not be deemed to be an Incurrence of Indebtedness for purposes of this Section 4.03. (d) Notwithstanding any other provision of this Section 4.03: (1) the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may Incur pursuant to this Section 4.03 shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rates of currencies; and (2) Indebtedness Incurred pursuant to the Credit Agreement prior to or on the date of this Indenture shall be treated as Incurred pursuant to clause (2) of paragraph (a) of this Section 4.03. SECTION 4.04. Limitation on Restricted Payments. (a) The Company --------------------------------- shall not, and shall not cause or permit any Restricted Subsidiary to, directly or indirectly, on or prior to December 31, 2002: (1) declare or pay any dividend, or make any distribution of any kind or character (whether in cash, property or securities), in respect of any class of Capital Stock of the Company, excluding any dividends or distributions payable solely in shares of Qualified Stock of the Company or in options, warrants or other rights to acquire Qualified Stock of the Company; (2) purchase, redeem or otherwise acquire or retire for value any shares of Capital Stock of the Company, any options, warrants or rights to purchase or acquire such shares or any securities convertible or exchangeable into such shares (other than any such shares of Capital Stock, options, warrants, rights or securities that are owned by the Company or a Restricted Subsidiary); (3) make any Investment (other than a Permitted Investment) in any Person other than the Company or a Restricted Subsidiary; or (4) redeem, defease, repurchase, retire or otherwise acquire or retire for value, prior to its scheduled maturity, repayment or any sinking fund payment, Subordinated Indebtedness or make any payment of interest or premium on, or distribution of any kind 39 or character (whether in cash, property or securities) in respect of, the Series A Notes, excluding payments of interest or distributions payable solely in additional Series A Notes, each of the transactions described in clauses (1) through (4) (other than any exception to any such clause) being a "Restricted Payment"; and at any time after December 31, 2002, the Company shall not, and shall not cause or permit any Restricted Subsidiary to, directly or indirectly, make a Restricted Payment if, at the time thereof: (A) a Default or an Event of Default shall have occurred and be continuing at the time of or after giving effect to such Restricted Payment; (B) immediately after giving effect to such Restricted Payment, the Company could not Incur at least $1.00 of additional Indebtedness pursuant to clause (1) of Section 4.03; and (C) immediately upon giving effect to such Restricted Payment, the aggregate amount of all Restricted Payments declared or made on or after the date of this Indenture (including any Designation Amount) exceeds the sum (without duplication) of: (1) the amount of (x) the Consolidated Cash Flow of the Company after December 31, 2002, through the end of the latest full fiscal quarter for which consolidated financial statements of the Company are available preceding the date of such Restricted Payment (treated as a single accounting period), less (y) 150% of the cumulative Consolidated Interest Expense of the Company after December 31, 2002, through the end of the latest full fiscal quarter for which consolidated financial statements of the Company are available preceding the date of such Restricted Payment (treated as a single accounting period); plus (2) the aggregate net cash proceeds (other than Excluded Cash Proceeds) received by the Company as a capital contribution in respect of Qualified Stock or from the proceeds of a sale of Qualified Stock made after the date of this Indenture (excluding in each case (x) the proceeds from a sale of Qualified Stock to a Restricted Subsidiary and (y) the proceeds from a sale of Qualified Stock to an employee stock ownership plan or other trust established by the Company or any of its Subsidiaries); plus (3) the aggregate net cash proceeds received by the Company or any Restricted Subsidiary from the sale, disposition or repayment (other than to the Company or a Restricted Subsidiary) of any Investment made after the date of this Indenture and constituting a Restricted Payment in an amount equal to the lesser of (x) the return of capital with respect to such Investment and (y) the initial amount of such Investment, in either case, less the cost of disposition of such Investment; plus (4) an amount equal to the consolidated Net Investment on the date of Revocation made by the Company and/or any Restricted Subsidiary in any 40 Subsidiary of the Company that has been designated as an Unrestricted Subsidiary after the date of this Indenture upon its redesignation as a Restricted Subsidiary in accordance with Section 4.13. (b) For purposes of: (1) the preceding clause (a)(C)(2), the value of the aggregate net cash proceeds received by the Company from, or as a capital contribution in connection with, the issuance of Qualified Stock either upon the conversion of convertible Indebtedness of the Company or any of its Restricted Subsidiaries or in exchange for outstanding Indebtedness of the Company or any of its Restricted Subsidiaries or upon the exercise of options, warrants or rights shall be the net cash proceeds received by the Company or any Restricted Subsidiary upon the issuance of such Indebtedness, options, warrants or rights plus the incremental amount received by the Company or any Restricted Subsidiary upon the conversion, exchange or exercise thereof; (2) the preceding clause (a)(C)(4), the value of the consolidated Net Investment on the date of Revocation shall be equal to the Fair Market Value of the aggregate amount of the Company's and/or any Restricted Subsidiary's Investments in such Subsidiary of the Company on the applicable date of Designation; and (3) determining the amount expended for Restricted Payments, cash distributed shall be valued at the face amount thereof and property other than cash shall be valued at its Fair Market Value on the date such Restricted Payment is made by the Company or a Restricted Subsidiary, as the case may be. (c) The provisions of this Section 4.04 shall not prohibit: (1) the payment of any dividend or distribution within 60 days after the date of declaration thereof, if at such date of declaration such payment would comply with the provisions of this Indenture; (2) so long as no Default or Event of Default shall have occurred and be continuing, the purchase, redemption, retirement or other acquisition of any Capital Stock of the Company out of the net cash proceeds of the substantially concurrent capital contribution to the Company in connection with Qualified Stock or out of the net cash proceeds received by the Company from the substantially concurrent issue or sale (other than to a Restricted Subsidiary or to an employee stock ownership plan or other trust established by the Company or any of its Subsidiaries) of Qualified Stock; provided that (a) any such net cash proceeds shall be excluded from clause -------- (a)(C)(2) and (b) such proceeds do not constitute Excluded Cash Proceeds; (3) so long as no Default or Event of Default shall have occurred and be continuing, the purchase, redemption, retirement, defeasance or other acquisition of Subordinated Indebtedness of the Company made by exchange for or conversion into, or out of the net cash proceeds received by the Company, or out of a capital contribution to the Company in connection with a concurrent issue and sale (other than to a Restricted 41 Subsidiary) of, (a) Qualified Stock (provided that (x) any such net cash proceeds are excluded from clause (a)(C)(2), (y) such proceeds do not constitute Excluded Cash Proceeds and (z) such proceeds, if from a sale other than a Public Sale, are not applied to optionally redeem Securities on or prior to April 15 , 2002) or (b) other Subordinated Indebtedness of the Company that has an Average Life equal to or greater than the Average Life of the Subordinated Indebtedness being purchased, redeemed, retired, defeased or otherwise acquired and that is subordinated in right of payment to the Securities at least to the same extent as the Subordinated Indebtedness being purchased, redeemed, retired, defeased or otherwise acquired; (4) so long as no Default or Event of Default shall have occurred and be continuing, the making of a direct or indirect Investment constituting a Restricted Payment in an amount not to exceed the amount of the proceeds of a concurrent capital contribution in respect of Qualified Stock or from the issue or sale (other than to a Restricted Subsidiary) of Qualified Stock of the Company; provided that (a) any such net cash proceeds are excluded from -------- clause (a)(C)(2), (b) such proceeds do not constitute Excluded Cash Proceeds and (c) such proceeds, if from a sale other than a Public Sale, are not applied to optionally redeem Securities on or prior to April 15, 2002; (5) so long as no Default or Event of Default shall have occurred and be continuing and so long as, immediately after giving effect to such Investment, the Company could Incur at least $1.00 of additional Indebtedness pursuant to clause (1) of Section 4.03, the making by the Company of a direct or indirect Investment constituting a Restricted Payment in any Person incorporated, formed or created for the purpose of acquiring one or more Qualified Licenses through participation in any auction or reauction of Licenses conducted by the FCC, in an amount not to exceed $50,000,000 at any time outstanding; provided that (a) such Person -------- shall qualify as an "entrepreneur" under the Communications Act in the case of any proposed acquisition of Qualified Licenses through participation in any auction or reauction of C-Block Licenses or F-Block Licenses conducted by the FCC, and (b) the Company shall have received, prior to making such Investment, from one or more Strategic Equity Investors, irrevocable, unconditional commitments to purchase Qualified Stock of the Company, (i) at the earliest to occur of (A) the date that is 30 days after the date on which such Person acquires any such Qualified Licenses, (B) the date that is 30 days after the date on which such Person withdraws from such auction or reauction, (C) the date that is 30 days after the date the FCC terminates such auction or reauction and (D) the date that is 180 days after the date on which any amounts were deposited by or on behalf of such Person in escrow with the FCC in connection with such proposed acquisition of Qualified Licenses, and (ii) in an amount not less than the amount of such Investment (plus the amount of all fees, expenses and other costs incurred in connection with such participation); provided further that if -------- ------- at any time the aggregate net cash proceeds paid to the Company by such Strategic Equity Investors shall exceed the amount of such Investment plus all fees, expenses and other costs incurred in connection with such participation (a) such commitments may terminate in accordance with their terms to the extent, but only to the extent, of such excess and (b) the Company may rescind all or a portion of the payments made by the Strategic Equity Investors for such Qualified Stock and redeem all or a portion of such Qualified Stock in an amount not greater than such 42 excess; provided further that (x) the aggregate net proceeds received by --------------- the Company upon the purchase by such Strategic Equity Investors of such Qualified Stock are excluded from clause (a)(C)(2) unless such Person becomes a Restricted Subsidiary or is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all its assets to, or is liquidated into the Company or a Restricted Subsidiary, (y) such proceeds shall not constitute Excluded Cash Proceeds and (z) such proceeds are not applied to optionally redeem the Securities prior to April 15, 2002; (6) so long as no Default or Event of Default shall have occurred and be continuing and so long as, immediately after giving effect to such Investment, the Company could Incur at least $1.00 of additional Indebtedness pursuant to clause (1) of Section 4.03, the making by the Company of a direct or indirect Investment constituting a Restricted Payment in any Person engaged in a Permitted Business in an amount not to exceed $60,000,000 at any time outstanding; provided that the Company shall -------- have received, prior to making such Investment, from one or more Strategic Equity Investors, aggregate net cash proceeds from capital contributions or the issuance or sale of Capital Stock of the Company (other than Disqualified Stock, but including Qualified Stock issued upon the conversion of convertible Indebtedness or upon the exercise of options, warrants or rights to purchase Qualified Stock) in an amount equal to the amount of such Investment plus the amount of all fees, expenses and other costs incurred in connection with such Investment (regardless of whether or not such Investment is consummated); provided further that (x) the proceeds -------- ------- received by the Company as capital contributions from, or the purchase of Capital Stock of the Company by, such Strategic Equity Investors are excluded from clause (a)(C)(2) unless such Person becomes a Restricted Subsidiary or is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all its assets to, or is liquidated into the Company or a Restricted Subsidiary, (y) such proceeds shall not constitute Excluded Cash Proceeds and (z) such proceeds are not applied to optionally redeem the Securities prior to April 15, 2002; or (7) so long as no Default or Event of Default has occurred and is continuing, the repurchase, redemption, acquisition or retirement for value of any Capital Stock of the Company held by any member of management of the Company or any of its Subsidiaries pursuant to any management equity subscription agreement, stock option agreement, restricted stock agreement or other similar agreement; provided that (a) the aggregate amount of such -------- dividends or distributions shall not exceed $4,000,000 in any twelve-month period, (b) any unused amount in any twelve-month period may be carried forward to one or more future twelve-month periods and (c) the aggregate of all unused amounts that may be carried forward to any future twelve-month period shall not exceed $16,000,000. (d) Restricted Payments made pursuant to clauses (1) and (7) of paragraph (c) shall be included in making the determination of available amounts under clause (C) of paragraph (a), Restricted Payments made pursuant to clauses (5) and (6) of paragraph (c) shall be included in making the determination of available amounts under clause (C) of paragraph (a) unless, after giving effect to such Investment, such Person becomes a Restricted Subsidiary or is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all its assets to, or is liquidated into, the Company or a Restricted Subsidiary and Restricted Payments 43 made pursuant to clauses (2), (3) and (4) of paragraph (c) shall not be included in making the determination of available amounts under clause (C) of paragraph (a). SECTION 4.05. Limitation on Restrictions Affecting Restricted ----------------------------------------------- Subsidiaries. The Company shall not, and shall not cause or permit any - ------------- Restricted Subsidiary to, directly or indirectly, create or otherwise cause or suffer to exist any consensual encumbrances or restrictions of any kind on the ability of any Restricted Subsidiary to: (1) pay, directly or indirectly, dividends, in cash or otherwise, or make any other distributions in respect of its Capital Stock or pay any Indebtedness or other obligation owed to the Company or any other Restricted Subsidiary; (2) make any Investment in the Company or any other Restricted Subsidiary; or (3) transfer any of its property or assets to the Company or any other Restricted Subsidiary, except for such encumbrances or restrictions existing under or by reason of: (A) any agreement in effect on the date of this Indenture as any such agreement is in effect on such date; (B) any agreement relating to any Indebtedness Incurred by such Restricted Subsidiary prior to the date on which such Restricted Subsidiary was acquired by the Company and outstanding on such date and not Incurred in anticipation or contemplation of becoming a Restricted Subsidiary; provided, however, that such encumbrance or restriction shall not apply to -------- ------- any property or assets of the Company or any Restricted Subsidiary other than such Restricted Subsidiary; (C) customary provisions contained in an agreement which has been entered into for the sale or disposition of all or substantially all of the Capital Stock or assets of a Restricted Subsidiary; provided, however, that such encumbrance or restriction is applicable only -------- ------- to such Restricted Subsidiary or its property and assets; (D) any agreement effecting a Refinancing or amendment of Indebtedness Incurred pursuant to any agreement referred to in clause (A) or (B) above; provided, however, that the provisions contained in such Refinancing or -------- ------- amendment agreement relating to such encumbrance or restriction are no more restrictive in any material respect than the provisions contained in the agreement that is the subject thereof in the reasonable judgment of the board of directors of the Company; (E) this Indenture; (F) applicable law or any applicable rule, regulation or order; 44 (G) customary provisions restricting subletting or assignment of any lease governing any leasehold interest of any Restricted Subsidiary; (H) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the type referred to in clause (3) of this Section 4.05; and (I) restrictions of the type referred to in clause (3) of this Section 4.05 contained in security agreements securing Indebtedness of a Restricted Subsidiary to the extent that such Liens restrict the transfer of property subject to such agreements. SECTION 4.06. Limitation on Certain Asset Dispositions. (a) The ----------------------------------------- Company shall not, and shall not cause or permit any Restricted Subsidiary to, directly or indirectly, make any Asset Disposition unless: (1) the Company or such Restricted Subsidiary, as the case may be, receives consideration for such Asset Disposition at least equal to the Fair Market Value of the assets sold or disposed of as determined by the board of directors of the Company in good faith and evidenced by a resolution of such board of directors filed with the Trustee; (2) other than in the case of a Permitted Asset Swap, not less than 75% of the consideration received by the Company or such Restricted Subsidiary from the disposition consists of: (A) cash or Cash Equivalents; (B) the assumption of Indebtedness (other than non-recourse Indebtedness or any Subordinated Indebtedness) of the Company or such Restricted Subsidiary or other obligations relating to such assets (accompanied by an irrevocable and unconditional release of the Company or such Restricted Subsidiary from all liability on the Indebtedness or other obligations assumed); or (C) notes or other obligations received by the Company or such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into cash or Cash Equivalents concurrently with the receipt of such notes or other obligations (to the extent of the cash actually received by the Company); and (3) all Net Available Proceeds, less any amounts invested within 365 days of such Asset Disposition to acquire all or substantially all of the assets of, or a majority of the Voting Stock of, an entity primarily engaged in a Permitted Business, to make a capital expenditure or to acquire other long-term assets that are used or useful in a Permitted Business, are applied, on or prior to the 365th day after such Asset Disposition, unless and to the extent that the Company shall determine to make an Offer to Purchase, to the permanent reduction and prepayment of any Senior Indebtedness of 45 the Company then outstanding (including a permanent reduction of the commitments in respect thereof). (b) Any Net Available Proceeds from any Asset Disposition which is subject to the immediately preceding sentence that are not applied as provided in the immediately preceding sentence shall be used promptly after the expiration of the 365th day after such Asset Disposition (or earlier if the Company so elects) to make an Offer to Purchase outstanding Securities at a purchase price in cash equal to (a) 100% of the Accreted Value on the Purchase Date, if such Purchase Date is on or before April 15, 2004 and (b) 100% of the principal amount at maturity plus accrued and unpaid interest to the Purchase Date, if such Purchase Date is after April 15, 2004; provided, however, that if -------- ------- the Company elects (or is required by the terms of any other Senior Subordinated Indebtedness) an offer may be made ratably to purchase the Securities and such other Senior Subordinated Indebtedness. Notwithstanding the foregoing, the Company may defer making any Offer to Purchase outstanding Securities (and any offer to purchase other Senior Subordinated Indebtedness ratably) until there are aggregate unutilized Net Available Proceeds from Asset Dispositions otherwise subject to the two immediately preceding sentences equal to or in excess of $15,000,000 (at which time the entire unutilized Net Available Proceeds from Asset Dispositions otherwise subject to the two immediately preceding sentences, and not just the amount in excess of $15,000,000, shall be applied as required pursuant to this paragraph). Any remaining Net Available Proceeds following the completion of the required Offer to Purchase (and any offer to purchase other Senior Subordinated Indebtedness ratably) may be used by the Company for any other purpose (subject to the other provisions of this Indenture), and the amount of Net Available Proceeds then required to be otherwise applied in accordance with this Section 4.06 shall be reset to zero. These provisions shall not apply to a transaction consummated in compliance with the provisions of Section 5.01. (c) Pending application as set forth above, the Net Available Proceeds of any Asset Disposition may be invested in cash or Cash Equivalents or used to reduce temporarily Indebtedness outstanding under any revolving credit agreement to which the Company is a party and pursuant to which it has Incurred Indebtedness. (d) The Company shall comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Securities pursuant to this Section 4.06. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section 4.06, the Company shall be required to comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.06 by virtue thereof. 46 SECTION 4.07. Limitation on Transactions with Affiliates. (a) The ------------------------------------------- Company shall not, and shall not cause or permit any Restricted Subsidiary to, directly or indirectly, conduct any business or enter into, renew or extend any transaction with any of their respective Affiliates, including, without limitation, the purchase, sale, lease or exchange of property, the rendering of any service or the making of any guarantee, loan, advance or Investment, either directly or indirectly, unless the terms of such transaction are at least as favorable as the terms that could be obtained at such time by the Company or such Restricted Subsidiary, as the case may be, in a comparable transaction made on an arm's-length basis with a Person that is not such an Affiliate; provided, -------- however, that: - ------- (1) in any transaction involving aggregate consideration in excess of $10,000,000, the Company shall deliver an Officers' Certificate to the Trustee stating that a majority of the disinterested directors of the board of directors of the Company or such Restricted Subsidiary, as the case may be, have determined, in their good faith judgment, that the terms of such transaction are at least as favorable as the terms that could be obtained by the Company or such Restricted Subsidiary, as the case may be, in a comparable transaction made on an arms'-length basis between unaffiliated parties; and (2) if the aggregate consideration is in excess of $25,000,000, the Company shall also deliver to the Trustee, prior to the consummation of the transaction, the favorable written opinion of a nationally recognized accounting, appraisal or investment banking firm as to the fairness of the transaction to the holders of the Securities, from a financial point of view. (b) Notwithstanding the foregoing, the restrictions set forth in this Section 4.07 shall not apply to: (1) transactions between or among the Company and/or any Restricted Subsidiaries; (2) any Restricted Payment or Permitted Investment permitted by Section 4.04; (3) directors' fees, indemnification and similar arrangements, officers' indemnification, employee stock option or employee benefit plans and employee salaries and bonuses paid or created in the ordinary course of business; (4) any other agreement in effect on the date of this Indenture, as the same shall be amended from time to time; provided that any material -------- amendment shall be required to comply with the provisions of the immediately preceding paragraph; (5) the Acquisitions; (6) transactions with AT&T or any of its Affiliates relating to the marketing or provision of telecommunication services or related hardware, software or equipment on terms that are no less favorable (when taken as a whole) to the Company or such Restricted Subsidiary, as applicable, than those available from unaffiliated third parties; 47 (7) transactions involving the leasing or sharing or other use by the Company or any Restricted Subsidiary of communications network facilities (including, without limitation, cable or fiber lines, equipment or transmission capacity) of any Affiliate of the Company (such Affiliate being a "Related Party") on terms that are no less favorable (when taken as a whole) to the Company or such Restricted Subsidiary, as applicable, than those available from such Related Party to unaffiliated third parties; (8) transactions involving the provision of telecommunication services by a Related Party in the ordinary course of its business to the Company or any Restricted Subsidiary, or by the Company or any Restricted Subsidiary to a Related Party, on terms that are no less favorable (when taken as a whole) to the Company or such Restricted Subsidiary, as applicable, than those available from such Related Party to unaffiliated third parties; (9) any sales agency agreements pursuant to which an Affiliate has the right to market any or all of the products or services of the Company or any of the Restricted Subsidiaries; (10) transactions involving the sale, transfer or other disposition of any shares of Capital Stock of any Marketing Affiliate; provided that such -------- Marketing Affiliate is not engaged in any activity other than the registration, holding, maintenance or protection of trademarks and the licensing thereof; and (11) customary commercial banking, investment banking, underwriting, placement agent or financial advisory fees paid in connection with services rendered to the Company and its subsidiaries in the ordinary course. SECTION 4.08. Change of Control. (a) Upon the occurrence of a ------------------ Change of Control, each holder of Securities shall have the right to require the Company to repurchase all or any part of such holder's Securities at a purchase price in cash equal to (a) 101% of the Accreted Value on the Purchase Date, if such date is on or before April 15, 2004, or (b) 101% of the principal amount at maturity, plus accrued and unpaid interest, if any, to the Purchase Date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if such date is after April 15, 2004. (b) Within 30 days following any Change of Control, the Company shall be required to mail a notice to each holder of Securities, with a copy to the Trustee (the "Change of Control Offer"), stating that the Company is commencing an Offer to Purchase all outstanding Securities at a purchase price in cash equal to (a) 101% of the Accreted Value on the Purchase Date, if such date is on or before April 15, 2004, or (b) 101% of the principal amount at maturity, plus accrued and unpaid interest, if any, to the Purchase Date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if such date is after April 15 , 2004. (c) The Company shall not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to 48 a Change of Control Offer made by the Company and purchases all Securities validly tendered and not withdrawn under such Change of Control Offer. (d) The Company shall be required to comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Securities pursuant to this Section 4.08. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section 4.08, the Company shall be required to comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.08 by virtue thereof. (e) In the event that, at the time of a Change of Control, the terms of the Bank Indebtedness restrict or prohibit the repurchase of Securities pursuant to this Section 4.08, then, prior to the mailing of the notice to holders of Securities as provided in the immediately following paragraph, but in any event within 30 days following any Change of Control, the Company shall be required to: (1) repay in full all Bank Indebtedness; or (2) obtain the requisite consent under the agreements governing such Bank Indebtedness to permit the repurchase of the Securities as required by this Section 4.08. SECTION 4.09. Compliance Certificate. The Company shall deliver to ----------------------- the Trustee within 120 days after the end of each fiscal year of the Company an Officers' Certificate stating that in the course of the performance by the signers of their duties as Officers of the Company they would normally have knowledge of any Default and whether or not the signers know of any Default that occurred during such period. If they do, the certificate shall describe the Default, its status and what action the Company is taking or proposes to take with respect thereto. The Company also shall comply with Section 314(a)(4) of the TIA (including the making of all representations and warranties mandated thereby). SECTION 4.10. Further Instruments and Acts. Upon request of the ----------------------------- Trustee, the Company shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture. SECTION 4.11. Future Subsidiary Guarantors. The Company shall cause ----------------------------- each Restricted Subsidiary that Incurs Indebtedness to become a Subsidiary Guarantor, and, if applicable, execute and deliver to the Trustee a supplemental indenture in the form set forth in Exhibit C pursuant to which such Restricted Subsidiary will guarantee payment of the Securities; provided that the Company -------- shall not cause any Special Purpose Subsidiary to become a Subsidiary Guarantor unless such Special Purpose Subsidiary Incurs Indebtedness other than Indebtedness in respect of the Credit Agreement (or any Refinancing Indebtedness Incurred to Refinance such Indebtedness) or FCC Debt. Each Subsidiary Guarantee will be limited to an amount not to exceed the maximum amount that can be guaranteed by that Restricted Subsidiary without rendering the Subsidiary Guarantee, as it relates to such Restricted Subsidiary, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. 49 SECTION 4.12. Limitation on Activities of the Company and the ----------------------------------------------- Restricted Subsidiaries. The Company shall not, and shall not permit any - ------------------------ Restricted Subsidiary to, engage in any business other than a Permitted Business, except to such extent as is not material to the Company and its Restricted Subsidiaries, taken as a whole. SECTION 4.13. Limitation on Designations of Unrestricted ------------------------------------------ Subsidiaries. (a) The Company may designate any Subsidiary of the Company - ------------- (other than an Ineligible Subsidiary) as an "Unrestricted Subsidiary" under this Indenture (a "Designation") only if: (1) no Default or Event of Default shall have occurred and be continuing at the time of or after giving effect to such Designation; (2) the Company would be permitted under this Indenture to make an Investment at the time of Designation (assuming the effectiveness of such Designation) in an amount (the "Designation Amount") equal to the Fair Market Value of the aggregate amount of its Investments in such Subsidiary on such date; and (3) except in the case of a Subsidiary of the Company in which an Investment is being made pursuant to, and as permitted by, paragraph (c) of Section 4.04, the Company would be permitted to Incur $1.00 of additional Indebtedness pursuant to clause (a)(1) of Section 4.03 at the time of Designation (assuming the effectiveness of such Designation). (b) In the event of any such Designation, the Company shall be deemed to have made an Investment constituting a Restricted Payment pursuant to Section 4.04 for all purposes of this Indenture in the Designation Amount. (c) The Company shall not, and shall not permit any Restricted Subsidiary to, at any time: (1) provide direct or indirect credit support for, or a guarantee of, any Indebtedness of any Unrestricted Subsidiary (including of any undertaking, agreement or instrument evidencing such Indebtedness); (2) be directly or indirectly liable for any Indebtedness of any Unrestricted Subsidiary; or (3) be directly or indirectly liable for any Indebtedness which provides that the holder thereof may (upon notice, lapse of time or both) declare a default thereon or cause the payment thereof to be accelerated or payable prior to its final scheduled maturity upon the occurrence of a default with respect to any Indebtedness of any Unrestricted Subsidiary (including any right to take enforcement action against such Unrestricted Subsidiary), except, in the case of clause (1) or (2) above, to the extent permitted under Section 4.04. 50 (d) The Company may revoke any Designation of a Subsidiary as an Unrestricted Subsidiary (a "Revocation"), whereupon such Subsidiary shall then constitute a Restricted Subsidiary, if no Default shall have occurred and be continuing at the time of and after giving effect to such Revocation. In the event of any such Revocation, the Company shall be deemed to continue to have a permanent Investment in an Unrestricted Subsidiary constituting a Restricted Payment pursuant Section 4.04 for all purposes under this Indenture in an amount (if positive) equal to: (1) the Fair Market Value of the aggregate amount of the Company's Investments in such Subsidiary at the time of such Revocation; less (2) the portion (proportionate to the Company's equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such Revocation. (e) All Designations and Revocations must be evidenced by a resolution of the board of directors of the Company delivered to the Trustee certifying compliance with the foregoing provisions. SECTION 4.14. Limitation on Layered Indebtedness. The Company shall ----------------------------------- not: (1) directly or indirectly Incur any Indebtedness that by its terms would expressly rank senior in right of payment to the Securities and rank subordinate in right of payment to any other Indebtedness of the Company; or (2) cause or permit any Subsidiary Guarantor to, and no Subsidiary Guarantor shall, directly or indirectly, Incur any Indebtedness that by its terms would expressly rank senior in right of payment to the Subsidiary Guarantee of such Subsidiary Guarantor and rank subordinate in right of payment to any other Indebtedness of such Subsidiary Guarantor; provided that no Indebtedness shall be deemed to be subordinated solely by - -------- virtue of being unsecured. SECTION 4.15. Amendments to the Securities Purchase Agreement. The ------------------------------------------------ Company shall not amend, modify or waive, or refrain from enforcing, any provision of the Securities Purchase Agreement in any manner that would cause the net cash proceeds from capital contributions or sales of Qualified Stock of the Company pursuant to the Securities Purchase Agreement to be less than $128,000,000. 51 ARTICLE 5 Successor Company ----------------- SECTION 5.01. Merger, Consolidation and Certain Sales of Assets. -------------------------------------------------- (a) The Company shall not consolidate or merge with or into any Person, or sell, assign, lease, convey or otherwise dispose of (or cause or permit any Restricted Subsidiary to consolidate or merge with or into any Person, or to sell, assign, lease, convey or otherwise dispose of) all or substantially all of the Company's assets (determined on a consolidated basis for the Company and the Restricted Subsidiaries), whether as an entirety or substantially an entirety in one transaction or a series of related transactions, including by way of liquidation or dissolution, to any Person unless, in each such case: (1) the entity formed by or surviving any such consolidation or merger (if other than the Company or such Restricted Subsidiary, as the case may be), or to which such sale, assignment, lease, conveyance or other disposition shall have been made (the "Surviving Entity"), is a corporation organized and existing under the laws of the United States, any state thereof or the District of Columbia; (2) the Surviving Entity assumes by supplemental indenture all of the obligations of the Company on the Securities and under this Indenture; (3) immediately after giving effect to such transaction and the use of any net proceeds therefrom on a pro forma basis, the Company or the Surviving Entity, as the case may be, could Incur at least $1.00 of Indebtedness pursuant to clause (1) of Section 4.03; (4) immediately after giving effect to such transaction and treating any Indebtedness which becomes an obligation of the Company or any of its Restricted Subsidiaries as a result of such transactions as having been Incurred by the Company or such Restricted Subsidiary, as the case may be, at the time of the transaction, no Default or Event of Default shall have occurred and be continuing; (5) the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such merger, consolidation or sale of assets and such supplemental indenture, if any, comply with this Indenture; and (6) the Company delivers to the Trustee an Opinion of Counsel to the effect that holders of Securities will not recognize income, gain or loss for federal income tax purposes as a result of such merger, consolidation or sale of assets and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such merger, sale or consolidation had not occurred. The provisions of this paragraph (a) shall not apply to any merger of a Restricted Subsidiary with or into the Company or a Wholly Owned Subsidiary or the release of any Subsidiary Guarantor in accordance with the terms of its Subsidiary Guarantee and this Indenture in connection with any transaction complying with the provisions of Section 4.06. 52 (b) The Company shall not permit any Subsidiary Guarantor to consolidate or merge with or into any Person, or sell, assign, lease, convey or otherwise dispose of all or substantially all of such Subsidiary Guarantor's assets, whether as an entirety or substantially an entirety in one transaction or a series of related transactions, including by way of liquidation or dissolution, to any Person unless, in each such case: (1) the entity formed by or surviving any such consolidation or merger (if other than such Subsidiary Guarantor), or to which such sale, assignment, lease, conveyance or other disposition shall have been made, is a corporation organized and existing under the laws of the United States, any state thereof or the District of Columbia; (2) such corporation assumes by supplemental indenture all of the obligations of the Subsidiary Guarantor, if any, under its Subsidiary Guarantee; (3) immediately after giving effect to such transaction and treating any Indebtedness which becomes an obligation of such Subsidiary Guarantor as a result of such transactions as having been Incurred by such Subsidiary Guarantor at the time of the transaction, no Default or Event of Default shall have occurred and be continuing; and (4) the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such merger, consolidation or sale of assets and such supplemental indenture, if any, comply with this Indenture. ARTICLE 6 Defaults and Remedies --------------------- SECTION 6.01. Events of Default. An Event of Default occurs under ------------------ this Indenture if: (1) the Company defaults in any payment of interest on any Security when due and payable, whether or not such payment shall be prohibited by Article 10, continued for 30 days; (2) the Company defaults in the payment of the Accreted Value or principal of any Security when due and payable at its Stated Maturity, upon required redemption or repurchase, upon declaration or otherwise, whether or not such payment shall be prohibited by Article 10; (3) the Company fails to comply with its obligations under Section 5.01; (4) the Company fails to comply for 30 days after notice with any of its obligations under Section 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.11, 4.12, 4.13, 4.14 or 53 4.15 (in each case, other than a failure to purchase Securities when required under Section 4.06 or 4.08); (5) the Company fails to comply for 60 days after notice with its other agreements contained in this Indenture or the Securities (other than those referred to in clause (1), (2), (3) or (4) above; (6) the Company or any Significant Subsidiary fails to pay any Indebtedness within any applicable grace period after final maturity or the acceleration of any such Indebtedness by the holders thereof because of a default if the total amount of such Indebtedness unpaid or accelerated exceeds $15,000,000 or its foreign currency equivalent (the "cross acceleration provision") and such failure continues for 10 days after receipt of the notice specified below; (7) the Company or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law: (A) commences a voluntary case; (B) consents to the entry of an order for relief against it in an involuntary case; (C) consents to the appointment of a Custodian of it or for any substantial part of its property; or (D) makes a general assignment for the benefit of its creditors or takes any comparable action under any foreign laws relating to insolvency; (8) a court of competent jurisdiction renders a final judgment or decree (not subject to appeal) for the payment of money in excess of $15,000,000 or its foreign currency equivalent at the time it is entered against the Company or a Significant Subsidiary and such judgment or decree is not discharged, waived or stayed if: (A) an enforcement proceeding thereon is commenced by any creditor; or (B) such judgment or decree remains outstanding for a period of 60 days following such judgment and is not discharged, waived or stayed (the "judgment default provision"); or (9) any Subsidiary Guarantee ceases to be in full force and effect (except as contemplated by the terms thereof) or any Subsidiary Guarantor or Person acting by or on behalf of such Subsidiary Guarantor denies or disaffirms such Subsidiary Guarantor's obligations under this Indenture or any Subsidiary Guarantee and such Default continues for 10 days after receipt of the notice specified below. The foregoing shall constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of 54 law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body. A Default under clause (4), (5) or (8) shall not constitute an Event of Default until the Trustee or the holders of at least 25% in aggregate principal amount at maturity of the outstanding Securities notify the Company of the Default and the Company does not cure such Default within the time specified in clauses (4), (5) or (8) after receipt of such notice. Such notice must specify the Default, demand that it be remedied and state that such notice is a "Notice of Default". SECTION 6.02. Acceleration. If an Event of Default (other than an ------------- Event of Default specified in clause (7) of Section 6.01 with respect to the Company) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in principal amount at maturity of the outstanding Securities by notice to the Company, may declare the principal of and accrued but unpaid interest on all the Securities to be due and payable. Upon such a declaration, such principal and interest shall be due and payable immediately. If an Event of Default specified in clause (7) of Section 6.01 with respect to the Company occurs, the principal of and interest on all the Securities shall ipso facto become and be immediately due and payable without any declaration or - ---- ----- other act on the part of the Trustee or any Securityholders. The Holders of a majority in principal amount at maturity of the Securities by notice to the Trustee may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of acceleration. No such rescission shall affect any subsequent Default or impair any right consequent thereto. SECTION 6.03. Other Remedies. If an Event of Default occurs and is --------------- continuing, the Trustee may pursue any available remedy to collect the payment of principal of or interest on the Securities or to enforce the performance of any provision of the Securities or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative. SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in ------------------------ principal amount at maturity of the Securities by notice to the Trustee may waive an existing Default and its consequences except (i) a Default in the payment of the Accreted Value of, principal amount at maturity of, or interest on a Security or (ii) a Default arising from the failure to redeem or purchase any Security when required pursuant to the terms of this Indenture or (iii) a Default in respect of a provision that under Section 9.02 cannot be amended without the consent of each Securityholder affected. When a Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or impair any consequent right. 55 SECTION 6.05. Control by Majority. The Holders of a majority in -------------------- principal amount at maturity of the Securities may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or, subject to Section 7.01, that the Trustee determines is unduly prejudicial to the rights of other Securityholders or would involve the Trustee in personal liability; provided, however, that the Trustee may take any other action deemed -------- ------- proper by the Trustee that is not inconsistent with such direction. Prior to taking any action hereunder, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. SECTION 6.06. Limitation on Suits. Except to enforce the right to -------------------- receive payment of principal, premium (if any) or interest when due, no Securityholder may pursue any remedy with respect to this Indenture or the Securities unless: (1) the Holder gives to the Trustee written notice stating that an Event of Default is continuing; (2) the Holders of at least 25% in principal amount at maturity of the Securities make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer to the Trustee security or indemnity reasonably satisfactory to the Trustee against any loss, liability or expense; (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of security or indemnity; and (5) the Holders of a majority in principal amount at maturity of the Securities do not give the Trustee a direction inconsistent with the request during such 60-day period. A Securityholder may not use this Indenture to prejudice the rights of another Securityholder or to obtain a preference or priority over another Securityholder. SECTION 6.07. Rights of Holders To Receive Payment. Notwithstanding ------------------------------------- any other provision of this Indenture, the right of any Holder to receive payment of principal of and liquidated damages and interest on the Securities held by such Holder, on or after the respective due dates expressed in the Securities, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. SECTION 6.08. Collection Suit by Trustee. If an Event of Default --------------------------- specified in clause (1) or (2) of Section 6.01 occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section 7.07. 56 SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file --------------------------------- such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Securityholders allowed in any judicial proceedings relative to the Company, any Subsidiary or Subsidiary Guarantor, their creditors or their property and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.07. SECTION 6.10. Priorities. If the Trustee collects any money or ----------- property pursuant to this Article 6, it shall pay out the money or property in the following order: FIRST: to the Trustee for amounts due under Section 7.07; SECOND: to holders of Senior Indebtedness of the Company to the extent required by Article 10; THIRD: to Securityholders for amounts due and unpaid on the Securities for principal and interest, ratably, and any liquidated damages without preference or priority of any kind, according to the amounts due and payable on the Securities for principal, any liquidated damages and interest, respectively; and FOURTH: to the Company. The Trustee may fix a record date and payment date for any payment to Securityholders pursuant to this Section. At least 15 days before such record date, the Trustee shall mail to each Securityholder and the Company a notice that states the record date, the payment date and amount to be paid. SECTION 6.11. Undertaking for Costs. In any suit for the enforcement ---------------------- of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in principal amount at maturity of the Securities. 57 SECTION 6.12. Waiver of Stay or Extension Laws. Neither the Company --------------------------------- nor any Subsidiary Guarantor (to the extent it may lawfully do so) shall at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company and each Subsidiary Guarantor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE 7 Trustee ------- SECTION 7.01. Duties of Trustee. (a) If an Event of Default has ------------------ occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person's own affairs. (b) Except during the continuance of an Event of Default: (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own wilful misconduct, except that: (1) this paragraph does not limit the effect of paragraph (b) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05. (d) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01. 58 (e) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. (f) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. (g) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (h) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 7.01 and to the provisions of the TIA. SECTION 7.02. Rights of Trustee. (a) The Trustee may conclusively ------------------ rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document believed to be genuine and to have been signed or presented by the proper party or parties. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officers' Certificate or Opinion of Counsel. (c) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through, agents, attorneys, custodians or nominees and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent, attorney, custodian or nominee appointed with due care by it hereunder. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided, however, that the Trustee's conduct does not constitute wilful -------- ------- misconduct or negligence. (e) The Trustee may consult with counsel, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Securities shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. (f) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, debenture, note or other paper or document unless requested in writing to do so by the Holders of not less than a majority in principal amount at maturity of the Securities at the time outstanding, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the 59 Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney. (g) The Trustee shall not be accountable for the use by the Company of the proceeds of the Securities. SECTION 7.03. Individual Rights of Trustee. The Trustee in its ----------------------------- individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar or co-paying agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11. SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be --------------------- responsible for and makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company's use of the proceeds from the Securities, and it shall not be responsible for any statement of the Company in this Indenture or in any document issued in connection with the sale of the Securities or in the Securities other than the Trustee's certificate of authentication. SECTION 7.05. Notice of Defaults. If a Default occurs and is ------------------- continuing and if it is actually known to a Trust Officer, the Trustee shall mail to each Securityholder notice of the Default within the earlier of 90 days after it occurs or 30 days after it actually becomes known to a Trust Officer. Except in the case of a Default in payment of principal of or interest on any Security (including payments pursuant to the mandatory redemption provisions of such Security, if any), the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is in the interests of Securityholders. SECTION 7.06. Reports by Trustee to Holders. As promptly as ------------------------------ practicable after each March 1 beginning with the March 1 following the date of this Indenture, and in any event prior to May 1 in each year, the Trustee shall mail to each Securityholder a brief report dated as of May 1 that complies with Section 313(a) of the TIA. The Trustee shall also comply with Section 313(b) of the TIA. A copy of each report at the time of its mailing to Securityholders shall be filed with the Commission and each stock exchange (if any) on which the Securities are listed. The Company agrees to notify promptly the Trustee in writing whenever the Securities become listed on any stock exchange and of any delisting thereof. SECTION 7.07. Compensation and Indemnity. The Company shall pay to --------------------------- the Trustee from time to time reasonable compensation for its services. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee's agents, counsel, accountants and experts. The Company and each Subsidiary Guarantor, jointly and severally shall indemnify the Trustee, its directors, officers, employees and agents against any and all loss, liability or expense (including reasonable attorneys' fees and 60 expenses) incurred by or in connection with the administration of this trust and the performance of its duties hereunder. The Trustee shall notify the Company of any claim for which it may seek indemnity promptly upon obtaining actual knowledge thereof; provided, however, that any failure so to notify the Company -------- ------- shall not relieve the Company or any Subsidiary Guarantor of its indemnity obligations hereunder. The Company shall defend the claim and the indemnified party shall provide reasonable cooperation at the Company's expense in the defense. Such indemnified parties may have separate counsel and the Company and the Subsidiary Guarantors, as applicable shall pay the fees and expenses of such counsel; provided, however, that the Company shall not be required to pay such -------- ------- fees and expenses if it assumes such indemnified parties' defense and, in such indemnified parties' reasonable judgment, there is no conflict of interest between the Company and the Subsidiary Guarantor, as applicable, and such parties in connection with such defense. The Company need not reimburse any expense or indemnify against any loss, liability or expense incurred by an indemnified party through such party's own wilful misconduct, negligence or bad faith. To secure the Company's payment obligations in this Section 7.07, the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee other than money or property held in trust to pay principal of and interest and any liquidated damages on particular Securities. The Company's payment obligations pursuant to this Section 7.07 shall survive the satisfaction or discharge of this Indenture, any rejection or termination of this Indenture under any Bankruptcy Law or the resignation or removal of the Trustee. When the Trustee incurs expenses after the occurrence of a Default specified in clause (7) or (8) of Section 6.01 with respect to the Company, the expenses are intended to constitute expenses of administration under the Bankruptcy Law. SECTION 7.08. Replacement of Trustee. The Trustee may resign at any ---------------------- time by so notifying the Company. The Holders of a majority in principal amount at maturity of the Securities may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee. The Company shall remove the Trustee if: (1) the Trustee fails to comply with Section 7.10; (2) the Trustee is adjudged bankrupt or insolvent; (3) a receiver or other public officer takes charge of the Trustee or its property; (4) the Trustee otherwise becomes incapable of acting; or (5) the Trustee increases its fees (exclusive of fees for extraordinary services) by more than 10% in any twelve month period. If the Trustee resigns, is removed by the Company or by the Holders of a majority in principal amount at maturity of the Securities and such Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy exists in the office of Trustee for any 61 reason (the Trustee in such event being referred to herein as the retiring Trustee), the Company shall promptly appoint a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Securityholders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.07. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of 10% in principal amount at maturity of the Securities may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with Section 7.10, any Securityholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. Notwithstanding the replacement of the Trustee pursuant to this Section, the Company's obligations under Section 7.07 shall continue for the benefit of the retiring Trustee. SECTION 7.09. Successor Trustee by Merger. If the Trustee --------------------------- consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee. In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture any of the Securities shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Securities so authenticated; and in case at that time any of the Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Securities or in this Indenture provided that the certificate of the Trustee shall have. SECTION 7.10. Eligibility; Disqualification. The Trustee shall at ----------------------------- all times satisfy the requirements of Section 310(a) of the TIA. The Trustee shall have a combined capital and surplus of at least $100,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with Section 3.01(b) of the TIA; provided, however, that there shall be -------- ------- excluded from the operation of Section 3.01(b)(1) of the TIA any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Company are outstanding if the requirements for such exclusion set forth in Section 3.01(b)(1) of the TIA are met. SECTION 7.11. Preferential Collection of Claims Against Company. The ------------------------------------------------- Trustee shall comply with Section 311(a) of the TIA, excluding any creditor relationship listed in 62 Section 311(b) of the TIA. A Trustee who has resigned or been removed shall be subject to Section 311(a) of the TIA to the extent indicated. SECTION 7.12. Trustee Acting as Paying Agent or Registrar. In the ------------------------------------------- event that the Trustee is also acting as a Paying Agent or Registrar hereunder, the rights and protections afforded to the Trustee pursuant to this Article 7 shall also be afforded to such Paying Agent or Registrar. ARTICLE 8 Discharge of Indenture; Defeasance ---------------------------------- SECTION 8.01. Discharge of Liability on Securities; Defeasance. (a) ------------------------------------------------ When (i) the Company delivers to the Trustee all outstanding Securities (other than Securities replaced pursuant to Section 2.07) for cancelation or (ii) all outstanding Securities have become due and payable, whether at maturity or as a result of the mailing of a notice of redemption pursuant to Article 3, and the Company irrevocably deposits with the Trustee funds or U.S. Government Obligations on which payment of principal and interest when due will be sufficient to pay at maturity or upon redemption all outstanding Securities, including interest thereon to maturity or such redemption date (other than Securities replaced pursuant to Section 2.07), and if in either case the Company pays all other sums payable hereunder by the Company, then this Indenture shall, subject to Section 8.01(c), cease to be of further effect. The Trustee shall acknowledge satisfaction and discharge of this Indenture on demand of the Company accompanied by an Officers' Certificate and an Opinion of Counsel and at the cost and expense of the Company. (b) Subject to Sections 8.01(c) and 8.02, the Company at any time may terminate (i) all of its obligations under the Securities and this Indenture ("legal defeasance option") or (ii) its obligations under Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14 and 4.15 and the operation of Section 5.01(a)(3), 6.01(4), 6.01(6), 6.01(7) (with respect to Significant Subsidiaries of the Company only) and 6.01(8) (with respect to Significant Subsidiaries of the Company only) ("covenant defeasance option"). The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. In the event that the Company terminates all of its obligations under the Securities and this Indenture by exercising its legal defeasance option, the obligations under the Subsidiary Guarantees shall each be terminated simultaneously with the termination of such obligations. If the Company exercises its legal defeasance option, payment of the Securities may not be accelerated because of an Event of Default. If the Company exercises its covenant defeasance option, payment of the Securities may not be accelerated because of an Event of Default specified in Section 6.01(4), 6.01(6), 6.01(7) (with respect to Significant Subsidiaries of the Company only) or 6.01(8) because of the failure of the Company to comply with clauses (3) and (4) of Section 5.01(a). Upon satisfaction of the conditions set forth herein and upon request of the Company, the Trustee shall acknowledge in writing the discharge of those obligations that the Company terminates. 63 (c) Notwithstanding clauses (a) and (b) above, the Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 7.07, 7.08 and in this Article 8 shall survive until the Securities have been paid in full. Thereafter, the Company's obligations in Sections 7.07, 8.04 and 8.05 shall survive. SECTION 8.02. Conditions to Defeasance. The Company may exercise its ------------------------ legal defeasance option or its covenant defeasance option only if: (1) the Company irrevocably deposits in trust with the Trustee money or U.S. Government Obligations for the payment of principal, premium (if any) and interest on the Securities to maturity or redemption, as the case may be; (2) the Company delivers to the Trustee a certificate from a nationally recognized firm of independent accountants expressing their opinion that the payments of principal and interest when due and without reinvestment on the deposited U.S. Government Obligations plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay principal and interest when due on all the Securities to maturity or redemption, as the case may be; (3) 123 days pass after the deposit is made and during the 123-day period no Default specified in clause (7) or (8) of Section 6.01 with respect to the Company occurs which is continuing at the end of the period; (4) the deposit does not constitute a default under any other agreement binding on the Company and is not prohibited by Article 10; (5) the Company delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940; (6) in the case of the legal defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of this Indenture there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Securityholders will not recognize income, gain or loss for Federal income tax purposes as a result of such defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred; (7) in the case of the covenant defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Securityholders will not recognize income, gain or loss for Federal income tax purposes as a result of such covenant defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; and 64 (8) the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Securities as contemplated by this Article 8 have been complied with. Before or after a deposit, the Company may make arrangements satisfactory to the Trustee for the redemption of Securities at a future date in accordance with Article 3. SECTION 8.03. Application of Trust Money. The Trustee shall hold in -------------------------- trust money or U.S. Government Obligations deposited with it pursuant to this Article 8. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Securities. Money and securities so held in trust are not subject to Article 10. SECTION 8.04. Repayment to Company. The Trustee and the Paying Agent -------------------- shall promptly turn over to the Company upon request any excess money or securities held by them at any time. Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Company upon written request any money held by them for the payment of principal or interest that remains unclaimed for two years, and, thereafter, Securityholders entitled to the money must look to the Company for payment as general creditors. SECTION 8.05. Indemnity for Government Obligations. The Company ------------------------------------ shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited U.S. Government Obligations or the principal and interest received on such U.S. Government Obligations. SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is ------------- unable to apply any money or U.S. Government Obligations in accordance with this Article 8 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to this Article 8 until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article 8; provided, however, that, if the -------- ------- Company has made any payment of interest on or principal of any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent. ARTICLE 9 Amendments ---------- SECTION 9.01. Without Consent of Holders. (a) Without the consent -------------------------- of any Holder of Securities, the Company, the Subsidiary Guarantors and the Trustee may amend this Indenture to: 65 (1) cure any ambiguity, omission, defect or inconsistency; (2) comply with Article 5; (3) provide for uncertificated Securities in addition to, or in place of, certificated Securities; provided, however, that the uncertificated -------- ------- Securities are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Code; (4) make any change in Article 10 or Article 12 that would limit or terminate the benefits available to any holder of Senior Indebtedness of the Company (or any Representative thereof) under Article 10 or Article 12; (5) add additional guarantees with respect to the Securities; (6) secure the Securities; (7) add to the covenants of the Company for the benefit of the Securityholders; (8) surrender any right or power herein conferred upon the Company; (9) make any change that does not adversely affect the rights of any Securityholder; (10) provide for the issuance of the Exchange Securities or Private Exchange Securities, subject to the provisions of this Indenture; or (11) comply with any requirement of the Commission in connection with the qualification of this Indenture under the TIA. (b) No amendment may be made under this Section 9.01, that adversely affects the rights under Article 10 or Article 12 of any holder of Senior Indebtedness of the Company then outstanding unless the holders of such Senior Indebtedness (or any group or representative thereof authorized to give a consent) consent to such change. (c) After an amendment under this Section 9.01 becomes effective, the Company shall mail to Securityholders a notice briefly describing such amendment. The failure to give such notice to all Securityholders, or any defect therein, shall not impair or affect the validity of the amendment. SECTION 9.02. With Consent of Holders. The Company, the Subsidiary ----------------------- Guarantors and the Trustee may amend this Indenture or the Securities without notice to any Securityholder but with the written consent of the Holders of a majority in aggregate principal amount at maturity of the Securities then outstanding (including consents obtained in connection with a tender offer or exchange for the Securities). However, without the consent of each Securityholder affected, an amendment may not: 66 (1) reduce the amount of Securities whose Holders must consent to an amendment; (2) reduce the rate of, or extend the time for payment of, interest or any liquidated damages on any Security; (3) reduce the principal of, or extend the Stated Maturity of, any Security; (4) reduce the premium payable upon the redemption of any Security or change the time at which any Security may be redeemed in accordance with Article 3; (5) make any Security payable in money other than that stated in the Security; (6) make any change in Article 10 or Article 12 that adversely affects the rights of any Holder of Securities under Article 10 or Article 12; (7) impair the right of any Holder of Securities to receive payment of principal of and interest or any liquidated damages on such Holder's Securities on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder's Securities; (8) make any change in the amendment provisions which require the consent of each Holder of Securities or in the waiver provisions; or (9) modify the Subsidiary Guarantees in any manner adverse to the Holders of Securities. It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof. After an amendment under this Section 9.02 becomes effective, the Company shall mail to Securityholders a notice briefly describing such amendment. The failure to give such notice to all Securityholders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.02. SECTION 9.03. Compliance with Trust Indenture Act. Every amendment ----------------------------------- to this Indenture or the Securities shall comply with the TIA as then in effect. SECTION 9.04. Revocation and Effect of Consents and Waivers. A --------------------------------------------- consent to an amendment or a waiver by a Holder of a Security shall bind the Holder and every subsequent Holder of that Security or portion of the Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent or waiver is not made on the Security. However, any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder's Security or portion of the Security if the Trustee receives the notice of revocation before the date on which the Trustee receives an Officers' Certificate from the Company certifying that 67 the requisite number of consents have been received. After an amendment or waiver becomes effective, it shall bind every Securityholder. An amendment or waiver becomes effective upon the (i) receipt by the Company or the Trustee of the requisite number of consents, (ii) satisfaction of conditions to effectiveness as set forth in this Indenture and any indenture supplemental hereto containing such amendment or waiver and (iii) execution of such amendment or waiver (or supplemental indenture) by the Company and the Trustee. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Securityholders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Securityholders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days after such record date. SECTION 9.05. Notation on or Exchange of Securities. If an amendment ------------------------------------- changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security regarding the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms. Failure to make the appropriate notation or to issue a new Security shall not affect the validity of such amendment. SECTION 9.06. Trustee To Sign Amendments. The Trustee shall sign any -------------------------- amendment authorized pursuant to this Article 9 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign it. In signing such amendment the Trustee shall be entitled to receive indemnity reasonably satisfactory to it and to receive, and (subject to Section 7.01) shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that such amendment is authorized or permitted by this Indenture and that such amendment is the legal, valid and binding obligation of the Company and the Subsidiary Guarantors enforceable against them in accordance with its terms, subject to customary exceptions, and complies with the provisions hereof (including Section 9.03). SECTION 9.07. Payment for Consent. Neither the Company nor any ------------------- Affiliate of the Company shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Securities unless such consideration is offered to be paid to all Holders that so consent, waive or agree to amend in the time frame set forth in solicitation documents relating to such consent, waiver or agreement. ARTICLE 10 Subordination ------------- 68 SECTION 10.01. Agreement To Subordinate. The Company agrees, and ------------------------ each Securityholder by accepting a Security agrees, that the Indebtedness evidenced by the Securities is subordinated in right of payment, to the extent and in the manner provided in this Article 10, to the prior payment in full of all Senior Indebtedness of the Company and that the subordination is for the benefit of and enforceable by the holders of such Senior Indebtedness. The Securities shall in all respects rank pari passu with all other Senior ---- ----- Subordinated Indebtedness of the Company and only Indebtedness of the Company that is Senior Indebtedness of the Company shall rank senior to the Securities in accordance with the provisions set forth herein. For purposes of this Article 10, the Indebtedness evidenced by the Securities shall be deemed to include the liquidated damages payable pursuant to the provisions set forth in the Securities and the Registration Agreement. All provisions of this Article 10 shall be subject to Section 10.12. SECTION 10.02. Liquidation, Dissolution, Bankruptcy. Upon any ------------------------------------ payment or distribution of the assets of the Company to creditors upon a total or partial liquidation or a total or partial dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property: (1) holders of Senior Indebtedness of the Company shall be entitled to receive payment in full of such Senior Indebtedness before Securityholders shall be entitled to receive any payment of principal of or interest on the Securities; and (2) until the Senior Indebtedness of the Company is paid in full, any payment or distribution to which Securityholders would be entitled but for this Article 10 shall be made to holders of such Senior Indebtedness as their interests may appear, except that Securityholders may receive shares of stock and any debt securities that are subordinated to such Senior Indebtedness to at least the same extent as the Securities. SECTION 10.03. Default on Senior Indebtedness. The Company may not ------------------------------ pay the principal of, premium (if any) or interest on the Securities or make any deposit pursuant to Section 8.01 and may not otherwise repurchase, redeem or otherwise retire any Securities (collectively, "pay the Securities") if (i) any Designated Senior Indebtedness of the Company is not paid when due or (ii) any other default on such Designated Senior Indebtedness occurs and the maturity of such Designated Senior Indebtedness is accelerated in accordance with its terms unless, in either case, (x) the default has been cured or waived and any such acceleration has been rescinded or (y) such Designated Senior Indebtedness has been paid in full; provided, however, that the Company may pay the Securities -------- ------- without regard to the foregoing if the Company and the Trustee receive written notice approving such payment from the Representative of such Designated Senior Indebtedness with respect to which either of the events set forth in clause (i) or (ii) of this sentence has occurred and is continuing. During the continuance of any default (other than a default described in clause (i) or (ii) of the preceding sentence) with respect to any Designated Senior Indebtedness of the Company pursuant to which the maturity thereof may be accelerated immediately without further notice (except such notice as may be required to effect such acceleration) or the expiration of any applicable grace periods, the Company may not pay the Securities for a period (a "Payment Blockage Period") commencing upon the receipt by the Trustee (with a copy to the Company) of written notice (a "Blockage Notice") of such default from the Representative of such Designated Senior Indebtedness specifying an election to effect a Payment Blockage Period and ending 179 days 69 thereafter (or earlier if such Payment Blockage Period is terminated (i) by written notice to the Trustee and the Company from the Person or Persons who gave such Blockage Notice, (ii) by repayment in full of such Designated Senior Indebtedness or (iii) because the default giving rise to such Blockage Notice is no longer continuing). Notwithstanding the provisions described in the immediately preceding sentence (but subject to the provisions contained in the first sentence of this Section 10.03), unless the holders of such Designated Senior Indebtedness or the Representative of such holders shall have accelerated the maturity of such Designated Senior Indebtedness, the Company may resume payments on the Securities after the end of such Payment Blockage Period. Not more than one Blockage Notice may be given in any consecutive 360-day period, irrespective of the number of defaults with respect to Designated Senior Indebtedness during such period; provided, however, that if any Blockage Notice -------- ------- within such 360-day period is given by or on behalf of any holders of Designated Senior Indebtedness other than the Bank Indebtedness, the Representative of the Bank Indebtedness may give another Blockage Notice within such period; provided -------- further, however, that in no event may the total number of days during which any - ------- ------- Payment Blockage Period or Periods is in effect exceed 179 days in the aggregate during any 360 consecutive day period. For purposes of this Section 10.03, no default or event of default that existed or was continuing on the date of the commencement of any Payment Blockage Period with respect to the Designated Senior Indebtedness initiating such Payment Blockage Period shall be, or be made, the basis of the commencement of a subsequent Payment Blockage Period by the Representative of such Designated Senior Indebtedness, whether or not within a period of 360 consecutive days, unless such default or event of default shall have been cured or waived for a period of not less than 90 consecutive days. SECTION 10.04. Acceleration of Payment of Securities. If payment of ------------------------------------- the Securities is accelerated because of an Event of Default, the Company or the Trustee shall promptly notify the holders of the Designated Senior Indebtedness of the Company (or their Representative) of the acceleration. If any Designated Senior Indebtedness of the Company is outstanding, the Company may not pay the Securities until five Business Days after such holders or the Representative of such Designated Senior Indebtedness receive notice of such acceleration and, thereafter, may pay the Securities only if this Article 10 otherwise permits payment at that time. SECTION 10.05. When Distribution Must Be Paid Over. If a ----------------------------------- distribution is made to Securityholders that because of this Article 10 should not have been made to them, the Securityholders who receive the distribution shall hold it in trust for holders of Senior Indebtedness of the Company and pay it over to them as their interests may appear. SECTION 10.06. Subrogation. After all Senior Indebtedness of the ----------- Company is paid in full and until the Securities are paid in full, Securityholders shall be subrogated to the rights of holders of such Senior Indebtedness to receive distributions applicable to Senior Indebtedness. A distribution made under this Article 10 to holders of such Senior Indebtedness which otherwise would have been made to Securityholders is not, as between the Company and Securityholders, a payment by the Company on such Senior Indebtedness. 70 SECTION 10.07. Relative Rights. This Article 10 defines the relative ---------------- rights of Securityholders and holders of Senior Indebtedness of the Company. Nothing in this Indenture shall: (1) impair, as between the Company and Securityholders, the obligation of the Company, which is absolute and unconditional, to pay principal of and interest on and liquidated damages in respect of, the Securities in accordance with their terms; or (2) prevent the Trustee or any Securityholder from exercising its available remedies upon a Default, subject to the rights of holders of Senior Indebtedness of the Company to receive distributions otherwise payable to Securityholders. SECTION 10.08. Subordination May Not Be Impaired by Company. No --------------------------------------------- right of any holder of Senior Indebtedness of the Company to enforce the subordination of the Indebtedness evidenced by the Securities shall be impaired by any act or failure to act by the Company or by its failure to comply with this Indenture. SECTION 10.09. Rights of Trustee and Paying Agent. Notwithstanding ----------------------------------- Section 10.03, the Trustee or Paying Agent may continue to make payments on the Securities and shall not be charged with knowledge of the existence of facts that would prohibit the making of any such payments unless, not less than two Business Days prior to the date of such payment, a Trust Officer of the Trustee receives notice satisfactory to it that payments may not be made under this Article 10. The Company, the Registrar, the Paying Agent, a Representative or a holder of Senior Indebtedness of the Company may give the notice; provided, -------- however, that, if an issue of Senior Indebtedness of the Company has a - ------- Representative, only the Representative may give the notice. The Trustee in its individual or any other capacity may hold Senior Indebtedness of the Company with the same rights it would have if it were not Trustee. The Registrar and the Paying Agent may do the same with like rights. The Trustee shall be entitled to all the rights set forth in this Article 10 with respect to any Senior Indebtedness of the Company which may at any time be held by it, to the same extent as any other holder of such Senior Indebtedness; and nothing in Article 7 shall deprive the Trustee of any of its rights as such holder. Nothing in this Article 10 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 7.07. SECTION 10.10. Distribution or Notice to Representative. Whenever a ----------------------------------------- distribution is to be made or a notice given to holders of Senior Indebtedness of the Company, the distribution may be made and the notice given to their Representative (if any). SECTION 10.11. Article 10 Not To Prevent Events of Default or Limit ---------------------------------------------------- Right To Accelerate. The failure to make a payment pursuant to the Securities - -------------------- by reason of any provision in this Article 10 shall not be construed as preventing the occurrence of a Default. Nothing in this Article 10 shall have any effect on the right of the Securityholders or the Trustee to accelerate the maturity of the Securities. SECTION 10.12. Trust Moneys Not Subordinated. Notwithstanding ------------------------------ anything contained herein to the contrary, payments from money or the proceeds of U.S. Government 71 Obligations held in trust under Article 8 by the Trustee for the payment of principal of and interest on the Securities shall not be subordinated to the prior payment of any Senior Indebtedness of the Company or subject to the restrictions set forth in this Article 10, and none of the Securityholders shall be obligated to pay over any such amount to the Company or any holder of Senior Indebtedness of the Company or any other creditor of the Company. SECTION 10.13. Trustee Entitled To Rely. Upon any payment or ------------------------- distribution pursuant to this Article 10, the Trustee and the Securityholders shall be entitled to rely conclusively (i) upon any order or decree of a court of competent jurisdiction in which any proceedings of the nature referred to in Section 10.02 are pending, (ii) upon a certificate of the liquidating trustee or agent or other Person making such payment or distribution to the Trustee or to the Securityholders or (iii) upon the Representatives for the holders of Senior Indebtedness of the Company for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of such Senior Indebtedness and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 10. In the event that the Trustee determines, in good faith, that evidence is required with respect to the right of any Person as a holder of Senior Indebtedness of the Company to participate in any payment or distribution pursuant to this Article 10, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of such Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and other facts pertinent to the rights of such Person under this Article 10, and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all actions or omissions of actions by the Trustee pursuant to this Article 10. SECTION 10.14. Trustee To Effectuate Subordination. Each ------------------------------------ Securityholder by accepting a Security authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination between the Securityholders and the holders of Senior Indebtedness of the Company as provided in this Article 10 and appoints the Trustee as attorney-in-fact for any and all such purposes. SECTION 10.15. Trustee Not Fiduciary for Holders of Senior ------------------------------------------- Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the - ------------- holders of Senior Indebtedness of the Company and shall not be liable to any such holders if it shall mistakenly pay over or distribute to Securityholders or the Company or any other Person, money or assets to which any holders of Senior Indebtedness of the Company shall be entitled by virtue of this Article 10 or otherwise. SECTION 10.16. Reliance by Holders of Senior Indebtedness on --------------------------------------------- Subordination Provisions. Each Securityholder by accepting a Security - ------------------------- acknowledges and agrees that the foregoing subordination provisions are, and are intended to be, an inducement and a consideration to each holder of any Senior Indebtedness of the Company, whether such Senior Indebtedness was created or acquired before or after the issuance of the Securities, to acquire and continue to hold, or to continue to hold, such Senior Indebtedness and such holder of such Senior Indebtedness shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold, or in continuing to hold, such Senior Indebtedness. 72 SECTION 10.17. Trustee's Compensation Not Prejudiced. Nothing in -------------------------------------- this Article shall apply to amounts due to the Trustee pursuant to other sections of this Indenture. SECTION 10.18. Defeasance. The terms of this Article 10 shall not ----------- apply to payments from money or the proceeds of U.S. Government Obligations held in trust by the Trustee for the payment of principal of and interest on the Securities pursuant to the provisions described in Section 8.03. ARTICLE 11 Subsidiary Guarantees --------------------- SECTION 11.01. Subsidiary Guarantees. Each Subsidiary Guarantor ---------------------- hereby jointly and severally irrevocably and unconditionally guarantees, as a primary obligor and not merely as a surety, to each Holder and to the Trustee and its successors and assigns (a) the full and punctual payment when due, whether at Stated Maturity, by acceleration, by redemption or otherwise, of all obligations of the Company under this Indenture (including obligations to the Trustee) and the Securities, whether for payment of principal of, interest on or liquidated damages in respect of, the Securities and all other monetary obligations of the Company under this Indenture and the Securities and (b) the full and punctual performance within applicable grace periods of all other obligations of the Company whether for expenses, indemnification or otherwise under this Indenture and the Securities (all the foregoing being hereinafter collectively called the "Guaranteed Obligations"). Each Subsidiary Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from each such Subsidiary Guarantor, and that each such Subsidiary Guarantor shall remain bound under this Article 11 notwithstanding any extension or renewal of any Guaranteed Obligation. Each Subsidiary Guarantor waives presentation to, demand of, payment from and protest to the Company of any of the Guaranteed Obligations and also waives notice of protest for nonpayment. Each Subsidiary Guarantor waives notice of any default under the Securities or the Guaranteed Obligations. The obligations of each Subsidiary Guarantor hereunder shall not be affected by (a) the failure of any Holder or the Trustee to assert any claim or demand or to enforce any right or remedy against the Company or any other Person under this Indenture, the Securities or any other agreement or otherwise; (b) any extension or renewal of any thereof; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Securities or any other agreement; (d) the release of any security held by any Holder or the Trustee for the Guaranteed Obligations or any of them; (e) the failure of any Holder or Trustee to exercise any right or remedy against any other guarantor of the Guaranteed Obligations; or (f) any change in the ownership of such Subsidiary Guarantor, except as provided in Section 11.02(b). Each Subsidiary Guarantor hereby waives any right to which it may be entitled to have its obligations hereunder divided among the Subsidiary Guarantors, such that such Subsidiary Guarantor's obligations would be less than the full amount claimed. Each Subsidiary 73 Guarantor hereby waives any right to which it may be entitled to have the assets of the Company first be used and depleted as payment of the Company's or such Subsidiary Guarantor's obligations hereunder prior to any amounts being claimed from or paid by such Subsidiary Guarantor hereunder. Each Subsidiary Guarantor hereby waives any right to which it may be entitled to require that the Company be sued prior to an action being initiated against such Subsidiary Guarantor. Each Subsidiary Guarantor further agrees that its Subsidiary Guarantee herein constitutes a guarantee of payment, performance and compliance when due (and not a guarantee of collection) and waives any right to require that any resort be had by any Holder or the Trustee to any security held for payment of the Guaranteed Obligations. The Subsidiary Guarantee of each Subsidiary Guarantor is, to the extent and in the manner set forth in Article 12, subordinated and subject in right of payment to the prior payment in full of the principal of and premium, if any, and interest on all Senior Indebtedness of the relevant Subsidiary Guarantor and is made subject to such provisions of this Indenture. Except as expressly set forth in Sections 8.01(b), 11.02 and 11.06, the obligations of each Subsidiary Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Subsidiary Guarantor herein shall not be discharged or impaired or otherwise affected by the failure of any Holder or the Trustee to assert any claim or demand or to enforce any remedy under this Indenture, the Securities or any other agreement, by any waiver or modification of any thereof, by any default, failure or delay, wilful or otherwise, in the performance of the obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of any Subsidiary Guarantor or would otherwise operate as a discharge of any Subsidiary Guarantor as a matter of law or equity. Each Subsidiary Guarantor agrees that its Subsidiary Guarantee shall remain in full force and effect until payment in full of all the Guaranteed Obligations (except as otherwise provided in Section 8.01(b)). Each Subsidiary Guarantor further agrees that its Subsidiary Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or interest on any Guaranteed Obligation is rescinded or must otherwise be restored by any Holder or the Trustee upon the bankruptcy or reorganization of the Company or otherwise. In furtherance of the foregoing and not in limitation of any other right which any Holder or the Trustee has at law or in equity against any Subsidiary Guarantor by virtue hereof, upon the failure of the Company to pay the principal of or interest on any Guaranteed Obligation when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, or to perform or comply with any other Guaranteed Obligation, each Subsidiary Guarantor hereby promises to and shall, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal to the sum of 74 (i) the unpaid principal amount of such Guaranteed Obligations, (ii) accrued and unpaid interest on such Guaranteed Obligations (but only to the extent not prohibited by law) and (iii) all other monetary obligations of the Company to the Holders and the Trustee. Each Subsidiary Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any Guaranteed Obligations guaranteed hereby until payment in full of all Guaranteed Obligations and all obligations to which the Guaranteed Obligations are subordinated as provided in Article 12. Each Subsidiary Guarantor further agrees that, as between it, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the Guaranteed Obligations guaranteed hereby may be accelerated as provided in Article 6 for the purposes of any Subsidiary Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guaranteed Obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such Guaranteed Obligations as provided in Article 6, such Guaranteed Obligations (whether or not due and payable) shall forthwith become due and payable by such Subsidiary Guarantor for the purposes of this Section 11.01. Each Subsidiary Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys' fees and expenses) incurred by the Trustee or any Holder in enforcing any rights under this Section 11.01. Upon request of the Trustee, each Subsidiary Guarantor shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture. SECTION 11.02. Limitation on Liability. (a) Any term or provision ------------------------ of this Indenture to the contrary notwithstanding, the maximum, aggregate amount of the Guaranteed Obligations guaranteed hereunder by any Subsidiary Guarantor shall not exceed the maximum amount that can be hereby guaranteed without rendering this Indenture, as it relates to such Subsidiary Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. (b) A Subsidiary Guarantee as to any Subsidiary Guarantor shall terminate and be of no further force or effect and such Subsidiary Guarantor shall be deemed to be released from all obligations under this Article 11 upon (i) the merger or consolidation of such Subsidiary Guarantor with or into any Person other than the Company or a Subsidiary or Affiliate of the Company where such Subsidiary Guarantor is not the surviving entity of such consolidation or merger or (ii) the sale by the Company or any Subsidiary of the Company (or any pledgee of the Company) of the Capital Stock of such Subsidiary Guarantor, where, after such sale, such Subsidiary Guarantor is no longer a Subsidiary of the Company; provided, however, that each such merger, consolidation or sale -------- ------- (or, in the case of a sale by such a pledgee, the disposition of the proceeds of such sale) shall comply with Section 4.06 and Section 5.01(b). At the written request of the Company, the Trustee shall execute and deliver an appropriate instrument evidencing such release. SECTION 11.03. Successors and Assigns. This Article 11 shall be ----------------------- binding upon each Subsidiary Guarantor and its successors and assigns and shall inure to the benefit of 75 the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges conferred upon that party in this Indenture and in the Securities shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of this Indenture. SECTION 11.04. No Waiver. Neither a failure nor a delay on the part ---------- of either the Trustee or the Holders in exercising any right, power or privilege under this Article 11 shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Trustee and the Holders herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which either may have under this Article 11 at law, in equity, by statute or otherwise. SECTION 11.05. Modification. No modification, amendment or waiver of ------------- any provision of this Article 11, nor the consent to any departure by any Subsidiary Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Trustee, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any Subsidiary Guarantor in any case shall entitle such Subsidiary Guarantor to any other or further notice or demand in the same, similar or other circumstances. SECTION 11.06. Execution of Supplemental Indenture for Future ---------------------------------------------- Subsidiary Guarantors. Each Subsidiary which is required to become a Subsidiary - ---------------------- Guarantor pursuant to Section 4.11 shall promptly execute and deliver to the Trustee a supplemental indenture in the form of Exhibit C hereto pursuant to which such Subsidiary shall become a Subsidiary Guarantor under this Article 11 and shall guarantee the Guaranteed Obligations. Concurrently with the execution and delivery of such supplemental indenture, the Company shall deliver to the Trustee an Opinion of Counsel and an Officers' Certificate to the effect that such supplemental indenture has been duly authorized, executed and delivered by such Subsidiary and that, subject to the application of bankruptcy, insolvency, moratorium, fraudulent conveyance or transfer and other similar laws relating to creditors' rights generally and to the principles of equity, whether considered in a proceeding at law or in equity, the Subsidiary Guarantee of such Subsidiary Guarantor is a legal, valid and binding obligation of such Subsidiary Guarantor, enforceable against such Subsidiary Guarantor in accordance with its terms. 76 ARTICLE 12 Subordination of the Subsidiary Guarantees ------------------------------------------ SECTION 12.01. Agreement To Subordinate. Each Subsidiary Guarantor ------------------------- agrees, and each Securityholder by accepting a Security agrees, that the obligations of a Subsidiary Guarantor hereunder are subordinated in right of payment, to the extent and in the manner provided in this Article 12, to the prior payment in full of all Senior Indebtedness of such Subsidiary Guarantor and that the subordination is for the benefit of and enforceable by the holders of such Senior Indebtedness of such Subsidiary Guarantor. The obligations hereunder with respect to a Subsidiary Guarantor shall in all respects rank pari ---- passu with all other Senior Subordinated Indebtedness of such Subsidiary - ----- Guarantor and shall rank senior to all existing and future Subordinated Obligations of such Subsidiary Guarantor; and only Indebtedness of such Subsidiary Guarantor that is Senior Indebtedness of such Subsidiary Guarantor shall rank senior to the obligations of such Subsidiary Guarantor in accordance with the provisions set forth herein. SECTION 12.02. Liquidation, Dissolution, Bankruptcy. Upon any ------------------------------------- payment or distribution of the assets of a Subsidiary Guarantor to creditors upon a total or partial liquidation or a total or partial dissolution of such Subsidiary Guarantor or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to such Subsidiary Guarantor and its properties: (1) holders of Senior Indebtedness of such Subsidiary Guarantor shall be entitled to receive payment in full of such Senior Indebtedness before Securityholders shall be entitled to receive any payment pursuant to any Guaranteed Obligations from such Subsidiary Guarantor; and (2) until the Senior Indebtedness of such Subsidiary Guarantor is paid in full, any payment or distribution to which Securityholders would be entitled but for this Article 12 shall be made to holders of such Senior Indebtedness as their respective interests may appear, except that Securityholders may receive shares of stock and any debt securities that are subordinated to such Senior Indebtedness to at least the same extent as the Guarantees. SECTION 12.03. Default on Designated Senior Indebtedness of a ---------------------------------------------- Subsidiary Guarantor. A Subsidiary Guarantor may not make any payment pursuant - --------------------- to any of the Guaranteed Obligations or repurchase, redeem or otherwise retire any Securities (collectively, "pay its Guarantee") if (i) any Designated Senior Indebtedness of such Subsidiary Guarantor is not paid when due or (ii) any other default on Designated Senior Indebtedness of such Subsidiary Guarantor occurs and the maturity of such Designated Senior Indebtedness is accelerated in accordance with its terms unless, in either case, (x) the default has been cured or waived and any such acceleration has been rescinded or (y) such Designated Senior Indebtedness has been paid in full; provided, however, that such -------- ------- Subsidiary Guarantor may pay its Guarantee without regard to the foregoing if such Subsidiary Guarantor and the Trustee receive written notice approving such payment from the Representative of the holders of such Designated Senior Indebtedness with respect to which either of the events in clause (i) or (ii) of this sentence has occurred and is 77 continuing. During the continuance of any default (other than a default described in clause (i) or (ii) of the preceding sentence) with respect to any Designated Senior Indebtedness of a Subsidiary Guarantor pursuant to which the maturity thereof may be accelerated immediately without further notice (except such notice as may be required to effect such acceleration) or the expiration of any applicable grace periods, such Subsidiary Guarantor may not pay its Guarantee for a Payment Blockage Period commencing upon the receipt by the Trustee (with a copy to such Subsidiary Guarantor and the Company) of a Blockage Notice of such default from the Representative of the holders of the Designated Senior Indebtedness of such Subsidiary Guarantor specifying an election to effect a Payment Blockage Period and ending 179 days thereafter (or earlier if such Payment Blockage Period is terminated (i) by written notice to the Trustee (with a copy to such Subsidiary Guarantor and the Company) from the Person or Persons who gave such Blockage Notice, (ii) because such Designated Senior Indebtedness has been repaid in full or (iii) because the default giving rise to such Blockage Notice is no longer continuing). Notwithstanding the provisions described in the immediately preceding sentence (but subject to the provisions contained in the first sentence of this Section 12.03), unless the holders of such Designated Senior Indebtedness or the Representative of such holders shall have accelerated the maturity of such Designated Senior Indebtedness, such Subsidiary Guarantor may resume paying its Guarantee after such Payment Blockage Period, including any missed payments. Not more than one Blockage Notice may be given with respect to a Subsidiary Guarantor in any consecutive 360-day period, irrespective of the number of defaults with respect to Designated Senior Indebtedness of such Subsidiary Guarantor during such period. SECTION 12.04. Demand for Payment. If payment of the Securities is ------------------- accelerated because of an Event of Default and a demand for payment is made on a Subsidiary Guarantor pursuant to Article 11, the Trustee shall promptly notify the holders of the Designated Senior Indebtedness of such Subsidiary Guarantor (or the Representative of such holders) of such demand. If any Designated Senior Indebtedness of such Subsidiary Guarantor is outstanding, such Subsidiary Guarantor may not pay its Guarantee until five Business Days after such holders or the Representative of the holders of the Designated Senior Indebtedness of such Subsidiary Guarantor receive notice of such demand and, thereafter, may pay its Guarantee only if this Article 12 otherwise permits payment at that time. SECTION 12.05. When Distribution Must Be Paid Over. If a payment or ------------------------------------ distribution is made to Securityholders that because of this Article 12 should not have been made to them, the Securityholders who receive the payment or distribution shall hold such payment or distribution in trust for holders of the Senior Indebtedness of the relevant Subsidiary Guarantor and pay it over to them as their respective interests may appear. SECTION 12.06. Subrogation. After all Senior Indebtedness of a ------------ Subsidiary Guarantor is paid in full and until the Securities are paid in full in cash, Securityholders shall be subrogated to the rights of holders of Senior Indebtedness of such Subsidiary Guarantor to receive distributions applicable to Designated Senior Indebtedness of such Subsidiary Guarantor. A distribution made under this Article 12 to holders of Senior Indebtedness of such Subsidiary Guarantor which otherwise would have been made to Securityholders is not, as between such Subsidiary Guarantor and Securityholders, a payment by such Subsidiary Guarantor on Senior Indebtedness of such Subsidiary Guarantor. 78 SECTION 12.07. Relative Rights. This Article 12 defines the relative ---------------- rights of Securityholders and holders of Senior Indebtedness of a Subsidiary Guarantor. Nothing in this Indenture shall: (1) impair, as between a Subsidiary Guarantor and Securityholders, the obligation of a Subsidiary Guarantor which is absolute and unconditional, to make payments with respect to the Guaranteed Obligations to the extent set forth in Article 11; or (2) prevent the Trustee or any Securityholder from exercising its available remedies upon a default by a Subsidiary Guarantor under its obligations with respect to the Guaranteed Obligations, subject to the rights of holders of Senior Indebtedness of such Subsidiary Guarantor to receive distributions otherwise payable to Securityholders. SECTION 12.08. Subordination May Not Be Impaired by a Subsidiary ------------------------------------------------- Guarantor. No right of any holder of Senior Indebtedness of a Subsidiary - ---------- Guarantor to enforce the subordination of the obligations of such Subsidiary Guarantor hereunder shall be impaired by any act or failure to act by such Subsidiary Guarantor or by its failure to comply with this Indenture. SECTION 12.09. Rights of Trustee and Paying Agent. Notwithstanding ----------------------------------- Section 12.03, the Trustee or the Paying Agent may continue to make payments on the Securities and shall not be charged with knowledge of the existence of facts that would prohibit the making of any such payments unless, not less than two Business Days prior to the date of such payment, a Trust Officer of the Trustee receives notice satisfactory to it that payments may not be made under this Article 12. A Subsidiary Guarantor, the Registrar or co-registrar, the Paying Agent, a Representative or a holder of Senior Indebtedness of a Subsidiary Guarantor may give the notice; provided, however, that if an issue of Senior -------- ------- Indebtedness of a Subsidiary Guarantor has a Representative, only the Representative may give the notice. The Trustee in its individual or any other capacity may hold Senior Indebtedness of a Subsidiary Guarantor with the same rights it would have if it were not Trustee. The Registrar and co-registrar and the Paying Agent may do the same with like rights. The Trustee shall be entitled to all the rights set forth in this Article 12 with respect to any Senior Indebtedness of a Subsidiary Guarantor which may at any time be held by it, to the same extent as any other holder of Senior Indebtedness of such Subsidiary Guarantor; and nothing in Article 7 shall deprive the Trustee of any of its rights as such holder. Nothing in this Article 12 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 7.07. SECTION 12.10. Distribution or Notice to Representative. Whenever a ----------------------------------------- distribution is to be made or a notice given to holders of Senior Indebtedness of a Subsidiary Guarantor, the distribution may be made and the notice given to their Representative (if any). SECTION 12.11. Article 12 Not To Prevent Events of Default or Limit ---------------------------------------------------- Right To Accelerate. The failure of a Subsidiary Guarantor to make a payment on - -------------------- any of its obligations by reason of any provision in this Article 12 shall not be construed as preventing the occurrence of a default by such Subsidiary Guarantor under such obligations. Nothing in this 79 Article 12 shall have any effect on the right of the Securityholders or the Trustee to make a demand for payment on a Subsidiary Guarantor pursuant to Article 11. SECTION 12.12. Trustee Entitled To Rely. Upon any payment or ------------------------- distribution pursuant to this Article 12, the Trustee and the Securityholders shall be entitled to rely conclusively (i) upon any order or decree of a court of competent jurisdiction in which any proceedings of the nature referred to in Section 12.02 are pending, (ii) upon a certificate of the liquidating trustee or agent or other Person making such payment or distribution to the Trustee or to the Securityholders or (iii) upon the Representatives for the holders of Senior Indebtedness of a Subsidiary Guarantor for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Indebtedness of a Subsidiary Guarantor and other Indebtedness of a Subsidiary Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 12. In the event that the Trustee determines, in good faith, that evidence is required with respect to the right of any Person as a holder of Senior Indebtedness of a Subsidiary Guarantor to participate in any payment or distribution pursuant to this Article 12, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness of such Subsidiary Guarantor held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and other facts pertinent to the rights of such Person under this Article 12, and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all actions or omissions of actions by the Trustee pursuant to this Article 12. SECTION 12.13. Trustee To Effectuate Subordination. Each ------------------------------------ Securityholder by accepting a Security authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination between the Securityholders and the holders of Senior Indebtedness of each of the Subsidiary Guarantors as provided in this Article 12 and appoints the Trustee as attorney-in-fact for any and all such purposes. SECTION 12.14. Trustee Not Fiduciary for Holders of Senior ------------------------------------------- Indebtedness of a Subsidiary Guarantor. The Trustee shall not be deemed to owe - --------------------------------------- any fiduciary duty to the holders of Senior Indebtedness of a Subsidiary Guarantor and shall not be liable to any such holders if it shall mistakenly pay over or distribute to Securityholders or the relevant Subsidiary Guarantor or any other Person, money or assets to which any holders of Senior Indebtedness of such Subsidiary Guarantor shall be entitled by virtue of this Article 12 or otherwise. SECTION 12.15. Reliance by Holders of Senior Indebtedness of a ----------------------------------------------- Subsidiary Guarantor on Subordination Provisions. Each Securityholder by - ------------------------------------------------- accepting a Security acknowledges and agrees that the foregoing subordination provisions are, and are intended to be, an inducement and a consideration to each holder of any Senior Indebtedness of a Subsidiary Guarantor, whether such Senior Indebtedness was created or acquired before or after the issuance of the Securities, to acquire and continue to hold, or to continue to hold, such Senior Indebtedness and such holder of Senior Indebtedness shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold, or in continuing to hold, such Senior Indebtedness. 80 SECTION 12.16. Defeasance. The terms of this Article 12 shall not ----------- apply to payments from money or the proceeds of U.S. Government Obligations held in trust by the Trustee for the payment of principal of and interest on the Securities pursuant to the provisions described in Section 8.03. ARTICLE 13 Miscellaneous ------------- SECTION 13.01. Trust Indenture Act Controls. If any provision of ----------------------------- this Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control. SECTION 13.02. Notices. Any notice or communication shall be in -------- writing and delivered in person or mailed by first-class mail addressed as follows: if to the Company: TeleCorp PCS, Inc. 1010 N. Glebe Road, Suite 800 Arlington, VA 22201 (703) 236-1100 Attention of: Thomas H. Sullivan, Esq. if to the Trustee: Bankers Trust Company Corporate Trust and Agency Services Four Albany Street New York, NY 10006 (212) 250-6657 Attention of: Corporate Market Services The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. Any notice or communication mailed to a Securityholder shall be mailed to the Securityholder at the Securityholder's address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed. Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or 81 communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. SECTION 13.03. Communication by Holders with Other Holders. -------------------------------------------- Securityholders may communicate pursuant to Section 312(b) of the TIA with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, the Trustee, the Registrar and anyone else shall have the protection of Section 312(c) of the TIA. SECTION 13.04. Certificate and Opinion as to Conditions Precedent. --------------------------------------------------- Upon any request or application by the Company to the Trustee to take or refrain from taking any action under this Indenture, the Company shall furnish to the Trustee: (1) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with. SECTION 13.05. Statements Required in Certificate or Opinion. Each ---------------------------------------------- certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture shall include: (1) a statement that the individual making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with. SECTION 13.06. When Securities Disregarded. In determining whether ---------------------------- the Holders of the required principal amount at maturity of Securities have concurred in any direction, waiver or consent, Securities owned by the Company, any Subsidiary Guarantor or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any Subsidiary Guarantor shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities which the Trustee knows are 82 so owned shall be so disregarded. Subject to the foregoing, only Securities outstanding at the time shall be considered in any such determination. 83 SECTION 13.07. Rules by Trustee, Paying Agent and Registrar. The --------------------------------------------- Trustee may make reasonable rules for action by or a meeting of Securityholders. The Registrar and the Paying Agent may make reasonable rules for their functions. SECTION 13.08. Legal Holidays. If a payment date is a Legal Holiday, --------------- payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. If a regular record date is a Legal Holiday, the record date shall not be affected. SECTION 13.09. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES -------------- SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. SECTION 13.10. No Recourse Against Others. A director, officer, --------------------------- employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder shall waive and release all such liability. The waiver and release shall be part of the consideration for the issue of the Securities. SECTION 13.11. Successors. All agreements of the Company and each ----------- Subsidiary Guarantor in this Indenture and the Securities shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. SECTION 13.12. Multiple Originals. The parties may sign any number ------------------- of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture. SECTION 13.13. Table of Contents; Headings. The table of contents, ---------------------------- cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof. IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above. TELECORP PCS, INC., by /s/ Thomas H. Sullivan ------------------------------------------ Name: Thomas H. Sullivan Title: Executive Vice President and Chief Financial Officer TELECORP COMMUNICATIONS, INC., by /s/ Thomas H. Sullivan ------------------------------------------ Name: Thomas H. Sullivan Title: President, Treasurer and Secretary BANKERS TRUST COMPANY, as Trustee, by /s/ Marc Parilla ------------------------------------------ Name: Marc Parilla Title: Assistant Vice President APPENDIX A PROVISIONS RELATING TO /INITIAL SECURITIES, ------------------------------------------- PRIVATE EXCHANGE SECURITIES --------------------------- AND EXCHANGE SECURITIES ----------------------- 1. Definitions ----------- 1.1 Definitions ----------- For the purposes of this Appendix A the following terms will have the meanings indicated below: "Applicable Procedures" means, with respect to any transfer or transaction involving a Regulation S Global Security or beneficial interest therein, the rules and procedures of the Depositary for such Global Security, Euroclear and Cedel, in each case to the extent applicable to such transaction and as in effect from time to time. "Cedel" means Cedel Bank, S.A., or any successor securities clearing agency. "Definitive Security" means a certificated Initial Security or Exchange Security (bearing the Restricted Securities Legend if the transfer of such Security is restricted by applicable law) that does not include the Global Securities Legend. "Depositary" means The Depository Trust Company, its nominees and their respective successors. "Euroclear" means the Euroclear Clearance System or any successor securities clearing agency. "Global Securities Legend" means the legend set forth under that caption in Exhibit A to this Indenture. "IAI" means an institutional "accredited investor" as described in Rule 501(a)(1), (2), (3) or (7) under the Securities Act. "Initial Purchasers" means Chase Securities Inc., BT Alex. Brown Incorporated and Lehman Brothers Inc. "Private Exchange" means an offer by the Company, pursuant to the Registration Agreement, to issue and deliver to certain purchasers, in exchange for the Initial Securities held by such purchasers as part of their initial distribution, a like aggregate principal amount at maturity of Private Exchange Securities. "Private Exchange Securities" means the Securities of the Company issued in exchange for Initial Securities pursuant to this Indenture in connection with the Private Exchange pursuant to the Registration Agreement. "Purchase Agreement" means the Purchase Agreement dated April 20, 1999, among the Company, the Subsidiary Guarantor and the Initial Purchasers. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "Registered Exchange Offer" means the offer by the Company, pursuant to the Registration Agreement, to certain Holders of Initial Securities, to issue and deliver to such Holders, in exchange for their Initial Securities, a like aggregate principal amount at maturity of Exchange Securities registered under the Securities Act. "Registration Agreement" means the Exchange and Registration Rights Agreement dated April 23, 1999 , among the Company, the Subsidiary Guarantor and the Initial Purchasers. "Regulation S" means Regulation S under the Securities Act. "Regulation S Securities" means all Initial Securities offered and sold outside the United States in reliance on Regulation S. "Restricted Period," with respect to any Securities, means the period of 40 consecutive days beginning on and including the later of (i) the day on which such Securities are first offered to persons other than distributors (as defined in Regulation S under the Securities Act) in reliance on Regulation S and (ii) the Issue Date with respect to such Securities. "Restricted Securities Legend" means the legend set forth in Section 2.3(e)(i) herein. "Rule 501" means Rule 501(a)(1), (2), (3) or (7) under the Securities Act. "Rule 144A" means Rule 144A under the Securities Act. "Rule 144A Securities" means all Initial Securities offered and sold to QIBs in reliance on Rule 144A. "Securities Act" means the Securities Act of 1933, as amended. "Securities Custodian" means the custodian with respect to a Global Security (as appointed by the Depositary) or any successor person thereto, who will initially be the Trustee. "Shelf Registration Statement" means a registration statement filed by the Company in connection with the offer and sale of Initial Securities pursuant to the Registration Agreement. "Transfer Restricted Securities" means Definitive Securities and any other Securities that bear or are required to bear the Restricted Securities Legend. 3 1.2 Other Definitions ----------------- Term: Defined in Section: ---- ------------------ "Agent Members".........................................2.1(b) "IAI Global Security"...................................2.1(a) "Global Security".......................................2.1(a) "Regulation S Global Security"..........................2.1(a) "Rule 144A Global Security".............................2.1(a) 2. The Securities -------------- 2.1 Form and Dating --------------- The Initial Securities issued on the date hereof will be (i) offered and sold by the Company pursuant to the Purchase Agreement and (ii) resold, initially only to (A) QIBs in reliance on Rule 144A and (B) Persons other than U.S. Persons (as defined in Regulation S) in reliance on Regulation S. Such Initial Securities may thereafter be transferred to, among others, QIBs, purchasers in reliance on Regulation S and, except as set forth below, IAIs in accordance with Rule 501. (a) Global Securities. Rule 144A Securities shall be issued ------------------ initially in the form of one or more permanent global Securities in definitive, fully registered form (collectively, the "Rule 144A Global Security") and Regulation S Securities shall be issued initially in the form of one or more global Securities (collectively, the "Regulation S Global Security"), in each case without interest coupons and bearing the Global Securities Legend and Restricted Securities Legend, which shall be deposited on behalf of the purchasers of the Securities represented thereby with the Securities Custodian, and registered in the name of the Depositary or a nominee of the Depositary, duly executed by the Company and authenticated by the Trustee as provided in this Indenture. One or more global securities in definitive, fully registered form without interest coupons and bearing the Global Securities Legend and the Restricted Securities Legend (collectively, the "IAI Global Security") shall also be issued on the date of this Indenture, deposited with the Securities Custodian, and registered in the name of the Depositary or a nominee of the Depositary, duly executed by the Company and authenticated by the Trustee as provided in this Indenture to accommodate transfers of beneficial interests in the Securities to IAIs subsequent to the initial distribution. Beneficial ownership interests in the Regulation S Global Security shall not be exchangeable for interests in the Rule 144A Global Security, the IAI Global Security or any other Security without a Restricted Securities Legend until the expiration of the Restricted Period. The Rule 144A Global Security, the IAI Global Security and the Regulation S Global Security are each referred to herein as a "Global Security" and are collectively referred to herein as "Global Securities." The aggregate principal amount at maturity of the Global Securities may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee as hereinafter provided. (b) Book-Entry Provisions. This Section 2.1(b) shall apply only --------------------- to a Global Security deposited with or on behalf of the Depositary. 4 The Company shall execute and the Trustee shall, in accordance with this Section 2.1(b) and pursuant to an order of the Company, authenticate and deliver initially one or more Global Securities that (a) shall be registered in the name of the Depositary for such Global Security or Global Securities or the nominee of such Depositary and (b) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary's instructions or held by the Trustee as Securities Custodian. Members of, or participants in, the Depositary ("Agent Members") shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depositary or by the Trustee as Securities Custodian or under such Global Security, and the Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices of such Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Security. (c) Definitive Securities. Except as provided in Section 2.3 or 2.4, ---------------------- owners of beneficial interests in Global Securities will not be entitled to receive physical delivery of certificated Securities. 2.2 Authentication. The Trustee shall authenticate and make available for -------------- delivery upon a written order of the Company signed by two Officers (1) Initial Securities for original issue on the date hereof in an aggregate principal amount at maturity of $575,000,000 and (2) the (A) Exchange Securities for issue only in a Registered Exchange Offer and (B) Private Exchange Securities for issue only a Private Exchange, in the case of each of (A) and (B) pursuant to the Registration Agreement and for a like principal amount of Initial Securities exchanged pursuant thereto. Such order shall specify the amount of the Securities to be authenticated, the date on which the original issue of Securities is to be authenticated and whether the Securities are to be Initial Securities, Exchange Securities or Private Exchange Securities. The aggregate principal amount at maturity of Securities outstanding at any time may not exceed $575,000,000 except as provided in Section 2.07 of this Indenture. 2.3 Transfer and Exchange. (a) Transfer and Exchange of Definitive ---------------------- ----------------------------------- Securities. When Definitive Securities are presented to the Registrar with a - ----------- request: (x) to register the transfer of such Definitive Securities; or (y) to exchange such Definitive Securities for an equal principal amount at maturity of Definitive Securities of other authorized denominations, 5 the Registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; provided, however, -------- ------- that the Definitive Securities surrendered for transfer or exchange: (i) shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing; and (ii) are accompanied by the following additional information and documents, as applicable: (A) if such Definitive Securities are being delivered to the Registrar by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect (in the form set forth on the reverse side of the Initial Security); or (B) if such Definitive Securities are being transferred to the Company, a certification to that effect (in the form set forth on the reverse side of the Initial Security); or (C) if such Definitive Securities are being transferred pursuant to an exemption from registration in accordance with Rule 144 under the Securities Act or in reliance upon another exemption from the registration requirements of the Securities Act, (i) a certification to that effect (in the form set forth on the reverse side of the Initial Security) and (ii) if the Company so requests, an opinion of counsel or other evidence reasonably satisfactory to it as to the compliance with the restrictions set forth in the legend set forth in Section 2.3(e)(i). (b) Restrictions on Transfer of a Definitive Security for a ------------------------------------------------------- Beneficial Interest in a Global Security. A Definitive Security may not be - ----------------------------------------- exchanged for a beneficial interest in a Global Security except upon satisfaction of the requirements set forth below. Upon receipt by the Trustee of a Definitive Security, duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Registrar, together with: (i) certification (in the form set forth on the reverse side of the Initial Security) that such Definitive Security is being transferred (A) to a QIB in accordance with Rule 144A, (B) to an IAI that has furnished to the Trustee a signed letter substantially in the form of Exhibit D or (C) outside the United States in an offshore transaction within the meaning of Regulation S and in compliance with Rule 904 under the Securities Act; and (ii) written instructions directing the Trustee to make, or to direct the Securities Custodian to make, an adjustment on its books and records with respect to such Global Security to reflect an increase in the aggregate principal amount at maturity of the Securities represented by the Global Security, such instructions to contain information regarding the Depositary account to be credited with such increase, 6 then the Trustee shall cancel such Definitive Security and cause, or direct the Securities Custodian to cause, in accordance with the standing instructions and procedures existing between the Depositary and the Securities Custodian, the aggregate principal amount at maturity of Securities represented by the Global Security to be increased by the aggregate principal amount at maturity of the Definitive Security to be exchanged and shall credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Global Security equal to the principal amount at maturity of the Definitive Security so canceled. If no Global Securities are then outstanding and the Global Security has not been previously exchanged for certificated securities pursuant to Section 2.4, the Company shall issue and the Trustee shall authenticate, upon written order of the Company in the form of an Officers' Certificate, a new Global Security in the appropriate principal amount at maturity. (c) Transfer and Exchange of Global Securities. (i) The transfer ------------------------------------------- and exchange of Global Securities or beneficial interests therein shall be effected through the Depositary, in accordance with this Indenture (including applicable restrictions on transfer set forth herein, if any) and the procedures of the Depositary therefor. A transferor of a beneficial interest in a Global Security shall deliver a written order given in accordance with the Depositary's procedures containing information regarding the participant account of the Depositary to be credited with a beneficial interest in such Global Security or another Global Security and such account shall be credited in accordance with such order with a beneficial interest in the applicable Global Security and the account of the Person making the transfer shall be debited by an amount equal to the beneficial interest in the Global Security being transferred. Transfers by an owner of a beneficial interest in the Rule 144A Global Security or the IAI Global Security to a transferee who takes delivery of such interest through the Regulation S Global Security, whether before or after the expiration of the Restricted Period, shall be made only upon receipt by the Trustee of a certification from the transferor to the effect that such transfer is being made in accordance with Regulation S or (if available) Rule 144 under the Securities Act and that, if such transfer is being made prior to the expiration of the Restricted Period, the interest transferred shall be held immediately thereafter through Euroclear or Cedel. In the case of a transfer of a beneficial interest in either the Regulation S Global Security or the Rule 144A Global Security for an interest in the IAI Global Security, the transferee must furnish a signed letter substantially in the form of Exhibit D to the Trustee. (ii) If the proposed transfer is a transfer of a beneficial interest in one Global Security to a beneficial interest in another Global Security, the Registrar shall reflect on its books and records the date and an increase in the principal amount at maturity of the Global Security to which such interest is being transferred in an amount equal to the principal amount at maturity of the interest to be so transferred, and the Registrar shall reflect on its books and records the date and a corresponding decrease in the principal amount at maturity of Global Security from which such interest is being transferred. (iii) Notwithstanding any other provisions of this Appendix (other than the provisions set forth in Section 2.4), a Global Security may not be transferred as a whole except by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary 7 or any such nominee to a successor Depositary or a nominee of such successor Depositary. (iv) In the event that a Global Security is exchanged for Definitive Securities pursuant to Section 2.4 prior to the consummation of the Registered Exchange Offer or the effectiveness of the Shelf Registration Statement with respect to such Securities, such Securities may be exchanged only in accordance with such procedures as are substantially consistent with the provisions of this Section 2.3 (including the certification requirements set forth on the reverse of the Initial Securities intended to ensure that such transfers comply with Rule 144A, Regulation S or such other applicable exemption from registration under the Securities Act, as the case may be) and such other procedures as may from time to time be adopted by the Company. (d) Restrictions on Transfer of Regulation S Global Security. (i) --------------------------------------------------------- Prior to the expiration of the Restricted Period, interests in the Regulation S Global Security may only be held through Euroclear or Cedel. During the Restricted Period, beneficial ownership interests in the Regulation S Global Security may only be sold, pledged or transferred through Euroclear or Cedel in accordance with the Applicable Procedures and only (A) to the Company, (B) so long as such security is eligible for resale pursuant to Rule 144A, to a person whom the selling holder reasonably believes is a QIB that purchases for its own account or for the account of a QIB to whom notice is given that the resale, pledge or transfer is being made in reliance on Rule 144A, (C) in an offshore transaction in accordance with Regulation S, (D) pursuant to an exemption from registration under the Securities Act provided by Rule 144 (if applicable) under the Securities Act, (E) to an IAI purchasing for its own account, or for the account of such an IAI, in a minimum principal amount at maturity of Securities of $250,000 or (F) pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States. Prior to the expiration of the Restricted Period, transfers by an owner of a beneficial interest in the Regulation S Global Security to a transferee who takes delivery of such interest through the Rule 144A Global Security or the IAI Global Security shall be made only in accordance with Applicable Procedures and upon receipt by the Trustee of a written certification from the transferor of the beneficial interest in the form provided on the reverse of the Initial Security to the effect that such transfer is being made to (i) a person whom the transferor reasonably believes is a QIB within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A or (ii) an IAI purchasing for its own account, or for the account of such an IAI, in a minimum principal amount at maturity of the Securities of $250,000. Such written certification shall no longer be required after the expiration of the Restricted Period. In the case of a transfer of a beneficial interest in the Regulation S Global Security for an interest in the IAI Global Security, the transferee must furnish a signed letter substantially in the form of Exhibit D to the Trustee. (ii) Upon the expiration of the Restricted Period, beneficial ownership interests in the Regulation S Global Security shall be transferable in accordance with applicable law and the other terms of this Indenture. 8 (e) Legend. ------- (i) Except as permitted by the following paragraphs (ii), (iii) or (iv), each Security certificate evidencing the Global Securities and the Definitive Securities (and all Securities issued in exchange therefor or in substitution thereof) shall bear a legend in substantially the following form (each defined term in the legend being defined as such for purposes of the legend only): "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION." THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT AT MATURITY OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE." 9 Each Security evidencing a Global Security offered and sold to QIBs pursuant to Rule 144A shall bear a legend in substantially the following form "EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER." Each Definitive Security shall bear the following additional legend: "IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS." (ii) Upon any sale or transfer of a Transfer Restricted Security that is a Definitive Security, the Registrar shall permit the Holder thereof to exchange such Transfer Restricted Security for a Definitive Security that does not bear the legends set forth above and rescind any restriction on the transfer of such Transfer Restricted Security if the Holder certifies in writing to the Registrar that its request for such exchange was made in reliance on Rule 144 (such certification to be in the form set forth on the reverse of the Initial Security). (iii) After a transfer of any Initial Securities or Private Exchange Securities during the period of the effectiveness of a Shelf Registration Statement with respect to such Initial Securities or Private Exchange Securities, as the case may be, all requirements pertaining to the Restricted Securities Legend on such Initial Securities or such Private Exchange Securities shall cease to apply and the requirements that any such Initial Securities or such Private Exchange Securities be issued in global form shall continue to apply. (iv) Upon the consummation of a Registered Exchange Offer with respect to the Initial Securities pursuant to which Holders of such Initial Securities are offered Exchange Securities in exchange for their Initial Securities, all requirements pertaining to Initial Securities that Initial Securities be issued in global form shall continue to apply, and Exchange Securities in global form without the Restricted Securities Legend shall be available to Holders that exchange such Initial Securities in such Registered Exchange Offer. (v) Upon the consummation of a Private Exchange with respect to the Initial Securities pursuant to which Holders of such Initial Securities are offered Private Exchange Securities in exchange for their Initial Securities, all requirements pertaining to such Initial Securities that Initial Securities be issued in global form shall continue to apply, and Private Exchange Securities in global form with the Restricted Securities Legend shall be available to Holders that exchange such Initial Securities in such Private Exchange. 10 (vi) Upon a sale or transfer after the expiration of the Restricted Period of any Initial Security acquired pursuant to Regulation S, all requirements that such Initial Security bear the Restricted Securities Legend shall cease to apply and the requirements requiring any such Initial Security be issued in global form shall continue to apply. (f) Cancelation or Adjustment of Global Security. At such time as --------------------------------------------- all beneficial interests in a Global Security have either been exchanged for Definitive Securities, transferred, redeemed, repurchased or canceled, such Global Security shall be returned by the Depositary to the Trustee for cancelation or retained and canceled by the Trustee. At any time prior to such cancelation, if any beneficial interest in a Global Security is exchanged for Definitive Securities, transferred in exchange for an interest in another Global Security, redeemed, repurchased or canceled, the principal amount at maturity of Securities represented by such Global Security shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Securities Custodian for such Global Security) with respect to such Global Security, by the Trustee or the Securities Custodian, to reflect such reduction. (g) Obligations with Respect to Transfers and Exchanges of ------------------------------------------------------ Securities. - ----------- (i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate, Definitive Securities and Global Securities at the Registrar's request. (ii) No service charge shall be made for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax, assessments, or similar governmental charge payable in connection therewith (other than any such transfer taxes, assessments or similar governmental charge payable upon exchange or transfer pursuant to Sections 3.06, 4.06, 4.08 and 9.05 of the Indenture). (iii) Prior to the due presentation for registration of transfer of any Security, the Company, the Trustee, the Paying Agent or the Registrar may deem and treat the person in whose name a Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of and interest on such Security and for all other purposes whatsoever, whether or not such Security is overdue, and none of the Company, the Trustee, the Paying Agent or the Registrar shall be affected by notice to the contrary. (iv) The Company shall not be required to make and the Registrar need not register transfers or exchanges of Securities selected for redemption (except, in the case of Securities to be redeemed in part, the portion thereof not to be redeemed) or any Securities for a period of 15 days before a selection of Securities to be redeemed. (v) All Securities issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Securities surrendered upon such transfer or exchange. (h) No Obligation of the Trustee. ----------------------------- 11 (i) The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Security, a member of, or a participant in the Depositary or any other Person with respect to the accuracy of the records of the Depositary or its nominee or of any participant or member thereof, with respect to any ownership interest in the Securities or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depositary) of any notice (including any notice of redemption or repurchase) or the payment of any amount, under or with respect to such Securities. All notices and communications to be given to the Holders and all payments to be made to Holders under the Securities shall be given or made only to the registered Holders (which shall be the Depositary or its nominee in the case of a Global Security). The rights of beneficial owners in any Global Security shall be exercised only through the Depositary subject to the applicable rules and procedures of the Depositary. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its members, participants and any beneficial owners. (ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers between or among Depositary participants, members or beneficial owners in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof. 2.4 Definitive Securities --------------------- (a) A Global Security deposited with the Depositary or with the Trustee as Securities Custodian pursuant to Section 2.1 shall be transferred to the beneficial owners thereof in the form of Definitive Securities in an aggregate principal amount at maturity equal to the principal amount at maturity of such Global Security, in exchange for such Global Security, only if such transfer complies with Section 2.3 and (i) the Depositary notifies the Company that it is unwilling or unable to continue as a Depositary for such Global Security or if at any time the Depositary ceases to be a "clearing agency" registered under the Exchange Act, and a successor depositary is not appointed by the Company within 90 days of such notice, or (ii) an Event of Default has occurred and is continuing or (iii) the Company, in its sole discretion, notifies the Trustee in writing that it elects to cause the issuance of certificated Securities under this Indenture. (b) Any Global Security that is transferable to the beneficial owners thereof pursuant to this Section 2.4 shall be surrendered by the Depositary to the Trustee, to be so transferred, in whole or from time to time in part, without charge, and the Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Security, an equal aggregate principal amount at maturity of Definitive Securities of authorized denominations. Any portion of a Global Security transferred pursuant to this Section 2.4 shall be executed, authenticated and delivered only in denominations of $1,000 of principal amount at maturity and any integral multiple thereof and registered in such names as the Depositary shall direct. Any certificated Initial Security in the form of a Definitive Security delivered in exchange for an 12 interest in the Global Security shall, except as otherwise provided by Section 2.3(e), bear the Restricted Securities Legend. (c) Subject to the provisions of Section 2.4(b), the registered Holder of a Global Security may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities. (d) In the event of the occurrence of any of the events specified in Section 2.4(a)(i), (ii) or (iii), the Company will promptly make available to the Trustee a reasonable supply of Definitive Securities in fully registered form without interest coupons. EXHIBIT A [FORM OF FACE OF INITIAL SECURITY] [Global Securities Legend] UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. [Restricted Securities Legend] THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED 2 EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT AT MATURITY OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. [Legend for Definitive Securities] IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS." No. $[ ] 115/8% Senior Subordinated Discount Note due 2009 CUSIP No. [ ] TeleCorp PCS, Inc., a Delaware corporation, promises to pay to Cede & Co., or registered assigns, the principal sum listed on the Schedule of Increases or Decreases in Global Security attached hereto on April 23, 2009. Interest Payment Dates: April 15 and October 15. Record Dates: April 1 and October 1. 2 Additional provisions of this Security are set forth on the other side of this Security. IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed. TELECORP PCS, INC., by ____________________________________ Name: Title: by ____________________________________ Name: Title: Dated: TRUSTEE'S CERTIFICATE OF AUTHENTICATION BANKERS TRUST COMPANY, as Trustee, certifies that this is one of the Securities referred to in the Indenture. By:_________________________ Authorized Signatory 3 [FORM OF REVERSE SIDE OF INITIAL SECURITY] 11 5/8% Senior Subordinated Discount Note due 2009 1. Interest -------- (a) TeleCorp PCS, Inc., a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the "Company"), promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company shall pay interest semiannually on April 15 and October 15 of each year commencing October 15, 2004. Interest on the Securities shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from April 15, 2004. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay cash interest on overdue principal at the rate borne by the Securities plus 1% per annum, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. (b) Liquidated Damages. The holder of this Security is entitled to ------------------ the benefits of an Exchange and Registration Rights Agreement, dated as of April 23, 1999, among the Company, TeleCorp Communications, Inc. (the "Subsidiary Guarantor") and the Initial Purchasers named therein (the "Registration Agreement"). Capitalized terms used in this paragraph (b) but not defined herein have the meanings assigned to them in the Registration Agreement. If (i) the Shelf Registration Statement or Exchange Offer Registration Statement, as applicable under the Registration Agreement, is not filed with the Commission on or prior to 60 days after the Issue Date, (ii) the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, is not declared effective within 180 days after the Issue Date, (iii) the Registered Exchange Offer is not consummated on or prior to 210 days after the Issue Date, or (iv) the Shelf Registration Statement is filed and declared effective within 180 days after the Issue Date but shall thereafter cease to be effective (at any time that the Company is obligated to maintain the effectiveness thereof) without being succeeded within 45 days by an additional Registration Statement filed and declared effective (each such event referred to in clauses (i) through (iv), a "Registration Default"), the Company shall pay liquidated damages to each holder of Transfer Restricted Securities, during the period of such Registration Default, in an amount equal to $0.192 per week per $1,000 of Accreted Value of the Securities constituting Transfer Restricted Securities held by such holder until the applicable Registration Statement is filed or declared effective, the Registered Exchange Offer is consummated or the Shelf Registration Statement again becomes effective, as the case may be. All accrued liquidated damages shall be paid to holders in the same manner as interest payments on the Securities on semi-annual payment dates which correspond to interest payment dates for the Securities. Following the cure of all Registration Defaults, the accrual of liquidated damages shall cease. The Trustee shall have no responsibility with respect to the determination of the amount of any such liquidated damages. For purposes of the foregoing, "Transfer Restricted Securities" means (i) each Initial Security until the date on which such Initial Security has been exchanged for a freely transferable Exchange Security in the Registered Exchange Offer, (ii) each Initial Security or Private Exchange Security until the date on which such Initial Security or Private Exchange Security has been effectively registered under the Securities Act 4 and disposed of in accordance with a Shelf Registration Statement or (iii) each Initial Security or Private Exchange Security until the date on which such Initial Security or Private Exchange Security is distributed to the public pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act. 2. Method of Payment ----------------- The Company shall pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at the close of business on the April 1 or October 1 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company shall pay principal, premium, liquidated damages and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium, liquidated damages and interest) shall be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company. The Company will make all payments in respect of a certificated Security (including principal, premium and interest), by mailing a check to the registered address of each Holder thereof; provided, however, that payments on -------- ------- the Securities may also be made, in the case of a Holder of at least $1,000,000 aggregate principal amount at maturity of Securities, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion). 3. Paying Agent and Registrar -------------------------- Initially, Bankers Trust Company, a New York banking corporation (the "Trustee"), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar. 4. Indenture --------- The Company issued the Securities under an Indenture dated as of April 23, 1999 (the "Indenture"), among the Company, the Subsidiary Guarantor and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-77bbbb) as in effect on the date of the Indenture (the ----- "TIA"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all terms and provisions of the Indenture, and Securityholders are referred to the Indenture and the TIA for a statement of such terms and provisions. The Securities are senior subordinated unsecured obligations of the Company limited to $575,000,000 aggregate principal amount at maturity at any one time outstanding (subject to Sections 2.01 and 2.08 of the Indenture). This Security is one of the Initial Securities 5 referred to in the Indenture. The Securities include the Initial Securities and any Exchange Securities and Private Exchange Securities issued in exchange for Initial Securities. The Initial Securities, the Exchange Securities and the Private Exchange Securities are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to, among other things, make certain Investments and other Restricted Payments, pay dividends and other distributions, Incur Indebtedness, enter into consensual restrictions upon the payment of certain dividends and distributions by Restricted Subsidiaries, enter into or permit certain transactions with Affiliates Asset Dispositions. The Indenture also imposes limitations on the ability of the Company to consolidate or merge with or into any other Person or convey, transfer or lease all or substantially all of the property of the Company. To guarantee the due and punctual payment of the principal and interest on the Securities and all other amounts payable by the Company under the Indenture and the Securities when and as the same shall be due and payable, whether at maturity, by acceleration or otherwise, according to the terms of the Securities and the Indenture, the Subsidiary Guarantors jointly and severally, unconditionally guarantee the Guaranteed Obligations on a senior subordinated basis pursuant to the terms of the Indenture. 5. Optional Redemption ------------------- Except as set forth in the following paragraph, the Securities will not be redeemable at the option of the Company prior to April 15, 2004. Thereafter, the Securities will be redeemable at the option of the Company, in whole or in part, on not less than 30 nor more than 60 days' prior notice, at the following redemption prices (expressed as percentages of principal amount at maturity), plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest, if any, due on the relevant interest payment date), if redeemed during the 12-month period commencing on April 15 of the years set forth below: 6
Year Redemption Price --------------------------------- 2004 105.813% 2005 103.875% 2006 101.938% 2007 and thereafter 100.000%
In addition, at any time and from time to time prior to April 15, 2002, the Company may redeem up to a maximum of 35% of the aggregate principal amount at maturity of the Securities with the proceeds of one or more Equity Offerings by the Company, at a redemption price equal to 111 5/8% of the Accreted Value on the redemption date; provided, however, that, after giving -------- ------- effect to any such redemption at least 65% of the aggregate principal amount at maturity of the Securities remains outstanding. In addition, any such redemption shall be made within 60 days of such Equity Offering upon not less than 30 nor more than 60 days' notice mailed to each holder of Securities being redeemed and otherwise in accordance with the procedures set forth in the Indenture. 6. Sinking Fund ------------ The Securities are not subject to any sinking fund. 7. Notice of Redemption -------------------- Notice of redemption will be mailed by first-class mail at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his or her registered address. Securities in denominations larger than $1,000 of principal amount at maturity may be redeemed in part but only in whole multiples of $1,000 of principal amount at maturity. If money sufficient to pay the redemption price of and accrued and unpaid interest and liquidated damages, if any, on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date and certain other conditions are satisfied, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption. 7 8. Repurchase of Securities at the Option of Holders upon Change of Control ------------------------------------------------------------------------ Upon a Change of Control, each Holder of Securities will have the right, subject to certain conditions specified in the Indenture, to require the Company to repurchase all or any part of such holder's Securities at a purchase price in cash equal to (a) 101% of the Accreted Value on the Purchase Date, if such date is on or before April 15, 2004, or (b) 101% of the principal amount at maturity, plus accrued and unpaid interest, if any, to the Purchase Date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if such date is after April 15, 2004, as provided in, and subject to the terms of, the Indenture. 9. Subordination ------------- The Securities are subordinated to Senior Indebtedness, as defined in the Indenture. To the extent provided in the Indenture, Senior Indebtedness must be paid before the Securities may be paid. The Company and each Subsidiary Guarantor agrees, and each Securityholder by accepting a Security agrees, to the subordination provisions contained in the Indenture and authorizes the Trustee to give it effect and appoints the Trustee as attorney-in-fact for such purpose. 10. Denominations; Transfer; Exchange --------------------------------- The Securities are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. Upon any transfer or exchange, the Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or to transfer or exchange any Securities for a period of 15 days prior to a selection of Securities to be redeemed. 11. Persons Deemed Owners --------------------- The registered Holder of this Security may be treated as the owner of it for all purposes. 12. Unclaimed Money --------------- If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its written request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment. 8 13. Discharge and Defeasance ------------------------ Subject to certain conditions, the Company at any time may terminate some of or all its obligations under the Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be. 14. Amendment, Waiver ----------------- Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended without prior notice to any Securityholder but with the written consent of the Holders of at least a majority in aggregate principal amount of the outstanding Securities and (ii) any default or noncompliance with any provision may be waived with the written consent of the Holders of at least a majority in principal amount at maturity of the outstanding Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Holder of Securities, the Company and the Trustee may amend the Indenture or the Securities (i) to cure any ambiguity, omission, defect or inconsistency; (ii) to comply with Article 5 of the Indenture; (iii) to provide for uncertificated Securities in addition to or in place of certificated Securities; (iv) to add Subsidiary Guarantees with respect to the Securities; (v) to secure the Securities; (vi) to add additional covenants or to surrender rights and powers conferred on the Company; (vii) to comply with the requirements of the Commission in order to effect or maintain the qualification of the Indenture under the TIA; (viii) to make any change that does not adversely affect the rights of any Securityholder; (ix) to make any change in the subordination provisions of the Indenture that would limit or terminate the benefits available to any holder of Senior Indebtedness of the Company (or any representative thereof) under such subordination provisions; or (x) to provide for the issuance of the Exchange Securities or Private Exchange Securities. 15. Defaults and Remedies --------------------- If an Event of Default occurs (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company) and is continuing, the Trustee or the Holders of at least 25% in principal amount at maturity of the outstanding Securities may declare the principal of and accrued but unpaid interest on all the Securities to be due and payable. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company occurs, the principal of and interest on all the Securities shall become immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Under certain circumstances, the Holders of a majority in principal amount at maturity of the outstanding Securities may rescind any such acceleration with respect to the Securities and its consequences. If an Event of Default occurs and is continuing, the Trustee shall be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to the Indenture or the Securities unless (i) such Holder has previously given the Trustee notice 9 that an Event of Default is continuing, (ii) Holders of at least 25% in principal amount at maturity of the outstanding Securities have requested the Trustee in writing to pursue the remedy, (iii) such Holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense, (iv) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity and (v) the Holders of a majority in principal amount at maturity of the outstanding Securities have not given the Trustee a direction inconsistent with such request within such 60-day period. Subject to certain restrictions, the Holders of a majority in principal amount at maturity of the outstanding Securities are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability. Prior to taking any action under the Indenture, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. 16. Trustee Dealings with the Company --------------------------------- Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. 17. No Recourse Against Others -------------------------- A director, officer, employee or stockholder, as such, of the Company or any Subsidiary Guarantor shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 18. Authentication -------------- This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security. 19. Abbreviations ------------- Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 10 20. Governing Law ------------- THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 21. CUSIP Numbers ------------- Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Securities and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Securityholders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 22. Holders' Compliance with Registration Agreement. ------------------------------------------------ Each Holder of a Security, by acceptance hereof, acknowledges and agrees to the provisions of the Registration Agreement, including, without limitation, the obligations of the Holders with respect to a registration and the indemnification of the Company to the extent provided therein. The Company will furnish to any Holder of Securities upon written request and without charge to the Holder a copy of the Indenture which has in it the text of this Security. 11 ASSIGNMENT FORM To assign this Security, fill in the form below: I or we assign and transfer this Security to ___________________________________________________________________________ (Print or type assignee's name, address and zip code) ___________________________________________________________________________ (Insert assignee's soc. sec. or tax I.D. No.) and irrevocably appoint ________________________________________________________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. Date: ______________________ Your Signature: ______________________________ ___________________________________________________________________________ Sign exactly as your name appears on the other side of this Security. 12 CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER RESTRICTED SECURITIES This certificate relates to $_________ principal amount at maturity of Securities held in (check applicable space) ____ book-entry or _____ definitive form by the undersigned. The undersigned (check one box below): [_] has requested the Trustee by written order to deliver in exchange for its beneficial interest in the Global Security held by the Depositary a Security or Securities in definitive, registered form of authorized denominations and an aggregate principal amount at maturity equal to its beneficial interest in such Global Security (or the portion thereof indicated above); [_] has requested the Trustee by written order to exchange or register the transfer of a Security or Securities. In connection with any transfer of any of the Securities evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act, the undersigned confirms that such Securities are being transferred in accordance with its terms: CHECK ONE BOX BELOW (1) [_] to the Company; or (2) [_] pursuant to an effective registration statement under the Securities Act of 1933; or (3) [_] inside the United States to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or (4) [_] outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; or (5) [_] to an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933) that has furnished to the Trustee a signed letter containing certain representations and agreements; or (6) [_] pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933. 13 Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any Person other than the registered holder thereof; provided, however, that if box -------- ------- (4), (5) or (6) is checked, the Trustee may require, prior to registering any such transfer of the Securities, such legal opinions, certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933. __________________________ Your Signature Signature Guarantee: Date: ______________________ __________________________ Signature must be guaranteed Signature of Signature by a participant in a Guarantee recognized signature guaranty medallion program or other signature guarantor acceptable to the Trustee ____________________________________________________________ TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ________________ ______________________________ NOTICE: To be executed by an executive officer 14 [TO BE ATTACHED TO GLOBAL SECURITIES] SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY The initial principal amount at maturity of this Global Security is $[ ]. The following increases or decreases in this Global Security have been made: Date of Amount of decrease in Amount of increase in Principal amount at maturity Signature of authorized Exchange Principal Amount of this Principal Amount at maturity of this Global Security signatory of Trustee or Global Security of this Global Security following such decrease or Securities Custodian increase
15 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased by the Company pursuant to Section 4.06 (Asset Disposition) or 4.08 (Change of Control) of the Indenture, check the box: Asset Disposition [_] Change of Control [_] If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.06 or 4.08 of the Indenture, state the principal amount at maturity: $___________ Date: __________________ Your Signature: ______________________________________ (Sign exactly as your name appears on the other side of the Security) Signature Guarantee: ___________________________________________________________ Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor acceptable to the Trustee EXHIBIT B [FORM OF FACE OF EXCHANGE SECURITY] No. $__________ 11 5/8% Senior Subordinated Discount Note due 2009 CUSIP No. ______ TeleCorp PCS, Inc., a Delaware corporation, promises to pay to Cede & Co., or registered assigns, the principal sum listed on the Schedule of Increases or Decreases in Global Security attached hereto on April 23, 2009. Interest Payment Dates: April 15 and October 15. Record Dates: April 1 and October 1. 2 Additional provisions of this Security are set forth on the other side of this Security. IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed. TELECORP PCS, INC., by ___________________________________________ Name: Title: by ___________________________________________ Name: Title: Dated: TRUSTEE'S CERTIFICATE OF AUTHENTICATION BANKERS TRUST COMPANY, as Trustee, certifies that this is one of the Securities referred to in the Indenture. by _______________________________________ Authorized Signatory 3 [FORM OF REVERSE SIDE OF EXCHANGE SECURITY] 11 5/8% Senior Subordinated Discount Note due 2009 1. Interest. -------- TeleCorp PCS, Inc., a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the "Company"), promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company shall pay interest semiannually on April 15 and October 15 of each year. Interest on the Securities shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from April 15, 2004. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay cash interest on overdue principal at the rate borne by the Securities plus 1% per annum, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. 2. Method of Payment ----------------- The Company shall pay interest on the Securities (except defaulted interest) to the Persons who are registered holders of Securities at the close of business on the April 1 or October 1 next preceding the interest payment date even if Securities are canceled after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company shall pay principal, premium and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Securities represented by a Global Security (including principal, premium and interest) shall be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company. The Company will make all payments in respect of a certificated Security (including principal, premium and interest), by mailing a check to the registered address of each Holder thereof; provided, however, that payments on the Securities may also be made, in the case - -------- ------- of a Holder of at least $1,000,000 aggregate principal amount at maturity of Securities, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion). 3. Paying Agent and Registrar -------------------------- Initially, Bankers Trust Company, a New York banking corporation (the "Trustee"), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar. 4 4. Indenture --------- The Company issued the Securities under an Indenture dated as of April 23, 1999 (the "Indenture"), among the Company, the Subsidiary Guarantor and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-77bbbb) as in effect on the date of the Indenture (the ------ "TIA"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all terms and provisions of the Indenture, and Securityholders are referred to the Indenture and the TIA for a statement of such terms and provisions. The Securities are senior subordinated unsecured obligations of the Company limited to $575,000,000 principal amount at maturity at any one time outstanding (subject to Sections 2.01 and 2.08 of the Indenture). This Security is one of the Initial Securities referred to in the Indenture. The Securities include the Original Securities and any Exchange Securities and Private Exchange Securities issued in exchange for the Initial Securities pursuant to the Indenture. The Initial Securities, the Exchange Securities and the Private Exchange Securities are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to, among other things, make certain Investments and other Restricted Payments, pay dividends and other distributions, Incur Indebtedness, enter into consensual restrictions upon the payment of certain dividends and distributions by Restricted Subsidiaries, enter into or permit certain transactions with Affiliates, and make Asset Dispositions. The Indenture also imposes limitations on the ability of the Company to consolidate or merge with or into any other Person or convey, transfer or lease all or substantially all of the property of the Company. To guarantee the due and punctual payment of the principal and interest, if any, on the Securities and all other amounts payable by the Company under the Indenture and the Securities when and as the same shall be due and payable, whether at maturity, by acceleration or otherwise, according to the terms of the Securities and the Indenture, the Subsidiary Guarantors have, jointly and severally, unconditionally guaranteed the Guaranteed Obligations on a senior subordinated basis pursuant to the terms of the Indenture. 5 5. Optional Redemption ------------------- Except as set forth in the following paragraph, the Securities will not be redeemable at the option of the Company prior to April 15, 2004. Thereafter, the Securities will be redeemable at the option of the Company, in whole or in part, on not less than 30 nor more than 60 days' prior notice, at the following redemption prices (expressed as percentages of principal amount at maturity), plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest, if any, due on the relevant interest payment date), if redeemed during the 12-month period commencing on April 15 of the years set forth below: YEAR REDEMPTION PRICE ---------------------------------------------------- 2004 105.813% 2005 103.875% 2006 101.938% 2007 and thereafter 100.000% In addition, at any time and from time to time prior to April 15, 2002, the Company may redeem up to a maximum of 35% of the aggregate principal amount at maturity of the Securities with the proceeds of one or more Equity Offerings by the Company, at a redemption price equal to 111 5/8% of the Accreted Value on the redemption date; provided, however, that, after giving -------- ------- effect t o any such redemption at least 65% of the aggregate principal amount at maturity of the Securities remains outstanding. In addition, any such redemption shall be made within 60 days of such Equity Offering upon not less than 30 nor more than 60 days' notice mailed to each holder of Securities being redeemed and otherwise in accordance with the procedures set forth in the Indenture. 6. Sinking Fund ------------ The Securities are not subject to any sinking fund. 7. Notice of Redemption -------------------- Notice of redemption will be mailed by first-class mail at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at his or her registered address. Securities in denominations larger than $1,000 of principal amount at maturity may be redeemed in part but only in whole multiples of $1,000 of principal amount at maturity. If money sufficient to pay the redemption price of and accrued and unpaid interest and liquidated damages, if any, on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date and certain other conditions are satisfied, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption. 6 8. Repurchase of Securities at the Option of Holders upon Change of Control ------------------------------------------------------------------------ Upon a Change of Control, each Holder of Securities will have the right, subject to certain conditions specified in the Indenture, to require the Company to repurchase all or any part of such holder's Securities at a purchase price in cash equal to (a) 101% of the Accreted Value on the Purchase Date, if such date is on or before April 15, 2004, or (b) 101% of the principal amount at maturity, plus accrued and unpaid interest, if any, to the Purchase Date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if such date is after April 15, 2004, as provided in, and subject to the terms of, the Indenture. 9. Subordination ------------- The Securities are subordinated to Senior Indebtedness, as defined in the Indenture. To the extent provided in the Indenture, Senior Indebtedness must be paid before the Securities may be paid. The Company and each Subsidiary Guarantor agrees, and each Securityholder by accepting a Security agrees, to the subordination provisions contained in the Indenture and authorizes the Trustee to give it effect and appoints the Trustee as attorney-in-fact for such purpose. 10. Denominations; Transfer; Exchange --------------------------------- The Securities are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000 of principal amount at maturity. A Holder may transfer or exchange Securities in accordance with the Indenture. Upon any transfer or exchange, the Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or to transfer or exchange any Securities for a period of 15 days prior to a selection of Securities to be redeemed or 15 days before an interest payment date. 11. Persons Deemed Owners --------------------- The registered Holder of this Security may be treated as the owner of it for all purposes. 12. Unclaimed Money --------------- If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its written request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment. 7 13. Discharge and Defeasance ------------------------ Subject to certain conditions, the Company at any time may terminate some of or all its obligations under the Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be. 14. Amendment, Waiver ----------------- Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended without prior notice to any Securityholder but with the written consent of the Holders of at least a majority in aggregate principal amount at maturity of the outstanding Securities and (ii) any default or noncompliance with any provision may be waived with the written consent of the Holders of at least a majority in principal amount at maturity of the outstanding Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Holder of Securities, the Company and the Trustee may amend the Indenture or the Securities (i) to cure any ambiguity, omission, defect or inconsistency; (ii) to comply with Article 5 of the Indenture; (iii) to provide for uncertificated Securities in addition to or in place of certificated Securities; (iv) to add Subsidiary Guarantees with respect to the Securities; (v) to secure the Securities; (vi) to add additional covenants or to surrender rights and powers conferred on the Company; (vii) to comply with the requirements of the Commission in order to effect or maintain the qualification of the Indenture under the TIA; (viii) to make any change that does not adversely affect the rights of any Securityholder; (ix) to make any change in the subordination provisions of the Indenture that would limit or terminate the benefits available to any holder of Senior Indebtedness of the Company (or any representative thereof) under such subordination provisions; or (x) to provide for the issuance of the Exchange Securities or Private Exchange Securities. 15. Defaults and Remedies --------------------- If an Event of Default occurs (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company) and is continuing, the Trustee or the Holders of at least 25% in principal amount at maturity of the outstanding Securities may declare the principal of and accrued but unpaid interest on all the Securities to be due and payable. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company occurs, the principal of and interest on all the Securities shall become immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Under certain circumstances, the Holders of a majority in principal amount at maturity of the outstanding Securities may rescind any such acceleration with respect to the Securities and its consequences. If an Event of Default occurs and is continuing, the Trustee shall be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to the Indenture or the Securities unless (i) such Holder has previously given the Trustee notice 8 that an Event of Default is continuing, (ii) Holders of at least 25% in principal amount at maturity of the outstanding Securities have requested the Trustee in writing to pursue the remedy, (iii) such Holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense, (iv) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity and (v) the Holders of a majority in principal amount at maturity of the outstanding Securities have not given the Trustee a direction inconsistent with such request within such 60-day period. Subject to certain restrictions, the Holders of a majority in principal amount at maturity of the outstanding Securities are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability. Prior to taking any action under the Indenture, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. 16. Trustee Dealings with the Company --------------------------------- Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. 17. No Recourse Against Others -------------------------- A director, officer, employee or stockholder, as such, of the Company or any Subsidiary Guarantor shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 18. Authentication -------------- This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security. 19. Abbreviations ------------- Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 9 20. Governing Law ------------- THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 21. CUSIP Numbers ------------- Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Securities and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Securityholders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Company will furnish to any Holder of Securities upon written request and without charge to the Holder a copy of the Indenture which has in it the text of this Security. 10 ASSIGNMENT FORM To assign this Security, fill in the form below: I or we assign and transfer this Security to: ______________________________________________________________________ (Print or type assignee's name, address and zip code) ______________________________________________________________________ (Insert assignee's soc. sec. or tax I.D. No.) and irrevocably appoint ________________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. Date: _____________________ Your Signature: _______________________________ ________________________________________________________________________________ Sign exactly as your name appears on the other side of this Security. Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor acceptable to the Trustee. 11 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased by the Company pursuant to Section 4.06 (Asset Sale) or 4.08 (Change of Control) of the Indenture, check the box: Asset Sale[_] Change of Control[_] If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.06 or 4.08 of the Indenture, state the amount: $________________________ Date: _____________ Your Signature:____________________________________ (Sign exactly as your name appears on the other side of the Security) Signature Guarantee:______________________________________________________________________ Signature must be guaranteed by a participant in a recognized signature Guaranty medallion program or other signature guarantor acceptable to the Trustee. EXHIBIT C FORM OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE (this "Supplemental Indenture") dated as of , among [GUARANTOR] (the "New Guarantor"), a subsidiary of TELECORP PCS, INC. (or its successor), a Delaware corporation (the "Company"), TELECORP COMMUNICATIONS INC. and BANKERS TRUST COMPANY, a New York corporation banking, as trustee under the indenture referred to below (the "Trustee"). W I T N E S S E T H : WHEREAS the Company and TeleCorp Communications, Inc. (the "Existing Guarantor") has heretofore executed and delivered to the Trustee an Indenture (the "Indenture") dated as of April 23, 1999, providing for the issuance of an aggregate principal amount at maturity of up to $575,000,000 of 11 5/8% Senior Subordinated Discount Notes due 2009 (the "Securities"); WHEREAS Section 4.11 of the Indenture provides that under certain circumstances the Company is required to cause the New Guarantor to execute and deliver to the Trustee a supplemental indenture pursuant to which the New Guarantor shall unconditionally guarantee all the Company's obligations under the Securities pursuant to a Subsidiary Guarantee on the terms and conditions set forth herein; and WHEREAS pursuant to Section 9.01 of the Indenture, the Trustee, the Company and the Existing Guarantor are authorized to execute and deliver this Supplemental Indenture; NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the New Guarantor, the Company, the Existing Guarantor and the Trustee mutually covenant and agree for the equal and ratable benefit of the holders of the Securities as follows: 1. Agreement to Guarantee. The New Guarantor hereby agrees, jointly ----------------------- and severally with the Existing Guarantor, to unconditionally guarantee the Company's obligations under the Securities on the terms and subject to the conditions set forth in Article 10 of the Indenture and to be bound by all other applicable provisions of the Indenture and the Securities. 2. Ratification of Indenture; Supplemental Indentures Part of ---------------------------------------------------------- Indenture. Except as expressly amended hereby, the Indenture is in all respects - ---------- ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Securities heretofore or hereafter authenticated and delivered shall be bound hereby. 3. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, -------------- AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 4. Trustee Makes No Representation. The Trustee makes no -------------------------------- representation as to the validity or sufficiency of this Supplemental Indenture. 5. Counterparts. The parties may sign any number of copies of this ------------- Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 6. Effect of Headings. The Section headings herein are for ------------------- convenience only and shall not effect the construction thereof. IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written. [NEW GUARANTOR], by ________________________________ Name: Title: TELECORP PCS, INC., by ________________________________ Name: Title: TELECORP COMMUNICATIONS, INC., ________________________________ Name: Title: BANKERS TRUST COMPANY, as Trustee, by ________________________________ Name: Title: EXHIBIT D Form of Transferee Letter of Representation TeleCorp PCS, Inc. In care of Bankers Trust Company One Bankers Trust Plaza 130 Liberty Street New York, New York 10006 Ladies and Gentlemen: This certificate is delivered to request a transfer of $ principal amount at maturity of the 11 5/8% Senior Subordinated Discount Notes due 2009 (the "Notes") of TeleCorp PCS, Inc. (the "Company"). Upon transfer, the Notes would be registered in the name of the new beneficial owner as follows: Name:________________________ Address:_____________________ Taxpayer ID Number:__________ The undersigned represents and warrants to you that: 1. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the "Securities Act")), purchasing for our own account or for the account of such an institutional "accredited investor" at least $250,000 principal amount at maturity of the Securities, and we are acquiring the Securities not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act. We have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Securities, and we invest in or purchase securities similar to the Securities in the normal course of our business. We, and any accounts for which we are acting, are each able to bear the economic risk of our or its investment. 2 2. We understand that the Securities have not been registered under the Securities Act and, unless so registered, may not be sold except as permitted in the following sentence. We agree on our own behalf and on behalf of any investor account for which we are purchasing the Securities to offer, sell or otherwise transfer such Securities prior to the date that is two years after the later of the date of original issue and the last date on which TeleCorp or any affiliate of TeleCorp was the owner of such Securities (or any predecessor thereto) (the "Resale Restriction Termination Date") only (a) to TeleCorp, (b) pursuant to a registration statement that has been declared effective under the Securities Act, (c) in a transaction complying with the requirements of Rule 144A under the Securities Act ("Rule 144A"), to a person we reasonably believe is a qualified institutional buyer under Rule 144A (a "QIB") that is purchasing for its own account or for the account of a QIB and to whom notice is given that the transfer is being made in reliance on Rule 144A, (d) in an offshore transaction within the meaning of, and in compliance with, Regulation S under the Securities Act, (e) to an institutional "accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is purchasing for its own account or for the account of such an institutional "accredited investor", in each case in a minimum principal amount at maturity of Notes of $250,000, or (f) pursuant to any other available exemption from the registration requirements of the Securities Act, subject in each of the foregoing cases to any requirement of law that the disposition of our property or the property of such investor account or accounts be at all times within our or their control and in compliance with any applicable state securities laws. The foregoing restrictions on resale will not apply subsequent to the Resale Restriction Termination Date. If any resale or other transfer of the Notes is proposed to be made pursuant to clause (e) above prior to the Resale Restriction Termination Date, the transferor shall deliver a letter from the transferee substantially in the form of this letter to TeleCorp and the Trustee, which shall provide, among other things, that the transferee is an institutional "accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act and that it is acquiring such Notes for investment purposes and not for distribution in violation of the Securities Act. Each purchaser acknowledges that TeleCorp and the Trustee reserve the right prior to the offer, sale or other transfer prior to the Resale Restriction Termination Date of the Notes pursuant to clause (d), (e) or (f) above to require the delivery of an opinion of counsel, certifications or other information satisfactory to TeleCorp and the Trustee. TRANSFEREE:_____________________ by:___________________________ TABLE OF CONTENTS ARTICLE 1 Definitions and Incorporation by Reference ------------------------------------------ SECTION 1.01. Definitions.............................................. 2 SECTION 1.02. Other Definitions........................................ 27 SECTION 1.03. Incorporation by Reference of Trust Indenture Act........ 27 SECTION 1.04. Rules of Construction.................................... 27 ARTICLE 2 The Securities -------------- SECTION 2.01. Form and Dating.......................................... 28 SECTION 2.02. Execution and Authentication............................. 28 SECTION 2.03. Registrar and Paying Agent............................... 29 SECTION 2.04. Paying Agent To Hold Money in Trust...................... 29 SECTION 2.05. Securityholder Lists..................................... 30 SECTION 2.06. Transfer and Exchange.................................... 30 SECTION 2.07. Replacement Securities................................... 31 SECTION 2.08. Outstanding Securities................................... 31 SECTION 2.09. Temporary Securities..................................... 32 SECTION 2.10. Cancelation.............................................. 32 SECTION 2.11. Defaulted Interest....................................... 32 SECTION 2.12. CUSIP Numbers............................................ 32 ARTICLE 3 Redemption ---------- SECTION 3.01. Notices to Trustee....................................... 32 SECTION 3.02. Selection of Securities To Be Redeemed................... 33 SECTION 3.03. Notice of Redemption..................................... 33 SECTION 3.04. Effect of Notice of Redemption........................... 34 SECTION 3.05. Deposit of Redemption Price.............................. 34 SECTION 3.06. Securities Redeemed in Part.............................. 34 ARTICLE 4 Covenants --------- SECTION 4.01. Payment of Securities.................................... 34 SECTION 4.02. Provision of Financial Information....................... 35 SECTION 4.03. Limitation on Incurrence of Indebtedness................. 35 SECTION 4.04. Limitation on Restricted Payments........................ 38 SECTION 4.05. Limitation on Restrictions Affecting Restricted Subsidiaries........................................ 43 SECTION 4.06. Limitation on Certain Asset Dispositions................. 44 SECTION 4.07. Limitation on Transactions with Affiliates............... 45 SECTION 4.08. Change of Control........................................ 47 SECTION 4.09. Compliance Certificate................................... 48 SECTION 4.10. Further Instruments and Acts............................. 48 SECTION 4.11. Future Subsidiary Guarantors............................. 48 SECTION 4.12. Limitation on Activities of the Company and the Restricted Subsidiaries............................. 48 SECTION 4.13. Limitation on Designations of Unrestricted Subsidiaries........................................ 48 SECTION 4.14. Limitation on Layered Indebtedness....................... 50
SECTION 4.15. Amendments to the Securities Purchase Agreement.......... 50 ARTICLE 5 Successor Company ----------------- SECTION 5.01. Merger, Consolidation and Certain Sales of Assets........ 50 ARTICLE 6 Defaults and Remedies --------------------- SECTION 6.01. Events of Default........................................ 52 SECTION 6.02. Acceleration............................................. 53 SECTION 6.03. Other Remedies........................................... 54 SECTION 6.04. Waiver of Past Defaults.................................. 54 SECTION 6.05. Control by Majority...................................... 54 SECTION 6.06. Limitation on Suits...................................... 54 SECTION 6.07. Rights of Holders To Receive Payment..................... 55 SECTION 6.08. Collection Suit by Trustee............................... 55 SECTION 6.09. Trustee May File Proofs of Claim......................... 55 SECTION 6.10. Priorities............................................... 55 SECTION 6.11. Undertaking for Costs.................................... 56 SECTION 6.12. Waiver of Stay or Extension Laws......................... 56 ARTICLE 7 Trustee ------- SECTION 7.01. Duties of Trustee........................................ 56 SECTION 7.02. Rights of Trustee........................................ 57 SECTION 7.03. Individual Rights of Trustee............................. 58 SECTION 7.04. Trustee's Disclaimer..................................... 58 SECTION 7.05. Notice of Defaults....................................... 58 SECTION 7.06. Reports by Trustee to Holders............................ 58 SECTION 7.07. Compensation and Indemnity............................... 59 SECTION 7.08. Replacement of Trustee................................... 59 SECTION 7.09. Successor Trustee by Merger.............................. 60 SECTION 7.10. Eligibility; Disqualification............................ 61 SECTION 7.11. Preferential Collection of Claims Against Company........ 61 SECTION 7.12. Trustee Acting as Paying Agent or Registrar.............. 61 ARTICLE 8 Discharge of Indenture; Defeasance ---------------------------------- SECTION 8.01. Discharge of Liability on Securities; Defeasance......... 61 SECTION 8.02. Conditions to Defeasance................................. 62 SECTION 8.03. Application of Trust Money............................... 63 SECTION 8.04. Repayment to Company..................................... 63 SECTION 8.05. Indemnity for Government Obligations..................... 63 SECTION 8.06. Reinstatement............................................ 63 ARTICLE 9 Amendments ---------- SECTION 9.01. Without Consent of Holders............................... 64 SECTION 9.02. With Consent of Holders.................................. 65 SECTION 9.03. Compliance with Trust Indenture Act...................... 66 SECTION 9.04. Revocation and Effect of Consents and Waivers............ 66 SECTION 9.05. Notation on or Exchange of Securities.................... 66 SECTION 9.06. Trustee To Sign Amendments............................... 66 SECTION 9.07. Payment for Consent...................................... 66 ARTICLE 10 Subordination -------------
SECTION 10.01. Agreement To Subordinate................................ 67 SECTION 10.02. Liquidation, Dissolution, Bankruptcy.................... 67 SECTION 10.03. Default on Senior Indebtedness.......................... 67 SECTION 10.04. Acceleration of Payment of Securities................... 68 SECTION 10.05. When Distribution Must Be Paid Over..................... 68 SECTION 10.06. Subrogation............................................. 69 SECTION 10.07. Relative Rights......................................... 69 SECTION 10.08. Subordination May Not Be Impaired by Company............ 69 SECTION 10.09. Rights of Trustee and Paying Agent...................... 69 SECTION 10.10. Distribution or Notice to Representative................ 69 SECTION 10.11. Article 10 Not To Prevent Events of Default or Limit Right To Accelerate........................... 70 SECTION 10.12. Trust Moneys Not Subordinated........................... 70 SECTION 10.13. Trustee Entitled To Rely................................ 70 SECTION 10.14. Trustee To Effectuate Subordination..................... 70 SECTION 10.15. Trustee Not Fiduciary for Holders of Senior Indebtedness........................................ 70 SECTION 10.16. Reliance by Holders of Senior Indebtedness on Subordination Provisions............................ 71 SECTION 10.17. Trustee's Compensation Not Prejudiced................... 71 SECTION 10.18. Defeasance.............................................. 71 ARTICLE 11 Subsidiary Guarantees --------------------- SECTION 11.01. Subsidiary Guarantees................................... 71 SECTION 11.02. Limitation on Liability................................. 73 SECTION 11.03. Successors and Assigns.................................. 74 SECTION 11.04. No Waiver............................................... 74 SECTION 11.05. Modification............................................ 74 SECTION 11.06. Execution of Supplemental Indenture for Future Subsidiary Guarantors............................... 74 ARTICLE 12 Subordination of the Subsidiary Guarantees ------------------------------------------ SECTION 12.01. Agreement To Subordinate................................ 75 SECTION 12.02. Liquidation, Dissolution, Bankruptcy.................... 75 SECTION 12.03. Default on Designated Senior Indebtedness of a Subsidiary Guarantor................................ 75 SECTION 12.04. Demand for Payment...................................... 76 SECTION 12.05. When Distribution Must Be Paid Over..................... 76 SECTION 12.06. Subrogation............................................. 76 SECTION 12.07. Relative Rights......................................... 77 SECTION 12.08. Subordination May Not Be Impaired by a Subsidiary Guarantor........................................... 77 SECTION 12.09. Rights of Trustee and Paying Agent...................... 77 SECTION 12.10. Distribution or Notice to Representative................ 77 SECTION 12.11. Article 12 Not To Prevent Events of Default or Limit Right To Accelerate........................... 77 SECTION 12.12. Trustee Entitled To Rely................................ 78 SECTION 12.13. Trustee To Effectuate Subordination..................... 78 SECTION 12.14. Trustee Not Fiduciary for Holders of Senior Indebtedness of a Subsidiary Guarantor.............. 78 SECTION 12.15. Reliance by Holders of Senior Indebtedness of a Subsidiary Guarantor on Subordination Provisions.... 78 SECTION 12.16. Defeasance.............................................. 78 ARTICLE 13 Miscellaneous ------------- SECTION 13.01. Trust Indenture Act Controls............................ 79 SECTION 13.02. Notices................................................. 79 SECTION 13.03. Communication by Holders with Other Holders............. 80
SECTION 13.04. Certificate and Opinion as to Conditions Precedent...... 80 SECTION 13.05. Statements Required in Certificate or Opinion........... 80 SECTION 13.06. When Securities Disregarded............................. 80 SECTION 13.07. Rules by Trustee, Paying Agent and Registrar............ 81 SECTION 13.08. Legal Holidays.......................................... 81 SECTION 13.09. GOVERNING LAW........................................... 81 SECTION 13.10. No Recourse Against Others.............................. 81 SECTION 13.11. Successors.............................................. 81 SECTION 13.12. Multiple Originals...................................... 81 SECTION 13.13. Table of Contents; Headings............................. 81
Page ---- Appendix A - Provisions Relating to Initial Securities, Private Exchange Securities and Exchange Securities Exhibit A - Form of Initial Security Exhibit B - Form of Exchange Security Exhibit C - Form of Supplemental Indenture Exhibit D - Form of Transferee Letter of Representation EX-10.1 5 NOTE PURCHASE AGREEMENT BY TELECORP PCS, INC. EXHIBIT 10.1 EXECUTION COPY ================================================================================ TELECORP PCS., INC. Increasing Rate Subordinated Notes Series A Due 2012 Increasing Rate Subordinated Notes Series B Due 2012 NOTE PURCHASE AGREEMENT Dated as of May 11, 1998 ================================================================================ TABLE OF CONTENTS
Page 1. Authorization of Notes............................................................................ -2- 2. Sale and Purchase of Notes........................................................................ -2- 2.1 Sale of Series A Notes................................................................... -2- 2.2 Sale of Series B Notes................................................................... -2- 3. Closings; Fees.................................................................................... -2- 3.1 Series A Closings........................................................................ -2- 3.2 Series B Closings........................................................................ -3- 3.3 Payments................................................................................. -4- 3.4 Legal Fees............................................................................... -4- 4. Terms of the Series A Notes and Series B Notes.................................................... -4- 4.1 Scheduled Payment of Notes............................................................... -4- 4.2 Interest on Series A Notes............................................................... -4- 4.3 Interest on Series B Notes............................................................... -5- 5. Conditions to Closing............................................................................. -6- 5.1 Initial Series A Closing................................................................. -6- 5.2 Initial Series B Closing................................................................. -9- 5.3 Conditions to Series A Closings and Series B Closings.................................... -10- 6. Representations and Warranties, etc............................................................... -11- 6.1 Organization, Standing, etc.............................................................. -11- 6.2 Authorization; Enforceability............................................................ -12- 6.3 Qualification............................................................................ -12- 6.4 Financial Statements..................................................................... -12- 6.5 Changes, etc............................................................................. -12- 6.6 Compliance with Other Instruments, etc................................................... -13- 6.7 Governmental Consents, etc............................................................... -13- 6.8 Capital Stock and Related Matters........................................................ -13- 6.9 Debt..................................................................................... -14- 6.10 Title to Properties; Liens............................................................... -14- 6.11 Litigation............................................................................... -14- 6.12 Patents, Trademarks, Authorizations, etc................................................. -14- 6.13 Requirements of Law...................................................................... -15- 6.14 Federal Reserve Regulations.............................................................. -15- 6.15 Status Under Certain Federal Statutes.................................................... -15- 6.16 Compliance with ERISA.................................................................... -15- 6.17 Offer of Securities...................................................................... -15- 6.18 Use of Proceeds.......................................................................... -16- 6.19 Solvency of the Company.................................................................. -16- 6.20 Certain Fees............................................................................. -16- 6.21 Regulatory Compliance.................................................................... -16-
-ii- 6.22 Disclosure............................................................................... -17- 6.23 Subsidiaries............................................................................. -17- 6.24 Security Agreement....................................................................... -17- 6.25 Licenses................................................................................. -18- 6.26 Transaction Documents.................................................................... -18- 7. Purchase Intent; Investor Status.................................................................. -19- 7.1 Purchase Intent.......................................................................... -19- 7.2 Accredited Investor...................................................................... -19- 8. Furnishing of Information......................................................................... -19- 8.1 Financial Statements and Other Information............................................... -19- 9. Inspection; Confidentiality....................................................................... -21- 9.1 Inspection............................................................................... -21- 9.2 Confidentiality.......................................................................... -21- 10. Prepayment of Notes............................................................................... -22- 10.1 Optional Prepayments..................................................................... -22- 10.2 Contingent Prepayments Upon Change of Control............................................ -22- 10.3 Premium.................................................................................. -23- 10.4 Mandatory Redemption of Series A Notes................................................... -23- 10.5 Mandatory Redemption of Series B Notes................................................... -24- 10.6 Notice of Optional Prepayments; Officers' Certificate.................................... -25- 10.7 Allocation of Partial Prepayments........................................................ -25- 10.8 Maturity; Surrender, etc................................................................. -25- 10.9 Acquisition of Notes..................................................................... -25- 11. Covenants......................................................................................... -25- 11.1 Payment of Notes......................................................................... -25- 11.2 Payment of Taxes and Claims.............................................................. -26- 11.3 Liens, etc............................................................................... -26- 11.4 Restricted Payments...................................................................... -26- 11.5 Consolidation, Merger, Sale of Assets, etc............................................... -26- 11.6 Requirements of Law...................................................................... -27- 11.7 Transactions with Affiliates............................................................. -27- 11.8 Corporate Existence, etc.; Business...................................................... -28- 11.9 Fundamental Business Change.............................................................. -28- 11.10 Compliance with ERISA.................................................................... -28- 12. Events of Default; Acceleration................................................................... -28- 13. Remedies on Default, etc.......................................................................... -31- 14. Subordination..................................................................................... -32- 14.1 Notes Subordinate to Senior Debt......................................................... -32- 14.2 Payment of Proceeds Upon Dissolution, Etc................................................ -32- 14.3 No Payment When Senior Debt in Default................................................... -34- 14.4 Acceleration of Subordinated Debt........................................................ -35- 14.5 Payment Permitted If No Default.......................................................... -35-
-iii- 14.6 Subrogation To Rights of Holders of Senior Debt.......................................... -35- 14.7 Provisions Solely To Define Relative Rights.............................................. -36- 14.8 No Waiver of Subordination Provisions.................................................... -36- 14.9 Reliance On Judicial Order or Certificate of Liquidating Agent........................... -37- 15. Definitions....................................................................................... -37- 16. Tax Matters....................................................................................... -51- 16.1 Taxes.................................................................................... -51- 17. Notes held by Company, etc., Deemed Not Outstanding............................................... -53- 18. Payments on Notes................................................................................. -53- 18.1 Place of Payment......................................................................... -53- 18.2 Home Office Payment...................................................................... -54- 18.3 Expenses, etc............................................................................ -54- 19. Survival of Representations and Warranties........................................................ -55- 20. Amendments and Waivers............................................................................ -55- 21. Notices, etc...................................................................................... -55- 22. Indemnification................................................................................... -56- 23. Successors and Assigns; Participations; Assignments; Replacement of Notes......................... -56- 23.1 Successors and Assigns................................................................... -56- 23.2 Participations........................................................................... -57- 23.3 Assignments.............................................................................. -57- 23.4 Register................................................................................. -58- 23.5 Disclosure of Information in Connection with a Transfer -58- 23.6 Assignment to Federal Reserve Bank....................................................... -58- 23.7 Replacement of Notes.................................................................... -58- 24. Remarketing....................................................................................... -59- 25. Adjustments....................................................................................... -60- 26. Miscellaneous..................................................................................... -60- 27. Submission To Jurisdiction; Waivers............................................................... -60- 28. Expansion Notes................................................................................... -61- 29. Waivers of Jury Trial............................................................................. -62-
-iv- SCHEDULE A Purchaser Information SCHEDULE B Disclosure Schedule EXHIBIT A Form of Increasing Rate Notes Series A due 2012 EXHIBIT B Form of Increasing Rate Notes Series B due 2012 EXHIBIT C Form of Opinion of Counsel to the Company EXHIBIT D Form of Security Agreement -v- TeleCorp PCS, Inc. 1101 17th Street, N.W. Washington, D.C. 20050 Increasing Rate Subordinated Notes Series A due January 1, 2012 Increasing Rate Subordinated Notes Series B due January 1, 2012 May 11, 1998 Lucent Technologies Inc. 600 Mountain Avenue Murray Hill, New Jersey 07974 Ladies and Gentlemen: TeleCorp PCS, Inc., a Delaware corporation (the "Company"), and its Subsidiaries intend to develop personal communications services ("PCS") Systems serving portions of the Boston, Massachusetts, Little Rock, Arkansas, St. Louis, Missouri, Houston, Texas, New Orleans, Louisiana, Louisville, Kentucky and Memphis, Tennessee MTAs (the "Designated Areas"), as well as additional MTAs and BTAs from time to time designated by the Company. The Company has entered into a Vendor Procurement Contract (as amended, modified or supplemented from time to time, the "Procurement Contract") dated as of the date hereof between the Company and you (in such capacity, the "Vendor") pursuant to which the Company shall purchase and the Vendor shall provide certain telecommunications systems and services for the development of the Company's PCS Systems in the Designated Areas all on the terms and conditions therein set forth. The Company intends to finance a portion of the development costs of such PCS Systems and certain working capital requirements by (a) issuing two series of increasing rate subordinated notes, (b) obtaining from the Cash Equity Investors on or prior to the Initial Series A Closing Date equity contributions in an amount not less than $25,000,000 and thereafter prior to or concurrent with any Series A Closing Date obtaining additional equity contributions which, together with amounts previously funded, shall be in an aggregate amount of $40,000,000 which contributions shall be refunded under the Securities Purchase Agreement, (c) obtaining from the Cash Equity Investors on or prior to the third annual anniversary of the initial closing under the Securities Purchase Agreements at least $88,000,000 of additional cash equity (to be provided in cash or by contribution of securities of the Company and the reissuance of such securities by the Company to third parties), (d) entering into the Credit Agreement on or prior to the Initial Series B Closing Date pursuant to which the lenders party thereto shall commit to provide loans in an aggregate principal amount of up to $500,000,000 and (e) issuing one or more series of High Yield Debt (collectively, the transactions contemplated under the Procurement Contract and the financings contemplated by this paragraph are referred to as the "Financing Transactions"). Certain capitalized terms used in this Agreement are defined in section 15; references to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement. The Company hereby agrees with you as follows: 1. Authorization of Notes. The Company will authorize the issue ---------------------- and sale of (a) its Increasing Rate Subordinated Notes Series A due January 1, 2012 in an initial aggregate principal amount not to exceed $40,000,000 (the "Series A Notes"; such term to include any notes issued in substitution therefor pursuant to section 23.7 and any Additional Series A Notes), and to be substantially in the form of Exhibit A, and (b) its Increasing Rate Subordinated Notes Series B due January 1, 2012 in an initial aggregate principal amount not to exceed $40,000,000 (the "Series B Notes"; such term to include any notes issued in substitution therefor pursuant to section 23.7 and any Additional Series B Notes), and to be substantially in the form of Exhibit B, in each case, with such changes therefrom, if any, as may be approved by you and the Company. The Series A Notes and Series B Notes are collectively referred to as the "Notes"; the Additional Series A Notes and Additional Series B Notes are collectively referred to as the "Additional Notes." 2. Sale and Purchase of Notes. -------------------------- 2.1 Sale of Series A Notes. From time to time commencing on the ---------------------- Initial Series A Closing Date and ending on the Series A Note Commitment Termination Date, the Company will issue and sell to you and, subject to the terms and conditions of this Agreement, you will purchase from the Company, Series A Notes in an aggregate initial principal amount not to exceed the Series A Note Commitment. 2.2 Sale of Series B Notes. From time to time commencing on the ---------------------- Initial Series B Closing Date and ending on the Series B Note Commitment Termination Date, the Company will issue and sell to you and, subject to the terms and conditions of this Agreement, you will purchase from the Company, Series B Notes in an aggregate initial principal amount not to exceed the Series B Note Commitment. -2- 3. Closings; Fees. -------------- 3.1 Series A Closings. (a) The initial sale of the Series A Notes ----------------- to be purchased by you shall take place at the offices of Sidley & Austin, 875 Third Avenue, New York, New York 10022, at 10:00 a.m., New York City time, at a closing (the "Initial Series A Closing") on May 29, 1998 or on such other Business Day thereafter as may be agreed upon by the Company and you (the "Initial Series A Closing Date"). At the Initial Series A Closing, the Company will deliver to you the Series A Notes to be purchased by you (which amount shall be specified by the Company to you in a notice delivered not less than two Business Days prior to the Initial Series A Closing Date) in the form of a single Series A Note (or such greater number of Series A Notes in denominations of at least $100,000 as you may request in a notice to the Company not less than one Business Day prior to the Series A Initial Closing Date) dated the Initial Series A Closing Date and registered in your name (or in the name of your nominee). (b) From time to time after the Initial Series A Closing Date but prior to the Series A Note Commitment Termination Date, the Company may issue to you, in accordance with the terms of this Agreement, additional Series A Notes (each, a "Series A Closing"). The Company shall deliver a notice to you setting forth the principal amount of the Series A Notes to be issued (which shall be in an amount equal to the lesser of (i) $5,000,000 or an integral multiple of $1,000,000 in excess thereof and (ii) the remaining amount of the Series A Note Commitment) and stating the date (which shall be not less than five Business Days after the date of such notice) on which the Company desires that you purchase such Series A Notes (each, a "Series A Closing Date"). At each Series A Closing, the Company will deliver to you the Series A Notes to be purchased by you in the form of a single Series A Note (or such greater number of Series A Notes in denominations of at least $100,000 as you may request not less than two Business Days prior to such Series A Closing Date) dated the date of such Series A Closing and registered in your name (or in the name of your nominee). 3.2 Series B Closings. (a) The initial sale of the Series B Notes ----------------- to be purchased by you shall take place at a closing (the "Initial Series B Closing") on the Initial Series B Closing Date at such time during the Series B Availability Period and at such location as the Company and you may agree. At the Initial Series B Closing, the Company will deliver to you the Series B Notes to be purchased by you (which amount shall be specified by the Company to you in a notice delivered not less than five Business Days prior to such Initial Series B Closing Date) in the form of a single Series B Note (or such greater number of Series B Notes in denominations of at least $100,000 as you may request at least one Business Day prior to the Initial Series B Closing Date) dated the Initial Series B Closing Date and registered in your name (or in the name of your nominee). (b) From time to time after the Initial Series B Closing Date but prior to the Series B Note Commitment Termination Date, the Company may issue to you, in accordance -3- with the terms of this Agreement, additional Series B Notes (each, a "Series B Closing"). The Company shall deliver a notice to you setting forth the principal amount of the Series B Notes to be issued (which shall be in an amount equal to the lesser of (i) $5,000,000 or an integral multiple of $1,000,000 in excess thereof and (ii) the remaining amount of the Series B Note Commitment) and stating the date (which shall be not less than five Business Days after the date of such notice) on which the Company desires that you purchase such Series B Notes (each, a "Series B Closing Date"). At each Series B Closing, the Company will deliver to you the Series B Notes to be purchased by you in the form of a single Series B Note (or such greater number of Series B Notes in denominations of at least $100,000 as you may request not less than two Business Days prior to such Series B Closing Date) dated the date of such Series B Closing and registered in your name (or in the name of your nominee). 3.3 Payments. (a) Payment for each of the Notes issued on or prior -------- to the closing under the Credit Agreement and the drawing thereunder of loans in an aggregate principal amount of not less than $75,000,000 shall be in immediately available funds or, if the Company so elects, by notice to you not less than three Business Days prior to the Closing in respect of such Notes, by means of a credit against amounts due to the Vendor under the Procurement Contract; provided that, if the Company elects to credit amounts under the -------- Procurement Contract, (i) you shall specify by notice to the Company one Business Day prior to such Closing which invoices will be so credited and (ii) on the date of such Closing, you shall deliver copies of such invoices marked "paid" against presentation of the Notes to be delivered by the Company. (b) Payment for each of the Notes issued after the closing under the Credit Agreement and the drawing thereunder of loans in an aggregate principal amount of not less than $75,000,000 shall be in immediately available funds or, if you elect, by notice to the Company not less than three Business Days prior to the Closing in respect of such Notes, by means of a credit against amounts due to the Vendor under the Procurement Contract; provided that, if you -------- elect to credit amounts under the Procurement Contract (i) you shall specify by notice to the Company one Business Day prior to such Closing which invoices will be so credited and (ii) on the date of such Closing, you shall deliver copies of such invoices marked "paid" against presentation of the Notes to be delivered by the Company. 3.4 Legal Fees. On the date of the Initial Series A Closing, the ---------- Company will pay the reasonable fees and disbursements of your special counsel (with evidence of time recorded as your special counsel may customarily provide) in connection with the transactions contemplated by this Agreement and thereafter the Company will promptly pay additional reasonable fees and disbursements of such special counsel, incurred in connection with such transactions. 4. Terms of the Series A Notes and Series B Notes. ---------------------------------------------- -4- 4.1 Scheduled Payment of Notes. The Company shall pay in full the -------------------------- outstanding aggregate principal amount of the Series A Notes, together with any accrued interest and other amounts with respect to such Notes no later than the Series A Final Maturity Date. The Company shall pay in full the outstanding aggregate principal amount of the Series B Notes, together with any accrued interest and other amounts with respect to such Notes no later than the Series B Final Maturity Date. 4.2 Interest on Series A Notes. The Series A Notes shall bear -------------------------- interest at an initial rate of 8.50% per annum; provided that if the Company -------- does not redeem all (but not less than all) the Series A Notes on or prior to January 1, 2001, such initial rate shall increase on each January 1, beginning January 1, 2001 and continuing thereafter, by an amount equal to 1.50% per annum or such lesser amount as will result in the Series A Notes bearing interest at the Maximum Rate (the "Series A Coupon Rate"). Interest on the Series A Notes shall be paid in arrears in cash on each six-month and yearly anniversary of the Initial Series A Closing Date (each, a "Series A Payment Date"), commencing with the date of initial issuance; provided, that (i) interest payable on the Series -------- A Notes on or prior to May 11, 2004 shall be payable in Additional Series A Notes and (ii) thereafter at any time that payment of interest on the Series A Notes in cash shall be prohibited under the terms of the Credit Agreement or the High Yield Debt of the Company interest on the Series A Notes shall be payable in Additional Series A Notes. Any principal payments on the Series A Notes not paid when due and, to the extent permitted by applicable law, any interest payment on the Series A Notes not paid when due, in each case whether at stated maturity, by notice of prepayment, by acceleration or otherwise, shall thereafter bear interest payable upon demand at a rate which is 2.00% per annum in excess of the rate of interest otherwise payable under this Agreement for the Series A Notes. Interest on the Series A Notes shall be computed on the basis of a 360-day year and twelve 30-day months. In computing interest on the Series A Notes, the date of the making of the Series A Notes shall be included and the date of payment shall be excluded. 4.3 Interest on Series B Notes. The Series B Notes shall bear -------------------------- interest at an initial rate of 10.00% per annum; provided that if the Company -------- does not redeem all (but not less than all) the Series B Notes on or prior to January 1, 2000, such initial rate shall increase on each January 1 beginning January 1, 2000 and continuing thereafter by an amount equal to 1.50% per annum or such lesser amount as will result in the Series B Notes bearing interest at the Maximum Rate (the "Series B Coupon Rate"). Interest on the Series B Notes shall be paid in arrears in cash on each six-month and yearly anniversary of the Initial Series B Closing Date (each, a "Series B Payment Date"), commencing with the date of initial issuance; provided, that (i) interest payable on the Series -------- B Notes on or prior to May 11, 2004 shall be payable in Additional Series B Notes and (ii) thereafter at any time that payment of interest on the Series B Notes in cash shall be prohibited under the terms of the Credit Agreement or the High Yield Debt of the Company interest on the Series B Notes shall be payable in Additional Series B Notes. Any principal -5- payments on the Series B Notes not paid when due and, to the extent permitted by applicable law, any interest payment on the Series B Notes not paid when due, in each case whether at stated maturity, by notice of prepayment, by acceleration or otherwise, shall thereafter bear interest payable upon demand at a rate which is 2.00% per annum in excess of the rate of interest otherwise payable under this Agreement for the Series B Notes. Interest on the Series B Notes shall be computed on the basis of a 360-day year and twelve 30-day months. In computing interest on the Series B Notes, the date of the making of the Series B Notes shall be included and the date of payment shall be excluded. 5. Conditions to Closing. --------------------- 5.1 Initial Series A Closing. Your obligation to purchase and pay ------------------------ for the Series A Notes to be sold to you at the Initial Series A Closing is subject to the fulfillment to your satisfaction, prior to or concurrently with such Closing, of the following conditions: (a) Representations and Warranties. The representations and ------------------------------ warranties of the Company contained in this Agreement (other than the representations and warranties contained in sections 6.25 and 6.26 which shall be effective as of the closing of the transactions under the Credit Agreement) which are not qualified by Material Adverse Effect shall be correct in all material respects when made and at the time of such Closing and the representations and warranties contained in this Agreement that are qualified by Material Adverse Effect shall be correct when made and at the time of such Closing. (b) Performance; No Default. The Company shall have performed and ----------------------- complied in all material respects with all agreements and conditions contained in this Agreement required to be performed or complied with by it prior to or at such Closing and, at the time of the Initial Series A Closing, no Event of Default or Potential Event of Default shall have occurred and be continuing. (c) Compliance Certificate. The Company shall have delivered to you ---------------------- an Officers' Certificate, dated the Initial Series A Closing Date, certifying that the conditions specified in paragraphs (a) and (b) of this section 5.1 have been fulfilled. (d) Delivery of Notes. The Company shall have delivered to you the ----------------- Series A Notes to be purchased by you at such Closing, which shall be duly authorized, executed and delivered and shall be in such denominations as you shall previously have requested pursuant to section 3. (e) Opinions of Counsel. You shall have received from McDermott, ------------------- Will & Emery, counsel for the Company, favorable opinions substantially in the forms set forth in -6- Exhibit C and covering such matters as you may request, each addressed to you, dated the Initial Series A Closing Date and satisfactory in substance and form to you. (f) Security Interest. The Company shall have entered into the ----------------- Security Agreement. You shall have received a valid perfected first security interest in and lien upon all equipment (and the proceeds therefrom) provided by the Vendor to the Company under the Procurement Contract (including any equipment (and the proceeds therefrom) to be provided after such Closing. (g) Procurement Contract. The Company shall have executed and -------------------- delivered the Procurement Contract. The Procurement Contract shall be a legal, valid and binding obligation of the Company enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditor's rights generally and to general equitable principles (whether enforcement is sought by proceedings in equity or at law), shall be in full force and effect and no default or breach by the Company shall have occurred thereunder and be continuing. (h) Consents, Agreements. The Company shall have obtained all -------------------- consents and waivers under any term of any agreement or instrument to which it is a party or by which it or any of its properties or assets are bound, or any term of any applicable law, ordinance, rule or regulation of any Governmental Authority or any term of any applicable order, judgment or decree of any court, arbitrator or Governmental Authority, necessary or appropriate in connection with this Agreement, the Securities Purchase Agreement and the Procurement Contract, and such consents and waivers shall be in full force and effect on the Initial Series A Closing Date. A complete and correct copy of each such consent and waiver shall have been delivered to you. (i) Compliance with Securities Laws. The offering and sale of the ------------------------------- Notes (including any Notes to be issued after the Initial Series A Closing Date) to you shall have complied with all applicable requirements of federal and state securities laws and you shall have received evidence thereof in form and substance satisfactory to you. (j) No Adverse U.S. Legislation, Action or Decision, etc. No ----------------------------------------------------- legislation shall have been enacted by either house of Congress or favorably reported by any committee thereof, no formal published action shall have been taken by any United States Governmental Authority, whether by order, regulation, rule, ruling or otherwise, and no decision shall have been rendered by any court of competent jurisdiction in the United States, which would materially and adversely affect the Notes being purchased by you hereunder. (k) No Actions Pending. There shall be no suit, action, ------------------ investigation, inquiry or other proceeding by or before any Governmental Authority or any other Person or any other legal or administrative proceeding, pending or, to the Company's knowledge, threatened, which -7- questions the validity or legality of the Financing Transactions or the payment, prepayment, administration, sale or other disposition of the Notes or performance by the Company of its obligations under this Agreement and the Security Agreement and seeks damages or injunctive or other equitable relief in connection therewith. (l) Purchase Permitted By Applicable Law, etc. On the Initial Series ------------------------------------------ A Closing Date, your purchase of Series A Notes (i) shall be permitted by the laws and regulations of each jurisdiction to which you are subject and (ii) shall not subject you to any tax (other than taxes based on net income) or penalty. (m) Proceedings and Documents. All corporate and other proceedings ------------------------- in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be satisfactory to you and your special counsel, and you and your special counsel shall have received all such counterpart originals or certified or other copies of such documents as you or they may reasonably request. (n) Fees. The fees required to be paid on the Initial Series A ---- Closing Date under section 3.4 shall have been paid. (o) Securities Purchase Agreement. The Company shall have delivered ----------------------------- to you a certified copy of the Securities Purchase Agreement (together with all schedules and exhibits thereto), which Agreement shall be the legal, valid and binding obligation of each party thereto enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditor's rights generally and to general equitable principles (whether enforcement is sought by proceedings in equity or at law), shall be in full force and effect and no breach or default thereunder shall have occurred which is continuing. The Company shall have received on or before the Initial Series A Closing Date not less than $25,000,000 of equity from the Cash Equity Investors on terms and conditions reasonably satisfactory to you. (p) Senior Lender Commitment. The Company and its Subsidiaries shall ------------------------ have delivered to you a certified copy of the Commitment Letter dated January 22, 1998 (the "Commitment Letter") from The Chase Manhattan Bank (the "Senior Lender") pursuant to which such Senior Lender shall have agreed to provide debt financing in an aggregate principal amount of not less than $435,000,000 on terms not less favorable to the Company than the "TeleCorp PCS, Inc. Senior Secured Credit Facilities Summary of Principal Terms and Conditions" appended as Exhibit A to such letter (the "Principal Terms and Conditions"); such Commitment Letter (including such Principal Terms and Conditions) shall not have been revoked, amended or modified and shall be in full force and effect. -8- (q) Commitment for Minimum Purchase. The Company shall have entered ------------------------------- into the Procurement Contract, which shall be the legal, valid and binding obligation of the Company enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditor's rights generally and to general equitable principles (whether enforcement is sought by proceedings in equity or at law), shall be in full force and effect and no breach or default thereunder shall have occurred which is continuing. Pursuant to the Procurement Agreement, the Company shall have irrevocably committed to purchase from the Vendor one mobile switching center and fifty base stations for each of the following Designated Areas: Memphis, Tennessee; Little Rock, Arkansas; New Orleans, Louisiana and Boston, Massachusetts. (r) Additional Matters. All corporate and other proceedings, and all ------------------ documents, instruments, and other legal matters in connection with the transactions contemplated by this Agreement and the Financing Transactions (to the extent the agreements evidencing such Financing Transactions have been or are required to have been completed as of the date of such Closing) shall be satisfactory to you in form and substance and you shall have received any other documents, instruments and legal opinions in respect of any aspect or consequence of the transactions contemplated hereby or thereby as you may reasonably request. 5.2 Initial Series B Closing. Your obligation to purchase and pay ------------------------ for the Series B Notes to be sold to you at the Initial Series B Closing is subject to the fulfillment to your satisfaction, prior to or concurrently with such Closing, of the following conditions: (a) Representations and Warranties: The representations and ------------------------------ warranties of the Company contained in this Agreement which are not qualified by Material Adverse Effect shall be correct in all material respects when made and at the time of such Closing and the representations and warranties of the Company contained in this Agreement that are qualified by Material Adverse Effect shall be correct when made and at the time of such Closing other than the representations and warranties contained in section 6.24, which shall cease to be effective on the date the Company consummates the transactions contemplated under the Credit Agreement. (b) No Default. No Potential Default or Event of Default shall have ---------- occurred and be continuing on such date or after giving effect to the issuance of the Series B Notes to be issued on such date. (c) Compliance Certificate. The Company shall have delivered to you ---------------------- an Officers' Certificates, dated the date of such Closing, certifying that the conditions specified in paragraphs (a) and (b) of this section 5.2 have been fulfilled. (d) Delivery of Notes. The Company shall have delivered to you the ----------------- Series B Notes to be purchased by you at such Closing, which shall be duly authorized, executed and -9- delivered and shall be in such denominations as you shall have previously requested pursuant to section 3. (e) Satisfaction of Conditions to Initial Series A Closing. Each of ------------------------------------------------------ the conditions set forth in section 5.1 shall have been satisfied at and as of the Initial Series B Closing Date, except that the Security Agreement and any financing statement filed in connection therewith shall have been terminated and the security interests created thereunder released if the Company shall have consummated the transactions contemplated under the Securities Purchase Agreement and the Credit Agreement and prior to or concurrent with such release, the Extended Payment Term Facility shall have been repaid in full in compliance with paragraph (g). (f) Securities Purchase Agreement. The Transactions (as defined in ----------------------------- the Securities Purchase Agreement) to be completed at or prior to the closing of the Securities Purchase Agreement under Article II and Article III of such Agreement including (i) the contribution by each Cash Equity Investor of its Initial Cash Contributions and its irrevocable commitment to contribute an amount equal to its Aggregate Commitment (each as defined in the Securities Purchase Agreement), (ii) the contribution by AT&T and TWR of the Contributed Licenses (as defined in the Securities Purchase Agreement), (iii) the sale by AT&T to the Company of the Purchased Licenses (as defined in the Securities Purchase Agreement) and (iv) the actions under the Related Agreements as in effect on the date of such closing shall have been completed and each of the Securities Purchase Agreement and the Related Agreements shall be the legal, valid and binding obligation of each party thereto enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditor's rights generally and to general equitable principles (whether enforcement is sought by proceedings in equity or at law), shall be in full force and effect and no breach or default thereunder shall have occurred which is continuing. (g) Extended Payment Terms. Prior thereto or concurrent with the ---------------------- issuance of the Series B Notes, the Company shall have paid in full all amounts owing to the Vendor under the Extended Payment Terms Facility using funds other than the proceeds of the Series B Notes. (h) Disclosure Schedule. If necessary, the Company shall have ------------------- delivered to you a revised section 6.8(b) setting forth the capitalization of each Subsidiary of the Company, section 6.9 of the Disclosure Schedule setting forth the Debt of the Company and its Subsidiaries outstanding, or for which the Company has any commitments on such Closing Date, and section 6.23 setting forth the identity of each Subsidiary of the Company other than TeleCorp PCS, LLC and TeleCorp Holdings. (i) Additional Matters. All corporate and other proceedings, and all ------------------ documents, instruments and other legal matters in connection with the transactions contemplated -10- by this Agreement and the Financing Transactions (to the extent the agreements evidencing such Financing Transactions have been or are required to have been completed as of the date of such Closing) shall be satisfactory to you in form and substance and you shall have received any other documents, instruments and legal opinions in respect of any aspect or consequence of the transactions contemplated hereby or thereby as you may reasonably request. 5.3 Conditions to Series A Closings and Series B Closings: Your ----------------------------------------------------- obligation to purchase and pay for any Notes to be sold to you at any Closing (other than the Initial Series A Closing and the Initial Series B Closing) is subject to the fulfillment to your satisfaction, prior to or concurrently with such Closing, of the following conditions: (a) Representations and Warranties: The representations and ------------------------------ warranties of the Company contained in this Agreement which are not qualified by Material Adverse Effect shall be correct in all material respects when made and at the time of such Closing and the representations and warranties of the Company contained in this Agreement that are qualified by Material Adverse Effect shall be correct when made and at the time of such Closing other than (i) the representations and warranties contained in section 6.24, which shall cease to be effective on the date the Company consummates the transactions contemplated under the Credit Agreement, and (ii) the representations and warranties contained in sections 6.25 and 6.26, which shall commence to be effective on any Closing which occurs on or after the closing of the transactions under the Credit Agreement. (b) No Default. No Potential Default or Event of Default shall have ---------- occurred and be continuing on such date or after giving effect to the issuance of the Notes to be issued on such date. (c) Compliance Certificate. The Company shall have delivered to you ---------------------- an Officers' Certificates, dated the date of such Closing, certifying that the conditions specified in paragraphs (a) and (b) of this section 5.3 have been fulfilled. (d) Delivery of Notes. The Company shall have delivered to you the ----------------- Notes to be purchased by you at such Closing, which shall be duly authorized, executed and delivered and shall be in such denominations as you shall have previously requested pursuant to section 3. (e) Disclosure Schedule. If necessary, the Company shall have ------------------- delivered to you a revised section 6.8(b) setting forth the capitalization of each subsidiary of the Company, section 6.9 of the Disclosure Schedule setting forth the Debt of the Company and its Subsidiaries outstanding, or for which the Company has any commitments on such Closing Date, and section 6.23 setting forth the identity of each Subsidiary of the Company other than TeleCorp PCS, LLC and TeleCorp Holdings. -11- (f) Additional Matters. All corporate and other proceedings, and all ------------------ documents, instruments, and other legal matters in connection with the transactions contemplated by this Agreement and the Financing Transactions (to the extent the agreements evidencing such Financing Transactions have been or are required to have been completed as of the date of such Closing) shall be reasonably satisfactory to you in form and substance and you shall have received any other documents, instruments and legal opinions in respect of any aspect or consequence of the transactions contemplated hereby or thereby as you may reasonably request. 6. Representations and Warranties, etc. The Company represents and ------------------------------------ warrants as follows; provided that (i) the representations and warranties -------- contained in section 6.24 shall cease to be effective on the date the Company consummates the transactions contemplated under the Credit Agreement and (ii) the representations and warranties contained in sections 6.25 and 6.26 shall be made commencing on the closing of the transactions under the Credit Agreement. 6.1 Organization, Standing, etc. Each of the Company and its ---------------------------- Subsidiaries is a corporation or limited liability company duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation and has all requisite corporate power and authority to own, lease and operate its properties, to carry on its business as now conducted and as proposed to be conducted following the Financing Transactions. The Company has all requisite corporate power and authority to enter into this Agreement, to issue and sell the Notes and to carry out the transactions contemplated by this Agreement and the Financing Transactions. 6.2 Authorization; Enforceability. The Company has taken all ----------------------------- necessary corporate action to execute, deliver and perform this Agreement, the Security Agreement and the Notes and has validly executed and delivered each of such documents. Each of this Agreement and the Security Agreement constitutes, and each of the Notes and any other documents upon execution and delivery will - constitute, the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally or general equitable principles or principles of good faith and fair dealing. 6.3 Qualification. Each of the Company and its Subsidiaries is, ------------- and after giving effect to the Financing Transactions will be, duly qualified and in good standing as a foreign corporation authorized to do business in each jurisdiction (other than the jurisdiction of its incorporation) in which the nature of its activities or the character of the properties it owns or leases makes such qualification necessary, except where the failure so to qualify would not have a Material Adverse Effect. -12- 6.4 Financial Statements. (a) The Company has delivered to you -------------------- complete and correct copies of the unaudited consolidated balance sheet of the Company and its Subsidiaries dated as of March 31, 1998, and the related statements of income, stockholders' equity and cash flows for the three month period then ended (the "Financial Statements"). The Financial Statements have been prepared in accordance with GAAP, applied on a consistent basis throughout the periods specified, and present fairly in all material respects the financial position of the Company and its Subsidiaries as of the respective dates specified and the consolidated results of their operations and changes in financial position for the respective periods specified subject to normal year- end adjustments and footnote disclosure. (b) The forecast of the Company and its Subsidiaries contained in the business plan entitled "TeleCorp PCS Bank Plan" dated May 5, 1998 for the period commencing January 1, 1998 to and including December 31, 2007, prepared by a Responsible Officer of the Company presented on a consolidated basis has been prepared in good faith and utilizing reasonable assumptions; provided that -------- nothing contained therein shall be deemed a representation that the results set forth in such Plan will be achieved. 6.5 Changes, etc. Except as set forth in section 6.5 of the ------------- Disclosure Schedule, since December 31, 1997, (a) there has been no change in the assets, liabilities or financial condition of the Company and its Subsidiaries, other than changes which have not been, in any case or in the aggregate, materially adverse to any of them, and (b) other than TeleCorp Holdings, neither the business, operations or affairs nor any of the properties or assets of the Company or its Subsidiaries has been affected by any occurrence or development (whether or not insured against) which has been, either in any case or in the aggregate, materially adverse to any of them. 6.6 Compliance with Other Instruments, etc. Neither the Company --------------------------------------- nor any Subsidiary is, and, after giving effect to the Financing Transactions, neither the Company nor any Subsidiary will be, in violation of its certificate of incorporation or by-laws. Neither the Company nor any Subsidiary is, and, after giving effect to the Financing Transactions, neither the Company nor any Subsidiary will be, in material violation of any term of any agreement or instrument to which it is a party or by which it or any of its properties or assets is bound, or any term of any applicable law, ordinance, rule or regulation of any Governmental Authority or any term of any applicable order, judgment or decree of any court, arbitrator or Governmental Authority, the consequences of any which violation (or all such violations in the aggregate) would reasonably be expected to have a Material Adverse Effect; and the execution, delivery and performance of this Agreement, the Notes and the Security Agreement will not result in any material violation of or be in material conflict with or constitute a default under any such term or result in the creation of (or impose any obligation on the Company to create) any Lien upon any of the properties or assets of the Company pursuant to any such term. -13- 6.7 Governmental Consents, etc. No consent, approval or --------------------------- authorization of, or declaration or filing with, any Governmental Authority on the part of any of the Company or any of its Subsidiaries is required for the valid execution and delivery of this Agreement or the consummation of the transactions contemplated hereby or the valid offer, issue, sale and delivery of the Notes, other than those which have been obtained or made and are unconditional and in full force and effect. 6.8 Capital Stock and Related Matters. --------------------------------- (a) The authorized Capital Stock of the Company is as set forth in section 6.8 of the Disclosure Schedule. Except in each case as specified therein, the Company does not have outstanding securities convertible into or exchangeable for any shares of its Capital Stock, nor will it have outstanding any rights to subscribe for or to purchase, or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, any shares of its Capital Stock or any securities convertible into or exchangeable for any shares of its Capital Stock. (b) The authorized Capital Stock of each Subsidiary of the Company, and the number of shares issued and outstanding, is as set forth in section 6.8 of the Disclosure Schedule. Except as set forth in section 6.8 of the Disclosure Schedule, no Subsidiary of the Company has any outstanding securities convertible into or exchangeable for any shares of its Capital Stock, nor will it have outstanding any rights to subscribe for or to purchase, or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, any shares of its Capital Stock or any securities convertible into or exchangeable for any shares of its Capital Stock. (c) The Company is not subject to any obligation (contingent or otherwise) to repurchase or otherwise to acquire or retire any shares of its Capital Stock. The Company is not required to file, nor has it filed, pursuant to Section 12 or Section 14(d) of the Exchange Act, a registration statement relating to any class of its debt or equity securities. 6.9 Debt. Section 6.9 of the Disclosure Schedule (as revised, if ---- necessary pursuant to section 5.2(j)) correctly describes all Debt of the Company and its Subsidiaries outstanding, or for which the Company or any Subsidiary has commitments on the date hereof and all Debt of the Company and its Subsidiaries to be outstanding, or for which the Company or any Subsidiary will have commitments, on the Initial Series A Closing Date and the Initial Series B Closing Date, in each case, after giving effect to the Financing Transactions. 6.10 Title to Properties; Liens. Each of the Company and its -------------------------- Subsidiaries has good and marketable title to all its material owned properties and assets, and none of such properties or assets will be subject to any Liens other than the Liens in favor of the -14- administrative or lead agent under the Credit Agreement for the benefit of the Lenders thereunder and other Liens permitted under the Credit Agreement including any Liens as to which the Lenders under the Credit Agreement shall have granted their consent or waived any objection and other Liens which could not reasonably be expected to have a Material Adverse Effect. On each Closing Date and after giving effect to the Financing Transactions, each of the Company and its Subsidiaries will enjoy peaceful and undisturbed possession under all leases necessary for the operation of its business, and all such leases will be valid and subsisting and will be in full force and effect except where such failure could not reasonably be expected to have a Material Adverse Effect. No Lien currently exists which would require the Company to equitably and ratably secure the Obligations hereunder and under the Notes pursuant to section 11.3. 6.11 Litigation. Except as set forth in section 6.11 to the ---------- Disclosure Schedule, there is no action, proceeding or investigation pending or, to the knowledge of the Company, threatened which questions the validity or legality of the Financing Transactions or this Agreement, the Notes or the Security Agreement, or any action taken or to be taken pursuant to this Agreement, the Notes or the Security Agreement or which would reasonably be expected to have a Material Adverse Effect. 6.12 Patents, Trademarks, Authorizations, etc. Each of the Company ---------------------------------------- and its Subsidiaries owns or is licensed to use all patents, trademarks, service marks, trade names, copyrights, technology, know-how and processes necessary for the conduct of its business, without any known conflict with the rights of others except to the extent that the failure to be in compliance could not reasonably be expected to have a Material Adverse Effect. Upon the closing of the transactions under the Securities Purchase Agreement and the Related Agreements, the Company will be licensed to market under the AT&T brand name and to use the trademarks, service marks, logo and trade dress licensed thereunder for a period of not less than five years. 6.13 Requirements of Law. Each of the Company and its Subsidiaries ------------------- is in compliance with all Requirements of Law applicable to it and its business, except to the extent that the failure to be in compliance could not reasonably be expected to have a Material Adverse Effect. 6.14 Federal Reserve Regulations. The Company will not use any of --------------------------- the proceeds of the sale of the Notes for the purpose, whether immediate, incidental or ultimate, of buying a "margin stock" or of maintaining, reducing or retiring any indebtedness originally incurred to purchase a stock that is currently a "margin stock", or for any other purpose which might constitute this transaction a "purpose credit", in each case, within the meaning of Regulation G of the Board of Governors of the Federal Reserve System (12 C.F.R. 207, as amended) or Regulation U of such Board (12 C.F.R. 221, as amended), or otherwise take or permit to be taken any action which would involve a violation of such Regulation G or Regulation U or of Regulation T (12 C.F.R. 220, as amended) or Regulation X (12 C.F.R. 224, -15- as amended) or any other regulation of such Board. No Debt of the Company or any Subsidiary being reduced or retired out of the proceeds of the sale of the Notes was incurred for the purpose of purchasing or carrying any such "margin stock" and neither the Company nor any Subsidiary owns or has any present intention of acquiring any such "margin stock". 6.15 Status Under Certain Federal Statutes. Neither the Company ------------------------------------- nor any Subsidiary is, and after giving effect to the Financing Transactions none of them will be, (a) an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended; (b) a "holding company" or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", as such terms are defined in the Public Utility Holding Company Act of 1935, as amended; (c) a "public utility", as such term is defined in the Federal Power Act, as amended; or (d) a "rail carrier or a person controlled by or affiliated with a rail carrier", within the meaning of Title 49, U.S.C., or a "carrier" to which 49 U.S.C. (S) 11301(b)(1) is applicable. Neither the Company nor any Subsidiary is subject to regulation under any Federal or state statute, regulation, decree or order which limits its ability to incur Debt or conditions such ability upon any act, approval or consent of any Governmental Authority. 6.16 Compliance with ERISA. Neither the acquisition of the Notes --------------------- by you nor the consummation of any of the other transactions contemplated by this Agreement is or will constitute a "prohibited transaction" within the meaning of Section 4975 of the Code, or Section 406 of ERISA. 6.17 Offer of Securities. The sale of the Notes in accordance with ------------------- the terms of this Agreement (a) is exempt from the registration requirements of the Securities Act and applicable state securities or blue sky laws and (b) does not require the qualification of an indenture under the Indenture Act. Neither the Company nor any financial advisor of the Company has directly or indirectly offered the securities to be purchased by you pursuant to this Agreement or any part thereof or any similar securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with any Person other than you. Neither the Company nor anyone acting on its behalf has taken or will take any action which would subject the issuance and sale of the Notes to the registration and prospectus delivery provisions of the Securities Act. 6.18 Use of Proceeds. The Company will apply the proceeds of the --------------- sale of the Notes solely to develop PCS Systems in the Designated Areas. -16- 6.19 Solvency of the Company. As of each Closing Date, (a) the ----------------------- aggregate value of all the assets of the Company and its Subsidiaries taken as a whole, at a fair valuation, will exceed the total liabilities of such Person (including contingent, subordinated, unmatured and unliquidated liabilities); (b) each of the Company and its Subsidiaries will be able to pay its debts as they mature; and (c) neither the Company nor any Subsidiary will have unreasonably small capital for the business in which it is proposed to be engaged. For purposes of this section 6.20, the "fair valuation" of any asset will be that amount which may be realized within a reasonable time, either through collection or sale of such asset at fair market value, defining the latter as the amount which could be obtained for the property in question within such period by a willing seller from a willing buyer, each having reasonable knowledge of the relevant facts, neither being under any compulsion to act, with equity to both. Neither the Company nor any Subsidiary has any intent to hinder, delay or defraud any entity to which it is, or will become, on or after the Initial Series A Closing Date, indebted or to incur debts that would be beyond its ability to pay as they mature. 6.20 Certain Fees. Except for the fees referred to in section 3.4 ------------ and as disclosed on section 6.21 of the Disclosure Schedule, no broker's or finder's fee or commission has been paid or will be payable by the Company with respect to the offer, issue and sale of the Notes or with respect to the Financing Transactions and the Company hereby indemnifies you against, and will hold you harmless from, any claim, demand or liability asserted against you for broker's or finder's fees alleged to have been incurred by the Company or any other Person (other than you or your Affiliates) in connection with any such offer, issue and sale or the Financing Transactions or any of the other transactions contemplated by this Agreement. 6.21 Regulatory Compliance. (a) The Company and its Subsidiaries --------------------- are in compliance with the Communications Act and the Telecommunications Act, except to the extent that the failure to be in compliance could not reasonably be expected to have a Material Adverse Effect. (b) None of the chief executive officer, chief operating officer, chief financial officer, general counsel or any other officer or employee of the Company specifically charged with having knowledge of or monitoring FCC matters has knowledge of any investigation, notice of apparent liability, violation, forfeiture or other order or complaint issued by or before the FCC, or of any other proceedings of or before the FCC, which could reasonably be expected to have a Material Adverse Effect. (c) Each of the Company and its Subsidiaries holds all Licenses necessary for the operation of its business as currently conducted except where the failure to hold such Licenses could not reasonably be expected to have a Material Adverse Effect (it being understood that on the date hereof neither Company nor its Subsidiary has any Licenses and no Licenses are required for the operation of the business of the Company or such Subsidiary as -17- currently conducted). No event has occurred which (i) results in, or after notice or lapse of time or both would result in, revocation, suspension, adverse modification, non-renewal, impairment, restriction or termination of, or order of forfeiture with respect to, any such License in any respect that could reasonably be expected to have a Material Adverse Effect, or (ii) affects or could reasonably be expected in the future to affect any of the rights of the Borrower or its Subsidiaries under any License in any respect that could reasonably be expected to have a Material Adverse Effect. (d) The Company and its Subsidiaries have duly filed in a timely manner all material filings, reports, applications, documents, instruments and information required to be filed by it under the Communications Act, the Telecommunications Act and under any other applicable federal, state and local laws, and all such filings were when made true, correct and complete in all material respects, except to the extent that the failure of any of the foregoing to be true and correct could not reasonably be expected to have a Material Adverse Effect. (e) TeleCorp Holdings currently qualifies, and at all times since it has held any Licenses from the FCC has qualified and will qualify, as a "very small business," as defined in 47 C.F.R. 101.112(b), and neither the Company nor Telecorp Holdings has committed or has any present intention to take any action that would result in Telecorp Holdings not being qualified as a "very small business" other than by reason of its annual gross revenues. As a result of the closing of the transactions under Article II and Article III of the Securities Purchase Agreement the Company owns (or, prior to such closing, the Company will own) 100% of the issued and outstanding Capital Stock of TeleCorp Holdings. 6.22 Disclosure. Neither this Agreement nor any other document, ---------- certificate or instrument delivered to you by or on behalf of the Company in connection with the transactions contemplated by this Agreement taken as a whole contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein, in light of the circumstances under which they were made, not misleading (it being understood that, except as set forth in section 6.4, no representation or warranty is made with respect to any projections or other prospective financial information). There is no fact known to the Company (other than matters of a general economic or political nature which do not affect the Company uniquely) which has resulted in, or could reasonably be expected to result in, a Material Adverse Effect, which has not been set forth in this Agreement or in the other documents, certificates and instruments delivered to you by or on behalf of the Company in connection with the transactions contemplated hereby and thereby. 6.23 Subsidiaries. On the Initial Series A Closing Date, the ------------ Borrower's only Subsidiary is TeleCorp PCS, LLC. On the Initial Series B Closing Date, the Borrower's only subsidiaries will be TeleCorp Holdings, TeleCorp PCS, LLC and such other Subsidiaries as Borrower shall identify to you by written notice on or prior to such Closing Date. -18- 6.24 Security Agreement. Except as enforceability may be limited ------------------ by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law), the Security Agreement is effective to create in your favor a legal, valid and enforceable security interest in the collateral secured thereunder and the proceeds thereof and, when financing statements with respect to such collateral and proceeds have been filed in each of the jurisdictions set forth in section 6.24 to the Disclosure Schedule, you shall have a fully perfected Lien on, and security interest in, all right, title and interest of the Company in such collateral and the proceeds thereof as described in the Security Agreement. 6.25 Licenses. (a) (i) The Company and its Subsidiaries hold all -------- Licenses necessary to operate a System in each of the MTAs in the Designated Areas, (ii) such Licenses have been duly issued by the FCC and are in full force and effect and (iii) the Company and its Subsidiaries are in compliance in all material respects with all the provisions of each such License. No such License is subject to any pending or, to the knowledge of the Company, threatened revocation, adverse modification, suspension or termination proceeding or action. (b) The Company and its Subsidiaries hold all Licenses necessary to operate Systems in MTAs and BTAs covering at least 11,100,000 POPs, and such Licenses have been duly issued by the FCC, are held by the Company or any Subsidiary and are in full force and effect; and the Company and its Subsidiaries are in compliance in all material respects with all of the provisions of each such License. 6.26 Transaction Documents. (a) The Company has delivered to you --------------------- complete and correct copies of each of the Transaction Documents (including all exhibits, schedules and disclosure letters referred to therein or delivered pursuant thereto, if any) and all amendments thereto, waivers relating thereto and other side letters or agreements affecting the terms thereof, as such Documents are in effect on the date this representation is made or deemed made. Each of the Transaction Documents, as such Documents are in effect on the date this representation is made or deemed made, has been duly executed and delivered by the Company, each Subsidiary and other party thereto and is a legal, valid and binding obligation of the Company, Subsidiary and each other party thereto, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or other similar laws affecting the rights of creditors generally and by general principles of equity (whether enforcement is sought by proceedings in equity or at law). The transactions under Article II and Article III of the Securities Purchase Agreement contemplated to be completed on the Closing Date (as defined in the Securities Purchase Agreement) have been consummated in accordance with the terms thereof, each Transaction Document is in full force and effect. -19- (b) The representations and warranties of the Company and to the knowledge of the chief executive officer, chief operating officer, chief financial officer and the general counsel of the Company, each other party to the Transaction Documents, as such Documents are in effect on the date this representation is made or deemed made, are true and correct in all material respects except where the failure of such representations to be true and correct in all material respects could not reasonably be expected to have a Material Adverse Effect. Such representations and warranties, together with the definitions of all defined terms used therein, are by this reference deemed incorporated herein mutatis mutandis and you are entitled to rely on the ---------------- accuracy of such representations and warranties. 7. Purchase Intent; Investor Status. -------------------------------- 7.1 Purchase Intent. You represent that you are purchasing the --------------- Notes for your own account, not with a view to the distribution thereof or with any present intention of distributing or selling any of such Notes except in compliance with the Securities Act and any applicable state securities laws; provided that the disposition of your property shall at all times be within your - -------- control. 7.2 Accredited Investor. You are knowledgeable, sophisticated and ------------------- experienced in business and financial matters; you acknowledge that the Notes have not been registered under the Securities Act; you understand that the Notes must be held indefinitely unless they are subsequently registered under the Securities Act or such sale is permitted pursuant to an available exemption from such registration requirement; you are able to bear the economic risk of your investment in the Notes and are presently able to afford the complete loss of such investment; you are an "accredited investor" as defined in Regulation D promulgated under the Securities Act; and you have been afforded access to information about the Company and its Subsidiaries and their financial condition, results of operations, business, property, management and prospects sufficient to enable you to evaluate your investment in the Notes. You acknowledge that you have conducted your own analysis of the foregoing factors. 8. Furnishing of Information. ------------------------- 8.1 Financial Statements and Other Information. The Company will ------------------------------------------ deliver to you, so long as you shall be entitled to purchase Notes under this Agreement or you or your nominee shall be the holder of any Notes and to each other holder of any Notes: (a) within 45 days after the end of each of the first three quarterly fiscal periods in each fiscal year of the Company, unaudited consolidated and consolidating balance sheets of the Company and its Subsidiaries as at the end of such period and the related unaudited consolidated and consolidating statements of income, stockholders' equity and cash flows for such period and (in the case of the second and third quarterly periods) for the period from the -20- beginning of the current fiscal year to the end of such quarterly period, setting forth in each case in comparative form the consolidated figures for the corresponding periods of the previous fiscal year, all in reasonable detail and certified by a principal financial officer of the Company as having been prepared in accordance with GAAP (except for the absence of notes thereto) applied (except as specifically set forth therein) on a basis consistent with such prior fiscal periods, subject to changes resulting from normal year-end audit adjustments; (b) within 90 days after the end of each fiscal year of the Company, consolidated balance sheets of the Company and its Subsidiaries as at the end of such year and the related consolidated statements of income, shareholders' equity and cash flows of the Company and its Subsidiaries for such fiscal year, accompanied by a report thereon of Coopers & Lybrand, or other independent public accountants of recognized national standing selected by the Company (and reasonably satisfactory to the Required Holders) (subject to section 17), which report shall state that such consolidated financial statements present fairly the financial position of the Company and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except as otherwise specified in such report) and that the audit by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards together with a consolidating balance sheet and consolidating statements of income and cash flow reviewed by Coopers & Lybrand and certified by a principal financial officer of the Company as presenting fairly the financial position of the Company and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated in accordance with GAAP (except as specifically set forth therein) applied on a basis consistent with prior years; (c) promptly upon receipt thereof, copies of all reports submitted to the Company or any Subsidiary by independent public accountants in connection with each annual, interim or special audit of the books of the Company or such Subsidiary made by such accountants, including, without limitation, any comment letter submitted by such accountants to management in connection with their annual audit; (d) promptly upon their becoming available, copies of all financial statements, reports, notices and proxy statements sent or made available generally by the Company to its security holders, of all regular and periodic reports and all registration statements and prospectuses filed by the Company with any securities exchange or with the Securities and Exchange Commission or any Governmental Authority succeeding to any of its functions, and of all press releases and other statements made available generally by the Company to the public concerning material developments in the business of the Company or its Subsidiaries; (e) subject to Section 30, promptly upon any Responsible Officer obtaining knowledge of any condition or event which constitutes an Event of Default or Potential Event of -21- Default, or that the holder of any Note has given any notice or taken any other action with respect to a claimed Event of Default or Potential Event of Default under this Agreement or that any Person has given any notice to the Company or any Subsidiary or taken any other action with respect to a claimed default or event or condition of the type referred to in paragraph (g) of section 12, an Officers' Certificate describing the same and the period of existence thereof and what action the Company and its Subsidiaries have taken, are taking and propose to take with respect thereto; (f) (i) prior to the completion by the Company a Qualifying High Yield Offering, such other information as the Company may provide to the lenders (or to the lead agent or administrative agent for the lenders) under the Credit Agreement (including any certifications or statements with respect to the Company's financial condition or otherwise, in each case, modified as necessary to reflect compliance with this Agreement) and (ii) thereafter, in lieu of the information provided in clause (i), such information as the Company may provide to the holders of its High Yield Debt (including any such certifications); provided that, in connection with any remarketing of the Notes after the - -------- completion by the Company of a Qualifying High Yield Offering, you may request and, subject to section 9.2, the Company shall provide to any prospective participant or assignee such information as the Company may provide to the lenders (or to the lead agent or administrative agent for the benefit of the lenders) under the Credit Agreement. 8.2 Opinion of Counsel. Concurrent with the closing of the ------------------ transactions under the Credit Agreement, the Company will deliver an opinion addressed to you of (a) Wiley, Rien & Fielding, special FCC counsel to the Company, and (b) McDermott, Will & Emery, special counsel to the Company, each in the same form and addressing the same issues as are addressed in the opinion of each such firm delivered to the lenders or to the agent, for the benefit of the lenders in connection with the Credit Agreement. 9. Inspection; Confidentiality. --------------------------- 9.1 Inspection. Subject to section 30, the Company will permit and ---------- will cause its Subsidiaries to permit any authorized representatives designated by any holder or holders of 25% or more in principal amount of the Notes at the time outstanding (subject to section 17), upon reasonable prior notice and during normal business hours, to visit and inspect any of the properties of the Company and its Subsidiaries, including their books of account, and to make copies and to take extracts therefrom, and to discuss their affairs, finances and accounts all at such reasonable times; provided, that so long as no Event of -------- Default has occurred and is continuing (i) if the Notes are held by a single holder, such holder shall be permitted one such visit and inspection in each year and (ii) if the Notes are held by more than one holder, the holders collectively shall be permitted two such visits and inspections in each year. -22- 9.2 Confidentiality. (a) You agree to exercise all reasonable --------------- efforts (consistent with your customary methods for keeping information confidential) to keep any information delivered or made available by the Company confidential from anyone other than persons employed or retained by you who are or are expected to become engaged in evaluating, approving, structuring or administering the transactions contemplated hereunder; provided, that nothing -------- herein shall prevent you from disclosing such information (i) to any Affiliate (provided that you shall be responsible for any breach of this provision by such -------- Affiliate) or to any other holder of the Notes, (ii) upon the order of any court or administrative agency, (iii) upon the request or demand of any regulatory agency or Governmental Authority having jurisdiction over you, (iv) that has been publicly disclosed, (v) in connection with any litigation relating to the Notes, this Agreement or any transaction contemplated hereby to which any of you, the Company or any Subsidiary may be a party, (vi) to the extent reasonably required in connection with the exercise of any remedy hereunder, (vii) to your legal counsel and independent auditors and (viii) to any proposed participant or assignee of all or any part of the Notes hereunder, if such other Person, prior to such disclosure, agrees, in writing, for the benefit of the Company to comply with the provisions of this section 9.2 (it being understood that prior to any disclosure under clause (ii), (iii) or (v) of this proviso, you shall, if reasonably practicable and if such action could not reasonably be expected to subject you to any civil or criminal sanction or penalty, notify the Company of such potential disclosure so as to afford the Company the opportunity to contest such disclosure). (b) The Company shall use its good faith efforts to obtain from any Governmental Authority to whom this Agreement or the terms thereof must be disclosed or publicly filed confidential treatment with respect to those provisions of this Agreement and the Notes which relate to the interest rate, pricing and remarketing and such other provisions as you may reasonably designate. The Company shall cooperate with you in such manner as you may reasonably request to obtain such confidential treatment and will promptly advise you of any discussions with representatives of any Governmental Authority with respect to obtaining such treatment. (c) The provisions set forth in this section 9.2 are subject to section 30. 10. Prepayment of Notes. ------------------- 10.1 Optional Prepayments. -------------------- (a) The Company, at its option, upon notice as provided in section 10.6, may redeem at any time, in whole or in part (in a minimum amount of $10,000,000 and in integral multiples of $1,000,000 in excess thereof), without premium, any Notes that are held by the Vendor or any Affiliate to the extent that participations have not been granted to Participants (other than Participants who are Affiliates of the Vendor) in such Notes. -23- (b) Subject to section 10.01 (a), with respect to any Series A Notes which the Vendor has either assigned or granted participations, in each case, to Persons who are not Affiliates of the Vendor, the Company, at its option, upon notice as provided in section 10.6, may redeem at any time prior to May 1, 2002 in whole or in part (in a minimum amount of $10,000,000 and in integral multiples of $1,000,000 in excess thereof), without premium, any such Series A Notes; provided, that any such Series A Notes that are not redeemed prior to -------- such date shall not be subject to redemption prior to May 1, 2007. On or after May 1, 2007, such Series A Notes shall be subject to redemption at a price equal to 100% of the aggregate principal amount being so redeemed plus a premium expressed as a percentage of the Series A Coupon Rate (determined in accordance with section 10.3(a)). (c) Subject to section 10.01 (a), with respect to any Series B Notes which the Vendor has either assigned or granted participations, in each case, to Persons who are not Affiliates of the Vendor, the Company, at its option, upon notice as provided in section 10.6, may redeem at any time prior to May 1, 2000, in whole or in part (in a minimum amount of $10,000,000 and in integral multiples of $1,000,000 in excess thereof), without premium, any such Series B Notes; provided, that any such Series B Notes that are not redeemed prior to -------- such date shall not be subject to redemption prior to May 1, 2005. On or after May 1, 2005, such Series B Notes shall be subject to redemption at a price equal to 100% of the aggregate principal amount being so redeemed plus a premium expressed as a percentage of the Series B Coupon Rate (determined in accordance with section 10.3(b). 10.2 Contingent Prepayments Upon Change of Control. In the event --------------------------------------------- of the occurrence of a Change of Control, the Company shall give prompt written notice thereof to each holder of the Notes, by facsimile transmission (and shall confirm such notice by prompt telephonic advice to an investment officer of each such holder) or registered mail, which notice shall also contain a written, irrevocable offer by the Company to prepay, not more than 60 days and not less than 30 days after the date of such notice, the Notes held by such holder in full (and not in part); provided that such prepayment shall be permitted under -------- the Credit Agreement and the other Funded Debt Documents of the Company. Upon the acceptance of such offer by such holder by written notice to the Company at least 10 days prior to the date of prepayment specified in the Company's offer, such prepayment of the Notes shall be made at a premium (determined in accordance with section 10.3) expressed as a percentage of the Series A Coupon Rate or Series B Coupon Rate, as applicable, together with, in each case, accrued and unpaid interest through the date of purchase. Any offer by the Company to prepay the Notes pursuant to this section 10.2 shall be accompanied by an Officers' Certificate certifying that the conditions of this section 10.2 have been fulfilled and specifying the particulars of such fulfillment. If the holder of any Notes shall accept such offer, the principal amount of such Notes shall become due and payable on the date specified in such offer. Notwithstanding the foregoing, if a Change of Control shall occur prior to May 1,2002, in the case of the Series B Notes, or May 1,2000, in -24- the case of the Series A Notes, the Company may in lieu of such irrevocable offer to prepay elect to prepay the Series A Notes or the Series B Notes pursuant to section 10.1; provided that (a) such prepayment shall be for all the -------- Notes of such Series and (b) all the Notes then outstanding shall be redeemed or prepaid; provided further, that such time restrictions shall not apply to any -------- ------- Notes held by the Vendor or any of its Affiliates (except to the extent participations have been granted to Persons who are not Affiliates of the Vendor). 10.3 Premium. (a) For the purposes of clauses (b) and (c) of ------- sections 10.1 and for purposes of section 10.2, whenever a premium is required to be paid upon prepayment of any Series A Note, the applicable premium shall be (i) for twelve-month period commencing May 31, 2007, 50% of the Series A Coupon Rate and (ii) for each twelve-month period thereafter, the excess of (A) the applicable premium for the prior twelve-month period over (B) the product obtained by multiplying (1) 50% by (2) a fraction, the numerator of which is 1 and the denominator of which is the lesser of (x) 5 and (y) the number of years from May 31, 2007 to the Series A Final Maturity Date. (b) For the purposes of sections 10.1 and 10.2, whenever a premium is required to be paid upon prepayment of any Series B Note, the applicable premium shall be (i) for the twelve-month period commencing May 31, 2005, 50% of the Series B Coupon Rate and (ii) for each twelve-month period thereafter, the excess of (A) the applicable premium for the prior twelve-month period over (B) the product obtained by multiplying (1) 50% by (2) a fraction, the numerator of which is 1 and the denominator of which is the lesser of (x) 5 and (y) the number of years from May 31, 2005 to the Series B Final Maturity Date. 10.4 Mandatory Redemption of Series A Notes. In the event that the -------------------------------------- Net Securities Proceeds, received by the Company from Equity Issuances shall exceed $130,000,000 as adjusted under section 28, the Company shall give prompt written notice thereof (which notice shall in any event be within 10 days after such receipt) to each holder of the Series A Notes by facsimile transmission (and shall confirm such notice by prompt telephonic advice to an investment officer of each such holder) or by registered mail. Such notice shall state that on a date specified thereon (which date shall be not less than 15 days after the date of such notice) the Company shall redeem to the extent of such excess the aggregate principal amount of the Series A Notes held by each holder for a price equal to the aggregate principal amount thereof plus accrued interest; provided that if all or any portion of such redemption of the Series A -------- Notes shall not be permitted under the Credit Agreement (i) the Company shall redeem Series A Notes in a principal amount equal to the maximum amount of the Net Securities Proceeds permitted to be so applied under the Credit Agreement which in no event shall be less than 50% of all Net Securities Proceeds in excess of $130,000,000 as adjusted under section 28 (the "Proceeds Redemption Amount") and (ii) from time to time thereafter if the Company shall receive additional proceeds from Equity Issuances, the Company shall redeem Series A Notes in a principal amount equal to the Proceeds Redemption Amount until the Series A Notes have been -25- redeemed in full. Any notice from the Company to redeem all or a portion of the Series A Notes pursuant to this section 10.4 shall be accompanied by an Officers' Certificate certifying that the conditions of this section 10.4 have been fulfilled. On the date specified in the Company's notice, the Company, upon receipt of an outstanding Series A Note, shall redeem all or such portion of such Series A Note together with accrued interest thereon and shall promptly mail to the holder of such Series A Note payment therefor and, if applicable, a new Series A Note in a principal amount equal to the excess of the principal amount of the Series A Note redeemed in connection with such redemption over the principal amount of such Series A Note so redeemed. 10.5 Mandatory Redemption of Series B Notes. (a) In the event that -------------------------------------- the Company receives the Net Debt Proceeds from a High Yield Offering and such Net Debt Proceeds, (together with any prior Net Debt Proceeds previously received by the Company and its subsidiaries from any other High Yield Offerings) are less than $120,000,000 in the aggregate (as adjusted pursuant to section 28), the Company shall give prompt written notice thereof (which notice shall in any event be within 10 days after such receipt) to each holder of the Series B Notes by facsimile transmission (and shall confirm such notice by prompt telephonic advice to an investment officer of each such holder) or by registered mail. Such notice shall state that on a date specified therein (which date shall not be less than 15 days after the date of such notice) the Company, upon receipt of the outstanding Series B Note, shall redeem Series B Notes in an aggregate principal amount equal to the Debt Redemption Amount. Any notice from the Company to redeem any of the Series B Notes pursuant to this section 10.5(a) shall be accompanied by an Officer's Certificate certifying that the conditions of this section 10.5(a) have been fulfilled. On the date specified in the Company's notice, the Company, upon receipt of an outstanding Series B Note, shall redeem such portion of such Series B Note together with accrued interest thereon and shall promptly mail to the holder of such Series B Note the redemption payment therefor and a new Series B Note in a principal amount equal to the excess of the principal amount of the Series B Note submitted in connection with such redemption over the principal amount of such Series B Note so redeemed. (b) In the event that the Net Debt Proceeds received by the Company from High Yield Offerings equal or exceed $120,000,000 in the aggregate (as adjusted pursuant to section 28), the Company shall give prompt written notice thereof (which notice shall in any event be within 10 days after such receipt) to each holder of Series B Notes by facsimile transmission (and shall confirm such notice by prompt telephonic notice to an investment officer of each such holder) or by registered mail. Such notice shall state that on a date specified therein (which date shall be not less than 15 days after the date of such notice) the Company shall redeem all the Series B Notes then outstanding. Any notice from the Company to redeem all the Series B Notes pursuant to this section 10.5(b) shall be accompanied by an Officer's Certificate certifying that the conditions in this section 10.5(b) have been fulfilled. On the date specified in the Company's notice, the Company, upon receipt of an outstanding Series B Note, shall redeem -26- such Series B Note together with accrued interest thereon and shall promptly mail to the holder of such Series B Note the redemption payment therefor. 10.6 Notice of Optional Prepayments; Officers' Certificate. The ----------------------------------------------------- Company will give each holder of any Notes written notice of each optional prepayment under section 10.1 not less than 15 days and not more than 60 days prior to the date fixed for such prepayment, in each case specifying such date, the aggregate principal amount of the Notes to be prepaid, the principal amount of each Note held by such holder to be prepaid, and the premium, if any, applicable to such prepayment. Such notice shall be accompanied by an Officers' Certificate certifying that the conditions of such section have been fulfilled and specifying the particulars of such fulfillment. 10.7 Allocation of Partial Prepayments. In the case of each --------------------------------- partial prepayment paid or to be prepaid (except a prepayment pursuant to section 10.2), the principal amount of the Notes to be prepaid shall be allocated (in integral multiples of $1,000) among all the Notes at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment, with adjustments, to the extent practicable, to compensate for any prior prepayments not made exactly in such proportion. In the case of each partial prepayment under section 10.2, the principal amount of the Notes to be prepaid or purchased, as applicable, shall be allocated pro rata among the holders who accepted such prepayment offer or offer to tender. 10.8 Maturity; Surrender, etc. In the case of each prepayment, the ------------------------- principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment, together with interest on such principal amount accrued to such date and the applicable premium, if any. From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest and premium, if any, as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in full shall be surrendered to the Company and canceled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note. 10.9 Acquisition of Notes. The Company shall not, and shall not -------------------- permit any Subsidiary or Affiliate to, purchase, redeem or otherwise acquire any Note except upon the payment, redemption or prepayment thereof in accordance with the terms of this Agreement and such Note. 11. Covenants. The Company covenants that from the date of this --------- Agreement through the Initial Series A Closing and thereafter so long as any of the Notes are outstanding: 11.1 Payment of Notes. The Company shall pay the principal of, ---------------- premium, if any, and interest on the Notes on the dates and in the manner provided herein and in the Notes. -27- 11.2 Payment of Taxes and Claims. Subject to section 30, the --------------------------- Company shall, and shall cause each Subsidiary to, pay all taxes, assessments and other governmental charges imposed upon it or any of its properties or assets or in respect of any of its franchises, business, income or profits as and when due and all claims (including, without limitation, claims for labor, services, materials and supplies) for sums which have become due and payable and which by law have or might become a Lien upon any of its properties or assets; provided that (i) no such charge or claim need be paid if being contested in - -------- good faith by appropriate proceedings diligently conducted, if reserves or other appropriate provision, if any, as shall be required by GAAP, shall have been made therefor and (ii) there shall be no default pursuant to this section if the failure to pay any of the foregoing could not reasonably be expected to have Material Adverse Effect. 11.3 Liens, etc. The Company shall not, and shall not permit any ---------- Subsidiary to, directly or indirectly incur, issue, assume, guarantee or suffer to exist any High Yield Debt or any other Debt which ranks pari passu or junior to the Notes which is secured by any Lien on any property or assets of the Company or any Subsidiary or on any shares of Capital Stock of any Subsidiary, without effectively providing that the principal of, premium, if any, and interest on the Notes shall be secured equitably and ratably with (or prior to) such High Yield Debt or other Debt; provided that the priority of such lien shall be subordinated to any Liens securing any High Yield Debt that is senior to the Notes Debt. 11.4 Restricted Payments. Unless (a) no Event of Default or ------------------- Potential Event of Default shall exist which is continuing and (b) the Company shall have paid all interest on the Notes on each of the prior three Payment Dates in cash, the Company shall not declare or make any Restricted Payment; provided that the restriction set forth in clause (b) shall not apply to - -------- Restricted Payments made by the Company in respect of shares of Series A Convertible Preferred Stock $.01 par value which are outstanding and held by AT&T PCS, TWR or any other wholly-owned Subsidiary of AT&T which payments shall not exceed $100 per share per year. 11.5 Consolidation, Merger, Sale of Assets, etc. The Company shall ------------------------------------------- not, and shall not permit any Subsidiary to, directly or indirectly: (a) consolidate with or merge into any other Person or permit any other Person to consolidate with or merge into it, except that: (i) any Subsidiary of the Company may consolidate with or merge into the Company or a Subsidiary (or any Person who, after giving effect to any such merger or consolidation would be a Subsidiary) if the Company or such Subsidiary, as the case may be, shall be the surviving corporation and if, -28- immediately after giving effect to such transaction, no condition or event shall exist which constitutes an Event of Default or Potential Event of Default; (ii) any corporation (other than a Subsidiary) may consolidate with or merge into the Company if the Company shall be the surviving corporation and if, immediately after giving effect to such transaction, (x) substantially all the assets of the Company shall be - located and substantially all its business shall be conducted within the United States and Puerto Rico, (y) the Company's Consolidated Net - Worth shall not be less than the Consolidated Net Worth of the Company immediately prior to such transaction and (z) no condition or event - shall exist which constitutes an Event of Default or Potential Event of Default; and (iii) the Company may consolidate with or merge into any other corporation if (w) the surviving corporation is a corporation - organized and existing under the laws of the United States of America or a state thereof, with substantially all its assets located and substantially all its business conducted within the United States and Puerto Rico, (x) such corporation expressly assumes, by an agreement - reasonably satisfactory in substance and form to the Required Holders (which agreement may require the delivery in connection with such assumption of such opinions of counsel as such holders may reasonably require), the obligations of the Company under this Agreement and under the Notes, (y) immediately after giving effect to such - transaction (and such assumption), the Company's Consolidated Net Worth shall not be less than the Consolidated Net Worth of the Company immediately prior to such transaction and (z) immediately after giving - effect to such transaction no condition or event shall exist which constitutes an Event of Default or a Potential Event of Default; or (b) sell, lease, abandon or otherwise dispose of all or substantially all its assets, except that: (i) any Subsidiary of the Company may sell, lease or otherwise dispose of all or substantially all its assets to the Company or a Wholly-Owned Subsidiary; and (ii) the Company may sell, lease or otherwise dispose of all or substantially all its assets to any corporation into which the Company could be consolidated or merged in compliance with subdivision (a)(iii) of this section 11.5; provided that (x) each of the -------- - conditions set forth in such subdivision (a)(iii) shall have been fulfilled, and (y) no such disposition shall relieve the Company from - its obligations under this Agreement or the Notes. -29- 11.6 Requirements of Law. Subject to section 30, each of the ------------------- Company and its Subsidiaries shall comply with all applicable Requirements of Law and obtain and comply in all material respects with and maintain any and all Licenses necessary for its operations, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect. 11.7 Transactions with Affiliates. The Company shall not, and ---------------------------- shall not permit any Subsidiary to, directly or indirectly, engage in any transaction material to the Company or any Subsidiary (including, without limitation, the purchase, lease, sale or exchange of assets or the rendering of any service) with any Affiliate, except upon fair and reasonable terms that are no less favorable to the Company or such Subsidiary, as the case may be, than those which might be obtained, in the good faith judgment of the Company, in an arm's length transaction at the time from Persons which are not Affiliates and, in the case of any transaction between the Company and any Management Stockholder(or any Affiliate of any Management Stockholder) shall have been approved by a majority of the directors (excluding any directors who are either Management Investors or who are selected by the Management Stockholders and are not subject to approval by any of the other holders of the Capital Stock of the Company); provided that the foregoing restrictions shall not apply to the -------- transactions contemplated under the Transaction Documents or any transaction between the Company and any Wholly-Owned Subsidiary or between one Wholly-Owned Subsidiary and another Wholly-Owned Subsidiary. 11.8 Corporate Existence, etc.; Business. Subject to section 30, ----------------------------------- the Company shall at all times preserve and keep in full force and effect its corporate existence, rights, qualifications and franchises (including, without limitation, all Licenses) deemed material to its business and those of each of its Subsidiaries (including, in the case of TeleCorp Holdings, its qualification as a "very small business" as defined as 47 C.F.R. 101.112(b) other than by reason of its annual gross revenues), except as otherwise specifically permitted by section 11.5 and except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect. 11.9 Fundamental Business Change. The Company and its Subsidiaries --------------------------- shall not materially change the nature of their businesses or engage in any business other than the development of PCS Systems in the Designated Areas and in the Expansion Areas and other businesses reasonably related thereto (including providing cellular, wireless local loop, competitive local exchange carrier, wireless communications service, and local multipoint distribution services). 11.10 Compliance with ERISA. Subject to section 30, the Company --------------------- and its Subsidiaries and any Commonly Controlled Entity shall not, permit any Person to engage in any -30- "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan. 12. Events of Default; Acceleration. If any of the following ------------------------------- conditions or events ("Events of Default") shall occur and be continuing: (a) if the Company shall default in the payment of any principal of or premium, if any, on or any other amount (other than interest not paid in connection with a prepayment or redemption) with respect to any Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or (b) if the Company shall default in the payment of any cash interest (other than interest paid in connection with a prepayment or redemption) or pay- in-kind interest on any Note for more than 15 days after the same becomes due and payable; or (c) if the Company shall default in the performance of section 11.5; or (d) if the Company shall default in the performance of or compliance with any other term contained in this Agreement and such default shall not have been remedied within 30 days after such failure shall first have become known to any Responsible Officer of the Company or written notice thereof shall have been received by the Company from any holder of any Note; or (e) if any representation or warranty made in writing by or on behalf of the Company in this Agreement or in any instrument furnished in compliance with this Agreement shall prove to have been false or incorrect in any material respect on the date as of which made; or (f)v if the Company or any Subsidiary shall default (as principal or guarantor or other surety) in the payment of any principal of or premium or interest on any Senior Debt which is outstanding in a principal amount of at least $15,000,000 (or on any one or more items of Senior Debt which are outstanding in the aggregate in a principal amount of at least $15,000,000), or if any event shall occur or condition shall exist in respect of any such Debt or under any evidence of any such Debt or of any mortgage, indenture or other agreement relating thereto, the effect of which default in payment event or condition is to cause the acceleration of the payment of such Debt, or to require the Company or Subsidiary to repurchase such Debt, before its stated maturity or before its regularly scheduled dates of payment, provided that in -------- the event such default in payment or such event or condition is waived and any acceleration rescinded prior to the acceleration of the Notes or the commencement of any exercise of remedies under section 13 and in any event within 30 days following such occurrence by each affected holder of such Debt and by each Person that acquired a remedy as a result of such -31- default in payment or such event or condition, then such default in payment or such event or condition shall be deemed waived hereunder; or (g) if a final judgment or judgments shall be rendered against the Company or any Subsidiary for the payment of money in excess of $15,000,000 in the aggregate (excluding any such judgment covered by insurance not disputed by the carrier thereof) and any one of such judgments shall not be discharged or execution thereon stayed or bonded pending appeal within 90 days after entry thereof or, in the event of such a stay, such judgment shall not be discharged or satisfied within 90 days after such stay expires; or (h) if the Company or any Material Subsidiary shall (i) be generally not paying its debts as they become due, (ii) file, or consent by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, (iii) make an assignment for the benefit of its creditors, (iv) consent to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) be finally adjudicated insolvent or (vi) take corporate action for the purpose of any of the foregoing; or (i) if a court or Governmental Authority of competent jurisdiction shall enter an order appointing, without consent by the Company or any Material Subsidiary, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or if an order for relief shall be entered in any case or proceeding for liquidation or reorganization or otherwise to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of the Company or any Material Subsidiary, or if any petition for any such relief shall be filed against the Company or any Material Subsidiary and such petition shall not be dismissed within 60 days; or (j) the Company shall be in default of or shall breach any of its obligations under the Procurement Contract and as a result thereof such Procurement Contract shall have terminated; provided that no Event of Default shall exist under this clause (j) if (i) none of the Notes are then held by the Vendor or, if held by the Vendor, participations have been granted in such Notes (other than participations to Persons who are Affiliates) or (ii) the Company shall have acquired from the Vendor, shall have deployed and shall have paid all amounts to the Vendor with respect to a mobile switching center and fifty base stations for each of the following Designated Areas: Memphis, Tennessee; Little Rock, Arkansas; New Orleans, Louisiana and Boston, Massachusetts and, if you shall have provided financing for any Expansion Areas, a mobile switching station and fifty base stations for each such Expansion Area. -32- (k) the Company and AT&T shall fail to consummate the transactions contemplated under Article II and III of the Securities Purchase Agreement and under the Related Agreements on or prior to September 30, 1998; or (l) the Company shall fail to enter into the Credit Agreement and obtain term loans thereunder in a principal amount of not less than $75,000,000 on or prior to September 30, 1998; or (m) the Company shall fail to repay all amounts under the Extended Payment Terms Facility on or prior to September 30, 1998; then (i) (A) upon the occurrence of any Event of Default described in paragraphs (h) and (i) of this section 12, the Commitments shall automatically terminate and (B) with respect to any other Event of Default, the Required Holders of the Notes (subject to section 17) may by notice to the Company declare the Commitments terminated forthwith whereupon the Commitments shall be terminated, and (ii) (A) upon the occurrence of any Event of Default described in paragraphs (h) and (i) of this section 12, the unpaid principal amount of and accrued interest on the Notes shall automatically be due and payable or (B) with respect to any other Event of Default (x) if such event is an Event of Default described in paragraphs (a), (b), (f), (j), or (k), of this section 12 the Required Holders of Notes at such time outstanding (subject to section 17) may at any time (unless all defaults shall have been remedied) at its or their option, by written notice or notices to the Company, declare the Notes to be due and payable; or (y) if such event is an Event of Default described in any other - paragraph of this section 12 and such event occurs before the Credit Agreement shall have been executed and delivered and shall be in full force and effect, the Required Holders of the Notes (subject to section 17) may declare the Notes due and payable; whereupon, with reference to any such declaration, the Notes shall forthwith mature and become due and payable together with interest accrued thereon, without presentment, demand, protest or notice, all of which are hereby waived. At any time after the principal of, and interest on, all the Notes are declared due and payable, the holders of 66 2/3% or more in aggregate principal amount of the Notes then outstanding, by written notice to the Company, may rescind and annul any such declaration and its consequences if (1) the Company has paid all overdue interest on the Notes and the principal of, and premium, if any, on any Notes which have become due otherwise by reason of such declaration, and interest on such overdue principal and premium and (to the extent permitted by applicable law) any overdue interest in respect of the Notes at the rate of 2% per annum above the then effective rate of interest on the Notes, (2) all Events of Default, other than non-payment of amounts which have become due solely by reason of such declaration, and all conditions and events which constitute Events of Default or Potential Events of Default have been cured or waived and (3) no judgment or decree shall have been entered for the payment of any monies due pursuant to the Notes or this Agreement that has not been vacated; but no such rescission and -33- annulment shall extend to or affect any subsequent Event of Default or Potential Event of Default or impair any right consequent thereon. 13. Remedies on Default, etc. If any Event of Default shall occur ------------------------ and be continuing, the holder of any Note at the time outstanding may, to the extent permitted by applicable law, proceed to protect and enforce the rights of such holder by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein or in such Note, or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or otherwise. No course of dealing and no delay on the part of any holder of any Note in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder's rights, powers or remedies. No right, power or remedy conferred by this Agreement or by any Note upon any holder thereof shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise. 14. Subordination. ------------- 14.1 Notes Subordinate to Senior Debt. The Company covenants and -------------------------------- agrees, and each holder of a Note, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this section, the payment of the principal of, premium, if any, and interest on each and all the Notes and the repurchase, redemption or other retirement of the Notes is hereby expressly made subordinate and subject in right of payment to the prior payment in full in cash or cash equivalents or, as acceptable to the holders of Senior Debt, in any other manner, of all Senior Debt in the manner set forth in this section 14. The terms of this section 14 are for the benefit of, and shall be enforceable directly by, each holder of Senior Debt, and each holder of Senior Debt whether now outstanding or hereafter created, incurred, assumed or guaranteed shall be deemed to have acquired such Senior Debt in reliance upon the covenants and provisions contained in this Agreement. 14.2 Payment of Proceeds Upon Dissolution, Etc. Upon any payment or ----------------------------------------- distribution of assets of the Company to creditors upon any liquidation, dissolution, winding-up, reorganization, assignment for the benefit of creditors, marshaling of assets or liabilities or any bankruptcy, reorganization, receivership, insolvency or similar proceedings of the Company or its property, whether voluntary or involuntary (each such event, if any, herein sometimes referred to as a "Proceeding"): (a) The holders of Senior Debt shall receive payment in full in cash or cash equivalents or, as acceptable to the holders of Senior Debt, in any other manner, of all amounts due on or to become due on or in respect of all Senior Debt (including any interest accruing thereon after the commencement of any such Proceeding, whether or not allowed as a claim against the Company in such Proceeding) or provision shall be made for such payment in a -34- manner acceptable to such holders before the holders of the Notes are entitled to receive any payment or distribution whether by setoff, exercising contractual or statutory rights or otherwise and whether in the form of cash, stock or property or otherwise (excluding any payment or distribution described in the last paragraph of this section 14.2(b)), on account of the principal of, premium, if any, interest on or any other obligation owing in respect of the Notes or on account of any purchase, redemption or other acquisition of Notes by the Company (all such payments, distributions, purchases, redemptions and acquisitions, whether or not in connection with a Proceeding (but excluding any payment or distribution described in the last paragraph of this section 14.2), being herein referred to, individually and collectively, as a "Securities Payment"); and (b) Any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, by set-off or otherwise, to which the holders of the Notes would be entitled but for the provisions of this section 14, shall be paid by the Company or the liquidating trustee or agent or other Person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of Senior Debt or their representatives or trustees under any credit agreement, indenture or other agreement under which any such Senior Debt may have been issued, ratably according to the aggregate amounts remaining unpaid on account of the Senior Debt held or represented by each, to the extent necessary to make payment in full in cash or cash equivalents or, as acceptable to the holders of Senior Debt, in any other manner, of all Senior Debt remaining unpaid, after giving effect to any concurrent payment or distribution to the holders of such Senior Debt. In the event that, notwithstanding the foregoing provisions of this section, the holder of any Notes shall have received in connection with any Proceeding any Securities Payment before all Senior Debt is paid in full or payment thereof is provided for in cash or cash equivalents, then and in such event such Securities Payment shall be held in trust for the benefit of and paid over or delivered forthwith to the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other Person making payment or distribution of assets of the Company for application to the payment of all Senior Debt remaining unpaid, to the extent necessary to make payment in full in cash or cash equivalents or, as acceptable to the holders of the Senior Debt, in any other manner, of all Senior Debt remaining unpaid after giving effect to any concurrent payment to or for the holders of Senior Debt. For purposes of this section 14 only, the words "payment or distribution" or "any payment or distribution of any kind or character, whether in cash, property or securities" shall not be deemed to include a payment or distribution of stock or securities of the Company provided for by a plan of reorganization or readjustment authorized by an order or decree of a court of competent jurisdiction in a reorganization proceeding under any applicable bankruptcy law or of any other corporation provided for by such plan of reorganization or readjustment, which stock -35- or securities are subordinated in right of payment to all then outstanding Senior Debt to substantially the same extent, or to a greater extent than, the Notes are so subordinated as provided in this section 14. The consolidation of the Company with, or the merger of the Company into, another Person or the liquidation or dissolution of the Company following the conveyance, transfer or lease of all or substantially all of its properties and assets to another Person upon the terms and conditions set forth in section 11.5 and so long as permitted under the terms of the Senior Debt shall not be deemed a Proceeding for the purposes of this section if the Person formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease such properties and assets, as the case may be, shall, as a part of such consolidation, merger, conveyance, transfer or lease, comply with the conditions set forth in section 14. (c) To the extent any payment of Senior Debt (whether by or on behalf of the Company, as proceeds of security or enforcement of any right of setoff or otherwise) is declared to be fraudulent or preferential, set aside or required to be paid to any receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person under any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then if such payment is recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person, the Senior Debt or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment had not occurred. 14.3 No Payment When Senior Debt in Default. In the event that any -------------------------------------- Senior Payment Default (as defined below) shall have occurred and be continuing, then no Securities Payment whether by setoff, exercising contractual or statutory rights or otherwise and whether in the form of cash, stock or property or otherwise shall be made, unless and until such Senior Payment Default shall have been cured or waived in writing or shall have ceased to exist or all amounts then due and payable in respect of such Senior Debt (including, without limitation, amounts that have become and remain due by acceleration) shall have been paid in full in cash. "Senior Payment Default" means any default in the payment of the principal of, premium, if any, or interest on any Senior Debt when due, whether at the stated maturity of any such payment or by declaration of acceleration, call for redemption, notice of the exercise of an option to require such repayment, mandatory payment or prepayment or otherwise. In the event that any Senior Nonmonetary Default (as defined below) shall have occurred and be continuing, then, upon the receipt by the Company of written notice of such Senior Nonmonetary Default from the agent under the Credit Agreement to which such Senior Nonmonetary Default relates or, if no loans or other amounts are then outstanding under the Credit Agreement or any renewal, extension or refunding thereof, and the Credit Agreement and any such renewal, extension or refunding have been terminated, upon receipt of such notice by or on behalf of any other holder or holders of Senior Debt in an aggregate amount in excess of $25,000,000, no Securities Payment shall be made whether by setoff, exercising contractual or -36- statutory rights or otherwise and whether in the form of cash, stock or property or otherwise be made during the period (the "Payment Blockage Period") commencing on the date of such receipt by the Company of such written notice and ending on the earlier of (a) the date, if any, on which the Senior Debt to which such Senior Nonmonetary Default relates is discharged or such Senior Nonmonetary Default shall have been cured or waived in writing or shall have ceased to exist and any acceleration of Senior Debt to which such Senior Nonmonetary Default relates shall have been rescinded or annulled and (b) the 179th day after the date of such receipt of such written notice. No more than one Payment Blockage Period may be commenced with respect to the Notes during any period of 360 consecutive days and there shall be a period of at least 181 consecutive days in each period of 360 consecutive days when no Payment Blockage Period is in effect. Following the commencement of any Payment Blockage Period, the holders of Senior Debt shall be precluded from commencing a subsequent Payment Blockage Period until the conditions set forth in the preceding sentence shall have been satisfied. For all purposes of this paragraph, no Senior Nonmonetary Default that existed and was continuing on the date of commencement of any Payment Blockage Period with respect to the Senior Debt initiating such Payment Blockage Period shall be, or may be made, the basis for the commencement of a subsequent Payment Blockage Period by any holder of Senior Debt or any representative or trustee under any indenture under which any such Senior Debt may have been issued unless such Senior Nonmonetary Default shall have been cured for a period of not less than 90 consecutive days. "Senior Nonmonetary Default" means any default (other than a Senior Payment Default), under the terms of any instrument or agreement pursuant to which any Senior Debt is outstanding, permitting one or more holders of such Senior Debt or any representative or trustee under any indenture under which any such Senior Debt may have been issued to declare such Senior Debt due and payable prior to the date on which it would otherwise become due and payable. In the event that, notwithstanding the foregoing, the Company shall make any Securities Payment to any holder prohibited by the foregoing provisions of this section 14.3, then in such event such Securities Payment shall be held in trust and paid over and delivered forthwith to the representatives or trustee under any indenture under which any such Senior Debt may have been issued ratably according to the aggregate amounts remaining unpaid on account of the Senior Debt held or represented by under the Senior Debt or, if there is no such representative or trustee with respect to such Senior Debt, to the holders of such Senior Debt. The provisions of this section 14.3 shall not apply to any Securities Payment with respect to which section 14.2 hereof would be applicable. 14.4 Acceleration of Subordinated Debt. If an Event of Default shall --------------------------------- have occurred and be continuing (other than an Event of Default pursuant to paragraphs (h) or (i) of section 12), the holders of the Notes shall give the holders of the Senior Debt not less than 30 days prior written notice before accelerating the Notes which notice shall state it is a "Notice of -37- Intent to Accelerate". Upon such declaration, the holders of Senior Debt outstanding at the time such Subordinated Debt so becomes due and payable shall be entitled to receive payment in full in cash, cash equivalents or, as acceptable to the holders of the Senior Debt, in any other manner on all amounts due or to become due on or in respect of such Senior Debt, before the Company may make, and before any holder of Subordinated Debt is entitled to receive, any payment or distribution of assets of the Company of any kind or character, whether in cash, securities or other property on account of any Subordinated Debt. All payments in respect of the Subordinated Debt postponed under this section 14.4 shall be immediately due and payable upon the termination of such postponement; the remittance in full of such payments by the Company in accordance with the terms of the this Agreement and the acceptance thereof by the holders of the Notes shall be deemed to constitute a cure by the Company and a waiver by the holders of the Notes of any Event of Default that existed immediately prior to such remittance and acceptance to the extent that such Event of Default existed solely as a consequence of the previous non-payment of such postponed payments during such period of postponement. 14.5 Payment Permitted If No Default. Nothing contained in this ------------------------------- section 14 or elsewhere in this Agreement or in any of the Notes shall prevent the Company, at any time except during the pendency of any Proceeding referred to in section 14.2 or under the conditions described in section 14.3, from making Securities Payments in accordance with the terms of this Agreement. Nothing in this section 14 shall have any effect on the right of the holders to accelerate the maturity of the Notes upon the occurrence of an Event of Default, but, in that event, no payment may be made in violation of the provisions of this section 14 with respect to the Notes. If payment of the Notes is accelerated because of an Event of Default, the Company shall promptly notify the holders of the Senior Debt (or their representatives) of such acceleration. 14.6 Subrogation To Rights of Holders of Senior Debt. Subject to the ----------------------------------------------- payment in full in cash or cash equivalents, or as acceptable to the holders of Senior Debt, in any other manner, of all Senior Debt, the holders of the Notes shall be subrogated to the rights of the holders of such Senior Debt to receive payments and distributions of cash, property and securities applicable to the Senior Debt until the principal of, premium, if any, and interest on the Notes shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Debt of any cash, property or securities to which the holders of the Notes would be entitled except for the provisions of this section 14, and no payments pursuant to the provisions of this section 14 to the holders of Senior Debt by holders of the Notes, shall, as among the Company, its creditors other than holders of Senior Debt and the holders of the Notes, be deemed to be a payment or distribution by the Company to or on account of the Senior Debt. 14.7 Provisions Solely To Define Relative Rights. The provisions of ------------------------------------------- this section 14 are and are intended solely for the purpose of defining the relative rights of the holders of the Notes on the one hand and the holders of Senior Debt on the other hand. Nothing -38- contained in this section 14 or elsewhere in this Agreement or in the Notes is intended to or shall (a) impair, as among the Company, its creditors other than holders of Senior Debt and the holders of the Notes, the obligation of the Company, which is absolute and unconditional (and which, subject to the rights under this section 14 of the holders of Senior Debt, is intended to rank equally with all other general obligations of the Company), to pay to the holders of the Notes the principal of, premium, if any, and interest on the Notes as and when the same shall become due and payable in accordance with their terms; or (b) affect the relative rights against the Company of the holders of the Notes and creditors of the Company other than the holders of Senior Debt; or (c) prevent the holder of any Note from exercising all remedies otherwise permitted by applicable law upon default under this Agreement, subject to this section 14, including the rights, if any, under this section 14 of the holders of Senior Debt to receive cash, property and securities otherwise payable or deliverable to such holder or, under the conditions specified in section 14.3, to prevent any payment prohibited by such section or enforce their rights pursuant to the penultimate paragraph in section 14. 14.8 No Waiver of Subordination Provisions. No right of any present ------------------------------------- or future holder of any Senior Debt to enforce the subordination provisions provided herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Agreement, regardless of any knowledge thereof any such holder may have or be otherwise charged with. Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Debt may, at any time and from time to time, without the consent of or notice to the holders of the Notes, without incurring responsibility to the holders of the Notes and without impairing or releasing the subordination provided in this section 14 or the obligations hereunder of the holders of the Notes to the holders of Senior Debt, do any one or more of the following: (a) change the manner, place or terms of payment or extend the time of payment of, or renew, refinance or alter, Senior Debt, or otherwise amend or supplement in any manner Senior Debt or any instrument evidencing the same or any agreement under which Senior Debt is outstanding; (b) permit the Company to borrow, repay and then reborrow any or all the Senior Debt; (c) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt; (d) release any Person liable in any manner for the collection of Senior Debt; (e) exercise or refrain from exercising any rights against the Company and any other Person; and (f) apply any sums received by such holders to Senior Debt. 14.9 Reliance On Judicial Order or Certificate of Liquidating Agent. -------------------------------------------------------------- Upon any payment or distribution of assets of the Company referred to in this section 14, the holders of the Notes shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person -39- making such payment or distribution, delivered to the holders of Notes, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this section 14; provided that the foregoing shall apply -------- only if such court has been apprised of the provisions of this section 14. 15. Definitions. As used herein the following terms have the ----------- following respective meanings: Additional Notes: the meaning specified in section 1. ---------------- Additional Series A Notes: the additional Series A Notes issued by the ------------------------- Company in lieu of payment of cash interest on the Series A Notes. Additional Series B Notes: the additional Series B Notes issued by the ------------------------- Company in lieu of payment of cash interest on the Series B Notes. Affiliate: any Person directly or indirectly controlling or controlled --------- by or under common control with another Person or any Subsidiary of such other Person, including (without limitation) any Person beneficially owning or holding 5% or more of any class of voting securities of another Person or any Subsidiary of such other Person or any other corporation of which another Person or any Subsidiary of such other Person owns or holds 10% or more of any class of voting securities; provided that, for purposes of this definition, "control" -------- (including, with correlative meanings, the terms "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise. Assignee: the meaning specified in section 23.3. -------- AT&T: AT&T Corp. ---- AT&T PCS: AT&T Wireless PCS, Inc. -------- Base Case: the meaning specified in section 28. --------- Benefitted Holder: the meaning specified in section 25. ----------------- Board: the Board of Directors of the Company. ----- -40- BTA: a Basic Trading Area as defined in 47 C.F.R. 24.202, as amended --- from time to time. Business Day: any day except a Saturday, a Sunday or other day on ------------ which commercial banks in New York City are required or authorized by law to be closed. Capital Lease: as applied to any Person, any lease of any property ------------- (whether real, personal or mixed) by such Person as lessee which would, in accordance with GAAP, be required to be classified and accounted for as a capital lease on a balance sheet of such Person. Capital Lease Obligation: with respect to any Capital Lease, the ------------------------ amount of the obligation of the lessee thereunder which would, in accordance with GAAP, appear on a balance sheet of such lessee in respect of such Capital Lease. Capital Stock: any and all shares, interests, participations or other ------------- equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants or options to purchase any of the foregoing. Cash Equity Investors: the investors referred to on Schedule I to the --------------------- Securities Purchase Agreement. Change of Control: (a) the sale, lease, abandonment or other ----------------- disposition by the Company of all or substantially all its assets; or (b) at any time from and after the occurrence of an IPO, (i) any Person or "group" (within the meaning of Section 13(d)(3) of the Exchange Act), other than AT&T being or becoming the beneficial owner, directly or indirectly, of more than 20% of the Voting Stock of the Company; (ii) a majority of the persons who comprised the Board on the date the IPO is completed shall be replaced, unless such replacements shall have been approved by at least two-thirds of the Board then still in office who either were members of such Board on such date or whose election as a member of such Board was previously so approved; or (iii) the Company shall fail at all times to own, directly or indirectly, all the outstanding Capital Stock of its Subsidiaries; provided that the definition set -------- forth herein shall be subject to section 30. Closing: the reference to any Series A Closing or Series B Closing, ------- as the context may require. Code: the Internal Revenue Code of 1986, as amended from time to time. ---- Commitment Letter: the meaning specified in section 5.1(p). ----------------- -41- Commitments: the collective reference to the Series A Note Commitment ----------- and the Series B Note Commitment. Commonly Controlled Entity: an entity, whether or not incorporated, -------------------------- which is under common control with the Company within the meaning of Section 4001 of ERISA or is part of a group which includes the Company and which is treated as a single employer under Section 414 of the Code. Communications Act: The Communications Act of 1934 and the rules and ------------------ regulations thereunder, as amended from time to time. Competitor: any Person which is engaged directly or indirectly in the ---------- ownership or operation of a wireless telecommunications system encompassing at least one MTA; provided that a Person (a) which is solely a passive investor in -------- companies engaged in the same or related business as the Companies or (b) which purchases or to whom the Company or any agent of the Company offers Senior Debt of the Company shall not be a Competitor. Contractual Obligation: as to any Person, any provision of any ---------------------- security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. Consolidated Net Worth: the total of the amounts shown on the balance ---------------------- sheet of such Person and its consolidated Subsidiaries, determined on a consolidated basis in accordance with GAAP, as (a) the par or stated value of all outstanding Capital Stock of such Person plus (b) paid-in capital or capital surplus relating to such Capital Stock plus (c) any retained earnings or earned surplus less (i) any accumulated deficit, (ii) any amounts attributable to Redeemable Stock and (iii) any amounts attributable to Exchangeable Stock. Credit Agreement: a credit agreement among the Company, the banks and ---------------- other financial institutions party thereto, as lenders, and the Senior Lender, as agent, which agreement conforms in all material respects to the terms of the Principal Terms and Conditions. Debt: as applied to any Person (without duplication): ---- (a) any indebtedness for borrowed money which such Person has directly or indirectly created, incurred or assumed; and (b) any other indebtedness of such Person which is evidenced by a note, bond, debenture or similar instrument; and -42- (c) any indebtedness, whether or not for borrowed money, secured by any Lien in respect of property owned by such Person, whether or not such Person has assumed or become liable for the payment of such indebtedness; and (d) any indebtedness, whether or not for borrowed money, including any Capital Lease Obligation, with respect to which such Person has become directly or indirectly liable and which represents or has been incurred to finance the purchase price (or a portion thereof) of any property or services or business acquired by such Person, whether by purchase, consolidation, merger or otherwise (excluding accounts payable incurred in the ordinary course of business, if such accounts payable are not more than 90 days past due); (e) any indebtedness owing to the FCC with respect to payments for Licenses; and (f) any indebtedness of any other Person of the character referred to in subdivision (a), (b), (c), (d) or (e) of this definition with respect to which the Person whose Debt is being determined has become liable by way of a Guaranty. Debt Redemption Amount: in respect of any High Yield Offering, the ---------------------- amount which is equal to the excess of (a) the principal amount of the Series B Notes outstanding over (b) (i) $120,000,000 (as such amount may be increased ---- pursuant to section 28) minus (ii) the aggregate Net Debt Proceeds received by the Company from all High Yield Offerings. Designated Area: the meaning specified in the introduction. --------------- Disclosure Schedule: the Disclosure Schedule attached as Schedule B ------------------- to this Agreement. EBITDA: shall mean, for any period of determination, an amount equal ------ to the sum of (without duplication) (a) Net Income for such period, after deduction of (i) all items which should be classified as extraordinary, all determined in accordance with GAAP; (ii) all insurance proceeds (other than proceeds of business interruption insurance) received during such period to the extent, if any, included in Net Income and (iii) tax adjusted gains (or inclusion of tax adjusted losses) incurred in connection with the disposition of capital assets, plus (b) all amounts deducted in computing such Net Income in respect of (i) Interest Expense (after giving effect to all Hedging Agreements and payments and receipts thereunder), (ii) noncash amortization expense (including amortization of financing costs, noncurrent assets and non-cash charges), (iii) depreciation, (iv) income taxes and (v) all other non-cash expenses. -43- Eligible Assignee: any Person who is either an accredited investor ----------------- (as defined in Rule 501 under the Securities Act) or a Qualified Institutional Buyer (as defined in Rule 144A under the Securities Act) and is (a) a commercial bank having total assets in excess of $250,000,000, an insurance company or other similar financial institution, (b) any other entity which is (or which is managed by a manager which manages funds which are) primarily engaged in making, purchasing or otherwise investing in commercial loans or extending, or investing in extensions of, credit for its own account in the ordinary course of its business, which has total assets in excess of $250,000,000, (c) a fund principally engaged in investing in commercial loans, debt securities or other extensions of credit or (d) a Person which is not a Competitor and has total assets in excess of $250,000,000. Employment Agreement: the meaning set forth in Section 6.10 of the -------------------- Securities Purchase Agreement. Equity Issuance: the issuance after the Initial Series A Closing Date --------------- of any Capital Stock or the receipt of any capital contribution (other than capital contributions in an aggregate amount equal to $133,000,000 pursuant to the Securities Purchase Agreements) by the Company. ERISA: the Employee Retirement Income Security Act of 1974, as ----- amended from time to time. Event of Default: the meaning specified in section 12. ---------------- Exchange Act: the Securities Exchange Act of 1934. ------------ Exchangeable Stock: any Capital Stock which is exchangeable or ------------------ convertible into a debt security of the issuer or any of its subsidiaries. Expansion Areas: the meaning specified in section 28. --------------- Expansion Notes: the meaning specified in section 28. --------------- Extended Payment Terms Facility: the agreement between the Company ------------------------------- and the Vendor pursuant to which the Vendor has agreed to permit the Company to defer payment on all Vendor equipment and services purchased by the Company and its Subsidiaries under the Procurement Contract to a date that is the earlier of (a) September 30, 1998 and (b) the closing of the transactions under the Credit Agreement. FCC: The Federal Communications Commission or any successor thereto. --- -44- Financial Statements: the meaning specified in section 6.4(a). -------------------- Financing Transactions: the meaning specified in the introduction. ---------------------- Five-Year No-Call: the meaning specified in section 24(c). ----------------- Fully Diluted Outstanding: with respect to the determination of the ------------------------- number of shares of Voting Stock outstanding on any date, the sum of (a) all shares of Voting Stock outstanding on such date and (b) all shares of Voting Stock that would be outstanding if all outstanding rights, warrants or options that may be exercised, exchanged or converted into Voting Stock were exercised, exchanged or converted on such date. Funded Debt: all Debt of the Company and its Subsidiaries other than ----------- Debt that ranks pari passu or junior to the Notes. Funded Debt Documents: any loan or credit agreement, note, security --------------------- document or other agreement or instrument evidencing, setting forth the terms of, or creating a lien on or security interest in property or assets which secures any Funded Debt of a Person. GAAP: shall mean generally accepted accounting principles in the ---- United States of America consistent with those utilized in preparing the audited financial statements referred to in section 8.1. Governing Documents: as to any Person, its articles or certificate of ------------------- incorporation and by-laws, its partnership agreement, its certificate of formation and operating agreement, or the other organizational or governing documents of such Person. Governmental Authority: any nation or government, any state or other ---------------------- political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. Guaranty: as applied to any Person, any direct or indirect liability, -------- contingent or otherwise, of such Person with respect to any indebtedness, lease, dividend or other obligation of another, including, without limitation, any such obligation directly or indirectly guaranteed, endorsed (otherwise than for collection or deposit in the ordinary course of business) or discounted or sold with recourse by such Person, or in respect of which such Person is otherwise directly or indirectly liable, including, without limitation, any such obligation in effect guaranteed by such Person through any agreement (contingent or otherwise) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain the solvency or any balance sheet or -45- other financial condition of the obligor of such obligation, or to make payment for any products, materials or supplies or for any transportation or services regardless of the non-delivery or nonfurnishing thereof, in any such case if the purpose or intent of such agreement is to provide assurance that such obligation will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such obligation will be protected against loss in respect thereof. The amount of any Guaranty shall be equal to the outstanding principal amount of the obligation guaranteed. Hedging Agreements: (a) any interest rate protection agreement, ------------------ interest rate future, interest rate option, interest rate swap, interest rate cap or other interest rate hedge or arrangement under which the Company or any Subsidiary is a party or a beneficiary and (b) any other agreement or arrangement designed to limit or eliminate the risk and/or exposure of the Company or any Subsidiary to fluctuations in currency exchange rates. High Yield Debt: any Debt issued pursuant to a High Yield Offering. --------------- High Yield Debt Percentage: the quotient (expressed as a percentage) -------------------------- obtained by dividing (a) the aggregate outstanding principal amount of High Yield Debt outstanding by (b) the sum of (i) High Yield Debt outstanding and (ii) the aggregate principal amount of loans outstanding and commitments available under the Credit Agreement. High Yield Offering: an offering, either in a registered public ------------------- offering or a private placement, of notes, bonds or other securities that are senior to the Notes and are not issued pursuant to the Credit Agreement. Indemnified Party: the meaning specified in section 22. ----------------- Indenture Act: The Trust Indenture Act of 1939, as amended from time ------------- to time. Initial Series A Closing: the meaning specified in section 3.1(a). ------------------------ Initial Series A Closing Date: the meaning specified in section 3.1. ----------------------------- Initial Series B Closing: the meaning specified in section 3.2(a). ------------------------ Initial Series B Closing Date: the date on which the conditions ----------------------------- contained in section 5.2 have been satisfied or waived by you. Interest Expense: for any period, the sum of (a) all interest in ---------------- respect of all Funded Debt of the Company and its Subsidiaries accrued or capitalized during such period (whether or not actually paid during such period) plus (b) the net amount payable (or minus the - ---- -46- net amount receivable) under Hedging Agreements accrued during such period plus ---- (c) all financing or commitment fees in respect of Debt (exclusive of any transaction or "up front" fees incurred in establishing or entering into any such Hedging Agreement) of the Company and its Subsidiaries accrued or capitalized during such period (whether or not actually paid during such period). IPO: the issuance by the Company in an initial registered public --- offering under the Securities Act (other than a registration statement on form S-8 or any successor form) of shares of its Capital Stock. Lenders: the banks and other financial institutions listed as lenders ------- from time to time under the Credit Agreement. License: any broadband personal communications license issued by the ------- FCC in connection with the operation of a System. License Purchase Agreement: the License Purchase Agreement dated -------------------------- January 23, 1998 between AT&T and the Company. Lien: any mortgage, pledge, hypothecation, assignment, deposit ---- arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement and any Capital Lease having substantially the same economic effect as any of the foregoing), and the filing of any financial statement under the Uniform Commercial Code or comparable law of any jurisdiction in respect of any of the foregoing. Management Agreement: the Management Agreement between the Company -------------------- and Telecorp Management Corp. I, L.L.C. substantially in the form of Exhibit A to the Securities Purchase Agreement. Management Stockholders: Gerald T. Vento and Thomas H. Sullivan. ----------------------- Material Adverse Effect: a material adverse effect on (a) the ----------------------- business, operations, affairs, condition (financial or otherwise), properties, assets of the Company and its Subsidiaries taken as a whole, (b) the ability of the Company or any of its Subsidiaries to perform its obligations under any of the Transaction Documents to which it is a party and (c) the validity or enforceability of this Agreement or the rights or remedies of the holders of Notes. -47- Material Subsidiary: any Subsidiary of the Company (a) representing ------------------- more than 10% of the EBITDA in the past 12 months of the Company and its Subsidiaries determined in accordance with GAAP or (b) which holds any Licenses. Maximum Rate: The lesser of (a) 12.50% per annum and (b) if the ------------ Company shall have completed a High Yield Offering prior to May 1, 2001 (in the case of the Series A Notes) or May 1, 2000 (in the case of the Series B Notes), the sum of (i) the aggregate initial yield on the securities offered in the Company's Qualifying High Yield Offering (including in such calculation the coupon on any debt securities and any additional yield attributable to any equity securities or warrants to acquire Capital Stock of the Company or its Subsidiaries) plus (ii) 0.50%. ---- MTA: a Major Trading Area as defined in 47 C.F.R. 24.202, as amended --- from time to time. Multiemployer Plan: any Plan which is a multiemployer plan (as such ------------------ term is defined in section 4001(a)(3) of ERISA). Net Debt Proceeds: with respect to any High Yield Offering by the ----------------- Company or any Subsidiary after the Initial Series B Closing Date, the excess of: (a) the gross cash proceeds received by the Company or such Subsidiary from such Offering, over (b) all reasonable fees and expenses incurred in connection with such offering (including customary underwriting commissions and legal, investment banking, brokerage and accounting, trustee fees and other professional fees, sales commission and disbursements) which have not been paid to Affiliates of the Company in connection therewith. Net Income: for any period, net income (or deficit) of the Company ---------- and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP. Net Securities Proceeds: with respect to any Equity Issuance by the ----------------------- Company or any Subsidiary after the Initial Series A Closing Date, the excess of: (a) the gross cash proceeds received by the Company or such Subsidiary from such Issuance over (b) all reasonable fees and expenses incurred in connection with such Issuance (including customary underwriting commissions and legal, investment banking, brokerage and accounting fees and other professional fees, sales commission and disbursements) which have not been paid to Affiliates of the Company in connection therewith. Network Membership License Agreement: the Network Membership License ------------------------------------ Agreement between AT&T and the Company substantially in the form of Exhibit B to the Securities Purchase Agreement. -48- Non-Excluded Taxes: the meaning specified in section 16.1. ------------------ Offering: (a) any public offering and (b) any public offering or -------- private placement of Notes or Refinancing Securities that is underwritten for resale pursuant to Rule 144A, Regulation S or otherwise under the Securities Act to 10 or more beneficial holders. Officers' Certificate: with respect to the Company, a certificate --------------------- executed on behalf of the Company by the Chairman of the Board of Directors (if an officer) or its President or one of its Vice Presidents and its Treasurer or one of its Assistant Treasurers. Participants: the meaning specified in section 23.2. ------------ Payment Blockage Period: the meaning specified in section 14.2. ----------------------- Payment Dates: the collective reference to the Series A Payment Dates ------------- and the Series B Payment Dates. PBGC: the Pension Benefit Guaranty Corporation or any governmental ---- authority succeeding to any of its functions. Permit: any permit, approval, authorization, certificate, license, ------ variance, filing or permission required by or from any Governmental Authority. Person: an individual, a partnership, an association, a joint ------ venture, a corporation, a limited liability Company, a business, a trust, an unincorporated organization or a government or any department, agency or subdivision thereof. Plan: any employee benefit plan which is covered by ERISA and in ---- respect of which the Company or any Subsidiary is an "employer" as defined in Section 3(5) of ERISA other than a Multiemployer Plan. POPs: as of any date, with respect to any BTA or MTA, the population ---- of such BTA or MTA as such number is published in the then most recently issued retail marketing reports by Claritas, Inc. of Arlington, Virginia, or if Claritas, Inc. is not reasonably acceptable to the Vendor or the Company, another Person mutually acceptable to the Vendor and the Company. Potential Event of Default: any condition or event which, with notice -------------------------- or lapse of time or both, would become an Event of Default. Principal Terms and Conditions: the meaning specified in section ------------------------------ 5.1(p). -49- Proceeds Redemption Amount: the meaning specified in section 10.4. -------------------------- Proceeding: the meaning specified in section 14.2. ---------- Procurement Contract: the meaning specified in the introduction and -------------------- shall include any assignment thereof pursuant to the terms of such Agreement. Qualifying High Yield Offering: a High Yield Offering that results in ------------------------------ Net Debt Proceeds to the Company of at least $100,000,000. Redeemable Stock: any Capital Stock that by its terms or otherwise is ---------------- required to be redeemed prior to the maturity of the Notes or is redeemable at the option of the holder thereof at any time prior to maturity of the Notes. Refinancing Securities: securities issued by the Company which are ---------------------- exchanged by the Company for Notes held by you either (i) upon your request in connection with a Remarketing Transfer involving at least 50% of then outstanding aggregate principal amount of the Notes and are issued pursuant to an indenture reasonably satisfactory to the Company and you or (ii) in a transaction constituting a Permitted Refinancing Transaction. Register: the meaning specified in section 23.4. -------- Related Agreements: the collective reference to the Resale Agreement, ------------------ Management Agreement, Roaming Agreement, Network Membership License Agreement, License Purchase Agreement, Employment Agreement and Stockholders Agreement. Remarketing Notice: the meaning specified in section 24(b). ------------------ Remarketing Transfer: the meaning specified in section 24. -------------------- Reportable Event: any of the events set forth in section 4043(c) of ---------------- ERISA, other than those events as to which the thirty day notice period is waived under sections 13, 14, 16, 18, 19 or 20 of PBGC Reg. (S)4043. Required Holders: at any time, (a) until the first date upon which ---------------- you hold Notes and Unused Commitments in an aggregate amount less than 50% of the aggregate Notes and Unused Commitments then outstanding, holders holding a majority of the then outstanding Notes and Unused Commitments not held by you and (b) thereafter, holders of Notes and Unused Commitments in an aggregate amount equal to at least a majority of the aggregate amount of Notes and Unused Commitments then outstanding. -50- Requirement of Law: as to any Person, the Governing Documents of such ------------------ Person, and any law, treaty, rule, regulation or Permit or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. Resale Agreement: the Resale Agreement between the Company and AT&T ---------------- substantially in the form of Exhibit C to the Securities Purchase Agreement. Responsible Officer: the chief executive officer and the president of ------------------- the Company or, with respect to financial matters, the chief financial officer or treasurer of the Company. Restricted Payment: (a) any dividend or other distribution, direct or ------------------ indirect, on account of any shares of any class of stock of the Company or any Subsidiary now or hereafter outstanding, except a dividend payable solely in shares of Common Stock of the Company; (b) any redemption, retirement, purchase or other acquisition, direct or indirect, of any shares of any class of stock of the Company or any Subsidiary now or hereafter outstanding, or of any warrants, rights or options to acquire any such shares, except to the extent that the consideration therefor consists of shares of stock of the Company; and (c) any payment of any interest on or principal or premium of, and any redemption, retirement, purchase or other acquisition, direct or indirect, of, any Debt of the Company or any Subsidiary which ranks pari passu with or junior to the Notes. Roaming Agreement: the Intercarrier Roamer Services Agreement between ----------------- the Company and AT&T substantially in the form of Exhibit F to the Securities Purchase Agreement. Securities Act: the Securities Act of 1933. -------------- Securities Payment: the meaning specified in section 14.2(a). ------------------ Securities Purchase Agreement. Securities Purchase Agreement dated as ----------------------------- of January 23, 1998 among AT&T, TWR, the Cash Equity Investors, the investors referred to on Schedule II.A thereto, the investors referred to on Schedule II.B thereto and the Company. Security Agreement. the Security Agreement between the Company and ------------------ you substantially in the form of Exhibit D hereto. Senior Debt: (i) all Debt of the Company for money borrowed, ----------- including principal, premium, if any, interest thereon (including, without limitation, any interest accruing subsequent to the filing of a petition of other action concerning bankruptcy or other similar -51- proceedings), reimbursements and indemnification amounts, fees, expenses or other amounts relating to such Debt (other than any such Debt which by its terms is stated to be subordinate to or pari passu with the Notes); and (ii) renewals, extensions, refundings, restructurings, amendments and modifications of any of the foregoing Debt Senior Debt Agreement: with respect to any Senior Debt, the agreement --------------------- or instrument pursuant to which such Senior Debt is outstanding. Senior Lender: the meaning specified in section 5.1(p). ------------- Senior Non-Monetary Default: the meaning specified in section 14.3. --------------------------- Senior Payment Default: the meaning specified in section 14.3. ---------------------- Series A Closing: the meaning specified in section 3.1(b). ---------------- Series A Closing Date: the meaning specified in section 3.1(b). --------------------- Series A Coupon Rate: the meaning specified in section 4.2. -------------------- Series A Final Maturity Date: the first to occur of (a) the date that ---------------------------- is six months after the scheduled maturity date under the Company's initial Qualifying High Yield Offering or, at the election of the Required Holders of Series A Notes, the Company's initial High Yield Offering and (b) May 1, 2012. Series A Notes: the meaning specified in section 1. -------------- Series A Note Commitment: your commitment to purchase Series A Notes ------------------------ in an original aggregate principal amount not to exceed $40,000,000 which amount shall be decreased on a dollar for dollar basis to the extent the Company receives Net Securities Proceeds from Equity Issuances in an aggregate amount which exceeds $130,000,000 as such amount may be modified pursuant to section 28. Series A Note Commitment Termination Date: The earliest to occur of ----------------------------------------- (a) January 1, 2000 or (b) such earlier date on which the Series A Note Commitment shall terminate pursuant to the terms of the Agreement. Series A Notes: the meaning specified in section 1. -------------- Series B Availability Period: the period commencing on the earlier to ---------------------------- occur of (a) September 30, 1998, and (b) the consummation by the Company of a High Yield Offering and -52- continuing to but excluding the earlier of (i) January 1, 2000 and (ii) the date on which the Company completes one or more High Yield Offerings the proceeds of which aggregate $120,000,000 and, in any case, such earlier date as the Series B Note Commitment shall terminate as provided herein. Series B Closing: the meaning specified in section 3.2(b). ---------------- Series B Closing Date: the meaning specified in section 3.2(b). --------------------- Series B Coupon Rate: as defined in section 4.3. -------------------- Series B Final Maturity Date: the first to occur of (a) the date that ---------------------------- is six months after the scheduled maturity date under the Company's initial Qualifying High Yield Offering or, at the election of the Required Holders of Series B Notes, the Company's initial High Yield Offering and (b) May 1, 2012. Series B Notes: the meaning specified in section 1. -------------- Series B Note Commitment: your commitment to purchase Series B Notes ------------------------ in an original aggregate principal amount equal to $40,000,000 which amount shall be decreased on a dollar for dollar basis to the extent the Company receives Net Debt Proceeds from High Yield Offerings in an amount which exceeds $80,000,000. Series B Note Commitment Termination Date: January 1, 2000 or such ----------------------------------------- earlier date on which the Series B Note Commitment shall terminate pursuant to the terms of this Agreement. Series B Payment Date: the meaning specified in section 4.3. --------------------- Single Employer Plan: any Plan which is covered by Title IV of ERISA, -------------------- but which is not a Multiemployer Plan. Stockholders Agreement: the Stockholders Agreement among the Company, ---------------------- AT&T, the Cash Equity Investors, and the other investors party thereto substantially in the form of Exhibit G to the Securities Purchase Agreement. Subsidiary: with respect to any Person, any corporation at least 50% ---------- (by number of votes) of the Voting Stock of which is at the time owned by such Person or by one or more Subsidiaries or by such Person and one or more Subsidiaries. Unless otherwise indicated, all references to Subsidiaries shall be deemed references to the Company's Subsidiaries. -53- System: as to any Person, assets constituting a radio communications ------ system authorized under the rules for wireless communications services (including any license and the network, marketing, distribution, sales, customer interface and operations functions relating thereto) owned and operated by such Person. Telecommunications Act: The Telecommunication Act of 1996 and the ---------------------- rules and regulations promulgated thereunder, as amended from time to time. TeleCorp Holdings: TeleCorp Holding Corp., Inc., a Delaware ----------------- corporation. Transaction Documents: the collective reference to the Securities --------------------- Purchase Agreement, the Related Agreements, the Procurement Contract, the Credit Agreement and each of the other agreements, instruments or other documents delivered by the Company or any other Person in connection with the consummation of the Financing Transactions. Transferee: the meaning specified in section 23.5. ---------- TWR: TWR Cellular, Inc., a Maryland corporation. --- Unused Commitment: at any time as to any holder, an amount equal to ----------------- the excess, if any, of (a) the amount of the Commitment of such holder over (b) the aggregate principal amount of Notes purchased by such holder, and in each case excluding Additional Notes. Vendor: the meaning specified in the introduction. ------ Voting Stock: with reference to any corporation, stock of any class ------------ or classes (or equivalent interests), if the holders of the stock of such class or classes (or equivalent interests) are ordinarily, in the absence of contingencies, entitled to vote for the election of the directors (or Persons performing similar functions) of such corporation, even though the right so to vote has been suspended by the happening of such a contingency. Wholly-Owned: as applied to any Subsidiary, a Subsidiary all the ------------ outstanding shares (other than directors' qualifying shares, if required by law) of every class of stock of which are at the time owned by the Company or by one or more Wholly-Owned Subsidiaries or by the Company and one or more Wholly-Owned Subsidiaries. 16. Tax Matters. ----------- 16.1 Taxes. (a) All payments made by the Company under this Agreement ----- and the Notes shall be made free and clear of, and without deduction or withholding for or on account -54- of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net income taxes and franchise or overall gross receipts taxes imposed on any holder (or Transferee) as a result of a present or former connection between such holder (or Transferee) and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from such holder (or Transferee) having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or the Notes). If any such non- excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts ------------------ payable to any holder (or Transferee) hereunder or under the Notes, the amounts so payable to such holder (or Transferee) shall be increased to the extent necessary to yield to such holder (or Transferee) (after payment of all Non- Excluded Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement and the Notes; provided that -------- the Company shall not be required to increase any such amounts payable to any holder (or Transferee) that is not organized under the laws of the United States of America or a state thereof if such holder (or Transferee) fails to comply with the requirements of paragraph (b) of this section. Whenever any Non- Excluded Taxes are payable by the Company, as promptly as possible thereafter, the Company shall send to such holder (or Transferee) a certified copy of an original official receipt received by the Company showing payment thereof. If the Company fails to pay any Non-Excluded Taxes when due to the appropriate taxing authority or fails to remit to the holder (or Transferee) the required receipts or other required documentary evidence, the Company shall indemnify such holder or (Transferee) for any incremental taxes, interest or penalties that may become payable by any holder or (Transferee) as a result of any such failure. The covenants in this section shall survive the termination of this Agreement and the payment of the Notes and payment of the Obligations hereunder. (b) Each holder (or Transferee) of any Notes shall: (i) in the case of a holder (or Transferee) that is a "bank" under Section 881(c)(3)(A) of the Code; (A) on or before the date on which the first payment becomes payable to it hereunder or under any Note (or in the case of a Participant, on or before the date such Participant becomes a Participant hereunder) deliver to the Company (1) in the case of a holder (or Transferee) that is not incorporated under the laws of the United States or any State thereof, two duly completed copies of United States Internal Revenue Service Form 1001 or 4224, or successor applicable form, as the case may be, and an Internal Revenue Service Form W-8 or W-9, or successor applicable form, as the case may be, and (2) in the case of any other holder (or -55- Transferee), an Internal Revenue Service Form W-9, or successor applicable form; (B) deliver to the Company two further copies of any such form or certification on or before the date that any such form or certification expires or becomes obsolete and after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Company, and (C) obtain such extensions of time for filing and timely complete and deliver such forms or certifications as may reasonably be requested by the Company; (ii) in the case of a holder (or Transferee) that is not a "bank" under Section 881(c)(3)(A) of the Code: (A) on or before the date on which the first payment becomes payable to it hereunder or under any Note (or, in the case of a Participant, on or before the date such Participant becomes a Participant hereunder) deliver to the Company (1) in the case of a holder (or Transferee) that is not organized under the laws of the United States or any state thereof, (I) a statement under penalties of perjury that such holder (or Transferee) (x) is not a "bank" under Section 881(c)(3)(A) of the Code, is not subject to regulatory or other legal requirements as a bank in any jurisdiction, and has not been treated as a bank for purposes of any tax, securities law or other filing or submission made to any Governmental Authority, any application made to a rating agency or qualification for any exemption from tax, securities law or other legal requirements, (y) is not a 10- percent shareholder of the Company within the meaning of Section 881(c)(3)(B) of the Code and (z) is not a controlled foreign corporation receiving interest from a related person within the meaning of Section 881(c)(3)(C) of the Code and (II) a properly completed and duly executed Internal Revenue Service Form W-8 or applicable successor form, and where applicable, an Internal Revenue Form W-9 or applicable successor form, and (2) in the case of any other holder (or Transferee), an Internal Revenue Service Form W-9 or successor applicable form. (B) deliver to the Company two further properly completed and duly executed copies of said form or certification or any successor applicable form or certification on or before the date that any such form or certification expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent form or certification previously delivered by it to the Company or upon the request of the Company; and -56- (C) obtain such extensions of time for filing and timely complete and deliver such forms or certifications as may be reasonably requested by the Company; unless in any such case any change in treaty, law or regulation has occurred subsequent to the date such holder (or Transferee) became a party to this Agreement (or, in the case of a Participant, the date such Participant became a Participant hereunder) which renders all such forms inapplicable or which would prevent such holder from properly completing and executing any such form with respect to it and such holder (or Transferee) so advises the Company in writing no later than 15 calendar days before any payment hereunder or under any Note is due. Each such holder (and each Transferee) shall certify (i) in the case of a Form 1001 or 4224 or in the case of a holder providing certification pursuant to section 16.1(b)(ii), that it is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes and (ii) in the case of a Form W-8 or W-9 delivered pursuant to section 16.1(b), that it is entitled to an exemption from United States backup withholding tax. Each Person that shall become a holder or a Participant pursuant to section 23 shall, upon the effectiveness of the related transfer, provide all of the forms and statements required pursuant to this section; provided that, in the case of a Participant, such Participant shall furnish all - -------- such required forms and statements to the holder from which the related participation shall have been purchased. (c) Notwithstanding the foregoing paragraphs (a) and (b) of this section 16.1, the Company shall only be required to pay any additional amounts to any holder (or Transferee) in respect of any amounts pursuant to such paragraph (a) if such holder (or Transferee), in addition to complying with the requirements of paragraph (b), shall have taken such other steps as such holder or Transferee may determine in the exercise of its business judgment (utilizing criteria it determines to be appropriate) are reasonably available to it under applicable laws and any applicable tax treaty or convention to obtain an exemption from, or reduction (to the lowest applicable rate) of, such tax (it being understood that no holder shall be required to take any action that it concludes could subject it to heightened audit scrutiny or extend the period that such holder's tax returns remain open for review by any taxing authority). (d) Any claim by a holder (or Transferee) for payment from the Company of any amounts under this section 16.1 shall be made within ninety (90) days after such holder (or Transferee) determines the exact amount of any such claim. 17. Notes held by Company, etc., Deemed Not Outstanding. For the --------------------------------------------------- purposes of determining whether the holders of the Notes of the requisite principal amount at the time outstanding have taken any action authorized by this Agreement with respect to the giving of consents or approvals or with respect to ac celeration upon an Event of Default, any Notes -57- directly or indirectly owned by any of the Company or any Subsidiary or Affiliates shall be disregarded and deemed not to be outstanding. 18. Payments on Notes. ----------------- 18.1 Place of Payment. Payments of principal, premium, if any, and ---------------- interest becoming due and payable on the Notes shall be made at the principal office of Chase Manhattan Bank, in the Borough of Manhattan, the City and State of New York, unless the Company, by written notice to each holder of any Notes, shall designate the principal office of another bank or trust company in such Borough as such place of payment, in which case the principal office of such other bank or trust company shall thereafter be such place of payment. 18.2 Home Office Payment. So long as you or your nominee shall be the ------------------- holder of any Note, and notwithstanding anything contained in section 18.1 or in such Note to the contrary, the Company, at its election, shall pay all sums becoming due on such Note for principal, premium, if any, and interest (including pay-in-kind interest) by the method and at the address specified for such purpose in Schedule A, or by such other method or at such other address as you shall have from time to time specified to the Company in writing for such purpose, without the presentation or surrender of such Note or the making of any notation thereon, except that any Note paid or prepaid in full shall be surrendered to the Company at its principal office or at the place of payment maintained by the Company pursuant to section 18.1 for cancellation. Prior to any sale or other disposition of any Note held by you or your nominee you will, at your election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Note to the Company in exchange for a new Note or Notes pursuant to section 23.7. Each transferee of a Note, as a condition to completing such transfer shall agree that the Company, at its election, may make payments to such transferee in the manner contemplated in the first sentence hereof. The Company will afford the benefits of this section 18.2 to any institutional investor which is the direct or indirect transferee of any Note purchased by you under this Agreement and which has made the same agreement relating to such Note as you have made in this section 18.2. 18.3 Expenses, etc. Whether or not the transactions contemplated by -------------- this Agreement shall be consummated, the Company will pay all reasonable expenses in connection with such transactions and in connection with any amendments or waivers (whether or not the same become effective) under or in respect of this Agreement, the Notes, including, without limitation: (a) the cost and expenses of preparing and reproducing this Agreement and the Notes, of furnishing all opinions by counsel for the Company (including any opinions requested by your special counsel as to any legal matter arising hereunder) and all certificates on behalf of the Company, and of the Company's performance of and compliance with all agreements and conditions contained herein on its part to be performed or complied with; (b) the cost of delivering to your principal office, insured to your satisfaction, the Notes sold to you hereunder -58- and any Notes delivered to you upon any substitution of Notes pursuant to section 23 of this Agreement, and of your delivering any Notes, insured to your satisfaction, upon any such substitution; (c) the reasonable expenses and disbursements of special counsel for the holders of the Notes in connection with such transactions and any such amendments or waivers; and (d) the reasonable out-of-pocket expenses incurred by you in connection with such transactions and any such amendments or waivers. The Company also will pay, and will save you and each holder of any Notes harmless from, all claims in respect of the fees, if any, of brokers and finders and, subject to section 16, any and all liabilities with respect to any taxes (including interest and penalties but excluding taxes measured by or payable with respect to gross or net income) which may be payable in respect of the execution and delivery of this Agreement, the issue of the Notes and any amendment or waiver under or in respect of this Agreement and the Notes. The obligation of the Company under this section 18.3 shall survive any disposition or payment of the Notes and the termination of this Agreement. 19. Survival of Representations and Warranties. All representations ------------------------------------------ and warranties contained in this Agreement or made in writing by or on behalf of the Company in connection with the transactions contemplated by this Agreement shall survive the execution and delivery of this Agreement, any investigation at any time made by you or on your behalf, the purchase of the Notes by you under this Agreement and any disposition or payment of the Notes. All statements contained in any certificate or other instrument delivered by or on behalf of the Company pursuant to this Agreement shall be deemed representations and warranties of the Company under this Agreement. The provisions of this section 19 are subject to section 30. 20. Amendments and Waivers. Any term of this Agreement or of the ---------------------- Notes may be amended and the observance of any term of this Agreement or of the Notes may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Required Holders (subject to section 17); provided that, without the -------- prior written consent of the holders of all the Notes at the time outstanding (subject to section 17), no such amendment or waiver shall (a) change the maturity or the principal amount of, or reduce the rate or change the time of payment of interest on, or change the amount or the time of payment of any principal or premium payable on any prepayment of, any Note, (b) reduce the percentage of the principal amount of the Notes the holders of which are required to consent to any such amendment or waiver, or (c) change the percentage of the principal amount of the Notes the holders of which may declare the Notes to be due and payable as provided in section 12. Any amendment or waiver effected in accordance with this section 20 shall be binding upon each holder of any Note at the time outstanding, each future holder of any Note and the Company. 21. Notices, etc. Except as otherwise provided in this Agreement, ------------- notices and other communications under this Agreement shall be in writing and shall be delivered by hand or courier service, or mailed by registered or certified mail, return receipt requested, addressed, -59- (a) if to you, at the address set forth in Schedule A or at such other address as you shall have furnished to the Company in writing, except as otherwise provided in section 18 with respect to payments on Notes held by you or your nominee, or (b) if to any other holder of any Note, at such address as such other holder shall have furnished to the Company in writing, or, until any such other holder so furnishes to the Company an address, then to and at the address of the last holder of such Note who has furnished an address to the Company, or (c) if to the Company, at its address set forth at the beginning of this Agreement, to the attention of General Counsel and Chief Financial Officer, with copies to McDermott, Will & Emery, 50 Rockefeller Center, New York, New York, Attention: Jeffrey Dunetz, Esq. or at such other address, or to the attention of such other officer, as the Company shall have furnished to you and each such other holder in writing. Any notice so addressed and delivered by hand or courier shall be deemed to be given when received, and any notice so addressed and mailed by registered or certified mail shall be deemed to be given three Business Days after being so mailed. 22. Indemnification. The Company will indemnify and hold harmless --------------- each holder of Notes and each person who controls a holder within the meaning of the Securities Act or the Exchange Act and each of the holder's subsidiaries and each holder's respective directors, officers, employees, agents and advisors (any and all of whom are referred to as the "Indemnified Party") from and against any and all losses, claims, damages and liabilities, whether joint or several (including all legal fees or other expenses reasonably incurred by counsel for any Indemnified Party in connection with the preparation for or defense of any pending or threatened third party claim, action or proceeding, whether or not resulting in any liability), to which such Indemnified Party may become subject (whether or not such Indemnified Party is a party thereto) under any applicable federal or state law or otherwise, caused by or arising out of, the Financing Transactions, or this Agreement or any transaction contemplated hereby or thereby (including without limitation, any of the foregoing relating to the violation of, non-compliance with or liability under any Environmental Law applicable to the operations of the Company or its Subsidiaries), other than, with respect to any Indemnified Party, losses, claims, damages or liabilities that are the result of the gross negligence or willful misconduct of such Indemnified Party. Promptly after receipt by an Indemnified Party of notice of any claim, action or proceeding with respect to which an Indemnified Party is entitled to indemnity hereunder, such Indemnified Party will notify the Company of such claim or the commencement of such action or proceeding; provided that the -------- failure of an Indemnified Party to give notice as provided herein shall not relieve the Company of its obligations under this section 22 with respect to such Indemnified Party, except to the extent that the Company is actually prejudiced by such failure. The Company will assume the defense of such claim, action or proceeding and will employ counsel reasonably satisfactory to the Indemnified Party and will pay the fees and expenses of such counsel. Notwithstanding the preceding sentence, the Indemnified Party will be entitled, at the expense of the Company, to employ counsel separate from counsel for the Company and for -60- any other party in such action if the Indemnified Party reasonably determines that a conflict of interest or other reasonable basis exists which makes representation by counsel chosen by the Company not advisable, but the Company will not be obligated to pay the fees and expenses of more than one counsel for all Indemnified Parties. The agreements in this section shall survive repayment of the Notes and all other amounts payable hereunder. 23. Successors and Assigns; Participations; Assignments; Replacement ---------------------------------------------------------------- of Notes. - -------- 23.1 Successors and Assigns. This Agreement shall be binding upon and ---------------------- inure to the benefit of the Company, the holders and their respective successors and assigns, except that the Company may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of each holder. 23.2 Participations. Subject to section 24, any holder may, in -------------- accordance with applicable law, including compliance with applicable federal and state securities and "blue sky" laws and regulations, at any time sell to one or more Eligible Assignees ("Participants") participating interests in any Note owned by such holder, the Commitments of such holder or any other interest of such holder hereunder. In the event of any such sale by a holder of a participating interest to a Participant, such holder's obligations under this Agreement to the Company and any other holder shall remain unchanged, such holder shall remain solely responsible for the performance thereof, such holder shall remain the holder of any such Note for all purposes under this Agreement, and the Company shall continue to deal solely and directly with such holder in connection with such holder's rights and obligations under this Agreement. No holder shall be entitled to create in favor of any Participant, in the participation agreement pursuant to which such Participant's participating interest shall be created or otherwise, any right to vote on, consent to or approve any matter relating to this Agreement except for those specified in clauses (a) and (b) of section 20. The Company also agrees that each Participant shall be entitled to the benefits of section 16 with respect to its participation in the Commitments and the Notes outstanding from time to time as if it were a holder; provided that, in the case of section 16, such Participant -------- shall have complied with the requirements of such section and provided, -------- further, that no Participant shall be entitled to receive any greater amount - ------- pursuant to such section than the transferor holder would have been entitled to receive in respect of the amount of the participation transferred by such transferor holder to such Participant had no such transfer occurred. 23.3 Assignments. Subject to section 24, any holder may, in ----------- accordance with applicable law, including compliance with applicable federal and state securities and "blue sky" laws and regulations, at any time and from time to time assign to any other holder or to an -61- Eligible Assignee (an "Assignee") all or any part of its Notes and Commitments pursuant to an assignment and acceptance executed by such Assignee and such assigning holder and delivered to the Company for acceptance and recording in the Register; provided that, in the case of any such assignment to an Eligible -------- Assignee, the sum of the aggregate principal amount of the Notes and the aggregate amount of Unused Commitment being assigned is not less than $5,000,000 (or such lesser amount as constitutes the assigning holder's entire aggregate principal amount of Notes and Unused Commitment) and, if such assignment is of less than all of the Notes and Commitments of the assigning holder, the sum of the aggregate principal amount of the assigning holder's remaining Notes and the aggregate amount of Unused Commitment is not less than $5,000,000 (or such lesser amount as may be agreed to by the Company). Upon such execution, delivery, acceptance and recording, from and after the effective date determined pursuant to such Assignment and Acceptance, (i) the Assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a holder hereunder, and (ii) the assigning holder thereunder shall, to the extent provided in such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning holder's rights and obligations under this Agreement, such assigning holder shall cease to be a party hereto but shall be entitled to the benefits of section 16 in respect of the period prior to such assignment). 23.4 Register. The Company shall maintain a copy of each Assignment -------- and Acceptance delivered to it and a register (the "Register") for the recordation of the names and addresses of the holders, the registered owners of the Obligations evidenced by the Notes and the principal amount of the Notes owing to each holder from time to time. The entries in the Register shall be prima facie evidence of the accuracy thereof, and the Company and the holders shall treat each Person whose name is recorded in the Register as the owner of a Note hereunder as the owner thereof for all purposes of this Agreement, notwithstanding any notice to the contrary. Any assignment or transfer of all or part of any Note shall be registered on the Register only upon surrender for registration of assignment or transfer of such Note, duly endorsed by (or accompanied by a written instrument of assignment or transfer duly executed by) the holder thereof, and thereupon one or more new Note(s) in the same aggregate principal amount shall be issued to the designated Assignee(s) and the old Note shall be returned to the Company marked "canceled". The Register shall be available for inspection by any holder at any reasonable time and from time to time upon reasonable prior notice. 23.5 Disclosure of Information in Connection with a Transfer. ------------------------------------------------------- Subject to section 30, the Company authorizes each holder to disclose to any Participant or Assignee (each, a "Transferee") and any prospective Transferee and its advisers and agents, any and all information in such holder's possession concerning the Company and its Subsidiaries which has been delivered to such holder by or on behalf of the Company pursuant to this Agreement or which has been delivered to such holder by or on behalf of the Company in connection with such -62- holder's credit evaluation of the Company and its Subsidiaries prior to becoming a party to this Agreement; provided that no such disclosure may be made unless -------- such Transferee or prospective Transferee and its advisers and agents shall have executed and delivered to the Company an agreement reasonably acceptable to the Company to keep such information confidential. 23.6 Assignment to Federal Reserve Bank. Nothing contained herein ---------------------------------- shall prohibit assignments creating security interests, including, without limitation, any pledge or assignment by a holder of any Note to any Federal Reserve Bank in accordance with applicable law. 23.7 Replacement of Notes. Upon receipt of evidence reasonably -------------------- satisfactory to the Company of the loss, theft, destruction or mutilation of any Note and, in the case of any such loss, theft or destruction of any Note, upon delivery of an indemnity bond in such reasonable amount as the Company may determine (or, in the case of any Note held by you or another institutional holder or your or its nominee, of an indemnity agreement from you or such other holder) or, in the case of any such mutilation, upon the surrender of such Note for cancellation to the Company at its principal office, the Company at its expense will execute and deliver, in lieu thereof, a new Note in the unpaid principal amount of such lost, stolen, destroyed or mutilated Note, dated so that there will be no loss of interest on such Note and otherwise of like tenor. Any Note in lieu of which any such new Note has been so executed and delivered by the Company shall not be deemed to be an outstanding Note for any purpose of this Agreement. 24. Remarketing ----------- (a) You shall not engage in any remarketing efforts (i) prior to the earlier of 9 months after the consummation of the Company's initial High Yield Offering and January 1, 2001, with respect to any assignment of any Unused Commitment related to the Series A Note Commitment or any Series A Notes and (ii) prior to the earlier of 9 months after the consummation of the Company's initial High Yield Offering and June 30, 2000, with respect to any assignment of any Unused Commitment related to the Series B Note Commitment or any Series B Notes except as provided in this section. Prior to such time, you may request that the Company shorten the period in which you are restricted from remarketing the Notes. The Company will consider any such request and will not object to any such request if it concludes (in the exercise of its business judgement based on such criteria as it considers appropriate) that any such remarketing will not impair the ability of the Company to any High Yield Offering. The restrictions set forth in this section 24 shall not apply to any remarketing of the Notes to any of your Affiliates. (b) You shall provide the Company at least with 60 days prior written notice (a "Remarketing Notice") if you wish the Company to assist in any transfer or assignment of any amount of the Commitments or the Notes or if the Five-Year No-Call (as defined below) will be -63- applicable to the Notes being so assigned (a "Remarketing Transfer"). Upon receipt of a Remarketing Notice, the Company and its Subsidiaries shall cooperate with you and your underwriters or agents in each remarketing effort undertaken by you. Such cooperation shall include, if requested by you, (i) the Company providing customary information in respect of the Company and its Subsidiaries and making customary representations and warranties with respect to such information in connection with any Offering and, if required by the Securities Act, the Company acting as co-registrant, issuer or co-issuer of such Offering, (ii) senior officers of the Company and its Subsidiaries participating to a reasonable degree and upon reasonable prior notice, in the "road show" for any Offering or in meetings with prospective transferees or assignees of the Notes and, (iii) appropriate personnel from the Company and its Subsidiaries assisting in the drafting of a registration statement or offering circular used in marketing of any Offering; provided that the Company may elect to combine the -------- registration of such Offering with the registration of any of the Company's other High Yield Debt. The Company will promptly after delivery of a Remarketing Notice, upon your request, direct its counsel (i) to prepare required documentation for Refinancing Securities and/or any required amendments to this Agreement to permit a Remarketing Transfer or (ii) to review any such documentation prepared by your counsel, and the Company will work diligently with you to finalize such documentation and issue such Refinancing Securities in the manner you request. (c) In connection with any Remarketing Transfer involving a sale of Notes, the holders of the Notes or Refinancing Securities that are the subject of such Remarketing Transfer shall, if you so request, be granted the right to decline any optional or mandatory prepayments of such Notes or Refinancing Securities (excluding regularly scheduled installments of principal) for a period of up to five years from the date of consummation of such Remarketing Transfer (the "Five-Year No-Call"). (d) If you have not completed a Remarketing Transfer for all the Series A Notes and the Series B Notes then outstanding prior to January 1, 2003, then the Company will pay you up to 3% of the then outstanding principal amount of all Notes to defray any actual marketing distribution and other costs incurred by you in connection with any such remarketing. (e) At any time after the earlier to occur of (i) the disposition by you of more than 50% of the aggregate principal amount of the Series A Notes or Series B Notes then outstanding and (ii) January 1, 2001, you or the Required Holders may request the issuance of Refinancing Securities in place of such Series A Notes or Series B Notes, as applicable. 25. Adjustments. If any holder (a "Benefitted Holder") shall at any ----------- time receive any payment of all or part of its Notes, or interest thereon, (whether voluntarily or involuntarily) in a greater proportion than any such payment to any other holder, if any, in respect of such other holder's Notes, or interest thereon, such Benefitted Holder shall purchase for cash from the other holders a participating interest in such portion of each such other holder's -64- Notes, Notes as shall be necessary to cause such Benefitted Holder to share the excess payment ratably with each of the other holders, provided, that if all or -------- any portion of such excess payment is thereafter recovered from such Benefitted Holder, such purchase shall be rescinded, and the purchase price returned, to the extent of such recovery, but without interest. 26. Miscellaneous. This Agreement shall be binding upon and inure to ------------- the benefit of and be enforceable by the respective successors and assigns of the parties hereto, whether so expressed or not, and, in particular, shall inure to the benefit of and be enforceable by any holder or holders at the time of the Notes or any part thereof. Except as stated in section 19, this Agreement embodies the entire agreement and understanding between you and the Company and supersedes all prior agreements and understandings relating to the subject matter hereof. This Agreement and the Notes shall be construed and enforced in accordance with and governed by the law of the State of New York. The headings in this Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. 27. Submission To Jurisdiction; Waivers. The Company hereby ----------------------------------- irrevocably and unconditionally: (a) submits for itself and its property in any legal action or proceeding relating to this Agreement, and the Notes, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof; (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Company at its address set forth in section 18 or at such other address of which you shall have been notified pursuant thereto; (d) agrees that nothing contained herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and -65- (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this section any special, exemplary, punitive or consequential damages. 28. Expansion Notes. If the Company obtains the right to develop --------------- or operate PCS networks serving BTAs or MTAs in addition to those contained in the Designated Areas (such additional markets, the "Expansion Areas"), you agree to provide financing related to such Expansion Areas through the purchase of Notes having the same terms and conditions as the Series A Notes and Series B Notes (such Notes, the "Expansion Notes") in an aggregate principal amount representing 30% of the software, hardware and services to be provided by the Vendor for such Expansion Area as set forth in a definitive business plan with respect to such Expansion Area as approved by the board of directors of the Company (the "Base Case"). Fifty percent of the Notes purchased by you shall have the same terms as the Series A Notes and the remainder shall have the same terms as the Series B Notes; provided that you shall not be obligated to -------- purchase more than an aggregate principal amount of $80,000,000 of Expansion Notes. The expiration date for the Expansion Notes issued to finance a particular Expansion Area shall be the earlier to occur of (X) the date which is six months after the scheduled maturity under the Company's initial Qualifying High Yield Offering the proceeds of which are used to finance such Expansion Area, and (Y) the fourteenth annual anniversary of the initial issuance of such Expansion Notes. The Company acknowledges that your obligation to purchase Expansion Notes is contingent on the Company irrevocably committing to purchase one mobile switching center and fifty base stations for each Expansion Area from the Vendor either pursuant to the Procurement Contract or under a new procurement contract acceptable to the Company and the Vendor./1/ The Company further acknowledges that the purchase of such Expansion Notes by you may be conditioned on (a) the Company having entered into one or more agreements with AT&T and AT&T PCS on terms substantially equivalent, in your determination, as those entered into with AT&T, AT&T PCS and TWR with respect to the Designated Areas which relate to the use of the AT&T brand name, trademarks and service marks, roaming, access to the AT&T network with seamless integration for customers and that none of AT&T PCS, TWR and the other parties to the Stockholders' Agreement (in each case together with the Affiliated Successors (as defined in the Stockholders' Agreement) will offer any Company Communications Services (as defined in the Stockholders' Agreement) in such Expansion Area (other than the right of AT&T PCS to offer resale services similar to those set forth in Section 8.6 of the Stockholders' Agreement), (b) the Company having received cash equity contributions per POP in such Expansion Area in an amount of not less than $10, (c) the Company having Licenses covering such Expansion Area that (i) are in full force and effect with no pending appeal, and (ii) are not subject to any pending or, to the knowledge of the Company, threatened revocation or termination proceeding or action (d) the Company being in compliance with all Licenses covering Expansion Area in all material ____________________ /1/ A reciprocal provision should be included in the Procurement Agreement. -66- respects, (e) entry into a new procurement contract or amendment of the Procurement Contract, as described above, (f) modification of the threshold amount of Net Debt Proceeds under section 10.5(b) and of the definition of Debt Redemption Amount to an amount not to exceed the product of (i) the sum of (A) the aggregate principal amount of loans outstanding and commitments available under the Credit Agreement and (B) the aggregate principal amount of High Yield Debt outstanding (including any High Yield Debt to be issued in connection with such Expansion Area) multiplied by (ii) the lesser of (A) the High Yield Percentage (after giving effect to any High Yield Debt to be issued in connection with such Expansion Area) and (B) 40 %, (it being understood that if the High Yield Percentage (after giving effect to any High Yield Debt to be issued in connection with such Expansion Area) exceeds 40% and you and the Company do not agree on the increase in such threshold amount, then the Company shall not be obligated to issue and you shall not be obligated to purchase any Expansion Notes with respect to such Expansion Area and the Company shall not be required to commit to purchase software, hardware or services from the Vendor for such Expansion Area), (g) modification of the threshold amount of Net Securities Proceeds under section 10.4 to an amount not to exceed the product of (i) $130,000,000 multiplied by (ii) a fraction the numerator of which is the sum of (A) 11,100,000 plus (B) the number of POPs in Expansion Areas for which Expansion Notes have been or concurrent therewith are being issued and the denominator of which is 11,100,000 and (h) entry into an agreement and/or an amendment to this Agreement related to the purchase of the Expansion Notes. The Company's and your obligations under this section 28 shall expire June 30, 2001. 29. Waivers of Jury Trial. THE COMPANY AND YOU HEREBY IRREVOCABLY AND --------------------- UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR, THE NOTES AND FOR ANY COUNTERCLAIM THEREIN. 30. High Yield Offering. Upon the completion by the Company of its ------------------- initial Qualifying High Yield Offering, sections 8.1(e), 9.1, 9.2, 11.2, 11.6, 11.8, 11.10, 19 and 23.5 and the definition of "Change of Control" shall be deleted and shall be replaced in their entirety by the comparable provisions (including any defined terms contained therein), if any, contained in the indenture or similar agreement with respect to such High Yield Offering. Upon the request of either the Company or you, the parties will prepare an amended and restated version of this Agreement for the purpose of setting forth the changes to such provisions. -67- If you are in agreement with the foregoing, please sign the form of agreement on the accompanying counterparts of this letter and return one of the same to the Company, whereupon this letter shall become a binding agreement between you and the Company. Very truly yours, TELECORP PCS, INC. By: /s/ Thomas H. Sullivan ----------------------- Title: Executive Vice President The foregoing Agreement is hereby agreed to as of the date thereof. LUCENT TECHNOLOGIES INC. By: /s/ [SIGNATURE ILLEGIBLE] -------------------------------- Title: -68- EXHIBIT 10.1 (Attachment 5) Schedule A PURCHASER INFORMATION Lucent Technologies Inc. 600 Mountain Avenue Murray Hill, New Jersey 07974 Schedule B DISCLOSURE SCHEDULE TO THE NOTE PURCHASE AGREEMENT BY AND --------------------------------------------------------- BETWEEN TELECORP PCS, INC. AND LUCENT TECHNOLOGIES, INC. ------------------------------------------------------- Section 6.5 Changes, etc. - ------------------------- The Company has certain obligations under the following contracts: 1. Securities Purchase Agreement by and among AT&T Wireless PCS Inc., TWR Cellular, Inc., Cash Equity Investors, TeleCorp Investors, Management Stockholders and the Company, dated as of January 23, 1998, and all agreements related thereto; 2. General Agreement for the Purchase of PCS Systems and Services by and between the Company and Lucent Technologies, Inc., dated May 12, 1998; and 3. Contribution Agreement by and among the Company, AT&T Wireless PCS Inc., TWR Cellular, Inc., Gerald T. Vento, Thomas H. Sullivan, TeleCorp Holding Corp., Inc. and certain Cash Equity Investors and TeleCorp Investors identified therein, dated May 15, 1998. Section 6.8 Capital Stock and Related Matters. - ---------------------------------------------- (a) As of the date of the Note Purchase Agreement, the Company has 20,000 shares of common stock, no par value, authorized of which 10 shares are issued and outstanding. (b) As of the date of the Note Purchase Agreement, TeleCorp PCS, LLC has the Company as its sole member. Section 6.9 Debt. - ----------------- The Company has certain obligations under the following contracts: 1. Securities Purchase Agreement by and among AT&T Wireless PCS Inc., TWR Cellular, Inc., Cash Equity Investors, TeleCorp Investors, Management Stockholders and the Company, dated as of January 23, 1998, and all agreements related thereto; 2. General Agreement for the Purchase of PCS Systems and Services by and between the Company and Lucent Technologies, Inc., dated May 12, 1998; and 3. Contribution Agreement by and among the Company, AT&T Wireless PCS Inc., TWR Cellular, Inc., Gerald T. Vento, Thomas H. Sullivan, TeleCorp Holding Corp., Inc. and certain Cash Equity Investors and TeleCorp Investors identified therein, dated May 15, 1998. Section 6.11 Litigation. - ------------------------ Gerald T. Vento, in his capacity as Chief Executive Officer of TeleCorp Holding Corp., Inc., received a letter from Mark A. Pelson, dated February 26, 1998, asserting an equity interest in TeleCorp Holding Corp., Inc. and its affiliates. TeleCorp Holding Corp., Inc. responded with a detailed letter sent by its counsel, Steven W. Kasten at McDermott, Will & Emery, denying Mr. Pelson's right to any equity interest in TeleCorp Holding Corp., Inc. or its affiliates. No further action has been taken by either party at this time. Section 6.24 Security Agreement. - -------------------------------- As of the Closing Date, the Company and Lucent Technologies, Inc. have agreed that financing statements will be filed for the following locations: 1. Little Rock, Arkansas 2. Memphis, Tennessee 3. Baton Rouge, Louisiana 4. New Orleans, Louisiana 5. Nashua, NH 6. Concord, NH 7. Manchester, NH 8. Worcester, MA 9. Barnstable County, MA EXHIBIT 10.1 (Attachment A) INCREASING RATE SUBORDINATED NOTE (SERIES A) $10,000,000 June 16, 1998 FOR VALUE RECEIVED, TeleCorp PCS, Inc., a Delaware corporation ( the "Company"), promises to pay to the order of Lucent Technologies Inc.("Payee"), on May 1, 2012 or such earlier date as may be provided pursuant to the Purchase Agreement referred to below, the principal amount of Ten Million Dollars ($10,000,000). The Company also promises to pay interest on the unpaid principal amount hereof from the date hereof until paid in full at a rate equal to 8.50% per annum (the "Initial Rate"). If the Series A Notes (as defined in the Purchase Agreement referred to below) are not redeemed in their entirety by January 1, 2001, the Initial Rate will increase for the calendar year 2001, commencing January 1, 2001, to a rate per annum which is the lower of 10.0% and 0.50% above the yield (coupon rate plus any yield attributable to equity securities or warrants) of the High Yield Debt (as defined in the Purchase Agreement referred to below) the Initial Rate will increase for the calendar year 2002, commencing January 1, 2002, to a rate per annum which is the lower of 11.5% and 0.5% above the yield (coupon rate plus any yield attributable to equity securities or warrants) of the High Yield Debt (as defined in the purchase Agreement referred to below); and the Initial Rate will increase for each calendar year thereafter, commencing January 1 of such calendar year, to a rate per annum which is the lower of 12.5% and 0.50% above the yield (coupon rate plus any yield attributable to equity securities or warrants) of the High Yield Debt (as defined in the Purchase Agreement referred to below); provided, -------- however, if the Company has not issued High Yield Debt on or before January 1, - ------- 2001, the Initial Rate will increase to 12.5% commencing January 1, 2001 and for all times thereafter. Interest shall be payable semiannually on June 16 and December 16 of each year, commencing on December 16, 1998; provided that during -------- the period from the date hereof to the sixth anniversary thereof, the Company may pay the interest on any interest payment date during such period by issuing to the Payee an additional Note, identical to this Note (other than the date thereof, which shall be the date such interest payment is due)in the principal amount of the interest payable on such payment date. After the date which is the sixth anniversary of the date hereof, interest shall be payable in cash unless there exists at the time such interest payment is due restrictions on such cash interest payment in any document evidencing Senior Debt. This Note is issued pursuant to and entitled to the benefits of the Note Purchase Agreement dated as of May 11, 1998, as the same may at any time be amended, modified or supplemented and in effect (the "Purchase Agreement") between the Company and the Payee, to which reference is hereby made for a more complete statement of the terms and conditions under which the Notes were purchased and are to be repaid. Capitalized terms used herein without definition shall have the meanings set forth in the Purchase Agreement. All payments of principal and interest in respect of this Note shall be made in lawful money of the United States of America in same day funds to Payee at the office of Chase Manhattan Bank in the Borough of Manhattan, the City and State of New York or at such other place as shall be designated in writing for such purpose in accordance with the terms of the Purchase Agreement. Each of Payee and any subsequent holder of this Note agrees, by its acceptance hereof, that before disposing of this Note or any part hereof it will make a notation hereon of all principal payments previously made hereunder and of the date to which interest hereon has been paid; provided, however, that the failure to make a notation of any payment made on this Note shall not limit or otherwise affect the obligation of the Company hereunder with respect to payments of principal or interest on this Note. Whenever any payment on this Note shall be stated to be due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the payment of interest on this Note. This Note is subject to prepayment at the option of the Company as provided in subsection 10.1 of the Purchase Agreement. The Company is obligated to prepay or make an offer to purchase all or part of this Note under the circumstances described in subsections 10.2, 10.4 and 10.5 of the Purchase Agreement. This Note is subordinated in right of payment to Senior Debt as and to the extent provided in Section 14 of the Purchase Agreement. THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS. Upon the occurrence of an Event of Default, the unpaid balance of the principal amount of this Note, together with all accrued but unpaid interest thereon, may become, or may be declared to be, due and payable in the manner, upon the conditions and with the effect provided in the Purchase Agreement. The terms of this Note are subject to amendment only in the manner provided in the Purchase Agreement. No reference herein to the Purchase Agreement and no provisions of this Note or the Purchase Agreement shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the place, at the respective times, and in the currency herein prescribed. The Company promises to pay all costs and expenses, including all reasonable attorneys' fees, expenses and disbursements, incurred in the collection and enforcement of this Note. The Company and endorsers of this Note hereby consent to renewals and extensions of time at or after the maturity hereof, without notice, and hereby waive diligence, presentment, protest, demand and notice of every kind and, to the full extent permitted by law, the right to plead any statute of limitations as a defense to any demand hereunder. IN WITNESS WHEREOF, the Company has caused this Note to be executed and delivered by its duly authorized officer, as of the day and year and at the place first above written. TELECORP PCS, INC. BY:__________________________ Title: -3- EXHIBIT 10.1 (Exhibit B) INCREASING RATE SUBORDINATED NOTE (SERIES B) $_______________ ______________, 1998 FOR VALUE RECEIVED, Telecorp PCS, Inc., a Delaware corporation (the "Company"), promises to pay to the order of Lucent Technologies Inc. ("Payee"), on May 1, 2012 or such earlier date as may be provided pursuant to the Purchase Agreement referred to below, the principal amount of __________ Dollars ($ _________). The Company also promises to pay interest on the unpaid principal amount hereof from the date hereof until paid in full at a rate equal to 10% per annum (the "Initial Rate"). If the Series A Notes (as defined in the Purchase Agreement referred to below) are not redeemed in their entirety by January 1, 2000, the Initial Rate will increase for the calendar year 2000, commencing January 1, 2000, to a rate per annum which is the lower of 11.5% and 0.50% above the yield (coupon rate plus any yield attributable to equity securities or warrants) of the High Yield Debt (as defined in the Purchase Agreement referred to below); the Initial Rate will increase for each calendar year thereafter commencing January 1 of such calendar year, to a rate per annum which is the lower of 12.5% and 0.50% above the yield (coupon rate plus any yield attributable to equity securities or warrants) of the high Yield debt (as defined in the Purchase Agreement referred to below); provided, however, if the -------- ------- Company has not issued High Yield Debt on or before January 1, 2000, the Initial Rate will increase to 12.5% commencing January 1, 2000 and for all times thereafter. Interest shall be payable semiannualy on ____________ and __________ of each year, commencing on _________; provided that during the period from the -------- date hereof to May 11, 2004, the Company may pay the interest on any interest payment date during such period by issuing to the Payee an additional Note, identical to this Note (other than the date thereof, which shall be the date such interest payment is due) in the principal amount of the interest payable on such payment date. After May 11, 2004, interest shall be payable in cash unless there exists at the time such interest payment is due restrictions on such cash interest payment in any document evidencing Senior Debt. This Note is issued pursuant to and entitled to the benefits of the Note Purchase Agreement dated as of May 11, 1998 as the same may at any time be amended, modified or supplemented and in effect (the "Purchase Agreement") between the Company and the Payee, to which reference is hereby made for a more complete statement of the terms and conditions under which the Notes were purchased and are to be repaid. Capitalized terms used herein without definition shall have the meanings set forth in the Purchase Agreement. All payments of principal and interest in respect of this Note shall be made in lawful money of the United States of America in some day funds to Payee at the office of Chase Manhattan Bank in the Borough of Manhattan, the City and State of New York or at such other place as shall be designated in writing for such purpose in accordance with the terms of the Purchase Agreement. Each of payee and an subsequent holder of this Note agrees, by its acceptance hereof, that before disposing of this Note or any part hereof it will make a notation hereon of all principal payments previously made hereunder and of the date to which interest hereon has been paid; provided, however, that the failure to make a notation of any payment made on this Note shall not limit or otherwise affect the obligation of the Company hereunder with respect to payment or principal or interest on this Note. Whenever any payment on this Note shall be stated to be due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the payment of interest on this Note. This Note is subject to prepayment at the option of the Company as provided in subsection 10.1 of the Purchase Agreement. The Company is obligated to prepay or make an offer to purchase all or part of this Note under the circumstances described in subsection 10.2, 10.4 and 10.5 of the Purchase Agreement. This Note is subordinated in right of payment to Senior Debt as and to the extend provided in Section 14 of the Purchase Agreement. THIS NOTE SHALL BE GOVERENED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS. Upon the occurrence of an Event of Default, the unpaid balance of the principal amount of this Note, together with all accrued but unpaid interest thereon, may become, or may be declared to be, due and payable in the manner, upon the conditions and with the effect provided in the Purchase Agreement. The terms of this Note are subject to amendment only in the manner provided in the Purchase Agreement. No reference herein to the Purchase Agreement and no provisions of this Note or the Purchase Agreement shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the place, at the respective times, and in the currency herein prescribed. The Company promises to pay all costs and expenses, including all reasonable attorneys' fees, expenses and disbursements, incurred in the collection and enforcement of this Note. The Company and endorsers of this Note hereby consent to renewals and extension of time at or after the maturity hereof, without notice, and hereby waive diligence, presentment, protest, demand and notice of every kind and, to the full extent permitted by law, the right to plead any statute of limitations as a defense to any demand hereunder. IN WITNESS WHEREOF, the Company has caused this Note to be executed and delivered by its duly authorized officer, as of the day and year and at the place first above written. TELECORP PCS, INC BY:____________________________ Title: -3- EXHIBIT 10.1 (Attachment 3) May ___, 1998 Lucent Technologies Inc. 600 Mountain Avenue Murray Hill, New Jersey 07974 TeleCorp PCS, Inc. ------------------ Ladies and Gentlemen: We have acted as special New York counsel to TeleCorp PCS Inc., a Delaware corporation (the "Company"), in connection with the Note Purchase Agreement, ------- dated as of May 11, 1998 (the "Note Agreement"), between the Company and Lucent -------------- Technologies Inc. ("Lucent", together with each holder of a Note, being ------ individually a "Noteholder" and collectively the "Noteholders"). This opinion ---------- ----------- is furnished to you pursuant to Section 5.1(e) of the Note Agreement. Unless otherwise defined herein (a) terms used herein have the meanings provided for in the Note Agreement and (b) terms for which meanings are provided for in the New York Uniform Commercial Code (the "UCC") are used herein as defined therein. --- In connection with this opinion we have examined (a) originals, or copies identified to our satisfaction as being true copies, of such records, documents and other instruments as we have deemed necessary for the purposes of this opinion and (b) the form of execution copies of the Note Agreement, the Series A Note and the Security Agreement (collectively, the "Subject Documents"). In ----------------- addition, we have examined the (i) the certificate of incorporation and by-laws of the Company and (ii) the good standing certificates of the Company attached at Annex A hereto. ------- With regard to factual matters, we have been furnished with, and with your consent have relied (without independent verification) upon and assumed the accuracy of, (a) certificates of the Company, (b) the representations of the Company set forth in the Subject Documents and (c) certificates and assurances from public officials as we have deemed necessary for purposes of expressing the opinions expressed herein. Whenever our opinion with respect to the existence or absence of facts is indicated to be based on our knowledge or awareness, we are referring solely to the actual knowledge of the particular McDermott, Will & Emery attorneys who have represented the Company in connection with the Subject Documents. Except as expressly set forth herein, we have not undertaken any independent investigation (including, without limitation, conducting any review, search or investigation of any public files, records or documents) to determine the existence or absence of such facts and no inference as to our knowledge concerning such facts should be drawn from the fact that we have relied upon such representations and warranties in connection with the preparation and delivery of this opinion. In our examination, and for all purposes of the opinions expressed herein, we have assumed, with your permission, and without independent investigation, that: (a) the signatures of individuals (other than individuals signing on behalf of the Company) signing the Subject Documents are genuine and authorized; (b) all documents submitted to us as copies conform to authentic original documents; (c) all parties (other than the Company) to the Subject Documents (i) have full power and authority to execute, deliver and perform thereunder and under the documents required or permitted to be delivered and performed thereunder and (ii) all such documents (A) have been duly authorized by all necessary corporate or other actions on the part of such parties, (B) have been duly executed by such parties, (C) have been duly delivered by such parties and (D) are legal, valid and binding obligations enforceable against such parties; and (d) the representations and warranties in the Subject Documents as to factual matters are accurate and complete in all respects. Based on the foregoing, and subject to the limitations, qualifications and exceptions set forth in lettered paragraphs (A) through (G) below, we are of the -------------- --- opinion that: 1. Corporate Status. The Company is a corporation validly existing under the ---------------- laws of the State of Delaware and has the corporate power and authority to own its property and assets and to transact the business in which it is currently engaged as described in the Note Agreement. Based solely upon our review of the certificates of good standing attached at Annex A hereto, the Company is a ------- corporation in good standing under the laws of its jurisdiction of incorporation and is authorized to do business and is in good standing in each jurisdiction listed on Annex B attached hereto. ------- 2. Corporate Power and Authority. The Company has the corporate power and ----------------------------- authority to execute, deliver and perform the terms and provisions of each Subject Document to which it is party and has taken all necessary corporate action to authorize the execution, delivery and performance by it of each such Subject Document. 3. Due Execution, Validity and Enforceability. The Company has duly executed ------------------------------------------ and delivered each Subject Document to which it is party, and each such Subject Document constitutes the legal, valid, binding and enforceable obligations of the Company. -2- 4. No Violation. Neither the execution, delivery nor performance by the ------------ Company of any Subject Document, nor compliance by the Company with the terms and provisions thereof, (a) violate, based on our review of those laws, rules and regulations which, in our experience, are normally applicable to transactions of the contemplated by the Subject Documents, any present law, statute or regulation of the State of New York, the General Corporation Law of the State of Delaware or the United States; or (b) violate any provision of the certificate of incorporation or by-laws of the Company; or (c) result in any breach of any of the terms of, or constitute a default under, or with respect to any of the Article Nine Collateral (as defined in opinion paragraph 6 below) result in the creation or imposition of any Lien ----------- (except as contemplated by the Subject Documents) upon any of such Article Nine Collateral, in each case pursuant to the terms of any written agreement of the Company set forth on Annex C attached hereto. ------- 5. Governmental Approvals. Based on our review of those laws, rules and ---------------------- regulations which, in our experience, are normally applicable to transactions of the type contemplated by the Subject Documents, no consent, approval or authorization of, or filing with, any governmental authority of the United States, the State of New York or pursuant to the Delaware General Corporation Law, is required for (a) the due execution, delivery and performance by the Company of any Subject Document or (b) the legality, validity, binding effect or enforceability of any Subject Document, except (i) for filings, recordings and other actions which have previously been made or obtained, (ii) consents, approvals, authorizations and filings as may be required to be obtained or made by each Noteholder as a result of its involvement in the transaction contemplated by the Subject Documents, (iii) routine filings to be made after the date hereof in the ordinary course of business of the Company and (iv) filings which are necessary to perfect the security interest granted under the Security Agreement. 6. Security Interests. After giving effect to the issuance and payment of ------------------ the Series A Note on the date hereof, the Security Agreement creates a valid security interest in favor of Lucent to secure the Obligations (as defined in each Security Agreement) in all right, title and interest of the Company in and to all personal property included within the definition of the term Collateral (as defined in the Security Agreement) in which a security interest can be granted under Article 9 of the UCC (collectively, the "Article Nine ------------ Collateral"). - ---------- 7. Judgments, Actions and Proceedings. To the best of our knowledge, there ---------------------------------- are no outstanding judgments, actions, suits or proceedings pending against the Company before any court or governmental authority which purports to affect the legality, validity, binding effect or enforceability of any of the Subject Documents. The opinions set forth above are subject to the following qualifications: -3- (A) Our opinions expressed herein are limited to the laws of the State of New York, the Federal law of the United States and the Delaware General Corporation Law, and we do not express any opinion concerning any other law. (B) Our opinions expressed herein are subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally. (C) Our opinions expressed herein are subject to the effect of general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether considered in a proceeding in equity or at law). In applying such principles a court, among other things, might limit the availability of specific equitable remedies (such as injunctive relief and the remedy of specific performance), might not allow a creditor to accelerate maturity of debt or any portion thereof upon the occurrence of a default deemed immaterial or for non-credit reasons or might decline to order a debtor to perform covenants in a Subject Document. In addition, a court may refuse to enforce a covenant if and to the extent that it deems such covenant to be violative of applicable public policy, including, for example, provisions indemnifying a party against liability for its own wrongful or negligent acts. (D) We call your attention to the following matters (as well as those matters set out in paragraph (G) below) as to which we express no opinion: ------------- (1) the agreement of the Company in the Subject Documents relating to indemnification, contribution or exculpation of costs, expenses or other liabilities incurred by the Noteholders that arise out of or in connection with the transactions contemplated by the Subject Documents; (2) fraudulent transfer laws and principles of equitable subordination; (3) the agreement of the Company in the Subject Documents to submit to the jurisdiction of courts of the State of New York, or to waive the right to jury trial or to establish evidentiary standards; (4) the creation of any trust relationship by the Company on behalf of any Noteholder; (5) the ordinances and statutes, the administrative decisions and orders and the rules and regulations of any municipality, county, special district or other political subdivision of the State of New York; -4- (6) any waiver or remedy contained in the Loan Documents, whether or not any Loan Document deems any such waiver or remedy commercially reasonable, if such waiver or remedy is determined (a) not to be commercially reasonable, (b) to conflict with mandatory provisions under the UCC or any other applicable law or (c) to be taken in a manner determined to be unreasonable; and (7) certain of the provisions contained in the Subject Documents may be unenforceable or ineffective in whole or in part, but the inclusion of such provisions does not render any of Subject Documents invalid as a whole and each of the Subject Documents contains, in our opinion, adequate remedial provisions for the practical realization of the principal rights and benefits purported to be afforded by the Subject Documents, subject to the other qualifications contained in this opinion. We note, however, that the unenforceability of such provisions may result in delays in enforcement of the rights and remedies of the Noteholders under the Subject Documents (and we express no opinion as to the economic consequences, if any, of such delays). (E) With respect to our opinions in paragraph 4 we express no opinion as ----------- to any violation not readily ascertainable from the face of the agreement referred to therein or arising from any cross-default provision insofar as it relates to a default under an agreement not referred to therein or arising under a covenant of a financial or numerical nature or requiring computation. (F) Our opinions in paragraph 6 above are subject to the following: ----------- (1) the continuation of Lucent's security interest in the proceeds of the Collateral is limited to the extent set forth in Section 9-306 of the UCC; (2) in the case of property which becomes part of the Collateral after the date hereof, Section 552 of the Federal Bankruptcy Code limits the extent to which property acquired by a debtor after the commencement of a case under the Federal Bankruptcy Code may be subject to a security interest arising from a security agreement entered into by the debtor before the commencement of such case; (3) in the case of property which becomes part of the Collateral after the date hereof, Section 547 of the Bankruptcy Code provides that a transfer is not made until the debtor has rights in the property transferred, so a security interest in after-acquired property which is security for other than a contemporaneous advance may be treated as a voidable preference under the -5- conditions (and subject to the exceptions) provided by Section 547 of the Bankruptcy Code; (4) Section 364 of the Bankruptcy Code provides that the extension of secured credit after the commencement of a case under the Bankruptcy Code requires court approval; (5) the rights of Lucent with respect to the Collateral consisting of accounts, instruments, licenses, leases, contracts or other agreements will be subject to the claims, rights and defenses of the other parties thereto against the Company; and (6) in the case of any Collateral consisting of licenses or permits issued by governmental authorities, the Company may not have sufficient rights therein for the security interest of Lucent to attach and, even if the Company has sufficient rights for the security interest of Lucent to attach, the exercise of remedies may be limited by the terms of the license or permit or require the consent of the governmental authority issuing such license or permit. (G) With respect to our opinions in paragraph 6 above, we express no ----------- opinion as to: (1) the Company's ownership rights in or title to, or perfection of any Lien on or with respect to, any property or assets forming any part of the Collateral; and (2) the creation, validity, perfection, priority or enforceability of any security interest purported to be granted in or in respect of (a) any real property, fixtures, equipment used in farming operations, farm products, crops, timber or minerals and the like (including oil and gas) or accounts resulting from the sale of any of the foregoing; (b) patents, trademarks, copyrights, trade names, service marks and other intellectual property; (c) policies or insurance, deposit accounts, receivables due from any government or agency thereof, inventory which is subject to any negotiable documents of title (such as negotiable bills of lading or warehouse receipts), consumer goods, beneficial interests in a trust, letters of credit or accounts resulting from the sale of any of the foregoing; or (d) any other property or assets the creation, perfection or priority of a security interest in which is excluded from the coverage of Article 9 of the UCC, including such property or assets the creation, perfection or priority of a security in which are subject to (i) a statute or treaty of the United States which provides for a national or international registration or a national or international certificate of title for the perfection or recordation of a security interest therein or which specifies a place of filing different from that specified in the UCC for filing to perfect or record such security interest or (ii) a certificate of title statute. -6- The opinions set forth herein are made as of the date hereof and we assume no obligation to supplement this opinion if any applicable laws change after the date hereof or if we become aware after the date hereof of any facts that might change the opinions expressed herein. The foregoing opinions are being furnished to Lucent for the purpose referred to in the first two sentences of this opinion, and this opinion is not to be used, furnished to any Person (other than Persons who have purchased participations from Lucent in accordance with the terms of Section 23.2 of the Purchase Agreement) or relied upon for any other purpose without our prior written consent, except that other Persons who, in the future, become an assignee in accordance with the terms of Section 23.3 of the Note Agreement may be furnished with, and rely upon, this opinion. Very truly yours, -7- Attachments Annex A - Good Standing Certificates Annex B - Jurisdictions Qualified in Good Standing Annex C - No Conflict Agreements Annex A ------- Good Standing Certificates -------------------------- Annex B ------- Jurisdictions Qualified in Good Standing ---------------------------------------- ========================== Arkansas ========================== Delaware ========================== District of Columbia ========================== Louisiana ========================== Massachusetts ========================== Mississippi ========================== Missouri ========================== New Hampshire ========================== Tennessee ========================== Texas ========================== Virginia ========================== ========================== Annex C ------- No Conflict Agreements ---------------------- 1. General Agreement for Purchase of Personal Communications Systems and Services between Lucent and the Company. 2. Securities Purchase Agreement, dated as of January 23, 1998, among AT&T Corp., TWR Cellular, Inc., the Company and the investors referred to on the schedules thereto. 3. License Purchase Agreement, dated January 23, 1998, between AT&T Corp. and the Company. 4. Management Agreement between the Company and TeleCorp Management Corp. I, L.L.C. 5. Network Membership License Agreement between AT&T Corp. and the Company. 6. Resale Agreement between AT&T Corp. and the Company. 7. Intercarrier Roamer Services Agreement between AT&T Corp. and the Company. EXHIBIT 10.1 (Attachment 4) FORM OF SECURITY AGREEMENT SECURITY AGREEMENT, dated as of May __, 1998, made by TeleCorp PCS, Inc. a Delaware corporation (the "Grantor"), in favor of Lucent Technologies ------- Inc., a Delaware corporation (the "Grantee"). ------- W I T N E S S E T H : ------------------- WHEREAS, pursuant to the Note Purchase Agreement dated as of May __, 1998 between the Grantor and Grantee (as amended, supplemented or otherwise modified from time to time, the "Note Purchase Agreement"), the Grantee has agreed to purchase certain Increasing Rate Subordinated Notes Series A Due 2012 (the "Series A Notes") from the Grantor upon the terms and subject to the conditions set forth therein; and WHEREAS, it is a condition precedent to the obligation of the Grantee to purchase and pay for the Series Notes under the Note Purchase Agreement that the Grantor shall have executed and delivered this Security Agreement to the Grantee; NOW, THEREFORE, in consideration of the premises and to induce the Grantee to enter into the Note Purchase Agreement and to purchase and pay for the Series Notes issued therewith, the Grantor hereby agrees with the Grantee, as follows: 1. Defined Terms. Unless otherwise defined herein, terms defined in the Note ------------- Purchase Agreement and used herein are used herein as defined therein. The following terms which are defined in the Uniform Commercial Code in effect in the State of New York on the date hereof are used herein as defined therein: Instruments, Chattel Paper, Farm Products, Documents and Proceeds. The following terms shall have the following meanings: "Code" shall mean the Uniform Commercial Code as from time to time in ---- effect in the State of New York. "Equipment" shall mean all equipment sold to and acquired by the --------- Grantor from the Vendor under the Procurement Contract (as defined below), including any and all equipment sold to and acquired by the Grantor from the Vendor after the Initial Series A Closing under the Procurement Contract. "Obligations" shall mean the unpaid principal of and interest on ----------- (including, without limitation, interest accruing after the maturity any of the Notes and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Grantor, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Notes and all other obligations and liabilities of the Grantor to any holder, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter incurred, which may arise under, out of, or in connection with, the Note Purchase Agreement, this Security Agreement or the Notes or any other document made, delivered or given in connection therewith or herewith, whether on account of principal, interest, fees, indemnities, costs, expenses (including, without limitation, all fees and disbursements of counsel to the holders) that are required to be paid by the Grantor pursuant to the terms of the Note Purchase Agreement, or otherwise. "Procurement Contract" shall mean the Vendor Procurement Contract -------------------- dated as of May 11, 1998 between the Grantor and the Grantee, as Vendor, including (i) all rights of the Grantor to receive equipment (and the proceeds therefrom) thereunder or in connection therewith, (ii) all rights of the Grantor to damages arising out of, or for, breach or default in respect thereof and (iii) all rights of the Grantor to perform and to exercise all remedies thereunder. "Security Agreement" means this Security Agreement, as amended, ------------------ supplemented or otherwise modified from time to time. 2. Grant of Security Interest. As collateral security for the prompt -------------------------- and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations, the Grantor hereby grants to the Grantee a security interest in all the following property now owned or at any time hereafter acquired by the Grantor or in which the Grantor now has or at any time in the future may acquire any right, title or interest in (collectively, the "Collateral"): ---------- (i) all Equipment; and (ii) to the extent not otherwise included, all Proceeds and products of any and all of the foregoing. 3. Rights of Grantee; Limitations on Grantee's Obligations. ------------------------------------------------------- Grantor Remains Liable under the Procurement Contract. Anything ----------------------------------------------------- herein to the contrary notwithstanding, the Grantor shall remain liable under the Procurement Contract to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise to the Procurement -2- Contract and in accordance with and pursuant to the terms and provisions of the Procurement Contract. 4. Representations and Warranties. The Grantor hereby represents and ------------------------------ warrants that: (a) Title; No Other Liens. The Grantor owns each item of the --------------------- Collateral free and clear of any and all Liens (other than Liens imposed by statute (other than ERISA or any environmental laws) arising in the ordinary course of business for amounts (i) not yet due or (ii) which are being contested in good faith by appropriate proceedings and as to which adequate reserves or other provisions are being maintained in accordance with GAAP). No security agreement, financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except such as may have been filed in favor of the Grantee pursuant to this Security Agreement or under the Procurement Contract. (b) Perfected First Priority Liens. The Liens granted pursuant to ------------------------------ this Security Agreement will, upon the filing of appropriate financing statements, constitute perfected Liens on the Collateral in favor of the Grantee, which are prior to all other Liens on the Collateral created by the Grantor and in existence on the date hereof and which are enforceable as such against all creditors of and purchasers from the Grantor and against any owner or purchaser of the real property where any of the Equipment is located and any present or future creditor obtaining a Lien on such real property, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditor's rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). (c) Books and Records. The place where the Grantor keeps its books ----------------- and records relating in any manner to the Collateral is 1101 17th Street NW, 9th Floor, Washington D.C., 20036. (d) Equipment. The Equipment is kept at the locations listed on --------- Schedule I hereto. (e) Chief Executive Office. The Grantor's chief executive office and ---------------------- chief place of business is located at 1101 17th Street NW, 9th Floor, Washington D.C., 20036. 5. Covenants. The Grantor covenants and agrees with the Grantee --------- that, from and after the date of this Security Agreement until the earlier of (a) the repayment in full of the Obligations, and (b) the Liens granted hereunder are terminated pursuant to Section 21. -3- (a) Further Documentation; Pledge of Instruments and Chattel Paper. -------------------------------------------------------------- At any time and from time to time, upon the written request of the Grantee, and at the sole expense of the Grantor, the Grantor will promptly and duly execute and deliver such further instruments and documents and take such further action as the Grantee may reasonably request for the purpose of obtaining or preserving the full benefits of this Security Agreement and of the rights and powers herein granted, including, without limitation, the filing of any financing or continuation statements under the Uniform Commercial Code in effect in any jurisdiction with respect to the Liens created hereby. The Grantor also hereby authorizes the Grantee to file any such financing or continuation statement without the signature of the Grantor to the extent permitted by applicable law. A carbon, photographic or other reproduction of this Security Agreement shall be sufficient as a financing statement for filing in any jurisdiction. (b) Indemnification. The Grantor agrees to pay, and to save the --------------- Grantee harmless from, any and all liabilities, costs and expenses (including, without limitation, legal fees and expenses) (i) with respect to, or resulting from, any delay in paying any and all excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral, (ii) with respect to, or resulting from, any delay in complying with any Requirement of Law applicable to any of the Collateral or (iii) in connection with any of the transactions contemplated by this Security Agreement, except resulting from the Grantee's gross negligence or willful misconduct. (c) Maintenance of Records. The Grantor will keep and maintain at its ---------------------- own cost and expense satisfactory and complete records of the Collateral. The Grantor will mark its books and records pertaining to the Collateral to evidence this Security Agreement and the security interests granted hereby in such manner as the Grantee may reasonably request. For the Grantee's further security, the Grantee shall have a security interest in all the Grantor's books and records pertaining to the Collateral, and the Grantor shall, during the continuance of a Default, turn over copies of such books and records and during the continuation of an Event of Default turn over any such books and records, in each case, to the Grantee or to its representatives during normal business hours at the request of the Grantee. (d) Right of Inspection. The Grantee and its representatives shall at ------------------- all reasonable times also have the right to enter into and upon any premises where any of the Equipment or any records with respect to the Equipment is located for the purpose of inspecting the same, observing its use or otherwise protecting its interests therein. (e) Compliance with Laws. The Grantor will comply in all material -------------------- respects with all Requirements of Law applicable to the Collateral or any part thereof or to the operation of the Grantor's business; provided that -------- the Grantor may contest any -4- Requirement of Law in any reasonable manner which shall not, in the sole opinion of the Grantee, adversely affect the Grantee's rights or the priority of its Liens on the Collateral. (f) Limitation on Liens on Collateral. The Grantor will not create, --------------------------------- incur or permit to exist, will defend the Collateral against, and will take such other action as is necessary to remove, any Lien or claim on or to the Collateral, other than the Liens created hereby and will defend the right, title and interest of the Grantee in and to any of the Collateral against the claims and demands of all Persons whomsoever. (g) Limitations on Dispositions of Collateral. The Grantor will not ----------------------------------------- sell, transfer, lease or otherwise dispose of any of the Collateral, or attempt, offer or contract to do so. (h) Maintenance of Equipment. The Grantor will maintain each item ------------------------ of Equipment in good operating condition, ordinary wear and tear and immaterial impairments of value and damage by the elements excepted, and will provide all maintenance, service and repairs necessary for such purpose. (i) Maintenance of Insurance. The Grantor will maintain, with ------------------------ financially sound and reputable companies, insurance policies on the Equipment in at least such amounts and against at least such risks (but including in any event public liability, business interruption and storm damage) as are usually insured against in the same general area by companies engaged in the same or a similar business. All such policies shall (i) contain a breach of warranty clause in favor of the Grantee, (ii) provide that no cancellation, material reduction in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by the Grantee of written notice thereof, (iii) name the Grantee as loss payee of each such policy and (iv) name the Grantee as insured to the extent of its interests under each such policy. The Grantor shall deliver to the Grantee any other information as to the insurance carried with respect to the Equipment as the Grantee may reasonably request. (j) Further Identification of Collateral. The Grantor will furnish to ------------------------------------ the Grantee from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Grantee may request, all in reasonable detail. (k) Notices. The Grantor will advise the Grantee promptly, in ------- reasonable detail, at its address set forth in the Note Purchase Agreement, (i) of any Lien (other than Liens created hereby or permitted under the Note Purchase Agreement) on, or claim asserted against, any of the Collateral and (ii) of the occurrence of any other event which could reasonably be expected to have a material adverse effect on the aggregate value of the Collateral or on the Liens created hereunder. -5- (l) Changes in Locations, Name, etc. Unless the Grantor takes such ------------------------------- action as the Grantee may request to preserve at all times the Liens hereunder, the Grantor will not (i) change the location of its chief executive office/chief place of business from that specified in Section ------- 4(d) or remove its books and records from the location specified in Section ---- ------- 4(e), (ii) permit any of the Equipment to be kept at a location other than ---- those listed on Schedule I hereto or (iii) change its name, identity or corporate structure to such an extent that any financing statement filed by the Grantee in connection with this Security Agreement would become seriously misleading. 6. Grantee's Appointment as Attorney-in-Fact. ----------------------------------------- (a) Powers. The Grantor hereby irrevocably constitutes and appoints ------ the Grantee and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the Grantor and in the name of the Grantor or in its own name, from time to time in the Grantee's discretion, upon the occurrence and during the continuance of any Event of Default, for the purpose of carrying out the terms of this Security Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Security Agreement, and, without limiting the generality of the foregoing, the Grantor hereby gives the Grantee the power and right, on behalf of the Grantor, without notice to or assent by the Grantor, to do the following: (i) to pay or discharge taxes and Liens levied or placed on or threatened against the Collateral, to effect any repairs or any insurance called for by the terms of this Security Agreement and to pay all or any part of the premiums therefor and the costs thereof; and (ii) (A) to direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to the Grantee or as the Grantee shall direct; (B) to ask or demand for, collect, receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (C) to sign and endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, notices and other documents in connection with any of the Collateral; (D) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any thereof and to enforce any other right in respect of any Collateral; (E) to defend any suit, action or proceeding brought against the Grantor with respect to any Collateral; (F) to settle, compromise or adjust any suit, action or proceeding described in clause (E) above and, in connection therewith, to give such discharges or releases as the Grantee may deem appropriate; and (G) generally, to sell, transfer, pledge and make any -6- agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Grantee were the absolute owner thereof for all purposes, and to do, at the Grantee's option and the Grantor's expense, at any time, or from time to time, all acts and things which the Grantee deems necessary to protect, preserve or realize upon the Collateral and the Grantee's thereon and to effect the intent of this Security Agreement, all as fully and effectively as the Grantor might do. The Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and shall be irrevocable. (b) Other Powers. The Grantor also authorizes the Grantee, at any ------------ time and from time to time, to execute, in connection with the sale provided for in this Section 6 or in Section 9 hereof, any endorsements, assignments or other --------- --------- instruments of conveyance or transfer with respect to the Collateral. (c) No Duty on Grantee's Part. The powers conferred on the Grantee ------------------------- hereunder are solely to protect the Grantee's interests in the Collateral and shall not impose any duty upon the Grantee to exercise any such powers. The Grantee shall be accountable only for amounts that it actually receives as a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents shall be responsible to the Grantor for any act or failure to act hereunder, except for its own gross negligence or willful misconduct. 7. Proceeds. It is agreed that if an Event of Default shall occur -------- and be continuing (a) upon written notice by the Grantee to the Grantor, all Proceeds (relating to the Collateral) received by the Grantor consisting of cash, checks and other near-cash items shall be held by the Grantor in trust for the Grantee, segregated from other funds of the Grantor, and, forthwith upon receipt by the Grantor, shall be turned over to the Grantee in the exact form received by the Grantor (duly endorsed by the Grantor to the Grantee, if required), and (b) any and all such Proceeds received by the Grantee (whether from the Grantor or otherwise) may, in the sole discretion of the Grantee, be held by the Grantee as collateral security for, and/or then or at any time thereafter may be applied by the Grantee against, the Obligations (whether matured or unmatured), such application to be in such order as the Grantee shall elect. Any balance of such Proceeds remaining after the Obligations shall have been paid in full and the Commitments shall have been terminated shall be paid over to the Grantor or to whomsoever may be lawfully entitled to receive the same. 8. Remedies. If an Event of Default shall occur and be continuing, -------- the Grantee may exercise, in addition to all other rights and remedies granted to it in this Security Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the Code. Without limiting the generality of the foregoing, the Grantee, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law -7- referred to below) to or upon the Grantor, any guarantor, or any other Person (all and each of which demands, defenses, advertisements and notices being hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any office of the Grantee or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Grantee shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in the Grantor, which right or equity is hereby waived or released. The Grantor further agrees, at the Grantee's request, to assemble the Collateral and make it available to the Grantee at such places as the Grantee shall reasonably select, whether at the Grantor's premises or elsewhere. The Grantee shall apply the net proceeds of any such collection, recovery, receipt, appropriation, realization or sale, after deducting all reasonable costs and expenses of every kind incurred therein or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Grantee and the Lenders hereunder, including, without limitation, reasonable attorneys' fees and disbursements, to the payment in whole or in part of the Obligations, in such order as the Grantee may elect, and only after such application and after the payment by the Grantee of any other amount required by any provision of law, including, without limitation, Section 9-504(i)(c) of the Code, need the Grantee account for the surplus, if any, to the Grantor. To the extent permitted by applicable law, the Grantor waives all claims, damages and demands it may acquire against the Grantee arising out of the exercise by it of any rights hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 10 days before such sale or other disposition. The Grantor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay the Obligations and the fees and disbursements of any attorneys employed by the Grantee to collect such deficiency. 9. Limitation on Duties Regarding Preservation of Collateral. The --------------------------------------------------------- Grantee's sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the Code or otherwise, shall be to deal with it in the same manner as the Grantee deals with similar property for its own account. Neither the Grantee nor any of its directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon all or any part of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of the Grantor or otherwise. 10. Powers Coupled with an Interest. All authorizations and agencies ------------------------------- herein contained with respect to the Collateral are irrevocable and powers coupled with an interest. -8- 11. Limitation on Lines of Business. Nothing contained in this ------------------------------- Security Agreement shall be deemed or construed as modifying in any way the restrictions on Grantor's activities as set forth in Section 11.9 of the Note Purchase Agreement. 12. Severability. Any provision of this Security Agreement which is ------------ prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 13. Section Headings. The section headings used in this Security ---------------- Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 14. No Waiver; Cumulative Remedies. The Grantee shall not by any act ------------------------------ (except by a written instrument pursuant to Section 15), delay, indulgence, ---------- omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default or in any breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of the Grantee, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Grantee of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Grantee or such Lender would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. 15. Waivers and Amendments; Successors and Assigns. None of the ---------------------------------------------- terms or provisions of this Security Agreement may be waived, amended, supplemented or otherwise modified except by a written instrument executed by the Grantor and the Grantee; provided that any provision of this Security -------- Agreement may be waived by the Grantee; in a written letter or agreement executed by the Grantee; or by telex or facsimile transmission from the Grantee. This Security Agreement shall be binding upon the successors and assigns of the Grantor and shall inure to the benefit of the Grantee and its successors and assigns. 16. Governing Law. THIS SECURITY AGREEMENT AND THE RIGHTS AND ------------- OBLIGATIONS OF THE PARTIES UNDER THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, EXCEPT FOR PERFECTION AND ENFORCEMENT OF SECURITY INTERESTS AND LIENS IN OTHER -9- JURISDICTIONS TO THE EXTENT THE LAW OF ANOTHER JURISDICTION IS MANDATORILY APPLICABLE PURSUANT TO THE LAWS OF SUCH JURISDICTION. 17. Notices. Notices hereunder may be given by mail, by telex or by ------- facsimile transmission, addressed or transmitted to the Person to which it is being given at such Person's address or transmission number set forth in the Note Purchase Agreement and shall be effective (a) in the case of mail, three days after deposit in the postal system, first class postage pre-paid and (b) in the case of telex or facsimile notices, when sent. The Grantor may change its address and transmission number by written notice to the Grantee, and the Grantee may change its address and transmission number by written notice to the Grantor. 18. Authority of Grantee. The Grantor acknowledges that the rights -------------------- and responsibilities of the Grantee under this Security Agreement with respect to any action taken by the Grantee or the exercise or non-exercise by the Grantee of any option, right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Security Agreement shall be governed by the Note Purchase Agreement. 19. Counterparts. This Security Agreement may be executed in ------------ counterparts, and all of such counterparts taken together shall be deemed to constitute one and the same instrument. 20. Termination. Upon the earlier to occur of (a) the Initial Series ----------- B Closing Date and (b) the repayment of all amounts owing under the Extended Payment Facility and the Grantor entering into the Credit Agreement and obtaining term loans thereunder in an aggregate principal amount of $75,000,000 on or prior to September 30, 1998, the Security Agreement shall terminate and Grantee, at the request and expense of Grantor, will promptly execute and deliver to the Grantee the proper instruments (including Uniform Commercial Code termination statements on form UCC-3) acknowledging the termination of the Security Agreement, and will duly assign, transfer and deliver to the Grantor (without recourse and without any representation or warranty of any law) such of the Collateral as may be in the possession of the Grantee and has not theretofore been disposed of or otherwise applied or released. -10- IN WITNESS WHEREOF, the Grantor and the Grantee have caused this Security Agreement to be duly executed and delivered as of the date first above written. TELECORP PCS, INC. By: _______________________________ Title: LUCENT TECHNOLOGIES INC. By: _______________________________ Title: SCHEDULE I TO SECURITY AGREEMENT TELECORP PCS, INC. 1101 17th Street NW, 9th Floor, Washington D.C., 20036 LOCATION OF EQUIPMENT --------------------- EX-10.2 6 GENERAL AGREEMENT FOR PURCHASE OF PCS SYSTEMS EXHIBIT 10.2.1 TeleCorp General Agreement for Purchase of PCS Systems and Services between Telecorp PCS, Inc. and Lucent Technologies, Inc. TABLE OF CONTENTS Page GENERAL AGREEMENT FOR PURCHASE OF PERSONAL COMMUNICATIONS SYSTEMS AND SERVICES BETWEEN TELECORP PCS, INC. AND LUCENT TECHNOLOGIES INC. 1. ARTICLE I GENERAL PROVISIONS APPLICABLE TO ENTIRE AGREEMENT...... 2 1.1 HEADINGS AND DEFINITIONS...................................... 2 1.2 TERM OF AGREEMENT............................................. 8 1.3 SCOPE......................................................... 9 1.4 MINIMUM MARKET COMMITMENT..................................... 10 1.5 ADDITIONAL PURCHASES.......................................... 10 1.6 PLANNING INFORMATION.......................................... 11 1.7 ORDERS........................................................ 12 1.8 ORDER ACCEPTANCE.............................................. 12 1.9 CHANGES IN CUSTOMER'S ORDERS.................................. 13 1.10 PRICES, DISCOUNTS AND INCENTIVES.............................. 13 1.11 CO-OP MARKETING FUND.......................................... 20 1.12 INVOICES AND TERMS OF PAYMENT................................. 23 1.13 PURCHASE MONEY SECURITY INTEREST.............................. 25 1.14 MOST FAVORED CUSTOMER......................................... 26 1.15 DELIVERY AND INSTALLATION SCHEDULE............................ 26 1.16 SYSTEM LOCK DOWN; COMPLETION DELAY............................ 27 1.17 TRANSPORTATION................................................ 28 1.18 PACKING, MARKING, AND SHIPPING................................ 29 1.19 TITLE AND RISK OF LOSS........................................ 29 1.20 COMPLIANCE WITH LAWS.......................................... 30 1.21 TAXES......................................................... 31 1.22 TRAINING...................................................... 31 1.23 TERMINATION FOR CONVENIENCE................................... 31 1.24 CANCELLATION FOR BREACH....................................... 32 1.25 PATENTS, TRADEMARKS AND COPYRIGHTS............................ 32 -i- Page 1.26 USE OF INFORMATION............................................ 34 1.27 NOTICES....................................................... 35 1.28 RIGHT OF ACCESS............................................... 36 1.29 INDEPENDENT CONTRACTOR........................................ 36 1.30 CUSTOMER'S REMEDIES........................................... 36 1.31 FORCE MAJEURE................................................. 38 1.32 ASSIGNMENT.................................................... 38 1.33 PUBLICITY..................................................... 39 1.34 APPLICABLE LAW................................................ 39 1.35 SURVIVAL OF OBLIGATIONS....................................... 39 1.36 SEVERABILITY.................................................. 39 1.37 NON-WAIVER.................................................... 40 1.38 CUSTOMER RESPONSIBILITY....................................... 40 1.39 PUBLICATION OF AGREEMENT...................................... 40 1.40 ARBITRATION................................................... 40 2.ARTICLE II PROVISIONS APPLICABLE TO THE PURCHASE OF PRODUCTS...... 41 2.1 GENERAL....................................................... 41 2.2 PRODUCT FEATURES COMMITMENT................................... 41 2.3 PRODUCT AVAILABILITY.......................................... 43 2.4 DOCUMENTATION................................................. 43 2.5 PRODUCT COMPLIANCES........................................... 43 2.6 PRODUCT CHANGES............................................... 44 2.7 CONTINUING PRODUCT SUPPORT- PARTS AND SERVICES................ 45 2.8 SPECIFICATIONS................................................ 46 2.9 CUSTOMER TECHNICAL SUPPORT.................................... 46 2.9A CLASS A AND B CHANGES......................................... 46 2.10 PRODUCT WARRANTY.............................................. 50 3.ARTICLE III PROVISIONS APPLICABLE TO THE LICENSING OF SOFTWARE.... 55 3.1 GENERAL....................................................... 55 -ii- TABLE OF CONTENTS (continued) Page 3.2 LICENSE....................................................... 55 3.3 TITLE, RESTRICTIONS AND CONFIDENTIALITY....................... 56 3.4 CHANGES IN LICENSED MATERIALS................................. 56 3.5 MODIFICATIONS TO SOFTWARE..................................... 57 3.6 MODIFICATION BY CUSTOMER...................................... 57 3.7 RELATED DOCUMENTATION......................................... 57 3.8 SOFTWARE WARRANTY............................................. 57 3.9 CANCELLATION OF LICENSE....................................... 61 3.10 TAXES APPLICABLE TO SOFTWARE.................................. 62 3.11 LIMITED TRANSFERABILITY....................................... 62 3.12 AVAILABILITY AND SUPPORT OF LICENSED MATERIAL FEATURES/ LICENSED MATERIAL UPDATES..................................... 63 3.13 YEAR 2000 COMPLIANCE WARRANTY................................. 64 4.ARTICLE IV............................................................ 4.1 GENERAL....................................................... 65 4.2 ACCEPTANCE OF INSTALLATION.................................... 65 4.3 CONDITIONS OF INSTALLATION AND OTHER SERVICES PERFORMED ON CUSTOMER'S SITE............................................... 66 4.3.1 ITEMS PROVIDED BY CUSTOMER............................. 67 4.3.2 ITEMS TO BE FURNISHED BY SELLER........................ 70 4.4 WORK DONE BY OTHERS........................................... 72 4.5 SERVICES WARRANTIES........................................... 72 5.ARTICLE V ENTIRE AGREEMENT AND EXECUTION ............................ 73 5.1 ENTIRE AGREEMENT.............................................. 73 5.2 COUNTERPARTS.................................................. 73 -iii- TABLE OF CONTENTS Page ATTACHMENT A - PRICING ATTACHMENT B - FINANCING AGREEMENTS ATTACHMENT C - RESPONSIBILITY MATRIX ATTACHMENT D - ACCEPTANCE TESTING PLAN/PERFORMANCE METRICS ATTACHMENT E - SUBSCRIBER PROJECTIONS ATTACHMENT F - MILESTONE TIMELINE ATTACHMENT G - DUPLEXER & FILTER SPECIFICATIONS ATTACHMENT H - FORM OF EXTENDED WARRANTY AGREEMENT ATTACHMENT I - OPTIONAL SOFTWARE FEATURE LIST -i- GENERAL AGREEMENT FOR PURCHASE OF PERSONAL COMMUNICATIONS SYSTEMS AND SERVICES This is an agreement ("Agreement")(No. LNM980501JATEL) between Lucent Technologies Inc., ("Seller" or "Lucent"), a Delaware corporation having an office at 283 King George Road, Warren, New Jersey 07059, and TeleCorp PCS, Inc. ("Customer"), a Delaware corporation having an office at 1101 17th Street, N.W., Suite 900, Washington, D.C. 20036. WHEREAS, the Customer desires to provide Personal Communications Services ("PCS") at or near the 1.9 GHz bands under a license(s) issued by the Federal Communications Commission ("FCC"); and WHEREAS, the Customer desires Seller to be a substantial supplier of the wireless base stations, switches, power, cable and transmission equipment and system integration services to include but not be limited to engineering services, such as preparation of equipment specifications, and installation of the networks, such as equipment installation, equipment removal and cable mining, and maintenance and repair of their networks ("Services"); NOW, THEREFORE, the parties agree to the following terms and conditions. 1. ARTICLE I GENERAL PROVISIONS APPLICABLE TO ENTIRE AGREEMENT 1.1 HEADINGS AND DEFINITIONS All headings used in this Agreement are inserted for convenience only and are not intended to affect the meaning or interpretation of this Agreement or any clause. For the purpose of this Agreement, the following definitions will apply: "Acceptance Date" means the date on which an Initial System or Service is accepted or, as provided in this Agreement, is deemed to have been accepted by Customer, and may be referred to as "Acceptance" or in the verb form "Accepted"; "Acceptance Test" means the test to be performed under the terms of this Agreement, and specified in Attachment D, during the Acceptance Test Period to determine whether an Initial System in each MTA or Market substantially conforms to all applicable Specifications and thereafter the tests to be performed for subsequent installation of Products to determine whether such products meet the system element specifications; "Acceptance Test Period" means the period of time in days agreed to by the parties and specified in Attachment D allowed for performance of an Acceptance Test; "Advertising" means all advertising, sales promotion, press releases, and other publicity matters relating to performance under this Agreement; "Affiliate" of a corporation means its Subsidiaries, any company of which it is a Subsidiary, and other Subsidiaries of such company, and any entity controlled, controlling or under common control with such corporation; "Annual Release Maintenance Fee" means those recurring annual fees of the Seller, invoiced annually in January and based upon the number of MSCs installed and BTSs installed at the time the invoice is issued, full payment of which entitles the Customer to receive all core features in standard software releases, software enhancements and software upgrades applicable to TDMA PCS Products (but not including Optional Software Features) which will be made available to Customer when made generally available by Seller during the period for which the fees were paid. All Annual Release Maintenance Fees shall be entitled to the discounts set forth in Section 1.10.1; "Class A Change" means a modification of existing Product to remedy a non conformance to Seller's Specifications required to correct design defects of a type that result in electrical or mechanical inoperative conditions, extremely unsatisfactory operating conditions, or which is recommended to enhance safety; "Class B Change" means a change that provides Product enhancements resulting in new features or improved service capabilities; "Customer Price List" means Seller's published "Price Reference Guide" or other price notification releases furnished by Seller for the purpose of communicating Seller's list pricing or pricing related information to customers of Seller; however, this does not include firm price quotations; "Designated Processor" means the Product for which the licenses to use Licensed Materials are initially granted; "Effective Date" shall mean May 1, 1998; "Final Acceptance" means the process set forth in Section 4.2 pursuant to which Customer accepts Seller's installation of its Products or Licensed Materials; "Firmware" means a combination of (i) hardware and (ii) Software represented by a pattern of bits contained in such hardware; "Fit" means physical size or mounting arrangement (e.g., electrical or mechanical connections); "Form" means physical shape; "Function" means product features; "Force Majeure" means fires, strikes, riots, embargoes, explosions, earthquakes, floods, wars, water, the elements, labor disputes, government requirements, civil or military authorities, acts of God or by the public enemy, inability (affecting Seller's industry as a whole) to secure raw materials or transportation facilities, acts or omissions of carriers or suppliers, or other causes beyond a party's control whether or not similar to the foregoing; "Hazardous Material" means material designated as a "hazardous chemical substance or mixture" by the Administrator, pursuant to Section 6 of the Toxic Substance Control Act, a "hazardous material" as defined in the Hazardous Materials Transportation Act (49 U.S.C. 1801, et seq.), or a "hazardous substance" as defined in the Occupational Safety and Health Act Hazard Communication Standard (29 CFR 1910.1200); "In Revenue Service" means use of a Product or any part thereof for commercial service (exclusive of operations for purposes of conducting Acceptance Tests), whether or not revenue is actually being generated; "Information" means all documentation and technical and business information in whatever form recorded, which a party may furnish under, or has furnished in contemplation of, this Agreement; "Initial System" means the PCS Systems ordered pursuant to the terms of this Agreement for each Market that is scheduled for optimization prior to the Acceptance jointly established by the Parties, reduced by the amount of any Products, for each date(s) and Licensed Materials, which due to fault of the Customer cannot be properly installed, integrated and optimized prior to System Acceptance without additional expense to Seller; "Licensed Area" means an area for which the Federal Communications Commission ("FCC") has granted a permit to construct a Personal Communication Services System; "Licensed Materials" means the Software and Related Documentation for which licenses are granted by Seller under this Agreement; no Source Code versions of Software are included in Licensed Materials; "Market" means a geographic area in which Customer is licensed to provide PCS services, consisting of at least an initial MSC (access manager and 5ESS switch) and a minimum of 50 TDMA PCS mini-cells. "Material Service Impact" means an operating characteristic of Seller's Products or Licensed Materials having a materially adverse impact on Customers ability to network, administer, operate or maintain its Network Wireless System obtained under this Agreement, to render billings to Customer's subscribers, or to continue to furnish or to offer to such subscribers service functionalities and features; "Operating Affiliates" means a subsidiary of TeleCorp PCS, Inc. which is authorized to operate the FCC PCS Licenses in any of the Markets listed in Section 1.4 or any additional Markets awarded to Seller pursuant to the provisions of this contract; "Optional Software Features" means software features for PCS Products available to Seller's customers on an optional, separate fee basis; "PCS System" means Personal Communications Services System, which would consist of, the minimally necessary Products, Licensed Materials, Services, and integration thereof necessary to provide PCS within any definable geographic area; "Product" means PCS TDMA and/or Cellular TDMA and future generation wireless Products (including hardware which is part of firmware) systems, equipment, and parts thereof, but the term does not mean Software whether or not such Software is part of Firmware; "Product Manufacturing Information" means manufacturing drawings and specifications of raw materials and components, including part manufacturing drawings and specifications covering special tooling and the operation thereof, and a detailed list of all commercially available parts and components purchased by Seller on the open market disclosing the part number, name and location of the supplier, and price lists; "Provisional Acceptance" means that the Customer acknowledges that the Products Licensed Material and installation services have been performed as required and accepts them pending satisfactory completion of system optimization; "Related Documentation" means materials useful in connection with Software, such as, but not limited to, flow charts, logic diagrams, program descriptions, and specifications. No Source Code versions of Software are included in Related Documentation; "Repair Parts" means new, remanufactured, reconditioned, refurbished, or functionally equivalent parts for the maintenance, replacement, and repair of Products sold pursuant to this Agreement; "Seller's Manufactured Product" means a Product manu-factured by Seller or purchased by it pursuant to its procurement specifications (e.g., KS or AT); "Seller's Standard Charges" means Seller's applicable rates and charges then in effect for labor and materials as determined from Seller's Customer Price List, less any applicable discounts; "Services" means the performance of work for the Customer and includes but is not limited to: (1) engineering Services such as preparation of equipment specifications, preparation and updating of office records, and preparation of a summary of material not specifically itemized in the Order; (2) installation Services such as installation equipment removal, and cable mining; and (3) other Services such as maintenance and repair. Services do not include Turnkey Services; "Software" means a computer program consisting of a set of logical instructions and tables of information which guide the functioning of a processor; such program may be contained in any medium whatsoever, including hardware containing a pattern of bits representing such program, but the term "Software" does not mean or include such medium; "Source Code" means any version of Software incorporating high-level or assembly language that generally is not directly executable by a processor. Except as may be expressly provided, this Agreement does not require Seller to furnish any Source Code; "Specifications" means the specifications for Products and/or Licensed Materials furnished by Seller to Customer as set forth in this Agreement or its Attachments; "Start Date" means, the date upon which Seller has received Customer's written notice that Customer has performed all Customer responsibilities and furnished all necessary items required prior to Seller's commencement of installation of the Initial System; "Subsidiary" of a company means a corporation, the shares or other securities holding a majority of the votes for election of directors which are now or hereafter owned or controlled by such company either directly or indirectly; but any such corporation shall be deemed to be a Subsidiary of such company only as long as such ownership or control exists; "System Acceptance" means Customer's acceptance of the Initial System in each of the Markets pursuant to the terms of Attachment D; "Territory" means the 50 states of the United States plus the District of Columbia and the territories and possessions of the United States; "Turnkey Item" means a good or product or a partial assembly of goods or products furnished and, perhaps, installed by Seller as part of a Turnkey Service but not furnished by Seller pursuant to this Agreement. A Turnkey Item is not a Vendor Item or a Product as described in this Agreement; "Turnkey Services" means items and activities normally the responsibility of the Customer under this Agreement, which may include, but shall not be limited to, project management, field coordination, construction and system testing. Turnkey Services do not include, and are separate from, Seller's normal engineering and installation Services; "Use" with respect to Licensed Materials means loading the Licensed Materials, or any portion thereof, into a processor for execution of the instructions and tables contained in such Licensed Materials; "Vendor Item" means a Product or partial assembly of Products furnished by Seller but neither manufactured by Seller nor purchased by Seller pursuant to its procurement specifications. A Vendor Item is not a Turnkey Item; and "Warranty Period" means the period of time listed in the respective WARRANTY clauses which, unless otherwise stated, commences on the date of shipment, or if installed by Seller on Acceptance by Customer or thirty (30) days from the date Seller submits its notice of completion of its installation whichever is sooner, and for Services, commences on the date the Service is completed. 1.2 TERM OF AGREEMENT 1.2.1 This Agreement shall be effective on the Effective Date and, except as otherwise provided herein, shall continue in effect for a period of [_] [_] [_] years. Within sixty (60) days of the scheduled expiration date of this Agreement, the parties shall meet to discuss extension of this Agreement for some additional length of time. An obligatory condition of such extension shall be that the Products, Licensed Materials and Annual Maintenance Fees, as specified in Attachment A of this Agreement, shall not exceed the amount specified in Seller's then effective Customer Price List less the applicable discounts set forth in Section 1.10. The modification or termination of this Agreement shall not affect the rights or obligations of either party under any order accepted by Seller before the effective date of the modification or termination. 1.2.2 Customer's obligations under this Agreement shall be contingent on (i) a final closing under the terms of the Securities Purchase Agreement dated January 23, 1998 among Customer, AT&T Wireless and certain other parties for the joint development of TDMA PCS Networks serving portions of the Boston, Little Rock, Louisville, St. Louis, Houston, Memphis, and New Orleans major trading areas (MTAs); and (ii) the execution of the Financing Agreements attached hereto as Attachment B and consummation of the transactions contemplated thereby. 1.2.3 The Parties agree that Customer may wish to purchase certain Products from Seller in advance of the satisfaction of the contingencies set forth in Section 1.2.2 being completed. Such purchases shall be subject to the terms and conditions contained in this Agreement and not exceed a total of forty million dollars. 1.2.4 Should, despite the Parties best efforts, the contingencies set forth above not be met on or before September 30, 1998, this Agreement shall be terminated by either party giving notice in writing and the Parties shall have no further obligation to each other, except Customer may either retain the purchased Products at the prices set forth in this Agreement or return the purchased Products to the Seller and receive a full refund of any amounts actually paid to Seller and shall not be responsible for the Deferred Payments under Section 1.12(d). 1.3 SCOPE During the term of this Agreement, Seller agrees to sell (or, with respect to licensed Materials, license) to Customer or its Operating Affiliates for the use and benefit of Customer or its Operating Affiliates and not for resale, Products (with associated Licensed Materials, licenses) and associated Services, as and to the extent ordered by Customer or its Operating Affiliates pursuant to orders issued by such entity and accepted by Seller hereunder. Seller agrees that it will offer to Customer or its Operating Affiliates all items, products or services generally offered or made available to other providers of telecommunications services, but nothing herein shall be deemed to require Seller to disaggregate into subassemblies, components or other parts any such items, products or services, which Seller does not disaggregate for others. The terms and conditions of this Agreement shall apply to all orders for Products and Licensed Materials and Services listed in Customer Price Lists and for related Services placed by Customer or its Operating Affiliates. Unless otherwise specifically agreed in writing by Seller, Seller's provision of any other item, product or service not listed in the then current Customer Price List is not subject to the terms and conditions of this Agreement, but to a separate written agreement of the parties or, if none, to Seller's standard term and conditions for such item, product or service. Seller agrees that Seller will maintain and from time to time furnish to Customer a copy of such Customer Price Lists, which shall contain all of Seller's currently available commercial offerings of Seller's PCS and PCS related telecommunications systems. Provided that Customer is not undertaking the payment obligations of an Affiliate, Customer will have a reasonable opportunity to approve any Affiliates seeking to purchase under this Agreement, such approval not to be unreasonably withheld, based upon (i) reasonable credit criteria within the context of the PCS industry, (ii) whether or not such Affiliate has in the past materially breached agreements with Seller, (iii) whether or not the Affiliate (or any of its Owners or Partners) is a direct competitor of Seller in the wireless infrastructure manufacturing business, and (iv) whether or not the Affiliate is otherwise engaged with Seller in an agreement for the purchase and/or supply of PCS TDMA wireless technology. 1.4 MINIMUM MARKET COMMITMENT With respect to each of the following Markets, if Customer, in its sole discretion, elects to build out an Initial System in such Market, Seller agrees to engineer, furnish and install and Customer agrees to purchase the PCS Products, Licensed Materials and Services which are sufficient to build out the Initial System for such Markets. Boston New Orleans Little Rock Memphis St. Louis Notwithstanding the foregoing, Customer may, in its sole discretion, substitute a new Market of similar size for any of the above Markets. 1.5 ADDITIONAL PURCHASES In the event that Customer or its Affiliates, wish to obtain additional Products, Licensed Materials and Services to expand the coverage of or add features to any Initial System constructed or initiated under this Agreement , orders for such additional items received by Seller during the term of this Agreement shall be received and accepted subject to the terms and conditions hereof. In addition, if Customer or its Affiliates, at their option, award Seller any additional Markets, the terms and conditions of this Agreement shall apply to the purchase of Products, Licensed Materials and Software for such additional Markets 1.6 PLANNING INFORMATION Upon Seller's request, and to the extent reasonable, feasible, and available, Customer will provide to Seller forecasts of Customer's annual Product, Licensed Materials, and Services needs. Customer shall provide to Seller a forecast of the number of base stations, growth frames, voice channels, CSU's, Power Cabinets, and 5ESS Switches, among other necessary components, needed for the PCS System. This forecast is expected to be accurate within +/- 25%. Except for the initial order, nine (9) months prior to requested ship date, Customer shall provide to Seller an updated forecast of the quantity of Products necessary for the PCS System as indicated above. This forecast is expected to be accurate within +/- 25%. If the accuracy of this forecast deviates from the stated parameters, Seller will not be penalized for any resulting delays for quantities above the forecast. There shall be a twelve (12) week interval between order and ship date for switching equipment orders for each Initial System, unless the parties mutually agree to a shorter interval. For all other switch orders, no less than twenty (20) weeks prior to the requested ship date for switching equipment, Customer shall provide to Seller a final forecast of the number of units of switch equipment required for the PCS System as indicated above. No less than four (4) weeks prior to the requested ship date for base stations, Customer shall provide to Seller a final forecast of the number of base station units required for the PCS System as indicated above. The final forecasts shall be submitted as orders under clauses 1.7 and 1.8. Customer may postpone orders for base stations without penalty up to one (1) week prior to the requested ship date, however Seller may elect to ship base stations in accordance with Section 1.17. Customer may postpone orders for switching equipment without penalty up to three weeks prior to the requested ship date provided that the equipment ships within 4 weeks of the original requested ship date. Any postponement of an order by Customer pursuant to this Section 1.6 shall not relieve Customer of its purchase obligations for the Initial Systems set forth in Section 1.4 and Attachment A and the New Market Incentive purchase commitment set forth in Section 1.10.1.1.10. 1.7 ORDERS All orders submitted by Customer shall be deemed to incorporate and be subject to the terms and conditions of this Agreement unless otherwise agreed by both parties in writing. All orders, including electronic orders, shall contain the information necessary for Seller to fulfill the order. All schedules and requested dates are subject to Seller's concurrence; provided if orders are made within the agreed to lead times Seller shall not withhold its concurrence to the requested dates. No provision or data on any order or contained in any documents attached to or referenced in any order, any subordinate document (such as shipping releases), shall be binding, except data necessary for Seller to fill the order. All such other data and provisions are hereby rejected. Electronic orders shall be binding on Customer notwithstanding the absence of a signature, so long as such orders have been verified as valid purchase orders by Customer's technical department and finance department in accordance with procedures to be mutually agreed upon by the parties. 1.8 ORDER ACCEPTANCE All orders are subject to acceptance by Seller. Seller shall acknowledge the date of order receipt either in writing or electronic data interface format within 72 hours. The acknowledged date of order receipt is the price effective date for purposes of this Agreement. Seller agrees to deliver and install Products and Licensed Materials and perform Services in accordance with Seller's standard delivery and installation schedules being quoted at the time such order is placed, or the delivery and installation schedules otherwise agreed pursuant to Section 1.6. If Customer submits an order requesting a delivery or completion interval less than the interval listed in the applicable Customer Price List, or as set forth in Section 1.6, Seller will accept such order only for its standard interval. Seller will, however, attempt to meet Customer's requested interval and provide confirmation or denial of the requested guidelines for accruals and reimbursements of qualifying promotional activities and the procedures and documentation necessary for such reimbursements. b. Without limiting the foregoing or anything in this Agreement, Customer expressly agrees to submit all proposed usage of Seller's Indicia (as defined under "USE OF MARKS" below) for approval by the Seller Co- Marketing Program Office on such forms as may be developed by Seller from time to time, and shall not use such Indicia unless and until the Seller Co-Marketing Program Office grants such approval. Seller shall either accept or reject Customer's proposed usage of Seller's Indicia within three (3) business days of acknowledged receipt of Customer's request. If no response is rendered within this time period, the proposed usage shall be deemed approved. c. Without limiting the foregoing or anything in this Agreement, Customer acknowledges it has no ownership or other interest in the Indicia and shall make no claim to such Indicia. d. Without limiting the foregoing or anything in this Agreement, Customer expressly agrees that accruals shall be only for qualifying purchases of specific Products or Software for its own use and not for resale. e. Without limiting the foregoing or anything in this Agreement, Customer expressly agrees to submit requests for reimbursement for qualifying promotions within ninety days after deployment of the subject promotional activity and to utilize reimbursement funds within one year of the time the accrual is reported to Customer. USE OF MARKS a. The use of Seller's tradenames, trademarks, trade devices, logos, codes, Co-Marketing Brand and logo or other symbols (collectively "Indicia") shall be solely for the purpose of and in the manner permitted by the Program Documentation. Seller hereby grants Customer permission to use Indicia in Customer's marketing and advertising of, and in Customer's publicity relating to, the Products and Agreements identified in Program Documentation, PROVIDED such use conforms to Seller standards and guidelines contained in the Program Documentation which Seller may furnish from time to time. Without limiting the terms of such Program Documentation, the following shall also apply: (1) Customer may not conduct business under Seller's name or logo; (2) Customer may not use any of Seller's Indicia or variations thereof to identify Customer or Customer's products or services except as specifically permitted by the Seller Co-Marketing Program Office identified in the Program Documentation; and (3) Customer may not use any of Seller's Indicia in a manner that is likely to confuse the public concerning the relationship of the parties. Customer's use of Indicia shall inure to the benefit of Seller and shall not invest in Customer any rights in or to the Indicia. All uses of Indicia by Customer shall be subject to prepublication or pre-use review and written approval by Seller. If, in Seller's judgment, any use of Indicia by Customer is deemed detrimental to the Indicia or Seller's reputation, or is deemed otherwise undesirable, Seller may withdraw such permission without liability as a result thereof. b. Customer agrees that it has no exclusive right to use of Indicia as defined herein in any Market or for any Product identified herein. Seller expressly reserves the right to contract with others to promote, market, sell and/or install Products, to use the Indicia and to permit others to engage in such activities at any time and in any place. 1.12 INVOICES AND TERMS OF PAYMENT a. For the Products and Licensed Materials (including transportation charges and taxes, if applicable), comprising the Initial System for a Market as set forth on Attachment A, Customer shall be invoiced as follows: a) 85% of the purchase price on delivery or as soon thereafter as practicable b) 10% of the purchase price on System Acceptance of the Initial System c) 5% of the purchase price on completion of all punch list items For orders submitted after Acceptance of an Initial System, ninety percent (90%) of the purchase price (including transportation and taxes, if applicable) will be invoiced on delivery, or as soon thereafter as possible. The remaining ten percent (10%) shall be invoiced on Final Acceptance of installation on a unit by unit basis. Invoicing for the four million ($4,000,000) dollar Optional Feature RTU per MSC shall occur on delivery, and payment for said invoices shall be due thirty (30) days after Acceptance of the Initial System. In every case, engineering will be billed upon main shipment of Products and installation will be billed as performed or as soon thereafter as practical. b. Except as set forth in paragraph (d) below, Customer shall pay these invoiced amounts, less any disputed amounts, within thirty (30) days from the date of Seller's invoice. Delinquent payments are subject to a late payment charge at the rate of one and one-half percent (1-1/2%) per month, or portion thereof, of the amount due (but not to exceed the maximum lawful rate). Any disputed items which are determined to be validly billed are due for payment based upon the original invoice date and will be subject to a retroactive late payment charge based upon the original invoice date. Customer shall notify Seller of any disputed invoice amounts within thirty (30) days from the date of the invoice. Seller may apply any credit which remains outstanding. c. Customer shall pay the invoiced amounts due on completion of all punch list items, less any disputed amounts, within ten (10) days from the date of Seller's invoice. No late payment charges will accrue until after thirty (30) days of the date of Seller's invoice. d. Notwithstanding anything herein to the contrary, Customer may defer payment (the "Deferred Payments") on all invoices for Customer Products, Licensed Materials and Services purchased by Customer or its Operating Affiliates for which payment would be due pursuant to subsections (a) and (b) above until the later of (i) September 30, 1998, or (ii) the initial closing of Customer's senior credit facility. The amounts owed to Seller for Deferred Payments shall be payable in full, along with associated carrying costs (prime plus 1.9%), upon the earlier of (i) September 30, 1998, or (ii) the initial closing of the senior credit facility of the Customer. The aggregate amount of all outstanding invoices subject to the Deferred Payment arrangement shall at no time be greater than $40 million, exclusive of associated carrying costs. If such outstanding invoice amount exceeds $40 million, the Customer shall immediately pay invoices sufficient to reduce the balance below $40 million, exclusive of associated carrying costs. Customer shall also pay invoices in accordance with Sections 1. 12(a) and 1. 12(b) if using the Deferred Payment option would cause the outstanding invoice amount to exceed $40 million. 1.13 PURCHASE MONEY SECURITY INTEREST a. Seller reserves and Customer agrees that Seller shall have a purchase money security interest in all Products and Licensed Materials supplied to Customer by Seller under this Agreement until any and all Deferred Payments due Seller under this Agreement are paid in full. Seller shall have the right, at anytime and without notice to customer to file in any state or local jurisdiction such financing statements (e.g UCC-1 financing statements, as Seller deems necessary to perfect its purchase money security interest hereunder. Upon request, by Seller, Customer hereby agrees to execute all documents necessary to secure Seller's purchase money security interest including without limitation, UCC -1 or such other documents Seller deems reasonably necessary to evidence its security interest. Notwithstanding the foregoing obligation of Customer to execute, Customer hereby appoints Seller as its attorney-in-fact for purpose of executing and filing such financing statements and such other documents prepared by Seller or its designated agent for purposes of perfecting Seller's security interest hereunder. b. Seller shall provide Customer promptly following any such filing with a copy of all such Financing Statements together with a listing of a filing number and location sufficient to enable Customer's lenders to arrange for termination of such Financing Statements upon closing Customer's senior credit facility. c. In addition to any other remedy available to Seller as provided herein for any failure of Customer to pay the purchase price, by common law and by statute, Seller may exercise its right to reclaim all Products and Licensed Materials sold to Customer pursuant to UCC-202 or such other applicable provision as it may exist from state to state, upon discovery of Customer insolvency, provided Seller demands in writing reclamation of such goods before ten (10) days after receipt of such goods by Customer, or if such ten (10) days period expires after the commencement of a bankruptcy case, before twenty (20) days after receipt of such goods by the Customer. 1.14 MOST FAVORED CUSTOMER At any time during the Term of this Agreement, Customer will receive Products, Licensed Materials and Services at prices and on payment terms and all other contract terms (including financing) no less favorable to the Customer when viewed collectively than those offered or made available by the Seller to any other AT&T Wireless Affiliate within the United States who are involved in transactions of similar or lesser volumes. For the purposes of this section, the other AT&T Wireless Affiliates, shall consist of Mercury PCS, Triton, Wireless One, Americall and Triad. To the extent Seller offers or provides more favorable contract terms to another AT&T Wireless Affiliate (the "Offer"), pursuant to this section, it shall commencing on the effective date of such Offer prospectively adjust its prices, payment terms and/or other contract terms to Customer so as to implement the more favorable contract terms contained in the Offer. In addition, prior to System Acceptance in each of the first five Markets, Seller shall retroactively apply the more favorable offer term for all Customer orders issued during the ninety (90) day period prior to the effective date of the Offer. 1.15 DELIVERY AND INSTALLATION SCHEDULE Customer shall notify Seller of those PCS site(s), ready for installation of Product and that Customer's responsibilities referred to in the Responsibility Matrix and Article IV relating to such sites have been performed or furnished in accordance with Attachment F or, if Attachment F is not applicable, by the date mutually agreed to by the parties prior to order acceptance. Seller shall have access to such sites on and from the date of Seller's receipt of such notification (the "Start Date"). If Seller is notified by Customer that a PCS site is ready and finds upon arrival that the site does not meet the criteria indicated on the Responsibility Matrix and in Article IV (an "Erroneous Dispatch"), Customer shall pay an additional $350 for each Erroneous Dispatch. If Seller incurs extraordinary costs due to an Erroneous Dispatch, Customer agrees to negotiate in good faith appropriate compensation for such extraordinary costs. Additionally, except to the extent covered by Attachment F, the parties agree to develop, by mutual agreement, delivery and installation schedules under which Seller shall complete its obligations as required under the Responsibility Matrix, and/or any subsequent order, and submit notices of completion to Customer on or before the Installation Complete date. 1.16 SYSTEM LOCK DOWN; COMPLETION DELAY ---------------------------------- a) System Lock Down For Each MTA listed in Section 1.4. On the --------------------------------------------------- "System Lock Down" as reasonably determined by Customer and to be inserted on the Milestone Timeline attached as Exhibit F, the date (the "System Lock Down Date) of which shall be sixty (60) days prior to Customer's anticipated date of System Acceptance (the date falling sixty (60) days after the System Lock Down Date is the "Guaranteed System Acceptance Date"), the Seller shall provide the Customer with a final revised RF Engineering Plot and the Customer shall use its best efforts to deliver to Seller one- hundred percent (100%) of the BTS sites constituting the Initial System. Construction and Site Acceptance check-off (as defined by the Site Acceptance checklist) of at least sixty-five percent (65%) of the BTS sites included in such RF Engineering Plot shall have been completed on the System Lock Down Date. During the thirty (30) day period prior to the Guaranteed System Acceptance Date, Customer cannot include more than fifteen (15%) percent of the BTS sites in the revised RF Engineering Plot for each Initial System. If at this time key missing cells from the RF Engineering Plot cause the inability of Seller to meet System Acceptance metrics as defined in Attachment D, then Seller and Customer shall together redefine any affected drive routes so as to exclude these missing cells from the Initial System Acceptance metrics. Any BTS sites constructed in the fifteen (15) day period prior to the Guaranteed System Acceptance Date shall not be included as part of the System Acceptance process set forth in Attachment D. However, Seller will use its best efforts to install and integrate these sites prior to the Guaranteed System Acceptance Date. On the System Lock Down Date, or as soon as reasonably practicable, the Seller shall begin to perform System Acceptance Tests and Systemwide RF optimization services in accordance with Exhibit D attached hereto. b) Completion Delay. For each day that the Initial System in a ---------------- Market fails to achieve System Acceptance due to the sole fault of Seller on or before the Guaranteed System Acceptance Date, Seller will pay to Customer an amount equal to .35 % (thirty-five hundredths of one percent) of the aggregate purchases ordered for such market through the Guaranteed System Acceptance Date for each day from the Guaranteed System Acceptance Date until the date when System Acceptance occurs (the "Late Acceptance Payment"). The amount due to Customer under the provisions of this subsection 1.16(b) shall be credited against any outstanding amounts due Seller for the affected Market up to a maximum of the unbilled amount to be invoiced upon System Acceptance of the Initial System and upon completion of all punch list items. 1.17 TRANSPORTATION Seller's prices for Products and Licensed Materials, as specified in Section 1.10, do not include freight charges or related transportation Services including hauling and hoisting, or charges therefor, unless expressly stated in writing by Seller to the contrary. At Customer's request, Seller, in accordance with its normal practices, will arrange for transportation for such items to the site designated by Customer. In such cases, Seller will prepay transportation, if appropriate, and invoice transportation charges without mark-up. If Customer elects to route Products and/or Licensed Materials or to arrange for transportation, Seller will provide related services subject to a separate fee. Premium transportation will only be used with Customer's concurrence. 1.18 PACKING, MARKING, AND SHIPPING Seller shall, at no additional charge, pack and mark shipping containers in accordance with its standard practices for domestic shipments. Where in order to meet Customer's requests, Seller packs and/or is required to mark shipping cartons in accordance with Customer's specifications, Seller shall invoice Customer additional charges for such packing and/or marking. Seller shall: a) Enclose a packing memorandum with each shipment and, if the shipment contains more than one package, identify the package containing the memorandum; and b) Mark Products as practicable for identification in accordance with Seller's marking specifications (e.g., model/serial number and month and year of manufacture). Partial shipments under an order may be made by Seller and separately invoiced. 1.19 TITLE AND RISK OF LOSS Title (except as provided in the clause USE OF INFORMATION and in Article III) and risk of loss to a Product, Licensed Material, or other item furnished to Customer under this Agreement shall pass to Customer upon the delivery to the Customer's specified location. Delivery of an item to its final destination by Seller shall be deemed complete at such time as all transportation, interim warehousing, hauling and hoisting required to be performed by Seller or its agents under the order for the item have been completed Notwithstanding the above, if sooner, title and risk of loss to the item shall pass to Customer at the point at which, at Customer's request, Seller or Seller's supplier or agent turns over possession of the item to Customer, Customer's employee, Customer's designated carrier, warehouser or hoister, or other Customer's agent. If Customer requests deferral of a base station order after submission of the final purchase order required in Section 1.6, Seller shall have the right to deliver the Product to its warehouse. Seller shall pay for the cost of transportation to the warehouse and any warehouse costs. Customer shall pay the costs of transportation from the warehouse to its specified location. If Customer is unable to have the Products delivered to its location within thirty (30) days after delivery to the warehouse, title and risk of loss shall pass to Customer on the thirty-first day and Seller shall issue an invoice pursuant to the terms of Section 1.12. If Customer requests deferral of a switch order less than three (3) weeks prior to the scheduled shipment date set forth in the final purchase order required in Section 1.6, Seller shall have the right to deliver the Product to its warehouse. Seller shall pay for the cost of transportation to the warehouse and any warehouse costs. Customer shall pay the costs of transportation from the warehouse to its specified location. If Customer is unable to have the Products delivered to its location within thirty (30) days after delivery to the warehouse, title and risk of loss shall pass to Customer on the thirty-first day and Seller shall issue an invoice pursuant to the terms of Section 1.12. Customer shall notify Seller and Seller shall notify Customer promptly of any claim with respect to loss which occurs while the other party has the risk of loss and shall cooperate in every reasonable way to facilitate the settlement of any claim. Nothing herein shall, during the period Seller has the risk of loss to an item, relieve Customer of responsibility for loss to the item resulting from the acts or omissions of Customer, Customer's employees or Customer's agents. Nothing herein shall, during the period Customer has the risk of loss to an item, relieve Seller of responsibility for loss to the item resulting from the acts or omissions of Seller, Seller's employees or Seller's agents. 1.20 COMPLIANCE WITH LAWS Performance under this Agreement shall be subject to all applicable laws, orders, and regulations of federal, state, and local governmental entities. Both parties shall obtain all necessary governmental approvals to perform their respective obligations hereunder. 1.21 TAXES Customer shall be liable for and shall reimburse Seller for all taxes and related charges, however designated, (excluding taxes on Seller's net income or gross receipts) imposed upon or arising from the provision of Services, or the transfer, sale, license, or use of Products, Licensed Materials, or other items provided by Seller. Taxes reimbursable under this paragraph shall be separately listed on the invoice. Seller shall not collect the otherwise applicable tax if the front of the order indicates that the purchase is exempt from Seller's collection of such tax and a valid tax exemption certificate is furnished by Customer to Seller. 1.22 TRAINING Seller will make available Seller's standard training for Customer's personnel in the planning for, operation and maintenance of Products and Software furnished hereunder in accordance with Seller's published prices at Seller's training locations. Additionally, Seller shall provide to Customer a credit of two hundred thousand dollars ($200,000). Vendor warrants that this credit is sufficient to provide training for Customer to support its operations in the initial Markets listed in Section 1.4. 1.23 TERMINATION FOR CONVENIENCE Customer may, upon written notice to Seller, terminate any order or portion thereof, except with respect to any order for Products or Licensed Materials that have already been shipped and Services that have already been performed. For those Products and Licensed Materials not shipped but considered stock items, Customer agrees that it will pay Seller an order restocking fee equal to five percent (5%) of the price or license fee for such items. For those Products and Licensed Materials not shipped and considered customized or non-stock items, Customer agrees to pay a fee based upon Seller's reasonably incurred expenses (after adjustment for recoveries and/or salvage value, if any), including associated general and administrative expenses plus a reasonable profit. Customer may issue "holds" on orders or suspend performance under this Agreement, in whole or in part, with Seller's prior written consent and upon terms that will compensate Seller for any loss, damages, or expenses. 1.24 CANCELLATION FOR BREACH In the event Seller or Customer is in material breach or default of this Agreement or any order placed hereunder and such breach or default continues for a period of sixty (60) days after the receipt of written notice (and such additional time as may be agreed upon by the parties), then Seller or Customer shall have the right to cancel that part of any order affected by the breach or default without any charge, obligation or liability, except for those items already fully discharged. Both parties shall cooperate in every reasonable way to facilitate the remedy of a breach or default hereunder within such sixty (60) day period and such sixty (60) day period shall be extended for an additional period of up to sixty (60) days if the breach or default could not reasonably have been cured in the first sixty (60) days and the breaching party is diligently pursuing such breach or default. 1.25 PATENTS, TRADEMARKS AND COPYRIGHTS In the event of any claim, action, proceeding or suit by a third party against Customer or its Affiliates alleging an infringement of any United States patent, United States copyright, or United States trademark, or a violation in the United States of any trade secret, intellectual property right or proprietary rights by reason of the use, in accordance with Seller's or other applicable specifications, of any Product or Licensed Material or Indicia furnished by Seller to Customer or its Operating Affiliates under this Agreement, Seller, at its expense, will indemnify, hold harmless and defend Customer, subject to the conditions and exceptions stated below. Seller will reimburse Customer for any cost, expense or attorney's fee, incurred at Seller's written request or authorization, and will indemnify Customer against any liability assessed against Customer by final judgment on account of such infringement or violation arising out of such use. If Customer's use shall be enjoined or in Seller's opinion is likely to be enjoined, Seller will, at its expense and at its option without causing a Material Service Impact to Customer or its Operating Affiliates, either (1) replace the enjoined Product or Licensed Material furnished pursuant to this Agreement with a suitable substitute (which is equivalent in Form, Fit and Function) free of any infringement, (2) modify it so that it will be free of the infringement, so long as such modification does not affect Form, Fit or Function; or (3) procure for Customer a license or other right to use it. If none of the foregoing options is practical, Seller will remove the enjoined Product or Licensed Material and refund to Customer any amounts paid to Seller less a reasonable charge for any actual period of use by Customer, provided, however, if such removal will cause a Material Service Impact, Customer's consent shall be required prior to any such removal. Customer shall give Seller prompt written notice of all such claims, actions, proceedings or suits alleging infringement or violation and Seller shall have full and complete authority to assume the sole defense thereof, including appeals, and to settle same. Customer shall, upon Seller's reasonable request and at Seller's expense, furnish all information and assistance available to Customer and cooperate in every reasonable way to facilitate the defense and/or settlement of any such claim, action, proceeding or suit. No undertaking of Seller under this clause shall extend to any such alleged infringement or violation to the extent that it: (1) arises from adherence to design modifications, specifications, drawings, or written instructions which Seller is directed by Customer to follow, but only if such alleged infringement or violation does not reside in corresponding commercial Product or Licensed Material of Seller's design or selection; or (2) arises from adherence to instructions to apply Customer's trademark, trade name, or other company identification; or (3) resides in a Product or Licensed Material which is not of Seller's origin and which is furnished by Customer to Seller for use under this Agreement; or (4) relates to uses of Products or Licensed Materials provided by Seller in combinations with other Products or Licensed Materials, furnished by others, which combination was not installed, recommended or otherwise approved by Seller. In the foregoing cases numbered (1) through (4), Customer will defend and save Seller harmless, subject to the same terms and conditions and exceptions stated above with respect to the Seller's rights and obligations under this clause. The liability of Seller and Customer with respect to any and all claims, actions, proceedings, or suits by third parties alleging infringement of patents, trademarks, or copyrights or violation of trade secrets, intellectual property rights or proprietary rights because of, or in connection with, any items furnished pursuant to this Agreement shall be limited to the specific undertakings contained in this clause. 1.26 USE OF INFORMATION All Information in whatever form recorded which is furnished hereunder or has been furnished in contemplation hereof, shall remain the property of the furnishing party. The furnishing party grants the receiving party the right to use such Information only as follows. Such Information (1) shall not be reproduced or copied, in whole or part, except for use as authorized in this Agreement; and (2) shall, together with any full or partial copies thereof, be returned or destroyed when no longer needed. Moreover, when Seller is the receiving party, Seller shall use such Information only for the purpose of performing under this Agreement, and when Customer is the receiving party, Customer shall use such Information only (1) to order, (2) to evaluate Products, Licensed Materials or Services, or (3) to install, operate, and maintain the particular Products or Licensed Materials for which it was originally furnished. Unless the furnishing party consents in writing, such Information, except for that part, if any, which is known to the receiving party free of any confidential obligation, or which becomes generally known to the public through acts not attributable to the receiving party, shall be held in confidence by the receiving party. The receiving party may disclose such Information to other persons, upon the furnishing party's prior written authorization, but solely to perform acts which this clause expressly authorizes the receiving party to perform itself and further provided such other person agrees in writing (a copy of which writing will be provided to the furnishing party at its request) to the same conditions respecting use of Information contained in this clause and to any other reasonable conditions requested by the furnishing party. The term "Information" as used in this clause does not include Software (whether or not embodied in Firmware) or Related Documentation. The use of Software and Related Documentation is governed by Article III of this Agreement. Nothing in this Section shall preclude or prohibit a receiving party from disclosing any Information, if such disclosure is required by law, rule or regulation or ordered by a court or governmental agency of competent jurisdiction, provided that such party notifies the furnishing party prior to such disclosure and provides the furnishing party such assistance as is reasonable in the circumstances to protect the Information from public disclosure. For purposes of this provision, "Information" shall mean all information about business, technical and financial matters (including costs, profits and plans for future development, methods of operation and marketing concepts) and any other proprietary information relating to Seller, Customer or its Affiliates and their respective operations, businesses and technical and financial affairs; provided, however, the Information shall not include information that (a) becomes generally available to the public other than as a result of disclosure by the recipient, its Affiliates or their representatives, (b) was available to recipient or its Affiliates on a nonconfidential basis prior to disclosure hereunder, (c) is independently developed by recipient or its Affiliates without use of the Information, or (d) becomes rightfully available to recipient from a third party that is under no obligation to maintain such information as confidential. To facilitate a recipient's proper handling of Information, the disclosing party shall use all reasonable efforts to mark as proprietary (or with another reference to indicate confidentiality) all documentary information and to so identify prior to disclosure all orally delivered information which the disclosing party desires to be protected under this provision. 1.27 NOTICES All notices under this Agreement shall be in writing (except where otherwise stated) and shall be addressed to the addresses set forth below or to such other address as either party may designate by notice pursuant hereto. Such notices shall be deemed to have been given (a) when received if delivered by hand or facsimile, (b) three business days after mailing if sent by certified mail, return receipt requested, and (c) one day after delivery to a nationally recognized overnight delivery service if sent by overnight mail. Seller: Lucent Technologies Inc. Suite 980, 485 LBJ Freeway Dallas, TX 75244 Attn. Doris Jean Head Phone: (972) 858-4910 Fax: (972) 858-4945 Copy To: Marc N. Epstein Corporate Counsel 283 King George Road Warren, NJ 07059 Phone: (908) 559-3377 Fax: (908) 559-2174 Customer: TeleCorp PCS, Inc. Attn: Thomas Sullivan Executive Vice President 1101 17th Street, N.W. Suite 900 Washington, DC 20036 Phone: (202) 721-0230 Fax: (202) 833-4882 Copy to: Rubin, Baum, Levin, Constant & Friedman Attn: Barry A. Adelman, Esq. 30 Rockefeller Plaza New York, NY 10112 Phone: (212) 698-7700 Fax: (212) 698-7825 1.28 RIGHT OF ACCESS Each party shall provide the other access to its facilities reasonably required in connection with the performance of the respective obligations under this Agreement. No charge shall be made for such access. Reasonable prior notification will be given when access is required. Neither party shall require releases of any personal rights in connection with visits to its premises. 1.29 INDEPENDENT CONTRACTOR All work performed by one party under this Agreement shall be performed as an independent contractor and not as an agent of the other and no persons furnished by the performing party shall be considered the employees or agents of the other. The performing party shall be responsible for its employees' compliance with all laws, rules, and regulations while performing work under this Agreement. 1.30 CUSTOMER'S REMEDIES a) Customer's exclusive remedies and the entire liability of Seller and its affiliates and their employees and agents for any claim, loss, damage, or expense of Customer or any other entity arising out of this Agreement, or the use or performance of any Product, Licensed Material, or Service, whether in an action for or arising out of breach of contract, tort, including negligence indemnity, or strict liability shall be as follows: (1) For infringement-the remedy set forth in the "PATENTS, TRADEMARKS, AND COPYRIGHTS" clause; (2) For the performance of Products, Software and Services, or claims that they do not conform to a warranty-the remedy set forth in the applicable "WARRANTY" clause; (3) For "Class A and B Changes" - the obligations set forth in Section 2.10. (4) For tangible property damage and personal injury caused by negligence or willful misconduct of Seller, its employees, subcontractors or agents-the amount of direct damage; (5) For delays in System Acceptance-the remedy set forth in the "Completion Delay" clause; (6) For everything other than as set forth above--the amount of direct damages not to exceed $2,000,000 per occurrence plus awarded counsel fees and costs. b) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, NEITHER CUSTOMER NOR SELLER NOR THEIR AFFILIATES AND THEIR EMPLOYEES AND AGENTS SHALL BE LIABLE FOR INCIDENTAL, INDIRECT, OR CONSEQUENTIAL DAMAGE OR LOST PROFITS, REVENUES OR SAVINGS ARISING OUT OF THIS AGREEMENT, OR THE USE OR PERFORMANCE OF ANY PRODUCT, LICENSED MATERIALS OR SERVICES, WHETHER IN AN ACTION FOR OR ARISING OUT OF BREACH OF CONTRACT, TORT, INCLUDING NEGLIGENCE, OR STRICT LIABILITY. THIS CLAUSE 1.30(b) SHALL SURVIVE FAILURE OF AN EXCLUSIVE OR LIMITED REMEDY, PROVIDED THAT THIS CLAUSE SHALL NOT BE DEEMED TO LIMIT CUSTOMER'S RIGHTS UNDER SECTION 1.25, "PATENTS, TRADEMARKS AND COPYRIGHTS". c) Customer shall give Seller prompt notice of any claim and Seller shall give Customer prompt notice of any claim. Any action or proceeding against Seller or Customer must be brought within twenty-four (24) months after the cause of action accrues. 1.31 FORCE MAJEURE Except with respect to Customer's obligation to make timely payments under this Agreement, neither party shall be held responsible for any delay or failure in performance to the extent that such delay or failure is caused by a Force Majeure. Nothing contained herein or elsewhere shall impose any obligation on either party to settle any labor difficulty. If the Force Majeure event prevents performance for a period of thirty (30) days, then the party adversely effected by the nonperformance may terminate this Agreement without recourse or obligation, except for any benefit already received hereunder. 1.32 ASSIGNMENT Except as provided in this clause, neither party shall assign this Agreement or any right or interest under this Agreement, nor delegate any work or obligation to be performed under this Agreement, (an "assignment") without the other party's prior written consent. Any attempted assignment in contravention of this shall be void and ineffective. Nothing shall preclude a party from employing a mutually acceptable subcontractor, whose acceptance shall not be unreasonably withheld by any party, in carrying out its obligations under this Agreement. A party's use of such subcontractor shall not release the party from its obligations under this Agreement. Notwithstanding the foregoing, Seller has the right to assign this Agreement and to assign its rights and delegate its duties under this Agreement, in whole or in part, at any time and without Customer's consent, to any present or future Subsidiary or Affiliate of Seller or to any combination of the foregoing. Such assignment or delegation shall not release Seller from any further obligation or liability thereon. Seller shall give Customer prompt written notice of the assignment. Customer has the right to assign this Agreement and to assign its rights and delegate its duties under this Agreement, in whole or in part, at any time and without Seller's consent, to its parent or to any present or future Subsidiary or Affiliate of Customer or its parent providing tariffed services, provided that Seller may require changes to the methods of payment and/or refuse to extend credit in the same amount or manner as to Customer's assignor. Customer shall give Seller advance written notice of the assignment promptly upon anticipation of such assignment. In addition, Customer shall have the right to assign this Agreement, in whole or in part, other than the provisions relating to financing and deferred payment, to an entity to whom it sells a System to be operated by such assignee entity in place, provided that such assignee entity is not a competitor of Seller and has the financial resources to meet Customer's obligations under this Agreement. For purposes of this clause, the term "Agreement" includes this Agreement, any subordinate contract placed under this Agreement and any order placed under such Agreement or subordinate contract. 1.33 PUBLICITY Each party shall submit to the other proposed copy of all Advertising wherein the name, trademark, code, specification or service mark of the other party or its affiliates is mentioned; and neither party shall publish or use such Advertising without the other's prior written approval. Such approval shall be granted as promptly as possible (usually within ten (10) days), and may be withheld only for good cause. 1.34 APPLICABLE LAW The construction and interpretation of, and the rights and obligations of the parties pursuant to this Agreement, shall be governed by the laws of the State of New York, except for its rules on conflicts of law. 1.35 SURVIVAL OF OBLIGATIONS The parties' rights and obligations which, by their nature, would continue beyond the termination, cancellation, or expiration of this Agreement, shall survive such termination. cancellation, or expiration, including, for example, the provisions of Sections 1.10.1.1.2, 1.26, 1.30, 2.10, 2.11 and 3.8 and the rights of Customer to the price protections set forth in Attachment A which extend beyond the five (5) year term of this Agreement. 1.36 SEVERABILITY If any provision in this Agreement shall be held to be invalid or unenforceable, the remaining portions shall remain in effect. In the event such invalid or unenforceable provision is considered an essential element of this Agreement, the parties shall promptly negotiate a replacement provision. 1.37 NON-WAIVER No waiver of the terms and conditions of this Agreement, or the failure of either party strictly to enforce any such term or condition on one or more occasions shall be construed as a waiver of the same or of any other term or condition of this Agreement on any other occasion. 1.38 CUSTOMER RESPONSIBILITY Customer shall, at no charge to Seller, provide Seller with such electrical and environmental conditions, technical information, data, technical support, or assistance in Customer's possession as may reasonably be required by Seller to fulfill its obligations under this Agreement, any subordinate agreement, or order. If Customer fails to provide the required conditions, information, data, support, or assistance, Seller shall be discharged from any such obligation. 1.39 PUBLICATION OF AGREEMENT The parties shall keep the provisions of this Agreement and any order submitted hereunder confidential except as reasonably necessary for performance hereunder and except to the extent disclosure may be required by applicable laws, regulations or the Financing Arrangements set forth on Attachment B or to other prospective lenders or investors of Customer, in which latter case, the party required to make such disclosure shall promptly inform the other prior to such disclosure in sufficient time to enable such other party to make known any objections it may have to such disclosure. The disclosing party shall take all reasonable steps to secure a protective order or otherwise assure that the Agreement or order will be withheld from the public record. 1.40 ARBITRATION If a dispute arises out of or relates to this Agreement, or its breach, the parties agree to escalate such dispute to their respective senior executives for good faith negotiations seeking a mutually agreeable resolution. This demand for escalation shall be in writing and notice shall be served in accordance with the notice provision of this Agreement. If the dispute is not resolved through such escalation within fifteen (15) days after the date of escalation, either party shall have the right to submit the dispute to a sole mediator selected by the parties which shall be a nonbinding mediation. If not thus resolved, it shall be referred to a sole arbitrator, experienced in wireless infrastructure and transactions, selected by the parties within thirty (30) days of the mediation or, in the absence of such selection, by the American Arbitration Association, and judgment on the award may be entered in any court having jurisdiction. The decision of the arbitrator shall be final and binding on both parties. The arbitrator may determine issues of arbitrability, but may not award punitive damages or limit, expand or otherwise modify the terms of this Agreement. All post award proceedings shall be governed by the United States Arbitration Act. Each party shall bear the cost of preparing and presenting its case. The cost of the arbitration, including the fees and expenses of the arbitrator, will be shared equally by the parties unless the award otherwise provides. The parties, their representatives, other participants and the mediator and arbitrator shall hold the existence, content and result of mediation and arbitration in confidence, except as such disclosure may be necessary for the purpose of recording or otherwise acting upon the arbitrator's award. 2. ARTICLE II PROVISIONS APPLICABLE TO THE PURCHASE OF PRODUCTS 2.1 GENERAL The provisions of this Article II shall be applicable to the purchase of Products from Seller. If Software is also to be licensed for use on a purchased Product, or if a Product is also to be engineered or installed by Seller, the provisions of Articles III and IV shall also be applicable. 2.2 PRODUCT FEATURES COMMITMENT 2.2.1 Duplexing Upgrades a) On or before June 30, 1998, Seller shall make available to Customer duplexing upgrades to base stations. The duplexers shall meet the specifications set forth in Attachment G. Thereafter, Seller shall be responsible, at its expense, for delivery and installation of duplexers at all sites constructed prior to their general availability. b) If Seller fails to make available a specification compliant duplexer on or before July 30, 1998, Customer shall have the option of deploying a Simplex Network in all those Markets awarded to Seller and which Customer has elected to construct. Seller shall be responsible for the reasonable and actual costs incurred by customer in retrofitting sites and changing equipment, together with all incremental recurring costs directly caused by the deployment of the Simplex Networks. In analyzing whether or not to exercise this option, Customer shall take into account all relevant factors including, but not limited to, changes in Market launch dates, the number of cell sites deployed as of July 30, 1998, and Seller's development schedule. 2.2.2 Filter Solution a) For an interim solution in the New Orleans, Little Rock and Memphis Markets, (or any other Market with the same technical constraints;), and at no additional costs to Customer, Seller shall provide 60MHz wide transmit and receive filters, provide up to fifteen (15) Type III stations per Market at the price of Type I base stations and, in New Orleans only, deliver and install an additional EDRU for each EDRU installed (up to a maximum of 660 EDRUs). For every cell site in New Orleans the interim solution shall be deployed on or before August 30, 1998. b) By September 30, 1999, Seller will deliver and install in the New Orleans Market only a complete 60MHz filter product which meets the specifications set forth on Attachment G. If Seller fails to provide a specification compliant 60MHz filter on or before the end of September 30, 1999, Seller shall be responsible for the cost of any additional equipment required to meet Customer's functionality and license buildout requirements. 2.2.3 Rural Service Seller agrees to provide reasonable research and development efforts to explore a solution for the economic provision of PCS Services in Customer's more rural service areas. These efforts shall include "first office application" status, "preferred test bed" status as well as preferred involvement in any other testing or study of the use of PCS spectrum or development of applications utilizing PCS spectrum provided that Customer's network topology is consistent with Seller's requirements for the "first office application", "preferred test bed" or other tests or studies. 2.2.4 TDMA PCS Microcell Seller will provide a TDMA PCS Microcell on or before July 30, 1999 for inbuilding applications. It is anticipated that there will be fewer than ten (10) applications per market in 1999. If Seller fails to meet this commitment, it will provide TDMA PCS Minicell equipment on an equivalent per radio price basis. 2.2.5 Other Customer Needs Seller agrees to support Customer's other customer needs including WCS and LMDS as well as Customer CLEC requirements. This support shall include "first office applications", "preferred test bed" status, as well as preferred involvement in any other testing or study of the use of WCS and LMDS spectrum or development of applications utilizing WCS and LMDS spectrum provided that Customer's network topology is consistent with Seller's requirements for the "first office application", "preferred test bed" or other tests or studies. 2.3 PRODUCT AVAILABILITY Seller shall notify Customer, usually at least six (6) months, before Seller discontinues accepting orders for a Seller's Manufactured Product sold under this Agreement. Where Seller offers a functionally equivalent Product for sale, the notification period may vary. 2.4 DOCUMENTATION Seller shall furnish to Customer, at no additional charge, two copies of documentation (one CD Rom and one printed) for the Products provided hereunder sufficient to operate and maintain such Products. Such documentation will be that customarily provided by Seller to its Customers at no additional charge. Such documentation shall be provided prior to, with, or shortly after the shipment of the Products from Seller to Customer. Additional copies of the documentation are available at prices set forth in the Customer Price List. 2.5 PRODUCT COMPLIANCES Seller represents that a Product furnished hereunder shall comply, to the extent required, with the requirements of Part 24 of the Federal Communication Commission's Rules and Regulations pertaining to personal communications services in effect upon delivery of such Product. In addition, Seller represents that a Product furnished hereunder shall comply, to the extent required, with the requirements of Subpart J of Part 15 of the Federal Communication Commission's Rules and Regulations in effect upon delivery of such Product, including those sections concerning the labeling of such Product and the suppression of radio frequency and electromagnetic radiation to specified levels. Seller makes no undertaking with respect to harmful interference caused by (i) installation, repair, modification or change of Products or Software by other than Seller, its employees, subcontractors or agents; (ii) Products being subjected to misuse, neglect, accident or abuse by other than Seller, its employees, subcontractors or agents; or (iii) Products or Software being used in a manner not In accordance with operating instructions or in a suitable installation environment or operations of other equipment in the frequency range reserved for Customer within the licensed Area. Seller assumes no responsibility under this clause for items not specified or supplied by Seller. Type acceptance or certification of such items shall be the sole responsibility of Customer. 2.6 PRODUCT CHANGES Prior to the shipment of a Product, Seller may at any time make changes in a Product furnished pursuant to this Agreement, or modify the drawings and published specifications relating thereto, or substitute Products of later design to fill an order, provided the changes, modifications, or substitutions under normal and proper use do not impact upon the Form, Fit, or Function of an ordered Product as identified in Seller's specifications. Seller shall notify Customer, usually at least one (1) year, before Seller discontinues accepting orders for an item of Seller's Manufactured Product sold u this Agreement. Where Seller offers a product for sale that is equivalent in Form, Fit, and Function, the notification period may vary. Seller further agrees that, in issuing Licensed Material Updates and Licensed Material Generic Releases of Network Wireless System Licensed Materials, Seller shall assure that any changes and modifications to existing features and functionalities effected thereby shall not result in a Material Service Impact. Seller agrees to maintain a standard, supported, generic version of the Licensed Materials necessary for or integral to operation of Products furnished by Seller pursuant to this Agreement for a period of not less than seven (7) years from the effective date of this Agreement. If Seller ceases to maintain a standard, supported, generic version of any such Licensed Materials furnished by Seller pursuant to this Agreement, and such maintenance is not available from another entity, then Seller shall furnish Customer, under a suitable confidentiality agreement, to the extent that it is authorized to do so, the then existing Licensed Materials Source Code, Licensed Materials development programs, and associated documentation for such standard version to the extent necessary for Customer to maintain and enhance for its own Use the standard version of that Licensed Material for which it has the right to Use. Seller agrees that it shall use all reasonable efforts to qualify as Seller's Manufactured Product any Vendor Items orderable under this Agreement, the unavailability of which would result in a Material Service Impact. If such efforts are successful, such item shall thereafter be treated as Seller Manufactured Product for purposes of Section 2.7 "CONTINUING PRODUCT/SUPPORT- PARTS AND SERVICES." If such item cannot be so qualified, Seller agrees that it will use all reasonable efforts to establish or locate a secondary source for such item, to identify an item of equivalent Form, Fit, and Function, or to take other steps, so as to minimize the circumstances in which Seller shall not be able to provide the notice of discontinuance and the continuing supply of Repair Parts and repair Services as contemplated by Section 2.7 "CONTINUING PRODUCT/SUPPORT-PARTS AND SERVICES." 2.7 CONTINUING PRODUCT SUPPORT- PARTS AND SERVICES In addition to repairs provided for under Product Warranty, Seller offers repair Services and Repair Parts in accordance with Seller's repair and Repair Parts practices and term and conditions then in effect, for Seller's Products furnished pursuant to this Agreement. Such repair Services and Repair Parts shall be available while Seller is manufacturing or stocking such Products or Repair Parts, but in no event less than five (5) years after such Product's discontinued availability effective date. Seller may use either new, remanufactured, reconditioned, refurbished, or functionally equivalent Products or parts in the furnishing of repairs or replacements under this Agreement. If during the agreed to support period Seller is unable to provide Repair Part(s) and/or repair Service(s) and a functionally equivalent replacement has not been designated, Seller shall advise Customer, by written notice prior to such discontinuance to allow Customer to plan appropriately, and if Seller is unable to identify another source of supply for such Repair Part(s) and/or repair Service(s), Seller shall provide Customer, upon request, with non- exclusive licenses for Product Manufacturing Information to the extent Seller can grant such licenses, so that Customer will have sufficient information to have manufactured, or obtain such Service or parts from other sources. License terms will be in accordance with Seller's licensing procedures then in effect. 2.8 SPECIFICATIONS Upon request, Seller shall provide to Customer, at no charge, two (2) copies of Seller's available commercial specifications applicable to Products orderable hereunder. Additional copies are available at the applicable price therefor. 2.9 CUSTOMER TECHNICAL SUPPORT Seller provides Customer Technical Support for the PCS through the Customer Technical Support Organization (CTSO). The CTSO provides diagnostic center support, performance measurement and system engineering services at its then standard prices, term and conditions for such services. Special, unusual or customized services may be billable, depending upon the nature of the request. Seller shall provide Customer access to emergency technical diagnostic assistance Service, twenty-four (24) hours a day, 365/366 days per year. Such Service is currently provided at no charge to Seller's customers. Seller agrees that during the term of this Agreement it shall not commence to charge Customer for such Service unless and until it commences generally to charge its other customers in comparable circumstances for such Services. In all cases, however, such Service shall be free of charge to Customer if it relates to service affecting warranty defects. 2.9A CLASS A AND B CHANGES Class A and B Changes - After a Product has been shipped to Customer, if Seller issues a Class A or Class B Change, or where modification to correct an error in field documentation is to be introduced, Seller shall promptly notify Customer of such change. Customer may notify Seller of any problems which it considers to require Class A Change. Seller shall then make a determination as to whether such problem requires a Class A Change. However, if Customer disagrees with Seller's determination, then, Customer may submit such disagreement to arbitration in accordance with Section 1.40. With respect to a Product which is subject to a Class A Change, Seller will implement such change, at its expense, if such change is announced (or Customer notifies Seller that such change is required) within seven (7) years from the date of shipment of the applicable Product, by, at Seller's option, either (1) modifying the Product at Customer's site; (2) modifying the Product which Customer has returned to Seller in accordance with Seller's instructions; or (3) replacing the Product requiring the change with replacement Product for which such change has already been implemented. If Seller did not engineer the original Product and, accordingly, office records are not available to Seller, and/or Seller did not install the original Product, Seller will, at its expense, provide the generic Class A Change information and associated parts for Customer's use in applying such change, if it is announced within seven (7) years from the date of shipment of that Product. Notwithstanding the above, in the event that the first attempt to implement such change cannot reasonably be expected to be successful without the on-site assistance of Seller, Seller also shall, at no expense to Customer, furnish reasonable amounts of on-site assistance to effect the first such change. If Seller determines that the applicable Product or part thereof is readily returnable, Customer, at its expense, shall remove such Product or part and return it to Seller's designated location and Seller, at its expense, shall implement such change (or replace it with Product or part for which such change has already been implemented) and return such changed (or replacement) Product or part to Customer's designated location within the Territory. Reinstallation shall be performed by Customer, at its expense. In unusual situations where Customer's spares or plug-in stocks are not available to implement a rotational program for a Class A Change, Seller will provide a seed stock. In administering the Class A Change procedure provided for herein, Seller shall use all reasonable efforts to assure that implementation of a Class A Change will not result in the System being out of service or otherwise result in a Material Service Impact. If, in spite of such efforts, such an impact would occur during implementation of the change, Seller shall work with Customer and Seller shall use its best efforts to establish procedures to ensure that such impact will be minimized and limited to off peak hours. If Customer does not make or permit Seller to make a Class A Change as stated above within one (1) year from the date of change notification or two (2) years in the case of Customer Change Notices (CCNs), subsequent changes, repairs or replacements affected by the failure to make such change may, at Seller's option, be billed to Customer whether or not such subsequent change, repair or replacement is covered under warranty. If requested, Class A Changes announced more than seven (7) years from date of shipment will be implemented at Customer's expense. If Seller issues a Class B Change after a Product has been shipped to Customer, Seller shall promptly notify Customer of such Class B Change. If such Class B Change is being generally offered to Seller's customers then Seller shall perform such Class B Change for Customer at no cost to Customer. With respect to Class B Changes not being generally offered to Seller's customers, Customer may request Seller's performance of such Class B Change; provided, however, that Seller may charge Customer its then-standard rates for such Class B Change. All change notifications for Class A Changes and Class B Changes shall contain the following information: (1) a description of the change; (2) reason(s) for the change; (3) the price impact such change will have, if known, (4) the effective date of the change; (5) the procedure for implementing the change, and (6) the implementation schedule for the change. In administering the Class A Change procedure provided for in this Section 2.10, and where the items necessary to effect a change are in limited availability, Seller agrees to allocate reasonably such items among its customers in a way that does not discriminate against Customer on account of any lesser volume of business they may give to Seller than other customers may give to Seller. Epidemic Failures - In the event that Customer experiences failures of a Product, which Customer's Chief Technical Officer (the "Customer CTO") believes in good faith to be excessive, the Customer CTO may bring such failures to the attention of Seller by giving written notice to Seller and Seller shall give highest priority to the remedy of the cause of such failures. If such failures are as a result of defects or nonconformitites which would be covered by the applicable warranty provisions of this Agreement, they shall be dealt with under this Section 2.10 as a matter requiring a Class A Change. If such failures have occurred in a circuit board, radio base station subassembly or other Product that is intended for deinstallation and reinstallation by Customer in the ordinary course of business, and such failures have materially depleted Customer's spares complement of such board, subassembly or Product, Seller shall, without charge to Customer, supply to Customer such additional units of the affected board, subassembly, or Product as are necessary to maintain an adequate emergency replacement stock, until implementation of a permanent remedy. Upon implementation of the permanent remedy, such additional boards, subassemblies or Products shall, at Customer's expense, be returned to Seller in the same condition as originally supplied by Seller, reasonable wear and tear accepted. Where excessive failure occurs in a Product the unavailability of which would result in a Material Service Impact, Seller agrees to use, at no additional cost to Customer, expedited freight handling when forwarding fixes, replacements or additional Products. Disputes - The parties acknowledge that because the classification of charges will determine whether charges to Products must be performed at Seller's expense, the parties may dispute the classification given to an identified problem, including alleged problems of excessive failures identified by the Customer CTO. If the Customer CTO in good faith contends that such failures are resulting or shall result in a Material Service Impact or, if not remedied, are likely to result in such an impact, Seller shall, upon written request of the Customer CTO, undertake to remedy the identified problem hereunder. If it is ultimately determined that the problem should not be classified as a problem requiring Class A Change treatment, Seller shall be entitled to invoice Customer at Seller's then-standard charges for the work to remedy such problem. 2.10 PRODUCT WARRANTY a) Seller warrants to Customer only, that: (i) Seller shall convey free and clear title to the Products to Customer and, as of the date title to Products passes to Customer, Seller will have the right to sell, transfer, and assign such Products and the title conveyed by Seller shall be good; (ii) Seller's Manufactured Products will be free from defects in material and workmanship, will conform to and perform in accordance with Seller's applicable Specification (Attachment D), will operate in accordance with Attachment D when installed on or adjacent to electrical high voltage transmission towers, and will, when used as designed, create no material adverse health effects; (iii) With respect to Vendor Items, Seller, to the extent permitted, does hereby assign to Customer the warranties given to Seller by its vendor of such Vendor Items. Such assignment will be effective on the date of shipment of such Vendor Items. With respect to Vendor Items recommended by Seller in its Specifications for which the vendor's warranty cannot be assigned to Customer, or if assigned, less than sixty (60) days remain of the vendor's warranty at the time of assignment, Seller warrants for sixty (60) days from the date of shipment or, if installed by Seller, on Acceptance by Customer or thirty (30) days from the date Seller submits its notice of completion of its installation whichever is sooner, that such Vendor's Items will be free from defects in material and workmanship. b) The Warranty Periods listed below are applicable to Seller's Manufactured Products furnished pursuant to this Agreement, and unless otherwise stated begin upon delivery to the destination specified in Customer's order or, if installed by Seller, on the first day of the next full calendar month following Acceptance by Customer or on the first day of the second full calendar month following the date Seller submits its notice of completion of its installation, whichever is sooner:
Repaired or Class of New Replacement Product Product* Product or Part** - ------- -------- ----------------- PCS Switching Center and 24 Months 6 Months Base Station Hardware Transmission Systems - -All Transmission Products in the "2000 Product Family" 60 Months 6 Months - -D4 Circuit Packs 60 Months 6 Months - -SLC Circuit Packs 60 Months 6 Months - -SLC Series 5 Plug-ins 60 Months 6 Months - -T1 Repeaters 60 Months 6 Months - -DDM-1000 Circuit Packs 60 Months 6 Months - -Other Transmission Products 24 Months 6 Months Energy Systems 12 Months 3 Months All other Network Systems Products 12 Months 3 Months
* Refer to the SOFTWARE WARRANTY CLAUSE for associated Software warranties. ** The Warranty Period for a repaired Product or part thereof repaired under or for a replacement Product or part thereof furnished in lieu of repair under this Warranty is the period listed or the unexpired term of the new Product Warranty Period, whichever is longer. Notwithstanding anything in this Agreement to the contrary, Customer's use of any part of any system In Revenue Service (or to provide training or hands-on experience to Customer's personnel) shall, if prior to Seller's notice of installation completion, commence the applicable warranty period; provided; however, this provision shall not apply to training provided by Seller nor to the extent that Customer's personnel merely familiarize themselves with the Initial Order without actual operation of the Products. c) If, under normal and proper use during the applicable Warranty Period, a defect or nonconformity is identified in a Product furnished by Seller, and Customer notifies Seller in writing of such defect or nonconformity promptly after Customer discovers such defect or nonconformity and follows Seller's instructions regarding the return of the defective or nonconforming Product, Seller shall take the following action: (i) Seller, at its option, shall attempt first to repair or replace such Product without charge at its facility or, if not feasible, provide a refund or credit based on the original purchase price, and installation charges if installed by Seller, provided however, if such removal will cause a Material Service Impact, Customer's consent shall be required prior to any such removal. Customer must return the Product to Seller for repair and replacement, except as noted below. (ii) Where Seller has elected to repair or replace a Product which has been installed by Seller and Seller ascertains that the Product is not readily returnable by Customer, Seller will repair or replace the Product at Customer's site. d) If Seller has elected to repair or replace a defective Product, Customer is responsible for removing and reinstalling and, in addition, for on-site repair or replacement of cable and wire Products, Customer must make the Product accessible for repair or replacement, and is responsible to restore the site. e) Products returned for repair or replacement will be accepted by Seller only in accordance with its instructions and procedures for such returns. The transportation expense associated with returning such Product to Seller shall be borne by Customer. Seller shall pay the cost of transportation of the repaired or replacing Product to the destination designated by Customer within the Territory. f) Defective or nonconforming Products or parts which are replaced hereunder shall become Seller's property. Seller may use either new, remanufactured, reconditioned, refurbished, or functionally equivalent Products or parts in the furnishing of repairs or replacements under this Agreement. g) If Seller determines that a Product for which warranty Service is claimed is not defective or not nonconforming, Customer shall pay Seller's costs of handling, inspecting, testing, and transporting and, if applicable, traveling and related expenses. h) Seller make no warranty with respect to defective conditions or nonconformities resulting from the following: Customer modifications (other than in accordance with Seller's instructions), misuse, neglect, accident or abuse; improper wiring, repairing, splicing, alteration, installation, storage or maintenance by other than Seller, its employees, subcontractors, representatives or agents; use in a manner not in accordance with Seller's or vendor's specifications, or operating instructions or failure of Customer to apply previously applicable Seller modifications and corrections. In addition, Seller makes no warranty with respect to Products which have had their serial numbers or months and year of manufacture removed, altered or with respect to expendable items, including, without limitation, fuses, light bulbs, motor brushes, and the like. i) THE FOREGOING PRODUCT WARRANTIES ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER EXPRESS AND IMPLIED WARRANTIES, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. CUSTOMER'S SOLE AND EXCLUSIVE REMEDY SHALL BE SELLER'S OBLIGATION TO REPAIR, REPLACE, CREDIT OR REFUND AS SET FORTH ABOVE IN THIS WARRANTY. If Customer and Seller have a disagreement as to whether or not a problem is a defect or non-conformity covered by this warranty, Seller agrees to correct the problem and bill Customer for the corrective action under Section "Invoices and Terms of Payment" of the Agreement. Seller will segregate such bills. Such disputed warranty claims will be subject to resolution by the arbitration in accordance with Section 1.40 of this Agreement, and if resolved in Customer's favor, Seller agrees to credit Customer for the costs of corrective action covered by warranty. Seller agrees that if Customer acquired equipment, software, or licensed materials (including, without limitation, radio frequency and network equipment, but not including components internal to Products furnished under this Agreement) from a source other than Seller, and if Customer installs such an item in or interconnects such an item with any PCS System, Products or Licensed Materials obtained under this Agreement, Seller agrees that Seller's warranties hereunder shall not be voided or affected; provided, however, Seller's warranties shall not apply to damage, defects, nonconformities, or degradation in performance in Products and/or Licensed Materials purchased (or, with respect to Licensed Materials, licensed) under this Agreement to the extent they are caused by installation or interconnection of the item in violation of Seller's instructions, which such instructions shall be based upon reasonable and appropriate technical considerations, or caused by (but not simply revealed by) such installed or interconnected items. Seller shall be entitled to bill Customer Seller's Standard Charges for Seller's efforts to identify and/or correct any such damage, defect, nonconformity, or degradation in performance so caused, and to test and transport the corrected item. Nothing in this paragraph shall itself be deemed to require Seller to publish interface information or otherwise to facilitate such installation or interconnection of items not obtained from Seller. If as a result of a defect or non-conformity covered by this warranty a Material Service Impact is experienced, Seller shall at its sole cost and expense repair or correct the problem or replace the defective Products or Licensed Materials and ship any required replacement Products (or components thereof) or replacement Licensed Materials to Customer as promptly as possible. If such repair, replacement or installation or replacement Products or Licensed Materials require the Services of Seller service personnel at Customer's sites, Seller shall, at its sole cost and expense, dispatch such service personnel as are required to correct such problem as promptly as possible upon being notified thereof by Customer. The warranties provided for Licensed Materials are transferable to the extent provided in Section 3.11 "LIMITED TRANSFERABILITY" of this Agreement. The warranties on Products (including any warranties for the installation and repair thereof) shall be transferable along with the Products with which they are associated. No charge shall be made by Seller to Customer in respect of any such transfer of warranty; but, Seller shall have the right to charge the transferee a nominal fee to compensate Seller for registering the transferee as entitled to the transferred warranty and otherwise readying Seller to react to warranty claims made by the transferee. Warranties provided in this Agreement are otherwise non- transferable. Notwithstanding the foregoing, if as a result of the transfer of Licensed Materials or Products it would be used or operated in a country other than the United States, the warranties furnished hereunder shall not be transferable; however, should the Warranty Period for such item have not expired by the time of such transfer, Seller agrees to offer to the transferee Seller's standard warranty for such item offered (or intended to be offered) by Seller in such country, if any, for the remainder of such unexpired Warranty Period. Furthermore, Seller shall have no obligation hereunder to honor any warranty claim made by any equipment manufacturer competitor of Seller, including any party whose principal business is the sales of new or used telecommunications equipment, it being the intention of the parties that only claims from a user of such equipment directly in the provision of telecommunications services to the public are authorized under any transferred warranty. 3. ARTICLE III PROVISIONS APPLICABLE TO THE LICENSING OF SOFTWARE 3.1 GENERAL The provisions of this Article apply to the granting of licenses pursuant to this Agreement by Seller to Customer for Licensed Materials. 3.2 LICENSE Upon delivery of Licensed Materials, but subject to payment of all applicable license fees including, but not limited to, any continuing up-date fees, Seller grants to Customer a perpetual, personal, nontransferable, except as set forth in Section 3.11, and nonexclusive license pursuant to this Agreement to use Licensed Materials in the Territory with either the Designated Processor or temporarily on any comparable replacement, if the Designated Processor becomes inoperative, until the Designated Processor is restored to operational status. Customer shall use Licensed Materials only for its own internal business operation. The license grants Customer no right to and Customer will not sublicense such Licensed Materials, or modify, decompile, or disassemble Software furnished as object code to generate corresponding Source Code, 3.3 TITLE, RESTRICTIONS AND CONFIDENTIALITY All Licensed Materials (whether or not part of Firmware) furnished by Seller, and all copies thereof made by Customer, including translations, compilations, and partial copies are the property of Seller. Except for any part of such Licensed Materials which is or becomes generally known to the public through acts not attributable to Customer, Customer shall hold such Licensed Materials in confidence, and shall not, without Seller's prior written consent, disclose, provide, or otherwise make available, in whole or in part, any Licensed Materials to anyone, except to its employees having a need- to-know. Customer shall not copy Software embodied in Firmware. Customer shall not make any copies of any other Licensed Materials except as necessary in connection with the rights granted hereunder. Customer shall reproduce and include any Seller copyright and proprietary notice on all such necessary copies of the Licensed Materials. Customer shall also mark all media containing such copies with a warning that the Licensed Materials are subject to restrictions contained in an agreement between Seller and Customer and that such Licensed Materials are the property of Seller. Customer shall maintain records of the number and location of all copies of the Licensed Materials. Customer shall take appropriate action by instruction, agreement, or otherwise, with the persons permitted access to the Licensed Materials so as to enable Customer to satisfy its obligations under this Agreement. When the Licensed Materials are no longer needed by Customer, or if Customer's license is canceled or terminated, Customer shall return all copies of such Licensed Materials to Seller or follow written disposition instructions provided by Seller. 3.4 CHANGES IN LICENSED MATERIALS Prior to shipment, Seller may at any time modify the specifications relating to its Licensed Materials. Seller may substitute modified Licensed Materials to fill an order, provided the modifications, under normal and proper Use, do not materially adversely affect the Use, Function, or performance of the ordered Licensed Materials or result in a Material Service Impact. Unless otherwise agreed, such substitution shall not result in any additional charges to Customer with respect to licenses for which Seller has quoted fees to Customer. If Seller has not provided two (2) archival copies of the Licensed Materials, Customer may also make and maintain an archival copy of the Licensed Materials for so long as such Licensed Materials is relevant to Customer's operations and provided that the original license issued for such Licensed Materials is valid and effective. Moreover, nothing in this Agreement shall be deemed to prevent Customer from making backup copies, with Seller's pre- approval, which will not be unreasonably withheld, of the disk drive of the Designated Processor on which Licensed Materials furnished hereunder are loaded and run, but all such copies to the extent they contain a copy of such Licensed Materials shall be subject to return, erasure, or destruction as provided in this section. 3.5 MODIFICATIONS TO SOFTWARE Customer may request Seller to make changes to Seller's Software. Upon receipt of a document describing in detail the changes requested by Customer, Seller will respond in writing to Customer within ninety (90) days. If Seller agrees to undertake such modifications, the response shall quote a proposed delivery date and a fee for a license under such modified Software. 3.6 MODIFICATION BY CUSTOMER Unless otherwise agreed, Customer is not granted any right to modify Software furnished by Seller under this Agreement. 3.7 RELATED DOCUMENTATION Seller shall furnish to Customer, at no additional charge, two copies of the Related Documentation for Software furnished by Seller pursuant to this Agreement. Such Related Documentation will be that customarily provided by Seller to its Customers at no additional charge. Such Related Documentation shall be provided prior to, with, or shortly after provision of Software by Seller to Customer. Additional copies of the Related Documentation are available at prices set forth in the Customer Price List. 3.8 SOFTWARE WARRANTY a) Seller warrants to Customer only that: (i) Software developed by Seller and Software integral to the Products provided to Customer will, upon shipment, be free from those defects which materially affect performance in accordance with Seller's Specifications and Seller further warrants that it has the right to grant the licenses to Use Software it grants under this Agreement; and (ii) With respect to Software not covered in paragraph (a), sub-paragraph (i), Seller to the extent permitted, does hereby assign to Customer the warranties given to Seller by its supplier of such Software. (iii) The TDMA optional features buyout package will provide Customer with the same features and functionality offered to AT&T Wireless as of the date of System Acceptance for the Initial System. b) The Warranty Periods listed below are applicable to Software developed by Seller and Software integral to the Products provided to Customer, the Related Documentation associated with such Software, and the medium on which such Software is recorded, unless otherwise stated. Software Warranty Period -------- --------------- PCS Switching Center 1 Year and Base Station Transmission System 1 Year All Other 1 Year The Warranty Period for media and Related Documentation shall commence on the same date as commences the Warranty Period for their associated Software. The Warranty Period for PCS Switching Center and Base Station Software (including any prior Software Update issued to Customer in respect thereto) expires upon installation of any subsequent Software Update or Software Generic Release for such Software (or Software Update). c) If, under normal and proper use during the applicable Warranty Period, Software covered in paragraph (a), subparagraph (i) proves to have a defect, which materially affects its performance in accordance with the specifications referenced in the order, and Customer notifies Seller in writing of such defect promptly after Customer discovers or should have discovered such defect and follows Seller's instructions, if any, regarding return of defective Software, Seller shall at its option, attempt first to either correct or replace such Software without charge or if correction or replacement is not feasible, provide a refund or credit based on the original license fee, provided however, if such removal will cause a Material Service Impact, Customer's consent shall be required prior to any such removal. d) Software returned for correction or replacement will be accepted by Seller only in accordance with its instructions and procedures for such returns. The transportation expense associated with returning such Software to Seller shall be borne by Customer. Seller shall pay the costs of transportation of the corrected or replacing Software to the destination designated by Customer within the Territory. e) If Seller determines that Software for which warranty Service is claimed is not defective or nonconforming, Customer shall pay Seller's costs of handling, inspecting, testing and transporting and, if applicable, traveling and related expenses. f) Seller makes no warranty with respect to defective conditions or nonconformities resulting from the following: Customer modifications (other than in accordance with Seller's instructions), misuse, neglect, accident, or abuse; installation, or maintenance by other than Seller, its employees, subcontractors, representatives, or agents; use in a manner not in accordance with Seller's specifications, operating instructions, or license-to-use; or failure of Customer to apply previously applicable Seller modifications and corrections. Moreover, no warranty is made that Software will run uninterrupted or error free. g) THE FOREGOING SOFTWARE WARRANTIES ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER EXPRESS AND IMPLIED WARRANTIES, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. CUSTOMER'S SOLE AND EXCLUSIVE REMEDY SHALL BE SELLER'S OBLIGATION TO CORRECT, REPLACE, CREDIT, OR REFUND AS SET FORTH ABOVE IN THIS WARRANTY. If Customer and Seller have a disagreement as to whether or not a problem is a defect or non-conformity covered by this warranty, Seller agrees to correct the problem and bill Customer for the corrective action under Section "Invoices and Term of Payment" of the Agreement- Seller will segregate such bills. Such disputed warranty claims will be subject to resolution by the arbitration in accordance with Section 1.40 of this Agreement, and if resolved in Customer's favor, Seller agrees to credit Customer for the costs of corrective action covered by warranty. Seller agrees that if Customer acquired equipment, software, or licensed materials (including, without limitation, radio frequency and network equipment, but not including components internal to Products furnished under this Agreement) from a source other than Seller, and if Customer installs such an item in or interconnects such an item with any PCS System, Products or Licensed Materials obtained under this Agreement, Seller agrees that Seller's warranties hereunder shall not be voided or affected; provided, however, Seller's warranties shall not apply to damage, defects, nonconformities, or degradation in performance in Products and/or Licensed Materials purchased (or, with respect to Licensed Materials, licensed)under this Agreement to the extent they are caused by installation or interconnection of the item in violation of Seller's instructions, which such instructions shall be based upon reasonable and appropriate technical considerations, or caused by (but not simply revealed by) such installed or interconnected items. Seller shall be entitled to bill Customer Seller's Standard Charges for Seller's efforts to identify and/or correct any such damage, defect, nonconformity, or degradation in performance so caused, and to test and transport the corrected item. Nothing in this paragraph shall itself be deemed to require Seller to publish interface information or otherwise to facilitate such installation or interconnection of items not obtained from Seller. If as a result of a defect or non-conformity covered by this warranty a Material Service Impact is experienced, seller shall at its sole cost and expense repair or correct the problem or replace the defective Products or Licensed Materials and ship any required replacement Products (or components thereof) or replacement Licensed Materials to Customer as promptly as possible. If such repair, replacement, or installation or replacement Products or Licensed Materials require the Services of Seller service personnel at Customer's sites, Seller shall, at its sole cost and expense, dispatch such service personnel as are required to correct such problem as promptly as possible upon being notified thereof by Customer. The warranties provided for Licensed Materials are transferable to the extent provided in Section 3.11 "LIMITED TRANSFERABILITY" of this Agreement. The warranties on Products (including any warranties for the installation and repair thereof) shall be transferable along with the Products with which they are associated. No charge shall be made by Seller to Customer in respect of any such transfer of warranty; but, Seller shall have the right to charge the transferee a nominal fee to compensate Seller for registering the transferee as entitled to the transferred warranty and otherwise readying Seller to react to warranty claims made by the transferee. Warranties provided in this Agreement are otherwise non-transferable. Notwithstanding the foregoing, if as a result of the transfer of Licensed Materials or Products it would be used or operated in a country other than the United States, the warranties furnished hereunder shall not be transferable; however, should the Warranty Period for such item have not expired by the time of such transfer, Seller agrees to offer to the transferee Seller's standard warranty for such item offered (or intended to be offered) by Seller in such country, if any, for the remainder of such unexpired Warranty Period Furthermore, Seller shall have no obligation hereunder to honor any warranty claim made by any equipment manufacturer competitor of Seller, including any party whose principal business is the sales of new or used telecommunications equipment, it being the intention of the parties that only claims from a user of such equipment directly in the provision of telecommunications services to the public are authorized under any transferred warranty. 3.9 CANCELLATION OF LICENSE If Customer fails to comply with any of material terms and conditions of the second Paragraph of Section 3.2 and Section 3.3 and such failure continues beyond thirty (30) days after receipt of written notice thereof by Customer, Seller, upon written notice to Customer, may cancel any affected license for Licensed Materials. 3.10 TAXES APPLICABLE TO SOFTWARE Notwithstanding clause TAXES in Article I of this Agreement, Seller shall not bill, collect, or remit any state or local sales or use tax with respect to the license of Software under this Agreement, or with respect to the performance of Services related to such software, which Customer represents to Seller is not properly due under Customer's interpretation of the law of the taxing jurisdiction, if (1) Customer submits to Seller a written explanation of the authorities upon which Customer bases its position that the license or performance of Services is not subject to sales or use tax, and (2) Seller agrees that there is authority for Customer's position, provided, however, that Customer shall hold Seller harmless for all costs and expenses (including, but not limited to, taxes and related charges payable under clause TAXES, and attorneys fees) arising from the assertion by a taxing authority that the license of, or the performance of Services with respect to, the Software was subject to state or local sales or use tax. 3.11 LIMITED TRANSFERABILITY a. Where Customer elects to transfer Products furnished under this Agreement to a third party and where such Products will remain in place and operational for the purpose of continuing to provide wireless telecommunications services in the area for which such Products were installed, or where Customer elects to transfer Products to another of its Markets or to an Operating Affiliate for reuse within the United States (including Puerto Rico), Customer may transfer its right to use the Licensed Materials furnished under this Agreement for Use with such Products without Seller's consent and without the payment of any additional Licensed Materials right-to-use fee(s) by the transferee, except where feature or size sensitive units are a factor, but only under the following conditions: (1) The right to use such Licensed Materials may be transferred only together with the Products with which Customer has a right to use such Licensed Materials, and such right to use the Licensed Materials shall continue to be limited to Use with such Products: (2) Before any such Licensed Materials shall be transferred, Customer shall notify Seller of such transfer and the transferee shall have agreed in writing (a copy of which will be provided to Seller) to keep the Licensed Materials in confidence and to corresponding conditions respecting use of Licensed Materials as those imposed on Customer in this Agreement; and (3) The transferee shall have the same right to Licensed Materials warranty and Licensed Materials maintenance for such Licensed Materials as the transferor, provided the transferee continues to pay the fees, including recurring Licensed Materials Update fees, if any, associated with such Licensed Materials or maintenance. b. Except as may otherwise in this Agreement be provided expressly, Customer shall have no right to transfer Licensed Materials furnished by Seller under this Agreement without consent of Seller. If Customer elects to transfer Products purchased under this Agreement for which it does not under this Agreement have the right to transfer the related Licensed Materials, Seller agrees that upon written request of the transferee of such Products, or of Customer, Seller shall not without reasonable cause fail to grant to the transferee a license to use such Licensed Materials with the Products upon Seller's then standard license terms and conditions, including any and all recurring or continuing fees associated with such Licensed Materials, but excluding any nonrecurring initial license fees previously paid for such Licensed Materials by Customer. 3.12 AVAILABILITY AND SUPPORT OF LICENSED MATERIAL FEATURES/ LICENSED MATERIAL UPDATES Seller agrees to make available to Customer, at Seller's Standard Charges therefor, those additional Licensed Materials features applicable to the Initial Systems and other Seller's Manufactured Product which are developed by Seller and which Seller has a right to and has elected to license to others providing wireless telecommunications services. Seller shall, when available, offer to Customer at Seller's prices quoted in the then current applicable Customer Price List, maintenance and/or annual Licensed Material Update Services, as provided in this Agreement. 3.13 YEAR 2000 COMPLIANCE WARRANTY a. The Seller represents and warrants that during the Warranty Periods set forth in Section 2.11 (b) any Seller Products and Software delivered by the Seller to the Customer under this Contract will (1) accurately and fully record, store, present and process calendar dates falling on or after January 1, 2000, with substantially the same functionality as such products record, store, present and process calendar dates falling on or before December 31, 1999; and (2) provide substantially the same functionality with respect to the introduction of records containing dates falling on or after January 1, 2000, as it provides with respect to the introduction of records containing dates falling on or before December 31, 1999. All of the foregoing functionality shall be known as "Year 2000 Capable." b. When Customer purchases more than one version of Year 2000 Capable software, if they are intended by Seller to interoperate, all such versions of Year 2000 Capable Software will be compatible and interoperate in such manner as to process between them, as applicable, date related data correctly as described in Section (a) above. c. The foregoing sets forth an additional warranty for Seller's Products and Software. The failure of the Products and Software to meet the foregoing requirements during the warranty period set forth in subsection 3.8(b) entitles Customer to the remedies set forth in subsection 3.8(c). d. Nothing in the foregoing shall be deemed to make Seller responsible for the Year 2000 capability of any third party Software interoperating or intending to operate with Seller's Software. Customer and/or the manufacturer of other supplier of such third party Software shall be responsible for any Year 2000 compliance and assuring the ability of such third party Software to successfully operate while interoperating with Seller's Software. 4. ARTICLE IV PROVISIONS APPLICABLE TO ENGINEERING, INSTALLATION, AND OTHER SERVICES 4.1 GENERAL The provisions of this Article IV shall be applicable to the furnishing by Seller of Services other than Services furnished pursuant to any other Article of this Agreement. 4.2 ACCEPTANCE OF INSTALLATION At reasonable times during the course of Seller's installation, Customer, at its request may, or upon Seller's request, shall, inspect completed portions of such installation. Seller shall provide Customer with at least seven (7) days prior notice before Seller commences installation completion tests, and Customer shall have the right to observe Seller's testing of the Product being installed to determine that such testing and the test results are in accordance with Seller's acceptance standards or acceptance procedures, as described in Attachment D. If Customer does not attend Seller's tests, Seller shall proceed with the tests and promptly provide the test results to Customer. The installation work shall be considered complete and ready for acceptance by Customer when the Product has been installed and tested by Seller in accordance with its standard procedures, and Seller represents such Product to be in working order. Upon completion of the installation, Seller will submit to Customer a Notice of Completion, pursuant to section "1.27 -Notices" of this Agreement. The issuance of said Notice of Completion shall be deemed "Provisional Acceptance." Upon receipt by Customer from Seller of a Notice of Completion, Customer has the right to perform an Acceptance Test with respect to Products, Software or other items furnished pursuant to this Agreement. Unless otherwise agreed by the parties, Customer shall have an Acceptance Test Period of thirty (30) consecutive calendar days from the date of the Notice of Completion to conduct the Acceptance Test. The job will be considered as meeting Final Acceptance unless Seller receives notification to the contrary within thirty (30) days after submitting the notice of completion. In Revenue Service at any time after completion of the installation shall automatically constitute Final Acceptance of the relevant installation. The provisions of this Section 4.2 shall not apply to acceptance of an Initial System in each Market. A separate process for determination of System Acceptance for an Initial System shall be conducted pursuant to the provisions of Attachment D. If an item so fails the Acceptance Test during the Acceptance Test Period, the Acceptance Date shall be extended on a day-to-day basis until the item as modified, is accepted. If no notification is submitted to Seller by Customer within such Acceptance Test Period stating that the item has initially failed the Acceptance Test, then the date on which such period commences shall be the Acceptance Date. When an item has initially failed acceptance testing, prior to Customer resuming the Acceptance Test Customer and Seller must agree that all problems which would cause a Material Service Impact have been corrected by Seller. Should the parties disagree as to whether a problem would cause a Material Service Impact, the matter will be submitted to arbitration in accordance with Section 1.40. Problems which would not cause Material Service Impact shall be corrected by Seller at Seller's expense as quickly as practicable after Acceptance. No later than thirty (30) days after the effective date of this Agreement, Seller shall provide Customer with a proposed Acceptance Test Plan (ATP). Customer shall within 30 days of receipt of Seller's ATP, provide proposed changes or additions to the ATP. Seller, upon receipt of such Customer proposed changes or additions, shall provide a final ATP to Customer within seven (7) days. The completed ATP shall be incorporated as Attachment D to this Agreement. 4.3 CONDITIONS OF INSTALLATION AND OTHER SERVICES PERFORMED ON CUSTOMER'S SITE The respective responsibilities of Seller and Customer are set forth in the Responsibility Matrix attached hereto as Attachment C. 4.3.1 ITEMS PROVIDED BY CUSTOMER Except as the parties may have otherwise agreed for Turnkey Services or in the Responsibility Matrix, as set forth in this Agreement or in other agreements of the parties, Customer will be responsible for furnishing the following items (as required by the conditions of the particular installation or other on-site Service, hereinafter collectively referred to as the "Service") at no charge to Seller and these items will not be included in Seller's price for the Service. Seller's representative shall have the right to inspect the site prior to Service start date. Should Customer fail to furnish any of such items for which it is responsible after Seller provides Customer notice, Seller may furnish such items and charge Customer for them in addition to the prices otherwise charged by Seller for the Service. Regulatory Commission Approvals--Prior to Service Start Date, obtain all ------------------------------- such material approvals, licenses, permits, tariffs and/or other authorities from the Federal Communications Commission and state and local public utilities commissions as may be reasonably necessary for construction and operation of a Personal Communications Services System. Easements, Permits and Rights-of-Way--Prior to Service Start Date, provide ------------------------------------ all rights-of-way, easements, licenses to come upon land to perform the Service, permits and authority for installation of Products and other item; permits for opening sidewalks, streets, alleys, and highways; and construction and building permits. Access to Building and Work Site--Allow employees of Seller and its -------------------------------- subcontractors free access to premises and facilities at all normal business hours during the scheduled Service or at such other times as are reasonably requested by Seller. Customer shall obtain for Seller's and its subcontractors' employees any necessary identification and clearance credentials to enable Seller and its subcontractors to have access to the work site. General Building Conditions--When Customer provides or arranges for a third --------------------------- party to provide facilities or structures for PCS installation services, Customer shall prior to Service start date: a. Insure that the PCS site structures are in a structurally safe and sound condition to properly house the materials to be installed, in accordance with weight, strength, and structural requirements specified by Seller. Prior to the start of installation, if requested by Seller, Customer shall provide Seller a certificate of a duly licensed architect or engineer (dated within ninety (90) days of the date such certificate is furnished to Seller) stating that the site(s) meets such requirements; b. Take such action as may be necessary to insure that the premises will be dry and free from dust and Hazardous Materials, including but not limited to asbestos, and in such condition as not to be injurious to Seller's or its subcontractors' employees or to the materials to be installed. Prior to commencement of the Services and during the performance of the Service, Customer shall, if requested by Seller, provide Seller with sufficient data to assist Seller's supplier in evaluating the environmental conditions at the work site (including the presence of Hazardous Materials). The price quoted by Seller's supplier for the Service does not include the cost of removal or disposal of the Hazardous Materials from the work site. Customer is responsible for removing and disposing of the Hazardous Materials, including but not limited to asbestos, prior to commencement of the Service. Sensitive Equipment--Prior to commencement of the Service, inform Seller of ------------------- the presence of any sensitive equipment at the work site (e.g., equipment sensitive to static electricity or light). Repairs to Buildings--Prior to Service start date, make such alterations -------------------- and repairs as are necessary for proper installation of items to be installed. Openings in Buildings--Prior to Service start date, furnish suitable --------------------- openings in buildings to allow the items to be installed to be placed in position, and provide necessary openings and ducts for cable and conductors in floors and walls as designated on engineering drawings furnished by Seller. Surveys--Prior to Service start date furnish surveys (describing the ------- physical characteristics, legal limitations and utility locations for the work site) and a legal description of the site. Electrical Current, Heat, Light and Water--Provide electric current for ----------------------------------------- charging storage batteries and for any other necessary purposes with suitable terminals where work is to be performed; provide temperature control and general illumination (regular and emergency) in rooms in which work is to be performed or Products or other items stored, equivalent to that ordinarily furnished for similar purposes in a working office; provide exit lights; provide water and other necessary utilities for the proper execution of the Service. PCS Utility Requirements--Negotiate with the power and telephone companies ------------------------ for installation of the power and telephone facilities necessary to proper operation of the Products and/or other items being installed. The method by which such facilities are interconnected with Seller's Products shall be delivered to Customer sufficiently in advance of the time by which Customer must have such facilities installed so that Customer may complete installation in a timely manner. The type and quantity of such facilities shall be subject to Seller's reasonable approval. Customer shall have the telephone company provide, place, install, extend and terminate telephone facilities into the PCS; line up and test the telephone company facilities outside and inside the PCS; and provide to Seller copies of the test results prior to Seller's commencing integration testing of the PCS. Material Furnished by Customer--New or used material furnished by Customer ------------------------------ shall be in such condition that it requires no material repair and no material adjustment or test effort in excess of that normal for new equipment. Customer assumes all responsibility for the proper functioning of such material. Customer shall also provide the necessary information for Seller to properly Install such material. Furniture--provide and install all furniture. --------- Floor Space and Storage Facilities--Provide at the cell site or switch ---------------------------------- location, where practicable, during progress of the Service, suitable and easily accessible floor space and storage facilities (a) to permit storing major items of Products and other material closely adjacent to where they will be used, (b) for administrative and luncheon purposes, (c) for Seller's and its subcontractors' employees' personal effects, and (d) for tools and property of Seller and its subcontractors. Where the Service is to be performed outside of a building or in a building under construction, Customer shall, in addition to the above requirements, as appropriate, permit or secure permission for Seller and its subcontractors to maintain at the work site, storage facilities (such as trailers) for Products, materials and other items and for tools and equipment needed to complete the Service. Watch Service--For PCS, provide reasonable normal security (for cell sites, ------------- commercial alarms) necessary to prevent admission of unauthorized persons to building and other areas where installation Service is performed and to prevent unauthorized removal of the Products and other items. Seller will inform Customer as to which storage facilities at the work site Seller will keep locked; such storage facilities will remain closed to Customer's surveillance. Hazardous Materials Cleanup--At the conclusion of the Service, Customer --------------------------- shall be responsible for the cleanup, removal, and proper disposal of all Hazardous Materials present at Customer's premises that were brought onto the premises by Customer, its subcontractors or agents . Access to Existing Facilities--Customer shall permit Seller reasonable use ----------------------------- of such portions of the existing plant or equipment as are necessary for the proper completion of such tests as require coordination with existing facilities. Such use shall not interfere with the Customer's normal maintenance of equipment. Grounds--Customer shall provide access to suitable and isolated building ------- ground as required for Seller's standard grounding of equipment. Where installation is outside or in a building under construction, Customer shall also furnish lightning protection ground. Requirements for Customer Designed Circuits--Customer shall furnish ------------------------------------------- information covering the proper test and readjust requirements for apparatus and requirements for circuit performance associated with circuits designed by Customer or standard circuits modified by Customer's drawings. Through Tests and Trunk Tests--Customer shall make required through tests ----------------------------- and trunk tests to other offices after Seller provides its notice of completion or notice of advanced turnover. 4.3.2 ITEMS TO BE FURNISHED BY SELLER The following items will be furnished by Seller (if required by the conditions of the particular Service) and the price thereof is included in Seller's price for Service: Protection of Equipment and Building -Seller shall provide protection for ------------------------------------ Customer's equipment and buildings during the performance of the Service and in accordance with Seller's standard practices. Method of Procedure--Seller shall prepare a detailed Method of Procedure ------------------- ("MOP") before starting work on live equipment. Customer shall review the MOP and any requested changes shall be negotiated. Customer shall give Seller written acceptance of the MOP prior to start of the work. The following items will be furnished by Seller if requested by Customer, but Customer will be billed and shall pay for them in addition to Seller's standard or firm quoted price for the Services: Protection of Building and Equipment--Seller may provide protection of ------------------------------------ buildings and equipment in accordance with special practices of Customer differing from Seller's standard practices. Maintenance--Maintenance of Products, Software and other items from ----------- completion of installation until date of acceptance. Locally Purchased Items--Purchase of items indicated by Seller's ----------------------- specifications as needing to be purchased locally. Readjusting Apparatus--Seller may provide readjustment (in excess of that --------------------- normally required on new apparatus) of apparatus associated with relocated or rewired circuits. Cross-Connections (Other than to Outside Cable Terminations)--Seller may ------------------------------------------------------------ run or rerun permanent cross-connections in accordance with revised cross- connection lists furnished by Customer. Handling, Packing, Transportation and Disposition of Removed and Surplus ------------------------------------------------------------------------ Customer Equipment--Seller may pack, transport, and dispose of surplus and - ------------------ removed Customer equipment as agreed by the parties. Premium Time Allowances and Night Shift Bonuses--Seller may have its ----------------------------------------------- Services personnel work premium time and night shifts. To the extent that such premium time and/or night shifts are needed for Seller to timely perform its obligations under this Agreement due to Customers failure to meet its responsibilities, Customer shall reimburse Seller for the costs of said premium time and/or night shifts. Emergency Lighting System--Seller may provide new emergency lighting system ------------------------- (other than the original ceiling mounted stumble lighting) to satisfy illumination and safety needs of Products of certain heights. 4.4 WORK DONE BY OTHERS Work done at the site by Customer or its other vendors or contractors shall not interfere with Seller's performance of the installation or other Services. If Customer or its other vendors or contractors fail to timely complete the site readiness or if Customer's or its other vendors or contractors' work interferes with Seller's performance, the scheduled completion date of Seller's Services under this agreement shall be extended as necessary to compensate for such delay or interference and Customer shall reimburse Seller for any actual direct and reasonable expenses directly resulting from such delay or interference. 4.5 SERVICES WARRANTIES a. Seller warrants to Customer only, that Services will be performed in a careful and workmanlike manner and in accordance with Seller's specifications or those referenced in the order and with accepted practices in the community in which such Services are performed, using material free from defects except where such material is specified or provided by Customer. If Services prove to be not so performed and if Customer notifies Seller, with respect to engineering, installation, or repair Services, within a one (1) year period commencing on the date of completion of the Service, and with respect to other Services, as identified by Customer in writing, Seller, at its option, either will correct the defective or nonconforming Service or render a full or prorated refund or credit based on the original charge for the Services. b. Customer shall deliver to Seller RF design for each of the Markets it elects to deploy. In accordance with Attachment D, Seller will review and comment to Customer on each RF design within twenty (20) business days following receipt thereof from the Customer. c. Where Seller performs engineering or installation Services as part of a combined engineering, furnishing, and installation order, the one (1) year period referenced above shall commence on completion of the installation Service. d. THE FOREGOING SERVICES WARRANTIES ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER EXPRESS AND IMPLIED WARRANTIES INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. CUSTOMER'S SOLE AND EXCLUSIVE REMEDY SHALL BE SELLER'S OBLIGATION TO MAKE CORRECTIONS OR GIVE A CREDIT OR REFUND AS SET FORTH ABOVE IN THIS WARRANTY. e. With respect to turnkey services, consultation services, and other services not identified in (a) above, the applicable warranty provisions will be negotiated on a case by case basis. 5. ARTICLE V ENTIRE AGREEMENT AND EXECUTION 5.1 ENTIRE AGREEMENT The terms and conditions contained in this Agreement supersede all prior oral or written understanding's between the parties with respect to the subject matter hereof and constitute the entire agreement of the parties with respect to such subject matter. Such terms and conditions shall not be modified or amended except by a writing signed by authorized representatives of both parties. 5.2 COUNTERPARTS This Agreement may be executed in counterparts, each of which shall be an original but both of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives on the date(s) indicated. TELECORP PCS, INC. LUCENT TECHNOLOGIES INC. By: /s/ Gerald T. Vento By: /s/ [SIGNATURE ILLEGIBLE] ----------------------- ------------------------- Name: Gerald T. Vento Name: --------------------- ----------------------- Title: CEO Title: -------------------- ---------------------- Date: May 12, 1998 Date: May 12, 1998 --------------------- ----------------------- ATTACHMENT A
TELECORP PRICING SUMMARY Total all Markets - -------------------------------------------------------------------------------------------------------------------------- 1998 1999 2000 2001 Component QUANTITY PRICE QUANTITY PRICE QUANTITY PRICE QUANTITY PRICE - -------------------------------------------------------------------------------------------------------------------------- TYPE I 45 $ 7,257,420 25 $ 3,225,655 60 $ 7,500,000 50 $ 6,250,000 TYPE I GROWTH 30 23 $ 1,012,000 13 $ 572,000 18 $ 792,000 TYPE II 15 $ 2,038,740 55 $ 7,475,380 40 $ 4,600,000 25 $ 2,875,000 TYPE III 410 $ 74,408,660 115 $20,496,240 50 $ 7,250,000 30 $ 4,350,000 BTS ENG. & INSTALL 470 $ 3,532,625 195 $ 1,565,113 150 N/A 105 N/A FILTER REPLACEMENT E&I $ 46,750 $ 178,500 DUPLEXER DEPLOYMENT $ 300,000 OSF $ 300,000 BTS OPTIMIZATION 470 Incl. 195 150 105 BTS TRANSPORT & DELIVERY 470 $ 799,000 195 $ 331,500 150 $ 255,000 105 $ 178,500 EXPANSION RADIOS 885 $ 2,885,625 2,190 $23,756,800 1,450 $12,325,000 1,550 $12,090,000 MSC 5 ESS 5 $ 0 $ 0 $ 1,111,781 $ 748,940 ACCESS MANAGER 5 $ 0 $ 0 $ 2,553,858 $ 1,282,176 OPTIONAL SOFTWARE $ 20,000,000 $ 13,320 $ 474,600 $ 767,706 MSC B&I $ 2,434,400 $ 110,000 $ 305,000 $ 190,000 MSC POWER with Backup $ 925,000 $ 0 $ 150,000 $ 75,000 PROJECT MGMT $ 900,000 $ 0 $ 0 $ 0 BTS SPARES $ 408,284 $ 25,000 $ 25,000 $ 25,000 MSC SPARES $ 1,957,176 $ 0 $ 0 $ 0 ANNUAL BTS FEE 470 $ 0 195 $ 0 150 $ 917,700 105 $ 1,124,700 ANNUAL MSC FEE 5 $ 0 5 $ 0 5 $ 1,440,000 5 $ 1,440,000 NETWORK MGMT AUTOSPACE $ 90,000 Incl. Incl. Incl. NOC1 $ 600,483 $ 105,000 $ 105,000 $ 73,200 BILLDATS $ 567,120 $ 93,780 $ 93,780 $ 62,520 TRAINING Incl. Incl. $ 20,000 $ 20,000 DOCUMENTATION Incl. Incl. Incl. Incl. INSTALLATION TEST EQUIP. $ 25,000 Incl. $ 100,000 N/A RF AUDIT $ 1,503,250 N/A N/A N/A RS&R $ 2,000,000 ONGOING TECHNICAL SUPPORT Incl. Incl. Incl. Incl. (1-800 NUMBER) SYSTEM INTEGRATION $ 400,000 OTA* Incl. Incl. Incl. Incl. NEW MARKET INCENTIVE* ($26,000,000) $ 178,500 ------------------------------------------------------------------------------------------------ TOTAL $ 95,439,533 $68,211,788 $39,799,719 $34,344,744 ================================================================================================ - -------------------------------------------------------------------------------------------------------------------------- *First Market=$2m. *Second Market=$3m. *Third Market=$4m. *Fourth Market=$6m. *Fifth Market=$9m. - ------------------------------------------------------------------------------------ 2002 TOTAL Component QUANTITY PRICE QUANTITY PRICE - ------------------------------------------------------------------------------------ TYPE I 35 $ 4,375,000 215 $ 28,608,075 TYPE I GROWTH 25 $ 1,100,000 79 $ 3,476,000 TYPE II 20 $ 2,300,000 155 $ 19,289,120 TYPE III 25 $ 3,625,000 630 $ 110,129,900 BTS ENG. & INSTALL 80 N/A 665 $ 5,097,736 FILTER REPLACEMENT E&I DUPLEXER DEPLOYMENT OSF BTS OPTIMIZATION 80 1,000 BTS TRANSPORT & DELIVERY 80 $ 136,000 1,000 $ 1,700,000 EXPANSION RADIOS 1,950 $14,625,000 8,025 $ 65,684,425 MSC 5 ESS $ 608,013 5 $ 2,468,734 ACCESS MANAGER $ 1,009,650 5 $ 4,845,684 OPTIONAL SOFTWARE $ 1,038,850 0 $ 22,294,478 MSC B&I $ 168,000 0 $ 3,207,400 MSC POWER with Backup $ 60,000 0 $ 1,210,000 PROJECT MGMT $ 0 0 $ 900,000 BTS SPARES $ 25,000 0 $ 568,284 MSC SPARES $ 0 0 $ 1,957,176 ANNUAL BTS FEE 80 $ 1,269,600 1,000 $ 3,312,000 ANNUAL MSC FEE 5 $ 1,440,000 5 $ 4,320,000 NETWORK MGMT AUTOSPACE Incl. $ 90,000 NOC1 $ 73,200 $ 956,883 BILLDATS $ 62,520 $ 879,720 TRAINING $ 20,000 $ 60,000 DOCUMENTATION Incl. Incl. INSTALLATION TEST EQUIP. N/A $ 125,000 RF AUDIT N/A 0 $ 1,503,250 RS&R $ 3,200,000 0 $ 5,200,000 ONGOING TECHNICAL SUPPORT Incl. Incl. (1-800 NUMBER) SYSTEM INTEGRATION OTA* Incl. Incl. NEW MARKET INCENTIVE* ($ 26,178,500) ----------------------------------------------- TOTAL $36,136,833 $ 261,788,367 =============================================== - ------------------------------------------------------------------------------------ *First Market=$2m.
- --------------------------------------------------------------------------------------------------------------------------------- TELECORP PRICING SUMMARY Total all Missouri - --------------------------------------------------------------------------------------------------------------------------------- 1998 1999 2000 2001 Component QUANTITY PRICE QUANTITY PRICE QUANTITY PRICE QUANTITY PRICE - --------------------------------------------------------------------------------------------------------------------------------- TYPE I 15 $ 2,419,140 15 $ 2,419,140 10 $ 1,250,000 5 $ 625,000 TYPE I GROWTH $ 0 8 $ 352,000 8 $ 352,000 5 $ 220,000 TYPE II 15 $ 2,038,740 15 $ 2,038,740 5 $ 575,000 5 $ 575,000 TYPE III 20 $ 3,679,520 5 $ 919,880 5 $ 725,000 0 $ 0 BTS ENG. & INSTALL. 50 $ 353,375 35 $ 291,613 20 N/A 10 N/A BTS OPTIMIZATION 50 Incl. 35 20 10 BTS TRANSPORT & DELIVERY 50 $ 85,000 35 $ 59,500 20 $ 34,000 10 $ 17,000 EXPANSION RADIOS 25 $ 320,625 100 $ 1,218,400 100 $ 850,000 100 $ 780,000 MSC 5 ESS 1 $ 0 $ 0 $ 10,037 $ 35,489 ACCESS MANAGER 1 $ 0 $ 0 $ 256,467 $ 62,646 OPTIONAL SOFTWARE $ 4,000,000 $ 90,240 $ 203,041 $ 328,652 MSC B&I $ 486,880 $ 22,000 $ 61,000 $ 38,000 MSC POWER with Backup $ 185,000 $ 0 $ 30,000 $ 15,000 PROJECT MGMT $ 180,000 $ 0 $ 0 $ 0 BTS SPARES $ 93,657 $ 5,000 $ 5,000 $ 5,000 MSC SPARES $ 391,435 $ 0 $ 0 $ 0 ANNUAL BTS FEE 50 $ 0 35 $ 0 20 $ 117,300 10 $ 144,900 ANNUAL MSC FEE 1 $ 0 1 $ 0 1 $ 288,000 1 $ 288,000 NETWORK MGMT AUTOPACE NOC 1 BILLDATS TRAINING Incl. Incl. $ 4,000 $ 4,000 DOCUMENTATION Incl. Incl. Incl. Incl. INSTALLATION TEST EQUIP. $ 5,000 Incl. $ 20,000 N/A RF AUDIT $ 310,000 N/A N/A N/A RS&R $ 400,000 ONGOING TECHNICAL SUPPORT Incl. Incl. Incl. Incl. (1-800 NUMBER) OTA* Incl. Incl. Incl. Incl. NEW MARKET INCENTIVE* ($2,000,000) ----------------------------------------------------------------------------------------------------- TOTAL $ 12,548,372 $ 7,416,513 $ 4,780,845 $ 3,538,687 ===================================================================================================== - --------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------- 2002 TOTAL Component QUANTITY PRICE QUANTITY PRICE - ----------------------------------------------------------------------------- TYPE I 5 $ 625,000 50 $ 7,338,280 TYPE I GROWTH 2 $ 88,000 23 $ 1,012,000 TYPE II 0 $ 0 40 $ 5,227,480 TYPE III 0 $ 0 30 $ 5,324,400 BTS ENG. & INSTALL. 5 N/A 665 $ 644,988 BTS OPTIMIZATION 5 120 BTS TRANSPORT & DELIVERY 5 $ 8,500 120 $ 204,000 EXPANSION RADIOS 100 $ 750,000 425 $ 3,919,025 MSC 5 ESS $ 223,707 1 $ 269,233 ACCESS MANAGER $ 176,808 1 $ 495,921 OPTIONAL SOFTWARE $ 469,623 0 $ 5,091,556 MSC B&I $ 33,600 0 $ 641,480 MSC POWER with Backup $ 12,000 0 $ 242,000 PROJECT MGMT $ 0 0 $ 180,000 BTS SPARES $ 5,000 0 $ 113,657 MSC SPARES $ 0 0 $ 391,435 ANNUAL BTS FEE 5 $ 158,700 120 $ 420,900 ANNUAL MSC FEE 1 $ 288,000 1 $ 864,000 NETWORK MGMT AUTOPACE NOC 1 BILLDATS TRAINING $ 4,000 $ 12,000 DOCUMENTATION Incl. Incl. INSTALLATION TEST EQUIP. N/A $ 25,000 RF AUDIT N/A 0 $ 310,000 RS&R $ 640,000 0 $ 1,040,000 ONGOING TECHNICAL SUPPORT Incl. Incl. (1-800 NUMBER) OTA* Incl. Incl. NEW MARKET INCENTIVE* ($ 2,000,000) -------------------------------------------- TOTAL $ 3,482,938 $ 31,767,354 ============================================ - -----------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------- TELECORP PRICING SUMMARY Total New Orleans - -------------------------------------------------------------------------------------------------------------------------- 1998 1999 2000 Component QUANTITY PRICE QUANTITY PRICE QUANTITY PRICE - -------------------------------------------------------------------------------------------------------------------------- TYPE I 0 $ 0 0 $ 0 15 $1,875,000 TYPE I GROWTH $ 0 0 $ 0 0 $ 0 TYPE II 0 $ 0 10 $ 1,359,160 10 $1,150,000 TYPE III 110 $ 19,896,860 40 $ 7,245,540 15 $2,175,000 BTS BNG. & INSTALL. 110 $ 840,125 50 $ 372,375 40 N/A FILTER REPLACEMENT E&I $ 46,750 $ 68,000 BTS OPTIMIZATION 110 Incl. 50 40 BTS TRANSPORT & DELIVERY 110 $ 187,000 50 $ 85,000 40 $ 68,000 EXPANSION RADIOS 710 $ 641,250 740 $ 6,092,000 0 $ 0 MSC 5 ESS 1 $ 0 $ 0 $ 412,312 ACCESS MANAGER 1 $ 0 $ 0 $ 664,620 OPTIONAL SOFTWARE $ 4,000,000 $ 90,240 $ 203,041 MSC B&I $ 486,880 $ 22,000 $ 61,000 MSC POWER with Backup $ 185,000 $ 0 $ 30,000 PROJECT MGMT $ 180,000 $ 0 $ 0 BTS SPARES $ 93,657 $ 5,000 $ 5,000 MSC SPARES $ 391,435 $ 0 $ 0 ANNUAL BTS FEE 110 $ 0 50 $ 0 40 $ 220,800 ANNUAL MSC FEE 1 $ 0 1 $ 0 1 $ 288,000 NETWORK MGMT AUTOPACE NOC 1 BILLDATS TRAINING Incl. Incl. $ 4,000 DOCUMENTATION Incl. Incl. Incl. INSTALLATION TEST EQUIP. $ 5,000 Incl. $ 20,000 RF AUDIT $ 310,000 N/A N/A RS&R ONGOING TECHNICAL SUPPORT Incl. Incl. Incl. (1-800 NUMBER) OTA* Incl. Incl. Incl. NEW MARKET INCENTIVE* ($ 3,000,000) ------------------------------------------------------------------------------------------ TOTAL $ 24,263,957 $18,339,316 $7,176,773 ========================================================================================== - -------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------- 2001 2002 TOTAL Component QUANTITY PRICE QUANTITY PRICE QUANTITY PRICE - ----------------------------------------------------------------------------------------------------------------------- TYPE I 15 $1,875,000 10 $1,250,000 40 $ 5,000,000 TYPE I GROWTH 8 $ 352,000 8 $ 352,000 16 $ 704,000 TYPE II 5 $ 575,000 5 $ 575,000 30 $ 3,659,160 TYPE III 10 $1,450,000 10 $1,450,000 185 $32,217,400 BTS BNG. & INSTALL. 30 N/A 25 N/A 665 $ 1,212,500 FILTER REPLACEMENT E&I BTS OPTIMIZATION 30 25 255 BTS TRANSPORT & DELIVERY 30 $ 51,000 25 $ 42,500 255 $ 433,500 EXPANSION RADIOS 100 $ 780,000 500 $3,750,000 2,050 $11,263,250 MSC 5 ESS $ 55,206 $ 317,987 1 $ 785,505 ACCESS MANAGER $ 326,268 $ 245,337 1 $ 1,236,225 OPTIONAL SOFTWARE $ 328,652 $ 469,623 0 $ 5,091,556 MSC B&I $ 38,000 $ 33,600 0 $ 641,480 MSC POWER with Backup $ 15,000 $ 12,000 0 $ 242,000 PROJECT MGMT $ 0 $ 0 0 $ 180,000 BTS SPARES $ 5,000 $ 5,000 0 $ 113,657 MSC SPARES $ 0 $ 0 0 $ 391,435 ANNUAL BTS FEE 30 $ 276,000 25 $ 317,400 255 $ 814,200 ANNUAL MSC FEE 1 $ 288,000 1 $ 288,000 1 $ 864,000 NETWORK MGMT AUTOPACE NOC 1 BILLDATS TRAINING $ 4,000 $ 4,000 $ 12,000 DOCUMENTATION Incl. Incl. Incl. INSTALLATION TEST EQUIP. N/A N/A $ 25,000 RF AUDIT N/A N/A 0 $ 310,000 RS&R $ 400,000 $ 640,000 0 $ 1,040,000 ONGOING TECHNICAL SUPPORT Incl. Incl. Incl. (1-800 NUMBER) OTA* Incl. Incl. Incl. NEW MARKET INCENTIVE* ($ 3,000,000) ------------------------------------------------------------------------------------- TOTAL $4,819,126 $9,752,447 $63,234,868 ===================================================================================== - -----------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------ TELECORP PRICING SUMMARY Total Little Rock - -------------------------------------------------------------------------------------------------------------------------------- 1998 1999 2000 2001 Component QUANTITY PRICE QUANTITY PRICE QUANTITY PRICE QUANTITY PRICE - -------------------------------------------------------------------------------------------------------------------------------- TYPE I $ 0 0 $ 0 10 $1,250,000 10 $1,250,000 TYPE I GROWTH $ 0 0 $ 0 0 $ 0 0 $ 0 TYPE II 0 $ 0 10 $ 1,359,160 5 $ 575,000 5 $ 575,000 TYPE III 80 $ 14,407,580 30 $ 5,208,780 5 $ 725,000 5 $ 725,000 BTS ENG. & INSTALL. 80 $ 611,000 40 $ 296,000 20 N/A 20 N/A FILTER REPLACEMENT E&I $ 51,000 BTS OPTIMIZATION 80 Incl. 40 20 20 BTS TRANSPORT & DELIVERY 80 $ 136,000 40 $ 68,000 20 $ 34,000 20 $ 34,000 EXPANSION RADIOS 50 $ 641,250 350 $ 4,264,400 350 $2,975,000 350 $2,730,000 MSC 5 ESS 1 $ 0 $ 0 $ 13,622 $ 239,480 ACCESS MANAGER 1 $ 0 $ 0 $ 335,649 $ 186,825 OPTIONAL SOFTWARE $ 4,000,000 $ 90,240 $ 203,041 $ 328,652 MSC B&I $ 486,880 $ 22,000 $ 61,000 $ 38,000 MSC POWER with Backup $ 185,000 $ 0 $ 30,000 $ 15,000 PROJECT MGMT $ 180,000 $ 0 $ 0 $ 0 BTS SPARES $ 93,657 $ 5,000 $ 5,000 $ 5,000 MSC SPARES $ 391,435 $ 0 $ 0 $ 0 ANNUAL BTS FEE 80 $ 0 40 $ 0 20 $ 165,600 20 $ 193,200 ANNUAL MSC FEE 1 $ 0 1 $ 0 1 $ 288,000 1 $ 288,000 NETWORK MGMT AUTOPACE NOC 1 BILLDATS TRAINING Incl. Incl. $ 4,000 $ 4,000 DOCUMENTATION Incl. Incl. Incl. Incl. INSTALLATION TEST EQUIP. $ 5,000 Incl. $ 20,000 N/A RF AUDIT $ 310,000 N/A N/A N/A RS&R $ 400,000 ONGOING TECHNICAL SUPPORT Incl. Incl. Incl. Incl. (1-800 NUMBER) OTA* Incl. Incl. Incl. Incl. NEW MARKET INCENTIVE* ($4,000,000) - -------------------------------------------------------------------------------------------------------------------------------- TOTAL $ 17,447,802 $11,364,580 $6,684,912 $7,012,157 ================================================================================================== - -------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 2002 TOTAL Component QUANTITY PRICE QUANTITY PRICE - ------------------------------------------------------------------------------- TYPE I 5 $ 625,000 25 $ 3,125,000 TYPE I GROWTH 5 $ 220,000 5 $ 220,000 TYPE II 5 $ 575,000 25 $ 3,084,160 TYPE III 5 $ 725,000 125 $ 21,791,360 BTS BNG. & INSTALL. 15 N/A 665 $ 907,000 FILTER REPLACEMENT E&I BTS OPTIMIZATION 15 175 BTS TRANSPORT & DELIVERY 15 $ 25,500 175 $ 297,500 EXPANSION RADIOS 350 $2,625,000 1,450 $ 13,235,650 MSC 5 ESS $ 17,565 1 $ 270,667 ACCESS MANAGER $ 163,611 1 $ 686,085 OPTIONAL SOFTWARE $ 469,623 0 $ 5,091,556 MSC B&I $ 33,600 0 $ 641,480 MSC POWER with Backup $ 12,000 0 $ 242,000 PROJECT MGMT $ 0 0 $ 180,000 BTS SPARES $ 5,000 0 $ 113,657 MSC SPARES $ 0 0 $ 391,435 ANNUAL BTS FEE 15 $ 220,800 175 $ 579,600 ANNUAL MSC FEE 1 $ 288,000 1 $ 864,000 NETWORK MGMT AUTOPACE NOC 1 BILLDATS TRAINING $ 4,000 $ 12,000 DOCUMENTATION Incl. Incl. INSTALLATION TEST EQUIP. N/A $ 25,000 RF AUDIT N/A 0 $ 310,000 RS&R $ 640,000 0 $ 1,040,000 ONGOING TECHNICAL SUPPORT Incl. Incl. (1-800 NUMBER) OTA* Incl. Incl. NEW MARKET INCENTIVE* ($4,000,000) ------------------------------------------------- TOTAL $6,649,699 $ 49,108,150 ================================================= - -------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------- TELECORP PRICING SUMMARY Total Memphis - ------------------------------------------------------------------------------------------------------------------------------- 1998 1999 2000 2001 Component QUANTITY PRICE QUANTITY PRICE QUANTITY PRICE QUANTITY PRICE - ------------------------------------------------------------------------------------------------------------------------------- TYPE I 0 $ 0 0 $ 0 15 $ 1,875,000 10 $1,250,000 TYPE I GROWTH $ 0 0 $ 0 0 $ 0 0 $ 0 TYPE II 0 $ 0 10 $ 1,359,160 10 $ 1,150,000 5 $ 575,000 TYPE III 100 $ 18,087,100 20 $ 3,472,520 15 $ 2,175,000 10 $1,450,000 BTS BNG. & INSTALL. 100 $ 763,750 30 $ 219,625 40 N/A 25 N/A FILTER $ 59,500 REPLACEMENT E&I BTS OPTIMIZATION 100 Incl. 30 40 25 BTS TRANSPORT & DELIVERY 100 $ 170,000 30 $ 51,000 40 $ 68,000 25 $ 42,500 EXPANSION RADIOS 50 $ 641,250 500 $ 6,092,000 500 $ 4,250,000 500 $3,900,000 MSC 5 ESS 1 $ 0 $ 0 $ 256,329 $ 340,257 ACCESS MANAGER 1 $ 0 $ 0 $ 561,588 $ 504,348 OPTIONAL $ 4,000,000 $ 90,240 $ 203,041 $ 328,652 SOFTWARE MSC B&I $ 486,880 $ 22,000 $ 61,000 $ 38,000 MSC POWER with Backup $ 185,000 $ 0 $ 30,000 $ 15,000 PROJECT MGMT $ 180,000 $ 0 $ 0 $ 0 BTS SPARES $ 93,657 $ 5,000 $ 5,000 $ 5,000 MSC SPARES $ 391,435 $ 0 $ 0 $ 0 ANNUAL BTS FEE 100 $ 0 30 $ 0 40 $ 179,400 25 $ 234,600 ANNUAL MSC FEE 1 $ 0 1 $ 0 1 $ 288,000 1 $ 288,000 NETWORK MGMT AUTOPACE NOC 1 BILLDATS TRAINING Incl. Incl. $ 4,000 $ 4,000 DOCUMENTATION Incl. Incl. Incl. Incl. INSTALLATION $ 5,000 Incl. $ 20,000 N/A TEST EQUIP. RF AUDIT $ 310,000 N/A N/A N/A RS&R $ 400,000 ONGOING TECHNICAL SUPPORT Incl. Incl. Incl. Incl. (1-800 NUMBER) OTA* Incl. Incl. Incl. Incl. NEW MARKET INCENTIVE* ($6,000,000) --------------------------------------------------------------------------------------------------- TOTAL $ 19,314,072 $11,371,045 $11,126,358 $9,375,357 =================================================================================================== - ------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- 2002 TOTAL Component QUANTITY PRICE QUANTITY PRICE - ----------------------------------------------------------------------------- TYPE I 10 $1,250,000 35 $ 4,375,000 TYPE I GROWTH 5 $ 220,000 5 $ 220,000 TYPE II 5 $ 575,000 30 $ 3,659,160 TYPE III 5 $ 725,000 150 $25,909,620 BTS BNG. & INSTALL. 20 N/A 665 $ 983,375 FILTER REPLACEMENT E&I BTS OPTIMIZATION 20 215 BTS TRANSPORT & DELIVERY 20 $ 34,000 215 $ 365,500 EXPANSION RADIOS 500 $3,750,000 2,050 $18,633,250 MSC 5 ESS $ 24,377 1 $ 620,963 ACCESS MANAGER $ 241,203 1 $ 1,307,139 OPTIONAL $ 469,623 0 $ 5,091,556 SOFTWARE MSC B&I $ 33,000 0 $ 641,480 MSC POWER with Backup $ 12,000 0 $ 242,000 PROJECT MGMT $ 0 0 $ 180,000 BTS SPARES $ 5,000 0 $ 113,657 MSC SPARES $ 0 0 $ 391,435 ANNUAL BTS FEE 20 $ 269,100 215 $ 683,100 ANNUAL MSC FEE 1 $ 288,000 1 $ 864,000 NETWORK MGMT AUTOPACE NOC 1 BILLDATS TRAINING $ 4,000 $ 12,000 DOCUMENTATION Incl. Incl. INSTALLATION N/A $ 25,000 TEST EQUIP. RF AUDIT N/A 0 $ 310,000 RS&R $ 640,000 0 $ 1,040,000 ONGOING TECHNICAL SUPPORT Incl. Incl. (1-800 NUMBER) OTA* Incl. Incl. NEW MARKET INCENTIVE* ($6,000,000) ----------------------------------------------- TOTAL $8,540,903 $59,668,235 =============================================== - -----------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------- TELECORP PRICING SUMMARY Total New England - -------------------------------------------------------------------------------------------------------------------------- 1998 1999 2000 2001 Component QUANTITY PRICE QUANTITY PRICE QUANTITY PRICE QUANTITY PRICE - -------------------------------------------------------------------------------------------------------------------------- TYPE I 30 $ 4,838,280 10 $ 1,612,760 10 $ 1,250,000 10 $1,250,000 TYPE I GROWTH $ 0 15 $ 660,000 5 $ 220,000 5 $ 220,000 TYPE II 0 $ 0 10 $ 1,359,760 10 $ 1,150,000 5 $ 575,000 TYPE III 100 $ 18,397,600 10 $ 1,839,760 10 $ 1,450,000 5 $ 725,000 BTS BNG. & INSTALL. 130 $ 964,375 30 $ 309,125 30 N/A 20 N/A BTS OPTIMIZATION 130 Incl. 30 30 20 BTS TRANSPORT & DELIVERY 130 $ 221,000 30 $ 51,000 30 $ 51,000 20 $ 34,000 EXPANSION RADIOS 50 $ 641,250 500 $ 6,092,000 500 $ 4,250,000 500 $3,900,000 MSC 5 ESS 1 $ 0 $ 0 $ 419,481 $ 78,507 ACCESS MANAGER 1 $ 0 $ 0 $ 735,534 $ 202,089 OPTIONAL SOFTWARE $ 4,000,000 $ 90,240 $ 203,041 $ 328,652 MSC B&I $ 486,880 $ 22,000 $ 61,000 $ 38,000 MSC POWER with Backup $ 185,000 $ 0 $ 30,000 $ 15,000 PROJECT MGMT $ 180,000 $ 0 $ 0 $ 0 BTS SPARES $ 93,657 $ 5,000 $ 5,000 $ 5,000 MSC SPARES $ 391,435 $ 0 $ 0 $ 0 ANNUAL BTS FEE 130 $ 0 30 $ 0 30 $ 220,800 20 $ 262,200 ANNUAL MSC FEE 1 $ 0 1 $ 0 1 $ 288,000 1 $ 288,000 NETWORK MGMT AUTOPACE NOC 1 BILLDATS TRAINING Incl. Incl. $ 4,000 $ 4,000 DOCUMENTATION Incl. Incl. Incl. Incl. INSTALLATION TEST EQUIP. $ 5,000 Incl. $ 20.000 N/A RF AUDIT $ 310,000 N/A N/A N/A RS&R $ 400,000 ONGOING TECHNICAL SUPPORT Incl. Incl. Incl. Incl. (1-800 NUMBER) OTA* Incl. Incl. Incl. Incl. NEW MARKET INCENTIVE* ($ 9,000,000) ---------------------------------------------------------------------------------------------------- TOTAL $ 21,714,477 $12,041,645 $10,357,856 $8,325,448 ==================================================================================================== - -------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------- TELECORP PRICING SUMMARY Total New England - --------------------------------------------------------------------- 2002 TOTAL Component QUANTITY PRICE QUANTITY PRICE - --------------------------------------------------------------------- TYPE I 5 $ 625,000 65 $ 9,576,040 TYPE I GROWTH 5 $ 220,000 30 $ 1,320,000 TYPE II 5 $ 575,000 30 $ 3,659,760 TYPE III 5 $ 725,000 130 $23,137,360 BTS BNG. & INSTALL. 15 N/A 665 $ 1,273,500 BTS OPTIMIZATION 15 225 BTS TRANSPORT & DELIVERY 15 $ 25,500 225 $ 382,500 EXPANSION RADIOS 500 $3,750,000 2,050 $18,633,250 MSC 5 ESS $ 24,377 1 $ 522,365 ACCESS MANAGER $ 182,691 1 $ 1,120,314 OPTIONAL SOFTWARE $ 469,623 0 $ 5,091,556 MSC B&I $ 33,600 0 $ 641,480 MSC POWER with Backup $ 12,000 0 $ 242,000 PROJECT MGMT $ 0 0 $ 180,000 BTS SPARES $ 5,000 0 $ 113,657 MSC SPARES $ 0 0 $ 391,435 ANNUAL BTS FEE $ 289,800 225 $ 772,800 ANNUAL MSC FEE $ 288,000 1 $ 864,000 NETWORK MGMT AUTOPACE NOC 1 BILLDATS TRAINING $ 4,000 $ 12,000 DOCUMENTATION Incl. Incl. INSTALLATION TEST EQUIP. N/A $ 25,000 RF AUDIT N/A 0 $ 310,000 RS&R $ 640,000 0 $ 1,040,000 ONGOING TECHNICAL SUPPORT Incl. Incl. (1-800 NUMBER) OTA* Incl. Incl. NEW MARKET INCENTIVE* ($9,000,000) -------------------------------------------------- TOTAL $7,869,591 $60,309,017 ================================================== - ---------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------- BASE STATION PACKAGE - ---------------------------------------------------------------------------------------------------- TYPE I TYPE II TYPE III Base Package $126,000 $105,000 $146,700 Installation Kit $ 4,269 $ 4,269 $ 4,269 Outdoor Cabinet(s) $ 2,000 $ 2,000 $ 4,000 Power $ 15,927 $ 15,927 $ 15,927 MAU/FRU $ 7,860 $ 5,240 $ 7,860 HP ICLA $ 5,220 $ 3,480 $ 5,220 Total $161,276 $135,916 $183,976 ===================================================================== - ----------------------------------------------------------------------------------------------------
ATTACHMENT C RESPONSIBILITY MATRIX Functional Division of Responsibility RF ENGINEERING
No. Lucent TeleCorp - --- ---------- ------------ 1. Provide specifications for TDMA guard isolation requirements X 2. Prepare demand forecast for first 2 years of operation X 3. Develop coverage objectives X Prepare coverage plan to meet objectives 4. Initial CE4 model calibration and optimization X 5. Preliminary TDMA RF design X 6. RF Evaluation X 7. Provide Link Budget and Design Criteria - TeleCorp X 8. Review and Accept Link Budget and Design Criteria X 9. Identify, qualify and secure real estate for radio base station X sites 10. On a per sector basis, determine the following demand and radio parameters: (a) Number of voice channels/EPRUs per sector X (b) Effective radiated power X (c) Recommend antenna radiation center above ground level X (d) Recommend initial sector/OMNI antenna and orientations X Maximum antenna feeder loss acceptable (e) Initial downtilt angle X (f) Site name, site code numbers X (g) Create base station translations based on TeleCorp input X To load into the MSC - Site Specific Stuff - Neighbor Lists 11. Frequency coordination if required X 12. Perform field site visits to specify antenna mounting locations X and antenna downtilts 13. Provide 2 year subscriber and demand information X 14. Generate a 2 year equipment growth plan based on subscriber and X demand information
15. Spectrum Clearing X 16. Hand-off and performance parameter plan X 17. Provide detail reporting of progress on mutually agreed upon X deliverables
OPTIMIZATION AND SYSTEMS PERFORMANCE
No. Lucent TeleCorp - --- ----------- ------------- 1. Perform system optimization in accordance with Lucent document X "Methods and Procedures for PCS TDMA RF Cluster Testing & Optimization" Handbook 603, Issue 2. 2. Provide personnel, vehicles, software (data collection and post X processing) and equipment (including positioning equipment to perform system optimization 3. Participate in Optimization X X 4. Implement power reductions antenna downtilts and antenna X re-orientations 5. Detailed reporting and work order tracking of the optimization X process on a site by site basis. Reports to include maps and histograms for coverage evaluations, dropped calls, blocked calls, and other performance parameters as reasonable requested by owner 6. Provide access to sites for Lucent to conduct optimization activities X and information regarding access restrictions
BASE STATION SITE CONSTRUCTION
No. Lucent TeleCorp - --- ----------- ------------- 1. Provide specific technical requirements for base station design to X Owner (based on Radio Network Design) 2. Immediate formal notification of product design changes X 3. Architectural/Engineering design for site X 4. Use Layout drawings to prepare Bill of Material. Furnish Bill of X Material to Owner 5. Ensure that ground provide to minicell meets National Electrical Code X Article 250 6. Preparation of tender document for site construction bids 7. Application for building permits X 8. Evaluation of construction bids X 9. Negotiations with bidders X 10. Placing order to contractors X 11. Furnish estimated "site ready for installation" date to Vendor X 12. Schedule installation X 13. Surveyor verification of initial antenna orientations X 13.B Provide Site Ready Check List X 14. Check of site ready for installation X 15. Develop punch list of outstanding civil issues X
16. Supervision of site construction X 17. Auditing contractor invoices X 17.B Review of Construction Specs X 18. Acceptance of completed construction X 19. Owner representative at site-ready inspection X 20. Perform main feed line and antenna VSWR sweeps X 21. Provide and Retrofit Existing Sites with Duplexers once GA X 22. After GA date, Install Vendor Provided DMAU X
SITE INSTALLATION/INTEGRATION
No. Lucent TeleCorp - --- ----------- ------------- 1. Delivery to BTS including transportation, al lifting and hoisting, X associated permits and coordination with landlord 2. Perform physical installation per the site cabinet installation X manual Lucent 401-703-300, Issue 1 or latest available 3. Arrange for site access during cell install and testing X 4. Installation and test T1 facilities up to BTS platform (provide and X insert loop around plugs as required) 4B Install DFRU X 5. Connection of T1 to BTS cabinet X 6. Teleco connection for De-mark to CSI X 7. Install AC services connections to power cabinet and perform power X installation to primary and growth cabinets 8. Install tested coaxial jumpers for main feed line to cabinet RF X interface connection. Tag jumpers with proper color code as defined by site plan 9. Drill/bolt to platform, concrete pads, galvanize drill holes where X needed 9A Define Alarm Configuration (normally open/closed) X X 10. Connect and test TeleCorp-provided external alarms (tower lights, AC, X Door, etc.) 11. Make all cabinet ground connections and ensure compliance to industry X standard 12. Evaluate and approve physical installation (Per Agreed to Punch X list/Check list)
13. Perform PCS TDMA power up and test per Lucent installation X engineering handbook 223 or latest issue 14. Perform cell boot from switch X 15. Perform cell diagnostic session from switch and provide a hard copy X of the session 16. Provide switch cell diagnostics, and HEH reports X 17. Review switch cell diagnostics, and HEH reports X 18. Source and replace defective equipment during cell install and testing X 19. Provide ongoing defective component list, via cell log, for each cell X up to system acceptance 20. Verify all components working properly with switch X 21. BTS and component level tracking equipment (For Warranty and CN X Tracking Purposes) 22. Creation of BTS acceptable test plan X 23. Approval of BTS acceptance test plan X X 24. Perform BTS acceptance test plan X 25. Acceptance of BTS test results X 26. Create punchlist X X 27. Concurrent with final system acceptance, bring all BTS components and X the BTS to the current standard BTS configuration that is operationally equivalent
CIVIL CONSTRUCTION OF SWITCH FACILITIES
No. Lucent TeleCorp - --- ------ -------- 1. Determine which type of air cooling system will be installed (Lucent X X advises only based upon equipment requirements) 2. Determine overhead of floor cabling X X 3. Determine raised floor or not X X 4. Definition of technical system requirements e.g. floor space, floor X loading, heat load, DC amperage, A/C requirement. Provide to owner 5. Definition of suitable area X 6. Evaluate possibilities and select the best one X 7. Vendor pre-survey of selected location with Owner X 8. Negotiate with site owners X 9. Finalize lease contract X 10. Civil engineering design for MSC locations X 11. Approve completed layout plan, including transmission equipment area X X 12. Define requirements for Lucent equipment grounding to conform with X National Electrical Code Article 250 13. Install building ground system X 14. Install building and equipment ground system X X 15. Detailed installation design completed for MSC/ECP, including X switching system demark for T1, OM&P, data circuits, modems, I/O, etc., to be provided on CAD if available 16. Preparation of tender documents for construction bids for MSC X locations
17. Evaluation of bids X 18. Negotiations with bidders X 19. Selection of sub-contractors X 20. Place orders to sub-contractors X 21. Supervision of site construction X 22. Auditing of contractor invoices X 23. Review and advise on completed site construction X 24. Acceptance of completed site construction X 25. Building ready inspection and acceptance with Owner X X 26. Security during construction X 27. Install fire and security systems X 28. Determine hours of reserve for emergency power X X 29. Determine fuel tank size X X 30. Provide for shipment and temporary storage equipment (Does not have X to be in market. May be in Oklahoma City until your site is ready) 31. Prepare schedule of building ready dates for equipment locations X
SWITCH INSTALLATION
No. Lucent TeleCorp - --- ------ -------- 1. Prepare market requirement questionnaire (database) e.g. cell plan, X network plan, grade of service plan, transmission plan, numbering plan, routing plan, network synchronization plan, signaling plan, charging plan, services plan, operations and maintenance plan 2. Answer market requirements questionnaire X 3. Review market requirements answers and recommend changes or approve X 4. Input based AWS Feature Set X 5. Define exchange requirements data (exchange specific items of the X market requirements) for MSC/ECP, BTS, OM&P 6. Complete ODA X 7. Vocoder Relocation X 8. Install and test all translations X 9. Approve translations X 10. Detailed switch design and dimensioning X 11. Provide erlang projections for switch dimensioning X 12. Provide floor layout based on TeleCorp Scale Floor Plan X 13. Verification of structural, HVAC, power requirements for operation X
14. Switch equipment delivery and install to Lucent provided DSX panel X (Punch list for DSC by TeleCorp) 15. Spares inventory to be provided on site X 16. Concurrent with, and as part of final acceptance, a full accounting X of all equipment shipped, installed, and left as spares will be provided to TeleCorp 17. Review and approval of all equipment listed by vendor under X accounting requirement 18. Creation of MSC/ECP acceptance test plan X 19. Approval of MSC/ECP acceptance test plan X 20. Perform final testing X 21. Final acceptance of switch X 22. Security during installation of switch, if deemed necessary X X 23. Furnish installation tools, test equipment and supplies as required X during installation 24. Supply basic facilities, e.g. lights, power, water, sanitary, X telephone connection 25. Engineer, design, furnish, and install DC power system X 26. Approve DC power system design X 27. Provide DC power system acceptance test plan X 28. Review and approve DC power system acceptance and test plan X 29. Perform DC power system acceptance and test plan X
ACCESS AND LEASED LINES
No. Lucent TeleCorp - ---- ------ -------- 1. Supply conversion formula or chart for calculating slots required for X control and/or OSS functions for sector/OMNI cells, as a function of number of voice channels. Specify any particular slot assignment constraints, e.g. control must always be on Ch. 16, and other limitations on connection of circuits if relevant to TDMA. 2. Provide interface requirement, to Network Elements, for Lucent X Equipment 3. Obtain cost and schedule of supply of leased lines from Telco X providers 4. Supply report to vendors with trunk and slot assignments on customer X side of DSX demark 5. Use connectivity report to size MSC and BTS hardware and software. X Review for equipment incompatibilities. Return acknowledgement to Owner. Discuss problem area with Owner. Provide lead time requirements for circuits. 6. Develop schedule of required in-service date for each circuit. Enter X order to Telco provider. Follow up progress. If facilities schedule cannot be met by Telco provider adjust schedule and notify vendors 7. Obtain Telco provider requirements for equipment rooms, power, X standard connectors, levels, impedances, etc. 8. Specify and supply appropriate lease line facilities X 9. Arrange access from Telco providers for installation of leased lines X 10. Supply Owner with performance requirements for 1.5 Mb/s circuits X
11. Approve access leased line performance criteria X 12. Provide leased lines and access circuits X 13. Perform short term (1 hour) bit error rate and other line testing X 14. Review Telco provider requirement against equipment standard. Advise X Owner of problems or incompatibilities 15. Design and furnish equipment room or space for Telco provider line X connections. Copy layout to vendor 16. Installation of equipment for Telco provider line connections X 17. Furnish Telco provider lines up to Telco provider connector block X (Telco provider to furnish) 18. Install cables, connectors blocks, and protectors (if required) from X network equipment to Owner supplied DDF and CSUs. Tag with identity 19. Design, furnish and install connection between the network equipment X (MSC) and the point of connection (DSX). Provide cross-connect elevation diagrams and record to Owner (TeleCorp have a Cross-Connect Plan) 20. Supply and install all demark equipment at MSC, Includes i.e. DS1, X DSX, V.35, RS232, DSX, patchmates, modem eliminators, and all other connection requirements on the vendor side of DSX demark 21. Provide cross connects from vendor DSX demark to TeleCorp DSX demark X
ACCESS CIRCUITS (MSC-PSTN)
No. Lucent TeleCorp - --- ------ -------- 1. Identify voice channel, signaling, and data service requirements by X MSC, by year 2. Determine destination/origin of traffic X 3. Specify performance/reliability/connectivity requirements and X standards for the network 4. Obtain cost and schedule of supply of access lines from Telco X provider. Negotiate charges and due dates 5. Review MSC-PSTN Network Design X 6. Supply data to vendor's access configuration X 7. Use access data to size MSC hardware and software. Review for X equipment incompatibilities. Discuss problem areas with Owner. Supply configuration reports to Owner 8. Develop schedule of required in service dates for access circuits at X each MSC. Enter order with Telco provider and follow up on progress. If facilities schedule cannot be met, adjust schedule and notify vendors 9. Review Telco provider requirements against equipment standards. X Inform Owner of problems or incompatibilities 10. Design equipment space for line connections X 11. Furnish equipment and copy of layout to customer X 12. Specify and supply appropriate connecting facilities X 13. Arrange access for Telco provider installation X 14. Supply Owner with BER objectives and other line parameters necessary X for guaranteed performance levels 15. Perform short term (approx. 1 hour) BER and other line testing if X requested by Vendor. Supply report to Vendor if problems are observed
16. Supply vendor with Telco provider power requirements X 17. Furnish battery power to Telco provider. Incorporate Telco provider X battery and connection requirements in equipment order 18. Furnish Telco provider lines up to Telco provider connector block X (Telco provider to finish) 19. Install cables, connectors, blocks and protectors (if required), form X network equipment to Telco provider connector block. Tag cables and DDF with identify. Design, furnish and install jumper connectors between the network equipment, and the Telco provider point of connection. Provide cross-connect record to Owner. 20. Design backhaul of transmission network X 21. Determine transmission equipment design on customer side of DSX demark X 22. Select transmission equipment vendors X 23. Negotiate prices, and obtain transmission equipment delivery X 24. Design transmission room equipment layout X 25. Provide transmission room power requirements for dimensioning of DC X power plant 26. Engineer DC power plant to support switch and transmission requirements
SYSTEM INTEGRATION VENDOR PROVIDED EQUIPMENT
No. Lucent TeleCorp - --- ------ -------- 1. Full integration of switches platform to AUC X X HLR X X VLR X X MSC X X SMS-SC X X STP X X Billing System X X PSTN X X NOC1 X X Autopace X X Fraud System X X ILR (GSM=IS41 Gateway) X X OTA X X Voice Mail X X BTS X X Vendor-supplied products X X Other AWS systems X X Other roaming partners X X NACN X X Customer Care X X 2. If interface doesn't presently exist, work with vendor on interface X X specs 3. Prepare plan for testing of integration of Vendor equipment and X X provide to owner for review 4. Review test plan, agree to changes, and approve X X 5. Perform integration tests of interfaces defined above X X
6. Customer to be present during integration test X 7. Record results of tests and provide Owner X 8. Review tests results and proceed as required X
2. Ensure participation of other vendors in integration Process. CUSTOMER CARE SYSTEM (INCLUDING BILLING SYSTEM)
No. Lucent TeleCorp - ------ ------ -------- 1. Define customer care and billing requirements X 2. Define requirements on interfaces to Vendor's equipment X 3. Acceptance testing of Lucent interfaces billing platform X X 4. Review test plan, agree to changes and approve X 5. Perform interfaces tests according to test plan X 6. Record test results and provide to Owner X 7. Review and approve tests results and proceed as required
PCS TDMA TERMINALS (MAXIMUM 3 VENDORS)
No. Lucent TeleCorp - --- ------ -------- 1. If Applicable, develop test plan for interface testing X X 2. If available, provide and terminal test data and results from X Interoperability lab or field 3. Review test plan, agree to changes and approve X 4. Supply third party terminals X 5. Perform interface tests according to test plan X X 6. Record test results and provide to Owner X X 7. Review test results and proceed as required X
No. Lucent TeleCorp - --- ------ -------- 1. Perform vendor commissioning tests (equipment) and record results X (Lucent equipment) 2. Review vendor test results X 3. Prepare system acceptance test procedures (For Lucent Equipment) X 4. Review and approve system acceptance test procedures X 5. Perform system acceptance test and record results (For Lucent X Equipment) 6. Develop punchlist detailing major and minor items X 7. Remedy all major punchlist items prior to system acceptance on all X Lucent equipment 8. Remedy all minor punchlist items prior to final acceptance on Lucent X equipment 9. Review test results X 10. Accept system X 11. Provide manuals, drawings and documentation for all equipment, X software, and diagnostics provided by vendor. One complete set per switch of hardcopy and CD-ROM required. Included are any user guides 12. Accept documentation as provided or request changes X 13. Turn-up for service X 14. Monitor performance during Acceptance Test Period X X 15. Perform corrective action as necessary for all Lucent provided X equipment, interfaces, and protocols 16. Develop Exit Criteria X X
No. Lucent TeleCorp - --- ------ -------- 1. Develop training packages for engineering and operations in English X 2. Review training packages X 3. Deliver training X 4. Determine recommended spares requirements X 5. Approve spares recommendations X 6. Provide spares X 7. Spares provided by vendor at system acceptance to be operationally X equivalent of latest revision level 8. Establish return and repair procedures X Warranty Non-warranty 9. Review return and repair procedure-change or approve as necessary X 10. Develop test equipment recommendations for Lucent components X 11. Review and approve test equipment recommendations X 12. Order test equipment except as noted in #13 below X 13. Furnish Lucent-specific test equipment (If there is any Test X equipment they need after we leave, get it for them and they will pay) 14. Develop proposal for technical assistance plan for hardware and X software both on-site and remote with resources defined in Section 1.10 15. Review technical assistance plan and approve X 16. Establish technical assistance if ordered by Owner X 17. Develop installation plans for each location and entity (pert or bar X chart) (MS Project Plan and Access Database)
Site Ready Check List The following items are required to install a typical PCS TDMA mini-cell 1. A/C Power-or generator 2. Inside construction complete 3. Antenna erection complete (Union will NOT allow work while antenna is being erected) 4. Access to site arranged prior to Build Team dispatch 5. Site cleaned of construction materials and dust 6. POTS or cell phone provided 7. Equipment delivered to site 8. Grounding completed and per equipment specifications 9. Ancillary equipment delivered and ready at time of equipment installation (Batteries; Rectifiers; FIF; cable racks; etc.) The following items are required to integrate (intra cell test) a PCS TDMA mini- cell 1. Commercial A/C or commercial generator 2. T1 or Microwave facility in place and verified 3. POTS or Tellular box 4. Antennas (installed & swept) 5. Translation loaded at switch 6. Access arranged prior to Test Team dispatch. ATTACHMENT D RF Performance Criteria for System Acceptance 1.0 Metrics and procedures. The performance metrics defined below (section 5.0) are part of the contract. The procedures for measuring the performance metrics shall be executed as described below. The metrics and associated measurement techniques apply to the entire as-built TDMA system (i.e., all clusters). Metrics assessed on a per cluster basis may be computed but are for information only and shall not be used in assessing system acceptance. 2.0 Test setup. All tests shall be performed using test vehicles equipped with a calibrated test mobile(s) that meet or exceed the minimum performance specifications (TIA/EIA IS-136 and IS-137) for a TDMA mobile subscriber unit. Test mobiles shall have fixed attenuators connected between the transceiver and antenna to compensate for the test setup. The compensation shall be computed to render the test data equivalent to that which would be obtained with an operational subscriber unit under common conditions (e.g., attenuation shall be added in order to compensate for the benefit offered by the additional gain and height of the test vehicle antenna.). The values of any attenuators shall be mutually agreed upon and determined via calibration procedure. No attenuators shall be added into the mobile path to compensate for vehicle or building penetration losses. The net value of attenuation used shall take into account the cable loss from test vehicle antenna to test unit, as this loss would not present in an operational subscriber unit under common conditions. 3.0 RF Design. The RF design is to be done by the Customer and audited by the Vendor; accordingly, mutual agreement shall be reached in determining the design service area. The design service area consists of those areas predicted via design tools and processes to be covered. In addition, for the RF warranty to be valid, the Vendor and the Customer shall mutually agree to all design parameters and translations (e.g. handoff thresholds, frequency plan, C/I [ratio of carrier to cochannel interference power], C/N [ratio of carrier to total impairment power], BER [bit error rate], antenna orientations). 4.0 Coverage Area and Valid Data The coverage area for test shall consist of mutually agreed upon test drive routes within the design service area (see section 3.0). For purposes of data collection and analysis, the test drive routes shall be divided into spatial subdivisions called geographic bins. The bins shall be of mutually agreed size. During data collection, the test routes shall be driven at speeds that are representative of normal subscriber behavior. To be valid, data collected must be taken within the design service area (see section 3.0). Only valid data shall be used in computing the performance metrics (see section 5.0). In-building coverage via external TDMA infrastructure shall not be tested as part of acceptance. 5.0 Performance Metrics The following performance metrics shall be satisfied for acceptance. All test drive data shall be collected and analyzed using Vendor's AutoPace and TEMS (or mutually agreed equivalent) tools. 5.1 Bit Error Rate (BER). Forward and reverse links shall be characterized separately. Data shall be averaged per geographic bin in order to obtain an average BER score that characterizes that bin's location. Bin size must be mutually agreed between Vendor and Buyer and need not necessarily be uniform; however, a minimum of 5 seconds of data per bin must be used in computing the BER score for that bin. Of the valid data collected (see 4.0), the worst 1% of bins may be discarded. The remaining 99% of the bins shall together constitute the non-excluded area. The remaining average BER values for all bins shall be averaged together. For acceptance, this system average shall not exceed 3%. 5.2 Dropped Calls. Data shall be collected and analyzed as follows. A sequence of test calls shall be placed along the test drive routes. The number of calls placed shall be sufficient to ensure statistical significance of the results (i.e., at least 1,500 calls over the entire system unless mutually agreed to be different). The duration of each call shall not exceed 100 seconds. The dropped call rate shall be the ratio of successfully originated calls that were dropped to the total number of successfully originated calls. A successfully originated call is defined as a call that has entered the voice state. This definition includes drops for any reason, including handoff failures. Only data collected within the non-excluded area (see section 5.1) shall be included in this analysis. For acceptance, the system dropped call rate shall be less than or equal to 1.7%. 5.3 Established Calls. Data shall be collected and analyzed as follows. A sequence of test calls shall be placed along the test drive routes. The number of calls placed shall be sufficient to ensure statistical significance of the results. The established call success rate shall be computed as the ratio of the total number of successfully originated and terminated calls to the total number of valid call attempts. A successfully originated/terminated call is defined as a call that has entered the voice state. A valid origination call attempt is defined as an origination attempt via a correctly dialed number to a non-busy radio/number at the cell/switch. A valid termination call attempt is defined as a termination attempt via a correctly dialed number from the switch through a nonbusy radio to an idle test mobile. Only data collected within the non- excluded area (see section 5.1) shall be included in this analysis. For acceptance, the established call success rate shall meet or exceed 98%. 6.0 A link budget and associated projections of coverage probability are included in Appendix 1. The presence of this information within this appendix does not, explicitly or implicitly, constitute warranties on the values provided, with the exception of values for Vendor provided equipment as referenced in Section __ of this contract. These values are for information only. The performance warranty is based only the performance metrics specified above as computed on valid data collected on the test drive routes. Appendix 1 Table 1: Probability of Service at Cell Edge (%) - --------------------------------------------------------------------- Morphology Indoor In Vehicle Outdoor - --------------------------------------------------------------------- Urban 80 99 >99 Suburban 74 94 >99 Rural 74 88 99 - --------------------------------------------------------------------- Table 2: Probability of Area Coverage (%) - -------------------------------------------------------------------- Morphology Indoor In Vehicle Outdoor - --------------------------------------------------------------------- Urban 94 >99 >99 Suburban 90 99 >99 Rural 90 98 >99 - ------------------------------------------------------------------- Given the following: Recommended Base Station Balanced EIRP: 52.2 dBm (165.8W) Recommended Base Station Transmitter Output 37.9 dBm (6.2W) Designed signal strength at cell edge: Urban -75dBm Suburban -82dBm Rural -85dBm Standard deviation for log-normal shadowing: Outdoor 8dB Indoor 5dB Vehicle 3dB Vehicle Penetration Margin: 8dB Building Penetration Margin: Urban 2OdB Suburban l5dB Rural l2dB ATTACHMENT E Optional Software Pricing
- ----------------------------------------------------------------------------------------------------------------- Year Pops % Cov Pops Cov Pen Subs Yearly Fee Cumm Fee Pops - ----------------------------------------------------------------------------------------------------------------- 1-Jan-99 11,100,000 0.2 2,220,000 0.0010 2,220 13,320 13,320 - ----------------------------------------------------------------------------------------------------------------- 1-Jan-00 11,300,000 0.4 4,520,000 0.0175 79,100 474,600 487,920 - ----------------------------------------------------------------------------------------------------------------- 1-Jan-01 11,373,450 0.5 5,686,725 0.0225 127,951 767,708 1,255,628 - ----------------------------------------------------------------------------------------------------------------- 1-Jan-02 11,447,377 0.55 6,296,058 0.0275 173,142 1,038,850 2,294,477 - ----------------------------------------------------------------------------------------------------------------- 1-Jan-03 11,521,785 0.6 6,913,071 0.0325 224,675 1,348,049 3,642,526 - ----------------------------------------------------------------------------------------------------------------- 1-Jan-04 11,596,677 0.65 7,537,840 0.0375 282,669 1,696,014 5,338,540 - ----------------------------------------------------------------------------------------------------------------- 1-Jan-05 11,672,055 0.66 7,703,557 0.0425 327,401 1,964,407 7,302,947 - ----------------------------------------------------------------------------------------------------------------- 1-Jan-06 11,747,924 0.67 7,871,109 0.0450 354,200 2,125,199 9,428,147 - ----------------------------------------------------------------------------------------------------------------- 1-Jan-07 11,824,285 0.67 7,922,271 0.0475 376,308 2,257,847 11,685,994 - -----------------------------------------------------------------------------------------------------------------
ATTACHMENT F TeleCorp and Lucent New England
May 1 July 27 Aug 15 Dec 15 TBD Feb 15 June 15 July 30 Sept 30 Nov 15 Jan 15 - ------------------------------------------------------------------------------------------------------------------------------------ T-Order L-Begin BTS Equip L-Duplexers T-PSTN and SS7 L-MSC Install L-Network Number Deliveries Available Links Complete Element Blocks Installed Integration T-Begin MSC Civil T-Duplexer L-Begin BTS Complete T-HLR Decision Construction Decision T-Transmission Integrations Date Equip . Billing Installed L-First Call T- Data . Voice Mail Network T-Begin T1 T-Microwave Complete Acceptance Relo Complete . Customer Care . Fraud . AT & T Core Features T-Begin BTS L-MSC Equip. T-MSC Civil L-Network L-New Orleans Site Ship Complete Element Filter Construction Integration Solution T-MSC Power T-Begin Complete Installed Room Transmission Complete Equipment . HLR T-NOC Complete Install . SMSC T-Launch Sites L-Begin MSC Constrution Equip. Install . NACN Complete . Autospace T-Lockdown of Launch Date (Launch Minus 60 Days) TBD TBD - ---------------------------------------------- L-Launch Sites Optimization Complete T-Begin System Acceptance Testing T-Begin 30 Day Stable Period (Launch Minus 30 Days) T-System Acceptance * Launch *
T-TeleCorp Responsibility L-Lucent Responsibility ATTACHMENT G ATTACHMENT G Engineer's Notes This document provides high level specifications for modifications to the PCS TDMA MiniCell needed to support TeleCorp. Primary objectives of these modifications are the following: 1. Provide support for any two (2) different PCS frequency blocks on every sector of the MiniCell. This capability will give the service provider the ability to perform radio frequency changes remotely from the MSC via software command. 2. Reduce the antenna and antenna cable counts by providing double duplexing tower top low noise amplifier (DTT-LNA). The DTT-LNA will not be block- specific and will thus support multiple PCS blocks as discussed in item 1. Specifications for multiple band support, final product: The modified PCS TDMA MiniCell shall operate in any two(2) different PCS frequency blocks on each physical antenna face (i.e., sector). It shall support up to 8 traffic radios per sector, which can be allocated in any combination between the 2 blocks. Radio channel assignments shall be made from the ECP (using current APX RCV), and for a given radio, channel assignments within either block will be allowed. The modified PCS TDMA MiniCell shall be operated only with the double duplex tower top Low Noise Amplifier (DTT-LNA). All current radio diagnostics shall be supported. Antenna diagnostics shall be provided via the current transmit antenna functional test. The modified PCS TDMA MiniCell shall be available only in the current Type 3 configuration; requiring a primary and one growth cabinets as the minimum configuration. The current feature set shall be available. Note that there may need to be certain restrictions on allowable combinations, or spacing of channels due to intermodulation performance. For example, 2 channels that are spaced 20 MHz apart will cause a 3rd order intermodulation product to fall directly on the receive frequency of the lower channel. This situation should not be allowed. Every effort will be made to minimize these situations, and the customer will be provided with equipage recommendations. Specifications for multiple band support, interim product The interim modified PCS TDMA MiniCell shall operate in any two(2) different PCS frequency blocks on each physical antenna face (i.e., sector). It shall support up to 8 traffic radios per sector and on each sector, a maximum of 4 per block, which will be allocated in pairs between the two blocks. Radio channel assignments within a block shall be made from the ECP (using current APX RCV). In addition, each radio may be enabled and disabled from APX RCV. The interim modified PCS TDMA MiniCell shall be operated only with the double duplex tower top Low Noise Amplifier (DTT-LNA). The interim modified PCS TDMA MiniCell shall be available only in the current Type 3 configuration; requiring a primary and one growth cabinets as the minimum configuration. Specifications for the Double Duplex Tower Top Low Noise Amplifier: The double duplex tower top LNA (DTT-LNA) shall consist of two parts: the Duplex Masthead Antenna Unit (DMAU) and the Duplex Frame Receive Unit (DFRU). The DMAU will be mounted on the antenna mast, near the antenna to minimize the cable length. The DFRU shall be mounted within the MiniCell enclosure; it replaces the current FRU used in non-duplex tower top applications. The combination of DMAU and DFRU shall provide a common cable for transmit and receive signals for the run up the antenna tower, and shall allow a common antenna to be used for transmit and receive. DTT-LNA shall be required for both diversity receive paths, when diversity is equipped, and both receive paths will be duplexed with transmit paths if more than one traffic radio is equipped. The DMAU and DFRU shall always be used together. The DMAU and DFRU shall be designed to support 60 MHz base station transmit and receive bands. The noise figure for the entire MiniCell receive path, measured at the input of the DMAU, and including the combination of DMAU, up to 7 dB antenna cable loss, DFRU, RF switch, EDRU and frame cabling shall not exceed 5.5 dB. The DFRU shall provide DC power to the DMAU over the antenna cable. The DFRU shall monitor the DMAU current alarm and report alarms to the remote ECP, in the same manner as the current MAU/FRU combination. ATTACHMENT H ATTACHMENT H EXTENDED WARRANTY PLAN Upon the expiry of the warranty period applicable to any equipment, purchaser may, at its option, subscribe to Vendors's extended warranty plan for the repair and/or replacement of the hardware components of such equipment. The support services provided by Vendor to Purchaser under the extended warranty plan shall be equivalent to those services which were available to Purchaser in respect of such equipment prior to the expiry of the warranty period relating to such equipment. The price of subscribing to the extended warranty plan, during the initial term, is set out below: - ----------------------------------------------------------------------------- TYPE OF ANNUAL PRICE (a) NETWORK ELEMENT PER NETWORK ELEMENT - ----------------------------------------------------------------------------- 5ESS Switch 2/% of Value of Out-of Warranty Hardware - ----------------------------------------------------------------------------- PCS Access Manager 2% of Value of Out of Warranty Hardware - ----------------------------------------------------------------------------- PCS Minicell $2,000 per PCS Minicell - ----------------------------------------------------------------------------- PCS Microcell 2% of Value of Out of Warranty Hardware - ----------------------------------------------------------------------------- ATTACHMENT I
- ------------------------------------------------------------------------------------------------------------------------------------ 1997 TDMA Plan: Cellular & PCS =============================================================================================================================== R9.0 (Cellular) R9/1 (PCS) R9.1 (Cellular) R10.0 CI 6/6/97 CI 6/27/97 GA 8/29/97 GA target 12/2/97 - --------------------------------------------- ------------------------------ ----------------------------------------- . EDRU for 850 MHz - VSELP only . ACELP Phase 2, Switchable Per . Digital Locate - EDRU Support . Visual Zone ID Call . DVCC with RSSI . Carrier-Specific Teleservice Transport . Interhyperband (PCS-D to . Mobile Saturation . OA&M Improvements Cellular A) Hand-down Resolution . Analog Performance Enhancements: . TTLNA Support . Hybrid MAHO/Locate ------------------------------ - SAT SINAD for Voice . ARR - Service Measurements ----------------------- Overhaul (Phase 2) PCS . IS-136 Private Networks - Digital Color Code Tower Top ECP 10.0 . BER-Controlled DPC - --------------------------------------------- Low Noise GA 7/97 Amplifier . Rogue Mobile ----------------------- Detection ------------------- . IS-41 Facilities . Rogue Mobile Directive 2 Identification Messaging . AMUG 29-15 VCSA ------------------- Trigger Type . AMUG 29-16 CP Failure Reason Msg . E911 (ECP) . HA OMP (ECP) ----------------------------------------- -------------------- PCS C,D,E,F band Filters -------------------- =============================================================================================================================== 1H97 Lucent Technologies Proprietary - Restricted 2H97 - ------------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------- 1998 TDMA Plan: Cellular & PCS ------------------------------------------------------------------------------------------------------------------------------ R11.0 R12.0 R13.0 Candidates FOA 1/98 GA target 9/98 GA target 4Q98 GA target 2/98 ------------------------------------------- ------------------------------------------- -------------------------- . Vocoder Relocation . Two-Branch Intelligent Antenna . Interhyperband . IS-136 SMS Mobile Originated Phase 1 Operation (Digital to . R-Data over DCCH and DTC* . IS-136A Calling Name Digital) - User Acknowledgment Presentation . DCCH Info on AVC - Mobile Originated Messages . IS-130/IS-135 Circuit Mode Data & Release . AMUG 36-12 Separate DCCH and Fax*# . Service Meas Overhaul DTC "Access Thresholds . IS-136A Over the Air Activation* Phase 3 . AMUG 35-17 HOBIT to AMPS (3 . Test-EDRU . XTA support on S1lmm thresholds) . IS-54/IS-136 Signaling Message . AMUG 35-06 Dual -------------------------------------------- Encryption Server Group OOS 1999 Candidates ------------------------------------------- Limits -------------------------------------------- . AMUG 36-13 Chng . Flexible Channel Allocation TDMA Trans Levels . Teleservice Screening Ph2 . AMUG 38-13 DS-1 . Hierarchical Cell Enhancements Alarms Clearing after . 2 Branch Intelligent Antenna Ph2 DS-1 Board is Restored . PACA . AMUG 28-29 Locate . Multiple DCCH's on a single EDRU Count per Face . IMSI -------------------------- . Mobile Station Locator . Flexible Alerting . Wireless Business Service . SMS Broadcast . Separate BER Thresholds for ACELP and VSELP . Discontinuous Transmission . Enhanced Voice Privacy . Automatic Call Delivery on Deregistration . IS-136+ ---------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------ 1 H97 Luccent Technologies Proprietary-Restricted 2 H97 - -----------------------------------------------------------------------------------------------------------------------------------
Lucent Technologies Inc. 4851 LBJ Freeway Suite 900 Dallas, Texas 75224 May 12, 1998 Thomas Sullivan Gerald Vento 1101 17th Street, N.W. 9th Floor Washington, D.C. 20036 Gentlemen: Reference is made to the General Agreement for Purchase of Personal Communications Systems and Services, dated the date hereof, between TeleCorp PCS Inc. ("TeleCorp") and Lucent Technologies Inc. ("Lucent") regarding the purchase by TeleCorp from Lucent of certain telecommunications systems and services (the "Agreement"). In connection with the execution and delivery of the Agreement by TeleCorp and Lucent, Lucent hereby agrees as follows: 1. Lucent hereby agrees that any Affiliate (as hereinafter defined) shall have the right (but not the obligation) to purchase from Lucent telecommunications systems and services under terms identical to the terms contained in the Agreement; provided, however, that (a) Lucent shall be reasonably satisfied with the credit worthiness of the Affiliate and (b) Lucent shall not be required to provide financing to such Affiliate unless Lucent, in its reasonable discretion, agrees to do so. If an Affiliate elects to purchase equipment from Lucent on the same terms as the Agreement, Lucent agrees to enter into an agreement ("Separate Agreement") with such Affiliate on the identical terms as the Agreement, with only such changes therein as are appropriate to reflect the markets to be covered by such Separate Agreement, the Affiliate being the Customer, and similar changes; however, the pricing, warranty, discount and other terms and conditions contained in the Agreement shall be contained in the Separate Agreement (except for financing terms, unless otherwise agreed to by Lucent). As used herein, the term "Affiliate" shall mean any person, firm, partnership, corporation or other entity ("Company") operating a wireless telecommunications system (a) which is, directly or indirectly, controlled by, under common control with or controls TeleCorp; or (b) which is controlled, directly or indirectly, by either or both of Thomas Sullivan or Gerald Vento (collectively the "Controlling Parties"). For purposes of the foregoing definition of Affiliate the term "control" shall mean (a) the ownership, directly or indirectly, of at least 50.1% of the voting control of the Company, (b) a binding agreement or option to acquire at least 50.1% of the voting control of the Company or (c) serving as a management or construction management agent for an entity holding a construction permit or license to operate a wireless telecommunications system or having an agreement to operate such. 2. Entire Agreement. This Letter Constitutes the entire agreement between ---------------- the parties and supersedes any prior understandings, agreements or representations by or between the parties, written or oral, to the extent they related in any way to the subject matter hereof. 3. Counterparts. This Letter may be executed in counterparts, each of ------------ which shall be an original but both of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto. 4. Jurisdiction. The provisions of this Letter shall be governed by the ------------ internal laws of the State of New York, without regard to its principles of conflict of laws. 5. Notices. All notices to a party hereunder shall be deemed to have been ------- adequately given if delivered in person or mailed, certified mail, return receipt requested, to such party at its address set forth below (or such other address as it may from time to time designate in writing to the other parties hereto): To Lucent: Doris Jean Head Suite 980 44851 LBJ Freeway Dallas, TX 75244 with a copy to: Marc N. Epstein Corporate Counsel 283 King George Road Warren, NJ 02059 980-559-3377 980-559-8174 (facsimile) To Controlling Parties: Thomas Sullivan Gerald Vento 1101 17th Street 9th Floor Washington, D.C. 20036 6. Succession and Assignment. This Letter shall be binding upon and inure to the ------------------------- benefit of the parties named herein and their respective successors and permitted assigns. Please confirm your agreement to the foregoing by executing the counterpart of this letter and returning it to the undersigned. Very truly yours, LUCENT TECHNOLOGIES, INC. By: /s/ [signature illegible] ------------------------- Name: ------------------------- Title: ------------------------- AGREED TO AND ACCEPTED AS OF 12 May, 1998 /s/ Thomas Sullivan - -------------------------- Thomas Sullivan /s/ Gerald Vento ___________________________ Gerald Vento May 12, 1998 Lucent Technologies Inc. 4851 LBJ Freeway Suite 900 Dallas, Texas 75244 Attention: Ms. Doris Jean Head - ------------------------------ Reference is made to the General Agreement for Purchase of Personal Communications Systems and Services, dated the date hereof, between TeleCorp PCS, Inc. ("TeleCorp") and Lucent Technologies Inc. ("Lucent") regarding the purchase by TeleCorp from Lucent of certain telecommunications systems and services (the "Agreement"). Capitalized terms used in this letter, unless otherwise defined herein, shall have the meanings ascribed to them in the Agreement. In connection with the execution and delivery of the Agreement by TeleCorp and Lucent, and as a condition thereto, TeleCorp and Lucent have agreed as follows: 1. The Minimum Market Commitment set forth in Section 1.4 of the Agreement shall be expanded to include San Diego and Puerto Rico, provided (i) TeleCorp acquires these markets from AT&T Wireless and TeleCorp, its sole discretion, elects to build out the Initial System for each such Market and (ii) at the time that TeleCorp acquires these Markets and, in its sole discretion, elects to build out the Initial System for each such Market, Lucent has theretofore performed, on a timely basis, all of its obligations under the Agreement in accordance with the terms of the Agreement and is not in default of any of its obligations under the Agreement. 2. On or before September 30, 1998, TeleCorp shall have submitted to Lucent binding purchase orders to purchase $40 million in aggregate purchase price (or license fees with respect to Licensed Materials) of Products, Licensed Materials and Services. 3. Seller agrees that it will support Phase I of the FCC requirements regarding E-911 services and the FCC requirements regarding CALEA and, with respect to the Initial System for each Market, will provide Customer as part of the Initial System for each Market, at no additional charge(with the exception of any third party equipment, software or services), all Products, Licensed Materials and Services required to permit Customer to provide such services to its subscribers in accordance with applicable FCC requirements as in effect at the date of Acceptance of such Initial System. CONSENTED AND AGREED: Lucent Technologies TeleCorp PCS, Inc. By: /s/ [signature illegible] By: /s/ Gerald T. Vento ------------------------------ ----------------------------- Name: Name: Gerald T. Vento ------------------------------ ----------------------------- Title: Title: CEO ------------------------------ ----------------------------- Date: May 12, 1998 Date: May 12, 1998 ------------------------------- ----------------------------- EX-10.3 7 SECURITIES PURCHASE AGREEMENT EXHIBIT 10.3.1 -------------- _________________________________________________________________ SECURITIES PURCHASE AGREEMENT by and among AT&T WIRELESS PCS INC., TWR CELLULAR, INC., CASH EQUITY INVESTORS, TELECORP INVESTORS, MANAGEMENT STOCKHOLDERS and TELECORP PCS, INC. Dated as of January 23, 1998 __________________________________________________________________ TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS............................................................................................ 2 ARTICLE II CONTRIBUTIONS; PURCHASE AND SALE OF SECURITIES; CERTAIN RESTRICTIONS ON TRANSFER....................... 8 2.1 AT&T PCS Contributions................................................................................. 8 2.2 Cash Equity Investor Contributions..................................................................... 9 2.3 TeleCorp Investor Contributions........................................................................ 9 2.4 Management Stockholder Contributions................................................................... 10 2.5 Purchase and Sale of Securities at Closing............................................................. 10 2.6 Additional Purchase by Cash Equity Investors........................................................... 10 2.7 Restrictive Legends.................................................................................... 10 2.8 Use of Proceeds........................................................................................ 11 ARTICLE III CLOSING................................................................................................ 11 3.1 Time and Place of Closing.............................................................................. 11 3.2 Closing Actions and Deliveries......................................................................... 11 3.3 Payment of Transfer Taxes.............................................................................. 13 3.4 Issuance of Additional Shares.......................................................................... 13 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASERS........................................................... 13 4.1 Organization; Power and Authority...................................................................... 13 4.2 Consents; No Conflicts................................................................................. 14 4.3 Litigation............................................................................................. 15 4.4 FCC Compliance......................................................................................... 15 4.5 Brokers................................................................................................ 15 4.6 AT&T PCS Licenses...................................................................................... 15 4.7 Capital Commitment..................................................................................... 16 4.8 No Distribution........................................................................................ 16 4.9 Investor Acknowledgments............................................................................... 16 4.10 Institutional Investors................................................................................ 17 ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY, THE TELECORP INVESTORS AND THE MANAGEMENT STOCKHOLDERS.. 17 5.1 Organization, Power and Authority...................................................................... 17
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Page ---- 5.2 Consents; No Conflicts................................................................................. 18 5.3 Litigation............................................................................................. 19 5.4 FCC Compliance......................................................................................... 19 5.5 Brokers................................................................................................ 19 5.6 Newly Formed Company................................................................................... 19 5.7 Capitalization......................................................................................... 19 5.8 Shares................................................................................................. 20 5.9 No Undisclosed Liabilities; Subsidiaries............................................................... 20 5.10 Offering of Securities................................................................................. 20 5.11 Loan Documents......................................................................................... 21 5.12 Minimum Build-Out Plan................................................................................. 21 5.13 Small Business Matters................................................................................. 21 5.14 No Distribution........................................................................................ 22 5.15 Investor Acknowledgments............................................................................... 22 5.16 Representations as to TeleCorp......................................................................... 23 ARTICLE VI COVENANTS.............................................................................................. 25 6.1 Consummation of Transactions........................................................................... 25 6.2 Confidentiality........................................................................................ 26 6.3 Retained Licenses...................................................................................... 27 6.4 No Further Commitment.................................................................................. 27 6.5 Use of Proceeds........................................................................................ 28 6.6 SBIC Regulatory Provisions............................................................................. 28 6.7 Regulatory Compliance Cooperation...................................................................... 28 6.8 Permitted Pre-Closing Expenditures..................................................................... 29 6.9 Certain Covenants...................................................................................... 30 6.10 Employment Agreements.................................................................................. 31 6.11 Restricted Stock Plan.................................................................................. 31 ARTICLE VII. CLOSING CONDITIONS..................................................................................... 32 7.1 Conditions to Obligations of All Parties............................................................... 32 7.2 Conditions to Obligations of Each Party................................................................ 32
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Page ---- 7.3 Conditions to the Obligations of the Purchasers........................................................ 34 ARTICLE VIII SURVIVAL AND INDEMNIFICATION........................................................................... 34 8.1 Survival............................................................................................... 34 8.2 Indemnification by the Purchasers...................................................................... 35 8.3 Indemnification by the Management Stockholders......................................................... 35 8.4 Indemnification by the Company......................................................................... 36 8.5 Indemnification by the TeleCorp Investors and the Management Stockholders.............................. 36 8.6 Procedures............................................................................................. 36 8.7 Registration Rights.................................................................................... 38 8.8 Limit on Indemnity..................................................................................... 38 ARTICLE IX TERMINATION............................................................................................ 38 9.1 Termination............................................................................................ 38 9.2 Effect of Termination.................................................................................. 39 ARTICLE X MISCELLANEOUS PROVISIONS............................................................................... 39 10.1 Amendment and Modification............................................................................. 39 10.2 Waiver of Compliance; Consents......................................................................... 39 10.3 Notice................................................................................................. 39 10.4 Expenses............................................................................................... 41 10.5 Parties in Interest; Assignment........................................................................ 41 10.6 Applicable Law......................................................................................... 41 10.7 Counterparts........................................................................................... 42 10.8 Interpretation......................................................................................... 42 10.9 Entire Agreement....................................................................................... 42 10.10 Publicity.............................................................................................. 42 10.11 Specific Performance................................................................................... 42 10.12 Remedies Cumulative.................................................................................... 42 10.13 Authorized Agent of AT&T PCS........................................................................... 43
iii Schedules Schedule I -- Cash Equity Investors and Commitments Schedule II-A -- TeleCorp Investors Schedule II-B -- Management Stockholders Schedule III-A -- AT&T PCS Licenses and TWR Licenses Schedule III-B -- TeleCorp Licenses Schedule IV -- Company Territory Schedule V -- Securities Schedule 1.1 -- Pre-Closing Expenditures Schedule 2.1 -- Description of AT&T PCS Contributed and Retained Licenses Schedule 4.2 -- Purchaser Consents Schedule 5.2 -- Company and Management Stockholder Consents Schedule 5.12 -- Minimum Build-Out Schedule Schedule 5.16(d) -- TeleCorp Financial Statements Schedule 5.16(g) -- TeleCorp FCC Proceedings Schedule 6.11 -- Restricted Stock Plan Exhibits Exhibit A -- Form of Management Agreement Exhibit B -- Form of Network Membership License Agreement Exhibit C -- Form of Resale Agreement Exhibit D -- Form of Restated Bylaws Exhibit E -- Form of Restated Certificate Exhibit F -- Form of Roaming Agreement Exhibit G -- Form of Stockholders Agreement Exhibit H- I -- Form of Opinion of Counsel to AT&T PCS Exhibit H-2 -- Form of Opinion of FCC Counsel to AT&T PCS Exhibit I -- Form of Opinion of Counsel to Cash Equity Investors Exhibit J- I -- Form of Opinion of Counsel to TeleCorp Investors Exhibit J-2 -- Form of Opinion of FCC Counsel to TeleCorp Investors Exhibit K- I -- Form of Opinion of Counsel to Company and Management Stockholders Exhibit K-2 -- Form of Opinion of FCC Counsel to Company and Management Stockholders Exhibit L -- Form of Pledge Agreement Exhibit M -- Form of Assignment Exhibit N -- Form of TeleCorp Charter Amendment iv SECURITIES PURCHASE AGREEMENT ----------------------------- SECURITIES PURCHASE AGREEMENT, dated as of January 23, 1998, by and among AT&T Wireless PCS Inc., a Delaware corporation ("AT&T PCS"), TWR Cellular, -------- Inc., a Maryland corporation ("TWR"), the investors referred to on Schedule I --- (individually, a "Cash Equity Investor" and, collectively, the "Cash Equity -------------------- ----------- Investors"), the investors listed on Schedule II-A (individually, a "TeleCorp - --------- -------- Investor" and, collectively, the "TeleCorp Investors"), the individuals listed - -------- ------------------ on Schedule II-B (individually, a "Management Stockholder" and, collectively, ---------------------- the "Management Stockholders") and TeleCorp PCS, Inc., a Delaware corporation ----------------------- (the "Company"). AT&T PCS, TWR, the Cash Equity Investors, and the TeleCorp ------- Investors are sometimes referred to herein, individually, as a "Purchaser" and, --------- collectively, as the "Purchasers." ---------- WHEREAS, AT&T PCS has been granted the PCS licenses described on Schedule III-A (the "AT&T PCS Licenses"); ----------------- WHEREAS, TWR holds the PCS licenses described on Schedule III-A (the "TWR Licenses"); ------------ WHEREAS, TeleCorp Holding Corp., Inc., a Delaware corporation ("TeleCorp"), has been granted the PCS licenses described on Schedule III-B (the -------- "TeleCorp Licenses"); ----------------- WHEREAS, the Management Stockholders organized the Company by the filing of a Certificate of Incorporation (the "Original Certificate"), and as of -------------------- the date hereof the Management Stockholders are the record and beneficial owners of all of the issued and outstanding capital stock of the Company; WHEREAS, the Management Stockholders have extensive experience and expertise in the wireless telecommunications industry and have organized the Company in order to construct and operate a mobile wireless telecommunications system in the territory (the "Company Territory") described on Schedule IV; ----------------- WHEREAS, each of the Purchasers wishes to acquire securities of the Company in consideration of contributions of cash and/or other property to the capital of the Company, and the Company wishes to accept such contributions and issue securities to each of the Purchasers, all on the terms and subject to the conditions herein set forth; and WHEREAS, the parties wish to amend and restate the Original Certificate in its entirety in order to reflect, among other things, the authorization of the securities being issued hereunder, and the parties wish to enter into certain agreements relating to the parties' rights and obligations in connection with the Company; NOW, THEREFORE, in consideration of the promises and the mutual representations, warranties, covenants, conditions and agreements hereinafter set forth, the parties agree as follows: ARTICLE I DEFINITIONS As used herein, the following terms have the following meanings (unless indicated otherwise, all Section and Article references are to Sections and Articles in this Agreement, and all Schedule and Exhibit references are to Schedules and Exhibits to this Agreement): "Affiliate" means, with respect to any Person, any other Person that --------- directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with that Person. For purposes of this definition, "control" (including the terms "controlling " and "controlled") means the power to direct or cause the direction of the management and policies of a Person, directly or indirectly, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise. "Aggregate Commitment" means, with respect to each Cash Equity -------------------- Investor, the amount set forth opposite its name on Schedule I under the heading "Aggregate Commitment." "AT&T Contributed Licenses" has the meaning set forth in Section 2.1. ------------------------- "AT&T License Transfer" has the meaning set forth in Section 3.2(a). --------------------- "AT&T Party" means AT&T PCS, TWR and each Affiliate of AT&T PCS that ---------- is a party to any of the Related Agreements. "AT&T PCS" has the meaning set forth in the preamble. -------- "AT&T PCS Licenses" has the meaning set forth in the first recital. ----------------- "AT&T PCS Purchased Licenses" mean the PCS licenses that the Company --------------------------- has agreed to purchase from AT&T PCS pursuant to the terms of the License Purchase Agreement. "AT&T Retained Licenses" has the meaning set forth in Section 2.1. ---------------------- "Bridge Notes" means promissory notes of TeleCorp issued to certain ------------ Cash Equity Investors. "Cash Equity Investor" has the meaning set forth in the preamble. -------------------- "Cash Equity Investor Contributions" means the Aggregate Commitments, ---------------------------------- The Initial Capital Contributions and the additional cash contributions in respect of the Supplemental Commitments and the Unfunded Commitments, in each case of the Cash Equity Investors. "Class C Common Stock" means the Class C Common Stock, par value $.01 -------------------- per share, of the Company. "Class D Common Stock" means the Class D Common Stock, par value $.01 -------------------- per share, of the Company. "Claim" has the meaning set forth in Section 8.6(a). ----- "Closing" has the meaning set forth in Section 3.1. ------- "Closing Date" has the meaning set forth in Section 3.1. ------------ "Common Stock" means, collectively, Voting Preference Stock, the ------------ Tracked Common Stock, the Voting Common Stock and the Non-Voting Common Stock. "Company" has the meaning set forth in the preamble. ------- "Company Territory" has the meaning set forth in the fifth recital. ----------------- "Confidential Information" means any and all information regarding the ------------------------ business, finances, operations, products, services and customers of the Person specified and its Affiliates, in written or oral form or in any other medium. "Consents" means all consents and approvals of Governmental -------- Authorities or other third parties necessary to authorize, approve or permit the parties hereto to consummate the Transactions and for the Company to operate its business after the Closing Date as currently contemplated. "Contributions" means, collectively, the AT&T Contributed Licenses, ------------- the TeleCorp Equity Interests, and the Cash Equity Investor Contributions. "Credit Agreement" means the agreement among the Company, the lenders ---------------- and the agents referred to therein, and any other parties who become lenders or agents thereunder, to be dated as of the Closing Date, to provide a credit facility having aggregate commitments of at least S435 million, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Credit Documents" means the Credit Agreement and all agreements, ---------------- instruments and documents executed and delivered pursuant thereto, as the same may from time to time be amended, modified or supplemented in accordance with the terms thereof. "Employment Agreements" has the meaning set forth in Section 6.10. --------------------- ------------ "FCC" means the Federal Communications Commission or similar --- regulatory authority established in replacement thereof. "FCC Law" means the Communications Act of 1934, as amended, including ------- as amended by the Telecommunications Act of 1996, and the rules, regulations and policies promulgated thereunder. "Final Order" has the meaning set forth in Section 7.1(b). ----------- "Financing" has the meaning set forth in the SBIC Regulations. --------- "Governmental Authority" means a Federal, state or local court, ---------------------- legislature, governmental agency (including, without limitation, the United States Department of Justice), commission or regulatory or administrative authority or instrumentality. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of ------- 1976, as amended, and the rules and regulations promulgated thereunder. "Indemnified Party" has the meaning set forth in Section 8.6(a). ----------------- "Indemnifying Party" has the meaning set forth in Section 8.6(a). ------------------ "Initial Cash Contribution" means, with respect to each Cash Equity ------------------------- Investor, the amount set forth opposite its name on Schedule I under the heading "Initial Cash Contribution." "Law" means applicable common law and any statute, ordinance, code or --- other law, rule, permit, permit condition, regulation, order, decree, technical or other standard, requirement or procedure enacted, adopted, promulgated, applied or followed by any Governmental Authority. "License" means a license, permit, certificate of authority, waiver, ------- approval, certificate of public convenience and necessity, registration or other authorization, consent or clearance to construct or operate a facility, including any emissions, discharges or releases therefrom, or to transact an activity or business, to construct a tower or to use an asset or process, in each case issued or granted by a Governmental Authority. "License Purchase Agreement" means the License Purchase Agreement, -------------------------- dated as of the date hereof, between AT&T PCS and the Company, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Lien" means, with respect to any asset, any mortgage, lien, pledge, ---- charge, security interest, right of first refusal or right of others therein, or encumbrance of any nature whatsoever in respect of such asset. "Losses" has the meaning set forth in Section 8.2. ------ "Management Agreement" means the Management Agreement between the -------------------- Company and TeleCorp Management Corp. I, L.L.C., in substantially the form of Exhibit A, to be dated as of the Closing Date, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Management Stockholder" has the meaning set forth in the preamble. ---------------------- "Material Adverse Effect" means a material adverse effect on the ----------------------- business, financial condition, assets, liabilities or results of operations or prospects of the Person specified. "Network Membership License Agreement" means the Network Membership ------------------------------------ License Agreement between the Company and AT&T Corp., in substantially the form of Exhibit B, to be dated as of the Closing Date, as the same may be amended, modified or supplemented in accordance with the terms thereof. "New York Courts" has the meaning set forth in Section 10.6. --------------- "Non-Voting Common Stock" means the Company's Class B Non-Voting ----------------------- Common Stock, par value $.01 per share. "Old Common Stock" has the meaning set forth in Section 5.7. ---------------- "Original Certificate" has the meaning set forth in the fourth -------------------- recital. "Permitted Liens" means (i) Liens arising in favor of sellers or --------------- lessors for indebtedness and obligations incurred to purchase or lease fixed or capital assets, provided that such liens secure only the indebtedness and obligations created thereunder and are limited to the assets purchased or leased pursuant thereto and the proceeds thereof; (ii) mechanic's and workmen's liens, liens for taxes, assessments or other governmental charges; (iii) pledges or deposits to secure obligations under workmen's compensation, unemployment insurance or social security laws or similar legislation; (iv) deposits to secure performance or payment bonds, bids, tenders, contracts, leases, franchises or public and statutory obligations required in the ordinary course of business; (v) deposits to secure surety, appeal or custom bonds required in the ordinary course of business; and (vi) statutory landlord liens, in each case to the extent incurred in accordance with the terms of Section 6.8. "Person" means an individual, corporation, partnership, limited ------ liability company, association, joint stock company, Governmental Authority, business trust, unincorporated organization, or other legal entity. "Pre-Closing Advances" has the meaning set forth in Section 6.8(b). -------------------- "Pre-Closing Commitment" has the meaning set forth in Section 6.8(a). ---------------------- "Pre-Closing Expenditures" means expenditures of the nature and up to ------------------------- the amount set forth on Schedule 1.1; provided, that such expenditures shall be for general working capital or assets, properties or rights that are necessary or advisable, in the good faith determination of the Company, in order to facilitate the construction of PCS systems in the geographical areas within the portion of the Company Territory covered by the AT&T PCS Licenses and the TWR Licenses. "Pre-Closing Notes" has the meaning set forth in Section 6.8(b). ----------------- "Preferred Stock" means the shares of Series A Preferred Stock, Series --------------- C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock and Series F Preferred Stock being issued hereunder. "Purchaser" has the meaning set forth in the preamble. --------- "Regulatory Problem" means, with respect to any SBIC Holder providing ------------------ Financing under this Agreement, any set of facts or circumstances wherein it has been asserted by any governmental regulatory agency (or any SBIC Holder reasonably believes in good faith that there is a substantial risk of such assertion) that such SBIC Holder and its Affiliates are not entitled to hold, or exercise any significant right with respect to, the Securities. "Related Agreements" means the Management Agreement, Employment ------------------ Agreements, License Purchase Agreement, Network Membership License Agreement, Resale Agreement, Roaming Agreement and Stockholders Agreement. "Representatives" has the meaning set forth in Section 6.2(a). --------------- "Resale Agreement" means the Resale Agreement between the Company and ---------------- AT&T Wireless Services, Inc., or an Affiliate thereof, in substantially the form of Exhibit C, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Restated Bylaws" means the Amended and Restated Bylaws of the --------------- Company, in the form of Exhibit D, to be adopted as of the Closing Date, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Restated Certificate" means the Amended and Restated Certificate of -------------------- Incorporation of the Company, in the form of Exhibit E, to be filed with the office of the Secretary of State of the State of Delaware on the Closing Date, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Roaming Agreement" means the Intercarrier Roamer Service Agreement ----------------- between the Company and AT&T Wireless Services, Inc., in substantially the form of Exhibit F to be dated as of the Closing Date, as the same may be amended, modified or supplemented in accordance with the terms thereof. "SBA" has the meaning set forth in Section 6.6(b). --- "SBA Compliance Documents" has the meaning set forth in 7.3(c). ------------------------ "SBIC" means a small business investment company licensed under the ---- SBIC Act. "SBIC Act" means the Small Business Investment Company Act of 1958, as -------- amended. "SBIC Holder" means each Purchaser that is an SBIC. ----------- "SBIC Regulations" means the SBIC Act and the regulations issued ---------------- thereunder as set forth in 13 CFR 107 and 121, as amended. "Section 8.2 Indemnified Party" has the meaning set forth in Section ----------------------------- 8.2. "Section 8.3 Indemnified Party" has the meaning set forth in Section ----------------------------- 8.3. "Section 8.4 Indemnified Party" has the meaning set forth in Section ----------------------------- 8.4. "Section 8.5 Indemnified Party" has the meaning set forth in Section ----------------------------- 8.5. "Securities" means the shares of Preferred Stock and Common Stock ---------- being issued hereunder, together with any shares of Preferred Stock or Common Stock issued upon conversion of or delivered in substitution or exchange for any of the foregoing. "Securities Act" means the Securities Act of 1933, as amended. -------------- "Series A Preferred Stock" has the meaning set forth in Section 2.5. ------------------------ "Series C Preferred Stock" has the meaning set forth in Section 2.5. ------------------------ "Series D Preferred Stock" has the meaning set forth in Section 2.5. ------------------------ "Series E Preferred Stock" has the meaning set forth in Section 2.5. ------------------------ "Series F Preferred Stock" has the meaning set forth in Section 2.5. ------------------------ "Stockholders Agreement" means the Stockholders Agreement, by and ---------------------- among the Company, AT&T PCS, the Cash Equity Investors, the TeleCorp Investors and the Management Stockholders, as stockholders, in substantially the form of Exhibit G, to be dated as of the Closing Date, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Subsidiary" shall mean, with respect to any Person, a corporation or ---------- other entity of which 50% or more of the voting power or the voting equity securities or equity interest is owned, directly or indirectly, by such Person. "Supplemental Closing" means the consummation by the Company or one of -------------------- its wholly owned Subsidiaries of an acquisition of F-Block PCS Licenses in respect of one million or more POPs (as defined in the Stockholders Agreement). "Supplemental Commitment" means, with respect to each Cash Equity ----------------------- Investor, the amount set forth opposite its name on Schedule I under the heading "Supplemental Commitment." "TeleCorp" has the meaning set forth in the third recital. -------- "TeleCorp Charter Amendment" has the meaning set forth in Section -------------------------- 3.2(g). "TeleCorp Equity Interest" means, with respect to each TeleCorp ------------------------ Investor and Management Stockholder, the equity interest(s) in TeleCorp specified opposite his or its name on Schedule II-A and II-B, respectively. "TeleCorp Financial Statements" has the meaning set forth in Section ----------------------------- 5.16(d). "TeleCorp Investor" has the meaning set forth in the preamble. ----------------- "TeleCorp Licenses" has the meaning set forth in the third recital. ----------------- "Tracked Common Stock" means, collectively, the Class C Common Stock -------------------- and the Class D Common Stock. "Transactions" means the transactions contemplated by this Agreement ------------ and the Related Agreements. "Transfer Taxes" has the meaning set forth in Section 3.3. -------------- "TWR" has the meaning set forth in the preamble. --- "TWR Licenses" has the meaning set forth in the second recital. ------------ "Unfunded Commitment" has the meaning set forth in Section 2.2. ------------------- "Voting Common Stock" means the Class A Voting Common Stock, par value ------------------- $.01 per share, of the Company. "Voting Preference Stock" means the Voting Preference Stock, par value ----------------------- $.01 per share, of the Company. ARTICLE II CONTRIBUTIONS; PURCHASE AND SALE OF SECURITIES; CERTAIN RESTRICTIONS ON TRANSFER 2.1 AT&T PCS Contributions. Upon the terms and subject to the conditions hereof and in reliance upon the representations, warranties and agreements herein contained: (a) AT&T PCS and TWR (as applicable) shall partition and disaggregate each AT&T PCS License (excluding the AT&T PCS Purchased Licenses) and each TWR License (other than the Little Rock, Arkansas PCS License which shall be disaggregated only) to create, as more particularly described on Schedule 2.1, (i) Licenses (the "AT&T Contributed Licenses") providing in the ------------------------- aggregate the right to use 20 MHz of authorized frequencies within the geographic area covered by the AT&T Contributed Licenses, and (ii) Licenses (the "AT&T Retained Licenses") providing in the aggregate the right to use the ---------------------- balance of the authorized frequencies within such geographic area and the right to use the authorized frequencies outside of such geographic area (but within the geographic area covered by the AT&T PCS Licenses and the TWR Licenses), and (b) at the Closing, AT&T PCS and TWR (as applicable) shall contribute to the capital of the Company (or one or more wholly owned Subsidiaries of the Company designated by the Company) the AT&T Contributed Licenses. 2.2 Cash Equity Investor Contributions. (a) Upon the terms and subject to the conditions hereof and in reliance upon the representations, warranties and agreements herein contained: (i) effective upon the Closing, each Cash Equity Investor hereby irrevocably commits, severally and not jointly, to contribute to the capital of the Company an amount equal to its Aggregate Commitment plus, if and only if the Supplemental Closing occurs, an additional amount equal to its Supplemental Commitment, and (ii) at the Closing, each Cash Equity Investor shall contribute to the capital of the Company an amount equal to its Initial Cash Contribution and the Company shall accept such capital contribution. Each Cash Equity Investor shall contribute to the capital of the Company an additional amount equal to the excess of its Aggregate Commitment over its Initial Cash Contribution in the amounts and on the dates specified on Schedule I (or such earlier dates as may be established in accordance with the terms of the Stockholders Agreement); provided that, in all events, the aggregate amount of the Initial Cash Contributions plus the additional capital contributions in 1998 shall be no less than the Company's "operating losses," determined in accordance with generally accepted accounting principles, for the 1998 calendar year. In addition, if and only if the Supplemental Closing occurs, each Cash Equity Investor shall contribute to the capital of the Company supplemental capital contributions in the amounts and on the dates specified in Schedule I (or such other dates as may be established in accordance with the terms of the Stockholders Agreement). The obligation of each Cash Equity Investor to make such additional cash contributions in respect of its Aggregate Commitment and Supplemental Commitment in accordance with this Section 2.2 and Section 3.10 of the Stockholders Agreement is sometimes referred to herein as the "Unfunded -------- Commitment." Nothing herein shall be construed to require any Cash Equity - ---------- Investor to make contributions in an aggregate amount in excess of its Aggregate Commitment plus, if applicable, its Supplemental Commitment or later than the third anniversary of the Closing Date. (b) Each Cash Equity Investor acknowledges and agrees that, if the Closing occurs, its obligation to make capital contributions to the Company after the Closing Date in respect of its Unfunded Commitment constitutes an irrevocable and unconditional obligation, and shall not be subject to counterclaim, set-off, deduction or defense, or to abatement, suspension, deferment, diminution or reduction for any reason whatsoever. By way of amplification, and not in limitation of the foregoing, each Cash Equity Investor further acknowledges and agrees to fulfill its obligations in respect of its Unfunded Commitment regardless of any claims it may have against any other Person (whether or not related to the Transactions) and regardless of the existence or non-existence of any facts or circumstances (whether or not such facts and circumstances existed on the date hereof or the Closing Date or were then known by it). 2.3 TeleCorp Investor Contributions. Upon the terms and subject to the conditions hereof and in reliance upon the representations, warranties and agreements herein contained, at the Closing each TeleCorp Investor shall contribute to the capital of the Company all of such TeleCorp Investor's right, title and interest in and to its TeleCorp Equity Interest(s), which interests are described on Schedule II-A. 2.4 Management Stockholder Contributions. Upon the terms and subject to the conditions hereof and in reliance upon the representations, warranties and agreements herein contained, at the Closing each Management Stockholder shall contribute to the capital of the Company all of such Management Stockholder's right, title and interest in and to all of his TeleCorp Equity Interest(s), which interests are described on Schedule II-B. 2.5 Purchase and Sale of Securities at Closing. Upon the terms and subject to the conditions hereof and in reliance upon the representations, warranties and agreements herein contained, at the Closing, in consideration of the Contributions, the Company shall issue, sell and deliver to the Purchasers and the Management Stockholders the following securities: (a) to each of AT&T PCS and TWR, the number of shares set forth opposite its name on Schedule V of the following: (i) the Company's Series A Convertible Preferred Stock par value $.01 per share (the "Series A Preferred ------------------ Stock"), the terms of which are set forth in the Restated Certificate, which, - ----- subject to the terms thereof, are convertible on and after the eighth anniversary of the Closing Date into shares of newly issued Non-Voting Common Stock; (ii) the Company's Series D Preferred Stock, par value $.01 per share (the "Series D Preferred Stock"), the terms of which are set forth in the ------------------------ Restated Certificate; (iii) the Company's Series F Preferred Stock, par value $.01 per share (the "Series F Preferred Stock"), the terms of which are set ------------------------ forth in the Restated Certificate; and (iv) Tracked Common Stock; and (b) to each Cash Equity Investor, TeleCorp Investor and Management Stockholder, the number of shares set forth opposite his or its name on Schedule V of the following: (i) the Company's Series C Preferred Stock, par value $.01 per share (the "Series C Preferred Stock"), the terms of which are set forth in ------------------------ the Restated Certificate, which, subject to the terms thereof, are convertible into shares of newly issued Common Stock upon the Company's initial public offering; (ii) the Company's Series E Preferred Stock, par value $.01 per share (the "Series E Preferred Stock"), the terms of which are set forth in the ------------------------ Restated Certificate; and (iii) Common Stock. 2.6 Additional Purchase by Cash Equity Investors. On the date (if any) that the Supplemental Closing occurs, the Company shall issue, sell and deliver to each Cash Equity Investor, the number of shares of Series C Preferred Stock and Common Stock set forth opposite its name on Schedule I under the heading "Number of Supplemental Shares." 2.7 Restrictive Legends. Each certificate representing Securities (including Securities originally issued hereunder or delivered upon conversion of the Preferred Stock or Common Stock, or delivered in substitution or exchange for any of the foregoing) will bear a legend reading substantially as follows until such Securities have been sold pursuant to an effective registration statement under the Securities Act, Rule 144 under the Securities Act, or an opinion of counsel reasonably satisfactory in form and substance to the Company and otherwise in full compliance with any other applicable restrictions on transfer, including those contained in this Agreement and the Stockholders Agreement: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE' ACT'), OR UNDER ANY STATE SECURITIES OR 'BLUE SKY' LAWS, SAID SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF, UNLESS AND UNTIL REGISTERED UNDER THE ACT AND THE RULES AND REGULATIONS THEREUNDER AND ALL APPLICABLE STATE SECURITIES OR 'BLUE SKY' LAWS OR EXEMPTED THEREFROM UNDER THE ACT AND ALL APPLICABLE STATE SECURITIES OR 'BLUE SKY' LAWS." 2.8 Use of Proceeds. The Company shall use the net cash proceeds of its sale of Securities hereunder solely (i) for capital and other expenditures relating to the conduct of the Business (as defined in the Stockholders Agreement) by the Company and its Subsidiaries, (ii) to pay the purchase price payable under the License Purchase Agreement, (iii) to repay the Bridge Notes and the indebtedness of TeleCorp to the United States Department of the Treasury pursuant to the terms thereof, (iv) to consummate the Supplemental Closing (it any), and (v) to pay fees and expenses incurred in connection with the Transactions. ARTICLE III CLOSING 3.1 Time and Place of Closing. Upon the terms and subject to the conditions hereof, the closing of the Transactions (the "Closing") shall take ------- place at the offices of Mayer, Brown & Platt, 1675 Broadway, New York, New York, at 10:00 a.m. local time on the twelfth business day following the date of receipt of the last Consent required by subsections (a) through (c) of Section 7.1, or at such other place and/or time and/or on such other date as the parties may agree or as may be necessary to permit the fulfillment or waiver of the conditions set forth in Article VII (the "Closing Date"). ------------ 3.2 Closing Actions and Deliveries. Upon the terms and subject to the satisfaction or waiver by the appropriate parties, if applicable, of the conditions set forth in Article VII, to effect the purchase and sale of the Securities and consummate the other Transactions, the parties shall on the Closing Date take the following actions: (a) AT&T Party Contributions. Each of AT&T PCS and TWR shall execute and deliver to the Company one or more instruments of assignment, substantially in the form of Exhibit M, sufficient to assign to the Company (or one or more wholly owned Subsidiaries of the Company designated by the Company) the AT&T Contributed Licenses (such assignments being herein collectively referred to as the "AT&T License Transfer"). (b) Cash Equity Investor Contributions. (i) Each Cash Equity Investor shall deliver to the Company by wire transfer of immediately available funds to the account designated by the Company on or prior to the Closing Date an amount equal to its Initial Cash Contribution, as set forth on Schedule I. Each Cash Equity Investor shall convert the principal amount of its Pre-Closing Notes, together with the interest thereon, into a capital contribution to the Company, and the principal amount of Pre-Closing Notes (but not any interest thereon) so converted shall be credited against its Initial Cash Contribution. (ii) Immediately prior to the Closing, the Bridge Notes shall be converted into shares of Series A Preferred Stock of TeleCorp, and the principal amount of Bridge Notes so converted, together with interest accrued thereon through the date hereof only, shall be credited against the respective Initial Cash Contributions of the holders thereof, and all Liens in respect of the Bridge Notes shall be released and terminated by the holders thereof. (c) TeleCorp Investor Contributions. Each TeleCorp Investor shall execute and deliver to the Company one or more stock certificates, together with stock powers duly executed in blank, representing all of the TeleCorp Equity Interests owned by such TeleCorp Investor, as set forth on Schedule II-A. (d) Management Stockholder Contribution. Each Management Stockholder shall deliver to the Company one or more stock certificates, together with stock Powers duly executed in blank, representing all of the TeleCorp Equity Interests owned by such Management Stockholder, as set forth on Schedule II-B. (e) Delivery of Securities. The Company shall deliver: (i) to each of AT&T PCS and TWR certificates, duly executed by authorized signatories of the Company, representing the shares of Series A Preferred Stock, Series D Preferred Stock, Series F Preferred Stock and Tracked Common Stock to be issued to AT&T PCS and TWR in accordance with Section 2.5; (ii) to each Cash Equity Investor and TeleCorp Investor, certificates, duly executed by authorized signatories of the Company, representing the shares of Series C Preferred Stock and Common Stock to be issued to each of them in accordance with the terms of Section 2.5; and (iii) to each Management Stockholder, certificates, duly executed by authorized signatories of the Company, representing (x) the shares of Series E Preferred Stock and Common Stock to be issued to each of them in accordance with the terms of Section 2.5 and (y) five fully paid and non-assessable shares of Voting Preference Stock to be issued to them in exchange for their five shares of Old Common Stock, which shall be surrendered to the Company for cancellation. (f) Restated Certificate. Duly authorized officers of the Company shall execute the Restated Certificate and cause it to be filed with the office of the Secretary of State of the State of Delaware. (g) TeleCorp Matters. Duly authorized officers of TeleCorp shall execute an amendment to the articles of incorporation of TeleCorp in the form of Exhibit N (the "TeleCorp Charter Amendment") and cause it to be filed with the office of the Secretary of State of the State of Delaware. Each of the directors and officers of TeleCorp shall tender his or her resignation as such effective as of the Closing. (h) Other Deliveries. The parties shall execute and deliver or cause to be executed and delivered all other documents, instruments, opinions and certificates contemplated by this Agreement or the Related Agreements to be delivered at the Closing or necessary and appropriate in order to consummate the Transactions contemplated to be consummated on the Closing Date. 3.3 Payment of Transfer Taxes. The Company shall pay or cause to be paid at the Closing or, if due thereafter, promptly when due, all gross receipts taxes, gains taxes (including, without limitation, real property gains tax or other similar taxes), transfer taxes, sales taxes, stamp taxes, and any other taxes, but excluding any Federal, State or local income taxes (collectively, "Transfer Taxes"), payable in connection with the transfer of the Contributions. -------------- 3.4 Issuance of Additional Shares. In addition to the shares of Preferred and Common Stock issued to the Cash Equity Investors at the Closing, on the date of the Supplemental Closing (if any), the Company shall deliver to each such Cash Equity Investor, certificates, duly executed by authorized signatories of the Company, representing the shares of Series C Preferred Stock and Common Stock to be issued to such Cash Equity Investor in accordance with the terms of Section 2.6. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASERS Each of AT&T PCS and TWR, as to itself and each other AT&T Party, and each other Purchaser, as to itself, represents and warrants to the Company and each of the other parties as follows: 4.1 Organization; Power and Authority. (a) Each AT&T Party is a corporation, duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Each of the Cash Equity Investors and the TeleCorp Investors is a corporation, limited liability company, general partnership or limited partnership, duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and has the requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. (b) It has the requisite power and authority to execute, deliver and perform this Agreement, each of the Related Agreements to which it is a party and each other instrument, document, certificate and agreement required or contemplated to be executed, delivered and performed by it hereunder and thereunder to which it is or will be a party. (c) It is duly qualified to do business in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary other than any such jurisdiction in which the failure to be so qualified would not have a Material Adverse Effect on it or materially adversely affect the Transactions or its ability to perform its obligations under the Related Agreements. (d) The execution and delivery of this Agreement by it and the consummation of the Transactions by it, including without limitation the execution and delivery of the Related Agreements to which it is a party, have been duly and validly authorized by its Board of Directors (or equivalent body) and no other proceedings on its part which have not been taken (including, without limitation, approval of its stockholders, partners or members) are necessary to authorize this Agreement or to consummate the Transactions. (e) This Agreement has been duly executed and delivered by it and constitutes its valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally and may be subject to general principles of equity. Each of the Related Agreements to which it is a party shall be duly executed and delivered by it at (or prior to) the Closing and, upon such execution and delivery, shall constitute its valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally and may be subject to general principles of equity. (f) As of the Closing Date, after giving effect to the Transactions, it is not in breach of any obligation under this Agreement or any of the Related Agreements. (g) TWR is an indirect wholly owned Subsidiary of AT&T Corp. 4.2 Consents; No Conflicts. Neither the execution, delivery and performance by it of this Agreement or the Related Agreements to which it is a party nor the consummation of the Transactions will (a) conflict with, or result in a breach or violation of, any provision of its organizational documents; (b) subject to obtaining the Consents set forth on Schedule 4.2, constitute, with or without the giving of notice or passage of time or both, a breach, violation or default, create a Lien, or give rise to any right of termination, modification, cancellation, prepayment or acceleration, under (i) any Law or License or (ii) any note, bond, mortgage, indenture, lease, agreement or other instrument, in each case which is applicable to or binding upon it or any of its assets; or (c) require any Consent, other than those set forth on Schedule 4.2 or the approval of its board of directors, general partner, stockholders or similar constituent bodies, as the case may be (which approvals have been obtained), except in each case, where such breach, violation, default, Lien, right, or the failure to obtain or give such Consent would not have a Material Adverse Effect on it or materially adversely affect the Transactions or its ability to perform its obligations under the Related Agreements. To its knowledge, there is no fact relating to it or its Affiliates that would be reasonably expected to prevent it from consummating the Transactions or performing its obligations under the Related Agreements or disqualify the Company from obtaining the Consents (including without limitation, FCC Consent) required in order to consummate the AT&T License Transfer and the contribution of the TeleCorp Equity Interests, as provided for in this Agreement. 4.3 Litigation. There is no action, proceeding or investigation pending or, to its knowledge, threatened against it or any of its properties or assets that would be reasonably expected to have an adverse effect on its ability to consummate the Transactions to which it is a party or to fulfill its obligations under this Agreement or any of the Related Agreements to which it is a party, or which seeks to prevent or challenge the Transactions. 4.4 FCC Compliance. It complies with all eligibility rules issued by the FCC to hold broadband PCS licenses, including without limitation, FCC rules on foreign ownership and the CMRS spectrum cap. The fact that it owns the interest in the Company contemplated by this Agreement and the Related Agreements will not cause the Company or its wholly owned Subsidiaries to be ineligible under FCC rules to hold PCS licenses in general or the licenses to be held by the Company's wholly owned Subsidiaries. 4.5 Brokers. It has not employed any broker, finder or investment banker or incurred any liability for any brokerage fees, commissions or finder's fees in connection with the Transactions. 4.6 AT&T PCS Licenses. (a) AT&T PCS is the authorized legal holder, free and clear of any Liens, of the AT&T PCS Licenses, true and correct copies of which are attached to Schedule III-A hereto. The AT&T PCS Licenses are, and on the Closing Date each of the AT&T PCS Licenses will be, valid and in full force and effect. Except for proceedings affecting the PCS or wireless communications services industry generally, including investigations by governmental agencies of bidding practices of bidders in the FCC auctions of PCS spectrum, there is not pending, nor to the knowledge of AT&T PCS, threatened against AT&T PCS or against the AT&T PCS Licenses, any application, action, petition, objection or other pleading, or any proceeding with the FCC which questions or contests the validity of, or seeks the revocation, non-renewal or suspension of, any of the AT&T PCS Licenses, which seeks the imposition of any modification or amendment with respect thereto, or which adversely affects the ability of the Company to employ the AT&T Contributed Licenses or the AT&T PCS Purchased Licenses in its business after the Closing Date. The AT&T PCS Licenses are not subject to any conditions other than those appearing on the face of the Licenses themselves and those imposed by FCC Law. (b) TWR is the authorized legal holder, free and clear of any Liens, of the TWR Licenses, true and correct copies of which are attached to Schedule III-A hereto. The TWR Licenses are, and on the Closing Date each of the TWR Licenses will be, valid and in full force and effect. Except for proceedings affecting the PCS or wireless communications services industry generally, including investigations by governmental agencies of bidding practices of bidders in the FCC auctions of PCS spectrum, there is not pending, nor to the knowledge of TWR, threatened against TWR or against the TWR Licenses, any application, action, petition, objection or other pleading, or any proceeding with the FCC which questions or contests the validity of, or seeks the revocation, non-renewal or suspension of, any of the TWR Licenses, which seeks the imposition of any modification or amendment with respect thereto, or which adversely affects the ability of the Company to employ the TWR Licenses in its business after the Closing Date. The TWR Licenses are not subject to any conditions other than those appearing on the face of the Licenses themselves and those imposed by FCC Law. 4.7 Capital Commitment. Each Cash Equity Investor has, and will have on the Closing Date and on any subsequent date on which it is obligated to make a capital contribution, cash available to it in an amount sufficient to make its respective Cash Equity Investor Contributions in accordance with the terms of Section 2.2. 4.8 No Distribution. It is acquiring the Securities to be purchased by it hereunder for the purpose of investment and not with a view to or for sale in connection with any distribution thereof (other than in compliance with the Securities Act and all applicable state securities laws). 4.9 Investor Acknowledgments. (a) Each Purchaser is an "accredited investor" as defined in Regulation D of the Securities Act. Its representatives have been provided an opportunity to ask questions of, and have received answers thereto from, the Company and its representatives regarding the terms and conditions of its purchase of Securities, and the Company and its proposed business generally, and have obtained all additional information requested by it to verify the accuracy of all information furnished to it in connection with such purchase. (b) It has such knowledge and experience in financial and business affairs that it is capable of evaluating the merits and risks of purchasing the Securities it is purchasing hereunder. (c) It is not relying on and acknowledges that no representation is being made by any other Purchaser, the Company or any of its officers, employees, Affiliates, agents or representatives, or any Management Stockholder, except for representations and warranties expressly set forth in this Agreement and the Related Agreements, and, in particular, it is not relying on, and acknowledges that no representation is being made in respect of, (x) any projections, estimates or budgets delivered to or made available to them of future revenues, expenses or expenditures, or future results of operations and (y) any other information or documents delivered or made available to it or its representatives, except for representations and warranties expressly set forth in this Agreement and the Related Agreements. (d) In deciding to invest in the Company, it has relied exclusively on the representations and warranties expressly set forth in this Agreement and the Related Agreements and the investigations made by itself and its representatives and its and such representatives' knowledge of the industry in which the Company proposes to operate. Based solely on such representations and warranties and such investigations and knowledge, it has determined that the Securities it is acquiring are a suitable investment for it. 4.10 Institutional Investors. Each Purchaser of shares of Class C Common Stock represents as to itself that it is an Institutional Investor, as such term if used in 47 C.F.R. Section 24.720(h). ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY, THE TELECORP INVESTORS AND THE MANAGEMENT STOCKHOLDERS The Company and the Management Stockholders represent and warrant, jointly and severally, as to the Company and its Subsidiaries, if any (except that (x) the representations and warranties as to the Company set forth in Sections 5.1(f), 5.7(b), 5.8, 5.11(b)(ii) and 5.13 are not being made by the Management Stockholders and (y) the representations and warranties as to the Company set forth, in Sections 5.2 and 5.4 are being made by the Management Stockholders only as of the date hereof and not as of the Closing Date), to the Purchasers, and each Management Stockholder represents and warrants, severally and not jointly, as to itself, and each TeleCorp Investor and Management Stockholder represents, jointly and severally, as to TeleCorp (except that the representation and warranty set forth in Section 5.16(b)(iv) is being made severally by each TeleCorp Investor and Management Stockholder as to itself only), to the Company and each of the other parties, as follows: 5.1 Organization, Power and Authority. (a) Each of the Company and each of its Subsidiaries is a corporation, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted and proposed to be conducted. The Company has furnished to the Purchasers a true and correct copy of its and each of its Subsidiaries' Certificate of Incorporation and Bylaws as in effect on the date hereof and as of the Closing Date. As of the Closing Date, the Bylaws of the Company shall read in full as set forth in the Restated Bylaws, which shall be in full force and effect. (b) It has the requisite power, authority and/or legal capacity to execute, deliver and perform this Agreement, each of the Related Agreements to which it is a party and each other instrument, document, certificate and agreement required or contemplated to be executed, delivered and performed by it hereunder and thereunder to which it is or will be a party. (c) Each of the Company and each of its Subsidiaries is duly qualified to do business in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary other than any such jurisdiction in which the failure to be so qualified would not have a Material Adverse Effect on the Company or such Subsidiary or materially adversely affect the Transactions or its ability to perform its obligations under the Related Agreements. (d) The execution and delivery of this Agreement by the Company and the consummation of the Transactions by the Company, including without limitation the execution and delivery of the Related Agreements to which it is a party, have been duly and validly authorized by the Board of Directors of the Company and, except for the filing of the Restated Certificate with the office of the Secretary of State of Delaware, no other proceedings on the part of the Company which have not been taken (including, without limitation, approval of its shareholders) are necessary to authorize this Agreement or to consummate the Transactions. (e) This Agreement has been duly executed and delivered by the Company and each Management Stockholder and constitutes the valid and binding obligation of the Company, and such Management Stockholder, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally and may be subject to general principles of equity. Each of the Related Agreements to which it is a party shall be duly executed and delivered by it at (or prior to) the Closing and, upon such execution and delivery, shall constitute the valid and binding obligation of it, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally and may be subject to general principles of equity. (f) As of the Closing, after giving effect to the Transactions, neither the Company nor any Management Stockholder is in breach of any obligation under this Agreement, any Related Agreement or any of the Credit Documents. 5.2 Consents; No Conflicts. Neither the execution, delivery and performance by the Company and the Management Stockholders of this Agreement and the Related Agreements to which it is a party nor the consummation of the Transactions will (a) conflict with, or result in a breach or violation of, any provision of the Company's organizational documents; (b) subject to obtaining the Consents set forth on Schedule 5.2, constitute, with or without the giving of notice or passage of time or both, a breach, violation or default, create a Lien, or give rise to any right of termination, modification, cancellation, prepayment or acceleration, under (i) any Law or License, or (ii) any note, bond, mortgage, indenture, lease, agreement or other instrument, in each case which is applicable to or binding upon the Company or any of its assets; or (c) require any Consent on the part of the Company or any Management Stockholder, other than those set forth on Schedule 5.2 or the approval of the Company's Board of Directors (which approval has been obtained), except in each case where such breach, violation, default, Lien, right, or the failure to obtain or give such Consent would not have a Material Adverse Effect on it or materially adversely affect the Transactions, its ability to perform its obligations under the Related Agreements or the operation of the Company's business after the Closing Date. To its knowledge, there is no fact relating to it or its Affiliates that would be reasonably expected to prevent it from consummating the Transactions or performing its obligations under the Related Agreements or disqualify the Company from obtaining the Consents (including without limitation, FCC Consent) required in order to consummate the AT&T License Transfer and the contribution of the TeleCorp Equity Interests, as provided for in this Agreement. 5.3 Litigation. There is no action, proceeding or investigation pending or, to the knowledge of the Company or the Management Stockholders, threatened against the Company or any of the Management Stockholders or any of their respective properties or assets that would have an adverse effect on its ability to consummate the Transactions to which it is a party or to fulfill its obligations under this Agreement or any of the Related Agreements to which it is a party, or, in the case of the Company, to operate its business after the Closing Date, or which seeks to prevent or challenge the Transactions. There is no judgment, decree, injunction, rule or order outstanding against the Company which would limit in any material respect the ability of the Company to operate its business in the manner currently contemplated. 5.4 FCC Compliance. It complies with all eligibility rules issued by the FCC to hold broadband PCS licenses, including without limitation, FCC rules on foreign ownership and the CMRS spectrum cap. The fact that it owns the interest in the Company contemplated by this Agreement and the Related Agreements will not cause the Company or its wholly owned Subsidiaries to be ineligible under FCC rules to hold PCS licenses in general or the licenses to be held by the Company's wholly owned Subsidiaries. The Management Stockholders, in aggregate, satisfy the financial requirements established by the FCC in 47 CFR (S)24.720(b)(2) for a "very small business." 5.5 Brokers. Neither the Company nor any of the Management Stockholders has employed any broker, finder or investment banker or incurred any liability for any brokerage fees, commissions or finder's fees in connection with the Transactions, except for Chase Securities Inc., whose fee of $1.0 million will be paid by the Company at the Closing. 5.6 Newly Formed Company. The Company was organized on November 14, 1997, and, except for assets and liabilities relating to Pre-Closing Expenditures and Pre-Closing Advances and activities undertaken in connection therewith, since its organization has at no time (i) had assets or liabilities in excess of $1,000,000 in the aggregate or (ii) carried on any activities or incurred any liabilities or obligations other than in connection with its organization and with the consummation of the Transactions. 5.7 Capitalization. (a) As of the date hereof and as of the Closing Date before giving effect to the filing of the Restated Certificate, the authorized capital stock of the Company consists of 20,000 shares of common stock, no par value per share ("Old Common Stock"), of which ten shares are issued and outstanding, have been validly issued and are fully paid and nonassessable. As of the date hereof and as of the Closing Date before giving effect to the Transactions, each of Gerald T. Vento and Thomas H. Sullivan owns beneficially and of record five shares of Old Common Stock, free and clear of any Liens. There are not on the date hereof nor will there be on or as of the Closing Date, before giving effect to the Transactions, any existing options, warrants, calls, subscriptions, or other rights, or other agreements or commitments, obligating the Company to issue, transfer or sell any shares of capital stock of the Company. (b) As of the Closing Date, after giving effect to the filing of the Restated Certificate, the authorized capital stock of the Company will consist of 700,000 shares of Voting Common Stock, 700,000 shares of Non-Voting Common Stock, ten shares of Voting Preference Stock, 1,000 shares of Class C Common Stock, 3,000 shares of Class D Common Stock, 70,000 shares of Series A Preferred Stock, 140,000 shares of Series B Preferred Stock, 140,000 shares of Series C Preferred Stock, 35,000 shares of Series D Preferred Stock, 20,000 shares of Series E Preferred Stock, 35,000 shares of Series F Preferred Stock and 70,000 shares of Senior Common Stock. As of the Closing Date, after giving effect to the Transactions (but excluding the Securities issued pursuant to Section 2.6), there will be issued and outstanding the shares of Preferred Stock and Common Stock set forth on Schedule V. The record and beneficial owners of such outstanding shares of Common Stock and Preferred Stock, as of the Closing Date, after giving effect to the Transactions, are set forth on Schedule V. On the Closing Date, after giving effect to the Transactions, there will not be any existing options, warrants, calls, subscriptions, or other rights, or other agreements or commitments, obligating the Company to issue, transfer or sell any shares of capital stock of the Company, except the Preferred Stock and the Common Stock (other than the Voting Preference Stock). 5.8 Shares. The shares of Preferred Stock and Common Stock being issued to the Purchasers hereunder, when issued and paid for pursuant to the terms of this Agreement, will be duly authorized, validly issued, fully paid and nonassessable, and will be free of any Liens caused or created by the Company, except as set forth in the Stockholders Agreement and the Restated Certificate. The shares of Common Stock or Preferred Stock, as the case may be, issued upon conversion of the Preferred Stock and the Common Stock (other than the Voting Preference Stock), when issued pursuant to the terms thereof, will be validly issued, fully paid and nonassessable, and will be free of any Liens caused or created by the Company, except as set forth in the Stockholders Agreement and the Restated Certificate. 5.9 No Undisclosed Liabilities; Subsidiaries. As of the date hereof and as of the Closing Date before giving effect to the Transactions, the Company has no indebtedness or liability of any nature whatsoever, absolute or contingent, liquidated or unliquidated, except for liabilities consisting of the Bridge Notes, the Pre-Closing Advances and liabilities incurred in connection with Pre- Closing Expenditures. The Company owns all of the outstanding shares of capital stock of each of its Subsidiaries, free and clear of any Liens, except Liens granted to the lenders pursuant to the Credit Documents. Prior to the Closing Date, the Company shall furnish to each of the Purchasers a complete list of its direct and indirect Subsidiaries indicating the jurisdictions in which each such Subsidiary is organized or qualified to conduct business. 5.10 Offering of Securities. (a) None of the Company, any Management Stockholder or any Person acting on its behalf has offered the Securities or any similar equity securities of the Company for sale to, or solicited any offers to buy Securities or any similar equity securities of the Company from, any Person, other than the Purchasers and a limited number of other "accredited investors" (as defined in Rule 501 (a) under the Securities Act). (b) None of the Company, any Management Stockholder or any Person acting on its behalf will, directly or indirectly, take any action which might subject the offering, issuance or sale of the Securities to the registration and prospectus delivery requirements of Section 5 of the Securities Act. (c) Assuming the accuracy of the representations and warranties of the Purchasers contained in Sections 4.9 and 4.10, each of the offering and sale of Securities under this Agreement to the Purchasers complies with all applicable requirements of Federal and state securities laws. 5.11 Loan Documents. (a) Prior to the date hereof, the Company has delivered to each of the Purchasers a true and correct copy of a commitment letter, dated January 22, 1998, from Chase Securities Inc., relating to a proposed $435 million senior secured credit facility. Such commitment letter has been executed and delivered by the financial institutions referred to above and the Company, and is in full force and effect and, as of the date hereof, such commitment letter has not been modified or withdrawn. (b) (i) Prior to the Closing, the Company shall have delivered to each of the Purchasers a true and correct copy of each of the Credit Documents, together with all amendments and modifications thereto. Such documents (including the exhibits and schedules thereto) shall comprise a full and complete copy of all agreements between the parties thereto with respect to the subject matter thereof and transactions related thereto, and there shall be no agreements or understandings, oral or written, or side agreements not contained therein that relate to or modify the substance thereof. (ii) As of the Closing Date, the Credit Documents shall have been duly authorized by all necessary corporate action on the part of the Company, shall have been validly executed and delivered by the Company and shall be the legal, valid and binding obligation of the Company, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally and may be subject to general principles of equity. As of the Closing Date, the Credit Documents shall be in full force and effect, none of the provisions thereof shall have been waived by any party thereto, and no "Default" or "Event of Default" (as such terms are defined in the Credit Agreement) shall have occurred and be continuing. 5.12 Minimum Build-Out Plan. The Company's Minimum Build-Out Plan in respect of the construction of a PCS system in the Company Territory is attached as Schedule 5.12. 5.13 Small Business Matters. The Company, together with its "affiliates" (as that term is defined in Title 13, Code of Federal Regulations, Section 121.103), is a "Small Business" within the meaning of the SBIC Act and the regulations thereunder, including Title 13, Code of Federal Regulations, Sections 107.50, 107.700 and 121.301(c). The information regarding the Company and its Affiliates set forth in the Small Business Administration Form 480, Form 652 and Parts A and B of Form 1031 delivered at the Closing is accurate and complete. Copies of such forms shall have been completed and executed by the Company and delivered to each Purchaser which is an SBIC at the Closing together with a written statement of the Company regarding its planned use of the proceeds from the sale of the Securities. Neither the Company nor any Subsidiary: (i) presently engages in, and none of them shall hereafter engage in, any activities, or (ii) shall use directly or indirectly the proceeds from the sale of the Securities for any purpose, which, in either case, a SBIC is prohibited from engaging in or providing funds for by the SBIC Act and the regulations thereunder (including Title 13, Code of Federal Regulations, Section 107.720). 5.14 No Distribution. Each Management Stockholder is acquiring the Securities to be purchased by him hereunder for the purpose of investment and not with a view to or for sale in connection with any distribution thereof (other than in compliance with the Securities Act and all applicable state securities laws). 5.15 Investor Acknowledgments. (a) Each Management Stockholder is an "accredited investor" as defined in Regulation D of the Securities Act. He has been provided an opportunity to ask questions of, and has received answers thereto from, the Company and its representatives regarding the terms and conditions of his purchase of Securities, and the Company and its proposed business generally, and has obtained all additional information requested by him to verify the accuracy of all information furnished to him in connection with such purchase. (b) Each Management Stockholder has such knowledge and experience in financial and business affairs that he is capable of evaluating the merits and risks of purchasing the Securities he is purchasing hereunder. (c) Each Management Stockholder is not relying on and acknowledges that no representation is being made by any other Purchaser, the Company or any of its officers, employees, Affiliates, agents or representatives, or any other Management Stockholder, except for representations and warranties expressly set forth in this Agreement and the Related Agreements, and, in particular, he is not relying on, and acknowledges that no representation is being made in respect of, (x) any projections, estimates or budgets delivered to or made available to him of future revenues, expenses or expenditures, or future results of operations and (y) any other information or documents delivered or made available to him, except for representations and warranties expressly set forth in this Agreement and the Related Agreements. (d) In deciding to invest in the Company, each Management Stockholder has relied exclusively on the representations and warranties expressly set forth in this Agreement and the Related Agreements and the investigations made by himself and his representatives and his and such representatives' knowledge of the industry in which the Company proposes to operate. Based solely on such representations and warranties and such investigations and knowledge, he has determined that the Securities he is acquiring are a suitable investment for him. 5.16 Representations as to TeleCorp. (a) TeleCorp is a corporation, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted and proposed to be conducted. TeleCorp has furnished to the Company and the Purchasers a true and correct copy of its Certificate of Incorporation and Bylaws as in effect on the date hereof and as of the Closing Date. TeleCorp is duly qualified to do business in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary other than any such jurisdiction in which the failure to be so qualified would not have a Material Adverse Effect on TeleCorp or would materially adversely affect the Transactions. (b) (i) As of the date hereof and as of the Closing Date before giving effect to the filing of the TeleCorp Charter Amendment, the authorized capital stock of TeleCorp consists of 125,000 shares of Class A Common Stock of which 4,833.751 shares are issued and outstanding, 175,000 shares of Class B Common Stock of which 1,973.717 shares are issued and outstanding, 175,000 shares of Class C Common Stock of which 12,573.533 shares are issued and outstanding, and 200,000 shares of Preferred Stock of which 6,000 shares are designated as Series A Preferred Stock and 367.365 shares are issued and outstanding, and all such shares have been validly issued and are fully paid and non-assessable. The record and beneficial owners of the issued and outstanding shares of each class of capital stock of TeleCorp as of the date hereof and as of the Closing Date, before giving effect to the Transactions, are set forth on Schedules II-A and II-B. There are not on the date hereof or as of the Closing Date, before giving effect to the Transactions, any existing options, warrants, calls, subscriptions, or other rights, or other agreements or commitments, obligating TeleCorp to issue, transfer or sell any shares of capital stock of TeleCorp. (ii) As of the Closing Date, after giving effect to the filing of the TeleCorp Charter Amendment, the authorized capital stock of TeleCorp will consist of 1,000 shares of Common Stock, par value $.01 per share, of which 100 shares will be issued and outstanding, fully paid and non-assessable, and will be owned beneficially and of record by the Company. On the Closing Date, after giving effect to the Transactions, there will not be any existing options, warrants, calls, subscriptions, or other rights, or other agreements or commitments, obligating TeleCorp to issue, transfer or sell any shares of capital stock of TeleCorp. (iii) TeleCorp has no Subsidiaries. (iv) Each TeleCorp Investor and Management Stockholder owns beneficially and of record the shares of each class of capital stock of TeleCorp set forth opposite his or its name on Schedule II-A or II-B, as the case may be, free and clear of any Liens. On or prior to the Closing Date, each TeleCorp Investor and Management Stockholder shall have terminated, and shall have caused TeleCorp to terminate, all agreements between such TeleCorp Investor or Management Stockholder, as the case may be, and TeleCorp. (c) TeleCorp was organized on July 29, 1996, and, except for its acquisition and ownership of the TeleCorp Licenses and activities undertaken in connection therewith, since its organization has at no time (i) had assets (excluding the TeleCorp Licenses) or liabilities in excess of $1,000,000 in the aggregate or (ii) carried on any activities or incurred any liabilities or obligations other than in connection with its organization and with the consummation of the Transactions. (d) Schedule 5.16(d) sets forth a list of unaudited financial statements of TeleCorp for the periods indicated on such list (the "TeleCorp -------- Financial Statements"), including an unaudited December 31, 1997 balance sheet. - -------------------- True and complete copies of each item listed thereon have previously been delivered to each of the Company, AT&T PCS and the Cash Equity Investors. The TeleCorp Financial Statements have been prepared from the books and records of TeleCorp and fairly present the financial position of TeleCorp as of the dates of such statements and the results of its operations and changes in financial position for the year or interim period then ended, in each case in conformity with generally accepted accounting principals applied on a basis consistent with past practices, subject in the case of interim statements to normal year end audit adjustments and the absence of footnotes, which adjustments and footnotes are immaterial in the aggregate. (e) As of the date hereof and as of the Closing Date, before giving effect to the Transactions, TeleCorp has no indebtedness or liability of any nature whatsoever, absolute or contingent, liquidated or unliquidated, except for liabilities set forth on TeleCorp's December 31, 1997 balance sheet, the Bridge Notes, and other liabilities incurred in connection with Pre-Closing Expenditures. (f) There is no action, proceeding or investigation pending or, to the knowledge of the TeleCorp Investors or the Management Stockholders, threatened against TeleCorp or any of its properties or assets that would be reasonably expected to have an adverse effect on its ability to consummate the Transactions to which it is a party or to fulfill its obligations under this Agreement or any of the Related Agreements to which it is a party, or to operate its business after the Closing Date, or which seeks to prevent or challenge the Transactions. There is no judgment, decree, injunction, rule or order outstanding against TeleCorp which would limit in any material respect the ability of TeleCorp to operate its business in the manner currently contemplated. (g) TeleCorp is the authorized legal holder, free and clear of any Liens (except for Liens securing the Bridge Notes and $7,727,322 in net principal amount of TeleCorp's indebtedness to the United States Department of the Treasury), of the TeleCorp Licenses, true and correct copies of which are attached to Schedule III-B. The TeleCorp Licenses are, and on the Closing Date each of the TeleCorp Licenses will be, valid and in full force and effect. Except as set forth on Schedule 5.16(g) and for proceedings affecting the PCS or wireless communications services industry generally, including investigations by governmental agencies of bidding practices of bidders in the FCC auctions of PCS spectrum, there is not pending, nor to the knowledge of any of the TeleCorp Investors or the Management Stockholders, threatened against TeleCorp or against the TeleCorp Licenses, any application, action, petition, objection or other pleading, or any proceeding with the FCC which questions or contests the validity of, or seeks the revocation, non-renewal or suspension of, any of the TeleCorp Licenses, which seeks the imposition of any modification or amendment with respect thereto, or which adversely affects the ability of TeleCorp or the Company to employ the TeleCorp Licenses in its business after the Closing Date. The TeleCorp Licenses are not subject to any conditions other than those appearing on the face of the Licenses themselves or the financing documents appended thereto and those imposed by FCC Law. ARTICLE VI COVENANTS 6.1 Consummation of Transactions. Each party shall use all commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable and consistent with applicable law to carry out all of their respective obligations under this Agreement and the Related Agreements and to consummate the Transactions, which efforts shall include, without limitation, the following: (a) The parties shall use all commercially reasonable efforts to cause the Closing to occur and the Transactions to be consummated in accordance with the terms hereof, and, without limiting the generality of the foregoing, to obtain all necessary Consents including, without limitation, the approval of this Agreement and the Transactions by all Governmental Authorities and agencies, including the FCC and any Consents necessary or advisable in the reasonable judgment of AT&T PCS in connection with franchise laws applicable to the execution, delivery and performance of this Agreement and the Related Agreements or the consummation of the Transactions, and to make all filings with and to give all notices to third parties which may be necessary or reasonably required in order for the parties to consummate the Transactions. (b) Each party shall furnish to the other parties all information concerning such party and its Affiliates reasonably required for inclusion in any application or filing to be made by AT&T PCS or the Company or any other party in connection with the Transactions or otherwise to determine compliance with applicable FCC Rules. (c) Upon the request of any other party, each party shall forthwith execute and deliver, or cause to be executed and delivered, such farther instruments of assignment, transfer, conveyance, endorsement, direction or authorization and other documents as may reasonably be requested by such party in order to effectuate the purposes of this Agreement and the Related Agreements. (d) Each party shall use all commercially reasonable efforts to modify the structure of the Transactions in such a manner that no franchise laws shall be applicable to the relationship between AT&T PCS (or its Affiliates) and the Company; provided that, no party shall be obligated to agree to any modification that adversely affects such party. The Company acknowledges that (i) the Company and AT&T PCS and its Affiliates do not intend to create a franchise or business opportunity relationship; (ii) the wireless telephones ("Telephones") if any, purchased by the Company from AT&T PCS and its Affiliates and minutes for mobile wireless radiotelephonic service ("Minutes") purchased by the Company under the terms of the Roaming are being sold at bona fide wholesale prices; (iii) the Company is not required by this Agreement or the Related Agreements or as a matter of practical necessity to purchase more than a reasonable quantity of Telephones or Minutes; and (iv) neither AT&T PCS nor any of its Affiliates has made any representation to the Company that (a) the Company or its equity holders will earn, or are likely to earn, a gross or net profit, (b) AT&T PCS or any of its Affiliates has knowledge of the market that the Company will operate in or that the market demand will enable the Company to earn a profit, (c) there is a guaranteed market for the Company, or (d) AT&T PCS or any of its Affiliates will provide the Company with locations or assist the Company in finding locations for use or operation of its business. The Company has been informed at least seven days prior to the execution of this Agreement that AT&T PCS's principal business address is, and AT&T's agent for service of process is, c/o AT&T Corp., 32 Avenue of the Americas, New York, New York 10013. Nothing in this Agreement shall be construed to require the parties to consummate the Closing if any regulatory approval would require that it (i) divest or hold separate any of its assets existing as of the date hereof other than as contemplated by this Agreement and the Related Agreements or (ii) otherwise take or commit to take any action that limits its freedom of action in any material respect with respect to any of its businesses, product lines or assets. 6.2 Confidentiality. (a) Each party shall, and shall cause each of its Affiliates, and its and their respective shareholders, members, managers, directors, officers, employees and agents (collectively, "Representatives") to, keep secret --------------- and retain in strictest confidence any and all Confidential Information relating to any other party that it receives in connection with the negotiation or performance of this Agreement, and shall not disclose such Confidential Information, and shall cause its Representatives not to disclose such Confidential Information, to anyone except the receiving party's Affiliates and Representatives and any other Person that agrees in writing to keep in confidence all Confidential Information in accordance with the terms of this Section 6.2. Until the Closing, each party agrees to use Confidential Information received from another party only (i) to evaluate its interest in pursuing the Transactions and (ii) to pursue such Transactions, but not for any other purpose. All Confidential Information furnished pursuant to this Agreement shall be returned promptly to the party to whom it belongs upon request by such party. Upon the Closing, the provisions of this Section 6.2 shall terminate and the obligations of the parties in respect of Confidential Information shall be governed by Section 7.7 of the Stockholders Agreement. (b) The obligations set forth in Section 6.2(a) shall be inoperative with respect to Confidential Information that (i) is or becomes generally available to the public other than as a result of disclosure by the receiving party or its Representatives, (ii) was available to the receiving party on a non-confidential basis prior to its disclosure to the receiving party, or (iii) becomes available to the receiving party on a non-confidential basis from a source other than the providing party or its agents, provided that such source is not known by the receiving party to be bound by a confidentiality agreement with the providing party or the providing party's agents. (c) To the fullest extent permitted by law, if a party or any of its Affiliates or Representatives breaches, or threatens to commit a breach of, this Section 6.2, the party whose Confidential Information shall be disclosed, or threatened to be disclosed, shall have the right and remedy to have this Section 6.2 specifically enforced by any court having jurisdiction, it being acknowledged and agreed that money damages will not provide an adequate remedy to such party. Nothing in this Section 6.2 shall be construed to limit the right of any party to collect money damages in the event of breach of this Section 6.2. (d) Anything else in this Agreement or the Related Agreements notwithstanding, each party shall have the right to disclose any information, including Confidential Information of the other party or such other party's Affiliates, in any filing with any regulatory agency, court or other authority or any disclosure to a trustee of public debt of a party to the extent that the disclosing party determines in good faith that it is required by Law, regulation or the terms of such debt to do so, provided that any such disclosure shall be as limited in scope as possible and shall be made only after giving the other party as much notice as practicable of such required disclosure and an opportunity to contest such disclosure if possible. 6.3 Retained Licenses. AT&T PCS and its Affiliates may use the AT&T Retained Licenses, and may market and sell to their customers or others any services that use such Licenses permitted under applicable Laws, in each case as it may determine, and may otherwise deal with and permit others to deal with the AT&T Retained Licenses, except from and after the Closing Date to the extent otherwise expressly agreed by any AT&T Party in any of the Related Agreements. 6.4 No Further Commitment. The Cash Equity Investors and the Management Stockholders have arranged for the Company to obtain financing under this Agreement and will use all reasonable efforts to arrange for financing under the Credit Agreement. It is anticipated that the Company, in consultation and cooperation with the Cash Equity Investors, will have responsibility for arranging for all of the additional debt and equity financing required by the Company. Further, the Management Stockholders, in their capacity as officers and employees of the Company, shall be responsible for conducting the day-to-day operations of the Company, all under the control and supervision of the Company's Board of Directors. In connection with the execution and delivery of this Agreement, each of the Purchasers is agreeing to acquire Securities of the Company and each of the Purchasers and certain of their respective Affiliates are agreeing to enter into the Related Agreements to which each of them is a party. The parties acknowledge and agree that, except to the extent expressly set forth in this Agreement and such Related Agreements, neither AT&T PCS nor any of its Affiliates has any legal, contractual or other obligation to acquire debt or equity securities of the Company, provide or arrange for debt or equity financing required by the Company, provide services to or otherwise assist the Company in connection with the conduct of its business or in any other manner, refrain from exercising its rights under this Agreement and the Related Agreements (including, without limitation, the right to terminate the Network Membership License Agreement in accordance with its terms) or refrain from competing, directly or indirectly, with businesses conducted by the Company. Nothing herein shall be construed to relieve any Person of its express contractual obligations under this Agreement and the Related Agreements or from any common law obligation of good faith relating to its performance of such contractual obligations. 6.5 Use of Proceeds. The Company shall use the proceeds of the sale of Securities only for the purposes described in Section 2.8 and in the written statement referred to in Section 5.13. 6.6 SBIC Regulatory Provisions. (a) The Company shall notify each SBIC Holder as soon as practicable (and, in any event, not later than 15 days) prior to taking any action after which the number of record holders of the Company's voting stock would be increased from fewer than 50 to 50 or more, and the Company shall notify each SBIC Holder of any other action or occurrence after which the number of record holders of the Company's voting stock was increased (or would increase) from fewer than 50 to 50 or more, as soon as practicable after the Company becomes aware that such other action or occurrence has occurred or is proposed to occur. (b) Within 75 days after the Closing, the Company shall deliver to each SBIC Holder a written statement certified by the Company's president or chief financial officer describing in reasonable detail the use of the proceeds of the sale of Securities hereunder by the Company and its Subsidiaries. In addition to any other rights granted hereunder, the Company shall grant each SBIC Holder and the United States Small Business Administration (the "SBA") --- access to the Company's records for the purpose of verifying the use of such proceeds to the extent required pursuant to SBIC Regulations. (c) Promptly after the end of each fiscal year (but in any event prior to February 28 of each year), the Company shall deliver to each SBIC Holder a written assessment of the economic impact of each SBIC Holder's investment in the Company, specifying the full-time equivalent jobs created or retained in connection with the investment, the impact of the investment on the revenues and profits of the business and on taxes paid by the business and its employees. (d) During the one-year period commencing on the Closing Date, the Company shall not engage in any activity which constitutes an ineligible business activity (within the meaning of the SBIC Regulations as in effect on the date hereof). 6.7 Regulatory Compliance Cooperation. In the event that any SBIC Holder reasonably determines that it has a Regulatory Problem, to the extent reasonably necessary, such SBIC Holder shall have the right to transfer its Securities (and any shares of Common Stock issued upon conversion thereof) to another Person without regard to any restrictions on transfer set forth in this Agreement or in Section 4.1 (c) of the Stockholders Agreement and without complying with the provisions of Section 4.3 of the Stockholders Agreement, but subject to the other provisions of the Stockholders Agreement and federal and state securities law restrictions, and the Company shall take all such actions as are reasonably requested by such SBIC Holder in order to (i) effectuate and facilitate such transfer by such SBIC Holder of any Securities of the Company then held by such SBIC Holder to such Person, (ii) permit such SBIC Holder (or any of its Affiliates) to exchange all or any portion of voting Securities then held by it on a share-for-share basis for shares of a class of non-voting Securities of the Company, which non-voting Securities shall be identical in all respects to such voting Securities, except that such non-voting Securities (or Common Stock, as applicable) shall be non-voting and shall be convertible into voting Securities (or Common Stock, as applicable) on such terms as are requested by such SBIC Holder in light of regulatory considerations then prevailing, (iii) continue and preserve the respective allocation of the voting interests with respect to the Company arising out of the SBIC Holder's ownership of voting Securities and/or provided for in the Stockholders Agreement before the transfers and amendments referred to in this Section (including entering into such additional agreements as are reasonably requested by such SBIC Holder to permit any Person(s) designated by such SBIC Holder) to exercise any voting power which is relinquished by such SBIC Holder and (iv) amend this Agreement, the Restated Certificate, and any other related documents, agreements or instruments to effectuate and reflect the foregoing. The parties to this Agreement agree to vote their Securities in favor of such amendments and actions. 6.8 Permitted Pre-Closing Expenditures. (a) AT&T PCS hereby irrevocably and unconditionally commits (the "Pre-Closing Commitment") to repay Pre-Closing Advances in the aggregate amount ---------------------- of up to $2.25 million in accordance with the terms of Section 6.8(f). (b) The Cash Equity Investors hereby irrevocably and unconditionally commit, from time to time upon ten business days' notice from the Company, to make unsecured, noninterest bearing advances ("Pre-Closing Advances") to the -------------------- Company evidenced by notes, such notes to be in form satisfactory to Cash Equity Investors representing a majority of the Aggregate Commitments of all Cash Equity Investors (the "Pre-Closing Notes"), pro rata based on their respective ------------------- Aggregate Commitments, in an amount up to the aggregate amount of $2.0 million. (c) Prior to the Closing, the Company shall request Pre-Closing Advances and shall use the proceeds thereof only to make Pre-Closing Expenditures for assets, properties or rights that are, prior to the Closing, assignable to AT&T PCS or its designee(s), free and clear of Liens (other than Permitted Liens) and without penalty or cost to effect such assignment other than penalties or costs that individually or in the aggregate are not material in amount. The Company shall not incur obligations (including any deferred or contingent obligations) in excess of the amounts set forth on Schedule 1.1, without regard to lease commitments. (d) The Company shall furnish each of the Purchasers with written monthly reports detailing any Pre-Closing Advances, Pre-Closing Expenditures and related activities. (e) Except to the extent Pre-Closing Notes are converted to capital at the election of the Cash Equity Investors in accordance with the second sentence of Section 3.2(b)(i), the Company shall repay the Pre-Closing Advances (if any) on the Closing Date, concurrently with the Closing. (f) If this Agreement is terminated in accordance with the terms hereof prior to the Closing, AT&T PCS shall repay any Pre-Closing Advances then outstanding and shall also repay up to $250,000 of interest on the Bridge Notes (the aggregate amount of such repayments not to exceed the amount of the Pre- Closing Commitment) within five business days after the date of termination, such payment to be made against the transfer and assignment, if and to the extent requested by AT&T PCS, by the Company to AT&T PCS or its designee(s), free and clear of all Liens (other than Permitted Liens), of any asset, property or right acquired by the Company with the proceeds of such Pre-Closing Advances. 6.9 Certain Covenants. From and after the execution and delivery of this Agreement to and including the Closing Date, each of AT&T PCS, TWR, the TeleCorp Investors and the Management Stockholders shall, and the TeleCorp Investors and the Management Stockholders shall cause TeleCorp to: (a) Comply in all material respects with all applicable Laws, including all such Laws relating to the AT&T PCS Licenses, the TWR Licenses and the TeleCorp Licenses, as the case may be, or their use; (b) Use commercially reasonable efforts to maintain the AT&T PCS Licenses, the TWR Licenses and the TeleCorp Licenses, as the case may be, in full force and effect; (c) Not (i) sell, transfer, assign or dispose of, or offer to, or enter into any agreement, arrangement or understanding to, sell, transfer, assign or dispose of any of the AT&T PCS Licenses, the TWR Licenses or the TeleCorp Licenses, as the case may be, or any interest therein, or negotiate therefor, or (ii) create, incur or suffer to exist any Lien (except for Liens securing the Bridge Notes and $7,727,322 in net principal amount of TeleCorp's indebtedness to the United States Department of the Treasury) of any nature whatsoever relating to any of the AT&T PCS Licenses, the TWR Licenses or the TeleCorp Licenses, as the case may be, or any interest therein. Without limiting the foregoing, none of AT&T PCS, TWR, the TeleCorp Investors or the Management Stockholders shall, and the TeleCorp Investors and the Management Stockholders shall cause TeleCorp not to, incur any material obligation or liability, absolute or contingent, relating to or affecting the AT&T PCS Licenses, the TWR Licenses and the TeleCorp Licenses, as the case may be, or their use; (d) Give written notice to the other parties promptly upon the commencement of, or upon obtaining knowledge of any facts that would give rise to a threat of, any claim, action or proceeding commenced against or relating to (i) it, its properties or assets, including the AT&T PCS Licenses, the TWR Licenses or the TeleCorp Licenses, as the case may be, or their use, and which could have a Material Adverse Effect on it or materially adversely affect the Transactions, or (ii) the AT&T PCS Licenses, the TWR Licenses or the TeleCorp Licenses, as the case may be, or their use; (e) Promptly after obtaining knowledge of the occurrence of, or the impending or threatened occurrence of, any event which could cause or constitute a material breach of any of its warranties, representations, covenants or agreements contained in this Agreement, give notice in writing of such event, or occurrence or impending or threatened event or occurrence, to the other parties and use commercially reasonable efforts to prevent or to promptly remedy such breach; and (f) Cause the other parties to be advised promptly in writing of (i) any event, condition or state of facts known to it, which has had or could have a Material Adverse Effect on it, or materially adversely affect the AT&T PCS Licenses, the TWR Licenses or the TeleCorp Licenses, as the case may be, their use, or the Transactions (other than proceedings affecting the PCS or wireless communications services industry generally), or (ii) any claim, action or proceeding which seeks to enjoin the consummation of the Transactions. 6.10 Employment Agreements. On the Closing Date, each of the Management Stockholders shall enter into an employment agreement with the Company (collectively, the "Employment Agreements"), in form and substance satisfactory --------------------- to Cash Equity Investors representing 66-2/3% of the Aggregate Commitment of all Cash Equity Investors, AT&T PCS and the Management Stockholders, which will provide, among other things, for the vesting and repurchase of Series E Preferred Stock and Voting Common Stock on such terms and conditions and upon the occurrence of such events or circumstances as are set forth in the Management Agreement; it being understood that any cash compensation payable under the Employment Agreements shall reduce the management fee payable by the Company pursuant to the Management Agreement. 6.11 Restricted Stock Plan. Prior to the Closing, the Company shall establish a restricted stock plan, in form and substance satisfactory to Cash Equity Investors representing 66-2/3% of the Aggregate Commitment of all Cash Equity Investors, AT&T PCS and the Management Stockholders, which will provide, among other things, that (a) shares of Voting Common Stock issued thereunder will be subject to the vesting provisions and repurchase rights set forth on Schedule 6.11, (b) all of the shares issued under the plan shall be allocated to Company employees on the Closing Date (other than those shares reserved under the plan for issuance to a Chief Operating Officer), (c) any shares (other than shares issued in respect of the Supplemental Closing) that are repurchased by the Company under the terms of the plan shall be available for re-allocation to Company employees pursuant to the Plan, and (d) any shares (other than shares issued in respect of the Supplemental Closing) that are not re-allocated to Company employees on the fifth anniversary of the Closing Date shall be re- allocated to the Management Stockholders ratably in accordance with the number of shares of Voting Common Stock being issued to each of them hereunder. ARTICLE VII CLOSING CONDITIONS 7.1 Conditions to Obligations of All Parties. The obligation of each of the parties to consummate the Transactions contemplated to occur at the Closing shall be conditioned on the following, unless waived by each of the parties: (a) Any applicable waiting period under the HSR Act shall have expired or been terminated. (b) The Consent of the FCC to each of the AT&T License Transfer and the contribution of the TeleCorp Equity Interests shall have been obtained pursuant to a Final Order free of any conditions materially adverse to the Company or any of the Purchasers. For the purposes of this paragraph, "Final Order" means an action or decision that has been granted by the FCC as to which (i) no request for a stay or similar request is pending, no stay is in effect, the action or decision has not been vacated, reversed, set aside, annulled or suspended and any deadline for filing such request that may be designated by statute or regulation has passed, (ii) no petition for rehearing or reconsideration or application for review is pending and the time for the filing of any such petition or application has passed, (iii) the FCC does not have the action or decision under reconsideration on its own motion and the time within which it may effect such reconsideration has passed and (iv) no appeal is pending including other administrative or judicial review, or in effect and any deadline for filing any such appeal that may be designated by statute or rule has passed. (c) All Consents by any Governmental Authority (other than the Consents referred to in paragraphs (a) and (b) above) required to permit the consummation of the Transactions, the failure to obtain or make which would be reasonably expected to have a Material Adverse Effect on the Company or any of the Purchasers or to materially adversely affect the Transactions or its ability to perform its obligations under the Related Agreements shall have been obtained or made. (d) No preliminary or permanent injunction or other order, decree or ruling issued by a Governmental Authority, nor any statute, rule, regulation or executive order promulgated or enacted by any Governmental Authority, shall be in effect that would (i) impose material limitations on the ability of any party to consummate the Transactions or prohibit such consummation, or (ii) impair in any material respect the operation of the Company. (e) The closing under the License Purchase Agreement shall occur concurrently with the Closing. 7.2 Conditions to Obligations of Each Party. The obligation of each party (the "receiving party") to consummate the Transactions contemplated to occur at --------------- the Closing shall be further conditioned upon the satisfaction or fulfillment, at or prior to the Closing, of the following conditions by each of the other parties, unless waived by the receiving party: (a) The representations and warranties of each party other than the receiving party contained herein and in the Related Agreements shall be true and correct in all material respects (except for representations and warranties that are qualified as to materiality, which shall be true and correct), in each case when made and at and as of the Closing (except for representations and warranties made as of a specified date, which shall be true and correct as of such date) with the same force and effect as though made at and as of such time, except for inaccuracies in respect of the representations and warranties set forth in Section 4.3, the first sentence of each of Sections 5.3 and 5.16(f) and the third sentence of each of Sections 4.6(a) and (b) and 5.16(g) (disregarding any qualifications as to materiality contained therein) that in the aggregate would not be reasonably expected to have a Material Adverse Effect on the Company or its ability to perform its obligations under the Related Agreements or to materially adversely affect the Transactions. (b) Each party other than the receiving party shall have performed in all material respects all agreements contained herein or in the Related Agreements required to be performed by it at or before the Closing. (c) An officer of each party other than the receiving party shall have delivered to the receiving party a certificate, dated the Closing Date, certifying as to the fulfillment of the conditions set forth in paragraphs (a) and (b) above as to the party delivering such certificate. (d) Each party other than the receiving party shall have furnished the receiving party with one or more opinions of counsel to the party furnishing the opinion(s), each dated the Closing Date, in substantially the forms of Exhibits H- I through K-2, as applicable. (e) Each of the Related Agreements shall have been executed and delivered by the parties thereto (other than the receiving party) and shall be in full force and effect. (f) Each Cash Equity Investor (other than the receiving party) shall have executed and delivered to the Company a Pledge Agreement, substantially in the form of Exhibit L. (g) All corporate and other proceedings of each party other than the receiving party in connection with the AT&T License Transfer, the contribution of the TeleCorp Equity Interests and the other Transactions, and all documents and instruments incident thereto, shall be reasonably satisfactory in form and substance to the receiving party, and each party other than the receiving party shall have delivered to the receiving party such receipts, documents, instruments and certificates, in form and substance reasonably satisfactory to the receiving party, which the receiving party shall have reasonably requested. 7.3 Conditions to the Obligations of the Purchasers. The obligation of each Purchaser to consummate the Transactions contemplated to occur at the Closing shall be further conditioned upon the satisfaction or fulfillment at or prior to the Closing, of the following conditions, unless waived by each such Purchaser: (a) The terms, conditions and provisions of the Credit Documents shall be satisfactory to such Purchaser in all material respects, including without limitation provisions relating to principal amounts, rates of interest, terms of mandatory and permitted prepayments, prepayment charges (if any), fees and expenses, representations and warranties, affirmative and negative covenants, conditions to disbursements of loan funds, defaults and remedies therefor and collateral, it being acknowledged that such terms, conditions and provisions shall be deemed to be satisfactory to such Purchaser if they are in the aggregate at least as favorable to the Company as the terms of the commitment letter referred to in Section 5.11 (a). The disbursements of loan funds contemplated by the Credit Agreement to occur on the Closing Date shall be made in accordance with the terms thereof concurrently with the Closing and such Purchaser shall have received such evidence thereof as it may request. (b) On the Closing Date, counsel to each Purchaser shall have received the legal fees and expenses required to be paid or reimbursed by the Company as provided in Section 10.4 for statements rendered on or prior to the Closing Date. (c) For each SBIC Holder, the Company shall have prepared the Size Status Declaration on Form 480, the Assurance of Compliance for Nondiscrimination on Form 652 and the Portfolio Financing Report on Form 1031 (Parts A and B) (collectively, the "SBA Compliance Documents"), the Company ------------------------ shall have duly executed and delivered the Forms 480 and 652 to each SBIC Holder, and all of the information set forth in the SBA Compliance Documents shall be true and correct in all respects. The Company shall have delivered a list, after giving effect to the transactions contemplated by this Agreement, of: (a) the name of each of the Company's directors, (b) the name and title of each of the Company's officers and (c) the name of each of the Company's stockholders and the number and class of shares held by each stockholder. ARTICLE VIII SURVIVAL AND INDEMNIFICATION 8.1 Survival. The representations and warranties made in this Agreement shall survive the Closing until the second anniversary thereof and shall thereupon expire together with any right to indemnification in respect thereof (except to the extent a written notice asserting a claim for breach of any such representation or warranty and describing such claim in reasonable detail shall have been given prior to such date to the party which made such representation or warranty). The covenants and agreements contained herein to be performed or complied with prior to the Closing shall expire at the Closing. The covenants and agreements contained in this Agreement to be performed or complied with after the Closing shall survive the Closing; provided that the right to indemnification pursuant to this Article VIII in respect of a breach of a representation or warranty shall expire on the second anniversary of the Closing (except to the extent written notice asserting a claim thereunder and describing such claim in reasonable detail shall have been given prior to such date to the party from whom such indemnification is sought). After the Closing, the sole and exclusive remedy of the parties for any breach or inaccuracy of any representation or warranty contained in this Agreement, or any other claim (whether or not alleging a breach of this Agreement) that arises out of the facts and circumstances constituting such breach or inaccuracy, shall be the indemnity provided in this Article VIII. 8.2 Indemnification by the Purchasers. Each Purchaser shall indemnify and hold harmless each other Purchaser, the Company, each Management Stockholder and their respective Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them (each, a "Section 8.2 Indemnified Party"), against all liabilities and expenses (including amounts paid in satisfaction of judgments, in compromise, as fines and penalties, and as counsel fees) (collectively, "Losses") incurred by him or it in connection with the investigation, defense, or disposition of any action, suit or other proceeding in which any Section 8.2 Indemnified Party may be involved or with which he or it may be threatened that arises out of or results from (a) any representation or warranty of such indemnifying party contained in this Agreement (except, in the case of the TeleCorp Investors, for the representations contained in Section 5.16) or any Related Agreement being untrue in any material respect as of the date on which it was made or (b) any material default by such indemnifying party or any of its Affiliates in the performance of their respective obligations under this Agreement and any Related Agreement, except to the extent (but only to the extent) any such Losses arise out of or result from the gross negligence or willful misconduct of such Section 8.2 Indemnified Party or its Affiliates. 8.3 Indemnification by the Management Stockholders. Each Management Stockholder, severally and not jointly, shall indemnify and hold harmless each Purchaser and the Company and their respective Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them (each, a "Section 8.3 Indemnified Party"), against all Losses ----------------------------- incurred by him or it in connection with the investigation, defense, or disposition of any action, suit or other proceeding in which any Section 8.3 Indemnified Party may be involved or with which he or it may be threatened that arises out of or results from (a) any representation or warranty of such Management Stockholder contained in this Agreement (except for the representations contained in Section 5.16) or any Related Agreement being untrue in any material respect as of the date on which it was made or (b) any material default by such Management Stockholder in the performance of his obligations under this Agreement and any Related Agreement, except to the extent (but only to the extent) any such Losses arise out of or result from the gross negligence or willful misconduct of such Section 8.3 Indemnified Party or its Affiliates; provided that the aggregate liability of each Management Stockholder to indemnify Section 8.3 Indemnified Parties against Losses arising out of or resulting from (x) the untruth in any material respect of any representation or warranty as to the Company made by such Management Stockholder in this Agreement or any Related Agreement, (y) any material default by such Management Stockholder in the performance of his obligations under this Agreement or any Related Agreement, shall (except, in the case of clause (y), to the extent (but only to the extent) any such Losses arise out of or result from the gross negligence or willful misconduct of such Management Stockholder) be limited to the shares of Common Stock and Preferred Stock of the Company then held by such Management Stockholder, and Section 8.3 Indemnified Parties seeking indemnification against any Management Stockholder for such Losses hereunder shall not have recourse to any other assets of such Management Stockholder. 8.4 Indemnification by the Company. The Company shall indemnify and hold harmless each of the Purchasers and their respective Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them (each, a "Section 8.4 Indemnified Party") against ----------------------------- all Losses incurred by him or it in connection with the investigation, defense, or disposition of any action, suit or other proceeding in which any Section 8.4 Indemnified Party may be involved or with which he or it may be threatened that arises out of or results from (a) any representation or warranty of the Company contained in this Agreement or any Related Agreement being untrue in any material respect as of the date on which it was made or (b) any material default by the Company or any of its Affiliates in the performance of their respective obligations under this Agreement and any Related Agreement, except to the extent (but only to the extent) any such Losses arise out of or result from the gross negligence or willful misconduct of such Section 8.4 Indemnified Party or its Affiliates. 8.5 Indemnification by the TeleCorp Investors and the Management Stockholders. The TeleCorp Investors and the Management Stockholders, jointly and severally, shall indemnify and hold harmless AT&T PCS, TWR, the Cash Equity Investors, and the Company and their respective Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them (each, a "Section 8.5 Indemnified Party"), ----------------------------- against all Losses incurred by him or it in connection with the investigation, defense, or disposition of any action, suit or other proceeding in which any Section 8.5 Indemnified Party may be involved or with which he or it may be threatened that arises out of or results from (a) any representation or warranty of such indemnifying party contained in Section 5.16 being untrue in any material respect as of the date on which it was made or (b) any liabilities of TeleCorp attributable to events that occurred prior to the Closing, other than liabilities set forth on the TeleCorp Financial Statements or arising out of ownership of the Purchased Licenses, and except to the extent (but only to the extent) any such Losses arise out of or result from the gross negligence or willful misconduct of such Section 8.5 Indemnified Party or its Affiliates; provided that the aggregate liability of each TeleCorp Investor and Management Stockholder to indemnify Section 8.5 Indemnified Parties against Losses arising out of or resulting from the untruth in any material respect of any representation or warranty made by such TeleCorp Investor or Management Stockholder in Section 5.16 shall be limited (i) to the shares of Common Stock and Preferred Stock of the Company acquired by such TeleCorp Investor or Management Stockholder in respect of its contribution of TeleCorp Equity Interests (or the proceeds therefrom), and Section 8.5 Indemnified Parties seeking indemnification against any TeleCorp Investor or Management Stockholder for such Losses hereunder shall not have recourse to any other assets of such TeleCorp Investor or Management Stockholder, and (ii) in the case of the Management Stockholders only, to $375,000 in the aggregate; provided, further, that the TeleCorp Investors and Management Stockholders shall not have any obligation to indemnify Section 8.5 Indemnified Parties pursuant to this Section 8.5 in respect of any Claim arising under Section 5.16 unless and until Section 8.5 Indemnified Parties, individually or in the aggregate, shall have incurred Losses in an aggregate amount in excess of $250,000, in which event each Section 8.5 Indemnified Party shall be entitled to be indemnified for all of its Losses commencing at $1. 8.6 Procedures. (a) The terms of this Section 8.6 shall apply to any claim (a "Claim") for indemnification under the terms of Sections 8.2, 8.3, 8.4 or 8.5 ----- The Section 8.2 Indemnified Party, Section 8.3 Indemnified Party, Section 8.4 Indemnified Party or Section 8.5 Indemnified Party Indemnified Party (each, an "Indemnified Party"), as the case may be, shall give prompt written notice of ----------------- such Claim to the indemnifying party (the "Indemnifying Party") under the ------------------ applicable Section, which party may assume the defense thereof, provided that any delay or failure to so notify the Indemnifying Party shall relieve the Indemnifying Party of its obligations hereunder only to the extent, if at all, that it is materially prejudiced by reason of such delay or failure. The Indemnified Party shall have the right to approve any counsel selected by the Indemnifying Party and to approve the terms of any proposed settlement, such approval not to be unreasonably delayed or withheld (unless such settlement provides only, as to the Indemnified Party, the payment of money damages actually paid by the Indemnifying Party and a complete release of the Indemnified Party in respect of the claim in question). Notwithstanding any of the foregoing to the contrary, the provisions of this Article VIII shall not be construed so as to provide for the indemnification of any Indemnified Party for any liability to the extent (but only to the extent) that such indemnification would be in violation of applicable law or that such liability may not be waived, modified or limited under applicable law, but shall be construed so as to effectuate the provisions of this Article VIII to the fullest extent permitted by law. (b) In the event that the Indemnifying Party undertakes the defense of any Claim, the Indemnifying Party will keep the Indemnified Party advised as to all material developments in connection with such Claim, including, but not limited to, promptly furnishing the Indemnified Party with copies of all material documents filed or served in connection therewith. (c) In the event that the Indemnifying Party fails to assume the defense of any Claim within ten business days after receiving written notice thereof, the Indemnified Party shall have the right, subject to the Indemnifying Party's right to assume the defense pursuant to the provisions of this Article VIII, to undertake the defense, compromise or settlement of such Claim for the account of the Indemnifying Party. Unless and until the Indemnified Party assumes the defense of any Claim, the Indemnifying Party shall advance to the Indemnified Party any of its reasonable attorneys' fees and other costs and expenses incurred in connection with the defense of any such action or proceeding. Each Indemnified Party shall agree in writing prior to any such advancement that, in the event he or it receives any such advance, such Indemnified Party shall reimburse the Indemnifying Party for such fees, costs and expenses to the extent that it shall be determined that he or it was not entitled to indemnification under this Article VIII. (d) In no event shall an Indemnifying Party be required to pay in connection with any Claim for more than one firm of counsel (and local counsel) for each of the following groups of Indemnified Parties: (i) AT&T PCS and TWR, their respective Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them; (ii) the Cash Equity Investors, their respective Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them; (iii) the TeleCorp Investors, their respective Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them; and (iv) the Company and the Management Stockholders, their respective Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them. 8.7 Registration Rights. Notwithstanding anything to the contrary in this Article VIII, the indemnification and contribution provisions set forth in Sections 5(e) and 5(f) of the Stockholders Agreement shall govern any claim made with respect to the registration statements filed pursuant to Section 5 of the Stockholders Agreement or sales made thereunder. 8.8 Limit on Indemnity. So long as the Company does not conduct any business or engage in any activities other than those described in the first sentence of the definition of "Business" (as such term is defined in the Stockholders Agreement), each party waives its right to indemnification under this Article VIII or any other right to assert any claim arising from any inaccuracy in the Company's representations and warranties set forth in the first and last sentence of Section 5.13 or the violation by the Company of the covenant set forth in Section 6.6(d) to the extent such Section relates to ineligible or prohibited activities of SBICs. ARTICLE IX TERMINATION 9.1 Termination. This Agreement may be terminated, and the transactions contemplated hereby abandoned, without further obligation of any party (except as set forth herein), at any time prior to the Closing Date: (a) by mutual written consent of the parties; (b) by any party by written notice to the other parties, if the Closing shall not have occurred on or before the date that is six months after the date hereof, provided that the party electing to exercise such right is not otherwise in breach of its obligations under this Agreement, provided further, that so long as the average amount of advances during the period commencing December 19, 1997 (whether in respect of Bridge Notes, Pre-Closing Advances or otherwise) by Cash Equity Investors to the Company and TeleCorp equals or exceeds $2.0 million per month, AT&T may not exercise such right prior to the date that is ten months after the date hereof, or (c) by any party by written notice to the other parties, if the consummation of the Transactions shall be prohibited by a final, non-appealable order, decree or injunction of a court of competent jurisdiction. Within ten business days after the request of AT&T PCS, the chief financial officer of the Company shall certify the average amount of the advances referred to in Section 9.1(b) per month during the period referred to therein. 9.2 Effect of Termination. (a) In the event of a termination of this Agreement, no party hereto shall have any liability or further obligation to any other party to this Agreement, except as set forth in paragraph (b) below, and except that nothing herein will relieve any party from liability for any breach by such party of this Agreement. (b) In the event of a termination of this Agreement pursuant to Section 9.1, all provisions of this Agreement shall terminate, except Section 6.2 and paragraphs (a) and (f) of Section 6.8 and Articles VIII and X. (c) Whether or not the Closing occurs, except as otherwise expressly provided in this Agreement, all costs and expenses incurred in connection with this Agreement and the Transactions shall be paid by the party incurring such expenses. ARTICLE X MISCELLANEOUS PROVISIONS 10.1 Amendment and Modification. This Agreement may be amended, modified or supplemented only by written agreement of each of the parties. 10.2 Waiver of Compliance; Consents. Any failure of any of the parties to comply with any obligation, covenant, agreement or condition herein may be waived by the party or parties entitled to the benefits thereof only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be given in writing in a manner consistent with the requirement for a waiver of compliance as set forth in this Section 10.2. 10.3 Notice. All notices or other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by facsimile transmission, or by registered or certified mail (return receipt requested), postage prepaid, with an acknowledgment of receipt signed by the addressee or an authorized representative thereof, addressed as follows (or to such other address for a party as shall be specified by like notice; provided that notice of a change of address shall be effective only upon receipt thereof): If to AT&T PCS: c/o AT&T Wireless Services, Inc. 5000 Carillon Point Kirkland, Washington 98033 Attention: William W. Hague Facsimile: (206) 828-8451 With a copy to: AT&T Corp. 295 North Maple Avenue Basking Ridge, New Jersey 07920 Attention: Corporate Secretary Facsimile: (908) 953-4657 Friedman Kaplan & Seiler LLP 875 Third Avenue, 8th Floor New York, New York 10022 Attention: Daniel M. Taitz Facsimile: (212) 355-6401 Rubin Baum Levin Constant & Friedman 30 Rockefeller Plaza New York, New York 10112 Attention: Gregg S. Lerner Facsimile: (212) 698-7825 If to a Cash Equity Investor, to its address set forth on Schedule I. With a copy to: Mayer, Brown & Platt 1675 Broadway New York, New York 10019 Attention: Mark S. Wojciechowski Facsimile: (212) 262-1910 If to a TeleCorp Investor, to its address set forth on Schedule II-A. With a copy to: TeleCorp Holding Corp., Inc. 1110 N. Glebe Road, Suite 3 00 Arlington, Virginia 22201 Attn: General Counsel Facsimile: (703) 522-4873 If to a Management Stockholder, to him in care of the Company. With a copy to: TeleCorp PCS, Inc. 1110 N. Glebe Road, Suite 300 Arlington, Virginia 22201 Attn: General Counsel Facsimile: (703) 522-4873 If to the Company, to it: TeleCorp PCS, Inc. 1110 N. Glebe Road, Suite 300 Arlington, Virginia 22201 Attn: General Counsel Facsimile: (703) 522-4873 With a copy to each other party sent to the addresses set forth in this Section 10.3. 10.4 Expenses. The Company agrees, in the event the Transactions are consummated, to pay, and save the Purchasers harmless against, the reasonable fees and disbursements of counsel to each of the Purchasers in connection with the preparation, negotiation, execution and delivery of this Agreement, the Related Agreements, the Credit Documents, the instruments and documents executed pursuant hereto or thereto or in connection herewith or therewith, and the consummation of the Transactions. 10.5 Parties in Interest; Assignment. This Agreement is binding upon and is solely for the benefit of the parties hereto and their respective permitted successors, legal representatives and permitted assigns. None of AT&T PCS, TWR, the Company, any Cash Equity Investor, any TeleCorp Investor, or any Management Stockholder may assign its rights and obligations hereunder without the prior written consent of each of the other parties; provided, that: (a) the Company shall have the right to assign its rights under this Agreement to the lenders (the "Lenders") named in the Credit Agreement, as security pursuant to the terms ------- of the Credit Documents, it being understood that as a result of any such assignment to the Lenders, after an event of default under the Credit Agreement and the expiration of any applicable grace and cure periods thereunder, the Lenders shall have the right, on behalf of the Company, to enforce the obligation of each Cash Equity Investor to make capital contributions to the Company in the amounts and on the dates specified on Schedule I (or such earlier dates as may be established in accordance with the terms of the Stockholders Agreement) and that, in connection with any such assignment to the Lenders, the Lenders shall not assume any obligations of the Company hereunder; (b) AT&T PCS and TWR shall have the right to assign to AT&T Corp., or to one or more direct or indirect wholly owned Subsidiaries of AT&T Corp., any and all rights and obligations of AT&T PCS or TWR, as the case may be, under this Agreement, provided, that such assignee shall have assumed in writing all the obligations of AT&T PCS or TWR as the case may be, hereunder and no such assignment shall relieve AT&T PCS of its obligations hereunder; and (c) any Cash Equity Investor may assign its rights and obligations hereunder with the prior written consent of AT&T PCS, such consent not to be unreasonably withheld, and any Cash Equity Investor may assign its rights and obligations hereunder to any Affiliate, provided, that such assignee shall have assumed in writing all the obligations of such Cash Equity Investor hereunder and no such assignment shall relieve such Cash Equity Investor of its obligations hereunder. 10.6 Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without giving effect to the conflicts of law principles thereof. The parties hereto hereby irrevocably and unconditionally consent to submit to the non-exclusive jurisdiction of the courts of the State of New York and of the United States of America located in the County of New York, New York (the "New York Courts") for any litigation --------------- arising out of or relating to this Agreement and the Transactions, waive any objection to the laying of venue of any such litigation in the New York Courts and agrees not to plead or claim in any New York Court that such litigation brought therein has been brought in an inconvenient forum. 10.7 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. 10.8 Interpretation. The article and section headings contained in this Agreement are for convenience of reference only, are not part of the agreement of the parties and shall not affect in any way the meaning or interpretation of this Agreement. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the antecedent Person or Person may require. 10.9 Entire Agreement. This Agreement and the Related Agreements, including the exhibits and schedules hereto and thereto and the certificates and instruments delivered pursuant to the terms of this Agreement and the Related Agreements, embody the entire agreement and understanding of the parties hereto in respect of the Transactions. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein or the Related Agreements. This Agreement and the Related Agreements supersede all prior agreements and understandings between the parties with respect to such Transactions. 10.10 Publicity. So long as this Agreement is in effect, the parties agree to consult with each other in issuing any press release or otherwise making any public statement with respect to the Transactions, and no party shall issue any press release or make any such public statement prior to such consultation, except as may be required by Law. No press release or other public statement by the parties hereto shall disclose any of the financial terms of the Transactions without the prior consent of the other parties, except as may be required by Law. A breach of the provisions of this Section 10.10 by a party shall not give rise to any right to terminate this Agreement. 10.11 Specific Performance. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any New York Courts. 10.12 Remedies Cumulative. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise or beginning of the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. 10.13 Authorized Agent of AT&T PCS. AT&T PCS hereby authorizes Wireless PCS, Inc, as its agent, with full power to execute, in the name of and on behalf of AT&T PCS, the Related Agreements to which AT&T PCS is a party and any and all other documents that AT&T PCS is required to execute and deliver in connection with the Closing, and to give and receive all notices, requests, consents, amendments, demands and other communications to or from AT&T PCS hereunder or thereunder. Each party hereto (other than AT&T PCS) shall be entitled to rely on the full power and authority of Wireless PCS, Inc, to act on behalf of AT&T PCS in accordance with this Section 10.13. Nothing contained in this Section 10.13 shall relieve AT&T PCS from complying with its obligations under this Agreement or any of the Related Agreements to which it is a party. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. TELECORP PCS, INC. By: /s/ Gerald T. Verto ------------------------- Name: Title: CEO AT&T WIRELESS PCS INC. By: /s/ William W. Hague ------------------------- Name: Title: TWR CELLULAR, INC. By: /s/ William W. Hague -------------------------- Name: Title: Cash Equity Investors: CB CAPITAL INVESTORS, L.P. By: CB Capital Investors, Inc., Its general partner By: /s/ Michael R. Hannon -------------------------- Name: Michael R. Hannon Title: General Partner NORTHWOOD VENTURES LLC By: /s/ Peter G. Schiff -------------------------- Name: Peter G. Schiff Title: President NORTHWOOD CAPITAL PARTNERS LLC By: /s/ Peter G. Schiff -------------------------- Name: Peter G. Schiff Title: President ONELIBERTY FUND III, L.P. By: /s/ Joseph T. McCullen ------------------------------ Name: Joseph T. McCullen, Jr. Title: General Partner ONELIBERTY FUND IV, L.P. By: /s/ Joseph T. McCullen ------------------------------ Name: Joseph T. McCullen, Jr. Title: General Partner MEDIA/COMMUNICATIONS INVESTORS LIMITED PARTNERSHIP By: M/C Investors General Partner - J. Inc., a general partner By: /s/ James F. Wade ------------------------------ Name: James F. Wade Title: Manager MEDIA/COMMUNICATIONS PARTNERS III LIMITED PARTNERSHIP By: M/CP III L.L.C. Its general partner By: /s/ James F. Wade -------------------------- Name: James F. Wade Title: Manager EQUITY-LINKED INVESTORS-II By: ROHIT M. DESAI ASSOCIATES-II Its general partner By: /s/ Rohit M. Desai -------------------------- Name: Title: PRIVATE EQUITY INVESTORS III, L.P. By: ROHIT M. DESAI ASSOCIATES III, LLC, Its general partner By: /s/ Frank J. Pados -------------------------- Name: Frank J. Pados Title: Executive Vice President HOAK COMMUNICATIONS PARTNERS, L.P. By: HCP Investments, L.P., Its general partner By: Hoak Partners, LLC Its general partner By: /s/ James M. Hoak -------------------------- Name: James M. Hoak Title: Manager HCP CAPITAL FUND, L.P. By: James M. Hoak & Co., Its general partner By: /s/ James M. Hoak -------------------------- Name: James M. Hoak Title: Chairman ENTERGY TECHNOLOGY HOLDING COMPANY By: /s/ John A. Brayman -------------------------- Name: John A. Brayman Title: President TORONTO DOMINION INVESTMENTS INC. By: /s/ Martha L. Gariepy -------------------------- Name: Martha L. Gariepy Title: Vice President WHITNEY EQUITY PARTNERS, L.P. By: J.H. Whitney & Co., Its general partner By:/s/ William Laverack, Jr. ------------------------- Name: William Laverack, Jr. Title: J.H. WHITNEY STRATEGIC III, L.P. By: J.H. Whitney & Co., Its general partner By:/s/ William Laverack, Jr. ------------------------- Name: William Laverack, Jr. Title: WHITNEY STRATEGIC PARTNERS, III, L.P. By: J.H. Whitney & Co., Its general partner By:/s/ William Laverack, Jr. ------------------------- Name: William Laverack, Jr. Title: TeleCorp Investors: CB CAPITAL INVESTORS, L.P. By: CB Capital Investors, Inc., Its general partner By:/s/ Michael R. Hannon ------------------------- Name: Michael R. Hannon Title: General Partner NORTHWOOD VENTURES LLC By:/s/ Peter G. Schiff ------------------------- Name: Peter G. Schiff Title: President NORTHWOOD CAPITAL PARTNERS LLC By:/s/ Peter G. Schiff ------------------------- Name: Peter G. Schiff Title:President ONELIBERTY FUND III, L.P. By:/s/ Joseph T. McCullen, Jr. --------------------------- Name: Joseph T. McCullen, Jr. Title: General Partner ONELIBERTY FUND IV, L.P. By:/s/ Joseph T. McCullen, Jr. --------------------------- Name: Joseph T. McCullen, Jr. Title: General Partner MEDIA/COMMUNICATIONS INVESTORS LIMITED PARTNERSHIP By: M/C Investors General Partner - J. Inc., a general partner By:/s/ James F. Wade ------------------------- Name: James F. Wade Title: Manager MEDIA/COMMUNICATIONS PARTNERS III LIMITED PARTNERSHIP By: M/CP III L.L.C. Its general partner By:/s/ James F. Wade ------------------------------------- Name: James F. Wade Title: Manager EQUITY-LINKED INVESTORS-II By: ROHIT M. DESAI ASSOCIATES-II Its general partner By:/s/ Frank J. Pados ------------------------------------- Name: Frank J. Pados Title: Executive Vice President PRIVATE EQUITY INVESTORS III, L.P. By: ROHIT M. DESAI ASSOCIATES III, LLC, Its general partner By:/s/ Frank J. Pados ------------------------------------- Name: Frank J. Pados Title: Executive Vice President HOAK COMMUNICATIONS PARTNERS, L.P. By: HCP Investments, L.P., Its general partner By: Hoak Partners, LLC Its general partner By:/s/ James M. Hoak ------------------------------ Name: James M. Hoak Title: Manager HCP CAPITAL FUND, L.P. By: James M. Hoak & Co., Its general partner By:/s/ James M. Hoak ------------------------------ Name: James M. Hoak Title: Chairman ENTERGY TECHNOLOGY HOLDING COMPANY By:/s/ John A. Brayman ------------------------------ Name: John A. Brayman Title: President TORONTO DOMINION INVESTMENTS INC. By:/s/ Martha L. Gariepy ------------------------------ Name: Martha L. Gariepy Title: Vice President WHITNEY EQUITY PARTNERS, L.P. By: J.H. Whitney & Co., Its general partner By:/s/ William Laverack, Jr. ------------------------------ Name: William Laverack, Jr. Title: J.H. WHITNEY III, L.P. By: J.H. Whitney & Co., Its general partner By:/s/ William Laverack, Jr. ------------------------------ Name: William Laverack, Jr. Title: WHITNEY STRATEGIC PARTNERS, III, L.P. By: J.H. Whitney & Co., Its general partner By:/s/ William Laverack, Jr. ------------------------------ Name: William Laverack, Jr. Title: GILDE INTERNATIONAL B.V. By:/s/ Joseph T. McCullen, Jr. ------------------------------ Name: Joseph T. McCullen, Jr. Title: Attorney-in-Fact TELECORP INVESTMENT CORP., LLC By:/s/ Thomas H. Sullivan ------------------------------ Name: Thomas H. Sullivan Title: Authorized Person Management Stockholders: GERALD T. VENTO /s/ Gerald T. Vento --------------------------------- THOMAS H. SULLIVAN /s/ Thomas H. Sullivan -------------------------- SCHEDULE 1 Cash Equity Funding - Supplemental Funding
Initial Cash 2nd 3rd 4th Supplemental Equity Sources Contribution/(2)/ Equity Draw Equity Draw Equity Draw Commitment ------------ ----------- ----------- ----------- ---------- CB Capital Investors, Inc. 122,071 357,494 305,178 305,173 1,089,916 Desai Associates Equity Linked Investors II 61,036 178,747 152,589 152,587 544,959 Private Equity Investors III, L.P. 61,036 178,747 152,589 152,587 544,959 Hoak Capital Corporation Hoak Communications Partners, L.P. 83,882 245,652 209,703 209,701 748,937 HCP Capital Fund, L.P. 7,672 22,468 19,180 19,180 68,501 JH Whitney & Co./(3)/ 76,295 223,434 190,736 190,734 681,199 Entergy Technology Holding Company 61,036 178,747 152,589 152,587 544,959 M/C Partners Media/Communications Investors Ltd Partnership 43,946 128,698 109,864 109,863 392,371 Media/Communications Partners III Ltd Partnership 1,831 5,362 4,578 4,578 16,349 OneLiberty Fund III, L.P. 15,259 44,687 38,148 38,147 136,241 Toronto Dominion Investments, Inc. 15,259 44,687 38,148 38,147 136,241 Northwood Capital Partners Northwood Ventures LLC 8,546 25,025 21,362 21,362 76,295
Northwood Capital Partners LLC 2,136 6,256 5,341 5,341 19,074 Supplemental Commitment 560,004 1,640,004 1,400,005 1,399,987 5,000,000 Cumulative Equity Funding 500,004/(1)/ 2,200,008 3,600,013 5,000,000
Note: /(1)/ If the supplemental closing is not completed with the closing under the purchase agreement, then the Time 0 equity contribution herein will be funded in the subsequent 3 fundings on a pro rata basis. /(2)/ The 2nd equity draw will coincide with the 1998 fiscal year end (12/31/98), subsequent equity fundings will coincide with the 24 and 36 month anniversary of the closing. /(3)/ JH Whitney & Co. will allocate the commitment amongst the following entities: Whitney Equity Partners, L.P., J.H. Whitney III, L.P. and Whitney Strategic Partners III, L.P. Schedule 1 Cash Equity Funding - w/o Supplemental Funding
Initial Cash 2nd 3rd 4th Aggregate Equity Sources Contribution/(2)/ Equity Draw Equity Draw Equity Draw Commitment ------------ ----------- ----------- ----------- ---------- CB Capital Investors, Inc. 8,583,107 3,514,987 7,901,908 7,901,904 27,901,906 Desai Associates Equity Linked Investors II 4,291,654 1,757,494 3,950,954 3,950,952 13,951,953 Private Equity Investors III, L.P. 4,291,654 1,757,494 3,950,954 3,950,952 13,951,953 Hoak Capital Corporation Hoak Communications Partners, L.P. 5,897,882 2,415,323 6,429,796 5,429,793 19,172,794 HCP Capital Fund, L.P. 539,448 220,917 496,635 496,635 1,753,635 JH Whitney & Co./(4)/ 5,354,442 2,190,887 4,938,693 4,938,690 17,438,692 Entergy Technology Holding Company 4,291,554 1,757,494 3,950,954 3,950,952 13,950,954 M/C Partners Media/Communications Investors Ltd Partnership 3,089,918 1,265,395 2,844,687 2,844,685 10,044,686 Media/Communications Partners III Ltd Partnership 128,747 52,725 118,529 118,529 418,529 OneLiberty Fund III, L.P. 1,072,889 439,374 987,739 987,738 3,487,740 Toronto Dominion Investments, Inc. 1,072,889 439,374 987,739 987,738 3,487,740 Northwood Capital Partners Northwood Ventures LLC 600,818 246,050 553,134 553,134 1,953,134 Northwood Capital Partners LLC 150,204 61,512 138,283 138,283 488,284 Aggregate Commitment 39,375,005 16,125,005/(1)/ 36,250,005 36,249,985 128,000,000
Cumulative Equity Funding 39,375,005 65,500,010 91,750,015 128,000,000
Note: /(1)/ If the non-supplemental funding is not simultaneous with the initial cash equity funding, then the 2nd equity draw (12/31/98) may have to be increased to offset any shortfall in the funding of 1998 Operating Losses. /(2)/ The 2/nd/ equity draw will coincide with the 1998 fiscal year end (12/31/98). Subsequent equity fundings will coincide with the 24 and 36 month anniversary of the closing. /(3)/ CB Capital Investors, Inc. equity funding commitment may be increased by 1.0M$ in the event management stockholders elect to purchase 1.0M$ of Series C Preferred Stock and Class A Common Stock. In such event, the funding requirement of each of the other equity investors will be proportionately reduced by 1 M$. /(4)/ JH Whitney & Co. will allocate the commitment amongst the following entities: Whitney Equity Partners, L.P., J.H. Whitney III, L.P. and Whitney Strategic Partners III, L.P. Notice Addresses - ---------------- CB Capital Investors. L.P. 380 Madison Avenue, 12th Floor New York, NY 10017 Attn: Michael Hannon Fax: (212) 622-3101 Private Equity Investors III, L.P. 540 Madison Avenue, 36th Floor New York. NY 10022 Attn: Rohit M. Desai Fax: (212) 752-7807 Hoak Communications Partners, L.P. HCP Capital Fund, L.P. One Galleria Tower 13355 Noel Road, Suite 1050 Dallas, Texas 75240 Attn: James Hoak Fax: (972) 960-4899 Whitney Equity Partners, L.P. J.H. Whitney III, L.P. Whitney Strategic Partners III, L.P. 177 Broad Street, 15th Floor Stamford, Connecticut 06901 Attn: William Laverack, Jr. Fax: (203) 973-1422 Entergy Technology Holding Company Three Financial Centre 900 South Shackleford Road Suite 210 Little Rock, Arkansas 72211 Attn: John A. Brayman Fax: (501) 954-5095 Northwood Ventures LLC Northwood Capital Partners LLC 75 State Street, Suite 2500 Boston, MA 02109 Attn: James F. Wade Fax: (617) 345-7201 One Liberty Fund III, L.P. One Liberty Fund IV, L.P. One Liberty Square Boston. MA 02109 Attn: Joseph T. McCullen Fax: (617) 423-1765 Toronto Dominion Investments, Inc. 31 West 52nd Street New York, NY 10019-6101 Attn: Brian Rich Fax: (212) 974-8429 (with a copy to) Toronto Dominion Investments, Inc. 909 Fannin Suite 1700 Houston, Texas 77010 Attn: Martha Gariepy Fax: (713) 652-2647 Northwood Ventures LLC Northwood Capital Partners LLC 485 Underhill Boulevard, Suite 205 Syosset, New York 11791-3419 Attn: Peter Schiff Fax: (516) 364-0879 SCHEDULE II-A TeleCorp Equity Interests of TeleCorp Investors/1/
- ----------------------------------------------------------------------------------------------------------------------------------- TeleCorp Investors: Class A Shares Class B Shares Class C Shares Series A Preferred Shares - ----------------------------------------------------------------------------------------------------------------------------------- One Liberty Fund III L.P. 837.449 2273.069 76.567 Gilde Investment Fund B.V. 8.457 22.962 .773 Northwood Ventures 289.832 1837.018 46.404 Northwood Capital Partners LLC 72.700 459.013 11.601 CB Capital Investors, L.P. 362.531 2296.031 58.005 TeleCorp Investment Corp., L.L.C. - 2658.563 58.005 Media/Communications Investors Limited Partnership 14.501 91.841 2.320 Media/Communications Partners III Limited Partnership 348.030 2204.190 55.685 Entergy Technology Holding Company - 1973.717 684.846 58.005 Total 1933.369 1973.717 12527.533 367.365 - -----------------------------------------------------------------------------------------------------------------------------------
/1/ TeleCorp Equity Interests also include the shares of Series A Preferred Stock of TeleCorp to be issued upon conversion of Bridge Notes pursuant to Section 3.2(b)(ii) of the Securities Purchase Agreement. Notice Addresses ---------------- CB Capital Investors. L.P. 380 Madison Avenue, 12th Floor New York, NY 10017 Attn: Michael Hannon Fax: (212) 622-3101 Equity-Linked Investors-II Private Equity Investors III, L.P. 540 Madison Avenue, 36/th/ Floor New York, NY 10022 Attn: Rohit M. Desia Fax: (212) 752-7807 Hoak Communications Partners, L.P. HCP Capital Fund, L.P. One Galleria Tower 13355 Noel Road, Suite 1050 Dallas, Texas 75240 Attn: James Hoak Fax: (972) 960-4899 Whitney Equity Partners, L.P. J.H. Whitney III, L.P. Whitney Strategic Partners III, L.P. 177 Broad Street, 15th Floor Stamford, Connecticut 06901 Attn: William Laverack, Jr. Fax: (203) 973-1422 Entergy Technology Holding Company Three Financial Centre 900 South Shackleford Road Suite 210 Little Rock, Arkansas 72211 Attn: John A. Brayman Fax: (501) 954-5095 Media/Communications Partners III Limited Partnership Media/Communications Investors Limited Partnership 75 State Street, Suite 2500 Boston. MA 02109 Ann: James F. Wade Fax: (617) 345-7201 Gilde International B.V. One Liberty Fund III, L.P. One Liberty Fund IV, L.P. One Liberty Square Boston, MA 02109 Attn: Joseph T. McCullen Fax: (617)423-1765 Toronto Dominion Investments, Inc. 31 West 52nd Street New York, NY 10019-6101 Attn: Brian Rich Fax: (212) 974-8429 (with a copy to) Toronto Dominion Investments, Inc. 909 Fannin Suite 1700 Houston, Texas 77010 Attn: Martha Gariepy Fax: (713) 652-2647 Northwood Ventures LLC Northwood Capital Partners LLC 485 Underhill Boulevard, Suite 205 Syosset, New York 11791-3419 Attn: Peter Schiff Fax: (516) 364-0879 TeleCorp Investments Corp., LLC 1110 N. Glebe Road, Suite 300 Arlington, Virginia 22201 Attn: General Counsel Fax: (703) 522 4873 SCHEDULE II-B TeleCorp Equity Interest of Management Stockholders -------------------------- Gerald T. Vento 1,788.488 Class A Shares Thomas H. Sullivan 1,111.763 Class A Shares SCHEDULE III-A AT&T PCS Licenses -----------------
- -------------------------------------------------------------------------------- Market Number Frequency Block License Description - -------------------------------------------------------------------------------- M008 A Boston-Providence - -------------------------------------------------------------------------------- M019 A St. Louis - -------------------------------------------------------------------------------- M026 A Louisville-Lexington-Evansville - -------------------------------------------------------------------------------- B032 D Baton Rouge - -------------------------------------------------------------------------------- B236 D Lafayette-New Iberia - -------------------------------------------------------------------------------- B320 D New Orleans - --------------------------------------------------------------------------------
TWR Licenses ------------
- -------------------------------------------------------------------------------- Market Number Frequency Block License Description - -------------------------------------------------------------------------------- M040 A Little Rock - -------------------------------------------------------------------------------- M028 B Memphis-Jackson - --------------------------------------------------------------------------------
United States of America Federal Communications Commission RADIO STATION AUTHORIZATION Commercial Mobile Radio Services Personal Communications Service - Broadband AT&T WIRELESS PCS INC. Call Sign: KNLF216 1150 Connecticut Avenue, Market: M008 Boston-Providence N.W., 4/th/ Floor Channel Block: A Washington, DC 20036 File Number: 00013-CW-L-95 The licensee hereof is authorized, for the period indicated, to construct and operate radio transmitting facilities in accordance with the terms and conditions hereinafter described. This authorization is subject to the provisions of the Communications Act of 1934, as amended, subsequent Acts of Congress, international treaties and agreements to which the United States is a signatory, and all pertinent rules and regulations of the Federal Communications Commission contained in the Title 47 of the U.S. Code of Federal Regulations. ____________________________________________________________ Initial Grant Date.............................................June 23, 1995 Five-year Build Out Date.......................................June 23, 2000 Expiration Date................................................June 23, 2005 _____________________________________________________________ CONDITIONS: Pursuant to Section 309(h) of the Communications Act of 1914, as amended, (47 U.S.C. (S) 309(h)), this license is subject to the following conditions: This license does not vest in the licensee any right to operate a station nor any right in the use of frequencies beyond the term thereof nor in any other manner than authorized herein. Neither this License nor the right granted thereunder shall be assigned or otherwise transferred in violation of the Communications Act of 1934, as amended (47 U.S.C. (S) 151. et seq.). This licensee is subject in terms to the right of use or control conferred by Section 706 of the Communications Act of 1934. as amended (47 U.S.C. (S) 606). Conditions continued on Page 2 ______________________________________________________________________ Waivers: No waivers associated with this authorization ________________________________________________________________________________ Issue Date: June 23, 1995 Page 1 of 2 FCC Form 463a KNLF216 AT&T WIRELESS PCS INC. 00013-CW-L-95 CONDITIONS: This authorization is subject to the condition that, in the event that systems using the same frequencies as granted herein are authorized in an adjacent foreign territory (Canada/United States), future coordination of any base station transmitters within 72 km (45 miles) of the United States/Canada border shall be required to eliminate any harmful interference to operations in the adjacent foreign territory and to ensure continuance of equal access to the frequencies by both countries. This authorization is subject to the condition that the remaining balance of the winning bid amount will be paid in accordance with Part 1 of the Commission's rules, 47 C.F.R. Part 1. Issue Date: June 23, 1995 Page 2 of 2 FCC Form 463a United States of America Federal Communications Commission RADIO STATION AUTHORIZATION Commercial Mobile Radio Services Personal Communications Service - Broadband AT&T WIRELESS PCS INC. Call Sign: KNLF237 1150 Connecticut Avenue, Market: M019 N.W., 4/th/ Floor St. Louis Washington, DC 20036 Channel Block: A File Number: 0034-CW-L-95 The licensee hereof is authorized, for the period indicated, to construct and operate radio transmitting facilities in accordance with the terms and conditions hereinafter described. This authorization is subject to the provisions of the Communications Act of 1934, as amended, subsequent Acts of Congress, international treaties and agreements to which the United States is a signatory, and all pertinent rules and regulations of the Federal Communications Commission, contained in the Title 47 of the U.S. Code of Federal Regulations. _________________________________________________________ Initial Grant Date .......................................... June 23, 1995 Five-year Build Out Date .................................... June 23, 2000 Expiration Date ............................................. June 23, 2005 _________________________________________________________ CONDITIONS: Pursuant to Section 309(h) of the Communications Act of 1934, as amended, (47 U.S.C. (S) 309(h)), this license is subject to the following conditions: This license does not vest in the licensee any right to operate a station nor any right in the use of frequencies beyond the term thereof nor in any other manner than authorized herein. Neither this license nor the right granted thereunder shall be assigned or otherwise transferred in violation of the Communications Act of 1934, as amended (47 U.S.C. (S) 151, et. seq.). This license is subject in terms to the right of use or control conferred by Section 706 of the Communications Act of 1934, as amended (47 U.S.C. (S) 606). Conditions continued on Page 2. ______________________________________________________________________ WAIVERS: No waivers associated with this authorization. ________________________________________________________________________________ KNLF237 AT&T WIRELESS PCS INC. 00034-CW-L-95 CONDITIONS: This authorization is subject to the condition that, in the event that systems using the same frequencies as granted herein are authorized in an adjacent foreign territory (Canada/United States), future coordination of any base station transmitters within 72 km (45 miles) of the United States/Canada border shall be required to eliminate any harmful interference to operations in the adjacent foreign territory and to ensure continuance of equal access to the frequencies by both countries. This authorization is subject to the condition that the licensee shall comply with Section 24.204 of the Commission's rules, 47 C.F.R. 24.204. This authorization is subject to the condition that the remaining balance of the winning bid amount will be paid in accordance with Part 1 of the Commission's rules, 47 C.F.R. Part 1. Issue Date: June 23, 1995 Page 2 of 2 FCC Form 463a United States of America Federal Communications Commission RADIO STATION AUTHORIZATION Commercial Mobile Radio Services Personal Communications Service - Broadband AT&T WIRELESS PCS INC. Call Sign: KNLF251 1150 Connecticut Avenue, N.W., Market: M026 4/th/ Floor Louisville-Lexington-Evansville Washington, DC 20036 Channel Block: A File Number: 0048-CW-L-95 The licensee hereof is authorized, for the period indicated, to construct and operate radio transmitting facilities in accordance with the terms and conditions hereinafter described. This authorization is subject to the provisions of the Communications Act of 1934, as amended, subsequent Acts of Congress, international treaties and agreements to which the United States is a signatory, and all pertinent rules and regulations of the Federal Communications Commission, contained in the Title 47 of the U.S. Code of Federal Regulations. ________________________________________________________ Initial Grant Date ......................................... June 23, 1995 Five-year Build Out Date ................................... June 23, 2000 Expiration Date............................................. June 23, 2005 ________________________________________________________ CONDITIONS: Pursuant to Section 309(h) of the Communications Act of 1934, as amended, (47 U.S.C. (S) 309(h)), this license is subject to the following conditions: This license does not vest in the licensee any right to operate a station nor any right in the use of frequencies beyond the term thereof nor in any other manner than authorized herein. Neither this license nor the right granted thereunder shall be assigned or otherwise transferred in violation of the Communications Act of 1934, as amended (47 U.S.C. (S) 151, et. seq.). This license is subject in terms to the right of use or control conferred by Section 706 of the Communications Act of 1934, as amended (47 U.S.C. (S) 606). Conditions continued on Page 2. ______________________________________________________________________ WAIVERS: No waivers associated with this authorization. ________________________________________________________________________________ Issue Date: June 23, 1995 Page 1 of 2 FCC Form 463a KNLF251 AT&T WIRELESS PCS INC. 00048-CW-L-95 CONDITIONS: This authorization is subject to the condition that, in the event that systems using the same frequencies as granted herein are authorized in an adjacent foreign territory (Canada/United States), future coordination of any base station transmitters within 72 km (45 miles) of the United States/Canada border shall be required to eliminate any harmful interference to operations in the adjacent foreign territory and to ensure continuance of equal access to the frequencies by both countries. This authorization is subject to the condition that the remaining balance of the winning bid amount will be paid in accordance with Part 1 of the Commission's rules, 47 C.F.R. Part 1. Issue Date: June 23, 1995 Page 2 of 2 FCC Form 463a United States of America Federal Communications Commission RADIO STATION AUTHORIZATION Commercial Mobile Radio Services Personal Communications Service - Broadband AT&T WIRELESS PCS INC., N/A Call Sign: KNLG381 1150 Connecticut Avenue, N.W., Market: B032 4/th/ Floor Baton Rouge, LA Washington, DC 20036 Channel Block: D File Number: 01519-CW-L-97 The licensee hereof is authorized, for the period indicated, to construct and operate radio transmitting facilities in accordance with the terms and conditions hereinafter described. This authorization is subject to the provisions of the Communications Act of 1934, as amended, subsequent Acts of Congress, international treaties and agreements to which the United States is a signatory, and all pertinent rules and regulations of the Federal Communications Commission, contained in the Title 47 of the U.S. Code of Federal Regulations. _________________________________________________________ Initial Grant Date ......................................... April 28, 1997 Five-year Build Out Date ................................... April 28, 2002 Expiration Date ............................................ April 28, 2007 _________________________________________________________ CONDITIONS: Pursuant to Section 309(h) of the Communications Act of 1934, as amended, (47 U.S.C. (S) 309(h)), this license is subject to the following conditions: This license does not vest in the licensee any right to operate a station nor any right in the use of frequencies beyond the term thereof nor in any other manner than authorized herein. Neither this license nor the right granted thereunder shall be assigned or otherwise transferred in violation of the Communications Act of 1934, as amended (47 U.S.C. (S) 151, et. seq.). This license is subject in terms to the right of use or control conferred by Section 706 of the Communications Act of 1934, as amended (47 U.S.C. (S) 606). Conditions continued on Page 2. ______________________________________________________________________ WAIVERS: No waivers associated with this authorization. ________________________________________________________________________________ Issue Date: April 28, 1997 Page 1 of 2 FCC Form 463B KNLF381 AT&T WIRELESS PCS INC. 01519-CW-L-97 CONDITIONS: Grant of this license is without prejudice to any future enforcement action the Commission may determine is appropriate regarding the bidding activities of AT&T Wireless PCS, Inc. in the D, E, and F block PCS auction. This authorization is subject to the condition that, in the event that systems using the same frequencies as granted herein are authorized in an adjacent foreign territory (Canada/United States), future coordination of any base station transmitters within 72 km (45 miles) of the United States/Canada border shall be required to eliminate any harmful interference to operations in the adjacent foreign territory and to ensure continuance of equal access to the frequencies by both countries. This authorization is subject to the condition that the remaining balance of the winning bid amount will be paid in accordance with Part 1 of the Commission's rules, 47 C.F.R. Part 1. Issue Date: April 28, 1997 Page 2 of 2 United States of America Federal Communications Commission RADIO STATION AUTHORIZATION Commercial Mobile Radio Services Personal Communications Service - Broadband AT&T WIRELESS PCS INC.,N/A Call Sign: KNLG462 1150 Connecticut Avenue, Market: B236 N.W., 4th Floor Lafayette-New Iberia,LA Washington, DC 20036 Channel Block: D File Number: 01700-CW-L-97 The licensee hereof is authorized, for the period indicated, to construct and operate radio transmitting facilities in accordance with the terms and conditions hereinafter described. This authorization is subject to the provisions of the Communications Act of 1934, as amended, subsequent Acts of Congress, international treaties and agreements to which the United States is a signatory, and all pertinent rules and regulations of the Federal Communications Commission, contained in the Title 47 of the U.S. Code of Federal Regulations. _________________________________________________________________ Initial Grant Date............................................ April 28, 1997 Five-year Build Out Date...................................... April 28, 2002 Expiration Date............................................... April 28, 2007 _________________________________________________________________ CONDITIONS: Pursuant to Section 309(h) of the Communications Act of 1934, as amended, (47 U.S.C. (S) 309(h)), this license is subject to the following conditions: This license does not vest in the licensee any right to operate a station nor any right in the use of frequencies beyond the term thereof nor in any other manner than authorized herein. Neither this license nor the right granted thereunder shall be assigned or otherwise transferred in violation of the Communications Act of 1934, as amended (47 U.S.C. (S) 151, et. seq.). This license is subject in terms to the right of use or control conferred by Section 706 of the Communications Act of 1934, as amended (47 U.S.C. (S) 606). Conditions continued on Page 2. _____________________________________________________________________ WAIVERS: No waivers associated with this authorization. ________________________________________________________________________________ Issue Date: April 28, 1997 Page 1 of 2 FCC Form 463B KNLF462 AT&T WIRELESS PCS INC. 01700-CW-L-97 CONDITIONS: Grant of this license is without prejudice to any future enforcement action the Commission may determine is appropriate regarding the bidding activities of AT&T Wireless PCS, Inc. in the D, E, and F block PCS auction. This authorization is subject to the condition that, in the event that systems using the same frequencies as granted herein are authorized in an adjacent foreign territory (Canada/United States), future coordination of any base station transmitters within 72 km (45 miles) of the United States/Canada border shall be required to eliminate any harmful interference to operations in the adjacent foreign territory and to ensure continuance of equal access to the frequencies by both countries. This authorization is subject to the condition that the remaining balance of the winning bid amount will be paid in accordance with Part 1 of the Commission's rules, 47 C.F.R. Part 1. Issue Date: April 28, 1997 Page 2 of 2 United States of America Federal Communications Commission RADIO STATION AUTHORIZATION Commercial Mobile Radio Services Personal Communications Service - Broadband AT&T WIRELESS PCS INC.,N/A Call Sign: KNLG500 1150 Connecticut Avenue, Market: B320 N.W.,4/th/ Floor New Orleans,LA Washington, DC 20036 Channel Block: D File Number: 01738-CW-L-97 The licensee hereof is authorized, for the period indicated, to construct and operate radio transmitting facilities in accordance with the terms and conditions hereinafter described. This authorization is subject to the provisions of the Communications Act of 1934, as amended, subsequent Acts of Congress, international treaties and agreements to which the United States is a signatory, and all pertinent rules and regulations of the Federal Communications Commission, contained in the Title 47 of the U.S. Code of Federal Regulations. _________________________________________________________________ Initial Grant Date........................................ April 28, 1997 Five-year Build Out Date.................................. April 28, 2002 Expiration Date.......................................... April 28, 2007 _________________________________________________________________ CONDITIONS: Pursuant to Section 309(h) of the Communications Act of 1934, as amended, (47 U.S.C. (S) 309(h)), this license is subject to the following conditions: This license does not vest in the licensee any right to operate a station nor any right in the use of frequencies beyond the term thereof nor in any other manner than authorized herein. Neither this license nor the right granted thereunder shall be assigned or otherwise transferred in violation of the Communications Act of 1934, as amended (47 U.S.C. (S) 151, et. seq.). This license is subject in terms to the right of use or control conferred by Section 706 of the Communications Act of 1934, as amended (47 U.S.C. (S) 606). Conditions continued on Page 2. ________________________________________________________________ WAIVERS: No waivers associated with this authorization. ________________________________________________________________________________ Issue Date: April 28, 1997 Page 1 of 2 FCC Form 463B KNLG500 AT&T WIRELESS PCS INC. 01738-CW-L-97 CONDITIONS: Grant of this license is without prejudice to any future enforcement action the Commission may determine is appropriate regarding the bidding activities of AT&T Wireless PCS, Inc. in the D, E, and F block PCS auction. This authorization is subject to the condition that, in the event that systems using the same frequencies as granted herein are authorized in an adjacent foreign territory (Canada/United States), future coordination of any base station transmitters within 72 km (45 miles) of the United States/Canada border shall be required to eliminate any harmful interference to operations in the adjacent foreign territory and to ensure continuance of equal access to the frequencies by both countries. This authorization is subject to the condition that the remaining balance of the winning bid amount will be paid in accordance with Part 1 of the Commission's rules, 47 C.F.R. Part 1. Issue Date: April 28, 1997 Page 2 of 2 FCC Form 463B United States of America Federal Communications Commission RADIO STATION AUTHORIZATION Commercial Mobile Radio Services Personal Communications Service - Broadband TWR CELLULAR,INC. Call Sign: KNLF256 1150 Connecticut Avenue, Market: M028 N.W. 4/th/ Floor MEMPHIS-JACKSON Washington, DC 20036 Channel Block: B File Number: 00053-CW-L-95 The licensee hereof is authorized, for the period indicated, to construct and operate radio transmitting facilities in accordance with the terms and conditions hereinafter described. This authorization is subject to the provisions of the Communications Act of 1934, as amended, subsequent Acts of Congress, international treaties and agreements to which the United States is a signatory, and all pertinent rules and regulations of the Federal Communications Commission, contained in the Title 47 of the U.S. Code of Federal Regulations. ________________________________________________________________ Initial Grant Date......................................... June 23, 1995 Five-year Build Out Date................................... June 23, 2000 Expiration Date............................................ June 23, 2005 ________________________________________________________________ CONDITIONS: ________________________________________________________________________________ Issue Date: January 9, 1997 Page 1 of 2 FCC Form 463a Pursuant to Section 309(h) of the Communications Act of 1934, as amended, (47 U.S.C. (S) 309(h)), this license is subject to the following conditions: This license does not vest in the licensee any right to operate a station nor any right in the use of frequencies beyond the term thereof nor in any other manner than authorized herein. Neither this license nor the right granted thereunder shall be assigned or otherwise transferred in violation of the Communications Act of 1934, as amended (47 U.S.C. (S) 151, et. seq.). This license is subject in terms to the right of use or control conferred by Section 706 of the Communications Act of 1934, as amended (47 U.S.C. (S) 606). Conditions continued on Page 2. ______________________________________________________________________ WAIVERS: No waivers associated with this authorization. ________________________________________________________________________________ Issue Date: January 9, 1997 Page 1 of 2 FCC Form 463a KNLF256 TWR CELLULAR, INC. 00053-CW-L-95 CONDITIONS: This authorization is subject to the condition that, in the event that systems using the same frequencies as granted herein are authorized in an adjacent foreign territory (Canada/United States), future coordination of any base station transmitters within 72 km (45 miles) of the United States/Canada border shall be required to eliminate any harmful interference to operations in the adjacent foreign territory and to ensure continuance of equal access to the frequencies by both countries. This authorization is subject to the condition that the remaining balance of the winning bid amount will be paid in accordance with Part 1 of the Commission's rules, 47 C.F.R. Part 1. ________________________________________________________________________________ Issue Date: January 9, 1997 Page 2 of 2 FCC Form 463a United States of America Federal Communications Commission RADIO STATION AUTHORIZATION Commercial Mobile Radio Services Personal Communications Service - Broadband TWR CELLULAR, INC. Call Sign: KNLF279 1150 Connecticut Avenue, Market: M040 N.W. 4/th/ Floor LITTLE ROCK Washington, DC 20036 Channel Block: A File Number: 00076-CW-L-95 The licensee hereof is authorized, for the period indicated, to construct and operate radio transmitting facilities in accordance with the terms and conditions hereinafter described. This authorization is subject to the provisions of the Communications Act of 1934, as amended, subsequent Acts of Congress, international treaties and agreements to which the United States is a signatory, and all pertinent rules and regulations of the Federal Communications Commission, contained in the Title 47 of the U.S. Code of Federal Regulations. ________________________________________________________ Initial Grant Date.......................................... June 23, 1995 Five-year Build Out Date.................................... June 23, 2000 Expiration Date............................................. June 23, 2005 ________________________________________________________ CONDITIONS: ________________________________________________________________________________ Issue Date: January 9, 1997 Page 1 of 2 FCC Form 463a Pursuant to Section 309(h) of the Communications Act of 1934, as amended, (47 U.S.C. (S) 309(h)), this license is subject to the following conditions: This license does not vest in the licensee any right to operate a station nor any right in the use of frequencies beyond the term thereof nor in any other manner than authorized herein. Neither this license nor the right granted thereunder shall be assigned or otherwise transferred in violation of the Communications Act of 1934, as amended (47 U.S.C. (S) 151, et. seq.). This license is subject in terms to the right of use or control conferred by Section 706 of the Communications Act of 1934, as amended (47 U.S.C. (S) 606). Conditions continued on Page 2. ______________________________________________________________________ WAIVERS: No waivers associated with this authorization. ________________________________________________________________________________ Issue Date: January 9, 1997 Page 2 of 2 FCC Form 463a KNLF279 TWR CELLULAR, INC. 00076-CW-L-95 CONDITIONS: This authorization is subject to the condition that, in the event that systems using the same frequencies as granted herein are authorized in an adjacent foreign territory (Canada/United States), future coordination of any base station transmitters within 72 km (45 miles) of the United States/Canada border shall be required to eliminate any harmful interference to operations in the adjacent foreign territory and to ensure continuance of equal access to the frequencies by both countries. This authorization is subject to the condition that the remaining balance of the winning bid amount will be paid in accordance with Part 1 of the Commission's rules, 47 C.F.R. Part 1. ________________________________________________________________________________ Issue Date: January 9, 1997 Page 2 of 2 FCC Form 463a SCHEDULE III-B TeleCorp Licenses - -------------------------------------------------------------------------------- Market Number Freq. Block License Description - -------------------------------------------------------------------------------- B034 F Beaumont-Port Arthur, TX - -------------------------------------------------------------------------------- B257 F Little Rock, AR - -------------------------------------------------------------------------------- B290 F Memphis, TN - -------------------------------------------------------------------------------- B320 F New Orleans, LA - -------------------------------------------------------------------------------- United States of America Federal Communications Commission RADIO STATION AUTHORIZATION Commercial Mobile Radio Services Personal Communications Service - Broadband TELECORP HOLDING CORP., INC. Call Sign: KNLG228 1110 NORTH GLEBE ROAD Market: B034 SUITE 850 BEAUMONT-PORT ARTHUR, TX ARLINGTON, VA 22201 Channel Block: F File Number: 00139-CW-L-97 The licensee hereof is authorized, for the period indicated, to construct and operate radio transmitting facilities in accordance with the terms and conditions hereinafter described. This authorization is subject to the provisions of the Communications Act of 1934, as amended, subsequent Acts of Congress, international treaties and agreements to which the United States is a signatory, and all pertinent rules and regulations of the Federal Communications Commission, contained in the Title 47 of the U.S. Code of Federal Regulations. __________________________________________________________ Initial Grant Date......................................... April 28, 1997 Ten Year Build Out Date.................................... April 28, 2007 Expiration Date............................................ April 28, 2007 __________________________________________________________ CONDITIONS: Pursuant to Section 309(h) of the Communications Act of 1934, as amended, (47 U.S.C. 309(h)), this license is subject to the following conditions: This license does not vest in the licensee any right to operate a station nor any right in the use of ________________________________________________________________________________ Issue Date: 11/26/97 Page 1 of 2 FCC Form 4638 frequencies beyond the term thereof nor in any other manner than authorized herein. Neither this license nor the right granted thereunder shall be assigned or otherwise transferred in violation of the Communications Act of 1934, as amended (47 U.S.C. 151, et. seq.). This license is subject in terms to the right of use or control conferred by Section 706 of the Communications Act of 1934, as amended (47 U.S.C. 606). (Conditions continued on Page 2) ______________________________________________________________________ WAIVERS: No waivers associated with this authorization. ________________________________________________________________________________ Issue Date: 11/26/97 Page 2 of 2 KNLG228 TELECORP HOLDING CORP., INC. 001390-CW-L-97 This authorization is subject to the condition that, in the event that systems using the same frequencies as granted herein are authorized in an adjacent foreign territory (Canada/United States), future coordination of any base station transmitters within 72 km (45 miles) of the United States/Canada border shall be required to eliminate any harmful interference to operations in the adjacent foreign territory and to ensure continuance of equal access to the frequencies by both countries. This authorization is conditioned upon the full and timely payment of all monies due pursuant to Sections 1.2110 and 24.716 of the Commission's Rules and the terms of the Commission's installment plan as set forth in the Note and Security Agreement executed by the licensee. Failure to comply with this condition will result in the automatic cancellation of this authorization. ________________________________________________________________________________ Issue Date: 11/26/97 Page 2 of 2 United States of America Federal Communications Commission RADIO STATION AUTHORIZATION Commercial Mobile Radio Services Personal Communications Service - Broadband TELECORP HOLDING CORP., INC. Call Sign: KNLH628 1110 NORTH GLEBE ROAD Market: B290 SUITE 850 MEMPHIS, TN ARLINGTON, VA 22201 Channel Block: F File Number: 00870-CW-L-97 The licensee hereof is authorized, for the period indicated, to construct and operate radio transmitting facilities in accordance with the terms and conditions hereinafter described. This authorization is subject to the provisions of the Communications Act of 1934, as amended, subsequent Acts of Congress, international treaties and agreements to which the United States is a signatory, and all pertinent rules and regulations of the Federal Communications Commission, contained in the Title 47 of the U.S. Code of Federal Regulations. __________________________________________________________ Initial Grant Date.......................................... April 28, 1997 Ten Year Build Out Date..................................... April 28, 2007 Expiration Date............................................. April 28, 2007 __________________________________________________________ CONDITIONS: Pursuant to Section 309(h) of the Communications Act of 1934, as amended, (47 U.S.C. 309(h)), this license is subject to the following conditions: This license does not vest in the licensee any right to operate a station nor any right in the use of ________________________________________________________________________________ Issue Date: 11/26/97 Page 1 of 2 FCC Form 4638 frequencies beyond the term thereof nor in any other manner than authorized herein. Neither this license nor the right granted thereunder shall be assigned or otherwise transferred in violation of the Communications Act of 1934, as amended (47 U.S.C. 151, et. seq.). This license is subject in terms to the right of use or control conferred by Section 706 of the Communications Act of 1934, as amended (47 U.S.C. 606). (Conditions continued on Page 2) ______________________________________________________________________ WAIVERS: No waivers associated with this authorization. ________________________________________________________________________________ Issue Date: 11/26/97 Page 2 of 2 KNLH628TELECORP HOLDING CORP., INC. 00870-CW-L-97 This authorization is subject to the condition that, in the event that systems using the same frequencies as granted herein are authorized in an adjacent foreign territory (Canada/United States), future coordination of any base station transmitters within 72 km (45 miles) of the United States/Canada border shall be required to eliminate any harmful interference to operations in the adjacent foreign territory and to ensure continuance of equal access to the frequencies by both countries. This authorization is conditioned upon the full and timely payment of all monies due pursuant to Sections 1.2110 and 24.716 of the Commission's Rules and the terms of the Commission's installment plan as set forth in the Note and Security Agreement executed by the licensee. Failure to comply with this condition will result in the automatic cancellation of this authorization. ________________________________________________________________________________ Issue Date: 11/26/97 Page 2 of 2 United States of America Federal Communications Commission RADIO STATION AUTHORIZATION Commercial Mobile Radio Services Personal Communications Service - Broadband TELECORP HOLDING CORP., INC. Call Sign: KNLH626 1110 NORTH GLEBE ROAD Market: B257 SUITE 850 LITTLE ROCK, AR ARLINGTON, VA 22201 Channel Block: F File Number: 00868-CW-L-97 The licensee hereof is authorized, for the period indicated, to construct and operate radio transmitting facilities in accordance with the terms and conditions hereinafter described. This authorization is subject to the provisions of the Communications Act of 1934, as amended, subsequent Acts of Congress, international treaties and agreements to which the United States is a signatory, and all pertinent rules and regulations of the Federal Communications Commission, contained in the Title 47 of the U.S. Code of Federal Regulations. _____________________________________________________________ Initial Grant Date.......................................... April 28, 1997 Ten Year Build Out Date..................................... April 28, 2007 Expiration Date............................................. April 28, 2007 _____________________________________________________________ CONDITIONS: Pursuant to Section 309(h) of the Communications Act of 1934, as amended, (47 U.S.C. 309(h)), this license is subject to the following conditions: This license does not vest in the licensee any right to operate a station nor any right in the use of frequencies beyond the term thereof nor in any other manner than authorized herein. ________________________________________________________________________________ Issue Date: 11/26/97 Page 1 of 2 FCC Form 4638 Neither this license nor the right granted thereunder shall be assigned or otherwise transferred in violation of the Communications Act of 1934, as amended (47 U.S.C. 151, et. seq.). This license is subject in terms to the right of use or control conferred by Section 706 of the Communications Act of 1934, as amended (47 U.S.C. 606). (Conditions continued on Page 2) ______________________________________________________________________ WAIVERS: No waivers associated with this authorization. ________________________________________________________________________________ Issue Date: 11/26/97 Page 2 of 2 FCC Form 4638 KNLH626TELECORP HOLDING CORP., INC. 00868-CW-L-97 This authorization is subject to the condition that, in the event that systems using the same frequencies as granted herein are authorized in an adjacent foreign territory (Canada/United States), future coordination of any base station transmitters within 72 km (45 miles) of the United States/Canada border shall be required to eliminate any harmful interference to operations in the adjacent foreign territory and to ensure continuance of equal access to the frequencies by both countries. This authorization is conditioned upon the full and timely payment of all monies due pursuant to Sections 1.2110 and 24.716 of the Commission's Rules and the terms of the Commission's installment plan as set forth in the Note and Security Agreement executed by the licensee. Failure to comply with this condition will result in the automatic cancellation of this authorization. ________________________________________________________________________________ Issue Date: 11/26/97 Page 2 of 2 FCC Form 4638 United States of America Federal Communications Commission RADIO STATION AUTHORIZATION Commercial Mobile Radio Services Personal Communications Service - Broadband TELECORP HOLDING CORP., INC. Call Sign: KNLH629 1110 NORTH GLEBE ROAD Market: B320 SUITE 850 NEW ORLEANS, LA ARLINGTON, VA 22201 Channel Block: F File Number: 00871-CW-L-97 The licensee hereof is authorized, for the period indicated, to construct and operate radio transmitting facilities in accordance with the terms and conditions hereinafter described. This authorization is subject to the provisions of the Communications Act of 1934, as amended, subsequent Acts of Congress, international treaties and agreements to which the United States is a signatory, and all pertinent rules and regulations of the Federal Communications Commission, contained in the Title 47 of the U.S. Code of Federal Regulations. ___________________________________________________________ Initial Grant Date......................................... April 28, 1997 Ten Year Build Out Date.................................... April 28, 2007 Expiration Date............................................ April 28, 2007 ___________________________________________________________ CONDITIONS: Pursuant to Section 309(h) of the Communications Act of 1934, as amended, (47 U.S.C. 309(h)), this license is subject to the following conditions: This license does not vest in the licensee any right to operate a station nor any right in the use of frequencies beyond the term thereof nor in any other manner than authorized herein. Neither this license nor the right granted thereunder shall be assigned or otherwise transferred in violation of the Communications Act of 1934, as amended (47 U.S.C. 151, et. seq.). This license is subject in terms to the right of use or control conferred by Section 706 of the Communications Act of 1934, as amended (47 U.S.C. 606). (Conditions continued on Page 2) ______________________________________________________________________ WAIVERS: No waivers associated with this authorization. ________________________________________________________________________________ KNLH629TELECORP HOLDING CORP., INC. 00871-CW-L-97 This authorization is subject to the condition that, in the event that systems using the same frequencies as granted herein are authorized in an adjacent foreign territory (Canada/United States), future coordination of any base station transmitters within 72 km (45 miles) of the United States/Canada border shall be required to eliminate any harmful interference to operations in the adjacent foreign territory and to ensure continuance of equal access to the frequencies by both countries. This authorization is conditioned upon the full and timely payment of all monies due pursuant to Sections 1.2110 and 24.716 of the Commission's Rules and the terms of the Commission's installment plan as set forth in the Note and Security Agreement executed by the licensee. Failure to comply with this condition will result in the automatic cancellation of this authorization. SCHEDULE IV ----------- Company Territory/1/ --------------------
I. From New Orleans MTA BTA Market Designator -------------------- --------------------- Baton Rouge, LA 32 Lafayette-New Iberia, LA 236 New Orleans, LA 320 II. From Houston, MTA 34 ----------------- Beaumont, TX III. From St. Louis MTA ------------------ Cape Giradeau-Sikeston, MO 66 Carbondale-Marion, IL 67 Columbia, MO 90 Jefferson City, MO 217 Kirksville, MO 230 Mount Vernon-Centralia, IL 308 Poplar Bluff, MO 355 Quincy, IL-Hannibal, MO 367 Rolla, MO 383 Portions of Springfield, MO BTA: 428 Camden County, MO Cedar County, MO Dallas County, MO Douglas County, MO Hickory County, MO Laclede County, MO Polk County, MO Stone County, MO
______________________ /1/ The Company Territory is more particularly described in the FCC applications filed in connection with the transfer of FCC PCS Licenses to the Licensee. Taney County, MO Texas County, MO Webster County, MO Wright County, MO West Plains, MO 470
IV. From Little Rock MTA BTA Market Designator -------------------- --------------------- El Dorado-Magnolia-Camden, AR 125 Fayetteville-Springdale-Rogers, AR 140 Rogers, AR Fort Smith, AR 153 Harrison, AR 182 Hot Springs, AR 193 Joesboro-Paragould, AR 219 Little Rock, AR 257 Pine Bluff, AR 348 Russellville, AR 387 V. From Memphis-Jackson MTA ------------------------ Blytheville, AR 49 Dyersburg-Union City, TN 120 Jackson, TN 211 Portions of Memphis, TN BTA: 290 Crittendon County, AR Cross County, AR Lee County, AR Phillips County, AR St. Francis County, AR Benton County, MS Coahoma County, MS DeSoto County, MS Grenada County, MS Lafayette County, MA Marshall County, MS Panola County, MS Quitman County, MS Tallahatchie County, MS Tate County, MS Tunica County, MS Yalobusha County, MS Fayette County, TN Hardeman County, TN Haywood County, TN Lauderdale County, TN Shelby County, TN Tipton County, TN VI. Boston-Providence MTA BTA Market Designator --------------------- --------------------- Boston, MA 51 Rockingham County, NH Strafford County, NH Hyannis, MA 201 Manchester, NH 274 Portions of Worcester County, MA/2/ 480 VII. From Louisville-Lexington-Evansville MTA ---------------------------------------- Evansville, IN BTA 135 Paducah-Murray-Mayfield, KY BTA 339 ____________________ /2/ The portions of Worcester County are those to the east of the line described by Points A, B and C on the map included in Schedule 2.1 to this Agreement. SCHEDULE V Equity Issued to Cash Equity Investors, TeleCorp Investors and Management Stockholders ---------------------------------------------- See revised Schedule V (Share Allocation with Supplemental and Share Allocation without Supplemental), in Agreement dated as of July 17, 1998, by and among AT&T Wireless PCS Inc., TWR Cellular, Incl, the Cash Equity Investors, the TeleCorp Investors, the Management Stockholders and TeleCorp PCS, Inc. Schedule 1.1 Sources & Uses of Cash - Presigning & Pre/Post Closing
Total SOURCES OF CASH Initial Equity Investor Funding 3,673,650 December 1997 pre-signing loan 2,808,500 January 1998 pre-signing loan 5,297,700 Mandatory repayments to TeleCorp License Companies (1,524,900) --------- ----------- TOTAL SOURCES of CASH - Pre-Signing 6,482,150 3,772,800 Cumulative 6,482,150 10,254,950 Total USES OF CASH Interconnect 67,941 271,763 339,704 Site Operating Expenses 0 166,750 1,196,719 1,675,407 1,914,751 4,953,627 Engineering & Implementation 114,947 1,051,103 1,751,838 2,102,206 2,102,206 7,122,299 Billing 0 0 0 6,202 9,438 15,730 Customer Care 0 0 0 378,491 567,736 946,227 Sub Total Operational 114,947 1,217,853 2,948,557 4,230,336 4,865,893 13,377,586 Admin/Financial/Corp/Legal/Bad Debt 247,733 1,716,693 4,713,609 5,656,330 6,632,454 18,966,820
Marketing & Sales 104,647 474,657 1,186,642 1,423,970 1,661,298 4,851,214 Equipment Costs 0 0 0 0 315,352 315,352 ------------ ---------- ---------- ----------- ----------- ------------ TOTAL Operating Expenses 467,327 3,400,203 8,848,807 11,310,636 13,474,998 37,510,972 Capital Expenditures 3,716,689 11,837,116 44,096,139 74,802,884 41,114,348 175,567,076 Cash Interest Payments 0 75,649 1,475,393 1,067,594 2,687,905 6,106,541 Financing Fees 0 0 2,250,000 5,893,750 46,875 8,190,625 AT&T Licenses 0 0 21,000,000 0 0 21,000,000 FCC License Deposits 2,298,234 0 0 0 0 2,298,234 Cash Interest Income 0 (766) (100,097) (521,433) (1,108,124) (1,730,410) ------------ ---------- ---------- ----------- ----------- ------------ TOTAL USES of CASH 6,482,150 15,321,702 77,570,251 93,353,431 56,216,003 248,943,038 Cumulative 6,482,150 21,803,352 99,373,603 192,727,035 248,943,038
Notes: (1) Company expects to enter into a 5-year supply contract in the month of February with an infrastructure vendor in the approximate amount of 282M$, subject to obtaining the consent of management. AT&T and Cash Equity Investors representing 66.696% of the Aggregate Commitment of all cash Equity Investors (excluding any interested Investors). As part of this supply contract, the company will receive 40M$ of non recourse purchase money financing. (2) Company expects to enter into a 20M$ microwave relocation and a 16M$ site acquisition and civil construction management contract with Entel Technologies, Inc. in the month of February subject to obtaining the consent of AT&T and Cash Equity Investors representing 66.666% of the Aggregate Commitment of all Cash Equity Investors (excluding any interested Investors). SCHEDULE 2.1 Description of Licenses ----------------------- Description of Partitioned Area and Disaggregated Spectrum The St. Louis MTA has a population of 4,663,926./1/ AT&T proposes to assign the 20 MHz of A Block broadband PCS spectrum at 1850-1860 MHz and 1930-1940 MHz to Telecorp PCS, L.L.C. in the following BTAs and/or other areas within the St. Louis MTA: - ------------------------------------------------------------------------------- Area Name Area Designator Area Population - ------------------------------------------------------------------------------- Carbondale-Marion, B. BTA B067 209,497 - ------------------------------------------------------------------------------- Columbia MO BTA B090 190,536 - ------------------------------------------------------------------------------- Cape Girardeau-Sikeston, MO BTA B066 181,795 - ------------------------------------------------------------------------------- Quincy, IL-Hannibal MO BTA B367 177,213 - ------------------------------------------------------------------------------- Poplar Bluff, MO BTA B355 148,240 - ------------------------------------------------------------------------------- Jefferson City, MO BTA B217 141,404 - ------------------------------------------------------------------------------- Mount Vernon-Centralia, IL B308 199,236 - ------------------------------------------------------------------------------- Rolla, MO BTA B383 98,233 - ------------------------------------------------------------------------------- West Plains, MO BTA B470 67,165 - ------------------------------------------------------------------------------- Kirksville, MO BTA B230 55,563 - ------------------------------------------------------------------------------- Camden County, MO 27,495 - ------------------------------------------------------------------------------- Cedar County, MO 12,093 - ------------------------------------------------------------------------------- Dallas County, MO 12,646 - ------------------------------------------------------------------------------- Douglas County, MO 11,376 - ------------------------------------------------------------------------------- Hickory County, MO 7,335 - ------------------------------------------------------------------------------- Laclede County, MO 27,158 - ------------------------------------------------------------------------------- Polk County, MO 21,826 - ------------------------------------------------------------------------------- Stone County, MO 19,078 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Taney County, MO 25,561 - ------------------------------------------------------------------------------- Texas County, MO 21,476 - ------------------------------------------------------------------------------- Webster County, MO 23,753 - ------------------------------------------------------------------------------- Wright County, MO 16,758 - ------------------------------------------------------------------------------- Total Population 1,615,987 - ------------------------------------------------------------------------------- ____________________ /1/ MTA and BTA population figures in this exhibit were taken from April 1, 1990 U.S. Census, U.S. Department of Commerce, Bureau of Census, as published in the Summary of Licenses to Be Auctioned from the August 2, 1995 C Block Bidder Information Package. Population of non-MTA and BTA areas was taken from April 1, 1990 U.S. Census. AT&T proposes to retain the 10MHz of A Block broadband PCS spectrum at 1850-1865 MHz and 1940-1945 MHz in the following BTAs and areas within the St. Louse MTA: - -------------------------------------------------------------------------------- Area Name Area Designator Area Population - -------------------------------------------------------------------------------- Carbendale-Marion, IL BTA B067 209,497 - -------------------------------------------------------------------------------- Columbia, MO BTA B090 190,536 - -------------------------------------------------------------------------------- Cape Girardeau-Sikeston, MO BTA B066 181,795 - -------------------------------------------------------------------------------- Quincy, IL-Hannibal, MO BTA B367 177,213 - -------------------------------------------------------------------------------- Poplar Bluff, MO BTA B355 148,240 - -------------------------------------------------------------------------------- Jefferson City, MO BTA B217 141,404 - -------------------------------------------------------------------------------- Mount Vernon-Centralia IL B308 119,286 - -------------------------------------------------------------------------------- Rolla, MO BTA B383 98,233 - -------------------------------------------------------------------------------- West Plains, MO BTA B470 67,165 - -------------------------------------------------------------------------------- Kirksville, MO BTA B230 55,563 - -------------------------------------------------------------------------------- Camden County, MO 27,495 - -------------------------------------------------------------------------------- Cedar County, MO 12,093 - -------------------------------------------------------------------------------- Dallas County, MO 12,646 - -------------------------------------------------------------------------------- Douglas County, MO 11,876 - -------------------------------------------------------------------------------- Hickory County, MO 7,335 - -------------------------------------------------------------------------------- Laclede County, MO 27,158 - -------------------------------------------------------------------------------- Polk County, MO 21,826 - -------------------------------------------------------------------------------- Stone County, MO 19,078 - -------------------------------------------------------------------------------- Taney County, MO 25,561 - -------------------------------------------------------------------------------- Texas County, MO 21,476 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Webster County, MO 23,753 - -------------------------------------------------------------------------------- Wright County, MO 16,758 - -------------------------------------------------------------------------------- Total Population 1,615,987 - -------------------------------------------------------------------------------- AT&T proposes to retain the full 30 MHz of A Block broadband PCS spectrum in the following BTAs and areas within the St. Louis MTA: - -------------------------------------------------------------------------------- Area Name Area Designator Area Population - -------------------------------------------------------------------------------- St. Louis, MO BTA B394 2,742,114 - -------------------------------------------------------------------------------- Barry County, MO 27,547 - -------------------------------------------------------------------------------- Christian County, MO 32,644 - -------------------------------------------------------------------------------- Dade County, MO 7,449 - -------------------------------------------------------------------------------- Greene County, MO 207,949 - -------------------------------------------------------------------------------- Lawrence County, MO 30,236 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Total Population 3,047,939 - -------------------------------------------------------------------------------- Description of Partitioned Area and Disaggregated Spectrum The Louisville-Lexington-Evansville MTA has a population of 3,556,648./1/ AT&T proposes to assign the 20 MHz of A Block broadband PCS spectrum at 1850-1860 MHz and 1930-1940 MHz to Telecorp PCS, L.L.C. in the following BTAs and/or other areas within the Louisville-Lexington-Evansville MTA: - -------------------------------------------------------------------------------- Area Name Area Designator Area Population - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Evansville, IN BTA B135 504,859 - -------------------------------------------------------------------------------- Paducah-Murray-Mayfield, KY BTA B339 217,082 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Total Population 721,941 - -------------------------------------------------------------------------------- ____________________ /1/ MTA and BTA population figures in this exhibit were taken from April 1, 1990 U.S. Census, U.S. Department of Commerce, Bureau of Census, as published in the Summary of Licenses to Be Auctioned from the August 2, 1995 C Block Bidder Information Package. Population of non-MTA and BTA areas was taken from April 1, 1990 U.S. Census. AT&T proposes to retain the 10 MHz of A Block broadband PCS spectrum at 1860-1865 MHz and 1940-1945 MHz in the following BTAs and areas within the Louisville-Lexington-Evansville MTA:
- ------------------------------------------------------------------------------------------- Area Name Area Designator Area Population - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Evansville, IN BTA B135 504,859 - ------------------------------------------------------------------------------------------- Paducah-Murray-Mayfield KY BTA B339 217,082 - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Total Population 721,941 - -------------------------------------------------------------------------------------------
AT&T proposes to retain the full 30 MHz of A Block broadband PCS spectrum in the following BTAs and areas within the Louisville-Lexington- Evansville MTA:
- ------------------------------------------------------------------------------------------- Area Name Area Designator Area Population - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Louisville, KY BTA B263 1,852,955 - ------------------------------------------------------------------------------------------- Lexington, KY BTA B252 316,101 - ------------------------------------------------------------------------------------------- Bowling Green-Giasgow, KY BTA B052 222,748 - ------------------------------------------------------------------------------------------- Owensboro, KY BTA B338 157,104 - ------------------------------------------------------------------------------------------- Cerbin, KY BTA B098 128,186 - ------------------------------------------------------------------------------------------- Somerset, KY BTA B423 111,487 - ------------------------------------------------------------------------------------------- Madisonville, KY BTA B273 46,126 - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Total Population 2,834,707 - -------------------------------------------------------------------------------------------
/2/Description of Partitioned Area and Disaggregated Spectrum The Boston-Providence MTA has a population of 9,452,712./3/ AT&T proposes to assign the 20 MHz of A Block broadband PCs spectrum at 1850-1860 MHz and 1930-1940 MHz to Telecorp PCS, L.L.C. in the following BTAs and/or other areas within the Boston-Providence MTA:
- ------------------------------------------------------------------------------------------- Area Name Area Designator Area Population - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Rockingham County, NH 245,845 - ------------------------------------------------------------------------------------------- Strafford County, NH 104,233 - ------------------------------------------------------------------------------------------- Hyannis, MA B201 204,256 - ------------------------------------------------------------------------------------------- Manchester-Nashua-Concord, NH BTA B274 540,704 - ------------------------------------------------------------------------------------------- Portions of Worcester County, MA/4/ 676,837 - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Total Population 1,771,875 - -------------------------------------------------------------------------------------------
______________________ /2/ 430 Form information for Telecorp PCS, Inc. is included in the 430 Form or Telecorp PCS, L.L.C . /3/ MTA and BTA population figures in this exhibit were taken from April 1, 1990 U.S. Census, U.S. Department of Commerce, Bureau of Census, as published in the Summary of Licenses to Be Auctioned from the August 2, 1995 C Block Bidder Information Package. Population of non-MTA and BTA areas was taken from April 1, 1990 U.S. Census. /4/ The portions of Worcester County are those to the west of the line described by points A, B and C on the map of Worcester County attached hereto. AT&T proposes to retain the 10 MHz of A Block broadband PCS spectrum at 1860-1865 MHz and 1940-1945 MHz in the following BTAs and areas within the Boston-Providence MTA:
- ------------------------------------------------------------------------------------------- Area Name Area Designator Area Population - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Rockingham County, NH 245,845 - ------------------------------------------------------------------------------------------- Strafford County, NH 104,233 - ------------------------------------------------------------------------------------------- Hyannis, MA B201 204,256 - ------------------------------------------------------------------------------------------- Manchester-Nashua-Concord, NH BTA B274 540,704 - ------------------------------------------------------------------------------------------- Portions of Worcester County, MA/4/ 676,837 - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Total Population 1,771,875 - -------------------------------------------------------------------------------------------
____________________ /4/ The portions of Worcester County are those to the west of the line described by points A, B and C on the map of Worcester County attached hereto. AT&T proposes to retain the full 30 MHz of A Block broadband PCS spectrum in the following BTAs and areas within the Boston-Providence MTA:
- ------------------------------------------------------------------------------------------------- Area Name Area Designator Area Population - ------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------- Essex County, MA 670,080 - ------------------------------------------------------------------------------------------------- Middlesex County, MA 1,398,468 - ------------------------------------------------------------------------------------------------- Norfolk County, MA 616,087 - ------------------------------------------------------------------------------------------------- Plymouth County, MA 435,276 - ------------------------------------------------------------------------------------------------- Suffolk County, MA 663,906 - ------------------------------------------------------------------------------------------------- Providence-Pawtucket RI-New B364 1,509,789 Bedford-Fall River MA - ------------------------------------------------------------------------------------------------- Springfield-Holyoke, MA B274 672,970 - ------------------------------------------------------------------------------------------------- Portland-Brunswick, ME B357 471,614 - ------------------------------------------------------------------------------------------------- Bangor, ME B030 316,838 - ------------------------------------------------------------------------------------------------- Lewiston-Auburn, ME B251 221,697 - ------------------------------------------------------------------------------------------------- Lebanon-Claremont, NH B249 167,576 - ------------------------------------------------------------------------------------------------- Waterville-Augusta, ME B465 165,671 - ------------------------------------------------------------------------------------------------- Pittsfield, MA B351 139,352 - ------------------------------------------------------------------------------------------------- Keene, NH B227 111,709 - ------------------------------------------------------------------------------------------------- Presque Isle, ME B363 89,936 - ------------------------------------------------------------------------------------------------- Portions of Worcester County, MA/5/ 32,868 - ------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------- Total Population 7,683,837 - -------------------------------------------------------------------------------------------------
___________________ /5/ The portions of Worcester County are those to the east of the line described by Points A, B and C on the map attached hereto. [MAP APPEARS HERE] Description of Disaggregated Spectrum TWR proposes to assign the 20 MHz of A Block broadband PCS spectrum at 1850-1860 MHz and 1930-1940 MHz to Telecorp PCS, L.L.C. in the entire Little Rock MTA. TWR proposes to retain the 10 MHz of A Block broadband PCS spectrum at 1860-1865 MHz and 1940-1945 MHz in the entire Little Rock MTA. 25 Description of Partitioned Area and Disaggregated Spectrum The Memphis-Jackson MTA has a population of 3,465,226./1/ TWR proposes to assign the 20 MHz of B Block broadband PCS spectrum at 1870-1880 MHz and 1950-1960 MHz to Telecorp PCS, L.L.C. in the following BTAs and other areas within the Memphis-Jackson MTA.
- ----------------------------------------------------------------------------------------------- Area Name Area Designator Area Population - ----------------------------------------------------------------------------------------------- Blytheville,AR BTA B049 79,446 - ----------------------------------------------------------------------------------------------- Dyersburg-Union city, TN BTA B120 113,943 - ----------------------------------------------------------------------------------------------- Jackson, TN BTA B211 255,379 - ----------------------------------------------------------------------------------------------- Crittendon County, AR/2/ 49,939 - ----------------------------------------------------------------------------------------------- Cross County, AR 19,225 - ----------------------------------------------------------------------------------------------- Lee County, AR 13,053 - ----------------------------------------------------------------------------------------------- Phillips County, AR 28,838 - ----------------------------------------------------------------------------------------------- St. Francis County, AR 28,497 - ----------------------------------------------------------------------------------------------- Benton County, MS 8,046 - ----------------------------------------------------------------------------------------------- Coahoma County, MS 31,665 - ----------------------------------------------------------------------------------------------- DeSoto County, MS 67,910 - ----------------------------------------------------------------------------------------------- Grenada County, MS 21,555 - ----------------------------------------------------------------------------------------------- Lafayette County, MS 31,826 - ----------------------------------------------------------------------------------------------- Marshall County, MS 30,361 - ----------------------------------------------------------------------------------------------- Panola County, MS 29,996 - ----------------------------------------------------------------------------------------------- Quitman County, MS 10,490 - ----------------------------------------------------------------------------------------------- Tallahatchie County, MS 15,210 - ----------------------------------------------------------------------------------------------- Tate County, MS 21,432 - ----------------------------------------------------------------------------------------------- Tunica County, MS 8,164 - ----------------------------------------------------------------------------------------------- Yalobusha County, MS 12,033 - ----------------------------------------------------------------------------------------------- Fayette County, TN 25,559 - ----------------------------------------------------------------------------------------------- Hardeman County, TN 23,377 - ----------------------------------------------------------------------------------------------- Haywood County, TN 19,437 - ----------------------------------------------------------------------------------------------- Lauderdale County, TN 23,491 - ----------------------------------------------------------------------------------------------- Shelby County, TN 826,330 - ----------------------------------------------------------------------------------------------- Tipton County, TN 37,568 - ----------------------------------------------------------------------------------------------- Total Population 1,832,770 - -----------------------------------------------------------------------------------------------
26 ___________________________ /1/ MTA and BTA population figures in this exhibit were taken from the April 1, 1990 U.S. Census, U.S. Department of Commerce, Bureau of Census, as published in the Summary of Licenses To Be Auctioned - from the August 2, 1995 C Block Bidder Information Package. Population for non-MTA and BTA areas was taken from the April 1, 1990 U.S. Census. /2/ The Arkansas, Mississippi and Tennessee counties listed are part of the Memphis, TN BTA 27 TWR proposes to retain the 10 MHz of B Block broadband PCS spectrum at 1880-1885 MHz and 1960-1965 MHz in the following BTAs and areas within the Memphis-Jackson MTA:
- ---------------------------------------------------------------------------------------------- Area Name Area Designator Area Population - ---------------------------------------------------------------------------------------------- Blytheville,AR BTA B049 79,446 - ---------------------------------------------------------------------------------------------- Dyersburg-Union city, TN BTA B120 113,943 - ---------------------------------------------------------------------------------------------- Jackson, TN BTA B211 255,379 - ---------------------------------------------------------------------------------------------- Crittendon County, AR/3/ 49,939 - ---------------------------------------------------------------------------------------------- Cross County, AR 19,225 - ---------------------------------------------------------------------------------------------- Lee County, AR 13,053 - ---------------------------------------------------------------------------------------------- Phillips County, AR 28,838 - ---------------------------------------------------------------------------------------------- St. Francis County, AR 28,497 - ---------------------------------------------------------------------------------------------- Benton County, MS 8,046 - ---------------------------------------------------------------------------------------------- Coahoma County, MS 31,665 - ---------------------------------------------------------------------------------------------- DeSoto County, MS 67,910 - ---------------------------------------------------------------------------------------------- Grenada County, MS 21,555 - ---------------------------------------------------------------------------------------------- Lafayette County, MS 31,826 - ---------------------------------------------------------------------------------------------- Marshall County, MS 30,361 - ---------------------------------------------------------------------------------------------- Panola County, MS 29,996 - ---------------------------------------------------------------------------------------------- Quitman County, MS 10,490 - ---------------------------------------------------------------------------------------------- Tallahatchie County, MS 15,210 - ---------------------------------------------------------------------------------------------- Tate County, MS 21,432 - ---------------------------------------------------------------------------------------------- Tunica County, MS 8,164 - ---------------------------------------------------------------------------------------------- Yalobusha County, MS 12,033 - ----------------------------------------------------------------------------------------------
28 - ---------------------------------------------------------------------------------------------- Fayette County, TN 25,559 - ---------------------------------------------------------------------------------------------- Hardeman County, TN 23,377 - ---------------------------------------------------------------------------------------------- Haywood County, TN 19,437 - ---------------------------------------------------------------------------------------------- Lauderdale County, TN 23,491 - ---------------------------------------------------------------------------------------------- Shelby County, TN 826,330 - ---------------------------------------------------------------------------------------------- Tipton County, TN 37,568 - ---------------------------------------------------------------------------------------------- Total Populance 1,832,770 ----------------------------------------------------------------------------------------------
/3/ The Arkansas, Mississippi and Tennessee counties listed are part of the Memphis, TN BTA 29 TWR proposes to retain the full 30 MHz of B Block broadband PCS spectrum in the following BTAs and areas within the Memphis-Jackson MTA:
- -------------------------------------------------------------------------------------------------- Area Name Area Designator Area Population - -------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------- Montgomery County, MS/4/ 12,388 - -------------------------------------------------------------------------------------------------- Jackson, MS BTA B210 615,521 - -------------------------------------------------------------------------------------------------- Tupelo-Corinth, MS BTA B449 291,701 - -------------------------------------------------------------------------------------------------- Greenville-Greenwood, MS BTA B175 213,943 - -------------------------------------------------------------------------------------------------- Meridian, MS BTA B292 200,024 - -------------------------------------------------------------------------------------------------- Columbus-Starkville, MS BTA B094 166,415 - -------------------------------------------------------------------------------------------------- Natchez, MS BTA B315 73,214 - -------------------------------------------------------------------------------------------------- Vicksburg, MS B455 69,250 - -------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------- Total Population 1,632,456 - --------------------------------------------------------------------------------------------------
___________________ /4/ Montgomery County is a county within the Memphis, TN BTA. 30 SCHEDULE 4.2 Purchaser Consents ------------------ The execution, delivery and performance of the Agreement will or may require the following consents, approvals and reviews: 1. The Federal Communications Commission. 2. The Federal Trade Commission/Department of Justice. 3. Various Governmental Authorities with respect to Franchise Laws. 31 SCHEDULE 5.2 Company and Management Stockholder Consents ------------------------------------------- The execution, delivery and performance of the Agreement will or may require the following consents, approvals and reviews: 1. The Federal Communications Commission. 2. The Federal Trade Commission/Department of Justice. 3. Various Governmental Authorities with respect to Franchise Laws. 32 SCHEDULE 5.12 Minimum Buildout Schedule ------------------------- - -------------------------------------------------------------------------------- Year 1/5/ 2.2 million pops (20% of total pops) during the first year. - -------------------------------------------------------------------------------- The initial deployment consists of launching the core urban and suburban areas of Memphis and New Orleans. Memphis ------- Bartlett, TN Frayser, TN Memphis, TN New Orleans ----------- Baton Rouge, LA Kenner, LA Mandeville,LA Metairie, LA New Orleans, LA Slidell, LA - -------------------------------------------------------------------------------- Year 2 2.2 million pops (20% of total pops) for an aggregate pop coverage of 40%. Year 2 consists of launching New England, Little Rock and Missouri and enhancing the coverage in all markets during the remainder of the year. The coverage at the end of year 2 is detailed below. Little Rock ----------- Benton, AR Conway, AR Hot Springs, AR Jonesboro, AR - -------------------------------------------------------------------------------- _____________________ /5/The years defined as the 12-month periods starting on the date the FCC approves the transfer of the PCS licenses to TeleCorp PCS. 33 - -------------------------------------------------------------------------------- Little Rock, AR North Little Rock, AR Memphis ------- Brownsville, TN Jackson, TN Millington, TN Tunica, MS Missouri -------- Columbia, MO Jefferson City, MO New England ----------- Cape Cod, MA Concord, NH Manchester, NH Nashua, NH Portsmouth, NH Worcester, MA New Orleans ----------- Lafayette, LA Covington, LA Houma, LA - -------------------------------------------------------------------------------- Year 3 1.65 million pops (15% of total pops) for an aggregate pop coverage of 55%. Year 3 consists of building the secondary cities and the important associated connecting highways. Little Rock ----------- Bentonville, AR Fayetteville, AR Fort Smith, AR Pine Bluff, AR Springdale, AR Memphis ------- Covington, TN Humboldt, TN Milan, TN - -------------------------------------------------------------------------------- 34 - -------------------------------------------------------------------------------- Missouri -------- Cape Giradeau, MO Carbondale, MO New England ----------- Dover, NH Fitchburg, MA Leominster, MA Martha's Vineyard, MA Nantucket, MA Rochester, NH New Orleans ----------- Beaumont, TX Hammond, LA - -------------------------------------------------------------------------------- Year 4 1.65 million pops (15% of total pops) for an aggregate pop coverage of 70%. Year 4 consists of continuing to expand the secondary cities as well as enhancing the coverage and capacity of the core areas. Little Rock ----------- Malvern, AR Morrilton, AR Russellville, AR Memphis ------- Batesville MS Dyersburg, TN Oxford, MS Union City, TN Missouri -------- Centralia, MO Mount Vernon, MO New England ----------- Expansion of the suburban cores surrounding, Worcester, Nashua, and Manchester. New Orleans ----------- - -------------------------------------------------------------------------------- 35 - -------------------------------------------------------------------------------- Expansion of the suburban cores surrounding New Orleans, Baton Rouge, and Lafayette. - -------------------------------------------------------------------------------- Year 5 550,000 pops (5% of total pops) for an aggregate of coverage of 75%. - -------------------------------------------------------------------------------- For all the markets, year 5 consists of adding capacity sites and filling in the remaining suburban areas bringing the total pop coverage to 75% - -------------------------------------------------------------------------------- 36 SCHEDULE 5.16(D) TeleCorp Financial Statements 37 TeleCorp Holding Corp., Inc. Balance Sheet As of January 2, 1998
ASSETS - ------ Current Assets Cash & cash equivalents $ 2,567,294 Other current assets 73,734 Total current assets 2,641,028 Property and equipment, net 329,360 Capitalized FCC licenses 9,886,840 Capitalized interest on FCC licenses 131,397 Network under development 3,269,793 Microwave relocation 91,667 Other assets 26,673 ----------- 16,376,758 =========== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current Liabilities Accounts payable 3,179,036 Investor notes payable 2,808,500 Affiliate payable (TMC) 825,966 Affiliate payable net (License companies) 1,527,470 Accrued interest on investor notes payable 6,144 Accrued interest payable - US Government financing 382,935 ----------- Total current liabilities 8,730,051 US Government financing-gross 9,192,938 Unamortized debt discount (1,465,616) ----------- US Government financing-net 7,727,322 Total Liabilities 16,457,373 ----------- Shareholder's Equity Common Stock, no par value -------------------------- 19,335 shares issued and outstanding 0 Preferred Stock, $10,000 par value Series A, 10%, 367.38 shares issued and outstanding 4,158,308 ----------- Total Capital 4,158,308 Beginning Retained Earnings (203,006) Current deficit accumulated during development stage (4,035,917) ----------- 16,376,758 ===========
38 TeleCorp Holding Corp., Inc. Income Statement For the Year Ended January 2, 1998
Expenses Year to Date ------------ Salary and other related expenses $1,290,010 Legal services 682,190 Professional services 419,594 Travel & entertainment 361,962 Occupancy expenses 180,664 Office postage & miscellaneous other 152,602 Office supplies & equipment 90,628 Marketing expenses 54,734 Repairs and maintenance 24,186 Depreciation 10,561 Franchise fee 1,112 Allocated operating expenses for fiscal January 1997 (100,990) ---------- Total operating expenses 3,167,253 Interest income (12,217) Interest expense 396,362 ---------- Total Net Loss 3,551,398 ==========
39 Schedule 6.11 TELECORP PCS, INC. 1998 RESTRICTED STOCK PLAN 1. Purpose. The purpose of this Restricted Stock Plan (the ------- "Plan") is to advance the interests of TeleCorp PCS, Inc. (the "Company") by providing an opportunity to selected key employees of the Company and its subsidiaries to acquire units of securities in the Company ("Units") under this Plan. By encouraging such ownership, the Company seeks to attract, retain and motivate employees of superior training, experience and ability. 2. Administration. Except to the extent otherwise provided -------------- herein, this Plan shall be administered by the Compensation Committee of the Board of Directors of the Company (the "Committee"). Subject to the provisions of this Plan, the Committee shall have full power to construe and interpret the Plan and to establish, amend and rescind rules and regulations for its administration. 3. Units Subject to the Plan. The number of Units that may be ------------------------- awarded to key employees under this Plan (the "Grant Shares") shall not exceed 5,505.03 Units consisting of one share of Series E Preferred Stock and approximately one and eighty-two hundredths (1.82) shares of Class A Voting Common Stock (collectively, the "Shares") of the Company outstanding from time to time; provided that the number of Units shall be reduced by 228.13 Units if the Supplemental Closing (as defined in Exhibit A to the form of Share Grant Agreement) has not occurred prior to January 23, 2000. Grant Shares shall be granted pursuant to the rules set forth in Section 5, and shall be subject to the vesting provisions of Section 6 of the Plan. Any Grant Shares which for any reason are forfeited pursuant to the vesting provisions of Section 6 may again be awarded under the Plan to another Participant (as defined in section 4) in this Plan. Grant Shares shall be Shares (a) issued by the Company out of its authorized but unissued shares; or (b) acquired by the Company through a forfeiture pursuant to the vesting provisions of Section 6 of the Plan. 40 4. Eligible Employees. Grant Shares may be awarded to such key employees ------------------ of the Company or of any of its subsidiaries performing the functions described on Schedule A hereto, as are selected by the Committee (any such selected ---------- employee, a "Participant"). 5. Award of Grant Shares. The Committee may, from time to time, make --------------------- awards of Grant Shares to a Participant in the form of Restricted Shares (as defined in the following paragraph), in its sole discretion. The Committee shall, in its sole discretion, determine the number of Grant Shares to be awarded to a Participant. Restricted Shares shall consist of Units transferred to Participants without other payment therefor as additional compensation for their services to the Company and its affiliates. Restricted Shares shall be subject to such terms and conditions as the Committee determines appropriate, including, without limitation, restrictions on sale or other disposition. 6. Vesting. ------- (a) Grant Shares shall vest in accordance with the vesting schedule set forth on Schedule B hereto. ---------- (b) With respect to Restricted Shares, the Participant must remain employed by the Company or one of its subsidiaries during each of the vesting periods set forth on Schedule B hereto in order for such Grant ---------- Shares to become vested in him. If the Participant fails to satisfy such requirements, the Participant shall forfeit and transfer to the Company or one or more persons designated by the Committee all unvested Grant Shares awarded to him on such date and the Participant shall have no further rights with respect to such unvested Grant Shares. (c) Any Grant Shares not granted on or prior to July 17, 2003 shall be awarded to Messrs. Gerald T. Vento and Thomas H. Sullivan, pro rata in accordance with their stockholdings in the Company received pursuant to the terms of the Management 41 Agreement by and between the Company and TeleCorp Management Corp., as of the date of such Management Agreement. (d) If the Participant's employment with the Company or one of its subsidiaries terminates prior to full vesting in any Grant Shares awarded hereunder by reason of his retirement under a retirement plan maintained by the Company or one of its subsidiaries, the Committee may, in its discretion, specify that any Grant Shares awarded to the Participant become vested at that time, at a future date or upon the completion of such other conditions as the Committee, in its sole discretion, may provide. 7. Terms and Conditions of Grant Shares. Grant Shares awarded under this ------------------------------------ Plan shall be awarded pursuant to written agreements ("Agreements") in the form attached as Exhibit A for Restricted Shares as such form may be changed from --------- time to time by the Committee, each of which Agreement shall evidence among its terms and conditions the following: (a) Price. Grant Shares shall be awarded for no consideration, ----- except such minimum consideration as may be required by Delaware law. (b) Number of Shares. Each Agreement shall specify the number ---------------- of Grant Shares to which it pertains. (c) Forfeiture of Grant Shares. Each Agreement shall specify -------------------------- that all or a portion of the Grant Shares shall be subject to forfeiture provisions specified in Section 6. 8. Nontransferability. Any Grant Shares which are subject to forfeiture ------------------ under the Agreement shall be nontransferable by the Participant except as the Agreement may otherwise provide. 9. Rights as Shareholder. Except as otherwise provided in this Plan or --------------------- the Agreement, the Participant shall have all of the rights of a shareholder of the Company with respect to the Grant Shares registered in his name, including the right to vote such Grant Shares and receive the dividends and other distributions paid or made with respect to such Grant Shares. 42 10. Share Dividends; Share Splits; Share Combinations; -------------------------------------------------- Recapitalization. The Board of Directors of the Company shall make appropriate - ---------------- adjustment in the maximum number of Shares subject to the Plan to give effect to any share dividends, share splits, share combinations, recapitalizations and other similar changes in the capital structure of the Company after the date of award. The provisions contained in the Plan and in any Agreement shall apply equally to any other capital shares of the Company, and any other securities, which may be acquired by the Participant as a result of a share dividend, share split, share combination, or exchange for other securities resulting from any recapitalization, reorganization or any other transaction affecting the Grant Shares. 43 11. Termination or Amendment of Plan. The Board of Directors may at any -------------------------------- time terminate the Plan or make such changes in or additions to the Plan as it deems advisable without further action on the part of the shareholders of the Company, provided: (a) that no such termination or amendment shall adversely affect or impair any then issued and outstanding Grant Shares without the consent of the Participant holding such Grant Shares; and (b) Section 6 (c) may not be amended without the consent of Messrs. Vento and Sullivan. 12. Construction of Pronouns. Masculine pronouns used herein shall refer ------------------------ to men or women or both and nouns and pronouns when stated in the singular shall include the plural and when stated in the plural shall include the singular, wherever appropriate. 44 Schedule A ---------- Executive Functions ------------------- Director, Brand Management General Manager Memphis New Orleans Little Rock New England Vice President, Product Development Chief Operating Officer Chief Financial Officer Vice President, Engineering/Operations Vice President, Sales/Marketing Vice President, Information Technology Schedule B ---------- Vesting Schedule ---------------- TeleCorp Vesting Schedule ------------------------- Executives Hired Before 1/1/98 Vesting ------------------------------ ------- Commencement Date/6/ 20.0% Year 1& 2 Build Out Complete/7/ 10.0% 2/nd/ Anniversary of Commencement Date 15.0% Year 3 Build Out + 60% Pops Coverage 10.0% 3/rd/ Anniversary of Commencement Date 15.0% 4/th/ Anniversary of Commencement Date 15.0% 5/th/ Anniversary of Commencement Date 15.0% ------ 100.0% Executives Hired After 1/1/98 Vesting ----------------------------- ------- 1/st/ Anniversary of Employment Date 20.0% 3/rd/ Anniversary of Employment Date 15.0% 4/th/ Anniversary of Employment Date 15.0% ___________________ /6/ Commencement Date means the Closing Date as that term is defined in that certain Securities Purchase Agreement, dated January 23, 1998, as amended, by and among the Company, AT&T Wireless PCS, Inc., TWR Cellular, Inc. and certain Cash Equity Investors, TeleCorp Investors and Management Stockholders identified therein (the "Securities Purchase Agreement"). /7/ The Build Out Schedule is set forth in Schedule 5.12 of the Securities Purchase Agreement, a copy of such Schedule 5.12 of which is attached hereto. 5/th/ Anniversary of Employment Date 15.0% 6/th/ Anniversary of Employment Date 15.0% Year 1 & 2 Build Out Complete 10.0% Year 3 Build Out + 60% Pops Coverage 10.0% ------- 100.00% EX-10.4.1 8 NETWORK MEMBERSHIP LICENSE AGREEMENT EXHIBIT 10.4.1 EXECUTION COPY - -------------------------------------------------------------------------------- AT&T WIRELESS SERVICES NETWORK MEMBERSHIP LICENSE AGREEMENT between AT&T CORP. and TELECORP PCS, INC. Dated as of July 17, 1998 - -------------------------------------------------------------------------------- 1. Definitions................................................................1 2. GRANT OF LICENSE, ETC......................................................5 2.1 Grant of License..................................................5 2.2 No Other Services or Products.....................................5 2.3 Exclusivity.......................................................6 2.4 Use of Licensed Marks on Mobile Phones............................6 3. AGREEMENT PERSONAL.........................................................6 3.1 Personal to Licensee..............................................6 3.2 Licensee Acknowledgment...........................................7 4. USE OF LICENSED MARKS AND OTHER MARKS......................................7 4.1 Approved Licensee Marks...........................................7 4.2 Marks To Be Used..................................................7 4.3 Modification of Licensed Marks....................................8 4.4 Use of Additional Marks at Licensor's Request.....................8 5. RETENTION OF RIGHTS........................................................8 6. SYSTEM REQUIREMENTS........................................................8 7. QUALITY CONTROL............................................................8 7.1 General...........................................................8 7.2 Quality Standards.................................................9 7.3 Quality Service Reviews; Right of Inspection......................9 7.4 Authorized Dealers................................................9 7.5 Sponsorship......................................................10 7.6 Universal Wireless Consortium....................................10 8. REMEDIES FOR NONCOMPLIANCE WITH QUALITY STANDARDS.........................10 8.1 Cure Period......................................................10 8.2 Potential Injury to Persons or Property..........................11 9. PROTECTION OF LICENSED MARKS..............................................11 9.1 Ownership and Rights.............................................11 9.2 Similar Marks....................................................11 9.3 Infringement.....................................................12 9.4 Compliance With Laws.............................................12 10. NO SUBLICENSING...........................................................12 11. TERM AND TERMINATION......................................................13 -i- 11.1 Term................................................................13 11.2 Breach by Licensee..................................................14 11.3 Termination Obligations.............................................15 11.4 No Waiver of Rights.................................................15 11.5 Survival............................................................15 12. INDEMNITY.................................................................15 13. CONSENT OF LICENSOR.......................................................16 14. NOTICES AND DEMANDS.......................................................16 15. COMPLIANCE WITH LAW.......................................................17 16. GOVERNMENTAL LICENSES, PERMITS, AND APPROVALS.............................17 17. APPLICABLE LAW; JURISDICTION..............................................17 18. CONFIDENTIALITY OF INFORMATION AND USE RESTRICTION........................18 19. MISCELLANEOUS.............................................................18 19.1 NAME, CAPTIONS......................................................18 19.2 ENTIRE AGREEMENT....................................................18 19.3 AMENDMENTS, WAIVERS.................................................19 19.4 SPECIFIC PERFORMANCE................................................19 19.5 REMEDIES CUMULATIVE.................................................19 19.6 NO WAIVER...........................................................19 19.7 NO THIRD PARTY BENEFICIARIES........................................19 19.8 COUNTERPARTS........................................................19 -ii- Schedules - --------- Schedule A Licensed Logo Schedule B Licensed Trade Dress Schedule B I United States Service Mark Registrations or Applications Schedule C Initial Licensed Territory Schedule D Quality Control Standards Schedule E Guidelines for Use of the Licensed Logo and Licensed Phrase Schedule F Permitted Events AT&T WIRELESS SERVICES NETWORK MEMBERSHIP LICENSE AGREEMENT NETWORK MEMBERSHIP LICENSE AGREEMENT (the "Agreement") dated as of July 17, 1998, by and between AT&T Corp., a New York corporation, with offices located at 32 Avenue of the Americas, New York, New York 10013, for itself and its affiliated companies, including AT&T Wireless Services, Inc. (collectively "Licensor"), and TeleCorp PCS, Inc., a Delaware corporation, with offices located at 1110 N. Glebe Road, Arlington, Virginia 22201 ("Licensee"). Certain capitalized terms used herein are defined in Section 1. WHEREAS, Licensor has, for many years, used and Licensor desires that Licensee use, the AT&T Service Marks, and Licensor desires that Licensee use the Licensed Marks, in connection with Telecommunications Services; WHEREAS, Licensee, an Affiliate of Licensor and the other stockholders of Licensee are parties to that certain Stockholders Agreement, dated as of the date hereof (as the same may be amended, modified or supplemented in accordance with the terms thereof, the "Stockholders Agreement;" capitalized terms defined therein and not otherwise defined herein being used herein as therein defined) and the execution and delivery of the Stockholders Agreement and the other agreements contemplated therein is a condition to Licensee entering into this Agreement; WHEREAS, Licensee wishes to use the Licensed Marks in a limited manner in the Licensed Territory in connection with the Licensed Activities; and WHEREAS, Licensor is willing to license and allow Licensee to use the Licensed Marks under the terms and conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows: 1. DEFINITIONS. As used herein, the following terms shall have the ----------- meanings set forth below: "Affiliate": A Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the Person specified. "Approval": The granting by all appropriate Regulatory Authorities of all necessary licenses, permits, approvals, authorizations and clearances for this Agreement and the registration or recording of this Agreement as required by all Regulatory Authorities. "Approved Licensee Marks": As defined in Section 4.1. "AT&T Service Marks": The service marks and trademarks AT&T, and AT&T with a fanciful globe design. "Authorized Dealers": Any distributor or other agent of Licensee authorized to market, advertise or otherwise offer, on behalf of Licensee, any Licensed Services under the Licensed Marks in the Licensed Territory. "Bankruptcy": With respect to a Person, means (i) the filing by such Person of a voluntary petition seeking liquidation, dissolution, reorganization, rearrangement or readjustment, in any form, of its debts under Title 11 of the United States Code (or corresponding provisions of future laws) or any other bankruptcy or insolvency law, or such Person's filing an answer consenting to, or acquiescing in any such petition; (ii) the making by such Person of any assignment for the benefit of its creditors, or the admission by such Person in writing of its inability to pay its debts as they mature; (iii) the expiration of 60 days after the filing of an involuntary petition under Title 11 of the United States Code (or corresponding provisions of future laws), an application for the appointment of a receiver for the assets of such Person, or an involuntary petition seeking liquidation, dissolution, reorganization, rearrangement or readjustment of its debts or similar relief under any bankruptcy or insolvency law, provided that the same shall not have been vacated, set aside or stayed within such 60 day period; or (iv) the entry of an order for relief against such Person under Title 11 of the United States Bankruptcy Code. "Change of Control": Any transaction or event, whether voluntary or involuntary, that results in, or as a consequence of which, any of the following events shall occur, except as a result of a sale, transfer or other disposition by Licensor or any of its Affiliates: (i) any Person, excluding any Person that is an owner of shares of capital stock of Licensee on the date hereof or that acquires shares of Voting Preference Common Stock of Licensee pursuant to the terms of the Management Agreement or the Lenders (as defined in Section 3.1(b)) or any Person to whom the Lenders, with the consent of Licensor, assign this Agreement, shall acquire, directly or indirectly, Beneficial Ownership (as defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of (x) more than 50% of the voting stock of Licensee, or (y) more than 33-1/3% of the voting stock of Licensee, unless the Persons owning capital stock of Licensee on the date hereof (together with any Person that acquires Voting Preference Common Stock of Licensee pursuant to the terms of the Management Agreement) collectively own a percentage of such voting stock that is higher than such Person; (ii) any Disallowed Transferee shall acquire, directly or indirectly, Beneficial Ownership of more than 15% of the voting stock of Licensee; provided that, for purposes of this Agreement, purchases of Licensee's capital stock made by third parties in the open market shall not be deemed to be acquisitions of Licensee's capital stock by Disallowed Transferees; or (iii) a proxy contest for the election of directors of Licensee results in the persons constituting the Board of Directors of Licensee immediately prior to the initiation of such proxy contest ceasing to constitute a majority of the Board of Directors upon the conclusion of such proxy contest. "Company Communications Services": Mobile wireless telecommunications services (including the transmission of voice, data, image or other messages or content) provided solely within the Licensed Territory, initiated or terminated using TDMA and frequencies licensed by the FCC, to or from subscriber equipment that is capable of usage during routine movement throughout the area covered by a cell site and routine handing-off between cell sites, and is either intended for such usage or is temporarily fixed to a specific location on a short-term basis (e.g., a bank of wireless telephones temporarily installed during a special event of limited duration). Without limiting the foregoing, Company Communications Services shall include wireless office services if such services comply with this definition. Company Communications Services shall also include the transmissions between Licensee's cell sites and Licensee's switch or switches in the Licensed Territory, handing-off transmissions at Licensee's switch or switches for termination by other carriers, and receiving transmissions to Licensee's customers handed-off at Licensee's switch or switches. "Company Systems": The systems operated by Licensee to provide Company Communications Services in the Licensed Territory. "Control": For purposes of the definitions of "Affiliate" and "Change of Control", the term "control" (including the terms "controlling," "controlled by", and "under common control with") of a Person means the possession, direct or indirect, of the power to (i) vote 50% or more of the voting securities of such Person or (ii) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. "Disallowed Transferee": Any Prohibited Transferee, or any Regional Bell Operating Companies, Microsoft, GTE, SNET or any of their respective Affiliates, successors or assigns. "FCC": The Federal Communications Commission and any successor governmental authority. "Licensed Activities": Each of the following activities: (a) the provision to end-users and resellers, solely within the Licensed Territory, of Company Communications Services on frequencies licensed to Licensee for Commercial Mobile Radio Services pursuant to the AT&T PCS Contributed Licenses, the Purchased Licenses, the TeleCorp Licenses, the Mercury Licenses and the Permitted Cellular Licenses, and the provision in connection with such Company Communications Services of Adopted Service Features (as defined in the Stockholders Agreement), and (b) marketing and offering the services and features described in clause (a) within the Licensed Territory, including advertising such services and features using broadcast and other media, so long as such advertising extends beyond the Licensed Territory only when and to the extent necessary to reach end-users and potential end-users in the Licensed Territory. "Licensed Logo": The logo containing the AT&T and globe design, as such logo may be modified or replaced pursuant to Section 4.3, and the expression "Member, AT&T Wireless Services Network," as set forth in Schedule A attached hereto. Registrations and pending applications covering the Licensed Logo in the United States are set forth in Schedule B1 attached hereto. The listing of goods or services in the specification of any of these registrations or applications which are outside the scope of services authorized under this Agreement shall not be construed as inclusion of such goods or services in the license granted by this Agreement; it being understood that the only services authorized under this Agreement are as expressly set forth in this Agreement. "Licensed Marks": Collectively, the Licensed Logo, the Licensed Phrase, the Licensed Trade Dress, and any additional Marks that may be licensed hereunder pursuant to Section 4.3 or 4.4. "Licensed Phrase": The expression "Member, AT&T Wireless Services Network" or the expression " [Licensee] is a member of the AT&T Wireless Services Network" and the form of such expression as it may be modified or replaced pursuant to Section 4.3 or 4.4. "Licensed Services": The services described in clause (a) of the definition of the term "Licensed Activities." "Licensed Territory": The Territory (as defined in the Stockholders Agreement). The Licensed Territory as of the date hereof is comprised of those geographic areas set forth in Schedule C. "Licensed Trade Dress": The general image or appearance of the marketing of services performed under the Licensed Logo, including without limitation, the colors, designs, sizing configurations, publication formats and the like as set forth in Schedule B attached hereto and as such trade dress may be modified or replaced pursuant to Section 4.3, and such other trade dress as may be added thereto or substituted therefor in accordance with Section 4.3 or 4.4. "Licensee": As defined in the preamble. "Licensor": As defined in the preamble. "Mark": Any name, brand, mark, trademark, service mark, sound mark, trade dress, trade name, business name, slogan, or other indicia of origin. "Marketing Materials": Any and all materials, whether written, oral, visual or in any other medium, used by Licensee or its Authorized Dealers to market, advertise or otherwise offer any Licensed Services under the Licensed Marks. "Person": Any individual, corporation, partnership, firm, joint venture, limited liability company, limited liability partnership, association, joint- stock company, trust, estate, incorporated or unincorporated organization, governmental or regulatory body, or other entity. "Purchased Licenses": The PCS licenses that Licensee has agreed to purchase from Licensor pursuant to the terms of the License Purchase Agreement, dated as of January 23, 1998, between Licensor and Licensee, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Quality Control Representatives": Representatives of Licensor appointed in accordance with Section 7. "Quality Standards": The TDMA Quality Standards and the Guidelines for Use of the Licensed Logo and Licensed Phrase set forth in Schedules D and E to this Agreement. "Regulatory Authority": Any regulatory, administrative or governmental entity, authority or agency, including without limitation, the FCC and the Export Licensing Office of the U.S. Department of Commerce. "Significant Breach by Licensee": As defined in Section 11.2. "Stockholders Agreement": As defined in the second recital. "Successor": With respect to any party, any successor, transferee or assignee, including without limitation, any receiver, debtor in possession, trustee, conservator or similar Person with respect to such party or such party's assets. "TDMA Quality Standards": The quality standards applicable to TDMA PCS Systems and Cellular Systems (as such terms are defined in the Stockholders Agreement) owned and operated by Licensor's Affiliates in the Central and Southwest Region, which, as currently in effect, are set forth on Schedule D, as the same may be amended from time to time, provided any such amended standards shall become effective one hundred twenty (120) days after notice thereof is given to Licensee. "Telecommunications Service": Any service providing the transmission of voice, data, image or other messages or content, by radio or by aid of wire, cable or other means now known or later developed between the points of origin and reception of such transmission, or by means of any combination of the foregoing. 2. GRANT OF LICENSE, ETC. ---------------------- 2.1 Grant of License. Subject to the terms and conditions of this ---------------- Agreement, Licensor hereby grants to Licensee a royalty free, non-transferable, non-sublicensable, non-exclusive limited right and license to use the Licensed Marks in the Licensed Territory, solely in connection with Licensed Activities. 2.2 No Other Services or Products. The Licensed Marks may not be used by ----------------------------- Licensee in connection with any service, except as expressly set forth in this Agreement, or any product, except as expressly permitted by the terms of Section 2.4. Specifically, but not by way of limitation, this Agreement does not grant Licensee the right to use the Licensed Marks in connection with (a) the manufacture or distribution of any products other than the distribution of mobile phones to the extent expressly permitted by the terms of Section 2.4, or (b) any Telecommunications Services, including, but not limited to long distance services, other than Licensed Services. Accordingly, this Agreement does not grant any license, authorization or permission to Licensee to appear on an equal access ballot, or in any other fashion, as a long distance provider using the Licensed Marks, or to use the Licensed Marks in connection with the reselling of long distance or local service or any other service. Licensee shall identify to Licensee's customers that Licensor is their long distance carrier and refer to Licensor by its Marks and trade dress. This Agreement does not grant Licensee the right to use any AT&T Service Mark or any other Mark of Licensor in any manner, except as part of the Licensed Logo, Licensed Phrase and Licensed Trade Dress as specifically set forth in this Agreement, or in the manner specifically set forth in Sections 2.4, 4.1, 4.3 and 4.4. 2.3 Exclusivity. Licensor (on behalf of itself and its Affiliates) shall ----------- not grant to any Person (other than a Subsidiary of Licensor) a right or license to provide or resell, or act as agent for any Person offering, Company Communications Services under the Licensed Marks except to any Person that (i) resells, or acts as Licensee's agent for, Company Communications Services provided by Licensee, including bundling any such Company Communications Services with other Telecommunications Services marketed, offered and provided or resold by such Person pursuant to an agreement between such Person and Licensor or its Affiliates (in its capacity as reseller or agent) or Licensee, or (ii) provides or resells wireless Telecommunications Services to or from specific locations (such as buildings or office complexes), even if the subscriber equipment used in connection with such service may be capable of routine movement within a limited area (such as a building or office complex), and even if such subscriber equipment may be capable of obtaining other telecommunications services beyond such limited area (which other services may include routine movement beyond such limited area) and handoff between the service to such specific location and such other telecommunications services. To the extent the "other telecommunications services" referred to in clause (ii) of the immediately preceding sentence constitute Company Communications Services, Licensor (on behalf of itself and its Affiliates) shall not grant to any Person a right or license to provide or resell such "other telecommunications services" under the Licensed Marks, except in accordance with the terms of clause (i) of the immediately preceding sentence. Nothing herein shall be construed to affect the obligations of AT&T Wireless PCS Inc. and its Affiliates set forth in Section 8.6 of the Stockholders Agreement. 2.4 Use of Licensed Marks on Mobile Phones. In connection with its -------------------------------------- marketing, offering and provision of Licensed Services, Licensee may offer and distribute to end-users mobile phones branded with the same Marks of Licensor, and in the same manner, as the mobile phones distributed by or on behalf of Licensor and its Affiliates, provided that such mobile phones (a) are purchased from Licensor or its Affiliates, (b) are identical to mobile phones offered and distributed by Licensor and its Affiliates and are purchased from the same manufacturer (or its authorized dealers), or (c) are manufactured and distributed by a manufacturer authorized by Licensor to manufacture mobile phones branded with such Marks (or its authorized dealers). 3. AGREEMENT PERSONAL. ------------------ 3.1 Personal to Licensee. -------------------- (a) In recognition of the unique nature of the relationship between Licensor and Licensee, the fact that Licensor would not be willing to enter into an agreement such as this Agreement with any other party in any other circumstances, and the unique nature of Licensee (including without limitation, the fact that Licensee is partially owned by Licensor's Affiliate, AT&T Wireless PCS Inc.), the parties agree that the rights, obligations and benefits of this Agreement shall be personal to Licensee, and Licensor shall not be required to accept performance from, or render performance to an entity other than Licensee or even to Licensee itself in the event of a Change of Control of Licensee. Pursuant to 11 U.S.C. (S) 365(c)(1)(A) (as it may be amended from time to time, and including any successor to such provision), in the event of the Bankruptcy of Licensee, this Agreement may not be assigned or assumed by Licensee (or any Successor) and Licensor shall be excused from rendering performance to, or accepting performance from, Licensee or any Successor. (b) Notwithstanding the foregoing, this Agreement may be assigned to the lenders (the "Lenders") named in the $435 million Credit Agreement (the "Credit Agreement") dated the date hereof entered into between Licensee and the Lenders, and, after a default under the Credit Agreement and the expiration of any applicable grace and cure periods thereunder, the Lenders may enforce Licensee's rights hereunder and the Lenders may assign this Agreement to any Person with the consent of Licensor. 3.2 Licensee Acknowledgment. Licensee acknowledges and agrees that it ----------------------- understands it may have, or, in the future, may elect to enter into, agreements with Licensor's Affiliates and that neither the execution or continuation nor the renewal of any of these agreements will have any effect on this Agreement and Licensee may choose to contract, or not, with Licensor's Affiliates as it deems appropriate. 4. USE OF LICENSED MARKS AND OTHER MARKS. ------------------------------------- 4.1 Approved Licensee Marks. Licensee shall have the right from time to ----------------------- time during the term hereof to create and use its own Marks, together with the Licensed Marks, in connection with the Licensed Activities; provided that Licensee provides Licensor with prior written notice of its desire to use any such Marks owned by Licensee and Licensor approves Licensee's proposed use of such Marks (which approval shall not be unreasonably withheld, delayed or conditioned). Licensor shall use commercially reasonable efforts to approve or disapprove any Marks proposed to be used by Licensee within 30 days of its receipt of a written request for such approval. If Licensee has not received a response from Licensor by the end of such 30-day period, Licensee shall have the right to send a second written request for such approval to Licensor that states expressly that, if Licensee does not receive a response from Licensor within 30 days after Licensor's receipt of such second request, Licensor shall be deemed to have approved Licensee's proposed Mark or Marks. If Licensee does not receive such response by the end of such second 30-day period, Licensor shall be deemed to have approved such proposed Mark or Marks. Marks approved by Licensor in accordance with this Section 4.1 shall be sometimes referred to herein as "Approved Licensee Marks." 4.2 Marks To Be Used. Licensee shall conduct all Licensed Activities solely ---------------- under the Approved Licensee Marks, together with the Licensed Marks, all in accordance with guidelines set forth on Schedule E. 4.3 Modification of Licensed Marks. In the event Licensor modifies or ------------------------------ replaces any of the Licensed Marks as they are used in any portion of Licensor's business, and if Licensor requests Licensee to adopt and use any such modified or replaced Licensed Marks, Licensee will adopt and use such modified or replaced Licensed Marks and, in such event, such modified or replaced Licensed Marks shall be considered the Licensed Marks contemplated by this Agreement; provided that in such event, Licensee shall be granted a 180-day period during which to phase-out its use of the superseded forms of the Licensed Marks, as applicable, and during such 180-day period Licensee shall have the right to use its existing inventory of Marketing Materials bearing the superseded forms of the Licensed Marks, as applicable. 4.4 Use of Additional Marks at Licensor's Request. Licensor may, from time --------------------------------------------- to time, request Licensee to adopt and use a Mark or Marks of Licensor, in addition to the then existing Licensed Marks in connection with the Licensed Activities. Such additional Mark or Marks shall be licensed hereunder on the same terms as the then existing Licensed Marks and Licensee shall within a reasonable time, but in any event within one hundred eighty (180) days, comply with Licensor's request by adopting and using such additional Mark or Marks; provided that during such 180-day period Licensee shall have the right to use its existing inventory of Marketing Materials that do not contain the additional Mark or Marks. 5. RETENTION OF RIGHTS. Except as otherwise expressly provided in Section ------------------- 2, nothing in this Agreement shall be deemed or construed to limit in any way Licensor's rights in and to the AT&T Service Marks and the Licensed Marks, including without limitation: (a) all rights of ownership in and to the AT&T Service Marks and the Licensed Marks, including the right to license or transfer the same; and (b) the unimpaired right to use the AT&T Service Marks and the Licensed Marks in connection with marketing, offering or providing any products or services (including, without limitation Licensed Services) whether within or without the Licensed Territory. 6. SYSTEM REQUIREMENTS. The terms of Sections 8.1(a), 8.2, 8.3, and 8.5(a) ------------------- of the Stockholders Agreement are hereby incorporated herein by reference with the same effect as if set forth herein in their entirety and Licensee shall comply with its obligations therein. 7. QUALITY CONTROL. --------------- 7.1 General. Licensee acknowledges that the services and activities covered ------- by this Agreement must be of sufficiently high quality as to provide maximum enhancement to and protection of the Licensed Marks and the good will they symbolize. Licensee further acknowledges that the maintenance of high quality services is of the essence of this Agreement, as is the use of the Licensed Marks in connection therewith, and that it will utilize only Marketing Materials which enhance (and do not disparage or place in disrepute) Licensor, its businesses or its business reputation, and enhance (and do not adversely affect or detract from) Licensor's good will and will use the Licensed Marks in ways (but only in ways) which will so enhance Licensor's business reputation and good will. 7.2 Quality Standards. Licensee shall use commercially reasonable efforts ----------------- to cause the Company Systems to comply with the TDMA Quality Standards. Without limiting the foregoing, with respect to each material portion of a Company System (such as a city) that Licensee places in commercial service, on or prior to the first anniversary of the date such material portion is placed in commercial service, Licensee shall cause each such material portion to achieve a level of compliance with the TDMA Quality Standards equal to at least the average level of compliance achieved by comparable PCS and Cellular Systems owned and operated by AT&T PCS taking into account, among other things, the relative stage of development thereof. Licensee shall also comply with the Guidelines for Use of the Licensed Logo and Licensed Phrase as set forth in Schedule E to this Agreement, and which shall be considered part of the Quality Standards. 7.3 Quality Service Reviews; Right of Inspection. Licensor shall have the ----------------------- right to designate from time to time, one or more Quality Control Representatives, who shall have the right at any time, upon fifteen (15) days notice to Licensee, to conduct during regular business hours an inspection, test, survey and review of Licensee's facilities and the facilities of Licensee's Authorized Dealers, if any, and otherwise to determine compliance with the Quality Standards (each, an "Inspection"); provided that Licensor shall -------- use all commercially reasonable efforts to ensure that such Inspections shall not unreasonably interfere with Licensee's conduct of its business; and provided -------- further that Licensor shall not be permitted to conduct more than two (2) - ------- Inspections during each 12-month period of the term of this Agreement unless Licensor reasonably believes that Licensee is not in compliance with the Quality Standards, in which case Licensor shall be permitted to conduct Inspections from time to time until Licensee has been determined to be in compliance. Licensee agrees to collect, maintain and furnish to the Quality Control Representatives: (i) all performance data relating to Licensee's Licensed Services reasonably requested by the Quality Control Representatives and representative samples of Marketing Materials that are marketed or provided under the Licensed Marks for Inspections to assure conformance of the Licensed Services and the Marketing Materials with the Quality Standards; and (ii) all performance data in its control reasonably requested by the Quality Control Representatives relating to the conformance of Licensed Services with the Quality Standards. Any such data provided to Licensor shall be treated confidentially in accordance with Section 18. Licensor may independently conduct continuous customer satisfaction and other surveys to determine if Licensee is meeting the Quality Standards. Licensee shall cooperate with Licensor fully in the distribution and conduct of such surveys so long as such cooperation shall not unreasonably interfere with the conduct of Licensee's business. If Licensee learns that it is not complying with the Quality Standards in any material respect, it shall notify Licensor, and the provisions of Section 8 shall apply to such noncompliance. 7.4 Authorized Dealers. Licensee shall provide to Licensor within 10 days ------------------ after the expiration of each calendar quarter during the term of this Agreement a list of all Authorized Dealers. Licensor shall have the right, exercisable in its reasonable discretion, to give Licensee written notice requiring Licensee to terminate any Authorized Dealer that Licensor reasonably believes is not in compliance with the Quality Standards (after notice of such non-compliance and a reasonable opportunity to cure has been granted to such Authorized Dealer) effective no later than 30 days from the date such written notice is given by Licensor to Licensee. All Authorized Dealers shall be bound by Licensor's Quality Standards and by Licensee's obligations under this Agreement. A breach by any such Authorized Dealer of this Agreement shall be deemed a breach of this Agreement by Licensee; provided that Licensee's termination of such breaching Authorized Dealer shall be deemed to cure any such breach. 7.5 Sponsorship. Licensee shall not use the Licensed Marks to sponsor, ----------- endorse, or claim affiliation with any event, meeting, charitable endeavor or any other undertaking (each, an "Event") without the express written permission of Licensor; provided however that, the categories of Events described on Schedule F attached hereto shall be deemed pre-approved by Licensor and Licensee shall not be required to seek permission from Licensor to sponsor, endorse or claim affiliation with such Events using the Licensed Marks. Notwithstanding the foregoing, Licensor reserves the right to deny permission to any event and to amend Schedule F. In the event that Licensee desires to sponsor, endorse or claim affiliation with an Event not described on Schedule F, Licensee shall provide Licensor with at least twenty (20) business days prior written notice of such Event in reasonable detail and Licensor shall be deemed to have granted Licensee permission to sponsor, endorse or claim affiliation with such Event if a denial of permission is not received by Licensee by the date or time specified in such notice. Any breach of this provision reasonably determined to have a material adverse effect on Licensor or the Licensed Marks shall be deemed a Significant Breach by Licensee (in no event less than ten business days after receipt of the notice). 7.6 Universal Wireless Consortium. Licensee shall, throughout the term of ----------------------------- this Agreement, and any renewals or extensions thereof, be a member of the Universal Wireless Consortium. 8. REMEDIES FOR NONCOMPLIANCE WITH QUALITY STANDARDS. ------------------------------------------------- 8.1 Cure Period. If Licensor becomes aware that Licensee or its Authorized ----------- Dealers, if any, are not complying with any Quality Standards in any material respect and notifies Licensee in writing thereof, setting forth, in reasonable detail, a written description of the noncompliance and any suggestions for curing such noncompliance, then Licensee shall cure such noncompliance as soon as is practicable but in any event within thirty (30) days thereafter or, in the case of noncompliance with the TDMA Quality Standards, if such breach is not capable of being cured on commercially reasonable terms within such thirty (30) day period, within one-hundred eighty (180) days of such notice, provided that Licensee is using commercially reasonable efforts to cure such material breach as soon as reasonably practicable. In the event that the non-compliance with the Quality Standards is being caused by an Authorized Dealer, Licensee's termination of such Authorized Dealer shall be deemed to cure such non- compliance. If such non-compliance with the Quality Standards continues beyond the applicable cure period described above, Licensee shall then: (i) cease any Licensed Activities under the Licensed Marks in the Licensed Territory until it can comply with the Quality Standards; and (ii) at Licensor's election, be deemed to be in breach of this Agreement. 8.2 Potential Injury to Persons or Property. Notwithstanding the foregoing, --------------------------------------- in the event that Licensor reasonably determines that any noncompliance creates a material threat of personal injury or injury to property of any third party, upon written notice thereof by Licensor to Licensee, Licensee shall cure such non-compliance as soon as practicable but in any event within thirty (30) days after receiving such notice. If the non-compliance continues beyond such cure period, Licensee shall either cease any Licensed Activities under the Licensed Marks in the Licensed Territory until it can comply with the Quality Standards, or be deemed to be in breach of this Agreement. 9. PROTECTION OF LICENSED MARKS. ---------------------------- 9.1 Ownership and Rights. Licensee admits the validity of, and agrees not -------------------- to challenge the ownership or validity of the Licensed Marks. Licensee acknowledges that it will not obtain any ownership interest in the Licensed Marks or any other right or entitlement to continued use of them, regardless of how long this Agreement remains in effect and regardless of any reason or lack of reason for the termination thereof by Licensor; provided that by making this acknowledgment Licensee is not waiving, and does not intend to waive, any contractual rights hereunder or its remedies upon a breach hereof by Licensor. Licensee shall not disparage, dilute or adversely affect the validity of the Licensed Marks. Licensee agrees that any and all good will and other rights that may be acquired by the use of the Licensed Marks by Licensee shall inure to the sole benefit of Licensor, except a security interest granted to the Lenders in accordance with the terms of the Credit Agreement. Licensee will not grant or attempt to grant a security interest in the Licensed Marks or this Agreement, or to record any such security interest in the United States Patent and Trademark Office or elsewhere, against any trademark application or registration belonging to Licensor. Licensee agrees to execute all documents reasonably requested by Licensor to effect registration of, maintenance and renewal of the Licensed Marks. For purposes of this Agreement, Licensee shall be considered a "related company" under the U.S. Trademark Act, 15 U.S.C. (S) 1051 et seq. 9.2 Similar Marks. Licensee further agrees not to register in any country ------------- any Mark resembling or confusingly similar to the Licensed Marks or the AT&T Service Marks, or which dilutes the Licensed Marks or the AT&T Service Marks, and not to use the Licensed Marks or the AT&T Service Marks or any part thereof as part of its corporate name, nor use (except in accordance with Section 4.1) any Mark confusingly similar, deceptive or misleading with respect to the Licensed Marks or the AT&T Service Marks or which dilutes the Licensed Marks or the AT&T Service Marks. Licensee further agrees not to use or register in any country any Mark similar to the Licensed Marks or the AT&T Service Marks, or which dilutes the Licensed Marks or the AT&T Service Marks. If any application for registration is, or has been filed in any country by Licensee which relates to any Mark which, in the sole opinion of Licensor, is confusingly similar, deceptive or misleading with respect to the Licensed Marks or the AT&T Service Marks, or which dilutes the Licensed Marks or the AT&T Service Marks, Licensee shall, at Licensor's sole discretion, immediately abandon any such application or registration or assign it (free and clear of any Liens, and for consideration of $1.00) to Licensor. If Licensee uses any Mark which, in the sole opinion of Licensor, is confusingly similar, deceptive or misleading with respect to the Licensed Marks or the AT&T Service Marks, or which dilutes the Licensed Marks or the AT&T Service Marks, or if Licensee uses the Licensed Marks or the AT&T Service Marks in connection with any product, or in connection with any service not specifically authorized hereunder, Licensee shall, immediately upon receiving written request from Licensor, permanently cease such use. Notwithstanding anything to the contrary contained in this Section 9.2, Licensee shall have the right to use and register the Approved Licensee Marks that are used together with the Licensed Marks in accordance with the terms of this Agreement and the Approved Licensee Marks shall not be deemed by Licensor to resemble or to be confusingly similar to the Licensed Marks. 9.3 Infringement. In the event that either party learns of any infringement ------------ or threatened infringement of the Licensed Marks, or any unfair competition, passing-off or dilution with respect to the Licensed Marks, or any third party alleges or claims that any of the Licensed Marks are liable to cause deception or confusion to the public, or is liable to dilute or infringe any right of such third party (each such event, an "Infringement"), such party shall promptly notify the other party or its authorized representative giving particulars thereof, and Licensee shall provide necessary information and reasonable assistance to Licensor or its authorized representatives in the event that Licensor decides that proceedings should be commenced or defended. For purposes of this Agreement, Licensee shall be deemed to have "learned" of an Infringement when either (i) the General Manager of one of Licensee's operating subsidiaries or divisions or (ii) an executive officer of Licensee obtains actual knowledge of the Infringement. Licensor shall have exclusive control of any litigation, opposition, cancellation or related legal proceedings. The decision whether to bring, defend, maintain or settle any such proceedings shall be at the exclusive option and expense of Licensor, and all recoveries shall belong exclusively to Licensor. Licensee will not initiate any such litigation, opposition, cancellation or related legal proceedings in its own name but, at Licensor's request, agrees to be joined as a party in any action taken by Licensor to enforce its rights in the Licensed Marks or the AT&T Service Marks; provided that Licensor shall reimburse Licensee for all reasonable out-of-pocket costs and expenses incurred by Licensee, its Affiliates and authorized representatives (and their respective directors, officers, stockholders, employees and agents) in connection with their participation in such action. Nothing in this Agreement shall require, or be deemed to require Licensor to enforce the Licensed Marks or the AT&T Service Marks against others. 9.4 Compliance With Laws. In the performance of this Agreement, Licensee -------------------- shall comply in all material respects with all applicable laws and regulations and administrative orders, including those laws and regulations particularly pertaining to the proper use and designation of Marks in the Licensed Territory. Should Licensee be or become aware of any applicable laws or regulations which are inconsistent with the provisions of this Agreement, Licensee shall promptly notify Licensor of such inconsistency. In such event, Licensor may, at its option, either waive the performance of such inconsistent provisions, or negotiate with Licensee to make changes in such provisions to comply with applicable laws and regulations, it being understood that the parties intend that any such changes shall preserve to the extent reasonably practicable the parties' respective benefits under this Agreement. 10. NO SUBLICENSING. Licensee shall not: (i) assign, license, transfer, --------------- dispose or relinquish any of its rights or obligations hereunder (whether by merger, consolidation, sale, operation of law or otherwise) other than as contemplated by Section 3.1(b); or (ii) grant or purport to grant any sublicense in respect of the Licensed Marks; provided that Licensee's Authorized Dealers and Subsidiaries shall have the right to use the Licensed Marks in accordance with the Quality Standards in connection with Licensed Activities. Any such purported assignment, license, transfer, disposition, relinquishment or sublicense shall be void and of no effect. 11. TERM AND TERMINATION. -------------------- 11.1 Term. ---- (a) This Agreement shall commence on the date hereof and shall be in effect for five (5) years following such date, unless terminated earlier pursuant to this Section 11. Neither party has a right or obligation to renew this Agreement beyond the initial term; provided, however, that if each party -------- ------- gives written notice (a "Renewal Notice") to the other party of an election to renew not less than ninety (90) days prior to the end of the initial term, then, and only then, shall this Agreement renew for an additional five (5) year term. During the ten (10) day period commencing one hundred twenty (120) days prior to the end of the initial term, either party may give written notice (a "Renewal Request") to the other party requesting that such other party give a Renewal Notice. No later than ninety (90) days prior to the end of the initial term, the recipient of a Renewal Request shall give to the requesting party either, in its sole discretion: (i) a Renewal Notice or (ii) a written notice (a "Non-Renewal Notice") stating it is not electing to renew the term of this Agreement. Any recipient of a Renewal Request that fails to send either a Renewal Notice or a Non-Renewal Notice in accordance with the immediately preceding sentence shall be deemed to have given a Renewal Notice. In the event either party fails to give a Renewal Notice or, in response to a Renewal Request, gives a Non- Renewal Notice, such party shall be presumed to have good cause for non- renewal either due to an action or failure to act by the other party or due to circumstances related to the party who did not provide the notice. In the event that AT&T Wireless PCS Inc. shall convert any shares of Series A Preferred Stock of Licensee into Common Stock of Licensee (as such terms are defined in the Stockholders Agreement), the term of this Agreement shall expire on the later of (x) two (2) years from the Series A Conversion Date (as such term is defined in Licensee's Restated Certificate of Incorporation), and (y) the then existing expiration date of this Agreement. (b) Notwithstanding anything to the contrary contained in this Section 11.1, this Agreement may be terminated by Licensor upon written notice to Licensee at any time following the later to occur of (x) the termination by AT&T Wireless PCS Inc. of its obligations under Section 8.6 of the Stockholders Agreement pursuant to Section 8.8(c) of the Stockholders Agreement, and (y) the second anniversary of the date Licensor (or an affiliate of Licensor) gives written notice to Licensee that it has entered into a letter of intent or binding agreement to engage in a Disqualifying Transaction (as defined in the Stockholders Agreement); provided, however, that in no event shall Licensor have the right to terminate this Agreement as of a date prior to the fifth anniversary of the date hereof, provided further however that, in the event that this Agreement is terminated pursuant to this Section 11.1(b) and Licensee does not exercise its right pursuant to Section 6.1 of the Stockholders Agreement to convert all of the shares of Company Stock (as defined in the Stockholders Agreement) owned by AT&T Wireless PCS Inc. into Series B Preferred Stock (as defined in the Stockholders Agreement), the termination shall only apply to the portion of the Territory that constitutes the "Overlap Territory" (as defined in the Stockholders Agreement) and this Agreement shall remain in full force and effect with respect to the remainder of the Territory. 11.2 Breach by Licensee. Licensor may terminate this Agreement at any time ------------------ in the event of a Significant Breach by Licensee. A "Significant Breach by Licensee" shall mean, after exhaustion of any applicable cure periods set forth in this Agreement, any of the following: (a) Licensee's use of any Mark (including the Licensed Marks and the AT&T Service Marks) contrary to the provisions of this Agreement, or the use by an Authorized Dealer of any Mark (including the Licensed Marks and the AT&T Service Marks) contrary to the provisions of this Agreement, including a violation by Licensee of Section 4.2, in each case which continues for more than 30 days after written notice thereof has been given to Licensee; (b) Subject to the provisions of Section 8.1, Licensee's use of the Licensed Marks in connection with any Marketing Materials, or the offering, marketing or provision of any Licensed Services, or the conduct of any Licensed Activities or any other aspect of its business conducted by it, which fail to meet the Quality Standards in any material respect; (c) Licensee's refusing or neglecting a request by Licensor pursuant to Section 7.3 for access to Licensee's facilities or Marketing Materials, which refusal or neglect continues for more than five business days after written notice thereof is given to Licensee; (d) Licensee's licensing, assigning, transferring, disposing of or relinquishing (or purporting to license, assign, transfer, dispose of or relinquish) any of the rights granted in this Agreement to others, except as permitted by Section 10; (e) Licensee's failure to maintain the Quality Standards and other information furnished under this Agreement in confidence pursuant to Section 18, or failing to restrict the transmission of information, products and commodities as required by Section 18; (f) The occurrence of a Change of Control of Licensee; (g) Licensee's loss, for any reason whatsoever, of its rights to hold, directly or indirectly, the FCC licenses for Company Communications Services in the Licensed Territory or to provide the Company Communications Services under such licenses, unless (i) such loss results, directly or indirectly, from the actions or inactions of Licensor or its Affiliates or (ii) such loss relates to less than 5% of the POPS in the Licensed Territory; (h) The Bankruptcy of Licensee; (i) Licensee's failure in any material respect to obtain Licensor's permission as provided in, or any other material breach of the provisions of, Section 7.5; or (j) Any Substantial Company Breach. 11.3 Termination Obligations. In the event this Agreement terminates ----------------------- pursuant to this Section 11: (a) Licensee shall immediately cease use of the Licensed Marks upon notice of termination, except that Licensee shall have the right to continue to use the Licensed Marks (including without limitation, Licensee's then existing inventory of Marketing Materials bearing the Licensed Marks) to the extent such use is otherwise in accordance with the provisions of this Agreement, for a period of up to ninety (90) days following such termination; and (b) Licensee shall have no further rights under this Agreement, except as provided in Section 11.5. 11.4 No Waiver of Rights. In addition to any other provision of this ------------------- Section 11, each party will retain all rights to any other remedy it may have at law or equity for any breach by the other of this Agreement. 11.5 Survival. Sections 11.3(a), 12.1, 17 and 18 shall survive any -------- expiration or termination of this Agreement. 12. INDEMNITY. --------- 12.1 Licensor shall defend, indemnify and hold Licensee and its authorized representatives (including the Authorized Dealers), and their respective directors, officers, stockholders, employees and agents, harmless against all claims, suits, proceedings, costs, damages, losses and expenses (including reasonable attorneys' fees) and judgments incurred, claimed or sustained by Licensee or such persons arising out of: (i) claims by third parties that Licensee's use of the Licensed Marks in accordance with this Agreement constitutes trademark, service mark or trade dress infringement (or infringement of any other intellectual property or other proprietary right owned by a third party), dilution, unfair competition, misappropriation or false/misleading advertising; (ii) any third party claims as to the lack of validity or enforceability of (A) the registrations of the Licensed Marks or (B) Licensor's ownership rights in the Licensed Marks; and (iii) any lack of validity or enforceability of this Agreement caused by Licensor. Subject to Licensor's indemnification obligations in the previous sentence, Licensee shall defend, indemnify and hold Licensor, its Affiliates and authorized representatives, and their respective directors, officers, stockholders, employees and agents, harmless against all claims, suits, proceedings, costs, damages and judgments incurred, claimed or sustained by third parties, whether for personal injury or otherwise, arising out of Licensee's or any Authorized Dealer's marketing, sale, or use of services under the Licensed Marks and shall indemnify Licensor and the foregoing persons for all damages, losses, costs and expenses (including reasonable attorneys' fees) arising out of such use, sale or marketing and also for any improper or unauthorized use of the Licensed Marks or any use of its own Marks. Licensee shall also defend, indemnify and hold Licensor, its Affiliates and authorized representatives, and their respective directors, officers, stockholders, employees and agents, harmless against all claims, suits, proceedings, costs, damages, losses and expenses (including reasonable attorneys' fees) and judgments incurred, claimed or sustained by Licensor or such persons arising out of (i) any third party claims as to the lack of validity or enforceability of (x) the registrations (if any) of the Approved Licensee Marks or (y) Licensee's ownership rights in the Approved Licensee Marks; and (ii) any lack of validity or enforceability of this Agreement caused by Licensee. 12.2 Licensee shall maintain, at its own expense, in full force and effect at all times during which Licensed Services bearing the Licensed Marks are being sold, with a responsible insurance carrier acceptable to Licensor, at least a Two Million Five Hundred Thousand Dollar ($2,500,000.00) products liability insurance policy with respect to the Licensed Services offered under the Licensed Marks. This insurance shall be primary to any of Licensor's coverage, shall name Licensor as an insured party, shall be for the benefit of Licensor and Licensee and shall provide for at least ten (10) days' prior written notice to Licensor and Licensee of the cancellation or any substantial modification of the policy. This insurance may be obtained for Licensor by Licensee in conjunction with a policy which covers services and/or products other than the services covered under this Agreement. 12.3 Licensee shall from time to time, upon reasonable request by Licensor, promptly furnish or cause to be furnished to Licensor, evidence in form and substance satisfactory to Licensor, of the maintenance of the insurance required by Section 12.2, including without limitation, originals or copies of policies, certificates of insurance (with applicable riders and endorsements) and proof of premium payments. 13. CONSENT OF LICENSOR. Except where another standard is expressly ------------------- provided for herein, whenever reference is made to Licensor's consent or approval in this Agreement, such consent or approval may be granted or withheld in Licensor's sole discretion and, if granted, may be done so conditionally or unconditionally; provided, however, that such standard shall not be interpreted -------- ------- by Licensor as justifying arbitrary rejection, but will connote a reasonable application of judgment, taking into consideration Licensor's licensing practices and customs in telecommunications licensing transactions. 14. NOTICES AND DEMANDS. All notices, requests, demands or other ------------------- communications required by, or otherwise with respect to this Agreement shall be in writing and shall be deemed to have been duly given to any party when delivered personally (by courier service or otherwise), against receipt, when delivered by telecopy and confirmed by return telecopy, or when actually received when mailed by registered first-class mail, postage prepaid and return receipt requested in each case to the applicable addresses set forth below: If to Licensee: TeleCorp PCS, Inc. 1101 17th Street, N.W. Suite 900 Washington, D.C. 20036 Attn: General Counsel Fax No: (202) 833-4888 If to Licensor: AT&T Corp. 295 North Maple Avenue Basking Ridge, New Jersey 07920 Attention: General Counsel Fax No.: (908) 953-8360 With a copies to: AT&T Corp. 131 Morristown Road Basking Ridge, New Jersey 07920-1650 Attention: Frank L. Politano, General Attorney Fax No.: (908) 204-8537 AT&T Corp. 131 Morristown Road Basking Ridge, NJ 07920 Attention: Corporate Secretary Fax No.: (908) 953-4657 AT&T Wireless Services Inc. 5000 Carillon Point Kirkland, Washington 98033 Attention: William W. Hague Fax No.: (425) 827-4500 or to such other address as such party shall have designated by notice so given to each other party. 15. COMPLIANCE WITH LAW. Subject to the provisions of Section 9.4, nothing ------------------- in this Agreement shall be construed to prevent Licensor or Licensee from complying fully with all applicable laws and regulations, whether now or hereafter in effect. 16. GOVERNMENTAL LICENSES, PERMITS, AND APPROVALS. Licensee, at its --------------------------------------------- expense, shall be responsible for obtaining and maintaining all licenses, permits and approvals which are required by all Regulatory Authorities with respect to this Agreement, and to comply with any requirements of such Regulatory Authorities for the registration or recording of this Agreement. Licensee shall furnish to Licensor written evidence from such Regulatory Authorities of any such licenses, permits, clearances, authorizations, approvals, registration or recording. 17. APPLICABLE LAW; JURISDICTION. The construction, performance and ---------------------------- interpretation of this Agreement shall be governed by the U.S. Trademark Act, 15 U.S.C. 1051 et seq., and the internal, substantive laws of the State of New York, without regard to its principles of conflicts of law; provided that if the foregoing laws should be modified during the term hereof in such a way as to adversely affect the original intent of the parties, the parties will negotiate in good faith to amend this Agreement to effectuate their original intent as closely as possible. Except as otherwise provided herein, Licensor and Licensee hereby irrevocably submit to the exclusive jurisdiction of the United States District Court for the Southern District of New York, or absent subject matter jurisdiction in that court, the state courts of the State of New York located in New York County for all actions, suits or proceedings arising in connection with this Agreement, and agree that any such action, suit or proceeding shall be brought only in such courts (and waive any objection based on forum non conveniens or any other objection to venue therein). Licensee and Licensor hereby waive any right to a trial by jury. 18. CONFIDENTIALITY OF INFORMATION AND USE RESTRICTION. The Quality -------------------------------------------------- Standards and other technical information furnished to Licensee under this Agreement and other confidential and proprietary information, know-how and trade secrets of Licensor that are disclosed or otherwise provided to Licensee in connection with this Agreement, shall remain the property of Licensor, and shall be returned to Licensor upon request and upon termination of this Agreement. Unless such information was previously known to Licensee free of any obligation to keep it confidential, or has been or is subsequently made public (a) by any person other than Licensee and Licensor is not attempting to limit further dissemination of such information, (b) by Licensor, or (c) by Licensee, as required by law (including securities laws) or to enforce its rights under this Agreement, it shall be held in confidence, and shall be used only for the purposes of this Agreement. All confidential and proprietary information, know-how and trade secrets of Licensee that are disclosed or otherwise provided to Licensor hereunder (including without limitation, during any Inspection) (collectively, "Licensee Information") shall remain the property of Licensee and shall be returned to Licensee upon request and upon termination of this Agreement. Unless such Licensee Information was previously known to Licensor free of any obligation to keep it confidential, or has been or is subsequently made public (a) by any person other than Licensor and Licensee is not attempting to limit further dissemination of such information, (b) by Licensee, or (c) by Licensor, as required by law (including securities law) or to enforce its rights under this Agreement, it shall be held in confidence and shall be used only for purposes of this Agreement. 19. MISCELLANEOUS. ------------- 19.1 Name, Captions. The name assigned this Agreement and the section -------------- captions used herein are for convenience of reference only and shall not affect the interpretation or construction hereof. 19.2 Entire Agreement. The provisions of this Agreement contain the entire ---------------- agreement between the parties relating to use by Licensee of the Licensed Marks, and supersede all prior agreements and understandings relating to the subject matter hereof. This Agreement shall be interpreted to achieve the objectives and intent of the parties as set forth in the text and factual recitals of the Agreement. It is specifically agreed that no evidence of discussions during the negotiation of the Agreement, or drafts written or exchanged, may be used in connection with the interpretation or construction of this Agreement. No rights are granted to use the Licensed Marks or any other marks or trade dress except as specifically set forth in this Agreement. In the event of any conflict between the provisions of this Agreement and provisions in any other agreement involving Licensee, the provisions of this Agreement shall prevail. This Agreement is not a franchise under federal or state law, does not create a partnership or joint venture, and shall not be deemed to constitute an assignment of any rights of Licensor to Licensee. Licensee is an independent contractor, not an agent or employee of Licensor, and Licensor is not liable for any acts or omissions by Licensee. 19.3 Amendments, Waivers. This Agreement may not be amended, changed, ------------------- supplemented, waived or otherwise modified except by an instrument in writing signed by the party against whom enforcement is sought. 19.4 Specific Performance. The parties acknowledge that money damages are -------------------- not an adequate remedy for violations of this Agreement and that any party may, in its sole discretion, apply to the court set forth in paragraph 17 for specific performance, or injunctive, or such other relief as such court may deem just and proper, in order to enforce this Agreement or prevent any violation hereof, and to the extent permitted by applicable law, each party waives any objection to the imposition of such relief. 19.5 Remedies Cumulative. All rights, powers and remedies provided under ------------------- this Agreement, or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise or beginning of the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. 19.6 No Waiver. The failure of any party hereto to exercise any right, --------- power or remedy provided under this Agreement, or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, and any custom or practice of the parties at variance with the terms hereof, shall not constitute a waiver by such party of its right to exercise any such or other right, power or remedy or to demand such compliance. 19.7 No Third Party Beneficiaries. Except with respect to the persons ---------------------------- entitled to indemnification under Section 12.1, this Agreement is not intended to be for the benefit of, and shall not be enforceable by any person or entity who or which is not a party hereto. 19.8 Counterparts. This Agreement may be executed in any number of ------------ counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies each signed by less than all, but together signed by all the parties hereto. IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed in duplicate originals by its duty authorized representatives as of the date first stated above. AT&T CORP. By: /s/ Frank L. Politano ---------------------------- Name: Frank L. Politano Title: Assistant Secretary Authorized Signatory TELECORP PCS, INC. By: /s/ Thomas H. Sullivan ---------------------------- Name: Thomas H. Sullivan Title: President SCHEDULE A LICENSED LOGO [LOGO APPEARS HERE] AT&T MEMBER AT&T Wireless Services Network Schedule B ---------- LICENSED TRADE DRESS -------------------- 1. The overall configurations of the AT&T and globe design corporate signature as set forth more fully in the attached AT&T document Corporate Identity ------------------ Program: Graphic Standards Manual ("Graphic Standards Manual"), and solely --------------------------------- as expressed in the Licensed Logo set forth in Schedules A and E. 2. The acceptable color applications of the AT&T and globe design corporate signature as set forth in the Graphic Standards Manual, and solely as ------------------------ expressed in the Licensed Logo set forth in Schedules A and E. 3. The acceptable graphic techniques relating to the AT&T and globe design corporate signature as set forth in the Graphic Standards Manual, and ------------------------ solely as expressed in the Licensed Logo set forth in Schedules A and E. 4. The acceptable applications of the AT&T globe design corporate signature as set forth in Schedule E. 5. Nothing in this Schedule shall restrict or limit AT&T's claim to trade dress rights in or protection of AT&T's Trade Dress. Schedule B1 ----------- UNITED STATES SERVICE MARK REGISTRATIONS OR APPLICATIONS - --------------------------------------------------------
Registration No. Registration Date Mark (Application No.) (Application Date) Services ---- ----------------- ------------------ -------- AT&T and Globe 75/378,611 October 24, 1997 Telecommunication Design/Member services, namely, the AT&T Wireless mobile wireless Services Network electronic transmission of voice, data, paging and facsimile services; electronic voice and data messaging services, namely, the recording, storage, and subsequent wireless transmission of voice and data messages from and to mobile wireless telephones
Schedule C ---------- Initial Licensed Territory/1/ ----------------------------- I. From New Orleans MTA BTA Market Designator -------------------- --------------------- Baton Rouge, LA 32 Lafayette-New Iberia, LA 236 New Orleans, LA 320 II. From Houston, MTA ----------------- Beaumont, TX 34 III. From St. Louis MTA ------------------ Cape Giradeau-Sikeston, MO 66 Carbondale-Marion, IL 67 Columbia, MO 90 Jefferson City, MO 217 Kirksville, MO 230 Mount Vernon-Centralia, IL 308 Poplar Bluff, MO 355 Quincy, IL-Hannibal, MO 367 Rolla, MO 383 Portions of Springfield, MO BTA: 428 Camden County, MO - -------------------- /1/ The Company Territory is more particularly described in the FCC applications filed in connection with the transfer of FCC PCS Licenses to the Licensee. Cedar County, MO Dallas County, MO Douglas County, MO Hickory County, MO Laclede County, MO Polk County, MO Stone County, MO Taney County, MO Texas County, MO Webster County, MO Wright County, MO West Plains, MO 470 -2- IV. From Little Rock MTA BTA Market Designator -------------------- --------------------- El Dorado, AR 125 Fayetteville, AR 140 Fort Smith, AR 153 Harrison, AR 182 Hot Springs, AR 193 Joesboro-Paragould, AR 219 Little Rock, AR 257 Pine Bluff, AR 348 Russellville, AR 387 V. From Memphis-Jackson MTA ------------------------ Blytheville, AR 49 Dyersburg-Union City, TN 120 Jackson, TN 211 Portions of Memphis, TN BTA: 290 Crittendon County, AR Cross County, AR Lee County, AR Phillips County, AR St. Francis County, AR Benton County, MS Coahoma County, MS -3- DeSoto County, MS Grenada County, MS Lafayette County, MS Marshall County, MS Panola County, MS Quitman County, MS Tallahatchie County, MS Tate County, MS Tunica County, MS Yalobusha County, MS Fayette County, TN Hardeman County, TN Haywood County, TN Lauderdale County, TN Shelby County, TN Tipton County, TN -4- VI. From Boston-Providence MTA BTA Market Designator -------------------------- --------------------- Boston, MA 51 Rockingham County, NH Strafford County, NH Hyannis, MA 201 Manchester, NH 274 Portions of Worcester County, MA/2/ 480 VII. From Louisville-Lexington-Evansville MTA ---------------------------------------- Evansville, IN BTA 135 Paducah-Murray-Mayfield, KY BTA 339 - -------------------- /2/ The portions of Worchester County are those to the east of the line described by Points A, B and C on the map included in Schedule 2.1 to the Securities Purchase Agreement. -5- Schedule D ---------- TDMA QUALITY STANDARDS ---------------------- General Overview This Schedule VII sets out the Network and Reporting Standards with which Licensee shall comply pursuant to Section 8.2 of this Agreement. These Standards set out the network performance metrics and the process by which such metrics will be established, measured and reported. All metrics which represent a defined standard of quality for acceptable network operations have, or will have, specific targets which Licensee must comply with in accordance with the following network standards. I. NETWORK STANDARDS There are three categories of Network Standards: network quality (the "Network Quality Category"); system performance (the "System Performance Category"); and audio quality (the "Audio Quality Category") (each hereafter referred to generally as a "Category"). For each Category of Network Standards, specific metrics have been identified to measure performance in each such Category. The detailed description of how to measure and interpret the metrics for each Category is set out in the following AWS documents (each referred to generally as a "Network Standards Document"): . Network Quality Category: Document ES-4034, Revision 1.1, dated July 30, ------------------------ 1997 entitled "Network Quality Scorecard User Guide" (as referred to as the "Network Quality Standards Document"). This document is a collection of key network performance and traffic indicators (metrics) that are measured and reported on a regular basis. Included in this category, Licensee shall perform the ANS Consistency Test, as attached to this Schedule VII. . System Performance Category: OSS draft document, Revision 0.7, dated June --------------------------- 17, 1997 entitled "Key Metrics for System Performance Document" (as referred to as the "System Performance Standards Document"). This document identifies the network-wide key metrics for Ericsson and Lucent switching systems, as well as cell sites, which will provide a high level assessment of the system. . Audio Quality Category: Document PP-4027E, Revision 1.1, dated May 30, 1996 ---------------------- entitled "Audio Quality Measurement (AQM)" (as referred to as the "Audio Quality Standards Document"). This document provides the basis for assessing the quality of RF transmission by describing the standards for performing audio quality measurements and the reporting of their results. AWS measures the metrics for the Audio Quality Category using the "Radio Quality Scorecard". The Radio Quality Scorecard is comprised of performance statistics derived from driving the PCS system using the Buzzard tool or a tool with similar measurement and reporting capability. These Network Standards Documents are collectively attached to this Schedule VII which, subject to the terms and conditions of this Agreement including, without limitation, this Schedule VII, is hereby incorporated into and forms a part of this Agreement. IN the event of any inconsistency between any part of a Network Standards Document and the provisions of this Schedule VII, the provisions of this Schedule VII shall govern. Notwithstanding anything else in this Agreement including, without limitation, this Schedule VII, the parties acknowledge and confirm that the Network Standards Documents represent the standards and metrics currently identified by AWS as applicable to each Category. Target values for key quality related metrics are contained herein and Licensee agrees to comply with the specific metric target values as specified in Schedule VII. In addition, the parties acknowledge and confirm that the Network Standards Documents are subject to revision and Licensee shall comply with subsequent revisions to these Network Standards Documents, as well as with Call Center Quality Standards which will constitute an additional Category once they are formally implemented, in accordance with Section 8.2 of this Agreement. Set out below is a brief description of each Category of Network Standard and the currently established metrics for each such Category. II. TARGETS FOR NETWORK STANDARDS Licensee shall meet the following targets for key metrics which represent overall network and system quality. These targets are subject to revision and shall be implemented in accordance with Section 8.2 of this Agreement. . % Established Calls: The percentage of call attempts to and from a mobile ------------------- phone that result in a successful voice channel assignment. The target goal for this metric is 93%. . % Dropped Calls: The percentage of established calls, as defined below, --------------- which terminate abnormally. The target goal for this metric is a drop call rate of 1.7% or less. . % Handoff Failures: The target goal for this metric is a handoff failure ------------------ rate of 1.5%. . Failures per Erlang: The ratio of failed calls to carried traffic, where ------------------- failed calls are measured utilizing switch counters for originating and terminating traffic, and carried traffic is measured in erlangs. The target goal for this metric is 1.68. . Switch Outage Time: The amount of time (in minutes) in a month when ------------------ subscribers are impacted by a cellular switch outage. Target for this metric is 10 minutes per switch per year, with all ten minutes occurring in the maintenance window between 12:00 am and 5:00 am. -2- . % Blocking Cell Routes: Percentage of time all cellular traffic channels ---------------------- (voice paths in a trunk group) are unavailable within a given measurement interval. Target for this metric is 5%. . % Blocking Network Routes: Percentage of time all network traffic channels ------------------------- are unavailable within the measurement interval. Target for this metric is 5%. . ANS Consistency Test: The percentage of successful. ANS feature deliveries, -------------------- based on the following sequence: feature activation/deactivation (when applicable), test call, correct response, and call termination. The target goal for this metric is 96% for all ANS features. This target metric includes feature delivery failures due to call processing failures (i.e. call delivery, call origination, handoff failures, or dropped calls. These failures are estimated to be approximately 4%.) III. REPORTING STANDARDS Licensee agrees to comply with the reporting requirements as specified in the Network Standards Documents and as specified below: . Except as specified Audio Quality Network Standards, Licensee will submit the metric reports required pursuant to this Schedule VII (the "Results") to AWS no less than quarterly. . With respect to Audio Quality Network Standards, Licensee shall only submit quarterly Results for markets with 10,000 or more subscribers; for markets with less than 10,000 subscribers, Licensee shall only submit Results on a semi-annual basis. . Licensee shall submit all Results by the fifteenth day of the month following the end of the applicable reporting period. . Licensee will report the Results to AWS on an aggregated national basis; the aggregated national Results will reflect the distribution of the metrics measured across Licensee's Territory. Licensee may also be required to provide a breakdown, by market, of any metric. -3- AT&T Brand Values Marketing, Advertising & Promotion Guidelines The Licensed Logo as set forth in Schedules A and E should not be placed on any content relating to or containing any of the following, unless it has redeeming social value: . Illegal activities . Content which demeans, ridicules or attacks an individual or group on the basis of age, color, national origin, race, religion, sex, secular orientation, or handicap . Pornographic, obscene or sexually explicit suggestive material or content . Material targeted to children, which is deemed to be obscene, vulgar or pornographic . Tobacco and/or alcoholic beverages . Firearms/Ammunition/Fireworks . Gambling . Contraceptives . Violence . Vulgar/obscene language . Solicitation of funds Schedule E ---------- GUIDELINES FOR USE OF THE LICENSED LOGO AND LICENSED PHRASE ------------------- AT&T welcomes Members of the AT&T Wireless Services Network (Member) to use the enclosed icon ("icon") and the expression "Member, AT&T Wireless Services Network" (the "Expression") for their advertising and promotion needs. There are only a few requirements to follow: . The icon or the expression may never be used in connection with services or products that are not provided or approved by AT&T in accordance with the Network Membership License Agreement. . Only authorized Members of the AT&T Wireless Services Network marketing AT&T services under a written Network Membership License Agreement may use the icon and the expression. . The authorized member's identity or logo must be at least 3 times the overall size of the icon; provided, however, for stationery and business cards the authorized members identity or logo must be at least 2 times the overall size of the icon. . Use of the icon or expression must never give the impression that the member is a part of AT&T. . There must be a reference in the authorized member's advertising body copy, to the extent that it refers to the nature, character or quality of AT&T's service or network, that states the value, quality, and reliability of AT&T's services and network. . The icon must be used only as illustrated and specified in this document. Do not alter the design in any way. . The expression may not appear in type size or style that is larger or more prominent than the largest or most prominent type size or style of surrounding or accompanying text or body copy. . Any misuse of the icon or the expression or misrepresentation of the AT&T Member relationship may result in termination of permission to use the icon and the expressions cancellation of agreements between Member and AT&T, and/or additional legal action. For questions regarding the use of these materials please contact the AT&T Corporate Identity Office, (973) 564-4942. Permission to use the icon or the expression may not be granted to any telecommunications aggregator or reseller. For additional copies of this document call AT&T Corporate Identity at (973) 564-4942 or e-mail fayhkelly@attmail.com. The "icon" on disk Always reproduce the icon so that it appears with a solid white or black field. See Illustrations. There are two versions of the icon on the disk. One is for larger size reproduction (i.e., advertisements) and one is for smaller sizes (i.e., stationery). It is important to use the correct one because failing to do so will result in poor legibility. Versions AW, AB, AWC and ABC are for larger than P in height. Versions BW, BB, BWC and BBC are for 1" and smaller. Legal Information: 1. Permission to use the icon and expression will not be granted to any telecommunications aggregator or reseller. 2. Permission to use the icon and expression must be contained in a written Network Membership License Agreement between AT&T and the entity using the icon and expression. 3. The user of the icon and expression must abide by all terms and conditions outlined in this document. 4. The icon or expression may never be used in connection with products or services not provided by the representative through or approved by AT&T. With respect to a specific AT&T service, a person or entity is a Member of the AT&T Wireless Network for that specific service under these guidelines if (1) the person or entity has executed a written contract with AT&T that expressly grants that status for that service; and (2) the contract is in effect and grants the right to use, in accordance with these guidelines and such other limitations as are contained in the contract, AT&T's logo, signature and trademarks as expressed in the icon and expression in connection with the marketing, sale, or provision of that specific product or service. The written contract may not alter these guidelines or grant more rights to use AT&T's logo, signature and trademarks than are expressly set forth in these guidelines. Furthermore, the authorization to use the AT&T logo, signature and trademarks under these guidelines for a specific service does not allow use of the AT&T logo, signature and trademarks for any other product or service. Subscription to an AT&T tariffed service does not make the subscriber a Member of the AT&T Wireless Services Network. -2- Schedule F ---------- PERMITTED EVENTS ---------------- 1. Local community events, such as school athletic and cultural events or other athletic events (e.g. corporate golf or tennis outings). 2. Local events held in conjunction with regionally or nationally recognized organizations, such as Rotary International, Exchange Club, Heart Association, Red Cross, Make-A-Wish Foundation, etc. 3. Events in support of major charitable institutions such as Children's Hospitals, Ronald McDonald Foundation, march of Dimes and so on. 4. Local trade shows, Chamber of Commerce events, educational business seminars. 5. Licensee or authorized dealer store grand openings and kiosk sampling. EX-10.4.2 9 AMENDMENT #1 TO LICENSE AGREEMENT EXHIBIT 10.4.2 AMENDMENT NO. 1 TO AT&T WIRELESS SERVICES NETWORK MEMBERSHIP LICENSE AGREEMENT AMENDMENT NO. 1 TO NETWORK MEMBERSHIP LICENSE AGREEMENT ("Amendment No.1") dated as of March 30, 1999, by and between AT&T Corp., a New York corporation, with offices located at 32 Avenue of the Americas, New York, New York 10013, for itself and its affiliated companies, including AT&T Wireless Services, Inc. (collectively "Licensor"), and TeleCorp PCS, Inc., a Delaware corporation, with offices located at 1010 No. Glebe Road, Arlington, Virginia 22201 ("Licensee"). Certain capitalized terms used herein and not otherwise defined have the meaning assigned to such term in the License Agreement referred to below. WHEREAS, Licensor and Licensee are parties to that certain Network Membership License Agreement, dated as of July 17, 1998 (as amended, and including the terms and conditions of the letter from Mary Hawkins-Key to Andrew Price, dated October 20, 1998, the"License Agreement"), pursuant to which Licensor agreed to license and allow Licensee to use the Licensed Marks in the Licensed Territory on the terms set forth in the License Agreement; WHEREAS, the Company has entered into an agreement with Wireless 2000, Inc., dated as of December 2, 1998 (the "Wireless 2000 Acquisition Agreement"), pursuant to which, among other things, Licensee will acquire 15MHz of C Block PCS Licenses in the Alexandria, LA BTA, the Lake Charles, LA BTA and the Monroe, LA BTA; WHEREAS, the Company has entered into an agreement with Mercury PCS II, LLC, dated as of May 15, 1998 (the "Mercury Acquisition Agreement"), pursuant to which, among other things, Licensee will acquire 10 MHz of F Block PCS Licenses for the Baton Rouge, LA BTA, the Lafayette-New Iberia, LA BTA, the Houma-Thibodeaux, LA BTA and the Hammond, LA BTA; WHEREAS, the parties desire that the term "Licensed Territory" as used in the License Agreement be amended to include (i) effective upon the closing of the transactions contemplated by the Wireless 2000 Acquisition Agreement (the "Wireless 2000 Closing"), the -1- Alexandria, LA BTA, the Lake Charles, LA BTA and each of Ashley County, LA, Caldwell County, LA and Catahoula County, LA within the Monroe, LA BTA and (ii) effective upon the closing of the transactions contemplated by the Mercury Acquisition Agreement (the "Supplemental Closing"), the Hammond, LA BTA and the Houma-Thibodeaux, LA BTA; WHEREAS, Licensee has agreed to acquire from an Affiliate of Licensor pursuant to an asset purchase agreement (the "Asset Purchase Agreement"), a portion of the Block A PCS License for the Puerto Rico - U.S. Virgin Islands MTA (the "Puerto Rico MTA") owned by such Affiliate of Licensor covering such market, on the terms set forth therein; and WHEREAS, upon consummation of Licensee's purchase of the Puerto Rico MTA in accordance with the Asset Purchase Agreement, Licensee and Licensor desire, that the term "Licensed Territory" as used in the License Agreement be amended to include the Puerto Rico MTA and that certain other changes to the definition of the term "Licensed Territory" be effected, on the terms and conditions set forth in this Amendment No. 1. NOW THEREFORE, in consideration of the mutual promises and covenants herein contained and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows: 1. Amendments. (a) Schedule C to the License Agreement is hereby ---------- amended to: (i) include in the portion of Licensed Territory within the New Orleans MTA the Alexandria, LA BTA -- Market Designator B009, the Lake Charles, LA BTA -- Market Designator B238 and each of Ashley County, LA, Caldwell County, LA and Catahoula County, LA within the Monroe, LA BTA -- Market Designator B 304; (ii) delete from the Licensed Territory within the Boston-Providence MTA Strafford County, New Hampshire; (iii) include a new Section VIII to said Schedule C as follows: "The entire Puerto Rico - U.S. Virgin Islands MTA"; and (iv) include in the portion of the Licensed Territory within the New Orleans MTA the Houma-Thibodeaux, LA BTA-- Market Designator B195 and the Hammond, LA BTA -- Market Designator B180; and -2- (b) (i) Section 1 to the License Agreement is hereby amended to add the following defined terms thereto: "FTC Rule": Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures, 16 C.F.R.(S) 436 et. seq. "Minutes": As defined in Section 20.2(i). "Roaming Agreement": As defined in Section 20.2(iii). "Telephones": As defined in Section 20.2(i); (ii) Section 11.1(a) of the License Agreement is hereby amended by deleting the fifth sentence thereof in its entirety and inserting the following sentence in replacement therefor: "In the event either party fails to give a Renewal Notice or, in response to a Renewal Request, gives a Non-Renewal Notice, such party shall be presumed to have: (a) good cause of non-renewal either due to an action or failure to act by the other party or due to circumstances related to the party who did not provide the notice, and (b) shown that such action or failure to act by the other party may affect, or has affected, the interests of such party in an adverse or substantial manner in the development of the market, distribution of merchandise, or rendering of services."; (iii) Section 17 of the License Agreement is hereby amended by deleting the first sentence thereof in its entirety and inserting the following sentence in replacement therefor: "The construction, performance, and interpretation of this Agreement shall be governed by the U.S. Trademark Act, 15 U.S.C. 1051 et seq., and the internal, substantive laws of the State of New York, without regard to its principles of conflicts of law; provided, that (i) if the foregoing laws should be modified during the term hereof in such a way as to adversely affect the original intent of the parties, the parties will negotiate in good faith to amend this Agreement to effectuate their original intent as closely as possible, or (ii) if Puerto Rican law is required to govern a specific aspect of the parties' relationship related to Licensee's operations in Puerto Rico, Puerto Rican law shall govern only such claims or actions relating to Licensee's operations in Puerto Rico, and, then, only to the extent that Puerto Rico law is required to apply."; and -3- (iv) The License Agreement is hereby amended by adding the following Sections 20 and 21 at the end thereof: 20. "Recognition. Licensee recognizes the following: ----------- 20.1 The parties do not intend for the Puerto Rico Dealers' Contract Law to apply to the relationship between Licensee and Licensor and, in that regard, Licensee recognizes that (i) Licensor and Licensor's marks, including, but not limited to the AT&T Service Marks and the Licensed Marks, are well known throughout the United States and Puerto Rico; (ii) Licensor engages in extensive advertising throughout the United States and Puerto Rico; and (iii) Licensee has entered into this relationship with Licensor in order to enjoy the market developed by Licensor's name and reputation, and the goodwill of the AT&T Service Marks and the Licensed Marks. 20.2 The parties do not intend to create a franchise or business opportunity relationship between Licensee and Licensor and, in that regard, Licensee recognizes that: (i) in providing telecommunications service under the terms of this Agreement, Licensee may purchase on its own behalf for resale wireless telephones ("Telephones") and minutes for mobile wireless radiotelephonic service ("Minutes") from Licensor or Licensor's Affiliates, and Licensee (a) is not required to maintain an inventory of any item sold by Licensor, (b) is not required and will not engage in collections activities on behalf of Licensor, and (c) is not authorized and will not execute any contracts (including sales contracts) on behalf of Licensor; (ii) Licensor will not provide Licensee with a Uniform Franchise Offering Circular which is required by the FTC Rule and several state franchise investment laws to be provided with the offer and/or sales of a franchise, as the parties acknowledge and agree that the FTC Rule and state franchise investment laws do not, by their terms and the definitions contained therein, apply; (iii) the Telephones (if any) and Minutes purchased under the terms of the Intercarrier Roamer Service Agreement between Licensor and Licensee, dated as of July 17, 1998 ("Roaming -4- Agreement"), are being sold by Licensor to Licensee at bona fide wholesale prices; (iv) Licensee is not required, by this Agreement or the Roaming Agreement between Licensor and Licensee, or as a matter of practical necessity, to purchase more than a reasonable quantity of Telephones and Minutes for resale; (v) Licensor did not make any representation to Licensee that (a) Licensee or its equity holders will earn, or are likely to earn, a gross or net profit in excess of the initial required investment paid by Licensee for the wireless service company, (b) Licensor or any of its Affiliates has knowledge of the wireless market that Licensee will operate in or that the market demand will enable Licensee to earn a profit, (c) there is a guaranteed market for Licensee and/or wireless service, or (d) Licensor or any of its Affiliates will provide Licensor with locations or assist Licensee in finding locations for use or operation of the wireless service company; and (vi) Licensee was informed at least seven days prior to the execution of this Agreement that Licensor's principal business address in New York is 32 Avenue of the Americas, New York, New York 10013 and Licensor's agent for service of process in New York is c/o AT&T Corp., 32 Avenue of the Americas, New York, New York 10013. 20.3 Licensee has had ample time and opportunity to consult with attorneys and advisors of its own choosing and has consulted with them about the arrangement with Licensor and the above issues. 21. Puerto Rico Dealers' Contract Law Definitions. If, contrary to the --------------------------------------------- intent of the parties, the Puerto Rico Dealers' Contract Law is interpreted by a court to apply to the relationship between Licensor and Licensee, the parties acknowledge and agree that the following shall constitute "just cause" under the Puerto Rico Dealers' Contract Law: (i) if either of the parties fails to renew this Agreement as provided in Section 11.1; and (ii) termination of this Agreement for any of the reasons specified in Section 11.2." 2. Effectiveness of Amendment No. 1. Clause (i) of Section 1(a) shall -------------------------------- become effective only upon the date of the Wireless 2000 Closing, clause (ii) of Section 1(a) -5- shall become effective immediately upon the execution hereof by the parties, clause (iv) of Section 1(a) shall become effective only upon the date of the Supplemental Closing, and clause (iii) of Section 1(a) and clauses (i), (ii), (iii) and (iv) of Section 1(b) shall become effective only upon the consummation of the Licensee's purchase of the Puerto Rico MTA in accordance with the Asset Purchase Agreement. 3. Severability of Provisions. Any provision of this Amendment No. 1 -------------------------- which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. 4. Agreement to Remain in Full Force and Effect. This Amendment No. 1 -------------------------------------------- shall be deemed to be an amendment to the License Agreement. All references to the License Agreement in any other agreements or documents shall on and after the date hereof be deemed to refer to the License Agreement as amended hereby. Except as amended hereby, the License Agreement shall remain in full force and effect and is hereby ratified, adopted and confirmed in all respects. 5. Heading. The headings in this Amendment No. 1 are inserted for ------- convenience and identification only and are not intended to describe, interpret, define or limit the scope, extent or intent of this Amendment No. 1 or any provision thereof. 6. Counterparts. This Amendment No. 1 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. 7. Applicable Law; Jurisdiction. The construction, performance and ---------------------------- interpretation of this Agreement shall be governed by the U.S. Trademark Act, 15 U.S.C. 1051 et seq., and the internal, substantive laws of the State of New York, without regard to its principles of conflicts of law; provided that if the foregoing laws should be modified during the term hereof in such a way as to adversely affect the original intent of the parties, the parties will negotiate in good faith to amend this Amendment No. 1 to effectuate their original intent as closely as possible. [signature page follows] -6- Executed as of the date first written above. AT&T CORP. TELECORP PCS, INC. By__________________________________ By___________________________________ Its_________________________________ Its__________________________________ -7- EX-10.5.1 10 MANAGEMENT AGREEMENT EXHIBIT 10.5.1 EXECUTION COPY ================================================================================ MANAGEMENT AGREEMENT between TELECORP MANAGEMENT CORP. and TELECORP PCS, INC. Dated as of July 17, 1998 ================================================================================ TABLE OF CONTENTS -----------------
Page SECTION 1. ENGAGEMENT........................................................................................... 2 SECTION 2. MANAGEMENT STANDARDS................................................................................. 2 SECTION 3. SERVICES TO BE PROVIDED.............................................................................. 2 (a) Scope of Services.............................................................................. 2 (b) Accounts....................................................................................... 3 (c) Senior Executives of Manager................................................................... 4 (d) Restrictions on Manager's Authority............................................................ 4 SECTION 4. COMPENSATION......................................................................................... 6 (a) Reimbursement.................................................................................. 6 (b) Management Fees................................................................................ 6 (c) Disputes, etc.................................................................................. 6 (d) Directors and Officers Liability Insurance..................................................... 7 (e) Benefits....................................................................................... 7 (f) Relocation Expenses............................................................................ 7 SECTION 5. TERM AND TERMINATION................................................................................. 7 (a) Term........................................................................................... 7 (b) Termination.................................................................................... 7 (c) Benefits Payable Upon Termination.............................................................. 8 (d) Remedies....................................................................................... 9 (e) Continuing Obligations......................................................................... 9 (f) Transition Arrangements........................................................................ 9 (g) Return of Information.......................................................................... 11 SECTION 6. NONCOMPETITION AND CONFIDENTIALITY................................................................... 11 (a) Noncompetition................................................................................. 11 (b) Confidentiality................................................................................ 11 (c) Company Property............................................................................... 12 (d) Non-Solicitation of Employees.................................................................. 12 (e) Injunctive Relief with Respect to Covenants.................................................... 12 SECTION 7. VESTING AND REPURCHASE OF RESTRICTED SHARES, ETC..................................................... 12 (a) General........................................................................................ 12
-i- TABLE OF CONTENTS (continued)
Page (b) Repurchase of Shares.......................................................................... 14 (c) Closing of Repurchase; Assignment of Repurchase Right......................................... 15 (d) Escrow of Shares.............................................................................. 15 (e) Legends....................................................................................... 16 SECTION 8. LIMITATIONS OF LIABILITY............................................................................ 16 (a) Force Majeure................................................................................. 16 (b) Exculpation of Manager........................................................................ 16 (c) No Consequential or Special Damages........................................................... 16 (d) Vento and Sullivan............................................................................ 17 SECTION 9. BOOKS AND RECORDS................................................................................... 17 SECTION 10. DISPUTE RESOLUTION................................................................................. 17 (a) Dispute Resolution............................................................................ 17 (b) Mediation..................................................................................... 17 (c) Arbitration................................................................................... 18 (d) Confidentiality............................................................................... 18 (e) Fees and Expenses............................................................................. 18 SECTION 11. INSPECTION RIGHTS; DELIVERY OF INFORMATION......................................................... 19 (a) Company's Right to Inspect.................................................................... 19 (b) Notice of Certain Events...................................................................... 19 (c) Other Information............................................................................. 19 SECTION 12. REPRESENTATIONS AND WARRANTIES..................................................................... 19 (a) Organization and Standing of Parties.......................................................... 19 (b) Execution, Delivery, Performance and Binding Effect........................................... 20 (c) Consents...................................................................................... 20 (d) Litigation; Claims............................................................................ 20 (e) Court Orders, Decrees, Judgments, Etc......................................................... 20 SECTION 13. INDEMNIFICATION; EXPENSES.......................................................................... 20 (a) Indemnification............................................................................... 20 (b) Advancement of Expenses....................................................................... 21 SECTION 14. MISCELLANEOUS...................................................................................... 21
-ii- TABLE OF CONTENTS (continued)
Page (a) Counterparts.................................................................................. 21 (b) Construction.................................................................................. 21 (c) Benefit; Assignment........................................................................... 21 (d) Complete Agreement............................................................................ 21 (e) Amendment..................................................................................... 22 (f) Governing Law................................................................................. 22 (g) Severability.................................................................................. 22 (h) Further Assurances............................................................................ 22 (i) Waiver........................................................................................ 22 (j) Notices....................................................................................... 22 SCHEDULE I...................................................................................................... I-1 SCHEDULE II..................................................................................................... II-1
-iii- MANAGEMENT AGREEMENT -------------------- This Management Agreement (the "Agreement") is entered into as of July 17, 1998 (the "Effective Date") by and between TELECORP MANAGEMENT CORP., a Delaware corporation ("Manager"), and TELECORP PCS, INC., a Delaware corporation (the "Company"). Capitalized terms used but not defined in this Agreement shall have the meanings given to such terms in the Stockholders Agreement of the Company, dated as of the date hereof (the "Stockholders Agreement"). WITNESSETH: WHEREAS, the operation of the Business, including, without limitation, the determination of policy, the preparation and filing of any and all applications and other filings with the FCC, the hiring, supervision and dismissal of personnel, day-to-day system operations, and the payment of financial obligations and operating expenses, shall be controlled by the Company, and Manager shall assist the Company in connection therewith and any action undertaken by Manager shall be under the Company's continuing oversight, review, control and approval, and the Company shall retain unfettered control of, access to, and use of the Business, including its facilities and equipment and shall be entitled to receive all profits from the operation of the Business; WHEREAS, Manager is willing to provide management services for the Company and its Subsidiaries on the terms and subject to the conditions contained in this Agreement; WHEREAS, Gerald Vento ("Vento") and Thomas Sullivan ("Sullivan") are the owners of all of the ownership interests in Manager and are each the record and beneficial owner of the shares of the Common Stock and Preferred Stock described on Schedule V to the Securities Purchase Agreement, dated January 23, 1998 (the shares of Class A Voting Common Stock and Series E Preferred Stock listed on such Schedule are hereafter referred to collectively as the "Shares"); WHEREAS, in order to induce the Purchasers referred to in such Securities Purchase Agreement to purchase the securities issued by the Company thereunder, and to induce the Company to enter into this Agreement with Manager, Sullivan and Vento have agreed to grant to the Company the repurchase rights with respect to the Shares set forth in this Agreement; and WHEREAS, the parties desire to execute this Agreement to specify the terms upon which Manager will perform services to the Company hereunder and to evidence the Company's acceptance of the grant by Sullivan and Vento of such repurchase rights. NOW, THEREFORE, for and in consideration of the premises, the covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are acknowledged by the execution and delivery hereof, the parties agree as follows: Section 1. Engagement. The Company hereby engages Manager to oversee, ---------- manage and supervise the Company and the development and operation of the Business, and Manager hereby accepts such engagement, subject to and upon the terms and conditions hereof. Section 2. Management Standards. Manager shall discharge its duties -------------------- hereunder in compliance with the Stockholders Agreement, the Network Membership License Agreement, the Resale Agreement and the Roaming Agreement (collectively the "Operating Agreements") and all applicable Law. In performing its obligations hereunder, Manager shall act in a manner that it reasonably believes to be in or not opposed to the best interests of the Company consistent with the standards set forth herein. Nothing in this Agreement shall be construed as constituting Manager an agent of the Company beyond the extent expressly provided in, and as limited by, this Agreement. Section 3. Services to be Provided. ----------------------- (a) Scope of Services. Subject to the Company's oversight, review and ----------------- ultimate control and approval and the limitations of Section 3(d) below, Manager shall be responsible for the design, construction and operation of the Company and the Business in accordance with the Operating Agreements, which shall be carried out by the Company's employees under the supervision and control of Manager's senior management. To this end Manager shall provide generally, on the terms and subject to the conditions set forth herein and in a manner consistent with the standards set forth herein and in the Operating Agreements, supervisory services with respect to (I) all administrative, accounting, billing, credit, collection, insurance, purchasing, clerical and such other general services as may be necessary to the administration of the Business, (II) operational, engineering, maintenance, construction, repair and such other technical services as may be necessary to the construction and operation of the Business, and (III) marketing, sales, advertising and such other promotional services as may be necessary to the marketing of the Business. The services for which Manager shall be responsible, subject in each case to the Operating Agreements, the Company's oversight, review and ultimate control and approval and to the limitations of Section 3(d) below, shall include but shall not be limited to the following: (i) the marketing of Company Communications Services to be offered and provided by the Company; (ii) the management, tax compliance, accounting and financial reporting for the Company including, but not limited to, the preparation and presentation of reports and reviews of the business, financial results and condition, regulatory status, competitive position and strategic prospects of the Company as requested by the Board of Directors; (iii) the regulatory processing for the Company, including without limitation the preparation and filing of all appropriate regulatory filings, certificates, tariffs and reports that are required by, and participation in any hearings or other proceedings before, local, state and federal governmental regulatory bodies; -2- (iv) the engineering, design, planning, construction and installation, maintenance and repair (both emergency and routine) and operation of, and equipment purchases for, the Company; (v) assisting the Company in the development and preparation of budgets, including, without limitation, preparing and presenting, not later than 90 days before the beginning of each fiscal year, a proposed draft of an annual operating budget for the Company's review, evaluation and approval setting forth in reasonable detail the anticipated capital expenditures and other projected costs and expenses of constructing and operating the Business during the period covered by the budget, as well as projected revenues for that period, and generally describing all contracts and commitments which Manager expects to enter into on behalf of the Company during the period covered thereby; (vi) services relating to sales of the products and services offered by the Company, including without limitation processing orders for service, customer support, billing for services provided by the Company and collection of receivables for the Company; (vii) management information services for the Company; (viii) monitoring and controlling the Business and its PCS and Cellular Systems; (ix) negotiating contracts, issuing purchase orders and otherwise entering into agreements on behalf of the Company for the purchase, lease, license or use of such properties, services and rights as may be necessary or desirable in the judgment of Manager for the operation of the Company; (x) supervising, recruiting and training all necessary personnel to be employed by the Company, and determining salaries, wages and benefits for the Company's employees; (xi) administering the Company's employee benefit programs and the Company's programs for compliance with applicable laws governing the administration and operation of such plans and programs; (xii) administering the Company's risk management programs, including negotiating the terms of property and casualty insurance and preparing a comprehensive disaster recovery program; and (xiii) in furtherance of the foregoing, making or committing to make expenditures (including capital expenditures) on behalf of the Company. (b) Accounts. Subject to the foregoing, the Company shall be -------- responsible for payment of all costs and expenses necessary to fund the ongoing business and operations of the Business and for the provision of all services of Manager hereunder, which shall include, but not be limited to, expenses arising under Article 3, payments to independent contractors, payments to vendors and suppliers of the Business, and interest payments to creditors who have financed the -3- construction or operation of the Business. To the extent provided herein, Manager shall make such payments on the Company's behalf from one or more accounts maintained in the name of the Company at one or more banks acceptable to the Board of Directors, into which all Company revenues shall be deposited (the "Accounts"). All funds of the Company shall be promptly deposited in such bank accounts. All disbursements made by the Company as permitted under this Agreement shall be made by checks drawn on the Accounts, and all funds on deposit in the Accounts shall at all times be the property of the Company. Manager will have the right and authority to make deposits to and disbursements and withdrawals from the Accounts as required in connection with the performance of its services hereunder, provided that all signatories on the Accounts shall he subject to the approval of the Board of Directors. (c) Senior Executives of Manager. During the term of this Agreement, ---------------------------- Manager shall cause the services of Vento and Sullivan to be provided to the Company in connection with Manager's performance of its obligations hereunder. Such individuals shall devote their entire business time and attention to the services required to be provided by Manager pursuant to this Agreement. Except for certain employee benefits provided to officers of the Company, they shall receive all compensation and other benefits for such services directly from Manager. In addition, Vento shall serve as Chief Executive Officer of the Company and Sullivan shall serve as Executive Vice President of the Company. In the event that either of such individuals shall cease for any reason to be employed by Manager, Manager shall immediately notify the Company. Subject to the Company's rights under Section 5(b)(ii)(C), any individual hired by Manager to replace either of such individuals shall be acceptable to the Board of Directors (excluding Vento and Sullivan) in its sole discretion. Nothing contained herein shall preclude (i) Vento or Sullivan from devoting reasonable periods of time to the management (including serving on the board of directors) of the businesses in which THC of Tampa, Inc., THC of Orlando, Inc., THC of Melbourne, Inc., THC of Houston, Inc., TeleCorp Management Co., Inc., TeleCorp WCS, Inc., TeleCorp LMDS, Inc. and Entel Technologies, Inc. are currently engaged; (ii) Sullivan from serving on the board of directors of Sullivan & Son Contracting; (iii) Vento or Sullivan serving on a board of directors of a charitable organization; or (iv) Vento or Sullivan serving on other boards of directors or advisory groups (in each case, with the consent of the Board of Directors excluding Vento and Sullivan), in each such case, so long as such activities do not interfere with the performance of Vento's or Sullivan's duties hereunder. (d) Restrictions on Manager's Authority. Any provision to the contrary ----------------------------------- in this Agreement notwithstanding, unless such action is within (or on terms more favorable to the Company than) parameters set forth in a budget or business plan approved by the Board of Directors, Manager shall not do, or cause or permit to be done, any of the following for or on behalf of the Company without the prior written consent of the Board of Directors (excluding Vento and Sullivan): (i) settle any claim or litigation by or against the Company if the settlement involves a payment of $100,000 or more, or any regulatory proceedings involving the Company, unless such action is consistent with the Company's regulatory strategy as set forth in a budget approved by the Board of Directors; (ii) lend money or guarantee debts of others on behalf of the Company, or assign, transfer, or pledge any debts due the Company, or release or discharge any debt -4- due or compromise any claim of the Company, other than trade credit and advances to employees in the ordinary course of business; (iii) invest in or otherwise acquire any debt or equity securities of any other Person, enter into any binding agreement for the acquisition of any interest in any business entity or other Person (whether by purchase of assets, purchase of stock or other securities, merger, loan or otherwise), or enter into any joint venture or partnership with any other Person; (iv) take any tax reporting position or make any related election on behalf of the Company which is inconsistent with the directions given by the Board of Directors; (v) formally assert a strategic position with respect to a material matter before the Federal Communications Commission or any Governmental Authority on behalf of the Company with respect to any such matter; (vi) knowingly take or fail to take any action that violates (A) any Law relating to the Business, (B) any agreement, arrangement or understanding to which the Company is a party, including an Operating Agreement, (C) any License or other governmental authorization granted to the Company in connection with its ownership and operation of the Business, or (D) any judicial or administrative order or decree to which the Company is subject, in each case unless such violation would not be reasonably expected (so far as can be foreseen at the time) to have a material adverse effect on the Company or the Business; (vii) sell, assign, transfer, or otherwise dispose of, or hypothecate or grant a Lien on any assets belonging to the Company (other than the disposal of assets or equipment in the ordinary course of business); (viii) take any action amending or agreeing to amend any License granted to the Company in connection with its ownership and operation of the Business; (ix) borrow money on behalf of the Company or negotiate or enter into other forms of financing for the Business, including any capital lease; (x) commingle any funds of the Company with funds of any other entity or Person; (xi) hire or fire the independent certified public accountants of the Company; (xii) pay to a ny employee or agent of, or consultant or advisor to, the Company, compensation in any form in excess of $100,000 in any fiscal year, (xiii) establish any reserves; or (xiv) enter into any contract, agreement or other commitment or issue any purchase order, which contract or other agreement or purchase order (i) is not in the ordinary course of business, (ii) obligates the Company to make payments of $100,000 or -5- more or (iii) will create a material variance (greater than 15%) relative to (x) in the case of a capital expenditure, the total budget for capital expenditures contained in any budget approved by the Board of Directors and (y) in the case of an operating expense, the total operating expense budget contained in any budget approved by the Board of Directors, in each case for the year-to-date period in which the expenditure is made or incurred and taking into account all previous expenditures and commitments in such year-to-date period, provided, that the approval of the Board of Directors shall not be required for any contract, purchase order or agreement the material terms of which are within (or on terms more favorable to the Company than) the parameters set forth in any budget approved by the Board of Directors; or terminate or amend in any material respect any contract, agreement or other commitment or purchase order, in each case if the execution and delivery or issuance thereof requires approval pursuant to this Section 3(d). Section 4. Compensation. ------------ (a) Reimbursement. The Company shall reimburse Manager for all ------------- out-of-pocket expenses ("Out-of-Pocket Expenses") reasonably incurred by Manager for goods and services provided by third parties to, for or on behalf of the Company (including those out-of-pocket expenses incurred by Messrs. Vento and Sullivan in traveling to and from and visiting the Business in connection with providing services under this Agreement). Manager shall provide the Company with a statement setting forth in reasonable detail (and with copies of invoices or other supporting documentation) the Out-of-Pocket Expenses claimed and the Company shall pay to Manager each such amount within thirty (30) days of receipt of the statement. Notwithstanding anything to the contrary contained in this Agreement, (i) no portion of the salaries of Messrs. Vento or Sullivan or the general overhead expenses of Manager shall be subject to reimbursement as Out-of-Pocket Expenses and (ii) in no event will Manager be responsible for the payment from its own funds of any expenses, obligations or liabilities of the Company. (b) Management Fees. In consideration of Manager's performance of its --------------- responsibilities with respect to the Business, the Company shall pay Manager, commencing on the date hereof, a management fee per annum equal to $550,000, payable monthly in arrears on the last day of each calendar month. Upon the first anniversary hereof, and annually thereafter, the Compensation Committee of the Board of Directors shall review the management fee in light of the performance of Manager and the Company, and may, in its discretion, increase (but not decrease) the management fee by an amount it determines to be appropriate. Manager's annual management fee payable hereunder, as it may be increased from time to time, is referred to herein as the "Management Fee." For each calendar year or part thereof during the term of this Agreement, Manager shall be eligible to receive an annual bonus equal to up to 50% of the Management Fee based upon the achievement of certain objectives determined by the Compensation Committee of the Board of Directors for such calendar year (the "Annual Bonus") payable within 30 days after the certification of the Company's financial statements for such year. (c) Disputes, etc. If the Company disputes the amount of expenses or fees ------------- claimed by Manager, the Company shall notify Manager in writing before payment is due, and if the matter cannot be resolved informally between the parties, either the Company or Manager may request -6- resolution of the dispute pursuant to Section 10. The Company shall pay when due the portion of any such amounts that is not in dispute. (d) Directors and Officers Liability Insurance. The Company shall use its ------------------------------------------ reasonable efforts to obtain and maintain directors and officers liability insurance coverage in amounts customary for similarly situated companies in the telecommunications industry. (e) Benefits. During the Term of this Agreement, Vento and Sullivan -------- shall be entitled to participate in any welfare benefit plan sponsored or maintained by the Company to the extent Vento or Sullivan, as applicable, is eligible to participate in any such plan under the generally applicable provisions thereof, such welfare plans to include life, health and disability insurance. (f) Relocation Expenses. The Company shall pay or reimburse Sullivan ------------------- for all reasonable expenses incurred or paid by Sullivan in relocating to a residence in the Arlington, Virginia vicinity, including brokerage commission payable in connection with the sale of Sullivan's current residence. Sullivan shall provide the Company with a statement setting forth in reasonable detail (with copies of invoices and the supporting documentation) the expenses claimed under this Section 4(f) and the Company shall pay to Sullivan each such amount promptly after receipt of such statement. Section 5. Term and Termination. -------------------- (a) Term. This Agreement shall commence on the Effective Date and, unless ---- earlier terminated in accordance herewith, shall terminate on the fifth (5th) anniversary of the Effective Date (the "Term"). (b) Termination. ----------- (i) By Either Party. Either party may terminate this Agreement in the event that a Governmental Authority shall enter an order appointing a custodian, receiver, trustee, intervenor or other officer with similar powers with respect to the other party or with respect to any substantial part of its property, or constituting an order for relief or approving a petition in bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding up or liquidation of such party; or if a party files a petition seeking any such order; or if any such petition shall be filed against such party and shall not be dismissed within sixty (60) days thereafter; or an order shall have been issued granting such party a suspension of payments under applicable law and any such order is not dismissed within sixty (60) days thereafter. (ii) By Company. The Company may terminate this Agreement: (A) immediately in the event of the indictment or conviction of Manager, Vento or Sullivan of any felony; or any act constituting fraud, embezzlement, willful misconduct or gross negligence by Manager that materially adversely affects the Company or the Business monetarily or otherwise (as determined by a majority vote of the Board of Directors (excluding Messrs. Vento and Sullivan)); -7- (B) immediately in the event of a material breach of this Agreement by Manager (as determined by a majority vote of the Board of Directors (excluding Messrs. Vento and Sullivan)), which has not been cured within thirty (30) days following notice thereof from the Company, including, without limitation, the failure of the Company to meet any of the objectives set forth on Schedule I hereto; (C) immediately in the event of the failure by Manager to cause to be provided to the Company the services of both Messrs. Vento and Sullivan as contemplated by Section 3(c) hereof; (D) immediately in the event that the Company shall fail to comply with the terms of any representation, warranty, covenant or agreement contained in the Credit Documents 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, or with notice or the passage of time would result in, an event of default thereunder; or (E) immediately in the event that the indebtedness incurred pursuant to the Credit Documents or any other indebtedness for borrowed money of the Company in the principal amount of $25,000,000 or more shall have been accelerated by the holder thereof. (iii) By Manager. Manager may terminate this Agreement: (A) if the Company has failed to make any payment pursuant to Section 4 within thirty (30) business days following Manager's written notice to the Company of such failure; (B) in the event of 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; (C) in the event that (i) Vento and Sullivan are removed as directors of the Company or are demoted or removed from their respective offices or there is a material diminishment of Vento's and Sullivan'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 from Vento and Sullivan of their respective written notice referring to this provision and describing such diminishment, or (ii) the Company relocates its principal offices without Manager's consent to a location more than 50 miles from the principal offices of the Company in Arlington, Virginia; or (D) voluntarily upon thirty (30) days prior written notice to the Company. (c) Benefits Payable Upon Termination. --------------------------------- (i) Following the termination of this Agreement pursuant to any manner described in Section 5(b), the Company shall pay to Manager any Management Fee earned, but unpaid, for services rendered to the Company on or prior to the date of such termination. -8- (ii) Following the termination of this Agreement by Manager pursuant to Sections 5(b)(iii)(A), (B) or (C) or a termination by the Company pursuant to Sections 5(b)(ii)(B), (C) or (D), Manager shall be entitled to receive payment of (x) the Management Fee, and (y) the Annual Bonus. 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), in either instance 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 hereinafter defined) shall be retained by the Company in accordance with Section 5(f)(i), and (b) the Manager shall have nominated a Successor Control Group (as hereinafter defined) acceptable to the Board of Directors in its sole discretion (excluding Vento and Sullivan) in accordance with Section 5(f)(ii). The Management Fee shall be payable monthly in arrears commencing on the last day of the month after which (I) a New Provider shall be retained by the Company in accordance with Section 5(f))(i) and (II) the Manager shall have nominated a Successor Control Group reasonably acceptable to the Board of Directors in its sole discretion (excluding Vento and Sullivan) in accordance with Section 5(f)(ii). (iii) The Company shall be entitled to set off against the Management Fee payable to the Manager following the termination of this Agreement pursuant to Section 5(c)(ii), any amounts earned by either Vento or Sullivan in other employment after the termination of this Agreement; provided, however, that neither Vento nor Sullivan shall be required, as a -------- ------- condition to the receipt of such payment pursuant to Section 5(c)(ii), to seek such other employment. (d) Remedies. The remedies set forth herein are not intended to be -------- exclusive, and all remedies shall be cumulative and may be exercised concurrently with any other remedy available to Manager or the Company at law or in equity. (e) Continuing Obligations. After receipt of written notice of ---------------------- termination, but prior to the effective date of such termination, Manager shall continue to perform under this Agreement unless specifically instructed to discontinue such performance. In the event of termination, Manager and the Company shall remain liable for their respective obligations accrued under this Agreement prior to the effective date of termination. (f) Transition Arrangements. ----------------------- (i) In the event of termination of this Agreement for any reason, Manager shall at the Company's expense cooperate with the Company in order to facilitate the transition to a new management service provider (the "New Provider"). Upon such -9- termination, the Board of Directors (excluding Vento and Sullivan) shall nominate a New Provider that would not cause a significant detrimental effect on the eligibility of the Company to realize the benefits, if any, that the Company derives from its status as a "very small business," as defined in 47 CFR Section 24.720(b)(2), which New Provider shall be acceptable to the Manager. In the event that the Manager does not approve such New Provider within five (5) business days of notice of such nomination by the Board of Directors, 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 Vento and Sullivan, each of Vento and Sullivan shall sell to the Company, in addition to the other Repurchased Shares required to be sold to the Company pursuant to Section 7, an additional 50% of the Shares then owned by each of them at a price per share equal to $.01 per Share. Manager shall at the Company's expense take whatever steps are commercially reasonable to assist the New Provider in assuming the management of the Company and the operation of the Business including, without limitation, transferring to the New Provider all historical financial, tax, accounting and other data in the possession of Manager, and giving such consents, assigning such permits and executing such instruments as may be necessary to vest in the New Provider those rights that were necessary for Manager to perform its services hereunder. (ii) Within five (5) business days after the nomination by the Board of Directors of a New Provider, each of Vento and Sullivan agrees to nominate a successor Person or group of Persons (collectively, a "Successor Control Group") that would not cause a significant detrimental effect on the eligibility of the Company to hold a Block F PCS license and to realize the benefits, if any, that the Company derives from its status as a "very small business," as defined in 47 CFR Section 24.720(b)(2), to whom the Voting Preference Common Stock and Class C Common Stock shall be transferred by Vento and Sullivan, which Successor Control Group shall be reasonably acceptable to the Board of Directors in its sole discretion (excluding Vento and Sullivan); it being understood that the New Provider shall be deemed to be a Successor Control Group reasonably acceptable to the Board of Directors. In the event that Vento and Sullivan do not nominate a Successor Control Group reasonably acceptable to the Board of Directors in its sole discretion (excluding Vento and Sullivan) within such five (5) business day period, then for each successive 30 day period or portion thereof that Vento and Sullivan shall not have nominated a Successor Control Group reasonably acceptable to the Board of Directors in its sole discretion (excluding Vento and Sullivan), each of Vento and Sullivan shall sell to the Company after the expiration of each 30 day period, in addition to any other Repurchased Shares, and after giving effect to the repurchase by the Company of Shares pursuant to Section 5(f)(i), an additional 50% of the Shares then owned by each of them at a price per share equal to $.01 per Share. Immediately after a Successor Control Group reasonably acceptable to the Board of Directors is nominated, the Company, Vento and Sullivan shall take, or cause to be taken, all actions necessary or required, including, without limitation, filing of all applications with the FCC, to obtain all requisite consents and authorizations to permit the transfer of the Voting Preference Common Stock and Class C Common Stock to the Successor Control Group. On the first business day after all such consents and authorizations shall have been obtained, Vento and Sullivan agree to resign as directors and officers of the Company and to sell to the Successor Control Group all of the shares of Voting Preference Common Stock and Class -10- C Common Stock owned by them for the per share price paid by them for such shares. If at any time, whether by reason of the inability of the Company to obtain all requisite consents and authorizations to permit the transfer of the Voting Preference Common Stock and Class C Common Stock to the Successor Control Group or otherwise, the Board of Directors withdraws its consent to the nomination of a Successor Control Group, the procedure outlined in Sections 5(f)(i) and (ii) shall be repeated commencing with the nomination by Vento and Sullivan of a Successor Control Group within five (5) business days after the nomination by the Board of Directors of a successor New Provider. (g) Return of Information. Upon termination of this Agreement, all books --------------------- and records in the possession of Manager relating to the maintenance and operation of and accounting for the Company, together with all supplies and other items of property owned by the Company and in Manager's possession, shall be delivered to the Company. Section 6. Noncompetition and Confidentiality. ---------------------------------- (a) Noncompetition. During the Term and (x) for one year thereafter if -------------- after the expiration of the Term on the fifth (5th) anniversary of the Effective Date the Company offers to extend this Agreement for at least one (1) year on terms and conditions no less favorable than those contained herein and the Manager rejects such offer, and (y) for so long as the Company is paying to the Manager the Management Fee pursuant to Section 5(c)(ii) following the termination of this Agreement pursuant to Sections 5(b)(ii)(B), (C) or (D) or Sections 5(b)(iii)(A), (B) or (C), none of Manager, Vento, Sullivan or any of their respective Affiliates shall, 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. (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, none of Manager, Vento, Sullivan or any of their respective Affiliates shall disclose any trade secrets, customer lists, drawings, designs, information regarding product development, marketing plans, sales plans, manufacturing 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 Manager's, Vento's, Sullivan's or any of their respective Affiliates' breach of this Section 6(b)), except that Manager, Vento, Sullivan and their respective Affiliates may disclose Confidential Information to the extent advisable in their sole discretion in connection with (i) the performance of Manager's duties hereunder, or (ii) the issuance of Company securities, or (iii) obtaining financing for the Company, or (iv) the enforcement of Manager's fights under this Agreement, or (v) any disclosures that may be required by law, including securities laws. -11- (c) Company Property. Promptly following the termination of this ---------------- Agreement, Manager, Vento and Sullivan shall return to the Company all property of the Company, and all copies thereof in its possession or under its control, and all tangible embodiments of Confidential Information in its possession in whatever media such Confidential Information is maintained. (d) Non-Solicitation of Employees. During the Term and for one year ----------------------------- thereafter, none of Manager, Vento, Sullivan or any of their respective Affiliates will 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. (e) Injunctive Relief with Respect to Covenants. Manager, Vento and ------------------------------------------- Sullivan acknowledge and agree that the covenants and obligations 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, Manager, Vento and Sullivan agree 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 Manager, Vento and Sullivan from committing any violation of the covenants and obligations contained in this Section 6. These injunctive remedies are cumulative and are in addition to any other fights and remedies the Company may have at law or in equity. Notwithstanding the foregoing, in the event that this Agreement is terminated by the Company pursuant to Section 5(b)(ii)(A) by reason of the indictment or conviction of Vento, Sullivan or the Manager of any felony or any act constituting fraud, misappropriation or embezzlement due to the wrongful acts of either Vento or Sullivan, that materially adversely effects the Company or the Business monetarily or otherwise (as determined by a majority vote of the Board of Directors (excluding Vento and Sullivan), Sullivan or Vento, as applicable, shall sell to the Company, and the Company shall purchase from Vento or Sullivan, as applicable, all of the Shares (whether or not vested) at a price per share equal to $.01 per Share, it being understood that in the event that the Company shall have terminated this Agreement by reason of any such event, and either Vento or Sullivan shall not have been indicted for or been convicted of any felony or act constituting fraud, misappropriation or embezzlement that materially adversely effects the Company or the Business monetarily or otherwise (as determined by a majority vote of the Board of Directors (excluding Vento and Sullivan), such individual shall not be obligated to sell his vested Shares to the Company. Section 7. Vesting and Repurchase of Restricted Shares, Etc. ------------------------------------------------ (a) General. Each of Vento and Sullivan hereby agrees that the Management ------- Shares shall be subject to repurchase by the Company at a repurchase price of $.01 per share in accordance with the terms of this Section 7. As used in this Section 7, the following terms have the following meanings: -12- (i) "Base Shares" means 14,425.49 shares of Class A Voting Common Stock and 14,155.78 shares of Series E Preferred Stock or, if the Supplemental Shares have theretofore been repurchased pursuant to Section 7(b)(i)(v) or 7(b)(ii), 13,816.91 shares of Class A Voting Common Stock and 13,569.18 shares of Series E Preferred Stock. (ii) "Deemed Per Share Value" means (A) in the case of an Extraordinary Event specified in clause (x) or (y) of the definition thereof, (1) the fair market value of all of the assets of the Company and its Subsidiaries at the time of any calculation of such value, less (x) any expenses which would be incurred solely in connection with the disposition of such assets, (y) the aggregate amount of all liabilities of the Company and (z) the aggregate redemption price of all outstanding shares of all series of Preferred Stock of the Company that are not then convertible into Common Stock at the option of the holder thereof (or, if any such series is not then redeemable, the aggregate liquidation preference thereof), all as determined in good faith by the Board of Directors (excluding Vento and Sullivan), divided by (2) the number of shares of Common Stock outstanding on a Fully Diluted Basis, and (B) in the case of an Extraordinary Event specified in clause (z) of the definition thereof, the per share offering price of the Common Stock issued in connection with the public offering occurring on the IPO Date. (iii) "Extraordinary Event" means (x) the consummation of a Company Merger (as defined in the Stockholders Agreement) after giving effect to which the Cash Equity Investors in the aggregate shall beneficially own on a Fully Diluted Basis less than 33% of the capital stock or other equity interests in the surviving entity, (y) the consummation of a Company Sale (as defined in the Stockholders Agreement) or (z) the occurrence of the IPO Date. (iv) "Extraordinary Event Shares" means a number of Management Shares equal to 3,606.38 shares of Class A Voting Common Stock, or, if the Supplemental Shares have theretofore been repurchased pursuant to Section 7(b)(i)(v) or 7(b)(ii), 3,454.22 shares of Class A Voting Common Stock. (v) "Fully Diluted Basis" means, with respect to the shares of Common Stock outstanding, all of the shares of all classes of Common Stock then outstanding (regardless of whether subject to repurchase), plus all the shares of Common Stock issuable upon the exercise of outstanding options or convertible securities that are then convertible into Common Stock at the option of the holder thereof, provided that for the purpose of calculating the number of -------- shares 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) (iii) equals (A) more than 30% but less than 35%, none of the Extraordinary Event Shares shall be deemed to be outstanding, and (B) 35% or more, one-half of the Extraordinary Event Shares shall be deemed to be outstanding. (vi) "Management Shares" means collectively, the shares of Series E Preferred Stock and Class A Voting Common Stock issued to each of Vento and Sullivan pursuant to Section 2.5 of the Securities Purchase Agreement. (vii) "Restricted Holder" means each of Vento and Sullivan. -13- (viii) "Supplemental Shares" means 586.60 shares of Series E Preferred Stock and 760.74 shares of Class A Voting Common Stock. (b) Repurchase of Shares. -------------------- (i) Repurchase Upon Termination. Following the termination of this --------------------------- Agreement for any reason, each Restricted Holder shall sell to the Company, and the Company shall purchase from each Restricted Holder: (v) first, if and only if the termination occurs prior to January 23, 2000 and the Supplemental Closing shall not have theretofore occurred, such Restricted Holder's Supplemental Shares, (w) second, if and only if the termination occurs prior to the occurrence of an Extraordinary Event, such Restricted Holder's Extraordinary Event Shares; (x) third, if and only if the termination occurs after the occurrence of an Extraordinary Event, such Restricted Holder's Extraordinary Event Shares that have not theretofore vested pursuant to Schedule II: (y) fourth, such Restricted Holder's Base Shares that have not theretofore vested pursuant to Schedule II; and (z) fifth, the number of shares of Series E Preferred Stock and Class A Common Stock subject to repurchase pursuant to Sections 5(f) and 6(e). (ii) Repurchase In Absence of Supplemental Closing. If and only if --------------------------------------------- the Supplemental Closing shall not have occurred on or before January 23, 2000, each Restricted Holder shall sell to the Company, and the Company shall purchase from each Restricted Holder, his Supplemental Shares. (iii) Repurchase Upon Extraordinary Event. Upon the occurrence of an ----------------------------------- Extraordinary Event, each Restricted Holder shall sell to the Company, and the Company shall purchase from each Restricted Holder, the percentage of his Extraordinary Event Shares set forth opposite the Internal Rate of Return realized by the Cash Equity Investors as set forth on the chart below in connection with the applicable Extraordinary Event: Internal Rate of Return Realized by Percentage of Extraordinary Cash Equity Investors Event Shares to be Repurchased --------------------- ------------------------------ less than 30% 100% 30% or more but less 50% than 35% 35% or more 0% For the purpose of this paragraph, 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 actually made in respect of the Cash Equity Investors' Series C Preferred Stock and 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 aggregate -14- redemption price of all outstanding shares of Series C Preferred Stock then Beneficially Owned by the Cash Equity Investors, plus the product of the Deemed Per Share Value multiplied by the number of shares of all classes of Common Stock then owned by the Cash Equity Investors, 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) The Management Shares repurchased pursuant to this Section 7(b) are sometimes referred to, collectively, as the "Repurchased Shares." (c) Closing of Repurchase; Assignment of Repurchase Right. The closing of ----------------------------------------------------- a purchase and sale of Repurchased Shares shall take place on a date mutually agreed by the applicable Restricted Holder and the Company, but in no event later than 30 days after (i) in the case of Section 7(b)(i), the date that this Agreement terminated or, in the case of Section 7(b)(i)(z), the end of any 30- day period referred to in Section 5(f) or (ii) in the case of Section 7(b)(ii), January 23, 2000, or (iii) in the case of Section 7(b)(iii), the occurrence of the Extraordinary Event. At such closing, the Company shall deliver to the applicable Restricted Holder 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 Repurchased 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 the shares of Preferred Stock and/or Common Stock being repurchased by the Company. Whenever the Company shall have the right to repurchase Preferred Stock and/or Common Stock 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 Preferred Stock and/or Common Stock. (d) Escrow of Shares. The Certificate(s) representing all shares, subject ---------------- to repurchase pursuant to Section 7 (b) shall be held by the Secretary of the Company as escrow holder (the "Escrow Holder"), along with a stock power executed by the applicable Restricted Holder 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 (excluding Vento and Sullivan). 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. If the Company or any assignee repurchases any of the Management 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 a Restricted Holder's request, the Escrow Holder shall: (i) cancel the certificate(s) held by the Escrow Holder and representing Management Shares, (ii) cause new certificate(s) to be issued representing the number of Management Shares no longer subject to repurchase pursuant to this Section 7, which certificate(s) the Escrow Holder shall deliver to such Restricted Holder, and (iii) cause new certificate(s) to be issued representing the balance of the Management 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, a Restricted Holder shall have all the rights of stockholder with respect to the Management Shares while they are held in escrow, -15- including without limitation, the right to vote the Management 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 Management 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 Restricted Holder is entitled by reason of his ownership of the Management Shares shall be immediately subject to this escrow, deposited with the Escrow Holder and included thereafter as "Management Shares" for purposes of this Agreement and the Company's repurchase right. (e) Legends. The share certificates evidencing the Management 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 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. After the IPO Date, each of Vento and Sullivan shall have the right to exchange certificates evidencing the number of Management Shares no longer subject to repurchase pursuant to this Section 7, for certificates that do not contain the legend set forth above. Section 8. Limitations of Liability. ------------------------ (a) Force Majeure. Neither of the parties will be liable for ------------- nonperformance or defective or late performance of any of its obligations hereunder to the extent and for such periods of time as such nonperformance, defective performance or late performance is due to reasons outside such party's control, including acts of God, war (declared or undeclared), acts (including failure to act) of any governmental authority, riots, revolutions, fire, floods, explosions, sabotage, nuclear incidents, lightning, weather, earthquakes, storms, sinkholes, epidemics, strikes, or delays of suppliers or subcontractors for the same causes. Neither party shall be required to settle any labor dispute in any manner which is deemed by that party to be less than totally advantageous, in that party's sole discretion. (b) Exculpation of Manager. Notwithstanding any other provision of this ---------------------- Agreement, Manager shall not be liable for any failure or delay in its performance hereunder (except with respect to its performance of its obligations under Section 5(f)) or for any performance which is substandard, except where such failure, delay or substandard performance is the result of willful misconduct or gross negligence on the part of Manager. (c) No Consequential or Special Damages. Manager shall not be ----------------------------------- responsible to the Company for any indirect, incidental, consequential or special damages to the Company, the Business or any subscriber or customer of any Business or any other person, including any -16- damage to or loss of revenues, business or goodwill, suffered by any person or entity for any failure of any system or failure of performance hereunder. Manager's liability to the Company in respect of any such failure shall be limited (in addition to the limits set forth in paragraphs (a) and (b) above) to the amounts paid by the Company to Manager pursuant to this Agreement for the period of any such failure. (d) Vento and Sullivan. The limitations of liabilities set forth in ------------------ paragraphs (a), (b) and (c) above shall apply to Vento's and Sullivan's obligation to use good faith efforts to cause the Manager to perform all of its obligations pursuant to this Agreement. Section 9. Books and Records. Manager shall keep or cause to be kept ----------------- accounts and complete books and records with respect to its management of the operation of the Business, showing all costs, expenditures, allocations, receipts, revenues, assets, and liabilities; any and all other records necessary, convenient or incidental to recording the financial aspects of the operation of the Business and sufficient to record the profits and losses generated by the operation of the Business. Within 15 days after the end of each month Manager shall prepare or cause to be prepared and transmit to the Company unaudited statements, which shall include a general ledger and a trail balance. Manager shall also provide at the Company's request any and all such additional statements or reports as may be reasonably necessary to the Company's oversight and control of the Business. The Company shall have control over and access, at all reasonable times during normal business hours, to the books and records maintained by Manager pursuant to this Section 9. Section 10. Dispute Resolution. ------------------ (a) Dispute Resolution. The parties desire to resolve disputes arising ------------------ out of this Agreement without litigation. Accordingly, except for action seeking a temporary restraining order injunction related to the purposes of this Agreement, or suit to compel compliance with this dispute resolution process, the parties agree to use the dispute resolution procedures set forth in Section 10 as their sole remedy with respect to any controversy or claim arising out of or relating to this Agreement or its breach. At the written request of any party, the parties to the dispute will appoint knowledgeable, responsible representatives to meet and negotiate in good faith to resolve any dispute arising under this Agreement. The parties intend that these negotiations be conducted by business representatives, including at least one senior executive of each party to the dispute. The location, format, frequency, duration and conclusion of these discussions shall be left to the discretion of the representatives. Discussion and correspondence among the representatives for purposes of these negotiations shall be treated as confidential information developed for purposes of settlement, exempt from discovery and production, which shall not be admissible in the arbitration described below. Documents identified in or provided with such communications, which are not prepared for purposes of the negotiations, are not so exempted and may, if otherwise admissible, be admitted in evidence in the arbitration or lawsuit. (b) Mediation. If the negotiations set forth in Section 10(a) do not --------- resolve the dispute within thirty (30) days of the initial written request, the parties agree to work in good faith to settle the dispute by mediation under the commercial mediation rules of the American -17- Arbitration Association. The parties will attempt to agree on a mediator. If they are unable to do so, the mediation will be referred to the New York, New York office of the American Arbitration Association for mediation which will appoint a qualified mediator to serve. The mediation shall take place in New York, New York or such other location as mutually agreed upon by the parties. Unless the parties agree otherwise, the first mediation session shall take place no later than ten (10) days after the initial written request to negotiate. The mediation shall continue until the dispute is resolved or until such time as the mediator makes a good faith determination that the likelihood of resolution is sufficiently remote that continuation of the mediation is not warranted. (c) Arbitration. If the mediation conducted pursuant to Section 10(b) ----------- does not resolve the dispute within thirty (30) days of the commencement of mediation, or if prior to the expiration of such thirty (30) day period the mediator determines that continuation of the mediation process is not warranted, the dispute shall be submitted to binding arbitration by a panel of three arbitrators pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Any party may demand such arbitration in accordance with the procedures set out in those rules. Each party shall have the right to take the deposition of up to five individuals (or a larger number of individuals with the consent of two of the three arbitrators), and any expert witness designated by the other party. Each party shall also have the right to request production of relevant documents, the scope and enforcement of which shall be governed by the arbitrator. Additional discovery may be only by order of the arbitrator, and only upon a showing of substantial need. The arbitrator shall be authorized to issue subpoenas for the purpose of requiring attendance of witnesses at depositions. The arbitration hearing shall be commenced within ten (10) days of the determination that mediation is not going to be successful. The arbitration shall be held in New York, New York or such other location as mutually agreed upon by the parties. The arbitrator shall control the scheduling so as to process the matter expeditiously. The parties may submit written briefs. The arbitrator shall rule on the dispute by issuing a written opinion within thirty (30) days after the close of hearings. The times specified in this section may be extended upon mutual agreement of the parties or by the arbitrator upon a showing of good cause. The award rendered by arbitration shall be final, binding and nonappealable judgment and the aware may be entered in any court of competent jurisdiction in the United States. Special, consequential or punitive damages shall not be awarded by the arbitrator. (d) Confidentiality. The parties agree that all communications and --------------- negotiations between the parties during the dispute resolution process, any settlements agreed upon during the dispute resolution process and any information regarding the other party obtained during the dispute resolution process (that are not already public knowledge) are confidential and may be disclosed only to employees and agents of the parties who shall have a "need to know" the information and who shall have been made aware of the confidentiality obligations set forth in this Section, unless the party is required by law to disclose such information. (e) Fees and Expenses. The parties shall equally split the fees of the ----------------- mediator and the arbitrator. Any party found by the arbitrator to have breached this Agreement shall pay all other out-of-pocket costs and expenses, including reasonable attorneys' fees and expenses, of the other party incurred in connection with the dispute resolution process. If the arbitrator does not find -18- that any party has breached this Agreement, then each party shall bear its own costs and expenses, including attorneys' fees and expenses. Section 11. Inspection Rights; Delivery of Information. ------------------------------------------ (a) Company's Right to Inspect. Manager will permit representatives of -------------------------- the Company, at the Company's cost, during normal business hours and upon not less than five business days' advanced written request, to (i) visit and inspect during normal business hours Manager's properties and facilities which are utilized in connection with Manager's provision of services to the Company pursuant to this Agreement, including without limitation access to, and the right to make copies of, books and records of the Company located at such properties and facilities, and (ii) discuss with Manager's officers and employees such properties and facilities and Manager's provision of services to the Company pursuant to this Agreement. All such information shall be held in confidence by the Company, except for disclosures made to the Company's advisors, lenders and investors, or as required to be disclosed by process of law or other applicable law. (b) Notice of Certain Events. Promptly and in any event within three (3) ------------------------ business days after Manager has received notice or has otherwise become aware thereof, Manager shall give the Company notice of (i) the commencement of any material proceeding or investigation against the Company or Manager by or before any governmental body or in any court or before any arbitrator which would be likely to have a material adverse effect on Manager, the Business or the Company, or on Manager's ability to perform its obligations hereunder, and (ii) the occurrence or nonoccurrence of any event (x) which constitutes, or which with the passage of time or giving of notice or both would constitute, a default by the Company or Manager under this Agreement or under any other material agreement to which the Company or Manager is a party or by which its properties may be bound, and (y) would be likely to have a material adverse effect on Manager, the Business or the Company, or on Manager's ability to perform its obligations hereunder, giving in each case the details thereof and specifying the action being taken or proposed to be taken with respect thereto. Promptly upon receipt thereof, Manager shall deliver to the Company copies of any material notice or report regarding any License from the grantor of such license or from any Governmental authority regarding the Business or the Company. (c) Other Information. From time to time and promptly upon each request, ----------------- Manager shall provide the Company with such data, certificates, reports, statements, financial projections, documents or further information regarding the business, equity owners, assets, liabilities, financial position or results of operations of Manager, as may be reasonably requested by the Company. Section 12. Representations and Warranties. Each party makes the ------------------------------ following representations and warranties to the other party, as a material inducement to the other party to enter into this Agreement. (a) Organization and Standing of Parties. Each party is a limited ------------------------------------ liability company and is duly organized, validly existing and in good standing under the laws of the State of its formation referenced in the first paragraph of this Agreement. Each party has full limited -19- liability company power and authority to own its assets and carry on its business as now conducted by it. (b) Execution, Delivery, Performance and Binding Effect. The execution, --------------------------------------------------- delivery and performance by each party of this Agreement have been duly authorized by all necessary limited liability company or corporate action, as appropriate, including by each party's members or managers, as appropriate. Each party has full power and authority to enter into and perform its obligations under this Agreement. The execution, delivery and performance by such party of this Agreement will not (with the passage of time or giving of notice or both) conflict with, violate any provision of, result in the breach of, or constitute a default under (i) such party's articles of organization, certificate of incorporation, regulations, or other constituent, organizational or governing documents, as applicable, (ii) any License held by such party, (iii) any Law, (iv) any order, writ, injunction, decree, judgment or regulation of any Governmental Agency or (v) any contract, agreement, arrangement or understanding, (A) to which such party is a party, (B) to which or by which such party is subject or bound, or (C) to which or by which such party's assets are subject or bound. The execution, delivery and performance of this Agreement will not (with the passage of time or giving of notice or both) (i) create or impose any Lien upon the assets of such party, (ii) result in the termination, suspension, modification or impairment of any contract, agreement, arrangement or understanding (A) to which such party is a party, (B) to which, or by which, such party is subject or bound, or (C) to which or by which such party's assets are subject or bound, or (iii) result in the termination, suspension, modification or impairment of any governmental license, permit, authorization or certificate held by such party or relating to its assets or businesses. This Agreement constitutes the legal, valid and binding obligation of such party enforceable against it in accordance with its terms. (c) Consents. No consent, approval, order or authorization of, or -------- registration, qualification, designation, declaration or filing with, any Governmental Authority or other Person is required on the part of each party in connection with the execution, delivery and performance of this Agreement. (d) Litigation; Claims. With respect to each party, there is no claim, ------------------ action, audit, arbitration, dispute, investigation, suit, litigation or legal proceeding pending, or to the best of such party's knowledge threatened, against such party (i) relating to or otherwise affecting such party's ability to execute and deliver this Agreement or to perform such party's obligations hereunder, or (ii) which would materially adversely affect the Company or the Company's contemplated business. (e) Court Orders, Decrees, Judgments, Etc. There is outstanding no order, ------------------------------------- writ, injunction, decree or judgment of any court, governmental agency or arbitration tribunal against a party (i) relating to or otherwise affecting such party's ability to execute and deliver this Agreement or to perform such party's obligations hereunder or (ii) which would materially adversely affect the Company or the Company's contemplated business. Section 13. Indemnification; Expenses. ------------------------- (a) Indemnification. In the event Vento or Sullivan (each, an --------------- "Indemnified Party") is threatened to be made a party to any threatened, pending, or completed action, suit, or -20- proceeding (a "Proceeding"), whether civil, criminal, administrative, or investigative (whether or not by or in the right of the Company), by reason of the fact that such person is or was a director, officer, incorporator, employee, or agent of the Company, or is or was serving at the request of the Company as a director, officer, incorporator, employee, partner, trustee, or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise (including the Manager) (an "Other Entity"), shall be entitled to be indemnified by the Company to the full extent then permitted by law against expenses (including counsel fees and disbursements), judgments, fines (including excise taxes assessed on a person with respect to an employee benefit plan), and amounts paid in settlement incurred by him in connection with such Proceeding. (b) Advancement of Expenses. The Company shall, from time to time, ----------------------- reimburse or advance to any Indemnified Party the funds necessary for payment of expenses, including attorneys' fees and disbursements, incurred in connection with any Proceeding, in advance of the final disposition of such Proceeding; provided, however, that, if (and only if) required by the Delaware General Corporation Law, such expenses incurred by or on behalf of any such Indemnified Party may be paid in advance of the final disposition of a Proceeding only upon receipt by the Company of an undertaking, by or on behalf of such Indemnified Party, to repay any such amount so advanced if it shall ultimately be determined by final judicial decision from which there is no further right of appeal that such Indemnified Party is not entitled to be indemnified for such expenses. Section 14. Miscellaneous. ------------- (a) Counterparts. This Agreement may be executed by one or more of the ------------ parties hereto in any number of counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. (b) Construction. Each of the parties hereto acknowledge that it has ------------ reviewed this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments hereto. (c) Benefit; Assignment. This Agreement shall be binding upon and inure ------------------- to the benefit of all parties hereto and their respective successors and permitted assigns; provided, however, that Manager shall not assign or otherwise transfer its rights and obligations under this Agreement without the Company's prior written consent. Any sale, assignment, sublease or other transfer in violation of this Section 14(c) shall be null and void. Each of the Stockholders (as such term is defined in the Stockholders Agreement) shall be deemed a third party beneficiary of the Company's rights under this Agreement and shall be permitted to exercise any rights pursuant to this provision with the consent of AT&T and two-thirds in interest of the Cash Equity Investors. (d) Complete Agreement. This document and the exhibits attached hereto ------------------ and each of the documents referred to herein embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements, or representations -21- by or among the parties written or oral, which may have related to the subject matter hereof in any way. (e) Amendment. This Agreement may not be amended except by a writing --------- signed by each of the parties. (f) Governing Law. This Agreement shall be governed by and construed in ------------- accordance with the internal laws, and not the laws of conflict, of the State of New York. (g) Severability. If any provision of this Agreement or the application ------------ thereof to any person or circumstance shall for any reason or to any extent be invalid or unenforceable, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected thereby, but, rather, shall be enforced to the extent permitted by law. Furthermore, in lieu of such an illegal, invalid or unenforceable provision, there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid or enforceable. (h) Further Assurances. The parties agree that they will take all such ------------------ further actions and execute and deliver all such further instruments and documents as may be required in order to effectuate the agreements set forth In this Agreement. (i) Waiver. No failure or delay on the part of the parties or any of ------ them in exercising any right, power or privilege hereunder, nor any course of dealing among the parties or any of them shall operate as a waiver of any such right, power or privilege nor shall any single or partial exercise of any such right, power or privilege preclude the simultaneous or later exercise of any other right, power or privilege. The rights and remedies herein expressly provided are cumulative and are not exclusive of any rights or remedies which the parties or any of them would otherwise have. (j) Notices. All notices and communications hereunder shall be in ------- writing and shall be deemed to have been duly given to a party when delivered in person (including delivery by an express delivery service or by facsimile transmission during the recipient's regular business hours) to an officer of the Company or Manager, respectively, or three business days after such notice is enclosed in a properly sealed envelope, certified or registered, and deposited (postage and certification or registration prepaid) in a post office or collection facility regularly maintained by the United States Postal Service and addressed as follows: -22- If to Manager: TeleCorp Management Corp. 1101 17th Street, NW - Suite 900 Washington, D.C. 20036 Attn: Chief Executive Officer Telephone: (202) 721-0230 Facsimile: (202) 833-4888 with a copy to: TeleCorp Management Corp. 1101 17th Street, NW- Suite 900 Washington, D.C. 20036 Attention: General Counsel Telephone: (202) 721-0230 Facsimile: (202) 833-4888 If to the Company: TeleCorp PCS, Inc. 1101 17th Street, NW - Suite 900 Washington, D.C. 20036 Attn: Chief Executive Officer Telephone: (202) 721-0230 Facsimile: (202) 833-4888 With copies to: TeleCorp Management Corp. 1101 17th Street, NW - Suite 900 Washington, D.C. 20036 Attention: General Counsel Telephone: (202) 721-0230 Facsimile: (202) 833-4888 AT&T Wireless Services, Inc. 5000 Carillon Point Kirkland, Washington 98033 Attention: William W. Hague Telephone: (425) 828-8461 Facsimile: (425) 828-8451 And -23- AT&T Corp. 295 North Maple Avenue Basking Ridge, NJ 07920 Attention: Corporate Secretary Telephone: Facsimile: (908) 953-4657 and Friedman Kaplan & Seiler LLP 875 Third Avenue, 8th Floor New York, New York 10022 Attention: Daniel M. Taitz Telephone: (212) 833-1109 Facsimile: (212) 355-6401 and Rubin Baum Levin Constant & Friedman 30 Rockefeller Plaza New York, New York 10112 Attention: Gregg S. Lerner, Esq. Telephone: (212) 698-7705 Facsimile: (212) 698-7825 and To each Cash Equity Investor, to its address set forth on Schedule I to the Stockholders Agreement. and Mayer, Brown & Platt 1675 Broadway New York, New York 10019 Attention: Mark S. Wojciechowski, Esq. Telephone: (212) 506-2525 Facsimile: (212) 262-1910 or to such other addresses as either party may designate in a written notice served upon the other party in the manner provided herein. *** -24- IN WITNESS WHEREOF, the parties have set their hands effective as of the date first written above. COMPANY: TELECORP PCS, INC. By: /s/ Thomas H. Sullivan --------------------------------------- Name: Title: Executive Vice President MANAGER: TELECORP MANAGEMENT CORP. By: /s/ Thomas H. Sullivan --------------------------------------- Name: Title: President In order to induce the Company to execute and deliver the foregoing Management Agreement, by their execution in the spaces provided below each of the undersigned hereby agrees to be bound by the provisions of Sections 5(f), 6 and 7 of this Agreement and (subject to the limitations on liability set forth in Section 8(d)) to use good faith efforts to cause the Manager to perform all of its obligations pursuant to this Agreement. /s/ Gerald Vento - -------------------------- Gerald Vento /s/ Thomas Sullivan - -------------------------- Thomas Sullivan -25- I-1 SCHEDULE II Vesting Schedule ---------------- Vesting of Vento's and Sullivan's Non-Extraordinary Event Shares. - ---------------------------------------------------------------- Vento's and Sullivan's Management Shares (other than his Extraordinary Event Shares) shall vest on the Effective Date, the completion of the Minimum Build-Out Plan (as defined in the Stockholder Agreement) and on the specified anniversaries of the Effective Date as follows:
Vesting Date Percent of 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 plus aggregate POP coverage of 60% of total POPs (based on 1995 POPs, as defined in the Stockholder's Agreement) 10% -- Total 100%
Accelerated Vesting of Vento's and Sullivan's Non-Extraordinary Event Shares. - ---------------------------------------------------------------------------- In the event of a termination of the Management Agreement by Manager pursuant to Section 5(b)(iii)(A), (B) or (C) or a termination by the Company pursuant to Section 5(b)(ii)(B), (C) or (D), in addition to any of Vento's and Sullivan's Management Shares that shall have theretofore vested in accordance with the above "Vesting of Vento's and Sullivan's Non-Extraordinary event Shares" schedule, a number of each of Vento's and Sullivan's unvested Base Shares determined as set forth below shall immediately vest (and shall not be subject to repurchase by the Company): (a) in the event that the date of termination is no more than six months after the Commencement Date or no more than six months after the most recent Anniversary Date, a pro II-1 rata portion (based upon the actual number of days since the Commencement Date or the Anniversary Date) of the number of shares (if any) that would have vested on the immediately following Anniversary Date; and (b) in the event that the date of termination is more than six months after the Effective Date or more than six months after the most recent Anniversary Date, all of the shares (if any) that would have vested on the immediately following Anniversary Date. Vesting of Vento's and Sullivan's Extraordinary Event Shares. - ------------------------------------------------------------ Vento's and Sullivan's Extraordinary Event Shares, to the extent not repurchased in connection with an Extraordinary Event, shall vest (A) in the case of an Extraordinary Event described in Section 7(a)(iii)(x) or (y), on the date of consummation of the Extraordinary Event, and (B) in the case of an Extraordinary Event described in Section 7(a)(iii)(z), on the IPO Date and the specified anniversaries of such date as follows:
Vesting Date Percent of Shares - ------------ ----------------- IPO Date 50% First Anniversary 16-2/3% Second Anniversary 16-2/3% Third Anniversary 16-2/3% ------ Total 100.00
II-2 EX-10.5.2 11 AMENDMENT #1 TO MANAGEMENT AGREEMENT EXHIBIT 10.5.2 AMENDMENT NO. 1 TO MANAGEMENT AGREEMENT Between TELECORP MANAGEMENT CORP. and TELECORP PCS, INC. Dated as of May 25, 1999 AMENDMENT NO. 1 TO ------------------ MANAGEMENT AGREEMENT -------------------- This Amendment No. 1 to Management Agreement (the "Amendment") is entered into as of May 25, 1999 by and between TELECORP MANAGEMENT CORP., a Delaware corporation ("Manager"), and TELECORP PCS, INC., a Delaware corporation (the "Company"). WITNESSETH: WHEREAS, the Company and Manager entered into that certain Management Agreement dated as of July 17, 1998 (the "Management Agreement"); WHEREAS, the Company and Manager wish to amend the Management Agreement in order to impose certain restrictions on the additional securities of the Company issued to the stockholders of Manager in conjunction with the expansion of the Company's Territory from the continental United States (the "Domestic Market") into the San Juan MTA (the "Puerto Rico Market"); NOW, THEREFORE, for and in consideration of the premises, the covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are acknowledged by the execution and delivery hereof, the parties agree as follows: Amendment 1. The Third "WHEREAS" clause n the recitals of the Management ----------- Agreement is hereby amended and restated as follows: "WHEREAS, Gerald Vento ("Vento") and Thomas Sullivan ("Sullivan") are the owners of all of the ownership interests in Manager and are each the of record and beneficial owner of the shares of the Common Stock and Preferred Stock described on Schedule A attached hereto (hereafter referred to collectively as the "Shares") which were issued in conjunction with the closings under the Securities Purchase Agreement (the "Domestic Market Closing") and the Puerto Rico Stock Purchase Agreement (the "Puerto Rico Market Closing"), respectively;" Amendment 2. Section 2 of the Management Agreement is hereby amended and ----------- restated in its entirety as follows: "Section 2. Management Standards. Manager shall discharge its duties -------------------- hereunder in compliance with the Stockholders Agreement, the Network Membership License Agreement, the Resale Agreement and the Roaming Agreement (collectively as the same have been or may be amended from time to time the "Operating Agreements") and all applicable Law. In performing its obligations hereunder, Manager shall act in a manner that it reasonably believes to be in or not opposed to the best interests of the Company consistent with the standards set forth herein. Nothing in this Agreement shall be construed as constituting Manager an agent of the Company beyond the extent expressly provided in, and as limited by, this Agreement." Amendment 3. Section 5(f)(ii) of the Management Agreement is hereby ----------- amended and restated in its entirety as follows: "(ii) Within five (5) business days after the nomination by the Board of Directors of a New Provider, each of Vento and Sullivan agrees to nominate a successor Person or group of Persons (collectively, a "Successor Control Group") that would not cause a significant detrimental effect on the eligibility of the Company to hold a Block F PCS license and to realize the benefits, if any, that the Company derives from its status as a "very small business," as defined in 47 CFR Section 24.720(b)(2), to whom the Voting Preference Common Stock and the Class C Common Stock set forth on Schedule A (the "Class C Common Stock") shall be transferred by Vento and Sullivan, which Successor Control Group shall be reasonably acceptable to the Board of Directors in its sole discretion (excluding Vento and Sullivan); it being understood that the New Provider shall be deemed to be a Successor Control Group reasonably acceptable to the Board of Directors. In the event that Vento and Sullivan do not nominate a Successor Control Group reasonably acceptable to the Board of Directors in its sole discretion (excluding Vento and Sullivan) within such five (5) business day period, then for each successive 30 day period or portion thereof that Vento and Sullivan shall not have nominated a Successor Control Group reasonably acceptable to the Board of Directors in its sole discretion (excluding Vento and Sullivan), each of Vento and Sullivan shall sell to the Company after the expiration of each 30 day period, in addition to any other Repurchased Shares, and after giving effect to the repurchase by the Company of Shares pursuant to Section 5(f)(i), an additional 50% of the Shares then owned by each of them at a price per share equal to $.01 per Share. Immediately after a Successor Control Group reasonably acceptable to the Board of Directors is nominated, the Company, Vento and Sullivan shall take, or cause to be taken, all actions necessary or required, including, without limitation, filing of all applications with the FCC, to obtain all requisite consents and authorizations to permit the transfer of the Voting Preference Common Stock and Class C Common Stock to the Successor Control Group. On the first business day after all such consents and authorizations shall have been obtained, Vento and Sullivan agree to resign as directors and officers of the Company and to sell to the Successor Control Group all of the shares of Voting Preference Common Stock and Class C Common Stock owned by them for the per share price paid by them for such shares. If at any time, whether by reason of the inability of the Company to obtain all requisite consents and authorizations to permit the transfer of the Voting Preference Common Stock and Class C Common Stock to the Successor Control Group or otherwise, the Board of Directors withdraws its consent to the nomination of a Successor Control Group, the procedure outlined in Sections 5(f)(i) and (ii) shall be repeated commencing with the nomination by Vento and 2 Sullivan of a Successor Control Group within five (5) business days after the nomination by the Board of Directors of a successor New Provider." Amendment 4. Sections 7(a) and 7(b) of the Management Agreement are ----------- hereby amended and restated in their entirety as follows: "Section 7. Vesting and Repurchase of Restricted Shares, Etc. ------------------------------------------------- (a) General. Each of Vento and Sullivan hereby agrees that the ------- Shares shall be subject to repurchase by the Company at a repurchase price of $.01 per share in accordance with the terms of this Section 7. As used in this Section 7, the following terms have the following meanings: (i) "Base Shares" means 18,655.65 shares of Class A Voting Common Stock and 18,219.13 shares of Series E Preferred Stock. (ii) "Deemed Per Share Value" means (A) in the case of an Extraordinary Event specified in clause (x) or (y) of the definition thereof, (1) the fair market value of all of the assets of the Company and its Subsidiaries at the time of any calculation of such value, less (x) any expenses which would be incurred solely in connection with the disposition of such assets, (y) the aggregate amount of all liabilities of the Company and (z) the aggregate redemption price of all outstanding shares of all series of Preferred Stock of the Company that are not then convertible into Common Stock at the option of the holder thereof (or, if any such series is not then redeemable, the aggregate liquidation preference thereof), all as determined in good faith by the Board of Directors (excluding Vento and Sullivan), divided by (2) the number of shares of Common Stock outstanding on a Fully Diluted Basis, and (B) in the case of an Extraordinary Event specified in clause (z) of the definition thereof, the per share offering price of the Common Stock issued in connection with the public offering occurring on the IPO Date. (iii) "Extraordinary Event" means (x) the consummation of a Company Merger (as defined in the Stockholders Agreement) after giving effect to which the Cash Equity Investors in the aggregate shall beneficially own on a Fully Diluted Basis less than 33% of the capital stock or other equity Interests in the surviving entity (exclusive of any previously existing ownership interest in any entity party to the Company Merger other than the Company), (y) the consummation of a Company Sale (as defined in the Stockholders Agreement) or (z) the occurrence of the IPO Date. (iv) "Extraordinary Event Shares" means a number of Shares equal to 4,663.92 shares of Class A Voting Common Stock. (v) "Fully Diluted Basis" means, with respect to the shares of Common Stock outstanding, all of the shares of all classes of Common Stock then outstanding (regardless of whether subject to repurchase), plus all the shares of Common 3 Stock issuable upon the exercise of outstanding options or convertible securities that are then convertible into Common Stock at the option of the holder thereof, 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) (iii) equals (A) more than 30% but less than 35%, none of the Extraordinary Event Shares shall be deemed to be outstanding, and (B) 35% or more, one- half of the Extraordinary Event Shares shall be deemed to be outstanding. (vi) "Restricted Holder" means each of Vento and Sullivan. (b) Repurchase of Shares. -------------------- (i) Repurchase Upon Termination. Following the termination of --------------------------- this Agreement for any reason, each Restricted Holder shall sell to the Company, and the Company shall purchase from each Restricted Holder: (v) first, if and only if the termination occurs prior to the occurrence of an Extraordinary Event, such Restricted Holder's Extraordinary Event Shares, (w) second, if and only if the termination occurs after the occurrence of an Extraordinary Event, such Restricted Holder's Extraordinary Event Shares that have not theretofore vested pursuant to Schedule B; (x) third, such Restricted Holder's Base Shares that have not theretofore vested pursuant to Schedule B, and (y) fourth, the number of shares of Series E Preferred Stock and Class A Common Stock subject to repurchase pursuant to Sections 5(f) and 6(e). (ii) Repurchase Upon Extraordinary Event. Upon the occurrence ----------------------------------- of an Extraordinary Event, each Restricted Holder shall sell to the Company, and the Company shall purchase from each Restricted Holder, the percentage of his Extraordinary Event Shares set forth opposite the Internal Rate of Return realized by the Cash Equity Investors as set forth on the chart below in connection with the applicable Extraordinary Event: Internal Rate of Return Realized by Percentage of Extraordinary Cash Equity Investors Event Shares to be Repurchased --------------------- ------------------------------ less than 30% 100% 30% or more but less 50% than 35% 35% or more 0% For the purpose of this paragraph, 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 actually made in respect of the Cash Equity Investors' Series C Preferred Stock and 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 4 the date of the calculation, plus the aggregate redemption price of all outstanding shares of Series C Preferred Stock then Beneficially Owned by the Cash Equity Investors, plus the product of the Deemed Per Share Value multiplied by the number of shares of all classes of Common Stock then owned by the Cash Equity Investors, 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. (iii) The Management Shares repurchased pursuant to this Section 7(b) are sometimes referred to, collectively, as the "Repurchased Shares." Amendment 5. All references to "Management Shares" in the Management ----------- Agreement are hereby amended to say "Shares". Amendment 6. Section 12(a) and Section 12(b) of the Management Agreement ----------- are hereby amended and restated in their entirety as follows: "(a) Organization and Standing of Parties. Each party is a corporation ------------------------------------ and is duly organized, validly existing and in good standing under the laws of the State of its incorporation referenced in the first paragraph of this Agreement. Each party has full corporate power and authority to own its assets and carry on its business as now conducted by it. (c) Execution, Delivery, Performance and Binding Effect. The --------------------------------------------------- execution, delivery and performance by each party of this Agreement have been duly authorized by all necessary corporate action, including by each party's board of directors. Each party has full power and authority to enter into and perform its obligations under this Agreement. The execution, delivery and performance by such party of this Agreement will not (with the passage of time or giving of notice or both) conflict with, violate any provision of, result in the breach of or constitute a default under (i) such party's certificate of incorporation or by-laws, (ii) any License held by such party, (iii) any Law, (iv) any order, writ, injunction, decree, judgment or regulation of any Governmental Agency or (v) any contract, agreement, arrangement or understanding, (A) to which such party is a party, (B) to which or by which such party is subject or bound, or (C) to which or by which such party's assets are subject or bound. The execution, delivery and performance of this Agreement will not (with the passage of time or giving of notice or both) (i) create or impose any Lien upon the assets of such party, (ii) result in the termination, suspension, modification or impairment of any contract, agreement, arrangement or understanding (A) to which such party is a party, (B) to which, or by which, such party is subject or bound, or (C) to which or by which such party's assets are subject or bound, or (iii) result in the termination, suspension, modification or impairment of any governmental license, permit, authorization or certificate held by such party or relating to its assets or businesses. This Agreement constitutes the legal, valid and binding obligation of such party enforceable against it in accordance with its terms." 5 Amendment 7. Section 14(j) of the Management Agreement is hereby amended ----------- and restated in its entirety as follows: "Notices. All notices and communications hereunder shall be in -------- writing and shall be deemed to have been duly given to a party when delivered in person (including delivery by an express delivery service or by facsimile transmission during the recipient's regular business hours) to an officer of the Company or Manager, respectively, or three business days after such notice is enclosed in a properly sealed envelope, certified or registered, and deposited (postage and certification or registration prepaid) in a post office or collection facility regularly maintained by the United States Postal Service and addressed as follows: If to Manager: TeleCorp Management Corp. 1010 N. Glebe Road - Suite 800 Arlington, Virginia 22201 Attn: Chief Executive Officer Telephone: (703) 236-1100 Facsimile: (703) 236-1376 With a copy to: TeleCorp Management Corp. 1010 N. Glebe Road - Suite 800 Arlington, Virginia 22201 Attention: General Counsel Telephone: (703) 236-1100 Facsimile: (703) 236-1376 If to the Company: TeleCorp PCS, Inc. 1010 N. Glebe Road - Suite 800 Arlington, Virginia 22201 Attn: Chief Executive Officer Telephone: (703) 236-1100 Facsimile: (703) 236-1376 With copies to: TeleCorp Management Corp. 6 1010 N. Glebe Road - Suite 800 Arlington, Virginia 22201 Attention: General Counsel Telephone: (703) 236-1100 Facsimile: (703) 236-1376 AT&T Wireless Services, Inc. 5000 Carillon Point Kirkland, Washington 98033 Attention: William W. Hague Telephone: (425) 828-8461 Facsimile: (425) 828-8451 and AT&T Corp. 295 North Maple Avenue Basking Ridge, NJ 07920 Attention: Corporate Secretary Telephone: Facsimile: (908) 953-4657 and Friedman Kaplan & Seiler LLP 875 Third Avenue, 8th Floor New York, New York 10022 Attention: Daniel M. Taitz Telephone: (212) 833-1109 Facsimile: (212) 355-6401 and To each Cash Equity Investor, to its address set forth on Schedule I to the Stockholders Agreement. 7 and Mayer, Brown & Platt 1675 Broadway New York, new York 10019 Attention: Mark S. Wojciechowski, Esq. Telephone: (212) 506-2525 Facsimile: (212) 262-1910 or to such other addresses as either party may designate in a written notice served upon the other party in the manner provided herein." Amendment 8. Schedule II to the Management Agreement is hereby amended ----------- and restated in its entirety as set forth in Schedule B hereto. All other terms and conditions of the Management Agreement shall remain in full force and effect. Capitalized terms used herein, but not otherwise defined herein, shall have the meaning set forth in the Management Agreement. 8 IN WITNESS WHEREOF, the parties have set their hands effective as of the date first written above. COMPANY: TELECORP PCS, INC. By: /s/ Thomas H. Sullivan -------------------------------- Name: Title: Executive Vice President MANAGER: TELECORP MANAGEMENT CORP. By: /s/ Thomas H. Sullivan -------------------------------- Name: Title: President In order to induce the Company to execute and deliver the foregoing Amendment No. 1 to Management Agreement, by their execution in the spaces provided below each of the undersigned hereby agrees to be bound by the provisions of Amendments 2, 3 and 7 of this Amendment. /s/ Gerald Vento - ------------------------ Gerald Vento /s/ Thomas Sullivan - ------------------------ Thomas Sullivan 9 SCHEDULE A ---------- Domestic Market Closing -----------------------
Series E Preferred Class A Common Class C Common Voting Preference ------------------- ------------------- ------------------- ------------------- Gerald Vento 8,729.40 10,779.82 339.83 5 Thomas Sullivan 5,426.38 6,700.97 211.25 5
Puerto Rico Market Closing --------------------------
Series E Preferred Class A Common Class C Common Voting Preference ------------------- ------------------- ------------------- ------------------- Gerald Vento 2,505.73 3,260.75 NA NA Thomas Sullivan 1,557.62 2,026.95 NA NA
10 SCHEDULE B ---------- Vesting Schedule ---------------- Vesting of Vento's and Sullivan's Non-Extraordinary Event Shares. - ----------------------------------------------------------------- Vento's and Sullivan's Shares (other than his Extraordinary Event Shares) shall vest on the Effective Date, the completion of the Minimum Build-Out Plan for each of the Domestic and Puerto Rico and on the specified anniversaries of the Effective Date as follows:
Vesting Date Percent of Shares ------------ ----------------- Effective Date 20% Second Anniversary 15% Third Anniversary 15% Fourth Anniversary 15% Fifth Anniversary 15% Completion of Year I and Year 2 of 10% of the Shares issued at the Minimum Build-Out Plan of the Domestic Market Domestic Market Closing Completion of Year 3 of Minimum 10% of the Shares issued at the Build-Out Plan of the Domestic Market Domestic Market Closing plus aggregate POP coverage of 60% of total POPs in the Domestic Market (based on 1995 POPs, as defined in the Stockholder's Agreement) Completion of Year I and Year 2 of 10% of the Shares issued at the Minimum Build-Out Plan of the Puerto Puerto Rico Market Closing Rico Market Completion of Year 3 of Minimum 10% of the Shares issued at the Build-Out Plan of the Puerto Rico Puerto Rico Market Closing Market plus aggregate POP coverage of 60% of total POPs in the Puerto Rico Market (based on 1995 POPs, as defined in the Stockholder's Agreement) Total 100%
11 Accelerated Vesting of Vento's and Sullivan's Non-Extraordinary Event Shares. - ----------------------------------------------------------------------------- In the event of a termination of the Management Agreement by Manager pursuant to Section 5(b)(iii)(A), (B) or (C) or a termination by the Company pursuant to Section 5(b)(ii)(B), (C) or (D), in addition to any of Vento's and Sullivan's Shares that shall have theretofore vested in accordance with the above "Vesting of Vento's and Sullivan's Non-Extraordinary Event Shares" schedule, a number of each of Vento's and Sullivan's unvested Base Shares determined as set forth below shall immediately vest (and shall not be subject to repurchase by the Company): (a) in the event that the date of termination is no more than six months after the Effective Date or no more than six months after the most recent Anniversary Date, a pro rata portion (based upon the actual number of days since the Effective Date or the Anniversary Date) of the number of shares (if any) that would have vested on the immediately following Anniversary Date; and (b) in the event that the date of termination is more than six months after the Effective Date or more than six months after the most recent Anniversary Date, all of the shares (if any) that would have vested on the immediately following Anniversary Date. Vesting of Vento's and Sullivan's Extraordinary Event Shares. - ------------------------------------------------------------- Vento's and Sullivan's Extraordinary Event Shares, to the extent not repurchased in connection with an Extraordinary Event, shall vest (A) in the case of an Extraordinary Event described in Section 7(a)(iii)(x) or (y), on the date of consummation of the Extraordinary Event, and (B) in the case of an Extraordinary Event described in Section 7(a)(iii)(z), on the IPO Date and the specified anniversaries of such date as follows: Vesting Date Percent of Shares ------------ ----------------- IPO Date 50% First Anniversary 16-2/3% Second Anniversary 16-2/3% Third Anniversary 16-2/3% ------- Total 100.00 12 EX-10.6.1 12 INTERCARRIER ROAMER SERVICE AGREEMENT EXHIBIT 10.6.1 EXECUTION COPY INTERCARRIER ROAMER SERVICE AGREEMENT ------------------------------------- THIS INTERCARRIER ROAMER SERVICE AGREEMENT (the "Agreement") is dated as of the 17th day of July, 1998 by and between AT&T Wireless Services, Inc., on behalf of itself and its Affiliates listed in Schedule I hereto (individually and collectively, "AT&T") and TeleCorp PCS, Inc., on behalf of itself and its Affiliates listed in Schedule 2 hereto (individually and collectively, "Company"). AT&T and Company are sometimes referred to, individually, as a "Party" and together as "Parties." R E C I T A L ------------- WHEREAS, each of AT&T and Company desire to make arrangements to facilitate the provision of voice and voice-related mobile wireless radiotelephone service to the customers of the other Party, while such customers are using the wireless radiotelephone facilities of such Party, in accordance with the terms of this Agreement; NOW, THEREFORE, in consideration of the mutual promises herein set forth and intending to be legally bound hereby, the Parties do hereby agree as follows: ARTICLE I DEFINITIONS ----------- As used in this Agreement, the terms below shall have the following meanings: Affiliate means, with respect to a Party, any facilities-based CMRS operating company that (a) is controlled by or under common control with the Party, (b) is an entity in which the Party has at least fifty percent (50%) voting interest, (c) shares switching facilities with the Party, (d) is managed by the Party, or (e) is providing Service utilizing CMRS spectrum it has acquired from a Party. Approved CIBERNET Negative File Guidelines means the negative file guidelines appearing in the CIBER Record in effect from time to time. Authorized Receipt Point or "ARP" means the location or address of the Party designated by the Home Carrier as the delivery point for its CIBER records and authorized agent for performing CIBER edits. Authorized Roamer means a Roamer using equipment and an assigned telephone number with the NPA/NXX combinations listed in accordance with Article IV below for Serving Carrier has not received a negative notification in accordance with the provisions of this Agreement. CIBER means Cellular Intercarrier Billing Exchange Record. CIBER Record means the publication prepared by CIBERNET Corporation, a wholly-owned subsidiary of the Cellular Telecommunications Industry Association, as a service to the wireless communications industry. Unless specifically provided otherwise in this Agreement, all words and phrases defined in the CIBER Record shall have the meaning herein that they have therein. Clearinghouse means that entity which provides for the exchange of CIBER records and performs industry accepted CIBER edits, including edits to verify Industry Negative File information. CMRS means Commercial Mobile Radio Service. ESN means the Electronic Serial Number that is encoded in a wireless telephone set by the manufacturer and which is broadcast by such telephone. Home Carrier means a Party who is providing Service to its registered customers in a geographic area where it holds a license or permit to construct and operate a mobile wireless radiotelephone system and station. Industry Negative File means the negative file maintained by the authorized Clearinghouses in accordance with approved CIBERNET Negative File Guidelines. MIN means the "Mobile Identification Number" which is assigned by a Home Carrier to each of its registered customers. NPA/NXX combinations means the six-digit numerical combinations assigned by regulatory authorities to identify the area code and telephone number prefix for Service. Roamer means a customer of one Party who seeks Service within a geographic area served by the other Party. Service means telecommunications service for the transmission and reception of voice and voice-related features provided by means of radio frequencies that are or may be licensed, permitted or authorized now or in the future by the Federal Communications Commission (or any successor agency), and in respect of which service the user equipment is capable of and intended for usage during routine movement, including halts at unspecified points, at more than one location throughout a wide area public or private wireless network. Unless otherwise specifically agreed by the Parties, Service shall include personal base station services but, by way of example and without limitation, does not include fixed wireless services, two-way messaging wireless services (NBPCS), video broadcasting wireless services, television services (whether cable, broadcast or direct broadcast satellite), broadcast radio services, interactive informational or transactional content services such as on-line content network services, Internet based services, satellite based communications services, and air to ground communications services. 2 Serving Carrier means a Party who provides Service for registered customers of another Party while such customers are in the geographic area where the Serving Carrier, directly or through subsidiaries, provides Service. ARTICLE II PROVISION OF SERVICE -------------------- 2.1 Each Party shall provide, to any Authorized Roamer who so requests, voice communication service and any and all other types of Service that such Party provides to its own customers. Notwithstanding the foregoing, the Serving Carrier shall not be required to modify or supplement its system in any way to address any incompatibility in the technologies used by the Serving Carrier and the Home Carrier that may preclude the provision of Service to an Authorized Roamer. Service shall be provided in accordance with the Serving Carrier's own ordinary requirements, restrictions, practices, and tariffs, if applicable, and with the terms and conditions of this Agreement. 2.2 Notwithstanding anything in this Agreement to the contrary, a Serving Carrier may suspend or terminate Service to an Authorized Roamer in accordance with the terms of its own ordinary requirements, restrictions, practices, and tariffs, but such suspension or termination shall not affect the rights and obligations of the Parties for Service furnished hereunder prior to such termination or suspension. 2.3 In connection with its Service to Roamers, no Serving Carrier shall use recorded announcements or other inducements for an Authorized Roamer to discontinue the Service of its Home Carrier or, unless otherwise authorized herein, Roamer's use of a Serving Carrier's system. 2.4 In the event that an operating entity becomes an Affiliate of a Party after the date of this Agreement, such Party may, upon thirty (30) days prior written notice to the other Party, add such operating entity to Schedule 1 or Schedule 2, as the case may be, at the expiration of which thirty-day period (a) the customers of such entity shall be entitled to Service as Roamers from the other Party on the terms and conditions of this Agreement and (b) such operating entity shall provide Service to customers of the other Party who are Authorized Roamers, although the other Party is not obligated to request such Service or to require its customers to request such Service. Notwithstanding the foregoing, the other Party, in its reasonable discretion, may reject the addition of any such Affiliate by delivering written notice thereof prior to the expiration of the thirty-day period. ARTICLE III CHARGES ------- Each Home Carrier whose customers (including the customers of its resellers) receive Service from a Serving Carrier as Authorized Roamers under this Agreement shall pay to the Serving Carrier who provided such Service one hundred percent (100%) of the Serving Carrier's 3 charges for CMRS and one hundred percent (100%) of the toll charges set forth in Exhibit A. The amount of the charges for the use of each Serving Carrier's Service are set forth in Exhibit A attached to this Agreement. ARTICLE IV EXCHANGE OF INFORMATION ----------------------- 4.1 Exhibit B to this Agreement is a list furnished by the respective Parties of the valid NPA/NXX combinations used by their respective customers. These combinations shall be accepted by the other Party. Each NPA/NXX combination is and shall be within the entire line range (0000-9999), or a specified portion thereof. The minimum line range to be exchanged by the Parties shall be 1,000 line numbers. Each Party shall be responsible for all billings otherwise properly made under this Agreement to any number listed by such Party within the range or ranges specified by it in Exhibit B. Additions, deletions, or changes to NPA/NXX combinations and line number range(s) for the Home Carrier's customers may be made upon at least fifteen (15) days prior written notice to the Serving Carrier. Such notice shall be in the form attached as Exhibit B to this Agreement and shall include the requested effective date for the addition, deletion or change. 4.2 Each Party shall provide to each other Party a list of MINs (from among those within the NPA/NXX combination(s) identified pursuant to Section 4.1 hereof) and ESNs (of the telephones to which the other Party is not authorized to provide Service pursuant to this Agreement), which shall be entered into the Industry Negative File. The approved CIBERNET Negative File Guidelines, as amended from time to time, shall be the governing criteria for the Parties. Thereafter, from time to time, as agreed by the Parties, each Party shall notify each other Party of all additions to, and deletions from, these lists for the customers of that particular Party. Such notifications shall be made during normal business hours of the Party being notified by facsimile or by telephone with a written confirmation and shall be effective one (1) hour after receipt. 4.3 Each Party hereby agrees to indemnify each and all of the other Parties, together with their partners and any and all of their officers, directors, employees, agents and/or affiliates, against, and hold them harmless from, any and all claims, suits, demands, losses and expenses, including reasonable attorneys' fees and disbursements, which may result in any way whatsoever from the indemnified Party's denial of Roamer or local Service to any NPA/NXX and MIN combination which has been listed by the indemnifying Party as not being authorized to receive Service; provided that (i) the person seeking indemnification (the "Indemnified Person") provides notice of such claim promptly after its discovery to the Party from which indemnification is sought (the "Indemnifying Person") and in any event the Indemnifying Person will be released from any obligation hereunder to the extent it is prejudiced by any delay in the delivery of such notice, (ii) the Indemnifying Person shall have the right to assume the defense of such claim, (iii) the Indemnified Person shall provide such reasonable assistance and cooperation in the defense of such claim as is requested by the Indemnifying Person, and (iv) the Indemnified 4 Person shall not settle or compromise any such claim without the prior written consent of the Indemnifying Person. 4.4 Each Party, due to system limitations, may purge or delete numbers of its customers from the lists as referred to in Section 4.2 hereof, but in all such cases, such purging or deletion must be done in accordance with the approved CIBERNET Negative File Guidelines. If purging or deletion of numbers is done prior to the time periods established by such Guidelines, or through procedures not otherwise set forth, in the approved CIBERNET Negative File Guidelines, the Party implementing the purge or deletion will assume financial liability for any charges incurred by those numbers. All purges or deletions made pursuant to this Section 4.4 shall be given through the Parties and shall be in the form mutually agreed upon by the Parties and effective as of the time established by the approved CIBERNET Negative File Guidelines (unless otherwise modified by mutual agreement of the Parties.) 4.5 Upon the implementation of wireless number portability in any portion of either Party's system, the Parties shall cooperate in establishing an alternative method for exchanging ESN, MIN, and NPA/NXX information required to permit roaming by the other Party's customers in their respective systems. ARTICLE V FRAUD ----- 5.1 The Parties will cooperate and, as necessary, supplement this Agreement in order to minimize fraudulent or other unauthorized use of their systems. If any Party reasonably decides that, in its sole judgment, despite due diligence and cooperation pursuant to the preceding sentence, fraudulent or other unauthorized use has reached an unacceptable level of financial loss and is not readily remediable, such Party may suspend the use of applicable NPA/NXX combinations, in whole or in part, pursuant to the terms of this Agreement. 5.2 Each Party shall take reasonable actions to control fraudulent Roamer usage, including without limitation using either (i) a positive validation/verification ("PV') system provided by a mutually agreed upon validation/verification service under which the ESN, MIN and/or NPA/NXX used in a call in the Serving Carrier's system is compared against a list of Authorized Roamers or (ii) SS-7 connections through a network of carriers. The Parties shall work together in good faith to designate and implement a mutually agreeable PV system and enhancements thereto or alternative systems. The Home Carrier shall have no responsibility or liability for calls completed by a Serving Carrier without obtaining positive validation/verification as required herein. 5.3 In addition to other procedures set forth in this Agreement, a Home Carrier may notify a Serving Carrier by facsimile, with written confirmation, that certain NPA/NXX combinations are not to receive Service. Any calls completed using such NPA/NXX combinations made one full business day or more after such notice has been given shall be the sole responsibility of the Serving Carrier and the Home Carrier shall not be charged any amount for such calls. 5 5.4 Each Serving Carrier shall use commercially reasonable efforts to provide each Home Carrier with real-time visibility of call detail records delivered through a network compatible with AT&T's network. Such information shall be delivered within one hour of the applicable call. In the event that the Serving Carrier provides such a real-time visibility system, the Serving Carrier shall not be liable in any event for a temporary failure of the system unless the Serving Carrier has been notified of such failure by the Home Carrier and the Serving Carrier does not take commercially reasonable steps to remedy the failure. If the Serving Carrier has been so notified and has so failed to take such commercially reasonable steps, the Serving Carrier shall be liable for all unauthorized usage attributed to Home Carrier's subscribers during the period from the time Serving Carrier was notified of the problem to the time that the problem has been resolved to the reasonable satisfaction of the Home Carrier. 5.5 For purposes of notification under this Article V, the following addresses and facsimile numbers shall be used: If to AT&T: AT&T Wireless Services, Inc. 5000 Carillon Point Kirkland, WA 98033 Attn: Billing and ICS Operations Tel. No. 425-827-4500 Fax No. 425-828-1390 If to Company: TeleCorp PCS, Inc. ____________________________ ____________________________ ____________________________ Attn: Product Development - Roaming Tel. No. 202-261-4751 Fax No. 202-833-4882 Each Party may change the names, addresses and numbers set forth above by providing notice to the other Party as provided in Article XIII below. ARTICLE VI BILLING ------- 6.1 Each Home Carrier shall be responsible for billing to, and collecting from, its own customers all charges that are incurred by such customers as a result of service provided to them as Authorized Roamers by the Serving Carrier. The Home Carrier shall also be responsible for billing its customers for, and remitting to, the Federal Government all federal excise tax that may be due in connection with the service being billed by it to its customers. While the Serving Carrier will be responsible for the computation and remittance of all state and local taxes, each Home Carrier shall be liable to the Serving Carrier for all such state and local taxes remitted by 6 the Serving Carrier, for Authorized Roamers regardless of whether these amounts are paid to the Home Carrier by its customers. 6.2 Each Serving Carrier who provides Service to an Authorized Roamer pursuant to this Agreement shall forward Roamer billing information, within five business days of the call date, in accordance with the procedures and standards set forth in the CIBER Record to the Home Carrier's Authorized Receipt Point. CIBER Type 50 and CIBER Type 70 records shall not be accepted without mutual signed agreement and if such mutual agreement is reached it will be attached to this Agreement. Any future revisions of the CIBER Record or additional record types must be mutually agreed upon before implementation. In the event the parties use the CIBERNET Net Settlement Program, or alternative settlement program such information must be in a format in compliance with the CIBER Record requirements or agreed upon format. 6.3 Where the Authorized Roamer billing information required to be provided by the Serving Carrier in accordance with Section 6.2 above is not in accordance with the CIBER Record, the Home Carrier may return a record to the Serving Carrier as provided in the CIBER Record. Returning the defective record will be in accordance with CIBER Record established procedures. The Serving Carrier may correct the defective record and return it to the Home Carrier for billing, provided that the time period from the date of the Service call at issue to the receipt of the corrected record does not exceed sixty (60) days. 6.4 No credit for insufficient data or defective records shall be permitted except as provided in Section 6.3 above, unless mutually agreed upon by both Parties. 6.5 Each Home Carrier may at its discretion perform any necessary edits at its Clearinghouse on incollect or outcollect call records to ensure compliance with the terms of this Agreement. ARTICLE VII SETTLEMENT ---------- 7.1 Each Party will settle its accounts with the other Parties on the basis of billing information received as described in this Article VII. In the event both Parties use a net financial settlement procedure, the Parties shall not submit a paper invoice but will make payments in accordance with such net financial settlement procedures provided that the Parties may submit call records for payment that relate to calls made more than sixty (60) days from the date of the call if such call was the subject of a dispute or investigation regarding fraudulent or unauthorized use. 7.2 If an incorrect roaming rate is charged by the Serving Carrier to the Home Carrier, the Serving Carrier shall refund all amounts in excess of the contract rate back to the Home Carrier within forty-five (45) days of notification by the Home Carrier. Each carrier shall have ninety (90) days from the end of the settlement period to invoice for amounts in excess of the contract rate. The Home Carrier will send a collection letter within sixty (60) days of the invoice date, within ninety (90) days of the invoice date, and within one hundred (120) days of the invoice 7 date. If the invoice remains unpaid after one hundred twenty (120) days from the original invoice date, the Home Carrier may withhold the amounts from the CIBERNET Net Settlement Program or alternative settlement program. 7.3 In the event that either Party does not use a net financial settlement procedure, the billing and payment for charges incurred under this Agreement shall be as set forth below. 7.3.1 The parties shall determine amounts owed to each other for Service provided to Roamers in one-month periods with such period beginning on the sixteenth day of each calendar month and ending on the fifteenth day of the following month in which Service is provided. The end of this Period shall be referred to as "Close of Billing." 7.3.2 The Parties shall send each other an invoice for Services used under this Agreement within fifteen (15) days after the Close of Billing. 7.3.3 Each invoice shall contain the following information. (a) Billing period used by Serving Carrier (b) Batch sequence number (c) Serving and Home Carrier System Identification Number (d) Air Service charges (e) Total toll charges (both intrastate and interstate) (f) All other charges and credits (g) Total taxes (h) Total charges 7.3.4 Payment on such invoices shall be made in the form of a check or a wire transfer which must be received by the invoicing party within thirty (30) days from the date of the invoice. Late payments shall be charged with a late payment fee of one and one half percent (1.5%) of the outstanding balance for each thirty-day period (or portion thereof) that such payments are late. 7.3.5 Each Party may offset the amount owed to the other Party under this Agreement and a single payment of the balance to the Party entitled to receive such balance shall be made. 7.4 If the Serving Carrier provides pre-call validation of the Home Carrier's customers, the Home Carrier agrees to implement Negative File Suppression at the Clearinghouse and the CIBERNET Negative File Guidelines and procedures do not apply. 8 ARTICLE VIII AUTOMATIC CALL DELIVERY AND HAND-OFF ------------------------------------ 8.1 Each Party shall, as Serving Carrier, provide for automatic call delivery for customers of the other Party who are Roamers in the Serving Carrier's system. To this end, each Party shall continuously provide the hardware, software and transmission facilities required for such call delivery either directly between the systems of the Parties or indirectly through a separate network of wireless communications carriers. The hardware, software and transmission facilities provided by each Party hereunder shall at all times be operated and maintained to provide the most efficient level of service that is technically feasible and commercially reasonable to minimize transmission errors and Service interruptions. 8.2 If the Parties have implemented linking facilities pursuant to Section 8.3, the Serving Carrier shall automatically hand-off to the Home Carrier, and as requested shall automatically accept hand-off from the Home Carrier in order to provide Service as specified in Article II, calls to or from a customer of the Home Carrier in accordance with the hand-off procedures established for such linking facilities. To this end, each Party shall continuously provide the hardware, software and transmission facilities required for such call hand-off either directly between the systems of such Home and Serving Carrier or indirectly through a separate network of wireless communications carriers. The hardware, software and transmission facilities provided by each Party hereunder shall at all times be operated and maintained to provide the most efficient level of service that is technically feasible and commercially reasonable to minimize transmission errors and Service interruption. 8.3 The Parties will work together to evaluate the economic advantage of various switch linking options to interconnect and facilitate networking of the Parties' respective systems as required by this Agreement. Should the Parties agree to install and maintain linking facilities, the cost of the linking facilities shall be allocated pursuant to the following provisions: 8.3.1 AT&T and Company will each pay one-half of the equipment costs for the establishment of microwave facilities to link the Parties' respective systems for the purposes of automatic call delivery and automatic call hand-off. Each Party is solely responsible for the costs of preparing its own facilities for the system link. 8.3.2 Equipment costs for the establishment of a landline link (T-1) to link the Parties' respective systems together for these purposes shall be split between the Parties as follows: (a) AT&T and Company shall each pay one-half of the cost for the installation, use, modification, or discontinuance of the linking facilities. Each Party is solely responsible for all costs to prepare its own facilities for the link between the systems. (b) For ease of administration, AT&T will order and be the customer of record ("COR") for such facilities. Company will reimburse AT&T monthly for its share of the 9 recurring costs of such facilities. The COR shall be responsible for invoicing the other Party for its share of the costs, with payment due within 30 days of receipt of the invoice. 8.3.3 The Parties agree that this Section 8.3 relates only to those costs necessary to establish the referenced facilities. This section is not applicable to the allocation of costs with respect to the provision of Service for each Parties' customers. 8.4 The Parties acknowledge that they do not currently have the technical systems in place to allocate charges for cellular service provided by a Carrier when a customer's call is handed off from one system to another. The Parties agree that the revenues and costs for a call belong to the Party whose system operates the originating cell site (the "Bill and Keep System"). ARTICLE IX TERM, TERMINATION, AND SUSPENSION OF AGREEMENT ---------------------------------------------- 9.1 This Agreement shall have a term commencing on the date first written above and continuing for a period of 20 years. Thereafter, this Agreement shall renew automatically on a year-to-year basis unless either party terminates the Agreement by written notice to the other party given at least 90 days prior to the conclusion of the original or any subsequent term. After ten years, the Agreement may be terminated by either party at any time upon 90 days prior written notice. 9.2 This Agreement may be terminated or suspended by either Party immediately upon written notice to the other of a Default (as defined in Section 10.1) by the other Party. In addition, either Party may suspend this Agreement immediately upon written notice to the other Party of the existence of a breach of this Agreement, whether or not such breach constitutes a Default, which materially affects the Service being provided to Customers of the non-breaching Party. While any suspension of this Agreement, whether in part or in whole, is in effect, the Parties shall work together to resolve as expeditiously as possible the difficulty that caused the suspension. At such time as the Party originally giving notice of suspension concludes that the problem causing the suspension has been resolved, that Party shall give to the other written notice to this effect. This Agreement shall resume in full effect within five (5) business days after the Parties have mutually agreed that the problem has been resolved. 9.3 The Parties shall cooperate to limit the extent and effect of any suspension of this Agreement to what is reasonably required to address the cause of the suspension. 9.4 In the event that a Party transfers control of an Affiliate listed in Schedule 1 or Schedule 2, as the case may be, the Party shall provide at least four (4) months' prior written notice to the other Party and upon such transfer such Affiliate shall be deleted from the appropriate Schedule. The termination or suspension of this Agreement shall not affect the rights and liabilities of the Parties under this Agreement with respect to all Authorized Roamer charges incurred prior to the effective date of such termination or suspension. 10 ARTICLE X DEFAULT ------- 10.1 A Party will be in "Default" under this Agreement upon the occurrence of any of the following events: 10.1.1 Material breach of any material term of this Agreement, if such breach shall continue for thirty (30) days after receipt of written notice thereof from the nonbreaching Party; 10.1.2 Voluntary liquidation or dissolution or the approval by the management or owners of a Party of any plan or arrangement for the voluntary liquidation or dissolution of the Party; 10.1.3 A final order by the Federal Communications Commission ("FCC") revoking or denying renewal of CMRS licenses or permits granted to such Party which, individually or in the aggregate, are material to the business of such Party; or 10.1.4 Such Party (i) filing pursuant to a statute of the United States or of any state, a petition for bankruptcy or insolvency or for reorganization or for the appointment of a receiver or trustee for all or a portion of such Party's property, (ii) has filed against it, pursuant to a statute of the United States or of any state, a petition for bankruptcy or insolvency or for reorganization or for the appointment of a receiver or trustee for all or a portion of such Party's property, provided that within sixty (60) days after the filing of any such petition such Party fails to obtain a discharge thereof, or (iii) making an assignment for the benefit of creditors or petitioning for, or voluntarily entering into, an arrangement of similar nature, and provided that such filing, petition, or appointment is still continuing. 10.2 All claims and disputes relating in any way to the performance, interpretation, validity, or breach of this Agreement, including but not limited to a claim based on or arising from an alleged tort, shall be resolved as provided in this Section 10.2. It is the intent of the Parties that any disagreements be resolved amicably to the greatest extent possible. 10.2.1 If a disagreement cannot be resolved by the representatives of the Parties with day-to-day responsibility for this Agreement, such matter shall be referred to an executive officer of each of the Parties. The executive officers shall conduct face-to-face negotiations at a neutral location or such other location as shall be mutually agreed upon. If these representatives are unable to resolve the dispute within ten business days after either Party requests the involvement of the executive officers, then either Party may, but is not required to, refer the matter to mediation or arbitration, as applicable in accordance with Sections 10.2.2 and 10.2.3. 10.2.2 In any case where the amount claimed or at issue is Five Hundred Thousand Dollars ($500,000) or more and the Parties are unsuccessful in resolving the disagreement, the Parties agree to submit the disagreement to non-binding mediation upon written notification by either Party. The Parties shall mutually select an independent mediator experienced in telecommunications system disputes. The specific format for the mediation shall be left to the discretion of the mediator. If mediation does not result in resolution of the disagreement within 11 thirty days of the initial request for mediation, then either Party may, but is not required to, refer the matter to arbitration. 10.2.3 Any disagreement not finally resolved in accordance with the foregoing provisions of this Section 10.2 shall, upon written notice by either Party to the other, be resolved by final and binding arbitration. Subject to this Section 10.2.3, such arbitration shall be conducted through, and in accordance with the rules of, JAMS/Endispute. A single neutral arbitrator shall decide all disputes. Each Party shall bear its own expense with respect to the arbitration, except that the costs of arbitration proceeding itself, including the fees and expenses of the arbitrator, shall be shared equally by the Parties. The arbitration shall take place in a neutral location selected by the arbitrator. The arbitrator may permit discovery to the full extent permitted by the Federal Rules of Civil Procedure or to such lesser extent as the arbitrator determines is reasonable. The arbitrator shall be bound by and strictly enforce the terms of this Agreement. The arbitrator shall make a good faith effort to apply applicable law, but an arbitration decision and award shall not be subject to review because of errors of law. The arbitrator shall have the sole authority to resolve issues of the arbitrability of any disagreement, including the applicability or running of any applicable statute of limitation. The arbitrator shall not have power to award damages in connection with any dispute in excess of actual compensatory damages nor to award punitive damages nor any damages that are excluded under this Agreement and each party irrevocably waives any claim thereto. The award of any arbitration shall be final, conclusive and binding on the Parties. Judgment on the award may be entered in any court having jurisdiction over the Party against which the award was made. Nothing contained in this Section 10.2.3 shall be deemed to prevent either party from seeking any interim equitable relief, such as a preliminary injunction or temporary restraining order, pending the results of the arbitration. The United States Arbitration Act and federal arbitration law shall govern the interpretation, enforcement, and proceedings pursuant to the arbitration clause in this Agreement. ARTICLE XI SUCCESSORS AND ASSIGNS ---------------------- 11.1 Neither Party may, directly or indirectly, sell, assign, transfer, or convey its interest in this Agreement or any of its rights or obligations hereunder, including any assignment or transfer occurring by operation of law, without the written consent of both Parties, except that (i) either Party may assign or delegate this Agreement or any of its rights or obligations hereunder to an Affiliate of such Party without the consent of the other Party, but such assignment or delegation will not relieve the Party of any of its obligations hereunder and (ii) a Party may assign its rights and obligations hereunder to an assignee of its Service license or permit issued by the FCC, provided that such assignee expressly assumes, by written instrument approved by the other Party, all of the obligations of such Party hereunder and thereby becomes a Party hereunder. In no event will an assignment permitted under this Section 11.1 without the consent of the other Party obligate a Serving Carrier to provide Service to any customers of the assignee or any of its Affiliates other than customers residing in the area in which the assignor previously was licensed to provide Service. 12 11.2 No person other than a Party to this Agreement shall acquire any rights hereunder as a third-party beneficiary or otherwise by virtue of this Agreement. ARTICLE XII NO PARTNERSHIP OR AGENCY RELATIONSHIP IS CREATED ------------------------------------------------ Nothing contained in this Agreement shall constitute the Parties as partners with one another or render any Party liable for any debts or obligations of any other Party, nor shall any Party hereby be constituted the agent of any other Party. ARTICLE XIII NOTICES AND AUTHORIZED REPRESENTATIVES -------------------------------------- Unless otherwise provided herein, any notice, request, instruction or other document to be given hereunder by any Party to the other shall be in writing and delivered by hand delivery, certified mail (postage prepaid, return receipt requested), facsimile, or overnight air delivery service, as follows: If to AT&T, to: AT&T Wireless Services, Inc. 5000 Carillon Point Kirkland, WA 98033 Attn: Intercarrier Services with a copy to: AT&T Wireless Services, Inc. 5000 Carillon Point Kirkland, WA 98033 Attn: Legal Department If to Company, to: TeleCorp PCS, Inc. 1101 17th St., N.W. Suite 900 Washington, D.C. 20036 Attn: Product Development--Roaming with a copy to: TeleCorp PCS, Inc. 1101 17th St., N.W. Suite 900 Washington, D.C. 20036 Attn: Legal Department or such other address as any Party may from time to time furnish to the other Party by a notice given in accordance with the terms of this Section. All such notices and communications shall be deemed to have been duly given at the time delivered by hand, if personally delivered; three 13 business days after being deposited in the mail, if mailed; subject to confirmation of receipt, on the date of receipt if received by 3:00 p.m., local time, on any business day and otherwise on the next business day, if by facsimile; and the next business day, if sent by overnight air delivery service. ARTICLE XIV CONFIDENTIALITY --------------- 14.1 Each Party shall, and shall cause each of its Affiliates and each of its and their employees, agents, and contractors, to keep confidential and not use for any purpose, except as contemplated by this Agreement, any and all information and know-how provided to it by the other Party which is identified in writing as confidential ("Confidential Information"). Identification of information as confidential shall, in the case of information delivered in tangible form, appear on at least the face or first page of such information and, in the case of information communicated verbally, be given verbally contemporaneously with the delivery of the information and confirmed in writing within five business days thereafter. Notwithstanding the foregoing, the following information shall be treated as Confidential Information without any further identification as such: (i) The terms, but not including the mere existence, of this Agreement; and (ii) all information exchanged pursuant to Article IV. 14.2 Notwithstanding Section 14.1, a Party shall have no obligation to keep confidential any information that (a) was rightfully in the receiving Party's possession before receipt from the disclosing Party, (b) is or becomes a matter of public knowledge without violation of this Agreement by the receiving Party, (c) is received by the receiving Party from a third party in possession of and, to the best of the receiving Party's knowledge, with a right to make an unrestricted disclosure of such information, (d) is disclosed by the disclosing Party to a third party without imposing a duty of confidentiality on the third party, or (e) is independently developed by the receiving Party without the use of any Confidential Information. In addition, a Party may disclose any Confidential Information to the extent required by applicable law or regulation or by order of a court or governmental agency; provided, that prior to disclosure the Party shall use all reasonable efforts to notify the other Party of such pending disclosure and shall provide any reasonable assistance requested by the other Party to maintain the confidentiality of the information. 14.3 The Parties agree that a Party will not have an adequate remedy at law in the event of a disclosure or threatened disclosure of Confidential Information in violation of this Article XIV. Accordingly, in such event, in addition to any other remedies available at law or in equity, a Party shall be entitled to specific enforcement of this Article XIV and to other injunctive and equitable remedies against such breach without the posting of any bond. 14.4 The obligations under this Article XIV shall survive the termination of this Agreement for a period of three years. 14 ARTICLE XV MISCELLANEOUS ------------- 15.1 The Parties agree to comply with, conform to, and abide by all applicable and valid laws, regulations, rules and orders of all governmental agencies and authorities, and agree that this Agreement is subject to such laws, regulations, rules and orders. All references in this Agreement to such laws, regulations, rules and orders include any successor provision. If any amendment to or replacement of the same materially alters the benefits, fights, and duties of the Parties hereunder, the Parties agree to negotiate in good faith an amendment to this Agreement to restore the respective positions of the Parties to substantially the same point as existed prior to such amendment or replacement. 15.2 The Parties agree to use their respective best, diligent, and good faith efforts to fulfill all of their obligations under this Agreement. The Parties recognize, however, that to effectuate all the purposes of this Agreement, it may be necessary either to enter into future agreements or to amend this Agreement, or both. In that event, the Parties agree to negotiate with each other in good faith. 15.3 This Agreement constitutes the full and complete agreement of the Parties. Any prior agreements among the Parties with respect to this subject matter are hereby superseded. This Agreement may not be amended, except by the written consent of the Parties. Waiver of any breach of any provision of the Agreement must be in writing signed by the Party waiving such breach or provision and such waiver shall not be deemed to be a waiver of any preceding or succeeding breach of the same or any other provision. The failure of a Party to insist upon strict performance of any provision of this Agreement or any obligation under this Agreement shall not be a waiver of such Party's right to demand strict compliance therewith in the future. 15.4 The headings in this Agreement are inserted for convenience and identification only and are not intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision thereof. 15.5 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 Agreement. 15.6 This Agreement shall be construed in accordance with the laws of the state of Washington without reference to the choice of law principles, except as subject to the United States Arbitration Act and the Federal Communications Act, each as amended. 15.7 Neither Party shall be liable to the other Party for any special, indirect, consequential or punitive damages. 15.8 The Parties agree that they will not use the name, service marks or trademarks of the other party or any of its Affiliates in any advertising, publicity releases or sales presentations, without such Party's written consent. Neither Party is licensed hereunder to conduct business under any logo, trademark, service or trade name (or any derivative thereof) of the other Party. 15 15.9 Neither of the Parties will be liable for nonperformance or defective performance of its obligations under this Agreement to the extent and for such periods of time as such nonperformance or defective performance is due to reasons outside such Party's control, including, without limitation, acts of God, war, acts of any governmental authority, riots, revolutions, fire, floods, explosions, sabotage, nuclear incidents, lightning, weather, earthquakes, storms, sinkholes, epidemics, strikes, or delays of suppliers or subcontractors for the same causes. Neither Party shall be required to settle any labor dispute or other third party dispute in any manner which is deemed by that Party to be less than totally advantageous, in that Party's sole discretion. 15.10 This Agreement is a non-exclusive arrangement between the Parties. Nothing contained in this Agreement is intended or should be construed to preclude or limit a Party from obtaining from or providing to a third party Service of a type available or required to be provided under this Agreement. EXECUTED as of the date first written above. AT&T WIRELESS SERVICES, INC. TELECORP PCS, INC. /s/ [SIGNATURE ILLEGIBLE] /s/ Thomas Sullivan ----------------------------- ------------------------------ By: By: Vice President President ----------------------------- ------------------------------ Its: Its 16 SCHEDULE 1 AT&T Schedule 1: AT&T Wireless Services, Inc. and its Affiliates
MKT# MARKET SID/BID OPERATING ENTITY/LICENSEE ----------- ------- ------------------------- ALASKA 187 Anchorage 251 Cellular Alaska Partnership 316 Alaska - 2 RSA Wasilia 30921 AT&T Wireless Services of Alaska, Inc. CALIFORNIA 215 Chico 311 AT&T Wireless Services of California, Inc. 74 Fresno 153 AT&T Wireless Services of California, Inc. 142 Modesto 30857 AT&T Wireless Services of California, Inc. 73 Oxnard-Ventura 30065 AT&T Wireless Services of California, Inc. 254 Redding 513 Redding Cellular Partnership 35 Sacramento 129 AT&T Wireless Services of California, Inc. 107 Stockton 233 AT&T Wireless Services of California, Inc. 150 Visalia 30863 Visalia Cellular Telephone Company 274 Yuba City 30861 Yuba City Cellular Telephone Company 124 Santa Barbara 531 Santa Barbara Cellular Systems, Ltd. 338 California - 3 RSA 233 AT&T Wireless Services of California, Inc. 343 California - 8 RSA 30859 AT&T Wireless Services of California, Inc. 347 California - 12 RSA 153 AT&T Wireless Services of California, Inc. CONNECTICUT 357 CT-1 (Litchfield) 1101 Litchfield Acquisitions Corporation COLORADO 117 Colorado Springs 30743 AT&T Wireless Services of Colorado, Inc. 19 Denver 45 AT&T Wireless Services of Colorado, Inc. 210 Fort Collins 30747 Fort Collins-Loveland Cellular Telephone Co. 243 Greeley 30751 Greeley Cellular Telephone Company 350 Colorado - 3 RSA 30989 AT&T Wireless Services of Colorado, Inc. (Vall/Grand Junction) FLORIDA 211 Bradenton 30853 Bradenton Cellular Partnership 146 Daytona Beach 325 AT&T Wireless Services of Florida, Inc. 51 Jacksonville 76 AT&T Wireless Services of Florida, Inc. 137 Melbourne 30851 Melbourne Cellular Telephone Company 12 Miami, Key West 37, 30277 AT&T Wireless Services of Florida, Inc. 245 Ocala 30063 Ocala Cellular Telephone Company, Inc. 60 Orlando 175 AT&T Wireless Services of Florida, Inc. 167 Sarasota 30849 Sarasota Cellular Telephone Company, Inc. 22 Tampa 30283 AT&T Wireless Services of Florida, Inc. 363 FL-4 Citrus - Brooksville 30251 AT&T Wireless Services of Florida, Inc. 361 FL-2 Glades 37 Talcom, Inc. 208 Fort Pierce, Vero Beach, 37, 30281, 30309 AT&T Wireless Services of Florida, Inc. Sebastian 114 Lakeland 37 AT&T Wireless Services of Florida, Inc. 72 West Palm Beach 37 AT&T Wireless Services of Florida, Inc. 370 FL-11 AT&T Wireless Services of Florida, Inc. 364 FL-5 Flagler (A2) Talcom, Inc. HAWAII 386 Hawaii - 2 RSA (Maui) 1159 AT&T Wireless Services of Hawaii, Inc.
17 IDAHO 190 Boise 289 Boise City Cellular Partnership 391 Idaho - 4 RSA (Elmore) 30393 AT&T Wireless Services of Idaho, Inc. LOUISIANA 219 Monroe 463 Monroe Cellular, Inc. 100 Shreveport 229 First Cellular Group of Shreveport, Inc. 455 LA - 2 A2 Monroe Cellular, Inc. 456 LA - 3 A3 First Cellular Group of Shreveport, Inc. MINNESOTA 15 Minneapolis 23 AT&T Wireless Services of Minnesota, Inc. 288 Rochester, Austin 30233, 262321 Rochester CellTelCo 198 St. Cloud 30235 St. Cloud Cellular Telephone Company, Inc. MISSOURI 163 Springfield 559 MC Cellular Corporation, Inc. 239 Joplin 30069 MC Cellular Corporation, Inc. 517 Missouri - 14 RSA (Monet) 30071 Auburn Television Group, Inc. NEVADA 93 Las Vegas 211 AT&T Wireless Services of Nevada, Inc. 171 Reno 515 Reno Cellular Telephone Company 545 Nevada - 3 RSA (Carson 30855 AT&T Wireless Services of Nevada, Inc. City) NEW JERSEY 550 Hunterdon (NJ-1) 1487 NJ Cellular, Inc. NEW YORK 1 New York 25 Cellular Telephone Company OKLAHOMA 260 Lawton, OK 425 OK-5 Cellular, Inc. 45 Oklahoma City 169 Midwest Cellular Telephone Ltd Ptsp 57 Tulsa 111 AT&T Wireless Services of Tulsa, Inc. 598 OK-3 Grant 30919 OK-3 Cellular, Inc. 599 OK-4 Nowata AT&T Wireless Services, Inc. 600 OK-5 1585 OK-5 Cellular, Inc. OHIO 199 Steubenville/Weirton 30317 McLang Cellular, Inc. 199 Wintersville, St. 30501, 30889 McLang Cellular, Inc. Clairsville OREGON 135 Eugene 61 AT&T Wireless Services of Oregon, Inc. 229 Medford 30867 Medford Cellular Telephone Company, Inc. 30 Portland 61 AT&T Wireless Services of Oregon, Inc. 148 Salem 30869 Salem Cellular Telephone Company 607 Oregon 2 - Madras 31011 Pueblo Cellular Communications, Inc. 607 Oregon 2 - The Dallas 30293 Pueblo Cellular Communications, Inc. 607 Hood River 1601 Pueblo Cellular Communications, Inc. PENNSYLVANIA 143 Johnstown, Somerset 30051, 30971 McCaw Communications of Johnstown, Inc. 13 Pittsburgh 39 Pittsburgh Cellular Telephone Company TEXAS 9 Dallas 33 Metroplex Telephone Company 75 Austin 107 Texas Cellular Telephone Company Ltd Partnership 662 TX-11 Cherokee 1711 Northeast Texas Cellular Telephone Company 287 Bryan-College Station 297 Texas Cellular Telephone Company Ltd Partnership 657 TX-6 Jack 30287 McCaw Communications of Gainesville, TX, Inc. 160 Killeen-Temple 409 Texas Cellular Telephone Company Ltd Partnership 206 Longview-Marshall 30473 Longview Cellular, Inc. 661 TX-10 Navarro 1709, 30953, 30969 AT&T Wireless Services, Inc. 668 TX-17 Newton 1723 Texas Cellular Telephone Company Ltd Partnership 33 San Antonio 151 AT&T Wireless Services of San Antonio, Inc. 292 Sherman-Denison 30635 Texas Cellular Telephone Company Ltd. Partnership 240 Texarkana 30475 Texarkana Cellular Partnership 237 Tyler 579 Northeast Texas Cellular Telephone Company
18 194 Waco 587 Texas Cellular Telephone Company Ltd Partnership 233 Wichita Falls, TX 595 Wichita Falls CellTelCo 666 Lampassas/Johnson City 30773, 30843 UTAH 159 Provo 30871 Provo Cellular Telephone Company 39 Salt Lake City 91 AT&T Wireless Services of Utah, Inc. 673 Utah - 1 RSA (Box Elder) 91 AT&T Wireless Services of Utah, Inc. WASHINGTON 270 Bellingham 30877 Bellingham Cellular Partnership 212 Bremerton 30873 Bremerton Cellular Telephone Company 242 Olympia 30875 Olympia Cellular Telephone Company, Inc. 20 Seattle 47 AT&T Wireless Services of Washington, Inc. 20 Kirkland 26345 AT&T Wireless Services of Washington, Inc. 109 Spokane 231 Spokane Cellular Telephone Company 82 Tacoma 47 AT&T Wireless Services of Washington, Inc. 191 Yakima 30227 Yakima Cellular Telephone Company 699 Skamania Pueblo Cellular Communications, Inc. 693 WA-1 Calallam AT&T Wireless Services of Washington, Inc. 698 WA-6 Longview WA 30243 AT&T Wireless Services of Washington, Inc. 698 WA-6 Chehalls WA 30837 AT&T Wireless Services of Washington, Inc. 697 WA-5 Ellensburg/Moses 30231 AT&T Wireless Services of Washington, Inc. Lakes 214 Tri Cities WA 30229 AT&T Wireless Services of Washington, Inc. WEST VA. 178 Wheeling 30059 Wheeling Cellular Telephone Company
19
MKT# MARKET SID/BID OPERATING ENTITY/LICENSEE ----------- ------- ------------------------- AT&T Wireless TDMA Digital PCS Markets - 1900 MHz Properties - ------------------------------------------------------------ ARKANSAS PCS Little Rock MTA 40 AT&T WIRELESS PCS, INC. ARIZONA PCS Phoenix 4169 AT&T WIRELESS PCS, INC. ILLINOIS PCS Chicago 411 AT&T WIRELESS PCS, INC. NEBRASKA PCS Omaha 4165 AT&T WIRELESS PCS, INC. VIRGINIA PCS Richmond 4177 AT&T WIRELESS PCS, INC. WA DC PCS Washington - Baltimore 4196 AT&T WIRELESS PCS, INC. PUERTO RICO PCS Puerto Rico 4175 AT&T WIRELESS PCS, INC. NEW MEXICO PCS El Paso/Albuquerque 4128 AT&T WIRELESS PCS, INC. PENNSYLVANIA PCS Philadelphia 4167 AT&T WIRELESS PCS OF PHILADELPHIA, LLC TENNESSEE PCS Memphis/Jackson MTA:28 AT&T WIRELESS PCS, INC. TENNESSEE PCS Knoxville 4141 AT&T WIRELESS PCS, INC. NORTH CAROLINA PCS Charlotte/Greensboro 4109 AT&T WIRELESS PCS, INC. NORTH CAROLINA PCS Greensboro 40117 AT&T WIRELESS PCS, INC. SOUTH CAROLINA PCS Rock Hill 40119 AT&T WIRELESS PCS, INC. OHIO PCS Cincinnati/Dayton 4113 AT&T WIRELESS PCS, INC. OHIO PCS Cleveland 4116 AT&T WIRELESS PCS OF CLEVELAND, LLC OHIO PCS Columbus 4117 AT&T WIRELESS PCS, INC. NEW YORK PCS Buffalo/Rochester 4108 AT&T WIRELESS PCS, INC. MISSOURI PCS St. Louis 4189 AT&T WIRELESS PCS, INC. KENTUCKY PCS Louisville/Lexington 4147 AT&T WIRELESS PCS, INC. KENTUCKY PCS Nashville 4158 AT&T WIRELESS PCS, INC. MASSACHUSETTS PCS Boston/Providence 4105 AT&T WIRELESS PCS, INC. MICHIGAN PCS Detroit 4125 AT&T WIRELESS PCS, INC. GEORGIA PCS Atlanta 4101 AT&T WIRELESS PCS, INC.
20 Schedule 1
AWS KANSAS CITY JOINT VENTURE MARKETS Kansas 179 Topeka 30057 Airtouch Cellular of Kansas City, Inc. Kansas 89 Wichita 165 AT&T Wireless Services, Inc. Kansas 24 Kansas City 59 CMT Partners Kansas 301 Lawrence 30049 CMT Partners Missouri 275 St. Joseph 30055 St. Joseph CellTelCo Schedule 1 (AWS 850 Managed Markets) MKT# MARKET SID/BID OPERATING ENTITY/LICENSEE ----------- ------- ------------------------- Colorado 351 Canon City, CO 1089 CellUDyne Idaho 388 Coeur D'Alene, ID 1163 North American Cell Maryland 467 Deep Creek, MD 1321 MD-1 LP Oregon 606 Newburg, OR 30249 Crystal Communications Inc. Oregon 606 Astoria, OR 30409 Crystal Communications Inc. Texas 658 Greenville, TX 1703 KO Communications Texas 666 San Saba, TX 1973 Concho Cellular California 345 Sierra 30237 Data Cellular Systems California 346 El Dorado, CA 30239 Cellular Pacific California 340 San Luis Obispo, CA 30425 C-1 San Luis Obispo Louisiana 454 Ruston, LA 30573 LA-1 Joint Venture Utah 674 Utah 2 (Morgan Park City) 30363 Omega
21 SCHEDULE 2 Affiliates of TELECORP PCS, INC. TeleCorp Communications, Inc. 22 EXHIBIT A SERVICE CHARGES Airtime Rates: - -------------- AWS Boston and TeleCorp BTAs within the Boston MTA, Boston (Rockingham, Stafford Counties NH, Hyannis, MA., Manchester, NH. and Worcester, MA 7/17/1998 through 7/16/1999 $0.10 per minute or partial minute. 7/17/1999 through the remaining term of this Agreement: TeleCorp and AWS agree that the airtime rates charged between the parties shall be the lower of (a) the actual AWS average retail rate charged by AWS to its Boston customers roaming into TeleCorp markets located within the Boston MTA (but not less than the actual AWS average retail rate charged by AWS to its Boston customers in the AWS Boston Market) or (b) $0.10 per minute. AWS and remaining TeleCorp BTA's 7/17/1998 through 12/31/1999 $0.25 per minute or partial minute. 1/1/2000 through 12/31/2000 $0.20 per minute or partial minute. 1/1/2001 through 12/31/2001 $0.15 per minute or partial minute. 1/1/2002 through 12/31/2002 $0.10 per minute or partial minute. 7/17/2002 through the remaining term of this Agreement TeleCorp and AWS agree that the airtime rates charged between the parties shall be the lower of (a) the actual AWS average retail rates charged by AWS to its customers roaming into TeleCorp markets (but not less than the actual AWS average retail rate charged by AWS to its customers) or (b) $0.10 per minute. Neither Party will charge for incomplete calls, busy calls, 611 calls, feature activations or interconnect fees. Airtime rates are charged in full minute increments with each partial minute rounded to the next full minute. Toll Rates: - ----------- $0.05 per InterLata minute and $0.02 per Intralata minute. International toll rates shall be no more than AT&T tariff rates. TeleCorp, Inc. and AWS agree to offer a toll free calling area within their respective cellular areas which reasonably approximates, or is larger than, the toll free area offered by the landline telephone company in the area. Default rates apply to markets managed by AT&T Wireless Services on behalf of other carriers as shown on Schedule 1. 23 EXHIBIT B Technical Data The following information is furnished by __________ to __________ pursuant to Section 4.1 of the Intercarrier Roamer Service Agreement between AT&T Wireless Services, Inc. and _______________________, by _____________________: - -------------------------------------------------------------------------------- NPA/NXX LINE RANGE SID/BID CITY START DATE END DATE - -------------------------------------------------------------------------------- By:________________________ Title:_____________________ Issue Date:________________ The effective date shall be - --------------------------- 24 EX-10.6.2 13 AMENDMENT #1 TO SERVICE AGREEMENT EXHIBIT 10.6.2 AMENDMENT NO. 1 TO INTERCARRIER ROAMER SERVICE AGREEMENT AMENDMENT NO. 1 TO INTERCARRIER ROAMER SERVICE AGREEMENT ("Amendment No.1") dated as of May ______, 1999, by and between AT&T Wireless Services, Inc., on behalf of itself and its Affiliates listed on Schedule 1 to the IRSA (as hereinafter defined) (individually and collectively, "AT&T"), and TeleCorp PCS, Inc., on behalf of itself and its Affiliates listed on Schedule 2 to the IRSA (individually and collectively, the "Company"). Certain capitalized terms used herein and not otherwise defined have the meaning assigned to such term in the IRSA. WHEREAS, AT&T and the Company are party to that certain Intercarrier Roamer Service Agreement, dated as of July 17, 1998 (the "IRSA"), pursuant to which each of AT&T and the Company made arrangements to facilitate the provision of voice and voice-related mobile wireless radio telephone service to the customers of the other Party, while such customers are using the wireless radio telephone facilities of such Party, and set forth certain roaming charges in respect thereof; WHEREAS, an Affiliate of AT&T and the Company are parties to that certain Asset Purchase Agreement, dated as of May __, 1999 (the "Asset Purchase Agreement"), pursuant to which, among other things, the Company has acquired from such Affiliate of AT&T a portion of the Block A PCS License for the Puerto Rico - U.S. Virgin Islands MTA (the "Puerto Rico MTA") owned by such Affiliate of AT&T covering such market; and WHEREAS, pursuant to the Asset Purchase Agreement, it was agreed, and AT&T and the Company desire, that Exhibit A to the IRSA be amended to set forth the service charges with respect to the Puerto Rico MTA on terms set forth therein. NOW THEREFORE, in consideration of the mutual promises and covenants herein contained and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows: 1. Amendment. Exhibit A to the IRSA is hereby amended and restated as --------- set forth in Schedule A hereto to provide, among other things, that service charges with respect to the Puerto Rico MTA shall be calculated as set forth on such Schedule A. 2. Severability of Provisions. Any provision of this Amendment No. 1 -------------------------- which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. 3. Agreement to Remain in Full Force and Effect. This Amendment No. 1 -------------------------------------------- shall be deemed to be an amendment to the IRSA. All references to the IRSA in any other agreements or documents shall on and after the date hereof be deemed to refer to the IRSA as amended hereby. Except as amended hereby, the IRSA shall remain in full force and effect and is hereby ratified, adopted and confirmed in all respects. 4. Heading. The headings in this Amendment No. 1 are inserted for ------- convenience and identification only and are not intended to describe, interpret, define or limit the scope, extent or intent of this Amendment No. 1 or any provision thereof. 5. Counterparts. This Amendment No. 1 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. 6. Governing Law. This Amendment No. 1 shall be construed in accordance ------------- with the laws of the State of Washington without reference to the choice of law principles, except as subject to the United States Arbitration Act and the Federal Communications Act, each as amended. [signature page follows] -2- Executed as of the date first written above. AT&T WIRELESS SERVICES, INC. TELECORP PCS, INC. By__________________________________ By_________________________________ Its_________________________________ Its________________________________ -3- Schedule A to Amendment No. 1 EXHIBIT A SERVICE CHARGES FOR ALL SERVICE OTHER THAN AS SET FORTH BELOW WITH RESPECT TO PUERTO RICO - U.S. VIRGIN ISLANDS Airtime Rates: - ------------- AWS Boston and Company BTAs within the Boston MTA, Boston (Rockingham, County NH, Hyannis, MA, Manchester, NH, Worcester, MA). 7/17/1998 through 12/31/1999 $0.10 per minute or partial minute 1/1/2000 through the remaining term of this Agreement: The Company and AWS agree that the airtime rates charged between the parties shall be the lower of (a) the actual AWS average retail rate charged by AWS to its Boston customers roaming into Company markets located within the Boston MTA (but not less than the actual AWS average retail rate charged by AWS to its Boston customers in the AWS Boston Market), and (b) $0.10 per minute. AWS and remaining TeleCorp BTA's 7/17/1998 through 12/31/1999 $0.25 per minute or partial minute. 1/1/2000 through 12/31/2000 $0.20 per minute or partial minute. 1/1/2001 through 12/31/2001 $0.15 per minute or partial minute. 1/1/2002 through 12/31/2002 $0.10 per minute or partial minute. 1/1/2003 through the remaining term of this Agreement: The Company and AWS agree that the airtime rates charged between the parties shall be the lower of (a) the actual AWS average retail rates charged by AWS to its customers roaming into Company markets (but not less than the actual AWS average retail rate charged by AWS to its customers), and (b) $0.10 per minute. -4- Neither Party will charge for incomplete calls, busy calls, 611 calls, feature activations or interconnect fees. Airtime rates are charged in full minute increments with each partial minute rounded to the next full minute. Toll Rates: - ---------- $0.05 per InterLata minute and $0.02 per IntraLata minute. International toll rates shall be no more than AT&T tariff rates. The Company and AWS agree to offer a toll free calling area within their respective cellular areas which reasonably approximates, or is larger than, the toll free area offered by the landline telephone company in the area. Default rates apply to markets managed by AT&T Wireless Services on behalf of the other carriers as shown on Schedule 1. -5- SERVICE CHARGES FOR THE PUERTO RICO - U.S. VIRGIN ISLANDS MTA The following rates shall apply (I) to customers of AT&T while using the wireless radio telephone facilities of the Company in the Puerto Rico - U.S. Virgin Islands MTA, and (ii) to customers of the Company from the Puerto Rico - U.S. Virgin Islands MTA while using the wireless radio telephone facilities of AT&T. Airtime Rates: - ------------- The Company and AWS agree that the airtime rates charged between the parties during the term of this Agreement with respect to the Puerto Rico - U.S. Virgin Islands MTA as described above shall be the lower of (a) the actual AWS average retail rate charged by AWS to its customers roaming into Company markets (but not less than the actual AWS average retail rate charged by AWS to its customers), and (b) $0.10 per minute. AWS agrees that, commencing after the date the Company launches its PCS service in the Puerto Rico - U. S. Virgin Islands MTA (i.e., begins offering and marketing its PCS services to subscribers in the Puerto Rico - U.S. Virgin Islands MTA), the Company shall receive from AWS a minimum number of roaming minutes per month, adjusted as hereinafter set forth for the percentage of Pops in the Puerto Rico - U.S. Virgin Islands MTA where the Company's PCS system shall have been constructed (the "Adjusted Minimum Number of Minutes"). The Adjusted Minimum Number of Minutes (a) for each full month in 1999 after the Company's launch of its PCS service in the Puerto Rico - U.S. Virgin Islands MTA shall be equal to (x) 250,000, times (y) a fraction, the numerator of which is the number of Pops covered by the Company's PCS system in the Puerto Rico - U.S. Virgin Islands MTA on the first day of such month and the denominator of which is 3,876,000 and (b) for each full month in 2000 shall be equal to the aggregate number of roaming minutes received by the Company from AWS customers roaming in the Puerto Rico - U.S. Virgin Islands in October, November and December of 1999 divided by six (6), times the fraction set forth in clause (y) hereof. The Company shall determine (I) the aggregate number of roaming minutes received by the Company from AWS for each such full month in 1999 and 2000, respectively ("Aggregate Roaming Minutes"), and (II) the sum of the monthly Adjusted Minimum Number of Minutes for each such full month in 1999 and 2000, (the "Aggregate Minimum Minutes"). In the event that the Aggregate Minimum Minutes in 1999 or 2000, as applicable, exceeds the Aggregate Roaming Minutes in 1999 or 2000, as applicable, AWS shall pay to the Company an amount equal to such excess number of minutes times the applicable Airtime Rate for such year determined as set forth above. The Company shall promptly after the end of each of the 1999 and 2000 years deliver to the AWS its -6- determination of any amounts due and owing by AWS pursuant to this provision including reasonable supporting documentation for such calculation, such documentation to include the Company's basis for determining the Adjusted Minimum Number of Minutes for each applicable month. AWS shall make any required payment pursuant to this provision within 30 days of the Company's delivery of such determination, or if AWS objects to such determination, promptly after the parties agree on any such amount due and payable by AWS. Toll Rates: - ---------- $0.05 per InterLata minute and $0.02 per IntraLata minute. Calls between the Puerto Rico - U.S. Virgin Islands MTA and any other part of the United States shall be deemed to be InterLata toll calls. International toll rates shall be no more than AT&T tariff rates. The Company and AWS agree to offer a toll free calling area within their respective cellular areas which reasonably approximates, or is larger than, the toll free area offered by the landline telephone company in the area. Default rates apply to markets managed by AT&T Wireless Services on behalf of the other carriers as shown on Schedule 1. -7- EX-10.7 14 ROAMING ADMINISTRATION SERVICE AGREEMENT EXHIBIT 10.7.1 EXECUTION COPY ROAMING ADMINISTRATION SERVICE AGREEMENT ROAMING ADMINISTRATION SERVICE AGREEMENT ("Agreement") made this 17th day of July, 1998, by and between AT&T Wireless Services, Inc. ("AWS"), a Delaware corporation, with its principal place of business at 5000 Carillon Point, Kirkland, WA 98033, and TeleCorp PCS, Inc. ("TeleCorp"), a Delaware corporation, with its principal place of business at 1101 17th Street, N.W., Washington, D.C. 20036. Recitals -------- WHEREAS, TeleCorp would like to receive certain benefits under Intercarrier Roaming Services Agreements between AWS and other providers of wireless telecommunications service, and AWS would like TeleCorp to receive such benefits under the terms and conditions of this Agreement: WHEREAS, AWS provides Roamer Administration Services to owners and operators of wireless telecommunications systems; WHEREAS, TeleCorp owns and operates wireless telecommunications system(s) identified on Exhibit A and would like to receive Roamer Administration Services from AWS; and WHEREAS, AWS would like to provide TeleCorp with Roamer Administration Services subject to the terms and conditions of this Agreement; NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the parties hereby agree as follows: Definitions As used herein, the following terms shall have the following meanings: AS means the Administrative Services as more fully described in Exhibit B. CIBER means Cellular Intercarrier Billing Exchange Record as more fully described in the CIBER Standard. CIBER Standard means the publication prepared by CIBERNET Corporation, a wholly-owned subsidiary of the Cellular Telecommunications Industry Association, as a service to the wireless communications industry. Unless specifically provided otherwise in this Agreement, all words and phrases defined in the CIBER Standard shall have the meaning herein that they have therein. Claims means any claims, liabilities, damages, costs and expenses (including reasonable attorneys' fees) asserted by a third party against a party to this Agreement. CMRS or Service means Commercial Mobile Radio Service. EDS PCC means EDS Personal Communications Corporation. EDS PCC Agreement means that certain Interoperator Agreement dated January 3, 1997, between AWS and EDS PCC for certain services, as that Agreement may be amended, extended or renegotiated from time to time. ESN means the Electronic Serial Number that is encoded in a wireless telephone set by the manufacturer and which is broadcast by such telephone. Expenses means those costs and expenses related to providing the Roaming Administration Services set forth in Exhibit C, as may be amended from time to time by AWS. Fees means those fees for Roaming Administration Services set forth in Exhibit C, as may be amended from time to time by AWS. Incollect Obligations means those obligations of TeleCorp to AWS and Other Wireless Carriers that arise from Roaming by TeleCorp's subscribers on other wireless systems. These Incollect Obligations accrue separate for each of AWS and each Other Wireless Carrier. Intercarrier Roaming Services Agreement means an agreement entered into by two facilities-based providers of CMRS under which each carrier agrees to provide Service to the subscribers of the other carrier and which sets forth other terms and conditions of the provision of such Service, including but not limited to price, payment or settlement, and fraud liability terms, as the agreement may be amended, extended or renegotiated from time to time. ISS means Intercarrier Settlement Services as more fully described in Exhibit B. MIN means the ten-digit Mobile Identification Number which is assigned by a Home Carrier to each of its registered customers. NACN means the North American Cellular Network, Inc. and the SS7 signaling network owned and operated by the North American Cellular Network, Inc. NPA/NXX combinations means the six-digit numerical combinations assigned by regulatory authorities to identify the area code and telephone number prefix for Service. 2 NSS means Net Settlement Services as more fully described in Exhibit B. Other Wireless Carriers means facilities-based providers of CMRS with whom AWS has entered an Intercarrier Roaming Services Agreement and which are listed on Exhibit A-1. Outcollect Obligations means obligations owed to TeleCorp by AWS and Other Wireless Carriers arising from Roaming by the subscribers of these companies on the TELECORP System. These Outcollect Obligations accrue separately for each of AWS and each Other Wireless Carrier. PRV means Positive Roamer Verification services as more fully described in Exhibit B. Roamer means a customer of a wireless carrier who seeks Service within a geographic area served by another wireless carrier. Roaming Administrative Services means the services described in Exhibit B, including AS, FV, ISS, NSS, PRV and XLI, together with the services that may be provided in connection with the access to the Intercarrier Roaming Services Agreements entered into between AWS and Other Wireless Carriers. Serving Carrier means a Party who provides Service for registered customers of another Party while such customers are in the geographic area where the Serving Carrier, directly or through subsidiaries, provides Service. Settlement Period shall mean each one-month period of time commencing at 12:01 a.m. Pacific Standard Time on the sixteenth day of a given calendar month and ending at 12:00 midnight on the fifteenth day of the immediately following calendar month. XLI means a certain type of PRV service as more fully described in Exhibit B. TELECORP System means the wireless telecommunications system(s) owned and operated by TeleCorp as identified on Exhibit A. 3 Agreement 1. Access to Intercarrier Roaming Services Agreements. During the -------------------------------------------------- term of this Agreement, AWS will make available to TeleCorp the benefits of the Intercarrier Roaming Services Agreements between AWS and Other Wireless Carriers listed on Exhibit A-1, subject to the consent of such Other Wireless Carriers and subject to TeleCorp being a member in good standing of the NACN. TeleCorp will permit the subscribers of such Other Wireless Carriers to use the facilities of TeleCorp under the terms and conditions of the applicable Intercarrier Roaming Services Agreements. AWS may amend Exhibit A-1 by adding Other Wireless Carriers who have agreed to extend an Intercarrier Roaming Services Agreement to TeleCorp or by deleting Other Wireless Carriers who have either revoked the consent to extend an Intercarrier Roaming Services Agreement to TeleCorp or with whom the Intercarrier Roaming Services Agreement has terminated or expired, any such amendment to be effective no earlier than 7 days after the date such notice is given. 1.1 AWS Authority and Separate Rate Agreements. TeleCorp agrees that ------------------------------------------ AWS has full authority to negotiate terms, amendments of and addenda to the Intercarrier Roaming Services Agreements, administer the Intercarrier Roaming Services Agreements and settle disputes under the Intercarrier Roaming Services Agreements on behalf of TeleCorp and that TeleCorp will be bound by and comply with such terms, amendments, addenda, administrative decisions and settlements. TeleCorp may, at its option, choose to negotiate a separate rate for roaming Service with any or all of the Other Wireless Carriers. In order to have these separate rates included within the Roamer Administration Services, TeleCorp must provide AWS with written documentation verifying the rates at least thirty (30) days prior to the effective date for such rates. 1.2 Separate Liability. TeleCorp is liable for all of its obligations ------------------ under each Intercarrier Roaming Services Agreement in which it participates, including but not limited to payment obligations and fraud liability obligations. AWS will make available a copy of applicable Intercarrier Roaming Services Agreements within 30 days of request by TeleCorp. 1.3 Effect of Intercarrier Roaming Services Agreements. Each -------------------------------------------------- Intercarrier Roaming Services Agreement, as may be amended with respect to TeleCorp under section 1.1 above, supplies the terms and conditions of roaming services with respect to each Other Wireless Carrier. AWS maintains full control to continue or to terminate or let expire any Intercarrier Roaming Services Agreement. Nothing in this Agreement obligates AWS to enter into or to continue any Intercarrier Roaming Services Agreement with any Other Wireless Carrier. AWS will notify TeleCorp no less than thirty (30) days in advance of any termination by AWS or expiration of any Intercarrier Roaming Services Agreement. 1.4 Fraud Control. TeleCorp shall take reasonable actions to control ------------- fraudulent Roamer usage when acting as a Serving Carrier to be consistent with the Intercarrier Roaming Services Agreements, including without limitation using SS-7 connections through the NACN which perform validation functions. TeleCorp shall use commercially reasonable efforts to provide each Other Wireless Carrier with real-time visibility of call 4 detail records delivered through a network compatible with AT&T's network. Such information shall be delivered within one hour of the applicable call. In the event that TeleCorp provides such a real-time visibility system, TeleCorp shall not be liable in any event for a temporary failure of the system unless TeleCorp has been notified of such failure by the Other Wireless Carrier and TeleCorp does not take commercially reasonable steps to remedy the failure. If TeleCorp has been so notified and has so failed to take such commercially reasonable steps, TeleCorp shall be liable for all unauthorized usage attributed to the Other Wireless Carrier's subscribers during the period from the time TeleCorp was notified of the problem to the time that the problem has been resolved to the reasonable satisfaction of the Other Wireless Carrier. 1.5 Allocation of Roamer Revenues and Roamer Expenses. AWS will treat ------------------------------------------------- TeleCorp as an affiliate of AWS for administrative purposes in collecting and paying amounts owed to TeleCorp and owed by TeleCorp under the applicable Intercarrier Roaming Services Agreement. TeleCorp acknowledges and agrees that amounts owed to TeleCorp from Other Wireless Carriers will be collected by AWS, intermingled with other funds owed to AWS and then distributed to TeleCorp based upon the amounts owed to TeleCorp for Roamer usage by subscribers of the Other Wireless Carriers. TeleCorp further acknowledges and agrees that AWS will make payments for TeleCorp to Other Wireless Carriers based on the reports of Roamer usage by subscribers of TeleCorp on the systems of the Other Wireless Carriers. AWS will recover these amounts through the NSS functions described in Exhibit B. 2. Roaming Administration Services. During the term of this ------------------------------- Agreement, AWS hereby agrees to make available Roaming Administration Services to TeleCorp, subject to the terms of this Agreement. The Roaming Administration Services are set forth in Exhibit B, which may be amended by AWS from time to time upon written notice to TeleCorp. 2.1 Effect of EDS PCC Agreement. TeleCorp acknowledges that AWS --------------------------- receives certain of the Roaming Administration Services under the EDS PCC Agreement. In the event the EDS PCC Agreement terminates or expires, AWS' obligations to provide such Roaming Administration Services will cease. AWS will give TeleCorp notice promptly following its receipt of notice of termination from EDS PCC and will give prior notice of any cessation of Roaming Administration Services under this section 2.1. AWS will offer to resume such services (on such terms as it determines at the time of such offer) in the event that it extends or continues with EDS PCC, or enters into a new agreement with any other provider, with respect to such services. Nothing in this Agreement obligates AWS to extend, continue or enter into a new EDS PCC Agreement. TeleCorp agrees to comply with reasonable requests made by AWS in order to comply with and administer the EDS PCC Agreement. 2.2 Rates for Service. TeleCorp shall pay AWS Fees and Expenses for ----------------- the Roamer Administration Services as set forth on Exhibit C attached hereto. AWS may modify the Fees and Expenses set forth in Exhibit C upon thirty (30) days prior written notice to TeleCorp. Amounts owed each month for Fees and Expenses will be included as amounts owed to AWS in the NSS function described in Exhibit B. 5 3. Taxes. Unless TeleCorp provides a certificate of exemption or ----- other evidence acceptable to appropriate taxing authorities, TeleCorp shall pay any applicable federal, state or local sales, use, public utility, gross receipts or other taxes, fees or charges imposed on AWS as a result of (a) the roaming services received by TeleCorp under the Intercarrier Roaming Services Agreements and (b) providing the Roaming Administration Services to TeleCorp. Such taxes will be included in bills when imposed or required by law and shall be paid by TeleCorp in accordance with this Agreement. 4. Payment of Net Amounts. ---------------------- 4.1 Amounts Owed to AWS. TeleCorp will pay AWS in full any amounts ------------------- owed to AWS after the NSS procedure described in Exhibit B has occurred, including amounts owed to AWS or Other Wireless Carriers, on or before the fifteenth day of the month immediately following the close of a Settlement Period, provided TeleCorp has received the bill for such amounts at least five (5) business days prior to such payment date. If TeleCorp receives the bill later than such time, TeleCorp shall pay the bill within ten (10) days of its receipt by TeleCorp. Payments will be submitted to: AT&T Wireless Services, Inc., 5000 Carillon Point, Kirkland, WA 98033, ATTN: Billing and Intercarrier Settlement Services. 4.2 Amounts Owed to TeleCorp. AWS will pay TeleCorp in full any ------------------------ undisputed amounts owed to TeleCorp after the NSS procedure described in Exhibit B has occurred by AWS or Other Wireless Carriers, (a) for amounts owed by AWS, on or before the fifteenth day of the month immediately following the close of a Settlement Period, (b) for amounts owed by Other Wireless Carriers, together with the net settlement for the month following the date AWS receives payment from the Other Wireless Carriers. Payments will be submitted to: TeleCorp PCS, Inc., 1101 17th Street, N.W., Suite 900, Washington, D.C. 20036, ATTN: Controller. 4.3 Time. TeleCorp acknowledges and understands that, AWS will pay ---- Other Wireless Carriers for TeleCorp `subscribers' roaming usage prior to receiving payment from TeleCorp. Accordingly, TeleCorp acknowledges and agrees that time is of the essence and will make timely payments to AWS of all amounts set forth in each bill after the NSS procedures described in Exhibit B have occurred. TeleCorp is strictly liable to make timely payments hereunder, and such liability is not relieved by any dispute that TeleCorp may have with AWS, Other Wireless Carriers or any other third party. 4.4 Late Payment. If either party fails to make any payment to the ------------ other party when due hereunder, interest shall be paid, from the date due until paid in full, at a rate of 1.5% per month or portion thereof. In no event shall interest hereunder accrue at a rate that is in excess of the maximum rate permitted by applicable law. 5. Compatibility with AWS Systems. AWS will establish and, from time ------------------------------ to time, enhance the systems that provide information used in performing functions related to either the EDS PCC Agreement or Intercarrier Roaming Services Agreements, including, but not limited to, enhancements to billing systems. TeleCorp will maintain compatibility with these systems and system enhancements, including but not limited to the CIBER 6 format for billing records. TeleCorp will be responsible for the costs and expenses it incurs in maintaining this compatibility. 6. Indemnification. TeleCorp will defend, indemnify and hold AWS, --------------- its parent, subsidiaries and affiliates, and the officers, directors, employees and representatives of each of them harmless from and against any Claims arising from or made in connection with (a) any access or use (or inability to access or use) of roaming Service by TeleCorp or any subscriber of TeleCorp, on the system of AWS or any Other Wireless Carrier, (b) any access or use (or inability to access or use) of roaming Service on TeleCorp wireless system by AWS or an Other Wireless Carrier or a subscriber of AWS or an Other Wireless Carrier, (c) any information provided by TeleCorp to AWS, including without limitation any rate information and suspected fraud information, (d) any unlawful, negligent or otherwise wrongful act or failure to act of TeleCorp or its representatives, (e) a breach by TeleCorp of any provision of this Agreement, or (f) a breach by TeleCorp of any obligation to or agreement with its subscribers. 7. Limitation of Liability. ----------------------- 7.1 AWS SHALL NOT BE RESPONSIBLE TO TELECORP FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH AWS' PERFORMANCE UNDER THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, ANY DAMAGE TO OR LOSS OF REVENUES, BUSINESS OR GOODWILL. FURTHER, TELECORP ACKNOWLEDGES THAT IN PERFORMING ITS OBLIGATIONS HEREUNDER AWS WILL RELY UPON INFORMATION AND REPORTS PROVIDED TO AWS BY THIRD PARTIES. TELECORP AGREES THAT AWS MAY RELY UPON SUCH INFORMATION IN PERFORMING ITS OBLIGATIONS HEREUNDER, AND AWS SHALL NOT BE RESPONSIBLE OR LIABLE FOR THE ACCURACY OF ANY INFORMATION IT RECEIVES FROM THIRD PARTIES IN PERFORMING ITS OBLIGATIONS UNDER THIS AGREEMENT. IN NO EVENT WILL AWS' LIABILITY TO TELECORP, IN THE AGGREGATE, EXCEED THE AMOUNT PAID IN FEES BY TELECORP UNDER THIS AGREEMENT DURING THE FIRST TWELVE-MONTH PERIOD OF THE TERM OF THIS AGREEMENT. THIS SECTION 7.1 WILL SURVIVE THE TERMINATION OR EXPIRATION OF THIS AGREEMENT. 7.2 Neither of the parties will be liable for nonperformance or defective or late performance of any of its obligations under this Agreement to the extent and for such periods of time as such nonperformance, defective performance is due to reasons outside such party's control, including, without limitation, acts of God, war, acts (including failure to act) of any governmental authority, riots, revolutions, fire, floods, explosions, sabotage, nuclear incidents, lightning, weather, earthquakes, storms, sinkholes, epidemics, strikes or delays of suppliers, subcontractors, Other Wireless Carriers or EDS PCC. Neither party shall be required to settle any labor dispute in any manner which is deemed by that party to be less than totally advantageous, in that party's sole discretion. 7 8. Confidentiality. --------------- 8.1 Each of the parties hereto hereby covenants and agrees that, during the term of this Agreement and thereafter, neither it, nor any of its employees, agents, officers or directors, will at any time make use of, divulge or disclose to any person, firm or corporation any trade secrets or confidential or proprietary information about the other party, its business, financial condition, operations or otherwise (including, without limitation, any information concerning the other party's subscribers, their names, addresses, or telephone numbers, the terms and conditions of each Intercarrier Roaming Services Agreement and its amendments and addenda), whatever the source of such confidential or proprietary information. Specifically, and without limitation, TeleCorp acknowledges that all operational user's guides, manuals, computer application programs, written procedures or other systems documentation furnished to it by AWS is the sole property and proprietary information of AWS. This confidentiality agreement shall not apply to information which is in the public domain through no act of the party desiring to disclose. Information contained in documents shall be considered confidential or proprietary if it relates to information described above or the content and context of the information is indicative of a desire to maintain confidentiality, whether or not the document is specifically marked "confidential" or "proprietary". 8.2 Each party agrees that such confidential or proprietary information concerning the other party shall only be divulged or disclosed to its employees who have a valid business reason to know such information and then only to the extent required for the performance of such employee's duties. 8.3 Nothing herein shall restrict the right of any party to disclose confidential or proprietary information which is ordered to be disclosed pursuant to judicial or other lawful governmental action, but only to the extent so ordered, or as otherwise required by applicable law or regulation. If either party is served with process to obtain any confidential or proprietary information or subscriber records of the other party, that party shall immediately notify the other party and permit the other party to conduct the defense against disclosure. 8.4 Upon termination of this Agreement, each party shall, upon written request of the other party, return to the other all confidential and proprietary information concerning the other which exists in written or electronic form. 8.5 Each of the parties acknowledges and confirms that any failure on its part to adhere strictly to the terms and conditions of this paragraph is likely to cause substantial and irreparable injury to the other party. Accordingly, each party confirms and agrees that, in addition to all other remedies to which the other party may be entitled under this Agreement or at law or in equity, the other party shall be entitled to specific performance and other equitable relief, including temporary relief. 9. Term and Termination. -------------------- 8 9.1 This Agreement shall run for an initial term of two years, commencing on the date of this Agreement. It shall automatically renew for additional successive terms of one year each, unless either party gives the other party written notice of its intent not to renew at least ninety (90) days prior to the termination of the then-current term. 9.2 Either party may terminate this Agreement (except for any obligations which survive termination) for any reason or for no reason upon one hundred eighty (180) days prior written notice to the other party. 9.3 Either party may terminate this Agreement (except for any obligations which survive termination) for any of the following reasons: 9.3.1 Upon material breach of the other party which is not cured or for which cure is not reasonably commenced within 30 days after notice of claimed breach; 9.3.2 Immediately by either party, after reasonable prior notice, if the other party's operations materially and unreasonably interfere with its operations and such interference is not eliminated within 10 days; 9.4 AWS may terminate this Agreement (except for any obligations which survive termination) in the event that TeleCorp is no longer a member in good standing with the NACN. 9.5 AWS may terminate this Agreement with respect to any Intercarrier Roaming Services Agreement in accordance with Section 1. 9.6 AWS may terminate its obligations with respect to certain provisions under this Agreement: 9.6.1 with respect to the EDS PCC Agreement in the event such agreement expires or terminates; and 9.6.2 with respect to the Roaming Administration Services as set forth in Section 2.1 above. 9.7 Section 1 shall survive any termination by AWS pursuant to Section 9.4 or 9.5. 10. Events Upon Termination. Upon termination of this Agreement for ----------------------- whatever reason, each party shall immediately (or upon final accounting) pay all amounts owing to the other parties hereunder, whether due or to become due. 11. Representations and Warranties of TeleCorp. TeleCorp hereby ------------------------------------------ represents and warrants to AWS the following: 11.1 It is duly organized and validly existing under the laws of the jurisdiction of its organization. 9 11.2 It has full power and authority to execute and perform this Agreement. 11.3 The execution, delivery and performance of this Agreement has been duly authorized by all necessary action on its part and is binding and enforceable against it. 11.4 It is and for the term of this Agreement will remain qualified to hold a wireless operating license for the areas listed on Schedule A pursuant to the rules and regulations of the Federal Communications Commission any state authority with jurisdiction over the areas identified on Schedule A. 12. Notices and Other Communications. -------------------------------- 12.1 All notices required hereunder shall be in writing and shall be deemed to have been duly delivered effective upon receipt if personally delivered, or upon mailing if mailed by prepaid overnight express service, addressed to the following: If to AWS: AT&T Wireless Services, Inc. Carrier Relations 5000 Carillon Point Kirkland, WA 98033 Attn: Eric Baxter With a copy to: AT&T Wireless Services, Inc. 5000 Carillon Point Kirkland, WA 98033 Attn: Legal Department. If to TeleCorp: TeleCorp PCS, Inc. 1101 17th Street, N.W. Suite 900 Washington, D.C. 20036 Attn: Product Development-Roaming With a copy to: TeleCorp PCS, Inc. 1101 17th Street, N.W. Suite 900 Washington, DC 20036 Attn: Legal Department 10 12.2 For purposes of communication in order to administer this Agreement effectively, the parties designate the following contact persons for the subject matters set forth for them below. Either party may change the information with respect to its designated contacts under this Section 12.2 upon oral or written notice to the other party. TeleCorp Customer Care Contact Name: Scott Weismiller Tel: 202-261-4804 Fax: 202-833-4888 TeleCorp Switch Update/Technical Contact Name: Curt Gervelis Tel: 202-261-4730 Fax: 202-833-4888 TeleCorp Finance/Accounting Contact Name: Jackie Talady Tel: 202-261-4736 Fax: 202-833-4888 AWS Customer Care Contact Name: David Mansisidor Tel: 425-803-8821 Fax: 425-828-1390 AWS Switch Update/Technical Contact Name: David Mansisidor Tel: 425-803-8821 Fax: 425-828-1390 AWS Finance/Accounting Contact Name: Mary Hawes Tel: 425-828-1308 Fax: 425-828-1390 13. Miscellaneous Provisions. ------------------------ 13.1 Attorneys' Fees and Costs. In the event of any action at law or ------------------------- in equity concerning the enforcement or interpretation of the terms of this Agreement, the prevailing party shall be entitled to reimbursement for reasonable attorneys' fees, costs, and necessary disbursements in addition to any other relief to which it may show itself to be entitled. 11 13.2 No Joint Venture. Nothing in this Agreement is intended, or shall ---------------- be construed, to create a joint venture, partnership or other common business entity as among AWS and TeleCorp. Neither of the parties shall have the authority to accept legal process on behalf of the other party. Nothing herein gives TeleCorp or AWS claim to the subscribers of the other or to revenues of the other derived from its respective system. Both parties shall be solely responsible for the operation of its systems or businesses, including but not limited to payment of wages, benefits, taxes for employees and sales or income taxes. 13.3 Governmental Approval. The performance of any obligations of any --------------------- party hereunder, or the exercise of any rights hereunder by any party hereto that may require FCC or other governmental authority approval, shall be subject to obtaining such approval. Both parties agree to take no action under this Agreement which may place the other party in non-compliance with known and applicable government regulations. 13.4 Governing Law. This Agreement shall be construed under and in ------------- accordance with the Laws of the State of Washington. 13.5 Assignment. This Agreement and the duties and obligations ---------- hereunder may not be assigned by either party without the express written consent of the other party and an agreement by the assignee to be fully bound by the terms and conditions hereof; provided, however, that such consent will not be unreasonably withheld; and, provided further, that AWS may assign its rights and obligations to an affiliate without obtaining the consent of TeleCorp. TeleCorp acknowledges that AWS may subcontract any or all of its duties under this Agreement to a third party. In the event AWS assigns this Agreement to a third party, TeleCorp may terminate this Agreement upon 90 days' written notice within 30 days of such assignment. 13.6 No Third-Party Beneficiary. This Agreement is not intended, nor -------------------------- shall it be construed, to create or convert any right in or upon any person or entity not a party to this Agreement, unless specifically set forth in this Agreement. 13.7 Parties Bound. This Agreement shall be binding upon and inure to ------------- the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and assigns where permitted by this Agreement. 13.8 Severability. In case any one or more of the provisions contained ------------ in this Agreement shall for any reason be held by any arbitration tribunal or court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision thereof, and this Agreement shall be construed as if such invalid, illegal, or unenforceable provisions were deleted, and replaced with enforceable provisions, which as nearly as possible, give effect to the intent of such invalid, illegal or unenforceable provisions. 13.9 Entire Agreement. This Agreement constitutes the sole and only ---------------- agreement of the parties with respect to the services described herein and supersedes any prior understanding or written or oral agreements between the parties respecting the within 12 subject matter. In the event another form or invoice is used for provision of the services and such form or invoice contains terms or conditions different from those set forth herein, the parties agree that the language of this Agreement shall control. 13.10 Section Headings. The headings of the several sections and ---------------- paragraphs of this Agreement are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. 13.11 No Waiver. Either party's failure at any time to enforce any of --------- the provisions of this Agreement or any right with respect thereto, or to exercise any option herein provided, will in no way be construed to be a waiver of such provisions, rights or options or in any way to affect the validity of this Agreement. The exercise by either party of any rights or options herein shall not preclude or prejudice the exercising thereafter of the same or other rights under this Agreement. 13.12 Dispute Resolution. ------------------ 13.13 All claims and disputes relating in any way to the performance, interpretation, validity, or breach of this Agreement, including but not limited to a claim based on or arising from an alleged tort, shall be resolved as provided in this Section 13.12. It is the intent of the parties that any disagreements be resolved amicably to the greatest extent possible. 13.14 If a disagreement cannot be resolved by the representatives of the parties with day-to-day responsibility for this Agreement, such matter shall be referred to an executive officer of each of the parties. The executive officers shall conduct face-to-face negotiations at a neutral location or such other location as shall be mutually agreed upon. If these representatives are unable to resolve the dispute within ten business days after either party requests the involvement of the executive officers, then either party may, but is not required to, refer the matter to mediation or arbitration, as applicable in accordance with this Section 13.12. 13.15 In any case where the amount claimed or at issue is Five Hundred Thousand Dollars ($500,000.00) or more and the parties are unsuccessful in resolving the disagreement, the parties agree to submit the disagreement to non-binding mediation upon written notification by either party. The parties shall mutually select an independent mediator experienced in telecommunications system disputes. The specific format for the mediation shall be left to the discretion of the mediator. If mediation does not result in resolution of the disagreement within thirty days of the initial request for mediation, then either party may, but is not required to, refer the matter to arbitration. 13.16 Any disagreement not finally resolved in accordance with the foregoing provisions of this Section 13.12 shall, upon written notice by either party to the other, be resolved by final and binding arbitration. Subject to this Section, such arbitration shall be conducted through, and in accordance with the rules of, JAMS/Endispute. A single neutral arbitrator shall decide all disputes. Each party shall bear its own expenses with respect to the arbitration, except that the costs of arbitration proceeding itself, including the fees and 13 expenses of the arbitrator, shall be shared equally by the parties. The arbitration shall take place in a neutral location selected by the arbitrator. The arbitrator may permit discovery to the full extent permitted by the Federal Rules of Civil Procedure or to such lesser extent as the arbitrator determines is reasonable. The arbitrator shall be bound by and strictly enforce the terms of this Agreement. The arbitrator shall make a good faith effort to apply applicable law, but an arbitration decision and award shall not be subject to review because of errors of law. The arbitrator shall have the sole authority to resolve issues of the arbitrability of any disagreement, including the applicability or running of any applicable statute of limitation. The arbitrator shall not have power to award damages in connection with any dispute in excess of actual compensatory damages nor to award punitive damages nor any damages that are excluded under this Agreement and each party irrevocably waives any claim thereto. The award of any arbitration shall be final, conclusive and binding on the Parties. Judgment on the award may be entered in any court having jurisdiction over the Party against which the award was made. Nothing contained in this Section 13.12 shall be deemed to prevent either party from seeking any interim equitable relief, such as a preliminary injunction or temporary restraining order, pending the results of the arbitration. The United States Arbitration Act and federal arbitration law shall govern the interpretation, enforcement, and proceedings pursuant to the arbitration clause in this Agreement. 13.17 No action or arbitration, regardless of form, may be brought by either party more than two (2) years from the date of the event which gave rise to such action. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written. AWS: AT&T Wireless Services, Inc. By: /s/ Signature illegible --------------------------------- Its: Vice President --------------------------------- TeleCorp PCS, Inc.: TeleCorp PCS, Inc. By: /s/ Thomas H. Sullivan --------------------------------- Its: Executive Vice President --------------------------------- 14 EXHIBIT A TeleCorp PCS, Inc. System PCS systems to be constructed in the Territory (as such term is defined in the Securities Purchase Agreement dated January 23, 1998 by and among TeleCorp PCS, Inc., AT&T Wireless PCS Inc., TWR Cellular, Inc. and the other signatories thereto). 15 EXHIBIT A-1 Other Wireless Carriers (See Attached) A-1 Effective 7/16/98 Exhibit A-1 Carrier_Name Carrier_Shortname VALLEY TELECOMMUNICATIONS COMPANY VALLEY TELECOMMUNICATIONS WESTERN WIRELESS CORPORATION WESTERN WIRELESS COMCAST CELLULAR CORPORATION COMCAST CELLULAR HOUSTON CELLULAR TELEPHONE CO HOUSTON CELL WESTEL - INDIANAPOLIS TELEPHONE COMPANY WESTEL AT&T WIRELESS SERVICES, INC. AWS SYGNET COMMUNICATIONS INC. SYGNET COMM INC. UNITED STATES CELLULAR CORP U.S. CELLULAR MERCURY CELLULAR INCORPORATED MERCURY CELLULAR ALLTEL MOBILE COMMUNICATIONS ALLTEL PALMER WIRELESS INC. PALMER WIRELESS GALVESTON CELLULAR TELEPHONE CO. GALVESTON CELL PETROLEUM COMMUNICATIONS PETROCOM SANTA CRUZ CELLULAR TELEPHONE CO. SANTA CRUZ CELL. APPALACHIAN CELLULAR APPALACHIAN CELLULAR SPRINGWICH CELLULAR LTD PARTNERSHIP SNET CELLULAR ARCTIC SLOPE TELECOMM. & CELLULAR, INC. ARCTIC SLOPE CELLULAR DOBSON CELLULAR SYSTEMS OF KS/MO DCS OF KS/MO BACHOW/COASTEL OPERATIONS, INC. COASTEL COMMUNICATIONS ALLEGAN CELLULAR L.P. ALLEGAN CELLULAR EASTERBROOKE CELLULAR CORP - RCM EASTERBROOKE CELLULAR LAKE HURON CELLULAR CORPORATION LAKE HURON CELLULAR TEXAS 16 CELLULAR TELEPHONE COMPANY TEXAS 16 CELLULAR TRIAD CELLULAR PREVIOUSLY C-1 N. TEXAS TRIAD CELLULAR METACOMM CELLULAR PARTNERS METACOMM CELLULAR BLACKWATER CELL/DOUGLAS TELECOMMUNICATIONS BLACKWATER CELLULAR ALPHA CELLULAR C-1 COLUMBUS CELLULAR COMM OF PUERTO RICO INC CCPR PRICELLULAR CORPORATION PRICELLULAR GREAT LAKES OF IOWA, INC. C-1 GREAT LAKES OF IOWA DOBSON CELLULAR SYSTEMS INCORPORATED DOBSON CELLULAR CAL-ONE CELLULAR CAL-ONE CELLULAR MERCURY COMMUNICATIONS MERCURY COMMUNICATIONS HLD CELLULAR HLD CELLULAR IFC CELLULAR PARTNERS C-1 FREDERICK BLUE MOUNTAIN CELLULAR BLUE MOUNTAIN CELLULAR CELLULAR ONE OF SOUTHWEST FLORIDA C-1 SW FLORIDA UNIVERSAL TELECELL, INC. UNITEL INC. Page 1 EXHIBIT B Roaming Administration Services 1. Administration Services (AS) The AS will include various services that AWS will perform to manage TeleCorp's roaming program. 1.1 Reports and Bills. Each month during the term of this Agreement, ----------------- within a reasonable period of time after receipt by AWS of information regarding the Roamer activity during the prior Settlement Period, AWS shall provide TeleCorp with a report summarizing Roamer activity during the prior Settlement Period. 1.2 Exchange of Information. AWS shall provide Other Wireless ----------------------- Carriers and the North American Cellular Network with information (including, without limitation, NPA/NXX and number range combinations) provided to AWS by TeleCorp pursuant to the Intercarrier Roamer Services Agreement between AWS and TeleCorp that will enable TeleCorp's subscribers to roam in the markets owned by Other Wireless Carriers. Further, AWS shall provide TeleCorp with information (including, without limitation, NPA/NXX combinations and MINs) provide to AWS by Other Wireless Carriers and the NACN pursuant to roaming agreements that will enable the subscribers of Other Wireless Carriers to roam in the wireless systems identified in Exhibit A-1. 1.3 Outcollect Table Maintenance. In the event that TeleCorp uses ---------------------------- CBIS as its billing vendor, AWS will maintain the Macro/Cell tables necessary to bill subscribers of AWS and Other Wireless Carriers for use of the TeleCorp network. Specifically, AWS agrees to maintain the Roamer Outcollect Maintenance (070101) and roamer Surcharge Maintenance (070102) tables including bi-weekly updates of new NPA/NXX information, maintenance required by changes to rate agreements and corrections identified through the course of AWS' regular operations work. 1.4 Fraud Brownout Notifications. AWS agrees to serve as the request ---------------------------- processor and single point of contact between TeleCorp, on the one hand, and AWS and Other Wireless Carriers, on the other hand, for the exchange of suspected fraudulent use notifications and NPA/NXX pull and reload requests related to fraudulent use of TeleCorp NPA/NXX's on the networks of AWS and Other Wireless Carriers and the NPA/NXX's of AWS and Other Wireless Carriers on the network of TeleCorp. AWS will receive and forward all requests on a daily (Monday - Friday) basis to the appropriate party for action. In addition, AWS agrees to maintain and distribute as requested historical data regarding fraud pull and reload request data. 1.5 Rate Monitoring. AWS will monitor incollect rates charged to --------------- TeleCorp and outcollect rates charged by TeleCorp. If an incorrect roaming rate is charged by TeleCorp to an Other Wireless Carrier, and the Other Wireless Carrier invoices AWS for amounts charged in excess of the amounts that should have been charged under the B-1 applicable Intercarrier Roaming Services Agreement, AWS shall refund all amounts in excess of the contract rate back to the Other Wireless Carrier within forty-five days of notification by the Other Wireless Carrier. If an incorrect roaming rate is charged to TeleCorp by an Other Wireless Carrier so that the amounts charged in a month are more than $200 over the amounts that should have been charged under the applicable Intercarrier Roaming Services Agreement, AWS will invoice the Other Wireless Carrier for all amounts in excess of the contract rate. AWS shall not be responsible for any amounts undercharged by AWS on behalf of TeleCorp to any Other Wireless Carrier. 2. Full Visibility (FV) Services - Optional Service ------------------------------------------------ FV services are adjunct to XLI service. FV provides a mechanism for receiving transaction information on all call attempts made by a Roamer who subscribes to a carrier using XLI while roaming on a market serviced by the GTE TSI network for validation. The FV services include the following features: 2.1 When a subscriber from a carrier using XLI is roaming in an area served by GTE for validation is found negative in GTE's negative file, GTE sends a visibility notification message which can then be used to report the activity. When a subscriber from a carrier using XLI is roaming in an area served by GTE for validation, and is not found in the GTE negative file, but has a valid status in their industry file, GTE will send a visibility notification message which can then be used to report the activity. 2.2 Additional options for updating visibility settings by NPA/NXX ranges or by System Identification ("SID") or Billing Identification ("BID") are available. 2.3 Home carrier enabling/disabling option by NPA/NXX range or by SID/BID within a 45-day period. 2.4 Availability of cloning activity reports for Roamers on systems using GTE and XLI. 3. Intercarrier Settlement Services (ISS) -------------------------------------- With ISS, AWS will instruct EDS PCC to edit roaming records to verify the billable status of these records. These edits will be performed in accordance with the then current CIBER standards. AWS will also provide certain standard reports in connection with these edits. 3.1 Edits. The records will be edited against the CIBERNET standards, ----- using a 60-day standard for the Call Age Edit. Any records which do not satisfy these standards will be returned to the serving carrier. 3.1.1 Negative File Edit 3.1.2 CIBER Edit 3.1.3 NPA/NXX Edit - Proper Routing of Call 3.1.4 Call Age Edit 3.1.5 Out-of-Sequence Batch Edits B-2 3.1.6 Duplicate Call Edit 3.1.7 Roamer Agreement Edit 3.1.8 Out of Balance Edit 3.1.9 Invalid Record Type Edit 3.1.10 Incorrect Rate Edit 3.1.11 Additional Edits Per CIBER Standard Table 3 3.2 Reports. The following reports reflect activity within a ------- settlement cycle. Each report is produced at the end of each settlement cycle (the 1st through the 15th of the calendar month and the 16th of a calendar month through month end). 3.2.1 Incollect Reports which summarize the amounts owed by TeleCorp for Roamer calls to each of AWS and each Other Wireless Carrier. 3.2.2 Outcollect Reports which summarize the amounts owed to TeleCorp for Roamer calls from each of AWS and each Other Wireless Carrier. 3.2.3 Net Settlement Reports which summarize the net amount owed to or owed by TeleCorp for Roamer calls with respect to each of AWS and each Other Wireless Carrier. 4. Net Settlement Services (NSS) ----------------------------- 4.1 Clearinghouse Functions. AWS shall provide Roamer clearinghouse ----------------------- functions for TeleCorp, such that TeleCorp's Incollect Obligations are netted against TeleCorp's Outcollect Obligations for AWS and each Other Wireless Carrier. To the extent that the Incollect Obligations, Fees and Expenses exceed the net Outcollect Obligations with respect to AWS or with respect to any Other Wireless Carrier, TeleCorp shall pay such net Incollect Obligations, Fees and Expenses to AWS. To the extent that net Outcollect Obligations exceed net Incollect Obligations, Fees and Expenses with respect to AWS or any Other Wireless Carrier, AWS shall pay such net Outcollect Obligations to TeleCorp. 4.2 Fraud Settlement Functions. AWS will invoice Other Wireless -------------------------- Carriers for Roamer fraud, under the terms of any Intercarrier Roaming Services Agreements in place with Other Wireless Carriers. AWS will provide invoices to TeleCorp for Roamer fraud incurred by Other Wireless Carriers and make payments to Other Wireless Carriers for these invoices. Information to be included in any invoice to AWS or any Other Wireless Carrier must be in the format required by AWS, as that format may change from time to time. This information must be submitted to AWS sufficiently close to the date of the call record at issue in order to permit AWS to invoice Other Wireless Carriers. 5. Positive Roamer Verification (PRV) - Optional Service ----------------------------------------------------- The PRV service will provide TeleCorp with the ability to verify the billing status of Roamers from Other Wireless Carriers not connected to TeleCorp through the NACN or other network or carriers which provide alternative SS7 verification services. This B-3 verification will be accomplished through comparison of the Roamer's MIN an ESN combination with a database designed to identify potential fraudulent use. This information can be used by TeleCorp to deny service to callers when roaming in the TELECORP System. B-4 EXHIBIT C Fees and Expenses Service Fee - ------- --- PRV (optional) $0.21 per unique ESN validation per each calendar day. XLI (optional) $0.16 per unique ESN validation per each calendar day. $1000.00 per SID/BID minimum (waived if transaction charges are greater than or equal to $1000.00) FULL VISIBILITY $0.025/transaction (optional) $500.00 for first SID/BID using FV. $50.00 for additional SID/BIDs using FV. $500.00 Installation - one time charge. ISS $0.015 per outcollect record $0.015 per incollect record Monthly minimum: Up to 100K records monthly: $2,000 per SID/BID flat fee and no record fee. Greater than 100K records monthly: $1,000 per SID/BID plus record fee for records above 100K CLEARINGHOUSE $1000.00 per SID/BID SET UP FEE ROAM AGREEMENT $25,000.00 SET UP FEE CIBERNET Fees $0.005 per outcollect amount dollar owed to TeleCorp. Special Processing and As agreed by the parties in writing Reports Clearinghouse Financial $50.00 per market per Settlement Period Reports TeleCorp will also pay all postage, handling, overnight mail fees, and any other fees incurred by AWS as the result of complying with special requests from TeleCorp for services and reports not described in this Agreement or for special modifications to any service or report. AWS may modify the fees outlined above with 30 days' prior written notice. EX-10.8.1 15 CREDIT AGREEMENT EXHIBIT 10.8.1 CONFORMED COPY ================================================================================ CREDIT AGREEMENT dated as of July 17, 1998 among TELECORP PCS, INC. The Lenders Party Hereto and THE CHASE MANHATTAN BANK, as Administrative Agent and Issuing Bank TD SECURITIES (USA) INC., as Syndication Agent BANKERS TRUST COMPANY, as Documentation Agent ================================================================================ TABLE OF CONTENTS
Page ---- ARTICLE I Definitions ----------- SECTION 1.01. Defined Terms............................................ 1 SECTION 1.02. Classification of Loans and Borrowings................... 40 SECTION 1.03. Terms Generally.......................................... 40 SECTION 1.04. Accounting Terms; GAAP................................... 39 ARTICLE II The Credits ----------- SECTION 2.01. Commitments.............................................. 41 SECTION 2.02. Loans and Borrowings..................................... 41 SECTION 2.03. Requests for Borrowings.................................. 43 SECTION 2.04. Funding of Borrowings.................................... 44 SECTION 2.05. Interest Elections....................................... 44 SECTION 2.06. Termination and Optional Reduction of Commitments........................................... 46 SECTION 2.07. Repayment of Loans; Evidence of Debt..................... 47 SECTION 2.08. Automatic Revolving Commitment Reductions; Amortization of Term Loans............................................ 48 SECTION 2.09. Prepayment of Loans...................................... 50 SECTION 2.10. Fees..................................................... 53 SECTION 2.11. Interest................................................. 54 SECTION 2.12. Alternate Rate of Interest............................... 55 SECTION 2.13. Increased Costs.......................................... 55 SECTION 2.14. Break Funding Payments................................... 57 SECTION 2.15. Taxes.................................................... 57 SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Setoffs........................... 59 SECTION 2.17. Mitigation Obligations; Replacement of Lenders........... 62 SECTION 2.18. Expansion Facility....................................... 63 SECTION 2.19. Letters of Credit........................................ 64 ARTICLE III Representations and Warranties ------------------------------ SECTION 3.01. Organization; Powers..................................... 69
SECTION 3.02. Authorization; Enforceability............................ 70 SECTION 3.03. Governmental Approvals; No Conflicts..................... 70 SECTION 3.04. Financial Condition; No Material Adverse Change.......... 70 SECTION 3.05. Properties............................................... 71 SECTION 3.06. Litigation and Environmental Matters..................... 71 SECTION 3.07. Compliance with Laws and Agreements...................... 72 SECTION 3.08. Investment and Holding Company Status.................... 72 SECTION 3.09. Taxes.................................................... 72 SECTION 3.10. ERISA.................................................... 73 SECTION 3.11. Disclosure............................................... 73 SECTION 3.12. Subsidiaries; Parents.................................... 74 SECTION 3.13. Absence of Non-Permitted Obligations..................... 75 SECTION 3.14. Licenses................................................. 75 SECTION 3.15. No Burdensome Restrictions............................... 75 SECTION 3.16. Use of Proceeds.......................................... 76 SECTION 3.17. Flood Insurance.......................................... 76 SECTION 3.18. Insurance................................................ 76 SECTION 3.19. Labor Matters............................................ 76 SECTION 3.20. Solvency................................................. 76 SECTION 3.21. FCC Compliance........................................... 77 SECTION 3.22. Security Documents....................................... 77 SECTION 3.23. Copyrights, Trademarks, etc.............................. 79 SECTION 3.24. Federal Regulations...................................... 79 SECTION 3.25. Year 2000................................................ 79 ARTICLE IV Conditions ---------- SECTION 4.01. Effective Date........................................... 80 SECTION 4.02. Each Credit Event........................................ 87 ARTICLE V Affirmative Covenants ---------------------- SECTION 5.01. Financial Statements and Other Information............................................. 88 SECTION 5.02. Notices of Material Events............................... 91 SECTION 5.03. Information Regarding Collateral......................... 92 SECTION 5.04. Existence; Conduct of Business........................... 93 SECTION 5.05. Payment of Obligations................................... 93 SECTION 5.06. Maintenance of Properties................................ 93
SECTION 5.07. Insurance................................................ 93 SECTION 5.08. Casualty and Condemnation................................ 93 SECTION 5.09. Books and Records; Inspection and Audit Rights........... 94 SECTION 5.10. Compliance with Laws..................................... 94 SECTION 5.11. Use of Proceeds.......................................... 95 SECTION 5.12. Additional Subsidiaries.................................. 95 SECTION 5.13 Further Assurances....................................... 95 SECTION 5.14. Interest Rate Protection................................. 97 SECTION 5.15. Satisfaction of F-Block Licence Requirements............. 97 ARTICLE VI Negative Covenants ------------------ SECTION 6.01. Indebtedness; Certain Equity Securities.................. 97 SECTION 6.02. Liens.................................................... 101 SECTION 6.03. Sale and Lease-Back Transactions......................... 102 SECTION 6.04. Fundamental Changes...................................... 102 SECTION 6.05. Investments, Loans, Advances, Guarantees and Acquisitions.............................. 103 SECTION 6.06 Asset Sales.............................................. 105 SECTION 6.07. Hedging Agreements....................................... 106 SECTION 6.08. Restricted Payments; Certain Payments of Indebtedness.......................................... 106 SECTION 6.09. Transactions with Affiliates............................. 107 SECTION 6.10. Restrictive Agreements................................... 108 SECTION 6.11. Amendment of Material Documents.......................... 108 SECTION 6.12. Financial Covenants...................................... 109 SECTION 6.13. Liabilities of Special Purpose Subsidiaries.............. 113 ARTICLE VII Events of Default................................. 114 ----------------- ARTICLE VIII The Administrative Agent.......................... 119 ------------------------ ARTICLE IX Miscellaneous -------------
SECTION 9.01. Notices.................................................. 121 SECTION 9.02. Waivers; Amendments...................................... 122 SECTION 9.03. Expenses; Indemnity; Damage Waiver....................... 124 SECTION 9.04. Successors and Assigns................................... 126 SECTION 9.05. Survival................................................. 129 SECTION 9.06. Counterparts; Integration; Effectiveness................. 129 SECTION 9.07. Severability............................................. 130 SECTION 9.08. Right of Setoff.......................................... 130 SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process................................... 130 SECTION 9.10. WAIVER OF JURY TRIAL..................................... 131 SECTION 9.11. Headings................................................. 132 SECTION 9.12. Confidentiality.......................................... 132
SCHEDULES: - --------- Schedule 1.01 -- Equity Participations Schedule 2.01 -- Commitments Schedule 3.05 -- Real Property Schedule 3.06 -- Litigation and Environmental Matters Schedule 3.12 -- Subsidiaries Schedule 3.14 -- Network Area/Licenses Schedule 3.18 -- Insurance Schedule 3.22 -- Mortgaged Property Schedule 6.01 -- Existing Indebtedness Schedule 6.02 -- Existing Liens Schedule 6.05(b) -- Investments Schedule 6.10 -- Existing Restrictions EXHIBITS: - -------- Exhibit A -- Form of Assignment and Acceptance Exhibit B-1 -- Opinion of Borrower's Counsel Exhibit B-2 -- Opinion of FCC Counsel Exhibit B-3 -- Form of Opinion of Local Counsel Exhibit C -- Form of Guarantee Agreement Exhibit D -- Form of Pledge Agreement Exhibit E -- Form of Security Agreement Exhibit F -- Form of Indemnity, Subrogation and Contribution Agreement Exhibit G -- Master Lease between the Equipment Subsidiary and the Borrower CREDIT AGREEMENT dated as of July 17, 1998 among TELECORP PCS, INC., a Delaware corporation (the "Borrower"), the LENDERS (as -------- defined in Article I) party hereto, THE CHASE MANHATTAN BANK, as Administrative Agent and Issuing Bank, TD SECURITIES (USA) INC., as Syndication Agent, and BANKERS TRUST COMPANY, as Documentation Agent. WHEREAS the Borrower intends to construct and operate a mobile wireless PCS telecommunications network utilizing TDMA IS-136 technology or its successor and networks ancillary thereto serving the MTAs and BTAs listed on Schedule 3.14 (the "Network"); ------- WHEREAS the Borrower has requested the Lenders to make available credit facilities to finance capital expenditures related to the construction of the Network, the acquisition of Related Businesses, working capital needs of the Borrower and subscriber acquisition costs; and WHEREAS the Lenders are willing to make the requested credit facilities available on the terms and subject to the conditions set forth in this Agreement; NOW, THEREFORE, in consideration of the premises and the mutual agreements set forth below, the parties hereto agree as follows: ARTICLE I Definitions ----------- SECTION 1.01. Defined Terms. As used in this Agreement, the -------------- following terms have the meanings specified below: "ABR", when used in reference to any Loan or Borrowing, refers to --- whether such Loan, or the Loans comprising such Borrowing, bear interest at a rate determined by reference to the Alternate Base Rate. "Adjusted EBITDA" means for any fiscal period, the sum of (a) --------------- Consolidated EBITDA for such period plus (b) the aggregate amount deducted in ---- determining Consolidated Net Income for such period in respect of sales, marketing and advertising expenses and consumer-related equipment subsidy expenses. "Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing ------------------ for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate. "Administrative Agent" means The Chase Manhattan Bank, in its capacity -------------------- as administrative agent and collateral agent for the Lenders. "Administrative Questionnaire" means an Administrative Questionnaire ---------------------------- in the form supplied by the Administrative Agent. "Affiliate" means, with respect to a specified Person, another Person --------- that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified and with respect to any Lender that is a fund that invests in commercial loans, any other fund that invests in commercial loans and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor. "Aggregate Revolving Exposure" means the aggregate amount of the ---------------------------- Lenders' Revolving Exposures. "Aggregate Service Revenue" means for any period, all service ------------------------- revenues, including without limitation subscriber revenues, toll revenues, roaming revenues, wholesale service revenues and long-distance revenues, of the Borrower and the Restricted Subsidiaries for such period. "Alternate Base Rate" means, for any day, a rate per annum equal to ------------------- the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively. "Annualized Adjusted EBITDA" means for the period ending on the last --------------------------- day of any fiscal quarter, the product of 3 (a) Adjusted EBITDA for the two consecutive fiscal quarters ending on such last day, multiplied by (b) two. "Annualized EBITDA" means for the period ending on the last day of any ----------------- fiscal quarter, the product of (a) Consolidated EBITDA for the two consecutive fiscal quarters ending on such last day, multiplied by (b) two. "Applicable Margin" means, for any day (a) with respect to any Tranche ----------------- B Term Loan, the applicable Tranche B Rate, and (b) with respect to any ABR Loan or Eurodollar Loan that is a Revolving Loan or a Tranche A Term Loan, as the case may be, the applicable rate per annum set forth below under the caption "ABR Spread" or "Eurodollar Spread", as the case may be, based upon the Leverage Ratio as of the most recent determination date; provided that, unless -------- Consolidated EBITDA for the most recent fiscal quarter for which financial statements have been delivered pursuant to Section 5.01 is positive, the "Applicable Margin" for purposes of clause (b) shall be the applicable rate per annum set forth below in Category 1:
- -------------------------------------------------------------------------- Leverage Ratio: ABR Eurodollar --------------- --- ---------- Spread Spread ------ ------ - -------------------------------------------------------------------------- Category 1 1.75% 2.75% ---------- Not Applicable - -------------------------------------------------------------------------- Category 2 1.50% 2.50% ---------- Greater than or equal to 10.0 to 1.00 - --------------------------------------------------------------------------- Category 3 1.25% 2.25% ---------- Greater than or equal to 9.0 to 1.00 but less than 10.0 to 1.00 - --------------------------------------------------------------------------- Category 4 1.00% 2.00% ---------- Greater than or equal to 8.0 to 1.00 but less than 9.0 to 1.00 - --------------------------------------------------------------------------- Category 5 0.75% 1.75% ---------- Greater than or equal to 6.0 to 1.00 but less than 8.0 to 1.00 - --------------------------------------------------------------------------- Category 6 0.50% 1.50% ---------- - ---------------------------------------------------------------------------
4
- -------------------------------------------------------------------------- Leverage Ratio: ABR Eurodollar --------------- --- ---------- Spread Spread ------ ------ - -------------------------------------------------------------------------- Greater than or equal to 5.0 to 1.00 but less than 6.0 to 1.00 - --------------------------------------------------------------------------- Category 7 ---------- 0.25% 1.25% Less than 5.0 to 1.00 - ---------------------------------------------------------------------------
For purposes of the foregoing, (i) the Leverage Ratio shall be determined as of the end of each fiscal quarter of the Borrower's fiscal year based upon the Borrower's consolidated financial statements delivered pursuant to Section 5.01(a) or (b) and (ii) each change in the Applicable Margin resulting from a change in the Leverage Ratio shall be effective during the period commencing on and including the date of delivery to the Administrative Agent of such consolidated financial statements indicating such change and ending on the date immediately preceding the effective date of the next such change; provided that the Leverage Ratio shall be deemed to be in Category 1 (A) -------- at any time that an Event of Default has occurred and is continuing or (B) if the Borrower fails to deliver the consolidated financial statements required to be delivered by it pursuant to Section 5.01(a) or (b), during the period from the expiration of the time for delivery thereof until such consolidated financial statements are delivered. Notwithstanding the foregoing, in the event that within twelve months of the Closing Date the Borrower effects an issuance of Subordinated Debt with an initial public offering or purchase price which, together with the outstanding principal amount (after giving effect to any prepayments of the Series B Bonds made with the proceeds of such Subordinated Debt) of the Series B Bonds, exceeds $220,000,000, the Applicable Margin will be reduced by 25 basis points. "Applicable Rate" means with respect to the commitment fees payable --------------- hereunder, the applicable rate per annum set forth below based upon the percentage of the total Revolving Commitments and Tranche A Commitments which are unused on such date: 5
- ---------------------------------------------------------------------------------------- Undrawn Commitments as a Percentage of the Total - ------------------------------------------------ Revolving Commitments and Tranche A Commitments Commitment Fee ----------------------------------------------- -------------- - ---------------------------------------------------------------------------------------- Greater than or equal to 75.0% 1.25% - ---------------------------------------------------------------------------------------- Greater than or equal to 50.0% but less than 75.0% 0.875% - ---------------------------------------------------------------------------------------- Less than 50% 0.50% - ----------------------------------------------------------------------------------------
"Assignment and Acceptance" means an assignment and acceptance entered ------------------------- into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent. "AW" means AT&T Wireless PCS, Inc. -- "AW Licenses" has the meaning set forth in the definition of Initial ----------- Equity Contributions. "Base Station" means a radio electronic hardware cabinet designed to ------------ be used in the operation of a System and the equipment appurtenant thereto. "Board" means the Board of Governors of the Federal Reserve System of ----- the United States of America. "Borrower" means TeleCorp PCS, Inc., a Delaware corporation. -------- "Borrowing" means Loans of the same Class and Type, made, converted or --------- continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect. "Borrowing Request" means a request by the Borrower for a Borrowing in ----------------- accordance with Section 2.03. "BTA" means a Basic Trading Area, as defined in 47 C.F.R. (S)24.202. --- "Business Day" means any day that is not a Saturday, Sunday or other ------------ day on which commercial banks in New York City are authorized or required by law to remain 6 closed; provided that, when used in connection with a Eurodollar Loan, the term -------- "Business Day" shall also exclude any day on which banks are not open for ------------ for dealings in dollar deposits in the London interbank market. "Capital Expenditures" means, for any period, (a) the additions to -------------------- property, plant and equipment and other capital expenditures of the Borrower and its consolidated Subsidiaries (other than Unrestricted Subsidiaries) that are (or would be) set forth in a consolidated statement of cash flows of the Borrower for such period prepared in accordance with GAAP and (b) Capital Lease Obligations incurred by the Borrower and its consolidated Subsidiaries (other than Unrestricted Subsidiaries) during such period (other than Capital Lease Obligations permitted by Section 6.01(a)(vi)). "Capital Lease Obligations" of any Person means the obligations of ------------------------- such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP. "Capital Stock" means any and all shares, interests, participations or ------------- other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase or subscribe for any of the foregoing, or any warrants, rights or options to purchase or subscribe for any such warrants, rights or options. "Cash Interest Expense" means, for any period, (a) Consolidated --------------------- Interest Expense for such period, minus (b) the aggregate amount of pay-in-kind or accreted Consolidated Interest Expense for such period not involving any payment in cash. "Change in Control" means (a) the sale or other disposition by AW of ----------------- any Capital Stock of the Borrower prior to the date which is three years from the Effective Date; (b) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the 7 rules of the Securities and Exchange Commission thereunder as in effect on the date hereof) of shares representing more than 20% of the aggregate ordinary voting power represented by the issued and outstanding Capital Stock of the Borrower; (c) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Borrower by Persons who were not (i) nominated by the board of directors of the Borrower, (ii) appointed by directors so nominated or (iii) members of the Board of Directors on the Closing Date or (iv) appointed in accordance with the terms of the Stockholders Agreement as in effect on the date hereof; (d) the acquisition of direct or indirect Control of the Borrower by any Person or group other than Persons owning Capital Stock of the Borrower on the date hereof and their Affiliates; or (e) Gerald Vento and Thomas Sullivan not owning, directly or indirectly, shares representing more than a majority of the aggregate ordinary voting power represented by the issued and outstanding Capital Stock of the Borrower; provided, however, that neither (A) the sale by -------- ------- AW of all or any of its equity interest in the Borrower subsequent to the date which is three years from the Effective Date nor (B) the public sale by the Borrower of newly issued Common Stock in an initial public offering (provided that the conditions described in clause (e) above do not result therefrom), shall constitute a Change of Control. "Change in Law" means (a) the adoption of any law, rule or regulation ------------- after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or Issuing Bank (or, for purposes of Section 2.15(b), by any lending office of such Lender or by such Lender's or Issuing Bank's holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement. "Class", when used in reference to any Loan or Borrowing, refers to ----- whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans, Tranche A Term Loans or Tranche B Term Loans and, when used in reference to any Commitment, refers to whether such Commitment is a Revolving Commitment, Tranche A Commitment or Tranche B Commitment. 8 "Code" means the Internal Revenue Code of 1986, as amended from time ---- to time. "Collateral" means any and all "Collateral", as defined in any ---------- applicable Security Document and shall also include the Mortgaged Properties. "Committed Equity" means irrevocable binding commitments to purchase ---------------- stock of the Borrower pursuant to the Securities Purchase Agreement. "Commitment" means a Revolving Commitment, Tranche A Commitment or ---------- Tranche B Commitment, or any combination thereof (as the context requires). "Common Stock" means the Common Stock, par value $.01 per share, of ------------ the Borrower, including Common Stock designated as Senior Common Stock, "Class A ------- Voting Common Stock", "Class B Non-Voting Common Stock", "Class C Common Stock", - ------------------- ------------------------------- -------------------- "Class D Common Stock" or "Voting Preference Common Stock". -------------------- ------------------------------ "Communications Act" means the Communications Act of 1934, and any ------------------ similar or successor Federal statute, and the rules and regulations and published policies of the FCC thereunder, all as amended and as the same may be in effect from time to time. "Consents to Assignment" has the meaning set forth in subsection ---------------------- 4.01(r). "Consolidated EBITDA" means, for any period, Consolidated Net Income ------------------- plus, to the extent deducted in computing such Consolidated Net Income, the sum of (a) income or franchise tax expense for such period, (b) Consolidated Interest Expense, (c) depreciation and amortization expense and (d) any non-cash charges or non-cash losses, minus, to the extent added in computing such Consolidated Net Income, (i) any non-cash gains or other non-cash items and (ii) any income tax credits, all as determined on a consolidated basis with respect to the Borrower and the Subsidiaries (other than the Unrestricted Subsidiaries) in accordance with GAAP. "Consolidated Interest Expense" means, for any period, the interest ----------------------------- expense of the Borrower and the Subsidiaries (other than the Unrestricted Subsidiaries) for 9 such period determined on a consolidated basis in accordance with GAAP, including but not limited to the portion of any payments or accruals with respect to Capital Lease Obligations that are allocable to interest expense. "Consolidated Net Income" means, for any period, net income or loss of ----------------------- the Borrower and the Subsidiaries (other than the Unrestricted Subsidiaries) for such period determined on a consolidated basis in accordance with GAAP; provided -------- that there shall be excluded (a) the income of any Person in which any other Person (other than the Borrower or any of the Subsidiaries (other than the Unrestricted Subsidiaries) or any director holding qualifying shares in compliance with applicable law) has a joint interest, except to the extent of the amount of dividends or other distributions (i) that the Borrower or any of the Subsidiaries (other than the Unrestricted Subsidiaries) has the power to cause such Person to make to the Borrower or any Subsidiary (other than the Unrestricted Subsidiaries) during such period and such dividend or other distribution is not prohibited by the terms of any agreement binding upon such Person or otherwise or (ii) that, to the extent not already included in Consolidated Net Income for any period pursuant to clause (i) above, were actually paid to the Borrower or any of the Subsidiaries (other than the Unrestricted Subsidiaries) by such Person during such period, (b) any after tax gains or losses attributable to sales of assets out of the ordinary course of business and (c) (to the extent not included in clauses (a) or (b) above) any extraordinary gains or extraordinary losses. "Contractual Obligations" means as to any Person, any provision of any ----------------------- security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. "Contributed Equity" means at any time or for any period, (x) the sum ------------------ (without duplication) of (a) $100,084,120, the agreed value of the AW Licenses set forth on Schedule I to the Securities Purchase Agreement, (b) cash proceeds from sales by the Borrower of Common Stock and Preferred Stock less any payments made by the Borrower or any Subsidiary with respect to Common Stock or Preferred Stock (other than payments of additional Common Stock or Preferred Stock), (c) cash proceeds from the sale to Lucent of the Series A Bonds (less any payments made by the 10 Borrower or any Subsidiary with respect to the Series A Bonds (other than payments of additional Series A Bonds)), (d) after consummation of the San Juan Acquisition, $39,900,000, representing the agreed value of the stock of the Borrower acquired by AW in connection with the San Juan Acquisition, (e) $7,347,750, the agreed value of the equity interests in THC contributed to the Borrower on the Closing Date pursuant to the Securities Purchase Agreement, (f) after consummation of the THC San Diego Merger, $4,800,000, representing the agreed value of the stock issued to the existing shareholders of THC San Diego in connection with the THC San Diego Merger, (g) after consummation of the Mercury Acquisition, $2,332,645, representing the agreed value of the stock issued to Mercury PCS in connection with the Mercury Acquisition, (h) after consummation of the Wireless 2000 Acquisition, $880,000, representing the agreed value of the stock issued to Wireless 2000, Inc. in connection with the Wireless 2000 Acquisition, (i) after consummation of the LMDS Merger, $3,800,000, representing the agreed value of the stock of the Borrower issued to the existing shareholders of Telecorp LMDS Inc. in connection with the LMDS Merger and (j) the fair market value as reasonably determined by the Administrative Agent of any other assets contributed to the Borrower in exchange for Capital Stock of the Borrower minus (y) any amounts (including the fair market value of any transferred assets, as reasonably determined by the Administrative Agent) invested by the Borrower or any Restricted Subsidiary in an Unrestricted Subsidiary. "Control" means the possession, directly or indirectly, of the power ------- to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "Controlling" and "Controlled" have meanings correlative thereto. ----------- ---------- "Covered Pops" means the aggregate number of Pops within each ------------ geographic area for which facilities owned by the Borrower or its Restricted Subsidiaries that provide service to such geographic area have achieved substantial completion. "Credit Event" means the making, conversion or continuation of any ------------ Borrowing or the issuance or extension of any Letter of Credit. 11 "Debt Service" means for any period, the sum of (a) Cash Interest ------------ Expense for such period plus (b) scheduled principal amortization of Total Debt ---- for such period. "Default" means any event or condition which constitutes an Event of ------- Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default. "Disclosed Matters" means the actions, suits and proceedings and the ----------------- environmental matters disclosed in Schedule 3.06. "Disqualifying Transaction" has the meaning set forth in the ------------------------- Stockholders Agreement. "dollars" or "$" refers to lawful money of the United States of ------- - America. "Effective Date" means the date on which the conditions specified in -------------- Section 4.01 are satisfied (or waived in accordance with Section 9.02). "Environmental Laws" means all laws, rules, regulations, codes, ------------------ ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters. "Environmental Liability" means any liability, contingent or otherwise ----------------------- (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing. 12 "Equipment Subsidiary" means Telecorp Equipment Leasing L.P. and/or -------------------- any other Wholly Owned Restricted Subsidiary of the Borrower designated as an Equipment Subsidiary by notice to the Administrative Agent; provided, however, -------- ------- that (i) such Restricted Subsidiary has no obligations or liabilities other than as permitted by Section 3.13, (ii) all the outstanding Capital Stock of such Restricted Subsidiary is pledged to the Collateral Agent for the benefit of the Lenders in accordance with the terms of the Pledge Agreement, (iii) the Borrower and such Restricted Subsidiary have entered into a Special Purpose Subsidiary Funding Agreement and (iv) such subsidiary has granted to the Administrative Agent on behalf of the Lenders a first priority perfected security interest in all its assets. "Equity Participants" means the entities and individuals listed on ------------------- Schedule 1.01 hereto. "ERISA" means the Employee Retirement Income Security Act of 1974, as ----- amended from time to time. "ERISA Affiliate" means any trade or business (whether or not --------------- incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code. "ERISA Event" means (a) any "reportable event", as defined in Section ----------- 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; 13 or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA. "Eurodollar", when used in reference to any Loan or Borrowing, refers ---------- to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate. "Event of Default" has the meaning assigned to such term in Article ---------------- VII. "Excess Cash Flow" means, for any period, the sum of (without ---------------- duplication): (a) Consolidated Net Income for such period, adjusted to exclude any gains or losses attributable to Prepayment Events; plus ---- (b) depreciation, amortization and other non-cash charges or losses deducted in determining such Consolidated Net Income for such period; plus ---- (c) the sum of (i) the amount, if any, by which Net Working Capital decreased during such period plus (ii) the amount, if any, by which the consolidated deferred revenues of the Borrower and its consolidated Subsidiaries (other than the Unrestricted Subsidiaries) increased during such period plus (iii) the aggregate principal amount of Capital Lease Obligations and other Indebtedness incurred during such period to finance Capital Expenditures, to the extent that mandatory principal payments in respect of such Indebtedness would not be excluded from clause (f) below when made; minus ----- (d) the sum of (i) any non-cash gains included in determining such Consolidated Net Income (or loss) for such period plus (ii) the amount, if any, by which Net Working Capital increased during such period plus (iii) the amount, if any, by which the consolidated deferred revenues of the Borrower and its consolidated 14 Subsidiaries (other than the Unrestricted Subsidiaries) decreased during such period; minus ----- (e) cash Capital Expenditures for such period; minus ----- (f) the aggregate principal amount of Indebtedness repaid or prepaid by the Borrower and its consolidated Subsidiaries (other than the Unrestricted Subsidiaries) during such period, excluding (i) Indebtedness in respect of Revolving Loans, (ii) Term Loans prepaid pursuant to Section 2.09(b) or (c), (iii) repayments or prepayments of Indebtedness financed by incurring other Indebtedness, to the extent that mandatory principal payments in respect of such other Indebtedness would not be excluded from this clause (f) when made, (iv) Indebtedness which is permitted to be reborrowed or refinanced pursuant to Section 6.01 and (v) Indebtedness owed to the Borrower or any Subsidiary; plus ---- (g) to the extent not otherwise included in Consolidated Net Income for such period, any cash dividends or any other cash distributions paid or made by, and received by the Borrower or any Restricted Subsidiary from, any Unrestricted Subsidiary during such period. "Excluded Assets" means at any time, the collective reference to all --------------- assets of the Borrower or any Subsidiary (other than the Unrestricted Subsidiaries) then subject to a Lien permitted by sub-Section 6.02(iii)-(vi). "Excluded Real Property Assets" means Real Property Assets which ----------------------------- constitute Excluded Assets. "Excluded Real Property-Related Equipment" means Real Property-Related ---------------------------------------- Equipment which constitutes Excluded Assets. "Excluded Taxes" means, with respect to the Issuing Bank, the -------------- Administrative Agent or any Lender (a) income or franchise Taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending 15 office is located or any Governmental Authority of or in any of the foregoing (including, without limitation, minimum Taxes and Taxes computed under alternative methods, the principal one of which is based on or measured by net income), (b) any branch profits Taxes imposed by the United States of America or any similar Tax imposed by any other jurisdiction in which the Borrower is located or the Issuing Bank, the Administrative Agent or Lender as applicable, or organized or any Governmental Authority of or in any of the foregoing, (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 2.17(b)), any withholding Tax that is in effect and would apply to a payment to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding Tax pursuant to Section 2.15(a), (d) any Taxes to the extent imposed by reason of the Issuing Bank, Lender or Administrative Agent, as applicable, engaging in activities in the jurisdiction imposing the Tax that are unrelated to the transactions contemplated hereby and (e) any Tax that would not have been imposed but for the failure of a Lender or the Administrative Agent, as applicable, to comply with the certification requirements described in Section 2.15(e). "Expansion Facility Amendment" means an amendment to this Agreement ---------------------------- which contains the procedures for borrowing Expansion Term Loans, the administrative information of the Lenders of such Expansion Loans and other matters which have no adverse impact on any Lender, which amendment shall be in form and substance satisfactory to the Administrative Agent. "Expansion Term Loans" shall have the meaning assigned thereto in -------------------- Section 2.18. "Extended Payment Terms Facility" means the agreement between the ------------------------------- Borrower and Lucent pursuant to which Lucent has agreed to permit the Borrower to defer payment on all equipment and services purchased from Lucent by the Borrower until the earlier of (a) September 30, 1998 and (b) the Closing Date. 16 "FCC" means the Federal Communications Commission, or any other --- similar or successor agency of the Federal government administering the Communications Act. "FCC Debt" means Indebtedness owed to the United States Treasury -------- Department that is incurred in connection with the acquisition of a License. "Federal Funds Effective Rate" means, for any day, the weighted ---------------------------- average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it. "Financial Officer" means the chief financial officer, principal ----------------- accounting officer, treasurer or controller of the Borrower. "Fixed Charges" means (a) Debt Service, (b) Capital Expenditures, (c) ------------- Taxes and (d) dividends and distributions paid pursuant to Section 6.08(a)(iii). "Foreign Lender" means any Lender or Issuing Bank that is organized -------------- under the laws of a jurisdiction other than that in which the Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction. "Foreign Subsidiary" means any Subsidiary that is organized under the ------------------ laws of a jurisdiction other than the United States of America or any State thereof or the District of Columbia. "Funded Debt" means, as of the date of determination, all Indebtedness ----------- for borrowed money of the Borrower and its Restricted Subsidiaries which by its terms matures more than one year after the date of calculation, and any such Indebtedness maturing within one year from such date which is renewable or extendable at the option of the 17 obligor to a date more than one year from such date including, in any event, the Revolving Loans. "GAAP" means generally accepted accounting principles in the United ---- States of America. "Governmental Authority" means the government of the United States of ---------------------- America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. "Guarantee" of or by any Person (the "guarantor") means any --------- --------- obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the "primary obligor") in any manner, whether directly or --------------- indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include -------- endorsements for collection or deposit in the ordinary course of business. "Guarantee Agreement" means the Guarantee Agreement with respect to ------------------- the Obligations substantially in the form of Exhibit C, made by the Subsidiary Loan Parties in favor of the Administrative Agent for the benefit of the Secured Parties. "Hazardous Materials" means all explosive or radioactive substances ------------------- or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing 18 materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law. "Hedging Agreement" means any interest rate protection agreement, ----------------- foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement. "Indebtedness" of any Person means, without duplication, (a) all ------------ obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business and, in the case of property or services purchased pursuant to vendor financing agreements, accounts payable which are not overdue by more than 30 days if such accounts are being contested in good faith by the Borrower), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (j) all obligations, contingent or otherwise, of such Person in respect of bankers' acceptances. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person's ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. "Indemnity, Subrogation and Contribution Agreement" means the ------------------------------------------------- Indemnity, Subrogation and Contribution Agreement, substantially in the form of Exhibit F, among the Borrower and the Subsidiary Loan Parties. 19 "Indemnified Taxes" means Taxes other than Excluded Taxes. ----------------- "Information Memorandum" means the Confidential Information Memorandum ---------------------- dated May 1998 relating to the Borrower and the Transactions. "Initial Equity Contributions" means (i) AW's contribution to the ---------------------------- Borrower of 20 MHz of A or B Block PCS licenses covering the markets and Pops set forth in Part A of Schedule 3.14 hereto (the "AW Licenses") in exchange for 66,722 shares of Series A Preferred Stock, 34,292 shares of Series D Preferred Stock, and 33,360 shares of Series F Preferred Stock, (ii) purchases of 124,525 shares (or 129,525 shares if the Supplemental Closing (as defined in the Securities Purchase Agreement) occurs) of Common Stock and 128,000 shares (or 133,000 shares if the Supplemental Closing occurs) of Series C Preferred Stock of the Borrower by other investors for cash consideration and irrevocable commitments of not less than $128,000,000, or, if the Supplemental Closing occurs, not less than $133,000,000, pursuant to the Securities Purchase Agreement, (iii) the contribution by the existing shareholders of THC of all their right, title and interest in the equity of THC to the Borrower in exchange for Common Stock and Preferred Stock with the result that THC becomes a wholly owned subsidiary of the Borrower and the Borrower thereby indirectly acquires Licenses covering the markets and Pops set forth in Part B of Schedule 3.14 hereto,(iv) if the San Juan Acquisition occurs prior to or on the Closing Date, the contribution by AW of 20 MZ of A Block PCS Licenses covering the markets and pops set forth in Part D of Schedule 3.14 hereto together with related assets for approximately $55,000,000 in cash, $2,400,000 in additional Common Stock, and $37,500,000 in additional Preferred Stock and, in connection therewith, the purchase by third party investors of additional Common Stock and additional Preferred Stock for cash consideration of not less than $39,700,000 and (v) if the THC San Diego Merger occurs prior to or on the Closing Date, the contributions, purchases and stock issuances described in the definition of "THC San Diego Merger". "Initial Pops" means the aggregate number of Pops covered by the ------------ Licenses set forth in Parts A and B of Schedule 3.14 hereto. 20 "Intercompany THC Loans" means loans made by the Borrower to THC ---------------------- evidenced by a promissory note pledged to the Administrative Agent on behalf of the Lenders pursuant to the Pledge Agreement the proceeds of which are used by THC to repay FCC Debt of THC. "Interest Election Request" means a request by the Borrower to convert ------------------------- or continue a Revolving Borrowing or Term Borrowing in accordance with Section 2.05. "Interest Payment Date" means (a) with respect to any ABR Loan, the --------------------- last day of each March, June, September and December and (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months' duration, each day prior to the last day of such Interest Period that occurs at intervals of three months' duration. "Interest Period" means, with respect to any Eurodollar Borrowing, the --------------- period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months (or, with the consent of each Lender, nine or twelve months) thereafter, as the Borrower may elect; provided, that (i) if any Interest Period would end on a day -------- other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing. "Issuing Bank" means The Chase Manhattan Bank, in its capacity as an ------------ issuer of Letters of Credit hereunder, and any successor Issuing Bank appointed pursuant to Section 2.19(i). Each Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by 21 Affiliates of such Issuing Bank, in which case the term "Issuing Bank" shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate. "Issuing Bank Fees" shall have the meaning assigned to such term in ----------------- Section 2.10(c). "L/C Commitment" shall mean, with respect to any Issuing Bank, the -------------- commitment of such Issuing Bank to issue Letters of Credit pursuant to Section 2.19. "L/C Disbursement" means a payment made by an Issuing Bank pursuant to ---------------- a Letter of Credit. "L/C Exposure" means, at any time, the sum of (a) the aggregate ------------ undrawn amount of all outstanding Letters of Credit at such time plus (b) the ---- aggregate amount of all L/C Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. "L/C Participation Fee" shall have the meaning assigned to such term --------------------- in Section 2.10(c). "Lenders" means the Persons listed on Schedule 2.01 and any other ------- Person that shall have become a party hereto pursuant to an Assignment and Acceptance or pursuant to Section 2.18 hereof, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Acceptance. "Letter of Credit" means any letter of credit issued pursuant to this ---------------- Agreement. "Leverage Ratio" means for any fiscal period, the ratio of (a) Total -------------- Debt on the last day of such fiscal period to (b) Annualized EBITDA for the period ending on the last day of such fiscal period. "LIBO Rate" means, with respect to any Eurodollar Borrowing for any --------- Interest Period, the rate appearing on Page 3750 of Dow Jones Market (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank 22 market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the "LIBO Rate" with respect to such --------- Eurodollar Borrowing for such Interest Period shall be the rate at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period. "License" means any broadband Personal Communications Services license ------- issued by the FCC in connection with the operation of a System. "License Subsidiary" means Telecorp PCS, L.L.C. and THC and/or any ------------------ other Wholly Owned Restricted Subsidiary of the Borrower designated as a License Subsidiary by notice to the Administrative Agent; provided, however, that (i) -------- ------- such Restricted Subsidiary has no obligations or liabilities other than as permitted by Section 3.13, (ii) all the outstanding Capital Stock of such Restricted Subsidiary is pledged to the Collateral Agent for the benefit of the Lenders in accordance with the terms of the Pledge Agreement and (iii) the Borrower and such Restricted Subsidiary have entered into a Special Purpose Subsidiary Funding Agreement. "License Related Assets" means assets directly associated with the ---------------------- License that is the subject of a License Swap and which constitute part of the System to be constructed to serve the MTA or BTA covered by such License. "License Swap" means (i) any exchange, with another Person (other than ------------ an Unrestricted Subsidiary), of a License or Licenses owned by the Borrower and/or any Restricted Subsidiary, for a License or Licenses owned by such other Person or (ii) any sale (other than to an Unrestricted Subsidiary) of a License or Licenses owned by the Borrower and/or any Restricted Subsidiary and the use of the Net Proceeds received therefrom to purchase a License or Licenses owned by another Person (other than an Unrestricted Subsidiary); provided, that, (i) -------- ---- such purchase occurs not more than 180 days following such sale and either (x) the 23 Borrower or such Restricted Subsidiary deposits the Net Proceeds received therefrom in a cash collateral account with the Administrative Agent (who, at the request of the Borrower, will invest such proceeds in Permitted Investments) pending such purchase or (y) the Borrower notifies the Administrative Agent (prior to or simultaneously with such sale) that such sale is part of a License Swap and repays outstanding Revolving Loans with the Net Proceeds received from such sale pending the related purchase, (ii) to the extent the Net Proceeds received from such sale are not used to make a purchase described above, such sale shall constitute a Prepayment Event rather than a License Swap and the Net Proceeds therefrom shall be applied in accordance with Section 2.09(b) and (iii) any License Swap involving an Affiliate of the Borrower must be approved by the Administrative Agent. "Lien" means, with respect to any asset, (a) any mortgage, deed of ---- trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities. "LMDS Merger" means the merger of TeleCorp LMDS, Inc. into THC and in ----------- connection therewith the issuance of $3.8 million of stock to the existing shareholders of TeleCorp LMDS Inc. and the acquisition by THC of 1150 MHz of Block A or 150 MHz of Block B Licenses for the markets set forth in Part E of Schedule 3.14 hereto; provided that, such acquisition is consummated on terms and conditions satisfactory to the Administrative Agent. "Loan Documents" means this Agreement, the Letters of Credit, the -------------- Guarantee Agreement, the Pledge Agreement, the Security Agreement, the Indemnity, Subrogation and Contribution Agreement, the Special Purpose Subsidiary Funding Agreements, the Consents to Assignment and the other Security Documents. "Loan Parties" means the Borrower and the Subsidiary Loan Parties. ------------ 24 "Loans" means the loans made by the Lenders to the Borrower pursuant ----- to this Agreement. "Lucent" means Lucent Technologies Inc. ------ "Lucent Note Purchase Agreement" means the Note Purchase Agreement ------------------------------ between the Borrower and Lucent dated May 11, 1998. "Management Agreement" means the Management Agreement between TeleCorp -------------------- Management Corp. and the Borrower in the form attached as Exhibit A to the Securities Purchase Agreement as the same may be amended in accordance with Section 6.11. "Master Lease" means the Master Lease, substantially in the form of ------------ Exhibit G, among the Borrower, certain of the Restricted Subsidiaries and the Equipment Subsidiary. "Material Adverse Effect" means a material adverse effect on (a) the ----------------------- business, assets, results of operations, prospects or financial condition of the Borrower and the Restricted Subsidiaries taken as a whole, (b) the ability of any Loan Party to perform any of its obligations under any Loan Document or (c) the validity or enforceability of any Loan Document or the rights of or remedies available to the Administrative Agent or the Lenders under any Loan Document; provided that, on or after the date which is five years from the Effective Date, - -------- neither (x) the nonrenewal of the Network License Agreement by AW nor (y) the termination of the Network License Agreement by AW in accordance with its terms as a result of a Disqualifying Transaction shall be a Material Adverse Effect. "Material Indebtedness" means Indebtedness (other than the Loans), or --------------------- obligations in respect of one or more Hedging Agreements, of any one or more of the Borrower and the Restricted Subsidiaries in an aggregate principal amount exceeding $5,000,000. For purposes of determining Material Indebtedness, the "principal amount" of the obligations of the Borrower or any Restricted Subsidiary in respect of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Restricted Subsidiary would be required to pay if such Hedging Agreement were terminated at such time. 25 "Mercury Acquisition" means the purchase by the Borrower from Mercury ------------------- PCS, Inc. of 10 MHz of F Block PCS Licenses for the Baton Rouge, Houma, Hammond, and Lafayette, Louisiana BTAs together with related assets for approximately $2.3 million of stock of the Borrower and in connection therewith the assumption of $4,101,456 of FCC Debt; provided that, such acquisition is consummated on terms and conditions satisfactory to the Administrative Agent. "Moody's" means Moody's Investors Service, Inc. ------- "Mortgage" means a mortgage, deed of trust, assignment of leases and -------- rents, leasehold mortgage or other security document granting a Lien on any Mortgaged Property to secure the Obligations. Each Mortgage shall be satisfactory in form and substance to the Administrative Agent. "Mortgaged Property" means, initially, each interest in real property ------------------ and any improvements thereto owned by a Loan Party and identified on Schedule 3.22, and includes each interest in real property and any improvements thereto with respect to which a Mortgage is granted pursuant to Section 5.12 or 5.13. "MTA" means a Major Trading Area, as defined in 47 C.F.R. (S)24.202. --- "Multiemployer Plan" means a multiemployer plan as defined in Section ------------------ 4001(a)(3) of ERISA. "Net Proceeds" means, with respect to any event (a) the cash proceeds ------------ received in respect of such event including (i) any cash received in respect of any non-cash proceeds, but only as and when received, (ii) in the case of a casualty, insurance proceeds, and (iii) in the case of a condemnation or similar event, condemnation awards and similar payments, net of (b) the sum of (i) all reasonable fees and out-of-pocket expenses paid by the Borrower and the Restricted Subsidiaries to third parties (other than Affiliates) in connection with such event, (ii) in the case of a sale or other disposition of an asset (including pursuant to a casualty or condemnation), the amount of all payments required to be made by the Borrower and the Restricted Subsidiaries as a result of such event to repay Indebtedness (other than Loans) secured by such asset or 26 otherwise subject to mandatory prepayment as a result of such event, and (iii) the amount of all taxes paid (or reasonably estimated to be payable) by the Borrower and the Restricted Subsidiaries, and the amount of any reserves established (and not reversed) by the Borrower and the Restricted Subsidiaries to fund contingent liabilities reasonably estimated to be payable, in each case that are directly attributable to such event (as determined reasonably and in good faith by the chief financial officer of the Borrower). "Network" has the meaning set forth in the first recital. ------- "Network License Agreement" means the Network Membership License ------------------------- Agreement dated as of the date hereof, between AT&T Corp. and the Borrower, as the same may be amended, supplemented or otherwise modified from time to time in accordance with Section 6.11. "Net Working Capital" means, at any date, (a) the consolidated current ------------------- assets of the Borrower and its consolidated Subsidiaries (other than the Unrestricted Subsidiaries) as of such date (excluding cash and Permitted Investments) minus (b) the consolidated current liabilities of the Borrower and its consolidated Subsidiaries (other than the Unrestricted Subsidiaries) as of such date (excluding current liabilities in respect of Indebtedness). Net Working Capital at any date may be a positive or negative number. Net Working Capital increases when it becomes more positive or less negative and decreases when it becomes less positive or more negative. "Obligations" has the meaning assigned to such term in the Guarantee ----------- Agreement and the Security Documents. "Other Taxes" means any and all present or future stamp or documentary ----------- taxes or any other excise or property taxes, charges or similar levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document. "PBGC" means the Pension Benefit Guaranty Corporation referred to and ---- defined in ERISA and any successor entity performing similar functions. 27 "PCS Documents" means the Securities Purchase Agreement and each of ------------- the documents that is an exhibit thereto (including the Network License Agreement). "Perfection Certificate" means a certificate in the form of Annex 2 to ---------------------- the Security Agreement or any other form approved by the Administrative Agent. "Permitted Encumbrances" means: ---------------------- (a) Liens imposed by law for taxes that are not yet due or are being contested in compliance with Section 5.05; (b) carriers', warehousemen's, mechanics', materialmen's, repairmen's and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than 60 days or are being contested in compliance with Section 5.05; (c) pledges and deposits made in the ordinary course of business in compliance with workers' compensation, unemployment insurance and other social security laws or regulations and deposits securing liability to insurance carriers under insurance or self-insurance arrangements; (d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business; (e) liens of attachments, judgments or awards in respect of judgments that do not constitute an Event of Default under clause (k) of Article VII and in respect of which adequate reserves have been established in accordance with GAAP; (f) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere with the ordinary conduct of business of the Borrower or any Restricted Subsidiary; 28 (g) restrictions on the transfer of assets contained in any License or imposed by the Communications Act or comparable state legislation enacted after the date hereof; (h) leases or subleases granted to others not interfering in any material respect with the business of the Borrower and its Restricted Subsidiaries taken as a whole and any interest or title of a lessor under any lease not prohibited by this Agreement; (i) ground leases in respect of real property on which facilities owned or leased by the Borrower or its Restricted Subsidiaries are located; (j) Liens in favor of a lessor arising from precautionary Uniform Commercial Code financing statements filed by such lessor with respect to assets leased by the Borrower or any Restricted Subsidiary pursuant to an operating lease not prohibited by this Agreement; provided that such Lien -------- shall not apply to any other property or asset of the Borrower or any Restricted Subsidiary. "Permitted Investments" means: --------------------- (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof; (b) investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from S&P or from Moody's; (c) investments in certificates of deposit, banker's acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof which has 29 a combined capital and surplus and undivided profits of not less than $500,000,000; and (d) fully collateralized repurchase agreements with a term of not more than 90 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above. "Person" means any natural person, corporation, limited liability ------ company, trust, joint venture, association, company, partnership, Governmental Authority or other entity. "Plan" means any employee pension benefit plan (other than a ---- Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA. "Pledge Agreement" shall mean the Pledge Agreement, substantially in ---------------- the form of Exhibit D, between the Borrower, the Subsidiary Loan Parties and the Administrative Agent for the benefit of the Secured Parties. "Pops" means, as of any date, with respect to any BTA or MTA, the ---- population of such BTA or MTA as set forth in the Donnelly Marketing Service Population Guide published in 1995. "Preferred Stock" means the Series A Preferred Stock, the Series B --------------- Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock, the Series E Preferred Stock and the Series F Preferred Stock. "Prepayment Event" means: ---------------- (a) any sale, transfer or other disposition (including pursuant to a sale and leaseback transaction) of any property or asset of the Borrower or any Restricted Subsidiary, other than (i) dispositions described in clauses (a), (b) and (d) of Section 6.06 and (ii) other dispositions resulting in aggregate Net Proceeds not exceeding $1,000,000 during any fiscal year of the Borrower; or 30 (b) any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any property or asset of the Borrower or any Restricted Subsidiary; provided that, if no -------- Default exists or would result therefrom, such event shall constitute a Prepayment Event only to the extent that the Net Proceeds therefrom have not been applied, or the Borrower or any Restricted Subsidiary has not entered into a binding contractual agreement to apply such Net Proceeds, to repair, restore or replace such property or asset within 270 days after such event; or (c) the issuance by the Borrower or any Restricted Subsidiary of any equity securities, or the receipt by the Borrower or any Restricted Subsidiary of any capital contribution, other than, in the case of Borrower or any Restricted Subsidiary, any such issuance of equity securities to, or receipt of any such capital contribution from the Borrower or a Restricted Subsidiary; provided that none of the following shall constitute a -------- Prepayment Event (i) the initial $128,000,000 (or, if the Supplemental Closing (as defined in the Securities Purchase Agreement) occurs, the initial $133,000,000) contribution and commitment of capital to the Borrower pursuant to the Securities Purchase Agreement, (ii) the issuance of $39,900,000 of Common Stock and Preferred Stock to AW and $39,700,000 of Common Stock and Preferred Stock to certain of the Equity Participants in connection with the San Juan Acquisition, (iii) the issuance of $4,000,000 of stock to the existing stockholders of THC San Diego and $41,000,000 of stock to certain of the Equity Participants in connection with the THC San Diego Merger and (iv) any issuance or receipt if, after giving effect to such issuance or receipt (x) Senior Leverage would be less than 5.00 to 1.00 and (y) the Borrower would be in Pro Forma Compliance; or (d) the incurrence by the Borrower or any Restricted Subsidiary of any Indebtedness, other than Indebtedness permitted by Section 6.01; provided -------- that (i) no such incurrence shall constitute a Prepayment Event if, after giving effect to such incurrence Senior Leverage would be less than 5.00 to 1.00 and (ii) the foregoing shall not relieve the Borrower from any 31 requirement hereunder to obtain the consent of the Lenders for the incurrence of any Indebtedness. "Prime Rate" means the rate of interest per annum publicly announced ---------- from time to time by The Chase Manhattan Bank as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective. "Pro Forma Compliance" shall exist if (a) the Borrower shall be in pro -------------------- --- forma compliance with the covenants set forth in Section 6.12 recomputed, with - ----- respect to income statement items, as of the last day of the most recently ended fiscal quarter for which financial statements have been delivered in accordance with subsection 5.01 as if the events with respect to which Pro Forma Compliance is being measured had occurred on the first day of the twelve-month period ending on such last day of the most recently ended fiscal quarter for which financial statements have been delivered and as if Restricted Payments under Section 6.08(a)(iii) were deductions to EBITDA and (b) no Default or Event of Default shall exist either immediately prior to the events with respect to which Pro Forma Compliance is being determined or after giving effect to such events. "Pro Rata Percentage" of any Revolving Lender at any time means the ------------------- percentage of the Total Revolving Commitment represented by such Lender's Revolving Commitment. "Real Property Assets" means all interests (including leasehold -------------------- interests) of the Borrower and its Restricted Subsidiaries in real property. "Real Property-Related Equipment" means all equipment (as defined in ------------------------------- the UCC) of the Borrower or any Restricted Subsidiary that constitutes a fixture (as defined in the UCC) on Real Property Assets, excluding Base Stations. "Real Property Subsidiary" means Telecorp Realty L.L.C. and/or any ------------------------ Wholly Owned Restricted Subsidiary of the Borrower designated by the Borrower as the Real Property Subsidiary by notice to the Administrative Agent; provided, -------- however, that (i) such Restricted Subsidiary has no - ------- 32 obligations or liabilities other than as permitted by Section 3.13, (ii) all the outstanding Capital Stock of such Restricted Subsidiary is pledged to the Collateral Agent for the benefit of the Lenders in accordance with the terms of the Pledge Agreement and (iii) the Borrower and such Restricted Subsidiary have entered into a Special Purpose Subsidiary Funding Agreement. "Register" has the meaning set forth in Section 9.04. -------- "Related Business" means any business of the type conducted by the ---------------- Borrower and its Restricted Subsidiaries on the Effective Date or any business contemplated to be conducted by the Borrower and its Restricted Subsidiaries in the business plan delivered to the Lenders prior to the date hereof and any business reasonably related thereto (including the business contemplated to be conducted by the Borrower by (S) 7.11(b) of the Stockholders Agreement, subject to the conditions therein). "Related Parties" means, with respect to any specified Person, such --------------- Person's Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person's Affiliates. "Required Lenders" means, at any time, Lenders having Revolving ---------------- Exposures, Term Loans and unused Commitments representing more than 50% of the sum of the total Revolving Exposures, outstanding Term Loans and unused Commitments at such time; provided, however, that for purposes of requesting the -------- ------- Administrative Agent to terminate Commitments during an Event of Default pursuant to Article VII, Required Lenders shall mean, Lenders having Revolving Commitments and unused Tranche A Commitments representing more than 50% of the sum of the aggregate Revolving Commitments and unused Tranche A Commitments at such time. "Requirement of Law" means, as to any Person, the certificate of ------------------ incorporation and by-laws, the partnership agreement or other organizational or governing documents of such Person, and any law, treaty, rule or regulation, or determination, judgment, writ, injunction, decree or order of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. 33 "Resale Agreement" means the Resale Agreement between AW and the ---------------- Borrower in the form attached as an exhibit to the Securities Purchase Agreement, as the same may be amended, supplemented or otherwise modified from time to time in accordance with Section 6.11. "Responsible Officer" means any of the president, chief executive ------------------- officer or chief financial officer of the Borrower. "Restricted Payment" means any dividend or other distribution (whether ------------------ in cash, securities or other property) with respect to any shares of any class of capital stock of the Borrower or any Restricted Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancelation or termination of any such shares of capital stock of the Borrower or any Restricted Subsidiary or any option, warrant or other right to acquire any such shares of capital stock of the Borrower or any Restricted Subsidiary. "Restricted Subsidiary" means any Subsidiary of the Borrower not --------------------- designated as an Unrestricted Subsidiary. "Revolving Availability Period" means the period from and including ----------------------------- the Effective Date to but excluding the earlier of the Revolving Maturity Date and the date of termination of the Revolving Commitments. "Revolving Commitment" means, with respect to each Lender, the -------------------- commitment, if any, of such Lender to make Revolving Loans hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.06 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. The initial amount of each Lender's Revolving Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Revolving Commitment, as applicable. The initial aggregate amount of the Lenders' Revolving Commitments is $150,000,000. "Revolving Exposure" means, with respect to any Lender at any time, ------------------ the sum of the outstanding principal 34 amount of such Lender's Revolving Loans plus the aggregate amount at such time of such Lender's L/C Exposure. "Revolving Lender" means a Lender with a Revolving Commitment or, if ---------------- the Revolving Commitments have terminated or expired, a Lender with Revolving Exposure. "Revolving Loan" means a Loan made pursuant to clause (c) of Section -------------- 2.01. "Revolving Maturity Date" means the date which is eight and one-half ----------------------- years from the Effective Date. "Roaming Agreement" means the Intercarrier Roamer Service Agreement ----------------- between AW and the Borrower in the form attached as an exhibit to the Securities Purchase Agreement, as the same may be amended, supplemented or otherwise modified from time to time in accordance with Section 6.11. "S&P" means Standard & Poor's Ratings Group, a division of The McGraw- --- Hill Companies, Inc. "San Diego Swap" means the exchange of all or a portion of the -------------- Licenses acquired by the Borrower in the THC San Diego Merger for Licenses of another Person covering certain MTAs or BTAs in the State of Connecticut. "San Juan Acquisition" means the merger of Puerto Rico Acquisition -------------------- Corp. into the Borrower and the purchase by the Borrower from AW of 20 MHz of A Block PCS licenses covering the markets and pops set forth in Part D of Schedule I hereto together with related assets for approximately $55,000,000 in cash, $2,400,000 in additional Common Stock, and $37,500,000 in additional Preferred Stock; provided that, (i) such acquisition is consummated on terms and -------- conditions satisfactory to the Administrative Agent and (ii) in connection therewith, certain of the Equity Participants, or other investors reasonably acceptable to the Administrative Agent, purchase from the Borrower Common Stock and Preferred Stock for cash consideration of at least $39,700,000. "Secured Parties" has the meaning assigned to such term in the --------------- Security Agreement. "Secured Real Property Assets" means all Real Property Assets ---------------------------- (including Mortgaged Properties) in which 35 the Administrative Agent, for the benefit of the Secured Parties, has a first priority perfected Mortgage or other first priority perfected security interest pursuant to the Security Documents. "Secured Real Property-Related Equipment" means Real Property-Related --------------------------------------- Equipment in which the Administrative Agent, for the benefit of the Secured Parties, has a first priority perfected security interest pursuant to the Security Documents. "Securities Purchase Agreement" means the Securities Purchase ----------------------------- Agreement by and among AW, the Borrower and the other parties thereto dated as of January 23, 1998, including the schedules thereto. "Security Agreement" means the Security Agreement among the Borrower, ------------------ the Subsidiary Loan Parties and the Administrative Agent, substantially in the form of Exhibit E. "Security Documents" means the Security Agreement, the Pledge ------------------ Agreement, the Mortgages and the Consents to Assignment and each other security agreement or other instrument or document executed and delivered pursuant to any of the foregoing or Section 5.12 or 5.13 to secure any of the Obligations. "Senior Debt" shall mean all Indebtedness of the Borrower and the ----------- Restricted Subsidiaries on a consolidated basis other than the Subordinated Debt. "Senior Leverage" means, on any date, the ratio of (a) Senior Debt on --------------- such date to (b) Annualized EBITDA for the most recently ended fiscal quarter for which financial statements have been delivered in accordance with Section 5.01. "Series A Bonds" means the Series A Bonds of the Borrower purchased by -------------- Lucent pursuant to the Lucent Note Purchase Agreement. "Series A Preferred Stock" means the Series A Preferred Stock, par ------------------------ value $.01 per share, of the Borrower. 36 "Series B Bonds" means the Series B Bonds of the Borrower purchased by -------------- Lucent pursuant to the Lucent Note Purchase Agreement. "Series B Preferred Stock" means the Series B Preferred Stock, par ------------------------ value $.01 per share, of the Borrower. "Series C Preferred Stock" means the Series C Preferred Stock, par ------------------------ value $.01 per share, of the Borrower. "Series D Preferred Stock" means the Series D Preferred Stock, par ------------------------ value $.01 per share, of the Borrower. "Series E Preferred Stock" means the Series E Preferred Stock, par ------------------------ value $.01 per share, of the Borrower. "Series F Preferred Stock" means the Series F Preferred Stock, par ------------------------ value $.01 per share, of the Borrower. "Special Purpose Subsidiary" means each License Subsidiary, the -------------------------- Equipment Subsidiary, and the Real Property Subsidiary. "Special Purpose Subsidiary Funding Agreement" means an agreement -------------------------------------------- between the Borrower and Telecorp Communications, Inc. and each Special Purpose Subsidiary whereby (a) such Special Purpose Subsidiary agrees to provide to the Borrower the benefit of the use of such Special Purpose Subsidiary's assets, (b) the Borrower agrees to pay to such Special Purpose Subsidiary an amount equal to all liabilities of such Special Purpose Subsidiary less any amounts contributed by the Borrower to the equity of such Special Purpose Subsidiary for the purpose of paying such liabilities (provided, that with respect to the Equipment Subsidiary such payments may be in the form of payments under leases), (c) the Borrower agrees to cause all Contractual Obligations of such Special Purpose Subsidiary to be performed and all Requirements of Law of such Special Purpose Subsidiary to be complied with and (d) the Borrower and such Special Purpose Subsidiary agree, for the benefit of the Administrative Agent and the Secured Parties, to the assignment by each of its rights thereunder to the Administrative Agent for the benefit of the Secured Parties. "Statutory Reserve Rate" means a fraction (expressed as a decimal), ---------------------- the numerator of which is the number one and the denominator of which is the number one 37 minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Administrative Agent is subject for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve percentages shall include those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage. "Stockholders Agreement" means the Stockholders' Agreement among AW, ---------------------- the Borrower and the other parties thereto dated as of the date hereof. "Subordinated Debt" means high yield subordinated debt issued by the ----------------- Borrower (other than the Series A Bonds and the Series B Bonds) on terms reasonably acceptable to the Required Lenders maturing on a date that is not earlier than the date which is six months subsequent to the Tranche B Maturity Date with a minimum initial public offering or purchase price of $220,000,000 and the Indebtedness represented thereby and refinancings of such Indebtedness; provided that (i) any such refinancing Indebtedness (a) shall not have a greater outstanding principal amount, an earlier maturity date or a decreased weighted average life than the Subordinated Debt refinanced and (b) shall be subordinated to the Indebtedness created under the Loan Documents to at least the extent of, and shall otherwise be issued on terms no less favorable to the Lenders than, the Subordinated Debt refinanced and (ii) the proceeds of such refinancing Indebtedness shall be used solely to repay the Subordinated Debt refinanced thereby and fees and expenses in connection therewith. "Subordinated Debt Documents" means the indenture under which the --------------------------- Subordinated Debt, if any, is issued and all other instruments, agreements and other documents evidencing or governing the Subordinated Debt, if any, or providing for any Guarantee or other right in respect thereof. 38 "Subscribers" means as of any date, all customers then receiving ----------- Wireless Services from the Borrower or any of its Restricted Subsidiaries none of the subscriber payments (other than those disputed in good faith by such customer) of which are, as of such date, past due more than (x) prior to March 31, 1999, 90 days and (y) after March 31, 1999, 60 days (or past due for more than such shorter period of time as the Borrower may have established for accounting or credit policy purposes for treating a customer as not being in good standing). "subsidiary" means, with respect to any Person (the "parent") at any ---------- ------ date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent's consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent. "Subsidiary" means any subsidiary of the Borrower. ---------- "Subsidiary Loan Party" means any Restricted Subsidiary that is not a --------------------- Foreign Subsidiary. "Swap of License Related Assets" means (i) any exchange in connection ------------------------------ with a License Swap, with any Person (other than an Unrestricted Subsidiary), of License Related Assets owned by the Borrower and/or any Restricted Subsidiary, for License Related Assets owned by such other Person or (ii) any sale (other than to an Unrestricted Subsidiary) of License Related Assets owned by the Borrower and/or any Restricted Subsidiary in connection with a License Swap and the use of the Net Proceeds received therefrom to purchase License Related Assets owned by another Person (other than an Unrestricted Subsidiary) in connection therewith; provided, that, (i) such purchase occurs not more than 180 -------- ---- days following such sale and either (x) the Borrower or such Restricted Subsidiary deposits the 39 Net Proceeds received therefrom in a cash collateral account with the Administrative Agent pending such purchase or (y) the Borrower notifies the Administrative Agent (prior to or simultaneously with such sale) that such sale is part of a Swap of License Related Assets and repays outstanding Revolving Loans with the Net Proceeds received from such sale pending the related purchase and (ii) to the extent the Net Proceeds received from such sale are not used to make a purchase described above, such sale shall constitute a Prepayment Event rather than a Swap of License Related Assets and the Net Proceeds therefrom shall be applied in accordance with Section 2.09(b). "System" means, as to any Person, assets constituting a radio ------ communications system authorized under the rules for wireless communications services (including any license and the network, marketing, distribution, sales, customer interface and operations functions relating thereto) owned and operated by such Person. "Taxes" means any and all present or future taxes, levies, imposts, ----- duties, deductions, charges or withholdings imposed by any Governmental Authority. "Term Loans" means Tranche A Term Loans and Tranche B Term Loans. ---------- "THC" means TeleCorp Holding Corp., Inc., a Delaware corporation and --- an Subsidiary of the Borrower. "THC San Diego" means THC of San Diego, Inc., a Delaware corporation. ------------- "THC San Diego Merger" means the merger of THC San Diego into THC and -------------------- in connection therewith the issuance by the Borrower of approximately $4.8 million of stock to the existing stockholders of THC San Diego and the contribution to wholly owned subsidiaries of the Borrower by THC San Diego of a 10 MHz F Block PCS License for the San Diego, BTA and certain related assets; provided that such merger is consummated on terms and conditions satisfactory to - -------- the Administrative Agent. "Total Capital" means, at any date, the sum, without duplication, of ------------- (a) Funded Debt outstanding on such date plus (b) Contributed Equity on such ---- date plus (c) Committed Equity on such date. 40 "Total Debt" shall mean, at any time, all Indebtedness of the Borrower ---------- and the Restricted Subsidiaries as determined on a consolidated basis in accordance with GAAP. "Total Revolving Commitment" means, at any time, the aggregate amount -------------------------- of the Revolving Commitments, as in effect at such time. "Tranche A Availability Period" means the period from and including ----------------------------- the Effective Date to but excluding the earlier of the third anniversary of the Effective Date and the date of termination of the Tranche A Commitments. "Tranche A Commitment" means, with respect to each Lender, the -------------------- commitment, if any, of such Lender to make Tranche A Term Loans hereunder, expressed as an amount representing the maximum principal amount of the Tranche A Term Loans to be made by such Lender hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.06 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. The initial amount of each Lender's Tranche A Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Tranche A Commitment, as applicable. The initial aggregate amount of the Lenders' Tranche A Commitments is $150,000,000. If on the second anniversary of the Closing Date the aggregate unused Tranche A Commitments exceed $50,000,000, the aggregate Tranche A Commitments will be automatically reduced on such date by the amount of such excess. "Tranche A Lender" means a Lender with a Tranche A Commitment or an ---------------- outstanding Tranche A Term Loan. "Tranche A Maturity Date" means the date that is eight and one-half ----------------------- years from the Effective Date. "Tranche A Term Loan" means a Loan made pursuant to clause (a) of ------------------- Section 2.01. "Tranche B Commitment" means, with respect to each Lender, the -------------------- commitment, if any, of such Lender to make Tranche B Term Loans hereunder, expressed as an amount representing the maximum principal amount of the Tranche B 41 Term Loans to be made by such Lender hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.06 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. The initial amount of each Lender's Tranche B Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Tranche B Commitment, as applicable. The initial aggregate amount of the Lenders' Tranche B Commitments is $225,000,000. "Tranche B Lender" means a Lender with a Tranche B Commitment or an ---------------- outstanding Tranche B Term Loan. "Tranche B Maturity Date" means the date that is nine and one-half ----------------------- years from the Effective Date. "Tranche B Rate" means, with respect to any Tranche B Term Loan (a) -------------- 2.25% per annum, in the case of an ABR Loan, and (b) 3.25% per annum, in the case of a Eurodollar Loan; provided, however, that in the event that within -------- ------- twelve months of the Closing Date the Borrower effects an issuance of Subordinated Debt with an initial public offering or purchase price which, together with the outstanding principal amount (after giving effect to any prepayments of the Series B Bonds made with the proceeds of such Subordinated Debt) of the Series B Bonds, exceeds $220,000,000, the Tranche B Rate will be reduced by 25 basis points. "Tranche B Term Loan" means a Loan made pursuant to clause (b) of ------------------- Section 2.01. "Transactions" means (a) the execution, delivery and performance by ------------ each Loan Party of the Loan Documents to which it is to be a party, the borrowing of Loans and the use of the proceeds thereof requests for issuances of Letters of Credit, (b) the execution, delivery and performance by each Loan Party of the Subordinated Debt Documents, if any, to which it is to be a party, the issuance of the Subordinated Debt, if any, and the use of the proceeds thereof, (c) the Initial Equity Contributions, (d) the Supplemental Closing (as defined in the Securities Purchase Agreement), if any, and (e) the purchase by the Borrower and sale by AW of 10 MHz of D Block licenses covering the markets and pops set forth in Part C of Schedule 3.14 hereto for $21,000,000 in cash. 42 "Type", when used in reference to any Loan or Borrowing, refers to ---- whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate. "UCC" mean the Uniform Commercial Code of the State of New York. --- "Unrestricted Subsidiary" means any subsidiary of the Borrower or any ----------------------- other direct or indirect investment by the Borrower in the Capital Stock of any other person so long as (a) at the time such subsidiary is acquired or created or such investment is made (i) no Default or Event of Default shall have occurred and be continuing or would result therefrom, (ii) the Borrower shall have notified the Administrative Agent of its acquisition or creation of such subsidiary or its making of such investment and its ownership interest therein and its designation thereof as an Unrestricted Subsidiary concurrently with such acquisition, creation or investment and the intended purposes of such subsidiary or investment, (iii) all transactions related thereto shall be consummated in accordance with applicable laws, (iv) the Borrower shall be in Pro Forma Compliance and (b) at all times (i) neither the Borrower nor any Restricted Subsidiary shall have any contingent liability in respect thereof (other than any contingent tax liabilities in respect of which there shall exist a tax sharing agreement with the other owners of such Unrestricted Subsidiary providing for an allocation of tax liabilities and benefits customary in similar circumstances), (ii) any management or service provided by the Borrower or any Restricted Subsidiary to such subsidiary or investment shall be provided in consideration of cash remuneration in an amount not less than could have been obtained from a third party on an arms'-length basis and (iii) such subsidiary or investment shall be capitalized solely from (A) capital contributed to the Borrower specifically for such purpose and not required to be contributed to the Borrower pursuant to the Securities Purchase Agreement in an aggregate amount for all such Unrestricted Subsidiaries not to exceed $50,000,000 to be substantially contemporaneously contributed by the Borrower to such Unrestricted Subsidiary or used to effect its acquisition, as the case may be, (B) investments by persons other than the Borrower or any Restricted Subsidiary and (C) the proceeds of Indebtedness 43 of persons other than the Borrower or any Restricted Subsidiary. "Wholly Owned Subsidiary" of any Person shall mean a subsidiary of ----------------------- such Person of which securities (except for directors' qualifying shares) or other ownership interests representing 100% of the equity, 100% of the ordinary voting power or 100% of the general partnership interests are, at the time any determination is being made, owned, controlled or held by such Person or one or more wholly owned subsidiaries of such Person or by such Person and one or more wholly owned subsidiaries of such Person. "Wireless 2000 Acquisition" means the purchase by the Borrower from ------------------------- Wireless 2000, Inc. of 15 MHz of C Block PCS Licenses for the Monroe, Alexandria and Lake Charles Louisiana BTAs for approximately $880,000 of stock of the Borrower and in connection therewith the assumption of $7,000,000 of FCC Debt; provided that, such acquisition is consummated on terms and conditions satisfactory to the Administrative Agent. "Withdrawal Liability" means liability to a Multiemployer Plan as a -------------------- result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA. "Wireless Services" means broadband personal communications services ----------------- provided in one or more Systems (including cellular services provided on the 850 MHZ band to the extent such services constitute a Related Business). SECTION 1.02. Classification of Loans and Borrowings. For purposes --------------------------------------- of this Agreement, Loans may be classified and referred to by Class (e.g., a ---- "Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type ---- (e.g., a "Eurodollar Revolving Loan"). Borrowings also may be classified and - ----- referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a ---- ---- "Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving ---- Borrowing"). SECTION 1.03. Terms Generally. The definitions of terms herein shall ---------------- apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", 44 "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person's successors and assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly ----------------------- provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided -------- that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. 45 ARTICLE II The Credits ----------- SECTION 2.01. Commitments. Subject to the terms and conditions set ------------ forth herein, each Lender agrees, severally and not jointly, (a) to make up to ten Tranche A Term Loans to the Borrower during the Tranche A Availability Period in an aggregate principal amount not exceeding its Tranche A Commitment, (b) to make Tranche B Term Loans to the Borrower on the Effective Date in a principal amount not exceeding its Tranche B Commitment and (c) to make Revolving Loans to the Borrower from time to time during the Revolving Availability Period in an aggregate principal amount that will not result in such Lender's Revolving Exposure exceeding such Lender's Revolving Commitment. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans. Amounts repaid or prepaid in respect of Term Loans may not be reborrowed. SECTION 2.02. Loans and Borrowings. (a) Each Loan shall be made as --------------------- part of a Borrowing consisting of Loans of the same Class and Type made by the Lenders ratably in accordance with their respective Commitments of the applicable Class. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be - -------- responsible for any other Lender's failure to make Loans as required. (b) Subject to Section 2.12, each Revolving Borrowing and Term Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith. Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall -------- not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement. (c) At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $5,000,000. At the time that each ABR Revolving Borrowing is made, such Borrowing shall be in an 46 aggregate amount that is an integral multiple of $1,000,000 and not less than $2,000,000; provided that an ABR Revolving Borrowing may be in an aggregate -------- amount that is equal to the entire unused balance of the total Revolving Commitments. Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of -------- 10 Eurodollar Borrowings outstanding. (d) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Revolving Maturity Date, Tranche A Maturity Date or Tranche B Maturity Date, as applicable. (e) If the Issuing Bank shall not have received from the Borrower the payment required to be made by Section 2.19(e) within the time specified in such Section, such Issuing Bank will promptly notify the Administrative Agent of the L/C Disbursement and the Administrative Agent will promptly notify each Revolving Lender of such L/C Disbursement and its Pro Rata Percentage thereof. Each Revolving Lender shall pay by wire transfer of immediately available funds to the Administrative Agent not later than 3:00 p.m., New York City time, on such date (or, if such Revolving Lender shall have received such notice later than 12:00 (noon), New York City time, on any day, not later than 10:00 a.m., New York City time, on the immediately following Business Day), an amount equal to such Lender's Pro Rata Percentage of such L/C Disbursement (it being understood that such amount shall be deemed to constitute an ABR Revolving Loan of such Lender and such payment shall be deemed to have reduced the L/C Exposure), and the Administrative Agent will promptly pay to the Issuing Bank amounts so received by it from the Revolving Lenders. The Administrative Agent will promptly pay to the Issuing Bank any amounts received by it from the Borrower pursuant to Section 2.19(e) prior to the time that any Revolving Lender makes any payment pursuant to this paragraph (e); any such amounts received by the Administrative Agent thereafter will be promptly remitted by the Administrative Agent to the Revolving Lenders that shall have made such payments and to the Issuing Bank, as their interests may appear. If any Revolving Lender shall not have made its Pro Rata Percentage of such L/C Disbursement available to the Administrative Agent as provided above, such Lender and the Borrower 47 severally agree to pay interest on such amount, for each day from and including the date such amount is required to be paid in accordance with this paragraph to but excluding the date such amount is paid, to the Administrative Agent for the account of the Issuing Bank at (i) in the case of the Borrower, a rate per annum equal to the interest rate applicable to Revolving Loans pursuant to Section 2.11(a), and (ii) in the case of such Lender, for the first such day, the Federal Funds Effective Rate, and for each day thereafter, the Alternate Base Rate. SECTION 2.03. Requests for Borrowings. To request a Revolving ------------------------ Borrowing or Term Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, one Business Day before the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Borrowing Request in a form approved by the Administrative Agent and signed by the Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02: (i) whether the requested Borrowing is to be a Revolving Borrowing, Tranche A Term Borrowing or Tranche B Term Borrowing; (ii) the aggregate amount of such Borrowing; (iii) the date of such Borrowing, which shall be a Business Day; (iv) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; (v) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term "Interest Period"; and 48 (vi) the location and number of the Borrower's account to which funds are to be disbursed, which shall comply with the requirements of Section 2.06. If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Revolving Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month's duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender's Loan to be made as part of the requested Borrowing. SECTION 2.04. Funding of Borrowings. (a) Each Lender shall make ---------------------- each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon, New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower maintained with the Administrative Agent in New York City and designated by the Borrower in the applicable Borrowing Request. (b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender's share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in 49 the case of the Borrower, the interest rate applicable to ABR Loans. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender's Loan included in such Borrowing. SECTION 2.05. Interest Elections. (a) Each Revolving Borrowing and ------------------- Term Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. (b) To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Revolving Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Interest Election Request in a form approved by the Administrative Agent and signed by the Borrower. (c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02 and paragraph (f) of this Section: (i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing); 50 (ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day; (iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and (iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term "Interest Period". If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month's duration. (d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender's portion of each resulting Borrowing. (e) If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto. (f) A Borrowing of any Class may not be converted to or continued as a Eurodollar Borrowing if after giving effect thereto (i) the Interest Period therefor would commence before and end after a date on which any principal of the Loans of such Class is scheduled to be repaid and (ii) the sum of the aggregate principal amount of outstanding Eurodollar Borrowings of such Class with Interest Periods ending on or prior to such scheduled repayment date plus the aggregate principal amount of 51 outstanding ABR Borrowings of such Class would be less than the aggregate principal amount of Loans of such Class required to be repaid on such scheduled repayment date. SECTION 2.06. Termination and Optional Reduction of Commitments. (a) -------------------------------------------------- Unless previously terminated, (i) the Tranche A Commitments shall terminate at 5:00 p.m., New York City time, on the last day of the Tranche A Availability Period, (ii) the Tranche B Commitments shall terminate at 5:00 p.m., New York City time, on the Effective Date and (iii) the Revolving Commitments and the L/C Commitments shall terminate on the Revolving Maturity Date. (b) The Borrower may at any time terminate, or from time to time reduce, the Commitments of any Class; provided that (i) each reduction of the -------- Commitments of any Class shall be in an amount that is an integral multiple of $1,000,000 and not less than $2,000,000 (or, if less, the remaining aggregate principal amount thereof) and (ii) the Borrower shall not terminate or reduce the Revolving Commitments if, after giving effect to any concurrent prepayment of the Revolving Loans in accordance with Section 2.09, the sum of the Revolving Exposures would exceed the total Revolving Commitments. (c) The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a notice -------- of termination of the Revolving Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Commitments of any Class shall be permanent. Each reduction of the Commitments of any Class shall be made ratably among the Lenders in accordance with their respective Commitments of such Class. 52 SECTION 2.07. Repayment of Loans; Evidence of Debt. (a) The ------------------------------------- Borrower hereby unconditionally promises to pay (i) to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Revolving Loan of such Lender on the Revolving Maturity Date and (ii) to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Term Loan of such Lender as provided in Section 2.08. (b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender's share thereof. (d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall, to the extent permitted by law, be prima facie ----- ----- evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain - -------- such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement. (e) Any Lender may request that Loans of any Class made by it be evidenced by a promissory note. In such event, the Borrower shall execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent and the Borrower. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein 53 (or, if such promissory note is a registered note, to such payee and its registered assigns). SECTION 2.08. Automatic Revolving Commitment Reductions; Amortization ------------------------------------------------------- of Term Loans. (a) The aggregate amount of the Lenders' Revolving Commitments - -------------- shall automatically and permanently reduce in eight consecutive quarterly reductions occurring on the date that is six years and nine months after the Effective Date and on each successive date thereafter which is three months after the preceding reduction date, in the aggregate amount set forth below for each reduction:
Reduction Amount --------- ------ 1-4 $12,500,000 5-8 $25,000,000
(b) Subject to adjustment pursuant to paragraph (e) of this Section, the Borrower shall repay Tranche A Term Loans in 18 consecutive quarterly installments, payable on the date that is four years and three months after the Effective Date and on each successive date thereafter which is three months after the preceding installment date, in the aggregate amount set forth below for each installment:
Installment Amount ----------- ------ 1-6 $ 3,750,000 7-10 $ 9,375,000 11-18 $11,250,000
(c) Subject to adjustment pursuant to paragraph (e) of this Section, the Borrower shall repay Tranche B Term Loans in 22 consecutive quarterly installments, payable on the date that is four years and three months after the Effective Date and on each successive date thereafter which is three months after the preceding installment date, in the aggregate amount set forth below for each installment: Installment Amount ----------- ------ 1-18 $ 562,500 19-22 $53,718,750 54 (d) To the extent not previously paid, (i) all Tranche A Term Loans shall be due and payable on the Tranche A Maturity Date and (ii) all Tranche B Term Loans shall be due and payable on the Tranche B Maturity Date. (e) If the initial aggregate amount of the Lenders' Term Commitments of either Class exceeds the aggregate principal amount of Term Loans of such Class that are made during the Tranche A Availability Period, in the case of the Tranche A Term Loans, or on the Effective Date, in the case of the Tranche B Term Loans, then the scheduled repayments of Term Borrowings of such Class to be made pursuant to this Section shall be reduced ratably by an aggregate amount equal to such excess. Any prepayment of a Term Borrowing of either Class shall be applied to reduce the subsequent scheduled repayments of the Term Borrowings of such Class to be made pursuant to this Section ratably. (f) Prior to any repayment of any Term Borrowings of either Class hereunder, the Borrower shall select the Borrowing or Borrowings of the applicable Class to be repaid and shall notify the Administrative Agent by telephone (confirmed by telecopy) of such selection not later than 11:00 a.m., New York City time, three Business Days before the scheduled date of such repayment; provided that each repayment of Term Borrowings of either Class shall -------- be applied to repay any outstanding ABR Term Borrowings of such Class before any other Borrowings of such Class. Each repayment of a Borrowing shall be applied ratably to the Loans included in the repaid Borrowing. Repayments of Term Borrowings shall be accompanied by accrued interest on the amount repaid. SECTION 2.09. Prepayment of Loans. (a) The Borrower shall have the -------------------- right at any time and from time to time to prepay any Borrowing in whole or in part, subject to the requirements of this Section. (b) In the event and on each occasion that any Net Proceeds are received by or on behalf of the Borrower or any Subsidiary in respect of any Prepayment Event, promptly and in any event not later than the Business Day after such Net Proceeds are received, the Borrower shall prepay Term Borrowings and the Revolving Commitments and the unused Tranche A Commitments shall be automatically and permanently reduced in an aggregate amount (to be applied ratably among the Tranche A Term Loans, the unused Tranche A Commitments, 55 the Tranche B Term Loans and the Revolving Commitments based on their then respective amounts) equal to (i) in the case of an event described in clause (c) of the definition of "Prepayment Event", 50% of such Net Proceeds and (ii) in the case of an event described in any other clause of the definition of "Prepayment Event", 100% of such Net Proceeds. (c) Following the end of the fiscal year of the Borrower ending December 31, 2001 and following the end of each subsequent fiscal year, the Borrower shall prepay Term Borrowings and the Revolving Commitments and the unused Tranche A Commitments shall be automatically and permanently reduced in an aggregate amount (to be applied ratably among the Tranche A Term Loans, the unused Tranche A Commitments, the Tranche B Term Loans and the Revolving Commitments based on their then respective amounts) equal to 50% of Excess Cash Flow for such fiscal year. Each prepayment pursuant to this paragraph shall be made on or before the third Business Day after the date on which financial statements are delivered (or, if earlier, required to be delivered) pursuant to Section 5.01(a) with respect to the fiscal year for which Excess Cash Flow is being calculated. (d) Prior to any optional or mandatory prepayment of Borrowings hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid and shall specify such selection in the notice of such prepayment pursuant to paragraph (e) of this Section; provided that (i) all prepayments shall be -------- applied ratably among the Tranche A Term Loans, the unused Tranche A Commitments, the Tranche B Term Loans and the Revolving Commitments and (ii) each prepayment of Borrowings of any Class shall be applied to prepay ABR Borrowings of such Class before any other Borrowings of such Class. Any amounts remaining after such application shall, at the option of the Borrower, be applied to prepay Eurodollar Borrowings immediately and/or shall be deposited in the Prepayment Account (as defined below). The Administrative Agent shall apply any cash deposited in the Prepayment Account to prepay Eurodollar Borrowings on the last day of their respective Interest Periods (or, at the direction of the Borrower, on any earlier date) until all outstanding Eurodollar Borrowings have been prepaid or until all the allocable cash on deposit with respect to such Loans has been exhausted. For purposes of this Agreement, the term "Prepayment Account" shall mean an account established by the Borrower with the Administrative Agent and over which 56 the Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal for application in accordance with this paragraph (d). The Administrative Agent will, at the request of the Borrower, invest amounts on deposit in the Prepayment Account in Permitted Investments that mature prior to the last day of the applicable Interest Periods of the Eurodollar Borrowings to be prepaid; provided, however, that (i) the -------- ------- Administrative Agent shall not be required to make any investment that, in its sole judgment, would require or cause the Administrative Agent to be in, or would result in any, violation of any law, statute, rule or regulation and (ii) the Administrative Agent shall have no obligation to invest amounts on deposit in the Prepayment Account if a Default or Event of Default shall have occurred and be continuing. The Borrower shall indemnify the Administrative Agent for any losses relating to the investments so that the amount available to prepay Eurodollar Borrowings on the last day of the applicable Interest Period is not less than the amount that would have been available had no investments been made pursuant thereto. Other than any interest earned on such investments, the Prepayment Account shall not bear interest. Interest or profits, if any, on such investments shall be deposited in the Prepayment Account and reinvested and disbursed as specified above. If the maturity of the Loans has been accelerated pursuant to Article VII, the Administrative Agent may, in its sole discretion, apply all amounts on deposit in the Prepayment Account to satisfy any of the Obligations. The Borrower hereby grants to the Administrative Agent, for its benefit and the benefit of the Issuing Bank and the Lenders, a security interest in the Prepayment Account to secure the Obligations. In the event of any optional or mandatory prepayment of Term Borrowings or reduction of Tranche A Commitments made at a time when Term Borrowings or unused Commitments of both Classes remain outstanding, the Borrower shall select Term Borrowings to be prepaid and Tranche A Commitments to be reduced so that the aggregate amount of such prepayment is allocated between the Tranche A Term Borrowings, the unused Tranche A Commitments and Tranche B Term Borrowings pro rata based on the aggregate principal amount of outstanding Borrowings or unused Commitments of each such Class; provided that any Tranche B Lender may elect, by notice to the -------- Administrative Agent by telephone (confirmed by telecopy) at least one Business Day prior to the prepayment date, to decline all or any portion of any prepayment of its Tranche B Term Loans pursuant to this Section (other than an optional prepayment 57 pursuant to paragraph (a) of this Section, which may not be declined), in which case the Net Proceeds or Excess Cash Flow that would have been applied to prepay Tranche B Term Loans but were so declined shall be applied to prepay Tranche A Term Loans and to reduce the Revolving Commitments and the unused Tranche A Commitments on a pro rata basis based on their then respective amounts. (e) The amount of any optional or mandatory prepayments allocated to Tranche A Term Loans or Tranche B Term Loans shall be applied pro rata to reduce the principal amount of the then remaining amortization installments applicable to such Loans set forth in Section 2.08. The amount of any optional or mandatory commitment reductions allocated to the Revolving Commitments or the unused Tranche A Commitments shall be applied pro rata to reduce the principal amount of the then remaining reductions applicable to such Commitments set forth in Section 2.08. Any reduction of the Revolving Commitments shall be accompanied by prepayment of Revolving Loans to the extent the aggregate amount of such loans outstanding exceeds the total amount of the Revolving Commitments as so reduced. (f) The Borrower shall notify the Administrative Agent by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Revolving Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of prepayment, (ii) in the case of prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m., New York City time, one Business Day before the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date, the principal amount of each Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment; provided that, if a notice of optional prepayment is given in -------- connection with a conditional notice of termination of the Revolving Commitments as contemplated by Section 2.08, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.08. Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02, except as necessary to apply fully the 58 required amount of a mandatory prepayment. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.13. SECTION 2.10. Fees. (a) The Borrower agrees to pay to the ----- Administrative Agent for the account of each Lender a commitment fee, which shall accrue at the Applicable Rate on the daily unused amount of each Commitment of such Lender for each day during the period from and including the date hereof to but excluding the date on which such Commitment terminates. Accrued commitment fees shall be payable in arrears on the last day of March, June, September and December of each year and on the date on which any Commitments of such Lender shall expire or terminate, commencing on the first such date to occur after the date hereof. All commitment fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). For purposes of computing commitment fees with respect to Revolving Commitments, a Revolving Commitment of a Lender shall be deemed to be used to the extent of the outstanding Revolving Exposure of such Lender. (b) The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent. (c) The Borrower agrees to pay (i) to each Revolving Lender, through the Administrative Agent, on the last Business Day of March, June, September and December of each year and on the date on which the Revolving Commitment of such Lender shall be terminated as provided herein, a fee (an "L/C Participation Fee") calculated on such Lender's Pro Rata Percentage of the actual daily aggregate L/C Exposure (excluding the portion thereof attributable to unreimbursed L/C Disbursements) for each day during the preceding quarter (or shorter period commencing with the date hereof or ending with the Revolving Maturity Date or the date on which all Letters of Credit have been canceled or have expired and the Revolving Credit Commitments of all Lenders shall have been terminated) at a rate per annum equal to the Applicable Margin for Eurodollar Borrowings and (ii) to the Issuing Bank with respect to each Letter of Credit a fronting fee of one quarter of one percent per annum along with the standard 59 issuance and drawing fees specified from time to time by such Issuing Bank (the "Issuing Bank Fees"). All L/C Participation Fees and Issuing Bank Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days. (d) All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, in the case of commitment fees and participation fees, to the Lenders entitled thereto, except that the Issuing Bank Fees shall be paid directly to the Issuing Bank. Fees paid shall not be refundable under any circumstances. SECTION 2.11. Interest. (a) The Loans comprising each ABR Borrowing --------- shall bear interest at the Alternate Base Rate plus the Applicable Margin. (b) The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin. (c) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Revolving Loans as provided in paragraph (a) of this Section. (d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and, in the case of Revolving Loans, upon termination of the Revolving Commitments; provided that (i) interest accrued -------- pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of the Revolving Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any 60 conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion. (e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or Adjusted LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error. SECTION 2.12. Alternate Rate of Interest. If prior to the --------------------------- commencement of any Interest Period for a Eurodollar Borrowing: (a) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or (b) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period; then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist (provided that the Administrative Agent shall use commercially reasonable efforts to determine whether or not the circumstances which have caused the notice, continue to exist), (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective 61 and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing. SECTION 2.13. Increased Costs. (a) If any Change in Law shall: ---------------- (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank; or (ii) impose on any Lender or the Issuing Bank or the London interbank market any other condition (other than a condition relating to a Tax) affecting this Agreement or Eurodollar Loans made by such Lender; and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Issuing Bank of issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or such Issuing Bank hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender or such Issuing Bank such additional amount or amounts as will compensate such Lender or such Issuing Bank for such additional costs incurred or reduction suffered. (b) If any Lender or Issuing Bank determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender's or Issuing Bank's capital or on the capital of such Lender's or Issuing Bank's holding company, if any, as a consequence of this Agreement or the Loans made by such Lender, the Letters of Credit issued by such Issuing Bank or the Letters of Credit participated in by such Lender, to a level below that which such Lender or Issuing Bank or such Lender's or Issuing Bank's holding company could have achieved but for such Change in Law (taking into consideration such Lender's or Issuing Bank's policies and the policies of such Lender's or Issuing Bank's holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or Issuing Bank or such Lender's 62 or Issuing Bank's holding company for any such reduction suffered. (c) A certificate of a Lender or Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender or Issuing Bank the amount shown as due on any such certificate within 10 days after receipt thereof. (d) Failure or delay on the part of any Lender or Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender's or Issuing Bank's right to demand such compensation; provided that -------- the Borrower shall not be required to compensate a Lender or Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than 270 days prior to the date that such Lender or Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender's or Issuing Bank's intention to claim compensation therefor; provided further that, if the Change in Law giving rise ---------------- to such increased costs or reductions is retroactive, then the 270-day period referred to above shall be extended to include the period of retroactive effect thereof. SECTION 2.14. Break Funding Payments. In the event of (a) the ----------------------- payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Revolving Loan or Term Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.11(g) and is revoked in accordance therewith), or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.17, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of 63 interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the eurodollar market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof. SECTION 2.15. Taxes. (a) Any and all payments by or on account of ------ any obligation of the Borrower hereunder or under any other Loan Document shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required to deduct any -------- Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. (b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law, except Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower has set aside on its books reserves in accordance with GAAP. (c) The Borrower shall indemnify the Administrative Agent, each Lender, and the Issuing Bank within 30 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the 64 Administrative Agent, such Lender, or the Issuing Bank, on or with respect to any payment by or on account of any obligation of the Borrower hereunder or under any other Loan Document (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender, the Issuing Bank or by the Administrative Agent on its own behalf or on behalf of a Lender, or the Issuing Bank, shall be conclusive absent manifest error. (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent. (e) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate, including, without limitation, if such Lender is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code and intends to claim exemption from the U.S. Federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of "portfolio interest", a Form W-8, or any subsequent versions thereof or successors thereto (and, if such Foreign Lender delivers a Form W-8, a certificate representing that such Foreign Lender is not a bank for purposes of Section 881(c) of the code, is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code of the Borrower and is not a controlled foreign corporation related to the Borrower (within the meaning of 65 Section 864(d)(4) of the Code)), properly completed and duly executed by such Foreign Lender claiming complete exemption from, or a reduced rate of, U.S. Federal withholding tax on payments of interest by the Borrower under this Agreement and the other Loan Documents. (f) If the Administrative Agent or a Lender receives a refund in respect of any Indemnified Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 2.15, it shall within 30 days from the date of such receipt pay over to the Borrower (a) such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 2.15 with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative agent or such Lender and (b) interest paid by the relevant Governmental Authority with respect to such refund); provided, however, that the -------- ------- Borrower, upon the request of the Administrative Agent or such Lender shall repay the amount paid over to the Borrower (plus penalties, interest or other charges) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of -------------------------------------------------- Setoffs. (a) The Borrower shall make each payment required to be made by it - -------- hereunder or under any other Loan Document (whether of principal, interest, fees, or of amounts payable under Section 2.13, 2.14 or 2.15, or otherwise) prior to 12:00 noon, New York City time, on the date when due, in immediately available funds, without setoff or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at its offices at 270 Park Avenue, New York, New York, except that payments pursuant to Sections 2.13, 2.14, 2.15 and 9.03 shall be made directly to the Persons entitled thereto, payments of Issuing Bank Fees shall be made directly to the Issuing Bank and payments pursuant to other Loan Documents shall be made to the Persons specified therein. The Administrative Agent shall distribute any such payments received by it for the account of any other Person 66 to the appropriate recipient promptly following receipt thereof. If any payment under any Loan Document shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments under each Loan Document shall be made in dollars. (b) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal then due to such parties. (c) If any Lender shall, by exercising any right of set off or counterclaim or otherwise, obtain payment in respect of any Loan or Loans or L/C Disbursement as a result of which the unpaid principal portion of its Tranche A Term Loans, Tranche B Term Loans or Revolving Loans or participations in L/C Disbursements shall be proportionately less than the unpaid principal portion of the Tranche A Term Loans, Tranche B Term Loans or Revolving Loans and participations in L/C Disbursements of any other Lender, it shall be deemed simultaneously to have purchased from such other Lender at face value, and shall promptly pay to such other Lender the purchase price for, a participation in the Tranche A Term Loans, Tranche B Term Loans or Revolving Loans or L/C Exposure, as the case may be, of such other Lender, so that the aggregate unpaid principal amount of the Tranche A Term Loans, Tranche B Term Loans and Revolving Loans and participations in Tranche A Term Loans, Tranche B Term Loans and Revolving Loans and L/C Exposure held by each Lender shall be in the same proportion to the aggregate unpaid principal amount of all Tranche A Term Loans, Tranche B Term Loans and Revolving Loans and L/C Exposure then outstanding as the principal amount of its Tranche A Term Loans, Tranche B Term Loans and Revolving Loans prior to such exercise of any right of setoff or counterclaim or other event was to the principal amount of all Tranche A Term Loans, Tranche B Term Loans and Revolving Loans and L/C 67 Exposure outstanding prior to such exercise of any right of setoff or counterclaim or other event; provided that (i) if any such participations are -------- purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation. (d) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. (e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.04(b), 2.04(c), 2.06(d) or 9.03(c), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to 68 satisfy such Lender's obligations under such Sections until all such unsatisfied obligations are fully paid. SECTION 2.17. Mitigation Obligations; Replacement of Lenders. (a) ----------------------------------------------- If any Lender or Issuing Bank requests compensation under Section 2.13, or if the Borrower is required to pay any additional amount to any Lender or Issuing Bank or any Governmental Authority for the account of any Lender or Issuing Bank pursuant to Section 2.15, then such Lender or Issuing Bank shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender or Issuing Bank, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.13 or 2.15, as the case may be, in the future and (ii) would not subject such Lender or Issuing Bank to any unreimbursed cost or expense and would not otherwise be disadvantageous in any material respect to such Lender or Issuing Bank. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment. (b) If any Lender or Issuing Bank requests compensation under Section 2.13, or if the Borrower is required to pay any additional amount to any Lender or Issuing Bank or any Governmental Authority for the account of any Lender or Issuing Bank pursuant to Section 2.15, or if any Lender defaults in its obligation to fund Loans hereunder, then the Borrower may, at its sole expense and effort, upon notice to such Lender or Issuing Bank and the Administrative Agent, require such Lender or Issuing Bank to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04 and, in the case of an Issuing Bank, subject to Section 2.19(i) hereof), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower -------- shall have received the prior written consent of the Administrative Agent (and, if a Revolving Commitment is being assigned, the Issuing Bank), which consent shall not unreasonably be withheld, (ii) such Lender or Issuing Bank shall have received payment of an amount equal to the outstanding principal of its Loans and L/C Disbursements, accrued interest thereon, accrued fees and all other amounts 69 payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.13 or payments required to be made pursuant to Section 2.15, such assignment will result in a reduction in such compensation or payments. A Lender or Issuing Bank shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or Issuing Bank or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply. SECTION 2.18. Expansion Facility. On two occasions prior to the ------------------- Tranche B Maturity Date, the Borrower may, by notice to the Administrative Agent (which shall promptly deliver a copy to each of the Lenders), request the addition of a new tranche of Term Loans (all such Term Loans, collectively, the "Expansion Term Loans") provided, however, that both at the time of any such -------------------- -------- ------- request and after giving effect to any such Expansion Term Loans (x) no Default shall exist and the Borrower shall be in pro forma compliance with each financial covenant. The Expansion Term Loans (i) shall be in an aggregate principal amount not in excess of $75,000,000, (ii) shall rank pari passu in ---- ----- right of payment and of security with the Loans, (iii) shall mature no sooner than, and have a longer average weighted life than, the Tranche B Term Loans, (iv) shall have such pricing as may be agreed by the Borrower and the persons providing such Expansion Term Loans and shall otherwise be treated hereunder no more favorably than the Tranche B Term Loans. Such notice shall set forth the requested amount of Expansion Term Loans (which amount, together with the amount of all previous Expansion Term Loans, shall not exceed $75,000,000), and shall offer each Lender the opportunity to offer a commitment to provide Expansion Term Loans by giving written notice of such offered commitment to the Administrative Agent and the Borrower within 10 Business Days after the date of the Borrower's notice; provided, however, that no existing Lender will be -------- ------- obligated to subscribe for any portion of such commitments. In the event that, on the tenth Business Day after the Borrower shall have delivered a notice pursuant to the first sentence of this paragraph, Lenders shall have provided commitments in an aggregate amount less than the total amount of the Expansion Term Loans requested by the Borrower, the Borrower shall have the right to arrange for one or more banks or 70 other financial institutions (any such bank or other financial institution being called an "Additional Lender") to extend commitments to provide Expansion Term ----------------- Loans in an aggregate amount equal to the unsubscribed amount, provided that -------- each Additional Lender shall be subject to the approval of the Administrative Agent (which approval shall not be unreasonably withheld) and provided further -------- ------- that the Additional Lenders shall be offered the opportunity to provide the Expansion Term Loans only on terms previously offered to the existing lenders pursuant to the immediately preceding sentence. Commitments in respect of Expansion Term Loans shall become Commitments under this Agreement pursuant to an Expansion Facility Amendment executed by each of the Borrower, each Lender agreeing to provide such Commitment, if any, each Additional Lender, if any, and the Administrative Agent. The effectiveness of any Expansion Facility Amendment shall be subject to the satisfaction on the date thereof and, if different, on the date on which the Expansion Term Loans are made, of each of the conditions set forth in Section 4.02. SECTION 2.19. Letters of Credit. (a) General. The Borrower may ------------------ request the issuance of Letters of Credit denominated in dollars, for its own account, in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time while the Revolving Commitments remain in effect. This Section shall not be construed to impose an obligation upon the Issuing Bank to issue any Letter of Credit that is inconsistent with the terms and conditions of this Agreement. (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. In order to request the issuance of a Letter of Credit (or to amend, renew or extend an existing Letter of Credit), the Borrower shall hand deliver or telecopy to the Issuing Bank and the Administrative Agent (at least three days in advance of the requested date of issuance, amendment, renewal or extension or such shorter time period agreed upon by the Issuing Bank and the Borrower) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, the date of issuance, amendment, renewal or extension, the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) below), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare such Letter of 71 Credit. Following receipt of such notice and prior to the issuance of the requested Letter of Credit or the applicable amendment, renewal or extension, the Administrative Agent shall notify the Borrower, the Issuing Bank and the Lenders of the amount of the Aggregate Revolving Exposure after giving effect to (i) the issuance, amendment, renewal or extension of such Letter of Credit, (ii) the issuance or expiration of any other Letter of Credit that is to be issued or will expire prior to the requested date of issuance of such Letter of Credit and (iii) the borrowing or repayment of any Revolving Loans that (based upon notices delivered to the Administrative Agent by the Borrower) are to be borrowed or repaid prior to the requested date of issuance of such Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if, and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that, after giving effect to such issuance, amendment, renewal or extension (A) the L/C Exposure shall not exceed $10,000,000 and (B) the Aggregate Revolving Exposure shall not exceed the Total Revolving Commitment. (c) Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of the date one year after the date of the issuance of such Letter of Credit and the date that is five Business Days prior to the Revolving Maturity Date. (d) Participations. By the issuance of a Letter of Credit and without any further action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Revolving Lender, and each such Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Lender's Pro Rata Percentage of the aggregate amount available to be drawn under such Letter of Credit, effective upon the issuance of such Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Lender's Pro Rata Percentage of each L/C Disbursement made by such Issuing Bank and not reimbursed by the Borrower (or, if applicable, another party pursuant to its obligations under any other Loan Document) forthwith on the date due as provided in Section 2.02(e). Each Revolving Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit 72 is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or an Event of Default, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. (e) Reimbursement. If the Issuing Bank shall make any L/C Disbursement in respect of a Letter of Credit, the Borrower shall pay to the Administrative Agent an amount equal to such L/C Disbursement not later than two hours after the Borrower shall have received notice from such Issuing Bank that payment of such draft will be made, or, if the Borrower shall have received such notice later than 3:00 p.m., New York City time, on any Business Day, not later than 10:00 a.m., New York City time, on the immediately following Business Day. (f) Obligations Absolute. The Borrower's obligations to reimburse L/C Disbursements as provided in paragraph (e) above shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement, under any and all circumstances whatsoever, and irrespective of: (i) any lack of validity or enforceability of any Letter of Credit or any Loan Document, or any term or provision therein; (ii) any amendment or waiver of or any consent to departure from all or any of the provisions of any Letter of Credit or any Loan Document; (iii) the existence of any claim, setoff, defense or other right that the Borrower, any other party guaranteeing, or otherwise obligated with, the Borrower, any Subsidiary or other Affiliate thereof or any other Person may at any time have against the beneficiary under any Letter of Credit, the Issuing Bank, the Administrative Agent or any Lender or any other Person, whether in connection with this Agreement, any other Loan Document or any other related or unrelated agreement or transaction; (iv) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; 73 (v) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit; and (vi) any other act or omission to act or delay of any kind of the Issuing Bank, the Lenders, the Administrative Agent or any other Person or any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of the Borrower's obligations hereunder. Without limiting the generality of the foregoing, it is expressly understood and agreed that the absolute and unconditional obligation of the Borrower hereunder to reimburse L/C Disbursements will not be excused by the gross negligence or wilful misconduct of the Issuing Bank. However, the foregoing shall not be construed to excuse the Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by such Issuing Bank's gross negligence or wilful misconduct in determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof; it is understood that the Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary and, in making any payment under any Letter of Credit (i) the Issuing Bank's exclusive reliance on the documents presented to it under such Letter of Credit as to any and all matters set forth therein, including reliance on the amount of any draft presented under such Letter of Credit, whether or not the amount due to the beneficiary thereunder equals the amount of such draft and whether or not any document presented pursuant to such Letter of Credit proves to be insufficient in any respect, if such document on its face appears to be in order, and whether or not any other statement or any other document presented pursuant to such Letter of Credit proves to be forged or invalid or any statement therein proves to be inaccurate or untrue in any respect whatsoever and (ii) any noncompliance in any immaterial respect of the documents presented under such Letter of Credit with the terms thereof shall, in each case, 74 be deemed not to constitute wilful misconduct or gross negligence of the Issuing Bank. (g) Disbursement Procedures. The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall as promptly as possible give telephonic notification, confirmed by telecopy, to the Administrative Agent and the Borrower of such demand for payment and whether such Issuing Bank has made or will make an L/C Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Revolving Lenders with respect to any such L/C Disbursement. The Administrative Agent shall promptly give each Revolving Lender notice thereof. (h) Interim Interest. If the Issuing Bank shall make any L/C Disbursement in respect of a Letter of Credit, then, unless the Borrower shall reimburse such L/C Disbursement in full on such date, the unpaid amount thereof shall bear interest for the account of such Issuing Bank, for each day from and including the date of such L/C Disbursement, to but excluding the earlier of the date of payment by the Borrower or the date on which interest shall commence to accrue thereon as provided in Section 2.02(e), at the rate per annum that would apply to such amount if such amount were an ABR Loan. (i) Resignation or Removal of the Issuing Bank. The Issuing Bank may resign at any time by giving 180 days' prior written notice to the Administrative Agent, the Lenders and the Borrower, and may be removed at any time by the Borrower by notice to the Issuing Bank, the Administrative Agent and the Lenders. Subject to the next succeeding paragraph, upon the acceptance of any appointment as the Issuing Bank hereunder by a Lender that shall agree to serve as successor Issuing Bank, such successor shall succeed to and become vested with all the interests, rights and obligations of the retiring Issuing Bank and the retiring Issuing Bank shall be discharged from its obligations to issue additional Letters of Credit hereunder. At the time such removal or resignation shall become effective, the Borrower shall pay all accrued and unpaid fees pursuant to Section 2.05(d). The acceptance of any appointment as the Issuing Bank hereunder by a successor 75 Lender shall be evidenced by an agreement entered into by such successor, in a form satisfactory to the Borrower and the Administrative Agent, and, from and after the effective date of such agreement, (i) such successor Lender shall have all the rights and obligations of the previous Issuing Bank under this Agreement and the other Loan Documents and (ii) references herein and in the other Loan Documents to the term "Issuing Bank" shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the resignation or removal of an Issuing Bank hereunder, the retiring Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement and the other Loan Documents with respect to Letters of Credit issued by it prior to such resignation or removal, but shall not be required to issue additional Letters of Credit. (j) Cash Collateralization. If any Event of Default shall occur and be continuing, the Borrower shall, on the Business Day it receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Revolving Lenders holding participations in outstanding Letters of Credit representing greater than 50% of the aggregate undrawn amount of all outstanding Letters of Credit) thereof and of the amount to be deposited, deposit in an account with the Collateral Agent, for the benefit of the Revolving Lenders, an amount in cash equal to the L/C Exposure as of such date. Such deposit shall be held by the Collateral Agent as collateral for the payment and performance of the Obligations. The Collateral Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits in Permitted Investments, which investments shall be made at the option and sole discretion of the Collateral Agent, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall (i) automatically be applied by the Administrative Agent to reimburse the Issuing Bank for L/C Disbursements for which they have not been reimbursed, (ii) be held for the satisfaction of the reimbursement obligations of the Borrower for the L/C Exposure at such time and (iii) if the maturity of the Loans has been accelerated (but subject to the consent of Revolving Lenders holding participations in 76 outstanding Letters of Credit representing greater than 50% of the aggregate undrawn amount of all outstanding Letters of Credit), be applied to satisfy the Obligations. If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all Events of Default have been cured or waived. ARTICLE III Representations and Warranties ------------------------------ The Borrower represents and warrants to the Lenders that: SECTION 3.01. Organization; Powers. Each of the Borrower and its --------------------- Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and to own and operate Systems in the areas set forth on Schedule 3.14 and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required. SECTION 3.02. Authorization; Enforceability. The Transactions to be ------------------------------ entered into by each Loan Party are within such Loan Party's corporate or other organizational powers and have been duly authorized by all necessary action. This Agreement has been duly executed and delivered by the Borrower and constitutes, and each other Loan Document to which any Loan Party is to be a party, when executed and delivered by such Loan Party, will constitute, a legal, valid and binding obligation of the Borrower or such Loan Party (as the case may be), enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. 77 SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions ------------------------------------- (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except (i) such as have been obtained or made and are in full force and effect, (ii) with respect to the Subordinated Debt, such as will be obtained or made or be in full force and effect prior to the issuance thereof and (iii) filings necessary to perfect Liens created under the Loan Documents, (b) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of any Loan Party or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon any Loan Party or any of their assets, or give rise to a right thereunder to require any payment to be made by any Loan Party and (d) will not result in the creation or imposition of any Lien on any asset of any Loan Party, except Liens created under the Loan Documents. SECTION 3.04. Financial Condition; No Material Adverse Change. (a) ------------------------------------------------ The Borrower has heretofore furnished to the Lenders a pro forma consolidated balance sheet as of the Closing Date, prepared giving effect to the Transactions as if the Transactions had occurred on such date. Such pro forma consolidated balance sheet (i) has been prepared in good faith based on the same assumptions used to prepare the pro forma financial statements included in the Information Memorandum (which assumptions are believed by the Borrower to be reasonable), (ii) is based on the best information available to the Borrower after due inquiry, (iii) accurately reflects all adjustments necessary to give effect to the Transactions and (iv) presents fairly, in all material respects, the pro forma financial position of the Borrower and its consolidated Subsidiaries as of such date as if the Transactions had occurred on such date. (b) Except as disclosed in the financial statements referred to above or the notes thereto or in the Information Memorandum and except for the Disclosed Matters, after giving effect to the Transactions, none of the Borrower or its Subsidiaries has, as of the Effective Date, any material contingent liabilities, unusual long-term commitments or unrealized losses. (c) Since December 31, 1997, there has been no material adverse change in the business, assets, operations, 78 prospects or condition, financial or otherwise, of THC, the Borrower and its Restricted Subsidiaries, taken as a whole. SECTION 3.05. Properties. (a) Each of the Borrower and its ----------- Subsidiaries has good title to, or valid leasehold interests in all real and personal property material to its business (including its Mortgaged Properties), except for minor defects in title that do not materially interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes. (b) Each of the Borrower and its Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by the Borrower and its Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. (c) Schedule 3.05 sets forth the address of each real property that is owned or leased by the Borrower or any of its Subsidiaries as of the Effective Date after giving effect to the Transactions. (d) As of the Effective Date, neither the Borrower nor any of its Subsidiaries has received notice of, or has knowledge of, any pending or contemplated condemnation proceeding affecting any Mortgaged Property or any sale or disposition thereof in lieu of condemnation. Neither any Mortgaged Property nor any interest therein is subject to any right of first refusal, option or other contractual right to purchase such Mortgaged Property or interest therein. SECTION 3.06. Litigation and Environmental Matters. (a) There are ------------------------------------- no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any of its Subsidiaries (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect (other than the Disclosed Matters) or (ii) that involve any of the Loan Documents or the Transactions. 79 (b) Except for the Disclosed Matters and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, none of the Borrower or any Subsidiary (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability. (c) Since the date of this Agreement, there has been no change in the status of the Disclosed Matters that, individually or in the aggregate, has resulted in, or materially increased the likelihood of, a Material Adverse Effect. SECTION 3.07. Compliance with Laws and Agreements. Each Loan Party ------------------------------------ is in compliance with (a) all laws, regulations and orders of any Governmental Authority applicable to it or its property and (b) the terms of the PCS Documents and all other indentures, agreements and instruments binding upon it or its property, except, in the case of laws, regulations, orders, agreements, indentures and instruments other than the PCS Documents, where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. No Default has occurred and is continuing. SECTION 3.08. Investment and Holding Company Status. No Loan Party -------------------------------------- is (a) an "investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940 or (b) a "holding company" as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935. SECTION 3.09. Taxes. Each Loan Party has filed or caused to be filed ------ all Tax returns which, to the knowledge of the Borrower are required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary, as applicable, has set aside on its books reserves in accordance with GAAP. 80 SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably ------ expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. The present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $1,000,000 the fair market value of the assets of such Plan, and the present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $1,000,000 the fair market value of the assets of all such underfunded Plans. SECTION 3.11. Disclosure. The Borrower has disclosed to the Lenders ----------- all agreements, instruments and corporate or other restrictions to which any Loan Party is subject, and all other matters known to any of them, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. Neither the Information Memorandum nor any of the other reports, financial statements, certificates or other information furnished by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the negotiation of this Agreement or any other Loan Document or delivered hereunder or thereunder (as modified or supplemented by other information so furnished), as of the date thereof, contained any material misstatement of fact or omitted to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial -------- information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time. All information furnished by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the negotiation of this Agreement or any other Loan Document or delivered hereunder or thereunder (as modified or supplemented by other information so furnished), taken as a whole, does not contain any material misstatement of fact and does not omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not 81 misleading; provided that, with respect to projected financial information, the -------- Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time. SECTION 3.12. Subsidiaries; Parents. (a) Schedule 3.12 sets forth ---------------------- the name of, and the ownership interest of the Borrower in, each Subsidiary of the Borrower and identifies each Subsidiary that is a Subsidiary Loan Party, in each case as of the Effective Date. Each License Subsidiary, the Equipment Subsidiary and the Real Property Subsidiary is a Wholly Owned Subsidiary, and all the Capital Stock of each such Person is directly owned by the Borrower free and clear of any Lien (other than Liens created by the Security Documents). (b) As of the Effective Date, the Capital Stock of the Borrower will be owned as set forth on Schedule 3.12. As of the date hereof, to the best of the Borrower's knowledge, AW is a Wholly Owned Subsidiary of AT&T Corp. (c) As of the date hereof, there is not, and as of the Effective Date, there will not be, any issued or outstanding Capital Stock or other interest of or in the Borrower or any of its Subsidiaries other than as described in subsections 3.12(a) and (b). All outstanding Capital Stock of each Restricted Subsidiary of the Borrower is owned, directly or indirectly, by the Borrower or another Restricted Subsidiary free and clear of all Liens whatsoever (other than Liens created by the Security Documents). (d) All Licenses which are directly or indirectly held by the Borrower or any of its Restricted Subsidiaries are owned, beneficially and of record by a License Subsidiary, free and clear of all Liens (other than Liens under the Security Documents or imposed by the Communications Act). (e) All Real Property Assets and Real Property-Related Equipment (other than Excluded Real Property Assets, Excluded Real Property-Related Equipment, Secured Real Property Assets and Secured Real Property-Related Equipment) which are directly or indirectly owned by the Borrower or any other Loan Party are owned, beneficially and of record by the Real Property Subsidiary, free and clear of all Liens (other than Liens under the Security Documents or Permitted Encumbrances). At least 90% of the value of (A) the Real 82 Property Assets and (B) the Real Property-Related Equipment of the Borrower and its Restricted Subsidiaries (excluding Secured Real Property Assets and Secured Real Property-Related Equipment) are owned, beneficially and of record, free and clear of all Liens (other than the Liens under the Security Documents) by the Real Property Subsidiary. All Base Stations which are directly or indirectly owned by the Borrower or any of its Restricted Subsidiaries are owned, beneficially and of record, free and clear of all Liens (other than Liens under the Security Documents) by the Equipment Subsidiary or the Real Property Subsidiary. SECTION 3.13. Absence of Non-Permitted Obligations. None of the ------------------------------------- Special Purpose Subsidiaries has any obligations or liabilities other than (a) under the Guarantee Agreement and the Security Agreement, (b) in the case of the Real Property Subsidiary, under any lease of real property or equipment which it has entered into in the ordinary course of business and for taxes incurred in the ordinary course of business which are incident to being the owner or lessee of real property and equipment, (c) in the case of any License Subsidiary, under the Communications Act and in the case of THC, with respect to the Intercompany THC Loans and FCC Debt, (d) in the case of the Equipment Subsidiary, under any lease of equipment which it has entered into in the ordinary course of business and for taxes incurred in the ordinary course of business which are incident to being the owner or lessor of equipment and (e) taxes incurred in the ordinary course in order for it to continue to maintain its existence. SECTION 3.14. Licenses. (i) The Borrower and its Restricted --------- Subsidiaries have the full use and benefit of all Licenses necessary to operate a System in the MTAs and BTAs listed on Parts A, B and C of Schedule 3.14 and each other area in which the Borrower or any Subsidiary conducts a broadband personal communications services business and will have the full use and benefit of the Licenses listed on (a) Part D of Schedule 3.14 upon consummation of the San Juan Acquisition, (b) Part E of Schedule 3.14 upon consummation of the LMDS Merger, (c) Part F of Schedule 3.14 upon consummation of the Mercury Acquisition, (d) Part G of Schedule 3.14 upon consummation of the San Diego Merger and (e) Part H of Schedule 3.14 upon consummation of the Wireless 2000 Acquisition, (ii) such Licenses have been duly issued by the FCC, are (in the case of Licenses listed on Parts A, B or C of Schedule 3.14) or will be (upon 83 consummation of the relevant transaction in the case of Licenses listed on Parts D, E, F, G and H of Schedule 3.14) held by a License Subsidiary and are in full force and effect and (iii) the Borrower and its Subsidiaries are in compliance in all material respects with all of the provisions of each such License held by any of them. SECTION 3.15. No Burdensome Restrictions. No Requirement of Law or --------------------------- Contractual Obligation (other than, in the case of clause (b) below, any restriction under subsection 6.08(a)) applicable to the Borrower or any Subsidiary could, as a result of compliance by the Borrower and the Subsidiaries therewith, reasonably be expected to (a) have a Material Adverse Effect or (b) limit the ability of any Restricted Subsidiary to pay dividends or to make distributions or advances to the Borrower or any other Restricted Subsidiary. SECTION 3.16. Use of Proceeds. The Borrower will use the proceeds of ---------------- the Loans to fund capital expenditures related to the construction of the Network, the acquisition of Related Businesses, working capital needs of the Borrower and subscriber acquisition costs and will request the issuance of Letters of Credit only to support payment obligations incurred in the ordinary course of business by the Borrower and the Restricted Subsidiaries. SECTION 3.17. Flood Insurance. To the extent reasonably available, ---------------- the Borrower has obtained for all Mortgaged Properties which are located in a "flood hazard area", as designated in any Flood Insurance Rate Map published by the Federal Emergency Management Agency, such flood insurance in such total amount as the Administrative Agent has from time to time reasonably required. SECTION 3.18. Insurance. Schedule 3.18 sets forth a description of ---------- all insurance maintained by or on behalf of the Borrower and its Restricted Subsidiaries as of the Effective Date. As of the Effective Date, all premiums in respect of such insurance have been paid. SECTION 3.19. Labor Matters. As of the Effective Date, there are no -------------- strikes, lockouts or slowdowns against the Borrower or any Subsidiary pending or, to the knowledge of the Borrower, threatened. With such exceptions as could not reasonably be expected to result in a Material Adverse Effect, (i) the hours worked by and payments made to 84 employees of the Borrower and the Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Federal, state, local or foreign law dealing with such matters and (ii) all payments due from the Borrower or any Subsidiary, or for which any claim may be made against the Borrower or any Subsidiary, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of the Borrower or such Subsidiary. SECTION 3.20. Solvency. Immediately after the consummation of the --------- Transactions to occur on the Effective Date and immediately following the making of each Loan made on the Effective Date and after giving effect to the application of the proceeds of such Loans and the provisions of the Indemnity, Subrogation and Contribution Agreement, (a) the fair value of the assets of each Loan Party, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the property of each Loan Party will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) each Loan Party will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d) each Loan Party will not have unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted following the Effective Date. SECTION 3.21. FCC Compliance. (a) The Borrower and each Subsidiary --------------- are in compliance in all material respects with the Communications Act and all requirements of the FCC, including its Very Small Business requirements. (b) The Borrower has no knowledge of any investigation, notice of apparent liability, violation, forfeiture or other order or complaint issued by or before the FCC, or of any other proceedings (other than proceedings relating to the wireless communications industries generally) of or before the FCC, which could reasonably be expected to have a Material Adverse Effect except as set forth in Schedule 3.21. 85 (c) No event has occurred which (i) results in, or after notice or lapse of time or both would result in, revocation, suspension, adverse modifications, non-renewal, impairment, restriction or termination of, or order of forfeiture with respect to, any License in any respect which could reasonably be expected to have a Material Adverse Effect or (ii) affects or could reasonably be expected in the future to affect any of the rights of the Borrower or any License Subsidiary under any License held by the Borrower or any License Subsidiary in any respect which could reasonably be expected to have a Material Adverse Effect. (d) The Borrower and each License Subsidiary have duly filed in a timely manner all material filings, reports, applications, documents, instruments and information required to be filed by it under the Communications Act, and all such filings were when made true, correct and complete in all material respects. (e) The Borrower has no reason to believe that each License of the Borrower or any Subsidiary will not be renewed in the ordinary course. SECTION 3.22. Security Documents. (a) The Pledge Agreement is ------------------- effective to create in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral (as defined in the Pledge Agreement) and, when the Collateral is delivered to the Administrative Agent, the Pledge Agreement shall create a fully perfected first priority Lien on, and security interest in, all right, title and interest of the pledgors thereunder in such Collateral, in each case prior and superior in right to any other Person. (b) The Security Agreement is effective to create in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral (as defined in the Security Agreement) and, when financing statements in appropriate form are filed in the offices specified on Schedule 6 to the Perfection Certificate, the Security Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the grantors thereunder in such Collateral (other than the Intellectual Property, as defined in the Security Agree- 86 ment), in each case prior and superior in right to any other Person, other than with respect to Liens expressly permitted by Section 6.02. Following an Event of Default, the Borrower's rights under the PCS Documents (other than the Stockholders Agreement) will be enforceable by the Lenders; provided, however, -------- ------- that the Administrative Agent shall not assign the Network Licensing Agreement to a third party without first obtaining AW's consent. (c) When the Security Agreement is filed in the United States Patent and Trademark Office and the United States Copyright Office, and, with respect to Collateral in which a security interest cannot be perfected by such filings, upon the filing of the financing statements referred to in paragraph (b) above, the Security Agreement and such financing statements shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the grantors thereunder in the Intellectual Property (as defined in the Security Agreement), in each case prior and superior in right to any other Person (it being understood that subsequent recordings in the United States Patent and Trademark Office and the United States Copyright Office may be necessary to perfect a lien on registered trademarks, trademark applications and copyrights acquired by the grantors after the date hereof), other than with respect to Liens expressly permitted by Section 6.02. (d) The Mortgages are effective to create in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable Lien on all of the Borrower's right, title and interest in and to the Mortgaged Property thereunder and the proceeds thereof, and when the Mortgages are filed in the offices specified on Schedule 3.22, the Mortgages shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Borrower in such Mortgaged Property and the proceeds thereof, in each case prior and superior in right to any other Person, other than with respect to the rights of Persons pursuant to Liens expressly permitted by Section 6.02. SECTION 3.23. Copyrights, Trademarks, etc. The Borrower and the ---------------------------- Restricted Subsidiaries own, or, to the best of their knowledge, are licensed to use, all copyrights, trademarks, trade names, patents, technology, know-how and processes, service marks and rights with 87 respect to the foregoing that are (a) used in or necessary for the conduct of their respective businesses as currently conducted and (b) material to the business, assets, operations, properties, prospects or condition (financial or otherwise) of the Borrower and the Restricted Subsidiaries taken as a whole. The use of such copyrights, trademarks, trade names, patents, technology, know-how and processes, service marks and rights with respect to the foregoing by the Borrower and the Restricted Subsidiaries does not infringe on the rights of any Person. SECTION 3.24. Federal Regulations. No part of the proceeds of any -------------------- Loans or any Letter of Credit will be used in any manner which would result in a violation of Regulation U or X of the Board as now and from time to time hereafter in effect or to buy or carry "margin stock" (as defined thereunder) or to refinance any Indebtedness incurred for such purpose. SECTION 3.25. Year 2000. Any reprogramming required to permit the ---------- proper functioning, in and following the year 2000, of (i) the Borrower's computer systems and equipment containing embedded microchips (including systems and equipment supplied by others or with which Borrower's systems interface) and the testing of all such systems and equipment, as so reprogrammed, will be completed by January 1, 1999. The cost to the Borrower of such reprogramming and testing and of the reasonably foreseeable consequences of year 2000 to the Borrower (including, without limitation, reprogramming errors and the failure of others' systems or equipment) will not result in a Default or a Material Adverse Effect. Except for such of the reprogramming referred to in the preceding sentence as may be necessary, the computer and management information systems of the Borrower and its Subsidiaries are and, with ordinary course upgrading and maintenance, will continue for the term of this Agreement to be, sufficient to permit the Borrower to conduct its business without Material Adverse Effect. 88 ARTICLE IV Conditions ---------- SECTION 4.01. Effective Date. The obligations of the Lenders to make --------------- Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 9.02): (a) The Administrative Agent (or its counsel) shall have received from each party hereto either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement. (b) The Administrative Agent shall have received a favorable written opinion (addressed to the Administrative Agent and the Lenders and dated the Effective Date) of (i) McDermott, Will & Emery, counsel for the Borrower substantially in the form of Exhibit B-1 and (ii) Wiley, Rein & Fielding, special counsel to the Borrower with respect to FCC matters, substantially in the form of Exhibit B-2 and, in the case of each such opinion required by this paragraph, covering such other matters relating to the Loan Parties, the Loan Documents or the Transactions as the Required Lenders shall reasonably request. The Borrower hereby requests such counsel to deliver such opinions. (c) The Administrative Agent shall have received (i) a certificate of the Secretary or Assistant Secretary of the Borrower and each Subsidiary Loan Party dated the Effective Date and certifying (A) that attached thereto is a true and complete copy of the by-laws, operating agreement or partnership agreement of such Loan Party as in effect on the Effective Date and at all times since a date prior to the date of the resolutions described in clause (B) below, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the board of directors (or equivalent governing body), members or partners of the Borrower and each Subsidiary Loan Party authorizing the execution, delivery and performance of the Loan 89 Documents to which such Person is a party and, in the case of the Borrower, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect, and (C) as to the incumbency and specimen signature of each officer or partner of the Borrower (or its general partner) and any Subsidiary Loan Party executing any Loan Document on behalf of such Loan Party; (ii) a certificate of another officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary executing the certificate pursuant to (i) above; and (iii) such other documents as the Lenders or Cravath, Swaine & Moore, counsel for the Administrative Agent, may reasonably request. (d) The Administrative Agent shall have received a certificate, dated the Effective Date and signed by the President, a Vice President or a Financial Officer of the Borrower, confirming compliance with the conditions set forth in paragraphs (a) and (b) of Section 4.02. (e) The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Effective Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by any Loan Party hereunder or under any other Loan Document. (f) The Borrower shall have transferred to (i) the Real Property Subsidiary all Real Property Assets and Real Property-Related Equipment other than (A) Real Property Assets constituting rights under leases that as of the date hereof prohibit such transfer (without regard to any such prohibition which contains exceptions if the Borrower or any other Subsidiary remains liable for the obligations under the applicable lease or if the Borrower or its Subsidiaries were to take other actions which are reasonably (considering the expenses involved) within their power to take ("Restricted Real Property Assets")), (B) equipment which constitutes a ------------------------------- fixture to any Restricted Real Property Asset ("Restricted Real Property- Related Equipment") and (c) Secured Real Property Assets and Secured Real Property Related Equipment but in any event the Borrower shall have so transferred assets constituting at least 90% of the 90 value of all Real Property Assets and Real Property-Related Equipment of the Borrower and its Subsidiaries (excluding Secured Real Property Assets and Secured Real Property-Related Equipment) as of the date hereof and provided evidence reasonably satisfactory to the Administrative Agent of the transfers described above, (ii) the Equipment Subsidiary or the Real Property Subsidiary all Base Stations which are held directly or indirectly by the Borrower or any of its Restricted Subsidiaries and (iii) a License Subsidiary all Licenses which are directly or indirectly held by the Borrower or any of its Restricted Subsidiaries (including the Licenses for the MTAs and BTAs listed on Schedule 3.14), free and clear of all Liens whatsoever (other than Liens created by the Security Documents and, with respect to any License Subsidiary, Liens arising under the Communications Act), and each Special Purpose Subsidiary shall have entered into a Special Purpose Subsidiary Funding Agreement with the Borrower. (g) The Pledge Agreement shall have been duly executed by the parties thereto, shall have been delivered to the Administrative Agent and shall be in full force and effect, and all the outstanding (i) intercompany Indebtedness owed to any Loan Party by the Borrower or any Subsidiary and (ii) equity interests that are owned by the Borrower or any Subsidiary Loan Party (in each case as of the Effective Date after giving effect to the Transactions) (A) shall have been duly and validly pledged thereunder to the Administrative Agent for the ratable benefit of the Secured Parties, and (B) certificates representing such equity interests (except that such certificates representing equity interests in a Foreign Subsidiary may be limited to 65% of the outstanding shares of such partnership interests or equity interests in such Foreign Subsidiary) and promissory notes evidencing such intercompany Indebtedness shall be in the actual possession of the Administrative Agent, accompanied by stock powers or other instruments of transfer, endorsed in blank, with respect to such certificates and such promissory notes. (h) The Security Agreement shall have been duly executed by the parties thereto, shall have been delivered to the Administrative Agent and shall be in full force and effect, and all documents and 91 instruments, including Uniform Commercial Code financing statements, required by law or reasonably requested by the Administrative Agent to be filed, registered or recorded to create or perfect the Liens intended to be created under the Security Agreement shall have been delivered to the Administrative Agent. (i) The Administrative Agent shall have received a completed Perfection Certificate (giving effect to the Transactions) dated the Effective Date and signed by an executive officer or Financial Officer of the Borrower, together with all attachments contemplated thereby, including the results of a search of the Uniform Commercial Code (or equivalent) filings made with respect to the Borrower and the Subsidiary Loan Parties in the jurisdictions contemplated by the Perfection Certificate and copies of the financing statements (or similar documents) disclosed by such search and evidence reasonably satisfactory to the Administrative Agent that the Liens indicated by such financing statements (or similar documents) are permitted by Section 6.02 or have been released. (j) The Guarantee Agreement shall have been duly executed by the Subsidiary Loan Parties and the Administrative Agent, shall have been delivered to the Administrative Agent and shall be in full force and effect. (k) The Indemnity, Subrogation and Contribution Agreement shall have been duly executed by the parties thereto, shall have been delivered to the Administrative Agent and shall be in full force and effect. (l) The Administrative Agent shall have received evidence satisfactory to it that the insurance required by Section 5.07 is in effect. (m) The Administrative Agent shall have received from the Borrower a photocopy, certified to be true and complete, of its Licenses for the MTAs and BTAs listed in Schedule 3.14 and such Licenses shall be owned by the Borrower free and clear of all Liens other than liens imposed by the Communications Act. (n) The Administrative Agent shall have received from the Borrower conformed copies, certified and true 92 and complete, of (i) the Securities Purchase Agreement, (ii) the Network License Agreement, (iii) the Stockholders Agreement, (iv) the Roaming Agreement, (v) the Resale Agreement and (vi) the Special Purpose Subsidiary Funding Agreements (copies of any of which will be delivered to any Lender upon request), none of which shall contain any material adverse change to the interests of the Lenders as compared with the final form of each such agreement delivered to the Administrative Agent prior to the date hereof. Each of the agreements referred to in the previous sentence (other than the Resale Agreement) shall have been duly executed and delivered on behalf of each party thereto, shall have been duly authorized thereby, and shall constitute a legal, valid and binding obligation of such party, enforceable against such party in accordance with its terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law); and the Borrower shall have delivered to the Lenders a certificate of a Responsible Officer as to the accuracy of the foregoing. (o) To the extent not expressly contemplated in the final form of Securities Purchase Agreement or the final form of Restated Certificate of Incorporation delivered to the Administrative Agent prior to May 12, 1998, the Administrative Agent shall be satisfied with (i) the corporate and capital structure of the Borrower and its subsidiaries, (ii) the contributions to the Borrower's equity and (iii) all legal, tax and accounting matters related to the formation, capitalization and operations of the Borrower. (p) The Borrower shall have entered into (i) supply contracts with vendors for the build out of the Network and the acquisition of related equipment, and, to the extent material, such contracts shall be reasonably satisfactory to the Administrative Agent and (ii) such other agreements with third parties as may be reasonably necessary to the conduct of its proposed operations in accordance with its business plan. (q) The Borrower shall have received all scheduled cash capital contributions set forth on 93 Schedule I to the Securities Purchase Agreement, including contributions of $40,000,000 in cash on or prior to the Effective Date as set forth therein. (r) Each of the Borrower, AW and the other parties thereto shall have executed and delivered to the Administrative Agent consents to assignment ("Consents to Assignment") to the Administrative Agent for the benefit of the Secured Parties, in form and substance satisfactory to the Administrative Agent, with respect to the Securities Purchase Agreement, the Network License Agreement and such of the other PCS Documents as are requested by the Administrative Agent; provided, however, that the Consent -------- ------- to Assignment with respect to AW shall be set forth in the Network License Agreement and, with respect to the Network License Agreement, such Consent to Assignment will not permit the Administrative Agent to assign the Network License Agreement to any person other than the Lenders without first obtaining AW's consent. (s) The terms and conditions of any Subordinated Debt, if any, and the provisions of the Subordinated Debt Documents, if any, shall be satisfactory to the Lenders and the Administrative Agent shall have received copies of any Subordinated Debt Documents, if any, certified by a Responsible Officer as complete and correct. (t) All consents and approvals required to be obtained from any Governmental Authority or other Person in connection with the Transactions or the other transactions contemplated hereby shall have been obtained, and all applicable waiting periods and appeal periods shall have expired or, with respect to the consent of the FCC to the License Transfer (as defined in the Securities Purchase Agreement) a Final Order (as defined in the Securities Purchase Agreement) shall have been obtained, in each case without the imposition of any material conditions and there shall be no governmental or judicial action, actual or threatened, that could reasonably be expected to restrain, prevent or impose material conditions on the Transactions or the other transactions contemplated hereby. To the extent contemplated by the terms of this Agreement and the Securities Purchase Agreement, the Transactions shall have been, or substantially simultaneously with 94 the initial funding of Loans on the Effective Date shall be, consummated in accordance with the PCS Documents and applicable law, without any amendment to or waiver of any material terms or conditions of the PCS Documents not approved by the Required Lenders. The Administrative Agent shall have received copies of the PCS Documents and all certificates, opinions and other documents delivered thereunder, certified by a Responsible Officer as complete and correct and the PCS Documents shall contain no material changes adverse to the interests of the Lenders compared to the final form of such documents delivered to the Administrative Agent prior to May 12, 1998. (u) The Lenders shall have received a pro forma consolidated balance sheet of the Borrower as of the Closing Date, reflecting all pro forma adjustments as if the Transactions had been consummated on such date, and such pro forma consolidated balance sheets shall not be materially inconsistent with the projections previously provided to the Lenders. After giving effect to the Transactions, neither the Borrower nor any of its Subsidiaries shall have outstanding any shares of preferred stock or any Indebtedness, other than (i) Indebtedness incurred under the Loan Documents, (ii) preferred stock of the Borrower issued to AW and the other equity investors listed on Schedules I and II to the Securities Purchase Agreement pursuant to the terms of the Securities Purchase Agreement, (iii) Indebtedness owed to the FCC by THC in the amount of $13,000,000 (or, if the THC San Diego Merger has occurred, $22,200,000), (iv) the Series A Bonds and (v) the Subordinated Debt (if issued on or prior to the Closing Date) in an amount not to exceed $350,000,000. (v) The Administrative Agent shall have received from the Borrower (i) the financial statements referred to in Section 3.04 and (ii) a certificate dated the Effective Date and duly executed by a Responsible Officer of the Borrower certifying that attached thereto is the annual budget of the Borrower for the fiscal year ending December 31, 1998 as well as a 10-year business plan of the Borrower satisfactory to the Lenders with quarterly projections for at least the two-year period following the Effective Date. 95 (w) There shall have been no material adverse change in the business, assets, results of operations, properties, prospects, financial condition or material agreements of THC, the Borrower and the Restricted Subsidiaries, taken as a whole, since December 31, 1997. (x) The Borrower shall be in Pro Forma Compliance. (y) After giving effect to the Transactions and the consummation of the other transactions contemplated hereby, amounts available under this Agreement shall be sufficient to meet the ongoing working capital requirements of the Borrower and the Subsidiaries in accordance with the projections set forth in the Information Memorandum. (z) The amount of cash consideration received by the Borrower for the sale of its stock pursuant to the Securities Purchase Agreement plus the amount of cash consideration payable by investors for stock of the Borrower pursuant to binding commitments with the Borrower set forth in the Securities Purchase Agreement, shall be at least $128,000,000 or, if the Supplemental Closing (as defined in the Securities Purchase Agreement) occurs, at least $133,000,000. The amount of cash consideration received by the Borrower for the sale of its stock to Equity Participants other than AW in connection with (x) the San Juan Acquisition (if such acquisition occurs on or prior to the Closing Date) shall be at least $39,700,000 and (y) the THC San Diego Merger (if such merger occurs on or prior to the Closing Date) shall be at least $41,000,000. The Agents shall be satisfied with the identity of the equity holders of the Borrower other than AW and the Equity Participants. The Administrative Agent shall be satisfied with the identity of the equity holders of the Borrower other than AW and the Equity Participants. (aa) THC shall have become a wholly owned subsidiary of the Borrower. (bb) The Extended Payment Terms Facility between the Borrower and Lucent shall have been repaid in full and all security interests relating thereto shall have been released. 96 (cc) The Borrower shall have purchased the Licenses described in Part D of Schedule 3.14 from AW for cash consideration of not more than $21,000,000. The Administrative Agent shall notify the Borrower and the Lenders of the Effective Date, and such notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of the Lenders to make Loans shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 9.02) at or prior to 3:00 p.m., New York City time, on the date hereof (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate at such time). SECTION 4.02. Each Credit Event. The obligation of each Lender to ------------------ make a Loan on the occasion of any Borrowing and of the Issuing Bank to issue Letters of Credit, is subject to the satisfaction of the following conditions: (a) The representations and warranties of each Loan Party set forth in the Loan Documents shall be true and correct in all material respects on and as of the date of such Credit Event except with respect to representations and warranties expressly made only as of the date hereof or the Effective Date which shall be true in all material respects as of such date. (b) At the time of and immediately after giving effect to such Credit Event no Default shall have occurred and be continuing and the Borrower shall be in Pro Forma Compliance. (c) At the time of and immediately after giving effect to such Credit Event, the Borrower shall be in Pro Forma Compliance with (i) if the Subordinated Debt has not been issued, the covenant set forth in subsection 6.12(a) and (ii) if the Subordinated Debt has been issued, the covenant set forth in subsection 6.12(b); provided, however, that, after the Borrower -------- ------- delivers the financial statements required for the fiscal quarter ended December 31, 2001 pursuant to Section 5.01, this clause (c) shall be deemed to have been satisfied if at the time of and immediately after giving effect to such Credit Event, the Borrower is in 97 pro forma compliance with the covenants set forth in Section 6.12(g) and (i). Each Credit Event shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (a), (b) and (c) of this Section. ARTICLE V Affirmative Covenants --------------------- Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit have been canceled or have expired and all amounts drawn thereunder have been reimbursed in full the Borrower covenants and agrees with the Lenders that: SECTION 5.01. Financial Statements and Other Information. The ------------------------------------------- Borrower will furnish to the Administrative Agent and each Lender: (a) within 90 days after the end of each fiscal year its audited consolidated balance sheet and related statements of operations, stockholders' equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by Coopers & Lybrand, or other independent public accountants of recognized national standing (without a "going concern" or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Borrower and its Restricted Subsidiaries on a consolidated basis in accordance with GAAP consistently applied; (b) within 45 days after the end of each of the first three fiscal quarters of each fiscal year, its consolidated balance sheet and related statements of operations, stockholders' equity and cash flows as of the end of and for such fiscal quarter and the then 98 elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of its Financial Officers as presenting fairly in all material respects the financial condition and results of operations of the Borrower and its Restricted Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes; (c) concurrently with any delivery of financial statements under clause (a) or (b) above, a certificate of a Financial Officer of the Borrower (i) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations demonstrating compliance with Sections 6.08 and 6.12 and (iii) stating whether any change in GAAP or in the application thereof has occurred since the date of the Borrower's audited financial statements referred to in Section 3.04 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate; (d) concurrently with any delivery of financial statements under clause (a) above, a certificate of the accounting firm that reported on such financial statements stating whether they obtained knowledge during the course of their examination of such financial statements of any Default (which certificate may be limited to the extent required by accounting rules or guidelines); (e) no more than 90 days after the commencement of fiscal year 1999 and no more than 45 days after the commencement of each other fiscal year, a detailed consolidated budget for such fiscal year, broken down by fiscal quarters (including a projected consolidated balance sheet and related statements of projected operations and cash flow as of the end of and for each such fiscal quarter) and, promptly when available, any significant revisions of such budget; 99 (f) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Borrower or any Subsidiary with the Securities and Exchange Commission, or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national securities exchange, as the case may be; (g) within 45 days after the end of each calendar month, a certificate of a Responsible Officer setting forth (A) the aggregate number of Subscribers at the end of the calendar month preceding such calendar month and (B) the aggregate number of Subscribers at the end of such calendar month; (h) within 45 days after the end of each fiscal quarter, a certificate of a Responsible Officer setting forth (A) the aggregate number of Subscribers whose service terminated during such fiscal quarter, (B) the aggregate number of Subscribers added during such fiscal quarter and (C) certain revenue and system build information; (i) within five Business Days after the same are sent, a copy of any financial statement, report or notice which the Borrower or any Subsidiary sends to any Person under or pursuant to or in connection with the Securities Purchase Agreement, the Network License Agreement, the Stockholders Agreement, the Roaming Agreement, the Resale Agreement or any other PCS Document, in each case if such statement, report or notice relates to an event that has resulted or could reasonably be expected to result in an Event of Default or a Material Adverse Effect; and, within five Business Days after the same are received by the Borrower or any Subsidiary, copies of all notices sent to any such Person under or pursuant to or in connection with any such agreement or instrument which notice relates to an event that has resulted or could reasonably be expected to result in an Event of Default or a Material Adverse Effect; (j) concurrently with any delivery of financial statements under clause (a) or (b) above, a balance sheet and related statements of operations, stockholders' equity and cash flows for each 100 Unrestricted Subsidiary for the applicable period (each of which may be unaudited); and (k) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower or any Subsidiary, or compliance with the terms of any Loan Document, or such consolidating financial statements, or such financial statements showing the results of operations or financial condition of any Unrestricted Subsidiary, as the Administrative Agent or any Lender may reasonably request. SECTION 5.02. Notices of Material Events. Upon a Responsible Officer --------------------------- having knowledge of the following, the Borrower will furnish to the Administrative Agent, the Issuing Bank and each Lender prompt written notice of the following: (a) the occurrence of any Default; (b) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting the Borrower or any Affiliate thereof that, if adversely determined, could reasonably be expected to result in a Material Adverse Effect; (c) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in a Material Adverse Effect; and (d) any other development (other than general economic conditions and developments affecting the wireless industry generally) that results in, or could reasonably be expected to result in, a Material Adverse Effect. Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto. SECTION 5.03. Information Regarding Collateral. (a) The Borrower --------------------------------- will furnish to the Administrative Agent 101 prompt written notice of any change (i) in any Loan Party's corporate name or in any trade name used to identify it in the conduct of its business or in the ownership of its properties, (ii) in the location of any Loan Party's chief executive office, its principal place of business, any office in which it maintains books or records relating to Collateral owned by it or any office or facility at which Collateral owned by it is located (including the establishment of any such new office or facility), (iii) in any Loan Party's identity or corporate structure or (iv) in any Loan Party's Federal Taxpayer Identification Number. The Borrower agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the Uniform Commercial Code or otherwise that are required in order for the Administrative Agent to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral. The Borrower also agrees promptly to notify the Administrative Agent if any material portion of the Collateral is damaged or destroyed. (b) Each year, at the time of delivery of annual financial statements with respect to the preceding fiscal year pursuant to clause (a) of Section 5.01, the Borrower shall deliver to the Administrative Agent a certificate of a Financial Officer of the Borrower (i) setting forth the information required pursuant to Section 2 of the Perfection Certificate or confirming that there has been no change in such information since the date of the Perfection Certificate delivered on the Effective Date or the date of the most recent certificate delivered pursuant to this Section and (ii) certifying that all Uniform Commercial Code financing statements (including fixture filings, as applicable) or other appropriate filings, recordings or registrations, including all refilings, rerecordings and reregistrations, containing a description of the Collateral have been filed of record in each governmental, municipal or other appropriate office in each jurisdiction identified pursuant to clause (i) above to the extent necessary to protect and perfect the security interests under the Security Agreement for a period of not less than 18 months after the date of such certificate (except as noted therein with respect to any continuation statements to be filed within such period). SECTION 5.04. Existence; Conduct of Business. The Borrower will, and ------------------------------- will cause each of its Subsidiaries 102 to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and except to the extent it could not reasonably be expected to have a Material Adverse Effect, all the rights, licenses, permits, privileges, franchises, patents, copyrights, trademarks and trade names used in or necessary for the conduct of its business; provided that -------- the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.04. SECTION 5.05. Payment of Obligations. The Borrower will, and will ----------------------- cause each of its Subsidiaries to, pay its Indebtedness and other obligations, including Tax liabilities, before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on its books reserves with respect thereto in accordance with GAAP, (c) such contest effectively suspends collection of the contested obligation and the enforcement of any Lien securing such obligation and (d) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect. SECTION 5.06. Maintenance of Properties. The Borrower will, and will -------------------------- cause each of its Subsidiaries to, maintain (i) all property necessary to the conduct of its business in good working order and condition with such exceptions as would not have a Material Adverse Effect and (ii) its accounting, software and billing systems and controls at a level consistent with the standards of other reputable wireless services providers and reasonably required in connection with the Borrower's business. SECTION 5.07. Insurance. The Borrower will, and will cause each of ---------- its Subsidiaries to, maintain, with financially sound and reputable insurance companies insurance on all its property in at least such amounts and against at least such risks as are usually insured against by companies engaged in the same or a similar business in the same or similar locations, and furnish to the Administrative Agent, promptly upon written request therefor, full information as to the insurance carried. SECTION 5.08. Casualty and Condemnation. (a) The Borrower will -------------------------- furnish to the Administrative Agent and the Lenders prompt written notice of any casualty or 103 other insured damage to any portion of any Collateral or the commencement of any action or proceeding for the taking of any Collateral or any part thereof or interest therein under power of eminent domain or by condemnation or similar proceeding. (b) If any event described in paragraph (a) of this Section results in Net Proceeds (whether in the form of insurance proceeds, condemnation award or otherwise), the Administrative Agent is authorized to collect such Net Proceeds and, if received by the Borrower or any Subsidiary, such Net Proceeds shall be paid over to the Administrative Agent; provided that (i) if the -------- aggregate Net Proceeds in respect of such event (other than proceeds of business income insurance) are less than $3,000,000, such Net Proceeds shall be paid over to the Borrower unless a Default has occurred and is continuing, and (ii) all proceeds of business income insurance shall be paid over to the Borrower unless a Default has occurred and is continuing. All such Net Proceeds retained by or paid over to the Administrative Agent shall be held by the Administrative Agent and released from time to time to pay the costs of repairing, restoring or replacing the affected property in accordance with the terms of the applicable Security Document (subject to the provisions of the applicable Security Document regarding application of such Net Proceeds during a Default). (c) If any Net Proceeds retained by or paid over to the Administrative Agent as provided above continue to be held by the Administrative Agent on the date that is 270 days after the occurrence of the event resulting in such Net Proceeds, then such Net Proceeds shall be applied to prepay Term Borrowings as provided in Section 2.09(b). SECTION 5.09. Books and Records; Inspection and Audit Rights. The ----------------------------------------------- Borrower will, and will cause each of its Subsidiaries to, keep proper books of record and account in which entries which are accurate and complete in all material respects are made of all dealings and transactions in relation to its business and activities. The Borrower will, and will cause each of its Subsidiaries to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, 104 all at such reasonable times and as often as reasonably requested. SECTION 5.10. Compliance with Laws. The Borrower will, and will --------------------- cause each of its Subsidiaries to, comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property and to comply in all respects with all of its Contractual Obligations, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. SECTION 5.11. Use of Proceeds. The proceeds of the Loans, together ---------------- with the proceeds of the Initial Equity Contributions and the Subordinated Debt, if any, will be used only to fund capital expenditures related to the construction of the Network, the acquisition of Related Businesses, working capital needs of the Borrower and subscriber acquisition costs and Letters of Credit will be issued only to support payment obligations incurred in the ordinary course of business by the Borrower and the Restricted Subsidiary. No part of the proceeds of any Loan and no Letter of Credit will be used, whether directly or indirectly, (i) to make any investment in, or finance the acquisition of, any Unrestricted Subsidiary or (ii) for any purpose that entails a violation of any of the Regulations of the Board, including Regulations U and X. SECTION 5.12. Additional Subsidiaries. If any additional Subsidiary ------------------------ is formed or acquired after the Effective Date, the Borrower will notify the Administrative Agent and the Lenders thereof and (a) if such Subsidiary is a Subsidiary Loan Party, the Borrower will cause such Subsidiary to become a party to the Pledge Agreement (if such Subsidiary owns capital stock or intercompany Indebtedness), the Security Agreement, the Guarantee Agreement and the Indemnity, Subrogation and Contribution Agreement as contemplated under each agreement, within three Business Days after such Subsidiary is formed or acquired and promptly take such actions to create and perfect Liens on such Subsidiary's assets to secure the Obligations as the Administrative Agent or the Required Lenders shall reasonably request and (b) if any shares of Capital Stock or Indebtedness of such Subsidiary (other than an Unrestricted Subsidiary) are owned by or on behalf of any Loan Party, the Borrower will cause such shares and promissory notes evidencing such Indebtedness to be pledged pursuant to the 105 Pledge Agreement within three Business Days after such Subsidiary is formed or acquired (except that, if such Subsidiary is a Foreign Subsidiary, shares of common stock of such Subsidiary to be pledged pursuant to the Pledge Agreement may be limited to 65% of the outstanding shares of common stock of such Subsidiary). SECTION 5.13. Further Assurances. (a) The Borrower will, and will ------------------- cause each Loan Party to, execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, mortgages, deeds of trust and other documents), which may be required under any applicable law, or which the Administrative Agent or the Required Lenders may reasonably request, to effectuate the transactions contemplated by the Loan Documents or to grant, preserve, protect or perfect the Liens created or intended to be created by the Security Documents or the validity or priority of any such Lien, all at the expense of the Loan Parties. The Borrower also agrees to provide to the Administrative Agent, from time to time upon request, evidence reasonably satisfactory to the Administrative Agent as to the perfection and priority of the Liens created or intended to be created by the Security Documents (including opinions of local counsel in the jurisdictions in which assets of any Loan Party are located). (b) If any material assets (including any real property or improvements thereto or any interest therein) are acquired by the Borrower or any Loan Party after the Effective Date (other than assets constituting Collateral under the Security Documents that become subject to the Lien of the Security Documents upon acquisition thereof), the Borrower will notify the Administrative Agent and the Lenders thereof, and, if requested by the Administrative Agent or the Required Lenders, the Borrower will cause such assets to be subjected to a Lien securing the Obligations and will take, and cause the Loan Parties to take, such actions as shall be necessary or reasonably requested by the Administrative Agent to grant and perfect such Liens, including actions described in paragraph (a) of this Section, all at the expense of the Borrower. In addition, if (i) any License is acquired by the Borrower or any Subsidiary (other than a License Subsidiary) the Borrower will promptly transfer or cause the transfer to a License Subsidiary of such License, (ii) any Real Property Assets 106 (other than Restricted Real Property Assets, Secured Real Property Assets and Excluded Real Property Assets) or any Real Property-Related Equipment (other than Restricted Real Property-Related Equipment, Secured Real Property-Related Equipment and Excluded Real Property Equipment) is acquired by the Borrower or any Subsidiary (other than the Real Property Subsidiary) the Borrower will promptly transfer or cause the transfer of such assets to the Real Property Subsidiary, (iii) any Base Station is acquired by the Borrower or any Subsidiary (other than the Equipment Subsidiary or the Real Property Subsidiary) the Borrower will promptly transfer or cause the transfer of such Base Station to the Equipment Subsidiary or the Real Property Subsidiary and (iv) any fee interests in real property having at the time of acquisition thereof a purchase price or fair market value greater than $1,000,000 (a "Mortgaged Property") are ------------------ acquired by the Borrower or any Subsidiary after the date hereof (including Mortgaged Properties of any Person that becomes a Subsidiary or is merged with or into or consolidated with the Borrower or any Subsidiary) the Borrower will promptly create or cause to be created a first priority perfected Mortgage in favor of the Administrative Agent for the benefit of the Secured Parties on, and pay all recording taxes, title insurance costs, survey costs and other costs in connection with such Mortgage. SECTION 5.14. Interest Rate Protection. As promptly as practicable, ------------------------- and in any event within 90 days after the Effective Date, the Borrower will enter into, and thereafter until the final maturity of all the Loans, will maintain in effect, one or more interest rate protection agreements with one or more Lenders or Affiliates of Lenders on such terms as shall be reasonably satisfactory to the Administrative Agent, the effect of which shall be to fix or limit the interest cost to the Borrower with respect to at least 50% of the outstanding Indebtedness of the Borrower (other than indebtedness which bears interest at a fixed rate) at a maximum rate reasonably acceptable to the Administrative Agent. SECTION 5.15. Satisfaction of F-Block License Requirements. The --------------------------------------------- Borrower and its Subsidiaries shall take all actions necessary to satisfy the FCC's Very Small Business requirements and all Requirements of Law the Borrower and its Subsidiaries are required to comply with in order for the Borrower and THC to be permitted to hold F-Block Licenses. 107 ARTICLE VI Negative Covenants ------------------ Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full and all Letters of Credit have been canceled or have expired and all amounts drawn thereunder have been reimbursed in full, the Borrower covenants and agrees with the Lenders that: SECTION 6.01. Indebtedness; Certain Equity Securities. (a) The ---------------------------------------- Borrower will not, and will not permit any Restricted Subsidiary to, create, incur, assume or permit to exist any Indebtedness, except: (i) Indebtedness created under the Loan Documents; (ii) the Subordinated Debt issued on terms reasonably satisfactory to the Required Lenders in an aggregate principal amount not to exceed $350,000,000 minus the principal amount of any Series B Bonds outstanding; provided that the proceeds of the Subordinated Debt shall be used by the -------- Borrower solely to fund the build-out of the Network and to make prepayments of the Series B Bonds permitted by Section 6.08(b)(vi); (iii) Indebtedness of the Borrower to any Restricted Subsidiary (other than any Special Purpose Subsidiary) and of any Restricted Subsidiary (other than any Special Purpose Subsidiary) to the Borrower or any other Restricted Subsidiary (other than any Special Purpose Subsidiary); provided -------- that Indebtedness of any Restricted Subsidiary that is not a Loan Party to the Borrower or any Subsidiary Loan Party shall be subject to Section 6.05; (iv) Guarantees by the Borrower of Indebtedness of any Restricted Subsidiary (other than any Special Purpose Subsidiary) and by any Restricted Subsidiary (other than any Special Purpose Subsidiary) of Indebtedness of the Borrower or any other Restricted Subsidiary (other than any Special Purpose Subsidiary); provided that (i) Guarantees by the -------- Borrower or any 108 Subsidiary Loan Party of Indebtedness of any Subsidiary that is not a Loan Party shall be subject to Section 6.05 and (ii) a Subsidiary shall not Guarantee the Series A Bonds or the Series B Bonds and shall not Guarantee the Subordinated Debt unless (A) such Subsidiary also has Guaranteed the Obligations pursuant to the Guarantee Agreement, (B) such Guarantee of the Subordinated Debt is subordinated to such Guarantee of the Obligations on terms no less favorable to the Lenders than the subordination provisions of the Subordinated Debt and (C) such Guarantee of the Subordinated Debt provides for the release and termination thereof, without action by any party, upon any release and termination of such Guarantee of the Obligations; (v) the Series A Bonds in an aggregate principal amount not to exceed $80 million at any time outstanding and the Series B Bonds of the Borrower in an aggregate principal amount not to exceed $80 million at any time outstanding; provided, however, that (i) the proceeds of such bonds shall -------- ------- be used by the Borrower solely to fund the build-out of the Network, including in the Expansion Areas (as defined in the Lucent Note Purchase Agreement), (ii) such bonds will be subordinated to all the Obligations on the terms set forth in the Lucent Note Purchase Agreement and (iii) until 6 months after the Tranche B Maturity Date, no principal or interest payments may be made with respect thereto except for (x) prepayments of the Series B Bonds in accordance with the terms of Section 10.5 of the Lucent Note Purchase Agreement and (y) prepayments of the Series A Bonds with up to 50% of the net cash proceeds received from the issuance and sale of equity securities by the Borrower; provided, that no prepayment of the Series A -------- ---- Bonds will be made as a result of (A) sales of stock necessary to provide the initial $128,000,000 of cash equity capitalization of the Borrower or, if the Supplemental Closing (as defined in the Securities Purchase Agreement) occurs, the initial $133,000,000 of cash equity capitalization of the Borrower, (B) the issuance by the Borrower of approximately $39,900,000 of stock to AW and approximately $39,700,000 of stock to certain of the Equity Participants in connection with the San Juan Acquisition and (C) the issuance of approximately $4,800,000 million of stock to stockholders of THC 109 San Diego and approximately $41,000,000 of stock to certain of the Equity Participants in connection with the THC San Diego Merger. (vi) Capital Lease Obligations of the Borrower or any Restricted Subsidiary (other than any Special Purpose Subsidiary) with respect to the leasing of tower sites and equipment that is a fixture thereto; provided -------- that such Capital Lease Obligations shall not exceed $25,000,000 in aggregate principal amount at any time outstanding; (vii) Indebtedness (other than Indebtedness described in (v) or (vi) above) of the Borrower or any Restricted Subsidiary (other than any Special Purpose Subsidiary) incurred to finance the acquisition, construction or improvement of any fixed or capital assets, including Capital Lease Obligations and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof or result in an earlier maturity date or decreased weighted average life thereof; provided that such Indebtedness is incurred prior to or within 180 -------- days after such acquisition or the completion of such construction or improvement and shall not exceed $10,000,000 in aggregate principal amount at any time outstanding; (viii) FCC Debt assumed in connection with (a) the THC San Diego Merger in the amount of $8,200,000, (b) the Mercury Acquisition in the amount of $4,100,000 and (c) the Wireless 2000 Acquisition in the amount of $7,000,000. (ix) Indebtedness other than FCC Debt permitted by clause (viii) of any Restricted Subsidiary acquired after the date hereof; provided that (A) such Indebtedness exists at the time such Restricted Subsidiary is acquired and is not created in contemplation of or in connection with such acquisition and (B) the aggregate Indebtedness acquired in connection with all such acquisitions does not exceed $20,000,000 at any time outstanding and (C) the 110 aggregate Indebtedness acquired which is not FCC Debt does not exceed $5,000,000; (x) Indebtedness of the Borrower and the Restricted Subsidiaries existing on the date hereof and set forth on Schedule 6.01; (xi) Indebtedness arising under customary indemnification and purchase price adjustment obligations incurred in connection with asset sales permitted by Section 6.06(c); (xii) Indebtedness incurred to refinance any Indebtedness permitted under clauses (ix) and (x) of this Section 6.01; provided that (a) such -------- refinancing Indebtedness (i) shall not have a greater outstanding principal amount, an earlier maturity date or a decreased weighted average life than the Indebtedness refinanced and (ii) shall be subordinated to the Indebtedness created under the Loan Documents to at least the extent of, and shall otherwise be issued on terms no less favorable in any material respect to the Lenders than, the Indebtedness refinanced and (b) the proceeds of such Indebtedness shall be used solely to repay the Indebtedness refinanced thereby and fees and expenses in connection therewith; and (xiii) other unsecured Indebtedness of the Borrower and the Restricted Subsidiaries (other than any Special Purpose Subsidiary); provided that the -------- aggregate principal amount of such Indebtedness shall not exceed $3,000,000 at any time outstanding. (b) The Borrower will not, and will not permit any Restricted Subsidiary to, issue any preferred stock (other than preferred stock of the Borrower issued pursuant to the terms of the Securities Purchase Agreement or in connection with acquisitions permitted by Section 6.05 and Series E Preferred Stock issued in connection with employee compensation plans) or be or become liable in respect of any obligation (contingent or otherwise) to purchase, redeem, retire, acquire or make any other payment in respect of any shares of Capital Stock of the Borrower or any Subsidiary or any option, warrant or other right to acquire any such shares of Capital Stock. No preferred stock issued by the Borrower or any Restricted Subsidiary shall be mandatorily redeemable or subject to mandatory purchase by the Borrower or any Restricted Subsidiary, and no payments (including of 111 dividends) may be made (it being understood that dividends may accrue) in respect thereof under any circumstances prior to the date that is six months after the Tranche B Maturity Date (other than those dividend payments permitted pursuant to Section 6.08(a)(iv)). SECTION 6.02. Liens. The Borrower will not, and will not permit any ------ Restricted Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except: (i) Liens created under the Loan Documents; (ii) Permitted Encumbrances; (iii) any Lien on any property or asset of the Borrower or any Restricted Subsidiary (other than the License Subsidiary or the Property Subsidiary) existing on the date hereof and set forth in Schedule 6.02; provided that (A) such Lien shall not apply to any other property or asset -------- of the Borrower or any Restricted Subsidiary and (B) such Lien shall secure only those obligations which it secures on the date hereof; (iv) any Lien existing on any property or asset prior to the acquisition thereof by the Borrower or any Restricted Subsidiary or existing on any property or asset of any Person that becomes a Restricted Subsidiary after the date hereof prior to the time such Person becomes a Subsidiary; provided that (A) such Lien is not created in contemplation of -------- or in connection with such acquisition or such Person becoming a Subsidiary, as the case may be, (B) such Lien shall not apply to any other property or assets of the Borrower or any Restricted Subsidiary and (C) such Lien shall secure only those obligations which it secures on the date of such acquisition or the date such Person becomes a Subsidiary, as the case may be; and (v) Liens on fixed or capital assets acquired, constructed or improved by the Borrower or any 112 Restricted Subsidiary; provided that (A) such security interests secure -------- Indebtedness permitted by clause (vii) of Section 6.01(a), (B) such security interests and the Indebtedness secured thereby are incurred prior to or within 180 days after such acquisition or the completion of such construction or improvement, (C) the Indebtedness secured thereby does not exceed 100% of the cost of acquiring, constructing or improving such fixed or capital assets and (D) such security interests shall not apply to any other property or assets of the Borrower or any Restricted Subsidiary. SECTION 6.03. Sale and Lease-Back Transactions. The Borrower will --------------------------------- not, nor will it permit any Restricted Subsidiary to, enter into any arrangement, directly or indirectly, with any Person whereby it shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property which it intends to use for substantially the same purpose as the property being sold or transferred, except for sales and lease-backs of towers the Net Proceeds of which are used to prepay Loans pursuant to Section 2.09 (it being understood that, in calculating Net Proceeds, lease and other related payments arising in connection with any such sale and lease-back transaction shall not be deducted from the proceeds received from the sale of any tower or towers that are the subject of such sale and lease-back transaction). SECTION 6.04. Fundamental Changes. (a) The Borrower will not, and -------------------- will not permit any Restricted Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing (i) any Restricted Subsidiary (other than any Special Purpose Subsidiary) may merge into the Borrower in a transaction in which the Borrower is the surviving corporation, (ii) any Restricted Subsidiary (other than any Special Purpose Subsidiary) may merge into any Restricted Subsidiary (other than any Special Purpose Subsidiary) or another entity acquired pursuant to an acquisition permitted hereunder in a transaction in which the surviving entity is a Wholly Owned Restricted Subsidiary, (iii) any Restricted Subsidiary (other than any Special Purpose Subsidiary) may 113 liquidate or dissolve if the Borrower determines in good faith that such liquidation or dissolution is in the best interests of the Borrower and is not materially disadvantageous to the Lenders, (iv) the THC San Diego Merger may be consummated and (v) the Borrower or any Restricted Subsidiary (other than any License Subsidiary or Property Subsidiary) may effect any acquisition permitted by Section 6.05 by means of a stock-for-stock merger in which the Borrower or a Wholly owned Restricted Subsidiary is the surviving corporation. (b) The Borrower will not, and will not permit any of its Restricted Subsidiaries to, engage in any business other than businesses of the type conducted or contemplated to be conducted by the Borrower and its Restricted Subsidiaries on the date of execution of this Agreement and Related Businesses. SECTION 6.05. Investments, Loans, Advances, Guarantees and -------------------------------------------- Acquisitions. The Borrower will not, and will not permit any of its Restricted - ------------- Subsidiaries to, purchase, hold or acquire (including pursuant to any merger with any Person that was not a Wholly Owned Subsidiary prior to such merger) any capital stock, evidences of indebtedness or other securities (including any option, warrant or other right to acquire any of the foregoing) of, make or permit to exist any loans or advances to, Guarantee any obligations of, or make or permit to exist any investment or any other interest in, any other Person, or purchase or otherwise acquire (in one transaction or a series of transactions) any assets of any other Person constituting a business unit, except: (a) Permitted Investments; (b) investments existing on the date hereof and set forth on Schedule 6.05(b), to the extent such investments would not be permitted under any other clause of this Section; (c) investments by the Borrower and its Restricted Subsidiaries (other than any Special Purpose Subsidiary) in the Capital Stock of the Restricted Subsidiaries; provided that any such shares of capital stock held by a Loan -------- Party shall be pledged pursuant to the Pledge Agreement (subject to the limitations applicable to common stock of a Foreign Subsidiary 114 referred to in Section 5.12) and no investments may be made in Subsidiaries that are not Loan Parties; (d) loans or advances made by the Borrower to any Restricted Subsidiary and made by any Restricted Subsidiary to the Borrower or any other Restricted Subsidiary; provided that any such loans and advances made -------- by a Loan Party shall be evidenced by a promissory note pledged pursuant to the Pledge Agreement and no loans or advances may be made to Subsidiaries that are not Loan Parties; (e) Guarantees constituting Indebtedness permitted by Section 6.01; provided that a Subsidiary shall not Guarantee the Subordinated Debt unless -------- (A) such Subsidiary also has Guaranteed the Obligations pursuant to the Guarantee Agreement, (B) such Guarantee of the Subordinated Debt is subordinated to such Guarantee of the Obligations on terms no less favorable to the Lenders than the subordination provisions of the Subordinated Debt and (C) such Guarantee of the Subordinated Debt provides for the release and termination thereof, without action by any party, upon any release and termination of such Guarantee of the Obligations; (f) investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business; (g) the San Juan Acquisition; (h) the THC San Diego Merger; (i) the Mercury Acquisition; (j) the Wireless 2000 Acquisition; (k) the LMDS Merger; (l) Other acquisitions in which the only consideration paid by the Borrower or any Restricted Subsidiary consists of Capital Stock of the Borrower; 115 (m) Loans and advances to employees in an amount not to exceed $250,000 at any time outstanding; and (n) Investments by the Borrower in Unrestricted Subsidiaries funded with the proceeds of capital contributed to the Borrower specifically for such purpose and not required to be contributed to the Borrower pursuant to the Securities Purchase Agreement in an aggregate amount for all such Unrestricted Subsidiaries not to exceed $50,000,000. SECTION 6.06. Asset Sales. The Borrower will not, and will not ------------ permit any Restricted Subsidiary to, sell, transfer, lease or otherwise dispose of any asset, including any Capital Stock, nor will the Borrower permit any of its Restricted Subsidiaries to issue any additional shares of Capital Stock or other ownership interest in such Restricted Subsidiary, except in the case of the Borrower and its Restricted Subsidiaries: (a) sales of inventory, used or surplus equipment and Permitted Investments in the ordinary course of business; (b) sales, transfers and dispositions to the Borrower or a Restricted Subsidiary; provided that any such sales, transfers or dispositions -------- involving a Restricted Subsidiary that is not a Loan Party shall be made in compliance with Section 6.09; (c) sales, transfers and dispositions of assets (other than capital stock of a Restricted Subsidiary) that are not permitted by any other clause of this Section; provided that the aggregate fair market value of -------- all assets sold, transferred or otherwise disposed of in reliance upon this clause (c) shall not exceed $1,000,000 during any fiscal year of the Borrower; (d) so long as after giving effect thereto the Borrower is in Pro Forma Compliance, any License Swap and any Swap of License Related Assets in connection therewith, provided that, (i) the aggregate number of Pops in -------- the BTAs and MTAs covered by the License or Licenses that are the subject of all License Swaps (other than the San Diego Swap) in each fiscal year may not exceed 10% of the Initial Pops and (ii) the fair market value of the License Related Assets that are the 116 subject of Swaps of License Related Assets in each fiscal year may not exceed $2,000,000; provided that all sales, transfers, leases and other dispositions permitted - -------- hereby shall be made for fair value and, except in the case of clause (d), solely for cash consideration. SECTION 6.07. Hedging Agreements. The Borrower will not, and will ------------------- not permit any Restricted Subsidiary to, enter into any Hedging Agreement, other than (a) Hedging Agreements required by Section 5.14 and (b) Hedging Agreements entered into in the ordinary course of business to hedge or mitigate risks to which the Borrower or any Restricted Subsidiary is exposed in the conduct of its business or the management of its liabilities. SECTION 6.08. Restricted Payments; Certain Payments of Indebtedness. ------------------------------------------------------ (a) The Borrower will not, nor will it permit any Restricted Subsidiary to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except (i) the Borrower may declare and pay dividends with respect to its capital stock payable solely in additional shares of Common Stock or warrants to purchase its Common Stock, (ii) Restricted Subsidiaries may declare and pay dividends ratably with respect to their capital stock; provided that no -------- distribution referred to in this clause (ii) shall be permitted to be made by any Special Purpose Subsidiary if any Default or Event of Default shall have occurred and be continuing or would result therefrom, (iii) the Borrower may make Restricted Payments, not exceeding $1,000,000 during any fiscal year, pursuant to and in accordance with stock option plans or other benefit plans for management or employees of the Borrower and its Subsidiaries and (iv) following the end of the fiscal year of the Borrower ending December 31, 2001, and following the end of each subsequent fiscal year, the Borrower may pay cash dividends with respect to the Series A Preferred Stock in an amount not in excess of 50% of Excess Cash Flow for such fiscal year; provided that the -------- prepayments required by Section 2.09(c) have previously been made. (b) The Borrower will not, and will not permit any Restricted Subsidiary to, make or agree to pay or make, directly or indirectly, any payment or other distribution (whether in cash securities or other property) of or in 117 respect of principal of or interest on any Indebtedness, or any payment or other distribution (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancelation or termination of any Indebtedness, except: (i) payment of Indebtedness created under the Loan Documents; (ii) payment of regularly scheduled interest and principal payments as and when due in respect of any Indebtedness permitted by Section 6.01(a), other than (x) payments in respect of the Subordinated Debt prohibited by the subordination provisions thereof and (y) payments in respect of the Series A Bonds or the Series B Bonds prohibited by the proviso in 6.01(a)(v); (iii) refinancings of Indebtedness to the extent permitted by Section 6.01; (iv) payment of secured Indebtedness permitted by Section 6.01(a) that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness; (v) mandatory prepayments of the Series A Bonds as a result of the issuance of equity securities by the Borrower with up to 50% of the net cash proceeds of any such issuance; provided, that, no prepayment of the -------- ---- Series A Bonds will be made in connection with (i) sales of stock necessary to provide the initial $128,000,000 of cash equity capitalization of the Borrower or, if the Supplemental Closing (as defined in the Securities Purchase Agreement) occurs, the initial $133,000,000 of cash equity capitalization of the Borrower, (ii) the issuance by the Borrower of approximately $39,900,000 of stock to AW and approximately $39,700,000 of stock to other Equity Participants in connection with the San Juan Acquisition and (iii) the issuance of the Borrower of approximately $4.0 million of stock to stockholders of THC San Diego and approximately $41,000,000 of stock to certain Equity Participants in connection with the THC San Diego Merger); and 118 (vi) mandatory prepayments of the Series B Bonds in accordance with the terms of Section 10.5 of the Lucent Note Purchase Agreement. SECTION 6.09. Transactions with Affiliates. The Borrower will not, ----------------------------- and will not permit any Restricted Subsidiary to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) transactions in the ordinary course of business that are at prices and on terms and conditions (taken as a whole) not less favorable to the Borrower or such Restricted Subsidiary than could be obtained on an arm's-length basis from unrelated third parties, (b) transactions between or among the Borrower and the Restricted Subsidiary Loan Parties not involving any other Affiliate, (c) any Restricted Payment permitted by Section 6.08, (d) transactions consummated pursuant to the PCS Documents and (e) payments by the Borrower to Telecorp Management Corp. pursuant to the Management Agreement. SECTION 6.10. Restrictive Agreements. The Borrower will not, nor ----------------------- will it permit any Restricted Subsidiary to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of the Borrower or any Restricted Subsidiary to create, incur or permit to exist any Lien upon any of its property or assets or (b) the ability of any Restricted Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or advances to the Borrower or any other Restricted Subsidiary or to Guarantee Indebtedness of the Borrower or any other Restricted Subsidiary; provided that (i) the foregoing shall not apply to restrictions and -------- conditions imposed by law or by any Loan Document or Subordinated Debt Document, (ii) the foregoing shall not apply to restrictions and conditions existing on the date hereof identified on Schedule 6.10 (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition), (iii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale, provided such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder, 119 (iv) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness and (v) clause (a) of the foregoing shall not apply to customary provisions in leases restricting the assignment thereof. SECTION 6.11. Amendment of Material Documents. The Borrower will -------------------------------- not, and will not permit any Restricted Subsidiary to, amend, modify or waive any of its rights under (a) any agreement relating to Material Indebtedness, (b) its certificate of incorporation, by-laws or other organizational documents, (c) the Special Purpose Subsidiary Funding Agreements, (d) the PCS Documents or (e) the Master Lease, in the case of clauses (a), (b), (c) and (e) above, in a manner adverse to the interests of the Lenders and, in the case of clause (d) above, in a manner that could be adverse in a material respect to the interests of the Lenders. SECTION 6.12. Financial Covenants. (a) Senior Debt to Total -------------------- -------------------- Capital. The Borrower will not permit the ratio of Senior Debt to Total Capital - -------- on any day on which a Borrowing occurs and the last day of each fiscal quarter to exceed .50 to 1.00; provided, however, that if (i) all Unfunded Commitments -------- ------- (as defined in the Securities Purchase Agreement) have been contributed in full in cash to the Borrower and (ii) Covered Pops meet or exceed 60% of the aggregate number of Pops within the Licensed Territory (as defined in the Network License Agreement) then the ratio of Senior Debt to Total Capital may exceed .50 to 1.00 but shall not exceed .55 to 1.00. (b) Total Debt to Total Capital. The Borrower will not permit the ---------------------------- ratio of Total Debt to Total Capital on any day on which a Borrowing occurs and the last day of each fiscal quarter to exceed .70 to 1.00. 120 (c) Covered Pops. The Borrower will not permit Covered Pops as a ------------- percentage of the total number of Pops in the BTAs and MTAs listed on Schedule 3.14 on or after any date set forth below to be less than the percentage set forth opposite such date:
Minimum Covered Date Pops ---- --------------- June 30, 1999 35% December 31, 1999 40% June 30, 2000 50% June 30, 2001 60% June 30, 2002 65% June 30, 2003 and thereafter 70%
(d) Subscribers. The Borrower will not permit the number of ------------ Subscribers on or after any date set forth below to be less than the number of Subscribers set forth opposite such date:
Minimum Date Subscribers ---- ----------- December 31, 1999 45,000 June 30, 2000 82,000 December 31, 2000 155,000 June 30, 2001 190,000 December 31, 2001 265,000 June 30, 2002 305,000 December 31, 2002 and thereafter 400,000
121 (e) Aggregate Service Revenue. The Borrower will not permit -------------------------- Aggregate Service Revenue for any period of four consecutive fiscal quarters ending on or after any date set forth below to be less than Aggregate Service Revenue set forth opposite such date:
Minimum Aggregate Date Service Revenue ---- ----------------- December 31, 1999 $ 12,500,000 June 30, 2000 $ 35,000,000 December 31, 2000 $ 65,000,000 June 30, 2001 $ 95,000,000 December 31, 2001 $135,000,000 June 30, 2002 $180,000,000 December 31, 2002 and thereafter $240,000,000
(f) Total Debt to Annualized EBITDA. The Borrower will not permit -------------------------------- the ratio of (i) Total Debt outstanding on any day from and including (A) the last day of any fiscal quarter set forth below through (B) the day immediately preceding the last day of the immediately following fiscal quarter to (ii) Annualized EBITDA for the period ending on the date referred to in clause (i)(A) above to exceed the ratio set forth opposite such date:
Fiscal Quarter Ending On Ratio -------------- ----- September 30, 2002 25.0 to 1.00 December 31, 2002 20.0 to 1.00 March 31, 2003 16.0 to 1.00 June 30, 2003 13.0 to 1.00 September 30, 2003 10.0 to 1.00 December 31, 2003 8.5 to 1.00 March 31, 2004 7.5 to 1.00 June 30, 2004 6.5 to 1.00 September 30, 2004 5.5 to 1.00 December 31, 2004 and thereafter 4.5 to 1.00
122 (g) Total Debt to Annualized Adjusted EBITDA. The Borrower will not ----------------------------------------- permit the ratio of (i) Total Debt outstanding on any day from and including (A) the last day of any fiscal quarter set forth below through (B) the day immediately preceding the last day of the immediately following fiscal quarter to (ii) Annualized Adjusted EBITDA for the period ending on the date referred to in clause (i)(A) above to exceed the ratio set forth opposite such date:
Fiscal Quarter Ending On Ratio -------------- ----- December 31, 2001 22.0 to 1.00 March 31, 2002 16.0 to 1.00 June 30, 2002 14.0 to 1.00 September 30, 2002 12.0 to 1.00 December 31, 2002 10.0 to 1.00 March 31, 2003 8.0 to 1.00 June 30, 2003 7.0 to 1.00 September 31, 2003 and thereafter 6.0 to 1.00
123 (h) Senior Debt to Annualized EBITDA. The Borrower will not permit --------------------------------- the ratio of (i) Senior Debt outstanding on any day from and including (A) the last day of any fiscal quarter set forth below through (B) the day immediately preceding the last day of the immediately following fiscal quarter to (ii) Annualized EBITDA for the period ending on the date referred to in clause (i)(A) above to exceed the ratio set forth opposite such date:
Fiscal Quarter Ending On Ratio -------------- ----- September 30, 2002 18.0 to 1.00 December 31, 2002 13.0 to 1.00 March 31, 2003 10.0 to 1.00 June 30, 2003 8.5 to 1.00 September 30, 2003 6.5 to 1.00 December 31, 2003 5.5 to 1.00 March 31, 2004 4.5 to 1.00 June 30, 2004 4.0 to 1.00 September 30, 2004 and thereafter 3.0 to 1.00
124 (i) Senior Debt to Annualized Adjusted EBITDA. The Borrower will not ------------------------------------------ permit the ratio of (i) Senior Debt outstanding on any day from and including (A) the last day of any fiscal quarter set forth below through (B) the day immediately preceding the last day of the immediately following fiscal quarter to (ii) Annualized Adjusted EBITDA for the period ending on the date referred to in clause (i)(A) above to exceed the ratio set forth opposite such date:
Fiscal Quarter Ending On Ratio -------------- ----- September 30, 2001 21.0 to 1.00 December 31, 2001 17.0 to 1.00 March 31, 2002 12.0 to 1.00 June 30, 2002 10.0 to 1.00 September 30, 2002 8.0 to 1.00 December 31, 2002 6.0 to 1.00 March 31, 2003 5.0 to 1.00 June 30, 2003 and thereafter 4.0 to 1.00
(j) Interest Coverage Ratio. The Borrower will not permit the ratio ------------------------ of (i) Consolidated EBITDA for any period of four consecutive fiscal quarters ending on any date or during any "Test Period" set forth below to (ii) Cash Interest Expense for such period to be less than the ratio set forth opposite such date or Test Period:
Date or Test Period Ratio ------------------- ----- December 31, 2002 1.00 to 1.00 March 31, 2003 - June 30, 2003 1.15 to 1.00 September 30, 2003 - June 30, 2004 1.25 to 1.00 September 30, 2004 - December 31, 2004 1.50 to 1.00 March 31, 2005 - June 30, 2005 2.00 to 1.00 September 30, 2005 and thereafter 2.25 to 1.00
(k) Fixed Charges Ratio. The Borrower will not permit the ratio of -------------------- (i) Consolidated EBITDA for any period of four consecutive fiscal quarters ending during any "Test Period" set forth below to Fixed Charges for such period to be less than the ratio set forth opposite such Test Period: 125
Test Period Ratio ----------- ----- March 31, 2004 - December 31, 2004 1.00 to 1.00 March 31, 2005 and thereafter 1.10 to 1.00
(l) Capital Expenditures. The Borrower will not permit Capital --------------------- Expenditures of the Borrower and its Restricted Subsidiaries for any period set forth below to exceed the sum set forth opposite such period:
Period Amount ------ ------ Date of formation through $320,000,000 December 31, 1998 January 1, 1999 - December 31, 1999 $146,500,000 January 1, 2000 - December 31, 2000 $ 65,000,000 January 1, 2001 - December 31, 2001 $ 39,000,000 January 1, 2002 - December 31, 2002 $ 37,500,000 January 1, 2003 and thereafter $ 35,000,000
; provided that any permitted amount which is not expended in any of the periods -------- specified above may be carried over for expenditure in the immediately subsequent period. SECTION 6.13. Liabilities of Special Purpose Subsidiaries. The -------------------------------------------- Borrower will not: (a) permit any License Subsidiary to incur, assume or permit to exist any liabilities (other than under the Guarantee Agreement and the Security Agreement, the Communications Act, FCC Debt and taxes and other liabilities incurred in the ordinary course in order to maintain its existence) or to engage in any business or activities other than the holding of Licenses; (b) permit the Real Property Subsidiary to incur, assume or permit to exist any liabilities (other than (i) under the Guarantee Agreement and the Security Agreement, (ii) other liabilities incurred in the ordinary course of business which are incident to being the lessee of real property or the purchaser, owner or lessee of equipment and (iii) taxes and other liabilities in the ordinary course in order to maintain its existence) or to engage in any business or activities 126 other than the owning or leasing, as lessee, of Real Property Assets and the leasing, as lessor, or, as the case may be, subleasing, as sublessor, thereof to the Borrower, and the owning of Real Property-Related Equipment constituting fixtures thereto and the leasing thereof to the Borrower; or (c) permit the Equipment Subsidiary to incur, assume or permit to exist any liabilities (other than (i) under the Guarantee Agreement and the Security Agreement, (ii) other liabilities incurred in the ordinary course of business which are incident to being the lessor of equipment or the purchaser or owner of equipment and (iii) taxes and other liabilities incurred in the ordinary course in order to maintain its existence) or to engage in any business or activities other than the owning of equipment and the leasing thereof, as lessor, to the Borrower or another Restricted Subsidiary. ARTICLE VII Events of Default ----------------- If any of the following events ("Events of Default") shall occur: ----------------- (a) the Borrower shall fail to pay any principal of any Loan or the reimbursement with respect to any L/C Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise; (b) the Borrower shall fail to pay any interest on any Loan or any fee or L/C Disbursement or any other amount (other than an amount referred to in clause (a) of this Article) payable under this Agreement or any other Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five days; (c) any representation or warranty made or deemed made by or on behalf of any Loan Party in or in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, or in any report, certificate, financial statement or other 127 document furnished pursuant to or in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, shall prove to have been incorrect in any material respect when made or deemed made; (d) the Borrower shall fail to observe or perform any covenant, condition or agreement contained in Section 5.02, 5.04 (with respect to the existence of the Borrower) or 5.11 or in Article VI; (e) any Loan Party shall fail to observe or perform any covenant, condition or agreement contained in any Loan Document (other than those specified in clause (a), (b) or (d) of this Article), and such failure shall continue unremedied for a period of 30 days after notice thereof from the Administrative Agent to the Borrower (which notice will be given at the request of any Lender); (f) any Loan Party shall fail to make any payment (whether of principal or interest or otherwise and regardless of amount) in respect of any Material Indebtedness, when and as the same shall become due and payable; (g) any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that this clause (g) -------- shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness; (h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of any Loan Party or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the 128 appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered; (i) any Loan Party shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (h) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing; (j) any Loan Party shall become unable, admit in writing its inability or fail generally to pay its debts as they become due; (k) one or more judgments for the payment of money in an aggregate amount in excess of $5,000,000 (to the extent not covered by insurance) shall be rendered against the Borrower, any Loan Party or any combination thereof and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Borrower or any Subsidiary to enforce any such judgment; (l) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all other ERISA Events that have occurred, could reasonably be expected to result in a Material Adverse Effect; 129 (m) any Lien purported to be created under any Security Document shall cease to be, or shall be asserted by any Loan Party not to be, a valid and perfected Lien on any Collateral, with the priority required by the applicable Security Document, except (i) as a result of the sale or other disposition of the applicable Collateral in a transaction permitted under the Loan Documents, (ii) as a result of the Administrative Agent's failure to maintain possession of any stock certificates, promissory notes or other instruments delivered to it under the Pledge Agreement or the Administrative Agent's failure to file necessary continuation financing statements or make required filings with the Patent and Trademark Office of the United States of America after delivery to the Administrative Agent by the Borrower of executed copies of such financing statements and filings or (iii) to the extent such loss is covered by a title insurance policy in favor of the Administrative Agent in which the relevant insurer has not denied liability thereunder; (n) any of the Security Documents shall cease to be or shall be asserted by any Loan Party not to be in full force and effect; (o) the Guarantee Agreement shall cease to be or shall be asserted by any Loan Party not to be in full force and effect; (p) a Change in Control shall occur; (q) the failure of the Borrower to make any payments required to be made to the FCC or any other Governmental Authority with respect to any License held by the Borrower or any Subsidiary or any Indebtedness or other payment obligations relating thereto as and when due which failure could reasonably be expected to lead to the loss, termination, revocation, non- renewal or material impairment of any License or otherwise result in a Material Adverse Effect; (r) any termination (prior to the expiration of its term), revocation or non-renewal by the FCC of one or more Licenses of the Borrower or its Subsidiaries; (s) the Borrower's right to use any "AT&T" trademark (other than any trademark which AT&T itself no 130 longer uses) pursuant to the Network License Agreement shall terminate (it being understood that, on or after the date which is five years from the Effective Date, neither the non-renewal of the Network License Agreement by AW nor the termination of the Network License Agreement by AW as a result of a Disqualifying Transaction (as defined in the Stockholders Agreement) shall constitute an Event of Default hereunder); (t) the loss by any Loan Party of any rights to the benefit of, or the occurrence of any default or the termination of any rights under, any application, marketing or other material agreements, which loss, occurrence or termination could reasonably be expected to have a Material Adverse Effect; (u) the failure of any party to the Securities Purchase Agreement or the Stockholders Agreement to comply with any funding or contribution obligation under such Agreement and such failure shall continue unremedied for a period of 30 days; (v) the failure by the Borrower to satisfy the FCC's Very Small Business requirements or any Requirements of Law the Borrower is required to comply with in order to hold an F-Block License, including any such failure which leads to the imposition of a penalty, fine or similar enforcement measure by the FCC; then, and in every such event (other than an event with respect to the Borrower described in clause (h) or (i) of this Article), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, 131 all of which are hereby waived by the Borrower; and in case of any event with respect to the Borrower described in clause (h) or (i) of this Article, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower. ARTICLE VIII The Administrative Agent ------------------------ Each of the Lenders and the Issuing Bank hereby irrevocably appoints the Administrative Agent as its agent and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto. The bank serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not the Administrative Agent hereunder. The Administrative Agent shall not have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that the Administrative Agent is required to exercise in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02), and (c) except as expressly set forth in the Loan Documents, the Administrative Agent shall not have any 132 duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02) or in the absence of its own gross negligence or wilful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. The Administrative Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Administrative 133 Agent. The Administrative Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of each Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. Subject to the appointment and acceptance of a successor the Administrative Agent as provided in this paragraph, the Administrative Agent may resign at any time by notifying the Lenders, the Issuing Bank and the Borrower. Upon any such resignation, the Required Lenders shall have the right, in consultation with the Borrower (unless an Event of Default has occurred and is continuing), to appoint a successor from among the other Lenders. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Administrative Agent which shall be a bank with an office in New York, New York, or an Affiliate of any such bank. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the Administrative Agent's resignation hereunder, the provisions of this Article and Section 9.03 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Administrative Agent. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also 134 acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or related agreement or any document furnished hereunder or thereunder. ARTICLE IX Miscellaneous ------------- SECTION 9.01. Notices. Except in the case of notices and other -------- communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows: (a) if to the Borrower, to it at 1101 17th Street, N.W., Washington, D.C. 20036, Attention of Thomas Sullivan and Robert Dowski (Telecopy No. (202) 833-5036); with a copy to McDermott, Will & Emery, 50 Rockefeller Plaza, New York, NY 10020, Attention of Jeffrey Dunetz (Telecopy No. (212) 547-5444); (b) if to the Administrative Agent, to The Chase Manhattan Bank, Loan and Agency Services Group, One Chase Manhattan, 8th Floor, New York, New York 10081, Attention of Donna Montgomery (Telecopy No. (212) 552-5700), with a copy to The Chase Manhattan Bank, 270 Park Avenue, New York, New York 10017, Attention of William Rottino (Telecopy No. (212) 270-4584); and (c) if to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire. Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the 135 provisions of this Agreement shall be deemed to have been given on the date of receipt. SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the -------------------- Administrative Agent, the Issuing Bank or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent or any Lender may have had notice or knowledge of such Default at the time. (b) Neither this Agreement nor any other Loan Document nor any provision hereof or thereof may be waived, amended or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders (or in the case of an Expansion Facility Amendment, by the parties required to enter into such amendment by Section 2.18 hereof) or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Administrative Agent and the Loan Party or Loan Parties that are parties thereto, in each case with the consent of the Required Lenders; provided that no -------- such agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender or increase the aggregate Commitments (other than pursuant to Section 2.18) without the consent of each Lender, (ii) reduce the principal amount of any Loan or L/C Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby, (iii) postpone the scheduled date of payment of the 136 principal amount of any Loan or L/C Disbursement, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date or amount of any reduction or expiration of any Commitment, without the written consent of each Lender affected thereby, (iv) change Section 2.16(b) or (c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender, (v) change any of the provisions of this Section or the definition of "Required Lenders" or any other provision of any Loan Document specifying the number or percentage of Lenders (or Lenders of any Class) required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder, without the written consent of each Lender (or each Lender of such Class, as the case may be), (vi) release any Subsidiary Loan Party from its Guarantee under the Guarantee Agreement (except as expressly provided in the Guarantee Agreement), or limit its liability in respect of such Guarantee, without the written consent of each Lender, (vii) release all or a substantial part of the Collateral from the Liens of the Security Documents, without the written consent of each Lender (provided, however, that the sale of up to 20% of -------- ------- the equity interests in the general partner of the Equipment Subsidiary shall require the consent only of the Required Lenders), (viii) change any provisions of any Loan Document in a manner that by its terms adversely affects the rights in respect of payments due to Lenders holding Loans of any Class differently than those holding Loans of any other Class, without the written consent of Lenders holding a majority in interest of the outstanding Loans and unused Commitments of each affected Class or (ix) change the rights of the Tranche B Lenders to decline mandatory prepayments as provided in Section 2.09, without the written consent of Tranche B Lenders holding a majority of the outstanding Tranche B Loans; provided further that (A) no such agreement shall amend, modify ---------------- or otherwise affect the rights or duties of the Administrative Agent or the Issuing Bank without the prior written consent of the Administrative Agent or the Issuing Bank, as the case may be, and (B) any waiver, amendment or modification of this Agreement that by its terms affects the rights or duties under this Agreement of the Revolving Lenders (but not the Tranche A Lenders and Tranche B Lenders), the Tranche A Lenders (but not the Revolving Lenders and Tranche B Lenders) or the Tranche B Lenders (but not the Revolving Lenders and Tranche A Lenders) may be effected by an agreement or agreements in 137 writing entered into by the Borrower and requisite percentage in interest of the affected Class of Lenders. SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower ----------------------------------- shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent, the Issuing Bank and their Affiliates, including due diligence expenses and the reasonable fees, charges and disbursements of counsel for the Administrative Agent, in connection with the syndication of the credit facilities provided for herein, the preparation, execution, delivery and administration of the Loan Documents or the other documentation contemplated hereby or thereby or any amendments, modifications or waivers of the provisions thereof (whether or not the transactions contemplated hereby or thereby shall be consummated) and (ii) all out-of-pocket expenses incurred by the Administrative Agent, the Issuing Bank or any Lender, including the fees, charges and disbursements of any counsel for the Administrative Agent, the Issuing Bank or any Lender, in connection with (x) the enforcement or protection of its rights in connection with the Loan Documents, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or related negotiations in respect of such Loans and Letters of Credit, and (y) any documentary taxes associated with the consummation of the Facilities. (b) The Borrower shall indemnify the Administrative Agent, the Issuing Bank, and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an "Indemnitee") against, and hold each ---------- Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of any Loan Document or any other agreement or instrument contemplated hereby, the performance by the parties to the Loan Documents of their respective obligations thereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or the use of the proceeds therefrom and any Letter of Credit and the use thereof, (iii) any actual or alleged presence or release of Hazardous Materials on or from any Mortgaged Property or any other property owned or 138 operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided -------- that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by a final judgment (not overturned or vacated on appeal) to have resulted from the gross negligence or wilful misconduct of such Indemnitee. (c) To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Administrative Agent, such Lender's pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, - -------- liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent in its capacity as such. For purposes hereof, a Lender's "pro rata share" shall be determined based upon its share of the sum of the total Revolving Exposures, outstanding Term Loans and unused Commitments at the time. (d) To the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or the use of the proceeds thereof. (e) All amounts due under this Section shall be payable promptly after written demand therefor. SECTION 9.04. Successors and Assigns. (a) The provisions of this ----------------------- Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written 139 consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement. (b) Any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that (i) -------- except in the case of an assignment to a Lender or an Affiliate of a Lender, each of the Borrower and the Administrative Agent (and, in the case of an assignment of a Revolving Commitment, the Issuing Bank) must give their prior written consent to such assignment (which consent shall not be unreasonably withheld, it being understood that the Borrower may reasonably withhold consent to any proposed assignment to a Foreign Lender that does not qualify for a complete exemption from withholding taxes), (ii) except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender's Commitment or Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 and, after giving effect to such assignment, the remaining aggregate amount of such assigning Lender's Commitment and Loans shall not be less than $1,000,000, unless each of the Borrower and the Administrative Agent otherwise consent, (iii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement, except that this clause (iii) shall not be construed to prohibit the assignment of a proportionate part of all the assigning Lender's rights and obligations in respect of one Class of Commitments or Loans, (iv) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500 (provided, however, that no such fee shall be payable in the case of an -------- ------- assignment to another Lender or an Affiliate of a Lender; 140 and provided further that, in the case of contemporaneous assignments by a -------- ------- Lender to more than one fund managed by the same investment advisor (which funds are not then Lenders hereunder), only a single $3,500 such fee shall be payable for all such contemporaneous assignments) and (v) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire; and provided further that any consent of the Borrower otherwise ---------------- required under this paragraph shall not be required if an Event of Default has occurred and is continuing. Subject to acceptance and recording thereof pursuant to paragraph (d) of this Section, from and after the effective date specified in each Assignment and Acceptance the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.13, 2.14, 2.15 and 9.03). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (e) of this Section. (c) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices in The City of New York a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be -------- conclusive, and the Borrower, the Administrative Agent, the Issuing Bank and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice. 141 (d) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, the assignee's completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Acceptance and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph. (e) Any Lender may, without the consent of the Borrower, the Administrative Agent or the Issuing Bank, sell participations to one or more banks or other entities (a "Participant") in all or a portion of such Lender's ----------- rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (i) such Lender's -------- obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent, the Issuing Bank and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce the Loan Documents and to approve any amendment, modification or waiver of any provision of the Loan Documents; provided that such agreement or -------- instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that affects such Participant. Subject to paragraph (f) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.13, 2.14 and 2.15 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section provided that no Participant shall be entitled to receive any greater amount pursuant to such Sections than the assigning Lender would have been entitled to receive in respect of the amount of the participation transferred had no such transfer occurred. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it 142 were a Lender, provided such Participant agrees to be subject to Section 2.16(c) as though it were a Lender. (f) A Participant shall not be entitled to receive any greater payment under Section 2.13 or 2.15 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower's prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.15 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.15(e) as though it were a Lender. (g) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement and any other Loan Document to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release - -------- a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. SECTION 9.05. Survival. All covenants, agreements, representations --------- and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid and so long as the Commitments have not expired or terminated. The provisions of Sections 2.13, 2.14, 2.15, 9.03 and 9.12 and Article VIII shall survive and remain in full force and 143 effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Commitments or the termination of this Agreement or any provision hereof. SECTION 9.06. Counterparts; Integration; Effectiveness. This ----------------------------------------- Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Document and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement. SECTION 9.07. Severability. Any provision of this Agreement held to ------------- be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. SECTION 9.08. Right of Setoff. If an Event of Default shall have ---------------- occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now or hereafter existing under this Agreement held 144 by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have. SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of -------------------------------------------------- Process. (a) This Agreement shall be construed in accordance with and governed - -------- by the law of the State of New York. (b) The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to any Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any right that the Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against the Borrower or its properties in the courts of any jurisdiction. (c) The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. 145 (d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law. SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, --------------------- TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. SECTION 9.11. Headings. Article and Section headings and the Table --------- of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement. 146 SECTION 9.12. Confidentiality. Each of the Administrative Agent and ---------------- the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates' directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (g) with the consent of the Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent or any Lender on a nonconfidential basis from a source other than the Borrower or any Affiliate of the Administrative Agent or the Lenders. For the purposes of this Section, "Information" means all information received from or on behalf of the ----------- Borrower relating to the Borrower or its business, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by the Borrower. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. TELECORP PCS, INC., by /s/ Thomas Sullivan -------------------------------------- Name: Thomas Sullivan Title: President THE CHASE MANHATTAN BANK, individually and as Administrative Agent, by /s/ Deborah Davey -------------------------------------- Name: Deborah Davey Title: Vice President TORONTO DOMINION [TEXAS], INC., by /s/ Debbie A. Greene -------------------------------------- Name: Debbie A. Greene Title: Vice President BANKERS TRUST COMPANY, individually and as Documentation Agent, by /s/ Gregory P. Ghefrin -------------------------------------- Name: Gregory P. Ghefrin Title: Vice President THE BANK OF NEW YORK, by /s/ Gerry Granovsky -------------------------------------- Name: Gerry Granovsky Title: Vice President CIBC INC., by /s/ Cynthia McCahill -------------------------------------- Name: Cynthia McCahill Title: Executive Director CIBC Oppenheimer Corp., as Agent MORGAN GUARANTY TRUST COMPANY OF NEW YORK, by /s/ R. Blake Witherington -------------------------------------- Name: R. Blake Witherington Title: Vice President GENERAL ELECTRIC CAPITAL CORPORATION, by /s/ Molly S. Fergusson -------------------------------------- Name: Molly S. Fergusson Title: Manager, Operations LEHMAN COMMERCIAL PAPER INC., by /s/ William J. Gallagher -------------------------------------- Name: William J. Gallagher Title: Authorized Signatory BANK OF TOKYO MITSUBISHI TRUST COMPANY, by /s/ Michael Deadder -------------------------------------- Name: Michael Deadder Title: Vice President BANKBOSTON, N.A., by /s/ Jeffrey A. Wellington -------------------------------------- Name: Jeffrey A. Wellington Title: Director FLEET NATIONAL BANK, by /s/ William Weiss -------------------------------------- Name: William Weiss Title: Assistant Vice President CREDIT LYONNAIS NEW YORK BRANCH, by /s/ Michael Henderlong -------------------------------------- Name: Michael Henderlong Title: Vice President MERRILL LYNCH SENIOR FLOATING RATE FUND, INC., by /s/ Andrew C. Liggio -------------------------------------- Name: Andrew C. Liggio Title: Authorized Signatory SENIOR HIGH INCOME PORTFOLIO, INC., by /s/ Andrew C. Liggio -------------------------------------- Name: Andrew C. Liggio Title: Authorized Signatory DEBT STRATEGIES FUND, INC., by /s/ Andrew C. Liggio -------------------------------------- Name: Andrew C. Liggio Title: Authorized Signatory FRANKLIN FLOATING RATE TRUST, by /s/ Chauncey Lufkin -------------------------------------- Name: Chauncey Lufkin Title: Vice President SCHEDULE 1.01 Equity Participants Chase Capital Desai Capital Hoak Capital CB Capital Investors, L.P. Equity-Linked Investors-II Private Equity Investors III, L.P. Hoak Communications Partners, L.P. HCP Capital Fund, L.P. Whitney Equity Partners, L.P. J.H. Whitney III, L.P. Whitney Strategic Partners III, L.P. Entergy Technology Holding Company Media/Communications Partners III Limited Partnership Media/Communications Investors Limited Partnership One Liberty Fund III, L.P. Toronto Dominion Investments, Inc. Northwood Ventures LLC Northwood Capital Partnerships LLC Gerald Vento Thomas Sullivan SCHEDULE 2.01 Commitments
Revolving Tranche A Tranche B --------- --------- --------- Lenders Commitment Commitment Commitment ------- ---------- ---------- ---------- The Chase Manhattan Bank 25,000,000 25,000,000 115,000,000 Toronto Dominion (Texas), Inc. 20,000,000 20,0000000 0 Bankers Trust Company 25,000,000 25,0000000 0 The Bank of New York 12,500,000 12,500,000 10,000,000 CIBC Inc. 12,500,000 12,500,000 10,000,000 Morgan Guaranty Trust Company of New York 12,500,000 12,500,000 10,000,000 General Electric Capital Corporation 12,500,000 12,500,000 5,000,000 Lehman Commercial Paper Inc. 12,500,000 12,500,000 5,000,000 Bank of Tokyo Mitsubishi Trust Company 7,500,000 7,500,000 0 BankBoston, N.A. 5,000,000 5,000,000 15,000,000 Fleet National Bank 5,000,000 5,000,000 5,000,000 Credit Lyonnais New York Branch 0 0 20,000,000 Merrill Lynch Senior Floating Rate Fund, Inc. 0 0 15,000,000 Senior High Income Portfolio, Inc. 0 0 5,000,000 Debt Strategies Fund, Inc. 0 0 5,000,000 Franklin Floating Rate Trust 0 0 5,000,000 ----------- ----------- ----------- Total 150,000,000 150,000,000 225,000,000
SCHEDULE 3.05 Real Property Owned or Leased Owned: None. Leased: See attached pages.
- ----------------------------------------------------------------------------------------------------- Landlord Execution Date Monthly Base Rent Assignment - ----------------------------------------------------------------------------------------------------- Paula A. Dolan, May 29, 1998 $7,461.80 (1-5 yrs.) Permitted to Trustee of Lease Status: Fully Affiliates 100 Tech Realty Executed Trust, under Declaration of Trust dated April 4, 1998 13 Wheeling Avenue Woburn, MA 01801 - ----------------------------------------------------------------------------------------------------- Facility: Switch Facility Address: 155 Northboro Road Southborough, MA - ----------------------------------------------------------------------------------------------------- FIVE N ASSOCIATES October 17, 1997 $9,250.00 Permitted to 40 Temple Street First Supplement: May Lease Status: Fully Affiliates Nashua, NH 03060 29, 1998 Executed - ----------------------------------------------------------------------------------------------------- Facility: Office Facility Address: 20 Industrial Park Drive Nashua, NH - ----------------------------------------------------------------------------------------------------- Charles E. Smith June 5, 1998 $9,528.75 No assignment Commercial Realty Lease Status: Fully provision is 1666 K Street, NW Executed contained within the Suite 1200 agreement Washington, DC 20006 - ----------------------------------------------------------------------------------------------------- Facility: Office Facility Address: 1101 17th Street, N.W. Suite 411 Washington, DC - ----------------------------------------------------------------------------------------------------- Continental Poydras October 22, 1997 April 1- April 30: Prior written consent Corporation Amended: March 30, $10,236.25 from the lessor is 1340 Poydras Street 1998 required. 60 day Suite 1430 May 1, 1998- July 31, notice to be provided New Orleans, LA 70112 1998: $10,986.25 including financial information for the Lease Status: Fully assignee Executed - ----------------------------------------------------------------------------------------------------- Facility: Office Facility Address: 1340 Poydras Street Suite 550 New Orleans, LA - ----------------------------------------------------------------------------------------------------- Three Financial October 23, 1997 $17,174.84 Need copy of Lease - -----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------- Centre Joint Venture 900 So. Shackleford Road Suite 210 Little Rock, AR 72211 - ----------------------------------------------------------------------------------------------------- Facility: Facility Address: - ----------------------------------------------------------------------------------------------------- M. Arthur Gensler, March, 1998 $33,500.00 Prior consent from Jr. & Associates, Lease Status: Fully the sublessor is Inc. executed copy is required. Permitted 600 California required to affiliates San Francisco, CA 94108 Attn: Ben Fisher - ----------------------------------------------------------------------------------------------------- Facility: Office Facility Address: 1101 17th Street, N.W. Suite 900 Washington, D.C. - ----------------------------------------------------------------------------------------------------- Richard Orgel November 1, 1997 $1,850.00 Permitted to 4091 Viscount Avenue Lease Status: Fully affiliates Memphis, TN 38118 executed - ----------------------------------------------------------------------------------------------------- Facility: Office Facility Address: 4357 Getwell Road Memphis, TN - ----------------------------------------------------------------------------------------------------- State of CA Public March 3, 1998 March 1, 1998- May Permitted to an Employees' 31, 2003: $10,306.88 affiliate. Thirty Retirement System day prior notice to C/o LaSalle Advisors May 1, 2003-May 31, Lessor. Limited 2008: $11,612.41 5910 North Central Expressway, Suite Lease Status: Fully 1130 executed Dallas, TX 75206 - ----------------------------------------------------------------------------------------------------- Facility: Switch Facility Address: Building "A" Mendenhall Business Center 4400 Mendenhall - -----------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------- Road Suites 7 and 8 Memphis, TN - --------------------------------------------------------------------------------------------- Entergy Enterprises, September 1, 1997 $17,174.84 Permitted to an Inc. affiliate 900 South Shackleford Status: Fully executed Suite 210 Little Rock, AR 72211 - --------------------------------------------------------------------------------------------- Facility: Office Facility Address: Three Financial Center 900 South Shackleford Road Sixth Floor Little Rock, AR - --------------------------------------------------------------------------------------------- General Motors February 25, 1998 $18,015.00 Permitted to an Corporation affiliate 3044 West Grand Blvd. Status: Fully Executed Detroit, MI 48202 - --------------------------------------------------------------------------------------------- Facility: Office Facility Address: 866 Ridgeway Loop Suite 100 Memphis, TN - --------------------------------------------------------------------------------------------- First Industrial, February 27, 1998 $8,480.74 Permitted to an L.P. Status: Require fully affiliate. Prior 311 So. Wacker Drive executed copy. notice is required. Suite 4000 Chicago, IL 60606 Attn: Michael W. Brennan - --------------------------------------------------------------------------------------------- Facility: Office Facility Address: James Park 160 James Drive East St. Rose, LA - --------------------------------------------------------------------------------------------- 485 Properties, June 12, 1998 $70,257.83 Permitted to an L.L.C. affiliate. Thirty c/o LaSalle Partners Status: Fully executed day prior notice to Management lessor required - ---------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------- Limited 1010 North Glebe Road Arlington, VA 22201 - --------------------------------------------------------------------------------------------- Facility: Office Facility Address: One Ballston Plaza 1010 North Glebe Road Arlington, VA - ---------------------------------------------------------------------------------------------
Executed Lease Report
Little Rock Site ID Landlord Name Site Address LTR001 Dale Wilcox and Gail Wilcox 800 Gaines Street Little Rock Arkansas LTR002 Inntowne Partners, Ltd. 600 Interstate 30 Little Rock Arkansas LTR003 Mercantile Bank of Arkansas, N.A., formerly One Riverfront Place North Little Rock Arkansas known as The Twin City Bank LTR006 John Mosley and Barry Mosley 10021 Highway 70 North Little Rock Arkansas LTR007 William T. McCauley and Sonja G. McCauley 2700 Booker Street Little Rock Arkansas LTR008 The Crestwood Company, an Arkansas 4801 North Hills Partnership Boulevard North Little Rock Arkansas LTR010 Rivercliff Company, Inc. 2000 Magnolia Avenue Little Rock Arkansas LTR011 Centre Place Property Owners Association 212 Center Street Little Rock Arkansas LTR015 Rosedale Optimist Club 8616 Asher Avenue Little Rock Arkansas LTR018 Newman E. McGee, Jr. and Bonnie Sue McGee 901 Towne Oaks Drive Little Rock Arkansas LTR024 Clarence Bryels 8510 Colonel Miller Road Little Rock Arkansas LTR024 Daniel Lloyd Nunley #6 Hethwood Little Rock Arkansas LTR024 Oak Park Baptist Church 8200 Flint Ridge Road Little Rock Arkansas LTR025 Edward Culin and Emma Lou Culin 11209 Interstate 30 Little Rock Arkansas LTR026 Doug Reynolds Suzuki of Little Rock, Inc. 9800 Highway I-30 Little Rock Arkansas LTR027 Mid-South Appliance Store 7501 Enmar Drive Little Rock Arkansas LTR028 Arkco, Inc. 3001 West 60th Street Little Rock Arkansas
LTR031 Maumelle Suburban Improvement District No. Off Milwood Circle Maumelle Arkansas 500 LTR032 Kay Bush 10306 Dairy Lane North Little Rock Arkansas LTR03 Maumelle Suburban Improvement District No. #99 Club Manor Maumelle Arkansas 500 LTR034 John Kierre, Jr. and Jeannie Kierre 22A Remount Road North Little Rock Arkansas LTR035 Maurice Johnson and Ruthie Johnson 603 Cotton Street North Little Rock Arkansas LTR036 Koppers Industries, Inc. End of Ira Street North Little Rock Arkansas LTR038 Harvey Watson and Donna Watson 9202 Highway 165 North Little Rock Arkansas LTR039 James Tice and Margurette Tice 5900 Wadley Road Pulaski County Arkansas LTR042 Summitt House Apartments Limited Partnership 400 N. University Little Rock Arkansas LTR043 Steven D. Brant and Ramona C. Brant 14717 Highway 107 Jacksonville Arkansas LTR045 Jacksonville Water Commission Paradise Park Jacksonville Arkansas LTR047 Joseph David Harris and Faye B. Harris 4411 John Hardin Drive Jacksonville Arkansas LTR050 Jacksonville Water Commission Ray Road Jacksonville Arkansas LTR052 Oak Hill Manor, LLC 8700 Riley Road Little Rock Arkansas LTR053 Dr. Charles Logan 708 Kirk Road Little Rock Arkansas LTR055 Linda M. Patterson, Lana K. Patterson, Lisa 701 Nix Road Little Rock Arkansas P. Strom, and Dennis Strom
TR056 Ernest Melvin White, Theil Eugene White, 10500 Chicot Road Little Rock Arkansas Estelle White, Virginia Lee Grable, Harold Lynn White and Joann White LTR057 Paul Dixon, Jr. and Mildred Alice Dixon 31 Shamburger Lane Sweet Home Arkansas Staggs LTR070 Conway Corporation 480 Amity Road Conway Arkansas LTR071 Winton Mattison and Dorothy Mattison 3491 Highway 286W Conway Arkansas LTR072 Conway Corporation Robins Street Conway Arkansas LTR073 Conway Corporation #1 Hickory Hills Road Conway Arkansas LTR075 Mickey Johnston and Shelley Johnston 10 East Cadron Ridge Road Greenbriar Arkansas LTR076 Bonnie Steenis 13 Thorn Cemetery Road Greenbriar Arkansas LTR077 Conway Corporation Veteran Drive Conway Arkansas LTR090 Donald L. Utley and Jane A. Utley 1225 Old Hot Springs Highway Benton Arkansas LTR091 Clifton D. Bailey and Pauline T. Bailey 3300 Derby Road Benton Arkansas LTR092 Lynch's Stor-N-Lock, LLC 1510 Gray Street Benton Arkansas LTR103 SunBay Beach Club Council of Co-Owners, Inc. 4810 Central Avenue Hot Springs Arkansas LTR105 First Church of the Nazarene, Inc. 3804 Central Avenue Hot Springs Arkansas LTR109 James Murrell Sheets, Jeffrey Murrell 1802 Airport Road Hot Springs Arkansas Sheets, Beverly Sheets, and Elizabeth A. Sheets LTR140 E.J. Ball Plaza, Inc. 112 W. Center Fayetteville Arkansas LTR148 Pleasant Grove Baptist Church 517 Pleasant Grove Road Lowell Arkansas
LTR150 Benton County Two-Way Radio, Inc. 840 S. 45th Street Rogers Arkansas LTR153 Mary Louetta Clark, Jerry C. Clark, Becky M. 11682 Rice Lane Bentonville Arkansas Clark, Coy A. Clark, Tabitha Clark, Thomas P. Clark, Dorothy Clark, Virginia Louise Kildow, Robert Kildow, and Robert E. Clark LTR200 Rudy Toepke 4900 South Kerr Road Scott Arkansas LTR215 South Central District of the Pentecostal 7226 Wheat Road North Little Rock Arkansas Church of God LTR216 Geneva Bevans 14421-C Frontier Drive North Little Rock Arkansas LTR219 Dallas Provin and Patricia Provin 16 Moore Lane Conway Arkansas LTR252 Lonnie R. Watkins and Patricia L. Watkins 565 Napier Greenland Arkansas LTR270 Edward Culin and Emma Lou Culin 25550 I-30 Alexander Arkansas LTR271 Roy E. Bishop 208 Roya Lane Bryant Arkansas LTR272 Betty Styles and Leamon H. Styles 19522 Interstate 30 Benton Arkansas LTR280 Cecil Pruett End of Grayhawk Circle Cabot Arkansas LTR286 Alf D. Price and Betty Price 61 Smith Road Cabot Arkansas
Memphis Site ID Landlord Name Site Address MEM001 Jefferson Plaza Associates 147 Jefferson Memphis Tennessee MEM002 Memphis Light, Gas and Water Shelby County Tennessee
MEM003 Memphis Apartment Partners, L.P. 141 Manassas Memphis Tennessee MEM004 Seventeen Fifty Madison Avenue Partnership 1750 Madison Avenue Memphis Tennessee MEM005 Carnevale, Inc. 900 Pennsylvania Memphis Tennessee MEM006 Waterford Plaza Owners' Association, Inc. 200 Wagner Place Memphis Tennessee MEM009 Memphis Light, Gas and Water Illinois Central Shelby Tennessee Railroad and Hernando Road County MEM011 Tower Ventures I, LLC 2246 Deadrick Avenue Memphis Tennessee MEM013 Richard Pearce 5056 Pleasant View Memphis Tennessee MEM014 Tower Ventures I, LLC 3420 Chealsea Avenue Memphis Tennessee MEM015 Memphis Light, Gas and Water 2541 Frisco Memphis Tennessee MEM017 New Wesley Highland Towers Associates 400 South Highland Street Memphis Tennessee MEM018 BMT, LLC 181 West Bodley Memphis Tennessee MEM020 Memphis Light, Gas and Water Shelby County Tennessee MEM022 Color Craft Incorporated 2727 Faxon Street Memphis Tennessee MEM025 Memphis Light, Gas and Water Getwell Street and Mallory Avenue Shelby County Tennessee MEM027 Tower Ventures I, LLC 1888 E. Raines Road Memphis Tennessee MEM028 BellSouth Cellular Corp. 2875 Starling Place Memphis Tennessee MEM029 TPT, LLC 2585 McLean Boulevard Memphis Tennessee MEM030 Memphis Light, Gas and Water Raleigh Bartlett Road and Shelby County Tennessee Covington Pike MEM032 Memphis Light, Gas and Water Whitney and Stage Avenues Memphis Tennessee MEM033 Memphis Light, Gas and Water Poplar Pike at Memorial Park Shelby County Tennessee Cemetery MEM034 Memphis Light, Gas and Water Poplar Pike and Kirby Road Shelby County Tennessee
MEM035 WEO Tower, Inc. 7120 Malton Drive Memphis Tennessee MEM036 Tower Ventures II, LLC 3785 Edison Memphis Tennessee MEM037 Lakeview Tower, LLC 3928 Lakeview Road Memphis Tennessee MEM042 Memphis Light, Gas and Water Airways and Holmes Road Shelby County Tennessee MEM043 Clyde Olin Bynum 6841 Center Street West Horn Lake Mississippi MEM045 Charles Faulkner 7283 Horn Lake Road Walls Mississippi MEM049 Memphis Light, Gas and Water 6204 Mt. Moriah Road Memphis Tennessee MEM050 Underwood United Methodist Church, Inc. 1501 Mt. Moriah Memphis Tennessee MEM052 Memphis Light, Gas and Water Holmes and Tchulahoma Roads Shelby County Tennessee MEM053 Memphis Light, Gas and Water Holmes Shelby County Tennessee MEM054 Pleasant Hill Water Association, Inc. 7600 Pleasant Hill Road Olive Branch Mississippi MEM055 Ronnie D. Hopkins 7380 Craft-Goodman Highway Olive Branch Mississippi MEM056 Pinnacle Towers, Inc. 4357 Get Well Road Memphis Tennessee MEM057 Yates Hopper Partnership 10290 Old Highway 78 Olive Branch Mississippi MEM058 HHG Partnership 6195 Shelby Drive Memphis Tennessee MEM059 Memphis Light, Gas and Water Holmes Road Shelby County Tennessee MEM060 Tower Ventures II, LLC 699 Herbert Road Memphis Tennessee MEM066 Memphis Light, Gas and Water German Parkway Shelby County Tennessee MEM067 Pinnacle Towers, Inc. 9351 Macon Road Memphis Tennessee MEM068 Tower Ventures I, LLC 2301 Pate Road Memphis Tennessee MEM070 Memphis Light, Gas and Water US Highway 64 and Cobb Road Shelby County Tennessee MEM071 Memphis Light, Gas and Water I-40 and Chambers Chapel Road Shelby County Tennessee
MEM072 Memphis Light, Gas and Water Raleigh-LaGrange Road Shelby County Tennessee MEM074 Tim Fortner and Debbie Fortner 7258 Memphis-Arlington Road Bartlett Tennessee MEM075 Bartlett Gutter Company, Inc. 10410 Highway 70 Arlington Tennessee MEM076 City of Bartlett 4055 Altruria Bartlett Tennessee MEM077 City of Bartlett 6220 Guffin Road Bartlett Tennessee MEM078 BellSouth Cellular Corp. 5445 Bolen Huse Road Memphis Tennessee MEM079 Memphis Light, Gas and Water St. Elmo and Raleigh Millington Shelby County Tennessee MEM080 Tower Ventures I, LLC 2950 Frayser Boulevard Memphis Tennessee MEM081 Schoolfield United Methodist Church 1621 Dellwood Avenue Memphis Tennessee MEM083 Tower Ventures I, LLC 3968 North Watkins Memphis Tennessee MEM084 Tower Ventures I, LLC 2670 Fite Road Memphis Tennessee MEM085 Memphis Light, Gas and Water Highway 51 north of Big Creek Memphis Tennessee Church MEM086 Lee W. Jones and Juanita E. Jones 5762 Pleasant Ridge Road Millington Tennessee MEM089 Memphis Light, Gas and Water 12010 Brockwell Road Arlington Tennessee MEM091 BellSouth Cellular Corp. 2000 Centrepoint Drive Braden Tennessee MEM093 WEO Tower, Inc. Albright and Campground Roads Stanton Tennessee MEM094 James L. Willis and Mary A. Willis Map 122, Parcel 32, Haywood County Stanton Tennessee MEM096 Bridgewater Lumber Company 136 South Washington Street Brownsville Tennessee MEM097 Virginia Tritt, Wayne Tritt and Patsy Tritt Bratt Thomas Road, Lot 9 Brownsville Tennessee MEM098 WEO Tower, Inc. Brownsville and Denmark Roads Brownsville Tennessee MEM105 Bernard W. Cogbill 8843 Highway 70 Memphis Tennessee MEM107 Charles Markham 78 Fairway Boulevard Jackson Tennessee
MEM108 Otto Bailey, Sr. and Lila Bailey 4201 Petro Road West Memphis Arkansas MEM110 Heartland Equipment, Inc. 8341 Highway 70 West Memphis Arkansas MEM112 Memphis Light, Gas and Water 1664 Channel Memphis Tennessee MEM113 Northwest Arkansas 900, L.L.C. North of Casino Center Drive Tunica County Mississippi MEM114 Alpha One Leasing, Inc. 2228 Fitzgeralds Boulevard Robinsonville Mississippi MEM117 Pinnacle Towers, Inc. Morrow Crest Drive DeSoto County Tennessee MEM119 All States Farm Equipment, Inc. 4441 I-55 Marion Arkansas MEM122 James R. Moore and Nancy M. Moore 1478 Front Street Gilmore Arkansas MEM123 Norcross Farms, LLC Section 27, Township 10N, Range 7E Tyronza Arkansas MEM124 Jeram, Inc. 515 Highway 63 West Marked Tree Arkansas MEM126 Calvary Baptist Church 305 Bell Street Trumann Arkansas MEM127 Aubrey VanWinkle and Ora Mae VanWinkle 341 CR 639 Bay Arkansas MEM129 Andrew A. Gray, DDS 2206 Fowler Street Jonesboro Arkansas MEM130 Robert J. Sartin and L. Rachel Sartin 3703 Culberhouse Road Jonesboro Arkansas MEM131 Robert J. Sartin and L. Rachel Sartin 2916 Casey Springs Road Jonesboro Arkansas MEM135 Memphis Light, Gas and Water I-240 and Shelbt Street Shelby County Tennessee MEM137 Sukabhai Patel and Gangaben Patel 3645 Canada Road Lakeland Tennessee MEM139 Ronald Bruce Anglin 2811 Sanderwood Avenue Memphis Tennessee MEM141 Tower Ventures I, LLC 1566 Havana Street Memphis Tennessee MEM142 Memphis Light, Gas and Water Mitchell Avenue Shelby County Tennessee
MEM144 Dattel Family Limited Partnership 75 Perkins Road Memphis Tennessee MEM148 City of Bartlett 5727 Woodlawn South Bartlett Tennessee MEM149 Memphis Light, Gas and Water Mendenhall and Mt. Moriah Roads Shelby County Tennessee MEM152 Helen K. Blackwell and David A. Blackwell 87 Newt Blackwell Road Humboldt Tennessee MEM153 Harold D. Nowell and Stephen Johnson Nowell 2027 Bypass South Trenton Tennessee MEM154 City of Gibson Estes Street Gibson Tennessee MEM155 17 House, LLC 1005 North Baird Milan Tennessee MEM158 Tan-Houston Levee, LLC South of Lenow & Morning Sun Roads Cordova Tennessee MEM160 Memphis Brakes Service Inc. 753 Airways Boulevard Jackson Tennessee
New England Site ID Landlord Name Site Address HYN004 Seacoast Limited Partnership Southern Eagle Cartway Brewster Massachusetts HYN008 Boch Broadcasting, LP 27 Commodity Road Dennis Massachusetts HYN009 Dennis Water District 875 Route 28 West Dennis Massachusetts HYN016 Mashpee Industrial Park Trust 154 Industrial Drive Mashpee Massachusetts HYN019 Radio Falmouth, Inc. Spring Bars Road Falmouth Massachusetts HYN021 American Tower Systems, L.P. Scraggy Neck Road Cotaumet Massachusetts HYN022 Paul J. Medeiros 50 Portside Drive Bourne Massachusetts
HYN031 Marine Biological Laboratory 18 MBL Street Wood Hole Massachusetts HYN107 B&F Realty Trust 256 White's Path South Yarmouth Massachusetts HYN109 AIRCOMM, LLC 765 Oak Street West Barnstable Massachusetts HYN111 Ronald Leonard and Karen Leonard 669 Route 6A Sandwich Massachusetts HYN112 Seacoast Limited Partnership Chase Road and Bay View Sandwich Massachusetts HYN116 Highview Condominium Association End of Highway Drive, Building One Sandwich Massachusetts NAS001 Costco Wholesale Corporation 311 Daniel Webster Highway Nashua New Hampshire NAS013 Francis H. Bettencourt Chestnut Drive Bedford New Hampshire NAS021 Verres Financial Corporation 800 Harvey Road Manchester New Hampshire NAS024 Talarico Pontiac-Cadillac, Inc. 1050 Gold Street Manchester New Hampshire NAS025 Normand Campeau East Industrial Drive Manchester New Hampshire NAS026 Brawest Cypress, LLC 335 Cypress Street Manchester New Hampshire NAS027 IPC Office Properties, LLC 900 Elm Street Manchester New Hampshire NAS028 Order of St. Benedict of New Hampshire 100 St. Anslem Drive Goffstown New Hampshire NAS029 Department of Veterans Affairs 718 Smyth Road Manchester New Hampshire NAS030 University of New Hampshire of the Rear Hackett Hill Road Manchester New Hampshire University System of New Hampshire
NAS031 15 West Alice Realty, LLC 15 West Alice Avenue Hooksett New Hampshire NAS042 PFP Associates LP 22 Bridge Street Concord New Hampshire NAS052 Reed P. Clark 94 Stonehenge Road Londonderry New Hampshire NAS057 Town of Salem 20-26 Howard Street Salem New Hampshire NAS058 Shoreline Realty Corporation 85 Range Road Windham New Hampshire NAS062 55 Congress Street Condominium Association 55 Congress Street Portsmouth New Hampshire NAS064 Sprague Energy Corp. and Coastal Cement 127 River Road Newington New Hampshire Corporation NAS073 George M. Kelly 10 North Main Street Rochester New Hampshire NAS076 James Andres, d/b/a Vertical Realty Abby Sawyer Memorial Highway Dover New Hampshire Properties Company NAS084 Michael J. McFadden, an individual doing 333 Borthwick Avenue Portsmouth New Hampshire business as MCF Communications NAS101 S.O.N. Properties 71 Sinclair Avenue Manchester New Hampshire NAS103 Richard Gilbert and Roberta Gilbert 26 Old Manchester Road Candia New Hampshire NAS105 Michael J. O'Donnell and Elizabeth M. 39 Lane Road Raymond New Hampshire O'Donnell NAS107 Edward Moulton 108 Main Street Raymond New Hampshire NAS109 M.S.E.A. Realty 453-465 Route 125 Brentwood New Hampshire NAS111 Seacoast Mills, Inc. 136 Pine Street Brentwood New Hampshire
NAS113 Berkshire Life Insurance Company 10 Chestnut Street Exeter New Hampshire NAS115 Hampton Falls Properties, Ltd. Intersection of Route 88 Hampton Falls New Hampshire and I-95 NAS122 Freedom Park Associates 10 Beacon Hill Road Derry New Hampshire NAS124 Freedom Park Associates Jacks Bridge Road Londonderry New Hampshire NAS143 Pennichuck Water Works, Inc. Al Paul Lane Merrimack New Hampshire NAS144 Surfsong Properties, Inc. 160 Industrial Drive Merrimack New Hampshire NAS146 Columbia Realty, LLC 14 Columbia Circle Merrimack New Hampshire NAS148 S&T Realty, LLC 33 Elm Street Merrimack New Hampshire NAS149 One Line Realty Development, LLC 768 Daniel Webster Highway Merrimack New Hampshire NAS153 Hans D. Sassenberg and Christine Sassenberg 13 Dow Road Bow New Hampshire NAS154 Marcia Gintzler 4 Northeast Ave. Bow New Hampshire NAS171 Airspace Corporation NAS172 Sagamore Hampton Golf Club 101 North Road North Hampton New Hampshire NAS182 Greek Orthodox Church of the Annunciation Dover Strafford County New Hampshire NAS199 Tamkor Realty Trust 15 Constitution Drive Bedford New Hampshire WOR007 Edwidge Development Trust 44 Byron Street Worcester Massachusetts WOR009 Stratton Hill Park Associates 161 Mountain Street West Worcester Massachusetts
WOR010 Town of Holden Avery Heights Drive Holden Massachusetts WOR011 Lincoln Street Realty Company 52 Pleasant Valley Drive Worcester Massachusetts WOR012 Kingdom Communications, LLC 597 Southbridge Street Auburn Massachusetts WOR013 Ladner Bruso, Inc. 1017 Southbridge Street Worcester Massachusetts WOR014 Kingdom Communications, LLC 194 Granite Street Rear Worcester Massachusetts WOR016 Osgood Bradley Building Corporation 18 Grafton Street Worcester Massachusetts WOR017 Worcester Housing Authority 425 Pleasant Street Worcester Massachusetts WOR018 AAT Communications Corporation 39 First Street Worcester Massachusetts WOR019 Worcester Housing Authority 11 Lake Avenue Worcester Massachusetts WOR030 Milford Water Company rear Central Street off Frank Milford Massachusetts Street WOR032 R&D Realty Trust, LLP 25 Brigham Street Westborough Massachusetts WOR081 American Tower Systems, L.P.(2) 100 Highland Street Milford Massachusetts WOR118 Omnipoint Communications MB Operations, LLC 800 Boston Turnpike Shrewsbury Massachusetts WOR119 K&D Trust 360 Southwest Cutoff Northborough Massachusetts WOR120 Joycor, Inc. 91 Turnpike Road Westborough Massachusetts WOR145 Mekontrol, Inc. 63 Hudson Street Northborough Massachusetts
WOR152 John Christian Kristoff Greenland Road Sterling Massachusetts WOR187 Fox Bus Lines, Inc. 3 Silver Fox Road Millbury Massachusetts WOR191 Zane H. Arnold and E. Evelyn Arnold 15 Spring Road Westborough Massachusetts WOR196 Central New England Sports Center, Inc. 119 Colburn Street Northborough Massachusetts
New Orleans Site ID Landlord Name Site Address BRG061 Pinnacle Towers, Inc. 5550 Mancusco Lane East Baton Rouge Louisiana BRG067 The Baton Rouge Water Company 5424 Highland Baton Rouge Louisiana BRG070 Woman's Hospital Foundation 9000 Airline Highway Baton Rouge Louisiana BRG073 The Baton Rouge Water Company 7912 Bluebonnet Baton Rouge Louisiana BRG078 Greater Baton Rouge Port Commission Tower Road Baton Rouge Louisiana BRG079 Pinnacle Towers, Inc. 3116 College Avenue Baton Rouge Louisiana BRG117 BellSouth Telecommunications, Inc. 566 Lobdell Avenue Baton Rouge Louisiana BRG136 Pinnacle Towers, Inc. I-10 and Highway 74 Ascension Parish Louisiana BRG138 Pinnacle Towers, Inc. 103 Dort Street East Baton Rouge Louisiana BRG139 The Baton Rouge Water Company 11755 Cloverland Baton Rouge Louisiana BRG141 Joseph M. Stablier and Dorothy Miller 14407 Highway 44 Ascension Louisiana Stablier BRG141 Starmount Towers, LLC North Bryan at Airline Gonzales Louisiana
BRG142 W. Benjamin Valentine, Jody Myers Valentine, East Side of Highway 61, .04 mi Ascension Parish Louisiana W.J. Cointmat, Ruby Carlile Cointmat, Wayne south of State Road Louis Alexander and Evelyn Buynum Alexander BRG143 PrimeCo Personal Communications, L.P. 11752 Highland Road Baton Rouge Louisiana BRG151 Pinnacle Towers, Inc. Highway 22 and I-10 Ascension Louisiana BRG154 Pinnacle Towers, Inc. 3920 LA 1-North West West Baton Rouge Louisiana BRG158 Diversified Real Estate Inc. 2355 Tecumseh Street Baton Rouge Louisiana LAF172 Harold Lee Landry and Thelma Judice Landry 2600 West Willow Street Scott Louisiana LAF173 Michael Ray Roberts and Vanessa Ann Jones 1708 North University Avenue Lafayette Louisiana NOR004 Lifemark Hospitals of Louisiana, Inc. d/b/a 180 West Esplanade Avenue Kenner Louisiana Kenner Regional Medical Center NOR007 The 2633 Napoleon Venture 2633 Napoleon Avenue New Orleans Louisiana NOR009 Fountainbleau Storage Associates 4040 Tulane Avenue New Orleans Louisiana NOR013 Executive Plaza, Inc. 10001 Lake Forest Boulevard New Orleans Louisiana NOR015 Pinnacle Towers, Inc. 1112 Ridgewood Drive Metarie Louisiana NOR018 Pinnacle Towers, Inc. 2725 Arts Street New Orleans Louisiana NOR020 Pinnacle Towers, Inc. 1030 Distributors Row Jefferson Louisiana NOR026 Christopher Homes d/b/a Christopher Inn 2110 Royal Street New Orleans Louisiana Apartments NOR027 Roman Catholic Church of Archdiocese of New 1000 Howard Avenue New Orleans Louisiana Orleans
NOR028 Mid City Electric Company, Inc. d/b/a M.C. 2609 Canal Street New Orleans Louisiana Realty Companies NOR030 Alice Schouest and Arthur J. Hebert and 718 Bataraia Boulevard Marrero Louisiana Thelma Doiron and Sherman Hebert NOR030 Wynhoven Apartments 4606 10th Street Marrero Louisiana NOR033 City of Gretna 2525 Belle Chasse Highway Gretna Louisiana NOR034 Alli Investments, LLC 5148 Taravelle Road Marrero Louisiana NOR036 Lake Marina Tower Condominium Association, 300 Lake Marina Avenue New Orleans Louisiana Inc. NOR040 Sixty-Three Twenty-Four Chef Menteur 6324 Chef Menteur Highway New Orleans Louisiana Highway, LLC d/b/a Ramada Inn Highrise NOR041 Canal 66 Partnership d/b/a Doubletree Hotel 300 Canal Street New Orleans Louisiana NOR042 Regions Bank 2026 St. Charles Avenue New Orleans Louisiana NOR043 Doctors Hospital of Jefferson 4320 Houma Boulevard Metairie Louisiana NOR045 Tupelo Street Ventures, Inc. 3228 Patterson Street New Orleans Louisiana NOR047 123 Walnut Condominium Association, Inc. 123 Walnut Street New Orleans Louisiana NOR048 Radio Towers Rental, Inc. 5284 West Airline Highway Garyville Louisiana NOR095 Tenet HealthSystem Hospitals, Inc., d/b/a 3700 St. Charles Avenue New Orleans Louisiana St. Charles General Hospital NOR102 Pinnacle Towers, Inc. Gramercy I-10 and LA Highway 641 Gramercy Louisiana NOR103 Greater New Orleans Expressway Commission Causeway Bridge, Milemark 9, Lake Metairie Louisiana Pontchartrain
SCHEDULE 3.06 Litigation and Environmental Matters 1. Gerald T. Vento, in his capacity as Chief Executive Officer of TeleCorp Holding Corp., Inc., received a letter from Mark A. Pelson, dated February 26, 1998, asserting an equity interest in TeleCorp Holding Corp., Inc. and its affiliates. TeleCorp Holding Corp., Inc. responded with a detailed letter sent by its counsel, Steven W. Kasten at McDermott, Will & Emery, denying Mr. Pelson's right to any equity interest in TeleCorp Holding Corp., Inc. or its affiliates. Mr. Pelson's counsel responded to Mr. Kasten's letter and reiterated Mr. Pelson's demand. Mr. Kasten is preparing a further detailed denial. No further action has been taken by either party at this time. 2. The United States Department of Justice issued a Civil Investigative Demand to TeleCorp Holding Corp., Inc. on April 25, 1997 regarding a possible violation of Section 1 of the Sherman Act (15 U.S.C. (S)1). TeleCorp Holding Corp., Inc. produced all materials and answered all interrogatories set forth in the demand on June 26, 1997. No further action has been taken by either party at this time. SCHEDULE 3.12 Ownership of Borrower and its Subsidiaries 1. TeleCorp PCS, Inc. (the "Borrower")'s Subsidiaries
- --------------------------------------------------------------------------------------------- Number of Shares % of Name of Subsidiary Owned by the Borrower Capital Stock - --------------------------------------------------------------------------------------------- (a) TeleCorp Holding Corp, Inc. One hundred (100) shares 100% - --------------------------------------------------------------------------------------------- (b) TeleCorp Communications, Inc. One hundred (100) shares 100% - --------------------------------------------------------------------------------------------- (c) TeleCorp PCS, LLC The Borrower is the sole member of TeleCorp PCS, LLC. - ---------------------------------------------------------------------------------------------
2. TeleCorp Communications, Inc.'s Subsidiaries
- --------------------------------------------------------------------------------------------- Number of Shares Owned by % of Name of Subsidiary TeleCorp Communications, Inc. Capital Stock - --------------------------------------------------------------------------------------------- (a) TeleCorp Limited Holdings, Inc. One hundred (100) shares 100% - --------------------------------------------------------------------------------------------- (b) TeleCorp Realty Holdings, Inc. One hundred (100) shares 100% - ---------------------------------------------------------------------------------------------
3. Ownership of TeleCorp Equipment Leasing L.P.
- --------------------------------------------------------------------------------------------- Number of Shares of TeleCorp % of Name of Owner of Its Shares Equipment Leasing, L.P. Capital Stock - --------------------------------------------------------------------------------------------- (a) TeleCorp Limited Holdings, Inc. Ninety-nine (99) units 99% - --------------------------------------------------------------------------------------------- (b) TeleCorp Communications, Inc. One (1) unit 1% - ---------------------------------------------------------------------------------------------
2 4. Ownership of TeleCorp Realty, LLC
- --------------------------------------------------------------------------------------------- Number of Shares of TeleCorp % of Name of Owner of Its Shares Equipment Leasing, L.P. Capital Stock - --------------------------------------------------------------------------------------------- (a) TeleCorp Communications Inc. Ninety-nine (99) units 99% - --------------------------------------------------------------------------------------------- (b) TeleCorp Realty Holdings, Inc. One (1) unit 1% - ---------------------------------------------------------------------------------------------
All of the foregoing entities are Loan Parties. The Capital Stock of the Borrower is owned as set forth on the following page. SCHEDULE 3.14 Network Area/Licenses Part A - Licenses contributed by AW pursuant to the Securities Purchase - ----------------------------------------------------------------------- Agreement - ---------
- ----------------------------------------------------------------------------------------------------- Market Number Frequency Block License Description Pops - ----------------------------------------------------------------------------------------------------- M008 A Boston-Providence/1/ 1,771,875 - - ----------------------------------------------------------------------------------------------------- M019 A St. Louis/1/ 1,615,987 - ----------------------------------------------------------------------------------------------------- M026 A Louisville-Lexington-Evansville/1/ 721,941 - ----------------------------------------------------------------------------------------------------- M040 A Little Rock 2,051,667 - ----------------------------------------------------------------------------------------------------- M028 B Memphis-Jackson/1/ 1,832,770 - -----------------------------------------------------------------------------------------------------
Part B - Licenses held by THC - -----------------------------
- ----------------------------------------------------------------------------------------------------- Market Number Frequency Block License Description Pops - ----------------------------------------------------------------------------------------------------- B034 F Beaumont-Port Arthur, TX 432,129 - ----------------------------------------------------------------------------------------------------- B257 F Little Rock, AR 852,026 - ----------------------------------------------------------------------------------------------------- B290 F Memphis, TN 1,396,390 - ----------------------------------------------------------------------------------------------------- B320 F New Orleans, LA 1,367,169 - -----------------------------------------------------------------------------------------------------
/1/ Contribution includes only a portion of the geographic area in the - referenced market as detailed in Schedule 2.1 to the Securities Purchase Agreement. Pops are based on the portion of the geographic area contributed. Part C - Licenses purchased from AW pursuant to the License Purchase Agreement - ------------------------------------------------------------------------------ dated January 23, 1998 - ----------------------
- ----------------------------------------------------------------------------------------------------- Market Number Frequency Block License Description Pops - ----------------------------------------------------------------------------------------------------- B032 D Baton Rouge, LA 623,657 - ----------------------------------------------------------------------------------------------------- B236 D Lafayette-New Iberia 496,579 - ----------------------------------------------------------------------------------------------------- B320 D New Orleans, LA 1,367,169 - -----------------------------------------------------------------------------------------------------
Part D - San Juan Acquisition License - -------------------------------------
- ----------------------------------------------------------------------------------------------------- Market Number Frequency Block License Description Pops - ----------------------------------------------------------------------------------------------------- M025 A Puerto Rico - U.S. Virgin 3,623,846 Islands - -----------------------------------------------------------------------------------------------------
Part E - LMDS Merger Licenses - -----------------------------
- ----------------------------------------------------------------------------------------------------- Market Number Frequency Block License Description Pops - ----------------------------------------------------------------------------------------------------- BTA032 B Baton Rouge, LA 623,657 - ----------------------------------------------------------------------------------------------------- BTA034 B Beaumont-Port Arthur, TX 432,129 - ----------------------------------------------------------------------------------------------------- BTA257 A Little Rock, AR 852,026 - ----------------------------------------------------------------------------------------------------- BTA320 B New Orleans, LA 1,367,169 - ----------------------------------------------------------------------------------------------------- BTA488 B San Juan, PR 2,170,246 - ----------------------------------------------------------------------------------------------------- BTA489 B Mayaguez-Aquadilla-Ponce, 1,351,600 PR - ----------------------------------------------------------------------------------------------------- BTA491 B U.S. Virgin Islands 102,000 - -----------------------------------------------------------------------------------------------------
Part F - Mercury Acquisition Licenses - ------------------------------------- - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------- Market Number Frequency Block License Description Pops - ----------------------------------------------------------------------------------------------------- B032 F Baton Rouge, LA 623,657 - ----------------------------------------------------------------------------------------------------- B180 F Hammond, LA 95,583 - ----------------------------------------------------------------------------------------------------- B195 F Houma-Thibodeaux, LA 263,681 - ----------------------------------------------------------------------------------------------------- B236 F Lafayette-New Iberia, LA 496,579 - -----------------------------------------------------------------------------------------------------
Part G - San Diego Merger License - ---------------------------------
- ----------------------------------------------------------------------------------------------------- Market Number Frequency Block License Description Pops - ----------------------------------------------------------------------------------------------------- B402 F San Diego, CA 2,498,016 - -----------------------------------------------------------------------------------------------------
Part H Wireless 2000 Licenses - -----------------------------
- ----------------------------------------------------------------------------------------------------- Market Number Frequency Block License Description Pops - ----------------------------------------------------------------------------------------------------- B009 C Alexandria, LA 280,133 - ----------------------------------------------------------------------------------------------------- B238 C Lake Charles, LA 259,425 - ----------------------------------------------------------------------------------------------------- B304 C Monroe, LA 324,397 - -----------------------------------------------------------------------------------------------------
SCHEDULE 3.18 Insurance Both TeleCorp PCS, Inc. and TeleCorp Holding Corp., Inc. are insured by Travelers Property Casualty and The Phoenix Insurance Company (through B.F. Saul Insurance Agency) as follows:
Type of Insurance Policy No. Coverage Amount Deductible - ----------------- ---------- --------------- ---------- General Liability P-630-959K3748-TIL- $2,000,000 general aggregate None limit; $1,000,000 each occurrence limit Automobile Liability P-810-959K375A-TIL- $1,000,000 each accident $500 Excess Liability PSM-CUP-959K3761-TI $5,000,000 general aggregate None limit; $5,000,000 each occurrence limit Workers Compensation and Employers Liability PN-UB-959K365-6-98 $1,000,000 each accident Special Form or All Rate Property P-630-959K3748-TIL Varies by asset insured Varies
SCHEDULE 3.22 Mortgaged Property Not applicable. SCHEDULE 6.01 Existing Indebtedness --------------------- FCC Debt of THC in an aggregate principal amount of approximately $9,192,938. SCHEDULE 6.02 Existing Liens Liens of the FCC securing FCC Debt. SCHEDULE 6.05(b) Investments None. SCHEDULE 6.10 Existing Restrictions The restrictions pursuant to Section 11.3 of the Note Purchase Agreement dated as of May 11, 1998 between Lucent and the Borrower. EXHIBIT A [Form of] ASSIGNMENT AND ACCEPTANCE Reference is made to the Credit Agreement dated as of July 17, 1998 (the "Credit Agreement"), among Telecorp PCS, Inc., a Delaware corporation (the "Borrower"), the lenders party thereto (the "Lenders") and The Chase Manhattan Bank, as administrative agent for the Lenders (in such capacity, the "Administrative Agent") and collateral agent. Terms defined in the Credit Agreement are used herein with the same meanings. 1. The assignor whose full legal name is set forth below (the "Assignor") hereby sells and assigns, without recourse, to the assignee whose full legal name is set forth below (the "Assignee"), and the Assignee hereby purchases and assumes, without recourse, from the Assignor, effective as of the Effective Date set forth below (but not prior to the registration of the information contained herein in the Register pursuant to Section 9.04(d) of the Credit Agreement), the interests set forth below (the "Assigned Interest") in the Assignor's rights and obligations under the Credit Agreement and the other Loan Documents, including, without limitation, the amounts and percentages set forth below of (i) the Commitments of the Assignor on the Assignment Date, (ii) the Loans owing to the Assignor which are outstanding on the Assignment Date and (iii) participation in Letters of Credit. From and after the Assignment Date (i) the Assignee shall be a party to and be bound by the provisions of the Credit Agreement and, to the extent of the interests assigned by this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and under the Loan Documents and (ii) the Assignor shall, to the extent of the interests assigned by this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement. 2. This Assignment and Acceptance is being delivered to the Administrative Agent together with (i) if the Assignee is a Foreign Lender, the forms specified in Section 2.15(e) of the Credit Agreement, duly completed and executed by such Assignee, (ii) if the Assignee is not already a Lender under the Credit Agreement, an Administrative Questionnaire duly completed by the Assignee. 3. This Assignment and Acceptance shall be governed by and construed in accordance with the laws of the State of New York. Date of Assignment: Legal Name of Assignor: Legal Name of Assignee: Assignee's Address for Notices: Effective Date of Assignment ("Assignment Date") 3
Percentage Assigned of Applicable Facility/Commitment (set forth, to at least 8 decimals, as a percentage of the Facility and the aggregate Commitments of all Lenders Facility/Commitment Principal Amount Assigned thereunder) - -------------------------- --------------------------- ----------- Revolving Credit $ % Tranche A $ % Tranche B $ % The terms set forth above are hereby agreed to: __________________, as Assignor, By_____________________________ Name: Title: __________________, as Assignee, By____________________________ Name: Title:
4 The undersigned hereby consent to the above assignment **/ -- TELECORP PCS, INC., THE CHASE MANHATTAN BANK, as Administrative Agent, By___________________________ By______________________ Name: Name: Title: Title: THE CHASE MANHATTAN BANK, as Issuing Bank, By___________________________ Name: Title: _____________________ **/ To be completed to the extent consents are required under Section 9.04(b) of - -- the Credit Agreement. EXHIBIT B-3 [Letterhead of] Local Counsel July , 1998 The Chase Manhattan Bank, as Administrative Agent, Issuing Bank and Collateral Agent 270 Park Avenue New York, NY 10017 TD Securities (USA) Inc., as Syndication Agent 31 West 52nd Street New York, NY 10019-6101 Bankers Trust Company, as Documentation Agent 130 Liberty Street New York, NY 10006 Chase Securities Inc., Toronto Domininion Securities (USA) Inc. BT Alex. Brown Incorporated, as Arrangers c/o Chase Securities Inc. 270 Park Avenue New York, NY 10017 The Lenders party to the Credit Agreement referred to below (all of the Addressees, collectively, the "Creditors") Ladies and Gentlemen: We have acted as special counsel in the State of [ ] (the "State") to Telecorp PCS Inc., a Delaware corporation (the "Borrower"), and each of the subsidiaries of the Borrower listed on the attached Schedule A (the "Subsidiaries"), in connection with the execution and delivery today of, and the consummation of the transactions contemplated by, the Credit Agreement dated as of July , 1998 (the "Credit Agreement"), among the Borrower, the financial institutions party thereto as lenders (the "Lenders") and The Chase Manhattan Bank, as administrative agent (in such capacity, the "Administrative Agent") and as collateral agent (in such capacity, the "Collateral Agent"). This opinion is delivered pursuant to Section 4.02(b) of the Credit Agreement. Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Credit Agreement. In connection with this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of the following documents (collectively, the "Documents"): (a) the Credit Agreement; (b) the Guarantee Agreement; (c) the Security Agreement; (d) the Pledge Agreement; (e) the Indemnity, Subrogation and Contribution Agreement; (f) the Mortgages; (g) UCC-1 financing statements, copies of which are attached hereto as Exhibit A (the "Financing Statements"); and (h) the Assignment of Rights. In addition, we have examined originals or copies, certified or otherwise identified to our satisfaction, of such records, agreements, instruments and other documents, and have made such other investigations, as we have deemed necessary for the purpose of this opinion. References in this opinion to the "UCC" shall mean the Uniform Commercial Code as in effect on the date hereof in the State. In rendering this opinion to you, we have assumed that: (a) there has occurred due execution and delivery of the Documents; and (b) except as otherwise set forth in the applicable Security Documents, the Borrower and each Guarantor, as applicable, owns the Mortgaged Property (as defined in [the] [each] Mortgage) and the Collateral (as defined in the Security Agreement and the Pledge Agreement). 3 Subject to the foregoing assumptions, we are of the opinion that: 1. None of the Collateral Agent or the other Creditors is required (a) to be qualified to do business, file any designation for service of process or file any reports or pay any taxes in the State, or (b) to comply with any statutory or regulatory requirement applicable only to financial institutions chartered or qualified or required to be chartered or qualified to do business in the State, in each case by reason of the execution and delivery or filing or recording, as applicable, of any of the Documents, or by reason of the participation in any of the transactions under or contemplated by the Documents, including, without limitation, the extension of any credit contemplated thereby, the making and receipt of payments pursuant thereto and the exercise of any remedy thereunder. If it were determined that such qualification and filing were required, the validity of the Documents would not be affected thereby, but (a) if the Collateral Agent were not qualified it would be precluded from enforcing its rights as collateral agent on behalf of the Creditors in the courts of the State until such time as it is admitted to transact business in the State or (b) assuming the Creditors would institute remedies without the Collateral Agent, they would be precluded from enforcing their rights in the courts of the State until such time as they were admitted to transact business in the State. However, the lack of qualification would not result in any waiver of rights or remedies pending such qualification. 2. The execution, delivery, filing or recording, as applicable, and performance by the Borrower and each Guarantor of each of the Documents to which each of them is a party (i) will not violate any existing law, governmental rule or regulation of the State and (ii) do not require any license, permit, authorization, consent or other approval of, any exemption by, or any registration, recording or filing with any court, administrative agency or other Governmental Authority of the State. 3. Assuming that the Security Agreement and the Pledge Agreement were governed by the law of the State for the purpose of rendering the opinion set forth in this paragraph, each of the Security Agreement and the Pledge Agreement is in proper form under the applicable laws of the State to (i) be enforceable against the grantors or pledgors named therein in accordance with its terms and (ii) create and constitute a 4 valid security interest in, lien on or pledge of the Collateral. 4. The Mortgage[s] [is] [are] in proper form under applicable laws of the State (a)(i) to be accepted for recording by the Recorder of [and ] County [Counties] and (ii) to be enforceable against the Borrower and each Guarantor, as applicable, in accordance with [its] [their] terms, and (b)(i) to create and constitute valid, legal, binding and enforceable mortgage lien[s] on the real property described therein (the "Real Property"), (ii) to create and constitute valid, legal, binding and enforceable perfected security interests in such of the Mortgaged Property (the "UCC Property") as is subject to the provisions of Article 9 of the UCC, and (iii) to create and constitute valid, legal, binding and enforceable perfected common law liens on or pledges of such of the Mortgaged Property as is not UCC Property or Real Property (such property, together with the UCC Property, the "Personal Property"). 5. The Financing Statements relating to the Mortgage[s] (a) are in proper form under the applicable laws of the State for filing, (b) adequately identify the collateral described therein to provide sufficient notice to third parties of the security interest referenced therein and (c) are required to be filed with the Office of the Secretary of State of the State and with the Recorder of [and ] County [Counties]. The Financing Statements relating to the Security Agreement (a) are in proper form under the applicable laws of the State for filing, (b) adequately identify the collateral described therein to provide sufficient notice to third parties of the security interest referenced therein and (c) are required to be filed with the Office of the Secretary of State of the State and with the Recorder of [and ] County [Counties]. Upon the filing of the Financing Statements, the Collateral Agent for the benefit of the Creditors will have a valid and duly perfected security interest in and lien on the Personal Property and Collateral (including after- acquired property) described in the Mortgage[s] and the Security Agreement, respectively. 6. The recording of the Mortgage[s] and the filing of the Financing Statements with the recorders and in the offices described above are the only actions, recordings or filings necessary to publish notice and protect the validity of and to establish of record the rights of the parties under the Mortgage[s] and Security Agreement, except (i) that 5 continuation statements under the UCC are required to be filed within six months prior to the expiration of five years from the date of filing of the Financing Statements, and (ii) that a security interest in or pledge of money or instruments, other than money or instruments constituting chattel paper, cannot be perfected by filing Financing Statements or recording a Mortgage, but must be perfected by taking physical possession thereof. 7. Subject to appropriate continuation or perfection under the UCC as set forth the preceding paragraph, the priority of the security interest in, lien on or pledge of the Collateral created by the Security Agreement and the Pledge Agreement with respect to any extension of credit (each, a "Further Advance") made or deemed to have been made by the Creditors after the date (the "Perfection Date") on which the security interest in, lien on or pledge of the Collateral shall have been perfected will be the same as the priority of the security interest, lien on or pledge of the Collateral with respect to all extensions of credit made or deemed to have been made by the Creditors on or before the Perfection Date, and such priority will not be affected by the rights in and to the Collateral of any third party whose interest in the Collateral attached thereto after the Perfection Date but prior to the date of such Further Advance. 8. The Collateral Agent has the power without naming all the Creditors in any applicable legal proceeding to exercise remedies under the Security Documents for the realization of any of the Mortgaged Property or the Collateral in its own name, as collateral agent. 9. No taxes or other charges, including, without limitation, intangible or documentary stamp taxes, mortgage or recording taxes, transfer taxes or similar charges, are payable to the State or to any jurisdiction therein on account of the execution or delivery or recording or filing of the Mortgage[s] or any of the other Documents or the creation of the indebtedness evidenced or secured by any of the Documents, as applicable, except for nominal filing or recording fees. [In the event that an intangible tax would be required to be paid in connection with any of the transactions described in the preceding paragraph, please describe with specificity in the context of this transaction, and the collateral to be secured in your State, (a) the nature of the tax, (b) how and when it is paid, (c) how it is calculated, (d) what forms or 6 other documentation would be required, and (e) any other information that would be necessary or useful in order for the Borrower or any Guarantor to comply with the payment of such tax. In the event that an intangible tax would not be required to be paid, please specify that the intangible tax is inapplicable and the basis for such conclusion.] 10. The transfer of all or any portion of the Mortgaged Property in connection with the exercise of any remedy under the Mortgage[s], including, without limitation, by way of judicial foreclosure, will not restrict, affect or impair the liability of the Borrower and the other Loan Parties with respect to the indebtedness secured thereby or the mortgagee's rights or remedies relating thereto, including the foreclosure or enforcement of any other security interest or liens securing such indebtedness, and the laws of the State do not require a lienholder to elect to pursue its remedies either against mortgaged real property or personal property where such lienholder holds security interests and liens on both real and personal property of a debtor. 11. A State court or a federal court applying the choice of laws principles prevailing under the laws of the State to which the question is presented will give effect to the provisions in the Documents selecting the laws of the State of New York as the governing law thereof (except as therein provided) and will apply such laws, rather than the laws of the State, to the construction and application thereof. 12. Assuming that the Documents were governed by the law of the State for the purpose of rendering the opinion set forth in this paragraph, (a) none of the provisions of the Documents will violate any law, statute or regulation of the State relating to usury and (b) the use of counterpart copies of any of the Documents does not affect the enforceability of any of the Documents. We are admitted to practice in the State. We express no opinion as to matters under or involving the laws of any jurisdiction other than laws of the United States and the State and its political subdivisions. This opinion may be relied upon by each of you, by any successors and assigns of the Administrative Agent or the Collateral Agent, and any participant, assignee or successor to the interests of the Lenders under the Loan Documents. 7 Very truly yours, EXHIBIT C GUARANTEE AGREEMENT dated as of July , 1998, among each of the subsidiaries listed on Schedule I hereto (each such subsidiary individually, a "Guarantor" and, collectively, the "Guarantors") of Telecorp PCS, Inc., a Delaware corporation (the "Borrower"), and THE CHASE MANHATTAN BANK, a Delaware corporation, as collateral agent (the "Collateral Agent") for the Secured Parties (as defined in the Credit Agreement referred to below). Reference is made to the Credit Agreement dated as of July 17, 1998 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, the lenders from time to time party thereto (the "Lenders") and The Chase Manhattan Bank, as Administrative Agent, Issuing Bank and Collateral Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned to such terms in the Credit Agreement. The Lenders have agreed to make Loans to the Borrower and the Issuing Bank has agreed to issue Letters of Credit for the account of the Borrower pursuant to, and upon the terms and subject to the conditions specified in, the Credit Agreement. Each of the Guarantors is a direct or indirect wholly owned Subsidiary of the Borrower and acknowledges that it will derive substantial benefit from the making of the Loans by the Lenders. The obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit are conditioned on, among other things, the execution and delivery by the Guarantors of a Guarantee Agreement in the form hereof. As consideration therefor and in order to induce the Lenders to make Loans and the Issuing Banks to issue Letters of Credit, the Guarantors are willing to execute this Agreement. Accordingly, the parties hereto agree as follows: 2 SECTION 1. Guarantee. Each Guarantor unconditionally guarantees, jointly with the other Guarantors and severally, as a primary obligor and not merely as a surety, (a) the due and punctual payment of (i) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, and (ii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Loan Parities to the Secured Parties under the Credit Agreement and the other Loan Documents, (b) the due and punctual performance of all covenants, agreements, obligations and liabilities of the Loan Parties under or pursuant to the Credit Agreement and the other Loan Documents and (c) unless otherwise agreed upon in writing by the applicable Lender party thereto, all obligations of the Borrower, monetary or otherwise, under each Interest Rate Protection Agreement entered into with a counterparty that was a Lender or an Affiliate of a Lender at the time such Interest Rate Protection Agreement was entered into (all the monetary and other obligations referred to in the preceding clauses (a) through (c) being collectively called the "Obligations"). Each Guarantor further agrees that the Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its guarantee notwithstanding any extension or renewal of any Obligation. Anything contained in this Agreement to the contrary notwithstanding, the obligations of each Guarantor hereunder shall be limited to a maximum aggregate amount equal to the greatest amount that would not render such Guarantor's obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any provisions of applicable state law (collectively, the "Fraudulent Transfer Laws"), in each case after giving effect to all other liabilities of such Guarantor, contingent or otherwise, that are relevant under the Fraudulent Transfer Laws (specifically excluding, however, any liabilities of such Guarantor (a) in respect of intercompany indebtedness to the Borrower or Affiliates of the Borrower to the extent that such indebtedness would be discharged in an amount equal to the amount paid by such Guarantor hereunder and (b) under any Guarantee of senior 3 unsecured indebtedness or Indebtedness subordinated in right of payment to the Obligations which Guarantee contains a limitation as to maximum amount similar to that set forth in this paragraph, pursuant to which the liability of such Guarantor hereunder is included in the liabilities taken into account in determining such maximum amount) and after giving effect as assets to the value (as determined under the applicable provisions of the Fraudulent Transfer Laws) of any rights to subrogation, contribution, reimbursement, indemnity or similar rights of such Guarantor pursuant to (i) applicable law or (ii) any agreement providing for an equitable allocation among such Guarantor and other Affiliates of the Borrower of obligations arising under Guarantees by such parties (including the Indemnity, Subrogation and Contribution Agreement). SECTION 2. Obligations Not Waived. To the fullest extent permitted by applicable law, each Guarantor waives presentment to, demand of payment from and protest to the Borrower of any of the Obligations, and also waives notice of acceptance of its guarantee and notice of protest for nonpayment. SECTION 3. Security. Each of the Guarantors authorizes the Collateral Agent and each of the other Secured Parties, to (a) take and hold, as provided in the Security Agreement, security for the payment of this Guarantee and the Obligations and exchange, enforce, waive and release any such security, (b) apply such security and direct the order or manner of sale thereof as provided in the Security Agreement and (c) release or substitute any one or more endorsees, other guarantors of other obligors. SECTION 4. Guarantee of Payment. Each Guarantor further agrees that its guarantee constitutes a guarantee of payment when due and not of collection, and waives any right to require that any resort be had by the Collateral Agent or any other Secured Party to any of the security held for payment of the Obligations or to any balance of any deposit account or credit on the books of the Collateral Agent or any other Secured Party in favor of the Borrower or any other person. SECTION 5. No Discharge or Diminishment of Guarantee. The obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason (other than the indefeasible payment in full in cash of the Obligations), including any 4 claim of waiver, release, surrender, alteration or compromise of any of the Obligations, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Guarantor hereunder shall not be discharged or impaired or otherwise affected by the failure of the Collateral Agent or any other Secured Party to assert any claim or demand or to enforce any remedy under the Credit Agreement, any other Loan Document or any other agreement, by any waiver or modification of any provision of any thereof, by any default, failure or delay, wilful or otherwise, in the performance of the Obligations, or the failure to perfect any security interest in, or the release of, any of the security held by or on behalf of the Collateral Agent or any other Secured Party, or by any other act or omission that may or might in any manner or to any extent vary the risk of any Guarantor or that would otherwise operate as a discharge of each Guarantor as a matter of law or equity (other than the indefeasible payment in full in cash of all the Obligations). SECTION 6. Defenses of Borrower Waived. To the fullest extent permitted by applicable law, each of the Guarantors waives any defense based on or arising out of any defense of the Borrower or the unenforceability of the Obligations or any part thereof from any cause, or the cessation from any cause of the liability of the Borrower, other than the final and indefeasible payment in full in cash of the Obligations. The Collateral Agent and the other Secured Parties may, at their election, foreclose on any security held by one or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Obligations, make any other accommodation with the Borrower or any other guarantor or exercise any other right or remedy available to them against the Borrower or any other guarantor, without affecting or impairing in any way the liability of any Guarantor hereunder except to the extent the Obligations have been fully, finally and indefeasibly paid in cash. SECTION 7. Agreement to Pay; Subordination. In furtherance of the foregoing and not in limitation of any other right that the Collateral Agent or any other Secured Party has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Borrower or any other Loan Party to pay any Obligation when and as the same shall become 5 due, whether at maturity, by acceleration, after notice of prepayment or otherwise, each Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the Collateral Agent or such other Secured Party as designated thereby in cash the amount of such unpaid Obligations. Upon payment by any Guarantor of any sums to the Collateral Agent or any Secured Party as provided above, all rights of such Guarantor against the Borrower arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subordinate and junior in right of payment to the prior indefeasible payment in full in cash of all the Obligations. In addition, any indebtedness of the Borrower now or hereafter held by any Guarantor is hereby subordinated in right of payment to the prior payment in full of the Obligations during the existence of an Event of Default. If any amount shall erroneously be paid to any Guarantor on account of (i) such subrogation, contribution, reimbursement, indemnity or similar right or (ii) any such indebtedness of the Borrower, such amount shall be held in trust for the benefit of the Secured Parties and shall forthwith be paid to the Collateral Agent to be credited against the payment of the Obligations, whether matured or unmatured, in accordance with the terms of the Loan Documents. SECTION 8. Information. Each of the Guarantors assumes all responsibility for being and keeping itself informed of the Borrower's financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Obligations and the nature, scope and extent of the risks that such Guarantor assumes and incurs hereunder, and agrees that none of the Collateral Agent or the other Secured Parties will have any duty to advise any of the Guarantors of information known to it or any of them regarding such circumstances or risks. SECTION 9. Representations and Warranties. Each of the Guarantors represents and warrants as to itself that all representations and warranties relating to it contained in the Credit Agreement are true and correct. SECTION 10. Termination. The Guarantees made hereunder (a) shall terminate when all the Obligations have been indefeasibly paid in full and the Lenders have no further commitment to lend under the Credit Agreement and (b) shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Obligation is rescinded or must otherwise be restored by any Secured 6 Party or any Guarantor upon the bankruptcy or reorganization of the Borrower, any Guarantor or otherwise. SECTION 11. Binding Effect; Several Agreement; Assignments. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all covenants, promises and agreements by or on behalf of the Guarantors that are contained in this Agreement shall bind and inure to the benefit of each party hereto and their respective successors and assigns. This Agreement shall become effective as to any Guarantor when a counterpart hereof executed on behalf of such Guarantor shall have been delivered to the Collateral Agent, and a counterpart hereof shall have been executed on behalf of the Collateral Agent, and thereafter shall be binding upon such Guarantor and the Collateral Agent and their respective successors and assigns, and shall inure to the benefit of such Guarantor, the Collateral Agent and the other Secured Parties, and their respective successors and assigns, except that no Guarantor shall have the right to assign its rights or obligations hereunder or any interest herein (and any such attempted assignment shall be void). If all of the capital stock of a Guarantor is sold, transferred or otherwise disposed of to a person that is not an Affiliate of the Borrower pursuant to a transaction permitted by Section 6.06 of the Credit Agreement, such Guarantor shall be released from its obligations under this Agreement without further action. This Agreement shall be construed as a separate agreement with respect to each Guarantor and may be amended, modified, supplemented, waived or released with respect to any Guarantor without the approval of any other Guarantor and without affecting the obligations of any other Guarantor hereunder. SECTION 12. Waivers; Amendment. (a) No failure or delay of the Collateral Agent in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Collateral Agent hereunder and of the other Secured Parties under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any Guarantor therefrom shall in any event be effective unless the same 7 shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on any Guarantor in any case shall entitle such Guarantor to any other or further notice or demand in similar or other circumstances. (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to a written agreement entered into between the Guarantors with respect to which such waiver, amendment or modification relates and the Collateral Agent, with the prior written consent of the Required Lenders (except as otherwise provided in the Credit Agreement). SECTION 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 14. Notices. All communications and notices hereunder shall be in writing and given as provided in Section 9.01 of the Credit Agreement. All communications and notices hereunder to each Guarantor shall be given to it in care of the Borrower at the address set forth in the Credit Agreement. SECTION 15. Survival of Agreement; Severability. (a) All covenants, agreements, representations and warranties made by the Guarantors herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Collateral Agent and the other Secured Parties and shall survive the making by the Lenders of the Loans regardless of any investigation made by the Secured Parties or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any other fee or amount payable under this Agreement or any other Loan Document is outstanding and unpaid or the L/C Exposure does not equal zero and as long as the Commitments and the L/C Commitment have not been terminated. (b) In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the 8 remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. SECTION 16. Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract, and shall become effective as provided in Section 11. Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually executed counterpart of this Agreement. SECTION 17. Rules of Interpretation. The rules of interpretation specified in Section 1.03 of the Credit Agreement shall be applicable to this Agreement. SECTION 18. Jurisdiction; Consent to Service of Process. (a) Each Guarantor hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Collateral Agent or any other Secured Party may otherwise have to bring any action or proceeding relating to this Agreement or the other Loan Documents against any Guarantor or its properties in the courts of any jurisdiction. (b) Each Guarantor hereby irrevocably and unconditionally waives, to the fullest extent it may legally 9 and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any New York State or Federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 14. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law. SECTION 19. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 19. SECTION 20. Additional Guarantors. Pursuant to Section 5.12 of the Credit Agreement, each Subsidiary Loan Party of the Borrower that was not in existence or not a Subsidiary Loan Party on the date of the Credit Agreement is required to enter into this Agreement as a Guarantor upon becoming a Subsidiary Loan Party. Upon execution and delivery after the date hereof by the Collateral Agent and such a Subsidiary of an instrument in the form of Annex 1, such Subsidiary Loan Party shall become a Guarantor hereunder with the same force and effect as if originally named as a Guarantor herein. The execution and delivery of any instrument adding an additional Guarantor as a party to this Agreement shall not require the consent of any other Guarantor hereunder. The rights and obligations of each Guarantor hereunder shall remain in full force and effect notwithstanding the addition of any new Guarantor as a party to this Agreement. 10 SECTION 21. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Secured Party is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other Indebtedness at any time owing by such Secured Party to or for the credit or the account of any Guarantor against any or all the obligations of such Guarantor now or hereafter existing under this Agreement and the other Loan Documents held by such Secured Party, irrespective of whether or not such Secured Party shall have made any demand under this Agreement or any other Loan Document and although such obligations may be unmatured. After any exercise of such right of setoff, the Secured Party shall give notice of such exercise to the Administrative Agent and the Borrower; provided, however, that -------- ------- failure to give such notice shall not in any way affect the rights of any Secured Party. The rights of each Secured Party under this Section 21 are in addition to other rights and remedies (including other rights of setoff) which such Secured Party may have. SECTION 22. FCC Consent. Notwithstanding anything herein which may be construed to the contrary, no action shall be taken by any of the Collateral Agent and the Secured Parties with respect to the Licenses or any license of the Federal Communications Commission ("FCC") unless and until any required approval under the Federal Communications Act of 1934, and any applicable rules and regulations thereunder, requiring the consent to or approval of such action by the FCC or any governmental or other authority, have been satisfied. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written. [EACH GUARANTOR], By___________________________ Name: Title: THE CHASE MANHATTAN BANK, as Collateral Agent, 11 By___________________________ Name: Title: Schedule I to the Guarantee Agreement Guarantor Address --------- ------- [List each Subsidiary Loan Party] EX-10.8.2 16 FIRST AMENDMENT TO CREDIT AGREEMENT EXHIBIT 10.8.2 CONFORMED COPY FIRST AMENDMENT, CONSENT AND WAIVER, dated as of December 18, 1998 (this "Amendment"), to the Credit Agreement, dated as of July 17, 1998 (as amended, ---------- supplemented or otherwise modified from time to time, the "Credit Agreement"), ---------------- among TELECORP PCS, INC., a corporation organized under the laws of the State of Delaware (the "Borrower"), the several banks and other financial institutions -------- and entities from time to time parties thereto (the "Lenders"), and THE CHASE ------- MANHATTAN BANK, as administrative agent (the "Administrative Agent") for the -------------------- Lenders. WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make certain loans to the Borrower; and WHEREAS the Borrower has requested that certain provisions of the Credit Agreement be modified in the manner provided for in this Amendment, and the Lenders are willing to agree to such modifications as provided for in this Amendment. NOW, THEREFORE, the parties hereto hereby agree as follows: 1. Defined Terms. Capitalized terms used and not defined herein -------------- shall have the meanings given to them in the Credit Agreement, as amended hereby. 2. Amendments to the Credit Agreement. ----------------------------------- (a) Section 1.01 of the Credit Agreement is hereby amended by: (i) inserting the words "or the FCC" after the words "Treasury Department" in the definition of "FCC Debt"; (ii) inserting after the definition of "Interest Period" and before the definition of "Issuing Bank" the following definition: "`IDB' means The Industrial Development Board of the City of Memphis and County of Shelby, Tennessee."; (iii) inserting after the definition of "Management Agreement" and before the definition of "Master Lease" the following definition: "`Marketing Affiliate' means a limited liability company owned 1/2 by the Borrower and 1/2 by Triton PCS, Inc. or 1/3 by the Borrower, 1/3 by Triton PCS, Inc. and 1/3 by TriTel PCS, Inc., which engages in no activity other than the registering, holding, maintenance and protection of trademarks and the licensing thereof to its members." (iv) inserting after the definition of "Material Indebtedness" and before the definition of "Mercury Acquisition" the following definitions: `Memphis Equipment' means the personal property to be leased to the Equipment Subsidiary by the IDB pursuant to the Memphis Lease all of which is described in Exhibit A thereto. `Memphis Event of Default' has the meaning assigned to such term in the Memphis Lease. `Memphis Lease' has the meaning ascribed thereto in the definition of Memphis Sale Lease-Back. `Memphis Lease Documents' has the meaning ascribed thereto in the definition of Memphis Sale Lease-Back. `Memphis Sale Lease-Back' means the sale of the Memphis Equipment to the IDB by the Equipment Subsidiary pursuant to Bills of Sale acceptable to the Administrative Agent and the lease-back by the Equipment Subsidiary of such equipment pursuant to a Personal Property Lease Agreement (the "Memphis Lease") between the IDB and the Equipment Subsidiary substantially in the form of, and no less favorable to the Lenders than, the draft thereof examined by the Administrative Agent prior to the date hereof; provided that (i) all the Equipment Subsidiary's rights under the Memphis Lease and related documentation (collectively, the "Memphis Lease Documents") are assigned to the Lenders as collateral, (ii) payments to the IDB under the Memphis Lease in any year do not exceed the amount of taxes that would have been paid to the State of Tennessee by the Borrower and the 3 Subsidiaries in such year that are not required to be and are not paid as a result of the Memphis Sale Lease-Back (the "Saved Taxes") and (iii) the Equipment Subsidiary has the right to repurchase from the IDB at any time all the Memphis Equipment then owned by the IDB for $1,000 or less." (v) amending the definition of "Prepayment Event" by deleting from clause (a)(i) thereof "and (d)" and substituting therefor ", (d) and (e)."; (vi) deleting the words "the Real Property Subsidiary" in the definition of "Real Property Subsidiary" and substituting therefor the words "a Real Property Subsidiary"; (vii) inserting the word "each" before the words "such Restricted Subsidiary" each time they appear in the definition of "Real Property Subsidiary"; and (viii) deleting the dollar amounts "$880,000" and "$7,000,000" in the definition of "Wireless 2000 Acquisition" and substituting in lieu thereof the dollar amounts "$1,075,600" and "$7,449,191", respectively. (b) Section 3.13 of The Credit Agreement is hereby amended by deleting clause (d) therefrom in its entirety and substituting therefor the following: "(d) in the case of any Equipment Subsidiary, (i) under any lease of equipment which it has entered into in the ordinary cause of business, (ii) for payments in lieu of taxes and other obligations under the Memphis Lease not exceeding the amount of the Saved Taxes in any year and (iv) for taxes incurred in the ordinary course of business which are incident to being the owner or lessor of equipment and" (c) Section 5.13 of the Credit Agreement is hereby amended by inserting the following paragraph at the end thereof: "(c) The Borrower will (i) take all necessary actions required to grant, preserve, protect and perfect a first priority security 4 interest in favor of the Lenders in all assets subject to the Memphis Lease, (ii) obtain from the IDB all consents, filings or other actions the Administrative Agent may reasonably request in connection therewith and (iii) promptly notify and provide the Administrative Agent with a copy of any notice the Equipment Subsidiary receives pursuant to any of the Memphis Lease Documents." (d) Section 6.01(a)(viii) of the Credit Agreement is hereby amended by deleting the dollar amount "$7,000,000" therefrom and substituting in lieu thereof the dollar amount "$7,449,191". (e) Section 6.02 of the Credit Agreement is hereby amended by: (i) deleting the word "and" at the end of clause (iv) thereof; (ii) deleting "." at the end of clause (v) thereof and substituting "; and" therefor; and (iii) inserting the following after clause (v) thereof: "(vi) Liens on the Memphis Equipment in favor of the IDB arising pursuant to the Memphis Sale Lease-Back." (f) Section 6.03 of the Credit Agreement is hereby amended by: (i) inserting "(i)" after the words "except for" therein; (ii) deleting "." at the end thereof and substituting therefor the following: "and (ii) the Memphis Sale Lease-Back." (g) Section 6.05 of the Credit Agreement is hereby amended by inserting after clause (n) thereof the following: "(o) Investments in the Capital Stock of the Marketing Affiliate not exceeding $1,000 in the aggregate; provided that (i) all such Capital Stock is pledged pursuant to the Pledge Agreement and (ii) all agreements entered into between the 5 Marketing Affiliate and any Loan Party are assigned to the Lenders as collateral." (h) Section 6.06 of the Credit Agreement is hereby amended as follows: (i) by inserting after clause (d) thereof and before the proviso the following: "(e) sales of the Memphis Equipment to the IDB pursuant to and in accordance with the terms of the Memphis Sale Lease-Back." (ii) inserting ", except for the Memphis Sale Lease-Back," in the proviso thereof after the words "provided that" and before the words, "all -------- sales". (i) Section 6.11 of the Credit Agreement is hereby amended by inserting after the words "Master Lease" the words "or the Memphis Lease Documents". (j) Section 6.13(c) of the Credit Agreement is hereby amended by: (i) inserting before the word "and" at the end of clause (ii) of the parenthetical therein the following: ",(iii) for payments in lieu of taxes and other obligations under the Memphis Lease not exceeding the amount of the Saved Taxes in any year" (ii) renumbering clause (iii) thereof as clause (iv); and (iii) inserting before the period at the end of such subsection the words "and the Memphis Sale and Lease-Back". (k) Article VII of the Credit Agreement is hereby amended by inserting the following clause immediately after clause (v) thereof: "(w) a Memphis Event of Default shall have occurred and be continuing;" 6 3. Consent. The Lenders hereby consent to an amendment of the -------- Security Agreement by the Borrower and the Collateral Agent which deletes Section 7.16 therefrom in its entirety and substitutes in lieu thereof the following: "SECTION 7.16. FCC Consent. Notwithstanding anything herein which may be construed to the contrary, no action shall be taken by any of the Collateral Agent and the Secured Parties with respect to the Licenses or any license of the Federal Communications Commission ("FCC") unless and until any required approval under the Federal Communications Act of 1934, and any applicable rules and regulations thereunder, requiring the consent to or approval of such action by the FCC or any governmental or other authority, have been satisfied. Without limiting the generality of the foregoing, the Collateral Agent and the Secured Parties shall have no security interest in the Licenses or any license of the FCC for so long as such security interest is prohibited by the rules or regulations of the FCC or any agreement between a Loan Party and the FCC securing FCC Debt in connection with any such License or other license. 4. Waiver. The Lenders hereby expressly waive any rights or remedies ------- in connection with any breach of or failure to comply with the second sentence of Section 5.03(a) of the Credit Agreement and the second sentence of Section 4.01 of the Security Agreement to the extent, and only to the extent, such provision is breached in connection with the Borrower's relocation of its primary business office to 1010 N. Glebe Road, Suite 800, Arlington, Virginia 22201. 5. No Other Amendments; Confirmation. Except as expressly amended, ---------------------------------- waived, modified and supplemented hereby, the provisions of the Credit Agreement are and shall remain in full force and effect. 6. Representations and Warranties. The Borrower hereby represents ------------------------------- and warrants to the Administrative Agent and the Lenders as of the date hereof: (a) No Default or Event of Default has occurred and is continuing. 7 (b) The execution, delivery and performance by the Borrower of this Amendment have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, notice to or action by, any person (including any governmental agency) in order to be effective and enforceable. The Credit Agreement as amended by this Amendment constitutes the legal, valid and binding obligation of the Borrower, enforceable against each in accordance with its terms, subject only to the operation of the Bankruptcy Code and other similar statutes for the benefit of debtors generally and to the application of general equitable principles. (c) All representations and warranties of the Borrower contained in the Credit Agreement (other than representations or warranties expressly made only on and as of the Effective Date) are true and correct as of the date hereof. 7. Effectiveness. This Amendment shall become effective only upon -------------- the satisfaction in full of the following conditions precedent: (a) The Administrative Agent shall have received counterparts hereof, duly executed and delivered by the Borrower, and the Required Lenders; (b) The Administrative Agent shall have received such opinions and certificates from the Borrower and its counsel as it may reasonably request in form reasonably satisfactory to its counsel. 8. Expenses. The Borrower agrees to reimburse the Administrative --------- Agent for its out-of-pocket expenses in connection with this Amendment, including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel for the Administrative Agent. 9. Governing Law; Counterparts. (a) This Amendment and the rights ---------------------------- and obligations of the parties hereto shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York. 8 (b) This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. This Amendment may be delivered by facsimile transmission of the relevant signature pages hereof. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written. TELECORP, PCS, INC. by /s/ Thomas H. Sullivan ------------------------------ Name: Thomas H. Sullivan Title: Executive Vice President THE CHASE MANHATTAN BANK, individually and as Administrative Agent, by /s/ William E. Rottino ------------------------------ Name: William E. Rottino Title: Vice President THE BANK OF NEW YORK, by /s/ Gerry Granovsky ------------------------------ Name: Gerry Granovsky Title: Vice President BANK OF TOKYO MITSUBISHI TRUST COMPANY, by /s/ Michael Deadder ------------------------------ Name: Michael Deadder Title: Vice President BANKBOSTON, N.A., by /s/ Jonathan D. Sharkey ------------------------------ Name: Jonathan D. Sharkey Title: Vice President BANKERS TRUST COMPANY, individually and as Documentation Agent, by /s/ Gregory Shefrin ------------------------------ Name: Gregory Shefrin Title: Vice President CANADIAN IMPERIAL BANK OF COMMERCE, by CIBC Oppenheimer Corp., as Agent, by /s/ Harold Birk ------------------------------ Name: Harold Birk Title: Executive Director CIT GROUP/EQUIPMENT FINANCING, by /s/ J. E. Palmer ------------------------------ Name: J. E. Palmer Title: Assistant Vice President CAPTIVA III FINANCE, LTD., as advised by Pacific Investment Management Company, by /s/ David Egglishaw ------------------------------ Name: David Egglishaw Title: Director DELANO COMANY, by Pacific Investment Management Company as its Investment Advisor, by /s/ Raymond Kennedy ------------------------------ Name: Raymond Kennedy Title: Senior Vice President 11 FLEET NATIONAL BANK, by /s/ William Weiss ------------------------------ Name: William Weiss Title: Assistant Vice President GENERAL ELECTRIC CAPITAL CORPORATION, by /s/ Mark F. Mylon ------------------------------ Name: Mark F. Mylon Title: Manager, Operations KZH APPALOOSA LLC, by /s/ Virginia Conway ------------------------------ Name: Virginia Conway Title: Authorized Agent KZH IV LLC, by /s/ Virginia Conway ------------------------------ Name: Virginia Conway Title: Authorized Agent KZH PAMCO LLC, by /s/ Virginia Conway ------------------------------ Name: Virginia Conway Title: Authorized Agent PAMCO CAYMAN LTD., by Highland Capital Management, L.P., as Collateral Manager, by /s/ James Dondero, CFA, CPA ------------------------------ Name: James Dondero, CFA, CPA Title: President, Highland Capital Management, L.P. SYNDICATED LOAN FUNDING TRUST, by Lehman Commercial Paper Inc., not in its individual capacity but solely as Asset Manager, by /s/ Michele Swanson ------------------------------ Name: Michele Swanson Title: Authorized Signatory TORONTO DOMINION [TEXAS], INC., by /s/ Lynn Chasin ------------------------------ Name: Lynn Chasin Title: Vice President VAN KAMPEN PRIME RATE INCOME TRUST, by /s/ Jeffrey W. Maillet ------------------------------ Name: Jeffrey W. Maillet Title: Senior Vice President and Director VAN KAMPEN SENIOR FLOATING RATE FUND, by /s/ Jeffrey W. Maillet ------------------------------ Name: Jeffrey W. Maillet Title: Senior Vice President and Director VAN KAMPEN SENIOR INCOME TRUST, by /s/ Jeffrey W. Maillet ------------------------------ Name: Jeffrey W. Maillet Title: Senior Vice President and Director EX-10.8.3 17 SECOND AMENDMENT TO CREDIT AGREEMENT EXHIBIT 10.8.3 EXECUTION COPY SECOND AMENDMENT AND WAIVER, dated as of March 1, 1999 (this "Amendment"), --------- to the Credit Agreement, dated as of July 17, 1998 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among TELECORP ---------------- PCS, INC., a corporation organized under the laws of the State of Delaware (the "Borrower"), the several banks and other financial institutions and entities -------- from time to time parties thereto (the "Lenders"), and THE CHASE MANHATTAN BANK, ------- as administrative agent (the "Administrative Agent") for the Lenders. -------------------- WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make certain loans to the Borrower; and WHEREAS the Borrower has requested that certain provisions of the Credit Agreement be modified in the manner provided for in this Amendment, and the Lenders are willing to agree to such modifications as provided for in this Amendment. NOW, THEREFORE, the parties hereto hereby agree as follows: 1. Defined Terms. Capitalized terms used and not defined herein -------------- shall have the meanings given to them in the Credit Agreement, as amended hereby. 2. Amendments to the Credit Agreement. ----------------------------------- (a) Section 1.01 of the Credit Agreement is hereby amended by: (i) adding in the appropriate alphabetical order the following definitions: "`Bidding Subsidiary' means Viper Wireless, Inc., a Delaware corporation." "`Equity Commitments' means irrevocable, unconditional commitments (other than commitments required to be contributed to the Borrower pursuant to the Securities Purchase Agreement) of Persons owning Capital Stock of the Borrower and their Affiliates to 2 purchase additional Capital Stock of the Borrower for an aggregate purchase price no less than the aggregate amount of all investments by the Borrower and its Restricted Subsidiaries in the Bidding Subsidiary over the amount of all Restricted Payments made by the Bidding Subsidiary to THC on or prior to the earlier of (i) August 15, 1999 and (ii) the date that is ten days following the Bidding Subsidiary's receipt of any funds from the escrow account with the FCC." "`Equity Commitments Documentation' means documentation evidencing the Equity Commitments in form and substance reasonably satisfactory to the Required Lenders." "`PCS C Block Auction' means the reauction conducted by the FCC for the sale of Licenses in the C block as set forth in parts 1 and 24 of Title 47 of the Code of Federal Regulations, scheduled to commence on or about March 23, 1999." (ii) inserting the parenthetical "(provided that the Bidding Subsidiary need not be a Wholly Owned Subsidiary at any time prior to its becoming a Wholly Owned Subsidiary pursuant to Section 5.16)" immediately following the words "Wholly Owned Restricted Subsidiary" in the definition of "License Subsidiary". (iii) inserting the words "owned by the Borrower or a Restricted Subsidiary" immediately following the words "such Restricted Subsidiary" in clause (ii) of the proviso to the definition of "License Subsidiary". (iv) inserting the parenthetical "(provided that the Bidding Subsidiary shall not be required to enter into a Special Purpose Subsidiary Funding Agreement prior to its becoming a Wholly Owned Subsidiary)" immediately before the period at the end of the definition of "License Subsidiary". (b) Section 3.13 of the Credit Agreement is hereby amended by inserting at the end of clause (c) thereof "and in the case of the Bidding Subsidiary, the obligation to redeem the Capital Stock and preferred stock held by THC". 3 (c) Article V of the Credit Agreement is hereby amended by adding the following new Sections 5.16 and 5.17 at the end thereof: "SECTION 5.16. The Bidding Subsidiary. The Borrower and THC shall ----------------------- endeavor in good faith to cause all assets held by the Bidding Subsidiary to be transferred to a Wholly Owned Restricted Subsidiary or to cause the Bidding Subsidiary or any successor thereto to become a Wholly Owned Restricted Subsidiary or to be merged with or into a Wholly Owned Restricted Subsidiary pursuant to a transaction in which the surviving entity is a Wholly Owned Restricted Subsidiary as soon as is practicable after the acquisition of any License by the Bidding Subsidiary. SECTION 5.17. The Equity Commitments. The Borrower will cause the ----------------------- Equity Commitments Documentation to become effective and shall provide the Administrative Agent with such proof of effectiveness as the Administrative Agent may reasonably request on or prior to the earlier of (i) March 23, 1999 or (ii) the date on which the Bidding Subsidiary submits a bid in the PCS C Block Auction; provided that the Equity Commitments Documentation -------- ---- need not become effective if the Bidding Subsidiary does not submit any bid in the PCS C Block Auction, uses its best efforts to obtain prompt return of all funds placed in escrow with the FCC, and reimburses substantially all funds invested in it by THC to THC no later than the second day after the Bidding Subsidiary's receipt of such funds from the escrow account with the FCC (and, in any event, no later than April 23, 1999)." (d) Section 6.01(b) of the Credit Agreement is hereby amended by inserting immediately after "acquisitions permitted by Section 6.05" in the first parenthetical thereto the following ", preferred stock of the Bidding Subsidiary issued to and held by THC". (e) Section 6.04(a) of the Credit Agreement is hereby amended by: (i) deleting the word "and" at the end of clause (iv) thereof and substituting therefor a comma; and 4 (ii) inserting immediately before the period at the end thereof the following "and (vi) the Bidding Subsidiary may merge with or into any License Subsidiary in a transaction in which a Wholly Owned License Subsidiary is the surviving corporation". (f) Section 6.05(c) of the Credit Agreement is hereby amended by inserting the following proviso at the end thereof "provided further that THC -------- shall be permitted to make and hold investments in the Capital Stock and preferred stock of the Bidding Subsidiary;". (g) Section 6.08(a) of the Credit Agreement is hereby amended by (i) deleting the word "and" at the end of clause (iii) thereof and substituting therefor a comma; and (ii) inserting immediately before the period at the end thereof the following "and (v) the Bidding Subsidiary may make Restricted Payments to THC with respect to its preferred stock and its Capital Stock". (h) Section 6.11 of the Credit Agreement is hereby amended by deleting the words "or (e) the Master Lease or Master Lease Documents, in the case of clause (a), (b), (c) and (e) above" and substituting therefor ", (e) the Master Lease or Master Lease Documents or (f) any agreement relating to the Equity Commitments, in the case of clause (a), (b), (c), (e) and (f) above". (i) Section 6.13(a) is hereby amended by inserting the following proviso at the end thereof "provided, however, that THC may make an investment -------- ------- or investments in the Bidding Subsidiary during the period beginning March 1, 1999 and ending on the earlier of the date on which the Bidding Subsidiary ceases to participate in the PCS C Block Auction and August 15, 1999 in an aggregate amount not in excess of $25,000,000;" (j) Article VI of the Credit Agreement is hereby further amended by adding the following new Section 6.14 at the end thereof: "SECTION 6.14. The Bidding Subsidiary's Licenses. Prior to its ---------------------------------- becoming a Wholly Owned Subsidiary, the Bidding Subsidiary shall hold no Licenses other than 5 Licenses acquired by the Bidding Subsidiary in the PCS C Block Auction." (k) Article VII of the Credit Agreement is hereby amended by inserting the following clauses (x) and (y) immediately after clause (w) thereof: "(x) The Bidding Subsidiary shall fail to reimburse promptly after its receipt thereof from the FCC escrow account, and in no event later than August 15, 1999, substantially all funds invested in it by THC which have not been used by such date to purchase Licenses. (y) the failure of any Person to comply with any funding or contribution obligation pursuant to the Equity Commitments and such failure shall continue unremedied for a period of 30 days." 3. Waiver. The Lenders hereby expressly waive any rights or remedies ------- in connection with any breach of or failure to comply with (i) the second sentences of Section 3.12(a) and Section 3.12(c) of the Credit Agreement to the extent, and only to the extent, such Sections are breached by the ownership of 15% of the common stock (representing 51% of the total ordinary voting power) of the Bidding Subsidiary by Gerald Vento and Thomas Sullivan at any time prior to its becoming a Wholly Owned Subsidiary pursuant to Section 5.16 and (b) Section 6.13(a) to the extent, and only to the extent, such Section is breached by the Bidding Subsidiary being obligated to redeem the Capital stock and preferred stock being held by THC or participating in the PCS C Block Auction. 4. License Subsidiary. By executing this Amendment the Borrower ------------------- hereby gives notice to the Administrative Agent that the Bidding Subsidiary is designated as a License Subsidiary. 5. No Other Amendments; Confirmation. Except as expressly amended, ---------------------------------- waived, modified and supplemented hereby, the provisions of the Credit Agreement are and shall remain in full force and effect. 6 6. Representations and Warranties. The Borrower hereby represents ------------------------------- and warrants to the Administrative Agent and the Lenders as of the date hereof: (a) No Default or Event of Default has occurred and is continuing. (b) The execution, delivery and performance by the Borrower of this Amendment have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, notice to or action by, any person (including any governmental agency) in order to be effective and enforceable. The Credit Agreement as amended by this Amendment constitutes the legal, valid and binding obligation of the Borrower, enforceable against each in accordance with its terms, subject only to the operation of the Bankruptcy Code and other similar statutes for the benefit of debtors generally and to the application of general equitable principles. (c) All representations and warranties of the Borrower contained in the Credit Agreement (other than representations or warranties expressly made only on and as of the Effective Date) are true and correct as of the date hereof. 7. Effectiveness. This Amendment shall become effective only upon -------------- the satisfaction in full of the following conditions precedent: (a) The Administrative Agent shall have received counterparts hereof, duly executed and delivered by the Borrower and the Required Lenders. (b) The Administrative Agent shall have received an executed copy of an agreement requiring the Bidding Subsidiary to distribute to THC (including, without limitation, by means of stock redemption) substantially all funds contributed to it which are not used to purchase C Block Licenses on or prior to August 15, 1999. (c) The Administrative Agent shall have received such opinions and certificates from the Borrower and its counsel relating to this Amendment as it may reasonably request in form reasonably satisfactory to its counsel. 7 (d) The requirements of Section 5.12 of the Credit Agreement with respect to the Bidding Subsidiary shall have been met. (e) THC shall own (a) 85% of the common stock of the Bidding Subsidiary representing 49.9% of the ordinary voting power and (ii) all issued shares of the non-convertible 10% preferred stock of the Bidding Subsidiary. Gerry Vento and Tom Sullivan shall own 15% of the common stock of the Bidding Subsidiary representing 50.1% of the ordinary voting power. The Bidding Subsidiary shall have no other outstanding stock. 8. Expenses. The Borrower agrees to reimburse the Administrative --------- Agent for its out-of-pocket expenses in connection with this Amendment, including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel for the Administrative Agent. 9. Governing Law; Counterparts. (a) This Amendment and the rights ---------------------------- and obligations of the parties hereto shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York. (b) This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. This Amendment may be delivered by facsimile transmission of the relevant signature pages hereof. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written. TELECORP, PCS, INC. by /s/ Thomas Sullivan ------------------------------- Name:Thomas Sullivan Title:President 8 THE CHASE MANHATTAN BANK, by /s/ William Rottino ------------------------------- Name: William Rottino Title: Vice President THE BANK OF NEW YORK, by /s/ Gerry Granovsky ------------------------------ Name:Gerry Granovsky Title:Vice President BANK OF TOKYO MITSUBISHI TRUST COMPANY, by /s/ Michael Deadder ------------------------------ Name:Michael Deadder Title:Vice President BANKBOSTON, N.A., by /s/ Signature illegible ----------------------------- Name: Title: BANKERS TRUST COMPANY, by /s/ Gregory Shefrin ------------------------------ Name:Gregory Shefrin Title:Principal CANADIAN IMPERIAL BANK OF COMMERCE, by CIBC Oppenheimer Corp., as Agent, by /s/ Harold Birk ------------------------------ Name:Harold Birk Title:Executive Director CIT GROUP/EQUIPMENT FINANCING, by /s/ J.E. Palmer ------------------------------ Name:J.E. Palmer Title:Assistant Vice President CAPTIVA III FINANCE, LTD., as advised by Pacific Investment Management Company, by /s/ Signature illegible -----------------------------_ Name: Title: DELANO COMANY, by Pacific Investment Management Company as its Investment Advisor, by /s/ Signature illegible ------------------------------ Name: Title: FLEET NATIONAL BANK, by /s/ Garret Komjathy ------------------------------ Name:Garrett Komjathy Title:Vice President GENERAL ELECTRIC CAPITAL CORPORATION, by /s/ Mark F. Mylon ------------------------------ Name:Mark F. Mylon Title:Manger-Operations KZH APPALOOSA LLC, by /s/ Virginia Conway ------------------------------ Name:Virginia Conway Title:Authorized Agent KZH IV LLC, by /s/ Virginia Conway ------------------------------ Name:Virginia Conway Title:Authorized Agent KZH PAMCO LLC, by /s/ Virginia Conway ------------------------------ Name:Virginia Conway Title:Authorized Agent PAMCO CAYMAN LTD., by Highland Capital Management, L.P., as Collateral Manager, by /s/ Mark K. Okada ------------------------------ Name:Mark K. Okada Title:Executive Vice President Highland Capital Management L.P. SYNDICATED LOAN FUNDING TRUST, by Lehman Commercial Paper Inc., not in its individual capacity but solely as Asset Manager, by /s/ Michele Swanson ------------------------------ Name:Michele Swanson Title:Authorized Signatory TORONTO DOMINION [TEXAS], INC., by /s/ Lynn Chasin ------------------------------ Name:Lynn Chasin Title:Vice President VAN KAMPEN PRIME RATE INCOME TRUST, by /s/ Signature illegible ------------------------------ Name: Title: VAN KAMPEN SENIOR FLOATING RATE FUND, by /s/ Signature illegible ------------------------------ Name: Title: VAN KAMPEN SENIOR INCOME TRUST, by /s/ Signature illegible ------------------------------ Name: Title: MOUNTAIN CLO TRUST, by /s/ Signature illegible ------------------------------ Name: Title: FRANKLIN FLOATING RATE TRUST, by /s/ Signature illegible ------------------------------ Name: Title: MORGAN GUARANTY TRUST COMPANY OF NEW YORK, by /s/ Gery Sampere ------------------------------ Name:Gery Sampere Title:Vice President DEBT STRATEGIES FUND, INC. by /s/ signature illegible ------------------------------ Name: Title: MERRILL LYNCH ASSET MANAGEMENT, by /s/ signature illegible ------------------------------ Name: Title: MERRILL LYNCH PRIME RATE PORTFOLIO, INC., by /s/ signature illegible ------------------------------ Name: Title: MERRILL LYNCH SENIOR FLOATING RATE FUND, INC., by /s/ signature illegible ------------------------------ Name: Title: SENIOR HIGH INCOME PORTFOLIO, INC., by /s/ Signature illegible ----------------------------- Name: Title: EX-10.8.4 18 THIRD AMENDMENT TO CREDIT AGREEMENT EXHIBIT 10.8.4 EXECUTION COPY THIRD AMENDMENT, dated as of March 30, 1999 (this "Amendment"), to the Credit --------- Agreement, dated as of July 17, 1998 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among TELECORP PCS, INC., a ---------------- corporation organized under the laws of the State of Delaware (the "Borrower"), -------- the several banks and other financial institutions and entities from time to time parties thereto (the "Lenders"), and THE CHASE MANHATTAN BANK, as ------- administrative agent (the "Administrative Agent") for the Lenders. -------------------- WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make certain loans to the Borrower; and WHEREAS the Borrower has requested that certain provisions of the Credit Agreement be modified in the manner provided for in this Amendment, and the Lenders are willing to agree to such modifications as provided for in this Amendment. NOW, THEREFORE, the parties hereto hereby agree as follows: 1. Defined Terms. Capitalized terms used and not defined herein -------------- shall have the meanings given to them in the Credit Agreement, as amended hereby. 2. Amendments to the Credit Agreement. ----------------------------------- Section 1.01 of the Credit Agreement is hereby amended by deleting the definition of "Senior Debt" in its entirety and substituting in lieu therefor the following definition: "`Senior Debt' shall mean all Indebtedness of the Borrower and ----------- the Subsidiaries on a consolidated basis other than the Subordinated Debt, the Series A Bonds and the Series B Bonds." 3. No Other Amendments; Confirmation. Except as expressly amended, ---------------------------------- waived, modified and supplemented hereby, the provisions of the Credit Agreement are and shall remain in full force and effect. 2 4. Representations and Warranties. The Borrower hereby represents ------------------------------- and warrants to the Administrative Agent and the Lenders as of the date hereof: (a) No Default or Event of Default has occurred and is continuing. (b) The execution, delivery and performance by the Borrower of this Amendment have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, notice to or action by, any person (including any governmental agency) in order to be effective and enforceable. The Credit Agreement as amended by this Amendment constitutes the legal, valid and binding obligation of the Borrower, enforceable against each in accordance with its terms, subject only to the operation of the Bankruptcy Code and other similar statutes for the benefit of debtors generally and to the application of general equitable principles. (c) All representations and warranties of the Borrower contained in the Credit Agreement (other than representations or warranties expressly made only on and as of the Effective Date) are true and correct as of the date hereof. 5. Effectiveness. This Amendment shall become effective only upon -------------- the satisfaction in full of the following conditions precedent: (a) The Administrative Agent shall have received counterparts hereof, duly executed and delivered by the Borrower, and the Requisite Lenders; and (b) The Administrative Agent shall have received such opinions and certificates from the Borrower and its counsel as it may reasonably request in form reasonably satisfactory to its counsel. 6. Expenses. The Borrower agrees to reimburse the Administrative --------- Agent for its out-of-pocket expenses in connection with this Amendment, including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel for the Administrative Agent. 3 7. Governing Law; Counterparts. (a) This Amendment and the rights ---------------------------- and obligations of the parties hereto shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York. (b) This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. This Amendment may be delivered by facsimile transmission of the relevant signature pages hereof. 4 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written. TELECORP, PCS, INC. by /s/ Thomas H. Sullivan ------------------------------ Name: Thomas H. Sullivan Title: CFO THE CHASE MANHATTAN BANK, individually and as Administrative Agent, by /s/ William E. Rottino ------------------------------ Name: William E. Rottino Title: Vice President 5 THE BANK OF NEW YORK, by /s/ Gerry Granovsky ------------------------------ Name: Gerry Granovsky Title: Vice President BANK OF TOKYO MITSUBISHI TRUST COMPANY, by /s/ Signature illegible ------------------------------ Name: Title: BANKBOSTON, N.A., by /s/ Jonathan D. Sharkey ------------------------------ Name: Jonathan D. Sharkey Title: Vice President BANKERS TRUST COMPANY, by /s/ Gregory Shefrin ------------------------------ Name: Gregory Shefrin Title: Principal CANADIAN IMPERIAL BANK OF COMMERCE, by CIBC Oppenheimer Corp., as Agent, by /s/ Harold Birk ------------------------------ Name: Harold Birk Title: Executive Director CIT GROUP/EQUIPMENT FINANCING, by /s/ J.E. Palmer ------------------------------ Name: J.E. Palmer Title: Assistant Vice President CAPTIVA III FINANCE, LTD., as advised by Pacific Investment Management Company, by /s/ [SIGNATURE ILLEGIBLE] ____________________________ Name: Title: DELANO COMANY, by Pacific Investment Management Company as its Investment Advisor, by /s/ Raymond Kennedy ------------------------------- Name: Raymond Kennedy Title: Senior Vice President FLEET NATIONAL BANK, by /s/ William Weiss ------------------------------- Name: William Weiss Title: Assistant Vice President GENERAL ELECTRIC CAPITAL CORPORATION, by /s/ Mark F. Mylon ------------------------------- Name: Mark F. Mylon Title: Manager-Operations KZH APPALOOSA LLC, by /s/ Virginia Conway ------------------------------- Name: Virginia Conway Title: Authorized Agent KZH IV LLC, by /s/ Virginia Conway ------------------------------ Name: Virginia Conway Title: Authorized Agent KZH PAMCO LLC, by /s/ Virginia Conway ------------------------------ Name: Virginia Conway Title: Authorized Agent PAMCO CAYMAN LTD., by Highland Capital Management, L.P., as Collateral Manager, by /s/ Mark K. Okada ------------------------------ Name: Mark K. Okada Title: CFA, Executive Vice President SYNDICATED LOAN FUNDING TRUST, by Lehman Commercial Paper Inc., not in its individual capacity but solely as Asset Manager, by /s/ Michele Swanson ------------------------------ Name: Michele Swanson Title: Authorized Signatory TORONTO DOMINION [TEXAS], INC., by /s/ Lynn Chasin ------------------------------ Name: Lynn Chasin Title: Vice President VAN KAMPEN PRIME RATE INCOME TRUST, by /s/ Jeffrey W. Maillet ------------------------------ Name: Jeffrey W. Maillet Title: Senior Vice President & Director VAN KAMPEN SENIOR FLOATING RATE FUND, by /s/ Jeffrey W. Maillet ------------------------------ Name: Jeffrey W. Maillet Title: Senior Vice President & Director VAN KAMPEN SENIOR INCOME TRUST, by /s/ Jeffrey W. Maillet ------------------------------ Name: Jeffrey W. Maillet Title: Senior Vice President & Director MOUNTAIN CLO TRUST, by /s/ [SIGNATURE ILLEGIBLE] ______________________________ Name: Title: FRANKLIN FLOATING RATE TRUST, by /s/ [SIGNATURE ILLEGIBLE] ______________________________ Name: Title: MORGAN GUARANTY TRUST COMPANY OF NEW YORK, by /s/ [SIGNATURE ILLEGIBLE] ______________________________ Name: Title: DEBT STRATEGIES FUND, INC. by /s/ [SIGNATURE ILLEGIBLE] ______________________________ Name: Title: MERRILL LYNCH ASSET MANAGEMENT, by /s/ [SIGNATURE ILLEGIBLE] ______________________________ Name: Title: MERRILL LYNCH PRIME RATE PORTFOLIO, INC., by /s/ [SIGNATURE ILLEGIBLE] ______________________________ Name: Title: MERRILL LYNCH SENIOR FLOATING RATE FUND, INC., by /s/ [SIGNATURE ILLEGIBLE] ______________________________ Name: Title: SENIOR HIGH INCOME PORTFOLIO, INC., by /s/ [SIGNATURE ILLEGIBLE] ______________________________ Name: Title: LEHMAN COMMERCIAL PAPER INC. by /s/ Michele Swanson ------------------------------ Name: Michele Swanson Title: Authorized Signatory EX-10.8.5 19 FOURTH AMENDMENT TO CREDIT AGREEMENT EXHIBIT 10.8.5 CONFORMED COPY FOURTH AMENDMENT, dated as of March 31, 1999 (this "Amendment"), to the Credit Agreement, dated as of July 17, 1998 ---------- (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among TELECORP PCS, INC., a ---------------- corporation organized under the laws of the State of Delaware (the "Borrower"), the several banks and other financial -------- institutions and entities from time to time parties thereto (the "Lenders"), and THE CHASE MANHATTAN BANK, as administrative agent ------- (the "Administrative Agent") for the Lenders. -------------------- WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make certain loans to the Borrower; and WHEREAS the Borrower has requested that certain provisions of the Credit Agreement be modified in the manner provided for in this Amendment, and the Lenders are willing to agree to such modifications as provided for in this Amendment. NOW, THEREFORE, the parties hereto hereby agree as follows: 1. Defined Terms. Capitalized terms used and not defined herein ------------- shall have the meanings given to them in the Credit Agreement, as amended hereby. 2. Amendment to the Credit Agreement. Section 6.13(a) of the Credit --------------------------------- Agreement is hereby amended by deleting the amount "$25,000,000" immediately before the semicolon at the end thereof and substituting therefor "$30,000,000 at any one time outstanding". 3. No Other Amendments; Confirmation. Except as expressly amended, --------------------------------- waived, modified and supplemented hereby, the provisions of the Credit Agreement are and shall remain in full force and effect. 4. Representations and Warranties. The Borrower hereby represents ------------------------------ and warrants to the Administrative Agent and the Lenders as of the date hereof: (a) No Default or Event of Default has occurred and is continuing. (b) The execution, delivery and performance by the Borrower of this Amendment have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, notice to or action by, any person (including any governmental agency) in order to be effective and enforceable. The Credit Agreement as amended by this Amendment constitutes the legal, valid and binding obligation of the Borrower, enforceable against each in accordance with its terms, subject only to the operation of the Bankruptcy Code and other similar statutes for the benefit of debtors generally and to the application of general equitable principles. (c) All representations and warranties of the Borrower contained in the Credit Agreement (other than representations or warranties expressly made only on and as of the Effective Date) are true and correct as of the date hereof. 5. Effectiveness. This Amendment shall become effective only upon ------------- the satisfaction in full of the following conditions precedent: (a) The Administrative Agent shall have received counterparts hereof, duly executed and delivered by the Borrower and the Required Lenders. (b) The Administrative Agent shall have received such opinions and certificates from the Borrower and its counsel relating to this Amendment as it may reasonably request in form reasonably satisfactory to its counsel. (c) The Administrative Agent shall have received proof, reasonably satisfactory to it, that the Equity Commitments shall have been increased to $30,000,000. 6. Expenses. The Borrower agrees to reimburse the Administrative -------- Agent for its out-of-pocket expenses in connection with this Amendment, including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel for the Administrative Agent. 7. Governing Law; Counterparts. (a) This Amendment and the rights --------------------------- and obligations of the parties 3 hereto shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York. (b) This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. This Amendment may be delivered by facsimile transmission of the relevant signature pages hereof. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written. TELECORP PCS, INC. by /s/ Thomas H. Sullivan ------------------------------------ Name: Thomas H. Sullivan Title: Chief Financial Officer THE CHASE MANHATTAN BANK, by /s/ William E. Rottino ------------------------------------ Name: William E. Rottino Title: Vice President THE BANK OF NEW YORK, by /s/ Gerry Granovsky ------------------------------------ Name: Gerry Granovsky Title: Vice President BANK OF TOKYO MITSUBISHI TRUST COMPANY, by /s/ [SIGNATURE ILLEGIBLE] ____________________________________ Name: Title: BANKBOSTON, N.A., by /s/ Jonathan D. Sharkey ------------------------------------ Name: Jonathan D. Sharkey Title: Vice President BANKERS TRUST COMPANY, by /s/ Gregory Shefrin ------------------------------------ Name: Gregory Shefrin Title: Principal CANADIAN IMPERIAL BANK OF COMMERCE, by CIBC Oppenheimer Corp., as Agent, by /s/ Harold Birk ------------------------------------ Name: Harold Birk Title: Executive Director CIT GROUP/EQUIPMENT FINANCING, by /s/ J. E. Palmer ------------------------------------ Name: J. E. Palmer Title: Assistant Vice President CAPTIVA III FINANCE, LTD., as advised by Pacific Investment Management Company, by /s/ [SIGNATURE ILLEGIBLE] ____________________________________ Name: Title: DELANO COMPANY, by Pacific Investment Management Company as its Investment Advisor, by /s/ [SIGNATURE ILLEGIBLE] ____________________________________ Name: Title: FLEET NATIONAL BANK, by /s/ Garret Komjathy ------------------------------------ Name: Garret Komjathy Title: Vice President GENERAL ELECTRIC CAPITAL CORPORATION, by /s/ Mark F. Mylon ------------------------------------ Name: Mark F. Mylon Title: Manager-- Operations KZH APPALOOSA LLC, by /s/ Virginia Conway ------------------------------------ Name: Virginia Conway Title: Authorized Agent KZH IV LLC, by /s/ Virginia Conway ------------------------------------ Name: Virginia Conway Title: Authorized Agent KZH PAMCO LLC, by /s/ Virginia Conway ------------------------------------ Name: Virginia Conway Title: Authorized Agent PAMCO CAYMAN LTD., by Highland Capital Management, L.P., as Collateral Manager, by /s/ Mark K. Okada ------------------------------------ Name: Mark K. Okada, CFA Title: Executive Vice President SYNDICATED LOAN FUNDING TRUST, by Lehman Commercial Paper Inc., not in its individual capacity but solely as Asset Manager, by /s/ Michele Swanson ------------------------------------ Name: Michele Swanson Title: Authorized Signatory LEHMAN COMMERCIAL PAPER INC. by /s/ Michele Swanson ------------------------------------ Name: Michele Swanson Title: Authorized Signatory TORONTO DOMINION [TEXAS], INC., by /s/ Lynn Chasin ------------------------------------ Name: Lynn Chasin Title: Vice President VAN KAMPEN PRIME RATE INCOME TRUST, by /s/ Jeffrey W. Maillet ------------------------------------ Name: Jeffrey W. Maillet Title: Senior Vice President and Director VAN KAMPEN SENIOR FLOATING RATE FUND, by /s/ Jeffrey W. Maillet ------------------------------------ Name: Jeffrey W. Maillet Title: Senior Vice President and Director VAN KAMPEN SENIOR INCOME TRUST, by /s/ Jeffrey W. Maillet ------------------------------------ Name: Jeffrey W. Maillet Title: Senior Vice President and Director MOUNTAIN CLO TRUST, by /s/ [SIGNATURE ILLEGIBLE] ------------------------------------ Name: Title: FRANKLIN FLOATING RATE TRUST, by /s/ Chauncey Lufkin ------------------------------------ Name: Chauncey Lufkin Title: Senior Vice President MORGAN GUARANTY TRUST COMPANY OF NEW YORK, by /s/ Gery Sampere ------------------------------------ Name: Gery Sampere Title: Vice President DEBT STRATEGIES FUND, INC. by /s/ [SIGNATURE ILLEGIBLE] ------------------------------------ Name: Title: MERRILL LYNCH ASSET MANAGEMENT, by /s/ [SIGNATURE ILLEGIBLE] ------------------------------------ Name: Title: MERRILL LYNCH PRIME RATE PORTFOLIO, INC., by /s/ [SIGNATURE ILLEGIBLE] ------------------------------------ Name: Title: MERRILL LYNCH SENIOR FLOATING RATE FUND, INC., by /s/ [SIGNATURE ILLEGIBLE] ------------------------------------ Name: Title: SENIOR HIGH INCOME PORTFOLIO, INC., by /s/ [SIGNATURE ILLEGIBLE] ------------------------------------ Name: Title: EX-10.8.6 20 FIFTH AMENDMENT TO CREDIT AGREEMENT EXHIBIT 10.8.6 CONFORMED COPY FIFTH AMENDMENT AND ACCEPTANCE, dated as of April 7, 1999 (this "Amendment"), to the Credit Agreement, dated as of July 17, 1998 (as amended, --------- supplemented or otherwise modified from time to time, the "Credit Agreement"), ---------------- among TELECORP PCS, INC., a corporation organized under the laws of the State of Delaware (the "Borrower"), the several banks and other financial institutions -------- and entities from time to time parties thereto (the "Lenders"), and THE CHASE ------- MANHATTAN BANK, as administrative agent (the "Administrative Agent") for the -------------------- Lenders. WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make certain loans to the Borrower; and WHEREAS the Borrower has requested that Credit Agreement be amended in the manner provided for in this Amendment and that the Lenders accept the terms of certain Subordinated Debt to be issued by the Borrower, and the Lenders party hereto are willing to agree to such modifications and give such acceptance as provided for in this Amendment. NOW, THEREFORE, the parties hereto hereby agree as follows: 1. Defined Terms. Capitalized terms used and not defined herein -------------- shall have the meanings given to them in the Credit Agreement, as amended hereby. 2. Amendment to Section 1.01 of the Credit Agreement. Section 1.01 of -------------------------------------------------- the Credit Agreement is hereby amended by inserting immediately before the period at the end of the definition of "Indebtedness" the proviso"; provided that solely for the purposes of determining compliance with the - ------------- covenants set forth in paragraphs (b), (f) and (g) of Section 6.12, Indebtedness of the Borrower shall not include the Series A Bonds". 3. Amendment to Section 6.01(a) of the Credit Agreement. Section ----------------------------------------------------- 6.01(a) of the Credit Agreement is hereby amended by: (a) deleting the phrase "in an aggregate principal amount not to exceed $350,000,000 minus the principal amount of" in clause (ii) thereof and substituting therefor the phrase "with gross proceeds therefrom not to exceed $350,000,000 minus the gross proceeds from"; and (b) deleting the phrase "in an aggregate principal amount" in each place it appears in clause (v) thereof and substituting therefor the phrase "with gross proceeds therefrom". 4. Acceptance. For the purposes of determining whether debt issued ----------- on such terms constitutes Subordinated Debt, the Lenders party hereto hereby accept the terms of the debt set forth in the description of notes attached hereto as Exhibit A (or any terms substantially identical thereto and no more adverse to the interests of the Lenders than are the terms set forth in such description of notes). 5. No Other Amendments; Confirmation. Except as expressly amended, ---------------------------------- waived, modified and supplemented hereby, the provisions of the Credit Agreement are and shall remain in full force and effect. 6. Representations and Warranties. The Borrower hereby represents ------------------------------- and warrants to the Administrative Agent and the Lenders as of the date hereof: (a) No Default or Event of Default has occurred and is continuing. (b) The execution, delivery and performance by the Borrower of this Amendment have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, notice to or action by, any person (including any governmental agency) in order to be effective and enforceable. The Credit Agreement as amended by this Amendment constitutes the legal, valid and binding obligation of the Borrower, enforceable against each in accordance with its terms, subject only to the operation of the Bankruptcy Code and other similar statutes for the benefit of debtors generally and to the application of general equitable principles. (c) All representations and warranties of the Borrower contained in the Credit Agreement (other than representations or warranties expressly made only on and as of the Effective Date) are true and correct as of the date hereof. 7. Effectiveness. This Amendment shall become effective only upon -------------- the satisfaction in full of the following conditions precedent: 3 (a) The Administrative Agent shall have received counterparts hereof, duly executed and delivered by the Borrower and the Required Lenders. (b) The Administrative Agent shall have received such opinions and certificates from the Borrower and its counsel relating to this Amendment as it may reasonably request in form reasonably satisfactory to its counsel. (c) The Administrative Agent shall have received proof, reasonably satisfactory to it, that the Equity Commitments shall have been increased to $30,000,000. 8. Expenses. The Borrower agrees to reimburse the Administrative --------- Agent for its out-of-pocket expenses in connection with this Amendment, including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel for the Administrative Agent. 9. Governing Law; Counterparts. (a) This Amendment and the rights ---------------------------- and obligations of the parties hereto shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York. (b) This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. This Amendment may be delivered by facsimile transmission of the relevant signature pages hereof. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written. TELECORP, PCS, INC. by /s/ Thomas H. Sullivan ---------------------------- Name: Thomas H. Sullivan Title: CFO 4 THE CHASE MANHATTAN BANK, by /s/ William E. Rottino ---------------------------------- Name: William E. Rottino Title: Vice President THE BANK OF NEW YORK, by /s/ Gerry Granovsky ---------------------------------- Name: Gerry Granovsky Title: Vice President BANK OF TOKYO MITSUBISHI TRUST COMPANY, by /s/ [SIGNATURE ILLEGIBLE] ----------------------------------- Name: Title: BANKBOSTON, N.A., by /s/ Jonathan D. Sharkey ----------------------------------- Name: Jonathan D. Sharkey Title: Vice President BANKERS TRUST COMPANY, by /s/ Gregory Shefrin ----------------------------------- Name: Gregory Shefrin Title: Principal CANADIAN IMPERIAL BANK OF COMMERCE, by CIBC Oppenheimer Corp., as Agent by /s/ [SIGNATURE ILLEGIBLE] ----------------------------------- Name: Title: 5 CIT GROUP/EQUIPMENT FINANCING, by /s/ J.E. Palmer ---------------------------------- Name: J.E. Palmer Title: Assistant Vice President CAPTIVA III FINANCE, LTD., as advised by Pacific Investment Management Company, by /s/ John H. Cullinane ---------------------------------- Name: John H. Cullinane Title: Director DELANO COMPANY, by Pacific Investment Management Company as its Investment Advisor, by /s/ Raymond G. Kennedy ---------------------------------- Name: Raymond G. Kennedy Title: Senior Vice President FLEET NATIONAL BANK, by /s/ William Weiss ---------------------------------- Name: William Weiss Title: Assistant Vice President GENERAL ELECTRIC CAPITAL CORPORATION, by /s/ Mark F. Mylon ---------------------------------- Name: Mark F. Mylon Title: Manager-Operations KZH APPALOOSA LLC, by /s/ Virginia Conway ---------------------------------- 6 Name: Virginia Conway Title: Authorized Agent KZH IV LLC, by /s/ Virginia Conway ---------------------------------- Name: Virginia Conway Title: Authorized Agent KZH PAMCO LLC, by /s/ Virginia Conway ---------------------------------- Name: Virginia Conway Title: Authorized Agent PAMCO CAYMAN LTD., by Highland Capital Management, L.P., as Collateral Manager, by /s/ James Dondero ---------------------------------- Name: James Dondero, CFA, CPA Title: President SYNDICATED LOAN FUNDING TRUST, by Lehman Commercial Paper Inc., not in its individual capacity but solely as Asset Manager, by /s/ Michele Swanson ---------------------------------- Name: Michele Swanson Title: Authorized Signatory LEHMAN COMMERCIAL PAPER INC. by /s/ Michele Swanson ---------------------------------- Name: Michele Swanson Title: Authorized Signatory TORONTO DOMINION [TEXAS], INC., 7 by /s/ Anne C. Favoriti ---------------------------------- Name: Anne C. Favoriti Title: Vice President VAN KAMPEN PRIME RATE INCOME TRUST, by /s/ Jeffrey W. Maillet ---------------------------------- Name: Jeffrey W. Maillet Title: Senior Vice President & Director VAN KAMPEN SENIOR FLOATING RATE FUND, by /s/ Jeffrey W. Maillet ---------------------------------- Name: Jeffrey W. Maillet Title: Senior Vice President & Director VAN KAMPEN SENIOR INCOME TRUST, by /s/ Jeffrey W. Maillet ---------------------------------- Name: Jeffrey W. Maillet Title: Senior Vice President & Director MOUNTAIN CLO TRUST, by /s/ signature illegible ---------------------------------- Name: Title: FRANKLIN FLOATING RATE TRUST, by /s/ signature illegible ---------------------------------- Name: Title: 8 MORGAN GUARANTY TRUST COMPANY OF NEW YORK, by /s/ Gery Sampere ---------------------------------- Name: Gery Sampere Title: Vice President DEBT STRATEGIES FUND, INC. by __________________________________ Name: Title: MERRILL LYNCH ASSET MANAGEMENT, by __________________________________ Name: Title: MERRILL LYNCH PRIME RATE PORTFOLIO, INC., by __________________________________ Name: Title: MERRILL LYNCH SENIOR FLOATING RATE FUND, INC., by __________________________________ Name: Title: SENIOR HIGH INCOME PORTFOLIO, INC., by __________________________________ Name: Title: EX-10.8.7 21 SIXTH AMENDMENT TO CREDIT AGREEMENT EXHIBIT 10.8.7 CONFORMED COPY SIXTH AMENDMENT, dated as of April 7, 1999 (this "Amendment"), to the --------- Credit Agreement, dated as of July 17, 1998 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among TELECORP ---------------- PCS, INC., a corporation organized under the laws of the State of Delaware (the "Borrower"), the several banks and other financial institutions and entities -------- from time to time parties thereto (the "Lenders"), and THE CHASE MANHATTAN BANK, ------- as administrative agent (the "Administrative Agent") for the Lenders. -------------------- WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make certain loans to the Borrower; and WHEREAS the Borrower has requested that certain provisions of the Credit Agreement be modified in the manner provided for in this Amendment, and the Lenders are willing to agree to such modifications as provided for in this Amendment. NOW, THEREFORE, the parties hereto hereby agree as follows: 1. Defined Terms. Capitalized terms used and not defined herein -------------- shall have the meanings given to them in the Credit Agreement, as amended hereby. 2. Amendment to the Credit Agreement. Section 6.13(a) of the Credit ---------------------------------- Agreement is hereby amended by deleting the amount "$30,000,000" immediately before the semicolon at the end thereof and substituting therefor "$33,000,000 at any one time outstanding". 3. No Other Amendments; Confirmation. Except as expressly amended, ---------------------------------- waived, modified and supplemented hereby, the provisions of the Credit Agreement are and shall remain in full force and effect. 4. Representations and Warranties. The Borrower hereby represents ------------------------------- and warrants to the Administrative Agent and the Lenders as of the date hereof: (a) No Default or Event of Default has occurred and is continuing. (b) The execution, delivery and performance by the Borrower of this Amendment have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, notice to or action by, any person (including any governmental agency) in order to be effective and enforceable. The Credit Agreement as amended by this Amendment constitutes the legal, valid and binding obligation of the Borrower, enforceable against each in accordance with its terms, subject only to the operation of the Bankruptcy Code and other similar statutes for the benefit of debtors generally and to the application of general equitable principles. (c) All representations and warranties of the Borrower contained in the Credit Agreement (other than representations or warranties expressly made only on and as of the Effective Date) are true and correct as of the date hereof. 5. Effectiveness. This Amendment shall become effective only upon -------------- the satisfaction in full of the following conditions precedent: (a) The Administrative Agent shall have received counterparts hereof, duly executed and delivered by the Borrower and the Required Lenders. (b) The Administrative Agent shall have received such opinions and certificates from the Borrower and its counsel relating to this Amendment as it may reasonably request in form reasonably satisfactory to its counsel. (c) The Administrative Agent shall have received proof, reasonably satisfactory to it, that the Equity Commitments shall have been increased to $30,000,000. 6. Expenses. The Borrower agrees to reimburse the Administrative --------- Agent for its out-of-pocket expenses in connection with this Amendment, including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel for the Administrative Agent. 7. Governing Law; Counterparts. (a) This Amendment and the rights ---------------------------- and obligations of the parties 3 hereto shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York. (b) This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. This Amendment may be delivered by facsimile transmission of the relevant signature pages hereof. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written. TELECORP, PCS, INC. by /s/ Thomas H. Sullivan ------------------------------- Name: Thomas H. Sullivan Title: CFO THE CHASE MANHATTAN BANK, by /s/ William E. Rottino ------------------------------- Name: William E. Rottino Title: Vice President THE BANK OF NEW YORK, by /s/ Gerry Granovksy ------------------------------- Name: Gerry Granovsky Title: Vice President BANK OF TOKYO MITSUBISHI TRUST COMPANY, by /s/ Michael Deadder ------------------------------- Name: Michael Deadder Title: Vice President 4 BANKBOSTON, N.A., by /s/ Jonathan D. Sharkey --------------------------------- Name: Jonathan D. Sharkey Title: Vice President BANKERS TRUST COMPANY, by /s/ Gregory Shefrin --------------------------------- Name: Gregory Shefrin Title: Principal CANADIAN IMPERIAL BANK OF COMMERCE, by CIBC Oppenheimer Corp., as Agent, by /s/ Christine Harrigan --------------------------------- Name: Christine Harrigan Title: Executive Director THE CIT GROUP/EQUIPMENT FINANCING, INC. by /s/ J.E. Palmer --------------------------------- Name: J.E. Palmer Title: Assistant Vice President CAPTIVA III FINANCE, LTD., as advised by Pacific Investment Management Company, by /s/ [SIGNATURE ILLEGIBLE] --------------------------------- Name: Title: 5 DELANO COMPANY, by Pacific Investment Management Company as its Investment Advisor, by /s/ [ILLEGIBLE SIGNATURE] --------------------------------- Name: Title: FLEET NATIONAL BANK, by /s/ William Weiss --------------------------------- Name: William Weiss Title: Assistant Vice President GENERAL ELECTRIC CAPITAL CORPORATION, by /s/ Mark F. Mylon --------------------------------- Name: Mark F. Mylon Title: Manager-Operations KZH APPALOOSA LLC, by /s/ Virginia Conway --------------------------------- Name: Virginia Conway Title: Authorized Agent KZH IV LLC, by /s/ Virginia Conway --------------------------------- Name: Virginia Conway Title: Authorized Agent 6 KZH PAMCO LLC, by /s/ Virginia Conway ------------------------------- Name: Virginia Conway Title: Authorized Agent PAMCO CAYMAN LTD., by Highland Capital Management, L.P., as Collateral Manager, by /s/ Mark K. Okada --------------------------------- Name: Mark K. Okada, CFA Title: Executive Vice President SYNDICATED LOAN FUNDING TRUST, by Lehman Commercial Paper Inc., not in its individual capacity but solely as Asset Manager, by /s/ Michele Swanson --------------------------------- Name: Michele Swanson Title: Authorized Signatory LEHMAN COMMERCIAL PAPER INC. by /s/ Michele Swanson --------------------------------- Name: Michele Swanson Title: Authorized Signatory TORONTO DOMINION [TEXAS], INC., by /s/ Anne C. Favoriti --------------------------------- Name: Anne C. Favoriti Title: Vice President 7 VAN KAMPEN PRIME RATE INCOME TRUST, by /s/ Jeffrey W. Maillet --------------------------------- Name: Jeffrey W. Maillet Title: Senior Vice President & Director VAN KAMPEN SENIOR FLOATING RATE FUND, by /s/ Jeffrey W. Maillet --------------------------------- Name: Jeffrey W. Maillet Title: Senior Vice President & Director VAN KAMPEN SENIOR INCOME TRUST, by /s/ Jeffrey W. Maillet --------------------------------- Name: Jeffrey W. Maillet Title: Senior Vice President & Director MOUNTAIN CLO TRUST, by /s/ [SIGNATURE ILLEGIBLE] --------------------------------- Name: Title: FRANKLIN FLOATING RATE TRUST, by /s/ [SIGNATURE ILLEGIBLE] --------------------------------- 8 Name: Title: MORGAN GUARANTY TRUST COMPANY OF NEW YORK, by /s/ Gery Sampere --------------------------------- Name: Gery Sampere Title: Vice President DEBT STRATEGIES FUND, INC. by /s/ [SIGNATURE ILLEGIBLE] --------------------------------- Name: Title: MERRILL LYNCH ASSET MANAGEMENT, by /s/ [SIGNATURE ILLEGIBLE] --------------------------------- Name: Title: MERRILL LYNCH PRIME RATE PORTFOLIO, INC., by /s/ [SIGNATURE ILLEGIBLE] --------------------------------- Name: Title: MERRILL LYNCH SENIOR FLOATING RATE FUND, INC., by /s/ [SIGNATURE ILLEGIBLE] --------------------------------- Name: Title: 9 SENIOR HIGH INCOME PORTFOLIO, INC., by /s/ [SIGNATURE ILLEGIBLE] ---------------------------------- Name: Title: EX-10.8.8 22 SEVENTH AMENDMENT TO CREDIT AGREEMENT EXHIBIT 10.8.8 EXECUTION COPY SEVENTH AMENDMENT, dated as of May 21, 1999 (this "Amendment"), to the Credit --------- Agreement, dated as of July 17, 1998 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among TELECORP PCS, INC., a ---------------- corporation organized under the laws of the State of Delaware (the "Borrower"), -------- the several banks and other financial institutions and entities from time to time parties thereto (the "Lenders"), and THE CHASE MANHATTAN BANK, as ------- administrative agent (the "Administrative Agent") for the Lenders. -------------------- WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make certain loans to the Borrower; and WHEREAS the Borrower has requested that certain provisions of the Credit Agreement be modified in the manner provided for in this Amendment, and the Lenders are willing to agree to such modifications as provided for in this Amendment. NOW, THEREFORE, the parties hereto hereby agree as follows: 1. Defined Terms. Capitalized terms used and not defined herein -------------- shall have the meanings given to them in the Credit Agreement, as amended hereby. 2. Amendments to the Credit Agreement. ----------------------------------- (a) Section 1.01 of the Credit Agreement is hereby amended by: (i) deleting the definition of "Committed Equity" and substituting the following therefor: "`Committed Equity' means irrevocable unconditional binding ---------------- commitments to purchase stock of the Borrower for cash pursuant to (i) the Securities Purchase Agreement (in an amount not in excess of $128,000,000), (ii) the San Juan 2 Purchase Agreement (in an amount not in excess of $39,996,000), (iii) the Viper Purchase Agreement (in an amount not in excess of $33,000,000; provided, in each case, that (x) such irrevocable binding -------- commitments are on terms and from investors acceptable to the Required Lenders (it being agreed that the investors under the Securities Purchase Agreement are acceptable), (y) such irrevocable unconditional binding commitments are by their terms expressly assignable to the Collateral Agent for the benefit of the Lenders and (z) the applicable Loan Party has assigned to the Collateral Agent for the benefit of the Lenders as collateral the right to enforce such commitments and the Collateral Agent has a perfected first priority security interest in such commitments." (ii) deleting "the Donnelly Marketing Service Population Guide published in 1995." at the end of the definition of "Pops" and substituting therefor "the most recently published edition of the Kagan Guide."; and (iii) deleting the definition of "San Juan Acquisition" and substituting the following therefor: "`San Juan Acquisition' means the merger of Puerto Rico -------------------- Acquisition Corp. into the Borrower and the purchase by the Borrower from AW of 20 MHz of A Block PCS licenses covering the markets and pops set forth in Part D of Schedule I hereto together with related assets for consideration consisting of (x) approximately $95,000,000 in cash, (y) the assumption of the San Juan Assumed Liabilities and (z) reimbursement to AW of $3,200,000 of microwave clearing costs incurred by AW with respect to clearing other users from frequencies relevant to the licenses the Borrower is acquiring from AW; provided -------- that, (i) such acquisition is consummated on terms and conditions satisfactory to the Administrative Agent, (ii) in connection therewith, certain of the Equity Participants or other investors reasonably acceptable to the Administrative Agent (the "San Juan Investors"), purchase or commit to purchase, on the terms set forth in the San Juan Purchase 3 Agreement, from the Borrower Common Stock and Preferred Stock for cash consideration of at least $39,700,000 and (iii) in connection therewith, AW purchases from the Borrower Preferred Stock for cash consideration of at least $40,000,000." (iv) deleting the definition of "PCS Documents" and substituting the following therefor: "`PCS Documents' means the Securities Purchase Agreement and each ------------- of the documents that is an exhibit thereto (including the Network License Agreement), the San Juan Purchase Agreement and the Viper Purchase Agreement." (v) inserting in the appropriate alphabetical order the following definitions: "`San Juan Assumed Liabilities' means rental and incidental ---------------------------- liabilities under real estate leases of AW acquired in connection with the San Juan Acquisition." "`San Juan Purchase Agreement' means the Puerto Rico Stock --------------------------- Purchase Agreement by and among the San Juan Investors, the Borrower, and the other parties thereto dated as of March 30, 1999." "`Secured Base Station' means any Base Station located in Puerto -------------------- Rico in which the Collateral Agent, for the benefit of the Secured Parties, has a first priority perfected security interest pursuant to the Security Documents." "`Viper Purchase Agreement' means the Stock Purchase Agreement by ------------------------ and among the Investors therein, the Borrower, and the other parties thereto dated as of March 22, 1999." (b) Section 3.12(a) of the Credit Agreement is hereby amended by deleting "directly owned by the Borrower" and substituting therefor "directly owned by the Borrower or any Wholly-Owned Restricted Subsidiary". (c) Section 3.12(e) of the Credit Agreement is hereby amended by inserting immediately before the period at 4 the end thereof "or, in the case of Secured Base Stations, any Restricted Subsidiary". (d) Section 3.13 is hereby amended by deleting clause (b) thereof in its entirety and substituting therefor "in the case of the Real Property Subsidiary, any liabilities expressly permitted pursuant to Section 6.13(b)". (e) Section 5.13(b) of the Credit Agreement is hereby amended by (i) inserting after the words "any Base Station" the parenthetical "(other than a Secured Base Station)" and (ii) deleting the words "Excluded Real Property Equipment" and substituting therefor "Excluded Real Property-Related Equipment.". (f) Section 6.05(n) is hereby amended by inserting immediately before the period at the end thereof "at any time outstanding". (g) Section 6.12(a) is hereby amended by deleting "Unfunded Commitments (as defined in the Securities Purchase Agreement) have" and substituting "Committed Equity has" therefor. (h) Article VII of the Credit Agreement is hereby amended by: (i) deleting each reference to "the Borrower or any Subsidiary" in paragraphs (h), (i) and (k) thereof and substituting therefor "any Loan Party"; and (ii) inserting the following after paragraph (y) thereof: "(z) the failure of any party to the San Juan Purchase Agreement or the Viper Purchase Agreement to comply with any funding or contribution obligation under such Agreement and such failure shall continue unremedied for a period of 30 days;" (i) Section 9.01 of the Credit Agreement is hereby deleting clause (a) thereof in its entirety and substituting the following therefor: 5 "(a) if the Borrower, to it at 1110 North Globe Rd., Suite 800, Arlington, VA 22201, Attention of Thomas Sullivan (Telecopy No. (703) 236- 1101); with a copy to McDermott, Will & Emery, 28 State Street, Boston, MA 02109, Attention of John B. French (Telecopy No. (617) 535-3800);". 3. Waiver and Consent. (a) The Lenders hereby waive (i) any ------------------- misrepresentation prior to the effective date of this Amendment by the Borrower with respect to the representation and warranty made in Section 3.12(a) of the Credit Agreement but only to extent there would not have been any misrepresentation of Section 3.12(a) as amended hereby and (ii) any breach of Section 5.01(e) resulting from the Borrower failing to deliver the 1999 consolidated budget prior to May 14, 1999. (b) The Lenders hereby consent and agree that One Liberty Fund IV, L.P. is an acceptable investor for purposes of the proviso in the definition of "Committed Equity". 4. No Other Amendments; Confirmation. Except as expressly amended, ---------------------------------- waived, modified and supplemented hereby, the provisions of the Credit Agreement are and shall remain in full force and effect. 5. Representations and Warranties. The Borrower hereby represents ------------------------------- and warrants to the Administrative Agent and the Lenders as of the date hereof: (a) No Default or Event of Default has occurred and is continuing. (b) The execution, delivery and performance by the Borrower of this Amendment have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, notice to or action by, any person (including any governmental agency) in order to be effective and enforceable. The Credit Agreement as amended by this Amendment constitutes the legal, valid and binding obligation of the Borrower, enforceable against each in accordance with its terms, subject only to the operation of the Bankruptcy Code and other similar statutes for the benefit of debtors generally and to the application of general equitable principles. 6 (c) All representations and warranties of the Borrower contained in the Credit Agreement (other than representations or warranties expressly made only on and as of the Effective Date) are true and correct as of the date hereof. 6. Effectiveness. This Amendment shall become effective only upon -------------- the satisfaction in full of the following conditions precedent: (a) The Administrative Agent shall have received counterparts hereof, duly executed and delivered by the Borrower, and the Requisite Lenders; and (b) The Administrative Agent shall have received such opinions and certificates from the Borrower and its counsel as it may reasonably request in form reasonably satisfactory to its counsel. 7. Expenses. The Borrower agrees to reimburse the Administrative --------- Agent for its out-of-pocket expenses in connection with this Amendment, including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel for the Administrative Agent. 8. Governing Law; Counterparts. (a) This Amendment and the rights ---------------------------- and obligations of the parties hereto shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York. (b) This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. This Amendment may be delivered by facsimile transmission of the relevant signature pages hereof. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written. TELECORP, PCS, INC. by________________________________ Name: Title: THE CHASE MANHATTAN BANK, by_______________________________ Name: Title: TORONTO DOMINION [TEXAS], INC., by_______________________________ Name: Title: BANKERS TRUST COMPANY, by_______________________________ Name: Title: THE BANK OF NEW YORK, by_______________________________ Name: Title: CANADIAN IMPERIAL BANK OF COMMERCE, by CIBC Oppenheimer Corp., as Agent, by_________________________________ Name: Title: MORGAN GUARANTY TRUST COMPANY OF NEW YORK, by_________________________________ Name: Title: GENERAL ELECTRIC CAPITAL CORPORATION, by_________________________________ Name: Title: LEHMAN COMMERCIAL PAPER INC., by_________________________________ Name: Title: SYNDICATED LOAN FUNDING TRUST, by Lehman Commercial Paper Inc., not in its individual capacity but soley as Asset Manager, by_________________________________ Name: Title: BANK OF TOKYO-MITSUBISHI TRUST COMPANY, by_________________________________ Name: Title: BANKBOSTON, N.A., by_________________________________ Name: Title: FLEET NATIONAL BANK, by_________________________________ Name: Title: FRANKLIN FLOATING RATE TRUST, by_________________________________ Name: Title: MERRILL LYNCH ASSET MANAGEMENT, by_________________________________ Name: Title: SENIOR HIGH INCOME PORTFOLIO, INC., by_________________________________ Name: Title: DEBT STRATEGIES FUND, INC., by_________________________________ Name: Title: MERRILL LYNCH PRIME RATE PORTFOLIO, INC., by_________________________________ Name: Title: MERRILL LYNCH SENIOR FLOATING RATE FUND, INC., by_________________________________ Name: Title: THE CIT GROUP/EQUIPMENT FINANCING, INC., by_________________________________ Name: Title: CAPTIVA III FINANCE, LTD., as advised by Pacific Investment Management Company, by_________________________________ Name: Title: DELANO COMPANY, by Pacific Investment Management Company as its Investment Advisor, by_________________________________ Name: Title: KZH APPALOOSA LLC, by_________________________________ Name: Title: KZH IV LLC, by_________________________________ Name: Title: KZH PAMCO LLC, by_________________________________ Name: Title: PAMCO CAYMAN LTD., by Highland Capital Management, L.P., as Collateral Manager, by_________________________________ Name: Title: VAN KAMPEN PRIME RATE INCOME TRUST, by_________________________________ Name: Title: VAN KAMPEN SENIOR FLOATING RATE FUND, by_________________________________ Name: Title: VAN KAMPEN SENIOR INCOME TRUST, by_________________________________ Name: Title: MOUNTAIN CLO TRUST, by_________________________________ Name: Title: EX-10.9 23 STOCK PURCHASE AGREEMENT BY & AMONG TELECORP PCS, EXHIBIT 10.9.1 - -------------------------------------------------------------------------------- STOCK PURCHASE AGREEMENT by and among TELECORP PCS, INC., AT&T WIRELESS PCS, INC. and CASH EQUITY INVESTORS named herein Dated as of March 22, 1999 - -------------------------------------------------------------------------------- STOCK PURCHASE AGREEMENT ------------------------ STOCK PURCHASE AGREEMENT, dated as of March 22, 1999, by and among TeleCorp PCS. Inc., a Delaware corporation (the "Company") AT&T Wireless PCS, Inc., a ------- Delaware corporation ("AT&T PCS") and the investors referred to on Schedule I (individually, a "Cash Equity Investor" and, collectively, the "Cash Equity -------------------- ----------- Investors" and together with AT&T PCS, the "Investors"). - --------- W I T N E S S E T H: ------------------- WHEREAS, the Cash Equity Investors are stockholders of the Company; WHEREAS the Company is seeking to raise up to $25,000,000 from investors to fund its participation in the Reauction conducted by the Federal Communications Commission ("FCC") for the sale of broadband Personal Communications Services ("PCS") licenses (the "PCS Licenses") in the "C" Block (the "PCS "C" Block Auction"), as set forth in Parts 1 and 24 of Title 47 of the Code of Federal Regulations (the "CFR"), scheduled to commence on March 23, 1999; WHEREAS, the Cash Equity Investors are committing to invest up to $25,000,000 in the Company at a Closing (hereinafter defined) in consideration of the issuance by the Company of certain additional securities of the Company, and the Company wishes to issue and sell the securities to each of the Cash Equity Investors all on the terms and subject to the conditions herein set forth; WHEREAS, AT&T PCS desires to purchase certain securities of the Company in an amount set forth herein, in exchange for the cancellation of certain Series D Promissory Notes of the Company held by AT&T PCS, and on the same terms and conditions as the Cash Equity Investors; WHEREAS, the Investors' subscription for and purchase of such additional securities hereunder shall satisfy in full each Investor's preemptive rights to purchase securities of the Company under the Stockholders' Agreement, as hereinafter defined; WHEREAS, the additional securities to be acquired by the Investors hereunder will be subject to the provisions of the Stockholders' Agreement as after acquired Equity Securities, as such term is defined in the Stockholders' Agreement; NOW, THEREFORE, in consideration of the promises and the mutual representations, warranties, covenants, conditions and agreements hereinafter set forth, the parties agree as follows: ARTICLE I DEFINITIONS For purposes of this Agreement: "Affiliate" means, with respect to any Person, any other Person that --------- directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with that Person. For purposes of this definition, "control" (including the terms "controlling" and "controlled") means ------- ----------- ---------- the power to direct or cause the direction of the management and policies of a Person, directly or indirectly, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise. "Aggregate Commitment" means, with respect to each Cash Equity -------------------- Investor and AT&T PCS, the amount set forth opposite its name on Schedule I under the heading "Aggregate Commitment." "Agreement" means this Stock Purchase Agreement, as the same may be --------- amended, modified or supplemented in accordance with the terms hereof. "AT&T PCS" has the meaning set forth in the preamble. -------- "AT&T Securities" means shares of the Company's Series D Preferred --------------- Stock and Series F Preferred Stock to be purchased by AT&T PCS under this Agreement. "Bidding Subsidiary" has the meaning set forth in Section 2.5. ------------------ "Business Day" means any day other than a Saturday, Sunday or a legal ------------ holiday in New York, New York or any other day on which commercial banks in New York, New York are authorized by law or governmental decree to close. "Capital Stock" means any and all shares, interests, participations or ------------- other equivalents (however designated) of capital stock of a corporation, and any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase or subscribe for any of the foregoing or any warrants, rights or options to purchase or subscribe for any such warrants, rights or options. "Cash Equity Investor" has the meaning set forth in the preamble. -------------------- "Cash Equity Investors' Securities" means shares of the Company's --------------------------------- Voting Common Stock and Series C Preferred Stock to be purchased by each of the Cash Equity Investors under this Agreement. -2- "Claim" has the meaning set forth in Section 8.5(a). ----- "Class C Common Stock" means the Class C Common Stock, par value $.01 -------------------- per share, of the Company. "Class D Common Stock" means the Class D Common Stock, par value $.01 -------------------- per share, of the Company. "Closing" has the meaning set forth in Section 3.1. ------- "Closing Date" has the meaning set forth in Section 3.1. ------------ "Common Stock" means, collectively, Voting Preference Stock, the ------------ Tracked Common Stock, the Voting Common Stock and the Non-Voting Common Stock. "Company" has the meaning set forth in the preamble. ------- "Confidential Information" means any and all information regarding the ------------------------ business, finances, operations, products, services and customers of the Person specified and its Affiliates, in written or oral form or in any other medium. "Consents" means all consents and approvals of Governmental -------- Authorities or other third parties necessary to authorize, approve or permit the parties hereto to consummate the Transactions and for the Company to operate its business after the Closing Date as currently contemplated. "Credit Agreement" means the agreement among the Company, the lenders ---------------- and the agents referred to therein, as of July 17, 1998, providing a credit facility having aggregate commitments of $525 million, as amended to date and as the same may be further amended, modified or supplemented in accordance with the terms thereof. "Credit Documents" means the Credit Agreement and all agreements, ---------------- instruments and documents executed and delivered pursuant thereto, as the same may from time to time be amended, modified or supplemented in accordance with the terms thereof. "Expended Amount" means the Company's net investment in the Bidding --------------- Subsidiary, i.e., the excess of (i) the aggregate amount invested by the Company and its Subsidiaries in the Bidding Subsidiary over (ii) the aggregate amount of such investment returned to TeleCorp Holding Corp, Inc. by the Bidding Subsidiary before the Closing Date. "FCC" means the Federal Communications Commission or similar --- regulatory authority established in replacement thereof. -3- "FCC Law" means the Communications Act of 1934, as amended, including ------- as amended by the Telecommunications Act of 1996, and the rules, regulations and policies promulgated thereunder. "Financing" has the meaning set forth in the SBIC Regulations. --------- "Governmental Authority" means a Federal, state or local court, ---------------------- legislature, governmental agency (including, without limitation, the United States Department of Justice), commission or regulatory or administrative authority or instrumentality. "Indemnified Party" has the meaning set forth in Section 8.4(a). ----------------- "Indemnifying Party" has the meaning set forth in Section 8.4(a). ------------------ "Investors" has the meaning set forth in the preamble. --------- "Law" means applicable common law and any statute, ordinance, code or --- other law, rule, permit, permit condition, regulation, order, decree, technical or other standard, requirement or procedure enacted, adopted, promulgated, applied or followed by any Governmental Authority. "Lenders" has the meaning set forth in Section 10.5. ------- "License" means a license, permit, certificate of authority, waiver, ------- approval, certificate of public convenience and necessity, registration or other authorization, consent or clearance to construct or operate a facility, including any emissions, discharges or releases therefrom, or to transact an activity or business, to construct a tower or to use an asset or process, in each case issued or granted by a Governmental Authority. "License Transfer" means the assignment of any License requiring the ---------------- Consent of the FCC or any equivalent state Governmental Authority. "Lien" means, with respect to any asset, any mortgage, lien, pledge, ---- charge, security interest, right of first refusal or right of others therein, or encumbrance of any nature whatsoever in respect of such asset. "Losses" has the meaning set forth in Section 8.2. ------ "Management Shareholders" shall mean Gerald T. Vento and Thomas H. ----------------------- Sullivan. "Material Adverse Effect" means a material adverse effect on the ----------------------- business, financial condition, assets, liabilities or results of operations or prospects of the Person specified. "New York Courts" has the meaning set forth in Section 10.6. --------------- -4- "Non-Voting Common Stock" means the Company's Class B Non-Voting ----------------------- Common Stock, par value $.01 per share. "PCS" has the meaning set forth in the preamble. --- "PCS License" has the meaning set forth in the recitals. ----------- "PCS "C" Block Auction" has the meaning set forth in the recitals. --------------------- "Person" means an individual, corporation, partnership, limited ------ liability company, association, joint stock company, Governmental Authority, business trust, unincorporated organization, or other legal entity. "Preferred Stock" means the shares of Series A Preferred Stock, Series --------------- B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock and Senior Common Stock. "Purchase Commitment" means, with respect to each Cash Equity Investor ------------------- and AT&T PCS, its ratable portion of the Expended Amount (but not more than the amount of its Aggregate Commitment). "Regulatory Problem" means, with respect to any SBIC Holder providing ------------------ Financing under this Agreement, any set of facts or circumstances wherein it has been asserted by any governmental regulatory agency (or any SBIC Holder reasonably believes in good faith that there is a substantial risk of such assertion) that such SBIC Holder and its Affiliates are not entitled to hold, or exercise any significant right with respect to, the Securities. "Restated Certificate" means the Third Amended and Restated -------------------- Certificate of Incorporation of the Company, dated as of the Closing Date. "SBA" has the meaning set forth in Section 6.5(b). --- "SBIC" means a small business investment company licensed under the ---- SBIC Act. "SBIC Act" means the Small Business Investment Company Act of 1958, as -------- amended. "SBIC Holder" means each Cash Equity Investor that is an SBIC. ----------- "SBIC Regulations" means the SBIC Act and the regulations issued ---------------- thereunder as set forth in 13 CFR 107 and 121, as amended. "Section 8.2 Indemnified Party" has the meaning set forth in Section ----------------------------- 8.2. -5- "Section 8.3 Indemnified Party" has the meaning set forth in Section ----------------------------- 8.3. "Securities" means the Cash Equity Investors' Securities and AT&T ---------- Securities being issued hereunder, together with any shares of Preferred Stock or Common Stock issued upon conversion of or delivered in substitution or exchange for any of the foregoing. "Securities Act" means the Securities Act of 1933, as amended. -------------- "Senior Common Stock" means the Senior Common Stock, par value $.01 ------------------- per share, of the Company. "Series A Preferred Stock" means the Series A Preferred Stock, par ------------------------ value $.01 per share, of the Company. "Series B Preferred Stock" means the Series B Preferred Stock, par ------------------------ value $.01 per share, of the Company. "Series C Preferred Stock" means the Series C Preferred Stock, par ------------------------ value $.01 per share, of the Company. "Series D Notes" means the Series D Senior Subordinated convertible -------------- notes of the Company to be issued to AT&T PCS pursuant to that certain Asset Purchase Agreement to be entered into by and between the Company and AT&T PCS pursuant to which the Company and/or one or more of its direct or indirect wholly-owned Subsidiaries will acquire from AT&T PCS a portion of a certain PCS License for the San Juan, Puerto Rico market. "Series D Preferred Stock" means the Series D Preferred Stock, par ------------------------ value $.01 per share, of the Company. "Series E Preferred Stock" means the Series E Preferred Stock, par ------------------------ value $.01 per share, of the Company. "Series F Preferred Stock" means the Series F Preferred Stock, par ------------------------ value $.01 per share, of the Company. "Stock Exchange" has the meaning set forth in Section 2.3. -------------- "Stockholders' Agreement" means the Stockholders' Agreement, by and ----------------------- among the Company, AT&T PCS, the Cash Equity Investors, and the other parties named therein, as stockholders, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Subsidiary" shall mean, with respect to any Person, a corporation or ---------- other entity of which 50% or more of the voting power or the voting equity securities or equity interest is owned, directly or indirectly, by such Person. -6- "Tracked Common Stock" means, collectively, the Class C Common Stock -------------------- and the Class D Common Stock. "Transactions" means the transactions contemplated by this Agreement. ------------ "Voting Common Stock" means the Class A Voting Common Stock, par value ------------------- $.01 per share, of the Company. "Voting Preference Stock" means the Voting Preference Stock, par value ----------------------- $.01 per share, of the Company. When a reference is made in this Agreement to an Article or a Section, such reference shall be to an Article or a Section of this Agreement unless otherwise indicated. Unless the context otherwise requires, the terms defined hereunder shall have the meanings therein specified for all purposes of this Agreement, applicable to both the singular and plural forms of any of the terms defined herein. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." The use of a gender herein shall be deemed to include the neuter, masculine and feminine genders whenever necessary or appropriate. Whenever the word "herein" or "hereof" is used in this Agreement, it shall be deemed to refer to this Agreement and not to a particular Section of this Agreement unless expressly stated otherwise. ARTICLE II PURCHASE AND SALE ----------------- OF SECURITIES; CERTAIN RESTRICTIONS ON TRANSFER ----------------------------------------------- 2.1. Purchase Commitments. (a) Upon the terms and subject to the conditions -------------------- hereof and in reliance upon the representations, warranties and agreements herein contained: (i) effective upon the execution and delivery hereof, each Cash Equity Investor hereby irrevocably commits, severally and not jointly, to purchase from the Company Cash Equity Investors' Securities in an amount equal to its Aggregate Commitment, and (ii) at the Closing, each Cash Equity Investor shall purchase from the Company Cash Equity Investors' Securities, in an amount equal to its Purchase Commitment, the amount of which will be determined in accordance herewith. In the event that the combined Aggregate Commitments of all of the Cash Equity Investors exceeds the total amount of proceeds required by the Company for the purposes set forth in Section 2.5 hereof, at the Closing each Cash Equity Investors' Aggregate Commitment shall be reduced proportionately. (b) Each Cash Equity Investor acknowledges and agrees that, if the Closing occurs, its obligation to purchase Cash Equity Investors' Securities in an amount up to its Aggregate Commitment constitutes an irrevocable and unconditional obligation (subject, however, to the rights of the Cash Equity Investors set forth in that certain bidding letter dated as of March 22, 1999 by and among the Company and the Cash Equity Investors) and shall not be subject to counterclaim, set-off, deduction or defense, or to abatement, suspension, deferment, diminution or reduction for any reason -7- whatsoever. By way of amplification, and not in limitation of the foregoing, each Cash Equity Investor further acknowledges and agrees to fulfill its obligations in respect of its Aggregate Commitment regardless of any claims it may have against any other Person (whether or not related to the Transactions) and regardless of the existence or non-existence of any facts or circumstances (whether or not such facts and circumstances existed on the date hereof or the Closing Date or were then known by it). (c) Based on the representations and warranties of AT&T PCS contained herein, the Company hereby agrees to issue and sell to AT&T PCS, and, subject to all of the terms and conditions hereof and in reliance on the representations and warranties of the Company set forth or referred to herein, (i) effective upon the execution and delivery hereof, AT&T PCS hereby irrevocably commits to purchase from the Company, the AT&T Securities in an amount equal to its Aggregate Commitment and (ii) at the Closing, AT&T PCS shall purchase from the Company the AT&T Securities in an amount equal to its Purchase Commitment. The consideration for the AT&T Securities purchased by AT&T PCS shall be at the option of AT&T PCS, either the cancellation by AT&T PCS of certain Series D Notes, at the option of AT&T PCS, in an amount equal to its Purchase Commitment or cash. 2.2. Purchase and Sale of Securities at Closing. Upon the terms and subject ------------------------------------------ to the conditions hereof and in reliance upon the representations, warranties and agreements herein contained, at the Closing, in consideration of the Transactions, the Company shall issue, sell and deliver to AT&T PCS the number of shares of AT&T Securities, and to each Cash Equity Investor, the number of shares of Cash Equity Investors' Securities, determined by dividing its Purchase Commitment by $1,000. 2.3. Management Benefit Plan, Management Shareholders. ------------------------------------------------ (a) If and when the Bidding Subsidiary is merged into TeleCorp Holdings Corp., Inc., a direct wholly-owned subsidiary of the Company, the Management Stockholders shall be entitled, as a consequence of such merger, to exchange all of the capital stock of the Bidding Subsidiary owned by such Management Stockholders for the shares of the Company's Voting Common Stock and Series E Preferred Stock set forth on Schedule II (the "Stock Exchange"). At such time, additional shares of Voting Common Stock and Series E Preferred Stock shall be added to the Company's 1998 Restricted Stock Plan as set forth on Schedule II. The Company's Compensation Committee shall grant such restricted shares pursuant to such Plan to the Company's employees, other than the Management Stockholders. (b) At the Closing, the parties hereby agree that the Company shall establish a stock option plan to be funded with shares of the Company's Voting Common Stock determined by subtracting the shares of Voting Common Stock issued pursuant to Section 2.3(a) from 7,500, such shares to be issued to the Company's directors, senior management and employees as determined by the Company's Compensation Committee, upon terms and conditions determined by the Compensation Committee. -8- 2.4. Restrictive Legends. Each certificate representing Securities ------------------- (including Securities originally issued hereunder or delivered upon conversion of Preferred Stock or Common Stock, or delivered in substitution or exchange for any of the foregoing) will bear a legend, in addition to any legends required by the Stockholders' Agreement or otherwise required by Law, reading substantially as follows until such Securities have been sold pursuant to an effective registration statement under the Securities Act, Rule 144 under the Securities Act, or an opinion of counsel reasonably satisfactory in form and substance to the Company and otherwise in full compliance with any other applicable restrictions on transfer, including those contained in this Agreement and the Stockholders' Agreement: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE `ACT'), OR UNDER ANY STATE SECURITIES OR `BLUE SKY' LAWS. SAID SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF, UNLESS AND UNTIL REGISTERED UNDER THE ACT AND THE RULES AND REGULATIONS THEREUNDER AND ALL APPLICABLE STATE SECURITIES OR `BLUE SKY' LAWS OR EXEMPTED THEREFROM UNDER THE ACT AND ALL APPLICABLE STATE SECURITIES OR `BLUE SKY' LAWS." 2.5. Use of Proceeds. The Company shall use the net cash proceeds of its --------------- sale of Securities to the Investors hereunder to fund the Company's capital contribution to a subsidiary (the "Bidding Subsidiary") for the purchase of PCS Licenses at the PCS `C' Block Auction, to pay fees and expenses incurred in connection with the Transactions, and for general and working capital purposes. ARTICLE III CLOSING 3.1. Time and Place of Closing. Upon the terms and subject to the ------------------------- conditions hereof, the closing of the Transactions (the "Closing") shall take ------- place at the offices of McDermott, Will & Emery, 50 Rockefeller Plaza, 11th Floor, New York, New York, at 10:00 a.m. local time on the earlier of (a) the tenth Business Day following the date the Company is awarded any PCS Licenses at the PCS "C" Block Auction or (b) August 12, 1999, or at such other place and/or time and/or on such other date as the parties may agree or as may be necessary to permit the fulfillment or waiver of the conditions set forth in Article VII (the "Closing Date"). The Closing shall be deemed to have occurred as of 12:01 ------------ a.m. on the Closing Date. 3.2. Closing Actions and Deliveries. Upon the terms and subject to the ------------------------------ satisfaction or waiver by the appropriate parties, if applicable, of the conditions set forth in Article VII, to effect -9- the purchase and sale of the Securities and consummate the other Transactions, the parties shall on the Closing Date take the following actions: (a) Cash Equity Investor Purchases. Each Cash Equity Investor shall ------------------------------- deliver to the Company by wire transfer of immediately available funds to the account designated by the Company on or prior to the Closing Date an amount equal to its Purchase Commitment. (b) AT&T PCS Purchases. AT&T PCS shall either deliver to the Company ------------------ by wire transfer of immediately available funds to the account designated by the Company an amount equal to its Purchase Commitment or deliver to the Company for cancellation Series D Notes in an amount equal to its Purchase Commitment. (c) Delivery of Securities. The Company shall deliver to each ---------------------- Investor, certificates, duly executed by authorized signatories of the Company, representing the shares of the Securities to be issued to each of them in accordance with the terms of Sections 2.2(a) and 2.2(b). (d) Other Deliveries. The parties shall execute and deliver or cause ---------------- to be executed and delivered all other documents, instruments, opinions and certificates contemplated by this Agreement to be delivered at the Closing or necessary and appropriate in order to consummate the Transactions contemplated to be consummated on the Closing Date. 3.3. Closing Costs; Taxes and Fees. The Company shall pay or cause to be ----------------------------- paid at the Closing or, if due prior to the Closing or thereafter, promptly when due, all transfer taxes (including sales taxes, gross receipts taxes, stamp taxes, and other taxes) payable solely as a result of a transfer of the Contributions pursuant to this Agreement, but excluding any federal, state, local or other jurisdictional income taxes (or franchise, excise, gross receipts or other taxes that are generally imposed on a party on a periodic basis as a result of a party's status, presence, conduct of business, holding of assets, income, revenues, activities or other items). ARTICLE IV REPRESENTATIONS AND WARRANTIES OF INVESTORS Each of the Investors (as to itself) represents and warrants to the Company and each of the other parties as follows: 4.1. Organization, Power and Authority. --------------------------------- (a) Each Investor is a corporation, general partnership or limited partnership, duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization and has the requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. (b) It has the requisite power and authority to execute, deliver and perform this Agreement and each other instrument, document, certificate and agreement required or contemplated -10- to be executed, delivered and performed by it hereunder and thereunder to which it is or will be a party. (c) It is duly qualified to do business in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary other than any such jurisdiction in which the failure to be so qualified would not have a Material Adverse Effect on it or materially adversely affect the Transactions. (d) The execution and delivery of this Agreement by it and the consummation of the Transactions by it have been duly and validly authorized by its Board of Directors (or equivalent body) and no other proceedings on its part which have not been taken (including, without limitation, approval of its stockholders, partners or members) are necessary to authorize this Agreement or to consummate the Transactions. (e) This Agreement has been duly executed and delivered by it and constitutes its valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar Laws affecting or relating to enforcement of creditors' rights generally and may be subject to general principles of equity. (f) As of the Closing Date, after giving effect to the Transactions, it is not in breach of any obligation under this Agreement. 4.2. Consents; No Conflicts. Neither the execution, delivery and ---------------------- performance by it of this Agreement nor the consummation of the Transactions will (a) conflict with, or result in a breach or violation of, any provision of its organizational documents; (b) subject to obtaining the Consents set forth on Schedule 4.2, constitute, with or without the giving of notice or passage of time or both, a breach, violation or default, create a Lien, or give rise to any right of termination, modification, cancellation, prepayment or acceleration, under (i) any Law or License or (ii) any note, bond, mortgage, indenture, lease, agreement or other instrument, in each case which is applicable to or binding upon it or any of its assets; or (c) require any Consent, other than those set forth on Schedule 4.2 or the approval of its board of directors, general partner, stockholders or similar constituent bodies, as the case may be (which approvals have been obtained), except in each case, where such breach, violation, default, Lien, right, or the failure to obtain or give such Consent would not have a Material Adverse Effect on it or materially adversely affect the Transactions. To its knowledge, there is no fact relating to it or its Affiliates that would be reasonably expected to prevent it from consummating the Transactions. 4.3. Litigation. There is no action, proceeding or investigation pending ---------- or, to its knowledge, threatened against it or any of its properties or assets that would be reasonably expected to have an adverse effect on its ability to consummate the Transactions to which it is a party or to fulfill its obligations under this Agreement or which seeks to prevent or challenge the Transactions. -11- 4.4. FCC Compliance. It complies with all eligibility rules issued by the -------------- FCC to hold broadband PCS Licenses, including without limitation, FCC rules on foreign ownership and the CMRS spectrum cap. Set forth opposite its name on Schedule 4.4 are all "attributable" interests (within the meaning of Section 20.6 of the FCC's Rules) that it holds in CMRS licenses that overlap the territory covered by the PCS Licenses to be bid on at the PCS "C" Block Auction. 4.5. Brokers. It has not employed any broker, finder or investment banker ------- or incurred any liability for any brokerage fees, commissions or finder's fees in connection with the Transactions. 4.6. Capital Commitment. Each Investor has, and will have on the Closing ------------------ Date, cash available to it in an amount sufficient to make its respective Purchase Commitment in accordance with the terms of Section 2.1. 4.7. No Distribution. It is acquiring the Securities to be acquired by it --------------- hereunder for the purpose of investment and not with a view to or for sale in connection with any distribution thereof (other than in compliance with the Stockholders' Agreement and the Securities Act and all applicable state securities laws). 4.8. Investor Acknowledgments. ------------------------ (a) It is an "accredited investor" as defined in Regulation D of the Securities Act. Its representatives have been provided an opportunity to ask questions of, and have received answers thereto from, the Company and its representatives regarding the terms and conditions of its purchase of Securities, and the Company and its proposed business generally, and have obtained all additional information requested by it to verify the accuracy of all information furnished to it in connection with such purchase. (b) It has such knowledge and experience in financial and business affairs that it is capable of evaluating the merits and risks of purchasing the Securities it is purchasing hereunder. (c) It is not relying on and acknowledges that no representation is being made by any other Cash Equity Investor, the Company or any of its officers, employees, Affiliates, agents or representatives, except for representations and warranties expressly set forth in this Agreement, and, in particular, it is not relying on, and acknowledges that no representation is being made in respect of, (x) any projections, estimates or budgets delivered to or made available to them of future revenues, expenses or expenditures, or future results of operations and (y) any other information or documents delivered or made available to it or its representatives, except for representations and warranties expressly set forth in this Agreement and such information and documents obtained by it as a stockholder of the Company and through its representatives who serve as members of the Company's board of directors, as the case may be. (d) In deciding to invest in the Company, it has relied exclusively on the representations and warranties expressly set forth in this Agreement, and the investigations made by itself and its representatives and its and such representatives' knowledge of the industry in which the Company proposes to operate. Based solely on such representations and warranties and such -12- investigations and knowledge and such information obtained by him or it by virtue of his or its status as a stockholder of the Company, and through its representatives who serve as members of the Company's board of directors, as the case may be, it has determined that the Securities it is acquiring are a suitable investment for it. ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants severally as to the Company and its Subsidiaries to the Investors as follows: 5.1. Organization, Power and Authority. --------------------------------- (a) The Company and each of its Subsidiaries that is a corporation is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted and as proposed to be conducted. Each of the Company's Subsidiaries that is a limited liability company or a limited partnership is a limited liability company or a limited partnership, as the case may be, duly formed, validly existing and in good standing under the laws of the jurisdiction of formation and has the requisite limited liability company or a limited partnership, as the case may be, power and authority to own, lease and operate its properties and to carry on its business as now being conducted and as proposed to be conducted. (b) It has the requisite power, authority and/or legal capacity to execute, deliver and perform this Agreement and each other instrument, document, certificate and agreement required or contemplated to be executed, delivered and performed by it hereunder and thereunder to which it is or will be a party. (c) The Company and each of its Subsidiaries is duly qualified to do business in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary other than any such jurisdiction in which the failure to be so qualified would not have a Material Adverse Effect on it or materially adversely affect the Transactions. (d) The execution and delivery of this Agreement and the consummation of the Transactions by it have been duly and validly authorized by its Board of Directors and shareholders and, except for the filing the Company's Restated Certificate with the office of the Secretary of State of Delaware, no other proceedings which have not been taken are necessary to authorize this Agreement or to consummate the Transactions. (e) This Agreement has been duly executed and delivered by it and constitutes the valid and binding obligation of it, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar Laws affecting -13- or relating to enforcement of creditors' rights generally and may be subject to general principles of equity. (f) As of the Closing, after giving effect to the Transactions, it is not in breach of any obligation under this Agreement or any of the Credit Documents. 5.2. Consents; No Conflicts. Neither the execution, delivery and ---------------------- performance of this Agreement nor the consummation of the Transactions will (a) conflict with, or result in a breach or violation of, any provision of its organizational documents; (b) subject to obtaining the Consents set forth on Schedule 5.2, constitute, with or without the giving of notice or passage of time or both, a breach, violation or default, create a Lien, or give rise to any right of termination, modification, cancellation, prepayment or acceleration, under (i) any Law or License, or (ii) any note, bond, mortgage, indenture, lease, agreement or other instrument, in each case which is applicable to or binding upon it or any of its assets; or (c) require any Consent, other than those set forth on Schedule 5.2 or the approval of its Board of Directors or its stockholders (which approval has been obtained), except in each case where such breach, violation, default, Lien, right, or the failure to obtain or give such Consent would not have a Material Adverse Effect on it or materially adversely affect the Transactions or the operation of its business after the Closing Date. To its knowledge, there is no fact relating to it or its Affiliates that would be reasonably expected to prevent it from consummating the Transactions or performing its obligations under this Agreement or disqualify it from obtaining the Consents required in order to consummate the transactions contemplated hereunder. 5.3. Litigation. There is no action, proceeding or investigation pending ---------- or, to its knowledge, threatened against it or any of its properties or assets that would have an adverse effect on its ability to consummate the Transactions to which it is a party or to fulfill its obligations under this Agreement, or to operate its business after the Closing Date, or which seeks to prevent or challenge the Transactions. There is no judgment, decree, injunction, rule or order outstanding against it which would limit in any material respect its ability to operate its business in the manner currently contemplated. 5.4. FCC Compliance. The Company complies, and after giving effect to the -------------- Transactions will comply, with all eligibility rules issued by the FCC to hold broadband PCS Licenses, including FCC rules on foreign ownership and the CMRS spectrum cap. 5.5. Brokers. It has not employed any broker, finder or investment banker ------- or incurred any liability for any brokerage fees, commissions or finder's fees in connection with the Transactions. 5.6. Capitalization. -------------- (a) As of the date hereof, the authorized capital stock of the Company consists of 700,000 shares of Voting Common Stock, 700,000 shares of Non-Voting Common Stock, ten shares of Voting Preference Stock, 1,000 shares of Class C Common Stock, 3,000 shares of Class D Common Stock, 70,000 shares of Series A Preferred Stock, 140,000 shares of Series B Preferred -14- Stock, 140,000 shares of Series C Preferred Stock, 35,000 shares of Series D Preferred Stock, 20,000 shares of Series E Preferred Stock, 35,000 shares of Series F Preferred Stock and 70,000 shares of Senior Common Stock. As of the Closing Date, after giving effect to the filing of the Restated Certificate and the Transactions there will be issued and outstanding the shares of Preferred Stock and Common Stock set forth on Schedule III. The record and beneficial owners of such outstanding shares of Common Stock and Preferred Stock, as of the Closing Date, after giving effect to the Transactions, are set forth on Schedule III. (b) Except as set forth on Schedule 5.6, on the Closing Date, after giving effect to the Transactions, there will not be any existing options, warrants, calls, subscriptions, or other rights, or other agreements or commitments, obligating the Company to issue, transfer or sell any shares of capital stock of the Company. 5.7. Shares. The shares of Securities being issued to the Investors ------ hereunder, when issued and paid for pursuant to the terms of this Agreement and after giving effect to the filing of the Restated Certificate, will be duly authorized, validly issued, fully paid and non-assessable, and will be free of any Liens caused or created by the Company, except as set forth in the Stockholders' Agreement and the Restated Certificate. The shares of Common Stock or Preferred Stock, as the case may be, issued upon conversion of the Securities issued on the Closing Date, or upon conversion thereof after the Closing Date, when issued pursuant to the terms thereof, will be validly issued, fully paid and non-assessable, and will be free of any Liens caused or created by the Company, except as set forth in the Stockholders' Agreement and the Restated Certificate. -15- 5.8. Offering of Securities. ---------------------- (a) None of the Company or any Person acting on its behalf has offered the Securities or any similar equity securities of the Company for sale to, or solicited any offers to buy Securities or any similar equity securities of the Company from, any Person, other than the Investors and a limited number of other "accredited investors" (as defined in Rule 501(a) under the Securities Act). (b) None of the Company or any Person acting on its behalf will, directly or indirectly, take any action which might subject the offering, issuance or sale of the Securities to the registration and prospectus delivery requirements of Section 5 of the Securities Act. (c) Assuming the accuracy of the representations and warranties of the Investors contained in Section 4.8, each of the offering and sale of Securities under this Agreement to the Investors complies with all applicable requirements of Federal and state securities laws. 5.9. Subsidiaries. Except as set forth in Schedule 5.9 hereto, the Company ------------ owns directly or indirectly all of the outstanding shares of Capital Stock of each of its Subsidiaries, free and clear of any Liens, except Liens granted to the lenders pursuant to the Credit Documents. Set forth on Schedule 5.9 is a complete list of its direct and indirect Subsidiaries indicating the jurisdictions in which each such Subsidiary is organized or qualified to conduct business. 5.10. Small Business Matters. Neither the Company nor any Subsidiary: (i) ---------------------- presently engages in, and none of them shall hereafter engage in, any activities, or (ii) shall use directly or indirectly the proceeds from the sale of the Securities for any purpose, which, in either case, a SBIC is prohibited from engaging in or providing funds for by the SBIC Act and the regulations thereunder (including Title 13, Code of Federal Regulations, Section 107.720). ARTICLE VI COVENANTS 6.1. Consummation of Transactions. Each party shall use all commercially ---------------------------- reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable and consistent with applicable law to carry out all of their respective obligations under this Agreement and to consummate the Transactions, which efforts shall include, without limitation, the following: (a) The parties shall use all commercially reasonable efforts to cause the Closing to occur and the Transactions to be consummated in accordance with the terms hereof, and, without limiting the generality of the foregoing, to make all filings with and to give all notices to third parties which may be necessary or reasonably required in order for the parties to consummate the Transactions. -16- (b) Each party shall furnish to the other parties all information concerning such party and its Affiliates reasonably required for inclusion in any application or filing to be made by the Company or any other party in connection with the Transactions or otherwise to determine compliance with applicable FCC Law. (c) Upon the request of any other party, each party shall forthwith execute and deliver, or cause to be executed and delivered, such further instruments of assignment, transfer, conveyance, endorsement, direction or authorization and other documents as may reasonably be requested by such party in order to effectuate the purposes of this Agreement. 6.2. Use of Proceeds. The Company shall use the proceeds of the sale to --------------- Investors only for the purposes described in Section 2.5. 6.3. SBIC Regulatory Provisions. -------------------------- (a) The Company shall notify each SBIC Holder as soon as practicable (and, in any event, not later than 15 days) prior to taking any action after which the number of record holders of the Company's voting stock would be increased from fewer than 50 to 50 or more, and the Company shall notify each SBIC Holder of any other action or occurrence after which the number of record holders of the Company's voting stock was increased (or would increase) from fewer than 50 to 50 or more, as soon as practicable after the Company becomes aware that such other action or occurrence has occurred or is proposed to occur. (b) Within 75 days after the Closing, the Company shall deliver to each SBIC Holder a written statement certified by the Company's president or chief financial officer describing in reasonable detail the use of the proceeds of the sale of Securities hereunder by the Company and its Subsidiaries. In addition to any other rights granted hereunder, the Company shall grant each SBIC Holder and the United States Small Business Administration (the "SBA") ---- access to the Company's records for the purpose of verifying the use of such proceeds to the extent required pursuant to SBIC Regulations. (c) Promptly after the end of each fiscal year (but in any event prior to February 28 of each year), the Company shall deliver to each SBIC Holder a written assessment of the economic impact of each SBIC Holder's investment in the Company, specifying the full-time equivalent jobs created or retained in connection with the investment, the impact of the investment on the revenues and profits of the business and on taxes paid by the business and its employees. 6.4. Regulatory Compliance Cooperation. In the event that any SBIC Holder --------------------------------- reasonably determines that it has a Regulatory Problem, to the extent reasonably necessary, such SBIC Holder shall have the right to transfer its Securities (and any shares of Common Stock issued upon conversion thereof) to another Person without regard to any restrictions on transfer set forth in this Agreement or in Section 4.1(c) of the Stockholders' Agreement and without complying with the provisions of Section 4.3 of the Stockholders' Agreement, but subject to the other provisions of the Stockholders' Agreement and federal and state securities law restrictions, and the Company shall -17- take all such actions as are reasonably requested by such SBIC Holder in order to (i) effectuate and facilitate such transfer by such SBIC Holder of any Securities of the Company then held by such SBIC Holder to such Person, (ii) permit such SBIC Holder (or any of its Affiliates) to exchange all or any portion of voting Securities then held by it on a share-for-share basis for shares of a class of non-voting Securities of the Company, which non-voting Securities shall be identical in all respects to such voting Securities, except that such non-voting Securities (or Common Stock, as applicable) shall be non- voting and shall be convertible into voting Securities (or Common Stock, as applicable) on such terms as are requested by such SBIC Holder in light of regulatory considerations then prevailing, (iii) continue and preserve the respective allocation of the voting interests with respect to the Company arising out of the SBIC Holder's ownership of voting Securities and/or provided for in the Stockholders' Agreement before the transfers and amendments referred to in this Section (including entering into such additional agreements as are reasonably requested by such SBIC Holder to permit any Person(s) designated by such SBIC Holder) to exercise any voting power which is relinquished by such SBIC Holder and (iv) amend this Agreement, the Restated Certificate, and any other related documents, agreements or instruments to effectuate and reflect the foregoing. The parties to this Agreement agree to vote their Securities in favor of such amendments and actions. 6.5. Offering of Securities. None of the Company or any Person acting on ---------------------- its behalf will, directly or indirectly, take any action which might subject the offering, license or sale of the Securities to the registration and prospectus delivery requirements of Section 5 of the Securities Act. 6.6. Waiver of Preemptive Rights. With respect to the Transactions and the --------------------------- issuance of the shares of Securities hereunder, each of the Investors hereby waives (a) the notice requirements set forth in Section 7.2(b) of the Stockholders' Agreement and (b) its preemptive rights that are afforded such party in Section 7.2 of the Stockholders' Agreement. 6.7. Bidding Requirements. The Company shall comply and shall ensure that -------------------- the Bidding Subsidiary complies with (a) all FCC Laws regarding bidding for PCS Licenses and (b) any and all written agreements among the parties regarding the bidding by the Bidding Subsidiary for the PCS Licenses. ARTICLE VII CLOSING CONDITIONS 7.1. Conditions to Obligations of All Parties. The obligation of each of ---------------------------------------- the parties to consummate the Transactions contemplated to occur at the Closing shall be conditioned on the Company being awarded one or more PCS Licenses at the PCS "C" Block Auction; provided, that, the Closing shall occur on August 12, 1999 even if the Company has not been awarded any PCS Licenses, unless the Expended Amount shall be zero. 7.2. Conditions to Obligations of the Company. The obligation of the ---------------------------------------- Company to -18- consummate the Transactions contemplated to occur at the Closing shall be further conditioned upon the Company receiving any consent of the lenders that may be required pursuant to the terms of the Credit Agreement. ARTICLE VIII SURVIVAL AND INDEMNIFICATION 8.1. Survival. Except for the representations and warranties contained in -------- Sections 4.1(a), (b), (d) and (e), and 5.1(a), (b), (d) and (e) (which shall survive the Closing, without regard to any investigation made by any of the parties hereto, until the expiration of the applicable statute of limitations relating thereto), the representations and warranties made in this Agreement shall survive the Closing without regard to any investigation made by any of the parties hereto until the second anniversary thereof and shall thereupon expire together with any right to indemnification in respect thereof (except to the extent a written notice asserting a claim for breach of any such representation or warranty and describing such claim in reasonable detail shall have been given prior to the expiration of the applicable survival period to the party which made such representation or warranty). The covenants and agreements contained herein to be performed or complied with prior to the Closing shall expire at the Closing. The covenants and agreements contained in this Agreement to be performed or complied with after the Closing shall survive the Closing; provided that the right to indemnification pursuant to this Article VIII in respect of a breach of a representation or warranty shall expire upon the application of the applicable survival period of the Closing (except to the extent written notice asserting a claim thereunder and describing such claim in reasonable detail shall have been given prior to such expiration to the party from whom such indemnification is sought). After the Closing, the sole and exclusive remedy of the parties for any breach or inaccuracy of any representation or warranty contained in this Agreement, or any other claim (whether or not alleging a breach of this Agreement) that arises out of the facts and circumstances constituting such breach or inaccuracy, shall be the indemnity provided in this Article VIII. 8.2. Indemnification by the Investors. Each Investor shall indemnify and -------------------------------- hold harmless each other Investor and the Company and their respective Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them (each, a "Section 8.2 ----------- Indemnified Party"), against all liabilities and expenses (including amounts - ----------------- paid in satisfaction of judgments, in compromise, as fines and penalties, and as counsel fees) (collectively, "Losses") incurred by him or it in connection with ------ the investigation, defense, or disposition of any action, suit or other proceeding in which any Section 8.2 Indemnified Party may be involved or with which he or it may be threatened (whether arising out of or relating to matters asserted by third parties against a Section 8.2 Indemnified Party or incurred or sustained by such party in the absence of a third-party claim), that arises out of or results from (a) any representation or warranty of such indemnifying party contained in this Agreement being untrue in any material respect as of the date on which it was made or (b) any material default by such indemnifying party or any of its Affiliates in the performance of their respective obligations under this Agreement, except to the extent (but -19- only to the extent) any such Losses arise out of or result from the gross negligence or willful misconduct of such Section 8.2 Indemnified Party or its Affiliates. 8.3. Indemnification by the Company. The Company shall indemnify and hold ------------------------------ harmless each of the Investors and their respective Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them (each, a "Section 8.3 Indemnified Party"), ----------------------------- against all Losses incurred by him or it in connection with the investigation, defense, or disposition of any action, suit or other proceeding in which any Section 8.3 Indemnified Party may be involved or with which he or it may be threatened (whether arising out of or relating to matters asserted by third parties against a Section 8.3 Indemnified Party or incurred or sustained by such party in the absence of a third-party claim), that arises out of or results from (a) any representation or warranty of the Company contained in this Agreement being untrue in any material respect as of the date on which it was made or (b) any material default by the Company or any of its Affiliates in the performance of their respective obligations under this Agreement, except to the extent (but only to the extent) any such Losses arise out of or result from the gross negligence or willful misconduct of such Section 8.3 Indemnified Party or its Affiliates. 8.4. Procedures. ---------- (a) The terms of this Section 8.4 shall apply to any claim (a "Claim") for indemnification under the terms of Sections 8.2 or 8.3. The Section 8.2 Indemnified Party or Section 8.3 Indemnified Party (each, an "Indemnified Party"), as the case may be, shall give prompt written notice of such Claim to the indemnifying party (the "Indemnifying Party") under the applicable Section, which party may assume the defense thereof, provided that any delay or failure to so notify the Indemnifying Party shall relieve the Indemnifying Party of its obligations hereunder only to the extent, if at all, that it is materially prejudiced by reason of such delay or failure. The Indemnified Party shall have the right to approve any counsel selected by the Indemnifying Party and to approve the terms of any proposed settlement, such approval not to be unreasonably delayed or withheld (unless, in the case of approval of a proposed settlement, such settlement provides only, as to the Indemnified Party, the payment of money damages actually paid by the Indemnifying Party and a complete release of the Indemnified Party in respect of the claim in question). Notwithstanding any of the foregoing to the contrary, the provisions of this Article VIII shall not be construed so as to provide for the indemnification of any Indemnified Party for any liability to the extent (but only to the extent) that such indemnification would be in violation of applicable law or that such liability may not be waived, modified or limited under applicable law, but shall be construed so as to effectuate the provisions of this Article VIII to the fullest extent permitted by law. (b) In the event that the Indemnifying Party undertakes the defense of any Claim, the Indemnifying Party will keep the Indemnified Party advised as to all material developments in connection with such Claim, including, but not limited to, promptly furnishing the Indemnified Party with copies of all material documents filed or served in connection therewith. (c) In the event that the Indemnifying Party fails to assume the defense of any Claim within ten business days after receiving written notice thereof, the Indemnified Party shall have the -20- right, subject to the Indemnifying Party's right to assume the defense pursuant to the provisions of this Article VIII, to undertake the defense, compromise or settlement of such Claim for the account of the Indemnifying Party. Unless and until the Indemnified Party assumes the defense of any Claim, the Indemnifying Party shall advance to the Indemnified Party any of its reasonable attorneys' fees and other costs and expenses incurred in connection with the defense of any such action or proceeding. Each Indemnified Party shall agree in writing prior to any such advancement that, in the event he or it receives any such advance, such Indemnified Party shall reimburse the Indemnifying Party for such fees, costs and expenses to the extent that it shall be determined that he or it was not entitled to indemnification under this Article VIII. (d) In no event shall an Indemnifying Party be required to pay in connection with any Claim for more than one firm of counsel (and local counsel) for each of the following groups of Indemnified Parties: (i) the Investors, their respective Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them; and (ii) the Company and its respective Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them. 8.5. Registration Rights. Notwithstanding anything to the contrary in this ------------------- Article VIII, the indemnification and contribution provisions set forth in Sections 5(e) and 5(f) of the Stockholders' Agreement shall govern any claim made with respect to the registration statements filed pursuant to Section 5 of the Stockholders' Agreement or sales made thereunder. 8.6. Limit on Indemnity. So long as the Company does not conduct any ------------------ business or engage in any activities other than those described in the first sentence of the definition of "Business" (as such term is defined in the Stockholders' Agreement), each party waives its right to indemnification under this Article VIII or any other right to assert any claim arising from any inaccuracy in the Company's representations and warranties set forth in Section 5.10. ARTICLE IX TERMINATION 9.1. Termination. In addition to any other rights of termination set forth ----------- herein, this Agreement may be terminated, and the Transactions abandoned, without further obligation of any party (except as set forth herein), at any time prior to the Closing Date: (a) by mutual written consent of the parties; (b) by any party by written notice to the other parties, if the consummation of the Transactions shall be prohibited by a final, non-appealable order, decree or injunction of a court of competent jurisdiction. Notwithstanding the foregoing, subject to the conditions set forth in Article VII, this Agreement may not be terminated by any party under any circumstance until after the completion of the PCS `C' Block Auction or until after the Bidding Subsidiary ceases to bid in -21- the PCS `C' Block Auction, in which event this Agreement may be terminated only as to the amount by which the total Purchase Commitments exceed the Expended Amount. 9.2. Effect of Termination. (a) In the event of a termination of this --------------------- Agreement, no party hereto shall have any liability or further obligation to any other party to this Agreement, except as set forth in paragraph (b) below, and except that nothing herein will relieve any party from liability for any breach by such party of this Agreement. (a) In the event of a termination of this Agreement pursuant to Section 9.1, all provisions of this Agreement shall terminate, except Articles VIII and X. (b) Whether or not the Closing occurs, except as otherwise expressly provided in this Agreement, all costs and expenses incurred in connection with this Agreement and the Transactions shall be paid by the party incurring such expenses. ARTICLE X MISCELLANEOUS PROVISIONS 10.1. Amendment and Modification. This Agreement may be amended, modified -------------------------- or supplemented only by written agreement of each of the parties. 10.2. Waiver of Compliance; Consents. Any failure of any of the parties to ------------------------------ comply with any obligation, covenant, agreement or condition herein may be waived by the party or parties entitled to the benefits thereof only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be given in writing in a manner consistent with the requirement for a waiver of compliance as set forth in this Section 10.2. 10.3. Notices. All notices or other communications hereunder shall be in ------- writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person against receipt, by facsimile transmission with confirmation of receipt, or by registered or certified mail (return receipt requested), postage prepaid, with an acknowledgment of receipt signed by the addressee or an authorized representative thereof, addressed as follows (or to such other address for a party as shall be specified by like notice; provided that notice of a change of address shall be effective only upon receipt thereof): If to an Investor, to its address set forth on Schedule I. If to the Company, to it: 1010 N. Glebe Road, Suite 800 Arlington, Virginia 22201 -22- Attn: General Counsel Facsimile: (703) 236-1102 10.4. Expenses. The Company agrees, in the event the Transactions are -------- consummated, to pay, and save the Cash Equity Investors harmless against, the reasonable fees and disbursements of one corporate counsel and one FCC counsel of the Investors in the aggregate in connection with the preparation, negotiation, execution and delivery of this Agreement, the instruments and documents executed pursuant hereto or thereto or in connection herewith or therewith, and the consummation of the Transactions. 10.5. Parties in Interest; Assignment. This Agreement is binding upon and ------------------------------- is solely for the benefit of the parties hereto and their respective permitted successors, legal representatives and permitted assigns. Neither the Company nor any Investor may assign its rights and obligations hereunder without the prior written consent of each of the other parties; provided, that: (a) the Company shall have the right to assign its rights under this Agreement to the lenders (the "Lenders") named in the Credit Agreement, as security pursuant to the terms ------- of the Credit Documents, it being understood that as a result of any such assignment to the Lenders, after an event of default under the Credit Agreement and the expiration of any applicable grace and cure periods thereunder, the Lenders shall have the right, on behalf of the Company, to enforce the obligation of each Investor to make capital contributions to the Company in the amounts and on the dates specified on Schedule I (or such earlier dates as may be established in accordance with the terms of the Stockholders' Agreement) and that, in connection with any such assignment to the Lenders, the Lenders shall not assume any obligations of the Company hereunder. 10.6. Applicable Law. This Agreement shall be governed by and construed in -------------- accordance with the laws of the State of New York without giving effect to the conflicts of law principles thereof. The parties hereto hereby irrevocably and unconditionally consent to submit to the non-exclusive jurisdiction of the courts of the State of New York and of the United States of America located in the County of New York, New York (the "New York Courts") for any litigation --------------- arising out of or relating to this Agreement and the Transactions, waive any objection to the laying of venue of any such litigation in the New York Courts and agrees not to plead or claim in any New York Court that such litigation brought therein has been brought in an inconvenient forum. 10.7. Counterparts. This Agreement may be executed in two or more ------------ counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. 10.8. Interpretation. The article and section headings contained in this -------------- Agreement are for convenience of reference only, are not part of the agreement of the parties and shall not affect in any way the meaning or interpretation of this Agreement. 10.9. Entire Agreement. This Agreement, including the exhibits and schedules hereto and thereto and the certificates and instruments delivered pursuant to the terms of this Agreement, embody the entire agreement and understanding of the parties hereto in respect of the Transactions. -23- There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such Transactions. 10.10. Publicity. So long as this Agreement is in effect, the parties --------- agree to consult with each other in issuing any press release or otherwise making any public statement with respect to the Transactions, and no party shall issue any press release or make any such public statement prior to such consultation, except as may be required by Law. No press release or other public statement by the parties hereto shall disclose any of the financial terms of the Transactions without the prior consent of the other parties, except as may be required by Law. A breach of the provisions of this Section 10.10 by a party shall not give rise to any right to terminate this Agreement. 10.11. Specific Performance. The parties hereto agree that irreparable -------------------- damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any New York Courts. 10.12. Remedies Cumulative. All rights, powers and remedies provided under ------------------- this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise or beginning of the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. 10.13. Severability. Any provision of this Agreement that is prohibited or ------------ unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. If any court determines that any covenant or any part of any covenant is invalid or unenforceable, such covenant shall be enforced to the extent permitted by such court, and all other covenants shall not thereby be affected and shall be given full effect, without regard to the invalid portions. 10.14. Beneficiaries of Agreement. The representations, warranties, -------------------------- covenants and agreements expressed in this Agreement are for the sole benefit of the other parties hereto and the Section 8.2 Indemnified Parties and Section 8.3 Indemnified Parties and are not intended to benefit, and may not be relied upon or enforced by, any other party as a third party beneficiary or otherwise, except that the Management Shareholders are intended to benefit by, and may rely upon or enforce, the provisions of Section 2.3 of this Agreement. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] -24- IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. TELECORP PCS, INC. By: /s/ Thomas H. Sullivan ------------------------------ Name: Thomas H. Sullivan Title: President AT&T WIRELESS PCS, INC. By: /s/ William W. Hague ------------------------------ Name: William W. Hague Title: Vice President Cash Equity Investors: CB CAPITAL INVESTORS, L.P. By: CB Capital Investors, Inc., its general partner By: /s/ Michael R. Hannon ------------------------------- Name: Michael R. Hannon Title: General Partner NORTHWOOD VENTURES LLC By: /s/ Henry T. Wilson ------------------------------- Name: Henry T. Wilson Title: Managing Director NORTHWOOD CAPITAL PARTNERS LLC -25- By: /s/ Henry T. Wilson ------------------------------------ Name: Henry T. Wilson Title: Managing Director MEDIA\COMMUNICATIONS INVESTORS LIMITED PARTNERSHIP By: M/C Investor General Partner - J, Inc., its general partner By: /s/ James F. Wade ----------------------------------- Name: James F. Wade Title: MEDIA\COMMUNICATIONS PARTNERS III LIMITED PARTNERSHIP By: M/C III L.L.C., its general partner By: /s/ James F. Wade ----------------------------------- Name: James F. Wade Title: Manager EQUITY-LINKED INVESTORS-II By: ROHIT M. DESAI ASSOCIATES-II, its general partner By: /s/ Frank J. Pados, Jr. ------------------------------------ Name: Frank J. Pados, Jr. Title: Attorney-in-Fact PRIVATE EQUITY INVESTORS III, L.P. By: ROHIT M. DESAI ASSOCIATES III, LLC, -26- its general partner By: /s/ Frank J. Pados, Jr. ----------------------------------- Name: Frank J. Pados, Jr. Title: Attorney-in-Fact HOAK COMMUNICATIONS PARTNERS, L.P. By: HCP Investments, L.P., its general partner By: Hoak Partners, LLC, its general partner By: /s/ James M. Hoak ----------------------------------- Name: James M. Hoak Title: Manager HCP CAPITAL FUND, L.P. By: James M. Hoak & Co., its general partner By: /s/ James M. Hoak ----------------------------------- Name: James M. Hoak Title: Chairman WHITNEY EQUITY PARTNERS, L.P. By: J.H. Whitney & Co., its general partner -27- By: /s/ William Laverack, Jr. -------------------------------------- Name: Title: General Partner J.H. WHITNEY III, L.P. By: J.H. Whitney & Co., its general partner By: /s/ William Laverack, Jr. -------------------------------------- Name: Title: General Partner WHITNEY STRATEGIC PARTNERS III, L.P. By: J.H. Whitney & Co., its general partner By: /s/ William Laverack, Jr. -------------------------------------- Name: Title: General Partner TORONTO DOMINION INVESTMENTS INC. By: /s/ Martha L. Gariepy -------------------------------------- Name: Martha L. Gariepy Title: Vice President ONE LIBERTY FUND IV, L.P. By: /s/ Joseph T. McCullen, Jr. -------------------------------------- Name: Joseph T. McCullen, Jr. Title: General Partner -28- SCHEDULE I Aggregate Commitment --------------------
- -------------------------------------------------------------------------- Name and Notice Address Aggregate Commitment - -------------------------------------------------------------------------- AT&T Wireless PCS, Inc. $4,640,000 P.O. Box 97061 Redmond, WA 98073-9761 Attn: Michael Schwartz - -------------------------------------------------------------------------- CB Capital Investors, L.P. $3,758,000 380 Madison Avenue, 12th Floor New York, NY 10017 Attn: Michael Hannon Fax: (212) 622-3101 - -------------------------------------------------------------------------- Desai Associates $3,758,000 Equity-Linked Investors-II $1,879,000 Private Equity Investors III, L.P. $1,879,000 540 Madison Avenue, 36th Floor New York, NY 10022 Attn: Rohit M. Desai Fax: (212) 752-7807 - -------------------------------------------------------------------------- Hoak Capital Corporation $2,818,000 Hoak Communications Partners, L.P. $2,581,850 HCP Capital Fund, L.P. $ 236,150 One Galleria Tower 13355 Noel Road, Suite 1050 Dallas, Texas 75240 Attn: James Hoak Fax: (972) 960-4899 - -------------------------------------------------------------------------- J.H. Whitney & Co. $2,348,000 Whitney Equity Partners, L.P. $ 704,400 J.H. Whitney III, L.P. $1,604,927 Whitney Strategic Partners III, L.P. $ 38,673 177 Broad Street, 15th Floor Stamford, Connecticut 06901 Attn: William Laverack, Jr. Fax: (203) 973-1422 - --------------------------------------------------------------------------
Aggregate Commitment (Continued) -------------------------------- - -------------------------------------------------------------------------- M/C Partners $ 1,410,000 Media/Communications Investors Limited Partnership Media/Communications Partners III Limited $ 56,400 Partnership $ 1,353,600 75 State Street, Suite 2500 Boston, MA 02109 Attn: James F. Wade Fax: (617) 345-7201 - -------------------------------------------------------------------------- OneLiberty Fund IV, L.P. $ 470,000 One Liberty Square Boston, MA 02109 Attn: Joseph T. McCullen Fax: (617) 423-1765 - -------------------------------------------------------------------------- Toronto Dominion Investments Inc. $ 470,000 31 West 52/nd/ Street New York, NY 10019-6101 Attn: Steve Reinstadtler Fax: (212) 974-8429 (with a copy to) Toronto Dominion Investments, Inc. 909 Fannin Suite 1700 Houston, TX 77010 Attn: Martha Gariepy Fax: (713) 652-2647 - -------------------------------------------------------------------------- Northwood Capital Partners $ 328,000 Northwood Ventures LLC $ 278,800 Northwood Capital Partners LLC $ 49,200 485 Underhill Boulevard, Suite 205 Syosset, New York 11791-3419 Attn: Peter Schiff Fax: (516) 364-0879 - -------------------------------------------------------------------------- TOTAL: $20,000,000 - --------------------------------------------------------------------------
SCHEDULE II Stock Exchange -------------- Voting Common Stock: Gerald T. Vento = total Voting Common Stock and Series F Preferred Stock issued hereunder to Cash Equity Investors and AT&T PCS divided by .86 and multiplied by .0555 up to an aggregate amount equal to 645.35 shares. Thomas H. Sullivan = total Voting Common Stock and Series F Preferred Stock issued hereunder to Cash Equity Investors and AT&T PCS divided by .86 and multiplied by .0345 up to an aggregate amount equal to 401.16 shares. 1998 Restricted Stock Plan = total Voting Common Stock and Series F Preferred Stock issued hereunder to Cash Equity Investors and AT&T PCS divided by .86, multiplied by .14 and minus Voting Common Stock issued hereunder to Vento and Sullivan. Series E Preferred Stock: Gerald T. Vento = total Series C Preferred Stock and Series D Preferred Stock issued hereunder to Cash Equity Investors and AT&T PCS divided by .90 and multiplied by .0444 up to an aggregate of 493.33 shares. Thomas H. Sullivan = total Series C Preferred Stock and Series D Preferred Stock issued hereunder to Cash Equity Investors and AT&T PCS divided by .90 and multiplied by .0276 up to an aggregate of 306.67 shares. 1998 Restricted Stock Plan = total Series C Preferred Stock and Series D Preferred Stock issued hereunder to Cash Equity Investors and AT&T PCS divided by .90, multiplied by .10 minus the Series E Preferred Stock issued hereunder to Vento and Sullivan. SCHEDULE 4.2 Cash Equity Investor Consents ----------------------------- The execution, delivery and performance of the Agreement will or may require the following consents, approvals and reviews: None. SCHEDULE 4.4 Attributable Interests ---------------------- None. SCHEDULE 5.2 Company Consents ---------------- The execution, delivery and performance of the Agreement will or may require the following consents, approvals and reviews: None. SCHEDULE 5.6 Outstanding Options, Warrants, etc. ----------------------------------- 1. Upon the closing of the transaction contemplated by the License Acquisition Agreement by and between Wireless 2000, Inc. ("Wireless") and the Company, dated as of December 2, 1998 (the "Wireless Acquisition Agreement"), the Company shall issue to Wireless: (i) five hundred forty-five and 20/100 (545.20) shares of Series C Preferred Stock, par value $.01 per share, and (ii) five hundred thirty and 40/100 (530.40) shares of Class A Voting Common Stock, par value $.01 per share, of the Company. 2. Upon the closing of the transaction contemplated by the License Acquisition Agreement by and between Mercury PCS II, LLC ("Mercury") and the Company, dated as of May 15, 1998 (the "Mercury Acquisition Agreement"), the Company shall issue to Mercury: (i) two thousand three hundred thirty-two and 55/100 (2,332.50) shares of Series C Preferred Stock, par value $.01 per share, and (ii) two thousand two hundred sixty-nine and 23/100 (2,269.23) shares of Class A Voting Common Stock, par value $.01 per share, of the Company and shall issue additional shares of Series C Preferred Stock and Class A Voting Common Stock to the Cash Equity Investors as set forth on Schedule V of the Securities Purchase Agreement, setting forth Share Allocation With Supplemental Allocation. 3. The Company is in negotiations with respect to a transaction which would involve the issuance of instruments convertible into Capital Stock of the Company to certain existing shareholders of the Company in connection with the purchase by the Company of non-management equity interests in each of THC of Houston, Inc., THC of Melbourne, Inc., THC of Tampa, Inc. and THC of Orlando, Inc. 4. The Company is in negotiations to enter into: (A) an Asset Purchase Agreement with AT&T PCS to purchase from AT&T PCS a certain disaggregated 20 MHz of the 30MHz A Block license for the San Juan, Puerto Rico MTA in exchange for: (v) $19,000,000 in cash, (w) Series A Convertible Preferred Stock, Series D Preferred Stock and Series F Preferred Stock of the Company in an aggregate amount of $40,000,000, (x) Series D Senior Subordinated Notes (or Series D Senior Subordinated Notes combined with Series E Senior Subordinated Notes), issued under a certain Indenture by and between the Company and a designated Trustee, in an aggregate amount of $36,000,000, (y) assumption of certain liabilities, and (z) reimbursement to AT&T PCS of $3,200,000 of Microwave clearing costs, and (B) a Stock Purchase Agreement between the Company and certain Cash Equity Investors identified therein pursuant to which the Company will sell to such Cash Equity Investors an aggregate of $39,996,000 of its Series C Preferred Stock and Class A Common Stock. SCHEDULE 5.9 Subsidiaries ------------
========================================================================================= Subsidiary Name State of Qualified in: Incorporation - ----------------------------------------------------------------------------------------- 1. TeleCorp Communications, Inc. DE AR, DC, IL, IN, LA, MA, MO, MS, NH, TN, TX, VA - ----------------------------------------------------------------------------------------- 2. TeleCorp Holding Corp., Inc. DE LA, MA, NH, TN, TX, VA/1/ - ----------------------------------------------------------------------------------------- 3. TeleCorp Limited Holdings, Inc. DE AR, DC, IL, MA, MS - ----------------------------------------------------------------------------------------- 4. TeleCorp Realty Holdings, Inc. DE None - ----------------------------------------------------------------------------------------- 5. TeleCorp PCS, L.L.C. (Sole Member is: TeleCorp PCS, Inc.) DE None - ----------------------------------------------------------------------------------------- 6. TeleCorp Realty, L.L.C. DE AR, DC, IL, LA, MA, MO, (Managing Member is: TeleCorp MS, NH, TN, TX Communications, Inc.) - ----------------------------------------------------------------------------------------- 7. TeleCorp Equipment Leasing, L.P. DE AR, DC, IL, IN, LA, MA, (General Partner is: TeleCorp Limited MO, MS, NH, TN, TX Holdings, Inc.) =========================================================================================
_____________________ /1/ TeleCorp Holding Corp will be withdrawn from each of the states in which it is qualified (except Delaware) upon the filing of the company's tax returns for the year ended December 31, 1998. EX-10.10 24 STOCK PURCHASE AGREEMENT BY & AMONG VIPER WIRELESS EXHIBIT 10.10.1 ================================================================================ STOCK PURCHASE AGREEMENT by and among VIPER WIRELESS, INC. TELECORP HOLDING CORP., INC. and TELECORP PCS, INC. Dated as of March 1, 1999 ================================================================================ STOCK PURCHASE AGREEMENT ------------------------ STOCK PURCHASE AGREEMENT dated as of March 1, 1999 by and among Viper Wireless, Inc., a Delaware corporation (the "Company"), TeleCorp Holding Corp., Inc. a Delaware corporation (the "Purchaser") and TeleCorp PCS, Inc., a Delaware corporation (the "Parent"). WHEREAS, the Purchaser is the wholly-owned subsidiary of the Parent; WHEREAS the Company is seeking to raise $25,000,000 from investors to fund its participation in the reauction conducted by the Federal Communications Commission ("FCC") for the sale of broadband Personal Communications Services ("PCS") licenses (the "PCS Licenses") in the "C" Block (the "PCS "C" Block Auction"), as set forth in Parts 1 and 24 of Title 47 of the Code of Federal Regulations (the "CFR"), scheduled to commence on March 23, 1999; WHEREAS, the Purchaser is committing to invest up to $25,000,000 in the Company at one or more Closings (hereinafter defined) in consideration of the issuance by the Company of 100,000 shares of its Series A Preferred Stock, $.01 par value per share and 42,500 shares of its Class B Common Stock, no par value per share (collectively, the "Securities"), and the Company wishes to issue and sell the Securities to the Purchaser, all on the terms and subject to the conditions herein set forth; WHEREAS, in order to fund the Purchaser's purchase of the Securities, the Parent wishes to contribute up to $25,000,000 to the capital of the Purchaser, but solely subject to the terms and conditions set forth, and the Purchaser is willing to accept such capital contribution subject to said terms and conditions. NOW THEREFORE, in consideration of the promises and the mutual representations, warranties, covenants, conditions and agreements hereafter set forth, the parties agree as follows: covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS For purposes of this Agreement: "Accrued Dividend" with respect to any date, means $250 multiplied by ---------------- 0.10 multiplied by a fraction, the numerator of which is the number of days elapsed since the Closing Date and the denominator is 365. "Affiliate" means, with respect to any Person, any other Person that --------- directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with that Person. For purposes of this definition, "control" (including the terms "controlling" and "controlled") means ------- ----------- ---------- the power to direct or cause the direction of the management and policies of a Person, directly or indirectly, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise. "Aggregate Commitment" means $25,000,000. -------------------- "Agreement" means this Stock Purchase Agreement, as the same may be --------- amended, modified or supplemented in accordance with the terms hereof. "Business Day" means any day other than a Saturday, Sunday or a legal ------------ holiday in New York, New York or any other day on which commercial banks in New York, New York are authorized by law or governmental decree to close. "Capital Stock" means any and all shares, interests, participations or ------------- other equivalents (however designated) of capital stock of a corporation, and any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase or subscribe for any of the foregoing or any warrants, rights or options to purchase or subscribe for any such warrants, rights or options. "Claim" has the meaning set forth in Section 8.5(a). ----- "Class A Common Stock" means the Class A Common Stock, no par value -------------------- per share, of the Company. "Class B Common Stock" means the Class B Common Stock, no par value -------------------- per share, of the Company. "Closing" has the meaning set forth in Section 3.1. ------- "Closing Date" has the meaning set forth in Section 3.1. ------------ "Common Stock" means, collectively, Class A Common Stock and Class B ------------ Common Stock. "Company" has the meaning set forth in the preamble. ------- "Confidential Information" means any and all information regarding the ------------------------ business, finances, operations, products, services and customers of the Person specified and its Affiliates, in written or oral form or in any other medium. "Consents" means all consents and approvals of Governmental -------- Authorities or other third parties necessary to authorize, approve or permit the parties hereto to consummate the Transactions and for the Company to operate its business after the Closing Date as currently contemplated. "Courts" has the meaning set forth in Section 10.6. ------ -2- "Credit Agreement" means the agreement among the Parent, the lenders ---------------- and the agents referred to therein, as of July 17, 1998, providing a credit facility having aggregate commitments of $525 million, as amended to date and as the same may be further amended, modified or supplemented in accordance with the terms thereof. "Excess Funds" has the meaning set forth in Section 2.1(b). ------------ "FCC" means the Federal Communications Commission or similar --- regulatory authority established in replacement thereof. "FCC Law" means the Communications Act of 1934, as amended, including ------- as amended by the Telecommunications Act of 1996, and the rules, regulations and policies promulgated thereunder. "Funding Date" and "Funding Dates" and have the meanings set forth in ------------ ------------- Section 2.1. "Governmental Authority" means a Federal, state or local court, ---------------------- legislature, governmental agency (including, without limitation, the United States Department of Justice), commission or regulatory or administrative authority or instrumentality. "Indemnified Party" has the meaning set forth in Section 8.4(a). ----------------- "Indemnifying Party" has the meaning set forth in Section 8.4(a). ------------------ "Initial Cash Contribution" means $17,818,549. ------------------------- "Law" means applicable common law and any statute, ordinance, code or --- other law, rule, permit, permit condition, regulation, order, decree, technical or other standard, requirement or procedure enacted, adopted, promulgated, applied or followed by any Governmental Authority. "License" means a license, permit, certificate of authority, waiver, ------- approval, certificate of public convenience and necessity, registration or other authorization, consent or clearance to construct or operate a facility, including any emissions, discharges or releases therefrom, or to transact an activity or business, to construct a tower or to use an asset or process, in each case issued or granted by a Governmental Authority. "Lien" means, with respect to any asset, any mortgage, lien, pledge, ---- charge, security interest, right of first refusal or right of others therein, or encumbrance of any nature whatsoever in respect of such asset. "Losses" has the meaning set forth in Section 8.2. ------ "Material Adverse Effect" means a material adverse effect on the ----------------------- business, financial condition, assets, liabilities or results of operations or prospects of the Person specified. -3- "PCS" has the meaning set forth in the preamble. --- "PCS `C' Block Auction" has the meaning set forth in the preamble. --------------------- "PCS Licenses" has the meaning set forth in the preamble. ------------ "Person" means an individual, corporation, partnership, limited ------ liability company, association, joint stock company, Governmental Authority, business trust, unincorporated organization, or other legal entity. "Preferred Stock" means the Series A Preferred Stock, no par value per --------------- share, of the Company. "Purchaser" has the meaning set forth in the preamble. --------- "Required Funds" has the meaning set forth in Section 2.1(b). -------------- "Restated Certificate" means the Amended and Restated Certificate of -------------------- Incorporation of the Company, dated as of the Closing Date. "Section 8.2 Indemnified Party" has the meaning set forth in Section ----------------------------- 8.2. "Section 8.3 Indemnified Party" has the meaning set forth in Section ----------------------------- 8.3. "Securities" has the meaning set forth in the preamble. ---------- "Securities Act" means the Securities Act of 1933, as amended. -------------- "Subsidiary" shall mean, with respect to any Person, a corporation or ---------- other entity of which 50% or more of the voting power or the voting equity securities or equity interest is owned, directly or indirectly, by such Person. "Transactions" means the transactions contemplated by this Agreement. ------------ When a reference is made in this Agreement to an Article or a Section, such reference shall be to an Article or a Section of this Agreement unless otherwise indicated. Unless the context otherwise requires, the terms defined hereunder shall have the meanings therein specified for all purposes of this Agreement, applicable to both the singular and plural forms of any of the terms defined herein. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." The use of a gender herein shall be deemed to include the neuter, masculine and feminine genders whenever necessary or appropriate. Whenever the word "herein" or "hereof" is used in this Agreement, it shall be deemed to refer to this Agreement and not to a particular Section of this Agreement unless expressly stated otherwise. -4- ARTICLE II PURCHASE AND SALE ----------------- OF SECURITIES; CERTAIN RESTRICTIONS ON TRANSFER ----------------------------------------------- 2.1. Purchase and Sale of Securities. (a) Upon the terms and subject to ------------------------------- the conditions hereof and in reliance upon the representations, warranties and agreements herein contained: (i) effective upon the Closing, Purchaser hereby irrevocably commits to contribute to the capital of the Company an amount equal to its Aggregate Commitment, and (ii) at the Closing, shall contribute to the capital of the Company an amount equal to its Initial Cash Contribution and the Company shall accept such capital contribution. Upon prior notice from the Company, Purchaser shall contribute to the capital of the Company additional amounts as requested by the Company, up to an aggregate amount equal to its Aggregate Commitment over the Initial Cash Contribution, on the dates specified by the Company in such notices (each such date, a "Funding Date" and collectively with the Closing Date, the "Funding Dates"). The obligation of the Purchaser to make such additional capital contributions in respect of its Aggregate Commitment in accordance with this Section 2.1 is sometimes referred to herein as the "Unfunded Commitment." The Purchaser acknowledges and agrees ------------------- that its obligation to make capital contributions to the Company after the Closing Date in respect of its Unfunded Commitment constitutes an irrevocable and unconditional obligation, and shall not be subject to counterclaim, set-off, deduction or defense, or to abatement, suspension, deferment, diminution or reduction for any reason whatsoever. By way of amplification, and not in limitation of the foregoing, the Purchaser further acknowledges and agrees to fulfill its obligations in respect of its Unfunded Commitment regardless of any claims it may have against any other Person (whether or not related to the Transactions) and regardless of the existence or non-existence of any facts or circumstances (whether or not such facts and circumstances existed on the date hereof or the Closing Date or were then known by it). (b) In the event that the amounts paid to the Company on the Funding Dates exceeds the amount required by the Company (i) to acquire any PCS Licenses awarded to the Company at the PCS `C' Block Auction and (ii) to pay fees and expenses incurred in connection with the Transactions (the "Required Funds"), the Company shall use its best efforts to secure the return of the excess of such funds over the Required Funds (the "Excess Funds") as soon as practicable and shall, no later than the 2nd Business Day following the return of the Excess Funds from the FCC (the "Redemption Date"), redeem from the Purchaser that number of shares of Preferred Stock which is equal to the amount of the Excess Funds divided by the sum of (x) $250 and (y) the Accrued Dividend as of the Redemption Date (the "Redeemed Shares"). Upon such redemption, the Purchaser shall deliver to the Company a stock certificate or certificates, duly endorsed for transfer to the Company, or accompanied by duly endorsed stock powers, representing the Redeemed Shares. As payment in full for the Redeemed Shares, and against delivery of the stock certificate or certificates therefor as aforesaid, upon such redemption, the Company shall deliver to the Purchaser, by federal wire transfer of immediately available funds in accordance with wire transfer instructions provided by the Purchaser, an amount equal to the Excess Funds. (c) In the event that the Company is not awarded any PCS Licenses at the PCS `C' Block Auction, or the Company shall stop bidding at the PCS `C' Block Auction, the -5- Company shall use its best efforts to secure the return of its funds as soon as is practicable and shall, within 2 business days of the return of its funds from the FCC, redeem from the Purchaser all of the Preferred Stock purchased hereunder. Upon such redemption, the Purchaser shall deliver to the Company a stock certificate or certificates, duly endorsed for transfer to the Company, or accompanied by duly endorsed stock powers, representing such Preferred Stock. As payment in full for such Preferred Stock, and against delivery of the stock certificate or certificates therefor as aforesaid, upon such redemption, the Company shall deliver to the Purchaser, by federal wire transfer of immediately available funds in accordance with wire transfer instructions provided by the Purchaser, an amount equal to the Purchase Price. (d) In order to fund the purchase of the Securities, on or before each of the Funding Dates, upon prior notice from the Purchaser, the Parent shall, subject to the conditions set forth herein, contribute the amounts specified by the Purchaser, up to an aggregate of $25,000,000, to the capital of the Purchaser (the "Capital Contributions"). The Capital Contributions shall be used only for the purchase of the Securities by the Purchaser and for no other purpose. In the event that the Purchaser receives from the Company Excess Funds pursuant to subsections 2.1(b) or 2.1(c) above, the Purchaser shall immediately return the full amount of the Excess Funds to the Parent as a return of capital. The Parent acknowledges and agrees that its obligation to make capital contributions to the Purchaser constitutes an irrevocable and unconditional obligation, and shall not be subject to counterclaim, set-off, deduction or defense, or to abatement, suspension, deferment, diminution or reduction for any reason whatsoever. By way of amplification, and not in limitation of the foregoing, the Parent further acknowledges and agrees to fulfill its obligations in respect of its capital contributions regardless of any claims it may have against any other Person (whether or not related to the Transactions) and regardless of the existence or non-existence of any facts or circumstances (whether or not such facts and circumstances existed on the date hereof or the Closing Date or were then known by it). 2.2 Issuance of Securities. At the Closing, the Company shall issue and ---------------------- deliver to the Purchaser the shares of Class B Common Stock and Preferred Stock set forth on Schedule I attached hereto. At each subsequent Funding Date, the Company shall issue and deliver to the Purchaser the number of shares of preferred stock which are equal to100,000 multiplied by the quotient of the dollar amount contributed on such Funding date divided by the Aggregate Commitment. 2.3 Restrictive Legends. Each certificate representing the Securities ------------------- will bear a legend, in addition to any legends otherwise required by Law, reading substantially as follows until such Securities have been sold pursuant to an effective registration statement under the Securities Act, Rule 144 under the Securities Act, or an opinion of counsel reasonably satisfactory in form and substance to the Company and otherwise in full compliance with any other applicable restrictions on transfer, including those contained in this Agreement: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE `ACT'), OR UNDER ANY STATE SECURITIES OR `BLUE SKY' LAWS. SAID SECURITIES MAY NOT BE SOLD, TRANSFERRED, -6- ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF, UNLESS AND UNTIL REGISTERED UNDER THE ACT AND THE RULES AND REGULATIONS THEREUNDER AND ALL APPLICABLE STATE SECURITIES OR `BLUE SKY' LAWS OR EXEMPTED THEREFROM UNDER THE ACT AND ALL APPLICABLE STATE SECURITIES OR `BLUE SKY' LAWS." 2.4. Use of Proceeds. The Company shall use the net cash proceeds of its --------------- sale of Securities to the Purchaser hereunder to fund its purchase of PCS Licenses at the PCS `C' Block Auction and to pay fees and expenses incurred in connection with the Transactions. ARTICLE III CLOSING 3.1. Time and Place of Closing. Upon the terms and subject to the ------------------------- conditions hereof, the closing of the Transactions (the "Closing") shall take ------- place at the offices of McDermott, Will & Emery, 28 State Street, Floor 33, Boston, Massachusetts at 10:00 a.m. local time simultaneously with the execution hereof, or at such other place and/or time and/or on such other date as the parties may agree (the "Closing Date"). The Closing shall be deemed to have ------------ occurred as of 12:01 a.m. on the Closing Date. 3.2. Closing Actions and Deliveries. To effect the purchase and sale of the ------------------------------ Securities and consummate the other Transactions, the parties shall on the Closing Date take the following actions: (a) Capital Contribution. The Parent shall contribute an amount equal -------------------- to the Initial Cash Contribution to the Purchaser. (b) Purchaser Payment. The Purchaser shall deliver to the Company by ----------------- wire transfer of immediately available funds to the account designated by the Company on or prior to the Closing Date an amount equal to the Initial Cash Contribution. (c) Delivery of Securities. The Company shall deliver to the Purchaser ---------------------- certificates duly executed by authorized signatories of the Company, representing the Securities to be issued to it in accordance with the terms of Section 2.2. (d) Other Deliveries. The parties shall execute and deliver or cause ---------------- to be executed and delivered all other documents, instruments, opinions and certificates contemplated by this Agreement to be delivered at the Closing or necessary and appropriate in order to consummate the Transactions contemplated to be consummated on the Closing Date. 3.3. Closing Costs; Taxes and Fees. The Company shall pay or cause to be ----------------------------- paid at the Closing or, if due prior to the Closing or thereafter, promptly when due, all transfer taxes (including sales taxes, gross receipts taxes, stamp taxes, and other taxes) payable solely as a result of a transfer of the Contributions pursuant to this Agreement, but excluding any federal, state, local or other jurisdictional income taxes (or franchise, excise, gross receipts or other taxes that are generally -8- imposed on a party on a periodic basis as a result of a party's status, presence, conduct of business, holding of assets, income, revenues, activities or other items). ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER The Purchaser represents and warrants to the Company as follows: 4.1. Organization, Power and Authority. --------------------------------- (a) The Purchaser is a corporation, duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization and has the requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. (b) It has the requisite power and authority to execute, deliver and perform this Agreement, and each other instrument, document, certificate and agreement required or contemplated to be executed, delivered and performed by it hereunder and thereunder to which it is or will be a party. (c) It is duly qualified to do business in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary other than any such jurisdiction in which the failure to be so qualified would not have a Material Adverse Effect on it or materially adversely affect the Transactions. (d) The execution and delivery of this Agreement by it and the consummation of the Transactions by it have been duly and validly authorized by its Board of Directors (or equivalent body) and no other proceedings on its part which have not been taken (including, without limitation, approval of its stockholders, partners or members) are necessary to authorize this Agreement or to consummate the Transactions. (e) This Agreement has been duly executed and delivered by it and constitutes its valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar Laws affecting or relating to enforcement of creditors' rights generally and may be subject to general principles of equity. (f) As of the Closing Date, after giving effect to the Transactions, it is not in breach of any obligation under this Agreement. 4.2. Consents; No Conflicts. Neither the execution, delivery and ---------------------- performance by it of this Agreement nor the consummation of the Transactions will (a) conflict with, or result in a breach or violation of, any provision of its organizational documents; (b) subject to obtaining the Consents set forth on Schedule 4.2, constitute, with or without the giving of notice or passage of time or both, a breach, violation or default, create a Lien, or give rise to any right of termination, modification, cancellation, prepayment or acceleration, under (i) any Law or License or (ii) any note, bond, -8- mortgage, indenture, lease, agreement or other instrument, in each case which is applicable to or binding upon it or any of its assets; or (c) require any Consent, other than those set forth on Schedule 4.2 or the approval of its board of directors, general partner, stockholders or similar constituent bodies, as the case may be (which approvals have been obtained), except in each case, where such breach, violation, default, Lien, right, or the failure to obtain or give such Consent would not have a Material Adverse Effect on it or materially adversely affect the Transactions. To its knowledge, there is no fact relating to it or its Affiliates that would be reasonably expected to prevent it from consummating the Transactions. 4.3. Litigation. There is no action, proceeding or investigation pending ---------- or, to its knowledge, threatened against it or any of its properties or assets that would be reasonably expected to have an adverse effect on its ability to consummate the Transactions to which it is a party or to fulfill its obligations under this Agreement or which seeks to prevent or challenge the Transactions. 4.4. FCC Compliance. It complies with all eligibility rules issued by the -------------- FCC to hold broadband PCS Licenses, including without limitation, FCC rules on foreign ownership. Set forth opposite its name on Schedule 4.4 are all "attributable" interests (within the meaning of Section 20.6 of the FCC's Rules) that it holds in CMRS licenses that overlap the territory covered by the PCS Licenses to be bid on at the PCS "C" Block Auction. 4.5. Brokers. It has not employed any broker, finder or investment banker ------- or incurred any liability for any brokerage fees, commissions or finder's fees in connection with the Transactions. 4.6. No Distribution. It is acquiring the Securities to be acquired by it --------------- hereunder for the purpose of investment and not with a view to or for sale in connection with any distribution thereof (other than in compliance with the Securities Act and all applicable state securities laws). 4.7. Investor Acknowledgments. (a) It is an "accredited investor" as ------------------------ defined in Regulation D of the Securities Act. Its representatives have been provided an opportunity to ask questions of, and have received answers thereto from, the Company and its representatives regarding the terms and conditions of its purchase of Securities, and the Company and its proposed business generally, and have obtained all additional information requested by it to verify the accuracy of all information furnished to it in connection with such purchase. (b) It has such knowledge and experience in financial and business affairs that it is capable of evaluating the merits and risks of purchasing the Securities it is purchasing hereunder. (c) It is not relying on and acknowledges that no representation is being made by the Company or any of its officers, employees, Affiliates, agents or representatives, except for representations and warranties expressly set forth in this Agreement, and, in particular, it is not relying on, and acknowledges that no representation is being made in respect of, (x) any projections, estimates or budgets delivered to or made available to them of future revenues, expenses or expenditures, or future results of operations and (y) any other information or documents delivered or made available to it or its representatives, except for representations and warranties expressly set forth in this Agreement and such information and documents obtained by it as a stockholder of the -9- Company and through its representatives who serve as members of the Company's board of directors, as the case may be. (d) In deciding to invest in the Company, it has relied exclusively on the representations and warranties expressly set forth in this Agreement, and the investigations made by itself and its representatives and its and such representatives' knowledge of the industry in which the Company proposes to operate. Based solely on such representations and warranties and such investigations and knowledge and such information obtained by him or it by virtue of his or its status as a stockholder of the Company, and through its representatives who serve as members of the Company's board of directors, as the case may be, it has determined that the Securities it is acquiring are a suitable investment for it. (e) The Purchaser understands that the Securities purchased hereby may not be sold, transferred, or otherwise disposed of without registration under the Securities Act or an exemption therefrom, and that in the absence of an effective registration statement covering the Securities or an available exemption from registration under the Securities Act, the Securities must be held indefinitely. In particular, the Purchaser is aware that none of the Securities may be sold pursuant to Rule 144 promulgated under the Securities Act unless all of the conditions of that Rule are met. Among the conditions for use of Rule 144 may be the availability of current information to the public about the Company. ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to the Purchaser as follows: 5.1. Organization, Power and Authority. (a) The Company is a corporation --------------------------------- duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation and has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted and as proposed to be conducted. (b) It has the requisite power, authority and/or legal capacity to execute, deliver and perform this Agreement and each other instrument, document, certificate and agreement required or contemplated to be executed, delivered and performed by it hereunder and thereunder to which it is or will be a party. (c) The Company is duly qualified to do business in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary other than any such jurisdiction in which the failure to be so qualified would not have a Material Adverse Effect on it or materially adversely affect the Transactions. (d) The execution and delivery of this Agreement and the consummation of the Transactions by it have been duly and validly authorized by its Board of Directors and shareholders and, except for the filing of an amendment to the Company's Restated Certificate with the office of -10- the Secretary of State of Delaware, no other proceedings which have not been taken are necessary to authorize this Agreement or to consummate the Transactions. (e) This Agreement has been duly executed and delivered by it and constitutes the valid and binding obligation of it, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar Laws affecting or relating to enforcement of creditors' rights generally and may be subject to general principles of equity. (f) As of the Closing, after giving effect to the Transactions, it is not in breach of any obligation under this Agreement. 5.2. Consents; No Conflicts. Neither the execution, delivery and ---------------------- performance of this Agreement nor the consummation of the Transactions will (a) conflict with, or result in a breach or violation of, any provision of its organizational documents; (b) subject to obtaining the Consents set forth on Schedule 5.2, constitute, with or without the giving of notice or passage of time or both, a breach, violation or default, create a Lien, or give rise to any right of termination, modification, cancellation, prepayment or acceleration, under (i) any Law or License, or (ii) any note, bond, mortgage, indenture, lease, agreement or other instrument, in each case which is applicable to or binding upon it or any of its assets; or (c) require any Consent, other than those set forth on Schedule 5.2 or the approval of its Board of Directors or its stockholders (which approval has been obtained), except in each case where such breach, violation, default, Lien, right, or the failure to obtain or give such Consent would not have a Material Adverse Effect on it or materially adversely affect the Transactions or the operation of its business after the Closing Date. To its knowledge, there is no fact relating to it or its Affiliates that would be reasonably expected to prevent it from consummating the Transactions or performing its obligations under this Agreement or disqualify it from obtaining the Consents required in order to consummate the Transactions. 5.3. Litigation. There is no action, proceeding or investigation pending ---------- or, to its knowledge, threatened against it or any of its properties or assets that would have an adverse effect on its ability to consummate the Transactions to which it is a party or to fulfill its obligations under this Agreement or to operate its business after the Closing Date, or which seeks to prevent or challenge the Transactions. There is no judgment, decree, injunction, rule or order outstanding against it which would limit in any material respect its ability to operate its business in the manner currently contemplated. 5.4. FCC Compliance. The Company complies, and after giving effect to the -------------- Transactions will comply, with all eligibility rules issued by the FCC to hold broadband PCS Licenses, including FCC rules on foreign ownership and the CMRS spectrum cap. 5.5. Brokers. It has not employed any broker, finder or investment banker ------- or incurred any liability for any brokerage fees, commissions or finder's fees in connection with the Transactions. 5.6. Capitalization (a) As of the date hereof, the authorized capital stock -------------- of the Company consists of 15,000 shares of Class A Common Stock, of which 7,500 shares are currently issued and -11- outstanding and 85,000 shares of Class B Common Stock, none of which is currently issued and outstanding. As of the Closing Date, after giving effect to the filing of the Restated Certificate and the Transactions there will be issued and outstanding the shares of Preferred Stock and Common Stock set forth on Schedule I. The record and beneficial owners of such outstanding shares of Common Stock and Preferred Stock, as of the Closing Date, after giving effect to the Transactions, are set forth on Schedule I. (b) Except as set forth on Schedule 5.6, on the Closing Date, after giving effect to the Transactions, there will not be any existing options, warrants, calls, subscriptions, or other rights, or other agreements or commitments, obligating the Company to issue, transfer or sell any shares of capital stock of the Company, except the Securities being sold hereunder. 5.7. Shares. The Securities being issued to the Purchaser hereunder, when ------ issued and paid for pursuant to the terms of this Agreement and after giving effect to the filing of the Restated Certificate, will be duly authorized, validly issued, fully paid and non-assessable, and will be free of any Liens caused or created by the Company, except as set forth in the Restated Certificate. 5.8. Offering of Securities. (a) None of the Company or any Person acting ---------------------- on its behalf has offered the Securities or any similar equity securities of the Company for sale to, or solicited any offers to buy Securities or any similar equity securities of the Company from, any Person, other than the Purchaser and a limited number of other "accredited investors" (as defined in Rule 501(a) under the Securities Act). (b) None of the Company or any Person acting on its behalf will, directly or indirectly, take any action which might subject the offering, issuance or sale of the Securities to the registration and prospectus delivery requirements of Section 5 of the Securities Act. (c) Assuming the accuracy of the representations and warranties of the Purchaser contained in Section 4.7, each of the offering and sale of Securities under this Agreement to the Purchaser complies with all applicable requirements of Federal and state securities laws. 5.9. Subsidiaries. The Company has no Subsidiaries. ------------ ARTICLE VI COVENANTS 6.1. Consummation of Transactions. Each party shall use all commercially ---------------------------- reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable and consistent with applicable law to carry out all of their respective obligations under this Agreement and to consummate the Transactions, which efforts shall include, without limitation, the following: (a) The parties shall use all commercially reasonable efforts to cause the Closing to occur and the Transactions to be consummated in accordance with the terms hereof, and, without limiting the generality of the foregoing, to obtain all necessary Consents including the approval of -12- this Agreement and the Transactions by all Governmental Authorities and agencies, including the FCC delivery and performance of this Agreement or the consummation of the Transactions, and to make all filings with and to give all notices to third parties which may be necessary or reasonably required in order for the parties to consummate the Transactions. (b) Each party shall furnish to the other parties all information concerning such party and its Affiliates reasonably required for inclusion in any application or filing to be made by the Company or any other party in connection with the Transactions or otherwise to determine compliance with applicable FCC Law. (c) Upon the request of any other party, each party shall forthwith execute and deliver, or cause to be executed and delivered, such further instruments of assignment, transfer, conveyance, endorsement, direction or authorization and other documents as may reasonably be requested by such party in order to effectuate the purposes of this Agreement. 6.2. Use of Proceeds. The Company shall use the proceeds of the sale of --------------- Securities only for the purposes described in Section 2.4. 6.3. Offering of Securities. None of the Company or any Person acting on ---------------------- its behalf will, directly or indirectly, take any action which might subject the offering, license or sale of the Securities to the registration and prospectus delivery requirements of Section 5 of the Securities Act. ARTICLE VII [INTENTIONALLY OMITTED] ARTICLE VIII SURVIVAL AND INDEMNIFICATION 8.1. Survival. Except for the representations and warranties contained in -------- Sections 4.1(a), (b), (d) and (e), and 5.1(a), (b), (d) and (e) (which shall survive the Closing, without regard to any investigation made by any of the parties hereto, until the expiration of the applicable statute of limitations relating thereto), the representations and warranties made in this Agreement shall survive the Closing without regard to any investigation made by any of the parties hereto until the second anniversary thereof and shall thereupon expire together with any right to indemnification in respect thereof (except to the extent a written notice asserting a claim for breach of any such representation or warranty and describing such claim in reasonable detail shall have been given prior to the expiration of the applicable survival period to the party which made such representation or warranty). The covenants and agreements contained herein to be performed or complied with prior to the Closing shall expire at the Closing. The covenants and agreements contained in this Agreement to be performed or complied with after the Closing shall survive the Closing; provided that the right to indemnification pursuant to this Article VIII in respect of a breach of a representation or warranty shall expire upon the application of the applicable survival period of the Closing (except to the extent written notice asserting a claim thereunder and describing such claim -13- in reasonable detail shall have been given prior to such expiration to the party from whom such indemnification is sought). After the Closing, the sole and exclusive remedy of the parties for any breach or inaccuracy of any representation or warranty contained in this Agreement, or any other claim (whether or not alleging a breach of this Agreement) that arises out of the facts and circumstances constituting such breach or inaccuracy, shall be the indemnity provided in this Article VIII. 8.2. Indemnification by the Purchaser. The Purchaser shall indemnify and -------------------------------- hold harmless the Company and its Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them (each, a "Section 8.2 Indemnified Party"), against all liabilities and ----------------------------- expenses (including amounts paid in satisfaction of judgments, in compromise, as fines and penalties, and as counsel fees) (collectively, "Losses") incurred by ------ him or it in connection with the investigation, defense, or disposition of any action, suit or other proceeding in which any Section 8.2 Indemnified Party may be involved or with which he or it may be threatened (whether arising out of or relating to matters asserted by third parties against a Section 8.2 Indemnified Party or incurred or sustained by such party in the absence of a third-party claim), that arises out of or results from (a) any representation or warranty of the Purchaser contained in this Agreement being untrue in any material respect as of the date on which it was made or (b) any material default by the Purchaser or any of its Affiliates in the performance of their respective obligations under this Agreement, except to the extent (but only to the extent) any such Losses arise out of or result from the gross negligence or willful misconduct of such Section 8.2 Indemnified Party or its Affiliates. 8.3. Indemnification by the Company. The Company shall indemnify and hold ------------------------------ harmless the Purchaser and its Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them (each, a "Section 8.3 Indemnified Party"), against all Losses incurred by ----------------------------- him or it in connection with the investigation, defense, or disposition of any action, suit or other proceeding in which any Section 8.3 Indemnified Party may be involved or with which he or it may be threatened (whether arising out of or relating to matters asserted by third parties against a Section 8.3 Indemnified Party or incurred or sustained by such party in the absence of a third-party claim), that arises out of or results from (a) any representation or warranty of the Company contained in this Agreement being untrue in any material respect as of the date on which it was made or (b) any material default by the Company or any of its Affiliates in the performance of their respective obligations under this Agreement, except to the extent (but only to the extent) any such Losses arise out of or result from the gross negligence or willful misconduct of such Section 8.3 Indemnified Party or its Affiliates. -14- 8.4. Procedures. ---------- (a) The terms of this Section 8.4 shall apply to any claim (a "Claim") ----- for indemnification under the terms of Sections 8.2 or 8.3. The Section 8.2 Indemnified Party or Indemnified Party (each, an "Indemnified Party"), as ----------------- the case may be, shall give prompt written notice of such Claim to the indemnifying party (the "Indemnifying Party") under the applicable Section, ------------------ which party may assume the defense thereof, provided that any delay or failure to so notify the Indemnifying Party shall relieve the Indemnifying Party of its obligations hereunder only to the extent, if at all, that it is materially prejudiced by reason of such delay or failure. The Indemnified Party shall have the right to approve any counsel selected by the Indemnifying Party and to approve the terms of any proposed settlement, such approval not to be unreasonably delayed or withheld (unless, in the case of approval of a proposed settlement, such settlement provides only, as to the Indemnified Party, the payment of money damages actually paid by the Indemnifying Party and a complete release of the Indemnified Party in respect of the claim in question). Notwithstanding any of the foregoing to the contrary, the provisions of this Article VIII shall not be construed so as to provide for the indemnification of any Indemnified Party for any liability to the extent (but only to the extent) that such indemnification would be in violation of applicable law or that such liability may not be waived, modified or limited under applicable law, but shall be construed so as to effectuate the provisions of this Article VIII to the fullest extent permitted by law. (b) In the event that the Indemnifying Party undertakes the defense of any Claim, the Indemnifying Party will keep the Indemnified Party advised as to all material developments in connection with such Claim, including, but not limited to, promptly furnishing the Indemnified Party with copies of all material documents filed or served in connection therewith. (c) In the event that the Indemnifying Party fails to assume the defense of any Claim within ten business days after receiving written notice thereof, the Indemnified Party shall have the right, subject to the Indemnifying Party's right to assume the defense pursuant to the provisions of this Article VIII, to undertake the defense, compromise or settlement of such Claim for the account of the Indemnifying Party. Unless and until the Indemnified Party assumes the defense of any Claim, the Indemnifying Party shall advance to the Indemnified Party any of its reasonable attorneys' fees and other costs and expenses incurred in connection with the defense of any such action or proceeding. Each Indemnified Party shall agree in writing prior to any such advancement that, in the event he or it receives any such advance, such Indemnified Party shall reimburse the Indemnifying Party for such fees, costs and expenses to the extent that it shall be determined that he or it was not entitled to indemnification under this Article VIII. (d) In no event shall an Indemnifying Party be required to pay in connection with any Claim for more than one firm of counsel (and local counsel) for each of the following groups of Indemnified Parties: (i) the Purchaser, its Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them; and (ii) the Company, its respective Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them. -15- ARTICLE IX [INTENTIONALLY OMITTED] ARTICLE X MISCELLANEOUS PROVISIONS 10.1. Amendment and Modification. This Agreement may be amended, -------------------------- modified or of the parties. 10.2. Waiver of Compliance; Consents. Any failure of any of the parties ------------------------------ to comply with any obligation, covenant, agreement or condition herein may be waived by the party or parties entitled to the benefits thereof only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be given in writing in a manner consistent with the requirement for a waiver of compliance as set forth in this Section 10.2. 10.3. Notices. All notices or other communications hereunder shall be ------- in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person against receipt, by facsimile transmission with confirmation of receipt, or by registered or certified mail (return receipt requested), postage prepaid, with an acknowledgment of receipt signed by the addressee or an authorized representative thereof, addressed as follows (or to such other address for a party as shall be specified by like notice; provided that notice of a change of address shall be effective only upon receipt thereof): -16- If to a Purchaser, to it: 1010 N. Glebe Road, Suite 800 Arlington, Virginia 22201 Attn: General Counsel Facsimile: (703) 236-1376 If to the Company, to it: 1010 N. Glebe Road, Suite 800 Arlington, Virginia 22201 Attn: General Counsel Facsimile: (703) 236-1376 10.4. Parties in Interest; Assignment. This Agreement is binding upon ------------------------------- and is solely for the benefit of the parties hereto and their respective permitted successors, legal representatives and permitted assigns. Neither the Company nor the Purchaser may assign its rights and obligations hereunder without the prior written consent of each of the other parties. 10.5. Applicable Law. This Agreement shall be governed by and construed -------------- in accordance with the laws of the State of New York without giving effect to the conflicts of law principles thereof. The parties hereto hereby irrevocably and unconditionally consent to submit to the non-exclusive jurisdiction of the courts of the State of New York and of the United States of America located in the County of New York, New York (the "Courts") for any litigation arising out ------ of or relating to this Agreement and the Transactions, waive any objection to the laying of venue of any such litigation in the Courts and agrees not to plead or claim in any Court that such litigation brought therein has been brought in an inconvenient forum. 10.6. Counterparts. This Agreement may be executed in two or more ------------ counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. 10.7. Interpretation. The article and section headings contained in -------------- this Agreement are for convenience of reference only, are not part of the agreement of the parties and shall not affect in any way the meaning or interpretation of this Agreement. 10.8. Entire Agreement. This Agreement, including the exhibits and ---------------- schedules hereto and thereto and the certificates and instruments delivered pursuant to the terms of this Agreement, embody the entire agreement and understanding of the parties hereto in respect of the Transactions. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such Transactions. 10.9. Publicity. So long as this Agreement is in effect, the parties --------- agree to consult with each other in issuing any press release or otherwise making any public statement with respect to the Transactions, and no party shall issue any press release or make any such public statement prior to -17- such consultation, except as may be required by Law. No press release or other public statement by the parties hereto shall disclose any of the financial terms of the Transactions without the prior consent of the other parties, except as may be required by Law. A breach of the provisions of this Section 10.10 by a party shall not give rise to any right to terminate this Agreement. 10.10. Specific Performance. The parties hereto agree that irreparable -------------------- damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any Courts. 10.11. Remedies Cumulative. All rights, powers and remedies provided ------------------- under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise or beginning of the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. 10.12. Severability. Any provision of this Agreement that is prohibited ------------ or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. If any court determines that any covenant or any part of any covenant is invalid or unenforceable, such covenant shall be enforced to the extent permitted by such court, and all other covenants shall not thereby be affected and shall be given full effect, without regard to the invalid portions. 10.13. Beneficiaries of Agreement. The representations, warranties, -------------------------- covenants and agreements expressed in this Agreement are for the sole benefit of the other parties hereto and the Section 8.2 Indemnified Parties and Section 8.3 Indemnified Parties and are not intended to benefit, and may not be relied upon or enforced by, any other party as a third party beneficiary or otherwise. [END OF PAGE] -18- [EXECUTION PAGE OF STOCK PURCHASE AGREEMENT] IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. VIPER WIRELESS, INC. By: /s/ Thomas H. Sullivan ------------------------------ Name: Thomas H. Sullivan Title: President TELECORP HOLDING CORP., INC. By: /s/ Thomas H. Sullivan ------------------------------ Name: Thomas H. Sullivan Title: President TELECORP PCS, INC. By: /s/ Thomas H. Sullivan ------------------------------ Name: Thomas H. Sullivan Title: Executive Vice President -19-
Stockholder Shares of Class A Shares of Class B Shares of Series A Common Stock Common Stock Preferred Stock Gerald Vento 3,750 0 0 Thomas Sullivan 3,750 0 0 TeleCorp Holding 0 42,500 71,274.20 Corp., Inc.
-20- SCHEDULE 4.2 Purchaser Consents ------------------ None. -21- SCHEDULE 4.4 Attributable Interests ---------------------- TeleCorp Holding Corp., Inc holds the following licenses: 1. Beaumont-Port Arthur, TX BTA 2. Little Rock, AR BTA 3. Memphis, TN BTA 4. New Orleans, LA BTA Upon the closing of the transactions contemplated by the License Acquisition Agreement by and between Mercury PCS II, LLC and TeleCorp PCS, Inc., TeleCorp Holding Corp., Inc. will hold: 1. Baton Rouge, LA BTA 2. Hammond, LA BTA 3. Houma-Thibodeaux, LA BTA 4. Lafayette-New Iberia, LA BTA Upon the closing of the transactions contemplated by the License Acquisition Agreement by and between Wireless 2000, Inc. and TeleCorp PCS, Inc., TeleCorp Holding Corp., Inc. will hold: 1. Alexandria, LA BTA 2. Monroe, LA BTA 3. Lake Charles, LA BTA -22- SCHEDULE 5.2 Company Consents ---------------- None. -23- SCHEDULE 5.6 Outstanding Options, Warrants, etc. ----------------------------------- None. EX-10.11 25 PUERTO RICO STOCK PURCHASE AGREEMENT EXHIBIT 10.11 ================================================================================ PUERTO RICO STOCK PURCHASE AGREEMENT by and among CASH EQUITY INVESTORS, MANAGEMENT STOCKHOLDERS, PUERTO RICO ACQUISITION CORP., and TELECORP PCS, INC. Dated as of March 30, 1999 =============================================================================== Exhibit 10.11. Table of Contents: to Annex Draft 02/16/99 TABLE OF CONTENTS ----------------- Page ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE.........................2 SECTION 1.1 Terms Incorporated by Reference............................2 SECTION 1.2 Additional Definitions.....................................2 SECTION 1.3 Other Definitions..........................................7 ARTICLE II THE NOTES.........................................................8 SECTION 2.1 Terms of Series E Notes....................................8 SECTION 2.2 Execution and Authentication..............................10 ARTICLE III PREPAYMENTS AND MANDATORY REDEMPTIONS...........................10 SECTION 3.1 Optional Prepayments......................................10 SECTION 3.2 Premium...................................................11 SECTION 3.3 Mandatory Redemption of Series E Notes....................11 SECTION 3.4 Optional Redemption Upon Equity Issuance..................12 SECTION 3.5 Acquisition of Notes......................................12 ARTICLE IV SUPPLEMENTARY COVENANTS..........................................12 SECTION 4.1 Limitation on Transactions with Affiliates................12 SECTION 4.2 Limitation on Incurrence of Indebtedness..................13 SECTION 4.3 Limitation on Restricted Payments.........................15 SECTION 4.4 Payment of Taxes and Other Claims.........................18 SECTION 4.5 Notice of Defaults........................................19 SECTION 4.6 Maintenance of Properties.................................19 SECTION 4.7 Compliance Certificate....................................19 SECTION 4.8 Provision of Financial Information........................20 SECTION 4.9 Waiver of Stay, Extension or Usury Laws...................20 SECTION 4.10 Limitation on Layered Debt................................20 SECTION 4.11 Limitation on Restrictions Affecting Restricted Subsidiaries.............................................21 SECTION 4.12 Limitation on Liens.......................................21 SECTION 4.13 Subsidiary Guarantees.....................................22 SECTION 4.14 Limitation on Activities of the Company and the Restricted Subsidiaries..................................23 SECTION 4.15 Amendments to Agreements..................................23 ARTICLE V EVENTS OF DEFAULT.................................................23 SECTION 5.1 Events of Default.........................................23 ARTICLE VI SUBORDINATION....................................................24 SECTION 6.1 Series E Notes Subordinate to Senior Debt.................24 SECTION 6.2 Payment of Proceeds Upon Dissolution, Etc.................24 SECTION 6.3 No Payment When Designated Senior Debt in Default.........26 SECTION 6.4 Acceleration of Series E Notes............................27 SECTION 6.5 Payment Permitted If No Default...........................28 SECTION 6.6 Obligation of Company Unconditional.......................28 SECTION 6.7 Subrogation To Rights of Holders of Senior Debt...........28 SECTION 6.8 Provisions Solely To Define Relative Rights...............29 SECTION 6.9 No Waiver of Subordination Provisions.....................29 SECTION 6.10 Reliance On Judicial Order or Certificate of Liquidating Agent....................................................30 SECTION 6.11 Notice to Trustee.........................................30 SECTION 6.12 Trustee's Relation to Senior Debt.........................31 SECTION 6.13 Series E Note Holders Authorize Trustee to Effectuate Subordination............................................31 SECTION 6.14 This Article Not to Prevent Event of Default..............31 SECTION 6.15 Trustee's Compensation Not Prejudiced.....................32 SECTION 6.16 Subordination Provisions Not Applicable to Money Held in Trust for Holders of Series E Notes; Payments May Be Paid prior to Dissolution................................32 ARTICLE VII TAX MATTERS.....................................................32 SECTION 7.1 Taxes.....................................................32 ARTICLE VIII THE TRUSTEE...............................................35 SECTION 8.1 Trustee's Disclaimer......................................35 ARTICLE IX GUARANTEE........................................................36 SECTION 9.1 Unconditional Guarantee...................................36 SECTION 9.2 Severability..............................................36 SECTION 9.3 Release of a Guarantor....................................37 SECTION 9.4 Limitation of Guarantor's Liability.......................37 SECTION 9.5 Contribution..............................................37 SECTION 9.6 Execution of Guarantee....................................38 SECTION 9.7 Subordination of Subrogation and Other Rights.............38 ARTICLE X SUBORDINATION OF GUARANTEE........................................38 SECTION 10.1 Guarantee Obligations Subordinated to Designated Senior Debt.....................................................38 SECTION 10.2 Payment of Proceeds Upon Dissolution, Etc.................39 SECTION 10.3 No Payment When Designated Senior Debt in Default.........40 SECTION 10.4 Acceleration of Series E Notes............................42 SECTION 10.5 Payments Permitted If No Default..........................42 SECTION 10.6 Obligations of Guarantors Unconditional...................42 SECTION 10.7 Subrogation To Rights of Holders of Designated Senior Debt.....................................................43 SECTION 10.8 Provisions Solely to Define Relative Rights...............43 SECTION 10.9 No Waiver of Subordination Provisions.....................44 SECTION 10.10 Reliance On Judicial Order or Certificate of Liquidating Agent....................................................44 SECTION 10.11 Notice to Trustee.........................................45 SECTION 10.12 Trustee's Relation to Designated Senior Debt..............45 SECTION 10.13 Series E Note Holders Authorize Trustee to Effectuate Subordination............................................46 SECTION 10.14 This Article Not to Prevent Event of Default..............46 SECTION 10.15 Trustee's Compensation Not Prejudiced.....................46 SECTION 10.16 Subordination Provisions Not Applicable to Money Held in Trust for Holders of Series E Notes; Payments May Be Paid prior to Dissolution................................46 ARTICLE XI MISCELLANEOUS....................................................47 SECTION 11.1 Reference to Indenture....................................47 SECTION 11.2 Benefits of Indenture.....................................47 SECTION 11.3 Amendments Only With Consent of the Holders...............47 SECTION 11.4 Governing Law.............................................48 SECTION 11.5 Successors................................................48 SECTION 11.6 Counterparts..............................................48 PUERTO RICO STOCK PURCHASE AGREEMENT ------------------------------------ PUERTO RICO STOCK PURCHASE AGREEMENT, dated as of March 30, 1999, by and among the investors referred to on Schedule I (individually, a "Cash Equity ----------- Investor" and, collectively, the "Cash Equity Investors"), the individuals - -------- --------------------- listed on Schedule II (individually, a "Management Stockholder" and, together, ---------------------- the "Management Stockholders"), Puerto Rico Acquisition Corp., a Delaware ----------------------- corporation ("Acquisition Corp.") and TeleCorp PCS, Inc., a Delaware corporation ----------------- (the "Company"). ------- W I T N E S S E T H : ------------------- WHEREAS, the Cash Equity Investors and the Management Stockholders are stockholders of the Company; WHEREAS, the Management Stockholders are also the sole stockholders of Acquisition Corp.; WHEREAS, AT&T Wireless PCS, Inc., a Delaware corporation ("AT&T PCS"), -------- and Acquisition Corp. entered into a letter of intent, dated September, 1998, setting forth the terms upon which Acquisition Corp. would acquire from AT&T PCS a portion of the A Block PCS License for the San Juan MTA, including 20 MHz of the 30 MHz of the PCS licenses owned by AT&T PCS covering such market, together with certain other rights and assets; WHEREAS, contemporaneously with the closing hereunder, the Management Stockholders will enter into a stock-for-stock exchange whereby the Management Stockholders will transfer all of the stock of Acquisition Corp. to the Company's direct wholly-owned subsidiary, TeleCorp Communications, Inc. ("Communications"), in exchange for shares of the Company's voting common stock as set forth on Schedule III (b) (the "Stock Exchange"), thus causing Acquisition Corp. to become a direct wholly-owned subsidiary of Communications and facilitating the Company's obtaining the rights under the letter of intent referenced in the preceding paragraph; WHEREAS, simultaneously herewith, the Company and AT&T PCS are executing an Asset Purchase Agreement, dated of even date herewith (the "Acquisition Agreement"), pursuant to which the Company and/or one or more of --------------------- its direct or indirect wholly-owned Subsidiaries shall acquire from AT&T PCS such portion of the A Block PCS License for the San Juan MTA, including 20 MHz of the 30 MHz of the PCS licenses owned by AT&T PCS covering such market, together with certain other rights and assets set forth in the Acquisition Agreement (the "AT&T PCS License"); ---------------- WHEREAS, in connection with the consummation of the transactions contemplated by the Acquisition Agreement, (a) each of the Cash Equity Investors wishes to purchase additional securities of the Company in consideration of contributions of cash to the capital of the Company, (b) the Company wishes to accept such contributions and issue additional securities to each of the Cash Equity Investors all on the terms and subject to the conditions herein set forth and (c) the Company and the Cash Equity Investors wish to provide an opportunity for the Cash Equity Investors to purchase their pro rata share of the Series E Notes. WHEREAS, the transactions contemplated hereby will be consummated simultaneously with the consummation of the transactions contemplated by the Acquisition Agreement; and NOW, THEREFORE, in consideration of the promises and the mutual representations, warranties, covenants, conditions and agreements hereinafter set forth, the parties agree as follows: ARTICLE I DEFINITIONS For purposes of this Agreement: "Acquisition Corp." has the meaning set forth in the preamble. ----------------- "Acquisition Agreement" has the meaning set forth in the recitals. --------------------- "Affiliate" means, with respect to any Person, any other Person that --------- directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with that Person. For purposes of this definition, "control" (including the terms "controlling" and "controlled") means ------- ----------- ---------- the power to direct or cause the direction of the management and policies of a Person, directly or indirectly, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise. "Aggregate Commitment" means, with respect to each Cash Equity -------------------- Investor, the amount set forth opposite its name on Schedule III(a) under the heading "Aggregate Commitment." "Agreement" means this Puerto Rico Stock Purchase Agreement, as the --------- same may be amended, modified or supplemented in accordance with the terms hereof. "AT&T PCS" has the meaning set forth in the preamble. -------- "AT&T PCS License" has the meaning set forth in the recitals. ---------------- "Base Indenture" has the meaning set forth in Section 6.8. -------------- "Business Day" means any day other than a Saturday, Sunday or a legal ------------ holiday in New York, New York or any other day on which commercial banks in New York, New York are authorized by law or governmental decree to close. -2- "Capital Stock" means any and all shares, interests, participations or ------------- other equivalents (however designated) of capital stock of a corporation, and any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase or subscribe for any of the foregoing or any warrants, rights or options to purchase or subscribe for any such warrants, rights or options. "Cash Equity Investor" has the meaning set forth in the preamble. -------------------- "Claim" has the meaning set forth in Section 8.5(a). ----- "Class C Common Stock" means the Class C Common Stock, par value $.01 -------------------- per share, of the Company. "Class D Common Stock" means the Class D Common Stock, par value $.01 -------------------- per share, of the Company. "Closing" has the meaning set forth in Section 3.1. ------- "Closing Date" has the meaning set forth in Section 3.1. ------------ "Common Stock" means, collectively, Voting Preference Stock, the ------------ Tracked Common Stock, the Voting Common Stock and the Non-Voting Common Stock. "Communications" has the meaning set forth in the recitals. -------------- "Company" has the meaning set forth in the preamble. ------- "Contributions" means the Aggregate Commitments, the Initial Capital ------------- Contributions and the additional cash contributions in respect of Unfunded Commitments, in each case, of the Cash Equity Investors. "Confidential Information" means any and all information regarding the ------------------------ business, finances, operations, products, services and customers of the Person specified and its Affiliates, in written or oral form or in any other medium. "Consents" means all consents and approvals of Governmental -------- Authorities or other third parties necessary to authorize, approve or permit the parties hereto to consummate the Transactions and for the Company to operate its business after the Closing Date as currently contemplated. "Credit Agreement" means the agreement among the Company, the lenders ---------------- and the agents referred to therein, as of July 17, 1998, providing a credit facility having aggregate commitments of $525 million, as the same may be amended, modified or supplemented in accordance with the terms thereof. -3- "Credit Documents" means the Credit Agreement and all agreements, ---------------- instruments and documents executed and delivered pursuant thereto, as the same may from time to time be amended, modified or supplemented in accordance with the terms thereof. "Excluded Stock" shall mean with respect to each Management -------------- Stockholder, the number of shares of Preferred Stock and Common Stock set forth opposite his name on Schedule II; provided, however, that if a Management -------- Stockholder Transfers (as such term is defined in the Stockholders' Agreement) any shares of Preferred Stock and Common Stock (other than to satisfy his indemnification obligations hereunder) the number of Excluded Shares held by such Management Stockholder shall be reduced by the number of shares of Common Stock so Transferred. "FCC" means the Federal Communications Commission or similar --- regulatory authority established in replacement thereof. "FCC Law" means the Communications Act of 1934, as amended, including ------- as amended by the Telecommunications Act of 1996, and the rules, regulations and policies promulgated thereunder. "Final Order" has the meaning set forth in Section 7.1(b). ----------- "Financing" has the meaning set forth in the SBIC Regulations. --------- "Governmental Authority" means a Federal, state or local court, ---------------------- legislature, governmental agency (including, without limitation, the United States Department of Justice), commission or regulatory or administrative authority or instrumentality. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of ------- 1976, as amended, and the rules and regulations promulgated thereunder. "Indemnified Party" has the meaning set forth in Section 8.5(a). ----------------- "Indemnifying Party" has the meaning set forth in Section 8.5(a). ------------------ "Initial Cash Contribution" means, with respect to each Cash Equity ------------------------- Investor, the amount set forth opposite its name on Schedule III(a) under the heading "Initial Cash Contribution." "Joint Venture Notes" has the meaning set forth in the Acquisition ------------------- Agreement. "Law" means applicable common law and any statute, ordinance, code or --- other law, rule, permit, permit condition, regulation, order, decree, technical or other standard, requirement or procedure enacted, adopted, promulgated, applied or followed by any Governmental Authority. -4- "Lenders" has the meaning set forth in Section 10.5. ------- "License" means a license, permit, certificate of authority, waiver, ------- approval, certificate of public convenience and necessity, registration or other authorization, consent or clearance to construct or operate a facility, including any emissions, discharges or releases therefrom, or to transact an activity or business, to construct a tower or to use an asset or process, in each case issued or granted by a Governmental Authority. "License Transfer" means the assignment of any License requiring the ---------------- Consent of the FCC or any equivalent state Governmental Authority. "Lien" means, with respect to any asset, any mortgage, lien, pledge, ---- charge, security interest, right of first refusal or right of others therein, or encumbrance of any nature whatsoever in respect of such asset. "Losses" has the meaning set forth in Section 8.2. ------ "Lucent Notes" has the meaning set forth in Section 6.8. ------------ "Management Agreement" means the Management Agreement between the -------------------- Company and TeleCorp Management Corp., dated July 17, 1998, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Management Stockholders" has the meaning set forth in the preamble. ----------------------- "Material Adverse Effect" means a material adverse effect on the ----------------------- business, financial condition, assets, liabilities or results of operations or prospects of the Person specified. "New York Courts" has the meaning set forth in Section 10.6. --------------- "Non-Voting Common Stock" means the Company's Class B Non-Voting ----------------------- Common Stock, par value $.01 per share. "Opinion of Counsel" or "Opinion of Special FCC Counsel" means, with ------------------ ------------------------------ respect to any Person, a legal opinion of such Person's counsel substantially in the form and substance of the legal opinion rendered on behalf of such Person in connection with the consummation on July 17, 1998 of the transactions contemplated by the Securities Purchase Agreement. "Person" means an individual, corporation, partnership, limited ------ liability company, association, joint stock company, Governmental Authority, business trust, unincorporated organization, or other legal entity. "Pledge Agreements" means the Pledge Agreements between the Company ----------------- and each Cash Equity Investor, in substantially the form of Exhibit A, to be dated as of the Closing -5- Date, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Preferred Stock" means the shares of Series A Preferred Stock, Series --------------- B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock and Senior Common Stock. "Regulatory Problem" means, with respect to any SBIC Holder providing ------------------ Financing under this Agreement, any set of facts or circumstances wherein it has been asserted by any governmental regulatory agency (or any SBIC Holder reasonably believes in good faith that there is a substantial risk of such assertion) that such SBIC Holder and its Affiliates are not entitled to hold, or exercise any significant right with respect to, the Securities. "Related Agreements" means the Management Agreement and Stockholders' ------------------ Agreement. "Related Agreement Amendments" has the meaning set forth in Section ---------------------------- 6.8. "Restated Certificate" means the Second Amended and Restated -------------------- Certificate of Incorporation of the Company, dated as of the Closing Date. "SBA" has the meaning set forth in Section 6.5(b). --- "SBA Compliance Documents" has the meaning set forth in 7.4(g). ------------------------ "SBIC" means a small business investment company licensed under the ---- SBIC Act. "SBIC Act" means the Small Business Investment Company Act of 1958, as -------- amended. "SBIC Holder" means each Cash Equity Investor that is an SBIC. ----------- "SBIC Regulations" means the SBIC Act and the regulations issued ---------------- thereunder as set forth in 13 CFR 107 and 121, as amended. "Section 8.2 Indemnified Party" has the meaning set forth in Section ----------------------------- 8.2. "Section 8.3 Indemnified Party" has the meaning set forth in Section ----------------------------- 8.3. "Section 8.4 Indemnified Party" has the meaning set forth in Section ----------------------------- 8.4. "Securities" means the shares of Preferred Stock being issued ---------- hereunder, together with any shares of Preferred Stock or Common Stock issued upon conversion of or delivered in substitution or exchange for any of the foregoing. -6- "Securities Act" means the Securities Act of 1933, as amended. -------------- "Securities Purchase Agreement" means the Securities Purchase ----------------------------- Agreement dated as of January 23, 1998, by and among the Company, AT&T PCS, the Cash Equity Investors and the other parties named therein. "Senior Common Stock" means the Senior Common Stock, par value $.01 ------------------- per share, of the Company. "Series A Preferred Stock" has the meaning set forth in Section 2.2. ------------------------ "Series B Preferred Stock" means the Series B Preferred Stock, par ------------------------ value $.01 per share, of the Company. "Series C Preferred Stock" has the meaning set forth in Section 2.2. ------------------------ "Series D Notes" has the meaning set forth in the Acquisition -------------- Agreement. "Series D Preferred Stock" has the meaning set forth in Section 2.2. ------------------------ "Series E Notes" means Series E Senior Subordinated Notes -------------- substantially in the form attached hereto as Exhibit B issued by the Company pursuant to an Indenture substantially in the form attached hereto as Exhibit C, which Notes are pari passu with the Series D Notes and are convertible into shares of Series C Preferred Stock and Voting Common Stock. "Series E Preferred Stock" has the meaning set forth in Section ------------------------ 2.1(c). "Series F Preferred Stock" has the meaning set forth in Section 2.2. ------------------------ "Stock Exchange" has the meaning set forth in the recitals. -------------- "Stockholders' Agreement" means the Stockholders' Agreement, by and ----------------------- among the Company, AT&T PCS, the Cash Equity Investors, and the other parties named therein, as stockholders, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Subsidiary" shall mean, with respect to any Person, a corporation or ---------- other entity of which 50% or more of the voting power or the voting equity securities or equity interest is owned, directly or indirectly, by such Person. "Summary of Principal Terms" has the meaning set forth in Section -------------------------- 10.15. "Tracked Common Stock" means, collectively, the Class C Common Stock -------------------- and the Class D Common Stock. "Transactions" means the transactions contemplated by this Agreement. ------------ -7- "Unfunded Commitment" has the meaning set forth in Section 2.1 ------------------- "Voting Common Stock" means the Class A Voting Common Stock, par value ------------------- $.01 per share, of the Company. "Voting Preference Stock" means the Voting Preference Stock, par value ----------------------- $.01 per share, of the Company. When a reference is made in this Agreement to an Article or a Section, such reference shall be to an Article or a Section of this Agreement unless otherwise indicated. Unless the context otherwise requires, the terms defined hereunder shall have the meanings therein specified for all purposes of this Agreement, applicable to both the singular and plural forms of any of the terms defined herein. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." The use of a gender herein shall be deemed to include the neuter, masculine and feminine genders whenever necessary or appropriate. Whenever the word "herein" or "hereof" is used in this Agreement, it shall be deemed to refer to this Agreement and not to a particular Section of this Agreement unless expressly stated otherwise. ARTICLE II CONTRIBUTIONS; PURCHASE AND SALE -------------------------------- OF SECURITIES; CERTAIN RESTRICTIONS ON TRANSFER ----------------------------------------------- 2.1. Cash Equity Investor and Management Stockholder Contributions. (a) ------------------------------------------------------------- Upon the terms and subject to the conditions hereof and in reliance upon the representations, warranties and agreements herein contained: (i) effective upon the Closing, each Cash Equity Investor hereby irrevocably commits, severally and not jointly, to contribute to the capital of the Company an amount equal to its Aggregate Commitment, and (ii) at the Closing, each Cash Equity Investor shall contribute to the capital of the Company an amount equal to its Initial Cash Contribution and the Company shall accept such capital contribution. Each Cash Equity Investor shall contribute to the capital of the Company an additional amount equal to the excess of its Aggregate Commitment over its Initial Cash Contribution in the amounts and on the dates specified on Schedule III(a) (or such earlier dates as may be established in accordance with the terms of the Stockholders' Agreement). The obligation of each Cash Equity Investor to make such additional cash contributions in respect of its Aggregate Commitment in accordance with this Section 2.1 is sometimes referred to herein as the "Unfunded Commitment." ------------------- Nothing herein shall be construed to require any Cash Equity Investor to make contributions in an aggregate amount in excess of its Aggregate Commitment or later than the third anniversary of the Closing Date. (b) Each Cash Equity Investor acknowledges and agrees that, if the Closing occurs, its obligation to make capital contributions to the Company after the Closing Date in -8- respect of its Unfunded Commitment constitutes an irrevocable and unconditional obligation, and shall not be subject to counterclaim, set-off, deduction or defense, or to abatement, suspension, deferment, diminution or reduction for any reason whatsoever. By way of amplification, and not in limitation of the foregoing, each Cash Equity Investor further acknowledges and agrees to fulfill its obligations in respect of its Unfunded Commitment regardless of any claims it may have against any other Person (whether or not related to the Transactions) and regardless of the existence or non-existence of any facts or circumstances (whether or not such facts and circumstances existed on the date hereof or the Closing Date or were then known by it). Each Cash Equity Investor further agrees to execute and deliver a Pledge Agreement pursuant to which each such Cash Equity Investor agrees to pledge the securities acquired in accordance with Section 2.2, together with the securities acquired pursuant to the Securities Purchase Agreement, as security for its obligations to make capital contributions to the Company in respect of its Unfunded Commitment and as security for its obligations to make capital contributions to the Company in respect of its Unfunded Commitment (as such term is defined in the Securities Purchase Agreement). (c) Upon the terms and subject to the conditions hereof and in reliance upon the representations, warranties and agreements herein contained, at the Closing, each Management Stockholder shall contribute to the capital of the Company the amount set forth opposite his name on Schedule III(b) and the Company shall accept such capital contribution in consideration of the shares of the Company's Series E Preferred Stock, par value $.01 per share (the "Series E -------- Preferred Stock"). - --------------- 2.2. Purchase and Sale of Securities at Closing. Upon the terms and subject ------------------------------------------ to the conditions hereof and in reliance upon the representations, warranties and agreements herein contained, at the Closing, in consideration of the Transactions, the Company shall issue, sell and deliver the following securities: (a) to the Cash Equity Investors, the number of shares set forth opposite its name on Schedule III of the following: (i) the Company's Series C Preferred Stock, par value $.01 per share, (the "Series C Preferred Stock"), the terms of which are set forth in the Restated Certificate, and (ii) Voting Common Stock; and (b) to the Management Stockholders, the number of shares set forth opposite his name on Schedule III(b) of the Company's Series E Preferred Stock, the terms of which are set forth in the Restated Certificate. 2.3. Management Stockholder Contribution. Upon the terms and subject to the ----------------------------------- conditions hereof and in reliance upon the representations, warranties and agreements herein contained, at the Closing, the Management Stockholders shall contribute to the capital of Communications all their right, title and interest in the issued and outstanding capital stock of Acquisition Corp. in consideration of the Company's Voting Common Stock set forth in Schedule III(b). -9- 2.4. Management Benefit Plan. On or prior to the Closing, the Company shall ----------------------- amend its 1998 Restricted Stock Plan to include an additional 2,937.62 shares of Voting Common Stock, 1,292.55 shares of which shall be designated as Extraordinary Event Shares (as defined in such Plan), and an additional 1,580.19 shares of Series E Preferred Stock. The Company's Compensation Committee shall grant restricted shares pursuant to such Plan to the Company's employees, other than the Management Stockholders. The Company may utilize any unissued shares under the Plan to fund an employee stock option plan for the general benefit of the Company's employees, other than the Management Stockholders. 2.5. Restrictive Legends. Each certificate representing Securities ------------------- (including Securities originally issued hereunder or delivered upon conversion of the Preferred Stock or Common Stock, or delivered in substitution or exchange for any of the foregoing) will bear a legend, in addition to any legends required by the Stockholders' Agreement or otherwise required by Law, reading substantially as follows until such Securities have been sold pursuant to an effective registration statement under the Securities Act, Rule 144 under the Securities Act, or an opinion of counsel reasonably satisfactory in form and substance to the Company and otherwise in full compliance with any other applicable restrictions on transfer, including those contained in this Agreement and the Stockholders' Agreement: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE `ACT'), OR UNDER ANY STATE SECURITIES OR `BLUE SKY' LAWS. SAID SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF, UNLESS AND UNTIL REGISTERED UNDER THE ACT AND THE RULES AND REGULATIONS THEREUNDER AND ALL APPLICABLE STATE SECURITIES OR `BLUE SKY' LAWS OR EXEMPTED THEREFROM UNDER THE ACT AND ALL APPLICABLE STATE SECURITIES OR `BLUE SKY' LAWS." 2.6. Participation in Note Purchase. In the event that AT&T PCS elects to ------------------------------ eliminate the Joint Venture Notes from the consideration under the Acquisition Agreement and receive additional Series D Notes pursuant to the terms and conditions of Section 2.2 of the Acquisition Agreement, then at any time up to fifteen days prior to the later of the closing of the Acquisition Agreement or May 15, 1999, one or more of the Cash Equity Investors may elect to fund additional cash into the Company by purchasing their pro-rata share of the Series E Notes based on their percentage ownership of the Company immediately prior to such closing (such pro rata rights to be calculated on the basis that AT&T PCS and its Affiliates and the Cash Equity Investors are the sole beneficial owners of the Company's common equity and beneficially own the percentages of the Company's common equity set forth on Schedule IV hereto) (the "Purchase Right"); provided, however, that no Series E Notes will be issued unless Series D Notes are then outstanding; and provided, further, that if any Cash Equity Investor does not elect to purchase its pro rata share of the Series E Notes, then any or all of the other Cash Equity -10- Investors shall have the right to purchase that percentage of the principal amount of the Series E Notes as to which the Purchase Right shall have not been exercised (an "Additional Purchase Right") equal to a fraction, the numerator of which is the percentage of the Company's common equity beneficially owned by the Cash Equity Investor (as set forth on Schedule IV hereto) so exercising such Additional Purchase Right and the denominator of which is the percentage of the Company's common equity beneficially owned by all Cash Equity Investors so exercising such Additional Purchase Right and AT&T PCS and its Affiliates (in each case as set forth on Schedule IV hereto). The foregoing procedure shall be repeated until all Series E Notes as to which Cash Equity Investors shall have a Purchase Right or an Additional Purchase Right shall have been so exercised by such Cash Equity Investors. Any and all preemptive rights afforded by Section 7.2 of the Stockholders' Agreement to the Cash Equity Investors with regard to the transactions set forth in the Acquisition Agreement are hereby waived by them. In the event that the Cash Equity Investors elect to purchase Series E Notes pursuant to this Section 2.6 after the closing of the Acquisition Agreement, then the Company shall redeem a corresponding amount of Series D Notes from AT&T PCS at par value, plus accrued interest. The Series E Notes issued pursuant to this paragraph 2.6 shall be dated the date of the Series D Notes, shall bear interest from such date, and shall be issued for a price equal to the then principal amount, plus interest accrued from such date. 2.7. Use of Proceeds. The Company shall use the net cash proceeds of its --------------- sale of Securities hereunder solely for consummation of the transactions contemplated by the Acquisition Agreement and to pay fees and expenses incurred in connection with the Transactions. Proceeds from the sale of Series E Notes to Cash Equity Investors pursuant to Section 2.6 prior to the closing under the Acquisition Agreement, if any, shall be paid to AT&T PCS as consideration under the Acquisition Agreement. ARTICLE III CLOSING 3.1. Time and Place of Closing. Upon the terms and subject to the conditions ------------------------- hereof, the closing of the Transactions (the "Closing") shall take place at the offices of Mayer, Brown & Platt, 1675 Broadway, New York, New York, at 10:00 a.m. local time on the twelfth Business Day following the date of receipt of the last Consent required by subsections (a) through (c) of Section 7.1, or at such other place and/or time and/or on such other date as the parties may agree or as may be necessary to permit the fulfillment or waiver of the conditions set forth in Article VII (the "Closing Date"). The Closing shall be deemed to have ------------ occurred as of 12:01 a.m. on the Closing Date. 3.2. Closing Actions and Deliveries. Upon the terms and subject to the ------------------------------ satisfaction or waiver by the appropriate parties, if applicable, of the conditions set forth in Article VII, to effect the purchase and sale of the Securities and consummate the other Transactions, the parties shall on the Closing Date take the following actions: -11- (a) Cash Equity Investor Contributions. Each Cash Equity Investor ---------------------------------- shall deliver to the Company by wire transfer of immediately available funds to the account designated by the Company on or prior to the Closing Date an amount equal to its Initial Cash Contribution, as set forth on Schedule III(a). (b) Delivery of Securities. The Company shall deliver to (i) each ---------------------- Cash Equity Investor, certificates, duly executed by authorized signatories of the Company, representing the shares of Series C Preferred Stock and Voting Common Stock to be issued to each of them in accordance with the terms of Section 2.2(a) and (ii) each Management Stockholder certificates, duly executed by authorized signatories of the Company, representing the shares of Series E Preferred Stock and Voting Common Stock to be issued to each of them in accordance with the terms of Sections 2.2(b) and 2.3. (c) Delivery of Acquisition Corp. Each Management Stockholder shall ---------------------------- execute and deliver to Communications one or more stock certificates, together with stock powers duly executed in blank, representing all of the equity interests in Acquisition Corp. (d) Deliveries Under Acquisition Agreement. The closing under the -------------------------------------- Acquisition Agreement shall occur prior to, or contemporaneously with, the Closing. (e) Other Deliveries. The parties shall execute and deliver or ---------------- cause to be executed and delivered all other documents, instruments, opinions and certificates contemplated by this Agreement to be delivered at the Closing or necessary and appropriate in order to consummate the Transactions contemplated to be consummated on the Closing Date. 3.3. Closing Costs; Taxes and Fees. The Company shall pay or cause to be ----------------------------- paid at the Closing or, if due prior to the Closing or thereafter, promptly when due, all transfer taxes (including sales taxes, gross receipts taxes, stamp taxes, and other taxes) payable solely as a result of a transfer of the Contributions pursuant to this Agreement, but excluding any federal, state, local or other jurisdictional income taxes (or franchise, excise, gross receipts or other taxes that are generally imposed on a party on a periodic basis as a result of a party's status, presence, conduct of business, holding of assets, income, revenues, activities or other items). -12- ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASERS AND MANAGEMENT STOCKHOLDERS Each of the Cash Equity Investors (as to itself), the Management Stockholders (as to himself, and solely with respect to the representations contained in Sections 4.1(b), 4.1(e), 4.1(f) , 4.7 and 4.8), represents and warrants to the Company and each of the other parties as follows: 4.1. Organization, Power and Authority. (a) Each Cash Equity Investor is a corporation, general partnership or limited partnership, duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization and has the requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. (b) It has the requisite power and authority to execute, deliver and perform this Agreement, each of the Related Agreements Amendments to which it is a party and each other instrument, document, certificate and agreement required or contemplated to be executed, delivered and performed by it hereunder and thereunder to which it is or will be a party. (c) It is duly qualified to do business in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary other than any such jurisdiction in which the failure to be so qualified would not have a Material Adverse Effect on it or materially adversely affect the Transactions or its ability to perform its obligations under the Related Agreements. (d) The execution and delivery of this Agreement by it and the consummation of the Transactions by it, including, without limitation, the execution and delivery of the Related Agreement Amendments to which it is a party, have been duly and validly authorized by its Board of Directors (or equivalent body) and no other proceedings on its part which have not been taken (including, without limitation, approval of its stockholders, partners or members) are necessary to authorize this Agreement or to consummate the Transactions. (e) This Agreement has been duly executed and delivered by it and constitutes its valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar Laws affecting or relating to enforcement of creditors' rights generally and may be subject to general principles of equity. Each of the Related Agreement Amendments to which it is a party shall be duly executed and delivered by it at (or prior to) the Closing and, upon such execution and delivery, shall constitute its valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, -13- moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally and may be subject to general principles of equity. (f) As of the Closing Date, after giving effect to the Transactions, it is not in breach of any obligation under this Agreement or any of the Related Agreements. 4.2. Consents; No Conflicts. Neither the execution, delivery and ---------------------- performance by it of this Agreement or the Related Agreement Amendments to which it is a party nor the consummation of the Transactions will (a) conflict with, or result in a breach or violation of, any provision of its organizational documents; (b) subject to obtaining the Consents set forth on Schedule 4.2, constitute, with or without the giving of notice or passage of time or both, a breach, violation or default, create a Lien, or give rise to any right of termination, modification, cancellation, prepayment or acceleration, under (i) any Law or License or (ii) any note, bond, mortgage, indenture, lease, agreement or other instrument, in each case which is applicable to or binding upon it or any of its assets; or (c) require any Consent, other than those set forth on Schedule 4.2 or the approval of its board of directors, general partner, stockholders or similar constituent bodies, as the case may be (which approvals have been obtained), except in each case, where such breach, violation, default, Lien, right, or the failure to obtain or give such Consent would not have a Material Adverse Effect on it or materially adversely affect the Transactions or its ability to perform its obligations under the Related Agreements and the Related Agreement Amendments. To its knowledge, there is no fact relating to it or its Affiliates that would be reasonably expected to prevent it from consummating the Transactions or performing its obligations under the Related Agreements and the Related Agreement Amendments or disqualify the Company from obtaining the Consents (including without limitation, FCC Consent) required in order to consummate the transfer of the PCS License for the San Juan MTA to the Company pursuant to the Acquisition Agreement. 4.3. Litigation. There is no action, proceeding or investigation ---------- pending or, to its knowledge, threatened against it or any of its properties or assets that would be reasonably expected to have an adverse effect on its ability to consummate the Transactions to which it is a party or to fulfill its obligations under this Agreement or any of the Related Agreements to which it is a party, or which seeks to prevent or challenge the Transactions. 4.4. FCC Compliance. It complies with all eligibility rules issued by the -------------- FCC to hold broadband PCS Licenses, including without limitation, FCC rules on foreign ownership. Set forth opposite its name on Schedule 4.4 are all "attributable" interests (within the meaning of Section 20.6 of the FCC's Rules) that it holds in CMRS licenses that overlap the territory covered by the AT&T PCS License. 4.5. Brokers. It has not employed any broker, finder or investment ------- banker or incurred any liability for any brokerage fees, commissions or finder's fees in connection with the Transactions. -14- 4.6. Capital Commitment. Each Cash Equity Investor has, and will have ------------------ on the Closing Date and on any subsequent date on which it is obligated to make a capital contribution, cash available to it in an amount sufficient to make its respective Contributions in accordance with the terms of Section 2.1. 4.7. No Distribution. It is acquiring the Securities to be acquired by it --------------- hereunder for the purpose of investment and not with a view to or for sale in connection with any distribution thereof (other than in compliance with the Stockholders' Agreement and the Securities Act and all applicable state securities laws). 4.8. Investor Acknowledgments. (a) It is an "accredited investor" as ------------------------ defined in Regulation D of the Securities Act. Its representatives have been provided an opportunity to ask questions of, and have received answers thereto from, the Company and its representatives regarding the terms and conditions of its purchase of Securities, and the Company and its proposed business generally, and have obtained all additional information requested by it to verify the accuracy of all information furnished to it in connection with such purchase. (b) It has such knowledge and experience in financial and business affairs that it is capable of evaluating the merits and risks of purchasing the Securities it is purchasing hereunder. (c) It is not relying on and acknowledges that no representation is being made by any other Cash Equity Investor, the Company or any of its officers, employees, Affiliates, agents or representatives, except for representations and warranties expressly set forth in this Agreement, and, in particular, it is not relying on, and acknowledges that no representation is being made in respect of, (x) any projections, estimates or budgets delivered to or made available to them of future revenues, expenses or expenditures, or future results of operations and (y) any other information or documents delivered or made available to it or its representatives, except for representations and warranties expressly set forth in this Agreement, the Related Agreements and the Related Agreement Amendments and such information and documents obtained by it as a stockholder of the Company and through its representatives who serve as members of the Company's board of directors, as the case may be. (d) In deciding to invest in the Company, it has relied exclusively on the representations and warranties expressly set forth in this Agreement, and the investigations made by itself and its representatives and its and such representatives' knowledge of the industry in which the Company proposes to operate. Based solely on such representations and warranties and such investigations and knowledge and such information obtained by him or it by virtue of his or its status as a stockholder of the Company, and through its representatives who serve as members of the Company's board of directors, as the case may be, it has determined that the Securities it is acquiring are a suitable investment for it. -15- ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND ACQUISITION CORP. The Company represents and warrants severally (except that it is not making the representation and warranty set forth in Section 5.6(c)) as to the Company and its Subsidiaries, and Acquisition Corp. represents and warrants severally (except that it is not making the representations and warranties set forth in Sections 5.4, 5.6(a), (b), 5.7, 5.8, 5.9 and 5.10) to the Cash Equity Investors as follows: 5.1. Organization, Power and Authority. (a) Each of the Company and --------------------------------- each of its Subsidiaries that is a corporation, and Acquisition Corp. is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted and as proposed to be conducted. Each of the Company's Subsidiaries that is a limited liability company or a limited partnership is a limited liability company or a limited partnership, as the case may be, duly formed, validly existing and in good standing under the laws of the jurisdiction of formation and has the requisite limited liability company or a limited partnership, as the case may be, power and authority to own, lease and operate its properties and to carry on its business as now being conducted and as proposed to be conducted. (b) It has the requisite power, authority and/or legal capacity to execute, deliver and perform this Agreement, each of the Related Agreement Amendments to which it is a party and each other instrument, document, certificate and agreement required or contemplated to be executed, delivered and performed by it hereunder and thereunder to which it is or will be a party. (c) Each of the Company and each of its Subsidiaries and Acquisition Corp. is duly qualified to do business in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary other than any such jurisdiction in which the failure to be so qualified would not have a Material Adverse Effect on it or materially adversely affect the Transactions or its ability to perform its obligations under the Related Agreements. (d) The execution and delivery of this Agreement and the consummation of the Transactions by it, including the execution and delivery of the Related Agreement Amendments to which it is a party, have been duly and validly authorized by its Board of Directors and shareholders and, except for the filing of an amendment to the Company's Restated Certificate with the office of the Secretary of State of Delaware, no other proceedings which have not been taken are necessary to authorize this Agreement or to consummate the Transactions. -16- (e) This Agreement has been duly executed and delivered by it and constitutes the valid and binding obligation of it, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar Laws affecting or relating to enforcement of creditors' rights generally and may be subject to general principles of equity. Each of the Related Agreement Amendments to which it is a party shall be duly executed and delivered by it at (or prior to) the Closing and, upon such execution and delivery, shall constitute the valid and binding obligation of it, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally and may be subject to general principles of equity. (f) As of the Closing, after giving effect to the Transactions, it is not in breach of any obligation under this Agreement, any Related Agreement or any of the Credit Documents. 5.2. Consents; No Conflicts. Neither the execution, delivery and ---------------------- performance of this Agreement and the Related Agreement Amendments to which it is a party nor the consummation of the Transactions will (a) conflict with, or result in a breach or violation of, any provision of its organizational documents; (b) subject to obtaining the Consents set forth on Schedule 5.2, constitute, with or without the giving of notice or passage of time or both, a breach, violation or default, create a Lien, or give rise to any right of termination, modification, cancellation, prepayment or acceleration, under (i) any Law or License, or (ii) any note, bond, mortgage, indenture, lease, agreement or other instrument, in each case which is applicable to or binding upon it or any of its assets; or (c) require any Consent, other than those set forth on Schedule 5.2 or the approval of its Board of Directors or its stockholders (which approval has been obtained), except in each case where such breach, violation, default, Lien, right, or the failure to obtain or give such Consent would not have a Material Adverse Effect on it or materially adversely affect the Transactions, its ability to perform its obligations under the Related Agreements and the Related Agreement Amendments or the operation of its business after the Closing Date. To its knowledge, there is no fact relating to it or its Affiliates that would be reasonably expected to prevent it from consummating the Transactions or performing its obligations under this Agreement, the Related Agreements and the Related Agreement Amendments or disqualify it from obtaining the Consents (including FCC Consent) required in order to consummate the transfer of the PCS License for the San Juan MTA to the Company pursuant to the Acquisition Agreement. 5.3. Litigation. There is no action, proceeding or investigation pending ---------- or, to its knowledge, threatened against it or any of its properties or assets that would have an adverse effect on its ability to consummate the Transactions to which it is a party or to fulfill its obligations under this Agreement or any of the Related Agreements to which it is a party, or to operate its business after the Closing Date, or which seeks to prevent or challenge the Transactions. There is no judgment, decree, injunction, rule or order outstanding against it which would limit in any material respect its ability to operate its business in the manner currently contemplated. -17- 5.4. FCC Compliance. The Company complies, and after giving effect to the -------------- Transactions will comply, with all eligibility rules issued by the FCC to hold broadband PCS Licenses, including FCC rules on foreign ownership and the CMRS spectrum cap. 5.5. Brokers. It has not employed any broker, finder or investment banker ------- or incurred any liability for any brokerage fees, commissions or finder's fees in connection with the Transactions, except that the Company engaged Chase Securities Inc., whose fee of $2 million will be paid by the Company at the Closing. 5.6. Capitalization. (a) As of the date hereof, the authorized capital -------------- stock of the Company consists of 700,000 shares of Voting Common Stock, 700,000 shares of Non-Voting Common Stock, ten shares of Voting Preference Stock, 1,000 shares of Class C Common Stock, 3,000 shares of Class D Common Stock, 70,000 shares of Series A Preferred Stock, 140,000 shares of Series B Preferred Stock, 140,000 shares of Series C Preferred Stock, 35,000 shares of Series D Preferred Stock, 20,000 shares of Series E Preferred Stock, 35,000 shares of Series F Preferred Stock and 70,000 shares of Senior Common Stock. As of the Closing Date, after giving effect to the filing of the Restated Certificate and the Transactions there will be issued and outstanding the shares of Preferred Stock and Common Stock set forth on Schedule IV. The record and beneficial owners of such outstanding shares of Common Stock and Preferred Stock, as of the Closing Date, after giving effect to the Transactions, are set forth on Schedule IV. (b) Except as set forth on Schedule 5.6, on the Closing Date, after giving effect to the Transactions, there will not be any existing options, warrants, calls, subscriptions, or other rights, or other agreements or commitments, obligating the Company to issue, transfer or sell any shares of capital stock of the Company. (c) As of the date hereof, the authorized capital stock of Acquisition Corp. consists of 15,000 shares of Common Stock, of which 1,000 shares are issued and outstanding to, and beneficially owned by, the Management Stockholders. There are no existing options, warrants, calls, subscriptions, or other rights or other agreements or commitments, obligating Acquisition Corp. to issue, transfer or sell any shares of its capital stock. 5.7. Shares. The shares of Preferred Stock and Common Stock being ------ issued to the Cash Equity Investors hereunder, when issued and paid for pursuant to the terms of this Agreement and after giving effect to the filing of the Restated Certificate, will be duly authorized, validly issued, fully paid and non-assessable, and will be free of any Liens caused or created by the Company, except as set forth in the Stockholders' Agreement and the Restated Certificate. The shares of Common Stock or Preferred Stock, as the case may be, issued upon conversion of the Preferred Stock and the Common Stock issued on the Closing Date, or upon conversion thereof after the Closing Date, when issued pursuant to the terms thereof, will be validly issued, fully paid and non-assessable, and will be free of any Liens caused or created by the Company, except as set forth in the Stockholders' Agreement and the Restated Certificate. -18- 5.8. Offering of Securities. (a) None of the Company or any Person acting ---------------------- on its behalf has offered the Securities or any similar equity securities of the Company for sale to, or solicited any offers to buy Securities or any similar equity securities of the Company from, any Person, other than the Cash Equity Investors and a limited number of other "accredited investors" (as defined in Rule 501(a) under the Securities Act). (b) None of the Company or any Person acting on its behalf will, directly or indirectly, take any action which might subject the offering, issuance or sale of the Securities to the registration and prospectus delivery requirements of Section 5 of the Securities Act. (c) Assuming the accuracy of the representations and warranties of the Cash Equity Investors contained in Section 4.8, each of the offering and sale of Securities under this Agreement to the Cash Equity Investors complies with all applicable requirements of Federal and state securities laws. 5.9. Subsidiaries. The Company owns directly or indirectly all of the ------------ outstanding shares of Capital Stock of each of its Subsidiaries, free and clear of any Liens, except Liens granted to the lenders pursuant to the Credit Documents. Set forth on Schedule 5.9 is a complete list of its direct and indirect Subsidiaries indicating the jurisdictions in which each such Subsidiary is organized or qualified to conduct business. 5.10. Small Business Matters. Neither the Company nor any Subsidiary: (i) ---------------------- presently engages in, and none of them shall hereafter engage in, any activities, or (ii) shall use directly or indirectly the proceeds from the sale of the Securities for any purpose, which, in either case, a SBIC is prohibited from engaging in or providing funds for by the SBIC Act and the regulations thereunder (including Title 13, Code of Federal Regulations, Section 107.720). ARTICLE VI COVENANTS 6.1. Consummation of Transactions. Each party shall use all commercially ---------------------------- reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable and consistent with applicable law to carry out all of their respective obligations under this Agreement and the Related Agreements and to consummate the Transactions, which efforts shall include, without limitation, the following: (a) The parties shall use all commercially reasonable efforts to cause the Closing to occur and the Transactions to be consummated in accordance with the terms hereof, and, without limiting the generality of the foregoing, to obtain all necessary Consents including the approval of this Agreement and the Transactions by all Governmental Authorities and agencies, including the FCC delivery and performance of this Agreement and the Related Agreements or the consummation of the Transactions, and to make all filings with and to give all notices to third -19- parties which may be necessary or reasonably required in order for the parties to consummate the Transactions. (b) Each party shall furnish to the other parties all information concerning such party and its Affiliates reasonably required for inclusion in any application or filing to be made by the Company or any other party in connection with the Transactions or otherwise to determine compliance with applicable FCC Law. (c) Upon the request of any other party, each party shall forthwith execute and deliver, or cause to be executed and delivered, such further instruments of assignment, transfer, conveyance, endorsement, direction or authorization and other documents as may reasonably be requested by such party in order to effectuate the purposes of this Agreement and the Related Agreements. 6.2. Use of Proceeds. The Company shall use the proceeds of the sale of --------------- Securities only for the purposes described in Section 2.7. 6.3. SBIC Regulatory Provisions. (a) The Company shall notify each SBIC -------------------------- Holder as soon as practicable (and, in any event, not later than 15 days) prior to taking any action after which the number of record holders of the Company's voting stock would be increased from fewer than 50 to 50 or more, and the Company shall notify each SBIC Holder of any other action or occurrence after which the number of record holders of the Company's voting stock was increased (or would increase) from fewer than 50 to 50 or more, as soon as practicable after the Company becomes aware that such other action or occurrence has occurred or is proposed to occur. (b) Within 75 days after the Closing, the Company shall deliver to each SBIC Holder a written statement certified by the Company's president or chief financial officer describing in reasonable detail the use of the proceeds of the sale of Securities hereunder by the Company and its Subsidiaries. In addition to any other rights granted hereunder, the Company shall grant each SBIC Holder and the United States Small Business Administration (the "SBA") access to the Company's records for the purpose of verifying the use of such proceeds to the extent required pursuant to SBIC Regulations. (c) Promptly after the end of each fiscal year (but in any event prior to February 28 of each year), the Company shall deliver to each SBIC Holder a written assessment of the economic impact of each SBIC Holder's investment in the Company, specifying the full-time equivalent jobs created or retained in connection with the investment, the impact of the investment on the revenues and profits of the business and on taxes paid by the business and its employees. 6.4. Regulatory Compliance Cooperation. In the event that any SBIC Holder --------------------------------- reasonably determines that it has a Regulatory Problem, to the extent reasonably necessary, such SBIC Holder shall have the right to transfer its Securities (and any shares of Common Stock issued -20- upon conversion thereof) to another Person without regard to any restrictions on transfer set forth in this Agreement or in Section 4.1(c) of the Stockholders' Agreement and without complying with the provisions of Section 4.3 of the Stockholders' Agreement, but subject to the other provisions of the Stockholders' Agreement and federal and state securities law restrictions, and the Company shall take all such actions as are reasonably requested by such SBIC Holder in order to (i) effectuate and facilitate such transfer by such SBIC Holder of any Securities of the Company then held by such SBIC Holder to such Person, (ii) permit such SBIC Holder (or any of its Affiliates) to exchange all or any portion of voting Securities then held by it on a share-for-share basis for shares of a class of non-voting Securities of the Company, which non-voting Securities shall be identical in all respects to such voting Securities, except that such non-voting Securities (or Common Stock, as applicable) shall be non- voting and shall be convertible into voting Securities (or Common Stock, as applicable) on such terms as are requested by such SBIC Holder in light of regulatory considerations then prevailing, (iii) continue and preserve the respective allocation of the voting interests with respect to the Company arising out of the SBIC Holder's ownership of voting Securities and/or provided for in the Stockholders' Agreement before the transfers and amendments referred to in this Section (including entering into such additional agreements as are reasonably requested by such SBIC Holder to permit any Person(s) designated by such SBIC Holder) to exercise any voting power which is relinquished by such SBIC Holder and (iv) amend this Agreement, the Restated Certificate, and any other related documents, agreements or instruments to effectuate and reflect the foregoing. The parties to this Agreement agree to vote their Securities in favor of such amendments and actions. 6.5. Related Agreement Amendments; Amendments to Restated Certificate. ---------------------------------------------------------------- Certain of the parties hereto (and/or certain of their respective Affiliates) are (or, with respect to the Resale Agreement, will be) parties to the Related Agreements. It is the intention of the parties hereto that, upon consummation of each of the Transactions, each Related Agreement shall be amended and/or restated as necessary (the "Related Agreement Amendments") to give effect to, ---------------------------- among other things, (a) the AT&T PCS License acquired by the Company upon the closing of the Acquisition Agreement; (b) the Securities issued to the Cash Equity Investors at the Closing, and (c) the execution of the agreements contemplated by the Acquisition Agreement it being agreed that except as otherwise set forth in the Related Agreement Amendments, the agreements contemplated by the Acquisition Agreement, the rights and obligations of the parties under the Related Agreements pertaining to the Licenses and securities thereunder shall pertain also to the Licenses and Securities hereunder. The Related Agreement Amendments shall include, without limitation, amendments to the term "Territory" as used in the Stockholders' Agreement, the San Juan MTA and the Minimum Build-out Plan attached as Schedule V to the Stockholders' Agreement shall be amended as more fully described in the Acquisition Agreement to include the minimum build-out requirements for the San Juan MTA, it being further understood that the parties shall make such other conforming changes to the terms of such agreements as shall be necessary to reflect the acquisition by the Company of the Purchased Assets (as defined in the Acquisition Agreement) and to otherwise extend the benefits of such agreements to the Purchased Assets. It is also the intention of the parties hereto that the Restated Certificate shall be amended as necessary (e.g., to increase the number of authorized shares of Capital Stock) to -21- give effect to, among other things, the Securities issued at the Closing. The parties agree to use their respective best efforts to effectuate any and all such amendments at any such Closing. 6.6. Offering of Securities. None of the Company or any Person acting ---------------------- on its behalf will, directly or indirectly, take any action which might subject the offering, license or sale of the Securities to the registration and prospectus delivery requirements of Section 5 of the Securities Act. 6.7. Waiver of Preemptive Rights. With respect to the Transactions and the --------------------------- issuance of the shares of Series A Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock and Series F Preferred Stock hereunder, each of the Cash Equity Investors hereby waives (a) the notice requirements set forth in Section 7.2(b) of the Stockholders' Agreement and (b) its preemptive rights that are afforded such party in Section 7.2 of the Stockholders' Agreement. 6.8. Base Indenture. The base indenture (the "Base Indenture") pursuant to -------------- which the Company shall issue any Series D Notes, any Series E Notes and any series of notes in favor of Lucent Technologies, Inc. (the "Lucent Notes") shall be substantially in the form of Exhibit D hereto. 6.9. Supplemental Indentures. The supplemental indentures to the Base ----------------------- Indenture pursuant to which the Company shall issue any Series D Notes and any Lucent Notes shall be substantially in the form of Exhibit E and Exhibit F, respectively. ARTICLE VII CLOSING CONDITIONS 7.1. Conditions to Obligations of All Parties. The obligation of each of ---------------------------------------- the parties to consummate the Transactions contemplated to occur at the Closing shall be conditioned on the following, unless waived by each of the parties at or prior to Closing: (a) Any applicable waiting period under the HSR Act shall have expired or been terminated. (b) The Consent of the FCC to the transfer of the PCS License for the San Juan MTA to the Company pursuant to the Acquisition Agreement shall have been obtained pursuant to a Final Order, free of any conditions materially adverse to the Company or any of the Cash Equity Investors other than those applicable to the PCS or wireless communications services generally. For the purposes of this paragraph, "Final Order" means an action or decision ----------- that has been granted by the FCC as to which (i) no request for a stay or similar request is pending, no stay is in effect, the action or decision has not been vacated, reversed, set aside, annulled or suspended and any deadline for filing such request that may be designated by statute or regulation has passed, (ii) no petition for rehearing or reconsideration or application for review is -22- pending and the time for the filing of any such petition or application has passed, (iii) the FCC does not have the action or decision under reconsideration on its own motion and the time within which it may effect such reconsideration has passed and (iv) no appeal is pending including other administrative or judicial review, or in effect and any deadline for filing any such appeal that may be designated by statute or rule has passed. (c) All Consents by any Governmental Authority (other than the Consents referred to in paragraphs (a) and (b) above) required to permit the consummation of the Transactions, the failure to obtain or make which would be reasonably expected to have a Material Adverse Effect on the Company or any of the Cash Equity Investors or to materially adversely affect the Transactions or its ability to perform its obligations under the Related Agreements shall have been obtained or made. (d) No preliminary or permanent injunction or other order, decree or ruling issued by a Governmental Authority, nor any statute, rule, regulation or executive order promulgated or enacted by any Governmental Authority, shall be in effect that would (i) impose material limitations on the ability of any party to consummate the Transactions or prohibit such consummation, or (ii) impair in any material respect the operation of the Company. (e) The closing under the Acquisition Agreement shall occur prior to, or contemporaneously with, the Closing. (f) The Stock Exchange shall occur contemporaneously with the Closing. (g) The Restated Certificate shall have been filed with the Delaware Secretary of State. (h) Each Cash Equity Investor shall have executed and delivered to the Company a Pledge Agreement. (i) Each Stockholder (as such term is defined in the Stockholders' Agreement) who is not a Cash Equity Investor hereunder shall have delivered a waiver of the pre-emptive rights afforded to such Stockholder pursuant to Section 7.2(b) of the Stockholders' Agreement, in form and substance substantially similar to Section 6.10. 7.2. Conditions to Obligations of the Company. The obligation of the ---------------------------------------- Company to consummate the Transactions contemplated to occur at the Closing shall be further conditioned upon the satisfaction or fulfillment, at or prior to the Closing, of the following conditions by each of the other parties, unless waived by the Company at or prior to the Closing: (a) The representations and warranties of each of the Cash Equity Investors contained herein shall be true and correct in all material respects (except for representations and warranties that are qualified as to materiality, which shall be true and correct), in each case when made and at and as of the Closing (except for representations and warranties made as of a specified date, which shall be true and correct as of such date) with the same force and effect as -23- though made at and as of such time, except for inaccuracies in respect of the representations and warranties set forth in Section 4.3, (disregarding any qualifications as to materiality contained therein) that in the aggregate would not be reasonably expected to have a Material Adverse Effect on the Company or to materially adversely affect the Transactions. (b) Each Cash Equity Investor shall have performed in all material respects all agreements contained herein or required to be performed by it at or before the Closing. (c) An officer of each of the Cash Equity Investors shall have delivered to the Company a certificate, dated the Closing Date, certifying as to the fulfillment of the conditions set forth in paragraphs (a) and (b) above as to the party delivering such certificate. (d) The Company shall have been furnished with an Opinion of Counsel to each Cash Equity Investor each dated the Closing Date. (e) The Company shall have received any consent of the lenders that may be required pursuant to the terms of the Credit Agreement. (f) Each of the Related Agreement Amendments shall have been executed and delivered by the parties thereto (other than the Company) and shall be in full force and effect. (g) All corporate and other proceedings of each of the Cash Equity Investors in connection with the Transactions, and all documents and instruments incident thereto, shall be reasonably satisfactory in form and substance to the Company, and each of the Cash Equity Investors shall have delivered to the Company such receipts, documents, instruments and certificates, in form and substance reasonably satisfactory to the Company which the Company shall have reasonably requested in order to consummate the Transactions. 7.3. Conditions to the Obligations of the Cash Equity Investors. The ---------------------------------------------------------- obligation of each Cash Equity Investor to consummate the Transactions contemplated to occur at the Closing shall be further conditioned upon the satisfaction or fulfillment, at or prior to the Closing, of the following conditions, unless waived by each such Cash Equity Investor at or prior to the Closing: (a) The representations and warranties of each of the Company, Acquisition Corp. each other Cash Equity Investor and each Management Stockholder contained herein shall be true and correct in all material respects (except for representations and warranties that are qualified as to materiality, which shall be true and correct), in each case when made and at and as of the Closing (except for representations and warranties made as of a specified date, which shall be true and correct as of such date) with the same force and effect as though made at and as of such time, except for inaccuracies in respect of the representations and warranties set forth in Section 4.3 and the first sentence of Section 5.3, (disregarding any qualifications as to materiality contained therein) that in the aggregate would not be reasonably expected to have a Material Adverse Effect on the Company or to materially adversely affect the Transactions. -24- (b) Each of the Company, Acquisition Corp., each other Cash Equity Investor and each Management Stockholder shall have performed in all material respects all agreements contained herein or required to be performed by it at or before the Closing. (c) Each Management Stockholder, an officer of each of the Company, Acquisition Corp., and each other Cash Equity Investor shall have delivered to such Cash Equity Investor a certificate, dated the Closing Date, certifying as to the fulfillment of the conditions set forth in paragraphs (a) and (b) above as to the party delivering such certificate. (d) Such Cash Equity Investor shall have been furnished with an Opinion of Counsel, to each of each other Cash Equity Investor and the Company each dated the Closing Date. (e) Each of the Related Agreement Amendments shall have been executed and delivered by the parties thereto (other than the Cash Equity Investors) and shall be in full force and effect. (f) The Base Indenture pursuant to which the Company shall issue any Series D Notes, any Series E Notes and any Lucent Notes shall be substantially in the form of Exhibit D. (g) The supplement indentures to the Base Indenture pursuant to which the Company shall issue any Series D Notes, and any Lucent Notes shall be substantially in the form of Exhibit E and F, respectively. (h) All corporate and other proceedings of each other Cash Equity Investor, the Company and Acquisition Corp. in connection with the Transactions, and all documents and instruments incident thereto, shall be reasonably satisfactory in form and substance to such Cash Equity Investor, and each other Cash Equity Investor, the Company and Acquisition Corp. shall have delivered to such Cash Equity Investor all such receipts, documents, instruments and certificates, in form and substance reasonably satisfactory to such Cash Equity Investor, which such Cash Equity Investor shall have reasonably requested in order to consummate the Transactions. (i) On the Closing Date, counsel to each Cash Equity Investor shall have received the legal fees and expenses required to be paid or reimbursed by the Company as provided in Section 10.4 for statements rendered on or prior to the Closing Date. (j) For each SBIC Holder, the Company shall have prepared the Size Status Declaration on Form 480, the Assurance of Compliance for Nondiscrimination on Form 652 and the Portfolio Financing Report on Form 1031 (Parts A and B) (collectively, the "SBA Compliance Documents"), the Company ------------------------ shall have duly executed and delivered the Forms 480 and 652 to each SBIC Holder, and all of the information set forth in the SBA Compliance Documents shall be true and correct in all respects. The Company shall have delivered a list, after giving effect to the transactions contemplated by this Agreement, of: (a) the name of each of the Company's directors, (b) the name and title of each of the Company's officers and (c) the -25- name of each of the Company's stockholders and the number and class of shares held by each stockholder. ARTICLE VIII SURVIVAL AND INDEMNIFICATION 8.1. Survival. Except for the representations and warranties contained in -------- Sections 4.1(a), (b), (d) and (e), and 5.1(a), (b), (d) and (e) (which shall survive the Closing, without regard to any investigation made by any of the parties hereto, until the expiration of the applicable statute of limitations relating thereto), the representations and warranties made in this Agreement shall survive the Closing without regard to any investigation made by any of the parties hereto until the second anniversary thereof and shall thereupon expire together with any right to indemnification in respect thereof (except to the extent a written notice asserting a claim for breach of any such representation or warranty and describing such claim in reasonable detail shall have been given prior to the expiration of the applicable survival period to the party which made such representation or warranty). The covenants and agreements contained herein to be performed or complied with prior to the Closing shall expire at the Closing. The covenants and agreements contained in this Agreement to be performed or complied with after the Closing shall survive the Closing; provided that the right to indemnification pursuant to this Article VIII in respect of a breach of a representation or warranty shall expire upon the application of the applicable survival period of the Closing (except to the extent written notice asserting a claim thereunder and describing such claim in reasonable detail shall have been given prior to such expiration to the party from whom such indemnification is sought). After the Closing, the sole and exclusive remedy of the parties for any breach or inaccuracy of any representation or warranty contained in this Agreement, or any other claim (whether or not alleging a breach of this Agreement) that arises out of the facts and circumstances constituting such breach or inaccuracy, shall be the indemnity provided in this Article VIII. 8.2. Indemnification by the Cash Equity Investors. Each Cash Equity -------------------------------------------- Investor shall indemnify and hold harmless each other Cash Equity Investor, each Management Stockholder and the Company and their respective Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them (each, a "Section 8.2 Indemnified Party"), ----------------------------- against all liabilities and expenses (including amounts paid in satisfaction of judgments, in compromise, as fines and penalties, and as counsel fees) (collectively, "Losses") incurred by him or it in connection with the ------ investigation, defense, or disposition of any action, suit or other proceeding in which any Section 8.2 Indemnified Party may be involved or with which he or it may be threatened (whether arising out of or relating to matters asserted by third parties against a Section 8.2 Indemnified Party or incurred or sustained by such party in the absence of a third-party claim), that arises out of or results from (a) any representation or warranty of such indemnifying party contained in this Agreement being untrue in any material respect as of the date on which it was made or (b) any material default by such indemnifying party or any of its Affiliates in the performance of their respective obligations under this Agreement, except to the extent (but only to the extent) any such Losses arise out of or result -26- from the gross negligence or willful misconduct of such Section 8.2 Indemnified Party or its Affiliates. 8.3. Indemnification by the Management Stockholders. Each Management ---------------------------------------------- Stockholder, severally and not jointly, shall indemnify and hold harmless each Cash Equity Investor and the Company and their respective Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them (each, a "Section 8.3 Indemnified Party"), ----------------------------- against all Losses incurred by him or it in connection with the investigation, defense, or disposition of any action, suit or other proceeding in which any Section 8.3 Indemnified Party may be involved or with which he or it may be threatened (whether arising out of or relating to matters asserted by third parties against a Section 8.3 Indemnified Party or incurred or sustained by such party in the absence of a third-party claim), that arises out of or results from (a) any representation or warranty of such Management Stockholder contained in this Agreement being untrue in any material respect as of the date on which it was made or (b) any material default by such Management Stockholder in the performance of his obligations under this Agreement, except to the extent (but only to the extent) any such Losses arise out of or result from the gross negligence or willful misconduct of such Section 8.3 Indemnified Party or its Affiliates; provided that the aggregate liability of each Management Stockholder to indemnify Section 8.3 Indemnified Parties against Losses arising out of or resulting from (x) the untruth in any material respect of any representation or warranty as to the Company made by such Management Stockholder in this Agreement, (y) any material default by such Management Stockholder in the performance of his obligations under this Agreement, shall (except, in the case of clause (y), to the extent (but only to the extent) any such Losses arise out of or result from the gross negligence or willful misconduct of such Management Stockholder) be limited to the shares of Common Stock and Preferred Stock of the Company (other than any Excluded Stock) then held by such Management Stockholder, and Section 8.3 Indemnified Parties seeking indemnification against any Management Stockholder for such Losses hereunder shall not have recourse to any other assets of such Management Stockholder. 8.4. Indemnification by the Company. The Company shall indemnify and hold ------------------------------ harmless each of the Cash Equity Investors and their respective Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them (each, a "Section 8.4 Indemnified Party"), ----------------------------- against all Losses incurred by him or it in connection with the investigation, defense, or disposition of any action, suit or other proceeding in which any Section 8.4 Indemnified Party may be involved or with which he or it may be threatened (whether arising out of or relating to matters asserted by third parties against a Section 8.4 Indemnified Party or incurred or sustained by such party in the absence of a third-party claim), that arises out of or results from (a) any representation or warranty of the Company contained in this Agreement being untrue in any material respect as of the date on which it was made or (b) any material default by the Company or any of its Affiliates in the performance of their respective obligations under this Agreement, except to the extent (but only to the extent) any such Losses arise out of or result from the gross negligence or willful misconduct of such Section 8.4 Indemnified Party or its Affiliates. -27- 8.5. Procedures. (a) The terms of this Section 8.5 shall apply to any claim (a "Claim") for indemnification under the terms of Sections 8.2, 8.3 or 8.4. The ----- Section 8.2 Indemnified Party, Section 8.3 Indemnified Party or Section 8.4 Indemnified Party (each, an "Indemnified Party"), as the case may be, shall ----------------- give prompt written notice of such Claim to the indemnifying party (the "Indemnifying Party") under the applicable Section, which party may assume ------------------- the defense thereof, provided that any delay or failure to so notify the Indemnifying Party shall relieve the Indemnifying Party of its obligations hereunder only to the extent, if at all, that it is materially prejudiced by reason of such delay or failure. The Indemnified Party shall have the right to approve any counsel selected by the Indemnifying Party and to approve the terms of any proposed settlement, such approval not to be unreasonably delayed or withheld (unless, in the case of approval of a proposed settlement, such settlement provides only, as to the Indemnified Party, the payment of money damages actually paid by the Indemnifying Party and a complete release of the Indemnified Party in respect of the claim in question). Notwithstanding any of the foregoing to the contrary, the provisions of this Article VIII shall not be construed so as to provide for the indemnification of any Indemnified Party for any liability to the extent (but only to the extent) that such indemnification would be in violation of applicable law or that such liability may not be waived, modified or limited under applicable law, but shall be construed so as to effectuate the provisions of this Article VIII to the fullest extent permitted by law. (b) In the event that the Indemnifying Party undertakes the defense of any Claim, the Indemnifying Party will keep the Indemnified Party advised as to all material developments in connection with such Claim, including, but not limited to, promptly furnishing the Indemnified Party with copies of all material documents filed or served in connection therewith. (c) In the event that the Indemnifying Party fails to assume the defense of Claim within ten business days after receiving written notice thereof, the Indemnified Party shall have the right, subject to the Indemnifying Party's right to assume the defense pursuant to the provisions of this Article VIII, to undertake the defense, compromise or settlement of such Claim for the account of the Indemnifying Party. Unless and until the Indemnified Party assumes the defense of any Claim, the Indemnifying Party shall advance to the Indemnified Party any of its reasonable attorneys' fees and other costs and expenses incurred in connection with the defense of any such action or proceeding. Each Indemnified Party shall agree in writing prior to any such advancement that, in the event he or it receives any such advance, such Indemnified Party shall reimburse the Indemnifying Party for such fees, costs and expenses to the extent that it shall be determined that he or it was not entitled to indemnification under this Article VIII. (d) In no event shall an Indemnifying Party be required to pay in connection with any Claim for more than one firm of counsel (and local counsel) for each of the following groups of Indemnified Parties: (i) the Cash Equity Investors, their respective Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them; and (ii) the Company and the Management Stockholders, its respective Affiliates, -28- and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them. 8.6. Registration Rights. Notwithstanding anything to the contrary ------------------- in this Article VIII, the indemnification and contribution provisions set forth in Sections 5(e) and 5(f) of the Stockholders' Agreement shall govern any claim made with respect to the registration statements filed pursuant to Section 5 of the Stockholders' Agreement or sales made thereunder. 8.7. Limit on Indemnity. So long as the Company does not conduct any ------------------ business or engage in any activities other than those described in the first sentence of the definition of "Business" (as such term is defined in the Stockholders' Agreement), each party waives its right to indemnification under this Article VIII or any other right to assert any claim arising from any inaccuracy in the Company's representations and warranties set forth in the first and last sentence of Section 5.9 or the violation by the Company of the covenant set forth in Section 6.5(d) to the extent such Section relates to ineligible or prohibited activities of SBICs. ARTICLE IX TERMINATION 9.1. Termination. In addition to any other rights of termination set forth ----------- herein, this Agreement may be terminated, and the Transactions abandoned, without further obligation of any party (except as set forth herein), at any time prior to the Closing Date: (a) by mutual written consent of the parties; (b) by any party (other than a Management Stockholder) by written notice to the other parties, if the Closing shall not have occurred on or before the date that is six months after the date hereof, provided that the party electing to exercise such right is not otherwise in breach of its obligations under this Agreement; or (c) by any party by written notice to the other parties, if the consummation of the Transactions shall be prohibited by a final, non-appealable order, decree or injunction of a court of competent jurisdiction. 9.2. Effect of Termination. (a) In the event of a termination of this --------------------- Agreement, no party hereto shall have any liability or further obligation to any other party to this Agreement, except as set forth in paragraph (b) below, and except that nothing herein will relieve any party from liability for any breach by such party of this Agreement. (a) In the event of a termination of this Agreement pursuant to Section 9.1, all provisions of this Agreement shall terminate, except Articles VIII and X. -29- (b) Whether or not the Closing occurs, except as otherwise expressly provided in this Agreement, all costs and expenses incurred in connection with this Agreement and the Transactions shall be paid by the party incurring such expenses. ARTICLE X MISCELLANEOUS PROVISIONS 10.1. Amendment and Modification. This Agreement may be amended, modified -------------------------- or supplemented only by written agreement of each of the parties. 10.2. Waiver of Compliance; Consents. Any failure of any of the parties to ------------------------------ comply with any obligation, covenant, agreement or condition herein may be waived by the party or parties entitled to the benefits thereof only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be given in writing in a manner consistent with the requirement for a waiver of compliance as set forth in this Section 10.2. 10.3. Notices. All notices or other communications hereunder shall be in ------- writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person against receipt, by facsimile transmission with confirmation of receipt, or by registered or certified mail (return receipt requested), postage prepaid, with an acknowledgment of receipt signed by the addressee or an authorized representative thereof, addressed as follows (or to such other address for a party as shall be specified by like notice; provided that notice of a change of address shall be effective only upon receipt thereof): If to a Cash Equity Investor, to its address set forth on Schedule I. With a copy to: Mayer, Brown & Platt 1675 Broadway New York, New York 10019 Attention: Mark S. Wojciechowski Facsimile: (212) 262-1910 If to a Management Stockholder, to him in care of the Company. With a copy to: TeleCorp PCS, Inc. 1010 N. Glebe Road, Suite 800 Arlington, Virginia 22201 Attn: General Counsel -30- Facsimile: (703) 236-1102 If to the Company or Acquisition Corp., to it: 1010 N. Glebe Road, Suite 800 Arlington, Virginia 22201 Attn: General Counsel Facsimile: (703) 236-1102 With a copy to each other party sent to the addresses set forth in this Section 10.3. 10.4. Expenses. The Company agrees, in the event the Transactions are -------- consummated, to pay, and save the Cash Equity Investors harmless against, the reasonable fees and disbursements of one corporate counsel and one FCC counsel of the Cash Equity Investors in the aggregate in connection with the preparation, negotiation, execution and delivery of this Agreement, the Related Agreement Amendments, the instruments and documents executed pursuant hereto or thereto or in connection herewith or therewith, and the consummation of the Transactions. 10.5. Parties in Interest; Assignment. This Agreement is binding upon and ------------------------------- is solely for the benefit of the parties hereto and their respective permitted successors, legal representatives and permitted assigns. Neither the Company nor any Cash Equity Investor may assign its rights and obligations hereunder without the prior written consent of each of the other parties; provided, that: (a) the Company shall have the right to assign its rights under this Agreement to the lenders (the "Lenders") named in the Credit Agreement, as security pursuant to ------- the terms of the Credit Documents, it being understood that as a result of any such assignment to the Lenders, after an event of default under the Credit Agreement and the expiration of any applicable grace and cure periods thereunder, the Lenders shall have the right, on behalf of the Company, to enforce the obligation of each Cash Equity Investor to make capital contributions to the Company in the amounts and on the dates specified on Schedule III(a) (or such earlier dates as may be established in accordance with the terms of the Stockholders' Agreement) and that, in connection with any such assignment to the Lenders, the Lenders shall not assume any obligations of the Company hereunder; and (b) any Cash Equity Investor may assign its rights and obligations hereunder with the prior written consent of AT&T PCS, such consent not to be unreasonably withheld, and any Cash Equity Investor may assign its rights and obligations hereunder to any Affiliate, provided, that such assignee shall have assumed in writing all the obligations of such Cash Equity Investor hereunder and no such assignment shall relieve such Cash Equity Investor of its obligations hereunder 10.6. Applicable Law. This Agreement shall be governed by and construed in -------------- accordance with the laws of the State of New York without giving effect to the conflicts of law principles thereof. The parties hereto hereby irrevocably and unconditionally consent to submit to the non-exclusive jurisdiction of the courts of the State of New York and of the United States -31- of America located in the County of New York, New York (the "New York Courts") --------------- for any litigation arising out of or relating to this Agreement and the Transactions, waive any objection to the laying of venue of any such litigation in the New York Courts and agrees not to plead or claim in any New York Court that such litigation brought therein has been brought in an inconvenient forum. 10.7. Counterparts. This Agreement may be executed in two or more ------------ counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. 10.8. Interpretation. The article and section headings contained in this -------------- Agreement are for convenience of reference only, are not part of the agreement of the parties and shall not affect in any way the meaning or interpretation of this Agreement. 10.9. Entire Agreement. This Agreement, including the exhibits and schedules ---------------- hereto and thereto and the certificates and instruments delivered pursuant to the terms of this Agreement, embody the entire agreement and understanding of the parties hereto in respect of the Transactions. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such Transactions. 10.10. Publicity. So long as this Agreement is in effect, the parties agree --------- to consult with each other in issuing any press release or otherwise making any public statement with respect to the Transactions, and no party shall issue any press release or make any such public statement prior to such consultation, except as may be required by Law. No press release or other public statement by the parties hereto shall disclose any of the financial terms of the Transactions without the prior consent of the other parties, except as may be required by Law. A breach of the provisions of this Section 10.10 by a party shall not give rise to any right to terminate this Agreement. 10.11. Specific Performance. The parties hereto agree that irreparable -------------------- damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any New York Courts. 10.12. Remedies Cumulative. All rights, powers and remedies provided under ------------------- this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise or beginning of the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. -32- 10.13. Severability. Any provision of this Agreement that is prohibited or ------------ unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. If any court determines that any covenant or any part of any covenant is invalid or unenforceable, such covenant shall be enforced to the extent permitted by such court, and all other covenants shall not thereby be affected and shall be given full effect, without regard to the invalid portions. 10.14. Beneficiaries of Agreement. The representations, warranties, -------------------------- covenants and agreements expressed in this Agreement are for the sole benefit of the other parties hereto and the Section 8.2 Indemnified Parties, Section 8.3 Indemnified Parties and Section 8.4 Indemnified Parties and are not intended to benefit, and may not be relied upon or enforced by, any other party as a third party beneficiary or otherwise. 10.15. F Block Joint Ventures. In the event that AT&T PCS elects to receive ---------------------- Joint Venture Notes as consideration pursuant to the Acquisition Agreement, then the Cash Equity Investors hereby agree (i) to the terms and conditions of the Summary of Principal Terms attached hereto as Exhibit D regarding a joint venture involving certain companies holding F-Block licenses, and (ii) to consummate such transaction as contemplated therein. The parties hereby further agree that references in the Summary of Principal Terms to "TeleCorp Notes" also means Series E Notes. 10.16. Stock Valuation. The parties hereby agree that the per share value --------------- attributable as of the date hereof to the Voting Common Stock, the Series C Preferred Stock and the Series E Preferred Stock is $1.00, $999.00 and $.01, respectively. -33- IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. TELECORP PCS, INC. By:/s/ Thomas H. Sullivan ------------------------------- Name: Thomas H. Sullivan Title: Executive Vice President PUERTO RICO ACQUISITION CORP. By:/s/ Thomas H. Sullivan ------------------------------- Name: Thomas H. Sullivan Title: President Cash Equity Investors: CB CAPITAL INVESTORS, L.P. By: CB Capital Investors, Inc. its general partner By:/s/ Michael R. Hannon ------------------------------- Name: Michael R. Hannon Title: General Partner NORTHWOOD VENTURES LLC By:/s/ Peter G. Schiff ------------------------------- Name: Peter G. Schiff Title: President -34- NORTHWOOD CAPITAL PARTNERS LLC By: /s/ Peter G. Schiff ------------------------------ Name: Peter G. Schiff Title: President MEDIA/COMMUNICATIONS INVESTORS LIMITED PARTNERSHIP By: M/C Investors General Partner - J. Inc., a general partner By: /s/ James F. Wade --------------------------------- Name: James F. Wade Title: MEDIA/COMMUNICATIONS PARTNERS III LIMITED PARTNERSHIP By: M/CP III L.L.C. its general partner By: /s/ James F. Wade --------------------------------- Name: James F. Wade Title: Manager EQUITY-LINKED INVESTORS-II By: ROHIT M. DESAI ASSOCIATES-II, Its general partner By: /s/ Frank J. Pados ---------------------------------- Name: Frank J. Pados, Jr. Title: Attorney-in-Fact -35- PRIVATE EQUITY INVESTORS III, L.P. By: ROHIT M. DESAI ASSOCIATES III, LLC, Its general partner By: /s/ Frank J. Pados ---------------------------------- Name: Frank J. Pados, Jr. Title: Attorney-in-Fact HOAK COMMUNICATIONS PARTNERS, L.P. By: HCP Investments, L.P., Its general partner By: Hoak Partners, LLC, Its general partner By: /s/ James M. Hoak ---------------------------------- James M. Hoak Manager HCP CAPITAL FUND, L.P. By: James M. Hoak & Co., Its general partner By: /s/ James M. Hoak ----------------------------------- James M. Hoak Chairman -36- WHITNEY EQUITY PARTNERS, L.P. By: J.H. Whitney & Co., Its general partner By: /s/ William Laverack Jr. ------------------------------------ Name: William Laverack Jr. Title: J.H. WHITNEY III, L.P. By: J.H. Whitney & Co., Its general partner By: /s/ William Laverack Jr. ----------------------------------- Name: William Laverack Jr. Title: WHITNEY STRATEGIC PARTNERS III, L.P. By: J.H. Whitney & Co., Its general partner By: /s/ William Laverack Jr. ------------------------------------ Name: William Laverack Jr. Title: TORONTO DOMINION INVESTMENTS INC. By: /s/ Martha L. Gariepy ------------------------------------ Name: Martha L. Gariepy Title: Vice President -37- ONELIBERTY FUND IV, L.P. By: /s/ Joseph T. McCullen, Jr. ----------------------------------- Name: Joseph T. McCullen, Jr. Title: General Partner Management Stockholders: /s/ Thomas Sullivan --------------------------------------- Thomas Sullivan /s/ Gerald Vento --------------------------------------- Gerald Vento -38- SCHEDULE I Cash Equity Investors --------------------- Notice Addresses - ---------------- CB Capital Investors, L.P. 380 Madison Avenue, 12th Floor New York, NY 10017 Attn: Michael Hannon Fax: (212) 622-3101 Equity-Linked Investors-II Private Equity Investors III, L.P. 540 Madison Avenue, 36th Floor New York, NY 10022 Attn: Rohit M. Desai Fax: (212) 752-7807 Hoak Communications Partners, L.P. HCP Capital Fund, L.P. One Galleria Tower 13355 Noel Road, Suite 1050 Dallas, Texas 75240 Attn: James Hoak Fax: (972) 960-4899 Whitney Equity Partners, L.P. J.H. Whitney III, L.P. Whitney Strategic Partners III, L.P. 177 Broad Street, 15th Floor Stamford, Connecticut 06901 Attn: William Laverack, Jr. Fax: (203) 973-1422 Media/Communications Investors Limited Partnership Media/Communications Partners III Limited Partnership 75 State Street, Suite 2500 Boston, MA 02109 Attn: James F. Wade Fax: (617) 345-7201 One Liberty Fund IV, L.P. One Liberty Square Boston, MA 02109 Attn: Joseph T. McCullen Fax: (617) 423-1765 Northwood Ventures LLC Northwood Capital Partners LLC 485 Underhill Boulevard, Suite 205 Syosset, New York 11791-3419 Attn: Peter Schiff Fax: (516) 364-0879 Toronto Dominion Investments Inc. 31 West 52nd Street New York, NY 10019-6101 Attn: Steve Reinstadtler Fax: (212) 974-8429 (with a copy to) Toronto Dominion Investments, Inc. 909 Fannin Suite 1700 Houston, TX 77010 Attn: Martha Gariepy Fax: (713) 652-2647 SCHEDULE II Management Stockholders ----------------------- Excluded Stock --------------
Management Stockholders ----------------------- Excluded Stock Gerald T. Vento Thomas H. Sullivan Common Stock Class A Common Stock 11,206.93 6,795.88 Class C Common Stock 341.24 211.56 Class D Common Stock 9.26 2.06 Voting Preference Stock 5 5 --------- -------- Common Stock Total: 11,562.43 7,014.50 Preferred Stock Series C Preferred Stock 450 100 Series E Preferred Stock 8729.40 5426.38 --------- -------- Preferred Stock Total: 9,179.40 5,526.38
SCHEDULE III Equity Issued to Cash Equity Investors -------------------------------------- See Attached Chart: TeleCorp PCS, Inc. Puerto Rico Transaction Cash Equity Commitment and Share Allocation. TeleCorp PCS Inc. Puerto Rico Transaction Cash Equity Commitment and Share Allocation
Baseline Commitment Preferred Common Common Common Total Cash Equity Holder (dollars) Series C Series A Tracking C Tracking D Common ------------------ ------------------- --------- -------- ---------- ---------- -------- Chase 9,785,100 9,785.10 9,785.10 - - 9,785.10 Desai Equity-Linked Investors-II 4,892,550 4,892.55 4,892.55 - - 4,892.55 Private Equity Investors III, L.P. 4,892,550 4,892.55 4,892.55 - - 4,892.55 -------------- ------------- ----------- ----------- ---------- ---------- Total Desai 9,785,100 9,785.10 9,785.10 - - 9,785.10 Hoak Hoak Communications Partners, L.P. 6,723,900 6,723.90 6,723.90 - - 6,723.90 HCP Capital Fund, L.P. 615,000 615.00 615.00 - - 615.00 -------------- ------------- ----------- ---------- ---------- ---------- Total Hoak 7,338,900 7,338.90 7,338.90 - - 7,338.90 JH Whitney J.H. Whitney III LP 4,180,258 4,180.26 4,180.26 - - 4,180.26 Whitney Equity Partners, LP 1,834,710 1,834.71 1,834.71 - - 1,834.71 Whitney Strategic Partners, III LP 100,732 100.73 100.73 _ - 100.73 -------------- ------------ ----------- ----------- ---------- ---------- Total JH Whitney 6,115,700 6,115.70 6,115.70 _ - 6,115.70 Entergy - - - - - - M/C Partners M/C Partners III Limited Partnership 3,522,624 3,522.62 3,522.62 _ - 3,522.62 M/C Investors Limited Partnership 146,776 146.78 146.78 - - 146.78 -------------- ------------ ----------- ---------- ----------- ---------- Total M/C Partners 3,669,400 3,669.40 3,669.40 - - 3,669.40 One Liberty One Liberty Fund 1,210,869 1,210.87 1,210.87 - - 1,210.87 Gilde International 12,231 12.23 12.23 - - 12.23 -------------- ------------ ----------- ---------- ----------- ---------- Total One Liberty 1,223,100 1,223.10 1,223.10 - - 1,223.10 TD 1,223,100 1,223.10 1,223.10 - - 1,223.10 Northwood Northwood Ventures LLC 727,770 727.77 727.77 - - 727.77 Northwood Capital Partners LLC 128,430 128.43 128.43 - - 128.43 -------------- ---------- ---------- ---------- ----------- ---------- Total Northwood 856,200 856.20 856.20 - - 856.20 - ------------------------------------------------------------------------------------------------------------------------------------ Total Cash Equity 39,996,600 39,996.60 39,996.60 - - 39,996.60 - ------------------------------------------------------------------------------------------------------------------------------------ Common Cash Equity Holder Percent of Total - ------------------ ------------------- Chase 24.46% Desai Equity-Linked Investors-II 12.23% Private Equity Investors III, L.P. 12.23% ----------- Total Desai 24.46% Hoak Hoak Communications Partners, L.P. 16.61% HCP Capital Fund, L.P. 1.54% ----------- Total Hoak 18.35% JH Whitney J.H. Whitney III LP 10.45% Whitney Equity Partners, LP 4.59% Whitney Strategic Partners, III LP 0.25% ----------- Total JH Whitney 15.29% Entergy 0.00% M/C Partners M/C Partners III Limited Partnership 8.81% M/C Investors Limited Partnership 0.37% ---------- Total M/C Partners 9.17% One Liberty One Liberty Fund 3.03% Gilde International 0.03% ----------- Total One Liberty 3.06% TD 3.06% Northwood Northwood Ventures LLC 1.82% Northwood Capital Partners LLC 0.32% ----------- Total Northwood 2.14% - --------------------------------------------------------- Total Cash Equity 100.00% - ---------------------------------------------------------
SCHEDULE III(a) Cash Equity Investors Funding Schedule -------------------------------------- See Attached Chart: TeleCorp PCS, Inc. Puerto Rico Transaction Cash Equity Funding Schedule. TeleCorp Pcs Inc. Puerto Rico Transaction Cash Equity Funding Schedule
Initial Cash 2nd Equity Draw 3rd Equity Draw 4th Equity Draw Aggregate Cash Equity Holder Contribution (12/15/99) (3/2001) (3/2002) Commitment - ------------------ ------------------- --------------- --------------- --------------- ---------- Chase 2,935,530 1,467,770 2,690,900 2,690,900 9,785,100 Desai Equity-Linked Investors-II 1,467,765 733,885 1,345,450 1,345,450 4,892,550 Private Equity Investors III, L.P. 1,467,765 733,885 1,345,450 1,345,450 4,892,550 ----------------- --------------- --------------- -------------- ---------- Total Desai 2,935,530 1,467,770 2,690,900 2,690,900 9,785,100 Hoak Hoak Communications Partners, L.P. 2,017,170 1,008,590 1,849,070 1,849,070 6,723,900 HCP Capital Fund, L.P. 184,500 92,250 169,125 169,125 615,000 ----------------- -------------- --------------- -------------- ---------- Total Hoak 2,201,670 1,100,840 2,018,195 2,018,195 7,338,900 JH Whitney J.H Whitney III LP 1,254,007 627,040 1,149,570 1,149,570 4,180,258 Whitney Equity Partners, LP 550,413 275,210 504,544 504,544 1,834,710 Whitney Strategic Partners, III LP 30,220 15,110 27,701 27,701 100,732 ----------------- -------------- --------------- -------------- ---------- Total JH Whitney 1,834,710 917,360 1,681,815 1,681,815 6,115,700 Entergy - - - - - M/C Partners M/C Partners III Limited Partnership 1,056,787 528,390 968,723 968,723 3,522,624 M/C Investors Limited Partnership 44,033 22,020 40,362 40,362 146,776 ----------------- --------------- --------------- -------------- ---------- Total M/C Partners 1,100,820 550,410 1,009,085 1,009,085 3,669,400 One Liberty One Liberty Fund 363,261 181,635 332,987 332,987 1,210,869 Gilde International 3,669 1,835 3,363 3,363 12,231 ----------------- -------------- --------------- -------------- ---------- Total One Liberty 366,930 183,470 336,350 336,350 1,223,100 TD Northwood Northwood Ventures LLC 218,331 109,170 200,135 200,135 727,770 Northwood Capital Partners LLC 38,529 19,260 35,321 35,321 128,430 ----------------- -------------- --------------- -------------- ---------- Total Northwood 256,860 128,430 235,455 235,455 856,200 - ------------------------------------------------------------------------------------------------------------------------------------ Total Cash Equity 11,998,980 5,999,520.00 10,999,050.00 10,999,050 39,996,600 - ------------------------------------------------------------------------------------------------------------------------------------
SCHEDULE III(b) Equity Issued to Management Stockholders ----------------------------------------
- ---------------------------------------------------------------------------------------------------------- Name Total Voting Common Stock Series E Preferred Stock Extraordinary Event Shares - -------------------- ------------------------- --------------------------- ---------------------------- Gerald T. Vento 3,260.75 2,505.73 652.15 - ---------------------------------------------------------------------------------------------------------- Thomas H. Sullivan 2,026.95 1,557.62 405.39 - ----------------------------------------------------------------------------------------------------------
Management Stockholders Funding Commitment ------------------------------------------ Gerald T. Vento $25.06 Thomas H. Sullivan $15.58 SCHEDULE IV Capitalization -------------- See Attached.
TeleCorp PCS Inc. Capitalization Table As of 5/25/1999 --------------------------------------------------------------------------------- Preferred Stock --------------------------------------------------------------------------------- Total Dollars Senior Committed Series A Series B Series C Series D Series E Series F Common ------------------------------------------------------------------------------------------------ Cash Equity - ----------- Chase 40,015,650 - - 40,015.66 - - - - Desai 40,015,652 - - 40,015.66 - - - - Hoak 30,011,649 - - 30,011.65 - - - - JH Whitney 25,009,539 - - 25,009.54 - - - - Entergy 14,435,968 - - 14,435.97 - - - - M/C Partners 15,006,156 - - 15,006.16 - - - - One Liberty 5,002,015 - - 5,002.01 - - - - TD 4,926,095 - - 4,926.09 - - - - Northwood 3,501,077 - - 3,501.08 - - - - Total Management 550,000 - - 550.00 - - - - Total 178,473,801 178,473.82 -------------------------------------------------------------------------------------------------------------------------------- License Equity -------------- One Liberty Fund III LP 1,531,425 - - 1,531.43 - - - - Gilde Investment Fund BV 15,469 - - 15.46 - - - - Northwood Ventures LLC 928,136 - - 928.14 - - - - Northwood Capital Partners LLC 232,034 - - 232.03 - - - - CB Capital Investors, LP 1,160,171 - - 1,160.17 - - - - TeleCorp Investment Corp., LLC 1,160,171 - - 1,160.18 - - - - M/C Partners III LP 1,113,768 - - 1,113.77 - - - - M/C Investors LP 46,403 - - 46.40 - - - - Entergy 1,160,171 - - 1,160.17 - - - - Total 7,347,748 7,347.75 -------------------------------------------------------------------------------------------------------------------------------- New License Equity ------------------ AT&T 45,974,850 30,649.90 - - 15,740.93 - 15,324.95 - TRW 54,109,369 36,072.91 - - 18,526.04 - 18,036.46 - AT&T Puerto Rico 41,000,043 30,750.03 - - 10,250.01 - 10,000.00 - ----------- ------------- --------- --------- Subtotal AT&T 141,084,262 97,472.84 - - 44,516.98 - 43,361.41 - Mercury / Digital PCS 2,332,545 - - 2,332.55 - - - - G. Vento - - - - - 11,235.13 - - T. Sullivan - - - - - 6,984.00 - - Total Other Management - - - - - 7,085.22 - - Total 143,416,807 97,472.84 - 2,332.55 44,516.98 25,304.34 43,361.41 - - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Total Equity 329,238,356 97,472.84 - 188,154.12 44,516.98 25,304.34 43,361.41 - - ----------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------- Common ----------------------------------------------------------------------------------- Voting Percent Series A Series B Tracking C Tracking D Preference Total * of Total ------------------------------------------------------------------------------------- Cash Equity - ----------- Chase 38,602.66 - 87.10 571.78 - 39,261.54 14.87% Desai 38,602.66 - 87.10 571.78 - 39,261.54 14.87% Hoak 28,951.91 - 65.32 428.84 - 29,446.07 11.15% JH Whitney 24,126.42 - 54.44 357.37 - 24,538.23 9.29% Entergy 13,729.47 - - 329.44 - 14,058.91 5.32% M/C Partners 14,476.28 - 32.66 214.42 - 14,723.36 5.58% One Liberty 4,825.39 - 10.89 71.47 - 4,907.75 1.86% TD 4,749.47 - 10.89 71.47 - 4,831.83 1.83% Northwood 3,377.44 - 7.62 50.03 - 3,435.09 1.30% Total Management 522.02 - 1.72 11.32 - 535.06 0.20% Total 171,963.72 357.74 2,677.92 174,999.38 66.27% - ------------------------------------------------------------------------------------------------------------------------------- License Equity -------------- One Liberty Fund III LP 1,336.43 - 2.18 14.31 - 1,352.92 0.51% Gilde Investment Fund BV 13.49 - 0.02 0.14 - 13.65 0.01% Northwood Ventures LLC 913.80 - 1.49 9.79 - 925.08 0.35% Northwood Capital Partners LLC 228.45 - 0.37 2.45 - 231.27 0.09% CB Capital Investors, LP 1,142.25 - 1.86 12.23 - 1,156.34 0.44% TeleCorp Investment Corp., LLC 1,142.25 - 1.86 12.23 - 1,156.34 0.44% M/C Partners III LP 45.69 - 0.07 0.49 - 46.25 0.02% M/C Investors LP 1,096.55 - 1.79 11.74 - 1,110.08 0.42% Entergy 1,142.25 - - 14.09 - 1,156.34 0.44% Total 7,061.16 9.64 77.47 7,148.27 2.71% - ------------------------------------------------------------------------------------------------------------------------------- New License Equity - ------------------- AT&T - - - - - 15,324.95 5.80% TRW - - - - - 18,036.46 6.83% AT&T Puerto Rico - - - - - 10,000.00 3.79% ---------- Subtotal AT&T 43,361.41 16.42% Mercury / Digital PCS 2,269.23 - - - - 2,269.23 0.86% G. Vento 14,040.57 - 339.83 - 5.00 14,380.40 5.45% T. Sullivan 8,727.92 - 211.25 - 5.00 8,939.17 3.39% Total Other Management 12,955.33 - - - - 12,955.33 4.91% Total 37,993.05 - 551.08 - 10.00 81,905.54 31.02% - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- Total Equity 217,017.93 - 918.46 2,755.39 10.00 264,053.19 100.00% - -------------------------------------------------------------------------------------------------------------------------------
* Total Shares = all classes of Common Shares plus Series F Preferred SCHEDULE 4.2 Cash Equity Investor Consents ----------------------------- The execution, delivery and performance of the Agreement will or may require the following consents, approvals and reviews: 1. The Federal Communications Commission. 2. The Federal Trade Commission/Department of Justice. 3. Various Governmental Authorities with respect to Franchise Laws. SCHEDULE 4.4 Attributable Interests ---------------------- Chase Capital Partners: Harold S. Hook, an outside director on the Board of - ---------------------- Directors of Chase Manhattan Corporation, an affiliated entity of CB Capital Investors, L.P., also serves on the Board of Directors of Sprint Corporation. SCHEDULE 5.2 Company Consents ---------------- The execution, delivery and performance of the Agreement will or may equire the following consents, approvals and reviews: 1. The Federal Communications Commission. 2. The Federal Trade Commission/Department of Justice. 3. Various Governmental Authorities with respect to Franchise Laws. SCHEDULE 5.6 Outstanding Options, Warrants, etc. ----------------------------------- 1. Upon the closing of the transaction contemplated by the License Acquisition Agreement by and between Wireless 2000, Inc. ("Wireless") and the Company, dated as of December 2, 1998 (the "Wireless Acquisition Agreement"), the Company shall ssue to Wireless: (i) five hundred forty-five and 20/100 (545.20) shares of Series C Preferred Stock, par value $.01 per share, and (ii) five hundred thirty nd 40/100 (530.40) shares of Class A Voting Common Stock, par value $.01 per share, of the Company. 2. Upon the closing of the transaction contemplated by the License Acquisition Agreement by and between Mercury PCS II, LLC ("Mercury") and the Company, dated as of May 15, 1998 (the "Mercury Acquisition Agreement"), the Company shall issue to Mercury: (i) two thousand three hundred thirty-two and 55/100 (2,332.50) shares of Series C Preferred Stock, par value $.01 per share, and (ii) two thousand two hundred sixty-nine and 23/100 (2,269.23) shares of Class A Voting Common Stock, par value $.01 per share, of the Company and shall issue additional shares of Series C Preferred Stock and Class A Voting Common Stock to the Cash Equity Investors as set forth on Schedule V of the Securities Purchase Agreement, setting forth Share Allocation With Supplemental Allocation. 3. The Company may issue Series E Notes to certain existing shareholders of the Company in connection with the transactions set forth in the Summary of Principal Terms. SCHEDULE 5.9 Subsidiaries ------------
Subsidiary Name State of Qualified in: Incorporation - ----------------------------------------------------------------------------------------- 1. TeleCorp Communications, Inc. DE AR, DC, IL, IN, LA, MA, MO, MS, NH, TN, TX, VA - ----------------------------------------------------------------------------------------- 2. TeleCorp Holding Corp., Inc. DE LA, MA, NH, TN, TX, VA(1) - ----------------------------------------------------------------------------------------- 3. TeleCorp Limited Holdings, Inc. DE AR, DC, IL, MA, MS - ----------------------------------------------------------------------------------------- 4. TeleCorp Realty Holdings, Inc. DE None - ----------------------------------------------------------------------------------------- 5. TeleCorp PCS, L.L.C. (Sole Member is: TeleCorp PCS, Inc.) DE None - ----------------------------------------------------------------------------------------- 6. TeleCorp Realty, L.L.C. DE AR, DC, IL, LA, MA, MO, (Managing Member is: TeleCorp MS, NH, TN, TX Communications, Inc.) - ----------------------------------------------------------------------------------------- 7. TeleCorp Equipment Leasing, L.P. DE AR, DC, IL, IN, LA, MA, (General Partner is: TeleCorp Limited MO, MS, NH, TN, TX Holdings, Inc.) - -----------------------------------------------------------------------------------------
- -------------------------- (1) TeleCorp Holding Corp will be withdrawn from each of the states in which it is qualified (except Delaware) upon the filing of the company's tax returns for the year ended December 31, 1998. Exhibit A Form of ------- Amended and Restated Pledge Agreement ------------------------------------- AMENDED AND RESTATED PLEDGE AGREEMENT, dated ______________, 1999, made by __________ ("Pledgor") to TeleCorp PCS, Inc., a Delaware corporation ------- ("Pledgee"). Capitalized terms used and not defined herein shall have the ------- meaning set forth in the Stock Purchase Agreement (defined below). WHEREAS, Pledgor and Pledgee entered into a Pledge Agreement dated July 17, 1998 (the "Pledge Agreement"); WHEREAS, Pledgor has entered into a Stock Purchase Agreement with Pledgee and certain other investors identified therein, dated as ___________, 1999 (the "Stock Purchase Agreement"), pursuant to which Pledgor has agreed, among other things, to make additional cash contributions to the Company in an amount equal to the excess of its Aggregate Commitment over its Initial Cash Contribution paid at Closing (the "Puerto Rico Unfunded Commitment") on the terms and subject to the conditions thereof; WHEREAS, simultaneously with the execution of the Pledge Agreement, Pledgor entered into a Securities Purchase Agreement pursuant to which Pledgor agreed, among other things, to make Cash Equity Investor Contributions (as defined in the Securities Purchase Agreement) to the Company on the terms and subject to the conditions thereof; WHEREAS, Pledgor is the owner of ___________ shares of Series C Preferred Stock, par value $0.01 per share, _________ shares of Class A Common Stock, par value $0.01 per share, _________ shares of Class C Common Stock, par value $.01 per share, and _________ shares of Class D Common Stock, par value $.01 per share, of the Company and, upon the Supplemental Closing, shall acquire additional shares of such Series C Preferred Stock and Common Stock (collectively, the "Pledged Shares"); -------------- WHEREAS, the Pledgee has required, as a condition to its execution and delivery of the Stock Purchase Agreement and its consummation of the transactions contemplated thereby, that Pledgor enter into this Amended and Restated Pledge Agreement in order to secure Pledgor's obligation to: (i) make capital contributions to the Company in respect of its Puerto Rico Unfunded Commitment in accordance with the terms of Section 2.1 of the Stock Purchase Agreement and (ii) make Cash Equity Investor Contributions in accordance with the terms of Section 2.2 of the Securities Purchase Agreement and Section 3.10 of the Stockholders' Agreement ((i) and (ii) collectively referred to herein as the "Unfunded Commitment Obligations"); ------------------------------- -15- NOW, THEREFORE, in consideration of the mutual covenants herein contained, Pledgor hereby agrees with Pledgee that the Pledge Agreement is hereby amended and restated as follows: SECTION 1. Pledge. Pledgor hereby pledges to Pledgee, and grants to ------ Pledgee a security interest in the following, whether now owned or hereafter acquired (the "Collateral"): (a) The Pledged Shares and the certificates representing the Pledged Shares, and all dividends, cash, instruments, securities and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Shares; and (b) All proceeds of any and all of the foregoing Collateral (including, without limitation, proceeds that constitute property of the types described above). SECTION 2. Security for Obligations. This Agreement secures the ------------------------ Unfunded Commitment Obligations and all Pledgor's obligations under, in respect of or in connection with this Agreement (all such obligations being referred to hereinafter, together with the Unfunded Commitment Obligations, as the "Obligations"). Without limiting the generality of the foregoing, this Agreement secures the payment of all amounts that constitute part of the Obligations and would be owned by Pledgor to Pledgee under the Stock Purchase Agreement, Securities Purchase Agreement or Stockholders' Agreement but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving Pledgor. SECTION 3. Delivery of Collateral. All certificates or instruments ---------------------- representing or evidencing the Collateral shall be delivered to and held by or on behalf of Pledgee pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to Pledgee. Pledgee shall have the right, at any time in its discretion and without notice to Pledgor, to transfer to or to register in the name of Pledgee or any of its nominees any or all of the Collateral, subject only to the rights specified in Section 6(a); provided, that notwithstanding the foregoing, until any transfer -------- of beneficial ownership with respect to the Collateral pursuant to any exercise of remedies under Section 11, Pledgor shall continue to be the beneficial owner of the Collateral. In addition, Pledgee shall have the right at any time to exchange certificates or instruments representing or evidencing Collateral for certificates or instruments of smaller or larger denominations. SECTION 4. Representations and Warranties. Pledgor represents and ------------------------------ warrants as follows: (a) Pledgor is the legal and beneficial owner of the presently existing Collateral free and clear of any Lien except for the security interest created by this Agreement and Liens created by the Stockholders' Agreement. -16- (b) The pledge of the Pledged Shares pursuant to this Agreement, together with the delivery of the Pledged Shares pursuant to Section 3, creates a valid ad perfected first priority security interest in the presently existing Collateral, securing the payment of the Obligations. (c) No consent of any other Person and no authorization, approval, or other action by, and no notice to or filing with, any Governmental Authority is required (i) for the pledge by Pledgor of the Collateral pursuant to this Agreement or for the execution, delivery or performance of this Agreement by Pledgor, (ii) for the perfection or maintenance of the security interest created hereby (including the first priority nature of such security interest) or (iii) for the exercise by Pledgee of the voting or other rights provided for in this Agreement or the remedies in respect of the Collateral pursuant to this Agreement (except (x) as may be required in connection with any disposition of any portion of the Pledged Shares by laws affecting the offering and sale of securities generally, (y) that the consent, authorization or approval of the FCC may be required if the exercise of rights or remedies by Pledgee hereunder would result in a voluntary or involuntary assignment of or transfer of control of a License and (z) for the filing of financing statements pursuant to the Code (as defined below) with respect to Collateral). SECTION 5. Further Assurances. Pledgor agrees that at any time and ------------------ from time to time, at the expense of Pledgor, Pledgor will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary, or that Pledgee may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable Pledgee to exercise and enforce its rights and remedies hereunder with respect to any Collateral, including, without limitation, all action specified in Section 13. SECTION 6. Voting Rights; Dividends; Etc. ----------------------------- (a) Unless and until Pledgor shall fail to pay in full within 35 days of the due date any of the Unfunded Commitment Obligations: (i) Pledgor shall be entitled to exercise or refrain from exercising any and all voting and other consensual rights pertaining to the Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement or the Stockholders' Agreement. (ii) Pledgor shall be entitled to receive and retain any and all dividends and interest, cash, instruments and other property paid in respect of the Collateral, provided that any and all -------- (1) dividends and interest paid or payable other than in cash in -17- respect of, and instruments and other property received, receivable or otherwise distributed in respect of, or in exchange for, any Collateral, (2) dividends and other distributions paid or payable in cash in respect of any Collateral in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus or paid-in- surplus, and (3) cash paid, payable or otherwise distributed in respect of principal of, or in redemption of, or in exchange for, any Collateral, shall be, and shall be forthwith delivered to Pledgee to hold as, Collateral and shall, if received by Pledgor, be received in trust for the benefit of Pledgee, be segregated from the other property or funds of Pledgor, and be forthwith delivered to Pledgee as Collateral in the same form as so received (with any necessary endorsement or assignment). (b) In the event that Pledgor shall fail to pay in full within 35 days of the due date any of the Unfunded Commitment Obligations: (i) All rights of Pledgor to exercise or refrain from exercising the voting and other consensual rights which it would otherwise be entitled to exercise pursuant to Section 6(a)(i), and to receive the dividends, interest, cash, instruments and other property which it would otherwise be authorized to receive and retain pursuant to Section 6(a)(ii), shall cease, and all such rights shall thereupon become vested in Pledgee who shall thereupon have the sole right to exercise or refrain from exercising such voting and other consensual rights and to receive and hold as Collateral such dividends and interest payments. (ii) All dividends ad interest payments that are received by Pledgor contrary to Section 6(b)(i) shall be received in trust for the benefit of Pledgee, shall be segregated from other funds of Pledgor and shall be forthwith paid over to Pledgee as Collateral in the same form as so received (with any necessary endorsements or assignment). (c) Pledgor shall execute and deliver (or cause to be executed and delivered) to Pledgee all such proxies and other instruments as Pledgee may reasonably request for the purpose of enabling Pledgee to exercise the voting and other rights which it is entitled to exercise pursuant to Section 5(b)(i) above and to receive the dividends or interest payments that it is authorized to receive and retain pursuant to Sections 6(a)(ii) and 6(b)(ii) . -18- SECTION 7. Transfer Restriction. Pledgor shall not Transfer (as such -------------------- term is defined in the Stockholders' Agreement) any Pledged Shares or other Collateral to any Person, unless this Pledge Agreement remains in effect with respect to all of the Collateral (if any) other than the Collateral being Transferred and concurrently with such Transfer the transferee pledges all of the transferred Collateral in favor of the Company pursuant to a pledge agreement in the form of this Pledge Agreement. The Pledgee shall release the security interest created by this Agreement to the extent necessary in order to facilitate any Transfer complying with the terms of this Section 7. SECTION 8. Pledgee Appointed Attorney-in-Fact. If at any time the ---------------------------------- Pledgor shall fail to pay in full within 35 days of the due date any of its Unfunded Commitment Obligations, Pledgee shall automatically and without further action become Pledgor's attorney-in-fact, with full authority in the place an stead of Pledgor and in the name of Pledgor or otherwise, from time to time in Pledgee's discretion to take any action and to execute any instrument which Pledgee may deem necessary or advisable to accomplish the purposes of this Agreement (subject to the rights of Pledgor under Section 6), including, without limitation, to receive, endorse and collect all instruments made payable to Pledgor representing any dividend, interest payment or other distribution in respect of the Collateral or any part thereof and to give full discharge for the same. SECTION 9. Pledgee May Perform. If Pledgor fails to perform any ------------------- agreement contained herein, Pledgee may itself perform, or cause performance of, such agreement, and the expenses of Pledgee incurred in connection therewith shall be payable by Pledgor under Section 12. SECTION 10. Pledgee's Duties. The powers conferred on Pledgee ---------------- hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the reasonable care in the custody and preservation of any Collateral in its possession and the accounting for monies and other instruments and property actually received by it hereunder, Pledgee shall have not duty as to any Collateral, as to ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Collateral, whether or not Pledgee has or is deemed to have knowledge of such matters, or as to the taking of any necessary steps to preserve rights against any parties or any other rights pertaining to any Collateral. Pledgee shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its possession if such Collateral is accorded treatment substantially equal to that which Pledgee accords its own property. SECTION 11. Remedies Upon Default. In the event that Pledgor shall fail --------------------- to pay in full within 35 days of the due date any of its Obligations: (a) Pledgee may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the Uniform Commercial Code in effect in the State of New York at that time (the "Code") (whether or not the Code applies to the affected ---- Collateral), and -19- may also, without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any exchange, broker's board or at any of Pledgee's offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as Pledgee may deem commercially reasonable. Pledgor agrees that, to the extent notice of sale shall be required by law, at least ten days' notice to Pledgor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. Pledgee shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. Pledgee may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. (b) Any cash held by Pledgee as Collateral and all cash proceeds received by Pledgee in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of Pledgee, be held by Pledgee as collateral for, and/or then or at any time thereafter be applied (after payment of any amounts payable to Pledgee pursuant to Section 12) in whole or in part by Pledgee against, all or any part of the Obligations then due. Any surplus of such cash or cash proceeds held by Pledgee and remaining after payment in full of all the Obligations shall be paid over to Pledgor. SECTION 12. Interest and Expenses. In the event that Pledgor shall --------------------- fail to pay in full within 35 days of the due date any of the Unfunded Commitment Obligations, it will upon demand pay to Pledgee (a) in respect of the period commencing on the date of such payment default and ending on the date its Unfunded Commitment Obligations equals zero, interest (computed on the basis of a 360-day year of twelve 30-day months) on the aggregate amount of its Unfunded Commitment Obligations at a fluctuating rate per annum equal to the Company's borrowing rate under the Credit Agreement, plus four percent (4%), provided that in no event shall the Pledgor be obligated to pay interest in excess of the maximum interest rate permitted under applicable law, and (b) the amount of all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, that Pledgee may incur in connection with (i) the administration of this Agreement, (ii) the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Collateral, (iii) the exercise or enforcement of any of the rights of Pledgee hereunder or (iv) the failure by Pledgor to perform or observe any of the provisions hereof. SECTION 13. Amendments, Etc. No amendment or waiver of any provision --------------- of this Agreement, and no consent to any departure by Pledgor here from, shall in any event be effective unless the same shall be in writing and signed by Pledgee and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. -20- SECTION 14. Notices. All notices and other communications provided for ------- hereunder shall be in writing and shall be delivered by hand, by nationally recognized overnight courier or by facsimile transmission, in each case to the address for the recipient specified in the Stock Purchase Agreement. All such notices and other communications shall be effective upon delivery or upon facsimile transmission, when confirmed by return facsimile transmission. SECTION 15. Continuing Security Interest ---------------------------- (a) This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the date Pledgor's Unfunded Commitment equals zero, or, if Pledgor shall have failed to pay in full when due any of the Unfunded Commitment Obligations, the later of such date and the date it has paid in full in cash all of the Obligations, (b) be binding upon Pledgor, it successors and assigns, and (c) inure, together with the rights and remedies of Pledgee hereunder, to the benefit of, and be enforceable by, Pledgee and its successors. (b) Pledgee agrees to release the Collateral upon deposit by Pledgor into a cash collateral account in favor of Pledgee, the terms of which cash collateral account shall be acceptable to Pledgee in its sole discretion, the aggregate amount of the cash equal to Pledgor's remaining Unfunded Commitment Obligations. SECTION 16. Release and Termination. Upon the date the amount of ----------------------- Pledgor's Unfunded Commitment Obligations equals zero, or, if Pledgor shall have failed to pay in full when due any of the Unfunded Commitment Obligations, the later of such date and the date it has paid in full in cash all of the Obligations, the security interest granted hereby shall terminate and all rights to the Collateral shall revert to Pledgor. Upon any such termination, Pledgee will, at Pledgor's expense release to Pledgor all Collateral then held by it and execute and deliver to Pledgor such documents as Pledgor shall reasonably request to evidence such termination. SECTION 17. Governing Law; Terms. This Agreement shall be governed -------------------- by, and construed in accordance with, the laws of the State of New York, except as required by mandatory provisions of law and except to the extent that the validity or perfection of the security interest hereunder, or remedies hereunder, in respect of any particular Collateral are governed by the laws of a jurisdiction other than the State of New York. Unless otherwise defined herein or in the Stock Purchase Agreement, terms defined in Article 9 of the Code are used herein as therein defined. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] -21- IN WITNESS WHEREOF, Pledgor has caused this Agreement to be duly executed and delivered by its officers thereunto duly authorized as of the date first above written. [NAME] By: _________________________ Name: Title: Agreed and Accepted: TELECORP PCS, INC. By: _________________________ Name: Title: Exhibit B Form of Series E Note --------------------- See Attachment hereto. DRAFT 03/03/99 THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. THE HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH NOTE, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE NOTE FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM AND, IN THE CASE OF THE FOREGOING CLAUSE (D), A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE ISSUER AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. THIS NOTE MAY NOT BE TRANSFERRED, OTHER THAN TO AN INSTITUTIONAL HOLDER, PRIOR TO THE EARLIER OF 6 MONTHS AFTER THE CONSUMMATION OF THE COMPANY'S INITIAL HIGH YIELD OFFERING AND SEPTEMBER 30, 2000. TELECORP PCS, INC. ___% Senior Subordinated Notes due _______, Series E [CUSIP No.]: ________ No. __________ $ TELECORP PCS, INC., a Delaware corporation (the "Company," which term includes any successor corporation), for value received, promises to pay to ______________ or registered assigns the principal sum of Dollars ($ ), on the earlier of (i) the final maturity date of the Company's initial Qualifying High Yield Offering and (ii) December 30, 2009. Interest Payment Dates: on each six month and annual anniversary of the Issue Date, commencing on ____, 1999. Reference is made to the further provisions of this Note contained herein, which will for all purposes have the same effect as if set forth at this place. IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by its duly authorized officer. TELECORP PCS, INC. By: __________________________ Name: Title: By:___________________________ Name: Title: Dated: _______ This is one of the ___% Senior Subordinated Notes due _____, Series E, described in the within-mentioned Indenture. Dated: _______ [__________________,] as Trustee By:______________________________ Authorized Signatory (REVERSE OF NOTE) TELECORP PCS, INC. __% Senior Subordinated Notes due _____, Series E 1. INTEREST. TELECORP PCS, INC. promises to pay interest on the principal amount of this Note at the rate per annum set forth in Section 2.01(b) of the Third Supplemental Indenture (as defined below). Cash interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the Issue Date. The Company will pay interest in cash semi-annually in arrears on each Interest Payment Date, commencing on _____ ___, 2004; provided, that any interest accrued prior thereto due and owing on -------- any Interest Payment Date and, if payment in cash shall thereafter be prohibited by the terms of the Senior Credit Facilities, interest accrued thereafter, may be paid by issuance of a _____% Senior Subordinated Note due _______, Series E substantially in the form of this Note in the principal amount of such accrued interest. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue principal from time to time on demand and on overdue installments of interest (without regard to any applicable grace periods) to the extent lawful from time to time on demand, in each case at the rate equal to 2% per annum in excess of the rate of interest otherwise payable under the Third Supplemental Indenture. 2. METHOD OF PAYMENT. The Company shall pay interest on the Notes (except defaulted interest) to the persons who are the registered Holders at the close of business on the business day immediately preceding the Interest Payment Date even if the Notes are canceled on registration of transfer or registration of exchange after such business day. Holders must surrender the Notes to a Paying Agent to collect principal payments. The Company shall pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts ("U.S. Legal Tender"). However, the Company may pay principal and interest by wire transfer of Federal funds (provided that the Paying Agent shall have received wire instructions on or prior to the relevant Interest Payment Date), or interest by check payable in such U.S. Legal Tender. The Company may deliver any such interest payment to the Paying Agent or to a Holder at the Holder's registered address. 3. PAYING AGENT AND REGISTRAR. Initially, the Trustee will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to the Holders. The Company may, subject to certain exceptions, act as Paying Agent and Registrar. 4. INDENTURE. The Company issued the Notes under an Indenture, dated as of ________ ___, 1999 (the "Base Indenture"), between the Company and the Trustee as supplemented by a Third Supplemental Indenture, dated as of _______ ___, 1999 (the "Third Supplemental Indenture"), among the Company and the Trustee (the Base Indenture and the Third Supplemental Indenture are referred to herein as the "Indenture"). Capitalized terms herein are used as defined in the Indenture unless otherwise defined herein. This Note is one of a duly authorized issue of notes of the Company designated as its ___% Senior Subordinated Notes due ______, Series E (such Series E Notes being referred to herein as the "Notes"), which may be issued under the Indenture. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture (except as otherwise indicated in the Indenture) until such time as the Indenture is qualified under the TIA, and thereafter as in effect on the date on which the Indenture is qualified under the TIA. Notwithstanding anything to the contrary herein, the Notes are subject to all such terms, and holders of Notes are referred to the Indenture and the TIA for a statement of them. The Notes are general unsecured obligations of the Company. Payment on the Notes is guaranteed (each a "Guarantee") on a subordinated basis, jointly and severally, by each Restricted Subsidiary of the Company (each, a "Guarantor") that guarantees the Notes pursuant to the terms of the Indenture. 5. SUBORDINATION. The Notes are subordinated in right of payment to the Senior Debt of the Company to the extent and in the manner provided in the Indenture. Each Holder of a Note, by accepting a Note, agrees to such subordination, authorizes the Trustee to give effect to such subordination and appoints the Trustee as attorney-in-fact for such purpose. 6. OPTIONAL REDEMPTION. The Company has the right (but not the obligation) to effect optional redemption of the Notes pursuant to Section 3.01 of the Third Supplemental Indenture and has the right (but not the obligation) to repurchase up to 35% of the aggregate principal amount of the Notes, subject to the conditions set forth in Section 3.04 of the Third Supplemental Indenture. If any Note is to be redeemed in part only, the notice of redemption that relates to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note in a principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Note. On and after the Redemption Date, interest will cease to accrue on Notes or portions thereof called for redemption so long as the Company has deposited with the Paying Agent for the Notes funds in satisfaction of the redemption price pursuant to the Indenture and the Paying Agent is not prohibited from paying such funds to the Holders pursuant to the terms of the Indenture. 7. CHANGE OF CONTROL OFFER. Following the occurrence of a Change of Control (the date of such occurrence being the "Change of Control Date"), the Company shall, within 30 days after the Change of Control Date, make an Offer to Purchase all Notes then outstanding at a purchase price in cash equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon, if any, to the Purchase Date (subject to the right of Holders to receive interest due on the relevant Interest Payment Date). 8. LIMITATION ON DISPOSITION OF ASSETS. The Company is, subject to certain conditions and certain exceptions, obligated to make an Offer to Purchase Notes at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest thereon, if any, to the Purchase Date (subject to the right of Holders to receive interest due on the relevant Interest Payment Date) with the proceeds of certain Asset Dispositions as set forth in Section 4.05 of the Base Indenture. 9. DENOMINATIONS; TRANSFER; EXCHANGE. The Notes are in registered form, without coupons, in denominations of [$______] and integral multiples of [$______]. A Holder shall register the transfer or exchange of Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay certain transfer taxes or similar governmental charges payable in connection therewith as permitted by the Indenture. The Registrar need not register the transfer of or exchange any Notes or portions thereof selected for redemption, except the unredeemed portion of any Note being redeemed in part. 10. PERSONS DEEMED OWNERS. The registered Holder of a Note shall be treated as the owner of it for all purposes. 11. UNCLAIMED FUNDS. If funds for the payment of principal or interest remain unclaimed for two years, the Trustee and the Paying Agent will repay the funds to the Company at their written request. After that, all liability of the Trustee and such Paying Agent with respect to such funds shall cease. 12. LEGAL DEFEASANCE AND COVENANT DEFEASANCE. The Company and the Guarantors may be discharged from their obligations under the Indenture, the Guarantees and the Notes, except for certain provisions thereof, and may be discharged from obligations to comply with certain covenants contained in the Indenture, the Guarantees and the Notes, in each case, upon satisfaction of certain conditions specified in the Indenture. 13. AMENDMENT; SUPPLEMENT; WAIVER. Subject to certain exceptions, the Indenture, the Guarantees and the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount of the Notes of all series then outstanding, and any existing Default or Event of Default or compliance with any provision may be waived with the consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding; provided that if there -------- shall be notes of more than one series outstanding and if the proposed action to be taken will materially adversely affect the rights of holders of Notes of one or more of such series, then the consent only of Holders of a majority in aggregate principal amount (or, if provided in the Supplemental Indentures with respect to more than one series of the Notes, Holders of not less than a majority in aggregate principal amount of the Notes issued under such multiple series) of outstanding Notes of each series so affected shall be required. Without notice to or consent of any Holder, the parties thereto may amend or supplement the Indenture, the Guarantees and the Notes to, among other things, cure any ambiguity, defect or inconsistency, provide for uncertificated Notes in addition to or in place of certificated Notes or comply with any requirements of the SEC in connection with the qualification of the Indenture under the TIA, or make any other change that does not materially adversely affect the rights of any Holder of a Note. 14. RESTRICTIVE COVENANTS. The Indenture contains certain covenants that, among other things, limit the ability of the Company and the Restricted Subsidiaries to make restricted payments, to incur indebtedness, to create liens, to sell assets, to permit restrictions on dividends and other payments by Restricted Subsidiaries to the Company, to consolidate, merge or sell all or substantially all its assets and to engage in transactions with affiliates. The limitations are subject to a number of important qualifications and exceptions. The Company must report quarterly to the Trustee on compliance with such limitations. 15. DEFAULTS AND REMEDIES. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of Notes then outstanding may declare all the Notes to be due and payable immediately in the manner and with the effect provided in the Indenture. Holders of Notes may not enforce the Indenture, the Guarantees or the Notes except as provided in the Indenture. The Trustee is not obligated to enforce the Indenture, the Guarantees or the Notes unless it has received an indemnity reasonably satisfactory to it. The Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount of the Notes then outstanding to direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Notes notice of certain continuing Defaults or Events of Default if it determines that withholding notice is in their interest. 16. TRUSTEE DEALINGS WITH COMPANY. The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company, the Guarantors, their respective Subsidiaries or their respective Affiliates as if it were not the Trustee. 17. NO RECOURSE AGAINST OTHERS. No director, officer, employee, incorporator or stockholder of the Company or any Guarantor, as such, shall have any liability for any obligations of the Company or any Guarantor under the Notes or the Guarantees, as the case may be, or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes and the Guarantees. 18. AUTHENTICATION. This Note shall not be valid until the Trustee or authenticating agent signs the certificate of authentication on this Note. 19. ABBREVIATIONS AND DEFINED TERMS. Customary abbreviations may be used in the name of a Holder of a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). ). 20. RESTRICTION ON REMARKETING. This Note may not be transferred, other than to an Institutional Holder, prior to the earlier of 6 months after the consummation of the Company's initial High Yield Offering and September 30, 2000. 21. [CUSIP NUMBERS.] [Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon.] 22. GOVERNING LAW. The laws of the State of New York shall govern the Indenture and this Note without regard to principles of conflicts of laws to the extent that the application of the laws of another jurisdiction would be required thereby. 23. CONFLICT. In the event of an express and irreconcilable conflict between this Note and the Indenture, the terms of the Indenture shall govern. [FORM OF NOTATION ON NOTE RELATING TO GUARANTEE] SENIOR SUBORDINATED GUARANTEE The Guarantor(s) (as defined in the Third Supplemental Indenture referred to in the Note upon which this notation is endorsed) hereby, jointly and severally, unconditionally guarantee on a senior subordinated basis (such guarantee by each Guarantor being referred to herein as the "Guarantee") the due and punctual payment of the principal of, premium, if any, and interest on the Notes, whether at maturity, by acceleration or otherwise, the due and punctual payment of interest on the overdue principal, premium and interest, if any, on the Notes, and the due and punctual performance of all other obligations of the Company to the Holders or the Trustee, all in accordance with the terms set forth in Article 9 of the Third Supplemental Indenture. The obligations of each Guarantor to the Holders and to the Trustee pursuant to the Guarantee, the Indenture and the Third Supplemental Indenture are expressly set forth, and are expressly subordinated and subject in right of payment to the prior payment in full of all Designated Senior Debt, to the extent and in the manner provided in Article 10 of the Third Supplemental Indenture, and reference is hereby made to such Third Supplemental Indenture for the precise terms of the Guarantee therein made. The Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Notes upon which the Guarantee is noted shall have been executed by the Trustee under the Indenture by the manual signature of one or more of its authorized officers. This Guarantee shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of law. This Guarantee is subject to release upon the terms set forth in the Third Supplemental Indenture. [GUARANTORS] By:__________________________ Name: Title: Exhibit C Form of Series E Note Indenture ------------------------------- See Attachment hereto. TABLE OF CONTENTS ARTICLE I DEFINITIONS....................................................................... 2 ARTICLE II CONTRIBUTIONS; PURCHASE AND SALE OF SECURITIES; CERTAIN RESTRICTIONS ON TRANSFER.. 8 2.1. Cash Equity Investor and Management Stockholder Contributions..................... 8 2.2. Purchase and Sale of Securities at Closing........................................ 9 2.3. Management Stockholder Contribution............................................... 9 2.4. Management Benefit Plan........................................................... 9 2.5. Restrictive Legends............................................................... 9 2.6. Participation in Note Purchase.................................................... 10 2.7. Use of Proceeds................................................................... 10 ARTICLE III CLOSING........................................................................... 10 3.1. Time and Place of Closing......................................................... 11 3.2. Closing Actions and Deliveries.................................................... 11 3.3. Closing Costs; Taxes and Fees..................................................... 11 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASERS AND MANAGEMENT STOCKHOLDERS.......... 12 4.1. Organization, Power and Authority................................................. 12 4.2. Consents; No Conflicts............................................................ 13 4.3. Litigation........................................................................ 13 4.4. FCC Compliance.................................................................... 13 4.5. Brokers........................................................................... 13 4.6. Capital Commitment................................................................ 13 4.7. No Distribution................................................................... 13 4.8. Investor Acknowledgments.......................................................... 14 ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND ACQUISITION CORP................ 15 5.1. Organization, Power and Authority................................................. 15 5.2. Consents; No Conflicts............................................................ 16 5.3. Litigation........................................................................ 16 5.4. FCC Compliance.................................................................... 16 5.5. Brokers........................................................................... 16
i 5.6. Capitalization.................................................................... 17 5.7. Shares............................................................................ 17 5.8. Offering of Securities............................................................ 17 5.9. Subsidiaries...................................................................... 18 5.10. Small Business Matters............................................................ 18 ARTICLE VI COVENANTS......................................................................... 18 6.1. Consummation of Transactions...................................................... 18 6.2. Use of Proceeds................................................................... 19 6.3. SBIC Regulatory Provisions........................................................ 19 6.4. Regulatory Compliance Cooperation................................................. 19 6.5. Related Agreement Amendments; Amendments to Restated Certificate.................. 20 6.6. Offering of Securities............................................................ 20 6.7. Waiver of Preemptive Rights....................................................... 20 ARTICLE VII CLOSING CONDITIONS................................................................ 20 7.1. Conditions to Obligations of All Parties.......................................... 20 7.2. Conditions to Obligations of the Company.......................................... 22 7.3. Conditions to the Obligations of the Cash Equity Investors........................ 22 ARTICLE VIII SURVIVAL AND INDEMNIFICATION...................................................... 24 8.1. Survival.......................................................................... 24 8.2. Indemnification by the Cash Equity Investors...................................... 24 8.3. Indemnification by the Management Stockholders.................................... 24 8.4. Indemnification by the Company.................................................... 25 8.5. Procedures........................................................................ 25 8.6. Registration Rights............................................................... 26 8.7. Limit on Indemnity................................................................ 26 ARTICLE IX TERMINATION....................................................................... 27 9.1. Termination....................................................................... 27 9.2. Effect of Termination............................................................. 27 ARTICLE X MISCELLANEOUS PROVISIONS.......................................................... 27 10.1. Amendment and Modification........................................................ 27 10.2. Waiver of Compliance; Consents.................................................... 27 10.3. Notices........................................................................... 28
ii 10.4. Expenses.......................................................................... 28 10.5. Parties in Interest; Assignment................................................... 29 10.6. Applicable Law.................................................................... 29 10.7. Counterparts...................................................................... 29 10.8. Interpretation.................................................................... 29 10.9. Entire Agreement.................................................................. 29 10.10. Publicity......................................................................... 30 10.11. Specific Performance.............................................................. 30 10.12. Remedies Cumulative............................................................... 30 10.13. Severability...................................................................... 30 10.14. Beneficiaries of Agreement........................................................ 30 10.15. F Block Joint Ventures............................................................ 30
iii SCHEDULES Schedule I - Cash Equity Investors Schedule II - Management Stockholders Schedule III - Equity Issued to Cash Equity Investors Schedule III(a) - Cash Equity Investors Funding Schedule Schedule III(b) - Equity Issued to, and Funding Commitment of, Management Stockholders Schedule IV - Capitalization Schedule 4.2 - Cash Equity Investor Consents Schedule 4.4 - Attributable Interests Schedule 5.2 - Company Consents Schedule 5.6 - Outstanding Options, Warrants, etc. Schedule 5.9 - Subsidiaries EXHIBITS Exhibit A - Form of Pledge Agreement Exhibit B - Form of Series E Note Exhibit C - Form of Series E Note Indenture Exhibit D - Summary of Principal Terms
Draft 3/3/99 ================================================================================ THIRD SUPPLEMENTAL INDENTURE TELECORP PCS, INC. To ________________________, Trustee Dated as of _____________, 1999 SERIES E NOTES, Supplemental to Indenture Dated as of _____________, 1999 ================================================================================ CONFIDENTIAL -- FOR DISCUSSION PURPOSES ONLY - ------------------------------------------------------------------------------- TABLE OF CONTENTS
PAGE ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE............................................. 2 SECTION 1.1 Terms Incorporated by Reference........................................................ 2 SECTION 1.2 Additional Definitions................................................................. 2 SECTION 1.3 Other Definitions...................................................................... 7 ARTICLE II THE NOTES.............................................................................. 8 SECTION 2.1 Terms of Series E Notes................................................................ 8 SECTION 2.2 Execution and Authentication........................................................... 10 ARTICLE III PREPAYMENTS AND MANDATORY REDEMPTIONS.................................................. 10 SECTION 3.1 Optional Prepayments................................................................... 10 SECTION 3.2 Premium................................................................................ 11 SECTION 3.3 Mandatory Redemption of Series E Notes................................................. 11 SECTION 3.4 Optional Redemption Upon Equity Issuance............................................... 12 SECTION 3.5 Acquisition of Notes................................................................... 12 ARTICLE IV SUPPLEMENTARY COVENANTS................................................................ 12 SECTION 4.1 Limitation on Transactions with Affiliates............................................. 12 SECTION 4.2 Limitation on Incurrence of Indebtedness............................................... 13 SECTION 4.3 Limitation on Restricted Payments...................................................... 15 SECTION 4.4 Payment of Taxes and Other Claims...................................................... 18 SECTION 4.5 Notice of Defaults..................................................................... 19 SECTION 4.6 Maintenance of Properties.............................................................. 19 SECTION 4.7 Compliance Certificate................................................................. 19 SECTION 4.8 Provision of Financial Information..................................................... 20 SECTION 4.9 Waiver of Stay, Extension or Usury Laws................................................ 20 SECTION 4.10 Limitation on Layered Debt............................................................. 20 SECTION 4.11 Limitation on Restrictions Affecting Restricted Subsidiaries........................... 21
CONFIDENTIAL -- FOR DISCUSSION PURPOSES ONLY - -------------------------------------------------------------------------------- SECTION 4.12 Limitation on Liens.................................................................... 21 SECTION 4.13 Subsidiary Guarantees.................................................................. 22 SECTION 4.14 Limitation on Activities of the Company and the Restricted Subsidiaries................ 23 SECTION 4.15 Amendments to Agreements............................................................... 23 ARTICLE V EVENTS OF DEFAULT...................................................................... 23 SECTION 5.1 Events of Default...................................................................... 23 ARTICLE VI SUBORDINATION.......................................................................... 24 SECTION 6.1 Series E Notes Subordinate to Senior Debt.............................................. 24 SECTION 6.2 Payment of Proceeds Upon Dissolution, Etc.............................................. 24 SECTION 6.3 No Payment When Designated Senior Debt in Default...................................... 26 SECTION 6.4 Acceleration of Series E Notes......................................................... 27 SECTION 6.5 Payment Permitted If No Default........................................................ 28 SECTION 6.6 Obligation of Company Unconditional.................................................... 28 SECTION 6.7 Subrogation To Rights of Holders of Senior Debt........................................ 28 SECTION 6.8 Provisions Solely To Define Relative Rights............................................ 29 SECTION 6.9 No Waiver of Subordination Provisions.................................................. 29 SECTION 6.10 Reliance On Judicial Order or Certificate of Liquidating Agent......................... 30 SECTION 6.11 Notice to Trustee...................................................................... 30 SECTION 6.12 Trustee's Relation to Senior Debt...................................................... 31 SECTION 6.13 Series E Note Holders Authorize Trustee to Effectuate Subordination.................... 31 SECTION 6.14 This Article Not to Prevent Event of Default........................................... 31 SECTION 6.15 Trustee's Compensation Not Prejudiced.................................................. 32 SECTION 6.16 Subordination Provisions Not Applicable to Money Held in Trust for Holders of Series E Notes; Payments May Be Paid prior to Dissolution....................................... 32 ARTICLE VII TAX MATTERS............................................................................ 32 SECTION 7.1 Taxes.................................................................................. 32
CONFIDENTIAL -- FOR DISCUSSION PURPOSES ONLY - -------------------------------------------------------------------------------- ARTICLE VIII THE TRUSTEE............................................................................ 35 SECTION 8.1 Trustee's Disclaimer................................................................... 35 ARTICLE IX GUARANTEE.............................................................................. 36 SECTION 9.1 Unconditional Guarantee................................................................ 36 SECTION 9.2 Severability........................................................................... 36 SECTION 9.3 Release of a Guarantor................................................................. 37 SECTION 9.4 Limitation of Guarantor's Liability.................................................... 37 SECTION 9.5 Contribution........................................................................... 37 SECTION 9.6 Execution of Guarantee................................................................. 38 SECTION 9.7 Subordination of Subrogation and Other Rights.......................................... 38 ARTICLE X SUBORDINATION OF GUARANTEE............................................................. 38 SECTION 10.1 Guarantee Obligations Subordinated to Designated Senior Debt........................... 38 SECTION 10.2 Payment of Proceeds Upon Dissolution, Etc.............................................. 39 SECTION 10.3 No Payment When Designated Senior Debt in Default...................................... 40 SECTION 10.4 Acceleration of Series E Notes......................................................... 42 SECTION 10.5 Payments Permitted If No Default....................................................... 42 SECTION 10.6 Obligations of Guarantors Unconditional................................................ 42 SECTION 10.7 Subrogation To Rights of Holders of Designated Senior Debt............................. 43 SECTION 10.8 Provisions Solely to Define Relative Rights............................................ 43 SECTION 10.9 No Waiver of Subordination Provisions.................................................. 44 SECTION 10.10 Reliance On Judicial Order or Certificate of Liquidating Agent......................... 44 SECTION 10.11 Notice to Trustee...................................................................... 45 SECTION 10.12 Trustee's Relation to Designated Senior Debt........................................... 45 SECTION 10.13 Series E Note Holders Authorize Trustee to Effectuate Subordination.................... 46 SECTION 10.14 This Article Not to Prevent Event of Default........................................... 46 SECTION 10.15 Trustee's Compensation Not Prejudiced.................................................. 46
CONFIDENTIAL -- FOR DISCUSSION PURPOSES ONLY - -------------------------------------------------------------------------------- SECTION 10.16 Subordination Provisions Not Applicable to Money Held in Trust for Holders of Series E Notes; Payments May Be Paid prior to Dissolution....................................... 46 ARTICLE XI MISCELLANEOUS.......................................................................... 47 SECTION 11.1 Reference to Indenture................................................................. 47 SECTION 11.2 Benefits of Indenture.................................................................. 47 SECTION 11.3 Amendments Only With Consent of the Holders............................................ 47 SECTION 11.4 Governing Law.......................................................................... 48 SECTION 11.5 Successors............................................................................. 48 SECTION 11.6 Counterparts........................................................................... 48
THIRD SUPPLEMENTAL INDENTURE THIS THIRD SUPPLEMENTAL INDENTURE, dated as of , 1999 (the ----------- "Supplemental Indenture"), between TELECORP PCS, INC., a Delaware corporation (the "Company"), and as Trustee (the "Trustee"). ----------------- WITNESSETH WHEREAS, the Company will issue under its Indenture, dated as of , --------- 1999 (the "Indenture"), Notes which Notes may be created and established from time to time in one or more series; and WHEREAS, the Company desires to create a new series of senior subordinated Notes (the "Series E Notes") to be issued under the Indenture pursuant to this Supplemental Indenture, and to set forth herein the forms, the maturity dates, interest rates, terms of subordination, optional and mandatory redemption, certain additional covenants and Events of Default (in addition to the covenants and Events of Default contained in the Indenture); and WHEREAS, the execution, delivery and performance of this Supplemental Indenture (including all the agreements herein contained) have been in all respects duly authorized, and all acts and things have been done and performed which are necessary to make this Supplemental Indenture, when duly executed and delivered, a valid, binding and legal instrument in accordance with its terms and for the purposes herein expressed; NOW THEREFORE, in consideration of the premises and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows: DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.1 Terms Incorporated by Reference. Except for the terms defined in this Supplemental Indenture, all capitalized terms used in this Supplemental Indenture have the respective meanings set forth in the Indenture. SECTION 1.2 Additional Definitions. "Acquired Indebtedness" means, with respect to any specified Person, Indebtedness of another Person (i) existing at the time such other Person becomes a Restricted Subsidiary or (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specific Person. "Additional Series E Notes" means any additional Series E Notes issued by the Company in lieu of payments of cash interest on the Series E Notes. 1 "Annualized Pro Forma Consolidated Operating Cash Flow" means Consolidated Cash Flow for the latest two full fiscal quarters for which consolidated financial statements of the Company are available multiplied by two. For purposes of calculating "Consolidated Cash Flow" for any period for purposes of this definition only, (i) any Subsidiary of the Company that is a Restricted Subsidiary on the date of the transaction giving rise to the need to calculate "Annualized Pro Forma Consolidated Operating Cash Flow" (the "Transaction Date") shall be deemed to have been a Restricted Subsidiary at all times during such period and (ii) any Subsidiary of the Company that is not a Restricted Subsidiary on the Transaction Date shall be deemed not to have been a Restricted Subsidiary at any time during such period. In addition to and without limitation of the foregoing, for purposes of this definition only, "Consolidated Cash Flow" shall be calculated after giving effect on a pro forma basis for the applicable period, without duplication, to any Asset Dispositions or Asset Acquisitions (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of the Company or one of the Restricted Subsidiaries (including any Person that becomes a Restricted Subsidiary as a result of an Asset Acquisition) incurring, assuming or otherwise being liable for Acquired Indebtedness) occurring during the period commencing on the first day of such two fiscal quarter period to and including the Transaction Date (the "Reference Period"), as if such Asset Disposition or Asset Acquisition occurred on the first day of the Reference Period. "Asset Acquisition" means (i) any purchase or other acquisition (by means of transfer of cash or other property to others or payment for property or services for the account or use of others, or otherwise) of Equity Interests of any Person by the Company or any Restricted Subsidiary, in either case, pursuant to which such Person shall become a Restricted Subsidiary or shall be merged with or into the Company or any Restricted Subsidiary or (ii) any acquisition by the Company or any Restricted Subsidiary of the property or assets of any Person which constitute all or substantially all of an operating unit or line of business of such Person. "Asset Disposition" means, in lieu of the definition thereof contained in the Indenture, any sale, transfer or other disposition (including, without limitation, by merger, consolidation or sale-and- leaseback transaction) of (i) shares of Capital Stock of a Subsidiary of the Company (other than directors' qualifying shares), (ii) any FCC License for the provision of wireless telecommunications services held by the Company or any Restricted Subsidiary (whether by sale of Capital Stock or otherwise) or (iii) property or assets of the Company or any Subsidiary of the Company; provided , that an Asset Disposition shall not include (a) any sale, transfer or other disposition of shares of Capital Stock, property or assets by a Restricted Subsidiary to the Company or to any other Restricted Subsidiary or by the Company to any Restricted Subsidiary, (b) any sale, transfer or other disposition of defaulted receivables for collection or any sale, transfer or other disposition of property or assets in the ordinary course of business, (c) any sale, transfer or other disposition that does not (together with all related sales, transfers or dispositions) involve aggregate consideration in excess of $5.0 million, (d) any Permitted 2 Sale-Leaseback, (e) any exchange of FCC PCS Licenses and any License Related Assets in connection therewith; provided that (1) such exchange shall be for a comparable number of POPs, (2) such exchange shall have been approved by the Board of Directors of the Company as being in the best interest of the Company and the Trustee shall have received a certified copy of such approval, (3) such exchange shall be for PCS Licenses held on the date of such exchange by AT&T PCS or a Person associated with or introduced by AT&T PCS, and (4) the PCS Licenses acquired in such exchange shall relate to BTAs or MTA's included within the Territory (as each such term is defined in the Stockholders' Agreement dated as of July 17, 1998, as amended, among AT&T PCS, the Company and the other parties thereto), (f) the sale, lease, conveyance or disposition or other transfer of all or substantially all the assets of the Company as permitted under Article 5 or (g) any disposition that constitutes a Change of Control. "AT&T Entity" means AT&T PCS and its Affiliates. "AT&T Holder" means a Holder that is an AT&T Entity. "AT&T PCS" means AT&T Wireless PCS, Inc., a Delaware corporation. "Average Life" means, as of the date of determination, with respect to any Indebtedness for borrowed money or Preferred Stock, the quotient obtained by dividing (i) the sum of the product obtained by multiplying (a) the number of years from the date of determination to the date of each successive scheduled principal or liquidation value payment of such Indebtedness or Preferred Stock, respectively, by (b) the amount of such principal or liquidation value payments, by (ii) the sum of all such principal or liquidation value payments. "Class A Common Stock" means Class A Voting Common Stock, par value $0.01 per share, of the Company. "Common Stock" means common stock, par value $0.01 per share, of the Company. "Communications Act" means the Communications Act of 1934, and any similar or successor Federal statute, and the rules and regulations and published policies of the FCC thereunder, as the same may be in effect from time to time. "Consolidated Cash Flow" of any Person means, for any period, the Consolidated Net Income of such Person for such period (i) increased (to the extent Consolidated Net Income for such period has been reduced thereby) by the sum of (without duplication) (a) Consolidated Interest Expense of such Person for such period, plus (b) Consolidated Income Tax Expense of such Person for such period, plus (c) the consolidated depreciation and amortization expense of such Person and its Restricted Subsidiaries for such period, plus (d) any other non-cash charges of such Person and its Restricted Subsidiaries for such period except for any non-cash charges that represent accruals of, or 3 reserves for, cash disbursements to be made in any future accounting period and (ii) decreased (to the extent Consolidated Interest Expense for such period has been increased thereby) by any non-cash gains from Asset Dispositions. "Consolidated Income Tax Expense" of any Person means, for any period, the consolidated provision for income taxes of such Person and its Restricted Subsidiaries for such period calculated on a consolidated basis in accordance with GAAP. "Consolidated Interest Expense" for any Person means, for any period the sum of (without duplication) (i) the consolidated interest expense included in a consolidated income statement (without deduction of interest or finance charge income) of such Person and its Restricted Subsidiaries for such period calculated on a consolidated basis in accordance with GAAP (including, without limitation, (a) any amortization of debt discount, (b) the net costs under any Hedging Agreement (other than interest rate cap or collar or other similar arrangement), (c) all capitalized interest, (d) the interest portion of any deferred payment obligation and (e) all amortization of any premiums, fees and expenses payable in connection with the incurrence of any Indebtedness, plus (ii) the interest component of Capital Lease Obligations paid, accrued and/or scheduled to be paid or accrued by such Person and its Restricted Subsidiaries during such period as determined on a consolidated basis in accordance with GAAP. "Consolidated Net Income" of any Person means, for any period, the consolidated net income (or loss) of such Person and its Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided, that there shall be excluded therefrom (a) the net income (or loss) of any other Person acquired by such Person or its Restricted Subsidiary in a pooling-of-interests transaction for any period prior to the date of such transaction, (b) the net income (but not loss) of any Restricted Subsidiary of such Person which is subject to restrictions which prevent or limit the payment of dividends or the making of distributions to such Person to the extent of such restrictions (regardless of any waiver thereof) except to the extent of the amount of dividends or other distributions representing such Person's proportionate share of such Restricted Subsidiary's net income for such period which amount is actually paid, in cash, to such Person by such Restricted Subsidiary during such period, (c) the net income of any Person that is not a Restricted Subsidiary of such Person, except to the extent of the amount of dividends or other distributions representing such Person's proportionate share of such other Person's net income for such period actually paid in cash to such Person by such other Person during such period, (d) gains or losses (other than for purposes of calculating Consolidated Net Income under Section 4.05(a)(3) of the Indenture) on Asset Dispositions by such Person or its Restricted Subsidiaries, (e) all extraordinary gains or losses as determined in accordance with GAAP and (f) in the case of a successor to such Person by consolidation or merger or as a transferee of such Person's assets, any earnings (or losses) of the successor corporation prior to such consolidation, merger or transfer of assets. 4 "Designated Senior Debt" means (i) so long as any Indebtedness under one or more Senior Credit Facilities is outstanding or any lender has any commitment to extend credit to the Company thereunder, the Senior Debt incurred under any such Credit Facility and (ii) so long as any other Senior Debt is outstanding, such Senior Debt if, at the time of initial issuance, it has an aggregate outstanding principal amount in excess of $25.0 million and such Senior Debt has been so designated as Designated Senior Debt by the Board of the Company at the time of initial issuance in a resolution delivered to the Trustee. "Excluded Cash Proceeds" means the net cash proceeds received by the Company subsequent to the Issue Date from capital contributions in respect of Qualified Stock of the Company or from the issue or sale (other than to a Restricted Subsidiary) of Qualified Stock of the Company to the extent such proceeds, pursuant to the Note Purchase Agreement, are required to be applied to repay the Series A Notes. "Expiration Event" means any of the following: (a) the occurrence of the "IPO Date" as defined in the Stockholders Agreement dated as of July 17, 1998 among AT&T PCS, the cash equity investors named therein, the management stockholders named therein and the Company, (b) a Change of Control or (c) the consummation of a Qualifying High Yield Offering. "High Yield Offering" means an offering, either in a registered public offering or a private placement, of notes, bonds or other securities that are pari passu or subordinated to the Notes but shall not include any Senior Credit Facility, the Series A Notes, the Series B Notes or any Notes issued under the Indenture. "Guarantor" means (i) each Restricted Subsidiary that, on any Issue Date, is a direct or indirect obligor under, or in respect of, any Senior Debt and (ii) each Restricted Subsidiary that executes this Supplemental Indenture as a Guarantor, in each case, until such Restricted Subsidiary is released from its Guarantee. "Institutional Entity" means the management stockholders party to the Puerto Rico Stock Purchase Agreement dated as of April , 1999 ---- among such management stockholders, Thomas Sullivan, Gerald Vento, Puerto Rico Acquisition Corp. and the Company, and their respective Affiliates. "Institutional Holder" means a Holder that is an Institutional Entity. "Issue Date" means , 1999, the issue date of the --------------- Series E Notes initially issued hereunder. "Maturity Date" means the earlier of (i) the final maturity date of the Company's initial Qualifying High Yield Offering and (ii) [[ insert date six months earlier than Series C maturity]]. ------------- 5 "MTA" means a Major Trading Area as defined in 47 C.F.R. 24.202, as amended from time to time. "Net Debt Proceeds" with respect to any High Yield Offering by the Company or any Subsidiary, the excess of: (a) the gross cash proceeds received by the Company or such Subsidiary from such offering, over (b) all reasonable fees and expenses incurred in connection with such offering (including customary underwriting commissions or discounts and legal, investment banking, brokerage and accounting, trustee fees and other professional fees, sales commission and disbursements) which have not been paid to Affiliates of the Company in connection therewith. "Note Purchase Agreement" means the Amended and Restated Note Purchase Agreement dated , 1999 between the Company and Lucent. --------- "Public Sale" means any underwritten public offering, made on a primary basis pursuant to a registration statement filed with, and declared effective by, the SEC in accordance with the Securities Act. "Qualified Stock" means any Capital Stock of the Company other than Disqualified Stock. "Qualifying High Yield Offering" means a High Yield Offering that results in Net Debt Proceeds to the Company of at least $100,000,000. "Series C Notes" means the Series C Notes of the Company in an initial aggregate principal account not to exceed $65,000,000 which Notes are to be issued pursuant to the Indenture. "Series C Preferred Stock" means Series C Preferred Stock, par value $0.01 per share, of the Company. "Series D Notes" means the Series D Notes of the Company in an initial aggregate principal not to exceed $[ ] which Notes ------------- are to be issued pursuant to the Indenture. "Series E Guarantee" means the guarantee of the Series E Notes by each Guarantor under this Supplemental Indenture. "Series E Guarantor" means (i) each Restricted Subsidiary that, on an Issue Date, is a direct or indirect obligor under, or in respect of, one or more of the Senior Credit Facilities and (ii) each Restricted Subsidiary that pursuant to the terms of this Supplemental Indenture executes a further supplement as a Guarantor, in each case, until such Restricted Subsidiary is released from its guarantee. "Total Consolidated Indebtedness" means, at any date of determination, an amount equal to (i) the accreted value of all Indebtedness, in the case of any Indebtedness 6 isued with original issue discount, plus (ii) the principal amount of all Indebtedness, in the case of any other Indebtedness, of the Company and the Restricted Subsidiaries outstanding as of the date of determination. "Total Invested Capital" means, at any date of determination, the sum of, without duplication, (i) the total amount of equity contributed to the Company as of the initial Issue Date (as set forth on the , audited consolidated balance sheet of the --------------------- Company), plus (ii) irrevocable binding commitments to purchase Capital Stock (other than Disqualified Stock) existing as of such Issue Date, plus (iii) the aggregate net cash proceeds received by the Company from capital contributions or the issuance or sale of Capital Stock (other than Disqualified Stock but including Capital Stock issued upon the conversion of convertible Indebtedness or from the exercise of options, warrants or rights to purchase Capital Stock (other than Disqualified Stock)) subsequent to the Issue Date, other than to a Restricted Subsidiary; provided, such aggregate net cash proceeds received pursuant to this clause (iii) shall exclude any amounts included as commitments to purchase Capital Stock in the preceding clause (ii), plus (iv) the aggregate net cash proceeds received by the Company or any Restricted Subsidiary from the sale, disposition or repayment of any Investment made after the Issue Date and constituting a Restricted Payment in an amount equal to the lesser of (a) the return of capital with respect to such Investment and (b) the initial amount of such Investment, in either case, less the cost of the disposition of such Investment, plus (v) an amount equal to the consolidated net Investment on such date of the Company and/or any of the Restricted Subsidiaries in any Subsidiary that has been designated as an Unrestricted Subsidiary after the Issue Date upon its redesignation as a Restricted Subsidiary in accordance with Section 4.06 of the Indenture, plus (vi) Total Consolidated Indebtedness, minus (vii) the aggregate amount of all Restricted Payments (including any Designation Amount, but other than a Restricted Payment of the type referred to in Section 4.03(b)(iii)(b)) declared or made on or after the Issue Date. "Triton Bonds" means the 11% Senior Subordinated Discount Notes due 2008 issued by Triton PCS, Inc. pursuant to the Indenture dated as of May 4, 1998 among Triton PCS, Inc., the guarantors thereto and PNC Bank, National Association, as trustee. "Vendor" means Lucent in its capacity as such under the Procurement Contract. "Vendor Credit Arrangement" means any Indebtedness (including, without limitation, Indebtedness under any credit facility entered into with any vendor or supplier or any financial institution acting on behalf of such vendor or supplier); provided that the net proceeds of such Indebtedness are utilized solely for the purpose of financing the cost (including, without limitation, the cost of design, development, site acquisition, construction, integration, handset manufacture or acquisition or microwave relocation) of assets used or usable in a Permitted Business (including, without limitation, through the acquisition of Capital Stock of an entity engaged in a Permitted Business). 7 "Yield" means, in respect of any bond, as of any date of determination, the average yield to maturity on such bond (computed on a bond equivalent basis and utilizing the last quoted sale price for each day or, if no sales occur on such date, the last quoted sales price from the immediately preceding day) for the 30 consecutive days immediately prior to such date of determination.
SECTION 1.3 Other Definitions. Defined in: Term Section "Administrative Agent" 6.03 "Cash Equity Investors" 4.15 "Event of Default" 5.01 "Funding Guarantor" 9.05 "Guarantee Payment" 10.02 "Guarantee Payment Blockage Period" 10.03 "Indenture" Recitals "Management Stockholders" 4.15 "Participant" 7.01 "Payment Blockage Period" 6.03 "Proceeding" 6.02 "Related Party" 4.01 "Restricted Payments" 4.03 "Securities Payment" 6.02 "Senior Nonmonetary Default" 6.03 "Senior Payment 6.03 "Series E Notes" Recitals "Purchase Agreement" Recitals "Supplemental Indenture" Recitals "Transferee" 7.01
ARTICLE II THE NOTES SECTION 2.1 Terms of Series E Notes. (a) There are hereby created and established the Series E Notes to be issued in the initial aggregate principal amount of $ and maturing on the Maturity Date. --------- (b) The Company may issue at any time, and, subject to the terms and conditions set forth herein, the Trustee shall authenticate Series E Notes. The Series E Notes shall have the following terms: 8 (i) The Series E Notes shall bear interest through and including October 31, 1999 at an initial rate per annum, determined two Business Days before the initial issuance, equal to the lesser of (a) 12% and (b) the Yield on the Triton Bonds; provided that from and after the earlier of (x) November 1, 1999 and (y) the date of an Expiration Event, the Series E Notes shall bear interest at a rate per annum equal to 7%. The rate of interest borne by the Series C Notes as determined pursuant to the terms of this clause (i) is referred to as the "Series E Coupon Rate." (ii) The Series E Notes are subject to redemption and repurchase by the Company in accordance with the terms of the Indenture and in Article 3 hereof. (iii) The Series E Notes are entitled to the protections of the covenants contained in the Indenture and in Article 4 hereof and are subject to the provisions pertaining to Events of Default contained in the Indenture and in Article 5 hereof. (iv) The Series E Notes shall be issuable in fully registered form, without coupons, in denominations of $ and integral multiples of $ ---------- ---------- in excess thereof. (v) The Series E Notes shall be dated as described in Section 2.02 of the Indenture, except that the Series E Notes first issued shall be dated as of the Issue Date. (vi) The Company shall pay in full the outstanding aggregate principal amount of the Series E Notes, together with any accrued interest and other amounts with respect to such Series E Notes, no later than the Maturity Date. (vii) Interest on the Series E Notes shall be paid in arrears in cash on the six-month and annual anniversary of the Issuance Date; provided that (A) interest on the Series E Notes on or prior to the fifth annual anniversary of the Issuance Date may be paid in Additional Series E Notes and (B) thereafter Interest on the Series E Notes shall be paid in arrears in cash, provided that if such payment in cash shall be prohibited under the terms of the Company's Senior Credit Facilities, payment shall be in Additional Series E Notes. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law whether or not a claim for post-petition 9 interest is allowed in such proceeding) on overdue principal, premium, if any, and interest (whether at stated maturity, by notice of prepayment, by acceleration or otherwise) at the rate equal to 2% per annum in excess of the rate of interest otherwise payable under this Supplemental Indenture, in each case, to the extent lawful. Interest shall be computed on the basis of a 360-day year and twelve 30-day months. In computing interest on the Series E Notes, the date of the making of the Series E Notes shall be included and the date of payment shall be excluded. (viii) For purposes of Section 2.10 of the Indenture, Series E Notes owned by any Affiliate of the Company shall be considered as though not outstanding except that for purposes of determining whether the Trustee shall be protected in relying on any direction, waiver or contract, only Notes that a Trustee knows are so owned shall be so considered. (ix) Payment of principal, premium, if any, and interest on the Series E Notes will be made in lawful money of the United States of America as at the time of payment is legal tender for the payment of private and public debt. Payment of principal of and premium, if any, on the Series E Notes will be made upon surrender thereof at the office or agency of the Company maintained for that purpose in the City and State of New York, and principal and interest may be paid by check mailed to the address of the Holder as such address appears in the records of the Registrar as of the applicable record date or upon written request made prior to the applicable record date by a Holder in an aggregate principal amount in excess of $ , payments in respect of such ---------- Series E Notes shall be made by wire transfer; provided, that in the case of redemption or repurchase the Company may designate such other offices or agencies at which Series E Notes subject to such redemption or repurchase may be surrendered for payment. (c) The Series E Notes shall be substantially in the form of Exhibit A which Exhibit shall be a part of this Supplemental Indenture. (d) The Series E Notes may not be transferred, except to an Institutional Holder, on or prior to December 31, 2000. Upon the transfer of any Series E Note to any Person that is not an 10 Institutional Holder, the conversion privilege of such Series E Note shall terminate. (e) For all purposes of any provision of the Indenture or this Supplemental Indenture that contemplates action to be taken by the Holders of Notes of any Series (including without limitation any action or consent referred to in Article 6 or Article 9 of the Indenture), the Series E Notes and the Series D Notes taken together shall be treated as a single Series. SECTION 2.2 Execution and Authentication. (a) The Series E Notes shall be executed and authenticated pursuant to Section 2.03 of the Indenture. SECTION 2.3 Conversion Privilege. The initial Holder or a permitted transferee of such Holder that is an Institutional Holder may convert the Series E Notes held by it into units ("Units") comprised of shares of Class A Common Stock and Series C Preferred Stock as follows. The Series E Notes may not be converted on or before October 31, 1999 and may not be converted after the occurrence of an Expiration Event. On any day that is both (x) after October 31, 1999 and (y) before the occurrence of an Expiration Event, an Institutional Holder may convert the Series E Notes then held by it, in an amount equal to all (or any part of the principal thereof that is an integral multiple of $100,000) of the Series E Notes owned by such Holder, into a number of fully paid and non-assessable shares of Class A Common Stock and Series C Preferred Stock determined as set forth below. The conversion privilege shall terminate permanently (a) as to all Series E Notes upon the occurrence of an Expiration Event and (b) as to a particular Series E Note upon any transfer of such Note to any Person that is not an Institutional Holder. (a) Number of Shares of Class A Common Stock and Series C Preferred Stock Issuable Upon Conversion. Each Unit shall consist of 1 share of Class A Common Stock and 1 share of Series C Preferred Stock. The number of Units to be issued upon any conversion of Series E Notes shall be equal to (i) the principal amount of Series E Notes to be converted, divided by (ii) $1,200. (b) Fractional Shares. No fractional shares of Class A Common Stock or Series C Preferred Stock shall be issued upon conversion of Series E Notes. In lieu of any fractional share to which the Holder would otherwise be entitled after determination of the aggregate full number of shares of Class A Common Stock and Series C Preferred Stock issuable in respect of the principal amount of Series E Notes then being converted, the Company shall pay cash equal to such fraction multiplied by the Liquidation Preference of the shares of Class A Common Stock or Series C Preferred Stock, 11 as the case may be, to which the Holder would otherwise be entitled. (c) Mechanics of Conversion. In order for a Holder of Series E Notes to convert such Series E Notes into Units, such Holder of Series E Notes shall surrender his or its Note(s) in the aggregate principal amount to be converted to the Company at the office of the [Trustee], together with written notice that such Holder elects to convert the aggregate principal amount of Series E Notes specified in such notice. The date of receipt of such Note(s) and notice by the Company at such office shall be the "Conversion Date". If required by the Company, Series E Notes surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Company, duly executed by the Holder or his or its attorney duly authorized in writing. As soon as practicable after the Conversion Date and the surrender of the Series E Notes(s), the Company shall issue and deliver to such Holder, at its address as it appears on the books of the Registrar, one or more certificates for the number of shares of Class A Common Stock and Series C Preferred Stock, respectively, issuable upon such conversion in accordance with the provisions hereof. (d) Reservation of Shares. The Company shall, at all times when the Series E Notes shall be outstanding, reserve and keep available out of its authorized but unissued stock, for the purpose of effecting the conversion of the Series E Notes, such number of its duly authorized shares of Class A Common Stock and Series C Preferred Stock as shall from time to time be sufficient to effect the conversion of all outstanding Series E Notes. Before taking any action which would cause Class A Common Stock or Series C Preferred Stock, upon the conversion of Series E Notes, to be issued below the then par value of the shares of Class A Common Stock or Series C Preferred Stock, as the case may be, the Company will take any corporate action that may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and non- assessable shares of Class A Common Stock and Series C Preferred Stock to the Holders of Series E Notes. (e) Interest. Accrued and unpaid interest on the Series E Notes shall be convertible in the same manner as principal. (f) Termination of Rights. All Series E Notes that shall be subject to conversion as herein provided, and which have not been surrendered prior to the Conversion Date, shall no longer be 12 deemed to be outstanding and all rights with respect to such Series E Notes, including the rights, if any, to receive notices, shall immediately cease and terminate on the Conversion Date, except only the right of the Holders thereof to receive payment of any accrued and unpaid interest thereon. On and as of the Conversion Date, the shares of Class A Common Stock and Series C Preferred Stock issuable upon such conversion shall be deemed to be outstanding, and the holder thereof shall be entitled to exercise and enjoy all rights with respect to such shares of Class A Common Stock and Series C Preferred Stock, including the rights, if any, to receive notices and to vote. (g) No Conversion Charge or Tax. The issuance and delivery of certificates for shares of Class A Common Stock and Series C Preferred Stock upon the conversion of Series E Notes shall be made without charge to the Holder of Series E Notes for any issue or transfer tax, or other incidental expense in respect of the issuance or delivery of such certificates or the securities represented thereby, all of which taxes and expenses shall be paid by the Company. (h) Reorganization, Reclassification and Merger Adjustment. If there occurs any capital reorganization or any reclassification of Class A Common Stock or Series C Preferred Stock, the consolidation or merger of the Company with or into another Person (other than a consolidation or merger of the Company in which the Company is the continuing corporation and that does not result in any reclassification or change of outstanding shares of its Class A Common Stock) or the sale or conveyance of all or substantially all of the assets of the Company to another Person, then each Series E Note shall thereafter be convertible into the same kind and amounts of securities (including shares of stock) or other assets, or both, that were issuable or distributable to the holders of outstanding Class A Common Stock or Series C Preferred Stock, as the case may be, upon such reorganization, reclassification, consolidation, merger, sale or conveyance, in respect of that number of shares of Class A Common Stock or Series C Preferred Stock, as the case may be, into which such principal amount of Series E Notes might have been converted immediately prior to such reorganization, reclassification, consolidation, merger, sale or conveyance; and, in any such case, appropriate adjustments (as determined in good faith by the Board of Directors of the Company), whose determination shall be conclusive) shall be made to assure that the provisions set forth herein shall thereafter be applicable, as nearly as reasonably may be practicable, in 13 relation to any securities or other assets thereafter deliverable upon the conversion of the Series E Notes. (i) Notice of Adjustment. Whenever the securities or other property deliverable upon the conversion of the Series E Notes shall be adjusted pursuant to the provisions hereof, the Company shall promptly give written notice thereof to each Holder of Series E Notes at such Holder's address as it appears on the transfer books of the Registrar and shall forthwith file, at its principal executive office and with the Trustee, a certificate, signed by the Chairman of the Board, President or one of the Vice Presidents of the Company, and by its Chief Financial Officer, Treasurer or one of its Assistant Treasurers, stating the securities or other property deliverable per $100,000 in principal amount of Series E Notes calculated to the nearest cent or to the nearest one-hundredth of a share and setting forth in reasonable detail the method of calculation and the facts requiring such adjustment and upon which such calculation is based. Each adjustment shall remain in effect until a subsequent adjustment hereunder is required. (j) Notice of Certain Events. In case the Company shall propose at any time or from time to time (i) to declare or pay any dividend payable in stock of any class to the holders of Common Stock, Class A Common Stock or Series C Preferred Stock or to make any other distribution to the holders of Common Stock, Class A Common Stock or Series C Preferred Stock, (ii) to offer to the holders of Common Stock, Class A Common Stock or Series C Preferred Stock rights or warrants to subscribe for or to purchase any additional shares of Common Stock or shares of stock of any class or any other securities, rights or options, (iii) to effect any reclassification of its Common Stock, Class A Common Stock or Series C Preferred Stock, (iv) to effect any consolidation, merger or sale, transfer or other disposition of all or substantially all of the property, assets or business of the Company which would, if consummated, adjust the conversion ratio specified in paragraph (a) above or the securities issuable upon conversion of Series E Notes, or (v) to effect the liquidation, dissolution or winding up of the Company, then, in each such case, the Company shall mail to each Holder, at such Holder's address as it appears on the transfer books of the Registrar, a written notice of such proposed action, which shall specify (A) the date on which a record is to be taken for the purpose of such dividend or distribution of rights or warrants or, if a record is not to be taken, the date as of which the holders of shares of Common Stock, Class A Common Stock or Series C Preferred Stock, as the case may be, of record to be entitled to such dividend or distribution of rights or warrants are to 14 be determined, or (B) the date on which such reclassification, consolidation, merger, sale, conveyance, dissolution, liquidation or winding up is expected to become effective, and such notice shall be so given as promptly as possible but in any event at least ten Business Days prior to the applicable record, determination or effective date, specified in such notice. ARTICLE III PREPAYMENTS AND MANDATORY REDEMPTIONS SECTION 3.1 Optional Prepayments. The Company, at its option, upon notice as provided in Section 3.03 of the Indenture, may redeem at any time, in whole or in part (in a minimum amount of $10,000,000 and in integral multiples of $1,000,000 in excess thereof), without premium, any or all of the Series E Notes. SECTION 3.2 Mandatory Redemption of Series E Notes. In the event that the Company receives the Net Debt Proceeds from a Qualifying High Yield Offering, the Company shall first apply such proceeds to redeem the Series E Notes and the Series D Notes held by Institutional Holders and AT&T Holders, respectively, together with any accrued interest thereon. The Company shall give prompt written notice of the receipt of any Net Debt Proceeds (which notice shall in any event be within 10 days after such receipt) to any Institutional Holder holding Series E Notes by facsimile transmission (and shall confirm such notice by prompt telephonic advice to an investment officer of each such Holder) or by registered mail. Such notice shall state that on a date specified therein (which date shall not be less than 15 days after the date of such notice) the Company, upon receipt of the outstanding Series E Notes, shall redeem Series E Notes held by Institutional Holders in an aggregate principal amount equal to the Net Debt Proceeds. Any notice from the Company to redeem any of the Series E Notes pursuant to this Section 3.02 shall be accompanied by an Officers' Certificate certifying that the conditions of this Section 3.02 have been fulfilled and shall otherwise satisfy the requirements of Section 3.03 of the Indenture. On the date specified in the Company's notice, the Company, upon receipt of an outstanding Series E Note, shall redeem such portion of such Series E Note together with accrued interest thereon and shall promptly mail to the Holder of such Series E Note the redemption payment therefor and a new Series E Note in a principal amount equal to the excess of the principal amount of the Series E Note submitted in connection with such redemption over the principal amount of such Series E Note so redeemed. 15 ARTICLE IV SUPPLEMENTARY COVENANTS SECTION 4.1 Limitation on Transactions with Affiliates. The Company will not, and will not cause or permit any Restricted Subsidiary to, directly or indirectly, conduct any business or enter into, renew or extend any transaction with any of their respective Affiliates or any beneficial holder of 10% or more of any class of Capital Stock of the Company, including, without limitation, the purchase, sale, lease or exchange of property, the rendering of any service, or the making of any guarantee, loan, advance or Investment, either directly or indirectly, unless the terms of such transaction are at least as favorable as the terms that could be obtained at such time by the Company or such Restricted Subsidiary, as the case may be, in a comparable transaction made on an arms'-length basis with a Person that is not such an Affiliate; provided, that (x) in any transaction involving aggregate consideration in excess of $10.0 million, the Company shall deliver an Officers' Certificate to the Trustee stating that the Board of Directors have determined, in their good faith judgment, that the terms of such transaction are at least as favorable as the terms that could be obtained by the Company or such Restricted Subsidiary, as the case may be, in a comparable transaction made on an arms'- length basis between unaffiliated parties and (y) if the aggregate consideration is in excess of $25.0 million, the Company shall also deliver to the Trustee, prior to the consummation of the transaction, the favorable written opinion of a nationally recognized accounting, appraisal or investment banking firm as to the fairness of the transaction to Holders, from a financial point of view (it being understood that no such opinion shall be required in connection with (1) the Puerto Rico Transaction or (2) any acquisition of PCS Licenses from AT&T PCS or a Person associated with or introduced by AT&T PCS, which transaction has been approved by a majority of the Company's Directors other than Thomas Sullivan, Gerald Vento or Directors appointed by AT&T PCS and which relates to PCS Licenses for BTAs or MTA's included within the Territory (as each such term is defined in the Stockholders' Agreement dated as of July 17, 1998, as amended, among AT&T PCS, the Company and the other parties thereto)). Notwithstanding the foregoing, the restrictions set forth in this Section 4.01 shall not apply to (i) transactions between or among the Company and/or any Restricted Subsidiaries, (ii) any Restricted Payment or Permitted Investments permitted by Section 4.03, (iii) directors' fees, indemnification and similar arrangements, officers' indemnification, employee stock option plans, restricted stock plans or employee benefit plans and employee salaries and bonuses paid or created in the ordinary course of business, (iv) any other agreement in effect on the Issue Date, as the same shall be amended from time to time; provided that any material amendment shall be required to comply with the provisions of the preceding paragraph of this Section 4.01, (v) transactions with AT&T or any of its Affiliates relating to marketing of telecommunications services, providing any voice and voice related mobile wireless radio telephone services and using certain intellectual property of AT&T on terms that are no less favorable (when taken as a whole) to the Company or such Restricted Subsidiary, as applicable, than those available from unaffiliated third parties, (vi) transactions involving the leasing or sharing or other use by the Company or any Restricted Subsidiary of communications network facilities (including, without limitation, cable or fiber lines, equipment or transmission capacity) of any Affiliate of the Company or any beneficial holder of 10% or more of any class of Capital Stock of the Company (such Affiliate or holder being a "Related Party") on terms that are no less favorable (when taken 16 as a whole) to the Company or such Restricted Subsidiary, as applicable, than those available from such Related Party to unaffiliated third parties, (vii) transactions involving the provision of personal communications services by a Related Party in the ordinary course of its business to the Company or any Restricted Subsidiary, or by the Company or any Restricted Subsidiary to a Related Party, on terms that are no less favorable (when taken as a whole) to the Company or such Restricted Subsidiary, as applicable, than those available from such Related Party to unaffiliated third parties, (viii) any sales agency agreements pursuant to which an Affiliate has the right to market any or all the products or services of the Company or any Restricted Subsidiary, and (ix) customary commercial banking, investment banking, underwriting, placement agent or financial advisory fees paid in connection with services rendered to the Company and its Subsidiaries in the ordinary course. SECTION 4.2 Limitation on Incurrence of Indebtedness. The Company shall not, and shall not cause or permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness (including Acquired Indebtedness), except: (i) Indebtedness of the Company, if immediately after giving effect to the incurrence of such Indebtedness and the receipt and application of the net proceeds thereof (including, without limitation, the application or use of the net proceeds therefrom to repay Indebtedness, to consummate an Asset Acquisition or to make any Restricted Payment), (a) in the case of any incurrence of Indebtedness on or after September 30, 2002 only, the ratio of (x) Total Consolidated Indebtedness to (y) Annualized Pro Forma Consolidated Operating Cash Flow would be less than (i) 30.0 to 1.0, if the Indebtedness is to be incurred on or after September 30, 2002 and prior to December 31, 2002, or (ii) 24.0 to 1.0, if the Indebtedness is to be incurred on or after December 31, 2002 and prior to December 31, 2003, or (iii) 10.25.0 to 1.0, if the Indebtedness is to be incurred on or after December 31, 2003 and prior to December 31, 2004, or (iv) 5.5 to 1.0, if the Indebtedness is to be incurred on or after December 31, 2004, or (b) in the case of any incurrence of Indebtedness prior to March 31, 2005 only, Total Consolidated Indebtedness would be equal to or less than 75% of Total Invested Capital ; (ii) Indebtedness of the Company and the Restricted Subsidiaries incurred under one or more Senior Credit Facilities in an aggregate amount at any one time outstanding not to exceed $600 million in the aggregate for all such Senior Credit Facilities; 17 (iii) Indebtedness of the Company and its Restricted Subsidiaries outstanding from time to time pursuant to any Vendor Credit Arrangement; (iv) Indebtedness owed by the Company to any Restricted Subsidiary or Indebtedness owed by a Restricted Subsidiary to the Company or another Restricted Subsidiary; provided, that upon either (x) the transfer or other disposition by such Restricted Subsidiary or the Company of any Indebtedness so permitted under this clause (iv) to a Person other than the Company or another Restricted Subsidiary or (y) the issuance (other than directors' qualifying shares), sale, transfer or other disposition of shares of Capital Stock or other ownership interests (including by consolidation or merger) of such Restricted Subsidiary to a Person other than the Company or another such Restricted Subsidiary, the exception provided by this clause (iv) shall no longer be applicable to such Indebtedness and such Indebtedness shall be deemed to have been incurred at the time of any such issuance, sale, transfer or other disposition, as the case may be; (v) Indebtedness of the Company or any Restricted Subsidiary under any Hedging Agreement to the extent entered into to protect the Company or such Restricted Subsidiary from fluctuations in interest rates on any other Indebtedness permitted under the Indenture (including the Notes) and not for speculative purposes; (vi) Indebtedness incurred to refinance any Indebtedness incurred under the prior clause (i) or (iii) above, the Notes or the Guarantees; provided, that (x) such Indebtedness does not exceed the principal amount (or accreted value, if less) of the Indebtedness so refinanced plus the amount of any premium required to be paid in connection with such refinancing pursuant to the terms of the Indebtedness being refinanced or the amount of any premium reasonably determined by the issuer of such Indebtedness as necessary to accomplish such refinancing by means of a tender offer, exchange offer, or privately negotiated repurchase, plus the expenses of such issuer reasonably incurred in connection therewith and (y)(1) in the case of any refinancing of Indebtedness that is pari passu with the Series E Notes, such refinancing Indebtedness is made pari passu with or subordinate in right of payment to the Series E Notes, and, in the case of any refinancing of Indebtedness that is 18 subordinate in right of payment to the Notes, such refinancing Indebtedness is subordinate in right of payment to the Notes on terms no less favorable to the Holders than those contained in the Indebtedness being refinanced, (2) in either case, the refinancing Indebtedness by its terms, or by the terms of any agreement or instrument pursuant to which such Indebtedness is issued, does not have an Average Life that is less than the remaining Average Life of the Indebtedness being refinanced and (3) any Indebtedness incurred to refinance any Indebtedness is incurred by the obligor on the Indebtedness being refinanced or by the Company; (vii) Capital Lease Obligations of the Company or any Restricted Subsidiary with respect to the leasing by the Company or any Restricted Subsidiary of tower sites and equipment that is a fixture thereto; provided, that the aggregate principal amount of Capital Lease Obligations at any time outstanding shall not exceed the sum of (x) the aggregate principal amount of Capital Lease Obligations then outstanding under the Permitted Sale-Leaseback and (y) $25 million; (viii) Indebtedness of the Company or any Restricted Subsidiary consisting of a guarantee of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.02; (ix) FCC Debt in an aggregate principal amount not to exceed $40 million at any time outstanding plus the FCC Debt incurred in connection with the Mercury Acquisition and the Wireless 2000 Acquisition; (x) Indebtedness of the Company or any Restricted Subsidiary in respect of statutory obligations, performance, surety or appeal bonds or other obligations of a like nature incurred in the ordinary course of business; and (xi) Indebtedness of the Company not otherwise permitted to be incurred pursuant to clauses (i) through (x) above which, together with any other outstanding Indebtedness incurred pursuant to this clause (xi), has an aggregate principal amount not in excess of $75 million at any time outstanding. Indebtedness of a person existing at the time such person becomes a Restricted Subsidiary or which is 19 secured by a Lien on an asset acquired by the Company or a Restricted Subsidiary (whether or not such Indebtedness is assumed by the acquiring person) shall be deemed incurred at the time the person becomes a Restricted Subsidiary or at the time of the asset acquisition, as the case may be. For purposes of determining compliance with this Section 4.02, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Indebtedness permitted pursuant to clauses (i) through (x) above, the Company shall, in its sole discretion, be permitted to classify such item of Indebtedness in any manner that complies with this Section 4.04 and may from time to time reclassify such item of Indebtedness in any manner that would comply with this Section 4.04 at the time of such reclassification. Accrual of interest and the accretion of accreted value will not be deemed to be an incurrence of Indebtedness for purposes of this Section 4.04. SECTION 4.3 Limitation on Restricted Payments. (a) The Company shall not, and shall not cause or permit any Restricted Subsidiary to, directly or indirectly, on or prior to , 2002. ------------ (i) declare or pay any dividend, or make any distribution of any kind or character (whether in cash, property or securities), in respect of any class of Capital Stock of the Company excluding, any dividends or distributions payable solely in shares of Qualified Stock of the Company or in options, warrants or other rights to acquire Qualified Stock of the Company, (ii) purchase, redeem or otherwise acquire or retire for value any shares of Capital Stock of the Company, any options, warrants or rights to purchase or acquire such shares or any securities convertible or exchangeable into such shares (other than any such shares of Capital Stock, options, warrants, rights or securities that are owned by the Company or a Restricted Subsidiary), (iii) make any Investment (other than Permitted Investments) in any Person, other than the Company or a Restricted Subsidiary, or (iv) redeem, defease, repurchase, retire or otherwise acquire or retire for value, prior to its scheduled maturity, repayment or any sinking fund payment, Subordinated Indebtedness (each of the transactions described in clauses (i) through 20 (iv) (other than any exception to any such clause) being a "Restricted Payment"); and at any time after , 2002, the Company will not, and will not ----------- cause or permit any Restricted Subsidiary to, directly or indirectly, make a Restricted Payment if, at the time thereof: (1) a Default or an Event of Default shall have occurred and be continuing at the time of or after giving effect to such Restricted Payment, (2) immediately after giving effect to such Restricted Payment, the Company could not incur at least $1.00 of additional Indebtedness pursuant to Section 4.02(i), and (3) immediately after giving effect to such Restricted Payment, the aggregate amount of all Restricted Payments declared or made on or after the Issue Date (including any Designation Amount) exceeds the sum (without duplication) of: (i) the amount of (x) the Consolidated Cash Flow of the Company after [ , 2002,] through the end of the latest full fiscal ----------- quarter for which consolidated financial statements of the Company are available preceding the date of such Restricted Payment (treated as a single accounting period) less (y) 150% of the cumulative Consolidated Interest Expense of the Company after [ , 2002,] through the end of the latest full ----------- fiscal quarter for which consolidated financial statements of the Company are available preceding the date of such Restricted Payment (treated as a single accounting period), plus (ii) the aggregate net cash proceeds (other than Excluded Cash Proceeds) received by the Company as a capital contribution in respect of Qualified Stock or from the proceeds of a sale of Qualified Stock made after the Issue Date (excluding in each case (x) the proceeds from a sale of Qualified Stock to a Restricted Subsidiary and (y) the proceeds from a sale, other than from a Public Sale, of Qualified Stock the proceeds of which are applied to optionally redeem Notes on or prior to , ), plus --------- ---- (iii) the aggregate net cash proceeds received by the Company or any Restricted Subsidiary from the sale or disposition (other than to the Company or a Restricted 21 Subsidiary) or repayment (other than by the Company or a Restricted Subsidiary) of any Investment made after the Issue Date and constituting a Restricted Payment in an amount equal to the lesser of (x) the return of capital with respect to such Investment and (y) the initial amount of such Investment, in either case, less the cost of disposition of such Investment, plus (iv) an amount equal to the consolidated net Investment (including any support provided or liability assumed by the Company or any Restricted Subsidiary pursuant to the penultimate paragraph of Section 4.06 of the Indenture) on the date of Revocation made by the Company and/or any of the Restricted Subsidiaries in any Subsidiary that has been designated as an Unrestricted Subsidiary after the Issue Date upon its redesignation as a Restricted Subsidiary in accordance with Section 4.06 of the Indenture. For purposes of the preceding clause (ii), the value of the aggregate net cash proceeds received by the Company from, or as a capital contribution in connection with, the issuance of Qualified Stock either upon the conversion of convertible Indebtedness of the Company or any of its Restricted Subsidiaries or in exchange for outstanding Indebtedness of the Company or any of its Restricted Subsidiaries or upon the exercise of options, warrants or rights will be the net cash proceeds received by the Company or any of its Restricted Subsidiaries upon the issuance of such Indebtedness, options, warrants or rights plus the incremental amount received by the Company or any of its Restricted Subsidiaries upon the conversions, exchange or exercise thereof. For purposes of the preceding clause (iv), the value of the consolidated net Investment on the date of Revocation shall be equal to the Fair Value of the aggregate amount of the Company's and/or any Restricted Subsidiary's Investments in such Subsidiary on the applicable date of Designation. For purposes of determining the amount expended for Restricted Payments, cash distributed shall be valued at the face amount thereof and property other than cash shall be valued at its Fair Value on the date such Restricted Payment is made by the Company or a Restricted Subsidiary, as the case may be. 22 (b) The foregoing provisions will not prohibit any of the following: (i) the payment of any dividend or distribution within sixty (60) days after the date of declaration thereof, if at such date of declaration such payment would comply with the provisions of the Indenture and the Supplemental Indenture; (ii) so long as no Default or Event of Default shall have occurred and be continuing, the purchase, redemption, retirement or other acquisition of any Capital Stock of the Company out of the net cash proceeds of the substantially concurrent capital contribution to the Company in connection with Qualified Stock or out of the net cash proceeds received by the Company from the substantially concurrent issue or sale (other than to a Restricted Subsidiary) of Qualified Stock; provided that (x) any such net cash proceeds shall be excluded from Section 4.03(a)(3)(ii), (y) such proceeds do not constitute Excluded Cash Proceeds and (z) such proceeds, if from a sale other than a Public Sale are not applied to optionally redeem Notes on or prior to , 2002; -------- (iii) so long as no Default or Event of Default shall have occurred and be continuing, the purchase, redemption, retirement, defeasance or other acquisition of Subordinated Indebtedness of the Company made by exchange for or conversion into, or out of the net cash proceeds received by the Company, or out of a capital contribution to the Company in connection with a concurrent issue and sale (other than to a Restricted Subsidiary) of (a) Qualified Stock (provided that (x) any such net cash proceeds are excluded from Section 4.03(a)(3)(ii), (y) such proceeds do not constitute Excluded Cash Proceeds and (z) such proceeds, if from a sale other than a Public Sale, are not applied to optionally redeem Notes on or prior to , 2002) or ----- (b) other Subordinated Indebtedness of the Company that has an Average Life equal to or greater than the Average Life of the Subordinated Indebtedness being purchased, redeemed, retired, defeased or otherwise acquired; (iv) so long as no Default or Event of Default shall have occurred and be continuing, the making of a direct or indirect Investment constituting a Restricted Payment in an amount not to exceed the amount of the proceeds of a 23 concurrent capital contribution in respect of Qualified Stock or from the issue or sale (other than to a Restricted Subsidiary) of Qualified Stock of the Company; provided that (x) any such net cash proceeds are excluded from Section 4.03(a)(3)(ii) and (y) such proceeds do not constitute Excluded Cash Proceeds and (z) such proceeds, if from a sale other than a High Yield Offering are not applied to optionally redeem Notes on or prior to , 2002; or ------ (v) so long as no Default or Event of Default has occurred and is continuing, dividends or distributions by the Company to repurchase, redeem, acquire or retire for value any Capital Stock of the Company, held by any member of management of the Company or any of its Subsidiaries pursuant to any management equity subscription agreement, stock option agreement, restricted stock option or other similar agreement; provided that (x) the aggregate amount of such dividends or distributions shall not exceed $5.0 million in any twelve-month period and (y) any unused amount in any twelve-month period may be carried forward to one or more future periods. Restricted Payments made pursuant to clauses (i) and (v) of the immediately preceding paragraph (b) shall be included in making the determination of available amounts under Section 4.03(a)(3) and Restricted Payments made pursuant to (ii), (iii) and (iv) of the immediately preceding paragraph (b) shall not be included in making the determination of available amounts under Section 4.03(a)(3). SECTION 4.4 Payment of Taxes and Other Claims. The Company shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, all material taxes, assessments and governmental charges levied or imposed upon the Company or any of its Subsidiaries or upon the income, profits or property of the Company or any of its Subsidiaries; provided, that the Company shall not be required to pay or discharge any claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders. SECTION 4.5 Notice of Defaults. Within five (5) days after becoming aware of any Default, if such Default is then continuing, the Company shall promptly deliver an Officers' Certificate to the Trustee specifying the details of such Default and the action which the Company proposes to take with respect thereto. 24 SECTION 4.6 Maintenance of Properties. The Company shall cause all material properties owned by or leased to it or any of its Subsidiaries and used or useful in the conduct of its business or the business of any of its Subsidiaries to be maintained and kept in normal condition, repair and working order and supplied with all necessary equipment and shall cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary, so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, that nothing in this Section 4.06 shall prevent the Company or any of its Subsidiaries from discontinuing the use, operation or maintenance of any of such properties, or disposing of any of them, if such discontinuance or disposal is, in the judgment of the Board of Directors or of the board of directors of the Subsidiary concerned, or of an officer (or other agent employed by the Company or of any of its Subsidiaries) of the Company or such Subsidiary having managerial responsibility for any such property, desirable in the conduct of the business of the Company or any of its Subsidiaries, and if such discontinuance or disposal is not adverse in any material respect to the Holders. SECTION 4.7 Compliance Certificate. The Company shall deliver to the Trustee within 45 days after the end of each of the first three fiscal quarters of the Company and within 90 days after the close of each fiscal year a certificate signed by the principal executive officer, principal financial officer or principal accounting officer stating that a review of the activities of the Company has been made under the supervision of the signing officers with a view to determining whether a Default or Event of Default has occurred and whether or not the signers know of any Default by the Company that occurred during such fiscal quarter or fiscal year. If they do know of such a Default, the certificate shall describe all such Defaults, their status and the action the Company is taking or proposes to take with respect thereto. The first certificate to be delivered by the Company pursuant to this Section 4.07 shall be for the fiscal quarter ending , 1999. - ------------ SECTION 4.8 Provision of Financial Information. Whether or not required by the rules and regulations of the SEC, so long as any Series E Notes are outstanding, the Company will furnish to the Holders of Series E Notes (i) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries and, with respect to the annual information only, a report thereon by the Company's certified independent accountants, and (ii) all current reports that would be required to be filed with the SEC on Form 8-K if the Company were required to file such reports, in each case within the time period specified in the SEC's rules and regulations; provided that no such information or reports shall be required prior to the earlier to occur of (x) September 30, 2000 and (y) completion by the Company of a High Yield Offering, and provided further that until such information and reports are required to be furnished, the Company shall provide the Holders of the Series E Notes with the same information and reports (at the same times and with the same 25 frequency) as the Company provides such information and reports to the Administrative Agent and the group of banks, under the Senior Credit Facility. SECTION 4.9 Waiver of Stay, Extension or Usury Laws. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law, which would prohibit or forgive the Company from paying all or any portion of the principal of and/or interest on the Series E Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of the Indenture and this Supplemental Indenture; and (to the extent that it may lawfully do so) the Company hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted. SECTION 4.10 Limitation on Layered Debt. The Company will not (i) directly or indirectly, incur any Indebtedness that by its terms would expressly rank senior in right of payment to the Notes and rank subordinate in right of payment to any other Indebtedness of the Company and (ii) cause or permit any Series E Guarantor to, and no Series E Guarantor will, directly or indirectly, incur any Indebtedness that by its terms would expressly rank senior in right of payment to the Series E Guarantee of such Series E Guarantor and rank subordinate in right of payment to any other Indebtedness of such Series E Guarantor; provided, that no Indebtedness shall be deemed to be subordinated solely by virtue of being unsecured. The Company will not issue any Indebtedness (other than in a High Yield Offering) which by its terms provides for, or the holders of which would have the right to demand or participate in, any registration of such Indebtedness or exchange of such Indebtedness for any other Indebtedness of the Company that is registered under the Securities Act unless the Company shall have provided equivalent rights to the Holders. SECTION 4.11 Limitation on Restrictions Affecting Restricted Subsidiaries. The Company shall not, and shall not cause or permit any Restricted Subsidiary to, directly or indirectly, create or otherwise cause or suffer to exist any consensual encumbrance or restriction of any kind on the ability of any Restricted Subsidiary to (i) pay, directly or indirectly, dividends, in cash or otherwise, or make any other distributions in respect of its Capital Stock or pay any Indebtedness or other obligation owed to the Company or any other Restricted Subsidiary, (ii) make any Investment in the Company or any other Restricted Subsidiary or (iii) transfer any of its property or assets to the Company or any other Restricted Subsidiary, except for such encumbrances or restrictions existing under or by reason of (a) any agreement in effect on the Issue Date as any such agreement is in effect on such date, (b) any Senior Credit Facilities, (c) any agreement relating to any Indebtedness incurred by such Restricted Subsidiary prior to the date on which such Restricted Subsidiary was acquired by the Company and outstanding on such date and not incurred in anticipation or contemplation of becoming a Restricted Subsidiary; provided, that such encumbrance or restriction shall not apply 26 to any property or assets of the Company or any Restricted Subsidiary other than such Restricted Subsidiary, (d) customary provisions contained in an agreement which has been entered into for the sale or disposition of all or substantially all the Capital Stock or assets of a Restricted Subsidiary; provided, that such encumbrance or restriction is applicable only to such Restricted Subsidiary or its property and assets, (e) any agreement effecting a refinancing or amendment of Indebtedness incurred pursuant to any agreement referred to in clause (a) above; provided, that the provisions contained in such refinancing or amendment agreement relating to such encumbrance or restriction are no more restrictive in any material respect than the provisions contained in the agreement that is the subject thereof in the reasonable judgment of the Board of Directors of the Company, (f) the Indenture, (g) applicable law or any applicable rule, regulation or order, (h) customary provisions restricting subletting or assignment of any lease governing any leasehold interest of any Restricted Subsidiary, (i) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the type referred to in clause (iii) of this Section 4.11; (j) restrictions of the type referred to in clause (iii) of this Section 4.11 contained in security agreements securing Indebtedness of a Restricted Subsidiary to the extent that such Liens were otherwise incurred in accordance with Section 4.12 and restrict the transfer of property subject to such agreements; or (k) customary provisions in joint venture agreements and other similar agreements entered into in the ordinary course of business. SECTION 4.12 Limitation on Liens. The Company shall not, and shall not cause or permit any Restricted Subsidiary to directly or indirectly, create, cause, incur or suffer to exist any Lien on or with respect to any Capital Stock or any property or assets of the Company or such Restricted Subsidiary owned on the Issue Date or thereafter created or acquired to secure any Indebtedness, without making, or causing such Restricted Subsidiary to make, effective provision for securing the Series E Notes and all other amounts due under the Indenture equally and ratably with such Indebtedness or, in the event such Indebtedness is Subordinated Indebtedness, prior to such Indebtedness, as to such property or assets for so long as such Indebtedness shall be so secured. The foregoing restrictions shall not apply to (i) Liens existing on the Issue Date securing Indebtedness existing on the Issue Date; (ii) Liens securing Senior Debt (including Liens securing Indebtedness under any Senior Credit Facilities) and any guarantees thereof to the extent that the Indebtedness secured thereby is permitted to be incurred under Section 4.02; (iii) Liens securing only the Series E Notes and the Guarantees, if any; (iv) Liens in favor of the Company or any Guarantor; (v) Liens to secure Indebtedness incurred in connection with Vendor Credit Agreements; (vi) Liens on property existing immediately prior to the time of acquisition thereof (and not created in connection with or in anticipation or contemplation of the financing of such acquisition); (vii) Liens on property of a Person existing at the time such Person is acquired or merged with or into or consolidated with the Company or any such Restricted Subsidiary (and not created in connection with or in anticipation or contemplation thereof); (viii) Liens to secure the performance of statutory obligations, surety or appeal bonds or bid or performance bonds, or landlords', carriers', warehousemen's, mechanics', suppliers', materialmen's or other similar Liens, in any case incurred in the ordinary course of business and with respect to amounts not yet delinquent or being contested in good faith by appropriate 27 process of law, if a reserve or other appropriate provision, if any, as is required by GAAP shall have been made therefor; (ix) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded; provided that any reserve or other appropriate provision that shall be required in conformity with GAAP shall have been made therefor; (x) restrictions on the transfer of assets contained in any FCC License or any other telecommunications license or imposed by the Communications Act or comparable state legislation enacted after the date hereof; (xi) Liens in favor of the FCC or the United States Treasury to secure FCC Debt permitted under Section 4.02(ix); provided such Liens are limited to the FCC Licenses subject to such Debt; (xii) liens to secure Indebtedness incurred to refinance, in whole or in part, any Indebtedness secured by Liens referred to in the foregoing clauses (i)-(xi) so long as such Liens do not extend to any additional category of property and the principal amount of Indebtedness so secured is not increased except for the amount of any premium required to be paid in connection with such refinancing pursuant to the terms of the Indebtedness refinanced or the amount of any premium reasonably determined by the Company as necessary to accomplish such refinancing by means of a tender offer, exchange offer or privately negotiated repurchase, plus the expenses of the issuer of such Indebtedness reasonably incurred in connection with such refinancing; and (xiii) Liens in favor of the Trustee as provided for in the Indenture on money or property held or collected by the Trustee in its capacity as Trustee. SECTION 4.13 Subsidiary Guarantees. The Company shall not permit any Subsidiary (other than any Special Purpose Subsidiary, as defined in the Credit Facility) to become a direct or indirect obligor under, or in respect of, any Senior Credit Facilities without causing such Subsidiary to become a Guarantor. Any such Subsidiary shall (a) execute and deliver a supplemental indenture in form and substance reasonably satisfactory to the Trustee and in compliance with the requirements, if any, of the Senior Credit Facility pursuant to which such Subsidiary shall unconditionally guarantee all the Company's obligations under the Series E Notes and the Indenture and (b) deliver to the Trustee an Opinion of Counsel that such supplemental indenture has been duly authorized, executed and delivered by such Subsidiary and constitutes a valid and legally binding and enforceable obligation of such Subsidiary (subject, in the case of enforceability, to customary bankruptcy, insolvency, fraudulent conveyance, general principles of equity and similar exceptions). The Company may, at its option, cause any of its Subsidiaries to be a Guarantor. SECTION 4.14 Limitation on Activities of the Company and the Restricted Subsidiaries. The Company shall not, and shall not permit any Restricted Subsidiary to, engage in any business other than a Permitted Business, except to such extent as is not material to the Company and its Restricted Subsidiaries, taken as a whole. SECTION 4.15 Amendments to Agreements. 28 The Company shall not amend, modify or waive, or refrain from enforcing, any provision of (i) the Securities Purchase Agreement in any manner that would materially alter the obligations of the Cash Equity Investors or the Management Stockholders (as each such term is defined in the Securities Purchase Agreement) thereunder to provide additional equity capital to the Company until such time as the Company has received subsequent to the Issue Date, net cash proceeds from capital contributions, or sales, in respect of Qualified Stock of the Company equal to at least [$72,499,990]; (ii) the Puerto Rico Stock Purchase Agreement in any manner that would materially alter the obligations of the investors thereunder to provide at least $39.996 million of additional equity for the development of the San Juan MTA within [3 years] after the closing of such transaction; (iii) the Asset Purchase Agreement in any manner that would adversely affect the rights of the Company thereunder in any material respect; and (iv) the Related Agreements and the Related Agreement Amendments (each as defined in the Asset Purchase Agreement) in any manner that would affect the rights of the Company thereunder in any material respect. whole. SECTION 4.16 Limitation on Pari Passu Debt. The Company shall not incur any Indebtedness, other than the Series D Notes, that ranks pari passu with the Series E Notes. SECTION 4.17 Limitation on Optional Redemptions of Series C Notes. The Company shall not optionally prepay or optionally redeem any amount of Series C Notes until the Series E Notes shall have been redeemed in full, it being understood that this limitation shall not apply to any mandatory redemption or prepayment of the Series C Notes. ARTICLE V EVENTS OF DEFAULT [Reserved.] ARTICLE VI SUBORDINATION SECTION 6.1 Series E Notes Subordinate to Senior Debt. The Company covenants and agrees, and the Trustee and each Holder of a Series E Note, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Article 6, the payment of the principal of, premium, if any, and interest on each and all the Series E Notes and the repurchase, redemption or other retirement of the Series E Notes is hereby expressly made subordinate and subject in right of 29 payment to the prior payment in full in cash or cash equivalents or, as acceptable to the holders of Senior Debt, in any other manner, of all Senior Debt in the manner set forth in this Article 6. The terms of this Article 6 are for the benefit of, and shall be enforceable directly by, each holder of Senior Debt, and each holder of Senior Debt whether now outstanding or hereafter created, incurred, assumed or guaranteed shall be deemed to have acquired such Senior Debt in reliance upon the covenants and provisions contained herein. SECTION 6.2 Payment of Proceeds Upon Dissolution, Etc. Upon any payment or distribution of assets of the Company to creditors upon any liquidation, dissolution, winding-up, reorganization, assignment for the benefit of creditors, marshaling of assets or liabilities or any bankruptcy, reorganization, receivership, insolvency or similar proceedings of the Company or its property, whether voluntary or involuntary (each such event, if any, herein sometimes referred to as a "Proceeding"): (a) The holders of Senior Debt shall receive payment in full in cash or cash equivalents or, as acceptable to the holders of Senior Debt, in any other manner, of all amounts due on or to become due on or in respect of all Senior Debt (including any interest accruing thereon after the commencement of any such Proceeding, whether or not allowed as a claim against the Company in such Proceeding) or provision shall be made for such payment in a manner acceptable to such holders before the Trustee or the Holders of the Series E Notes are entitled to receive any payment or distribution whether by setoff, exercising contractual or statutory rights or otherwise and whether in the form of cash, stock or property or otherwise (excluding any payment or distribution described in the last paragraph of Section 6.02(b)), on account of the principal of, premium, if any, interest on or any other obligation owing in respect of the Series E Notes or on account of any purchase, redemption or other acquisition of Series E Notes by the Company (all such payments, distributions, purchases, redemptions and acquisitions, whether or not in connection with a Proceeding (but excluding any payment or distribution described in the last paragraph of Section 6.02(b)), being herein referred to, individually and collectively, as a "Securities Payment"); and (b) Any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, by set-off or otherwise, to which the Trustee or the Holders of the Series E Notes would be entitled but for the provisions of this Article 6, shall be paid by the Company or the liquidating trustee or agent or other Person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of Senior Debt or their representatives or trustees under any credit agreement, indenture or other agreement 30 under which any such Senior Debt may have been issued, ratably according to the aggregate amounts remaining unpaid on account of the Senior Debt held or represented by each, to the extent necessary to make payment in full in cash or cash equivalents or, as acceptable to the holders of Senior Debt, in any other manner, of all Senior Debt remaining unpaid, after giving effect to any concurrent payment or distribution to the holders of such Senior Debt. In the event that, notwithstanding the foregoing provisions of this section, the Trustee or the Holder of any Series E Notes shall have received in connection with any Proceeding any Securities Payment before all Senior Debt is paid in full or payment thereof is provided for in cash or cash equivalents, then and in such event such Securities Payment shall be held in trust for the benefit of and paid over or delivered forthwith to the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other Person making payment or distribution of assets of the Company for application to the payment of all Senior Debt remaining unpaid, to the extent necessary to make payment in full in cash or cash equivalents or, as acceptable to the holders of the Senior Debt, in any other manner, of all Senior Debt remaining unpaid after giving effect to any concurrent payment to or for the holders of Senior Debt. For purposes of this Article 6 only, the words "payment or distribution" or "any payment or distribution of any kind or character, whether in cash, property or securities" shall not be deemed to include a payment or distribution of stock or securities of the Company provided for by a plan of reorganization or readjustment authorized by an order or decree of a court of competent jurisdiction in a reorganization proceeding under any applicable bankruptcy law or of any other corporation provided for by such plan of reorganization or readjustment, which stock or securities are subordinated in right of payment to all then outstanding Senior Debt to substantially the same extent, or to a greater extent than, the Series E Notes are so subordinated as provided in this Article 6. The consolidation of the Company with, or the merger of the Company into, another Person or the liquidation or dissolution of the Company following the conveyance, transfer or lease of all or substantially all of its properties and assets to another Person and so long as permitted under the terms of the Senior Debt shall not be deemed a Proceeding for the purposes of this section if the Person formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease such properties and assets, as the case may be, shall, as a part of such consolidation, merger, conveyance, transfer or lease, comply with the conditions set forth in Article 6. (c) To the extent any payment of Senior Debt (whether by or on behalf of the Company, as proceeds of security or enforcement of any right of setoff or otherwise) is declared to be fraudulent or preferential, set aside or required to be paid to any receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person under any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then if such payment is recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person, the Senior Debt or part 31 thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment had not occurred. SECTION 6.3 No Payment When Designated Senior Debt in Default. In the event that any Senior Payment Default shall have occurred and be continuing, then no Securities Payment whether by setoff, exercising contractual or statutory rights or otherwise and whether in the form of cash, stock or property or otherwise shall be made, unless and until such Senior Payment Default shall have been cured or waived in writing or shall have ceased to exist or all amounts then due and payable in respect of such Designated Senior Debt (including, without limitation, amounts that have become and remain due by acceleration) shall have been paid in full in cash. "Senior Payment Default" means any default in the payment of the principal of, premium, if any, or interest on any Designated Senior Debt when due, whether at the stated maturity of any such payment or by declaration of acceleration, call for redemption, notice of the exercise of an option to require such repayment, mandatory payment or prepayment or otherwise. In the event that any Senior Nonmonetary Default shall have occurred and be continuing, then, upon the receipt by the Company of written notice of such Senior Nonmonetary Default from the administrative agent under the Credit Facility (the "Administrative Agent") to which such Senior Nonmonetary Default relates or, if no loans or other amounts are then outstanding under the Credit Facility or any renewal, extension or refunding thereof, and the Credit Facility and any such renewal, extension or refunding have been terminated, upon receipt of such notice by or on behalf of any other holder or holders of Designated Senior Debt in an aggregate amount in excess of $25,000,000, no Securities Payment shall be made whether by setoff, exercising contractual or statutory rights or otherwise and whether in the form of cash, stock or property or otherwise during the period (the "Payment Blockage Period") commencing on the date of such receipt by the Company of such written notice and ending on the earlier of (a) the date, if any, on which the Designated Senior Debt to which such Senior Nonmonetary Default relates is discharged or such Senior Nonmonetary Default shall have been cured or waived in writing or shall have ceased to exist and any acceleration of Designated Senior Debt to which such Senior Nonmonetary Default relates shall have been rescinded or annulled and (b) the 179th day after the date of receipt of such written notice. No more than one Payment Blockage Period may be commenced with respect to the Series E Notes during any period of 360 consecutive days and there shall be a period of at least 181 consecutive days in each period of 360 consecutive days when no Payment Blockage Period is in effect. Following the commencement of any Payment Blockage Period, the holders of Designated Senior Debt shall be precluded from commencing a subsequent Payment Blockage Period until the conditions set forth in the preceding sentence shall have been satisfied. For all purposes of this paragraph, no Senior Nonmonetary Default that existed and was continuing on the date of commencement of any Payment Blockage Period with respect to the Designated Senior Debt initiating such Payment Blockage Period shall be, or may be made, the basis for the commencement of a subsequent Payment Blockage Period by any holder of Designated Senior Debt or any representative or trustee under any indenture under which any such Designated Senior Debt may have been issued unless such Senior Nonmonetary Default shall have been cured for a period of not less than 90 consecutive days. "Senior Nonmonetary Default" means any default (other than 32 a Senior Payment Default), under the terms of any instrument or agreement pursuant to which any Senior Debt is outstanding, permitting one or more holders of such Designated Senior Debt or any representative or trustee under any indenture under which any such Designated Senior Debt may have been issued to declare such Designated Senior Debt due and payable prior to the date on which it would otherwise become due and payable. In the event that, notwithstanding the foregoing, the Company shall make any Securities Payment to any holder prohibited by the foregoing provisions of this Section 6.03, then in such event such Securities Payment shall be held in trust and paid over and delivered forthwith to the representatives or trustee under any indenture under which any such Designated Senior Debt may have been issued ratably according to the aggregate amounts remaining unpaid on account of the Designated Senior Debt held or represented by under the Designated Senior Debt or, if there is no such representative or trustee with respect to such Designated Senior Debt, to the holders of such Designated Senior Debt. The provisions of this Section 6.03 shall not apply to any Securities Payment with respect to which Section 6.02 hereof would be applicable. SECTION 6.4 Acceleration of Series E Notes. If an Event of Default shall have occurred and be continuing (other than an Event of Default pursuant to paragraphs (ix) and (x) of Section 6.01 of the Indenture), the Trustee shall give the holders of the Designated Senior Debt not less than 30 days prior written notice before accelerating the Series E Notes which notice shall state it is a "Notice of Intent to Accelerate". Upon such declaration, the holders of Designated Senior Debt outstanding at the time the Series E Notes so become due and payable shall be entitled to receive payment in full in cash, cash equivalents or, as acceptable to the holders of the Designated Senior Debt, in any other manner on all amounts due or to become due on or in respect of such Designated Senior Debt, before the Company may make, and before any Holder of the Series E Notes is entitled to receive, any payment or distribution of assets of the Company of any kind or character, whether in cash, securities or other property on account of any Series E Notes. All payments in respect of the Subordinated Debt postponed under this Section 6.04 shall be immediately due and payable upon the termination of such postponement; the remittance in full of such payments by the Company in accordance with the terms of the this Supplemental Indenture and the acceptance thereof by the Holders of the Series E Notes shall be deemed to constitute a cure by the Company and a waiver by the Holders of the Series E Notes of any Event of Default that existed immediately prior to such remittance and acceptance to the extent that such Event of Default existed solely as a consequence of the previous non-payment of such postponed payments during such period of postponement. SECTION 6.5 Payment Permitted If No Default. Nothing contained in this Article 6 or elsewhere in this Supplemental Indenture or in any of the Series E Notes shall prevent the Company, at any time except during the pendency of any Proceeding referred to in Section 6.02 or under the conditions described in Section 6.03, from making Securities Payments in accordance with the terms of this Supplemental Indenture. 33 Nothing in this Article 6 shall have any effect on the right of the Trustee (on behalf of the Holders) or the Holders to accelerate the maturity of the Series E Notes upon the occurrence of an Event of Default, but, in that event, no payment may be made in violation of the provisions of this Article 6 with respect to the Series E Notes. If payment of the Series E Notes is accelerated because of an Event of Default, the Company shall promptly notify the holders of the Senior Debt (or their representatives) of such acceleration. SECTION 6.6 Obligation of Company Unconditional. Nothing contained in this Article 6 or elsewhere in this Supplemental Indenture or in the Series E Notes is intended to or shall impair, as among the Company and the Holders of the Series E Notes, the obligation of the Company, which is absolute and unconditional, to pay to the Holders of the Series E Notes the principal of, premium, if any, and interest on the Series E Notes as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders of the Series E Notes and creditors of the Company other than the holders of the Senior Debt, nor shall anything herein or therein prevent any Holder or the Trustee on their behalf from exercising all remedies otherwise permitted by applicable law upon default under this Supplemental Indenture, subject to the rights, if any, under this Article 6 of the holders of the Senior Debt in respect of cash, property or securities of the Company received upon the exercise of any such remedy. Without limiting the generality of the foregoing, nothing contained in this Article 6 shall restrict the right of the Trustee or the Holders of the Series E Notes to take any action to declare the Series E Notes to be due and payable prior to their stated maturity pursuant to Section 5.01 or to pursue any rights or remedies hereunder; provided, however, that all Senior Debt then due and payable shall first be paid in full before the Holders or the Trustee are entitled to receive any direct or indirect payment from the Company of principal of or interest on the Series E Notes. SECTION 6.7 Subrogation To Rights of Holders of Senior Debt. Subject to the payment in full in cash or cash equivalents, or as acceptable to the holders of Senior Debt, in any other manner, of all Senior Debt, the Trustee and the Holders of the Series E Notes shall be subrogated to the rights of the holders of such Senior Debt to receive payments and distributions of cash, property and securities applicable to the Senior Debt until the principal of, premium, if any, and interest on the Series E Notes shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Debt of any cash, property or securities to which the Trustee and the Holders of the Series E Notes would be entitled except for the provisions of this Article 6, and no payments pursuant to the provisions of this Article 6 to the holders of Senior Debt by Holders of the Series E Notes, shall, as among the Company, its creditors other than holders of Senior Debt and the Holders of the Series E Notes, be deemed to be a payment or distribution by the Company to or on account of the Senior Debt. SECTION 6.8 Provisions Solely To Define Relative Rights. 34 The provisions of this Article 6 are and are intended solely for the purpose of defining the relative rights of the Trustee and the Holders of the Series E Notes on the one hand and the holders of Senior Debt on the other hand. Nothing contained in this Article 6 or elsewhere in this Supplemental Indenture or in the Series E Notes is intended to or shall (a) impair, as among the Company, its creditors other than holders of Senior Debt and the Trustee and the Holders of the Series E Notes, the obligation of the Company, which is absolute and unconditional (and which, subject to the rights under this Article 6 of the holders of Senior Debt, is intended to rank equally with all other general obligations of the Company), to pay to the Trustee for the Holders of the Series E Notes the principal of, premium, if any, and interest on the Series E Notes as and when the same shall become due and payable in accordance with their terms; or (b) affect the relative rights against the Company of the Trustee, the Holders of the Series E Notes and creditors of the Company other than the holders of Senior Debt; or (c) prevent the Trustee or any Holder of any Series E Note from exercising all remedies otherwise permitted by applicable law upon default under this Supplemental Indenture, subject to this Article 6, including the rights, if any, under this Article 6 of the holders of Senior Debt to receive cash, property and securities otherwise payable or deliverable to such holder or, under the conditions specified in Section 6.03, to prevent any payment prohibited by such section or enforce their rights pursuant to the penultimate paragraph in Article 6. SECTION 6.9 No Waiver of Subordination Provisions. No right of any present or future holder of any Senior Debt to enforce the subordination provisions provided herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Supplemental Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with. Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Debt may, at any time and from time to time, without the consent of or notice to the Holders of the Series E Notes, without incurring responsibility to the Holders of the Series E Notes and without impairing or releasing the subordination provided in this Article 6 or the obligations hereunder of the Trustee or Holders of the Series E Notes to the holders of Senior Debt, do any one or more of the following: (a) change the manner, place or terms of payment or extend the time of payment of, or renew, refinance or alter, any Senior Debt, or otherwise amend or supplement in any manner any Senior Debt or any instrument evidencing the same or any agreement under which such Senior Debt is outstanding; (b) permit the Company to borrow, repay and then reborrow any or all the Senior Debt; (c) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt; (d) release any Person liable in any manner for the collection of Senior Debt; (e) exercise or refrain from exercising any rights against the Company and any other Person; and (f) apply any sums received by such holders to Senior Debt. SECTION 6.10 Reliance On Judicial Order or Certificate of Liquidating Agent. 35 Upon any payment or distribution of assets of the Company referred to in this Article 6, the Trustee and the Holders of the Series E Notes shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the receiver, trustee in bankruptcy, liquidation trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 6; provided that the foregoing shall apply only if such court has been apprised of the provisions of this Article 6. SECTION 6.11 Notice to Trustee. The Company shall give prompt written notice to the Trustee of any fact known to the Company which would prohibit the making of any payment to or by the Trustee in respect of the Series E Notes pursuant to the provisions of this Article 6. Failure to give such notice to the Trustee shall not affect the subordination of the Series E Notes to Senior Debt. The Trustee shall not be charged with knowledge of the existence of any default or event of default with respect to any Senior Debt or of any other facts which would prohibit the making of any payment to or by the Trustee unless and until the Trustee shall have received notice in writing to that effect signed by an officer of the Company, or by a holder of any Senior Debt or trustee or agent therefor; and prior to the receipt of any such written notice, the Trustee shall, subject to Article 7 of the Indenture, be entitled to assume that no such facts exist; provided, however, that if the Trustee shall not have received the notice provided for in this Section 6.11 at least three Business Days prior to the date upon which by the terms of this Supplemental Indenture any moneys shall become payable for any purpose (including, without limitation, the payment of the principal of, premium, if any, or interest on any Series E Note), then, regardless of anything herein to the contrary, the Trustee shall have full power and authority to receive any moneys from the Company and to apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary which may be received by it on or after such prior date. Nothing contained in this Section 6.11 shall limit the right of the holders of Senior Debt to recover payments as contemplated by Article 6. The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or itself to be a holder of any Senior Debt (or a trustee on behalf of, or other representative of, such holder) to establish that such notice has been given by a holder of such Senior Debt or a trustee or representative on behalf of any such holder. In the event that the Trustee determines in good faith that any evidence is required with respect to the right of any Person as a holder of any Senior Debt to participate in any payment or distribution pursuant to this Article 6, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of such Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article 6, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. 36 SECTION 6.12 Trustee's Relation to Senior Debt. The Trustee shall be entitled to all the rights set forth in this Article 6 with respect to any Senior Debt which may at any time be held by it in its individual or any other capacity to the same extent as any other holder of such Senior Debt, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. With respect to the holders of any Senior Debt, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article 6, and no implied covenants or obligations with respect to the holders of such Senior Debt shall be read into this Supplemental Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of any Senior Debt (except as provided in Section 6.02(b)). The Trustee shall not be charged with knowledge of the existence of any Senior Debt or of any facts that would prohibit any payment hereunder unless the Trustee shall have received written notice to that effect at the address of the Trustee set forth in Section 11.01 of the Indenture. SECTION 6.13 Series E Note Holders Authorize Trustee to Effectuate Subordination. Each Holder of Series E Notes by its acceptance of such Series E Notes authorizes and expressly directs the Trustee on its behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article 6, and appoints the Trustee its attorney-in-fact for such purposes, including, in the event of any dissolution, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency, receivership, reorganization or similar proceedings or upon an assignment for the benefit of creditors or otherwise) tending towards liquidation of the business and assets of the Company, the filing of a claim for the unpaid balance of its Series E Notes in the form required in those proceedings. SECTION 6.14 This Article Not to Prevent Event of Default. The failure to make a payment on account of principal of, premium, if any or interest on the Series E Notes by reason of any provision of this Article 6 shall not be construed as preventing the occurrence of an Event of Default specified in Section 6.01(i), (ii) or (iii) of the Indenture. SECTION 6.15 Trustee's Compensation Not Prejudiced. Nothing in this Article 6 shall apply to amount due to the Trustee pursuant to other sections in this Supplemental Indenture or in the Indenture. SECTION 6.16 Subordination Provisions Not Applicable to Money Held in Trust for Holders of Series E Notes; Payments May Be Paid prior to Dissolution. All money and United States Government Securities deposited in trust with the Trustee pursuant to and in accordance with Article 8 of the Indenture shall be for the sole benefit of the Holders of the Series E Notes and shall not be subject to this Article 6. 37 Nothing contained in this Article or elsewhere in this Supplemental Indenture shall prevent (i) the Company, except under the conditions described in Section 6.03, from making payments of principal of and interest on the Series E Notes, or from depositing with the Trustee any moneys for such payments or from effecting a termination of the Company's and each Guarantor's obligations under the Series E Notes and this Supplemental Indenture as provided in Article 8 of the Indenture, or (ii) the application by the Trustee of any moneys deposited with it for the purposed of making such payments of principal of, premium, if any, and interest on the Series E Notes, to the Holders entitled thereto unless at least three Business Days prior to the date upon which such payment becomes due and payable, the Trustee shall have received the written notice provided for in Section 6.11. ARTICLE VII TAX MATTERS SECTION 7.1 Taxes. (a) All payments made by the Company under this Supplemental Indenture and the Series E Notes shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net income taxes and franchise or overall gross receipts taxes imposed on any holder (or any transferee permitted under Section 2.15 of the Indenture (a "Transferee")) as a result of a present or former connection between such holder (or Transferee) and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from such holder (or Transferee) having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or the Notes). If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings ("Non- Excluded Taxes") are required to be withheld from any amounts payable to any holder (or Transferee) hereunder or under the Series E Notes, the amounts so payable to such holder (or Transferee) shall be increased to the extent necessary to yield to such holder (or Transferee) (after payment of all Non-Excluded Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Supplemental Indenture and the Series E Notes; provided that the Company shall not be required to increase any such amounts payable to any holder (or Transferee) that is not organized under the laws of the United States of America or a state thereof if such holder (or Transferee) fails to comply with the requirements 38 of paragraph (b) of this section. Whenever any Non-Excluded Taxes are payable by the Company, as promptly as possible thereafter, the Company shall send to such holder (or Transferee) a certified copy of an original official receipt received by the Company showing payment thereof. If the Company fails to pay any Non-Excluded Taxes when due to the appropriate taxing authority or fails to remit to the holder (or Transferee) the required receipts or other required documentary evidence, the Company shall indemnify such holder or (Transferee) for any incremental taxes, interest or penalties that may become payable by any holder or (Transferee) as a result of any such failure. The covenants in this section shall survive the termination of the Indenture, the Supplemental Indenture and the payment of the Series E Notes and payment of the obligations hereunder and thereunder. (b) Each holder (or Transferee) of any Notes shall: (i) in the case of a holder (or Transferee) that is a "bank" under Section 881(c)(3)(A) of the Code; (1) on or before the date on which the first payment becomes payable to it hereunder or under any Note (or in the case of a Person who acquires a participating interest in any of the Series E Notes (a "Participant"), on or before the date such Participant becomes a Participant hereunder) deliver to the Company (1) in the case of a holder (or Transferee) that is not incorporated under the laws of the United States or any State thereof, two duly completed copies of United States Internal Revenue Service Form 1001 or 4224, or successor applicable form, as the case may be, and an Internal Revenue Service Form W-8 or W-9, or successor applicable form, as the case may be, and (2) in the case of any other holder (or Transferee), an Internal Revenue Service Form W-9, or successor applicable form; (2) deliver to the Company two further copies of any such form or certification on or before the date that any such form or certification expires or becomes obsolete and after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Company, and 39 (3) obtain such extensions of time for filing and timely complete and deliver such forms or certifications as may reasonably be requested by the Company; (ii) in the case of a holder (or Transferee) that is not a "bank" under Section 881(c)(3)(A) of the Code: (1) on or before the date on which the first payment becomes payable to it hereunder or under any Note (or, in the case of a Participant, on or before the date such Participant becomes a Participant hereunder) deliver to the Company (1) in the case of a holder (or Transferee) that is not organized under the laws of the United States or any state thereof, (I) a statement under penalties of perjury that such holder (or Transferee) (x) is not a "bank" under Section 881(c)(3)(A) of the Code, is not subject to regulatory or other legal requirements as a bank in any jurisdiction, and has not been treated as a bank for purposes of any tax, securities law or other filing or submission made to any Governmental Authority, any application made to a rating agency or qualification for any exemption from tax, securities law or other legal requirements, (y) is not a 10-percent shareholder of the Company within the meaning of Section 881(c)(3)(B) of the Code and (z) is not a controlled foreign corporation receiving interest from a related person within the meaning of Section 881(c)(3)(C) of the Code and (II) a properly completed and duly executed Internal Revenue Service Form W-8 or applicable successor form, and where applicable, an Internal Revenue Form W-9 or applicable successor form, and (2) in the case of any other holder (or Transferee), an Internal Revenue Service Form W-9 or successor applicable form. (2) deliver to the Company two further properly completed and duly executed copies of said form or certification or any successor applicable form or certification on or before the date that any such form or certification expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent form or certification previously delivered by it to the Company or upon the request of the Company; and 40 (3) obtain such extensions of time for filing and timely complete and deliver such forms or certifications as may be reasonably requested by the Company; unless in any such case any change in treaty, law or regulation has occurred subsequent to the date such holder (or Transferee) became a party to this Agreement (or, in the case of a Participant, the date such Participant became a Participant hereunder) which renders all such forms inapplicable or which would prevent such holder from properly completing and executing any such form with respect to it and such holder (or Transferee) so advises the Company in writing no later than 15 calendar days before any payment hereunder or under any Note is due. Each such holder (and each Transferee) shall certify (i) in the case of a Form 1001 or 4224 or in the case of a holder providing certification pursuant to Section 7.01(b)(ii), that it is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes and (ii) in the case of a Form W-8 or W-9 delivered pursuant to Section 7.01(b), that it is entitled to an exemption from United States backup withholding tax. Each Person that shall become a holder or a Participant shall, upon the effectiveness of the related transfer, provide all of the forms and statements required pursuant to this section; provided that, in the case of a Participant, such Participant shall furnish all such required forms and statements to the holder from which the related participation shall have been purchased. (c) Notwithstanding the foregoing paragraphs (a) and (b) of this Section 7.01, the Company shall only be required to pay any additional amounts to any holder (or Transferee) in respect of any amounts pursuant to such paragraph (a) if such holder (or Transferee), in addition to complying with the requirements of paragraph (b), shall have taken such other steps as such holder or Transferee may determine in the exercise of its business judgment (utilizing criteria it determines to be appropriate) are reasonably available to it under applicable laws and any applicable tax treaty or convention to obtain an exemption from, or reduction (to the lowest applicable rate) of, such tax (it being understood that no holder shall be required to take any action that it concludes could subject it to heightened audit scrutiny or extend the period that such holder's tax returns remain open for review by any taxing authority). (d) Any claim by a holder (or Transferee) for payment from the Company of any amounts under this Section 7.01 shall be made within ninety (90) days after such holder (or Transferee) determines the exact amount of any such claim. ARTICLE VIII THE TRUSTEE SECTION 8.1 Trustee's Disclaimer. 41 The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or the due execution hereof by the Company, or for or in respect of the recitals and statements contained herein, all of which recitals and statements are made solely by the Company. Except as herein otherwise provided, no duties, responsibilities or liabilities are assumed, or shall be construed to be assumed, by the Trustee by reason of this Supplemental Indenture other than as set forth in the Indenture, and this Supplemental Indenture is executed and accepted on behalf of the Trustee, subject to all the terms and conditions set forth in the Indenture, as fully to all intents as if the same were set forth at length herein. ARTICLE IX GUARANTEE SECTION 9.1 Unconditional Guarantee. Each Guarantor who becomes a party to this Supplemental Indenture hereby unconditionally, jointly and severally, guarantees to each Holder of a Series E Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns that: the principal of, premium, if any, and interest on the Series E Notes will be promptly paid in full when due, subject to any applicable grace period, whether at maturity, by acceleration or otherwise, and interest on the overdue principal and interest on any overdue interest on the Series E Notes and all other obligations of the Company to the Holders or the Trustee hereunder or under the Indenture or the Series E Notes will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; subject, however, to the limitations set forth in Section 9.04. Each such Guarantor hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Series E Notes, the Indenture or this Supplemental Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Series E Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Guarantor. Each such Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that the Guarantee will not be discharged except by complete performance of the obligations contained in the Series E Notes, the Indenture, this Supplemental Indenture, and such Guarantee. If any Holder or the Trustee is required by any court or otherwise to return to the Company, any Guarantor or any custodian, trustee, liquidator or other similar official acting in relation to the Company or any Guarantor, any amount paid by the Company or any Guarantor to the Trustee or such Holder, this Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. Each Guarantor further agrees that, as between each Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article Six of the Indenture for the purpose of this Guarantee, notwithstanding any stay, injunction or other 42 prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any acceleration of such obligations as provided in Article 6 of the Indenture, such obligations (whether or not due and payable) shall forthwith become due and payable by each Guarantor for the purpose of this Guarantee. 43 SECTION 9.2 Severability. In case any provision of this Guarantee shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 9.3 Release of a Guarantor. If the Series E Notes are defeased in accordance with Section 8.02 of the Indenture, or if all of the Capital Stock of any Guarantor is sold (including by issuance or otherwise) by the Company or any of its Subsidiaries in a transaction constituting an Asset Disposition (or which, but for the provisions of clause (c) of the definition of such term, would constitute an Asset Disposition), and, if required by this Supplemental Indenture, (x) the Net Available Proceeds from such Asset Disposition are used in accordance with Section 4.05 of the Indenture or (y) the Company delivers to the Trustee an Officer's Certificate covenanting that the Net Available Proceeds from such Asset Disposition will be used in accordance with Section 4.05 of the Indenture and within the time limits specified thereon, then such Guarantor shall be released and discharged from all obligations under this Article 9 upon such use in the case of clause (x) or upon such delivery in the case of clause (y). The Trustee shall, at the sole cost and expense of the Company and upon receipt at the reasonable request of the Trustee of an Opinion of Counsel that the provisions of this Section 9.03 have been complied with, deliver an appropriate instrument evidencing such release upon receipt of a request by the Company accompanied by an Officers' Certificate certifying as to the compliance with this Section 9.03, any Guarantor not so released remains liable for the full amount of principal of (premium, if any) hereunder as provided in this Article 9. Any Subsidiary of the Company that ceases to be a direct or indirect obligor (including as guarantor) under, or in respect of all Senior Credit Facilities shall be released from its Guarantee upon delivery of an Officers' Certificate to the Trustee certifying to such effect. SECTION 9.4 Limitation of Guarantor's Liability. Each Guarantor, and by its acceptance hereof each Holder and the Trustee, hereby confirms that it is the intention of all such parties that the guarantee by such Guarantor pursuant to its Guarantee not constitute a fraudulent transfer or conveyance for purposes of title 11 of the United States Code, as amended, the Uniform Fraudulent Conveyance Act or any similar U.S. Federal or state or other applicable law. To effectuate the foregoing intention, the Holders and such Guarantor hereby irrevocably agree that the obligations of such Guarantor under the Guarantee shall be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee or pursuant to Section 9.05, result in the obligations of such Guarantor under the Guarantee not constituting such fraudulent transfer or conveyance. SECTION 9.5 Contribution. 44 In order to provide for just and equitable contribution among the Guarantors, the Guarantors agree, inter se, that in the event any payment or distribution is made by any Guarantor (a "Funding Guarantor") under the Guarantee, such Funding Guarantor shall be entitled to a contribution from all other Guarantors in a pro rata amount, based on the net assets of each Guarantor (including the Funding Guarantor), determined in accordance with GAAP, subject to Section 9.04, for all payments, damages and expenses incurred by that Funding Guarantor in discharging the Company's obligations with respect to the Series E Notes or any other Guarantor's obligations with respect to the Guarantee. SECTION 9.6 Execution of Guarantee. To further evidence its Guarantee to the Holders, any Guarantor required to Guarantee the Series E Notes pursuant to Section 4.13 shall execute the endorsement of Guarantee in substantially the form set forth in Exhibit A hereto, which endorsement shall be delivered to each Holder to be attached to each Series E Note. Each such Guarantor hereby agrees that its Guarantee set forth in Section 9.01 shall remain in full force and effect notwithstanding any failure to endorse on each Series E Note a notation of such Guarantee. Each such Guarantee shall be signed on behalf of each Guarantor by its chairman of the board, its president or one of its vice presidents prior to the authentication of the Series E Note on which it is endorsed, and the delivery of such Series E Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of such Guarantee on behalf of such Guarantor. Such signature upon the Guarantee may be manual or facsimile signature of such officer and may be imprinted or otherwise reproduced on the Guarantee, and in case such officer who shall have signed the Guarantee shall cease to be such officer before the Series E Note on which such Guarantee is endorsed shall have been authenticated and delivered by the Trustee or disposed of by the Company, such Series E Note nevertheless may be authenticated and delivered or disposed of as though the Person who signed the Guarantee had not ceased to be such officer of the Guarantor. SECTION 9.7 Subordination of Subrogation and Other Rights. Each Guarantor hereby covenants and agrees that any claim against the Company that arises from the payment, performance or endorsement of such Guarantor's obligations under its Guarantee or this Supplemental Indenture, including, without limitation, any right of subrogation, is expressly made subordinate to and subject in right of payment to the prior payment in full in cash or cash equivalents or, as acceptable to the Holders of the Series E Notes, in any other manner, of all outstanding Series E Notes in accordance with the provisions provided therefor in this Supplemental Indenture. 45 ARTICLE X SUBORDINATION OF GUARANTEE SECTION 10.1 Guarantee Obligations Subordinated to Senior Debt. Each Guarantor covenants and agrees, and the Trustee and each Holder of the Series E Notes by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Section 10.01, the Guarantees shall be issued subject to the provisions of this Article 10; and each Person holding any Series E Note, whether upon original issue or upon transfer, assignment or exchange thereof, accepts and agrees that all payments of the principal of, premium, if any, and interest on the Series E Notes pursuant to the Guarantee made by or on behalf of any Guarantor is expressly hereby made subordinate and subject in right of payment to the prior payment in full in cash or cash equivalents or, as acceptable to the holders of Senior Debt in any other manner, of all Senior Debt in the manner set forth in this Article 10. The terms of this Article 10 are for the benefit of, and shall be enforceable directly by, each holder of Senior Debt, and each holder of Senior Debt whether how outstanding or hereafter created, incurred, assumed or guaranteed shall be deemed to have acquired such Senior Debt in reliance upon the covenants and provisions contained herein. SECTION 10.2 Payment of Proceeds Upon Dissolution, Etc. Upon any payment or distribution of assets of any Guarantor to creditors upon any Proceeding: (a) The holders of Senior Debt shall receive payment in full in cash or cash equivalents or, as acceptable to the holders of Senior Debt, in any other manner, of all amounts due on or to become due on or in respect of all Senior Debt (including any interest accruing thereon after the commencement of any such Proceeding, whether or not allowed as a claim against such Guarantor in such Proceeding) or provision shall be made for such payment in a manner acceptable to such holders before any payment or distribution may be made to the Trustee or the Holders of the Series E Notes by, or on behalf of, any Guarantor, whether by setoff, exercising contractual or statutory rights or otherwise and whether in the form of cash, stock or property or otherwise (excluding any payment or distribution described in the last paragraph of Section 10.02(b)), on account of the principal of, premium, if any, interest on or any other obligation owing in respect of the Series E Notes (all such payments, distributions, purchases, redemptions and acquisitions, whether or not in connection with a Proceeding (but excluding any payment or distribution described in the last paragraph of Section 10.02(b)), being herein referred to, individually and collectively, as a "Guarantee Payment"); and 46 (b) Any payment or distribution of assets of any Guarantor of any kind or character, whether in cash, property or securities, by set-off or otherwise, to which the Trustee or the Holders of the Series E Notes would be entitled but for the provisions of this Article 10, shall be paid by the Guarantor or the liquidating trustee or agent or other Person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of Senior Debt or their representatives or trustees under any credit agreement, indenture or other agreement under which any such Senior Debt may have been issued, ratably according to the aggregate amounts remaining unpaid on account of the Senior Debt held or represented by each, to the extent necessary to make payment in full in cash or cash equivalents or, as acceptable to the holders of Senior Debt, in any other manner, of all Senior Debt remaining unpaid, after giving effect to any concurrent payment or distribution to the holders of such Senior Debt. In the event that, notwithstanding the foregoing provisions of this section, the Trustee or the Holder of any Series E Notes shall have received in connection with any Proceeding any Guarantee Payment before all Senior Debt is paid in full or payment thereof is provided for in cash or cash equivalents, then and in such event such Guarantee Payment shall be held in trust for the benefit of and paid over or delivered forthwith to the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other Person making payment or distribution of assets of such Guarantor for application to the payment of all Senior Debt remaining unpaid, to the extent necessary to make payment in full in cash or cash equivalents or, as acceptable to the holders of the Senior Debt, in any other manner, of all Senior Debt remaining unpaid after giving effect to any concurrent payment to or for the holders of Senior Debt. For purposes of this Article 10 only, the words "payment or distribution" or "any payment or distribution of any kind or character, whether in cash, property or securities" shall not be deemed to include a payment or distribution of stock or securities of any Guarantor provided for by a plan of reorganization or readjustment authorized by an order or decree of a court of competent jurisdiction in a reorganization proceeding under any applicable bankruptcy law or of any other corporation provided for by such plan of reorganization or readjustment, which stock or securities are subordinated in right of payment to all then outstanding Senior Debt to substantially the same extent, or to a greater extent than, any payment by such Guarantor of the principal of, premium, if any, or interest on the Series E Notes are so subordinated as provided in this Article 10. The consolidation of any Guarantor with, or the merger of any Guarantor into, another Person or the liquidation or dissolution of any Guarantor following the conveyance, transfer or lease of all or substantially all of its properties and assets to another Person and so long as permitted under the terms of the Senior Debt shall not be deemed a Proceeding for the purposes of this section if the Person formed by such consolidation or into which any Guarantor is merged or the Person which acquires by conveyance, transfer or lease 47 such properties and assets, as the case may be, shall, as a part of such consolidation, merger, conveyance, transfer or lease, comply with the conditions set forth in Article 10. (c) To the extent any payment of Senior Debt (whether by or on behalf of any Guarantor, as proceeds of security or enforcement of any right of setoff or otherwise) is declared to be fraudulent or preferential, set aside or required to be paid to any receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person under any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then if such payment is recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person, the Senior Debt or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment had not occurred. SECTION 10.3 No Payment When Designated Senior Debt in Default. In the event that any Senior Payment Default shall have occurred and be continuing, then no Guarantee Payment whether by setoff, exercising contractual or statutory rights or otherwise and whether in the form of cash, stock or property or otherwise shall be made, unless and until such Senior Payment Default shall have been cured or waived in writing or shall have ceased to exist or all amounts then due and payable in respect of such Designated Senior Debt (including, without limitation, amounts that have become and remain due by acceleration) shall have been paid in full in cash. In the event that any Senior Nonmonetary Default shall have occurred and be continuing, then, upon the receipt by such Guarantor of written notice of such Senior Nonmonetary Default from the Administrative Agent to which such Senior Nonmonetary Default relates or, if no loans or other amounts are then outstanding under the Credit Facility or any renewal, extension or refunding thereof, and the Credit Facility and any such renewal, extension or refunding have been terminated, upon receipt of such notice by or on behalf of any other holder or holders of Designated Senior Debt in an aggregate amount in excess of $25,000,000, no Guarantee Payment shall be made whether by setoff, exercising contractual or statutory rights or otherwise and whether in the form of cash, stock or property or otherwise during the period (the "Guarantee Payment Blockage Period") commencing on the date of such receipt by such Guarantor of such written notice and ending on the earlier of (a) the date, if any, on which the Designated Senior Debt to which such Senior Nonmonetary Default relates is discharged or such Senior Nonmonetary Default shall have been cured or waived in writing or shall have ceased to exist and any acceleration of Designated Senior Debt to which such Senior Nonmonetary Default relates shall have been rescinded or annulled and (b) the 179th day after the date of receipt of such written notice. No more than one Guarantee Payment Blockage Period may be commenced with respect to the Series E Notes during any period of 360 consecutive days and there shall be a period of at least 181 consecutive days in each period of 360 consecutive days when no Guarantee Payment Blockage Period is in effect. Following the commencement of any Guarantee Payment Blockage Period, the holders of Designated Senior Debt shall be precluded from commencing a subsequent Guarantee Payment Blockage Period 48 until the conditions set forth in the preceding sentence shall have been satisfied. For all purposes of this paragraph, no Senior Nonmonetary Default that existed and was continuing on the date of commencement of any Guarantee Payment Blockage Period with respect to the Designated Senior Debt initiating such Guarantee Payment Blockage Period shall be, or may be made, the basis for the commencement of a subsequent Guarantee Payment Blockage Period by any holder of Designated Senior Debt or any representative or trustee under any indenture under which any such Designated Senior Debt may have been issued unless such Senior Nonmonetary Default shall have been cured for a period of not less than 90 consecutive days. In the event that, notwithstanding the foregoing, any Guarantor shall make any Guarantee Payment to any Holder prohibited by the foregoing provisions of this Section 10.03, then in such event such Guarantee Payment shall be held in trust and paid over and delivered forthwith to the representatives or trustee under any indenture under which any such Designated Senior Debt may have been issued ratably according to the aggregate amounts remaining unpaid on account of the Designated Senior Debt held or represented by under the Designated Senior Debt or, if there is no such representative or trustee with respect to such Designated Senior Debt, to the holders of such Designated Senior Debt. The provisions of this Section 10.03 shall not apply to any Guarantee Payment with respect to which Section 10.02 hereof would be applicable. SECTION 10.4 Acceleration of Series E Notes. If an Event of Default shall have occurred and be continuing (other than an Event of Default pursuant to paragraphs (ix) and (x) of Section 6.01 of the Indenture), the Trustee shall give the holders of the Designated Senior Debt not less than 30 days prior written notice before accelerating the Series E Notes (which notice shall state it is a "Notice of Intent to Accelerate") and before demanding payment from any Guarantor pursuant to its Guarantee. Upon such declaration, the holders of Designated Senior Debt outstanding at the time the Series E Notes so becomes due and payable shall be entitled to receive payment in full in cash, cash equivalents or, as acceptable to the holders of the Designated Senior Debt, in any other manner on all amounts due or to become due on or in respect of such Designated Senior Debt, before any Guarantor may make, and before any Holder of the Series E Notes is entitled to receive, any payment or distribution of assets of any Guarantor of any kind or character, whether in cash, securities or other property on account of any principal of, premium, if any, and interest on the Series E Notes. All payments in respect of the Subordinated Debt postponed under this Section 10.04 shall be immediately due and payable upon the termination of such postponement; the remittance in full of such payments by any Guarantor in accordance with the terms of the this Supplemental Indenture and the acceptance thereof by the Holders of the Series E Notes shall be deemed to constitute a cure by the Guarantor and a waiver by the Holders of the Series E Notes of any Event of Default that existed immediately prior to such remittance and acceptance to the extent that such Event of Default existed solely as a consequence of the previous non-payment of such postponed payments during such period of postponement. SECTION 10.5 Payments Permitted If No Default 49 Nothing contained in this Article 10 or elsewhere in this Supplemental Indenture or in any of the Series E Notes shall prevent any Guarantor, at any time except during the pendency of any Proceeding referred to Section 10.02 or under the conditions described in Section 10.03, from making Guarantee Payments in accordance with the terms of this Supplemental Indenture, or from depositing with the Trustee any moneys for such Guarantee Payments, or the application by the Trustee of any moneys deposited with it for the purpose of making payments of principal of, premium, if any, and interest on the Series E Notes in accordance with the terms of this Supplemental Indenture. Nothing in this Article 10 shall have any effect on the right of the Trustee (on behalf of the Holders) or the Holders to accelerate the maturity of the Series E Notes upon the occurrence of an Event of Default, but, in that event, no payment may be made in violation of the provisions of this Article 10 with respect to the Series E Notes. If payment of the Series E Notes is accelerated because of an Event of Default, the Guarantors shall promptly notify the holders of the Senior Debt (or their representatives) of such acceleration. SECTION 10.6 Obligations of Guarantors Unconditional. Nothing contained in this Article 10 or elsewhere in this Supplemental Indenture or in the Series E Notes is intended to or shall impair, as among the Guarantors and the Holders of the Series E Notes, the obligation of each Guarantor, which is absolute and unconditional, to pay to the Holders of the Series E Notes the principal of, premium, if any, and interest on the Series E Notes as and when the same shall become due and payable in accordance with the terms of the Guarantee, or is intended to or shall affect the relative rights of the Holders of the Series E Notes and creditors of any Guarantor other than the holders of the Senior Debt, nor shall anything herein or therein prevent any Holder or the Trustee on their behalf from exercising all remedies otherwise permitted by applicable law upon default under this Supplemental Indenture, subject to the rights, if any, under this Article 10 of the holders of the Senior Debt in respect of cash, property or securities of any Guarantor received upon the exercise of any such remedy. Without limiting the generality of the foregoing, nothing contained in this Article 10 shall restrict the right of the Trustee or the Holders of the Series E Notes of the Series E Notes to take any action to declare the Series E Notes to be due and payable prior to their stated maturity pursuant to Section 5.01 or to pursue any rights or remedies hereunder; provided, however, that all Senior Debt then due and payable shall first be paid in full before the Holders or the Trustee are entitled to receive any direct or indirect payment from such Guarantor of principal of or interest on the Series E Notes pursuant to such Guarantor's Guarantee. SECTION 10.7 Subrogation To Rights of Holders of Senior Debt. Subject to the payment in full in cash or cash equivalents, or as acceptable to the holders of Senior Debt, in any other manner, of all Senior Debt, the Trustee and the Holders of the Series E Notes shall be subrogated to the rights of the holders of such Senior Debt to receive payments and distributions of cash, property and securities applicable to the Senior Debt until the principal of, premium, if any, and interest on the Series E Notes shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Debt of any cash, property or securities to which the Trustee and the Holders of the Series E Notes would 50 be entitled except for the provisions of this Article 10, and no payments pursuant to the provisions of this Article 10 to the holders of Senior Debt by Holders of the Series E Notes, shall, as among any Guarantor, its creditors other than holders of Senior Debt and the Holders of the Series E Notes, be deemed to be a payment or distribution by such Guarantor to or on account of the Senior Debt. SECTION 10.8 Provisions Solely to Define Relative Rights. The provisions of this Article 10 are and are intended solely for the purpose of defining the relative rights of the Trustee and the Holders of the Series E Notes on the one hand and the holders of Senior Debt on the other hand. Nothing contained in this Article 10 or elsewhere in this Supplemental Indenture or in the Series E Notes or in any Guarantee is intended to or shall (a) impair, as among the Guarantors, its creditors other than holders of Senior Debt and the Trustee and the Holders of the Series E Notes, the obligation of each Guarantor, which is absolute and unconditional (and which, subject to the rights under this Article 10 of the holders of Senior Debt, is intended to rank equally with all other general obligations of such Guarantor), to pay to the Trustee for the Holders of the Series E Notes the principal of, premium, if any, and interest on the Series E Notes as and when the same shall become due and payable in accordance with the terms of each Guarantor's Guarantee; (b) affect the relative rights against any Guarantor of the Trustee, the Holders of the Series E Notes and the creditors of such Guarantor other than the holders of Senior Debt; or (c) prevent the Trustee on behalf of the Holders or any Holder of any Series E Note from exercising all remedies otherwise permitted by applicable law upon default under this Supplemental Indenture, subject to this Article 10, including the rights, if any, under this Article 10 of the holders of Senior Debt to receive cash, property or and securities otherwise payable or deliverable to such holder or, under the conditions specified in Section 10.03, to prevent any payment prohibited by such section or enforce their rights pursuant to the penultimate paragraph in Article 10. SECTION 10.9 No Waiver of Subordination Provisions. No right of any present or future holder of any Senior Debt to enforce subordination as provided herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of any Guarantor or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by any Guarantor with the terms, provisions and covenants of this Supplemental Indenture, regardless of any knowledge thereof which any such holder may have or otherwise be charged with. Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Debt may, at any time and from time to time, without the consent of or notice to the Holders of the Series E Notes, without incurring responsibility to the Holders of the Series E Notes and without impairing or releasing the subordination provided in this Article 10 or the obligations hereunder of the Trustee or Holders of the Series E Notes to the holders of Senior Debt, do any one or more of the following: (a) change the manner, place or terms of payment or 51 extend the time of payment of, or renew, refinance or alter, any Senior Debt, or otherwise amend or supplement in any manner any Senior Debt or any instrument evidencing the same or any agreement under which such Senior Debt is outstanding; (b) permit any Guarantor to borrow, repay and then reborrow any or all the Senior Debt; (c) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt; (d) release any Person liable in any manner for the collection of Senior Debt; (e) exercise or refrain from exercising any rights against any Guarantor and any other Person; and (f) apply any sums received by such holders to Senior Debt. SECTION 10.10 Reliance On Judicial Order or Certificate of Liquidating Agent. Upon any payment or distribution of assets of any Guarantor referred to in this Article 10, the Trustee and the Holders of the Series E Notes shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the receiver, trustee in bankruptcy, liquidation trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 10; provided that the foregoing shall apply only if such court has been apprised of the provisions of this Article 10. SECTION 10.11 Notice to Trustee. The Company shall give prompt written notice to the Trustee of any fact known to the Company or such Guarantor which would prohibit the making of any payment to or by the Trustee in respect of the Series E Notes pursuant to the provisions of this Article 10. Failure to give such notice to the Trustee shall not affect the subordination of the Series E Notes to Senior Debt. The Trustee shall not be charged with knowledge of the existence of any default or event of default with respect to any Senior Debt or of any other facts which would prohibit the making of any payment to or by the Trustee unless and until the Trustee shall have received notice in writing to that effect signed by an officer of the Company, or by a holder of any Senior Debt or trustee or agent therefor; and prior to the receipt of any such written notice, the Trustee shall, subject to Article 7 of the Indenture, be entitled to assume that no such facts exist; provided, however, that if the Trustee shall not have received the notice provided for in this Section 10.10 at least three Business Days prior to the date upon which by the terms of this Supplemental Indenture any moneys shall become payable for any purpose (including, without limitation, the payment of the principal of, premium, if any, or interest on any Series E Note), then, regardless of anything herein to the contrary, the Trustee shall have full power and authority to receive any moneys from any Guarantor and to apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary which may be received by it on or after such prior date. Nothing contained in this Section 10.10 shall limit the right of the holders of Senior Debt to recover payments as contemplated by Article 10. The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or itself to be a holder of any Senior Debt (or a trustee on behalf of, or other representative of, such holder) to 52 establish that such notice has been given by a holder of such Senior Debt or a trustee or representative on behalf of any such holder. In the event that the Trustee determines in good faith that any evidence is required with respect to the right of any Person as a holder of any Senior Debt to participate in any payment or distribution pursuant to this Article 10, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of such Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article 10, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. SECTION 10.12 Trustee's Relation to Senior Debt. The Trustee shall be entitled to all the rights set forth in this Article 10 with respect to any Senior Debt which may at any time be held by it in its individual or any other capacity to the same extent as any other holder of such Senior Debt, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. With respect to the holders of any Senior Debt, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article 10, and no implied covenants or obligations with respect to the holders of such Senior Debt shall be read into this Supplemental Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of any Senior Debt (except as provided in Section 10.02(b)). The Trustee shall not be charged with knowledge of the existence of any Senior Debt or of any facts that would prohibit any payment hereunder unless the Trustee shall have received written notice to that effect at the address of the Trustee set forth in Section 11.01 of the Indenture. SECTION 10.13 Series E Note Holders Authorize Trustee to Effectuate Subordination. Each Holder of Series E Notes by its acceptance of such Series E Notes authorizes and expressly directs the Trustee on its behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article 10, and appoints the Trustee its attorney-in-fact for such purposes, including, in the event of any dissolution, winding up, liquidation or reorganization of any Guarantor (whether in bankruptcy, insolvency, receivership, reorganization or similar proceedings or upon an assignment for the benefit of creditors or otherwise) tending towards liquidation of the business and assets of such Guarantor, the filing of a claim for the unpaid balance of its Series E Notes in the form required in those proceedings. SECTION 10.14 This Article Not to Prevent Event of Default. The failure to make a payment on account of principal of, premium, if any, or interest on the Series E Notes by reason of any provision of this Article 10 shall not be construed as preventing the occurrence of an Event of Default specified in Section 6.01(i), (ii) or (iii) of the Indenture. 53 SECTION 10.15 Trustee's Compensation Not Prejudiced. Nothing in this Article 10 shall apply to amounts due to the Trustee pursuant to other sections in this Supplemental Indenture or in the Indenture. 54 SECTION 10.16 Subordination Provisions Not Applicable to Money Held in Trust for Holders of Series E Notes; Payments May Be Paid prior to Dissolution. All money and United States Government Securities deposited in trust with the Trustee pursuant to and in accordance with Article 8 of the Indenture of the Indenture shall be for the sole benefit of the Holders of the Series E Notes and shall not be subject to this Article 10. Nothing contained in this Article or elsewhere in this Supplemental Indenture shall prevent (i) the Company, except under the conditions described in Section 10.03, from making payments of principal of and interest on the Series E Notes, or from depositing with the Trustee any moneys for such payments or from effecting a termination of the Guarantors' obligations under the Series E Notes and this Supplemental Indenture as provided in Article 8 of the Indenture, or (ii) the application by the Trustee of any moneys deposited with it for the purposed of making such payments of principal of, premium, if any, and interest on the Series E Notes, to the Holders entitled thereto unless at least three Business Days prior to the date upon which such payment becomes due and payable, the Trustee shall have received the written notice provided for in Section 10.11. ARTICLE XI MISCELLANEOUS SECTION 11.1 Reference to Indenture. Except insofar as otherwise expressly provided herein, all the provisions, definitions, terms and conditions of the Indenture, as it may from time to time be amended, shall be deemed to be incorporated in and made a part of this Supplemental Indenture; and the Indenture as supplemented by this Supplemental Indenture is in all respects ratified and confirmed; and the Indenture, as amended, and this Supplemental Indenture shall be read, taken and construed as one and the same instrument. SECTION 11.2 Benefits of Indenture. Nothing in this Supplemental Indenture is intended, or shall be construed, to give to any Person, other than the parties hereto and the Holders issued under the Indenture, any legal or equitable right, remedy or claim under or in respect of this Supplemental Indenture, or under any covenant, condition or provision herein contained, all the covenants, conditions and, provisions of this Supplemental Indenture being intended to be, and being, for the sole and exclusive benefit of the parties hereto and of the Holders issued and to be issued under the Indenture and this Supplemental Indenture. 55 SECTION 11.3 Amendments Only With Consent of the Holders. Notwithstanding Section 9.01 of the Indenture, without the consent of each Holder of a Series E Note affected, an amendment, waiver or Supplemental Indenture may not (with respect to any Series E Note held by a non-consenting Holder): (a) release any Guarantor from any of its obligations under its Guarantee of the Series E Notes other than in accordance with this Supplemental Indenture; or (b) modify the ranking or priority of the Series E Notes or the Guarantees, or modify the definition of Senior Debt or Designated Senior Debt or amend or modify the subordination provisions in the Supplemental Indenture in any manner adverse to the Holders. SECTION 11.4 Governing Law. This Supplemental Indenture and the Series E Notes issued hereunder shall be governed by and interpreted and construed in accordance with the laws of the State of New York (without giving effect to any choice of law principles of such state other than Section 5-1401 of the General Obligations Law. SECTION 11.5 Successors. All covenants, stipulations and agreements of the Company in this Supplemental Indenture and the Series E Notes shall bind its successors and assigns. All agreements of the Trustee in this Supplemental Indenture shall bind its successor. SECTION 11.6 Counterparts. This Supplemental Indenture may be executed in any number of counterparts, and each of such counterparts when so executed shall be deemed to be an original, but all such counterparts shall together constitute by one and the same instrument. 56 IN WITNESS WHEREOF, TELECORP PCS., INC. has caused this supplemental Indenture to be executed by its [Chairman of the Board, Chief Executive Officer or one of its Vice Presidents], and duly attested by its [Secretary or one of its Assistant Secretaries], and has caused the -------------------------------- same to be executed by one of its [Vice Presidents or Assistant Vice Presidents] and its corporate seal to be hereunto affixed, and duly attested by one of its [Assistant Secretaries], as of the day and year first above written. TELECORP PCS, INC. _________________________________ Name: Title: [TRUSTEE] _________________________________ Name: Title: 57 ACKNOWLEDGMENT STATE OF NEW YORK SS: COUNTY OF NEW YORK On the day of [ , ] before me personally came ---- --------- ---- --------, to me known, who, being by me duly sworn, did depose and say that he resides in ; that he/she is the of TeleCorp PCS, Inc., - -------------- -------------------- a Delaware corporation, the corporation described in and which executed the foregoing instrument; and that he/she signed his/her name thereto by authority of the board of directors of said corporation. 58 ACKNOWLEDGMENT STATE OF NEW YORK SS: COUNTY OF NEW YORK On the day of [ , ], before me personally came ---- --------- ---- ----------, to me known, who, being by me duly sworn, did depose and say that he/she resides in ; that he/she is an [ ] of --------------- ----------------- ---------, a banking corporation organized under the laws of , the ---------------------- corporation described in and which executed the foregoing instrument, that he/she knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the board of directors of said corporation, and that he/she signed his/her name thereto by like authority. CONFIDENTIAL - FOR DISCUSSION PURPOSES ONLY ------------------------------------------- EXHIBIT D Summary of Principal Terms See attached. CONFIDENTIAL - FOR DISCUSSION PURPOSES ONLY ------------------------------------------- AT&T WIRELESS/VENTO AND SULLIVAN F Block Joint Ventures Summary of Principal Terms General Parties AT&T Wireless Services, Inc. and/or one or more affiliates ("AT&T"), each of the entities (each, a "License Entity") that owns one or more of the F Block licenses referred to below, Thomas Sullivan and Gerald Vento (the "Management Group"), TeleCorp PCS, Inc. ("TeleCorp"), the TeleCorp Cash Equity Investors (the "TeleCorp Investors"), and the non-Management Group equity holders in the License Entities (the "Non-Management Equity Holders"). Structure Each of the Houston, San Diego, Melbourne - Titusville, Orlando and Tampa - St. Petersburg - Clearwater F Block licenses (each, an "F Block License") are held by a separate entity (each, a "License Entity" and collectively the "License Entities"). Each of the five entities will be independent of each other, but will have substantially identical ownership and governance, as set forth below. Acquisition of San Diego License and Non-Management Equity Holders' Interests/Puerto Rico Transaction AT&T Loan AT&T makes a loan (the "AT&T Loan") to the Management Group in an amount equal to 100% of the cash required to pay the purchase price of the San Diego F Block License, plus the aggregate amount of legal fees and other expenses (approximately $225,000) TeleCorp incurred directly related to such acquisition. The Management Group will secure the AT&T Loan with a pledge of all of the capital stock of the San Diego License Entity. CONFIDENTIAL - FOR DISCUSSION PURPOSES ONLY ------------------------------------------- Capitalization of the San Diego License Entity Concurrently with the consummation of the AT&T Loan, the Management Group will contribute to the capital of the San Diego License Entity all the proceeds of such loan. Use of AT&T Loan Proceeds Concurrently with the capitalization of the San Diego License Entity, the San Diego License Entity will use the Management Group capital contribution to pay the purchase price of the San Diego F Block License and related expenses. Exchange of Note for Interests Concurrently with the closing of the acquisition by TeleCorp of AT&T's PCS license covering Puerto Rico, TeleCorp will acquire 100% of the Non-Management Equity Holders' equity interests in the License Entities (the "Non-Management Equity Interests") in exchange for TeleCorp promissory notes in the aggregate principal amount, in the case of each of the F Block Licenses, set forth on Schedule A, or approximately $26 million in the aggregate (the "Non-Management Equity Interests Purchase Price"). The TeleCorp notes will be of the same tenor as those being issued to AT&T in partial consideration for AT&T's Puerto Rico PCS license. TeleCorp Notes The principal terms of the TeleCorp notes are: -- Initial interest rate, equivalent to Lucent Series C, 12% per annum -- Hold period: October 31, 1999 -- Interest rate after hold period: 7% -- Convert (if the holder is AT&T, to Series A Preferred, or Series D and F Preferred, at AT&T's option, or if the holder is an Investor, to Series C Preferred and Series A Common) at a price of 20% premium to par or $1,200/unit -- Senior to Lucent Series C on maturity, redemption priority and repayment -- Mandatory repayment or conversion on qualifying IPO or high yield offering -- Other terms equivalent to Lucent Series C, except conversion rights are forfeited on transfer 66 CONFIDENTIAL - FOR DISCUSSION PURPOSES ONLY ------------------------------------------- Sale of Interests to License Entity Concurrently with the exchange referred to in the "Exchange of Notes for Interests" section, TeleCorp will assign to each License Entity (other than San Diego License Entity) the applicable Non-Management Equity Interests (i.e., the interests TeleCorp has acquired in the Houston License Entity will be assigned to Houston License Entity, etc.). In consideration therefor, each License Entity (other than San Diego License Entity) will issue to TeleCorp promissory notes (the "JV Notes"), on terms reasonably acceptable to AT&T, in the aggregate principal amount, in the case of each License Entity, set forth on Schedule A, or approximately $26 million in the aggregate. Puerto Rico Consideration As a portion of the consideration payable by TeleCorp to AT&T for the Puerto Rico license, TeleCorp will deliver to AT&T the JV Notes. Timing The closing of the AT&T Loan and the Management Group capital contribution to the San Diego License Entity will occur concurrently with the acquisition of the San Diego F Block License by the San Diego License Entity, and is not conditioned on the consummation of the Puerto Rico acquisition and the transactions described herein (but see "Alternative Arrangement" below). The closing of the Puerto Rico acquisition and the exchanges described above involving the Non-Management Equity Interests, the TeleCorp notes and the JV Notes will all occur concurrently with the closing of the joint venture contributions described in this term sheet. Alternative Arrangements Anything in this Term Sheet to the contrary notwithstanding, at any time on or before the closing of the Puerto Rico transaction, AT&T shall have the right to restructure the Transactions by (a) canceling the transactions set forth in "Exchange of Notes for Interests" and "Sale of Interests to License Entity," and (b) revising the "Puerto Rico Consideration" by eliminating the JV Notes, and increasing the amount of the TeleCorp Notes to $36 million. 67 CONFIDENTIAL - FOR DISCUSSION PURPOSES ONLY ------------------------------------------- In the event that the Puerto Rico transaction is not restructured as set forth in the immediately preceding paragraph and fails to close, (a) AT&T will lend to the License Entities an amount equal to the Non-Management Equity Interests Purchase Price in exchange for the JV notes, (b) the License Entities will acquire for cash, and the Non-Management Equity Holders will sell to the License Entities, the Non-Management Equity Interests. License Entity Capitalization and Management Structure Capitalization There will be two classes of interests in the License Entities: voting (which have no economic rights) and non- voting (which represent all of the economic interests in the License Entities) The Management Group shall have 75% of the voting interests and 51% of the non-voting interests of each License Entity, and AT&T shall have 25% of the voting interests, and 49% of the non-voting interests of each License Entity. Board AT&T will have the right to designate two directors, and each member of the Management Group will be a director. The Management Group (or its successor) will have the right to designate one additional director, provided such third director is independent of the Management Group and reasonably acceptable to AT&T. The initial members of the Board will be mutually agreed upon. Voting Rights A list of significant matters will require an 80% supermajority approval by the Board of License Entity (this list will include, but not be limited to, all matters for which TeleCorp requires a supermajority approval). Management Fee In consideration of their services, the Management Group will be paid an annual fee equal to $150,000 (prorated for any partial year) in the aggregate for all License Entities (irrespective of the number of License Entities, and to be divided among the License Entities in a mutually acceptable manner). Replacement of Management 68 CONFIDENTIAL - FOR DISCUSSION PURPOSES ONLY ------------------------------------------- Group In the event that agreed upon performance benchmarks or other objective requirements are not satisfied (such benchmarks and or requirements to be reasonably acceptable to AT&T), the Management Group will be required to assign to substitute control group, reasonably acceptable to a majority of the License Entity directors (excluding the members of the Management Group), all of the Management Group's voting interests. In the event of replacement, the Management Group will, at AT&T's option, either retain its non-voting stock, transfer that stock to its replacement for either cash in an amount equal to the then current value of its put (discussed below) and/or an instrument with the same economic features as the put (so that the Management Group's return will not be worsened as the result of such transfer). AT&T Assistance AT&T agrees to, at the request of the Board, negotiate in good faith a management agreement pursuant to which AT&T would build and manage a system that satisfied the applicable FCC license requirements. Funding At the request of the Board, AT&T agrees to fund, on terms acceptable to it, the operating expenses of the License Entity (including without limitation the Management Put, the build out costs described in the immediately preceding paragraph, the management fees, and the interest on the FCC debt). AT&T Liquidity Anything to the contrary in the AT&T Loan notwithstanding, the Management Group agrees that if at any time AT&T requests repayment of the AT&T Loan and/or the JV notes, the Management Group will use its best efforts to take all commercially reasonable steps to raise funds to do so. 69 Right of First Negotiation In order to induce AT&T to extend the AT&T Loan, and in consideration of the JV Notes and the commitments AT&T has made to the License Entities hereunder, the Management Group hereby agrees with AT&T that it will in good faith negotiate with AT&T a mutually acceptable transaction (an "F Block Transaction") relating to the F Block Licenses, and, until both parties agree in writing that they are no longer interested in entering into an F Block Transaction, the Management group will not enter into an agreement or arrangement with any person or entity relating to any alliance, sale or other transaction involving the F Block PCS Licenses, or solicit, initiate or engage in any discussion with respect to any such licenses. Indemnification Each License Entity will provide customary indemnification for its directors and officers (including the Management Group), including without limitation indemnifying them against director liability arising from AT&T's failure to fund License Entity's capital requirements (provided the Management Group and AT&T agree on acceptable terms for such funding) and AT&T's provision of management services. AT&T will assure performance by License Entity of its indemnification obligations. Management Put The Management Group will have the right to put to AT&T its interest in each License Entity for a sum of cash equal to, for each License Entity, the amount set forth on Schedule B ($[4] million in the aggregate), plus 6% per annum (and, during the period, if any, following replacement of the Management Group, 10% per annum), compounded annually. The put will be exercisable (in whole but not in part) only during the one-year period following the earliest date that exercise of the put would not violate FCC rules or trigger any penalties (the Management Group shall receive written notice of this date), provided that to the extent permitted by FCC rules without triggering any penalty, each member of the Management Group may put $400,000 of its F Block Tracking Interests during the one-year period commencing December 31, 1999 (at AT&T's option, it may fund the redemption of the Management Group's interest, in lieu of the put). 70 CONFIDENTIAL - FOR DISCUSSION PURPOSES ONLY ------------------------------------------- Transfer Restrictions The Management Group may not transfer, pledge or otherwise dispose of all or any portion of its License Entity interests prior to the ninth anniversary of the closing. * * * * * 71 CONFIDENTIAL - FOR DISCUSSION PURPOSES ONLY ------------------------------------------- SCHEDULE A F Block License Aggregate Principal Amount of Notes --------------- ----------------------------------- Houston San Diego* -0- Melbourne Orlando Tampa TOTAL $[26,000,000] - ----------------- * The Non-Management Equity Holders do not hold an equity interest in the San Diego License Entity. Accordingly, no San Diego JV Notes will be issued and the formation of San Diego License Entity is not subject to the consummation of the other F Block transactions or the Puerto Rico transaction. 72 SCHEDULE B License Entity Value of Management Group Equity Interest - -------------- ----------------------------------------- Houston San Diego Melbourne Orlando Tampa TOTAL [$4,000,000] 73 ASSIGNMENT FORM If you the Holder want to assign this Note, fill in the form below and have your signature guaranteed: I or we assign and transfer this Note to: ___________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ (Print or type name, address and zip code and social security or tax ID number of assigned) and irrevocably appoint , agent to __________________________ transfer this Note on the books of the Company. The agent may substitute another to act for him. Date: Signed: ---------- ------------------------------------------- (Sign exactly as name appears on the other side of this Note) Signature Guarantee: ________________________________________________ SIGNATURE GUARANTEE Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934. 74 FORM OF CERTIFICATE OF TRANSFER TeleCorp PCS, Inc. 1010 Glebe Road, Suite 800 Arlington, VA 22201 [Name and Address of Registrar Re: __% Senior Subordinated Discount Notes due _____, Series E Reference is hereby made to the Indenture, dated as of _______, 1999 (the "Base Indenture"), between TeleCorp PCS, Inc. (the "Company") and ____________, as trustee (the "Trustee") as supplemented by a Third Supplemental Indenture, dated as of _________, 1999 (the "Third Supplemental Indenture") among the Company and the Trustee (the Base Indenture and the Third Supplemental Indenture are referred to herein as the "Indenture"). Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. ____________, (the "Transferor") owns and proposes to transfer the Note[s] specified in Annex A hereto in the principal amount at maturity of $__________ in such Note[s] (the "Transfer'), to _________ (the "Transferee"), as further specified in Annex A hereto. This Certificate is accompanied by one or more certificates aggregating at least the principal amount at maturity of the Notes proposed to be transferred. The Transferor hereby certifies that: Check and complete if Transferee will take delivery of a Note pursuant to Rule 144A or Regulation S. One or more of the events specified in the Indenture have occurred and the Transfer is being effected in compliance with the transfer restrictions applicable to Notes bearing the Private Placement Legend and pursuant to and in accordance with the United States Securities Act of 1933 (the "Securities Act"), and accordingly the Transferor hereby further certifies that (check one): (a) such Transfer is being effected pursuant to and in accordance with Rule 144A under the Securities Act and the Transferor certifies to that the Transfer is being effected pursuant to and in accordance with Rule 144A and, accordingly, the Transferor hereby further certifies that the Notes are being transferred to a Person that the Transferor reasonably believes is purchasing the Notes for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with a applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend and in the Indenture and the Securities Act ; or (b) such Transfer is being effected pursuant to an in accordance with Rule 904 under the Securities Act and the Transferor that the Transfer is being effected pursuant to and in accordance with Rule 904 and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 904(b) of Regulation S under the Securities Act and (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the Note will be subject to the restrictions on Transfer enumerated in the private placement legend printed on any global Series E Note issued under Regulation S and in the Third Supplemental Indenture and the Securities Act. This certificate and the statements contained herein are made for your benefit and the benefit of the Company. Dated: [Insert Name of Transferor] By: Name: Title: EX-10.12 26 LETTER OF AGREEMENT Exhibit 10.12 December 21, 1998 Mr. Tom Sullivan Executive Vice President Telecorp Communications, Inc. 1101 17/th/ Street, Suite 900 Washington, DC 20036 Letter of Agreement Dear Tom: This Letter of Agreement ("LOA") serves to identify the terms by which AT&T Wireless Services, Inc. ("AWS") will arrange to purchase interstate and intrastate long distance voice and/or data services (the "Services") from AT&T Carrier Markets ("Carrier Markets") for the shared use of Telecorp Communications, Inc. ("Carrier") and other Affiliated Markets as such term is defined below. If you are in agreement with the terms described herein, please sign below. Sharing Arrangement In exchange for making certain volume commitments to Carrier Markets, AWS has negotiated the right to purchase the Services at the rates specified in LOA Attachments 1 and 2, respectively, so that Affiliated Markets can share the use of these Services at such rates. By sharing the Services, with AWS as the intermediary enabling such sharing, the Affiliated Markets can efficiently obtain the Services at the best possible terms and conditions. For the Services they purchase under this LOA, Affiliated Markets will pay the rates that AWS pays to Carrier Markets for such services, as specified in LOA Attachments 1 and 2. AWS does not mark up the charges for the Services or receive any type of commission or fee. Affiliated Market Status This sharing arrangement is for the benefit of Affiliated Markets, and Carrier's eligibility to purchase the Services under this LOA is contingent upon Carrier maintaining its status as an Affiliated Market. An Affiliated Market means any facilities-based company that: (a) is controlled by AWS; (b) is an entity in which AWS has at least fifty percent (50%) voting interest; (c) shares switching facilities with AWS; (d) is managed by AWS; (e) has purchased a portion of CMRS spectrum from AWS in which AWS maintains an ownership interest; or (f) is a party to an agreement providing for the interoperability of Carrier's system and AWS' system as each is operated in accordance with the IS-136 or AT&T PROPRIETARY Letter of Agreement December 21, 1998 Page 2 of 6 successor standard. The terms and conditions identified in this LOA will terminate no later than three (3) months after the cessation of Carrier as an Affiliated Market or immediately upon termination of AWS' contract with Carrier Markets. AWS agrees it will endeavor to provide Carrier with a minimum of three (3) months notice of such termination. In addition, AWS may terminate this LOA upon any breach by Carrier of the AT&T Wireless Services Network Membership License Agreement between AT&T Corp. and Telecorp PCS, Inc. dated as of July 17, 1998 which breach is not cured in accordance with the provisions of such agreement. Provision of Service and Rates Carrier may order any of the Services described in LOA Attachments 1 and 2 and AWS will provide those Services to Carrier pursuant to this LOA. Carrier agrees to pay all recurring and nonrecurring charges for the Services it orders as specified in LOA Attachments 1 and 2. (Carrier will need to contact appropriate personnel at Carrier Markets with specific information to determine pricing for certain data elements.) Please note that volume and minimum revenue commitments between AWS and Carrier Markets in LOA Attachments 1 and 2 are confidential and have been blacked out. Taxes and Surcharges Carrier shall pay any applicable local, state, federal, public utilities, gross receipts or other taxes, surcharges, assessments, recoveries or fees imposed on AWS, Carrier Markets or Carrier as a result of the sale, installation, use or provision of the Services described in this LOA, except to the extent customer provides a valid tax exemption certificate to AT&T prior to the delivery of Services and except for taxes based on AWS' or Carrier Markets' net income. Consistent with FCC rules, because Carrier is not an end user, Carrier Markets will not impose any Federal Universal Service Fund surcharges on the Services. However, if the FCC changes its rules in this regard, Carrier Markets will adjust its imposition of surcharges accordingly. Volume Commitment Carrier agrees to the Minimum Traffic Volume Commitment(s) as specified in LOA Attachment 3. AWS and Carrier agree that the Minimum Traffic Volume Commitment(s) will be adjusted a minimum of once each calendar year at the time specified by AWS. Such Minimum Traffic Volume Commitment(s) may be adjusted more frequently upon mutual agreement between AWS and Carrier. During the first calendar year, the Minimum Traffic Volume Commitment for Carrier shall be as specified by Carrier at its sole discretion. Following the first calendar year, the Minimum Traffic Volume Commitment for Carrier may be increased any amount or may be decreased by any amount up to ten percent (10%) at Carriers' sole discretion. If Carrier AT&T PROPRIETARY Letter of Agreement December 21, 1998 Page 3 of 6 proposes to reduce the Minimum Traffic Volume Commitments by more than ten percent (10%), it may do so only with AWS' permission. If Carrier fails to meet any minimum traffic volumes, Carrier will pay a Shortfall Charge equal to the difference between the charges for the Minimum Traffic Volume Commitment and the amount of eligible charges for that Minimum Traffic Volume Commitment incurred during the commitment period. The Shortfall Charge will be calculated as follows for voice traffic: the difference between Carrier's Minimum Voice Traffic Volume Commitment (in terms of Minutes of Use) and the actual voice traffic volume will be multiplied by $0.0360. The Shortfall Charge will be calculated as follows for data traffic: 1) the difference between Carrier's Minimum Data DS I Volume Commitment (in terms of the number of DS Is) and the actual DS I volume will be multiplied by $1,121; 2) the difference between Carrier's Minimum Data DS') Volume Commitment (in terms of the number of DS3s) and the actual DS3 volume will be multiplied by $7,227; 3) Carrier will be charged the difference between Carrier's Minimum Frame Relay Commitment (in terms of dollars per month) and the average of Carrier's actual Frame Relay monthly charges. AWS will use the Shortfall Charge it collects from Carrier to pay any Shortfall Charges AWS is obligated to pay Carrier Markets. If the Shortfall Charges that AWS collects from all of the Affiliated Markets participating in the sharing arrangement exceed the amount of the shortfall charge that AWS must pay Carrier Markets, AWS will refund to Carrier its pro rata share of the overage. Carrier is not obligated to meet that portion of their Minimum Data Volume Commitment for which Carrier Markets is unable to deliver service within a reasonable time frame. A reasonable time frame for delivery of baseline service (POP, or point-of-presence, to POP) is defined as approximately fourteen (14) business days for DS1s and twenty-five (25) business days for DS3s. The reasonable time frame for delivery of DS1s and DS3s may be extended if the Local Exchange Carrier requires a longer installation interval. A reasonable time frame for the delivery of Frame Relay is defined as approximately thirty-five (35) calendar days. Please note that Carrier must provide accurate tie-down information and a "firm order" must be placed in the Carrier Markets provisioning system before the time frames identified above become valid. As applicable, Carrier agrees to provide a fifteen (15) month voice traffic volume forecast document to AWS on a quarterly basis for use in network planning. AWS will provide Carrier with the format for the traffic volume forecast document. AT&T PROPRIETARY Letter of Agreement December 21, 1998 Page 4 of 6 Rate Review At the initiation of Carrier, not more than one time within any twelve (12) month period, the parties agree to review the rates for the Services described in this LOA. If Carrier wishes to adjust the rates, Carrier must provide evidence to AWS that substantially lower rates are offered by other interexchange providers for Services that are comparable in quality and have comparable minimum volume and duration requirements. Upon receipt of such evidence AWS will use good faith efforts to work with Carrier to adjust the rates, if appropriate, in order to ensure that such rates are reasonably competitive. Billing Carrier will be billed monthly for the Services it purchases from AWS. Payment is due upon presentation of a bill, and must be received no later than thirty (30) days after the bill date. For voice services, the bill date is the day after the end of the usage period covered by the bill; for data services, the bill date is the first day of the service period covered by the bill. Any charges not paid within such a period will be considered past due. Interest charges may be added to any past due amounts at the lower of twelve percent (12.0%) per year or the maximum rate allowed by law. If Carrier wishes to dispute a charge-on a bill, Carrier must identify the amount of the disputed charge and provide a full written explanation of the basis for the dispute within ninety (90) days after the bill date. A pending billing dispute does not relieve Carrier of the obligation to pay the disputed charge. Marks Nothing in this LOA creates in Carrier any rights in the AT&T or AWS' tradenames, trademarks, service marks or any other intellectual property of AT&T or AWS. Account Team Support Carrier will be supported directly by a Carrier Markets account team consisting of a sales manager, voice and/or data account executives, as well as technical and customer care support. All orders should be placed directly with the Carrier Markets account team and all issues and concerns regarding Services contracted for under this LOA should be addressed directly with such account team members. CMRS The Services that AWS purchases from Carrier Markets for Carrier under this LOA are provided to Carrier solely for Carrier's provision of the Services to its commercial mobile radio services ("CMRS") customers, for calls that originate on Carrier's CMRS system and those CMRS systems that share Carrier's switches, and not for any other purpose. AT&T PROPRIETARY Letter of Agreement December 21, 1998 Page 5 of 6 Compliance with Master Carrier Agreement Carrier agrees to comply with the obligations imposed on Customer and its End Users as set forth in Paragraphs 9 through 14 and 16 through 35 of the attached Master Carrier Agreements (LOA Attachments I and 2 and the attachments thereto), and to afford AWS the same rights and protections afforded to AT&T thereunder. AWS and Carrier Markets will afford Carrier the rights and protections, if any, afforded to Customer and its End Users under Paragraphs 9 through 14 and 16 through 35 of the attached Master Carrier Agreements (LOA Attachments 1 and 2 and the attachments thereto). Confidentiality All information contained in this LOA and its Attachments is considered confidential and is governed by the confidentiality agreement(s) in place between AWS and Carrier, together with the Confidentiality provision in Paragraph 20 of the attached Master Carrier Agreements (LOA Attachments 1 and 2). Term The Term of this LOA runs concurrently with the Terms of the long distance data services and long distance voice services Master Carrier Agreements (LOA Attachments 1 and 2 and the attachments thereto). These Terms are approximately 36 months from the first day of the first full billing month of the first service provided to the first Affiliated Market under each of the respective Master Carrier Agreements. Accordingly, the Term of this LOA for Carrier may be shorter than 36 months. Specifically, the long distance voice services Master Carrier Agreement (LOA Attachment 1 and the attachments thereto) provides that: "The Term of this Attachment consists of a Ramp-Up Period of 6 months and a Full Service Period of 36 months. The Ramp-Up Period begins on the first full billing month for the first service provided under this Attachment. For each service provided under this Attachment, the Full Service Period begins on the day after the Ramp-Up Period ends, which day is referred to as the Term Start Date." Specifically, the long distance data services Master Carrier Agreement (LOA Attachment 2 and the attachments thereto) provides that: "The Term of this Attachment is 36 months. For each service provided under this Attachment, the Term begins on the first day of the first full billing month for the first service provided under this Attachment, which day is referred to as the Customer's Initial Service Date (CISD). Different Services may have different billing cycles, and so the billing months may AT&T PROPRIETARY Letter of Agreement December 21, 1998 Page 6 of 6 be staggered. For each service, however, the Term will begin within one month after the Term begins for the first service provided under this Agreement." If Carrier decides to terminate this LOA prior to the end of such Term, Carrier will be liable for the Minimum Traffic Volume Commitment(s) made above through the end of said Term. Sincerely, AT&T WIRELESS SERVICES, INC. /s/ Kerri Landeis - ---------------------------------------- Kerri Landeis Director, External Affairs Accepted and agreed: Telecorp Communications, Inc. By: /s/ Thomas H. Sullivan ------------------------------------ Signature Thomas H. Sullivan - ---------------------------------------- Printed Name President - ---------------------------------------- Title January 4, 1999 - ---------------------------------------- Date Attachment 1 - Voice Contract Attachment 2 - Data Contract Attachment 3 - Minimum Traffic Volume Commitments AT&T PROPRIETARY EX-10.13 27 ASSET PURCHASE AGREEMENT EXHIBIT 10.13 ASSET PURCHASE AGREEMENT between AT&T WIRELESS PCS INC. and TELECORP PCS, INC. Dated as of May 24, 1999 TABLE OF CONTENTS -----------------
Page ---- ARTICLE I - DEFINITIONS.................................................................................... 1 ARTICLE II - PURCHASE AND SALE OF ASSETS; PAYMENT OF CONSIDERATION; CERTAIN RESTRICTIONS ON TRANSFER............................................... 8 2.1 Purchase and Sale of Purchased Assets................................................ 8 2.2 Payment of Consideration............................................................. 9 2.3 Assumption of Obligations............................................................ 9 2.4 Company Reimbursement of AT&T Puerto Rico's Cost of Certain Employees.................................................................... 10 2.5 No Expansion of Third-Party Rights................................................... 11 2.6 Payment of Certain Expenses.......................................................... 11 2.7 Allocation of Purchase Price......................................................... 11 ARTICLE III - CLOSING...................................................................................... 12 3.1 Time and Place of Closing............................................................ 12 3.2 Closing Actions and Deliveries....................................................... 12 3.3 Closing Costs; Taxes and Fees........................................................ 14 3.4 Acquisition Corp. Stockholder Transaction............................................ 15 ARTICLE IV - COVENANTS..................................................................................... 15 4.1 Consummation of Transactions......................................................... 15 4.2 Confidentiality...................................................................... 16 4.3 Covenants of AT&T PCS................................................................ 17 4.4 Covenants of the Company............................................................. 18 4.5 Employees............................................................................ 19 4.6 Assignment of Assigned Agreements and AT&T PCS Sold License......................................................................... 20 4.7 FCC Construction Requirement......................................................... 20 4.8 Non-Solicitation..................................................................... 20 4.9 Lien Searches........................................................................ 21 4.10 Environmental Due Diligence.......................................................... 21 ARTICLE V - REPRESENTATIONS AND WARRANTIES OF AT&T PCS..................................................... 22 5.1 Organization, Power and Authority.................................................... 22 5.2 Consents; No Conflicts............................................................... 22 5.3 Litigation........................................................................... 23 5.4 FCC Compliance....................................................................... 23
i 5.5 Brokers.............................................................................. 23 5.6 Stockholders' Agreement.............................................................. 23 5.7 License.............................................................................. 23 5.8 Title to Purchased Assets............................................................ 24 5.9 Assigned Agreements.................................................................. 24 5.10 Environmental Matters................................................................ 24 5.11 Compliance With Laws................................................................. 25 5.12 Employees; Employee Benefits......................................................... 25 ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................. 25 6.1 Organization, Power and Authority.................................................... 25 6.2 Consents; No Conflicts............................................................... 26 6.3 Litigation........................................................................... 26 6.4 FCC Compliance....................................................................... 27 6.5 Brokers.............................................................................. 27 6.6 Stockholders' Agreement.............................................................. 27 6.7 No Additional Representations........................................................ 27 6.8 Compliance With Laws................................................................. 27 6.9 No Material Adverse Effect........................................................... 27 6.10 Capitalization....................................................................... 27 6.11 Employees............................................................................ 28 ARTICLE VII - CLOSING CONDITIONS........................................................................... 28 7.1 Conditions to Obligations of All Parties............................................. 28 7.2 Conditions to Obligations of the Company............................................. 29 7.3 Conditions to the Obligations of AT&T PCS............................................ 30 ARTICLE VIII - SURVIVAL AND INDEMNIFICATION................................................................ 30 8.1 Survival............................................................................. 30 8.2 Indemnification by AT&T PCS.......................................................... 31 8.3 Indemnification by the Company....................................................... 32 8.4 Procedures........................................................................... 33 ARTICLE IX - TERMINATION................................................................................... 34 9.1 Termination.......................................................................... 34 9.2 Effect of Termination................................................................ 34 ARTICLE X - MISCELLANEOUS PROVISIONS....................................................................... 35 10.1 Amendment and Modification........................................................... 35 10.2 Waiver of Compliance; Consents....................................................... 35 10.3 Notices.............................................................................. 35 10.4 Designated Purchasers................................................................ 36
ii 10.5 Parties in Interest; Assignment...................................................... 36 10.6 Applicable Law....................................................................... 36 10.7 Counterparts......................................................................... 36 10.8 Interpretation....................................................................... 36 10.9 Entire Agreement..................................................................... 36 10.10 Publicity............................................................................ 37 10.11 Specific Performance................................................................. 37 10.12 Remedies Cumulative.................................................................. 37 10.13 Severability......................................................................... 37 10.14 Beneficiaries of Agreement........................................................... 37 10.15 Waiver of Purchase Right Pursuant to Securities Purchase Agreement................... 37 10.16 Alternative Arrangement Term Sheet................................................... 37 10.17 Certain Payments..................................................................... 38
iii ASSET PURCHASE AGREEMENT ------------------------ ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of May 24, 1999, --------- between AT&T WIRELESS PCS INC., a Delaware corporation ("AT&T PCS"), and -------- TELECORP PCS, INC., a Delaware corporation (the "Company"). ------- W I T N E S S E T H: ------------------- WHEREAS, AT&T PCS has been granted the PCS License for the Puerto Rico - U.S. Virgin Islands (the "Puerto Rico MTA") described on Schedule I --------------- (the "PCS License"); ----------- WHEREAS, AT&T PCS and Puerto Rico Acquisition Corp., a Delaware corporation ("Acquisition Corp."), entered into a Term Sheet, dated September 1, ----------------- 1998 (the "Acquisition Corp. Term Sheet"), setting forth the terms upon which ---------------------------- Acquisition Corp. would acquire from AT&T PCS the Purchased Assets (as hereinafter defined), which include the PCS License; WHEREAS, Acquisition Corp. and the Company have entered into an agreement pursuant to which contemporaneously with the Closing (as hereinafter defined) the stockholders of Acquisition Corp. will engage in a stock-for-stock exchange, whereby such stockholders will transfer all of the stock of Acquisition Corp. to a subsidiary of the Company in exchange for shares of capital stock of the Company, thereby resulting in Acquisition Corp. becoming an indirect wholly-owned Subsidiary (as hereinafter defined) of the Company and facilitating the Company's obtaining the rights under the Acquisition Corp. Term Sheet; and WHEREAS, AT&T PCS wishes to sell to the Company, and the Company wishes to acquire from AT&T PCS, the Purchased Assets, all on the terms and subject to the conditions herein set forth. NOW, THEREFORE, in consideration of the promises and the mutual representations, warranties, covenants, conditions and agreements hereinafter set forth, the parties agree as follows: ARTICLE I DEFINITIONS ----------- For purposes of this Agreement: "Acquisition Corp." has the meaning set forth in the recitals. ----------------- "Acquisition Corp. Term Sheet" has the meaning set forth in the ---------------------------- recitals. "Affiliate" means, with respect to any Person, any other Person that --------- directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with that Person. For purposes of this definition, "control" (including the terms "controlling" and "controlled") means ------- ----------- ---------- the power to direct or cause the direction of the management and policies of a Person, directly or indirectly, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise. "Agreement" means this Asset Purchase Agreement, as the same may be --------- amended, modified or supplemented in accordance with the terms hereof. "Alternative Arrangement Term Sheet" means that certain Term Sheet ---------------------------------- attached hereto as Schedule II, with respect to one or more of the F Block licenses referred to therein. "Assigned Agreements" has the meaning set forth in Section 2.1(b). ------------------- "Assumed Liabilities" has the meaning set forth in Section 2.3(a). ------------------- "AT&T PCS" has the meaning set forth in the preamble. -------- "AT&T PCS Material Adverse Effect" means a material adverse effect on -------------------------------- the AT&T PCS Sold License. "AT&T PCS Retained License" has the meaning set forth in Section 2.1. ------------------------- "AT&T PCS Sold License" has the meaning set forth in Section 2.1. --------------------- "AT&T Party" means AT&T PCS and each Affiliate of AT&T PCS that is a ---------- party to any of the Related Agreements. "AT&T Puerto Rico" has the meaning set forth in Section 2.4. ---------------- "Benefit Arrangement" means any employment, severance or similar ------------------- contract or arrangement (whether or not written) or any plan, policy, fund, program or contract or arrangement (whether or not written) providing for compensation, bonus, profit-sharing, stock option, or other stock related rights or other forms of incentive or deferred compensation, vacation benefits, insurance coverage (including any self-insured arrangements), health or medical benefits, disability benefits, workers' compensation, supplemental unemployment benefits, severance benefits and post-employment or retirement benefits (including compensation, pension, health, medical or life insurance or other benefits) or any other benefit that (i) is not an Employee Plan, (ii) is entered into, maintained, administered or contributed to, as the case may be, by AT&T PCS, AT&T Puerto Rico or any of their Affiliates, and (iii) covers any employee or former employee of AT&T Puerto Rico or any employee or former employees of AT&T PCS providing services in the United States or Puerto Rico in connection with AT&T Puerto Rico. "Business Day" means any day other than a Saturday, Sunday or a legal ------------ holiday in New York, New York or any other day on which commercial banks in New York, New York are authorized by law or governmental decree to close. "BTA" means the unit of division (of which there are four hundred --- ninety-three (493)) for the United States of America, devised by Rand McNally based upon geography, population and other factors, which units form the basis for the auction by the FCC of a portion of the License for PCS Systems for Basic Trading Areas, as defined by the FCC. "Claim" has the meaning set forth in Section 8.4(a). ----- "Closing" has the meaning set forth in Section 3.1. ------- "Closing Date" has the meaning set forth in Section 3.1. ------------ "Code" means the Internal Revenue Code of 1986, as amended. ---- "Common Stock" has the meaning set forth in the Securities Purchase ------------ Agreement. "Company" has the meaning set forth in the preamble. ------- "Company Material Adverse Effect" means a material adverse effect on ------------------------------- the business, financial condition, assets, liabilities or results of operations, taken as a whole, of the Company. "Confidential Information" means any and all information regarding the ------------------------ business, finances, operations, products, services and customers of the Person specified and its Affiliates, in written or oral form or in any other medium. "Consents" means all consents and approvals of Governmental -------- Authorities or other third parties necessary to authorize, approve or permit the parties hereto to consummate the Transactions and for the Company to operate its business after the Closing Date as currently contemplated. "Designated Purchaser" has the meaning set forth in Section 10.4. -------------------- "Employees" has the meaning set forth in Section 2.4. --------- "Employee Payment" has the meaning set forth in Section 2.4. ---------------- 3 "Employee Plan" means any "employee benefit plan", as defined in ------------- Section 3(3) of ERISA, that (i) is subject to any provision of ERISA, (ii) is maintained, administered or contributed to by AT&T PCS, AT&T Puerto Rico or any of their Affiliates, and (iii) covers any employee or former employee of AT&T Puerto Rico or any current or former employee of AT&T PCS providing services in the United States or Puerto Rico in connection with AT&T Puerto Rico. "Environmental Law" means any of the following: the Resource ----------------- Conservation Recovery Act, the Comprehensive Environmental Responsibility Compensation and Liability Act, the Superfund Amendments and Reauthorization Act, the Toxic Substances Control Act, the Hazardous Materials Transportation Act, the Clean Air Act, the Clean Water Act, and other similar Federal and state and local laws, as amended, together with all regulations issued or promulgated thereunder, relating to pollution, the protection of the environment or the health and safety of workers or the general public. "Excluded Liabilities" has the meaning set forth in Section 2.3(a). -------------------- "FCC" means the Federal Communications Commission or similar --- regulatory authority established in replacement thereof. "FCC Law" means the Communications Act of 1934, as amended, including ------- as amended by the Telecommunications Act of 1996, and the rules, regulations and policies promulgated thereunder. "Final Order" has the meaning set forth in Section 7.1(b). ----------- "Governmental Authority" means a Federal, state or local court, ---------------------- legislature, governmental agency, commission or regulatory or administrative authority or instrumentality. "Hazardous Material" shall mean anything defined as a "hazardous ------------------ substance," "hazardous material," "hazardous waste," "pollutant," "contaminant," "toxic substance" or other similar item in any Environmental Law. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of ------- 1976, as amended, and the rules and regulations promulgated thereunder. "Indemnified Party" has the meaning set forth in Section 8.4(a). ----------------- "Indemnifying Party" has the meaning set forth in Section 8.4(a). ------------------ "Independent Accountant" means Arthur Andersen LLP. ---------------------- 4 "Law" means applicable common law and any statute, ordinance, code or --- other law, rule, permit, permit condition, regulation, order, decree, technical or other standard, requirement or procedure enacted, adopted, promulgated, applied or followed by any Governmental Authority. "License" means a license, permit, certificate of authority, waiver, ------- approval, certificate of public convenience and necessity, registration or other authorization, consent or clearance to construct or operate a facility, including any emissions, discharges or releases therefrom, or to transact an activity or business, to construct a tower or to use an asset or process, in each case issued or granted by a Governmental Authority. "License Transfer" has the meaning set forth in Section 3.2(a). ---------------- "Lien" means, with respect to any asset, any mortgage, lien, pledge, ---- charge, security interest, right of first refusal or right of others therein, or encumbrance of any nature whatsoever in respect of such asset. "Losses" has the meaning set forth in Section 8.2. ------ "Management Agreement" means the Management Agreement between the -------------------- Company and TeleCorp Management Corp., dated July 17, 1998, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Microwave Clearing Reimbursement Payment" has the meaning set forth ---------------------------------------- in Section 2.2(a). "MTA" means the unit of division (of which there are fifty-one (51)) --- for the United States of America, devised by Rand McNally based upon geography, population and other factors, which units form the basis for the auction by the FCC of a portion of the Licenses for PCS Systems for Major Trading Areas, as defined by the FCC. "Network Membership License Agreement" means the Network Membership ------------------------------------ License Agreement between the Company and AT&T Corp., dated as of July 17, 1998, as the same may be amended, modified or supplemented in accordance with the terms thereof. "New York Courts" has the meaning set forth in Section 10.6. --------------- "PCS" means Personal Communications Services, which is the term that --- describes the services that may be provided as a result of obtaining the AT&T PCS Sold License under FCC Law. "PCS License" has the meaning set forth in the recitals. ----------- 5 "Person" means an individual, corporation, partnership, limited ------ liability company, association, joint stock company, Governmental Authority, business trust, unincorporated organization, or other legal entity. "Potentially Rejected Sites" has the meaning set forth in Section -------------------------- 4.11. "Preferred Stock" has the meaning set forth in the Securities Purchase --------------- Agreement. "Puerto Rico MTA" has the meaning set forth in the recitals. --------------- "Purchase Price" has the meaning set forth in Section 2.2(a). -------------- "Purchased Assets" means the assets described in Section 2.1. ---------------- "Related Agreement Amendments" means Amendment No. 1 to Network ---------------------------- Membership License Agreement, Amendment No. 1 to Stockholders' Agreement and Amendment No. 1 to Intercarrier Roamer Service Agreement, attached hereto as Schedule III, IV and V, respectively, which amend certain of the Related Agreements to give effect to, among other things, the Purchased Assets acquired by the Company upon the Closing. "Related Agreements" means the Management Agreement, Network ------------------ Membership License Agreement, Resale Agreement, Roaming Agreement and Stockholders' Agreement. "Representatives" has the meaning set forth in Section 4.2(a). --------------- "Resale Agreement" means the form of Resale Agreement attached as ---------------- Exhibit C to the Securities Purchase Agreement, dated as of January 23, 1998, among AT&T PCS, the Company and the other parties named therein, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Restated Certificate" means the Amended and Restated Certificate of -------------------- Incorporation of the Company, dated as of July 17, 1998, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Roaming Agreement" means the Intercarrier Roamer Service Agreement ----------------- between the Company and AT&T Wireless Services, Inc., dated as of July 17, 1998, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Search Results" has the meaning set forth in Section 4.9. -------------- "Section 8.2 Indemnified Party" has the meaning set forth in Section ----------------------------- 8.2. "Section 8.3 Indemnified Party" has the meaning set forth in Section ----------------------------- 8.3. 6 "Section 1031 Escrow" has the meaning set forth in Section 2.2(b). -------------------- "Section 1031 Exchange" has the meaning set forth in Section 2.2(b). ---------------------- "Securities" means the shares of Series A Preferred Stock, Series D ---------- Preferred Stock and Series F Preferred Stock being issued hereunder, together with any shares of Preferred Stock or Common Stock issued upon conversion of or delivered in substitution or exchange of any of the foregoing. "Securities Act" means the Securities Act of 1933, as amended. -------------- "Securities Purchase Agreement" means the Puerto Rico Securities ----------------------------- Purchase Agreement, dated as of March 30, 1999, among the Company, Puerto Rico Acquisition Corp., the management stockholders named therein and the cash equity investors named therein, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Stockholders" has the meaning set forth in the Stockholders ------------ Agreement. "Stockholders' Agreement" means the Stockholders' Agreement of the ----------------------- Company, dated as of July 17, 1998, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Subsidiary" shall mean, with respect to any Person, a corporation or ---------- other entity of which 50% or more of the voting power or the voting equity securities or equity interest is owned, directly or indirectly, by such Person. "1031 Agent" has the meaning set forth in Section 3.2(b). ---------- "Third Party Proposal" has the meaning specified in Section 4.8. -------------------- "Termination Date" has the meaning specified in Section 6.12. ---------------- "Transactions" means the transactions contemplated by this Agreement. ------------ When a reference is made in this Agreement to an Article or a Section, such reference shall be to an Article or a Section of this Agreement unless otherwise indicated. Unless the context otherwise requires, the terms defined hereunder shall have the meanings therein specified for all purposes of this Agreement, applicable to both the singular and plural forms of any of the terms defined herein. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." The use of a gender herein 7 shall be deemed to include the neuter, masculine and feminine genders whenever necessary or appropriate. Whenever the word "herein" or "hereof" is used in this Agreement, it shall be deemed to refer to this Agreement and not to a particular Section of this Agreement unless expressly stated otherwise. ARTICLE II PURCHASE AND SALE OF ASSETS; PAYMENT OF CONSIDERATION; ----------------------------------------------------- CERTAIN RESTRICTIONS ON TRANSFER -------------------------------- II.1 Purchase and Sale of Purchased Assets. Upon the terms and subject ------------------------------------- to the conditions hereof and in reliance upon the representations, warranties, covenants and agreements herein contained: (a) AT&T PCS shall partition and disaggregate the PCS License to create, as more particularly described on Schedule 2.1, (i) a License (the "AT&T PCS Sold License") providing in the --------------------- aggregate the right to use 20 MHz of authorized frequencies to provide broadband PCS services throughout the entirety of the Puerto Rico MTA, and (ii) a License (the "AT&T PCS Retained License") providing in the aggregate the right to use 10 ------------------------- MHz of the authorized frequencies under the PCS License to provide broadband PCS services throughout the entirety of the Puerto Rico MTA, and (b) at the Closing, AT&T PCS shall sell, transfer, assign, convey and deliver to the Company (or one or more Designated Purchasers), free and clear of all Liens (other than those arising under any of the obligations being assumed by the Company pursuant to Section 2.3), and the Company shall purchase, acquire and accept from AT&T PCS, the AT&T PCS Sold License. In addition to the AT&T PCS Sold License, upon the terms and subject to the conditions hereof and in reliance upon the representations, warranties, covenants and agreements herein contained, at the Closing, AT&T PCS shall sell, transfer, assign, convey and deliver to the Company (or one or more Designated Purchasers), free and clear of all Liens (other than Liens securing the Assumed Liabilities), and the Company shall purchase, acquire and accept from AT&T PCS, the following assets of AT&T PCS as the same exist at the Closing Date (together with the AT&T PCS Sold License, the "Purchased Assets"): ---------------- (a) the towers, antennas, transmission lines, air conditioning units and shelters owned by AT&T PCS and utilized solely in connection with the development of a PCS system in the Puerto Rico MTA; (b) each of the leases described on Schedule 2.1(b) (collectively, the "Assigned Agreements") entered into by AT&T PCS in connection with the ------------------- development of a PCS system in the Puerto Rico MTA; (c) all prepaid property taxes, prepaid rent and other prepaid expenses and deposits of AT&T PCS relating to the development of a PCS system in the Puerto Rico MTA; and 8 (d) all rights and benefits obtained by AT&T PCS in respect of microwave clearing of the frequencies covered by the AT&T PCS Sold License. II.2 Payment of Consideration. (a) Upon the terms and subject to the ------------------------ conditions hereof and in reliance upon the representations, warranties, covenants and agreements herein contained, at the Closing, in consideration of the assignment of the Purchased Assets, the Company shall pay to AT&T PCS by wire transfer of immediately available funds the amount of Ninety-Five Million ($95, 000,000) Dollars (subject to adjustment pursuant to Section 2.3(b)) (the "Purchase Price"). In addition to the Purchase Price, on the Closing Date the -------------- Company shall pay to AT&T PCS in respect of all rights and benefits obtained by AT&T PCS in connection with microwave clearing of the frequencies covered by the AT&T PCS Sold License, an amount equal to Three Million Two Hundred Thousand ($3,200,000) Dollars (the "Microwave Clearing Reimbursement Payment"). ---------------------------------------- (b) Notwithstanding the provisions of Section 2.2(a), AT&T PCS, may elect, by notice to the Company, to structure the transfer of the Purchased Assets as a deferred like-kind exchange which qualifies under the provisions of Section 1031 of the Code (a "Section 1031 Exchange"). If AT&T PCS elects to --------------------- treat the transactions contemplated hereunder as a Section 1031 Exchange, (i) the Company agrees to cooperate with and assist AT&T PCS in any reasonable actions necessary or appropriate to structure the parties' transactions hereunder as a Section 1031 Exchange (including, without limitation, entering into an escrow agreement containing standard escrow instructions normally found in escrow agreements relating to exchanges of property under Section 1031); (ii) all amounts payable to AT&T PCS pursuant to Section 2.2(a) and Section 2.3(b), if any, shall be deposited by the Company with an escrow agent (the "1031 ---- Agent") on the Closing Date in an escrow account (the "Section 1031 Escrow") ------------------- pending completion or termination of the Section 1031 Exchange, (iii) AT&T PCS may, in its sole discretion, elect to assign its rights under this Agreement to the 1031 Agent on or before the Closing Date, it being understood that any such assignment of AT&T PCS' rights under this Agreement shall not relieve AT&T PCS from any of its obligations under this Agreement, including, any of its obligations under Section 8.2. During the time that any amounts are held in the Section 1031 Escrow, AT&T PCS shall have no right, title or interest in the amounts so held and shall be expressly prohibited from pledging, borrowing, exercising control over, receiving distributions from, or otherwise obtaining any benefit from the Section 1031 Escrow except as provided herein or in the escrow agreement with the Section 1031 Agent. II.3 Assumption of Obligations. ------------------------- (a) On and as of the Closing Date, the Company (or, if applicable, the Company and any Designated Purchasers, jointly and severally) shall assume and agree to discharge and perform, when due, those liabilities and obligations accruing, arising out of or relating to events or occurrences on or after the Closing Date under the Assigned Agreements (collectively, the "Assumed ------- Liabilities"). Except for the Assumed Liabilities, neither the Company nor any - ----------- of its Affiliates shall assume or in any way undertake to pay, perform, satisfy or discharge any liabilities and obligations 9 of AT&T PCS, and AT&T PCS agrees to pay and satisfy when due any liabilities and obligations relating to or arising out of the ownership of the Purchased Assets other than the Assumed Liabilities (collectively, the "Excluded Liabilities"). -------------------- (b) The Company and AT&T PCS hereby agree that AT&T PCS shall be responsible for all payments and other obligations due and owing pursuant to the Assigned Agreements for all periods prior to January 1, 1999 and the Company shall be responsible for all such payments and obligations due and owing on January 1, 1999 and all periods thereafter. Accordingly, all payments made by AT&T PCS, and all obligations arising, under the Assigned Agreements shall be prorated as of January 1, 1999, and the amounts thereof allocable or attributable to periods ending prior to January 1, 1999 shall be for the account of AT&T PCS and amounts thereof allocable or attributable to periods commencing on and after January 1, 1999 shall be for the account of the Company. A preliminary schedule of all adjustments pursuant to this Section 2.3(b) shall be prepared by AT&T PCS and delivered to the Company promptly after the Closing Date. The Company and its representatives will be provided with supporting documentation used in the preparation thereof by AT&T PCS. The Company shall have a period of five (5) Business Days following the date the Company receives such preliminary schedule to review such preliminary schedule and supporting documentation and provide AT&T PCS with written notice of any objections or corrections thereto that the Company may have. A final schedule of such adjustments (including the disputed adjustments) shall be prepared jointly by the Company and AT&T PCS on or prior to the twentieth (20th) Business Day following the date the Company receives such preliminary schedule. In the absence of mutual agreement regarding such final schedule within such twenty (20) Business Day period, the parties shall engage the Independent Accountant to determine the amount of the adjustment to be made pursuant to this Section 2.3(b). The determination of the Independent Accountant shall be final, binding and conclusive on the parties hereto, and the fees and expenses of the Independent Accountant shall be borne equally by the parties. A final adjustment to the Cash Purchase Price based upon such final schedule and payment of the net amount thereof to which AT&T PCS or the Company shall be entitled under this Section 2.3(b) shall be made on the twentieth (20th) Business Day following the date the Company receives such preliminary schedule, or upon the determination of the Independent Accountant, as the case may be. In connection with the final calculation of any such adjustment, each party shall give to the other party and its agents and representatives (including its independent auditors and attorneys) and the Independent Accountant, reasonable access, during normal business hours and upon reasonable notice, to the records, books, contracts and documents reasonably requested by such other party or the Independent Accountant for such purpose, furnish such other party and the Independent Accountant, with all such information as such other party or the Independent Accountant may reasonably request for such purpose and cause its appropriate officers, employees, consultants, agents, accountants and attorneys to cooperate with such attorneys and representatives and the Independent Accountant in connection therewith. II.4 Company Reimbursement of AT&T Puerto Rico's Cost of Certain ------------------------------------------------------------ Employees. The Company hereby acknowledges that AT&T Puerto Rico, Inc., an - --------- Affiliate of AT&T PCS ("AT&T ---- 10 Puerto Rico"), made certain of its then current employees ("Employees") - ----------- ----------- available to perform services for the Company on the condition that at the Closing the Company reimburse AT&T Puerto Rico in respect of the salary, benefits and other costs incurred by AT&T Puerto Rico in connection with the Employees. At the Closing, the Company shall reimburse and pay to AT&T Puerto Rico $510,174, for costs (including the cost of salaries and benefits provided to the Employees) incurred by AT&T Puerto Rico in connection with the Employees (the "Employee Payment"). ---------------- II.5 No Expansion of Third-Party Rights. The assumption by the Company ---------------------------------- (or, if applicable, the Company and any Designated Purchasers) of the Assumed Liabilities, and the transfer thereof by AT&T PCS to the Company, shall in no way expand the rights or remedies of any third party against the Company (and, if applicable, such Designated Purchasers) as compared to the rights and remedies that such third party would have had against AT&T PCS had the Company (and, if applicable, such Designated Purchasers) not assumed the Assumed Liabilities. Without limiting the generality of the preceding sentence, the assumption by the Company (and, if applicable, such Designated Purchasers) of the Assumed Liabilities shall not create any third-party beneficiary rights. II.6 Payment of Certain Expenses. At the Closing, the Company agrees, --------------------------- to pay, and save AT&T PCS harmless against, the reasonable fees and disbursements of AT&T PCS's counsel in connection with (i) the preparation, negotiation, execution and delivery of this Agreement, the instruments and documents executed pursuant hereto or in connection herewith, and (ii) the consummation of the Transactions, including, without limitation, all legal fees and related expenses incurred in connection with the preparation and filing of applications on Form 490 with the FCC necessary to effect the License. II.7 Allocation of Purchase Price. On or prior to the Closing Date, the ---------------------------- Company and AT&T PCS shall mutually agree upon the allocation of the Purchase Price among the Purchased Assets. The parties agree that such allocation shall be made based upon the relative fair market values of the Purchased Assets as of the Closing Date. In the absence of mutual agreement within such period, the parties shall submit promptly the determination of such allocation to the Independent Accountant who will be engaged by the parties to allocate the Purchase Price among the Purchased Assets based upon their relative fair market values as of the Closing Date. The determination of the Independent Accountant shall be final, binding and conclusive on the parties hereto, and the fees and expenses of the Independent Accountant shall be borne equally by the parties. The Company and AT&T PCS agree to file all tax returns and reports, including Internal Revenue Service Form 8594, in accordance with such allocation and not to take any position inconsistent therewith unless required to do so pursuant to a "determination" as such term is defined in Section 1313 of the Code. ARTICLE III CLOSING ------- 11 III.1 Time and Place of Closing. Upon the terms and subject to the ------------------------- conditions hereof, the closing of the Transactions (the "Closing") shall take ------- place at the offices of Friedman Kaplan & Seiler LLP, 875 Third Avenue, New York, New York, at 10:00 a.m. local time on the twelfth Business Day following the date of receipt of the last Consent required by subsections (a) through (c) of Section 7.1, or at such other place and/or time and/or on such other date as the parties may agree or as may be necessary to permit the fulfillment or waiver of the conditions set forth in Article VII (the "Closing Date"). The Closing ------------ shall be deemed to have occurred as of 12:01 a.m. on the Closing Date. III.2 Closing Actions and Deliveries. Upon the terms and subject to the ------------------------------ satisfaction or waiver by the appropriate party, if applicable, of the conditions set forth in Article VII, to effect the purchase and sale of the Purchased Assets and the payment of the Purchase Price in consideration therefor, the parties shall on the Closing Date take the following actions: (a) Assignment of License. AT&T PCS shall execute and deliver to the --------------------- Company one or more instruments of assignment, substantially in the form of Schedule 3.2(a), sufficient to assign to the Company (or any Designated Purchasers) the AT&T PCS Sold License (such assignment being herein referred to as the "License Transfer"). ---------------- (b) Assignment of Purchased Assets. AT&T PCS shall execute and ------------------------------ deliver to the Company one or more bills of sale or instruments of assignment, substantially in the form of Schedule 3.2(b), sufficient to assign to the Company (or any Designated Purchasers) the Purchased Assets. (c) Delivery of Cash Purchase Price. The Company shall deliver to ------------------------------- AT&T PCS or the 1031 Agent, as the case may be, the Cash Purchase Price and the Microwave Clearing Reimbursement Payment by wire transfer of immediately available funds to a bank account specified by AT&T PCS. (d) Delivery of Payments In Respect of Employee Payment. The Company --------------------------------------------------- shall deliver to AT&T Puerto Rico the Employee Payment in accordance with Section 2.4 by wire transfer of immediately available funds. (e) Assumption of Obligations. The Company shall execute and deliver ------------------------- to AT&T PCS an instrument of assumption, substantially in the form of Schedule 3.2(e), in respect of the obligations to be assumed by the Company pursuant to Section 2.3. (f) Other Deliveries. ---------------- (i) AT&T PCS shall execute and deliver or cause to be executed and delivered to the Company the following additional documents: 12 (A) original or copies of all Assigned Agreements to the extent not previously provided to the Company; (B) the opinion of counsel to AT&T PCS, reasonably satisfactory to the Company, dated the Closing Date, addressed to the Company (and its lenders, if applicable) and substantially in the form of Schedule 3.2(f)(i)(B); (C) the opinion of Young & Jatlow, dated the Closing Date, addressed to the Company (and its lenders, if applicable) and substantially in the form of Schedule 3.2(f)(i)(C); (D) a certificate of an officer of AT&T PCS, dated the Closing Date, certifying as to the fulfillment of the conditions set forth in Sections 7.2(a) and 7.2(b) and that all of the conditions precedent to the obligations of AT&T PCS hereunder have been waived by AT&T PCS or satisfied; (E) a certificate of an officer of AT&T PCS, dated the Closing Date, certifying as to (I) the resolutions adopted by AT&T PCS duly authorizing the execution, delivery and performance of this Agreement by AT&T PCS and the execution and delivery by AT&T PCS of all instruments and documents contemplated hereby and (II) the signatures of the Persons who have been authorized to execute and deliver this Agreement on behalf of AT&T PCS and any other agreement executed or to be executed in connection herewith; (F) a good standing certificate of AT&T PCS from the Secretary of State of Delaware, dated no earlier than 30 days prior to the Closing; (G) all Consents set forth on Schedule 5.2; (H) the Search Results, as set forth in Section 4.9, together with all releases and satisfaction pieces required to release the Liens on the Purchased Assets shown in the Search Results (other than Liens securing the Assumed Liabilities); (I) the Related Agreement Amendments executed by AT&T PCS or its Affiliate, as applicable; and (J) all such other documents and instruments as the Company or its counsel may reasonably request in order to consummate the Transactions. (ii) The Company shall execute and deliver or cause to be executed and delivered to AT&T PCS the following additional documents: 13 (A) the opinion of McDermott, Will & Emery, dated the Closing Date, addressed to AT&T PCS and substantially in the form of Schedule 3.2(f)(ii)(A); (B) a certificate of an officer of the Company, dated the Closing Date, certifying as to the fulfillment of the conditions set forth in Sections 7.3(a) and 7.3(b) and that all of the conditions precedent to the obligations of the Company hereunder have been waived by the Company or satisfied; (C) a certificate of an officer of the Company, dated the Closing Date, certifying as to (I) the resolutions adopted by the Company duly authorizing the execution, delivery and performance of this Agreement by the Company and the execution and delivery by the Company of all instruments and documents contemplated hereby and (II) the signatures of the Persons who have been authorized to execute and deliver this Agreement on behalf of the Company and any other agreement executed or to be executed in connection herewith; (D) good standing certificate of the Company from the Secretary of State of Delaware, dated no earlier than 30 days prior to the Closing; (E) the Related Agreement Amendments executed by the parties thereto (other than AT&T PCS); and (F) all such other documents and instruments as AT&T PCS or its counsel may reasonably request in order to consummate the Transactions. III.3 Closing Costs; Taxes and Fees. The Company shall pay or cause to ----------------------------- be paid at the Closing or, if due prior to the Closing or thereafter, promptly when due: (i) all transfer taxes (including sales taxes, gross receipts taxes, stamp taxes, and other taxes) payable solely as a result of a transfer of assets pursuant to this Agreement, but excluding any federal, state, local or other jurisdictional income taxes (or franchise, excise, gross receipts or other taxes that are generally imposed on a party on a periodic basis as a result of a party's status, presence, conduct of business, holding of assets, income, revenues, activities or other items); and (ii) one fee under the HSR Act relating to the Transactions hereunder. AT&T PCS shall pay or cause to be paid at the Closing, or if due prior to the closing or thereafter, promptly when due, any additional fee under the HSR Act that may be required to consummate the Transactions. III.4 Acquisition Corp. Stockholder Transaction. Simultaneously with ----------------------------------------- the Closing, in accordance with the terms and conditions of the Securities Purchase Agreement, each stockholder of Acquisition Corp. shall sell, transfer and assign its shares of Acquisition Corp. to TeleCorp Communications, Inc., a wholly-owned Subsidiary of the Company, in consideration for shares of Capital Stock (as such term is defined in the Securities Purchase Agreement) of the Company as set forth in the Securities Purchase Agreement. 14 ARTICLE IV COVENANTS --------- IV.1 Consummation of Transactions. Each party shall use all commercially ---------------------------- reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable and consistent with applicable law to carry out all of their respective obligations under this Agreement to consummate the Transactions, which efforts shall include the following: (a) The parties shall use all commercially reasonable efforts to cause the Closing to occur and the Transactions to be consummated in accordance with the terms hereof, and, without limiting the generality of the foregoing, to obtain, subject to Section 4.4(f), all necessary Consents including the approval of this Agreement and the Transactions by all Governmental Authorities and agencies and third parties, including the FCC, and to make all filings with and to give all notices to third parties which may be necessary or reasonably required in order for the parties to consummate the Transactions; it being understood and agreed that AT&T PCS shall not be obligated to obtain, or seek to obtain, the Consents of any third parties to the assignment of the Assigned Agreements set forth on Schedule 5.2. (b) Each party shall furnish to the other party all information concerning such party and its Affiliates reasonably required for inclusion in any application or filing to be made by AT&T PCS or the Company or any other party in connection with the Transactions or otherwise to comply with applicable FCC Law. (c) Upon the request of the other party, each party shall forthwith execute and deliver, or cause to be executed and delivered, such further instruments of assignment, transfer, conveyance, endorsement, direction or authorization and other documents as may reasonably be requested by such party in order to effectuate the purposes of this Agreement. (d) Each party covenants and agrees from and after the execution and delivery of this Agreement to and including the Closing Date as follows: (i) It is understood that the Closing is subject to prior approval of the FCC and may be subject to the prior approval of one or more state regulatory commissions. The parties shall use their best efforts to file with the FCC and any relevant state agency or agencies, as soon as practicable following the date hereof and in no event later than ten (10) Business Days from the date hereof, a joint application requesting the approval of the transfer of the Purchased Assets to the Company, or its designee. Each of the parties hereto shall diligently take or cooperate in the taking of all steps which are necessary or appropriate to expedite the prosecution and favorable consideration of such applications. The parties covenant and agree to undertake all actions reasonably requested by the FCC or other regulatory authority and to file such material as shall be 15 necessary or required to obtain any necessary waivers or other authority from the FCC or such state agency or agencies in connection with the foregoing applications. (ii) Within five (5) Business Days of the date of execution hereof, the parties shall file, or cause to be filed, with the Federal Trade Commission and the Antitrust Division of the Department of Justice any and all reports or notifications which are required to be filed under the HSR Act or other Law. IV.2 Confidentiality. --------------- (a) Each party shall, and shall cause each of its Affiliates, and its and their respective shareholders, members, managers, directors, officers, employees and agents (collectively, "Representatives") to, keep secret and --------------- retain in strictest confidence any and all Confidential Information relating to any other party that it receives in connection with the negotiation or performance of this Agreement, and shall not disclose such Confidential Information, and shall cause its Representatives not to disclose such Confidential Information, to anyone except the receiving party's Affiliates and Representatives and any other Person that agrees in writing to keep in confidence all Confidential Information in accordance with the terms of this Section 4.2. Until the Closing, each party agrees to use Confidential Information received from another party only to pursue such Transactions, but not for any other purpose. All tangible embodiments of Confidential Information furnished pursuant to this Agreement shall be returned promptly to the party to whom it belongs upon request by such party. (b) The obligations set forth in Section 4.2(a) shall be inoperative with respect to Confidential Information that (i) is or becomes generally available to the public other than as a result of disclosure by the receiving party or its Representatives, (ii) was available to the receiving party on a non-confidential basis prior to its disclosure to the receiving party, or (iii) becomes available to the receiving party on a non-confidential basis from a source other than the providing party or its agents, provided, that such source is not known by the receiving party to be bound by a confidentiality agreement with the providing party or the providing party's agents. In addition, from and after the Closing the obligations set forth in Section 4.2(a) shall not apply to the Company with respect to Confidential Information relating to the Purchased Assets. (c) To the fullest extent permitted by law, if a party or any of its Affiliates or Representatives breaches, or threatens to commit a breach of, this Section 4.2, the party whose Confidential Information shall be disclosed, or threatened to be disclosed, shall have the right and remedy to have this Section 4.2 specifically enforced by any court having jurisdiction, it being acknowledged and agreed that money damages will not provide an adequate remedy to such party. Nothing in this Section 4.2 shall be construed to limit the right of any party to collect money damages in the event of breach of this Section 4.2. 16 (d) Anything else in this Agreement notwithstanding, each party shall have the right to disclose any information, including Confidential Information of the other party or such other party's Affiliates: (i) to its Affiliates or Representatives; (ii) in any filing with any regulatory agency, court, or other authority or any disclosure to a trust of public debt of a party to the extent that the disclosing party determines in good faith that it is required by law, regulation or the terms of such debt to do so; provided, that any such disclosure shall be as limited in scope as possible and shall be made only after giving the other party as much notice as practicable of such required disclosure and an opportunity to contest such disclosure if possible; (iii) as required by its existing or potential lending sources (such lending sources to acknowledge that any such Confidential Information disclosed to them is subject to the provisions hereof); (iv) as required to enforce its rights under this Agreement; or (v) as required to obtain the Consents specified in Sections 7.1(a) through (c). IV.3 Covenants of AT&T PCS. From and after the execution and delivery of --------------------- this Agreement to and including the Closing Date, AT&T PCS shall: (a) Comply with all applicable Laws relating to the PCS License and the Purchased Assets or their use except to the extent that such failure to comply would not have an AT&T PCS Material Adverse Effect or a material adverse effect on the Transactions; (b) Use its reasonable best efforts to maintain the PCS License in full force and effect; (c) Without the Company's prior written consent, such consent not to be unreasonably withheld, delayed or conditioned, not (i) sell, transfer, assign or dispose of, or offer to, or enter into any agreement, arrangement or understanding to, sell, transfer, assign or dispose of any of the Purchased Assets or any interest therein, or negotiate therefor, or (ii) create, incur or suffer to exist any Lien of any nature whatsoever relating to any of the Purchased Assets or any interest therein (other than Liens securing the Assumed Liabilities or Liens which will be terminated and released prior to Closing); (d) Deliver to the Company copies of all environmental assessment reports, if any, it has in its possession covering any real property that is leased pursuant to an Assigned Agreement; (e) Give written notice to the Company promptly upon the commencement of, or upon obtaining knowledge of any facts that would give rise to a threat of, any claim, action or proceeding commenced against or relating to (other than proceedings affecting the PCS or wireless communications services industry generally) the Purchased Assets or their use, and which would reasonably be expected to have an AT&T PCS Material Adverse Effect or a material adverse effect on the Transactions; 17 (f) Promptly after obtaining knowledge of the occurrence of, or the impending or threatened occurrence of, any event which would cause or constitute a material breach of any of its warranties, representations, covenants or agreements contained in this Agreement, or which would reasonably be expected to have an AT&T PCS Material Adverse Effect or a material adverse effect on the Transactions, give notice in writing of such event or occurrence or impending or threatened event or occurrence (provided, that such disclosure shall not be deemed to cure any violation or breach of any such representation, warranty, covenant, agreement or provision), to the Company and use commercially reasonable efforts to prevent or to promptly remedy such breach; (g) Cause the Company to be advised promptly in writing of (i) any event, condition or state of facts known to it, which has had or would reasonably be expected to have an AT&T PCS Material Adverse Effect or a material adverse effect on the Transactions, or materially adversely affect the Purchased Assets (taken as a whole) or their use (other than proceedings affecting the PCS or wireless communications services industry generally), (ii) any claim, action or proceeding which seeks to enjoin the consummation of the Transactions, and (iii) any event, occurrence, transaction or other item that would have been required to have been disclosed on any Exhibit or Schedule delivered hereunder, had such event, occurrence, transaction or item existed on the date hereof; (h) Use commercially reasonable efforts to preserve its relationships with all parties to the Assigned Agreements and to perform in all material respects all of its payment obligations under the Assigned Agreements according to the terms and conditions thereof; and (i) Not fail to pay when due any liability or obligations that, if unpaid, would become a Lien upon any of the Purchased Assets. IV.4 Covenants of the Company. From and after the execution and ------------------------ delivery of this Agreement to and including the Closing Date, the Company shall: (a) Comply with all applicable Laws, including all such Laws relating to the PCS License and the Purchased Assets or their use except to the extent that such failure to comply would not have a Company Material Adverse Effect or a material adverse effect on the Transactions; (b) Comply with the terms of the Stockholders' Agreement; (c) Give written notice to AT&T PCS promptly upon the commencement of, or upon obtaining knowledge of any facts that would give rise to a threat of, any claim, action or proceeding commenced against or relating to (other than proceedings affecting the PCS or wireless communications services industry generally) it, its properties or assets, and which would reasonably be expected to have a Company Material Adverse Effect or a material adverse effect on the Transactions; 18 (d) Promptly after obtaining knowledge of the occurrence of, or the impending or threatened occurrence of, any event which would cause or constitute a material breach of any of its warranties, representations, covenants or agreements contained in this Agreement or which would reasonably be expected to have a Company Material Adverse Effect or a material adverse effect on the Transactions, give notice in writing of such event or occurrence or impending or threatened event or occurrence (provided, that such disclosure shall not be deemed to cure any violation or breach of any such representation, warranty, covenant, agreement or provision), to AT&T PCS and use commercially reasonable efforts to prevent or to promptly remedy such breach; (e) Cause AT&T PCS to be advised promptly in writing of (i) any event, condition or state of facts known to it, which has had or would reasonably be expected to have a Company Material Adverse Effect or a material adverse effect on the Transactions (other than proceedings affecting the PCS or wireless communications services industry generally) and (ii) any claim, action or proceeding which seeks to enjoin the consummation of the Transactions; and (f) Be responsible for obtaining, and shall use its commercially reasonable best efforts (which shall not include an obligation on the part of the Company to expend any material cash amount) to obtain, the Consents of any third parties to the assignment of the Assigned Agreements set forth on Schedule 5.2. IV.5 Employees. Without limiting any rights of AT&T PCS pursuant to --------- Section 2.4, all expenses covered under any medical, dental, vision, prescription drug, disability, travel accident, accidental death and dismemberment, and life insurance plans of the Company and which are incurred by Employees and their dependents after the Termination Date, including any expenses attributable to facts or conditions existing on or before the Termination Date, are the responsibility of the Company and shall be paid directly by the Company or its insurance carrier to such Employees and dependents. The Company shall be responsible for any medical, dental or life insurance coverage under the terms of the Company's plans (if any) due to any Continuing Employees and their dependents who retire after the Termination Date. The Company shall fulfill the obligations under continuation coverage rules of the Consolidation Omnibus Budget Reconciliation Act (COBRA) with respect to a "qualifying event" within the meaning of Section 4980B(f) of the Code or Section 603 of the Employee Retirement Income Security Act of 1974, as amended, occurring after the Termination Date with respect to any Employees and their dependents. All short-term, long-term and extended disability benefits under the terms of the Company's plans (if any) payable to Employees and their dependents who become disabled after the Termination Date shall be the responsibility of the Company and shall be paid directly by the Company or its insurance carrier to such Employees and their dependents. IV.6 Assignment of Assigned Agreements and AT&T PCS Sold License. To the ----------------------------------------------------------- extent that any of the Assigned Agreements being assigned pursuant hereto is not assignable without the consent of another Person and such Consent has not been obtained by the Company as contemplated by Section 4.4(f) on or prior to the Closing Date, this Agreement shall not constitute an assignment 19 or attempted assignment of such Assigned Agreement if such assignment or attempted assignment would constitute a breach thereof. AT&T PCS agrees, at the request of the Company, to assist the Company in obtaining (i) the Consent of such other Person to an assignment of an Assigned Agreement in all cases in which such Consent is required or (ii) novation agreements to Assigned Agreements not so assignable. If such Consent or novation is not obtained, AT&T PCS agrees to cooperate with the Company to provide for the Company, to the extent permitted under the terms of such Assigned Agreement, the benefits under such Assigned Agreement, including enforcement of any and all rights of AT&T PCS against the other Person that is a party thereto arising out of the cancellation by such other Person or otherwise. IV.7 FCC Construction Requirement. The Company and AT&T PCS hereby agree ---------------------------- that the Company shall assume and be obligated to satisfy the construction requirements set forth in 47 C.F.R. 24.203 with respect to the AT&T PCS Retained License and the AT&T PCS Sold License. IV.8 Non-Solicitation. ---------------- (a) From the date hereof until the Closing Date, AT&T PCS (and any of AT&T PCS's officers, directors, partners, employees, representatives or agents) will not solicit, initiate, encourage or participate in negotiations in any manner with respect to, or furnish or cause or permit to be furnished any information to any Person (other than to the Company or the Company's representatives) in connection with, any inquiry or offer for any purchase or sale of any of the Purchased Assets (collectively, a "Third-Party Proposal"). -------------------- During such period, AT&T PCS shall promptly inform the Company of the occurrence of a Third-Party Proposal and the terms thereof (including the identity of the prospective soliciting party). (b) If AT&T PCS (or any of AT&T PCS's officers, directors, partners, employees, representatives or agents) breaches or threatens to commit a breach of any of the provisions of this section, the Company shall have the right (in addition to any other rights and remedies available to the Company at law or in equity) to equitable relief (including injunctions) against such breach or threatened breach, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable harm to the Company and that money damages would not be an adequate remedy to the Company. AT&T PCS agrees that it will not seek, and hereby waives any requirement for, the securing or posting of a bond or proving actual damages in connection with the Company's seeking or obtaining such relief. IV.9 Lien Searches. AT&T PCS shall deliver to the Company chattel ------------- mortgage search reports issued by all applicable jurisdictions with respect to the Purchased Assets (the "Search Results") dated no earlier than seventy (70) -------------- days prior to the Closing Date. If the Search Results reveal that any Liens on the Purchased Assets exist, AT&T PCS shall use commercially reasonable efforts to have such Liens removed as of the Closing. 20 IV.10 Environmental Due Diligence. The Company shall have conducted an --------------------------- environmental due diligence investigation of the Purchased Assets, the results of which investigation shall be reasonably satisfactory to the Company, it being understood that such investigation shall include: (i) reviewing all Phase I environmental assessments prepared prior to the date hereof on behalf of AT&T PCS for the parcels of real property subject to leases included in the Assigned Agreements; and (ii) conducting and reviewing Phase I environmental assessments for parcels of real property subject to leases included in the Assigned Agreements for which such assessments have not been performed prior to the date hereof. In the event the Company is not reasonably satisfied with the results of its environmental due diligence investigation with respect to any such parcel, the Company shall provide AT&T PCS with written notice of such dissatisfaction no later than 30 days after the date hereof, which written notice shall set forth in reasonable detail the parcels as to which the Company is not reasonably satisfied and the reasons therefor (the "Potentially Rejected -------------------- Sites"). In the event there are five (5) or fewer Potentially Rejected Sites, - ----- the Closing shall take place in accordance with the terms hereof with no reduction in the Purchase Price, and (i) with respect to each Potentially Registered Site the Company shall have the right at the Company's sole cost and expense to deinstall and remove all Purchased Assets located at any Potentially Rejected Site and (ii) any Assigned Agreements relating to a Potentially Rejected Site as to which such right shall be exercised shall be excluded from the Purchased Assets and shall not be assigned to the Company pursuant to Section 2.1(b) and the liabilities arising thereunder shall not be Assumed Liabilities pursuant to Section 2.3(a). The Company shall exercise such right by written notice thereof given at least ten (10) Business Days prior to the Closing Date. In the event there are more than five (5) Potentially Rejected Sites, the Company may elect by written notice provided to AT&T PCS no later than 30 days after the date hereof to terminate this Agreement in accordance with Article IX; provided, however, that such 30 day period may be extended by -------- ------- the Company, by written notice given to AT&T PCS, for such period not to exceed 30 days, as shall be necessary to investigate any potential environmental liability relating to any Potentially Rejected Site. In the event that the Company elects to deinstall and remove any Purchased Assets located at any Potentially Rejected Site in accordance with this Section 4.10, and this Agreement shall thereafter be terminated without the Closing having occurred, the Company shall at its sole cost and expense reinstall and restore all Purchased Assets to their prior locations. Notwithstanding anything to the contrary contained herein, AT&T PCS shall not be deemed to be in breach of any representation or warranty contained in this Agreement, or have any indemnification obligation relating thereto, in respect of any matter of which the Company acquires knowledge during the course of its environmental due diligence investigation of the Purchased Assets. As used in this Section 4.10, the term "knowledge" refers to actual and not constructive knowledge of the Company. ARTICLE V REPRESENTATIONS AND WARRANTIES OF AT&T PCS ------------------------------------------ AT&T PCS represents and warrants to the Company as follows: 21 V.1 Organization, Power and Authority. --------------------------------- (a) It is a corporation duly organized, validly existing and in good standing under the laws of Delaware and has the requisite power and authority to own, lease and operate the Purchased Assets and to carry on its business as now being conducted. (b) It has the requisite power and authority to execute, deliver and perform this Agreement and each other instrument, document, certificate and agreement required or contemplated to be executed, delivered and performed by it hereunder and thereunder to which it is or will be a party. (c) It is duly qualified to do business in each jurisdiction where the Purchased Assets are used or the nature of its activities makes such qualification necessary other than any such jurisdiction in which the failure to be so qualified would not have an AT&T PCS Material Adverse Effect or a material adverse effect on the Transactions. (d) The execution and delivery of this Agreement by it and the consummation of the Transactions by it have been duly and validly authorized by its Board of Directors and no other proceedings on its part which have not been taken (including approval of its stockholders) are necessary to authorize this Agreement or to consummate the Transactions. (e) This Agreement has been duly executed and delivered by it and constitutes its valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally or may be subject to general principles of equity. V.2 Consents; No Conflicts. Neither the execution, delivery and ---------------------- performance by it of this Agreement nor the consummation of the Transactions will (a) conflict with, or result in a breach or violation of, any provision of its organizational documents; (b) subject to obtaining Consents set forth on Schedule 5.2, constitute, with or without the giving of notice or passage of time or both, a breach, violation or default, create a Lien on any of the Purchased Assets, or give rise to any right of termination, modification, cancellation, prepayment or acceleration, under (i) any Law or the PCS License or (ii) any note, bond, mortgage, indenture, lease, agreement or other instrument, in each case which is applicable to or binding upon it or any of its assets or (c) require any Consent, other than those set forth on Schedule 5.2, except where such breach, violation, default, Lien or right would not have an AT&T PCS Material Adverse Effect or a material adverse effect on the Transactions. To its knowledge, there is no fact relating to it or its Affiliates that would be reasonably expected to prevent it from consummating the Transactions or disqualify the Company from obtaining the Consents (including the Consent of the FCC) required in order to consummate the License Transfer as provided for in this Agreement. Notwithstanding anything to the contrary contained herein, AT&T PCS makes no representation or warranty as to any Consents that may be 22 required pursuant to the terms of the Assigned Agreements and has relied solely upon the advice of the Company in connection with the preparation of the portion of Schedule 5.2 relating to any such Consents required pursuant to the terms of the Assigned Agreements. V.3 Litigation. There is no action, proceeding or investigation pending ---------- or, to its knowledge, threatened against it or any of its properties or assets that would be reasonably expected to have a material adverse effect on its ability to consummate the Transactions or to fulfill its obligations under this Agreement, or which seeks to prevent or challenge the Transactions. V.4 FCC Compliance. To its knowledge, it is in compliance with all -------------- eligibility rules issued by the FCC to hold broadband PCS Licenses, including FCC rules on foreign ownership and the CMRS spectrum cap. V.5 Brokers. It has not employed any broker, finder or investment ------- banker and has not incurred and will not incur any liability for any brokerage fees, commissions or finder's fees in connection with the Transactions. V.6 Stockholders' Agreement. From and after July 17, 1998, through and ----------------------- including the date hereof, AT&T PCS has performed all covenants and agreements required to be performed by it pursuant to the Stockholders' Agreement. V.7 License. It is the authorized legal holder, free and clear of any ------- Liens, of the PCS License, evidence of which is attached to Schedule I. The PCS License is, and on the Closing Date the AT&T PCS Sold License will be, valid and in full force and effect. Except for proceedings affecting the PCS or wireless communications services industry generally, there is not pending, nor to the knowledge of AT&T PCS, threatened against AT&T PCS or against the PCS License, any application, action, petition, objection or other pleading, or any proceeding with the FCC which questions or contests the validity of, or seeks the revocation, nonrenewal or suspension of, the PCS License, which seeks the imposition of any modification or amendment with respect thereto, or which adversely affects the ability of the Company to employ the AT&T PCS Sold License in its business after the Closing Date. The PCS License is not subject to any conditions other than those appearing on the face of the PCS License itself and those imposed by FCC Law. V.8 Title to Purchased Assets. AT&T PCS has good and marketable title ------------------------- to, or a valid and enforceable leasehold interest in, all of the Purchased Assets (other than the AT&T PCS Sold License), free and clear of all Liens except for Liens for taxes, assessments, governmental charges or levies which are not due and delinquent or which hereafter can be paid without penalty, and except for warehousemen's, mechanics', carriers', landlords', repairmen's, or other similar Liens arising in the ordinary course of business (none of which, either singly or in the aggregate, would create an AT&T Material Adverse Effect or a material adverse effect on the Transactions). V.9 Assigned Agreements. ------------------- 23 (a) AT&T PCS has made all payments required to be paid by it under all Assigned Agreements through and including the date hereof. AT&T PCS has complied in all material respects with all of its obligations under the Assigned Agreements in connection with the construction by AT&T PCS of the cell sites identified on Schedule 2.1(b). (b) Each of the Assigned Agreements has been lawfully entered into and is or will be valid and in full force and effect and is or will be enforceable in accordance with its terms for the period stated in such Assigned Agreement. As of the date hereof, AT&T PCS has not received written notice from any party to any Assigned Agreement threatening cancellation of, or asserting the existence of, any outstanding disputes or material defaults under, any Assigned Agreement. AT&T PCS will not modify, amend or waive any provisions of any Assigned Agreement in a manner that would materially adversely affect the Purchased Assets or terminate any Assigned Agreement prior to the Closing other than in the ordinary course of business and with the prior written consent of the Company, which consent will not be unreasonably withheld. V.10 Environmental Matters. There has been no manufacture, refining, --------------------- storage, disposal or treatment of Hazardous Substances by AT&T PCS, or to AT&T PCS' knowledge, by any of its predecessors, at or from any real property that is leased pursuant to an Assigned Agreement, in violation of any Environmental Laws or which would require remedial action under any Environmental Law. During its occupancy of such real property, AT&T PCS has not received with respect to any such real property any (i) notice of any such violation with respect to any Hazardous Substance at or on any of such real property, (ii) notice from any governmental agency that it, or any present or former owner, lessee or operator of such real property is a potentially responsible party for cleanup liability with respect to the emission, discharge or release of any Hazardous Substance or for any other matter arising under the Environmental Laws or in any litigation, administrative proceeding, finding, order, citation, notice, investigation or complaint under any Environmental Law, or (iii) notice of violation, citation, complaint, request for information, order, directive, compliance schedule, notice of claim, proceeding or litigation from any party concerning the compliance of AT&T PCS with any Environmental Law. As used in this Section 5.10, the term "knowledge" refers to actual and not constructive knowledge and is not intended to impose upon AT&T PCS any duty to investigate the condition of any real property. V.11 Compliance With Laws. With respect to the Purchased Assets, AT&T -------------------- PCS is in, and has operated in, compliance with all applicable Laws, including all FCC Laws, Environmental Laws and Laws relating to taxes, except for noncompliance that, individually or in the aggregate, has not and would not reasonably be expected to have an AT&T PCS Material Adverse Effect. AT&T PCS has not received notice to the effect that, or otherwise been advised that, it is not in compliance with any Laws with respect to the System or the Purchased Assets, and AT&T PCS has not taken any action or failed to take any action that is a violation of any such Laws with respect to the System or the Purchased Assets, except for actions or failures to take action that, individually or in the 24 aggregate, have not and would not reasonably be expected to have an AT&T PCS Material Adverse Effect or a material adverse effect on the Transactions. V.12 Employees; Employee Benefits ---------------------------- (a) AT&T Puerto Rico and each of its Affiliates is in material compliance with all United States and Puerto Rico laws and regulations with respect to employment, employment practices, or the terms and conditions of employment, wages and hours for the Employees through the Termination Date. (b) Each Employee Plan and Benefit Arrangement has been maintained in all material respects in compliance with its terms and with the requirements prescribed by and all applicable statutes, orders, rules and regulations under United States and Puerto Rico law, including but not limited to ERISA and the Code, through the Termination Date. ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE COMPANY --------------------------------------------- The Company represents and warrants to AT&T PCS as follows: VI.1 Organization, Power and Authority. --------------------------------- (a) Each of the Company and each of its Subsidiaries that is a corporation is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted and as proposed to be conducted. Each of its Subsidiaries that is a limited liability company or a limited partnership is a limited liability company or a limited partnership, as the case may be, duly formed, validly existing and in good standing under the laws of the jurisdiction of formation and has the requisite limited liability company or limited partnership, as the case may be, power and authority to own, lease and conduct its properties and to carry on the business as new being conducted and as proposed to be conducted. (b) It has the requisite power and authority to execute, deliver and perform this Agreement, and each other instrument, document, certificate and agreement required or contemplated to be executed, delivered and performed by it hereunder and thereunder to which it is or will be a party. (c) Each of the Company and each of its Subsidiaries is duly qualified to do business in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary other than any such jurisdiction in which 25 the failure to be so qualified would not have a Company Material Adverse Effect or a material adverse effect on the Transactions. (d) The execution and delivery of this Agreement by the Company and the consummation of the Transactions by it have been duly and validly authorized by its Board of Directors and no other proceedings on its part which have not been taken (including approval of its shareholders) are necessary to authorize this Agreement or to consummate the Transactions. (e) This Agreement has been duly executed and delivered by the Company and constitutes its valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar Laws affecting or relating to enforcement of creditors' rights generally or may be subject to general principles of equity. (f) As of the Closing, after giving effect to the Transactions, the Company is not in breach of any obligation under this Agreement or the Stockholders' Agreement. VI.2 Consents; No Conflicts. Neither the execution, delivery and ---------------------- performance by the Company of this Agreement nor the consummation of the Transactions will (a) conflict with, or result in a breach or violation of, any provision of its organizational documents; (b) subject to obtaining the Consents set forth on Schedule 6.2, constitute, with or without the giving of notice or passage of time or both, a breach, violation or default, create a Lien on its assets, or give rise to any right of termination, modification, cancellation, prepayment or acceleration, under (i) any Law or License, or (ii) any note, bond, mortgage, indenture, lease, agreement or other instrument, in each case which is applicable to or binding upon it or any of its assets; or (c) require any Consent other than those set forth on Schedule 6.2, or the approval of the Company's Board of Directors or its stockholders (which approvals have been obtained), except where such breach, violation, default, Lien or right would not have a Company Material Adverse Effect or a material adverse effect on the Transactions. To its knowledge, there is no fact relating to it or its Affiliates that would be reasonably expected to prevent it from consummating the Transactions or performing its obligations under this Agreement or disqualify the Company from obtaining the Consents (including the Consent of the FCC) required in order to consummate the License Transfer as provided for in this Agreement. VI.3 Litigation. There is no action, proceeding or investigation ---------- pending or, to the Company's knowledge, threatened against it or any of its properties or assets that would have a material adverse effect on its ability to consummate the Transactions or to fulfill its obligations under this Agreement, or to operate its business after the Closing Date, or which seeks to prevent or challenge the Transactions. There is no judgment, decree, injunction, rule or order outstanding against the Company which would limit in any material respect its ability to operate its business in the manner currently contemplated. 26 VI.4 FCC Compliance. It complies, and after giving effect to the -------------- consummation of the Transactions will comply, with all eligibility rules issued by the FCC to hold broadband PCS Licenses, including FCC rules on foreign ownership and the CMRS spectrum cap. VI.5 Brokers. The Company has not employed any broker, finder or ------- investment banker and has not incurred and will not incur any liability for any brokerage fees, commissions or finder's fees in connection with the Transactions, except for Chase Securities Inc., whose fee of Two Million ($2,000,000) Dollars will be paid by the Company at the Closing. VI.6 Stockholders' Agreement. From and after July 17, 1998, through ----------------------- and including the date hereof, the Stockholders' Agreement has been in full force and effect and the Company has performed all covenants and agreements required to be performed by it pursuant to the Stockholders' Agreement. VI.7 No Additional Representations. The Company is not relying on and ----------------------------- acknowledges that no representation or warranty is being made by AT&T PCS or any of its officers, employees, Affiliates, agents or representatives, except for representations and warranties expressly set forth in this Agreement and, in particular, it is not relying on, and acknowledges that no representation or warranty is being made in respect of, (i) any projections, estimates or budgets delivered to or made available to them of future revenues, expenses or expenditures, or future results of operations of the Purchased Assets and (ii) any other information or documents delivered or made available to it or its representatives, except for representations and warranties expressly set forth in this Agreement (including the Schedules attached hereto). VI.8 Compliance With Laws. The Company is in, and has operated in, -------------------- compliance with all applicable Laws, except for noncompliance that, individually or in the aggregate, has not and would not reasonably be expected to have a Company Material Adverse Effect. The Company has not received notice to the effect that, or otherwise been advised that, it is not in compliance with any Laws, and the Company has not taken any action or failed to take any action that is a violation of any such Laws, except for actions or failures to take action that, individually or in the aggregate, have not and would not reasonably be expected to have a Company Material Adverse Effect or a material adverse effect on the Transactions. VI.9 No Material Adverse Effect. Since the formation of the Company, -------------------------- there has been no Company Material Adverse Effect. VI.10 Capitalization. (a) As of the Closing Date, after giving effect -------------- to the Transactions there will be issued and outstanding the shares of Preferred Stock and Common Stock set forth on Schedule 6.10(a). The record and beneficial owners of such outstanding shares of Common Stock and Preferred Stock, as of the Closing Date, after giving effect to the Transactions, are set forth on Schedule 6.10(a). 27 (b) Except as set forth on Schedule 6.10(b), on the Closing Date, after giving effect to the Transactions, there will not be any existing options, warrants, calls, subscriptions, or other rights, or other agreements or commitments, obligating the Company to issue, transfer or sell any shares of capital stock of the Company, except the Preferred Stock and the Common Stock (other than the Voting Preference Stock). VI.11 Employees. --------- (a) On December 31, 1998 (the "Termination Date"), the Company hired ---------------- each of the Employees set forth in Schedule 6.11 on terms consistent with the Company's standard policies. The Company has given each Employee comparable employment to that such Employee had with AT&T Puerto Rico, whereby the Employee's duties and responsibilities have not been significantly reduced, the Employee's base pay has not been reduced, and the Employee has not been transferred to a new facility located more than 50 miles from such Employee's former AT&T Puerto Rico work site. (b) Effective January 1, 1999, the Company caused all Employees and their dependents to be eligible to participate in a group health plan and waived any minimum eligibility period of employment for coverage and any preexisting condition requirement and provided credit towards the payment of any deductible for any Employees and their dependents with respect to such plan. ARTICLE VII CLOSING CONDITIONS ------------------ VII.1 Conditions to Obligations of All Parties. The obligation of each ---------------------------------------- of the parties to consummate the Transactions contemplated to occur at the Closing shall be conditioned on the following, unless waived by each of the parties at or prior to Closing: (a) Any applicable waiting period under the HSR Act shall have expired or been terminated. (b) The Consent of the FCC to the License Transfer shall have been obtained pursuant to a Final Order, free of any conditions materially adverse to the Company or AT&T PCS, other than those applicable to the PCS or wireless communications services industry generally. For the purposes of this paragraph, "Final Order" means an action or decision that has been granted by the FCC as to ----------- which (i) no request for a stay or similar request is pending, no stay is in effect, the action or decision has not been vacated, reversed, set aside, annulled or suspended and any deadline for filing such request that may be designated by statute or regulation has passed, (ii) no petition for rehearing or reconsideration or application for review is pending and the time for the filing of any such petition or application has passed, (iii) the FCC does not have the action or decision under 28 reconsideration on its own motion and the time within which it may effect such reconsideration has passed and (iv) no appeal is pending, including other administrative or judicial review, or in effect and any deadline for filing any such appeal that may be designated by statute or rule has passed. (c) All Consents by any Governmental Authority (other than the Consents referred to in paragraphs (a) and (b) above) required to permit the consummation of the Transactions shall have been obtained, except where the failure to obtain such Consents would not be reasonably expected to have an AT&T PCS Material Adverse Effect or a Company Material Adverse Effect or to materially adversely affect the Transactions or the ability of AT&T PCS or the Company to perform its obligations under this Agreement. (d) The Consent of the lenders under the Company's credit facility dated as of July 17, 1998 shall have been obtained. (e) No preliminary or permanent injunction or other order, decree or ruling issued by a Governmental Authority, nor any statute, rule, regulation or executive order promulgated or enacted by any Governmental Authority, shall be in effect that would (i) impose material limitations on the ability of any party to consummate the Transactions or prohibit such consummation, or (ii) impair in any material respect the operations of the Company. (f) The closing under the Securities Purchase Agreement shall occur prior to, or contemporaneously with, the Closing. VII.2 Conditions to Obligations of the Company. The obligation of the ---------------------------------------- Company to consummate the Transactions contemplated to occur at the Closing shall be further conditioned upon the satisfaction or fulfillment, at or prior to the Closing, of the following conditions unless waived by the Company, at or prior to Closing: (a) The representations and warranties of AT&T PCS contained herein shall be true and correct in all material respects, in each case when made and at and as of the Closing (except (i) for representations made as of a specified date, which shall be true and correct as of such date, and (ii) for representations and warranties that are qualified as to materiality which shall be true and correct in all respects) with the same force and effect as though made at and as of such time, except (x) for inaccuracies in respect of the representations and warranties set forth in Section 5.3 and the third sentence of Section 5.7 (disregarding any qualifications as to materiality contained therein) that in the aggregate would not be reasonably expected to have an AT&T PCS Material Adverse Effect or would not adversely affect AT&T PCS's ability to perform its obligations under this Agreement and (y) for inaccuracies in respect of the representations and warranties set forth in Sections 5.3, 5.10, 5.11, 5.12, 5.13 and 5.14 to the extent that such inaccuracies were caused by acts or omissions by the Company or its agents. 29 (b) AT&T PCS shall have performed in all material respects all agreements contained herein required to be performed by it at or before the Closing. (c) AT&T PCS shall have delivered to the Company the documents required pursuant to Section 3.2(f)(i). (d) Releases, duly executed by the appropriate parties (other than with respect to Assumed Liabilities), releasing each of the Liens upon the Purchased Assets, each in form and substance reasonably satisfactory to the Company, shall have been obtained. VII.3 Conditions to the Obligations of AT&T PCS. The obligation of AT&T ----------------------------------------- PCS to consummate the Transactions contemplated to occur at the Closing shall be further conditioned upon the satisfaction or fulfillment, at or prior to the Closing, of the following conditions, unless waived by AT&T PCS, at or prior to Closing: (a) The representations and warranties of the Company contained herein shall be true and correct in all material respects, in each case when made and at and as of the Closing (except for representations and warranties made as of a specified date, which shall be true and correct as of such date and except for representations and warranties that are qualified as to materiality which shall be true and correct in all respects) with the same force and effect as though made at and as of such time, except for inaccuracies in respect of the representations and warranties set forth in Section 6.3 (disregarding any qualifications as to materiality contained therein) that in the aggregate would not be reasonably expected to have a Company Material Adverse Effect or would not adversely affect the Company's ability to perform its obligations under this Agreement. (b) The Company shall have performed in all material respects all agreements contained herein required to be performed by it at or before the Closing. (c) Concurrently with the consummation of the Transactions, the transactions contemplated by the Alternative Arrangement Term Sheet shall have been consummated on terms and conditions reasonably satisfactory to AT&T PCS. (d) The Company shall have delivered to AT&T PCS the documents required pursuant to Section 3.2(f)(ii). ARTICLE VIII SURVIVAL AND INDEMNIFICATION ---------------------------- VIII.1 Survival. Except for the representations and warranties -------- contained in Sections 5.1(a), (b), (d) and (e), and 6.1(a), (b), (d) and (e) (which shall survive the Closing, without regard to any investigation made by any of the parties hereto, until the expiration of the applicable statute of 30 limitations relating thereto), the representations and warranties made in this Agreement shall survive the Closing without regard to any investigation made by any of the parties hereto until the second anniversary thereof and shall thereupon expire together with any right to indemnification in respect thereof (except to the extent a written notice asserting a claim for breach of any such representation or warranty and describing such claim in reasonable detail shall have been given prior to the expiration of the applicable survival period to the party which made such representation or warranty). The covenants and agreements contained herein to be performed or complied with prior to the Closing shall expire at the Closing. The covenants and agreements contained in this Agreement to be performed or complied with after the Closing shall survive the Closing; provided, that the right to indemnification pursuant to this Article VIII in respect of a breach of a representation or warranty shall expire upon the application of the applicable survival period (except to the extent written notice asserting a claim thereunder and describing such claim in reasonable detail shall have been given prior to such expiration to the party from whom such indemnification is sought). After the Closing, the sole and exclusive remedy of the parties for any breach or inaccuracy of any representation or warranty contained in this Agreement, or any other claim (whether or not alleging a breach of this Agreement) that arises out of the facts and circumstances constituting such breach or inaccuracy, shall be the indemnity provided in this Article VIII. VIII.2 Indemnification by AT&T PCS. AT&T PCS shall indemnify and hold --------------------------- harmless the Company and its Affiliates, and the directors, shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them (each, a "Section 8.2 Indemnified Party"), against all ----------------------------- liabilities and expenses incurred by any Section 8.2 Indemnified Party (including amounts paid in satisfaction of judgments, in compromise, as fines and penalties, and as counsel fees) (collectively, "Losses") and Losses incurred ------ in connection with the investigation, defense, or disposition of any action, suit or other proceeding in which any Section 8.2 Indemnified Party may be involved or with which any Section 8.2 Indemnified Party may be threatened (whether arising out of or relating to matters asserted by third parties against a Section 8.2 Indemnified Party or incurred or sustained by such party in the absence of a third-party claim), that arise out of or result from (a) any representation or warranty of AT&T PCS contained in this Agreement being untrue, (b) (i) any act or omission of AT&T Puerto Rico relating to any Employee's employment by AT&T Puerto Rico on or prior to the Termination Date, and (ii) any salary, benefits or other obligations due and owing to the Employees and relating to periods on or prior to the Termination Date, or (c) any default by AT&T PCS or any of its Affiliates in the performance of their respective obligations under this Agreement (including its obligation to discharge the Excluded Liabilities), except for untruths in respect of the representations and warranties set forth in Sections 5.3, 5.8, 5.9, 5.10 , 5.11 and 5.12 to the extent that such untruths were caused by acts or omissions by the Company or its agents or to the extent (but only to the extent) any such Losses arise out of or result from the gross negligence or willful misconduct of such Section 8.2 Indemnified Party or its Affiliates; provided, that the aggregate liability of AT&T PCS to indemnify Section 8.2 Indemnified Parties against Losses arising out of or resulting from (x) any such representation or warranty of AT&T PCS contained in this Agreement and included in this indemnification by AT&T PCS being untrue, or (y) default by AT&T PCS or any of its Affiliates in the performance of their respective obligations 31 under this Agreement shall (except, in the case of clause (y), to the extent (but only to the extent) any such Losses arise out of or result from the gross negligence or willful misconduct of AT&T PCS) be limited to $30,000,000; provided further, that such $30,000,000 limitation shall not apply to the obligation of AT&T PCS to indemnify the Section 8.2 Indemnified Parties against Losses arising out of the Excluded Liabilities. AT&T PCS shall have the option of satisfying any such Losses incurred by the Company (in its capacity as a Section 8.2 Indemnified Party) by tendering to the Company shares of Series A Preferred Stock (such shares to be valued for such purposes at the aggregate liquidation preference thereof). VIII.3 Indemnification by the Company. The Company shall indemnify and ------------------------------ hold harmless AT&T PCS and its Affiliates, and the directors, shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them (each, a "Section 8.3 Indemnified Party"), against all Losses ----------------------------- incurred by any Section 8.3 Indemnified Party (including, without limitation, amounts paid in satisfaction of judgments, in compromise, as fines and penalties, and as counsel fees) and Losses incurred in connection with the investigation, defense, or disposition of any action, suit or other proceeding in which any Section 8.3 Indemnified Party may be involved or with which any Section 8.3 Indemnified Party may be threatened (whether arising out of or relating to matters asserted by third parties against a Section 8.3 Indemnified Party or incurred or sustained by such party in the absence of a third party claim) that arise out of or result from (a) any representation or warranty of the Company contained in this Agreement being untrue, (b) (i) any act or omission of the Company relating to any Employee's employment by the Company after the Termination Date, (ii) any salary, benefits or other obligations due and owing to the Employees and relating to periods after the Termination Date, (iii) the performance of services by any Employee for any period after January 23, 1998 (other than services performed by any Employee at the direction of AT&T PCS (disregarding for such purpose the fact that the Employees were, at AT&T PCS's direction, performing services on behalf of the Company from and after January 23, 1998 through the Termination Date)), and (iv) and the Employee Payment set forth in Section 2.4, (c) any default by the Company or any of its Affiliates in the performance of their respective obligations under this Agreement (including its obligation to discharge the Assumed Liabilities), or (d) any act or omission by the Company prior to or subsequent to the Closing Date in connection with the development, construction, management, improvement or operation by the Company of the PCS system in the Puerto Rico MTA, including, without limitation, any such Losses incurred or sustained by a Section 8.3 Indemnified Party that arise out of or relate to an act or omission by the Company prior to or subsequent to the Closing Date in connection with any Assigned Agreement or any other Purchased Asset, except to the extent (but only to the extent) any such Losses arise out of or result from the gross negligence or willful misconduct of such Section 8.3 Indemnified Party or its Affiliates; provided, that the aggregate liability of the Company to indemnify Section 8.3 Indemnified Parties against Losses arising out of or resulting from (x) any representation or warranty of the Company contained in this Agreement being untrue, or (y) any default by the Company or any of its Affiliates in the performance of their respective obligations under this Agreement shall (except, in the case of clause (y), to the extent (but only to the extent) any such Losses arise out of or result from the gross negligence or willful misconduct of the Company) be limited to $30,000,000; provided further, that 32 such $30,000,000 limitation shall not apply to (A) any claim pursuant to Section 8.3(b), or (B) the obligation of the Company to pay the Purchase Price, the Microwave Clearing Reimbursement Payment or the Employee Payment or to indemnify the Section 8.3 Indemnified Parties against Losses arising out of the Assumed Liabilities. VIII.4 Procedures. ---------- (a) The terms of this Section 8.4 shall apply to any claim (a "Claim") ----- for indemnification under the terms of Sections 8.2 or 8.3. The Section 8.2 Indemnified Party or Section 8.3 Indemnified Party (each, an "Indemnified ----------- Party"), as the case may be, shall give prompt written notice of such Claim to - ----- the indemnifying party (the "Indemnifying Party") under the applicable Section, ------------------ which party may assume the defense thereof, provided, that any delay or failure to so notify the Indemnifying Party shall relieve the Indemnifying Party of its obligations hereunder only to the extent, if at all, that it is materially prejudiced by reason of such delay or failure. The Indemnified Party shall have the right to approve any counsel selected by the Indemnifying Party and to approve the terms of any proposed settlement, such approvals not to be unreasonably delayed or withheld (unless, in the case of approval of a proposed settlement, such settlement provides only, as to the Indemnified Party, the payment of money damages actually paid by the Indemnifying Party and a complete release of the Indemnified Party in respect of the claim in question). Notwithstanding any of the foregoing to the contrary, the provisions of this Article VIII shall not be construed so as to provide for the indemnification of any Indemnified Party for any liability to the extent (but only to the extent) that such indemnification would be in violation of applicable law or that such liability may not be waived, modified or limited under applicable law, but shall be construed so as to effectuate the provisions of this Article VIII to the fullest extent permitted by law. (b) In the event that the Indemnifying Party undertakes the defense of any Claim, the Indemnifying Party will keep the Indemnified Party advised as to all material developments in connection with such Claim, including promptly furnishing the Indemnified Party with copies of all material documents filed or served in connection therewith. (c) In the event that the Indemnifying Party fails to assume the defense of any Claim within ten (10) business days after receiving written notice thereof, the Indemnified Party shall have the right, subject to the Indemnifying Party's right to assume the defense pursuant to the provisions of this Article VIII, to undertake the defense, compromise or settlement of such Claim for the account of the Indemnifying Party. Unless and until the Indemnified Party assumes the defense of any Claim, the Indemnifying Party shall advance to the Indemnified Party any of its reasonable attorneys' fees and other costs and expenses incurred in connection with the defense of any such action or proceeding. Each Indemnified Party shall agree in writing prior to any such advancement that, in the event he or it receives any such advance, such Indemnified Party shall reimburse the Indemnifying Party for such fees, costs and expenses to the extent that it shall be determined that he or it was not entitled to indemnification under this Article VIII. 33 (d) In no event shall an Indemnifying Party be required to pay in connection with any Claim for more than one firm of counsel (and local counsel) for each of the following groups of Indemnified Parties: (i) AT&T PCS, its Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them; and (ii) the Company and its Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them. ARTICLE IX TERMINATION ----------- IX.1 Termination. In addition to any other rights of termination set ----------- forth herein, this Agreement may be terminated, and the Transactions abandoned, without further obligation of any party, except as set forth herein, at any time prior to the Closing Date: (a) by mutual written consent of the parties; (b) by any party by written notice to the other party, if the Closing shall not have occurred on or before the date that is ten (10) months after the date hereof, provided, that the party electing to exercise such right is not otherwise in breach of its obligations under this Agreement; (c) by any party by written notice to the other party, if the consummation of the Transactions shall be prohibited by a final, non-appealable order, decree or injunction of a court of competent jurisdiction; or (d) by the Company in accordance with Section 4.10. IX.2 Effect of Termination --------------------- (a) In the event of a termination of this Agreement, no party hereto shall have any liability or further obligation to any other party to this Agreement, except as set forth in paragraph (b) below, and except that nothing herein will relieve any party from liability for any breach by such party of this Agreement. (b) In the event of a termination of this Agreement pursuant to Section 9.1, all provisions of this Agreement shall terminate, except Section 4.2 and Articles VIII and X, except that nothing herein will relieve any party from liability for any breach of this Agreement. (c) Whether or not the Closing occurs, all costs and expenses incurred in connection with this Agreement and the Transactions shall be paid by the party incurring such expenses, except as otherwise provided in Section 2.6. 34 ARTICLE X MISCELLANEOUS PROVISIONS ------------------------ X.1 Amendment and Modification. This Agreement may be amended, modified -------------------------- or supplemented only by written agreement of each of the parties. X.2 Waiver of Compliance; Consents. Any failure of any of the parties ------------------------------ to comply with any obligation, covenant, agreement or condition herein may be waived by the party or parties entitled to the benefits thereof only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be given in writing in a manner consistent with the requirement for a waiver of compliance as set forth in this Section 10.2. X.3 Notices. All notices or other communications hereunder shall be in ------- writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person against receipt, by facsimile transmission with confirmation of receipt, or by registered or certified mail (return receipt requested), postage prepaid, with an acknowledgment of receipt signed by the addressee or an authorized representative thereof, addressed as follows (or to such other address for a party as shall be specified by like notice; provided, that notice of a change of address shall be effective only upon receipt thereof): If to AT&T PCS, to it at: c/o AT&T Wireless Services, Inc. 7277 164th Avenue Northeast Redmond, WA 98052 Attn: William H. Hague, Esq. Facsimile: (425) 580-8405 With a copy to: Friedman Kaplan & Seiler LLP 875 Third Avenue New York, NY 10022 Attn: Gregg S. Lerner, Esq. Facsimile: (212) 355-6401 If to the Company, to it at: 35 TeleCorp PCS, Inc. 1010 N. Glebe Road, Suite 800 Arlington, Virginia 22201 Attn: General Counsel Facsimile: (703) 236-1106 X.4 Designated Purchasers. It is understood and agreed between the --------------------- parties that the Company may cause one or more of its direct or indirect wholly owned Subsidiaries (each a "Designated Purchaser") to purchase all or part of -------------------- the Purchased Assets hereunder; provided, that notwithstanding any such designation, the Company shall remain fully liable for all of its obligations and those of the Designated Purchaser hereunder. X.5 Parties in Interest; Assignment. This Agreement is binding upon and ------------------------------- is solely for the benefit of the parties hereto and their respective permitted successors, legal representatives and permitted assigns. Neither party may assign its rights and obligations hereunder without the prior written consent of the other party. X.6 Applicable Law. This Agreement shall be governed by and construed -------------- in accordance with the laws of the State of New York without giving effect to the conflicts of law principles thereof. The parties hereto hereby irrevocably and unconditionally consent to submit to the non-exclusive jurisdiction of the courts of the State of New York and of the United States of America located in the County of New York, New York (the "New York Courts") for any litigation --------------- arising out of or relating to this Agreement and the Transactions, waive any objection to the laying of venue of any such litigation in the New York Courts and agrees not to plead or claim in any New York Court that such litigation brought therein has been brought in an inconvenient forum. X.7 Counterparts. This Agreement may be executed in two or more ------------ counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. Facsimile signatures on this Agreement shall be deemed to be original signatures for all purposes. X.8 Interpretation. The article and section headings contained in this -------------- Agreement are for convenience of reference only, are not part of the agreement of the parties and shall not affect in any way the meaning or interpretation of this Agreement. X.9 Entire Agreement. This Agreement, including the Schedules hereto ---------------- and the certificates and instruments delivered pursuant to the terms of this Agreement, embody the entire agreement and understanding of the parties hereto in respect of the Transactions. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein or in the Stockholders' Agreement. This Agreement supersedes all prior agreements and understandings between the parties with respect to the Transactions. 36 X.10 Publicity. So long as this Agreement is in effect, the parties --------- agree to consult with each other in issuing any press release or otherwise making any public statement with respect to the Transactions, and no party shall issue any press release or make any such public statement prior to such consultation, except as may be required by Law. No press release or other public statement by a party shall disclose any of the financial terms of the Transactions without the prior consent of the other party, except as may be required by Law. A breach of the provisions of this Section 10.10 by a party shall not give rise to any right to terminate this Agreement. X.11 Specific Performance. The parties hereto agree that irreparable -------------------- damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any New York Courts. X.12 Remedies Cumulative. All rights, powers and remedies provided ------------------- under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise or beginning of the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. X.13 Severability. Any provision of this Agreement that is prohibited ------------ or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. If any court determines that any covenant or any part of any covenant is invalid or unenforceable, such covenant shall be enforced to the extent permitted by such court, and all other covenants shall not thereby be affected and shall be given full effect, without regard to the invalid portions. X.14 Beneficiaries of Agreement. The representations, warranties, -------------------------- covenants and agreements expressed in this Agreement are for the sole benefit of the other parties hereto and the Section 8.2 Indemnified Parties and Section 8.3 Indemnified Parties and are not intended to benefit, and may not be relied upon or enforced by, any other party as a third party beneficiary or otherwise. Without limiting the foregoing, nothing contained in this Agreement shall confer upon any Employee any right with respect to continued employment by AT&T PCS or the Company. X.15 Waiver of Purchase Right Pursuant to Securities Purchase Agreement. ------------------------------------------------------------------ Subject to the consummation of the Transactions, AT&T PCS hereby waives, on behalf of itself and TWR Cellular, Inc., any "Purchase Right" it may have pursuant to the Stockholders Agreement in respect of any securities being issued by the Company pursuant to the Securities Purchase Agreement. 37 X.16 Alternative Arrangement Term Sheet. Exhibit II sets forth the ---------------------------------- Alternative Arrangement Term Sheet. The parties hereby agree to the terms and conditions thereof. X.17 Certain Payments. Notwithstanding anything to the contrary ---------------- contained herein, AT&T PCS hereby agrees that, so long as each of the Company, each Cash Equity Investor (as such term is defined in the Securities Purchase Agreement) and each Management Stockholder (as such term is defined in the Securities Purchase Agreement) shall have performed all of their respective obligations under this Agreement and the Securities Purchase Agreement, as the case may be, if the Closing does not occur (i) due solely to a breach by AT&T PCS of its obligations under this Agreement, AT&T PCS shall pay to each Cash Equity Investor and each Management Stockholder its pro rata share of One Million ($1,000,000) Dollars (based upon their respective ownership interest in the Company), or (ii) for any reason other than that set forth in clause (i) hereof, AT&T PCS shall pay to each Cash Equity Investor and each Management Stockholder its pro rata share of Five Hundred Thousand ($500,000) Dollars (based upon their respective ownership interest in the Company). 38 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. TELECORP PCS, INC. By: /s/ Thomas Sullivan ------------------------------- Name: Thomas Sullivan Title: Executive Vice President AT&T WIRELESS PCS INC. By: /s/ W. Hague ------------------------------- Name: W. Hague Title: SVP 39 Schedule I United States of America Federal Communications Commission RADIO STATION AUTHORIZATION Commercial Mobile Radio Services Personal Communications Service - Broadband AT&T WIRELESS PCS INC. Call Sign: KNLF249 1150 Connecticut Avenue, N.W., 4th Floor Market: M025 Washington, DC 20036 PUERTO RICO-U.S. VIRGIN ISLANDS Channel Block: A File Number: 00046-CW-L-95 - -------------------------------------------------------------------------------- The licensee hereof is authorized, for the period indicated, to construct and operate radio transmitting facilities in accordance with the terms and conditions hereinafter described. This authorization is subject to the provisions of the Communications Act of 1934, as amended, subsequent Acts of Congress, international treaties and agreements to which the United States is a signatory, and all pertinent rules and regulations of the Federal Communications Commission contained in the Title 47 of the U.S. Code of Federal Regulations. - -------------------------------------------------------------------------------- Initial Grant Date.............................. June 23, 1995 Five-year Build Out Date........................ June 23, 2000 Expiration Date................................. June 23, 2005 - -------------------------------------------------------------------------------- CONDITIONS: - ----------- Pursuant to Section 309(h) of the Communications Act of 1934, as amended (47 U. S.C. (S) 309(h)), this license is subject to the following conditions: This license does not vest in the licensee any right to operate a station nor any right in the use of frequencies beyond the term thereof nor in any other manner than authorized herein. Neither this license nor the right granted thereunder shall be assigned or otherwise transferred in violation of the Communications Act of 1934, as amended (47 U.S.C. (S) 151. et seq.). This license is subject in terms to the right of use or control conferred by Section 706 of the Communications Act of 1934, as amended (47 U.S.C. (S) 606). Conditions continued on Page 2. - -------------------------------------------------------------------------------- WAIVERS: - -------- No waivers associated with this authorization. - -------------------------------------------------------------------------------- Issue Date: June 23, 1995 FCC Form 463a Page 1 of 2 KNLF AT&T WIRELESS PCS INC. 00046-CW-L-95 CONDITIONS: This authorization is subject to the condition that, in the event that systems using the same frequencies as granted herein are authorized in an adjacent foreign territory (Canada/United States), future coordination of any base station transmitters within 72 km (45 miles) of the United States/Canada border shall be required to eliminate any harmful interference to operations in the adjacent foreign territory and to ensure continuance of equal access to the frequencies by both countries. This authorization is subject to the condition that the remaining balance of the winning bid amount will be paid in accordance with Part I of the Commission's rules, 47 C.F.R. Part 1. - -------------------------------------------------------------------------------- Issue Date: June 23, 1995 Page 2 of 2 FCC Form 463a Schedule II AT&T WIRELESS/VENTO AND SULLIVAN F Block Joint Ventures Summary of Principal Terms -------------------------- General - ------- Parties AT&T Wireless Services, Inc. and/or one or more affiliates ("AT&T"), each of the entities (each, a "License Entity") that owns one or more of the F Block licenses referred to below, Thomas Sullivan and Gerald Vento (the "Management Group"), TeleCorp PCS, Inc. ("TeleCorp"), the TeleCorp Cash Equity Investors (the "TeleCorp Investors"), and the non-Management Group equity holders in the License Entities (the "Non-Management Equity Holders"). Structure Each of the Houston, San Diego, Melbourne - Titusville, Orlando and Tampa - St. Petersburg - Clearwater F Block licenses (each, an "F Block License") are held by a separate entity (each, a "License Entity" and collectively the "License Entities"). Each of the five entities will be independent of each other, but will have substantially identical ownership and governance, as set forth below. Acquisition of San Diego License and Non-Management Equity Holders' - ------------------------------------------------------------------- Interests/Puerto Rico Transaction - --------------------------------- AT&T Loan AT&T makes a loan (the "AT&T Loan") to the Management Group in an amount equal to 100% of the cash required to pay the purchase price of the San Diego F Block License, plus the aggregate amount of legal fees and other expenses (approximately $225,000) TeleCorp incurred directly related to such acquisition. The Management Group will secure the AT&T Loan with a pledge of all of the capital stock of the San Diego License Entity. CONFIDENTIAL -- FOR DISCUSSION PURPOSES ONLY - -------------------------------------------------------------------------------- Capitalization of the San Diego License Entity Concurrently with the consummation of the AT&T Loan, the Management Group will contribute to the capital of the San Diego License Entity all the proceeds of such loan. Use of AT&T Loan Proceeds Concurrently with the capitalization of the San Diego License Entity, the San Diego License Entity will use the Management Group capital contribution to pay the purchase price of the San Diego F Block License and related expenses. Exchange of Note for Interests Concurrently with the closing of the acquisition by TeleCorp of AT&T's PCS license covering Puerto Rico, TeleCorp will acquire 100% of the Non-Management Equity Holders' equity interests in the License Entities (the "Non-Management Equity Interests") in exchange for TeleCorp promissory notes in the aggregate principal amount, in the case of each of the F Block Licenses, set forth on Schedule A, or approximately $26 million in the aggregate (the "Non-Management Equity Interests Purchase Price"). The TeleCorp notes will be of the same tenor as those being issued to AT&T in partial consideration for AT&T's Puerto Rico PCS license. TeleCorp Notes The principal terms of the TeleCorp notes are: -- Initial interest rate, equivalent to Lucent Series C, 12% per annum -- Hold period: October 31, 1999 -- Interest rate after hold period: 7% -- Convert (if the holder is AT&T, to Series A Preferred, or Series D and F Preferred, at AT&T's option, or if the holder is an Investor, to Series C Preferred and Series A Common) at a price of 20% premium to par or $1,200/unit -- Senior to Lucent Series C on maturity, redemption priority and repayment -- Mandatory repayment or conversion on qualifying IPO or high yield offering -- Other terms equivalent to Lucent Series C, except conversion rights are forfeited on transfer 10 CONFIDENTIAL -- FOR DISCUSSION PURPOSES ONLY - -------------------------------------------------------------------------------- Sale of Interests to License Entity Concurrently with the exchange referred to in the "Exchange of Notes for Interests" section, TeleCorp will assign to each License Entity (other than San Diego License Entity) the applicable Non-Management Equity Interests (i.e., the interests TeleCorp has acquired in the Houston License Entity will be assigned to Houston License Entity, etc.). In consideration therefor, each License Entity (other than San Diego License Entity) will issue to TeleCorp promissory notes (the "JV Notes"), on terms reasonably acceptable to AT&T, in the aggregate principal amount, in the case of each License Entity, set forth on Schedule A, or approximately $26 million in the aggregate. Puerto Rico Consideration As a portion of the consideration payable by TeleCorp to AT&T for the Puerto Rico license, TeleCorp will deliver to AT&T the JV Notes. Timing The closing of the AT&T Loan and the Management Group capital contribution to the San Diego License Entity will occur concurrently with the acquisition of the San Diego F Block License by the San Diego License Entity, and is not conditioned on the consummation of the Puerto Rico acquisition and the transactions described herein (but see "Alternative Arrangement" below). The closing of the Puerto Rico acquisition and the exchanges described above involving the Non-Management Equity Interests, the TeleCorp notes and the JV Notes will all occur concurrently with the closing of the joint venture contributions described in this term sheet. Alternative Arrangements Anything in this Term Sheet to the contrary notwithstanding, at any time on or before the closing of the Puerto Rico transaction, AT&T shall have the right to restructure the Transactions by (a) canceling the transactions set forth in "Exchange of Notes for Interests" and "Sale of Interests to License Entity," and (b) revising the "Puerto Rico Consideration" by eliminating the JV Notes, and increasing the amount of the TeleCorp Notes to $36 million. 11 CONFIDENTIAL -- FOR DISCUSSION PURPOSES ONLY - -------------------------------------------------------------------------------- In the event that the Puerto Rico transaction is not restructured as set forth in the immediately preceding paragraph and fails to close, (a) AT&T will lend to the License Entities an amount equal to the Non-Management Equity Interests Purchase Price in exchange for the JV notes, (b) the License Entities will acquire for cash, and the Non-Management Equity Holders will sell to the License Entities, the Non-Management Equity Interests. License Entity Capitalization and Management Structure - ------------------------------------------------------ Capitalization There will be two classes of interests in the License Entities: voting (which have no economic rights) and non- voting (which represent all of the economic interests in the License Entities) The Management Group shall have 75% of the voting interests and 51% of the non-voting interests of each License Entity, and AT&T shall have 25% of the voting interests, and 49% of the non-voting interests of each License Entity. Board AT&T will have the right to designate two directors, and each member of the Management Group will be a director. The Management Group (or its successor) will have the right to designate one additional director, provided such third director is independent of the Management Group and reasonably acceptable to AT&T. The initial members of the Board will be mutually agreed upon. Voting Rights A list of significant matters will require an 80% supermajority approval by the Board of License Entity (this list will include, but not be limited to, all matters for which TeleCorp requires a supermajority approval). Management Fee In consideration of their services, the Management Group will be paid an annual fee equal to $150,000 (prorated for any partial year) in the aggregate for all License Entities (irrespective of the number of License Entities, and to be divided among the License Entities in a mutually acceptable manner). 12 CONFIDENTIAL -- FOR DISCUSSION PURPOSES ONLY - -------------------------------------------------------------------------------- Replacement of Management Group In the event that agreed upon performance benchmarks or other objective requirements are not satisfied (such benchmarks and or requirements to be reasonably acceptable to AT&T), the Management Group will be required to assign to substitute control group, reasonably acceptable to a majority of the License Entity directors (excluding the members of the Management Group), all of the Management Group's voting interests. In the event of replacement, the Management Group will, at AT&T's option, either retain its non-voting stock, transfer that stock to its replacement for either cash in an amount equal to the then current value of its put (discussed below) and/or an instrument with the same economic features as the put (so that the Management Group's return will not be worsened as the result of such transfer). AT&T Assistance AT&T agrees to, at the request of the Board, negotiate in good faith a management agreement pursuant to which AT&T would build and manage a system that satisfied the applicable FCC license requirements. Funding At the request of the Board, AT&T agrees to fund, on terms acceptable to it, the operating expenses of the License Entity (including without limitation the Management Put, the build out costs described in the immediately preceding paragraph, the management fees, and the interest on the FCC debt). AT&T Liquidity Anything to the contrary in the AT&T Loan notwithstanding, the Management Group agrees that if at any time AT&T requests repayment of the AT&T Loan and/or the JV notes, the Management Group will use its best efforts to take all commercially reasonable steps to raise funds to do so. 13 CONFIDENTIAL -- FOR DISCUSSION PURPOSES ONLY - -------------------------------------------------------------------------------- Right of First Negotiation In order to induce AT&T to extend the AT&T Loan, and in consideration of the JV Notes and the commitments AT&T has made to the License Entities hereunder, the Management Group hereby agrees with AT&T that it will in good faith negotiate with AT&T a mutually acceptable transaction (an "F Block Transaction") relating to the F Block Licenses, and, until both parties agree in writing that they are no longer interested in entering into an F Block Transaction, the Management group will not enter into an agreement or arrangement with any person or entity relating to any alliance, sale or other transaction involving the F Block PCS Licenses, or solicit, initiate or engage in any discussion with respect to any such licenses. Indemnification Each License Entity will provide customary indemnification for its directors and officers (including the Management Group), including without limitation indemnifying them against director liability arising from AT&T's failure to fund License Entity's capital requirements (provided the Management Group and AT&T agree on acceptable terms for such funding) and AT&T's provision of management services. AT&T will assure performance by License Entity of its indemnification obligations. Management Put The Management Group will have the right to put to AT&T its interest in each License Entity for a sum of cash equal to, for each License Entity, the amount set forth on Schedule B ($[4] million in the aggregate), plus 6% per annum (and, during the period, if any, following replacement of the Management Group, 10% per annum), compounded annually. The put will be exercisable (in whole but not in part) only during the one-year period following the earliest date that exercise of the put would not violate FCC rules or trigger any penalties (the Management Group shall receive written notice of this date), provided that to the extent permitted by FCC rules without -------- triggering any penalty, each member of the Management Group may put $400,000 of its F Block Tracking Interests during the one- year period commencing December 31, 1999 (at AT&T's 14 CONFIDENTIAL -- FOR DISCUSSION PURPOSES ONLY - -------------------------------------------------------------------------------- option, it may fund the redemption of the Management Group's interest, in lieu of the put). Transfer Restrictions The Management Group may not transfer, pledge or otherwise dispose of all or any portion of its License Entity interests prior to the ninth anniversary of the closing. * * * * * 15 CONFIDENTIAL -- FOR DISCUSSION PURPOSES ONLY - -------------------------------------------------------------------------------- SCHEDULE A F Block License Aggregate Principal Amount of Notes -------------------------------------------------------- Houston San Diego* -0- Melbourne Orlando Tampa TOTAL $[26,000,000] __________________________ * The Non-Management Equity Holders do not hold an equity interest in the San Diego License Entity. Accordingly, no San Diego JV Notes will be issued and the formation of San Diego License Entity is not subject to the consummation of the other F Block transactions or the Puerto Rico transaction. 16 CONFIDENTIAL -- FOR DISCUSSION PURPOSES ONLY - -------------------------------------------------------------------------------- SCHEDULE B License Entity Value of Management Group Equity Interest - ---------------------------------------------------------------- Houston San Diego Melbourne Orlando Tampa TOTAL [$4,000,000] 17 CONFIDENTIAL -- FOR DISCUSSION PURPOSES ONLY - -------------------------------------------------------------------------------- Schedule III Filed Separately Schedule IV Filed Separately Schedule V Filed Separately 18 Schedule 2.1 Description of Area and Population to be Assigned The Puerto Rico-U.S. Virgin Islands MTA has a population of 3,623,846./1/ AT&T Wireless PCS Inc. proposes to assign the 20 MHz of A Block broadband PCS spectrum at 1850-1860 MHz and 1930-1940 MHz to TeleCorp of Puerto Rico, Inc. throughout the entire Puerto Rico-U.S. Virgin Islands MTA as follows:
================================================================================================ Market Name Market Designator Market Population ================================================================================================ - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------ Puerto Rico-U.S. Virgin Islands M025 3,623,846 - ------------------------------------------------------------------------------------------------ E ================================================================================================ Total Population 3,623,846 ================================================================================================
________________________ /1/ MTA population figures taken from the April 1, 1990 U.S. Census, U.S. department of Commerce, Bureau of Census, as published in the Summary of Licenses To Be Auctioned from the August 2, 1995 C Block Bidder Information Package. Description of Area and Population to be Retained The Puerto Rico-U.S. Virgin Islands MTA has a population of 3,623,846.1 AT&T Wireless PCS Inc. proposes to retain the 10 MHz of A Block broadband PCS spectrum at 1860-1865 MHz and 1940-1945 MHz throughout the entire Puerto Rico-U.S. Virgin Islands MTA as follows:
================================================================================================ Market Name Market Designator Market Population ================================================================================================ - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------ Puerto Rico-U.S. Virgin Islands M025 3,623,846 - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------ Total Population 3,623,846 ================================================================================================
/1/ MTA population figures taken from the April 1, 1990 U.S. Census, U.S. Department of Commerce, Bureau of Census, as published in the Summary of Licenses To Be Auctioned from the August 2, 1995 C Block Bidder Information Package. SCHEDULE 2.1(b) Agreements to be Assigned
- ------------------------------------------------------------------------------- REALTY LEASES - ------------------------------------------------------------------------------- SITE NUMBER CLUSTER SITE NAME - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- PMT 001 A - Old San Juan Trade Center - ------------------------------------------------------------------------------- PMT 003 A Caribe Hilton - ------------------------------------------------------------------------------- PMT 008 A San Alberto Building - ------------------------------------------------------------------------------- PMT 009 A Bogorioin Building - ------------------------------------------------------------------------------- PMT 010 A Topeka - Loiza St. - ------------------------------------------------------------------------------- PMT 011 A Gonzalez Padin - ------------------------------------------------------------------------------- PMT 012 B Ramirez College - ------------------------------------------------------------------------------- PMT 013 B Plaza Las Americas - ------------------------------------------------------------------------------- PMT 014 B Barbosa Building - ------------------------------------------------------------------------------- PMT 023 B El Amal - ------------------------------------------------------------------------------- PMT 028 B Medina Center - ------------------------------------------------------------------------------- PMT 094 C Puerto Nuevo El Centro - ------------------------------------------------------------------------------- PMT 002 C Plaza Mercantil - ------------------------------------------------------------------------------- PMT 004 C La Marketin - ------------------------------------------------------------------------------- PMT 005 C Sprint - ------------------------------------------------------------------------------- PMT 006 C Int. Technical College - ------------------------------------------------------------------------------- PMT 007 C La Ceiba - ------------------------------------------------------------------------------- PMT 021 D-Rio Piedras Medical Center Plaza - ------------------------------------------------------------------------------- PMT 024 D GM Group - ------------------------------------------------------------------------------- PMT 026 D Alturas del Senorial - ------------------------------------------------------------------------------- PMT 064 D Torre de la Cumbre - ------------------------------------------------------------------------------- PMT 065 D Gasolinera Coqui - ------------------------------------------------------------------------------- PMT 015 E-Isla Verde Crowne Plaza - ------------------------------------------------------------------------------- PMT 033 E Tony Tirri - ------------------------------------------------------------------------------- PMT 035 E Monserrate Tower - -------------------------------------------------------------------------------
- ------------------------------------------------------------------------------- PMT 052 E Narvaez Cleaners - ------------------------------------------------------------------------------- -22-
- -------------------------------------------------------------------------------- SITE NUMBER CLUSTER SITE NAME - -------------------------------------------------------------------------------- PMT 018 F-Guaynabo Las Lomas Building - -------------------------------------------------------------------------------- PMT 020 F Hogar Crea - Los Filtros - -------------------------------------------------------------------------------- PMT 022 F Camino Alejandrino - -------------------------------------------------------------------------------- PMT 061 F Jardines de Guaynabo - -------------------------------------------------------------------------------- PMT 062 F Quintas Reales - -------------------------------------------------------------------------------- PMT 030 G - Trujillo Alto Berwind Shopping - -------------------------------------------------------------------------------- PMT 031 G De Diego Building - -------------------------------------------------------------------------------- PMT 032 G Efron Hill Mansions - -------------------------------------------------------------------------------- PMT 036 G Loma Santo Domingo - -------------------------------------------------------------------------------- PMT 037 G San Anton Building - -------------------------------------------------------------------------------- PMT 038 G Fabrica de Mattress - -------------------------------------------------------------------------------- PMT 066 G lglesia del Libano - -------------------------------------------------------------------------------- PMT 017 H - Bayamon Jardines de Caparra - -------------------------------------------------------------------------------- PMT 058 H FP Centurion - -------------------------------------------------------------------------------- PMT 059 H Madison - -------------------------------------------------------------------------------- PMT 060 H Bayamon Pueblo - -------------------------------------------------------------------------------- PMT 053 I - Caguas Norte La Pava - -------------------------------------------------------------------------------- PMT 068 I Finca Moros - -------------------------------------------------------------------------------- PMT 070 I Finca Ocasio 11 - -------------------------------------------------------------------------------- PMT 071 I Peaje Caguas - -------------------------------------------------------------------------------- PMT 047 J - Levittown Boulevard Levittown - -------------------------------------------------------------------------------- PMT 048 J Club Leones Catano - -------------------------------------------------------------------------------- PMT 050 J Bolera Coqui - -------------------------------------------------------------------------------- PMT 055 J Barrio Pajaros - -------------------------------------------------------------------------------- PMT 056 J AT&T Hato Tejas - -------------------------------------------------------------------------------- PMT 049 J Comunidad Paraiso - -------------------------------------------------------------------------------- PMT 019 K - Caguas La Marketa - -------------------------------------------------------------------------------- PMT 072 K Santa Juana Building - --------------------------------------------------------------------------------
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- -------------------------------------------------------------------------------- SITE NUMBER CLUSTER SITE NAME - -------------------------------------------------------------------------------- PMT 081 K Taller Familiar - -------------------------------------------------------------------------------- PMT 088 K Iglesia de Dios - -------------------------------------------------------------------------------- PMT 089 K Mueblelectric Caguas - -------------------------------------------------------------------------------- PES 041 L - Carolina -Ceiba Carolina Speedway - -------------------------------------------------------------------------------- PES 043 L Loiza Garaje - -------------------------------------------------------------------------------- PES 044 L Lechonera Landis - -------------------------------------------------------------------------------- PES 076 L PR Aggregate - -------------------------------------------------------------------------------- PES 045 L Marrero Auto - -------------------------------------------------------------------------------- PES 046 L Montana Duran - -------------------------------------------------------------------------------- PES 117 L WZOL -FM Fajardo - -------------------------------------------------------------------------------- PES 128 L Monte Cristiano - -------------------------------------------------------------------------------- PES 129 L El Conquistador - -------------------------------------------------------------------------------- PMT 054 M - Toa Baja - Dorado Finca Velez - -------------------------------------------------------------------------------- PNO 144 M Potrero Kuilan - -------------------------------------------------------------------------------- PNO 161 M Efron Dorado - -------------------------------------------------------------------------------- PNO 145 M Espinosa Industrial - -------------------------------------------------------------------------------- PNO 146 M Casa Luis Rodriguez - -------------------------------------------------------------------------------- PNO 147 M Monte Horeb - -------------------------------------------------------------------------------- PNO 148 M Fabrica de Bloques - -------------------------------------------------------------------------------- PNO 149 M La Carreta - -------------------------------------------------------------------------------- PNO 151 M Finca Santiago - -------------------------------------------------------------------------------- PNO 152 M Casa Luis Prieto Manati - -------------------------------------------------------------------------------- PNO 153 M Finca Otero - -------------------------------------------------------------------------------- PNO 155 M Finca Raul Roman - -------------------------------------------------------------------------------- PNO 156 M Casa Hernandez - -------------------------------------------------------------------------------- PNO 158 M Vaqueria Lopez - -------------------------------------------------------------------------------- PNO 157 M Farmacia San Martin - -------------------------------------------------------------------------------- PNO 160 M Terreno Vicente Rios - --------------------------------------------------------------------------------
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- ----------------------------------------------------------------------------------------------- SITE NUMBER CLUSTER SITE NAME - -------------------------------------------------------------------------------------------- PNO 164 M El Amal - -------------------------------------------------------------------------------------------- PNO 165 M Terreno Ocasio - -------------------------------------------------------------------------------------------- PSE 082 N - Juncos Barrio Mamey II - -------------------------------------------------------------------------------------------- PSE 091 N Hogar Crea - Juncos - -------------------------------------------------------------------------------------------- PSO 127 O Granja Barrio Beatriz, Caguas - -------------------------------------------------------------------------------------------- PSO 040 O Pinero III - -------------------------------------------------------------------------------------------- PSO 029 O AT&T Cayey - Earth Station - -------------------------------------------------------------------------------------------- PSO 095 O Centro Comercial Sierra Cayey - -------------------------------------------------------------------------------------------- PSO 096 O Monasterio Cayey, Asso. Autorealizacion - -------------------------------------------------------------------------------------------- PSO 093 O Cercadillo - -------------------------------------------------------------------------------------------- PSO 092 O Finca Pilin - --------------------------------------------------------------------------------------------
-25- SCHEDULE 5.2 AT&T PCS Consents ----------------- The execution, delivery and performance of the Agreement will or may require the following consents, approvals and reviews: (1) The Federal Communications Commission. (2) The Federal Trade Commission/Department of Justice. (3) Various Governmental Authorities with respect to Franchise Laws. (4) See attached for a list of certain Assigned Agreements as to which consent of the other party thereto is required. Required Consents (i) Leases 1- PMT 006 International Technical College. Prior written consent by Landlord required. 2- PMT 012 Ramirez College. Prior written consent by Landlord required. 3- PMT 013 Plaza Las Americas. Prior written consent by Landlord required. 4- PMT 032 Hill Mansions. Prior written consent by Landlord required. 5- PMT 036 Loma Santo Domingo. Prior written consent by Landlord required. 6- PMT 059 Madison. Prior written consent by Landlord required. 7- PMT 065 Gasolinera Coqui. Prior written consent by Landlord required. 8- PMT 071 Peaje Caguas. Prior written consent by Landlord required. 9- PMT 081 Taller Familiar. Prior written consent by Landlord required. 10- PMT 089 Mueblelectric Caguas. Sixty (60) days prior written consent by Landlord required. 11- PES 129 El Conquistador. Prior written consent by Landlord required. 12- PNO 153 Finca Otero. No provision for assignment or subleasing in contract. 13- PNO 161 Efron Dorado. Prior written consent by Landlord required. 14- PMT 047 Boulevard Levittown. Prior qualification and consent by Landlord. SCHEDULE 6.2 Company Consents ---------------- The execution, delivery and performance of the Agreement will or may require the following consents, approvals and reviews: 1. The Federal Communications Commission. 2. The Federal Trade Commission/Department of Justice. 3. Various Governmental Authorities with respect to Franchise Laws. 4. The Lenders under the Company's credit facility dated as of July 17, 1998. Outstanding Options, Warrants, etc. ----------------------------------- 1. Upon the closing of the transaction contemplated by the License Acquisition Agreement by and between Wireless 2000, Inc. ("Wireless") and the Company, dated as of December 2, 1998 (the "Wireless Acquisition Agreement"), the Company shall issue to Wireless: (i) five hundred forty-five and 20/100 (545.20) shares of Series C Preferred Stock, par value $.01 per share ("Series C Preferred Stock"), and (ii) five hundred thirty and 40/100 (530.40) shares of Class A Voting Common Stock, par value $.01 per share ("Class A Voting Common Stock"), of the Company. 2. Upon the closing of the transaction contemplated by the License Acquisition Agreement by and between Mercury PCS II, LLC ("Mercury") and the Company, dated as of May 15, 1998 (the "Mercury Acquisition Agreement"), the Company shall issue to Mercury: (i) two thousand three hundred thirty-two and 55/100 (2,332.50) shares of Series C Preferred Stock and (ii) two thousand two hundred sixty-nine and 23/100 (2,269.23) shares of Class A Voting Common Stock of the Company and shall issue additional shares of Series C Preferred Stock and Class A Voting Common Stock to certain Cash Equity Investors as set forth on Schedule V of the Securities Purchase Agreement by and among the Company, AT&T PCS, and certain Cash Equity Investors and other parties identified therein, dated as of January 23, 1998, setting forth Share Allocation With Supplemental Allocation. 3. The Company may issue Series E Notes, convertible into Class A Voting Common Stock and Series C Preferred Stock of the Company, to certain existing shareholders of the Company in connection with the transactions set forth in the Summary of Principal Terms attached as Exhibit D to the Securities Purchase Agreement. 4. Upon the closing of the transaction contemplated by the Securities Purchase Agreement, the Company will sell to such Cash Equity Investors an aggregate of $39,996,600 of its Series C Preferred Stock and Class A Voting Common Stock. 5. Upon the closing of the transaction contemplated by the Stock Purchase Agreement with AT&T PCS, and certain Cash Equity Investors identified therein, dated as of March 22, 1999, as amended, the Company will sell to such Cash Equity Investors and AT&T PCS up to an aggregate amount of $30,000,000 of its Series C Preferred Stock and Class A Voting Common Stock. 6. Certain shares of the Company's Preferred Stock are convertible pursuant to the terms and conditions set forth in the Company's Restated Certificate. 7. Upon the closing of the transactions contemplated by the Stock Purchase Agreement by and among Cash Equity Investors, Management Stockholders, Puerto Rico Acquisition Corp. and TeleCorp PCS, Inc., dated as of March 30, 1999. The company will sell to such Cash Equity Investors up to an aggregate amount of 36,996.60 shares of Series C Preferred Stock and an aggregate amount of 39,996.60 shares of Class A Voting Common Stock. SCHEDULE 6.11 AT&T EMPLOYEES HIRED BY TELECORP 1. Carlos Aponte RF Systems Engineer 2. Margarita Arroyo Site Acquisition Specialist 3. Lisa Barros Site Development Specialist 4. Ricardo Claudio Director Site Development 5. Daphne Domenech Administrative Assistant 6. Margie Vazquez Site Acquisition Manager EX-10.14 28 PREFERRED STOCK PURCHASE AGREEMENT EXHIBIT 10.14.1 ================================================================================ PREFERRED STOCK PURCHASE AGREEMENT by and between AT&T WIRELESS PCS INC. and TELECORP PCS, INC. Dated as of May 24, 1999 ================================================================================ TABLE OF CONTENTS
Page ARTICLE I DEFINITIONS........................................................................... 2 ARTICLE II PURCHASE PRICE; PURCHASE AND SALE OF SECURITIES; CERTAIN RESTRICTIONS ON TRANSFER..... 5 2.1. Investor Purchase Price.......................................................... 5 2.2. Purchase and Sale of Securities at Closing....................................... 5 2.3. Restrictive Legends.............................................................. 5 2.4. Use of Proceeds.................................................................. 6 ARTICLE III CLOSING............................................................................... 6 3.1. Time and Place of Closing........................................................ 6 3.2. Closing Actions and Deliveries................................................... 6 3.3. Closing Costs; Taxes and Fees.................................................... 7 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF INVESTOR............................................ 7 4.1. Organization, Power and Authority................................................ 7 4.2. Consents; No Conflicts........................................................... 8 4.3. Litigation....................................................................... 8 4.4. Brokers.......................................................................... 8 4.5. No Distribution.................................................................. 8 4.6. Investor Acknowledgments......................................................... 8 ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................................... 9 5.1. Organization, Power and Authority................................................ 9 5.2. Consents; No Conflicts........................................................... 10 5.3. Litigation....................................................................... 10 5.4. Brokers.......................................................................... 11 5.5. [Capitalization.................................................................. 11 5.6. Shares........................................................................... 11 5.7. Offering of Securities........................................................... 11 ARTICLE VI COVENANTS............................................................................. 12 6.1. Consummation of Transactions..................................................... 12 6.2. Use of Proceeds.................................................................. 12 6.3. Restated Certificate............................................................. 12 6.4. Offering of Securities........................................................... 12
-2- ARTICLE VII CLOSING CONDITIONS.................................................................... 12 7.1. Conditions to Obligations of All Parties......................................... 12 7.2. Conditions to Obligations of the Company......................................... 13 7.3. Conditions to the Obligations of the Investors................................... 14 ARTICLE VIII SURVIVAL AND INDEMNIFICATION.......................................................... 14 8.1. Survival......................................................................... 14 8.2. Indemnification by the Investor.................................................. 15 8.3. Indemnification by the Company................................................... 15 8.4. Procedures....................................................................... 16 8.5. Registration Rights.............................................................. 17 ARTICLE IX TERMINATION........................................................................... 17 9.1. Termination...................................................................... 17 9.2. Effect of Termination............................................................ 17 ARTICLE X MISCELLANEOUS PROVISIONS.............................................................. 17 10.1. Amendment and Modification....................................................... 17 10.2. Waiver of Compliance; Consents................................................... 17 10.3. Notices.......................................................................... 18 10.4. Parties in Interest; Assignment.................................................. 18 10.5. Applicable Law................................................................... 18 10.6. Counterparts..................................................................... 19 10.7. Interpretation................................................................... 19 10.8. Entire Agreement................................................................. 19 10.9. Publicity........................................................................ 19 10.10. Specific Performance............................................................. 19 10.11. Remedies Cumulative.............................................................. 19 10.12. Severability..................................................................... 19 10.13. Beneficiaries of Agreement....................................................... 20 10.14. Stock Valuation.................................................................. 20
-3- SCHEDULES Schedule I -- Capitalization Schedule 4.2 -- Investor Consents Schedule 5.2 -- Company Consents Schedule 5.5 Outstanding Options, Warrants, etc. Schedule 5.8 -- Subsidiaries of the Company -4- PREFERRED STOCK PURCHASE AGREEMENT ---------------------------------- PREFERRED STOCK PURCHASE AGREEMENT, dated as of May 24, 1999, by and between AT&T Wireless PCS Inc., a Delaware corporation (the "Investor") and -------- TeleCorp PCS, Inc., a Delaware corporation (the "Company"). ------- W I T N E S S E T H : ------------------- WHEREAS, the Investor is a stockholder of the Company; WHEREAS, the Company and certain stockholders of the Company (other than the Investor) entered into a securities purchase agreement dated as of March 30, 1999 (the "Cash Equity Securities Purchase Agreement"), pursuant to which, among other things, such stockholders of the Company agreed to make additional cash capital contributions to the Company and the Company agreed to issue additional securities to such stockholders in consideration therefor, all on the terms set forth in the Cash Equity Securities Purchase Agreement; and WHEREAS, the Investor wishes to purchase additional securities of the Company so that the Investor's equity in the Company is not diluted by the issuance of securities contemplated by the Cash Equity Securities Purchase Agreement and the Company wishes to sell additional securities to the Investor all on the terms and subject to the conditions herein set forth; NOW, THEREFORE, in consideration of the promises and the mutual representations, warranties, covenants, conditions and agreements hereinafter set forth, the parties agree as follows: ARTICLE I DEFINITIONS For purposes of this Agreement: "Affiliate" means, with respect to any Person, any other Person that --------- directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with that Person. For purposes of this definition, "control" (including the terms "controlling" and "controlled") means ------- ----------- ---------- the power to direct or cause the direction of the management and policies of a Person, directly or indirectly, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise. "Agreement" means this Preferred Stock Purchase Agreement, as the same --------- may be amended, modified or supplemented in accordance with the terms hereof. "Business Day" means any day other than a Saturday, Sunday or a legal ------------ holiday in New York, New York or any other day on which commercial banks in New York, New York are authorized by law or governmental decree to close. "Capital Stock" means any and all shares, interests, participations or ------------- other equivalents (however designated) of capital stock of a corporation, and any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase or subscribe for any of the foregoing or any warrants, rights or options to purchase or subscribe for any such warrants, rights or options. "Cash Equity Securities Purchase Agreement" has the meaning set forth ----------------------------------------- in the recitals. "Claim" has the meaning set forth in Section 8.4(a). ----- "Closing" has the meaning set forth in Section 3.1. ------- "Closing Date" has the meaning set forth in Section 3.1. ------------ "Common Stock" means, collectively, the Company's Voting Preference ------------ Stock, the Class A Voting Common Stock, the Class B Non-Voting Common Stock, the Class C Common Stock, and the Class D Common Stock, $0.01 par value per share, respectively. "Company" has the meaning set forth in the preamble. ------- "Confidential Information" means any and all information regarding the ------------------------ business, finances, operations, products, services and customers of the Person specified and its Affiliates, in written or oral form or in any other medium. "Consents" means all consents and approvals of Governmental -------- Authorities or other third parties necessary to authorize, approve or permit the parties hereto to consummate the Transactions and for the Company to operate its business after the Closing Date as currently contemplated. "Credit Agreement" means the agreement among the Company, the lenders ---------------- and the agents referred to therein, as of July 17, 1998, providing a credit facility having aggregate commitments of $525 million, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Credit Documents" means the Credit Agreement and all agreements, ---------------- instruments and documents executed and delivered pursuant thereto, as the same may from time to time be amended, modified or supplemented in accordance with the terms thereof. "Governmental Authority" means a Federal, state or local court, ---------------------- legislature, governmental agency (including, without limitation, the United States Department of Justice), commission or regulatory or administrative authority or instrumentality. "Indemnified Party" has the meaning set forth in Section 8.4(a). ----------------- -3- "Indemnifying Party" has the meaning set forth in Section 8.4(a). ------------------ "Investor" has the meaning set forth in the preamble. -------- "Law" means applicable common law and any statute, ordinance, code or --- other law, rule, permit, permit condition, regulation, order, decree, technical or other standard, requirement or procedure enacted, adopted, promulgated, applied or followed by any Governmental Authority. "Lenders" has the meaning set forth in Section 10.4. ------- "License" means a license, permit, certificate of authority, waiver, ------- approval, certificate of public convenience and necessity, registration or other authorization, consent or clearance to construct or operate a facility, including any emissions, discharges or releases therefrom, or to transact an activity or business, to construct a tower or to use an asset or process, in each case issued or granted by a Governmental Authority. "Lien" means, with respect to any asset, any mortgage, lien, pledge, ---- charge, security interest, right of first refusal or right of others therein, or encumbrance of any nature whatsoever in respect of such asset. "Losses" has the meaning set forth in Section 8.2. ------ "Material Adverse Effect" means a material adverse effect on the ----------------------- business, financial condition, assets, liabilities or results of operations or prospects of the Person specified. "New York Courts" has the meaning set forth in Section 10.5. --------------- "Opinion of Counsel" means, with respect to any Person, a legal ------------------ opinion of such Person's counsel substantially in the form and substance of the legal opinion rendered on behalf of such Person in connection with the consummation on July 17, 1998 of the transactions contemplated by the Securities Purchase Agreement. "Person" means an individual, corporation, partnership, limited ------ liability company, association, joint stock company, Governmental Authority, business trust, unincorporated organization, or other legal entity. "Preferred Stock" means the shares of the Company's Series A Preferred --------------- Stock, Series B Preferred Stock, Series D Preferred Stock, Series F Preferred Stock, and Senior Common Stock, $0.01 par value per share, respectively. "Purchase Price" shall have the meaning set forth in Section 2.1. -------------- -4- "Restated Certificate" means the Third Amended and Restated -------------------- Certificate of Incorporation of the Company, dated no later than as of the Closing Date. "Section 8.2 Indemnified Party" has the meaning set forth in Section ----------------------------- 8.2. "Section 8.3 Indemnified Party" has the meaning set forth in Section ----------------------------- 8.3. "Securities" means the shares of Preferred Stock being issued ---------- hereunder, together with any shares of Preferred Stock or Common Stock issued upon conversion of or delivered in substitution or exchange for any of the foregoing. "Securities Act" means the Securities Act of 1933, as amended. -------------- "Securities Purchase Agreement" means the Securities Purchase ----------------------------- Agreement dated as of January 23, 1998, by and among the Company, AT&T PCS, the Cash Equity Investors and the other parties named therein. "Series A Preferred Stock" has the meaning set forth in Section 2.2. ------------------------ "Series D Preferred Stock" has the meaning set forth in Section 2.2. ------------------------ "Series F Preferred Stock" has the meaning set forth in Section 2.2. ------------------------ "Stockholders' Agreement" means the Stockholders' Agreement, by and ----------------------- among the Company, AT&T PCS, the Cash Equity Investors named therein and the other parties named therein, as stockholders, dated as of July 17, 1999, as amended by Amendment No. 1 dated as of March 30, 1999. "Subsidiary" shall mean, with respect to any Person, a corporation or ---------- other entity of which 50% or more of the voting power or the voting equity securities or equity interest is owned, directly or indirectly, by such Person. "Transactions" means the transactions contemplated by this Agreement. ------------ When a reference is made in this Agreement to an Article or a Section, such reference shall be to an Article or a Section of this Agreement unless otherwise indicated. Unless the context otherwise requires, the terms defined hereunder shall have the meanings therein specified for all purposes of this Agreement, applicable to both the singular and plural forms of any of the terms defined herein. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." The use of a gender herein shall be deemed to include the neuter, masculine and feminine genders whenever necessary or appropriate. Whenever the word -5- "herein" or "hereof" is used in this Agreement, it shall be deemed to refer to this Agreement and not to a particular Section of this Agreement unless expressly stated otherwise. ARTICLE II PURCHASE AND SALE ----------------- OF SECURITIES; CERTAIN RESTRICTIONS ON TRANSFER ----------------------------------------------- 2.1. Investor Purchase. Upon the terms and subject to the conditions ----------------- hereof and in reliance upon the representations, warranties and agreements herein contained, at the Closing, the Investor shall pay Forty Million Dollars ($40,000,000) to the Company (the "Purchase Price") in immediately available -------------- funds. 2.2. Purchase and Sale of Securities at Closing. Upon the terms and ------------------------------------------ subject to the conditions hereof and in reliance upon the representations, warranties and agreements herein contained, at the Closing, in consideration of the Purchase Price, the Company shall issue, sell and deliver to the Investor Thirty Thousand Seven Hundred Fifty and 3/100ths (30,750.03) shares of Series A Preferred Stock, par value $.01 per share (the "Series A Preferred Stock"), Ten ------------------------ Thousand Two Hundred Fifty and 1/100ths (10,250.01) shares of Series D Preferred Stock, par value $0.01 per share (the "Series D Preferred Stock"), and Ten ------------------------ Thousand (10,000) shares of Series F Preferred Stock, par value $0.01 per share (the "Series F Preferred Stock"). ------------------------ 2.3. Restrictive Legends. Each certificate representing Securities ------------------- (including Securities originally issued hereunder or delivered upon conversion of the Preferred Stock, or delivered in substitution or exchange for any of the foregoing) will bear a legend, in addition to any legends required by the Stockholders' Agreement or otherwise required by Law, reading substantially as follows until such Securities have been sold pursuant to an effective registration statement under the Securities Act, Rule 144 under the Securities Act, or an opinion of counsel reasonably satisfactory in form and substance to the Company and otherwise in full compliance with any other applicable restrictions on transfer, including those contained in this Agreement and the Stockholders' Agreement: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE `ACT'), OR UNDER ANY STATE SECURITIES OR `BLUE SKY' LAWS. SAID SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF, UNLESS AND UNTIL REGISTERED UNDER THE ACT AND THE RULES AND REGULATIONS THEREUNDER AND ALL APPLICABLE STATE SECURITIES OR `BLUE SKY' LAWS OR EXEMPTED THEREFROM UNDER THE ACT AND ALL APPLICABLE STATE SECURITIES OR `BLUE SKY' LAWS." -6- 2.4. Use of Proceeds. The Company shall use the net cash proceeds of its --------------- sale of Securities hereunder solely for working capital purposes. ARTICLE III CLOSING 3.1. Time and Place of Closing. Upon the terms and subject to the ------------------------- conditions hereof, the closing of the Transactions (the "Closing") shall take at ------- the offices of Friedman Kaplan & Seiler LLP, 875 Third Avenue, New York, New York, at 10:00 a.m. local time on May 24, 1999, or at such other place and/or time and/or on such other date as the parties may agree or as may be necessary to permit the fulfillment or waiver of the conditions set forth in Article VII (the "Closing Date"). The Closing shall be deemed to have occurred as of 12:01 ------------ a.m. on the Closing Date. 3.2. Closing Actions and Deliveries. Upon the terms and subject to the ------------------------------ satisfaction or waiver by the appropriate parties, if applicable, of the conditions set forth in Article VII, to effect the purchase and sale of the Securities and consummate the other Transactions, the parties shall on the Closing Date take the following actions: (a) Investor Purchase Price. The Investor shall deliver to the ------------------------ Company by wire transfer of immediately available funds to the account designated by the Company on or prior to the Closing Date an amount equal to the Purchase Price. (b) Delivery of Securities. The Company shall deliver to the ---------------------- Investor, certificates, duly executed by authorized signatories of the Company, representing the shares of Series A Preferred Stock, Series D Preferred Stock and Series F Preferred Stock, to be issued to it in accordance with the terms of Section 2.2. (c) Other Deliveries. The parties shall execute and deliver or ---------------- cause to be executed and delivered all other documents, instruments, opinions and certificates contemplated by this Agreement to be delivered at the Closing or necessary and appropriate in order to consummate the Transactions contemplated to be consummated on the Closing Date. 3.3. Closing Costs; Taxes and Fees. The Company shall pay or cause to be ----------------------------- paid at the Closing or, if due prior to the Closing or thereafter, promptly when due, all transfer taxes (including sales taxes, gross receipts taxes, stamp taxes, and other taxes) payable solely as a result of the payment of the Purchase Price pursuant to this Agreement, but excluding any federal, state, local or other jurisdictional income taxes (or franchise, excise, gross receipts or other taxes that are generally imposed on a party on a periodic basis as a result of a party's status, presence, conduct of business, holding of assets, income, revenues, activities or other items). -7- ARTICLE IV REPRESENTATIONS AND WARRANTIES OF INVESTOR The Investor represents and warrants to the Company as follows: 4.1. Organization, Power and Authority. (a) The Investor is a corporation duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization and has the requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. (b) It has the requisite power and authority to execute, deliver and perform this Agreement and each other instrument, document, certificate and agreement required or contemplated to be executed, delivered and performed by it hereunder to which it is or will be a party. (c) It is duly qualified to do business in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary other than any such jurisdiction in which the failure to be so qualified would not have a Material Adverse Effect on it or materially adversely affect the Transactions. (d) The execution and delivery of this Agreement by it and the consummation of the Transactions by it have been duly and validly authorized by its Board of Directors and no other proceedings on its part which have not been taken (including, without limitation, approval of its stockholders) are necessary to authorize this Agreement or to consummate the Transactions. (e) This Agreement has been duly executed and delivered by it and constitutes its valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar Laws affecting or relating to enforcement of creditors' rights generally and may be subject to general principles of equity. (f) As of the Closing Date, after giving effect to the Transactions, it is not in breach of any obligation under this Agreement. 4.2. Consents; No Conflicts. Neither the execution, delivery and ---------------------- performance by it of this Agreement nor the consummation of the Transactions will (a) conflict with, or result in a breach or violation of, any provision of its organizational documents; (b) subject to obtaining the Consents set forth on Schedule 4.2, constitute, with or without the giving of notice or passage of time or both, a breach, violation or default, create a Lien, or give rise to any right of termination, modification, cancellation, prepayment or acceleration, under (i) any Law or License or (ii) any -8- note, bond, mortgage, indenture, lease, agreement or other instrument, in each case which is applicable to or binding upon it or any of its assets; or (c) require any Consent, other than those set forth on Schedule 4.2 or the approval of its board of directors or stockholders (which approvals have been obtained), except in each case, where such breach, violation, default, Lien, right, or the failure to obtain or give such Consent would not have a Material Adverse Effect on it or materially adversely affect the Transactions. To its knowledge, there is no fact relating to it or its Affiliates that would be reasonably expected to prevent it from consummating the Transactions. 4.3. Litigation. There is no action, proceeding or investigation pending ---------- or, to its knowledge, threatened against it or any of its properties or assets that would be reasonably expected to have an adverse effect on its ability to consummate the Transactions to which it is a party or to fulfill its obligations under this Agreement or which seeks to prevent or challenge the Transactions. 4.4. Brokers. It has not employed any broker, finder or investment banker ------- or incurred any liability for any brokerage fees, commissions or finder's fees in connection with the Transactions. 4.5. No Distribution. It is acquiring the Securities to be acquired by it --------------- hereunder for the purpose of investment and not with a view to or for sale in connection with any distribution thereof (other than in compliance with the Stockholders' Agreement and the Securities Act and all applicable state securities laws). 4.6. Investor Acknowledgments. (a) It is an "accredited investor" as ------------------------ defined in Regulation D of the Securities Act. Its representatives have been provided an opportunity to ask questions of, and have received answers thereto from, the Company and its representatives regarding the terms and conditions of its purchase of Securities, and the Company and its proposed business generally, and have obtained all additional information requested by it to verify the accuracy of all information furnished to it in connection with such purchase. (b) It has such knowledge and experience in financial and business affairs that it is capable of evaluating the merits and risks of purchasing the Securities it is purchasing hereunder. (c) It is not relying on and acknowledges that no representation is being made by the Company or any of its officers, employees, Affiliates, agents or representatives, except for representations and warranties expressly set forth in this Agreement, and, in particular, it is not relying on, and acknowledges that no representation is being made in respect of, (x) any projections, estimates or budgets delivered to or made available to them of future revenues, expenses or expenditures, or future results of operations and (y) any other information or documents delivered or made available to it or its representatives, except for representations and warranties expressly set forth in this Agreement, and such information and documents obtained -9- by it as a stockholder of the Company and through its representatives who serve as members of the Company's board of directors, as the case may be. (d) In deciding to invest in the Company, it has relied exclusively on the representations and warranties expressly set forth in this Agreement, and the investigations made by itself and its representatives and its and such representatives' knowledge of the industry in which the Company proposes to operate. Based solely on such representations and warranties and such investigations and knowledge and such information obtained by it by virtue of its status as a stockholder of the Company, and through its representatives who serve as members of the Company's board of directors, as the case may be, it has determined that the Securities it is acquiring are a suitable investment for it. ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants as to the Company and its Subsidiaries to the Investor as follows: 5.1. Organization, Power and Authority. (a) Each of the Company and --------------------------------- each of its Subsidiaries that is a corporation is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted and as proposed to be conducted. Each of the Company's Subsidiaries that is a limited liability company or a limited partnership is a limited liability company or a limited partnership, as the case may be, duly formed, validly existing and in good standing under the laws of the jurisdiction of formation and has the requisite limited liability company or a limited partnership, as the case may be, power and authority to own, lease and operate its properties and to carry on its business as now being conducted and as proposed to be conducted. (b) It has the requisite power, authority and/or legal capacity to execute, deliver and perform this Agreement and each other instrument, document, certificate and agreement required or contemplated to be executed, delivered and performed by it hereunder to which it is or will be a party. (c) Each of the Company and each of its Subsidiaries is duly qualified to do business in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary other than any such jurisdiction in which the failure to be so qualified would not have a Material Adverse Effect on it or materially adversely affect the Transactions. (d) The execution and delivery of this Agreement and the consummation of the Transactions by it have been duly and validly authorized by its Board of Directors and shareholders and, except for the filing of the Restated Certificate with the office of the Secretary -10- of State of Delaware, no other proceedings which have not been taken are necessary to authorize this Agreement or to consummate the Transactions. (e) This Agreement has been duly executed and delivered by it and constitutes the valid and binding obligation of it, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar Laws affecting or relating to enforcement of creditors' rights generally and may be subject to general principles of equity. (f) As of the Closing, after giving effect to the Transactions, it is not in breach of any obligation under this Agreement. 5.2. Consents; No Conflicts. Neither the execution, delivery and ---------------------- performance of this Agreement nor the consummation of the Transactions will (a) conflict with, or result in a breach or violation of, any provision of its organizational documents; (b) subject to obtaining the Consents set forth on Schedule 5.2, constitute, with or without the giving of notice or passage of time or both, a breach, violation or default, create a Lien, or give rise to any right of termination, modification, cancellation, prepayment or acceleration, under (i) any Law or License, or (ii) any note, bond, mortgage, indenture, lease, agreement or other instrument, in each case which is applicable to or binding upon it or any of its assets; or (c) require any Consent, other than those set forth on Schedule 5.2 or the approval of its Board of Directors or its stockholders (which approval has been obtained), except in each case where such breach, violation, default, Lien, right, or the failure to obtain or give such Consent would not have a Material Adverse Effect on it or materially adversely affect the Transactions or the operation of its business after the Closing Date. To its knowledge, there is no fact relating to it or its Affiliates that would be reasonably expected to prevent it from consummating the Transactions or performing its obligations under this Agreement. 5.3. Litigation. There is no action, proceeding or investigation pending ---------- or, to its knowledge, threatened against it or any of its properties or assets that would have an adverse effect on its ability to consummate the Transactions to which it is a party or to fulfill its obligations under this Agreement, or to operate its business after the Closing Date, or which seeks to prevent or challenge the Transactions. There is no judgment, decree, injunction, rule or order outstanding against it which would limit in any material respect its ability to operate its business in the manner currently contemplated. 5.4. Brokers. It has not employed any broker, finder or investment banker ------- or incurred any liability for any brokerage fees, commissions or finder's fees in connection with the Transaction, except for a fee paid to Chase Securities, Inc. by the Company in an amount which has previously been disclosed to AT&T PCS. 5.5. Capitalization (a) As of the date hereof, the authorized capital -------------- stock of the Company consists of 950,000 shares of Voting Common Stock, 950,000 shares of Non-Voting Common Stock, ten shares of Voting Preference Stock, 1,000 shares of Class C Common Stock, -11- 3,000 shares of Class D Common Stock, 100,000 shares of Series A Preferred Stock, 200,000 shares of Series B Preferred Stock, 215,000 shares of Series C Preferred Stock, 50,000 shares of Series D Preferred Stock, 30,000 shares of Series E Preferred Stock, 50,000 shares of Series F Preferred Stock and 70,000 shares of Senior Common Stock. As of the Closing Date, after giving effect to the filing of the Restated Certificate and the Transactions there will be issued and outstanding the shares of Preferred Stock and Common Stock set forth on Schedule I. The record and beneficial owners of such outstanding shares of Common Stock and Preferred Stock, as of the Closing Date, after giving effect to the Transactions, are set forth on Schedule I. (b) Except as set forth on Schedule 5.5, on the Closing Date, after giving effect to the Transactions, there will not be any existing options, warrants, calls, subscriptions, or other rights, or other agreements or commitments, obligating the Company to issue, transfer or sell any shares of capital stock of the Company. 5.6. Shares. The shares of Preferred Stock being issued to the Investor ------ hereunder, when issued and paid for pursuant to the terms of this Agreement and after giving effect to the filing of the Restated Certificate, will be duly authorized, validly issued, fully paid and non-assessable, and will be free of any Liens caused or created by the Company, except as set forth in the Stockholders' Agreement and the Restated Certificate. The Securities issued upon conversion of the Preferred Stock issued on the Closing Date, or upon conversion thereof after the Closing Date, when issued pursuant to the terms thereof, will be validly issued, fully paid and non-assessable, and will be free of any Liens caused or created by the Company, except as set forth in the Stockholders' Agreement and the Restated Certificate. 5.7. Offering of Securities. (a) None of the Company or any Person acting ---------------------- on its behalf has offered the Securities or any similar equity securities of the Company for sale to, or solicited any offers to buy Securities or any similar equity securities of the Company from, any Person, other than a limited number of other "accredited investors" (as defined in Rule 501(a) under the Securities Act). (b) None of the Company or any Person acting on its behalf will, directly or indirectly, take any action which might subject the offering, issuance or sale of the Securities to the registration and prospectus delivery requirements of Section 5 of the Securities Act. (c) Assuming the accuracy of the representations and warranties of the Investor contained in Section 4.6, each of the offering and sale of Securities under this Agreement to the Investor complies with all applicable requirements of Federal and state securities laws. 5.8. Subsidiaries. The Company owns directly or indirectly all of the ------------ outstanding shares of Capital Stock of each of its Subsidiaries, free and clear of any Liens, except Liens granted to the Lenders pursuant to the Credit Documents. Set forth on Schedule 5.8 is a complete list of its direct and indirect Subsidiaries indicating the jurisdictions in which such Subsidiary is organized or qualified to conduct business. -12- ARTICLE VI COVENANTS 6.1. Consummation of Transactions. Each party shall use all commercially ---------------------------- reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable and consistent with applicable law to carry out all of their respective obligations under this Agreement and to consummate the Transactions, which efforts shall include, without limitation, the following: (a) The parties shall use all commercially reasonable efforts to cause the Closing to occur and the Transactions to be consummated in accordance with the terms hereof, and, without limiting the generality of the foregoing, to obtain all necessary Consents including the approval of this Agreement and the Transactions by all Governmental Authorities and agencies, , and to make all filings with and to give all notices to third parties which may be necessary or reasonably required in order for the parties to consummate the Transactions. (b) Each party shall furnish to the other parties all information concerning such party and its Affiliates reasonably required for inclusion in any application or filing to be made by the Company or any other party in connection with the Transactions. (c) Upon the request of any other party, each party shall forthwith execute and deliver, or cause to be executed and delivered, such further instruments of assignment, transfer, conveyance, endorsement, direction or authorization and other documents as may reasonably be requested by such party in order to effectuate the purposes of this Agreement. 6.2. Use of Proceeds. The Company shall use the proceeds of the sale of --------------- Securities only for the purposes described in Section 2.4. 6.3. Restated Certificate. It is the intention of the parties hereto that -------------------- the Restated Certificate shall be amended as necessary (e.g., to increase the number of authorized shares of Capital Stock) to give effect to, among other things, the Securities issued at the Closing. The parties agree to use their respective best efforts to effectuate any and all such amendments at any such Closing. 6.4. Offering of Securities. None of the Company or any Person acting on ---------------------- its behalf will, directly or indirectly, take any action which might subject the offering, license or sale of the Securities to the registration and prospectus delivery requirements of Section 5 of the Securities Act. -13- ARTICLE VII CLOSING CONDITIONS 7.1. Conditions to Obligations of All Parties. The obligation of each of ---------------------------------------- the parties to consummate the Transactions contemplated to occur at the Closing shall be conditioned on the following, unless waived by each of the parties at or prior to Closing: (a) All Consents by any Governmental Authority required to permit the consummation of the Transactions and to permit the transactions contemplated by the Asset Purchase Agreement, the failure to obtain or make which would be reasonably expected to have a Material Adverse Effect on the Company or Investor or to materially adversely affect the Transactions shall have been obtained or made. (b) No preliminary or permanent injunction or other order, decree or ruling issued by a Governmental Authority, nor any statute, rule, regulation or executive order promulgated or enacted by any Governmental Authority, shall be in effect that would (i) impose material limitations on the ability of any party to consummate the Transactions or prohibit such consummation, or (ii) impair in any material respect the operation of the Company. (c) The Restated Certificate shall have been filed with the Delaware Secretary of State. (d) Each Stockholder (as such term is defined in the Stockholders' Agreement) other than the Investor shall have delivered a waiver of the pre-emptive rights afforded to such Stockholder pursuant to Section 7.2(b) of the Stockholders' Agreement. (e) The Company shall have received any consent of the lenders that may be required pursuant to the terms of the Credit Agreement. 7.2. Conditions to Obligations of the Company. The obligation of the ---------------------------------------- Company to consummate the Transactions contemplated to occur at the Closing shall be further conditioned upon the satisfaction or fulfillment, at or prior to the Closing, of the following conditions by the Investor, unless waived by the Company at or prior to the Closing: (a) The representations and warranties of the Investor contained herein shall be true and correct in all material respects (except for representations and warranties that are qualified as to materiality, which shall be true and correct), in each case when made and at and as of the Closing (except for representations and warranties made as of a specified date, which shall be true and correct as of such date) with the same force and effect as though made at and as of such time, except for inaccuracies in respect of the representations and warranties set forth in Section 4.3, (disregarding any qualifications as to materiality contained therein) that in the aggregate would not be reasonably expected to have a Material Adverse Effect on the Company or to materially adversely affect the Transactions. (b) The Investor shall have performed in all material respects all agreements contained herein or required to be performed by it at or before the Closing. -14- (c) An officer of the Investor shall have delivered to the Company a certificate, dated the Closing Date, certifying as to the fulfillment of the conditions set forth in paragraphs (a) and (b) above. (d) The Company shall have been furnished with an Opinion of Counsel to the Investor dated the Closing Date. (e) All corporate and other proceedings of the Investor in connection with the Transactions, and all documents and instruments incident thereto, shall be reasonably satisfactory in form and substance to the Company, and the Investor shall have delivered to the Company such receipts, documents, instruments and certificates, in form and substance reasonably satisfactory to the Company which the Company shall have reasonably requested in order to consummate the Transactions. 7.3. Conditions to the Obligations of the Investors. The obligation of ---------------------------------------------- the Investor to consummate the Transactions contemplated to occur at the Closing shall be further conditioned upon the satisfaction or fulfillment, at or prior to the Closing, of the following conditions, unless waived by it at or prior to the Closing: (a) The representations and warranties of the Company contained herein shall be true and correct in all material respects (except for representations and warranties that are qualified as to materiality, which shall be true and correct), in each case when made and at and as of the Closing (except for representations and warranties made as of a specified date, which shall be true and correct as of such date) with the same force and effect as though made at and as of such time, except for inaccuracies in respect of the representations and warranties set forth in Section 5.3 (disregarding any qualifications as to materiality contained therein) that in the aggregate would not be reasonably expected to have a Material Adverse Effect on the Company or to materially adversely affect the Transactions. (b) The Company shall have performed in all material respects all agreements contained herein or required to be performed by it at or before the Closing. (c) An officer of the Company shall have delivered to the Investor a certificate, dated the Closing Date, certifying as to the fulfillment of the conditions set forth in paragraphs (a) and (b) above. (d) The Investor shall have been furnished with an Opinion of Counsel to the Company dated the Closing Date. (e) All corporate and other proceedings of the Company in connection with the Transactions, and all documents and instruments incident thereto, shall be reasonably satisfactory in form and substance to the Investor, the Company shall have delivered to the Investor all such receipts, documents, instruments and certificates, in form and substance -15- reasonably satisfactory to the Investor, which the Investor shall have reasonably requested in order to consummate the Transactions. ARTICLE VIII SURVIVAL AND INDEMNIFICATION 8.1. Survival. Except for the representations and warranties contained in -------- Sections 4.1(a), (b), (d) and (e), and 5.1(a), (b), (d) and (e) (which shall survive the Closing, without regard to any investigation made by any of the parties hereto, until the expiration of the applicable statute of limitations relating thereto), the representations and warranties made in this Agreement shall survive the Closing without regard to any investigation made by any of the parties hereto until the second anniversary thereof and shall thereupon expire together with any right to indemnification in respect thereof (except to the extent a written notice asserting a claim for breach of any such representation or warranty and describing such claim in reasonable detail shall have been given prior to the expiration of the applicable survival period to the party which made such representation or warranty). The covenants and agreements contained herein to be performed or complied with prior to the Closing shall expire at the Closing. The covenants and agreements contained in this Agreement to be performed or complied with after the Closing shall survive the Closing; provided that the right to indemnification pursuant to this Article VIII in respect of a breach of a representation or warranty shall expire upon the application of the applicable survival period of the Closing (except to the extent written notice asserting a claim thereunder and describing such claim in reasonable detail shall have been given prior to such expiration to the party from whom such indemnification is sought). After the Closing, the sole and exclusive remedy of the parties for any breach or inaccuracy of any representation or warranty contained in this Agreement, or any other claim (whether or not alleging a breach of this Agreement) that arises out of the facts and circumstances constituting such breach or inaccuracy, shall be the indemnity provided in this Article VIII. 8.2. Indemnification by the Investor. The Investor shall indemnify and ------------------------------- hold harmless the Company and its Affiliates, directors, shareholders, officers, employees, agents and/or the legal representatives of any of them (each, a "Section 8.2 Indemnified Party"), against all liabilities and expenses ----------------------------- (including amounts paid in satisfaction of judgments, in compromise, as fines and penalties, and as counsel fees) (collectively, "Losses") incurred by him/her ------ or it in connection with the investigation, defense, or disposition of any action, suit or other proceeding in which any Section 8.2 Indemnified Party may be involved or with which he/she or it may be threatened (whether arising out of or relating to matters asserted by third parties against a Section 8.2 Indemnified Party or incurred or sustained by such party in the absence of a third-party claim), that arises out of or results from (a) any representation or warranty of the Investor contained in this Agreement being untrue in any material respect as of the date on which it was made or (b) any material default by such indemnifying party or any of its Affiliates in the performance of their respective obligations under this Agreement, except to the extent (but only to the extent) any such Losses arise out of or result from the gross negligence or willful misconduct of such -16- Section 8.2 Indemnified Party or its Affiliates, provided, that the aggregate liability of the Investor to indemnify Section 8.2 Indemnified Parties against Losses arising out of or resulting from (x) any such representation or warranty of the Investor contained in this Agreement and included in this indemnification by the Investor being untrue, or (y) default by the Investor or any of its Affiliates in the performance of their respective obligations under this Agreement shall (except, in the case of clause (y), to the extent (but only to the extent) any such Losses arise out of or result from the gross negligence or willful misconduct of the Investor) be limited to $30,000,000; provided further, that the Investor shall have the option of satisfying any such Losses incurred by the Company (in its capacity as a Section 8.2 Indemnified Party) by tendering to the Company shares of Series A Preferred Stock (such shares to be valued for such purposes at the aggregate liquidation preference thereof). 8.3. Indemnification by the Company. The Company shall indemnify and hold ------------------------------ harmless the Investor and its Affiliates, directors, shareholders, officers, employees, agents and/or the legal representatives of any of them (each, a "Section 8.3 Indemnified Party"), against all Losses incurred by him/her or it ----------------------------- in connection with the investigation, defense, or disposition of any action, suit or other proceeding in which any Section 8.3 Indemnified Party may be involved or with which he/she or it may be threatened (whether arising out of or relating to matters asserted by third parties against a Section 8.3 Indemnified Party or incurred or sustained by such party in the absence of a third-party claim), that arises out of or results from (a) any representation or warranty of the Company contained in this Agreement being untrue in any material respect as of the date on which it was made or (b) any material default by the Company or any of its Affiliates in the performance of their respective obligations under this Agreement, except to the extent (but only to the extent) any such Losses arise out of or result from the gross negligence or willful misconduct of such Section 8.3 Indemnified Party or its Affiliates, provided, that the aggregate liability of the Company to indemnify Section 8.3 Indemnified Parties against Losses arising out of or resulting from (x) any such representation or warranty of the Company contained in this Agreement and included in this indemnification by the Company being untrue, or (y) any default by the Company or any of its Affiliates in the performance of their respective obligations under this Agreement shall (except, in the case of clause (y), to the extent (but only to the extent) any such Losses arise out of or result from the gross negligence or willful misconduct of the Company) be limited to $30,000,000. 8.4. Procedures. (a) The terms of this Section 8.4 shall apply to any claim (a "Claim") for indemnification under the terms of Sections 8.2 or 8.3. The ----- Section 8.2 Indemnified Party or Section 8.3 Indemnified Party (each, an "Indemnified Party"), as the case may be, shall give prompt written notice of ----------------- such Claim to the indemnifying party (the "Indemnifying Party") under the ------------------ applicable Section, which party may assume the defense thereof, provided that any delay or failure to so notify the Indemnifying Party shall relieve the Indemnifying Party of its obligations hereunder only to the extent, if at all, that it is materially prejudiced by reason of such delay or failure. The Indemnified Party shall have the right to approve any counsel selected by the -17- Indemnifying Party and to approve the terms of any proposed settlement, such approval not to be unreasonably delayed or withheld (unless, in the case of approval of a proposed settlement, such settlement provides only, as to the Indemnified Party, the payment of money damages actually paid by the Indemnifying Party and a complete release of the Indemnified Party in respect of the claim in question). Notwithstanding any of the foregoing to the contrary, the provisions of this Article VIII shall not be construed so as to provide for the indemnification of any Indemnified Party for any liability to the extent (but only to the extent) that such indemnification would be in violation of applicable law or that such liability may not be waived, modified or limited under applicable law, but shall be construed so as to effectuate the provisions of this Article VIII to the fullest extent permitted by law. (b) In the event that the Indemnifying Party undertakes the defense of any Claim, the Indemnifying Party will keep the Indemnified Party advised as to all material developments in connection with such Claim, including, but not limited to, promptly furnishing the Indemnified Party with copies of all material documents filed or served in connection therewith. (c) In the event that the Indemnifying Party fails to assume the defense of any Claim within ten business days after receiving written notice thereof, the Indemnified Party shall have the right, subject to the Indemnifying Party's right to assume the defense pursuant to the provisions of this Article VIII, to undertake the defense, compromise or settlement of such Claim for the account of the Indemnifying Party. Unless and until the Indemnified Party assumes the defense of any Claim, the Indemnifying Party shall advance to the Indemnified Party any of its reasonable attorneys' fees and other costs and expenses incurred in connection with the defense of any such action or proceeding. Each Indemnified Party shall agree in writing prior to any such advancement that, in the event he or it receives any such advance, such Indemnified Party shall reimburse the Indemnifying Party for such fees, costs and expenses to the extent that it shall be determined that he or it was not entitled to indemnification under this Article VIII. (d) In no event shall an Indemnifying Party be required to pay in connection with any Claim for more than one firm of counsel (and local counsel) for each of the following groups of Indemnified Parties: (i) the Investor, its Affiliates, directors, shareholders, officers, employees, agents and/or the legal representatives of any of them; and (ii) the Company, its Affiliates, directors, shareholders, officers, employees, agents and/or the legal representatives of any of them. 8.5. Registration Rights. Notwithstanding anything to the contrary in this ------------------- Article VIII, the indemnification and contribution provisions set forth in Sections 5(e) and 5(f) of the Stockholders' Agreement shall govern any claim made with respect to the registration statements filed pursuant to Section 5 of the Stockholders' Agreement or sales made thereunder. -18- ARTICLE IX TERMINATION 9.1. Termination. In addition to any other rights of termination set forth ----------- herein, this Agreement may be terminated, and the Transactions abandoned, without further obligation of any party (except as set forth herein), at any time prior to the Closing Date: (a) by mutual written consent of the parties; (b) by either party by written notice to the other parties, if the Closing shall not have occurred on or before the date that is six months after the date hereof, provided that the party electing to exercise such right is not otherwise in breach of its obligations under this Agreement; or (c) by any party by written notice to the other parties, if the consummation of the Transactions shall be prohibited by a final, non-appealable order, decree or injunction of a court of competent jurisdiction. 9.2. Effect of Termination. In the event of a termination of this --------------------- Agreement, no party hereto shall have any liability or further obligation to any other party to this Agreement, except as set forth in paragraph (b) below, and except that nothing herein will relieve any party from liability for any breach by such party of this Agreement. (a) In the event of a termination of this Agreement pursuant to Section 9.1, all provisions of this Agreement shall terminate, except Articles VIII and X. (b) Whether or not the Closing occurs, except as otherwise expressly provided in this Agreement, all costs and expenses incurred in connection with this Agreement and the Transactions shall be paid by the party incurring such expenses. ARTICLE X MISCELLANEOUS PROVISIONS 10.1. Amendment and Modification. This Agreement may be amended, modified -------------------------- or supplemented only by written agreement of each of the parties. 10.2. Waiver of Compliance; Consents. Any failure of any of the parties to ------------------------------ comply with any obligation, covenant, agreement or condition herein may be waived by the party or parties entitled to the benefits thereof only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on -19- behalf of any party hereto, such consent shall be given in writing in a manner consistent with the requirement for a waiver of compliance as set forth in this Section 10.2. 10.3. Notices. All notices or other communications hereunder shall be in ------- writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person against receipt, by facsimile transmission with confirmation of receipt, or by registered or certified mail (return receipt requested), postage prepaid, with an acknowledgment of receipt signed by the addressee or an authorized representative thereof, addressed as follows (or to such other address for a party as shall be specified by like notice; provided that notice of a change of address shall be effective only upon receipt thereof): -20- If to the Investor, to: c/o AT&T Wireless Services, Inc. 7277 164th Avenue N.E. Redmond, Washington 98052 Attention: William H. Hague, Esq. Facsimile: (425) 580-8405 With a copy to: Friedman Kaplan & Seiler LLP 875 Third Avenue New York, New York 10019 Attention: Gregg L. Lerner, Esq. Facsimile: (212) 833-1100 If to the Company, to it: 1010 N. Glebe Road, Suite 800 Arlington, Virginia 22201 Attn: General Counsel Facsimile: (703) 236-1102 10.4. Parties in Interest; Assignment. This Agreement is binding upon and ------------------------------- is solely for the benefit of the parties hereto and their respective permitted successors, legal representatives and permitted assigns. Neither the Company nor the Investor may assign its rights and obligations hereunder without the prior written consent of each of the other parties; provided, that: (a) the Company shall have the right to assign its rights under this Agreement to the lenders (the "Lenders") named in the Credit Agreement, as security pursuant to ------- the terms of the Credit Documents, it being understood that as a result of any such assignment to the Lenders, the Lenders shall not assume any obligations of the Company hereunder. 10.5. Applicable Law. This Agreement shall be governed by and construed in -------------- accordance with the laws of the State of New York without giving effect to the conflicts of law principles thereof. The parties hereto hereby irrevocably and unconditionally consent to submit to the non-exclusive jurisdiction of the courts of the State of New York and of the United States of America located in the County of New York, New York (the "New York Courts") for any litigation --------------- arising out of or relating to this Agreement and the Transactions, waive any objection to the laying of venue of any such litigation in the New York Courts and agrees not to plead or claim in any New York Court that such litigation brought therein has been brought in an inconvenient forum. -21- 10.6. Counterparts. This Agreement may be executed in two or more ------------ counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. 10.7. Interpretation. The article and section headings contained in this -------------- Agreement are for convenience of reference only, are not part of the agreement of the parties and shall not affect in any way the meaning or interpretation of this Agreement. 10.8. Entire Agreement. This Agreement, including the exhibits and ---------------- schedules hereto and thereto and the certificates and instruments delivered pursuant to the terms of this Agreement, embody the entire agreement and understanding of the parties hereto in respect of the Transactions. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such Transactions. 10.9. Publicity. So long as this Agreement is in effect, the parties --------- agree to consult with each other in issuing any press release or otherwise making any public statement with respect to the Transactions, and no party shall issue any press release or make any such public statement prior to such consultation, except as may be required by Law. No press release or other public statement by the parties hereto shall disclose any of the financial terms of the Transactions without the prior consent of the other parties, except as may be required by Law. A breach of the provisions of this Section 10.9 by a party shall not give rise to any right to terminate this Agreement. 10.10. Specific Performance. The parties hereto agree that irreparable -------------------- damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any New York Courts. 10.11. Remedies Cumulative. All rights, powers and remedies provided under ------------------- this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise or beginning of the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. 10.12. Severability. Any provision of this Agreement that is prohibited or ------------ unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. If any court determines that any covenant or any part of any covenant is invalid or unenforceable, such covenant shall be enforced to the extent permitted by such -22- court, and all other covenants shall not thereby be affected and shall be given full effect, without regard to the invalid portions. 10.13. Beneficiaries of Agreement. The representations, warranties, -------------------------- covenants and agreements expressed in this Agreement are for the sole benefit of the other parties hereto and the Section 8.2 Indemnified Parties and Section 8.3 Indemnified Parties and are not intended to benefit, and may not be relied upon or enforced by, any other party as a third party beneficiary or otherwise. 10.14. Stock Valuation. The parties hereby agree that the per share value --------------- attributable as of the date hereof to the Series F Preferred Stock is $1.00. -23- IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. TELECORP PCS, INC. By: /s/ Thomas H. Sullivan ------------------------------ Name: Thomas H. Sullivan Title: Executive Vice President AT&T WIRELESS PCS, INC. By: /s/ William W. Hague ------------------------------ Name: William W. Hague Title: Senior Vice President -24- SCHEDULE I Capitalization -------------- Filed Separately. -25- SCHEDULE 4.2 Investor Consents ----------------- The execution, delivery and performance of the Agreement will or may require the following consents, approvals and reviews: 1. The Federal Communications Commission. 2. The Federal Trade Commission/Department of Justice. 3. Various Governmental Authorities with respect to Franchise Laws. -26- SCHEDULE 5.2 Company Consents ---------------- The execution, delivery and performance of the Agreement will or may require the following consents, approvals and reviews: 1. The Federal Communications Commission. 2. The Federal Trade Commission/Department of Justice. 3. Various Governmental Authorities with respect to Franchise Laws. -27- SCHEDULE 5.5 Outstanding Options, Warrants, Etc. ----------------------------------- 1. Upon the closing of the transaction contemplated by the License Acquisition Agreement by and between Wireless 2000, Inc. ("Wireless") and the Company, dated as of December 2, 1998 (the "Wireless Acquisition Agreement"), the Company shall issue to Wireless: (i) five hundred forty-five and 20/100 (545.20) shares of Series C Preferred Stock, par value $.01 per share, and (ii) five hundred thirty and 40/100 (530.40) shares of Class A Voting Common Stock, par value $.01 per share, of the Company. 2. Pursuant to the terms of that certain Stock Purchase Agreement dated March 22, 1999 by and among the Company, AT&T Wireless PCS Inc. and certain other stockholders of the Company, as amended the Company shall issue 32,286 shares of Class A Common Voting Stock and Series C, D and F Preferred Stock. 3. Pursuant to the terms of that certain Puerto Stock Purchase Agreement, dated as of March 30, 1999, by and among the Company, Puerto Rico Acquisiton Corp. and the Cash Equity Investors and Management Stockholders identified therein, the Company shall issue an aggregate amount of 39,996.60 shares of each of Class A Common Voting Stock and Series C Preferred Stock. -28- SCHEDULE 5.8 ------------ Subsidiaries of the Company ---------------------------
========================================================================================= Subsidiary Name State Of Qualified In: Incorporation - ----------------------------------------------------------------------------------------- 1. TeleCorp Communications, Inc. DE AR, DC, IL, IN, LA, MA, MO, MS, NH, TN, TX, VA - ----------------------------------------------------------------------------------------- 2. TeleCorp Holding Corp., Inc. DE LA, MA, NH, TN, TX, VA/1/ - ----------------------------------------------------------------------------------------- 3. TeleCorp Limited Holdings, Inc. DE AR, DC, IL, MA, MS - ----------------------------------------------------------------------------------------- 4. TeleCorp Realty Holdings, Inc. DE None - ----------------------------------------------------------------------------------------- 5. TeleCorp PCS, L.L.C. (Sole Member is: TeleCorp PCS, DE None Inc.) - ----------------------------------------------------------------------------------------- 6. TeleCorp Realty, L.L.C. DE AR, DC, IL, LA, MA, MO,MS, NH, TN, TX (Managing Member is: TeleCorp Communications, Inc.) - ----------------------------------------------------------------------------------------- 7. TeleCorp Equipment Leasing, L.P. DE AR, DC, IL, IN, LA, MA, MO, MS, NH, TN, TX (General Partner is: TeleCorp Limited Holdings, Inc.) - ----------------------------------------------------------------------------------------- 8. Affiliate License Co., L.L.C. DE None (Sole Member is TeleCorp PCS, Inc.) =========================================================================================
- ----------------------------------- /1/ TeleCorp Holding Corp will be withdrawn from each of the states in which it is qualified (except Delaware) upon the filing of the company's tax returns for the year ended December 31, 1998. -29- EX-10.15 29 LICENSE ACQUISITION AGREEMENT EXHIBIT 10.15.1 ================================================================================ LICENSE ACQUISITION AGREEMENT between MERCURY PCS II, LLC and TELECORP PCS, INC. Dated as of May 15, 1998 ================================================================================ TABLE OF CONTENTS -----------------
Page ---- ARTICLE I -- DEFINITIONS....................................................................................... 1 ARTICLE II -- PURCHASE AND SALE OF LICENSES; PAYMENT OF CONSIDERATION; CERTAIN RESTRICTIONS ON TRANSFER............................................................. 5 2.1 Purchase and Sale of Licenses.................................................................... 5 2.2 Payment of Consideration......................................................................... 5 2.3 Assumption of Indebtedness....................................................................... 5 2.4 Payment of Certain Expenses...................................................................... 5 2.5 Restrictive Legends.............................................................................. 5 ARTICLE III -- CLOSING......................................................................................... 6 3.1 Time and Place of Closing........................................................................ 6 3.2 Closing Actions and Deliveries................................................................... 6 3.3 Payment of Transfer Taxes........................................................................ 7 ARTICLE IV -- REPRESENTATIONS AND WARRANTIES OF MERCURY........................................................ 7 4.1 Organization, Power and Authority................................................................ 7 4.2 Consents; No Conflicts........................................................................... 8 4.3 Litigation....................................................................................... 8 4.4 FCC Compliance................................................................................... 8 4.5 Brokers.......................................................................................... 8 4.6 Mercury Licenses................................................................................. 9 4.7 No Distribution.................................................................................. 9 4.8 Investor Acknowledgments......................................................................... 9
i ARTICLE V -- REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................................... 10 5.1 Organization, Power and Authority................................................................ 10 5.2 Consents; No Conflicts........................................................................... 11 5.3 Litigation....................................................................................... 11 5.4 FCC Compliance................................................................................... 11 5.5 Brokers.......................................................................................... 11 5.6 Capitalization................................................................................... 12 5.7 Shares........................................................................................... 12 5.8 Offering of Securities........................................................................... 12 5.9 Securities Purchase Agreement.................................................................... 13 ARTICLE VI -- COVENANTS........................................................................................ 13 6.1 Consummation of Transactions..................................................................... 13 6.2 Confidentiality.................................................................................. 14 6.3 Certain Covenants................................................................................ 15 ARTICLE VII -- CLOSING CONDITIONS.............................................................................. 15 7.1 Conditions to Obligations of All Parties......................................................... 15 7.2 Conditions to Obligations of the Company......................................................... 16 7.3 Conditions to the Obligations of Mercury......................................................... 17 ARTICLE VIII -- SURVIVAL AND INDEMNIFICATION.................................................................. 18 8.1 Survival......................................................................................... 18 8.2 Indemnification by Mercury....................................................................... 18 8.3 Indemnification by the Company................................................................... 19
ii TABLE OF CONTENTS ----------------- (continued)
Page ---- 8.4 Procedures....................................................................................... 19 8.5 Registration Rights.............................................................................. 20 ARTICLE IX -- TERMINATION...................................................................................... 20 9.1 Termination...................................................................................... 20 9.2 Effect of Termination............................................................................ 21 ARTICLE X -- MISCELLANEOUS PROVISIONS.......................................................................... 21 10.1 Amendment and Modification...................................................................... 21 10.2 Waiver of Compliance; Consents.................................................................. 21 10.3 Notices......................................................................................... 21 10.4 Parties in Interest; Assignment................................................................. 22 10.5 Applicable Law.................................................................................. 22 10.6 Counterparts.................................................................................... 23 10.7 Interpretation.................................................................................. 23 10.8 Entire Agreement................................................................................ 23 10.9 Publicity....................................................................................... 23 10.10 Specific Performance........................................................................... 23 10.11 Remedies Cumulative............................................................................ 23
Schedules - --------- Schedule I -- Mercury Licenses Schedule 4.2 -- Mercury Consents Schedule 4.3 -- Mercury Litigation Schedule 4.6 -- Mercury FCC Proceedings iii Schedule 5.2 -- Company Consents Exhibits - -------- Exhibit A -- Form of Opinion of Counsel to Mercury Exhibit B -- Form of Opinion of FCC Counsel to Mercury Exhibit C -- Form of Opinion of Counsel to Company Exhibit D -- Form of Assignment iv LICENSE ACQUISITION AGREEMENT ----------------------------- LICENSE ACQUISITION AGREEMENT, dated as of May 15, 1998, between MERCURY PCS II, LLC, a Mississippi limited liability company ("Mercury"), and ------- TELECORP PCS, a Delaware corporation (the "Company"). ------- WHEREAS, Mercury has been granted the PCS licenses described on Schedule I (the "Mercury Licenses"); and ---------------- WHEREAS, Mercury wishes to sell to the Company, and the Company wishes to acquire from Mercury, the Mercury Licenses, all on the terms and subject to the conditions herein set forth; NOW, THEREFORE, in consideration of the promises and the mutual representations, warranties, covenants, conditions and agreements hereinafter set forth, the parties agree as follows: ARTICLE I DEFINITIONS ----------- As used herein, the following terms have the following meanings (unless indicated otherwise, all Section and Article references are to Sections and Articles in this Agreement, and all Schedule and Exhibit references are to Schedules and Exhibits to this Agreement): "Affiliate" means, with respect to any Person, any other Person that --------- directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with that Person. For purposes of this definition, "control" (including the terms "controlling" and "controlled") means ------- ----------- ---------- the power to direct or cause the direction of the management and policies of a Person, directly or indirectly, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise. "AT&T PCS" means AT&T Wireless PCS Inc., a Delaware corporation. -------- "Cash Equity Investors" means the Persons identified as such in the --------------------- Securities Purchase Agreement. "Claim" has the meaning set forth in Section 8.5. ----- "Closing" has the meaning set forth in Section 3.1. ------- "Closing Date" has the meaning set forth in Section 3.1. ------------ "Common Stock" means, collectively, the Voting Common Stock and the ------------ Non-Voting Common Stock. "Company" has the meaning set forth in the preamble. ------- "Confidential Information" means any and all information regarding the ------------------------ business, finances, operations, products, services and customers of the Person specified and its Affiliates, in written or oral form or in any other medium. "Consents" means all consents and approvals of Governmental -------- Authorities or other third parties necessary to authorize, approve or permit the parties hereto to consummate the Transactions and for the Company to operate its business after the Closing Date as currently contemplated. "FCC" means the Federal Communications Commission or similar --- regulatory authority established in replacement thereof. "FCC Law" means the Communications Act of 1934, as amended, including ------- as amended by the Telecommunications Act of 1996, and the rules, regulations and policies promulgated thereunder. "Final Order" has the meaning set forth in Section 7.1(b). ----------- "Governmental Authority" means a Federal, state or local court, ---------------------- legislature, governmental agency (including, without limitation, the United States Department of Justice), commission or regulatory or administrative authority or instrumentality. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of ------- 1976, as amended, and the rules and regulations promulgated thereunder. "Indemnified Party" has the meaning set forth in Section 8.4. ----------------- "Indemnifying Party" has the meaning set forth in Section 8.4. ------------------ "Law" means applicable common law and any statute, ordinance, code or --- other law, rule, permit, permit condition, regulation, order, decree, technical or other standard, requirement or procedure enacted, adopted, promulgated, applied or followed by any Governmental Authority. "License" means a license, permit, certificate of authority, waiver, ------- approval, certificate of public convenience and necessity, registration or other authorization, consent or clearance to construct or operate a facility, including any emissions, discharges or releases therefrom, or to transact an activity or business, to construct a tower or to use an asset or process, in each case issued or granted by a Governmental Authority. "Lien" means, with respect to any asset, any mortgage, lien, pledge, ---- charge, security interest, right of first refusal or right of others therein, or encumbrance of any nature whatsoever in respect of such asset. "Losses" has the meaning set forth in Section 8.2. ------ "Management Stockholders" means the Persons identified as such in the ----------------------- Securities Purchase Agreement. "Material Adverse Effect" means a material adverse effect on the ----------------------- business, financial condition, assets, liabilities or results of operations or prospects of the Person specified. "Mercury" has the meaning set forth in the preamble. ------- "Mercury License Transfer" has the meaning set forth in Section ------------------------ 3.2(a). "Mercury Licenses" has the meaning set forth in the first recital. ---------------- "New York Courts" has the meaning set forth in Section 10.6. --------------- "Non-Voting Common Stock" means the Company's Class B Non-Voting ----------------------- Common Stock, par value $.01 per share. "Original Certificate" has the meaning set forth in the second -------------------- recital. "Person" means an individual, corporation, partnership, limited ------ liability company, association, joint stock company, Governmental Authority, business trust, unincorporated organization, or other legal entity. "Preferred Stock" means the shares of Series A Preferred Stock, Series --------------- C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock and Series F Preferred Stock of the Company. "Purchaser" means any Person identified as such in the Securities --------- Purchase Agreement. "Representatives" has the meaning set forth in Section 6.2(a). --------------- "Restated Bylaws" means the Amended and Restated Bylaws of the --------------- Company, in the form of Exhibit D to the Securities Purchase Agreement, to be adopted as of the TeleCorp Closing Date, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Restated Certificate" means the Amended and Restated Certificate of -------------------- Incorporation of the Company, in the form of Exhibit E to the Securities Purchase Agreement, to be filed with the office of the Secretary of State of the State of Delaware on the TeleCorp Closing Date, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Section 8.2 Indemnified Party" has the meaning set forth in Section ----------------------------- 8.2. "Section 8.3 Indemnified Party" has the meaning set forth in Section ----------------------------- 8.3. "Securities" means the shares of Series C Preferred Stock and Common ---------- Stock being issued hereunder, together with any shares of Common Stock issued upon conversion of shares of Series C Preferred Stock. "Securities Act" means the Securities Act of 1933, as amended. -------------- "Securities Purchase Agreement" means the Securities Purchase ----------------------------- Agreement, dated as of January 23, 1998, by and among the Company, AT&T PCS, the Cash Equity Investors, the TeleCorp Investors and the Management Stockholders, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Series C Preferred Stock" has the meaning set forth in Section 2.2. ------------------------ "Stockholders Agreement" means the Stockholders Agreement, by and ---------------------- among the Company, AT&T PCS, the Cash Equity Investors, the TeleCorp Investors, Mercury and the Management Stockholders, in substantially the form of Exhibit G to the Securities Purchase Agreement, to be dated as of the TeleCorp Closing Date, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Subsidiary" shall mean, with respect to any Person, a corporation or ---------- other entity of which 50% or more of the voting power or the voting equity securities or equity interest is owned, directly or indirectly, by such Person. "TeleCorp Closing" means the closing under the Securities Purchase ---------------- Agreement. "TeleCorp Investors" means the Persons identified as such in the ------------------ Securities Purchase Agreement. "TeleCorp Transactions" means the transactions contemplated by the --------------------- Securities Purchase Agreement and the agreements referred to therein. "Transactions" means the transactions contemplated by this Agreement ------------ and the Stockholders Agreement. "Voting Common Stock" has the meaning set forth in Section 2.2. ------------------- "Voting Preference Stock" means the Company's Voting Preference Stock, ----------------------- par value $.01 per share. ARTICLE II PURCHASE AND SALE OF LICENSES; PAYMENT OF CONSIDERATION; ------------------------------------------------------- CERTAIN RESTRICTIONS ON TRANSFER -------------------------------- 2.1 Purchase and Sale of Licenses. Upon the terms and subject to the ----------------------------- conditions hereof and in reliance upon the representations, warranties and agreements herein contained, at the Closing, Mercury shall sell, transfer, assign, convey and deliver to the Company (or one or more wholly owned Subsidiaries of the Company designated by the Company), free and clear of all Liens (other than Liens securing the indebtedness to be assumed by the Company pursuant to Section 2.3), and the Company agrees to purchase, acquire and accept from Mercury, the Mercury Licenses. 2.2 Payment of Consideration. Upon the terms and subject to the ------------------------ conditions hereof and in reliance upon the representations, warranties and agreements herein contained, at the Closing, in consideration of the assignment of the Mercury Licenses, the Company shall issue, sell and deliver to Mercury (i) 2,332.55 shares of Series C Preferred Stock, par value $.01 per share ("Series C Preferred Stock"), of the Company and (ii) 2,269.23 shares of Class A ------------------------ Voting Common Stock, par value $.01 per share ("Voting Common Stock"), of the ------------------- Company, subject in each case to appropriate adjustment in the event of any stock dividend, stock split or combination, or similar recapitalization, prior to the Closing affecting the Series C Preferred Stock or the Voting Common Stock, as applicable. 2.3 Assumption of Indebtedness. On and as of the Closing Date, the -------------------------- Company shall (a) accept and assume the indebtedness of Mercury to the United States Department of the Treasury incurred in connection with the acquisition of the Mercury Licenses and (b) reimburse Mercury for interest actually paid by Mercury on such indebtedness through the Closing Date. 2.4 Payment of Certain Expenses. At the Closing (if any) the Company --------------------------- shall reimburse Mercury, against delivery of customary invoices in reasonable detail, for its legal fees and related expenses incurred in connection with the preparation and filing of applications on Form 490 with the FCC necessary to effect the Mercury License Transfer, provided, that the Company's reimbursement obligation shall be limited to fees and expenses incurred through the date of filing of the last of such applications. 2.5 Restrictive Legends. Each certificate representing Securities ------------------- (including the Securities originally issued hereunder or delivered upon conversion of the Series C Preferred Stock, or delivered in substitution or exchange for any of the foregoing) will bear a legend reading substantially as follows until such Securities have been sold pursuant to an effective registration statement under the Securities Act, Rule 144 under the Securities Act, or an opinion of counsel reasonably satisfactory in form and substance to the Company and otherwise in full compliance with any other applicable restrictions on transfer, including those contained in this Agreement and the Stockholders Agreement: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE 'ACT'), OR UNDER ANY STATE SECURITIES OR 'BLUE SKY' LAWS. SAID SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF, UNLESS AND UNTIL REGISTERED UNDER THE ACT AND THE RULES AND REGULATIONS THEREUNDER AND ALL APPLICABLE STATE SECURITIES OR 'BLUE SKY' LAWS OR EXEMPTED THEREFROM UNDER THE ACT AND ALL APPLICABLE STATE SECURITIES OR 'BLUE SKY' LAWS." ARTICLE III CLOSING ------- 3.1 Time and Place of Closing. Upon the terms and subject to the ------------------------- conditions hereof, the closing of the Transactions (the "Closing") shall take ------- place at the offices of Friedman Kaplan & Seiler LLP, 875 Third Avenue, New York, New York at 10:00 a.m. local time on the twelfth business day following the date of receipt of the last Consent required by subsections (a) through (c) of Section 7.1, or at such other place and/or time and/or on such other date as the parties may agree or as may be necessary to permit the fulfillment or waiver of the conditions set forth in Article VII (the "Closing Date"). ------------ 3.2 Closing Actions and Deliveries. Upon the terms and subject to ------------------------------ the satisfaction or waiver by the appropriate party, if applicable, of the conditions set forth in Article VII, to effect the purchase and sale of the Mercury Licenses and the issuance of the Securities in consideration therefor, the parties shall on the Closing Date take the following actions: (a) Assignment of Licenses. Mercury shall execute and deliver to the ---------------------- Company one or more instruments of assignment, substantially in the form of Exhibit D, sufficient to assign to the Company (or one or more wholly owned Subsidiaries of the Company designated by the Company) the Mercury Licenses (such assignment being herein referred to as the "Mercury License Transfer"). ------------------------ (b) Delivery of Securities. The Company shall deliver to Mercury ---------------------- certificates, duly executed by authorized signatories of the Company, representing the Securities to be issued to Mercury in accordance with the terms of Section 2.2. (c) Assumption of Indebtedness. The Company shall (i) execute and -------------------------- deliver to Mercury an instrument of assumption, in form and substance reasonably satisfactory to Mercury, in respect of the indebtedness to be assumed by the Company pursuant to Section 2.3 and (ii) pay Mercury an amount equal to interest actually paid by Mercury on such indebtedness through the Closing Date as evidenced by documentation reasonably satisfactory to the Company. (d) Other Deliveries. The parties shall execute and deliver or cause ---------------- to be executed and delivered all other documents, instruments, opinions and certificates contemplated by this Agreement or the Stockholders Agreement to be delivered at the Closing or necessary and appropriate in order to consummate the Transactions contemplated to be consummated on the Closing Date. 3.3 Payment of Transfer Taxes. The Company shall pay or cause to be ------------------------- paid at the Closing or, if due thereafter, promptly when due, all gross receipts taxes, gains taxes (including, without limitation, real property gains tax or other similar taxes), transfer taxes, sales taxes, stamp taxes, and any other taxes, but excluding any Federal, State or local income taxes payable in connection with the transfer of the Mercury Licenses. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF MERCURY ----------------------------------------- Mercury represents and warrants to the Company as follows: 4.1 Organization, Power and Authority. (a) It is a limited --------------------------------- liability company duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and has the requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. (b) It has the requisite power and authority to execute, deliver and perform this Agreement, the Stockholders Agreement and each other instrument, document, certificate and agreement required or contemplated to be executed, delivered and performed by it hereunder and thereunder to which it is or will be a party. (c) It is duly qualified to do business in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary other than any such jurisdiction in which the failure to be so qualified would not have a Material Adverse Effect on it or materially adversely affect the Transactions or its ability to perform its obligations under this Agreement and the Stockholders Agreement. (d) The execution and delivery of this Agreement and the Stockholders Agreement by it and the consummation of the Transactions by it have been duly and validly authorized by its Board of Directors (or equivalent body) and no other proceedings on its part which have not been taken (including, without limitation, approval of its stockholders, partners or members) are necessary to authorize this Agreement and the Stockholders Agreement or to consummate the Transactions. (e) This Agreement has been duly executed and delivered by it and constitutes its valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally and may be subject to general principles of equity. The Stockholders Agreement shall be duly executed and delivered by it at the Closing and, upon such execution and delivery, shall constitute its valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally and may be subject to general principles of equity. (f) As of the Closing Date, after giving effect to the Transactions, it is not in breach of any obligation under this Agreement or the Stockholders Agreement. 4.2 Consents; No Conflicts. Neither the execution, delivery and ---------------------- performance by it of this Agreement or the Stockholders Agreement nor the consummation of the Transactions will (a) conflict with, or result in a breach or violation of, any provision of its organizational documents; (b) constitute, with or without the giving of notice or passage of time or both, a breach, violation or default, create a Lien, or give rise to any right of termination, modification, cancellation, prepayment or acceleration, under (i) any Law or License or (ii) any note, bond, mortgage, indenture, lease, agreement or other instrument, in each case which is applicable to or binding upon it or any of its assets; or (c) require any Consent, other than those set forth on Schedule 4.2 or the approval of its members, managers or similar constituent bodies, as the case may be (which approvals have been obtained), except in each case, where such breach, violation, default, Lien, right, or the failure to obtain or give such Consent would not have a Material Adverse Effect on it or materially adversely affect the Transactions or its ability to perform its obligations under this Agreement. To its knowledge, except as set forth on Schedule 4.2, there is no fact relating to it or its Affiliates that would be reasonably expected to prevent it from consummating the Transactions or performing its obligations under the Stockholders Agreement or disqualify the Company from obtaining the Consents (including without limitation, FCC Consent) required in order to consummate the Mercury License Transfer as provided for in this Agreement. 4.3 Litigation. Except as set forth on Schedule 4.3, there is no ---------- action, proceeding or investigation pending or, to its knowledge, threatened against it or any of its properties or assets that would be reasonably expected to have an adverse effect on its ability to consummate the Transactions or to fulfill its obligations under this Agreement or the Stockholders Agreement, or which seeks to prevent or challenge the Transactions. 4.4 FCC Compliance. It complies with all eligibility rules issued by -------------- the FCC to hold broadband PCS licenses, including without limitation, FCC rules on foreign ownership and the CMRS spectrum cap. The fact that it owns the interest in the Company contemplated by this Agreement and the Stockholders Agreement will not cause the Company or its wholly owned Subsidiaries to be ineligible under FCC rules to hold PCS licenses in general or the licenses to be held by the Company's wholly owned Subsidiaries. 4.5 Brokers. It has not employed any broker, finder or investment ------- banker or incurred any liability for any brokerage fees, commissions or finder's fees in connection with the Transactions. 4.6 Mercury Licenses. It is the authorized legal holder, free and ---------------- clear of any Liens (other than Liens securing the indebtedness to be assumed by the Company pursuant to Section 2.3), of the Mercury Licenses, true and correct copies of which are attached to Schedule I. The Mercury Licenses are, and on the Closing Date each of the Mercury Licenses will be, valid and in full force and effect. Except as set forth on Schedule 4.6 and for proceedings affecting the PCS or wireless communications services industry generally, there is not pending, nor to the knowledge of Mercury, threatened against Mercury or against the Mercury Licenses, any application, action, petition, objection or other pleading, or any proceeding with the FCC which questions or contests the validity of, or seeks the revocation, nonrenewal or suspension of, any of the Mercury Licenses, which seeks the imposition of any modification or amendment with respect thereto, or which adversely effects the ability of the Company to employ the Mercury Licenses in its business after the Closing Date or seeks the payment of a fine, sanction, penalty, damages or contribution in connection with the use of any Mercury License. The Mercury Licenses are not subject to any conditions other than those appearing on the face of the Licenses themselves and those imposed by FCC Law. 4.7 No Distribution. It is acquiring the Securities to be acquired --------------- by it hereunder for the purpose of investment and not with a view to or for sale in connection with any distribution thereof (other than in compliance with the Securities Act and all applicable state securities laws). 4.8 Investor Acknowledgments. (a) It is an "accredited investor" as ------------------------ defined in Regulation D of the Securities Act. Its representatives have been provided an opportunity to ask questions of, and have received answers thereto from, the Company and its representatives regarding the terms and conditions of its acquisition of Securities, and the Company and its proposed business generally, and have obtained all additional information requested by it to verify the accuracy of all information furnished to it in connection with such purchase. (b) It has such knowledge and experience in financial and business affairs that it is capable of evaluating the merits and risks of acquiring the Securities it is acquiring hereunder. (c) It is not relying on and acknowledges that no representation is being made by any Purchaser, the Company or any of its officers, employees, Affiliates, agents or representatives, or any Management Stockholder, except for representations and warranties expressly set forth in this Agreement and the Stockholders Agreement, and, in particular, it is not relying on, and acknowledges that no representation is being made in respect of, (x) any projections, estimates or budgets delivered to or made available to them of future revenues, expenses or expenditures, or future results of operations and (y) any other information or documents delivered or made available to it or its representatives, except for representations and warranties expressly set forth in this Agreement and the Stockholders Agreement. (d) In deciding to invest in the Company, it has relied exclusively on the representations and warranties expressly set forth in this Agreement and the Stockholders Agreement, investigations made by itself and its representatives and its and such representatives' knowledge of the industry in which the Company proposes to operate. Based solely on such representations and warranties and such investigations and knowledge, it has determined that the Securities it is acquiring are a suitable investment for it. ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY --------------------------------------------- The Company represents and warrants to Mercury as follows: 5.1 Organization, Power and Authority. (a) The Company and each of --------------------------------- its Subsidiaries is a corporation, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted and proposed to be conducted. The Company has furnished to Mercury a true and correct copy of its and each of its Subsidiaries' Certificate of Incorporation and Bylaws as in effect on the date hereof and as of the Closing Date. As of the Closing Date, the Bylaws of the Company shall read in full as set forth in the Restated Bylaws, which shall be in full force and effect. (b) It has the requisite corporate power and authority to execute, deliver and perform this Agreement and the Stockholders Agreement, and each other instrument, document, certificate and agreement required or contemplated to be executed, delivered and performed by it hereunder and thereunder to which it is or will be a party. (c) The Company and each of its Subsidiaries is duly qualified to do business in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary other than any such jurisdiction in which the failure to be so qualified would not have a Material Adverse Effect on the Company or such Subsidiary or materially adversely affect the Transactions or its ability to perform its obligations under this Agreement and the Stockholders Agreement. (d) The execution and delivery of this Agreement by the Company and the consummation of the Transactions by it have been duly and validly authorized by its Board of Directors and, except for the filing of the Restated Certificate with the office of the Secretary of State of Delaware, no other proceedings on its part which have not been taken (including, without limitation, approval of its shareholders) are necessary to authorize this Agreement or to consummate the Transactions. (e) This Agreement has been duly executed and delivered by the Company and constitutes its valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally and may be subject to general principles of equity. The Stockholders Agreement shall be duly executed and delivered by the Company at (or prior to) the Closing and, upon such execution and delivery, shall constitute its valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally and may be subject to general principles of equity. (f) As of the Closing, after giving effect to the Transactions, the Company is not in breach of any obligation under this Agreement or the Stockholders Agreement. 5.2 Consents; No Conflicts. Neither the execution, delivery and ---------------------- performance by the Company of this Agreement and the Stockholders Agreement nor the consummation of the Transactions will (a) conflict with, or result in a breach or violation of, any provision of its organizational documents; (b) constitute, with or without the giving of notice or passage of time or both, a breach, violation or default, create a Lien, or give rise to any right of termination, modification, cancellation, prepayment or acceleration, under (i) any Law or License, or (ii) any note, bond, mortgage, indenture, lease, agreement or other instrument, in each case which is applicable to or binding upon it or any of its assets; or (c) require any Consent on its part, other than those set forth on Schedule 5.2 or the approval of its Board of Directors (which approval has been obtained), except in each case where such breach, violation, default, Lien, right, or the failure to obtain or give such Consent would not have a Material Adverse Effect on it or materially adversely affect the Transactions, its ability to perform its obligations under this Agreement or the Stockholders Agreement or the operation of its business after the Closing Date. To its knowledge, there is no fact relating to it or its Affiliates that would be reasonably expected to prevent it from consummating the Transactions or performing its obligations under this Agreement or the Stockholders Agreement or disqualify the Company from obtaining the Consents (including without limitation, FCC Consent) required in order to consummate the Mercury License Transfer as provided for in this Agreement. 5.3 Litigation. There is no action, proceeding or investigation ---------- pending or, to the Company's knowledge, threatened against it or any of its properties or assets that would have an adverse effect on its ability to consummate the Transactions or to fulfill its obligations under this Agreement or the Stockholders Agreement, or to operate its business after the Closing Date, or which seeks to prevent or challenge the Transactions. There is no judgment, decree, injunction, rule or order outstanding against the Company which would limit in any material respect its ability to operate its business in the manner currently contemplated. 5.4 FCC Compliance. It complies with all eligibility rules issued by -------------- the FCC to hold broadband PCS licenses, including without limitation, FCC rules on foreign ownership and the CMRS spectrum cap. 5.5 Brokers. The Company has not employed any broker, finder or ------- investment banker or incurred any liability for any brokerage fees, commissions or finder's fees in connection with the Transactions. 5.6 Capitalization. (a) As of the date hereof and as of the -------------- TeleCorp Closing Date before giving effect to the filing of the Restated Certificate, the authorized capital stock of the Company consists of 20,000 shares of common stock, no par value per share ("Old Common Stock"), of which ---------------- ten shares are issued and outstanding, have been validly issued and are fully paid and non-assessable. As of the date hereof and as of the TeleCorp Closing Date before giving effect to the Transactions, each of Gerald T. Vento and Thomas H. Sullivan owns beneficially and of record five shares of Old Common Stock, free and clear of any Liens. There are not on the date hereof nor will there be on or as of the TeleCorp Closing Date, before giving effect to the TeleCorp Transactions, any existing options, warrants, calls, subscriptions, or other rights, or other agreements or commitments, obligating the Company to issue, transfer or sell any shares of capital stock of the Company. (b) As of the TeleCorp Closing Date, after giving effect to the filing of the Restated Certificate, the authorized capital stock of the Company will consist of 700,000 shares of Voting Common Stock, 700,000 shares of Non- Voting Common Stock, ten shares of Voting Preference Stock, 1,000 shares of Class C Common Stock, 3,000 shares of Class D Common Stock, 70,000 shares of Series A Preferred Stock, 140,000 shares of Series B Preferred Stock, 140,000 shares of Series C Preferred Stock, 35,000 shares of Series D Preferred Stock, 20,000 shares of Series E Preferred Stock, 35,000 shares of Series F Preferred Stock and 70,000 shares of Senior Common Stock. As of the TeleCorp Closing Date, after giving effect to the TeleCorp Transactions, there will be issued and outstanding the shares of Preferred Stock and Common Stock set forth on Schedule V to the Securities Purchase Agreement. The record and beneficial owners of such outstanding shares of Common Stock and Preferred Stock, as of the TeleCorp Closing Date, after giving effect to the TeleCorp Transactions, are set forth on Schedule V to the Securities Purchase Agreement. On the TeleCorp Closing Date, after giving effect to the TeleCorp Transactions, there will not be any existing options, warrants, calls, subscriptions, or other rights, or other agreements or commitments, obligating the Company to issue, transfer or sell any shares of capital stock of the Company, except the Preferred Stock and the Common Stock (other than the Voting Preference Stock). (c) On the Closing Date, after giving effect to the Transactions, the outstanding capital stock of the Company will be as set forth in the second sentence of paragraph (b) above, except for such changes that do not have a material adverse effect on the financial value of the Securities. 5.7 Shares. The Securities being issued to Mercury hereunder, when ------ issued and paid for pursuant to the terms of this Agreement, will be duly authorized, validly issued, fully paid and nonassessable, and will be free of any Liens caused or created by the Company, except as set forth in the Stockholders Agreement and the Restated Certificate. The shares of Common Stock issued upon conversion of the Series C Preferred Stock, when issued pursuant to the terms of the Series C Preferred Stock, will be validly issued, fully paid and nonassessable, and will be free of any Liens caused or created by the Company, except as set forth in the Stockholders Agreement and the Restated Certificate. 5.8 Offering of Securities. (a) Neither the Company nor any Person ---------------------- acting on its behalf has offered the Securities or any similar equity securities of the Company for sale to, or solicited any offers to buy Securities or any similar equity securities of the Company from, any Person, other than the Purchasers and a limited number of other "accredited investors" (as defined in Rule 501(a) under the Securities Act). (b) Neither the Company nor any Person acting on its behalf will, directly or indirectly, take any action which might subject the offering, issuance or sale of the Securities to the registration and prospectus delivery requirements of Section 5 of the Securities Act. (c) Assuming the accuracy of the representations and warranties of Mercury contained in Sections 4.7 and 4.8, each of the offering and sale of Securities under this Agreement to Mercury complies with all applicable requirements of federal and state securities laws. 5.9 Securities Purchase Agreement. The Company has furnished to ----------------------------- Mercury a true and complete copy of each of the Securities Purchase Agreement as in effect on the date hereof. ARTICLE VI COVENANTS --------- 6.1 Consummation of Transactions. Each party shall use all ---------------------------- commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable and consistent with applicable law to carry out all of their respective obligations under this Agreement and the Stockholders Agreement to consummate the Transactions, which efforts shall include, without limitation, the following: (a) The parties shall use all commercially reasonable efforts to cause the Closing to occur and the Transactions to be consummated in accordance with the terms hereof, and, without limiting the generality of the foregoing, to obtain all necessary Consents including, without limitation, the approval of this Agreement and the Transactions by all Governmental Authorities and agencies, including the FCC, and make all filings with and to give all notices to third parties which may be necessary or reasonably required in order for the parties to consummate the Transactions; provided that Mercury shall not make any filings with the FCC regarding the Mercury Licenses without the prior review and approval of the Company. (b) Each party shall furnish to the other parties all information concerning such party and its Affiliates reasonably required for inclusion in any application or filing to be made by Mercury or the Company or any other party in connection with the Transactions or otherwise to determine compliance with applicable FCC Rules. (c) Upon the request of any other party, each party shall forthwith execute and deliver, or cause to be executed and delivered, such further instruments of assignment, transfer, conveyance, endorsement, direction or authorization and other documents as may reasonably be requested by such party in order to effectuate the purposes of this Agreement and the Stockholders Agreement. Nothing in this Agreement shall be construed to require the parties to consummate the Closing if any regulatory approval would require that it (i) divest or hold separate any of its assets existing as of the date hereof other than as contemplated by this Agreement and the Stockholders Agreement or (ii) otherwise take or commit to take any action that limits its freedom of action in any material respect with respect to any of its businesses, product lines or assets. 6.2 Confidentiality. --------------- (a) Each party shall, and shall cause each of its Affiliates, and its and their respective shareholders, members, managers, directors, officers, employees and agents (collectively, "Representatives") to, keep secret and --------------- retain in strictest confidence any and all Confidential Information relating to any other party that it receives in connection with the negotiation or performance of this Agreement, and shall not disclose such Confidential Information, and shall cause its Representatives not to disclose such Confidential Information, to anyone except the receiving party's Affiliates and Representatives and any other Person that agrees in writing to keep in confidence all Confidential Information in accordance with the terms of this Section 6.2. Until the Closing, each party agrees to use Confidential Information received from another party only (i) to evaluate its interest in pursuing the Transactions and (ii) to pursue such Transactions, but not for any other purpose. All Confidential Information furnished pursuant to this Agreement shall be returned promptly to the party to whom it belongs upon request by such party. Upon the Closing, the provisions of this Section 6.2 shall terminate and the obligations of the parties in respect of Confidential Information shall be governed by Section 7.12 of the Stockholders Agreement. (b) The obligations set forth in Section 6.2(a) shall be inoperative with respect to Confidential Information that (i) is or becomes generally available to the public other than as a result of disclosure by the receiving party or its Representatives, (ii) was available to the receiving party on a non-confidential basis prior to its disclosure to the receiving party, or (iii) becomes available to the receiving party on a non-confidential basis from a source other than the providing party or its agents, provided that such source is not known by the receiving party to be bound by a confidentiality agreement with the providing party or the providing party's agents. (c) To the fullest extent permitted by law, if a party or any of its Affiliates or Representatives breaches, or threatens to commit a breach of, this Section 6.2, the party whose Confidential Information shall be disclosed, or threatened to be disclosed, shall have the right and remedy to have this Section 6.2 specifically enforced by any court having jurisdiction, it being acknowledged and agreed that money damages will not provide an adequate remedy to such party. Nothing in this Section 6.2 shall be construed to limit the right of any party to collect money damages in the event of breach of this Section 6.2. (d) Anything else in this Agreement or the Stockholders Agreement notwithstanding, each party shall have the right to disclose any information, including Confidential Information of the other party or such other party's Affiliates, in any filing with any regulatory agency, court or other authority or any disclosure to a trustee of public debt of a party to the extent that the disclosing party determines in good faith that it is required by Law, regulation or the terms of such debt to do so, provided that any such disclosure shall be as limited in scope as possible and shall be made only after giving the other party as much notice as practicable of such required disclosure and an opportunity to contest such disclosure if possible. 6.3 Certain Covenants. From and after the execution and delivery of ----------------- this Agreement to and including the Closing Date, Mercury shall: (a) Comply in all material respects with all applicable Laws, including all such Laws relating to the Mercury Licenses or their use; (b) Use commercially reasonable efforts to maintain the Mercury Licenses in full force and effect; (c) Not (i) sell, transfer, assign or dispose of, or offer to, or enter into any agreement, arrangement or understanding to, sell, transfer, assign or dispose of any of the Mercury Licenses or any interest therein, or negotiate therefor, or (ii) create, incur or suffer to exist any Lien of any nature whatsoever relating to any of the Mercury Licenses or any interest therein (other than Liens securing the indebtedness to be assumed by the Company pursuant to Section 2.3). Without limiting the foregoing, Mercury shall not incur any material obligation or liability, absolute or contingent, relating to or affecting the Mercury Licenses or their use; (d) Give written notice to the other parties promptly upon the commencement of, or upon obtaining knowledge of any facts that would give rise to a threat of, any claim, action or proceeding commenced against or relating to (i) it, its properties or assets, including the Mercury Licenses or their use, and which could have a Material Adverse Effect on it or materially adversely affect the Transactions, or (ii) the Mercury Licenses or their use; (e) Promptly after obtaining knowledge of the occurrence of, or the impending or threatened occurrence of, any event which could cause or constitute a material breach of any of its warranties, representations, covenants or agreements contained in this Agreement, give notice in writing of such event, or occurrence or impending or threatened event or occurrence, to the other parties and use commercially reasonable efforts to prevent or to promptly remedy such breach; and (f) Cause the other parties to be advised promptly in writing of (i) any event, condition or state of facts known to it, which has had or could have a Material Adverse Effect on it, or materially adversely affect the Mercury Licenses or their use or the Transactions (other than proceedings affecting the PCS or wireless communications services industry generally), or (ii) any claim, action or proceeding which seeks to enjoin the consummation of the Transactions. ARTICLE VII CLOSING CONDITIONS ------------------ 7.1 Conditions to Obligations of All Parties. The obligation of each ---------------------------------------- of the parties to consummate the Transactions contemplated to occur at the Closing shall be conditioned on the following, unless waived by each of the parties: (a) Any applicable waiting period under the HSR Act shall have expired or been terminated. (b) The Consent of the FCC to the Mercury License Transfer shall have been obtained pursuant to a Final Order, free of any conditions materially adverse to the Company or Mercury, other than those applicable to the PCS or wireless communications services industry generally. For the purposes of this paragraph, "Final Order" means an action or decision that has been granted by ----------- the FCC as to which (i) no request for a stay or similar request is pending, no stay is in effect, the action or decision has not been vacated, reversed, set aside, annulled or suspended and any deadline for filing such request that may be designated by statute or regulation has passed, (ii) no petition for rehearing or reconsideration or application for review is pending and the time for the filing of any such petition or application has passed, (iii) the FCC does not have the action or decision under reconsideration on its own motion and the time within which it may effect such reconsideration has passed and (iv) no appeal is pending including other administrative or judicial review, or in effect and any deadline for filing any such appeal that may be designated by statute or rule has passed. (c) All Consents by any Governmental Authority (other than the Consents referred to in paragraphs (a) and (b) above) required to permit the consummation of the Transactions, the failure to obtain or make which would be reasonably expected to have a Material Adverse Effect on the Company or Mercury or to materially adversely affect the Transactions or its ability to perform its obligations under this Agreement shall have been obtained or made. (d) No preliminary or permanent injunction or other order, decree or ruling issued by a Governmental Authority, nor any statute, rule, regulation or executive order promulgated or enacted by any Governmental Authority, shall be in effect that would (i) impose material limitations on the ability of any party to consummate the Transactions or prohibit such consummation, or (ii) impair in any material respect the operation of the Company. (e) The TeleCorp Closing shall have occurred prior to or shall occur concurrently with the Closing hereunder. 7.2 Conditions to Obligations of the Company. The obligation of the ---------------------------------------- Company to consummate the Transactions contemplated to occur at the Closing shall be further conditioned upon the satisfaction or fulfillment, at or prior to the Closing, of the following conditions by each of the other parties, unless waived by the Company: (a) The representations and warranties of Mercury contained herein and in the Stockholders Agreement shall be true and correct in all material respects (except for representations and warranties that are qualified as to materiality, which shall be true and correct), in each case when made and at and as of the Closing (except for representations and warranties made as of a specified date, which shall be true and correct as of such date) with the same force and effect as though made at and as of such time, except for inaccuracies in respect of the representations and warranties set forth in Section 4.3 and the third sentence of Section 4.6 (disregarding any qualifications as to materiality contained therein) that in the aggregate would not be reasonably expected to have a Material Adverse Effect on Mercury or its ability to perform its obligations under this Agreement or the Stockholders Agreement or to materially adversely affect the Transactions. (b) Mercury shall have performed in all material respects all agreements contained herein and in the Stockholders Agreement required to be performed by it at or before the Closing. (c) An officer of Mercury shall have delivered to the Company a certificate, dated the Closing Date, certifying as to the fulfillment of the conditions set forth in paragraphs (a) and (b) above as to Mercury. (d) Mercury shall have furnished the Company with opinions of counsel, each dated the Closing Date, in substantially the forms of Exhibits A and B. (e) All corporate and other proceedings of Mercury in connection with the Mercury License Transfer and the other Transactions, and all documents and instruments incident thereto, shall be reasonably satisfactory in form and substance to the Company, and Mercury shall have delivered to the Company such receipts, documents, instruments and certificates, in form and substance reasonably satisfactory to the Company, which the Company shall have reasonably requested. (f) Mercury shall have executed and delivered to the Company a counterpart signature page to the Stockholders Agreement. (g) Mercury shall have executed and delivered to the other parties thereto a counterpart signature page to the Investors Stockholders Agreement among the Cash Equity Investors. 7.3 Conditions to the Obligations of Mercury. The obligation of ---------------------------------------- Mercury to consummate the Transactions contemplated to occur at the Closing shall be further conditioned upon the satisfaction or fulfillment, at or prior to the Closing, of the following conditions, unless waived by Mercury: (a) The representations and warranties of the Company contained herein shall be true and correct in all material respects (except for representations and warranties that are qualified as to materiality, which shall be true and correct), in each case when made and at and as of the Closing (except for representations and warranties made as of a specified date, which shall be true and correct as of such date) with the same force and effect as though made at and as of such time, except for inaccuracies in respect of the representations and warranties set forth in Section 5.3 (disregarding any qualifications as to materiality contained therein) that in the aggregate would not be reasonably expected to have a Material Adverse Effect on the Company or its ability to perform its obligations under this Agreement or to materially adversely affect the Transactions. (b) The Company shall have performed in all material respects all agreements contained herein required to be performed by it at or before the Closing. (c) An officer of the Company shall have delivered to Mercury a certificate, dated the Closing Date, certifying as to the fulfillment of the conditions set forth in paragraphs (a) and (b) above as to the Company. (d) The Company shall have furnished Mercury with an opinion of counsel, dated the Closing Date, in substantially the form of Exhibit C. (e) All corporate and other proceedings of the Company in connection with the Mercury License Transfer and the other Transactions, and all documents and instruments incident thereto, shall be reasonably satisfactory in form and substance to Mercury, and the Company shall have delivered to Mercury such receipts, documents, instruments and certificates, in form and substance reasonably satisfactory to Mercury, which Mercury shall have reasonably requested. (f) The Stockholders Agreement shall have been amended in accordance with the terms thereof to provide that (i) Mercury shall, in addition to its rights and obligations as a Stockholder thereunder, have the rights and obligations of a Cash Equity Investor thereunder, (ii) William M. Mounger, II and E.B. Martin, Jr. shall not be deemed to be in violation of Section 8.6 of the Stockholders Agreement by reason of their respective interests in Mississippi-34 Cellular Corporation on the date hereof or the activities of such entity as being conducted on date hereof and (iii) and William M. Mounger, II, Jerry M. Sullivan, Jr. and E.B. Martin, Jr. shall not be deemed to be in violation of Section 8.6 of the Stockholders Agreement by reason of their respective interests in Mercury Wireless Management Inc. (which owns certain IVDS Licenses covering the Jackson, Mississippi MSA) on the date hereof or the activities of such entity as being conducted on date hereof. ARTICLE VIII ------------ SURVIVAL AND INDEMNIFICATION ---------------------------- 8.1 Survival. The representations and warranties made in this -------- Agreement shall survive the Closing until the second anniversary thereof and shall thereupon expire together with any right to indemnification in respect thereof (except to the extent a written notice asserting a claim for breach of any such representation or warranty and describing such claim in reasonable detail shall have been given prior to such date to the party which made such representation or warranty). The covenants and agreements contained herein to be performed or complied with prior to the Closing shall expire at the Closing. The covenants and agreements contained in this Agreement to be performed or complied with after the Closing shall survive the Closing; provided that the right to indemnification pursuant to this Article VIII in respect of a breach of a representation or warranty shall expire on the second anniversary of the Closing (except to the extent written notice asserting a claim thereunder and describing such claim in reasonable detail shall have been given prior to such date to the party from whom such indemnification is sought). After the Closing, the sole and exclusive remedy of the parties for any breach or inaccuracy of any representation or warranty contained in this Agreement, or any other claim (whether or not alleging a breach of this Agreement) that arises out of the facts and circumstances constituting such breach or inaccuracy, shall be the indemnity provided in this Article VIII. 8.2 Indemnification by Mercury. Mercury shall indemnify and hold -------------------------- harmless the Company and its Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them (each, a "Section 8.2 Indemnified Party"), ----------------------------- against all liabilities and expenses (including amounts paid in satisfaction of judgments, in compromise, as fines and penalties, and as counsel fees) (collectively, "Losses") incurred by him or it in connection with the investigation, defense, or disposition of any action, suit or other proceeding in which any Section 8.2 Indemnified Party may be involved or with which he or it may be threatened that arises out of or results from (a) any representation or warranty of such indemnifying party contained in this Agreement or in the Stockholders Agreement being untrue in any material respect as of the date on which it was made, (b) any of the matters referred to on Schedules 4.2, 4.3 or 4.6 or (c) any material default by such indemnifying party or any of its Affiliates in the performance of their respective obligations under this Agreement and the Stockholders Agreement, except to the extent (but only to the extent) any such Losses arise out of or result from the gross negligence or willful misconduct of such Section 8.2 Indemnified Party or its Affiliates. 8.3 Indemnification by the Company. The Company shall indemnify and ------------------------------ hold harmless Mercury and its Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them (each, a "Section 8.3 Indemnified Party"), against all Losses incurred by ----------------------------- him or it in connection with the investigation, defense, or disposition of any action, suit or other proceeding in which any Section 8.3 Indemnified Party may be involved or with which he or it may be threatened that arises out of or results from (a) any representation or warranty of the Company contained in this Agreement and the Stockholders Agreement being untrue in any material respect as of the date on which it was made or (b) any material default by the Company or any of its Affiliates in the performance of their respective obligations under this Agreement or in the Stockholders Agreement, except to the extent (but only to the extent) any such Losses arise out of or result from the gross negligence or willful misconduct of such Section 8.3 Indemnified Party or its Affiliates. 8.4 Procedures. ---------- (a) The terms of this Section 8.4 shall apply to any claim (a "Claim") for indemnification under the terms of Sections 8.2 or 8.3. The Section ----- 8.2 Indemnified Party or Section 8.3 Indemnified Party Indemnified Party (each, an "Indemnified Party"), as the case may be, shall give prompt written notice of ----------------- such Claim to the indemnifying party (the "Indemnifying Party") under the ------------------ applicable Section, which party may assume the defense thereof, provided that any delay or failure to so notify the Indemnifying Party shall relieve the Indemnifying Party of its obligations hereunder only to the extent, if at all, that it is materially prejudiced by reason of such delay or failure. The Indemnified Party shall have the right to approve any counsel selected by the Indemnifying Party and to approve the terms of any proposed settlement, such approval not to be unreasonably delayed or withheld (unless such settlement provides only, as to the Indemnified Party, the payment of money damages actually paid by the Indemnifying Party and a complete release of the Indemnified Party in respect of the claim in question). Notwithstanding any of the foregoing to the contrary, the provisions of this Article VIII shall not be construed so as to provide for the indemnification of any Indemnified Party for any liability to the extent (but only to the extent) that such indemnification would be in violation of applicable law or that such liability may not be waived, modified or limited under applicable law, but shall be construed so as to effectuate the provisions of this Article VIII to the fullest extent permitted by law. (b) In the event that the Indemnifying Party undertakes the defense of any Claim, the Indemnifying Party will keep the Indemnified Party advised as to all material developments in connection with such Claim, including, but not limited to, promptly furnishing the Indemnified Party with copies of all material documents filed or served in connection therewith. (c) In the event that the Indemnifying Party fails to assume the defense of any Claim within ten business days after receiving written notice thereof, the Indemnified Party shall have the right, subject to the Indemnifying Party's right to assume the defense pursuant to the provisions of this Article VIII, to undertake the defense, compromise or settlement of such Claim for the account of the Indemnifying Party. Unless and until the Indemnified Party assumes the defense of any Claim, the Indemnifying Party shall advance to the Indemnified Party any of its reasonable attorneys' fees and other costs and expenses incurred in connection with the defense of any such action or proceeding. Each Indemnified Party shall agree in writing prior to any such advancement that, in the event he or it receives any such advance, such Indemnified Party shall reimburse the Indemnifying Party for such fees, costs and expenses to the extent that it shall be determined that he or it was not entitled to indemnification under this Article VIII. (d) In no event shall an Indemnifying Party be required to pay in connection with any Claim for more than one firm of counsel (and local counsel) for each of the following groups of Indemnified Parties: (i) Mercury, its Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them; and (ii) the Company and its Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them. 8.5 Registration Rights. Notwithstanding anything to the contrary in ------------------- this Article VIII, the indemnification and contribution provisions set forth in Sections 5(e) and 5(f) of the Stockholders Agreement shall govern any claim made with respect to the registration statements filed pursuant to Section 5 of the Stockholders Agreement or sales made thereunder. ARTICLE IX TERMINATION ----------- 9.1 Termination. This Agreement may be terminated, and the ----------- Transactions abandoned, without further obligation of any party, except as set forth herein, at any time prior to the Closing Date: (a) by mutual written consent of the parties; (b) by any party by written notice to the other parties, if the Closing shall not have occurred on or before the date that is two years after the date hereof, provided that the party electing to exercise such right is not otherwise in breach of its obligations under this Agreement; or (c) by any party by written notice to the other parties, if the consummation of the Transactions shall be prohibited by a final, non-appealable order, decree or injunction of a court of competent jurisdiction. 9.2 Effect of Termination. (a) In the event of a termination of --------------------- this Agreement, no party hereto shall have any liability or further obligation to any other party to this Agreement, except as set forth in paragraph (b) below, and except that nothing herein will relieve any party from liability for any breach by such party of this Agreement. (b) In the event of a termination of this Agreement pursuant to Section 9.1, all provisions of this Agreement shall terminate, except Section 6.2 and Articles VIII and X. (c) Whether or not the Closing occurs, all costs and expenses incurred in connection with this Agreement and the Transactions shall be paid by the party incurring such expenses, except as otherwise provided in Section 2.4. ARTICLE X MISCELLANEOUS PROVISIONS ------------------------ 10.1 Amendment and Modification. This Agreement may be amended, -------------------------- modified or supplemented only by written agreement of each of the parties. 10.2 Waiver of Compliance; Consents. Any failure of any of the ------------------------------ parties to comply with any obligation, covenant, agreement or condition herein may be waived by the party or parties entitled to the benefits thereof only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be given in writing in a manner consistent with the requirement for a waiver of compliance as set forth in this Section 10.2. 10.3 Notices. All notices or other communications hereunder shall be ------- in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by facsimile transmission, or by registered or certified mail (return receipt requested), postage prepaid, with an acknowledgment of receipt signed by the addressee or an authorized representative thereof, addressed as follows (or to such other address for a party as shall be specified by like notice; provided that notice of a change of address shall be effective only upon receipt thereof): If to Mercury: Mercury PCS II, LLC 1410 Livingston Lane Jackson, MS 39213-8003 Attn: William M. Mounger, II Fax: (601) 362-2664 With a copy to: Young, Williams, Henderson & Fuselier, P.A. 2000 Deposit Guaranty Plaza Jackson, MS 39201 P.O. Box 23059 Jackson, MS 39225-3059 Attn: James H. Neeld, IV, Esq. Fax: (601) 355-6136 If to the Company: TeleCorp PCS, Inc. 1110 N. Glebe Road, Suite 300 Arlington, Virginia 22201 Attn: General Counsel Facsimile: (703) 522-4873 With a copy to each other party to the Securities Purchase Agreement sent to the addresses set forth in Section 10.3 thereof. 10.4 Parties in Interest; Assignment. This Agreement is binding upon ------------------------------- and is solely for the benefit of the parties hereto and their respective permitted successors, legal representatives and permitted assigns. Neither party may assign its rights and obligations hereunder without the prior written consent of the other party, except that the Company shall have the right to assign its rights under this Agreement to the lenders (the "Lenders") named in ------- the Credit Agreement, as security pursuant to the terms of the Credit Documents (as such terms are defined in the Securities Purchase Agreement), it being understood that, in connection with any such assignment to the Lenders, the Lenders shall not assume any obligations of the Company hereunder. 10.5 Applicable Law. This Agreement shall be governed by and -------------- construed in accordance with the laws of the State of New York without giving effect to the conflicts of law principles thereof. The parties hereto hereby irrevocably and unconditionally consent to submit to the non-exclusive jurisdiction of the courts of the State of New York and of the United States of America located in the County of New York, New York (the "New York Courts") for --------------- any litigation arising out of or relating to this Agreement and the Transactions, waive any objection to the laying of venue of any such litigation in the New York Courts and agrees not to plead or claim in any New York Court that such litigation brought therein has been brought in an inconvenient forum. 10.6 Counterparts. This Agreement may be executed in two or more ------------ counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. 10.7 Interpretation. The article and section headings contained in -------------- this Agreement are for convenience of reference only, are not part of the agreement of the parties and shall not affect in any way the meaning or interpretation of this Agreement. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the antecedent Person or Person may require. 10.8 Entire Agreement. This Agreement and the Stockholders ---------------- Agreement, including the exhibits and schedules hereto and the certificates and instruments delivered pursuant to the terms of this Agreement and the Stockholders Agreement, embody the entire agreement and understanding of the parties hereto in respect of the Transactions. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein or in the Stockholders Agreement. This Agreement and the Stockholders Agreement supersede all prior agreements and understandings between the parties with respect to such Transactions. 10.9 Publicity. So long as this Agreement is in effect, the parties --------- agree to consult with each other in issuing any press release or otherwise making any public statement with respect to the Transactions, and no party shall issue any press release or make any such public statement prior to such consultation, except as may be required by Law. No press release or other public statement by the parties hereto shall disclose any of the financial terms of the Transactions without the prior consent of the other parties, except as may be required by Law. A breach of the provisions of this Section 10.9 by a party shall not give rise to any right to terminate this Agreement. 10.10 Specific Performance. The parties hereto agree that -------------------- irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any New York Courts. 10.11 Remedies Cumulative. All rights, powers and remedies provided ------------------- under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise or beginning of the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. TELECORP PCS, INC. By: /s/ Thomas H. Sullivan ------------------------------ Name: Thomas H. Sullivan Title: Executive Vice President MERCURY PCS II, LLC By: /s/ E. B. Martin, Jr. ------------------------------ Name: E. B. Martin, Jr. Title: V. P. of MSM, Inc., Manager SCHEDULE I MERCURY LICENSES ----------------
- ----------------------------------------------------------------------- BTA BLOCK MARKET - ----------------------------------------------------------------------- B032 F Baton Rouge - ----------------------------------------------------------------------- B180 F Hammond - ----------------------------------------------------------------------- B195 F Houma-Thibodeaux - ----------------------------------------------------------------------- B236 F Lafayette-New Iberia - -----------------------------------------------------------------------
United States of America Federal Communications Commission RADIO STATION AUTHORIZATION Commercial Mobile Radio Services [STAMP APPEARS Personal Communications Service - Broadband HERE] Call Sign: KNLG906 Market: B032 BATON ROUGE, LA MERCURY PCS II, LLC 1410 LIVINGSTON LANE Channel Block: F JACKSON, MS 39213 File Number:01284-CW-L-97 - -------------------------------------------------------------------------------- The licensee hereof is authorized, for the period indicated, to construct and operate radio transmitting facilities in accordance with the terms and conditions hereinafter described. This authorization is subject to the provisions of the Communications Act of 1934, as amended, subsequent Acts of Congress, international treaties and agreements to which the United States is a signatory and all pertinent rules and regulations of the Federal Communications Commission contained in the Title 47 of the U.S. Code of Federal Regulations. - -------------------------------------------------------------------------------- Initial Grant Date......................... August 21, 1997 Five-year Build Out Date................... August 21, 2002 Expiration Date............................ August 21, 2007 - -------------------------------------------------------------------------------- CONDITIONS - ---------- Pursuant to Section 309(h) of the Communications Act of 1934, as amended, (47 U.S.C. (S) 309(h)), this license is subject to the following conditions: This license does not vest in the licensee any right to operate a station nor any right in the use of frequencies beyond the term thereof nor in any other manner than authorized herein. Neither this license nor the right granted thereunder shall be assigned or otherwise transferred in violation of the Communications Act of 1934, as amended (47 U.S.C. (S) 151, et seq.). This license is subject in terms to the right of use or control conferred by Section 706 of the Communications Act of 1934, as amended (47 U.S.C. (S) 606). Conditions continued on Page 2. - -------------------------------------------------------------------------------- WAIVERS : - ------- No waivers associated with this authorization. - -------------------------------------------------------------------------------- KNLG906 MERCURY PCS II, LLC 01284-CW-L-97 CONDITIONS: This authorization is subject to the condition that, in the event that systems using the same frequencies as granted herein are authorized in an adjacent foreign territory (Canada/United States), future coordination of any base station transmitters within 72 km (45 miles) of the United States/Canada border shall be required to eliminate any harmful interference to operations in the adjacent foreign territory and to ensure continuance of equal access to the frequencies by both countries. This authorization is conditioned upon the full and timely payment of all monies due pursuant to Sections 1.2110 and 24.716 of the Commission's Rules and the terms of the Commission's installment plan as set forth in the Note and Security Agreement executed by the licensee. Failure to comply with this condition will result in the automatic cancellation of this authorization. - -------------------------------------------------------------------------------- United States of America Federal Communications Commission RADIO STATION AUTHORIZATION Commercial Mobile Radio Services [STAMP APPEARS Personal Communications Service - Broadband HERE] Call Sign: KNLG917 Market: B180 HAMMOND, LA MERCURY PCS II, LLC 1410 LIVINGSTON LANE Channel Block: F JACKSON, MS 39213 File Number:01295-CW-L-97 - -------------------------------------------------------------------------------- The licensee hereof is authorized, for the period indicated, to construct and operate radio transmitting facilities in accordance with the terms and conditions hereinafter described. This authorization is subject to the provisions of the Communications Act of 1934, as amended, subsequent Acts of Congress, international treaties and agreements to which the United States is a signatory and all pertinent rules and regulations of the Federal Communications Commission contained in the Title 47 of the U.S. Code of Federal Regulations. - -------------------------------------------------------------------------------- Initial Grant Date......................... August 21, 1997 Five-year Build Out Date................... August 21, 2002 Expiration Date............................ August 21, 2007 - -------------------------------------------------------------------------------- CONDITIONS - ---------- Pursuant to Section 309(h) of the Communications Act of 1934, as amended, (47 U.S.C. (S) 309(h)), this license is subject to the following conditions: This license does not vest in the licensee any right to operate a station nor any right in the use of frequencies beyond the term thereof nor in any other manner than authorized herein. Neither this license nor the right granted thereunder shall be assigned or otherwise transferred in violation of the Communications Act of 1934, as amended (47 U.S.C. (S) 151, et seq.). This license is subject in terms to the right of use or control conferred by Section 706 of the Communications Act of 1934, as amended (47 U.S.C. (S) 606). Conditions continued on Page 2. - -------------------------------------------------------------------------------- WAIVERS : - ------- No waivers associated with this authorization. - -------------------------------------------------------------------------------- KNLG917 MERCURY II PCS II, LLC 01295-CW-L-97 CONDITIONS: This authorization is subject to the condition that, in the event that systems using the same frequencies as granted herein are authorized in an adjacent foreign territory (Canada/United States), future coordination of any base station transmitters within 72 km (45 miles) of the United States/Canada border shall be required to eliminate any harmful interference to operations in the adjacent foreign territory and to ensure continuance of equal access to the frequencies by both countries. This authorization is conditioned upon the full and timely payment of all monies due pursuant to Sections 1.2110 and 24.716 of the Commission's Rules and the terms of the Commission's installment plan as set forth in the Note and Security Agreement executed by the licensee. Failure to comply with this condition will result in the automatic cancellation of this authorization. - -------------------------------------------------------------------------------- Issue Date: January 30, 1998 Page 2 of 2 FCC Form 463a United States of America Federal Communications Commission RADIO STATION AUTHORIZATION Commercial Mobile Radio Services Personal Communications Service - Broadband Call Sign: KNLG920 [STAMP APPEARS HERE] Market: B195 HOUMA-THIBODAUX, LA MERCURY PCS II, LLC 1410 LIVINGSTON LANE Channel Block: F JACKSON, MS 39213 File Number:01298-CW-L-97 - -------------------------------------------------------------------------------- The licensee hereof is authorized, for the period indicated, to construct and operate radio transmitting facilities in accordance with the terms and conditions hereinafter described. This authorization is subject to the provisions of the Communications Act of 1934, as amended, subsequent Acts of Congress, international treaties and agreements to which the United States is a signatory and all pertinent rules and regulations of the Federal Communications Commission contained in the Title 47 of the U.S. Code of Federal Regulations. - -------------------------------------------------------------------------------- Initial Grant Date ......................... August 21, 1997 Five-year Build Out Date ................... August 21, 2002 Expiration Date ............................ August 21, 2007 - -------------------------------------------------------------------------------- CONDITIONS - ---------- Pursuant to Section 309(h) of the Communications Act of 1934, as amended, (47 U.S.C. (S) 309(h)), this license is subject to the following conditions: This license does not vest in the licensee any right to operate a station nor any right in the use of frequencies beyond the term thereof nor in any other manner than authorized herein. Neither this license nor the right granted thereunder shall be assigned or otherwise transferred in violation of the Communications Act of 1934, as amended (47 U.S.C. (S) 151, et seq.). This license is subject in terms to the right of use or control conferred by Section 706 of the Communications Act of 1934, as amended (47 U.S.C. (S) 606). Conditions continued on Page 2. - -------------------------------------------------------------------------------- WAIVERS : - ------- No waivers associated with this authorization. - -------------------------------------------------------------------------------- KNLG920 MERCURY PCS II, LLC 01298-CW-L-97 CONDITIONS: This authorization is subject to the condition that, in the event that systems using the same frequencies as granted herein are authorized in an adjacent foreign territory (Canada/United States), future coordination of any base station transmitters within 72 km (45 miles) of the United States/Canada border shall be required to eliminate any harmful interference to operations in the adjacent foreign territory and to ensure continuance of equal access to the frequencies by both countries. This authorization is conditioned upon the full and timely payment of all monies due pursuant to Sections 1.2110 and 24.716 of the Commission's Rules and the terms of the Commission's installment plan as set forth in the Note and Security Agreement executed by the licensee. Failure to comply with this condition will result in the automatic cancellation of this authorization. - -------------------------------------------------------------------------------- United States of America Federal Communications Commission RADIO STATION AUTHORIZATION Commercial Mobile Radio Services Personal Communications Service - Broadband [STAMP APPEARS HERE] Call Sign: KNLG921 Market: B236 LAFAYETTE-NEW IBERIA, LA MERCURY PCS II, LLC 1410 LIVINGSTON LANE Channel Block: F JACKSON, MS 39213 File Number:01299-CW-L-97 - -------------------------------------------------------------------------------- The licensee hereof is authorized, for the period indicated, to construct and operate radio transmitting facilities in accordance with the terms and conditions hereinafter described. This authorization is subject to the provisions of the Communications Act of 1934, as amended, subsequent Acts of Congress, international treaties and agreements to which the United States is a signatory and all pertinent rules and regulations of the Federal Communications Commission contained in the Title 47 of the U.S. Code of Federal Regulations. - -------------------------------------------------------------------------------- Initial Grant Date ......................... August 21, 1997 Five-year Build Out Date ................... August 21, 2002 Expiration Date ............................ August 21, 2007 - -------------------------------------------------------------------------------- CONDITIONS - ---------- Pursuant to Section 309(h) of the Communications Act of 1934, as amended, (47 U.S.C. (S) 309(h)), this license is subject to the following conditions: This license does not vest in the licensee any right to operate a station nor any right in the use of frequencies beyond the term thereof nor in any other manner than authorized herein. Neither this license nor the right granted thereunder shall be assigned or otherwise transferred in violation of the Communications Act of 1934, as amended (47 U.S.C. (S) 151, et seq.). This license is subject in terms to the right of use or control conferred by Section 706 of the Communications Act of 1934, as amended (47 U.S.C. (S) 606). Conditions continued on Page 2. - -------------------------------------------------------------------------------- WAIVERS : - ------- No waivers associated with this authorization. - -------------------------------------------------------------------------------- KNLG921 MERCURY PCS II, LLC 01299-CW-L-97 CONDITIONS: This authorization is subject to the condition that, in the event that systems using the same frequencies as granted herein are authorized in an adjacent foreign territory (Canada/United States), future coordination of any base station transmitters within 72 km (45 miles) of the United States/Canada border shall be required to eliminate any harmful interference to operations in the adjacent foreign territory and to ensure continuance of equal access to the frequencies by both countries. This authorization is conditioned upon the full and timely payment of all monies due pursuant to Sections 1.2110 and 24.716 of the Commission's Rules and the terms of the Commission's installment plan as set forth in the Note and Security Agreement executed by the licensee. Failure to comply with this condition will result in the automatic cancellation of this authorization. - -------------------------------------------------------------------------------- SCHEDULE 4.2 Mercury Consents ---------------- The execution, delivery and performance of the Agreement will or may require the following consents, approvals and reviews: 1. The Federal Communications Commission. Matters which could prevent Mercury from consummating the Transactions include: A. Amarillo Celltelco and High Plains Wireless L.P. v. William M. Mounger, II, E.B. Martin, Jr., Jerry Sullivan, Jr., Mercury Southern, LLC and Mercury PCS II, LLC; No. 83, 268-A in the 47th District Court in and for Potter County, Texas. B. Applications for Review filed by High Plains Wireless, L.P.: In re Application of Mercury PCS II, LLC for Facilities in the Broadband Personal Communications Services in the D, E and F Blocks, Federal Communications Commission File Numbers 00114CWL97, et al. C. United States Department of Justice, Antitrust Division, Washington, D.C.; Mercury PCS II, LLC, Civil Investigative Demand No. 16337. SCHEDULE 4.3 Mercury Litigation ------------------ See Items A-C on Schedule 4.2. SCHEDULE 4.6 Mercury FCC Proceedings ----------------------- See Items A-C on Schedule 4.2. SCHEDULE 5.2 Company Consents ---------------- The execution, delivery and performance of the Agreement will or may require the following consents, approvals and reviews: 1. The Federal Communications Commission. EXHIBIT A --------- _____________, 1998 TeleCorp PCS, Inc. 1110 N. Glebe Road, Suite 300 Arlington, VA 22201 Ladies and Gentlemen: We have acted as counsel to Mercury PCS II, LLC, a Mississippi limited liability company ("Mercury") in connection with the closing (the "Closing") under the ------- ------- License Acquisition Agreement dated as of February , 1998 (the "License ------- Acquisition Agreement") by and between Mercury and TeleCorp PCS, Inc. a - --------------------- Delaware corporation (the "Company"). This opinion is furnished to you pursuant ------- to Section 72 of the License Acquisition Agreement. Capitalized terms used in this opinion which are defined in the License Acquisition Agreement shall have the meanings ascribed to them in the License Acquisition Agreement, unless otherwise defined in this opinion. In connection with this opinion, we have examined the Certificate of Formation and Limited Liability Company Agreement of Mercury and the limited liability company proceedings taken by Mercury in connection with the Transaction Documents (defined below). We have also examined executed copies or photocopies of executed copies of the following documents: 1. the License Acquisition Agreement, 2. the Restated Certificate and Restated Bylaws, 3. the Stockholders Agreement; 4. the instruments of assignment referred to in Section 32 of the License Acquisition Agreement (the "Instruments of -------------- Assignment"); ---------- 5. the opinion of Brown & Wood LLP (the "New York Counsel Opinion"), ------------------------ a copy of which is attached as Exhibit A; and --------- 6. such other documents records and papers as we have deemed necessary and relevant as a basis for this opinion. The specific documents listed at I through 4 above are collectively referred to herein as the "Transaction Documents". --------------------- We have examined originals or copies of such certificates, documents, records, agreements and instruments and have made such investigations of law and fact as we have deemed necessary to TeleCorp PCS, Inc. ______________,1998 Page 6 render this opinion. To the extent we deem proper, we have relied as to certain factual matters on representations made in the Transaction Documents and oral or written statements, letters or certificates of public officials or the manager and/or members of Mercury. For the opinion of good standing of Mercury we have relied solely upon the Certificate of Existence on Mercury issued by the Mississippi Secretary of State on February _____,1998. In each place where the phrase 'to our knowledge" or like references appear, this shall mean to the best of our knowledge after due inquiry and investigation. Due inquiry and investigation shall include only (i) discussions inquiries and conferences occurring in connection with our representation of Mercury, (ii) reviews of certain limited liability company records, documents and proceedings of Mercury, and (iii) reviews of our files, relating to Mercury, and shall not imply any independent verification of any factual matter of which we became aware as a result of such discussions, inquiries, conferences and reviews. As used herein, the term "Applicable Laws" means the General Corporation Law of --------------- the State of Delaware and the laws, rules and regulations of the State of Mississippi, of the State of New York, and of the United States, and "Governmental Authorities" means any Mississippi, New York, Delaware or federal ------------------------ executive, legislative, judicial, administrative or regulatory body. All opinions expressed in this letter are subject in their entirety to the following qualifications and assumptions and the qualifications and assumptions set forth in the New York Counsel Opinion: (i) We have assumed the authenticity of all documents submitted to us as originals, the genuineness of all signatures, the legal capacity of natural persons and the conformity to originals of all documents submitted to us as copies (ii) Although certain of our attorneys are qualified to practice in states other than Mississippi we express no opinion regarding matters which may be governed by any laws other than the Applicable Laws. In this regard, we note that the License Acquisition Agreement and the Instruments of Assignment are to be governed by the laws of the State of New York. With respect to the opinions expressed in Paragraphs 4, 5 and 6 below which involve matters governed by or concerning the laws of the State of New York, we have, with your permission relied entirely and exclusively on the New York Counsel Opinion. (iii) We express no opinion as to (i) matters arising under or governed by the Communications Act of 1934, as amended, or the rules and regulations of the Federal Communications Commission (the "FCC") promulgated --- thereunder, (ii) the public service or public utilities laws, rules or regulations of any jurisdiction, (iii) the antitrust or similar laws of the United States or any other jurisdiction, (iv) the franchise or similar laws of the United States or any other jurisdiction, or (v) the laws of any municipality or other local agency within any state. TeleCorp PCS, Inc. ______________,1998 Page 7 (iv) We have assumed that the transactions contemplated by the Transaction Documents will be effected in the future in accordance with the terms thereof. (v) We have assumed that each of the parties (other than Mercury) has the full power, authority and legal right to enter into and perform its obligations under each of the Transaction Documents to which it is a party, and has duly authorized, executed and delivered the same, and that each such agreement or instrument is its valid and binding obligation, enforceable against it in accordance with its terms. We express no opinion as to the effect on the opinions expressed herein of (i) the compliance or non-compliance of any party (other than Mercury) to the Transaction Documents with any state, federal or other laws or regulations applicable to them, (ii) the regulatory status or the name of the business of any party to the Transaction Documents (other than Mercury) or (iii) the applicability or effect of any fraudulent transfer or similar law on the Transaction Documents or any transactions contemplated thereby. (vi) We have assumed that all parties will in all respects act in good faith in a commercially reasonable manner and in compliance with applicable federal and state laws and authority. Based solely upon and in reliance on the documents and statements referred to above, and subject to the assumptions, qualifications and limitations set forth or incorporated herein, we are of the opinion that: 1. Mercury is duly organized, validly existing and in good standing under the laws of the State of Mississippi. 2. Mercury has all requisite limited liability company power to own, lease and operate its properties and to carry on its business as now being conducted, and to execute and deliver and perform its obligations under the Transaction Documents to which it is a party, including the assignment to the Company of the Mercury Licenses, and in each case to engage in the respective Transactions. 3. The execution, delivery and performance by Mercury of each of the Transaction Documents to which it is a party, and the consummation of the Transactions, including the Mercury License Transfer, have been duly authorized by all necessary limited liability company action on the part of Mercury and its members and no other proceedings on its part or the part of its members is necessary to authorize the Transaction Documents or to consummate the Transactions. 4. Each Transaction Document to which Mercury is a party has been duly executed and delivered by Mercury and constitutes the valid and binding obligation of Mercury, enforceable against Mercury in accordance with its terms, subject to the following qualifications: TeleCorp PCS, Inc. ______________,1998 Page 8 a. the enforceability of the Transaction Documents may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting generally the enforcement of creditors' rights. b. our opinion is subject to limitations on the enforceability of any rights to contribution or indemnification provided for in any of the Transaction Documents which are violative of the public policy underlying any law, rule or regulation (including any federal or state securities law or regulation). c. no opinion is expressed as to the enforceability of provisions relating to restrictive covenants, waiver of remedies (or the delay or omission of enforcement thereof), disclaimers, liability limitations with respect to third parties, releases of legal or equitable rights, or discharges of defenses. d. the enforceability of the Transaction Documents is subject to and may be affected by general principles of equity (regardless of whether considered in a proceeding in equity or at law) including, but not limited to, the availability of specific performance. e. we have assumed there are no oral or written modifications of or amendments to the Transaction Documents and there has been no waiver of any of the provisions of these documents, by actions or conduct of the parties or otherwise. 5. Except as set forth in the Transaction Documents (including by reference to a schedule of exhibit), neither the execution, delivery and performance by Mercury of the Transaction Documents to which it is a party, nor the consummation by Mercury of the Transactions, including the Mercury License Transfer will (a) conflict with any provision of the organizational documents of Mercury; (b) contravene any provision of Applicable Law, or (c) require any Consent on the part of any Governmental Authority, except, in the case of clauses (b) and (c) hereof, where such conflict or contravention, or the failure to obtain or give such Consent, would not have a Material Adverse Effect on Mercury or materially adversely affect the Transactions. 6. The License Acquisition Agreement and the Instruments of Assignment are in form sufficient to effect the Mercury License Transfer. We express no opinion, however, as to the nature or extent of Mercury's rights in, or title to, the Mercury Licenses or any other property purported to be transferred by the License Acquisition Agreement or the Instruments of Transfer. TeleCorp PCS, Inc. ______________,1998 Page 9 This opinion is for the benefit of and may be relied upon only by, you in connection with the Transaction Documents and nay not be relied upon by any third person, reproduced or used for any other purpose without our prior written consent. You have not requested us to update our opinion, and we will not do so unless you request us to do so on a periodic basis with the consent of Mercury . Yours sincerely, Exhibit B --------- Opinion Letter Of FCC Counsel To Mercury PCS Corporation _______________, 1998 TeleCorp PCS, Inc. 1110 N. Glebe Road Suite 300 Arlington, Virginia 22201 Dear Sir or Madame: We have acted as special Federal Communications Commission ("FCC") counsel for Mercury PCS II, L.L.C. ("Mercury") in connection with the License Acquisition Agreement (the "Agreement") dated as of __________, 1998 between Mercury and TeleCorp PCS, Inc. ("TeleCorp"). This opinion is being furnished to you pursuant to Section 7.2(d) of the Agreement. Except as otherwise specified, capitalized terms used in this opinion which are defined in the Agreement are used herein with the same meaning. This opinion is governed by, and shall be interpreted in accordance with, the Legal Opinion Accord of the ABA Section of Business Law (1991) and the Report of the Subcommittee on Legal Opinions of the Transactional Practice Committee of the Federal Communications Bar Association (1996). As a consequence, it is subject to a number of qualifications, exceptions, definitions, limitations on coverage and other limitations, all as more particularly described in the Accord, and this opinion should be read in conjunction therewith. As special FCC counsel to Mercury, we have represented Mercury before the FCC. This opinion is limited strictly to matters arising under the Communications Act of 1934, as amended (the "Act"), and the published rules, regulations and policies of the FCC (collectively "Communications Laws) , all as applicable to Mercury. We express no opinion with respect to any other law, statute, rule, regulation, ordinance, decision, judgment, decree, legal requirement, or legal authority. This opinion should not be construed to render an opinion on any matter of state law with respect to Mercury or its operations, or on the validity of the issuance of any securities, or on the lawful procedures for perfection of security interests. In connection with this opinion, we have examined such records, documents, certificates, and other instruments of record in the publicly available files of the FCC ("Public File") on ___________, 1998, and have made such investigations of law as we deem necessary to render this opinion. (Collectively our investigation described above undertaken to render this opinion is 'Our Inquiry.") In making Our Inquiry, we have assumed: (i) the genuineness of all signatures (other than those of representatives of Mercury) appearing on all documents: (ii) the legal capacity of all persons executing documents to do so; (iii) the authenticity and completeness of documents submitted to us for our examination, whether or not they have been submitted to us as originals: (iv) the conformity to authentic original documents of all documents submitted to us as certified, conformed, facsimile, or photostatic copies; (v) the accuracy and completeness of all records made available to us by Mercury and by the FCC, except as otherwise expressly stated herein; (vi) the due authorization of the execution, delivery, and performance of the Agreement; and (vii) the validity and binding effect of the Agreement upon the parties thereto. As to various matters of fact in connection with this opinion, we have relied solely upon Our Inquiry as described herein. No inference as to our knowledge of the existence or nonexistence of facts, other than facts of which we have obtained actual knowledge as a result of Our Inquiry, should be drawn from the fact of our representation of Mercury as special FCC counsel. When used in this opinion, the term "our knowledge," or some similar phrase, refers to the actual current knowledge of the attorneys currently in this firm who have been actively involved in Mercury's representation. Whenever our opinion with respect to the existence or nonexistence of facts is qualified by the phrase "to our knowledge," or some similar phrase, it is intended to indicate that no information has come to the attention of those attorneys in the course of our representation that would give them actual knowledge that our opinion with respect to the existence or nonexistence of any facts is inaccurate. Whenever our opinion is qualified by the phrase "after Our Inquiry" or some similar phrase, it is intended to indicate that we undertook Our Inquiry as described herein, but did not undertake any independent investigation or evaluation to confirm the accuracy or completeness of the responses of Mercury or FCC to Our Inquiry or any on-site field inspection of Mercury or its facilities, and have relied fully on Mercury's descriptions of its facilities in the Agreement. Moreover, a field inspection of Mercury's facilities is not within the scope of our professional responsibility or expertise as attorneys and we do not make such inspections, including but not limited to inspection of the physical condition of Mercury's facilities or whether actual operation of these facilities is in compliance with legal, regulatory or technical standards which may be applicable. The phrase "to our knowledge" or like language includes the limitation expressed in this paragraph with respect to the fact that we have conducted no field inspection of Mercury's facilities. Based upon the foregoing, it is our opinion that: 1. Mercury is the legal holder of the Mercury Licenses attached to Schedule I of the Agreement. Each of the PCS Licenses is valid and is in full force and effect. With regard to the Mercury Licenses, Mercury has submitted to the FCC all required material documents, applications and reports required pursuant to FCC Rules and is in compliance with respect to the operation of the Mercury Licenses in all material respects. 2. Except for those matters set forth in Schedule II, there is not pending, nor to the best of our knowledge, threatened against Mercury or the Mercury Licenses, any application, action, petition, objection or other pleading, or any proceeding pending at the FCC which questions or contests the validity of, or seeks the revocation, non-renewal or suspension of, or the imposition of any fine or forfeiture on, any of the Mercury Licenses or which seeks modification of any of the Mercury Licenses in any case which would have a material adverse effect on the ability of Mercury to consummate the transactions contemplated by the Agreement. 3. Except for those matters set forth in Schedule II, all FCC consents required in order to consummate the transactions contemplated by the Agreement have been obtained and all such consents are Final orders. 4. Except for those matters set forth in Schedule II, there in not now pending at the FCC any action, petition or proceeding, nor to the best of our knowledge is any such matter threatened, against Mercury which could cause Mercury to be ineligible to hold the Mercury Licenses. This opinion in being provided solely for your use and benefit in connection with the Agreement. It may not be quoted, copied, delivered to, or relied upon by anyone other than you and your senior lenders directly involved in connection with the Agreement and for no other purpose without the express, written consent of this firm. This opinion is effective only as of the date hereof and is based on statutory laws and judicial decisions that are effective on the date hereof; we do not opine with respect to any law, regulation, rule, or governmental policy which may be enacted, adopted, or become effective after the date hereof; nor do we undertake any professional responsibility to advise you as to any subsequent event either in the nature of a change of fact or law, as to which we may become aware. This opinion should not be assumed to state general principles of law applicable to transactions of this kind. Where opinions are expressed concerning the financial effect or possible effect of any event upon Mercury or any aspect of its operations, you should be advised that we have no particular expertise in any such matter and you rely on such opinion at your own risk. Very truly yours, LUKAS, NACE, GUTIERREZ, & SACHS CHARTERED By:______________________________ Thomas Gutierrez Principal EXHIBIT C [Letterhead of Counsel to the Company] Mercury PCS II, LLC Ladies and Gentlemen: We have acted as counsel for TeleCorp PCS, Inc., a Delaware corporation (the "Company"), in connection with the closing (the "Closing") under the License Acquisition Agreement, dated as of May 15, 1998 (the "License Acquisition Agreement"), by and between the Company and Mercury PCS II, LLC, a Mississippi limited liability company ("Mercury"). Capitalized terms used herein without definition shall have the respective meanings ascribed to them in the License Acquisition Agreement. This opinion is being delivered pursuant to Section 7.3 of the License Acquisition Agreement. In connection herewith, we have examined executed copies or photocopies of executed copies of the following documents (collectively, the "Transaction Documents"): 1. the License Acquisition Agreement; 2. the Restated Certificate and Restated Bylaws; and 3. the Stockholders Agreement. In giving this opinion, we have examined and relied on the representations as to factual matters contained in or made pursuant to the Transaction Documents, and have also examined and relied upon the originals, or copies certified or otherwise identified to our satisfaction, of such corporate records, documents, certificates and other instruments, and have made such other investigations, as in our judgment are necessary or appropriate to enable us to render the opinions expressed below with respect to our opinion as to whether the Company and its Subsidiaries are in good standing in a particular jurisdiction, we have relied on good standing or similar certificates issued on or prior to the date hereof by the Office of the Secretary of State or similar office of such jurisdictions. In our examinations, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such copies. We have also assumed that each of the parties (other than the Company) (i) has the full power, authority and legal right to enter into and perform its obligations under each of the Transaction Documents to which it is a party, (ii) has duly authorized, executed and delivered the same, (iii) has complied with the terms of the Transaction Documents, and (iv) that each such agreement or instrument is its valid and binding obligation, enforceable against it in accordance with its terms. We express no opinion as to the effect on the opinions expressed herein of (i) the compliance or non-compliance of any party (other than the Company) to the Transaction Documents with any state, federal or other laws or regulations applicable to them, (ii) the regulatory status or the nature of the business of any party to the Transaction Documents (other than the Company) or (iii) the applicability or effect of any fraudulent transfer or similar law on the Transaction Documents or any transactions contemplated thereby. As used herein, the term "Applicable Laws" means the General Corporation Law of the State of Delaware and the laws, rules and regulations of the State of New York and of the United States; and "Governmental Authorities" mean any New York, Delaware or federal executive, legislative, judicial, administrative or regulatory body. Whenever our opinion herein is indicated to be based upon our knowledge of any matter or issue, it is intended to signify that, in the course of our preparation of this opinion and representation of the Company in connection with its execution and delivery of the Transaction Documents, without having made any special investigation, none of the attorneys who were involved in the preparation of the opinion, or such representation of the Company has acquired actual knowledge of the matter or issue. Based upon the foregoing, subject to the assumptions, qualifications and limitations stated herein, and relying as to factual matters solely upon statements of fact contained in the documents that we have examined, we are of the opinion that: 1. Each of the Company and each of its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. 2. Each of the Company and each of its Subsidiaries has all requisite corporate power to own, lease and operate its properties and to carry on its business as now being conducted and as proposed to be conducted, and in the case of the Company to execute, deliver and perform its obligations under the Transaction Documents to which it is a party, including the issuance of the Preferred Stock and the Common Stock, and in each case to engage in the respective Transactions. 3. The execution, delivery and performance by the Company of each of the Transaction Documents to which it is a party, and the consummation of the Transactions, have been duly authorized by all necessary corporate action on the part of the Company and its stockholders and no other proceedings on its part or the part of its stockholders is necessary to authorize the Transaction Documents or to consummate the Transactions. 4. Each Transaction Document to which the Company is a party has been duly executed and delivered by the Company and constitutes the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to the following qualifications: a. enforcement may be limited by applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar laws affecting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in equity or at law); b. our opinion is subject to limitations on the enforceability of any rights to contribution or indemnification provided for in any of the Transaction Documents which are violative of the public policy underlying any law, rule or regulation (including any federal or state securities law or regulation); and c. no opinion is expressed as to the enforceability of provisions relating to restrictive covenants, waiver of remedies (or the delay or omission of enforcement thereof), disclaimers, liability limitations with respect to third parties, releases of legal or equitable rights, or discharges of defenses. 5. Except as set forth in the Transaction Documents (including by reference to a schedule or exhibit), neither the execution, delivery and performance by the Company of the Transaction Documents, nor the consummation of the Transactions, will (a) conflict with any provision of the Company's organizational documents, (b) contravene any provision of Applicable Law; or (c) require any Consent on the part of any Governmental Authority other than those set forth on Schedule 5.2 to the License Acquisition Agreement, except, in the case of clauses (b) and (c) hereof, where such contravention, or the failure to obtain or give such Consent, would not have a Material Adverse Effect on the Company or materially adversely affect the Transactions or the operation of the Company's business after the Closing Date. 6. The shares of Preferred Stock and Common Stock being delivered pursuant to the License Acquisition Agreement will be duly authorized, validly issued, fully paid and nonassessable, and will be free of any Liens caused or created by the Company, except as set forth in the Stockholders Agreement and the Restated Certificate. The shares of Common Stock or Preferred Stock issued upon conversion or exchange of the Preferred Stock, when issued pursuant to the terms of the Preferred Stock, will be validly issued, fully paid and nonassessable, and will be free of any Liens caused or created by the Company, except as set forth in the Stockholders Agreement and the Restated Certificate. The foregoing opinions are limited to the laws of the State of New York, the General Corporation Law of the State of Delaware and the Federal laws of the United States of America, except that we express no opinion as to (i) matters arising under or governed by the Communications Act of 1934, as amended, or the rules and regulations of the Federal Communications Commission (the "FCC") promulgated thereunder, (ii) the public service or public utilities laws, rules or regulations of any jurisdiction, (iii) the antitrust or similar laws of the United States or any other jurisdiction, (iv) the franchise or similar laws of the United States or any other jurisdiction, and (v) matters arising under or governed by the Small Business Investment Company Act of 1958, as amended, or the rules and regulations of the Small Business Administration promulgated thereunder, or (vi) the laws of any municipality or other local agency within any state. We are members of the bar of the State of New York, and, as such, do not purport to be experts on laws other than the laws of the State of New York, the General Corporation Law of the State of Delaware and certain Federal laws of the United States. This opinion is being furnished to you in connection with the Closing occurring today. This opinion is solely for your benefit and is not to be used, circulated, quoted or otherwise referred to for any other purpose without our prior consent. We assume no obligation to update or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in facts or law that may hereafter occur. Very truly yours, EXHIBIT D [FORM OF ASSIGNMENT] INSTRUMENT OF ASSIGNMENT INSTRUMENT OF ASSIGNMENT from Mercury PCS II, LLC, a Mississippi limited liability company ("Assignor"), to [NAME OF ASSIGNEE], a Delaware corporation (the "Company"). Assignor and the Company have executed and delivered a License Acquisition Agreement, dated as of May 15, 1998 (the "Acquisition Agreement"). Capitalized terms used herein without definition shall have the respective meanings assigned to them in the Acquisition Agreement. 1. Pursuant to Section 2.1 of the Acquisition Agreement, for valuable consideration, receipt of which is hereby acknowledged, Assignor does hereby assign, transfer and convey to the Company, its successors and assigns forever, the Mercury Licenses, TO HAVE AND TO HOLD, all and singular, the assets and properties hereby assigned, conveyed, transferred and delivered or intended so to be unto the Company and its successors and assigns to and for its or their use forever. 2. Nothing contained in this Instrument of Assignment shall in any way supersede, modify, replace, amend, change, rescind, waive, exceed, expend, enlarge or in any way affect the provisions, including the warranties, covenants, agreements, conditions, representations or, in general any of the rights and remedies, and any of the obligations and indemnifications of Assignor or the Company set forth in the Acquisition Agreement, including without limitation any limits on indemnification specified therein. This Instrument of Assignment is intended only to effect the transfer of a certain interest the transfer of which is contemplated in the Acquisition Agreement and shall be governed in accordance with the terms and conditions of the Acquisition Agreement. 3. This Instrument of Assignment is (i) executed pursuant to the Acquisition Agreement and may be executed in counterparts, each of which as so executed shall be deemed to be an original, but all of which together shall constitute one instrument and (ii) shall be governed by and in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. IN WITNESS THEREOF, Assignor has caused this Instrument of Assignment to be duly executed and delivered as of this ____ day of ________, 199_. MERCURY PCS II, LLC By:______________________ Name: Title: Accepted: [NAME OF ASSIGNEE] By:___________________________ Name: Title: EX-10.16 30 LICENSE ACQUISITION AGREEMENT 5/15/98 EXHIBIT 10.16.1 ============================================================== LICENSE ACQUISITION AGREEMENT between WIRELESS 2000, INC. and TELECORP PCS, INC. Dated as of December 2, 1998 =============================================================== TABLE OF CONTENTS ARTICLE I DEFINITIONS............................................................................ 1 ARTICLE II PURCHASE AND SALE OF LICENSES; PAYMENT OF CONSIDERATION; CERTAIN RESTRICTIONS ON TRANSFER....................................................... 5 2.1 Purchase and Sale of Licenses............................................................... 5 2.2 Payment of Consideration.................................................................... 5 2.3 Restrictive Legends......................................................................... 5 ARTICLE III CLOSING................................................................................ 6 3.1 Time and Place of Closing................................................................... 6 3.2 Closing Actions and Deliveries.............................................................. 7 (1) Assignment of Licenses................................................................. 7 (2) Delivery of Securities and Reimbursements.............................................. 7 (3) Assumption of Indebtedness............................................................. 7 (4) Other Deliveries....................................................................... 7 3.3 Payment of Transfer Taxes................................................................... 8 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF WIRELESS............................................. 8 4.1 Organization, Power and Authority........................................................... 8 4.2 Consents; No Conflicts...................................................................... 9 4.3 Litigation.................................................................................. 9 4.4 FCC Compliance.............................................................................. 9 4.5 Brokers..................................................................................... 10 4.6 Disaggregated Licenses...................................................................... 10 4.7 No Distribution............................................................................. 10 4.8 Investor Acknowledgments.................................................................... 10 ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................... 11 5.1 Organization, Power and Authority........................................................... 11 5.2 Consents; No Conflicts...................................................................... 12
-i- TABLE OF CONTENTS 5.3 Litigation.................................................................................... 13 5.4 FCC Compliance................................................................................ 13 5.5 Brokers....................................................................................... 13 5.6 Capitalization................................................................................ 13 5.7 Shares........................................................................................ 13 5.8 Offering of Securities........................................................................ 13 5.9 Stockholders Agreements....................................................................... 14 ARTICLE VI COVENANTS................................................................................ 14 6.1 Consummation of Transactions.................................................................. 14 6.2 Confidentiality............................................................................... 15 6.3 Certain Covenants............................................................................. 16 6.4 Settlement with Century....................................................................... 17 6.5 Certain Advances for FCC Debt Interest Payments............................................... 17 ARTICLE VII CLOSING CONDITIONS....................................................................... 19 7.1 Conditions to Obligations of All Parties...................................................... 19 7.2 Conditions to Obligations of the Company...................................................... 20 7.3 Conditions to the Obligations of Wireless..................................................... 21 ARTICLE VIII SURVIVAL AND INDEMNIFICATION............................................................. 21 8.1 Survival...................................................................................... 21 8.2 Indemnification by Wireless................................................................... 22 8.3 Indemnification by the Company................................................................ 22 8.4 Procedures.................................................................................... 22 8.5 Registration Rights........................................................................... 24 ARTICLE IX TERMINATION.............................................................................. 24 9.1 Termination................................................................................... 24 9.2 Effect of Termination......................................................................... 24 ARTICLE X MISCELLANEOUS PROVISIONS................................................................. 25
-ii- TABLE OF CONTENTS 10.1 Amendment and Modification.................................................................. 25 10.2 Waiver of Compliance; Consents.............................................................. 25 10.3 Notices..................................................................................... 25 10.4 Parties in Interest; Assignment............................................................. 26 10.5 Applicable Law.............................................................................. 26 10.6 Counterparts................................................................................ 26 10.7 Interpretation.............................................................................. 26 10.8 Entire Agreement............................................................................ 27 10.9 Publicity................................................................................... 27 10.10 Specific Performance........................................................................ 27 10.11 Remedies Cumulative......................................................................... 27
-iii- SCHEDULES AND EXHIBITS ---------------------- Schedule I Wireless Licenses Schedule II FCC Debt Related to Wireless Licenses Schedule 2.2(3) Monroe Reimbursement and FCC Paid Interest Schedule 4.2 Wireless Consents Schedule 4.3 Wireless Litigation Schedule 4.6 Wireless FCC Proceedings Schedule 5.2 Company Consents Schedule 5.6 Company Capitalization Exhibit A Form of Disaggregated License Transfer Exhibit B Form of Wireless' FCC Opinion Exhibit C Form of Wireless' Counsel Opinion Exhibit D Form of Company's Counsel Opinion Exhibit 6.5(a) Form of Security Agreement Exhibit 6.5(b) Form of Stock Pledge Agreement LICENSE ACQUISITION AGREEMENT ----------------------------- LICENSE ACQUISITION AGREEMENT, dated as of December 2, 1998, between WIRELESS 2000, INC., a Louisiana corporation ("Wireless"), and TELECORP PCS, -------- INC., a Delaware corporation (the "Company"). ------- WHEREAS, Wireless has been granted the PCS licenses described on Schedule I (the "Wireless Licenses"); and - ---------- ----------------- WHEREAS, Wireless wishes to sell to the Company, and the Company wishes to acquire from Wireless, a disaggregated 15 MHz of each of the Wireless Licenses, all on the terms and subject to the conditions herein set forth; NOW, THEREFORE, in consideration of the promises and the mutual representations, warranties, covenants, conditions and agreements hereinafter set forth, the parties agree as follows: ARTICLE I DEFINITIONS ----------- As used herein, the following terms have the following meanings (unless indicated otherwise, all Section and Article references are to Sections and Articles in this Agreement, and all Schedule and Exhibit references are to Schedules and Exhibits to this Agreement): "Affiliate" means, with respect to any Person, any other Person that --------- directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with that Person. For purposes of this definition, "control" (including the terms "controlling" and "controlled") means ------- ----------- ---------- the power to direct or cause the direction of the management and policies of a Person, directly or indirectly, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise. "Changes in Company Capitalization" shall mean any change in the --------------------------------- Company's issued and outstanding capital stock to give effect to any share dividend, share split, share combination, recapitalization or other similar change in the capital structure of the Company after the execution date hereof and prior to the Closing. "Claim" has the meaning set forth in Section 8.5. ----- "Closing" has the meaning set forth in Section 3.1. ------- "Closing Date" has the meaning set forth in Section 3.1. ------------ "Common Stock" means, collectively, the Voting Common Stock and the ------------ Non-Voting Common Stock. "Company" has the meaning set forth in the preamble. ------- "Confidential Information" means any and all information regarding the ------------------------ business, finances, operations, products, services and customers of the Person specified and its Affiliates, in written or oral form or in any other medium. "Consents" means all consents and approvals of Governmental -------- Authorities or other third parties necessary to authorize, approve or permit the parties hereto to consummate the Transactions and for the Company to operate its business after the Closing Date as currently contemplated. "Disaggregated Licenses" has the meaning set forth in Section 2.1. ---------------------- "Excluded Liability" has the meaning set forth in Section 3.2(3). ------------------ "FCC" means the Federal Communications Commission or similar --- regulatory authority established in replacement thereof. "FCC Debt" means the outstanding principal balance of Seven Million -------- Four Hundred Forty-Nine Thousand One Hundred Ninety and 27/100 Dollars ($7,449,190.27) due to the United States Department of the Treasury incurred in connection with Wireless's acquisition of the Disaggregated Licenses, plus all accrued and/or "suspended" interest, if any, attributable to the Disaggregated Licenses, as of the Closing Date. A copy of the promissory notes and security agreements executed by Wireless and delivered to the FCC related to Wireless' acquisition of the Wireless Licenses is set forth on Schedule II attached hereto. "FCC Law" means the Communications Act of 1934, as amended, including ------- as amended by the Telecommunications Act of 1996, and the rules, regulations and policies promulgated thereunder. "Final Order" has the meaning set forth in Section 7.1(b). ----------- "Governmental Authority" means a Federal, state or local court, ---------------------- legislature, governmental agency (including, without limitation, the United States Department of Justice), commission or regulatory or administrative authority or instrumentality. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of ------- 1976, as amended, and the rules and regulations promulgated thereunder. "Indemnified Party" has the meaning set forth in Section 8.4. ----------------- "Indemnifying Party" has the meaning set forth in Section 8.4. ------------------ "Law" means applicable common law and any statute, ordinance, code or --- other law, rule, permit, permit condition, regulation, order, decree, technical or other standard, requirement or procedure enacted, adopted, promulgated, applied or followed by any Governmental Authority. "License" means a license, permit, certificate of authority, waiver, ------- approval, certificate of public convenience and necessity, registration or other authorization, consent or clearance to construct or operate a facility, including any emissions, discharges or releases therefrom, or to transact an activity or business, to construct a tower or to use an asset or process, in each case issued or granted by a Governmental Authority. "Lien" means, with respect to any asset, any mortgage, lien, pledge, ---- charge, security interest, right of first refusal or right of others therein, or encumbrance of any nature whatsoever in respect of such asset. "Losses" has the meaning set forth in Section 8.2. ------ "Material Adverse Effect" means a material adverse effect on the ----------------------- business, financial condition, assets, liabilities or results of operations or prospects of the Person specified. "Monroe License" means the C Block PCS license covering Monroe, LA, as -------------- set forth in Schedule I hereto. "Monroe Reimbursement" means the reimbursement for actual costs -------------------- incurred by Wireless as of the Closing Date for microwave relocation associated with the Monroe License, up to a total of Two Hundred Thousand Dollars ($200,000). "New York Courts" has the meaning set forth in Section 10.5. --------------- "Non-Voting Common Stock" means the Company's Class B Non-Voting ----------------------- Common Stock, par value $.01 per share. "Person" means an individual, corporation, partnership, limited ------ liability company, association, joint stock company, Governmental Authority, business trust, unincorporated organization, or other legal entity. "Pledge Agreement" means that certain pledge agreement by and among ---------------- the stockholders of Wireless identified therein and the Company executed and delivered pursuant to Section 6.5 below. "Pops" means the Paul Kagan Associates, Inc. estimate of the 1997 ---- population of a geographic area. "Preferred Stock" means the shares of Series A Preferred Stock, Series --------------- C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock and Series F Preferred Stock of the Company. "Representatives" has the meaning set forth in Section 6.2(a). --------------- "Restated Certificate" means the Amended and Restated Certificate of -------------------- Incorporation of the Company filed with the office of the Secretary of State of the State of Delaware on July 17, 1998. "Section 8.2 Indemnified Party" has the meaning set forth in Section ----------------------------- 8.2. "Section 8.3 Indemnified Party" has the meaning set forth in Section ----------------------------- 8.3. "Security Agreement" means that certain security agreement executed ------------------ and delivered by Wireless and the Company pursuant to Section 6.5 below. "Securities" means the shares of Series C Preferred Stock and Class A ---------- Voting Common Stock being issued hereunder, together with any shares of Common Stock issued upon conversion of shares of Series C Preferred Stock. "Securities Act" means the Securities Act of 1933, as amended. -------------- "Series C Preferred Stock" has the meaning set forth in Section 2.2. ------------------------ "Stockholders Agreements" mean the (i) Stockholders Agreement by and ----------------------- among AT&T Wireless PCS Inc., TWR Cellular, Inc., certain Cash Equity Investors, and certain Management Stockholders, each as further identified therein (the "Stockholders Agreement"), and (ii) the Investors Stockholders Agreement by and among AT&T Wireless PCS Inc., and certain Cash Equity Investors and Management Stockholders, each as further identified therein (the "Investors Stockholders Agreement"), each of which is dated July 17, 1998. "Subsidiary" shall mean, with respect to any Person, a corporation or ---------- other entity of which 50% or more of the voting power or the voting equity securities or equity interest is owned, directly or indirectly, by such Person. "THC" shall mean TeleCorp Holding Corp., Inc., a Delaware corporation --- and wholly-owned subsidiary of the Company. "Transactions" means the transactions contemplated by this Agreement, ------------ the Security Agreement, the Pledge Agreement and the Stockholders Agreements. "Voting Common Stock" has the meaning set forth in Section 2.2. ------------------- "Voting Preference Stock" means the Company's Voting Preference Common ----------------------- Stock, par value $.01 per share. "Wireless" has the meaning set forth in the preamble. -------- "Disaggregated License Transfer" has the meaning set forth in Section ------------------------------ 3.2(a). "Wireless Licenses" has the meaning set forth in the first recital. ----------------- ARTICLE II PURCHASE AND SALE OF LICENSES; PAYMENT OF CONSIDERATION; ------------------------------------------------------- CERTAIN RESTRICTIONS ON TRANSFER -------------------------------- 2.1 Purchase and Sale of Licenses. Upon the terms and subject to the ----------------------------- conditions hereof and in reliance upon the representations, warranties and agreements herein contained, at the Closing, Wireless shall sell, transfer, assign, convey and deliver to THC (or its qualified designee), free and clear of all Liens (other than Liens securing the indebtedness to be assumed by THC (or its qualified designee) pursuant to Section 2.2), and the Company and/or THC, as applicable, agrees to purchase, acquire and accept from Wireless, a disaggregated 15 MHz of each of the Wireless Licenses in the respective frequencies identified on Schedule I (the "Disaggregated Licenses"). ---------------------- 2.2 Payment of Consideration. Upon the terms and subject to the conditions ------------------------ hereof and in reliance upon the representations, warranties and agreements herein contained, at the Closing, in consideration of the assignment of the Disaggregated Licenses, the Company shall do the following (collectively, the "Purchase Price"): -------------- (1) the Company shall cause THC (or its qualified designee) to assume the FCC Debt on such terms and conditions in accordance with Section 7.2(7) below; (2) the Company shall issue, sell and deliver to Wireless (i) Five Hundred Forty-Five and 20/100 (545.20) shares of Series C Preferred Stock, par value $.01 per share ("Series C Preferred Stock"), of the Company, and (ii) Five ------------------------ Hundred Thirty and 40/100 (530.40) shares of Class A Voting Common Stock, par value $.01 per share ("Voting Common Stock"), of the Company, subject to ------------------- adjustment for any Changes in Company Capitalization; and (3) the Company shall reimburse Wireless for (i) the Monroe Reimbursement, and (ii) all interest (including all accrued and/or "suspended" interest, but not including interest paid through advances pursuant to Section 6.5 below) related to the Disaggregated Licenses that Wireless has paid, as of the Closing, to the FCC (the "FCC Paid Interest"), each of which is further ----------------- detailed on Schedule 2.2(3). --------------- 2.3 Restrictive Legends. Each certificate representing Securities ------------------- (including the Securities originally issued hereunder or delivered upon conversion of the Series C Preferred Stock, or delivered in substitution or exchange for any of the foregoing) will bear a legend reading substantially as follows until such Securities have been sold pursuant to an effective registration statement under the Securities Act, Rule 144 under the Securities Act, or an opinion of counsel reasonably satisfactory in form and substance to the Company and otherwise in full compliance with any other applicable restrictions on transfer, including those contained in this Agreement and the Stockholders Agreements: (a) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDERS' AGREEMENT DATED AS OF JULY 17, 1998, A COPY OF WHICH IS ON FILE AT THE OFFICES OF THE COMPANY AND WILL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST. SUCH STOCKHOLDERS' AGREEMENT PROVIDES, AMONG OTHER THINGS, FOR THE GRANTING OF CERTAIN RESTRICTIONS ON THE SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE, AND THAT UNDER CERTAIN CIRCUMSTANCES, THE HOLDER HEREOF MAY BE REQUIRED TO SELL THE SHARES REPRESENTED BY THIS CERTIFICATE. BY ACCEPTANCE OF THIS CERTIFICATE, EACH HOLDER HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF SUCH STOCKHOLDERS' AGREEMENT. THE COMPANY RESERVES THE RIGHT TO REFUSE TO TRANSFER THE SHARES REPRESENTED BY THIS CERTIFICATE UNLESS AND UNTIL THE CONDITIONS TO TRANSFER SET FORTH IN SUCH STOCKHOLDERS' AGREEMENT HAVE BEEN FULFILLED"; AND (b) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE 'ACT'), OR UNDER ANY STATE SECURITIES OR 'BLUE SKY' LAWS. SAID SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF, UNLESS AND UNTIL REGISTERED UNDER THE ACT AND THE RULES AND REGULATIONS THEREUNDER AND ALL APPLICABLE STATE SECURITIES OR 'BLUE SKY' LAWS OR EXEMPTED THEREFROM UNDER THE ACT AND ALL APPLICABLE STATE SECURITIES OR 'BLUE SKY' LAWS." ARTICLE III CLOSING ------- 3.1 Time and Place of Closing. Upon the terms and subject to the conditions ------------------------- hereof, the closing of the Transactions (the "Closing") shall take place at the ------- offices of McDermott, Will & Emery, 28 State Street, Boston, MA at 10:00 a.m. local time on the twelfth business day following the date of receipt of the last Consent required by subsections (1) through (3) of Section 7.1, or at such other place and/or time and/or on such other date as the parties may agree or as may be necessary to permit the fulfillment or waiver of the conditions set forth in Article VII (the "Closing ------- Date"). - ----- 3.2 Closing Actions and Deliveries. Upon the terms and subject to the ------------------------------ satisfaction or waiver by the appropriate party, if applicable, of the conditions set forth in Article VII, to effect the purchase and sale of the Disaggregated Licenses and the issuance of the Securities and the delivery of the Monroe Reimbursement and the FCC Paid Interest in consideration therefor, the parties shall on the Closing Date take the following actions: (1) Assignment of Licenses. Wireless shall execute and deliver to the ---------------------- Company one or more instruments of assignment, substantially in the form of Exhibit A, sufficient to assign to THC (or its qualified designee) the - --------- Disaggregated Licenses (such assignment being herein referred to as the "Disaggregated License Transfer"). ------------------------------ (2) Delivery of Securities and Reimbursements. The Company shall ----------------------------------------- deliver to Wireless by wire transfer or other form of immediately available funds the Monroe Reimbursement and the FCC Paid Interest, and certificates, duly executed by authorized signatories of the Company, representing the Securities to be issued to Wireless in accordance with the terms of Section 2.2. (3) Assumption of Indebtedness. (a) The Company shall cause THC (or -------------------------- its qualified designee) to execute and deliver to Wireless or the FCC, as the case may be, an instrument of assumption by THC (or its qualified designee) of the FCC Debt pursuant to Section 2.2 and in accordance with Section 7.2(7) below; and (b) Wireless shall receive evidence of cancellation of the FCC Debt or release from liability therefrom, in form and substance reasonably satisfactory to Wireless. Except for the specific assumption of the FCC Debt by THC (or its qualified designee) pursuant to this Section, the Company shall not assume or have any responsibility with respect to any obligation or liability of Wireless whatsoever (singularly, an "Excluded Liability"). (4) Other Deliveries. The parties shall execute and deliver or cause ---------------- to be executed and delivered all other documents, instruments, opinions and certificates contemplated by this Agreement, the Security Agreement, the Pledge Agreement or the Stockholders Agreements to be delivered at the Closing or necessary and appropriate in order to consummate the Transactions contemplated to be consummated on the Closing Date. 3.3 Payment of Transfer Taxes. The Company shall pay or cause to be ------------------------- paid at the Closing or, if due thereafter, promptly when due, all gross receipts taxes, gains taxes (including, without limitation, real property gains tax or other similar taxes), transfer taxes, sales taxes, stamp taxes, and any other taxes, but excluding any Federal, State or local income taxes payable in connection with the transfer of the Disaggregated Licenses. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF WIRELESS ------------------------------------------ Wireless represents and warrants to the Company as follows: 4.1 Organization, Power and Authority. --------------------------------- (1) It is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and has the requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. (2) It has the requisite power and authority to execute, deliver and perform this Agreement, the Security Agreement, each of the Stockholders Agreements and each other instrument, document, certificate and agreement required or contemplated to be executed, delivered and performed by it hereunder and thereunder to which it is or will be a party. (3) It is duly qualified to do business in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary other than any such jurisdiction in which the failure to be so qualified would not have a Material Adverse Effect on it or materially adversely affect the Transactions or its ability to perform its obligations under this Agreement, the Security Agreement and the Stockholders Agreements. (4) The execution and delivery of this Agreement, the Security Agreement and the Stockholders Agreements by it and the consummation of the Transactions by it have been duly and validly authorized by its Board of Directors (or equivalent body) and no other proceedings on its part which have not been taken (including, without limitation, approval of its stockholders, partners or members) are necessary to authorize this Agreement, the Security Agreement and the Stockholders Agreements or to consummate the Transactions. (5) This Agreement has been duly executed and delivered by it and constitutes its valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally and may be subject to general principles of equity. The Stockholders Agreements shall be duly executed and delivered by it at the Closing and the Security Agreement shall be duly executed and delivered as required under Section 6.5(2) below and, upon such execution and delivery, each shall constitute its valid and binding obligation, enforceable against it in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally and may be subject to general principles of equity. (6) As of the Closing Date, after giving effect to the Transactions, it is not in breach of any obligation under this Agreement, the Security Agreement or either of the Stockholders Agreements. 4.2 Consents; No Conflicts. Neither the execution, delivery and ---------------------- performance by it of this Agreement, the Security Agreement or the Stockholders Agreements nor the consummation of the Transactions will (a) conflict with, or result in a breach or violation of, any provision of its organizational documents; (b) except as set forth on Schedule 4.2, constitute, with or without the giving of notice or passage of time or both, a breach, violation or default, create a Lien (except as contemplated by the Security Agreement), or give rise to any right of termination, modification, cancellation, prepayment or acceleration, under (i) any Law or License or (ii) any note, bond, mortgage, indenture, lease, agreement or other instrument, in each case which is applicable to or binding upon it or any of its assets; or (c) require any Consent, other than those set forth on Schedule 4.2 or the approval of its ------------ members, managers or similar constituent bodies, as the case may be (which approvals have been obtained), except in each case, where such breach, violation, default, Lien, right, or the failure to obtain or give such Consent would not have a Material Adverse Effect on it or materially adversely affect the Transactions or its ability to perform its obligations under this Agreement. To its knowledge, except as set forth on Schedule 4.2, there is no fact relating ------------ to it or its Affiliates that would be reasonably expected to prevent it from consummating the Transactions or performing its obligations under the Stockholders Agreements or disqualify the Company from obtaining the Consents (including without limitation, FCC Consent) required in order to consummate the Disaggregated License Transfer as provided for in this Agreement. 4.3 Litigation. Except as set forth on Schedule 4.3, there is no ---------- ------------ action, proceeding or investigation pending or, to its knowledge, threatened against it or any of its properties or assets that would be reasonably expected to have an adverse effect on its ability to consummate the Transactions or to fulfill its obligations under this Agreement, the Security Agreement or the Stockholders Agreements, or which seeks to prevent or challenge the Transactions. 4.4 FCC Compliance. Assuming the Company utilizes a control group that -------------- complies with FCC Law Section 24.709(b)(3)(iii) and otherwise complies with all applicable FCC Laws, Wireless' contemplated ownership in the Company as a result of closing pursuant to this Agreement will be less than twenty-five percent (25%) and shall not limit the Company's (a) eligibility to hold PCS licenses, either generally or with respect to the Disaggregated Licenses, or (b) qualification with all FCC eligibility rules governing the Disaggregated Licenses including (i) designated entity status generally, (ii) entitlement to the preferred interest rate, bid credit and installment payment provisions currently in effect for the Disaggregated Licenses, (iii) foreign ownership restrictions and (iv) the FCC's CMRS spectrum cap. 4.5 Brokers. It has not employed any broker, finder or investment ------- banker or incurred any liability for any brokerage fees, commissions or finder's fees in connection with the Transactions. 4.6 Disaggregated Licenses. It is the authorized legal holder, free ---------------------- and clear of any Liens (other than Liens securing the indebtedness to be assumed by THC (or its qualified designee) pursuant to Section 2.2), of the Wireless Licenses (and the Disaggregated Licenses as of Closing), true and correct copies of which are attached to Schedule I. The Wireless Licenses are, and on the ---------- Closing Date each of the Disaggregated Licenses will be, valid and in full force and effect. Except as set forth on Schedule 4.6 and for proceedings affecting ------------ the PCS or wireless communications services industry generally, there is not pending, nor to the knowledge of Wireless, threatened against Wireless or against the Wireless Licenses (or the Disaggregated Licenses as of Closing), any application, action, petition, objection or other pleading, or any proceeding with the FCC which questions or contests the validity of, or seeks the revocation, nonrenewal or suspension of, any of the Wireless Licenses (or any of the Disaggregated Licenses as of Closing), which seeks the imposition of any modification or amendment with respect thereto, or which would have a Material Adverse Effect on the ability of the Company to employ the Disaggregated Licenses in its business. The Wireless Licenses are not, and as of Closing the Disaggregated Licenses will not be, subject to any conditions other than those appearing on the face of the Licenses themselves and those imposed by FCC Law. 4.7 No Distribution. It is acquiring the Securities to be acquired by --------------- it hereunder for the purpose of investment and not with a view to or for sale in connection with any distribution thereof (other than in compliance with the Securities Act and all applicable state securities laws). 4.8 Investor Acknowledgments. ------------------------ (1) It is an "accredited investor" as defined in Regulation D of the Securities Act. Its representatives have been provided an opportunity to ask questions of, and have received answers thereto from, the Company and its representatives regarding the terms and conditions of its acquisition of the Securities, and the Company and its proposed business generally, and have obtained all additional information requested by it to verify the accuracy of all information furnished to it in connection with such purchase. (2) It has such knowledge and experience in financial and business affairs that it is capable of evaluating the merits and risks of acquiring the Securities it is acquiring hereunder. (3) It is not relying on and acknowledges that no representation is being made by the Company or any of its officers, employees, Affiliates, agents or representatives, except for representations and warranties expressly set forth in this Agreement and the Stockholders Agreements, and, in particular, it is not relying on, and acknowledges that no representation is being made in respect of, (x) any projections, estimates or budgets delivered to or made available to them of future revenues, expenses or expenditures, or future results of operations and (y) any other information or documents delivered or made available to it or its representatives, except for representations and warranties expressly set forth in this Agreement and the Stockholders Agreements. (4) In deciding to invest in the Company, it has relied exclusively on the representations and warranties expressly set forth in this Agreement and the Stockholders Agreements, investigations made by itself and its representatives and its and such representatives' knowledge of the industry in which the Company proposes to operate. Based solely on such representations and warranties and such investigations and knowledge, it has determined that the Securities it is acquiring are a suitable investment for it. ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY --------------------------------------------- The Company represents and warrants to Wireless as follows: 5.1 Organization, Power and Authority. --------------------------------- (1) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted and proposed to be conducted. The Company has furnished to Wireless a true and correct copy of its Certificate of Incorporation and Bylaws, as in effect on the date hereof and as of the Closing Date. (2) It has the requisite corporate power and authority to execute, deliver and perform this Agreement, the Security Agreement and each of the Stockholders Agreements, and each other instrument, document, certificate and agreement required or contemplated to be executed, delivered and performed by it hereunder and thereunder to which it is or will be a party. (3) The Company is duly qualified to do business in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary other than any such jurisdiction in which the failure to be so qualified would not have a Material Adverse Effect on the Company or materially adversely affect the Transactions or its ability to perform its obligations under this Agreement, the Security Agreement and the Stockholders Agreements. (4) The execution and delivery of this Agreement and the Security Agreement by the Company and the consummation of the Transactions by the Company have been duly and validly authorized by the Board of Directors of the Company and no other proceedings on the part of the Company which have not been taken (including, without limitation, approval of its shareholders) are necessary to authorize this Agreement or to consummate the Transactions. (5) This Agreement and the Stockholders Agreements have been duly executed and delivered by the Company and constitute the valid and binding obligation of the Company, enforceable against it in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally and may be subject to general principles of equity. The Security Agreement shall be duly executed and delivered by the Company as required under Section 6.5(2) below and, upon such execution and delivery, shall constitute its valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally and may be subject to general principles of equity. (6) As of the Closing, after giving effect to the Transactions, the Company is not in breach of any obligation under this Agreement or either of the Stockholders Agreements. 5.2 Consents; No Conflicts. Neither the execution, delivery and ---------------------- performance by the Company of this Agreement, the Security Agreement and the Stockholders Agreements nor the consummation of the Transactions will (a) conflict with, or result in a breach or violation of, any provision of the Company's organizational documents; (b) constitute, with or without the giving of notice or passage of time or both, a breach, violation or default, create a Lien, or give rise to any right of termination, modification, cancellation, prepayment or acceleration, under (i) any Law or License, or (ii) any note, bond, mortgage, indenture, lease, agreement or other instrument, in each case which is applicable to or binding upon the Company or any of its assets; or (c) require any Consent on the part of the Company, other than those set forth on Schedule 5.2 or the approval of the Company's Board of Directors (which approval - ------------ has been obtained), except in each case where such breach, violation, default, Lien, right, or the failure to obtain or give such Consent would not have a Material Adverse Effect on it or materially adversely affect the Transactions, its ability to perform its obligations under this Agreement, the Security Agreement or the Stockholders Agreements or the operation of the Company's business after the Closing Date. To its knowledge, there is no fact relating to it or its Affiliates that would be reasonably expected to prevent it from consummating the Transactions or performing its obligations under this Agreement, the Security Agreement or the Stockholders Agreements or disqualify the Company from obtaining the Consents (including without limitation, FCC Consent) required in order to consummate the Disaggregated License Transfer as provided for in this Agreement. 5.3 Litigation. There is no action, proceeding or investigation pending ---------- or, to the knowledge of the Company, threatened against the Company or any of its properties or assets that would have an adverse effect on its ability to consummate the Transactions or to fulfill its obligations under this Agreement, the Security Agreement or the Stockholders Agreements, or to operate its business after the Closing Date, or which seeks to prevent or challenge the Transactions. There is no judgment, decree, injunction, rule or order outstanding against the Company which would limit in any material respect the ability of the Company to operate its business in the manner currently contemplated. 5.4 FCC Compliance. THC (or its qualified designee) complies with all -------------- eligibility rules issued by the FCC to hold C Block broadband PCS licenses, including without limitation, FCC rules on foreign ownership and the CMRS spectrum cap. 5.5 Brokers. The Company has not employed any broker, finder or investment ------- banker or incurred any liability for any brokerage fees, commissions or finder's fees in connection with the Transactions. 5.6 Capitalization. As of the execution date hereof, the authorized capital -------------- stock of the Company consists of 700,000 shares of Voting Common Stock, 700,000 shares of Non-Voting Common Stock, ten shares of Voting Preference Stock, 1,000 shares of Class C Common Stock, 3,000 shares of Class D Common Stock, 70,000 shares of Series A Preferred Stock, 140,000 shares of Series B Preferred Stock, 140,000 shares of Series C Preferred Stock, 35,000 shares of Series D Preferred Stock, 20,000 shares of Series E Preferred Stock, 35,000 shares of Series F Preferred Stock and 70,000 shares of Senior Common Stock. As of the execution date hereof, the Company has the issued and outstanding shares of Preferred Stock and Common Stock set forth on Schedule 5.6. 5.7 Shares. The Securities being issued to Wireless hereunder, when issued ------ and paid for pursuant to the terms of this Agreement, will be duly authorized, validly issued, fully paid and nonassessable, and will be free of any Liens caused or created by the Company, except as set forth in the Stockholders Agreements and the Restated Certificate. The shares of Common Stock issued upon conversion of the Series C Preferred Stock, when issued pursuant to the terms of the Series C Preferred Stock, will be validly issued, fully paid and nonassessable, and will be free of any Liens caused or created by the Company, except as set forth in the Stockholders Agreements and the Restated Certificate. 5.8 Offering of Securities. (a) Neither the Company nor any Person acting ---------------------- on its behalf has offered the Securities or any similar equity securities of the Company for sale to, or solicited any offers to buy Securities or any similar equity securities of the Company from, any Person, other than a limited number of other "accredited investors" (as defined in Rule 501(a) under the Securities Act). (b) Neither the Company nor any Person acting on its behalf will, directly or indirectly, take any action which might subject the offering, issuance or sale of the Securities to the registration and prospectus delivery requirements of Section 5 of the Securities Act. (c) Assuming the accuracy of the representations and warranties of Wireless contained in Sections 4.7 and 4.8, each of the offering and sale of Securities under this Agreement to Wireless complies with all applicable requirements of federal and state securities laws. 5.9 Stockholders Agreements. The Company has furnished to Wireless a true ----------------------- and complete copy of each of the Stockholders Agreements as in effect on the date hereof. ARTICLE VI COVENANTS --------- 6.1 Consummation of Transactions. Each party shall use all commercially ---------------------------- reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable and consistent with applicable law to carry out all of their respective obligations under this Agreement, the Security Agreement and the Stockholders Agreements to consummate the Transactions, which efforts shall include, without limitation, the following: (1) The parties shall use all commercially reasonable efforts to cause the Closing to occur and the Transactions to be consummated in accordance with the terms hereof, and, without limiting the generality of the foregoing, to obtain all necessary Consents including, without limitation, the approval of this Agreement and the Transactions by all Governmental Authorities and agencies, including the FCC, and make all filings with and to give all notices to third parties which may be necessary or reasonably required in order for the parties to consummate the Transactions. Wireless shall make, and the Company shall cause THC (or its qualified designee) to make, filings with the FCC to obtain FCC approval of the license transfers contemplated hereunder no later than ten (10) days following the date on which this Agreement is fully executed by each of Wireless and the Company. (2) Each party shall furnish to the other parties all information concerning such party and its Affiliates reasonably required for inclusion in any application or filing to be made by Wireless or the Company or any other party in connection with the Transactions or otherwise to determine compliance with applicable FCC Rules. (3) Upon the request of any other party, each party shall forthwith execute and deliver, or cause to be executed and delivered, such further instruments of assignment, transfer, conveyance, endorsement, direction or authorization and other documents as may reasonably be requested by such party in order to effectuate the purposes of this Agreement and the Stockholders Agreements. Nothing in this Agreement shall be construed to require the parties to consummate the Closing if any regulatory approval would require that it (i) divest or hold separate any of its assets existing as of the date hereof other than as contemplated by this Agreement and the Stockholders Agreements, or (ii) otherwise take or commit to take any action that limits its freedom of action in any material respect with respect to any of its businesses, product lines or assets. In addition, the Company shall not be required to consummate the Closing if the FCC build-out requirements for any of the Disaggregated Licenses exceeds those imposed by the FCC with regard to (A) holders of 10 MHz licenses, or (B) fifty percent (50%) of the Pops required under the original 30 MHz licenses (e.g., the Company will not be required to cover more than 1/6 of the Pops in any area covered by any Disaggregated License within the first five (5) years following the license grant date, independent of any other licensee's obligations). 6.2 Confidentiality. --------------- (1) Each party shall, and shall cause each of its Affiliates, and its and their respective shareholders, members, managers, directors, officers, employees and agents (collectively, "Representatives") to, keep secret --------------- and retain in strictest confidence any and all Confidential Information relating to any other party that it receives in connection with the negotiation or performance of this Agreement, and shall not disclose such Confidential Information, and shall cause its Representatives not to disclose such Confidential Information, to anyone except the receiving party's Affiliates and Representatives and any other Person that agrees in writing to keep in confidence all Confidential Information in accordance with the terms of this Section 6.2. Until the Closing, each party agrees to use Confidential Information received from another party only (i) to evaluate its interest in pursuing the Transactions and (ii) to pursue such Transactions, but not for any other purpose. All Confidential Information furnished pursuant to this Agreement shall be returned promptly to the party to whom it belongs upon request by such party. Upon the Closing, the provisions of this Section 6.2 shall terminate and the obligations of the parties in respect of Confidential Information shall be governed by Section 7.12 of the Stockholders Agreement. (2) The obligations set forth in Section 6.2(1) shall be inoperative with respect to Confidential Information that (i) is or becomes generally available to the public other than as a result of disclosure by the receiving party or its Representatives, (ii) was available to the receiving party on a non-confidential basis prior to its disclosure to the receiving party, or (iii) becomes available to the receiving party on a non-confidential basis from a source other than the providing party or its agents, provided that such source is not known by the receiving party to be bound by a confidentiality agreement with the providing party or the Representatives. (3) To the fullest extent permitted by law, if a party or any of its Affiliates or Representatives breaches, or threatens to commit a breach of, this Section 6.2, the party whose Confidential Information shall be disclosed, or threatened to be disclosed, shall have the right and remedy to have this Section 6.2 specifically enforced by any court having jurisdiction, it being acknowledged and agreed that money damages will not provide an adequate remedy to such party. Nothing in this Section 6.2 shall be construed to limit the right of any party to collect money damages in the event of breach of this Section 6.2. (4) Anything else in this Agreement or the Stockholders Agreements notwithstanding, each party shall have the right to disclose any information, including Confidential Information of the other party or such other party's Affiliates, in any filing with any regulatory agency, court or other authority or any disclosure to a trustee of public debt of a party to the extent that the disclosing party determines in good faith that it is required by Law, regulation or the terms of such debt to do so, provided that any such disclosure shall be as limited in scope as possible and shall be made only after giving the other party as much notice as practicable of such required disclosure and an opportunity to contest such disclosure if possible. 6.3 Certain Covenants. From and after the execution and delivery of this ----------------- Agreement to and including the Closing Date, Wireless shall: (1) Comply in all material respects with all applicable Laws, including all such Laws relating to, or that would be reasonably expected to relate to, the Disaggregated Licenses or their use; (2) Use commercially reasonable efforts to maintain the Disaggregated Licenses in full force and effect; (3) Except to effect the transfer of the Disaggregated Licenses to the Company as contemplated hereunder, not (i) sell, transfer, assign or dispose of, or offer to, or enter into any agreement, arrangement or understanding to, sell, transfer, assign or dispose of any of the Disaggregated Licenses or any interest therein, or negotiate therefor, or (ii) create, incur or suffer to exist any Lien of any nature whatsoever relating to any of the Disaggregated Licenses or any interest therein (other than Liens securing the indebtedness to be assumed by THC (or its qualified designee) pursuant to Section 2.2). Without limiting the foregoing, Wireless shall not incur any material obligation or liability, absolute or contingent, relating to or affecting the Disaggregated Licenses or their use; provided that Wireless shall be free to borrow money on such terms that are consistent with this Section 6.3(3) for the sole purpose of making payments to satisfy the FCC Debt. (4) Give written notice to the other parties promptly upon the commencement of, or upon obtaining knowledge of any facts that would give rise to a threat of, any claim, action or proceeding commenced against or relating to (i) it, its properties or assets, including the Wireless Licenses or their use, and which could have a Material Adverse Effect on it or materially adversely affect the Transactions, or (ii) the Wireless Licenses or their use; (5) Promptly after obtaining knowledge of the occurrence of, or the impending or threatened occurrence of, any event which could cause or constitute a material breach of any of its warranties, representations, covenants or agreements contained in this Agreement, give notice in writing of such event, or occurrence or impending or threatened event or occurrence, to the other parties and use commercially reasonable efforts to prevent or to promptly remedy such breach; and (6) Cause the other parties to be advised promptly in writing of (i) any event, condition or state of facts known to it, which has had or could have a Material Adverse Effect on it, or materially adversely affect the Wireless Licenses or their use or the Transactions (other than proceedings affecting the PCS or wireless communications services industry generally), or (ii) any claim, action or proceeding which seeks to enjoin the consummation of the Transactions. 6.4 Settlement with Century. The Company agrees that after the execution ----------------------- date hereof, Wireless (through its principle executive officers) will be free to negotiate and settle outstanding claims with Century Telephone Enterprises, Inc., a Louisiana corporation, and/or Century Personal Access Networks, Inc., a Louisiana corporation (each a "Century Company"); provided that any such settlement will be consistent with the terms set forth elsewhere in this Agreement and will not have a Material Adverse Effect on any transactions contemplated hereunder. 6.5 Certain Advances for FCC Debt Interest Payments. After the execution ----------------------------------------------- date hereof, the Company agrees to make interest payments to the FCC or the United States Department of the Treasury (the "Treasury") on behalf of Wireless that may become due under the FCC Debt prior to Closing (collectively, "Advances"). (1) No earlier than twenty (20) days nor later than ten (10) days prior to a scheduled interest payment under the FCC Debt, Wireless shall deliver a written notice to the Company that sets forth the payment due date (the "Payment Due Date") and the exact amount of such interest payment ("Payment Amount"). Upon receipt of such notice, the Company shall deliver funds to the FCC or the Treasury in an amount equal to the Payment Amount via wire transfer in immediately available funds no later than the Payment Due Date. (2) As a condition to the Company's agreement to make Advances hereunder and prior to the Company's delivery of any Advance hereunder, Wireless shall have executed and delivered to the Company the Security Agreement, the form of which is attached hereto as Exhibit 6.5(a), and the stockholders holding at least 50.1% of the issued and outstanding voting securities of Wireless, as of the execution date hereof, shall have executed and delivered to the Company a Stock Pledge Agreement, the form of which is attached hereto as Exhibit 6.5(b). (3) In the event this Agreement is terminated prior to Closing in accordance with Section 9.1 below, Wireless shall, no later than twenty (20) days after such termination, deliver via wire transfer in immediately available funds to the Company funds in an amount equal to all of the Advances made by the Company hereunder as of such termination date. (4) At Closing, Advances shall be deemed satisfied in full without payment or transfer by Wireless. 6.6 AT&T Approval. The Company agrees to use good faith commercially ------------- reasonable efforts to obtain the approval of AT&T Wireless required pursuant to Sections 7.1(5) and 7.2(8) hereof. 6.7 Company Securities and Information. Wireless agrees and acknowledges ---------------------------------- that each Century Company is a competitor or potential competitor in the Company's business and as a condition to entering into this Agreement, the Company and Wireless agree as follows: (1) Notwithstanding Wireless' ability, if applicable, under the Stockholders Agreements to transfer after Closing shares of Series C Preferred Stock or Voting Common Stock received by it pursuant to Section 2.2(2) above, Wireless agrees that it shall not distribute any of such shares of Series C Preferred Stock or Voting Common Stock to any Person, including without limitation to any of its stockholders until (i) each Century Company no longer holds any beneficial or record ownership interest in Wireless, and (ii) all of Wireless' obligations and liabilities to each Century Company are satisfied fully, each as contemplated and anticipated pursuant to Section 6.4 above (collectively, the "Century Settlement"). Except for the further restrictions on transfer set forth in this Section, Wireless acknowledges that nothing in this Section 6.7 shall amend or in any way alter any of the terms and conditions set forth in either of the Stockholders Agreements that apply to Wireless. (2) Commencing on the execution date hereof and terminating on the date the Century Settlement is effective, Wireless shall not distribute to any Person, including without limitation to any of its stockholders any Confidential Information that it has received from the Company or any information concerning or relating to the Company or any of its Affiliates that it receives from the Company after the execution date hereof without the prior written consent of the Company. This Section shall survive the Closing until all of its terms are satisfied. Wireless acknowledges that nothing in this Section 6.7 shall amend or in any way alter any of the terms and conditions set forth in Section 7.12 of the Stockholders Agreement that apply to Wireless. 6.8 FCC Filings. Wireless shall not make any filings with the FCC or agree ----------- to any proposal, settlement, amendment or alteration with the FCC with respect to the Wireless Licenses, the Disaggregated Licenses or the FCC Debt without the Company's prior written consent. ARTICLE VII CLOSING CONDITIONS ------------------ 7.1 Conditions to Obligations of All Parties. The obligation of each of ---------------------------------------- the parties to consummate the Transactions contemplated to occur at the Closing shall be conditioned on the following, unless waived by each of the parties: (1) The Consent of the FCC to the Disaggregated License Transfer shall have been obtained pursuant to a Final Order, free of any conditions materially adverse to THC (or its qualified designee), the Company or Wireless. For the purposes of this paragraph, "Final Order" means an action or decision ----------- that has been granted by the FCC as to which (i) no request for a stay or similar request is pending, no stay is in effect, the action or decision has not been vacated, reversed, set aside, annulled or suspended and any deadline for filing such request that may be designated by statute or regulation has passed, (ii) no petition for rehearing or reconsideration or application for review is pending and the time for the filing of any such petition or application has passed, (iii) the FCC does not have the action or decision under reconsideration on its own motion and the time within which it may effect such reconsideration has passed and (iv) no appeal is pending including other administrative or judicial review, or in effect and any deadline for filing any such appeal that may be designated by statute or rule has passed. (2) All Consents by any Governmental Authority (other than the Consents referred to in paragraphs (1) and (2) above) required to permit the consummation of the Transactions, the failure to obtain or make which would be reasonably expected to have a Material Adverse Effect on THC (or its qualified designee), the Company or Wireless or to materially adversely affect the Transactions or its ability to perform its obligations under this Agreement or the Stockholders Agreements shall have been obtained or made. (3) No preliminary or permanent injunction or other order, decree or ruling issued by a Governmental Authority, nor any statute, rule, regulation or executive order promulgated or enacted by any Governmental Authority, shall be in effect that would (i) impose material limitations on the ability of any party to consummate the Transactions or prohibit such consummation, or (ii) impair in any material respect the operation of the Company. (4) The Company or its Affiliate shall have received written approval from AT&T Wireless to utilize the AT&T brand in connection with the provision of mobile wireless services in the geographic area covered by the Disaggregated Licenses on substantially the same terms and conditions as the written approval granted to the Company by AT&T Wireless to use the brand name in connection with the provision of mobile wireless services in the geographic area covered by the licenses held by the Company. 7.2 Conditions to Obligations of the Company. The obligation of the ---------------------------------------- Company to consummate the Transactions contemplated to occur at the Closing shall be further conditioned upon the satisfaction or fulfillment, at or prior to the Closing, of the following conditions by each of the other parties, unless waived by the Company: (1) The representations and warranties of Wireless contained herein and in the Stockholders Agreements shall be true and correct in all material respects (except for representations and warranties that are qualified as to materiality, which shall be true and correct), in each case when made and at and as of the Closing (except for representations and warranties made as of a specified date, which shall be true and correct as of such date) with the same force and effect as though made at and as of such time, except for inaccuracies in respect of the representations and warranties set forth in Section 4.3 and the third sentence of Section 4.6 (disregarding any qualifications as to materiality contained therein) that in the aggregate would not be reasonably expected to have a Material Adverse Effect on Wireless or its ability to perform its obligations under this Agreement or the Stockholders Agreements or to materially adversely affect the Transactions. (2) Wireless shall have performed in all material respects all agreements contained herein and in the Stockholders Agreements required to be performed by it at or before the Closing. (3) An officer of Wireless shall have delivered to the Company a certificate, dated the Closing Date, certifying as to the fulfillment of the conditions set forth in paragraphs (1) and (2) above as to Wireless. (4) Wireless shall have furnished the Company with opinions of counsel, each dated the Closing Date, in substantially the forms of Exhibits B and C. (5) All corporate and other proceedings of Wireless in connection with the Disaggregated License Transfer and the other Transactions, and all documents and instruments incident thereto, shall be reasonably satisfactory in form and substance to the Company, and Wireless shall have delivered to the Company such receipts, documents, instruments and certificates, in form and substance reasonably satisfactory to the Company, which the Company shall have reasonably requested. (6) Wireless shall have executed and delivered to the Company a counterpart signature page to each of the Stockholders Agreements. (7) THC's (or its qualified designee's) assumption of the FCC Debt, as contemplated by Section 2.2 (1) above, shall be on terms and conditions no less favorable than those existing as of the execution date hereof in the promissory note(s) and security agreement(s) that evidence and secure the FCC Debt. (8) AT&T Wireless shall have approved the Company's acquisition of the Disaggregated Licenses on the terms and conditions set forth in this Agreement. 7.3 Conditions to the Obligations of Wireless. The obligation of Wireless ----------------------------------------- to consummate the Transactions contemplated to occur at the Closing shall be further conditioned upon the satisfaction or fulfillment, at or prior to the Closing, of the following conditions, unless waived by Wireless: (1) The representations and warranties of the Company contained herein shall be true and correct in all material respects (except for representations and warranties that are qualified as to materiality, which shall be true and correct), in each case when made and at and as of the Closing (except for representations and warranties made as of a specified date, which shall be true and correct as of such date) with the same force and effect as though made at and as of such time, except for inaccuracies in respect of the representations and warranties set forth in Section 5.3 (disregarding any qualifications as to materiality contained therein) that in the aggregate would not be reasonably expected to have a Material Adverse Effect on the Company or its ability to perform its obligations under this Agreement or to materially adversely affect the Transactions. (2) The Company shall have performed in all material respects all agreements contained herein required to be performed by it at or before the Closing. (3) An officer of the Company shall have delivered to Wireless a certificate, dated the Closing Date, certifying as to the capitalization of the Company as of the Closing Date and the fulfillment of the conditions set forth in paragraphs (1) and (2) above as to the Company. (4) The Company shall have furnished Wireless with an opinion of counsel, dated the Closing Date, in substantially the form of Exhibit D. (5) All corporate and other proceedings of the Company in connection with the Disaggregated License Transfer and the other Transactions, and all documents and instruments incident thereto, shall be reasonably satisfactory in form and substance to Wireless, and the Company shall have delivered to Wireless such receipts, documents, instruments and certificates, in form and substance reasonably satisfactory to Wireless, which Wireless shall have reasonably requested. ARTICLE VIII SURVIVAL AND INDEMNIFICATION ---------------------------- 8.1 Survival. The representations and warranties made in this Agreement -------- shall survive the Closing until the second anniversary thereof and shall thereupon expire together with any right to indemnification in respect thereof (except to the extent a written notice asserting a claim for breach of any such representation or warranty and describing such claim in reasonable detail shall have been given prior to such date to the party which made such representation or warranty). The covenants and agreements contained herein to be performed or complied with prior to the Closing shall expire at the Closing. The covenants and agreements contained in this Agreement to be performed or complied with after the Closing shall survive the Closing; provided that the right to indemnification pursuant to this Article VIII in respect of a breach of a representation or warranty shall expire on the second anniversary of the Closing (except to the extent written notice asserting a claim thereunder and describing such claim in reasonable detail shall have been given prior to such date to the party from whom such indemnification is sought). After the Closing, the sole and exclusive remedy of the parties for any breach or inaccuracy of any representation or warranty contained in this Agreement, or any other claim (whether or not alleging a breach of this Agreement) that arises out of the facts and circumstances constituting such breach or inaccuracy, shall be the indemnity provided in this Article VIII. For purposes of determining materiality thresholds in Section 8.2 and 8.3 below, any qualifications as to materiality contained elsewhere herein shall be disregarded. 8.2 Indemnification by Wireless. Wireless shall indemnify and hold --------------------------- harmless the Company and its Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them (each, a "Section 8.2 Indemnified Party"), against all liabilities and ----------------------------- expenses (including amounts paid in satisfaction of judgments, in compromise, as fines and penalties, and as counsel fees) (collectively, "Losses") incurred by ------ him or it in connection with the investigation, defense, or disposition of any action, claim, charge, suit or other proceeding in which any Section 8.2 Indemnified Party may be involved or with which he or it may be threatened that arises out of or results from (a) any representation or warranty of such indemnifying party contained in this Agreement or in either of the Stockholders Agreements being untrue in any material respect as of the date on which it was made, (b) any material default by such indemnifying party or any of its Affiliates in the performance of their respective obligations under this Agreement and the Stockholders Agreements, except to the extent (but only to the extent) any such Losses arise out of or result from the gross negligence or willful misconduct of such Section 8.2 Indemnified Party or his or its Affiliates, or (c) any Excluded Liability. 8.3 Indemnification by the Company. The Company shall indemnify and hold ------------------------------ harmless Wireless and its Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them (each, a "Section 8.3 Indemnified Party"), against all Losses incurred by him or ----------------------------- it in connection with the investigation, defense, or disposition of any action, suit or other proceeding in which any Section 8.3 Indemnified Party may be involved or with which he or it may be threatened that arises out of or results from (a) any representation or warranty of the Company contained in this Agreement or in either of the Stockholders Agreements being untrue in any material respect as of the date on which it was made or (b) any material default by the Company or any of its Affiliates in the performance of their respective obligations under this Agreement or in the Stockholders Agreements, except to the extent (but only to the extent) any such Losses arise out of or result from the gross negligence or willful misconduct of such Section 8.3 Indemnified Party or his or its Affiliates. 8.4 Procedures. ---------- (1) The terms of this Section 8.4 shall apply to any claim (a "Claim") for indemnification under the terms of Sections 8.2 or 8.3. The Section ----- 8.2 Indemnified Party or Section 8.3 Indemnified Party Indemnified Party (each, an "Indemnified Party"), as the case may be, shall give prompt written notice of ----------------- such Claim to the indemnifying party (the "Indemnifying Party") under the ------------------ applicable Section, which party may assume the defense thereof, provided that any delay or failure to so notify the Indemnifying Party shall relieve the Indemnifying Party of its obligations hereunder only to the extent, if at all, that it is materially prejudiced by reason of such delay or failure. The Indemnified Party shall have the right to approve any counsel selected by the Indemnifying Party and to approve the terms of any proposed settlement, such approval not to be unreasonably delayed or withheld (unless such settlement provides only, as to the Indemnified Party, the payment of money damages actually paid by the Indemnifying Party and a complete release of the Indemnified Party in respect of the claim in question). Notwithstanding any of the foregoing to the contrary, the provisions of this Article VIII shall not be construed so as to provide for the indemnification of any Indemnified Party for any liability to the extent (but only to the extent) that such indemnification would be in violation of applicable law or that such liability may not be waived, modified or limited under applicable law, but shall be construed so as to effectuate the provisions of this Article VIII to the fullest extent permitted by law. (2) In the event that the Indemnifying Party undertakes the defense of any Claim, the Indemnifying Party will keep the Indemnified Party advised as to all material developments in connection with such Claim, including, but not limited to, promptly furnishing the Indemnified Party with copies of all material documents filed or served in connection therewith. (3) In the event that the Indemnifying Party fails to assume the defense of any Claim within ten business days after receiving written notice thereof, the Indemnified Party shall have the right, subject to the Indemnifying Party's right to assume the defense pursuant to the provisions of this Article VIII, to undertake the defense, compromise or settlement of such Claim for the account of the Indemnifying Party. Unless and until the Indemnified Party assumes the defense of any Claim, the Indemnifying Party shall advance to the Indemnified Party any of its reasonable attorneys' fees and other costs and expenses incurred in connection with the defense of any such action or proceeding. Each Indemnified Party shall agree in writing prior to any such advancement that, in the event he or it receives any such advance, such Indemnified Party shall reimburse the Indemnifying Party for such fees, costs and expenses to the extent that it shall be determined that he or it was not entitled to indemnification under this Article VIII. (4) In no event shall an Indemnifying Party be required to pay in connection with any Claim for more than one firm of counsel (and local counsel) for each of the following groups of Indemnified Parties: (i) Wireless, its Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them; and (ii) the Company and its Affiliates, and the shareholders, members, managers, officers, employees, agents and/or the legal representatives of any of them. 8.5 Registration Rights. Notwithstanding anything to the contrary in this ------------------- Article VIII, the indemnification and contribution provisions set forth in Sections 5(e) and 5(f) of the Stockholders Agreement shall govern any claim made with respect to the registration statements filed pursuant to Section 5 of the Stockholders Agreement or sales made thereunder. ARTICLE IX TERMINATION ----------- 9.1 Termination. This Agreement may be terminated, and the Transactions ----------- abandoned, without further obligation of any party, except as set forth herein, at any time prior to the Closing Date: (1) by mutual written consent of the parties; (2) by any party by written notice to the other parties, if the Closing shall not have occurred on or before the later of March 23, 1999 or the date the FCC C Block re-auction is held, but in no event later than June 3, 1999; provided that the party electing to exercise such right is not otherwise in breach of its obligations under this Agreement; (3) by any party (provided that such party is not otherwise in breach) if any other party has breached a material representation, warranty, covenant or agreement set forth herein and fails to cure such breach within thirty (30) days of written notice thereof (except that no cure period shall be provided for a breach that by its nature cannot be cured); or (4) by any party by written notice to the other parties, if the consummation of the Transactions shall be prohibited by a final, non-appealable order, decree or injunction of a court of competent jurisdiction. 9.2 Effect of Termination. In the event of a termination of this --------------------- Agreement, no party hereto shall have any liability or further obligation to any other party to this Agreement, except as set forth in paragraph (2) below (and with regard to Wireless, if applicable, its repayment obligations set forth in Section 6.5(3) above), and except that nothing herein will relieve any party from liability for any breach by such party of this Agreement. (1) In the event of a termination of this Agreement pursuant to Section 9.1, all provisions of this Agreement shall terminate, except Section 6.2 and Articles VIII and X. (2) Whether or not the Closing occurs, all costs and expenses incurred in connection with this Agreement and the Transactions shall be paid by the party incurring such expenses. ARTICLE X MISCELLANEOUS PROVISIONS ------------------------ 10.1 Amendment and Modification. This Agreement may be amended, modified or -------------------------- supplemented only by written agreement of each of the parties. 10.2 Waiver of Compliance; Consents. Any failure of any of the parties to ------------------------------ comply with any obligation, covenant, agreement or condition herein may be waived by the party or parties entitled to the benefits thereof only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be given in writing in a manner consistent with the requirement for a waiver of compliance as set forth in this Section 10.2. 10.3 Notices. All notices or other communications hereunder shall be in ------- writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by facsimile transmission, or by registered or certified mail (return receipt requested), postage prepaid, with an acknowledgment of receipt signed by the addressee or an authorized representative thereof, addressed as follows (or to such other address for a party as shall be specified by like notice; provided that notice of a change of address shall be effective only upon receipt thereof): If to Wireless: Wireless 2000, Inc. Post Office Box 337 Marksville, Louisiana 71327 Attn: Joan Ducote, President Fax: (318) 253-0721 With a copy to: Charles S. Weems, III, Esquire Gold, Weems, Bruser, Sues & Rundell 2001 MacArthur Drive, P.O. Box 6118 Alexandria, Louisiana 71307-6118 If to the Company: TeleCorp PCS, Inc. 1101 17th Street, N.W. Washington, D.C. 20036 Attn: General Counsel Facsimile: (202) 833-4888 With a copy to: Alicia M.V. Wyman, P.C. McDermott, Will & Emery 28 State Street Boston, MA 02109-1807 10.4 Parties in Interest; Assignment. This Agreement is binding upon and is ------------------------------- solely for the benefit of the parties hereto and their respective permitted successors, legal representatives and permitted assigns. Neither party may assign its rights and obligations hereunder without the prior written consent of the other party, except that the Company shall have the right to assign its rights under this Agreement to the lenders (the "Lenders") named in the Credit ------- Agreement, dated as of July 17, 1998, by and among the Company, the lenders party thereto and the Chase Manhattan Bank, as Administrative Agent, TD Securities (USA) Inc., as Syndication Agent, and Bankers Trust Company, as Documentation Agent (the "Credit Agreement"), as security pursuant to the terms of the Credit Agreement and the documents and instruments executed therewith, it being understood that, in connection with any such assignment to the Lenders, the Lenders shall not assume any obligations of the Company hereunder. 10.5 Applicable Law. This Agreement shall be governed by and construed in -------------- accordance with the laws of the State of New York without giving effect to the conflicts of law principles thereof. The parties hereto hereby irrevocably and unconditionally consent to submit to the non-exclusive jurisdiction of the courts of the State of New York and of the United States of America located in the County of New York, New York (the "New York Courts") for any litigation --------------- arising out of or relating to this Agreement and the Transactions, waive any objection to the laying of venue of any such litigation in the New York Courts and agrees not to plead or claim in any New York Court that such litigation brought therein has been brought in an inconvenient forum. 10.6 Counterparts. This Agreement may be executed in two or more ------------ counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. 10.7 Interpretation. The article and section headings contained in this -------------- Agreement are for convenience of reference only, are not part of the agreement of the parties and shall not affect in any way the meaning or interpretation of this Agreement. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the antecedent Person or Person may require. 10.8 Entire Agreement. This Agreement, the Security Agreement and the ---------------- Stockholders Agreements, including the exhibits and schedules hereto and the certificates and instruments delivered pursuant to the terms of this Agreement, the Security Agreement and the Stockholders Agreements, embody the entire agreement and understanding of the parties hereto in respect of the Transactions. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein or in the Security Agreement or the Stockholders Agreements. This Agreement, the Security Agreement and the Stockholders Agreements supersede all prior agreements and understandings between the parties with respect to such Transactions. 10.9 Publicity. So long as this Agreement is in effect, the parties agree --------- to consult with each other in issuing any press release or otherwise making any public statement with respect to the Transactions, and no party shall issue any press release or make any such public statement prior to such consultation, except as may be required by Law. No press release or other public statement by the parties hereto shall disclose any of the financial terms of the Transactions without the prior consent of the other parties, except as may be required by Law. A breach of the provisions of this Section 10.9 by a party shall not give rise to any right to terminate this Agreement. 10.10 Specific Performance. The parties hereto agree that irreparable -------------------- damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any New York Courts. 10.11 Remedies Cumulative. All rights, powers and remedies provided under ------------------- this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise or beginning of the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. [THIS SPACE LEFT INTENTIONALLY BLANK] IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. TELECORP PCS, INC. By: /s/ Thomas H. Sullivan ------------------------------- Name: Thomas H. Sullivan Title: Executive Vice President WIRELESS 2000, INC. By: /s/ Joan S. Ducote ------------------------------ Name: Joan S. Ducote Title: President SCHEDULE I Wireless Licenses ----------------- - --------------------------------------------------------------------------- BTA Block Market - --------------------------------------------------------------------------- B009 C Alexandria, LA - --------------------------------------------------------------------------- B238 C Lake Charles, LA - --------------------------------------------------------------------------- B304 C Monroe, LA - --------------------------------------------------------------------------- Disaggregated Licenses ---------------------- - --------------------------------------------------------------------------- BTA Block Frequency (MHz) Market - --------------------------------------------------------------------------- B009 C 1902.5-1910 MHz Alexandria, LA 1982.5-1990 MHz - --------------------------------------------------------------------------- B238 C 1902.5-1910 MHz Lake Charles, LA 1982.5-1990 MHz - --------------------------------------------------------------------------- B304 C 1902.5-1910 MHz Monroe, LA 1982.5-1990 MHz - --------------------------------------------------------------------------- United States of America Federal Communications Commission RADIO STATION AUTHORIZATION Commercial Mobile Radio Services Personal Communications Service - Broadband [LOGO APPEARS HERE] Call Sign: KNLF391 Market: B009 ALEXANDRIA LA WIRELESS 2000 INC WIRELESS 2000 LLC Channel Block: C 208 N. WASHINGTON MARKSVILLE, LA 71351 File Number:00194-CW-L-96 - -------------------------------------------------------------------------------- The licensee hereof is authorized, for the period indicated, to construct and operate radio transmitting facilities in accordance with the terms and conditions hereinafter described. This authorization is subject to the provisions of the Communications Act of 1934, as amended, subsequent Acts of Congress, international treaties and agreements to which the United States is a signatory and all pertinent rules and regulations of the Federal Communications Commission contained in the Title 47 of the U.S. Code of Federal Regulations. - -------------------------------------------------------------------------------- Initial Grant Date . . . . . . . . . . . . . September 17, 1996 Five-year Build Out Date . . . . . . . . . . September 17, 2001 Expiration Date . . . . . . . . . . . . . . September 17, 2006 CONDITIONS - ---------- Pursuant to Section 309(h) of the Communications Act of 1934, as amended, (47 U.S.C. (S) 309(b)), this license is subject to the following conditions: This license does not vest in the licensee any right to operate a station nor any right in the use of frequencies beyond the term thereof nor in any other manner than authorized herein. Neither this license nor the right granted thereunder shall be assigned or otherwise transferred in violation of the Communications Act of 1934, as amended (47 U.S.C. (S) 151, et seq.). This license is subject in terms to the right of use or control conferred by Section 706 of the Communications Act of 1934, as amended (47 U.S.C. (S) 606). Conditions continued on Page 2. WAIVERS : - ------- No waivers associated with this authorization. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Issue Date: September 17, 1996 FCC Form 463a. Page 1 of 2 KNLF391 WIRELESS 2000, INC. 00194-CW-L-96 CONDITIONS: This authorization is subject to the condition that, in the event that systems using the same frequencies as granted herein are authorized in an adjacent foreign territory (Canada/United States), future coordination of any base station transmitters within 72 km (45 miles) of the United States/Canada border shall be required to eliminate any harmful interference to operations in the adjacent foreign territory and to ensure continuance of equal access to the frequencies by both countries. This authorization is conditioned upon the full and timely payment of all monies due pursuant to Sections 1.2110 and 24.711 of the Commission's Rules and the terms of the Commission's installment plan as set forth in the Note and Security Agreement executed by the licensee. Failure to comply with this condition will result in the automatic cancellation of this authorization. - -------------------------------------------------------------------------------- Issue Date: September 17, 1996 Page 2 of 2 FCC Form 463a United States of America Federal Communications Commission RADIO STATION AUTHORIZATION Commercial Mobile Radio Services Personal Communications Service - Broadband [STAMP APPEARS HERE] Call Sign: KNLF392 Market: B238 LAKE CHARLES, LA WIRELESS 2000 INC WIRELESS 2000 LLC Channel Block: C 208 N. WASHINGTON MARKSVILLE, LA 71351 File Number:00204-CW-L-96 - -------------------------------------------------------------------------------- The licensee hereof is authorized, for the period indicated, to construct and operate radio transmitting facilities in accordance with the terms and conditions hereinafter described. This authorization is subject to the provisions of the Communications Act of 1934, as amended, subsequent Acts of Congress, international treaties and agreements to which the United States is a signatory and all pertinent rules and regulations of the Federal Communications Commission contained in the Title 47 of the U.S. Code of Federal Regulations. - -------------------------------------------------------------------------------- Initial Grant Date . . . . . . . . . . . . . September 17, 1996 Five-year Build Out Date . . . . . . . . . . September 17, 2001 Expiration Date . . . . . . . . . . . . . . September 17, 2006 - -------------------------------------------------------------------------------- CONDITIONS - ---------- Pursuant to Section 309(h) of the Communications Act of 1934, as amended, (47 U.S.C. ss. 309(b)), this license is subject to the following conditions: This license does not vest in the licensee any right to operate a station nor any right in the use of frequencies beyond the term thereof nor in any other manner than authorized herein. Neither this license nor the right granted thereunder shall be assigned or otherwise transferred in violation of the Communications Act of 1934, as amended (47 U.S.C. ss. 151, et seq.). This license is subject in terms to the right of use or control conferred by Section 706 of the Communications Act of 1934, as amended (47 U.S.C. ss. 606). Conditions continued on Page 2. - -------------------------------------------------------------------------------- WAIVERS : - ------- No waivers associated with this authorization. - -------------------------------------------------------------------------------- Issue Date: September 17, 1996 FCC Form 463a. Page 1 of 2 KNLF392 WIRELESS 2000, INC. 00204-CW-L-96 CONDITIONS: This authorization is subject to the condition that, in the event that systems using the same frequencies as granted herein are authorized in an adjacent foreign territory (Canada/United States), future coordination of any base station transmitters within 72 km (45 miles) of the United States/Canada border shall be required to eliminate any harmful interference to operations in the adjacent foreign territory and to ensure continuance of equal access to the frequencies by both countries. This authorization is conditioned upon the full and timely payment of all monies due pursuant to Sections 1.2110 and 24.711 of the Commission's Rules and the terms of the Commission's installment plan as set forth in the Note and Security Agreement executed by the licensee. Failure to comply with this condition will result in the automatic cancellation of this authorization. - -------------------------------------------------------------------------------- Issue Date: September 17, 1996 Page 2 of 2 FCC Form 463a United States of America Federal Communications Commission RADIO STATION AUTHORIZATION Commercial Mobile Radio Services Personal Communications Service - Broadband [STAMP APPEARS HERE] Call Sign: KNLF393 Market: B304 MONROE, LA WIRELESS 2000 INC WIRELESS 2000 LLC Channel Block: C 208 N. WASHINGTON MARKSVILLE, LA 71351 File Number:00205-CW-L-96 - -------------------------------------------------------------------------------- The licensee hereof is authorized, for the period indicated, to construct and operate radio transmitting facilities in accordance with the terms and conditions hereinafter described. This authorization is subject to the provisions of the Communications Act of 1934, as amended, subsequent Acts of Congress, international treaties and agreements to which the United States is a signatory and all pertinent rules and regulations of the Federal Communications Commission contained in the Title 47 of the U.S. Code of Federal Regulations. - -------------------------------------------------------------------------------- Initial Grant Date . . . . . . . . . . . . . September 17, 1996 Five-year Build Out Date . . . . . . . . . . September 17, 2001 Expiration Date . . . . . . . . . . . . . . September 17, 2006 - -------------------------------------------------------------------------------- CONDITIONS - ---------- Pursuant to Section 309(h) of the Communications Act of 1934, as amended, (47 U.S.C. ss. 309(b)), this license is subject to the following conditions: This license does not vest in the licensee any right to operate a station nor any right in the use of frequencies beyond the term thereof nor in any other manner than authorized herein. Neither this license nor the right granted thereunder shall be assigned or otherwise transferred in violation of the Communications Act of 1934, as amended (47 U.S.C. ss. 151, et seq.). This license is subject in terms to the right of use or control conferred by Section 706 of the Communications Act of 1934, as amended (47 U.S.C. ss. 606). Conditions continued on Page 2. - -------------------------------------------------------------------------------- WAIVERS : - ------- No waivers associated with this authorization. - -------------------------------------------------------------------------------- Issue Date: September 17, 1996 FCC Form 463a. Page 1 of 2 KNLF393 WIRELESS 2000, INC. 00205-CW-L-96 CONDITIONS: This authorization is subject to the condition that, in the event that systems using the same frequencies as granted herein are authorized in an adjacent foreign territory (Canada/United States), future coordination of any base station transmitters within 72 km (45 miles) of the United States/Canada border shall be required to eliminate any harmful interference to operations in the adjacent foreign territory and to ensure continuance of equal access to the frequencies by both countries. This authorization is conditioned upon the full and timely payment of all monies due pursuant to Sections 1.2110 and 24.711 of the Commission's Rules and the terms of the Commission's installment plan as set forth in the Note and Security Agreement executed by the licensee. Failure to comply with this condition will result in the automatic cancellation of this authorization. - -------------------------------------------------------------------------------- Issue Date: September 17, 1996 Page 2 of 2 FCC Form 463a SCHEDULE II FCC Debt Related to Wireless Licenses ------------------------------------- September 11, 1998 Mr. Mark Martines McDermott, Will & Emery 75 State Street Boston, MA 02109-1807 RE: Wireless 2000, Inc. Dear Mark: In accordance with our recent telephone conversation I enclose herewith a schedule showing current principal balances, suspension interest, payments due, and amounts paid in July of this year, with respect to the licenses which TeleCorp is to acquire from Wireless. I also enclose a financial management service memorandum from the United States Treasury reflecting the amounts shown on the schedule. Note that the Treasury memorandum reflects 100% of the Lake Charles debt, accruals and payments, only one-half of which are to be assumed or paid by TeleCorp in our transactions. I trust that this information will be sufficient for your purposes. Please call me if you need further information or documentation. We look forward to receiving from you as early as possible revised documents to consummate the transaction. In addition, as we discussed, Wireless seeks agreement and confirmation that TeleCorp will make or advance the payments due October 31, 1998, which would otherwise be reimbursed at closing, if we have not closed by that date. With kindest regards, Sincerely, GOLD, WEEMS, BRUSER, SUES & RUNDELL By: /s/ Charles S. Weems, III ------------------------------- Charles S. Weems, III CSWII/brp Enclosures cc: Ms. Joan Ducote P.O. Box 309 Marksville, LA 71351 Mr. Glenn A. Goudeau P.O. Box 539 Cottonport, LA 71327 WIRELESS 2000/TELECORP FINANCIAL SUMMARY
INTEREST INTEREST PRINCIPAL PAYMENT MADE PAYMENT LICENSE BALANCE JULY 1998 DUE 10/31/98 - ------------- ------------- --------------- --------------- Alexandria $2,249,147.25 $ 69,903.69 $ 57,924.52 PBB009C (18,136.62)* Lake Charles 2,365,590.82 80,770.78 67,721.50 PBB238C (25,837.68)* Monroe PBB304C 2,834,452.20 88,072.27 72,975.73 (22,833.65)* ------------- ----------- ------------- Totals $7,449,190.27 $238,746.74 $198,621.75 to be assumed by to be reimbursed by to be assumed or TeleCorp TeleCorp paid (reimbursed if not advanced) by TeleCorp
a) * (suspension interest component due) November 9, 1998 To: Mark J. Martines McDermott, Will & Emery From: Joan S. Ducote Wireless 2000, Inc. Enclosed are copies of the "First Modification of Installment Payment Plan Note for Broadband PCS C-Block" for the three licenses held by Wireless 2000. These modifications were made pursuant to the election notice filed on June 8th with the FCC. You will notice that the copy of the Lake Charles (BTA 238) modification agreement is signed and executed by the FCC. We have not yet received executed copies of the Monroe and Alexandria (disaggregated licenses) from the FCC. The original FCC notes are being forwarded to you directly from David Nace's office. If you have any questions or need further information, please contact me. /s/ Joan S. Ducote - ------------------ Joan S. Ducote President CC: Charles S. Weems David Nace United States of America Federal Communications Commission RADIO STATION AUTHORIZATION Commercial Mobile Radio Services Personal Communications Service - Broadband WIRELESS 2000, INC. Call Sign: KNLF391 WIRELESS 2000, LLC Market: B009 208 N. WASHINGTON ALEXANDRIA, LA MARKSVILLE, LA 71351 Channel Block: C File Number: 00194-CW-L-96 ________________________________________________________________________________ The licensee hereof is authorized, for the period indicated, to construct and operate radio transmitting facilities in accordance with the terms and conditions hereinafter described. This authorization is subject to the provisions of the Communications Act of 1934, as amended, subsequent Acts of Congress, international treaties and agreements to which the United States is a signatory, and all pertinent rules and regulations of the Federal Communications Commission, contained in the Title 47 of the U.S. Code of Federal Regulations. ________________________________________________________________________________ Initial Grant Date.........................September 17, 1996 Five-year Build Out Date...................September 17, 2001 Expiration Date............................September 17, 2006 ________________________________________________________________________________ CONDITIONS: - ---------- Pursuant to Section 309(h) of the Communications Act of 1934, as amended, (47 U.S.C. (S) 309(h)), this license is subject to the following conditions: This license does not vest in the licensee any right to operate a station nor any right in the use of frequencies beyond the term thereof nor in any other manner than authorized herein. Neither this license nor the right granted thereunder shall be assigned or otherwise transferred in violation of the Communications Act of 1934, as amended (47 U.S.C. (S) 151, et seq). This license is subject in terms to the right of use or control conferred by Section 706 of the Communications Act of 1934, as amended (47 U.S.C. (S) 606). Conditions continued on Page 2. ________________________________________________________________________________ WAIVERS: - ------- No waivers associated with this authorization. ________________________________________________________________________________ Issue Date: September 17, 1996 KNLF391 WIRELESS 2000, INC. 00194-CW-L-96 CONDITIONS: This authorization is subject to the condition that, in the event that systems using the same frequencies as granted herein are authorized in an adjacent foreign territory (Canada/United States), future coordination of any base station transmitters within 72 km (45 miles) of the United States/Canada border shall be required to eliminate any harmful interference to operations in the adjacent foreign territory and to ensure continuance of equal access to the frequencies by both countries. This authorization is conditioned upon the full and timely payment of all monies due pursuant to Sections 1.2110 and 24.711 of the Commission's Rules and the terms of the Commission's installment plan as set forth in the Note and Security Agreement executed by the licensee. Failure to comply with this condition will result in the automatic cancellation of this authorization. Installment Payment Plan Note (Broadband Personal Communications Service, C Block): Auction Event No. 5) US $4,707,517.50 Washington, D.C. September 17, 1996 License No.: PBB009C ------- FOR VALUE RECEIVED, the undersigned, Wireless 2000, Inc., a CORPORATION ("Maker"), promises to pay to the order of the FEDERAL COMMUNICATIONS COMMISSION, an independent regulatory agency of the United States ("Payee" or "Commission"), the principal sum of 4,707,517.50 DOLLARS ("Principal Amount"), together with accrued interest, computed at the annual rate of seven percent (7.00%) per annum, ("Annual Rate") on the unpaid Principal Amount hereof, from the date of this Note until the date the entire Principal Amount has been paid in full. Interest and principal shall be payable as set forth below and in accordance with Schedule A attached hereto and made a part hereof: Interest only, at the Annual Rate from the date hereof until the last day of the month ninety (90) days hence, shall be due and payable on December 31, 1996 in the amount of $94,795.22. Commencing December 31, 1996, Maker shall pay interest only at the Annual Rate, in equal consecutive quarterly installments of $82,381.56, due on the last day of the month and every ninety (90) days thereafter from December 31, 1996 through September 30, 2002. Commencing December 31, 2002, Maker shall pay principal and interest in equal quarterly installments of $339,880.77, due on the last day of each month ninety (90) days hence through and including June 30, 2006. The entire unpaid Principal Amount, together with accrued and unpaid interest thereon, and all remaining obligations of Maker hereunder, shall be due and payable on September 17, 2006 ("Maturity Date"). All interest shall be computed on the basis of a 360-day year for actual days elapsed. All payments to be made hereunder, of principal, interest, costs, expenses, or other sums due hereunder, shall be made to the holder of this Note in lawful money of the United States of America which at the time of payment shall be legal tender for the payment of public and private debts, free and clear and without reduction by reason of any present or future income, stamp or other taxes, levies, imposts, deductions, charges, compulsory loans or withholdings whatsoever, including interest thereon or penalties with respect thereto, if any imposed, assessed, levied or collected by any political subdivision or taxing authority thereof or therein, on or in respect of this Note or the obligations it evidences. All payments shall be made during normal business hours at the Commission's designated lockbox location as set forth from time to time in the Commission's then-applicable orders and regulations and/or public notices. This Note is secured by, and entitled to the benefits of, a Security Agreement (the "Security Agreement") of even date between Maker and Payee. All the terms, covenants, conditions and agreements contained in the Security Agreement are hereby incorporated herein and made part of this Note to the same extent and effect as if fully set forth herein. It is expressly understood by Maker that all of the terms of the Security Agreement apply to this Note and that reference in the Security Agreement to "this Agreement" includes both the Security Agreement and this Note. IT IS HEREBY EXPRESSLY AGREED THAT TIME IS OF THE ESSENCE FOR THE PERFORMANCE OF ALL TERMS AND CONDITIONS UNDER THIS NOTE AND THE SECURITY AGREEMENT. A default under this Note ("Event of Default") shall occur upon any or all of the following: a. non-payment by Maker of any Principal or Interest on the due date as specified hereinabove if the Maker remains delinquent for more than 90 days and (1) Maker has not submitted a request, in writing, for a grace period or extension of payments, if any such grace period or extension of payments is provided for in the then-applicable orders and regulations of the Commission; or (2) Maker has submitted a request, in writing, for a grace period or extension of payments, if any such grace period or extension of payments is provided for in the then-applicable orders and regulations of the Commission, and following the expiration of the grant of such grace period or extension or upon denial of such a request for a grace period or extension, Maker has not resumed payments of Interest and Principal in accordance with the terms of this Note; or; b. failure by Maker to comply with any other condition for holding the above referenced license (as defined in the Security Agreement) as set forth in the license or in the Communications Act of 1934, as amended, or the then- applicable orders and regulations of the Commission; or c. violation by Maker of any other covenant or term of this Note or the Security Agreement. Upon any Event of Default under this Note, Payee may assess a late fee and/or administrative charge, plus the costs of collection, litigation, attorneys' fees, and default payment as specified in the then-applicable orders and regulations of the Commission, as amended, and Maker acknowledges that it is liable and herein expressly promises to pay on demand such additional costs, expenses, late charges, administrative charges, attorneys fees, and default payment. Upon a default under this Note, the unpaid Principal Amount, plus all unpaid interest accrued thereon, together with any late fee and/or administrative charge, plus the costs of collection, litigation, attorneys' fees, and default payment as specified in the then-applicable orders and regulations of the Commission, as amended, shall become immediately due and payable. The Maker hereby acknowledges that the Commission has issued Maker the above referenced license pursuant to the Communications Act of 1934, as amended, that is conditioned upon full and timely payment of financial obligations under the Commission's installment payment plan, as set forth in the then-applicable orders and regulations of the Commission, as amended, and that the sanctions and enforcement authority of the Commission shall remain applicable in the event of a failure to comply with the terms and conditions of the license, regardless of the enforceability of this Note or the Security Agreement. No delay or omission on the part of Payee in exercising any right under this Note, the Security Agreement, or any other instrument securing this Note, shall operate as a waiver of such right or of any other right of Payee, nor shall any waiver by Payee of any such right or rights on any one occasion be deemed a bar to or waiver of the same right or rights on any future occasion. The Maker is liable for all costs of collection or enforcement of the Payee's rights under this Note or under the Security Agreement or under any other instrument now or hereafter executed by Maker in favor of Payee which in any manner evidences or constitutes additional security for this Note, including reasonable attorneys' fees, whether suit is brought or not, and all such costs shall be paid by the Maker on demand, and whether or not such collection or enforcement occurs in any bankruptcy, reorganization, receivership or other proceedings involving creditors' rights or involving a claim under this Note or any of the other loan documents. Maker, all endorsers and guarantors hereof and any other party who may become liable for all or any part of the obligation evidenced hereby, waive presentment for payment, notice or dishonor, protest and notice of protest, notice of nonpayment and any and all lack of diligence or delays in collection or enforcement of this Note. Maker may prepay all or any part of the Principal Amount without premium or penalty upon ten (10) days' prior written notice to Payee, given in the manner provided in the Security Agreement. Partial prepayments shall not postpone or reduce regular payments to be made hereunder. All such prepayments shall be applicable first to the payment of late charges, if any, costs and expenses, and administrative penalties due hereunder, then to accrued and unpaid interest, then to that portion of the unpaid Principal Amount due on the Maturity Date and then, if applicable, to any unpaid installments of principal in the inverse order of installment maturities. The Payee may require that any partial prepayments be made on the dates installments of principal and interest are due hereunder. Anything to the contrary notwithstanding, Payee shall not charge, take or receive, and Maker shall not be obligated to pay to Payee, any amounts constituting interest on the Principal Amount in excess of the maximum rate permitted by applicable law. If by reason of the acceleration of the unpaid Principal Amount or otherwise, interest in excess of the highest legal contract rate permitted by applicable law shall at any time be paid, any such excess shall constitute and be treated as a payment of outstanding principal hereunder and shall operate to reduce such outstanding Principal Amount. ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS NOTE, THE SECURITY AGREEMENT, OR OTHER DOCUMENTS EVIDENCING OR SECURING THE DEBT TRANSACTION EVIDENCED HEREBY MAY ONLY BE BROUGHT IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA, AND, BY EXECUTION AND DELIVERY OF THIS NOTE AND SECURITY AGREEMENT, THE MAKER HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURT. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH ANY OF THEM MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN THE DISTRICT OF COLUMBIA. THE MAKER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF THE AFOREMENTIONED COURT IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF A COPY THEREOF BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, TO THE MAKER AT ITS ADDRESS PROVIDED HEREIN. SUCH SERVICE SHALL BE DEEMED TO HAVE OCCURRED ON THE THIRD DAY AFTER SUCH MAILING. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF PAYEE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE MAKER IN ANY OTHER JURISDICTION. EACH OF THE PARTIES HERETO HEREBY KNOWINGLY, WILLINGLY, VOLUNTARILY, UNCONDITIONALLY, IRREVOCABLY AND INTENTIONALLY FOREVER WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, THE SECURITY AGREEMENT, OR OTHER DOCUMENTS EVIDENCING OR SECURING THE DEBT TRANSACTION EVIDENCED HEREBY, ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (VERBAL OR WRITTEN) OR ACTION OF ANY PERSON OR ANY EXERCISE BY ANY PARTY OF THEIR RESPECTIVE RIGHTS UNDER THIS TRANSACTION, DOCUMENT OR ANY RELATED DOCUMENT OR IN ANY WAY RELATING TO THE COLLATERAL (INCLUDING, WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS TRANSACTION OR ANY CLAIMS OR DEFENSES ASSERTING THAT THIS TRANSACTION, IN WHOLE OR IN PART, WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR VOIDABLE). MAKER REPRESENTS THAT NO ORAL OR WRITTEN STATEMENTS HAVE BEEN MADE BY ANY PARTY TO INCLUDE THIS SUBMISSION OR JURISDICTION AND WAIVER OF TRAIL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS STATED EFFECT. MAKER FURTHER REPRESENTS THAT IT HAS BEEN REPRESENTED BY INDEPENDENT COUNSEL, SELECTED BY ITS OWN FREE WILL, IN SIGNING THIS NOTE AND IN THE MAKING OF THIS WAIVER AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH SUCH COUNSEL. THIS PROVISION IS A MATERIAL INDUCEMENT FOR PAYEE TO ENTER INTO THIS TRANSACTION AND THE VARIOUS DOCUMENTS RELATED THERETO. Maker acknowledges that this Note and Security Agreement (any attachments affixed thereto by the Commission with the permission and knowledge of the Maker/Debtor), along with the then-current applicable Commission orders and regulations and the Communications Act of 1934, as amended, set forth the entire agreement, written and oral, of the parties, and all inconsistent prior statements, understandings, notices, representations and agreements between the parties, oral or written, are superseded by and merged in this Note, the Security Agreement or other documents evidencing or securing the debt transaction evidenced hereby. Except as otherwise expressly provided herein, all of Payee's representations, warranties, covenants and agreements in this Note and Security Agreement shall merge in the documents and agreements executed by the Maker and shall not survive said execution. If any provision or part of this Note and/or the Security Agreement shall for any reason be held or deemed to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Note and this Note shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein and the remaining provisions of this Note shall remain in full force and effect. The enforceability of the Note and/or the Security Agreement do not alter the rights and obligations of the Maker and Payee under the Communications Act of 1934, as amended, or under the then-applicable orders and regulations of the Commission, as amended. Any notice demand or request hereunder shall be given in the manner set forth in the Security Agreement. This Note shall be governed by and construed in accordance with the Communications Act of 1934, as amended, the then-applicable orders and regulations of the Commission, and federal law. Nothing in this Note shall be deemed to modify any then-applicable orders and regulations of the Commission, and nothing in this Note shall be deemed to release the Maker from compliance therewith. This Note may not be changed, modified, waived, terminated or discharged orally, but only by an agreement in writing executed by the party against whom enforcement of any such change, modification, waiver, termination, or discharge is sought. Maker represents and warrants that any statements made by or on behalf of Maker in connection with this Note: (i) are true and accurate in all material respects; and (ii) do not omit any material facts or information that would make such statement misleading in the context of Payee's evaluation of the note, and acknowledges and agrees that Payee is entitled to and his relied on such statements in agreeing to the Note. Payee shall have the right at any time to assign, endorse, pledge, convey or otherwise transfer this Note and all of the other loan documents to any party. From and after the date of such assignment, endorsement, pledge, conveyance or other transfer, such transferee shall be entitled to exercise any and all rights and remedies of Payee hereunder. Maker shall not assign, convey or otherwise transfer its rights and obligations hereunder without the prior written consent of the Commission. Date: 11/21/96 WIRELESS 2000, INC. -------------- [NAME OF MAKER] By: /s/ Joan S. Ducote -------------------------- Its: President --------------------------
License Number: PBB009C INSTALLMENT PLAN C AMORTIZATION SCHEDULE for Federal Communications Commission Broadband Personal Communications Service, C-Block Licenses (Interest-only Payments for the First Six Years) Orig Balance Orig Rate Term (yrs) 1st PMT Future Value --------------------- -------------------------- ------------------ ------------------------ ------------------- $4,707,517.50 7.00% 10 Dec-96 $0 - ------------------------------------------------------------------------------------------------------------------------------------ Pmt # Date Yr Rate P&I Payment Principal Interest Extra Prin New Balance (Prin Only) Cum. Interest Yearlm Total Int - ------------------------------------------------------------------------------------------------------------------------------------ 1 Dec-96 7.00% $94,795.22 $0.00 $94,795.22 $0.00 $4,707,517.50 $94,795.22 $94,795.22 2 Mar-97 7.00% $82,381.56 $0.00 $82,381.56 $0.00 $4,707,517.50 $177,176.77 $82,381.56 3 Jun-97 7.00% $82,381.56 $0.00 $82,381.56 $0.00 $4,707,517.50 $259,558.33 $164,763.11 4 Sep-97 7.00% $82,381.56 $0.00 $82,381.56 $0.00 $4,707,517.50 $341,939.88 $247,144.67 5 Dec-97 7.00% $82,381.56 $0.00 $82,381.56 $0.00 $4,707,517.50 $424,321.44 $329,526.23 6 Mar-98 7.00% $82,381.56 $0.00 $82,381.56 $0.00 $4,707,517.50 $506,703.00 $82,381.56 7 Jun-98 7.00% $82,381.56 $0.00 $82,381.56 $0.00 $4,707,511.50 $589,084.55 $164,763.11 8 Sep-98 7.00% $82,381.56 $0.00 $82,381.56 $0.00 $4,707,517.50 $671,466.11 $247,144.67 9 Dec-98 7.00% $82,381.56 $0.00 $82,381.56 $0.00 $4,707,517.50 $753,847.67 $329,526.23 10 Mar-99 7.00% $82,381.56 $0.00 $82,381.56 $0.00 $4,707,517.50 $836,229.22 $82,381.56 11 Jun-99 7.00% $82,381.56 $0.00 $82,381.56 $0.00 $4,707,517.50 $918,610.78 $164,763.11 12 Sep-99 7.00% $82,381.56 $0.00 $82,381.56 $0.00 $4,707,517.50 $1,000,992.33 $247,144.67 13 Dec-99 7.00% $82,381.56 $0.00 $82,381.56 $0.00 $4,707,517.50 $1,083,373.89 $329,526.23 14 Mar-2000 7.00% $82,381.56 $0.00 $82,381.56 $0.00 $4,707,517.50 $1,165,755.45 $82,381.56 15 Jun-2000 7.00% $82,381.56 $0.00 $82,381.56 $0.00 $4,707,517.50 $1,248,137.00 $164,763.11 16 Sep-2000 7.00% $82,381.56 $0.00 $82,381.56 $0.00 $4,707,517.50 $1,330,518.56 $247,144.67 17 Dec-2000 7.00% $82,381.56 $0.00 $82,381.56 $0.00 $4,707,517.50 $1,412,900.12 $329,526.23 18 Mar-2001 7.00% $82,381.56 $0.00 $82,381.56 $0.00 $4,707,517.50 $1,495,281.67 $82,381.56 19 Jun-2001 7.00% $82,381.56 $0.00 $82,381.56 $0.00 $4,707,517.50 $1,577,663.23 $164,763.11 20 Sep-2001 7.00% $82,381.56 $0.00 $82,381.56 $0.00 $4,707,517.50 $1,660,044.78 $247,144.67 21 Dec-2001 7.00% $82,381.56 $0.00 $82,381.56 $0.00 $4,707,517.50 $1,742,426.34 $329,526.23 22 Mar-2002 7.00% $82,381.56 $0.00 $82,381.56 $0.00 $4,707,517.50 $1,824.807.90 $82,381.56 23 Jun-2002 7.00% $82,381.56 $0.00 $82,381.56 $0.00 $4,707,517.50 $1,907,189.45 $164,763.11 24 Sep-2002 7.00% $82,381.56 $0.00 $82,381.56 $0.00 $4,707,517.50 $1,989,571.01 $247,144.67 25 Dec-2002 7.00% $339,880.77 $257,499.21 $82,381.56 $0.00 $4,450,018.29 $2,071,952.57 $329,526.23 26 Mar-2003 7.00% $339,880.77 $262,005.45 $77,875.32 $0.00 $4,188,012.84 $2,149,827.89 $77,875.32 27 Jun-2003 7.00% $339,880.77 $266,590.55 $73,290.22 $0.00 $3,921,422.29 $2,223,118.11 $151,165.54 28 Sep-2003 7.00% $339,880.77 $271,255.88 $68,624.89 $0.00 $3,650,166.41 $2,291,743.00 $219,790.43 29 Dec-2003 7.00% $339,880.77 $276,002.86 $63,877.91 $0,00 $3,374,163.55 $2,355,620.91 $283,668.34 30 Mar-2004 7.00% $339,880.77 $280,832.91 $59,047.86 $0.00 $3,093,330.64 $2,414,668.77 $59,047.86 31 Jun-2004 7.00% $339,880.77 $285,747.48 $54,133.29 $0.00 $2,807,583.16 $2,468,802.06 $113,181.15 32 Sep-2004 7.00% $339,880.77 $290,748.06 $49,132.71 $0.00 $2,516,835.10 $2,517,934.77 $162,313.86 33 Dec-2004 7.00% $339,880.77 $295,836.16 $44,044.61 $0.00 $2,220,998.94 $2,561,979.38 $206,358.47 34 Mar-2005 7.00% $339,880.77 $301,013.29 $38,867.48 $0.00 $1,919,985.65 $2,600,846.86 $38,867.48 35 Jun-2005 7.00% $339,880.77 $306,281.02 $33,599.75 $0.00 $1,613,704.63 $2,634.446.61 $72,467.23 36 Sep-2005 7.00% $339,880.77 $311,640.94 $28,239.83 $0.00 $1,302,063.69 $2,662,686.44 $100,707.06 37 Dec-2005 7.00% $339,880.77 $317,094.66 $22,786.11 $0.00 $984,969.03 $2,685,472.55 $22,786.11 38 Mar-2006 7.00% $339,880.77 $322,643.81 $17,236.96 $0.00 $662,325.22 $2,702,709.51 $40,023.07 39 Jun-2006 7.00% $339,880.77 $328,290.08 $11,590.69 $0.00 $334,035.14 $2,714,300.20 $51,613.76 40 Sep-2006 7.00% $339,096.00 $334,035.14 $5,060.86 $0.00 $0.00 $2,719,361.06 $56,674.62 - ------------------------------------------------------------------------------------------------------------------------------------ License Grant date., September 17. 1996 First and last payments prorated based an the above license grant date.
SECURITY AGREEMENT (Broadband Personal Communications Service, C Block): Auction Event No. 5) License No. PBB009C ------- This SECURITY AGREEMENT DATED September 17, 1996, ("Agreement") between Wireless 2000, Inc., a CORPORATION ("Debtor") and the FEDERAL COMMUNICATIONS COMMISSION, an independent regulatory agency of the United States ("Commission" or "Secured Party") WITNESSETH WHEREAS, Debtor has submitted the highest accepted bid for license number PBB009C in the Broadband Personal Communications Service C Block auction (hereinafter the "License") conducted by the Commission to assign such licenses; WHEREAS, the Commission has duly determined to grant the License to Debtor, subject to the terms and conditions set forth in the orders and regulations of the Commission applicable to such licenses, and the Communications Act of 1934, as amended; WHEREAS, Debtor wishes to pay its auction price for the License by installments through an Installment Payment Plan as provided by 47 C.F.R. ss.ss. 24.711, 1.2110 (hereinafter the "Installment Payment Plan") and undertakes to hold the License under the terms and conditions set forth in the Commission's orders and regulations, as amended, applicable to such licenses, and the Communications Act of 1934, as amended and the terms and conditions of this Agreement; WHEREAS, the Commission has agreed to permit the Debtor to make payment of the auction price for the License through an Installment Payment Plan; and WHEREAS, as a condition to such agreement, Debtor has agreed to execute the Installment Payment Plan Note of even date ("Note") and to enter into this Agreement and make the pledge and assignment of collateral contemplated herein. NOW, THEREFORE, in consideration of the premises, the mutual agreements contained herein and for other good and valuable consideration, the receipt, adequacy, and sufficiency of which is hereby acknowledged, and in order to induce the Commission to permit Debtor to pay the auction price for the License through the Installment Payment Plan, Debtor hereby agrees with the Commission as follows: 1. Pledge and Assignment of Collateral of Obligations Under Note. ------------------------------------------------------------- Debtor hereby pledges, assigns, hypothecates, delivers, and sets over to the Commission and grants to the Commission a first lien on and continuing security interest in all of the Debtor's rights and interest in the License and all proceeds, profits and products of any sale of or other disposition thereof (collectively the "Collateral"), all as collateral security for the prompt and complete payment when due (whether in accordance with the schedule of payments, at the stated maturity, by acceleration, or otherwise) of the unpaid principal and interest due, and such other additional costs, expenses, late charges, administrative charges, attorneys fees, and default payments assessable under the terms of the Note (all collectively "Obligations"). It is expressly understood by Debtor that all of the terms of the Note apply to this Agreement and that reference herein to "this Agreement" includes both the Security Agreement herein and the Note. For purposes of interpreting the terms used in this Agreement shall have the meaning ascribed to them in the Uniform Commercial Code (Official Text and Comments, American Law Institute). 2. Interest of Commission. It is understood and acknowledged by Debtor ---------------------- that pursuant to Section 301 of the Communications Act of 1934, as amended, the Commission is charged with the regulatory mandate to maintain control over all channels of radio transmission (the "Spectrum"), and to provide licenses for the use of such radio channels, but not ownership thereof. Debtor understands and acknowledges that it holds a mere conditional license to use the Spectrum with no ownership interest in the Collateral (or any underlying right to use the Spectrum), or any power to assign the License without the prior Approval of the Commission pursuant to Section 310(d) of the Communications Act of 1934, as amended. Debtor further understands and acknowledges that it is giving a security interest to the Commission in the Collateral only to assist the Commission in protecting its ability to enforce the Commission's regulations which condition holding the license in compliance with all then-applicable orders and regulations of the Commission, including, but not limited to, full and timely payment of all payments under the Installment Payment Plan. To that end, and not in derogation of any of the Commission's regulatory authority over the License, Debtor hereby acknowledges that the Commission has a first security interest in the Collateral, and Debtor shall not dispute such first security interest, or the Commission's rights as a secured party hereunder, in any legal or equitable proceeding in which Debtor, or any assignee or trustee of the estate of Debtor in bankruptcy, is a party. 3. Compliance with Commission Orders and Regulations. Nothing in this ------------------------------------------------- Agreement shall be deemed to modify any then-applicable orders and regulations of the Commission, and nothing in this Agreement shall be deemed to release Debtor from compliance therewith. 4. Representations and Warranties of Debtor. Debtor represents and ---------------------------------------- warrants to the Commission as follows: (a) It has full power, authority and legal right to execute, deliver and perform this Agreement, the Note, and any other documents delivered in connection with the Note, this Agreement and the transactions contemplated therein to make the debt transaction evidenced by the Note, and to pledge the Collateral pursuant to this Agreement. (b) It is a duly organized CORPORATION existing in good standing under the laws of LOUISIANA and is duly qualified to do business wherever necessary to carry on its -2- present operations. Its principal place of business and chief executive office are located at 219 NORTH WASHINGTON STREET, MARKSVILLE, LA 71351. (c) The representative of Debtor purporting to act on behalf of Debtor in executing this Agreement, the Note, and any other documents delivered in connection with the Note, this Agreement and the transactions contemplated therein, is duly authorized by Debtor to take all such acts and to execute all such documents. (d) No security agreements have been executed and delivered, and no financing statements have been filed in any jurisdiction, granting or purporting to grant a security interest in the Collateral to any secured party except to the Commission. (e) No consent of any other party and no consent, license, approval or authorization of, exemption by, or registration or declaration with, any governmental instrumentality, domestic or foreign other than the Commission, is required to be obtained in connection with the execution, delivery or performance of this Agreement, the Note or any other document executed and delivered in connection with the delivery of the Note or this Agreement. (f) The execution, delivery and performance of this Agreement and the Note, does not and will not violate any provision of any applicable law or regulation or any order, judgment, writ, award or decree of any court, arbitrator, governmental instrumentality, domestic or foreign, or of any indenture, contract, agreement or other undertaking to which Debtor is a party or which purports to be binding upon Debtor or upon any of Debtor's assets, and will not result in the creation or imposition of any lien, charge or encumbrance on or security interest in any of the assets of Debtor, except as contemplated by this Agreement. (g) All right and interest of any kind in and to the Collateral is held by Debtor or the Commission and by no other party, and the Collateral is free from any lien, security interest, encumbrance or adverse claim of any kind whatsoever thereon. Debtor will not permit any financing statement to be filed with respect to the Collateral or any portion thereof or interest therein except in favor of Secured Party. Debtor will notify Secured Party of, and will defend the Collateral against, all claims and demands of all persons at any time claiming the same or any interest therein. 5. Covenants of Debtor. Debtor hereby covenants and agrees as follows: ------------------- (a) That it will defend the Commission's right, title and security interest in and to the Collateral against the claims and demands of all persons whomsoever. (b) That it will execute all financing statements and other instruments or documents related to the perfection of the Commission's security interest, including but not limited to any renewal financing statements or instruments as required to maintain the Commission's security interest, or as otherwise reasonably requested by the Commission, and to file and pay the cost of filing any such instruments or documents as required under this paragraph in whichever public office deemed advisable by the Commission. -3- (c) That it will not make any indenture, contract, agreement or other undertaking to which Debtor is a party or which purports to be binding upon Debtor, or upon any of Debtor's assets, that would result in the creation or imposition of any lien, charge or encumbrance on or security interest in any of the assets of Debtor that would be inconsistent with its pledge and assignment of the Collateral hereunder, except as contemplated by this Agreement. Except for the liens and encumbrances created hereby, Debtor will keep the Collateral free and clear of any lien, security interest or encumbrance. (d) That it will pay all costs and expenses, including reasonable attorneys' fees, of the Commission incurred in connection with the enforcement of this Agreement and any and all liability incurred by the Commission resulting from any act or omission of Debtor with respect to the Collateral and this Agreement. (e) Debtor will execute, alone or with Secured Party, any document, will procure any document and do all other acts and pay all connected costs, in a timely and proper manner, which from the character or use of the Collateral may be reasonably necessary to protect the Collateral against the rights, claims or interests of third persons, and will otherwise preserve the Collateral as security hereunder. The specific undertakings required of Debtor in this Agreement shall not be construed to exclude the aforementioned general obligation. 6. Power of Attorney. Debtor hereby irrevocably constitutes and ----------------- appoints the Commission and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Debtor and in the name of Debtor or in its own name, from time to time in the Commission's discretion, for the purpose of carrying out the terms of this Agreement and, to the extent permitted by applicable law, to take any and all appropriate actions and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement. Such appointment is a power coupled with an interest until all Obligations have been paid in full by Debtor. 7. Event of Default. Debtor shall be in default under this Agreement ---------------- if an Event of Default (as defined in the Note) has occurred. 8. Remedies. If an Event of Default shall occur, the Commission shall -------- thereafter have the following rights and remedies (to the extent permitted by applicable law) in addition to the rights and remedies relating to the Note, all such remedies being cumulative, not exclusive, and enforceable alternatively, successively or concurrently at such time or times as Commission deems expedient: (a) the License shall be automatically canceled pursuant to 47 C.F.R. (S). 1.2110; (b) all Obligations; secured hereunder shall become immediately due and payable without presentment, demand, protest, further notice, or other requirements of any kind; (c) the Commission may demand, sue for, and collect the outstanding balance of the unpaid Obligations, and make any compromise, or settlement the Commission deems suitable -4- with respect to any Collateral which may be held by it hereunder; (d) Debtor hereby acknowledges the Commission's authority, pursuant to the Communications Act of 1934, as amended, and the Commission's orders and regulations then-applicable to such licenses, to conduct another public auction or assign the License in the event that the Commission rescinds, cancels, or revokes the License for any default under this Agreement or any other violation of the terms and conditions of the License. The Undersigned hereby waives all notices prior to the conduct of said public auction or assignment by the Commission or its agents. Debtor further acknowledges that in the event that the Commission rescinds, cancels, or revokes the License for any default under this Agreement or any other violation of the terms and conditions of the License, Debtor has no right or interest in any moneys or evidence of indebtedness given to the Commission by a subsequent licensee of the Spectrum and that all such moneys or evidence of indebtedness are, and shall remain, the full property of the federal Treasury, pursuant to Section 309(j) of the Communications Act of 1934, as amended, and then-applicable Commission orders and regulations. (e) In addition to other remedies hereunder, Debtor shall remain liable, and obligated to pay on demand, all costs of collection and reasonable attorneys' fees and expenses incurred or paid by the Commission in enforcing this Agreement including, without limitation, all administrative fees and expenses of the Commission in attempting to collect the Obligations or to enforce this Agreement, or the prosecution or defense of any action or proceeding related to the subject matter of this Agreement, and all payments assessed by the Commission in the event of default as specified in Commission orders and regulations applicable to such licenses. (f) Debtor hereby acknowledges that the Commission has no adequate remedy at law with respect to a breach of any covenant contained in this Agreement and, as a consequence, agrees that each and every covenant contained in this Agreement shall be specifically enforceable against Debtor, and Debtor hereby waives and agrees not to assert any defense against an action for specific performance of such covenants. (g) Secured Party may exercise any and all of the rights and remedies conferred upon Secured Party by this Agreement, any other loan documents, or by applicable law, either concurrently or in such order as Secured Party may determine. (h) Secured Party may make such payments and do such acts as Secured Party may deem necessary to protect its secured interest in the Collateral. (i) the Commission may exercise any remedies of a Secured Party under the Uniform Commercial Code (Official Text and Comments, American Law Institute), or any other applicable law. (j) Secured Party shall have the right to enforce one or more remedies hereunder or under the Note, successively or concurrently, and such action shall not operate to estop or prevent Secured Party from pursuing any further remedy which it may have. 9. Severability. Any provision of this Agreement that is prohibited or ------------ unenforceable -5- in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 10. No Waiver; Cumulative Remedies. None of the terms or provisions of ------------------------------ this Agreement may be waived, altered, modified or amended except by an instrument in writing, duly executed by the Commission. The Commission shall not by any act, delay, omission or otherwise be deemed to have waived any of its rights or remedies under this Agreement, and no waiver shall be valid unless in writing, signed by the Commission, and then only to the extent therein set forth. A waiver by the Commission of any right or remedy under this Agreement on any one occasion shall not be construed as a bar to any right or remedy which the Commission would otherwise have on any future occasion. No failure to exercise nor any delay in exercising on the part of the Commission, any right, power or privilege under this Agreement shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege under this Agreement preclude any other or further exercise thereof or the exercise of any other right power or privilege. The rights and remedies provided in this Agreement are cumulative and may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. 11. Compliance With Other Applicable Orders and Regulations. Debtor ------------------------------------------------------- recognizes that its continued retention of the License, and rights to operate as a Commission licensee thereunder, are conditioned upon compliance with all Commission orders and regulations applicable to the License and the Communications Act of 1934, as amended. Debtor further recognizes that full and timely payment as set forth in the Note does not otherwise relieve it of its obligations otherwise to comply with the then-applicable orders and regulations of the Commission, and the Communications Act of 1934, as amended. 12. Applicable Law. This Agreement shall be governed by and construed -------------- in accordance with Communications Act of 1934, as amended, then-applicable Commission orders and regulations, as amended, and federal law. 13. Successors, Assigns, Designated Agents. Subject to the provisions -------------------------------------- of Paragraph 2 of this Agreement regarding the restriction upon Debtor's ability to assign the License, this Agreement shall be binding upon Debtor, its successors and assigns and shall inure to the benefit of the Commission, and its successors and assigns. The Commission may designate agents other than the Commission to act on its behalf with respect to any and all rights and remedies of the Commission under this Agreement or the Note, and such designee shall have all of the rights, powers and remedies available to the Commission within the scope of its designation. Nothing herein, however, shall be construed as granting Debtor any right to sell or assign the License. 14. Singular and Plural. Wherever used, the singular number shall ------------------- include the plural, the plural shall include the singular, and the use of any gender shall be applicable to all genders. 15. Financing Statements. To the extent permitted by applicable law, -------------------- Debtor authorizes the Commission to sign and file financing statements at any time with respect to any -6- of the Collateral without the signature of Debtor. Debtor will, however, at the same time and from time to time, execute such financing statements, agreements and other instruments and perform such acts as Commission may request in order to establish and maintain a validly perfected first priority security interest in the Collateral. All reasonable costs of filing and recording will be paid by Debtor. 16. Indemnification. Debtor hereby agrees to defend, indemnify and --------------- hold harmless Secured Party and its employees, officers and agents, from and against any and all liabilities, claims and obligations which may be incurred, asserted or imposed upon them or any of them as a result of or in connection with any use, operation, lease or consumption of any of the Collateral or as a result of Secured Party's seeking to obtain performance of any of the obligations due with respect to the Collateral. 17. Notices. All notices, requests and demands hereunder shall be in ------- writing and shall be deemed to have been duly given, made or served on the earliest of (i) three (3) business days after the date mailed if sent by first- class U.S. mail, postage prepaid, (ii) actual delivery thereof if delivered by hand to the party to be notified, (iii) receipt thereof if sent by express mail or other overnight courier service, or (iv) transmission to the telecopier number listed below for the party to be notified if sent within normal business hours or, otherwise, on the next business day thereafter. In each case such notification with respect to the Debtor and the Commission shall be addressed as set forth below or as may be hereafter designed by the respective parties hereto. As to Debtor: WIRELESS 2000, INC. - ------------ P. 0. BOX 337 219 NORTH WASHINGTON STREET MARKSVILLE, LA 71351 ATTN: JOAN S. DUCOTE, PRESIDENT As to the - --------- Commission: U.S. DEPARTMENT OF THE TREASURY - ---------- P. 0. BOX 44093 WASHINGTON, D. C. 20026-4093 ATTN: FCC-FMS/DEBT MANAGEMENT SERVICE -7- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written. DEBTOR: ------ WIRELESS 2000, INC. Date: 11/21/96 By: /s/ Joan S. Ducote ------------------- Its: PRESIDENT FEDERAL COMMUNICATIONS COMMISSION --------------------------------- Date: 12/18/96 By: /s/ [SIGNATURE ILLEGIBLE] --------------------------- Its: Associate Managing Director for Operations (or designee) -8- License No.: PBB009C Modified License No.: PBB009C1 FIRST MODIFICATION OF -------------------- INSTALLMENT PAYMENT PLAN NOTE ----------------------------- FOR BROADBAND PCS C BLOCK ------------------------- THIS FIRST MODIFICATION OF INSTALLMENT PAYMENT PLAN NOTE ("First Modification") is executed on the 21st day of July, 1998, and is intended to be effective for all purposes as of the 31st day of July, 1998 ("Effective Date"), by and between: (i) WIRELESS 2000, INC., A Louisiana Corporation ("Maker"); and (ii) FEDERAL COMMUNICATIONS COMMISSION, an independent regulatory agency of the United States ("Payee" or "Commission"). W I T N E S S E T H: -------------------- RECITALS: - -------- R-1. Reference is made to that certain Installment Payment Plan Note made by Maker, payable to the order of the Commission, in the original principal amount of $4,707,517.50 ("Original Note"). The Original Note is secured by, amongst other things (i) that certain Security Agreement by and between the Maker and the Commission ("Security Agreement"); and (ii) those certain Financing Statements related thereto (collectively, "Financing Statements"). The Original Note, Security Agreement, Financing Statements and all other documents evidencing, governing or securing the Original Note, together with any and all amendments, modifications or supplements thereto, are hereinafter collectively referred to as the "Loan Documents". All of the terms, conditions and provisions of the Loan Documents are hereby incorporated herein and made a part hereof in their entireties by this reference. R-2. The Security Agreement and Financing Statements created a first lien security interest in the "License" and the "Collateral" (as those terms are defined in the Security Agreement). R-3. Pursuant to that certain Public Notice, DA 97-649 (rel. March 31, 1997) ("Suspension Order"), the Commission suspended the deadline for payment of installment payments required to be made under the Original Note. Pursuant to that certain Second Report and Order and Further Notice of Proposed Rule Making adopted September 25, 1997 and released October 16, 1997 ("Second Report and Order"), the Commission rescinded the Suspension Order and ordered the reinstatement of payments under the Original Note effective March 31, 1998 and agreed to a schedule of payment of all accrued and unpaid interest due under the Original Note. The Second Report and Order was subsequently modified by that certain Order on Reconsideration of the Second Report and Order adopted March 23, 1998 and released March 24, 1998 ("Order on Reconsideration"). Pursuant to the Order on Reconsideration and the Public Notice, DA-98-741 (rel. April 17, 1998), the date for the resumption of payments under the Original Note was changed to July 31, 1998 as well as certain other modifications to the -9- terms contained in the Second Report and Order. R-4. Pursuant to the terms of the Second Report and Order, as modified by the Order of Reconsideration, the Maker elected to disaggregate a portion of the spectrum covered by the License and in return, receive a partial reduction of the principal balance of the Original Note (the "Disaggregation Election"). In order to reflect the Disaggregation Election, the modification to the payment terms with respect to "Suspension Interest" and "Deferred Interest" (as those terms are defined below), and certain other modifications to the terms of the Original Note and Original Security Agreement, (i) Maker and the Commission are modifying the terms of the Original Note by this First Modification (the Original Note, as modified by this First Modification, is hereinafter referred to as the "Note"), (ii) Maker and the Commission are modifying the terms of the Original Security Agreement by this First Modification (the Original Security Agreement, as modified by this First Modification, is hereinafter referred to as the "Security Agreement"), and (iii) Maker is executing and delivering new Financing Statements for the purpose of creating a lien on the "Modified License" (as hereinafter defined) in favor of the Commission (the "New Financing Statements") [the Original Financing Statements, as supplemented by the New Financing Statements, are hereinafter referred to as the "Financing Statements"]. The Original Loan Documents, as amended, modified and/or supplemented by this First Modification and the New Financing Statements, together with any and all amendments, modifications or supplements thereto, are hereinafter collectively referred to as the "Loan Documents". All of the terms, conditions and provisions of the Loan Documents are hereby incorporated herein and made a part hereof in their entireties by this reference. R-5. It is the intention of the Maker and the Payee that except as specifically modified by this First Modification, the Original Note and Original Security Agreement shall continue in full force and effect. NOW, THEREFORE, in consideration of the covenants and agreements herein contained, the sum of Ten dollars ($10.00) and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned parties hereby covenant and agree and amend the Original Note as follows: 1. The foregoing Recitals, including all terms defined therein, are hereby incorporated in this First Modifications in the same extent as if they had been herein stated in full. The documents referred to in the Original Note shall include the documents referred to therein, as well as any and all modifications, amendments, additions and/or supplements thereto and/or replacements thereof. 2. This First Modification shall amplify and modify where specifically provided herein but shall not replace the Original Note. Except as specifically modified herein, all the terms, conditions and obligations of the Original Note shall remain in full force and effect, and all of the rights and remedies provided for therein shall be preserved to the Commission. If there is any conflict between the provisions of the First Modification and the provisions of the Original Note, the provisions of this First Modification shall govern and prevail. THE COMMISSION AND MAKER COVENANT AND AGREE THAT THIS FIRST MODIFICATION ONLY -10- MODIFIES THE TERMS OF THE ORIGINAL NOTE AND IS NOT A NOTATION OF THE ORIGINAL NOTE. 3. The Original Security Agreement, as modified by this First Modification, and the Original Financing Statements, as supplemented by the New Financing Statements, will continue to encumber the License and Collateral (as each of those terms are modified in this First Modification) with a first lien security interest. The Original Note, as modified by this First Modification, and all extensions, renewals, modifications and amendments and consolidations thereof or substitutions therefore shall continue to be secured by the Security Agreement and all other documents, instruments, certifications, security agreements and financing statements executed and delivered in connection therewith by the Maker or by its successors. The Original Note and this First Modification shall be entitled to the benefits of, and to the security required to be provided by, the aforesaid documents, some of which contain provisions for the acceleration of the maturity of the Note upon the happening of certain stated events. 4. Pursuant to the Disaggregation Election, Maker and the Commission acknowledge and agree that the original principal balance of the Original Note is hereby reduced, effective for all purposes as of the effective date of the Original Note, to $2,834,452.50. Such reduced original principal balance is hereinafter referred to as the "Principal Amount" and the defined term Principal Amount contained in the Original Note is hereby modified to conform to the new original principal balance of the Original Note. 5. The Amortization Schedule attached to the Original Note as Schedule A is hereby deleted in its entirety. All references in the Original Note to Schedule A are hereby deleted. All payments under the Note shall continue to be made in accordance with the terms of the Original Note, as modified by the provisions of this First Modification. 6. Maker and the Commission covenant and agree that pursuant to the terms of the Suspension Order and the Second Report and Order, interest payments under the Original Note were suspended for the period effective as of March 31, 1997 through and including March 31, 1998. The entire amount of unpaid interest that accrued during the period beginning with the grant date of the License through and including March 31, 1998 is hereinafter referred to as the "Suspension Interest". All Suspension Interest is to be repaid in eight (8) equal payments with the first such payment being due on the Effective Date. In addition, pursuant to the terms of the Order on Reconciliation, (i) all interest accrued on the Original Note from April 1, 1998 through the Effective Date ("Deferred Interest") is due and payable in full on the Effective Date, (ii) all payments under the Note were reinstated as of the Effective Date, and (iii) the schedule for making quarterly interest and/or principal payments under the Note was changed to require quarterly payments on October 31, January 31, April 30 and July 31 of each year without any modification to the amounts for each payment as provided in the Original Note, with the first such payment being due and payable on October 31, 1998. Based upon the foregoing, the Original Note is hereby amended to provide that the payments of interest and principal shall be as follows: (a) On the Effective Date, Maker shall make a payment to Payee in the amount of all -11- Deferred Interest ("Deferred Interest Payment"). (b) On the Effective Date, and continuing on each following October 31, January 31, April 30 and July 31 thereafter until all Suspension Interest has been paid in full, Maker shall make a payment equal to one-eighth (1/8th) of the Suspension Interest outstanding as of March 31, 1998 ("Suspension Interest Payment"). (c) Commencing on October 31, 1998, and continuing on each January 31, April 30, July 31 and October 31 thereafter (such quarterly dates are hereinafter referred to as the "New Quarterly Payment Dates" or individually a "New Quarterly Payment Date"), Maker shall make equal, consecutive quarterly payments of interest only at the "Annual Rate" (as that term is defined in the Original Note) based upon the reduce Principal Amount as provided herein. On each New Quarterly Payment Date, all accrued and outstanding interest for the applicable calendar quarter shall be due and payable in full. The last quarterly interest only payment shall be due on the New Quarterly Payment Date occurring immediately prior to the date that the first quarterly payment of principal and interest is due. (d) Commencing on the "First Principal Repayment Date" (as hereinafter defined), and continuing on each New Quarterly Payment Date thereafter until the "Maturity Date" (as that term is defined in the Original Note), Maker shall pay principal and interest in equal quarterly installments equal to all accrued interest during the applicable calendar quarter plus a principal payment calculated using an amortization schedule which would result in the Note being repaid in full over a four (4) year term comprised of sixteen (16) quarterly payment periods. The "First Principal Repayment Date" shall be (i) the date provided in the Original Note for the first payment of principal and interest if such date is a New Quarterly Payment Date, or (ii) the first New Quarterly Payment Date following the date currently provided in the Original Note for the first payment of principal and interest if the first quarterly payment of principal and interest required under the Original Note is due on a day other than one of the New Quarterly Payment Dates. (e) The Maker and the Commission acknowledge and agree that no modification is being made to the "Maturity Date" (as that term is defined in the Original Note) and that the entire "Principal Amount" (as that term is defined in the Original Note), together with accrued and unpaid interest thereon, and all other remaining obligations of Maker under the Note, if not sooner paid, shall be due and payable on the Maturity Date. (7) The sixth (6th) paragraph of the Original Note reading "All interest shall be computed on the basis of a 360-day year for actual days elapsed." is hereby deleted in its entirety and replaced with the following: Interest on the Principal Amount of this Note shall be computed at the Annual Rate on the basis of a three hundred sixty (360)-day year composed of twelve (12) months of thirty (30) days each, except that interest due and payable for a period of less than a full quarterly payment period shall be calculated by dividing the full quarterly payment by the actual number of calendar days in the -12- applicable quarterly payment period to create a daily rate that is multiplied by the actual number of days elapsed since the last day of the previous quarterly payment period. (8) If the Suspension Interest Payment and the Deferred Interest Payment due on the Effective Date are received by the Commission on or before October 29, 1998, together with any applicable late fee, Maker and the Commission agree that the paragraphs of the Original Note defining when an "Event of Default" occurs will be modified by deleting in their entirety the provisions beginning with the phrase "a non-payment by Maker of any Principal or Interest on the due date. . ." and continuing through ". . ., Maker has not resumed payments of Interest and Principal in accordance with the terms of this Note; or "and replace with the following: a. Any non-payment by Maker of any Principal and/or Interest on the due date specified hereinabove, and the failure to make such payment, together with all applicable "Late Fees" (as hereinafter defined) within one hundred eighty (180) days after such Principal and/or Interest payment due date; or (9) The Original Note is hereby amended to provide that in addition to the Events of Default listed therein, as modified by this First Modification, it shall be an Event of Default under the Note if either the Suspension Interest Payment due on the Effective Date or the Deferred Interest Payment due on the Effective Date is not received by the Commission on or before October 29, 1998. No additional grace or cure period shall be applicable to such payment. All other payments of Suspension Interest shall be subject to the same terms and conditions as the remaining Principal and/or Interest payments under the Note. (10) The paragraph of the Original Note which imposes a late fee upon the occurrence of any Event of Default is hereby modified by deleting in its entirety the sentence reading "Upon any Event of Default under this Note, Payee may assess a late fee and/or administrative charge, plus the costs of collection, litigation, attorneys' fees, and default payment as specified in the then-applicable orders and regulations of the Commission as amended, and Maker acknowledges that it is liable and herein expressly promises to pay on demand such additional costs, expenses, late charges, administrative charges, attorneys fees, and default payment." and substituting in its place the following: Should any payment of Principal and/or Interest required under this Note not be paid in full on the due date as specified hereinabove, Maker acknowledges that the Payee will incur extra expenses for the handling of the delinquent payment and servicing the indebtedness evidenced hereby, and that the exact amount of theses extra expenses is extremely difficult and impractical to ascertain. Therefore, Maker shall, in such event, without further notice, and without prejudice to the right of the Payee to collect any other amounts provided to be paid hereunder or under the Security Agreement, or to declare an Event of Default, pay to the -13- Commission the "Late Fee" (as hereinafter defined) to compensate Payee for expenses incurred in handling delinquent payments and the Maker confirms and agrees that the Late Fee is a fair approximation of the expenses so incurred by the Payee. The "Late Fee" is defined as the total, if any, of the "Non-Delinquency Late Fee" and the "Grace Period Late Fee" (as hereinafter defined). The "Non-Delinquency Late Fee" shall be an amount equal to five percent (5.0%) of any Principal and/or Interest payment required to be made hereunder and shall be automatically assessed if such payment is not made on the original date that such Principal and/or Interest Payment is due (without the benefit of any notice of grace period). If such Principal and/or Interest payment, together with the Non-Delinquency Late Fee, is not made on or before the ninetieth (90th)-day after the original date that such Principal and/or Interest payment was due, such payment shall automatically be subject to a second late fee (the "Grace Period Late Fee") equal to ten percent (10.0%) of the amount of such past due Principal and/or Interest Payment (without the benefit of any notice or grace period) in addition to the Non- Delinquency Late Fee. In addition to the foregoing, there shall also automatically be imposed on Maker, and Maker shall pay to the Commission without further notice, and without prejudice to the right of the Payee to collect any other amounts provided to be paid hereunder or under the Security Agreement, or to declare an Event of Default, the "Resumption Date Late Fee" (as hereinafter defined ) to compensate Payee for expense incurred in handling delinquent payment of the Suspension Interest Payment due on the Effective Date and/or the Deferred Interest Payment. The Maker confirms and agrees that the Resumption Date Late Fee is a fair approximation of the expenses so incurred by the Payee. The "Resumption Date Late Fee" shall be an amount equal to (i) five percent (5.0%) of the Suspension Interest Payment due on the Effective Date if such payment is not received by the Payee on the Effective Date (without the benefit of any notice or grace period), and (ii) five percent (5.0%) of the Deferred Interest Payment due on the Effective Date if such payment is not received by the Payee on the Effective Date (without the benefit of any notice or grace period). Maker and Payee agree that all references in the Original Note to a late fee shall be deemed to be a reference to the Late Fee and/or the Resumption Date Late Fee, as applicable. (11) Pursuant to the Disaggregation Election, the Maker has returned to the Commission one-half (1/2) of the spectrum represented by the License and retained the right to -14- use the remaining one-half (1/2) of the spectrum represented by the License. In order to evidence the license for the retained spectrum, the Commission has issued an amended license to the Maker, license number PBB304C1 (herein referred to as the "Modified License"). Maker and the Commission covenant and agree that all references in the Original Security Agreement to "License" shall be deemed to refer to the License, as modified by the Modified License, and all references in the Original Security Agreement to "Collateral" shall be deemed to refer to all of the Maker's rights and interest in the License, as modified by the Modified License, and all proceeds, profits and products of any sale or other disposition thereof. In order to confirm the continuing lien, operation and effect of the Security Agreement on the License, as modified by the Modified License, and the Collateral, Maker does hereby regrant and reconvey unto the Commission, its successors and assigns, a security interest in the License, as modified by the Modified License, together with all other rights and property granted to the Commission pursuant to the terms of the Original Security Agreement. The foregoing grant by Maker shall be deemed to be a grant and conveyance of a security interest upon all of the terms and conditions contained in the Original Security Agreement without the necessity of repeating the Original Security Agreement herein in its entirety. 12. Maker represents and warrants that its principal place of business and chief executive office is located at Marksville, Louisiana. 13. All defined terms contained in the Loan Documents shall have the same meaning as set forth therein except as may otherwise be expressly set forth in this First Modification. Maker and the Commission covenant and agree that the reference in the Security Agreement to the "Note" shall be deemed a reference to the Original Note, as modified by this First Modification. 14. This First Modification constitutes the entire agreement regarding the amendment and modification of the Original Note between Maker and the Commission and is intended by Maker and the Commission to be a complete, exclusive and final integration of all prior and contemporaneous agreements and negotiations of Maker and the Commission concerning the amendment and modification of the Original Note. There have been no other agreements, covenants, representations or warranties between the Maker and the Commission regarding the amendment and modification of the Original Note other than those expressly stated or referred to in this First Modification or any document delivered pursuant hereto. 15. This First Modification may be amended or modified only by written instruments signed by Maker and Commission. If any covenant, condition or provision of this First Modification is declared by a court of competent jurisdiction to be invalid and not binding on the Maker and/or the Commission, such declaration shall in no way affect the validity of the other remaining covenants, conditions and provisions of this First Modification. 16. This First Modification shall bind, inure to the benefit of and be enforceable by Maker and the Commission, their respective heirs, beneficiaries, legal representatives, successors and assigns. 17. Except as modified by this First Modification, Maker agrees that the Original -15- Note shall continue in full force and effect without modification, and the Original Note and all of the other Loan Documents are hereby expressly approved, ratified, confirmed and reaffirmed by all parties to this First Modification. Maker hereby acknowledges and agrees that it has no claims, counterclaims, set- offs, defenses or other causes of action against the Commission and/or under the Note, Security Agreement or nay of the other Loan Documents and to the extent that any such set-offs, counterclaims, defenses or other causes of action may exist, whether known or unknown, they are hereby waived and forever relinquished by the Maker. 18. This First Modification shall be governed and construed in accordance with the Communications Act of 1934, as amended from time to time, the then applicable orders and regulations of the Commission and federal law. 19. This First Modification may be executed in counterparts, each of which shall be deemed to be an original and all of which shall collectively be deemed to constitute a single document. IN WITNESS WHEREOF, intending to be legally bound, the undersigned Maker and the Commission have each executed this First Modification, under seal, as of the day and year first hereinabove written. [SIGNATURE PAGES FOLLOW] -16- SIGNATURE PAGE FIRST MODIFICATION OF INSTALLMENT PAYMENT PLAN NOTE MAKER: ----- Witness/Attest: WIRELESS 2000, INC. A, Louisiana Corporation /s/ Donna Mayeux - --------------------- By: /s/ Joan S. Ducote ---------------------------- Name: Joan S. Ducote -------------------------- Title: President ------------------------- Date: July 21, 1998 -17- SIGNATURE PAGE FIRST MODIFICATION OF INSTALLMENT PAYMENT PLAN NOTE COMMISSION: ---------- Witness/Attest: FEDERAL COMMUNICATIONS COMMISSION - --------------------------- By: _____________________________ Name: _____________________________ Its: Authorized Signatory for the Wireless Telecommunications Bureau, Federal Communications Commission -18- STATE OF LOUISIANA UNIFORM COMMERCIAL CODE-FINANCING STATEMENT-UCC-1 Filed With: Ayoyelles This FINANCING STATEMENT is presented for filing pursuant to Chapter 9 of the Louisiana Commercial Laws - ---------------------------------------------------------------------------------------------------------------------------------- 1A. DEBTOR (LAST NAME, FIRST, MIDDLE - IF AN INDIVIDUAL) 1B. SS# OR EMPLOYER ID NO Wireless 2000, Inc. 72-1293258 - ---------------------------------------------------------------------------------------------------------------------------------- 1C. MAILING ADDRESS 221 N. Monroe, Suite 3 P.O. Box 337, Marksville, LA 71351 - ---------------------------------------------------------------------------------------------------------------------------------- 2A. ADDITIONAL DEBTOR (IF ANY) (LAST NAME, FIRST, MIDDLE - IF AN INDIVIDUAL) 2B. SS# OR EMPLOYER ID NO. - ---------------------------------------------------------------------------------------------------------------------------------- 2C. MAILING ADDRESS - ---------------------------------------------------------------------------------------------------------------------------------- 3A. ADDITIONAL DEBTOR OR DEBTOR'S TRADE NAMES OR STYLES (IF ANY) 3B. SS# OR EMPLOYER I.D. NO. - ---------------------------------------------------------------------------------------------------------------------------------- 3C. MAILING ADDRESS =================================================== SECURED PARTY INFORMATION ==================================================== 4A. SECURED PARTY 4B. SS# OR EMPLOYER I.D. NO. Federal Communications Commission - ---------------------------------------------------------------------------------------------------------------------------------- 4C. MAILING ADDRESS Attn: Jennifer Mock, 2025 M. Street NW Room 5126E Washington, DC 20554 - ---------------------------------------------------------------------------------------------------------------------------------- 5A. ASSIGNEE OF SECURED PARTY (IF ANY) 5B. SS# OR EMPLOYER ID NO. - ---------------------------------------------------------------------------------------------------------------------------------- 5C. MAILING ADDRESS - ----------------------------------------------------------------------------------------------------------------------------------
================================ PROPERTY INFORMATION ========================== 6A. This FINANCING STATEMENT covers the following types or items of property. ALL OF THE DEBTOR'S RIGHT, TITLE AND INTEREST IN AND TO THE "COLLATERAL" AND THE "LICENSE" NO. PBB009C1 (AS SUCH TERMS ARE DEFINED IN THE SECURITY AGREEMENT AS MODIFIED BY THAT CERTAIN FIRST MODIFICATION OF INSTALLMENT PAYMENT PLAN NOTE AND FIRST AMENDMENT OF SECURITY AGREEMENT ENTERED INTO BETWEEN THE DEBTOR AND THE SECURED PARTY, INCORPORATED HEREIN BY REFERENCE) AND ALL PROCEEDS, PROFITS AND PRODUCTS OF ANY SALE OF OR OTHER DISPOSITION THEREOF. 6B. [_]Products of collateral are also covered. - -------------------------------------------------------------------------------- 7A. Check if applicable and attach legal description of real property [_] Fixture filing under R.S. 10:9-313 [_] Minerals of the like (including oil and gas) or accounts subject to R.S. sec. 10:9-103(5) will be financed at the wellhead or minehead of the well or mine. [_] The debtor(s) do not have an interest of record in the real property. (Enter name and social security/employer i.d. number of an owner of record in 7E and 7C). - ---------------------------------------------------------------------------------------------------------------------------------- 7B. OWNER OF REAL PROPERTY (If other than named debtor) (Enter name and social 7C. SS# OR EMPLOYER ID NO. security/employer i.d. number of an owner of record in 7E and 7C). - ---------------------------------------------------------------------------------------------------------------------------------- 8A. This statement is filed without the debtor's signature to 8B. [_] Debtor is a transmitting Utility. Filing is perfect a security interest in collateral (check [_] if so): effective until terminated pursuant to R.S. secs 10:9-403(8) [_] Already subject to a security interest in another jurisdiction when it was brought into this state or debtor's location changed to this state. [_] Which is proceeds of the original collateral described above in which a security interest was perfected. [_] As to which the filing has lapsed. [_] Acquired after a change of debtor's name, identity or corporate structure AND social security/employer id # - ---------------------------------------------------------------------------------------------------------------------------------- 9 SIGNATURE(S) OF DEBTOR(S) 12. THIS SPACE FOR USE OF FILING OFFICER (DATE, TIME, Wireless 2000, Inc. ENTRY # AND FILING OFFICER) /s/ Joan S. Ducote President - -------------------------------------------------------------------- 10. SIGNATURE(S) OF SECURED PARTY(IES) (if applicable) ===================================================================== 11. Return copy to: NAME CT Corporation Systems 17 South High Street ADDRESS Suite 1100 Columbus, OH 43215 CITY, STATE ===========================================================
United States of America Federal Communications Commission RADIO STATION AUTHORIZATION [STAMP APPEARS HERE] Commercial Mobile Radio Services Personal Communications Service - Broadband Call Sign: KNLF392 Market: B238 LAKE CHARLES, LA WIRELESS 2000 INC WIRELESS 2000 LLC Channel Block: C 208 N. WASHINGTON MARKSVILLE, LA 71351 File Number:00204-CW-L-96 - -------------------------------------------------------------------------------- The licensee hereof is authorized, for the period indicated, to construct and operate radio transmitting facilities in accordance with the terms and conditions hereinafter described. This authorization is subject to the provisions of the Communications Act of 1934, as amended, subsequent Acts of Congress, international treaties and agreements to which the United States is a signatory and all pertinent rules and regulations of the Federal Communications Commission contained in the Title 47 of the U.S. Code of Federal Regulations. - -------------------------------------------------------------------------------- Initial Grant Date.......................... September 17, 1996 Five-year Build Out Date.................... September 17, 2001 Expiration Date............................. September 17, 2006 - -------------------------------------------------------------------------------- CONDITIONS - ---------- Pursuant to Section 309(h) of the Communications Act of 1934, as amended, (47 U.S.C. (S) 309(b)), this license is subject to the following conditions: This license does not vest in the licensee any right to operate a station nor any right in the use of frequencies beyond the term thereof nor in any other manner than authorized herein. Neither this license nor the right granted thereunder shall be assigned or otherwise transferred in violation of the Communications Act of 1934, as amended (47 U.S.C. (S) 151, et seq.). This license is subject in terms to the right of use or control conferred by Section 706 of the Communications Act of 1934, as amended (47 U.S.C. (S) 606). Conditions continued on Page 2. - -------------------------------------------------------------------------------- WAIVERS : - ------- No waivers associated with this authorization. - -------------------------------------------------------------------------------- Issue Date: September 17, 1996 FCC Form 463a. Page 1 of 2 KNLF392 WIRELESS 2000, INC. 00204-CW-L-96 CONDITIONS: This authorization is subject to the condition that, in the event that systems using the same frequencies as granted herein are authorized in an adjacent foreign territory (Canada/United States), future coordination of any base station transmitters within 72 km (45 miles) of the United States/Canada border shall be required to eliminate any harmful interference to operations in the adjacent foreign territory and to ensure continuance of equal access to the frequencies by both countries. This authorization is conditioned upon the full and timely payment of all monies due pursuant to Sections 1.2110 and 24.711 of the Commission's Rules and the terms of the Commission's installment plan as set forth in the Note and Security Agreement executed by the licensee. Failure to comply with this condition will result in the automatic cancellation of this authorization. Issue Date: September 17, 1996 Page 2 of 2 FCC Form 463a Installment Payment Plan Note (Broadband Personal Communications Service, C Block): Auction Event No. 5) US $4,731,181.64 Washington, D.C. September 17, 1996 License No.: PBB238C ------- FOR VALUE RECEIVED, the undersigned, Wireless 2000, Inc., a CORPORATION ("Maker"), promises to pay to the order of the FEDERAL COMMUNICATIONS COMMISSION, an independent regulatory agency of the United States ("Payee" or "Commission"), the principal sum of 4,731,181.64 DOLLARS ("Principal Amount"), together with accrued interest, computed at the annual rate of seven percent (7.00%) per annum, ("Annual Rate") on the unpaid Principal Amount hereof, from the date of this Note until the date the entire Principal Amount has been paid in full. Interest and principal shall be payable as set forth below and in accordance with Schedule A attached hereto and made a part hereof: Interest only, at the Annual Rate from the date hereof until the last day of the month ninety (90) days hence, shall be due and payable on December 31, 1996 in the amount of $95,217.74. Commencing December 31, 1996, Maker shall pay interest only at the Annual Rate, in equal consecutive quarterly installments of $82,795.68, due on the last day of the month and every ninety (90) days thereafter from December 31, 1996 through September 30, 2002. Commencing December 31, 2002, Maker shall pay principal and interest in equal quarterly installments of $341,589.31, due on the last day of each month ninety (90) days hence through and including June 30, 2006. The entire unpaid Principal Amount, together with accrued and unpaid interest thereon, and all remaining obligations of Maker hereunder, shall be due and payable on September 17, 2006 ("Maturity Date"). All interest shall be computed on the basis of a 360-day year for actual days elapsed. All payments to be made hereunder, of principal, interest, costs, expenses, or other sums due hereunder, shall be made to the holder of this Note in lawful money of the United States of America which at the time of payment shall be legal tender for the payment of public and private debts, free and clear and without reduction by reason of any present or future income, stamp or other taxes, levies, imposts, deductions, charges, compulsory loans or withholdings whatsoever, including interest thereon or penalties with respect thereto, if any imposed, assessed, levied or collected by any political subdivision or taxing authority thereof or therein, on or in respect of this Note or the obligations it evidences. All payments shall be made during normal business hours at the Commission's designated lockbox location as set forth from time to time in the Commission's then-applicable orders and regulations and/or public notices. This Note is secured by, and entitled to the benefits of, a Security Agreement (the "Security Agreement") of even date between Maker and Payee. All the terms, covenants, conditions and agreements contained in the Security Agreement are hereby incorporated herein and made part of this Note to the same extent and effect as if fully set forth herein. It is expressly understood by Maker that all of the terms of the Security Agreement apply to this Note and that reference in the Security Agreement to "this Agreement" includes both the Security Agreement and this Note. IT IS HEREBY EXPRESSLY AGREED THAT TIME IS OF THE ESSENCE FOR THE PERFORMANCE OF ALL TERMS AND CONDITIONS UNDER THIS NOTE AND THE SECURITY AGREEMENT. A default under this Note ("Event of Default") shall occur upon any or all of the following: a. non-payment by Maker of any Principal or Interest on the due date as specified hereinabove if the Maker remains delinquent for more than 90 days and (1) Maker has not submitted a request, in writing, for a grace period or extension of payments, if any such grace period or extension of payments is provided for in the then-applicable orders and regulations of the Commission; or (2) Maker has submitted a request, in writing, for a grace period or extension of payments, if any such grace period or extension of payments is provided for in the then-applicable orders and regulations of the Commission, and following the expiration of the grant of such grace period or extension or upon denial of such a request for a grace period or extension, Maker has not resumed payments of Interest and Principal in accordance with the terms of this Note; or; b. failure by Maker to comply with any other condition for holding the above referenced license (as defined in the Security Agreement) as set forth in the license or in the Communications Act of 1934, as amended, or the then- applicable orders and regulations of the Commission; or c. violation by Maker of any other covenant or term of this Note or the Security Agreement. Upon any Event of Default under this Note, Payee may assess a late fee and/or administrative charge, plus the costs of collection, litigation, attorneys' fees, and default payment as specified in the then-applicable orders and regulations of the Commission, as amended, and Maker acknowledges that it is liable and herein expressly promises to pay on demand such additional costs, expenses, late charges, administrative charges, attorneys fees, and default payment. Upon a default under this Note, the unpaid Principal Amount, plus all unpaid interest accrued thereon, together with any late fee and/or administrative charge, plus the costs of collection, litigation, attorneys' fees, and default payment as specified in the then-applicable orders and regulations of the Commission, as amended, shall become immediately due and payable. The Maker hereby acknowledges that the Commission has issued Maker the above referenced license pursuant to the Communications Act of 1934, as amended, that is conditioned upon full and timely payment of financial obligations under the Commission's installment payment plan, as set forth in the then-applicable orders and regulations of the Commission, as amended, and that the sanctions and enforcement authority of the Commission shall remain applicable in the event of a failure to comply with the terms and conditions of the license, regardless of the enforceability of this Note or the Security Agreement. No delay or omission on the part of Payee in exercising any right under this Note, the Security Agreement, or any other instrument securing this Note, shall operate as a waiver of such right or of any other right of Payee, nor shall any waiver by Payee of any such right or rights on any one occasion be deemed a bar to or waiver of the same right or rights on any future occasion. The Maker is liable for all costs of collection or enforcement of the Payee's rights under this Note or under the Security Agreement or under any other instrument now or hereafter executed by Maker in favor of Payee which in any manner evidences or constitutes additional security for this Note, including reasonable attorneys' fees, whether suit is brought or not, and all such costs shall be paid by the Maker on demand, and whether or not such collection or enforcement occurs in any bankruptcy, reorganization, receivership or other proceedings involving creditors' rights or involving a claim under this Note or any of the other loan documents. Maker, all endorsers and guarantors hereof and any other party who may become liable for all or any part of the obligation evidenced hereby, waive presentment for payment, notice or dishonor, protest and notice of protest, notice of nonpayment and any and all lack of diligence or delays in collection or enforcement of this Note. Maker may prepay all or any part of the Principal Amount without premium or penalty upon ten (10) days' prior written notice to Payee, given in the manner provided in the Security Agreement. Partial prepayments shall not postpone or reduce regular payments to be made hereunder. All such prepayments shall be applicable first to the payment of late charges, if any, costs and expenses, and administrative penalties due hereunder, then to accrued and unpaid interest, then to that portion of the unpaid Principal Amount due on the Maturity Date and then, if applicable, to any unpaid installments of principal in the inverse order of installment maturities. The Payee may require that any partial prepayments be made on the dates installments of principal and interest are due hereunder. Anything to the contrary notwithstanding, Payee shall not charge, take or receive, and Maker shall not be obligated to pay to Payee, any amounts constituting interest on the Principal Amount in excess of the maximum rate permitted by applicable law. If by reason of the acceleration of the unpaid Principal Amount or otherwise, interest in excess of the highest legal contract rate permitted by applicable law shall at any time be paid, any such excess shall constitute and be treated as a payment of outstanding principal hereunder and shall operate to reduce such outstanding Principal Amount. ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS NOTE, THE SECURITY AGREEMENT, OR OTHER DOCUMENTS EVIDENCING OR SECURING THE DEBT TRANSACTION EVIDENCED HEREBY MAY ONLY BE BROUGHT IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA, AND, BY EXECUTION AND DELIVERY OF THIS NOTE AND SECURITY AGREEMENT, THE MAKER HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURT. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH ANY OF THEM MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN THE DISTRICT OF COLUMBIA. THE MAKER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF THE AFOREMENTIONED COURT IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF A COPY THEREOF BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, TO THE MAKER AT ITS ADDRESS PROVIDED HEREIN. SUCH SERVICE SHALL BE DEEMED TO HAVE OCCURRED ON THE THIRD DAY AFTER SUCH MAILING. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF PAYEE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE MAKER IN ANY OTHER JURISDICTION. EACH OF THE PARTIES HERETO HEREBY KNOWINGLY, WILLINGLY, VOLUNTARILY, UNCONDITIONALLY, IRREVOCABLY AND INTENTIONALLY FOREVER WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, THE SECURITY AGREEMENT, OR OTHER DOCUMENTS EVIDENCING OR SECURING THE DEBT TRANSACTION EVIDENCED HEREBY, ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (VERBAL OR WRITTEN) OR ACTION OF ANY PERSON OR ANY EXERCISE BY ANY PARTY OF THEIR RESPECTIVE RIGHTS UNDER THIS TRANSACTION, DOCUMENT OR ANY RELATED DOCUMENT OR IN ANY WAY RELATING TO THE COLLATERAL (INCLUDING, WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS TRANSACTION OR ANY CLAIMS OR DEFENSES ASSERTING THAT THIS TRANSACTION, IN WHOLE OR IN PART, WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR VOIDABLE). MAKER REPRESENTS THAT NO ORAL OR WRITTEN STATEMENTS HAVE BEEN MADE BY ANY PARTY TO INCLUDE THIS SUBMISSION OR JURISDICTION AND WAIVER OF TRAIL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS STATED EFFECT. MAKER FURTHER REPRESENTS THAT IT HAS BEEN REPRESENTED BY INDEPENDENT COUNSEL, SELECTED BY ITS OWN FREE WILL, IN SIGNING THIS NOTE AND IN THE MAKING OF THIS WAIVER AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH SUCH COUNSEL. THIS PROVISION IS A MATERIAL INDUCEMENT FOR PAYEE TO ENTER INTO THIS TRANSACTION AND THE VARIOUS DOCUMENTS RELATED THERETO. Maker acknowledges that this Note and Security Agreement (any attachments affixed thereto by the Commission with the permission and knowledge of the Maker/Debtor), along with the then-current applicable Commission orders and regulations and the Communications Act of 1934, as amended, set forth the entire agreement, written and oral, of the parties, and all inconsistent prior statements, understandings, notices, representations and agreements between the parties, oral or written, are superseded by and merged in this Note, the Security Agreement or other documents evidencing or securing the debt transaction evidenced hereby. Except as otherwise expressly provided herein, all of Payee's representations, warranties, covenants and agreements in this Note and Security Agreement shall merge in the documents and agreements executed by the Maker and shall not survive said execution. If any provision or part of this Note and/or the Security Agreement shall for any reason be held or deemed to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Note and this Note shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein and the remaining provisions of this Note shall remain in full force and effect. The enforceability of the Note and/or the Security Agreement do not alter the rights and obligations of the Maker and Payee under the Communications Act of 1934, as amended, or under the then-applicable orders and regulations of the Commission, as amended. Any notice demand or request hereunder shall be given in the manner set forth in the Security Agreement. This Note shall be governed by and construed in accordance with the Communications Act of 1934, as amended, the then-applicable orders and regulations of the Commission, and federal law. Nothing in this Note shall be deemed to modify any then-applicable orders and regulations of the Commission, and nothing in this Note shall be deemed to release the Maker from compliance therewith. This Note may not be changed, modified, waived, terminated or discharged orally, but only by an agreement in writing executed by the party against whom enforcement of any such change, modification, waiver, termination, or discharge is sought. Maker represents and warrants that any statements made by or on behalf of Maker in connection with this Note: (i) are true and accurate in all material respects; and (ii) do not omit any material facts or information that would make such statement misleading in the context of Payee's evaluation of the note, and acknowledges and agrees that Payee is entitled to and his relied on such statements in agreeing to the Note. Payee shall have the right at any time to assign, endorse, pledge, convey or otherwise transfer this Note and all of the other loan documents to any party. From and after the date of such assignment, endorsement, pledge, conveyance or other transfer, such transferee shall be entitled to exercise any and all rights and remedies of Payee hereunder. Maker shall not assign, convey or otherwise transfer its rights and obligations hereunder without the prior written consent of the Commission. Date: 11/21/96 WIRELESS 2000, INC. [NAME OF MAKER] By: /s/ Joan S. Ducote ----------------------- Its: President --------------------------- SECTION AGREEMENT (Broadband Personal Communications Service, C Block): Auction Event No. 5) License No. PBB238C ------- This SECURITY AGREEMENT DATED September 17, 1996, ("Agreement") between Wireless 2000, Inc., a CORPORATION ("Debtor") and the FEDERAL COMMUNICATIONS COMMISSION, an independent regulatory agency of the United States ("Commission" or "Secured Party") WITNESSETH WHEREAS, Debtor has submitted the highest accepted bid for license number PBB238C in the Broadband Personal Communications Service C Block auction (hereinafter the "License") conducted by the Commission to assign such licenses; WHEREAS, the Commission has duly determined to grant the License to Debtor, subject to the terms and conditions set forth in the orders and regulations of the Commission applicable to such licenses, and the Communications Act of 1934, as amended; WHEREAS, Debtor wishes to pay its auction price for the License by installments through an Installment Payment Plan as provided by 47 C.F.R. ss.ss. 24.711, 1.2110 (hereinafter the "Installment Payment Plan") and undertakes to hold the License under the terms and conditions set forth in the Commission's orders and regulations, as amended, applicable to such licenses, and the Communications Act of 1934, as amended and the terms and conditions of this Agreement; WHEREAS, the Commission has agreed to permit the Debtor to make payment of the auction price for the License through an Installment Payment Plan; and WHEREAS, as a condition to such agreement, Debtor has agreed to execute the Installment Payment Plan Note of even date ("Note") and to enter into this Agreement and make the pledge and assignment of collateral contemplated herein. NOW, THEREFORE, in consideration of the premises, the mutual agreements contained herein and for other good and valuable consideration, the receipt, adequacy, and sufficiency of which is hereby acknowledged, and in order to induce the Commission to permit Debtor to pay the auction price for the License through the Installment Payment Plan, Debtor hereby agrees with the Commission as follows: 1. Pledge and Assignment of Collateral of Obligations Under Note. Debtor ------------------------------------------------------------- hereby pledges, assigns, hypothecates, delivers, and sets over to the Commission and grants to the Commission a first lien on and continuing security interest in all of the Debtor's rights and interest in the License and all proceeds, profits and products of any sale of or other disposition thereof (collectively the "Collateral"), all as collateral security for the prompt and complete payment when due (whether in accordance with the schedule of payments, at the stated maturity, by acceleration, or otherwise) of the unpaid principal and interest due, and such other additional costs, expenses, late charges, administrative charges, attorneys fees, and default payments assessable under the terms of the Note (all collectively "Obligations"). It is expressly understood by Debtor that all of the terms of the Note apply to this Agreement and that reference herein to "this Agreement" includes both the Security Agreement herein and the Note. For purposes of interpreting the terms used in this Agreement shall have the meaning ascribed to them in the Uniform Commercial Code (Official Text and Comments, American Law Institute). 2. Interest of Commission. It is understood and acknowledged by Debtor that ---------------------- pursuant to Section 301 of the Communications Act of 1934, as amended, the Commission is charged with the regulatory mandate to maintain control over all channels of radio transmission (the "Spectrum"), and to provide licenses for the use of such radio channels, but not ownership thereof. Debtor understands and acknowledges that it holds a mere conditional license to use the Spectrum with no ownership interest in the Collateral (or any underlying right to use the Spectrum), or any power to assign the License without the prior Approval of the Commission pursuant to Section 310(d) of the Communications Act of 1934, as amended. Debtor further understands and acknowledges that it is giving a security interest to the Commission in the Collateral only to assist the Commission in protecting its ability to enforce the Commission's regulations which condition holding the license in compliance with all then-applicable orders and regulations of the Commission, including, but not limited to, full and timely payment of all payments under the Installment Payment Plan. To that end, and not in derogation of any of the Commission's regulatory authority over the License, Debtor hereby acknowledges that the Commission has a first security interest in the Collateral, and Debtor shall not dispute such first security interest, or the Commission's rights as a secured party hereunder, in any legal or equitable proceeding in which Debtor, or any assignee or trustee of the estate of Debtor in bankruptcy, is a party. 3. Compliance with Commission Orders and Regulations. Nothing in this ------------------------------------------------- Agreement shall be deemed to modify any then-applicable orders and regulations of the Commission, and nothing in this Agreement shall be deemed to release Debtor from compliance therewith. 4. Representations and Warranties of Debtor. Debtor represents and warrants ---------------------------------------- to the Commission as follows: (a) It has full power, authority and legal right to execute, deliver and perform this Agreement, the Note, and any other documents delivered in connection with the Note, this Agreement and the transactions contemplated therein to make the debt transaction evidenced by the Note, and to pledge the Collateral pursuant to this Agreement. (b) It is a duly organized CORPORATION existing in good standing under the laws of LOUISIANA and is duly qualified to do business wherever necessary to carry on its present operations. Its principal place of business and chief executive office are located at 219 NORTH WASHINGTON STREET, MARKSVILLE, LA 71351. (c) The representative of Debtor purporting to act on behalf of Debtor in executing this Agreement, the Note, and any other documents delivered in connection with the Note, this Agreement and the transactions contemplated therein, is duly authorized by Debtor to take all such acts and to execute all such documents. (d) No security agreements have been executed and delivered, and no financing statements have been filed in any jurisdiction, granting or purporting to grant a security interest in the Collateral to any secured party except to the Commission. (e) No consent of any other party and no consent, license, approval or authorization of, exemption by, or registration or declaration with, any governmental instrumentality, domestic or foreign other than the Commission, is required to be obtained in connection with the execution, delivery or performance of this Agreement, the Note or any other document executed and delivered in connection with the delivery of the Note or this Agreement. (f) The execution, delivery and performance of this Agreement and the Note, does not and will not violate any provision of any applicable law or regulation or any order, judgment, writ, award or decree of any court, arbitrator, governmental instrumentality, domestic or foreign, or of any indenture, contract, agreement or other undertaking to which Debtor is a party or which purports to be binding upon Debtor or upon any of Debtor's assets, and will not result in the creation or imposition of any lien, charge or encumbrance on or security interest in any of the assets of Debtor, except as contemplated by this Agreement. (g) All right and interest of any kind in and to the Collateral is held by Debtor or the Commission and by no other party, and the Collateral is free from any lien, security interest, encumbrance or adverse claim of any kind whatsoever thereon. Debtor will not permit any financing statement to be filed with respect to the Collateral or any portion thereof or interest therein except in favor of Secured Party. Debtor will notify Secured Party of, and will defend the Collateral against, all claims and demands of all persons at any time claiming the same or any interest therein. 5. Covenants of Debtor. Debtor hereby covenants and agrees as follows: ------------------- (a) That it will defend the Commission's right, title and security interest in and to the Collateral against the claims and demands of all persons whomsoever. (b) That it will execute all financing statements and other instruments or documents related to the perfection of the Commission's security interest, including but not limited to any renewal financing statements or instruments as required to maintain the Commission's security interest, or as otherwise reasonably requested by the Commission, and to file and pay the cost of filing any such instruments or documents as required under this paragraph in whichever public office deemed advisable by the Commission. (c) That it will not make any indenture, contract, agreement or other undertaking to which Debtor is a party or which purports to be binding upon Debtor, or upon any of Debtor's assets, that would result in the creation or imposition of any lien, charge or encumbrance on or security interest in any of the assets of Debtor that would be inconsistent with its pledge and assignment of the Collateral hereunder, except as contemplated by this Agreement. Except for the liens and encumbrances created hereby, Debtor will keep the Collateral free and clear of any lien, security interest or encumbrance. (d) That it will pay all costs and expenses, including reasonable attorneys' fees, of the Commission incurred in connection with the enforcement of this Agreement and any and all liability incurred by the Commission resulting from any act or omission of Debtor with respect to the Collateral and this Agreement. (e) Debtor will execute, alone or with Secured Party, any document, will procure any document and do all other acts and pay all connected costs, in a timely and proper manner, which from the character or use of the Collateral may be reasonably necessary to protect the Collateral against the rights, claims or interests of third persons, and will otherwise preserve the Collateral as security hereunder. The specific undertakings required of Debtor in this Agreement shall not be construed to exclude the aforementioned general obligation. 6. Power of Attorney. Debtor hereby irrevocably constitutes and appoints ----------------- the Commission and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Debtor and in the name of Debtor or in its own name, from time to time in the Commission's discretion, for the purpose of carrying out the terms of this Agreement and, to the extent permitted by applicable law, to take any and all appropriate actions and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement. Such appointment is a power coupled with an interest until all Obligations have been paid in full by Debtor. 7. Event of Default. Debtor shall be in default under this Agreement if an ---------------- Event of Default (as defined in the Note) has occurred. 8. Remedies. If an Event of Default shall occur, the Commission shall -------- thereafter have the following rights and remedies (to the extent permitted by applicable law) in addition to the rights and remedies relating to the Note, all such remedies being cumulative, not exclusive, and enforceable alternatively, successively or concurrently at such time or times as Commission deems expedient: (a) the License shall be automatically canceled pursuant to 47 C.F.R. ss. 1.2110; (b) all Obligations; secured hereunder shall become immediately due and payable without presentment, demand, protest, further notice, or other requirements of any kind; (c) the Commission may demand, sue for, and collect the outstanding balance of the unpaid Obligations, and make any compromise, or settlement the Commission deems suitable with respect to any Collateral which may be held by it hereunder; (d) Debtor hereby acknowledges the Commission's authority, pursuant to the Communications Act of 1934, as amended, and the Commission's orders and regulations then-applicable to such licenses, to conduct another public auction or assign the License in the event that the Commission rescinds, cancels, or revokes the License for any default under this Agreement or any other violation of the terms and conditions of the License. The Undersigned hereby waives all notices prior to the conduct of said public auction or assignment by the Commission or its agents. Debtor further acknowledges that in the event that the Commission rescinds, cancels, or revokes the License for any default under this Agreement or any other violation of the terms and conditions of the License, Debtor has no right or interest in any moneys or evidence of indebtedness given to the Commission by a subsequent licensee of the Spectrum and that all such moneys or evidence of indebtedness are, and shall remain, the full property of the federal Treasury, pursuant to Section 309(j) of the Communications Act of 1934, as amended, and then-applicable Commission orders and regulations. (e) In addition to other remedies hereunder, Debtor shall remain liable, and obligated to pay on demand, all costs of collection and reasonable attorneys' fees and expenses incurred or paid by the Commission in enforcing this Agreement including, without limitation, all administrative fees and expenses of the Commission in attempting to collect the Obligations or to enforce this Agreement, or the prosecution or defense of any action or proceeding related to the subject matter of this Agreement, and all payments assessed by the Commission in the event of default as specified in Commission orders and regulations applicable to such licenses. (f) Debtor hereby acknowledges that the Commission has no adequate remedy at law with respect to a breach of any covenant contained in this Agreement and, as a consequence, agrees that each and every covenant contained in this Agreement shall be specifically enforceable against Debtor, and Debtor hereby waives and agrees not to assert any defense against an action for specific performance of such covenants. (g) Secured Party may exercise any and all of the rights and remedies conferred upon Secured Party by this Agreement, any other loan documents, or by applicable law, either concurrently or in such order as Secured Party may determine. (h) Secured Party may make such payments and do such acts as Secured Party may deem necessary to protect its secured interest in the Collateral. (i) the Commission may exercise any remedies of a Secured Party under the Uniform Commercial Code (Official Text and Comments, American Law Institute), or any other applicable law. (j) Secured Party shall have the right to enforce one or more remedies hereunder or under the Note, successively or concurrently, and such action shall not operate to estop or prevent Secured Party from pursuing any further remedy which it may have. 9. Severability. Any provision of this Agreement that is prohibited or ------------ unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 10. No Waiver; Cumulative Remedies. None of the terms or provisions of ------------------------------ this Agreement may be waived, altered, modified or amended except by an instrument in writing, duly executed by the Commission. The Commission shall not by any act, delay, omission or otherwise be deemed to have waived any of its rights or remedies under this Agreement, and no waiver shall be valid unless in writing, signed by the Commission, and then only to the extent therein set forth. A waiver by the Commission of any right or remedy under this Agreement on any one occasion shall not be construed as a bar to any right or remedy which the Commission would otherwise have on any future occasion. No failure to exercise nor any delay in exercising on the part of the Commission, any right, power or privilege under this Agreement shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege under this Agreement preclude any other or further exercise thereof or the exercise of any other right power or privilege. The rights and remedies provided in this Agreement are cumulative and may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. 11. Compliance With Other Applicable Orders and Regulations. Debtor ------------------------------------------------------- recognizes that its continued retention of the License, and rights to operate as a Commission licensee thereunder, are conditioned upon compliance with all Commission orders and regulations applicable to the License and the Communications Act of 1934, as amended. Debtor further recognizes that full and timely payment as set forth in the Note does not otherwise relieve it of its obligations otherwise to comply with the then-applicable orders and regulations of the Commission, and the Communications Act of 1934, as amended. 12. Applicable Law. This Agreement shall be governed by and construed in --------------- accordance with Communications Act of 1934, as amended, then-applicable Commission orders and regulations, as amended, and federal law. 13. Successors, Assigns, Designated Agents. Subject to the provisions of -------------------------------------- Paragraph 2 of this Agreement regarding the restriction upon Debtor's ability to assign the License, this Agreement shall be binding upon Debtor, its successors and assigns and shall inure to the benefit of the Commission, and its successors and assigns. The Commission may designate agents other than the Commission to act on its behalf with respect to any and all rights and remedies of the Commission under this Agreement or the Note, and such designee shall have all of the rights, powers and remedies available to the Commission within the scope of its designation. Nothing herein, however, shall be construed as granting Debtor any right to sell or assign the License. 14. Singular and Plural. Wherever used, the singular number shall include ------------------- the plural, the plural shall include the singular, and the use of any gender shall be applicable to all genders. 15. Financing Statements. To the extent permitted by applicable law, -------------------- Debtor authorizes the Commission to sign and file financing statements at any time with respect to any of the Collateral without the signature of Debtor. Debtor will, however, at the same time and from time to time, execute such financing statements, agreements and other instruments and perform such acts as Commission may request in order to establish and maintain a validly perfected first priority security interest in the Collateral. All reasonable costs of filing and recording will be paid by Debtor. 16. Indemnification. Debtor hereby agrees to defend, indemnify and hold --------------- harmless Secured Party and its employees, officers and agents, from and against any and all liabilities, claims and obligations which may be incurred, asserted or imposed upon them or any of them as a result of or in connection with any use, operation, lease or consumption of any of the Collateral or as a result of Secured Party's seeking to obtain performance of any of the obligations due with respect to the Collateral. 17. Notices. All notices, requests and demands hereunder shall be in ------- writing and shall be deemed to have been duly given, made or served on the earliest of (i) three (3) business days after the date mailed if sent by first- class U.S. mail, postage prepaid, (ii) actual delivery thereof if delivered by hand to the party to be notified, (iii) receipt thereof if sent by express mail or other overnight courier service, or (iv) transmission to the telecopier number listed below for the party to be notified if sent within normal business hours or, otherwise, on the next business day thereafter. In each case such notification with respect to the Debtor and the Commission shall be addressed as set forth below or as may be hereafter designed by the respective parties hereto. As to Debtor: WIRELESS 2000, INC. - ------------ P.0. BOX 337 219 NORTH WASHINGTON STREET MARKSVILLE, LA 71351 ATTN: JOAN S. DUCOTE, PRESIDENT As to the - --------- Commission: U.S. DEPARTMENT OF THE TREASURY - ---------- P.0. BOX 44093 WASHINGTON, D.C. 20026-4093 ATTN: FCC-FMS/DEBT MANAGEMENT SERVICE IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written. DEBTOR: ------ WIRELESS 2000, INC. Date: 11/21/96 By: /s/ Joan S. Ducote --------- -------------------- Its: PRESIDENT FEDERAL COMMUNICATIONS COMMISSION --------------------------------- Date: 12/18/96 By: /s/ [signature illegible] --------------------------- Its: Associate Managing Director for Operations (or designee) License No.: PBB238C Modified License No.: PBB238C1 FIRST MODIFICATION OF --------------------- INSTALLMENT PAYMENT PLAN NOTE ----------------------------- FOR BROADBAND PCS C BLOCK ------------------------- THIS FIRST MODIFICATION OF INSTALLMENT PAYMENT PLAN NOTE ("First Modification") is executed on the 21st day of July, 1998, and is intended to be effective for all purposes as of the 31st day of July, 1998 ("Effective Date"), by and between: (i) WIRELESS 2000, INC., A Louisiana Corporation ("Maker"); and (ii) FEDERAL COMMUNICATIONS COMMISSION, an independent regulatory agency of the United States ("Payee" or "Commission"). W I T N E S S E T H: - - - - - - - - - - RECITALS: - -------- R-1. Reference is made to that certain Installment Payment Plan Note made by Maker, payable to the order of the Commission, in the original principal amount of $4,731,181.65 ("Original Note"). The Original Note is secured by, amongst other things (i) that certain Security Agreement by and between the Maker and the Commission ("Security Agreement"); and (ii) those certain Financing Statements related thereto (collectively, "Financing Statements"). The Original Note, Security Agreement, Financing Statements and all other documents evidencing, governing or securing the Original Note, together with any and all amendments, modifications or supplements thereto, are hereinafter collectively referred to as the "Loan Documents". All of the terms, conditions and provisions of the Loan Documents are hereby incorporated herein and made a part hereof in their entireties by this reference. R-2. The Security Agreement and Financing Statements created a first lien security interest in the "License" and the "Collateral" (as those terms are defined in the Security Agreement). R-3. Pursuant to that certain Public Notice, DA 97-649 (rel. March 31, 1997) ("Suspension Order"), the Commission suspended the deadline for payment of installment payments required to be made under the Original Note. Pursuant to that certain Second Report and Order and Further Notice of Proposed Rule Making adopted September 25, 1997 and released October 16, 1997 ("Second Report and Order"), the Commission rescinded the Suspension Order and ordered the reinstatement of payments under the Original Note effective March 31, 1998 and agreed to a schedule of payment of all accrued and unpaid interest due under the Original Note. The Second Report and Order was subsequently modified by that certain Order on Reconsideration of the Second Report and Order adopted March 23, 1998 and released March 24, 1998 ("Order on Reconsideration"). Pursuant to the Order on Reconsideration and the Public Notice, DA-98-741 (rel. April 17, 1998), the date for the resumption of payments under the Original Note was changed to July 31, 1998 as well as certain other modifications to the terms contained in the Second Report and Order. R-4. Pursuant to the terms of the Second Report and Order, as modified by the Order of Reconsideration, the Maker elected to continue to operate under the License and continue making payments under the Original Note in accordance with its terms, subject to the modification of the payment terms with respect to "Suspension Interest" and "Deferred Interest" (as those terms are defined below). R-5. Pursuant to such election by Maker, Maker and the Commission are entering into this First Modification for the purpose of modifying the Original Note to provide for the repayment of all accrued and unpaid interest due under the Original Note and to make certain other conforming changes to the Original Note as provided herein. It is the intention of the Maker and the Payee that except as specifically modified by this First Modification, the Original Note shall continue in full force and effect. NOW, THEREFORE, in consideration of the covenants and agreements herein contained, the sum of Ten dollars ($10.00) and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned parties hereby covenant and agree and amend the Original Note as follows: 1. The foregoing Recitals, including all terms defined therein, are hereby incorporated in this First Modifications in the same extent as if they had been herein stated in full. The documents referred to in the Original Note shall include the documents referred to therein, as well as any and all modifications, amendments, additions and/or supplements thereto and/or replacements thereof. 2. This First Modification shall amplify and modify where specifically provided herein but shall not replace the Original Note. Except as specifically modified herein, all the terms, conditions and obligations of the Original Note shall remain in full force and effect, and all of the rights and remedies provided for therein shall be preserved to the Commission. If there is any conflict between the provisions of the First Modification and the provisions of the Original Note, the provisions of this First Modification shall govern and prevail. THE COMMISSION AND MAKER COVENANT AND AGREE THAT THIS FIRST MODIFICATION ONLY MODIFIES THE TERMS OF THE ORIGINAL NOTE AND IS NOT A NOTATION OF THE ORIGINAL NOTE. 3. The Security Agreement and Financing Statements will continue to encumber the License and Collateral with a first lien security interest. The Original Note, as modified by this First Modification (hereinafter collectively referred to as the "Note"), and all extensions, renewals, modifications and amendments and consolidations thereof or substitutions therefore shall continue to be secured by the Security Agreement and all other documents, instruments, certifications, security agreements and financing statements executed and delivered in connection therewith by the Maker or by its successors. The Original Note and this First Modification shall be entitled to the benefits of, and to the security required to be provided by, the aforesaid documents, some of which contain provisions for the acceleration of the maturity of the Note upon the happening of certain stated events. 4. The Amortization Schedule attached to the Original Note as Schedule A is hereby deleted in its entirety. All references in the Original Note to Schedule A are hereby deleted. All payments under the Note shall continue to be made in accordance with the terms of the Original Note, as modified by the provisions of this First Modification. 5. Maker and the Commission covenant and agree that pursuant to the terms of the Suspension Order and the Second Report and Order, interest payments under the Original Note were suspended for the period effective as of March 31, 1997 through and including March 31, 1998. The entire amount of unpaid interest that accrued during the period beginning with the grant date of the License through and including March 31, 1998 is hereinafter referred to as the "Suspension Interest". All Suspension Interest is to be repaid in eight (8) equal payments with the first such payment being due on the Effective Date. In addition, pursuant to the terms of the Order on Reconciliation, (i) all interest accrued on the Original Note from April 1, 1998 through the Effective Date ("Deferred Interest") is due and payable in full on the Effective Date, (ii) all payments under the Note were reinstated as of the Effective Date, and (iii) the schedule for making quarterly interest and/or principal payments under the Note was changed to require quarterly payments on October 31, January 31, April 30 and July 31 of each year without any modification to the amounts for each payment as provided in the Original Note, with the first such payment being due and payable on October 31, 1998. Based upon the foregoing, the Original Note is hereby amended to provide that the payments of interest and principal shall be as follows: a. On the Effective Date, Maker shall make a payment to Payee in the amount of all Deferred Interest ("Deferred Interest Payment"). b. On the Effective Date, and continuing on each following October 31, January 31, April 30 and July 31 thereafter until all Suspension Interest has been paid in full, Maker shall make a payment equal to one-eighth (1/8th) of the Suspension Interest outstanding as of March 31, 1998 ("Suspension Interest Payment"). c. Thereafter, except as provided in Sections 5.a and 5.b above, Maker shall continue to make interest only payments to the Commission at the "Annual Rate" (as that term is defined in the Original Note) in equal consecutive quarterly installments, and principal and interest payments to the Commission in equal quarterly installments in the amount provided in the Original Note, all as provided in the Original Note, except for the following modifications: (i) payments of interest accruing from and after the Effective Date shall not be due on October 31, January 31, April 30 and July 31 of each year (such quarterly dates are hereinafter referred to as the "New Quarterly Payment Dates" or individually a "New Quarterly Payment Date"); (ii) the last quarterly interest only payment shall be due on the New Quarterly Payment Date occurring immediately prior to the date that the first payment of principal and interest is due. (iii) if the first quarterly payment of principal and interest required under the Original Note is due on a New Quarterly Payment Date, the first quarterly payment of principal and interest shall be due on such New Quarterly Payment Date as provided in the Original Note and thereafter, Maker shall be required to make its payments of principal and interest in equal quarterly installments in the amount provided in the Original Note on each succeeding New Quarterly Payment Date; and (iv) if the first quarterly payment of principal and interest required under the Original Note is due on a day other than one of the New Quarterly Payment Dates, the Original Note is hereby modified to provide that the first quarterly payment of principal and interest shall be due on the first New Quarterly Payment Date following the date currently provided in the Original Note for the first payment of principal and interest and thereafter, Maker shall be required to make its payments of principal and interest in equal quarterly installments in the amount provided in the Original Note on each succeeding New Quarterly Payment Date. The Maker and the Commission acknowledge and agree that no modification is being made to the "Maturity Date" (as that term is defined in the Original Note) and that the entire "Principal Amount" (as that term is defined in the Original Note), together with accrued and unpaid interest thereon, and all other remaining obligations of Maker under the Note, if not sooner paid, shall be due and payable on the Maturity Date. 6. The sixth (6th) paragraph of the Original Note reading "All interest shall be computed on the basis of a 360-day year for actual days elapsed." is hereby deleted in its entirety and replaced with the following: Interest on the Principal Amount of this Note shall be computed at the Annual Rate on the basis of a three hundred sixty (360)-day year composed of twelve (12) months of thirty (30) days each, except that interest due and payable for a period of less than a full quarterly payment period shall be calculated by dividing the full quarterly payment by the actual number of calendar days in the applicable quarterly payment period to create a daily rate that is multiplied by the actual number of days elapsed since the last day of the previous quarterly payment period. 7. If the Suspension Interest Payment and the Deferred Interest Payment due on the Effective Date are received by the Commission on or before October 29, 1998, together with any applicable late fee, Maker and the Commission agree that the paragraphs of the Original Note defining when an "Event of Default" occurs will be modified by deleting in their entirety the provisions beginning with the phrase "a non-payment by Maker of any Principal or Interest on the due date. . ." and continuing through ". . ., Maker has not resumed payments of Interest and Principal in accordance with the terms of this Note; or "and replace with the following: a. Any non-payment by Maker of any Principal and/or Interest on the due date specified hereinabove, and the failure to make such payment, together with all applicable "Late Fees" (as hereinafter defined) within one hundred eighty (180) days after such Principal and/or Interest payment due date; or 8. The Original Note is hereby amended to provide that in addition to the Events of Default listed therein, as modified by this First Modification, it shall be an Event of Default under the Note if either the Suspension Interest Payment due on the Effective Date or the Deferred Interest Payment due on the Effective Date is not received by the Commission on or before October 29, 1998. No additional grace or cure period shall be applicable to such payment. All other payments of Suspension Interest shall be subject to the same terms and conditions as the remaining Principal and/or Interest payments under the Note. 9. The paragraph of the Original Note which imposes a late fee upon the occurrence of any Event of Default is hereby modified by deleting in its entirety the sentence reading "Upon any Event of Default under this Note, Payee may assess a late fee and/or administrative charge, plus the costs of collection, litigation, attorneys' fees, and default payment as specified in the then-applicable orders and regulations of the Commission as amended, and Maker acknowledges that it is liable and herein expressly promises to pay on demand such additional costs, expenses, late charges, administrative charges, attorneys fees, and default payment." and substituting in its place the following: Should any payment of Principal and/or Interest required under this Note not be paid in full on the due date as specified hereinabove, Maker acknowledges that the Payee will incur extra expenses for the handling of the delinquent payment and servicing the indebtedness evidenced hereby, and that the exact amount of theses extra expenses is extremely difficult and impractical to ascertain. Therefore, Maker shall, in such event, without further notice, and without prejudice to the right of the Payee to collect any other amounts provided to be paid hereunder or under the Security Agreement, or to declare an Event of Default, pay to the Commission the "Late Fee" (as hereinafter defined) to compensate Payee for expenses incurred in handling delinquent payments and the Maker confirms and agrees that the Late Fee is a fair approximation of the expenses so incurred by the Payee. The "Late Fee" is defined as the total, if any, of the "Non-Delinquency Late Fee" and the "Grace Period Late Fee" (as hereinafter defined). The "Non- Delinquency Late Fee" shall be an amount equal to five percent (5.0%) of any Principal and/or Interest payment required to be made hereunder and shall be automatically assessed if such payment is not made on the original date that such Principal and/or Interest Payment is due (without the benefit of any notice of grace period). If such Principal and/or Interest payment, together with the Non- Delinquency Late Fee, is not made on or before the ninetieth (90th)-day after the original date that such Principal and/or Interest payment was due, such payment shall automatically be subject to a second late fee (the "Grace Period Late Fee") equal to ten percent (10.0%) of the amount of such past due Principal and/or Interest Payment (without the benefit of any notice or grace period) in addition to the Non-Delinquency Late Fee. In addition to the foregoing, there shall also automatically be imposed on Maker, and Maker shall pay to the Commission without further notice, and without prejudice to the right of the Payee to collect any other amounts provided to be paid hereunder or under the Security Agreement, or to declare an Event of Default, the "Resumption Date Late Fee" (as hereinafter defined ) to compensate Payee for expense incurred in handling delinquent payment of the Suspension Interest Payment due on the Effective Date and/or the Deferred Interest Payment. The Maker confirms and agrees that the Resumption Date Late Fee is a fair approximation of the expenses so incurred by the Payee. The "Resumption Date Late Fee" shall be an amount equal to (i) five percent (5.0%) of the Suspension Interest Payment due on the Effective Date if such payment is not received by the Payee on the Effective Date (without the benefit of any notice or grace period), and (ii) five percent (5.0%) of the Deferred Interest Payment due on the Effective Date if such payment is not received by the Payee on the Effective Date (without the benefit of any notice or grace period). Maker and Payee agree that all references in the Original Note to a late fee shall be deemed to be a reference to the Late Fee and/or the Resumption Date Late Fee, as applicable. 10. Maker represents and warrants that its principal place of business and chief executive office is located at Marksville, Louisiana. 11. All defined terms contained in the Loan Documents shall have the same meaning as set forth therein except as may otherwise be expressly set forth in this First Modification. Maker and the Commission covenant and agree that the reference in the Security Agreement to the "Note" shall be deemed a reference to the Original Note, as modified by this First Modification. 12. This First Modification constitutes the entire agreement regarding the amendment and modification of the Original Note between Maker and the Commission and is intended by Maker and the Commission to be a complete, exclusive and final integration of all prior and contemporaneous agreements and negotiations of Maker and the Commission concerning the amendment and modification of the Original Note. There have been no other agreements, covenants, representations or warranties between the Maker and the Commission regarding the amendment and modification of the Original Note other than those expressly stated or referred to in this First Modification or any document delivered pursuant hereto. 13. This First Modification may be amended or modified only by written instruments signed by Maker and Commission. If any covenant, condition or provision of this First Modification is declared by a court of competent jurisdiction to be invalid and not binding on the Maker and/or the Commission, such declaration shall in no way affect the validity of the other remaining covenants, conditions and provisions of this First Modification. 14. This First Modification shall bind, inure to the benefit of and be enforceable by Maker and the Commission, their respective heirs, beneficiaries, legal representatives, successors and assigns. 15. Except as modified by this First Modification, Maker agrees that the Original Note shall continue in full force and effect without modification, and the Original Note and all of the other Loan Documents are hereby expressly approved, ratified, confirmed and reaffirmed by all parties to this First Modification. Maker hereby acknowledges and agrees that it has no claims, counterclaims, set-offs, defenses or other causes of action against the Commission and/or under the Note, Security Agreement or nay of the other Loan Documents and to the extent that any such set-offs, counterclaims, defenses or other causes of action may exist, whether known or unknown, they are hereby waived and forever relinquished by the Maker. 16. This First Modification shall be governed and construed in accordance with the Communications Act of 1934, as amended from time to time, the then applicable orders and regulations of the Commission and federal law. 17. This First Modification may be executed in counterparts, each of which shall be deemed to be an original and all of which shall collectively be deemed to constitute a single document. IN WITNESS WHEREOF, intending to be legally bound, the undersigned Maker and the Commission have each executed this First Modification, under seal, as of the day and year first hereinabove written. [SIGNATURE PAGES FOLLOW] SIGNATURE PAGE FIRST MODIFICATION OF INSTALLMENT PAYMENT PLAN NOTE MAKER: ----- Witness/Attest: WIRELESS 2000, INC. A, Louisiana Corporation /s/ Donna Mayeux - -------------------- By: /s/ Joan S. Ducote --------------------- Name: Joan S. Ducote Title: President Date: July 21, 1998 SIGNATURE PAGE FIRST MODIFICATION OF INSTALLMENT PAYMENT PLAN NOTE COMMISSION: ---------- Witness/Attest: FEDERAL COMMUNICATIONS COMMISSION /s/ Rita Cookmap - ------------------- By: /s/ E. R. Kazan --------------------------- Name: E.R. Kazan ------------------------- Its: Authorized Signatory for the Wireless Telecommunications Bureau, Federal Communications Commission United States of America Federal Communications Commission RADIO STATION AUTHORIZATION Commercial Mobile Radio Services Personal Communications Service - Broadband [LOGO] Call Sign: KNLF393 Market: B304 MONROE, LA WIRELESS 2000 INC WIRELESS 2000 LLC Channel Block: C 208 N. WASHINGTON MARKSVILLE, LA 71351 File Number:00205-CW-L-96 - -------------------------------------------------------------------------------- The licensee hereof is authorized, for the period indicated, to construct and operate radio transmitting facilities in accordance with the terms and conditions hereinafter described. This authorization is subject to the provisions of the Communications Act of 1934, as amended, subsequent Acts of Congress, international treaties and agreements to which the United States is a signatory and all pertinent rules and regulations of the Federal Communications Commission contained in the Title 47 of the U.S. Code of Federal Regulations. - -------------------------------------------------------------------------------- Initial Grant Date.......................... September 17, 1996 Five-year Build Out Date.................... September 17, 2001 Expiration Date............................. September 17, 2006 - -------------------------------------------------------------------------------- CONDITIONS - ---------- Pursuant to Section 309(h) of the Communications Act of 1934, as amended, (47 U.S.C. (S). 309(b)), this license is subject to the following conditions: This license does not vest in the licensee any right to operate a station nor any right in the use of frequencies beyond the term thereof nor in any other manner than authorized herein. Neither this license nor the right granted thereunder shall be assigned or otherwise transferred in violation of the Communications Act of 1934, as amended (47 U.S.C. (S). 151, et seq.). This license is subject in terms to the right of use or control conferred by Section 706 of the Communications Act of 1934, as amended (47 U.S.C. (S). 606). Conditions continued on Page 2. - -------------------------------------------------------------------------------- WAIVERS : - ------- No waivers associated with this authorization. - -------------------------------------------------------------------------------- Issue Date: September 17, 1996 Page 1 of 2 FCC Form 463a. KNLF393 WIRELESS 2000, INC. 00205-CW-L-96 CONDITIONS: This authorization is subject to the condition that, in the event that systems using the same frequencies as granted herein are authorized in an adjacent foreign territory (Canada/United States), future coordination of any base station transmitters within 72 km (45 miles) of the United States/Canada border shall be required to eliminate any harmful interference to operations in the adjacent foreign territory and to ensure continuance of equal access to the frequencies by both countries. This authorization is conditioned upon the full and timely payment of all monies due pursuant to Sections 1.2110 and 24.711 of the Commission's Rules and the terms of the Commission's installment plan as set forth in the Note and Security Agreement executed by the licensee. Failure to comply with this condition will result in the automatic cancellation of this authorization. Issue Date: September 17, 1996 Page 2 of 2 FCC Form 463a Installment Payment Plan Note (Broadband Personal Communications Service, C Block): Auction Event No. 5) US $5,932,575.00 Washington, D.C. September 17, 1996 License No.: PBB304C ------- FOR VALUE RECEIVED, the undersigned, Wireless 2000, Inc., a CORPORATION ("Maker"), promises to pay to the order of the FEDERAL COMMUNICATIONS COMMISSION, an independent regulatory agency of the United States ("Payee" or "Commission"), the principal sum of 5,932,575.00 DOLLARS ("Principal Amount"), together with accrued interest, computed at the annual rate of seven percent (7.00%) per annum, ("Annual Rate") on the unpaid Principal Amount hereof, from the date of this Note until the date the entire Principal Amount has been paid in full. Interest and principal shall be payable as set forth below and in accordance with Schedule A attached hereto and made a part hereof: Interest only, at the Annual Rate from the date hereof until the last day of the month ninety (90) days hence, shall be due and payable on December 31, 1996 in the amount of $119,464.18. Commencing December 31, 1996, Maker shall pay interest only at the Annual Rate, in equal consecutive quarterly installments of $103,820.06, due on the last day of the month and every ninety (90) days thereafter from December 31, 1996 through September 30, 2002. Commencing December 31, 2002, Maker shall pay principal and interest in equal quarterly installments of $428,329.40, due on the last day of each month ninety (90) days hence through and including June 30, 2006. The entire unpaid Principal Amount, together with accrued and unpaid interest thereon, and all remaining obligations of Maker hereunder, shall be due and payable on September 17, 2006 ("Maturity Date"). All interest shall be computed on the basis of a 360-day year for actual days elapsed. All payments to be made hereunder, of principal, interest, costs, expenses, or other sums due hereunder, shall be made to the holder of this Note in lawful money of the United States of America which at the time of payment shall be legal tender for the payment of public and private debts, free and clear and without reduction by reason of any present or future income, stamp or other taxes, levies, imposts, deductions, charges, compulsory loans or withholdings whatsoever, -2- including interest thereon or penalties with respect thereto, if any imposed, assessed, levied or collected by any political subdivision or taxing authority thereof or therein, on or in respect of this Note or the obligations it evidences. All payments shall be made during normal business hours at the Commission's designated lockbox location as set forth from time to time in the Commission's then-applicable orders and regulations and/or public notices. This Note is secured by, and entitled to the benefits of, a Security Agreement (the "Security Agreement") of even date between Maker and Payee. All the terms, covenants, conditions and agreements contained in the Security Agreement are hereby incorporated herein and made part of this Note to the same extent and effect as if fully set forth herein. It is expressly understood by Maker that all of the terms of the Security Agreement apply to this Note and that reference in the Security Agreement to "this Agreement" includes both the Security Agreement and this Note. IT IS HEREBY EXPRESSLY AGREED THAT TIME IS OF THE ESSENCE FOR THE PERFORMANCE OF ALL TERMS AND CONDITIONS UNDER THIS NOTE AND THE SECURITY AGREEMENT. A default under this Note ("Event of Default") shall occur upon any or all of the following: a. non-payment by Maker of any Principal or Interest on the due date as specified hereinabove if the Maker remains delinquent for more than 90 days and (1) Maker has not submitted a request, in writing, for a grace period or extension of payments, if any such grace period or extension of payments is provided for in the then-applicable orders and regulations of the Commission; or (2) Maker has submitted a request, in writing, for a grace period or extension of payments, if any such grace period or extension of payments is provided for in the then-applicable orders and regulations of the Commission, and following the expiration of the grant of such grace period or extension or upon denial of such a request for a grace period or extension, Maker has not resumed payments of Interest and Principal in accordance with the terms of this Note; or; b. failure by Maker to comply with any other condition for holding the above referenced license (as defined in the Security Agreement) as set forth in the license or in the Communications Act of 1934, as amended, or the then- applicable orders and regulations of the Commission; or -3- c. violation by Maker of any other covenant or term of this Note or the Security Agreement. Upon any Event of Default under this Note, Payee may assess a late fee and/or administrative charge, plus the costs of collection, litigation, attorneys' fees, and default payment as specified in the then-applicable orders and regulations of the Commission, as amended, and Maker acknowledges that it is liable and herein expressly promises to pay on demand such additional costs, expenses, late charges, administrative charges, attorneys fees, and default payment. Upon a default under this Note, the unpaid Principal Amount, plus all unpaid interest accrued thereon, together with any late fee and/or administrative charge, plus the costs of collection, litigation, attorneys' fees, and default payment as specified in the then-applicable orders and regulations of the Commission, as amended, shall become immediately due and payable. The Maker hereby acknowledges that the Commission has issued Maker the above referenced license pursuant to the Communications Act of 1934, as amended, that is conditioned upon full and timely payment of financial obligations under the Commission's installment payment plan, as set forth in the then-applicable orders and regulations of the Commission, as amended, and that the sanctions and enforcement authority of the Commission shall remain applicable in the event of a failure to comply with the terms and conditions of the license, regardless of the enforceability of this Note or the Security Agreement. No delay or omission on the part of Payee in exercising any right under this Note, the Security Agreement, or any other instrument securing this Note, shall operate as a waiver of such right or of any other right of Payee, nor shall any waiver by Payee of any such right or rights on any one occasion be deemed a bar to or waiver of the same right or rights on any future occasion. The Maker is liable for all costs of collection or enforcement of the Payee's rights under this Note or under the Security Agreement or under any other instrument now or hereafter executed by Maker in favor of Payee which in any manner evidences or constitutes additional security for this Note, including reasonable attorneys' fees, whether suit is brought or not, and all such costs shall be paid by the Maker on demand, and whether or not such collection or enforcement occurs in any bankruptcy, reorganization, receivership or other proceedings involving creditors' rights or involving a claim under this Note or any of the other loan documents. Maker, all endorsers and guarantors hereof and any other party who may become liable for all or any part of the obligation evidenced hereby, waive presentment for payment, notice or dishonor, protest and notice of protest, notice of nonpayment and any and all lack of diligence or delays in collection or enforcement of this Note. Maker may prepay all or any part of the Principal Amount without premium or penalty upon ten (10) days' prior written notice to Payee, given in the manner provided in the Security Agreement. -4- Partial prepayments shall not postpone or reduce regular payments to be made hereunder. All such prepayments shall be applicable first to the payment of late charges, if any, costs and expenses, and administrative penalties due hereunder, then to accrued and unpaid interest, then to that portion of the unpaid Principal Amount due on the Maturity Date and then, if applicable, to any unpaid installments of principal in the inverse order of installment maturities. The Payee may require that any partial prepayments be made on the dates installments of principal and interest are due hereunder. Anything to the contrary notwithstanding, Payee shall not charge, take or receive, and Maker shall not be obligated to pay to Payee, any amounts constituting interest on the Principal Amount in excess of the maximum rate permitted by applicable law. If by reason of the acceleration of the unpaid Principal Amount or otherwise, interest in excess of the highest legal contract rate permitted by applicable law shall at any time be paid, any such excess shall constitute and be treated as a payment of outstanding principal hereunder and shall operate to reduce such outstanding Principal Amount. ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS NOTE, THE SECURITY AGREEMENT, OR OTHER DOCUMENTS EVIDENCING OR SECURING THE DEBT TRANSACTION EVIDENCED HEREBY MAY ONLY BE BROUGHT IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA, AND, BY EXECUTION AND DELIVERY OF THIS NOTE AND SECURITY AGREEMENT, THE MAKER HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURT. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH ANY OF THEM MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN THE DISTRICT OF COLUMBIA. THE MAKER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF THE AFOREMENTIONED COURT IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF A COPY THEREOF BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, TO THE MAKER AT ITS ADDRESS PROVIDED HEREIN. SUCH SERVICE SHALL BE DEEMED TO HAVE OCCURRED ON THE THIRD DAY AFTER SUCH MAILING. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF PAYEE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE MAKER IN ANY OTHER JURISDICTION. EACH OF THE PARTIES HERETO HEREBY KNOWINGLY, WILLINGLY, VOLUNTARILY, UNCONDITIONALLY, IRREVOCABLY AND INTENTIONALLY -5- FOREVER WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, THE SECURITY AGREEMENT, OR OTHER DOCUMENTS EVIDENCING OR SECURING THE DEBT TRANSACTION EVIDENCED HEREBY, ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (VERBAL OR WRITTEN) OR ACTION OF ANY PERSON OR ANY EXERCISE BY ANY PARTY OF THEIR RESPECTIVE RIGHTS UNDER THIS TRANSACTION, DOCUMENT OR ANY RELATED DOCUMENT OR IN ANY WAY RELATING TO THE COLLATERAL (INCLUDING, WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS TRANSACTION OR ANY CLAIMS OR DEFENSES ASSERTING THAT THIS TRANSACTION, IN WHOLE OR IN PART, WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR VOIDABLE). MAKER REPRESENTS THAT NO ORAL OR WRITTEN STATEMENTS HAVE BEEN MADE BY ANY PARTY TO INCLUDE THIS SUBMISSION OR JURISDICTION AND WAIVER OF TRAIL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS STATED EFFECT. MAKER FURTHER REPRESENTS THAT IT HAS BEEN REPRESENTED BY INDEPENDENT COUNSEL, SELECTED BY ITS OWN FREE WILL, IN SIGNING THIS NOTE AND IN THE MAKING OF THIS WAIVER AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH SUCH COUNSEL. THIS PROVISION IS A MATERIAL INDUCEMENT FOR PAYEE TO ENTER INTO THIS TRANSACTION AND THE VARIOUS DOCUMENTS RELATED THERETO. Maker acknowledges that this Note and Security Agreement (any attachments affixed thereto by the Commission with the permission and knowledge of the Maker/Debtor), along with the then-current applicable Commission orders and regulations and the Communications Act of 1934, as amended, set forth the entire agreement, written and oral, of the parties, and all inconsistent prior statements, understandings, notices, representations and agreements between the parties, oral or written, are superseded by and merged in this Note, the Security Agreement or other documents evidencing or securing the debt transaction evidenced hereby. Except as otherwise expressly provided herein, all of Payee's representations, warranties, covenants and agreements in this Note and Security Agreement shall merge in the documents and agreements executed by the Maker and shall not survive said execution. If any provision or part of this Note and/or the Security Agreement shall for any reason be held or deemed to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Note and this Note shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein and the remaining provisions of this Note shall remain in full force and effect. The enforceability of the Note and/or the Security Agreement do not alter the rights and obligations of the Maker and Payee under the Communications Act of 1934, as amended, or under the then-applicable orders and regulations of the Commission, as amended. Any notice demand or request hereunder shall be given in the manner set forth in the -6- Security Agreement. This Note shall be governed by and construed in accordance with the Communications Act of 1934, as amended, the then-applicable orders and regulations of the Commission, and federal law. Nothing in this Note shall be deemed to modify any then-applicable orders and regulations of the Commission, and nothing in this Note shall be deemed to release the Maker from compliance therewith. This Note may not be changed, modified, waived, terminated or discharged orally, but only by an agreement in writing executed by the party against whom enforcement of any such change, modification, waiver, termination, or discharge is sought. Maker represents and warrants that any statements made by or on behalf of Maker in connection with this Note: (i) are true and accurate in all material respects; and (ii) do not omit any material facts or information that would make such statement misleading in the context of Payee's evaluation of the note, and acknowledges and agrees that Payee is entitled to and his relied on such statements in agreeing to the Note. Payee shall have the right at any time to assign, endorse, pledge, convey or otherwise transfer this Note and all of the other loan documents to any party. From and after the date of such assignment, endorsement, pledge, conveyance or other transfer, such transferee shall be entitled to exercise any and all rights and remedies of Payee hereunder. Maker shall not assign, convey or otherwise transfer its rights and obligations hereunder without the prior written consent of the Commission. Date: 11/21/96 WIRELESS 2000, INC. [NAME OF MAKER] By: /s/ Joan S. Ducote ----------------------------- Its: President ---------------------------- -7- SECURITY AGREEMENT (Broadband Personal Communications Service, C Block): Auction Event No. 5) License No. PBB304C ------- This SECURITY AGREEMENT DATED September 17, 1996, ("Agreement") between Wireless 2000, Inc., a CORPORATION ("Debtor") and the FEDERAL COMMUNICATIONS COMMISSION, an independent regulatory agency of the United States ("Commission" or "Secured Party") WITNESSETH WHEREAS, Debtor has submitted the highest accepted bid for license number PBB304C in the Broadband Personal Communications Service C Block auction (hereinafter the "License") conducted by the Commission to assign such licenses; WHEREAS, the Commission has duly determined to grant the License to Debtor, subject to the terms and conditions set forth in the orders and regulations of the Commission applicable to such licenses, and the Communications Act of 1934, as amended; WHEREAS, Debtor wishes to pay its auction price for the License by installments through an Installment Payment Plan as provided by 47 C.F.R. (SS) 24.711, 1.2110 (hereinafter the "Installment Payment Plan") and undertakes to hold the License under the terms and conditions set forth in the Commission's orders and regulations, as amended, applicable to such licenses, and the Communications Act of 1934, as amended and the terms and conditions of this Agreement; WHEREAS, the Commission has agreed to permit the Debtor to make payment of the auction price for the License through an Installment Payment Plan; and WHEREAS, as a condition to such agreement, Debtor has agreed to execute the Installment Payment Plan Note of even date ("Note") and to enter into this Agreement and make the pledge and assignment of collateral contemplated herein. NOW, THEREFORE, in consideration of the premises, the mutual agreements contained herein and for other good and valuable consideration, the receipt, adequacy, and sufficiency of which is hereby acknowledged, and in order to induce the Commission to permit Debtor to pay the auction price for the License through the Installment Payment Plan, Debtor hereby agrees with the Commission as follows: -8- 1. Pledge and Assignment of Collateral of Obligations Under Note. ------------------------------------------------------------- Debtor hereby pledges, assigns, hypothecates, delivers, and sets over to the Commission and grants to the Commission a first lien on and continuing security interest in all of the Debtor's rights and interest in the License and all proceeds, profits and products of any sale of or other disposition thereof (collectively the "Collateral"), all as collateral security for the prompt and complete payment when due (whether in accordance with the schedule of payments, at the stated maturity, by acceleration, or otherwise) of the unpaid principal and interest due, and such other additional costs, expenses, late charges, administrative charges, attorneys fees, and default payments assessable under the terms of the Note (all collectively "Obligations"). It is expressly understood by Debtor that all of the terms of the Note apply to this Agreement and that reference herein to "this Agreement" includes both the Security Agreement herein and the Note. For purposes of interpreting the terms used in this Agreement shall have the meaning ascribed to them in the Uniform Commercial Code (Official Text and Comments, American Law Institute). 2. Interest of Commission. It is understood and acknowledged by Debtor ---------------------- that pursuant to Section 301 of the Communications Act of 1934, as amended, the Commission is charged with the regulatory mandate to maintain control over all channels of radio transmission (the "Spectrum"), and to provide licenses for the use of such radio channels, but not ownership thereof. Debtor understands and acknowledges that it holds a mere conditional license to use the Spectrum with no ownership interest in the Collateral (or any underlying right to use the Spectrum), or any power to assign the License without the prior Approval of the Commission pursuant to Section 310(d) of the Communications Act of 1934, as amended. Debtor further understands and acknowledges that it is giving a security interest to the Commission in the Collateral only to assist the Commission in protecting its ability to enforce the Commission's regulations which condition holding the license in compliance with all then-applicable orders and regulations of the Commission, including, but not limited to, full and timely payment of all payments under the Installment Payment Plan. To that end, and not in derogation of any of the Commission's regulatory authority over the License, Debtor hereby acknowledges that the Commission has a first security interest in the Collateral, and Debtor shall not dispute such first security interest, or the Commission's rights as a secured party hereunder, in any legal or equitable proceeding in which Debtor, or any assignee or trustee of the estate of Debtor in bankruptcy, is a party. 3. Compliance with Commission Orders and Regulations. Nothing in this ------------------------------------------------- Agreement shall be deemed to modify any then-applicable orders and regulations of the Commission, and nothing in this Agreement shall be deemed to release Debtor from compliance therewith. 4. Representations and Warranties of Debtor. Debtor represents and ---------------------------------------- warrants to the Commission as follows: (a) It has full power, authority and legal right to execute, deliver and perform this Agreement, the Note, and any other documents delivered in connection with the Note, this -9- Agreement and the transactions contemplated therein to make the debt transaction evidenced by the Note, and to pledge the Collateral pursuant to this Agreement. (b) It is a duly organized CORPORATION existing in good standing under the laws of LOUISIANA and is duly qualified to do business wherever necessary to carry on its present operations. Its principal place of business and chief executive office are located at 219 NORTH WASHINGTON STREET, MARKSVILLE, LA 71351. (c) The representative of Debtor purporting to act on behalf of Debtor in executing this Agreement, the Note, and any other documents delivered in connection with the Note, this Agreement and the transactions contemplated therein, is duly authorized by Debtor to take all such acts and to execute all such documents. (d) No security agreements have been executed and delivered, and no financing statements have been filed in any jurisdiction, granting or purporting to grant a security interest in the Collateral to any secured party except to the Commission. (e) No consent of any other party and no consent, license, approval or authorization of, exemption by, or registration or declaration with, any governmental instrumentality, domestic or foreign other than the Commission, is required to be obtained in connection with the execution, delivery or performance of this Agreement, the Note or any other document executed and delivered in connection with the delivery of the Note or this Agreement. (f) The execution, delivery and performance of this Agreement and the Note, does not and will not violate any provision of any applicable law or regulation or any order, judgment, writ, award or decree of any court, arbitrator, governmental instrumentality, domestic or foreign, or of any indenture, contract, agreement or other undertaking to which Debtor is a party or which purports to be binding upon Debtor or upon any of Debtor's assets, and will not result in the creation or imposition of any lien, charge or encumbrance on or security interest in any of the assets of Debtor, except as contemplated by this Agreement. (g) All right and interest of any kind in and to the Collateral is held by Debtor or the Commission and by no other party, and the Collateral is free from any lien, security interest, encumbrance or adverse claim of any kind whatsoever thereon. Debtor will not permit any financing statement to be filed with respect to the Collateral or any portion thereof or interest therein except in favor of Secured Party. Debtor will notify Secured Party of, and will defend the Collateral against, all claims and demands of all persons at any time claiming the same or any interest therein. 5. Covenants of Debtor. Debtor hereby covenants and agrees as follows: ------------------- (a) That it will defend the Commission's right, title and security interest in and to the Collateral against the claims and demands of all persons whomsoever. -10- (b) That it will execute all financing statements and other instruments or documents related to the perfection of the Commission's security interest, including but not limited to any renewal financing statements or instruments as required to maintain the Commission's security interest, or as otherwise reasonably requested by the Commission, and to file and pay the cost of filing any such instruments or documents as required under this paragraph in whichever public office deemed advisable by the Commission. (c) That it will not make any indenture, contract, agreement or other undertaking to which Debtor is a party or which purports to be binding upon Debtor, or upon any of Debtor's assets, that would result in the creation or imposition of any lien, charge or encumbrance on or security interest in any of the assets of Debtor that would be inconsistent with its pledge and assignment of the Collateral hereunder, except as contemplated by this Agreement. Except for the liens and encumbrances created hereby, Debtor will keep the Collateral free and clear of any lien, security interest or encumbrance. (d) That it will pay all costs and expenses, including reasonable attorneys' fees, of the Commission incurred in connection with the enforcement of this Agreement and any and all liability incurred by the Commission resulting from any act or omission of Debtor with respect to the Collateral and this Agreement. (e) Debtor will execute, alone or with Secured Party, any document, will procure any document and do all other acts and pay all connected costs, in a timely and proper manner, which from the character or use of the Collateral may be reasonably necessary to protect the Collateral against the rights, claims or interests of third persons, and will otherwise preserve the Collateral as security hereunder. The specific undertakings required of Debtor in this Agreement shall not be construed to exclude the aforementioned general obligation. 6. Power of Attorney. Debtor hereby irrevocably constitutes and ----------------- appoints the Commission and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Debtor and in the name of Debtor or in its own name, from time to time in the Commission's discretion, for the purpose of carrying out the terms of this Agreement and, to the extent permitted by applicable law, to take any and all appropriate actions and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement. Such appointment is a power coupled with an interest until all Obligations have been paid in full by Debtor. 7. Event of Default. Debtor shall be in default under this Agreement if ---------------- an Event of Default (as defined in the Note) has occurred. 8. Remedies. If an Event of Default shall occur, the Commission shall -------- thereafter have the following rights and remedies (to the extent permitted by applicable law) in addition to the rights and remedies relating to the Note, all such remedies being cumulative, not exclusive, and -11- enforceable alternatively, successively or concurrently at such time or times as Commission deems expedient: (a) the License shall be automatically canceled pursuant to 47 C.F.R. (S) 1.2110; (b) all Obligations; secured hereunder shall become immediately due and payable without presentment, demand, protest, further notice, or other requirements of any kind; (c) the Commission may demand, sue for, and collect the outstanding balance of the unpaid Obligations, and make any compromise, or settlement the Commission deems suitable with respect to any Collateral which may be held by it hereunder; (d) Debtor hereby acknowledges the Commission's authority, pursuant to the Communications Act of 1934, as amended, and the Commission's orders and regulations then-applicable to such licenses, to conduct another public auction or assign the License in the event that the Commission rescinds, cancels, or revokes the License for any default under this Agreement or any other violation of the terms and conditions of the License. The Undersigned hereby waives all notices prior to the conduct of said public auction or assignment by the Commission or its agents. Debtor further acknowledges that in the event that the Commission rescinds, cancels, or revokes the License for any default under this Agreement or any other violation of the terms and conditions of the License, Debtor has no right or interest in any moneys or evidence of indebtedness given to the Commission by a subsequent licensee of the Spectrum and that all such moneys or evidence of indebtedness are, and shall remain, the full property of the federal Treasury, pursuant to Section 309(j) of the Communications Act of 1934, as amended, and then-applicable Commission orders and regulations. (e) In addition to other remedies hereunder, Debtor shall remain liable, and obligated to pay on demand, all costs of collection and reasonable attorneys' fees and expenses incurred or paid by the Commission in enforcing this Agreement including, without limitation, all administrative fees and expenses of the Commission in attempting to collect the Obligations or to enforce this Agreement, or the prosecution or defense of any action or proceeding related to the subject matter of this Agreement, and all payments assessed by the Commission in the event of default as specified in Commission orders and regulations applicable to such licenses. (f) Debtor hereby acknowledges that the Commission has no adequate remedy at law with respect to a breach of any covenant contained in this Agreement and, as a consequence, agrees that each and every covenant contained in this Agreement shall be specifically enforceable against Debtor, and Debtor hereby waives and agrees not to assert any defense against an action for specific performance of such covenants. (g) Secured Party may exercise any and all of the rights and remedies conferred upon Secured Party by this Agreement, any other loan documents, or by applicable law, either concurrently or in such order as Secured Party may determine. -12- (h) Secured Party may make such payments and do such acts as Secured Party may deem necessary to protect its secured interest in the Collateral. (i) the Commission may exercise any remedies of a Secured Party under the Uniform Commercial Code (Official Text and Comments, American Law Institute), or any other applicable law. (j) Secured Party shall have the right to enforce one or more remedies hereunder or under the Note, successively or concurrently, and such action shall not operate to estop or prevent Secured Party from pursuing any further remedy which it may have. 9. Severability. Any provision of this Agreement that is prohibited or ------------ unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 10. No Waiver; Cumulative Remedies. None of the terms or provisions of ------------------------------ this Agreement may be waived, altered, modified or amended except by an instrument in writing, duly executed by the Commission. The Commission shall not by any act, delay, omission or otherwise be deemed to have waived any of its rights or remedies under this Agreement, and no waiver shall be valid unless in writing, signed by the Commission, and then only to the extent therein set forth. A waiver by the Commission of any right or remedy under this Agreement on any one occasion shall not be construed as a bar to any right or remedy which the Commission would otherwise have on any future occasion. No failure to exercise nor any delay in exercising on the part of the Commission, any right, power or privilege under this Agreement shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege under this Agreement preclude any other or further exercise thereof or the exercise of any other right power or privilege. The rights and remedies provided in this Agreement are cumulative and may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. 11. Compliance With Other Applicable Orders and Regulations. Debtor ------------------------------------------------------- recognizes that its continued retention of the License, and rights to operate as a Commission licensee thereunder, are conditioned upon compliance with all Commission orders and regulations applicable to the License and the Communications Act of 1934, as amended. Debtor further recognizes that full and timely payment as set forth in the Note does not otherwise relieve it of its obligations otherwise to comply with the then-applicable orders and regulations of the Commission, and the Communications Act of 1934, as amended. 12. Applicable Law. This Agreement shall be governed by and construed -------------- in accordance with Communications Act of 1934, as amended, then-applicable Commission orders and regulations, as amended, and federal law. -13- 13. Successors, Assigns, Designated Agents. Subject to the provisions -------------------------------------- of Paragraph 2 of this Agreement regarding the restriction upon Debtor's ability to assign the License, this Agreement shall be binding upon Debtor, its successors and assigns and shall inure to the benefit of the Commission, and its successors and assigns. The Commission may designate agents other than the Commission to act on its behalf with respect to any and all rights and remedies of the Commission under this Agreement or the Note, and such designee shall have all of the rights, powers and remedies available to the Commission within the scope of its designation. Nothing herein, however, shall be construed as granting Debtor any right to sell or assign the License. 14. Singular and Plural. Wherever used, the singular number shall include ------------------- the plural, the plural shall include the singular, and the use of any gender shall be applicable to all genders. 15. Financing Statements. To the extent permitted by applicable law, -------------------- Debtor authorizes the Commission to sign and file financing statements at any time with respect to any of the Collateral without the signature of Debtor. Debtor will, however, at the same time and from time to time, execute such financing statements, agreements and other instruments and perform such acts as Commission may request in order to establish and maintain a validly perfected first priority security interest in the Collateral. All reasonable costs of filing and recording will be paid by Debtor. 16. Indemnification. Debtor hereby agrees to defend, indemnify and hold --------------- harmless Secured Party and its employees, officers and agents, from and against any and all liabilities, claims and obligations which may be incurred, asserted or imposed upon them or any of them as a result of or in connection with any use, operation, lease or consumption of any of the Collateral or as a result of Secured Party's seeking to obtain performance of any of the obligations due with respect to the Collateral. 17. Notices. All notices, requests and demands hereunder shall be in ------- writing and shall be deemed to have been duly given, made or served on the earliest of (i) three (3) business days after the date mailed if sent by first-class U.S. mail, postage prepaid, (ii) actual delivery thereof if delivered by hand to the party to be notified, (iii) receipt thereof if sent by express mail or other overnight courier service, or (iv) transmission to the telecopier number listed below for the party to be notified if sent within normal business hours or, otherwise, on the next business day thereafter. In each case such notification with respect to the Debtor and the Commission shall be addressed as set forth below or as may be hereafter designed by the respective parties hereto. As to Debtor: WIRELESS 2000, INC. - ------------ P. 0. BOX 337 219 NORTH WASHINGTON STREET MARKSVILLE, LA 71351 ATTN: JOAN S. DUCOTE, PRESIDENT -14- As to the - --------- Commission: U.S. DEPARTMENT OF THE TREASURY - ---------- P. 0. BOX 44093 WASHINGTON, D. C. 20026-4093 ATTN: FCC-FMS/DEBT MANAGEMENT SERVICE IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written. DEBTOR: ------ WIRELESS 2000, INC. Date: 11/21/96 By: /s/ Joan S. Ducote ------------------ Its: PRESIDENT FEDERAL COMMUNICATIONS COMMISSION --------------------------------- Date: 12/19/96 By: /s/ [signature illegible] ------------------------- Its: Associate Managing Director for Operations (or designee) -15- License No.: PBB304C Modified License No.: PBB304C1 FIRST MODIFICATION OF --------------------- INSTALLMENT PAYMENT PLAN NOTE ----------------------------- FOR BROADBAND PCS C BLOCK ------------------------- THIS FIRST MODIFICATION OF INSTALLMENT PAYMENT PLAN NOTE ("First Modification") is executed on the 21st day of July, 1998, and is intended to be effective for all purposes as of the 31st day of July, 1998 ("Effective Date"), by and between: (i) WIRELESS 2000, INC., A Louisiana Corporation ("Maker"); and (ii) FEDERAL COMMUNICATIONS COMMISSION, an independent regulatory agency of the United States ("Payee" or "Commission"). W I T N E S S E T H: - - - - - - - - - - RECITALS: - -------- R-1. Reference is made to that certain Installment Payment Plan Note made by Maker, payable to the order of the Commission, in the original principal amount of $5,932,575.00 ("Original Note"). The Original Note is secured by, amongst other things (i) that certain Security Agreement by and between the Maker and the Commission ("Security Agreement"); and (ii) those certain Financing Statements related thereto (collectively, "Financing Statements"). The Original Note, Security Agreement, Financing Statements and all other documents evidencing, governing or securing the Original Note, together with any and all amendments, modifications or supplements thereto, are hereinafter collectively referred to as the "Loan Documents". All of the terms, conditions and provisions of the Loan Documents are hereby incorporated herein and made a part hereof in their entireties by this reference. R-2. The Security Agreement and Financing Statements created a first lien security interest in the "License" and the "Collateral" (as those terms are defined in the Security Agreement). R-3. Pursuant to that certain Public Notice, DA 97-649 (rel. March 31, 1997) ("Suspension Order"), the Commission suspended the deadline for payment of installment payments required to be made under the Original Note. Pursuant to that certain Second Report and Order and Further Notice of Proposed Rule Making adopted September 25, 1997 and released October 16, 1997 ("Second Report and Order"), the Commission rescinded the Suspension Order and ordered the reinstatement of payments under the Original Note effective March 31, 1998 and agreed to a schedule of payment of all accrued and unpaid interest due under the Original Note. The Second Report and Order was subsequently modified by that certain Order on Reconsideration of the Second Report and Order adopted March 23, 1998 and released March 24, 1998 ("Order on Reconsideration"). Pursuant to the Order on Reconsideration and the Public Notice, DA-98-741 (rel. April 17, 1998), the date for the resumption of payments under the Original Note was changed to July 31, 1998 as well as certain other modifications to the terms contained in the Second Report and Order. R-4. Pursuant to the terms of the Second Report and Order, as modified by the Order of Reconsideration, the Maker elected to disaggregate a portion of the spectrum covered by the License and in return, receive a partial reduction of the principal balance of the Original Note (the "Disaggregation Election"). In order to reflect the Disaggregation Election, the modification to the payment terms with respect to "Suspension Interest" and "Deferred Interest" (as those terms are defined below), and certain other modifications to the terms of the Original Note and Original Security Agreement, (i) Maker and the Commission are modifying the terms of the Original Note by this First Modification (the Original Note, as modified by this First Modification, is hereinafter referred to as the "Note"), (ii) Maker and the Commission are modifying the terms of the Original Security Agreement by this First Modification (the Original Security Agreement, as modified by this First Modification, is hereinafter referred to as the "Security Agreement"), and (iii) Maker is executing and delivering new Financing Statements for the purpose of creating a lien on the "Modified License" (as hereinafter defined) in favor of the Commission (the "New Financing Statements") [the Original Financing Statements, as supplemented by the New Financing Statements, are hereinafter referred to as the "Financing Statements"]. The Original Loan Documents, as amended, modified and/or supplemented by this First Modification and the New Financing Statements, together with any and all amendments, modifications or supplements thereto, are hereinafter collectively referred to as the "Loan Documents". All of the terms, conditions and provisions of the Loan Documents are hereby incorporated herein and made a part hereof in their entireties by this reference. R-5. It is the intention of the Maker and the Payee that except as specifically modified by this First Modification, the Original Note and Original Security Agreement shall continue in full force and effect. NOW, THEREFORE, in consideration of the covenants and agreements herein contained, the sum of Ten dollars ($10.00) and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned parties hereby covenant and agree and amend the Original Note as follows: 1. The foregoing Recitals, including all terms defined therein, are hereby incorporated in this First Modifications in the same extent as if they had been herein stated in full. The documents referred to in the Original Note shall include the documents referred to therein, as well as any and all modifications, amendments, additions and/or supplements thereto and/or replacements thereof. 2. This First Modification shall amplify and modify where specifically provided -17- herein but shall not replace the Original Note. Except as specifically modified herein, all the terms, conditions and obligations of the Original Note shall remain in full force and effect, and all of the rights and remedies provided for therein shall be preserved to the Commission. If there is any conflict between the provisions of the First Modification and the provisions of the Original Note, the provisions of this First Modification shall govern and prevail. THE COMMISSION AND MAKER COVENANT AND AGREE THAT THIS FIRST MODIFICATION ONLY MODIFIES THE TERMS OF THE ORIGINAL NOTE AND IS NOT A NOTATION OF THE ORIGINAL NOTE. 3. The Original Security Agreement, as modified by this First Modification, and the Original Financing Statements, as supplemented by the New Financing Statements, will continue to encumber the License and Collateral (as each of those terms are modified in this First Modification) with a first lien security interest. The Original Note, as modified by this First Modification, and all extensions, renewals, modifications and amendments and consolidations thereof or substitutions therefore shall continue to be secured by the Security Agreement and all other documents, instruments, certifications, security agreements and financing statements executed and delivered in connection therewith by the Maker or by its successors. The Original Note and this First Modification shall be entitled to the benefits of, and to the security required to be provided by, the aforesaid documents, some of which contain provisions for the acceleration of the maturity of the Note upon the happening of certain stated events. 4. Pursuant to the Disaggregation Election, Maker and the Commission acknowledge and agree that the original principal balance of the Original Note is hereby reduced, effective for all purposes as of the effective date of the Original Note, to $2,834,452.50. Such reduced original principal balance is hereinafter referred to as the "Principal Amount" and the defined term Principal Amount contained in the Original Note is hereby modified to conform to the new original principal balance of the Original Note. 5. The Amortization Schedule attached to the Original Note as Schedule A is hereby deleted in its entirety. All references in the Original Note to Schedule A are hereby deleted. All payments under the Note shall continue to be made in accordance with the terms of the Original Note, as modified by the provisions of this First Modification. 6. Maker and the Commission covenant and agree that pursuant to the terms of the Suspension Order and the Second Report and Order, interest payments under the Original Note were suspended for the period effective as of March 31, 1997 through and including March 31, 1998. The entire amount of unpaid interest that accrued during the period beginning with the grant date of the License through and including March 31, 1998 is hereinafter referred to as the "Suspension Interest". All Suspension Interest is to be repaid in eight (8) equal payments with the first such payment being due on the Effective Date. In addition, pursuant to the terms of the Order on Reconciliation, (i) all interest accrued on the Original Note from April 1, 1998 through the Effective Date ("Deferred Interest") is due and payable in full on the Effective Date, (ii) all -18- payments under the Note were reinstated as of the Effective Date, and (iii) the schedule for making quarterly interest and/or principal payments under the Note was changed to require quarterly payments on October 31, January 31, April 30 and July 31 of each year without any modification to the amounts for each payment as provided in the Original Note, with the first such payment being due and payable on October 31, 1998. Based upon the foregoing, the Original Note is hereby amended to provide that the payments of interest and principal shall be as follows: (a) On the Effective Date, Maker shall make a payment to Payee in the amount of all Deferred Interest ("Deferred Interest Payment"). (b) On the Effective Date, and continuing on each following October 31, January 31, April 30 and July 31 thereafter until all Suspension Interest has been paid in full, Maker shall make a payment equal to one-eighth (1/8th) of the Suspension Interest outstanding as of March 31, 1998 ("Suspension Interest Payment"). (c) Commencing on October 31, 1998, and continuing on each January 31, April 30, July 31 and October 31 thereafter (such quarterly dates are hereinafter referred to as the "New Quarterly Payment Dates" or individually a "New Quarterly Payment Date"), Maker shall make equal, consecutive quarterly payments of interest only at the "Annual Rate" (as that term is defined in the Original Note) based upon the reduce Principal Amount as provided herein. On each New Quarterly Payment Date, all accrued and outstanding interest for the applicable calendar quarter shall be due and payable in full. The last quarterly interest only payment shall be due on the New Quarterly Payment Date occurring immediately prior to the date that the first quarterly payment of principal and interest is due. (d) Commencing on the "First Principal Repayment Date" (as hereinafter defined), and continuing on each New Quarterly Payment Date thereafter until the "Maturity Date" (as that term is defined in the Original Note), Maker shall pay principal and interest in equal quarterly installments equal to all accrued interest during the applicable calendar quarter plus a principal payment calculated using an amortization schedule which would result in the Note being repaid in full over a four (4) year term comprised of sixteen (16) quarterly payment periods. The "First Principal Repayment Date" shall be (i) the date provided in the Original Note for the first payment of principal and interest if such date is a New Quarterly Payment Date, or (ii) the first New Quarterly Payment Date following the date currently provided in the Original Note for the first payment of principal and interest if the first quarterly payment of principal and interest required under the Original Note is due on a day other than one of the New Quarterly Payment Dates. (e) The Maker and the Commission acknowledge and agree that no modification is being made to the "Maturity Date" (as that term is defined in the Original Note) and that the entire "Principal Amount" (as that term is defined in the Original Note), together with accrued -19- and unpaid interest thereon, and all other remaining obligations of Maker under the Note, if not sooner paid, shall be due and payable on the Maturity Date. (7) The sixth (6th) paragraph of the Original Note reading "All interest shall be computed on the basis of a 360-day year for actual days elapsed." is hereby deleted in its entirety and replaced with the following: Interest on the Principal Amount of this Note shall be computed at the Annual Rate on the basis of a three hundred sixty (360)-day year composed of twelve (12) months of thirty (30) days each, except that interest due and payable for a period of less than a full quarterly payment period shall be calculated by dividing the full quarterly payment by the actual number of calendar days in the applicable quarterly payment period to create a daily rate that is multiplied by the actual number of days elapsed since the last day of the previous quarterly payment period. (8) If the Suspension Interest Payment and the Deferred Interest Payment due on the Effective Date are received by the Commission on or before October 29, 1998, together with any applicable late fee, Maker and the Commission agree that the paragraphs of the Original Note defining when an "Event of Default" occurs will be modified by deleting in their entirety the provisions beginning with the phrase "a non-payment by Maker of any Principal or Interest on the due date. . ." and continuing through ". . ., Maker has not resumed payments of Interest and Principal in accordance with the terms of this Note; or "and replace with the following: a. Any non-payment by Maker of any Principal and/or Interest on the due date specified hereinabove, and the failure to make such payment, together with all applicable "Late Fees" (as hereinafter defined) within one hundred eighty (180) days after such Principal and/or Interest payment due date; or (9) The Original Note is hereby amended to provide that in addition to the Events of Default listed therein, as modified by this First Modification, it shall be an Event of Default under the Note if either the Suspension Interest Payment due on the Effective Date or the Deferred Interest Payment due on the Effective Date is not received by the Commission on or before October 29, 1998. No additional grace or cure period shall be applicable to such payment. All other payments of Suspension Interest shall be subject to the same terms and conditions as the remaining Principal and/or Interest payments under the Note. (10) The paragraph of the Original Note which imposes a late fee upon the occurrence of any Event of Default is hereby modified by deleting in its entirety the sentence reading "Upon any Event of Default under this Note, Payee may assess a late fee and/or administrative charge, plus the costs of collection, litigation, attorneys' fees, and default payment as specified in the -20- then-applicable orders and regulations of the Commission as amended, and Maker acknowledges that it is liable and herein expressly promises to pay on demand such additional costs, expenses, late charges, administrative charges, attorneys fees, and default payment." and substituting in its place the following: Should any payment of Principal and/or Interest required under this Note not be paid in full on the due date as specified hereinabove, Maker acknowledges that the Payee will incur extra expenses for the handling of the delinquent payment and servicing the indebtedness evidenced hereby, and that the exact amount of theses extra expenses is extremely difficult and impractical to ascertain. Therefore, Maker shall, in such event, without further notice, and without prejudice to the right of the Payee to collect any other amounts provided to be paid hereunder or under the Security Agreement, or to declare an Event of Default, pay to the Commission the "Late Fee" (as hereinafter defined) to compensate Payee for expenses incurred in handling delinquent payments and the Maker confirms and agrees that the Late Fee is a fair approximation of the expenses so incurred by the Payee. The "Late Fee" is defined as the total, if any, of the "Non-Delinquency Late Fee" and the "Grace Period Late Fee" (as hereinafter defined). The "Non-Delinquency Late Fee" shall be an amount equal to five percent (5.0%) of any Principal and/or Interest payment required to be made hereunder and shall be automatically assessed if such payment is not made on the original date that such Principal and/or Interest Payment is due (without the benefit of any notice of grace period). If such Principal and/or Interest payment, together with the Non-Delinquency Late Fee, is not made on or before the ninetieth (90th)-day after the original date that such Principal and/or Interest payment was due, such payment shall automatically be subject to a second late fee (the "Grace Period Late Fee") equal to ten percent (10.0%) of the amount of such past due Principal and/or Interest Payment (without the benefit of any notice or grace period) in addition to the Non-Delinquency Late Fee. In addition to the foregoing, there shall also automatically be imposed on Maker, and Maker shall pay to the Commission without further notice, and without prejudice to the right of the Payee to collect any other amounts provided to be paid hereunder or under the Security Agreement, or to declare an Event of Default, the "Resumption Date Late Fee" (as hereinafter defined ) to compensate Payee for expense incurred in handling delinquent -21- payment of the Suspension Interest Payment due on the Effective Date and/or the Deferred Interest Payment. The Maker confirms and agrees that the Resumption Date Late Fee is a fair approximation of the expenses so incurred by the Payee. The "Resumption Date Late Fee" shall be an amount equal to (i) five percent (5.0%) of the Suspension Interest Payment due on the Effective Date if such payment is not received by the Payee on the Effective Date (without the benefit of any notice or grace period), and (ii) five percent (5.0%) of the Deferred Interest Payment due on the Effective Date if such payment is not received by the Payee on the Effective Date (without the benefit of any notice or grace period). Maker and Payee agree that all references in the Original Note to a late fee shall be deemed to be a reference to the Late Fee and/or the Resumption Date Late Fee, as applicable. (11) Pursuant to the Disaggregation Election, the Maker has returned to the Commission one-half (1/2) of the spectrum represented by the License and retained the right to use the remaining one-half (1/2) of the spectrum represented by the License. In order to evidence the license for the retained spectrum, the Commission has issued an amended license to the Maker, license number PBB304C1 (herein referred to as the "Modified License"). Maker and the Commission covenant and agree that all references in the Original Security Agreement to "License" shall be deemed to refer to the License, as modified by the Modified License, and all references in the Original Security Agreement to "Collateral" shall be deemed to refer to all of the Maker's rights and interest in the License, as modified by the Modified License, and all proceeds, profits and products of any sale or other disposition thereof. In order to confirm the continuing lien, operation and effect of the Security Agreement on the License, as modified by the Modified License, and the Collateral, Maker does hereby regrant and reconvey unto the Commission, its successors and assigns, a security interest in the License, as modified by the Modified License, together with all other rights and property granted to the Commission pursuant to the terms of the Original Security Agreement. The foregoing grant by Maker shall be deemed to be a grant and conveyance of a security interest upon all of the terms and conditions contained in the Original Security Agreement without the necessity of repeating the Original Security Agreement herein in its entirety. 12. Maker represents and warrants that its principal place of business and chief executive office is located at Marksville, Louisiana. 13. All defined terms contained in the Loan Documents shall have the same meaning as set forth therein except as may otherwise be expressly set forth in this First Modification. Maker and the Commission covenant and agree that the reference in the Security Agreement to the "Note" shall be deemed a reference to the Original Note, as modified by this First -22- Modification. 14. This First Modification constitutes the entire agreement regarding the amendment and modification of the Original Note between Maker and the Commission and is intended by Maker and the Commission to be a complete, exclusive and final integration of all prior and contemporaneous agreements and negotiations of Maker and the Commission concerning the amendment and modification of the Original Note. There have been no other agreements, covenants, representations or warranties between the Maker and the Commission regarding the amendment and modification of the Original Note other than those expressly stated or referred to in this First Modification or any document delivered pursuant hereto. 15. This First Modification may be amended or modified only by written instruments signed by Maker and Commission. If any covenant, condition or provision of this First Modification is declared by a court of competent jurisdiction to be invalid and not binding on the Maker and/or the Commission, such declaration shall in no way affect the validity of the other remaining covenants, conditions and provisions of this First Modification. 16. This First Modification shall bind, inure to the benefit of and be enforceable by Maker and the Commission, their respective heirs, beneficiaries, legal representatives, successors and assigns. 17. Except as modified by this First Modification, Maker agrees that the Original Note shall continue in full force and effect without modification, and the Original Note and all of the other Loan Documents are hereby expressly approved, ratified, confirmed and reaffirmed by all parties to this First Modification. Maker hereby acknowledges and agrees that it has no claims, counterclaims, set-offs, defenses or other causes of action against the Commission and/or under the Note, Security Agreement or nay of the other Loan Documents and to the extent that any such set-offs, counterclaims, defenses or other causes of action may exist, whether known or unknown, they are hereby waived and forever relinquished by the Maker. 18. This First Modification shall be governed and construed in accordance with the Communications Act of 1934, as amended from time to time, the then applicable orders and regulations of the Commission and federal law. 19. This First Modification may be executed in counterparts, each of which shall be deemed to be an original and all of which shall collectively be deemed to constitute a single document. IN WITNESS WHEREOF, intending to be legally bound, the undersigned Maker and the Commission have each executed this First Modification, under seal, as of the day and year first hereinabove written. [SIGNATURE PAGES FOLLOW] -23- SIGNATURE PAGE FIRST MODIFICATION OF INSTALLMENT PAYMENT PLAN NOTE MAKER: Witness/Attest: WIRELESS 2000, INC. A, Louisiana Corporation /s/ Donna Mayeux - ---------------- By: /s/ Joan S. Ducote ---------------------- Name: Joan S. Ducote -------------------- Title: President -------------------- Date: July 21, 1998 -24- SIGNATURE PAGE FIRST MODIFICATION OF INSTALLMENT PAYMENT PLAN NOTE COMMISSION: Witness/Attest: FEDERAL COMMUNICATIONS COMMISSION __________________________ By: ___________________________________ Name: ___________________________________ Its: Authorized Signatory for the Wireless Telecommunications Bureau, Federal Communications Commission -25- Schedule 2.2(3) SCHEDULE OF REQUIRED PAYMENTS FROM TELECORP TO WIRELESS 2000 FOR MONROE REIMBURSEMENT AND PRIOR INTEREST PAYMENTS Monroe Reimbursement $200,000.00 Prior Interest Payments Made by Wireless July 31, 1998 $238,746.74 October 31, 1998 $198,621.75 ----------- Total Due From TeleCorp $637,368.49 -26- SCHEDULE 4.2 Wireless Consents ----------------- The execution, delivery and performance of the Agreement will or may require the following consents and approvals, without which Wireless will be in violation of contracts and agreements to which it is party, and its actions would constitute a breach and default of such agreements, to-wit: 1. The Federal Communications Commission; 2. Consent, approval and waiver of certain rights by Century Telephone Enterprises, Inc. and Century Personal Access Networks, Inc. (as to the Stock Pledge Agreement); and 3. Consent, approval and waiver of certain rights by Wireless 2000, Inc., and its stockholders (as to the Stock Pledge Agreement). -27- SCHEDULE 4.3 Wireless Litigation ------------------- None. -28- SCHEDULE 4.6 Wireless FCC Proceedings ------------------------ None. -29- SCHEDULE 5.2 Company Consents ---------------- The execution, delivery and performance of the Agreement will or may require the following consents, approvals and reviews: 1. The Federal Communications Commission. 2. AT&T Wireless pursuant to Section 7.1(4) and 7.2(8) of the Agreement. -30- SCHEDULE 5.6 Company Capitalization ---------------------- -31- Schedule V Share Allocation Without Supplemental Allocation (a)
Preferred Stock - ---------------------------------------------------------------------------------------------------------------------- Series A Series B Series C Series D Series E Series F Senior Common - ---------------------------------------------------------------------------------------------------------------------- 66,722.81 0.00 135,347.75 34,266.97 19,660.81 33,361.41 0.00 - ----------------------------------------------------------------------------------------------------------------------
Common - ---------------------------------------------------------------------------------------------------------------------- Series A Series B Tracking C Tracking D Voting Preference Total - ---------------------------------------------------------------------------------------------------------------------- 156,049.57 0.00 918.47 2,755.41 10.00 193,084.85 - ----------------------------------------------------------------------------------------------------------------------
-32- Schedule V Share Allocation Without Supplemental Allocation
Preferred Stock - ---------------------------------------------------------------------------------------------------------------------- Series A Series B Series C Series D Series E Series F Senior Common - ---------------------------------------------------------------------------------------------------------------------- 66,722.81 0.00 142,680.29 34,266.97 19,660.81 33,361.41 0.00 - ----------------------------------------------------------------------------------------------------------------------
Common - ---------------------------------------------------------------------------------------------------------------------- Series A Series B Tracking C Tracking D Voting Preference Total - ---------------------------------------------------------------------------------------------------------------------- 163,318.80 0.00 918.47 2,755.41 10.00 200,354.08 - ----------------------------------------------------------------------------------------------------------------------
-33- EXHIBIT 6.5(b) STOCK PLEDGE AGREEMENT This Agreement, dated as of _______________ ___, 199_, is between the stockholders of Wireless 2000, Inc. ("Wireless") listed on Schedule 1 attached hereto (together with their respective successors and assigns, each a "Pledgor" ------- and collectively, the "Pledgors"), and TeleCorp PCS, Inc., a Delaware -------- corporation ("TeleCorp"). Capitalized terms defined in the Acquisition Agreement (defined below) and not otherwise defined herein are used herein with the meanings so defined. Except as the context otherwise explicitly requires, (a) the word "including" shall be construed as "including without limitation", (b) terms defined in the UCC and not otherwise defined herein have the meaning provided under the UCC, (c) references to a particular statute or regulation include all rules and regulations thereunder and any successor statute, regulation or rules, in each case as from time to time in effect, and (d) references to a particular Person include such Person's successors and assigns to the extent not prohibited by this Agreement. RECITALS WHEREAS, TeleCorp and Wireless are parties to that certain license acquisition agreement dated December 2, 1998 (the "Acquisition Agreement"); WHEREAS, pursuant to (S)6.5 of the Acquisition Agreement, TeleCorp has agreed to make interest payments to the FCC or the Treasury on behalf of Wireless that may become due under the FCC Debt prior to Closing (collectively, "Advances"); WHEREAS, as a condition to the Company's agreement to make Advances and in order to secure Wireless' repayment of Advances under the Acquisition Agreement ("Repayment") in the event either Wireless or TeleCorp terminates the Acquisition Agreement, the parties hereto have agreed to execute and deliver this Agreement; NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto, intending to be legally bound hereby, agree as follows: 1. Security. -------- -34- 1.1 Collateral. As security for Repayment to TeleCorp by Wireless in the ---------- event either Wireless or TeleCorp terminates the Acquisition Agreement, each Pledgor mortgages, pledges and collaterally grants and assigns to TeleCorp, and creates a security interest in favor of TeleCorp, all of such Pledgor's right, title and interest in and to (but none of its obligations or liabilities with respect to) the securities set forth opposite of such Pledgor's name on Schedule 1, whether now owned or hereafter acquired, all of which shall be included in the term "Collateral": 1.1.1 Pledged Stock. (a) All shares of capital stock or other ------------- evidence of beneficial ownership interest in Wireless, and (b) all options, warrants and similar rights to acquire such capital stock or interests. All such capital stock, interests, options, warrants and other rights are collectively referred to as the "Pledged Stock". ------------- 1.1.2 Pledged Rights. All rights to receive profits or surplus of, or -------------- other distributions (including income, return of capital and liquidating distributions). All such rights are collectively referred to as the "Pledged Rights". -------------- 1.2 Representations, Warranties and Covenants with Respect to Collateral. -------------------------------------------------------------------- Each Pledgor represents, warrants and covenants to TeleCorp that: 1.2.1 Pledged Stock. All shares of capital stock and other securities ------------- included in the Pledged Stock are and shall be at all times duly authorized, validly issued, fully paid and (in the case of capital stock) non-assessable. Each Pledgor will deliver to TeleCorp certificates representing the Pledged Stock, registered, if TeleCorp so requests, in the name of TeleCorp or its nominee, as pledgee, or accompanied by a stock transfer power executed in blank and, if TeleCorp so requests, with the signature guaranteed, all in form and manner satisfactory to TeleCorp. Pledged Stock that is not evidenced by a certificate will be registered in TeleCorp's name as pledgee on the issuer's records, all in form and substance satisfactory to TeleCorp. TeleCorp may at any time transfer into its name or the name of its nominee, as pledgee, any Pledged Stock. 1.2.2 No Liens or Restrictions on Transfer. All Collateral shall be ------------------------------------ free and clear of any Liens and restrictions on the transfer thereof. None of the Pledged Stock is subject to any option to purchase or similar rights of any Person. 1.3 Administration of Collateral. The Collateral shall be administered as ---------------------------- follows, and if an Event of Default shall have occurred, Section 1.4 shall also apply. 1.3.1 Pledged Stock. ------------- (a) Distributions. Until an Event of Default shall occur, ------------- each Pledgor shall be entitled to receive all distributions on or with respect to the Pledged Stock (other than distributions constituting additional Pledged Stock). All distributions constituting additional Pledged Stock will be retained by TeleCorp (or if received -35- by any Pledgor shall be held by such Pledgor in trust and shall be immediately delivered by such Pledgor to TeleCorp in the original form received, endorsed in blank) and held by TeleCorp as part of the Collateral. (b) If an Event of Default shall have occurred, all distributions on or with respect to the Pledged Stock shall be retained by TeleCorp (or if received by any Pledgor shall be held by such Pledgor in trust and shall be immediately delivered by it to TeleCorp in the original form received, endorsed in blank) and held by TeleCorp as part of the Collateral or applied by TeleCorp to the payment of the Repayment in accordance with Section 1.4.5. 1.3.2 Voting. ------ (a) Until an Event of Default shall occur, each Pledgor shall be entitled to vote or consent with respect to Pledged Stock in any manner. (b) If an Event of Default shall have occurred, if and to the extent that TeleCorp shall so notify the Pledgors in writing, only TeleCorp shall be entitled to vote or consent or take any other action with respect to the Pledged Stock (and the Pledgors will, if so requested, execute or cause to be executed appropriate proxies therefor). 1.4 Right to Realize upon Collateral. Except to the extent prohibited by -------------------------------- applicable law that cannot be waived, this Section 1.4 shall govern TeleCorp's right to realize upon the Collateral if any Event of Default shall have occurred. The provisions of this Section 1.4 are in addition to any rights and remedies available at law or in equity. Upon an Event of Default, the following provisions shall apply: 1.4.1 General Authority. To the extent specified in written notice ----------------- from TeleCorp to the Pledgors, each Pledgor grants TeleCorp full and exclusive power and authority, subject to the other terms hereof and applicable law, to take any of the following actions (for the sole benefit of TeleCorp, but at each Pledgor's expense): (a) To ask for, demand, take, collect, sue for and receive all payments in respect of any Pledged Stock which such Pledgor could otherwise ask for, demand, take, collect, sue for and receive for its own use. (b) To settle, compromise, prosecute or defend any action or proceeding with respect to any Pledged Stock and to enforce all rights and remedies thereunder which such Pledgor could otherwise enforce. -36- (c) To notify the third party payor with respect to any Pledged Stock of the existence of the security interest created hereby and to cause all payments in respect thereof thereafter to be made directly to TeleCorp; provided, however, that whether or not TeleCorp -------- ------- shall have so notified such payor, such Pledgor will at its expense render all reasonable assistance to TeleCorp in collecting such items and in enforcing claims thereon. (d) To sell, transfer, assign or otherwise deal in or with any Collateral or the proceeds thereof, as fully as such Pledgor otherwise could do. 1.4.2 Marshaling. TeleCorp shall not be required to make any demand ---------- upon, or pursue or exhaust any of its rights or remedies against, the Pledgors or any other guarantor, pledgor or any other Person with respect to the Repayment or to pursue or exhaust any of its rights or remedies with respect to any collateral therefor or any direct or indirect guarantee thereof. TeleCorp shall not be required to marshal the Collateral or to resort to the Collateral in any particular order, and all of its rights hereunder shall be cumulative. To the extent it may lawfully do so, each Pledgor absolutely and irrevocably waives and relinquishes the benefit and advantage of, and covenants not to assert against TeleCorp, any valuation, stay, appraisement, extension, redemption or similar laws now or hereafter existing which, but for this provision, might be applicable to the sale of any Collateral made under the judgment, order or decree of any court, or privately under the power of sale conferred by this Agreement or otherwise. Without limiting the generality of the foregoing, each Pledgor (a) agrees that it will not invoke or utilize any law which might prevent, cause a delay in or otherwise impede the enforcement of the rights of TeleCorp in the Collateral, (b) waives all such laws, and (c) agrees that it will not invoke or raise as a defense to any enforcement by TeleCorp of any rights and remedies relating to the Collateral or any legal or contractual requirement with which TeleCorp may have in good faith failed to comply. In addition, each Pledgor waives any right to prior notice (except to the extent expressly required by this Agreement) or judicial hearing in connection with foreclosure on or disposition of any Collateral, including any such right which such Pledgor would otherwise have under the Constitution of the United States of America, any state or territory thereof or any other jurisdiction. 1.4.3 Sales of Collateral. All or any part of the Collateral may be ------------------- sold for cash or other value in any number of lots at public or private sale, without demand, advertisement or notice; provided, however, that -------- ------- unless the Collateral to be sold threatens to decline speedily in value or is of a type customarily sold on a recognized market, TeleCorp shall give the Pledgors 10 days' prior written notice of the time and place of any public sale, or the time after which a private sale may be made, which notice each Pledgor and TeleCorp hereby agrees to be reasonable. At any sale or sales of Collateral, TeleCorp or any of its respective officers acting on its behalf, or TeleCorp's assigns, may bid for and purchase all or any part of the property and rights so sold, may use all or any -37- portion of the Repayment as payment for the property or rights so purchased, and upon compliance with the terms of such sale may hold and dispose of such property and rights without further accountability to the Pledgors, except for the proceeds of such sale or sales pursuant to Section 1.4.5. Each Pledgor acknowledges that any such sale will be made by TeleCorp on an "as is" basis with disclaimers of all warranties, whether express or implied. Each Pledgor will execute and deliver or cause to be executed and delivered such instruments, documents, assignments, waivers, certificates and affidavits, will supply or cause to be supplied such further information and will take such further action as TeleCorp shall request in connection with any such sale. 1.4.4 Sale without Registration. If, at any time when TeleCorp shall ------------------------- determine to exercise its rights hereunder to sell all or part of the securities included in the Collateral, the securities in question shall not be effectively registered under the Securities Act (or other applicable law), TeleCorp may, in its sole discretion, sell such securities by private or other sale not requiring such registration in such manner and in such circumstances as TeleCorp may deem necessary or advisable in order that such sale may be effected in accordance with applicable securities laws without such registration and the related delays, uncertainty and expense. Without limiting the generality of the foregoing, in any event TeleCorp may, in its sole discretion, (a) approach and negotiate with a single purchaser or one or more possible purchasers to effect such sale, (b) restrict such sale to one or more purchasers each of whom will represent and agree that such purchaser is purchasing for its own account, for investment and not with a view to the distribution or sale of such securities, and (c) cause to be placed on certificates representing the securities in question a legend to the effect that such securities have not been registered under the Securities Act (or other applicable law) and may not be disposed of in violation of the provisions thereof. Each Pledgor agrees that such manner of disposition is commercially reasonable, that it will upon TeleCorp's request give any such purchaser access to such information regarding the issuer of the securities in question as TeleCorp may reasonably request and that TeleCorp shall not incur any responsibility for selling all or part of the securities included in the Collateral at any private or other sale not requiring such registration, notwithstanding the possibility that a substantially higher price might be realized if the sale were deferred until after registration under the Securities Act (or other applicable law) or until made in compliance with certain other rules or exemptions from the registration provisions under the Securities Act (or other applicable law). Each Pledgor acknowledges that no adequate remedy at law exists for breach by it of this Section 1.4.4 and that such breach would not be adequately compensable in damages and therefore agrees that this Section 1.4.4 may be specifically enforced. 1.4.5 Application of Proceeds. The proceeds of all sales and ----------------------- collections in respect of any Collateral or other assets of the Pledgors all funds collected from the -38- Pledgors and any cash contained in the Collateral, the application of which is not otherwise specifically provided for herein, shall be applied as follows: First, to the Repayment, the payment of the costs and expenses of such sales and collections, the reasonable expenses of TeleCorp and the reasonable fees and expenses of its counsel; and Second, any surplus then remaining shall be paid to the Pledgors, subject, however, to the rights of the holder of any then existing Lien of which TeleCorp has actual notice. 1.5 Custody of Collateral. Except as provided by applicable law that --------------------- cannot be waived, TeleCorp will have no duty as to the custody and protection of the Collateral, the collection of any part thereof or of any income thereon or the preservation or exercise of any rights pertaining thereto, including rights against prior parties, except for the use of reasonable care in the custody and physical preservation of any Collateral in its possession. TeleCorp will not be liable or responsible for any loss or damage to any Collateral, or for any diminution in the value thereof, by reason of the act or omission of any agent selected by TeleCorp acting in good faith. 2. Representations and Warranties. In order to induce TeleCorp to make ------------------------------ Advances under the Acquisition Agreement, each Pledgor represents and warrants to TeleCorp that: 2.1 Organization and Business. If a Pledgor is a corporation, such Pledgor ------------------------- is a duly organized and validly existing corporation, in good standing under the laws of the state of its incorporation, with all power and authority, corporate or otherwise, necessary (a) to enter into and perform this Agreement, and (b) to own its properties and carry on the business now conducted or proposed to be conducted by it. Certified copies of the Charter and By-laws of such Pledgor have been previously delivered to TeleCorp and are correct and complete, or prior to the delivery of any Advance by TeleCorp to Wireless under the Acquisition Agreement, such organizational documents of each corporate Pledgor will be delivered to TeleCorp in a form that is correct and complete. 2.2 Authorization and Enforceability. If a Pledgor is a corporation, such -------------------------------- Pledgor has taken all corporate action required to execute, deliver and perform this Agreement. This Agreement constitutes the legal, valid and binding obligation of such Pledgor, enforceable against such Pledgor in accordance with its terms. 2.3 No Legal Obstacle to Agreements. Neither the execution, delivery and ------------------------------- performance of this Agreement, nor the consummation of any transaction referred to in or contemplated by this Agreement, has constituted or resulted, or will constitute or result, in: -39- (a) Any breach or termination of the provisions of any agreement, instrument, deed or lease to which such Pledgor is a party or by which it is bound, or of the Charter or By-laws of such Pledgor; or (b) The violation of any law, statute, judgment, decree or governmental order, rule or regulation applicable to such Pledgor. No approval, authorization or other action by, or declaration to or filing with, any governmental or administrative authority or any other Person is required to be obtained or made by such Pledgor in connection with the execution, delivery and performance of this Agreement or the transactions contemplated hereby. 3. Definitions. ----------- 3.1 "Agreement" means this Pledge Agreement as amended, modified and from --------- time to time in effect. 3.2 "Collateral" is defined in Section 1.1. ---------- 3.3 "Event of Default" shall mean: ---------------- 3.3.1 Failure of Wireless to make the Repayment pursuant to the terms of the Acquisition Agreement. 3.3.2 An involuntary petition for bankruptcy is commenced against Wireless and the petition shall not have been dismissed, stayed, bonded or discharged within sixty (60) days after filing of the petition; or a court having jurisdiction in the premises shall enter a decree or order for relief in respect of Wireless in an involuntary case, under any applicable bankruptcy, insolvency or other similar law now or hereinafter in effect, or any other similar relief shall be granted under any applicable federal, state, local or foreign law. 3.3.3 Wireless shall (1) commence a voluntary case under any applicable bankruptcy, insolvency or similar law now or hereafter in effect, (2) consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, (3) consent to the appointment of or taking possession by a receiver, trustee or other custodian for all or a substantial part of its property, (4) make any assignment for the benefit of creditors, or (5) take any corporate action to authorize any of the foregoing. 3.3.4 Upon a "Change of Control," defined as any consolidation, reorganization or merger of Wireless or any sale of all or substantially all of the assets of Wireless (not including the transfer of 15 MHz of the Lake Charles License that is not included in the -40- Disaggregated Licenses), including without limitation, a transfer of any of the Disaggregated Licenses not in accordance with the terms and conditions of the Acquisition Agreement. 3.3.5 In the event any lien granted under this Agreement shall cease to be a perfected lien. 3.3.6 An occurrence of a default in the due performance or observance of any term, covenant or agreement required to be performed or observed pursuant hereto; provided that a default shall not be an Event of Default unless Wireless fails, after written notice thereof, to cure such default within thirty (30) days of receipt of such notice, or such additional time as may be necessary to cure such default so long as Wireless continues diligently to prosecute such cure. 3.4 "Pledged Rights" is defined in Section 1.1.2 -------------- 3.5 "Pledged Stock" is defined in Section 1.1.1. ------------- 4. Defeasance. Upon (i) Closing of the Acquisition Agreement, or (ii) in the ---------- event either TeleCorp or Wireless terminates the Acquisition Agreement, TeleCorp's receipt of the Repayment by Wireless, this Agreement shall terminate and, at the Pledgors' written request, accompanied by such certificates and other items as TeleCorp shall reasonably deem necessary, the Collateral shall revert to the Pledgors and the right, title and interest of TeleCorp therein shall terminate. Thereupon, on the Pledgors' demand and at its cost and expense, TeleCorp shall execute proper instruments, acknowledging satisfaction of and discharging this Agreement, and shall redeliver to the Pledgors any Collateral then in its possession. 5. Successors and Assigns. This Agreement is binding upon and is solely for ---------------------- the benefit of the parties hereto and their respective permitted successors, legal representatives and permitted assigns. Neither party may assign its rights and obligations hereunder without the prior written consent of the other party, except that TeleCorp shall have the right to assign its rights under this Agreement to the lenders (the "Lenders") named in the Credit Agreement, dated as ------- of July 17, 1998, by and amongTeleCorp, the lenders party thereto and the Chase Manhattan Bank, as Administrative Agent, TD Securities (USA) Inc., as Syndication Agent, and Bankers Trust Company, as Documentation Agent (the "Credit Agreement"), as security pursuant to the terms of the Credit Agreement and the documents and instruments executed therewith, it being understood that, in connection with any such assignment to the Lenders, the Lenders shall not assume any obligations of TeleCorp hereunder. 6. Notices. Any notice or other communication in connection with this ------- Agreement shall be deemed to be given if given in writing (including telex, telecopy or similar teletransmission) addressed as provided below (or to the addressee at such other address as the addressee shall have specified by notice actually received by the addressor), and if either (a) actually delivered in -41- fully legible form to such address (evidenced in the case of a telex by receipt of the correct answerback) or (b) in the case of a letter, five business days shall have elapsed after the same shall have been deposited in the United States mails, with first-class postage prepaid and registered or certified. If to the Pledgors, to their respective address set forth in Schedule 1 hereto. If to TeleCorp, to it at its address specified in or pursuant to Section 10.3 of the Acquisition Agreement. 7. Venue; Service of Process. ------------------------- (a) Each Pledgor irrevocably submits to the nonexclusive jurisdiction of the state courts of the Commonwealth of Virginia and to the nonexclusive jurisdiction of any United States District Court in Virginia for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement or the subject matter hereof; and (b) Each Pledgor waives to the extent not prohibited by applicable law, and agrees not to assert, by way of motion, as a defense or otherwise, in any such proceeding brought in any of the above-named courts, any claim that it is not subject personally to the jurisdiction of such court, that its property is exempt or immune from attachment or execution, that such proceeding is brought in an inconvenient forum, that the venue of any such proceeding is improper, or that this Agreement, or the subject matter hereof, may not be enforced in or by such court. 8. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH -------------------- CANNOT BE WAIVED, EACH OF TELECORP AND EACH PLEDGOR WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND OR ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE ACQUISITION AGREEMENT OR THE SUBJECT MATTER HEREOF OR THEREOF OR IN ANY WAY CONNECTED WITH THE DEALINGS OF TELECORP OR THE PLEDGORS IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. Each Pledgor acknowledges that it has been informed by TeleCorp that the provisions of this Section 8 constitute a material inducement upon which TeleCorp has relied, is relying and will rely in entering into the Acquisition Agreement, and that it has reviewed the provisions of this Section 8 with its counsel. TeleCorp or the Pledgors may file an original counterpart or a copy of this Section 8 with any -42- court as written evidence of the consent of TeleCorp and the Pledgors to the waiver of the right to trial by jury. 9. General. All covenants, agreements, representations and warranties made in ------- this Agreement or in certificates delivered pursuant hereto or thereto shall be deemed to have been relied on by TeleCorp, notwithstanding any investigation made by TeleCorp, and shall survive the execution and delivery to TeleCorp hereof. The invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of any other term or provision hereof. The headings in this Agreement are for convenience of reference only and shall not limit, alter or otherwise affect the meaning hereof. This Agreement constitute the entire understanding of the parties with respect to the subject matter hereof and supersede all prior and current understandings and agreements, whether written or oral. This Agreement may be executed in any number of counterparts, which together shall constitute one instrument. This Agreement shall be governed by and construed in accordance with the laws (other than the conflict of laws rules) of the Commonwealth of Virginia. 10. Further Assurances. Each Pledgor represents and warrants to TeleCorp that ------------------ after the execution date hereof it will execute and deliver, or cause to be executed and delivered, such instruments, documents and the like, and will take such further action as TeleCorp shall request, necessary or appropriate to effect the transactions contemplated under this Agreement. -43- Each of the undersigned has caused this Agreement to be executed and delivered by its duly authorized officer as an agreement under seal as of the date first written above. WIRELESS STOCKHOLDERS: ____________________________________ Name: _____________________________ ____________________________________ Name: _____________________________ ____________________________________ Name: _____________________________ ____________________________________ Name: _____________________________ TELECORP PCS, INC. By: _____________________________ Name: _____________________________ Title: _____________________________ -44- EX-10.17.1 31 STOCKHOLDER'S AGMT EXHIBIT 10.17.1 EXECUTION COPY =============================================================================== STOCKHOLDERS' AGREEMENT by and among AT&T WIRELESS PCS INC., CASH EQUITY INVESTORS, MANAGEMENT STOCKHOLDERS, and TELECORP PCS, INC. dated as of July 17, 1998 =============================================================================== TABLE OF CONTENTS -----------------
Page ---- 1. Certain Definitions.............................................................................. 2 2. Restated Certificate and Restated By-Laws........................................................ 15 3. Management of Company............................................................................ 15 3.1 Board of Directors...................................................................... 15 3.2 Removal; Filling of Vacancies........................................................... 16 3.3 Initial Directors....................................................................... 17 3.4 Compensation and Reimbursement.......................................................... 17 3.5 Business of the Company................................................................. 17 3.6 Required Votes.......................................................................... 17 3.7 Transactions between the Company and the Stockholders or their Affiliates............... 19 3.8 Board Committees........................................................................ 19 3.9 Voting Agreements and Voting Trusts..................................................... 19 3.10 Additional Capital Contributions........................................................ 20 3.11 Board of Directors After Voting Preference Stock........................................ 20 4. Transfers of Shares.............................................................................. 21 4.1 General................................................................................. 21 4.2 Right of First Offer.................................................................... 23 4.3 Rights of Inclusion..................................................................... 25 4.4 Right of First Negotiation.............................................................. 27 4.5 Additional Conditions to Permitted Transfers............................................ 28 4.6 Representations and Warranties.......................................................... 29 4.7 Stop-Transfer........................................................................... 29 5. Registration Rights.............................................................................. 30 6. Disqualifying Transactions....................................................................... 42 6.1 Company Conversion Rights............................................................... 42 6.2 Joint Marketing Right................................................................... 43 7. Additional Rights and Covenants.................................................................. 44 7.1 Financial Statements.................................................................... 44 7.2 Purchase Right.......................................................................... 45 7.3 Access.................................................................................. 46 7.4 Merger, Sale or Liquidation of the Company.............................................. 46 7.5 Wholly-Owned Subsidiaries............................................................... 48 7.6 Amendments of the Restated Certificate and By-Laws...................................... 48
i 7.7 Confidentiality......................................................................... 48 7.8 IPO Date................................................................................ 49 7.9 AT&T PCS Retained Licenses.............................................................. 49 7.10 Regulatory Cooperation.................................................................. 49 7.11 Permitted Transactions.................................................................. 49 7.12 Springfield/Joplin...................................................................... 50 7.13 Covenant of Holders of Class C Common Stock............................................. 50 8. Operating Arrangements........................................................................... 51 8.1 Construction of Company Systems......................................................... 51 8.2 Service Features........................................................................ 52 8.3 Quality Standards....................................................................... 52 8.4 No Change of Business................................................................... 52 8.5 Preferred Provider...................................................................... 53 8.6 Exclusivity............................................................................. 54 8.7 Other Business; Duties; Etc............................................................. 55 8.8 Acknowledgments and Termination of Exclusivity.......................................... 55 8.9 Equipment, Discounts and Roaming........................................................ 56 8.10 ANS Agreement........................................................................... 56 8.11 Resale Agreements....................................................................... 57 8.12 Non-Solicitation........................................................................ 57 8.13 Co-Location............................................................................. 58 9. After-Acquired Shares; Recapitalization.......................................................... 58 9.1 After Acquired Shares; Recapitalization................................................. 58 9.2 Amendment of Restated Certificate....................................................... 58 10. Share Certificates............................................................................... 59 10.1 Restrictive Endorsements; Replacement Certificates...................................... 59 11. Equitable Relief................................................................................. 59 12. Miscellaneous.................................................................................... 60 12.1 Notices................................................................................. 60 12.2 Entire Agreement; Amendment; Consents................................................... 61 12.3 Term.................................................................................... 62 12.4 Survival................................................................................ 64 12.5 Waiver.................................................................................. 64 12.6 Obligations Several..................................................................... 64 12.7 Governing Law........................................................................... 64 12.8 Dispute Resolution...................................................................... 64 12.9 Benefit and Binding Effect; Severability................................................ 67 12.10 Amendment of By-Laws.................................................................... 67 12.11 Authorized Agent of At&T PCS............................................................ 68
ii 12.12 FCC Approval............................................................................ 68 12.13 Expenses................................................................................ 68 12.14 Attorneys' Fees......................................................................... 68 12.15 Headings................................................................................ 68 12.16 Counterparts............................................................................ 68
iii Schedules Schedule I Cash Equity Investors Schedule II Management Stockholders Schedule III Equity Capitalization Schedule IV Core Features Schedule V Minimum Build-Out Plan Schedule VI PCS Territory Schedule VII Quality and Reporting Standards Schedule VIII Initial Directors Schedule IX Capital Budgets Schedule X Voting Agreements Schedule XI Critical Network Elements iv Exhibits Exhibit A Restated By-Laws Exhibit B Restated Certificate Exhibit C Form of Advanced Network Services Agreement v STOCKHOLDERS' AGREEMENT ----------------------- STOCKHOLDERS' AGREEMENT, dated as of July 17, 1998 (this "Agreement"), by and among AT&T WIRELESS PCS INC., a Delaware corporation (together with its Affiliated Successors, "AT&T PCS"), TWR CELLULAR, INC., a Delaware corporation (together with its Affiliated Successors, "TWR Cellular"), the investors listed on Schedule I (individually, each a "Cash Equity Investor" and, collectively, with any of its Affiliated Successors, the "Cash Equity Investors"), the individuals listed on Schedule II (individually, each a "Management Stockholder" and, collectively, the "Management Stockholders") and TELECORP PCS, INC., a Delaware corporation (the "Company"). Each of the foregoing Persons, together with all other Persons who, in connection with a Transfer (as hereinafter defined) are required to become a party to this Agreement (other than the Company), or with the consent of the Board of Directors (as hereinafter defined) are issued shares of Company Stock and are required as a condition of such issuance to become a party to this Agreement, are sometimes referred to herein, individually, as a "Stockholder" and, collectively, as the "Stockholders." RECITALS -------- WHEREAS, the authorized capital stock of the Company consists of: (a) 1,404,000 shares of common stock, par value $0.01 per share ("Common Stock"), including (i) 700,000 shares of Class A Voting Common Stock, par value $0.01 per share ("Class A Voting Common Stock"), of which 156,049.57 shares are issued and outstanding, (ii) 700,000 shares of Class B Non-Voting Common Stock, par value $0.01 per share ("Class B Non-Voting Common Stock") of which no shares are issued and outstanding (iii) 1,000 shares of Class C Common Stock, par value $.01 per share ("Class C Common Stock"), of which 918.47 shares are issued and outstanding, (iv) 3,000 shares of Class D Common Stock, par value $.01 per share ("Class D Common Stock"), of which 2,755.41 shares are issued and outstanding, and (v) 10 shares designated as Voting Preference Stock, par value $0.01 per share ("Voting Preference Stock"), of which 10 shares are issued and outstanding; and (b) 510,000 shares of Preferred Stock, par value $0.01 per share, including (i) 70,000 shares designated Series A Convertible Preferred Stock, par value $0.01 per share ("Series A Preferred Stock"), of which 66,722.81 shares are issued and outstanding, (ii) 140,000 shares designated Series B Preferred Stock, par value $0.01 per share ("Series B Preferred Stock"), of which no shares are issued and outstanding, (iii) 140,000 shares designated Series C Preferred Stock, $0.01 par value $0.01 per share ("Series C Preferred Stock"), of which 135,347.75 shares are issued and outstanding, (iv) 35,000 shares designated Series D Preferred Stock, par value $0.01 per share ("Series D Preferred Stock"), of which 34,266.97 shares are issued and outstanding, (v) 20,000 shares designated Series E Preferred Stock, par value $0.01 per share ("Series E Preferred Stock"), of which 19,660.81 shares are issued and outstanding, (vi) 35,000 shares designated Series F Preferred Stock, par value $0.01 per share ("Series F Preferred Stock"), of which 33,361.41 shares are issued and outstanding, and (vii) 70,000 shares designated Senior Common Stock, par value $0.01 per share ("Senior Common Stock"), of which no shares are issued and outstanding (the "Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock, the Series E Preferred Stock, the Series F Preferred Stock and the Senior Common Stock are collectively referred to as the "Preferred Stock"); and WHEREAS, the shares of Class A Voting Common Stock as a class represent 49.9% of the voting power of the Company and the shares Voting Preference Stock as a class represent 50.1% of the voting power of the Company; and WHEREAS, each Stockholder is the registered owner of the respective shares of Class A Voting Common Stock, Class B Non-Voting Common Stock, Series A Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock and Voting Preference Stock set forth opposite its name on Schedule III; and WHEREAS, the parties desire to enter into this Agreement in order to provide for the management of the Company and to impose certain restrictions with respect to the sale, transfer or other disposition of Common Stock on the terms and conditions hereinafter set forth; and NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants, conditions and agreements hereinafter set forth, the parties agree as follows: 1. Certain Definitions. ------------------- "Adopted Service Features" shall mean the Core Service Features and ------------------------ additional service features that are adopted by the Company's PCS Systems in accordance with the terms of Section 8.2. "Advice" shall have the meaning set forth in Section 5(d)(xvii). ------ "Affiliate" shall mean, with respect to any Person other than a natural --------- person, any other Person that, either directly or indirectly through one or more intermediaries, controls, or is controlled by or is under common control with such Person and, with respect to any natural Person, any trust for the exclusive benefit of such natural Person and/or any member of such natural Person's Immediate Family in which such Person is the sole trustee thereof; provided, -------- however, for purposes of Section 8.6, "Affiliate" shall not include (x) Persons - ------- who conduct business in the Territory in whom a Cash Equity Investor or any of their respective Affiliates has made an investment or holds securities on the date hereof in the ordinary course of their business, or any such Person who conducts business in the Territory in whom a Cash Equity Investor or any of their respective Affiliates makes an investment after the date hereof if such Cash Equity Investor or Affiliate thereof controls such Person on a temporary basis where reasonably necessary to protect its investment, or any person who serves as an officer, director or is a partner of any such Person who is affiliated with a Cash Equity Investor, or (y) The Chase Manhattan Bank and The Toronto Dominion Bank. For purposes of this Agreement and the Related Agreements, Authorized Fund Management, Inc., a Texas corporation, and any entity in 3 which it is the sole general partner shall be deemed an "Affiliate" of Hoak. As used in this Agreement, "control", "controlled" or "controlling" shall mean possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. "Affiliated Successor" shall mean, with respect to any Person, an Affiliate -------------------- thereof that is a transferee or a successor in interest to any or all of such Person's Company Stock and that is required to become a party to this Agreement in accordance with the terms hereof; provided, however, that, for purposes of -------- ------- Section 4, with respect to any Cash Equity Investor, "Affiliated Successor" shall also include partners, limited partners or members of a Cash Equity Investor that are transferees of Series C Preferred Stock or Common Stock pursuant to distributions in accordance with the partnership agreement or operating agreement of such Cash Equity Investor. "Arbitration Rules" shall have the meaning set forth in Section 12.8(d). ----------------- "AT&T Licensee" shall mean any Person that owns FCC licenses to provide ------------- Commercial Mobile Radio Service, which Person is authorized to provide any such services using the phrase "Member, AT&T Wireless Services Network" or other service marks of AT&T Corp. "AT&T PCS License Purchase Agreement" shall have the meaning assigned to ----------------------------------- such term in the Securities Purchase Agreement. "AT&T PCS" shall have the meaning set forth in the preamble. -------- "AT&T Contributed Licenses" shall have the meaning assigned to such term in ------------------------- the Securities Purchase Agreement. "AT&T PCS Licenses" shall mean the AT&T Contributed Licenses and the AT&T ----------------- PCS Purchased Licenses. "AT&T PCS Purchased Licenses" shall have the meaning assigned to such term --------------------------- in the Securities Purchase Agreement. "AT&T PCS Retained Licenses" shall have the meaning assigned to such term -------------------------- in the Securities Purchase Agreement. "AWS" shall mean AT&T Wireless Services, Inc., a Delaware corporation. --- "Beneficially Own" shall have the meaning set forth in Rule 13d-3 of the ---------------- Exchange Act. "Board of Directors" shall mean the Board of Directors of the Company. ------------------ "BTA" shall mean a geographic area established by the Rand McNally 1992 --- Commercial Atlas & Marketing Guide, 123rd Edition, pp. 38-39, as modified by the FCC to form the initial 4 geographic area of license for the C, D, E and F blocks of broadband PCS spectrum as defined in Section 24.202 of the FCC's rules. "Business" shall mean the business of (a) owning, constructing and -------- operating systems to provide Company Communications Services on frequencies licensed to the Company for Commercial Mobile Radio Services pursuant to the AT&T PCS Licenses and PCS Licenses acquired pursuant to a Supplemental Closing and the Telecorp Licenses and Permitted Cellular Licenses, (b) providing to end- users and resellers, solely within the Territory, Company Communications Services available on such systems, (c) providing in connection with such Company Communications Services, solely within the Territory, the Adopted Service Features and (subject to the immediately following sentence) telecommunications services incidental or ancillary to such Company Communications Services (including, by way of example, bundling additional telecommunications services with Company Communications Services), and (d) marketing and offering the services and features described in clauses (b) and (c) within the Territory, including advertising such services and features using broadcast and other media, so long as such advertising extends beyond the Territory only when and to the extent necessary to reach customers and potential customers in the Territory. The activities described in clauses (a) and (b) shall be the indispensable requisite, and primary business, of the Company and, to the extent the Company provides telecommunications services incidental or ancillary thereto, the Company and its Subsidiaries shall be only the agent or reseller for the provider thereof and shall not own or lease the facilities used to provide such services, except that (i) the Company may own or lease facilities that, in the aggregate, do not have a purchase price to the Company and its Subsidiaries in excess of $10 million, and the Company may be a facilities-based provider of services using such facilities, and (ii) after completion of the Minimum Build-Out Plan and certification that Company Systems meet the TDMA Quality Standards, the amount of $10 million set forth in clause (i) hereof shall be increased to $100 million. "Cash Equity Investors" shall have the meaning set forth in the preamble. --------------------- "Cellular System" shall mean a cellular mobile radio telephone system --------------- constructed and operated in a "metropolitan statistical area" as defined by the FCC or a "rural service area" as defined by the FCC (or any successor territorial designation or subdivision thereof authorized by the FCC) exclusively using the 824 MHZ to 849 MHZ and the 869 MHZ to 894 MHZ frequencies pursuant to a License therefor issued by the FCC. "Cellular Territory" shall mean the geographic area in respect of which the ------------------ Company acquires Permitted Cellular Licenses. "Central and Southwest Region" shall mean the geographic area comprising ---------------------------- the States of Louisiana, Oklahoma, Minnesota, Illinois and Texas (excluding Houston). "Class A Voting Common Stock" shall have the meaning set forth in the first --------------------------- recital. "Class B Non-Voting Common Stock" shall have the meaning set forth in the ------------------------------- first recital. 5 "Class C Common Stock" shall have the meaning set forth in the preamble. -------------------- "Class D Common Stock" shall have the meaning set forth in the preamble. -------------------- "Commission" shall mean the Securities and Exchange Commission or any other ---------- federal agency at the time administering the Securities Act. "Common Stock" shall have the meaning set forth in the first recital. ------------ "Company" shall have the meaning set forth in the preamble. ------- "Company Asset Sale" shall have the meaning set forth in Section 7.4(a). ------------------ "Company Communications Services" shall mean mobile wireless ------------------------------- telecommunications services (including the transmission of voice, data, image or other messages or content) provided solely within the Territory, initiated or terminated using TDMA and frequencies licensed by the FCC, to or from subscriber equipment that is capable of usage during routine movement throughout the area covered by a cell site and routine handing-off between cell sites, and is either intended for such usage or is temporarily fixed to a specific location on a short-term basis (e.g., a bank of wireless telephones temporarily installed during a special event of limited duration). Without limiting the foregoing, Company Communications Services shall include wireless office services if such services comply with this definition. Company Communications Services shall also include the transmissions between the Company's cell sites and the Company's switch or switches in the Territory, handing-off transmissions at the Company's switch or switches for termination by other carriers, and receiving transmissions to the Company's customers handed-off at the Company's switch or switches, in each case for the purpose of facilitating Company Communications Services described in the first sentence. "Company Merger" shall have the meaning set forth in Section 7.4(a). -------------- "Company Sale Notice" shall have the meaning set forth in Section 6.2(a). ------------------- "Company Stock" shall mean the Series A Preferred Stock, the Series C ------------- Preferred Stock, the Series D Preferred Stock, the Series E Preferred Stock, the Series F Preferred Stock, the Senior Common Stock, the Voting Preference Stock, the Class A Voting Common Stock, Class B Non-Voting Common Stock, the Class C Common Stock and the Class D Common Stock. "Company Systems" shall mean the systems owned and operated by the Company --------------- and its Subsidiaries to provide Company Communications Services in the Territory. "Confidential Information" shall have the meaning assigned to such term in ------------------------ Section 7.7(a). "Core Service Features" shall mean the service features set forth on --------------------- Schedule IV. 6 "CPR" shall have the meaning set forth in Section 12.8(c). --- "Demand Notice" shall have the meaning set forth in Section 5(a)(i). ------------- "Demand Registration" shall have the meaning set forth in Section 5(a)(i). ------------------- "Demanding Stockholder" shall have the meaning set forth in Section --------------------- 5(a)(i). "Dispute" shall have the meaning set forth in Section 12.8(a). ------- "Disqualifying Transaction" shall mean a merger, consolidation, asset ------------------------- acquisition or disposition, or other business combination involving AT&T Corp. (or its Affiliates) and another Person, which other Person (together with its Affiliates) (a) derives from telecommunications businesses annual revenues in excess of five billion dollars (based on its most recently ended fiscal year), (b) derives less than one-third of its aggregate revenues from the provision of wireless telecommunications (based on its most recently ended fiscal year for which such information is available), (c) owns FCC Licenses to offer (and does offer) mobile wireless telecommunications services (excluding for purposes of this clause (c) FCC Licenses to offer enhanced special mobile radio services) serving more than 25% of the POPs within the Territory, and (d) with respect to which AT&T PCS has given written notice to the Company and the other Stockholders specifying that such merger, consolidation, asset acquisition or disposition or other business combination shall be a Disqualifying Transaction for purposes of this Agreement and the transactions contemplated hereby. "Employment Agreements" shall have the meaning assigned to such term in the --------------------- Securities Purchase Agreement. "Equity Securities" shall have the meaning set forth in Section 7.2(a). ----------------- "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. ------------ "FAA" shall have the meaning set forth in Section 12.8(e). --- "FCC" shall mean the Federal Communications Commission or similar --- regulatory authority established in replacement thereof. "FCC Determination Date" shall mean such date, or such reasonable period of ---------------------- time as determined by the FCC in any regulation, rule, order or policy, as of or after which the continued ownership of the Class D Common Stock by a Stockholder which has suffered a Transfer Event will cause the Company to compromise or forfeit any Material Benefits. "Federal Arbitration Act" shall have the meaning set forth in Section ----------------------- 12.8(e). 7 "Final Order" shall mean an action or decision that has been granted by the ----------- FCC as to which (i) no request for a stay or similar request is pending, no stay is in effect, the action or decision has not been vacated, reversed, set aside, annulled or suspended and any deadline for filing such request that may be designated by statute or regulation has passed, (ii) no petition for rehearing or reconsideration or application for review is pending and the time for the filing of any such petition or application has passed, (iii) the FCC does not have the action or decision under reconsideration on its own motion and the time within which it may effect such reconsideration has passed, and (iv) no appeal is pending including other administrative or judicial review, or in effect and any deadline for filing any such appeal that may be designated by statute or rule has passed. "First Offer" shall have the meaning set forth in Section 4.2(a). ----------- "First Offer Period" shall have the meaning set forth in Section 4.2(b). ------------------ "First Offeree" shall have the meaning set forth in Section 4.2(a). ------------- "Governmental Authority" means a Federal, state or local court, ---------------------- legislature, governmental agency (including, without limitation, the United States Department of Justice), commission or regulatory or administrative authority or instrumentality. "Hoak" shall mean, collectively, Hoak Communications Partners, L.P. and HCP ---- Capital Fund, L.P. and their respective Affiliates. "Inclusion Event" shall have the meaning set forth in Section 4.3(a). --------------- "Inclusion Event Offeree" shall have the meaning set forth in Section ----------------------- 4.3(a). "Inclusion Event Purchaser" shall have the meaning set forth in Section ------------------------- 4.3(a). "Inclusion Notice" shall have the meaning set forth in Section 4.3(a). ---------------- "Inclusion Stock" shall have the meaning set forth in Section 4.3(a). --------------- "Indemnified Party" shall have the meaning set forth in Section 5(e)(v). ----------------- "Indemnified Stockholder" shall have the meaning set forth in Section ----------------------- 5(e)(i). "Indemnifying Party" shall have the meaning set forth in Section 5(e)(v). ------------------ "Immediate Family" shall mean an individual's spouse, children (including ---------------- adopted children), grandchildren, parents, grandparents, and siblings. 8 "IPO Date" shall mean the first date on which (a) the Class A Voting Common -------- Stock shall have been registered pursuant to an effective Registration Statement under the Securities Act, (b) the aggregate gross proceeds received by the Company in connection with such Registration Statement(s) equals or exceeds $20 million, and (c) the Class A Voting Common Stock shall be listed for trading on the New York Stock Exchange or the American Stock Exchange or authorized for trading on NASDAQ, including without limitation its National Market System. "Issuance Notice" shall have the meaning set forth in Section 7.2(a). --------------- "Joint Marketing Period" shall have the meaning set forth in Section ---------------------- 6.2(c). "Law" shall mean applicable common law and any statute, ordinance, code or --- other law, rule, permit, permit condition, regulation, order, decree, technical or other standard, requirement or procedure enacted, adopted, promulgated, applied or followed by any Governmental Authority. "License" shall mean a license, permit, certificate of authority, waiver, ------- approval, certificate of public convenience and necessity, registration or other authorization, consent or clearance to construct or operate a facility, including any emissions, discharges or releases therefrom, or to transact an activity or business, to construct a tower or to use an asset or process, in each case issued or granted by a Governmental Authority. "License Purchase Agreement" shall have the meaning assigned to such term -------------------------- in the Securities Purchase Agreement. "Liens" shall mean, with respect to any asset, any mortgage, lien, pledge, ----- charge, security interest, right of first refusal or right of others therein or encumbrance of any nature whatsoever in respect of such asset. "Majority in Interest" shall mean, with respect to the Cash Equity -------------------- Investors, Persons that Beneficially Own, in the aggregate more than 50% of the aggregate number of shares of Common Stock Beneficially Owned by all such Persons. "Majority of the Central and Southwest Region" shall mean PCS Systems and -------------------------------------------- Cellular Systems owned by AT&T PCS and its Affiliates covering a majority of the POPs in all such PCS Systems and Cellular Systems in the Central and Southwest Region. "Majority of the United States" shall mean PCS Systems and Cellular Systems ----------------------------- owned by AT&T PCS and its Affiliates covering a majority of the POPs in all such PCS Systems and Cellular Systems in the United States. 9 "Management Agreement" shall mean the Management Agreement, dated of even -------------------- date herewith, between the Company and TeleCorp Management Corp. I, L.L.C., as the same may be amended, modified or supplemented in accordance with the terms thereof. "Management Stockholder" shall have the meaning set forth in the preamble. ---------------------- "Material Benefits" shall have the meaning set forth in Section 7.13. ----------------- "Minimum Build-Out Plan" shall mean the build-out plan for the Company's ---------------------- PCS Systems set forth on Schedule V hereto. "Model Procedures" shall have the meaning set forth in Section 12.8(c). ---------------- "MTA" shall mean a geographic area established by the Rand McNally 1992 --- Commercial Atlas & Marketing Guide, 123rd Edition, pp. 38-39, as modified by the FCC to form the initial geographic area of license for the A and B blocks of broadband PCS spectrum as defined in Section 24.202 of the FCC's rules. "NASD" shall mean the National Association of Securities Dealers, Inc. ---- "NASDAQ" shall mean the National Association of Securities Dealers' ------ Automated Quotation System. "Network Membership License Agreement" shall mean the Network Membership ------------------------------------ License Agreement between the Company and AT&T Corp., dated of even date herewith, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Northwood" shall mean, collectively, Northwood Ventures LLC, Northwood --------- Capital Partners LLC, and their respective Affiliates. "Offer Notice" shall have the meaning set forth in Section 4.2(a). ------------ "Offered Shares" shall have the meaning set forth in Section 4.2(a). -------------- "One Liberty" shall mean, collectively, OneLiberty Fund III, L.P. and ---------- OneLiberty Fund IV, L.P. and their respective Affiliates. "Overlap Territory" shall mean that portion of the Territory in which a ----------------- Person or its Affiliates (other than AT&T PCS and its Affiliates) that is party to a transaction meeting the description of a transaction set forth in clauses (a), (b) and (c) of the definition of a Disqualifying Transaction owns an FCC License to offer Commercial Mobile Radio Services. "PCS System" shall mean a mobile communication system constructed and ---------- operated in a BTA or a MTA (or any successor territorial designations or subdivision thereof authorized by the 10 FCC) exclusively using the 1850 MHZ to 1910 MHZ and 1930 MHZ to 1990 MHZ frequencies, or portions thereof pursuant to a License therefor issued by the FCC. "PCS Territory" shall mean the territory described on Schedule VI hereto. ------------- "Permitted Cellular License" shall have the meaning assigned to such term -------------------------- in Section 7.11(b). "Permitted Consolidation Transaction" shall have the meaning set forth in ----------------------------------- Section 7.11(a). "Permitted Merger Participant" shall mean an AT&T Licensee that (i) owns ---------------------------- one or more FCC Licenses to provide Commercial Mobile Radio Services that were acquired from AT&T PCS or its Affiliates in all or any part of the Knoxville, TN, Memphis, TN, Little Rock, AR, Detroit, MI, St. Louis, MO, Atlanta, GA, Boston, MA, Louisville, KY, Nashville, TN, Charlotte, NC, Baltimore/Washington, Richmond, VA, Houston, TX, El Paso, TX, San Diego, CA and Columbus, OH MTAs and (ii) on the date of acquisition from AT&T PCS of any such FCC Licenses to provide Commercial Mobile Radio Service referred to in clause (i) hereof, owned FCC Licenses covering at least 8 million POPs (or, in the case of El Paso, TX and San Diego, CA, covering at least 1 million POPs), and in which AT&T PCS or its Affiliates has not disposed of more than one-half of its original equity interest therein. "Permitted Non-CMRS License" shall have the meaning set forth in Section -------------------------- 7.11(c). "Person" shall mean an individual, corporation, partnership, limited ------ liability company, association, joint stock company, Governmental Authority, business trust or other legal entity. "Piggyback Notice" shall have the meaning set forth in Section 5(b)(i). ---------------- "Piggyback Registration" shall have the meaning set forth in Section ---------------------- 5(b)(i). "POPs" shall mean, with respect to any licensed area, the residents of such ---- area based on the most recent publication by Equifax Marketing Decision Systems, Inc. "Prohibited Transferee" shall mean any Person that is one of the three --------------------- (excluding any Person excluded from this definition by reason of the proviso hereto) largest carriers (other than AT&T Corp.) of telecommunications services that as of the date hereof constitute interexchange services (based on revenue derived from the provision of such telecommunications services within the entire United States during the most recent fiscal year for which such information is available) or an Affiliate thereof; provided, however, that such Person shall -------- ------- not constitute a Prohibited Transferee if (a) a material portion of such Person's business is also the business of providing wireless communications systems, and (b) TDMA is utilized in a substantial majority of such Person's wireless communications systems. 11 "Prospectus" shall have the meaning set forth in Section 5(d)(i). ---------- "Purchase Notice" shall have the meaning set forth in Section 4.2(b). --------------- "Purchase Right" shall have the meaning set forth in Section 7.2(a). -------------- "Qualified Holder" shall mean (a) any Stockholder or group of Stockholders ---------------- that Beneficially Owns (x) for purposes of Section 7.3 and Section 7.8, greater than 33 1/3% percent of the outstanding shares of Common Stock on a fully diluted basis (as appropriately adjusted for stock splits, stock dividends and the like), (y) for purposes of Section 5, shares of Class A Voting Common Stock reasonably expected to, upon sale, result in aggregate gross proceeds of at least $25 million, or (b) AT&T PCS and TWR Cellular for so long as AT&T PCS and TWR Cellular Beneficially Own in the aggregate, greater than two-thirds of the initial issuance to AT&T PCS and TWR Cellular of shares of Series A Preferred Stock (as appropriately adjusted for stock splits, stock dividends and the like). "Registrable Securities" shall mean (a) the Class A Voting Common Stock now ---------------------- owned or hereafter acquired by any Stockholder or issuable upon conversion or exchange of any Equity Security, and (b) all Class A Voting Common Stock issued or issuable upon conversion, exchange or exercise of any Equity Security which is issued pursuant to a stock split, stock dividend or other similar distribution or event with respect to Class A Voting Common Stock but with respect to any Class A Voting Common Stock, only until such time as such Class A Voting Common Stock (i) has been effectively registered under the Securities Act and disposed of in accordance with the Registration Statement covering it, (ii) has been sold to the public pursuant to Rule 144 (or any similar provision then in force), (iii) shall otherwise have been transferred, a new certificate evidencing such Class A Voting Common Stock without a legend restricting further transfer shall have been delivered by the Company, and subsequent public distribution of such Class A Voting Common Stock shall neither require registration under the Securities Act nor qualification (or any similar filing) under any state securities or "blue sky" law then in effect, or (iv) shall have ceased to be issued and outstanding. "Registration" shall have the meaning set forth in Section 5(d). ------------ "Registration Expenses" shall have the meaning set forth in Section 5(g). --------------------- "Registration Statement" shall have the meaning set forth in Section ---------------------- 5(d)(i). "Regulatory Problem" shall have the meaning assigned to such term in the ------------------ Securities Purchase Agreement. "Related Agreements" shall mean each of the Network Membership License ------------------ Agreement, the Management Agreement, the Employment Agreements, the License Purchase Agreement, the Resale Agreement and the Roaming Agreement. 12 "Representative" shall have the meaning set forth in Section 7.7. -------------- "Resale Agreement" shall mean the Resale Agreement between the Company and ---------------- AWS or an Affiliate thereof, dated of even date herewith, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Restated By-Laws" shall mean the Amended and Restated By-Laws of the ---------------- Company in the form of Exhibit A, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Restated Certificate" shall mean the Amended and Restated Certificate of -------------------- Incorporation of the Company, in the form of Exhibit B, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Roaming Agreement" shall mean the Intercarrier Roamer Service Agreement ----------------- between the Company and AWS, dated of even date herewith, as the same may be amended, modified or supplemented in accordance with the terms thereof. "Rule 144" shall mean Rule 144 promulgated under the Securities Act (or any -------- similar rule as may be in effect from time to time). "Sale Notice" shall have the meaning set forth in Section 7.4(d). ----------- "Sale Offer" shall have the meaning set forth in Section 7.4(d). ---------- "Sale Transaction" shall have the meaning set forth in Section 7.4(c). ---------------- "SBIC" shall have the meaning assigned to such term in the Securities ---- Purchase Agreement. "SBIC Holder" shall have the meaning assigned to such term in the ----------- Securities Purchase Agreement. "Section 6.2 Period" shall have the meaning set forth in Section 6.2. ------------------ "Securities Act" shall mean the Securities Act of 1933, as amended. -------------- "Securities Purchase Agreement" shall mean the Securities Purchase ----------------------------- Agreement, dated as of January 23, 1998, among the Company and the Stockholders. "Seller" shall have the meaning set forth in Section 4.2(a). ------ "Selling Stockholder" shall have the meaning set forth in Section 4.3(a). ------------------- 13 "Senior Common Stock" shall have the meaning set forth in the first ------------------- recital. "Series A Preferred Directors" shall have the meaning set forth in Section ---------------------------- 3.1(d). "Series A Preferred Stock" shall have the meaning set forth in the first ------------------------ recital. "Series B Preferred Stock" shall have the meaning set forth in the first ------------------------ recital. "Series C Preferred Stock" shall have the meaning set forth in the first ------------------------ recital. "Series D Preferred Stock" shall have the meaning set forth in the first ------------------------ recital. "Series E Preferred Stock" shall have the meaning set forth in the first ------------------------ recital. "Series F Preferred Stock" shall have the meaning set forth in the first ------------------------ recital. "Stockholder" shall have the meaning set forth in the preamble. ----------- "Subject Market" shall mean, with respect to any announcement by AT&T PCS -------------- or its Affiliates of a transaction meeting the description of a transaction set forth in clauses (a), (b) and (c) of the definition of a Disqualifying Transaction, the PCS System owned and operated by AT&T PCS and its Affiliates in any of the St. Louis, Missouri, Louisville, Kentucky or Boston, Massachusetts BTA's. "Subsidiary" shall mean, with respect to any Person, a corporation or other ---------- entity of which 50% or more of the voting power of the voting equity securities or equity interests is owned, directly or indirectly, by such Person. "Substantial Company Breach" shall mean a material breach by the Company or -------------------------- its Subsidiaries of their respective obligations under any of Sections 8.1(a), 8.2, 8.3, or 8.5(a) of this Agreement, if and only if any such material breach is not cured within 30 days of notice thereof from AT&T PCS to the Company or, if such breach is not capable of being cured within such thirty (30) day period, within one-hundred eighty (180) days of such notice, provided the Company is using best efforts to cure such material breach as soon as reasonably practicable. "Sullivan" means Thomas Sullivan. -------- "Supplemental Closing" shall have the meaning assigned to such term in the -------------------- Securities Purchase Agreement. "TDMA" shall mean the North American Time Division Multiple Access standard ---- set by the Telecommunications Industry Association, IS-54/136, and any standard that is based upon, or is an upgrade from, or is a successor to, such standard, if and only if such new or upgraded 14 standard is (i) adopted by AT&T PCS and its Affiliates in a Majority of the Central and Southwest Region, (ii) technologically compatible in all material respects with the standard then being used in a Majority of the United States (including without limitation for the purpose of facilitating roaming, hand-off and automatic call delivery between systems), and the User Interface in PCS Systems using such new or upgraded standard will not differ from the User Interface in a Majority of the United States in a manner that would be material to customers, or (iii) is approved in writing by AT&T PCS. "TDMA Quality Standards" shall mean the quality standards applicable to ---------------------- TDMA PCS Systems and Cellular Systems owned and operated by AT&T PCS and its Affiliates in the Central and Southwest Region, which, as currently in effect, are set forth on Schedule VII, as the same may be amended from time to time, provided any such amended standards shall become effective one hundred twenty (120) days after notice thereof is given to the Company. "TWR Cellular" shall have the meaning set forth in the preamble. ------------ "Telecorp Licenses" shall have the meaning assigned to such term in the ----------------- Securities Purchase Agreement. "Territory" shall mean the PCS Territory and the Cellular Territory; --------- provided, however, that in the event that, after consummation of a Disqualifying Transaction, AT&T PCS terminates its and its Affiliates' obligations under Section 8.6 with respect to any Overlap Territory, the "Territory" shall exclude the Overlap Territory solely for the purpose of determining the rights and obligations of AT&T PCS and the Company hereunder. "Toronto Dominion" shall mean Toronto Dominion Investments, Inc. and its ---------------- Affiliates. "Transfer" shall have the meaning set forth in Section 4.1. -------- "Transfer Event" shall have the meaning set forth in Section 7.13. -------------- "Unfunded Commitment" shall have the meaning assigned to such term in the ------------------- Securities Purchase Agreement. "User Interface" shall mean the process, functional commands, and look and -------------- feel by which a mobile wireless telecommunications service subscriber operates and utilizes the mobile wireless telecommunications services and service features provided by a PCS System, including the sequence and detail of specific commands or service codes, the detailed operation and response of subscriber equipment to the sequence of keys pressed to effect subscriber equipment function, the response of subscriber equipment to the activation of these keys or signals or data from the PCS System, the manner in which information is displayed on the screen of subscriber equipment, and the use of announcement tones and messages. "Vento" means Gerald Vento. ----- 15 "Voting Preference Stock" shall have the meaning set forth in the first ----------------------- recital. Each definition or pronoun herein shall be deemed to refer to the singular, plural, masculine, feminine or neuter as the context requires. Words such as "herein," "hereinafter," "hereof," "hereto" and "hereunder" refer to this Agreement as a whole, unless the context otherwise requires. 2. Restated Certificate and Restated By-Laws. The Restated Certificate in ----------------------------------------- effect as of the date hereof is in the form of Exhibit B hereto. The Restated By-Laws of the Company in effect as of the date hereof are in the form of Exhibit A hereto. 3. Management of Company. --------------------- 3.1 Board of Directors. Subject to Section 3.11, the Board of Directors ------------------ shall consist of thirteen (13) directors; provided, however, that the number of -------- ------- directors constituting the Board of Directors shall be reduced in the circumstances set forth in this Section 3.1. Each of the Stockholders hereby agrees that it will vote all of the shares of Class A Voting Common Stock and Voting Preference Stock Beneficially Owned or held of record by it (whether now owned or hereafter acquired), in person or by proxy, to cause the election of directors and thereafter the continuation in office of such directors as follows: (a) three (3) individuals selected by holders of a Majority in Interest of the Class A Voting Common Stock Beneficially Owned by the Cash Equity Investors, in their sole discretion; (b) Gerald Vento (so long as he is an officer of the Company and the Management Agreement shall be in full force and effect); (c) Thomas Sullivan (so long as he is an officer of the Company and the Management Agreement shall be in full force and effect); (d) two (2) individuals (the "Series A Preferred Directors") elected by AT&T PCS in its capacity as holder of Series A Preferred Stock so long as it and TWR Cellular has the right to elect two directors in accordance with the Restated Certificate; and (e) (i) three (3) individuals selected by the holders of the Voting Preference Stock, which three (3) individuals shall be reasonably acceptable to holders of a Majority in Interest of the Class A Voting Common Stock Beneficially Owned by the Cash Equity Investors, and (ii) three (3) individuals selected by the holders of the Voting Preference Stock, which three (3) individuals shall be reasonably acceptable to holders of a Majority in Interest of the Class A Voting Common Stock Beneficially Owned by the Cash Equity Investors and AT&T PCS, in the reasonable discretion of such Cash Equity Investors, on the one hand, and AT&T PCS, on the other hand. 16 In the event that Mr. Vento or Mr. Sullivan shall cease to be an officer of the Company, or the Management Agreement shall cease to be in full force and effect, such individuals shall resign (or the holders of the Voting Preference Stock shall remove him) from the Board of Directors and the holders of the Voting Preference Stock shall select a replacement or replacements who shall be acceptable to a Majority in Interest of the Cash Equity Investors and AT&T PCS and TWR Cellular, in each case in its sole discretion. In the event that AT&T PCS shall cease to be entitled to elect the Series A Preferred Directors, such directors shall resign (or the other directors or Stockholders shall remove them) from the Board of Directors and the remaining directors shall take such action so that the number of directors constituting the entire Board of Directors shall be reduced accordingly. In the event that any Cash Equity Investor that has an Unfunded Commitment shall fail to satisfy any such portion of its Unfunded Commitments when due in accordance with Section 2.2 of the Securities Purchase Agreement or Section 3.10 hereof, and such failure is not cured by such Cash Equity Investor within thirty five (35) days thereof, then, until such failure is cured, the member of the Board of Directors who is designated by, or Affiliated with, such Cash Equity Investor (whether as an employee, partner, member, stockholder or otherwise) shall resign from the Board of Directors and the Person(s) who designated such member shall select an individual acceptable to AT&T PCS in its sole discretion. Each of One Liberty, Toronto Dominion and Northwood shall have the right, so long as it Beneficially Owns at least 5,000 shares of Series C Preferred Stock and 5,000 shares of Class A Voting Common Stock to designate one (1) person who shall be entitled to attend the Board of Directors Meeting as an observer, including meetings during which the Company's annual budget is discussed and presented. Such observer shall have the right to receive all of the Board of Directors materials and shall also have the right to meet quarterly with the management of the Company to consult on the business affairs of the Company. In addition, so long as AT&T PCS and TWR Cellular have the right to designate two directors in accordance with the Restated Certificate, up to two (2) AT&T PCS regional directors (in regions overlapping with or in geographic proximity to the Territory) shall have the right to attend each meeting of the Board of Directors as an observer. Any nomination or designation of directors and the acceptance thereof pursuant to Section 3.1 shall be evidenced in writing. 3.2 Removal; Filling of Vacancies. Except as set forth in Section 3.1, ----------------------------- each Stockholder agrees it will not vote any shares of Voting Preference Stock and/or Class A Voting Common Stock Beneficially Owned by such Stockholder, and shall not permit any Affiliated Successor of such Stockholder holding any Voting Preference Stock and/or Class A Voting Common Stock, to vote for the removal without cause of any director designated by any other Stockholder in accordance with Section 3.1. Any Stockholder or group of Stockholders who has the right to designate any member(s) of the Board of Directors shall have the right to replace any member(s) so designated by it (whether or not such member is removed from the Board of Directors with or without cause or ceases to be a member of the Board of Directors by reason of death, disability or for any other reason) upon written notice to the other Stockholders, the 17 Company and the members of the Board of Directors which notice shall set forth the name of the member(s) being replaced and the name of the new member(s); provided, however, that if a director designated pursuant to (x) Section - -------- ------- 3.1(e)(i) is replaced by the holders of Voting Preference Stock, the individual designated by the holders of Voting Preference Stock to replace such director must be acceptable to the Cash Equity Investors in accordance with the terms of Section 3.1(e)(i), and (y) Section 3.1(e)(ii) is replaced by the holders of Voting Preference Stock, the individual designated by the holders of Voting Preference Stock to replace such director must be acceptable to the Cash Equity Investors and AT&T PCS in accordance with the terms of Section 3.1(e)(ii). Each of the Stockholders agrees to vote, and to cause its Affiliated Successors to vote, its shares of Voting Preference Stock and/or Class A Voting Common Stock, or shall otherwise take any action as is necessary to cause the election of any successor director designated by any Stockholder pursuant to this Section 3.2. The holders of the Voting Preference Stock, agree that during the three (3) year period commencing on the date hereof they will not (i) remove the individuals nominated by them pursuant to Sections 3.1(e)(i) and 3.1(e)(ii), or (ii) nominate for election any individuals other than the individuals initially selected by them and approved in accordance with said Sections 3.1(e)(i) and (e)(ii), subject to the agreements of such individuals to serve on the Board of Directors. 3.3 Initial Directors. In accordance with Section 228 of the Delaware ----------------- General Corporation Law and pursuant to the provisions of Section 3.1 of this Agreement, the Stockholders hereby consent to the election of and do hereby elect in accordance with Section 3.1 hereof the persons designated in Schedule VIII hereto as directors of the Company. Such persons shall hold office until their successors are duly elected and qualified, except as otherwise provided in this Agreement or the Restated Certificate or the Restated By-Laws. 3.4 Compensation and Reimbursement. The members of the Board of ------------------------------ Directors (other than the directors selected pursuant to Section 3.1(e)(ii)) shall not be compensated for their services as a director or as a member of any committee of the Board of Directors. The Board of Directors shall determine the compensation payable, if any, to the directors selected pursuant to Section 3.1(e)(ii) for their services as a director. The Company shall reimburse each member of the Board of Directors for all out-of-pocket expenses reasonably incurred by such director in connection with the performance of his service as a director or as a member of any committee of the Board of Directors. 3.5 Business of the Company. The business and affairs of the Company ----------------------- shall be conducted by the officers of the Company under the supervision of the Board of Directors, substantially in accordance with operating and capital expenditure budgets approved by the Board of Directors from time to time. The Stockholders and the directors hereby approve the five (5) year build-out plan for the Business and the capital budget for the first two (2) years of the Business in the forms attached hereto as Schedule IX. 3.6 Required Votes. (a) All actions of the Board of Directors of the -------------- Company shall require the vote of at least a majority of the entire Board of Directors, unless otherwise required by Law, the Restated Certificate, the Restated By-Laws or this Agreement. 18 (b) None of the following transactions or actions shall be entered into or taken by the Company, unless (i) voted for or consented to by the vote of at least three (3) of the five (5) directors designated pursuant to Sections 3.1(a) and (d) and six (6) of the eight (8) directors designated pursuant to Sections 3.1(b), (c) and (e) of the Board of Directors of the Corporation. (i) The sale, transfer, assignment or other disposition of any material portion of the assets of the Company or any of its Subsidiaries other than in the ordinary course of business; (ii) The merger, combination or consolidation of the Company or any of its Subsidiaries with or into any other entity, regardless of whether the Company or any such Subsidiary is the surviving entity in any such merger, combination or consolidation, the acquisition of any businesses by the Corporation, the formation of any partnership or joint venture involving the Company, or the liquidation, dissolution or winding up of the Company or any of its Subsidiary; (iii) Any offering or issuance of additional shares of Preferred Stock, Voting Preference Stock or Common Stock of, or any other securities or ownership interests in, the Company or any of its Subsidiaries, including, without limitation, warrants, options or other rights convertible or exchangeable into Preferred Stock, Voting Preference Stock or Common Stock of, or other securities or ownership interests in, the Company or any of its Subsidiaries except as contemplated by the Securities Purchase Agreement or the declaration of any dividends thereon. (iv) The repurchase by the Company of any Company Stock (other than shares of Class A Voting Common Stock or Series E Preferred Stock purchased from former employees of the Company); (v) The authorization or adoption of any amendment to the Restated Certificate, Restated By-laws or any constituent document of the Company or any of its Subsidiaries; (vi) The hiring or termination of any executive officer of the Company; (vii) The approval of, or amendment to, any operating or capital budget of the Company or any of its Subsidiaries; (viii) The incurrence by the Company or any of its Subsidiaries, whether directly or indirectly, of any indebtedness for borrowed money or capital leases in any calendar quarter in excess of $1,000,000; (ix) Any agreement or arrangement, written or oral, to pay any director, officer, agent or employee of the Company or any of its Subsidiaries $200,000 or more 19 on an annual basis or any loan, lease, contract or other transaction with any employee of the Company or any of its Subsidiaries with an annual salary in excess of $200,000 or with any director or officer of the Company or any member of any such Person's Immediate Family; (x) The making of, or commitment to make, any capital expenditures involving a payment or liability in any one year of $1,000,000 or more in the aggregate by the Company or any of its Subsidiaries; (xi) The initiation of any bankruptcy proceeding, dissolution or liquidation of the Company or any of its Subsidiaries; and (xii) The entering into any contract, agreement or understanding to do any of the foregoing. Notwithstanding the foregoing, any amendment, modification, waiver or termination of the Management Agreement shall require the affirmative vote or consent of a majority of the Board of Directors (excluding Messrs. Vento and Sullivan). 3.7 Transactions between the Company and the Stockholders or their -------------------------------------------------------------- Affiliates. Except for this Agreement, the Securities Purchase Agreement and the - ---------- Related Agreements and the transactions contemplated hereby and thereby and any other arms-length agreements or transactions entered into from time to time between the Company and its Subsidiaries, on the one-hand, and AT&T PCS and its Affiliates, on the other hand, no Stockholder or any Affiliate of any Stockholder shall enter into any transaction with the Company or any Subsidiary of the Company unless such transaction is approved by a majority of the disinterested members of the Board of Directors. For purposes hereof, a director shall be deemed to be disinterested with respect to any such transaction if such director was not designated a director by the Stockholder that (or an Affiliate of which) proposed to engage in such transaction with the Company or any Subsidiary of the Company and such member is not an officer, director, partner, employee, stockholder of, or consultant to, such Stockholder or any of its Affiliates; provided, however, that for purposes of this Section 3.7 the -------- ------- directors designated pursuant to Sections 3.1(e)(ii) and 3.11(a)(ii) shall not be deemed to have been designated by the Cash Equity Investors, AT&T PCS or the holders of the Voting Preference Stock. 3.8 Board Committees. An executive committee of the Board of ---------------- Directors (or a committee of the Board of Directors having substantially the same mandate and powers of such a committee) shall be established, which committee shall be comprised of five (5) individuals as follows: one (1) of the Series A Preferred Directors, one of the directors selected by the Cash Equity Investors pursuant to Section 3.1(a), Mr. Vento (so long as he is an officer of the Company), one (1) of the directors selected pursuant to Section 3.1(e)(i) and one (1) of the directors selected pursuant to Section 3.1(e)(ii). 20 3.9 Voting Agreements and Voting Trusts. Except as disclosed on ----------------------------------- Schedule X or referred to in this Section 3.9, each Stockholder agrees that it will not, directly or indirectly, deposit any of his or its shares of Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Voting Preference Stock and/or Common Stock in a voting trust or other similar arrangement or, except as expressly provided herein, subject such shares to a voting agreement or other similar arrangements. Each of AT&T PCS and TWR Cellular covenants and agrees that it will not, directly or indirectly, enter into a voting or similar agreement with any Transferee of shares of Series A Preferred Stock. Each holder of Voting Preference Stock shall vote all shares of Voting Preference Stock owned by him in accordance with the vote of holders of a majority of the shares of Voting Preference Stock. 3.10 Additional Capital Contributions. In accordance with the -------------------------------- Securities Purchase Agreement, the Cash Equity Investors shall contribute to the capital of the Company an aggregate additional amount equal to their Unfunded Commitments, such contributions to be made by the Cash Equity Investors in the amounts and on the dates specified on Schedule I thereto. In the event that the Board of Directors determines in good faith that the Company requires all or any portion of the Unfunded Commitment prior to the dates specified on such Schedule, then upon notice given by the Company to the Cash Equity Investors, the Cash Equity Investors shall contribute, pro rata in accordance with their ownership of Series C Preferred Stock on the date hereof, the additional capital set forth in such notice up to the amount, in the case of each such Cash Equity Investor, of its Unfunded Commitment. Any such additional capital required to be contributed by the Cash Equity Investors shall be contributed by the Cash Equity Investors within twenty (20) business days of receipt of written notice from the Company. 3.11 Board of Directors After Voting Preference Stock. Effective on ------------------------------------------------ the later to occur of (x) the date that holders of shares of Voting Preference Stock shall vote as a class with holders of Class A Voting Common Stock, and (y) immediately prior to the IPO Date, the Board of Directors shall consist of seven (7) directors, each of the Stockholders hereby agrees that it will vote all of the shares Class A Voting Common Stock and Voting Preference Stock owned or held of record by it (whether now owned or hereafter acquired), in person or by proxy, to cause the election of directors as follows: (a) (i) two (2) individuals selected by holders of a Majority in Interest of the Common Stock Beneficially Owned by the Cash Equity Investors, in their sole discretion and (ii) two (2) additional individuals selected by holders of a Majority in Interest of the Common Stock held by the Cash Equity Investors, which two (2) additional individuals shall be acceptable to Vento and Sullivan (in each case so long as he is an officer of the Company) and AT&T PCS, in the discretion of Vento and Sullivan, on the one hand, and AT&T PCS, on the other hand; (b) Two (2) individuals employed by the Company and selected by Vento and Sullivan (in each case so long as Vento and Sullivan are officers of the Company), one of whom shall be acceptable to holders of a Majority in Interest of the Class A Voting Common Stock Beneficially Owned by the Cash Equity Investors and AT&T PCS, in the 21 reasonable discretion of such Cash Equity Investors, on the one hand, and AT&T PCS on the other hand; and (c) One (1) individual elected by AT&T PCS in its capacity as holder of Series A Preferred Stock so long as it has the right to elect one director in accordance with the Restated Certificate. In the event that an individual selected by Vento and Sullivan pursuant to paragraph (b) above shall cease to be an officer of the Company, such individual shall resign (or the other directors or Stockholders shall remove him) from the Board of Directors and the Board of Directors shall select a replacement from the executives of the Company who shall be reasonably acceptable to a Majority in Interest of the Cash Equity Investors, on the one hand, and AT&T PCS on the other hand, in each case in its sole discretion. In the event that AT&T PCS and TWR Cellular shall cease to be entitled to elect one (1) Series A Preferred Director, such director shall resign (or the other directors or Stockholders shall remove him) from the Board of Directors and the remaining directors shall take such action so that the number of directors constituting the entire Board of Directors shall be reduced accordingly. 4. Transfers of Shares. ------------------- 4.1 General. ------- (a) Each Stockholder agrees that at all times prior to the IPO Date it shall not, directly or indirectly, transfer, sell, assign, pledge, tender or otherwise grant, create or suffer to exist a Lien in or upon, give, place in trust, or otherwise voluntarily or involuntarily (including transfers by testamentary or intestate succession) dispose of by operation of law, offer or otherwise (any such action being referred to herein as a "Transfer"), any of the shares of Company Stock Beneficially Owned by such Stockholder as of the date hereof or which may hereafter be acquired by such Stockholder, except that (i) a Stockholder may Transfer shares of Common Stock to an Affiliated Successor, (ii) a Stockholder may Transfer shares of Common Stock to any other Person after complying first with Section 4.2 and next with Section 4.3, if applicable, (iii) a Cash Equity Investor may Transfer shares of Common Stock to another Cash Equity Investor, (iv) one or more Cash Equity Investors may Transfer up to 1,000 shares (in the aggregate for all Cash Equity Investors) of Class A Common Stock to the Management Stockholders, or (v) a Management Stockholder may Transfer shares of Class C Common Stock and Series E Preferred Stock to the Company. (b) Each Stockholder agrees that at all times on and after the IPO Date it shall not, directly or indirectly, Transfer any of the shares of Common Stock Beneficially Owned by such Stockholder as of the date hereof or which may hereafter be acquired by such Stockholder except that (i) a Management Stockholder may Transfer shares of Class C Common Stock and Series E Preferred Stock to the Company, (ii) a Cash Equity Investor may Transfer shares of Common Stock to another Cash Equity Investor, and (iii) a Stockholder may Transfer (x) shares of Common Stock to an Affiliated Successor, and (y) shares of Common Stock after 22 complying first with Section 4.2 and next with Section 4.3, if applicable, provided, however, a Stockholder shall not be required to comply with Section - -------- ------- 4.2 if such Stockholder first complies with the applicable provisions of Section 4.4 in connection with Transfers of Common Stock (1) pursuant to a Registration of Common Stock under Section 5 which is an underwritten offering and constitutes a bona fide distribution of such Common Stock pursuant to such Registration, (2) pursuant to Rule 144, or (3) in any single transaction or series of related transactions to one or more Persons which results in the Transfer by such Stockholder (together with any other Stockholder participating in such single transaction or series of related transactions) of not more than ten percent (10%) of the Common Stock on a fully diluted basis (excluding for such purposes the Series A Preferred Stock). (c) Notwithstanding anything to the contrary contained in Sections 4.1(a) or (b), prior to the (i) third anniversary of the date hereof, each Stockholder (other than the Management Stockholders) agrees that it will not Transfer any shares of Common Stock Beneficially Owned by it as of the date hereof or which may hereafter be acquired by it to any Person other than an Affiliated Successor, and (ii) fifth anniversary of the date hereof, each Management Stockholder agrees that it will not Transfer any shares of Common Stock Beneficially Owned by it as of the date hereof or which may hereafter be acquired by it to any Person; provided, however, that (x) on or after the later -------- ------- to occur of (I) the third anniversary of the date hereof, and (II) the IPO Date, a Management Stockholder may Transfer up to 25% of the shares of Common Stock held by such Management Stockholder on the date hereof plus any shares of Class A Common Stock or Series C Preferred Shares purchased from a Cash Equity Investor which shares may be Transferred notwithstanding the foregoing, and (y) in the event the Management Agreement is terminated on or after the later to occur of (I) the date that the Management Stockholders shall have performed all of their obligations pursuant to Section 5(f) of the Management Agreement, and (II) the third anniversary of the date hereof, a Management Stockholder may Transfer all shares of Class A Common Stock held by such Management Stockholder free of any restrictions imposed on any such Transfer by this Section 4.1(c). In addition, notwithstanding anything to the contrary contained herein, the Management Stockholders shall not Transfer any shares of Class A Common Stock that shall not have vested in accordance with the terms of the Management Agreement or any Employment Agreement between the Company and such Management Stockholder. (d) Prior to the IPO Date, each Stockholder agrees that it will not Transfer any shares of Preferred Stock held by it except (i) to an Affiliated Successor, (ii) that Cash Equity Investors may Transfer shares of Preferred Stock to another Cash Equity Investor and one or more Cash Equity Investors may Transfer up to 1,000 shares (in the aggregate for all Cash Equity Investors) of Series C Preferred Stock to the Management Stockholders or (iii) to any other Person after complying with Section 4.2; it being understood that on and after the IPO Date, each Stockholder may Transfer its shares of Preferred Stock free from any restrictions on Transfer of such shares under this Agreement. In addition, notwithstanding anything to the contrary contained herein, the Management Stockholders shall not Transfer any shares of Series E Preferred Stock that shall not have vested in accordance with the terms of the Management 23 Agreement or any Employment Agreement between the Company and such Management Stockholder. (e) (i) Each of the holders of Class C Common Stock and Voting Preference Stock agrees that it shall not Transfer any of the shares of Class C Common Stock or Voting Preference Stock Beneficially Owned by it other than pursuant to Section 5(f) of the Management Agreement. (ii) Prior to the IPO Date, each Stockholder agrees that it will not Transfer any shares of Class D Common Stock held by it except (I) to an Affiliated Successor, (II) that Cash Equity Investors may Transfer shares of Class D Common Stock to another Cash Equity Investor, or (III) to any other Person after complying with Section 4.2; it being understood that on and after the IPO Date, each Stockholder may Transfer its shares of Class D Common Stock free from any restrictions under this Section 4.1(e) on Transfer of such shares under this Agreement. Notwithstanding anything to the contrary contained in this Agreement, each Stockholder agrees that it will not effect a Transfer of shares of Class D Common Stock to any Person if after giving effect to such Transfer, such Person, together with its Affiliates would Beneficially Own 25% or more of all of the issued and outstanding shares of Class D Common Stock. (f) Notwithstanding anything to the contrary contained in this Section 4, (i) Section 4.1 shall not apply to the pledge by certain of the Cash Equity Investors of the Class C Preferred Stock and Common Stock as security for their Unfunded Commitments pursuant to a pledge agreement in favor of the Company or to any Transfer of shares of Class C Preferred Stock or Common Stock in connection with the exercise by the Company of its remedies pursuant to any such pledge agreement, and (ii) a Cash Equity Investor that is a SBIC Holder that is required to dispose of its investment in the Company by reason of a breach by the Company of Section 6.6(d) of the Securities Purchase Agreement or a Regulatory Problem, may Transfer its shares of Class C Preferred Stock or Common Stock without complying with the terms of Section 4.3. 4.2 Right of First Offer. -------------------- (a) If a Stockholder (each a "Seller") desires to Transfer any or all of its shares of Preferred Stock or Common Stock (other than Voting Preference Stock and Class C Common Stock which may only be transferred in accordance with Section 4.1(e)(i) collectively, the "Offered Shares"), such Seller shall give written notice (the "Offer Notice") to the Company and to each Stockholder entitled to become the First Offeree of such Offered Shares, as determined below. Each Offer Notice shall describe in reasonable detail the number of shares of each class of Offered Shares, the cash purchase price requested and all other material terms and conditions of the proposed Transfer. The Offer Notice shall constitute an irrevocable offer (a "First Offer") to sell all (and not less than all) of the Offered Shares to the First Offeree(s) at a cash price equal to the price contained in such Offer Notice and upon the same terms as the terms contained in such Offer Notice. The First Offeree(s) shall have the irrevocable right and 24 option, exercisable as provided below, but not the obligation, to accept the First Offer as to all (and not less than all) of the Offered Shares. The "First Offeree(s)" shall be determined as follows: (i) If the Seller is a Cash Equity Investor, AT&T PCS shall be First Offeree; (ii) If the Seller is AT&T PCS or TWR Cellular, each Cash Equity Investor shall be the First Offeree; and (iii) If the Seller is any Stockholder other than a Cash Equity Investor, AT&T PCS shall be the First Offeree. (b) The option provided for herein shall be exercisable by the First Offeree(s) by giving written notice (a "Purchase Notice"), that the First Offeree desires to purchase all (and not less than all) of such Offered Shares from the Seller, to the Stockholders (other than the Seller) and the Company not later than ten (10) business days (the "First Offer Period") after the date of the Offer Notice. If the Cash Equity Investors are First Offerees and two or more Cash Equity Investors notify the Seller of their desire to purchase all of the Offered Shares, then each Cash Equity Investor shall acquire the proportion of such Offered Shares as the number of shares of Company Stock owned by such Cash Equity Investor bears to the total number of shares of Company Stock owned by all Cash Equity Investors who elected to purchase all of the Offered Shares. If Offered Shares are purchased by more than one purchaser, the purchase price shall be allocated among the parties purchasing the shares on the basis of the number of shares being so purchased. The purchase of the Offered Shares by the First Offeree(s) shall be closed at the principal executive offices of the Company on a date specified by the First Offeree(s) upon at least five (5) business days' notice, that is within thirty (30) days after the expiration of the First Offer Period; provided, however, that if such purchase is subject to -------- ------- the consent of the FCC or any public service or public utilities commission, the purchase of the Offered Shares shall be closed on the first business day after all such consents shall have been obtained by Final Order. (c) If the First Offeree(s) decline (which shall include the failure to give timely notice of acceptance) to purchase all of the Offered Shares subject to the First Offer within the First Offer Period, the Seller shall have the right (for a period of ninety (90) days following the expiration of the First Offer Period) to consummate the sale of the Offered Shares to any Person; provided, however, that the purchase price of such Offered Shares payable by - -------- ------- such Person must be at least equal to the cash purchase price thereof set forth in the Offer Notice and all other terms and conditions of any such sale shall not be more beneficial to such third party than those contained in the Offer Notice. If any Offered Shares are not sold pursuant to the provisions of this Section 4.2 prior to the expiration of the ninety (90) day period specified in the immediately preceding sentence, such Offered Shares shall become subject once again to the provisions and restrictions hereof; provided, however, that if -------- ------- such purchase is subject to the consent of the FCC or any public service or public utilities commission, the purchase of the 25 Offered Shares shall be closed on the first business day after all such consents shall have been obtained by Final Order. (d) The purchase price of any Offered Shares Transferred pursuant to this Section 4.2 shall be payable in cash by certified bank check or by wire transfer of immediately available funds. (e) The provisions of this Section 4.2 shall not be applicable to the repurchase by the Company of any shares of Class A Voting Common Stock or Class E Preferred Stock repurchased by the Company from an employee of the Company in connection with such individual's termination of employment. 4.3 Rights of Inclusion. ------------------- (a) No Stockholder shall, directly or indirectly, Transfer, in any single transaction or series of related transactions to one or more Persons who are not Affiliated Successors of such Stockholder (each such Person an "Inclusion Event Purchaser") shares of any series or class of Company Stock (collectively, "Inclusion Stock") in circumstances in which, after giving effect to such Transfer, whether acting alone or in concert with any other Stockholder (such parties referred to herein as "Selling Stockholders") would result in such Selling Stockholder(s) Transferring twenty-five percent (25%) or more of the outstanding shares of any such class of Inclusion Stock (for purposes of this Section 4.3, in the event that the Inclusion Stock is Series C Preferred Stock, Series D Preferred Stock shall also be deemed to be Inclusion Stock and the Series C Preferred Stock and Series D Preferred Stock shall be deemed to be one class of Preferred Stock for purposes of this Section 4.3) outstanding on the date of such proposed Transfer on a fully diluted basis (excluding for such purposes the Series A Preferred Stock) (an "Inclusion Event"), unless the terms and conditions of such sale to such Inclusion Event Purchaser shall include an offer to AT&T PCS, the Cash Equity Investors and the Management Stockholders other than the Selling Stockholder (each, an "Inclusion Event Offeree") to Transfer to such Inclusion Event Purchasers up to that number of shares of any class of Inclusion Stock then Beneficially Owned by each Inclusion Event Offeree that bears the same proportion to the total number of shares of Inclusion Stock at that time Beneficially Owned (without duplication) by each such Inclusion Event Offeree as the number of shares of Inclusion Stock being Transferred by the Selling Stockholders (including shares of Inclusion Stock theretofore Transferred if in any applicable series of related transactions) bears to the total number of shares of Inclusion Stock at the time Beneficially Owned (without duplication) by the Selling Stockholders (including shares of Inclusion Stock theretofore Transferred if in any applicable series of related transactions). If the Selling Stockholders receive a bona fide offer from an Inclusion Event Purchaser to purchase shares of Inclusion Stock in circumstances in which, after giving effect to such sale would result in an Inclusion Event, and which offer such Selling Stockholders wish to accept, the Selling Stockholders shall then cause the Inclusion Event Purchaser's offer to be reduced to writing (which writing shall include an offer to purchase shares of Inclusion Stock from each Inclusion Event Offeree according to the terms and conditions set forth in this Section 4.3) and the Selling Stockholders shall send written 26 notice of the Inclusion Event Purchaser's offer (the "Inclusion Notice") to each Inclusion Event Offeree, which Inclusion Notice shall specify (i) the names of the Selling Stockholders, (ii) the names and addresses of the proposed acquiring Person, (iii) the amount of shares proposed to be Transferred and the price, form of consideration and other terms and conditions of such Transfer (including, if in a series of related transactions, such information with respect to shares of Inclusion Stock theretofore Transferred), (iv) that the acquiring Person has been informed of the rights provided for in this Section 4.3 and has agreed to purchase shares of Inclusion Stock in accordance with the terms hereof, and (v) the date by which each other Selling Stockholder may exercise its respective rights contained in this Section 4.3, which date shall not be less than thirty (30) days after the giving of the Inclusion Notice. The Inclusion Notice shall be accompanied by a true and correct copy of the Inclusion Event Purchaser's offer. At any time within thirty (30) days after receipt of the Inclusion Notice, each Inclusion Event Offeree may accept the offer included in the Inclusion Notice for up to such number of shares of Inclusion Stock as is determined in accordance with this Section 4.3, by furnishing written notice of such acceptance to each Selling Stockholder, and delivering, to an escrow agent (which shall be a bank or a law or accounting firm designated by the Company), on behalf of the Selling Stockholders, the certificate or certificates representing the shares of Inclusion Stock to be sold pursuant to such offer by each Inclusion Event Offeree, duly endorsed in blank, together with a limited power-of-attorney authorizing the escrow agent, on behalf of the Inclusion Event Offeree, to sell the shares to be sold pursuant to the terms of such Inclusion Event Purchaser's offer. In the event that the Inclusion Event Purchaser does not agree to purchase all of the shares of Inclusion Stock proposed to be sold by the Selling Stockholders and the Inclusion Event Offerees, then each Selling Stockholder and Inclusion Event Offeree shall have the right to sell to the Inclusion Event Purchaser that number of shares of Inclusion Stock as shall be equal to (x) the number of shares of Inclusion Stock which the Inclusion Event Purchaser has agreed to purchase times (y) a fraction, the numerator of which is the number of shares of Inclusion Stock Beneficially Owned (without duplication) by such Selling Stockholder or Inclusion Event Offeree and the denominator of which is the aggregate number of shares of Inclusion Stock Beneficially Owned (without duplication) by all Selling Stockholders and Inclusion Event Offerees. If any Inclusion Event Offeree desires to sell less than its proportionate amount of shares of Inclusion Stock that it is entitled to sell pursuant to this Section 4.3, then the Selling Stockholders and the remaining Inclusion Event Offerees shall have the right to sell to the Inclusion Event Purchaser an additional amount of shares of Inclusion Stock as shall be equal to (x) the number of shares of Inclusion Stock not being sold by any such Inclusion Event Purchasers times (y) a fraction, the numerator of which is the number of shares of Inclusion Stock owned such Selling Stockholder or remaining Inclusion Event Offeree and the denominator of which is the aggregate number of shares of Inclusion Stock Beneficially Owned (without duplication) by all Selling Stockholders and remaining Inclusion Event Offerees. Such process shall be repeated in series until all of the remaining Inclusion Event Offerees agree to sell their remaining proportionate number of shares of Inclusion Stock. (b) The purchase from each Inclusion Event Offeree pursuant to this Section 4.3 shall be on the same terms and conditions, including the price per share received by the 27 Selling Stockholders and stated in the Inclusion Notice provided to each Inclusion Event Offeree. In the event that the Inclusion Stock is Common Stock, all Inclusion Event Offerees shall be required, as a condition of participating in such transaction, to convert its Preferred Stock into Common Stock and Transfer Common Stock to the Inclusion Event Purchaser. In the event that the Inclusion Stock is Series C Preferred Stock and after giving effect to the rights of the Inclusion Event Offerees to sell their pro rata share of Series C Preferred Stock or Common Stock pursuant to this Section 4.3 the Inclusion Event Purchaser shall be required to purchase both Series C Preferred Stock and Common Stock, the purchase price allocable to holders of Series C Preferred Stock, on the one hand, and to holders of Common Stock, on the other hand, shall be determined by an independent committee of the Board of Directors selected from among those directors who were not designated by any Selling Stockholders or Inclusion Event Offerees, it being understood that the directors selected pursuant to Sections 3.1(e)(ii) and 3.11(a)(ii) shall be deemed independent for such purposes. (c) Simultaneously with the consummation of the sale of the shares of Inclusion Stock of the Selling Stockholders and each Inclusion Event Offeree to the Inclusion Event Purchaser pursuant to the Inclusion Event Purchaser's offer, the Selling Stockholders shall notify each Inclusion Event Offeree and shall cause the purchaser to remit to each Inclusion Event Offeree the total sales price of the shares of Inclusion Stock held by each Inclusion Event Offeree sold pursuant thereto and shall furnish such other evidence of the completion and time of completion of such sale and the terms thereof as may be reasonably requested by each Inclusion Event Offeree. (d) If within thirty (30) days after receipt of the Inclusion Notice, an Inclusion Event Offeree has not accepted the offer contained in the Inclusion Notice, such Inclusion Event Offeree shall be deemed to have waived any and all rights with respect to the sale described in the Inclusion Notice (but not with respect to any subsequent sale, to the extent this Section 4.3 is applicable to such subsequent sale) and the Selling Stockholders shall have sixty (60) days in which to sell not more than the number of shares of Inclusion Stock described in the Inclusion Notice, on terms not more favorable to the Selling Stockholders than were set forth in the Inclusion Notice; provided, however, that if such -------- ------- purchase is subject to the consent of the FCC or any public service or public utilities commission, the purchase of the Offered Shares shall be closed on the first business day after all such consents shall have been obtained by Final Order. 4.4 Right of First Negotiation. In the event that a Stockholder desires to -------------------------- Transfer any shares of Common Stock following the IPO Date in a Transfer described in clause (y) of Section 4.1(b)(iii), such Stockholder shall give written notice thereof to AT&T PCS, such notice to specify, among other things, the number of shares that such Stockholder desires to sell. For the applicable first negotiation period hereinafter set forth, AT&T PCS shall have the exclusive right to negotiate with such Stockholder with respect to the purchase of such shares; it being understood and agreed that such exclusive right shall not be deemed to be a right of first offer or right of first refusal for the benefit of AT&T PCS and such Stockholder shall have the right to reject any offer made by AT&T PCS during such applicable first negotiation period. Upon the expiration of such applicable first negotiation period, such Stockholder shall have the right (for 28 the applicable offer period hereinafter set forth with respect to each applicable first negotiation period), following the expiration of such applicable first negotiation period, to offer and sell such shares included in such written notice on such terms and conditions as shall be acceptable to such Stockholder in its sole discretion. If any of such shares included in such written notice are not sold pursuant to the provisions of this Section 4.4 prior to the expiration of the applicable offer period, such shares shall become subject once again to the provision and restrictions hereof. If a Stockholder desires to Transfer shares of Common Stock (a) pursuant to a Registration of Common Stock under Section 5 in an underwritten offering that constitutes a bona fide distribution of such Common Stock pursuant to such Registration, the applicable first negotiation period shall be ten (10) days and the applicable offer period upon the expiration of such first negotiation period shall be one hundred twenty (120) days, (b) pursuant to Rule 144, the applicable first negotiation period shall be three (3) hours (it being understood and agreed that such Stockholder shall, in addition to giving written notice of such proposed Transfer by facsimile, use commercially reasonable efforts to contact AT&T PCS by telephone in accordance with Section 12.1) and the applicable offer period upon the expiration of such first negotiation period shall be five (5) business days, and (c) in any single transaction or series of related transactions to one or more Persons which will result in the Transfer by such Stockholder (together with any other Stockholder participating in such single transaction or series of related transactions) of not more than ten percent (10%) of the Common Stock on a fully diluted basis (excluding for such purposes the Series A Preferred Stock), the applicable first negotiation period shall be one (1) business day, so long as notice of such proposed Transfer is given to AT&T PCS prior to 9:00 A.M. on the day prior to the date of such proposed Transfer (it being understood and agreed that such Stockholder shall, in addition to giving written notice of such proposed Transfer by facsimile, use commercially reasonable efforts to contact AT&T PCS by telephone in accordance with Section 12.1) and the applicable offer period upon the expiration of such first negotiation period shall be ten (10) business days. 4.5 Additional Conditions to Permitted Transfers. -------------------------------------------- (a) As a condition to any Transfer to an Affiliated Successor permitted pursuant to Section 4.1, or any Transfer pursuant to Section 4.2 or Section 4.3, each transferee that is not a party hereto shall, prior to such Transfer, agree in writing to be bound by all of the provisions of this Agreement applicable to the Stockholders (and shall thereby become a Stockholder for all purposes of this Agreement). Any Transfer without compliance with such provisions of this Agreement shall be null and void and such transferee shall have no rights as a Stockholder of the Company. (b) Notwithstanding anything to the contrary contained in this Agreement, each Stockholder agrees that it will not effect a Transfer of shares of Company Stock to a Prohibited Transferee; provided, however, that nothing contained in this Section 4.5(b) shall be construed to prohibit a Transfer of Common Stock by a Stockholder after the IPO Date pursuant to an underwritten Registration or in accordance with the provisions of Rule 144. It shall be deemed a breach of this Section 4.5(b) by a Stockholder Beneficially Owning more than 10% of 29 the Common Stock outstanding if any Prohibited Transferee shall acquire, directly or indirectly, in a private sale Beneficial Ownership of more than 33- 1/3% of any class of equity securities or equity interest in, such Stockholder. (c) Subject to Sections 4.1 and 4.2, prior to the IPO Date, the Cash Equity Investors, AT&T PCS and TWR Cellular may not Transfer shares of Common Stock to any Person that is not an Affiliated Successor of such Stockholder or another Cash Equity Investor unless after giving effect to such Transfer each of such Stockholder and such Person shall after giving effect to such Transfer Beneficially Own more than the lesser of (x) five percent (5%) of the Common Stock, and (y) one-half of the Common Stock Beneficially Owned by the transferor on the date hereof, upon such Transfer unless the Transfer by such Cash Equity Investor, AT&T PCS or TWR Cellular is a Transfer of all of the shares of Common Stock, as applicable, Beneficially Owned by it. Subject to Sections 4.1 and 4.2, prior to the IPO Date, no Management Stockholder may effect more than one (1) Transfer of its shares of Common Stock to a Person that is not an Affiliated Successor of such Management Stockholder during any twelve (12) month period. 4.6 Representations and Warranties. A Stockholder purchasing shares of ------------------------------ Company Stock pursuant to Section 4.2 shall be entitled to receive representations and warranties from the transferring Stockholder that such Stockholder has the authority (corporate or otherwise) to sell such shares, is the sole owner of such shares, and has good and valid title to such shares, free and clear of any and all Liens (other than pursuant to this Agreement, the Restated Certificate or any Related Agreement), and that the sale of such shares does not violate any agreement to which it is a party or by which it is bound. 4.7 Stop-Transfer. ------------- (a) The Company agrees not to effect any Transfer of shares of Company Stock by any Stockholder whose proposed Transfer is subject to Sections 4.2, 4.3 or 4.4 until it has received evidence reasonably satisfactory to it that the rights provided to any other Stockholders pursuant to such Sections, if applicable to such Transfer, have been complied with and satisfied in all respects. If any portion of such Stockholder's Unfunded Commitment shall remain unpaid on the date of such proposed Transfer, then, as a condition of such Transfer, such Person purchasing such Company Stock shall, or another Cash Equity Investor may, execute an instrument in form satisfactory to the Company agreeing to pay in full such Stockholder's Unfunded Commitment outstanding on the date of such proposed Transfer, provided, however, that such Stockholder -------- ------- shall not be released from its obligation in respect of such Unfunded Commitment. No Transfer of any shares of Preferred Stock and/or Common Stock shall be made except in compliance with all applicable securities laws. Any Transfer made in violation of this Agreement shall be null and void. (b) The Company agrees that it will not, without the prior written consent of AT&T PCS, Transfer, issue or dispose of any Equity Securities to a Prohibited Transferee except 30 that purchases of Common Stock by a Prohibited Transferee in connection with a Registration of Common Stock shall not constitute a violation of this Section 4.7(b). 5. Registration Rights. ------------------- (a) Demand Registration Rights. -------------------------- (i) Right to Demand Registration. From and after the ninety-first ---------------------------- (91st) day following the IPO Date (or such longer period as may be required by the managing underwriters of the Company's initial public offering) and, subject to Section 4.1(d), each of (A) a Qualified Holder, and (B) Management Stockholders that in the aggregate Beneficially Own at least 50.1% of the shares of Class A Voting Common Stock then Beneficially Owned by the Management Stockholders (each a "Demanding Stockholder" and, collectively, the "Demanding Stockholders") shall have the right to make a written request to the Company for registration with the Commission, under and in accordance with the provisions of the Securities Act, of all or part of their Registrable Securities pursuant to an underwritten offering (a "Demand Registration"), which request shall specify the number of Registrable Securities proposed to be sold by each Demanding Stockholder; provided, however, that (x) the Company need not effect a Demand -------- ------- Registration unless in the aggregate the sale of the Registrable Securities proposed to be sold by the Demanding Stockholder shall reasonably be expected to result in aggregate gross proceeds to such Demanding Stockholder of at least $10 million, and (y) if the Board of Directors determines that a Demand Registration would interfere with any pending or contemplated material acquisition, disposition, financing or other material transaction, the Company may defer a Demand Registration (including by withdrawing any Registration Statement filed in connection with a Demand Registration); so long as that the aggregate of all such deferrals shall not exceed one hundred twenty (120) days in any 360-day period. Demand Registration shall not be deemed a Demand Registration hereunder until such Demand Registration has been declared effective by the Commission (without interference by any stop order, injunction or other order or requirement of the Commission or other governmental agency, for any reason), and maintained continuously effective for a period of at least three (3) months or such shorter period when all Registrable Securities included therein have been sold in accordance with such Demand Registration; provided, however, that a -------- ------- Qualified Holder may, not more frequently than once in any twelve (12) month period, request that the Demand Registration be a shelf registration that is maintained continuously effective for a period of at least six (6) months or such shorter period when all Registrable Securities included therein have been sold in accordance with such Demand Registration. A Demanding Stockholder may make a written request for a Demand Registration in accordance with the foregoing in respect of Equity Securities that it intends to convert into shares of Class A Voting Common Stock upon the effectiveness of the Registration Statement prepared in connection with such demand, and the Company shall fulfill its obligations under this Section 5 in a manner that permits such Demanding Stockholder to exercise its conversion rights in respect of such Equity Securities and substantially contemporaneously sell the shares of Class A Voting Common Stock issuable upon such conversion under such Registration Statement. 31 The Company will not be obligated to effect more than two (2) separate Demand Registrations during any twelve (12) month period; provided, however, -------- ------- that only one (1) request for a Demand Registration may be exercised by (i) AT&T PCS and/or (ii) Management Stockholders that in the aggregate Beneficially Own at least 50.1% of the shares of Class A Voting Common Stock then Beneficially Owned by the Management Stockholders during any twelve (12) month period. Within ten (10) days after receipt of the request for a Demand Registration, the Company will send written notice (the "Demand Notice") of such Registration request and its intention to comply therewith to all Stockholders who are holders of Registrable Securities and, subject to Section 5(a)(ii), the Company will include in such Demand Registration all Registrable Securities of such Stockholders with respect to which the Company has received written requests for inclusion therein within twenty (20) days after the last date such Demand Notice was deemed to have been given pursuant to Section 12.1. (ii) Priority on Demand Registration. If the managing underwriter or ------------------------------- underwriters advise the Company and the holders of the Registrable Securities to be registered in writing that in its or their opinion that, the number of Registrable Securities proposed to be sold in such Registration and any other securities of the Company requested or proposed to be included in such Registration exceeds the number that can be sold in such offering without (A) creating a substantial risk that the proceeds or price per share to be derived from such Registration will be reduced or that the number of Registrable Securities to be registered is too large a number to be reasonably sold, or (B) materially and adversely affecting such Registration in any other respect, the Company will (x) include in such Registration the aggregate number of Registrable Securities recommended by the managing underwriter (the number of Registrable Securities to be registered for each Stockholder to be reduced pro rata based on the amount of Registrable Securities each of the Stockholders requested to be included in such Registration), and (y) not allow any securities other than Registrable Securities to be included in such Registration unless all Registrable Securities requested to be included shall have been included therein, and then only to the extent recommended by the managing underwriter or determined by the Company after consultation with an investment banker of nationally recognized standing (notification of which number shall be given by the Company to the holders of Registrable Securities). (iii) Selection of Underwriters. The offering of such Registrable ------------------------- Securities pursuant to such Demand Registration shall be in the form of an underwritten offering. The Demanding Stockholder that initiated such Demand Registration will select a managing underwriter or underwriters of recognized national standing to administer the offering, which managing underwriter or underwriters shall be reasonably acceptable to the Company. (b) Piggyback Registration Rights. ----------------------------- (i) Right to Piggyback. If the Company proposes to register any shares ------------------ of Class A Voting Common Stock (or securities convertible into or exchangeable for 32 Class A Voting Common Stock) with the Commission under the Securities Act (other than a Registration on Form S-4 or Form S-8, or any successor forms), and the Registration form to be used may be used for the Registration of the Registrable Securities (a "Piggyback Registration"), the Company will give written notice (a "Piggyback Notice") to all Stockholders, at least thirty (30) days prior to the anticipated filing date, of its intention to effect such a Registration, which notice will specify the proposed offering price (if determined at that time), the kind and number of securities proposed to be registered, the distribution arrangements and will, subject to Section 5(b)(ii), include in such Piggyback Registration all Registrable Securities with respect to which the Company has received written requests (which requests have not been withdrawn) for inclusion therein within twenty (20) days after the last date such Piggyback Notice was deemed to have been given pursuant to Section 12.1. If at any time after giving the Piggyback Notice and prior to the effective date of the Registration Statement filed in connection with such Registration, the Company determines for any reason not to register or to delay Registration, the Company may, at its election, give written notice of such determination to each holder of Registrable Securities that has requested inclusion of Registrable Securities in such Registration and (A) in the case of a determination not to register, shall be relieved of its obligation to register any Registrable Securities in connection with such Registration, and (B) in the case of a determination to delay registering, shall be permitted to delay registering any Registrable Securities for the same period as the delay in registering such other securities. (ii) Priority on Piggyback Registrations. If the managing ----------------------------------- underwriter or underwriters, if any, advise the Company and the holders of Registrable Securities in writing that in its or their opinion, that the number or kind of securities proposed to be sold in such Registration (including Registrable Securities to be included pursuant to Section 5(b)(i)) exceeds the number that can be sold in such offering without (A) creating a substantial risk that the proceeds or price per share the Company will derive from such Registration will be reduced, or that the number of shares to be registered is too large a number to be reasonably sold or (B) materially and adversely affecting such Registration in any other respect, without any reduction in the amount of securities the Company proposes to issue and sell for its own account or in the amount of securities any other security holder proposes to sell for its own account pursuant to a demand Registration right, the number of Registrable Securities to be registered for each Demanding Stockholder shall be reduced pro rata based on the amount of Registrable Securities each of the Demanding Stockholders requested to be included in such Registration, to the extent necessary to reduce the number of Registrable Securities to be registered to the number recommended by the managing underwriter or determined by the Company after consultation with an investment banker of nationally recognized standing (notification of which number shall be given by the Company to the holders of Registrable Securities of such determination). (c) Selection of Underwriters. Except as set forth in Section ------------------------- 5.1(a)(iii), the Company (by action of the Board of Directors) will select a managing underwriter or underwriters to administer the offering, which managing underwriter or underwriters will be of nationally recognized standing. 33 (d) Registration Procedures. With respect to any Demand Registration ----------------------- or Piggyback Registration (each, a "Registration"), the Company shall, subject to Sections 5(a)(i) and (5)(a)(ii) and Sections 5(b)(i) and 5(b)(ii), as expeditiously as practicable: (i) prepare and file with the Commission, as promptly as reasonably practicable (but in no event more than forty-five (45) days) after the receipt of the Registration requests under Sections 5(a) or 5(b), a registration statement or registration statements (each, a "Registration Statement") relating to the applicable Registration on any appropriate form under the Securities Act, which form shall be available for the sale of the Registrable Securities in accordance with the intended method or methods of distribution thereof; cooperate and assist in any filings required to be made with the NASD; and use its reasonable best efforts to cause such Registration Statement to become and (to the extent provided herein) remain effective; provided, however, that before filing a Registration Statement or prospectus - -------- ------- related thereto (a "Prospectus") or any amendments or supplements thereto, the Company shall furnish to the holders of the Registrable Securities covered by such Registration Statement and the underwriters, if any, copies of all such documents proposed to be filed, which documents will be subject to the reasonable review of such holders and underwriters and their respective counsel, and the Company shall not file any Registration Statement or amendment thereto or any Prospectus or any supplement thereto to which the holders of a majority of the Registrable Securities covered by such Registration Statement or the underwriters, if any, shall reasonably object; (ii) prepare and file with the Commission such amendments and supplements to the Registration Statement as may be necessary to keep each Registration Statement effective for three (3) months (six (6) months in the case of any shelf registration requested by a Qualified Holder pursuant to this Section 5) or such shorter period that will terminate when all Registrable Securities covered by such Registration Statement have been sold; cause each Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus; (iii) promptly notify the selling holders of Registrable Securities and the managing underwriters, if any (and, if requested by any such person or entity, confirm such advice in writing), (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to the Registration Statement or any post-effective amendment, when the same has become effective; (B) of any request by the Commission for amendments or supplements to the Registration Statement or the Prospectus or for additional information; (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (D) if at any time the representations and warranties of the Company contemplated by subsection (xiv) of this subsection (d) below cease to be true and correct; (E) of the receipt by the Company 34 of any notification with respect to the suspension of the qualification of the Registrable Securities for sale under the securities or blue sky laws of any jurisdiction or the initiation or threatening of any proceeding for such purpose; and (F) of the happening of any event which makes any statement made in the Registration Statement, the Prospectus or any document incorporated therein by reference untrue or which requires the making of any changes in the Registration Statement, the Prospectus or any document incorporated therein by reference in order to make the statements therein not misleading; (iv) use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of (I) the Registration Statement, or (II) the qualification of the Registrable Securities for sale under the securities or blue sky laws of any jurisdiction at the earliest possible time; (v) if requested by the managing underwriter or underwriters or a holder of Registrable Securities being sold in connection with an underwritten offering, promptly incorporate in a Prospectus supplement or post-effective amendment such information as the managing underwriters and the holders of a majority of the Registrable Securities being sold agree should be included therein relating to the plan of distribution with respect to such Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being sold to such underwriters, the purchase price being paid therefor by such underwriters and any other terms of the underwritten (or best efforts underwritten) offering of the Registrable Securities to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective amendment as soon as notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment; (vi) furnish to each selling holder of Registrable Securities and each managing underwriter, without charge, at least one signed copy of the Registration Statement and any amendment thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference); (vii) deliver to each selling holder of Registrable Securities and the underwriters, if any, without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such selling holder of Registrable Securities underwriters may reasonably request in order to facilitate the public sale or other disposition of the securities owned by such selling holder; (viii) prior to any public offering of Registrable Securities, use its reasonable best efforts to register or qualify or cooperate with the selling holders of Registrable Securities, the underwriters, if any, and their respective counsel in connection with the Registration or qualification of such Registrable Securities for offer and sale under the securities or "blue sky" laws of such jurisdictions in the United States as any seller or underwriter reasonably requests in writing, use its reasonable best efforts to obtain all appropriate registrations, permits and consents required in connection therewith, and do any and all other acts or things reasonably necessary or advisable to enable the disposition in such jurisdictions of 35 the Registrable Securities covered by the Registration Statement; provided, -------- however, that the Company will not be required to qualify generally to do - ------- business in any jurisdiction where it is not then so qualified or to take any action that would subject it to taxation or general service of process in any such jurisdiction where it is not then so subject; (ix) cooperate with the selling holders of Registrable Securities and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends and to be in such denominations and registered in such names as the managing underwriters may request at least two (2) business days prior to any sale of Registrable Securities to the underwriters; (x) use its reasonable best efforts to cooperate with any selling holder to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities in the United States as may be necessary to enable the seller or sellers thereof or the underwriters, if any, to consummate the disposition of such Registrable Securities; (xi) upon the occurrence of any event contemplated by subsection (iii)(F) above, promptly prepare a supplement or post-effective amendment to the Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading; (xii) cause all Registrable Securities covered by any Registration Statement to be listed on each securities exchange on which similar securities issued by the Company are then listed, or, if not so listed, cause such Registrable Securities to be authorized for trading on the NASDAQ National Market System if any similar securities issued by the Company are then so authorized, if requested by the holders of a majority of such Registrable Securities or the managing underwriters, if any; (xiii) not later than the effective date of the applicable Registration, provide a CUSIP number for all Registrable Securities; (xiv) enter into such customary agreements (including in the case of a Demand Registration that is an underwritten offering, an underwriting agreement in customary form) and take all such other actions reasonably required in connection therewith in order to expedite or facilitate the disposition of such Registrable Securities and in such connection, whether or not an underwriting agreement is entered into and whether or not the Registration is an underwritten Registration, (A) make such representations and warranties to the holders of such Registrable Securities and the underwriters, if any, in form, substance and scope as are customarily made by issuers to underwriters in primary underwritten offerings; (B) use reasonable best efforts to obtain opinions of counsel to the Company and updates thereof (which opinions of counsel shall be in form, scope and substance reasonably satisfactory to the 36 managing underwriters, if any, and to the holders of a majority of the Registrable Securities being sold), addressed to each selling holder and the underwriters, if any, covering the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such holders and underwriters; (C) use reasonable best efforts to obtain "cold comfort" letters and updates thereof from the Company's independent certified public accountants addressed to the selling holders of Registrable Securities and the underwriters, if any, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters by underwriters in connection with primary underwritten offerings; and (D) deliver such documents and certificates as may be reasonably requested by the holders of a majority of the Registrable Securities being sold and the managing underwriters, if any, to evidence compliance with subsection (xi) above and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company. All the above in this Section 5(d)(xiv) shall be done at each closing under each underwriting or similar agreement or as and to the extent required thereunder; (xv) make available for inspection by a representative of each Demanding Stockholder, any underwriter participating in any disposition pursuant to such Registration, and any attorney or accountant retained by the sellers or underwriter, copies or extracts of all financial and other records, pertinent corporate documents and properties of the Company as shall be reasonably necessary, in the opinion of the holders' or underwriter's counsel, to enable them to fulfill their due diligence responsibilities; and cause the Company's officers, directors and employees to supply all information reasonably requested by any such representative, underwriter, attorney or accountant in connection with such Registration Statement; provided, however, that the Company shall not -------- ------- be required to comply with this paragraph (xv) unless such person executes confidentiality agreements whereby such person agrees that any records, information or documents that are designated by the Company in writing as confidential shall be kept confidential by such Persons and used only in connection with the proposed Registration unless disclosure of such records, information or documents is required by court or administrative order or any regulatory body having jurisdiction; and each seller of Registrable Securities agrees that it will, upon learning that disclosure of such records, information or documents is sought in a court of competent jurisdiction or by a governmental agency, give notice to the Company and allow the Company, at the Company's expense, to undertake appropriate action to prevent disclosure of any records, information or documents deemed confidential; provided further, however, -------- ------- ------- notwithstanding any designation of confidentiality by the Company, confidential information shall not include information which (i) becomes generally available to the public other than as a result of a disclosure by or on behalf of any such Person, or (ii) becomes available to any such Person on a non-confidential basis from a source other than the Company or its advisors, provided that such source is not to such Person's knowledge bound by a confidentiality agreement with or other obligations of secrecy to the Company or another party with respect to such information; (xvi) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders, earnings statements satisfying the provisions of Section 11(a) of the Securities Act, no 37 later than forty-five (45) days after the end of any twelve (12) month period (or ninety (90) days, if such period is a fiscal year) (A) commencing at the end of any fiscal quarter in which Registrable Securities are sold to underwriters in a firm or best efforts underwritten offering, or (B) if not sold to underwriters in such an offering, beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the Registration Statement, which statements shall cover said twelve (12) month periods; and (xvii) promptly prior to the filing of any document that is to be incorporated by reference into any Registration Statement or Prospectus (after initial filing of the Registration Statement), provide copies of such document to counsel to the selling holders of Registrable Securities and to the managing underwriters, if any, make the Company's executive officers and other representatives available for discussion of such document and make such changes in such document prior to the filing thereof as counsel for such selling holders or underwriters may reasonably request. The Company may require each seller of Registrable Securities as to which any Registration is being effected to furnish to the Company such information regarding the proposed distribution of such securities as the Company may from time to time reasonably request in writing. Each holder of Registrable Securities agrees by acquisition of such Registrable Securities that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 5(d)(xi), such holder shall forthwith discontinue disposition of Registrable Securities until such holder's receipt of the copies of the supplemented or amended prospectus contemplated by Section 5(d)(xi), or until it is advised in writing (the "Advice") by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus; and, if so directed by the Company, such holder shall deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such seller's possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. In the event the Company gives any such notice, the time periods regarding the maintenance of the effectiveness of any Registration Statement in Sections 5(d)(ii) shall be extended by the number of days during the period from and including the date of the receipt of such notice pursuant to Section 5(d)(iii)(F) hereof to and including the date when each seller of Registrable Securities covered by such Registration Statement shall have received the copies of the supplemented or amended prospectuses contemplated by Section 5(d)(xi) or the Advice. (e) Indemnification. --------------- (i) In the event of the Registration or qualification of any Registrable Securities under the Securities Act or any other applicable securities laws pursuant to the provisions of this Section 5, the Company agrees to indemnify and hold harmless each Stockholder thereby offering such Registrable Securities for sale (an "Indemnified Stockholder"), underwriter, broker or dealer, if any, of such Registrable Securities, and each other person, if any, who controls any such Indemnified Stockholder, underwriter, broker or dealer within the meaning of the Securities Act or any other applicable securities laws, from and 38 against any and all losses, claims, damages, expenses or liabilities (or actions in respect thereof), joint or several, to which such Indemnified Stockholder, underwriter, broker or dealer or controlling person may become subject under the Securities Act or any other applicable federal or state securities laws or otherwise, insofar as such losses, claims, damages, expenses or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement under which such Registrable Securities were registered or qualified under the Securities Act or any other applicable securities laws, any preliminary prospectus or final prospectus relating to such Registrable Securities, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of any rule or regulation under the Securities Act or any other applicable federal or state securities laws applicable to the Company or relating to any action or inaction required by the Company in connection with any such Registration or qualification, and will reimburse each such Indemnified Stockholder, underwriter, broker or dealer and each such controlling person for any legal or other expenses reasonably incurred by such Indemnified Stockholder, underwriter, broker or dealer or controlling person in connection with investigating or defending any such loss, claim, damage, expense, liability or action; provided, however, that the Company will not be -------- ------- liable in any such case to the extent that any such loss, claim, damage, expense or liability arises out of or is based upon an untrue statement or omission contained in such Registration Statement, such preliminary prospectus, such final prospectus or such amendment or supplement thereto, made in reliance upon and in conformity with written information furnished to the Company by such Indemnified Stockholder, underwriter, broker, dealer or controlling person specifically and expressly for use in the preparation thereof or by the failure of such Indemnified Stockholder, underwriter, broker or dealer, or controlling person to deliver a copy of the Registration Statement, such preliminary prospectus, such final prospectus or such amendment or supplement thereto after the Company has furnished such party with a sufficient number of copies of the same and such party failed to deliver or otherwise provide a copy of the final prospectus to the person asserting an untrue statement or omission or alleged untrue statement or omission at or prior to the written confirmation of the sale of securities to such person, if such statement or omission was in fact corrected in such final prospectus. (ii) In the case of an underwritten offering in which the Registration Statement covers Registrable Securities, the Company agrees to enter into an underwriting agreement in customary form and substance with such underwriters and to indemnify the underwriters, their officers and directors, if any, and each person, if any, who controls such underwriters within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act, to the same extent as provided in the preceding paragraph with respect to the indemnification of the holders of Registrable Securities; provided, however, the -------- ------- Company shall not be required to indemnify any such underwriter, or any officer or director of such underwriter or any person who controls such underwriter within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act, to the extent that the loss, claim, damage, expense or liability (or actions in respect thereof) for which indemnification is sought results from such underwriter's failure to deliver or otherwise provide a copy of the final prospectus to the person 39 asserting an untrue statement or omission or alleged untrue statement or omission at or prior to the written confirmation of the sale of securities to such person, if such statement or omission was in fact corrected in such final prospectus. (iii) In the event of the Registration or qualification of any Registrable Securities of the Stockholders under the Securities Act or any other applicable federal or state securities laws for sale pursuant to the provisions hereof, each Indemnified Stockholder agrees severally, and not jointly, to indemnify and hold harmless the Company, each person who controls the Company within the meaning of the Securities Act, and each officer and director of the Company from and against any losses, claims, damages, expenses or liabilities (or actions in respect thereof), joint or several, to which the Company, such controlling person or any such officer or director may become subject under the Securities Act or any other applicable securities laws or otherwise, insofar as such losses, claims, damages, expenses or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement of any material fact contained in any Registration Statement under which such Registrable Securities were registered or qualified under the Securities Act or any other applicable securities laws, any preliminary prospectus or final prospectus relating to such Registrable Securities, or any amendment or supplement thereto, or arise out of or are based upon an untrue statement therein or the omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, which untrue statement or omission was made therein in reliance upon and in conformity with written information furnished to the Company by such Indemnified Stockholder specifically and expressly for use in connection with the preparation thereof, and will reimburse the Company, such controlling person and each such officer or director for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, expense, liability or action; provided, however, an Indemnified Stockholder's liability under this -------- ------- Section 5(e)(iii) shall not exceed the net proceeds received by such Indemnified Stockholder with respect to the sale of any Registrable Securities. (iv) In the case of an underwritten offering of Registrable Securities, each holder of a Registrable Security included in a Registration Statement shall agree to enter into an underwriting agreement in customary form and substance with such underwriters, and to indemnify such underwriters, their officers and directors, if any, and each person, if any, who controls such underwriters within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act, to the same extent as provided in the preceding paragraph with respect to indemnification by such holder of the Company, but subject to the same limitation as provided in Section 5(e)(ii) with respect to indemnification by the Company of such underwriters, officers, directors and control persons. (v) Promptly after receipt by a person entitled to indemnification under this Section 5(e) (an "Indemnified Party") of notice of the commencement of any action or claim relating to any Registration Statement filed under this Section 5 as to which indemnity may be sought hereunder, such Indemnified Party will, if a claim for indemnification hereunder in respect thereof is to be made against any other party hereto (an "Indemnifying Party"), give written notice to each such Indemnifying Party of the commencement of such action or claim, 40 but the omission to so notify each such Indemnifying Party will not relieve any such Indemnifying Party from any liability which it may have to any Indemnified Party otherwise than pursuant to the provisions of this Section 5(e) and shall also not relieve any such Indemnifying Party of its obligations under this Section 5(e) except to the extent that any such Indemnifying Party is actually prejudiced thereby. In case any such action is brought against an Indemnified Party, and such Indemnified Party notifies an Indemnifying Party of the commencement thereof, such Indemnifying Party will be entitled (at its own expense) to participate in and, to the extent that it may wish, jointly with any other Indemnifying Party similarly notified, to assume the defense, with counsel reasonably satisfactory to such Indemnified Party, of such action and/or to settle such action and, after notice from the Indemnifying Party to such Indemnified Party of its election so to assume the defense thereof, the Indemnifying Party will not be liable to such Indemnified Party for any legal or other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof, other than the reasonable cost of investigation; provided, however, that no Indemnifying Party shall consent to the entry of any - -------- ------- judgment or enter into any settlement agreement without the prior written consent of the Indemnified Party unless such Indemnified Party is fully released and discharged from any such liability, and no Indemnified Party shall consent to the entry of any judgment or enter into any settlement of any such action the defense of which has been assumed by an Indemnifying Party without the consent of each Indemnifying Party. Notwithstanding the foregoing, the Indemnified Party shall have the right to employ its own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (a) the employment of such counsel shall have been authorized in writing by the Indemnifying Party in connection with the defense of such suit, action, claim or proceeding; (b) the Indemnifying Party shall not have employed counsel (reasonably satisfactory to the Indemnified Party) to take charge of the defense of such action, suit, claim or proceeding; or (c) such Indemnified Party shall have reasonably concluded, based upon the advice of counsel, that there may be defenses available to it which are different from or additional to those available to the Indemnifying Party which, if the Indemnifying Party and the Indemnified Party were to be represented by the same counsel, could result in a conflict of interest for such counsel or materially prejudice the prosecution of the defenses available to such Indemnified Party. If any of the events specified in clauses (a), (b) or (c) of the preceding sentence shall have occurred or shall otherwise be applicable, then the fees and expenses of one counsel or firm of counsel selected by a majority in interest of the indemnified parties (and reasonably acceptable to the Indemnifying Party) shall be borne by the Indemnifying Party. If, in any such case, the Indemnified Party employs separate counsel, the Indemnifying Party shall not have the right to direct the defense of such action, suit, claim or proceeding on behalf of the Indemnified Party and the Indemnified Party shall assume such defense and/or settle such action; provided, however, that an Indemnifying Party shall not be liable for the - -------- ------- settlement of any action, suit, claim or proceeding effected without its prior written consent, which consent shall not be unreasonably withheld. The provisions of this Section 5(e) shall be in addition to any liability which any party may have to any other party and shall survive any termination of this Agreement. 41 (f) Contribution. If for any reason the indemnification provided for ------------ in Section 5(e)(i) or 5(e)(iii) is unavailable to an Indemnified Party as contemplated therein, then the Indemnifying Party, in lieu of indemnification shall contribute to the amount paid or payable by the Indemnified Party as a result of such loss, claim, damage, expense or liability (or action in respect thereof) in such proportion as is appropriate to reflect not only the relative benefits received by the Indemnified Party and the Indemnifying Party, but also the relative fault of the Indemnified Party and the Indemnifying Party, as well as any other relevant equitable considerations, provided that no Stockholder shall be required to contribute in an amount greater than the difference between the net proceeds received by such Stockholder with respect to the sale of any Registrable Securities and all amounts already contributed by such Stockholder with respect to such claims, including amounts paid for any legal or other fees or expenses incurred by such Stockholder. No person guilty of a fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of any such fraudulent misrepresentation. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. (g) Registration Expenses. Except as hereinafter provided, all --------------------- expenses incident to the Company's performance of or compliance with this Section 5 will be borne by the Company, including, without limitation, all Registration and filing fees under the Securities Act and the Exchange Act, the fees and expenses of the counsel and accountants for the Company (including the expenses of any "cold comfort" letters and special audits required by or incident to the performance of such persons), all other costs and expenses of the Company incident to the preparation, printing and filing under the Securities Act of the Registration Statement (and all amendments and supplements thereto), and furnishing copies thereof and of the Prospectus included therein, all out-of-pocket expenses of underwriters customarily paid for by issuers to the extent provided for in any underwriting agreement, the costs and expenses incurred by the Company in connection with the qualification of the Registrable Securities under the state securities or "blue sky" laws of various jurisdictions, the costs and expenses associated with filings required to be made with the NASD, the costs and expenses of listing the Registrable Securities for trading on a national securities exchange or authorizing them for trading on NASDAQ and all other costs and expenses incurred by the Company in connection with any Registration hereunder. In addition, the Company shall pay or reimburse the sellers of Registrable Securities the reasonable fees and expenses of one attorney to such sellers incurred in connection with a registration (collectively, with the expenses referred to in the immediately preceding sentence, the "Registration Expenses"). Except as provided in the immediately preceding sentence, each Stockholder shall bear the costs and expenses of any underwriters' discounts and commissions, brokerage fees or transfer taxes relating to the Registrable Securities sold by such Stockholder and the fees and expenses of any attorneys, accountants or other representatives retained by the Stockholder. 42 (h) Participation in Underwritten Registrations. No Stockholder may ------------------------------------------- participate in any underwritten Registration hereunder unless such Stockholder (i) agrees to sell its Registrable Securities on the basis provided in any customary and reasonable underwriting arrangements approved by the persons entitled hereunder to select the underwriter, and (ii) accurately completes in a timely manner and executes all questionnaires, powers of attorney, underwriting agreements, indemnities and other documents customarily required under the terms of such underwriting arrangements. (i) Holdback Agreements. ------------------- (i) Each holder of Registrable Securities whose securities are included in a Registration Statement agrees not to effect any public sale or distribution of the issue being registered or a similar security of the Company, or any securities convertible into or exchangeable or exercisable for such securities, including a sale pursuant to Rule 144 or Rule 144A under the Securities Act, during the fifteen (15) days prior to, and during the ninety (90)-day period (or such longer period as requested by the managing underwriter or underwriters in the case of an underwritten public offering) beginning on, the effective date of such Registration Statement (except as part of such Registration), if and to the extent requested by the managing underwriter or underwriters in an underwritten public offering. (ii) The Company agrees not to effect any public sale or distribution of the issue being registered or a similar security of the Company, or any securities convertible into or exchangeable or exercisable for such securities (other than any such sale or distribution of such securities in connection with any merger or consolidation by the Company or any Subsidiary or the acquisition by the Company or any Subsidiary of the capital stock or substantially all of the assets of any other Person), during the fifteen (15) days prior to, and during the ninety (90)-day period beginning on, the effective date of each Demand Registration. (j) Public Information Reporting. The Company hereby covenants and ---------------------------- agrees to and with the Stockholders that at all times following the IPO Date it shall provide and file such financial and other information concerning the Company as may from time to time be required by the Commission and any other governmental authority having jurisdiction, so as to comply with all reporting requirements under the Exchange Act, and shall, upon request, state in writing that it has complied with all such requirements, and further agrees that, for so long as (following the IPO Date) the Company is not subject to Section 13 or 15(d) of the Exchange Act, the Company shall comply in all respects with paragraph (c)(2) of Rule 144. 6. Disqualifying Transactions. -------------------------- 6.1 Company Conversion Rights. In the event AT&T PCS terminates its ------------------------- obligations under Section 8.6 pursuant to Section 8.8(c) with respect to any Overlap Territory, the Company shall have the following rights which may be exercised by the Company in its sole discretion during the sixty (60) day period commencing on the date of such termination: 43 (a) (i) The Company shall have the right in accordance with the Restated Certificate to cause AT&T PCS, TWR Cellular and any Section 4.12 Transferee (as defined in the Restated Certificate) to exchange either (A) all, or (B) a proportionate number of shares of Series A Preferred Stock then owned by AT&T PCS, TWR Cellular and each Section 4.12 Transferee equal to a fraction, the numerator of which is the number of POPS in the Overlap Territory and the denominator of which is the total number of POPS in the Territory, of the shares of Series A Preferred Stock then owned by AT&T PCS, TWR Cellular and each Section 4.12 Transferee for an equivalent number of shares of Series B Preferred Stock determined in accordance with the Restated Certificate; and (ii) The Company shall have the right in accordance with the Restated Certificate to cause AT&T PCS, TWR Cellular and each Section 4.12 Transferee to exchange either (A) all or (B) a proportionate number equal to a fraction, the numerator of which is the number of POPs in the Overlap Territory, and the denominator of which is the total number of POPs in the Territory, of the shares of Series D Preferred Stock, Series F Preferred Stock and Common Stock Beneficially Owned by AT&T PCS and TWR Cellular on the date hereof (or shares of Common Stock or Senior Common Stock into which such shares of Series D Preferred Stock, Series F Preferred Stock and Senior Common Stock shall have been converted) and that AT&T PCS, TWR Cellular or a Section 4.12 Transferee continues to own on the date such right is exercised by the Company for that number of shares of Series B Preferred Stock as shall be equal to the aggregate purchase price paid by AT&T PCS and TWR Cellular for all of such shares of Series D Preferred Stock, Series F Preferred Stock and Common Stock that AT&T PCS, TWR Cellular or such Section 4.12 Transferee then Beneficially Owns (including any shares of Common Stock or Senior Common Stock into which such Series D Preferred Stock, Series F Preferred Stock and Senior Common Stock shall have been converted) divided by the liquidation preference of the Series B Preferred Stock determined in accordance with the Restated Certificate; provided, however, that (x) if the Company exercises its right under clause - -------- ------- (i)(A) of this Section 6.1(a) it shall be required to exercise its right under clause (ii)(A) of this Section 6.1(a), and vice versa; and if the Company exercises its right under clause (i)(B) of the Section 6.1(a) it shall be required to exercise its right under clause (ii)(B) of this Section 6.1(a) and vice versa, and (y) the provisions of this Section 6.1(a) shall not apply to any Section 4.12 Transferee which is a Cash Equity Investor. (b) The Company may redeem the shares of Series B Preferred Stock at any time as provided in the Restated Certificate. 6.2 Joint Marketing Right. During the period commencing on the date of --------------------- announcement by AT&T PCS of a transaction meeting the description of a transaction set forth in clauses (a), (b) and (c) of the definition of a Disqualifying Transaction (unless AT&T PCS notifies the Company it has waived its right to declare such transaction a Disqualifying Transaction in which event, this Section 6.2 shall not be applicable to such transaction) and terminating on the later of (x) six (6) months after the date of consummation of such transaction, 44 and (y) if applicable, the date by which AT&T PCS is required under applicable law to dispose of any PCS System or Cellular System serving a Subject Market (the "Section 6.2 Period"), the following provisions shall apply: (a) If AT&T PCS proposes to sell, transfer or assign to any Person which is not an Affiliate of AT&T PCS any Subject Market, AT&T PCS shall give written notice (the "Company Sale Notice") to the Company and the Company shall have the right, exercisable by written notice given within ten (10) days of receipt of the Company Sale Notice, to elect to cause AT&T PCS to offer for sale jointly with the Company for a period of ninety (90) days the Subject Markets covered by the Company Sale Notice together with all of the Territory included in the MTA that includes the Subject Markets (the "Joint Marketing Period"). In the event that AT&T PCS has granted similar rights to the rights set forth in this Section 6.2 to any Permitted Merger Participant and any Subject Market is also a "Subject Market" under the terms of any agreement between AT&T PCS and any such Permitted Merger Participant, the Company agrees that any territory of the Permitted Merger Participant that is required under the terms of such agreement to be offered for sale jointly with any Subject Markets shall be offered for sale jointly with such Subject Markets and all of the Territory included in the MTA that includes such Subject Markets. During the Joint Marketing Period, AT&T PCS shall not sell the Subject Markets other than in a transaction that includes the Subject Markets and the Territory included in the MTA that includes the Subject Markets, provided, however, that neither AT&T PCS -------- ------- nor the Company shall be obligated to enter into a transaction for such Subject Markets and such Territory other than on terms acceptable to each of them in their sole discretion. This Section 6.2 shall cease to apply to any Subject Market upon the earlier of (x) if the Company fails to make the joint marketing election with respect to the applicable Subject Market within the ten (10) day period referred to above, the expiration of such ten (10) day period, or (y) if the Company makes the joint marketing election with respect to the applicable Subject Market, upon the expiration of the Joint Marketing Period. (b) Nothing contained in this Section 6.2 shall (x) be construed to require AT&T PCS to deliver a Company Sale Notice with respect to any Subject Market except during the Section 6.2 Period, (y) extend the obligation of AT&T PCS set forth in this Section 6.2 beyond the expiration of the Section 6.2 Period or (z) apply to any sale, transfer or assignment of any Subject Market pursuant to an agreement executed on any date not within the Section 6.2 Period. (c) Nothing in this Agreement shall be construed to require AT&T PCS to deliver the notice described in clause (d) of the definition of a Disqualifying Transaction, including, without limitation, circumstances in which AT&T PCS or its Affiliates enters into any transaction meeting the description of a transaction set forth in clauses (a), (b) and (c) of the definition of a Disqualifying Transaction. 45 7. Additional Rights and Covenants. ------------------------------- 7.1 Financial Statements. The Company shall provide to each Stockholder -------------------- (a) within seventy-five (75) days after the end of each fiscal quarter (other than the fourth fiscal quarter) or such shorter periods as is required pursuant to the terms of the Company's senior indebtedness, the unaudited consolidated balance sheet of the Company and its Subsidiaries as at the end of such period and the related unaudited consolidated statements of income, surplus and cash flows for such period and year-to-date and (b) within one hundred twenty (120) days after the end of each fiscal year, the audited consolidated balance sheet of the Company and its Subsidiaries as at the end of such year and the related unaudited consolidated statements of income, surplus and cash flows for such year. All financial statements and information provided pursuant to this Section 7.1 shall constitute Confidential Information under Section 7.7. 7.2 Purchase Right. -------------- (a) If on or prior to the IPO Date the Company proposes to offer, issue, sell or otherwise dispose of shares of any class or series of common stock or Preferred Stock, or options, rights, warrants, conversion rights or appreciation rights relating thereto, or any other type of equity security (collectively, "Equity Securities") of the Company for cash to any Person, including pursuant to an initial public offering, (x) the Company shall, prior to any such offer, issuance, sale or other disposition, give written notice (an "Issuance Notice") to each of the Stockholders setting forth the purchase price of such Equity Securities (or, in the case of an initial public offering, the anticipated price range), the type and aggregate number of Equity Securities or rights to acquire Equity Securities to be so offered, issued, sold or otherwise disposed of, the terms and conditions of such offer, issuance, sale or other disposition, and the rights, powers and duties inhering in such additional Equity Securities or rights to acquire Equity Securities, and (y) each Stockholder shall have the right (the "Purchase Right") to acquire the percentage of Equity Securities proposed to be offered, issued, sold or otherwise disposed of equal to the number of shares of Class A Voting Common Stock then Beneficially Owned by such Stockholder divided by the aggregate number of shares of Class A Voting Common Stock outstanding immediately prior to such offer, issuance, sale or other disposition of Equity Securities (including any shares of Class A Voting Common Stock Beneficially Owned by such Stockholder); provided, however, that the terms and conditions of this Section -------- -------- 7.2 shall not apply to any offer, issuance, sale or other disposition of Equity Securities or rights to acquire Equity Securities to any Person pursuant to a stock option or stock appreciation rights plan established by the Company for the benefit of its employees, officers, directors, agents or consultants, or otherwise granted to an employee of the Company in connection with such person's employment by the Company. In the case of an offer, issuance sale or other disposition of Equity Securities issued as part of a unit with other debt, equity or other securities of the Company, the right of a Stockholder to acquire such Equity Security shall be conditioned upon such Stockholder's acquisition of such debt, equity or other securities included in such unit. (b) Each Stockholder may exercise such Purchase Right, in whole or in part, on the terms and conditions and for the purchase price set forth in the Issuance Notice, by giving 46 to the Company notice to such effect, within thirty (30) days after the giving of the Issuance Notice. In the case of an initial public offering, the following conditions shall apply to the Purchase Right set forth herein: (i) In the event that a Stockholder exercises such Purchase Right, such Stockholder shall be obligated to exercise such right if the public offering price is not greater than the highest price in the anticipated range specified in the applicable notice, and (ii) in the event that a Stockholder exercises such Purchase Right and the public offering price is greater than the highest price in the anticipated range specified in the applicable notice, such Stockholder shall have the right but not the obligation, to exercise such right at such public offering price. After the expiration of such thirty (30) day period, the Company shall have the right to offer, issue, sell and otherwise dispose of any or all of the Equity Securities referred to in the applicable Issuance Notice as to which no Purchase Right has been exercised but only upon the terms and conditions, and for a purchase price not lower than the purchase price set forth in the Issuance Notice; provided, however, that in the case of an initial public offering, such right of the Company shall be the right to offer, issue, sell and otherwise dispose of such Equity Securities at any price. In the event of an initial public offering of Equity Securities at a price more than 20% below such lowest price, AT&T PCS shall have the right, exercisable at the time of pricing of such initial public offering, to exercise such Purchase Right. If the Company does not offer, issue, sell or otherwise dispose of the Equity Securities referred to in the applicable Issuance Notice on the terms and conditions set forth in such Issuance Notice within one hundred twenty (120) days after the expiration of such thirty (30) day period, then any subsequent proposal by the Company to offer, issue, sell or otherwise dispose of such Equity Securities shall be subject to this Section 7.2. 7.3 Access. The Company shall permit, and shall cause each of its ------ Subsidiaries to permit, upon reasonable notice, during normal business hours, each Qualified Holder and its directors, officers, employees, attorneys, accountants, representatives, consultants and other agents, at the sole expense of such Qualified Holder, to (a) visit and inspect any of the properties and facilities of the Company and its Subsidiaries, (b) examine and make copies of and extracts from the corporate and financial records of the Company and its Subsidiaries, (c) discuss the affairs, finances and accounts of the Company or any such Subsidiary with any of its officers, directors and key employees and its independent accountants, and (d) otherwise investigate the properties, businesses and operations of the Company and its Subsidiaries, in each case as such Qualified Holder reasonably deems necessary; provided, however, that each -------- ------- Qualified Holder may exercise its rights pursuant to this Section 7.3 no more than three times in any 12 month period. The Company shall, and shall cause each of its Subsidiaries and the officers, directors and employees of the Company and its Subsidiaries to, cooperate fully in connection with such inspection, examinations and discussions. The presentation of a copy of this Agreement by any Qualified Holder to the independent accountants of the Company or any of its Subsidiaries shall constitute permission by the Company or such Subsidiary to its independent accountants to participate in discussions with such Qualified Holder. 7.4 Merger, Sale or Liquidation of the Company. ------------------------------------------ 47 (a) Except for transactions permitted pursuant to Section 7.11 and to the extent permitted in this Section 7.4, the Company shall not, and shall not permit any of its Subsidiaries to, except with the prior written consent of AT&T PCS or in accordance with Sections 7.4(b) and 7.4(c), effect (i) any merger, combination or consolidation of the Company or such Subsidiary with or into any other entity (regardless of whether the Company or such Subsidiary is the surviving entity in any such transaction) (any such merger, combination or consolidation is referred to as a "Company Merger"), (ii) any sale or disposition of a substantial portion of its assets (a "Company Asset Sale"), or (iii) the liquidation, dissolution or winding up of the Company or such Subsidiary. (b) The Company and its Subsidiaries may effect a Company Merger, without the prior written consent of AT&T PCS, (i) in which the only constituent corporations are two or more of the Company's wholly owned Subsidiaries, (ii) in which the only constituent corporations are the Company and one or more of its wholly owned Subsidiaries and the Company is the surviving corporation, or (iii) between a Subsidiary of the Company and another entity for the purpose of acquiring such other entity; provided, that (x) such transaction does not affect -------- the capital structure of the Company, except to the extent the Company issues common stock to the stockholders of the other entity pursuant to the terms of such Company Merger, (y) the surviving corporation is a direct or indirect wholly owned Subsidiary of the Company, and (z) the consummation of such transaction does not violate Section 8.1(a). (c) The Company and its Subsidiaries may effect any of the transactions described in clauses (i) or (ii) of Section 7.4(a) (a "Sale Transaction"), without the prior written consent of AT&T PCS, if (a) such transaction has no material effect on AT&T PCS' equity interest in the Company (and the seniority thereof) or its rights under this Agreement, (b) the Company's direct or indirect interest in its assets is unaffected by such transaction in any material respect, and (c) such transaction is otherwise equivalent in all material respects to AT&T PCS to the sale by each of the other Stockholders of its equity interests in the Company for cash or marketable securities; provided, that any such Sale Transaction shall nevertheless be -------- subject to a right of first offer in accordance with the provisions of Section 7. 4(d). (d) Prior to entering into a Sale Transaction, the Company shall give written notice (the "Sale Notice") to AT&T PCS. Each Sale Notice shall describe in reasonable detail all material terms of the proposed Sale Transaction. The Sale Notice shall constitute an irrevocable offer (a "Sale Offer") to enter into the Sale Transaction with AT&T PCS on the terms set forth in the Sale Notice. AT&T PCS shall have the irrevocable right and option, but not the obligation, to accept the Sale Offer in whole but not in part by giving written notice of its acceptance of such offer within thirty (30) days of the date the Sale Notice is given. The Sale Transaction shall be closed at the principal executive offices of the Company within thirty (30) days after the acceptance by AT&T PCS of the Sale Offer; provided, however, that, if the Sale Transaction is subject to the -------- ------- consent of the FCC or any public service or public utilities commission, the Sale Transaction shall be closed on the fifth business day after all such consents shall have been obtained by Final Order. If AT&T PCS declines (which shall include the failure to give timely notice of acceptance) to accept the Sale Offer, the Company shall have the right 48 (for a period of ninety (90) days following the expiration of the thirty (30) day acceptance period referred to above) to close a Sale Transaction on the terms described in the Sale Offer (except that the price must be at least 95% of the price set forth in the Sale Offer); provided however that, if the consent of -------- ------- the FCC or any public service or public utilities commission is required, the Sale Transaction may be closed not later than the fifth business day after all such consents shall have been obtained by Final Order. If, after giving a Sale Offer, the Company does not close a Sale Transaction in accordance with the terms of the immediately preceding sentence, the Company shall not effect any Sale Transaction without giving another Sale Notice in accordance with this Section 7.4(d). 7.5 Wholly-Owned Subsidiaries. All of the Company's Subsidiaries shall be ------------------------- direct or indirect wholly owned Subsidiaries of the Company, and the Company shall not, and shall not permit any Subsidiary to, sell or issue, transfer, encumber or otherwise dispose of any shares of capital stock of any of the Company's Subsidiaries to any Person other than the Company and its direct or indirect wholly owned Subsidiaries, except for a pledge of any such shares in connection with the incurrence of indebtedness. 7.6 Amendments of the Restated Certificate and By-Laws. Prior to the IPO -------------------------------------------------- Date, the Company shall not, without the prior written consent of AT&T PCS, authorize or adopt any amendment, modification or repeal of any provision of the Restated Certificate or the Restated By-Laws, unless such amendment is consistent with the terms of this Agreement. 7.7 Confidentiality. --------------- (a) Each party shall, and shall cause each of its Affiliates, and its and their respective stockholders, members, managers, directors, officers, employees and agents (collectively "Representatives") to, keep secret and retain in strictest confidence any and all information relating to the Company or any other party that is designated in writing by the party providing such information or the Company as confidential ("Confidential Information") and shall not disclose such information, and shall cause its Representatives not to disclose such information, to anyone except such Affiliates, Representatives or any other Person that agrees in writing to keep in confidence all such information in accordance with the terms of this Section 7.7. Each party agrees to use such information received from another party or the Company only in connection with its ownership interest in the Company but not for any other purpose. All such information furnished pursuant to this Agreement shall be returned promptly to the party to whom it belongs upon request by such party. (b) To the fullest extent permitted by law, if a party or any of its Affiliates or Representatives breaches, or threatens to commit a breach of, this Section 7.7, the party whose Confidential Information shall be disclosed, or threatened to be disclosed, shall have the right and remedy to have this Section 7.7 specifically enforced by any court having jurisdiction, it being acknowledged and agreed that money damages will not provide an adequate remedy to such party. Nothing in this Section 7.7 shall be construed to limit the right of any party to collect money damages in the event of breach of this Section 7.7. 49 (c) Anything else in this Agreement notwithstanding, each party shall have the right to disclose any information, including Confidential Information of the other party or such other party's Affiliates, in any filing with any regulatory agency, court or other authority or any disclosure to a trustee of public debt of a party to the extent that the disclosing party determines in good faith that it is required by Law, regulation or the terms of such debt to do so; provided, however, that any such disclosure shall be as limited in scope -------- ------- as possible and shall be made only after giving the other party as much notice as practicable of such required disclosure and an opportunity to contest such disclosure if possible. 7.8 IPO Date. In the event that the IPO Date shall not have occurred on or -------- prior to the fifth (5th) anniversary of the date hereof, the Company shall, at the request of any Qualified Holder, as promptly as is reasonably practicable after the date of such request, undertake a registration of Common Stock pursuant to an effective Registration Statement that results in the occurrence of the IPO Date; provided, however, that if the Board of Directors determines -------- ------- that such registration would interfere with any pending or contemplated material acquisition, disposition, financing or other material transaction, the Company may defer such registration (including by withdrawing any Registration Statement filed in connection with such registration); provided that the aggregate of all -------- such deferrals shall not exceed one hundred twenty (120) days in any 360-day period. Any such registration shall be pursuant to an underwritten offering. Each Stockholder agrees to cooperate in such registration, including, without limitation, entering into customary holdback agreements. 7.9 AT&T PCS Retained Licenses. In the event that AT&T PCS desires to -------------------------- Transfer all or any of the AT&T PCS Retained Licenses in the Territory at any time prior to the eighth anniversary of the date hereof, AT&T PCS shall give written notice thereof to the Company at least thirty (30) days prior to entering into a binding agreement to sell such AT&T PCS Retained Licenses in the Territory such notice to specify among other things, the AT&T PCS Retained Licenses in the Territory that it desires to sell. For a period of thirty (30) days after the date such notice is given, the Company shall have the right to negotiate with AT&T PCS with respect to the purchase of all, but not less than all, of such AT&T Retained Licenses in the Territory; it being understood and agreed that such right shall not be deemed to be a right of first offer or right of first refusal for the benefit of the Company and AT&T PCS shall have the right to reject any offer made by the Company during such thirty (30) day period. In the event no binding agreement to sell all or any of such AT&T PCS Retained Licenses in the Territory is entered into prior to the expiration of the one hundred and eighty (180) day period following the expiration of such (30) day period, such Licenses shall become subject once again to the provision and restrictions hereof. 7.10 Regulatory Cooperation. Each of the Stockholders severally agrees to ---------------------- comply with the last sentence of Section 6.7 of the Securities Purchase Agreement. 7.11 Permitted Transactions. Notwithstanding the terms of Section 7.4(a) ---------------------- and 8.4(a): 50 (a) after completion of the Minimum Build-Out Plan and certification that Company Systems meet the TDMA Quality Standards, the Company and its Subsidiaries may effect a merger, combination of consolidation with or into a Permitted Merger Participant or acquire all or substantially all of the assets of a Permitted Merger Participant or sell all or substantially all of the assets of the Company and its Subsidiaries to a Permitted Merger Participant (any such transaction being referred to as a "Permitted Consolidation Transaction"), so long as such transaction is approved by the Board of Directors and the holders of the Company's capital stock to the extent such approval is required pursuant to the Restated Certificate or applicable law; (b) the Company may acquire FCC Licenses (each such License a "Permitted Cellular License") authorizing the holder to provide in a specified geographic area using specified frequencies in respect of which the Board of Directors has determined that the acquisition of such License (and any other assets being acquired together therewith) is a demonstrably superior alternative to constructing a PCS System in the applicable area within the PCS Territory, provided that, (i) a majority of the POPs included in the geographic area - -------- covered by such License are within the PCS Territory, (ii) none of AT&T PCS, any Affiliate thereof or any AT&T Licensee owns an interest in an FCC License to provide Commercial Mobile Radio Service in such geographic area, and (iii) the ownership of such License will not conflict with, or cause AT&T PCS, any Affiliate thereof or any AT&T Licensee to be in violation or breach of any agreement, instrument, Law or License applicable to or binding upon such Person or its assets. Notwithstanding the foregoing, the Company shall not acquire any Permitted Cellular License if the acquisition of such License would adversely affect the Company's ability to satisfy its obligations under the first sentence of Section 8.1(b); and (c) The Company may acquire licenses issued by the FCC to provide wireless services (other than FCC Licenses) (each such license a "Permitted Non- CMRS License") authorizing the holder to provide in a specified geographic area using specified frequencies in respect of which the Board of Directors has determined that the acquisition of such Permitted Non-CMRS License (and any other assets being acquired together therewith) is necessary or desirable to constructing a PCS System in the applicable area within the PCS Territory, provided that, (i) the POPs included in the geographic area covered by such - -------- License are within the PCS Territory, (ii) none of AT&T PCS or any Affiliate thereof owns an interest in a similar Permitted Non-CMRS License in such geographic area, (iii) the ownership of such License will not conflict with, or cause AT&T PCS or any Affiliate thereof to be in violation or breach of any agreement, instrument, Law or License applicable to or binding upon such Person or its assets, and (iv) the service to be provided by the Company using such Permitted Non-CMRS License complies with the definition of Business. Notwithstanding the foregoing, the Company shall not acquire any Permitted Non- CMRS License if the acquisition of such License would adversely affect the Company's ability to satisfy its obligations under the first sentence of Section 8.1(b). 7.12 Springfield/Joplin. In the event that AT&T PCS shall propose to sell, ------------------ transfer or otherwise dispose of its interest in the Springfield/Joplin System to any Person other than the Company, AT&T PCS agrees to negotiate in good faith with the Company to sell the License for 51 the Springfield/Joplin BTA to the Company; it being understood that AT&T PCS shall have no obligation to sell such License to the Company unless the terms thereof are satisfactory to AT&T PCS in its sole discretion. In the event the Company does not acquire an FCC PCS License covering the Springfield/Joplin BTA, the Minimum Build-Out Plan for the St. Louis MTA shall be deemed to be amended to be the minimum build-out requirements under applicable FCC rules in lieu of the build-out requirements set forth in the Minimum Build-Out Plan. 7.13 Covenant of Holders of Class C Common Stock. (a) Each holder of ------------------------------------------- Class C Common Stock hereby covenants and agrees that, for so long as it is a holder of any Class C Common Stock and for so long as required by FCC rules, it will maintain its status as an "Institutional Investor", as such term is used in 47 CFR Section 24.720(h), and that it will give written notice to the Company within five (5) days after such Stockholder becomes aware that it no longer maintains such status for any reason (the "Transfer Event"). Upon the -------------- occurrence of a Transfer Event with respect to any Stockholder under circumstances such that (i) the failure of the Stockholder to maintain its status as an Institutional Investor would compromise any of the material benefits the Company derives as a "Very Small Business", as defined in 47 CFR (S) 24.720(b)(2) or from the Company's eligibility to bid on frequency block "C" or "F" licenses, as specified in 47 CFR Section 24.709 or be eligible to receive any of the rights specified in 47CFR Sections 27.711, 24.712, 24.716 and 24.717 (collectively, the "Material Benefits") and (ii) the Stockholder is unable to ----------------- obtain a waiver from the FCC regarding, or to cure, such Transfer Event or loss of Material Benefits, the other holders of Class C Common Stock at the time shall have the right to purchase any or all of such Stockholder's Class C Common Stock pursuant to the terms hereof, or, if not so purchased by the other holders of Series C Common Stock, by one or more Persons designated by the Company. (b) Within fifteen (15) days of becoming aware that a Transfer Event has occurred with respect to a Stockholder, the Company shall give the other holders of Class C Common Stock notice of their right to purchase the Stockholder's Class C Common Stock for the purchase price paid by such holder of Class C Common Stock. (c) Notwithstanding the foregoing, any Stockholder which suffers a Transfer Event may, if to do so would avoid the loss of Material Benefits, elect to convert all or part of its Class C Common Stock to another class of Common Stock which the Company has authorized, or to waive in writing such rights pertaining to its ownership of such stock as may be necessary to avoid the loss of Material Benefits, which election shall be made no later than five (5) days before the FCC Determination Date. 8. Operating Arrangements. ---------------------- 8.1 Construction of Company Systems. ------------------------------- (a) The Company hereby agrees to construct, or cause its Subsidiaries to construct, Company Systems covering the Territory on a schedule no less rapid than is set forth in the Minimum Build-Out Plan. Company Systems shall be technologically compatible in all 52 material respects with systems being used in a Majority of the Central and Southwest Region (including without limitation for the purpose of facilitating roaming and hand-off between systems), and will to the extent technologically feasible implement the same User Interface as such systems, with the intention that the User Interface in Company Systems will not differ from the User Interface in a Majority of the Central and Southwest Region in a manner that would be material to customers. (b) The Company and AT&T PCS hereby agree that the Company shall assume and be obligated to satisfy the construction requirements set forth in 47 CFR 24.203 with respect to the AT&T PCS Retained Licenses in the Territory and the AT&T PCS Licenses. The Company and AT&T PCS agree from time to time at the request of the Company or AT&T PCS, as applicable, to provide the other with information concerning the status of construction of its PCS Systems to enable such party to determine the level of compliance with such construction requirements with respect to the AT&T PCS Retained Licenses and AT&T PCS Licenses, as applicable. (c) The Company will arrange for all necessary microwave relocation in connection with the AT&T PCS Licenses and pay, assume or (if applicable) reimburse AT&T PCS or its Affiliates for any obligation to pay, any reasonable costs incurred by it or AT&T PCS in connection with any such microwave relocation, provided, that nothing contained herein shall require the Company to -------- pay any costs incurred in connection with microwave relocation in connection with the AT&T PCS Retained Licenses. 8.2 Service Features. Company Systems will offer the Core Service ---------------- Features. Company Systems will also offer, at the written request of AT&T PCS, additional service features that AT&T PCS has notified the Company it will provide in a Majority of the Central and Southwest Region, unless the Board of Directors reasonably determines that the provision of such additional features would be financially detrimental to the Company. Unless the Board of Directors makes such a determination, any such additional features shall be adopted within one hundred twenty (120) days after the request by AT&T PCS. The Critical Network Elements are set forth on Schedule XI. 8.3 Quality Standards. The Company shall use commercially reasonable ----------------- efforts to cause the Company Systems to comply with the TDMA Quality Standards. Without limiting the foregoing, with respect to each material portion of a Company System (such as a city) that the Company places in commercial service, on or prior to the first anniversary of the date such material portion is placed in commercial service, the Company shall cause each such material portion to achieve a level of compliance with the TDMA Quality Standards equal to at least the average level of compliance achieved by comparable PCS and Cellular Systems owned and operated by AT&T PCS taking into account, among other things, the relative stage of development thereof. In the event that the Company fails to achieve such level of compliance, the Company shall not be deemed to be in material breach of this provision if such non-compliance is cured within thirty (30) days of notice thereof from AT&T PCS to the Company, or, if such breach is not capable of being cured within such thirty (30) day period using 53 commercially reasonable efforts, within one hundred eighty (180) days of such notice, provided the Company is using commercially reasonable efforts to cure -------- such material breach as soon as reasonably practicable. 8.4 No Change of Business. --------------------- (a) Subject to Section 7.11, the Company will not, and will not permit any of its Subsidiaries to, without obtaining the prior written consent of AT&T PCS, do any of the following: (i) conduct, directly or indirectly, any business other than the Business, (ii) make any material change to the Minimum Build-Out Plan in the Territory, or (iii) effect any transaction, agreement or arrangement which has or could reasonably be expected to have the effect of materially impairing or materially limiting the ability of (x) subscribers to Cellular Systems and PCS Systems in which AT&T PCS or its Affiliates have an ownership interest to utilize the Company Systems for roaming, or (y) AT&T PCS or its Affiliates to resell wireless service on the Company Systems; it being understood that clause (i) shall not be deemed to restrict the business of the Company in any Overlap Territory. (b) During the period commencing on the date hereof through and including the first anniversary of the date hereof, without obtaining the prior written consent of each SBIC Holder, the Company will not, and will not permit any of its Subsidiaries, to conduct, directly or indirectly, any business other than the Business. (c) If at any time during the term of this Agreement AT&T PCS and its Affiliates determine to discontinue use of TDMA in a Majority of the United States: (i) the Company will have the right to cease to use TDMA and may adopt the new technology adopted by AT&T PCS and its Affiliates in a Majority of the United States or implement any other alternative technology in Company Systems, and, if it exercises such right, the definition of Company Systems shall be automatically deemed to be modified by substituting a reference to such new or alternative technology in lieu of the reference in such definition to TDMA, and (ii) the obligations of AT&T PCS and its Affiliates pursuant to Section 8.6 shall terminate and be of no further force or effect, unless within sixty (60) days of notice by AT&T PCS to the Company specifying that AT&T PCS and its Affiliates have determined to discontinue use of TDMA in a Majority of the United States, the Company agrees to implement in Company Systems on a reasonable schedule the new technology adopted by AT&T PCS and its Affiliates in a Majority of the United States. In the event AT&T PCS desires to test any technology that is an alternative to TDMA in any PCS System or Cellular System contiguous to the Territory, AT&T PCS hereby agrees to notify the Company at least thirty (30) days before conducting such test and will conduct such tests in a manner that does not have a material adverse effect on the Company. 8.5 Preferred Provider. ------------------ (a) The Company and its Subsidiaries shall not market, offer, provide or resell interexchange services, except (i) interchange services that constitute Company Communication Services and (ii) interexchange services procured from AT&T Corp. or an Affiliate thereof 54 designated by AT&T Corp. Such interexchange services shall be provided by AT&T Corp. or such Affiliate at the same rates as the rates charged by AT&T Corp. or such Affiliate to other similarly situated carriers. It is anticipated that such services will be provided by AT&T Corp. or such Affiliate pursuant to an agreement incorporating such rates. (b) With respect to services other than interexchange services, when the Company or a Subsidiary does not itself develop, or is not permitted to develop, one or more telecommunications services that are offered or provided in connection with the conduct of its Business (including, by way of example, local telephone services or voicemail), but instead procures such services, the Company shall request in writing that AT&T PCS provide such services (directly or through an Affiliate designated by it) and, provided, that AT&T PCS (or a designated Affiliate) offers to provide such telecommunication services to the Company on reasonably competitive terms, the Company or such Subsidiary shall procure such services from AT&T PCS (or such Affiliate thereof). 8.6 Exclusivity. ----------- (a) None of the Stockholders or their respective Affiliates will provide or resell, or act as the agent for any Person offering, within the Territory, Company Communications Services except that, AT&T PCS and its Affiliates may (i) resell, or act as the Company's agent for, Company Communications Services provided by the Company in accordance with the Resale Agreement (or any other agreement between AT&T PCS and its Affiliates, on the one hand, and the Company, on the other hand), including bundling any such Company Communications Services with other telecommunications services marketed, offered and provided or resold by such Person, (ii) provide or resell wireless telecommunications services to or from specific locations (such as buildings or office complexes), even if the subscriber equipment used in connection with such service may be capable of routine movement within a limited area (such as a building or office complex), and even if such subscriber equipment may be capable of obtaining other telecommunications services beyond such limited area (which other services may include routine movement beyond such limited area) and hand-off between the service to such specific locations and such other telecommunications services; provided, however, that if AT&T PCS or any of its Affiliates sells such mobile wireless subscriber equipment such equipment shall be capable of providing (but not necessarily on an exclusive basis) Company Communications Services and (iii) resell Company Communications Services provided by a Person other than the Company in any geographical area within the Territory in which the Company has not placed a Company System into commercial service (it being understood that in the event that AT&T PCS or any of its Affiliates that is reselling Company Communication Services of a Person other than the Company in a geographic area within the Territory at the time the Company places a portion of a Company System including such geographic area into commercial service, AT&T PCS or its Affiliates, as applicable, shall terminate such resale arrangement with respect to such geographic areas within thirty (30) days of the date such portion of a Company System is placed in commercial service). AT&T PCS agrees to provide the Company with not less than sixty (60) days' prior notice of any resale activities described in clause (iii) hereof, such notice to include a reasonable description of such 55 resale activities and to use tri-mode phones, to the extent commercially reasonable in connection with such resale activities. To the extent the "other telecommunications services" referred to in clause (ii) of the first sentence of this Section 8.6(a) constitute Company Communications Services, neither AT&T PCS nor any of its Affiliates or any AT&T Licensee may provide or resell, or act as agent for any Person offering, such "other telecommunications services" except Company Communications Services provided by the Company in accordance with the terms of clause (i) of the first sentence of this Section 8.6(a). Nothing herein shall be construed to limit in any respect any advertising and promotional and similar activities by AT&T PCS or its Affiliates or any Cash Equity Investor or any of its Affiliates. (b) With respect to the markets listed on Schedules 1 and 2 to the Roaming Agreement, each of AT&T PCS and the Company shall, and shall cause each of its Affiliates to, in its and such Affiliates' capacity as Home Carrier: (i) program and direct its authorized dealers to program the subscriber equipment provided by it or such authorized dealers to its customers, at the time it is provided to such customers, (to the extent such programming is technologically feasible) so that the Company or AT&T PCS, as the case may be, and such Affiliates, in its and such Affiliates' capacity as Serving Carrier, is the preferred provider of Service in the markets listed on such Schedules 1 and 2, and (ii) refrain, and direct its authorized dealers to refrain, from inducing any of its customers to change or, except at such customer's request in the event the quality of the Company's services do not meet industry standards, changing the programming described in clause (i) above. For the purpose of this Section 8.6(b), the terms "Affiliate," "Home Carrier" and "Serving Carrier" shall have the meanings ascribed thereto in the Roaming Agreement. 8.7 Other Business; Duties; Etc. Except to the extent expressly set ---------------------------- forth in Section 8.6, AT&T PCS, TWR Cellular and each Cash Equity Investor and any Person affiliated with AT&T PCS, TWR Cellular or a Cash Equity Investor may engage in or possess an interest in other business ventures, and may engage in any other activities, of every kind and description (whether or not competitive with the business of the Company or otherwise affecting the Company), independently or with others and shall owe no duty or liability to the Company, the other Stockholders or their Affiliates in connection therewith. None of the Company or the other Stockholders shall have any rights in or to such independent ventures or the income or profits therefrom by virtue of this Agreement or any of the Related Agreements. Without limiting the generality of the foregoing, in the event that AT&T PCS, TWR Cellular or a Cash Equity Investor or a Person affiliated with AT&T PCS, TWR Cellular or a Cash Equity Investor develops inventions which are patentable or are otherwise trade secrets relevant to the Business, AT&T PCS, TWR Cellular or such Cash Equity Investor or affiliated Person shall nevertheless retain ownership of such invention and may license it to the Company if the Company so desires and if mutually satisfactory terms are agreed to. The Company shall also have the right to develop any inventions related to the Business deemed desirable by it and to retain title to such inventions. To the extent that, at law or in equity, AT&T PCS, TWR Cellular or a Cash Equity Investor or any Person affiliated with AT&T PCS, TWR Cellular or a Cash Equity Investor would have duties (including fiduciary duties) and liabilities to the Company, or to the Stockholders, different from or in addition to those provided in this Section 8.7 and Section 8.6 56 with respect to the subject matter of such Sections, all rights of the Company and the Stockholders arising out of such duties and liabilities are hereby waived and no such Person shall be liable to the Company or to any Stockholder for its good faith reliance on the provisions of this Section 8.7. 8.8 Acknowledgments and Termination of Exclusivity. ---------------------------------------------- (a) The Stockholders hereby expressly acknowledge that none of the Stockholders would have been willing to enter into this Agreement or make contributions to the capital of the Company, except for each other Stockholder's and its Affiliates willingness to enter into this Agreement (including without limitation the provisions set forth in this Section 8) and the Related Agreements. (b) Without limiting the foregoing, and without limiting the remedies that may be available to it at law or in equity, in the event of a Substantial Company Breach, the obligations of AT&T PCS and its Affiliates (including TWR Cellular) under Section 8.6 shall automatically terminate and be of no further force or effect. (c) Upon consummation of a Disqualifying Transaction, AT&T PCS may, by notice to the Company, terminate its and its Affiliates' (including TWR Cellular's) obligations under Section 8.6 with respect to any Overlap Territory, provided that the obligations of AT&T PCS (including TWR Cellular) and its - -------- Affiliates pursuant to Section 8.6(b)(ii) shall continue in effect with respect to the then existing customers of the PCS Systems and Cellular Systems owned and operated by AT&T PCS and its Affiliates (including TWR Cellular) (and their respective successors pursuant to the applicable Disqualifying Transaction) before giving effect to such Disqualifying Transaction, so long as such customers remain customers of such systems and such systems continue to be owned or operated by AT&T PCS or its Affiliates (including TWR Cellular). Notwithstanding the foregoing, in the event that the Company exercises its right pursuant to Section 6.1 to convert all of the shares of Company Stock owned by AT&T PCS (including TWR Cellular) into Series B Preferred Stock, the reference in this Section 8.8(c) to the "Overlap Territory" shall be deemed to refer to the Territory. 8.9 Equipment, Discounts and Roaming. AT&T PCS acknowledges and agrees -------------------------------- that, subject to the terms of Sections 8.1 and 8.5, the Company shall have the sole discretion to select (a) the equipment vendor(s) for the infrastructure to be constructed by the Company and (b) billing and other vendors providing goods and services to the Company. If reasonably requested by the Company, AT&T PCS agrees to use all commercially reasonable efforts to assist representatives of the Company in obtaining discounts from any AT&T PCS vendor with whom the Company is negotiating for the purchase of any such subscriber or infrastructure equipment or billing services. In addition, AT&T PCS agrees to use all commercially reasonable efforts to enable the Company to become a party to the roaming agreements between AT&T PCS and its Affiliates and operators of other Cellular Systems and PCS Systems or, subject to the Company agreeing to the obligations thereunder, entitled to the rights and benefits of AT&T PCS under such roaming agreements. The two immediately preceding sentences shall not be construed to 57 require AT&T PCS or its Affiliates to take any action that AT&T PCS or such Affiliate determines in its sole discretion to be adverse to its interests. AT&T PCS may develop a roaming clearinghouse for AT&T Licensees, including the Company, pursuant to which the Company's subscribers that are roaming on PCS or Cellular Systems with which AT&T PCS or any of its Affiliates have entered into a roaming agreement will be identified on such PCS or Cellular System as an AT&T PCS subscriber, and settlement of roaming accounts for such Company subscribers would be effected first between AT&T PCS and such PCS or Cellular System and then settled between AT&T PCS and the Company. In the event AT&T PCS provides such roaming clearinghouse to the Company, the per-subscriber handling charge to the Company shall be commercially reasonable. 8.10 ANS Agreement. At the request of the Company, AT&T PCS shall cause ------------- AWS to enter into an Advanced Network Services Agreement with the Company, substantially in the form of Exhibit C. 8.11 Resale Agreements. ----------------- (a) From time to time, upon the request of AT&T PCS, the Company shall enter into a Resale Agreement relating to the Territory, substantially in the form of Exhibit C to the Securities Purchase Agreement, with AT&T PCS and any of its Affiliates and, with respect to any geographic area within the Territory, one other Person designated by AT&T PCS, provided such other Person -------- is licensed to provide telecommunications services in such geographic area under the service marks used by AT&T Corp. and such other Person qualifies as a reseller under any generally applicable standards the Company establishes for its resellers from time to time and upon the request of AT&T PCS, the Company shall enter into an agency agreement authorizing AT&T PCS and any of its Affiliates and, with respect to any geographic area within the Territory, one other Person designated by AT&T PCS, provided such other Person is licensed to -------- provide telecommunications services in such geographic area under the service marks used by AT&T Corp. and such other Person qualifies as an agent under any generally applicable standards the Company establishes for its agents from time to time. Any such agency agreements shall provide that the Company shall pay the agent a commission at the rate then generally offered to the Company's agents and shall otherwise be on commercially reasonable terms. At no time shall there be more than one Person (other than AT&T PCS and its Affiliates) designated by AT&T PCS as a reseller or an agent with respect to any geographic area within the Territory. (b) It is the intention of the parties that, in light of AT&T's PCS's equity interest in the Company and the other arrangements between AT&T PCS and its Affiliates and the Company (including the roaming revenues anticipated to be earned by the Company from subscribers of AT&T PCS and its Affiliates), the rates, terms and conditions of Service (as defined in the Resale Agreement) provided by the Company pursuant to the Resale Agreement or any other agreement between AT&T PCS or such other reseller and the Company shall be at least as favorable to AT&T PCS or such other reseller, taken as a whole, as the rates, terms and conditions of Service, taken as a whole, provided by the Company to any other Customer (as 58 defined in the Resale Agreement) and, to the extent permitted by applicable law, such rates, terms and conditions shall be superior to those provided to any other Customer. Without limiting the foregoing, the rate plans offered by the Company pursuant to any Resale Agreement shall be designed to result in the average actual rate per minute paid by the Reseller for Service being at least 25% below the weighted average actual rate per minute billed by the Company to its subscribers for access and air time, but excluding revenues for features, taxes, toll or other non-rate items. The Company and Reseller shall negotiate commercially reasonable reductions to such resale rate based upon increased volume commitments (including roaming charges incurred by subscribers of AT&T PCS and its Affiliates). 8.12 Non-Solicitation. ---------------- (a) AT&T PCS hereby covenants and agrees that from and after the date hereof until six months after the date on which it shall cease to own any Equity Securities that neither AT&T PCS nor its Affiliates (including TWR Cellular) shall solicit for employment any employee of the Company; provided however that, -------- ------- nothing contained in this Section 8.12(a) shall prevent AT&T PCS or its Affiliates (including TWR Cellular) from engaging in a general solicitation for employment that is not directed at employees of the Company. (b) The Company hereby covenants and agrees that from and after the date hereof until six months after the date on which AT&T PCS or its Affiliates (including TWR Cellular) shall cease to own any Equity Securities that neither the Company nor its Affiliates (including TWR Cellular) shall solicit for employment any employee of the AT&T PCS or its Affiliates; provided, however that nothing contained in this Section 8.12(b) shall prevent the Company or its Affiliates (including TWR Cellular) from engaging in a general solicitation for employment that is not directed at employees of AT&T PCS and its Affiliates. 8.13 Co-Location. Except in any portion of the Territory as to which the ----------- provisions of Section 8.6 shall have been terminated: (a) the Company agrees to permit on commercially reasonable terms AT&T PCS and its Affiliates (including TWR Cellular) to install, operate and maintain cell site equipment owned or used by AT&T PCS and its Affiliates (including TWR Cellular) in their respective businesses on the towers, buildings and other locations at which the Company's cell site equipment is installed, operated and maintained, and (b) AT&T PCS and its Affiliates (including TWR Cellular) agree to permit on commercially reasonable terms the Company to install, operate and maintain cell site equipment owned or used by the Company in its business on the towers, buildings and other locations at which AT&T PCS and its Affiliates (including TWR Cellular) cell site equipment is installed, operated and maintained. 9. After-Acquired Shares; Recapitalization. --------------------------------------- 9.1 After Acquired Shares; Recapitalization. --------------------------------------- (a) All of the provisions of this Agreement shall apply to all of the shares of Equity Securities now owned or hereafter issued or transferred to a Stockholder or to his, her or 59 its Affiliated Successors in consequence of any additional issuance, purchase, exchange or reclassification of shares of Equity Securities, corporate reorganization, or any other form of recapitalization, or consolidation, or merger, or share split, or share dividend, or which are acquired by a Stockholder or its Affiliated Successors in any other manner. (b) Whenever the number of outstanding shares of Equity Securities is changed by reason of a stock dividend or a subdivision or combination of shares effected by a reclassification of shares, each specified number of shares referred to in this Agreement shall be adjusted accordingly. 9.2 Amendment of Restated Certificate. Whenever the number of shares of --------------------------------- authorized Common Stock is not sufficient in order to issue shares of Common Stock upon conversion of Preferred Stock in accordance with the Restated Certificate, (i) the Company shall promptly amend the Restated Certificate in order to authorize a sufficient number of shares of Common Stock, and (ii) each Stockholder agrees to vote its shares of Preferred Stock and Common Stock in favor of such amendment. 10. Share Certificates. ------------------ 10.1 Restrictive Endorsements; Replacement Certificates. Each certificate -------------------------------------------------- representing the shares of Equity Securities now or hereafter held by a Stockholder (including any such certificate delivered upon conversion of the Preferred Stock) or delivered in substitution or exchange for any of the foregoing certificates shall be stamped with legends in substantially the following form: (a) "The shares represented by this Certificate are subject to a Stockholders' Agreement dated as of July 17, 1998, a copy of which is on file at the offices of the Company and will be furnished by the Company to the holder hereof upon written request. Such Stockholders' Agreement provides, among other things, for the granting of certain restrictions on the sale, transfer, pledge, hypothecation or other disposition of the shares represented by this Certificate, and that under certain circumstances, the holder hereof may be required to sell the shares represented by this Certificate. By acceptance of this Certificate, each holder hereof agrees to be bound by the provisions of such Stockholders' Agreement. The Company reserves the rights to refuse to transfer the shares represented by this Certificate unless and until the conditions to transfer set forth in such Stockholders' Agreement have been fulfilled"; and (b) "The securities represented by this Certificate have been acquired for investment and have not been registered under the Securities Act of 1933, as amended (the "Act"), or under any state securities or `Blue Sky' laws. Said securities may not be sold, transferred, assigned, pledged, hypothecated or otherwise disposed of, unless and until registered under the Act and the rules and regulations thereunder and all applicable state securities or `Blue Sky' laws or exempted therefrom under the Act and all applicable state securities or `Blue Sky' laws." 60 Each Stockholder agrees that he, she or it will deliver all certificates for shares of Equity Securities owned by him, her or it to the Company for the purpose of affixing such legends thereto. (c) Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any certificate representing shares of Equity Securities subject to this Agreement and of a bond or other indemnity reasonably satisfactory to the Company, and upon reimbursement to the Company of all reasonable expenses incident thereto, and upon surrender of such certificate, if mutilated, the Company will make and deliver a new certificate of like tenor in lieu of such lost, stolen, destroyed or mutilated certificate. 11. Equitable Relief. The parties hereto agree and declare that legal ---------------- remedies may be inadequate to enforce the provisions of this Agreement and that, in addition to being entitled to exercise all of the rights provided herein or in the Restated Certificate or granted by law, including recovery of damages, equitable relief, including specific performance and injunctive relief, may be used to enforce the provisions of this Agreement. 12. Miscellaneous. ------------- 12.1 Notices. All notices or other communications hereunder shall be in ------- writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by facsimile transmission, or by registered or certified mail (return receipt requested), postage prepaid, with an acknowledgment of receipt signed by the addressee or an authorized representative thereof, addressed as follows (or to such other address for a party as shall be specified by like notice; provided that notice of a change of address shall be effective only upon receipt thereof: If to AT&T PCS or TWR Cellular: c/o AT&T Wireless Services, Inc. 5000 Carillon Point Kirkland, Washington 98033 Attention: William W. Hague Telephone: (425) 828-8461 Facsimile: (425) 828-8451 With a copy to: AT&T Corp. 295 North Maple Avenue Basking Ridge, NJ 07920 Attention: Corporate Secretary Telephone: Facsimile: (908) 953-4657 61 and Friedman Kaplan & Seiler LLP 875 Third Avenue, 8th Floor New York, New York 10022 Attention: Daniel M. Taitz Telephone: (212) 833-1109 Facsimile: (212) 355-6401 and Rubin Baum Levin Constant & Friedman 30 Rockefeller Plaza New York, New York 10112 Attention: Gregg S. Lerner, Esq. Telephone: (212) 698-7705 Facsimile: (212) 698-7825 If to a Cash Equity Investor, to its address set forth on Schedule I. With a copy to: Mayer, Brown & Platt 1675 Broadway New York, New York 10019 Attention: Mark S. Wojciechowski, Esq. Telephone: (212) 506-2525 Facsimile: (212) 262-1910 If to a Management Stockholder or to the Company, to the address set forth in the Securities Purchase Agreement. With a copy to each other party sent to the addresses set forth in this Section 12.1. 12.2 Entire Agreement; Amendment; Consents. ------------------------------------- (a) This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, among the parties or any of them with respect to the subject matter hereof. (b) No change or modification of this Agreement shall be valid, binding or enforceable unless the same shall be in writing and signed by the Company and the Beneficial Owners of a majority of the shares of Class A Voting Common Stock, including 62 AT&T PCS, 66 2/3% of the Class A Voting Common Stock Beneficially Owned by the Cash Equity Investors, and 66-2/3% of the Class A Voting Common Stock Beneficially Owned by the Management Stockholders; provided, however, that in -------- ------- the event any party hereto shall cease to own any shares of Equity Securities such party hereto shall cease to be a party to this Agreement and the rights and obligations of such party hereunder shall terminate, except to the extent otherwise provided in Section 4.7(a) with respect to any Unfunded Commitment. (c) Whenever in this Agreement the consent or approval of a Stockholder is required, except as expressly provided herein, such consent or approval may be given or withheld in the sole and absolute discretion of each Stockholder. 12.3 Term. ---- (a) Subject to Sections 12.3(b), 12.3(c) and 12.4, this Agreement shall terminate upon the earliest to occur of any of the following events: (i) The consent in writing of all of the parties hereto; or (ii) The expiration of eleven (11) years from the date of execution and delivery of this Agreement; or (iii) One Stockholder shall Beneficially Own all of the Class A Voting Common Stock. (b) Notwithstanding anything contained herein to the contrary, (i) the provisions of Sections 3.2, 3.3, 3.4, 3.5, 4.1(a), 4.5 (other than Section 4.5(b)), 7.1, 7.2 and 7.6 shall terminate on the earlier to occur of a termination pursuant to Section 12.3(a) and the IPO Date, (ii) the provisions of Sections 3 and 4 shall terminate on the earlier to occur of a termination pursuant to Section 12.3(a) and the expiration of ten (10) years from the date hereof, (iii) the provisions of Sections 3.1(e) (relating to AT&T PCS' right to approve the directors selected by the holders of the Voting Preference Stock pursuant to Section 3.1(e)(ii) and any replacement for Messrs. Vento or Sullivan to the Board of Directors), 3.11(a) (relating to AT&T PCS' right to approve the directors selected by the Cash Equity Investors pursuant to Section 3.11(a)(ii) and any individuals selected by the Management Stockholders and any replacement thereof to the Board of Directors), 4.7(b), 7.4, 7.6 and 8.4(a), shall terminate, and neither the Company nor any Stockholder shall be required to obtain AT&T PCS's prior written consent as required under such Sections, on the earlier to occur of (i) a termination pursuant to Section 12.3(a) and (ii) (x) with respect to the period prior to the eighth anniversary of the date hereof, the date on which AT&T PCS and TWR Cellular shall cease to Beneficially Own, in the aggregate, more than two-thirds of the number of shares of Series A Preferred Stock that AT&T PCS and TWR Cellular Beneficially Own, in the aggregate, on the date hereof and (y) with respect to the period after the eighth anniversary of the date hereof on which AT&T PCS and TWR Cellular shall cease to Beneficially Own, in the aggregate, more than two-thirds of the number of shares of Class A Voting Common Stock that AT&T PCS and TWR Cellular 63 Beneficially Owns, in the aggregate, on such eighth anniversary date, (iv) the provisions of Section 3.1 shall terminate on the later to occur of (x) the date that the holders of shares of Voting Preference Stock shall vote as a class with holders of Class A Voting Common Stock, and (y) immediately prior to the IPO Date; it being understood that in such event the Board of Directors on and as of the IPO Date shall be determined in accordance with Section 3.11 and (v) the provisions of 3.6 shall terminate on the date that the holders of shares of Voting Preference Stock shall vote as a class with holders of Class A Voting Common Stock. Notwithstanding anything contained herein to the contrary, the provisions of Section 3.11(a)(ii), (b), (c) and (d) shall terminate on the earlier to occur of a termination pursuant to Section 12.3 (a) and the date after the IPO Date. (c) (i) Notwithstanding anything contained herein to the contrary, in the event the Cash Equity Investors shall Beneficially Own less than (I) one- half but more than one-quarter of the number of shares of Common Stock Beneficially Owned by the Cash Equity Investors on the date hereof, the number of directors the Cash Equity Investors shall be permitted to designate under Section 3.1(a) shall be reduced to one, or (II) one-quarter of the number of shares of Common Stock Beneficially Owned by the Cash Equity Investors on the date hereof, the provisions of Section 3.1(a) and the provisions of Sections 3.1(e) (relating to the Cash Equity Investors' right to approve the directors selected by the holders of the Voting Preference Stock pursuant to Section 3.1(e)(i) and (ii)) and the right to approve any director that replaces Messrs. Vento or Sullivan on the Board of Directors shall terminate, and neither the Company nor any Stockholder shall be required to obtain the Cash Equity Investors' prior written consent as required under such Sections. In the event the number of directors the Cash Equity Investors are entitled to designate is reduced pursuant to Section 12.3(c)(i)(I), two of the directors designated by the Cash Equity Investors under Section 3.1(a)(i) shall resign (or the other directors or Stockholders shall remove them from the Board of Directors) and the remaining directors shall take such action so that the number of directors constituting the entire Board of Directors shall be reduced accordingly. In the event the provisions of Section 3.1(a) and 3.1(e) are terminated pursuant to Section 12.3(c)(i)(II), the directors designated by the Cash Equity Investors pursuant to Section 3.1(a) and the directors designated pursuant to Section 3.1(e)(i) shall resign (or the other directors or Stockholders shall remove them from the Board of Directors) and the remaining directors shall take such action so that the number of directors constituting the entire Board of Directors is reduced to seven (7) individuals. The holders of the Voting Preference Stock shall thereafter have the right to designate three (3) individuals to the Board of Directors provided each such individual is acceptable to AT&T PCS (so long as AT&T PCS and TWR Cellular continues to Beneficially Own, in the aggregate, more than two-thirds of the Common Stock Beneficially Owned by AT&T PCS and TWR Cellular, in the aggregate, on the date hereof). For all purposes of this Agreement (other than Section 3.1(a)), all references in this Agreement to directors designated pursuant to Section 3.1(e)(ii) shall thereafter be deemed to refer to the three (3) directors designated pursuant to the immediately preceding sentence. (ii) Notwithstanding anything contained herein to the contrary, in the event that the composition of the Board of Directors shall be determined in accordance with Section 3.11 and the Cash Equity Investors shall Beneficially Own less than (I) one-half but 64 more than one-quarter of the number of shares of Common Stock Beneficially Owned by the Cash Equity Investors on the date hereof, then notwithstanding the provisions of Section 3.11 the number of directors the Cash Equity Investors shall be permitted to designate under Section 3.11(a), shall be reduced to one, or (II) one-quarter of the number of shares of Common Stock Beneficially Owned by the Cash Equity Investors on the date hereof, the provisions of Section 3.11(a), shall terminate. In the event that the composition of the Board of Directors shall be determined in accordance with Section 3.11 and the number of directors the Cash Equity Investors are entitled to designate is reduced pursuant to Section 12.3(c)(ii)(I), one of the directors designated by the Cash Equity Investors under Section 3.11(a)(i) shall resign (or the other directors or Stockholders shall remove them from the Board of Directors) and the remaining directors shall take such action so that the number of directors constituting the entire Board of Directors shall be reduced accordingly. In the event the composition of the Board of Directors shall be determined in accordance with Section 3.11 and the provisions of Section 3.11(a) are terminated pursuant to Section 12.3(c)(ii)(II), the directors designated by the Cash Equity Investors pursuant to Section 3.11(a) shall resign (or the other directors or Stockholders shall remove them from the Board of Directors) and the remaining directors shall take such action so that the number of directors constituting the entire Board of Directors is reduced by two (2) individuals. Messrs. Sullivan and Vento (in each case so long as he is an officer of the Company) shall thereafter have the right to designate two (2) individuals to the Board of Directors provided such individual is acceptable to AT&T PCS (so long as AT&T PCS and TWR Cellular continue to Beneficially Own more than two-thirds of the Common Stock Beneficially Owned by AT&T PCS and TWR Cellular, in the aggregate, on the date hereof). For all purposes of this Agreement (other than Section 3.11(a)), all references in this Agreement to directors designated pursuant to Section 3.11(a)(ii) shall thereafter be deemed to refer to the two (2) directors designated pursuant to the immediately preceding sentence. 12.4 Survival. Nothing contained in Section 12.3 shall impair any rights or -------- obligations of any party hereto arising prior to the time of the termination of this Agreement, or which may arise by an event causing the termination of this Agreement. The provisions of Section 5 shall survive any termination of this Agreement pursuant to Section 12.3 and shall continue in full force and effect until the twentieth anniversary of the date hereof. The provisions of Section 7.7 and Article 12 shall survive the termination of this Agreement. 12.5 Waiver. No failure or delay on the part of any Stockholder in ------ exercising any right, power or privilege hereunder, nor any course of dealing between the Company and any Stockholder shall operate as a waiver thereof nor shall any single or partial exercise of any right, power or privilege hereunder preclude the simultaneous or later exercise of any other right, power or privilege. The rights and remedies herein expressly provided are cumulative and not exclusive of any rights and remedies which any Stockholder would otherwise have. No notice to or demand on the Company in any case shall entitle the Company to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Stockholders or any of them to take any other or further action in any circumstances without notice or demand. 65 12.6 Obligations Several. The obligations of each Stockholder under this ------------------- Agreement shall be several with respect to each such Stockholder. 12.7 Governing Law. This Agreement shall be governed and construed in ------------- accordance with the law of the State of Delaware. 12.8 Dispute Resolution. ------------------ (a) The parties shall use and strictly adhere to the following dispute resolution processes, except as otherwise expressly provided in this Section 12.8, to resolve any and all disputes, controversies or claims, whether based on contract, tort, statute, fraud, misrepresentation or any other legal or equitable theory (hereinafter, "Dispute(s)"), arising out of or relating to this Agreement (and any prior agreement this Agreement supersedes), including without limitation, its making, termination, non-renewal, its alleged breach and the subject matter of this Agreement (e.g., products or services furnished hereunder or those related to those furnished): (b) The parties shall first attempt to settle each Dispute through good faith negotiations. The aggrieved party shall initiate such negotiations by giving the other party(ies) written notice of the existence and nature of the Dispute. The other party(ies) shall in a writing to the aggrieved party acknowledge such notice of Dispute within ten (10) business days. Such acknowledgment may also set forth any Dispute that the acknowledging party desires to have resolved in accordance with this Section. (c) Thereafter, if any Dispute is not resolved by the parties through negotiation within thirty (30) calendar days of the date of the notice of acknowledgment, either party may terminate informal negotiations with respect to that Dispute and request that the Dispute be submitted to non-binding mediation. Any mediation of a Dispute under this Section shall be conducted by the CPR Institute for Dispute Resolution ("CPR") in accordance with the then current CPR "Model Mediation Procedure for Business Disputes" ("Model Procedures") and the procedures specified in this Section to the extent that they conflict with, modify or add to such Model Procedures. Any demand for initiation of mediation of a Dispute must be given in writing to both the other party(ies) involved and to the CPR and must set forth the nature of the Dispute. Each party to the mediation shall bear its own expenses with respect to mediation and the parties shall share equally the fees and expenses of the CPR and the mediator. The failure by a party to timely pay its share of the mediation fees and expenses of the CPR and the mediator shall be a bar to arbitration under Section 12.8(d) of that party's Dispute(s). Any mediation under this Section shall be conducted within the State of New York at a site selected by the mediator that is reasonably convenient to the parties. Each party shall be represented in the mediation by representatives having final settlement authority with respect to the Dispute(s). All information and documents disclosed in mediation by any party shall remain private and confidential to the disclosing party and may not be disclosed by any party outside the mediation. No privilege or right with respect to any information or document disclosed in mediation shall be waived or lost by such disclosure. 66 (d) Any Dispute not finally resolved after negotiation and mediation in accordance with Section 12.8(b) and 12.8(c) shall, upon the written demand of any involved party delivered to the other party(ies) and the CPR, be finally resolved through binding arbitration in accordance with the then current CPR "Non-Administered Arbitration Rules" ("Arbitration Rules") and the procedures specified in this Section to the extent that they conflict with, modify or add to such Arbitration Rules. Any Dispute of any other party not finally resolved after negotiation and mediation pursuant to this Section may be made a part of the arbitration demanded by another party, provided that the written notice of demand for arbitration of that Dispute is received by the CPR before selection of an arbitrator by the CPR. Any demand for arbitration of a Dispute received by the CPR after the selection of the arbitrator must be resolved through a separate arbitration proceeding in accordance with this Section. Each party shall bear its own expenses with respect to arbitration and the parties shall share equally the fees and expenses of the CPR and the arbitrator. Unless otherwise mutually agreed by the parties in writing, the arbitration shall be conducted by one (1) neutral arbitrator. The arbitration shall be conducted in the State of New York at a site selected by the arbitrator that is reasonably convenient to the parties. The arbitrator shall be bound by and strictly enforce the terms of the Agreement and may not limit, expand, or otherwise modify the terms of this Agreement. The arbitrator shall make a good faith effort to apply applicable law, but an arbitration decision and award shall not be subject to review because of errors of law. The arbitrator shall have the sole authority to resolve issues of the arbitrability of any Dispute, including the applicability or running of any statute of limitation. The arbitrator shall not have power to award damages in connection with any Dispute in excess of actual compensatory damages or to award punitive damages and each party irrevocably waives any claim thereto. The arbitrator shall not have the power to order pre-hearing discovery of documents or the taking of depositions. The arbitrator may compel, to the extent provided by the FAA, attendance of witnesses and the production of documents at the hearing. The arbitrator's decision and award shall be made and delivered to the parties within six (6) months of selection of the arbitrator by the CPR and judgment on the award by the arbitrator may be entered by any court having jurisdiction thereof. (e) This Section shall be interpreted, governed by and enforced in accordance with the United States Arbitration Act, 9 U.S.C. Sections 1-14 (the "Federal Arbitration Act" or "FAA"). The laws of the State of New York, except those pertaining to choice of law, arbitration of disputes and those pertaining to the time limits for bringing an action that conflict with the terms of this Dispute Resolution provision, shall govern all other substantive matters pertaining to the interpretation and enforcement of the other terms of this Agreement with respect to any Dispute. Any party to a Dispute, which is the subject of a notice initiating the Dispute resolution procedures under this Section, may seek a temporary injunction in any state or federal court of competent jurisdiction to the limited extent necessary to preserve the status quo during the pendency of final resolution of a Dispute in accordance with this Section. If court proceedings to stay litigation of a Dispute or compel arbitration of a Dispute are necessary, the party who unsuccessfully opposes such proceedings shall pay all associated costs, expenses, and attorneys' fees that the other party reasonably incurs in connection with such court proceedings. An order to pay such costs, expenses and attorney fees shall become part of any decision and award of the arbitrator of the Dispute. An arbitrator appointed pursuant 67 to Section 12.8(d) to resolve a Dispute may also issue such injunctive orders and shall have the power to modify or dissolve the injunctive order of any court to the extent it pertains to the Dispute which the arbitrator has been selected to finally resolve. The parties, their representatives, other participants, and the mediator and arbitrator shall hold the existence, content, and result of the mediation and arbitration of a Dispute in confidence except to the limited extent necessary to enforce a final settlement agreement or to obtain and secure enforcement of or a judgment on an arbitration decision and award. (f) The statute(s) of limitation applicable to any Dispute shall be tolled upon initiation of the Dispute resolution procedures under this Section and shall remain tolled until the Dispute is resolved by mediation or arbitration under this Section. Tolling shall cease if the aggrieved party with a Dispute does not initiate mediation within sixty (60) calendar days after good faith negotiations are terminated by any party and, after mediation of a Dispute, if the aggrieved party with a Dispute does not initiate a demand for arbitration within sixty (60) calendar days after mediation is terminated. However, any Dispute is forever barred that has not expressly been made the subject of the written notice required under Section 12.8(b) above within 365 days after the date the Party asserting the Dispute first knows or should have known of the existence of the acts or omissions that give rise to such Dispute. (g) Unless the parties mutually agree in writing, Disputes relating to trademarks (including service marks), patents and copyrights shall not be resolved in accordance with the Dispute resolution procedures set forth in this Section and shall be resolved as otherwise provided in this Agreement. (h) The Company and each of the Stockholders hereby irrevocably consents to the exclusive jurisdiction of the state or federal courts in the State of New York, and all state or federal courts competent to hear appeals therefrom, over any actions which may be commenced against any of them under or in connection with this Agreement. The Company and each Stockholder hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which any of them may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute in the Southern District of New York and New York County. The Company and each Stockholder hereby agree that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. The Company and each Stockholder hereby consent to process being served by any party to this Agreement in any actions by the transmittal of a copy thereof in accordance with the provisions of Section 12.1. 12.9 Benefit and Binding Effect; Severability. This Agreement shall be ---------------------------------------- binding upon and shall inure to the benefit of the Company, its successors and assigns, and each of the Stockholders and their respective executors, administrators and personal representatives and heirs and permitted assigns. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy or any listing requirement applicable to the Common Stock, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect. Upon such determination that any term or other provision is invalid, 68 illegal or incapable of being enforced, the parties hereto affected by such determination in any material respect shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the provisions hereof are given effect as originally contemplated to the greatest extent possible. 12.10 Amendment of By-Laws. The Stockholders agree that the terms of this -------------------- Agreement shall supersede any inconsistent provision that is contained in the Restated By-Laws and, to the extent required by Delaware law or the Restated By- Laws, this Agreement shall be deemed to constitute a written action taken by the Stockholders of the Company and shall be deemed an amendment of the Restated By- Laws. 12.11 Authorized Agent of AT&T PCS. AT&T PCS hereby authorizes Wireless ---------------------------- PCS, Inc. as its agent, with full power to execute, in the name of and on behalf of AT&T PCS, the Related Agreements to which AT&T PCS is a party and any and all other documents that AT&T PCS is required to execute and deliver, and to give and receive all notices, requests, consents, amendments, demands and other communications to or from AT&T PCS, hereunder or thereunder. Each party hereto (other than AT&T PCS) shall be entitled to rely on the full power and authority of Wireless PCS, Inc. to act on behalf of AT&T PCS in accordance with this Section 12.11. Nothing contained in this Section 12.11 shall relieve AT&T PCS from complying with its obligations under this Agreement or any of the Related Agreements to which it is a party. 12.12 FCC Approval. Notwithstanding anything contained in this Agreement ------------ to the contrary, no transaction or action contemplated herein shall be consummated and no interests or rights transferred, converted or exchanged prior to receiving FCC approval with respect thereto to the extent such approval is necessary. 12.13 Expenses. The Company shall pay the reasonable fees and expenses of -------- counsel to the Stockholders incurred in connection with the preparation, negotiation and execution of this Agreement and of any amendment or modification hereof. Except as provided in Sections 5(g) and 12.14, all other attorneys' fees incurred by the Stockholders in connection with this Agreement (including, without limitation, in the preparation of notices (and responses thereto) and consents) shall be borne by the Stockholder(s) incurring such fees. 12.14 Attorneys' Fees. In any action or proceeding brought to enforce any --------------- provision of this Agreement, or where any provision hereof is validly asserted as a defense, the successful party shall be entitled to recover reasonable attorneys' fees in addition to any other available remedy. 12.15 Headings. The captions in this Agreement are for convenience only -------- and shall not be considered a part of or affect the construction or interpretation of any provision of this Agreement. 69 12.16 Counterparts. This Agreement may be executed in two or more ------------ counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. 70 IN WITNESS WHEREOF, each of the parties has executed or consent this Agreement to be executed by its duly authorized officers as of the date first written above. AT&T WIRELESS PCS INC. By: /s/ Mark U. Thomas --------------------------- Name: Mark U. Thomas Title: V.P. & C.F.O TWR CELLULAR, INC. By: /s/ Mark U. Thomas --------------------------- Name: Mark U. Thomas Title: V.P TELECORP PCS, INC. By: /s/ Thomas H. Sullivan --------------------------- Name: Thomas H. Sullivan Title: President CASH EQUITY INVESTORS: CB CAPITAL INVESTORS, L.P. By: CB Capital Investors, Inc., its general partner By: /s/ Michael R. Hannon --------------------------- Name: Michael R. Hannon Title: General Partner NORTHWOOD VENTURES LLC By: /s/ Peter G. Schiff --------------------------- Name: Peter G. Schiff Title: President 71 NORTHWOOD CAPITAL PARTNERS LLC By: /s/ Peter G. Schiff ------------------------------- Name: Peter G. Schiff Title: President ONELIBERTY FUND III, L.P. By: /s/ Joseph T. McCullen, Jr. ------------------------------- Name: Joseph T. McCullen, Jr. Title: General Partner ONELIBERTY FUND IV, L.P. By: /s/ Joseph T. McCullen, Jr. ------------------------------- Name: Joseph T. McCullen, Jr. Title: General Partner MEDIA/COMMUNICATIONS INVESTORS LIMITED PARTNERSHIP By: M/C Investor General Partner - J. Inc. its general partner By: /s/ James F. Wade --------------------------- Name: James F. Wade Title: President MEDIA/COMMUNICATIONS PARTNERS III LIMITED PARTNERSHIP By: M/CP III General Partner - J. Inc., a general partner By: M/CP III General Partner - J. Inc., its general partner By: /s/ James F. Wade --------------------------- Name: James F. Wade Title: President EQUITY-LINKED INVESTORS-II By: ROHIT M. DESAI ASSOCIATES-II, its general partner By: /s/ Frank J. Pados, Jr. --------------------------- Name: Frank J. Pados, Jr. Title: Attorney-in-Fact PRIVATE EQUITY INVESTORS III, L.P. By: ROHIT M. DESAI ASSOCIATES III, its general partner By: /s/ Frank J. Pados, Jr. --------------------------- Name: Frank J. Pados, Jr. Title: Attorney-in-Fact 75 HOAK COMMUNICATIONS PARTNERS, L.P. By: HCP Investment, L.P., its general partner By: Hoak Partners, L.L.C., its general partner By: /s/ James M. Hoak ---------------------------- Name: James M. Hoak Title: Manager HCP CAPITAL FUND, L.P. By: James M. Hoak & Co., its general partner By: /s/ James M. Hoak ------------------------------- Name: James M. Hoak Title: Chairman ENTERGY TECHNOLOGY HOLDING COMPANY By: /s/ John A. Brayman ------------------------------- Name: John A. Brayman Title: President TORONTO DOMINION INVESTMENTS INC. By: /s/ Martha Gariepy ------------------------------- Name: Martha Gariepy Title: Vice President 76 HOAK COMMUNICATIONS PARTNERS, L.P. By: HCP Investment, L.P., its general partner By: Hoak Partners, L.L.C., its general partner By: /s/ James M. Hoak ---------------------------- Name: James M. Hoak Title: Manager HCP CAPITAL FUND, L.P. By: James M. Hoak & Co., its general partner By: /s/ James M. Hoak ---------------------------- Name: James M. Hoak Title: Chairman ENTERGY TECHNOLOGY HOLDING COMPANY By: /s/ John A. Brayman -------------------------------- Name: John A. Brayman Title: President TORONTO DOMINION INVESTMENTS INC. By: /s/ Martha L. Gariepy -------------------------------- Name: Martha Gariepy Title: Vice President 78 WHITNEY EQUITY PARTNERS, L.P. By: J.H.Whitney Equity Partners, L.L.C., Its General Partner By: /s/ Daniel J. O'Brien ---------------------------- Name: Daniel J. O'Brien Title: Member WHITNEY STRATEGIC PARTNERS III, L.P. By: J.H.Whitney Equity Partners III, L.L.C., Its General Partner By: /s/ Daniel J. O'Brien ---------------------------- Name: Daniel J. O'Brien Title: Member J.H. WHITNEY III, L.P. By: J.H.Whitney Equity Partners III, L.L.C., Its General Partner By: /s/ Daniel J. O'Brien ---------------------------- Name: Daniel J. O'Brien Title: Member 79 GILDE INTERNATIONAL B.V. By: /s/ Joseph T. McCullen, Jr. -------------------------------- Name: Joseph T. McCullen, Jr. Title: Attorney-in-Fact 80 /s/ Thomas Sullivan ------------------------------- Thomas Sullivan /s/ Gerald Vento ------------------------------- Gerald Vento MANAGEMENT STOCKHOLDERS: /s/ Thomas Sullivan ------------------------------- Thomas Sullivan /s/ Gerald Vento ------------------------------- Gerald Vento 76 Schedule I Cash Equity Investors --------------------- CB Capital Investors, L.P. 380 Madison Avenue, 12th Floor New York, NY 10017 Attn: Michael Hannon Fax: (212) 622-3101 Equity-Linked Investors-II Private Equity Investors III, L.P. 540 Madison Avenue, 36th Floor New York, NY 10022 Attn: Rohit M. Desai Fax: (212) 752-7807 Hoak Communications Partners, L.P. HCP Capital Fund, L.P. One Galleria Tower 13355 Noel Road, Suite 1050 Dallas, Texas 75240 Attn: James Hoak Fax: (972) 960-4899 Whitney Equity Partners, L.P. J.H. Whitney III, L.P. Whitney Strategic Partners III, L.P. 177 Broad Street, 15th Floor Stamford, Connecticut 06901 Attn: William Laverack, Jr. Fax: (203) 973-1422 Entergy Technology Holding Company Three Financial Centre 900 South Shackleford Road Suite 210 Little Rock, Arkansas 72211 Attn: William Bandt Fax: (501) 954-5095 Media/Communications Partners III Limited Partnership Media/Communications Investors Limited Partnership 75 State Street, Suite 2500 Boston, MA 02109 Attn: James F. Wade Fax: (617) 345-7201 One Liberty Fund III, L.P. One Liberty Fund IV, L.P. One Liberty Square Boston, MA 02109 Attn: Joseph T. McCullen Fax: (617) 423-1765 Toronto Dominion Investments, Inc. 31 West 52nd Street New York, NY 10019-6101 Attn: Brian Rich Fax: (212) 974-8429 (with a copy to) Toronto Dominion Investments, Inc. 909 Fannin Suite 1700 Houston, Texas 77010 Attn: Martha Gariepy Fax: (713) 652-2647 Northwood Ventures LLC Northwood Capital Partners LLC 485 Underhill Boulevard, Suite 205 Syosset, New York 11791-3419 Attn: Peter Schiff Fax: (516) 364-0879 Gerald Vento Thomas Sullivan 2 Schedule II Management Stockholders ----------------------- Gerald Vento Thomas Sullivan Schedule III Equity Capitalization --------------------- (See Attached) Schedule V Share Allocation Without Supplemental Allocation (a) AT&T Does Not Receive Tracking
Preferred Stock ----------------- ------------------------------------------------------------------- Total Dollars Committed Series A Series B Series C Series D Series E Series F ----------------- ------------------------------------------------------------------- Cash Equity Chase $ 27,782,016 0.00 0.00 27,782.02 0.00 0.00 0.00 Desai 27,782,016 0.00 0.00 27,782.02 0.00 0.00 0.00 Hoak 20,836,512 0.00 0.00 20,836.51 0.00 0.00 0.00 JH 17,363,760 0.00 0.00 17,363.76 0.00 0.00 0.00 Entergy 13,891,008 0.00 0.00 13,891.01 0.00 0.00 0.00 M/C 10,418,256 0.00 0.00 10,418.26 0.00 0.00 0.00 One Liberty 3,472,752 0.00 0.00 3,472.75 0.00 0.00 0.00 TD 3,472,752 0.00 0.00 3,472.75 0.00 0.00 0.00 Northwood 2,430,926 0.00 0.00 2,430.93 0.00 0.00 0.00 Gerald Vento 450,000 0.00 0.00 450.00 0.00 0.00 0.00 Tom Sullivan 100,000 0.00 0.00 100.00 0.00 0.00 0.00 ---------------------------------------------------------------------------------------- Total Cash Equity 128,000,000 0.00 0.00 128,000,000 0.00 0.00 0.00 Supplemental 0 0.00 0.00 0.00 0.00 0.00 0.00 TeleCorp Licenses One Liberty Fund 1,531,433 0.00 0.00 1,531.43 0.00 0.00 0.00 Gilde International 15,461 0.00 0.00 15.46 0.00 0.00 0.00 Northwood Ventures 928,137 0.00 0.00 928.14 0.00 0.00 0.00 Northwood Capital Partners 232,034 0.00 0.00 232.03 0.00 0.00 0.00 CB Capital Investors LP 1,160,171 0.00 0.00 1,160.17 0.00 0.00 0.00 TeleCorp Investment Corp., LLC 1,160,171 0.00 0.00 1,160.17 0.00 0.00 0.00 M/C Investors 46,403 0.00 0.00 46.40 0.00 0.00 0.00 M/C Partners 1,113,768 0.00 0.00 1,113.77 0.00 0.00 0.00 Entergy Technology 1,160,171 0.00 0.00 1,160.17 0.00 0.00 0.00 ---------------------------------------------------------------------------------------- SubTotal 7,347,748 0.00 0.00 7,347.75 0.00 0.00 0.00 AT&T 45,974,850 30,649.90 0.00 0.00 15,740.93 0.00 15,324.95 TRW 54,109,369 36,072.91 0.00 0.00 18,526.04 0.00 18,036.46 Mercury Licenses 0 0.00 0.00 0.00 0.00 0.00 0.00 Gerald Vento 0 0.00 0.00 0.00 0.00 8,729.40 0.00 Tom Sullivan 0 0.00 0.00 0.00 0.00 5,426.38 0.00 J. Dobson 0 0.00 0.00 0.00 0.00 2,287.21 0.00 R. Dowski 0 0.00 0.00 0.00 0.00 714.34 0.00 A. Price 0 0.00 0.00 0.00 0.00 714.34 0.00 J. Dorso 0 0.00 0.00 0.00 0.00 127.80 0.00 D. Chaplain 0 0.00 0.00 0.00 0.00 127.80 0.00 P. Collins 0 0.00 0.00 0.00 0.00 255.59 0.00 R. Johnson 0 0.00 0.00 0.00 0.00 255.59 0.00 S. Chandler 0 0.00 0.00 0.00 0.00 255.59 0.00 D. Knutson 0 0.00 0.00 0.00 0.00 255.59 0.00 A. Gordon 0 0.00 0.00 0.00 0.00 255.59 0.00 P. Bellman 0 0.00 0.00 0.00 0.00 255.59 0.00 ---------------------------------------------------------------------------------------- Total $235,431,967 66,722.81 0.00 135,347.75 34,266.97 19,660.81 33,361.41 ======================================================================================== Common ------- ------------------------------------------------------------------- ------------- Senior Voting Percent Common A B C D Preference Total of Total ------- ------------------------------------------------------------------- ------------- Cash Equity Chase 0.00 26,369.02 0.00 87.10 571.78 0.00 27,027.90 14.00% Desai 0.00 26,369.02 0.00 87.10 571.78 0.00 27,027.90 14.00% Hoak 0.00 19,776.;77 0.00 65.32 528.84 0.00 20,270.93 10.50% JH 0.00 16,480.64 0.00 54.44 357.37 0.00 16,892.44 8.75% Entergy 0.00 13,184.51 0.00 0.00 329.44 0.00 13,513.95 7.00% M/C 0.00 9,888.38 0.00 32.66 214.42 0.00 10,135.46 5.25% One Liberty 0.00 3,296.13 0.00 10.89 71.47 0.00 3,378.49 1.75% TD 0.00 3,296.13 0.00 10.89 71.47 0.00 3,378.49 1.75% Northwood 0.00 2,307.29 0.00 7.62 50.03 0.00 2,364.94 1.22% Gerald Vento 0.00 427.11 0.00 1.41 9.26 0.00 437.79 0.23% Tom Sullivan 0.00 94.91 0.00 0.31 2.06 0.00 97.29 0.05% ---------------------------------------------------------------------------------------------- Total Cash Equity 0.00 121,489.91 0.00 357.74 2,677.42 0.00 124,525.57 64.4% Supplemental 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00% TeleCorp Licenses One Liberty Fund 0.00 1,336.43 0.00 2.18 14.31 0.00 1,352.92 0.70% Gilde International 0.00 13.49 0.00 0.02 0.14 0.00 13.66 0.01% Northwood Ventures 0.00 913.80 0.00 1.49 9.79 0.00 925.08 0.48% Northwood Capital Partners 0.00 228.45 0.00 0.37 2.45 0.00 231.27 0.12% CB Capital Investors LP 0.00 1,142.25 0.00 1.86 12.23 0.00 1,156.34 0.60% TeleCorp Investment Corp., LLC 0.00 1,142.25 0.00 1.86 12.23 0.00 1,156.34 0.60% M/C Investors 0.00 45.69 0.00 0.07 0.49 0.00 46.26 0.02% M/C Partners 0.00 1,096.55 0.00 1.79 11.74 0.00 1,110.09 0.57% Entergy Technology 0.00 1,142.25 0.00 0.00 14.09 0.00 1,156.34 0.60% ---------------------------------------------------------------------------------------------- SubTotal 0.00 7,061.16 0.00 9.64 77.47 0.00 7,148.30 3.70% AT&T 0.00 0.00 0.00 0.00 0.00 0.00 15,324.95 7.94% TRW 0.00 0.00 0.00 0.00 0.00 0.00 18,036.46 9.34% Mercury Licenses 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00% Gerald Vento 0.00 10,799.82 0.00 339.83 0.00 5.00 11,119.65 5.76% Tom Sullivan 0.00 6,700.97 0.00 211.25 0.00 5.00 6,912.22 3.58% J. Dobson 0.00 3,459.45 0.00 0.00 0.00 0.00 3,459.45 1.79% R. Dowski 0.00 1,455.91 0.00 0.00 0.00 0.00 1,455.91 0.75% A. Price 0.00 1,455.91 0.00 0.00 0.00 0.00 1,455.91 0.75% J. Dorso 0.00 260.46 0.00 0.00 0.00 0.00 260.46 0.13% D. Chaplain 0.00 260.46 0.00 0.00 0.00 0.00 260.46 0.13% P. Collins 0.00 520.92 0.00 0.00 0.00 0.00 520.92 0.27% R. Johnson 0.00 520.92 0.00 0.00 0.00 0.00 520.92 0.27% S. Chandler 0.00 520.92 0.00 0.00 0.00 0.00 520.92 0.27% D. Knutson 0.00 520.92 0.00 0.00 0.00 0.00 520.92 0.27% A. Gordon 0.00 520.92 0.00 0.00 0.00 0.00 520.92 0.27% P. Bellman 0.00 520.92 0.00 0.00 0.00 0.00 520.92 0.27% ---------------------------------------------------------------------------------------------- Total 0.00 156,049.57 0.00 918.46 2,755.39 10.00 193,084.85 100.00% ============================================================================================== Cash Equity 64.49% Original THC 3.70% AT&T 17.28% Mercury 0.00%
(a) Management has received shares predicated on the occurrence of the supplemental allocation. If the supplemental allocation does not occur, shares will be repurchased from management such that management receives 14.00% of the fully-diluted equity. (b) Assumes that management meets certain return hurdles and that all management warrants are issued. Schedule A ---------- TeleCorp Investors ------------------ (parentheses indicate name as listed in Schedule V) CB Capital Investors, L.P. (Chase) Entergy Technology Holding Company (Entergy) Media/Communications Investors Limited Partnership (Media/Communications Investors, M/C) Media/Communications Partners III Limited Partnership (Media/Communications Partners, M/C) One Liberty Fund III, L.P. (One Liberty) Northwood Capital Partners LLC (Northwood Capital Partners, Northwood) Northwood Ventures LLC (Northwood Ventures, Northwood) Schedule V Share Allocation Without Supplemental Allocation (a) AT&T Does Not Receive Tracking
Preferred Stock ---------------------------------------------------------------------------------- Total Dollars Senior Committed Series A Series B Series C Series D Series E Series F Common ------------- ---------------------------------------------------------------------------------- Cash Equity Chase $ 27,782,016 0.00 0.00 27,782.02 0.00 0.00 0.00 0.00 Desai 27,782,016 0.00 0.00 27,782.02 0.00 0.00 0.00 0.00 Hoak 20,836.512 0.00 0.00 20,836.51 0.00 0.00 0.00 0.00 JH 17,363,760 0.00 0.00 17,363.76 0.00 0.00 0.00 0.00 Entergy 13,891,008 0.00 0.00 13,891.01 0.00 0.00 0.00 0.00 M/C 10,418,256 0.00 0.00 10,418.26 0.00 0.00 0.00 0.00 One Liberty 3,472,752 0.00 0.00 3,472.75 0.00 0.00 0.00 0.00 TD 3,472,752 0.00 0.00 3,472.75 0.00 0.00 0.00 0.00 Northwood 2,430,926 0.00 0.00 2,430.93 0.00 0.00 0.00 0.00 Gerald Vento 450,000 0.00 0.00 450.00 0.00 0.00 0.00 0.00 Tom Sullivan 100,000 0.00 0.00 100.00 0.00 0.00 0.00 0.00 ------------- ---------------------------------------------------------------------------------- Total Cash Equity 128,000,000 0.00 0.00 128,000,000 0.00 0.00 0.00 0.00 Supplemental 5,000,000 0.00 0.00 5,000,000 0.00 0.00 0.00 0.00 TeleCorp Licenses One Liberty Fund 1,531,433 0.00 0.00 1,531.43 0.00 0.00 0.00 0.00 Gilde International 15,461 0.00 0.00 15.46 0.00 0.00 0.00 0.00 Northwood Ventures 928,137 0.00 0.00 928.14 0.00 0.00 0.00 0.00 Northwood Capital Partners 232,034 0.00 0.00 232.03 0.00 0.00 0.00 0.00 CB Capital Investors LP 1,160,171 0.00 0.00 1,160.17 0.00 0.00 0.00 0.00 TeleCorp Investment Corp., LLC 1,160,171 0.00 0.00 1,160.17 0.00 0.00 0.00 0.00 M/C Investors 46,403 0.00 0.00 46.40 0.00 0.00 0.00 0.00 M/C Partners 1,113,768 0.00 0.00 1,113.77 0.00 0.00 0.00 0.00 Entergy Technology 1,160,171 0.00 0.00 1,160.17 0.00 0.00 0.00 0.00 ------------- ---------------------------------------------------------------------------------- SubTotal 7,347,748 0.00 0.00 7,347.75 0.00 0.00 0.00 0.00 AT&T 45,974,850 30,649.90 0.00 0.00 15,740.93 0.00 15,324.95 0.00 TRW 54,109,369 36,072.91 0.00 0.00 18,526.04 0.00 18,036.46 0.00 Mercury Licenses 2,332,543 0.00 0.00 2,332.55 0.00 0.00 0.00 0.00 Gerald Vento 0 0.00 0.00 0.00 0.00 8,729.40 0.00 0.00 Tom Sullivan 0 0.00 0.00 0.00 0.00 5,426.38 0.00 0.00 J. Dobson 0 0.00 0.00 0.00 0.00 2,287.21 0.00 0.00 R. Dowski 0 0.00 0.00 0.00 0.00 714.34 0.00 0.00 A. Price 0 0.00 0.00 0.00 0.00 714.34 0.00 0.00 J. Dorso 0 0.00 0.00 0.00 0.00 127.80 0.00 0.00 D. Chaplain 0 0.00 0.00 0.00 0.00 127.80 0.00 0.00 P. Collins 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00 R. Johnson 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00 S. Chandler 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00 D. Knutson 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00 A. Gordon 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00 P. Bellman 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00 ------------- ---------------------------------------------------------------------------------- Total $ 242,764,512 66,722.81 0.00 142,680.29 34,266.97 19,660.81 33,361.41 0.00 ============= ================================================================================== Common ---------------------------------------------------------------------------------------- Total Percent Series A Series B Tracking C Tracking D Voting Preference of Total ---------------------------------------------------------------------------------------- Cash Equity Chase 26,369.02 0.00 87.10 571.78 0.00 27,027.90 13.49% Desai 26,369.02 0.00 87.10 571.78 0.00 27,027.90 13.49% Hoak 19,776.77 0.00 65.32 528.84 0.00 20,270.93 10.17% JH 16,480.64 0.00 54.44 357.37 0.00 16,892.44 8.43% Entergy 13,184.51 0.00 0.00 329.44 0.00 13,513.95 6.75% M/C 9,888.38 0.00 32.66 214.42 0.00 10,135.46 5.06% One Liberty 3,296.13 0.00 10.89 71.47 0.00 3,378.49 1.69% TD 3,296.13 0.00 10.89 71.47 0.00 3,378.49 1.69% Northwood 2,307.29 0.00 7.62 50.03 0.00 2,364.94 1.18% Gerald Vento 427.11 0.00 1.41 9.26 0.00 437.79 0.22% Tom Sullivan 94.91 0.00 0.31 2.06 0.00 97.29 0.05% ---------------------------------------------------------------------------------------- Total Cash Equity 121,489.91 0.00 357.74 2,677.42 0.00 124,525.57 62.15% Supplemental 5,000.00 0.00 0.00 0.00 0.00 5,000.00 2.30% TeleCorp Licenses One Liberty Fund 1,336.43 0.00 2.18 14.31 0.00 1,352.92 .68% Gilde International 13.49 0.00 0.02 0.14 0.00 13.66 0.01% Northwood Ventures 913.80 0.00 1.49 9.79 0.00 925.08 0.46% Northwood Capital Partners 228.45 0.00 0.37 2.45 0.00 231.27 0.12% CB Capital Investors LP 1,142.25 0.00 1.86 12.23 0.00 1,156.34 0.58% TeleCorp Investment Corp., LLC 1,142.25 0.00 1.86 12.23 0.00 1,156.34 0.58% M/C Investors 45.69 0.00 0.07 0.49 0.00 46.26 0.02% M/C Partners 1,096.55 0.00 1.79 11.74 0.00 1,110.09 0.55% Entergy Technology 1,142.25 0.00 0.00 14.09 0.00 1,156.34 0.58% ---------------------------------------------------------------------------------------- SubTotal 7,061.16 0.00 9.64 77.47 0.00 7,148.30 3.57% AT&T 0.00 0.00 0.00 0.00 0.00 15,324.95 7.63% TRW 0.00 0.00 0.00 0.00 0.00 18,036.46 9.00% Mercury Licenses 2,269.23 0.00 0.00 0.00 0.00 2,269.23 1.13% Gerald Vento 10,799.82 0.00 339.83 0.00 5.00 11,119.65 3.53% Tom Sullivan 6,700.97 0.00 211.25 0.00 5.00 6,912.22 3.49% J. Dobson 3,459.45 0.00 0.00 0.00 0.00 3,459.45 1.73% R. Dowski 1,455.91 0.00 0.00 0.00 0.00 1,455.91 0.73% A. Price 1,455.91 0.00 0.00 0.00 0.00 1,455.91 0.73% J. Dorso 260.46 0.00 0.00 0.00 0.00 260.46 0.13% D. Chaplain 260.46 0.00 0.00 0.00 0.00 260.46 0.13% P. Collins 520.92 0.00 0.00 0.00 0.00 520.92 0.26% R. Johnson 520.92 0.00 0.00 0.00 0.00 520.92 0.26% S. Chandler 520.92 0.00 0.00 0.00 0.00 520.92 0.26% D. Knutson 520.92 0.00 0.00 0.00 0.00 520.92 0.26% A. Gordon 520.92 0.00 0.00 0.00 0.00 520.92 0.26% P. Bellman 520.92 0.00 0.00 0.00 0.00 520.92 0.26% ---------------------------------------------------------------------------------------- Total 163,318.80 0.00 918.46 2,755.39 10.00 200,354.08 100.00% ======================================================================================== Cash Equity 64.65% Original THC 3.37% AT&T 16.63% Mercury 1.13%
(b) Assumes that management meets certain return hurdles and that all management warrants are issued. Schedule IV Core Features ------------- Below is a list and description of the Core Features that Licensee agrees to implement in accordance with Section 8.2 of this Agreement. These definitions are functional descriptions of the Core Features, and the parties agree that such Core Features shall be implemented using the Critical Network Elements identified in Schedule XI hereto. Licensee further agrees to implement additional features in accordance with Section 8.2 of this Agreement. 1. Call Delivery This capability permits a PCS customer to receive incoming calls to his or her phone while in his or her home market or while roaming in any part of the Licensee's Wireless Network or the AWS Wireless Network (together, the "Mobile Wireless Network"). 2. Roaming - Do Not Disturb This capability permits a PCS customer, who would normally receive all incoming calls while visiting a Mobile Switching Center that is part of the Mobile Wireless Network, to temporarily inhibit the delivery of such calls. Activating this capability has no impact on the PCS customer's ability to originate calls or on the PCS customer's ability to receive calls via the roamer access ports. 3. Call Forwarding A. Call Forwarding Immediate This capability permits a PCS customer to send all incoming calls destined for the PCS customer's PCS phone to another phone number specified by the PCS customer. Activating this capability has no impact on the PCS customer's ability to originate calls. When this capability is activated, calls are forwarded regardless of whether the PCS customer is located within his or her local market or whether the customer is roaming outside of such local market. B. Call Forwarding Busy This capability permits a PCS customer to send all incoming calls destined for his or her PCS phone to another phone number specified by the PCS customer when the PCS customer is engaged in a call. C. Call Forwarding No Answer This capability permits a PCS customer to send all incoming calls destined for his or her PCS phone to another phone number specified by the PCS customer when the PCS customer does not answer or when the PCS customer's PCS phone does not respond to a page. 4. Call Waiting This capability permits a PCS customer to receive incoming calls even though a call may already be in progress. 5. Voicemail This capability forwards those PCS customer's incoming calls which are not answered by the PCS customer, and for which no other explicit treatment has been activated (for example, those described in items above), to a voice storage and retrieval system. This capability also permits a PCS customer to subsequently retrieve messages from the PCS customer's voice mail box. 6. Three Way Calling This capability permits a PCS customer to add a third party to an active two party call. 7. Message Waiting Indicator This capability is an enhancement to PCS voice mail, and provides the PCS customer with the current status of the number of unheard voice mail messages waiting in his or her PCS voice mail box. 8. Calling Number Identification This capability identifies for the PCS customer either the telephone number or the stored name (in the PCS phone) of the person who is calling. It also permits a PCS customer to inhibit the ability of a person to whom the PCS customer is placing a call from identifying either the telephone number or the name of such PCS customer who is placing the call. 9. Wireless Office Service (WOS) A. PCS/PBX Interworking This capability permits WOS customers to have just one published number that delivers all incoming calls to both the PCS and PBX phone. 2 B. Private Number Plan This capability permits a defined group of customers to call defined private network extensions by using an abbreviated unique dialing pattern (four digit dialing). C. Private Networks This capability permits a WOS customer to have his or her own private or semiprivate PCS system. D. Location ID This capability permits the PCS customer to identify the nature of the system (private, public, or residential) that the PCS customer is using, by displaying the system's name on the PCS phone. 10. Sleep Mode This capability permits an IS 136 PCS phone to operate in a power saving mode when camping on an IS 136 system, thereby allowing the battery standby time to increase. 11. PCS Messaging This capability will permit a caller to deliver both numeric and alphanumeric messages of up to eighty characters to an IS 136 PCS phone. If the PCS customer to whom the message has been delivered has his or her phone off or is not in the IS 136 coverage area, then messages are stored for future delivery. MessageFlash software permits alphanumeric messages to be sent from a computer via a standard modem to the customer. E-Mail messaging teleservice allowing an IS-136 phone to have an E-Mail address. 12. Authentication This capability allows for the validation of the IS-136 phone's identity. Text Dispatch Service permits people to call an operator (provided by or on behalf of the Company) and dictate a message which can then be converted to an alphanumeric message and delivered to the customer. Cut Through Paging permits people to send a numeric message while listening to the customer's voicemail greeting. 3 Schedule V MINIMUM BUILD-OUT PLAN ---------------------- (See Attached) Minimum Buildout Schedule ------------------------- Year 1/1/ 2.2 million pops (20% of total pops) during the first year. The initial deployment consists of launching the core urban and suburban areas of Memphis and New Orleans. Memphis ------- Bartlett, TN Frayser, TN Memphis, TN New Orleans ----------- Baton Rouge, LA Kenner, LA Mandeville, LA Metairie, LA New Orleans, LA Slidell, LA Year 2 2.2 million pops (20% of total pops) for an aggregate pop coverage of 40%. Year 2 consists of launching New England, Little Rock and Missouri and enhancing the coverage in all markets during the remainder of the year. The coverage at the end of the year 2 is detailed below./1/ Little Rock ----------- Benton, AR Conway, AR Hot Springs, AR Jonesboro, AR Little Rock, AR North Little Rock, AR Memphis ------- Brownsville, TN Jackson, TN Millington, TN __________________________ /1/ The years are defined as the 12-month periods starting on the date the FCC approves the transfer of the PCS licenses to the TeleCorp PCS. Tunica, MS Missouri -------- Columbia, MO Jefferson City, MO New England ----------- Cape Cod, MA Concord, NH Manchester, NH Nashua, NH Portsmouth, NH Worcester, MA New Orleans ----------- Lafayette, LA Covington, LA Hourna, LA Year 3 1.65 million pops (15% of total pops) for an aggregate pop coverage of 55% Year 3 consists of building the secondary cities and the important associated connecting highways. Little Rock ----------- Bentonville, AR Fayettville, AR Fort Smith, AR Pine Bluff, AR Springdale, AR Memphis ------- Covington, TN Humboldt, TN Milan, TN Missouri -------- Cape Girardeau, MO Carbondale, MO New England ----------- Dover, NH Fitchburg, MA Leominster, MA 2 Martha's Vineyard, MA Nantucket, MA Rochester, NH New Orleans ----------- Beaumont, TX Hammond, LA Year 4 1.65 million pops (15% of total pops) for an aggregate pop coverage of 70% Year 4 consists of continuing to expand the secondary cities as well as enhancing the coverage and capacity of the core areas. Little Rock ----------- Malvern, AR Morrilton, AR Russellville, AR Memphis ------- Batesville, MS Dyersburg, TN Oxford, MS Union City, TN Missouri -------- Centralia, MO Mount Vernon, MO New England ----------- Expansion of the suburban cores surrounding Worcester, Nashua, and Manchester. New Orleans ----------- Expansion of suburban cores surrounding New Orleans, Baton Rouge, and Lafayette. Year 5 550,000 pops (5% of total pops) for an aggregate pop coverage of 75%. For all markets, year 5 consists of adding capacity sites and filling in the remaining suburban areas bringing the total pop coverage to 75%. Schedule VI PCS Territory ------------- (See Attached) Company Territory* ----------------- I. From New Orleans MTA BTA Market Designator -------------------- --------------------- Baton Rouge, LA 32 Lafayette-New Iberia, LA 236 New Orleans, LA 320 II. From Houston MTA ---------------- Beaumont, TX 34 III. From St. Louis MTA ------------------ Cape Giradeau-Sikeston, MO 66 Carbondale-Marion, IL 67 Columbia, MO 90 Jefferson City, MO 217 Kirksville, MO 230 Mount Vernon-Centralia, IL 308 Poplar Bluff, MO 355 Quincy, IL-Hannibal, MO 367 Rolla, MO 383 Portions of Springfield, MO BTA: 428 Camden County, MO Cedar County,MO Dallas County, MO Douglas County, MO Hickory County, MO Laclede County, MO Polk County, MO Stone County, MO Taney County, MO Texas County, MO Webster County, MO Wright County, MO West Plains, MO 470 _____________________ * The Territory Company is more particularly described in the FCC applications filed in connection with the transfer of FCC PCS Licenses to the Company. IV. From Little Rock MTA BTA Market Designator -------------------- --------------------- El Dorado-Magnolia-Camden, AR 125 Fayettevillle-Springdale-Rogers, AR 140 Fort Smith, AR 153 Harrison, AR 182 Hot Springs, AR 193 Jonesboro-Paragould, AR 219 Little Rock, AR 257 Pine Bluff, AR 348 Russellville, AR 387 V. From Memphis-Jackson MTA ------------------------ Blytheville, AR 49 Dyersburg-Union City, TN 120 Jackson, TN 211 Portions of Memphis, TN BTA: 290 Crittendon County, AR Cross County, AR Lee County, AR Phillips County, AR St. Francis County, AR Benton County, MS Coahoma County, MS DeSoto County, MS Grenada County, MS Lafayette County, MS Marshall County, MS Panola County, MS Quitman County, MS Tallahatchie County, MS Tate County, MS Tunica County, MS Yalobusha County, MS Fayette County, TN Hardeman County, TN Haywood County, TN Lauderdale County, TN Shelby County, TN Tipton County, TN 2 VI. From Boston-Providence MTA BTA Market Designator -------------------------- --------------------- Boston, MA 51 Rockingham County, NH Stafford County, NH Hyannis, MA 201 Manchester-Nashua-Concord, NH 274 Portions of Worcester County, MA* 480 VII. From Louisville-Lexington-Evansville MTA ---------------------------------------- Evansville, TN BTA 135 Paducha-Murray-Mayfield, KY BTA 339 _________________________ * The portions of Worcester County are those to the east of the line described by Points A, B and C on the map included in Schedule 2.1 to this Agreement. 3 Schedule VII Quality and Reporting Standards ------------------------------- General Overview This Schedule VII sets out the Network and Reporting Standards with which Licensee shall comply pursuant to Section 8.2 of this Agreement. These Standards set out the network performance metrics and the process by which such metrics will be established, measured and reported. All metrics which represent a defined standard of quality for acceptable network operations have, or will have, specific targets which the Licensee must comply with in accordance with the following network standards. I. NETWORK STANDARDS There are three categories of Network Standards: network quality (the "Network Quality Category"); system performance (the "System Performance Category"); and audio quality (the "Audio Quality Category") (each hereafter referred to generally as a "Category"). For each Category of Network Standards, specific metrics have been identified to measure performance in each such Category. The detailed description of how to measure and interpret the metrics for each Category is set out in the following AWS documents (each referred to generally as a "Network Standards Document"): . Network Quality Category: Document ES-4034, Revision 1.1, dated July 30, ------------------------ 1997 entitled "Network Quality Scorecard User Guide" (as referred to as the "Network Quality Standards Document"). This document is a collection of key network performance and traffic indicators (metrics) that are measured and reported on a regular basis. Included in this category, Licensee shall perform the ANS Consistency Test, as attached to this Schedule VII. . System Performance Category: OSS draft document, Revision 0.7, dated June --------------------------- 17, 1997 entitled "Key Metrics for System Performance Document" (as referred to as the "System Performance Standards Document"). This document identifies the network-wide key metrics for Ericsson and Lucent switching systems, as well as cell sites, which will provide a high level assessment of the system. . Audio Quality Category: Document PP-4027E, Revision 1.1, dated May 30, 1996 ---------------------- entitled "Audio Quality Measurement (AQM)" (as referred to as the "Audio Quality Standards Document"). This document provides the basis for assessing the quality of RF transmission by describing the standards for performing audio quality measurements and the reporting of their results. AWS measures the metrics for the Audio Quality Category using the "Radio Quality Scorecard". The Radio Quality Scorecard is comprised of performance statistics derived from driving the PCS system using the Buzzard tool or a tool with similar measurement and reporting capability. These Network Standards Documents are collectively attached to this Schedule VII which, subject to the terms and conditions of this Agreement including, without limitation, this Schedule VII, is hereby incorporated into and forms a part of this Agreement. In the event of any inconsistency between any part of a Network Standards Document and the provisions of this Schedule VII, the provisions of this Schedule VII shall govern. Notwithstanding anything else in this Agreement including, without limitation, this Schedule VII, the parties acknowledge and confirm that the Network Standards Documents represent the standards and metrics currently identified by AWS as applicable to each Category. Target values for key quality related metrics are contained herein and Licensee agrees to comply with the specific metric target values as specified in Schedule VII. In addition, the parties acknowledge and confirm that the Network Standards Documents are subject to revision and the Licensee shall comply with subsequent revisions to these Network Standards Documents, as well as with Call Center Quality Standards which will constitute an additional Category once they are formally implemented, in accordance with Section 8.2 of this Agreement. Set out below is a brief description of each Category of Network Standard and the currently established metrics for each such Category. II. TARGETS FOR NETWORK STANDARDS Licensee shall meet the following targets for key metrics which represent overall network and system quality. These targets are subject to revision and shall be implemented in accordance with Section 8.2 of this Agreement. . % Established Calls: The percentage of call attempts to and from a mobile ------------------- phone that result in a successful voice channel assignment. The target goal for this metric is 93%. . % Dropped Calls: The percentage of established calls, as defined below, --------------- which terminate abnormally. The target, goal for this metric is a drop call rate of 1.7% or less. . % Handoff Failures: The target goal for this metric is a handoff failure ------------------ rate of 1.5%. . Failures per Erlang: The ratio of failed calls to carried traffic, where ------------------- failed calls are measured utilizing switch counters for originating and terminating traffic, and carried traffic is measured in erlangs. The target goal for this metric is 1.68. . Switch Outage Time: The amount of time (in minutes) in a month when ------------------ subscribers are impacted by a cellular switch outage. Target for this metric is 10 minutes per switch per 2 year, with all ten minutes occurring the maintenance window between 12:00 am and 5:00 am. . % Blocking - Cell Routes: Percentage of time all cellular traffic channels ------------------------ (voice paths in a trunk group) are unavailable within a given measurement interval. Target for this metric is 5%. . % Blocking- - Network Routes: Percentage of time all network traffic ---------------------------- channels are unavailable within the measurement interval. Target for this metric is 5%. . ANS Consistency Test: The percentage of successful ANS feature deliveries, -------------------- based on the following sequence: feature activation/deactivation (when applicable), test call, correct response, and call termination. The target goal for this metric is 96% for all ANS features. This target metric includes feature delivery failures due to call processing failures (i.e. call delivery, call origination, handoff failures, or dropped calls. These failures are estimated to be approximately 4%.) III. REPORTING STANDARDS Licensee agrees to comply with the reporting requirements as specified in the Network Standards Documents and as specified below: . Except as specified Audio Quality Network Standards, Licensee will submit the metric reports required pursuant to this Schedule VII (the "Results") to AWS no less than quarterly. . With respect to Audio Quality Network Standards, Licensee shall only submit quarterly Results for markets with 10,000 or more subscribers; for markets with less than 10,000 subscribers, Licensee shall only submit Results on a semi-annual basis. . Licensee shall submit all Results by the fifteenth day of the month following the end of the applicable reporting period. . Licensee will report the Results to AWS on an aggregated national basis; the aggregated national Results will reflect the distribution of the metric measured across Licensee's Territory. Licensee may also be required to provide a breakdown, by market, of any metric. 3 Schedule VIII Initial Directors ----------------- Selected Pursuant to Section 3.1(A) - ----------------------------------- Rohit Desai James Hoak William Laverack, Jr. Selected Pursuant to Section 3.1(b) and 3.1(c) - ---------------------------------------------- Gerald Vento Thomas Sullivan Selected Pursuant to Section 3.1(d) - ----------------------------------- William W. Hague Kurt Maas Selected Pursuant to Section 3.1(e)(i) - -------------------------------------- William Bandt Michael R. Hannon James F. Wade Selected Pursuant to Section 3.1(e)(ii) - --------------------------------------- Scott Anderson William Kussel Robert Dowski* __________________________ */ To be replaced with an individual selected in accordance with Section - - 3.1(e)(ii) at or prior the first Board meeting after July 17, 1998. Schedule X Voting Agreements ----------------- See Tab 6 EX-10.17.2 32 AMENDMENT NO. 1 TO STOCKHOLDER'S AGMT EXHIBIT 10.17.2 AMENDMENT NO. 1 TO STOCKHOLDERS' AGREEMENT AMENDMENT NO. 1 TO STOCKHOLDERS' AGREEMENT ("Amendment No. 1") dated as of March 30, 1999, by and among AT&T WIRELESS PCS INC., a Delaware corporation (together with its Affiliated Successors (as hereinafter defined), "AT&T PCS"), TWR CELLULAR, INC., a Delaware corporation (together with its Affiliated Successors, "TWR Cellular"), the investors listed under the heading "Cash Equity Investors" on the signature pages hereto (individually, each a "Cash Equity Investor" and, collectively, with any of its Affiliated Successors, the "Cash Equity Investors"), the individuals listed under the heading "Management Stockholders" on the signature pages hereto (individually, each a "Management Stockholder" and, collectively, the "Management Stockholders") and TELECORP PCS, INC., a Delaware corporation (the "Company"). Certain capitalized terms used herein and not otherwise defined have the meaning assigned to such term in the Stockholders' Agreement referred to below. WHEREAS, each of the parties hereto (other than the Company) are stockholders of the Company; WHEREAS, the parties hereto are parties to that certain Stockholders' Agreement, dated as of July 17, 1998 (the "Stockholders' Agreement"), pursuant to which, among other things, the parties hereto entered into certain agreements regarding the operation of the Company's business, including, restrictions on the ability of the Company to market interexchange services of providers other than AT&T Corp. or any Affiliate thereof and restrictions on the ability of AT&T PCS to provide Company Communications Services in the Territory; WHEREAS, an Affiliate of AT&T PCS has entered into a merger agreement with Vanguard Cellular Systems Inc. ("Vanguard") pursuant to which upon the consummation of the transactions contemplated by such merger agreement, AT&T PCS and its Affiliates will provide Company Communications Services in Strafford County, New Hampshire; WHEREAS, the Company has entered into an agreement with Wireless 2000, Inc. dated as of December 2, 1998 (the "Wireless 2000 Acquisition Agreement") pursuant to which, 1 among other things, the Company will acquire 15 MHz of C Block PCS Licenses in the Alexandria, LA BTA, the Lake Charles, LA BTA and the Monroe, LA BTA; WHEREAS, in connection with the transactions contemplated by the Supplemental Closing, (i) the Company has entered into a License Acquisition Agreement with Digital PCS, L.L.C. (a/k/a Mercury PCS II, LLC ) ("Digital") dated as of May 15, 1998 (the "Mercury Agreement") pursuant to which, among other things, the Company will acquire 10MHz of F Block PCS Licenses for the Baton Rouge, LA BTA, the Lafayette-New Iberia, LA BTA, the Houma-Thibodeaux, LA BTA and the Hammond, LA BTA, and (ii) the parties hereto desire to amend the Stockholders' Agreement upon consummation of the Supplemental Closing to provide that (A) Mercury shall have the rights and obligations of a Cash Equity Investor under the Stockholders' Agreement, (B) William M. Mounger, II and E. B. Martin, Jr. shall not be deemed to be in violation of Section 8.6 of the Stockholders' Agreement by reason of their respective interests in Mississippi-34 Cellular Corporation on the date of the Mercury Agreement or the activities of such entity as being conducted on the date of the Mercury Agreement, and (C) William M. Mounger, II, Jerry M. Sullivan, Jr. and E. B. Martin, Jr. shall not be deemed to be in violation of Section 8.6 of the Stockholders' Agreement by reason of their respective interests in Mercury Wireless Management Inc. (which owns certain IVDS Licenses covering the Jackson, Mississippi MSA) on the date of the Mercury Agreement or the activities of such entity as being conducted on the date of the Mercury Agreement; WHEREAS, the Company desires to expand the portions of the PCS Territory within the New Orleans MTA (i) effective upon the closing of the transactions contemplated by the Wireless 2000 Acquisition Agreement (the "Wireless 2000 Closing"), to include the Alexandria, LA BTA, the Lake Charles, LA BTA, and Ashley County, LA, Caldwell County, LA, and Catahoula County, LA within the Monroe, LA BTA (the "Included Monroe Counties") and (ii) effective upon the Supplemental Closing, to include the Houma-Thibodeaux, LA BTA and the Hammond, LA BTA, and AT&T PCS, TWR and the other Stockholders are willing to consent thereto provided on the terms and conditions hereinafter set forth; WHEREAS, subject to the terms and conditions set forth in this Amendment No. 1, the parties desire to amend the Stockholders' Agreement (i) to permit the Company to provide interexchange services of providers other than AT&T Corp. or an Affiliate thereof, on the terms set forth herein, (ii) to delete Strafford County, New Hampshire from the PCS Territory, (iii) effective upon the Wireless 2000 Closing, to expand the PCS Territory to include the Alexandria, LA BTA, Lake Charles, LA BTA and the Included Monroe Counties, and (iv) effective upon the Supplemental Closing, to expand the PCS Territory to include the Houma-Thibodeaux, LA BTA and the Hammond, LA BTA; WHEREAS, AT&T PCS and the Company are negotiating the terms and conditions of an Asset Purchase Agreement (the "Asset Purchase Agreement") and related agreements, pursuant to which, among other things, the Company proposes to acquire from 2 AT&T PCS, on the terms set forth in the Asset Purchase Agreement, a portion of the Block A PCS License for the Puerto Rico-U.S. Virgin Islands MTA (the "Puerto Rico MTA") owned by AT&T PCS covering such market, the parties expressly acknowledging and agreeing that binding commitments on the part of AT&T PCS and the Company with respect to the purchase and sale of the Puerto Rico MTA will result only from the execution of a definitive Asset Purchase Agreement and related documentation; WHEREAS, in the event that the Asset Purchase Agreement is entered into, the parties hereto agree that effective upon the closing of the transactions contemplated by the Asset Purchase Agreement (the "Puerto Rico Closing"), the Stockholders' Agreement shall be amended, without any further action of the parties hereto, to provide that (i) Schedule V to the Stockholders' Agreement include the minimum build-out plan for the Puerto Rico MTA and (ii) to expand the PCS Territory to include the Puerto Rico MTA (collectively, the "Puerto Rico Amendments"); and WHEREAS, the Stockholders desire to clarify certain other provisions of the Stockholders' Agreement. NOW THEREFORE, in consideration of the mutual promises and covenants herein contained and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows: 1. Amendments. A. From and after the Amendment Effectiveness Date ---------- (as hereinafter defined): (1) Section 3.1(d) of the Stockholders' Agreement shall be amended and restated in its entirety as follows: "(d) two (2) individuals nominated by AT&T PCS pursuant to the Restated Certificate in its capacity as holder of Series A Preferred Stock (each a "Series A Preferred Director") so long as it and TWR Cellular has the right to nominate two directors in accordance with the Restated Certificate"; (2) The second sentence immediately following clause (e) of Section 3.1 of the Stockholders' Agreement shall be amended and restated in its entirety as follows: "In the event that AT&T PCS shall cease to be entitled to nominate the Series A Preferred Directors, such directors shall resign (or the other directors or Stockholders shall remove them) from the Board of Directors and the remaining directors shall take such action so that the number of directors constituting the entire Board of Directors shall be reduced accordingly."; 3 (3) The last sentence of the second paragraph of Section 3.1 shall be amended and restated in its entirety as follows: "In addition, so long as AT&T PCS and TWR Cellular have the right to nominate two directors in accordance with the Restated Certificate, up to two (2) AT&T PCS regional directors (in regions overlapping with or in geographic proximity to the Territory) shall have the right to attend each meeting of the Board of Directors as an observer."; (4) Section 3.11(c) of the Stockholders' Agreement shall be amended and restated in its entirety as follows: "(c) One (1) Series A Preferred Director nominated by AT&T PCS in its capacity as holder of Series A Preferred Stock so long as it has the right to nominate one director in accordance with the Restated Certificate." (5) The last section of Section 3.11(c) of this Stockholders' Agreement shall be amended and restated in its entirety as follows: "In the event that AT&T PCS and TWR Cellular shall cease to be entitled to nominate one (1) Series A Preferred Director, such director shall resign (or the other directors or Stockholders shall remove him) from the Board of Directors and the remaining directors shall take such action so that the number of directors constituting the entire Board of Directors shall be reduced accordingly." (6) The following Section 3.12 shall be added to the Stockholders' Agreement: "3.12. Series A Preferred Directors. For so long as AT&T PCS ---------------------------- shall have the right to nominate one or more Series A Preferred Directors to the Board of Directors in accordance with the Restated Certificate, each of the Stockholders hereby agrees that it will vote all of the shares of Class A Voting Common Stock and Voting Preference Stock Beneficially Owned or held of record by it (whether now owned or hereafter acquired), in person or by proxy, to cause the election of any such Series A Preferred Director so nominated by AT&T PCS to serve on the Board of Directors and such obligation of the Stockholders to cause the election of any such Series A Preferred Director shall continue until the termination of this Agreement in accordance with Section 12.3." (7) Section 8.5(a) of the Stockholders' Agreement shall be amended and restated in its entirety as follows: 4 "(a) The Company and its Subsidiaries shall not market, offer, provide or resell interexchange services, except (i) interexchange services that constitute Company Communication Services and (ii) interexchange services procured from AT&T Corp. or an Affiliate thereof designated by AT&T Corp. Such interexchange services shall be provided by AT&T Corp. or such Affiliate at the same rates as the rates charged by AT&T Corp. or such Affiliate to other similarly situated carriers. It is anticipated that such services will be provided by AT&T Corp. or such Affiliate pursuant to an agreement incorporating such rates. Upon specific request of any customer, the Company may permit such customer to utilize the interexchange services of another interexchange provider (including the interexchange services of AT&T Corp. and its Affiliates), provided, however, that -------- ------- neither the Company nor any Affiliate thereof will accept any referral fee, commission, credit against its long distance bill, or any other remuneration, directly or indirectly, from such other provider in exchange for permitting its customers to utilize such other interexchange provider; it being understood that such prohibition against the acceptance of any such referral fees, commissions, credits or other remuneration shall not be applicable to any such referral fees, commissions, credits or other remuneration paid by AT&T Corp. and its Affiliates. The Company covenants and agrees that neither it nor its Affiliates will market, offer, promote or otherwise encourage its customers to utilize the interexchange services of any Person other than the Company (such services having been procured as set forth above by the Company from AT&T Corp. or an Affiliate thereof) or AT&T Corp. or an Affiliate thereof."; (8) Clause (a) of the definition of "Business" contained in Section 1 of the Stockholders' Agreement is hereby amended and restated as follows: "(a) owning, constructing and operating systems to provide Company Communications Services on frequencies licensed to the Company for Commercial Mobile Radio Services pursuant to the Licenses described on Schedule XII;" (9) Schedule VI to the Stockholders' Agreement is hereby amended to delete Strafford County, New Hampshire from the PCS Territory within the Boston- Providence MTA; and (10) Schedule I hereto is hereby added to the Stockholders' Agreement in its entirety as Schedule XII thereto. 2. From and after the later to occur of (x) the Amendment Effectiveness Date, and (y) the date of the Puerto Rico Closing, without any further action on the part of the 5 parties hereto, the Puerto Rico Amendments shall be effective and in full force and effect as set forth below: (1) Schedule V to the Stockholders' Agreement, "Minimum Build-Out Plan", shall be amended to include the Minimum Build-Out Plan for the Puerto Rico - U.S. Virgin Islands MTA as set forth on Schedule II to this Amendment No. 1; and (2) Schedule VI is hereby amended to include the following PCS Territory: "The entire Puerto Rico - U.S. Virgin Islands MTA"; and (3) Schedule XII to the Stockholders' Agreement is hereto amended to include the following PCS Licenses: "the 20 MHz PCS License for the Puerto Rico-U.S. Virgin Islands MTA acquired pursuant to the Asset Purchase Agreement dated as of March 30, 1999 between AT&T PCS and the Company." 3. From and after the later to occur of (x) the Amendment Effectiveness Date, and (y) the date of the Wireless 2000 Closing, without any further action on the part of the parties hereto, the following amendments shall be effective and in full force and effect as set forth below: (1) Schedule VI to the Stockholders' Agreement is hereby amended to include in the portion of the PCS Territory within the New Orleans MTA the Alexandria, LA BTA -- Market Designator B009, the Lake Charles, LA BTA -- Market Designator B238, and each of Ashley County, LA, Caldwell County, LA and Catahoula County, LA within the Monroe, LA BTA -- Market Designator B304; and (2) Schedule XII to the Stockholders' Agreement is hereby amended to include the following PCS Licenses: "the 15 MHz C Block PCS Licenses in the Alexandria, LA BTA, the Lake Charles, LA BTA and each of Ashley County, LA, Caldwell County, LA and Catahoula County, LA within the Monroe, LA BTA acquired pursuant to an agreement, dated December 2, 1998, between the Company and Wireless 2000, Inc." 4. From and after the later to occur of (x) the Amendment Effectiveness Date, and (y) the date of the Supplemental Closing, without any further action on the part of the parties hereto, (i) the following amendments shall be effective and in full force and effect as set forth below: 6 (A) Schedule VI to the Stockholders' Agreement shall be amended to include in the portion of the PCS Territory within the New Orleans MTA the Houma-Thibodeaux, LA BTA -- Market Designator B195 and the Hammond, LA BTA -- Market Designator B180; and (B) Schedule XII to the Stockholders' Agreement shall be amended to include the 10MHz F Block PCS Licenses in the Houma-Thibodeaux, LA BTA, the Hammond, LA BTA, the Baton Rouge, LA BTA and the Lafayette-New Iberia, LA BTA acquired in the Supplemental Closing; and (1) the parties hereby agree that: (A) Digital shall have the rights and obligations of a Cash Equity Investor under the Stockholders' Agreement; (B) William M. Mounger, II and E. B. Martin, Jr. shall not be deemed to be in violation of Section 8.6 of the Stockholders' Agreement by reason of their respective interests in Mississippi-34 Cellular Corporation on May 15, 1998 or the activities of such entity being conducted on May 15, 1998; and (C) William Mounger, II, Jerry M. Sullivan, Jr. and E. B. Martin, Jr. shall not be deemed in violation of Section 8.6 of the Stockholders' Agreement by reason of their respective interest in Mercury Wireless Management Inc. (which owns certain IVDS Licenses covering the Jackson, Mississippi MSA) on May 15, 1998 or the activities of such entity as being conducted on May 15, 1998. (D) By execution of this Amendment No. 1 the undersigned shall be deemed to have approved by written consent pursuant to Section 228 at the Delaware General Corporation Law of the amendment and restatement of the Company's Certificate of Incorporation in the form attached hereto as Exhibit A in order to provide that the holders of Series A Preferred Stock have a right to nominate directors, not elect directors. 2. Notwithstanding anything to the contrary contained in the Stockholders' Agreement (including as amended hereby) or Schedule V to the Stockholders' Agreement (including the amendment to such Schedule V referred to herein), from and after the later to occur of (x) the Amendment Effectiveness Date, and (y) the date of the Puerto Rico Closing, the Company and AT&T PCS shall have the right to amend the Minimum Build-Out Plan to accelerate or defer any portion of such Build-Out Plan on terms mutually agreeable to the Company and AT&T PCS. 3. The parties hereby consent to the acquisition by the Company of a 15 MHz C Block PCS License in the Monroe, LA BTA pursuant to the Wireless 2000 Closing. The 7 Company confirms that the Business shall not include any activities of any nature whatsoever in the Monroe, LA BTA, other than in the Included Monroe Counties, or in Strafford County, New Hampshire and the Company agrees that it shall not conduct any activities, including without limitation, providing Company Communications Services, in the Monroe, LA BTA, other than in the Included Monroe Counties, or in Strafford County, New Hampshire without the prior written consent of AT&T PCS. 4. Amendment Effectiveness Date. This Amendment No. 1 shall be ---------------------------- effective on the date that a counterpart hereof shall have been executed by each of the Company, AT&T PCS, holders of 66 2/3% of the Class A Voting Common Stock Beneficially Owned by the Cash Equity Investors and holders of 66 2/3% of the Class A Voting Stock Beneficially Owned by the Management Stockholders (the "Amendment Effectiveness Date"). 5. Representation and Warranties. Each party hereto, as to itself, ----------------------------- represents and warrants, as applicable, to each of the other parties as follows: A. It is a corporation, limited liability company, general partnership or limited partnership, duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and has the requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. B. It has the requisite power, authority and capacity to execute, deliver and perform this Amendment No. 1. C. The execution and delivery of this Amendment No. 1 by it have been duly and validly authorized by its Board of Directors (or equivalent body) and no other proceedings on its part which have not been taken (including, without limitation, approval of its stockholders, partners or members) are necessary to authorize this Amendment No. 1. D. This Amendment No. 1 has been duly executed and delivered by it and constitutes its valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally and may be subject to general principles of equity. E. The execution, delivery and performance by it of this Amendment No. 1 will not (a) conflict with, or result in a breach or violation of, any provision of its organizational documents; (b) constitute, with or without the giving of notice or passage of time or both, a breach, violation or default, create a Lien, or give rise to any right of termination, modification, cancellation, prepayment or acceleration, under (i) any Law or License or (ii) any note, bond, mortgage, indenture, lease, agreement or other instrument, in each case which is applicable to or binding upon it or any of its assets; or (c) require any Consent, or the approval of its board of 8 directors, general partner, stockholders or similar constituent bodies, as the case may be (which approvals have been obtained), except in each case, where such breach, violation, default, Lien, right, or the failure to obtain or give such Consent would not have a Material Adverse Effect on it or its ability to perform its obligations hereunder. F. There is no action, proceeding or investigation pending or, to its knowledge, threatened against it or any of its properties or assets that would be reasonably expected to have an adverse effect on its ability to enter into this Amendment No. 1 or to fulfill its obligations hereunder. 6. Severability of Provisions. Any provision of this Amendment No. -------------------------- 1 which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. 7. Agreements to Remain in Full Force and Effect. This Amendment --------------------------------------------- No. 1 shall be deemed to be an amendment to the Stockholders' Agreement. All references to the Stockholders' Agreement in any other agreements or documents shall on and after the date hereof be deemed to refer to the Stockholders' Agreement as amended hereby. Except as amended hereby, the Stockholders' Agreement shall remain in full force and effect and is hereby ratified, adopted and confirmed in all respects. 8. Heading. The headings in this Amendment No. 1 are inserted for ------- convenience and identification only and are not intended to describe, interpret, define or limit the scope, extent or intent of this Amendment No. 1 or any provision thereof. 9. Counterparts. This Amendment No. 1 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. 10. Governing Law. This Amendment No. 1 shall be governed and ------------- construed in accordance with the laws of the State of Delaware. 9 IN WITNESS WHEREOF, each of the parties has executed or consent this Agreement be executed by its duly authorized officers as of the date first written above. AT&T WIRELESS PCS, INC. By: /s/ W. Hague -------------------------------------- Name: William Hague Title: TWR CELLULAR, INC. By: /s/ W. Hague -------------------------------------- Name: William Hague Title: Vice President TELECORP PCS, INC. By: /s/ Thomas Sullivan -------------------------------------- Name: Thomas Sullivan Title: Executive Vice President CASH EQUITY INVESTORS: CB CAPITAL INVESTORS, L.P. By: CP Capital Investors, Inc., its general partner By: /s/ Michael R. Hannon -------------------------------------- Name: Michael R. Hannon Title: General Partner NORTHWOOD VENTURES LLC By: /s/ Peter G. Schiff ------------------------------------ Name: Peter G. Schiff Title: President NORTHWOOD CAPITAL PARTNERS LLC By: /s/ Peter G. Schiff ------------------------------------ Name: Peter G. Schiff Title: President ONE LIBERTY FUND III, L.P. By: /s/ Joseph T. McCullen, Jr. ------------------------------------ Name: Joseph T. McCullen, Jr. Title: General Partner ONE LIBERTY FUND IV, L.P. By: /s/ Joseph T. McCullen, Jr. ----------------------------------- Name: Joseph T. McCullen, Jr. Title: General Partner MEDIA COMMUNICATIONS INVESTORS LIMITED PARTNERSHIP By: M/C Investor General Partner - J. Inc., its general partner By: /s/ James F. Wade ------------------------------- Name: Title: MEDIA/COMMUNICATIONS PARTNERS III LIMITED PARTNERSHIP By: M/CP III General Partner - J. Inc., a general partner By: M/CP III General Partner - J. Inc., a general partner By: /s/ James F. Wade ------------------------------- Name: Title: EQUITY-LINKED INVESTORS-II By: ROHIT M. DESAI ASSOCIATES II, its general partner By: /s/ Frank J. Pados -------------------------------- Name: Frank J. Pados, Jr. Title: Attorney-in-fact PRIVATE EQUITY INVESTORS III, L.P. By: ROHIT M. DESAI ASSOCIATES III, its general partner By: /s/ Frank J. Pados --------------------------------- Name: Frank J. Pados, Jr. Title: Attorney-in-Fact HOAK COMMUNICATIONS PARTNERS, L.P. By: HCP Investment, L.P., its general partner By: Hoak Partners, L.L.C., its general partner By: /s/ James Hoak --------------------------------- Name: Title: HCP CAPITAL FUND, L.P. By: James M. Hoak & Co., its general partner By: /s/ James Hoak --------------------------------- Name: Title: ENTERGY TECHNOLOGY HOLDING COMPANY By: /s/ Gary S. Fuqua --------------------------------- Name: Gary S. Fuqua Title: President TORONTO DOMINION INVESTMENTS, INC. By: /s/ Martha L. Gariepy ------------------------------------ Name: Martha L. Gariepy Title: Vice President WHITNEY EQUITY PARTNERS, L.P. By: J.H. Whitney Equity Partners, L.L.C.,Its General Partner By: /s/ William Laverack, Jr. -------------------------------- Name: Title: WHITNEY STRATEGIC PARTNERS III, L.P. By: J.H. Whitney Equity Partners III, L.L.C.,Its General Partner By: /s/ William Laverack, Jr. -------------------------------- Name: Title: J.H. WHITNEY III, L.P. By: J.H. Whitney Equity Partners III, L.L.C.,Its General Partner By: /s/ William Laverack, Jr. -------------------------------- Name: Title: GILDE INTERNATIONAL B.V. By: /s/ Joseph McCullen Jr. -------------------------------------- Name: Joseph McCullen, Jr. Title: Attorney-in-Fact /s/ Thomas Sullivan ----------------------------------------- Thomas Sullivan /s/ Gerald Vento ----------------------------------------- Gerald Vento MANAGEMENT STOCKHOLDERS: /s/ Thomas Sullivan ----------------------------------------- Thomas Sullivan /s/ Gerald Vento ----------------------------------------- Gerald Vento SCHEDULE I To Amendment No. 1 to Stockholders' Agreement SCHEDULE XII to Stockholders' Agreement Licenses included in clause (a) of the definition of "Business": 1. AT&T PCS Licenses; provided, that, the AT&T PCS Licenses shall not include any portion of such Licenses covering Strafford County, New Hampshire within the Boston- Providence MTA. 2. The TeleCorp Licenses 3. The Permitted Cellular Licenses I-1 EXHIBIT A To Amendment No. 1 to Stockholders' Agreement Amended and Restated Certificate of Incorporation: See Exhibit 3.1. I-2 SCHEDULE V To Stockholders' Agreement Puerto Rico Minimum Build Out Plan SCHEDULE II to Amendment No.1 to Stockholders' Agreement Year 11 1.16 million pops (30% of total pops) during the first year. The initial deployment consists of launching the core urban and suburban cities of the San Juan metropolitan area. Puerto Rico ----------- San Juan Bayamon Guaynabo Caguas Year 2 387,000 pops (10% of total pops) for an aggregate pop coverage of 40%. Year 2 consists of launching secondary cities throughout Puerto Rico and enhancing the coverage in all markets during the remainder of the year. Puerto Rico ----------- Ponce Arecibo Humacao Mayaguez Year 3 581,000 pops (15% of total pops) for an aggregate pop coverage of 55%. Year 3 consists of continuing to expand the secondary cities of Puerto Rico and key cities to the Virgin Islands and the important associated connected highways. Puerto Rico ----------- Gurabo Cayey Aguadilla - --------------------------- /1/ The years are defined as the 12-month periods starting on the date the FCC approves the transfer of the PCS licenses in the Puerto Rico MTA to TeleCorp. I-3 St. Thomas ---------- Charlotte Amalie Heavensight St. Croix --------- Christiansted Year 4 581,000 pops (15% of total pops) for an aggregate pop coverage of 70%. Year 4 consists of continuing to expand the secondary cities as well as enhancing the coverage and capacity of the core areas. Puerto Rico ----------- Aguada Quebradillas Salinas Virgin Islands -------------- Expansion of core areas in St. Thomas and St. Croix Year 5 193,000 pops (5% of total pops) for an aggregate pop coverage of 75%. For all markets, year 5 consists of adding capacity sites and filling in the remaining suburban areas bringing the total pop coverage to 75%. This Puerto Rico Minimum Build Out Plan shall be deemed part of the Minimum Build Out Plan constituting Schedule V to the Stockholders' Agreement; provided, however, that all references to percentages of pops required to be - -------- covered as of various dates set forth on Schedule V attached to the Stockholders Agreement before being amended hereby (the "Initial Schedule"), shall not include pops from the Puerto Rico - U.S. Virgin Islands MTA. All percentages of pops required to be covered in the Puerto Rico - U.S. Virgin Islands MTA shall be measured separately from that in the Initial Schedule in accordance with this Puerto Rico Minimum Build Out Plan. I-4 EX-10.18 33 PURCHASE AGMT EXHIBIT 10.18 ------------- EXECUTION COPY TELECORP PCS, INC. $575,000,000 11 5/8% Senior Subordinated Discount Notes due 2009 PURCHASE AGREEMENT April 20, 1999 CHASE SECURITIES INC. BT ALEX. BROWN INCORPORATED LEHMAN BROTHERS INC. c/o Chase Securities Inc. 270 Park Avenue, 4th floor New York, New York 10017 Ladies and Gentlemen: TeleCorp PCS, Inc., a Delaware corporation (the "Company"), proposes to issue and sell $575,000,000 aggregate principal amount at maturity of its 11 5/8% Senior Subordinated Discount Notes due 2009 (the "Securities"). The Securities will be issued pursuant to an Indenture to be dated as of April 23, 1999 (the "Indenture") among the Company, TeleCorp Communications, Inc. (the "Subsidiary Guarantor") and Bankers Trust Company, as trustee (the "Trustee"), and will be guaranteed on an unsecured senior subordinated basis by the Subsidiary Guarantor. The Company and the Subsidiary Guarantor hereby confirm their agreement with Chase Securities Inc. ("CSI"), BT Alex. Brown Incorporated and Lehman Brothers Inc. (together with CSI, the "Initial Purchasers") concerning the purchase of the Securities from the Company by the several Initial Purchasers. The Securities will be offered and sold to the Initial Purchasers without being registered under the Securities Act of 1933, as amended (the "Securities Act"), in reliance upon an exemption therefrom. The Company has prepared a preliminary offering memorandum dated April 2, 1999 (the "Preliminary Offering Memorandum") and will prepare an offering memorandum dated the date hereof (the "Offering Memorandum") setting forth information concerning the Company and the Securities. Copies of the Preliminary Offering Memorandum have been, and copies of the Offering Memorandum will be, delivered by the Company to the Initial Purchasers pursuant to the terms of this Agreement. Any references herein to the Preliminary Offering Memorandum and the Offering Memorandum shall be deemed to include all amendments and supplements thereto, unless otherwise noted. The Company hereby confirms that it has authorized the use of the Preliminary Offering Memorandum and the Offering Memorandum in connection with the offering and resale of the Securities by the Initial Purchasers in accordance with Section 2. 2 Holders of the Securities (including the Initial Purchasers and their direct and indirect transferees) will be entitled to the benefits of an Exchange and Registration Rights Agreement, substantially in the form attached hereto as Annex A (the "Registration Rights Agreement"), pursuant to which the Company will agree to file with the Securities and Exchange Commission (the "Commission") (i) a registration statement under the Securities Act (the "Exchange Offer Registration Statement") registering an issue of senior subordinated discount notes of the Company (the "Exchange Securities") which are identical in all material respects to the Securities (except that the Exchange Securities will not contain terms with respect to transfer restrictions or registration rights) and (ii) under certain circumstances, a shelf registration statement pursuant to Rule 415 under the Securities Act (the "Shelf Registration Statement"). Capitalized terms used but not defined herein shall have the meanings given to such terms in the Offering Memorandum. 1. Representations, Warranties and Agreements of the Company. The Company and the Subsidiary Guarantor represent and warrant to, and agree with, the several Initial Purchasers on and as of the date hereof and the Closing Date (as defined in Section 3) that: (a) Each of the Preliminary Offering Memorandum and the Offering Memorandum, as of its respective date, did not, and on the Closing Date the Offering Memorandum will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company and the Subsidiary Guarantor make no representation or warranty as to information contained in or omitted from the Preliminary Offering Memorandum or the Offering Memorandum in reliance upon and in conformity with written information relating to the Initial Purchasers furnished to the Company by or on behalf of any Initial Purchaser specifically for use therein (the "Initial Purchasers' Information"). (b) Each of the Preliminary Offering Memorandum and the Offering Memorandum, as of its respective date, contains all of the information that, if requested by a prospective purchaser of the Securities, would be required to be provided to such prospective purchaser pursuant to Rule 144A(d)(4) under the Securities Act. (c) Assuming the accuracy of the representations and warranties of the Initial Purchasers contained in Section 2 and their compliance with the agreements set forth therein, it is not necessary, in connection with the issuance and sale of the Securities to the Initial Purchasers and the offer, resale and delivery of the Securities by the Initial Purchasers in the manner contemplated by this Agreement and the Offering Memorandum, to register the Securities under the Securities Act or to qualify the Indenture under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). (d) Except as set forth an Exhibit A hereto, the Company has no subsidiaries and holds no minority interest in any entity. The Company and each of its subsidiaries have been duly incorporated or formed and are validly existing as corporations, limited 3 liability companies or limited partnerships in good standing under the laws of their respective jurisdictions of incorporation or formation, are duly qualified to do business and are in good standing as foreign corporations, limited liability companies or limited partnerships in each jurisdiction in which their respective ownership or lease of property or the conduct of their respective businesses requires such qualification, and have all power and authority necessary to own or hold their respective properties and to conduct the businesses in which they are engaged, except where the failure to so qualify or have such power or authority would not, singularly or in the aggregate, have a material adverse effect on the condition (financial or otherwise), results of operations, business or prospects of the Company and its subsidiaries taken as a whole (a "Material Adverse Effect"). (e) As of the Closing Date, the Company will have an authorized capitalization as set forth in the Offering Memorandum under the heading "Capitalization"; all of the outstanding shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable; and the capital stock of the Company conforms in all material respects to the description thereof contained in the Offering Memorandum, including, in particular, under the heading "Description of Capital Stock". All of the outstanding shares of capital stock of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and, except as set forth on Exhibit A hereto, are owned directly or indirectly by the Company, free and clear of any lien, charge, encumbrance, security interest, restriction upon voting or transfer or any other claim of any third party, other than (i) liens, charges, encumbrances and security interests created by the Credit Agreement dated as of July 17, 1998, among the Company, the Lenders identified therein, The Chase Manhattan Bank, as Administrative Agent and Issuing Bank, TD Securities (USA) Inc., as Syndication Agent, and Bankers Trust Company, as Documentation Agent, and (ii) restrictions upon voting or transfer arising under (A) the Stockholders' Agreement dated as of July 17, 1998, among AT&T Wireless PCS Inc., TWR Cellular, Inc., the investors identified therein, the individuals identified therein and the Company, (B) the Management Agreement dated as of July 17, 1999, between TeleCorp Management Corp. and the Company and (C) the Investors Stockholders' Agreement dated as of July 17, 1998, among AT&T Wireless PCS, Inc., CB Capital Investors, L.P., Private Equity Investors III, L.P., Equity-Linked Investors-II, Entergy Technology Holding Company, Whitney Equity Partners, L.P., Whitney Strategic Partners III, L.P., J.H. Whitney III, L.P., Media/Communications Investors Limited Partnership, Media/Communications Partners III Limited Partnership, Toronto Dominion Investments, Inc., Northwood Ventures LLC, Northwood Capital Partners LLC, One Liberty Fund III, L.P., Hoak Communications Partners, L.P., HCP Capital Fund, L.P. and the stockholders named therein. (f) Each of the Company and the Subsidiary Guarantor has full right, power and authority to execute and deliver this Agreement, the Indenture, the Registration Rights Agreement and the Securities (in the case of the Company only) (collectively, the "Transaction Documents") and to perform its obligations hereunder and thereunder; and all corporate action required to be taken for the due and proper authorization, execution 4 and delivery of each of the Transaction Documents and the consummation of the transactions contemplated thereby have been duly and validly taken. (g) This Agreement has been duly authorized, executed and delivered by the Company and the Subsidiary Guarantor and constitutes a valid and legally binding agreement of the Company and the Subsidiary Guarantor. (h) The Registration Rights Agreement has been duly authorized by the Company and the Subsidiary Guarantor and, when duly executed and delivered in accordance with its terms by each of the parties thereto, will constitute a valid and legally binding agreement of the Company and the Subsidiary Guarantor enforceable against the Company and the Subsidiary Guarantor in accordance with its terms, except to the extent that such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors' rights generally and by general equitable principles (whether considered in a proceeding in equity or at law). (i) The Indenture has been duly authorized by the Company and the Subsidiary Guarantor and, when duly executed and delivered in accordance with its terms by each of the parties thereto, will constitute a valid and legally binding agreement of the Company and the Subsidiary Guarantor enforceable against the Company and the Subsidiary Guarantor in accordance with its terms, except to the extent that such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors' rights generally and by general equitable principles (whether considered in a proceeding in equity or at law). On the Closing Date, the Indenture will conform in all material respects to the requirements of the Trust Indenture Act and the rules and regulations of the Commission applicable to an indenture which is qualified thereunder. (j) The Securities have been duly authorized by the Company and the Subsidiary Guarantor and, when duly executed, authenticated, issued and delivered as provided in the Indenture and paid for as provided herein, will be duly and validly issued and outstanding and will constitute valid and legally binding obligations of the Company, as issuer, and the Subsidiary Guarantor, as guarantor, entitled to the benefits of the Indenture and enforceable against the Company as issuer, and the Subsidiary Guarantor, as guarantor, in accordance with their terms, except to the extent that such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors' rights generally and by general equitable principles (whether considered in a proceeding in equity or at law). (k) Each Transaction Document and each other document described in the Offering Memorandum conforms in all material respects to the description thereof contained in the Offering Memorandum. (l) The execution, delivery and performance by the Company and the Subsidiary Guarantor of each of the Transaction Documents to which each is a party, the issuance, 5 authentication, sale and delivery of the Securities and compliance by the Company and the Subsidiary Guarantor with the terms thereof and the consummation of the transactions contemplated by the Transaction Documents will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries (other than as provided by the Indenture) pursuant to, any material indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, nor will such actions result in any violation of the provisions of the charter or by-laws of the Company or any of its subsidiaries or any statute or any judgment, order, decree, rule or regulation of any court or arbitrator or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties or assets; and no consent, approval, authorization or order of, or filing or registration with, any such court or arbitrator or governmental agency or body under any such statute, judgment, order, decree, rule or regulation is required for the execution, delivery and performance by the Company and the Subsidiary Guarantor of each of the Transaction Documents to which each is a party, the issuance, authentication, sale and delivery of the Securities and compliance by the Company and the Subsidiary Guarantor with the terms thereof and the consummation of the transactions contemplated by the Transaction Documents, except for such consents, approvals, authorizations, filings, registrations or qualifications (i) which shall have been obtained or made prior to the Closing Date, (ii) as may be required to be obtained or made under the Securities Act and the rules and regulations promulgated thereunder and applicable state securities laws as provided in the Registration Rights Agreement, (iii) the failure to obtain (A) could not reasonably be expected to have a Material Adverse Effect or (B) would not materially and adversely affect the legal, valid and binding obligations of the Company or the Subsidiary Guarantor under the Transaction Documents or the ability of the Company or the Subsidiary Guarantor to perform its obligations under any of the Transaction Documents or (iv) which are otherwise not material in the context of the sale of the Securities. (m) PricewaterhouseCoopers LLP are independent certified public accountants with respect to the Company and its subsidiaries within the meaning of Rule 101 of the Code of Professional Conduct of the American Institute of Certified Public Accountants ("AICPA") and its interpretations and rulings thereunder. The historical financial statements (including the related notes) contained in the Offering Memorandum comply in all material respects with the requirements applicable to a registration statement on Form S-1 under the Securities Act (except that disclosure of earnings per share and certain supporting schedules are omitted); such financial statements have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods covered thereby and fairly present the financial position of the entities purported to be covered thereby at the respective dates indicated and the results of their operations and their cash flows for the respective periods indicated; and the historical financial information contained in the Offering Memorandum under the headings "Capitalization", "Selected Historical and Pro Forma Consolidated Financial Information" and "Management's Discussion and Analysis of Financial Condition and 6 Results of Operations" is derived from the accounting records of the entities covered thereby and fairly present the information purported to be shown thereby. The pro forma financial information contained in the Offering Memorandum has been prepared on a basis consistent with the historical financial statements contained in the Offering Memorandum (except for the pro forma adjustments specified therein), gives effect to assumptions made on a reasonable basis and fairly presents the historical and proposed transactions contemplated by the Offering Memorandum and the Transaction Documents. The other historical financial information and data included in the Offering Memorandum are, in all material respects, fairly presented. (n) There are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property or assets of the Company or any of its subsidiaries is the subject, other than proceedings described in the Offering Memorandum affecting the wireless communications industry generally which (i) singularly or in the aggregate, if determined adversely to the Company or any of its subsidiaries, could reasonably be expected to have a Material Adverse Effect or (ii) question the validity or enforceability of any of the Transaction Documents or any action taken or to be taken pursuant thereto; and to the best knowledge of the Company, no such proceedings are threatened or contemplated by governmental authorities or threatened by others. (o) To the best knowledge of the Company, no action has been taken and no statute, rule, regulation or order has been enacted, adopted or issued by any governmental agency or body which prevents the issuance of the Securities or suspends the sale of the Securities in any jurisdiction; no injunction, restraining order or order of any nature by any federal or state court of competent jurisdiction has been issued with respect to the Company or any of its subsidiaries which would prevent or suspend the issuance or sale of the Securities or the use of the Preliminary Offering Memorandum or the Offering Memorandum in any jurisdiction; no action, suit or proceeding is pending against or, to the best knowledge of the Company, threatened against or affecting the Company or any of its subsidiaries before any court or arbitrator or any governmental agency, body or official, domestic or foreign, which could reasonably be expected to interfere with or adversely affect the issuance of the Securities or in any manner draw into question the validity or enforceability of any of the Transaction Documents or any action taken or to be taken pursuant thereto; and the Company has complied with any and all requests by any securities authority in any jurisdiction for additional information to be included in the Preliminary Offering Memorandum and the Offering Memorandum. (p) Neither the Company nor any of its subsidiaries is (i) in violation of its charter, by-laws, operating agreement or limited partnership agreement, as appropriate, (ii) in default, and no event has occurred which, with notice or lapse of time or both, would constitute a default, in the due performance or observance of any term, covenant or condition contained in any material indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument to which it is a party or by which it is bound or to which any of its property or assets is subject or (iii) in violation of any law, ordinance, governmental rule, regulation or court decree to which it or its property or assets may be 7 subject, except, in the case of clause (ii) or clause (iii), for any default or violation that could not reasonably be expected to have a Material Adverse Effect. (q) Except as disclosed in the Offering Memorandum, the Company and each of its subsidiaries possess all material licenses, certificates, authorizations and permits issued by, and have made all declarations and filings with, the appropriate federal, state or foreign regulatory agencies or bodies which are necessary or desirable for the ownership of their respective properties or the conduct of their respective businesses as described in the Offering Memorandum, except where the failure to possess or make the same would not, singularly or in the aggregate, have a Material Adverse Effect, and neither the Company nor any of its subsidiaries has received notification of any revocation or modification of any such license, certificate, authorization or permit or has any reason to believe that any such license, certificate, authorization or permit will not be renewed in the ordinary course. (r) The Company and each of its subsidiaries have filed all federal, state, local and foreign income and franchise tax returns required to be filed through the date hereof and have paid all taxes due thereon, and no tax deficiency has been determined adversely to the Company or any of its subsidiaries which has had (nor does the Company or any of its subsidiaries have any knowledge of any tax deficiency which, if determined adversely to the Company or any of its subsidiaries, could reasonably be expected to have) a Material Adverse Effect. (s) Neither the Company nor any of its subsidiaries is (i) an "investment company" or a company "controlled by" an investment company within the meaning of the Investment Company Act of 1940, as amended (the "Investment Company Act"), and the rules and regulations of the Commission thereunder or (ii) a "holding company" or a "subsidiary company" of a holding company or an "affiliate" thereof within the meaning of the Public Utility Holding Company Act of 1935, as amended. (t) The Company and each of its subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (iii) access to financial assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences to the extent necessary. (u) The Company and each of its subsidiaries have insurance covering their respective properties, operations, personnel and businesses, which insurance is in amounts and insures against such losses and risks as are adequate to protect the Company and its subsidiaries and their respective businesses, determined by reference to the insurance maintained by other companies in the wireless communications industry. Neither the Company nor any of its subsidiaries has received notice from any insurer or 8 agent of such insurer that capital improvements or other expenditures are required or necessary to be made in order to continue such insurance. (v) Except as disclosed in the Offering Memorandum, the Company and each of its subsidiaries own or possess adequate rights to use all patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights, licenses and know- how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) necessary for the conduct of their respective businesses, except where the failure to possess such rights could not reasonably be expected to have a Material Adverse Effect; and the conduct of their respective businesses will not conflict in any respect with, and the Company and its subsidiaries have not received any notice of any claim of conflict with, any such rights of others that, if determined adversely to the Company or any of its subsidiaries would, individually or in the aggregate, have a Material Adverse Effect. (w) The Company and each of its subsidiaries have good and marketable title in fee simple to, or have valid rights to lease or otherwise use, all items of real and personal property which are material to the business of the Company and its subsidiaries, in each case free and clear of all liens, encumbrances, claims and defects and imperfections of title except such as (i) do not materially interfere with the use made and proposed to be made of such property by the Company and its subsidiaries or (ii) could not reasonably be expected to have a Material Adverse Effect. (x) No labor disturbance by or dispute with the employees of the Company or any of its subsidiaries exists or, to the best knowledge of the Company, is contemplated or threatened. (y) No "prohibited transaction" (as defined in Section 406 of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder ("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as amended from time to time (the "Code")) or "accumulated funding deficiency" (as defined in Section 302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA (other than events with respect to which the 30-day notice requirement under Section 4043 of ERISA has been waived) has occurred with respect to any employee benefit plan of the Company or any of its subsidiaries which could reasonably be expected to have a Material Adverse Effect; each such employee benefit plan is in compliance in all material respects with applicable law, including ERISA and the Code, except where such noncompliance, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect; the Company and each of its subsidiaries have not incurred and do not expect to incur liability under Title IV of ERISA with respect to the termination of, or withdrawal from, any pension plan for which the Company or any of its subsidiaries would have any liability; and each such pension plan that is intended to be qualified under Section 401(a) of the Code has filed for or received a favorable determination letter from the Internal Revenue Service and the Company has not amended any such pension plan in any way that could reasonably be expected to cause the loss of such qualification. 9 (z) There has been no storage, generation, transportation, handling, treatment, disposal, discharge, emission or other release of any kind of toxic or other wastes or other hazardous substances by, due to or caused by the Company or any of its subsidiaries (or, to the best knowledge of the Company, any other entity (including any predecessor) for whose acts or omissions the Company or any of its subsidiaries is or could reasonably be expected to be liable) upon any of the property now or previously owned or leased by the Company or any of its subsidiaries, or upon any other property, in violation of any statute or any ordinance, rule, regulation, order, judgment, decree or permit or which would, under any statute or any ordinance, rule (including rule of common law), regulation, order, judgment, decree or permit, give rise to any liability, except for any violation or liability that could not reasonably be expected to have, singularly or in the aggregate with all such violations and liabilities, a Material Adverse Effect; and there has been no disposal, discharge, emission or other release of any kind onto such property or into the environment surrounding such property of any toxic or other wastes or other hazardous substances with respect to which the Company has knowledge, except for any such disposal, discharge, emission or other release of any kind which could not reasonably be expected to have, singularly or in the aggregate with all such discharges and other releases, a Material Adverse Effect. (aa) Neither the Company nor, to the best knowledge of the Company and the Subsidiary Guarantor, any director, officer, agent, employee or other person associated with or acting on behalf of the Company or any of its subsidiaries has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment. (bb) Except as described in the Offering Memorandum, there are no outstanding subscriptions, rights, warrants, calls or options to acquire, or instruments convertible into or exchangeable for, or agreements or understandings with respect to the sale or issuance of, any shares of capital stock of or other equity or other ownership interest in the Company or any of its subsidiaries. (cc) Neither the Company nor any of its subsidiaries owns any "margin securities" as that term is defined in Regulation U of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), and none of the proceeds of the sale of the Securities will be used, directly or indirectly, for the purpose of purchasing or carrying any margin security, for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry any margin security or for any other purpose which might cause any of the Securities to be considered a "purpose credit" within the meanings of Regulation T, U or X of the Federal Reserve Board. (dd) Neither the Company nor any of its subsidiaries is a party to any contract, agreement or understanding with any person that would give rise to a valid claim against 10 the Company or the Initial Purchasers for a brokerage commission, finder's fee or like payment in connection with the offering and sale of the Securities. (ee) The Securities satisfy the eligibility requirements of Rule 144A(d)(3) under the Securities Act. (ff) None of the Company, any of its affiliates or any person acting on its or their behalf has engaged or will engage in any directed selling efforts (as such term is defined in Regulation S under the Securities Act ("Regulation S")), and all such persons have complied and will comply with the offering restrictions requirement of Regulation S to the extent applicable; provided that no representation or warranty is made with respect to CSI. (gg) Neither the Company nor any of its affiliates has, directly or through any agent, sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as such term is defined in the Securities Act), which is or will be integrated with the sale of the Securities in a manner that would require registration of the Securities under the Securities Act. (hh) None of the Company or any of its affiliates or any other person acting on its or their behalf has engaged, in connection with the offering of the Securities, in any form of general solicitation or general advertising within the meaning of Rule 502(c) under the Securities Act. (ii) There are no securities of the Company registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or listed on a national securities exchange or quoted in a U.S. automated inter- dealer quotation system. (jj) Neither the Company nor the Subsidiary Guarantor has taken or will take, directly or indirectly, any action prohibited by Regulation M under the Exchange Act in connection with the offering of the Securities. (kk) No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) contained in the Preliminary Offering Memorandum or the Offering Memorandum has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith. (ll) None of the Company or any of its subsidiaries does business with the government of Cuba or with any person or affiliate located in Cuba within the meaning of Florida Statutes Section 517.075. (mm) The Company and its subsidiaries are in the process of evaluating the accuracy of the representations made by (i) the vendors from whom components of the Company's internal information technology systems were purchased and (ii) the vendors from whom all network hardware was purchased regarding the risk that the products sold by such vendors may be unable to recognize and properly execute date-sensitive functions involving certain dates prior to and any dates after December 31, 1999 (the 11 "Year 2000 Problem"), and have determined that such evaluation will be completed on a timely basis without material expense; and the Company believes, after due inquiry, that each supplier, vendor, customer or financial service organization used or serviced by the Company and its subsidiaries has remedied or will remedy on a timely basis the Year 2000 Problem. (nn) Since the date as of which information is given in the Offering Memorandum, (i) there has been no material adverse change or any development involving a prospective material adverse change in the condition, financial or otherwise, or in the earnings, business affairs, management or business prospects of the Company and its subsidiaries, taken as a whole, whether or not arising in the ordinary course of business, (ii) neither the Company nor the Subsidiary Guarantor has incurred any material liability or obligation, direct or contingent, other than in the ordinary course of business, (iii) neither the Company nor the Subsidiary Guarantor has entered into any material transaction other than in the ordinary course of business and (iv) there has not been any change in the capital stock or long-term debt of the Company or the Subsidiary Guarantor, or any dividend or distribution of any kind declared, paid or made by the Company or the Subsidiary Guarantor on any class of their respective capital stock, other than, with respect to long-term debt of the Company, the issuance of additional junior subordinated notes pursuant to the Note Purchase Agreement dated as of May 11, 1998, between the Company and Lucent Technologies Inc. (the "Lucent Note Purchase Agreement"). (oo) (i) The Company and its subsidiaries have the full use and benefit of all broadband personal communications services ("PCS") licenses issued by the Federal Communications Commission (the "FCC") to the Company and its subsidiaries (the "Licenses") necessary to operate assets constituting a radio communications system authorized under the rules for wireless communications services (including any license and the network, marketing, distribution, sales, customer interface and operations functions relating thereto) owned and operated by the Company or any of its subsidiaries in the Major Trading Areas (as defined in 47 C.F.R. (S)24.202) and the Basic Trading Areas (as defined in 47 C.F.R. (S)24.202) listed on Parts A, B, C and D of Exhibit B attached hereto and each other area in which the Company or any of its subsidiaries conducts a broadband PCS business and will have the full use and benefit of the Licenses listed on (A) Part E of Exhibit B upon consummation of the acquisition of a 20 MHz PCS license covering the San Juan MTA from AT&T Corporation and (B) Part F of Exhibit B upon consummation of acquisition of 15 MHz C-Block PCS licenses covering the Louisiana BTAs of Alexandria, Lake Charles and Monroe from Wireless 2000, Inc.; (ii) such Licenses have been duly issued by the FCC, are (in the case of Licenses listed on Parts A, B, C and D of Exhibit B) or will be (upon consummation of the relevant transaction in the case of Licenses listed on Parts E and F of Exhibit B) held by a wholly owned subsidiary of the Company and are in full force and effect and (iii) the Company and its subsidiaries are in compliance in all material respects with all of the provisions of each such License held by any of them. (pp) (i) The Company and each of its subsidiaries are in compliance in all material respects with the Communications Act of 1934, and any similar or successor 12 federal statute, and the rules and regulations and published policies of the FCC thereunder, as amended and as in effect from time to time (collectively, the "Communications Act"), and all requirements of the FCC, including the "very small business" requirements; (ii) the Company has no knowledge of any investigation, notice of apparent liability, violation, forfeiture or other order or complaint issued by or before the FCC, or of any other proceedings (other than proceedings relating to the wireless communications industries generally) of or before the FCC, which could reasonably be expected to have a Material Adverse Effect; (iii) no event has occurred which (A) has resulted in, or after notice or lapse of time or both would result in, revocation, suspension, adverse modifications, non- renewal, impairment, restriction or termination of, or order of forfeiture with respect to, any License in any respect which could reasonably be expected to have a Material Adverse Effect or (B) affects or could reasonably be expected in the future to affect any of the rights of the Company or any of its subsidiaries under any License held by the Company or any of its subsidiaries in any respect which could reasonably be expected to have a Material Adverse Effect; (iv) the Company and each of its subsidiaries have duly filed in a timely manner all material filings, reports, applications, documents, instruments and information required to be filed under the Communications Act, and all such filings were when made true, correct and complete in all material respects; and (v) the Company has no reason to believe that each License of the Company or any of its subsidiaries will not be renewed in the ordinary course. (qq) The Company is in compliance with its "Minimum Build-Out Plan", as defined in the Securities Purchase Agreement dated January 23, 1998, among AT&T Wireless PCS Inc., TWR Cellular, Inc., the Cash Equity Investors (as identified therein), the TeleCorp Investors (as identified therein), Gerald Vento, Thomas Sullivan and the Company (the "Securities Purchase Agreement"). 2. Purchase and Resale of the Securities. (a) On the basis of the representations, warranties and agreements contained herein, and subject to the terms and conditions set forth herein, the Company agrees to issue and sell to each of the Initial Purchasers, severally and not jointly, and each of the Initial Purchasers, severally and not jointly, agrees to purchase from the Company, the principal amount at maturity of Securities set forth opposite the name of such Initial Purchaser on Schedule 1 hereto at a purchase price equal to 55.2706% of the principal amount at maturity thereof. The Company shall not be obligated to deliver any of the Securities except upon payment for all of the Securities to be purchased as provided herein. (b) The Initial Purchasers have advised the Company that they propose to offer the Securities for resale upon the terms and subject to the conditions set forth herein and in the Offering Memorandum. Each Initial Purchaser, severally and not jointly, represents, warrants and agrees that (i) it is purchasing the Securities pursuant to a private sale exempt from registration under the Securities Act, (ii) it has not solicited offers for, or offered or sold, and will not solicit offers for, or offer or sell, the Securities by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) of Regulation D under the Securities Act ("Regulation D") or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act and (iii) it has solicited and will solicit offers for the Securities only from, and has offered or sold and will offer, sell or deliver the Securities, as part of their 13 initial offering, only (A) within the United States to persons whom it reasonably believes to be qualified institutional buyers ("Qualified Institutional Buyers"), as defined in Rule 144A under the Securities Act ("Rule 144A"), or if any such person is buying for one or more institutional accounts for which such person is acting as fiduciary or agent, only when such person has represented to it that each such account is a Qualified Institutional Buyer to whom notice has been given that such sale or delivery is being made in reliance on Rule 144A and in each case, in transactions in accordance with Rule 144A and (B) outside the United States to persons other than U.S. persons in reliance on Regulation S. (c) In connection with the offer and sale of Securities in reliance on Regulation S, each Initial Purchaser, severally and not jointly, represents, warrants and agrees that: (i) the Securities have not been registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except pursuant to an exemption from, or in transactions not subject to, the registration requirements of the Securities Act; (ii) such Initial Purchaser has offered and sold the Securities, and will offer and sell the Securities, (A) as part of their distribution at any time and (B) otherwise until 40 days after the later of the commencement of the offering of the Securities and the Closing Date, only in accordance with Regulation S or Rule 144A or any other available exemption from registration under the Securities Act; (iii) none of such Initial Purchaser or any of its affiliates or any other person acting on its or their behalf has engaged or will engage in any directed selling efforts with respect to the Securities, and all such persons have complied and will comply with the offering restriction requirements of Regulation S; (iv) at or prior to the confirmation of sale of any Securities sold in reliance on Regulation S, it will have sent to each distributor, dealer or other person receiving a selling concession, fee or other remuneration that purchases Securities from it during the restricted period a confirmation or notice to substantially the following effect: "The Securities covered hereby have not been registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering of the Securities and the date of original issuance of the Securities, except in accordance with Regulation S or Rule 144A or any other available exemption from registration under the Securities Act. Terms used above have the meanings given to them by Regulation S."; and (v) it and each of its affiliates has not and will not enter into any contractual arrangement with any distributor with respect to the distribution of the Securities, except with its affiliates or with the prior written consent of the Company. 14 Terms used in this Section 2(c) have the meanings given to them by Regulation S. (d) Each Initial Purchaser, severally and not jointly, represents, warrants and agrees that (i) it has not offered or sold and prior to the date that is six months after the Closing Date will not offer or sell any Securities to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (ii) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 and the Public Offers of Securities Regulations 1995 with respect to anything done by it in relation to the Securities in, from or otherwise involving the United Kingdom; and (iii) it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issue of the Securities to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to whom such document may otherwise lawfully be issued or passed on. (e) Each Initial Purchaser, severally and not jointly, agrees that, prior to or simultaneously with the confirmation of sale by such Initial Purchaser to any purchaser of any of the Securities purchased by such Initial Purchaser from the Company pursuant hereto, such Initial Purchaser shall furnish to that purchaser a copy of the Offering Memorandum (and any amendment or supplement thereto that the Company shall have furnished to such Initial Purchaser prior to the date of such confirmation of sale). In addition to the foregoing, each Initial Purchaser acknowledges and agrees that the Company and, for purposes of the opinions to be delivered to the Initial Purchasers pursuant to Sections 5(d) and (e), counsel for the Company and for the Initial Purchasers, respectively, may rely upon the accuracy of the representations and warranties of the Initial Purchasers and their compliance with their agreements contained in this Section 2, and each Initial Purchaser hereby consents to such reliance. (f) Each Initial Purchaser, severally and not jointly, represents and warrants that this Agreement has been duly authorized, executed and delivered by such Initial Purchaser. (g) The Company and the Subsidiary Guarantor acknowledge and agree that the Initial Purchasers may sell Securities to any affiliate of an Initial Purchaser and that any such affiliate may sell Securities purchased by it to an Initial Purchaser. 3. Delivery of and Payment for the Securities. (a) Delivery of and payment for the Securities shall be made at the offices of Cravath, Swaine & Moore, New York, New York, or at such other place as shall be agreed upon by the Initial Purchasers and the Company, at 10:00 a.m., New York City time, on April 23, 1999, or at such other time or date, not later than seven full business days thereafter, as shall be agreed upon by the Initial Purchasers and the Company (such date and time of payment and delivery being referred to herein as the "Closing Date"). (b) On the Closing Date, payment of the purchase price for the Securities shall be made to the Company by wire or book-entry transfer of same- day funds to such account or accounts as the Company shall specify prior to the Closing Date or by such other means as the 15 parties hereto shall agree prior to the Closing Date against delivery to the Initial Purchasers of the certificates evidencing the Securities. Time shall be of the essence, and delivery at the time and place specified pursuant to this Agreement is a further condition of the obligations of the Initial Purchasers hereunder. Upon delivery, the Securities shall be in global form, registered in such names and in such denominations as CSI on behalf of the Initial Purchasers shall have requested in writing not less than two full business days prior to the Closing Date. The Company agrees to make one or more global certificates evidencing the Securities available for inspection by CSI on behalf of the Initial Purchasers in New York, New York at least 24 hours prior to the Closing Date. 4. Further Agreements of the Company and the Subsidiary Guarantor. The Company and the Subsidiary Guarantor agree with each of the several Initial Purchasers: (a) at all times prior to the resale of the Securities by the Initial Purchasers, to advise the Initial Purchasers promptly and, if requested, confirm such advice in writing, of the happening of any event which makes any statement of a material fact made in the Offering Memorandum untrue or which requires the making of any additions to or changes in the Offering Memorandum (as amended or supplemented from time to time) in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; to advise the Initial Purchasers of any order of any governmental authority preventing or suspending the use of the Preliminary Offering Memorandum or the Offering Memorandum, of any suspension of the qualification of the Securities for offering or sale in any jurisdiction and of the initiation or threatening of any proceeding for any such purpose promptly upon receipt of notice of such order, suspension or initiation or threatening of any such proceeding; and, prior to the resale of the Securities by the Initial Purchasers, to use its best efforts to prevent the issuance of any such order preventing or suspending the use of the Preliminary Offering Memorandum or the Offering Memorandum or suspending any such qualification and, if any such suspension is issued, to obtain the lifting thereof at the earliest possible time and thereafter to use commercially reasonable efforts to prevent the issuance of any such order preventing or suspending the use of the Preliminary Offering Memorandum or the Offering Memorandum or suspending any such qualification and, if any such suspension is issued, to obtain the lifting thereof at the earliest possible time; (b) to furnish promptly to each of the Initial Purchasers and counsel for the Initial Purchasers, without charge, as many copies of the Preliminary Offering Memorandum and the Offering Memorandum (and any amendments or supplements thereto) as may be reasonably requested; (c) prior to making any amendment or supplement to the Offering Memorandum, to furnish a copy thereof to each of the Initial Purchasers and counsel for the Initial Purchasers and not to effect any such amendment or supplement to which the Initial Purchasers shall reasonably object by notice to the Company after a reasonable period (under the circumstances) to review; (d) if, at any time prior to completion of the resale of the Securities by the Initial Purchasers, any event shall occur or condition exist as a result of which it is necessary, in 16 the reasonable opinion of counsel for the Initial Purchasers or counsel for the Company, to amend or supplement the Offering Memorandum in order that the Offering Memorandum will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time it is delivered to a purchaser, not misleading, or if it is necessary to amend or supplement the Offering Memorandum to comply with applicable law, to promptly prepare such amendment or supplement as may be necessary to correct such untrue statement or omission or so that the Offering Memorandum, as so amended or supplemented, will comply with applicable law; (e) for so long as the Securities are outstanding and are "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act, to furnish to holders of the Securities and prospective purchasers of the Securities designated by such holders, upon request of such holders or such prospective purchasers, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act, unless the Company is then subject to and in compliance with Section 13 or 15(d) of the Exchange Act (the foregoing agreement being for the benefit of the holders from time to time of the Securities and prospective purchasers of the Securities designated by such holders); (f) for so long as the Securities are outstanding, to furnish to the Initial Purchasers copies of any annual reports, quarterly reports and current reports filed by the Company with the Commission on Forms 10-K, 10- Q and 8-K, or such other similar forms as may be designated by the Commission, and such other documents, reports and information as shall be furnished by the Company to the Trustee or to the holders of the Securities pursuant to the Indenture or the Exchange Act or any rule or regulation of the Commission thereunder; (g) to promptly take from time to time such actions as the Initial Purchasers may reasonably request to qualify the Securities for offering and sale under the securities or Blue Sky laws of such jurisdictions as the Initial Purchasers may designate and to continue such qualifications in effect for so long as required for the resale of the Securities; and to arrange for the determination of the eligibility for investment of the Securities under the laws of such jurisdictions as the Initial Purchasers may reasonably request; provided that the Company and its subsidiaries shall not be obligated to qualify as foreign corporations in any jurisdiction in which they are not so qualified or to file a general consent to service of process in any jurisdiction; (h) to provide reasonable assistance to the Initial Purchasers in arranging for the Securities to be designated Private Offerings, Resales and Trading through Automated Linkages ("PORTAL") Market securities in accordance with the rules and regulations adopted by the National Association of Securities Dealers, Inc. ("NASD") relating to trading in the PORTAL Market and for the Securities to be eligible for clearance and settlement through The Depository Trust Company ("DTC"); (i) not to, and to cause its affiliates not to, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as such term is defined in the 17 Securities Act) which could be integrated with the sale of the Securities in a manner which would require registration of the Securities under the Securities Act; (j) except following the effectiveness of the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, not to, and to cause its affiliates not to, and not to authorize or knowingly permit any person acting on their behalf to, solicit any offer to buy or offer to sell the Securities by means of any form of general solicitation or general advertising within the meaning of Regulation D or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act; and not to offer, sell, contract to sell or otherwise dispose of, directly or indirectly, any securities under circumstances where such offer, sale, contract or disposition would cause the exemption afforded by Section 4(2) of the Securities Act to cease to be applicable to the offering and sale of the Securities as contemplated by this Agreement and the Offering Memorandum; (k) for a period of 180 days from the date of the Offering Memorandum, not to offer for sale, sell, contract to sell or otherwise dispose of, directly or indirectly, or file a registration statement for, or announce any offer, sale, contract for sale of or other disposition of any debt securities issued or guaranteed by the Company or any of its subsidiaries (other than (i) the Securities or the Exchange Securities (ii) notes issued by the Company pursuant to the Lucent Note Purchase Agreement (iii) debt securities issued or guaranteed by the Company or any of its subsidiaries pursuant to any Vendor Credit Arrangement; provided that any such Vendor Credit Arrangement contains terms prohibiting the remarketing of all debt securities issued or guaranteed thereunder for a period of not less than 180 days from the date of the Offering Memorandum and (iv) any debt securities issued by the Company or any of its Subsidiaries to the U.S. Government in connection with the acquisition of any License from the FCC or any debt securities assumed by the Company or any of its subsidiaries in connection with the acquisition of any License or any entity engaged in a Permitted Business). (l) during the period from the Closing Date until two years after the Closing Date, without the prior written consent of the Initial Purchasers, not to, and not permit any of its affiliates (as defined in Rule 144 under the Securities Act) to, resell any of the Securities that have been reacquired by them, except for Securities purchased by the Company or any of its affiliates and resold in a transaction registered under the Securities Act; (m) not to, for two years following the date on which the Securities are issued, be or become, or be or become owned by, an open-end investment company, unit investment trust or face-amount certificate company that is or is required to be registered under Section 8 of the Investment Company Act, and to not be or become, or be or become owned by, a closed-end investment company required to be registered, but not registered thereunder; (n) in connection with the offering of the Securities, until CSI on behalf of the Initial Purchasers shall have notified the Company of the completion of the resale of the Securities, not to, and to cause its affiliated purchasers (as defined in Regulation M 18 under the Exchange Act) not to, either alone or with one or more other persons, bid for or purchase, for any account in which it or any of its affiliated purchasers has a beneficial interest, any Securities, or attempt to induce any person to purchase any Securities; and not to, and to cause its affiliated purchasers not to, make bids or purchase for the purpose of creating actual, or apparent, active trading in or of raising the price of the Securities; (o) in connection with the offering of the Securities, to make its officers, employees, independent accountants and legal counsel reasonably available upon request by the Initial Purchasers; (p) to furnish to each of the Initial Purchasers on the Closing Date a copy of the independent accountants' report included in the Offering Memorandum signed by the accountants rendering such report; (q) to do and perform all things required to be done and performed by it under this Agreement that are within its control prior to or after the Closing Date, and to use commercially reasonable efforts to satisfy all conditions precedent on its part to the delivery of the Securities; (r) to not take any action prior to the Closing Date which would require the Offering Memorandum to be amended or supplemented pursuant to Section 4(d); (s) prior to the Closing Date, not to issue any press release or other communication directly or indirectly or hold any press conference with respect to the Company, its condition, financial or otherwise, or earnings, business affairs or business prospects (except for routine oral marketing communications in the ordinary course of business and consistent with the past practices of the Company and of which the Initial Purchasers are notified), without the prior written consent of the Initial Purchasers, unless in the judgment of the Company and its counsel, and after notification to the Initial Purchasers, such press release or communication is required by law; (t) to apply the net proceeds from the sale of the Securities as set forth in the Offering Memorandum under the heading "Use of Proceeds"; and (u) that Sections 4(b) and 4(c) of the Year 2000 Information and Readiness Disclosure Act are inapplicable to this Agreement and to waive any defenses arising under such act in any action or proceeding relating to this Agreement or the transactions contemplated hereby. 5. Conditions of Initial Purchasers' Obligations. The respective obligations of the several Initial Purchasers hereunder are subject to the accuracy, on and as of the date hereof and the Closing Date, of the representations and warranties of the Company and the Subsidiary Guarantor contained herein, to the accuracy of the statements of the Company and the Subsidiary Guarantor and their respective officers made in any certificates delivered pursuant hereto, to the performance by the Company and the Subsidiary Guarantor of their respective obligations hereunder, and to each of the following additional terms and conditions: 19 (a) The Offering Memorandum (and any amendments or supplements thereto) shall have been printed and copies distributed to the Initial Purchasers as promptly as practicable on or following the date of this Agreement or at such other date and time as to which the Initial Purchasers may agree; and no stop order suspending the sale of the Securities in any jurisdiction shall have been issued and no proceeding for that purpose shall have been commenced or shall be pending or threatened. (b) None of the Initial Purchasers shall have discovered and disclosed to the Company on or prior to the Closing Date that the Offering Memorandum or any amendment or supplement thereto contains an untrue statement of a fact which, in the opinion of counsel for the Initial Purchasers, is material or omits to state any fact which, in the opinion of such counsel, is material and is required to be stated therein or is necessary to make the statements therein not misleading. (c) All corporate proceedings and other legal matters incident to the authorization, form and validity of each of the Transaction Documents and the Offering Memorandum, and all other legal matters relating to the Transaction Documents and the transactions contemplated thereby, shall be satisfactory in all material respects to the Initial Purchasers, and the Company shall have furnished to the Initial Purchasers all documents and information that they or their counsel may reasonably request to enable them to pass upon such matters. (d) McDermott, Will & Emery shall have furnished to the Initial Purchasers their written opinion, as counsel to the Company, addressed to the Initial Purchasers and dated the Closing Date, in form and substance reasonably satisfactory to the Initial Purchasers, substantially to the effect set forth in Annex B hereto. Wiley, Rein & Fielding shall have furnished to the Initial Purchasers their written opinion, as special communications counsel to the Company, addressed to the Initial Purchasers and dated as of the Closing Date, in form and substance reasonably satisfactory to the Initial Purchasers, substantially to the effect set forth in Annex C hereto. (e) The Initial Purchasers shall have received from Cravath, Swaine & Moore, counsel for the Initial Purchasers, such opinion or opinions, dated the Closing Date, with respect to such matters as the Initial Purchasers may reasonably require, and the Company shall have furnished to such counsel such documents and information as they request for the purpose of enabling them to pass upon such matters. (f) The Company shall have furnished to the Initial Purchasers a letter (the "Initial Letter") of PricewaterhouseCoopers LLP, addressed to the Initial Purchasers and dated the date hereof, in form and substance satisfactory to the Initial Purchasers, substantially to the effect set forth in Annex D hereto. (g) The Company shall have furnished to the Initial Purchasers a letter (the "Bring-Down Letter") of PricewaterhouseCoopers LLP, addressed to the Initial Purchasers and dated the Closing Date, (i) confirming that they are independent public accountants with respect to the Company and its subsidiaries within the meaning of 20 Rule 101 of the Code of Professional Conduct of the AICPA and its interpretations and rulings thereunder, (ii) stating, as of the date of the Bring-Down Letter (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the Offering Memorandum, as of a date not more than three business days prior to the date of the Bring-Down Letter), that the conclusions and findings of such accountants with respect to the financial information and other matters covered by the Initial Letter are accurate and (iii) confirming in all material respects the conclusions and findings set forth in the Initial Letter. (h) The Company shall have furnished to the Initial Purchasers a certificate, dated the Closing Date, of its Chief Executive Officer and its Chief Financial Officer and the Subsidiary Guarantor shall have furnished to the Initial Purchasers a certificate, dated the Closing Date, of its Chief Executive Officer and its Treasurer, in each case stating that (i) such officers have carefully examined the Offering Memorandum, (ii) in their opinion, the Offering Memorandum, as of its date, did not include any untrue statement of a material fact and did not omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and since the date of the Offering Memorandum, no event has occurred which should have been set forth in a supplement or amendment to the Offering Memorandum so that the Offering Memorandum (as so amended or supplemented) would not include any untrue statement of a material fact and would not omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, (iii) as of the Closing Date, the representations and warranties of the Company or the Subsidiary Guarantor, as applicable, in this Agreement are true and correct in all material respects, the Company or the Subsidiary Guarantor, as applicable, has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder on or prior to the Closing Date and (iv) with respect to officers of the Company only, subsequent to the date of the most recent financial statements contained in the Offering Memorandum, there has been no material adverse change in the financial position or results of operation of the Company or any of its subsidiaries, or any material change, or any material development including a prospective material change, in or affecting the condition (financial or otherwise), results of operations, business or prospects of the Company and its subsidiaries taken as a whole, which is not disclosed in the Offering Memorandum. (i) The Initial Purchasers shall have received a counterpart of the Registration Rights Agreement which shall have been executed and delivered by a duly authorized officer of the Company and the Subsidiary Guarantor. (j) The Indenture shall have been duly executed and delivered by the Company, the Subsidiary Guarantor and the Trustee, and the Securities shall have been duly executed and delivered by the Company and duly authenticated by the Trustee. (k) The Securities shall have been approved by the NASD for trading in the PORTAL Market. 21 (l) If any event shall have occurred that requires the Company under Section 4(d) to prepare an amendment or supplement to the Offering Memorandum, such amendment or supplement shall have been prepared, the Initial Purchasers shall have been given a reasonable opportunity to comment thereon, and copies thereof shall have been delivered to the Initial Purchasers reasonably in advance of the Closing Date. (m) There shall not have occurred any invalidation of Rule 144A under the Securities Act by any court or any withdrawal or proposed withdrawal of any rule or regulation under the Securities Act or the Exchange Act by the Commission or any amendment or proposed amendment thereof by the Commission which in the reasonable judgment of the Initial Purchasers would materially impair the ability of the Initial Purchasers to purchase, hold or effect resales of the Securities as contemplated hereby. (n) Subsequent to the execution and delivery of this Agreement or, if earlier, the dates as of which information is given in the Offering Memorandum (exclusive of any amendment or supplement thereto), there shall not have been any change in the capital stock or long-term debt (other than, with respect to long-term debt, the issuance of additional junior subordinated notes pursuant to the Lucent Note Purchase Agreement) or any change, or any development involving a prospective change, in or affecting the condition (financial or otherwise), results of operations, business or prospects of the Company and its subsidiaries taken as a whole, the effect of which, in any such case described above, is, in the reasonable judgment of the Initial Purchasers, so material and adverse as to make it impracticable or inadvisable to proceed with the sale or delivery of the Securities on the terms and in the manner contemplated by this Agreement and the Offering Memorandum (exclusive of any amendment or supplement thereto). (o) No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any governmental agency or body which would, as of the Closing Date, prevent the issuance or sale of the Securities in any jurisdiction in which issuance or sale of the Securities is contemplated by the Offering Memorandum; and no injunction, restraining order or order of any other nature by any federal or state court of competent jurisdiction shall have been issued as of the Closing Date which would prevent the issuance or sale of the Securities in any jurisdiction in which the issuance or sale of the Securities is contemplated by the Offering Memorandum. (p) Subsequent to the execution and delivery of this Agreement (i) no downgrading shall have occurred in the rating accorded the Securities or any of the Company's other debt securities or preferred stock by any "nationally recognized statistical rating organization", as such term is defined by the Commission for purposes of Rule 436(g)(2) of the rules and regulations of the Commission under the Securities Act, and (ii) no such organization shall have publicly announced that it has under surveillance or review (other than an announcement with positive implications of a possible upgrading), its rating of the Securities or any of the Company's other debt securities or preferred stock. (q) Subsequent to the execution and delivery of this Agreement there shall not have occurred any of the following: (i) trading in securities generally on the New York 22 Stock Exchange, the American Stock Exchange or the over-the-counter market shall have been suspended or limited, or minimum prices shall have been established on any such exchange or market by the Commission, by any such exchange or by any other regulatory body or governmental authority having jurisdiction, or trading in any securities of the Company on any exchange or in the over-the-counter market shall have been suspended, (ii) any moratorium on commercial banking activities shall have been declared by federal or New York state authorities, (iii) an outbreak or escalation of hostilities or a declaration by the United States of a national emergency or war or (iv) a material adverse change in general economic, political or financial conditions (or the effect of international conditions on the financial markets in the United States shall be such) the effect of which, in the case of this clause (iv), is, in the judgment of the Initial Purchasers, so material and adverse as to make it impracticable or inadvisable to proceed with the sale or the delivery of the Securities on the terms and in the manner contemplated by this Agreement and in the Offering Memorandum (exclusive of any amendment or supplement thereto). All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Initial Purchasers. 6. Termination. The obligations of the Initial Purchasers hereunder may be terminated by the Initial Purchasers, in their absolute discretion, by notice given to and received by the Company prior to delivery of and payment for the Securities if, prior to that time, any of the events described in Section 5(m), (n), (o), (p) or (q) shall have occurred and be continuing. 7. Defaulting Initial Purchasers. (a) If, on the Closing Date, any Initial Purchaser defaults in the performance of its obligations under this Agreement, the non-defaulting Initial Purchasers may make arrangements for the purchase of the Securities which such defaulting Initial Purchaser agreed but failed to purchase by other persons satisfactory to the Company and the non- defaulting Initial Purchasers, but if no such arrangements are made within 36 hours after such default, this Agreement shall terminate without liability on the part of the non-defaulting Initial Purchasers or the Company, except that the Company and the Subsidiary Guarantor will continue to be liable for the payment of expenses to the extent set forth in Sections 8 and 12 and except that the provisions of Sections 9 and 10 shall not terminate and shall remain in effect. As used in this Agreement, the term "Initial Purchasers" includes, for all purposes of this Agreement unless the context otherwise requires, any party not listed in Schedule 1 hereto that, pursuant to this Section 7, purchases Securities which a defaulting Initial Purchaser agreed but failed to purchase. (b) Nothing contained herein shall relieve a defaulting Initial Purchaser of any liability it may have to the Company or any non-defaulting Initial Purchaser for damages caused by its default. If other persons are obligated or agree to purchase the Securities of a defaulting Initial Purchaser, either the non-defaulting Initial Purchasers or the Company may postpone the Closing Date for up to seven full business days in order to effect any changes that in the opinion of counsel for the Company or counsel for the Initial Purchasers may be necessary in the Offering Memorandum or in any other document or arrangement, and the Company agrees to 23 promptly prepare any amendment or supplement to the Offering Memorandum that effects any such changes. 8. Reimbursement of Initial Purchasers' Expenses. If (a) this Agreement shall have been terminated pursuant to Section 6 or 7, (b) the Company shall fail to tender the Securities for delivery to the Initial Purchasers for any reason permitted under this Agreement or (c) the Initial Purchasers shall decline to purchase the Securities for any reason permitted under this Agreement, the Company and the Subsidiary Guarantor shall reimburse the Initial Purchasers for such out-of-pocket expenses (including reasonable fees and disbursements of counsel) as shall have been reasonably incurred by the Initial Purchasers in connection with this Agreement and the proposed purchase and resale of the Securities. If this Agreement is terminated pursuant to Section 7 by reason of the default of one or more of the Initial Purchasers, the Company and the Subsidiary Guarantor shall not be obligated to reimburse any defaulting Initial Purchaser on account of such expenses. 9. Indemnification. (a) The Company and the Subsidiary Guarantor shall jointly and severally indemnify and hold harmless each Initial Purchaser, its affiliates, their respective officers, directors, employees, representatives and agents, and each person, if any, who controls any Initial Purchaser within the meaning of the Securities Act or the Exchange Act (collectively referred to for purposes of this Section 9(a) and Section 10 as an Initial Purchaser), from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, without limitation, any loss, claim, damage, liability or action relating to purchases and sales of the Securities), to which that Initial Purchaser may become subject, whether commenced or threatened, under the Securities Act, the Exchange Act, any other federal or state statutory law or regulation, at common law or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Offering Memorandum or the Offering Memorandum or in any amendment or supplement thereto or in any information provided by the Company pursuant to Section 4(e) or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and shall reimburse each Initial Purchaser promptly upon demand for any legal or other expenses reasonably incurred by that Initial Purchaser in connection with investigating or defending or preparing to defend against or appearing as a third party witness in connection with any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company and the Subsidiary Guarantor shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, an untrue statement or alleged untrue statement in or omission or alleged omission from any of such documents in reliance upon and in conformity with any Initial Purchasers' Information; and provided, further, that with respect to any such untrue statement in or omission from the Preliminary Offering Memorandum, the indemnity agreement contained in this Section 9(a) shall not inure to the benefit of any such Initial Purchaser to the extent that the sale to the person asserting any such loss, claim, damage, liability or action was an initial resale by such Initial Purchaser and any such loss, claim, damage, liability or action of or with respect to such Initial Purchaser results from the fact that both (A) to the extent required by applicable law, a copy of the Offering Memorandum was not sent or given to such person at or prior to the written confirmation of the sale of such Securities to such person and (B) the untrue statement in or 24 omission from the Preliminary Offering Memorandum was corrected in the Offering Memorandum unless, in either case, such failure to deliver the Offering Memorandum was a result of non-compliance by the Company with Section 4(b). (b) Each Initial Purchaser, severally and not jointly, shall indemnify and hold harmless the Company, its affiliates, their respective officers, directors, employees, representatives and agents, and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act (collectively referred to for purposes of this Section 9(b) and Section 10 as the Company), from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which the Company may become subject, whether commenced or threatened, under the Securities Act, the Exchange Act, any other federal or state statutory law or regulation, at common law or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Offering Memorandum or the Offering Memorandum or in any amendment or supplement thereto or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with any Initial Purchasers' Information, and shall reimburse the Company promptly upon demand for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending or preparing to defend against or appearing as a third party witness in connection with any such loss, claim, damage, liability or action as such expenses are incurred. (c) Promptly after receipt by an indemnified party under this Section 9 of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party pursuant to Section 9(a) or 9(b), notify the indemnifying party in writing of the claim or the commencement of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Section 9 except to the extent that it has been prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and, provided, further, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 9. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 9 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that an indemnified party shall have the right to employ its own counsel in any such action, but the fees, expenses and other charges of such counsel for the indemnified party will be at the expense of such indemnified party unless (i) the employment of counsel by the indemnified party has been authorized in writing by the indemnifying party, (ii) the indemnified party has reasonably concluded (based upon advice of counsel to the indemnified party) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those 25 available to the indemnifying party, (iii) a conflict or potential conflict exists (based upon advice of counsel to the indemnified party) between the indemnified party and the indemnifying party (in which case the indemnifying party will not have the right to direct the defense of such action on behalf of the indemnified party) or (iv) the indemnifying party has not in fact employed counsel reasonably satisfactory to the indemnified party to assume the defense of such action within a reasonable time after receiving notice of the commencement of the action, in each of which cases the reasonable fees, disbursements and other charges of counsel will be at the expense of the indemnifying party or parties. It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm of attorneys (in addition to any local counsel) at any one time for all such indemnified party or parties. Each indemnified party, as a condition of the indemnity agreements contained in Sections 9(a) and 9(b), shall use all reasonable efforts to cooperate with the indemnifying party in the defense of any such action or claim. No indemnifying party shall be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with its written consent or if there be a final judgment for the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified party (which consent shall not be unreasonably withheld), effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. The obligations of the Company, the Subsidiary Guarantor and the Initial Purchasers in this Section 9 and in Section 10 are in addition to any other liability that the Company, the Subsidiary Guarantor or the Initial Purchasers, as the case may be, may otherwise have, including in respect of any breaches of representations, warranties and agreements made herein by any such party. 10. Contribution. If the indemnification provided for in Section 9 is unavailable or insufficient to hold harmless an indemnified party under Section 9(a) or 9(b), then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company and the Subsidiary Guarantor on the one hand and the Initial Purchasers on the other from the offering of the Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Subsidiary Guarantor on the one hand and the Initial Purchasers on the other with respect to the statements or omissions that resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Subsidiary Guarantor on the one hand and the Initial Purchasers on the other with respect to such offering shall be deemed to be in the same proportion as the total net proceeds from the offering of the Securities purchased under this Agreement (before deducting expenses) received by or on behalf of the Company and the 26 Subsidiary Guarantor, on the one hand, and the total discounts and commissions received by the Initial Purchasers with respect to the Securities purchased under this Agreement, on the other, bear to the total gross proceeds from the sale of the Securities under this Agreement. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to the Company or information supplied by the Company and the Subsidiary Guarantor on the one hand or to any Initial Purchasers' Information on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The Company, the Subsidiary Guarantor and the Initial Purchasers agree that it would not be just and equitable if contributions pursuant to this Section 10 were to be determined by pro rata allocation (even if the Initial Purchasers were treated as one entity for such purpose) or by any other method of allocation that does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section 10 shall be deemed to include, for purposes of this Section 10, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending or preparing to defend any such action or claim. Notwithstanding the provisions of this Section 10, no Initial Purchaser shall be required to contribute any amount in excess of the amount by which the total discounts and commissions received by such Initial Purchaser with respect to the Securities purchased by it under this Agreement exceeds the amount of any damages which such Initial Purchaser has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Initial Purchasers' obligations to contribute as provided in this Section 10 are several in proportion to their respective purchase obligations and not joint. 11. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the Initial Purchasers, the Company, the Subsidiary Guarantor and their respective successors. This Agreement and the terms and provisions hereof are for the sole benefit of only those persons, except as provided in Sections 9 and 10 with respect to affiliates, officers, directors, employees, representatives, agents and controlling persons of the Company, the Subsidiary Guarantor and the Initial Purchasers and in Section 4(e) with respect to holders and prospective purchasers of the Securities. Nothing in this Agreement is intended or shall be construed to give any person, other than the persons referred to in this Section 11, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. 12. Expenses. The Company and the Subsidiary Guarantor agree with the Initial Purchasers to pay (a) the costs incident to the authorization, issuance, sale, preparation and delivery of the Securities and any taxes payable in that connection; (b) the costs incident to the preparation, printing and distribution of the Preliminary Offering Memorandum, the Offering Memorandum and any amendments or supplements thereto; (c) the costs of reproducing and distributing each of the Transaction Documents; (d) the costs incident to the preparation, printing and delivery of the certificates evidencing the Securities, including stamp duties and transfer taxes, if any, payable upon issuance of the Securities; (e) the fees and expenses of the Company's counsel and independent accountants; (f) the fees and expenses of qualifying the 27 Securities under the securities laws of the several jurisdictions as provided in Section 4(h) and of preparing, printing and distributing Blue Sky Memoranda (including related fees and expenses of counsel for the Initial Purchasers); (g) any fees charged by rating agencies for rating the Securities; (h) the fees and expenses of the Trustee and any paying agent (including related fees and expenses of any counsel to such parties); (i) all expenses and application fees incurred in connection with the application for the inclusion of the Securities on the PORTAL Market and the approval of the Securities for book-entry transfer by DTC; and (j) all other costs and expenses incident to the performance of the obligations of the Company under this Agreement which are not otherwise specifically provided for in this Section 12; provided, however, that except as provided in this Section 12 and Section 8, the Initial Purchasers shall pay their own costs and expenses. 13. Survival. The respective indemnities, rights of contribution, representations, warranties and agreements of the Company, the Subsidiary Guarantor and the Initial Purchasers contained in this Agreement or made by or on behalf of the Company, the Subsidiary Guarantor or the Initial Purchasers pursuant to this Agreement or any certificate delivered pursuant hereto shall survive the delivery of and payment for the Securities and shall remain in full force and effect, regardless of any termination or cancelation of this Agreement or any investigation made by or on behalf of any of them or any of their respective affiliates, officers, directors, employees, representatives, agents or controlling persons. 14. Notices, etc. All statements, requests, notices and agreements hereunder shall be in writing, and: (a) if to the Initial Purchasers, shall be delivered or sent by mail or telecopy transmission to Chase Securities Inc., 270 Park Avenue, New York, New York 10017, Attention: R. David McDonough (telecopier no.: (212) 270-0994); or (b) if to the Company or the Subsidiary Guarantor, shall be delivered or sent by mail or telecopy transmission to the address of the Company set forth in the Offering Memorandum, Attention: Thomas H. Sullivan (telecopier no.: (703) 236-1376); provided that any notice to an Initial Purchaser pursuant to Section 9(c) shall also be delivered or sent by mail to such Initial Purchaser at its address set forth on the signature page hereof. Any such statements, requests, notices or agreements shall take effect at the time of receipt thereof. The Company shall be entitled to act and rely upon any request, consent, notice or agreement given or made on behalf of the Initial Purchasers by CSI. 15. Definition of Terms. For purposes of this Agreement, (a) the term "business day" means any day on which the New York Stock Exchange, Inc. is open for trading, (b) the term "subsidiary" has the meaning set forth in Rule 405 under the Securities Act and (c) except where otherwise expressly provided, the term "affiliate" has the meaning set forth in Rule 405 under the Securities Act. 16. Initial Purchasers' Information. The parties hereto acknowledge and agree that, for all purposes of this Agreement, the Initial Purchasers' Information consists solely of the statements concerning the Initial Purchasers contained in the third, fifth (but only the third 28 sentence thereof), eighth, ninth (but only the third and fourth sentences thereof) and tenth paragraphs under the heading "Plan of Distribution" in the Preliminary Offering Memorandum and the Offering Memorandum. 17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 18. Counterparts. This Agreement may be executed in one or more counterparts (which may include counterparts delivered by telecopier) and, if executed in more than one counterpart, the executed counterparts shall each be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. 19. Amendments. No amendment or waiver of any provision of this Agreement, nor any consent or approval to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto. 20. Headings. The headings herein are inserted for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement. If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to us a counterpart hereof, whereupon this instrument will become a binding agreement between the Company, the Subsidiary Guarantor and the several Initial Purchasers in accordance with its terms. Very truly yours, TELECORP PCS, INC., by /s/ Thomas H. Sullivan ------------------------------------- Name: Thomas H. Sullivan Title: Executive Vice President TELECORP COMMUNICATIONS, INC., by /s/ Thomas H. Sullivan ------------------------------------- Name: Thomas H. Sullivan Title: President Accepted: CHASE SECURITIES INC., by /s/ R. David McDonough -------------------------- Authorized Signatory Address for notices pursuant to Section 9(c): 1 Chase Plaza, 25th floor New York, New York 10081 Attention: Legal Department BT ALEX. BROWN INCORPORATED, by /s/ Sanjai Bijawat -------------------------- Authorized Signatory Address for notices pursuant to Section 9(c): 130 Liberty Street 30th Floor New York, New York 10006 LEHMAN BROTHERS INC., by /s/ Paul Zoidis --------------------------- Authorized Signatory Address for notices pursuant to Section 9(c): 3 World Financial Center 10th Floor New York, New York 10285 SCHEDULE 1 Principal Amount Initial Purchasers of Securities ------------------ ------------- Chase Securities Inc. $ 287,500,000 BT Alex. Brown Incorporated $ 143,750,000 Lehman Brothers Inc. $ 143,750,000 ------------- Total $ 575,000,000 ============= EXHIBIT A [Subsidiaries of the Company] EXHIBIT B Network Area/Licenses Part A: Licenses contributed by AT&T Wireless PCS Inc. pursuant to the Securities Purchase Agreement - ---------------------------------------------------------------------- Market Number Frequency Block License Description - ---------------------------------------------------------------------- M008 A Boston-Providence/1/,/2/ - ---------------------------------------------------------------------- M019 A St. Louis/1/,/2/ - ---------------------------------------------------------------------- M026 A Louisville-Lexington- Evansville/1/,/2/ - ---------------------------------------------------------------------- M040 A Little Rock/2/ - ---------------------------------------------------------------------- M028 B Memphis-Jackson/1/,/2/ - ---------------------------------------------------------------------- Part B: Licenses held by TeleCorp Holding - ----------------------------------------------------------------------- Market Number Frequency Block License Description - ----------------------------------------------------------------------- B034 F Beaumont-Port Arthur, TX - ----------------------------------------------------------------------- B257 F Little Rock, AR - ----------------------------------------------------------------------- B290 F Memphis, TN - ----------------------------------------------------------------------- B320 F New Orleans, LA - ----------------------------------------------------------------------- /1/ Contribution includes only a portion of the geographic area in the referenced market as detailed in Schedule 2.1 to the Securities Purchase Agreement. /2/ Contribution includes only a portion of the spectrum in the referenced frequency block. Part C: Licenses purchased from AT&T Wireless PCS Inc. pursuant to the License Purchase Agreement dated as of January 23, 1998, between the Company and AT&T Wireless PCS Inc. - ---------------------------------------------------------------------- Market Number Frequency Block License Description - ---------------------------------------------------------------------- B032 D Baton Rouge, LA - ---------------------------------------------------------------------- B236 D Lafayette-New Iberia - ---------------------------------------------------------------------- B320 D New Orleans, LA - ---------------------------------------------------------------------- Part D: Licenses acquired from Digital PCS, L.L.C. - --------------------------------------------------------------------------- Market Number Frequency Block License Description - --------------------------------------------------------------------------- B032 F Baton Rouge, LA - --------------------------------------------------------------------------- B180 F Hammond, LA - --------------------------------------------------------------------------- B195 F Houma-Thibodeaux, LA - --------------------------------------------------------------------------- B236 F Lafayette-New Iberia, LA - --------------------------------------------------------------------------- Part E: License to be acquired from AT&T Corporation - ------------------------------------------------------------------------------ Market Number Frequency Block License Description - ------------------------------------------------------------------------------ M025 A Puerto Rico - U.S. Virgin Islands/2/ - ------------------------------------------------------------------------------ Part F: Licenses to be acquired from Wireless 2000, Inc. - ----------------------------------------------------------------- Market Number Frequency Block License Description - ----------------------------------------------------------------- B009 C Alexandria, LA/2/ - ----------------------------------------------------------------- B238 C Lake Charles, LA/2/ - ----------------------------------------------------------------- B304 C Monroe, LA/2/ - ----------------------------------------------------------------- EX-10.19 34 EXCHANGE & REGISTRATIONS RIGHTS AGMT EXHIBIT 10.19 ------------- EXECUTION COPY TELECORP PCS, INC $575,000,000 11 5/8 Senior Subordinated Discount Notes due 2009 EXCHANGE AND REGISTRATION RIGHTS AGREEMENT April 23, 1999 CHASE SECURITIES INC. BT ALEX. BROWN INCORPORATED LEHMAN BROTHERS INC. c/o Chase Securities Inc. 270 Park Avenue, 4th floor New York, New York 10017 Ladies and Gentlemen: TeleCorp PCS, Inc., a Delaware corporation (the "Company"), proposes to issue and sell to Chase Securities Inc. ("CSI"), BT Alex. Brown Incorporated and Lehman Brothers Inc. (together with CSI, the "Initial Purchasers"), upon the terms and subject to the conditions set forth in a purchase agreement dated April 20, 1999 (the "Purchase Agreement"), $575,000,000 aggregate principal amount at maturity of its 11 5/8 Senior Subordinated Discount Notes due 2009 (the "Securities") to be guaranteed on a senior subordinated basis by TeleCorp Communications, Inc., a subsidiary of the Company (the "Subsidiary Guarantor"). Capitalized terms used but not defined herein shall have the meanings given to such terms in the Purchase Agreement. As an inducement to the Initial Purchasers to enter into the Purchase Agreement and in satisfaction of a condition to the obligations of the Initial Purchasers thereunder, the Company and the Subsidiary Guarantor agree with the Initial Purchasers, for the benefit of the holders (including and the Market Maker (as defined below)) of the Securities, the Exchange Securities (as defined herein) and the Private Exchange Securities (as defined herein) (collectively, the "Holders"), as follows: 1. Registered Exchange Offer. The Company and the Subsidiary Guarantor shall (i) prepare and, not later than 60 days following the date of original issuance of the Securities (the "Issue Date"), file with the Commission a registration statement (the "Exchange Offer Registration Statement") on an appropriate form under the Securities Act with respect to a proposed offer to the Holders of the Securities (the "Registered Exchange Offer") who are not prohibited by applicable law or interpretations thereof by the Commission's staff from 2 participating in the Registered Exchange Offer to issue and deliver to such Holders, in exchange for the Securities, a like aggregate principal amount of debt securities of the Company (the "Exchange Securities") that are identical in all material respects to the Securities, except for the transfer restrictions and registration rights relating to the Securities, (ii) use their reasonable best efforts to cause the Exchange Offer Registration Statement to become effective under the Securities Act no later than 180 days after the Issue Date and the Registered Exchange Offer to be consummated no later than 210 days after the Issue Date and (iii) keep the Exchange Offer Registration Statement effective for not less than 30 days (or longer, if required by applicable law) after the date on which notice of the Registered Exchange Offer is mailed to the Holders (such period being called the "Exchange Offer Registration Period"). The Exchange Securities will be issued under the Indenture or an indenture (the "Exchange Securities Indenture") among the Company, the Subsidiary Guarantor and the Trustee or such other bank or trust company that is reasonably satisfactory to the Initial Purchasers, as trustee (the "Exchange Securities Trustee"), such indenture to be identical in all material respects to the Indenture, except for the transfer restrictions and registration rights relating to the Securities (as described above). All references in this Agreement to "Registration Statement" and "prospectus" shall, except where the context otherwise requires, include any Registration Statement (or amendment or supplement thereto) and prospectus (or amendment thereto), respectively, filed with the Commission pursuant to Section 6 of this Agreement. Upon the effectiveness of the Exchange Offer Registration Statement, the Company shall promptly commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder electing to exchange Securities for Exchange Securities (assuming that such Holder (a) is not an affiliate of the Company or an Exchanging Dealer (as defined herein) not complying with the requirements of the next sentence, (b) is not an Initial Purchaser holding Securities that have, or that are reasonably likely to have, the status of an unsold allotment in an initial distribution, (c) acquires the Exchange Securities in the ordinary course of such Holder's business, (d) has no arrangements or understandings with any person to participate in the distribution of the Exchange Securities and (e) is not otherwise prohibited by applicable law or interpretations thereof by the Commission's staff from participating in the Registered Exchange Offer) and to trade such Exchange Securities from and after their receipt without any limitations or restrictions under the Securities Act and without material restrictions under the securities laws of the several states of the United States. The Company, the Subsidiary Guarantor, the Initial Purchasers and each Exchanging Dealer acknowledge that, pursuant to current interpretations by the Commission's staff of Section 5 of the Securities Act, (i) each Holder that is a broker-dealer electing to exchange Securities, acquired for its own account as a result of market-making activities or other trading activities, for Exchange Securities (an "Exchanging Dealer"), is required to deliver a prospectus containing substantially the information set forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan of Distribution" section of such prospectus in connection with a sale of any such Exchange Securities received by such Exchanging Dealer pursuant to the Registered Exchange Offer and (ii) if an Initial Purchaser elects to sell Exchange Securities acquired in exchange for Securities constituting any portion of an unsold allotment, such Initial Purchaser is required to deliver a prospectus containing the information required by Item 507 and 508 of Regulation S-K under the Securities Act, as applicable, in connection with such sale. 3 If, prior to the consummation of the Registered Exchange Offer, any Holder holds any Securities acquired by it that have, or that are reasonably likely to be determined to have, the status of an unsold allotment in an initial distribution, or any Holder is not entitled to participate in the Registered Exchange Offer, the Company shall, upon the request of any such Holder, simultaneously with the delivery of the Exchange Securities in the Registered Exchange Offer, issue and deliver to any such Holder, in exchange for the Securities held by such Holder (the "Private Exchange"), a like aggregate principal amount of debt securities of the Company (the "Private Exchange Securities") that are identical in all material respects to the Exchange Securities, except for the transfer restrictions relating to such Private Exchange Securities. The Private Exchange Securities will be issued under the same indenture as the Exchange Securities, and the Company shall use commercially reasonable best efforts to cause the Private Exchange Securities to bear the same CUSIP number as the Exchange Securities. In connection with the Registered Exchange Offer, the Company shall: (a) mail to each Holder a copy of the prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents; (b) keep the Registered Exchange Offer open for not less than 30 days (or longer, if required by applicable law) after the date on which notice of the Registered Exchange Offer is mailed to the Holders; (c) utilize the services of a depositary (which may be the Trustee or an affiliate of the Trustee) for the Registered Exchange Offer with an address in the Borough of Manhattan, The City of New York; (d) permit Holders to withdraw tendered Securities at any time prior to the close of business, New York City time, on the last business day on which the Registered Exchange Offer shall remain open; and (e) otherwise comply in all respects with all laws that are applicable to the Registered Exchange Offer. As soon as practicable after the close of the Registered Exchange Offer and any Private Exchange, as the case may be, the Company shall: (a) accept for exchange all Securities validly tendered and not withdrawn pursuant to the Registered Exchange Offer and the Private Exchange; (b) deliver to the Trustee for cancelation all Securities so accepted for exchange; and (c) cause the Trustee or the Exchange Securities Trustee, as the case may be, promptly to authenticate and deliver to each Holder, Exchange Securities or Private Exchange Securities, as the case may be, equal in principal amount to the Securities of such Holder so accepted for exchange. 4 The Company shall use its reasonable best efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the prospectus contained therein in order to permit such prospectus to be used by all persons subject to the prospectus delivery requirements of the Securities Act for such period of time as such persons must comply with such requirements in order to resell the Exchange Securities; provided that (i) in the case where such prospectus and any amendment or supplement thereto must be delivered by an Exchanging Dealer, such period shall be the lesser of 180 days and the date on which all Exchanging Dealers have sold all Exchange Securities held by them and (ii) the Company shall make such prospectus and any amendment or supplement thereto available to any broker-dealer for use in connection with any resale of any Exchange Securities for a period of not less than 90 days after the consummation of the Registered Exchange Offer. The Indenture or the Exchange Securities Indenture, as the case may be, shall provide that the Securities, the Exchange Securities and the Private Exchange Securities shall vote and consent together on all matters as one class and that none of the Securities, the Exchange Securities or the Private Exchange Securities will have the right to vote or consent as a separate class on any matter. Interest on each Exchange Security and Private Exchange Security issued pursuant to the Registered Exchange Offer and in the Private Exchange will accrue from the last interest payment date on which interest was paid on the Securities surrendered in exchange therefor or, if no interest has been paid on the Securities, from the Issue Date. Each Holder participating in the Registered Exchange Offer shall be required to represent to the Company that at the time of the consummation of the Registered Exchange Offer (i) any Exchange Securities received by such Holder will be acquired in the ordinary course of business, (ii) such Holder will have no arrangements or understanding with any person to participate in the distribution of the Securities or the Exchange Securities within the meaning of the Securities Act, (iii) such Holder is not an affiliate of the Company or, if it is such an affiliate, such Holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable, (iv) if such Holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of the Exchange Securities and (v) if such Holder is a broker-dealer, that it will receive Exchange Securities for its own account in exchange for Securities that were acquired as a result of market- making activities or other trading activities and that it will deliver a prospectus in connection with any resale of such Exchange Securities. Notwithstanding any other provisions hereof, the Company and the Subsidiary Guarantor will ensure that (i) any Exchange Offer Registration Statement and any amendment thereto and any prospectus forming part thereof and any supplement thereto complies in all material respects with the Securities Act and the rules and regulations of the Commission thereunder, (ii) any Exchange Offer Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Exchange Offer Registration Statement, and any supplement to such prospectus, does not, as of the consummation of the Registered 5 Exchange Offer, include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 2. Shelf Registration. If (i) because of any change in applicable law or interpretations thereof by the Commission's staff the Company is not permitted to effect the Registered Exchange Offer as contemplated by Section 1 hereof or (ii) any Securities validly tendered pursuant to the Registered Exchange Offer are not exchanged for Exchange Securities within 210 days after the Issue Date or (iii) any Initial Purchaser so requests with respect to Securities or Private Exchange Securities not eligible to be exchanged for Exchange Securities in the Registered Exchange Offer and held by it following the consummation of the Registered Exchange Offer or (iv) any applicable law or interpretations thereof by the Commission's staff do not permit any Holder to participate in the Registered Exchange Offer or (v) any Holder that participates in the Registered Exchange Offer does not receive freely transferable Exchange Securities in exchange for tendered Securities or (vi) the Company so elects, then the following provisions shall apply: (a) the Company and the Subsidiary Guarantor shall use their reasonable best efforts to file as promptly as practicable (but in no event more than 45 days after so required or requested pursuant to this Section 2) with the Commission, and thereafter shall use their reasonable best efforts to cause to be declared effective, a shelf registration statement on an appropriate form under the Securities Act relating to the offer and sale of the Transfer Restricted Securities (as defined below) by the Holders thereof from time to time in accordance with the methods of distribution set forth in such registration statement (hereafter, a "Shelf Registration Statement" and, together with any Exchange Offer Registration Statement, a "Registration Statement"); provided that no Holder (other than an Initial Purchaser) shall be entitled to have the Securities held by it covered by such Shelf Registration Statement unless such Holder agrees in writing to be bound by all the provisions of this Agreement applicable to such Holder. (b) The Company and the Subsidiary Guarantor shall use their reasonable best efforts to keep the Shelf Registration Statement continuously effective in order to permit the prospectus forming part thereof to be used by Holders of Transfer Restricted Securities for a period ending on the earlier of (i) two years from the Issue Date or such shorter period that will terminate when all the Transfer Restricted Securities covered by the Shelf Registration Statement have been sold pursuant thereto and (ii) the date on which the Securities become eligible for resale without volume restrictions pursuant to Rule 144 under the Securities Act (in any such case, such period being called the "Shelf Registration Period"). The Company and the Subsidiary Guarantor shall be deemed not to have used their reasonable best efforts to keep the Shelf Registration Statement effective during the requisite period if any of them voluntarily take any action that would result in Holders of Transfer Restricted Securities covered thereby not being able to offer and sell such Transfer Restricted Securities during that period, unless (i) such action is required by applicable law or (ii) such action is 6 taken by the Company and the Subsidiary Guarantor in good faith and for valid business reasons (not including avoidance of their obligations hereunder), provided that the Company and the Subsidiary Guarantor within 90 days thereafter comply with the requirements of Section 4(j) hereof. Any such period during which the Company and the Subsidiary Guarantor fail to keep the Shelf Registration Statement effective and usable for offers and sales of Securities, Private Exchange Securities and Exchange Securities is referred to as a "Suspension Period". A Suspension Period shall commence on and include the date the Company and the Subsidiary Guarantor give notice that the Shelf Registration Statement is no longer effective or the prospectus included therein is no longer usable for offers and sales of Securities, Private Exchange Securities and Exchange Securities and shall end on the date when each Holder of Securities, Private Exchange Securities and Exchange Securities covered by such Shelf Registration Statement either receives the copies of the supplemented or amended prospectus contemplated by Section 4(j) hereof or is advised in writing by the Company and the Subsidiary Guarantor that use of the prospectus may be resumed. Not more than one Suspension Period shall be permitted in any period of 360 consecutive days. If one or more Suspension Periods occur, the two-year time period referenced above shall be extended by the number of days included in each such Suspension Period. (c) Notwithstanding any other provisions hereof, the Company and the Subsidiary Guarantor will ensure that (i) any Shelf Registration Statement and any amendment thereto and any prospectus forming part thereof and any supplement thereto complies in all material respects with the Securities Act and the rules and regulations of the Commission thereunder, (ii) any Shelf Registration Statement and any amendment thereto (in either case, other than with respect to information included therein in reliance upon or in conformity with written information furnished to the Company by or on behalf of any Holder specifically for use therein (the "Holders' Information")) does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Shelf Registration Statement, and any supplement to such prospectus (in either case, other than with respect to Holders' Information), does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 3. Liquidated Damages. (a) The parties hereto agree that the Holders of Transfer Restricted Securities will suffer damages if the Company and the Subsidiary Guarantor fails to fulfill their obligations under Section 1 or Section 2, as applicable, and that it would not be feasible to ascertain the extent of such damages. Accordingly, if (i) the applicable Registration Statement is not filed with the Commission on or prior to 60 days after the Issue Date, (ii) the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, is not declared effective within 180 days after the Issue Date (or in the case of a Shelf Registration Statement required to be filed in response to a change in applicable law or 7 interpretations thereof by the Commission's staff, if later, within 45 days after publication of the change in law or interpretation), (iii) the Registered Exchange Offer is not consummated on or prior to 210 days after the Issue Date, or (iv) the Shelf Registration Statement is filed and declared effective within 180 days after the Issue Date (or in the case of a Shelf Registration Statement required to be filed in response to a change in applicable law or interpretations thereof by the Commission's staff, if later, within 45 days after publication of the change in law or interpretation) but shall thereafter cease to be effective (at any time that the Company is obligated to maintain the effectiveness thereof) without being succeeded within 30 days by an additional Registration Statement filed and declared effective (each such event referred to in clauses (i) through (iv), a "Registration Default"), the Company and the Subsidiary Guarantor will be jointly and severally obligated to pay liquidated damages to each Holder of Transfer Restricted Securities, during the period of one or more such Registration Defaults, in an amount equal to $ 0.192 per week per $1,000 of Accreted Value (as defined in the Indenture) of Transfer Restricted Securities held by such Holder until (i) the applicable Registration Statement is filed, (ii) the Exchange Offer Registration Statement is declared effective and the Registered Exchange Offer is consummated, (iii) the Shelf Registration Statement is declared effective or (iv) the Shelf Registration Statement again becomes effective, as the case may be. Following the cure of all Registration Defaults, the accrual of liquidated damages will cease. As used herein, the term "Transfer Restricted Securities" means (i) each Security until the date on which such Security has been exchanged for a freely transferable Exchange Security in the Registered Exchange Offer, (ii) each Security or Private Exchange Security until the date on which it has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (iii) each Security or Private Exchange Security until the date on which it is distributed to the public pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act. Notwithstanding anything to the contrary in this Section 3(a), the Company and the Subsidiary Guarantor shall not be required to pay liquidated damages to a Holder of Transfer Restricted Securities if such Holder failed to comply with its obligations to make the representations set forth in the second to last paragraph of Section 1 or failed to provide the information required to be provided by it, if any, pursuant to Section 4(n). (b) The Company shall notify the Trustee and the Paying Agent under the Indenture with three business day of the happening of each and every Registration Default. The Company and the Subsidiary Guarantor shall pay the liquidated damages due on the Transfer Restricted Securities by depositing with the Paying Agent (which may not be the Company for these purposes), in trust, for the benefit of the Holders thereof, prior to 10:00 a.m., New York City time, on the next interest payment date specified by the Indenture and the Securities, sums sufficient to pay the liquidated damages then due. The liquidated damages due shall be payable on each interest payment date specified by the Indenture and the Securities to the record holder entitled to receive the interest payment to be made on such date. Each obligation to pay liquidated damages shall be deemed to accrue from and including the date of the applicable Registration Default. (c) The parties hereto agree that the liquidated damages provided for in this Section 3 constitute a reasonable estimate of and are intended to constitute the sole damages that will be suffered by Holders of Transfer Restricted Securities by reason of 8 the failure of (i) the Shelf Registration Statement or the Exchange Offer Registration Statement to be filed, (ii) the Shelf Registration Statement to remain effective or (iii) the Exchange Offer Registration Statement to be declared effective and the Registered Exchange Offer to be consummated, in each case to the extent required by this Agreement. 4. Registration Procedures. In connection with any Registration Statement, the following provisions shall apply: (a) The Company shall (i) furnish to each Initial Purchaser, prior to the filing thereof with the Commission, a copy of the Registration Statement and each amendment thereof and each supplement, if any, to the prospectus included therein and shall, in its reasonable judgment, use its reasonable best efforts to reflect in each such document, when so filed with the Commission, such comments as any Initial Purchaser may reasonably propose; (ii) include information substantially to the effect set forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan of Distribution" section of the prospectus forming a part of the Exchange Offer Registration Statement, and include information substantially to the effect set forth in Annex D hereto in the Letter of Transmittal delivered pursuant to the Registered Exchange Offer; and (iii) if requested by any Initial Purchaser, include the information required by Item 507 or 508 of Regulation S-K, as applicable, in the prospectus forming a part of the Exchange Offer Registration Statement. (b) The Company shall advise each Initial Purchaser, each Exchanging Dealer and the Holders (if applicable) and, if requested by any such person, confirm such advice in writing (which advice pursuant to clause (ii) through (v) hereof shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made): (i) when any Registration Statement and any amendment thereto has been filed with the Commission and when such Registration Statement or any post-effective amendment thereto has become effective; (ii) of any request by the Commission for amendments or supplements to any Registration Statement or the prospectus included therein or for additional information; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Securities, the Exchange Securities or the Private Exchange Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and 9 (v) of the happening of any event that requires the making of any changes so that the Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or any prospectus forming part of any Registration Statement, and any supplement to such prospectus, does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (c) If any event contemplated by clauses (ii) through (v) of Section 4 occurs during the period for which the Company and the Subsidiary Guarantor are required to maintain an effective Registration Statement, the Company and the Subsidiary Guarantor will as promptly as is practicable prepare and file with the Commission a post-effective amendment to the Registration Statement or a supplement to the related prospectus or file any other required document so that, as thereafter delivered to purchasers of the Securities, Exchange Securities or Private Exchange Securities from a Holder, the prospectus will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (d) The Company and the Subsidiary Guarantor will use all reasonable efforts to obtain the withdrawal at the earliest possible time of any order suspending the effectiveness of any Registration Statement. (e) The Company will furnish to each Holder of Transfer Restricted Securities included within the coverage of any Shelf Registration Statement, without charge, one conformed copy of such Shelf Registration Statement and any post-effective amendment thereto, including financial statements and schedules and, if any such Holder so requests in writing, all exhibits thereto (including those, if any, incorporated by reference) and as many conformed copies of such Registration Statement as such Holder reasonably requests. (f) The Company will, during the Shelf Registration Period, promptly deliver to each Holder of Transfer Restricted Securities included within the coverage of any Shelf Registration Statement, without charge, as many copies of the prospectus (including each preliminary prospectus) included in such Shelf Registration Statement and any amendment or supplement thereto as such Holder may reasonably request; and the Company and the Subsidiary Guarantor consent to the use of such prospectus or any amendment or supplement thereto by each of the selling Holders of Transfer Restricted Securities in connection with the lawful offer and sale of the Transfer Restricted Securities covered by such prospectus or any amendment or supplement thereto. (g) The Company will furnish to each Initial Purchaser and each Exchanging Dealer, and to any other Holder who so requests, without charge, one conformed copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules and, if any Initial Purchaser or Exchanging 10 Dealer or any such Holder so requests in writing, all exhibits thereto (including those, if any, incorporated by reference) and as many conformed copies of such Exchange Offer Registration Statement as such Holder reasonably requests. (h) The Company will, during the Exchange Offer Registration Period or the Shelf Registration Period, as applicable, promptly deliver to each Initial Purchaser, each Exchanging Dealer and such other persons that are required to deliver a prospectus following the Registered Exchange Offer, without charge, as many copies of the final prospectus included in the Exchange Offer Registration Statement or the Shelf Registration Statement and any amendment or supplement thereto as such Initial Purchaser, Exchanging Dealer or other persons may reasonably request; and the Company and the Subsidiary Guarantor consent to the use of such prospectus or any amendment or supplement thereto by any such Initial Purchaser, Exchanging Dealer or other persons, as applicable, as aforesaid. (i) Prior to the effective date of any Registration Statement, the Company and the Subsidiary Guarantor will use commercially reasonable best efforts to register or qualify, or cooperate with the Holders of Securities, Exchange Securities or Private Exchange Securities included therein and their respective counsel in connection with the registration or qualification of, such Securities, Exchange Securities or Private Exchange Securities for offer and sale under the securities or blue sky laws of such jurisdictions as any such Holder reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Securities, Exchange Securities or Private Exchange Securities covered by such Registration Statement; provided that the Company and the Subsidiary Guarantor will not be required to qualify generally to do business in any jurisdiction where they are not then so qualified or to take any action which would subject them to general service of process or to taxation in any such jurisdiction where they are not then so subject. (j) The Company and the Subsidiary Guarantor will reasonably cooperate with the Holders of Securities, Exchange Securities or Private Exchange Securities to facilitate the timely preparation and delivery of certificates representing Securities, Exchange Securities or Private Exchange Securities to be sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as the Holders thereof may request in writing prior to sales of Securities, Exchange Securities or Private Exchange Securities pursuant to such Registration Statement. (k) If any event contemplated by Section 4(b)(ii) through (v) occurs during the period for which the Company and the Subsidiary Guarantor are required to maintain an effective Registration Statement, the Company and the Subsidiary Guarantor will as promptly as is practicable prepare and file with the Commission a post-effective amendment to the Registration Statement or a supplement to the related prospectus or file any other required document so that, as thereafter delivered to purchasers of the Securities, Exchange Securities or Private Exchange Securities from a Holder, the prospectus will not include an untrue statement of a material fact or omit to state a 11 material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (l) Not later than the effective date of the applicable Registration Statement, the Company will provide a CUSIP number for the Securities, the Exchange Securities and the Private Exchange Securities, as the case may be, and provide the applicable trustee with printed certificates for the Securities, the Exchange Securities or the Private Exchange Securities, as the case may be, in a form eligible for deposit with The Depository Trust Company. (m) The Company and the Subsidiary Guarantor will comply with all applicable rules and regulations of the Commission and the Company will make generally available to its security holders as soon as practicable after the effective date of the applicable Registration Statement an earning statement satisfying the provisions of Section 11(a) of the Securities Act; provided that in no event shall such earning statement be delivered later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the applicable Registration Statement, which statement shall cover such 12- month period. (n) The Company and the Subsidiary Guarantor will cause the Indenture or the Exchange Securities Indenture, as the case may be, to be qualified under the Trust Indenture Act as required by applicable law in a timely manner. (o) The Company may require each Holder of Transfer Restricted Securities to be registered pursuant to any Shelf Registration Statement to furnish to the Company such information concerning the Holder and the distribution of such Transfer Restricted Securities as the Company may from time to time reasonably require for inclusion in such Shelf Registration Statement, and the Company may exclude from such registration the Transfer Restricted Securities of any Holder that fails to furnish such information within a reasonable time after receiving such request. (p) In the case of a Shelf Registration Statement, each Holder of Transfer Restricted Securities to be registered pursuant thereto agrees by acquisition of such Transfer Restricted Securities that, upon receipt of any notice from the Company pursuant to Section 4(b)(ii) through (v), such Holder will discontinue disposition of such Transfer Restricted Securities until such Holder's receipt of copies of the supplemental or amended prospectus contemplated by Section 4(j) or until advised in writing (the "Advice") by the Company that the use of the applicable prospectus may be resumed. If the Company shall give any notice under Section 4(b)(ii) through (v) during the period that the Company is required to maintain an effective Registration Statement (the "Effectiveness Period"), such Effectiveness Period shall be extended by the number of days during such period from and including the date of the giving of such notice to and including the date when each seller of Transfer Restricted Securities covered by such Registration Statement shall have received (x) the copies of the supplemental or amended prospectus contemplated by Section 4(j) (if an amended or supplemental 12 prospectus is required) or (y) the Advice (if no amended or supplemental prospectus is required). (q) In the case of a Shelf Registration Statement, the Company and the Subsidiary Guarantor shall enter into such customary agreements (including, if requested, an underwriting agreement in customary form and reasonably acceptable to the Company) and take all such other action, if any, as Holders of a majority in aggregate principal amount of the Securities, Exchange Securities and Private Exchange Securities being sold or the managing underwriters (if any) shall reasonably request in order to facilitate any disposition of Securities, Exchange Securities or Private Exchange Securities pursuant to such Shelf Registration Statement. (r) In the case of a Shelf Registration Statement, the Company shall (i) make reasonably available for inspection by a representative of, and Special Counsel (as defined below) acting for, Holders of a majority in aggregate principal amount of the Securities, Exchange Securities and Private Exchange Securities being sold and any underwriter participating in any disposition of Securities, Exchange Securities or Private Exchange Securities pursuant to such Shelf Registration Statement, all relevant financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries and (ii) use its reasonable best efforts to have its officers, directors, employees, accountants and counsel supply all relevant information reasonably requested by such representative, Special Counsel or any such underwriter (an "Inspector") in connection with such Shelf Registration Statement. (s) In the case of a Shelf Registration Statement, the Company shall, if requested by Holders of a majority in aggregate principal amount of the Securities, Exchange Securities and Private Exchange Securities being sold, their Special Counsel or the managing underwriters (if any) in connection with such Shelf Registration Statement, use its reasonable best efforts to cause (i) its counsel to deliver an opinion relating to the Shelf Registration Statement and the Securities, Exchange Securities or Private Exchange Securities, as applicable, substantially in the form delivered by counsel for the Company in connection with the issuance and sale of the Securities, (ii) its officers to execute and deliver all customary documents and certificates requested by Holders of a majority in aggregate principal amount of the Securities, Exchange Securities and Private Exchange Securities being sold, their Special Counsel or the managing underwriters (if any) and (iii) its independent public accountants to provide a comfort letter or letters in customary form, subject to receipt of appropriate documentation as contemplated, and only if permitted, by Statement of Auditing Standards No. 72. 5. Registration Expenses. The Company and the Subsidiary Guarantor will jointly and severally bear all expenses incurred in connection with the performance of their obligations under Sections 1, 2, 3 and 4 and the Company will reimburse the Initial Purchasers and the Holders for the reasonable fees and disbursements of one firm of attorneys (in addition to any local counsel) chosen by the Holders of a majority in aggregate principal amount of the Securities, the Exchange Securities and the Private Exchange Securities to be sold pursuant to 13 each Registration Statement (the "Special Counsel") acting for the Initial Purchasers or Holders in connection therewith. 6. Market-Making. (a) For so long as any of the Securities, Exchange Securities or Private Exchange Securities are outstanding and (i) Chase Securities Inc. (the "Market Maker") or any of its affiliates owns any equity securities of the Company and proposes to make a market in the Securities, Exchange Securities or Private Exchange Securities as part of its business in the ordinary course and (ii) in the judgment of the Market Maker or the Company, applicable law requires the delivery of a prospectus in connection with such market-making activities, the following provisions shall apply for the sole benefit of the Market Maker: (i) The Company and the Subsidiary Guarantor shall (A) on the date that the Exchange Offer Registration Statement is filed with the Commission, file a registration statement (the "Market-Making Registration Statement") (which may be the Exchange Offer Registration Statement or the Shelf Registration Statement if permitted by the rules and regulations of the Commission) and use their reasonable best efforts to cause such Market-Making Registration Statement to be declared effective by the Commission on or prior to the consummation of the Exchange Offer; (B) periodically amend such Market-Making Registration Statement so that the information contained therein complies with the requirements of Section 10(a) under the Securities Act; (C) within 45 days following the end of each of the Company=s fiscal quarters, file a supplement to the prospectus contained in the Market-Making Registration Statement that sets forth the financial results of the Company for such quarter; (D) amend the Market-Making Registration Statement or supplement the related prospectus contained therein when necessary to reflect any material changes in the information provided therein; and (E) amend the Market-Making Registration Statement when required to do so in order to comply with Section 10(a)(3) of the Securities Act; provided, however, that (1) ----------------- prior to filing the Market-Making Registration Statement, any amendment thereto or any supplement to the prospectus contained therein, the Company will furnish to the Market Maker copies of all such documents proposed to be filed, which documents will be subject to the review of the Market-Maker and its counsel, (2) the Company and the Subsidiary Guarantor will not file the Market-Making Registration Statement, any amendment thereto or any supplement to the prospectus contained therein to which the Market-Maker and its counsel shall reasonably object unless the Company is advised by counsel that such Market-Making Registration Statement, amendment or supplement is required to be filed in order to maintain the effectiveness of such Market-Making Registration Statement and (3) the Company will provide the Market Maker and its counsel with copies of the Market-Making Registration Statement and each amendment and supplement filed. (ii) Promptly upon the Company satisfying the eligibility criteria for use of Form S-3 under the Securities Act, the Company and the Subsidiary Guarantor shall file a post-effective amendment to the Market-Making 14 Registration Statement to convert it from a Form S-1 to a Form S-3 registration statement. (iii) The Company shall notify the Market-Maker, and, if requested by the Market Maker, confirm such advice in writing, (A) when any post-effective amendment to the Market-Making Registration Statement or any amendment or supplement to the related prospectus has been filed, and, with respect to any post-effective amendment, when the same has become effective; (B) of any request by the Commission for any post-effective amendment to the Market-Making Registration Statement, any supplement or amendment to the related prospectus or for additional information; (C) the issuance by the Commission of any stop order suspending the effectiveness of the Market-Making Registration Statement or the initiation of any proceedings for that purpose; (D) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceedings for such purpose; (E) of the happening of any event that causes (1) the Market-Making Registration Statement to contain an untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or (2) the prospectus contained in the Market Making Registration Statement to contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (F) of any advice from a nationally recognized statistical rating organization that such organization has placed the Company under surveillance or review with negative implications or has determined to downgrade the rating of the Securities, Exchange Securities or Private Exchange Securities or any other debt obligation of the Company whether or not such downgrade shall have been publicly announced. (iv) If any event contemplated by Section 6(a)(iii)(B) through (E) occurs during the period for which the Company and the Subsidiary Guarantor are required to maintain an effective Market-Making Registration Statement, the Company and the Subsidiary Guarantor shall promptly prepare and file with the Commission a post-effective amendment to the Market-Making Registration Statement or a supplement to the related prospectus or file any other required document so that the prospectus will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (v) In the event of the issuance of any stop order suspending the effectiveness of the Market-Making Registration Statement or of any order suspending the qualification of the Securities, Exchange Securities or Private Exchange Securities for sale in any jurisdiction, the Company and the Subsidiary Guarantor shall use their reasonable best efforts to obtain its withdrawal promptly. 15 (vi) The Company shall furnish to the Market Maker, without charge, (A) at least one conformed copy of the Market-Making Registration Statement and any post-effective amendment thereto and (B) as many copies of the related prospectus and any amendment or supplement thereto as the Market Maker may reasonably request. (vii) The Company and the Subsidiary Guarantor shall consent to the use of the prospectus contained in the Market-Making Registration Statement or any amendment or supplement thereto by the Market Maker in connection with the lawful offering and sale of the Securities, Exchange Securities or Private Exchange Securities. (viii)For so long as the Securities, Exchange Securities or Private Exchange Securities shall be outstanding, the Company shall furnish to the Market Maker (A) as soon as practicable after the end of each of the Company's fiscal years, the number of copies reasonably requested by the Market Maker of the Company's annual report for such year, if such report is distributed to the stockholders of the Company, (B) as soon as available, the number of copies reasonably requested by the Market Maker of each report (including, without limitation, reports on Forms 10-K, 10-Q and 8-K) or definitive proxy statements (if any) of the Company filed under the Exchange Act or mailed to stockholders and (C) any public reports and all reports and financial statements furnished by the Company to the Nasdaq National Market System or any U.S. national securities exchange or quotation service upon which the Securities or Exchange Securities may be listed pursuant to requirements of or agreements with such exchange or quotation service or to the Commission pursuant to the Exchange Act or any rule or regulation of the Commission thereunder. (b) In the case of the Market-Making Registration Statement, the Market Maker agrees that, upon receipt of any notice from the Company pursuant to clauses (B) through (E) of paragraph 6(a)(iii), the Market Maker will discontinue disposition of such Securities, Exchange Securities or Private Exchange Securities until the Market Maker's receipt of copies of the supplemental or amended prospectus contemplated by Section 6(a)(iv) or until advised in writing by the Company that the use of the applicable prospectus may be resumed. (c) Prior to the effective date of the Market-Making Registration Statement, the Company and the Subsidiary Guarantor will use commercially reasonable efforts to register or qualify, or cooperate with the Market Maker and its respective counsel in connection with the registration or qualification of, such Securities, Exchange Securities or Private Exchange Securities for offer and sale under the securities or blue sky laws of such jurisdictions as the Market Maker reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Securities, Exchange Securities or Private Exchange Securities covered by the Market-Making Registration Statement; provided that the Company and the Subsidiary Guarantor will not be required to qualify generally to do business in any 16 jurisdiction where they are not then so qualified or to take any action which would subject them to general service of process or to taxation in any such jurisdiction where they are not then so subject. (d) The Company and the Subsidiary Guarantor represent that the Market-Making Registration Statement, any post-effective amendments thereto, any amendments or supplements to the related prospectus and any documents filed by them under the Exchange Act will, when they become effective or are filed with the Commission, as the case may be, conform in all respects to the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission thereunder and will not, as of the effective date of such Market-Making Registration Statement or post- effective amendments and as of the filing date of amendments or supplements to such prospectus or filings under the Exchange Act, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided that no representation or warranty is made as to information contained in or omitted from the Market-Making Registration Statement or the related prospectus in reliance upon and in conformity with written information furnished to the Company by the Market Maker specifically for inclusion therein, which information the parties hereto agree will be limited to the statements concerning the market-making activities of the Market Maker to be set forth on the cover page and in the "Plan of Distribution" section of the prospectus (the "Market Maker's Information"). (e) At the time of effectiveness of the Market-Making Registration Statement and concurrently with each time the Market-Making Registration Statement or the related prospectus shall be amended or such prospectus shall be supplemented, the Company shall (if reasonably requested by the Market Maker) furnish the Market Maker and its counsel with a certificate of its Chief Executive Officer and its Executive Vice President and Chief Financial Officer to the effect that: (i) the Market-Making Registration Statement has been declared effective; (ii) in the case of an amendment or supplement, such amendment has become effective under the Securities Act as of the date and time specified in such certificate, if applicable, such amendment or supplement to the prospectus was filed with the Commission pursuant to the subparagraph of Rule 424(b) under the Securities Act specified in such certificate on the date specified therein; (iii) to the knowledge of such officers, no stop order suspending the effectiveness of the Market-Making Registration Statement has been issued and no proceeding for that purpose is pending or threatened by the Commission; and (iv) such officers have carefully examined (A) the Market-Making Registration Statement and, in the case of an amendment, such amendment, and as of the date of such Market-Making Registration Statement or amendment, as 17 applicable, the Market-Making Registration Statement, as amended, if applicable, did not include any untrue statement of a material fact and did not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (B) the related prospectus, and, in the case of a supplement, such supplement, and as of the date of such prospectus or supplement, as applicable, such prospectus, as supplemented, if applicable, did not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (f) At the time of effectiveness of the Market-Making Registration Statement and concurrently with each time the Market-Making Registration Statement or the related prospectus shall be amended or such prospectus shall be supplemented, the Company shall (if requested by the Market Maker) furnish the Market Maker and its counsel with the written opinion of counsel for the Company satisfactory to the Market Maker to the effect that: (i) the Market-Making Registration Statement has been declared effective; (ii) in the case of an amendment or supplement, such amendment has become effective under the Securities Act as of the date and time specified in such opinion and such amendment or supplement to the prospectus was filed with the Commission pursuant to the subparagraph of Rule 424(b) under the Securities Act specified in such opinion on the date specified therein; (iii) to the knowledge of such counsel, no stop order suspending the effectiveness of the Market-Making Registration Statement has been issued and no proceeding for that purpose is pending or threatened by the Commission; and (iv) such counsel has participated in conferences with officers of the Company and independent public accountants for the Company at which the contents of such Market-Making Registration Statement and prospectus (and, in the case of an amendment or supplement, such amendment or supplement) and related matters were discussed and has no reason to believe that as of the date of such Market-Making Registration Statement, amendment or supplement, as applicable, the Market-Making Registration Statement and the prospectus, as amended or supplemented, if applicable, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading. (g) At the time of effectiveness of the Market-Making Registration Statement and concurrently with each time the Market-Making Registration Statement or the related prospectus shall be amended or such prospectus shall be supplemented to include audited annual financial information, the Company shall (if requested by the Market Maker) furnish the Market-Maker and its counsel with a letter of PricewaterhouseCoopers LLP (or other independent public accountants for the Company of nationally recognized standing), in form satisfactory to the Market-Maker, addressed 18 to the Market-Maker and dated the date of delivery of such letter, (i) confirming that they are independent public accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission and, (ii) in all other respects, substantially in the form of the letter delivered to the Initial Purchasers pursuant to Section 5(f) of the Purchase Agreement, with, in the case of an amendment or supplement to include audited financial information, such changes as may be necessary to reflect the amended or supplemented financial information. (h) The Company hereby agrees to indemnify the Market Maker, and, if applicable, contribute to the Market Maker, in accordance with Sections 7 and 8 of this Agreement. (i) The Company will comply with the provisions of this Section 6 at its own expense and will reimburse the Market Maker for its expenses associated with this Section 6 (including reasonable fees and expenses of counsel). (j) The agreements contained in this Section 6 and the representations, warranties and agreements contained in this Agreement shall survive all offers and sales of the Securities and shall remain in full force and effect, regardless of any termination or cancelation of this Agreement or any investigation made by or on behalf of any indemnified party. (k) For purposes of this Section 6, any reference to the terms "amend", "amendment" or "supplement" with respect to the Market-Making Registration Statement or the prospectus contained therein shall be deemed to refer to and include the filing under the Exchange Act of any document deemed to be incorporated therein by reference. 7. Indemnification. (a) In the event of a Shelf Registration Statement or in connection with any prospectus delivery pursuant to an Exchange Offer Registration Statement by an Initial Purchaser or Exchanging Dealer, as applicable, or in connection with any prospectus delivery by the Market Maker, the Company and the Subsidiary Guarantor shall jointly and severally indemnify and hold harmless each Holder (including, without limitation, any such Initial Purchaser or Exchanging Dealer or the Market Maker), its affiliates, their respective officers, directors, employees, representatives and agents, and each person, if any, who controls such Holder within the meaning of the Securities Act or the Exchange Act (collectively referred to for purposes of this Section 7 and Section 8 as a Holder) from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, without limitation, any loss, claim, damage, liability or action relating to purchases and sales of Securities, Exchange Securities or Private Exchange Securities), to which that Holder may become subject, whether commenced or threatened, under the Securities Act, the Exchange Act, any other federal or state statutory law or regulation, at common law or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in any such Registration Statement or Market-Making Registration Statement or any prospectus forming part thereof or in any amendment or supplement thereto, (ii) the omission or alleged omission to state therein a 19 material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading or (iii) in the case of the Market Maker, any breach by the Company of its representations, warranties and agreements set forth in Section 6, and shall reimburse each Holder promptly upon demand for any legal or other expenses reasonably incurred by that Holder in connection with investigating or defending or preparing to defend against or appearing as a third party witness in connection with any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company and the Subsidiary Guarantor shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, an untrue statement or alleged untrue statement in, or omission or alleged omission from, any of such documents in reliance upon and in conformity with any Holders' Information or Market Maker's Information; and provided, further that with respect to any such untrue statement in or omission from any related preliminary prospectus, the indemnity agreement contained in this Section 7(a) shall not inure to the benefit of any Holder from whom the person asserting any such loss, claim, damage, liability or action received Securities, Exchange Securities or Private Exchange Securities to the extent that such loss, claim, damage, liability or action of or with respect to such Holder results from the fact that both (i) a copy of the final prospectus was not sent or given to such person at or prior to the written confirmation of the sale of such Securities, Exchange Securities or Private Exchange Securities to such person and (ii) the untrue statement in or omission from the related preliminary prospectus was corrected in the final prospectus unless, in either case, such failure to deliver the final prospectus was a result of non-compliance by the Company with Section 4(e), 4(f), 4(g) or 4(h) or Section 6, as applicable. (b) In the event of a Shelf Registration Statement or in connection with any prospectus delivery by the Market Maker, each Holder (including, if applicable, the Market Maker) shall indemnify and hold harmless the Company, its affiliates, their respective officers, directors, employees, representatives and agents, and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act (collectively referred to for purposes of this Section 7(b) and Section 8 as the Company), from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which the Company may become subject, whether commenced or threatened, under the Securities Act, the Exchange Act, any other federal or state statutory law or regulation, at common law or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in any such Registration Statement or Market-Making Registration Statement or any prospectus forming part thereof or in any amendment or supplement thereto or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with any Holders' Information or Market Maker's Information furnished to the Company by such Holder, and shall reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending or preparing to defend against or appearing as a third party witness in connection with any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that no such Holder shall be liable for any indemnity claims hereunder in excess of the amount of net proceeds received by such Holder 20 from the sale of Securities, Exchange Securities or Private Exchange Securities pursuant to such Shelf Registration Statement or prospectus. (c) Promptly after receipt by an indemnified party under this Section 7 of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party pursuant to Section 7(a) or 7(b), notify the indemnifying party in writing of the claim or the commencement of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Section 7 except to the extent that it has been prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided, further, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 7. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 7 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than the reasonable costs of investigation; provided, however, that an indemnified party shall have the right to employ its own counsel in any such action, but the fees, expenses and other charges of such counsel for the indemnified party will be at the expense of such indemnified party unless (i) the employment of counsel by the indemnified party has been authorized in writing by the indemnifying party, (ii) the indemnified party has reasonably concluded (based upon advice of counsel to the indemnified party) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, (iii) a conflict or potential conflict exists (based upon advice of counsel to the indemnified party) between the indemnified party and the indemnifying party (in which case the indemnifying party will not have the right to direct the defense of such action on behalf of the indemnified party) or (iv) the indemnifying party has not in fact employed counsel reasonably satisfactory to the indemnified party to assume the defense of such action within a reasonable time after receiving notice of the commencement of the action, in each of which cases the reasonable fees, disbursements and other charges of counsel will be at the expense of the indemnifying party or parties. It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm of attorneys (in addition to any local counsel) at any one time for all such indemnified party or parties. Each indemnified party, as a condition of the indemnity agreements contained in Sections 7(a) and 7(b), shall use all reasonable efforts to cooperate with the indemnifying party in the defense of any such action or claim. No indemnifying party shall be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with its written consent or if there be a final judgment for the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified party (which consent shall not be unreasonably withheld), effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have 21 been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. 8. Contribution. If the indemnification provided for in Section 7 is unavailable or insufficient to hold harmless an indemnified party under Section 7(a) or 7(b), then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company and the Subsidiary Guarantor from the initial offering and sale of the Securities, on the one hand, and by a Holder from receiving Securities, Exchange Securities or Private Exchange Securities, as applicable, registered under the Securities Act, on the other, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Subsidiary Guarantor, on the one hand, and such Holder, on the other, with respect to the statements or omissions that resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to the Company and the Subsidiary Guarantor or information supplied by the Company and the Subsidiary Guarantor, on the one hand, or to any Holders, Information or Market Maker's Information supplied by such Holder, on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 8 were to be determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section 8 shall be deemed to include, for purposes of this Section 8, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending or preparing to defend any such action or claim. Notwithstanding the provisions of this Section 8, an indemnifying party that is a Holder of Securities, Exchange Securities or Private Exchange Securities shall not be required to contribute any amount in excess of the amount by which the total price at which the Securities, Exchange Securities or Private Exchange Securities sold by such indemnifying party to any purchaser exceeds the amount of any damages which such indemnifying party has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 9. Rules 144 and 144A. The Company shall use its reasonable best efforts to file the reports required to be filed by it under the Securities Act and the Exchange Act in a timely manner and, if at any time the Company is not required to file such reports, it will, upon the written request of any Holder of Transfer Restricted Securities or the Market Maker, make publicly available other information so long as necessary to permit sales of such Holder's or the Market Maker's securities pursuant to Rules 144 and 144A. The Company and the Subsidiary Guarantor covenant that they will take such further action as any Holder of Transfer Restricted 22 Securities or the Market Maker may reasonably request, all to the extent required from time to time to enable such Holder or the Market Maker to sell Transfer Restricted Securities without registration under the Securities Act within the limitation of the exemptions provided by Rules 144 and 144A (including, without limitation, the requirements of Rule 144A(d)(4)). Upon the written request of any Holder of Transfer Restricted Securities or the Market Maker, the Company and the Subsidiary Guarantor shall deliver to such Holder or the Market Maker, as applicable, a written statement as to whether they have complied with such requirements. Notwithstanding the foregoing, nothing in this Section 8 shall be deemed to require the Company to register any of its securities pursuant to the Exchange Act. 10. Underwritten Registrations. If any of the Transfer Restricted Securities covered by any Shelf Registration Statement are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will administer the offering will be selected by the Holders of a majority in aggregate principal amount of such Transfer Restricted Securities included in such offering, subject to the consent of the Company (which shall not be unreasonably withheld or delayed), and such Holders shall be responsible for all underwriting commissions and discounts in connection therewith. No person may participate in any underwritten registration hereunder unless such person (i) agrees to sell such person's Transfer Restricted Securities on the basis reasonably provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. 11. Miscellaneous. (a) Amendments and Waivers. No failure or delay by the Company, the Subsidiary Guarantor, any Holder or the Market Maker in exercising any right under this Agreement shall operate as a waiver thereof nor shall any single or partial exercise of any such right or amendment or discontinuance of steps to enforce any such right preclude any other of further exercise thereof or the exercise of any other right. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of Holders of a majority in aggregate principal amount of the Securities, the Exchange Securities and the Private Exchange Securities, taken as a single class (and, with respect to the provisions of Section 6, the written consent of the Market Maker). Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders whose Securities, Exchange Securities or Private Exchange Securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by Holders of a majority in aggregate principal amount of the Securities, the Exchange Securities and the Private Exchange Securities being sold by such Holders pursuant to such Registration Statement. (b) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, telecopier or air courier guaranteeing next-day delivery: 23 (1) if to a Holder, at the most current address given by such Holder to the Company in accordance with the provisions of this Section 11(b), which address initially is, with respect to each Holder, the address of such Holder maintained by the Registrar under the Indenture, with a copy in like manner to Chase Securities Inc., BT Alex. Brown Incorporated and Lehman Brothers Inc.; (2) if to an Initial Purchaser, initially at its address set forth in the Purchase Agreement; and (3) if to the Company, initially at the address of the Company set forth in the Purchase Agreement. All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; one business day after being delivered to a next-day air courier; five business days after being deposited in the mail; and when receipt is acknowledged by the recipient's telecopier machine, if sent by telecopier. (c) Successors And Assigns. This Agreement shall be binding upon the Company and its successors and assigns. (d) Counterparts. This Agreement may be executed in any number of counterparts (which may be delivered in original form or by telecopier) and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (e) Definition of Terms. For purposes of this Agreement, (a) the term "business day" means any day on which the New York Stock Exchange, Inc. is open for trading, (b) the term "subsidiary" has the meaning set forth in Rule 405 under the Securities Act and (c) except where otherwise expressly provided, the term "affiliate" has the meaning set forth in Rule 405 under the Securities Act. (f) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. (h) Remedies. In the event of a breach by the Company, any Subsidiary Guarantor or by any Holder of any of their obligations under this Agreement, each Holder, the Company or any Subsidiary Guarantor, as the case may be, in addition to being entitled to exercise all rights granted by law, including recovery of damages (other than the recovery of damages for a breach by the Company or any Subsidiary Guarantor of its obligations under Sections 1 or 2 hereof for which liquidated damages have been paid pursuant to Section 3 hereof), will be entitled to specific performance of its rights under this Agreement. The Company, the Subsidiary Guarantor and each Holder agree that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by each such person of any of 24 the provisions of this Agreement and hereby further agree that, in the event of any action for specific performance in respect of such breach, each such person shall waive the defense that a remedy at law would be adequate. (i) No Inconsistent Agreements. The Company and each Subsidiary Guarantor represents, warrants and agrees that (i) it has not entered into, shall not, on or after the date of this Agreement, enter into any agreement that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof, (ii) it has not previously entered into any agreement which remains in effect granting any registration rights with respect to any of its debt securities to any person and (iii) (with respect to the Company) without limiting the generality of the foregoing, without the written consent of the Holders of a majority in aggregate principal amount of the then outstanding Transfer Restricted Securities and the Market Maker, it shall not grant to any person the right to request the Company to register any debt securities of the Company under the Securities Act unless the rights so granted are not in conflict or inconsistent with the provisions of this Agreement. (j) No Piggyback on Registrations. Neither the Company nor any of its security holders (other than the Holders of Transfer Restricted Securities in such capacity) shall have the right to include any securities of the Company in any Shelf Registration or Registered Exchange Offer other than Transfer Restricted Securities. (k) Severability. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. 25 Please confirm that the foregoing correctly sets forth the agreement among the Company, the Subsidiary Guarantor and the Initial Purchasers. Very truly yours, TELECORP PCS, INC., by /s/ Thomas H. Sullivan _____________________________________ Name: Thomas H. Sullivan Title: Executive Vice President and Chief Financial Officer TELECORP COMMUNICATIONS, INC., by /s/ Thomas H. Sullivan _____________________________________ Name: Thomas H. Sullivan Title: President, Treasurer and Secretary Accepted: CHASE SECURITIES INC., by /s/ R. David McDonough _______________________________ Authorized Signatory BT ALEX. BROWN INCORPORATED, by /s/ Sanjai Bijawat _______________________________ Authorized Signatory 26 LEHMAN BROTHERS INC., by /s/ Paul Zoidis ________________________________ Authorized Signatory ANNEX A Each broker-dealer that receives Exchange Securities for its own account pursuant to the Registered Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Securities where such Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date (as defined herein), it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution". ANNEX B Each broker-dealer that receives Exchange Securities for its own account in exchange for Securities, where such Securities were acquired by such broker- dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. See "Plan of Distribution". ANNEX C PLAN OF DISTRIBUTION Each broker-dealer that receives Exchange Securities for its own account pursuant to the Registered Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Securities where such Securities were acquired as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date, it will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until July 22, 1999, all dealers effecting transactions in the Exchange Securities may be required to deliver a prospectus. The Company will not receive any proceeds from any sale of Exchange Securities by broker-dealers. Exchange Securities received by broker-dealers for their own account pursuant to the Registered Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Securities. Any broker-dealer that resells Exchange Securities that were received by it for its own account pursuant to the Registered Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Securities may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of Exchange Securities and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of 180 days after the Expiration Date the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. The Company has agreed to pay all expenses incident to the Registered Exchange Offer (including the expenses of one counsel for the Holders of the Securities) other than commissions or concessions of any broker-dealers and will indemnify the Holders of the Securities (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act. ANNEX D [_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name: Address: If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Securities. If the undersigned is a broker-dealer that will receive Exchange Securities for its own account in exchange for Securities that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. EX-10.20 35 AGMT DATED 6/17/98 EXHIBIT 10.20.1 Execution Copy AGREEMENT, dated as of July 17,1998, by and among AT&T Wireless PCS Inc., a Delaware corporation ("AT&T PCS"), TWR Cellular, Inc., a Maryland corporation -------- ("TWR"), the Cash Equity Investors, the TeleCorp Investors, the Management --- Stockholders and TeleCorp PCS, Inc., a Delaware corporation (the "Company" and, ------- together with AT&T PCS, TWR, the Cash Equity Investors, the TeleCorp Investors, and the Management Stockholders, the "Parties'). AT&T PCS, TWR, the Cash Equity Investors, and the TeleCorp Investors are sometimes referred to herein as the "Purchasers." Capitalized terms used but not defined herein shall have the ---------- meanings given to such terms in the Securities Purchase Agreement referred to below. WHEREAS, the Parties have entered into a Securities Purchase Agreement, dated as of January 23, 1998 (the "Securities Purchase Agreement"), pursuant to ----------------------------- which the Purchasers acquired certain securities of the Company in consideration of contributions of cash and/or other property to the capital of the Company; WHEREAS, the Company is proposing to enter into agreements contemplating the acquisition by a subsidiary of the Company of the San Diego F-Block PCS License and the issuance of shares of capital stock of the Company in consideration therefor (the "San Diego Transactions"), all on the terms set forth in agreements substantially in the form of drafts which have been furnished to the Purchasers and their respective counsel; WHEREAS, concurrently with the execution hereof, AT&T Wireless Services, Inc., a Delaware corporation, and the Company have entered into a Letter of Intent relating to the San Diego F-Block PCS License proposed to be acquired; and WHEREAS, the Parties are entering into this Agreement in order to set forth their understandings with respect to the matters contemplated hereby; NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants herein contained, the parties agree as follows: 1. Consent. The Purchasers hereby consent to the consummation of the San ------- Diego Transactions by the Company and its subsidiaries. 2. Amendment of Certain Agreements. The Parties hereby agree that ------------------------------- immediately upon the consummation of the San Diego Transactions, the terms (i) "Company Territory", as used in the Securities Purchase Agreement; (ii) ----------------- "Licensed Territory", as used in the Network Membership License Agreement; (iii) "Territory", as used in the Stockholders' Agreement; and (iv) "TeleCorp Service --------- Area" as used in the Roaming Agreement, shall be amended to include the San Diego BTA (as such term is defined in the Roaming Agreement). Notwithstanding the foregoing, the Company shall not commence build-out activities with respect to the San Diego PCS System until the Company has adopted a build-out schedule with respect to such system and obtained additional financing sufficient to finance such build- out without affecting the Company's build-out plans for its other markets, which build-out schedule and the terms and amount of which additional financing are reasonably satisfactory to AT&T PCS and Cash Equity Investors representing 66- 2/3% of the Aggregate Commitment of all Cash Equity Investors. 3. Amendment of Schedules I and V of the Purchase Agreement-, Schedule I --------------------------------------------------------------------- of the Stockholders Agreement. - ----------------------------- (i) The Purchase Agreement is hereby amended by deleting page one of Schedule I thereto with respect to the Aggregate Commitment without the Supplemental Commitment in its entirety and replacing it with Schedule I annexed hereto, which reflects all modifications and additions to the proposed contributions of the Cash Equity Investors in respect of such Aggregate Commitment to the capital of the Company which have been made since the execution of the Purchase Agreement. Page two of Schedule I to the Purchase Agreement with respect to the Supplemental Commitment shall remain in full force and effect. In consideration of the Supplemental Commitment of $5 million, the Company will issue units comprised of one share of Series C Preferred and one share of Class A Common at the price of $ 1,000.00 per unit. (ii) The Purchase Agreement is hereby amended by deleting Schedule V thereto in its entirety and replacing it with Schedule V annexed hereto, which reflects the amendment set forth in Section 5 hereof and all other modifications and additions to the proposed capitalization of the Company which have been made since the execution of the Purchase Agreement. (iii) The Stockholders' Agreement is hereby amended by naming and including in Schedule I thereto Thomas Sullivan and Gerald Vento. 4. Amendment of Section 6. 10 of Purchase Agreement. The Purchase ------------------------------------------------ Agreement is hereby amended by deleting Section 6. 10 therefrom in its entirety. 5. Consideration to AT&T PCS and TWR. Notwithstanding the terms of the --------------------------------- Purchase Agreement, including without limitation Section 2.5(a) thereof, at the Closing AT&T PCS and TWR shall receive no shares of Class D Common Stock and, in lieu thereof, shall receive the number of shares of Series F Preferred Stock set forth opposite their names on Schedule V thereto, as amended by this Agreement. 6. Legal Structure. Attached hereto as Exhibit A is an accurate and --------------- complete legal structure chart depicting the ownership of the Company's subsidiaries, the states in which such subsidiaries were formed and any and all foreign qualifications to conduct business they possess. 7. Credit Agreement. Attached hereto as Exhibit B are accurate and ---------------- complete copies of the Credit Agreement and all other Credit Documents. 8. TeleCorp Financial Statements. Attached hereto as Exhibit C are the ----------------------------- updated financial statements of TeleCorp for the year ended December 31, 1997. -2- 9. Pre-Closing and Bridge Notes. The Company represents and warrants to ---------------------------- the Purchasers that Schedule I attached hereto sets forth, with respect to each Cash Equity Investor: (i) the Initial Cash Contribution of each such investor, (ii) the principal amount of its advances in respect of the Pre-Closing Notes, (iii) the principal amount of its advances in respect of the Bridge Notes, plus interest accrued thereon through January 23, 1998 and (iv) the net Initial Cash Contributions to be made by each Cash Equity Investor at Closing, which shall equal each such investor's Initial Cash Contribution less the amounts described in subsections (ii) and (iii) of this Section 9. 10. Termination of Agreements. Effective on the date hereof, each of the ------------------------- TeleCorp Investors and the Management Stockholders, on behalf of themselves and their Affiliates (other than the Company and its subsidiaries), agree that all agreements or understandings (other than the Purchase Agreement and the agreements entered into in connection therewith) to which both (a) TeleCorp is a party (or is otherwise entitled to any benefits, as a third party beneficiary or otherwise) and (b) such TeleCorp Investor or Management Stockholder (or an Affiliate thereof) is a party (or is otherwise entitled to any benefits, as a third party beneficiary or other-wise), are terminated and of no further force or effect. 11. Company Operations. It is contemplated that certain of the ------------------ Transactions and the business that the Company proposes to engage in will be conducted through subsidiaries of the Company. The Purchasers consent to such subsidiary's participation in such Transactions and business on the conditions that (i) the subsidiary shall at all times be a directly or indirectly wholly- owned subsidiary of the Company, and (ii) the Company shall at all times cause such subsidiary to perform the subsidiary's obligations thereby without any further actions required of the parties thereto. 12. Management Stockholders Agreements. By execution of this Agreement, ---------------------------------- the Purchasers hereby agree to be bound by the obligations in, and entitled to the benefits of, each of the several stockholders agreements among the Company, the Purchasers and each Company employee party thereto, all with the same effect as if the Purchasers had executed and delivered each such agreement. 13. Interexchange Services. AT&T Wireless Services, Inc. has offered to ---------------------- enter into an agreement with the Company with respect to the provision of interexchange services to the Company and its subsidiaries, the price and other terms of which agreement shall be substantially as set forth in the Draft Voice Contract and Pricing it has previously furnished to the Company. 14. Allocation. It is agreed that the value attributable as of the date ---------- hereof to the Series E Preferred Stock and Class A Common Stock is $0.01 and $1.00, respectively. 15. Reissuance of Stock Certificates. With respect to certificates -------------------------------- representing shares of Preferred Stock and Common Stock issued at the Closing to Cash Equity Investors that are also TeleCorp Investors, the Company covenants that promptly following the Closing each such certificate shall be cancelled and, in lieu thereof, the Company will issue two new certificates, one representing the shares issued to such Person in its capacity as a Cash Equity Investor, and the other representing the shares issued to such Person in its capacity as a TeleCorp Investor. The -3- Company shall retain possession of each such certificate issued to a Person in its capacity as a Cash Equity Investor, together with a stock power in respect of the shares represented by such certificate, all in accordance with the terms of such Cash Equity Investor's Pledge Agreement. The Company shall deliver each such certificate issued to a Person in its capacity as a TeleCorp Investor as directed by such Investor. 16. Miscellaneous. This Agreement embodies the entire agreement and ------------- understanding of the Parties relating to the subject matter hereof and supersedes all prior agreements and understandings relating to such subject matter. This Agreement may not be amended, changed, supplemented, waived or otherwise modified except by an instrument in writing signed by each Party against whom enforcement is sought. This Agreement shall be binding upon and shall inure to the benefit of each Party and their permitted successors and assigns. Each Party will execute and deliver such further documents and take such further actions as the other Parties may reasonably request consistent with the provisions hereof in order to effect the intent and purposes of this Agreement. The parties hereto hereby irrevocably and unconditionally consent to submit to the non-exclusive jurisdiction of the courts of the State of New York and of the United States of America located in the County of New York, New York (the "New York Courts") for any litigation arising out of or relating to this --------------- Agreement and the Transactions, waive any objection to the laying of venue of any such litigation in the New York Courts and agrees not to plead or claim in any New York Court that such litigation brought therein has been brought in an inconvenient forum. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other Jurisdiction. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one instrument. -4- IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written. TELECORP PCS, INC. By: /s/ Gerald T. Vento ----------------------------- Name: Gerald T. Vento --------------------------- Title: CEO -------------------------- AT&T WIRELESS PCS INC. By: /s/ Mark H. Thomas ---------------------------- Name: Mark H. Thomas --------------------------- Title: Vice President & CEO ------------------------- TWR CELLULAR, INC. By: /s/ Mark H. Thomas ---------------------------- Name: Mark H. Thomas --------------------------- Title: Vice President & CEO ------------------------- -5- Cash Equity Investors: CB CAPITAL INVESTORS, L.P. By: CB Capital Investors, Inc., its general partner By: /s/ Michael R. Hannon -------------------------------- Name: Michael R. Hannon ----------------------------- Title: General Partner --------------------------- NORTHWOOD VENTURES LLC By: /s/ Henry T. Wilson ------------------------------- Name: Henry T. Wilson ----------------------------- Title: Manager ---------------------------- NORTHWOOD CAPITAL PARTNERS LLC By: /s/ Henry T. Wilson ------------------------------- Name: Henry T. Wilson ----------------------------- Title: Manager --------------------------- ONELIBERTY FUND III, L.P. By: /s/ Joseph T. McCullen, Jr. ------------------------------- Name: Joseph T. McCullen, Jr. ----------------------------- Title: General Partner --------------------------- ONELIBERTY FUND IV, L.P. By: /s/ Joseph T. McCullen, Jr. ------------------------------- Name: Joseph T. McCullen, Jr. ----------------------------- Title: General Partner --------------------------- -6- MEDIA./COMMUNICATIONS INVESTORS LIMITED PARTNERSHIP By: M/C Investors General Partner - J. Inc., general partner By: /s/ James F. Wade ------------------------------- Name: James F. Wade Title: President MEDIA/COMMUNICATIONS PARTNERS III LIMITED PARTNERSHIP By: M/C III L.L.C., its general partner By: /s/ James F. Wade ------------------------------- Name: James F. Wade Title: Manager EQUITY-LINKED INVESTORS-II By: ROHIT M. DESAI ASSOCIATES-II, its general partner By: /s/ Frank S. Pados ------------------------------- Name: Frank S. Pados ------------------------------ Title: Executive Vice President ---------------------------- PRIVATE EQUITY INVESTORS M, L.P. By: ROHIT M. DESAI ASSOCIATES-II, its general partner By: /s/ Frank S. Pados ------------------------------- Name: Frank S. Pados ----------------------------- Title: Executive Vice President ---------------------------- -7- HOAK COMMUNICATIONS PARTNERS, L.P. By: HCP Investments, L.P., its general partner By: Hoak Ptrs, LLC, its general partner By: /s/ James M. Hoak ------------------------------- Name: James M. Hoak Title: Manager HCP CAPITAL FUND, L.P. By: James M. Hoak & Co., its General Partner By: /s/ James M. Hoak ------------------------------- Name: James M. Hoak Title: Chairman ENTERGY TECHNOLOGY HOLDING COMPANY By: /s/ Stephen T. Refsell ------------------------------- Name: Stephen T. Refsell ----------------------------- Title: Vice President ---------------------------- TORONTO DOMINION INVESTMENTS INC. By: /s/ Martha L. Gariepy ------------------------------- Name: Martha L. Gariepy ------------------------------ Title: Vice President --------------------------- -8- WHITNEY EQUITY PARTNERS. L.P. By: J.H. Whitney Equity Partners. L.L.C. its general partner By: /s/ Daniel J. O'Brien ------------------------------- Name: Daniel J. O'Brien Title: Member J.H. WHITNEY III, L.P. By: J.H. Whitney Equity Partners III, L.L.C.. its general partner By: /s/ Daniel J. O'Brien ------------------------------- Name: Daniel J. O'Brien Title: Member WHITNEY STRATEGIC PARTNERS III. L.P. By: J.H. Whitney Equity Partners III, L.L.C.. its general partner By: /s/ Daniel J. O'Brien ------------------------------- Name: Daniel J. O'Brien Title: Member -9- TeleCorp Investors: CB CAPITAL INVESTORS, L.P. By: CB Capital Investors, Inc., its general partner By: /s/ Michael R. Hannon ------------------------------- Name: Michael R. Hannon ----------------------------- Title: General Partner ---------------------------- NORTHWOOD VENTURES LLC By: /s/ Henry T. Wilson ------------------------------- Name: Henry T. Wilson ----------------------------- Title: Manager ---------------------------- NORTHWOOD CAPITAL PARTNERS LLC By: /s/ Henry T. Wilson ------------------------------- Name: Henry T. Wilson ----------------------------- Title: Manager ---------------------------- ONE LIBERTY FUND III, L.P. By: /s/ Joseph T. McCullen ------------------------------- Name: Joseph T. McCullen ----------------------------- Title: General Partner ---------------------------- ONE LIBERTY FUND IV, L.P. By: /s/ Joseph T. McCullen ------------------------------- Name: Joseph T. McCullen ----------------------------- Title: General Partner ---------------------------- -10- MEDIA./COMMUNICATIONS INVESTORS LIMITED PARTNERSHIP By: M/C Investors General Partner - J. Inc., general partner By: /s/ James F. Wade ------------------------------- Name: James F. Wade Title: President MEDIA/COMMUNICATIONS PARTNERS III LIMITED PARTNERSHIP By: M/C III L.L.C., its general partner By: /s/ James F. Wade ------------------------------- Name: James F. Wade Title: Manager ENTERGY TECHNOLOGY HOLDING COMPANY By: /s/ Stephen T. Refsell ------------------------------- Name: Stephen T. Refsell Title: Vice President -11- GILDE INTERNATIONAL, B.V. By: /s/ Joseph McCullen, Jr. ------------------------------- Name: Joseph McCullen, Jr. ----------------------------- Title: Attorney in Fact ---------------------------- -12- TELECORP INVESTMENT CORP., LLC By: /s/ Tom Sullivan ------------------------------- Name: Tom Sullivan ----------------------------- Title: ____________________________ -13- MANAGEMENT STOCKHOLDERS GERALD T. VENTO /s/ Gerald T. Vento ----------------------------------- THOMAS H. SULLIVAN /s/ Thomas Sullivan ----------------------------------- -14- Schedule V Share Allocation Without Supplemental Allocation(a) AT&T Does Not Receive Tracking
Preferred Stock ------------------ --------------------------------------------------------------------------- Total Dollars Series A Series B Series C Series D Series E Series F Senior Committed Common ------------------ --------------------------------------------------------------------------- Cash Equity Chase $ 27,782,016 0.00 0.00 27,782.02 0.00 0.00 0.00 0.00 Desai 27,782,016 0.00 0.00 27,782.02 0.00 0.00 0.00 0.00 Hoak 20,836.512 0.00 0.00 20,836.51 0.00 0.00 0.00 0.00 JH 17,363,760 0.00 0.00 17,363.76 0.00 0.00 0.00 0.00 Entergy 13,891,008 0.00 0.00 13,891.01 0.00 0.00 0.00 0.00 M/C 10,418,256 0.00 0.00 10,418.26 0.00 0.00 0.00 0.00 One Liberty 3,472,752 0.00 0.00 3,472.75 0.00 0.00 0.00 0.00 TD 3,472,752 0.00 0.00 3,472.75 0.00 0.00 0.00 0.00 Northwood 2,430,926 0.00 0.00 2,430.93 0.00 0.00 0.00 0.00 Gerald Vento 450,000 0.00 0.00 450.00 0.00 0.00 0.00 0.00 Tom Sullivan 100,000 0.00 0.00 100.00 0.00 0.00 0.00 0.00 ------------------ --------------------------------------------------------------------------- Total Cash Equity 128,000,000 0.00 0.00 128,000,000 0.00 0.00 0.00 0.00 Supplemental 0 0.00 0.00 0.00 0.00 0.00 0.00 0.00 TeleCorp Licenses One Liberty Fund 1,531,433 0.00 0.00 1,531.43 0.00 0.00 0.00 0.00 Gilde International 15,461 0.00 0.00 15.46 0.00 0.00 0.00 0.00 Northwood Ventures 928,137 0.00 0.00 928.14 0.00 0.00 0.00 0.00 Northwood Capital Partners 232,034 0.00 0.00 232.03 0.00 0.00 0.00 0.00 CB Capital Investors LP 1,160,171 0.00 0.00 1,160.17 0.00 0.00 0.00 0.00 TeleCorp Investment Corp., LLC 1,160,171 0.00 0.00 1,160.17 0.00 0.00 0.00 0.00 M/C Investors 46,403 0.00 0.00 46.40 0.00 0.00 0.00 0.00 M/C Partners 1,113,768 0.00 0.00 1,113.77 0.00 0.00 0.00 0.00 Entergy Technology 1,160,171 0.00 0.00 1,160.17 0.00 0.00 0.00 0.00 ------------------ ---------------------------------------------------------------------------- SubTotal 7,347,748 0.00 0.00 7,347.75 0.00 0.00 0.00 0.00 AT&T 45,974,850 30,649.90 0.00 0.00 15,740.93 0.00 15,324.95 0.00 TRW 54,109,369 36,072.91 0.00 0.00 18,526.04 0.00 18,036.46 0.00 Mercury Licenses 0 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Gerald Vento 0 0.00 0.00 0.00 0.00 8,729.40 0.00 0.00 Tom Sullivan 0 0.00 0.00 0.00 0.00 5,426.38 0.00 0.00 J. Dobson 0 0.00 0.00 0.00 0.00 2,287.21 0.00 0.00 R. Dowski 0 0.00 0.00 0.00 0.00 714.34 0.00 0.00 A. Price 0 0.00 0.00 0.00 0.00 714.34 0.00 0.00 J. Dorso 0 0.00 0.00 0.00 0.00 127.80 0.00 0.00 D. Chaplain 0 0.00 0.00 0.00 0.00 127.80 0.00 0.00 P. Collins 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00 R. Johnson 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00 S. Chandler 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00 D. Knutson 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00 A. Gordon 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00 P. Bellman 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00 ------------------ --------------------------------------------------------------------------- Total $235,431,967 66,722.81 0.00 135,347.75 34,266.97 19,660.81 33,361.41 0.00 ================== =========================================================================== Common -------------------------------------------------------------------------------------------- Series A Series B Tracking C Tracking D Voting Total Percent of Total Preference -------------------------------------------------------------------------------------------- Cash Equity Chase 26,369.02 0.00 87.10 571.78 0.00 27,027.90 14.00% Desai 26,369.02 0.00 87.10 571.78 0.00 27,027.90 14.00% Hoak 19,776.77 0.00 65.32 428.84 0.00 20,270.93 10.50% JH 16,480.64 0.00 54.44 357.37 0.00 16,892.44 8.75% Entergy 13,184.51 0.00 0.00 329.44 0.00 13,513.95 7.00% M/C 9,888.38 0.00 32.66 214.42 0.00 10,135.46 5.25% One Liberty 3,296.13 0.00 10.89 71.47 0.00 3,378.49 1.75% TD 3,296.13 0.00 10.89 71.47 0.00 3,378.49 1.75% Northwood 2,307.29 0.00 7.62 50.03 0.00 2,364.94 1.22% Gerald Vento 427.11 0.00 1.41 9.26 0.00 437.79 0.23% Tom Sullivan 94.91 0.00 0.31 2.06 0.00 97.29 0.05% -------------------------------------------------------------------------------------------- Total Cash Equity 121,489.91 0.00 357.73 2,677.93 0.00 124,525.57 64.49% Supplemental 0.00 0.00 0.00 0.00 0.00 0.00 0.00% TeleCorp Licenses One Liberty Fund 1,336.43 0.00 2.18 14.31 0.00 1,352.92 0.70% Gilde International 13.49 0.00 0.02 0.14 0.00 13.66 0.01% Northwood Ventures 913.80 0.00 1.49 9.79 0.00 925.08 0.48% Northwood Capital Partners 228.45 0.00 0.37 2.45 0.00 231.27 0.12% CB Capital Investors LP 1,142.25 0.00 1.86 12.23 0.00 1,156.34 0.60% TeleCorp Investment Corp., LLC 1,142.25 0.00 1.86 12.23 0.00 1,156.34 0.60% M/C Investors 45.69 0.00 0.07 0.49 0.00 46.26 0.02% M/C Partners 1,096.55 0.00 1.79 11.74 0.00 1,110.09 0.57% Entergy Technology 1,142.25 0.00 0.00 14.09 0.00 1,156.34 0.60% -------------------------------------------------------------------------------------------- SubTotal 7,061.16 0.00 9.65 77.48 0.00 7,148.30 3.70% AT&T 0.00 0.00 0.00 0.00 0.00 15,324.95 7.94% TRW 0.00 0.00 0.00 0.00 0.00 18,036.46 9.34% Mercury Licenses 0.00 0.00 0.00 0.00 0.00 0.00 0.00% Gerald Vento 10,779.82 0.00 339.83 0.00 5.00 11,119.65 5.76% Tom Sullivan 6,700.97 0.00 211.25 0.00 5.00 6,912.22 3.58% J. Dobson 3,459.45 0.00 0.00 0.00 0.00 3,459.45 1.79% R. Dowski 1,455.91 0.00 0.00 0.00 0.00 1,455.91 0.75% A. Price 1,455.91 0.00 0.00 0.00 0.00 1,455.91 0.75% J. Dorso 260.46 0.00 0.00 0.00 0.00 260.46 0.13% D. Chaplain 260.46 0.00 0.00 0.00 0.00 260.46 0.13% P. Collins 520.92 0.00 0.00 0.00 0.00 520.92 0.27% R. Johnson 520.92 0.00 0.00 0.00 0.00 520.92 0.27% S. Chandler 520.92 0.00 0.00 0.00 0.00 520.92 0.27% D. Knutson 520.92 0.00 0.00 0.00 0.00 520.92 0.27% A. Gordon 520.92 0.00 0.00 0.00 0.00 520.92 0.27% P. Bellman 520.92 0.00 0.00 0.00 0.00 520.92 0.27% -------------------------------------------------------------------------------------------- Total 156,049.57 0.00 918.47 2,755.39 10.00 193,084.85 100.00% ============================================================================================
(a) Management has received shares predicated on the occurrence of the supplemental allocation. If the supplemental allocation does not occur, shares will be repurchased from management such that management receives 14.00% of the fully-diluted equity. (b) Assumes that management meets certain return hurdles and that all management warrants are issued. 15 Schedule V Share Allocation With Supplemental Allocation AT&T Does Not Receive Tracking
Preferred Stock ------------------- -------------------------------------------------------------------------- Total Dollars Series A Series B Series C Series D Series E Series F Senior Committed Common ------------------- -------------------------------------------------------------------------- Cash Equity Chase $ 27,782,016 0.00 0.00 27,782.02 0.00 0.00 0.00 0.00 Desai 27,782,016 0.00 0.00 27,782.02 0.00 0.00 0.00 0.00 Hoak 20,836,512 0.00 0.00 20,836.51 0.00 0.00 0.00 0.00 JH 17,363,760 0.00 0.00 17,363.76 0.00 0.00 0.00 0.00 Entergy 13,891,008 0.00 0.00 13,891.01 0.00 0.00 0.00 0.00 M/C 10,418,256 0.00 0.00 10,418.26 0.00 0.00 0.00 0.00 One Liberty 3,472,752 0.00 0.00 3,472.75 0.00 0.00 0.00 0.00 TD 3,472,752 0.00 0.00 3,472.75 0.00 0.00 0.00 0.00 Northwood 2,430,926 0.00 0.00 2,430.93 0.00 0.00 0.00 0.00 Gerald Vento 450,000 0.00 0.00 450.00 0.00 0.00 0.00 0.00 Tom Sullivan 100,000 0.00 0.00 100.00 0.00 0.00 0.00 0.00 ------------------- -------------------------------------------------------------------------- Total Cash Equity 128,000,000 0.00 0.00 128,000,000 0.00 0.00 0.00 0.00 Supplemental 5,000,000 0.00 0.00 5,000.00 0.00 0.00 0.00 0.00 TeleCorp Licenses One Liberty Fund 1,531,433 0.00 0.00 1,531.43 0.00 0.00 0.00 0.00 Gilde International 15,461 0.00 0.00 15.46 0.00 0.00 0.00 0.00 Northwood Ventures 928,137 0.00 0.00 928.14 0.00 0.00 0.00 0.00 Northwood Capital Partners 232,034 0.00 0.00 232.03 0.00 0.00 0.00 0.00 CB Capital Investors LP 1,160,171 0.00 0.00 1,160.17 0.00 0.00 0.00 0.00 TeleCorp Investment Corp., LLC 1,160,171 0.00 0.00 1,160.17 0.00 0.00 0.00 0.00 M/C Investors 46,403 0.00 0.00 46.40 0.00 0.00 0.00 0.00 M/C Partners 1,113,768 0.00 0.00 1,113.77 0.00 0.00 0.00 0.00 Entergy Technology 1,160,171 0.00 0.00 1,160.17 0.00 0.00 0.00 0.00 ------------------- -------------------------------------------------------------------------- SubTotal 7,347,748 0.00 0.00 7,347.75 0.00 0.00 0.00 0.00 AT&T 45,974,850 30,649.90 0.00 0.00 15,740.93 0.00 15,324.95 0.00 TRW 54,109,369 36,072.91 0.00 0.00 18,526.04 0.00 18,036.46 0.00 Mercury Licenses 2,332,545 0.00 0.00 2,332.55 0.00 0.00 0.00 0.00 Gerald Vento 0 0.00 0.00 0.00 0.00 8,729.40 0.00 0.00 Tom Sullivan 0 0.00 0.00 0.00 0.00 5,426.38 0.00 0.00 J. Dobson 0 0.00 0.00 0.00 0.00 2,287.21 0.00 0.00 R. Dowski 0 0.00 0.00 0.00 0.00 714.34 0.00 0.00 A. Price 0 0.00 0.00 0.00 0.00 714.34 0.00 0.00 J. Dorso 0 0.00 0.00 0.00 0.00 127.80 0.00 0.00 D. Chaplain 0 0.00 0.00 0.00 0.00 127.80 0.00 0.00 P. Collins 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00 R. Johnson 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00 S. Chandler 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00 D. Knutson 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00 A. Gordon 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00 P. Bellman 0 0.00 0.00 0.00 0.00 255.59 0.00 0.00 ------------------- -------------------------------------------------------------------------- Total $242,764,512 66,722.81 0.00 142,680.29 34,266.97 19,660.81 33,361.41 0.00 ------------------- -------------------------------------------------------------------------- Common ----------------------------------------------------------------------------------------- Series A Series B Tracking C Tracking D Voting Total Percent of Total Preference ------------------------------------------------------------------------------------------- Cash Equity Chase 26,369.02 0.00 87.10 571.78 0.00 27,027.90 13.49% Desai 26,369.02 0.00 87.10 571.78 0.00 27,027.90 13.49% Hoak 19,776.77 0.00 65.32 428.84 0.00 20,270.93 10.12% JH 16,480.64 0.00 54.44 357.37 0.00 16,892.44 8.43% Entergy 13,184.51 0.00 0.00 329.44 0.00 13,513.95 6.75% M/C 9,888.38 0.00 32.66 214.42 0.00 10,135.46 5.06% One Liberty 3,296.13 0.00 10.89 71.47 0.00 3,378.49 1.69% TD 3,296.13 0.00 10.89 71.47 0.00 3,378.49 1.69% Northwood 2,307.29 0.00 7.62 50.03 0.00 2,364.94 1.18% Gerald Vento 427.11 0.00 1.41 9.26 0.00 437.79 0.22% Tom Sullivan 94.91 0.00 0.31 2.06 0.00 97.29 0.05% ------------------------------------------------------------------------------------------- Total Cash Equity 121,489.91 0.00 357.73 2,677.93 0.00 124,525.57 62.15% Supplemental 5,000.00 0.00 0.00 0.00 0.00 5,000.00 2.50% TeleCorp Licenses One Liberty Fund 1,336.43 0.00 2.18 14.31 0.00 1,352.92 0.68% Gilde International 13.49 0.00 0.02 0.14 0.00 13.66 0.01% Northwood Ventures 913.80 0.00 1.49 9.79 0.00 925.08 0.46% Northwood Capital Partners 228.45 0.00 0.37 2.45 0.00 231.27 0.12% CB Capital Investors LP 1,142.25 0.00 1.86 12.23 0.00 1,156.34 0.58% TeleCorp Investment Corp., LLC 1,142.25 0.00 1.86 12.23 0.00 1,156.34 0.58% M/C Investors 45.69 0.00 0.07 0.49 0.00 46.26 0.02% M/C Partners 1,096.55 0.00 1.79 11.74 0.00 1,110.09 0.55% Entergy Technology 1,142.25 0.00 0.00 14.09 0.00 1,156.34 0.58% ------------------------------------------------------------------------------------------- SubTotal 7,061.16 0.00 9.65 77.48 0.00 7,148.30 3.57% AT&T 0.00 0.00 0.00 0.00 0.00 15,324.95 7.65% TRW 0.00 0.00 0.00 0.00 0.00 18,036.46 9.00% Mercury Licenses 2,269.23 0.00 0.00 0.00 0.00 2,269.23 1.13% Gerald Vento 10,799.82 0.00 339.83 0.00 5.00 11,119.65 5.55% Tom Sullivan 6,700.97 0.00 211.25 0.00 5.00 6,912.22 3.45% J. Dobson 3,459.45 0.00 0.00 0.00 0.00 3,459.45 1.73% R. Dowski 1,455.91 0.00 0.00 0.00 0.00 1,455.91 0.73% A. Price 1,455.91 0.00 0.00 0.00 0.00 1,455.91 0.73% J. Dorso 260.46 0.00 0.00 0.00 0.00 260.46 0.13% D. Chaplain 260.46 0.00 0.00 0.00 0.00 260.46 0.13% P. Collins 520.92 0.00 0.00 0.00 0.00 520.92 0.26% R. Johnson 520.92 0.00 0.00 0.00 0.00 520.92 0.26% S. Chandler 520.92 0.00 0.00 0.00 0.00 520.92 0.26% D. Knutson 520.92 0.00 0.00 0.00 0.00 520.92 0.26% A. Gordon 520.92 0.00 0.00 0.00 0.00 520.92 0.26% P. Bellman 520.92 0.00 0.00 0.00 0.00 520.92 0.26% ------------------------------------------------------------------------------------------- Total 163,318.80 0.00 918.47 2,755.39 10.00 200,354.08 100.00% ------------------------------------------------------------------------------------------- Cash Equity 64.65% Original THC .37% AT&T 16.63% Mercury .13%
(a) Assumes that management meets certain return hurdles and that all management warrants are issued. 16 TELECORP HOLDING CORP., INC. FINANCIAL STATEMENTS for the years ended December 31, 1996 and 1997 AND REPORT THEREON 17 Report-of Independent Accountants --------------------------------- To the Board of Directors and Shareholders TeleCorp PCS Inc, and Predecessor Company: In our opinion, the accompanying balance sheets and the related statements of operations, changes in shareholders' equity (deficit) and cash flows present fairly, in all material respects, the financial position of TeleCorp Holding Corp. Inc., at December 31, 1996 and 1997, and the results of operations and its cash flows for the period July 29, 1996 (inception) to December 31, 1996, the year ended December 31, 1997, and the period July 29, 1996 (inception) to December 31, 1997, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based an our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. McLean, Virginia July 15, 1998 18 TELECORP HOLDING CORP., INC. (A Development Stage Enterprise) BALANCE SHEETS
ASSETS December 31, 1996 1997 ---- ---- Current assets: Cash and cash equivalents $ 51,646 $ 2,566,685 Other current assets 21,877 73,468 ---------- ----------- Total current assets 73,523 2,640,153 Property and equipment, net 829 3,609,274 PCS licenses - 10,018,375 Intangible assets - - FCC deposit 7,500,000 - Other assets _____ 26,673 ---------- ----------- Total assets 7,574,352 $16,294,476 LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT) Current liabilities: Accounts payable 98,570 $ 3,202,295 Notes payable 488,750 2,808,500 Notes payable to affiliates - 2,072,573 Due to affiliates - 824,164 Accrued interest 389.079 ----------- ----------- Total current liabilities 597.320 9,296,611 U.S. Government financing - 7,727,322 Lucent vendor Series A bonds - - Senior credit facility - - Other liabilities - - Total liabilities 597,320 17,023,933 ---------- ----------- Mandatorily redeemable preferred stock: Series A, mandatorily redeemable 10% cumulative preferred 7,788,969 4,144,340 stock, no par value, 5,000 shares authorized, 750 and 367, shares issued and outstanding, respectively (liquidation preference of $4,144,340 as of December 31, 1997) Commitments and contingencies Shareholders' equity (deficit): Class A common stock, no par value. 125,000 shares authorized; 2,000 856 12,500 and 4,834 shares issued and outstanding, respectively Class B common stock, no par value, 175,000 shares authorized; - - 5,104 and 1,974 shares issued and outstanding, respectively
The accompanying notes are an integral part of these financial statements 19 Class C common stock, no par value, 175,000 shares authorized; - - 25,520 and 12,527 shares issued and outstanding, respectively. Deficit accumulated during development stage (813,927) (4,874.654) ---------- ----------- Total shareholders' equity (deficit) (811,927) (4,873,798) ---------- ----------- Total liabilities and shareholders' equity (deficit) $7,574,352 $16,294,475
The accompanying notes are an integral part of these financial statements 20 TELECORP HOLDING CORP.. INC. (A Development Stage Enterprise) STATEMENTS OF OPERATIONS _________________
For the period July 29, Cumulative for the period 1996 (inception) to For the year ended July 28, 1995 (inception) December 31, 1996 December 31, 1997 to December 31, 1997 ----------------------------------------------------------------------------------- Revenue $ - $ - $ - ---------- ----------- ----------- Expenses: Selling and Marketing 9,747 304,062 313,809 General and administrative 515,221 2,647,660 3,162,881 --------- ----------- ----------- Total operating expenses 524,968 2,951,722 3,476,690 ----------------------------------------------------------------------------------- Other (income) expense: Interest income - (12,914) (12,914) Interest expense - 396,362 396,362 ----------------------------------------------------------------------------------- Net loss $(524,968) $(3,335,170) $(3,860,138) ===================================================================================
The accompanying notes are an integral part of these financial statements 21 TELECORP HOLDING CORP., INC. (A Development Stage Enterprise) STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
Deficit accumu-lated Class A Class B Class C during the Common Common Common develop-ment Stock Stock Stock stage ----- ----- ----- Shares Amount Shares Amount Shares Amount Total Initial capitalization 8,750 $ 2,000 - - - -$ $ - $ 2,000 Issuance of common stock 3,750 - 5,104 - 25,250 - - - Accretion of preferred stock dividends - - - - - - (288,959) (288,959) Net loss - - - - - - (524,968) (524,968) ----------------------------------------------------------------------------------- Balance, December 31, 1996 12,500 2,000 5,104 - 25,520 - (813,927) (811,927) Issuance of common stock - - - - 6,875 - - - Accretion of preferred stock dividends - - - - - - (725,557) (725,527) Redemption of equity interests (7,666) (1,144) (3,130) - (19,868) - - (1,144) Net loss - - - - - - (3,335,170) (3,335,170) Balance, December 31, 1997 4,834 $ 856 1,974 -$ 12,527 -$ $(4,874,654) $(4,873,798) ===================================================================================
The accompanying notes are an integral part of these financial statements. 22 TELECORP HOLDING CORP., INC. (A Development Stage Enterprise) STATEMENTS OF CASH FLOWS
For the period July For the year ended Cumulative for the 29, 1996 (inception) December 31, 1997 period July 29, 1996 to to December 31, 1996 December 31, 1997 - ---------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: - ---------------------------------------------------------------------------------------------------------------------- Net loss $ (524,968) $(3,335,170) $(3,860,138) - ---------------------------------------------------------------------------------------------------------------------- Adjustment to reconcile net loss to net cash used in operating activities: - ---------------------------------------------------------------------------------------------------------------------- Depreciation expense 75 10,625 10,700 - ---------------------------------------------------------------------------------------------------------------------- Non-cash capitalized interest - (131,397) (131,397) - ---------------------------------------------------------------------------------------------------------------------- Amortization of discount on notes payable - 134,040 134,040 - ---------------------------------------------------------------------------------------------------------------------- Increase (decrease) in cash flow from operating activities resulting from changes in assets and liabilities - ---------------------------------------------------------------------------------------------------------------------- Other current assets (21,877) (51,591) (73,468) - ---------------------------------------------------------------------------------------------------------------------- Other assets - (26,673) (26,673) - ---------------------------------------------------------------------------------------------------------------------- Accounts payable 98,570 618,889 717,459 - ---------------------------------------------------------------------------------------------------------------------- Accrued interest - 389,079 389,079 - ---------------------------------------------------------------------------------------------------------------------- Other liabilities - - - - ---------------------------------------------------------------------------------------------------------------------- Current microwave relocation obligation - - - - ---------------------------------------------------------------------------------------------------------------------- Net cash used in operating activities (448,200) (2,392,198) (2,840,398) - ---------------------------------------------------------------------------------------------------------------------- Cash flows from investing activities: - ---------------------------------------------------------------------------------------------------------------------- Expenditures for property and equipment (904) (1,134,234) (1,135,138) - ---------------------------------------------------------------------------------------------------------------------- Deposit on PCS licenses (7,500,000) - (7,500,000) - ---------------------------------------------------------------------------------------------------------------------- Partial refund of deposit on PCS - 1,561,702 1,561,702 licenses - ---------------------------------------------------------------------------------------------------------------------- Net cash (used in) provided by (7,500,904) 427,468 (7,073,436) investing activities - ----------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 23
- ----------------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: - ----------------------------------------------------------------------------------------------------------------------------- Proceeds from sale of Series A 7,500,000 1,500,000 9,000,000 preferred stock - ----------------------------------------------------------------------------------------------------------------------------- Proceeds from sale of common stock 2,000 - 2,000 - ----------------------------------------------------------------------------------------------------------------------------- Proceeds from issuance of notes payable 498,750 2,808,500 3,307,250 - ----------------------------------------------------------------------------------------------------------------------------- Net increase in amounts payable to - 171,269 171,269 affiliates - ----------------------------------------------------------------------------------------------------------------------------- Net cash provided by financing 8,000,750 4,479,769 12,480,519 activities - ----------------------------------------------------------------------------------------------------------------------------- Net increase in cash and cash 51,646 2,515,039 2,566,685 equivalents - ----------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at the - 51,645 - beginning of period - ----------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at the end of $ 51,646 $ 2,566,685 $ 2,566,685 period - ----------------------------------------------------------------------------------------------------------------------------- Supplemental disclosure of non-cash $ - $ 2,484,836 $ 2,484,836 investing and financing activities: Network under development and microwave relocation costs financed through accounts payable - ----------------------------------------------------------------------------------------------------------------------------- U.S. Government financing $ - $ 9,192,938 $ 9,192,938 - ----------------------------------------------------------------------------------------------------------------------------- Discount on U.S. Government financing $ - $ 1,599,656 $ 1,599,656 - ----------------------------------------------------------------------------------------------------------------------------- Conversion of notes payable to $ - $ 498,750 $ 498,750 shareholders into preferred stock - ----------------------------------------------------------------------------------------------------------------------------- Accretion of preferred stock dividends $ 288,958 $ 725,557 $ 1,014,516 - ----------------------------------------------------------------------------------------------------------------------------- Redemption of equity interests $ - $ 6,368,926 $ 6,368,926 - ----------------------------------------------------------------------------------------------------------------------------- Distribution of net assets to $ - $ 3,644,602 $ 3,644,602 affiliates - ------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements 24 1. Organization TeleCorp Holding Corp,. Inc., (the Company) was incorporated in the State of Delaware on July 29, 1996 (date of inception). The Company intends to design, build, own and operate broadband Personal Communications Services (PCS) in its licensed regions. The Company participated in the Federal Communications Commissions' (FCC) Auction of F Block PCS licenses (the Auction) in April 1997 and successfully obtained licenses in the New Orleans, Memphis, Beaumont, Little Rock, Houston, Tampa, Melbourne and Orlando Basic Trading Areas (BTAs). The Company qualifies as a Designated Entity and Very Small Business under Part 24 of the rules of the FCC applicable to broadband PCS. In April 1997, the Company and its shareholders agreed to the transfer of PCS licenses for the Houston, Tampa, Melbourne and Orlando BTAs to form newly-formed entities created by the Company's existing shareholder group: THC of Houston, Inc.; THC of Tampa, Inc.; THC of Melbourne, Inc.; and THC of Orlando, Inc. pending final FCC approval which occurred in August of 1997. These licenses were transferred along with the related operating assets and liabilities of these entities in exchange for investment units consisting of Class A, B and C common stock and Series A preferred stock. Concurrently, the Company distributed the investment units, on a pro rata basis, in a partial stock redemption to the Company's existing shareholder group. As a result of this distribution, the Company no longer retains any ownership equity interest in the newly formed entities. Because the above transaction was non-monetary in nature and occurred between entities with the same shareholder group, the transaction was accounted for at historical cost. 2. Summary of Significant Accounting Policies Development Stage Company ------------------------- The Company's activities to date principally have been planning and participation in the Auction, initiating research and development, conducting market research, securing capital and developing its proposed service and network. Accordingly, the Company's financial statements are presented as a development stage enterprise, as prescribed by Statement of Financial Accounting Standards No. 7, "Accounting and Reporting by Development Stage Enterprises." Since the Auction, the Company has been relying on the borrowing of funds and 25 the issuance of common and preferred stock rather than recurring revenues, for its primary sources of cash flow. Use of Estimates ---------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Concentration of Credit Risk ---------------------------- Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company has invested its excess cash in a money market account with a commercial bank. The underlying assets of the fund collateralize these investments. The money market account invests in U.S. Government securities. The Company has not experienced any losses on its cash and cash equivalents. Cash Equivalents ---------------- The Company considers all highly liquid instruments with an original maturity of three months or less to be cash equivalents. Licenses and Microwave Relocation --------------------------------- As a condition of each PCS license, the FCC requires each license-holder to relocate existing microwave users (Incumbents) within the awarded spectrum to microwave frequencies of equal strength. Microwave relocation costs will include the actual and estimated costs incurred to relocate the Incumbents microwave links affecting the Company's licensed frequencies an dare presented in the financial statements at the estimated value of the project cost. PCS licenses also include costs incurred, including capitalized interest related to the U.S. Government financing, to acquire FCC licenses on frequency block F in the 1850-1990 MHz radio frequency band. Interest 26 capitalization begins when the activities necessary to get the PCS network ready for its intended use are in progress. For the year ended December 31, 1997, the Company capitalized $131,397 of interest cost. The PCS licenses are issued conditionally for ten years. Historically, the FCC has granted license renewals providing the licensees have complied with applicable rules, policies and the Communications Act of 1934, as amended. The Company believes it had complied with and intends to continue to comply with these rules and policies. The Company will amortize the cost of the PCS licenses and microwave relocation costs on a straight-line basis over 40 years at the time PCS services commence, which is expected to be in early 1999 for certain BTAs. Property and Equipment and Network Under Development ---------------------------------------------------- Property and equipment are recorded at cost and depreciated on the straight-line method over three to ten years based upon estimated useful lives. Network under development, includes all costs of engineering, cell site acquisition, site development, capitalized interest and other development costs being incurred, to ready the PCS network for use. Network under development will be depreciated over its estimated useful life. Long-Lived Assets ----------------- The Company periodically evaluates the recoverability of the carrying value of the property and equipment, network under development, intangible assets and PCS licenses. The Company considers historical performance and anticipated future results in its evaluation of potential impairment. Accordingly, when indicators of impairment are present, the Company evaluates the carrying value of these assets in relation to the operating performance of the business and future and undiscounted cash flows expected to result from the use of these assets. Impairment losses are recognized when the sum of expected future cash flows are less than the assets' carrying value. No such impairment losses have been recognized to date. Income Taxes ------------ 27 The Company accounts for income taxes in accordance with the liability method. Deferred income taxes are recognized for tax consequences in future years for differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end, based on enacted laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary, to reduce net deferred tax assets to the amount expected to be realized. The provision for income taxes consists of the current tax provision and the change during the period in deferred tax assets and liabilities. 28 NOTES TO FINANCIAL STATEMENTS Start-Up and Advertising Costs ------------------------------ Start-up and advertising costs are expensed as incurred. 3. Property and Equipment Property and equipment consists of the following as of December 31,
1996 1997 --------------------------------- Network under development $ - $3,269,793 Computer and office equipment 904 328,875 Furniture and fixtures - 21,306 --------------------------------- 904 3,619,974 Accumulated depreciation (75) (10,700) --------------------------------- $ 829 $3,609,274 =================================
4. Notes Payable Notes payable consists of the following as of December 31,
1996 1997 ---------------------------------- U.S. Government financing $ - $ 9,192,938 Less: discount on U.S. - (1,465,616) Government financing ---------------------------------- $ - $ 7,727,322 ================================== Notes payable to shareholders $498,750 $ 2,808,500 ==================================
29 U.S. Government Financing ------------------------- In 1996, the Company placed $7,500,000 on deposit with the FCC in order to bid on F Block broadband PCS licenses. The funding for the deposit was obtained from the issuance of common and preferred stock in August 1996 (see Note 5). In April 1997, the Company's application for the PCS licenses was approved. The Company made a down payment of $5,942,835 using the funds from the FCC deposit and issued promissory notes to the FCC for $23,771,342. The balance of the Company's deposit of $1,557,165 was refunded in April 1997. The terms of the notes include: interest rate of 6.25% quarterly interest payments which commence in July 1998 for the two years thereafter, then quarterly principal and interest payments for the remaining 8 years. The notes were discounted using managements best estimate of the prevailing market interest: rate of 10.25%. The promissory notes are collateralized by the underlying PCS licenses. --------------- In August 1997 upon final approval by the FCC, certain of the PCS licenses with a cost of $15,678,814 and related US Government financing in the amount of $12,034,212 were transferred to four newly- formed entities created by the Company's existing shareholder group (See Notes 1 and 8). Notes Payable to Shareholders ----------------------------- In July 1996, the Company issued $498,750 of subordinated promissory notes to two shareholders. The notes bear interest at a rate of 10%, compounded semi-annually; and are dull in full in, July 2OO2. In April 1997, these notes were converted into 50 shares of Series A preferred stock (See Note 5). In December 1997, the Company issued various promissory notes to shareholders. The notes bear interest at a rate of 6.00% and are due in full in July 1998. The notes were discounted using management's best estimate of the prevailing market interest rate of 10.25%. The effect on the 1997 financial statement of discounting these notes was not material. The notes payable are collateralized by all of the Company's assets. Maturities of all notes payable (undiscounted) as of December 31, 1997 are as follows: Amount ------ 1998 $ 2,808,500 1999 450,719 30 2000 944,470 2001 1,004,898 2002 1,069,191 Thereafter 5,723,660 ----------- $12,001,438 ----------- 5. Shareholders' Equity Preferred Stock --------------- The Series A preferred stock has a cumulative annual dividend right equal to 10% of the sum of the Series A preferred stock plus all accrued and unpaid dividends compounded annually. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of the Series A preferred stock shall be entitled to receive, prior and in preference to any distribution of any assets of the Company to the holders of Class A, B and C common stock, an amount of $10,000 per share plus all accrued and unpaid dividends. The Company shall have the right to call all or any shares of the Series A preferred stock at anytime for $10,000 per share plus all accrued and unpaid dividends. At any time after August 31, 2002 each holder of Series A preferred stock may elect, by written notice to the Company, to redeem a specified number of shares at a price equal to $10,000 per share plus all accrued and unpaid dividends. Since the Series A preferred stock is mandatorily redeemable at the option of the holder, the Company accretes the 10% dividend right. For the period ended December 31, 1996 and for the year ended December 31, 1997 the cumulative accretion of preferred stock dividends was $288,959 and $1,014,516, respectively. Activity related to the preferred stock for the period July 29, 1996 (inception) to December 31, 1996 and the year ended December 31, 1997 is as follows:
Series A Preferred Stock ------------------------ Shares Amount ----------------------------------- Issuance of preferred stock 750 $ 7,500,000 Accretion of preferred stock dividends - 288,959 ----------------------------------- Balance, December 31, 1996 750 7,788,959 Issuance of preferred stock 150 1,500,000 Conversion of promissory note to preferred stock 50 498,750 Accretion of preferred stock dividends - 725,557 Redemption of equity interests (583) (6,368,926) ----------------------------------- Balance, December 31,1997 367 4,144,340 ===================================
31 Common Stock - ------------ Each class of common stock shall have equal dividend and liquidation rights subject to the rights and preferences of the holders of the preferred stock. Dividends may be declared and paid on the common stock from funds legally available as and when determined by the Board of Directors. The Class A common stock shall have 5,010,000 voting rights, the Class B common stock shall have no voting rights and the Class C common stock shall have 4,990,000 voting rights. Each holder of Class C common stock shall be entitled at any time to convert any and all of the shares into the same number of shares of Class B common stock upon the occurrence of certain defined regulatory events. Each holder of Class B common stock shall be entitled at any time to convert any or all of the shares into the same number of shares of Class C common stock upon a conversion event, as defined. Because the Series A preferred stock contains preferences that are significantly more than the Company's net worth, only nominal or no value has been ascribed to the common stock. Control Group Options - --------------------- In order to maintain its Designated Entity status, the Company has reserved for issuance options to purchase shares of Class A common stock for each holder of Class A common stock pro rata to their respective holdings, in connection with future sales of the Company's common stock, in such amount as necessary for management to hold not less than 60% of such Class A common stock (except that after the third anniversary of the grant of the PCS licenses management's ownership may be reduced to 40%). The options will be exercisable at any time within 10 years from the date of grant at an exercise price equal to the price per share of the common stock the issuance of which triggers such options. As of December 31, 1997, no options have been granted. 6. Income Taxes The tax effect of the temporary difference that gives rise to significant portions of the deferred tax assets as of December 31, 1996 and 1997, respectively, are as follows: 1996 1997 ---- ---- Capitalized organization costs $ 199,500 $ 1,267,400 --------- ----------- 199,500 1,267,400 Less valuation allowance (199,500) (1,267,400) --------- ----------- 32 $ $ =========== ========== Capitalized organization costs include expenses incurred, in the organization and start-up of the Company. For federal income tax purposes, these costs will be amortized over five years once active business operations commence. 33 7. Commitments The Company has operating leases primarily related to the rental of office space. As of December 31, 1997, the aggregate minimum rental commitments under noncancelable operating leases are as follows: 1998 $219,411 1999 222,916 2000 231,832 -------- Total $674,159 ======== Rental expense, which is recorded ratably over the lease terms, was approximately $2,000 and $157,000 for the period ending December 31, 1996 and the year ended December 31, 1997, respectively. Upon commencement of operations, the Company expects to pay Incumbents approximately $25,415,000 for equipment and installation costs in connection with the microwave relocation services. 8. Related Parties The Company utilizes the services of a law firm in which the President of the Company is also a partner. The Company paid the law firm approximately $110,000 and $250,000 for the period ended December 31, 1996 and for the year ended December 31, 1997, respectively, for legal services. As of December 31, 1996 and 1997, the Company owed the law firm $0 and $70,464, respectively. Subsequent to year-end, the individual resigned from the law firm. The Company receives site acquisition, construction management, program management, microwave relocation, and engineering services pursuant to a Master Service Agreement with Entel Technologies, Inc. (Entel). The Chief Executive Officer and the President of the Company are shareholders and the Chief Executive Officer is a senior officer of Entel. Fees for the above services are as follows: $12,000 per site for site acquisition services, $7,000 per site for construction management services, $9,000 per site for program management and $1,100,000 for microwave relocation services. The microwave relocation services obligation is recorded on the balance sheet as of January 21, 1998 since clearing has been initiated. Fees for engineering services are based upon Entel's customary hourly rates. For the period ended December 31, 1996 and for the year ended December 31, 1997, the Company paid $30,829 and 34 $440,375, respectively, to Entel for these services. As of December 31. 1996 and 1997, the Company owed Entel $57,478 and $170,596, respectively. In addition, Entel processes the payroll for all of the Company's employees for which the Company does not incur a fee. No amounts have been expensed for payroll processing services provided by Entel because they are not estimable. Subsequent to year end, the Chief Executive Officer and President sold 100% of their interests in Entel. As of December 31, 1997, the Company had notes payable to affiliates of $2,072,573. The notes represent the difference of the recorded historical costs of the assets, liabilities and equity interests distributed to THC Houston, Inc.; THC of Tampa, Inc.; THC of Melbourne, Inc.; and THC of Orlando, Inc. (see Note 1), and were originally comprised of the following: Due (to) from - amount -------------- PCS licenses $ 15,678,814 U.S. Government financing $(12,034,212) Equity interests (6,370,070) ------------ Total $ (2,725,468) ============ In connection with the transfer of the PCS licenses, US Government financing and equity interests, the Company reduced the notes payable to affiliates by $652,895, which represents certain costs incurred by the Company on behalf of the affiliates for the year ended December 31, 1997 pursuant to Transfer Agreements and Management Agreements. Therefore, as of December 31, 1997, the combined amounts owed to THC Houston, Inc., THC Tampa, Inc., THC Melbourne, Inc, and THC Orlando, Inc. was $2,072,573. These amounts were converted to notes payable due on demand bearing interest at the prime rate. 35 As of December 31, 1997, the Company had amounts payable of $824,164 to TeleCorp WCS, Inc. (WCS), a newly formed entity created by the Company's existing shareholder group in 1997. The amount payable to WCS represents $1,200,000 of funds received by the Company on behalf of WCS related to Wireless communications Service licenses owned by WCS reduced by expenses and other payments owed by WCS to the Company. 9. Subsequent events Commitments ----------- In March 1998, the Company entered into it short term sublease agreement for office space through December 31, 1998. The terms of the agreement include a security deposit of $33,500 and monthly rent, payable in advance, of $33,500 per month. The security deposit is to be held in a non-interest bearing account, and returned 30 days after sublease termination. In June 1998 the Company entered into a 10 year operating lease for office space. The terms of the agreement require the Company to obtain a letter of credit for $1,200,000, which may be reduced by 20% at the end of each year. The Company is responsible for its proportionate share of property taxes and operating expenses. Base rent increases on from 2% to 6% annually, as defined by the lease agreement. In 1998, the Company entered into several 10 year operating lease agreements for Multiple Switching Centers (MSC). The terms of the leases require the Company to obtain letters of credit ranging from S100,000 to $300,000 and base rent increases in year 6 from 10% to 15%. The combined monthly payments for these leases is approximately $26,500. The Company entered into numerous operating leases for cell sites subsequent to year end. Lease terms range from 3 to 10 years. Most of the leases provide the Company with renewal options and generally require the Company to pay for utilities, taxes, insurance and maintenance costs, in addition to base rent which generally increase 3% to 5% per annum after the first year. Generally, these leases commence upon installation of 36 equipment, accordingly, most leases have not commenced. As of July 15, 1998 future minimum lease commitments of commenced leases total $6,042,000. Financing - --------- During the six month period ended June 30, 1998, the Company borrowed approximately $22,500,000 in the form of promissory notes from existing and prospective shareholders to satisfy the working capital needs of the Company. The promissory notes bear interest at the rate of 6.25% per annum compounded quarterly and are payable in one lump sum on August 31, 1998. These funds are creditable against the $128,000,000 cash commitment in connection with the proposed AT&T Transaction described below. AT&T Transaction - ---------------- In January 1998, the Company shareholders entered into a strategic venture with TeleCorp PCS, Inc. (the Venture), AT&T Corporation and its affiliates (AT&T), and various other venture capital investors (VC Investors) for the purpose of providing broadband PCS services in the New Orleans, Houston, Louisville, St. Louis, Little Rock, Memphis and Boston PCS major trading areas (MTA). In exchange for an ownership interest in the Venture: (1) the Company's shareholders will contribute 100% of their ownership interests in the Company, (ii) AT&T will contribute PCS licenses in the aforementioned MTAs, the use of the AT&T service marks and a roaming agreement, and (iii) the VC Investors will commit to contribute $128,000,000 in cash. The ownership interests will be comprised of various classes of voting and non-voting common stock various series of preferred stock and common tracking stock. As a result of the above transaction, the Company will become a wholly-owned subsidiary of the Venture. The effective date of the Venture is anticipated to be July 15, 1998. The Company is finalizing an independent appraisal of the value of the AT&T PCS contributed licenses which will be amortized over 40 years once wireless service is ready to commence along with an appraisal for the use of the AT&T service marks, an intercarrier roaming agreement and a exclusivity arrangement. Lucent Agreements - ----------------- In May 1998, the Venture entered into a supply agreement with Lucent Technologies, Inc. (Lucent) whereby the Venture has agreed to purchase from Lucent radio, switching and network equipment and services up to $285,000,000 for the construction of its PCS networks over a five year period commencing in 1998. The Venture may defer payment on all Lucent equipment and services purchased by the Venture until the earlier of September 37 30,1998 or the initial closing of a senior credit facility. In addition, Lucent has agreed to provide $40,000,000 of extended payment terms in the form of a line-of-credit for purchase of Lucent equipment and services. Interest and principal will be due at maturity with mandatory redemption of all balances upon the earlier of a senior debt closing or September 30,1998. The Venture will have the ability to issue to Lucent increasing rate 8.5% Series A and 10.0% Series B Junior. Subordinated Bonds (the Bonds), with an aggregate face value of $95,000,000, subject to adjustment up to $160,000,000 based upon the occurrence of certain defined events, pursuant to a May 1998 note purchase agreement. The Bonds will be subject to a final maturity no later than January 2012, subject to an earlier maturity date upon the occurrence of certain defined events. Lucent's commitment to provide financing is conditioned upon the occurrence of certain events, including but not limited to the Venture's ability to obtain a commitment for a senior credit facility of at least $525,000,000, the closing of the supply agreement, the transfer of certain PCS licenses by AT&T Wireless PCS, Inc. to the Venture and the receipt of at least $128,000,000 of equity commitments from investors. In June 1998, the Venture borrowed $10,000,00 of the 8.5% Series A Junior Subordinated Bonds. Senior Secured Credit Facilities - -------------------------------- The Venture is currently negotiating with Chase Securities, Inc., TD Securities USA, and Bankers Trust Company to provide up to S525,000,000 of senior secured credit facilities (the Facilities) to the Venture. Proceeds of the Facilities will be used to fund capital expenditures related to the construction of the Venture's PCS System; acquisitions of PCS sites, certain AT&T PCS licenses and working capital. The Facilities will consist of three tranches in the form of a $150,000,000 Revolving Credit Note, a $150,000,000 Term Loan A, and a $225,000,000 Term Loan B. The initial interest rate on the Revolving Credit Note and Term Loan A will be LIBOR plus 275 basis points. The interest rate on the Term Loan B will be fixed at LIBOR plus 325 basis points. The initial commitment fee on the available, but unused, portion of the Facilities will be 125 basis points. The commitment fee will decrease based on usage under the Revolving Credit and Term Loan A. If the Venture issues high-yield subordinated debentures of at least $220,000,000 within 12 months of closing the Facilities, the spreads applicable to the Facilities will be reduced 25 basis points. 38 In addition, borrowing under the Facilities will be subject to a maximum Senior Debt to Total Capital, as defined, ratio of 50%, provided that if (i) all unfunded commitments have been contributed in full in cash and (ii) minimum covered POPs meet or exceed 60% of the aggregate number of POPs within the Licensed Area, then the ratio increases to 55%. Upon completion of a high yield issuance of at least $220 million, the Facilities will be subject to a maximum Total Debt to Total Capital ratio of 70%. Once certain specified operating benchmarks are achieved, the Facilities will be fully available without regard to the Total Debt to Total Capital Ratio. The Term Loan A and B will be amortized in quarterly installments of principal commencing approximately four years after the closing date; commitments under the Revolving Credit will automatically reduce in quarterly installments of principal commencing approximately six and one half years after the closing date. Commencing with the year ended December 31,2001, 50% of the Venture's excess cash flow will be applied ratably to reduce commitments under the Revolving Credit and to prepay portions of Term Loan A and Term Loan B. All obligations of the Venture under the Facilities will be unconditionally and irrevocably guaranteed by each of its existing and subsequently acquired domestic subsidiaries. The Facilities will be secured by substantially all the assets of the Venture, including (i) a first priority pledge of all the capital stock held by the Venture or any subsidiary of the Venture and (ii) perfected first priority security interest in, and mortgages on, all tangible and intangible assets of the Venture and its subsidiaries. Venture's equity subscription agreements and the contracts associated therewith will also be assigned as security to the Lenders. The closing of the Facilities is pending the closing of the AT&T Transaction. Acquisitions - ------------ On May 15, 1999, the Venture signed an agreement to acquire four additional F Block PCS licenses in the Baton Rouge, Houma, Hammond and Lafayette, Louisiana BTAs from Mercury PCS II, L.L.C., an AT&T affiliate for estimated total consideration of $6,400,000. The total consideration is comprised of 2,332 shares of Series C Preferred Stock and 2,269 shares of Class A Voting Common Stock with an estimated value of $2,300,000 and the assumption of FCC debt of $4,100,000. The final closing of this transaction is pending approval by the FCC. In addition, upon the final closing of this acquisition, the VC Investors will contribute an additional $5,000,000 of capital to the Venture in exchange for preferred and common stock. 39 CORRECTION TO AGREEMENT This Correction to Agreement entered into as of July 17, 1998 (this "Correction') is by and among AT&T Wireless PCS Inc., a Delaware corporation ("AT&T PCS"), TWR Cellular, Inc., a Maryland corporation ("TWR"), the Cash --------- --- Equity Investors, the TeleCorp Investors, the Management Stockholders and TeleCorp PCS, Inc., a Delaware corporation (the "Company" and, together with ------- AT&T PCS, TWR, the Cash Equity Investors, the TeleCorp Investors, and the Management Stockholders, the "Parties"). AT&T PCS, TWR, the Cash Equity Investors and TeleCorp Investors are sometimes referred to herein as the "Purchasers". Capitalized terms used but not defined herein shall have the ---------- meanings given to such terms in the Closing Agreement defined below. WHEREAS, the Parties entered into that certain Securities Purchase Agreement, dated as of January 23, 1998 (the "Securities Purchase Agreement"), ----------------------------- pursuant to which the Purchasers acquired certain securities of the Company in consideration of contributions of cash and/or other property to the capital of the Company; WHEREAS, the Parties entered into that certain Agreement, dated as of July 17, 1998 (the "Closing Agreement"), whereby Section 3 of the Closing ----------------- Agreement amended the Securities Purchase Agreement by deleting Schedule V thereto in its entirety and replacing it with Schedule V annexed to the Closing Agreement ("Schedule V"); ---------- WHEREAS, the Parties have determined that Schedule V is incorrect in certain respects; and WHEREAS, the Parties wish to correct Schedule V as set forth below. NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants herein contained, the Parties agree as follows: 1. Correction to Schedule V. The Parties acknowledge and agree that ------------------------ Schedule V is hereby corrected, as of July 17, 1998, by deleting Schedule V in its entirety and replacing it with Schedule V annexed hereto. 2. No Other Corrections; Full Force and Effect. Except as expressly ------------------------------------------- corrected in Section I above, all other terms and conditions of the Closing Agreement shall remain in full force and effect. 40 3. Miscellaneous. This Correction embodies the entire agreement and ------------- understanding of the Parties relating to the subject matter hereof and supersedes all prior agreements and understandings relating to such subject matter. This Correction may not be amended, changed, supplemented, waived or other-wise modified except by an instrument in writing signed by each Party against whom enforcement is sought. This Correction shall be binding upon and shall inure to the benefit of each Party and their permitted successors and assigns. Each Party will execute and deliver such further documents and take such further actions as the other Parties may reasonably request consistent with the provisions hereof in order to effect the intent and purposes of this Correction. The Parties hereby irrevocably and unconditionally consent to submit to the non-exclusive jurisdiction of the courts of the State of New York and of the United States of America located in the County of New York, New York, (the "New York Courts") for any litigation arising out of or relating to this --------------- Correction, waive any objection to the laying of venue of any such litigation in the New York Courts and agree not to plead or claim in any New York Court that such litigation brought therein has been brought in an inconvenient forum. Any provision of this Correction, which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, or unenforceability without invalidating the remaining provisions hereof and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. This Correction may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one instrument. IN WITNESS WHEREOF, the undersigned have executed this Correction as of the date first above written. TELECORP PCS, INC. By: /s/ Gerald T. Vento ------------------------------ Name: Gerald T. Vento Its: CEO AT&T WIRELESS PCS INC. By: /s/ William W. Hague ------------------------------ Name: William W. Hague Its: Senior Vice President TWR CELLULAR INC. By: /s/ Michael R. Hannon ------------------------------ Name: Michael R. Hannon Its: General Partner 41 Cash Equity Investors: CB CAPITAL INVESTORS, L.P. By: /s/ Michael R. Hannon ------------------------------ Name: Michael R. Hannnon Its: General Partner NORTHWOOD VENTURES LLC By: /s/ Peter G. Schiff ------------------------------ Name: Peter G. Schiff Its: President NORTHWOOD CAPITAL PARTNERS LLC By: /s/ Peter G. Schiff ------------------------------ Name: Peter G. Schiff Its: President ONELIBERTY FUND III, L.P. By: /s/ Joseph T. McCullen, Jr. ------------------------------ Name: Joseph T. McCullen, Jr. Its: General Partner ONELIBERTY FUND IV, L.P. By: /s/ Joseph T. McCullen, Jr. ------------------------------ Name: Joseph T. McCullen, Jr. Its: General Partner 42 HOAK COMMUNICATIONS PARTNERS, L.P., By: HCP Investments, L.P., its general partner By: Hoak Partners, LLC, its general partner By: /s/ James M. Hoak ----------------- Name: James M. Hoak Its: Manager HCP CAPITAL FUND, L.P. By: James M. Hoak & Co., Its General Partner By: /s/ James M. Hoak ----------------- Name: James M. Hoak Its: Manager ENTERGY TECHNOLOGY HOLDING COMPANY By: /s/ Stephen T. Refsell ---------------------- Name: Stephen T. Refsell Its: Vice President TORONTO DOMINION INVESTMENTS INC. By: /s/ Martha L. Gariepy --------------------- Name: Martha L. Gariepy Its: Vice President 43 WHITNEY EQUITY PARTNERS., L.P. By: J.H. Whitney Equity Partners L.L.C., Its general partner By: /s/ William Laverack, Jr ------------------------ Name: William Laverack, Jr Its: J.H. WHITNEY III, L.P. By: J.H. Whitney Equity Partners III, L.L.C., its general partner By: /s/ William Laverack, Jr ------------------------- Name: William Laverack, Jr Title: WHITNEY STRATEGIC PARTNERS III, L.P. By: J.H. Whitney Equity Partners III, L.L.C., its general partner By: /s/ William Laverack, Jr --------------------- Name: William Laverack, Jr Its: 44 CB CAPITAL INVESTORS, L.P. By: CB Capital Investors, Inc., its general partner By: /s/ Michael R. Hannon --------------------- Name: Michael R. Hannon Its: Vice President NORTHWOOD VENTURES LLC By: /s/ P.G. Schiff --------------- Name: P.G. Schiff Its: President NORTHWOOD CAPITAL PARTNERS LLC By: /s/ P.G. Schiff --------------- Name: Henry T. Wilson Its: President ONE LIBERTY FUND III, L.P. By: /s/ Joseph T. McCullen Jr. -------------------------- 45 Name: Joseph T. McCullen, Jr. Its: General Partner ONELIBERTY FUND III, L.P. By: /s/ Joseph T. McCullen, Jr. ------------------------- Name: Joseph T. McCullen, Jr. Its: General Partner MEDIA./COMMUNICATIONS INVESTORS LIMITED PARTNERSHIP By: M/C Investors General Partner - J. Inc., a general partner By: /s/ James F. Wade ----------------- Name: James F. Wade Its: President MEDIA/COMMUNICATIONS PARTNERS III LIMITED PARTNERSHIP By: M/C III L.L.C. its general partner By: /s/ James F. Wade ----------------- Name: James F. Wade Its: Manager 46 ENTERGY TECHNOLOGY HOLDING COMPANY By: /s/ Stephen T. Refsell ---------------------- Name: Stephen T. Refsell Its: Vice President 47 GILDE INTERNATIONAL B.V. By: /s/ Joseph McCullen, Jr. ------------------------ Name: Joseph McCullen, Jr. Its: Attorney-in-Fact TELECORP INVESTMENT CORP., LLC By: /s/ Gerald T. Vento ------------------- Name: Gerald T. Vento Its: CEO MANAGEMENT STOCKHOLDERS: GERALD T. VENTO Gerald T. Vento ------------------- THOMAS H. SULLIVAN Thomas H. Sullivan ------------------- 48 ENTERGY TECHNOLOGY HOLDING COMPANY By: /s/ Stephen T. Refsell ---------------------- Name: Stephen T. Refsell Its: Vice President 49 EX-10.21 36 EMPLOYEE AGREEMENT, STEVEN CHANDLER Exhibit 10.21 EMPLOYEE AGREEMENT BETWEEN TELECORP PCS, INC. AND STEVEN CHANDLER Table of Contents 1. Definitions.................................................................................. 1 2. Duties....................................................................................... 1 3. Compensation................................................................................. 2 4. Accrued Benefits............................................................................. 2 5. Death........................................................................................ 2 6. Termination for Cause/Voluntary Termination.................................................. 3 7. Termination Giving Rise to a Termination Payment............................................. 3 8. Confidential Information..................................................................... 3 9. Covenant Not to Compete/Non-Solicitation/Limitation on Public Statements..................... 3 10. Employee Representations..................................................................... 4 11. Amendment.................................................................................... 4 12. Governing Law................................................................................ 4 13. Notice....................................................................................... 4
EMPLOYEE AGREEMENT ------------------ AGREEMENT, made and entered into as of this 17th day of July, 1998, by and between TeleCorp PCS, Inc., a Delaware corporation (the "Company"), and Steven Chandler, residing at 8129 Kimbrook Drive, Germantown, Tennessee 38138 (hereinafter called the "Executive"). W I T N E S E T H: - - - - - - - - - WHEREAS, the Company desires to employ Executive as an EMPLOYEE-AT- WILL to serve as General Manager, and the Executive desires to be employed at will by the Company as General Manager; NOW, THEREFORE, in consideration of the premises, and the mutual covenants and agreements hereinafter contained, the parties do hereby mutually covenant and agree as follows: 1. Definitions. ----------- (a) Person. For the purposes of this Agreement, "Person" shall mean ------ any individual, partnership, joint venture, association, trust, corporation, limited liability company or other entity. (b) Cause. "Cause" for termination by the Company of the Executive's ----- employment shall, for purposes of this Agreement, be limited to (i) the Executive's engaging in misconduct which has caused demonstrable and serious injury to the Company, financial or otherwise, or to the Company's reputation; (ii) conviction of a felony or misdemeanor as evidenced by a judgment, order, or decree of a court of competent jurisdiction; (iii) failure to comply with the directions of the Board of Directors or neglect or refusal by the Executive to perform the Executive's duties or responsibilities (unless such duties or responsibilities are significantly changed without the Executive's consent); or (iv) for any violation by Executive of this Agreement or of any agreement by and among the Company and the Executive relating to Executive's participation in the TeleCorp PCS, Inc. 1998 Restricted Stock Plan. (c) Termination Date. For purposes of this Agreement, "Termination ---------------- Date" shall mean the date on which the Executive ceases to be employed by the Company for any reason, including without limitation, death, termination or resignation. 2. Duties. For so long as Executive is employed by the Company, the ------ Executive shall hold the position of General Manager of the Company and shall devote his full working time and attention to the performance of his duties hereunder but nothing in this Agreement shall preclude the Executive from (i) participating in charitable and community activities or (ii) subject to prior approval of the Board of Directors of the Company, serving on the board of directors of another company, provided that in each case such activities or services do not materially interfere with the regular performance of his duties and responsibilities under this Agreement. For so long as Executive is employed by the Company, the Executive agrees to use all reasonable efforts, skills and abilities to promote the Company's interests; to serve as an officer of the Company; and to perform any duties (consistent with his status) as may be assigned by the board of directors. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE EXECUTIVE IS AN EMPLOYEE-AT-WILL OF THE COMPANY AND HAS NO RIGHT, WHETHER UNDER THIS AGREEMENT OR OTHERWISE, TO ANY CONTINUED EMPLOYMENT WITH THE COMPANY. 3. Compensation. For so long as Executive is employed by the ------------ Company, the Executive shall be compensated as follows: (a) Executive shall receive, at such intervals and in accordance with the Company's customary payroll policies, an annual salary (the "Base Salary") of One Hundred Thirty-Five Thousand Dollars ($135,000) for services rendered as General Manager of the Company; (b) the Executive shall be eligible to receive an annual bonus commencing on December 31, 1998 in an amount up to 20% of Executive's Base Salary for such calendar year, prorated for the number of months actually employed, as determined by the Board of Directors of the Company in its discretion, taking into consideration all relevant factors, including, without limitation, the financial performance and development of the Company and the Executive's role therein; (c) the Company shall pay or reimburse the Executive for all reasonable expenses actually incurred or paid by the Executive in the performance of his services hereunder; and (d) the Executive shall be included to the extent eligible thereunder in any and all plans, if any, providing general benefits to the Company's employees, including, but not limited to, group life insurance, hospitalization, disability, medical, dental, and pension, and shall be provided any and all other benefits and perquisites, if any, made available to other employees of comparable status and position, at the expense of the Company on a comparable basis. 4. Accrued Benefits. For purposes of this Agreement, the Executive's ---------------- Accrued Benefits shall be defined as and include the following amounts, payable as described herein: (i) any and all Base Salary earned or accrued through the Termination Date; (ii) reimbursement for any and all monies advanced by the Executive without reimbursement in connection with Executive's employment for reasonable and necessary expenses incurred by the Executive through the Termination Date; and (iii) any and all other cash or non-cash benefits previously earned or accrued but not paid through the Termination Date. 5. Death. If the Executive shall die while an employee of the ----- Company, the Executive's estate, heirs and beneficiaries shall receive only the Executive's Accrued Benefits through the Termination Date. All family medical benefits available to them under the 2 Company's benefit plans as in effect on the Termination Date shall be continued for six (6) months after the Termination Date at the Company's expense. 6. Termination for Cause/Voluntary Termination. If the Executive's ------------------------------------------- employment is terminated for Cause, or if the Executive voluntarily terminates the Executive's employment, then the Executive shall be entitled to receive only Accrued Benefits. 7. Termination Giving Rise to a Termination Payment. ------------------------------------------------ (a) If the Executive's employment is terminated by the Company other than for Cause, then the Executive shall be entitled to receive and the Company shall promptly pay Accrued Benefits through the Termination Date, and the Company further agrees that Executive shall be entitled to receive, and the Company hereby agrees to pay to Executive, an amount equal to twelve month's of Executive's then Base Salary (the "Termination Payment"). The Termination Payment shall be payable to the Executive at such intervals in accordance with the Company's normal payroll practices as if Executive remained in the employ of the Company. (b) If the Executive's employment is terminated by the Company other than for Cause and the Executive is entitled to Accrued Benefits and the Termination Payment, then the Executive shall continue to be covered at the expense of the Company by the same or equivalent hospital, medical, and dental coverage as Executive was covered by immediately prior to the Termination Date for a period of twelve months. 8. Confidential Information. Executive shall during the Executive's ------------------------ employment with the Company and at all times thereafter, treat all confidential material (as hereinafter defined) of the Company confidentially. Executive shall not, without the prior written consent of the Company, disclose such confidential material to any party, who at the time of such disclosure is not an employee or agent of the Company. For the purposes hereof, the term "confidential material" shall mean all information acquired by the Executive in the course of the Executive's employment with the Company; provided, however, that the term "confidential material" shall not include information which (i) becomes generally available to the public other than as a result of a disclosure by the Executive, (ii) was available to the Executive on a non-confidential basis prior to his employment with the Company, or (iii) becomes available to the Executive on a non-confidential basis from a source other than the Company. 9. Covenant Not to Compete/Non-Solicitation/Limitation on Public ------------------------------------------------------------- Statements. (a) For so long as the Executive is employed by the Company and for - ---------- a period of one year after the Termination Date, the Executive shall not compete, directly or indirectly, with the Company, including, without limitation, by being employed by, or being an officer or director of, or consultant to, any Person engaged in the same business then engaged in by the Company, whereby the Executive performs services, or has reporting authority for others providing services, within the Company's service area, or by being an investor (representing more than a 5% equity interest) in a Person engaged in the same business then engaged in by the Company in the Company's service area. 3 (b) For so long as the Executive is employed by the Company and for a period of one year after the Termination Date, the Executive shall not interfere with, disrupt or attempt to disrupt the relationship, contractual or otherwise, between the Company and any customer, client, supplier, consultant or employee of the Company. (c) For a period of one year following the Termination Date, the Executive shall limit any public statements concerning the Company to those confirming the Company's prior employment of Executive. (d) It is the desire and intent of the parties that the provisions of this Section 9 shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular portion of this Section 9 shall be adjudicated to be invalid or unenforceable, this Section 9 shall be deemed amended to delete therefrom the portion thus adjudicated to be invalid or unenforceable, such deletion to apply only with respect to the operation of this Section in the particular jurisdiction in which such adjudication is made. 10. Employee Representations. The employee represents and warrants to ------------------------ the Company as follows: (i) he is not under any obligation to any Person which is inconsistent or in conflict with this Agreement or which would prevent, limit or impair in any way the performance of his obligations hereunder; and (ii) he has not disclosed and will not disclose to the Company, nor use for the Company's benefit, any confidential information or trade secrets of any prior employer or principal, unless and until such confidential information and trade secrets have become public knowledge without the employee's participation, or unless such disclosure is permitted by any agreement with such prior employer or principal. 11. Amendment. The terms and provisions of this Agreement may be --------- modified or amended only by written agreement executed by all parties hereto. 12. Governing Law. This Agreement and the rights and obligations ------------- hereunder shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia, without giving effect to the conflict of law principles thereof. 13. Notice. All notices, requests, consents and other communications ------ hereunder shall be in writing, shall be addressed to the receiving party's address set forth below or to such other address as a party may designate by notice hereunder, and shall be either (i) delivered by hand, (ii) telexed, telecopied or made by facsimile transmission, (iii) sent by overnight courier, or (iv) sent by certified or registered mail, return receipt requested, postage prepaid. If to the Company: TeleCorp PCS, Inc. 1101 17/th/ Street, N.W., Suite 900 Washington, D.C. 20036 Attention: General Counsel 4 If to Executive: c/o TeleCorp PCS, Inc. 1101 17/th/ Street, N.W. 9/th/ Floor Washington, D.C. 20036 All notices, requests, consents and other communications hereunder shall be deemed to have been given either (i) if by hand, at the time of the delivery thereof to the receiving party at the address of such party set forth above, (ii) if telexed, telecopied or made by facsimile transmission, at the time that receipt thereof has been acknowledged by electronic confirmation or otherwise, (iii) if sent by overnight courier, on the next day following the day such mailing is made (or in the case that such mailing is made on Saturday, on the immediately following Monday), or (iv) if sent by certified or registered mail, on the 5th day following the time of such mailing thereof to such address (or in the case that such 5th day is a Sunday, on the immediately following Monday). IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above. TELECORP PCS, INC. By: /s/ Gerald T. Vento --------------------------------- Gerald T. Vento, CEO EXECUTIVE /s/ Steven Chandler ------------------------------------ Steven Chandler 5 EX-10.22 37 SHARE GRANT AGREEMENT Exhibit 10.22 TELECORP PCS, INC. RESTRICTED STOCK PLAN SHARE GRANT AGREEMENT --------------------- THIS AGREEMENT is entered into by and between TeleCorp PCS, Inc., a Delaware Corporation (the "Company"), and Steven Chandler, an employee of the Company (hereinafter the "Executive"). WHEREAS, the Company adopted the TeleCorp PCS, Inc. 1998 Restricted Stock Plan (the "Plan") on July 16, 1998 in order to be able to award certain preferred and common shares of the Company to certain executives of the Company so as to give them a proprietary interest in the Company's success and to ensure their continuation as employees of the Company; and WHEREAS, the Executive renders important services to the Company or a subsidiary of the Company, and the Company desires to award shares to the Executive under the Plan; NOW, THEREFORE, in consideration of the foregoing and the mutual agreements herein contained, the parties hereto hereby agree as follows: 1. Issuance of Grant Shares. The Company hereby grants to the ------------------------ Executive and the Executive hereby accepts from the Company upon the terms and conditions hereinafter set forth, 255.59 shares of Series E Preferred Stock of the Company and 520.92 shares of Class A Voting Common Stock of the Company (the "Grant Shares"). The effective date of issuance of the Grant Shares is the date hereof. Upon execution of this Agreement, the Company hereby agrees to issue to the Executive one or more certificates in his name for the Grant Shares. The Grant Shares will be validly issued and outstanding, fully paid and non- assessable. The Grant Shares will be held by the Company in the name of the Executive until fully vested pursuant to Section 4, below. 2. Other Conditions and Limitations. The Grant Shares are granted on -------------------------------- the condition that the receipt of the Grant Shares hereunder shall be for investment purposes and not with a view to resale or distribution, except that such condition shall be inoperative if the reoffering of Grant Shares is registered under the Securities Act of 1933, as amended, or if in the opinion of counsel for the Company such Grant Shares may be resold without registration. 3. Relationship to Plan. The Grant Shares granted pursuant to this -------------------- Agreement have been granted pursuant to the Plan and are in all respects subject to the terms, conditions and definitions of the Plan. The Executive hereby accepts the Grant Shares subject to all the terms and provisions of the Plan and agrees that all decisions and the interpretations of the Plan by the Compensation Committee of the Board of Directors of the Company (the "Committee") shall be final, binding and conclusive upon the Executive and his heirs. 4. Forfeiture of Grant Shares. The Grant Shares shall vest in -------------------------- accordance with the schedule set forth on Schedule B of the Plan. In addition, ---------- the following forfeiture provisions are hereby imposed upon the Grant Shares and shares issued in respect of such Grant Shares as share dividends or as share splits, or otherwise (the term "Grant Shares" as used in this Agreement to include all such shares): (a) Except as provided in paragraph (b), the Executive must remain employed by the Company or any of its subsidiaries during the vesting periods set forth on Schedule B of the Plan to vest in such ---------- Grant Shares. If the Executive fails to satisfy such requirements and is not otherwise vested under paragraph (b), the Executive shall forfeit and transfer to one or more persons designated by the Committee, all unvested Grant Shares granted pursuant to this Agreement. (b) If the Executive's employment with the Company or one of its subsidiaries terminates prior to vesting in any Grant Shares issued pursuant to this Agreement by reason of his retirement under a retirement plan maintained by the Company or one of its subsidiaries, the Committee may, in its sole discretion, specify that the Executive become vested at that time, at a future date or upon the completion of such other conditions as the Committee, in its sole discretion, may provide. (c) Executive further agrees that the Grant Shares shall be subject to repurchase by the Company at a repurchase price of $.01 per share in accordance with the terms of Exhibit A attached hereto. --------- 2 (d) Within 30 days of an event giving rise to a forfeiture under paragraphs (a) or (b) hereof, the Executive shall deliver to one or more persons specified by the Committee, all certificates representing the Grant Shares which have been forfeited together with stock powers validly assigning such Grant Shares to such other persons as the Committee may designate. The Company shall make no payment to the Executive with respect to any Grant Shares so forfeited. (e) If the Executive fails to comply with any of the provisions of this Section 4, the Company, at its option and in addition to its other remedies, may suspend the rights of the Executive to vote and to receive future dividends on the Grant Shares which have been forfeited or may refuse to register on its books any transfer or change in the ownership of the Grant Shares which have been forfeited or in the right to vote thereon, until the provisions of this Section 4 are complied with to the satisfaction of the Company. To ensure compliance with the terms of this Agreement, the Company may issue to its transfer agent appropriate stop transfer instructions with respect of the Grant Shares (including without limitation any vested Grant Shares). 5. Nontransferability of Shares. Any Grant Shares which are not vested, ---------------------------- as specified in Section 4 above, shall be non-transferable by the Executive. Transfer of Grant Shares which are vested is further restricted pursuant to the terms of a Stockholders' Agreement by and among Executive, the Company, AT&T PCS, TWR Cellular and the Cash Equity Investors, TeleCorp Investors and Management Stockholders identified therein, executed as of the date hereof (the "Stockholders' Agreement"). 6. Legends. Each certificate representing Grant Shares shall contain ------- legends in substantially the form set forth in Section 4.1(a) and (b) of the Stockholders' Agreement. 7. Rights as Shareholder. Except as otherwise provided in the Plan or --------------------- this Agreement, the Executive shall have all of the rights of a shareholder of the Company with respect to the Grant Shares registered in his name, including the right to vote such Grant Shares and receive the dividends and other distributions paid or made with respect to such Grant Shares. 8. No Employment Commitment; Tax Treatment. Nothing herein contained --------------------------------------- shall be deemed to be or constitute an agreement or commitment by the Company to continue the Executive in its employ. The Company makes no representation about the tax treatment to the 3 Executive with respect to receiving, holding or disposing of the Grant Shares, and the Executive represents that he has had the opportunity to discuss such treatment (including the application of Section 83 of the Code) with his tax adviser. 9. Governing Law. This Agreement shall be subject to and construed in ------------- accordance with the law of Commonwealth of Delaware. 10. Withholding Tax. The Company shall have the right to require the --------------- Executive to pay the Company the amount of any taxes which the Company is or will be required to withhold with respect to the Grant Shares. IN WITNESS WHEREOF, the Company and the Executive have executed this Agreement in duplicate on this 16th day of July, 1998. TELECORP PCS, INC. EXECUTIVE By: /s/ Thomas Sullivan /s/ Steven Chandler ------------------------ ------------------- Steven Chandler 4 Exhibit A --------- DEFINITIONS. - ------------ "Base Shares" means 260.46 shares of Class A Voting Common Stock and 255.59 shares of Series E Preferred Stock or, if the Supplemental Shares have theretofore been repurchased pursuant to Section (b)(1)(i) or (b)(2), 249.47 shares of Class A Voting Common Stock and 245.00 shares of Series E Preferred Stock. "Company Merger" shall mean any merger, combination or consolidation of the Company or one of its subsidiaries with or into any other entity (regardless of who survives). "Company Asset Sale" shall mean any sale or disposition of a substantial portion of the Company's assets. "Deemed Per Share Value" means (A) in the case of an Extraordinary Event specified in clause (x) or (y) of the definition thereof, (1) the fair market value of all of the assets of the Company and its Subsidiaries at the time of any calculation of such value, less (x) any expenses which would be incurred solely in connection with the disposition of such assets, (y) the aggregate amount of all liabilities of the Company and (z) the aggregate redemption price of all outstanding shares of all series of Preferred Stock of the Company that are not then convertible into Common Stock at the option of the holder thereof (or if any such series is not then redeemable, the aggregate liquidation preference thereof), all as determined in good faith by the Board of Directors, divided by (2) the number of shares of Common Stock outstanding on a Fully Diluted Basis, and (B) in the case of an Extraordinary Event specified in clause (z) of the definition thereof, the per share offering price of the Common Stock issued in connection with the public offering occurring on the IPO Date. "Extraordinary Event" means (x) the consummation of a Company Merger after giving effect to which the cash equity investors (as defined by the Company) in the aggregate shall beneficially own on a Fully Diluted Basis less than 33% of the capital stock or other equity interests in the surviving entity, (y) the consummation of a Company Asset Sale or (z) the occurrence of the IPO Date. "Extraordinary Event Shares" means a number of Grant Shares equal to 260.46 shares of Class A Voting Common Stock, or, if the Supplemental Shares have theretofore been repurchased, 249.48 shares of Class A Voting Common Stock. "Fully Diluted Basis" means, with respect to the shares of Common Stock outstanding, all of the shares of all classes of 5 Common Stock then outstanding (regardless of whether subject to repurchase), plus all the shares of Common Stock issuable upon the exercise of outstanding options or convertible securities that are then convertible into Common Stock at the option of the holder thereof; 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 (b) (3) equals (A) more than 30% but less than 35%, none of the Extraordinary Event Shares shall be deemed to be outstanding, and (B) 35% or more, one-half of the Extraordinary Event Shares shall be deemed to be outstanding. "IPO Date" shall mean the first date on which (a) the Class A Voting Common Stock shall have been registered pursuant to an effective registration statement under the Securities Act of 1933, (b) the aggregate gross proceeds received by the Company in connection with such registration statement(s) equals or exceeds $20 million, and (c) the Class A Voting Common Stock shall be listed for trading on the New York Stock Exchange or the American Stock Exchange or authorized for trading on NASDAQ, including without limitation its National Market system. "Supplemental Closing" shall mean the consummation by the Company or one of its wholly-owned subsidiaries of an acquisition of F-Block PCS Licenses in respect of one million or more POPs from Mercury PCS, LLC or its designee. 1. "Subsidiaries" means any entity in which the Company owns, directly or indirectly, 50% or more of the voting power of the voting equity securities or equity interests. "Supplemental Shares" means 10.59 shares of Series E Preferred Stock and 21.97 shares of Class A Voting Common Stock. Repurchase of Shares. - -------------------- Repurchase Upon Termination. Following the termination of Executive's employment with the Company, for any reason, each Executive shall sell to the Company, and the Company shall purchase from each Executive, at a repurchase price of $.01 per share: (i) first, if and only if the termination occurs prior to January 23, 2000, Executive's Supplemental Shares; (ii) second, if and only if the termination occurs prior to the occurrence of an Extraordinary Event, Executive's Extraordinary Event Shares; (iii) third, if and only if the termination occurs after the occurrence of an Extraordinary Event, Executive's Extraordinary Event Shares that have not theretofore vested 6 pursuant to this Agreement; and (iv) fourth, Executive's Base Shares that have not theretofore vested pursuant to this Agreement. Repurchase In Absence of SupplementaL Closing. If and only if the Supplemental Closing shall not have occurred on or before January 23, 2000, each Executive shall sell to the Company, and the Company shall purchase from each Executive, his Supplemental Shares. Repurchase Upon Extraordinary Event. Upon the occurrence of an Extraordinary Event, Executive shall sell to the Company, and the Company shall purchase from Executive, the percentage of his Extraordinary Event Shares set forth opposite the Internal Rate of Return realized by the Cash Equity Investors (as defined by that certain Stockholders' Agreement by and among AT&T Wireless PCS, Inc., the Cash Equity Investors, Management Stockholders and TeleCorp PCS, Inc., dated as of July 17, 1998) as set forth on the chart below in connection with the applicable Extraordinary Event: Internal Rate of Return Realized by Percentage of Extraordinary Cash Equity Investors Event Shares to be Repurchased --------------------- ------------------------------ Less than 30% 100% 30% or more but less than 35% 50% 35% or more 0% For the purpose of this paragraph, 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 actually made in respect of the Cash Equity Investors' Series C Preferred Stock and 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 aggregate redemption price of all outstanding shares of Series C Preferred Stock then Beneficially Owned by the Cash Equity Investors, plus the product of the Deemed Per Share Value multiplied by the number of shares of all classes of Common Stock then owned by the Cash Equity Investors, 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. 7 The Grant Shares repurchased pursuant hereto are sometimes referred to, collectively, as the "Repurchased Shares." Closing of Repurchase; Assignment of Repurchase Right. The closing of a purchase and sale of Repurchased Shares shall take place on a date mutually agreed by the Executive and the Company, but in no event later than 30 days after (i) in the case of Section (b)(1), the date Executive's employment with the Company terminates or, (ii) in the case of Section (b)(2), January 23, 2000, or (iii) in the case of Section (b)(3), the occurrence of the Extraordinary Event. At each 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 Repurchased 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 the shares of Preferred Stock and/or Common Stock being repurchased by the Company. Whenever the Company shall have the right to repurchase Preferred Stock and/or Common Stock hereunder, such Grant Shares shall be returned to the Plan and may be reissued by the Company. Escrow of Shares. The Certificate(s) representing all shares, subject to repurchase pursuant to Section (b) 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. In the event further instructions are desired by the Escrow Holder, he shall be entitled to rely upon written directions of the Committee. 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. If the Company or any assignee repurchases any of the Grant Shares pursuant to this Agreement, 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, the Escrow Holder shall: (i) cancel the certificate(s) held by the Escrow Holder and representing Grant Shares, (ii) cause new certificate(s) to be issued representing the number of Grant Shares no longer subject to repurchase pursuant to this Agreement, which certificate(s) the Escrow Holder shall deliver to Executive, and (iii) cause new certificate(s) to be issued representing the balance of the Grant Shares, which certificate(s) shall be held in escrow by the Escrow Holder in accordance with the provisions of this Section (d). Subject to the terms hereof, Executive shall have all the rights of a stockholder with respect to the Grant Shares while they are held in escrow, including without limitation, the right to vote the Grant 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 Grant 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 Executive is entitled by reason of his ownership of the Grant Shares shall be immediately subject to this escrow, deposited with the Escrow Holder and included thereafter as "Grant Shares" for purposes of this Agreement and the Company's repurchase right. 8 After the IPO Date, Executive shall have the right to exchange certificates evidencing the number of Grant Shares no longer subject to repurchase pursuant to this Agreement, for certificates that do not contain a restrictive legend. 9 STOCKHOLDERS' AGREEMENT ----------------------- STOCKHOLDERS' AGREEMENT, dated as of July 17, 1998 (this "Agreement"), by and among AT&T WIRELESS PCS INC., a Delaware corporation (together with its Affiliated Successors, "AT&T PCS"), TWR CELLULAR, INC., a Delaware corporation (together with its Affiliated Successors, "TWR Cellular"), the investors listed on Schedule I (individually, each a "Cash Equity Investor" and, collectively, with any of its Affiliated Successors, the "Cash Equity Investors"), the Management Stockholders (defined below), TELECORP PCS, INC., a Delaware corporation (the "Company") and STEVEN CHANDLER, an employee of the Company (the "Executive"). Each of the foregoing, together with all others who, in connection with a Transfer (as hereinafter defined) are required to become a party to this Agreement (other than the Company), or with the consent of the Board of Directors (as hereinafter defined) are issued shares of Company Stock and are required as a condition of such issuance to become a party to this Agreement, are sometimes referred to herein, individually, as a "Stockholder" and, collectively, as the "Stockholders." Capitalized terms used and not defined herein shall have the meaning set forth in the Stockholders' Agreement by and between AT&T PCS, Cash Equity Investors, Management Stockholders and the Company (the "Joint Venture Stockholders' Agreement"). RECITALS -------- WHEREAS, pursuant to the terms of a Share Grant Agreement by and between Executive and the Company, of even date herewith, Executive has been granted by the Company 255.59 shares of Series E Preferred Stock and 520.92 shares of Class A Voting Common Stock (collectively, the "Grant Shares"); and WHEREAS, the parties desire to enter into this Agreement to impose certain restrictions with respect to the voting rights of the Grant Shares and the sale, transfer or other disposition of the Grant Shares on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants, conditions and agreements hereinafter set forth, the parties agree as follows: ARTICLE I --------- Management of Company --------------------- Section 1.1 Board of Directors. Subject to Section 1.9, the Board of ----------- ------------------ Directors shall consist of thirteen (13) directors; provided, however, that the -------- ------- number of directors constituting the Board of Directors shall be reduced in the circumstances set forth in this Section 1.1. Executive hereby agrees that he will vote all of his shares of Class A Voting Common Stock Beneficially Owned or held of record by him (whether now owned or hereafter acquired), in person or by proxy, to cause the election of directors and thereafter the continuation in office of such directors as follows: (a) three (3) individuals selected by holders of a Majority in Interest of the Class A Voting Common Stock Beneficially Owned by the Cash Equity Investors, in their sole discretion; (b) Gerald Vento (so long as he is an officer of the Company and the Management Agreement shall be in full force and effect); (c) Thomas Sullivan (so long as he is an officer of the Company and the Management Agreement shall be in full force and effect); (d) two (2) individuals (the "Series A Preferred Directors") elected by AT&T PCS in its capacity as holder of Series A Preferred Stock so long as it and TWR Cellular has the right to elect two directors in accordance with the Restated Certificate; and (e) (i) three (3) individuals selected by the holders of the Voting Preference Stock, which three (3) individuals shall be reasonably acceptable to holders of a Majority in Interest of the Class A Voting Common Stock Beneficially Owned by the Cash Equity Investors, and (ii) three (3) individuals selected by the holders of the Voting Preference Stock, which three (3) individuals shall be reasonably acceptable to holders of a Majority in Interest of the Class A Voting Common Stock Beneficially Owned by the Cash Equity Investors and AT&T PCS, in the reasonable discretion of such Cash Equity Investors, on the one hand, and AT&T PCS, on the other hand. In the event that Mr. Vento or Mr. Sullivan shall cease to be an officer of the Company, or the Management Agreement shall cease to be in full force and effect, such individuals shall resign (or the holders of the Voting Preference Stock shall remove him) from the Board of Directors and the holders of the Voting Preference Stock shall select a replacement or replacements who shall be acceptable to a Majority in Interest of the Cash Equity Investors, AT&T PCS ,and TWR Cellular, in each case in its sole discretion. In the event that AT&T PCS shall cease to be entitled to elect the Series A Preferred Directors, such directors shall resign (or the other directors or Stockholders shall remove them) from the Board of Directors and the remaining directors shall take such action so that the number of directors constituting the entire Board of Directors shall be reduced accordingly. In the event that any Cash Equity Investor that has an Unfunded Commitment shall fail to satisfy any such portion of its Unfunded Commitments when due in accordance with Section 2.2 of the Securities Purchase Agreement or Section 3.10 of the Joint Venture Stockholders' Agreement, and such failure is not cured by such Cash Equity Investor within thirty-five (35) days thereof, then, until such failure is cured, the member of the Board of Directors who is designated by, or Affiliated with, such Cash Equity Investor (whether as an employee, partner, member, stockholder or otherwise) shall resign from the Board of Directors and the Person(s) who designated such member shall select an individual acceptable to AT&T PCS in its sole discretion. Each of One Liberty, Toronto Dominion and Northwood shall have the right, so long as it Beneficially Owns at least 5,000 shares of Series C Preferred Stock and 5,000 shares of Class A Voting Common Stock to designate one (1) person who shall be entitled to attend the Board of Directors Meeting as an observer, including meetings during which the Company's annual budget is discussed and presented. Such observer shall have -2- the right to receive all of the Board of Directors materials and shall also have the right to meet quarterly with the management of the Company to consult on the business affairs of the Company. In addition, so long as AT&T PCS and TWR Cellular have the right to designate two directors in accordance with the Restated Certificate, up to two (2) AT&T PCS regional directors (in regions overlapping with or in geographic proximity to the Territory) shall have the right to attend each meeting of the Board of Directors as an observer. Any nomination or designation of directors and the acceptance thereof pursuant to Section 1.1 shall be evidenced in writing. SECTION 1.2 REMOVAL; FILLING OF VACANCIES. Except as set forth in ----------- ----------------------------- Section 1.1, Executive agrees he will not vote any shares of Class A Voting Common Stock Beneficially Owned by him, to vote for the removal without cause of any director designated by any other Stockholder in accordance with Section 1.1. Any Stockholder or group of Stockholders who has the right to designate any member(s) of the Board of Directors shall have the right to replace any member(s) so designated by it (whether or not such member is removed from the Board of Directors with or without cause or ceases to be a member of the Board of Directors by reason of death, disability or for any other reason) upon written notice to the other Stockholders, the Company and the members of the Board of Directors which notice shall set forth the name of the member(s) being replaced and the name of the new member(s); provided, however, that if a -------- ------- director designated pursuant to (x) Section 1.1(e)(i) is replaced by the holders of Voting Preference Stock, the individual designated by the holders of Voting Preference Stock to replace such director must be acceptable to the Cash Equity Investors in accordance with the terms of Section 1.1(e)(i), and (y) Section 1.1(e)(ii) is replaced by the holders of Voting Preference Stock, the individual designated by the holders of Voting Preference Stock to replace such director must be acceptable to the Cash Equity Investors and AT&T PCS in accordance with the terms of Section 1.1(e)(ii). Executive agrees to vote his shares of Class A Voting Common Stock, or shall otherwise take any action as is necessary, to cause the election of any successor director designated by any Stockholder pursuant to this Section 1.2. The holders of the Voting Preference Stock, agree that during the three (3) year period commencing on the date hereof they will not (i) remove the individuals nominated by them pursuant to Sections 1.1(e)(i) and 1.1(e)(ii), or (ii) nominate for election any individuals other than the individuals initially selected by them and approved in accordance with said Sections 1.1(e)(i) and (e)(ii), subject to the agreements of such individuals to serve on the Board of Directors. SECTION 1.3 INITIAL DIRECTORS. In accordance with Section 228 of the ----------- ----------------- Delaware General Corporation Law and pursuant to the provisions of Section 1.1 of this Agreement, Executive hereby consents to the election of and does hereby elect in accordance with Section 1.1 hereof the persons designated in Schedule II hereof as directors of the Company. Such persons shall hold office until their successors are duly elected and qualified, except as otherwise provided in this Agreement, the Joint Venture Stockholders' -3- Agreement or the Restated Certificate or the Restated By-Laws. SECTION 1.4 BUSINESS OF THE COMPANY. The business and affairs of the ----------- ----------------------- Company shall be conducted by the officers of the Company under the supervision of the Board of Directors, substantially in accordance with operating and capital expenditure budgets approved by the Board of Directors from time to time. Executive hereby approves the five (5) year build-out plan for the Business and the capital budget for the first two (2) years of the Business in the forms attached as Schedule IX of the Joint Venture Stockholders' Agreement. SECTION 1.5 REQUIRED VOTES. (a) All actions of the Board of Directors ----------- -------------- of the Company shall require the vote of at least a majority of the entire Board of Directors, unless otherwise required by Law, the Restated Certificate, the Restated By-Laws, the Joint Venture Stockholders' Agreement or this Agreement. (b) None of the following transactions or actions shall be entered into or taken by the Company, unless (i) voted for or consented to by the vote of at least three (3) of the five (5) directors designated pursuant to Sections 1.1(a) and (d) and six (6) of the eight (8) directors designated pursuant to Sections 1.1(b), (c) and (e) of the Board of Directors of the Corporation. 1. The sale, transfer, assignment or other disposition of any material portion of the assets of the Company or any of its Subsidiaries other than in the ordinary course of business; 2. The merger, combination or consolidation of the Company or any of its Subsidiaries with or into any other entity, regardless of whether the Company or any such Subsidiary is the surviving entity in any such merger, combination or consolidation, the acquisition of any businesses by the Corporation, the formation of any partnership or joint venture involving the Company, or the liquidation, dissolution or winding up of the Company or any of its Subsidiary; 3. Any offering or issuance of additional shares of Preferred Stock, Voting Preference Stock or Common Stock of, or any other securities or ownership interests in, the Company or any of its Subsidiaries, including, without limitation, warrants, options or other rights convertible or exchangeable into Preferred Stock, Voting Preference Stock or Common Stock of, or other securities or ownership interests in, the Company or any of its Subsidiaries except as contemplated by the Securities Purchase Agreement or the declaration of any dividends thereon. 4. The repurchase by the Company of any Company Stock -4- (other than shares of Class A Voting Common Stock or Series E Preferred Stock purchased from former employees of the Company); 5. The authorization or adoption of any amendment to the Restated Certificate, Restated By-laws or any constituent document of the Company or any of its Subsidiaries; 6. The hiring or termination of any executive officer of the Company; 7. The approval of, or amendment to, any operating or capital budget of the Company or any of its Subsidiaries; 8. The incurrence by the Company or any of its Subsidiaries, whether directly or indirectly, of any indebtedness for borrowed money or capital leases in any calendar quarter in excess of $1,000,000; 9. Any agreement or arrangement, written or oral, to pay any director, officer, agent or employee of the Company or any of its Subsidiaries $200,000 or more on an annual basis or any loan, lease, contract or other transaction with any employee of the Company or any of its Subsidiaries with an annual salary in excess of $200,000 or with any director or officer of the Company or any member of any such Person's Immediate Family; 10. The making of, or commitment to make, any capital expenditures involving a payment or liability in any one year of $1,000,000 or more in the aggregate by the Company or any of its Subsidiaries; 11. The initiation of any bankruptcy proceeding, dissolution or liquidation of the Company or any of its Subsidiaries; and 12. The entering into any contract, agreement or understanding to do any of the foregoing. Notwithstanding the foregoing, any amendment, modification, waiver or termination of the Management Agreement shall require the affirmative vote or consent of a majority of the Board of Directors (excluding Messrs. Vento and Sullivan). SECTION 1.6 TRANSACTIONS BETWEEN THE COMPANY AND THE STOCKHOLDERS OR ----------- -------------------------------------------------------- THEIR AFFILIATES. Except for this Agreement, the Joint Venture Stockholders' - ---------------- Agreement, the Securities Purchase Agreement and the Related Agreements and the transactions contemplated hereby and thereby and any other arms-length agreements or transactions -5- entered into from time to time between the Company and its Subsidiaries, on the one-hand, and AT&T PCS and its Affiliates, on the other hand, no Stockholder or any Affiliate of any Stockholder shall enter into any transaction with the Company or any Subsidiary of the Company unless such transaction is approved by a majority of the disinterested members of the Board of Directors. For purposes hereof, a director shall be deemed to be disinterested with respect to any such transaction if such director was not designated a director by the Stockholder that (or an Affiliate of which) proposed to engage in such transaction with the Company or any Subsidiary of the Company and such member is not an officer, director, partner, employee, stockholder of, or consultant to, such Stockholder or any of its Affiliates; provided, however, that for purposes of this Section 1.6 the directors designated pursuant to Section 1.1(e) (ii) and Section 1.9(a) (ii) shall not be deemed to have been designated by the Cash Equity Investors, AT&T PCS or the holders of the Voting Preference Stock. SECTION 1.7 BOARD COMMITTEES. An executive committee of the Board of ----------- ---------------- Directors (or a committee of the Board of Directors having substantially the same mandate and powers of such a committee) shall be established, which committee shall be comprised of five (5) individuals as follows: one (1) of the Series A Preferred Directors, one of the directors selected by the Cash Equity Investors pursuant to Section 1.1(a), Mr. Vento (so long as he is an officer of the Company), one (1) of the directors selected pursuant to Section 1.1(e)(i) and one (1) of the directors selected pursuant to Section 1.1(e)(ii). SECTION 1.8 VOTING AGREEMENTS AND VOTING TRUSTS. Except as disclosed on ----------- ----------------------------------- Schedule X of the Joint Venture Stockholders' Agreement or referred to in this Section 1.8, Executive agrees that he will not, directly or indirectly, deposit any of his shares of Series E Preferred Stock and/or Common Stock in a voting trust or other similar arrangement or, except as expressly provided herein, subject such shares to a voting agreement or other similar arrangements. Each of AT&T PCS and TWR Cellular covenants and agrees that it will not, directly or indirectly, enter into a voting or similar agreement with any Transferee of shares of Series A Preferred Stock. Each holder of Voting Preference Stock shall vote all shares of Voting Preference Stock owned by him in accordance with the vote of holders of a majority of the shares of Voting Preference Stock. SECTION 1.9 BOARD OF DIRECTORS AFTER VOTING PREFERENCE STOCK. Effective ----------- ------------------------------------------------ on the later to occur of (x) the date that holders of shares of Voting Preference Stock shall vote as a class with holders of Class A Voting Common Stock, and (y) immediately prior to the IPO Date, the Board of Directors shall consist of seven (7) directors, Executive hereby agrees that he will vote all of the shares Class A Voting Common Stock owned or held of record by him (whether now owned or hereafter acquired), in person or by proxy, to cause the election of directors as follows: (a) (i) two (2) individuals selected by holders of a Majority in Interest of the Common Stock Beneficially Owned by the Cash Equity Investors, in their sole discretion and (ii) two (2) additional individuals selected by holders of a Majority in Interest of the Common Stock held by the Cash Equity Investors, which two (2) additional individuals shall be acceptable to the Management Stockholders (in each case so long as each is an officer of the Company) and AT&T PCS, in the discretion of the Management -6- Stockholders, on the one hand, and AT&T PCS, on the other hand; (b) Two (2) individuals employed by the Company and selected by the Management Stockholders (in each case so long as the Management Stockholders are officers of the Company), one of whom shall be acceptable to holders of a Majority in Interest of the Class A Voting Common Stock Beneficially Owned by the Cash Equity Investors and AT&T PCS, in the reasonable discretion of such Cash Equity Investors, on the one hand, and AT&T PCS on the other hand; and (c) One (1) individual elected by AT&T PCS in its capacity as holder of Series A Preferred Stock so long as it has the right to elect one director in accordance with the Restated Certificate. In the event that an individual selected by the Management Stockholders pursuant to clause (b) above shall cease to be an officer of the Company, such ---------- individual shall resign (or the other directors or Stockholders shall remove him) from the Board of Directors and the Board of Directors shall select a replacement from the executives of the Company who shall be reasonably acceptable to a Majority in Interest of the Cash Equity Investors, on the one hand, and AT&T PCS, on the other hand, in each case in its sole discretion. In the event that AT&T PCS and TWR Cellular shall cease to be entitled to elect one (1) Series A Preferred Director, such director shall resign (or the other directors or Stockholders shall remove him) from the Board of Directors and the remaining directors shall take such action so that the number of directors constituting the entire Board of Directors shall be reduced accordingly. ARTICLE II ---------- TRANSFER OF SHARES ------------------ SECTION 2.1 General. ----------- (a) Executive agrees that at all times prior to the IPO Date he shall not, directly or indirectly, transfer, sell, assign, pledge, tender or otherwise grant, create or suffer to exist a lien in or upon, give, place in trust, or otherwise voluntarily or involuntarily (including transfers by testamentary or intestate succession) dispose of by operation of law, offer or otherwise (any such action being referred to herein as a "Transfer"), any of the Grant Shares which have vested (the "Vested Shares"), except after complying first with Section 2.2 and next with Section 2.3, if applicable. (b) Executive agrees that at all times on and after the IPO Date he shall not, directly or indirectly, transfer any of the Vested Shares except after complying first with Section 2.2 and next with Section 2.3, if applicable, provided, however, Executive shall not be required to comply with Section 2.2 if - -------- ------- he first complies with the applicable provisions of Section 2.4 in connection with Transfers of Common Stock pursuant to Rule 144, or in any single transaction or series of related transactions to one or more persons which results in the Transfer by Executive (together with any other stockholder of the Company participating in such single transaction or series of related transactions) of not -7- more than ten percent (10%) of the Common Stock on a fully diluted basis (excluding for such purposes the Series A Preferred Stock). (c) Prior to the IPO Date, Executive agrees that he will not transfer any Vested Shares of Preferred Stock held by him except after complying with Section 2.2; it being understood that on and after the IPO Date, Executive may transfer his Vested Shares of Preferred Stock free from any restrictions on transfer of such shares under this Agreement, but subject at all times to the restrictions imposed by federal and state securities laws. SECTION 2.2 Right of First Offer. ----------- (a) If Executive desires to Transfer any or all of his Vested Shares of Preferred Stock or Common Stock (collectively, the "Offered Shares"), he shall give written notice (the "Offer Notice") to the Company and to each Stockholder entitled to become the First Offeree of such Offered Shares, as determined below. Each Offer Notice shall describe in reasonable detail the number of shares of each class of Offered Shares, the cash purchase price requested and all other material terms and conditions of the proposed Transfer. The Offer Notice shall constitute an irrevocable offer (a "First Offer") to sell all (and not less than all) of the Offered Shares to the First Offeree(s) at a cash price equal to the price contained in such Offer Notice and upon the same terms as the terms contained in such Offer Notice. The First Offeree shall have the irrevocable right and option, exercisable as provided below, but not the obligation, to accept the First Offer as to all (and not less than all) of the Offered Shares. The "First Offeree" shall be AT&T PCS. (b) The option provided for herein shall be exercisable by the First Offeree by giving written notice (a "Purchase Notice"), that the First Offeree desires to purchase all (and not less than all) of such Offered Shares from the Seller, to the Stockholders (other than the Seller) and the Company not later than ten (10) business days (the "First Offer Period") after the date of the Offer Notice. The purchase of the Offered Shares by the First Offeree shall be closed at the principal executive offices of the Company on a date specified by the First Offeree upon at least five (5) business days' notice, that is within thirty (30) days after the expiration of the First Offer Period; provided, -------- however, that if such purchase is subject to the consent of the FCC or any - ------- public service or public utilities commission, the purchase of the Offered Shares shall be closed on the first business day after all such consents shall have been obtained by Final Order. (c) If the First Offeree declines (which shall include the failure to give timely notice of acceptance) to purchase all of the Offered Shares subject to the First Offer within the First Offer Period, the Seller shall have the right (for a period of ninety (90) days following the expiration of the First Offer Period) to consummate the sale of the Offered Shares to any person; provided, however, that the purchase price of such Offered Shares payable by - -------- ------- such person must be at least equal to the cash purchase price thereof set forth in the Offer Notice and all other terms and conditions of any such sale shall not be more beneficial to such third party than those contained in the Offer Notice. If any Offered Shares are not sold pursuant to the provisions of this Section 2.2 prior to the expiration of the ninety (90) day period specified in the immediately preceding sentence, such Offered -8- Shares shall become subject once again to the provisions and restrictions hereof; provided, however, that if such purchase is subject to the consent of -------- ------- the FCC or any public service or public utilities commission, the purchase of the Offered Shares shall be closed on the first business day after all such consents shall have been obtained by Final Order. (d) The purchase price of any Offered Shares Transferred pursuant to this Section 2.2 shall be payable in cash by certified bank check or by wire transfer of immediately available funds. SECTION 2.3 Rights of Inclusion. ----------- (a) Executive shall not, directly or indirectly, Transfer, in any single transaction or series of related transactions to one or more Persons (each such Person an "Inclusion Event Purchaser") shares of any series or class of stock issued by the Company (collectively, "Inclusion Stock") in circumstances in which, after giving effect to such Transfer, whether acting alone or in concert with any other Stockholder (such parties referred to herein as "Selling Stockholders") would result in such Selling Stockholder(s) Transferring twenty-five percent (25%) or more of the outstanding shares of any such class of Inclusion Stock outstanding on the date of such proposed Transfer on a fully diluted basis (an "Inclusion Event"), unless the terms and conditions of such sale to such Inclusion Event Purchaser shall include an offer to AT&T PCS, the Cash Equity Investors, and the Management Stockholders (each, an "Inclusion Event Offeree") to Transfer to such Inclusion Event Purchasers up to that number of shares of any class of Inclusion Stock then beneficially owned (as defined in the Securities Exchange Act of 1934) by each Inclusion Event Offeree that bears the same proportion to the total number of shares of Inclusion Stock at that time beneficially owned (without duplication) by each such Inclusion Event Offeree as the number of shares of Inclusion Stock being Transferred by the Selling Stockholders (including shares of Inclusion Stock theretofore Transferred if in any applicable series of related transactions) bears to the total number of shares of Inclusion Stock at the time beneficially owned (without duplication) by the Selling Stockholders (including shares of Inclusion Stock theretofore Transferred if in any applicable series of related transactions). If the Selling Stockholders receive a bona fide offer from an Inclusion Event Purchaser to purchase shares of Inclusion Stock in circumstances in which, after giving effect to such sale would result in an Inclusion Event, and which offer such Selling Stockholders wish to accept, the Selling Stockholders shall then cause the Inclusion Event Purchaser's offer to be reduced to writing (which writing shall include an offer to purchase shares of Inclusion Stock from each Inclusion Event Offeree according to the terms and conditions set forth in this Section 2.3) and the Selling Stockholders shall send written notice of the Inclusion Event Purchaser's offer (the "Inclusion Notice") to each Inclusion Event Offeree, which Inclusion Notice shall specify (i) the names of the Selling Stockholders, (ii) the names and addresses of the proposed acquiring Person, (iii) the amount of shares proposed to be Transferred and the price, form of consideration and other terms and conditions of such Transfer (including, if in a series of related transactions, such information with respect to shares of Inclusion Stock theretofore Transferred), (iv) that the acquiring Person has been informed of the rights provided for in this Section 2.3 and has agreed to purchase shares of Inclusion Stock in accordance with the terms hereof, and (v) -9- the date by which each other Selling Stockholder may exercise its respective rights contained in this Section 2.3, which date shall not be less than thirty (30) days after the giving of the Inclusion Notice. The Inclusion Notice shall be accompanied by a true and correct copy of the Inclusion Event Purchaser's offer. At any time within thirty (30) days after receipt of the Inclusion Notice, each Inclusion Event Offeree may accept the offer included in the Inclusion Notice for up to such number of shares of Inclusion Stock as is determined in accordance with this Section 2.3, by furnishing written notice of such acceptance to each Selling Stockholder, and delivering, to an escrow agent (which shall be a bank or a law or accounting firm designated by the Inclusion), on behalf of the Selling Stockholders, the certificate or certificates representing the shares of Inclusion Stock to be sold pursuant to such offer by each Inclusion Event Offeree, duly endorsed in blank, together with a limited power-of-attorney authorizing the escrow agent, on behalf of the Inclusion Event Offeree, to sell the shares to be sold pursuant to the terms of such Inclusion Event Purchaser's offer. In the event that the Inclusion Event Purchaser does not agree to purchase all of the shares of Inclusion Stock proposed to be sold by the Selling Stockholders and the Inclusion Event Offerees, then each Selling Stockholder and Inclusion Event Offeree shall have the right to sell to the Inclusion Event Purchaser that number of shares of Inclusion Stock as shall be equal to (x) the number of shares of Inclusion Stock which the Inclusion Event Purchaser has agreed to purchase times (y) a fraction, the numerator of which is the number of shares of Inclusion Stock beneficially owned (without duplication) by such Selling Stockholder or Inclusion Event Offeree and the denominator of which is the aggregate number of shares of Inclusion Stock beneficially owned (without duplication) by all Selling Stockholders and Inclusion Event Offerees. If any Inclusion Event Offeree desires to sell less than its proportionate amount of shares of Inclusion Stock that it is entitled to sell pursuant to this Section 2.3, then the Selling Stockholders and the remaining Inclusion Event Offerees shall have the right to sell to the Inclusion Event Purchaser an additional amount of shares of Inclusion Stock as shall be equal to (x) the number of shares of Inclusion Stock not being sold by any such Inclusion Event Purchasers times (y) a fraction, the numerator of which is the number of shares of Inclusion Stock owned such Selling Stockholder or remaining Inclusion Event Offeree and the denominator of which is the aggregate number of shares of Inclusion Stock beneficially owned (without duplication) by all Selling Stockholders and remaining Inclusion Event Offerees. Such process shall be repeated in series until all of the remaining Inclusion Event Offerees agree to sell their remaining proportionate number of shares of Inclusion Stock. (b) The purchase from each Inclusion Event Offeree pursuant to this Section 2.3 shall be on the same terms and conditions, including the price per share received by the Selling Stockholders and stated in the Inclusion Notice provided to each Inclusion Event Offeree. (c) Simultaneously with the consummation of the sale of the shares of Inclusion Stock of the Selling Stockholders and each Inclusion Event Offeree to the Inclusion Event Purchaser pursuant to the Inclusion Event Purchaser's offer, the Selling Stockholders shall notify each Inclusion Event Offeree and shall cause the purchaser to -10- remit to each Inclusion Event Offeree the total sales price of the shares of Inclusion Stock held by each Inclusion Event Offeree sold pursuant thereto and shall furnish such other evidence of the completion and time of completion of such sale and the terms thereof as may be reasonably requested by each Inclusion Event Offeree. (d) If within thirty (30) days after receipt of the Inclusion Notice, an Inclusion Event Offeree has not accepted the offer contained in the Inclusion Notice, such Inclusion Event Offeree shall be deemed to have waived any and all rights with respect to the sale described in the Inclusion Notice (but not with respect to any subsequent sale, to the extent this Section 2.3 is applicable to such subsequent sale) and the Selling Stockholders shall have sixty (60) days in which to sell not more than the number of shares of Inclusion Stock described in the Inclusion Notice, on terms not more favorable to the Selling Stockholders than were set forth in the Inclusion Notice; provided, however, that if such -------- ------- purchase is subject to the consent of the FCC or any public service or public utilities commission, the purchase of the Offered Shares shall be closed on the first business day after all such consents shall have been obtained by Final Order. SECTION 2.4 RIGHT OF FIRST NEGOTIATION. In the event that Executive ----------- -------------------------- desires to Transfer any shares of Common Stock following the IPO Date in a Transfer described in Section 2.1(b), he shall give written notice thereof to AT&T PCS, such notice to specify, among other things, the number of shares that he desires to sell. For the applicable first negotiation period hereinafter set forth, AT&T PCS shall have the exclusive right to negotiate with Executive with respect to the purchase of such shares; it being understood and agreed that such exclusive right shall not be deemed to be a right of first offer or right of first refusal for the benefit of AT&T PCS and Executive shall have the right to reject any offer made by AT&T PCS during such applicable first negotiation period. Upon the expiration of such applicable first negotiation period, Executive shall have the right (for the applicable offer period hereinafter set forth with respect to each applicable first negotiation period), following the expiration of such applicable first negotiation period, to offer and sell such shares included in such written notice on such terms and conditions as shall be acceptable to such Executive in his sole discretion. If any of such shares included in such written notice are not sold pursuant to the provisions of this Section 2.4 prior to the expiration of the applicable offer period, such shares shall become subject once again to the provision and restrictions hereof. If Executive desires to Transfer shares of Common Stock pursuant to Rule 144, the applicable first negotiation period shall be three (3) hours (it being understood and agreed that Executive shall, in addition to giving written notice of such proposed Transfer by facsimile, use commercially reasonable efforts to contact AT&T PCS by telephone) and the applicable offer period upon the expiration of such first negotiation period shall be five (5) business days, and in any single transaction or series of related transactions to one or more persons which will result in the Transfer by Executive (together with any other Stockholder participating in such single transaction or series of related transactions) of not more than ten percent (10%) of the Common Stock on a fully diluted basis (excluding for such purposes the Series A Preferred Stock), the applicable first negotiation period shall be one (1) business day, so long as notice of such proposed Transfer is given to AT&T PCS -11- prior to 9:00 A.M. on the day prior to the date of such proposed Transfer (it being understood and agreed that Executive shall, in addition to giving written notice of such proposed Transfer by facsimile, use commercially reasonable efforts to contact AT&T PCS by telephone) and the applicable offer period upon the expiration of such first negotiation period shall be ten (10) business days. Section 2.5 Additional Conditions to Permitted Transfers. ----------- (a) Upon any Transfer pursuant to Section 2.2 or Section 2.3, each Transferee that is not a party hereto shall, prior to such Transfer, agree in writing to be bound by all of the provisions of this Agreement applicable to Executive (and shall thereby become a Stockholder for all purposes of this Agreement). Any Transfer without compliance with such provisions of this Agreement shall be null and void and such Transferee shall have no rights as a Stockholder of the Company. (b) Notwithstanding anything to the contrary contained in this Agreement, Executive agrees that he will not effect a Transfer of shares of Company Stock to anyone prohibited by the Company; provided, however, that -------- ------- nothing contained in this Section 2.5(b) shall be construed to prohibit a Transfer of Common Stock by Executive after the IPO Date pursuant to an underwritten registration or in accordance with the provisions of Rule 144. Section 2.6 Representations And Warranties. A Stockholder purchasing ----------- ------------------------------ shares of Company Stock pursuant to Section 2.2 shall be entitled to receive representations and warranties from the transferring Stockholder that such Stockholder has the authority (corporate or otherwise) to sell such shares, is the sole owner of such shares, and has good and valid title to such shares, free and clear of any and all Liens (other than pursuant to this Agreement, the Restated Certificate or any Related Agreement), and that the sale of such shares does not violate any agreement to which it is a party or by which it is bound. Section 2.7 Stop-Transfer. ----------- (a) The Company agrees not to effect any Transfer of shares of Company Stock by Executive whose proposed Transfer is subject to Sections 2.2, 2.3 or 2.4 until it has received evidence reasonably satisfactory to it that the rights provided to any other Stockholders pursuant to such Sections, if applicable to such Transfer, have been complied with and satisfied in all respects. No Transfer of any shares of Preferred Stock and/or Common Stock shall be made except in compliance with all applicable securities laws. Any Transfer made in violation of this Agreement shall be null and void. ARTICLE III ----------- After-acquired Shares; Recapitalization --------------------------------------- Section 3.1 After Acquired Shares; Recapitalization ----------- (a) All of the provisions of this Agreement shall apply to all of the shares of Equity Securities now owned or hereafter issued or transferred to Executive or to -12- his Affiliated Successors in consequence of any additional issuance, purchase, exchange or reclassification of shares of Equity Securities, corporate reorganization, or any other form of recapitalization, or consolidation, or merger, or share split, or share dividend, or which are acquired by Executive or his Affiliated Successors in any other manner. (b) Whenever the number of outstanding shares of Equity Securities is changed by reason of a stock dividend or a subdivision or combination of shares effected by a reclassification of shares, each specified number of shares referred to in this Agreement shall be adjusted accordingly. Section 3.2 Amendment Of Restated Certificate. Whenever The Number Of ----------- --------------------------------- shares of authorized Common Stock is not sufficient in order to issue shares of Common Stock upon conversion of Preferred Stock in accordance with the Restated Certificate, (i) the Company shall promptly amend the Restated Certificate in order to authorize a sufficient number of shares of Common Stock, and (ii) Executive agrees to vote his shares of Preferred Stock and Common Stock in favor of such amendment. ARTICLE IV ---------- Share Certificates ------------------ Section 4.1 Restrictive Endorsements; Replacement Certificates. Each ----------- -------------------------------------------------- certificate representing the shares of Equity Securities now or hereafter held by a Stockholder (including any such certificate delivered upon conversion of the Preferred Stock) or delivered in substitution or exchange for any of the foregoing certificates shall be stamped with legends in substantially the following form: (a) "The shares represented by this Certificate are subject to a Stockholders' Agreement dated as of July 17, 1998, a copy of which is on file at the offices of the Company and will be furnished by the Company to the holder hereof upon written request. Such Stockholders' Agreement provides, among other things, for the granting of certain restrictions on the sale, transfer, pledge, hypothecation or other disposition of the shares represented by this Certificate, and that under certain circumstances, the holder hereof may be required to sell the shares represented by this Certificate. By acceptance of this Certificate, each holder hereof agrees to be bound by the provisions of such Stockholders' Agreement. The Company reserves the rights to refuse to transfer the shares represented by this Certificate unless and until the conditions to transfer set forth in such Stockholders' Agreement have been fulfilled"; and (b) "The securities represented by this Certificate have been acquired for investment and have not been registered under the Securities Act of 1933, as amended (the "Act"), or under any state securities or 'Blue Sky' laws. Said securities may not be sold, transferred, assigned, pledged, hypothecated or otherwise disposed of, unless and until registered under the Act and the rules and regulations thereunder and all applicable state securities or 'Blue Sky' laws or exempted therefrom under the Act and all applicable state securities or 'Blue Sky' laws." -13- Executive agrees that he will deliver all certificates for shares of Equity Securities owned by him to the Company for the purpose of affixing such legends thereto. (c) Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any certificate representing shares of Equity Securities subject to this Agreement and of a bond or other indemnity reasonably satisfactory to the Company, and upon reimbursement to the Company of all reasonable expenses incident thereto, and upon surrender of such certificate, if mutilated, the Company will make and deliver a new certificate of like tenor in lieu of such lost, stolen, destroyed or mutilated certificate. ARTICLE V --------- Miscellaneous ------------- Section 5.1 Notices. All notices or other communications hereunder ----------- ------- shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by facsimile transmission, or by registered or certified mail (return receipt requested), postage prepaid, with an acknowledgment of receipt signed by the addressee or an authorized representative thereof, addressed as follows (or to such other address for a party as shall be specified by like notice; provided that notice of a change of address shall be effective only upon receipt thereof: If to AT&T PCS or TWR Cellular: c/o AT&T Wireless Services, Inc. 5000 Carillon Point Kirkland, Washington 98033 Attention: William W. Hague Telephone: (425) 828-8461 Facsimile: (425) 828-8451 With a copy to: AT&T Corp. 295 North Maple Avenue Basking Ridge, NJ 07920 Attention: Corporate Secretary Telephone: Facsimile: (908) 953-4657 and Friedman Kaplan & Seiler LLP 875 Third Avenue, 8th Floor New York, New York 10022 Attention: Daniel M. Taitz -14- Telephone: (212) 833-1109 Facsimile: (212) 355-6401 and Rubin Baum Levin Constant & Friedman 30 Rockefeller Plaza New York, New York 10112 Attention: Gregg S. Lerner, Esq. Telephone: (212) 698-7705 Facsimile: (212) 698-7825 If to a Cash Equity Investor, to its address set forth on Schedule I. With a copy to: Mayer, Brown & Platt 1675 Broadway New York, New York 10019 Attention: Mark S. Wojciechowski, Esq. Telephone: (212) 506-2525 Facsimile: (212) 262-1910 If to a Management Stockholder or to the Company, to the address set forth in the Securities Purchase Agreement. If to Executive, to the address set forth in the Share Grant Agreement. With a copy to each other party sent to the addresses set forth in this Section 5.1. Section 5.2 Waiver failure or delay on the part of any Stockholder in ----------- ------ exercising any right, power or privilege hereunder, nor any course of dealing between the Company and any Stockholder shall operate as a waiver thereof nor shall any single or partial exercise of any right, power or privilege hereunder preclude the simultaneous or later exercise of any other right, power or privilege. The rights and remedies herein expressly provided are cumulative and not exclusive of any rights and remedies which any Stockholder would otherwise have. No notice to or demand on the Company in any case shall entitle the Company to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Stockholders or any of them to take any other or further action in any circumstances without notice or demand. Section 5.3 Modification. The terms and provisions of any change or ----------- ------------ modification to the Joint Venture Stockholders' Agreement made effective pursuant to Section 12(b) of the Joint Venture Stockholders' Agreement, shall be reflected in full in this Agreement as of the same was approved by the parties hereto. -15- Section 5.4 Obligations Several. The obligations of each Stockholder ----------- ------------------- under this Agreement shall be several with respect to each such Stockholder. Section 5.5 Governing Law. This Agreement shall be governed and ----------- ------------- construed in accordance with the law of the State of Delaware. Section 5.6 Benefit And Binding Effect; Severability. This Agreement ----------- ---------------------------------------- shall be binding upon and shall inure to the benefit of the Company, its successors and assigns, and each of the Stockholders and their respective executors, administrators and personal representatives and heirs and permitted assigns. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy or any listing requirement applicable to the Common Stock, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto affected by such determination in any material respect shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the provisions hereof are given effect as originally contemplated to the greatest extent possible. Section 5.7 Counterparts. This Agreement may be executed in two or more ----------- ------------ counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. -16- IN WITNESS WHEREOF, each of the parties has executed or consent this Agreement to be executed by its duly authorized officers as of the date first written above. TELECORP PCS, INC. By: /s/ Thomas Sullivan ----------------------------------------- Name: Thomas Sullivan Title: Executive Vice President EXECUTIVE: /s/ Steven Chandler -------------------------------------------- Steven Chandler By execution hereof, the Company and Executive agree that AT&T PCS, TWR Cellular, the Cash Equity Investors and the Management Stockholders are to be bound by the obligations in, and entitled to the benefits of, this Agreement by virtue of their respective execution of that certain Agreement by and among them and the Company dated as of the date of the Joint Venture Stockholders' Agreement. -17- Schedule I Cash Equity Investors --------------------- CB Capital Investors, L.P. 380 Madison Avenue, 12th Floor New York, NY 10017 Attn: Michael Hannon Fax: (212) 622-3101 Equity-Linked Investors-II Private Equity Investors III, L.P. 540 Madison Avenue, 36th Floor New York, NY 10022 Attn: Rohit M. Desai Fax: (212) 752-7807 Hoak Communications Partners, L.P. HCP Capital Fund, L.P. One Galleria Tower 13355 Noel Road, Suite 1050 Dallas, Texas 75240 Attn: James Hoak Fax: (972) 960-4899 Whitney Equity Partners, L.P. J.H. Whitney III, L.P. Whitney Strategic Partners III, L.P. 177 Broad Street, 15th Floor Stamford, Connecticut 06901 Attn: William Laverack, Jr. Fax: (203) 973-1422 Entergy Technology Holding Company Three Financial Centre 900 South Shackleford Road Suite 210 Little Rock, Arkansas 72211 Attn: John A. Brayman Fax: (501) 954-5095 Media/Communications Partners III Limited Partnership Media/Communications Investors Limited Partnership 75 State Street, Suite 2500 Boston, MA 02109 Attn: James F. Wade Fax: (617) 345-7201 One Liberty Fund III, L.P. Boston, MA 02109 Attn: Joseph T. McCullen Fax: (617) 423-1765 Toronto Dominion Investments, Inc. 31 West 52nd Street New York, NY 10019-6101 Attn: Brian Rich Fax: (212) 974-8429 (with a copy to) Toronto Dominion Investments, Inc. 909 Fannin Suite 1700 Houston, Texas 77010 Attn: Martha Gariepy Fax: (713) 652-2647 Northwood Ventures LLC Northwood Capital Partners LLC 485 Underhill Boulevard, Suite 205 Syosset, New York 11791-3419 Attn: Peter Schiff Fax: (516) 364-0879 Schedule II Initial Directors ----------------- William Hague Thomas Sullivan Michael Hannon James Hoak Rohit Desai William Bandt Joseph O'Donnell Kurt Maas Gerald Vento James Wade William Laverack, Jr. Scott Anderson William Kussell EX-10.23 38 EMPLOYEE AGREEMENT, JULIE DOBSON EXHIBIT 10.23 EMPLOYEE AGREEMENT BETWEEN TELECORP PCS, INC. AND JULIE DOBSON Table of Contents 1. Definitions............................................................... 1 2. Duties.................................................................... 1 3. Compensation.............................................................. 2 4. Accrued Benefits.......................................................... 2 5. Death..................................................................... 2 6. Termination for Cause/Voluntary Termination............................... 3 7. Termination Giving Rise to a Termination Payment.......................... 3 8. Confidential Information.................................................. 3 9. Covenant Not to Compete/Non-Solicitation/Limitation on Public Statements.. 3 10. Employee Representations.................................................. 4 11. Amendment................................................................. 4 12. Governing Law............................................................. 4 13. Notice.................................................................... 4
EMPLOYEE AGREEMENT ------------------ AGREEMENT, made and entered into as of this 17/th/ day of July, 1998, by and between TeleCorp PCS, Inc., a Delaware corporation (the "Company"), and Julie Dobson, residing at 5 Chestnut Glen Court, Mendham, New Jersey 07945 (hereinafter called the "Executive"). W I T N E S E T H: - - - - - - - - - WHEREAS, the Company desires to employ Executive as an employee-at- will to serve as Chief Operating Officer, and the Executive desires to be employed at will by the Company as Chief Operating Officer; NOW, THEREFORE, in consideration of the premises, and the mutual covenants and agreements hereinafter contained, the parties do hereby mutually covenant and agree as follows: 1. Definitions. ----------- (a) Person. For the purposes of this Agreement, "Person" shall mean ------ any individual, partnership, joint venture, association, trust, corporation, limited liability company or other entity. (b) Cause. "Cause" for termination by the Company of the Executive's ----- employment shall, for purposes of this Agreement, be limited to (i) the Executive's engaging in misconduct which has caused demonstrable and serious injury to the Company, financial or otherwise, or to the Company's reputation; (ii) conviction of a felony or misdemeanor as evidenced by a judgment, order, or decree of a court of competent jurisdiction; (iii) failure to comply with the directions of the Board of Directors or neglect or refusal by the Executive to perform the Executive's duties or responsibilities (unless such duties or responsibilities are significantly changed without the Executive's consent); or (iv) for any violation by Executive of this Agreement or of any agreement by and among the Company and the Executive relating to Executive's participation in the TeleCorp PCS, Inc. 1998 Restricted Stock Plan. (c) Termination Date. For purposes of this Agreement, "Termination ---------------- Date" shall mean the date on which the Executive ceases to be employed by the Company for any reason, including without limitation, death, termination or resignation. 2. Duties. For so long as Executive is employed by the Company, the ------ Executive shall hold the position of Chief Operating Officer of the Company and shall devote her full working time and attention to the performance of her duties hereunder but nothing in this Agreement shall preclude the Executive from (i) participating in charitable and community activities or (ii) subject to prior approval of the Board of Directors of the Company, serving on the board of directors of another company, provided that in each case such activities or services do not materially interfere with the regular performance of her duties and responsibilities under this Agreement. For so long as Executive is employed by the Company, the Executive agrees to use all reasonable efforts, skills and abilities to promote the Company's interests; to serve as an officer of the Company; and to perform any duties (consistent with her status) as may be assigned by the board of directors. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE EXECUTIVE IS AN EMPLOYEE-AT-WILL OF THE COMPANY AND HAS NO RIGHT, WHETHER UNDER THIS AGREEMENT OR OTHERWISE, TO ANY CONTINUED EMPLOYMENT WITH THE COMPANY. 3. Compensation. For so long as Executive is employed by the ------------ Company, the Executive shall be compensated as follows: (a) Executive shall receive, at such intervals and in accordance with the Company's customary payroll policies, an annual salary (the "Base Salary") of Two Hundred Fifty Thousand Dollars ($250,000) for services rendered as Chief Operating Officer of the Company; (b) the Executive shall be eligible to receive an annual bonus commencing on December 31, 1998 in an amount up to 50% of Executive's Base Salary for such calendar year, prorated for the number of months actually employed, as determined by the Board of Directors of the Company in its discretion, taking into consideration all relevant factors, including, without limitation, the financial performance and development of the Company and the Executive's role therein; (c) the Company shall pay or reimburse the Executive for all reasonable expenses actually incurred or paid by the Executive in the performance of her services hereunder; and (d) the Executive shall be included to the extent eligible thereunder in any and all plans, if any, providing general benefits to the Company's employees, including, but not limited to, group life insurance, hospitalization, disability, medical, dental, and pension, and shall be provided any and all other benefits and perquisites, if any, made available to other employees of comparable status and position, at the expense of the Company on a comparable basis. 4. Accrued Benefits. For purposes of this Agreement, the ---------------- Executive's Accrued Benefits shall be defined as and include the following amounts, payable as described herein: (i) any and all Base Salary earned or accrued through the Termination Date; (ii) reimbursement for any and all monies advanced by the Executive without reimbursement in connection with Executive's employment for reasonable and necessary expenses incurred by the Executive through the Termination Date; and (iii) any and all other cash or non-cash benefits previously earned or accrued but not paid through the Termination Date. 5. Death. If the Executive shall die while an employee of the ----- Company, the Executive's estate, heirs and beneficiaries shall receive only the Executive's Accrued Benefits through the Termination Date. All family medical benefits available to them under the 2 Company's benefit plans as in effect on the Termination Date shall be continued for six (6) months after the Termination Date at the Company's expense. 6. Termination for Cause/Voluntary Termination. If the Executive's ------------------------------------------- employment is terminated for Cause, or if the Executive voluntarily terminates the Executive's employment, then the Executive shall be entitled to receive only Accrued Benefits. 7. Termination Giving Rise to a Termination Payment. ------------------------------------------------ (a) If the Executive's employment is terminated by the Company other than for Cause, then the Executive shall be entitled to receive and the Company shall promptly pay Accrued Benefits through the Termination Date, and the Company further agrees that Executive shall be entitled to receive, and the Company hereby agrees to pay to Executive, an amount equal to twelve month's of Executive's then Base Salary (the "Termination Payment"). The Termination Payment shall be payable to the Executive at such intervals in accordance with the Company's normal payroll practices as if Executive remained in the employ of the Company. (b) If the Executive's employment is terminated by the Company other than for Cause and the Executive is entitled to Accrued Benefits and the Termination Payment, then the Executive shall continue to be covered at the expense of the Company by the same or equivalent hospital, medical, and dental coverage as Executive was covered by immediately prior to the Termination Date for a period of twelve months. 8. Confidential Information. Executive shall during the Executive's ------------------------ employment with the Company and at all times thereafter, treat all confidential material (as hereinafter defined) of the Company confidentially. Executive shall not, without the prior written consent of the Company, disclose such confidential material to any party, who at the time of such disclosure is not an employee or agent of the Company. For the purposes hereof, the term "confidential material" shall mean all information acquired by the Executive in the course of the Executive's employment with the Company; provided, however, that the term "confidential material" shall not include information which (i) becomes generally available to the public other than as a result of a disclosure by the Executive, (ii) was available to the Executive on a non-confidential basis prior to her employment with the Company, or (iii) becomes available to the Executive on a non-confidential basis from a source other than the Company. 9. Covenant Not to Compete/Non-Solicitation/Limitation on Public ------------------------------------------------------------- Statements. (a) For so long as the Executive is employed by the Company and - ---------- for a period of one year after the Termination Date, the Executive shall not compete, directly or indirectly, with the Company, including, without limitation, by being employed by, or being an officer or director of, or consultant to, any Person engaged in the same business then engaged in by the Company, whereby the Executive performs services, or has reporting authority for others providing services, within the Company's service area, or by being an investor (representing more than a 5% equity interest) in a Person engaged in the same business then engaged in by the Company in the Company's service area. 3 (b) For so long as the Executive is employed by the Company and for a period of one year after the Termination Date, the Executive shall not interfere with, disrupt or attempt to disrupt the relationship, contractual or otherwise, between the Company and any customer, client, supplier, consultant or employee of the Company. (c) For a period of one year following the Termination Date, the Executive shall limit any public statements concerning the Company to those confirming the Company's prior employment of Executive. (d) It is the desire and intent of the parties that the provisions of this Section 9 shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular portion of this Section 9 shall be adjudicated to be invalid or unenforceable, this Section 9 shall be deemed amended to delete therefrom the portion thus adjudicated to be invalid or unenforceable, such deletion to apply only with respect to the operation of this Section in the particular jurisdiction in which such adjudication is made. 10. Employee Representations. The employee represents and warrants ------------------------ to the Company as follows: (i) she is not under any obligation to any Person which is inconsistent or in conflict with this Agreement or which would prevent, limit or impair in any way the performance of her obligations hereunder; and (ii) she has not disclosed and will not disclose to the Company, nor use for the Company's benefit, any confidential information or trade secrets of any prior employer or principal, unless and until such confidential information and trade secrets have become public knowledge without the employee's participation, or unless such disclosure is permitted by any agreement with such prior employer or principal. 11. Amendment. The terms and provisions of this Agreement may be --------- modified or amended only by written agreement executed by all parties hereto. 12. Governing Law. This Agreement and the rights and obligations ------------- hereunder shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia, without giving effect to the conflict of law principles thereof. 13. Notice. All notices, requests, consents and other communications ------ hereunder shall be in writing, shall be addressed to the receiving party's address set forth below 4 or to such other address as a party may designate by notice hereunder, and shall be either (i) delivered by hand, (ii) telexed, telecopied or made by facsimile transmission, (iii) sent by overnight courier, or (iv) sent by certified or registered mail, return receipt requested, postage prepaid. If to the Company: TeleCorp PCS, Inc. 1101 17/th/ Street, N.W., Suite 900 Washington, D.C. 20036 Attention: General Counsel If to Executive: c/o TeleCorp PCS, Inc. 1101 17/th/ Street, N.W. 9/th/ Floor Washington, D.C. 20036 All notices, requests, consents and other communications hereunder shall be deemed to have been given either (i) if by hand, at the time of the delivery thereof to the receiving party at the address of such party set forth above, (ii) if telexed, telecopied or made by facsimile transmission, at the time that receipt thereof has been acknowledged by electronic confirmation or otherwise, (iii) if sent by overnight courier, on the next day following the day such mailing is made (or in the case that such mailing is made on Saturday, on the immediately following Monday), or (iv) if sent by certified or registered mail, on the 5th day following the time of such mailing thereof to such address (or in the case that such 5th day is a Sunday, on the immediately following Monday). IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above. TELECORP PCS, INC. By: /s/ Gerald T. Vento -------------------------------- Gerald T. Vento, CEO EXECUTIVE /s/ Julie Dobson ----------------------------------- Julie Dobson 5 EX-10.24 39 SHARE GRANT AGREEMENT, JULIE DOBSON Exhibit 10.24 TELECORP PCS, INC. RESTRICTED STOCK PLAN SHARE GRANT AGREEMENT --------------------- THIS AGREEMENT is entered into by and between TeleCorp PCS, Inc., a Delaware Corporation (the "Company"), and Julie Dobson, an employee of the Company (hereinafter the "Executive"). WHEREAS, the Company adopted the TeleCorp PCS, Inc. 1998 Restricted Stock Plan (the "Plan") on July 16, 1998 in order to be able to award certain preferred and common shares of the Company to certain executives of the Company so as to give them a proprietary interest in the Company's success and to ensure their continuation as employees of the Company; and WHEREAS, the Executive renders important services to the Company or a subsidiary of the Company, and the Company desires to award shares to the Executive under the Plan; NOW, THEREFORE, in consideration of the foregoing and the mutual agreements herein contained, the parties hereto hereby agree as follows: 1. Issuance of Grant Shares. The Company hereby grants to the Executive ------------------------ and the Executive hereby accepts from the Company upon the terms and conditions hereinafter set forth, 2,287.21 shares of Series E Preferred Stock of the Company and 3,459.45 shares of Class A Voting Common Stock of the Company (the "Grant Shares"). The effective date of issuance of the Grant Shares is the date hereof. Upon execution of this Agreement, the Company hereby agrees to issue to the Executive one or more certificates in her name for the Grant Shares. The Grant Shares will be validly issued and outstanding, fully paid and non- assessable. The Grant Shares will be held by the Company in the name of the Executive until fully vested pursuant to Section 4, below. 2. Other Conditions and Limitations. The Grant Shares are granted on the -------------------------------- condition that the receipt of the Grant Shares hereunder shall be for investment purposes and not with a view to resale or distribution, except that such condition shall be inoperative if the reoffering of Grant Shares is registered under the Securities Act of 1933, as amended, or if in the opinion of counsel for the Company such Grant Shares may be resold without registration. 3. Relationship to Plan. The Grant Shares granted pursuant to this -------------------- Agreement have been granted pursuant to the Plan and are in all respects subject to the terms, conditions and definitions of the Plan. The Executive hereby accepts the Grant Shares subject to all the terms and provisions of the Plan and agrees that all decisions and the interpretations of the Plan by the Compensation Committee of the Board of Directors of the Company (the "Committee") shall be final, binding and conclusive upon the Executive and her heirs. 4. Forfeiture of Grant Shares. The Grant Shares shall vest in accordance -------------------------- with the schedule set forth on Schedule B of the Plan. In addition, the following forfeiture provisions are hereby imposed upon the Grant Shares and shares issued in respect of such Grant Shares as share dividends or as share splits, or otherwise (the term "Grant Shares" as used in this Agreement to include all such shares): (a) Except as provided in paragraph (b), the Executive must remain employed by the Company or any of its subsidiaries during the vesting periods set forth on Schedule B of the Plan to vest in such Grant Shares. ---------- If the Executive fails to satisfy such requirements and is not otherwise vested under paragraph (b), the Executive shall forfeit and transfer to one or more persons designated by the Committee, all unvested Grant Shares granted pursuant to this Agreement. (b) If the Executive's employment with the Company or one of its subsidiaries terminates prior to vesting in any Grant Shares issued pursuant to this Agreement by reason of her retirement under a retirement plan maintained by the Company or one of its subsidiaries, the Committee may, in its sole discretion, specify that the Executive become vested at that time, at a future date or upon the completion of such other conditions as the Committee, in its sole discretion, may provide. (c) Executive further agrees that the Grant Shares shall be subject to repurchase by the Company at a repurchase price of $.01 per share in accordance with the terms of Exhibit A attached hereto. --------- 2 (d) Within 30 days of an event giving rise to a forfeiture under paragraphs (a) or (b) hereof, the Executive shall deliver to one or more persons specified by the Committee, all certificates representing the Grant Shares which have been forfeited together with stock powers validly assigning such Grant Shares to such other persons as the Committee may designate. The Company shall make no payment to the Executive with respect to any Grant Shares so forfeited. (e) If the Executive fails to comply with any of the provisions of this Section 4, the Company, at its option and in addition to its other remedies, may suspend the rights of the Executive to vote and to receive future dividends on the Grant Shares which have been forfeited or may refuse to register on its books any transfer or change in the ownership of the Grant Shares which have been forfeited or in the right to vote thereon, until the provisions of this Section 4 are complied with to the satisfaction of the Company. To ensure compliance with the terms of this Agreement, the Company may issue to its transfer agent appropriate stop transfer instructions with respect of the Grant Shares (including without limitation any vested Grant Shares). 5. Nontransferability of Shares. Any Grant Shares which are not vested, ---------------------------- as specified in Section 4 above, shall be non-transferable by the Executive. Transfer of Grant Shares which are vested is further restricted pursuant to the terms of a Stockholders' Agreement by and among Executive, the Company, AT&T PCS, TWR Cellular and the Cash Equity Investors, TeleCorp Investors and Management Stockholders identified therein, executed as of the date hereof (the "Stockholders' Agreement"). 6. Legends. Each certificate representing Grant Shares shall contain ------- legends in substantially the form set forth in Section 4.1(a) and (b) of the Stockholders' Agreement. 7. Rights as Shareholder. Except as otherwise provided in the Plan or --------------------- this Agreement, the Executive shall have all of the rights of a shareholder of the Company with respect to the Grant Shares registered in her name, including the right to vote such Grant Shares and receive the dividends and other distributions paid or made with respect to such Grant Shares. 8. No Employment Commitment; Tax Treatment. Nothing herein contained --------------------------------------- shall be deemed to be or constitute an agreement or commitment by the Company to continue the Executive in its employ. The Company makes no representation about the tax treatment to the 3 Executive with respect to receiving, holding or disposing of the Grant Shares, and the Executive represents that she has had the opportunity to discuss such treatment (including the application of Section 83 of the Code) with her tax adviser. 9. Governing Law. This Agreement shall be subject to and construed in ------------- accordance with the law of Commonwealth of Delaware. 10. Withholding Tax. The Company shall have the right to require the --------------- Executive to pay the Company the amount of any taxes which the Company is or will be required to withhold with respect to the Grant Shares. IN WITNESS WHEREOF, the Company and the Executive have executed this Agreement in duplicate on this 16th day of July, 1998. TELECORP PCS, INC. EXECUTIVE By: /s/ Thomas Sullivan /s/ Julie Dolson ----------------------- -------------------------- Julie Dobson 4 Exhibit A --------- Definitions. ----------- "Base Shares" means 2,330.79 shares of Class A Voting Common Stock and 2,287.21 shares of Series E Preferred Stock or, if the Supplemental Shares have theretofore been repurchased pursuant to Section (b)(1)(i) or (b)(2), 2,232.45 shares of Class A Voting Common Stock and 2,192.43 shares of Series E Preferred Stock. "Company Merger" shall mean any merger, combination or consolidation of the Company or one of its subsidiaries with or into any other entity (regardless of who survives). "Company Asset Sale" shall mean any sale or disposition of a substantial portion of the Company's assets. "Deemed Per Share Value" means (A) in the case of an Extraordinary Event specified in clause (x) or (y) of the definition thereof, (1) the fair market value of all of the assets of the Company and its Subsidiaries at the time of any calculation of such value, less (x) any expenses which would be incurred solely in connection with the disposition of such assets, (y) the aggregate amount of all liabilities of the Company and (z) the aggregate redemption price of all outstanding shares of all series of Preferred Stock of the Company that are not then convertible into Common Stock at the option of the holder thereof (or if any such series is not then redeemable, the aggregate liquidation preference thereof), all as determined in good faith by the Board of Directors, divided by (2) the number of shares of Common Stock outstanding on a Fully Diluted Basis, and (B) in the case of an Extraordinary Event specified in clause (z) of the definition thereof, the per share offering price of the Common Stock issued in connection with the public offering occurring on the IPO Date. "Extraordinary Event" means (x) the consummation of a Company Merger after giving effect to which the cash equity investors (as defined by the Company) in the aggregate shall beneficially own on a Fully Diluted Basis less than 33% of the capital stock or other equity interests in the surviving entity, (y) the consummation of a Company Asset Sale or (z) the occurrence of the IPO Date. "Extraordinary Event Shares" means a number of Grant Shares equal to 1,128.66 shares of Class A Voting Common Stock, or, if the Supplemental Shares have theretofore been repurchased, 1,081.04 shares of Class A Voting Common Stock. "Fully Diluted Basis" means, with respect to the shares of Common Stock outstanding, all of the shares of all classes of 5 Common Stock then outstanding (regardless of whether subject to repurchase), plus all the shares of Common Stock issuable upon the exercise of outstanding options or convertible securities that are then convertible into Common Stock at the option of the holder thereof; 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 (b) (3) equals (A) more than 30% but less than 35%, none of the Extraordinary Event Shares shall be deemed to be outstanding, and (B) 35% or more, one-half of the Extraordinary Event Shares shall be deemed to be outstanding. "IPO Date" shall mean the first date on which (a) the Class A Voting Common Stock shall have been registered pursuant to an effective registration statement under the Securities Act of 1933, (b) the aggregate gross proceeds received by the Company in connection with such registration statement(s) equals or exceeds $20 million, and (c) the Class A Voting Common Stock shall be listed for trading on the New York Stock Exchange or the American Stock Exchange or authorized for trading on NASDAQ, including without limitation its National Market system. "Supplemental Closing" shall mean the consummation by the Company or one of its wholly-owned subsidiaries of an acquisition of F-Block PCS Licenses in respect of one million or more POPs from Mercury PCS, LLC or its designee. 1. "Subsidiaries" means any entity in which the Company owns, directly or indirectly, 50% or more of the voting power of the voting equity securities or equity interests. "Supplemental Shares" means 94.78 shares of Series E Preferred Stock and 145.96 shares of Class A Voting Common Stock. Repurchase Of Shares. -------------------- Repurchase Upon Termination. Following the termination of Executive's employment with the Company, for any reason, each Executive shall sell to the Company, and the Company shall purchase from each Executive, at a repurchase price of $.01 per share: (i) first, if and only if the termination occurs prior to January 23, 2000, Executive's Supplemental Shares; (ii) second, if and only if the termination occurs prior to the occurrence of an Extraordinary Event, Executive's Extraordinary Event Shares; (iii) third, if and only if the termination occurs after the occurrence of an Extraordinary Event, Executive's Extraordinary Event Shares that have not theretofore vested 6 pursuant to this Agreement; and (iv) fourth, Executive's Base Shares that have not theretofore vested pursuant to this Agreement. Repurchase In Absence Of Supplemental Closing. If and only if the Supplemental Closing shall not have occurred on or before January 23, 2000, each Executive shall sell to the Company, and the Company shall purchase from each Executive, her Supplemental Shares. Repurchase Upon Extraordinary Event. Upon the occurrence of an Extraordinary Event, Executive shall sell to the Company, and the Company shall purchase from Executive, the percentage of her Extraordinary Event Shares set forth opposite the Internal Rate of Return realized by the Cash Equity Investors (as defined by that certain Stockholders' Agreement by and among AT&T Wireless PCS, Inc., the Cash Equity Investors, Management Stockholders and TeleCorp PCS, Inc., dated as of July 17, 1998) as set forth on the chart below in connection with the applicable Extraordinary Event:
Internal Rate of Return Realized by Percentage of Extraordinary Cash Equity Investors Event Shares to be Repurchased --------------------- ------------------------------ Less than 30% 100% 30% or more but less than 35% 50% 35% or more 0%
For the purpose of this paragraph, 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 actually made in respect of the Cash Equity Investors' Series C Preferred Stock and 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 aggregate redemption price of all outstanding shares of Series C Preferred Stock then Beneficially Owned by the Cash Equity Investors, plus the product of the Deemed Per Share Value multiplied by the number of shares of all classes of Common Stock then owned by the Cash Equity Investors, 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. 7 The Grant Shares repurchased pursuant hereto are sometimes referred to, collectively, as the "Repurchased Shares." Closing Of Repurchase; Assignment Of Repurchase Right. The closing of a purchase and sale of Repurchased Shares shall take place on a date mutually agreed by the Executive and the Company, but in no event later than 30 days after (i) in the case of Section (b)(1), the date Executive's employment with the Company terminates or, (ii) in the case of Section (b)(2), January 23, 2000, or (iii) in the case of Section (b)(3), the occurrence of the Extraordinary Event. At each 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 Repurchased 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 the shares of Preferred Stock and/or Common Stock being repurchased by the Company. Whenever the Company shall have the right to repurchase Preferred Stock and/or Common Stock hereunder, such Grant Shares shall be returned to the Plan and may be reissued by the Company. Escrow Of Shares. The Certificate(s) representing all shares, subject to repurchase pursuant to Section (b) 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. In the event further instructions are desired by the Escrow Holder, she shall be entitled to rely upon written directions of the Committee. The Escrow Holder shall have no liability for any act or omission hereunder while acting in good faith in the exercise of her own judgment. If the Company or any assignee repurchases any of the Grant Shares pursuant to this Agreement, 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, the Escrow Holder shall: (i) cancel the certificate(s) held by the Escrow Holder and representing Grant Shares, (ii) cause new certificate(s) to be issued representing the number of Grant Shares no longer subject to repurchase pursuant to this Agreement, which certificate(s) the Escrow Holder shall deliver to Executive, and (iii) cause new certificate(s) to be issued representing the balance of the Grant Shares, which certificate(s) shall be held in escrow by the Escrow Holder in accordance with the provisions of this Section (d). Subject to the terms hereof, Executive shall have all the rights of a stockholder with respect to the Grant Shares while they are held in escrow, including without limitation, the right to vote the Grant 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 Grant 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 Executive is entitled by reason of her ownership of the Grant Shares shall be immediately subject to this escrow, deposited with the Escrow Holder and included thereafter as "Grant Shares" for purposes of this Agreement and the Company's repurchase right. 8 After the IPO Date, Executive shall have the right to exchange certificates evidencing the number of Grant Shares no longer subject to repurchase pursuant to this Agreement, for certificates that do not contain a restrictive legend. 9 STOCKHOLDERS' AGREEMENT ----------------------- STOCKHOLDERS' AGREEMENT, dated as of July 17, 1998 (this "Agreement"), by and among AT&T WIRELESS PCS INC., a Delaware corporation (together with its Affiliated Successors, "AT&T PCS"), TWR CELLULAR, INC., a Delaware corporation (together with its Affiliated Successors, "TWR Cellular"), the investors listed on Schedule I (individually, each a "Cash Equity Investor" and, collectively, with any of its Affiliated Successors, the "Cash Equity Investors"), the Management Stockholders (defined below), TELECORP PCS, INC., a Delaware corporation (the "Company") and JULIE DOBSON, an employee of the Company (the "Executive"). Each of the foregoing, together with all others who, in connection with a Transfer (as hereinafter defined) are required to become a party to this Agreement (other than the Company), or with the consent of the Board of Directors (as hereinafter defined) are issued shares of Company Stock and are required as a condition of such issuance to become a party to this Agreement, are sometimes referred to herein, individually, as a "Stockholder" and, collectively, as the "Stockholders." Capitalized terms used and not defined herein shall have the meaning set forth in the Stockholders' Agreement by and between AT&T PCS, Cash Equity Investors, Management Stockholders and the Company (the "Joint Venture Stockholders' Agreement"). RECITALS -------- WHEREAS, pursuant to the terms of a Share Grant Agreement by and between Executive and the Company, of even date herewith, Executive has been granted by the Company 2,287.21 shares of Series E Preferred Stock and 3,459.45 shares of Class A Voting Common Stock (collectively, the "Grant Shares"); and WHEREAS, the parties desire to enter into this Agreement to impose certain restrictions with respect to the voting rights of the Grant Shares and the sale, transfer or other disposition of the Grant Shares on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants, conditions and agreements hereinafter set forth, the parties agree as follows: ARTICLE I --------- Management of Company --------------------- Section 1.1 Board of Directors. Subject to Section 1.9, the Board of ----------- ------------------ Directors shall consist of thirteen (13) directors; provided, however, that the -------- ------- number of directors constituting the Board of Directors shall be reduced in the circumstances set forth in this Section 1.1. Executive hereby agrees that she will vote all of her shares of Class A Voting Common Stock Beneficially Owned or held of record by her (whether now owned or hereafter acquired), in person or by proxy, to cause the election of directors and thereafter the continuation in office of such directors as follows: (a) three (3) individuals selected by holders of a Majority in Interest of the Class A Voting Common Stock Beneficially Owned by the Cash Equity Investors, in their sole discretion; (b) Gerald Vento (so long as he is an officer of the Company and the Management Agreement shall be in full force and effect); (c) Thomas Sullivan (so long as he is an officer of the Company and the Management Agreement shall be in full force and effect); (d) two (2) individuals (the "Series A Preferred Directors") elected by AT&T PCS in its capacity as holder of Series A Preferred Stock so long as it and TWR Cellular has the right to elect two directors in accordance with the Restated Certificate; and (e) (i) three (3) individuals selected by the holders of the Voting Preference Stock, which three (3) individuals shall be reasonably acceptable to holders of a Majority in Interest of the Class A Voting Common Stock Beneficially Owned by the Cash Equity Investors, and (ii) three (3) individuals selected by the holders of the Voting Preference Stock, which three (3) individuals shall be reasonably acceptable to holders of a Majority in Interest of the Class A Voting Common Stock Beneficially Owned by the Cash Equity Investors and AT&T PCS, in the reasonable discretion of such Cash Equity Investors, on the one hand, and AT&T PCS, on the other hand. In the event that Mr. Vento or Mr. Sullivan shall cease to be an officer of the Company, or the Management Agreement shall cease to be in full force and effect, such individuals shall resign (or the holders of the Voting Preference Stock shall remove her) from the Board of Directors and the holders of the Voting Preference Stock shall select a replacement or replacements who shall be acceptable to a Majority in Interest of the Cash Equity Investors, AT&T PCS ,and TWR Cellular, in each case in its sole discretion. In the event that AT&T PCS shall cease to be entitled to elect the Series A Preferred Directors, such directors shall resign (or the other directors or Stockholders shall remove them) from the Board of Directors and the remaining directors shall take such action so that the number of directors constituting the entire Board of Directors shall be reduced accordingly. In the event that any Cash Equity Investor that has an Unfunded Commitment shall fail to satisfy any such portion of its Unfunded Commitments when due in accordance with Section 2.2 of the Securities Purchase Agreement or Section 3.10 of the Joint Venture Stockholders' Agreement, and such failure is not cured by such Cash Equity Investor within thirty-five (35) days thereof, then, until such failure is cured, the member of the Board of Directors who is designated by, or Affiliated with, such Cash Equity Investor (whether as an employee, partner, member, stockholder or otherwise) shall resign from the Board of Directors and the Person(s) who designated such member shall select an individual acceptable to AT&T PCS in its sole discretion. Each of One Liberty, Toronto Dominion and Northwood shall have the right, so long as it Beneficially Owns at least 5,000 shares of Series C Preferred Stock and 5,000 shares of Class A Voting Common Stock to designate one (1) person who shall be entitled to attend the Board of Directors Meeting as an observer, including meetings during which the Company's annual budget is discussed and presented. Such observer shall have -2- the right to receive all of the Board of Directors materials and shall also have the right to meet quarterly with the management of the Company to consult on the business affairs of the Company. In addition, so long as AT&T PCS and TWR Cellular have the right to designate two directors in accordance with the Restated Certificate, up to two (2) AT&T PCS regional directors (in regions overlapping with or in geographic proximity to the Territory) shall have the right to attend each meeting of the Board of Directors as an observer. Any nomination or designation of directors and the acceptance thereof pursuant to Section 1.1 shall be evidenced in writing. Section 1.2 Removal; Filling of Vacancies. Except as set forth in ------- --- ----------------------------- Section 1.1, Executive agrees she will not vote any shares of Class A Voting Common Stock Beneficially Owned by her, to vote for the removal without cause of any director designated by any other Stockholder in accordance with Section 1.1. Any Stockholder or group of Stockholders who has the right to designate any member(s) of the Board of Directors shall have the right to replace any member(s) so designated by it (whether or not such member is removed from the Board of Directors with or without cause or ceases to be a member of the Board of Directors by reason of death, disability or for any other reason) upon written notice to the other Stockholders, the Company and the members of the Board of Directors which notice shall set forth the name of the member(s) being replaced and the name of the new member(s); provided, however, that if a -------- ------- director designated pursuant to (x) Section 1.1(e)(i) is replaced by the holders of Voting Preference Stock, the individual designated by the holders of Voting Preference Stock to replace such director must be acceptable to the Cash Equity Investors in accordance with the terms of Section 1.1(e)(i), and (y) Section 1.1(e)(ii) is replaced by the holders of Voting Preference Stock, the individual designated by the holders of Voting Preference Stock to replace such director must be acceptable to the Cash Equity Investors and AT&T PCS in accordance with the terms of Section 1.1(e)(ii). Executive agrees to vote her shares of Class A Voting Common Stock, or shall otherwise take any action as is necessary, to cause the election of any successor director designated by any Stockholder pursuant to this Section 1.2. The holders of the Voting Preference Stock, agree that during the three (3) year period commencing on the date hereof they will not (i) remove the individuals nominated by them pursuant to Sections 1.1(e)(i) and 1.1(e)(ii), or (ii) nominate for election any individuals other than the individuals initially selected by them and approved in accordance with said Sections 1.1(e)(i) and (e)(ii), subject to the agreements of such individuals to serve on the Board of Directors. Section 1.3 Initial Directors. In accordance with Section 228 of the ------- --- ----------------- Delaware General Corporation Law and pursuant to the provisions of Section 1.1 of this Agreement, Executive hereby consents to the election of and does hereby elect in accordance with Section 1.1 hereof the persons designated in Schedule II hereof as directors of the Company. Such persons shall hold office until their successors are duly elected and qualified, except as otherwise provided in this Agreement, the Joint Venture Stockholders' -3- Agreement or the Restated Certificate or the Restated By-Laws. Section 1.4 Business of the Company. The business and affairs of the ------- --- ----------------------- Company shall be conducted by the officers of the Company under the supervision of the Board of Directors, substantially in accordance with operating and capital expenditure budgets approved by the Board of Directors from time to time. Executive hereby approves the five (5) year build-out plan for the Business and the capital budget for the first two (2) years of the Business in the forms attached as Schedule IX of the Joint Venture Stockholders' Agreement. Section 1.5 Required Votes. (a) All actions of the Board of Directors ------- --- -------------- of the Company shall require the vote of at least a majority of the entire Board of Directors, unless otherwise required by Law, the Restated Certificate, the Restated By-Laws, the Joint Venture Stockholders' Agreement or this Agreement. (b) None of the following transactions or actions shall be entered into or taken by the Company, unless (i) voted for or consented to by the vote of at least three (3) of the five (5) directors designated pursuant to Sections 1.1(a) and (d) and six (6) of the eight (8) directors designated pursuant to Sections 1.1(b), (c) and (e) of the Board of Directors of the Corporation. 1. The sale, transfer, assignment or other disposition of any material portion of the assets of the Company or any of its Subsidiaries other than in the ordinary course of business; 2. The merger, combination or consolidation of the Company or any of its Subsidiaries with or into any other entity, regardless of whether the Company or any such Subsidiary is the surviving entity in any such merger, combination or consolidation, the acquisition of any businesses by the Corporation, the formation of any partnership or joint venture involving the Company, or the liquidation, dissolution or winding up of the Company or any of its Subsidiary; 3. Any offering or issuance of additional shares of Preferred Stock, Voting Preference Stock or Common Stock of, or any other securities or ownership interests in, the Company or any of its Subsidiaries, including, without limitation, warrants, options or other rights convertible or exchangeable into Preferred Stock, Voting Preference Stock or Common Stock of, or other securities or ownership interests in, the Company or any of its Subsidiaries except as contemplated by the Securities Purchase Agreement or the declaration of any dividends thereon. 4. The repurchase by the Company of any Company Stock -4- (other than shares of Class A Voting Common Stock or Series E Preferred Stock purchased from former employees of the Company); 5. The authorization or adoption of any amendment to the Restated Certificate, Restated By-laws or any constituent document of the Company or any of its Subsidiaries; 6. The hiring or termination of any executive officer of the Company; 7. The approval of, or amendment to, any operating or capital budget of the Company or any of its Subsidiaries; 8. The incurrence by the Company or any of its Subsidiaries, whether directly or indirectly, of any indebtedness for borrowed money or capital leases in any calendar quarter in excess of $1,000,000; 9. Any agreement or arrangement, written or oral, to pay any director, officer, agent or employee of the Company or any of its Subsidiaries $200,000 or more on an annual basis or any loan, lease, contract or other transaction with any employee of the Company or any of its Subsidiaries with an annual salary in excess of $200,000 or with any director or officer of the Company or any member of any such Person's Immediate Family; 10. The making of, or commitment to make, any capital expenditures involving a payment or liability in any one year of $1,000,000 or more in the aggregate by the Company or any of its Subsidiaries; 11. The initiation of any bankruptcy proceeding, dissolution or liquidation of the Company or any of its Subsidiaries; and 12. The entering into any contract, agreement or understanding to do any of the foregoing. Notwithstanding the foregoing, any amendment, modification, waiver or termination of the Management Agreement shall require the affirmative vote or consent of a majority of the Board of Directors (excluding Messrs. Vento and Sullivan). Section 1.6 Transactions between the Company and the Stockholders or ------- --- -------------------------------------------------------- their Affiliates. Except for this Agreement, the Joint Venture Stockholders' - ---------------- Agreement, the Securities Purchase Agreement and the Related Agreements and the transactions contemplated hereby and thereby and any other arms-length agreements or transactions -5- entered into from time to time between the Company and its Subsidiaries, on the one-hand, and AT&T PCS and its Affiliates, on the other hand, no Stockholder or any Affiliate of any Stockholder shall enter into any transaction with the Company or any Subsidiary of the Company unless such transaction is approved by a majority of the disinterested members of the Board of Directors. For purposes hereof, a director shall be deemed to be disinterested with respect to any such transaction if such director was not designated a director by the Stockholder that (or an Affiliate of which) proposed to engage in such transaction with the Company or any Subsidiary of the Company and such member is not an officer, director, partner, employee, stockholder of, or consultant to, such Stockholder or any of its Affiliates; provided, however, that for purposes of this Section 1.6 the directors designated pursuant to Section 1.1(e) (ii) and Section 1.9(a) (ii) shall not be deemed to have been designated by the Cash Equity Investors, AT&T PCS or the holders of the Voting Preference Stock. Section 1.7 Board Committees. An executive committee of the Board of ------- --- ---------------- Directors (or a committee of the Board of Directors having substantially the same mandate and powers of such a committee) shall be established, which committee shall be comprised of five (5) individuals as follows: one (1) of the Series A Preferred Directors, one of the directors selected by the Cash Equity Investors pursuant to Section 1.1(a), Mr. Vento (so long as he is an officer of the Company), one (1) of the directors selected pursuant to Section 1.1(e)(i) and one (1) of the directors selected pursuant to Section 1.1(e)(ii). Section 1.8 Voting Agreements and Voting Trusts. Except as disclosed on ------- --- ----------------------------------- Schedule X of the Joint Venture Stockholders' Agreement or referred to in this Section 1.8, Executive agrees that she will not, directly or indirectly, deposit any of her shares of Series E Preferred Stock and/or Common Stock in a voting trust or other similar arrangement or, except as expressly provided herein, subject such shares to a voting agreement or other similar arrangements. Each of AT&T PCS and TWR Cellular covenants and agrees that it will not, directly or indirectly, enter into a voting or similar agreement with any Transferee of shares of Series A Preferred Stock. Each holder of Voting Preference Stock shall vote all shares of Voting Preference Stock owned by her in accordance with the vote of holders of a majority of the shares of Voting Preference Stock. Section 1.9 Board of Directors After Voting Preference Stock. Effective ----------- ------------------------------------------------ on the later to occur of (x) the date that holders of shares of Voting Preference Stock shall vote as a class with holders of Class A Voting Common Stock, and (y) immediately prior to the IPO Date, the Board of Directors shall consist of seven (7) directors, Executive hereby agrees that she will vote all of the shares Class A Voting Common Stock owned or held of record by her (whether now owned or hereafter acquired), in person or by proxy, to cause the election of directors as follows: (a) (i) two (2) individuals selected by holders of a Majority in Interest of the Common Stock Beneficially Owned by the Cash Equity Investors, in their sole discretion and (ii) two (2) additional individuals selected by holders of a Majority in Interest of the Common Stock held by the Cash Equity Investors, which two (2) additional individuals shall be acceptable to the Management Stockholders (in each case so long as each is an officer of the Company) and AT&T PCS, in the discretion of the Management -6- Stockholders, on the one hand, and AT&T PCS, on the other hand; (b) Two (2) individuals employed by the Company and selected by the Management Stockholders (in each case so long as the Management Stockholders are officers of the Company), one of whom shall be acceptable to holders of a Majority in Interest of the Class A Voting Common Stock Beneficially Owned by the Cash Equity Investors and AT&T PCS, in the reasonable discretion of such Cash Equity Investors, on the one hand, and AT&T PCS on the other hand; and (c) One (1) individual elected by AT&T PCS in its capacity as holder of Series A Preferred Stock so long as it has the right to elect one director in accordance with the Restated Certificate. In the event that an individual selected by the Management Stockholders pursuant to clause (b) above shall cease to be an officer of the Company, such ---------- individual shall resign (or the other directors or Stockholders shall remove her) from the Board of Directors and the Board of Directors shall select a replacement from the executives of the Company who shall be reasonably acceptable to a Majority in Interest of the Cash Equity Investors, on the one hand, and AT&T PCS, on the other hand, in each case in its sole discretion. In the event that AT&T PCS and TWR Cellular shall cease to be entitled to elect one (1) Series A Preferred Director, such director shall resign (or the other directors or Stockholders shall remove her) from the Board of Directors and the remaining directors shall take such action so that the number of directors constituting the entire Board of Directors shall be reduced accordingly. ARTICLE II ---------- Transfer of Shares ------------------ Section 2.1 General. ------- --- (a) Executive agrees that at all times prior to the IPO Date she shall not, directly or indirectly, transfer, sell, assign, pledge, tender or otherwise grant, create or suffer to exist a lien in or upon, give, place in trust, or otherwise voluntarily or involuntarily (including transfers by testamentary or intestate succession) dispose of by operation of law, offer or otherwise (any such action being referred to herein as a "Transfer"), any of the Grant Shares which have vested (the "Vested Shares"), except after complying first with Section 2.2 and next with Section 2.3, if applicable. (b) Executive agrees that at all times on and after the IPO Date she shall not, directly or indirectly, transfer any of the Vested Shares except after complying first with Section 2.2 and next with Section 2.3, if applicable, provided, however, Executive shall not be required to comply with Section 2.2 if - -------- ------- she first complies with the applicable provisions of Section 2.4 in connection with Transfers of Common Stock pursuant to Rule 144, or in any single transaction or series of related transactions to one or more persons which results in the Transfer by Executive (together with any other stockholder of the Company participating in such single transaction or series of related transactions) of not -7- more than ten percent (10%) of the Common Stock on a fully diluted basis (excluding for such purposes the Series A Preferred Stock). (c) Prior to the IPO Date, Executive agrees that she will not transfer any Vested Shares of Preferred Stock held by her except after complying with Section 2.2; it being understood that on and after the IPO Date, Executive may transfer her Vested Shares of Preferred Stock free from any restrictions on transfer of such shares under this Agreement, but subject at all times to the restrictions imposed by federal and state securities laws. Section 2.2 Right of First Offer. ------- --- (a) If Executive desires to Transfer any or all of her Vested Shares of Preferred Stock or Common Stock (collectively, the "Offered Shares"), she shall give written notice (the "Offer Notice") to the Company and to each Stockholder entitled to become the First Offeree of such Offered Shares, as determined below. Each Offer Notice shall describe in reasonable detail the number of shares of each class of Offered Shares, the cash purchase price requested and all other material terms and conditions of the proposed Transfer. The Offer Notice shall constitute an irrevocable offer (a "First Offer") to sell all (and not less than all) of the Offered Shares to the First Offeree(s) at a cash price equal to the price contained in such Offer Notice and upon the same terms as the terms contained in such Offer Notice. The First Offeree shall have the irrevocable right and option, exercisable as provided below, but not the obligation, to accept the First Offer as to all (and not less than all) of the Offered Shares. The "First Offeree" shall be AT&T PCS. (b) The option provided for herein shall be exercisable by the First Offeree by giving written notice (a "Purchase Notice"), that the First Offeree desires to purchase all (and not less than all) of such Offered Shares from the Seller, to the Stockholders (other than the Seller) and the Company not later than ten (10) business days (the "First Offer Period") after the date of the Offer Notice. The purchase of the Offered Shares by the First Offeree shall be closed at the principal executive offices of the Company on a date specified by the First Offeree upon at least five (5) business days' notice, that is within thirty (30) days after the expiration of the First Offer Period; provided, however, that if such purchase is subject to the consent of the FCC or - -------- ------- any public service or public utilities commission, the purchase of the Offered Shares shall be closed on the first business day after all such consents shall have been obtained by Final Order. (c) If the First Offeree declines (which shall include the failure to give timely notice of acceptance) to purchase all of the Offered Shares subject to the First Offer within the First Offer Period, the Seller shall have the right (for a period of ninety (90) days following the expiration of the First Offer Period) to consummate the sale of the Offered Shares to any person; provided, however, that the purchase price of such Offered Shares -------- ------- payable by such person must be at least equal to the cash purchase price thereof set forth in the Offer Notice and all other terms and conditions of any such sale shall not be more beneficial to such third party than those contained in the Offer Notice. If any Offered Shares are not sold pursuant to the provisions of this Section 2.2 prior to the expiration of the ninety (90) day period specified in the immediately preceding sentence, such Offered -8- Shares shall become subject once again to the provisions and restrictions hereof; provided, however, that if such purchase is subject to the consent of -------- ------- the FCC or any public service or public utilities commission, the purchase of the Offered Shares shall be closed on the first business day after all such consents shall have been obtained by Final Order. (d) The purchase price of any Offered Shares Transferred pursuant to this Section 2.2 shall be payable in cash by certified bank check or by wire transfer of immediately available funds. Section 2.3 Rights of Inclusion. ----------- (a) Executive shall not, directly or indirectly, Transfer, in any single transaction or series of related transactions to one or more Persons (each such Person an "Inclusion Event Purchaser") shares of any series or class of stock issued by the Company (collectively, "Inclusion Stock") in circumstances in which, after giving effect to such Transfer, whether acting alone or in concert with any other Stockholder (such parties referred to herein as "Selling Stockholders") would result in such Selling Stockholder(s) Transferring twenty-five percent (25%) or more of the outstanding shares of any such class of Inclusion Stock outstanding on the date of such proposed Transfer on a fully diluted basis (an "Inclusion Event"), unless the terms and conditions of such sale to such Inclusion Event Purchaser shall include an offer to AT&T PCS, the Cash Equity Investors, and the Management Stockholders (each, an "Inclusion Event Offeree") to Transfer to such Inclusion Event Purchasers up to that number of shares of any class of Inclusion Stock then beneficially owned (as defined in the Securities Exchange Act of 1934) by each Inclusion Event Offeree that bears the same proportion to the total number of shares of Inclusion Stock at that time beneficially owned (without duplication) by each such Inclusion Event Offeree as the number of shares of Inclusion Stock being Transferred by the Selling Stockholders (including shares of Inclusion Stock theretofore Transferred if in any applicable series of related transactions) bears to the total number of shares of Inclusion Stock at the time beneficially owned (without duplication) by the Selling Stockholders (including shares of Inclusion Stock theretofore Transferred if in any applicable series of related transactions). If the Selling Stockholders receive a bona fide offer from an Inclusion Event Purchaser to purchase shares of Inclusion Stock in circumstances in which, after giving effect to such sale would result in an Inclusion Event, and which offer such Selling Stockholders wish to accept, the Selling Stockholders shall then cause the Inclusion Event Purchaser's offer to be reduced to writing (which writing shall include an offer to purchase shares of Inclusion Stock from each Inclusion Event Offeree according to the terms and conditions set forth in this Section 2.3) and the Selling Stockholders shall send written notice of the Inclusion Event Purchaser's offer (the "Inclusion Notice") to each Inclusion Event Offeree, which Inclusion Notice shall specify (i) the names of the Selling Stockholders, (ii) the names and addresses of the proposed acquiring Person, (iii) the amount of shares proposed to be Transferred and the price, form of consideration and other terms and conditions of such Transfer (including, if in a series of related transactions, such information with respect to shares of Inclusion Stock theretofore Transferred), (iv) that the acquiring Person has been informed of the rights provided for in this Section 2.3 and has agreed to purchase shares of Inclusion Stock in accordance with the terms hereof, and (v) -9- the date by which each other Selling Stockholder may exercise its respective rights contained in this Section 2.3, which date shall not be less than thirty (30) days after the giving of the Inclusion Notice. The Inclusion Notice shall be accompanied by a true and correct copy of the Inclusion Event Purchaser's offer. At any time within thirty (30) days after receipt of the Inclusion Notice, each Inclusion Event Offeree may accept the offer included in the Inclusion Notice for up to such number of shares of Inclusion Stock as is determined in accordance with this Section 2.3, by furnishing written notice of such acceptance to each Selling Stockholder, and delivering, to an escrow agent (which shall be a bank or a law or accounting firm designated by the Inclusion), on behalf of the Selling Stockholders, the certificate or certificates representing the shares of Inclusion Stock to be sold pursuant to such offer by each Inclusion Event Offeree, duly endorsed in blank, together with a limited power-of-attorney authorizing the escrow agent, on behalf of the Inclusion Event Offeree, to sell the shares to be sold pursuant to the terms of such Inclusion Event Purchaser's offer. In the event that the Inclusion Event Purchaser does not agree to purchase all of the shares of Inclusion Stock proposed to be sold by the Selling Stockholders and the Inclusion Event Offerees, then each Selling Stockholder and Inclusion Event Offeree shall have the right to sell to the Inclusion Event Purchaser that number of shares of Inclusion Stock as shall be equal to (x) the number of shares of Inclusion Stock which the Inclusion Event Purchaser has agreed to purchase times (y) a fraction, the numerator of which is the number of shares of Inclusion Stock beneficially owned (without duplication) by such Selling Stockholder or Inclusion Event Offeree and the denominator of which is the aggregate number of shares of Inclusion Stock beneficially owned (without duplication) by all Selling Stockholders and Inclusion Event Offerees. If any Inclusion Event Offeree desires to sell less than its proportionate amount of shares of Inclusion Stock that it is entitled to sell pursuant to this Section 2.3, then the Selling Stockholders and the remaining Inclusion Event Offerees shall have the right to sell to the Inclusion Event Purchaser an additional amount of shares of Inclusion Stock as shall be equal to (x) the number of shares of Inclusion Stock not being sold by any such Inclusion Event Purchasers times (y) a fraction, the numerator of which is the number of shares of Inclusion Stock owned such Selling Stockholder or remaining Inclusion Event Offeree and the denominator of which is the aggregate number of shares of Inclusion Stock beneficially owned (without duplication) by all Selling Stockholders and remaining Inclusion Event Offerees. Such process shall be repeated in series until all of the remaining Inclusion Event Offerees agree to sell their remaining proportionate number of shares of Inclusion Stock. (b) The purchase from each Inclusion Event Offeree pursuant to this Section 2.3 shall be on the same terms and conditions, including the price per share received by the Selling Stockholders and stated in the Inclusion Notice provided to each Inclusion Event Offeree. (c) Simultaneously with the consummation of the sale of the shares of Inclusion Stock of the Selling Stockholders and each Inclusion Event Offeree to the Inclusion Event Purchaser pursuant to the Inclusion Event Purchaser's offer, the Selling Stockholders shall notify each Inclusion Event Offeree and shall cause the purchaser to -10- remit to each Inclusion Event Offeree the total sales price of the shares of Inclusion Stock held by each Inclusion Event Offeree sold pursuant thereto and shall furnish such other evidence of the completion and time of completion of such sale and the terms thereof as may be reasonably requested by each Inclusion Event Offeree. (d) If within thirty (30) days after receipt of the Inclusion Notice, an Inclusion Event Offeree has not accepted the offer contained in the Inclusion Notice, such Inclusion Event Offeree shall be deemed to have waived any and all rights with respect to the sale described in the Inclusion Notice (but not with respect to any subsequent sale, to the extent this Section 2.3 is applicable to such subsequent sale) and the Selling Stockholders shall have sixty (60) days in which to sell not more than the number of shares of Inclusion Stock described in the Inclusion Notice, on terms not more favorable to the Selling Stockholders than were set forth in the Inclusion Notice; provided, -------- however, that if such purchase is subject to the consent of the FCC or any - ------- public service or public utilities commission, the purchase of the Offered Shares shall be closed on the first business day after all such consents shall have been obtained by Final Order. Section 2.4 Right of First Negotiation. In the event that Executive ------- --- -------------------------- desires to Transfer any shares of Common Stock following the IPO Date in a Transfer described in Section 2.1(b), she shall give written notice thereof to AT&T PCS, such notice to specify, among other things, the number of shares that she desires to sell. For the applicable first negotiation period hereinafter set forth, AT&T PCS shall have the exclusive right to negotiate with Executive with respect to the purchase of such shares; it being understood and agreed that such exclusive right shall not be deemed to be a right of first offer or right of first refusal for the benefit of AT&T PCS and Executive shall have the right to reject any offer made by AT&T PCS during such applicable first negotiation period. Upon the expiration of such applicable first negotiation period, Executive shall have the right (for the applicable offer period hereinafter set forth with respect to each applicable first negotiation period), following the expiration of such applicable first negotiation period, to offer and sell such shares included in such written notice on such terms and conditions as shall be acceptable to such Executive in her sole discretion. If any of such shares included in such written notice are not sold pursuant to the provisions of this Section 2.4 prior to the expiration of the applicable offer period, such shares shall become subject once again to the provision and restrictions hereof. If Executive desires to Transfer shares of Common Stock pursuant to Rule 144, the applicable first negotiation period shall be three (3) hours (it being understood and agreed that Executive shall, in addition to giving written notice of such proposed Transfer by facsimile, use commercially reasonable efforts to contact AT&T PCS by telephone) and the applicable offer period upon the expiration of such first negotiation period shall be five (5) business days, and in any single transaction or series of related transactions to one or more persons which will result in the Transfer by Executive (together with any other Stockholder participating in such single transaction or series of related transactions) of not more than ten percent (10%) of the Common Stock on a fully diluted basis (excluding for such purposes the Series A Preferred Stock), the applicable first negotiation period shall be one (1) business day, so long as notice of such proposed Transfer is given to AT&T PCS -11- prior to 9:00 A.M. on the day prior to the date of such proposed Transfer (it being understood and agreed that Executive shall, in addition to giving written notice of such proposed Transfer by facsimile, use commercially reasonable efforts to contact AT&T PCS by telephone) and the applicable offer period upon the expiration of such first negotiation period shall be ten (10) business days. Section 2.5 Additional Conditions to Permitted Transfers. ------- --- (a) Upon any Transfer pursuant to Section 2.2 or Section 2.3, each Transferee that is not a party hereto shall, prior to such Transfer, agree in writing to be bound by all of the provisions of this Agreement applicable to Executive (and shall thereby become a Stockholder for all purposes of this Agreement). Any Transfer without compliance with such provisions of this Agreement shall be null and void and such Transferee shall have no rights as a Stockholder of the Company. (b) Notwithstanding anything to the contrary contained in this Agreement, Executive agrees that she will not effect a Transfer of shares of Company Stock to anyone prohibited by the Company; provided, however, that -------- ------- nothing contained in this Section 2.5(b) shall be construed to prohibit a Transfer of Common Stock by Executive after the IPO Date pursuant to an underwritten registration or in accordance with the provisions of Rule 144. Section 2.6 Representations and Warranties. A Stockholder purchasing ------- --- ------------------------------ shares of Company Stock pursuant to Section 2.2 shall be entitled to receive representations and warranties from the transferring Stockholder that such Stockholder has the authority (corporate or otherwise) to sell such shares, is the sole owner of such shares, and has good and valid title to such shares, free and clear of any and all Liens (other than pursuant to this Agreement, the Restated Certificate or any Related Agreement), and that the sale of such shares does not violate any agreement to which it is a party or by which it is bound. Section 2.7 Stop-Transfer. ------- --- (a) The Company agrees not to effect any Transfer of shares of Company Stock by Executive whose proposed Transfer is subject to Sections 2.2, 2.3 or 2.4 until it has received evidence reasonably satisfactory to it that the rights provided to any other Stockholders pursuant to such Sections, if applicable to such Transfer, have been complied with and satisfied in all respects. No Transfer of any shares of Preferred Stock and/or Common Stock shall be made except in compliance with all applicable securities laws. Any Transfer made in violation of this Agreement shall be null and void. ARTICLE III ----------- After-Acquired Shares; Recapitalization --------------------------------------- Section 3.1 After Acquired Shares; Recapitalization ------- --- (a) All of the provisions of this Agreement shall apply to all of the shares of Equity Securities now owned or hereafter issued or transferred to Executive or to -12- her Affiliated Successors in consequence of any additional issuance, purchase, exchange or reclassification of shares of Equity Securities, corporate reorganization, or any other form of recapitalization, or consolidation, or merger, or share split, or share dividend, or which are acquired by Executive or her Affiliated Successors in any other manner. (b) Whenever the number of outstanding shares of Equity Securities is changed by reason of a stock dividend or a subdivision or combination of shares effected by a reclassification of shares, each specified number of shares referred to in this Agreement shall be adjusted accordingly. Section 3.2 Amendment of Restated Certificate. Whenever the number of ------- --- --------------------------------- shares of authorized Common Stock is not sufficient in order to issue shares of Common Stock upon conversion of Preferred Stock in accordance with the Restated Certificate, (i) the Company shall promptly amend the Restated Certificate in order to authorize a sufficient number of shares of Common Stock, and (ii) Executive agrees to vote her shares of Preferred Stock and Common Stock in favor of such amendment. ARTICLE IV ---------- Share Certificates ------------------ Section 4.1 Restrictive Endorsements; Replacement Certificates. Each ------- --- -------------------------------------------------- certificate representing the shares of Equity Securities now or hereafter held by a Stockholder (including any such certificate delivered upon conversion of the Preferred Stock) or delivered in substitution or exchange for any of the foregoing certificates shall be stamped with legends in substantially the following form: (a) "The shares represented by this Certificate are subject to a Stockholders' Agreement dated as of July 17, 1998, a copy of which is on file at the offices of the Company and will be furnished by the Company to the holder hereof upon written request. Such Stockholders' Agreement provides, among other things, for the granting of certain restrictions on the sale, transfer, pledge, hypothecation or other disposition of the shares represented by this Certificate, and that under certain circumstances, the holder hereof may be required to sell the shares represented by this Certificate. By acceptance of this Certificate, each holder hereof agrees to be bound by the provisions of such Stockholders' Agreement. The Company reserves the rights to refuse to transfer the shares represented by this Certificate unless and until the conditions to transfer set forth in such Stockholders' Agreement have been fulfilled"; and (b) "The securities represented by this Certificate have been acquired for investment and have not been registered under the Securities Act of 1933, as amended (the "Act"), or under any state securities or "Blue Sky" laws. Said securities may not be sold, transferred, assigned, pledged, hypothecated or otherwise disposed of, unless and until registered under the Act and the rules and regulations thereunder and all applicable state securities or "Blue Sky" laws or exempted therefrom under the Act and all applicable state securities or "Blue Sky" laws." -13- Executive agrees that she will deliver all certificates for shares of Equity Securities owned by her to the Company for the purpose of affixing such legends thereto. (c) Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any certificate representing shares of Equity Securities subject to this Agreement and of a bond or other indemnity reasonably satisfactory to the Company, and upon reimbursement to the Company of all reasonable expenses incident thereto, and upon surrender of such certificate, if mutilated, the Company will make and deliver a new certificate of like tenor in lieu of such lost, stolen, destroyed or mutilated certificate. ARTICLE V --------- Miscellaneous ------------- Section 5.1 Notices. All notices or other communications hereunder ------- --- ------- shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by facsimile transmission, or by registered or certified mail (return receipt requested), postage prepaid, with an acknowledgment of receipt signed by the addressee or an authorized representative thereof, addressed as follows (or to such other address for a party as shall be specified by like notice; provided that notice of a change of address shall be effective only upon receipt thereof: If to AT&T PCS or TWR Cellular: c/o AT&T Wireless Services, Inc. 5000 Carillon Point Kirkland, Washington 98033 Attention: William W. Hague Telephone: (425) 828-8461 Facsimile: (425) 828-8451 With a copy to: AT&T Corp. 295 North Maple Avenue Basking Ridge, NJ 07920 Attention: Corporate Secretary Telephone: Facsimile: (908) 953-4657 and Friedman Kaplan & Seiler LLP 875 Third Avenue, 8th Floor New York, New York 10022 Attention: Daniel M. Taitz -14- Telephone: (212) 833-1109 Facsimile: (212) 355-6401 and Rubin Baum Levin Constant & Friedman 30 Rockefeller Plaza New York, New York 10112 Attention: Gregg S. Lerner, Esq. Telephone: (212) 698-7705 Facsimile: (212) 698-7825 If to a Cash Equity Investor, to its address set forth on Schedule I. With a copy to: Mayer, Brown & Platt 1675 Broadway New York, New York 10019 Attention: Mark S. Wojciechowski, Esq. Telephone: (212) 506-2525 Facsimile: (212) 262-1910 If to a Management Stockholder or to the Company, to the address set forth in the Securities Purchase Agreement. If to Executive, to the address set forth in the Share Grant Agreement. With a copy to each other party sent to the addresses set forth in this Section 5.1. Section 5.2 Waiver failure or delay on the part of any Stockholder in ------- --- ------ exercising any right, power or privilege hereunder, nor any course of dealing between the Company and any Stockholder shall operate as a waiver thereof nor shall any single or partial exercise of any right, power or privilege hereunder preclude the simultaneous or later exercise of any other right, power or privilege. The rights and remedies herein expressly provided are cumulative and not exclusive of any rights and remedies which any Stockholder would otherwise have. No notice to or demand on the Company in any case shall entitle the Company to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Stockholders or any of them to take any other or further action in any circumstances without notice or demand. Section 5.3 Modification. The terms and provisions of any change or ------- --- ------------ modification to the Joint Venture Stockholders' Agreement made effective pursuant to Section 12(b) of the Joint Venture Stockholders' Agreement, shall be reflected in full in this Agreement as of the same was approved by the parties hereto. -15- Section 5.4 Obligations Several. The obligations of each Stockholder ------- --- ------------------- under this Agreement shall be several with respect to each such Stockholder. Section 5.5 Governing Law. This Agreement shall be governed and ------- --- ------------- construed in accordance with the law of the State of Delaware. Section 5.6 Benefit and Binding Effect; Severability. This Agreement ------- --- ---------------------------------------- shall be binding upon and shall inure to the benefit of the Company, its successors and assigns, and each of the Stockholders and their respective executors, administrators and personal representatives and heirs and permitted assigns. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy or any listing requirement applicable to the Common Stock, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto affected by such determination in any material respect shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the provisions hereof are given effect as originally contemplated to the greatest extent possible. Section 5.7 Counterparts. This Agreement may be executed in two or more ------- --- ------------ counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. -16- IN WITNESS WHEREOF, each of the parties has executed or consent this Agreement to be executed by its duly authorized officers as of the date first written above. TELECORP PCS, INC. By: /s/ Thomas Sullivan -------------------------------- Name: Thomas Sullivan Title: Executive Vice President EXECUTIVE: /s/ Julie Dobson ------------------------------- Julie Dobson By execution hereof, the Company and Executive agree that AT&T PCS, TWR Cellular, the Cash Equity Investors and the Management Stockholders are to be bound by the obligations in, and entitled to the benefits of, this Agreement by virtue of their respective execution of that certain Agreement by and among them and the Company dated as of the date of the Joint Venture Stockholders' Agreement. -17- Schedule I Cash Equity Investors --------------------- CB Capital Investors, L.P. 380 Madison Avenue, 12th Floor New York, NY 10017 Attn: Michael Hannon Fax: (212) 622-3101 Equity-Linked Investors-II Private Equity Investors III, L.P. 540 Madison Avenue, 36th Floor New York, NY 10022 Attn: Rohit M. Desai Fax: (212) 752-7807 Hoak Communications Partners, L.P. HCP Capital Fund, L.P. One Galleria Tower 13355 Noel Road, Suite 1050 Dallas, Texas 75240 Attn: James Hoak Fax: (972) 960-4899 Whitney Equity Partners, L.P. J.H. Whitney III, L.P. Whitney Strategic Partners III, L.P. 177 Broad Street, 15th Floor Stamford, Connecticut 06901 Attn: William Laverack, Jr. Fax: (203) 973-1422 Entergy Technology Holding Company Three Financial Centre 900 South Shackleford Road Suite 210 Little Rock, Arkansas 72211 Attn: John A. Brayman Fax: (501) 954-5095 Media/Communications Partners III Limited Partnership Media/Communications Investors Limited Partnership 75 State Street, Suite 2500 Boston, MA 02109 Attn: James F. Wade Fax: (617) 345-7201 One Liberty Fund III, L.P. Boston, MA 02109 Attn: Joseph T. McCullen Fax: (617) 423-1765 Toronto Dominion Investments, Inc. 31 West 52nd Street New York, NY 10019-6101 Attn: Brian Rich Fax: (212) 974-8429 (with a copy to) Toronto Dominion Investments, Inc. 909 Fannin Suite 1700 Houston, Texas 77010 Attn: Martha Gariepy Fax: (713) 652-2647 Northwood Ventures LLC Northwood Capital Partners LLC 485 Underhill Boulevard, Suite 205 Syosset, New York 11791-3419 Attn: Peter Schiff Fax: (516) 364-0879 Schedule II Initial Directors ----------------- William Hague Thomas Sullivan Michael Hannon James Hoak Rohit Desai William Bandt Joseph O'Donnell Kurt Maas Gerald Vento James Wade William Laverack, Jr. Scott Anderson William Kussell EX-10.25 40 SEPARATION AGREEMENT, ROBERT DOWSKI Exhibit 10.25 SEPARATION AGREEMENT -------------------- It is hereby agreed by and between Robert Dowski ("Dowski") and TeleCorp PCS, Inc. and TeleCorp Communications, Inc. (collectively "TeleCorp") for good and sufficient consideration more fully described below ("Agreement"), that: 1. Employment Status. Dowski's employment with TeleCorp shall cease on March 8, 1999 (the "Separation Date"). Dowski's regular salary and benefits will likewise cease as of the Separation Date, including any entitlement he had or might have had under any TeleCorp provided benefit programs, except as required by federal or state law or otherwise described below. The Separation Date shall be the date of the "qualifying event" under the Consolidated Budget Reconciliation Act of 1985 ("COBRA"), and Dowski will receive COBRA information under separate cover. 2. Consideration In consideration of Dowski's agreement in paragraphs 8(c), 5(a), 6 and 7, and the other consideration provided herein, and provided that Dowski shall not have taken any action to revoke this agreement, TeleCorp will make the following payments. a. TeleCorp will pay Dowski Seventeen Thousand Five Hundred Dollars ($17,500) a month for the twelve months following the Separation Date in accordance with TeleCorp's normal payroll practices beginning on the next regularly scheduled payday, but not before the expiration of the seven (7) day waiting period as set forth in paragraph 10. All amounts set forth in this Section 2 are subject to applicable (if any) federal, state and local withholding, payroll and other taxes. b. TeleCorp will pay Dowski a lump sum payment of One Hundred and Five Thousand Dollars ($105,000) representing his 1998 bonus, such payment to be made on the same date as TeleCorp pays its 1998 bonuses to its other employees, but not before the expiration of the seven (7) day waiting period as set forth in paragraph 10. c. TeleCorp will pay Dowski together with his next regular paycheck a lump sum equal to his earned but unpaid vacation, including any amounts carried over from 1998, in accordance with TeleCorp's vacation payment policy. d. TeleCorp will reimburse Dowski a total of $4,300 (after tax) in accordance with TeleCorp's relocation policy in payment for his February and March duplicate housing relocation benefit. e. TeleCorp will pay Dowski, within a reasonable period of time after Dowski's submission of documentation reasonably acceptable to TeleCorp, a lump sum equal to the total outstanding amounts due to Dowski for travel and expense reimbursement, net of any amounts due TeleCorp, in accordance with TeleCorp's reimbursement policies; provided, however, that within a reasonable period of time after execution of this Agreement, TeleCorp's Audit Committee will commission an audit of Dowski's expenses as charged by Dowski to TeleCorp's company credit card(s). Any and all expenses that the Audit Committee determines are personal in nature (collectively, "Dowski Personal Expenses") will be offset against any reimbursable amounts due to Dowski hereunder. In the event that the Dowski Personal Expenses exceed the total reimbursable amounts due to Dowski under this Section 5(e), such excess amount shall be offset against amounts due to Dowski elsewhere under this Agreement. f. To the extent that Dowski is not eligible for coverage under benefit plans of subsequent employers, Dowski will continue to be covered for a period of twelve months after the Separation Date at the expense of TeleCorp by the same or equivalent hospital, medical, and dental coverage as Dowski was covered by immediately prior to the Separation Date. g. Within seven (7) business days after TeleCorp receives this Agreement executed by Dowski, TeleCorp will: (i) Pay Dowski $18.93 in the aggregate for the repurchase of his Extraordinary Event Shares, Supplemental Shares and nonvested Base Shares; and (ii) Pursuant to the Share Grant Agreement dated July 16, 1998, TeleCorp will issue stock certificates to Dowski representing 139.448 shares of Class A voting common stock and 136.948 shares of Series E Preferred Stock, respectively. The shares to be issued as set forth above will continue to be restricted in accordance with the Stockholders' Agreement by and among Dowski, TeleCorp PCS, Inc. and certain other stockholders dated July 17, 1998. 3. Settlement of Amounts Due The amounts set forth in Section 2 shall be complete and unconditional payment, settlement, satisfaction and accord with respect to all obligations and liabilities of TeleCorp to Dowski, and with respect to all claims, causes of action and damages that could be asserted by Dowski against TeleCorp arising out of Dowski's employment with and separation of employment with TeleCorp, including, without limitation, all claims for wages, back wages, salary, vacation pay, draws, commissions, bonuses, compensation, professional expenses, severance pay, attorney's fees, compensatory damages, special damages, reliance damages, punitive damages, treble damages, consequential damages, exemplary damages, emotional distress damages, or other costs or sums. 4. Prior Agreements TeleCorp and Dowski hereby incorporate herein by reference sections 8, 9, and 10 of the Employee Agreement by and between Dowski and TeleCorp PCS, Inc., dated July 17, 1998 as subsequently assigned to TeleCorp Communications, Inc., (the "Employee Agreement") in their entirety as if fully set forth herein. The term "Company" as used in the Employee Agreement shall be herein interpreted synonymously with the term "TeleCorp" as TeleCorp is defined in -2- section 5 below. Except as set forth above in this Section 4, this Agreement shall supersede the Employee Agreement. 5. Release a. By Dowski In exchange for the amounts described in Section 2 and other good and valuable consideration, receipt and sufficiency of which is hereby acknowledged, Dowski and his representatives, agents, estate, successors and assigns, absolutely and unconditionally hereby release and forever discharge TeleCorp (which for purposes of this Section 5(a) shall hereinafter be defined to include without limitation TeleCorp, its parents and/or any of its subsidiaries, affiliates, their respective successors, assigns, shareholders/stockholders, officers, directors, representatives, attorneys, employees and/or agents in both their individual and official capacities) from any and all actions or causes of action, suits, claims, complaints, obligations, contracts, liabilities, agreements, promises, debts and damages, whether existing or contingent, known or unknown, accrued or unaccrued, which arise out of Dowski's employment with TeleCorp, the separation thereof or the aforementioned repurchase of the Extraordinary Event, Supplemental and Base Shares pursuant to the Share Grant Agreement between TeleCorp PCS, Inc and Dowski dated July 16, 1998. This release is intended by Dowski to be all-encompassing and to act as a full and total release of all claims known or unknown that Dowski may have or has had against TeleCorp, including, but not limited to, (a) claims under any federal or state law, statute or regulation dealing with either employment discrimination, including both federal and state laws or regulations concerning discrimination on the basis of age, race, color, religion, creed, sex, sexual preference, national origin, handicap status or status as a disabled veteran; (b) any contract whether oral or written, express or implied; and/or (c) at common law. b. By TeleCorp For good and valuable consideration, receipt and sufficiency of which is hereby acknowledged, TeleCorp [which for purposes of this Section 5(b) shall hereinafter be defined to include without limitation, its parents and/or any of its subsidiaries, affiliates, their respective successors, assigns, shareholders/stockholders, officers, directors, representatives, attorneys, employees and/or agents in both their individual and official capacities] absolutely and unconditionally hereby releases and forever discharges Dowski and his representatives, agents, estate, successors and assigns, from any and all actions or causes of action, suits, claims, complaints, obligations, contracts, liabilities, agreements, promises, debts and damages, whether existing or contingent, known or unknown, which arise out of Dowski's employment by TeleCorp or the separation thereof or the aforementioned repurchase of the Extraordinary Event, Supplemental and Base Shares pursuant to the Share Grant Agreement between TeleCorp PCS, Inc and Dowski dated July 16, 1998. This release is intended by TeleCorp to be all-encompassing and to act as a full and total release of any claims known or unknown that TeleCorp may have or has had against Dowski, including, but not limited to, claims arising under -3- the parties Employee Agreement dated July 17, 1998, except those specifically reserved herein, which TeleCorp does not waive and expressly reserves. 6. Non-Disparagement and Confidentiality Dowski and TeleCorp agree not to make any negative or adverse remarks whatsoever concerning each other, including, but not limited to, negative remarks concerning TeleCorp's operations, marketing strategies, management, affairs, or financial conditions or concerning Dowski's job competence, performance or reasons for separation. Dowski and TeleCorp agree they shall not divulge or publish any information whatsoever regarding the fact of, substance, terms or existence of this Agreement and/or any discussions or negotiations relating to this Agreement to any person or organization. Any disclosure of the terms, circumstances, negotiations, or fact of this Agreement shall be deemed a violation of this Agreement and shall entitle the party proving such a disclosure to all damages it proves as a result of such breach and reasonable attorney's fees. This provision is not intended to interfere with nor to prevent Dowski's legal obligation to fully and completely respond to a subpoena. Notwithstanding anything to the contrary in this Section 6, this Agreement shall not prohibit the disclosure of any amounts paid or to be paid by any party as a result of this Agreement to its accountants, bookkeepers, attorneys, or tax consultants nor shall it prohibit any party from taking any legal action necessary to enforce this Agreement or exercise any rights hereunder, provided such parties agree to maintain the non-disparagement and confidentiality provisions of this Agreement. 7. Non-solicitation Dowski agrees that for a period of one year from the effective date of this Agreement, he will not (a) attempt to employ or employ; (b) attempt to assist in employing or recommend the employment of; or (c) otherwise interfere with the employment of any employee of TeleCorp while that employee is employed by TeleCorp; provided that Dowski shall be free to provide, upon the request of a TeleCorp employee who reported directly to, or was directly supervised by, Dowski, a personal recommendation for future employment of such employee by a company with which Dowski has no relation whether as a shareholder (other than ownership of less than one percent of the common stock of a publicly-traded company), director, employee, consultant or otherwise; provided further that Dowski's recommendation is consistent with the spirit and terms of this Section 7. 8. Transition Matters a. TeleCorp and Dowski hereby agree that for a period of three months after the Separation Date, TeleCorp will maintain Dowski's voice-mail box and e- mail address, forwarding all e-mail messages electronically to his home no less often than once every other day. TeleCorp and Dowski hereby further agree that Dowski may retain use of his current lap top computer, printer and company- provided fax machine for a period of up to three months to assist -4- in transition activities; provided that upon expiration of such three month period Dowski shall promptly deliver such equipment to TeleCorp. TeleCorp and Dowski hereby further agree that Dowski may retain possession permanently of the mobile phone supplied to him by TeleCorp; provided that, the billing account for such phone shall be transferred to Dowski and he shall assume personal liability for the payment of such bill for all charges occurring after the Separation Date. b. TeleCorp will provide Dowski continuation of his duplicate housing relocation benefit of $2,150 (after tax) per month, in accordance with TeleCorp's relocation policy for the months of April through July, 1999, in consideration of ongoing transition support. c. Dowski hereby agrees that he shall use his best efforts to assist TeleCorp in transitioning his position and current projects at TeleCorp to a successor or other TeleCorp employees, including without limitation, Dowski shall assist TeleCorp in completing TeleCorp's ten-year financial model as outlined by TeleCorp's senior management. 9. Representations and Governing Law a. This Agreement represents the complete and sole understanding between the parties, and supersedes any and all other agreements and understandings regarding Dowski's employment and the separation thereof whether oral or written. b. This Agreement may not be modified, altered or rescinded except upon written consent of TeleCorp and Dowski. If any provision of this Agreement, or part thereof, is held invalid, void or voidable as against the public policy or otherwise, the invalidity shall not affect other provisions, and parts thereof, of this Agreement as the same are declared to be severable. c. The validity, interpretation and performance of this Agreement shall be construed and interpreted according to the laws of the Commonwealth of Virginia. d. Dowski acknowledges that he has had twenty-one (21) days to review this Agreement prior to execution of the same and he represents that he has consulted with such attorneys, accountants, and other advisors as he has deemed necessary and appropriate in connection with the negotiation and execution of this Agreement, and is fully aware of the legal consequences of this Agreement. Dowski does not rely on any representation, promise or inducement made by TeleCorp with the exception of the consideration described in this Agreement. 10. Effective Date Dowski may revoke this Agreement during the period of seven (7) days following the execution by Dowski and this Agreement shall not become effective or enforceable until this revocation period has expired. -5- [Remainder of this Page Intentionally Left Blank] -6- IN WITNESS WHEREOF, the undersigned has executed this Agreement on the dates shown below. /s/ Robert Dowski Date: March 8, 1999 ----------------------------- ------------------- Robert Dowski TELECORP COMMUNICATIONS, INC. Date: March 8, 1999 BY: /s/ Thomas Sullivan ------------------- ---------------------------- ITS: President --------------------------- TELECORP PCS, INC. BY: /s/ Thomas Sullivan ---------------------------- ITS: Executive Vice President --------------------------- -7- EX-12.1 41 SUBSIDIARIES OF TELECORP PCS, INC Exhibit 12.1 Computation of ratio of earnings to fixed charges:
For the period July 29, For the For the 1996 (inception) to year ended year ended December 31,1996 December 31,1997 December 31,1998 ---------------- ---------------- ---------------- Net loss ($524,968) ($3,335,170) ($51,155,280) ========================================================================== Fixed charges: Interest - 527,759 13,989,306 Interest factor of rent expense 667 52,333 1,064,333 -------------------------------------------------------------------------- Total fixed charges 667 580,092 15,053,639 -------------------------------------------------------------------------- Earnings before fixed charges ($525,635) ($3,915,262) ($66,208,919) ========================================================================== Ratio of earnings to fixed charges * * * ========================================================================== For the For the quarter ended quarter ended March 31, 1998 March 31, 1999 -------------- -------------- Net loss ($2,745,121) ($30,333,627) ==================================================== Fixed charges: Interest 330,409 5,136,911 Interest factor of rent expense 61,047 1,139,918 ---------------------------------------------------- Total fixed charges 391,456 6,276,829 ---------------------------------------------------- Earnings before fixed charges ($3,136,577) ($36,610,456) ==================================================== Ratio of earnings to fixed charges * * ====================================================
The ratio of earnings to fixed charges is computed by dividing fixed charges into income before taxes plus fixed charges. Fixed charges include interest expense and that portion of net rental expense (one-third) attributable to the interest factor. On this basis earnings before fixed charges for the period ended December 31, 1996, for the years ended December 31, 1997 and 1998, and for the three months ended March 31, 1998 and 1999 were not adequate to cover fixed charges by $525,635, $3,915,262, $66,208,919, $3,136,577, and $36,610,456, respectively. EX-21.1 42 SUBSIDIARIES OF TELECORP PCS, INC. EXHIBIT 21.1 TELECORP SUBSIDIARIES --------------------- Address for all entities: 1010 N. Glebe Road, Arlington, VA 22201 TeleCorp Entity State of Incorporation 1. TeleCorp Holding Corp., Inc. DE 2. TeleCorp PCS, L.L.C. (Sole Member is: TeleCorp PCS, Inc.) DE 3. TeleCorp Communications, Inc. (f/k/a TeleCorp Operating Company, Inc.) DE 4. Affiliate License Co., L.L.C. (TeleCorp Communications, Inc. has one-third voting rights in this entity) DE 5. TeleCorp Realty, L.L.C. (Managing Member is: TeleCorp Communications, Inc.) DE 6. TeleCorp Equipment Leasing, L.P. (General Partner is: TeleCorp Limited Holdings, Inc.) DE 7. TeleCorp Limited Holdings, Inc. DE 8. TeleCorp Realty Holdings, Inc. DE 9. TeleCorp of Puerto Rico, Inc. Puerto Rico 10. TeleCorp Puerto Rico Realty, Inc. Puerto Rico 11. Viper Wireless, Inc. DE EX-23.2 43 CONSENT OF PRICEWATERHOUSECOOPERS, LLP Exhibit 23.2 Consent of Independent Accountants We hereby consent to the use in this Registration Statement on Form S-4 of TeleCorp PCS, Inc. and Subsidiaries and Predecessor Company of our report dated March 8, 1999, except for the information in Note 15, for which the date is June 15, 1999, relating to the financial statements, which appear in such Registration Statement. We also consent to the references to us under the headings "Experts" and "Selected Historical and Pro Forma Consolidated Financial Information" in such Registration Statement. /s/ PricewaterhouseCoopers LLP McLean, Virginia June 22, 1999 EX-25.1 44 STATEMENT OF ELIGIBILITY OF TRUSTEE ON FORM T-1 EXHIBIT 25 _____________________________________________________________________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________ FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) BANKERS TRUST COMPANY (Exact name of trustee as specified in its charter) NEW YORK 54-1872248 (Jurisdiction of Incorporation or (I.R.S. Employer organization if not a Identification no.) U.S. national bank) FOUR ALBANY STREET NEW YORK, NEW YORK 10006 (Address of principal (Zip Code) executive offices) Bankers Trust Company Legal Department 130 Liberty Street, 31st Floor New York, New York 10006 (212) 250-2201 (Name, address and telephone number of agent for service) TELECORP PCS, INC. (Exact name of Registrant as specified in its charter) Delaware 54-1872248 (State or other jurisdiction of (IRS employer Incorporation or organization) Identification no.) 1010 N. Glebe Road Suite 800 Arlington, VA 22201 (Address, including zip code of principal executive offices) $575,000,000 11 5/8% Senior Subordinated Discount Notes due 2009 (Title of the securities) Item 1. General Information. Furnish the following information as to the trustee. (a) Name and address of each examining or supervising authority to which it is subject. Name Address ---- ------- Federal Reserve Bank (2nd District) New York, NY Federal Deposit Insurance Corporation Washington, D.C. New York State Banking Department Albany, NY (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with Obligor. If the obligor is an affiliate of the Trustee, describe each such affiliation. None. Item 3.-15. Not Applicable Item 16. List of Exhibits. Exhibit 1 - Restated Organization Certificate of Bankers Trust Company dated August 7, 1990, Certificate of Amendment of the Organization Certificate of Bankers Trust Company dated June 21, 1995- Incorporated herein by reference to Exhibit 1 filed with Form T-1 Statement, Registration No. 33- 65171, Certificate of Amendment of the Organization Certificate of Bankers Trust Company dated March 20, 1996, incorporate by referenced to Exhibit 1 filed with Form T-1 Statement, Registration No. 333-25843 and Certificate of Amendment of the Organization Certificate of Bankers Trust Company dated June 19, 1997, copy attached. Exhibit 2 - Certificate of Authority to commence business - Incorporated herein by reference to Exhibit 2 filed with Form T-1 Statement, Registration No. 33-21047. Exhibit 3 - Authorization of the Trustee to exercise corporate trust powers - Incorporated herein by reference to Exhibit 2 filed with Form T-1 Statement, Registration No. 33-21047. Exhibit 4 - Existing By-Laws of Bankers Trust Company, as amended on November 18, 1997. Copy attached. -2- Exhibit 5 - Not applicable. Exhibit 6 - Consent of Bankers Trust Company required by Section 321(b) of the Act. - Incorporated herein by reference to Exhibit 4 filed with Form T-1 Statement, Registration No. 22-18864. Exhibit 7 - The latest report of condition of Bankers Trust Company dated as of December 31, 1998. Copy attached. Exhibit 8 - Not Applicable. Exhibit 9 - Not Applicable. -3- SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Bankers Trust Company, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 17/th/ of --------- June, 1999. - ---- BANKERS TRUST COMPANY By: /s/ Marc J. Parilla ------------------------ Marc J. Parilla Assistant Vice President -4- SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Bankers Trust Company, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 17/th/ of --------- June, 1999. - ---- BANKERS TRUST COMPANY By:/s/ Marc J. Parilla ----------------------- Marc J. Parilla Assistant Vice President -5- State of New York, Banking Department I, MANUEL KURSKY, Deputy Superintendent of Banks of the State of New York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY Under Section 8005 of the Banking Law," dated June 19, 1997, providing for an increase in authorized capital stock from $1,601,666,670 consisting of 100,166,667 shares with a par value of $10 each designated as Common Stock and 600 shares with a par value of $1,000,000 each designated as Series Preferred Stock to $2,001,666,670 consisting of 100,166,667 shares with a par value of $10 each designated as Common Stock and 1,000 shares with a par value of $1,000,000 each designated as Series Preferred Stock. Witness, my hand and official seal of the Banking Department at the City of New York, this 27th day of June in the Year of our Lord ------ ----------- one thousand nine hundred and ninety-seven. /s/ Manuel Kursky ------------------------------ Deputy Superintendent of Banks CERTIFICATE OF AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST Under Section 8005 of the Banking Law _____________________________ We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing Director and an Assistant Secretary of Bankers Trust Company, do hereby certify: 1. The name of the corporation is Bankers Trust Company. 2. The organization certificate of said corporation was filed by the Superintendent of Banks on the 5th of march, 1903. 3. The organization certificate as heretofore amended is hereby amended to increase the aggregate number of shares which the corporation shall have authority to issue and to increase the amount of its authorized capital stock in conformity therewith. 4. Article III of the organization certificate with reference to the authorized capital stock, the number of shares into which the capital stock shall be divided, the par value of the shares and the capital stock outstanding, which reads as follows: "III. The amount of capital stock which the corporation is hereafter to have is One Billion, Six Hundred and One Million, Six Hundred Sixty-Six Thousand, Six Hundred Seventy Dollars ($1,601,666,670), divided into One Hundred Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven (100,166,667) shares with a par value of $10 each designated as Common Stock and 600 shares with a par value of One Million Dollars ($1,000,000) each designated as Series Preferred Stock." is hereby amended to read as follows: "III. The amount of capital stock which the corporation is hereafter to have is Two Billion One Million, Six Hundred Sixty-Six Thousand, Six Hundred Seventy Dollars ($2,001,666,670), divided into One Hundred Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven (100,166,667) shares with a par value of $10 each designated as Common Stock and 1000 shares with a par value of One Million Dollars ($1,000,000) each designated as Series Preferred Stock." 5. The foregoing amendment of the organization certificate was authorized by unanimous written consent signed by the holder of all outstanding shares entitled to vote thereon. IN WITNESS WHEREOF, we have made and subscribed this certificate this 19th day of June, 1997. /s/ James T. Byrne, Jr. ------------------------ James T. Byrne, Jr. Managing Director /s/ Lea Lahtinen ----------------------- Lea Lahtinen Assistant Secretary State of New York ) ) ss: County of New York ) Lea Lahtinen, being fully sworn, deposes and says that she is an Assistant Secretary of Bankers Trust Company, the corporation described in the foregoing certificate; that she has read the foregoing certificate and knows the contents thereof, and that the statements herein contained are true. /s/ Lea Lahtinen ------------------- Lea Lahtinen Sworn to before me this 19th day of June, 1997. /s/ Sandra L. West ------------------- Notary Public SANDRA L. WEST Notary Public State of New York No. 31-4942101 Qualified in New York County Commission Expires September 19, 1998 BY-LAWS NOVEMBER 18, 1997 Bankers Trust Company New York BY-LAWS of Bankers Trust Company ARTICLE I MEETINGS OF STOCKHOLDERS SECTION 1. The annual meeting of the stockholders of this Company shall be held at the office of the Company in the Borough of Manhattan, City of New York, on the third Tuesday in January of each year, for the election of directors and such other business as may properly come before said meeting. SECTION 2. Special meetings of stockholders other than those regulated by statute may be called at any time by a majority of the directors. It shall be the duty of the Chairman of the Board, the Chief Executive Officer or the President to call such meetings whenever requested in writing to do so by stockholders owning a majority of the capital stock. SECTION 3. At all meetings of stockholders, there shall be present, either in person or by proxy, stockholders owning a majority of the capital stock of the Company, in order to constitute a quorum, except at special elections of directors, as provided by law, but less than a quorum shall have power to adjourn any meeting. SECTION 4. The Chairman of the Board or, in his absence, the Chief Executive Officer or, in his absence, the President or, in their absence, the senior officer present, shall preside at meetings of the stockholders and shall direct the proceedings and the order of business. The Secretary shall act as secretary of such meetings and record the proceedings. ARTICLE II DIRECTORS SECTION 1. The affairs of the Company shall be managed and its corporate powers exercised by a Board of Directors consisting of such number of directors, but not less than ten nor more than twenty-five, as may from time to time be fixed by resolution adopted by a majority of the directors then in office, or by the stockholders. In the event of any increase in the number of directors, additional directors may be elected within the limitations so fixed, either by the stockholders or within the limitations imposed by law, by a majority of directors then in office. One-third of the number of directors, as fixed from time to time, shall constitute a quorum. Any one or more members of the Board of Directors or any Committee thereof may participate in a meeting of the Board of Directors or Committee thereof by means of a conference telephone or similar communications equipment which allows all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at such a meeting. All directors hereafter elected shall hold office until the next annual meeting of the stockholders and until their successors are elected and have qualified. No person who shall have attained age 72 shall be eligible to be elected or re- elected a director. Such director may, however, remain a director of the Company until the next annual meeting of the stockholders of Bankers Trust New York Corporation (the Company's parent) so that such director's retirement will coincide with the retirement date from Bankers Trust New York Corporation. No Officer-Director who shall have attained age 65, or earlier relinquishes his responsibilities and title, shall be eligible to serve as a director. SECTION 2. Vacancies not exceeding one-third of the whole number of the Board of Directors may be filled by the affirmative vote of a majority of the directors then in office, and the directors so elected shall hold office for the balance of the unexpired term. SECTION 3. The Chairman of the Board shall preside at meetings of the Board of Directors. In his absence, the Chief Executive Officer or, in his absence, such other director as the Board of Directors from time to time may designate shall preside at such meetings. SECTION 4. The Board of Directors may adopt such Rules and Regulations for the conduct of its meetings and the management of the affairs of the Company as it may deem proper, not inconsistent with the laws of the State of New York, or these By-Laws, and all officers and employees shall strictly adhere to, and be bound by, such Rules and Regulations. SECTION 5. Regular meetings of the Board of Directors shall be held from time to time on the third Tuesday of the month. If the day appointed for holding such regular meetings shall be a legal holiday, the regular meeting to be held on such day shall be held on the next business day thereafter. Special meetings of the Board of Directors may be called upon at least two day's notice whenever it may be deemed proper by the Chairman of the Board or, the Chief Executive Officer or, in their absence, by such other director as the Board of Directors may have designated pursuant to Section 3 of this Article, and shall be called upon like notice whenever any three of the directors so request in writing. SECTION 6. The compensation of directors as such or as members of committees shall be fixed from time to time by resolution of the Board of Directors. ARTICLE III COMMITTEES SECTION 1. There shall be an Executive Committee of the Board consisting of not less than five directors who shall be appointed annually by the Board of Directors. The Chairman of the Board shall preside at meetings of the Executive Committee. In his absence, the Chief Executive Officer or, in his absence, such other member of the Committee as the Committee from time to time may designate shall preside at such meetings. The Executive Committee shall possess and exercise to the extent permitted by law all of the powers of the Board of Directors, except when the latter is in session, and shall keep minutes of its proceedings, which shall be presented to the Board of Directors at its next subsequent meeting. All acts done and powers and authority conferred by the Executive Committee from time to time shall be and be deemed to be, and may be certified as being, the act and under the authority of the Board of Directors. A majority of the Committee shall constitute a quorum, but the Committee may act only by the concurrent vote of not less than one-third of its members, at least one of whom must be a director other than an officer. Any one or more directors, even though not members of the Executive Committee, may attend any meeting of the Committee, and the member or members of the Committee present, even though less than a quorum, may designate any one or more of such directors as a substitute or substitutes for any absent member or members of the Committee, and each such substitute or substitutes shall be counted for quorum, voting, and all other purposes as a member or members of the Committee. SECTION 2. There shall be an Audit Committee appointed annually by resolution adopted by a majority of the entire Board of Directors which shall consist of such number of directors, who are not also officers of the Company, as may from time to time be fixed by resolution adopted by the Board of Directors. The Chairman shall be designated by the Board of Directors, who shall also from time to time fix a quorum for meetings of the Committee. Such Committee shall conduct the annual directors' examinations of the Company as required by the New York State Banking Law; shall review the reports of all examinations made of the Company by public authorities and report thereon to the Board of Directors; and shall report to the Board of Directors such other matters as it deems advisable with respect to the Company, its various departments and the conduct of its operations. In the performance of its duties, the Audit Committee may employ or retain, from time to time, expert assistants, independent of the officers or personnel of the Company, to make studies of the Company's assets and liabilities as the Committee may request and to make an examination of the accounting and auditing methods of the Company and its system of internal protective controls to the extent considered necessary or advisable in order to determine that the operations of the Company, including its fiduciary departments, are being audited by the General Auditor in such a manner as to provide prudent and adequate protection. The Committee also may direct the General Auditor to make such investigation as it deems necessary or advisable with respect to the Company, its various departments and the conduct of its operations. The Committee shall hold regular quarterly meetings and during the intervals thereof shall meet at other times on call of the Chairman. SECTION 3. The Board of Directors shall have the power to appoint any other Committees as may seem necessary, and from time to time to suspend or continue the powers and duties of such Committees. Each Committee appointed pursuant to this Article shall serve at the pleasure of the Board of Directors. ARTICLE IV OFFICERS SECTION 1. The Board of Directors shall elect from among their number a Chairman of the Board and a Chief Executive Officer; and shall also elect a President, and may also elect a Senior Vice Chairman, one or more Vice Chairmen, one or more Executive Vice Presidents, one or more Senior Managing Directors, one or more Managing Directors, one or more Senior Vice Presidents, one or more Principals, one or more Vice Presidents, one or more General Managers, a Secretary, a Controller, a Treasurer, a General Counsel, one or more Associate General Counsels, a General Auditor, a General Credit Auditor, and one or more Deputy Auditors, who need not be directors. The officers of the corporation may also include such other officers or assistant officers as shall from time to time be elected or appointed by the Board. The Chairman of the Board or the Chief Executive Officer or, in their absence, the President, the Senior Vice Chairman or any Vice Chairman, may from time to time appoint assistant officers. All officers elected or appointed by the Board of Directors shall hold their respective offices during the pleasure of the Board of Directors, and all assistant officers shall hold office at the pleasure of the Board or the Chairman of the Board or the Chief Executive Officer or, in their absence, the President, the Senior Vice Chairman or any Vice Chairman. The Board of Directors may require any and all officers and employees to give security for the faithful performance of their duties. SECTION 2. The Board of Directors shall designate the Chief Executive Officer of the Company who may also hold the additional title of Chairman of the Board, President, Senior Vice Chairman or Vice Chairman and such person shall have, subject to the supervision and direction of the Board of Directors or the Executive Committee, all of the powers vested in such Chief Executive Officer by law or by these By-Laws, or which usually attach or pertain to such office. The other officers shall have, subject to the supervision and direction of the Board of Directors or the Executive Committee or the Chairman of the Board or, the Chief Executive Officer, the powers vested by law or by these By-Laws in them as holders of their respective offices and, in addition, shall perform such other duties as shall be assigned to them by the Board of Directors or the Executive Committee or the Chairman of the Board or the Chief Executive Officer. The General Auditor shall be responsible, through the Audit Committee, to the Board of Directors for the determination of the program of the internal audit function and the evaluation of the adequacy of the system of internal controls. Subject to the Board of Directors, the General Auditor shall have and may exercise all the powers and shall perform all the duties usual to such office and shall have such other powers as may be prescribed or assigned to him from time to time by the Board of Directors or vested in him by law or by these By- Laws. He shall perform such other duties and shall make such investigations, examinations and reports as may be prescribed or required by the Audit Committee. The General Auditor shall have unrestricted access to all records and premises of the Company and shall delegate such authority to his subordinates. He shall have the duty to report to the Audit Committee on all matters concerning the internal audit program and the adequacy of the system of internal controls of the Company which he deems advisable or which the Audit Committee may request. Additionally, the General Auditor shall have the duty of reporting independently of all officers of the Company to the Audit Committee at least quarterly on any matters concerning the internal audit program and the adequacy of the system of internal controls of the Company that should be brought to the attention of the directors except those matters responsibility for which has been vested in the General Credit Auditor. Should the General Auditor deem any matter to be of special immediate importance, he shall report thereon forthwith to the Audit Committee. The General Auditor shall report to the Chief Financial Officer only for administrative purposes. The General Credit Auditor shall be responsible to the Chief Executive Officer and, through the Audit Committee, to the Board of Directors for the systems of internal credit audit, shall perform such other duties as the Chief Executive Officer may prescribe, and shall make such examinations and reports as may be required by the Audit Committee. The General Credit Auditor shall have unrestricted access to all records and may delegate such authority to subordinates. SECTION 3. The compensation of all officers shall be fixed under such plan or plans of position evaluation and salary administration as shall be approved from time to time by resolution of the Board of Directors. SECTION 4. The Board of Directors, the Executive Committee, the Chairman of the Board, the Chief Executive Officer or any person authorized for this purpose by the Chief Executive Officer, shall appoint or engage all other employees and agents and fix their compensation. The employment of all such employees and agents shall continue during the pleasure of the Board of Directors or the Executive Committee or the Chairman of the Board or the Chief Executive Officer or any such authorized person; and the Board of Directors, the Executive Committee, the Chairman of the Board, the Chief Executive Officer or any such authorized person may discharge any such employees and agents at will. ARTICLE V INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS SECTION 1. The Company shall, to the fullest extent permitted by Section 7018 of the New York Banking Law, indemnify any person who is or was made, or threatened to be made, a party to an action or proceeding, whether civil or criminal, whether involving any actual or alleged breach of duty, neglect or error, any accountability, or any actual or alleged misstatement, misleading statement or other act or omission and whether brought or threatened in any court or administrative or legislative body or agency, including an action by or in the right of the Company to procure a judgment in its favor and an action by or in the right of any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise, which any director or officer of the Company is servicing or served in any capacity at the request of the Company by reason of the fact that he, his testator or intestate, is or was a director or officer of the Company, or is serving or served such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity, against judgments, fines, amounts paid in settlement, and costs, charges and expenses, including attorneys' fees, or any appeal therein; provided, however, that no indemnification shall be provided to any such person if a judgment or other final adjudication adverse to the director or officer establishes that (i) his acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, or (ii) he personally gained in fact a financial profit or other advantage to which he was not legally entitled. SECTION 2. The Company may indemnify any other person to whom the Company is permitted to provide indemnification or the advancement of expenses by applicable law, whether pursuant to rights granted pursuant to, or provided by, the New York Banking Law or other rights created by (i) a resolution of stockholders, (ii) a resolution of directors, or (iii) an agreement providing for such indemnification, it being expressly intended that these By-Laws authorize the creation of other rights in any such manner. SECTION 3. The Company shall, from time to time, reimburse or advance to any person referred to in Section 1 the funds necessary for payment of expenses, including attorneys' fees, incurred in connection with any action or proceeding referred to in Section 1, upon receipt of a written undertaking by or on behalf of such person to repay such amount(s) if a judgment or other final adjudication adverse to the director or officer establishes that (i) his acts were committed in bad faith or were the result of active and deliberate dishonesty and, in either case, were material to the cause of action so adjudicated, or (ii) he personally gained in fact a financial profit or other advantage to which he was not legally entitled. SECTION 4. Any director or officer of the Company serving (i) another corporation, of which a majority of the shares entitled to vote in the election of its directors is held by the Company, or (ii) any employee benefit plan of the Company or any corporation referred to in clause (i) in any capacity shall be deemed to be doing so at the request of the Company. In all other cases, the provisions of this Article V will apply (i) only if the person serving another corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise so served at the specific request of the Company, evidenced by a written communication signed by the Chairman of the Board, the Chief Executive Officer or the President, and (ii) only if and to the extent that, after making such efforts as the Chairman of the Board, the Chief Executive Officer or the President shall deem adequate in the circumstances, such person shall be unable to obtain indemnification from such other enterprise or its insurer. SECTION 5. Any person entitled to be indemnified or to the reimbursement or advancement of expenses as a matter of right pursuant to this Article V may elect to have the right to indemnification (or advancement of expenses) interpreted on the basis of the applicable law in effect at the time of occurrence of the event or events giving rise to the action or proceeding, to the extent permitted by law, or on the basis of the applicable law in effect at the time indemnification is sought. SECTION 6. The right to be indemnified or to the reimbursement or advancement of expense pursuant to this Article V (i) is a contract right pursuant to which the person entitled thereto may bring suit as if the provisions hereof were set forth in a separate written contract between the Company and the director or officer, (ii) is intended to be retroactive and shall be available with respect to events occurring prior to the adoption hereof, and (iii) shall continue to exist after the rescission or restrictive modification hereof with respect to events occurring prior thereto. SECTION 7. If a request to be indemnified or for the reimbursement or advancement of expenses pursuant hereto is not paid in full by the Company within thirty days after a written claim has been received by the Company, the claimant may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled also to be paid the expenses of prosecuting such claim. Neither the failure of the Company (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of or reimbursement or advancement of expenses to the claimant is proper in the circumstance, nor an actual determination by the Company (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant is not entitled to indemnification or to the reimbursement or advancement of expenses, shall be a defense to the action or create a presumption that the claimant is not so entitled. SECTION 8. A person who has been successful, on the merits or otherwise, in the defense of a civil or criminal action or proceeding of the character described in Section 1 shall be entitled to indemnification only as provided in Sections 1 and 3, notwithstanding any provision of the New York Banking Law to the contrary. ARTICLE VI SEAL SECTION 1. The Board of Directors shall provide a seal for the Company, the counterpart dies of which shall be in the charge of the Secretary of the Company and such officers as the Chairman of the Board, the Chief Executive Officer or the Secretary may from time to time direct in writing, to be affixed to certificates of stock and other documents in accordance with the directions of the Board of Directors or the Executive Committee. SECTION 2. The Board of Directors may provide, in proper cases on a specified occasion and for a specified transaction or transactions, for the use of a printed or engraved facsimile seal of the Company. ARTICLE VII CAPITAL STOCK SECTION 1. Registration of transfer of shares shall only be made upon the books of the Company by the registered holder in person, or by power of attorney, duly executed, witnessed and filed with the Secretary or other proper officer of the Company, on the surrender of the certificate or certificates of such shares properly assigned for transfer. ARTICLE VIII CONSTRUCTION SECTION 1. The masculine gender, when appearing in these By-Laws, shall be deemed to include the feminine gender. ARTICLE IX AMENDMENTS SECTION 1. These By-Laws may be altered, amended or added to by the Board of Directors at any meeting, or by the stockholders at any annual or special meeting, provided notice thereof has been given. I, Marc J. Parilla, an Assistant Vice President of Bankers Trust Company, New York, New York, hereby certify that the foregoing is a complete, true and correct copy of the By-Laws of Bankers Trust Company, and that the same are in full force and effect at this date. /s/ Marc J. Parilla _____________________________________ ASSISTANT VICE PRESIDENT DATED: June 16, 1999 Legal Title of Bank: Bankers Trust Company Call Date: 12/31/98 ST-BK: 36-4840 FFIEC 031 Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-1 City, State ZIP: New York, NY 10006 11 FDIC Certificate No.: 0 0 6 2 3
Consolidated Report of Condition for Insured Commercial and State-Chartered Savings Banks for December 31, 1998 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, reported the amount outstanding as of the last business day of the quarter.
Schedule RC--Balance Sheet ------------- C400 --------------------------------- Dollar Amounts in Thousands RCFD Bil Mil Thou - --------------------------------------------------------------------------------------------------------------------------- ASSETS 1. Cash and balances due from depository institutions (from Schedule RC-A): a. Noninterest-bearing balances and currency and coin (1).............. 0081 2,772,000 1.a. b. Interest-bearing balances (2)....................................... 0071 2,497,000 1.b. 2. Securities: a. Held-to-maturity securities (from Schedule RC-B, column A).......... 1754 0 2.a. b. Available-for-sale securities (from Schedule RC-B, column D)........ 1773 8,907,000 2.b. 3. Federal funds sold and securities purchased under agreements to resell 1350 22,851,000 3. 4. Loans and lease financing receivables: a. Loans and leases, net of unearned income (from Schedule RC-C) RCFD 2122 21,882,000 4.a. b. LESS: Allowance for loan and lease losses.....................RCFD 3123 620,000 4.b. c. LESS: Allocated transfer risk reserve.........................RCFD 3128 0 4.c. d. Loans and leases, net of unearned income,............................ allowance, and reserve (item 4.a minus 4.b and 4.c).................. 2125 21,262,000 4.d. 5. Trading Assets (from schedule RC-D)..................................... 3545 39,983,000 5. 6. Premises and fixed assets (including capitalized leases)................ 2145 974,000 6. 7. Other real estate owned (from Schedule RC-M)............................ 2150 80,000 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) 2130 97,000 8. 9. Customers' liability to this bank on acceptances outstanding............ 2155 232,000 9. 10. Intangible assets (from Schedule RC-M).................................. 2143 278,000 10. 11. Other assets (from Schedule RC-F)....................................... 2160 4,625,000 11. 12. Total assets (sum of items 1 through 11)................................ 2170 104,558,000 12. -------------------------------------
__________________________ (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading. Legal Title of Bank: Bankers Trust Company Call Date: 12/31/98 ST-BK: 36-4840 FFIEC 031 Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-2 City, State Zip: New York, NY 10006 12 FDIC Certificate No.: 0 0 6 2 3
Schedule RC--Continued ------------------------------- Dollar Amounts in Thousands Bil Mil Thou - --------------------------------------------------------------------------------------------------------------------------------- LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part I) RCON 2200 20,409,000 13.a (1) Noninterest-bearing(1)...............RCON 6631 3,124,000 13.a.(1) (2) Interest-bearing.....................RCON 6636 17,285,000 13.a.(2) b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E part II) RCFN 2200 20,167,000 13.b. (1) Noninterest-bearing..................RCFN 6631 1,781,000 13.b.(1) (2) Interest-bearing ....................RCFN 6636 18,386,000 14. Federal funds purchased and securities sold under agreements to repurchase RCFD 2800 13,919,000 14. 15. a. Demand notes issued to the U.S. Treasury........................... RCON 2840 0 15.a. b. Trading liabilities (from Schedule RC-D)........................... RCFD 3548 26,175,000 15.b. 16. Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases): a. With a remaining maturity of one year or less...................... RCFD 2332 5,422,000 16.a. b. With a remaining maturity of more than one year through three years A547 1,766,000 16.b. c. With a remaining maturity of more than three years................. A548 2,884,000 16.c 17. Not Applicable. 17. 18. Bank's liability on acceptances executed and outstanding............... RCFD 2920 232,000 18. 19. Subordinated notes and debentures (2).................................. RCFD 3200 984,000 19. 20. Other liabilities (from Schedule RC-G)................................. RCFD 2930 5,657,000 20. 21. Total liabilities (sum of items 13 through 20)......................... RCFD 2948 97,615,000 21. 22. Not Applicable EQUITY CAPITAL 23. Perpetual preferred stock and related surplus.......................... RCFD 3838 1,500,000 23. 24. Common stock........................................................... RCFD 3230 2,127,000 24. 25. Surplus (exclude all surplus related to preferred stock)............... RCFD 3839 541,000 25. 26. a. Undivided profits and capital reserves............................. RCFD 3632 3,200,000 26.a. b. Net unrealized holding gains (losses) on available-for-sale securities RCFD 8434 (36,000) 26.b. 27. Cumulative foreign currency translation adjustments.................... RCFD 3284 (389,000) 27. 28. Total equity capital (sum of items 23 through 27)...................... RCFD 3210 6,943,000 28. (sum of items 21 and 28)............................................... RCFD 3300 104,558,000 29
Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that Number best describes the most comprehensive level of auditing work performed ------------------------------------- for the bank by independent external auditors as of any date during 1998............... RCFD 6724 N/A M.1
1 = Independent audit conducted in accordance with generally accepted auditing standards by a certified external auditors (may be required by state chartering public accounting firm which submits a report on the bank 2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing auditors standards by a certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately) 3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority) 4 = Directors' examination of the bank performed by other external auditors (may be required by state chartering authority) 5 = Review of the bank's financial statements by external auditors 6 = Compilation of the bank's financial statements by external auditors 7 = Other audit procedures (excluding tax preparation work) 8 = No external audit work ________________ (1) Including total demand deposits and noninterest-bearing time and savings deposits. (2) Includes limited-life preferred stock and related surplus. EX-27.1 45 FINANCIAL DATA SCHEDULE
5 The schedule contains summary financial information extracted from the Company's balance sheet as of March 31, 1999 and the Statements of Operations for the year ended December 31, 1998 and is qualified in its entirety by reference to such financial statements. 1,000 12-MOS DEC-31-1998 JAN-01-1998 DEC-31-1998 11,211 0 3,658 0 7,701 2,629 262,654 2,882 457,904 84,564 0 172,706 0 2 (99,462) 457,904 29 29 0 43,920 27 0 11,934 (51,155) 0 (51,155) 0 0 0 (51,155) 0 0
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