-----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, IA/tEacEtHVSXPdmUDvnVJfmhVC4AF9rGdGRXbZiNICRGdCyoFT9JqRqzdGlYDqH /54ox3MnTDrrbSp6IEMnlA== 0000950130-01-001552.txt : 20010402 0000950130-01-001552.hdr.sgml : 20010402 ACCESSION NUMBER: 0000950130-01-001552 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TELECORP WIRELESS INC CENTRAL INDEX KEY: 0001089341 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 541872248 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-27901 FILM NUMBER: 1585193 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 FORMER COMPANY: FORMER CONFORMED NAME: TELECORP PCS INC DATE OF NAME CHANGE: 19990622 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TELECORP COMMUNICATIONS INC CENTRAL INDEX KEY: 0001092935 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 522105807 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 333-43596-01 FILM NUMBER: 1585194 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 10-K 1 0001.txt FORM 10-K - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number: 333-43596 TeleCorp Wireless, Inc. (Exact name of registrant as specified in its charter)
DELAWARE 54-1988007 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization)
and the following subsidiary of TeleCorp Wireless, Inc.: Commission file number 333-43596-01 TeleCorp Communications, Inc. (Exact name of registrant as specified in its charter)
DELAWARE 52-2105807 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization)
---------------- 1010 N. Glebe Road, Suite 800 Arlington, VA 22201 (Address of principal executive offices) (703) 236-1100 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [_] The registrant is a wholly-owned subsidiary of TeleCorp PCS, Inc. and meets the conditions set forth in General Instruction I(1) (a) and (b) of Form 10-K and is therefore filing this Form 10-K with the reduced disclosure format. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Forward-Looking Statements or Information This Form 10-K, future filings of the registrant, press releases of the registrant, and oral statements made with the approval of one of its authorized executive officers may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In connection therewith, please see the cautionary statements contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations--Forward Looking Statements: Cautionary Statements" contained in the Form 10-K filed by TeleCorp PCS, Inc. for the fiscal year ended December 31, 2000 and elsewhere in that report and this report which identify important factors which could cause actual results to differ materially from those in any such forward-looking statements. PART I Item 1. Business. The Company TeleCorp Holding Corp., Inc. (TeleCorp Holding) was incorporated in the State of Delaware on July 29, 1996 (date of inception). TeleCorp Holding was formed to participate in the Federal Communications Commission's (FCC) Auction of F-Block Personal Communications Services licenses in April 1997. TeleCorp Holding successfully obtained licenses in the New Orleans, Memphis, Beaumont, Little Rock, Houston, Tampa, Melbourne and Orlando Basic Trading Areas (BTAs). TeleCorp Holding qualified as a Designated Entity and Very Small Business under Part 24 of the rules of the FCC applicable to broadband digital wireless personal communications services, or PCS. TeleCorp Wireless, Inc. (TeleCorp Wireless), formerly TeleCorp PCS, Inc. was incorporated in the State of Delaware on November 14, 1997 by the controlling stockholders of TeleCorp Holding in order to effect an affiliation with AT&T. Upon completion of that transaction in 1998 (the 1998 AT&T transaction), TeleCorp Holding became a wholly-owned subsidiary of TeleCorp Wireless. In anticipation of the acquisition of Tritel, Inc. (Tritel) by TeleCorp PCS, Inc., a new holding company, TeleCorp-Tritel Holding Company (Holding Company), was formed in accordance with the Agreement and Plan of Reorganization and Contribution, as amended, dated as of February 28, 2000, among TeleCorp PCS, Inc., Tritel and AT&T Wireless Services, Inc. (the Merger). On November 13, 2000, each of TeleCorp PCS, Inc. and Tritel merged with newly-formed subsidiaries of Holding Company. At that time, Holding Company was renamed TeleCorp PCS, Inc. (TeleCorp PCS) and the newly-formed wholly-owned subsidiary was merged with and renamed TeleCorp Wireless. The newly merged subsidiary Tritel retained its name. In accordance with the terms of the Merger, all of the capital stock of TeleCorp Wireless and Tritel was converted into the right to receive capital stock in TeleCorp PCS. As a result of the Merger, TeleCorp PCS is controlled by the former holders of the voting preference common stock of TeleCorp Wireless, namely, Gerald T. Vento and Thomas H. Sullivan who are the Company's chief executive officer and its executive vice president and chief financial officer, respectively, and TeleCorp Wireless and Tritel are both wholly-owned subsidiaries of TeleCorp PCS. TeleCorp Wireless is hereafter referred to as the Company. The Company is an AT&T Wireless affiliate in the United States, providing digital wireless personal communications services to a licensed service area covering approximately 21.3 million people. As of December 31, 2000, the Company had launched service in 34 markets having approximately 12.1 million people and representing approximately 57% of the population where the Company holds licenses in the United States and Puerto Rico. As of December 31, 2000, the Company had more than 460,000 customers. Together with Tritel and Triton PCS, Inc., another AT&T Wireless affiliate, the Company operates under a common regional brand name, SunCom(R). The markets in which the Company provides coverage encompass a contiguous territory (other than Puerto Rico) including the following eight of the 100 largest metropolitan areas in the United States and Puerto Rico: New Orleans, Louisiana; Memphis, Tennessee; Little Rock, Arkansas; Milwaukee and Madison, Wisconsin; Des Moines, Iowa; and San Juan and Mayaguez, Puerto Rico. 2 Item 2. Properties. The Company currently owns no real property. The Company has entered into leases for 48,842 square feet of office space in Arlington, Virginia, for use as the national headquarters. The Company also leases space for its call connection equipment and for the network operations center, customer care and data center in Memphis, Tennessee. Further, the Company has operating leases primarily related to its other regional offices, retail store locations, distribution outlets, office space and network equipment sites. For the year ended December 31, 2000, the Company expensed $24.3 million related to its lease obligations for network equipment and operation, stores, and office sites. Item 3. Legal Proceedings. The Company was not a party to any lawsuit or proceeding which is likely, in the opinion of management, to have a material adverse effect on the Company's financial position, results of operations and cash flows. The Company is a party to routine filings and customary regulatory proceedings with the FCC relating to its operations. Item 4. Submission of Matters to a Vote of Security Holders. Intentionally omitted as the registrant is a wholly-owned subsidiary of TeleCorp PCS, Inc. and meets the conditions set forth in General Instructions I(1) (a) and (b) of Form 10-K and is, therefore, filing this Form 10-K with the reduced disclosure format. PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters. The Company's Class A Common Stock previously traded on the Nasdaq National Market ("Nasdaq") under the symbol "TLCP". In connection with the merger of the Company into a wholly-owned subsidiary of TeleCorp PCS, Inc. ("TeleCorp PCS"), on November 13, 2000 (i) the Company's Class A Common Stock ceased trading on Nasdaq, and (ii) TeleCorp PCS's Class A Common Stock began trading on Nasdaq under the symbol "TLCP". As a result, there is currently no established public trading market for any class of the Company's common stock. Item 6. Selected Financial Data. Intentionally omitted as the registrant is a wholly-owned subsidiary of TeleCorp PCS, Inc. and meets the conditions set forth in General Instructions I(1) (a) and (b) of Form 10-K and is, therefore, filing this Form 10-K with the reduced disclosure format. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. General You should read the following discussion in conjunction with the Company's accompanying audited Consolidated Financial Statements and notes thereto included in this report on Form 10-K. This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that are based on current expectations, estimates, and projections. Such forward-looking statements reflect management's good-faith evaluation of information currently available. However, because such statements are based upon, and therefore can be influenced by, a number of external variables over which management has no, or incomplete, control, they are not, and should not be read as being guarantees of future performance or of actual future results; nor will they necessarily prove to be accurate indications of the times at or by which any such performance or result will be achieved. Accordingly, actual outcomes and results may differ materially from those expressed in such forward-looking statements. The Company does not intend to update any such forward-looking statements. 3 Overview The Company is an AT&T Wireless affiliate in the United States providing digital wireless personal communications services, or PCS, to a licensed service area covering approximately 21.3 million people. As of December 31, 2000, the Company had launched service in 34 markets having approximately 12.1 million people and representing approximately 57% of the population where the Company holds licenses in the United States and Puerto Rico. As of December 31, 2000, the Company had more than 460,000 customers. Under the terms of the strategic alliance the Company has with AT&T, the Company is AT&T's exclusive provider of wireless mobility services on the Company's network. The Company is a wholly-owned subsidiary of TeleCorp PCS, Inc. Revenue The Company derives its revenue from the following sources: . Services. The Company sells wireless personal communications services. The various types of service revenue associated with personal communications services for the Company's customers include monthly recurring access charges and monthly non-recurring airtime charges for local, long distance and roaming airtime used in excess of pre-subscribed usage. The Company's customers' 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 the Company's prepaid customers. . Roaming Charges. The Company charges monthly, non-recurring, per minute fees to other wireless companies whose customers use its network facilities to place and receive wireless calls. . Equipment Sales. The Company sells wireless personal communications handsets and accessories that are used by its customers in connection with its wireless services. Service revenue constituted the Company's largest component of revenue during the year ended December 31, 2000, at 69%. Roaming revenue and equipment revenue represented 20% and 11%, respectively. The Company expects that as its customer base grows, service revenue will become an even larger percentage of revenue, while roaming revenue and equipment revenue are expected to decline as a percentage of total revenue. Roaming minutes on the Company's network are expected to increase as AT&T and other carriers increase the number of customers on their networks. Under the Company's reciprocal roaming agreement with AT&T Wireless, its largest roaming partner, the amount the Company will receive and pay per roaming minute will decline for each of the next several years. The wireless industry is experiencing a general trend towards offering rate plans containing larger buckets of minutes. This trend is expected to result in decreases in gross revenue per minute. The Company has autonomy in determining its pricing plans. The Company has developed its pricing plans to be competitive and to emphasize the advantages of its service. The Company may discount its pricing from time to time in order to obtain additional customers or in response to downward pricing in the market for wireless communications services. Cost of revenue . Equipment. The Company purchases personal communications handsets and accessories from third party vendors to resell to its customers for use in connection with its services. The cost of handsets is, and is expected to remain, higher than the resale price to the customer. The Company records as cost of revenue an amount approximately equal to its revenue on equipment sales. The Company records the excess cost of handsets as a selling and marketing expense. The Company does not manufacture any of this equipment. 4 . Roaming Fees. The Company pays fees to other wireless communications companies based on airtime usage of its customers on other communications networks. It is expected that reciprocal roaming rates charged between the Company and other carriers will decrease. The Company does not have any significant minimum purchase requirements. . Clearinghouse Fees. The Company pays fees to an independent clearinghouse for processing its call data records and performing monthly inter-carrier financial settlements for all charges that the Company pays to other wireless companies when its customers use their network, and that other wireless companies pay to the Company when their customers use its network. The Company does not have any significant minimum purchase requirements. These fees are based on the number of call data records processed in a month. . Variable Interconnect. The Company pays monthly charges associated with the connection of the Company's network with other carriers' networks. These fees are based on minutes of use by the Company's customers. These fees are known as interconnection. The Company does not have any significant minimum purchase requirements. . Variable Long Distance. The Company pays monthly usage charges to other communications companies for long distance service provided to its customers. These variable charges are based on the Company's customers' usage, applied at pre-negotiated rates with the other carriers. The Company does not have any significant minimum purchase requirements other than an obligation to AT&T Wireless to purchase a minimum number of minutes of traffic annually over a specified time period and a specified number of dedicated voice and data leased lines in order for us to retain preferred pricing rates. The Company believes it will be able to meet these minimum requirements. Operating expenses Operations and development. The Company's operations and development expense includes engineering operations and support, field technicians, network implementation support, product development, engineering management and non- cash stock compensation related to employees whose salaries are recorded within operations and development. This expense also includes monthly recurring charges directly associated with the maintenance of the network facilities and equipment. Operations and development expense is expected to increase as the Company expands its coverage and adds customers, however, the Company expects that this expense will decrease as a percentage of total revenue in future periods. Selling and marketing. The Company's selling and marketing expense includes brand management, external communications, sales training, and all costs associated with retail distribution, direct, indirect, third party and telemarketing sales (primarily salaries, commissions and retail store rent) and non-cash stock compensation related to employees whose salaries are recorded within selling and marketing. The Company also records the excess cost of handsets over the resale price as a cost of selling and marketing. Selling and marketing expense is expected to increase as the Company expands its coverage and adds customers. However, the Company expects that this expense will decrease as a percentage of total revenue in future periods. General and administrative. The Company's general and administrative expense includes customer support, billing, information technology, finance, accounting and legal services and non-cash stock compensation related to employees whose salaries are recorded within general and administrative. Although the Company expects general and administrative expense to increase in future periods, the Company expects this expense will decrease as a percentage of total revenue. Depreciation and amortization. Depreciation of property and equipment is computed using the straight-line method, generally over three to fifteen years, based upon estimated useful lives. Leasehold improvements are depreciated over the lesser of the useful lives of the assets or the term of the lease. Network development 5 costs incurred to ready the Company's network for use are capitalized. Depreciation of network development costs begins when the network equipment is ready for its intended use and will be depreciated over its estimated useful life ranging from three to fifteen years. The Company began amortizing the cost of the PCS licenses, microwave relocation costs, and capitalized interest in the first quarter of 1999, when PCS services commenced in some of its basic trading areas. Microwave relocation entails transferring business and public safety companies from radio airwaves that overlap with the portion of the airwaves covered by the Company's business to other portions of the airwaves. Amortization of PCS licenses and microwave relocation is calculated using the straight-line method over 40 years. The Company's agreements with AT&T are amortized on a straight-line basis over the related contractual terms, which range from three to twenty years. Amortization of the AT&T exclusivity agreement, long distance agreement and the intercarrier roamer services agreement began once wireless services were available to the Company's customers. Amortization of the network membership license agreement began on July 17, 1998, the date of the finalization of the initial AT&T transaction. Non-cash stock compensation. The Company periodically issues restricted stock awards and stock option grants to its employees. Upon reaching a measurement date, the Company records deferred compensation equal to the difference between the exercise price and the fair value of the stock award. Deferred compensation is amortized to compensation expense over the related vesting period. Other (income) expense Interest expense. Interest expense consists of interest due on the Company's senior credit facilities, senior subordinated discount notes, senior subordinated notes, vendor financing, and debt owed to the U.S. government related to its licenses, net of amounts capitalized and amortization of deferred financing costs. Interest income and other. Interest income consists of interest earned on the Company's cash and cash equivalents and short-term investments. Results of operations Year ended December 31, 2000 Compared to Year ended December 31, 1999 Subscribers Net additions were 358,869 and 142,231 for the years ended December 31, 2000 and 1999, respectively. Total PCS subscribers were 460,750 and 142,231 as of December 31, 2000 and 1999, respectively. The increase in net additions and total PCS subscribers over the same period in 1999 was primarily due to launching additional markets from the period January 1, 2000 to December 31, 2000 partially offset by the sale of 40,350 of the Company's New England subscribers related to the closing of the AT&T Contribution and Exchange on November 13, 2000. Revenue Revenue for the years ended December 31, 2000 and 1999 was $316.1 million and $87.7 million, respectively. Service revenue was $219.3 million and $41.3 million for the years ended December 31, 2000 and 1999, respectively. The increase in service revenue of $178.0 million was due to the addition of approximately 319,000 subscribers from January 1, 2000 to December 31, 2000 and to the launch of six additional markets. Roaming revenue was $63.0 million and $29.0 million for the years ended December 31, 2000 and 1999, respectively. The increase in roaming revenue of $34.0 million was due primarily to the full year use on the 741 cell sites integrated in 1999 and to the additional 555 cell sites integrated in 2000. Equipment revenue was $33.8 million and $17.4 million for the years ended December 31, 2000 and 1999, respectively. The equipment revenue increase of $16.4 million over 1999 was due primarily to the sales of handsets and related accessories in connection with significantly increased gross additions during 2000. 6 Cost of revenue Cost of revenue was $98.2 million and $39.3 million for the years ended December 31, 2000 and 1999, respectively. The increase in cost of revenue of $58.9 million over 1999 was due primarily to additional roaming, interconnection and long distance expenses in connection with the Company's increased subscriber base and increases in equipment costs due to significantly increased gross additions during 2000. Operations and development Operations and development costs were $54.7 million and $36.0 million for the years ended December 31, 2000 and 1999, respectively. The increase of $18.7 million over 1999 was primarily due to the development and growth of infrastructure and staffing and maintenance related to the support of the Company's network and network operations center. Selling and marketing Selling and marketing costs were $169.7 million and $71.2 million for the years ended December 31, 2000 and 1999, respectively. The increase of $98.5 million over 1999 was primarily due to the cost of acquiring the significantly increased gross additions in 2000. Costs associated with the Company's increased market base included advertising and promotion costs, commissions and the excess cost of handsets over the retail price. General and administrative General and administrative expenses were $141.0 million and $92.5 million for the years ended December 31, 2000 and 1999 respectively. The increase of $48.5 million over 1999 was primarily due to the development and growth of infrastructure and staffing related to information technology, customer care and other administrative functions incurred in conjunction with managing the corresponding growth in the Company's subscriber base and launching the additional markets. Depreciation and amortization Depreciation and amortization expense were $119.8 million and $55.1 million for the years ended December 31, 2000 and 1999, respectively. The increase of $64.7 million over 1999 relates primarily to depreciation of the Company's property, plant and equipment as well as the amortization of its PCS licenses and the AT&T operating agreements related to the Company's markets launched between January 1, 2000 and December 31, 2000. Interest expense Interest expense was $97.1 million, net of capitalized interest of $4.4 million for the year ended December 31, 2000. Interest expense was $51.3 million, net of capitalized interest of $5.4 million for the year ended December 31, 1999. The increase of $45.8 million over 1999 relates primarily to a full year of interest expense on the Company's senior subordinated discount notes which were issued in April of 1999, interest expense on the Company's 10 5/8% senior subordinated notes issued in July 2000, additional Lucent and FCC debt issued throughout 2000, and $100 million of additional senior credit facility drawn during 2000. Interest income and other Interest income was $16.8 million and $6.7 million for the year ended December 31, 2000 and 1999, respectively. The increase of $10.1 million over 1999 was due primarily to larger cash and short-term investment balances that resulted from the $450 million senior subordinated notes offering in July of 2000. 7 Gain on disposal of New England assets As part of the Company's Asset Exchange Agreement with AT&T Wireless that was consummated on November 13, 2000, the Company recognized a one-time gain of $330.8 million related to the exchange of its New England assets for certain assets during 2000. Forward Looking Statements: Cautionary Statements Statements in this annual report expressing the Company's expectations and beliefs regarding its future results or performance are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which statements involve a number of risks and uncertainties. In particular, certain statements contained in this Management's Discussion and Analysis of Financial Condition and Results of Operations which are not historical facts constitute forward-looking statements. Although the Company believes that the expectations expressed in such forward-looking statements are based on reasonable assumptions within the bounds of its knowledge of its business, the Company's actual future results may differ significantly from those stated in any forward-looking statements. Factors that may cause or contribute to such differences include, but are not limited to, the risks described in the Annual Report on Form 10-K filed by TeleCorp PCS, Inc. for the fiscal year ended December 31, 2000. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. The Company is exposed to market risk from changes in interest rates that could impact its results of operations. The Company manages interest rate risk through a combination of fixed and variable rate debt. At December 31, 2000, the Company had the following debt instruments outstanding: . $100.0 million of tranche A and $225.0 million of tranche B notes under the Company's senior credit facility, which carried a weighted average rate of 9.23% and 9.54%, respectively; . $450.0 million of 10 5/8% senior subordinated notes due 2010; . $396.6 million carrying value ($575.0 million at maturity) of the 11 5/8% senior subordinated discount notes due 2009; . $75.3 million debt ($71.1 million discounted) to the Federal Communications Commission, due in quarterly installments from 2001 to 2007 bearing a rate of between 6.125% and 7.0%, discounted to yield between 8.0% and 11.8%; and . $47.4 million of vendor financing debt which carried a rate of 8.5%. The senior subordinated notes, senior subordinated discount notes, FCC debt and vendor financing debt, are fixed interest rate debt securities and as a result are less sensitive to market rate fluctuations. However, the Company's tranche A and tranche B term loans outstanding under the senior credit facility and other amounts available under its senior credit facility agreements are variable interest rate debt securities. The Company uses interest rate swaps to hedge the effect of fluctuations in interest rates from its Senior Credit Facility. These transactions are classified as cash-flow hedging instruments pursuant to the definitions contained in Statement of Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative Instruments and Hedging Activities," which was adopted by the Company on January 1, 2001. 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 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 the hedged transaction 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. The fair value of the interest rate swaps is measured as the amount at which the swaps could be settled based on estimates obtained from dealers. As of December 31, 2000, the Company had entered into six interest rate swap agreements totaling $225.0 million to convert the Company's variable rate debt to fixed rate debt. 8 The following table provides information about the market risk exposure associated with the Company's variable rate debt at maturity value of the debt and the market risk exposure associated with the interest rate swaps:
Expected Maturity --------------------------------------------------------------- Fair 2001 2002 2003 2004 2005 Thereafter Total Value ---- ---- ------ ----- ----- ---------- -------- ------ (US$ in millions) Liabilities: Long-Term Debt: Face value of long-term fixed rate debt (a)... $1.4 $1.6 $ 16.0 $17.1 $18.3 $1,118.6(b) $1,173.0 $969.1(c) Average interest rate (d)................... 6.2% 6.2% 6.9% 6.9% 6.9% 11.2% Face value of tranche A variable rate debt.... $0.0 $5.0 $ 10.0 $25.0 $30.0 $ 30.0 $ 100.0 $100.0(f) Average interest rate (e)................... 0.0% 9.2% 9.2% 9.2% 9.2% 9.2% Face value of tranche B variable rate debt.... $0.0 $1.2 $ 2.2 $ 2.2 $ 2.2 $ 217.2 $ 225.0 $225.0(f) Average interest rate (e)................... 0.0% 9.5% 9.5% 9.5% 9.5% 9.5% Interest Rate Derivatives: Interest rate swaps: Variable to fixed (g).. $225.0 $ 225.0 *(h) Average pay rate (i)... 5.24% 5.24% Average receive rate (i)................... 6.46% 6.46%
- -------- (a) Fixed rate debt consists of the FCC government debt, 11 5/8% senior subordinated discount notes, 10 5/8% senior subordinated notes, and vendor financing. (b) The vendor financing interest rate will increase by 1.5% per annum on January 1, 2001 and shall not exceed 12.125%. The future principal amount in 2009 includes all unpaid interest of the vendor financing debt and totals $72.7 million. This total balance for all payments subsequent to 2005 also includes the future principal payment of $575.0 million of 11 5/8% senior subordinated discount notes in 2009, $450.0 million of 10 5/8% senior subordinated notes in 2010 and $20.9 million of FCC debt due in quarterly installments through 2007. (c) The fair value is based on (1) the carrying value of the FCC debt of $71.1 million, (2) the carrying value of the vendor financing of $47.4 million (3) the $393.9 million market value of the of the 11 5/8% senior subordinated discount notes as of December 31, 2000 priced at 11.7%, and (4) the $456.7 million market value of the 10 5/8% senior subordinated notes priced at a 1.5% premium on December 31, 2000. (d) Average interest rate is calculated as the weighted average rate related to the repayments of debt instruments in the year indicated of maturity. (e) The interest rate of the variable debt securities may and is expected to vary before maturity. The amount indicated is the current rate as of December 31, 2000. (f) The fair value of variable rate debt instruments is expected to approximate fair value. (g) Represents the total notional amount of the six swap agreements related to the tranche B senior credit facility. (h) The fair value of the variable to fixed interest rate swaps is nominal. (i) The average pay rate and average receive rate are based on the December 31, 2000 rate of variable rate tranche B debt less the fixed yield of 8.24%. These amounts may change due to fluctuations in the variable rate debt. The current swaps expire in 2003. 9 The Company is exposed to the impact of interest rate changes on our short- term cash investments, consisting of U.S. Treasury obligations and other investments in respect of institutions with the highest credit ratings. 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 investment income. The Company is not exposed to fluctuations in currency exchange rates since its operations are entirely within the United States and its territories and all of the Company's services are invoiced in U.S. dollars. Item 8. Financial Statements and Supplementary Data. Reference is made to the consolidated financial statements listed under the heading "Item 14. (a) (1) Consolidated Financial Statements" of Item 14 hereof, which financial statements are incorporated herein by reference in response to this Item 8. Quarterly Results of Operations The following table sets forth certain unaudited quarterly operating information for each of the eight quarters ended December 31, 2000. This data has been prepared on the same basis as the audited financial statements, and in management's opinion, includes all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the information for the periods presented. Results for any previous fiscal quarter are not necessarily indicative of results for the full year or for any future quarter. Quarterly Financial Data ($ in millions except per share amounts)
Quarter ended, ---------------------------------- June Dec. Mar. 31, 30, Sept. 30, 31, -------- ------ --------- ------- (unaudited) 2000 Revenue..................................... $ 55.5 $ 72.0 $ 91.9 $ 96.7 Operating loss.............................. (59.9) (78.1) (57.1) (72.1) Net income (loss)........................... $(74.5) $(93.9) $(81.5) $ 233.1 1999 Revenue..................................... $ 4.3 $ 17.1 $ 26.8 $ 39.5 Operating loss.............................. (26.9) (37.1) (50.2) (92.2) Net loss.................................... $(32.3) $(46.0) $(65.8) $(106.9)
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. 10 PART III Items 10, 11, 12 and 13. Intentionally omitted as the registrant is a wholly-owned subsidiary of TeleCorp PCS, Inc. and meets the conditions set forth in General Instructions I(1) (a) and (b) of Form 10-K and is, therefore, filing this Form 10-K with the reduced disclosure format. PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. (a) Financial Statements, Schedules and Exhibits (1) Consolidated Financial Statements. The following consolidated financial statements and the Report of Independent Accountants related thereto are included in Item 8 above.
Page ---- Report of Independent Accountants.................................. F-2 Consolidated Balance Sheets........................................ F-3 Consolidated Statements of Operations.............................. F-4 Consolidated Statements of Changes in Stockholders' Equity (Defi- cit).............................................................. F-5 Consolidated Statements of Cash Flows.............................. F-6 Notes to Consolidated Financial Statements......................... F-8
(2) Financial Statement Schedules. None. (3) Exhibits. The following exhibits are filed with this report or incorporated by reference as set forth below. EXHIBIT INDEX
Exhibit No. Description ----------- ------------------------------------------------------------------ 2.l.1+++ Agreement and Plan of Reorganization and Contribution (included as Annex A to the joint proxy statement-prospectus forming a part of the TeleCorp-Tritel Holding Company Registration Statement), dated February 28, 2000, by and between TeleCorp PCS, Tritel, Inc. and AT&T Wireless Services, Inc. 2.1.2+++ Amendment No. 1 to the Agreement and Plan of Reorganization and Contribution (included as Annex B to the joint proxy statement- prospectus forming a part of the TeleCorp-Tritel Holding Company Registration Statement), dated May 4, 2000, by and between TeleCorp PCS, Tritel, Inc. and AT&T Wireless Services, Inc. 2.1.3+++ Amendment No. 2 to the Agreement and Plan of Reorganization and Contribution (included as Annex C to the joint proxy statement prospectus forming a part of the TeleCorp-Tritel Holding Company Registration Statement), dated June 12, 2000, by and between TeleCorp PCS, Tritel, Inc. and AT&T Wireless Services, Inc. 3.1.1. . . Amended and Restated Certificate of Incorporation of TeleCorp PCS, Inc. (renamed TeleCorp Wireless, Inc.).
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Exhibit No. Description ----------- ------------------------------------------------------------------ 3.1.2. . . Certificate of Amendment of Certificate of Incorporation of TeleCorp PCS, Inc. changing the name of TeleCorp PCS, Inc. to TeleCorp Wireless, Inc. 3.2.1++++ Certificate of Incorporation of TeleCorp Operating Company, Inc. 3.2.2++++ Certificate of Amendment of the Certificate of Incorporation of TeleCorp Operating Company, Inc. changing the name of TeleCorp Operating Company, Inc. to TeleCorp Communications, Inc. 3.3 By-Laws of TeleCorp Wireless, Inc. 3.4++++ By-Laws of TeleCorp Communications, Inc. 4.1*** Indenture, dated as of July 14, 2000, by and among TeleCorp PCS, Inc., TeleCorp Communications, Inc. and Bankers Trust Company, as Trustee. 4.2++++ 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. 10.1. . Stockholders' Agreement, dated as of November 13, 2000, by and among AT&T Wireless PCS LLC, Cash Equity Investors, Management Stockholders, Other Stockholders and TeleCorp PCS, Inc. 10.2+++ TeleCorp PCS, Inc. Voting Agreement, dated February 28, 2000. 10.3+++ Side Letter Agreement regarding Milwaukee Option, dated February 28, 2000, by and between AT&T Wireless Services, Inc. and TeleCorp PCS, Inc. 10.4+++ Asset Exchange Agreement, dated as of February 28, 2000, by and among AT&T Wireless PCS, LLC, TeleCorp PCS, Inc., TeleCorp PCS, LLC, TeleCorp Holding Corp. Inc., TeleCorp Communications, Inc., TeleCorp Equipment Leasing, L.P., and TeleCorp Realty, LLC. l0.5+++ Side Letter Agreement regarding Additional Mutual Rights and Obligations in Connection with the Asset Exchange Agreement and the Agreement and Plan of Reorganization and Contribution, dated as of February 28, 2000, by and between AT&T Wireless PCS, LLC and TeleCorp PCS, Inc. 10.6+++ Amended and Restated License Acquisition Agreement, dated as of May 3, 2000, by and among Polycell Communications, Inc., Clinton Communications, Inc. and ABC Wireless, LLC. 10.7+++ License Acquisition Agreement, dated as of February 28, 2000, by and between ABC Wireless, LLC and AT&T Wireless PCS, LLC. 10.8+++ Form of Intermediary Agreement, by and among AT&T Wireless PCS, LLC, TeleCorp PCS, Inc., TeleCorp PCS, LLC, TeleCorp Holding Corp. Inc., TeleCorp Communications, Inc., TeleCorp Equipment Leasing, LP., TeleCorp Realty, LLC and the Intermediary. 10.9+++ Transition Services Agreement, dated as of February 28, 2000, by and between AT&T Wireless PCS, LLC and TeleCorp PCS, Inc. 10.10+++ Form of Assignment and Assumption Agreement, by and between Milwaukee PCS, LLC, Milwaukee Acquisition Subsidiary, Inc., and TeleCorp PCS, Inc. 10.11+++ Agreement and Plan of Merger, dated February 27, 2000, by and among Milwaukee PCS LLC, Milwaukee Acquisition Subsidiary, Inc., Kailas J. Rao, and Indus, Inc.
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Exhibit No. Description ----------- ---------------------------------------------------------------- 10.12+++ Airadigm Letter of Intent, dated January 24, 2000. 10.13.1++++ General Agreement for Purchase of PCS Systems and Services, dated as of May 12, 1998, by and between TeleCorp PCS, Inc. and Lucent Technologies Inc. 10.13.2++++++ Amendment No. 1 to the General Agreement for Purchase of Personal Communication Systems and Services, dated as of November 20, 1998, by and between TeleCorp PCS Inc. and Lucent Technologies Inc. 10.13.3++++++ Amendment No. 2 to the General Agreement for Purchase of Personal Communication Systems and Services, dated as of September 18, 1998, by and between TeleCorp PCS, Inc. and Lucent Technologies Inc. 10.13.4++++++ Amendment No. 3 to the General Agreement for Purchase of Personal Communication Systems and Services, dated as of November 10, 1998, by and between TeleCorp PCS, Inc. and Lucent Technologies Inc. 10.13.5++++++ Amendment No. 5 to the General Agreement for Purchase of Personal Communication Systems and Services, dated as of January 27, 1999, by and between TeleCorp PCS, Inc. and Lucent Technologies Inc. (the Amendment No. 5 to the General Agreement follows Amendment No. 3). 10.13.6++++++ Amendment No. 6 to the General Agreement for Purchase of Personal Communication Systems and Services, dated as of August 9, 1999, by and between TeleCorp PCS, Inc. and Lucent Technologies Inc. 10.13.7++++++ Amendment No. 7 to the General Agreement for Purchase of Personal Communication Systems and Services, dated as of July 1, 1999, by and between TeleCorp PCS, Inc. and Lucent Technologies Inc. 10.13.8++++++ Amendment No. 8 to the General Agreement for Purchase of Personal Communication Systems and Services, dated as of July 1, 2000, by and between TeleCorp PCS, Inc. and Lucent Technologies Inc. 10.14++++ Securities Purchase Agreement, dated as of January 23, 1998, by and among TeleCorp PCS, Inc., AT&T Wireless PCS Inc., TWR Cellular, Inc. and certain Initial investors other than AT&T Wireless, TeleCorp Investors and Management Stockholders identified therein. 10.15.1++++ Network Membership License Agreement, dated as of July 17, 1998, by and among AT&T Corp., including AT&T Wireless Services, Inc., and TeleCorp PCS, Inc. 10.15.2++++ Amendment No. 1 to Network Membership License Agreement, dated March 30, 1999. 10.15.3 Amendment No. 2 to Network Membership License Agreement, dated November 13, 2000. 10.16.1++++ Management Agreement, dated as of July 17, 1998, by and between TeleCorp Management Corp. and TeleCorp PCS, Inc. 10.16.2++++ Amendment No. 1 to the Management Agreement, dated as of May 25, 1999, by and between TeleCorp Management Corp. and TeleCorp PCS, Inc. 10.16.3* Amendment No. 2 to the Management Agreement, dated as of October 18, 1999, by and between TeleCorp Management Corp. and TeleCorp PCS, Inc. 10.17 Management Agreement, dated as of November 13, 2000, by and between TeleCorp Management Corp., Inc. and TeleCorp PCS, Inc.
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Exhibit No. Description ----------- ------------------------------------------------------------------ 10.18.1++++ Intercarrier Roamer Service Agreement, dated as of July 17, 1998, by and between AT&T Wireless Services, Inc. and TeleCorp PCS, Inc. 10.18.2++++ Amendment No. 1 to Intercarrier Roamer Service Agreement, dated May 25, 1999. 10.19.1* Roaming Administration Service Agreement, dated as of July 17, 1998, by and between AT&T Wireless Services, Inc. and TeleCorp PCS, Inc. 10.19.2 Amendment No. 1 to Roaming Administration Service Agreement, dated November 13, 2000, by and between AT&T Wireless Services, Inc. and TeleCorp PCS, Inc. 10.20 Credit Agreement, dated as of July 17, 1998, as amended and restated as of October 2, 2000, by and among TeleCorp PCS, Inc., The Lenders Party Thereto, 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. 10.21.1++++ Stock Purchase Agreement, dated as of March 22, 1999, by and among TeleCorp PCS, Inc., AT&T Wireless PCS, Inc. and certain Initial investors other than AT&T Wireless identified therein. 10.21.2++++ Amendment No. 1 to Stock Purchase Agreement, dated as of March 30, 1999, by and among TeleCorp PCS, Inc., AT&T Wireless PCS, Inc. and Initial investors other than AT&T Wireless. 10.21.3++++ Amendment No. 2 to Stock Purchase Agreement, dated as of April 6, 1999, by and among TeleCorp PCS, Inc., AT&T Wireless PCS, Inc. and Initial investors other than AT&T Wireless. 10.21.4++++ Amendment No. 3 to Stock Purchase Agreement, dated as of May 14, 1999, by and among TeleCorp PCS, Inc., AT&T Wireless PCS, Inc. and Initial investors other than AT&T Wireless. 10.21.5++++ Amendment No. 4 to Stock Purchase Agreement, dated as of July 15, 1999, by and among TeleCorp PCS, Inc., AT&T Wireless PCS, Inc. and Initial investors other than AT&T Wireless. 10.22++++ Stock Purchase Agreement, dated as of March 1, 1999, by and among Viper Wireless, Inc., TeleCorp Holding Corp., Inc. and TeleCorp PCS, Inc. 10.23++++ Puerto Rico Stock Purchase Agreement, dated as of March 30, 1999, by and among TeleCorp PCS, Inc., Puerto Rico Acquisition Corp. and certain Management Stockholders and Initial investors other than AT&T Wireless. 10.24** Stock Purchase Agreement, dated as of October 18, 1999, by and among TeleCorp PCS, Inc., TeleCorp Holding Corp., Inc., Gerald T. Vento, Thomas H. Sullivan, OneLiberty Fund IV, L.P., Northwood Ventures LLC, and Northwood Capital Partners LLC. 10.25++++ Asset Purchase Agreement, dated May 25, 1999, by and between AT&T Wireless PCS Inc. and TeleCorp PCS, Inc. 10.26++++ Preferred Stock Purchase Agreement, dated May 24, 1999, by and between AT&T Wireless PCS Inc. and TeleCorp PCS, Inc. 10.27.1++++ Stockholders' Agreement, dated as of July 17, 1998, by and among AT&T Wireless PCS, Inc., TWR Cellular, Inc., Initial investors other than AT&T Wireless, Management Stockholders, and TeleCorp PCS, Inc. 10.27.2++++ Amendment No. 1 to Stockholders' Agreement, dated May 25, 1999. 10.27.3* Amendment No. 2 to Stockholders' Agreement, dated November 1, 1999. 10.28+++ Form of Stockholders' Agreement, by and among AT&T Wireless PCS, LLC, Initial investors other than AT&T Wireless, Management Stockholders, Other Stockholders, and Holding Company, Inc.
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Exhibit No. Description ----------- ------------------------------------------------------------------ 10.29++++ 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. 10.30++++ Agreement, dated as of July 17, 1998, by and among AT&T Wireless PCS Inc., TWR Cellular, Inc., the Initial investors other than AT&T Wireless, the TeleCorp Investors and the Management Stockholders. 10.31++++ Employment Agreement, dated as of July 17, 1998, by and between TeleCorp PCS, Inc. and Julie A. Dobson. 10.32+++ Amendment to Employment Agreement, dated February 28, 2000, by and between TeleCorp PCS, Inc. and Julie A. Dobson. 10.33++++ Share Grant Agreement, dated July 16, 1998, by and between TeleCorp PCS, Inc. and Julie A. Dobson. 10.34++++ Separation Agreement, dated as of March 8, 1999, by and among TeleCorp PCS, Inc., TeleCorp Communications, Inc. and Robert Dowski. 10.35++++ Agreement among the Parties, dated as of June 30, 1999, by and among TeleCorp PCS, Inc., the Initial investors other than AT&T Wireless, Entergy Technology Holding Company, AT&T Wireless PCS, Inc., TWR Cellular Inc. and other stockholders. 10.36++++ Amended and Restated Agreement, dated April 16, 1999, by and among TeleCorp Communications, Inc., Triton PCS, Inc., Tritel Communications, Inc. and Affiliate License Co., L.L.C. 10.37++++ TeleCorp PCS, Inc. 1998 Restricted Stock Plan, as amended May 20, 1999. 10.38++++ TeleCorp PCS, Inc. 1999 Stock Option Plan, dated June 23, 1999, as amended. 10.39. TeleCorp PCS, Inc. 2000 Employee, Director and Consultant Stock Plan. 10.40* Form of Indemnification Agreement to be entered into between TeleCorp PCS, Inc. and its directors and executive officers. 10.41.1++ Stockholders' Agreement, dated January 7, 1999, by and among AT&T Wireless PCS Inc., Initial investors other than AT&T Wireless, Management Stockholders, and Tritel, Inc. 10.41.2++ First Amendment to Tritel's Stockholders' Agreement, dated August 27, 1999. 10.41.3++ Second Amendment to Tritel's Stockholders' Agreement, dated as of September 1, 1999. 10.41.4+ Third Amendment to Tritel's Stockholders' Agreement, dated November 18, 1999. 10.41.5+ Fourth Amendment to Tritel's Stockholders' Agreement, dated December 10, 1999. 10.42++ Investors Stockholders' Agreement, dated January 7, 1999, by and among Tritel, Inc., Washington National Insurance Company, United Presidential Life Insurance Company, Dresdner Kleinwort Benson Private Equity Partners LP, Toronto Dominion Investments, Inc., Entergy Wireless Corporation, General Electric Capital Corporation, Triune PCS, LLC, FCA Venture Partners II, L.P., Clayton Associates LLC, Trillium PCS, LLC, Airwave Communications, LLC, Digital PCS, LLC, and The Stockholders Named Therein. 10.43 Investors Stockholders' Agreement, dated as of February 28, 2000, by and among TeleCorp PCS, Inc. and The Stockholders Named Therein. 10.44.1++ AT&T Wireless Services, Inc. Network Membership License Agreement, dated January 7, 1999, by and between AT&T Corp. and Tritel, Inc.
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Exhibit No. Description ----------- ------------------------------------------------------------------ 10.44.2**** Amendment No. 1 to AT&T Wireless Services, Inc. Network Membership License Agreement, dated as of November 13, 2000, by and between AT&T Corp. and Tritel, Inc. 10.45.1++ Intercarrier Roamer Service Agreement, dated January 7, 1999, between AT&T Wireless Services, Inc. and Tritel, Inc. 10.45.2**** Amendment No. 1 to Intercarrier Roamer Service Agreement, dated as of November 13, 2000, between AT&T Wireless Services, Inc. and Tritel, Inc. 10.46++ Amended and Restated Agreement, dated April 16, 1999, by and between TeleCorp Communications, Inc., Triton PCS, Inc., Tritel Communications, Inc. and Affiliate License Co., L.L.C. 10.47 Employment Agreement, dated as of November 13, 2000, by and between TeleCorp PCS, Inc. and William M. Mounger, II. 10.48 Employment Agreement, dated as of November 13, 2000, by and between TeleCorp PCS, Inc. and E.B. Martin, Jr. 10.49+++ Letter Agreement, dated February 28, 2000, by and among William Mounger, II, TeleCorp PCS, Inc., Tritel, Inc., Thomas Sullivan, and Gerald Vento. 10.50+++ Letter Agreement, dated February 28, 2000, by and among E.B. Martin, Jr., TeleCorp PCS, Inc., Tritel, Inc., Thomas Sullivan, and Gerald Vento. 10.51+++ Asset Purchase Agreement, dated as of June 2, 2000, by and between Airadigm Communications, Inc. and RW Acquisition L.L.C. 10.52+++ Contingent Supplement to Asset Purchase Agreement, dated as of June 2, 2000, by and between Airadigm Communications, Inc. and RW Acquisition L.L.C. 10.53+++ Letter Agreement, dated June 2, 2000, by and between RW Acquisition, L.L.C. and Airadigm Communications, Inc. regarding Working Capital Loan. 10.54+++ Construction Management Agreement, dated as of June 2, 2000, by and between TeleCorp Communications, Inc. and Airadigm Communications, Inc. 10.55+++ Counterpart Signature Page and Joinder to the Agreement and Plan of Reorganization and Contribution, dated May 31, 2000, by TeleCorp-Tritel Holding Company. 10.56+++ Counterpart Signature Page and Joinder to the Agreement and Plan of Reorganization and Contribution, dated May 31, 2000, by TTHC First Merger Sub, Inc. 10.57+++ Counterpart Signature Page and Joinder to the Agreement and Plan of Reorganization and Contribution, dated May 31, 2000, by TTHC Second Merger Sub, Inc. 10.58+++++ Purchase Agreement, dated July 11, 2000, by and among Chase Securities Inc., Lehman Brothers Inc., Deutsche Banc Securities, Inc., TeleCorp PCS, Inc. and TeleCorp Communications, Inc. 10.59++++++ Consent Pursuant to Section 6.2(a) of the Agreement and Plan of Reorganization and Contribution, dated as of July 10, 2000, by Tritel, Inc. to TeleCorp PCS, Inc. 10.60++++++ Exchange and Registration Rights Agreement, dated as of July 14, 2000, by and among Chase Securities Inc., Lehman Brothers Inc., Deutsche Banc Securities, Inc., TeleCorp PCS, Inc., TeleCorp Communications, Inc. and Bankers Trust Company, as Trustee. 10.61++++ 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.
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Exhibit No. Description ----------- ------------------------------------------------------------------ 10.62*** Credit Agreement, dated as of July 14, 2000, by and among Black Label Wireless, Inc., as Borrower, the financial institutions from time to time parties thereto, as Lenders and Lucent Technologies Inc., as Agent for the Lenders. 10.63*** Letter Agreement, dated July 14, 2000, by and among Black Label Wireless, Inc., as Borrower, Lucent Technologies Inc., as Agent and Lucent Technologies Inc., as Lender. 10.64*** Commitment Letter, dated July 14, 2000, by and between TeleCorp- Tritel Holding Company and Lucent Technologies Inc. 10.65*** Form of Indenture related to the sale of notes by TeleCorp PCS, Inc. (formerly known as TeleCorp-Tritel Holding Company) to Lucent Technologies Inc. 10.66*** Form of Securities Purchase Agreement, by and between TeleCorp PCS, Inc. (formerly known as TeleCorp-Tritel Holding Company) and Lucent Technologies Inc. 10.67* Stock Purchase Agreement, dated as of November 22, 1999, by and between AT&T Wireless PCS LLC and TeleCorp PCS, Inc.
- -------- * Incorporated by reference to the Registration Statement on Form S-1 (File No. 333-89393) of TeleCorp PCS, Inc. ** Incorporated by reference to the Form 10-K filed on March 30, 2000 (File No. 000-27901) of TeleCorp PCS, Inc. *** Incorporated by reference to the Form 10-Q filed on August 11, 2000 (File No. 000-27901) of TeleCorp PCS, Inc. + Incorporated by reference to the Registration Statement on Form S-1 (File No. 333-91207) of Tritel, Inc. ++ Incorporated by reference to the Registration Statement on Form S-4 (File No. 333-82509) of Tritel PCS, Inc. +++ Incorporated by reference to the Registration Statement on Form S-4 (File No. 333-36954) of TeleCorp-Tritel Holding Company. ++++ Incorporated by reference to the Registration Statement on Form S-4 (File No. 333-81313, 333-81313-01) of TeleCorp PCS, Inc. and TeleCorp Communications, Inc. +++++ Incorporated by reference to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-81313, 333-81313-01) of TeleCorp PCS, Inc. and TeleCorp Communications, Inc. ++++++ Incorporated by reference to the Registration Statement on Form S-4 (File No. 333-43596) of TeleCorp PCS, Inc. and TeleCorp Communications, Inc. . Incorporated by reference to the Registration Statement on Form S-8 (File No. 333-49792) of TeleCorp-Tritel Holding Company (renamed TeleCorp PCS, Inc.). . . Incorporated by reference to the TeleCorp PCS, Inc. (f/k/a TeleCorp- Tritel Holding Company) Current Report on Form 8-K filed on November 13, 2000. . . . Incorporated by reference to the Form 10-Q filed on November 14, 2000 (File No. 000-27901) of TeleCorp Wireless, Inc. . . . . Incorporated by reference to the TeleCorp Wireless, Inc. Current Report on Form 8-K (File No. 000-27901) filed on November 13, 2000. . . . . . Incorporated by reference to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-43596) of TeleCorp PCS, Inc. and TeleCorp Communications, Inc. (b) Reports on Form 8-K: The Company filed a Current Report on Form 8-K dated November 13, 2000 under which the Company announced the consummation of the Company's acquisition of Tritel as well as the closing of the Asset Exchange Agreement with AT&T Wireless. A copy of the Company's press release, dated November 13, 2000, was filed as an exhibit. 17 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: March 29, 2001 TeleCorp Wireless, Inc. /s/ Thomas H. Sullivan By: _________________________________ Thomas H. Sullivan President, Treasurer and Secretary Date: March 29, 2001 Subsidiary of TeleCorp Wireless, Inc. TeleCorp Communications, Inc. /s/ Thomas H. Sullivan By: _________________________________ Thomas H. Sullivan President, Treasurer and Secretary Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of each Registrant and in the capacities indicated, as of the dates indicated.
Signature Title Date --------- ----- ---- /s/ Gerald T. Vento Chief Executive Officer March 29, 2001 ______________________________________ (Principal Executive Gerald T. Vento Officer) and Chairman /s/ Thomas H. Sullivan President, Chief Financial March 29, 2001 ______________________________________ Officer, Secretary
Thomas H. Sullivan (Principal Financial and Accounting Officer) and Director 18 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS TELECORP WIRELESS, INC.
Page ---- Report of Independent Accountants......................................... F-2 Consolidated Balance Sheets............................................... F-3 Consolidated Statements of Operations..................................... F-4 Consolidated Statements of Changes in Stockholders' Equity (Deficit)...... F-5 Consolidated Statements of Cash Flows..................................... F-6 Notes to Consolidated Financial Statements................................ F-8
F-1 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholder TeleCorp Wireless, Inc.: 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 Wireless, Inc. (the Company) at December 31, 2000 and 1999 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States of America. 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 auditing standards generally accepted in the United States of America, 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 our opinion. PricewaterhouseCoopers LLP McLean, Virginia March 29, 2001 F-2 TELECORP WIRELESS, INC. CONSOLIDATED BALANCE SHEETS ($ in thousands, except per share data)
December 31, --------------------- 1999 2000 --------- ---------- ASSETS Current assets: Cash and cash equivalents.............................. $ 182,330 $ 228,758 Short-term investments................................. -- 34,189 Accounts receivable, net............................... 23,581 44,792 Inventory.............................................. 15,802 23,680 Prepaid expenses and other current assets.............. 3,828 9,024 --------- ---------- Total current assets................................... 225,541 340,443 Property and equipment, net............................. 400,450 655,218 PCS licenses and microwave relocation costs, net........ 267,682 668,472 Intangible assets--AT&T agreements, net................. 37,908 174,775 Deferred financing costs, net........................... 19,577 32,877 Other assets............................................ 1,044 4,972 --------- ---------- Total assets........................................... $ 952,202 $1,876,757 ========= ========== LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable....................................... $ 38,903 $ 45,819 Accrued expenses and other ............................ 51,977 150,230 Microwave relocation obligation, current portion....... 36,122 21,232 Long-term debt, current portion........................ 1,361 1,459 Accrued interest....................................... 1,387 25,801 Deferred revenue....................................... 1,709 1,688 --------- ---------- Total current liabilities.............................. 131,459 246,229 Long-term debt.......................................... 639,210 1,288,628 Microwave relocation obligation......................... 2,365 15,736 Accrued expenses and other.............................. 6,541 6,320 --------- ---------- Total liabilities...................................... 779,575 1,556,913 --------- ---------- Mandatorily redeemable preferred stock, issued and outstanding 382,539 and 0 shares, respectively......... 360,182 -- Preferred stock subscriptions receivable................ (97,001) -- --------- ---------- Total mandatorily redeemable preferred stock, net...... 263,181 -- --------- ---------- Commitments and contingencies Stockholders' equity (deficit): Series F preferred stock, par value $.01 per share, 14,912,778 and 0 shares issued and outstanding........ 149 -- Common stock, par value $.01 per share, issued and outstanding 85,592,221 and 1,000 shares, respectively.......................................... 856 -- Additional paid-in capital............................. 267,442 689,659 Deferred compensation.................................. (42,811) (24,445) Common stock subscriptions receivable.................. (191) -- Due from TeleCorp PCS.................................. -- (13,542) Accumulated other comprehensive income................. -- 958 Accumulated deficit.................................... (315,999) (332,786) --------- ---------- Total stockholders' equity (deficit)................... (90,554) 319,844 --------- ---------- Total liabilities, mandatorily redeemable preferred stock and stockholders' equity (deficit).............. $ 952,202 $1,876,757 ========= ==========
The accompanying notes are an integral part of these consolidated financial statements. F-3 TELECORP WIRELESS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS ($ in thousands except per share data)
For the year ended December 31, ------------------------------ 1998 1999 2000 -------- --------- --------- Revenue: Service...................................... $ -- $ 41,319 $ 219,292 Roaming...................................... 29 29,010 62,956 Equipment.................................... -- 17,353 33,802 -------- --------- --------- Total revenue.............................. 29 87,682 316,050 -------- --------- --------- Operating expenses: Cost of revenue.............................. -- 39,259 98,235 Operations and development (including non- cash stock compensation of $0, $1,472 and $1,601)..................................... 9,772 35,979 54,663 Selling and marketing (including non-cash stock compensation of $0, $937 and $1,951)........................ 6,325 71,180 169,662 General and administrative (including non- cash stock compensation of $0, $29,408 and $31,268)................. 26,239 92,585 140,988 Depreciation and amortization................ 1,584 55,110 119,750 -------- --------- --------- Total operating expenses................... 43,920 294,113 583,298 -------- --------- --------- Operating loss............................. (43,891) (206,431) (267,248) Other (income) expense: Interest expense............................. 11,934 51,313 97,068 Interest income and other.................... (4,670) (6,748) (16,773) Gain on disposal of New England assets....... -- -- (330,756) -------- --------- --------- Net loss................................... $(51,155) $(250,996) $ (16,787) ======== ========= =========
The accompanying notes are an integral part of these consolidated financial statements. F-4 TELECORP WIRELESS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) ($ in thousands except per share data)
Accumu- Common lated Series F Addi- Stock Other Due Preferred Stock Common Stock tional Deferred Subscrip- Treasury Stock Compre- from ------------------- ------------------- Paid-in Compen- tions ---------------- hensive TeleCorp Shares Amount Shares Amount Capital sation Receivable Shares Amount Income PCS ----------- ------ ----------- ------ -------- -------- ---------- -------- ------ ------- -------- Balance, December 31, 1997......... -- $ -- 19,335 $ 1 $ -- $ -- $ -- -- $-- $-- $ -- Net loss......... -- -- -- -- -- -- -- -- -- -- -- Noncash redemption of equity interests........ -- -- (19,335) (1) -- -- -- -- -- -- -- Issuance of preferred and common stock for cash, PCS licenses and AT&T agreements....... 10,308,676 103 46,262,185 462 -- -- (86) -- -- -- -- Accretion of mandatorily redeemable preferred stock.. -- -- -- -- -- -- -- -- -- -- -- Non-cash issuance of restricted stock to employees........ -- -- 3,095,473 31 -- (10) -- -- -- -- -- Repurchase of common stock for cash............. -- -- -- -- -- 2 -- (552,474) -- -- -- Compensation expense related to restricted stock awards..... -- -- -- -- -- 1 -- -- -- -- -- ----------- ----- ----------- ----- -------- -------- ----- -------- ---- ---- -------- Balance, December 31, 1998......... 10,308,676 103 49,357,658 493 -- (7) (86) (552,474) -- -- -- Net loss......... -- -- -- -- -- -- -- -- -- -- -- Issuance of preferred stock and common stock for cash and PCS licenses......... 4,604,102 46 23,231,331 233 21,550 -- (105) -- -- -- -- Issuance of common stock in initial public offering......... -- -- 10,580,000 106 197,211 -- -- -- -- -- -- Costs associated with initial public offering.. -- -- -- -- (1,801) -- -- -- -- -- -- Deferred compensation expense related to stock option grants and restricted stock awards........... -- -- -- -- 73,049 (73,049) -- -- -- -- -- Compensation expense related to stock option grants and restricted stock awards........... -- -- -- -- -- 31,817 -- -- -- -- -- Non-cash issuance of restricted stock to employees........ -- -- 2,423,232 24 1,558 (1,573) -- 959,259 -- -- -- Repurchase of common stock for cash............. (1) 1 (406,785) -- -- -- Accretion of mandatorily redeemable preferred stock.. -- -- -- -- (24,124) -- -- -- -- -- -- ----------- ----- ----------- ----- -------- -------- ----- -------- ---- ---- -------- Balance, December 31, 1999......... 14,912,778 149 85,592,221 856 267,442 (42,811) (191) -- -- -- -- Comprehensive income: Net loss........ -- -- -- -- -- -- -- -- -- -- -- Unrealized holding gains, net............. -- -- -- -- -- -- -- -- -- 958 -- Issuance of common stock for PCS licenses..... -- -- 1,201,772 12 2,694 -- -- -- -- -- -- Deferred compensation in connection with Viper Wireless... -- -- -- -- 15,239 (15,239) -- -- -- -- -- Issuance of common stock for cash............. -- -- 2,245,000 22 41,847 -- -- -- -- -- -- Deferred compensation related to stock option grants and restricted stock awards........... -- -- -- -- 4,455 (4,455) -- -- -- -- -- Compensation expense related to stock option grants and restricted stock awards........... -- -- -- -- -- 34,762 -- -- -- -- -- Reduction in deferred compensation related to forfeitures...... -- -- -- -- (2,197) 2,197 -- -- -- -- -- Exercise of employee stock options.......... -- -- 67,866 1 -- -- -- -- -- -- -- Repurchase of common stock for cash............. -- -- (180,499) (2) (1,101) 1,101 -- 180,499 -- -- -- Accretion of mandatorily redeemable preferred stock.. -- -- -- -- (28,209) -- -- -- -- -- -- Receipt of common stock subscription receivable....... -- -- -- -- -- -- 191 -- -- -- -- Transfer of certain assets of TeleCorp PCS and the Company, net.............. -- -- -- -- -- -- -- -- -- -- (13,542) Exchange and issuance of shares with TeleCorp PCS..... (14,912,778) (149) (88,925,360) (889) 389,489 -- -- (180,499) -- -- -- ----------- ----- ----------- ----- -------- -------- ----- -------- ---- ---- -------- Balance December 31, 2000......... -- $ -- 1,000 $ -- $689,659 $(24,445) $ -- -- $-- $958 $(13,542) =========== ===== =========== ===== ======== ======== ===== ======== ==== ==== ======== Accumu- lated Deficit Total ---------- ---------- Balance, December 31, 1997......... $ (4,875) $ (4,874) Net loss......... (51,155) (51,155) Noncash redemption of equity interests........ -- (1) Issuance of preferred and common stock for cash, PCS licenses and AT&T agreements....... (383) 96 Accretion of mandatorily redeemable preferred stock.. (8,567) (8,567) Non-cash issuance of restricted stock to employees........ (21) -- Repurchase of common stock for cash............. (2) -- Compensation expense related to restricted stock awards..... -- 1 ---------- ---------- Balance, December 31, 1998......... (65,003) (64,500) Net loss......... (250,996) (250,996) Issuance of preferred stock and common stock for cash and PCS licenses......... -- 21,724 Issuance of common stock in initial public offering......... -- 197,317 Costs associated with initial public offering.. -- (1,801) Deferred compensation expense related to stock option grants and restricted stock awards........... -- -- Compensation expense related to stock option grants and restricted stock awards........... -- 31,817 Non-cash issuance of restricted stock to employees........ -- 9 Repurchase of common stock for cash............. -- -- Accretion of mandatorily redeemable preferred stock.. -- (24,124) ---------- ---------- Balance, December 31, 1999......... (315,999) (90,554) Comprehensive income: Net loss........ (16,787) (16,787) Unrealized holding gains, net............. -- 958 Issuance of common stock for PCS licenses..... -- 2,706 Deferred compensation in connection with Viper Wireless... -- -- Issuance of common stock for cash............. -- 41,869 Deferred compensation related to stock option grants and restricted stock awards........... -- -- Compensation expense related to stock option grants and restricted stock awards........... -- 34,762 Reduction in deferred compensation related to forfeitures...... -- -- Exercise of employee stock options.......... -- 1 Repurchase of common stock for cash............. -- (2) Accretion of mandatorily redeemable preferred stock.. -- (28,209) Receipt of common stock subscription receivable....... -- 191 Transfer of certain assets of TeleCorp PCS and the Company, net.............. -- (13,542) Exchange and issuance of shares with TeleCorp PCS..... -- 388,451 ---------- ---------- Balance December 31, 2000......... $(332,786) $ 319,844 ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. F-5 TELECORP WIRELESS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS ($ in thousands except per share data)
For the year ended December 31, ------------------------------ 1998 1999 2000 --------- --------- -------- Cash flows from operating activities: Net loss..................................... $ (51,155) $(250,996) $(16,787) Adjustments to reconcile net loss to net cash used in operating activities: Non-cash gain on disposal of New England assets...................................... -- -- (330,756) Depreciation and amortization................ 1,584 55,110 119,750 Non-cash compensation expense related to stock option grants and restricted stock awards...................................... 2 31,817 34,820 Non-cash interest expense.................... 1,182 32,718 49,562 Bad debt expense............................. -- 2,962 12,089 Non-cash general and administrative expense charge by affiliates........................ 197 -- -- Changes in cash flow from operations resulting from changes in assets and liabilities: Accounts receivable.......................... -- (23,581) (21,211) Inventory.................................... (778) (15,024) (7,878) Prepaid expenses and other current assets.... (3,331) (424) (5,196) Other assets................................. (1,184) (1,123) (3,928) Accounts payable............................. 11,586 24,808 6,916 Accrued expenses............................. 9,145 17,831 20,968 Accrued interest............................. 2,046 (3,104) 24,414 Deferred revenue............................. -- 1,709 (21) --------- --------- -------- Net cash used in operating activities....... (30,706) (127,297) (117,258) --------- --------- -------- Cash flows from investing activities: Expenditures for property and equipment...... (107,542) (298,506) (338,101) Expenditures for property and equipment-- Black Label Wireless, Inc................... -- -- (27,206) Purchase of short-term investments........... -- -- (134,663) Proceeds from the sale of short-term investments................................. -- -- 102,778 Capitalized interest and rent on wireless network..................................... (227) (5,317) (5,208) Proceeds from the sale of property and equipment................................... -- -- 930 Expenditures for microwave relocation........ (3,340) (5,654) (6,018) Purchase of PCS licenses..................... (21,000) (114,238) (66,771) Expenditures for acquisition of licenses-- Black Label Wireless, Inc................... -- -- (36,803) FCC deposit.................................. -- -- (12,368) Partial refund of deposit on PCS licenses.... -- -- 9,607 Purchase of intangibles--AT&T agreements..... -- (17,310) -- Payment of Tritel acquisition costs.......... -- -- (13,330) --------- --------- -------- Net cash used in investing activities....... (132,109) (441,025) (527,153) --------- --------- -------- Cash flows from financing activities: Proceeds from sale of mandatorily redeemable preferred stock............................. 26,661 70,323 -- Receipt of preferred and common stock subscription receivable..................... -- 9,414 37,650 Direct issuance costs from sale of mandatorily redeemable preferred stock...... (1,027) (2,500) -- Proceeds from sale of common stock and series F preferred stock........................... 38 21,724 41,869 Proceeds from long-term debt................. 257,492 407,635 550,000 Proceeds associated with initial public offering.................................... -- 197,317 -- Direct issuance cost from the initial public offering.................................... -- (1,801) -- Proceeds from exchange transaction with AT&T Wireless.................................... -- -- 80,000 Payments on long term debt................... (2,073) (50,451) (1,366) Payments of deferred financing costs......... (9,110) (12,742) (16,050) Proceeds from long-term debt--Black Label Wireless, Inc............................... -- -- 63,978 Payment on Black Label long-term debt........ -- -- (65,242) --------- --------- -------- Net cash provided by financing activities... 271,981 638,919 690,839 --------- --------- -------- Net increase in cash and cash equivalents..... 109,166 70,597 46,428 Cash and cash equivalents at the beginning of period....................................... 2,567 111,733 182,330 --------- --------- -------- Cash and cash equivalents at the end of period....................................... $ 111,733 $ 182,330 $228,758 ========= ========= ========
The accompanying notes are an integral part of these consolidated financial statements. F-6 TELECORP WIRELESS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS--(Continued) ($ in thousands except per share data)
For the year ended December 31, ------------------------------- 1998 1999 2000 ---------- -------------------- Supplemental disclosure of cash flow Information: Cash paid for income taxes.................... $ -- $ -- $ -- Cash paid for interest........................ 9,786 24,342 27,504 Supplemental disclosure of non-cash investing and financing activities: Network under development and microwave relocation costs included in accounts payable and accrued expenses......................... 98,092 32,424 110,802 Issuance of mandatorily redeemable preferred stock and preferred stock in exchange for PCS licenses and AT&T agreements................. 100,900 2,674 -- Issuance of mandatorily redeemable preferred stock and common stock in exchange for stock subscriptions receivable..................... 76,000 27,191 -- U.S. Government financing of PCS licenses..... -- 11,551 56,434 Discount on U.S. Government financing......... -- 1,631 2,298 Conversion of notes payable to stockholders into preferred stock......................... 25,300 -- -- Capitalized interest.......................... 2,055 5,409 4,412 Non-cash acquisition of PCS licenses and operating agreements in connection with the contribution and exchange agreement.......... $ -- $ -- $ 564,658
The accompanying notes are an integral part of these consolidated financial statements. F-7 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ in thousands except per share data) 1. Organization and Business TeleCorp Holding Corp., Inc. (TeleCorp Holding) was incorporated in the State of Delaware on July 29, 1996 (date of inception). TeleCorp Holding was formed to participate in the Federal Communications Commission's (FCC) Auction of F-Block Personal Communications Services licenses in April 1997. TeleCorp Holding successfully obtained licenses in the New Orleans, Memphis, Beaumont, Little Rock, Houston, Tampa, Melbourne and Orlando Basic Trading Areas (BTAs). TeleCorp Holding qualified as a Designated Entity and Very Small Business under Part 24 of the rules of the FCC applicable to broadband PCS. TeleCorp PCS, Inc. was incorporated in the State of Delaware on November 14, 1997 by the controlling stockholders of TeleCorp Holding. Upon completion of the 1998 AT&T transaction, TeleCorp Holding became a wholly-owned subsidiary of TeleCorp PCS, Inc. In anticipation of the acquisition of Tritel, Inc. (Tritel) by TeleCorp PCS, Inc., a new holding company, TeleCorp-Tritel Holding Company (Holding Company), was formed in accordance with the Agreement and Plan of Reorganization and Contribution, as amended, dated as of February 28, 2000, among TeleCorp PCS, Inc., Tritel and AT&T Wireless Services, Inc. On November 13, 2000, each of TeleCorp PCS, Inc. and Tritel merged with newly formed wholly-owned subsidiaries of Holding Company. At that time, Holding Company was renamed TeleCorp PCS, Inc. (TeleCorp PCS) and the newly formed wholly-owned subsidiary was merged with and renamed TeleCorp Wireless, Inc. (TeleCorp Wireless). In accordance with the terms of the merger agreement, all of the capital stock of TeleCorp Wireless and Tritel was converted into the right to receive capital stock in TeleCorp PCS. As a result of the merger, TeleCorp PCS is controlled by the former holders of the voting preference common stock of TeleCorp Wireless, namely, Gerald T. Vento and Thomas H. Sullivan and TeleCorp Wireless and Tritel are both wholly-owned subsidiaries of TeleCorp Wireless. TeleCorp Wireless is hereafter referred to as the Company. The Company is an AT&T Wireless affiliate in the United States, providing digital wireless personal communications services, or PCS, to a licensed service area covering approximately 21.3 million people. As of December 31, 2000, the Company had launched service in 34 markets having approximately 12.1 million people and representing approximately 57% of the population where the Company holds licenses in the United States and Puerto Rico. As of December 31, 2000, the Company had more than 460,000 customers. Together with Tritel and Triton PCS, Inc., another AT&T Wireless affiliate, the Company operates under a common regional brand name, SunCom(R). The markets in which the Company provides coverage encompass a contiguous territory (other than Puerto Rico) including the following eight of the 100 largest metropolitan areas in the United States and Puerto Rico: New Orleans, Louisiana; Memphis, Tennessee; Little Rock, Arkansas; Milwaukee and Madison, Wisconsin; Des Moines, Iowa; and San Juan and Mayaguez, Puerto Rico. 2. Black Label Wireless, Inc. On July 14, 2000, Black Label Wireless, Inc. (Black Label), a company wholly owned by Messrs. Sullivan and Vento, entered into a credit agreement with Lucent Technologies, Inc. (Lucent), under which Lucent agreed to lend Black Label up to $175,000. Black Label used the proceeds of loans under the credit agreement to develop wireless networks related to the licenses being acquired by the Company in the contribution and the exchange agreement with AT&T Wireless. Upon consummation of the merger, Black Label transferred its assets to the Company and the Company, in turn, assumed and repaid Black Label's indebtedness to Lucent. Black Label and Lucent agreed to reduce Lucent's commitment to Black Label to $100,000 following the merger. F-8 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) 3. Summary of Significant Accounting Policies Basis of Presentation TeleCorp Holding was formed to explore various business opportunities in the wireless telecommunications industry. The Company was formed to continue the activity of TeleCorp Holding through its strategic alliance with AT&T. The financial statements as of and for the year ended December 31, 1998 and for all periods thereafter, include the historical financial information of TeleCorp Holding Corp., Inc. and the Company. TeleCorp Holding and the Company were considered companies under common control, due to common ownership prior to finalization of the AT&T transaction, certain financing relationships and the similar nature of business activities. Risks and Uncertainties 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 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. Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, which include, among others TeleCorp Communications, Inc., TeleCorp LLC and TeleCorp Holding. All intercompany accounts and transactions have been eliminated in consolidation. Fair Value of Financial Instruments The Company believes that the carrying amount of its financial instruments approximates 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 concentrations of credit risk consist primarily of cash, cash equivalents, short-term investments and accounts receivable. The Company sells products and services to various customers throughout many regions in the United States and Puerto Rico. The Company routinely assesses the strength of its customers and maintains allowances for anticipated losses. For the years ended December 31, 1998, 1999 and 2000, no one customer accounted for 10% or more of total revenues or accounts receivable. F-9 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) 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. Short-term investments Short-term investments consist of high-grade commercial paper with original maturities greater than three months but less than one year. Management determines the appropriate classification of its investments at the time of purchase. Investments for which the Company does not have the intent or ability to hold to maturity are classified as available-for-sale. Available-for-sale securities are carried at fair value, with the unrealized gains and losses, net of tax, reported as a component of accumulated other comprehensive income in the stockholders' equity. Cost of securities sold is determined on a specific identification basis. Inventory Inventory, consisting of handsets and accessories, is valued at the lower of average cost or market and is recorded net of an allowance for obsolescence, if required. Property and Equipment and Network Under Development 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............................... 3 to 15 years Internal use software.................. 3 years Furniture, fixtures and office equipment............................. 5 years 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 wireless network for use. Internal and external costs incurred to develop the Company's billing, financial systems and other internal applications during the application development stage are capitalized as internal use software. All costs incurred prior to the application development stage are expensed as incurred. Training costs and all post implementation internal and external costs are expensed as incurred. 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. 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 and concluded when the wireless networks were ready for intended use. 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. F-10 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) 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 capacity. Microwave relocation costs include the actual and estimated costs incurred to relocate the Incumbent's microwave links affecting the Company's licensed frequencies. The Company begins amortizing the cost of the PCS licenses, microwave relocation costs, and capitalized interest when PCS service commences within the related Basic Trading Area or BTA. Amortization is calculated using the straight-line method over 40 years. Intangible Assets--AT&T Agreements The AT&T Agreements consist of the fair value of various agreements with AT&T 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. Long-Lived Assets The Company periodically evaluates the recoverability of the carrying value of its long-lived assets. 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. An impairment loss is recognized when the carrying amount of the assets exceeds the fair value of the asset. The fair value of the asset is determined based on quoted market prices in an active market, if available, the present value of estimated expected future cash flows using a discount rate commensurate with the risks involved, option pricing models, matrix pricing, appraisals and fundamental analysis. No such impairment losses have been recognized to date. Interest Capitalization The Company capitalizes interest expense related to the construction or purchase of certain assets including its Federal Communications Commission licenses which constitute activities preliminary to the commencement of the planned principal operations. Interest capitalized in the years ended December 31, 1998, 1999, and 2000 was $2,055, $5,409 and $4,412, respectively. Deferred Financing Costs Deferred finance costs are capitalized and amortized as a component of interest expense over the term of the related debt. Restricted Cash The Company includes restricted cash related to an acquisition holdback liability as a component of other assets. The balance of restricted cash for the years ended December 31, 1999 and 2000 was $0 and $3,510, respectively. Revenue Recognition The Company earns revenue by providing wireless mobility services to both its subscribers and subscribers of other wireless carriers traveling in the Company's service area, as well as sale of equipment and accessories. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, prices are fixed and determinable and collection is reasonably assured. F-11 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) Wireless mobility services revenue consists of monthly recurring and non- recurring charges for activation, local, long distance, roaming and airtime used in excess of pre-subscribed usage. Generally, access fees, airtime roaming and long distance charges are billed monthly and are recognized when service is provided. Prepaid service revenue is collected in advance, recorded as deferred revenue, and recognized as service is provided. Roaming revenue consists 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 is recognized when the service is provided. Activation fees are deferred and recognized over the expected customer life which approximates four years. Direct incremental costs of activation are deferred, to the extent of the amount of deferred activation revenue, and amortized to expense over the expected customer relationship period. Any losses on activation are recognized immediately since the Company chooses not to enforce its customer contracts for the full term. Equipment revenue, consisting of sales of handsets and accessories, is recognized upon delivery to the customer and when any related future obligations is no longer significant. Equipment revenue is a separate element since the handsets and accessories can be used on other wireless providers' networks and pricing information is readily available. The Company recognizes the cost of the equipment upon recognition of the equipment revenue. The cost of the handset is, and is expected to remain, higher than the sales price to a customer. The loss on the sale of equipment is recognized upon recognition of the revenue. The Company records as a cost of revenue an amount equal to the revenue on equipment sales. The Company records the excess costs of handsets as a selling and marketing expense. Equipment revenue is recognized upon delivery of the equipment to the customer and when future obligations are no longer significant. In December 1999, the SEC released Staff Accounting Bulletin Number 101 (SAB 101), "Revenue Recognition in Financial Statements." The bulletin establishes more clearly defined revenue recognition criteria than previously existing accounting pronouncements, and specifically addresses revenue recognition requirements for nonrefundable fees, such as activation fees, collected by a company upon entering into an arrangement with a customer, such as an arrangement to provide telecommunications services. The adoption of SAB 101 did not have a material impact on the Company's operations or financial position for the year ended December 31, 2000. Advertising Costs The Company expenses production costs of print, radio and television advertisements and other advertising costs as such costs are incurred. Advertising expense for the years ended December 31, 1998, 1999 and 2000 was $1,533, $16,158 and $16,124, respectively. Income Taxes The Company accounts for income taxes in accordance with the liability method. Deferred income taxes are recognized for tax consequences in future years for differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end, based on enacted laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce net deferred tax assets to the amount expected to be realized. The provision for income taxes consists of the current tax provision and the change during the period in deferred tax assets and liabilities. Accounting for Stock-Based Compensation SFAS No. 123, "Accounting for Stock-Based Compensation", requires disclosure of the fair value method of accounting for stock options and other equity instruments. Under the fair value method, compensation cost is F-12 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) measured at grant date based on the fair value of the award and is recognized over the service period. The Company has chosen, under provisions of SFAS No. 123, to continue to account for employee stock-based compensation under Accounting Principles Board (APB) No. 25, "Accounting for Stock Issued to Employees". The Company periodically issues restricted stock awards and stock option grants to its employees. Upon reaching a measurement date, the Company records deferred compensation equal to the difference between the strike price and the estimated fair value of the stock award. Deferred compensation is amortized to compensation expense over the related vesting period. 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 Midwestern United States and Puerto Rico. The Company operates in various MTAs including New Orleans, Louisiana, Memphis, Tennessee, Little Rock, Arkansas, and San Juan, Puerto Rico. Reclassifications Certain amounts in the 1998 and 1999 consolidated financial statements have been reclassified to conform with the presentations of the consolidated financial statements as of and for the year ended December 31, 2000. Derivative Financial Instruments The Company uses interest rate swaps to hedge the effect of fluctuations in interest rates from its Senior Credit Facility. 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 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 the hedged transaction 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. The fair value of the interest rate swaps is measured as the amount at which the swaps could be settled based on estimates obtained from dealers. The Company has adopted the Statement of Financial Accounting Standards No. 133 (SFAS 133) "Accounting for Derivative Instruments and Hedging Activities" effective on January 1, 2001. The effect of the adoption was not material. 4. Accounts Receivable Accounts receivable consists of the following:
December 31, ---------------- 1999 2000 ------- ------- Accounts receivable........................................ $26,203 $48,502 Allowance for doubtful accounts............................ (2,622) (3,710) ------- ------- $23,581 $44,792 ======= =======
Bad debt expense as a component of general and administrative expense for the years ended December 31, 1998, 1999 and 2000 was $0, $2,962, and $12,089, respectively. F-13 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) 5. Inventory Inventory consists of the following:
December 31, --------------- 1999 2000 ------- ------- Handsets..................................................... $15,090 $22,770 Accessories.................................................. 712 910 ------- ------- Total inventory............................................ $15,802 $23,680 ======= =======
6. Property and Equipment Property and equipment consists of the following:
December 31, ------------------- 1999 2000 -------- --------- Wireless network........................................ $364,491 $ 620,868 Network under development............................... 21,758 69,567 Computer equipment...................................... 16,888 30,304 Internal use software................................... 21,648 34,032 Leasehold improvements.................................. 12,011 16,885 Furniture, fixtures, office equipment and other......... 10,904 17,919 -------- --------- 447,700 789,575 Accumulated depreciation................................ (47,250) (134,357) -------- --------- $400,450 $ 655,218 ======== =========
Depreciation expense for the years ended December 31, 1998, 1999 and 2000 was $811, $46,428, and $104,532, respectively. 7. PCS Licenses and Microwave Relocation Costs PCS licenses, microwave relocation costs, and capitalized interest consist of the following:
December 31, ------------------ 1999 2000 -------- -------- PCS licenses............................................. $221,650 $622,196 Microwave relocation costs............................... 47,835 52,334 Capitalized interest..................................... 1,005 1,881 -------- -------- 270,490 676,411 Accumulated amortization................................. (2,808) (7,939) -------- -------- $267,682 $668,472 ======== ========
Amortization expense related to PCS licenses, its related capitalized interest, and microwave relocation costs for the years ended December 31, 1998, 1999 and 2000 was $0, $2,808 and $5,782, respectively. F-14 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) 8. Intangible Assets--AT&T Agreements, Net The AT&T operating agreement intangible assets consist of the following:
December 31, ----------------- 1999 2000 ------- -------- Network membership license agreement...................... $14,388 $148,727 AT&T exclusivity.......................................... 21,880 -- Intercarrier roamer services agreement.................... 4,000 33,528 Long distance agreement................................... 4,100 3,553 ------- -------- 44,368 185,808 Accumulated amortization.................................. (6,460) (11,033) ------- -------- $37,908 $174,775 ======= ========
Amortization expense related to the AT&T operating agreements for the years ended December 31, 1998, 1999 and 2000 was $773, $5,874 and $9,436 respectively. 9. Accrued Expenses and Other Accrued expenses consist of the following:
December 31, ---------------- 1999 2000 ------- -------- Property and equipment..................................... $32,725 $ 63,723 Sales and property taxes................................... 13,732 32,653 Payroll and related liabilities............................ 8,024 12,834 Accrued operational expenses............................... 3,020 38,705 Other liabilities.......................................... 1,017 8,635 ------- -------- 58,518 156,550 Less: non-current portion.................................. 6,541 6,320 ------- -------- $51,977 $150,230 ======= ========
10. Long-term Debt Long-term debt consists of the following:
December 31, ------------------- 1999 2000 -------- ---------- Senior credit facilities................................ $225,000 $ 325,000 Senior subordinated notes............................... -- 450,000 Senior subordinated discount notes...................... 354,291 396,572 Vendor financing........................................ 43,504 47,443 U.S. Government financing............................... 17,776 71,072 -------- ---------- 640,571 1,290,087 Less: current portion................................... 1,361 1,459 -------- ---------- $639,210 $1,288,628 ======== ==========
F-15 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) Senior Credit Facilities 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, in the aggregate, consisting of (i) up to $150,000 in revolving loans (the Senior Revolving Credit Facility) with a maturity date of January 2007, (ii) a $150,000 term loan (the Tranche A Term Loan) with a maturity date of January 2007, and (iii) a $225,000 term loan (the Tranche B Term Loan) with a maturity date of January 2008. In October 1999, the Company entered into amendments to increase the amount of credit available to $560,000. A total of $100,000 of indebtedness from the Tranche A Term Loan was outstanding at December 31, 2000. No amounts were drawn under the Tranche A Term Loan during 1999. A total of $225,000 of indebtedness from the Tranche B Term Loan was outstanding as of December 31, 1999 and 2000. The Senior Credit Facility also provides for an uncommitted $40,000 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, $2,500; next four, $6,250; last eight, $7,500. Quarterly principal repayments for the Tranche B Term Loan are as follows: first 18, $562, last four, $53,721. 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 Revolving Credit Facility will be permanently reduced on a quarterly basis through April 2007 as follows: first four reductions, $12,500; last four reductions $25,000. 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 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, 1999, the interest rate applicable to the Tranche B Term Loan was 9.12%. At December 31, 2000, the interest rates applicable to Tranche A and Tranche B Term Loans were 9.23% and 9.54%, respectively. 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 $3,817 and $2,872, for the years ended December 31, 1999 and 2000, respectively, 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, 1999 and 2000, the Company hedged 100% of its outstanding indebtedness of $225,000 to take advantage of favorable interest rate swaps. The six outstanding interest rate swap contracts fix the annual interest rates from 5.20% to 5.26%. The contracts mature in September of 2003. F-16 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) Initially, borrowings under the Senior Credit Facility are subject to a maximum Senior Debt to Total Capital ratio, as defined, of 50%. This ratio has been increased to 55% because certain specified operating benchmarks have been 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. 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. Senior Subordinated Notes On July 14, 2000, the Company completed the issuance and sale of 10 5/8% Senior Subordinated Notes (the Subordinated Notes) with an aggregate principal amount of $450,000. The Subordinated Notes mature July 15, 2010 and the Company is required to pay interest semi-annually beginning on January 15, 2001. Offering expenses consisting of underwriting, printing, legal and accounting fees totaled approximately $13,000, and have been recorded as deferred finance costs that will be amortized over the life of the Subordinated Notes. The Subordinated Notes are subject to optional redemption, allowing the Company on or after July 15, 2005, to redeem some or all of the Subordinated Notes together with accrued and unpaid interest at redemption prices. The Company also has the option until July 15, 2003, to redeem up to 35% of the original aggregate principal amount of these notes with the net proceeds of certain types of qualified equity offerings at a redemption price equal to 110.625% of the principal amount as long as at least 65% of the original aggregate principal amount of these notes remains outstanding immediately after redemption. If the Company experiences a change of control at any time on or prior to July 15, 2005, the Company has the option to redeem all of the Subordinated Notes at par plus a premium. If the Company has not previously redeemed the Subordinated Notes and if the Company experiences a change in control after July 15, 2005, the note holders may require the Company to make an offer to repurchase all of the Subordinated Notes, at a price equal to 101% of the principal amount, plus accrued and unpaid interest, if any, to the date of repurchase. The Company is required to comply with certain financial covenants outlined in the indenture agreement. The Subordinated Notes are not collateralized. The Subordinated Notes are subordinate to all of the Company's existing and future senior debt, rank equally with all existing senior subordinated debt and rank senior to all existing and future subordinated debt. The Subordinated Notes are guaranteed by the Company's wholly owned subsidiary, TeleCorp Communications, Inc. In August 2000, the Company registered the Notes with the Securities and Exchange Commission to become publicly traded. Senior Subordinated Discount Notes On April 23, 1999, the Company completed the issuance and sale of 11 5/8% Senior Subordinated Discount Notes (the Discount Notes) with an aggregate principal amount at maturity of $575,000. The total gross proceeds from the sale of the Notes were $327,635. Offering expenses consisting of underwriting, printing, F-17 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) legal and accounting fees totaled $10,999. The Discount Notes mature April 15, 2009, unless previously redeemed by the Company. As interest accrues, it will be added to the principal as an increase to interest expense and the carrying value of the Discount Notes until April 15, 2004. The Company will begin paying interest semi-annually beginning October 15, 2004. The Discount Notes are not collateralized. The Discount 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 Discount Notes are guaranteed by the Company's wholly owned subsidiary, TeleCorp Communications, Inc. (see Note 19). As of December 31, 2000 accrued interest added to the principal was $68,937. In October 1999, the Company registered the Notes with the Securities and Exchange Commission to become publicly traded securities. U.S. Government financing As of December 31, 1999 and 2000, the Company owed the U.S. Government $20,247 and $75,294, less a discount of $2,471 and $4,222, respectively, for the acquisition of PCS licenses. The terms of the notes related to the PCS licenses in New Orleans, Memphis, Beaumont and Little Rock obtained during the 1997 F-Block auction 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. During the year ended December 31, 1999, the Company completed the acquisition of additional PCS licenses from Digital PCS, LLC and Wireless 2000, Inc. As part of these acquisitions, the Company assumed additional U.S. Government financing with the FCC amounting to $11,551, less a discount of $1,631. The terms of the notes include an interest rate of 6.125% for notes assumed from Digital PCS, LLC and 7.00% for notes assumed from Wireless 2000, Inc., quarterly interest payments for a two-year period and then quarterly principal and interest payments for the remaining eight years. The notes related to the purchases of licenses during 1997, 1998 and 1999 were discounted using management's best estimate of the prevailing market interest rate at the time of issuance of 10.25%. In April 2000, the Company acquired PCS licenses in the Lake Charles, Louisiana basic trading area from Gulf Telecom, LLC (Gulf Telecom). As part of the consideration for the PCS licenses, the Company assumed $2,433, less a discount of $401, in FCC debt related to the licenses. The terms of the notes include an interest rate of 7.0%, quarterly interest payments which commenced in July 2000 and continue through October 2002, followed by interest and principal payments for the remaining four years. The notes were discounted using management's estimate of the Company's incremental borrowing rate at the time of issuance of 11.8%. As part of Contribution and Exchange Agreement with AT&T Wireless, the Company acquired PCS licenses in the Milwaukee, Wisconsin basic trading area from Indus, Inc. As part of this transaction, the Company assumed additional U.S. Government financing with the FCC of $54,001, less a discount of $1,897. The terms of the notes include quarterly interest payments which commence in January 2001 and continue through October 2002 after which quarterly principal and interest payments are due until September 2006. The notes were discounted using management's estimate of the incremental borrowing rate at the time of issuance of 8.0%. Vendor Financing In May 1998, the Company entered into a Note Purchase Agreement (the Lucent Note Agreement) with Lucent Technologies, Inc. (Lucent) which provides for the issuance of increasing rate 8.5% Series A (the Series A Notes) and 10.0% Series B (the Series B Notes) junior subordinated notes (the Lucent Subordinated Notes) F-18 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) with an aggregate face value of $80,000. The aggregate face value of the Lucent Subordinated Notes shall decrease dollar for dollar, upon the occurrence of certain events as defined in the Lucent Note Agreement. The proceeds of the Lucent Subordinated Notes are to be used to develop the Company's network in certain designated areas. As of December 31, 1999 and 2000, the Company had $43,504 and $47,443, respectively outstanding under the Series A Notes. During the year ended December 31, 1999, the Company borrowed and repaid $40,000 on the Lucent Series B Notes plus $228 of accrued interest. 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 interest rate on each note will increase by 1.5% per annum beginning January 1, 2001. However, the interest rate applicable to the Subordinated Notes shall not exceed 12.125%. 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 Senior Subordinated Discount Notes, in additional Series A and Series B Notes. As of December 31, 1999 and 2000, interest accrued under the Series A Notes of $3,504 and $7,443, respectively has 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, 1999 and 2000 are held by Lucent. The Company must comply with certain operating covenants. The amounts outstanding under these series A notes is subject to mandatory prepayment in an amount equal to not less than 50% of the excess over $198,000 in net proceeds TeleCorp Wireless receives from an equity offering other than the issuance of capital stock used concurrently to acquire assets or stock of a related business. This $198,000 threshold has been met so all additional proceeds of equity offerings (unless used concurrently to acquire stock or assets of a related business) must be used for prepayment of the series A notes. In October 1999, the Company entered into an amended and restated note purchase agreement with Lucent for the issuance of up to $12,500 of new series A notes and up to $12,500 of new series B notes under a vendor expansion facility in connection with prior acquisitions of licenses in certain markets. The terms of these notes issued under these facilities are identical to the original Lucent series A and series B notes. In addition, pursuant to the amended and restated note purchase agreement, Lucent has agreed to make available up to an additional $50,000 of new vendor financing not to exceed an amount equal to 30% of the value of equipment, software and services provided by Lucent in connection with any additional markets the Company acquires. This $50,000 of availability is subject to a reduction up to $20,000 on a dollar for dollar basis of any additional amounts Lucent otherwise lends to the Company for such purposes under the Company's senior credit facilities. Any notes purchased under this facility would be divided equally between Lucent series A and series B notes. The terms of Lucent series A and series B notes issued under these expansion facilities would be identical to the terms of the original Lucent series A and series B notes as amended, including a maturity date of October 23, 2009. F-19 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) In addition, any Lucent series B notes issued under the vendor expansion facility will mature 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 any private placement of notes issued to finance any additional markets and borrowings under the senior credit facilities or any replacement facility. Black Label Wireless, Inc. Credit Agreement On July 14, 2000, Black Label Wireless, Inc. (Black Label), a company wholly-owned by Messrs. Sullivan and Vento, entered into a credit agreement with Lucent, under which Lucent agreed to lend Black Label up to $175,000. Black Label used the proceeds of loans under the credit agreement to develop network related to the licenses acquired by the Company in the contribution and exchange agreements. The obligations under the Black Label credit agreement must be repaid by July 14, 2001. Upon consummation of the Merger with Tritel, Black Label transferred its assets to the Company and the Company in turn, assumed and repaid Black Label's indebtedness to Lucent. Black Label and Lucent agreed to reduce Lucent's commitment to Black Label to $100,000. During the year ended December 31, 2000, the Company drew and repaid $63,978 plus accrued interest of $1,264 under the credit agreement. As of December 31, 2000, $0 was outstanding under the Black Label credit agreement. Deferred financing costs In connection with entering into the senior credit facilities and the senior-subordinated discount notes, the Company incurred certain debt issuance costs. The Company capitalized debt issuance costs of $12,742 and $16,050, during the years ended December 31, 1999 and 2000, respectively. The financing costs are being amortized using the straight-line method over the term of the related debt. For the years ended December 31, 1998, 1999 and 2000, the Company recorded interest expense related to the amortization of the deferred financing costs of $525, $1,750 and $2,750, respectively. Future minimum principal payments As of December 31, 2000, minimum required annual principal repayment (undiscounted) under all of the Company's outstanding debt obligations were as follows: For the year ending December 31, 2001........................................................... $ 1,459 2002........................................................... 7,675 2003........................................................... 28,232 2004........................................................... 44,367 2005........................................................... 50,582 Thereafter..................................................... 1,365,699 ---------- Total........................................................ $1,498,014 ==========
11. Initial AT&T Transaction In January 1998, the Company entered into a Securities Purchase Agreement (the Securities Purchase Agreement) with AT&T Wireless PCS, Inc. and TWR Cellular, Inc. (both subsidiaries of AT&T Corporation and collectively referred to as AT&T PCS), the stockholders of TeleCorp Holding and various venture capital investment firms (the cash equity investors). The Securities Purchase Agreement allows the Company to be a provider of wireless mobility services in its licensed regions utilizing the AT&T brand name. Upon the receipt of FCC approval in July 1998, the Company finalized the transaction contemplated in the Securities Purchase Agreement (the AT&T Transaction). As a result, the Company (i) issued preferred stock F-20 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) and paid AT&T $21,000 in exchange for 20 MHz PCS licenses with a fair value of $94,850 and certain operating agreements with AT&T for exclusivity, network membership, long distance and roaming with a fair value of $27,050 (ii) issued preferred and common stock for 100% of the outstanding ownership interests in TeleCorp Holding, which includes 10 MHz PCS licenses which was recorded at historical cost; and (iii) issued preferred and common stock for a cash commitment from the Cash Equity Investors of $128,000 to be paid over a three year term plus an additional $5,000 upon the closing of the Digital PCS, Inc. transaction. 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 a ten year period. The Company determined the fair value of this agreement to be $11,870. 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. The Company determined the fair value of this agreement to be $8,480. Intercarrier Roamer Services Agreement: AT&T and the Company have entered into a twenty-year reciprocal roaming agreement providing that their customers who own tri-mode phones will roam on the other's mobile wireless systems at commercially reasonable rates to the extent commercially and technologically feasible. 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. The Company has determined the value of this roaming agreement to be $3,500. 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 $3,200. 12. Acquisition of Tritel and AT&T Contribution and Exchange On November 13, 2000, TeleCorp PCS completed its acquisition of Tritel through a merger of each of the Company and Tritel with wholly-owned subsidiaries of TeleCorp PCS. The Company and Tritel are the surviving entities of the merger. The merger resulted in the exchange of 100% of the outstanding common and preferred stock of the Company and Tritel for common and preferred stock of TeleCorp PCS. TeleCorp PCS is controlled by its voting preference common stockholders. Both the Company and Tritel are subsidiaries of TeleCorp PCS. Immediately after the merger of TeleCorp Wireless and Tritel with subsidiaries of TeleCorp PCS, AT&T Wireless had an ownership interest of approximately 23% in TeleCorp PCS. F-21 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) In connection with TeleCorp PCS's acquisition of Tritel, AT&T agreed to contribute certain assets and rights to the Company and TeleCorp PCS. This contribution resulted in TeleCorp PCS acquiring various assets in exchange for the consideration issued as follows: TeleCorp PCS acquired: . $20,000 cash from AT&T Wireless Services, Inc. (AT&T Wireless Services); . All of the common and preferred stock of Indus, Inc. (Indus) which was transferred to the Company through an inter-company transfer; . The right to acquire additional wireless properties and assets from Airadigm Communications Inc. (Airadigm) which was transferred to the Company through an inter-company transfer; and . The two year extension and expansion of the AT&T network membership license agreement to cover all people in the Company's markets which was transferred to the Company through an inter-company transfer. Consideration issued: . 9,272,740 shares of Class A common stock of TeleCorp PCS to AT&T Wireless Services. Separately, AT&T Wireless and the Company consummated on November 13, 2000 the Asset Exchange Agreement pursuant to which the Company agreed to exchange certain assets with AT&T Wireless, among other consideration. The Company received certain consideration in exchange for the assets as follows: The Company acquired: . $80,000 in cash from AT&T Wireless; . AT&T Wireless's existing 10 MHz PCS licenses in the areas covering part of the Wisconsin market, in addition to adjacent licenses; . AT&T Wireless's existing 10 MHz PCS licenses in Fort Dodge and Waterloo, Iowa; and . PCS licenses from Polycell Communications, Inc. (Polycell), Clinton Communications, Inc., and ABC Wireless, LLC (ABC Wireless). Consideration issued: . The Company's New England assets to AT&T Wireless; and . Cash to Polycell and cash to ABC Wireless. Further, AT&T agreed to extend the term of the roaming agreement and to expand the geographic coverage of the AT&T operating agreements with the Company to include the new markets by amending the Company's existing agreements. In addition, the Company has granted AT&T Wireless a "right of first refusal" with respect to certain markets transferred by AT&T Wireless Services or AT&T Wireless, triggered in the event of a sale of the Company to a third party. These transactions were accounted for as an asset purchase and disposition and recorded at fair value except for the PCS licenses acquired from ABC and Polycell which were recorded at the historical costs of those companies since the licenses were acquired from companies under common control. The purchase price was determined based on cash paid, the fair value of the Class A common stock issued, and the fair value of the assets relinquished. The purchase price was proportionately allocated to the long-term assets acquired based F-22 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) on their estimated fair values. A gain of $330,756 was recognized to reflect the difference between the fair value of the New England assets disposed and their net book value of $87,924 as of November 13, 2000. The following table sets forth the summary of the fair value of consideration given and fair value of assets received in accordance with the contributions from AT&T and Asset Exchange agreements: Fair value of consideration given: Cash (Indus, ABC and Polycell)..................................... $ 56,146 Fair value of New England assets................................... 418,680 Assumed U.S. Government financing.................................. 52,105 Other assumed liabilities.......................................... 42,410 Due to TeleCorp PCS, Inc. ......................................... 75,632 -------- Total consideration.............................................. $644,973 ======== Fair value of assets acquired: Cash............................................................... $ 80,000 PCS licenses from AT&T Wireless.................................... 175,030 PCS licenses from Indus............................................ 211,610 PCS licenses from ABC Wireless..................................... 6,868 PCS licenses from Polycell......................................... 5,232 AT&T operating agreements.......................................... 165,918 Other assets from Indus............................................ 315 -------- Total fair value of assets acquired.............................. $644,973 ========
13. Due from TeleCorp PCS The Company records a due from TeleCorp PCS which results from the intercompany transfer of various assets. The due from TeleCorp PCS is recorded as a component of stockholder's equity as settlement is not expected in the foreseeable future. The due from TeleCorp PCS consists of the following as of December 31, 2000: Net book value of exclusivity agreement for Wireless's benefit transferred to TeleCorp PCS due to the exclusivity agreement being a component of the stockholders' agreement of TeleCorp PCS........................................................... $(16,500) Net assets issued to the Company contributed by TeleCorp PCS's consideration given in relation to the Merger, Contribution and Exchange Agreements....................................... 62,302 Amortization of the exclusivity agreement held by TeleCorp PCS for the benefit of and use by the Company..................... 198 Preferred stock subscription receivable transferred to TeleCorp PCS .......................................................... (59,542) --------- Total due from TeleCorp PCS.................................... $ (13,542) =========
The preferred stock subscription receivables were transferred to TeleCorp PCS in order for the receivable to follow the underlying equity instrument held at TeleCorp PCS. However, the receivables are contractually required to be paid directly to the Company by the pledged equity investors. As such, the Company's receipt of this receivable directly from the pledged equity investors will satisfy this receivable. F-23 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) 14. Acquisitions Completed Acquisitions On April 20, 1999, the Company completed its acquisition of 10 MHz PCS licenses covering the Baton Rouge, Houma, Hammond and Lafayette, Louisiana BTA's from Digital PCS, LLC. The total purchase price of $6,114 was comprised of $2,335 of mandatorily redeemable preferred stock and common stock of the Company, the assumption of U.S. Government financing with the FCC of $4,102 less a discount of $609, and $286 in cash as reimbursement to Digital PCS, LLC, for interest due to the FCC incurred prior to close and legal costs. The entire purchase price has been allocated to the PCS license. As a result of completing the transaction with Digital PCS, LLC, the Cash Equity Investors have irrevocably committed to contribute $5,000 in exchange for mandatorily redeemable preferred stock and common stock over a two year period from the close of this transaction. As of December 31, 2000 the Company had received $3,600 of the $5,000 commitment. On May 24, 1999, the Company sold mandatorily redeemable preferred stock and preferred stock to AT&T for $40,000. 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. The total purchase price of this asset acquisition was $99,694 in cash plus legal fees of $252. The purchase price has been allocated to the assets acquired, based upon their estimated fair value as follows: PCS licenses..................................................... $70,421 Intangible assets--AT&T Agreements............................... 17,310 Cell sites site acquisition, switching facility assets and other assets.......................................................... 9,015 Microwave relocation costs....................................... 3,200 ------- $99,946 =======
As a result of completing this transaction, the Company's available borrowings under the Lucent Note Agreement increased by $15,000 ($7,500 of Series A and $7,500 of Series B) and certain Cash Equity Investors committed $39,997 in cash in exchange for mandatorily redeemable preferred and common stock. The Cash Equity Investors cash commitment of $39,997 will be funded over a three-year period from the close of this transaction. As of December 31, 2000, the Company had received $17,999 of this cash commitment. As a part of obtaining this additional preferred and common stock financing, the Company paid $2,000 to a Cash Equity Investor upon the closing of the transaction. In addition, certain officers, the Chief Executive Officer and the Executive Vice President and Chief Financial Officer of the Company were issued fixed and variable awards of 5,318 and 2,380,536 restricted shares of mandatorily redeemable Series E preferred stock and Class A common stock, respectively, in exchange for their interest in Puerto Rico Acquisition Corporation. Puerto Rico Acquisition Corporation was a special purpose entity wholly-owned by the Company's Chief Executive Officer and Executive Vice President and Chief Financial Officer. The fixed awards typically vest over a five-year period. The estimated fair value of these shares has been recorded as deferred compensation and is being amortized over the related vesting periods. The variable awards vested based upon the completion of the Company's initial public offering. On June 2, 1999 the Company completed its acquisition of 15 MHz PCS licenses covering the Alexandria, Lake Charles and Monroe, Louisiana BTAs from Wireless 2000, Inc. The total purchase price of $7,448 was F-24 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) comprised of $371 of mandatorily redeemable preferred stock and common stock of the Company, the assumption of U.S. Government financing with the FCC of $7,449 less a discount of $1,022 and $650 in cash as reimbursement of microwave relocation costs and reimbursement of FCC interest and legal costs. The entire purchase price has been allocated to the PCS licenses acquired. 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. Viper was initially capitalized for $100 and was equally- owned by the Company's Chief Executive Officer and Executive Vice President and Chief Financial Officer. AT&T and certain of the Company's other stockholders have committed an aggregate of up to approximately $32,300 in exchange for additional shares of mandatorily redeemable preferred stock, Series F preferred stock and common stock of the Company. In order to participate in the reauction, the Company with funds contributed by AT&T and certain of the Company's other initial investors for additional shares of the Company's preferred and common stock paid the FCC an initial deposit of $17,819 on behalf of Viper. Simultaneously, the Company transferred this initial deposit to Viper in exchange for an 85% ownership interest which represented a 49.9% voting interest. As of December 31, 1999 the Company had received $32,300 of these commitments. On April 15, 1999, the FCC announced Viper was the high bidder for 15 MHz licenses in New Orleans, Houma and Alexandria, Louisiana, San Juan, Puerto Rico and Jackson, Tennessee and 30 MHz licenses in Beaumont, Texas. The total auction price was $32,286 plus legal fees of $47. During the year ended December 31, 1999, the FCC refunded $11,361 of the initial deposit; however, during the same period the Company was required to pay the FCC $11,059 as a final deposit on behalf of Viper. As of and for the year ended December 31, 1999, Viper had no financial activity other than its capitalization which includes the transfer of the initial deposit to Viper from the Company and the payment and refund of the deposit between Viper and the FCC. The Company made its final payment of $14,770 to the FCC on September 13, 1999 with respect to these licenses and received the remaining funding commitments from AT&T and the certain Cash Equity Investors on September 29, 1999. The Company received final regulatory approval of the license transfer from the FCC on September 9, 1999. The entire purchase price has been allocated to the PCS licenses acquired. On April 11, 2000 the Company completed its acquisition of the 15% of Viper that it did not already own from Mr. Vento and Mr. Sullivan in exchange for an aggregate of 323,372 shares of the Company's Class A common stock and 800 shares of its Series E preferred stock. In connection with the completion of the acquisition, the Company recognized compensation expense of $15,297 based on the fair value of the Class A common stock and Series E mandatorily redeemable preferred stock given to Mr. Vento and Mr. Sullivan at the closing date. On April 7, 2000, the Company completed its acquisition of TeleCorp LMDS, Inc. (TeleCorp LMDS) through an exchange of all of the outstanding stock of TeleCorp LMDS for 878,400 shares of the Company's Class A common stock valued at $45,896 on the closing date. TeleCorp LMDS had no operations and its only assets were local multipoint distribution service licenses. By acquiring TeleCorp LMDS, TeleCorp gained local multipoint distribution service licenses covering 1100 MHz of airwaves in the Little Rock, Arkansas basic trading area and 150 MHz of airwaves in each of the Beaumont, Texas; New Orleans, Louisiana; San Juan and Mayaguez, Puerto Rico; and U.S. Virgin Islands basic trading areas. TeleCorp LMDS's stockholders were Mr. Vento and Mr. Sullivan and three of the Company's initial investors. As Mr. Vento and Mr. Sullivan have voting control of the Company and Telecorp LMDS, the acquisition was accounted for as an acquisition between companies under common control and recorded at historical cost. The licenses acquired have been recorded by the Company at $2,707, which represents the historical cost of TeleCorp LMDS. F-25 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) On April 27, 2000, the Company completed its acquisition of 15 MHz PCS licenses in the Lake Charles, Louisiana basic trading area from Gulf Telecom, LLC (Gulf Telecom). As consideration for the PCS licenses, the Company paid Gulf Telecom $262 in cash, assumed approximately $2,433, less a discount of $401, in Federal Communications Commission debt related to the licenses and reimbursed Gulf Telecom $471 for interest it paid to the Federal Communications Commission on the debt related to the license from June 1998 through March 2000. The entire purchase price has been allocated to the acquired licenses. On May 10, 2000, the Company was notified by the FCC that it was the high bidder on certain FCC licenses offered in the FCC's 39 GHz Band Auction. As consideration for these licenses, the Company paid the FCC $12,368. Each of the licenses purchased exists within areas where the Company and Tritel currently hold licenses or where the Company received licenses in the contribution and exchange with AT&T Wireless. Pending Acquisitions In connection with the right attained from AT&T Wireless, the Company and Telephone Data Systems (TDS) have entered into an agreement to collectively purchase the assets of Airadigm. Airadigm is a wireless provider based in Little Chute, Wisconsin and owns C-block FCC licenses in Wisconsin and Iowa. Airadigm filed for Chapter 11 bankruptcy protection in July 1999. Under the terms of the collective plan of financial reorganization approved by the U.S. Bankruptcy Court on November 1, 2000, the Company and TDS plan to provide the funding to meet Airadigm's debt obligations. The Company will receive disaggregated licenses for its consideration. The sale of Airadigm's licenses is contingent upon reinstatement of those licenses by the FCC and receipt of FCC approval for the transfer of the licenses to the Company designee. 15. Restricted Stock Plan and Other Restricted Stock Awards 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 shares consisting of Series E mandatorily redeemable preferred stock and Class A common stock. The fixed shares typically vest over a five or six year period. The variable shares vest based upon certain events taking place, such as buildout milestones, POP coverage, the completion of an initial public offering 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 shares that may be awarded to key employees shall not exceed 7,085 units and 4,000,000 shares of Series E preferred stock and Class A common stock, respectively, as determined upon award. Any shares not granted on or prior to July 17, 2003 shall be awarded to two officers of the Company. Each participant has voting, dividend and distribution rights with respect to all shares of both vested and unvested common stock. 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 and $0.00003 per share for the Series E preferred and Class A common stock, respectively. F-26 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) Activity under the Plan is as follows:
Estimated Series E fair Estimated preferred value per Class A fair value stock share common stock per share --------- ------------ ------------ ------------ Shares awarded................ 5,505 $ 1.00 3,095,473 $ .003 Repurchases................... (784) -- (552,474) -- ----- --------- Balance, December 31, 1998.... 4,721 1.00 2,542,999 .003 Shares awarded................ 2,677 52.00-72.98 1,748,609 .003-20.00 Repurchases................... (577) -- (406,787) -- ----- --------- Balance, December 31, 1999.... 6,821 1.00-72.98 3,884,821 .003-20.00 Shares awarded................ 800 72.98 -- -- Repurchases................... (323) -- (203,673) .003-20.00 ----- --------- Balance, December 31, 2000.... 7,298 $1.00-$72.98 3,681,148 $.003-$20.00 ===== =========
Deferred compensation and 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. Certain awards granted under the Plan were variable awards. Upon the Company's initial public offering, the variable stock awards became fixed. At that point, the Company recorded deferred compensation expense based on the difference between the estimated fair value and the exercise price of the award in the amount of $33,176. For the year ended December 31, 1999 and 2000, the Company recorded compensation expense related to the restricted stock awards of $15,299 and $11,005, respectively. The remaining deferred compensation balance related to the restricted stock awards will be recognized as compensation expense over the remaining vesting period. Outstanding fixed awards and variable awards as of December 31, 1998, 1999 and 2000 are as follows:
December 31, December 31, December 31, 1998 1999 2000 ------------ ------------ ------------ Series E preferred stock: Fixed awards........................... 3,664 6,821 7,298 Variable awards........................ 1,057 -- -- --------- --------- --------- Total Series E awards................ 4,721 6,821 7,298 ========= ========= ========= Class A common stock: Fixed awards........................... 1,152,605 3,884,821 3,681,148 Variable awards........................ 1,390,394 -- -- --------- --------- --------- Total Class A awards................. 2,542,999 3,884,821 3,681,148 ========= ========= =========
Other Restricted Stock Awards The Chief Executive Officer and the Executive Vice President and Chief Financial Officer were issued variable restricted stock awards outside of the Restricted Stock Plan. Upon the initial public offering, the variable stock awards became fixed. At that point, the Company recorded deferred compensation expense based the difference between the estimated fair value and the exercise price of the shares. The company recorded $28,823 as deferred compensation related to these awards and will recognize that as compensation expense over the related vesting periods, of which $14,809 and $4,805 was recorded as compensation expense for the year ended December 31, 1999 and 2000, respectively. The shares under the plan were exchanged for shares under the Company's parent, TeleCorp PCS's plan as a result of the Merger consummated on November 13, 2000. F-27 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) 16. Employee and Director Stock Option Plan On July 22, 1999, the Company implemented the 1999 Stock Option Plan to allow employees and members of the Board of Directors to acquire shares of Class A common stock. The options have an option term of 10 years, ratable vesting over a three to four year period, exercise prices equal to the estimated fair value of the underlying Class A common stock on the date of award and restrictions on exercisability until (i) a qualified initial public offering (IPO) to which the Class A voting common stock has been registered under the Securities Act of 1933 for aggregate proceeds of $20,000, (ii) the sale of all or substantially all of the assets of the Company or (iii) the sale of all or substantially all of the outstanding capital stock of the Company. The Company has reserved 1,814,321 shares of Class A common stock for issuance under this plan. 2000 Employee, Director and Consultant Stock Option Plan In November 2000, the Company established the 2000 Employee, Director and Consultant Stock Plan under which up to 15,000,000 shares of the Company's class A voting common stock may be issued to key employees, directors or consultants pursuant to awards consisting of stock options that are intended to qualify as "incentive stock options" under Section 422 of the Internal Revenue Code of 1986, as amended, nonqualified stock options, restricted shares, deferred shares and stock appreciation rights. The stock options granted under that plan have an option term of 10 years, ratable vesting over a four year period, exercise price equal to the estimated fair value of the underlying Class A common stock on the date of award. Our board has the discretion to determine the terms of any options or stock rights granted under this plan. The 581,967 stock options awarded during the period from July 22, 1999 to November 23, 1999 represented variable awards since their exercisability was restricted until the completion of the initial public offering, sale of substantially all of the assets or sale of substantially all of the capital stock of the Company. Therefore, the measurement date occurred when the exercisability restrictions were relieved, upon the initial public offering. At that point, the Company recorded deferred compensation expense based on the difference between the initial public offering of $20.00 per share and the exercise price of the shares. All shares granted after the initial public offering are fixed awards. The Company recorded $11,050 as deferred compensation related to the stock option awards and will recognize expense over the related vesting periods, of which $1,709 and $3,713 was recorded as compensation expense for the year ended December 31, 1999 and 2000, respectively. A summary of the status of the Company's stock option plan is presented below:
Weighted Average Weighted Remaining Average Option Price Contractual Exercise Shares Range per share Life (Years) Price --------- --------------- ----------- -------- Outstanding at December 31, 1998........................ -- $ -- -- $ -- Granted.................... 611,967 0.0065--37.88 8.6 1.28 Exercised.................. -- -- -- -- Forfeited.................. (66,470) 0.0065 8.6 0.0065 --------- Outstanding at December 31, 1999........................ 545,497 0.0065--37.88 8.6 1.43 Granted.................... 1,959,295 20.00--51.75 9.4 41.16 Exercised.................. (67,866) 0.0065--20.00 8.9 16.54 Forfeited.................. (127,730) 0.0065--51.75 8.6 0.39 --------- Outstanding at December 31, 2000........................ 2,309,196 $0.0065--$51.75 9.3 $ 34.33 ========= Options vested at December 31, 1999.................... 76,801 $ 0.0065 3.1 $0.0065 ========= Options vested at December 31, 2000.................... 241,675 $0.0065--$51.75 8.7 $ 3.72 =========
F-28 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) No options were exercisable as of December 31, 1999 and 241,675 options were exercisable as of December 31, 2000. Options Outstanding at December 31, 2000
Weighted Average Remaining Weighted Average Contractual Life Exercise Price Number of Shares (Years) ---------------- ---------------- ---------------- $0.0065 387,356 8.6 20.00 238,550 9.1 37.88 10,000 9.0 44.02 1,540,790 9.1 44.63 48,350 9.3 45.94 35,450 9.2 51.75 48,700 9.3 --------- $ 34.33 2,309,196 9.3 =========
During the year ended December 31, 2000 the Company granted options to purchase 1,959,295 shares of common stock, of which 255,750 were granted at an exercise price below fair market value, 145,300 were granted at an exercise price equal to fair market value and 1,558,245 were granted at an exercise price above fair market value. Options Granted for the Year Ended December 31, 2000
Market Price Weighted Average Weighted Average of Stock on Fair Value Remaining Shares Exercise Price Grant Date of Options Life (year) ------ ---------------- ------------- ------------- ---------------- 255,750 $20.00 $ 37.87 $ 35.73 9.1 41,450 44.02 43.063 39.53 9.1 37,300 45.938 45.938 42.14 9.2 56,100 51.75 51.75 47.43 9.3 51,900 44.625 44.625 40.86 9.3 1,209,650 44.02 30.375 27.31 9.4 66,170 44.02 40.313 36.76 9.4 74,135 44.02 43.063 39.39 9.6 56,440 44.02 35.25 31.88 9.7 48,350 44.02 35.00 31.66 9.8 62,050 44.02 19.00 16.53 9.8 --------- 1,959,295 $41.16 $19.00-$51.75 $16.53-$47.43 9.4 =========
As permitted by SFAS No. 123, "Accounting for Stock-Based Compensation," the Company has elected to continue to follow the provisions of Accounting Principle Board Opinion No. 25 (APB 25), "Accounting for Stock Issued to Employees," and to adopt the disclosure only provision of SFAS No. 123. If compensation expense had been recorded based on the fair value at the grant dates for awards under the Plan, the Company's pro forma net loss would have been $26,433 for the year ended December 31, 2000. If compensation expense had been recorded based on the fair value at the grant dates for awards under the Plan for the years ended December 31, 1998 and 1999, the Company's pro forma net loss would have been the same as their respective reported balances disclosed in the financial statements for such periods. F-29 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions used for grants issued during the year ended December 31, 1999 and 2000: volatility factor of 100%, weighted average expected life of 10 years, weighted-average risk free interest rate of 6%, and no dividend yield. The weighted average fair value of grants made during the year ended December 31, 1999 and 2000 was $20.52 and $30.56, respectively. The shares under the plan were exchanged for shares under the Company's parent, TeleCorp PCS's plan as a result of the Merger consummated on November 13, 2000. 17. Income Taxes There was no provision for income tax for the years ended December 31, 1998, 1999 and 2000, respectively. The tax effect of temporary differences which gives rise to significant portions of the deferred tax assets as of December 31, 1999 and 2000, respectively, are as follows:
December 31, -------------------- 1999 2000 --------- --------- Deferred tax assets: Capitalized start-up costs........................... $ 13,517 $ 10,138 Net operating loss carryforward...................... 92,579 208,007 Original issue discount.............................. 11,461 27,172 Other................................................ 1,402 1,402 --------- --------- Total gross deferred tax assets.................... 118,959 264,719 Less: valuation allowance.......................... (104,779) (169,679) --------- --------- Net deferred tax asset............................. 14,180 77,040 --------- --------- Deferred tax liabilities: Depreciation and amortization........................ (14,180) (77,040) --------- --------- Total gross deferred tax liabilities............... (14,180) (77,040) --------- --------- Net deferred tax asset (liability)..................... $ -- $ -- ========= =========
For federal income tax purposes, start-up costs are being amortized over five years starting January 1, 1999 when active business operations commenced. As of December 31, 2000, the Company had approximately $547,388 of net operating losses. The net operating losses will begin to expire in 2012. There may be a limitation on the annual utilization of net operating losses and capitalized start-up costs as a result of certain ownership changes that have occurred since the Company's inception. A valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. Based on the Company's financial results, management has concluded that a full valuation allowance for all of the Company's deferred tax assets is appropriate. A reconciliation between income taxes from operations computed using the federal statutory income tax rate and the Company's effective tax rate is as follows:
December 31, ------------------ 1998 1999 2000 ---- ---- ---- Federal tax benefit at statutory rates................ (34%) (34%) (34%) State tax benefit..................................... (4%) (4%) (4%) Stock based compensation.............................. -- 4% 114% Change in valuation allowance......................... 38% 34% (76%) --- --- --- 0% 0% 0% === === ===
F-30 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) 18. Commitments In May 1998, the Company entered into a vendor procurement contract (the Vendor Procurement Contract) with Lucent, pursuant to which the Company may purchase up to $285,000 of radio, switching and related equipment and services for the development of the Company's wireless communications network. At December 31, 1999 and 2000, the Company has purchased approximately $294,500 and $357,800, respectively, of equipment and services from Lucent since the inception of the Vendor Procurement Contract. 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 $1,576 and $2,401 at December 31, 1999 and 2000, respectively. The outstanding letters of credit reduce the amount available to be drawn under the Senior Credit Facility (see Note 8). The Company is unaware of any events that would have resulted in nonperformance of a contract during the years ended December 31, 1999 and 2000. The Company has minimum purchase commitments of 15 million roaming minutes from July 1999 to January 2002 from another wireless provider in Puerto Rico relating to customers roaming outside our coverage area. The Company believes it will be able to meet this minimum requirement. Additionally, the Company has an obligation to AT&T Wireless to purchase a minimum number of minutes of traffic annually over a specified time period and a specified number of dedicated voice and data leased lines in order for us to retain preferred pricing rates. We believe we will be able to meet these minimum requirements. The Company has operating leases primarily related to retail store locations, distribution outlets, office space, and rent for the Company's wireless network. 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, 2000, the aggregate minimum rental commitments under non-cancelable operating leases are as follows: For the Year Ended December 31, 2001........................................................... $ 28,514 2002........................................................... 27,727 2003........................................................... 25,424 2004........................................................... 21,136 2005........................................................... 14,186 Thereafter..................................................... 38,246 -------- Total........................................................ $155,233 ========
Rental expense was approximately $3,193, $13,792 and $24,243 for the years ended December 31, 1998, 1999 and 2000, respectively. 19. Related Parties The Company receives roaming revenue and recognizes roaming expense pursuant to an agreement with Tritel. From the effective date of the Company's merger with Tritel, November 13, 2000, to December 31, 2000 roaming revenues and expenses were $414 and $615, respectively. Intercompany roaming revenues and F-31 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) expenses between the Company and Tritel are eliminated in the consolidated financial statements of TeleCorp PCS. Additionally, the Company recognized $198 in cost of revenue related to intercompany amortization charges from TeleCorp PCS to the Company. These charges represent the Company's allocation of amortization of the AT&T operating agreements received in the AT&T Contribution and Exchange transaction. In the consolidated financial statements of TeleCorp PCS, intercompany cost of revenue charges are eliminated and are shown as depreciation and amortization. The Executive Vice President and Chief Financial Officer serves as a consultant to ML Strategies, a division of the law firm, Mintz, Levin, Cohn, Ferris, Glovksy, and Popeo, PC (the Firm). This agreement was terminated as of December 31, 2000. The Firm also provides services for the Company. During the years ended December 31, 1999 and 2000, the Company incurred $506 and $4,345, respectively for services performed by the Firm and there was $419 owed to the firm at December 31, 2000. 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 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 years ended December 31, 1999 and 2000, the Company paid approximately $1,665 and $1,104 respectively, 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 Towers provides network site leases for PCS deployment. The Company has incurred $77 and $937 in expenses for the years ended December 31, 1999 and 2000, respectively. 20. Subsidiary Guarantee On April 23, 1999, the Company completed the issuance and sale of 11 5/8% Senior Subordinated Discount Notes. The Notes are fully and unconditionally guaranteed on a joint and several basis by TeleCorp Communications, Inc. (TCI), one of the Company's wholly-owned subsidiaries. On July 14, 2000, the Company completed the issuance and sale of the 10 5/8% Subordinated Notes. The Subordinated Notes are fully and unconditionally guaranteed on a joint and several basis by TCI. Consolidating financial statements of Telecorp Wireless, Inc., TCI, the guarantor, the non-guarantor subsidiaries of TCI, and the non-guarantor subsidiaries of TeleCorp Wireless, Inc. as of December 31, 1999 and 2000 have been included on the following pages. Certain amounts in the 1999 consolidating financial statements have been reclassified to conform with the presentations of the consolidating financial statements as of December 31, 2000. These reclassifications are eliminated upon consolidation and do not impact the Company's consolidated financial statements. F-32 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) Consolidating Balance Sheet as of December 31, 1999:
TeleCorp Communications, Inc. TeleCorp Wireless, Inc. ------------------------------------ --------------------------------------- TeleCorp Non- Non- Wireless, Guarantor Guarantor Guarantor Inc. Subsidiary Subsidiaries Consolidated Subsidiaries Eliminations Consolidated --------- ---------- ------------ ------------ ------------ ------------ ------------ ASSETS Current assets: Cash and cash equivalents........... $ 182,330 $ -- $ -- $ -- $ -- $ -- $ 182,330 Accounts receivable, net................... -- 23,581 -- 23,581 -- -- 23,581 Inventory.............. -- 15,802 -- 15,802 -- -- 15,802 Prepaid expenses and other current assets.. -- 1,608 2,220 3,828 -- -- 3,828 --------- -------- -------- -------- -------- --------- --------- Total current assets.. 182,330 40,991 2,220 43,211 -- -- 225,541 Property and equipment, net.................... -- 182,235 218,215 400,450 -- -- 400,450 PCS licenses and microwave relocation costs, net............. -- -- -- -- 267,682 -- 267,682 Intangible assets--AT&T agreements, net........ 37,908 -- -- -- -- -- 37,908 Deferred financing costs, net............. 19,577 -- -- -- -- -- 19,577 Other assets............ -- 1,044 -- 1,044 -- -- 1,044 Investment in subsidiaries........... 556,128 -- -- -- -- (556,128) -- --------- -------- -------- -------- -------- --------- --------- Total assets.......... $795,943 $224,270 $220,435 $444,705 $267,682 $(556,128) $ 952,202 ========= ======== ======== ======== ======== ========= ========= LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable....... $ -- $ 12,318 $ 26,585 $ 38,903 $ -- $ -- $ 38,903 Accrued expenses and other................. -- 48,960 3,017 51,977 -- -- 51,977 Microwave relocation obligation, current portion............... -- -- -- -- 36,122 -- 36,122 Long-term debt, current portion............... -- -- -- -- 1,361 -- 1,361 Accrued interest....... 521 -- -- -- 866 -- 1,387 Deferred revenue....... -- 1,709 -- 1,709 -- 1,709 --------- -------- -------- -------- -------- --------- --------- Total current liabilities.......... 521 62,987 29,602 92,589 38,349 -- 131,459 Long-term debt.......... 622,795 -- -- -- 16,415 -- 639,210 Microwave relocation obligation............. -- -- -- -- 2,365 -- 2,365 Accrued expenses and other.................. -- -- 6,541 6,541 -- -- 6,541 --------- -------- -------- -------- -------- --------- --------- Total liabilities..... 623,316 62,987 36,143 99,130 57,129 -- 779,575 --------- -------- -------- -------- -------- --------- --------- Mandatorily redeemable preferred stock........ 360,182 -- -- -- -- -- 360,182 Preferred stock subscriptions receivable............. (97,001) -- -- -- -- -- (97,001) --------- -------- -------- -------- -------- --------- --------- Total mandatorily redeemable preferred stock, net........... 263,181 -- -- -- -- -- 263,181 --------- -------- -------- -------- -------- --------- --------- Commitments and contingencies Stockholders' equity (deficit): Series F preferred stock................. 149 -- -- -- -- -- 149 Common stock........... 856 -- -- -- -- -- 856 Additional paid-in capital............... 267,442 161,283 184,292 345,575 210,553 (556,128) 267,442 Deferred compensation.. (42,811) -- -- -- -- -- (42,811) Common stock subscriptions receivable............ (191) -- -- -- -- -- (191) Accumulated deficit.... (315,999) -- -- -- -- -- (315,999) --------- -------- -------- -------- -------- --------- --------- Total stockholders' equity (deficit)..... (90,554) 161,283 184,292 345,575 210,553 (556,128) (90,554) --------- -------- -------- -------- -------- --------- --------- Total liabilities, mandatorily redeemable preferred stock and stockholders' equity (deficit)............ $ 795,943 $224,270 $220,435 $444,705 $267,682 $(556,128) $ 952,202 ========= ======== ======== ======== ======== ========= =========
F-33 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) Consolidating Balance Sheet as of December 31, 2000
TeleCorp Communications, Inc. TeleCorp Wireless, Inc. ------------------------------------ --------------------------------------- TeleCorp Non- Non- Wireless, Guarantor Guarantor Guarantor Inc. Subsidiary Subsidiaries Consolidated Subsidiaries Eliminations Consolidated ---------- ---------- ------------ ------------ ------------ ------------ ------------ ASSETS Current assets: Cash and cash equivalents........... $ 228,758 $ -- $ -- $ -- $ -- $ -- $ 228,758 Short-term investments........... 34,189 -- -- -- -- -- 34,189 Accounts receivable, net................... -- 44,792 -- 44,792 -- -- 44,792 Inventory.............. -- 23,680 -- 23,680 -- -- 23,680 Prepaid expenses and other current assets.. 111 5,992 2,921 8,913 -- -- 9,024 ---------- -------- ------ -------- -------- ----------- ---------- Total current assets.. 263,058 74,464 2,921 77,385 -- -- 340,443 Property and equipment, net.................... -- 655,218 -- 655,218 -- -- 655,218 PCS licenses and microwave relocation costs, net............. -- -- -- -- 668,472 -- 668,472 Intangible assets--AT&T agreements, net........ 174,775 -- -- -- -- -- 174,775 Deferred financing costs, net............. 32,877 -- -- -- -- -- 32,877 Other assets............ 478 45 938 983 3,511 -- 4,972 Investments in subsidiaries........... 1,092,175 1,320 (1,320) -- -- (1,092,175) -- ---------- -------- ------ -------- -------- ----------- ---------- Total assets.......... $1,563,363 $731,047 $2,539 $733,586 $671,983 $(1,092,175) $1,876,757 ========== ======== ====== ======== ======== =========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable....... $ -- $ 45,819 $ -- $ 45,819 $ -- $ -- $ 45,819 Accrued expenses and other................. -- 150,230 -- 150,230 -- -- 150,230 Microwave relocation obligation, current portion............... -- -- -- -- 21,232 -- 21,232 Long-term debt, current portion............... -- -- -- -- 1,459 -- 1,459 Accrued interest....... 24,505 310 -- 310 986 -- 25,801 Deferred revenue....... -- 1,203 485 1,688 -- -- 1,688 ---------- -------- ------ -------- -------- ----------- ---------- Total current liabilities.......... 24,505 197,562 485 198,047 23,677 -- 246,229 Long-term debt.......... 1,219,014 -- -- -- 69,614 -- 1,288,628 Microwave relocation obligation............. -- -- -- -- 15,736 -- 15,736 Accrued expenses and other.................. -- -- 1,930 1,930 4,390 -- 6,320 ---------- -------- ------ -------- -------- ----------- ---------- Total liabilities..... 1,243,519 197,562 2,415 199,977 113,417 -- 1,556,913 ---------- -------- ------ -------- -------- ----------- ---------- Commitments and contingencies Stockholders' equity (deficit): Additional paid-in capital, net.......... 676,117 532,165 1,444 533,609 558,566 (1,092,175) 676,117 Deferred compensation.. (24,445) -- -- -- -- -- (24,445) Accumulated other comprehensive income.. 958 -- -- -- -- -- 958 (Accumulated deficit) retained earnings..... (332,786) 1,320 (1,320) -- -- -- (332,786) ---------- -------- ------ -------- -------- ----------- ---------- Total stockholders' equity (deficit)..... 319,844 533,485 124 533,609 558,566 (1,092,175) 319,844 ---------- -------- ------ -------- -------- ----------- ---------- Total liabilities and stockholders' equity............... $1,563,363 $731,047 $2,539 $733,586 $671,983 $(1,092,175) $1,876,757 ========== ======== ====== ======== ======== =========== ==========
F-34 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands) Consolidating Statement of Operations for the year ended December 31, 1998:
TeleCorp Communications, Inc. TeleCorp Wireless, Inc. -------------------------------------------------- --------------------------------------- TeleCorp Guarantor Non-Guarantor Non-Guarantor Wireless, Inc. Subsidiary Subsidiaries Eliminations Consolidated Subsidiaries Eliminations Consolidated -------------- ---------- ------------- ------------ ------------ ------------- ------------ ------------ Revenue: Service........... $ -- $ -- $ -- $ -- $ -- $-- $ -- $ -- Roaming........... -- 29 -- -- 29 -- -- 29 Equipment......... -- -- -- -- -- -- -- -- Intercompany...... 803 -- 3,432 (3,432) -- 927 (1,730) -- -------- -------- ------ ------- -------- ---- -------- --------- Total revenue... 803 29 3,432 (3,432) 29 927 (1,730) 29 -------- -------- ------ ------- -------- ---- -------- --------- Operating expenses: Cost of revenue... -- 5,162 -- (3,432) 1,730 -- (1,730) -- Operations and development...... -- 6,579 3,193 -- 9,772 -- -- 9,772 Selling and marketing........ -- 6,325 -- -- 6,325 -- -- 6,325 General and administrative... -- 26,239 -- -- 26,239 -- -- 26,239 Depreciation and amortization..... 803 542 239 -- 781 -- -- 1,584 -------- -------- ------ ------- -------- ---- -------- --------- Total operating expenses....... 803 44,847 3,432 (3,432) 44,847 -- (1,730) 43,920 -------- -------- ------ ------- -------- ---- -------- --------- Operating income (loss)......... -- (44,818) -- -- (44,818) 927 -- (43,891) Other (income) expense: Interest expense.. 11,007 6,337 -- -- 6,337 927 (6,337) 11,934 Interest income and other........ (11,007) -- -- -- -- -- 6,337 (4,670) Equity in net loss of subsidiaries.. (51,155) -- -- -- -- -- 51,155 -- -------- -------- ------ ------- -------- ---- -------- --------- Net loss........ $(51,155) $(51,155) $ -- $ -- $(51,155) $-- $ 51,155 $ (51,155) ======== ======== ====== ======= ======== ==== ======== =========
F-35 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) Consolidating Statement of Operations for the year ended December 31, 1999:
TeleCorp Communications, Inc. TeleCorp Wireless, Inc. -------------------------------------------------- -------------------------------------- TeleCorp Non- Non- Wireless, Guarantor Guarantor Guarantor Inc. Subsidiary Subsidiaries Eliminations Consolidated Subsidiaries Eliminations Consolidated --------- ---------- ------------ ------------ ------------ ------------ ------------ ------------ Revenue: Service............ $ -- $ 41,319 $ -- $ -- $ 41,319 $ -- $ -- $ 41,319 Roaming............ -- 29,010 -- -- 29,010 -- -- 29,010 Equipment.......... -- 17,353 -- -- 17,353 -- -- 17,353 Intercompany....... 37,475 -- 39,538 (39,538) -- 4,775 (42,250) -- --------- --------- ------- -------- --------- ------ -------- --------- Total revenue..... 37,475 87,682 39,538 (39,538) 87,682 4,775 (42,250) 87,682 --------- --------- ------- -------- --------- ------ -------- --------- Operating expenses: Cost of revenue.... 1,472 89,230 -- (39,538) 49,692 -- (11,905) 39,259 Operations and development....... 937 22,187 13,792 -- 35,979 -- (937) 35,979 Selling and marketing......... 29,408 71,180 -- -- 71,180 -- (29,408) 71,180 General and administrative.... -- 92,585 -- -- 92,585 -- -- 92,585 Depreciation and amortization...... 5,658 20,897 25,746 -- 46,643 2,809 -- 55,110 --------- --------- ------- -------- --------- ------ -------- --------- Total operating expenses......... 37,475 296,079 39,538 (39,538) 296,079 2,809 (42,250) 294,113 --------- --------- ------- -------- --------- ------ -------- --------- Operating income (loss)........... -- (208,397) -- -- (208,397) 1,966 -- (206,431) Other (income) expense: Interest expense... 49,347 42,599 -- -- 42,599 1,966 (42,599) 51,313 Interest income and other............. (49,347) -- -- -- -- -- 42,599 (6,748) Equity in net loss of subsidiaries... (250,996) -- -- -- -- -- 250,996 -- --------- --------- ------- -------- --------- ------ -------- --------- Net loss.......... $(250,996) $(250,996) $ -- $ -- $(250,996) $ -- $250,996 $(250,996) ========= ========= ======= ======== ========= ====== ======== =========
F-36 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) Consolidating Statement of Operations for the year ended December 31, 2000:
TeleCorp Communications, Inc. TeleCorp Wireless, Inc. -------------------------------------------------- -------------------------------------- TeleCorp Non- Non- Wireless, Guarantor Guarantor Guarantor Inc. Subsidiary Subsidiaries Eliminations Consolidated Subsidiaries Eliminations Consolidated --------- ---------- ------------ ------------ ------------ ------------ ------------ ------------ Revenue: Service............. $ -- $ 217,972 $ 1,320 $ -- $ 219,292 $ -- $ -- $ 219,292 Roaming............. -- 62,956 -- -- 62,956 -- -- 62,956 Equipment........... -- 33,802 -- -- 33,802 -- -- 33,802 Intercompany........ 9,437 -- 19,063 (19,063) -- 8,478 (17,915) -- -------- --------- ------- -------- --------- ------ -------- --------- Total revenue...... 9,437 314,730 20,383 (19,063) 316,050 8,478 (17,915) 316,050 -------- --------- ------- -------- --------- ------ -------- --------- Operating expenses: Cost of revenue..... -- 135,213 -- (19,063) 116,150 -- (17,915) 98,235 Operations and development........ -- 35,600 19,063 -- 54,663 -- -- 54,663 Selling and marketing.......... -- 169,662 -- -- 169,662 -- -- 169,662 General and administrative..... -- 140,988 -- -- 140,988 -- -- 140,988 Depreciation and amortization....... 9,437 104,531 -- -- 104,531 5,782 -- 119,750 -------- --------- ------- -------- --------- ------ -------- --------- Total operating expenses.......... 9,437 585,994 19,063 (19,063) 585,994 5,782 (17,915) 583,298 Operating income (loss)............ -- (271,264) 1,320 -- (269,944) 2,696 -- (267,248) Other (income) expense: Interest expense.... 94,372 77,808 -- -- 77,808 2,696 (77,808) 97,068 Interest income and other.............. (94,372) (209) -- -- (209) -- 77,808 (16,773) Gain on disposal of New England market............. -- (330,756) -- -- (330,756) -- -- (330,756) Equity in net loss of subsidiaries.... (16,787) -- -- -- -- -- 16,787 -- -------- --------- ------- -------- --------- ------ -------- --------- Net (loss) income.. $(16,787) $ (18,107) $ 1,320 $ -- $ (16,787) $ -- $ 16,787 $ (16,787) ======== ========= ======= ======== ========= ====== ======== =========
F-37 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands) Consolidating Statement of Cash Flows for the year ended December 31, 1998:
TeleCorp Communications, Inc. TeleCorp Wireless, Inc. -------------------------------------- --------------------------------------- TeleCorp Guarantor Non-Guarantor Non-Guarantor Wireless, Inc. Subsidiary Subsidiaries Consolidated Subsidiaries Eliminations Consolidated -------------- ---------- ------------- ------------ ------------- ------------ ------------ Cash flows from operating activities: Net loss................ $ (51,155) $ (51,155) $ -- $ (51,155) $ -- $ 51,155 $ (51,155) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Equity in net loss of subsidiaries........... 51,155 $ -- $ -- $ -- $ -- (51,155) -- Depreciation and amortization........... 803 542 239 781 -- -- 1,584 Noncash compensation expense related to stock option grants and restricted stock awards................. -- 2 -- 2 -- -- 2 Noncash interest expense................ 963 -- -- -- 219 -- 1,182 Noncash general and administrative change by affiliate........... -- 197 -- 197 -- -- 197 Changes in cash flow from operations resulting from changes in assets and liabilities: Inventory.............. -- (778) -- (778) -- -- (778) Intercompany receivables............ (166,015) -- -- -- -- 166,015 -- Prepaid expenses and other current assets... -- (2,035) (1,296) (3,331) -- -- (3,331) Other assets........... -- -- (1,184) (1,184) -- -- (1,184) Accounts payable....... -- -- 11,586 11,586 -- -- 11,586 Accrued expenses....... -- 4,115 5,030 9,145 -- -- 9,145 Accrued interest....... 1,434 612 -- 612 -- -- 2,046 Intercompany payables.. -- 98,196 43,698 141,894 24,121 (166,015) -- --------- --------- -------- --------- ------- -------- --------- Net cash (used in) provided by operating activities............. (162,815) 49,696 58,073 107,769 24,340 -- (30,706) --------- --------- -------- --------- ------- -------- --------- Cash flows from investing activities: Expenditures for network under development, wireless network and property and equipment.......... -- (49,469) (58,073) (107,542) -- -- (107,542) Capitalized interest on network under development and wireless network....... -- (227) -- (227) -- -- (227) Expenditures for microwave relocation... -- -- -- -- (3,340) -- (3,340) Purchase of PCS licenses............... -- -- -- -- (21,000) -- (21,000) --------- --------- -------- --------- ------- -------- --------- Net cash used in investing activities... -- (49,696) (58,073) (107,769) (24,340) -- (132,109) --------- --------- -------- --------- ------- -------- --------- Cash flows from financing activities: Proceeds from sale of mandatorily redeemable preferred stock........ 26,661 -- -- -- -- -- 26,661 Direct issuance costs from sale of mandatorily redeemable preferred stock........ (1,027) -- -- -- -- -- (1,027) Proceeds from sale of common stock and series F preferred stock...... 38 -- -- -- -- -- 38 Proceeds from long-term debt................... 257,492 -- -- -- -- -- 257,492 Payments of deferred financing costs........ (9,110) -- -- -- -- -- (9,110) Payments on long-term debt................... (2,073) -- -- -- -- -- (2,073) --------- --------- -------- --------- ------- -------- --------- Net cash provided by financing activities... 271,981 -- -- -- -- -- 271,981 --------- --------- -------- --------- ------- -------- --------- Net increase in cash and cash equivalents........ 109,166 -- -- -- -- -- 109,166 Cash and cash equivalents at the beginning of period..... 2,567 -- -- -- -- -- 2,567 --------- --------- -------- --------- ------- -------- --------- Cash and cash equivalents at the end of period............... $ 111,733 $ -- $ -- $ -- $ -- $ -- $ 111,733 ========= ========= ======== ========= ======= ======== =========
F-38 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) Consolidating Statement of Cash Flows for the year ended December 31, 1999:
TeleCorp Communications, Inc. TeleCorp Wireless, Inc. ------------------------------------- -------------------------------------- TeleCorp Non- Non- Wireless, Guarantor Guarantor Guarantor Inc. Subsidiary Subsidiaries Consolidated Subsidiaries Eliminations Consolidated --------- ---------- ------------ ------------ ------------ ------------ ------------ Cash flows from operating activities: Net loss................ $(250,996) $(250,996) $ -- $(250,996) $ -- $ 250,996 $(250,996) Adjustment to reconcile net loss to net cash (used in) provided by operating activities: Equity in net loss of subsidiaries.......... 250,996 -- -- -- -- (250,996) -- Depreciation and amortization.......... 5,658 20,897 25,746 46,643 2,809 -- 55,110 Non-cash compensation expense related to stock option grants and restricted stock awards................ -- 31,817 -- 31,817 -- -- 31,817 Non-cash interest expense............... 32,325 -- -- -- 393 -- 32,718 Bad debt expense....... -- 2,962 -- 2,962 -- -- 2,962 Changes in cash flow from operations resulting from changes in assets and liabilities: Accounts receivable.... -- (23,581) -- (23,581) -- -- (23,581) Inventory.............. -- (15,024) -- (15,024) -- -- (15,024) Intercompany receivables........... (586,801) -- -- -- -- 586,801 -- Prepaid expenses and other current assets.. -- 427 (851) (424) -- -- (424) Other assets........... -- (1,406) 283 (1,123) -- -- (1,123) Accounts payable....... -- 11,163 13,645 24,808 -- -- 24,808 Accrued expenses....... -- 8,202 9,629 17,831 -- -- 17,831 Accrued interest....... (2,194) -- -- -- (910) -- (3,104) Deferred revenue....... -- 1,709 -- 1,709 -- -- 1,709 Intercompany payables.. -- 354,967 114,234 469,201 117,600 (586,801) -- --------- --------- --------- --------- --------- --------- --------- Net cash (used in) provided by operating activities........... (551,012) 141,137 162,686 303,823 119,892 -- (127,297) --------- --------- --------- --------- --------- --------- --------- Cash flows from investing activities: Expenditures for network under development, wireless network and property and equipment......... -- (135,820) (162,686) (298,506) -- -- (298,506) Capitalized interest on network under development and PCS licenses.............. -- (5,317) -- (5,317) -- -- (5,317) Expenditures for microwave relocation.. -- -- -- -- (5,654) -- (5,654) Purchase of PCS licenses.............. -- -- -- -- (114,238) -- (114,238) Purchase of intangibles-AT&T agreements............ (17,310) -- -- -- -- -- (17,310) --------- --------- --------- --------- --------- --------- --------- Net cash used in investing activities........... (17,310) (141,137) (162,686) (303,823) (119,892) -- (441,025) --------- --------- --------- --------- --------- --------- --------- Cash flows from financing activities: Proceeds from sale of mandatorily redeemable preferred stock....... 70,323 -- -- -- -- -- 70,323 Receipt of preferred stock subscription receivable............ 9,414 -- -- -- -- -- 9,414 Direct issuance costs from sale of mandatorily redeemable preferred stock....... (2,500) -- -- -- -- -- (2,500) Proceeds from sale of common stock and series F preferred stock................. 21,724 -- -- -- -- -- 21,724 Proceeds from long-term debt.................. 407,635 -- -- -- -- -- 407,635 Payments of deferred financing costs....... (12,742) -- -- -- -- -- (12,742) Payments on long-term debt.................. (50,451) -- -- -- -- -- (50,451) Costs associated with initial public offering.............. (1,801) -- -- -- -- -- (1,801) Proceeds associated with initial public offering.............. 197,317 -- -- -- -- -- 197,317 --------- --------- --------- --------- --------- --------- --------- Net cash provided by financing activities........... 638,919 -- -- -- -- -- 638,919 --------- --------- --------- --------- --------- --------- --------- Net increase in cash and cash equivalents....... 70,597 -- -- -- -- -- 70,597 Cash and cash equivalents at the beginning of period.... 111,733 -- -- -- -- -- 111,733 --------- --------- --------- --------- --------- --------- --------- Cash and cash equivalents at the end of period.............. $ 182,330 $ -- $ -- $ -- $ -- $ -- $ 182,330 ========= ========= ========= ========= ========= ========= =========
F-39 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) Consolidating Statement of Cash Flows for the year ended December 31, 2000
TeleCorp Communications, Inc. TeleCorp Wireless, Inc. ------------------------------------- -------------------------------------- TeleCorp Non- Non- Wireless, Guarantor Guarantor Guarantor Inc. Subsidiary subsidiaries Consolidated Subsidiaries Eliminations Consolidated --------- ---------- ------------ ------------ ------------ ------------ ------------ Cash flows from operating activities: Net loss............... $ (16,787) $ (18,107) $1,320 $ (16,787) $ -- $ 16,787 $ (16,787) Adjustments to reconcile net loss to net cash used in operating activities: Non-cash gain on disposal of New England assets................. -- (330,756) -- (330,756) -- -- (330,756) Equity in net loss of subsidiaries........... 16,787 -- -- -- -- (16,787) -- Depreciation and amortization........... 9,437 104,531 -- 104,531 5,782 -- 119,750 Non-cash compensation expense related to stock option grants and restricted stock awards................. -- 34,820 -- 34,820 -- -- 34,820 Non-cash interest expense................ 49,562 -- -- -- -- -- 49,562 Bad debt expense....... -- 12,089 -- 12,089 -- -- 12,089 Changes in cash flow from operations resulting from changes in assets and liabilities: Accounts receivable.... -- (21,211) -- (21,211) -- -- (21,211) Inventory.............. -- (7,878) -- (7,878) -- -- (7,878) Intercompany receivables............ (617,550) -- -- -- -- 617,550 -- Prepaid expenses and other current assets... (111) (4,384) (701) (5,085) -- -- (5,196) Other assets........... (479) 999 (938) 61 (3,510) -- (3,928) Accounts payable....... -- 6,916 -- 6,916 -- -- 6,916 Accrued expenses....... -- 20,968 -- 20,968 -- -- 20,968 Accrued interest....... 23,985 310 -- 310 119 -- 24,414 Deferred revenue....... -- (506) 485 (21) -- -- (21) Intercompany payables.. -- 464,588 (166) 464,422 153,128 (617,550) -- --------- --------- ------ --------- ------- --------- ---------- Net cash (used in) provided by operating activities............ (535,156) 262,379 -- 262,379 155,519 -- (117,258) --------- --------- ------ --------- ------- --------- ---------- Cash flows from investing activities: Expenditures for property and equipment.............. -- (338,101) -- (338,101) -- -- (338,101) Expenditures for property and equipment--Black Label Wireless, Inc.......... -- -- -- -- (27,206) -- (27,206) Purchase of short-term investments............ (134,663) -- -- -- -- -- (134,663) Proceeds from the sale of short-term investments............ 102,778 -- -- -- -- -- 102,778 Capitalized interest on network under development............ -- (5,208) -- (5,208) -- -- (5,208) Proceeds from the sale of property and equipment.............. -- 930 -- 930 -- -- 930 Expenditures for microwave relocation... -- -- -- -- (6,018) -- (6,018) Purchase of PCS licenses............... -- -- -- -- (66,771) -- (66,771) Expenditures for acquisition of licenses--Black Label Wireless, Inc.......... -- -- -- -- (36,803) -- (36,803) FCC deposit............ -- -- -- -- (12,368) -- (12,368) Partial refund of deposit on PCS licenses............... -- -- -- -- 9,607 -- 9,607
F-40 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) Consolidating Statement of Cash Flows for the year ended December 31, 2000
TeleCorp Communications, Inc. TeleCorp Wireless, Inc. ------------------------------------- -------------------------------------- TeleCorp Non- Non- Wireless, Guarantor Guarantor Guarantor Inc. Subsidiary subsidiaries Consolidated Subsidiaries Eliminations Consolidated --------- ---------- ------------ ------------ ------------ ------------ ------------ Payment of Tritel acquisition costs...... -- -- -- -- (13,330) -- (13,330) -------- --------- ---- --------- -------- ---- --------- Net cash used in investing activities.. (31,885) (342,379) -- (342,379) (152,889) -- (527,153) -------- --------- ---- --------- -------- ---- --------- Cash flows from financing activities: Receipt of preferred and common stock subscription receivable............. 37,650 -- -- -- -- -- 37,650 Proceeds from sale of common stock and series F preferred stock...... 41,869 -- -- -- -- -- 41,869 Proceeds from long-term debt................... 550,000 -- -- -- -- -- 550,000 Proceeds from exchange transaction with AT&T Wireless............... -- 80,000 -- 80,000 -- -- 80,000 Payments on long term debt................... -- -- -- -- (1,366) -- (1,366) Payments of deferred financing costs........ (16,050) -- -- -- -- -- (16,050) Proceeds from long-term debt--Black Label Wireless, Inc. ........ -- -- -- -- 63,978 -- 63,978 Payment on Black Label long-term debt......... -- -- -- -- (65,242) -- (65,242) -------- --------- ---- --------- -------- ---- --------- Net cash provided by (used in) financing activities............ 613,469 80,000 -- 80,000 (2,630) -- 690,839 -------- --------- ---- --------- -------- ---- --------- Net increase in cash and cash equivalents........ 46,428 -- -- -- -- -- 46,428 Cash and cash equivalents at the beginning of period..... 182,330 -- -- -- -- -- 182,330 -------- --------- ---- --------- -------- ---- --------- Cash and cash equivalents at the end of period............... $228,758 $ -- $-- $ -- $ -- $-- $ 228,758 ======== ========= ==== ========= ======== ==== =========
F-41 TELECORP WIRELESS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) ($ in thousands except per share data) 21. Subsequent Events PCS License Acquisition from Pegasus PCS Partners, L.L.C. On February 5, 2001, the Company purchased from Pegasus PCS Partners, L.L.C. a 15 MHz C Block PCS license in the Mayaguez, Puerto Rico basic trading area for $18,000. Tower Sale-Lease-Back and Build-to-Suit Agreements On September 15, 2000 the Company entered into a purchase agreement to sell and transfer to SBA Communications Corporation (SBA) certain of its towers and related assets. On March 16, 2001, the Company completed the sale and transfer of 203 towers and related assets for an aggregate purchase price of $66,483, reflecting a price of approximately $328 per site. At closing, the Company agreed to provide SBA with an additional 200 towers under a separate master design build-to-suit agreement. At closing, the Company also agreed to enter into a master lease agreement with SBA under which the Company agreed to pay monthly rent of $1.2 per tower for the continued use of the space that the Company occupied on the towers prior to the sale and $1.3 per tower for space obtained under the build-to-suit agreement. The initial term of the lease is for five years and the monthly rental amount is subject to certain escalation clauses after the initial term. F-42 EXHIBIT INDEX
Exhibit No. Description ----------- ------------------------------------------------------------------ 2.l.1+++ Agreement and Plan of Reorganization and Contribution (included as Annex A to the joint proxy statement-prospectus forming a part of the TeleCorp-Tritel Holding Company Registration Statement), dated February 28, 2000, by and between TeleCorp PCS, Tritel, Inc. and AT&T Wireless Services, Inc. 2.1.2+++ Amendment No. 1 to the Agreement and Plan of Reorganization and Contribution (included as Annex B to the joint proxy statement- prospectus forming a part of the TeleCorp-Tritel Holding Company Registration Statement), dated May 4, 2000, by and between TeleCorp PCS, Tritel, Inc. and AT&T Wireless Services, Inc. 2.1.3+++ Amendment No. 2 to the Agreement and Plan of Reorganization and Contribution (included as Annex C to the joint proxy statement prospectus forming a part of the TeleCorp-Tritel Holding Company Registration Statement), dated June 12, 2000, by and between TeleCorp PCS, Tritel, Inc. and AT&T Wireless Services, Inc. 3.1.1. . . Amended and Restated Certificate of Incorporation of TeleCorp PCS, Inc. (renamed TeleCorp Wireless, Inc.).
1
Exhibit No. Description ----------- ------------------------------------------------------------------ 3.1.2. . . Certificate of Amendment of Certificate of Incorporation of TeleCorp PCS, Inc. changing the name of TeleCorp PCS, Inc. to TeleCorp Wireless, Inc. 3.2.1++++ Certificate of Incorporation of TeleCorp Operating Company, Inc. 3.2.2++++ Certificate of Amendment of the Certificate of Incorporation of TeleCorp Operating Company, Inc. changing the name of TeleCorp Operating Company, Inc. to TeleCorp Communications, Inc. 3.3 By-Laws of TeleCorp Wireless, Inc. 3.4++++ By-Laws of TeleCorp Communications, Inc. 4.1*** Indenture, dated as of July 14, 2000, by and among TeleCorp PCS, Inc., TeleCorp Communications, Inc. and Bankers Trust Company, as Trustee. 4.2++++ 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. 10.1. . Stockholders' Agreement, dated as of November 13, 2000, by and among AT&T Wireless PCS LLC, Cash Equity Investors, Management Stockholders, Other Stockholders and TeleCorp PCS, Inc. 10.2+++ TeleCorp PCS, Inc. Voting Agreement, dated February 28, 2000. 10.3+++ Side Letter Agreement regarding Milwaukee Option, dated February 28, 2000, by and between AT&T Wireless Services, Inc. and TeleCorp PCS, Inc. 10.4+++ Asset Exchange Agreement, dated as of February 28, 2000, by and among AT&T Wireless PCS, LLC, TeleCorp PCS, Inc., TeleCorp PCS, LLC, TeleCorp Holding Corp. Inc., TeleCorp Communications, Inc., TeleCorp Equipment Leasing, L.P., and TeleCorp Realty, LLC. l0.5+++ Side Letter Agreement regarding Additional Mutual Rights and Obligations in Connection with the Asset Exchange Agreement and the Agreement and Plan of Reorganization and Contribution, dated as of February 28, 2000, by and between AT&T Wireless PCS, LLC and TeleCorp PCS, Inc. 10.6+++ Amended and Restated License Acquisition Agreement, dated as of May 3, 2000, by and among Polycell Communications, Inc., Clinton Communications, Inc. and ABC Wireless, LLC. 10.7+++ License Acquisition Agreement, dated as of February 28, 2000, by and between ABC Wireless, LLC and AT&T Wireless PCS, LLC. 10.8+++ Form of Intermediary Agreement, by and among AT&T Wireless PCS, LLC, TeleCorp PCS, Inc., TeleCorp PCS, LLC, TeleCorp Holding Corp. Inc., TeleCorp Communications, Inc., TeleCorp Equipment Leasing, LP., TeleCorp Realty, LLC and the Intermediary. 10.9+++ Transition Services Agreement, dated as of February 28, 2000, by and between AT&T Wireless PCS, LLC and TeleCorp PCS, Inc. 10.10+++ Form of Assignment and Assumption Agreement, by and between Milwaukee PCS, LLC, Milwaukee Acquisition Subsidiary, Inc., and TeleCorp PCS, Inc. 10.11+++ Agreement and Plan of Merger, dated February 27, 2000, by and among Milwaukee PCS LLC, Milwaukee Acquisition Subsidiary, Inc., Kailas J. Rao, and Indus, Inc.
2
Exhibit No. Description ----------- ---------------------------------------------------------------- 10.12+++ Airadigm Letter of Intent, dated January 24, 2000. 10.13.1++++ General Agreement for Purchase of PCS Systems and Services, dated as of May 12, 1998, by and between TeleCorp PCS, Inc. and Lucent Technologies Inc. 10.13.2++++++ Amendment No. 1 to the General Agreement for Purchase of Personal Communication Systems and Services, dated as of November 20, 1998, by and between TeleCorp PCS Inc. and Lucent Technologies Inc. 10.13.3++++++ Amendment No. 2 to the General Agreement for Purchase of Personal Communication Systems and Services, dated as of September 18, 1998, by and between TeleCorp PCS, Inc. and Lucent Technologies Inc. 10.13.4++++++ Amendment No. 3 to the General Agreement for Purchase of Personal Communication Systems and Services, dated as of November 10, 1998, by and between TeleCorp PCS, Inc. and Lucent Technologies Inc. 10.13.5++++++ Amendment No. 5 to the General Agreement for Purchase of Personal Communication Systems and Services, dated as of January 27, 1999, by and between TeleCorp PCS, Inc. and Lucent Technologies Inc. (the Amendment No. 5 to the General Agreement follows Amendment No. 3). 10.13.6++++++ Amendment No. 6 to the General Agreement for Purchase of Personal Communication Systems and Services, dated as of August 9, 1999, by and between TeleCorp PCS, Inc. and Lucent Technologies Inc. 10.13.7++++++ Amendment No. 7 to the General Agreement for Purchase of Personal Communication Systems and Services, dated as of July 1, 1999, by and between TeleCorp PCS, Inc. and Lucent Technologies Inc. 10.13.8++++++ Amendment No. 8 to the General Agreement for Purchase of Personal Communication Systems and Services, dated as of July 1, 2000, by and between TeleCorp PCS, Inc. and Lucent Technologies Inc. 10.14++++ Securities Purchase Agreement, dated as of January 23, 1998, by and among TeleCorp PCS, Inc., AT&T Wireless PCS Inc., TWR Cellular, Inc. and certain Initial investors other than AT&T Wireless, TeleCorp Investors and Management Stockholders identified therein. 10.15.1++++ Network Membership License Agreement, dated as of July 17, 1998, by and among AT&T Corp., including AT&T Wireless Services, Inc., and TeleCorp PCS, Inc. 10.15.2++++ Amendment No. 1 to Network Membership License Agreement, dated March 30, 1999. 10.15.3 Amendment No. 2 to Network Membership License Agreement, dated November 13, 2000. 10.16.1++++ Management Agreement, dated as of July 17, 1998, by and between TeleCorp Management Corp. and TeleCorp PCS, Inc. 10.16.2++++ Amendment No. 1 to the Management Agreement, dated as of May 25, 1999, by and between TeleCorp Management Corp. and TeleCorp PCS, Inc. 10.16.3* Amendment No. 2 to the Management Agreement, dated as of October 18, 1999, by and between TeleCorp Management Corp. and TeleCorp PCS, Inc. 10.17 Management Agreement, dated as of November 13, 2000, by and between TeleCorp Management Corp., Inc. and TeleCorp PCS, Inc.
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Exhibit No. Description ----------- ------------------------------------------------------------------ 10.18.1++++ Intercarrier Roamer Service Agreement, dated as of July 17, 1998, by and between AT&T Wireless Services, Inc. and TeleCorp PCS, Inc. 10.18.2++++ Amendment No. 1 to Intercarrier Roamer Service Agreement, dated May 25, 1999. 10.19.1* Roaming Administration Service Agreement, dated as of July 17, 1998, by and between AT&T Wireless Services, Inc. and TeleCorp PCS, Inc. 10.19.2 Amendment No. 1 to Roaming Administration Service Agreement, dated November 13, 2000, by and between AT&T Wireless Services, Inc. and TeleCorp PCS, Inc. 10.20 Credit Agreement, dated as of July 17, 1998, as amended and restated as of October 2, 2000, by and among TeleCorp PCS, Inc., The Lenders Party Thereto, 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. 10.21.1++++ Stock Purchase Agreement, dated as of March 22, 1999, by and among TeleCorp PCS, Inc., AT&T Wireless PCS, Inc. and certain Initial investors other than AT&T Wireless identified therein. 10.21.2++++ Amendment No. 1 to Stock Purchase Agreement, dated as of March 30, 1999, by and among TeleCorp PCS, Inc., AT&T Wireless PCS, Inc. and Initial investors other than AT&T Wireless. 10.21.3++++ Amendment No. 2 to Stock Purchase Agreement, dated as of April 6, 1999, by and among TeleCorp PCS, Inc., AT&T Wireless PCS, Inc. and Initial investors other than AT&T Wireless. 10.21.4++++ Amendment No. 3 to Stock Purchase Agreement, dated as of May 14, 1999, by and among TeleCorp PCS, Inc., AT&T Wireless PCS, Inc. and Initial investors other than AT&T Wireless. 10.21.5++++ Amendment No. 4 to Stock Purchase Agreement, dated as of July 15, 1999, by and among TeleCorp PCS, Inc., AT&T Wireless PCS, Inc. and Initial investors other than AT&T Wireless. 10.22++++ Stock Purchase Agreement, dated as of March 1, 1999, by and among Viper Wireless, Inc., TeleCorp Holding Corp., Inc. and TeleCorp PCS, Inc. 10.23++++ Puerto Rico Stock Purchase Agreement, dated as of March 30, 1999, by and among TeleCorp PCS, Inc., Puerto Rico Acquisition Corp. and certain Management Stockholders and Initial investors other than AT&T Wireless. 10.24** Stock Purchase Agreement, dated as of October 18, 1999, by and among TeleCorp PCS, Inc., TeleCorp Holding Corp., Inc., Gerald T. Vento, Thomas H. Sullivan, OneLiberty Fund IV, L.P., Northwood Ventures LLC, and Northwood Capital Partners LLC. 10.25++++ Asset Purchase Agreement, dated May 25, 1999, by and between AT&T Wireless PCS Inc. and TeleCorp PCS, Inc. 10.26++++ Preferred Stock Purchase Agreement, dated May 24, 1999, by and between AT&T Wireless PCS Inc. and TeleCorp PCS, Inc. 10.27.1++++ Stockholders' Agreement, dated as of July 17, 1998, by and among AT&T Wireless PCS, Inc., TWR Cellular, Inc., Initial investors other than AT&T Wireless, Management Stockholders, and TeleCorp PCS, Inc. 10.27.2++++ Amendment No. 1 to Stockholders' Agreement, dated May 25, 1999. 10.27.3* Amendment No. 2 to Stockholders' Agreement, dated November 1, 1999. 10.28+++ Form of Stockholders' Agreement, by and among AT&T Wireless PCS, LLC, Initial investors other than AT&T Wireless, Management Stockholders, Other Stockholders, and Holding Company, Inc.
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Exhibit No. Description ----------- ------------------------------------------------------------------ 10.29++++ 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. 10.30++++ Agreement, dated as of July 17, 1998, by and among AT&T Wireless PCS Inc., TWR Cellular, Inc., the Initial investors other than AT&T Wireless, the TeleCorp Investors and the Management Stockholders. 10.31++++ Employment Agreement, dated as of July 17, 1998, by and between TeleCorp PCS, Inc. and Julie A. Dobson. 10.32+++ Amendment to Employment Agreement, dated February 28, 2000, by and between TeleCorp PCS, Inc. and Julie A. Dobson. 10.33++++ Share Grant Agreement, dated July 16, 1998, by and between TeleCorp PCS, Inc. and Julie A. Dobson. 10.34++++ Separation Agreement, dated as of March 8, 1999, by and among TeleCorp PCS, Inc., TeleCorp Communications, Inc. and Robert Dowski. 10.35++++ Agreement among the Parties, dated as of June 30, 1999, by and among TeleCorp PCS, Inc., the Initial investors other than AT&T Wireless, Entergy Technology Holding Company, AT&T Wireless PCS, Inc., TWR Cellular Inc. and other stockholders. 10.36++++ Amended and Restated Agreement, dated April 16, 1999, by and among TeleCorp Communications, Inc., Triton PCS, Inc., Tritel Communications, Inc. and Affiliate License Co., L.L.C. 10.37++++ TeleCorp PCS, Inc. 1998 Restricted Stock Plan, as amended May 20, 1999. 10.38++++ TeleCorp PCS, Inc. 1999 Stock Option Plan, dated June 23, 1999, as amended. 10.39. TeleCorp PCS, Inc. 2000 Employee, Director and Consultant Stock Plan. 10.40* Form of Indemnification Agreement to be entered into between TeleCorp PCS, Inc. and its directors and executive officers. 10.41.1++ Stockholders' Agreement, dated January 7, 1999, by and among AT&T Wireless PCS Inc., Initial investors other than AT&T Wireless, Management Stockholders, and Tritel, Inc. 10.41.2++ First Amendment to Tritel's Stockholders' Agreement, dated August 27, 1999. 10.41.3++ Second Amendment to Tritel's Stockholders' Agreement, dated as of September 1, 1999. 10.41.4+ Third Amendment to Tritel's Stockholders' Agreement, dated November 18, 1999. 10.41.5+ Fourth Amendment to Tritel's Stockholders' Agreement, dated December 10, 1999. 10.42++ Investors Stockholders' Agreement, dated January 7, 1999, by and among Tritel, Inc., Washington National Insurance Company, United Presidential Life Insurance Company, Dresdner Kleinwort Benson Private Equity Partners LP, Toronto Dominion Investments, Inc., Entergy Wireless Corporation, General Electric Capital Corporation, Triune PCS, LLC, FCA Venture Partners II, L.P., Clayton Associates LLC, Trillium PCS, LLC, Airwave Communications, LLC, Digital PCS, LLC, and The Stockholders Named Therein. 10.43 Investors Stockholders' Agreement, dated as of February 28, 2000, by and among TeleCorp PCS, Inc. and The Stockholders Named Therein. 10.44.1++ AT&T Wireless Services, Inc. Network Membership License Agreement, dated January 7, 1999, by and between AT&T Corp. and Tritel, Inc.
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Exhibit No. Description ----------- ------------------------------------------------------------------ 10.44.2**** Amendment No. 1 to AT&T Wireless Services, Inc. Network Membership License Agreement, dated as of November 13, 2000, by and between AT&T Corp. and Tritel, Inc. 10.45.1++ Intercarrier Roamer Service Agreement, dated January 7, 1999, between AT&T Wireless Services, Inc. and Tritel, Inc. 10.45.2**** Amendment No. 1 to Intercarrier Roamer Service Agreement, dated as of November 13, 2000, between AT&T Wireless Services, Inc. and Tritel, Inc. 10.46++ Amended and Restated Agreement, dated April 16, 1999, by and between TeleCorp Communications, Inc., Triton PCS, Inc., Tritel Communications, Inc. and Affiliate License Co., L.L.C. 10.47 Employment Agreement, dated as of November 13, 2000, by and between TeleCorp PCS, Inc. and William M. Mounger, II. 10.48 Employment Agreement, dated as of November 13, 2000, by and between TeleCorp PCS, Inc. and E.B. Martin, Jr. 10.49+++ Letter Agreement, dated February 28, 2000, by and among William Mounger, II, TeleCorp PCS, Inc., Tritel, Inc., Thomas Sullivan, and Gerald Vento. 10.50+++ Letter Agreement, dated February 28, 2000, by and among E.B. Martin, Jr., TeleCorp PCS, Inc., Tritel, Inc., Thomas Sullivan, and Gerald Vento. 10.51+++ Asset Purchase Agreement, dated as of June 2, 2000, by and between Airadigm Communications, Inc. and RW Acquisition L.L.C. 10.52+++ Contingent Supplement to Asset Purchase Agreement, dated as of June 2, 2000, by and between Airadigm Communications, Inc. and RW Acquisition L.L.C. 10.53+++ Letter Agreement, dated June 2, 2000, by and between RW Acquisition, L.L.C. and Airadigm Communications, Inc. regarding Working Capital Loan. 10.54+++ Construction Management Agreement, dated as of June 2, 2000, by and between TeleCorp Communications, Inc. and Airadigm Communications, Inc. 10.55+++ Counterpart Signature Page and Joinder to the Agreement and Plan of Reorganization and Contribution, dated May 31, 2000, by TeleCorp-Tritel Holding Company. 10.56+++ Counterpart Signature Page and Joinder to the Agreement and Plan of Reorganization and Contribution, dated May 31, 2000, by TTHC First Merger Sub, Inc. 10.57+++ Counterpart Signature Page and Joinder to the Agreement and Plan of Reorganization and Contribution, dated May 31, 2000, by TTHC Second Merger Sub, Inc. 10.58+++++ Purchase Agreement, dated July 11, 2000, by and among Chase Securities Inc., Lehman Brothers Inc., Deutsche Banc Securities, Inc., TeleCorp PCS, Inc. and TeleCorp Communications, Inc. 10.59++++++ Consent Pursuant to Section 6.2(a) of the Agreement and Plan of Reorganization and Contribution, dated as of July 10, 2000, by Tritel, Inc. to TeleCorp PCS, Inc. 10.60++++++ Exchange and Registration Rights Agreement, dated as of July 14, 2000, by and among Chase Securities Inc., Lehman Brothers Inc., Deutsche Banc Securities, Inc., TeleCorp PCS, Inc., TeleCorp Communications, Inc. and Bankers Trust Company, as Trustee. 10.61++++ 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.
6
Exhibit No. Description ----------- ------------------------------------------------------------------ 10.62*** Credit Agreement, dated as of July 14, 2000, by and among Black Label Wireless, Inc., as Borrower, the financial institutions from time to time parties thereto, as Lenders and Lucent Technologies Inc., as Agent for the Lenders. 10.63*** Letter Agreement, dated July 14, 2000, by and among Black Label Wireless, Inc., as Borrower, Lucent Technologies Inc., as Agent and Lucent Technologies Inc., as Lender. 10.64*** Commitment Letter, dated July 14, 2000, by and between TeleCorp- Tritel Holding Company and Lucent Technologies Inc. 10.65*** Form of Indenture related to the sale of notes by TeleCorp PCS, Inc. (formerly known as TeleCorp-Tritel Holding Company) to Lucent Technologies Inc. 10.66*** Form of Securities Purchase Agreement, by and between TeleCorp PCS, Inc. (formerly known as TeleCorp-Tritel Holding Company) and Lucent Technologies Inc. 10.67* Stock Purchase Agreement, dated as of November 22, 1999, by and between AT&T Wireless PCS LLC and TeleCorp PCS, Inc.
- -------- * Incorporated by reference to the Registration Statement on Form S-1 (File No. 333-89393) of TeleCorp PCS, Inc. ** Incorporated by reference to the Form 10-K filed on March 30, 2000 (File No. 000-27901) of TeleCorp PCS, Inc. *** Incorporated by reference to the Form 10-Q filed on August 11, 2000 (File No. 000-27901) of TeleCorp PCS, Inc. + Incorporated by reference to the Registration Statement on Form S-1 (File No. 333-91207) of Tritel, Inc. ++ Incorporated by reference to the Registration Statement on Form S-4 (File No. 333-82509) of Tritel PCS, Inc. +++ Incorporated by reference to the Registration Statement on Form S-4 (File No. 333-36954) of TeleCorp-Tritel Holding Company. ++++ Incorporated by reference to the Registration Statement on Form S-4 (File No. 333-81313, 333-81313-01) of TeleCorp PCS, Inc. and TeleCorp Communications, Inc. +++++ Incorporated by reference to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-81313, 333-81313-01) of TeleCorp PCS, Inc. and TeleCorp Communications, Inc. ++++++ Incorporated by reference to the Registration Statement on Form S-4 (File No. 333-43596) of TeleCorp PCS, Inc. and TeleCorp Communications, Inc. . Incorporated by reference to the Registration Statement on Form S-8 (File No. 333-49792) of TeleCorp-Tritel Holding Company (renamed TeleCorp PCS, Inc.). . . Incorporated by reference to the TeleCorp PCS, Inc. (f/k/a TeleCorp- Tritel Holding Company) Current Report on Form 8-K filed on November 13, 2000. . . . Incorporated by reference to the Form 10-Q filed on November 14, 2000 (File No. 000-27901) of TeleCorp Wireless, Inc. . . . . Incorporated by reference to the TeleCorp Wireless, Inc. Current Report on Form 8-K (File No. 000-27901) filed on November 13, 2000. . . . . . Incorporated by reference to the Post-Effective Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-43596) of TeleCorp PCS, Inc. and TeleCorp Communications, Inc. (b) Reports on Form 8-K: The Company filed a Current Report on Form 8-K dated November 13, 2000 under which the Company announced the consummation of the Company's acquisition of Tritel as well as the closing of the Asset Exchange Agreement with AT&T Wireless. A copy of the Company's press release, dated November 13, 2000, was filed as an exhibit. 7 EX-3.3 2 0002.txt BY-LAWS OF TELECORP WIRELESS, INC. ================================================================================ Exhibit 3.3 BYLAWS OF TELECORP WIRELESS, INC. ================================================================================ TABLE OF CONTENTS Page ---- ARTICLE I OFFICES Section 1.1 Registered Office..........................................1 Section 1.2 Other Offices..............................................1 ARTICLE II MEETING OF STOCKHOLDERS Section 2.1 Time and Place.............................................1 Section 2.2 Annual Meeting.............................................2 Section 2.3 Special Meetings of Stockholders...........................2 Section 2.4 Notice of Meetings.........................................2 Section 2.5 Quorum and Adjournment of Meetings.........................2 Section 2.6 Vote Required..............................................3 Section 2.7 Voting.....................................................3 Section 2.8 Proxies....................................................4 Section 2.9 Consents...................................................4 ARTICLE III DIRECTORS Section 3.1 Board of Directors.........................................5 Section 3.2 Number, Terms and Election of Directors....................5 Section 3.3 Resignation and Removal....................................5 Section 3.4 Vacancies..................................................6 Section 3.5 Compensation...............................................6 ARTICLE IV MEETINGS OF THE BOARD Section 4.1 Time and Place.............................................6 Section 4.2 Annual Meeting.............................................6 Section 4.3 Regular Meetings...........................................7 Section 4.4 Special Meetings...........................................7 -i- Section 4.5 Quorum and Voting..........................................7 Section 4.6 Consents...................................................7 Section 4.7 Telephonic Meetings of Directors...........................8 ARTICLE V COMMITTEES OF THE BOARD Section 5.1 Designation and Powers.....................................8 ARTICLE VI NOTICES Section 6.1 Delivery of Notices........................................8 Section 6.2 Waiver of Notice...........................................9 ARTICLE VII OFFICERS Section 7.1 Executive Officers.........................................9 Section 7.2 Other Officers and Agents..................................9 Section 7.3 Tenure; Resignation; Removal; Vacancies...................10 Section 7.4 Compensation..............................................10 Section 7.5 Authority and Duties......................................10 Section 7.6 Chairman of the Board.....................................11 Section 7.7 President.................................................11 Section 7.8 The Vice President(s).....................................11 Section 7.9 The Treasurer.............................................12 Section 7.10 The Secretary.............................................12 ARTICLE VIII CERTIFICATES OF STOCK Section 8.1 Form and Signature........................................13 Section 8.2 Lost or Destroyed Certificates............................13 Section 8.3 Registration of Transfer..................................14 ARTICLE IX GENERAL PROVISIONS Section 9.1 Record Date...............................................14 Section 9.2 Registered Stockholders...................................14 -ii- Section 9.3 Dividends.................................................15 Section 9.4 Checks and Notes..........................................15 Section 9.5 Fiscal Year...............................................15 Section 9.6 Voting of Securities of Other Corporations................15 Section 9.7 Transfer Agent............................................15 Section 9.8 Corporate Seal............................................16 ARTICLE X INDEMNIFICATION Section 10.1 Indemnification...........................................16 ARTICLE XI AMENDMENTS Section 11.1 By the Stockholders.......................................20 Section 11.2 By the Board of Directors.................................20 -iii- BY-LAWS OF TELECORP WIRELESS, INC. Article I. OFFICES Section 1.1 Registered Office. The registered office of TeleCorp Wireless, Inc. (hereinafter called the "Corporation") in the State of Delaware shall be The Corporation Trust Company, 1209 Orange Street, in the City of Wilmington, County of New Castle, Delaware 19801, and the registered agent in charge thereof shall be The Corporation Trust Company. Section 1.2 Other Offices. In addition to its registered office in the State of Delaware, the Corporation may have an office or offices in such other places as the Board of Directors (the "Board") may from time to time designate or the business of the Corporation may require. The corporate headquarters of the Corporation shall be initially located in Arlington, Virginia. ARTICLE II. MEETING OF STOCKHOLDERS Section 2.1 Time and Place. All meetings of the stockholders of the Corporation shall be held at such time and place, either within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2.2 Annual Meeting. The annual meeting of stockholders of the Corporation shall be held at such date, time and place, either within or without the State of Delaware, as shall be determined by the Board and stated in the notice of meeting. Section 2.3 Special Meetings of Stockholders. Special meetings of stockholders for any purpose or purposes if not otherwise prescribed by statute or by the Certificate of Incorporation, may be called by the Board, the Chairman of the Board, or the Secretary and shall be called by the President or Secretary at the request of stockholders owning a majority of the shares of capital stock of the Corporation issued and outstanding and entitled to vote at a meeting of stockholders. Such request shall state the purpose or purposes of the proposed meeting. The time of any such special meeting shall be fixed by the officer calling the meeting and shall be stated in the notice of such meeting, which notice shall specify the purpose or purposes thereof. Business transacted at any special meeting shall be confined to the purposes stated in the notice of meeting and matters germane thereto. Section 2.4 Notice of Meetings. Notice of the time and place of every annual or special meeting of the stockholders shall be given not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting, in the manner prescribed by Section 6.1 of these By-Laws, except that where the matter to be acted upon is a merger or consolidation of the Corporation, or a sale, lease or exchange of all or substantially all of its assets, such notice shall be given not less than twenty nor more than sixty days prior to such meeting. Section 2.5 Quorum and Adjournment of Meetings. The holders of a majority of the shares of capital stock issued and outstanding and entitled to vote thereat, present -2- in person, or represented by proxy, shall be requisite and shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by the Certificate of Incorporation. If a majority shall not be present in person or represented by proxy at any meeting of the stockholders at which action is to be taken by the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time without notice other than announcement at the meeting, until holders of the requisite number of shares of stock entitled to vote shall be present or represented by proxy. At such adjourned meeting at which such holders of the requisite number of shares of capital stock shall be present or represented by proxy, any business may be transacted which might have been transacted at the meeting as originally called. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of adjourned meeting shall be given to each stockholder of record entitled to vote thereat. Section 2.6 Vote Required. At any meeting of stockholders, directors shall be elected by a plurality of votes, and all other matters shall be decided by a majority of votes, cast by the stockholders present in person or represented by proxy and entitled to vote, unless the matter is one for which, by express provisions of statute, of the Certificate of Incorporation or of these By-Laws, a different vote is required, in which case such express provision shall govern and control the determination of such matter. Section 2.7 Voting. At any meeting of the stockholders, each stockholder having the right to vote shall be entitled to vote in person or by proxy. To determine the stockholders entitled to notice of or to vote at any meeting of the stockholders or any adjournment thereof, the Board may fix, in advance, a record date which shall be not more than -3- sixty days nor less than ten days before the date of such meeting. Except as otherwise provided by the Certificate of Incorporation or by statute, each stockholder of record shall be entitled to one vote for each outstanding share of capital stock standing in his or her name on the books of the Corporation as of the record date. A complete list of the stockholders entitled to vote at any meeting of stockholders arranged in alphabetical order with the address of each and the number of shares held by each, shall be prepared by the Secretary. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting during ordinary business hours for a period of at least ten days prior to the meeting, at the locations specified by the Delaware General Corporation Law. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 2.8 Proxies. Each proxy shall be in writing executed by the stockholder giving the proxy or his or her duly authorized attorney. No proxy shall be valid after the expiration of three years from its date, unless a longer period is provided for in the proxy. Unless and until voted, every proxy shall be revocable at the pleasure of the person who executed it or his or her legal representatives or assigns, except in those cases where an irrevocable proxy permitted by statute has been given. Section 2.9 Consents. The provision of these By-Laws covering notices and meetings to the contrary notwithstanding, any action required or permitted to be taken at any meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if a consent in writing setting forth the action so taken shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would have been necessary to authorize or take such action at a meeting at which all shares of stock entitled to -4- vote thereon were present and voted. Where corporate action is taken in such manner by less than unanimous written consent, prompt written notice of the taking of such action shall be given to all stockholders who have not consented in writing thereto and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting. ARTICLE III. DIRECTORS Section 3.1 Board of Directors. The business and affairs of the Corporation shall be managed by a Board of Directors. The Board may exercise all such powers of the Corporation and do all such lawful acts and things on its behalf as are not by statute or by the Certificate of Incorporation or by these By-Laws directed or required to be exercised or done by the stockholders. Section 3.2 Number, Election and Tenure. The number of directors shall be fixed initially by the incorporator of the Corporation and thereafter such number may be increased from time to time by the stockholders or by the Board or may be decreased by the stockholders, provided that no decrease in the number of directors shall shorten the term of any incumbent director. Except as provided by law or these By-Laws, directors shall be elected each year at the annual meeting of stockholders next succeeding his or her election until his or her successor is elected and has qualified or until his or her earlier resignation or removal. Section 3.3 Resignation and Removal. A director may resign at any time by giving written notice to the Board or to the President of the Corporation. Such resignation shall take effect upon receipt thereof by the Board or by the President, unless otherwise specified therein. Any one or more of the directors may be removed, either with or without cause, at any -5- time by the affirmative vote of a majority of the stockholders at any special meeting of the stockholders called for such purpose. Section 3.4 Vacancies. A vacancy occurring for any reason and newly created directorships resulting from an increase in the authorized number of directors may be filled by the vote of a majority of the directors then in office, although less than a quorum, or by the sole remaining director, or by the stockholders. Section 3.5 Compensation. Each director shall receive for services rendered as a director of the Corporation such compensation as may be fixed by the Board. Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. ARTICLE IV. MEETINGS OF THE BOARD Section 4.1 Time and Place. Meetings of the Board shall be held at such places, within or without the State of Delaware, and within or without the United States of America, as shall be determined in accordance with these By-Laws. Section 4.2 Annual Meeting. Immediately after and at the place of the annual meeting of the stockholders, or at such other place as the Board may designate, a meeting of the newly elected Board for the purpose of organization and the election of officers and otherwise may be held. Such meeting may be held without notice. -6- Section 4.3 Regular Meetings. Regular meetings of the Board may be held without notice, at such time and place as shall, from time to time, be determined by the Board of Directors. Section 4.4 Special Meetings. Special meetings of the Board of Directors may be held at any time and place as shall be determined by resolution of the Board or upon the call of the Chairman, the President, the Secretary, or any member of the Board on two days' notice to each director by mail or on one day's notice personally or by telecopy, telephone or telegraph. Meetings of the Board may be held at any time without notice if all the directors are present, or if those not present waive notice of the meeting in writing, either before or after the meeting. Section 4.5 Quorum and Voting. A majority of the entire Board shall constitute a quorum at any meeting of the Board of Directors and the act of a majority of the directors shall be the act of the Board, except as may otherwise be specifically provided by law, the Certificate of Incorporation or by these By-Laws. If at any meeting of the Board there shall be less than a quorum present, the director or directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall have been obtained. Section 4.6 Consents. Any action required or permitted to be taken at any meeting of the Board may be taken without a meeting if all members of the Board consent to such action in writing, and such writing or writings are filed with the minutes of the proceedings of the Board. -7- Section 4.7 Telephonic Meetings of Directors. The Board may participate in a meeting by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation by such means shall constitute presence in person at such meeting. ARTICLE V. COMMITTEES OF THE BOARD Section 5.1 Designation and Powers. The Board may in its discretion designate one or more committees. Each committee shall consist of one or more of the directors of the Corporation. Such committee or committees shall have duties and powers not inconsistent with the laws of the State of Delaware, the Certificate of Incorporation, these By-Laws, and the respective resolution or resolutions of the Board. ARTICLE VI. NOTICES Section 6.1 Delivery of Notices. Notices to directors and stockholders shall be in writing and may be delivered personally or by mail. Notice by mail shall be deemed to be given at the time when deposited in the United States mail, postage prepaid, and addressed to directors or stockholders at their respective addresses appearing on the books of the Corporation, unless any such director or stockholder shall have filed with the Secretary of the Corporation a written request that notices intended for him or her be mailed or delivered to some other address, in which case the notice shall be mailed to or delivered at the address designated in such request. Notice to directors may also be given by telegram or by telecopy. -8- Section 6.2 Waiver of Notice. Whenever notice is required to be given by statute, the Certificate of Incorporation or these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to such notice whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Attendance of a person at a meeting of stockholders, directors or any committee of directors, as the case may be, shall constitute a waiver of notice of such meeting, except where the person is attending for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of stockholders, directors or committee of directors need be specified in any written waiver of notice. Article VII. OFFICERS Section 7.1 Executive Officers. At the annual meeting of directors the Board shall elect a Chairman of the Board, President, Secretary and Treasurer and may elect one or more Vice Presidents, Assistant Secretaries or Assistant Treasurers and such other officers as the Board may from time to time designate or the business of the Corporation may require. Except for the Chairman of the Board, no executive officer need be a member of the Board. Any number of offices may be held by the same person, except that the office of Secretary may not be held by the Chairman of the Board or the President. Section 7.2 Other Officers and Agents. The Board may also elect such other officers and agents as the Board of Directors may at any time or from time to time determine to -9- be advisable, such officers and such agents to serve for such terms and to exercise such powers and perform such duties as shall be specified at any time or from time to time by the Board. Section 7.3 Tenure; Resignation; Removal; Vacancies. Each officer of the Corporation shall hold office until his or her successor is elected and qualified, or until his or her earlier resignation or removal; provided, that if the term of office of any officer elected or appointed pursuant to Section 7.2 of these By-Laws shall have been fixed by the Board, he or she shall cease to hold such office no later than the date of expiration of such term regardless of whether any other person shall have been elected or appointed to succeed him or her. Any officer elected by the Board may be removed at any time, with or without cause, by the Board, provided, that any such removal shall be without prejudice to the rights, if any, of the officer so employed under any employment contract or other agreement with the Corporation. An officer may resign at any time upon written notice to the Board. If the office of any officer becomes vacant by reason of death, resignation, retirement, disqualification, removal from office or otherwise, the Board may choose a successor or successors to hold office for such term as may be specified by the Board. Section 7.4 Compensation. Except as otherwise provided by these By-Laws, the salaries of all officers and agents of the Corporation appointed by the Board shall be fixed by the Board. Section 7.5 Authority and Duties. All officers as between themselves and the Corporation, shall have such authority and perform such duties in the management of the Corporation as may be provided in these By-Laws. In addition to the powers and duties hereinafter specifically prescribed for the respective officers, the Board may from time to time -10- impose or confer upon any of the officers such additional duties and powers as the Board may see fit, and the Board may from time to time impose or confer any or all of the duties and powers hereinafter specifically prescribed for any officer upon any other officer or officers. Section 7.6 Chairman of the Board. The Chairman of the Board, who shall be a director, shall preside at all meetings of the stockholders and at all meetings of the Board. As director, he or she shall perform such other duties as may be assigned from time to time by the Board. Section 7.7 President. The President shall be the chief executive officer of the Corporation. He or she shall perform such duties as may be assigned to him or her by the Board, and in the event of disability or absence of the Chairman of the Board, perform the duties of the Chairman of the Board, including presiding at meetings of stockholders and directors. He or she shall from time to time report to the Board all matters within his or her knowledge which the interest of the Corporation may require to be brought to their notice, and shall also have such other powers and perform such other duties as may be specifically assigned to him or her from time to time by the Board. The President shall see that all resolutions and orders of the Board are carried into effect, and in connection with the foregoing, shall be authorized to delegate to the Vice President and the other officers such of his or her powers and such of his or her duties as he or she may deem to be advisable. Section 7.8 The Vice President(s). The Vice President, or if there be more than one, the Vice Presidents, shall perform such duties as may be assigned to them from time to time by the Board or as may be designated by the President. In case of the absence or disability of the President the duties of the office shall, if the Board or the President has so authorized, be -11- performed by the Vice President, or if there be more than one Vice President, by such Vice President as the Board or President shall designate. Section 7.9 The Treasurer. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all monies and other valuable effects in the name and to the credit of the Corporation, in such depositories as may be designated by the Board or by any officer of the Corporation authorized by the Board to make such designation. The Treasurer shall exercise such powers and perform such duties as generally pertain or are necessarily incident to his or her office and shall perform such other duties as may be specifically assigned to him or her from time to time by the Board or by the President or any Vice President. Section 7.10 The Secretary. The Secretary shall attend all meetings of the Board and all meetings of the stockholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose; and shall perform like duties for any committee when required. He or she shall give, or cause to be given, notice of all meetings of the stockholders and, when necessary, of the Board. The Secretary shall exercise such powers and perform such duties as generally pertain or are necessarily incident to his or her office and he or she shall perform such other duties as may be assigned to him or her from time to time by the Board, the President or by any Vice President. -12- ARTICLE VIII. CERTIFICATES OF STOCK Section 8.1 Form and Signature. The certificates of stock of the Corporation shall be in such form or forms not inconsistent with the Certificate of Incorporation as the Board shall approve. They shall be numbered, the certificates for the shares of stock of each class to be numbered consecutively, and shall be entered in the books of the Corporation as they are issued. They shall exhibit the holder's name and number of shares and shall be signed by the Chairman of the Board, the President or a Vice President and the Treasurer (or any Assistant Treasurer) or the Secretary (or any Assistant Secretary); provided, however, that where any such certificate is signed by a transfer agent or an assistant transfer agent, or by a transfer clerk acting on behalf of the Corporation, and registered by a registrar, the signature of any such President, Vice President, Treasurer, Assistant Treasurer, Secretary or Assistant Secretary, may be a facsimile. In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been used on any such certificate or certificates, shall cease to be such officer or officers of the Corporation, whether because of death, resignation, removal or otherwise, before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates may nevertheless be issued and delivered as though the person or persons who signed such certificate or certificates, or whose facsimile signature or signatures shall have been used thereon, had not ceased to be such officer or officers of the Corporation. Section 8.2 Lost or Destroyed Certificates. The Board may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate or stock to be lost or destroyed. When authorizing -13- such issue of a new certificate or certificates, the Board may in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his or her legal representatives, to advertise the same in such manner as it shall require, and to give a bond in such sum as the Board may direct, indemnifying the Corporation, any transfer agent and any registrar against any claim that may be made against them or any of them with respect to the certificate alleged to have been lost or destroyed. Section 8.3 Registration of Transfer. Upon surrender to the Corporation of a certificate for shares, duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, the Corporation shall issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction on its books. ARTICLE IX. GENERAL PROVISIONS Section 9.1 Record Date. In order that the Corporation may 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 may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. Section 9.2 Registered Stockholders. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and -14- accordingly shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by the laws of the State of Delaware. Section 9.3 Dividends. Dividends upon the capital stock of the Corporation shall in the discretion of the Board from time to time be declared by the Board out of funds legally available therefor after setting aside of proper reserves. Section 9.4 Checks and Notes. All checks and drafts on the bank accounts of the Corporation, all bills of exchange and promissory notes of the Corporation, and all acceptances, obligations and other instruments for the payment of money drawn, signed or accepted by the Corporation, shall be signed or accepted, as the case may be, by such officer or officers, agent or agents as shall be thereunto authorized from time to time by the Board or by officers of the Corporation designated by the Board to make such authorization. Section 9.5 Fiscal Year. The fiscal year of the Corporation shall be fixed by the Board. Section 9.6 Voting of Securities of Other Corporations. In the event that the Corporation shall at any time own and have power to vote any securities (including but not limited to shares of stock) of any other issuer, such securities shall be voted by such person or persons, to such extent and in such manner, as may be determined by the Board. Section 9.7 Transfer Agent. The Board may make such rules and regulations as it may deem expedient concerning the issue, transfer and registration of stock. It may appoint -15- one or more transfer agents and one or more registrars and may require all stock certificates to bear the signature of either or both. Section 9.8 Corporate Seal. The corporate seal shall have inscribed thereon the name of the Corporation and the words "Corporate Seal, Delaware". ARTICLE X. INDEMNIFICATION Section 10.1 Indemnification. (a) Actions, Suits or Proceedings Other Than by or in the Right of the Corporation. The Corporation shall indemnify any current or former director or officer of the Corporation and may, at the discretion of the Board, indemnify any current or former employee or agent of the Corporation 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 a director, officer, employee or agent (including trustee) of another corporation, partnership, joint venture, trust or other enterprise (including employee benefit plans) (funds paid or required to be paid to any person as a result of the provisions of this Section 10.1 shall be returned to the Corporation or reduced, as the case may be, to the extent that such person receives funds pursuant to an indemnification from any such other corporation, partnership, joint venture, trust or enterprise) to the fullest extent permissible under Delaware law, as then in effect, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement -16- actually and reasonably incurred by such person in connection with such action, suit or proceeding, if he or she acted in good faith and in a manner he or she 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 that his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person seeking indemnification did not act in good faith and in a manner which he or she 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 that his or her conduct was unlawful. (b) Actions or Suits by or in the Right of the Corporation. The Corporation shall indemnify any current or former director or officer of the Corporation and may, at the discretion of the Board, indemnify any current or former employee or agent of the Corporation 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 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 a director, officer, employee or agent (including trustee) of another corporation, partnership, joint venture, trust or other enterprise (including employee benefit plans) (funds paid or required to be paid to any person as a result of the provisions of this Section 10.1 shall be returned to the Corporation or reduced, as the case may be, to the extent that such person receives funds pursuant to an indemnification from any such other corporation, partnership, joint venture, trust or enterprise) to the fullest extent permitted under Delaware law, as then in -17- effect, against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, 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 Court of Chancery of the State of Delaware 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. (c) Indemnification for Expenses of Successful Party. To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in paragraph (a) or (b) of this Section 10.1, or in defense of any claim, issue or matter therein, such person shall be indemnified by the Corporation against expenses (including attorneys' fees) actually and reasonably incurred by him or her in connection therewith. (d) Determination of Right to Indemnification. Any indemnification under paragraph (a) or (b) of this Section 10.1 (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because such person has met the applicable standard of conduct set forth in paragraphs (a) and (b) of this Section 10.1. Such determination shall be made (1) by the Board by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum or (2) if -18- there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (3) by the holders of a majority of the shares of capital stock of the Corporation entitled to vote thereon. (e) Advancement of Expenses. Expenses (including attorneys' fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation as authorized in this Section 10.1. Such expenses (including attorneys' fees) incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the Board deems appropriate. (f) Other Rights. The indemnification and advancement of expenses provided by, or granted pursuant to, the other paragraphs of this Section 10.1 shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any By-Law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office. (g) Insurance. By action of the Board, notwithstanding an interest of the directors in the action, the Corporation may purchase and maintain insurance, in such amounts as the Board deems appropriate, on 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 (including trustee) of another corporation, partnership, -19- joint venture, trust or other enterprise (including employee benefit plans), 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 shall have the power to indemnify such person against such liability under the provisions of this Section 10.l. (h) Continuation of Rights to Indemnification. The indemnification and advancement of expenses provided by, or granted pursuant to, this Section 10.1 shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. (i) Protection of Rights Existing at Time of Repeal or Modification. Any repeal or modification of this Section 10.1 shall not adversely affect any right or protection of an indemnified person existing at the time of such repeal or modification. ARTICLE XI. AMENDMENTS Section 11.1 By the Stockholders. These By-Laws may be altered, amended or repealed in whole or in part, and new By-Laws may be adopted, by the affirmative vote of the holders of a majority of the shares of capital stock issued and outstanding and entitled to vote at any annual or special meeting of the stockholders, if notice thereof shall be contained in the notice of the meeting. Section 11.2 By the Board of Directors. These By-Laws may be altered, amended or repealed by the Board at any regular or special meeting of the Board if notice thereof shall be contained in the notice of the meeting. -20- EX-10.15.3 3 0003.txt AMENDMENT NO.2 TO NETWORK MEMBERSHIP LICENSE AGMT Exhibit 10.15.3 AMENDMENT NO. 2 TO AT&T WIRELESS SERVICES NETWORK MEMBERSHIP LICENSE AGREEMENT AMENDMENT NO. 2 TO NETWORK MEMBERSHIP LICENSE AGREEMENT ("Amendment") dated as of November 13, 2000, 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 N. 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, modified or supplemented, 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, Licensee has entered into an Agreement and Plan of Reorganization and Contribution with Tritel, Inc. and AT&T Wireless Services, Inc., dated as of February 28, 2000, as amended (the "Merger Agreement"), pursuant to which, among other things, Licensee agreed to extend the term of the License Agreement; WHEREAS, upon consummation of the Contribution (as defined in the Merger Agreement), Licensee and Licensor desire, that the License Agreement be amended to extend the term of the License Agreement and make other conforming changes on the terms and conditions set forth in this Amendment; and WHEREAS, Licensee has entered into a letter agreement with AT&T Wireless PCS, LLC dated February 28, 2000 (the "Letter Agreement"), pursuant to which, among other things, Licensee agreed to expand or contract, as applicable, the territories to which the License Agreement applies to include (or exclude, as applicable) the territories covered by the licenses transferred to (or by) the Company or an Affiliate (i) pursuant to that certain Asset Exchange Agreement by and between TeleCorp PCS, Inc., certain of its affiliates, and AT&T Wireless Services, Inc., dated as of February 28, 2000 (the "Asset Exchange Agreement") and (ii) pursuant to the Contribution (as defined in the Merger 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. "Stockholder's Agreement." All references in the License Agreement to the ----------------------- "Stockholder's Agreement" are hereby amended to refer to that certain Stockholder's Agreement dated as of November 13, 2000 by and among Licensee, an Affiliate of Licensor and certain other stockholders of Licensee, as the same may be amended, modified or supplemented in accordance with the terms thereof. 2. Amendment to Term. Section 11.1(a) of the License Agreement is hereby ----------------- amended by deleting the first sentence thereof in its entirety and inserting the following sentence in replacement therefor: "This Agreement shall commence on the date hereof and shall be in effect for a term ending July 17, 2005, unless terminated earlier pursuant to this Section 11." 3. Amendment to Territory. Schedule C to the License Agreement is hereby ---------------------- deleted in its entirety and replaced with Schedule C attached hereto. 4. Effectiveness of Amendment. This Amendment shall become effective only upon -------------------------- the consummation of the Contribution (as defined in the Merger Agreement). 5. Severability of Provisions. Any provision of this Amendment 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. 6. Agreement to Remain in Full Force and Effect. This Amendment 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. 7. Heading. The headings in this Amendment 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 or any provision thereof. 8. Counterparts. This Amendment 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. 9. 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 to effectuate their original intent as closely as possible. -2- Executed as of the date first written above. AT&T CORP. By /s/ Steven Garfinkel -------------------- Name: Steven Garfinkel Its: Assistant Secretary TELECORP PCS, INC. By /s/ Thomas H. Sullivan ------------------------ Name: Thomas H. Sullivan Its: President, Treasurer and Secretary SCHEDULE C ---------- TeleCorp Territory: - -------------------
Market BTA Market Designator ------ --------------------- I. From New Orleans MTA -------------------- Baton Rouge, LA 32 Lafayette-New Iberia, LA 236 New Orleans, LA 320 Alexandria, LA 009 Houma-Thibodeaux, LA 195 Hammond, LA 180 II. From Dallas-Forth Worth MTA --------------------------------------------- Portions of the Monroe, LA BTA*: 304 Ashley, AR Caldwell, LA Catahoula, LA *The Licensed Territory will include the Parishes of East Carroll, Franklin, Madison, Morehouse, Ouachita, Richland, Tensas, Union and West Carroll in the Monroe BTA necessary for TeleCorp to satisfy the FCC minimum build-out requirements pursuant to a build-out plan prepared by the Company and approved by AT&T, in its sole discretion, in accordance with Section 8.4(d) of the Stockholder's Agreement. III. From Houston, MTA ----------------- Beaumont, TX 34 Lake Charles, LA 238 IV. 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
Market BTA Market Designator ------ --------------------- 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 V. From Little Rock MTA -------------------- El Dorado-Magnolia-Camden, AR 125 Fayetteville-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 VI. 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
Market BTA Market Designator ------ --------------------- 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 VII. From Louisville-Lexington-Evansville MTA ---------------------------------------- Evansville, IN 135 Paducah-Murray-Mayfield, KY 339 VIII. Portions of the Puerto Rico-U.S. Virgin --------------------------------------- Islands MTA ----------- San Juan-Arecibo, Humacao 488 Mayaguez Aguadilla-Ponce 489 U.S. Virgin Islands 491 IX. From Milwaukee MTA ------------------ Milwaukee 297 Appleton-Oshkosh, WI 18 Fond du Lac, WI 148 Portions of Green Bay, WI BTA: 173 Brown County, WI Door County, WI Kewaunee County, WI Janesville-Beloit, WI 216 Madison, WI 272 Manitowoc, WI 276 Sheboygan, WI 417 Portions of Marquette, MI BTA: 282 Alger, MI Escabana, MI 132 Stevens Point-Marshfield, WI (4) 432 Portions of the La Crosse, WI-Winona, MN 234 BTA (4): Allamakee, IA Buffalo, WI
Market BTA Market Designator ------ --------------------- Houston, MN Jackson, WI La Crosse, WI Monroe, WI Vernon, WI Winona, MN X. From Des Moines-Quad City, IA MTA --------------------------------- Fort Dodge, IA 150 Waterloo-Cedar Falls, IA 462 Davenport, IA - Moline, IL 105 Dubuque, IA 118 Iowa City, IA 205 Burlington, IA 61 Clinton, IA - Sterling, IL 86 Des Moines, IA 111 Marshall Town, IA(3) 283 Mason City, LA(3) 285 Ottumwa, IA(3) 337 Cedar Rapids, IA (4) 70 Sioux City, IA (3) 421
(3) The Licensed Territory shall be amended to include this market without any further action by the parties hereto upon the acquisition by the Company of a PCS License covering this market, if and only if, such PCS License is acquired (i) on or before November 13, 2002, or (ii) pursuant to an agreement to acquire such PCS License entered into by the Company on or before November 13, 2002, it being understood that if the Company does not acquire, or enter into an agreement to acquire, a PCS License covering this market on or before November 13, 2002, the Territory shall not be amended to include this market without AT&T PCS's prior written consent. (4) The Licensed Territory shall be amended to include this market without any further action by the parties hereto upon the acquisition by the Company of a PCS License covering this market, if and only if, such PCS License is: (i) held or formerly held by Airadigm Communications, Inc. ("Airadigm") and acquired by the Company either (A) from Airadigm through the bankruptcy proceeding In Re Airadigm Wireless Communications, Inc., in the United States Bankruptcy Court for the Western District of Wisconsin, Case No. 99-33500-11 (the "Bankruptcy Proceeding"), or (B) through a Federal Communications Commission re-auction of the PCS licenses formerly held by Airadigm (the "Re-auction"), as contemplated in the side letter between AT&T Wireless PCS, LLC and TeleCorp PCS, Inc., dated February 28, 2000, (ii) acquired pursuant to the right of first offer granted to the Company by AT&T Wireless Services, Inc. pursuant to that certain Letter Agreement dated November 13, 2000 between the Company and AT&T Wireless PCS, Inc., or (iii) acquired through any other means, provided, as to (iii) only, that such licenses are acquired prior to or contemporaneously with the later of (Y) the FCC Re-auction, or (Z) the closing of the Bankruptcy Proceeding. EX-10.17 4 0004.txt MANAGEMENT AGREEMENT DATED NOVEMBER 13, 2000 ================================================================================ Exhibit 10.17 MANAGEMENT AGREEMENT between TELECORP MANAGEMENT CORP., INC. and TELECORP PCS, INC. Dated as of November 13, 2000 ================================================================================ 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.......................................................4 (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..................................................7 (d) Directors and Officers Liability Insurance.....................7 (e) Benefits.......................................................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.......................................10 (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.; COMPANY LOAN .........................................................13 (a) General.......................................................13 (b) Repurchase of Shares Upon Termination.........................13 (c) Closing of Repurchase; Assignment of Repurchase Right.........13 (d) Escrow of Shares..............................................13 -i- (e) Legends.......................................................14 SECTION 8. LIMITATIONS OF LIABILITY......................................14 (a) Force Majeure.................................................14 (b) Exculpation of Manager........................................15 (c) No Consequential or Special Damages...........................15 (d) Vento and Sullivan............................................15 SECTION 9. BOOKS AND RECORDS.............................................15 SECTION 10. DISPUTE RESOLUTION............................................15 (a) Dispute Resolution............................................15 (b) Mediation.....................................................16 (c) Arbitration...................................................16 (d) Confidentiality...............................................17 (e) Fees and Expenses.............................................17 SECTION 11. INSPECTION RIGHTS; DELIVERY OF INFORMATION....................17 (a) Company's Right to Inspect....................................17 (b) Notice of Certain Events......................................17 (c) Other Information.............................................18 SECTION 12. REPRESENTATIONS AND WARRANTIES................................18 (a) Organization and Standing of Parties..........................18 (b) Execution, Delivery, Performance and Binding Effect...........18 (c) Consents......................................................18 (d) Litigation; Claims............................................18 (e) Court Orders, Decrees, Judgments, Etc.........................19 SECTION 13. INDEMNIFICATION; EXPENSES.....................................19 (a) Indemnification...............................................19 (b) Advancement of Expenses.......................................19 SECTION 14. MISCELLANEOUS.................................................19 (a) Counterparts..................................................19 (b) Construction..................................................19 (c) Benefit; Assignment...........................................19 (d) Complete Agreement............................................20 (e) Amendment.....................................................20 (f) Governing Law.................................................20 (g) Severability..................................................20 (h) Further Assurances............................................20 (i) Waiver........................................................20 (j) Notices.......................................................20 -ii- SCHEDULE A.................................................................A-1 SCHEDULE I.................................................................I-1 SCHEDULE II...............................................................II-1 -iii- MANAGEMENT AGREEMENT MANAGEMENT AGREEMENT ("Agreement") dated as of November 13, 2000 (the "Effective Date") and effective as of that same date, by and between TELECORP MANAGEMENT CORP., INC., 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, Manager and TeleCorp Wireless, Inc. (f/k/a TeleCorp PCS, Inc.) ("Virginia") entered into that certain management agreement dated as of July 17, 1998 (the "Original Agreement"); WHEREAS, pursuant to that certain Agreement and Plan of Reorganization and Contribution by and among Virginia, Tritel, Inc. ("Mississippi"), and AT&T Wireless Services, Inc. ("Washington") dated as of February 28, 2000 (the "Merger Agreement"), Virginia as of the date hereof became a subsidiary of the Company; WHEREAS, as of the date hereof, Manager and Virginia entered into a Termination Agreement whereby the Original Agreement was terminated subject to the execution and delivery of this Agreement; WHEREAS, Manager and the Company desire to replace the Original Agreement with this Agreement; 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, the parties intend this Agreement to specify the terms upon which Manager will perform services to the Company hereunder; WHEREAS, Gerald T. Vento ("Vento") and Thomas H. Sullivan ("Sullivan") are the owners of all of the ownership interests in Manager and pursuant to the Merger Agreement, are the beneficial and record owners of certain shares of Common Stock and Preferred Stock of the Company set forth on Schedules I and II attached hereto and subject to repurchase as described herein (the "Shares"); WHEREAS, in order to induce the Company to enter into this Agreement with Manager, Vento and Sullivan have agreed to grant to the Company the repurchase rights with respect to certain of the Shares as set forth in this Agreement; 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, intending to be legally bound, 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, 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. 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; 2 (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; (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; 3 (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 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 be 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 Chairman, Chief Executive Officer and President of the Company and Sullivan shall serve as the Chief Financial Officer, Executive Vice President/General Counsel, Treasurer and Secretary 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 any of their existing businesses, any business which has not commenced operations, or any business at the request of the Company, (ii) Vento or Sullivan serving on a board of directors of a charitable organization; or (iii) 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 4 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 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; 5 (xi) hire or fire the independent certified public accountants of the Company; (xii) pay to any 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 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. The Compensation Committee of the Board of Directors shall annually 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 6 each calendar year or part thereof during the term of this Agreement, Manager shall be eligible to receive an annual bonus 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 but in no event shall such bonus be less than 50% of the preceding year's Management Fee. (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 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. 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 July 17, 2003 (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 A 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) Notwithstanding any provision herein to the contrary, upon the termination of this Agreement by Manager pursuant to Section 5(b)(iii)(A), (B) or (C) or by the Company, other than pursuant to Section 5(b)(ii)(A) and (E), any Shares that have not previously vested shall immediately vest (and shall not be subject to repurchase by the Company) on the date of such termination. (iv) 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 during the period in which the Company is paying 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); 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 9 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 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, 50% of the Shares, inclusive of those Shares already subject to repurchase pursuant to Section 7(b), then owned by each of them at a price per share equal to $.0l 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, the Class C Common Stock set forth on Schedule I (the "Class C Common Stock") and any shares of Class E Common Stock acquired by Vento and Sullivan after the date hereof as contemplated by Section 7(f) below (any such shares being referred to as the "Class E 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 10 Sullivan shall sell to the Company after the expiration of each 30-day period, in addition to any other Shares repurchased, 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, Class C Common Stock and Class E 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, Class C Common Stock and Class E Common Stock owned by them for a per share price equal to the fair market value of the Company's Class A Common Stock. 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, Class C Common Stock and Class E 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 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 11 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 rights under this Agreement, or (v) any disclosures that may be required by law, including securities laws. (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 rights 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 $.0l 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 12 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.; Company Loan (a) General. Each of Vento and Sullivan hereby agrees that the Shares set forth on Schedule II shall be subject to the vesting schedules set forth on Schedule II, and are subject to repurchase by the Company at a repurchase price of $.01 per shares in accordance with the terms of this Section 7. As used in this Section 7, the following terms have the following meanings: (i) "Extraordinary Event Shares" means a number of Shares equal to 1,441,152 shares of Class A Voting Common Stock. (ii) "Restricted Holder" means each of Vento and Sullivan. (b) Repurchase of Shares 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 such Restricted Holder's Shares that have not theretofore vested pursuant to Schedule II. (c) Closing of Repurchase; Assignment of Repurchase Right. The closing of a purchase and sale of Shares pursuant to Section 7(b) 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 the date that this Agreement terminated. 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 such 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 part 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 such 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) 13 held by the Escrow Holder and representing such Shares, (ii) cause new certificate(s) to be issued representing the number of 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 such 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 such Shares while they are held in escrow, including without limitation, the right to vote such 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 such 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 such Shares shall be immediately subject to this escrow, deposited with the Escrow Holder and included thereafter as "Shares" for purposes of this Agreement and the Company's repurchase right. (e) Legends. The share certificates evidencing the Shares which have not theretofore vested pursuant to Schedule II 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. (f) Company Loans. In the event that Vento and Sullivan are permitted to purchase shares of the Company's capital stock owned by William Mounger and/or E.B. Martin pursuant to the employment agreements by and between the Company and such Persons, then upon the request of Vento and/or Sullivan, the Company shall lend Vento and Sullivan such amounts as needed in order to fund such purchases, upon such terms as the parties may agree to, which terms shall include that any such loan shall be non-recourse to the borrower, and Schedule I hereto shall be amended to reflect such purchase. Such shares shall be subject to purchase by the Company if this Agreement is terminated for any reason at a price per share equal to the fair market price of the Company's Class A Common Stock. 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, 14 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 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 an 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 15 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 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 a final, binding and nonappealable judgment and the award 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. 16 (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 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. 17 (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 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. (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 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 is assets or businesses. This Agreement constitutes the legal, valid and binding obligation of such party enforceable against it in accordance with its term. (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. 18 (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 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 19 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 Washington 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 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: 20 If to Manager: TeleCorp Management Corp., Inc. 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., Inc. 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., Inc. 1010 N. Glebe Road - Suite 800 Arlington, Virginia 22201 Attention: General Counsel Telephone: (703) 236-1100 Facsimile: (703) 236-1376 Washington Wireless Services, Inc. 5000 Carillon Point Kirkland, Washington 98033 Attention: William W. Hague Telephone: (425) 828-8461 Facsimile: (425) 828-8451 And 21 Washington Corp. 295 North Maple Avenue Basking Ridge, New Jersey 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: Gregg S. Lerner Telephone: (212) 833-1110 Facsimile: (212) 355-6401 and To each Cash Equity Investor, to its address set forth on Schedule A 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. 22 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: Thomas H. Sullivan Title: Executive Vice President MANAGER: TELECORP MANAGEMENT CORP., INC. By: /s/ Thomas H. Sullivan --------------------------------- Name: Thomas H. Sullivan 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 H. Sullivan - ---------------------- Thomas H. Sullivan 23 SCHEDULE A Objectives Sched. A-1 SCHEDULE I - --------------------------------------------- Voting Class C Common Preference - --------------------------------------------- Gerald Vento 105,008 1,545 - --------------------------------------------- Thomas Sullivan 65,277 1,545 - --------------------------------------------- Sched. I-1 SCHEDULE II Certain Class A Common Stock and Series E Preferred Stock owned by Vento and Sullivan which are not Extraordinary Event Shares (in aggregate, 5,764,596 shares of Class A Common Stock and 18,220 shares of Series E Preferred Stock) shall vest as follows. Vesting Date Percent of Shares ------------ ----------------- Vested 20% July 17, 2000 15% July 17, 2001 15% July 17, 2002 15% July 17, 2003 15% Completion of Year 1 and Year 2 of Minimum 10% of the Shares issued at the Build-Out Plan of the Domestic Market attached Domestic Market Closing as Exhibit A 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 1 and Year 2 of 10% of the Shares issued at the Minimum Build-Out Plan of the Puerto Puerto Rico Market Closing Rico Market attached as Exhibit B Completion of year 3 of Minimum 10% of the Shares issued at the Build-Out Plan of the Puerto Rico Market Puerto Rico Market Closing 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% Sched. II-1 Vesting of Vento's and Sullivan's Extraordinary Event Shares. Vento's and Sullivan's Extraordinary Event Shares shall vest as follows: Vesting Date Percent of Shares ------------ ----------------- The Effective Date 50% The Effective Date/November 23, 2000 16 2/3% November 23, 2001 16 2/3% November 23, 2002 16 2/3% Total 100.00% Sched. II-2 EX-10.19.2 5 0005.txt AMD. NO. 1 TO ROAMING ADMINISTRATION SERVICE AGMT Exhibit 10.19.2 AMENDMENT NO. 1 TO ROAMING ADMINISTRATION SERVICE AGREEMENT AMENDMENT NO. 1 TO ROAMING ADMINISTRATION SERVICE AGREEMENT ("Amendment") made this 13th day of November, 2000, by and between AT&T Wireless Services, Inc. ("AWS"), a Delaware corporation, with its principal place of business at 7277 164th Avenue NE, Redmond, Washington 98052, and TeleCorp PCS, Inc. ("TeleCorp"), a Delaware corporation, with its principal place of business at 1010 N. Glebe Road, Arlington, Virginia 22201. Certain capitalized terms used herein and not otherwise defined have the meaning assigned to such term in the Roaming Agreement (defined below). WHEREAS, AWS and TeleCorp are party to that certain Roaming Administration Services Agreement, dated as of July 17, 1998 (the "Roaming Agreement"), pursuant to which TeleCorp receives certain benefits under Intercarrier Roaming Services Agreements between AWS and other providers of wireless telecommunications service. WHEREAS, TeleCorp has entered into an Agreement and Plan of Reorganization and Contribution with Tritel, Inc. and AWS, dated as of February 28, 2000, as amended (the "Merger Agreement") pursuant to which, among other things, TeleCorp will acquire rights to acquire certain PCS licenses covering portions of Wisconsin, Iowa and Michigan as more fully described in the Contribution (as such term is defined in the Merger Agreement) and the Merger Agreement; WHEREAS, TeleCorp and certain of its affiliates have entered into an Asset Exchange Agreement and AWS, dated as of February 28, 2000 (the "Asset Exchange Agreement") pursuant to which, among other things, TeleCorp will exchange certain PCS licenses covering portions of Massachusetts and New Hampshire for PCS licenses or rights to acquire PCS licenses covering portions of Iowa, Wisconsin and Michigan as more fully described in the Asset Exchange Agreement; WHEREAS, the Company and AWS entered into a letter agreement dated February 28, 2000 (the "Letter Agreement"), pursuant to which, among other things, AWS agreed that the Company may acquire PCS Licenses covering all or any portion of the Des Moines-Quad Cities MTA as more fully described in the Letter Agreement; and WHEREAS, pursuant to the Letter Agreement, AWS agreed to expand or contract, as applicable, the territory to which the Roaming Agreement applies to include (or exclude, as applicable) the territories covered by the licenses transferred to (or by) the Company or an Affiliate (i) pursuant to the Asset Exchange Agreement, (ii) pursuant to the Contribution; and (iii) solely upon the closing of an acquisition of a PCS license covering the Des Moines-Quad Cities MTA pursuant to the Letter Agreement (in addition to those acquired under the Asset Exchange Agreement), the portion of the Des Moines-Quad Cities MTA covered by such License. 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 to Territories. Exhibit A to the Roaming Agreement is hereby ------------------------ deleted in its entirety and replaced with Exhibit A attached. 2. Amendment to "Other Wireless Carrier's Exhibit." Exhibit A-l to the Roaming ----------------------------------------------- Agreement is hereby deleted in its entirety and replaced with Exhibit A-1 attached. 3. Severability of Provisions. Any provision of this Amendment 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 shall be -------------------------------------------- deemed to be an amendment to the Roaming Agreement. All references to the Roaming Agreement in any other agreements or documents shall on and after the date hereof be deemed to refer to the Roaming Agreement as amended hereby. Except as amended hereby, the Roaming 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 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 or any provision thereof. 6. Counterparts. This Amendment 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. Governing Law. This Amendment 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] Executed as of the date first written above. AT&T WIRELESS SERVICES, INC. By /s/ Joseph Stumpf ------------------------------- Name: Joseph Stumpf ------------------------------- Its: Vice President-Acquisitions and Development -------------------------------------------- TELECORP PCS, INC. By /s/ Thomas H. Sullivan ------------------------------- Name: Thomas H. Sullivan ------------------------------- Its: President, Treasurer and Secretary -------------------------------------------- EXHIBIT A PCS Systems constructed or to be constructed in the TeleCorp Territory (as such term is defined in that certain Stockholder's Agreement, dated as of November 13, 2000 ("Stockholder's Agreement"), among TeleCorp, AT&T Wireless and the other parties signatory thereto) in accordance with the terms of the Stockholder's Agreement, as such agreement may be amended from time to time. Exhibit A-1 Other Wireless Carriers Effective 10/30/00 CARRIER_NAME ABIATAR SA ADVANTAGE SYSTEMS AERIAL COMMUNICATIONS AIRCELL AIRTOUCH CELLULAR NEW VECTOR AIRTOUCH GREAT LAKES KINI FRONTIER CELL OF ALABAMA ALLTEL AMERICAN CELLULAR WIRELESS AMERICAN MOBILE SATELLITE AMERITECH APPALACHIAN CELLULAR ARCTIC SLOPE CELLULAR AT&T WIRELESS SVCS ATL-BRAZIL ATT MOBILITY AWZ CELLULAR BAJA CELLULAR BELL ATLANTIC MOBILE BELL MOBILITY CELLULAR BELLSOUTH CELLULAR BELLSOUTH MOBILITY CELLULAR ONE OF INDIANAPOLIS TELCEL VENEZUELA BELLSOUTH INTERNATIONAL BELLSOUTH ECUADOR BSC PANAMA BCP TELECOMMUNICATIONS BELLSOUTH CHILE BELLSOUTH NICARAGUA BERMUDA DIGITAL BLUEGRASS CELLULAR BRAZOS CELLULAR BTC MOBILITY C-1 COLUMBIA TN C-1 EAST CENTRAL ILLINOIS C-1 GREAT LAKES OF IOWA C-1 MUSTANG C-1 NE COLORADO C-1 SW FLORIDA CABLE & WIRELESS-CARIBBEAN CABLE AND WIRELESS HKT CABLE AND WIRELESS-JAMAICA CAL-NORTH CELLULAR CANTEL CAROLINA WEST CC CELLULAR CCPR CEDETEL CELCARIBE S.A. CELLOM CELLCOM ISRAEL CELLULAR CONNECTION CELLULAR MOBILE SYSTEMS CELLULAR ONE AMARILLO CELLULAR SOUTH CELLULAR THREE CELLULAR XL ASSOC, L.P. CELLULINK CELUMOVIL S.A. ALLEGAN CELLULAR CENTENNIAL CELLULAR CORP CENTRAL WIRELESS CENTURYTEL CFW CELLULAR CHARITON VALLEY WIRELESS CIS CITIZENS MOHAVE CELL CJD CELLULAR COASTEL COMMUNICATIONS COCELCO COMCAST CELLULAR COMCEL COMMNET CELLULAR INC CORDOVA WIRELESS CORRCOMM CROSS COUNTRY CELLULAR CTC STARTEL CTE PERSONAL EL SALVADOR CTI MOVIL-ARGENTINA DIGITAL CELLULAR - TX C-1 DOBSON SANTA CRUZ CELL. DCS OF KS/MO C-1 NW OKLAHOMA DOBSON CELLULAR C-1 FREDERICK SYGNET COMM INC. DOUGLAS TELECOMMUNICATIONS EXPRESS TELECOM-PHILLIPINES FARMERS CELLULAR FIRST CELLULAR OF S. ILLINOIS FIVE STAR WIRELESS GAIA, INC GOLDEN STATE CELLULAR GSN GTE MOVILNET GTE WIN 4 GTE WIRELESS GUAM TELEPHONE AUTHORITY HARGRAY WIRELESS HAWAIIAN WIRELESS HIGHLAND CELLULAR HOUSTON CELL. ILLINOIS VALLEY CELLULAR INDUS IUSACELL KENTUCKY CELLULAR LARSEN CELLULAR LEACO MACTEL CELLULAR SYSTEM MAINE CELLULAR METACOMM CELLULAR MID-MISSOURI CELLULAR MID-SOUTH CELLULAR MID-TEX CELLULAR MIDWEST WIRELESS MINIPHONE MINNESOTA SOUTHERN WIRELESS MOBIKOM MOBILETEL MOCELL MOVICOM MOVITEL NORTHWEST MISSOURI CELLULAR NYNEX OCCEL OKLAHOMA W. CELLULAR PACE COMMUNICATIONS PC MANAGEMENT, INC. PETROCOM PINE CELLULAR PIONEER/ENID CELLULAR PLATEAU WIRELESS POKA LAMBRO TELECOMMUNICATIONS PORTATEL POWERTEL PRICE COMMUNICATIONS PRIMECO PTSI CELLULAR INTERCEL PUBLIC SERVICE PUERTO RICO CELLULAR QUEBEC TELEPHONE CELL QUICK CALL CELLULAR RADIOFONE RAMCELL OF OREGON RFB CELLULAR RCC HOLDINGS INC RURAL CELLULAR SAGE BRUSH CELLULAR SE INDIANA CELLULAR SETEL SINGTEL MOBILE SMITH BAGLEY SOUTH CAROLINA CELLULAR SPRINT PCS STAR CELLULAR STERLING CELLULAR SUSSEX CELLULAR CHICAGO CELL 1 SNET CELLULAR NEW YORK/SWB SWB SYRACUSE/UTICA BOSTON CELL ONE C-1 WASH/BALT TELCEL TEL-CEL--ST MARTIN TELE2000 TELECEL BOLIVIA TELECEL PARAGUAY TELECOM MOBILE TELECOM PERSONAL S.A. TELEFONICA DE EL SALVADOR TELEFONICA DEL PERU TELEMOVIL EL SALVADOR TELESP - BRAZIL TELET- BRAZIL TEXAS CELLULAR TRITON U.S. CELLULAR U.S. UNWIRED UBET WIRELESS UNIFON-ARGENTINA UNION TELEPHONE UNITEL INC. UNKNOWN CARRIER US WEST PCS USA TEL VALLEY TELECOMMUNICATIONS VIRGINIA 10 LP VIRGINIA CELLULAR VITELCOM WEST CENTRAL WIRELESS VOICESTREAM WIRELESS AMERICAN RURAL CELLULAR WESTERN WIRELESS WESTEX CELL WIRELESSNORTH PCS X-CELL CELLULAR XIT CELLULAR YORKVILLE TELEPHONE EX-10.20 6 0006.txt CREDIT AGREEMENT AMENDED AND RESTATED 10-2-2000 ================================================================================ EXHIBIT 10.20 CREDIT AGREEMENT dated as of July 17, 1998 as amended and restated as of October 2, 2000 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...................................... 48 SECTION 1.03. Terms Generally .................................. 48 SECTION 1.04. Accounting Terms; GAAP............................ ARTICLE II The Credits SECTION 2.01. Commitments....................................... 49 SECTION 2.02. Loans and Borrowings.............................. 50 SECTION 2.03. Requests for Borrowings........................... 51 SECTION 2.04. Funding of Borrowings............................. 52 SECTION 2.05. Interest Elections................................ 53 SECTION 2.06. Termination and Optional Reduction of Commitments.................................. 55 SECTION 2.07. Repayment of Loans; Evidence of Debt............................................ 56 SECTION 2.08. Automatic Revolving Commitment Reductions; Amortization of Term Loans................................... 57 SECTION 2.09. Prepayment of Loans............................... 58 SECTION 2.10. Fees.............................................. 62 SECTION 2.11. Interest.......................................... 63 SECTION 2.12. Alternate Rate of Interest........................ 64 SECTION 2.13. Increased Costs................................... 64 SECTION 2.14. Break Funding Payments............................ 66 SECTION 2.15. Taxes............................................. 66 SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Setoffs................... 68 SECTION 2.17. Mitigation Obligations; Replacement of Lenders...................................... 71 SECTION 2.18. Expansion Facility................................ 72 SECTION 2.19. Letters of Credit................................. 73 ARTICLE III Representations and Warranties SECTION 3.01. Organization; Powers.............................. 79 SECTION 3.02. Authorization; Enforceability..................... 79 SECTION 3.03. Governmental Approvals; No Conflicts.............. 79 SECTION 3.04. Financial Condition; No Material Adverse Change.................................. 80 SECTION 3.05. Properties........................................ 80 SECTION 3.06. Litigation and Environmental Matters......................................... 81 SECTION 3.07. Compliance with Laws and Agreements............... 81 SECTION 3.08. Investment and Holding Company Status.......................................... 82 SECTION 3.09. Taxes............................................. 82 SECTION 3.10. ERISA............................................. 82 SECTION 3.11. Disclosure........................................ 82 SECTION 3.12. Subsidiaries; Parents............................. 83 SECTION 3.13. Absence of Non-Permitted Obligations..................................... 84 SECTION 3.14. Licenses.......................................... 85 SECTION 3.15. No Burdensome Restrictions........................ 85 SECTION 3.16. Use of Proceeds................................... 85 SECTION 3.17. Flood Insurance................................... 85 SECTION 3.18. Insurance......................................... 86 SECTION 3.19. Labor Matters..................................... 86 SECTION 3.20. Solvency.......................................... 86 SECTION 3.21. FCC Compliance.................................... 86 SECTION 3.22. Security Documents................................ 87 SECTION 3.23. Copyrights, Trademarks, etc....................... 88 SECTION 3.24. Federal Regulations............................... 89 SECTION 3.25. Year 2000......................................... 89 ARTICLE IV Conditions SECTION 4.01. Effective Date.................................... 89 SECTION 4.02. Each Credit Event................................. 97 SECTION 4.03. Amendment Effective Date.......................... 98 ARTICLE V Affirmative Covenants SECTION 5.01. Financial Statements and Other Information ...................................... 99 SECTION 5.02. Notices of Material Events........................ 102 SECTION 5.03. Information Regarding Collateral.................. 102 SECTION 5.04. Existence; Conduct of Business.................... 103 SECTION 5.05. Payment of Obligations............................ 104 SECTION 5.06. Maintenance of Properties......................... 104 SECTION 5.07. Insurance......................................... 104 SECTION 5.08. Casualty and Condemnation......................... 104 SECTION 5.09. Books and Records; Inspection and Audit Rights.................................... 105 SECTION 5.10. Compliance with Laws.............................. 105 SECTION 5.11. Use of Proceeds................................... 105 SECTION 5.12. Additional Subsidiaries........................... 106 SECTION 5.13 Further Assurances................................ 106 SECTION 5.14. Interest Rate Protection.......................... 108 SECTION 5.15. Satisfaction of F-Block Licence Requirements.................................... 108 SECTION 5.16. The Auction Subsidiaries.......................... 108 ARTICLE VI Negative Covenants SECTION 6.01. Indebtedness; Certain Equity Securities...................................... 109 SECTION 6.02. Liens............................................. 113 SECTION 6.03. Sale and Lease-Back Transactions.................. 114 SECTION 6.04. Fundamental Changes............................... 114 SECTION 6.05. Investments, Loans, Advances, Guarantees and Acquisitions..................... 115 SECTION 6.06 Asset Sales....................................... 117 SECTION 6.07. Hedging Agreements................................ 119 SECTION 6.08. Restricted Payments; Certain Payments of Indebtedness................................. 119 SECTION 6.09. Transactions with Affiliates...................... 121 SECTION 6.10. Restrictive Agreements............................ 121 SECTION 6.11. Amendment of Material Documents................... 122 SECTION 6.12. Financial Covenants............................... 122 SECTION 6.13. Liabilities of Special Purpose Subsidiaries.................................... 127 ARTICLE VII Events of Default........................... 128 ARTICLE VIII The Administrative Agent.................... 133 ARTICLE IX Miscellaneous SECTION 9.01. Notices........................................... 136 SECTION 9.02. Waivers; Amendments............................... 136 SECTION 9.03. Expenses; Indemnity; Damage Waiver................ 138 SECTION 9.04. Successors and Assigns............................ 140 SECTION 9.05. Survival.......................................... 143 SECTION 9.06. Counterparts; Integration; Effectiveness................................... 144 SECTION 9.07. Severability...................................... 144 SECTION 9.08. Right of Setoff................................... 145 SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process........................... 145 SECTION 9.10. WAIVER OF JURY TRIAL.............................. 146 SECTION 9.11. Headings.......................................... 146 SECTION 9.12. Confidentiality................................... 146 SCHEDULES: Schedule 1.01 -- Equity Participations Schedule 2.01 -- Commitments Schedule 2.01(a) -- Tranche C Commitments Schedule 3.05 -- Real Property Schedule 3.06 -- Litigation and Environmental Matters Schedule 3.12 -- Subsidiaries Schedule 3.14 -- Revised Schedules to Credit Agreement Schedule 3.14(iii) -- Network Area/Licenses Schedule 3.18 -- Insurance Schedule 3.21 -- FCC Compliance 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, as amended and restated as of October 2, 2000 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 operates and intends to further construct 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 and additional MTAs and BTAs it may be licensed to service in the future (the "Network"); WHEREAS, the Borrower, the Lenders, the Administrative Agent, the Syndication Agent and the Documentation Agent are parties to the Credit Agreement dated as of July 17, 1998 (as amended by the prior eleven amendments thereto, the "Existing Credit Agreement") pursuant to which the Lenders agreed 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; WHEREAS, the Borrower has entered into an agreement to acquire Tritel, Inc. ("Tritel"), via a newly-formed holding company, Holdings (such term and each other capitalized term used and not otherwise defined in this preamble has the meaning assigned in Article I below), which will become the new ultimate parent of both the Borrower and Tritel; WHEREAS, in connection with the acquisition of Tritel the following transactions have occurred or will occur: (A) Holdings has been formed as a wholly-owned Unrestricted Subsidiary of the Borrower;(B) Holdings has formed two wholly-owned Unrestricted Subsidiaries (the "Merger Subsidiaries"); (C) one of the Merger Subsidiaries will merge with and into the Borrower, the other will merge with and into Tritel, with the Borrower and Tritel becoming the surviving entities and the shareholders of each receiving stock of Holdings; (D) AW will (1) assign to Holdings (which will in turn contribute the same to the Borrower as a capital contribution) the right to acquire Indus, Inc. ("Indus") and the licenses and certain other assets of Airadigm Communications, Inc. ("Airadigm"), (2) contribute $20,000,000 in cash to Holdings and (3) extend the exclusive use of the AT&T brand-name for an additional two years (to July 17, 2005) and extend the status as the exclusive wireless provider for AW to the Indus and Airadigm markets, all in exchange for equity in Holdings (the transactions listed in this clause (D) are hereafter referred to as the "Plan of Contribution"; the transactions listed in clauses (A) through (D) are hereafter referred to as the "Tritel Transactions"); and WHEREAS, the Borrower has requested that the Required Lenders approve an amendment to and a restatement of the Existing Credit Agreement to accommodate the Tritel Transactions, the AT&T Swap, the Lucent Financing and certain other modifications and the undersigned Lenders are willing to agree to such amendment and restatement as provided for herein. NOW, THEREFORE, in consideration of the premises and the mutual agreements set forth below, the parties hereto agree that upon the Amendment Effective Date (as defined in Article I below), the Existing Credit Agreement shall be amended and restated to read in its entirety as follows (as so amended and restated, the "Amended and Restated Credit Agreement"). 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, and revenue from data-related services, including without limitation revenue from advertising and revenue-sharing arrangements of the Borrower and the Restricted Subsidiaries for such period. "Airadigm" has the meaning set forth in the preamble hereof. "Airadigm Acquisition" means the acquisition by the Borrower or a Restricted Subsidiary of substantially all of the assets of Airadigm for consideration of up to $250,000,000 (including the assumption of up to $85,000,000 in principal amount of FCC Debt). "Airadigm Loan" means a senior secured loan made by the Borrower or a Restricted Subsidiary to Airadigm in an aggregate principal amount not to exceed $250,000,000 less the outstanding amount of any FCC Debt of Airadigm, which is secured by substantially all of the assets of Airadigm (other than Licenses but including Capital Stock in subsidiaries holding Licenses as soon as transfer of such Licenses to subsidiaries is approved of by the FCC) and is evidenced by a promissory note pledged to the Collateral Agent pursuant to the Pledge Agreement. "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. "Amendment Effective Date" means the date on which the conditions specified in Section 4.03 are satisfied (or waived in accordance with Section 9.02). "Amendment Effective Date Pops" means the aggregate number of Pops as of the Amendment Effective Date covered by the Licenses set forth on Schedule 3.14. "Annualized Adjusted EBITDA" means for the period ending on the last day of any fiscal quarter, the product of (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, (b) with respect to any Tranche C Term Loan, the applicable Tranche C Rate and (c) 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: - -------------------------------------------------------------------------------- ABR Eurodollar Leverage Ratio: Spread Spread - -------------------------------------------------------------------------------- Category 1 Not Applicable 1.75% 2.75% - -------------------------------------------------------------------------------- Category 2 Greater than or equal to 10.0 to 1.00 1.50% 2.50% - -------------------------------------------------------------------------------- Category 3 Greater than or equal to 9.0 to 1.00 but less than 10.0 to 1.00 1.25% 2.25% - -------------------------------------------------------------------------------- Category 4 Greater than or equal to 8.0 to 1.00 but less than 9.0 to 1.00 1.00% 2.00% - -------------------------------------------------------------------------------- Category 5 Greater than or equal to 6.0 to 1.00 but less than 8.0 to 1.00 0.75% 1.75% - -------------------------------------------------------------------------------- Category 6 Greater than or equal to 5.0 to 1.00 but less than 6.0 to 1.00 0.50% 1.50% - -------------------------------------------------------------------------------- Category 7 Less than 5.0 to 1.00 0.25% 1.25% - -------------------------------------------------------------------------------- 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: - -------------------------------------------------------------------------------- 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 0.875% less than 75.0% - -------------------------------------------------------------------------------- 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. "AT&T Swap" means a series of transactions pursuant to which the Borrower will exchange Licences and License Related Assets in the New England market with AW and, in consideration therefor, (a) AW will assign, or will cause to be assigned, to THC or Telecorp PCS, LLC, a wholly-owned Subsidiary of the Borrower, (i) the right to purchase certain Licenses of Polycell Communications, Inc. and Clinton Communications, Inc. in certain Iowa markets (the "Polycell Licenses"), (ii) certain 10 MHZ Licenses in certain Wisconsin markets, (iii) certain 10 MHZ Licenses in the Fort Dodge, Iowa and Waterloo, Iowa BTAs and (iv) the right to purchase certain 30 MHZ Licenses of ABC Wireless, LLC in certain Iowa markets (the "ABC Licenses"), (b) AW will pay, or will cause to be paid, to the respective sellers cash consideration of approximately $12,000,000 required to acquire the Polycell Licenses and the ABC Licenses (the "Cash Consideration") and (c) AW will pay to the Borrower the sum of $80,000,000 less the Cash Consideration. "Auction Subsidiary" means Zephyr Wireless, LLC, a Delaware limited liability company, and/or any other Wholly Owned Subsidiary of THC that is a Restricted Subsidiary formed for the purpose of participating in License auctions. "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. "Black Label Acquisition" means the acquisition by a Restricted Subsidiary of all of the Capital Stock of or substantially all of the assets of Black Label Wireless, Inc. for aggregate consideration not to exceed $175,000,000 (including in the case of an asset acquisition, the assumption of liabilities, but excluding the amount of any obligations with respect to unpaid accrued interest on such liabilities). "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, which, upon consummation of the Tritel Transactions, will change its name to "TeleCorp Wireless, Inc.". "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. ss.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 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 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 Holdings prior to July 17, 2001; (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 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 Holdings; (c) occupation of a majority of the seats (other than vacant seats) on the board of directors of Holdings by Persons who were not (i) nominated by the board of directors of Holdings, (ii) appointed by directors so nominated or (iii) members of the board of directors on the Amendment Effective Date or (iv) appointed in accordance with the terms of the Stockholders Agreement as in effect on the Amendment Effective Date; (d) the acquisition of direct or indirect Control of Holdings by any Person or group other than Persons owning Capital Stock of Holdings on the Amendment Effective Date and their Affiliates; (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 Holdings; (f) Holdings not owning shares representing more than 80% of the aggregate ordinary voting power represented by the issued and outstanding Capital Stock of the Borrower; or (g) the acquisition of direct or indirect Control of the Borrower by any Person or group other than Persons owning Capital Stock of Holdings on the Amendment Effective Date and their Affiliates; provided, however, that neither (A) the sale by AW of all or any of its equity interest in Holdings subsequent to July 17, 2001 nor (B) the public sale by Holdings of newly issued common stock in a primary 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, Tranche B Term Loans or Tranche C Term Loans and, when used in reference to any Commitment, refers to whether such Commitment is a Revolving Commitment, Tranche A Commitment, Tranche B Commitment or Tranche C Commitment. "Closing Date" means July 17, 1998. "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 unconditional binding commitments to contribute cash to the Borrower as a capital contribution pursuant to (i) the Securities Purchase Agreement (in an amount not in excess of $133,000,000) and (ii) the San Juan Purchase Agreement (in an amount not in excess of $39,996,000); 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. "Commitment" means a Revolving Commitment, Tranche A Commitment, Tranche B Commitment, Tranche C Commitment or a commitment (if any exist) in respect of Expansion Term Loans or any combination thereof (as the context requires). "Common Stock" means the Common Stock, par value $.01 per share, of the Borrower. "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, (ii) any income tax credits and (iii) any non-cash stock or stock option compensation, 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 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) $100,886,103, the agreed value of the AW Licenses set forth on Schedule I to the Securities Purchase Agreement, (b) capital contributions and cash proceeds from sales by the Borrower of Common Stock less any payments made by the Borrower or any Subsidiary with respect to Common Stock (other than payments of additional Common Stock), (c) cash proceeds from the sale to Lucent of the Series A Bonds (less any payments made by the 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, $39,996,000, 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, $2,335,000, 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, $1,075,600, 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, $45,896,000, representing the agreed value of the stock of the Borrower issued to the former shareholders of Telecorp LMDS, Inc. in connection with the LMDS Merger, (j) $474,200,000, representing the agreed value of the assets contributed to the Borrower in connection with the Plan of Contribution and (k) the fair market value as reasonably determined by the Administrative Agent of any other assets contributed to the Borrower by Holdings as a capital contribution or in exchange for Capital Stock of the Borrower minus (y) any amounts (including the fair market value of any transferred assets, as reasonably determined by the Administrative Agent) invested by the Borrower or any Restricted Subsidiary in an Unrestricted Subsidiary. "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "Controlling" and "Controlled" have meanings correlative thereto. "Covered Pops" means the aggregate number of Pops within each geographic area for which facilities owned by the Borrower or its Restricted Subsidiaries that provide service to such geographic area have achieved substantial completion. "Credit Event" means the making, conversion or continuation of any Borrowing or the issuance or extension of any Letter of Credit. "Debt Service" means for any period, the sum of (a) Cash Interest Expense for such period plus (b) scheduled principal amortization of Total Debt for such period. "Default" means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default. "Disclosed Matters" means the actions, suits and proceedings and the environmental matters disclosed in Schedule 3.06. "Disqualifying Transaction" has the meaning set forth in the Stockholders Agreement. "dollars" or "$" 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. "Equipment Subsidiary" means any 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; and provided further that at any time such Subsidiary does not own any Base Stations, such Subsidiary shall be deemed not to be an Equipment Subsidiary until such time as such Subsidiary owns one or more Base Stations. "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; 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, non-cash stock or stock option compensation expense 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 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 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. "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. "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 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, subject to Section 1.04. "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. "Gulf Telecomm Acquisition" means the purchase by the Borrower or a Restricted Subsidiary from Gulf Telecomm, L.L.C. (successor to Wireless, 2000 Inc.) of 15 MHZ of C Block PCS Licenses for the Lake Charles, Louisiana BTA for up to $1,000,000 in cash (or, at the Borrower's option, the same amount of stock) and in connection therewith the assumption of $2,345,000 of FCC Debt; provided, that such acquisition is consummated on terms and conditions satisfactory to the Administrative Agent. "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 materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law. "Holdings" means TeleCorp-Tritel Holding Corporation, a Delaware corporation, which, upon consummation of the Tritel Transactions, will change its name to "TeleCorp PCS, Inc." "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; 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. "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. "Indus" has the meaning assigned to such term in the preamble hereof. "Indus Acquisition" means the acquisition of Indus (d/b/a Industar Digital PCS) and the merger of Indus with and into a Restricted Subsidiary for consideration of up to $50,000,000 in cash and the assumption of up to $75,000,000 of FCC Debt and up to $50,000,000 of other Indebtedness and microwave clearing obligations of Indus and its subsidiaries; provided, that such acquisition is consummated on terms and conditions satisfactory to the Administrative Agent. "Indus Loan" means a loan made by the Borrower or a Restricted Subsidiary to Indus or one of its subsidiaries after the execution of definitive documentation with respect to the Indus Acquisition in an aggregate principal amount not to exceed $5,000,000. "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 of the Borrower, 34,292 shares of Series D preferred stock of the Borrower, and 33,360 shares of Series F preferred stock of the Borrower, (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 and (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 of the Borrower 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. "Initial Public Offering" means an offering of the Class A Voting Common Stock of the Borrower to the public that is registered under the Securities Act of 1933 and from which the Borrower receives gross proceeds of at least $75,000,000. "Intercompany Auction Obligations" means (i) in respect of THC, 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, (ii) in respect of any Auction Subsidiary, (A) loans made by the Borrower or THC to such Auction Subsidiary, 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 such Auction Subsidiary to repay FCC Debt of such Auction Subsidiary and (B) obligations to redeem the Capital Stock and preferred stock of such Auction Subsidiary held by 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. "IDB" means The Industrial Development Board of the City of Memphis and County of Shelby, Tennessee. "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 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). "Joint Venture" means any joint venture, corporation, limited liability company, company or partnership that is not a Subsidiary. "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). "Leaseback Subsidiary" means any newly-formed Subsidiary designated as such by the Borrower in a notice delivered to the Administrative Agent prior to its formation into which towers are contributed for the purpose of effectuating a sale and leaseback of towers in the form of a sale of the Capital Stock of such Subsidiary within 30 days of its formation and a leaseback thereafter of the towers owned by such Subsidiary; provided that (i) the only assets of any such Subsidiary prior to any sale of its Capital Stock as part of a sale and leaseback transaction are towers permitted to be subject to a sale and leaseback transaction hereunder, (ii) no such Subsidiary shall have any liabilities prior to the sale of its Capital Stock other than liabilities directly related to towers contributed to such subsidiary and (iii) if all of the Capital Stock of such Subsidiary is not sold within 30 days of its formation pursuant to a sale and leaseback transaction permitted hereunder, then such Subsidiary shall lose its designation as a "Leaseback Subsidiary" and shall thereafter become subject to all the requirements hereunder with respect to Restricted Subsidiaries. "Lenders" means the Persons listed on Schedule 2.01, Schedule 2.01(a) 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 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 or other communications 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 owned by the Borrower or a 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 12 months following such sale and either (x) the 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 acquisition by THC of all the Capital Stock of TeleCorp LMDS, Inc., and in connection therewith the issuance of approximately $45,896,000 of Common Stock to the existing shareholders of TeleCorp LMDS, Inc. and the acquisition by THC or another Restricted Subsidiary 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. "Loans" means the loans made by the Lenders to the Borrower pursuant to this Agreement. "Lucent" means Lucent Technologies Inc. "Lucent Financing" means the issuance of Indebtedness of Holdings to Lucent with aggregate proceeds not to exceed $350,000,000, a portion of which Holdings may either contribute to the Borrower as a cash capital contribution or loan to the Borrower. "Lucent Note Purchase Agreement" means the Note Purchase Agreement between the Borrower and Lucent dated May 11, 1998, as amended and restated as of October 29, 1999. "Management Agreement" means the Management Agreement between TeleCorp Management Corp. and Holdings in the form attached as Exhibit A to the Securities Purchase Agreement as the same may be amended in accordance with Section 6.11. "Marketing Affiliate" means a limited liability company owned 1/3 by the Borrower, 1/3 by Tritel PCS, Inc. and 1/3 by Triton PCS, Inc., which engages in no activity other than the registering, holding, maintenance and protection of trademarks and the licensing thereof to its members. "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 $15,000,000. 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. "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 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." "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. "Merger Subsidiaries" has the meaning set forth in the preamble hereof. "Midpoint of the Range" means the midpoint of the range set forth in the offering memorandum for the Initial Public Offering or of the range under discussion with the underwriters if the Initial Public Offering has not occurred. "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. ss.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 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 preamble hereof. "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. "PCS Documents" means the Securities Purchase Agreement and each of the documents that is an exhibit thereto (including the Network License Agreement) and the San Juan Purchase 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; (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 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. "Plan of Contribution" has the meaning set forth in the preamble hereof. "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 1998 edition of the Kagan Guide. "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), (d), (e), (f) and (g) (subject to the proviso therein) 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 (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 $133,000,000 (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 or to Holdings pursuant to the Securities Purchase Agreement, (ii) the issuance of $39,996,000 of Common Stock and preferred stock of the Borrower to AW and $39,996,000 of Common Stock and preferred stock of the Borrower to certain of the Equity Participants in connection with the San Juan Acquisition and the contribution and commitment of capital to the Borrower out of funds provided directly to the Borrower or to Holdings in respect of such Capital Stock, (iii) so long as no Default exists at the time thereof, any capital contribution to the Borrower to the extent used as consideration for, or to finance, or constituting, a substantially simultaneous acquisition otherwise made in accordance with the terms of this Agreement, (iv) the receipt by the Borrower or any Restricted Subsidiary of any capital contribution described in the definitions of "Lucent Financing" or "Plan of Contribution", (v) the issuance by the Borrower of equity securities (x) in the Initial Public Offering or (y) at any time after the Initial Public Offering so long as a class of the Holding's equity securities continues to be publicly held and (vi) any issuance or receipt by the Borrower 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 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. "Qualified Joint Venture" means any Joint Venture in respect of which not less than 75% of the equity interest and ordinary voting power is owned by one or more of (a) Holdings or its Affiliates, (b) Thomas H. Sullivan or Gerald T. Vento so long as they collectively own, directly or indirectly, shares representing a majority of the aggregate ordinary voting power of the issued and outstanding Capital Stock of Holdings, (c) a principal telecommunications carrier (or an Affiliate of such carrier) of the region in which such Joint Venture carries on its activities, (d) a principal international telecommunications carrier (or an Affiliate of such carrier), (e) AW or its Affiliates, (f) a financial investor that has total assets in excess of $250,000,000, (g) an investment fund that has total assets under management in excess of $250,000,000 or (h) a principal cable, media or broadcast company (or an Affiliate of such a company). "Public Offering Price" means the price at which the Class A Voting Common Stock of the Borrower is sold to the public in the Initial Public Offering. "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 a Real Property Subsidiary by notice to the Administrative Agent; provided, however, that (i) each such Restricted Subsidiary has no obligations or liabilities other than as permitted by Section 3.13, (ii) all the outstanding Capital Stock of each 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 each 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 ss. 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. "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, cancellation 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 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 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 Agreement, from the Borrower Common Stock and preferred stock of the Borrower for cash consideration of at least $39,996,000 and (iii) in connection therewith, AW purchases from the Borrower Preferred Stock for cash consideration of at least $40,000,000. "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. "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 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, the Series A Bonds and the Series B Bonds. "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 Holdings. "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 Holdings. "Series C Preferred Stock" means the Series C Preferred Stock, par value $.01 per share, of Holdings. "Series D Preferred Stock" means the Series D Preferred Stock, par value $.01 per share, of Holdings. "Series E Preferred Stock" means the Series E Preferred Stock, par value $.01 per share, of Holdings. "Series F Preferred Stock" means the Series F Preferred Stock, par value $.01 per share, of Holdings. "Special Purpose Subsidiary" means each License Subsidiary, each Auction Subsidiary (to the extent required by Section 5.16), each Equipment Subsidiary, and each Real Property Subsidiary. "Special Purpose Subsidiary Funding Agreement" means an agreement between the Borrower and Telecorp Communications, Inc. and a 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 collateral 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 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, Holdings and the other parties thereto dated as of the date of consummation of the first of the Tritel Transactions. "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 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. "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 90 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 or a Leaseback 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 twelve months following such sale and either (x) the Borrower or such Restricted Subsidiary deposits the 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, Tranche B Term Loans and Tranche C Term Loans. "THC" means TeleCorp Holding Corp., Inc., a Delaware corporation and a Subsidiary of the Borrower, or, following its merger into TeleCorp Holding Corp., L.L.C., a Delaware limited liability company and a Subsidiary of the Borrower, such company. "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. "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 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. "Tranche C Availability Period" means the period from and including May 5, 2000 to but excluding the earlier of May 5, 2002 and the date of termination of the Tranche C Commitments. "Tranche C Commitment" means, with respect to each Lender, the commitment, if any, of such Lender to make Tranche C Term Loans hereunder, expressed as an amount representing the maximum principal amount of the Tranche C 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 C Commitment is set forth on Schedule 2.01(a), or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Tranche C Commitment, as applicable. The initial aggregate amount of the Lenders' Tranche C Commitments is $35,000,000. "Tranche C Lender" means a Lender with a Tranche C Commitment or an outstanding Tranche C Term Loan. "Tranche C Maturity Date" means May 17, 2009. "Tranche C Rate" means, with respect to any Tranche C Term Loan (a) 2.00% per annum, in the case of an ABR Loan, and (b) 3.00% per annum, in the case of a Eurodollar Loan. "Tranche C Term Loan" means a Loan made pursuant to clause (c) 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. "Tritel" has the meaning set forth in the preamble hereof. "Tritel Transactions" has the meaning set forth in the preamble hereof. "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 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 $1,075,600 of stock of the Borrower and in connection therewith the assumption of $7,449,191 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 mobility or personal communications services provided by 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", "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, (e) all references herein to the "date hereof" or the "date of this Agreement" shall be construed as references to the Closing Date and (f) 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, (i) 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 and (ii) to the extent that any provision of GAAP requires any purchase or push-down accounting treatment of the Tritel Transactions (other than the Plan of Contribution) to be reflected in the consolidated financial statements of the Borrower and the Restricted Subsidiaries, GAAP shall be interpreted as if did not contain such provision so that any such treatment shall not affect the calculation of the financial ratios contained in Section 6.12. 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, (c) to make Tranche C Term Loans to the Borrower during the Tranche C Availability Period in an aggregate principal amount not exceeding its Tranche C Commitment and (d) 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 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, Tranche B Maturity Date or Tranche C 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 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, Tranche B Term Borrowing or Tranche C 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 (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 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); (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 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, (iii) the Tranche C Commitments shall terminate at 5:00 p.m. New York City Time on the last day of the Tranche C Availability Period and (iv) 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. 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 (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 (d) To the extent not previously paid, (i) all Tranche A Term Loans shall be due and payable on the Tranche A Maturity Date, (ii) all Tranche B Term Loans shall be due and payable on the Tranche B Maturity Date and (iii) all Tranche C Term Loans shall be due and payable on the Tranche C Maturity Date. (e) If the initial aggregate amount of the Lenders' Term Commitments of any Class exceeds the aggregate principal amount of Term Loans of such Class that are made (i) during the Tranche A Availability Period, in the case of the Tranche A Term Loans, (ii) on the Effective Date, in the case of the Tranche B Term Loans or (iii) during the Tranche C Availability Period, in the case of the Tranche C 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 any 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 any 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 and Tranche C Commitments shall be automatically and permanently reduced in an aggregate amount (to be applied ratably among the unused Tranche A Commitments, the Tranche A Term Loans, the Tranche B Term Loans, the unused Tranche C Commitments, the Tranche C 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. Notwithstanding the foregoing, in the case of any event described in clause (a) of the definition of Prepayment Event, if the Borrower shall deliver to the Administrative Agent a certificate of a Financial Officer to the effect that the Borrower and the Restricted Subsidiaries intend to apply the Net Proceeds from such event (or a portion thereof specified in such certificate), within twelve months after receipt of such Net Proceeds, to acquire System assets to be used in the business of the Borrower and the Restricted Subsidiaries, and certifying that no Default has occurred and is continuing, then no prepayment shall be required pursuant to this paragraph in respect of the Net Proceeds in respect of such event (or the portion of such Net Proceeds specified in such certificate, if applicable) except to the extent that any such Net Proceeds therefrom that have not been so applied by the end of such twelve-month period, at which time a prepayment shall be required in an amount equal to such Net Proceeds that have not been so applied; provided that the aggregate Net Proceeds in respect of events described in clause (a) of the definition of Prepayment Event not required to be applied towards prepayments pursuant to this paragraph shall not exceed $50,000,000 during any fiscal year of the Borrower and $125,000,000 in the aggregate. (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 and Tranche C Commitments shall be automatically and permanently reduced in an aggregate amount (to be applied ratably among the unused Tranche A Commitments, the Tranche A Term Loans, the Tranche B Term Loans, the unused Tranche C Commitments, the Tranche C 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 unused Tranche A Commitments, the Tranche A Term Loans, the Tranche B Term Loans, the unused Tranche C Commitments, the Tranche C 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 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 and Tranche C Commitments made at a time when Term Borrowings or unused Commitments of more than one Class remain outstanding, the Borrower shall select Term Borrowings to be prepaid and Tranche A Commitments and Tranche C Commitments to be reduced so that the aggregate amount of such prepayment is allocated between the unused Tranche A Commitments, the Tranche A Term Borrowings, the Tranche B Term Borrowings, the unused Tranche C Commitments and Tranche C 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 or Tranche C 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 or Tranche C Term Loans pursuant to this Section (other than an optional prepayment 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 or Tranche C Term Loans or to reduce the unused Tranche C Commitments 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 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, the unused Tranche A Commitments or the unused Tranche C 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 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 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. (e) The Borrower agrees to pay to each Lender that executes and delivers a signature page to this Amended and Restated Credit Agreement to the Administrative Agent (or its counsel) on or prior to October 2, 2000 an amendment fee in an amount equal to 0.20% of the sum of such Lender's Revolving Exposure, outstanding Term Loans and unused Commitments, in each case as of the date the condition in Section 4.03(a) is first satisfied; provided that the Borrower shall have no liability for such amendment fee if the condition in Section 4.03(a) is not satisfied. Such amendment fee shall be payable (i) on the date the condition in Section 4.03(a) is first satisfied, to each Lender entitled to receive such fee as of such date and (ii) in the case of any Lender that becomes entitled to such fee after such date, within two Business Days after such Lender becomes entitled to such fee. 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 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 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 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 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 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 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 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, Tranche C 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, Tranche C 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, Tranche C 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, Tranche C Term Loans and Revolving Loans and participations in Tranche A Term Loans, Tranche B Term Loans, Tranche C 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, Tranche C 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, Tranche C 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, Tranche C Term Loans and Revolving Loans and L/C 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 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 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 three 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, (iii) 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 other financial institutions or Lucent Technologies, Inc. or other significant equipment vendors (any such bank or other financial institution or significant equipment vendor or Lucent Technologies, Inc. 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. The Tranche C Term Loans are Expansion Term Loans. 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 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 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; (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, 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 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 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. 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, prospects or condition, financial or otherwise, of THC, the Borrower and its Restricted Subsidiaries, taken as a whole (it being agreed that the Tritel Transactions and the AT&T Swap do not constitute such material adverse changes). 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, trade names, 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. (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. 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 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 or any Wholly-Owned Restricted Subsidiary 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 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 or, in the case of Secured Base Stations, any Restricted 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, any liabilities expressly permitted pursuant to Section 6.13(b), (c) in the case of any License Subsidiary or Auction Subsidiary, under the Communications Act and in the case of THC or any Auction Subsidiary, with respect to the Intercompany Auction Obligations and FCC Debt, (d) in the case of any Equipment Subsidiary, (i) under any lease of equipment which it has entered into in the ordinary course 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 (iii) 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 through I of Schedule 3.14 (except as noted with respect to certain partitions of the Beaumont, TX BTA (BTA034) proposed to be assigned to a third party for which no representation or warranty shall be made after the consummation of the assignment) 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 J of Schedule 3.14 upon consummation of the AT&T Swap, which Licenses it will obtain in exchange for the Licenses covering the Boston-Providence MTA (M008) listed on Part A of Schedule 3.14 (and as to which Licenses covering the Boston-Providence MTA (M008) no representation or warranty shall be made after the consummation of the AT&T Swap), (b) Part K of Schedule 3.14 upon consummation of the Indus Acquisition and (c) Part L of Schedule 3.14 upon consummation of the Airadigm Acquisition and (d) Part M of Schedule 3.14 upon consummation of the acquisition of a 15 MHZ C Block license in the Mayaguez-Aguidilla-Ponce, Puerto Rico BTA from Pegasus PCS Partners, L.L.C., (ii) such Licenses have been duly issued by the FCC, are (in the case of Licenses listed on Parts A through I of Schedule 3.14) or will be (upon consummation of the relevant transaction in the case of Licenses listed on Parts J through M of Schedule 3.14) held by a License Subsidiary and are in full force and effect and (iii) except as set forth on Schedule 3.14(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 for general corporate purposes including 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 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. (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. (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 Agreement), 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 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. 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 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 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 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 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 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 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. (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. (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 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. SECTION 4.03. Amendment Effective Date. The amendments to and the restatement of the Existing Credit Agreement provided for herein 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 (i) counterparts of this Agreement that, when taken together, bear the signatures of the Borrower and the Required Lenders or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy transmission of signed signature pages of this Agreement) that the Borrower and the Required Lenders have signed counterparts of this Agreement. (b) The Administrative Agent shall have received a certificate, dated the Amendment 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. (c) The Borrower shall be in Pro Forma Compliance and no Default shall have occurred and be continuing. (d) The Tritel Transactions shall have been consummated and the Administrative Agent shall have received (i) copies of the executed documentation governing such transactions, each certified by the Secretary or Assistant Secretary of the Borrower as a true and correct copy and (ii) such other documents relating thereto reasonably requested by the Administrative Agent, its counsel or the Lenders. (e) All consents and approvals required to be obtained from any Governmental Authority or other Person in connection with the Tritel Transactions shall have been obtained. (f) The Administrative Agent shall have received an updated Perfection Certificate (giving effect to the Tritel Transactions and the AT&T Swap) dated the Amendment Effective Date and signed by an executive officer or Financial Officer of the Borrower, together with all documents and instruments including Uniform Commercial Code financing statements and amendments to financing statements, required by law or reasonably requested by the Administrative Agent to be filed, registered or recorded to create or perfect (or continue to perfect) the Liens intended to be created under the Security Agreement. Notwithstanding anything in this Section 4.03 to the contrary, the amendments to the Existing Credit Agreement provided for herein relating to investment in and use of Auction Subsidiaries, the entering into and investments in Qualified Joint Ventures, the funding of the Airadigm Loan, the changes to the definition of Subordinated Debt, the increase in the amount of tower sale and leaseback transactions permitted hereunder (and the establishment of Leaseback Subsidiaries for the purpose of entering into such sale and leaseback transactions) and the amendments to Sections 6.01(a)(ii), 6.04, 6.05(aa), 6.05(bb) and 6.13(a) shall become effective upon the date on which each of the conditions contained in paragraphs (a) and (c) of this Section 4.03 are satisfied (or waived in accordance with Section 9.02). 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 PricewaterhouseCoopers, 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 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; (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 and (B) the aggregate number of Subscribers added during such fiscal quarter; (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 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. Notice of the public availability of any financial statement, report or other material required to be delivered by Section 5.01(a), (b) or (f) on the Securities and Exchange Commission's internet website shall be deemed to have satisfied the delivery requirement with respect to such financial statement, report or other material. 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 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). The Lenders acknowledge that the Borrower's disclosures prior to the Amendment Effective Date with respect to the matters set forth in this Section 5.03(b) have satisfied the requirements of this Section 5.03(b). SECTION 5.04. Existence; Conduct of Business. The Borrower will, and will cause each of its Subsidiaries 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 other insured damage to any portion of any Collateral with a value in excess of $10,000,000 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 $10,000,000, 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, 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 for general corporate purposes including 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 or a Leaseback 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 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 or cause the Subsidiary holding such License to qualify as a License Subsidiary, (ii) any Real Property Assets (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-Related Equipment) is acquired by the Borrower or any Subsidiary (other than a Real Property Subsidiary) the Borrower will promptly transfer or cause the transfer of such assets to a Real Property Subsidiary or cause the Subsidiary holding such assets to qualify as a Real Property Subsidiary, (iii) any Base Station (other than a Secured Base Station) is acquired by the Borrower or any Subsidiary (other than an Equipment Subsidiary or a Real Property Subsidiary) the Borrower will promptly transfer or cause the transfer of such Base Station to an Equipment Subsidiary or a Real Property Subsidiary or cause the Subsidiary holding such Base Stations to qualify as an Equipment 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. (c) The Borrower will (i) take all necessary actions required to grant, preserve, protect and perfect a first priority security 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. 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 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. SECTION 5.16. Auction Subsidiaries. The Borrower and THC shall take all actions necessary so that each Auction Subsidiary merges with and into THC or another License Subsidiary or qualifies as a License Subsidiary as soon as is practicable after the acquisition of any License by such Auction Subsidiary. 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 with gross proceeds therefrom not to exceed $1,375,000,000 minus the gross proceeds from 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), to acquire additional Licenses as permitted hereunder, to make investments permitted by Section 6.05, and to pay dividends permitted by Sections 6.08(a)(vii) and 6.08(a)(viii); (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 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 with gross proceeds therefrom not to exceed $80 million at any time outstanding and the Series B Bonds of the Borrower with gross proceeds therefrom 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 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 Mercury Acquisition in the amount of $4,100,000, (b) the Wireless 2000 Acquisition in the amount of $7,449,191, (c) the Indus Acquisition in an aggregate principal amount of approximately $75,000,000, (d) the Gulf Telecomm Acquisition in an aggregate principal amount of approximately $2,345,000 and (e) the Airadigm Acquisition in an aggregate principal amount not to exceed $85,000,000. (ix) existing Indebtedness (other than FCC Debt) of (a) Indus and its subsidiaries assumed in connection with the Indus Acquisition and not created in contemplation thereof in an aggregate principal amount not to exceed $50,000,000 (b) Airadigm assumed in connection with the Airadigm Acquisition (other than with respect to the Airadigm Loan) and not created in contemplation thereof in an aggregate principal amount not to exceed $250,000,000 less the outstanding principal amount of any assumed FCC Debt and (c) Black Label assumed in connection with the Black Label Acquisition and not created in contemplation thereof in an aggregate principal amount not to exceed $175,000,000. (x) Indebtedness other than Indebtedness permitted by clause (viii) or clause (ix) 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 $40,000,000 at any time outstanding and (C) the aggregate Indebtedness acquired which is not FCC Debt does not exceed $20,000,000; (xi) Indebtedness of the Borrower and the Restricted Subsidiaries existing on the date hereof and set forth on Schedule 6.01; (xii) Indebtedness arising under customary indemnification and purchase price adjustment obligations incurred in connection with asset sales permitted by Section 6.06(c) and in connection with sale and leaseback transactions permitted by Section 6.03; (xiii) 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; (xiv) 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; and (xv) subordinated Indebtedness of the Borrower to Holdings with respect to any proceeds of the Lucent Financing which are loaned by Holdings to the Borrower, provided that (i) such Indebtedness shall be subordinated to all the Obligations and evidenced by a promissory note containing subordination provisions reasonably satisfactory to the Administrative Agent and shall require no payments earlier than December 31, 2000 and (ii) the aggregate amount of any payments required under such Indebtedness shall not exceed the amount of any Excess Cash Flow not required to be applied to prepay Term Borrowings pursuant to Section 2.09(c) generated after the date the Borrower first receives such proceeds or, if greater, an amount not in excess of Excess Cash Flow for the fiscal year most recently ended and not required to be applied to prepay Term Borrowings pursuant to Section 2.09(c). (b) The Borrower will not, and will not permit any Restricted Subsidiary to, issue any preferred stock 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. 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; (v) Liens on fixed or capital assets acquired, constructed or improved by the Borrower or any 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; (vi) Liens on the Memphis Equipment in favor of the IDB arising pursuant to the Memphis Sale Lease-Back; and (vii) Liens in favor of the FCC on Licenses securing FCC Debt incurred in connection with the acquisition of such Licenses. 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 (i) sales and lease-backs of towers (including sales of all of the Capital Stock of a Leaseback Subsidiary and lease-backs of towers owned by such Leaseback Subsidiary) for gross proceeds not exceeding $100,000,000 in the aggregate and (ii) the Memphis Sale Lease-Back. 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 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, (v) the Borrower or any Restricted Subsidiary (other than any License Subsidiary or Real 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, (vi) any Auction Subsidiary or License Subsidiary may merge with and into a License Subsidiary in which a License Subsidiary is the surviving corporation, (vii) THC may merge with and into TeleCorp Holding Corp., L.L.C. as contemplated by the definition of THC so long as the surviving entity meets the requirements of the proviso in the definition of License Subsidiary and (viii) the Borrower may merge into a Merger Subsidiary in a transaction in which the Borrower is the surviving entity for the purpose of consummating the Tritel Transactions. (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 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) [intentionally omitted]; (m) [intentionally omitted]; (n) the Gulf Telecomm Acquisition; (o) the Indus Acquisition; (p) the Idus Loan; (q) Other acquisitions in which the only consideration paid by the Borrower or any Restricted Subsidiary consists of Capital Stock of Holdings; (r) Loans and advances to employees in an amount not to exceed $250,000 at any time outstanding; (s) 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 at any time outstanding; (t) 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 Marketing Affiliate and any Loan Party are assigned to the Lenders as collateral; (u) investments by the Borrower in the Capital Stock of Qualified Joint Ventures in aggregate amount not to exceed (i) prior to the later of (x) the first anniversary of the date on which the conditions specified in paragraphs (a) and (c) of Section 4.03 are first satisfied and (y) December 31, 2001, an amount equal to the excess of $500,000,000 over the outstanding principal amount of the Airadigm Loan (if any) and (ii) at any time thereafter, $100,000,000; provided that any such shares of Capital Stock shall be pledged pursuant to the Pledge Agreement; (v) investments by THC in Auction Subsidiaries in an aggregate amount not to exceed $500,000,000; (w) the Airadigm Acquisition; (x) the Airadigm Loan; (y) the AT&T Swap; (z) the Black Label Acquisition; (aa) other acquisitions in which the aggregate consideration paid by the Borrower or any Restricted Subsidiary does not exceed $50,000,000 during any fiscal year of the Borrower; and (bb) other acquisitions of Persons or of assets constituting a business unit; provided that (i) in each case, not less than 80% of the consideration paid for such Person or assets is allocable to Licenses and (ii) the aggregate consideration paid by the Borrower and the Restricted Subsidiaries for all such acquisitions shall not exceed $100,000,000. 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 (i) $50,000,000 during any fiscal year of the Borrower and (ii) $125,000,000 at any time after the Amendment Effective Date; (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 Amendment Effective Date Pops and (ii) the fair market value of the License Related Assets that are the subject of Swaps of License Related Assets in each fiscal year may not exceed $50,000,000; (e) sales of the Memphis Equipment to the IDB pursuant to and in accordance with the terms of the Memphis Sale Lease-Back; (f) sales of towers or of all of the Capital Stock of a Leaseback Subsidiary in connection with sale and lease-back transactions permitted by this Agreement; and (g) the AT&T Swap, provided that (i) any Net Proceeds received by the Borrower are used to finance (x) the Airadigm Acquisition within two years of the Amendment Effective Date and/or (y) the Indus Acquisition and the acquisition of the Polycell Licenses and the ABC Licenses within one year of the Amendment Effective Date and (ii) the Borrower applies any of such Net Proceeds not so used in accordance with Section 2.09(b) (with respect to which the AT&T Swap shall be deemed to be a Prepayment Event); provided that, except for transfers of towers to a Leaseback Subsidiary the Memphis Sale Lease-Back, all sales, transfers, leases and other dispositions permitted hereby shall be made for fair value and, except in the case of clauses (d) and (g), 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, and at such times as shall be necessary in order to provide Holdings an amount of cash sufficient to enable Holdings to make payments pursuant to and in accordance with stock option plans or other benefit plans for management or employees of the Borrower and its Subsidiaries, (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 make Restricted Payments with respect to its Capital 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 and (v) any Auction Subsidiary may make Restricted Payments to THC with respect to its preferred stock and its Capital Stock, (vi) following the end of the fiscal year of the Borrower ending December 31, 2000, the Borrower may make Restricted Payments with respect to its Capital Stock in aggregate amount not to exceed the amount of any proceeds of the Lucent Financing contributed to the Borrower as a capital contribution in an amount not in excess of Excess Cash Flow generated after the date such capital contribution first occurs or, if greater, an amount not in excess of Excess Cash Flow for the fiscal year most recently ended, provided that the prepayments required by Section 2.09(c) have previously been made, (vii) the Borrower may make Restricted Payments with respect to its Capital Stock to fund the obligations of Holdings to make repurchase, redeem, acquire or retire for value any Capital Stock of Holdings held by any member or former member of the management of the Borrower and its Subsidiaries pursuant to any management equity subscription agreement, stock option agreement restricted stock agreement, put agreement or other similar arrangements, provided that (i) no Event of Default shall have occurred and be continuing and (ii) the aggregate amount of such Restricted Payments shall not exceed $10,000,000 in any fiscal year of the Borrower, provided further that up to an aggregate of $20,000,000 of unused amounts of permitted Restricted payments during one or more fiscal years may be carried forward to one or more future fiscal years and (viii) the Borrower may make Restricted Payments with respect to its Capital Stock for any other purpose not exceeding $10,000,000 during any fiscal year. (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 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, cancellation 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, (y) payments in respect of the Series A Bonds or the Series B Bonds prohibited by the proviso in 6.01(a)(v) and (z) payments in respect of the subordinated Indebtedness permitted by Section 6.01(a)(xv) prohibited by the subordination provisions thereof or prohibited by clause (ii) of the proviso of such Section; (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 Holdings 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 and (ii) the issuance by the Borrower of approximately $39,996,000 of stock to AW and approximately $39,996,000 of stock to other Equity Participants in connection with the San Juan Acquisition; (vi) mandatory prepayments of the Series B Bonds in accordance with the terms of Section 10.5 of the Lucent Note Purchase Agreement; and (vii) prepayments of Indebtedness assumed in connection with the Indus Acquisition, the Airadigm Acquisition and the Black Label Acquisition. 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, (e) payments by the Borrower to TeleCorp Management Corp. pursuant to the Management Agreement, (f) transfers of assets to a Leaseback Subsidiary permitted hereunder and (g) the AT&T Swap, the Plan of Contribution, the Black Label Acquisition and the Tritel Transactions, so long as each such transaction is for a price 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. 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, (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 or Memphis Lease Documents, in the case of clauses (a), (b), (c) and (e) above, in a manner adverse to the Lenders and, in the case of (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 Committed Equity has 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. (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, 2002 60% ------------------------------------------------------------------------- June 30, 2003 65% ------------------------------------------------------------------------- June 30, 2004 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 Suubscribers ---- ------------ ------------------------------------------------------------------------- December 31, 1999 45,000 ------------------------------------------------------------------------- June 30, 2000 82,000 ------------------------------------------------------------------------- December 31, 2000 370,000 ------------------------------------------------------------------------- June 30, 2001 460,000 ------------------------------------------------------------------------- December 31, 2001 565,000 ------------------------------------------------------------------------- June 30, 2002 650,000 ------------------------------------------------------------------------- December 31, 2002 and thereafter 720,000 ------------------------------------------------------------------------- (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 $ 180,000,000 ------------------------------------------------------------- June 30, 2001 $ 235,000,000 ------------------------------------------------------------- December 31, 2001 $ 310,000,000 ------------------------------------------------------------- June 30, 2002 $ 395,000,000 ------------------------------------------------------------- December 31, 2002 and thereafter $ 495,000,000 ------------------------------------------------------------- (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, 2003 25.0 to 1.00 ----------------------------------------------- December 31, 2003 20.0 to 1.00 ----------------------------------------------- March 31, 2004 16.0 to 1.00 ----------------------------------------------- June 30, 2004 13.0 to 1.00 ----------------------------------------------- September 30, 2004 10.0 to 1.00 ----------------------------------------------- December 31, 2004 8.5 to 1.00 ----------------------------------------------- March 31, 2005 7.5 to 1.00 ----------------------------------------------- June 30, 2005 6.5 to 1.00 ----------------------------------------------- September 30, 2005 5.5 to 1.00 ----------------------------------------------- December 31, 2005 and thereafter 4.5 to 1.00 ----------------------------------------------- (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, 2002 22.0 to 1.00 ----------------------------------------------- March 31, 2003 16.0 to 1.00 ----------------------------------------------- June 30, 2003 14.0 to 1.00 ----------------------------------------------- September 30, 2003 12.0 to 1.00 ----------------------------------------------- December 31, 2003 10.0 to 1.00 ----------------------------------------------- March 31, 2004 8.0 to 1.00 ----------------------------------------------- June 30, 2004 7.0 to 1.00 ----------------------------------------------- September 31, 2004 and thereafter 6.0 to 1.00 ----------------------------------------------- (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, 2003 13.0 to 1.00 ----------------------------------------------- December 31, 2003 10.0 to 1.00 ----------------------------------------------- March 31, 2004 8.5 to 1.00 ----------------------------------------------- June 30, 2004 6.5 to 1.00 ----------------------------------------------- September 30, 2004 5.5 to 1.00 ----------------------------------------------- December 31, 2004 4.5 to 1.00 ----------------------------------------------- March 31, 2005 4.0 to 1.00 ----------------------------------------------- June 30, 2005 3.0 to 1.00 and thereafter ----------------------------------------------- (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 --------- ----- --------------------------------------------- December 31, 2001 21.0 to 1.00 --------------------------------------------- March 31, 2002 17.0 to 1.00 --------------------------------------------- June 30, 2002 12.0 to 1.00 --------------------------------------------- September 30, 2002 10.0 to 1.00 --------------------------------------------- December 31, 2002 8.0 to 1.00 --------------------------------------------- March 31, 2003 6.0 to 1.00 --------------------------------------------- June 30, 2003 5.0 to 1.00 --------------------------------------------- September 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, 2003 1.00 to 1.00 - -------------------------------------------------------------------------------- March 31, 2004 - June 30, 2004 1.15 to 1.00 - -------------------------------------------------------------------------------- September 30, 2004 - June 30, 2005 1.25 to 1.00 - -------------------------------------------------------------------------------- September 30, 2005 - December 31, 2005 1.50 to 1.00 - -------------------------------------------------------------------------------- March 31, 2006 - June 30, 2006 2.00 to 1.00 - -------------------------------------------------------------------------------- September 30, 2006 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: - -------------------------------------------------------------------------------- Test Period Ratio ----------- ----- - -------------------------------------------------------------------------------- March 31, 2005 - December 31, 2005 1.00 to 1.00 - -------------------------------------------------------------------------------- March 31, 2006 and thereafter 1.10 to 1.00 - -------------------------------------------------------------------------------- (l) Capital Expenditures. (1) The Borrower will not permit Capital Expenditures of the Borrower and its Restricted Subsidiaries for any period set forth below that ends prior to the consummation of the Indus Acquisition, the Black Label Acquisition and one or both of the AT&T Swap and the Plan of Contribution to exceed the sum set forth opposite such period: - -------------------------------------------------------------------------------- Period Amount ------ ------ - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Date of formation through December 31, 1998 $320,000,000 - -------------------------------------------------------------------------------- January 1, 1999 - December 31, 1999 $180,000,000 - -------------------------------------------------------------------------------- January 1, 2000 - December 31, 2000 $250,000,000 - -------------------------------------------------------------------------------- January 1, 2001 - December 31, 2001 $115,000,000 - -------------------------------------------------------------------------------- January 1, 2002 - December 31, 2002 $ 70,000,000 - -------------------------------------------------------------------------------- January 1, 2003 and thereafter $ 50,000,000 - -------------------------------------------------------------------------------- ; 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; and (2) The Borrower will not permit Capital Expenditures of the Borrower and its Restricted Subsidiaries for any period set forth below that ends subsequent to the consummation of the Indus Acquisition, the Black Label Acquisition, and one or both of the AT&T Swap and the Plan of Contribution to exceed the sum set forth opposite such period: - -------------------------------------------------------------------------------- Period Amount ------ ------ - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Date of formation through December 31, 1998 $320,000,000 - -------------------------------------------------------------------------------- January 1, 1999 - December 31, 1999 $180,000,000 - -------------------------------------------------------------------------------- January 1, 2000 - December 31, 2000 $410,000,000 - -------------------------------------------------------------------------------- January 1, 2001 - December 31, 2001 $325,000,000 - -------------------------------------------------------------------------------- January 1, 2002 - December 31, 2002 $175,000,000 - -------------------------------------------------------------------------------- January 1, 2003 - December 31, 2003 $125,000,000 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- January 1, 2004 - December 31, 2004 $ 70,000,000 - -------------------------------------------------------------------------------- January 1, 2005 - December 31, 2005 $ 60,000,000 - -------------------------------------------------------------------------------- January 1, 2006 and thereafter $ 50,000,000 - -------------------------------------------------------------------------------- ; 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. (3) In addition to the amounts of Capital Expenditures permitted by clauses (1) and (2), the Borrower and its Restricted Subsidiaries may make other Capital Expenditures in an aggregate amount not to exceed the product of (x) $10.00 multiplied by (y) the number of aggregate Pops located within the Network for the purpose constructing voice, data, video and/or other media communication systems using new technology pursuant to a business plan and during periods approved of in advance in a writing by the Required Lenders. 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; provided, however, that, notwithstanding the provisions of Section 6.05(c), THC may make investments or investments in (i) TeleCorp LMDS, Inc. so long as TeleCorp LMDS, Inc. qualifies as a License Subsidiary, (ii) a License Subsidiary in connection with the acquisition of Licenses as part of the Indus Acquisition and (iii) Auction Subsidiaries in an aggregate amount not to exceed $500,000,000 at any one time outstanding. (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 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, (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 and (iv) 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 and the Memphis Sale and Lease-Back. 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 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 appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Loan Party 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 such Loan Party 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 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; (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 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 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; (w) a Memphis Event of Default shall have occurred and be continuing; (x) [intentionally omitted]; (y) [intentionally omitted]; (z) the failure of any party to the San Juan 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; 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, 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 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 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 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 1010 North Glebe 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); (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 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 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 or Tranche C Lenders, as applicable, to decline mandatory prepayments as provided in Section 2.09, without the written consent of Tranche B Lenders or Tranche C Lenders, as applicable, holding a majority of the outstanding Tranche B Loans or Tranche C Loans and unused Tranche C Commitments, as applicable; 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, Tranche B Lenders or Tranche C Lenders), the Tranche A Lenders (but not the Revolving Lenders, Tranche B Lenders or Tranche C Lenders), the Tranche B Lenders (but not the Revolving Lenders, Tranche A Lenders or the Tranche C Lenders) or the Tranche C Lenders (but not the Revolving Lenders, the Tranche A Lenders or the Tranche B Lenders) may be effected by an agreement or agreements in 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 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 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; 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. (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 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 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 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. (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. 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. SECTION 9.13. Certain Waivers. (a) The Required Lenders hereby expressly waive any rights or remedies in connection with each of the following: (i) any breach of or failure to comply with Section 5.12 in connection with the formation or acquisition of Zephyr Wireless, LLC ("Zephyr") and TeleCorp LMDS, Inc. (ii) any breach of or failure to comply with Section 6.05 or Section 6.13 with respect to the investment in and holding of the Capital Stock of Zephyr and TeleCorp LMDS, Inc. by THC and with respect to Zephyr's bidding at a FCC License auction and related activities. (b) The Required Lenders hereby expressly waive any requirement pursuant to Section 2.18 as to notice be delivered to the Administrative Agent requesting the addition of a new tranche of Term Loans and as to the offer to each Lender of the opportunity to provide such Term Loans in respect of an additional $20 million of Expansion Term Loans to be provided by Lucent Technologies, Inc. ("Lucent"), it being agreed that Lucent may provide such additional $20 million of Expansion Term Loans on such terms as Lucent and the Borrower shall agree. 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 H. Sullivan -------------------------------- Name: Title: THE CHASE MANHATTAN BANK, individually and as Administrative Agent, by /s/ William E. Rottino -------------------------------- Name: William E. Rottino 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/ Anca T. Rifan -------------------------------- Name: Anca T. Rifan Title: Director Signature Page to the TeleCorp PCS, Inc. Amended and Restated Credit Agreement To approve the amendment and restatement of the Existing Credit Agreement: Name of Institution: ALLFIRST BANK ---------------------------------- by /s/ W. Blake Hampson -------------------------------- Name: W. Blake Hampson Title: Vice President Signature Page to the Telecorp PCS, Inc. Amended and Restated Credit Agreement To approve the amendment and restatement of the Existing Credit Agreement: BANK OF TOKYO-MITSUBISHI TRUST COMPANY By: /s/ Michael Deadder ----------------------------- Name: MICHAEL DEADDER Title: VICE PRESIDENT CAPTIVA III FINANCE LTD., as advised by Pacific Investment Management Company LLC By: /s/ David Dyer ----------------------------- Name: David Dyer Title: Director -2- To approve the amendment and restatement of the Existing Credit Agreement: Name of Institution: CIBC Inc. By: /s/ Laura Hom -------------------------------------- Name: Laura J. Hom Title: Executive Director - CIBC World Markets Corp. As Agent -3- To approve the amendment and restatement of the Existing Credit Agreement: Name of Institution: COBANK, ACB By: /s/ Anita Youngblut ----------------------------- Name: Anita Youngblut Title: Vice President -4- To approve the amendment and restatement of the Existing Credit Agreement: Name of Institution: EATON VANCE CDO III, LTD. By: Eaton Vance Management as Investment Advisor By: /s/ Payson F. Swaffield --------------------------------- Name: Payson F. Swaffield Title: Vice President -5- To approve the amendment and restatement of the Existing Credit Agreement: Name of Institution: GENERAL ELECTRIC CAPITAL CORPORATION By: /s/ Brian P. Ward --------------------------- Name: Brian P. Ward Title: Manager - Operations -6- GLENEAGLES TRADING LLC By: /s/ Ann E. Morris ---------------------------- Name: Ann E. Morris Title: Asst. Vice President -7- To approve the amendment and restatement of the Existing Credit Agreement: Name of Institution: FLEET NATIONAL BANK By: /s/ Suzanne M. MacKay ------------------------------- Name: Suzanne M. MacKay Title: Vice President -8- HIGHLAND LEGACY LIMITED By: Highland Capital Management, L.P. as Collateral Manager by: /s/ Todd Travers ------------------------------- Name: Todd Travers Title: Senior Portfolio Manager -9- To approve the amendment and restatement of the Existing Credit Agreement: KZH HIGHLAND-2 LLC By: /s/ Kimberly Rowe --------------------------- Name: Kimberly Rowe Title: Authorized Agent -10- To approve the amendment and restatement of the Existing Credit Agreement: KZH PAMCO LLC By: /s/ Kimberly Rowe -------------------------- Name: Kimberly Rowe Title: Authorized Agent -11- To approve the amendment and restatement of the Existing Credit Agreement: Name of Institution: LEHMAN COMMERCIAL PAPER INC. By: /s/ Michele Swanson ----------------------------- Name: Michele Swanson Title: Authorized Signatory -12- To approve the amendment and restatement of the Existing Credit Agreement: Name of Institution: LUCENT TECHNOLOGIES By: /s/ Robert Grant -------------------------- Name: Robert Grant Title: Director -13- To approve the amendment and restatement of the Existing Credit Agreement: Name of Institution: NATIONAL WESTMINSTER BANK PLC By: NatWest Capital Markets Limited, its Agent By: Greenwich Capital Markets, Inc., its Agent By: /s/ Greenwich Capital Markets, Inc. ----------------------------------- Name: Greenwich Capital Markets, Inc. Title: -14- PAMCO CAYMAN LTD. By: Highland Capital Management, L.P. as Collateral Manager By: /s/ Todd Travers ---------------------------------- Name: Todd Travers Title: Senior Portfolio Manager -15- To approve the amendment and restatement of the Existing Credit Agreement: Name of Institution: MORGAN GUARANTY TRUST CO. OF NEW YORK By: /s/ Morgan Guaranty Trust Co. of New York ----------------------------------------- Name: Title: -16- To approve the amendment and restatement of the Existing Credit Agreement: SENIOR DEBT PORTFOLIO By: Boston Management and Research as Investment Advisor By: /s/ Payson F. Swaffield --------------------------------- Name: Payson F. Swaffield Title: Vice President -17- To approve the amendment and restatement of the Existing Credit Agreement: Name of Institution: THE BANK OF NEW YORK By: /s/ Gerry Granovsky ----------------------------- Name: Gerry Granovsky Title: Vice President -18- EX-10.43 7 0007.txt INVESTORS STOCKHOLDERS' AGREEMENT DATED 02-28-2000 EXECUTION COPY EXHIBIT 10.43 INVESTORS STOCKHOLDERS' AGREEMENT by and among TELECORP PCS, INC. and THE STOCKHOLDERS NAMED HEREIN dated as of February 28, 2000 TABLE OF CONTENTS Page 1. Certain Definitions.........................................................2 2. Management of Company; Certain Voting Requirements..........................2 2.1. Board of Directors.................................................2 2.2. Removal; Filling of Vacancies......................................3 2.3. Election of Initial Board of Directors.............................4 2.4. Reduction of Unfunded Commitment...................................4 3. Unfunded Commitment; Additional Capital Contributions.......................4 4. After-Acquired Shares; Recapitalization.....................................5 4.1. After-Acquired Shares; Recapitalization............................5 5. Equitable Relief............................................................5 5.1. Equitable Relief...................................................5 6. Miscellaneous...............................................................6 6.1. Notices............................................................6 6.2. Entire Agreement; Amendment; Consents..............................6 6.3. Term...............................................................6 6.4. Obligations Several................................................6 6.5. Governing Law......................................................6 6.6. Jurisdiction.......................................................7 6.7. Benefit and Binding Effect; Severability...........................7 6.8. Headings...........................................................7 6.9. Counterparts.......................................................7 Schedules Schedule I Cash Equity Investors Schedule II Stock Ownership Schedule III Initial Director Nominees Schedule IV Notices INVESTORS STOCKHOLDERS' AGREEMENT THIS INVESTORS STOCKHOLDERS' AGREEMENT, dated as of February 28, 2000 (this "Agreement"), is by and among AT&T WIRELESS PCS, INC., a Delaware corporation, CB CAPITAL INVESTORS, L.P., a Delaware corporation, together with its Affiliated Successors ("Chase"), PRIVATE EQUITY INVESTORS III, L.P. ("PEI III"), a Delaware limited partnership, EQUITY-LINKED INVESTORS-II, a New York limited partnership ("ELI II", and together with PEI III, "Desai"), WHITNEY EQUITY PARTNERS, L.P. ("WEP"), a Delaware limited partnership, J. H. WHITNEY III, L.P. ("JHW"), a Delaware limited partnership, WHITNEY STRATEGIC PARTNERS III, L.P., a Delaware limited partnership ("WSP", and together with JHW and WEP, "Whitney"), MEDIA/COMMUNICATIONS INVESTORS LIMITED PARTNERSHIP ("MC"), a Massachusetts limited partnership, MEDIA/COMMUNICATIONS PARTNERS III LIMITED PARTNERSHIP, a Delaware limited partnership ("MC-III", and, together with MC, "MC Partners"), TORONTO DOMINION INVESTMENTS, INC. ("TDI"), a Delaware corporation, NORTHWOOD VENTURES LLC, a New York limited liability company, ("NV"), NORTHWOOD CAPITAL PARTNERS LLC, a New York limited liability company ("NCP", and, together with NV, "Northwood"), ONELIBERTY FUND III, L.P., a Delaware limited partnership ("OneLiberty"), HOAK COMMUNICATIONS PARTNERS, L.P. ("HCP"), a Delaware limited partnership, HCP CAPITAL FUND, L.P., a Delaware limited partnership ("HCP Fund", and, together with HCP, "Hoak"), CIHC, INCORPORATED, a Delaware corporation, ("Conseco"), DRESDNER KLEINWORT BENSON PRIVATE EQUITY PARTNERS LP, a Delaware limited partnership ("Dresdner"), TORONTO DOMINION INVESTMENTS, INC., a Delaware corporation ("TD"), GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation ("GE Capital"), TRIUNE PCS, LLC, a Delaware limited liability company ("Triune"), FCA VENTURE PARTNERS II, L.P., a Delaware limited partnership ("FCA"), CLAYTON ASSOCIATES LLC, a Tennessee limited liability company ("Clayton"), TRILLIUM PCS, LLC., a Mississippi limited liability company ("Trillium"), AIRWAVE COMMUNICATIONS, LLC, a Mississippi limited liability company ("Airwave"), DIGITAL PCS, LLC, a Mississippi limited liability company ("Digital"), THE MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.), a Michigan corporation ("MF"), and the investors listed on Schedule I (individually, each a "Cash Equity Investor" and, collectively with Chase, Desai, Whitney, MC Partners, TDI, Northwood, OneLiberty, Hoak, Mercury, THC and any of their respective Affiliated Successors who become a Stockholder and a party to this Agreement in accordance with the terms hereof, the "Cash Equity Investors"). Each of the foregoing Persons are sometimes referred to herein, individually, as a "Stockholder" and, collectively, as the "Stockholders." RECITALS WHEREAS, on the date hereof, Tritel, Inc. ("Tritel") and TeleCorp PCS, Inc. ("Telecorp") entered into that certain Agreement and Plan of Reorganization and Contribution, copies of which have been provided to the parties hereto (the "Merger Agreement") providing for the merger of Telecorp Merger Sub, a to-be-formed wholly-owned subsidiary of Telecorp PCS, Inc., a to-be-formed Delaware corporation (the "Company"), with and into Telecorp, and the merger of Tritel Merger Sub, a to-be-formed wholly-owned subsidiary of the Company, with and into Tritel (collectively, the "Merger"), whereby Telecorp and Tritel will be the surviving corporations of the Merger and will become wholly-owned subsidiaries of the Company upon the effectiveness of the Merger (such date, the "Effective Date"); WHEREAS, the Cash Equity Investors, the Company and the other Stockholders named therein have agreed to become parties to that certain Stockholders Agreement, to be dated the Effective Date (as amended from time to time, in accordance with its terms, the "Company Stockholder Agreement") pursuant to which the Cash Equity Investors and the other parties thereto have agreed to provide for the management of the Company and to impose certain restrictions with respect to the sale, transfer or other disposition of Company Stock on the terms set forth therein; and WHEREAS, each Stockholder, without giving effect to the transfer of any shares of capital stock of Telecorp or Tritel owned or controlled by such Stockholder on or after the date hereof but prior to the Effective Date, shall, on the Effective Date, be registered owner of the respective shares of Common Stock of the Company, (excluding Class C Common Stock and Voting Preference Stock) (the "Common Stock") and Series C Preferred Stock set forth opposite its name on Schedule II; and WHEREAS, the parties hereto desire to enter into this Agreement in order to impose certain further restrictions with respect to the sale, transfer or other disposition of Company Stock and to provide for certain rights with respect to the management of the Company on the terms and conditions hereinafter set forth, such obligations to become effective on the Effective Date; 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. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Company Stockholder Agreement. 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. Management of Company; Certain Voting Requirements. (a) Board of Directors. Each of the Cash Equity Investors hereby agrees, so long as such Stockholder continues to hold any shares of Series C Preferred Stock or Common Stock, in exercising its rights under Section 3 of the Company Stockholder Agreement, that it will vote or cause to be voted all of the shares of its Common Stock owned or held of record by it (whether now owned or hereafter acquired), in person or by proxy, to cause the selection of directors, the election of directors and thereafter the continuation in office of the following persons as members of the Board of Directors (the "Cash Equity Directors") as follows: (i) one (1) individual to be designated by Chase (or its Affiliated Successors) and shall initially be Michael Hannon (the "Chase Designee"); (ii) one (1) individual to be designated by Desai (or its Affiliated Successors) and shall initially be Rohit Desai (the "Desai Designee"); (iii) one (1) individual to be designated by Dresdner (or its Affiliated Successors) and shall initially be Alex Coleman (the "Dresdner Designee"); (iv) one (1) individual to be designated by Triune (or its Affiliated Successors) and shall initially be Kevin Shepherd (the "Triune Designee"); (v) with respect to any individual selected pursuant to Section 3.1(e) of the Company Stockholder Agreement, such individual shall be deemed acceptable to holders of a "Majority in Interest of the Class A Common Stock Beneficially Owned by the Cash Equity Investors" in accordance with such Section 3.1(e) only in the event such individual has been approved by "Two-Thirds in Interest of the Cash Equity Investors" (as defined below). (vi) the right to designate any designee pursuant to this Section 2.1 shall terminate in accordance with Section 12.3(c) of the Company Stockholder Agreement; provided, that if the number of Cash Equity Directors is required to be reduced pursuant to Section 12.3(c) of the Company Stockholder Agreement, the designee pursuant to this Section 2.1(a) who represents the Stockholder holding the fewest shares of Common Stock of all such shares owned on the date of such mandated reduction by Stockholders whose designees then remain as Cash Equity Directors shall resign (or the other directors or Stockholders shall remove them) from the Board of Directors. (b) For purposes of this Agreement, "Two-Thirds in Interest of the Cash Equity Investors" shall mean the Cash Equity Investors owning two-thirds of the outstanding shares of Common Stock held by all Cash Equity Investors. (c) Any nomination or designation of directors and the acceptance thereof pursuant to this Section 2.1 shall be evidenced in writing. 2.2. Removal; Filling of Vacancies. Except as set forth in Section 2.1, each Cash Equity Investor agrees it will not vote any shares of Common Stock owned or controlled by such Cash Equity Investor, for the removal without cause of any director designated by any other Cash Equity Investor in accordance with Section 2.1. Any successor director to the director designated by Chase, Desai, Dresdner or Triune (each a "Designating CEI") shall be designated by the applicable Designating CEI; provided, however, that, in the event such successor director is not an employee of the applicable Designating CEI, such successor must also be approved by Two-Thirds in Interest of the Cash Equity Investors. 2.3. Election of Initial Board of Directors. Each Cash Equity Investor hereby consents to the nomination of the persons designated on Schedule III hereto to be the initial Cash Equity Directors of the Company pursuant to the Company Stockholder Agreement. 2.4. Reduction of Unfunded Commitment. In connection with a public offering of the Company's Common Stock, any Cash Equity Investor may request that the Company reduce the Unfunded Commitment of such Cash Equity Investor upon the divestiture to the Company by such Cash Equity Investor (including by transferring to the Company shares of Common Stock which may be sold by the Company, including by the Company's sale of such shares in a registered offering in lieu of such Cash Equity Investor's otherwise allocable pro rata share of such registered offering) a number of shares of Company Stock having a value (based upon the gross proceeds per share of Common Stock to be received by the Company in such offering) equal to the amount by which the then present value of the Unfunded Commitment (determined by using the Applicable Federal Rate as the relevant discount rate) is to be reduced. (a) Unfunded Commitment; Additional Capital Contributions. In the event any Cash Equity Investor (a "Defaulting Cash Equity Investor") fails to satisfy any portion of its Unfunded Commitment pursuant to Section 2.2 of the Telecorp Securities Purchase Agreement (a "Payment Default"), the Company shall give prompt written notice, but no later than one (1) business day following such default (a "Default Notice"), to each Cash Equity Investor other than the Defaulting Cash Equity Investor (each a "Non-Defaulting Cash Equity Investor") of the amount of such Payment Default (the "Default Amount"). In the event the Defaulting Cash Equity Investor has failed to cure such Payment Default or in the event that no Affiliated Cash Equity Investor (defined below) of such Defaulting Cash Equity Investor has cured such Payment Default, within five (5) days of the Payment Default, each Non-Defaulting Cash Equity Investor may, acting on its own or in conjunction with one or more of the other Non-Defaulting Cash Equity Investors (each a "Participating Cash Equity Investor"), agree to fund all or any portion of such Payment Default by providing written notice to the Company (a "Payment Notice") no later than 12:00 Noon (New York time) twenty (20) days following the date on which the Default Notice is delivered (the "Payment Notice Period") and the Company shall thereafter provide each Participating Cash Equity Investor with copies of such Payment Notice or Payment Notices; provided, however, that if the aggregate amount agreed to be funded by the Participating Cash Equity Investors shall exceed the Payment Default, then the amount to be funded by each such Participating Cash Equity Investor shall be divided amongst the Participating Cash Equity Investors pro rata in accordance with the shares of Common Stock owned or controlled by such Participating Cash Equity Investors; provided, further, however, that if the aggregate amount agreed to be funded by the Participating Cash Equity Investors shall be less than the Payment Default (a "Payment Default Shortfall"), the Company shall give prompt written notice, but no later than one (1) business day following the end of the Payment Notice Period, of such Payment Default Shortfall (a "Payment Default Shortfall Notice") to all Non-Defaulting Cash Equity Investors and all such Non-Defaulting Cash Equity Investors may agree to fund the Payment Default Shortfall by providing written notice to the Company within five (5) days of delivery of the Payment Notice and payment shall be made in accordance with the preceding two provisos. (b) Upon payment of the Default Amount (or any portion thereof), each Participating Cash Equity Investor (i) shall be deemed to be the record and beneficial owner of that number of shares of Common Stock owned or controlled by the Defaulting Cash Equity Investor equal to (w) the total number of shares of Common Stock owned or controlled by the Defaulting Cash Equity Investor multiplied by (x) the amount paid by such Participating Cash Equity Investor pursuant to this Section 4 divided by the Default Amount, and (ii) shall become obligated to the Company pursuant to Section 2.2 of the Securities Purchase Agreement with respect to the remaining Unfunded Commitment, if any, of the Defaulting Cash Equity Investor in an amount equal to (y) the amount of such remaining Unfunded Commitment multiplied by (z) the percentage of the Unfunded Commitment the Defaulting Cash Equity Investor failed to satisfy which such Participating Cash Equity Investor funded pursuant to this Section 4. (c) For purposes of this Section 3, an "Affiliated Cash Equity Investor" shall mean an Affiliated Successor of such Cash Equity Investor and (i) with respect to Desai, PEI III and ELI II and any of their respective Affiliated Successors, (ii) with respect to Whitney, WEP, JHW and WSP and any of their respective Affiliated Successors, (iii) with respect to MC Partners, MC and MC-III and any of their respective Affiliated Successors, (iv) with respect to Northwood, NV and NCP and any of their respective Affiliated Successors, (v) with respect to Hoak, HCP and HCP Fund and any of their respective Affiliated Successors. 3. After-Acquired Shares; Recapitalization. (a) After-Acquired Shares; Recapitalization. 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 in consequence of any additional 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 Affiliate 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. 4. Equitable Relief. 4.1. 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 Company's Certificate of Incorporation 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. 5. Miscellaneous. 5.1. Notices. All notices or other communications hereunder shall be in writing and shall be given in the manner prescribed in the Company Stockholder Agreement. (a) Entire Agreement; Amendment; Consents. This Agreement and the Company Stockholder Agreement constitute 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. The Stockholders agree that the terms of this Agreement shall supersede any inconsistent provision contained in the Company Stockholder Agreement. (b) No change or modification of this Agreement shall be valid, binding or enforceable unless the same shall be in writing and signed by Stockholders who own or control at least 66"% of all shares of Common Stock owned or controlled by the Cash Equity Investors; provided, however, that no change or modification to this Agreement which adversely effects the rights of any Stockholder or the Company shall be valid, binding and enforceable unless the same shall be in writing and signed by such Stockholder or the Company. 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. (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. (d) Whenever the Company Stockholder Agreement is amended in accordance with its terms, the Stockholders hereto agree to enter into such amendments to this Agreement necessary to effectuate the intent of this Agreement. The Stockholder shall not enter into any such amendment the effect of which adversely effects the rights of any Stockholder hereto without the consent of such Stockholder. 5.2. Term. This Agreement shall terminate upon the termination of the Company Stockholder Agreement. 5.3. Obligations Several. The obligations of each Stockholder under this Agreement shall be several with respect to each such Stockholder. 5.4. Governing Law. This Agreement shall be governed and construed in accordance with the law of the State of Delaware. (a) Jurisdiction. 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 8.1 of the Company Stockholder Agreement. 5.5. Benefit and Binding Effect; Severability. This Agreement shall be binding upon and shall inure to the benefit of the Company (solely with respect to Sections 3.2, 3.3 and 4), 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. 5.6. 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. 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. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written: Executed on behalf of TeleCorp PCS, Inc. as of November 13, 2000. TELECORP PCS, INC. By: /s/ Thomas H. Sullivan ------------------------------------ Name: Thomas H. Sullivan Title: Executive Vice President - Chief Financial Officer Telecorp Cash Equity Investors CB CAPITAL INVESTORS, L.P. By: CB Capital Investors, Inc. its general partner By: ------------------------------------ Name: Michael R. Hannon Title: Vice President CB Capital Investors, L.P. NORTHWOOD VENTURES LLC By: /s/ Henry T. Wilson ------------------------------------ Name: Henry T. Wilson Title: Managing Director NORTHWOOD CAPITAL LLC By: /s/ Henry T. Wilson ------------------------------------ Name: Henry T. Wilson Title: Managing Director ONE LIBERTY FUND IV, L.P. By: /s/ Edwin M. Kania, Jr. ------------------------------------ Name: Edwin M. Kania, Jr. Title: General Partner of OneLiberty Partners IV, LLC GP for OL Fund III ONE LIBERTY FUND III, L.P. By: /s/ Edwin M. Kania, Jr. ------------------------------------ Name: Edwin M. Kania, Jr. Title: General Partner of OneLiberty Partners IV, LLC GP for OL Fund III MEDIA COMMUNICATIONS INVESTORS LIMITED PARTNERSHIP By: M/C Investors General Partner - J. Inc., a general partner By: ____________________________________ Name: James F. Wade Title: Authorized Officer MEDIA/COMMUNICATIONS PARTNERS III LIMITED PARTNERSHIP By: M/CP III General Partner - J. Inc., a general partner By: ____________________________________ Name: James F. Wade Title: Authorized Officer 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/ Rohit M. Desai ------------------------------------ Name: ---------------------------------- Title: ---------------------------------- HOAK COMMUNICATIONS PARTNERS, L.P. By: HCP Investments, L.P., its general partner By: Hoak Partners, LLC, its general partner By: ____________________________________ Name: James M. Hoak Title: Manager HCP CAPITAL FUND, L.P. By: James M. Hoak & Co., its general partner By: ____________________________________ Name: James M. Hoak Title: Chairman ONELIBERTY ADVISORS FUND IV, L.P. By: OneLiberty Partners IV, LLC its general partner By: /s/ Edwin M. Kania, Jr. ------------------------------------ Name: Edwin M. Kania, Jr. Title: Managing Member WHITNEY EQUITY PARTNERS, L.P. By: J.H. Whitney & Co., its general partner By: /s/ William Laverack, Jr. ------------------------------------ Name: Title: J.H. WHITNEY III, L.P. By: J.H. Whitney & Co., its general partner By: /s/ William Laverack, Jr. ------------------------------------ Name: Title: WHITNEY STRATEGIC PARTNERS III, L.P. By: J.H. Whitney & Co. Its general partner By: /s/ William Laverack, Jr. ------------------------------------ Name: Title: TORONTO DOMINION INVESTMENTS INC. By: /s/ Martha L. Gariepy ------------------------------------ Name: Martha L. Gariepy ---------------------------------- Title: Vice President ---------------------------------- GILDE INTERNATIONAL B.V., by its attorney in fact Morgan, Holland Partners L.P., by its GP Morgan, Holland Partners II, L.P. By: /s/ Edwin M. Kania, Jr. ------------------------------------ Name: Edwin M. Kania, Jr. Title: General Partner TRITEL CASH EQUITY INVESTORS: TORONTO DOMINION INVESTMENTS, INC. By: /s/ Martha L. Gariepy ------------------------------------ Name: Martha L. Gariepy ---------------------------------- Title: Vice President ---------------------------------- GENERAL ELECTRIC CAPITAL CORPORATION By: ------------------------------------ Name: ---------------------------------- Title: ---------------------------------- CIHC, INCORPORATED By: /s/ CIHC, Incorporated ------------------------------------ Name: CIHC, Incorporated ---------------------------------- Title: ---------------------------------- DRESDNER KLEINWORT BENSON PRIVATE EQUITY PARTNERS LP By: Dresdner Kleinwort Benson Private Equity LLC, as its general partner By: /s/ Alexander P. Coleman ------------------------------------ Name: Alexander P. Coleman Title: Authorized Signatory TRIUNE PCS, LLC, A DELAWARE LIMITED LIABILITY COMPANY By: Oak Tree, LLC Title: Manager By: Triune Private Equity, LLC Title: Manager By: /s/ Kevin Shepherd ------------------------------------ Name: Kevin Shepherd Title: Manager FCA VENTURE PARTNERS II, L.P. By: Clayton-DC Venture Capital Group, LLC, its general partner By: ____________________________________ Name: D. Robert Crants, III Title: Manager CLAYTON ASSOCIATES, LLC By: ____________________________________ its managing member SOUTHERN FARM BUREAU LIFE INSURANCE COMPANY By: ____________________________________ Name: _________________________________ Title: _________________________________ M3, LLC By: ____________________________________ Name: _________________________________ Title: _________________________________ MCCARTY COMMUNICATIONS, LLC By: ____________________________________ Name: _________________________________ Title: _________________________________ DC INVESTMENT PARTNERS EXCHANGE FUND, L.P., FCA VENTURE PARTNERS I, L.P. By: ____________________________________ Name: _________________________________ Title: _________________________________ MERCURY PCS INVESTORS, LLC By: ____________________________________ Name: _________________________________ Title: _________________________________ The MANUFACTURERS' LIFE INSURANCE COMPANY (U.S.A.) By: ____________________________________ Name: _________________________________ Title: _________________________________ TRILLIUM PCS, LLC By: /s/ William M. Mounger, II ------------------------------------ Name: William M. Mounger, II ---------------------------------- Title: Manager ---------------------------------- JG FUNDING, LLC By: Chrysalis Ventures, LLC Title: Manager By: /s/ David A. Jones, Jr. ------------------------------------ Name: David A. Jones, Jr. Title: Manager SCHEDULE I CASH EQUITY INVESTORS CB Capital Investors 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 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 OneLiberty Fund III, 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 CIHC, Incorporated 11825 North Pennsylvania Street Carmel, IN 46032-4911 Attention: John J. Sabl Facsimile: 317-817-6327 Trillium PCS, LLC Airwave Communications, LLC Digital PCS, LLC 1410 Livingston Lane Jackson, MS 39213-8003 Attention: William M. Mounger, II Facsimile: 601-362-2664 Dresdner Kleinwort Benson Private Equity Managers LLC 75 Wall Street, 24th Floor New York, NY 10005-2889 Attention: Alexander P. Coleman Facsimile: 212-429-3139 Triune PCS, LLC 4770 Baseline Road, Suite 380 Boulder, CO 80303 Attention: Kevin Shepherd Facsimile: 303-499-6255 Toronto Dominion Investments, Inc. 31 W. 52nd Street New York, NY 10019 Attention: Steve Reinstadtler Facsimile: 212-974-8429 With copy to: Toronto Dominion Investments, Inc. 909 Fannin, Suite 1700 Houston, TX 77010 Attention: Martha Gariepy Facsimile: 713-652-2647 GE Capital Services Structured Finance Group 120 Long Ridge Road, 3rd Floor Stamford, CT 06927-4000 Attention: Mark De Cruccio Facsimile: 203-357-6868 FCA Venture Partners II, LP Clayton Associates, LLC 10 Burton Hills Blvd., Suite 120 Nashville, TN 37215 Attention: Joel Goldberg Facsimile: 615-263-0234 The Manufacturers' Life Insurance Company (U.S.A.) 73 Tremont Street, Suite 1300 Boston, MA 02108-3915 Attention: David Alpert Facsimile: 617-854-4340 JG Funding, LLC ______________________________ ______________________________ Attention: David A. Jones, Jr. Facsimile: ___________________ SCHEDULE II STOCK OWNERSHIP [See schedule attached] SCHEDULE III INITIAL CASH EQUITY DIRECTORS 1. Michael Hannon 2. Rohit Desai 3. Alex Coleman 4. Kevin Shepherd EX-10.47 8 0008.txt EMPLOYMENT AGREEMENT - WILLIAM M. MOUNGER, II EXHIBIT 10.47 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT, dated as of November 13, 2000, effective on the Effective Date (as defined below), by and between, TeleCorp PCS, Inc. (f/k/a TeleCorp-Tritel Holding Company), a Delaware corporation (the "Company") and William M. Mounger II ("Executive"). W I T N E S S E T H: WHEREAS, on February 28, 2000, Virginia Corp., Mississippi Corp., and Washington Corp. entered into an Agreement and Plan of Reorganization and Contribution (the "Merger Agreement") providing for the merger of First Merger Sub with and into Virginia and the merger of Second Merger Sub with and into Mississippi (the "Mergers"); and WHEREAS, the Merger shall become effective upon the filing of Certificates of Merger with the Secretary of State of Delaware (such date, the "Effective Date"); WHEREAS, Virginia Merger Sub and Mississippi Merger Sub (when duly formed and incorporated) will be wholly-owned subsidiaries of the Company, and as a result of the Mergers Virginia and Mississippi shall become wholly-owned subsidiaries of the Company; WHEREAS, Executive and Mississippi entered into an employment agreement dated as of January 7, 1999 (the "Original Agreement"); WHEREAS, Executive and the Company desire to terminate the Original Agreement and replace such Original Agreement with this Agreement, and neither party shall have any further rights or obligations under the Original Agreement; WHEREAS, the Company desires to employ Executive and to enter into an agreement embodying the terms of such employment (the "Agreement"); WHEREAS, Executive desires to accept such employment and enter into such Agreement; WHEREAS, pursuant to the terms of the Merger Agreement, Executive will be the beneficial and record owner of 5245.70 shares of the Company's Class E Common Stock, par value $.01 per share (the "Company Stock"). NOW, THEREFORE, in consideration of the mutual covenants herein contained, the Company and Executive, intending to be legally bound, hereby agree as follows: 1. Employment. a. Agreement to Employ. Upon the terms and subject to the conditions of this Agreement, the Company hereby employs Executive, and Executive hereby accepts employment by the Company. b. Employment Period. The term of Executive's employment shall initially be for a period of one (1) year (the "Initial Term") commencing on the Effective Date and continuing until the first anniversary of the date thereof; provided, however, that such term may be renewed by the mutual agreement of the Executive and the Company for an additional period of one (1) year (each, a "Renewal Term"), unless, in either case, this Agreement shall have been earlier terminated in accordance with Section 5 (the "Employment Period"). For the purposes of this Agreement, the "Expiration Date" shall mean the last day of the Initial Term or any Renewal Term. 2. Position and Duties. During the Employment Period, Executive shall serve as Chairman of the Board of Directors of the Company with such duties and responsibilities as the Board of Directors of the Company may from time to time determine. During the Employment Period, except as set forth herein, Executive shall devote his reasonable business time to the services required of him hereunder, except for vacation time, personal time and reasonable periods of absence due to sickness, personal injury or other disability. Nothing contained herein shall preclude Executive from devoting reasonable periods of time to other matters, so long as such activities do not violate the terms hereof, including Section 7 below, or interfere with the performance of Executive's duties hereunder. 3. Compensation. a. Base Salary. The Company shall pay Executive an annual salary of $250,000, with a minimum annual increase of $25,000. If this Agreement is renewed in accordance with Section 1(b), the Compensation Committee of the Board of Directors shall review Executive's base salary in light of the performance of Executive and the Company, and may, in its discretion, increase (but not decrease) such base salary by an amount it determines to be appropriate in addition to the minimum annual increase stated above. Notwithstanding the previous two sentences, Executive's annual base salary payable hereunder shall, if necessary, be increased in order to reflect an amount that is equal to the annual base salary earned by Geraldo Vento. Executive's annual base salary as payable hereunder, as it may be increased from time to time, is referred to herein as "Base Salary." The Company shall pay Executive his Base Salary in equal monthly installments, or in such other installments as the parties may mutually agree. b. Annual Bonus. For each calendar year or part thereof during the Employment Period, Executive shall receive an annual bonus (an "Annual Bonus") equal to no less than the greater of (i) 50% of his Base Salary or (ii) the amount of annual bonus paid to Geraldo Vento in such year. The Annual Bonus shall be payable within thirty (30) days after certification of the Company's financial statements for such year. 4. Benefits, Perquisites and Expenses. a. Benefit Plans. During the Employment Period, Executive shall be eligible to participate in any welfare benefit plan sponsored or maintained by the Company, including, without limitation, any group life, hospitalization, medical, dental, health, accident or disability insurance or similar plan or program of the Company, in each case, whether now existing or 2 established hereafter, to the extent that Executive is eligible to participate in any such plan under the generally applicable provisions thereof. b. Perquisites. Executive shall be entitled to up to four weeks paid vacation annually in accordance with the Company's policies and practices. Executive shall also be entitled to receive such perquisites as are generally provided to other senior officers of the Company in accordance with the policies and practices of the Company. c. Business Expenses. The Company shall pay or reimburse Executive for all reasonable expenses incurred or paid by Executive in performance of Executive's duties hereunder, upon presentation of expense statements or vouchers and such other information as the Company may reasonably require. d. Indemnification. The Company shall, to the maximum extent permitted by the Company's certificate of incorporation or its bylaws, indemnify Executive and hold Executive harmless from and against any claim, loss or cause of action arising from or out of Executive's performance as an officer, director or employee of the Company or any of its subsidiaries or in any other capacity, including serving as a fiduciary, in which Executive serves at the request of the Company. If any claim is asserted hereunder for which Executive reasonably believes in good faith he is entitled to be indemnified, the Company shall pay Executive's reasonable legal expenses (or cause such expenses to be paid), as may be reasonably required but no less frequently than on a quarterly basis, provided that Executive shall reimburse the Company for such amounts, plus simple interest thereon at the 90-day United States Treasury Bill rate as in effect from time to time, compounded annually, if Executive shall be found by a final, non-appealable order of a court of competent jurisdiction not to be entitled to indemnification. The indemnification obligations of the Company in this paragraph shall survive any termination of this Agreement. e. Directors and Officers Liability Insurance. Executive shall be covered by any directors and officers liability insurance maintained by the Company to the same extent that similarly situated senior officers of the Company are covered by such insurance. 5. Termination of Employment. a. Early Termination of the Employment Period. Executive's employment under this Agreement may be terminated in any of the following manners: i. Executive may, upon two weeks' prior written notice to the Company, voluntarily terminate employment with the Company at any time at the sole discretion of Executive; ii. This Agreement shall terminate automatically upon Executive's death; iii. The Company may, upon written notice to Executive, terminate this Agreement upon Executive's Disability. As used herein, the term "Disability" shall mean a determination that Executive suffers from illness or other physical or mental impairment that prevents Executive from substantially performing his duties for a period of 90 days during any 3 six-month period during the Employment Period or for 180 days during any 12-month period during the Employment Period. The determination of whether (and, if appropriate, when) a Disability has occurred shall be made by a majority of the Board of Directors of the Company (excluding the Senior Executives that are directors of the Company); iv. The Company may terminate Executive's employment under this Agreement with or without cause upon two weeks' prior written notice to Executive. b. Benefits Payable Upon Termination. i. Following the end of the Employment Period for any reason, the Company shall pay to Executive (or, in the event of his death, his surviving spouse, if any, or his estate): (A) any Base Salary earned, but unpaid, for services rendered to the Company on or prior to the date on which the Employment Period ended, and (B) amounts which are vested or which Executive is otherwise entitled to receive under the terms of or in accordance with any plan, policy, practice or program of, or any contract or agreement with, the Company at or subsequent to the date the Employment Period ends without regard to the performance by Executive of further services or the resolution of a contingency. ii. Following the end of the Employment Period for any reason, (i) Executive shall receive a Base Salary in an amount equal to the Base Salary Executive would have been entitled to receive, had Executive not been terminated, for the period commencing on the date of such termination and ending on January 7, 2004, and (ii) Executive shall also receive an Annual Bonus for each calendar year (other than 2004) that would have remained in the Employment Period, had Executive not been terminated, if such period had ended on January 7, 2004. iii. Upon the Effective Date, all of the restricted shares of the Company's Class A Voting Common Stock, par value $.01 per share, and Class E Common Stock, par value $.01 per share, that were subject to the vesting and repurchase provisions set forth in Section 7 of the Original Agreement (collectively, the "Restricted Shares") will become fully vested, provided that the Executive remains in continuous service with the Company or any Subsidiary until such Effective Date. c. Timing of Payments. i. Payments of Base Salary and Annual Bonuses made pursuant to the provisions in Section 5(b)(ii) above shall be calculated based on the year of termination and projected forward for each year remaining in the payment term had the Employment Period ended on January 7, 2004. Upon calculation of such amounts, both the Base Salary and Annual Bonus amounts shall be payable to Executive in a lump sum as soon as practicable, but in no event more than thirty days after the effective date of the termination of Executive's employment. ii. Vested benefits referred to in clause (B) of Section 5(b)(i) shall be payable in accordance with the terms of the plan, policy, practice, program, contract or agreement under which such benefits have accrued. 4 d. Continuing Obligations. After receipt of written notice of termination, but prior to the effective date of such termination, Executive shall continue to perform his duties under this Agreement unless specifically instructed to discontinue such performance. In the event of termination, Executive and the Company shall remain liable for their respective obligations accrued under this Agreement prior to the effective date of termination. 6. Repurchase of Company Stock. a. If the Executive's employment with the Company is terminated for any reason, including upon expiration of the Initial Term or any Renewal Term, as applicable (the "Termination Event"), Geraldo Vento and Thomas Sullivan, equally, or either of them if the other is no longer employed by the Company, or, if neither of them is then employed by the Company or they refuse to so purchase, the Company or any persons it may designate (the "Purchasers"), shall have the obligation to purchase from the Executive at the Purchase Price per share, and the Executive shall have the obligation to sell to such Purchasers at such price, each share of Company Stock then held by the Executive. b. Executive agrees to tender each share of Company Stock to the Purchasers upon receipt of the Purchase Price per share. Any Company Stock purchased by the Purchasers pursuant to this Section 6 shall be equally allocated among them. c. For the purposes hereof, the "Purchase Price" per share shall equal the average price of the Company's Class A Voting Common Stock, par value $.01 per share, as quoted on the Nasdaq National Market or other securities exchange for the 20 trading days immediately preceding the Termination Event. d. Notwithstanding anything contained herein to the contrary, the Company hereby guarantees the performance of the Purchasers under this Section 6. Furthermore, the Purchasers shall be intended third party beneficiaries of the provisions of this Section 6 and may enforce the rights described in this Section directly against the Executive. e. The share certificates evidencing the Company Stock shall be endorsed with the following legend (in addition to any legend required to be placed thereon by applicable federal or state securities laws or the Company's Stockholders Agreement): THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN EMPLOYMENT AGREEMENT BETWEEN THE COMPANY AND 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. 7. Noncompetition and Confidentiality. a. Noncompetition. During the Employment Period and for six (6) months thereafter, Executive shall not, without the consent of the Company, assist or become associated with any person or entity, whether as a principal, partner, employee, consultant or shareholder 5 (other than as a holder of not in excess of 5% of the outstanding voting shares of any publicly traded company) that is actively engaged in the business of providing mobile wireless telecommunications services in the Territory (as defined in the Company's Stockholders' Agreement). b. Confidentiality. Without the prior written consent of the Company, except to the extent required by an order of a court having competent jurisdiction or under subpoena from a governmental body or agency, Executive shall not disclose any trade secrets, customer lists, drawings, designs, information regarding product development, marketing plans, sales plans, manufacturing plans, management organization (including data and other information relating to members of the Board of Directors and management), operating policies and manuals, business plans, financial records, packaging design or other financial, commercial, business or technical information relating to the Company or any of its subsidiaries or affiliates (collectively, "Confidential Information"), to any third person, unless such Confidential Information has been previously disclosed to the public by the Company or is in the public domain (other than by reason of Executive's breach of this Section 7(b)); provided, however, that Executive may disclose Confidential Information to the extent advisable in connection with any disclosures that may be required by law or to enforce this Agreement if the Executive has given the Company advance written notice of his intention to so disclose and a reasonable opportunity to seek a protective court order. c. Inventions. Executive hereby sells, transfers and assigns to the Company all of the right, title and interest of Executive in and to all inventions, ideas, disclosures and improvements, whether patented or unpatented, and copyrightable material, made or conceived by Executive, solely or jointly, or in whole or in part, during the Employment Term which (i) relate to methods, apparatus, designs, products, processes or devices sold, leased, used or under construction or development by the Company or any subsidiary or affiliate or (ii) otherwise relate to or pertain to the business, functions or operations of the Company or any subsidiary or affiliate, or (iii) arise (wholly or partly) from the efforts of Executive during the Employment Period. Executive shall communicate promptly and disclose to the Company, in such form as the Company reasonably requests, all information, details and data pertaining to the aforementioned inventions, ideas, disclosures and improvements; and, whether during the Employment Period or thereafter, Executive shall execute and deliver to the Company (at the Company's sole cost and expense) such formal transfers and assignments and such other papers and documents as may be required of Executive to permit the Company to file and prosecute the patent applications and, as to copyrightable material, to obtain copyright thereon. d. Company Property. Promptly following Executive's termination of employment, Executive shall return to the Company all property of the Company, and all copies thereof in Executive's possession or under his control, and all tangible embodiments of Confidential Information in Executive's possession in whatever media such Confidential Information is maintained. e. Non-Solicitation of Employees. During the Employment Period and for one year thereafter, Executive will not directly or indirectly induce any employee of the Company or any of its subsidiaries or affiliates to terminate employment with such entity, and will not directly or indirectly, either individually or as owner, agent, employee, consultant or 6 otherwise, employ or offer employment to any person who is or was employed by the Company or a subsidiary thereof, unless such person's employment was terminated by such entity without cause, such person's employment was terminated by the person for Good Reason, or such person shall have ceased to be employed by the entity for a period of at least six months; provided, however, that the foregoing shall not prevent Executive from engaging in a general solicitation for employment that is not directed at employees of the Company or any of its subsidiaries or affiliates. For the purposes hereof, "Good Reason" shall mean the occurrence, without the person's prior written consent, of (i) a material diminution or alteration by the entity of the person's position, duties or responsibilities, or (ii) the relocation of the person's principal place of performance more than fifty (50) miles from his or her principal place of performance on the Effective Date. f. Injunctive Relief with Respect to Covenants. Executive acknowledges and agrees that the covenants and obligations of Executive with respect to noncompetition, inventions, confidentiality and Company property contained in this Section 7 relate to special, unique and extraordinary matters and that a violation of any of the terms of such covenants and obligations will cause the Company irreparable injury for which adequate remedies are not available at law. Therefore, Executive agrees that the Company shall be entitled to an injunction, restraining order, or such other equitable relief as a court of competent jurisdiction may deem necessary or appropriate to restrain Executive from committing any violation of the covenants and obligations contained in this Section 7. These injunctive remedies are cumulative and are in addition to any other rights and remedies the Company may have at law or in equity. 8. No Conflict With Prior Agreements; Due Authorization. a. Executive represents to the Company that neither Executive's execution of this Agreement or commencement of employment hereunder nor the performance of Executive's duties hereunder conflicts with any contractual commitment on Executive's part to any third party. The Company represents to Executive that it is fully authorized and empowered by action of the Company's Board of Directors to enter into this Agreement and that performance of its obligations under this Agreement will not violate any agreement between it and any other person, firm or other entity. b. Nothing herein shall be construed to require Executive to use or disclose any information that he is prohibited from using or disclosing as a result of legal or contractual obligations. c. Upon the Effective Date, the Original Agreement shall terminate, this Agreement shall replace the Original Agreement, and no party to the Original Agreement shall have any further rights or obligations under the Original Agreement. 9. Miscellaneous. a. Income Tax Payment. Subject to Section 9(b), if the Executive has received or will receive any non-cash compensation or recognize any non-cash income in connection with or as a result of the amendment of the Original Agreement to accelerate the vesting of, and remove the net exercise price requirements applicable to, the Restricted Shares, 7 then Mississippi shall pay the Executive in cash an amount (the "Income Tax Payment") equal to all federal, state and local income taxes payable by the Executive with respect to such non-cash compensation or income and with respect to such Income Tax Payment. The Income Tax Payment shall be paid by Mississippi to the Executive within 30 days of the written request therefor made by the Executive. b. Payment of Additional Amount. If in the opinion of tax counsel selected by the Executive and reasonably acceptable to the Company, the Executive has received or will receive any compensation or recognize any income from the Company or any of its affiliates (whether pursuant to this Agreement or otherwise) which in the opinion of counsel will constitute an "excess parachute payment" within the meaning of Section 280G(b)(1) of the Code (or for which a tax is otherwise payable under Section 4999 of the Code), then Mississippi shall pay the Executive an additional amount (the "Additional Amount") equal to the sum of (i) all taxes payable by the Executive under Section 4999 of the Code with respect to all such excess parachute payments and any such Additional Amount, plus (ii) all federal, state and local income taxes payable by Executive with respect to any such Additional Amount; provided, however, that in no event shall the aggregate amount determined or paid to Executive under this Section 9(b) and Section 9(a) (disregarding, for this purpose, any portion of the Additional Amount attributable to the sale of Executive's shares of Mississippi Voting Preference Stock) exceed $26,000,000, less all income tax, excise tax and other gross-up payments paid or payable to other executives of the Company or to present or former employees of Mississippi under Section 6.2(b)(iii)(F) of the Merger Agreement. Any amounts payable pursuant to this Section shall be paid by Mississippi to the Executive within 30 days of each written request therefor made by the Executive. c. Survival. Sections 4(d), 5, 6, 7, 8 and 9 shall survive the termination hereof. d. Binding Effect. This Agreement shall be binding on the Company and any person or entity which succeeds to the interest of the Company (regardless of whether such succession occurs by operation of law) by reason of the sale of all or a portion the Company's stock, a merger, consolidation, or reorganization involving the Company or a sale of the assets of the business of the Company (or portion thereof) in which Executive performs a majority of his services. This Agreement shall also inure to the benefit of Executive's heirs, executors, administrators and legal representatives. e. Assignment. Except as provided under Section 9(d), neither this Agreement nor any of the rights or obligations hereunder shall be assigned or delegated by any party hereto without the prior written consent of the other party, except that the Company may delegate to any of its direct or indirect wholly owned subsidiaries its obligations to provide compensation and benefits hereunder; provided no such delegation shall relieve the Company of its obligations hereunder. f. Entire Agreement. This Agreement, together with any Schedules attached hereto, constitutes the entire agreement between the parties hereto with respect to the matters referred to herein, and no other agreement, oral or otherwise, shall be binding between the parties unless it is in writing and signed by the party against whom enforcement is sought. There are no 8 promises, representations, inducements or statements between the parties other than those that are expressly contained herein. Executive acknowledges that he is entering into this Agreement of his own free will and accord, and with no duress, that he has been represented and fully advised by competent counsel in entering into this Agreement, that he has read it and that he understands it and its legal consequences. No parol or other evidence may be admitted to alter, modify or construe this Agreement, which may be altered, modified or amended only by a writing signed by the parties hereto. g. Severability; Reformation. In the event that one or more of the provisions of this Agreement shall become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby. In the event that any of Sections 7(a), (b) or (c) is not enforceable in accordance with its terms, Executive and the Company agree that such Section shall be reformed to make such Section enforceable in a manner which provides the Company the maximum rights permitted at law. h. Waiver. Waiver by any party hereto of any breach or default by the other party of any of the terms of this Agreement shall not operate as a waiver of any other breach or default, whether similar to or different from the breach or default waived. No waiver of any provision of this Agreement shall be implied from any course of dealing between the parties hereto or from any failure by either party hereto to assert its or his rights hereunder on any occasion or series of occasions. i. Notices. Any notice required or desired to be delivered under this Agreement shall be in writing and shall be delivered personally against receipt, by courier service or by registered mail, return receipt requested, and shall be effective upon actual receipt by the party to which such notice shall be directed, and shall be addressed as follows (or to such other address as the party entitled to notice shall hereafter designate in accordance with the terms hereof): If to the Company, to the attention of its Board of Directors at the Company's principal executive offices. If to Executive: William M. Mounger II 4781 East Massena Drive Jackson, MS 39211 j. Headings. Headings to paragraphs in this Agreement are for the convenience of the parties only and are not intended to be part of or to affect the meaning or interpretation hereof. k. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 9 l. Withholding. Any payments provided for herein shall be reduced by any amounts required to be withheld by the Company from time to time under applicable Federal, State or local income or employment tax laws or similar statutes or other provisions of law then in effect. m. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York. n. Resolution of Disputes. All disputes, controversies and claims arising in connection with this Agreement (other than claims for equitable relief to enforce any provision in this Agreement) that are not settled by agreement between the parties shall be finally settled under the Commercial Arbitration Rules of the American Arbitration Association ("AAA") in effect from time to time. A single arbitrator shall be appointed by agreement between the parties or, failing such agreement, by AAA. Executive and the Company shall, if possible, mutually agree upon a neutral forum for arbitration; in the absence of such agreement, the site of arbitration shall be Atlanta, Georgia. The arbitrator may grant any remedy that (s)he deems just and equitable within the scope of this Agreement, including specific performance. The award of the arbitrator shall be final and binding and judgment thereon may be entered in any court having jurisdiction. The costs and expenses (including reasonable attorney's fees) of the prevailing party shall be borne and paid by the party that the arbitrator determines is the non-prevailing party. 10 IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and Executive has hereunto set his hand as of the day and year first above written. TeleCorp PCS, Inc. By: /s/ Thomas H. Sullivan ------------------------------------ Name: Thomas H. Sullivan Title: Executive Vice President - Chief Financial Officer EXECUTIVE: WILLIAM M. MOUNGER II /s/ William M. Mounger II ---------------------------------------- S-IV-1 EX-10.48 9 0009.txt EMPLOYMENT AGREEMENT - E.B. MARTIN, JR. EXHIBIT 10.48 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT, dated as of November 13, 2000, effective on the Effective Date (as defined below), by and between, TeleCorp PCS, Inc. (f/k/a TeleCorp-Tritel Holding Company), a Delaware corporation (the "Company") and E.B. Martin, Jr. ("Executive"). W I T N E S S E T H: WHEREAS, on February 28, 2000, Virginia Corp., Mississippi Corp., and Washington Corp. entered into an Agreement and Plan of Reorganization and Contribution (the "Merger Agreement") providing for the merger of First Merger Sub with and into Virginia and the merger of Second Merger Sub with and into Mississippi (the "Mergers"); and WHEREAS, the Merger shall become effective upon the filing of Certificates of Merger with the Secretary of State of Delaware (such date, the "Effective Date"); WHEREAS, Virginia Merger Sub and Mississippi Merger Sub (when duly formed and incorporated) will be wholly-owned subsidiaries of the Company, and as a result of the Mergers Virginia and Mississippi shall become wholly-owned subsidiaries of the Company; WHEREAS, Executive and Mississippi entered into an employment agreement dated as of January 7, 1999 (the "Original Agreement"); WHEREAS, Executive and the Company desire to terminate the Original Agreement and replace such Original Agreement with this Agreement, and neither party shall have any further rights or obligations under the Original Agreement; WHEREAS, the Company desires to employ Executive and to enter into an agreement embodying the terms of such employment (the "Agreement"); WHEREAS, Executive desires to accept such employment and enter into such Agreement; WHEREAS, pursuant to the terms of the Merger Agreement, Executive will be the beneficial and record owner of 5245.70 shares of the Company's Class E Common Stock, par value $.01 per share (the "Company Stock"). NOW, THEREFORE, in consideration of the mutual covenants herein contained, the Company and Executive, intending to be legally bound, hereby agree as follows: 1. Employment. a. Agreement to Employ. Upon the terms and subject to the conditions of this Agreement, the Company hereby employs Executive, and Executive hereby accepts employment by the Company. b. Employment Period. The term of Executive's employment shall initially be for a period of one (1) year (the "Initial Term") commencing on the Effective Date and continuing until the first anniversary of the date thereof; provided, however, that such term may be renewed by the mutual agreement of the Executive and the Company for an additional period of one (1) year (each, a "Renewal Term"), unless, in either case, this Agreement shall have been earlier terminated in accordance with Section 5 (the "Employment Period"). For the purposes of this Agreement, the "Expiration Date" shall mean the last day of the Initial Term or any Renewal Term. 2. Position and Duties. During the Employment Period, Executive shall serve as Vice Chairman of the Board of Directors of the Company with such duties and responsibilities as the Board of Directors of the Company may from time to time determine. During the Employment Period, except as set forth herein, Executive shall devote his reasonable business time to the services required of him hereunder, except for vacation time, personal time and reasonable periods of absence due to sickness, personal injury or other disability. Nothing contained herein shall preclude Executive from devoting reasonable periods of time to other matters, so long as such activities do not violate the terms hereof, including Section 7 below, or interfere with the performance of Executive's duties hereunder. 3. Compensation. a. Base Salary. The Company shall pay Executive an annual salary of $250,000, with a minimum annual increase of $25,000. If this Agreement is renewed in accordance with Section 1(b), the Compensation Committee of the Board of Directors shall review Executive's base salary in light of the performance of Executive and the Company, and may, in its discretion, increase (but not decrease) such base salary by an amount it determines to be appropriate in addition to the minimum annual increase stated above. Notwithstanding the previous two sentences, Executive's annual base salary payable hereunder shall, if necessary, be increased in order to reflect an amount that is equal to the annual base salary earned by Thomas Sullivan. Executive's annual base salary as payable hereunder, as it may be increased from time to time, is referred to herein as "Base Salary." The Company shall pay Executive his Base Salary in equal monthly installments, or in such other installments as the parties may mutually agree. b. Annual Bonus. For each calendar year or part thereof during the Employment Period, Executive shall receive an annual bonus (an "Annual Bonus") equal to no less than the greater of (i) 50% of his Base Salary or (ii) the amount of annual bonus paid to Thomas Sullivan in such year. The Annual Bonus shall be payable within thirty (30) days after certification of the Company's financial statements for such year. 4. Benefits, Perquisites and Expenses. a. Benefit Plans. During the Employment Period, Executive shall be eligible to participate in any welfare benefit plan sponsored or maintained by the Company, including, without limitation, any group life, hospitalization, medical, dental, health, accident or disability insurance or similar plan or program of the Company, in each case, whether now existing or 2 established hereafter, to the extent that Executive is eligible to participate in any such plan under the generally applicable provisions thereof. b. Perquisites. Executive shall be entitled to up to four weeks paid vacation annually in accordance with the Company's policies and practices. Executive shall also be entitled to receive such perquisites (other than grants of equity or other equity-based compensation, such as stock options) as are generally provided to other senior officers of the Company in accordance with the policies and practices of the Company. c. Business Expenses. The Company shall pay or reimburse Executive for all reasonable expenses incurred or paid by Executive in performance of Executive's duties hereunder, upon presentation of expense statements or vouchers and such other information as the Company may reasonably require. d. Indemnification. The Company shall, to the maximum extent permitted by the Company's certificate of incorporation or its bylaws, indemnify Executive and hold Executive harmless from and against any claim, loss or cause of action arising from or out of Executive's performance as an officer, director or employee of the Company or any of its subsidiaries or in any other capacity, including serving as a fiduciary, in which Executive serves at the request of the Company. If any claim is asserted hereunder for which Executive reasonably believes in good faith he is entitled to be indemnified, the Company shall pay Executive's reasonable legal expenses (or cause such expenses to be paid), as may be reasonably required but no less frequently than on a quarterly basis, provided that Executive shall reimburse the Company for such amounts, plus simple interest thereon at the 90-day United States Treasury Bill rate as in effect from time to time, compounded annually, if Executive shall be found by a final, non-appealable order of a court of competent jurisdiction not to be entitled to indemnification. The indemnification obligations of the Company in this paragraph shall survive any termination of this Agreement. e. Directors and Officers Liability Insurance. Executive shall be covered by any directors and officers liability insurance maintained by the Company to the same extent that similarly situated senior officers of the Company are covered by such insurance. 5. Termination of Employment. a. Early Termination of the Employment Period. Executive's employment under this Agreement may be terminated in any of the following manners: i. Executive may, upon two weeks' prior written notice to the Company, voluntarily terminate employment with the Company at any time at the sole discretion of Executive; ii. This Agreement shall terminate automatically upon Executive's death; iii. The Company may, upon written notice to Executive, terminate this Agreement upon Executive's Disability. As used herein, the term "Disability" shall mean a determination that Executive suffers from illness or other physical or mental impairment that 3 prevents Executive from substantially performing his duties for a period of 90 days during any six-month period during the Employment Period or for 180 days during any 12-month period during the Employment Period. The determination of whether (and, if appropriate, when) a Disability has occurred shall be made by a majority of the Board of Directors of the Company (excluding the Senior Executives that are directors of the Company); iv. The Company may terminate Executive's employment under this Agreement with or without cause upon two weeks' prior written notice to Executive. b. Benefits Payable Upon Termination. i. Following the end of the Employment Period for any reason, the Company shall pay to Executive (or, in the event of his death, his surviving spouse, if any, or his estate): (A) any Base Salary earned, but unpaid, for services rendered to the Company on or prior to the date on which the Employment Period ended, and (B) amounts which are vested or which Executive is otherwise entitled to receive under the terms of or in accordance with any plan, policy, practice or program of, or any contract or agreement with, the Company at or subsequent to the date the Employment Period ends without regard to the performance by Executive of further services or the resolution of a contingency. ii. Following the end of the Employment Period for any reason, (i) Executive shall receive a Base Salary in an amount equal to the Base Salary Executive would have been entitled to receive, had Executive not been terminated, for the period commencing on the date of such termination and ending on January 7, 2004, and (ii) Executive shall also receive an Annual Bonus for each calendar year (other than 2004) that would have remained in the Employment Period, had Executive not been terminated, if such period had ended on January 7, 2004. iii. Upon the Effective Date, all of the restricted shares of the Company's Class A Voting Common Stock, par value $.01 per share, and Class E Common Stock, par value $.01 per share, that were subject to the vesting and repurchase provisions set forth in Section 7 of the Original Agreement (collectively, the "Restricted Shares") will become fully vested, provided that the Executive remains in continuous service with the Company or any Subsidiary until such Effective Date. c. Timing of Payments. i. Payments of Base Salary and Annual Bonuses made pursuant to the provisions in Section 5(b)(ii) above shall be calculated based on the year of termination and projected forward for each year remaining in the payment term had the Employment Period ended on January 7, 2004. Upon calculation of such amounts, both the Base Salary and Annual Bonus amounts shall be payable to Executive in a lump sum as soon as practicable, but in no event more than thirty days after the effective date of the termination of Executive's employment. ii. Vested benefits referred to in clause (B) of Section 5(b)(i) shall be payable in accordance with the terms of the plan, policy, practice, program, contract or agreement under which such benefits have accrued. 4 d. Continuing Obligations. After receipt of written notice of termination, but prior to the effective date of such termination, Executive shall continue to perform his duties under this Agreement unless specifically instructed to discontinue such performance. In the event of termination, Executive and the Company shall remain liable for their respective obligations accrued under this Agreement prior to the effective date of termination. 6. Repurchase of Company Stock. a. If the Executive's employment with the Company is terminated for any reason, including upon expiration of the Initial Term or any Renewal Term, as applicable (the "Termination Event"), Geraldo Vento and Thomas Sullivan, equally, or either of them if the other is no longer employed by the Company, or, if neither of them is then employed by the Company or they refuse to so purchase, the Company or any persons it may designate (the "Purchasers"), shall have the obligation to purchase from the Executive at the Purchase Price per share, and the Executive shall have the obligation to sell to such Purchasers at such price, each share of Company Stock then held by the Executive. b. Executive agrees to tender each share of Company Stock to the Purchasers upon receipt of the Purchase Price per share. Any Company Stock purchased by the Purchasers pursuant to this Section 6 shall be equally allocated among them. c. For the purposes hereof, the "Purchase Price" per share shall equal the average price of the Company's Class A Voting Common Stock, par value $.01 per share, as quoted on the Nasdaq National Market or other securities exchange for the 20 trading days immediately preceding the Termination Event. d. Notwithstanding anything contained herein to the contrary, the Company hereby guarantees the performance of the Purchasers under this Section 6. Furthermore, the Purchasers shall be intended third party beneficiaries of the provisions of this Section 6 and may enforce the rights described in this Section directly against the Executive. e. The share certificates evidencing the Company Stock shall be endorsed with the following legend (in addition to any legend required to be placed thereon by applicable federal or state securities laws or the Company's Stockholders Agreement): THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN EMPLOYMENT AGREEMENT BETWEEN THE COMPANY AND 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. 7. Noncompetition and Confidentiality. a. Noncompetition. During the Employment Period and for six (6) months thereafter, Executive shall not, without the consent of the Company, assist or become associated with any person or entity, whether as a principal, partner, employee, consultant or shareholder 5 (other than as a holder of not in excess of 5% of the outstanding voting shares of any publicly traded company) that is actively engaged in the business of providing mobile wireless telecommunications services in the Territory (as defined in the Company's Stockholders' Agreement). b. Confidentiality. Without the prior written consent of the Company, except to the extent required by an order of a court having competent jurisdiction or under subpoena from a governmental body or agency, Executive shall not disclose any trade secrets, customer lists, drawings, designs, information regarding product development, marketing plans, sales plans, manufacturing plans, management organization (including data and other information relating to members of the Board of Directors and management), operating policies and manuals, business plans, financial records, packaging design or other financial, commercial, business or technical information relating to the Company or any of its subsidiaries or affiliates (collectively, "Confidential Information"), to any third person, unless such Confidential Information has been previously disclosed to the public by the Company or is in the public domain (other than by reason of Executive's breach of this Section 7(b)); provided, however, that Executive may disclose Confidential Information to the extent advisable in connection with any disclosures that may be required by law or to enforce this Agreement if the Executive has given the Company advance written notice of his intention to so disclose and a reasonable opportunity to seek a protective court order. c. Inventions. Executive hereby sells, transfers and assigns to the Company all of the right, title and interest of Executive in and to all inventions, ideas, disclosures and improvements, whether patented or unpatented, and copyrightable material, made or conceived by Executive, solely or jointly, or in whole or in part, during the Employment Term which (i) relate to methods, apparatus, designs, products, processes or devices sold, leased, used or under construction or development by the Company or any subsidiary or affiliate or (ii) otherwise relate to or pertain to the business, functions or operations of the Company or any subsidiary or affiliate, or (iii) arise (wholly or partly) from the efforts of Executive during the Employment Period. Executive shall communicate promptly and disclose to the Company, in such form as the Company reasonably requests, all information, details and data pertaining to the aforementioned inventions, ideas, disclosures and improvements; and, whether during the Employment Period or thereafter, Executive shall execute and deliver to the Company (at the Company's sole cost and expense) such formal transfers and assignments and such other papers and documents as may be required of Executive to permit the Company to file and prosecute the patent applications and, as to copyrightable material, to obtain copyright thereon. d. Company Property. Promptly following Executive's termination of employment, Executive shall return to the Company all property of the Company, and all copies thereof in Executive's possession or under his control, and all tangible embodiments of Confidential Information in Executive's possession in whatever media such Confidential Information is maintained. e. Non-Solicitation of Employees. During the Employment Period and for one year thereafter, Executive will not directly or indirectly induce any employee of the Company or any of its subsidiaries or affiliates to terminate employment with such entity, and will not directly or indirectly, either individually or as owner, agent, employee, consultant or 6 otherwise, employ or offer employment to any person who is or was employed by the Company or a subsidiary thereof, unless such person's employment was terminated by such entity without cause, such person's employment was terminated by the person for Good Reason, or such person shall have ceased to be employed by the entity for a period of at least six months; provided, however, that the foregoing shall not prevent Executive from engaging in a general solicitation for employment that is not directed at employees of the Company or any of its subsidiaries or affiliates. For the purposes hereof, "Good Reason" shall mean the occurrence, without the person's prior written consent, of (i) a material diminution or alteration by the entity of the person's position, duties or responsibilities, or (ii) the relocation of the person's principal place of performance more than fifty (50) miles from his or her principal place of performance on the Effective Date. f. Injunctive Relief with Respect to Covenants. Executive acknowledges and agrees that the covenants and obligations of Executive with respect to noncompetition, inventions, confidentiality and Company property contained in this Section 7 relate to special, unique and extraordinary matters and that a violation of any of the terms of such covenants and obligations will cause the Company irreparable injury for which adequate remedies are not available at law. Therefore, Executive agrees that the Company shall be entitled to an injunction, restraining order, or such other equitable relief as a court of competent jurisdiction may deem necessary or appropriate to restrain Executive from committing any violation of the covenants and obligations contained in this Section 7. These injunctive remedies are cumulative and are in addition to any other rights and remedies the Company may have at law or in equity. 8. No Conflict With Prior Agreements; Due Authorization. a. Executive represents to the Company that neither Executive's execution of this Agreement or commencement of employment hereunder nor the performance of Executive's duties hereunder conflicts with any contractual commitment on Executive's part to any third party. The Company represents to Executive that it is fully authorized and empowered by action of the Company's Board of Directors to enter into this Agreement and that performance of its obligations under this Agreement will not violate any agreement between it and any other person, firm or other entity. b. Nothing herein shall be construed to require Executive to use or disclose any information that he is prohibited from using or disclosing as a result of legal or contractual obligations. c. Upon the Effective Date, the Original Agreement shall terminate, this Agreement shall replace the Original Agreement, and no party to the Original Agreement shall have any further rights or obligations under the Original Agreement. 9. Miscellaneous. a. Income Tax Payment. Subject to Section 9(b), if the Executive has received or will receive any non-cash compensation or recognize any non-cash income in connection with or as a result of the amendment of the Original Agreement to accelerate the vesting of, and remove the net exercise price requirements applicable to, the Restricted Shares, 7 then Mississippi shall pay the Executive in cash an amount (the "Income Tax Payment") equal to all federal, state and local income taxes payable by the Executive with respect to such non-cash compensation or income and with respect to such Income Tax Payment. The Income Tax Payment shall be paid by Mississippi to the Executive within 30 days of the written request therefor made by the Executive. b. Payment of Additional Amount. If in the opinion of tax counsel selected by the Executive and reasonably acceptable to the Company, the Executive has received or will receive any compensation or recognize any income from the Company or any of its affiliates (whether pursuant to this Agreement or otherwise) which in the opinion of counsel will constitute an "excess parachute payment" within the meaning of Section 280G(b)(1) of the Code (or for which a tax is otherwise payable under Section 4999 of the Code), then Mississippi shall pay the Executive an additional amount (the "Additional Amount") equal to the sum of (i) all taxes payable by the Executive under Section 4999 of the Code with respect to all such excess parachute payments and any such Additional Amount, plus (ii) all federal, state and local income taxes payable by Executive with respect to any such Additional Amount; provided, however, that in no event shall the aggregate amount determined or paid to Executive under this Section 9(b) and Section 9(a) (disregarding, for this purpose, any portion of the Additional Amount attributable to the conversion of Executive's shares of Mississippi Voting Preference Stock) exceed $26,000,000, less all income tax, excise tax and other gross-up payments paid or payable to other executives of the Company or to present or former employees of Mississippi under Section 6.2(b)(iii)(F) of the Merger Agreement. Any amounts payable pursuant to this Section shall be paid by Mississippi to the Executive within 30 days of each written request therefor made by the Executive. c. Survival. Sections 4(d), 5, 6, 7, 8 and 9 shall survive the termination hereof. d. Binding Effect. This Agreement shall be binding on the Company and any person or entity which succeeds to the interest of the Company (regardless of whether such succession occurs by operation of law) by reason of the sale of all or a portion the Company's stock, a merger, consolidation, or reorganization involving the Company or a sale of the assets of the business of the Company (or portion thereof) in which Executive performs a majority of his services. This Agreement shall also inure to the benefit of Executive's heirs, executors, administrators and legal representatives. e. Assignment. Except as provided under Section 9(d), neither this Agreement nor any of the rights or obligations hereunder shall be assigned or delegated by any party hereto without the prior written consent of the other party, except that the Company may delegate to any of its direct or indirect wholly owned subsidiaries its obligations to provide compensation and benefits hereunder; provided no such delegation shall relieve the Company of its obligations hereunder. f. Entire Agreement. This Agreement, together with any Schedules attached hereto, constitutes the entire agreement between the parties hereto with respect to the matters referred to herein, and no other agreement, oral or otherwise, shall be binding between the parties unless it is in writing and signed by the party against whom enforcement is sought. There are no 8 promises, representations, inducements or statements between the parties other than those that are expressly contained herein. Executive acknowledges that he is entering into this Agreement of his own free will and accord, and with no duress, that he has been represented and fully advised by competent counsel in entering into this Agreement, that he has read it and that he understands it and its legal consequences. No parol or other evidence may be admitted to alter, modify or construe this Agreement, which may be altered, modified or amended only by a writing signed by the parties hereto. g. Severability; Reformation. In the event that one or more of the provisions of this Agreement shall become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby. In the event that any of Sections 7(a), (b) or (c) is not enforceable in accordance with its terms, Executive and the Company agree that such Section shall be reformed to make such Section enforceable in a manner which provides the Company the maximum rights permitted at law. h. Waiver. Waiver by any party hereto of any breach or default by the other party of any of the terms of this Agreement shall not operate as a waiver of any other breach or default, whether similar to or different from the breach or default waived. No waiver of any provision of this Agreement shall be implied from any course of dealing between the parties hereto or from any failure by either party hereto to assert its or his rights hereunder on any occasion or series of occasions. i. Notices. Any notice required or desired to be delivered under this Agreement shall be in writing and shall be delivered personally against receipt, by courier service or by registered mail, return receipt requested, and shall be effective upon actual receipt by the party to which such notice shall be directed, and shall be addressed as follows (or to such other address as the party entitled to notice shall hereafter designate in accordance with the terms hereof): If to the Company, to the attention of its Board of Directors at the Company's principal executive offices. If to Executive: E.B. Martin, Jr. 2306 Twin Lakes Cr. Jackson, MS 39211 j. Headings. Headings to paragraphs in this Agreement are for the convenience of the parties only and are not intended to be part of or to affect the meaning or interpretation hereof. k. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 9 l. Withholding. Any payments provided for herein shall be reduced by any amounts required to be withheld by the Company from time to time under applicable Federal, State or local income or employment tax laws or similar statutes or other provisions of law then in effect. m. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York. n. Resolution of Disputes. All disputes, controversies and claims arising in connection with this Agreement (other than claims for equitable relief to enforce any provision in this Agreement) that are not settled by agreement between the parties shall be finally settled under the Commercial Arbitration Rules of the American Arbitration Association ("AAA") in effect from time to time. A single arbitrator shall be appointed by agreement between the parties or, failing such agreement, by AAA. Executive and the Company shall, if possible, mutually agree upon a neutral forum for arbitration; in the absence of such agreement, the site of arbitration shall be Atlanta, Georgia. The arbitrator may grant any remedy that (s)he deems just and equitable within the scope of this Agreement, including specific performance. The award of the arbitrator shall be final and binding and judgment thereon may be entered in any court having jurisdiction. The costs and expenses (including reasonable attorney's fees) of the prevailing party shall be borne and paid by the party that the arbitrator determines is the non-prevailing party. 10 IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and Executive has hereunto set his hand as of the day and year first above written. TeleCorp PCS, Inc. By: /s/ Thomas H. Sullivan ------------------------------------- Name: Thomas H. Sullivan Title: Executive Vice President - Chief Financial Officer EXECUTIVE: E.B. MARTIN, JR. /s/ E.B. Martin, Jr. ---------------------------------------- S-IV-1 -----END PRIVACY-ENHANCED MESSAGE-----