Employment Agreements.
In addition, the agreements also provide for annual option grants, contingent upon continued employment. Mr. Sharbutt's agreement provides for him to receive options to acquire Alamosa Holdings' common stock according to the following schedule: 250,000 in 2003; 425,000 in 2004; 300,000 in 2005; 240,000 in 2006; and 100,000 in 2007. Mr. Cowan's agreement provides for him to receive options to acquire Alamosa Holdings' common stock according to the following schedule: 150,000 in 2003; 375,000 in 2004; 250,000 in 2005; and 200,000 in 2006. The grants made for 2003 were made on October 1, 2003, and all options under these agreements will be fully vested and exercisable upon grant. For each subsequent annual grant, generally half the annual options will be granted in January and half in July, and the options will be exercisable six months following the grant date.
The agreements entitle the executives to $5,000,000 in term life insurance coverage, reimbursement for reasonable business expenses, a car allowance, reimbursement for approved club dues, reimbursement for an annual physical exam up to $5000, and financial planning services up to $10,000 per annum. The executives may participate in any incentive, retirement, life, medical, disability and other benefit plans available to Alamosa Holdings' other executives with comparable responsibilities, subject to the terms of those programs.
Upon termination of employment by Alamosa Holdings without cause or by the executive for good reason, within thirty days after the date of termination, Alamosa Holdings will provide the terminated executive a lump-sum severance payment equal to the sum of: (1) one year's base salary; (2) the higher of (a) the executive's target bonus or (b) the average annual bonus the executive earned over the two preceding years (the "Bonus"); and (3) a pro-rated bonus for the year of termination. If such termination occurs within twelve months following a change in control, the terminated executive is instead entitled to three times his base salary and Bonus, plus a pro-rata bonus for the year of termination. In either case, the terminated executive will also receive continuing welfare and fringe benefits for one year following termination of his employment and all restricted stock and options granted to the executive under the agreement will become vested and exercisable. Further, each executive is entitled to receive a gross-up payment to make him whole if he becomes subject to the excise tax imposed under Section 4999 of the Internal Revenue Code, as amended (the "Code"), on
excess parachute payments; provided, however, that no gross-up payment will be made to the executive and the amount paid to the executive will be reduced if a reduction of 15% or less to the payments and benefits that the executive would receive on termination would not subject him to the excise tax imposed under Section 4999 of the Code. If a reduction is imposed, the reduction will be the minimum amount required so that the executive will not be subject to the excise tax on excess parachute payments.
The agreements contain non-compete and non-solicitation provisions effective for two years following termination of employment without cause or for good reason within one year following a change in control or one year following termination of employment in any other circumstances. Generally, a change of control will occur for purposes of the agreements (and for the agreements described below) if (1) any person acquires 25% or more of the beneficial ownership of Alamosa Holdings, (2) continuing directors (other than those approved) cease to constitute a majority of the board or directors of Alamosa Holdings, (3) certain mergers or consolidations occur, (4) stockholders approve any plan or proposal for the liquidation or dissolution of Alamosa Holdings or (5) there is a sale of substantially all of Alamosa Holdings' assets.
Steven A. Richardson, Anthony Sabatino and Margaret Z. Couch. Alamosa Holdings entered into an employment agreement with Ms. Margaret Z. Couch on October 1, 2002; Mr. Anthony Sabatino on October 1, 2002, as amended as of January 1, 2004; Mr. Loyd I. Rinehart on October 1, 2002, as amended as of January 1, 2004; and Mr. Steven A. Richardson on December 1, 2002. Ms. Couch's employment agreement will expire on September 30, 2005, Mr. Sabatino's employment agreement will expire on September 30, 2006, Mr. Rinehart's employment agreement will expire on September 30, 2006 and Mr. Richardson's employment agreement will expire on November 30, 2005.
Ms. Couch is entitled to receive an annual base salary of $180,000 with a target annual bonus of $80,000; Mr. Sabatino is entitled to receive an annual base salary of $210,000 with a target annual bonus of $110,000; Mr. Rinehart is entitled to receive an annual base salary of $210,000 with a target annual bonus of $110,000; and Mr. Richardson is entitled to receive an annual base salary of $250,000 with a target annual bonus of $150,000. The executives are entitled to participate in any long-term incentive plans Alamosa Holdings establishes, including the LTIP.
In addition, the agreements also provide for annual option grants. Ms. Couch's agreement provides for her to receive options to acquire Alamosa Holdings' common stock according to the following schedule: 70,000 in 2003; 60,000 in 2004; and 50,000 in 2005. The agreements for Messrs. Sabatino and Rinehart provide for each to receive options to acquire Alamosa Holdings' common stock according to the following schedule: 70,000 in 2003; 150,000 in 2004; 125,000 in 2005; and 100,000 in 2006. Mr. Richardson's agreement provides for him to receive options to acquire Alamosa Holdings' common stock according to the following schedule: 150,000 in 2003; 125,000 in 2004; and 100,000 in 2005. The grants for 2003 will be made on October 1, 2003, and all options under these agreements will be fully vested and exercisable upon grant. For each subsequent annual grant, generally half the annual options will be granted in January and half in July, and the options will be exercisable six months following the grant date.
The agreements entitle the executives to reimbursement for reasonable business expenses, reimbursement for approved club dues, and a car allowance. In the case of Mr. Richardson, he is also eligible for reimbursement for an annual physical exam up to $5000, and each of Ms. Couch and Messrs. Sabatino and Rinehart is eligible for reimbursement for an annual physical exam up to $2500. They may participate in any incentive, retirement, life, medical, disability and other benefit plans available to Alamosa Holdings' other executives with comparable responsibilities, subject to the terms of those programs.
Upon termination of employment by Alamosa Holdings without cause or by the executive for good reason, within thirty days of the date of termination, Alamosa Holdings will provide the terminated executive a lump-sum severance payment equal to: (1) one year's base salary; (2) the higher of (a) the executive's target bonus or (b) the executive's Bonus; and (3) a pro-rated bonus for the year of termination. If such termination occurs within twelve months following a change in control, the executive is instead entitled to receive two times base salary and Bonus, plus a pro-rata bonus for the
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year of termination. In either case, the terminated executive will also receive continuing welfare and fringe benefits for one year and all restricted stock and options granted to the executive under the agreement would become vested and exercisable.
Payments to Ms. Couch and Messrs. Sabatino and Rinehart will be reduced so that no amount will be subject to the excise tax imposed under section 4999 of the Code if each such executive's after-tax position would be improved as a result of such reduction. Mr. Richardson is entitled to a gross-up payment on the same terms as are applicable to Messrs. Sharbutt and Cowan.
The agreements contain non-compete and non-solicitation provisions for two years following termination of employment without cause or for good reason within one year following a change of control or one year following termination of employment in any other circumstances.
Compensation committee of the board of directors
Compensation Committee Interlocks and Insider Participation.
Our Compensation Committee is responsible for, among other things, reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer; evaluating the Chief Executive Officer's performance in light of those goals and objectives; determining and approving the Chief Executive Officer's compensation level based on the committee's evaluation; and making recommendations to our board of directors with respect to executive compensation, incentive-compensation plans and equity-based plans. During fiscal year 2003, the Compensation Committee met on five occasions.
The current members of the Compensation Committee are Messrs. Clapp (Chairman), Marshall and White. During fiscal year 2003, Mr. Hart served on the Compensation Committee until his resignation from the committee on May 29, 2003. Messrs. Thomas B. Hyde and Tom M. Phelps also served on the Compensation Committee during fiscal year 2003 until their respective resignations from our board of directors effective February 2003.
In connection with our distribution and sales of Sprint PCS wireless communications equipment, on December 28, 1998, we entered into an agreement to lease space for a retail store in Lubbock, Texas with Lubbock HLH, Ltd., principally owned by Mr. Hart, who is one of our directors and the general manager of SPACE, a wholly owned subsidiary of South Plains Telephone Cooperative, Inc., one of our stockholders. This lease has a term of 15 years and provides for monthly payments aggregating to approximately $110,000 a year, subject to adjustment based on the Consumer Price Index on the first day of the sixth lease year and on the first day of the eleventh lease year. During fiscal year 2003, approximately $110,000 was paid under this lease. In addition to rental, we paid approximately $24,000 to Lubbock HLH for taxes and other expenses related to the leased property during the last fiscal year and expect similar additional payments during fiscal year 2004.
Compensation Committee Report On Executive Compensation.
Our compensation policies are designed to tie overall bonus compensation to performance. Incentive bonuses for our executive officers, including the Named Executive Officers, include bonus targets based on key objective quarterly milestones in our business plan and annual budget. Our objectives in 2003 were attainment of EBITDA (defined as net loss plus taxes, net interest expense, depreciation expense, amortization expense and other non-cash expense items) targets and net subscriber additions as contained in our 2003 business plan and budget. These measures are calculated and bonuses paid on both a quarterly and annual basis to ensure focus on both the quarterly and annual objectives.
For all executives, their target bonus amounts were split equally between quarterly and annual objectives. On the quarterly objectives, EBITDA was weighted at 60% and net subscribers at 40%. On the annual objectives, EBITDA was weighted at 90% and net subscribers at 10%.
Using the 1st quarter of 2003 as an example of how the bonus system worked: the Chief Executive Officer had an award target of $28,125. For 1st quarter, net-subscriber additions were 174.28% of
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target and EBITDA was 117.60% of target. The combination of these factors resulted in a 1st quarter bonus for the Chief Executive Officer of $47,812.50. Utilizing these same factors, the Chief Financial Officer received a total 1st quarter bonus of $29,750.00, the Chief Operating Officer received a total 1st quarter bonus of $31,875.00, the Chief Marketing Officer received a total 1st quarter bonus of $17,000.00, the Chief Technology Officer received a total 1st quarter bonus of $23,375.00 and the Senior Vice President-Finance received a total 1st quarter bonus of $20,187.50.
As the above discussion illustrates, the Compensation Committee has elected to utilize purely objective and quantitative measures for the purpose of quarterly and annual bonuses. The committee is also concerned with performance that may be considered subjective, or not subject to measurement. As such, the committee may also make a subjective evaluation of executive performance that may affect salary adjustments and other components of compensation.
For 2004, it is anticipated that the bonus opportunity for executive officers will continue to be split equally between quarterly and annual goals. In accordance with each executives' respective employment agreement, no annual or quarterly bonus will be payable unless the committee determines that at least 75% of the applicable performance goals have been achieved. For the first quarter of 2004, the committee has determined that the bonus compensation structure should continue to focus on EBITDA and net subscriber additions. Bonus objectives for the future will continue to be evaluated and approved by the committee.
U.S. federal income tax law limits the deductibility of certain compensation paid to the chief executive officer and the four most highly compensated executives (the "covered employees") in excess of the statutory maximum of $1 million per covered employee. The committee's general policy is to structure the compensation paid to the covered employees so as to maximize the deductibility of such compensation for U.S. federal income tax purposes; however, the committee retains the flexibility, where necessary to promote the incentive and retention goals described above, to pay compensation which may not be deductible.
2003 COMPENSATION COMMITTEE:
Ray M. Clapp, Jr. Jimmy White
Schuyler B. Marshall
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Certain relationships and related transactions
AGREEMENTS WITH MESSRS. MICHAEL V. ROBERTS AND STEVEN C. ROBERTS
On February 14, 2001, we completed the acquisition of Roberts Wireless. Messrs. Michael V. Roberts and Steven C. Roberts, who are members of our board of directors, were the sole owners of Roberts Wireless. Pursuant to the terms of the merger agreement with Roberts Wireless, upon closing of the transaction, each of Messrs. Michael V. Roberts and Steven C. Roberts was entitled to receive 6,750,000 shares of our common stock and approximately $2.0 million in cash as consideration in respect of his ownership interests in Roberts Wireless. As of April 15, 2004, Messrs. Michael V. Roberts and Steven C. Roberts owned approximately 4.74% and 5.21% of our outstanding shares of common stock, respectively. The terms of the merger agreement, including the consideration payable to Messrs. Michael V. Roberts and Steven C. Roberts, were determined on the basis of arm's length negotiations between us and Messrs. Michael V. Roberts and Steven C. Roberts. Messrs. Michael V. Roberts and Steven C. Roberts were appointed to our board of directors upon completion of the acquisition of Roberts Wireless.
In connection with the acquisition of Roberts Wireless, we entered into a number of arrangements with Messrs. Michael V. Roberts and Steven C. Roberts and certain companies affiliated with them, as described in more detail below:
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| ▸ | Joint venture development agreement. On October 30, 2000, Messrs. Michael V. Roberts and Steven C. Roberts entered into a joint venture development agreement with us. Pursuant to the agreement, if either Mr. Michael V. Roberts or Mr. Steven C. Roberts (each a "Project Member") undertakes an international telecommunications business venture (a "Project") and desires for us to be involved in that Project, then before the Project Member enters into a letter of intent or binding agreement of any nature with another person regarding the Project, written notice must be given to us, and we have 60 days to notify the Project Member of our desire to participate in the Project. During such 60 day period, we have the exclusive right to elect to participate in the Project. Promptly after we give a notice of participation, we, along with the Project Member, shall form a project entity and shall execute an agreement setting forth the terms, covenants, conditions and provisions for the purpose, ownership, management, financing and operating of the Project. Unless we and the Project Member agree to a different arrangement, we will have a 50% interest in each project entity and full managerial control of each project entity. Except as described above, neither the Project Members nor we are obligated to bring to the other any opportunity to participate in a Project or any activity, domestic or international. |
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| ▸ | Consulting agreements. On January 29, 2001, we entered into five-year consulting agreements with each of Messrs. Michael V. Roberts and Steven C. Roberts. The consulting agreements provide each of them with an annual compensation of $125,000, which is paid in monthly installments. |
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| ▸ | Right of first negotiation agreement. On February 14, 2001, we entered into a right of first negotiation agreement with Roberts Tower, which grants Roberts Tower a right to negotiate tower leases on a "build-to-suit" basis within our present and future territory. During the term of the agreement, whenever we are or one of our subsidiaries is required to "build to suit" communications towers within the present or future territories in which we operate or it operates, as the case may be, we must notify Roberts Tower and Roberts Tower will have the exclusive right for a period of 30 days to negotiate with us to provide such towers. After such 30 day period, if we have not reached an agreement with Roberts Tower, we may obtain such tower sites from other third parties. The term of this agreement is five years. To date, there have been no material discussions between us and Roberts Tower with respect to this agreement. |
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| ▸ | Resale agreement. On February 14, 2001, we entered into a resale agreement with Messrs. Michael V. Roberts and Steven C. Roberts that permits Messrs. Michael V. Roberts and Steven C. Roberts to buy air time at a discount for resale on a basis no less favorable than any other similar agreement to which we may be a party. Messrs. Michael V. Roberts and Steven C. Roberts may resell such airtime anywhere where such resales are permitted under applicable law. Any |
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| | arrangement between us and Messrs. Michael V. Roberts and Steven C. Roberts for resales and use of air time will be subject to all required approvals of Sprint, Sprint Spectrum and Sprint PCS and/or any other applicable Sprint entities. The resale agreement does not set forth a limitation on its duration. To date, neither Mr. Michael V. Roberts nor Mr. Steven C. Roberts has ever purchased any air time pursuant to these agreements. |
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| ▸ | Master lease agreement. On February 14, 2001, Roberts and Roberts Tower entered into a master lease agreement, which provides for the lease from Roberts Tower by Roberts Wireless of certain buildings, towers, tanks and/or improvements thereon for the purpose of installing, operating and maintaining communications facilities and services thereon. The initial term of the master lease agreement expires in February 2006, and Roberts Wireless has the right to extend the initial term of the lease for four additional terms of five years each. The agreement provides for monthly payments aggregating to approximately $16,800 per site per year, subject to an annual adjustment of 4% per annum. Roberts Wireless subsequently assigned all of its right, title and interest in the master lease agreement to its wholly owned subsidiary, Alamosa Missouri Properties, LLC (formerly Roberts Wireless Properties, L.L.C.). For fiscal year 2003, approximately $2,785,000 in rental expense was paid to Roberts Tower under this agreement. |
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| ▸ | Other payments. In addition to the specific agreements discussed above, we paid approximately $287,000 for the year ended December 31, 2003 to Roberts Tower for other items, including the lease of retail space and switching facility space and expect to pay a similar amount during fiscal year 2004. |
OTHER RELATED PARTY TRANSACTIONS
In connection with our distribution and sales of Sprint PCS wireless communications equipment, on December 28, 1998, we entered into an agreement to lease space for a retail store in Lubbock, Texas with Lubbock HLH, Ltd., principally owned by Mr. Hart, who is one of our directors and the general manager of SPACE, a wholly owned subsidiary of South Plains Telephone Cooperative, Inc., one of our stockholders. This lease has a term of 15 years and provides for monthly payments aggregating to approximately $110,000 a year, subject to adjustment based on the Consumer Price Index on the first day of the sixth lease year and on the first day of the eleventh lease year. During fiscal year 2003, approximately $110,000 was paid under this lease. In addition to rental, we paid approximately $24,000 to Lubbock HLH for taxes and other expenses related to the leased property during the last fiscal year and expect similar additional payments during fiscal year 2004.
Mr. Otto was an investment banker at Citigroup, which received professional fees from us for our IPO, past debt offerings and merger and acquisition activities. Citigroup maintains lending and investment banking relationships with us.
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Description of the new notes
You can find the definitions of certain terms used in this description under the subheading "—Certain definitions." In this description, the words "Company," "Alamosa Delaware," "us" and "we" refer only to Alamosa (Delaware), Inc. and not to any of its subsidiaries.
GENERAL
The old notes were, and the new notes will be, issued under an indenture, dated as of January 20, 2004, among Alamosa Delaware, the Guarantors and Wells Fargo Bank Minnesota, N.A., as trustee. The terms of the notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The terms of the new notes are the same as the terms of the old notes, except that the new notes:
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| • | will have been registered under the Securities Act; |
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| • | will not bear restrictive legends restricting their transfer under the Securities Act; |
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| • | will not be entitled to the registration rights applicable to the old notes; and |
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| • | will not contain provisions relating to special interest in connection with the old notes under circumstances related to the timing of the exchange offer. |
The following description is a summary of the material provisions of the Indenture. It does not restate the Indenture in its entirety. We urge you to read the Indenture because it, and not this description, defines your rights as holders of the senior notes. Certain defined terms used in this description but not defined below under "—Certain definitions" have the meanings assigned to them in the Indenture.
The registered holder of a senior note will be treated as the owner of it for all purposes. Only registered holders will have rights under the Indenture. For purposes of this description, references to accrued and unpaid interest on the senior notes shall include, when applicable, any accrued and unpaid special interest.
Anyone who receives this prospectus may obtain a copy of the Indenture without charge by writing to Alamosa (Delaware), Inc., 5225 S. Loop 289, Lubbock, Texas 79424, Attention: Investor Relations.
The old notes were issued without coupons, in denominations of $1,000 and integral multiples of $1,000.
PRINCIPAL, MATURITY AND INTEREST
The senior notes will mature on January 31, 2012. We may issue additional senior notes under the Indenture from time to time after the issuance and sale of the old notes. Any issuance of additional senior notes is subject to all of the covenants in the Indenture, including the covenant described below under the caption "—Certain covenants—Limitation on debt." The senior notes and any additional senior notes subsequently issued under the Indenture will be treated as a single class for all purposes under the Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase.
Interest on the senior notes will accrue at the rate of 8½% per annum and will be payable in cash semi-annually on January 31 and July 31 of each year, beginning on July 31, 2004. Alamosa Delaware will pay interest to those persons who were holders of record on the January 15 or July 15 immediately preceding each interest payment date. Interest on the senior notes will accrue from the date of original issuance or, if interest has already been paid, from the date it was most recently paid. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.
RANKING
The senior notes are:
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| • | senior unsecured obligations of Alamosa Delaware; |
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| • | equal in right of payment ("pari passu") with each other and with all existing and future unsecured senior debt of Alamosa Delaware, including the Existing Notes; |
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| • | senior in right of payment to all existing and future subordinated debt of Alamosa Delaware; |
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| • | effectively subordinated in right of payment to all existing and future secured debt of Alamosa Delaware to the extent of the assets securing such secured debt; and |
the Subsidiary Guarantees are:
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| • | senior subordinated unsecured obligations of the Subsidiary Guarantors; |
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| • | pari passu in right of payment with each other and with the guarantees on the Existing Notes and any future senior subordinated debt of that Guarantor; |
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| • | senior in right of payment to all existing and future subordinated debt of that Guarantor; and |
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| • | subordinated in right of payment to all existing and future Designated Senior Debt of that Guarantor. |
As of December 31, 2003, after giving effect to the issuance and sale of the old notes and the application of the proceeds therefrom, the total outstanding Debt of Alamosa Delaware and the Subsidiary Guarantors is approximately $715.7 million. As of this date, none of Alamosa Delaware's or the Subsidiary Guarantors' Debt, after taking the same factors into account, would have been subordinated to the senior notes or the Subsidiary Guarantees.
Alamosa Delaware has only a stockholder's claim against the assets of its subsidiaries. This stockholder's claim is junior to the claims that creditors of Alamosa Delaware's subsidiaries have against those subsidiaries. Holders of the senior notes have claims as creditors in the assets of the Subsidiary Guarantors, but those claims are subordinated to the claims of the holders of any Designated Senior Debt of the Subsidiary Guarantors.
All of Alamosa Delaware's operations are conducted through its subsidiaries. Therefore, Alamosa Delaware's ability to service its debt, including the senior notes, is dependent upon the earnings of its subsidiaries and their ability to distribute those earnings as dividends, loans or other payments to Alamosa Delaware. Certain laws restrict the ability of Alamosa Delaware's subsidiaries to pay dividends and make loans and advances to it. In addition, any future Credit Facilities may place restrictions on the ability of the Restricted Subsidiaries to make distributions to Alamosa Delaware. If the restrictions described above are applied to subsidiaries that are not Subsidiary Guarantors, then Alamosa Delaware would not be able to use the earnings of those subsidiaries to make payments on the senior notes. Furthermore, under certain circumstances, bankruptcy "fraudulent conveyance" laws or other similar laws could invalidate the Subsidiary Guarantees. If this were to occur, Alamosa Delaware would also be unable to use the earnings of the Subsidiary Guarantors to the extent they face restrictions on distributing funds to Alamosa Delaware. Any of the situations described above could make it more difficult for Alamosa Delaware to service its debt.
The total balance sheet liabilities of the Subsidiary Guarantors, as of December 31, 2003, after giving effect to the issuance and sale of the old notes and the guarantees in respect thereof and the application of the proceeds therefrom would have been approximately $190 million.
The Subsidiary Guarantors have other liabilities, including contingent liabilities, that may be significant. As of the date of the Indenture, other than Alamosa Delaware Operations, LLC, Alamosa Delaware did not have any subsidiaries that are not Subsidiary Guarantors. The Indenture contains limitations on the amount of additional Debt which Alamosa Delaware and the Restricted Subsidiaries may Incur. However, the amounts of such Debt could be substantial and may be Incurred either by Subsidiary Guarantors or by Alamosa Delaware's other subsidiaries.
The senior notes are unsecured obligations of Alamosa Delaware and the Subsidiary Guarantors. Secured Debt of Alamosa Delaware and the Subsidiary Guarantors will be effectively senior to the senior notes to the extent of the value of the assets securing such Debt.
As of December 31, 2003, Alamosa Delaware and the Subsidiary Guarantors had no secured Debt.
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SUBSIDIARY GUARANTEES
The obligations of Alamosa Delaware under the Indenture, including the repurchase obligation resulting from a Change of Control, is fully and unconditionally guaranteed, jointly and severally, on a senior subordinated, unsecured basis, by all the existing and any future Domestic Restricted Subsidiaries of Alamosa Delaware. However, the holders of any Designated Senior Debt (as defined below) or their authorized representative must be provided written notice of an Event of Default at least 10 business days prior to the Trustee or any holder of senior notes making any demand for payment under or exercising any right or remedy with respect to a Subsidiary Guaranty and prior to any Subsidiary Guarantor making payment under its Subsidiary Guaranty.
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| 1. | If Alamosa Delaware sells or otherwise disposes of either |
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| 2. | its entire ownership interest in a Subsidiary Guarantor, or all or substantially all the assets of a Subsidiary Guarantor, |
such Subsidiary Guarantor will be released from all its obligations under its Subsidiary Guaranty. In addition, if Alamosa Delaware redesignates a Subsidiary Guarantor as an Unrestricted Subsidiary, which Alamosa Delaware is permitted to do under certain circumstances, the redesignated Subsidiary Guarantor will be released from all its obligations under its Subsidiary Guaranty. See "—Certain covenants—Designation of restricted and unrestricted subsidiaries," "—Certain covenants—Limitation on issuance or sale of capital stock of restricted subsidiaries" and "—Merger, consolidation and sale of property," below.
If any Subsidiary Guarantor makes payments under its Subsidiary Guaranty, each of Alamosa Delaware and the other Subsidiary Guarantors must contribute their share of such payments. Alamosa Delaware's and the other Subsidiary Guarantors' shares of such payment will be computed based on the proportion that the net worth of Alamosa Delaware or the relevant Subsidiary Guarantor represents relative to the aggregate net worth of Alamosa Delaware and all the Subsidiary Guarantors combined.
SUBORDINATION OF SUBSIDIARY GUARANTEES
The obligations of the Subsidiary Guarantors under their respective Subsidiary Guarantees will be subordinated to any Designated Senior Debt as described below. As a result of this subordination, holders of Designated Senior Debt will be entitled to receive full payment in cash on all obligations owed to them before any Subsidiary Guarantor can make any payment to holders of the senior notes in any of the following situations or proceedings relating to such Subsidiary Guarantor:
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| • | liquidation, dissolution or winding up; |
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| • | bankruptcy, reorganization, insolvency, receivership or similar proceedings; |
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| • | any assignment for the benefit of its creditors; or |
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| • | any marshaling of its assets and liabilities. |
As a result of the subordination referred to above, no Subsidiary Guarantor may make any payment pursuant to its Obligations or repurchase, redeem or otherwise retire or defease any senior notes (collectively, "make a Subsidiary Guarantor payment"), if
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| (a) | any principal, premium or interest in respect of any Designated Senior Debt is not paid when due (including at maturity), or |
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| (b) | any other default on Designated Senior Debt occurs and the maturity of such Debt is accelerated in accordance with its terms, unless, in either case, |
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| (1) | the default has been cured or waived and any such acceleration has been rescinded, or |
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| (2) | such Designated Senior Debt has been paid in full in cash; |
provided, however, that a Subsidiary Guarantor may make a Subsidiary Guarantor payment without regard to the foregoing if such Subsidiary Guarantor and the Trustee receive written notice approving such payment from the holders of such Designated Senior Debt.
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During the continuance of any default (other than a default described in clause (a) or (b) above) under any Designated Senior Debt pursuant to which the maturity thereof may be accelerated immediately without further notice (except any notice required to effect the acceleration) or the expiration of any applicable grace period, no Subsidiary Guarantor may make a Subsidiary Guarantor payment for a period (a "Payment Blockage Period") commencing upon the receipt by such Subsidiary Guarantor and the Trustee of written notice of such default from a representative under such Designated Senior Debt specifying an election to effect a Payment Blockage Period (a "Payment Blockage Notice") and ending 179 days thereafter, unless such Payment Blockage Period is earlier terminated:
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| (a) | by written notice to the Trustee and such Subsidiary Guarantor from the holders of such Designated Senior Debt; |
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| (b) | because such default is no longer continuing; or |
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| (c) | because all such Designated Senior Debt has been repaid in full in cash. |
Unless the holders of such Designated Senior Debt have accelerated the maturity of such Designated Senior Debt and not rescinded such acceleration, a Subsidiary Guarantor may (unless otherwise prohibited as described in the first or second paragraphs of this section) resume making Subsidiary Guarantor payments after the end of such Payment Blockage Period.
Not more than one Payment Blockage Notice may be given in any consecutive 360-day period, irrespective of the number of defaults during such period.
Upon any payment or distribution of the assets of a Subsidiary Guarantor (1) upon a total or partial liquidation, dissolution or winding up of such Subsidiary Guarantor, (2) in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to such Subsidiary Guarantor, (3) upon an assignment for the benefit of creditors of such Subsidiary Guarantor or (4) upon any marshaling of the assets and liabilities of such Subsidiary Guarantor:
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| • | the holders of Designated Senior Debt will be entitled to receive payment in full in cash before the holders of the senior notes are entitled to receive any payment pursuant to the Subsidiary Guaranty of such Subsidiary Guarantor; and |
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| • | until the Designated Senior Debt is paid in full in cash, any distribution to which holders of the senior notes would be entitled but for the subordination provisions of the Indenture with respect to the Subsidiary Guarantees will be made to holders of such Designated Senior Debt, except that holders of senior notes may receive and retain shares of stock and any debt securities of such Subsidiary Guarantor that are subordinated to the Designated Senior Debt to at least the same extent as the Subsidiary Guaranty of such Subsidiary Guarantor is subordinated to the Designated Senior Debt. |
If a payment or distribution is made to holders of senior notes that, due to the subordination provisions with respect to the Subsidiary Guarantees, should not have been made to them, such holders are required to hold it in trust for the holders of Designated Senior Debt and pay it over to them as their interests may appear.
If payment of the senior notes is accelerated when any Designated Senior Debt is outstanding, no Subsidiary Guarantor may make a Subsidiary Guarantor payment until ten business days after the holders of such Designated Senior Debt receive notice of such acceleration and, thereafter, may make a Subsidiary Guarantor payment only if the Indenture otherwise permit payment at that time.
Because of the Indenture's subordination provisions with respect to the Subsidiary Guarantees, holders of Designated Senior Debt may recover disproportionately more than the holders of the senior notes recover in a bankruptcy or similar proceeding relating to any Subsidiary Guarantor. In such a case, there may be insufficient assets, or no assets, remaining to pay the principal of or interest on the senior notes.
OPTIONAL REDEMPTION
Except as set forth in the following paragraph, the senior notes will not be redeemable at the option of Alamosa Delaware prior to January 31, 2008. Starting on that date, Alamosa Delaware may
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redeem all or any portion of the senior notes, at once or over time, after giving the required notice under the Indenture. The senior notes may be redeemed at the redemption prices set forth below, plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date). The following prices are for senior notes redeemed during the 12-month period commencing on of the years set forth below, and are expressed as percentages of principal amount:
| | | | | | |
| Year | | Redemption Price |
| 2008 | | | 104.250 | % |
| 2009 | | | 102.125 | % |
| 2010 and thereafter | | | 100.000 | % |
|
At any time and from time to time, prior to January 31, 2007, Alamosa Delaware may redeem up to a maximum of 35% of the original aggregate principal amount of the senior notes with the proceeds of one or more Public Equity Offerings, at a redemption price equal to 108.500% of the principal amount thereof, plus accrued and unpaid interest thereon, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that after giving effect to any such redemption, at least 65% of the original aggregate principal amount of the senior notes remains outstanding. Any such redemption shall be made within 90 days of such Public Equity Offering upon not less than 30 nor more than 60 days' prior notice.
SINKING FUND
There are no mandatory sinking fund payments for the senior notes.
REPURCHASE AT THE OPTION OF HOLDERS UPON A CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each holder of senior notes will have the right to require us to repurchase all or any part of such holder's senior notes pursuant to the offer described below (the "Change of Control Offer") at a purchase price (the "Change of Control Purchase Price") equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the purchase date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).
Within 30 days following any Change of Control, Alamosa Delaware shall:
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| (a) | cause a notice of the Change of Control Offer to be sent at least once to the Dow Jones News Service or a similar business news service in the United States, and |
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| (b) | send, by first-class mail, with a copy to the Trustee, to each holder of senior notes, at such holder's address appearing in the book of the registrar appointed under the Indenture, a notice stating: |
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| (1) | that a Change of Control has occurred and a Change of Control Offer is being made pursuant to this covenant and that all senior notes timely tendered will be accepted for payment; |
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| (2) | the Change of Control Purchase Price and the purchase date, which shall be, subject to any contrary requirements of applicable law, a business day no earlier than 30 days nor later than 60 days from the date such notice is mailed; |
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| (3) | the circumstances and relevant facts regarding the Change of Control (including, if and to the extent material, information with respect to pro forma historical income, cash flows and capitalization after giving effect to the Change of Control); and |
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| (4) | the procedures that holders of senior notes must follow in order to tender their senior notes (or portions thereof) for payment, and the procedures that holders of senior notes must follow in order to withdraw an election to tender senior notes (or portions thereof) for payment. |
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Alamosa Delaware will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of senior notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the covenant described above, Alamosa Delaware will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the covenant described above by virtue of such compliance.
The Change of Control repurchase feature is a result of negotiations between Alamosa Delaware and the initial purchasers. Management has no present intention to engage in a transaction involving a Change of Control, although it is possible that Alamosa Delaware would decide to do so in the future. Subject to certain covenants described below, Alamosa Delaware could, in the future, enter into certain transactions, including acquisitions, refinancings or other recapitalizations, that would not constitute a Change of Control under the Indenture, but that could increase the amount of debt outstanding at such time or otherwise materially affect Alamosa Delaware's capital structure or credit ratings.
The definition of Change of Control includes a phrase relating to the sale, transfer, assignment, lease, conveyance or other disposition of "all or substantially all" of Alamosa Delaware's assets. Although there is a developing body of case law interpreting the phrase "substantially all," there is no precise established definition of the phrase under applicable law. Accordingly, if Alamosa Delaware disposes of less than all its assets by any of the means described above, the ability of a holder of senior notes to require Alamosa Delaware to repurchase its senior notes may be uncertain. In such a case, holders of the senior notes may not be able to resolve this uncertainty without resorting to legal action.
Future debt of Alamosa Delaware may contain prohibitions of certain events which would constitute a Change of Control or require such debt to be repurchased upon a Change of Control. Moreover, the exercise by holders of senior notes of their right to require Alamosa Delaware to repurchase such senior notes could cause a default under existing or future debt of Alamosa Delaware, even if the Change of Control itself does not, due to the financial effect of such repurchase on Alamosa Delaware. Finally, Alamosa Delaware's ability to pay cash to holders of senior notes upon a repurchase may be limited by Alamosa Delaware's then existing financial resources. There can be no assurance that sufficient funds will be available when necessary to make any required repurchases. Alamosa Delaware's failure to repurchase any senior notes in connection with a Change of Control would result in a default under the Indenture. Such a default would, in turn, constitute a default under existing debt of Alamosa Delaware and may constitute a default under future debt as well. Since the Subsidiary Guarantees are subordinate in right of payment to Designated Senior Debt, the Subsidiary Guarantors would first be obligated to pay any such Designated Senior Debt in full before repurchasing any of the Senior Notes. Alamosa Delaware's obligation to make an offer to repurchase the senior notes as a result of the completion of a transaction constituting a Change of Control may be waived or modified at any time prior to the completion of such Change of Control transaction with the written consent of the holders of at least a majority in aggregate principal amount of the senior notes then outstanding. See "—Amendments and waivers," below.
CERTAIN COVENANTS
The Indenture contains the following covenants which place limitations on the ability of Alamosa Delaware and the Subsidiary Guarantors to engage in certain activities and transactions, as described below.
Limitation on debt. Alamosa Delaware shall not, and shall not permit any Restricted Subsidiary to, Incur, directly or indirectly, any Debt unless, after giving effect to the application of the proceeds thereof, no Default or Event of Default would occur as a consequence of such Incurrence or be continuing following such Incurrence and:
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| 1. | such Debt is Debt of Alamosa Delaware or a Subsidiary Guarantor and after giving effect to the Incurrence of such Debt and the application of the proceeds thereof, the Leverage Ratio of Alamosa Delaware and the Restricted Subsidiaries (calculated on a consolidated basis using |
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| | Annualized Pro Forma EBITDA which gives pro forma effect to those Asset Sales, Investments or acquisitions of Property described in the definition of Pro Forma EBITDA) would not exceed 6.5 to 1.0; or |
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| 2. | such Debt is Permitted Debt. |
The term "Permitted Debt" is defined to include obligations which meet the requirements of any of the following clauses (a) through (j):
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| (a) | Debt of Alamosa Delaware evidenced by the senior notes issued on the Issue Date, the new notes issued pursuant to the registration rights agreement and the Existing Notes, and of Subsidiary Guarantors evidenced by Subsidiary Guarantees relating to the senior notes issued on the Issue Date and the new notes issued pursuant to the registration rights agreement; |
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| (b) | Debt of Alamosa Delaware or a Subsidiary Guarantor under any Credit Facilities, provided that the aggregate principal amount of all such Debt under Credit Facilities at any one time outstanding shall not exceed an amount equal to $330.0 million, which amount shall be permanently reduced by the amount of Net Available Cash used to Repay Debt under the Credit Facilities, and not subsequently reinvested in Additional Assets or used to purchase senior notes or Repay other Debt, pursuant to the covenant described under "—Limitation on Asset Sales"; |
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| (c) | Debt in respect of Capital Lease Obligations and Purchase Money Debt, provided that: |
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| (1) | the aggregate principal amount of such Debt does not exceed the Fair Market Value (on the date of the Incurrence thereof) of the Property acquired, constructed or leased; and |
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| (2) | the aggregate principal amount of all Debt Incurred and then outstanding pursuant to this clause (c) (together with all Permitted Refinancing Debt Incurred and then outstanding in respect of Debt previously Incurred pursuant to this clause (c)) does not exceed $50.0 million; |
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| (d) | Debt of Alamosa Delaware owing to and held by any Restricted Subsidiary and Debt of a Restricted Subsidiary owing to and held by Alamosa Delaware or any Restricted Subsidiary; provided, however, that (i) if Alamosa Delaware or any Subsidiary Guarantor is the obligor on such Debt and the payee is not Alamosa Delaware or a Subsidiary Guarantor, such Debt must be expressly subordinated to the prior payment in full in cash of all obligations then due with respect to the senior notes, in case of Alamosa Delaware, or to the Subsidiary Guarantee, in the case of a Subsidiary Guarantor, and (ii) any subsequent issue or transfer of Capital Stock or other event that results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of any such Debt (except to Alamosa Delaware or another Restricted Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Debt by the issuer thereof; |
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| (e) | Debt under Interest Rate Agreements entered into by Alamosa Delaware or a Restricted Subsidiary for the purpose of limiting interest rate risk in the ordinary course of the financial management of Alamosa Delaware or such Restricted Subsidiary and not for speculative purposes, provided that the obligations under such agreements are related to payment obligations on Debt otherwise permitted by the terms of this covenant; |
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| (f) | Debt in connection with one or more standby letters of credit or performance bonds issued by Alamosa Delaware or a Restricted Subsidiary in the ordinary course of business or pursuant to self-insurance obligations and not in connection with the borrowing of money or the obtaining of advances or credit; |
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| (g) | Debt outstanding on the Issue Date not otherwise described in clauses (a) through (f) above; |
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| (h) | Permitted Refinancing Debt Incurred in respect of Debt Incurred pursuant to clause (1) of the first paragraph of this covenant or clause (a), (c) or (g) above or clause (j) below; |
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| (i) | additional Debt of Alamosa Delaware in an aggregate principal amount outstanding at any one time not to exceed $75.0 million; and |
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| (j) | Acquired Debt Incurred by a Subsidiary Guarantor at the time a Sprint PCS Affiliate is merged with or into or becomes a Subsidiary of or transfers all or substantially all of its assets to such Subsidiary Guarantor on or prior to January 1, 2005, but only to the extent that immediately after giving effect to the Incurrence of such Debt (i) the Leverage Ratio would not exceed 7.75 to 1.0; and (ii) the Leverage Ratio immediately following such Incurrence would decrease as compared to the Leverage Ratio immediately prior to such Incurrence. |
For purposes of determining compliance with this covenant,
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| (a) | in the event that any Debt is allowed to be Incurred pursuant to more than one of the categories of Debt described above, including clause (1) of the first paragraph of this covenant or as Permitted Debt, Alamosa Delaware, in its sole discretion, will classify such Debt, as of the time of Incurrence thereof, as Debt incurred pursuant to a particular clause under the first paragraph of this covenant, and if Incurred as Permitted Debt will specify under which clause of Permitted Debt the Debt is Incurred; and |
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| (b) | Debt may be divided and classified in more than one of the categories of Debt described above. |
Notwithstanding anything to the contrary contained in this covenant,
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| (a) | Alamosa Delaware shall not, and shall not permit any Subsidiary Guarantor to, Incur any Debt pursuant to this covenant if the proceeds thereof are used, directly or indirectly, to Refinance any Subordinated Obligations unless such Debt shall be subordinated to the senior notes or the applicable Subsidiary Guaranty, as the case may be, to at least the same extent as such Subordinated Obligations; and |
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| (b) | Alamosa Delaware shall not permit any Restricted Subsidiary that is not a Subsidiary Guarantor to Incur any Debt pursuant to this covenant if the proceeds thereof are used, directly or indirectly, to Refinance any Debt of Alamosa Delaware or any Subsidiary Guarantor. |
Limitation on restricted payments. Alamosa Delaware shall not make, and shall not permit any Restricted Subsidiary to make, directly or indirectly, any Restricted Payment if at the time of, and after giving effect to, such proposed Restricted Payment,
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| (a) | a Default or Event of Default shall have occurred and be continuing, |
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| (b) | Alamosa Delaware could not Incur at least $1.00 of additional Debt pursuant to clause (1) of the first paragraph of the covenant described above under "—Limitation on debt" or |
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| (c) | the aggregate amount of such Restricted Payment and all other Restricted Payments declared or made since November 10, 2003 (the amount of any Restricted Payment, if made other than in cash, to be based upon Fair Market Value) would exceed an amount equal to the sum of |
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| (1) | the result of |
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| (A) | Cumulative EBITDA, minus |
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| (B) | the product of 1.5 and Cumulative Interest Expense, plus |
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| (2) | Capital Stock Sale Proceeds, plus |
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| (3) | the aggregate net cash proceeds received by Alamosa Delaware or any Restricted Subsidiary from the issuance or sale after November 10, 2003 of convertible or exchangeable Debt that has been converted into or exchanged for Capital Stock (other than Disqualified stock) of Alamosa Delaware or any direct or indirect parent holding company of Alamosa Delaware, excluding (x) any such Debt issued or sold to Alamosa Delaware or a Subsidiary of Alamosa Delaware or an employee stock ownership plan or trust established by Alamosa Delaware or any such Subsidiary for the benefit of their employees, and (y) the aggregate amount of any cash or other Property distributed by Alamosa Delaware or any Restricted Subsidiary upon any such conversion or exchange, plus |
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| (4) | an amount equal to the sum of |
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| (A) | the net reduction in Investments in any Person other than Alamosa Delaware or a Restricted Subsidiary resulting from dividends, repayments of loans or advances or other transfers of Property, in each case to Alamosa Delaware or any Restricted Subsidiary from such Person, less the cost of the disposition of such Investment, plus |
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| (B) | the portion (proportionate to Alamosa Delaware's equity interest in such Unrestricted Subsidiary) of the Fair Market Value of the net assets of an Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a Restricted Subsidiary, |
provided, however, that the sum in this clause (4) shall not exceed, in the case of any Person, the amount of Investments previously made (and treated as a Restricted Payment) by Alamosa Delaware or any Restricted Subsidiary in such Person.
Notwithstanding the foregoing limitation, Alamosa Delaware may take any action if it is in compliance with any of the following clauses (a) through (h):
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| (a) | pay dividends on its Capital Stock within 60 days of the declaration thereof if, on said declaration date, such dividends could have been paid in compliance with the Indenture; provided, however, that at the time of such payment of such dividend, no other Default or Event of Default shall have occurred and be continuing (or result therefrom); provided further, however, that such dividend shall be included in the calculation of the amount of Restricted Payments; |
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| (b) | purchase, repurchase, redeem, legally defease, acquire or retire for value Capital Stock of Alamosa Delaware or Subordinated Obligations in exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of Alamosa Delaware (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary of Alamosa Delaware or an employee stock ownership plan or trust established by Alamosa Delaware or any such Subsidiary for the benefit of their employees); provided, however, that: |
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| (1) | such purchase, repurchase, redemption, legal defeasance, acquisition or retirement shall be excluded in the calculation of the amount of Restricted Payments, and |
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| (2) | the Capital Stock Sale Proceeds from such exchange or sale shall be excluded from the calculation pursuant to clause (c)(2) above; |
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| (c) | purchase, repurchase, redeem, legally defease, acquire or retire for value any Subordinated Obligations in exchange for, or out of the proceeds of the substantially concurrent sale of, Permitted Refinancing Debt; provided, however, that such purchase, repurchase, redemption, legal defeasance, acquisition or retirement shall be excluded in the calculation of the amount of Restricted Payments; |
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| (d) | make a Restricted Payment, if at the time Alamosa Delaware or any Restricted Subsidiary first Incurred a commitment for such Restricted Payment, such Restricted Payment could have been made; provided, however, that all commitments Incurred and outstanding shall be treated as if such commitments were Restricted Payments expended by Alamosa Delaware or a Restricted Subsidiary at the time the commitments were Incurred, except that commitments Incurred and outstanding that are treated as a Restricted Payment expended by Alamosa Delaware or a Restricted Subsidiary and that are terminated shall no longer be treated as a Restricted Payment expended by Alamosa Delaware or a Restricted Subsidiary upon the termination of such commitment; |
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| (e) | repurchase shares of, or options to purchase shares of, common stock of Alamosa Delaware or any of its Subsidiaries (or pay dividends on its capital stock for the purpose of enabling any direct or indirect parent company of Alamosa Delaware to repurchase shares of, or options to purchase shares of, its common stock) from current or former officers, directors or employees of Alamosa Delaware or any of its Subsidiaries or any direct or indirect parent holding company of Alamosa Delaware (or permitted transferees of such current or former officers, directors or employees), pursuant to the terms of agreements (including employment agreements) or plans (or amendments thereto) approved by the Board of Directors of Alamosa Delaware or such parent holding company under which such individuals purchase or sell, or are granted the option to purchase or sell, shares of such common stock; provided, however, that: |
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| (1) | the aggregate amount of such repurchases (or such dividends made to facilitate such repurchases) shall not exceed $3.0 million in any calendar year, although any unused amount in any calendar year may be carried forward to one or more future calendar years, and |
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| (2) | at the time of such repurchase (or such dividends made to facilitate such repurchases), no other Default or Event of Default shall have occurred and be continuing (or result therefrom); provided further, however, that such repurchases (or such dividends made to facilitate such repurchases) shall be included in the calculation of the amount of Restricted Payments; |
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| (f) | make Investments in any Person, provided that the Fair Market Value thereof, measured on the date each such Investment was made or returned, as applicable, when taken together with all other Investments made pursuant to this clause (f), does not exceed the sum of $50.0 million, plus the aggregate amount of the net reduction in Investments in any Person made pursuant to this clause (f) on and after the Issue Date resulting from dividends, repayments of loans or other transfers of Property, in each case to Alamosa Delaware or any Restricted Subsidiary from such Person, except to the extent that any such net reduction amount is included in the amount calculated pursuant to clause (c) of the preceding paragraph or any other clause of this paragraph; provided, however, that at the time of such Investment, no other Default or Event of Default shall have occurred and be continuing (or result therefrom); provided further, however, that such Investment shall be included in the calculation of the amount of Restricted Payments; |
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| (g) | make payments to any direct or indirect parent holding company of Alamosa Delaware for legal, audit and other expenses directly relating to the administration of such parent holding company which payments do not exceed $2.0 million in any fiscal year; and |
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| (h) | make direct or indirect payments to Alamosa Holdings in amounts necessary to enable Alamosa Holdings to make cash dividend payments with respect to its series B convertible preferred stock and series C convertible preferred stock; provided, however, that with respect to any dividend payments occurring on or prior to July 31, 2008: |
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| (1) | at the time of payment of any such dividend, no other Default or Event of Default shall have occurred and be continuing, and |
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| (2) | immediately after giving effect to the payment of any such dividend, the Leverage Ratio would not exceed 7.75 to 1.0. |
Limitation on liens. Alamosa Delaware shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, Incur or suffer to exist, any Lien (other than Permitted Liens) upon any of its Property (including Capital Stock of a Restricted Subsidiary), whether owned at the Issue Date or thereafter acquired, or any interest therein or any income or profits therefrom, unless it has made or will make effective provision whereby the senior notes or the applicable Subsidiary Guaranty will be secured by such Lien equally and ratably with (or prior to) all other Debt of Alamosa Delaware or any Restricted Subsidiary secured by such Lien.
Limitation on issuance or sale of capital stock of restricted subsidiaries. Alamosa Delaware shall not:
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| (a) | sell, pledge, hypothecate or otherwise dispose of any shares of Capital Stock of a Restricted Subsidiary, except pledges of Capital Stock which constitute Permitted Liens; or |
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| (b) | permit any Restricted Subsidiary to, directly or indirectly, issue or sell or otherwise dispose of any shares of its Capital Stock, |
other than, in the case of either (a) or (b):
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| (1) | directors' qualifying shares; |
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| (2) | to Alamosa Delaware or a Restricted Subsidiary; |
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| (3) | a disposition of Capital Stock of such Restricted Subsidiary where immediately after giving effect thereto, either such Restricted Subsidiary remains a Restricted Subsidiary or Alamosa Delaware and the Restricted Subsidiaries no longer own any Capital Stock of such entity, provided, however, that, in the case of this clause (3), |
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| (A) | such issuance, sale or disposition is effected in compliance with the covenant described below under "—Limitation on Asset Sales," and |
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| (B) | upon consummation of any such disposition which results in Alamosa Delaware and the Restricted Subsidiaries no longer owning any Capital Stock of an entity and execution and delivery of a supplemental indenture in form satisfactory to the Trustee, such entity shall be released from any Subsidiary Guaranty previously made by such entity; |
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| (4) | the transfer, conveyance, sale or other disposition of shares required by applicable law or regulation; |
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| (5) | Capital Stock issued and outstanding on the Issue Date; |
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| (6) | Capital Stock of a Restricted Subsidiary issued and outstanding prior to the time that such Person becomes a Restricted Subsidiary so long as such Capital Stock was not issued in contemplation of such Person's becoming a Restricted Subsidiary or otherwise being acquired by Alamosa Delaware; or |
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| (7) | an issuance of Preferred Stock of a Restricted Subsidiary (other than Preferred Stock convertible or exchangeable into common stock of any Restricted Subsidiary) otherwise permitted by the Indenture. |
Limitation on asset sales. Alamosa Delaware shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, consummate any Asset Sale unless:
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| (a) | Alamosa Delaware or such Restricted Subsidiary receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the Property subject to such Asset Sale; |
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| (b) | at least 75% of the consideration paid to Alamosa Delaware or such Restricted Subsidiary in connection with such Asset Sale is in the form of cash or cash equivalents or Telecommunications Assets or the assumption by the purchaser of liabilities of Alamosa Delaware or any Restricted Subsidiary (other than liabilities that are by their terms subordinated to the senior notes or the applicable Subsidiary Guaranty) as a result of which Alamosa Delaware and the Restricted Subsidiaries are no longer obligated with respect to such liabilities; and |
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| (c) | Alamosa Delaware delivers an Officers' Certificate to the Trustee certifying that such Asset Sale complies with the foregoing clauses (a) and (b). |
The Net Available Cash (or any portion thereof) from Asset Sales may be applied by Alamosa Delaware or a Restricted Subsidiary, to the extent Alamosa Delaware or such Restricted Subsidiary elects (or is required by the terms of any Debt):
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| (a) | to Repay Senior Debt of Alamosa Delaware or any Subsidiary Guarantor (including the senior notes and Existing Notes), or Debt of any Restricted Subsidiary that is not a Subsidiary Guarantor (excluding, in any such case, any Debt owed to Alamosa Delaware or an Affiliate of Alamosa Delaware); or |
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| (b) | to reinvest in Additional Assets (including by means of an Investment in Additional Assets by a Restricted Subsidiary with Net Available Cash received by Alamosa Delaware or another Restricted Subsidiary). |
Any Net Available Cash from an Asset Sale not applied in accordance with the preceding paragraph within 360 days from the date of the receipt of such Net Available Cash shall constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $10.0 million (taking into account income earned on such Excess Proceeds, if any), Alamosa Delaware will be required to make an offer to purchase (the "Prepayment Offer") the senior notes, which offer shall be in the amount of the Allocable Excess Proceeds, on a pro rata basis according to principal amount, at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the purchase date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), in accordance with the procedures (including prorating in the event of oversubscription) set forth in the Indenture. To the extent that any portion of the amount
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of Net Available Cash remains after compliance with the preceding sentence and provided that all holders of senior notes have been given the opportunity to tender their senior notes for purchase in accordance with the Indenture, Alamosa Delaware or such Restricted Subsidiary may use such remaining amount for any purpose permitted by the Indenture and the amount of Excess Proceeds will be reset to zero.
The term "Allocable Excess Proceeds" will mean the product of:
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| (a) | the Excess Proceeds; and |
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| (b) | a fraction, |
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| (1) | the numerator of which is the aggregate principal amount of senior notes outstanding on the date of the Prepayment Offer, and |
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| (2) | the denominator of which is the sum of the aggregate principal amount of the senior notes outstanding on the date of the Prepayment Offer and the aggregate principal amount (or if Incurred with original issue discount, the aggregate accreted value) of other Debt of Alamosa Delaware (including the Existing Notes) outstanding on the date of the Prepayment Offer that is pari passu in right of payment with the senior notes and subject to terms and conditions in respect of Asset Sales similar in all material respects to the covenant described hereunder and requiring Alamosa Delaware to make an offer to purchase such Debt at substantially the same time as the Prepayment Offer. |
Within five business days after Alamosa Delaware is obligated to make a Prepayment Offer as described in the preceding paragraph, Alamosa Delaware shall send a written notice, by first-class mail, to the holders of senior notes, accompanied by such information regarding Alamosa Delaware and its Subsidiaries as Alamosa Delaware in good faith believes will enable such holders to make an informed decision with respect to such Prepayment Offer. Such notice shall state, among other things, the purchase price and the purchase date, which shall be, subject to any contrary requirements of applicable law, a business day no earlier than 30 days nor later than 60 days from the date such notice is mailed.
Alamosa Delaware will comply, to the extent applicable, with the requirements of section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of senior notes pursuant to the covenant described above. To the extent that the provisions of any securities laws or regulations conflict with provisions of the covenant described above, Alamosa Delaware will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the covenant described above by virtue thereof.
Limitation on restrictions on distributions from restricted subsidiaries. Alamosa Delaware shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create or otherwise cause or suffer to exist any consensual restriction on the right of any Restricted Subsidiary to:
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| (a) | pay dividends, in cash or otherwise, or make any other distributions on or in respect of its Capital Stock, or pay any Debt or other obligation owed, to Alamosa Delaware or any other Restricted Subsidiary; |
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| (b) | make any loans or advances to Alamosa Delaware or any other Restricted Subsidiary; or |
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| (c) | transfer any of its Property to Alamosa Delaware or any other Restricted Subsidiary. |
The foregoing limitations will not apply:
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| (1) | with respect to clauses (a), (b) and (c), to restrictions: |
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| (A) | contained in an agreement or instrument governing or relating to Debt contained in any Credit Facility outstanding pursuant to clause (b) of the definition of Permitted Debt in the covenant described above under "—Limitation on debt;" provided, however, that |
(x) the provisions of any Credit Facilities with a Stated Maturity prior to the scheduled maturity date of the senior notes must permit distributions to Alamosa
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Delaware for the sole purpose of, and in an amount sufficient to fund, the payment of interest when due as scheduled in respect of the senior notes, and
(y) the provisions of any Credit Facilities with a Stated Maturity on or after the scheduled maturity date of the senior notes must permit distributions to Alamosa Delaware for the sole purpose of, and in an amount sufficient to fund, the payment of principal at scheduled maturity and interest when due as scheduled in respect of the senior notes (provided, in the case of both (x) and (y), that such payment is due or to become due within 30 days from the date of such distribution and the cash distributed is in fact utilized to meet such payment obligation) at a time, in the case of both (x) and (y), when there does not exist an event (or such distribution would not cause an event) which, with the passage of time or notice or both, would permit the lenders under any Credit Facility to declare all amounts thereunder due and payable; provided further, however, that such agreement or instrument may nevertheless contain customary financial covenants;
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| (B) | relating to Debt of a Restricted Subsidiary and existing at the time it became a Restricted Subsidiary if such restriction was not created in connection with or in anticipation of the transaction or series of transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by Alamosa Delaware; or |
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| (C) | that result from the Refinancing of Debt Incurred pursuant to an agreement referred to in clause (1) (A) or (B) above or in clause (2) (A) or (B) below, provided such restriction is not materially less favorable to the holders of senior notes than those under the agreement evidencing the Debt so Refinanced; and |
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| (2) | with respect to clause (c) only, to restrictions: |
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| (A) | relating to Debt that is permitted to be Incurred and secured without also securing the senior notes or the applicable Subsidiary Guaranty pursuant to the covenants described above under "—Limitation on debt" and "—Limitation on liens" that limit the right of the debtor to dispose of the Property securing such Debt; |
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| (B) | encumbering Property at the time such Property was acquired by Alamosa Delaware or any Restricted Subsidiary, so long as such restriction relates solely to the Property so acquired and was not created in connection with or in anticipation of such acquisition; |
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| (C) | resulting from customary provisions restricting subletting or assignment of leases or licenses or customary provisions in other agreements that restrict assignment of such agreements or rights thereunder; |
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| (D) | customarily contained in property sale agreements limiting the transfer of such Property pending the closing of such sale; or |
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| (E) | customarily contained in Debt instruments limiting the sale of all or substantially all the assets of the obligor. |
Limitation on transactions with affiliates. Alamosa Delaware shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, conduct any business or enter into or suffer to exist any transaction or series of transactions (including the purchase, sale, transfer, assignment, lease, conveyance or exchange of any Property or the rendering of any service) with, or for the benefit of, any Affiliate of Alamosa Delaware (an "Affiliate Transaction"), unless:
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| (a) | the terms of such Affiliate Transaction are |
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| (1) | set forth in writing, and |
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| (2) | no less favorable to Alamosa Delaware or such Restricted Subsidiary, as the case may be, than those that could be obtained in a comparable arm's-length transaction with a Person that is not an Affiliate of Alamosa Delaware; |
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| (b) | if such Affiliate Transaction involves aggregate payments or value in excess of $5.0 million, the Board of Directors (including a majority of the disinterested members of the Board of Directors) |
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| | approves such Affiliate Transaction and, in its good faith judgment, believes that such Affiliate Transaction complies with clause (a)(2) of this paragraph as evidenced by a resolution of the Board of Directors promptly delivered to the Trustee; and |
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| (c) | if such Affiliate Transaction involves aggregate payments or value in excess of $25.0 million, Alamosa Delaware obtains a written opinion from an Independent Financial Advisor to the effect that the consideration to be paid or received in connection with such Affiliate Transaction is fair, from a financial point of view, to Alamosa Delaware and the Restricted Subsidiaries, taken as a whole. |
Notwithstanding the foregoing limitation, Alamosa Delaware or any Restricted Subsidiary may enter into or suffer to exist the following:
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| (a) | any transaction or series of transactions between Alamosa Delaware and one or more Restricted Subsidiaries or between two or more Restricted Subsidiaries, provided that no more than 10% of the total voting power of the Voting Stock (on a fully diluted basis) of any such Restricted Subsidiary is owned by an Affiliate of Alamosa Delaware (other than a Restricted Subsidiary); |
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| (b) | any Restricted Payment permitted to be made pursuant to the covenant described under "—Limitation on restricted payments" or any Permitted Investment; |
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| (c) | the payment of compensation (including amounts paid pursuant to employee benefit plans) and the provision of benefits for the personal services of officers, directors and employees of Alamosa Delaware or any of the Restricted Subsidiaries, so long as the Board of Directors in good faith shall have approved the terms thereof; |
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| (d) | loans and advances to employees made in the ordinary course of business and consistent with the past practices of Alamosa Delaware or such Restricted Subsidiary, as the case may be, provided that such loans and advances do not exceed $3.0 million in the aggregate at any one time outstanding; and |
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| (e) | any transaction or series of transactions pursuant to any agreement in existence on the Issue Date, and any renewal, extension or replacement of such agreement on terms no less favorable to Alamosa Delaware and the Restricted Subsidiaries than the agreement in existence on the Issue Date. |
Limitation on sale and leaseback transactions. Alamosa Delaware shall not, and shall not permit any Restricted Subsidiary to, enter into any Sale and Leaseback Transaction with respect to any Property unless:
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| (a) | Alamosa Delaware or such Restricted Subsidiary would be entitled to: |
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| (1) | Incur Debt in an amount equal to the Attributable Debt with respect to such Sale and Leaseback Transaction pursuant to the covenant described under "—Limitation on debt;" and |
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| (2) | create a Lien on such Property securing such Attributable Debt without also securing the senior notes or the applicable Subsidiary Guaranty pursuant to the covenant described under "—Limitation on liens;" and |
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| (b) | such Sale and Leaseback Transaction is effected in compliance with the covenant described under "—Limitation on asset sales." |
Designation of restricted and unrestricted subsidiaries. The Board of Directors may designate any Subsidiary of Alamosa Delaware to be an Unrestricted Subsidiary if:
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| (a) | the Subsidiary to be so designated does not own any Capital Stock or Debt of, or own or hold any Lien on any Property of, Alamosa Delaware or any other Restricted Subsidiary; |
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| (b) | either: |
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| (1) | the Subsidiary to be so designated has total assets of $1,000 or less, or |
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| (2) | such designation is effective immediately upon such entity becoming a Subsidiary of Alamosa Delaware or as of the date of issuance of the senior notes; and |
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| (c) | neither Alamosa Delaware nor any Restricted Subsidiary is directly or indirectly liable for any Debt that provides that the holder thereof may (with the passage of time or notice or both) declare a default thereon or cause the payment thereof to be accelerated or payable prior to its Stated Maturity upon the occurrence of a default with respect to any Debt, Lien or other obligation of the Subsidiary to be so designated (including any right to take enforcement action against the Subsidiary to be so designated). |
Unless so designated as an Unrestricted Subsidiary, any Person that becomes a Subsidiary of Alamosa Delaware will be classified as a Restricted Subsidiary; provided, however, that such Subsidiary shall not be designated a Restricted Subsidiary and shall be automatically classified as an Unrestricted Subsidiary if either of the requirements set forth in clauses (x) and (y) of the third immediately following paragraph will not be satisfied after giving pro forma effect to such classification or if such Person is a Subsidiary of an Unrestricted Subsidiary.
In addition, neither Alamosa Delaware nor any Restricted Subsidiary shall become directly or indirectly liable for any Debt that provides that the holder thereof may (with the passage of time or notice or both) declare a default thereon or cause the payment thereof to be accelerated or payable prior to its Stated Maturity upon the occurrence of a default with respect to any Debt, Lien or other obligation of any Unrestricted Subsidiary (including any right to take enforcement action against such Unrestricted Subsidiary).
Except as provided in the first sentence of the second preceding paragraph, no Restricted Subsidiary may be redesignated as an Unrestricted Subsidiary. Upon designation of a Restricted Subsidiary as an Unrestricted Subsidiary in compliance with this covenant, such Restricted Subsidiary shall, by execution and delivery of a supplemental indenture in form satisfactory to the Trustee, be released from any Subsidiary Guaranty previously made by such Restricted Subsidiary.
The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary if, immediately after giving pro forma effect to such designation,
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| (x) | Alamosa Delaware could Incur at least $1.00 of additional Debt pursuant to clause (1) of the first paragraph of the covenant described under "—Limitation on debt," and |
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| (y) | no Default or Event of Default shall have occurred and be continuing or would result therefrom. |
Any such designation or redesignation by the Board of Directors will be evidenced to the Trustee by filing with the Trustee a resolution of the Board of Directors giving effect to such designation or redesignation and an Officers' Certificate that:
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| (a) | certifies that such designation or redesignation complies with the foregoing provisions; and |
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| (b) | gives the effective date of such designation or redesignation, such filing with the Trustee to occur within 45 days after the end of the fiscal quarter of Alamosa Delaware in which such designation or redesignation is made (or, in the case of a designation or redesignation made during the last fiscal quarter of Alamosa Delaware's fiscal year, within 90 days after the end of such fiscal year). |
The Board of Directors designated Alamosa Delaware Operations, LLC as an Unrestricted Subsidiary on the Issue Date.
Limitation on Alamosa Delaware's business. Alamosa Delaware shall not, and shall not permit any Restricted Subsidiary to, engage in any business other than the Telecommunications Business.
Future subsidiary guarantors. Alamosa Delaware shall cause each Person that becomes a Domestic Restricted Subsidiary following the Issue Date to execute and deliver to the Trustee a Subsidiary Guaranty at the time such Person becomes a Domestic Restricted Subsidiary.
Limitation on layered debt. Alamosa Delaware shall not permit any Subsidiary Guarantor to Incur, directly or indirectly, any Debt that is subordinate or junior in right of payment to any Senior Debt unless such debt is expressly subordinated in right of payment to, or ranks pari passu with, the Obligations under its Subsidiary Guaranty.
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MERGER, CONSOLIDATION AND SALE OF PROPERTY
Alamosa Delaware shall not merge, consolidate or amalgamate with or into any other Person (other than a merger of a Wholly owned Restricted Subsidiary into Alamosa Delaware) or sell, transfer, assign, lease, convey or otherwise dispose of all or substantially all its Property in any one transaction or series of transactions unless:
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| (a) | Alamosa Delaware shall be the surviving Person (the "Surviving Person") or the Surviving Person (if other than Alamosa Delaware) formed by such merger, consolidation or amalgamation or to which such sale, transfer, assignment, lease, conveyance or disposition is made shall be a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia; |
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| (b) | the Surviving Person (if other than Alamosa Delaware) expressly assumes, by supplemental indenture in form satisfactory to the Trustee, executed and delivered to the Trustee by such Surviving Person, the due and punctual payment of the principal of, and premium, if any, and interest on, all the senior notes, according to their tenor, and the due and punctual performance and observance of all the covenants and conditions of the Indenture to be performed by Alamosa Delaware; |
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| (c) | in the case of a sale, transfer, assignment, lease, conveyance or other disposition of all or substantially all the Property of Alamosa Delaware, such Property shall have been transferred as an entirety or virtually as an entirety to one Person; |
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| (d) | immediately before and after giving effect to such transaction or series of transactions on a pro forma basis (and treating, for purposes of this clause (d) and clause (e) below, any Debt that becomes, or is anticipated to become, an obligation of the Surviving Person or any Restricted Subsidiary as a result of such transaction or series of transactions as having been Incurred by the Surviving Person or such Restricted Subsidiary at the time of such transaction or series of transactions), no Default or Event of Default shall have occurred and be continuing; |
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| (e) | immediately after giving effect to such transaction or series of transactions on a pro forma basis, either (A) Alamosa Delaware or the Surviving Person, as the case may be, would be able to Incur at least $1.00 of additional Debt under clause (1) of the first paragraph of the covenant described above under "—Certain covenants—Limitation on debt," or (B) in the event of such a transaction or series of transactions with Sprint PCS or a Sprint PCS Affiliate occurring prior to January 1, 2005, (i) the Leverage Ratio immediately following such transaction or series of transactions would decrease as compared to the Leverage Ratio immediately prior to such transaction or series of transactions and (ii) after giving effect to such transaction or series of transactions, the Leverage Ratio would not exceed 7.75 to 1.0; |
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| (f) | Alamosa Delaware shall deliver, or cause to be delivered, to the Trustee, in form and substance reasonably satisfactory to the Trustee, an Officers' Certificate and an Opinion of Counsel, each stating that such transaction and the supplemental indenture, if any, in respect thereto comply with this covenant and that all conditions precedent herein provided for relating to such transaction have been satisfied; and |
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| (g) | the Surviving Person shall have delivered to the Trustee an Opinion of Counsel to the effect that the holders will not recognize income, gain or loss for Federal income tax purposes as a result of such transaction or series of transactions and will be subject to Federal income tax on the same amounts and at the same times as would be the case if the transaction or series of transactions had not occurred. |
Alamosa Delaware shall not permit any Subsidiary Guarantor to merge, consolidate or amalgamate with or into any other Person (other than a merger of a Wholly owned Restricted Subsidiary into such Subsidiary Guarantor) or sell, transfer, assign, lease, convey or otherwise dispose of all or substantially all such Subsidiary Guarantor's Property in any one transaction or series of transactions unless:
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| (a) | the Surviving Person (if not such Subsidiary Guarantor) formed by such merger, consolidation or amalgamation or to which such sale, transfer, assignment, lease, conveyance or disposition is made |
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| | shall be a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia; |
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| (b) | the Surviving Person (if other than such Subsidiary Guarantor) expressly assumes, by Subsidiary Guaranty in form satisfactory to the Trustee, executed and delivered to the Trustee by such Surviving Person, the due and punctual performance and observance of all the obligations of such Subsidiary Guarantor under its Subsidiary Guaranty; |
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| (c) | in the case of a sale, transfer, assignment, lease, conveyance or other disposition of all or substantially all the Property of such Subsidiary Guarantor, such Property shall have been transferred as an entirety or virtually as an entirety to one Person; |
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| (d) | immediately before and after giving effect to such transaction or series of transactions on a pro forma basis (and treating, for purposes of this clause (d) and clause (e) below, any Debt that becomes, or is anticipated to become, an obligation of the Surviving Person, Alamosa Delaware or any Restricted Subsidiary as a result of such transaction or series of transactions as having been Incurred by the Surviving Person, Alamosa Delaware or such Restricted Subsidiary at the time of such transaction or series of transactions), no Default or Event of Default shall have occurred and be continuing; |
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| (e) | immediately after giving effect to such transaction or series of transactions on a pro forma basis, either (A) Alamosa Delaware would be able to Incur at least $1.00 of additional Debt under clause (1) of the first paragraph of the covenant described above under "—Certain covenants—Limitation on debt," or (B) in the event of such a transaction or series of transactions with Sprint PCS or a Sprint PCS Affiliate occurring prior to January 1, 2005, (i) the Leverage Ratio immediately following such transaction or series of transactions would decrease as compared to the Leverage Ratio immediately prior to such transaction or series of transactions and (ii) after giving effect to such transaction or series of transactions, the Leverage Ratio would not exceed 7.75 to 1.0; and |
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| (f) | Alamosa Delaware shall deliver, or cause to be delivered, to the Trustee, in form and substance reasonably satisfactory to the Trustee, an Officers' Certificate and an Opinion of Counsel, each stating that such transaction and such Subsidiary Guaranty, if any, in respect thereto comply with this covenant and that all conditions precedent herein provided for relating to such transaction have been satisfied. |
The foregoing provisions (other than clause (d)) shall not apply to any transactions which constitute an Asset Sale if Alamosa Delaware has complied with the covenant described under "—Certain covenants—Limitation on asset sales."
The Surviving Person shall succeed to, and be substituted for, and may exercise every right and power of Alamosa Delaware under the Indenture (or of the Subsidiary Guarantor under the Subsidiary Guaranty, as the case may be), but the predecessor Company in the case of
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| (a) | a sale, transfer, assignment, conveyance or other disposition (unless such sale, transfer, assignment, conveyance or other disposition is of all the assets of Alamosa Delaware as an entirety or virtually as an entirety), or |
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| (b) | a lease, |
shall not be released from the obligations to pay the principal of, and premium, if any, and interest on, the senior notes.
SEC REPORTS
Notwithstanding that Alamosa Delaware may not be subject to the reporting requirements of section 13 or 15(d) of the Exchange Act, Alamosa Delaware shall file with the SEC and provide the Trustee and holders of senior notes with such annual reports and such information, documents and other reports as are specified in sections 13 and 15(d) of the Exchange Act and applicable to a U.S. corporation subject to such sections, such information, documents and reports to be so filed and
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provided at the times specified for the filing of such information, documents and reports under such sections; provided, however, that Alamosa Delaware shall not be so obligated to file such information, documents and reports with the SEC if the SEC does not permit such filings.
EVENTS OF DEFAULT
Events of Default in respect of the senior notes include:
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| (i) | failure to make the payment of any interest on the senior notes when the same becomes due and payable, and such failure continues for a period of 30 days; |
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| (ii) | failure to make the payment of any principal of, or premium, if any, on, the senior notes when the same becomes due and payable at their Stated Maturity, upon acceleration, redemption, optional redemption, required repurchase or otherwise; |
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| (iii) | failure to comply with the covenant described under "—Merger, consolidation and sale of property" with respect to the senior notes; |
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| (iv) | failure to comply with any other covenant or agreement with respect to the senior notes (other than a failure that is the subject of the foregoing clause (i), (ii) or (iii)) and such failure continues for 30 days after written notice is given to Alamosa Delaware as provided below; |
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| (v) | a default under any Debt by Alamosa Delaware or any Restricted Subsidiary that results in acceleration of the maturity of such Debt, or failure to pay any such Debt at maturity, in an aggregate amount greater than $15.0 million (the "cross acceleration provisions"); |
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| (vi) | any judgment or judgments for the payment of money in an aggregate amount in excess of $15.0 million that shall be rendered against Alamosa Delaware or any Restricted Subsidiary and that shall not be waived, satisfied or discharged for any period of 60 consecutive days during which a stay of enforcement shall not be in effect (the "judgment default provisions"); |
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| (vii) | certain events involving bankruptcy, insolvency or reorganization of Alamosa Delaware or any Significant Subsidiary (the "bankruptcy provisions"); |
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| (viii) | any Subsidiary Guaranty ceases to be in full force and effect (other than in accordance with the terms of such Subsidiary Guaranty) or any Subsidiary Guarantor denies or disaffirms its obligations under its Subsidiary Guaranty (the "guaranty provisions"); and |
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| (ix) | any event occurs that causes, after giving effect to the expiration of any applicable grace period, an Event of Termination with Sprint (the "event of termination provisions"). |
A Default under clause (iv) is not an Event of Default until the Trustee or the holders of not less than 25% in aggregate principal amount at maturity of the senior notes then outstanding notify Alamosa Delaware of the Default and Alamosa Delaware does not cure such Default within the time specified after receipt of such notice. Such notice must specify the Default, demand that it be remedied and state that such notice is a "Notice of Default."
Alamosa Delaware shall deliver to the Trustee, within 30 days after the occurrence thereof, written notice in the form of an Officers' Certificate of any Event of Default or any event that with the giving of notice or the lapse of time would become an Event of Default, its status and what action Alamosa Delaware is taking or proposes to take with respect thereto.
If an Event of Default with respect to the senior notes (other than an Event of Default resulting from certain events involving bankruptcy, insolvency or reorganization with respect to Alamosa Delaware) shall have occurred and be continuing, the Trustee or the registered holders of not less than 25% in aggregate principal amount of the senior notes then outstanding may declare to be immediately due and payable the principal amount of all the senior notes then outstanding, plus accrued but unpaid interest to the date of acceleration.
In case an Event of Default resulting from certain events of bankruptcy, insolvency or reorganization with respect to Alamosa Delaware shall occur, such amount with respect to all the senior notes shall
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be due and payable immediately without any declaration or other act on the part of the Trustee or the holders of the senior notes. After any such acceleration, but before a judgment or decree based on acceleration is obtained by the Trustee, the registered holders of a majority in aggregate principal amount of the senior notes then outstanding may under certain circumstances, rescind and annul such acceleration if all Events of Default, other than the nonpayment of accelerated principal, premium or interest, have been cured or waived as provided in the Indenture.
Subject to the provisions of the Indenture relating to the duties of the Trustee, in case an Event of Default shall occur and be continuing, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the holders of the senior notes, unless such holders shall have offered to the Trustee reasonable indemnity. Subject to such provisions for the indemnification of the Trustee, the holders of a majority in aggregate principal amount of the senior notes then outstanding will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to the senior notes.
No holder of the senior notes will have any right to institute any proceeding with respect to the Indenture, or for the appointment of a receiver or trustee, or for any remedy thereunder, unless:
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| (a) | such holder has previously given to the Trustee written notice of a continuing Event of Default; |
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| (b) | the registered holders of at least 25% in aggregate principal amount of the senior notes then outstanding have made written request and offered reasonable indemnity to the Trustee to institute such proceeding as trustee; and |
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| (c) | the Trustee shall not have received from the registered holders of a majority in aggregate principal amount of the senior notes then outstanding a direction inconsistent with such request and shall have failed to institute such proceeding within 60 days. |
However, such limitations do not apply to a suit instituted by a holder of any senior note for enforcement of payment of the principal of, and premium, if any, or interest on, such senior note on or after the respective due dates expressed in such senior note.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture may be amended with respect to the senior notes with the consent of the registered holders of a majority in aggregate principal amount of the senior notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for such senior notes), and any past default or compliance with any provisions may also be waived (except a default in the payment of principal, premium or interest and certain covenants and provisions of the Indenture which cannot be amended without the consent of each holder of an outstanding senior note) with the consent of the registered holders of at least a (i) a majority in aggregate principal amount of the senior notes then outstanding. However, without the consent of each holder of an outstanding senior note, no amendment of the Indenture may, among other things,
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| (i) | reduce the amount of senior notes whose holders must consent to an amendment or waiver, |
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| (ii) | reduce the rate of or extend the time for payment of interest on any senior note, |
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| (iii) | reduce the principal of or extend the Stated Maturity of any senior note, |
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| (iv) | make any senior note payable in money other than that stated in the senior note, |
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| (v) | impair the right of any holder of the senior notes to receive payment of principal of and interest on such holder's senior notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such holder's senior notes or any Subsidiary Guaranty, |
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| (vi) | subordinate the senior notes or any Subsidiary Guaranty to any other obligation of Alamosa Delaware or the applicable Subsidiary Guarantor, |
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| (vii) | release any security interest that may have been granted in favor of the holders of the senior notes other than pursuant to the terms of such security interest, |
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| (viii) | reduce the premium payable upon the redemption of any senior note nor change the time at which any senior note may be redeemed, as described under "—Optional redemption," |
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| (ix) | reduce the premium payable upon a Change of Control or, at any time after a Change of Control has occurred, change the time at which the Change of Control Offer relating thereto must be made or at which the senior notes must be repurchased pursuant to such Change of Control Offer, |
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| (x) | at any time after Alamosa Delaware is obligated to make a Prepayment Offer with the Excess Proceeds from Asset Sales, change the time at which such Prepayment Offer must be made or at which the senior notes must be repurchased pursuant thereto, |
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| (xi) | make any change in any Subsidiary Guaranty or the subordination provisions with respect thereto that would adversely affect the holders of the senior notes, or |
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| (xii) | make any change in Section 6.04 (Waiver of Past Default) or 6.07 (Right of Holders to Receive Payment) of the Indenture or the amendment provision described in this sentence. |
Without the consent of any holder of the senior notes, Alamosa Delaware and the Trustee may amend the Indenture to:
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| • | cure any ambiguity, omission, defect or inconsistency; |
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| • | provide for the assumption by a successor corporation of the obligations of Alamosa Delaware under the Indenture; |
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| • | provide for uncertificated senior notes in addition to or in place of certificated senior notes (provided that the uncertificated senior notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated senior notes are described in Section 163(f)(2)(B) of the Code); |
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| • | add additional Guarantees with respect to the senior notes or to release Subsidiary Guarantors from Subsidiary Guaranties as provided by the terms of the Indenture; |
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| • | secure the senior notes, to add to the covenants of Alamosa Delaware for the benefit of the holders of the senior notes or to surrender any right or power conferred upon Alamosa Delaware; |
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| • | make any change to the subordination provisions of the Indenture with respect to the Subsidiary Guaranties that would limit or terminate the benefits available to holders of Designated Senior Debt under such provisions; |
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| • | make any change to comply with any requirement of the SEC in connection with the qualification of the Indenture under the Trust Indenture Act; or |
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| • | make any change that does not adversely affect the right of any noteholder. |
The consent of the holders of the senior notes is not necessary to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment. After an amendment becomes effective, Alamosa Delaware is required to mail to each registered holder of the senior notes at such holder's address appearing in the books of the registrar appointed under the Indenture a notice briefly describing such amendment. However, the failure to give such notice to all holders of the senior notes, or any defect therein, will not impair or affect the validity of the amendment.
DEFEASANCE
Alamosa Delaware at any time may terminate all its obligations, together with all the obligations of all Restricted Subsidiaries, under the senior notes and the Indenture ("legal defeasance"), except for certain obligations, including those respecting the defeasance trust and obligations to register the transfer or exchange of the senior notes, to replace mutilated, destroyed, lost or stolen senior notes and to maintain a registrar and paying agent in respect of the senior notes. Alamosa Delaware at any time may terminate:
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| (1) | its obligations under the covenants described above under "—SEC reports," "—Repurchase at the option of holders upon a change of control" and "—Certain covenants;" |
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| (2) | the operation of the cross acceleration provisions, the judgment default provisions, the bankruptcy provisions with respect to Significant Subsidiaries, the guaranty provisions and the event of termination provisions described under "—Events of default," above; and |
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| (3) | the limitations contained in clause (e) under the first paragraph of, and in the second paragraph of, "—Merger, consolidation and sale of property," above ("covenant defeasance"). |
Alamosa Delaware may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option.
If Alamosa Delaware exercises its legal defeasance option, payment of the senior notes may not be accelerated because of an Event of Default with respect thereto. If Alamosa Delaware exercises its covenant defeasance option, payment of the senior notes may not be accelerated because of an Event of Default specified in clause (iv) (with respect to the covenants described under "—Certain covenants"), (v), (vi), (vii) (but in the case of clause (vii) with respect only to Significant Subsidiaries), (viii) or (ix) under "—Events of default," above, or because of the failure of Alamosa Delaware to comply with clause (e) under the first paragraph of, or with the second paragraph of, "—Merger, consolidation and sale of property," above, with respect thereto. If Alamosa Delaware exercises its legal defeasance option or its covenant defeasance option with respect to the senior notes, each Subsidiary Guarantor will be released from all its obligations under its Subsidiary Guaranty.
The legal defeasance option or the covenant defeasance option may be exercised only if:
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| (a) | Alamosa Delaware irrevocably deposits in trust with the Trustee money or U.S. Government Obligations for the payment of principal of and interest on the senior notes to maturity or redemption, as the case may be; |
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| (b) | Alamosa Delaware delivers to the Trustee a certificate from a nationally recognized firm of independent certified public accountants expressing their opinion that the payments of principal and interest when due and without reinvestment on the deposited U.S. Government Obligations plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay principal and interest when due on all the senior notes to maturity or redemption, as the case may be; |
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| (c) | 123 days pass after the deposit is made and during the 123-day period no Default described in clause (vii) under "—Events of default" occurs with respect to Alamosa Delaware or any other Person making such deposit which is continuing at the end of the period; |
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| (d) | no Default or Event of Default has occurred and is continuing on the date of such deposit and after giving effect thereto; |
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| (e) | such deposit does not constitute a default under any other agreement or instrument binding on Alamosa Delaware; |
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| (f) | Alamosa Delaware delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940; |
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| (g) | in the case of the legal defeasance option, Alamosa Delaware delivers to the Trustee an Opinion of Counsel stating that: |
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| (i) | Alamosa Delaware has received from the Internal Revenue Service a ruling, or |
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| (ii) | since the date of the Indenture there has been a change in the applicable Federal income tax law, |
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| (iii) | to the effect, in either case, that, and based thereon such Opinion of Counsel shall confirm that, the holders of the senior notes will not recognize income, gain or loss for Federal income tax purposes as a result of such defeasance and will be subject to Federal income tax |
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| | on the same amounts, in the same manner and at the same time as would have been the case if such defeasance has not occurred; |
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| (h) | in the case of the covenant defeasance option, Alamosa Delaware delivers to the Trustee an Opinion of Counsel to the effect that the holders of the senior notes will not recognize income, gain or loss for Federal income tax purposes as a result of such covenant defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; and |
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| (i) | Alamosa Delaware delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the senior notes have been complied with as required by the Indenture. |
GOVERNING LAW
The Indenture and the senior notes are governed by the internal laws of the State of New York.
THE TRUSTEE
Except during the continuance of an Event of Default, the Trustee will perform only such duties as are specifically set forth in the Indenture. During the existence of an Event of Default, the Trustee will exercise such of the rights and powers vested in it under the Indenture and use the same degree of care and skill in its exercise as a prudent person would exercise under the circumstances in the conduct of such person's own affairs.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the Indenture. Reference is made to the Indenture for the full definition of all such terms as well as any other capitalized terms used herein for which no definition is provided. Unless the context otherwise requires, an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP.
"Acquired Debt" means, with respect to any specified Person, (1) Debt of any other Person existing at the time such other Person is merged with or into or becomes a Subsidiary of or transfers all or substantially all of its assets to such specified Person, which is not Incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, or transferring all or substantially all of its assets to, such specified Person, and (2) Debt secured by a Lien encumbering any asset acquired by such specified Person.
"Additional Assets" means:
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| (a) | any Property (other than cash, cash equivalents and securities) to be owned by Alamosa Delaware or any Restricted Subsidiary and used in a Telecommunications Business; or |
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| (b) | Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by Alamosa Delaware or another Restricted Subsidiary from any Person other than Alamosa Delaware or an Affiliate of Alamosa Delaware; provided, however, that, in the case of this clause (b), such Restricted Subsidiary is primarily engaged in a Telecommunications Business. |
"Affiliate" of any specified Person means:
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| (a) | any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person; or |
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| (b) | any other Person who is a director or officer of: |
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| (1) | such specified Person; |
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| (2) | any Subsidiary of such specified Person; or |
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| (3) | any Person described in clause (a) above. |
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For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. For purposes of the covenants described under "—Certain covenants—Limitation on transactions with affiliates" and "—Limitation on asset sales" and the definition of "Additional Assets" only, "Affiliate" shall also mean any beneficial owner of shares representing 10% or more of the total voting power of the Voting Stock (on a fully diluted basis) of Alamosa Delaware or of rights or warrants to purchase such Voting Stock (whether or not currently exercisable) and any Person who would be an Affiliate of any such beneficial owner pursuant to the first sentence hereof.
"Annualized Pro Forma EBITDA" means, as of any date of determination, the product of Pro Forma EBITDA of Alamosa Delaware and its consolidated Restricted Subsidiaries for Alamosa Delaware's two most recently completed fiscal quarters for which financial statements are available prior to such determination date multiplied by two.
"Asset Sale" means any sale, lease, transfer, issuance or other disposition (or series of related sales, leases, transfers, issuances or dispositions) by Alamosa Delaware or any Restricted Subsidiary, including any disposition by means of a merger, consolidation or similar transaction (each referred to for the purposes of this definition as a "disposition"), of:
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| (a) | any shares of Capital Stock of a Restricted Subsidiary (other than directors' qualifying shares); or |
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| (b) | any other assets of Alamosa Delaware or any Restricted Subsidiary outside of the ordinary course of business of Alamosa Delaware or such Restricted Subsidiary, |
other than, in the case of clause (a) or (b) above,
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| (1) | any disposition by a Restricted Subsidiary to Alamosa Delaware or by Alamosa Delaware or a Restricted Subsidiary to a Wholly owned Restricted Subsidiary, |
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| (2) | any disposition that constitutes a Permitted Investment or Restricted Payment permitted by the covenant described under "—Certain covenants—Limitation on restricted payments," |
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| (3) | any disposition effected in compliance with the first paragraph of the covenant described under "—Merger, consolidation and sale of property," and |
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| (4) | any disposition of assets having an aggregate Fair Market Value of, and for which the aggregate consideration received by Alamosa Delaware and its Restricted Subsidiaries is equal to, $1.0 million or less in any 12-month period. |
"Attributable Debt" in respect of a Sale and Leaseback Transaction means, at any date of determination,
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| (a) | if such Sale and Leaseback Transaction is a Capital Lease Obligation, the amount of Debt represented thereby according to the definition of "Capital Lease Obligation," and |
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| (b) | in all other instances, the present value (discounted at the interest rate borne by the senior notes, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale and Leaseback Transaction (including any period for which such lease has been extended). |
"Average Life" means, as of any date of determination, with respect to any Debt or Preferred Stock, the quotient obtained by dividing:
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| (a) | the sum of the product of the numbers of years (rounded to the nearest one-twelfth of one year) from the date of determination to the dates of each successive scheduled principal payment of such Debt or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment; by |
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| (b) | the sum of all such payments. |
"Beneficial Owner" has the meaning given to such term under Rule 13d-3 under the Exchange Act, except that a Person will be deemed to have "beneficial ownership" of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time.
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"Capital Lease Obligations" means any obligation under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP; and the amount of Debt represented by such obligation shall be the capitalized amount of such obligations determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. For purposes of "—Certain covenants—Limitation on liens," a Capital Lease Obligation shall be deemed secured by a Lien on the Property being leased.
"Capital Stock" means, with respect to any Person, any shares or other equivalents (however designated) of any class of corporate stock or partnership or limited liability company interests or any other participations, rights, warrants, options or other interests in the nature of an equity interest in such Person, including Preferred Stock, but excluding any debt security convertible or exchangeable into such equity interest.
"Capital Stock Sale Proceeds" means the aggregate cash proceeds received by Alamosa Delaware (or received by any direct or indirect parent Person of Alamosa Delaware and subsequently contributed to Alamosa Delaware) from the issuance or sale (other than to a Subsidiary of Alamosa Delaware or an employee stock ownership plan or trust established by Alamosa Delaware or any such Subsidiary for the benefit of their employees) by Alamosa Delaware or any direct or indirect parent Person of Alamosa Delaware of Capital Stock (other than Disqualified Stock) of Alamosa Delaware or such parent Person after November 10, 2003, net of attorneys' fees, accountants' fees, underwriters' or placement agents' fees, discounts or commissions and brokerage, consultant and other fees actually incurred by Alamosa Delaware or any Restricted Subsidiary of Alamosa Delaware in connection with such issuance or sale and net of taxes paid or payable as a result thereof.
"Change of Control" means the occurrence of any of the following events:
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| (a) | the sale, transfer, assignment, lease, conveyance or other disposition, other than by way of merger or consolidation, in one or a series of related transactions, of all or substantially all of the assets of Alamosa Delaware and its Restricted Subsidiaries taken as a whole to any "person" or "group" as such terms are used in Section 13(d)(3) of the Exchange Act, other than any such disposition to a Wholly owned Restricted Subsidiary; |
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| (b) | the adoption of a plan relating to the liquidation or dissolution of Alamosa Delaware; |
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| (c) | any "person" or "group" as defined above, other than a Permitted Holder, becomes the Beneficial Owner, directly or indirectly, of more than 50.0% of the total voting power of the Voting Stock of Alamosa Delaware (or any direct or indirect parent company thereof); |
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| (d) | during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (together with any new directors whose election or appointment by such Board or whose nomination for election by the shareholders of Alamosa Delaware was approved by a vote of not less than a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors then in office; or |
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| (e) | Alamosa Delaware or any direct or indirect parent company thereof consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, Alamosa Delaware or any direct or indirect parent company thereof, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of Alamosa Delaware or any direct or indirect parent company thereof is converted into or exchanged for cash, securities or other property, other than any such transaction where the Capital Stock of Alamosa Delaware or such direct or indirect parent company outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock, other than Disqualified Stock, of the surviving or transferee Person (or its ultimate parent Person) constituting at least a majority of the total voting power of the Voting Stock of such surviving or transferee Person (or such ultimate parent Person) immediately after giving effect to such transaction. |
"Code" means the Internal Revenue Code of 1986, as amended.
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"Commodity Price Protection Agreement" means, in respect of a Person, any forward contract, commodity swap agreement, commodity option agreement or other similar agreement or arrangement designed to protect such Person against fluctuations in commodity prices.
"Consolidated Interest Expense" means, for any period, the total interest expense of Alamosa Delaware and its consolidated Restricted Subsidiaries, plus, to the extent not included in such total interest expense, and to the extent Incurred by Alamosa Delaware or its Restricted Subsidiaries,
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| (a) | interest expense attributable to leases constituting part of a Sale and Leaseback Transaction and to Capital Lease Obligations, |
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| (b) | amortization of debt discount and debt issuance cost, including commitment fees, |
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| (c) | capitalized interest, |
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| (d) | non-cash interest expense, |
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| (e) | commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing, |
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| (f) | net costs associated with Hedging Obligations (including amortization of fees), |
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| (g) | Preferred Stock Dividends, |
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| (h) | interest Incurred in connection with Investments in discontinued operations, |
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| (i) | interest accruing on any Debt of any other Person to the extent such Debt is Guaranteed by Alamosa Delaware or any Restricted Subsidiary or is secured by any Liens on the Property of Alamosa Delaware or any Restricted Subsidiary, and |
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| (j) | the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than Alamosa Delaware) in connection with Debt Incurred by such plan or trust. |
"Consolidated Net Income" means, for any period, the net income (loss) of Alamosa Delaware and its consolidated Subsidiaries, on a consolidated basis, determined in accordance with GAAP; provided, however, that there shall not be included in such Consolidated Net Income:
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| (a) | any net income (loss) of any Person (other than Alamosa Delaware) if such Person is not a Restricted Subsidiary, except that: |
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| (1) | subject to the exclusion contained in clause (d) below, Alamosa Delaware's equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash distributed by such Person during such period to Alamosa Delaware or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the limitations contained in clause (c) below), and |
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| (2) | Alamosa Delaware's equity in a net loss of any such Person, other than an Unrestricted Subsidiary or a Person as to which Alamosa Delaware is not, and under no circumstances would be, obligated to make any additional Investment, for such period shall be included in determining such Consolidated Net Income, |
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| (b) | for purposes of the covenant described under "—Certain covenants—Limitation on restricted payments" only, any net income (loss) of any Person acquired by Alamosa Delaware or any of its consolidated Subsidiaries in a pooling of interests transaction for any period prior to the date of such acquisition, |
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| (c) | any net income (loss) of any Restricted Subsidiary that is not a Subsidiary Guarantor if such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions, directly or indirectly, to Alamosa Delaware, except that: |
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| (1) | subject to the exclusion contained in clause (d) below, Alamosa Delaware's equity in the net income of any such Restricted Subsidiary for such period shall be included in such |
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| | Consolidated Net Income up to the aggregate amount of cash distributed by such Restricted Subsidiary during such period to Alamosa Delaware or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to another Restricted Subsidiary, to the limitation contained in this clause), and |
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| (2) | Alamosa Delaware's equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income, |
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| (d) | any gain or loss realized upon the sale or other disposition of any Property of Alamosa Delaware or any of its consolidated Subsidiaries (including pursuant to any Sale and Leaseback Transaction) that is not sold or otherwise disposed of in the ordinary course of business, |
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| (e) | any extraordinary gain or loss, |
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| (f) | the cumulative effect of a change in accounting principles, and |
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| (g) | any non-cash compensation expense realized for grants of performance shares, stock options or other rights to officers, directors and employees of Alamosa Delaware or any Restricted Subsidiary, provided that such shares, options or other rights can be redeemed at the option of the holder only for Capital Stock of Alamosa Delaware (other than Disqualified Stock). |
Notwithstanding the foregoing, for purposes of the covenant described under "—Certain covenants—Limitation on restricted payments" only, there shall be excluded from Consolidated Net Income any dividends, repayments of loans or advances or other transfers of assets from Unrestricted Subsidiaries to Alamosa Delaware or a Restricted Subsidiary to the extent such dividends, repayments or transfers increase the amount of Restricted Payments permitted under such covenant pursuant to clause (c)(4) thereof.
"Credit Facilities" means, with respect to Alamosa Delaware or any Restricted Subsidiary, one or more debt facilities, commercial paper facilities, indentures or other agreements, in each case with vendors, banks, life insurance companies, mutual funds, pension funds or other institutional lenders or trustees or investors, providing for revolving credit loans, term loans, receivables or inventory financing (including through the sale of receivables or inventory to such lenders or to special purpose, bankruptcy remote entities formed to borrow from such lenders against such receivables or inventory), notes or letters of credit, in each case together with all documents related thereto (including, without limitation, any guaranty agreements and security documents), as any of the same may be amended (including any amendment and restatement thereof), supplemented or otherwise modified from time to time, including any refinancing, replacing (whether or not contemporaneously) or other restructuring of all or any portion of the indebtedness under such agreement or any successor or replacement agreements and whether by the same or any other agent, lender or group of lenders or investors and whether such refinancing or replacement is under one or more of the types of facilities, indentures or other agreements described above. Notwithstanding the foregoing, the Existing Notes will not deemed to be "Credit Facilities" for any purpose under the Indenture.
"Cumulative EBITDA" means, as of any date of determination, the cumulative EBITDA of Alamosa Delaware and its consolidated Restricted Subsidiaries from and after the last day of the fiscal quarter of Alamosa Delaware immediately preceding November 10, 2003 to the end of the fiscal quarter immediately preceding the date of determination or, if such cumulative EBITDA for such period is negative, the amount (expressed as a negative number) by which such cumulative EBITDA is less than zero.
"Cumulative Interest Expense" means, at any date of determination, the aggregate amount of Consolidated Interest Expense paid, accrued or scheduled to be paid or accrued from the last day of the fiscal quarter of Alamosa Delaware immediately preceding November 10, 2003 to the end of the fiscal quarter immediately preceding the date of determination.
"Currency Exchange Protection Agreement" means, in respect of a Person, any foreign exchange contract, currency swap agreement, currency option or other similar agreement or arrangement designed to protect such Person against fluctuations in currency exchange rates.
"Debt" means, with respect to any Person on any date of determination (without duplication):
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| (a) | the principal of and premium (if any) in respect of: |
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| (1) | debt of such Person for money borrowed, and |
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| (2) | debt evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable; |
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| (b) | all Capital Lease Obligations of such Person and all Attributable Debt in respect of Sale and Leaseback Transactions entered into by such Person; |
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| (c) | all obligations of such Person issued or assumed as the deferred purchase price of Property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business); |
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| (d) | all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in (a) through (c) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the third business day following receipt by such Person of a demand for reimbursement following payment on the letter of credit); |
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| (e) | the amount of all obligations of such Person with respect to the Repayment of any Disqualified Stock or, with respect to any Subsidiary of such Person, any Preferred Stock (but excluding, in each case, any accrued dividends); |
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| (f) | all obligations of the type referred to in clauses (a) through (e) of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guarantee; |
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| (g) | all obligations of the type referred to in clauses (a) through (f) of other Persons secured by any Lien on any Property of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the value of such Property or the amount of the obligation so secured; and |
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| (h) | to the extent not otherwise included in this definition, Hedging Obligations of such Person. |
The amount of Debt of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date. The amount of Debt represented by a Hedging Obligation shall be equal to:
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| (1) | zero if such Hedging Obligation has been Incurred pursuant to clause (e) of the second paragraph of the covenant described under "—Certain covenants—Limitation on debt;" or |
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| (2) | the notional amount of such Hedging Obligation if not Incurred pursuant to such clause. |
"Default" means any event which is, or after notice or passage of time or both would be, an Event of Default.
"Designated Senior Debt" of any Subsidiary Guarantor means all obligations consisting of the principal, premium, if any, accrued and unpaid interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the applicable Subsidiary Guarantor to the extent post-filing interest is allowed in such proceeding) and all other monetary obligations (including commitment fees, facilities fees, reimbursable expenses, indemnities and costs of collection (including reasonable attorney's fees)) payable or performable in connection with such obligations, whether outstanding on the date hereof or created or incurred after the date hereof in respect of Credit Facilities (including Permitted Refinancing Debt in respect thereof).
"Disqualified Stock" means, with respect to any Person, any Capital Stock that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable, in either case at the option of the holder thereof) or otherwise
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| (a) | matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, |
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| (b) | is or may become redeemable or repurchasable at the option of the holder thereof, in whole or in part, or |
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| (c) | is convertible or exchangeable at the option of the holder thereof for Debt or Disqualified Stock, |
on or prior to, in the case of clause (a), (b) or (c), the first anniversary of the Stated Maturity of the senior notes; provided, however, that Capital Stock will not be deemed to be Disqualified Stock if it is redeemable by exchange for or through the issuance of Capital Stock (other than Disqualified Stock) of that issuer; and provided further, however, that any Capital Stock that would not constitute Disqualified Stock but for the provisions thereof giving holders thereof the right to require such Person to repurchase or redeem such Capital Stock upon the occurrence of an Asset Sale or Change of Control occurring prior to the Stated Maturity of the senior notes shall not constitute Disqualified Stock if the Asset Sale or Change of Control provisions applicable to such Capital Stock are no more favorable to the holders of such Capital Stock than the covenants described under "—Certain covenants—Limitation on asset sales" and "—Repurchase at the option of holders upon a change of control" and such Capital Stock specifically provides that:
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| (1) | such Person shall not repurchase or redeem any such Capital Stock pursuant to such provisions prior to such Person having repurchased all the senior notes that are required to be repurchased pursuant to such covenants; and |
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| (2) | no default, event of default or similar occurrence under the terms of such Capital Stock shall result from such Person not so repurchasing or redeeming any such Capital Stock because of the prohibition described in the preceding clause (1). |
"Domestic Restricted Subsidiary" means any Restricted Subsidiary other than (a) a Foreign Restricted Subsidiary or (b) a Subsidiary of a Foreign Restricted Subsidiary.
"EBITDA" means, for any period, an amount equal to, for Alamosa Delaware and its consolidated Restricted Subsidiaries:
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| (a) | the sum of Consolidated Net Income for such period, plus the following to the extent such amount was deducted in calculating such Consolidated Net Income for such period: |
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| (1) | the provision for taxes based on income or profits or utilized in computing net loss; |
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| (2) | Consolidated Interest Expense; |
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| (3) | depreciation; |
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| (4) | amortization of intangibles; and |
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| (5) | any other non-cash items (other than any such non-cash item to the extent that it represents an accrual of or reserve for cash expenditures in any future period); minus |
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| (b) | all non-cash items increasing Consolidated Net Income for such period (other than any such non-cash item to the extent that it will result in the receipt of cash payments in any future period). |
Notwithstanding the foregoing clause (a), the provision for taxes and the depreciation, amortization and non-cash items of a Restricted Subsidiary that is not a Subsidiary Guarantor shall be added to Consolidated Net Income to compute EBITDA only to the extent (and in the same proportion) that the net income of such Restricted Subsidiary was included in calculating Consolidated Net Income and only if a corresponding amount would be permitted at the date of determination to be dividended to Alamosa Delaware by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to such Restricted Subsidiary or its shareholders.
"Event of Default" has the meaning set forth under "—Events of default."
"Event of Termination" means any of the events described in (i) Section 11.3 of the Management Agreements with Sprint or (ii) Section 13.2 of the Trademark and Service Mark License Agreements
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with Sprint, as such agreements referred to in clauses (i) and (ii) may be amended, supplemented or otherwise modified from time to time.
"Exchange Act" means the Securities Exchange Act of 1934.
"Existing Notes" means the 12 7/8% Senior Discount Notes due 2010, the 12½% Senior Notes due 2011, the 13 7/8% Senior Notes due 2011, the 11% Senior Notes due 2010 and the 12% Senior Discount Notes due 2009, issued by the Company and outstanding on the Issue Date and any subsidiary guarantees of such notes by the Subsidiary Guarantors.
"Fair Market Value" means, with respect to any Property, the price that could be negotiated in an arm's-length free market transaction, for cash, between a willing seller and a willing buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair Market Value shall be determined, except as otherwise provided,
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| (a) | if such Property has a Fair Market Value equal to or less than $15.0 million, by any Officer of Alamosa Delaware, or |
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| (b) | if such Property has a Fair Market Value in excess of $15.0 million, by a majority of the Board of Directors and evidenced by a resolution of the Board of Directors, dated within 30 days of the relevant transaction, delivered to the Trustee. |
"Foreign Restricted Subsidiary" means any Restricted Subsidiary which is not organized under the laws of the United States of America or any State thereof or the District of Columbia.
"GAAP" means United States generally accepted accounting principles as in effect on the Issue Date, including those set forth:
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| (a) | in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants; |
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| (b) | in the statements and pronouncements of the Financial Accounting Standards Board; |
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| (c) | in such other statements by such other entity as approved by a significant segment of the accounting profession; and |
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| (d) | the rules and regulations of the Securities and Exchange Commission governing the inclusion of financial statements (including pro forma financial statements) in periodic reports required to be filed pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the Securities and Exchange Commission. |
"Guarantee" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Debt of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person
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| (a) | to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt of such other Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise), or |
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| (b) | entered into for the purpose of assuring in any other manner the obligee against loss in respect thereof (in whole or in part), |
provided, however, that the term "Guarantee" shall not include:
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| (1) | an endorsement for collection or deposit in the ordinary course of business; or |
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| (2) | a contractual commitment by one Person to invest in another Person for so long as such Investment is reasonably expected to constitute a Permitted Investment under clause (b) of the definition of "Permitted Investment". |
The term "Guarantee" used as a verb has a corresponding meaning. The term "Guarantor" shall mean any Person Guaranteeing any obligation.
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"Hedging Obligation" of any Person means any obligation of such Person pursuant to any Interest Rate Agreement, Currency Exchange Protection Agreement, Commodity Price Protection Agreement or any other similar agreement or arrangement.
"Incur" means, with respect to any Debt or other obligation of any Person, to create, issue, incur (by merger, conversion, exchange or otherwise), extend, assume, Guarantee or become liable in respect of such Debt or other obligation or the recording, as required pursuant to GAAP or otherwise, of any such Debt or obligation on the balance sheet of such Person (and "Incurrence" and "Incurred" shall have meanings correlative to the foregoing); provided, however, that a change in GAAP that results in an obligation of such Person that exists at such time, and is not theretofore classified as Debt, becoming Debt shall not be deemed an Incurrence of such Debt; provided further, however, that any Debt or other obligations of a Person existing at the time such Person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary; and provided further, however, that solely for purposes of determining compliance with "—Certain covenants—Limitation on debt," neither accrual of interest on Debt nor amortization of debt discount shall be deemed to be the Incurrence of Debt, provided that in the case of Debt sold at a discount to the principal amount at maturity thereof, the amount of such Debt Incurred shall at all times be the accreted value of such Debt.
"Independent Financial Advisor" means an investment banking firm of national standing or any third party appraiser of national standing, provided that such firm or appraiser is not an Affiliate of Alamosa Delaware.
"Interest Rate Agreement" means, for any Person, any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other similar agreement designed to protect against fluctuations in interest rates.
"Investment" by any Person means any direct or indirect loan (other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of such Person), advance or other extension of credit or capital contribution (by means of transfers of cash or other Property to others or payments for Property or services for the account or use of others, or otherwise) to, or Incurrence of a Guarantee of any obligation of, or purchase or acquisition of Capital Stock, bonds, notes, debentures or other securities or evidence of Debt issued by, any other Person, except that the acquisition of the Capital Stock of another Person in exchange for the Capital Stock of Alamosa Delaware, other than Disqualified Stock, shall not be considered an Investment by Alamosa Delaware. For purposes of the covenant described under "—Certain covenants—Limitation on restricted payments," "—Certain covenants—Designation of restricted and unrestricted subsidiaries" and the definition of "Restricted Payment," "Investment" shall include the portion (proportionate to Alamosa Delaware's equity interest in such Subsidiary) of the Fair Market Value of the net assets of any Subsidiary of Alamosa Delaware at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, Alamosa Delaware shall be deemed to continue to have a permanent "Investment" in an Unrestricted Subsidiary of an amount (if positive) equal to:
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| (a) | Alamosa Delaware's "Investment" in such Subsidiary at the time of such redesignation, less |
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| (b) | the portion (proportionate to Alamosa Delaware's equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation. |
In determining the amount of any Investment made by transfer of any Property other than cash, such Property shall be valued at its Fair Market Value at the time of such Investment.
"Issue Date" means the date on which the senior notes are initially issued.
"Leverage Ratio" means the ratio of:
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| (a) | the outstanding Debt of Alamosa Delaware and the Restricted Subsidiaries on a consolidated basis, to |
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| (b) | the Annualized Pro Forma EBITDA. |
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The Leverage Ratio is calculated after giving pro forma effect to any Asset Sale, Investment or acquisition of Property required to be given pro forma effect pursuant to the definition of Pro Forma EBITDA.
"Lien" means, with respect to any Property of any Person, any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, lien, charge, easement (other than any easement not materially impairing usefulness or marketability), encumbrance, preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever on or with respect to such Property (including any Capital Lease Obligation, conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing or any Sale and Leaseback Transaction).
"Moody's" means Moody's Investors Service, Inc. or any successor to the rating agency business thereof.
"Net Available Cash" from any Asset Sale means cash payments received therefrom (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Debt or other obligations relating to the Property that is the subject of such Asset Sale or received in any other non-cash form), in each case net of:
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| (a) | all legal, title and recording tax expenses, commissions, brokerage fees and other fees and expenses incurred, and all Federal, state, provincial, foreign and local taxes required to be accrued as a liability under GAAP, as a consequence of such Asset Sale; |
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| (b) | all payments made on any Debt that is secured by any Property subject to such Asset Sale, in accordance with the terms of any Lien upon or other security agreement of any kind with respect to such Property, or which must by its terms, or in order to obtain a necessary consent to such Asset Sale, or by applicable law, be repaid out of the proceeds from such Asset Sale; |
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| (c) | all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Sale; and |
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| (d) | the deduction of appropriate amounts provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the Property disposed in such Asset Sale and retained by Alamosa Delaware or any Restricted Subsidiary after such Asset Sale. |
"Obligations" means the obligation of each Subsidiary Guarantor pursuant to its Subsidiary Guaranty of:
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| (a) | the full and punctual payment of principal, premium, if any, interest on the senior notes when due, whether at maturity, by acceleration, by redemption or otherwise, and all other monetary obligations of Alamosa Delaware under the senior notes; and |
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| (b) | the full and punctual performance within applicable grace periods of all other obligations of Alamosa Delaware under the senior notes. |
"Officer" means the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer, the Chief Technology Officer, any Executive Vice President or any Senior Vice President of Alamosa Delaware.
"Officers' Certificate" means a certificate signed by two Officers of Alamosa Delaware, at least one of whom shall be the principal executive officer or principal financial officer of Alamosa Delaware, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to Alamosa Delaware or the Trustee.
"Permitted Holder" means (i) an issuer of Voting Stock issued to the shareholders of Alamosa Holdings, Inc. (or any successor thereof) in a merger or consolidation of Alamosa Delaware (or any direct or indirect parent company thereof) that would not constitute a "Change of Control" pursuant
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to clause (5) of the definition of "Change of Control," (ii) Alamosa Holdings, Inc. (or any successor thereof), (iii) Alamosa PCS Holdings, Inc. (or any successor thereof), and (iv) any wholly owned subsidiary of any Person in (i), (ii) and (iii) above.
"Permitted Investment" means any Investment by Alamosa Delaware or a Restricted Subsidiary in:
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| (a) | Alamosa Delaware or any Restricted Subsidiary or any Person that will, upon the making of such Investment, become a Restricted Subsidiary; |
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| (b) | any Person if substantially simultaneously with and/or as a result of such Investment such Person is merged or consolidated with or into, or transfers or conveys all or substantially all its Property to, or otherwise becomes a Wholly owned Restricted Subsidiary of, Alamosa Delaware or a Restricted Subsidiary, provided that such Person's primary business is a Telecommunications Business; |
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| (c) | Temporary Cash Investments; |
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| (d) | receivables owing to Alamosa Delaware or a Restricted Subsidiary, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as Alamosa Delaware or such Restricted Subsidiary deems reasonable under the circumstances; |
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| (e) | payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business; |
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| (f) | loans and advances to employees made in the ordinary course of business consistent with past practices of Alamosa Delaware or such Restricted Subsidiary, as the case may be, provided that such loans and advances do not exceed $3.0 million at any one time outstanding; |
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| (g) | stock, obligations or other securities received in settlement of debts created in the ordinary course of business and owing to Alamosa Delaware or a Restricted Subsidiary or in satisfaction of judgments; and |
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| (h) | Hedging Obligations Incurred in compliance with the covenant described under "—Certain covenants—Limitation on debt." |
"Permitted Liens" means:
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| (a) | Liens to secure Debt permitted to be Incurred under clause (b) of the second paragraph of the covenant described under "—Certain covenants—Limitation on debt;" |
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| (b) | Liens to secure Debt permitted to be Incurred under clause (c) of the second paragraph of the covenant described under "—Certain covenants—Limitation on debt," provided that any such Lien may not extend to any Property of Alamosa Delaware or any Restricted Subsidiary, other than the Property acquired, constructed or leased with the proceeds of such Debt and any improvements or accessions to such Property; |
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| (c) | Liens for taxes, assessments or governmental charges or levies on the Property of Alamosa Delaware or any Restricted Subsidiary if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision that shall be required in conformity with GAAP shall have been made therefor; |
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| (d) | Liens imposed by law, such as carriers', warehousemen's and mechanics' Liens and other similar Liens, on the Property of Alamosa Delaware or any Restricted Subsidiary arising in the ordinary course of business and securing payment of obligations that are not more than 60 days past due or are being contested in good faith and by appropriate proceedings; |
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| (e) | Liens on the Property of Alamosa Delaware or any Restricted Subsidiary Incurred in the ordinary course of business to secure performance of obligations with respect to statutory or |
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| | regulatory requirements, performance or return-of-money bonds, surety bonds or other obligations of a like nature and Incurred in a manner consistent with industry practice, in each case which are not Incurred in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of Property and which do not in the aggregate impair in any material respect the use of Property in the operation of the business of Alamosa Delaware and the Restricted Subsidiaries taken as a whole; |
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| (f) | Liens on Property at the time Alamosa Delaware or any Restricted Subsidiary acquired such Property, including any acquisition by means of a merger or consolidation with or into Alamosa Delaware or any Restricted Subsidiary; provided, however, that any such Lien may not extend to any other Property of Alamosa Delaware or any Restricted Subsidiary; provided further, however, that such Liens shall not have been Incurred in anticipation of or in connection with the transaction or series of transactions pursuant to which such Property was acquired by Alamosa Delaware or any Restricted Subsidiary; |
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| (g) | Liens on the Property of a Person at the time such Person becomes a Restricted Subsidiary; provided, however, that any such Lien may not extend to any other Property of Alamosa Delaware or any other Restricted Subsidiary that is not a direct Subsidiary of such Person; provided further, however, that any such Lien was not Incurred in anticipation of or in connection with the transaction or series of transactions pursuant to which such Person became a Restricted Subsidiary; |
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| (h) | pledges or deposits by Alamosa Delaware or any Restricted Subsidiary under workmen's compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Debt) or leases to which Alamosa Delaware or any Restricted Subsidiary is party, or deposits to secure public or statutory obligations of Alamosa Delaware or any Restricted Subsidiary, or deposits for the payment of rent, in each case Incurred in the ordinary course of business; |
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| (i) | utility easements, building restrictions and such other encumbrances or charges against real Property as are of a nature generally existing with respect to properties of a similar character; |
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| (j) | Liens existing on the Issue Date not otherwise described in clauses (a) through (i) above; |
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| (k) | Liens on the Property of Alamosa Delaware or any Restricted Subsidiary to secure any Refinancing, in whole or in part, of any Debt secured by Liens referred to in clause (b), (f), (g) or (j) above; provided, however, that any such Lien shall be limited to all or part of the same Property that secured the original Lien (together with improvements and accessions to such Property) and the aggregate principal amount of Debt that is secured by such Lien shall not be increased to an amount greater than the sum of: |
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| (1) | the outstanding principal amount, or, if greater, the committed amount, of the Debt secured by Liens described under clause (b), (f), (g) or (j) above, as the case may be, at the time the original Lien became a Permitted Lien under the Indenture; and |
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| (2) | an amount necessary to pay any fees and expenses, including premiums and defeasance costs, incurred by Alamosa Delaware or such Restricted Subsidiary in connection with such Refinancing; |
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| (l) | Liens on the Property of Alamosa Delaware or any Restricted Subsidiary to secure Debt under any Interest Rate Agreement, provided that such Debt was Incurred pursuant to clause (e) of the second paragraph of the covenant described under "—Certain covenants—Limitation on debt;" |
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| (m) | any interest or title of a lessor in the Property subject to any lease incurred in the ordinary course of business, other than a Capital Lease; and |
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| (n) | judgment Liens securing judgment in an aggregate amount outstanding at any one time of not more than $15.0 million. |
"Permitted Refinancing Debt" means any Debt that Refinances any other Debt, including any successive Refinancings, so long as:
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| (a) | such Debt is in an aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price) not in excess of the sum of: |
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| (1) | the aggregate principal amount (or if Incurred with original issue discount, the aggregate accreted value) then outstanding of the Debt being Refinanced; and |
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| (2) | an amount necessary to pay any fees and expenses, including premiums and defeasance costs, related to such Refinancing; |
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| (b) | the Average Life of such Debt is equal to or greater than the Average Life of the Debt being Refinanced; |
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| (c) | the Stated Maturity of such Debt is no earlier than the Stated Maturity of the Debt being Refinanced; and |
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| (d) | the new Debt shall not be senior in right of payment to the Debt that is being Refinanced; provided, however, that Permitted Refinancing Debt shall not include: |
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| (x) | Debt of a Subsidiary Guarantor that Refinances Debt of Alamosa Delaware; |
| | |
| (y) | Debt of a Subsidiary that is not a Subsidiary Guarantor that Refinances Debt of Alamosa Delaware or a Subsidiary Guarantor (other than Debt Incurred pursuant to Credit Facilities); or |
| | |
| (z) | Debt of Alamosa Delaware or a Restricted Subsidiary that Refinances Debt of an Unrestricted Subsidiary. |
"Person" means any individual, corporation, company (including any limited liability company), association, partnership, joint venture, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.
"Preferred Stock" means any Capital Stock of a Person, however designated, which entitles the holder thereof to a preference with respect to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of any other class of Capital Stock issued by such Person.
"Preferred Stock Dividends" means all dividends with respect to Preferred Stock of Restricted Subsidiaries held by Persons other than Alamosa Delaware or a Wholly owned Restricted Subsidiary. The amount of any such dividend shall be equal to the quotient of such dividend divided by the difference between one and the maximum statutory federal income rate (expressed as a decimal number between 1 and 0) then applicable to the issuer of such Preferred Stock.
"pro forma" means, with respect to any calculation made or required to be made pursuant to the terms hereof, a calculation performed in accordance with Article 11 of Regulation S-X promulgated under the Securities Act, as interpreted in good faith by the Board of Directors after consultation with the independent certified public accountants of Alamosa Delaware, or otherwise a calculation made in good faith by the Board of Directors after consultation with the independent certified public accountants of Alamosa Delaware, as the case may be.
"Pro Forma EBITDA" means, for any period, the EBITDA of Alamosa Delaware and its consolidated Restricted Subsidiaries, after giving effect to the following:
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| (a) | since the beginning of such period, Alamosa Delaware or any Restricted Subsidiary shall have made any Asset Sale or an Investment (by merger or otherwise) in any Restricted Subsidiary (or any Person that becomes a Restricted Subsidiary) or an acquisition of Property, |
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| (b) | the transaction giving rise to the need to calculate Pro Forma EBITDA is such an Asset Sale, Investment or acquisition, or |
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| (c) | since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into Alamosa Delaware or any Restricted Subsidiary since the beginning of such period) shall have made such an Asset Sale, Investment or acquisition, |
EBITDA for such period shall be calculated after giving pro forma effect to such Asset Sale, Investment or acquisition as if such Asset Sale, Investment or acquisition occurred on the first day of such period.
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"Property" means, with respect to any Person, any interest of such Person in any kind of property or asset, whether real, personal or mixed or tangible or intangible, including Capital Stock in, and other securities of, any other Person. For purposes of any calculation required pursuant to the Indenture, the value of any Property shall be its Fair mixed, Market Value.
"Public Equity Offering" means an underwritten public offering of common stock of Alamosa Delaware or any direct or indirect parent Person of Alamosa Delaware pursuant to an effective registration statement under the Securities Act. In the event that any direct or indirect parent Person of Alamosa Delaware completes an underwritten public offering of such Person's common stock, any amount of the proceeds of such offering which are contributed to Alamosa Delaware may be used for an optional redemption of the senior notes as described under "Optional redemption."
"Purchase Money Debt" means Debt:
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| (a) | consisting of the deferred purchase price of property, conditional sale obligations, obligations under any title retention agreement, other purchase money obligations and obligations in respect of industrial revenue bonds, in each case where the maturity of such Debt does not exceed the anticipated useful life of the Property being financed; and |
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| (b) | Incurred to finance the acquisition, construction or lease by Alamosa Delaware or a Restricted Subsidiary of such Property, including additions and improvements thereto; |
provided, however, that such Debt is Incurred within 180 days after the acquisition, construction or lease of such Property by Alamosa Delaware or such Restricted Subsidiary.
"Receivables" means receivables, chattel paper, instruments, documents or intangibles evidencing or relating to the right to payment of money and proceeds and products thereof in each case generated in the ordinary course of business.
"Refinance" means, in respect of any Debt, to refinance, amend, extend, renew, refund, repay, prepay, repurchase, redeem, defease or retire, or to issue other Debt in exchange or replacement for, such Debt. "Refinanced" and
"Refinancing" shall have correlative meanings.
"Repay" means, in respect of any Debt, to repay, prepay, repurchase, redeem, legally defease or otherwise retire such Debt, including through open market repurchases. "Repayment" and "Repaid" shall have correlative meanings. For purposes of the covenant described under "—Certain covenants—Limitation on asset sales," Debt shall be considered to have been Repaid only to the extent the related loan commitment, if any, shall have been permanently reduced in connection therewith.
"Restricted Payment" means:
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| (a) | any dividend or distribution (whether made in cash, securities or other Property) declared or paid on or with respect to any shares of Capital Stock of Alamosa Delaware or any Restricted Subsidiary (including any payment in connection with any merger or consolidation with or into Alamosa Delaware or any Restricted Subsidiary), except for |
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| (1) | any dividend or distribution that is made solely to Alamosa Delaware or a Restricted Subsidiary (and, if such Restricted Subsidiary is not a Wholly owned Restricted Subsidiary, to the other shareholders of such Restricted Subsidiary on a pro rata basis or on a basis that results in the receipt by Alamosa Delaware or a Restricted Subsidiary of dividends or distributions of greater value than it would receive on a pro rata basis); or |
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| (2) | any dividend or distribution payable solely in shares (or options, warrants or other rights to purchase shares) of Capital Stock (other than Disqualified Stock) of Alamosa Delaware; |
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| (b) | the purchase, repurchase, redemption, acquisition or retirement for value of any Capital Stock of Alamosa Delaware (other than from Alamosa Delaware or a Restricted Subsidiary) or any securities exchangeable for or convertible into any such Capital Stock, including the exercise of any option to exchange any Capital Stock (other than for or into Capital Stock of Alamosa Delaware that is not Disqualified Stock); |
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| (c) | the purchase, repurchase, redemption, acquisition or retirement for value, prior to the date for any scheduled maturity, sinking fund or amortization or other installment payment, of any Subordinated Obligation (other than the purchase, repurchase or other acquisition of any Subordinated Obligation purchased in anticipation of satisfying a scheduled maturity, sinking fund or amortization or other installment obligation, in each case due within one year of the date of acquisition); or |
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| (d) | any Investment (other than Permitted Investments) in any Person. |
"Restricted Subsidiary" means any Subsidiary of Alamosa Delaware other than an Unrestricted Subsidiary.
"S&P" means Standard & Poor's Ratings Service or any successor to the rating agency business thereof.
"Sale and Leaseback Transaction" means any direct or indirect arrangement relating to Property now owned or hereafter acquired whereby Alamosa Delaware or a Restricted Subsidiary transfers such Property to another Person and Alamosa Delaware or a Restricted Subsidiary leases it from such Person.
"Securities Act" means the Securities Act of 1933.
"Senior Debt" of Alamosa Delaware means all Debt of Alamosa Delaware, except:
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| (a) | Debt of Alamosa Delaware that is by its terms subordinate in right of payment to the senior notes; |
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| (b) | any Debt Incurred in violation of the provisions of the Indenture; |
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| (c) | accounts payable or any other obligations of Alamosa Delaware to trade creditors created or assumed by Alamosa Delaware in the ordinary course of business in connection with the obtaining of materials or services (including Guarantees thereof or instruments evidencing such liabilities); |
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| (d) | any liability for Federal, state, local or other taxes owed or owing by Alamosa Delaware; |
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| (e) | any obligation of Alamosa Delaware to any Subsidiary; or |
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| (f) | any obligations with respect to any Capital Stock of Alamosa Delaware. |
"Senior Debt" of any Subsidiary Guarantor has a correlative meaning to Senior Debt of Alamosa Delaware.
"Significant Subsidiary" means any Subsidiary that would be a "Significant Subsidiary" of Alamosa Delaware within the meaning of Rule 1-02 under Regulation S-X promulgated by the Securities and Exchange Commission.
"Sprint PCS Affiliate" means any Person whose sole or predominant business is operating (directly or through one or more subsidiaries) a personal communications services business pursuant to arrangements with Sprint Spectrum L.P. and/or its Affiliates, or their successors, similar to the Management Agreements with Sprint.
"Sprint PCS Affiliate Parent" means any Person that owns 75% or more of the issued and outstanding common stock, calculated on a fully diluted basis, of a Sprint PCS Affiliate and whose primary business is either being a Sprint PCS Affiliate or holding the Capital Stock of one or more Sprint PCS Affiliates.
"Stated Maturity" means, with respect to any security, the date specified in such security as the fixed date on which the payment of principal of such security is finally due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of a Change of Control or any other contingency beyond the control of the issuer unless such contingency has occurred).
"Subordinated Obligation" means any Debt of Alamosa Delaware or any Subsidiary Guarantor (whether outstanding on the Issue Date or thereafter Incurred) that is subordinate or junior in right of payment to the senior notes or the applicable Subsidiary Guaranty pursuant to a written agreement to that effect.
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"Subsidiary" means, in respect of any Person, any corporation, company (including any limited liability company), association, partnership, joint venture or other business entity of which a majority of the total voting power of the Voting Stock is at the time owned or controlled, directly or indirectly, by:
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| (a) | such Person; |
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| (b) | such Person and one or more Subsidiaries of such Person; or |
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| (c) | one or more Subsidiaries of such Person. |
"Subsidiary Guarantor" means each Domestic Restricted Subsidiary and any other Person that becomes a Subsidiary Guarantor pursuant to the covenant described under "—Certain covenants—Future subsidiary guarantors."
"Subsidiary Guaranty" means a Guarantee on the terms set forth in the Indenture by a Subsidiary Guarantor of Alamosa Delaware's obligations with respect to the senior notes.
"Telecommunications Assets" means all assets and rights, contractual or otherwise, used or intended for use in connection with (i) transmitting, or providing services relating to the transmission of, voice, video or data through owned or leased transmission facilities or (ii) the ownership, design, construction, development, acquisition, installation or management of communications systems, and the Capital Stock of any Person engaged entirely or substantially entirely in the above listed activities.
"Telecommunications Business" means (a) the ownership, design, construction, development, acquisition, installation or management of communications systems, (b) the delivery or distribution of communications, voice, data or video services or (c) any business or activity reasonably related or ancillary to the activities described in clauses (a) or (b) of this definition, including, without limitation, any business conducted by Alamosa Delaware or any Restricted Subsidiary on the Issue Date and the acquisition, holding or exploitation of any license relating to the activities described in clauses (a) or (b) of this definition.
"Temporary Cash Investments" means any of the following:
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| (a) | Investments in U.S. Government Obligations or in securities guaranteed by the full faith and credit of the United States of America, in each case maturing within 365 days of the date of acquisition thereof; |
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| (b) | Investments in time deposit accounts, certificates of deposit and money market deposits maturing within 90 days of the date of acquisition thereof issued by a bank or trust company organized under the laws of the United States of America or any State thereof having capital, surplus and undivided profits aggregating in excess of $500.0 million and whose long-term debt is rated "A-3" or "A—" or higher according to Moody's or S&P (or such similar equivalent rating by at least one "nationally recognized statistical rating organization" (as defined in Rule 436 under the Securities Act)); |
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| (c) | repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (a) entered into with: |
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| (1) | a bank meeting the qualifications described in clause (b) above; or |
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| (2) | any primary government securities dealer reporting to the Market Reports Division of the Federal Reserve Bank of New York; |
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| (d) | Investments in commercial paper, maturing not more than 90 days after the date of acquisition, issued by a corporation (other than an Affiliate of Alamosa Delaware) organized and in existence under the laws of the United States of America with a rating at the time as of which any Investment therein is made of "P-1" (or higher) according to Moody's or "A-1" (or higher) according to S&P (or such similar equivalent rating by at least one "nationally recognized statistical rating organization" (as defined in Rule 436 under the Securities Act)); and |
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| (e) | direct obligations (or certificates representing an ownership interest in such obligations) of any State of the United States of America (including any agency or instrumentality thereof) for the |
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| | payment of which the full faith and credit of such State is pledged and which are not callable or redeemable at the issuer's option, provided that: |
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| (1) | the long-term debt of such State is rated "A-3" or "A-" or higher according to Moody's or S&P (or such similar equivalent rating by at least one "nationally recognized statistical rating organization" (as defined in Rule 436 under the Securities Act)); and |
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| (2) | such obligations mature within 180 days of the date of acquisition thereof. |
"Unrestricted Subsidiary" means:
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| (a) | any Subsidiary of Alamosa Delaware that is designated on or after the Issue Date as an Unrestricted Subsidiary as permitted or required pursuant to the covenant described under "—Certain covenants —Designation of restricted and unrestricted subsidiaries" and not thereafter redesignated as a Restricted Subsidiary as permitted pursuant thereto; and |
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| (b) | any Subsidiary of an Unrestricted Subsidiary. |
"U.S. Government Obligations" means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable or redeemable at the issuer's option.
"Voting Stock" of any Person means all classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.
"Wholly owned Restricted Subsidiary" means, at any time, a Restricted Subsidiary all the Voting Stock of which (except directors' qualifying shares) is at such time owned, directly or indirectly, by Alamosa Delaware and its other Wholly owned Subsidiaries.
BOOK-ENTRY SYSTEM
One or more global notes representing the new notes will be deposited with a custodian for DTC, and registered in the name of a nominee of DTC. Beneficial interests in the these global notes will be shown on records maintained by DTC and its direct or indirect participants (including, if applicable, Euroclear and Clearstream). Except as set forth below, the global notes may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the global notes may not be exchanged for definitive notes in registered certificated form ("Certificated Notes") except in the limited circumstances described below. See "—Exchange of global notes for certificated notes." Except in the limited circumstances described below, owners of beneficial interests in the Global Notes will not be entitled to receive physical delivery of senior notes in certificated form.
Transfers of beneficial interests in global notes will be subject to the applicable rules and procedures of DTC and its direct or indirect participants (including, if applicable, those of Euroclear and Clearstream), which may change from time to time.
Exchange of global notes for certificated notes
A global note is exchangeable for Certificated Notes if:
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| (1) | DTC (a) notifies us that it is unwilling or unable to continue as depositary for the global notes or (b) has ceased to be a clearing agency registered under the Exchange Act and, in either case, we fail to appoint a successor depositary; |
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| (2) | we, at our option, notify the Trustee in writing that we elect to cause the issuance of the Certificated Notes; or |
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| (3) | there has occurred and is continuing a default or event of default with respect to the senior notes. |
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In addition, beneficial interests in a global note may be exchanged for Certificated Notes upon prior written notice given to the Trustee by or on behalf of DTC in accordance with the Indenture. In all cases, Certificated Notes delivered in exchange for any global note or beneficial interests in global notes will be registered in the names, and issued in any approved denominations, requested by or on behalf of the depositary (in accordance with its customary procedures).
Exchange of certificated notes for global notes
Certificated Notes may not be exchanged for beneficial interests in any global note unless the transferor first delivers to the Trustee a written certificate (in the form provided in the Indenture) to the effect that such transfer will comply with the appropriate transfer restrictions applicable to such senior notes. See "Notice to investors."
Same day settlement and payment
We will make payments in respect of the senior notes represented by the global notes (including principal, premium, if any, interest and special interest, if any) by wire transfer of immediately available funds to the accounts specified by DTC or its nominee. We will make all payments of principal, interest and premium, if any, and special interest, if any, with respect to Certificated Notes by wire transfer of immediately available funds to the accounts specified by the holders of the Certificated Notes or, if no such account is specified, by mailing a check to each such holder's registered address.
Because of time zone differences, the securities account of a Euroclear or Clearstream participant purchasing an interest in a global note from a Participant will be credited, and any such crediting will be reported to the relevant Euroclear or Clearstream participant, during the securities settlement processing day (which must be a business day for Euroclear and Clearstream) immediately following the settlement date of DTC. DTC has advised us that cash received in Euroclear or Clearstream as a result of sales of interests in a global note by or through a Euroclear or Clearstream participant to a Participant will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or Clearstream cash account only as of the business day for Euroclear or Clearstream following DTC's settlement date.
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Important United States federal tax considerations
This is a general discussion of certain United States federal tax consequences of the acquisition, ownership, and disposition of the new notes. Unless otherwise stated, this summary is addressed only to holders that purchased the notes at original issuance for the original issue price and who hold the new notes as capital assets (generally, property held for investment). We do not discuss all aspects of United States federal taxation that may be important to you in light of your individual investment circumstances, such as if special tax rules apply to you, for example, if you are a dealer in securities, financial institution, bank, insurance company, tax-exempt organization or partnership. Our discussion is based on current provisions of the Internal Revenue Code of 1986, as amended, or the Code, Treasury Regulations, judicial opinions, published positions of the United States Internal Revenue Service, or the IRS, and other applicable authorities, all as in effect on the date hereof and all of which are subject to differing interpretations or change, possibly with retroactive effect. We have not sought, and will not seek, any ruling from the IRS with respect to the positions and issues discussed herein, and there can be no assurance that the IRS will not take a different position concerning the tax consequences from the purchase, ownership and taxable disposition of the new notes or that any position taken by the IRS would not be sustained. We urge you to consult your tax advisor about the U.S. federal tax consequences of acquiring, holding and disposing of the new notes, as well as any tax consequences that may arise under the laws of any foreign, state, local or other taxing jurisdiction.
For purposes of this discussion, a "U.S. Holder" is a holder of the new notes that is (1) an individual who is a citizen or resident of the United States, (2) a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in the United States or under the laws of the United States or of any political subdivision of the United States, (3) an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source, or (4) a trust, (a) the administration of which is subject to the primary supervision of a United States court and that has one or more U.S. persons who have the authority to control all substantial decisions of the trust or (b) which has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person. A "Non-U.S. Holder" is a beneficial owner of the new notes (other than a partnership) that is not a U.S. Holder. If a partnership (including for this purpose any entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of notes, the tax treatment of a partner in the partnership generally will depend upon the status of the partner and upon the activities of the partnership. Partnerships and partners of such partnerships should consult their tax advisors about the U.S. federal income tax consequences of purchasing, owning and disposing of the new notes.
EXCHANGE OFFER
The exchange of the old notes for new notes in the exchange offer will not constitute a taxable event for U.S. federal income tax purposes. Consequently, a holder will not recognize gain upon receipt of a new note in exchange for an old note in the exchange offer, a holder's basis in the new note received in the exchange offer will be the same as its basis in the corresponding note immediately before the exchange and a holder's holding period in the new note will include its holding period in the old note.
TAXATION OF U.S. HOLDERS
Interest.
Payments or accruals of interest on a new note generally will be taxable to a U.S. Holder as ordinary interest income at the time such interest accrues or is received, in accordance with the U.S. Holder's method of accounting for U.S. federal income tax purposes.
We are obligated to pay additional interest on the new notes under certain circumstances described under "The Exchange offer—Registration rights; special interest." Although the matter is not free from doubt, such additional interest should be taxable as ordinary income at the time it accrues or is received in accordance with the U.S. Holder's regular method of accounting for federal income tax purposes. It is possible, however, that the IRS may take a different position, in which case the timing and amount of income inclusion may be different from that described above. U.S. Holders should consult their tax advisors about payments of additional interest.
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Disposition of notes.
Upon the redemption, sale, exchange, retirement or other disposition (a "disposition") of a new note, a U.S. Holder generally will recognize capital gain or loss equal to the difference between the amount realized (less any accrued but unpaid interest, which will be subject to tax in the manner described above in "—Taxation of U.S. Holders—Interest") and such holder's adjusted tax basis in the note. The amount realized generally will equal the amount of cash and the fair market value of any property received in exchange for the note. A U.S. holder's adjusted tax basis in a note generally will equal the initial purchase price paid therefor. Any capital gain or loss will be long-term capital gain or loss if the U.S. Holder's holding period for the note exceeds one year at the time of the disposition of the note. For U.S. Holders other than corporations, preferential tax rates may apply to such long-term capital gain recognized on the disposition of the note compared to rates that may apply to ordinary income. Capital losses are subject to limitations on deductibility for U.S. federal income tax purposes.
Information reporting and backup withholding.
In general, information reporting requirements will apply to payments of principal and interest on the new notes and payments of the proceeds of the sale of the new notes, and a backup withholding tax may apply to those payments if (1) the U.S. Holder fails to furnish or certify such U.S. Holder's correct taxpayer identification number to us in the manner required, (2) we are notified by the IRS that the U.S. Holder has failed to report payments of interest and dividends properly, or (3) under certain circumstances, the U.S. Holder fails to certify that it has not been notified by the IRS that such U.S. Holder is subject to backup withholding for failure to report interest and dividend payments. All individuals are subject to these requirements. Some holders, including all corporations, tax-exempt organizations and individual retirement accounts, are exempt from these requirements.
Any amounts withheld under the backup withholding rules from a payment to a U.S. Holder will be allowed as a refund or credit against such U.S. Holder's U.S. federal income tax liability, provided that the required information is furnished to the IRS.
TAXATION OF NON-U.S. HOLDERS
Interest.
Subject to the discussion on backup withholding below, interest paid to a Non-U.S. Holder generally will not be subject to U.S. federal income tax or withholding provided that such interest income is not effectively connected with the conduct of a United States trade or business of such Non-U.S. Holder and that all of the following are true: (1) the Non-U.S. Holder does not actually or constructively own 10% or more of the total combined voting power of all our classes of stock entitled to vote, (2) the Non-U.S. Holder is not a controlled foreign corporation to which we are a related person for U.S. federal income tax purposes, (3) the Non-U.S. Holder is not a bank which acquired the note in consideration for an extension of credit made pursuant to a loan agreement entered into in the ordinary course of business, and (4) certain certification requirements are satisfied.
Interest paid to a Non-U.S. Holder that does not qualify for the above exception from withholding tax generally would be subject to withholding of U.S. federal income tax at the rate of 30% unless the Non-U.S. Holder of the note provides us or our paying agent, as the case may be, with a properly executed (1) IRS Form W-8BEN (or successor form) claiming an exemption from (or reduction in) withholding under the benefit of an applicable tax treaty or (2) IRS Form W-8ECI (or successor form) stating that the interest paid on the note is not subject to withholding tax because it is effectively connected with the Non-U.S. Holder's conduct of a trade or business in the United States. If, however, the interest is effectively connected with the conduct of a trade or business in the United States by the Non-U.S. Holder, the interest generally will be subject to U.S. federal income tax imposed on net income on the same basis that applies to U.S. persons generally, and, for corporate holders, under certain circumstances, an additional branch profits tax of 30%. Non-U.S. Holders should consult any applicable income tax treaties that may provide for a reduction of, or exemption from, withholding taxes.
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Disposition of notes.
Subject to the discussion on backup withholding below, a Non-U.S. Holder generally will not be subject to U.S. federal income tax, including by way of withholding, on gain recognized on a sale or other disposition of the new notes unless any one of the following is true: (1) the gain is effectively connected with the conduct of a trade or business in the United States by the Non-U.S. Holder, (2) the Non-U.S. Holder is a nonresident alien individual present in the United States for 183 or more days in the taxable year of the disposition and certain other requirements are met, or (3) the Non-U.S. Holder is subject to tax pursuant to provisions of the U.S. federal income tax law applicable to certain United States expatriates.
Gain that is effectively connected with the conduct of a trade or business in the United States by the Non-U.S. Holder will be subject to U.S. federal income tax imposed on net income on the same basis that applies to U.S. persons generally, and, for corporate holders under certain circumstances, the branch profits tax (described above), but will not be subject to withholding. Non-U.S. Holders should consult any applicable income tax treaties that may provide for different rules.
U.S. federal estate taxes.
A note that is owned or treated as owned by an individual who is not a citizen or resident, as specially defined for U.S. federal estate tax purposes, of the United States on the date of that person's death will not be included in his or her estate for U.S. federal estate tax purposes, provided that both of the following are true: (1) the Non-U.S. Holder does not actually or constructively own 10% or more of the total combined voting power of all of our classes of stock entitled to vote on the date of that person's death, and (2) the interest on the note would not have been effectively connected with the conduct of trade or business in the United States if it had been received by that person on the date of that person's death.
Information reporting and backup withholding.
U.S. information reporting requirements and backup withholding tax may apply to payments of principal and interest on the new notes offered hereby and the proceeds from a sale or other disposition of such new notes. U.S. backup withholding tax on these payments generally will not apply if certain certification requirements (described above under "—Taxation of Non-U.S. Holders— Interest") are met which establish that the Non-U.S. Holder is not a U.S. person for U.S. federal income tax purposes and provided that the paying agent does not know or have reason to know that such holder is a U.S. person.
Any amounts withheld under the backup withholding rules from a payment to a Non-U.S. Holder will be allowed as a refund or credit against such Non-U.S. Holder's U.S. federal income tax liability, provided that the required information is furnished to the IRS.
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Plan of distribution and selling restrictions
The exchange offer is not being made to, nor will we accept surrenders of old notes for exchange from, holders of old notes in any jurisdiction in which the exchange offer or the acceptance thereof would not be in compliance with the securities or blue sky laws of such jurisdiction.
The distribution of this prospectus and the offer and sale of the new notes may be restricted by law in certain jurisdictions. Persons who come into possession of this prospectus or any of the new notes must inform themselves about and observe any such restrictions. You must comply with all applicable laws and regulations in force in any jurisdiction in which you purchase, offer or sell the new notes or possess or distribute this prospectus and, in connection with any purchase, offer or sale by you of the new notes, must obtain any consent, approval or permission required under the laws and regulations in force in any jurisdiction to which you are subject or in which you make such purchase, offer or sale.
Based on interpretive letters issued by the SEC staff to other, unrelated issuers in transactions similar to the exchange offer, we believe that the new notes would be freely transferable by holders of the old notes other than affiliates of Alamosa Delaware after this exchange offer without further registration under the Securities Act if the holder of the new notes represents that it is acquiring the new notes in the ordinary course of its business, that it has no arrangement or understanding with any person to participate in a "distribution," as defined under the Securities Act, of the new notes and that it is not an "affiliate," as defined under the Securities Act, of Alamosa Delaware; provided, however, that participating broker-dealers receiving new notes in this exchange offer will have a prospectus delivery requirement with respect to resales of such new notes.
The staff of the SEC has taken the position that any participating broker-dealer may be deemed to be an "underwriter" within the meaning of the Securities Act and must deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of the new notes (other than a resale of an unsold allotment resulting from the original offering of the old notes).
If a prospectus includes a plan of distribution containing a statement to the effect set forth in the preceding paragraph and the means by which participating broker-dealers may resell the new notes, without naming the participating broker-dealers or specifying the amount of new notes owned by them, a prospectus, such as this one, may be delivered by participating broker-dealers to satisfy their prospectus delivery obligations under the Securities Act in connection with resales of new notes for their own accounts, so long as the prospectus otherwise meets the requirements of the Securities Act.
Any profit on these resales of new notes and any commissions or concessions received by a broker-dealer in connection with these resales may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not admit that it is an "underwriter" within the meaning of the Securities Act.
If requested by a participating broker-dealer in writing not later than 45 business days following completion of the exchange offer, we have agreed to use our reasonable best efforts to keep the exchange offer registration statement effective for not less than 180 days after the date on which the exchange offer registration statement is declared effective (or such longer period under specified circumstances set forth in the registration rights agreement) and make this prospectus, as amended or supplemented, available to broker-dealers for use in connection with such resales.
A broker-dealer desiring that the exchange offer registration statement be kept continuously effective for resales of new notes must notify the issuer in writing that, among other things, such broker-dealer acquired new notes as a result of market-making or other trading activities such that the broker-dealer would be required to deliver a prospectus under the Securities Act upon a subsequent sale or other disposition of the new notes. A broker-dealer making dispositions of new notes pursuant to the exchange offer registration statement will be required to suspend its use of the prospectus included in the exchange offer registration statement, as amended or supplemented, under specified circumstances upon receipt of written notice to that effect from the issuer.
We will not receive any proceeds from any sale of the new notes by broker-dealers. Broker-dealers acquiring new notes for their own accounts may sell the notes in one or more transactions in the
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over-the-counter market, in negotiated transactions, through writing options on the new notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of such new notes.
We have agreed to pay all expenses incident to our participation in the exchange offer, other than underwriting discounts and commissions, and will indemnify holders of the old notes, including any broker-dealers selling new notes in accordance with this "Plan of distribution and selling restrictions" section, against specified types of liabilities, including liabilities under the Securities Act.
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Legal matters
The validity of the new notes will be passed upon for us by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York.
Experts
The consolidated financial statements of Alamosa (Delaware), Inc. as of December 31, 2003 and 2002, and for each of the three years in the period ended December 31, 2003, and the financial statement schedule included in the registration statement of which this prospectus is a part have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of such firm as experts in auditing and accounting.
Where you can find more information
Alamosa Delaware files reports and other information with the SEC. Copies of these materials may be inspected without charge at the public reference facilities maintained by the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 or on the SEC's website at http://www.sec.gov. Copies of such materials can be obtained from the Public Reference Section of the SEC upon payment of prescribed fees. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room.
We have filed a registration statement on Form S-4 under the Securities Act of 1933 with the SEC with respect to the new notes to be issued in the exchange offer. This prospectus constitutes a part of that registration statement but does not contain all of the information set forth in the registration statement because certain parts of the registration statement are omitted in accordance with the rules and regulations of the SEC. The registration statement and its exhibits are available for inspection and copying as set forth above.
Any of these documents are also available at our Internet website, http://www.alamosapcs.com; or you may obtain any of these documents at no cost by writing or telephoning us at:
Alamosa (Delaware), Inc.
5225 S. Loop 289
Lubbock, Texas 79424
Phone: (806) 722-1100
You should rely only on the information contained in this prospectus or information to which we have specifically referred you. We have not authorized anyone to provide you with any additional information.
Notwithstanding that we may not be subject to the reporting requirements of section 13 or 15(d) of the Exchange Act, we will file with the SEC and provide the trustee under the indenture governing the senior notes and holders of senior notes with such annual reports and such information, documents and other reports as are specified in sections 13 and 15(d) of the Exchange Act and applicable to a U.S. corporation subject to such sections, such information, documents and reports to be so filed and provided at the times specified for the filing of such information, documents and reports under such sections; provided, however, that we will not be so obligated to file such information, documents and reports with the SEC if the SEC does not permit such filings.
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ALAMOSA (DELAWARE), INC.
INDEX TO FINANCIAL STATEMENTS
| | | | | | |
| Report of Independent Auditors | | | F-2 | |
| Consolidated Balance Sheets as of December 31, 2003 and December 31, 2002 | | | F-3 | |
| Consolidated Statements of Operations for the years ended December 31, 2003, 2002 and 2001 | | | F-4 | |
| Consolidated Statements of Stockholder's Equity for the period from December 31, 2000 to December 31, 2003 | | | F-5 | |
| Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2002 and 2001 | | | F-6 | |
| Notes to Consolidated Financial Statements | | | F-7 | |
| Report of Independent Auditors on Financial Statement Schedule | | | F-51 | |
|
F-1
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholder of Alamosa (Delaware), Inc.:
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, stockholder's equity and cash flows present fairly, in all material respects, the financial position of Alamosa (Delaware), Inc. and its subsidiaries at December 31, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2003 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.
As discussed in Note 3 to the consolidated financial statements, the Company has changed its method of accounting for goodwill and other intangible assets as a result of adopting SFAS No. 142 as of January 1, 2002. See also Note 2 regarding liquidity and capital resources.
PricewaterhouseCoopers LLP
Dallas, Texas
March 9, 2004
F-2
ALAMOSA (DELAWARE), INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share amounts)
| | | | | | | | | | |
| | | December 31, | | |
| | | 2003 | | 2002 |
| ASSETS | | | | | | | | |
| Current assets: | | | | | | | | |
| Cash and cash equivalents | | $ | 98,242 | | | $ | 60,525 | |
| Restricted cash | | | 1 | | | | 34,725 | |
| Customer accounts receivable, net | | | 28,034 | | | | 27,926 | |
| Receivable from Sprint | | | 18,465 | | | | 32,576 | |
| Interest receivable | | | — | | | | 973 | |
| Receivable from parent | | | 1 | | | | — | |
| Inventory | | | 7,309 | | | | 7,410 | |
| Prepaid expenses and other assets | | | 9,763 | | | | 7,239 | |
| Deferred customer acquisition costs | | | 8,060 | | | | 7,312 | |
| Deferred tax asset | | | 4,572 | | | | 5,988 | |
| Total current assets | | | 174,447 | | | | 184,674 | |
| Property and equipment, net | | | 434,840 | | | | 458,946 | |
| Debt issuance costs, net | | | 14,366 | | | | 33,351 | |
| Intangible assets, net | | | 448,354 | | | | 488,421 | |
| Other noncurrent assets | | | 6,393 | | | | 7,802 | |
| Total assets | | $ | 1,078,400 | | | $ | 1,173,194 | |
| LIABILITIES AND STOCKHOLDER'S EQUITY | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable | | $ | 31,010 | | | $ | 27,203 | |
| Accrued expenses | | | 37,325 | | | | 34,903 | |
| Payable to Sprint | | | 24,290 | | | | 26,903 | |
| Interest payable | | | 5,353 | | | | 22,242 | |
| Deferred revenue | | | 22,742 | | | | 18,901 | |
| Current installments of capital leases | | | 481 | | | | 1,064 | |
| Total current liabilities | | | 121,201 | | | | 131,216 | |
| Long term liabilities: | | | | | | | | |
| Capital lease obligations | | | 812 | | | | 1,355 | |
| Other noncurrent liabilities | | | 8,693 | | | | 10,641 | |
| Deferred tax liability | | | 15,379 | | | | 27,694 | |
| Senior secured debt | | | 200,000 | | | | 200,000 | |
| Senior notes | | | 464,424 | | | | 668,862 | |
| Total long term liabilities | | | 689,308 | | | | 908,552 | |
| Total liabilities | | | 810,509 | | | | 1,039,768 | |
| Commitments and contingencies (see Note 19) | | | — | | | | — | |
| Stockholder's equity: | | | | | | | | |
| Preferred stock, $.01 par value; 1,000 shares authorized; no shares issued | | | — | | | | — | |
| Common stock, $.01 par value; 9,000 shares authorized; 100 and 100 shares issued and outstanding, respectively | | | — | | | | — | |
| Additional paid-in capital | | | 1,015,991 | | | | 799,403 | |
| Accumulated deficit | | | (747,425 | ) | | | (664,133 | ) |
| Unearned compensation | | | (145 | ) | | | (294 | ) |
| Accumulated other comprehensive loss, net of tax | | | (530 | ) | | | (1,550 | ) |
| Total stockholder's equity | | | 267,891 | | | | 133,426 | |
| Total liabilities and stockholder's equity | | $ | 1,078,400 | | | $ | 1,173,194 | |
|
The accompanying notes are an integral part of the consolidated financial statements.
F-3
ALAMOSA (DELAWARE), INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
| | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2003 | | 2002 | | 2001 |
| Revenues: | | | | | |
| Subscriber revenues | | $ | 452,396 | | | $ | 391,927 | | | $ | 231,145 | |
| Roaming revenues | | | 150,772 | | | | 139,843 | | | | 99,213 | |
| Service revenues | | | 603,168 | | | | 531,770 | | | | 330,358 | |
| Product sales | | | 27,882 | | | | 23,922 | | | | 26,781 | |
| Total revenue | | | 631,050 | | | | 555,692 | | | | 357,139 | |
| Costs and expenses: | | | | | | | | | | | | |
| Cost of service and operation (excluding non-cash compensation of $14, $4, and $0 for 2003, 2002, and 2001, respectively) | | | 317,215 | | | | 343,468 | | | | 237,843 | |
| Cost of products sold | | | 59,651 | | | | 50,974 | | | | 53,911 | |
| Selling and marketing (excluding non-cash compensation of $14, $4, and $0 for 2003, 2002, and 2001, respectively) | | | 112,626 | | | | 119,059 | | | | 110,052 | |
| General and administrative expenses (excluding non-cash compensation of $121, $21, and ($916) for 2003, 2002, and 2001, respectively) | | | 15,814 | | | | 14,656 | | | | 13,853 | |
| Depreciation and amortization | | | 110,495 | | | | 105,121 | | | | 94,722 | |
| Impairment of goodwill | | | — | | | | 291,635 | | | | — | |
| Impairment of property and equipment | | | 2,243 | | | | 1,194 | | | | — | |
| Non-cash compensation | | | 149 | | | | 29 | | | | (916 | ) |
| Total costs and expenses | | | 618,193 | | | | 926,136 | | | | 509,465 | |
| Income (loss) from operations | | | 12,857 | | | | (370,444 | ) | | | (152,326 | ) |
| Loss on debt extinguishment | | | — | | | | — | | | | (5,472 | ) |
| Debt exchange expenses | | | (8,694 | ) | | | — | | | | — | |
| Interest and other income | | | 929 | | | | 3,459 | | | | 11,664 | |
| Interest expense | | | (99,914 | ) | | | (102,863 | ) | | | (81,730 | ) |
| Loss before income tax benefit | | | (94,822 | ) | | | (469,848 | ) | | | (227,864 | ) |
| Income tax benefit | | | 11,530 | | | | 67,086 | | | | 80,441 | |
| Net loss | | $ | (83,292 | ) | | $ | (402,762 | ) | | $ | (147,423 | ) |
|
The accompanying notes are an integral part of the consolidated financial statements.
F-4
ALAMOSA (DELAWARE), INC
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(Dollars in thousands, except share amounts)
FOR THE PERIOD FROM DECEMBER 31, 2000 TO DECEMBER 31, 2003
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Comprehensive
Income (Loss) | |
Preferred Stock | |
Common Stock | | Additional
Paid-In Capital | | Accumulated
Deficit | | Unearned
Compensation | | Accumulated
Other
Comprehensive
Loss | | Total |
| Shares | | Amount | | Shares | | Amount | |
| Balance December 31, 2000 | | | | | | | — | | | $ | — | | | | 100 | | | $ | — | | | $ | 246,458 | | | $ | (113,948 | ) | | $ | (1,112 | ) | | $ | — | | | $ | 131,398 | |
| Net loss | | $ | (147,423 | ) | | | | | | | | | | | | | | | | | | | | | | | (147,423 | ) | | | | | | | | | | | (147,423 | ) |
| Net change in fair value of derivative instruments qualifying as cash flow hedges, net of tax benefit of $540 | | | (936 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (936 | ) | | | (936 | ) |
| Total comprehensive loss | | $ | (148,359 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Capital infusion from parent | | | | | | | | | | | | | | | | | | | | | | | 555,863 | | | | | | | | | | | | | | | | 555,863 | |
| Forfeiture of variable stock-based awards | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Unearned compensation related to | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (916 | ) | | | | | | | (916 | ) |
| forfeiture of variable stock-based awards | | | | | | | | | | | | | | | | | | | | | | | (2,028 | ) | | | | | | | 2,028 | | | | | | | | — | |
| Balance December 31, 2001 | | | | | | | — | | | | — | | | | 100 | | | | — | | | | 800,293 | | | | (261,371 | ) | | | — | | | | (936 | ) | | | 537,986 | |
| Net loss | | $ | (402,762 | ) | | | | | | | | | | | | | | | | | | | | | | | (402,762 | ) | | | | | | | | | | | (402,762 | ) |
| Net change in fair value of derivative instruments qualifyingas cash flow hedges, net of tax | | | (614 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (614 | ) | | | (614 | ) |
| benefit of $376 | | $ | (403,376 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total comprehensive loss | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Capital distribution to parent | | | | | | | | | | | | | | | | | | | | | | | (1,213 | ) | | | | | | | | | | | | | | | (1,213 | ) |
| Unearned compensation | | | | | | | | | | | | | | | | | | | | | | | 323 | | | | | | | | (323 | ) | | | | | | | — | |
| Amortization of unearned Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 29 | | | | | | | | 29 | |
| Balance December 31, 2002 | | | | | | | — | | | | — | | | | 100 | | | | — | | | | 799,403 | | | | (664,133 | ) | | | (294 | ) | | | (1,550 | ) | | | 133,426 | |
| Net loss | | $ | (83,292 | ) | | | | | | | | | | | | | | | | | | | | | | | (83,292 | ) | | | | | | | | | | | (83,292 | ) |
| Net change in fair value of derivative instruments qualifyingas cash flow hedges, net of tax expense of $631 | | | 1,020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,020 | | | | 1,020 | |
| Total comprehensive loss | | $ | (82,272 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Capital infusion from parent | | | | | | | | | | | | | | | | | | | | | | | 221,115 | | | | | | | | | | | | | | | | 221,115 | |
| Capital distribution to parent | | | | | | | | | | | | | | | | | | | | | | | (4,527 | ) | | | | | | | | | | | | | | | (4,527 | ) |
| Amortization of unearned compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 149 | | | | | | | | 149 | |
| Balance December 31, 2003 | | | | | | | — | | | $ | — | | | | 100 | | | | — | | | $ | 1,015,991 | | | $ | (747,425 | ) | | $ | (145 | ) | | $ | (530 | ) | | $ | 267,891 | |
|
The accompanying notes are an integral part of the consolidated financial statements.
F-5
ALAMOSA (DELAWARE), INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
| | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2003 | | 2002 | | 2001 |
| Cash flows from operating activities: | | | | | | | | | | | | |
| Net loss | | $ | (83,292 | ) | | $ | (402,762 | ) | | $ | (147,423 | ) |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | | | | | | | | | | | | |
| Non-cash compensation | | | 149 | | | | 29 | | | | (916 | ) |
| Non-cash interest expense (benefit) on derivative instruments | | | (693 | ) | | | 464 | | | | 656 | |
| Non-cash accretion of asset retirement obligation | | | 565 | | | | — | | | | — | |
| Provision for bad debts | | | 13,451 | | | | 40,285 | | | | 17,490 | |
| Depreciation and amortization of property and equipment | | | 70,428 | | | | 64,702 | | | | 45,963 | |
| Amortization of goodwill and intangibles | | | 40,067 | | | | 40,419 | | | | 48,759 | |
| Amortization of financing costs included in interest expense | | | 4,270 | | | | 4,259 | | | | 3,274 | |
| Amortization of discounted interest | | | 329 | | | | 395 | | | | 165 | |
| Loss on debt extinguishment | | | — | | | | — | | | | 5,472 | |
| Deferred tax benefit | | | (11,530 | ) | | | (67,086 | ) | | | (80,441 | ) |
| Interest accreted on discount notes | | | 33,496 | | | | 31,655 | | | | 27,927 | |
| Impairment of property and equipment | | | 2,243 | | | | 1,194 | | | | — | |
| Impairment of goodwill | | | — | | | | 291,635 | | | | — | |
| Debt exchange expense | | | 8,694 | | | | — | | | | — | |
| (Increase) decrease in, net of effects from acquisitions: | | | | | | | | | | | | |
| Receivables | | | 1,524 | | | | (45,236 | ) | | | (47,895 | ) |
| Inventory | | | 101 | | | | (2,608 | ) | | | 1,275 | |
| Prepaid expenses and other assets | | | (1,864 | ) | | | (6,440 | ) | | | (6,655 | ) |
| Increase in, net of effects from acquisitions: | | | | | | | | | | | | |
| Accounts payable and accrued expenses | | | (22,234 | ) | | | 23,105 | | | | 18,594 | |
| Net cash provided by (used in) operating activities | | | 55,704 | | | | (25,990 | ) | | | (113,755 | ) |
| Cash flows from investing activities: | | | | | | | | | | | | |
| Proceeds from sale of assets | | | 2,645 | | | | 451 | | | | — | |
| Purchases of property and equipment | | | (38,625 | ) | | | (89,476 | ) | | | (143,731 | ) |
| Repayment of notes receivable | | | — | | | | — | | | | 11,860 | |
| Acquisition related costs | | | — | | | | — | | | | (37,617 | ) |
| Net change in short term investments | | | — | | | | 1,300 | | | | 300 | |
| Change in restricted cash | | | 34,724 | | | | 59,968 | | | | (94,693 | ) |
| Other | | | — | | | | 99 | | | | 102 | |
| Net cash used in investing activities | | | (1,256 | ) | | | (27,658 | ) | | | (263,779 | ) |
| Cash flows from financing activities: | | | | | | | | | | | | |
| Capital contributions (distributions) | | | (4,527 | ) | | | (1,213 | ) | | | 9,665 | |
| Proceeds from issuance of senior notes | | | — | | | | — | | | | 384,046 | |
| Borrowings under senior secured debt | | | — | | | | 12,838 | | | | 253,000 | |
| Repayments of borrowings under senior secured debt | | | — | | | | — | | | | (289,421 | ) |
| Debt issuance costs capitalized | | | (2,329 | ) | | | (1,351 | ) | | | (16,503 | ) |
| Debt exchange expenses | | | (8,694 | ) | | | — | | | | — | |
| Payments on capital leases | | | (1,077 | ) | | | (773 | ) | | | (349 | ) |
| Payment of fractional notes in debt exchange | | | (104 | ) | | | — | | | | — | |
| Net cash provided by (used in) financing activities | | | (16,731 | ) | | | 9,501 | | | | 340,438 | |
| Net increase (decrease) in cash and cash equivalents | | | 37,717 | | | | (44,147 | ) | | | (37,096 | ) |
| Cash and cash equivalents at beginning of period | | | 60,525 | | | | 104,672 | | | | 141,768 | |
| Cash and cash equivalents at end of period | | $ | 98,242 | | | $ | 60,525 | | | $ | 104,672 | |
| Supplemental disclosure — cash paid for interest | | $ | 79,401 | | | $ | 70,890 | | | $ | 27,804 | |
| Supplemental disclosure of non-cash investing and financing activities: | | | | | | | | | | | | |
| Capitalized lease obligations incurred | | $ | 73 | | | $ | 613 | | | $ | 1,242 | |
| Change in accounts payable for purchase of property and equipment | | | 11,387 | | | | (20,450 | ) | | | 1,844 | |
| Asset retirement obligations capitalized | | | 1,248 | | | | — | | | | — | |
| Capital infusion in connection with debt exchange | | | 239,944 | | | | — | | | | — | |
| Liabilities assumed in connection with debt issuance costs | | | — | | | | — | | | | 15,954 | |
| Capital infusion in connection with acquisitions | | | — | | | | — | | | | 546,175 | |
| Obligations assumed in connection with acquisitions | | | — | | | | — | | | | 253,686 | |
|
The accompanying notes are an integral part of the consolidated financial statements.
F-6
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except as noted)
| |
| 1. | ORGANIZATION AND BUSINESS OPERATIONS |
Alamosa (Delaware), Inc. is a direct wholly owned subsidiary of Alamosa PCS Holdings, Inc. and an indirect wholly owned subsidiary of Alamosa Holdings, Inc. ("Alamosa Holdings"). Alamosa Holdings was formed in July 2000. Alamosa Holdings is a holding company and through its subsidiaries provides wireless personal communications services, commonly referred to as PCS, in the Southwestern, Northwestern and Midwestern United States. Alamosa (Delaware), Inc. ("Alamosa (Delaware)"), was formed in October 1999 under the name "Alamosa PCS Holdings, Inc." to operate as a holding company in anticipation of its initial public offering. On February 3, 2000, Alamosa (Delaware) completed its initial public offering. Immediately prior to the initial public offering, shares of Alamosa (Delaware) were exchanged for Alamosa PCS, LLC's ("Alamosa LLC") membership interests, and Alamosa LLC became wholly owned by Alamosa (Delaware). Alamosa (Delaware) and its subsidiaries are collectively referred to in these consolidated financial statements as the "Company," "we," "us" or "our."
On December 14, 2000, Alamosa (Delaware) formed a new holding company pursuant to Section 251(g) of the Delaware General Corporation Law. In that transaction, each share of Alamosa (Delaware) was converted into one share of the new holding company, and the former public company, which was renamed "Alamosa (Delaware), Inc." became a wholly owned subsidiary of the new holding company, which was renamed "Alamosa PCS Holdings, Inc."
On February 14, 2001, Alamosa Holdings became the new public holding company of Alamosa PCS Holdings, Inc. ("Alamosa PCS Holdings") and its subsidiaries pursuant to a reorganization transaction in which a wholly owned subsidiary of Alamosa Holdings was merged with and into Alamosa PCS Holdings. As a result of this reorganization, Alamosa PCS Holdings became a wholly owned subsidiary of Alamosa Holdings, and each share of Alamosa PCS Holdings common stock was converted into one share of Alamosa Holdings common stock. Alamosa Holdings' common stock is quoted on the Over-the-Counter Bulletin Board under the symbol "ALMO." Alamosa (Delaware) remains the issuer of the Company's public debt.
| |
| 2. | LIQUIDITY AND CAPITAL RESOURCES |
Since inception, the Company has financed its operations through capital contributions from owners, through debt financing and through proceeds generated from public offerings of common stock. The proceeds from these transactions have been used to fund the build-out of the Company's portion of the PCS network of Sprint, subscriber acquisition costs and working capital.
While the Company has incurred substantial net losses since inception and negative cash flows from operating activities through 2002, the Company generated approximately $56 million of cash flows from operating activities for the year ended December 31, 2003. In November 2003, the Company completed a debt exchange, as described in Note 11, that provided for approximately $238 million of principal debt reduction.
As of December 31, 2003, the Company had $98,242 in cash and cash equivalents and additional availability of $25,000 under its undrawn revolving credit facility, subject to restrictions on drawing upon that facility. In January 2004, the Company completed an offering of $250 million in senior notes the proceeds from which were used to permanently repay and terminate its senior secured credit facility including the undrawn revolving portion discussed above. The Company received net proceeds from the January 2004 senior notes offering, after the repayment of the senior secured credit facility and transaction costs, of approximately $42 million which will be used for general corporate purposes.
The Company believes that its cash on hand plus the additional liquidity that it expects to generate from operations will be sufficient to fund expected capital expenditures and to cover its working capital and debt service requirements (including dividends on preferred stock) for at least the next 12 months.
F-7
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
The Company's future liquidity will be dependent on a number of factors influencing its projections of operating cash flows, including those related to subscriber growth, average revenue per user, average monthly churn and cost per gross addition. Should actual results differ significantly from these assumptions, the Company's liquidity position could be adversely affected and it could be in a position that would require it to raise additional capital, which may or may not be available on terms acceptable to the Company, if at all, and could have a material adverse effect on the Company's ability to achieve its intended business objectives.
| |
| 3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Principles of consolidation — The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions are eliminated.
Cash and cash equivalents — Cash and cash equivalents include cash, money market funds, and commercial paper with minimal interest rate risk and original maturities of three months or less at the date of acquisition.
The carrying amount approximates fair value.
Short-term investments — The Company invests in highly liquid debt instruments with strong credit ratings. Commercial paper investments with a maturity greater than three months, but less than one year, at the time of purchase are considered to be short-term investments. The carrying amount of the investments approximates fair value due to their short maturity. The Company maintains cash and cash equivalents and short-term investments with certain financial institutions. The Company performs periodic evaluations of the relative credit standing of those financial institutions that are considered in the Company's investment strategy.
Inventory — Inventory consists of handsets and related accessories. Inventories purchased for resale are carried at the lower of cost or market using the first-in first-out method. Market is determined using replacement cost which is consistent with industry practices. The Company also performs an analysis to identify obsolete or excess handset inventory for models that are no longer manufactured or are technologically obsolete and records a reserve, as appropriate.
Restricted cash — Restricted cash of $34,725 at December 31, 2002 was held in escrow to secure payment on certain of the Company's debt obligations. The escrow requirements were fulfilled during 2003 and the remaining $1 in the consolidated balance sheet at December 31, 2003 will be used in connection with the first semi-annual interest payment on senior notes in 2004.
Property and equipment — Property and equipment are reported at cost less accumulated depreciation. Costs incurred to design and construct the wireless network in a market are classified as construction in progress. When the wireless network for a particular market is completed and placed into service, the related costs begin to be depreciated. Repair and maintenance costs are charged to expense as incurred; significant renewals and betterments are capitalized. When depreciable assets are retired or otherwise disposed of, the related costs and accumulated depreciation are removed from the respective accounts, and any gains or losses on disposition are recognized in income. Property and equipment are depreciated using the straight-line method based on estimated useful lives of the assets.
F-8
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
Asset lives are as follows:
| | | | | | |
| Buildings | | 10 years |
| Network equipment | | 5-10 years |
| Vehicles | | 5 years |
| Furniture and office equipment | | 7-10 years |
|
Leasehold improvements are depreciated over the shorter of the remaining term of the lease or the estimated useful life of the improvement.
Interest is capitalized in connection with the construction of the wireless network. The capitalized interest is recorded as part of the asset to which it relates and will be amortized over the asset's estimated useful life. No interest costs were capitalized during 2003. During 2002, approximately $265 in interest costs were capitalized. During 2001, approximately $1,752 in interest costs were capitalized. The remaining unamortized balance of capitalized interest was approximately $1,807 as of December 31, 2003.
Microwave relocation includes costs and the related obligation incurred to relocate incumbent microwave frequencies in the Company's service area. Microwave relocation costs are amortized on a straight-line basis over 20 years beginning upon commencement of services in respective markets. The amortization of microwave relocation costs was approximately $275, $287 and $231 for the years ended December 31, 2003, 2002 and 2001, respectively.
Software costs — In accordance with Statement of Position ("SOP") 98-1, "Accounting for Costs of Computer Software Developed or Obtained for Internal Use," certain costs related to the development or purchase of internal-use software are capitalized and amortized over the estimated useful life of the software. During fiscal 2003, 2002 and 2001, the Company capitalized approximately $16, $838 and $1,228, respectively, in software costs under SOP 98-1, which are being amortized over a five-year life. The Company amortized computer software costs of approximately $749, $720 and $533 during 2003, 2002 and 2001, respectively.
Advertising costs — Advertising costs are expensed as incurred. Advertising expenses totaled approximately $21,669, $26,574 and $25,857 during 2003, 2002 and 2001, respectively.
Income taxes — The Company presents income taxes pursuant to Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes." SFAS No. 109 uses an asset and liability approach to account for income taxes, wherein deferred taxes are provided for book and tax basis differences for assets and liabilities. In the event differences between the financial reporting basis and the tax basis of the Company's assets and liabilities result in deferred tax assets, an evaluation of the probability of being able to realize the future benefits indicated by such assets is required. A valuation allowance is provided for a portion or all of the deferred tax assets when there is sufficient uncertainty regarding the Company's ability to recognize the benefits of the assets in future years. See Note 13.
Revenue recognition — The Company recognizes revenue as services are performed. Sprint handles the Company's billings and collections and retains 8% of billed service revenues from the Company's subscribers and from non-Sprint wireless subscribers who roam onto the Company's portion of the PCS network of Sprint. The amount retained by Sprint is recorded in Cost of Service and Operations. Revenues generated from the sale of handsets and accessories and from roaming services provided to Sprint wireless customers who are not based in the Company's territories are not subject to the 8% charge.
F-9
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
Prior to July 1, 2003, the Company deferred all customer activation fee revenue and an equal amount of customer acquisition related expenses. These deferred amounts were amortized over a three or one-year period depending on the credit class of the respective customer, which approximates the average life of that customer.
Effective July 1, 2003, the Company adopted the accounting provisions of Emerging Issues Task Force ("EITF") Abstract No. 00-21, "Accounting for Revenue Arrangements with Multiple Deliverables." Beginning July 1, 2003, the Company began to allocate amounts charged to customers at the point of activation between the sale of handsets and other equipment and the sale of wireless telecommunications services in those transactions taking place in distribution channels that are directly controlled by the Company. The amounts charged at the point of activation typically consist of the activation fee and the retail price of the equipment sold. This allocation resulted in approximately $1,642 in activation fees being allocated to the sale of handsets and other equipment for the year ended December 31, 2003.
For the years ended December 31, 2003, 2002 and 2001, the Company deferred $8,300, $11,846 and $11,544, respectively, of activation fee revenue and customer acquisition related expense. Amortization of deferred activation fee revenue and customer acquisition related expense was $8,970, $7,920 and $2,315 for the years ended December 31, 2003, 2002 and 2001, respectively. At December 31, 2003, $5,605 of the remaining deferral was classified as long-term.
Sprint and other PCS Affiliates of Sprint, pay the Company a roaming fee for each minute that a Sprint wireless subscriber based outside of the Company's territories roams on the Company's portion of the PCS network of Sprint. Revenue from these services is recognized as the services are performed. Similarly, the Company pays roaming fees to Sprint and other PCS Affiliates of Sprint, when the Company's subscribers roam on the PCS network of Sprint outside of the Company's territories. These costs are recorded as a cost of service when incurred.
Product revenues, consisting of proceeds from sales of handsets and accessories, are recorded net of an allowance for sales returns. The allowance is estimated based on Sprint's handset return policy that allows customers to return handsets for a full refund within 14 days of purchase. When handsets are returned to the Company, the Company may be able to reissue the handsets to customers at little additional cost. However, when handsets are returned to Sprint for refurbishing, the Company will receive a credit from Sprint, which will be less than the amount the Company originally paid for the handset. The cost of products sold includes the total cost of accessories and handsets sold through the Company's retail stores (including sales to local indirect retailers). The cost of handsets generally exceeds the retail sales price because the Company subsidizes the price of handsets for competitive reasons. For handsets sold through national indirect retailers (such as Radio Shack, Best Buy, etc.) and other channels controlled by Sprint, the Company reimburses Sprint for the subsidy incurred on such handsets activated within the Company's territory and this cost is reflected in selling and marketing expenses.
Goodwill and intangible assets — Goodwill and other intangible assets were recorded in connection with the acquisitions discussed in Note 4. Identifiable intangibles consisted of the Sprint agreements and the respective subscriber bases in place at the time of acquisition. The intangible assets related to the Sprint agreements are being amortized on a straight line basis over the remaining original term of the underlying Sprint agreements or approximately 17.6 years. The subscriber base intangible asset is being amortized on a straight line basis over the estimated life of the acquired subscribers or approximately 3 years.
The Company adopted the provisions of SFAS No. 142, "Goodwill and Other Intangible Assets," on January 1, 2002. SFAS No. 142 primarily addresses the accounting for goodwill and intangible assets subsequent to their initial recognition. The provisions of SFAS No. 142 (i) prohibit the
F-10
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
amortization of goodwill and indefinite-lived intangible assets, (ii) require that goodwill and indefinite-lived intangible assets be tested annually for impairment (and in interim periods if certain events occur indicating that the carrying value of goodwill and indefinite-lived intangible assets may be impaired), (iii) require that reporting units be identified for the purpose of assessing potential future impairments of goodwill and (iv) remove the forty-year limitation on the amortization period of intangible assets that have finite lives. As of December 31, 2001, the Company had recorded $15.9 million in accumulated amortization of goodwill. Upon the adoption of SFAS No. 142 the amortization of goodwill was discontinued. As discussed in Note 8, in connection with the first annual impairment testing of goodwill as of July 31, 2002 the Company recorded an impairment charge of $291,635 which represented the entire carrying value of goodwill at the time and the Company has no recorded goodwill at December 31, 2003.
Impairment of long-lived assets — If facts or circumstances indicate the possibility of impairment of long-lived assets, including intangibles, the Company will prepare a projection of future operating cash flows, undiscounted and without interest. If based on this projection, the Company does not expect to recover its carrying cost, an impairment loss equal to the difference between the fair value of the asset and its carrying value will be recognized in operating income.
Stock based compensation — The Company has elected to follow Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees" and related interpretations in accounting for its employee stock options. The Company has implemented the disclosure-only provisions of SFAS No. 123, "Accounting for Stock Based Compensation." See Note 17.
For fixed stock options granted under these plans, the exercise price of the option equals or exceeds the market value of Alamosa Holdings common stock on the date of grant. Accordingly, the Company does not record compensation expense for any of the fixed stock options granted. For performance-based options, compensation expense was recognized over the expected vesting period of the options and was adjusted for changes in the number of options expected to vest and the market value of Alamosa Holdings common stock. Compensation expense (credit) for the performance-based options amounted to $0 in 2003, $0 in 2002, and $(916) in 2001.
The following table illustrates the effects on net loss had the Company applied the fair value recognition provisions of SFAS No. 123 to its stock-based employee compensation plans:
| | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2003 | | 2002 | | 2001 |
| Net loss — as reported | | $ | (83,292 | ) | | $ | (402,762 | ) | | $ | (147,423 | ) |
Add: stock-based employee
compensation included in reported
Net loss, net of related tax | | | — | | | | — | | | | (916 | ) |
Deduct: stock-based employee
compensation expense determined
under fair value method,
net of related tax effects | | | (8,067 | ) | | | (5,832 | ) | | | (5,639 | ) |
| Net loss — pro forma | | $ | (91,359 | ) | | $ | (408,594 | ) | | $ | (153,978 | ) |
|
The pro forma amounts presented above may not be representative of the future effects on reported net loss, since the pro forma compensation expense is allocated over the periods in which options become exercisable, and new option awards may be granted each year.
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
F-11
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
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 period. The most significant of such estimates include:
| |
| • | Allowance for uncollectible accounts; |
| |
| • | Estimated customer life in terms of amortization of deferred revenue and direct costs of acquisition; |
| |
| • | Likelihood of realizing benefits associated with temporary differences giving rise to deferred tax assets; and |
| |
| • | Impairment of long-lived assets. |
Actual results could differ from those estimates.
Concentration of risk — The Company maintains cash and cash equivalents in accounts with financial institutions in excess of the amount insured by the Federal Deposit Insurance Corporation. The Company monitors the financial stability of these institutions regularly and management does not believe there is significant credit risk associated with deposits in excess of federally insured amounts.
The Company relies on Sprint to provide certain back-office functions such as billing and customer care, activation of new subscribers, handset logistics and technology development. Should Sprint be unable to provide these services, the Company could be negatively impacted. See Note 14.
Derivative financial instruments — The Company enters into derivative financial instruments for the purpose of hedging specific exposures as part of its risk management program and holds all derivatives for purposes other than trading. Historically, the Company's use of such instruments has been limited to interest rate swaps and collars. The Company currently uses hedge accounting as prescribed in SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities" with respect to its interest rate swaps. As such, the fair values of these arrangements are recorded in the consolidated balance sheet with changes in fair value being reported as a component of other comprehensive income.
The interest rate collar arrangement does not qualify for hedge accounting under SFAS No. 133 and as such, the fair value of the respective asset and liability is recorded in the consolidated balance sheet with any change during the period being reflected in the consolidated statement of operations.
Reclassification — Certain reclassifications have been made to prior year amounts to conform to the current year presentation. These reclassifications had no effect on the results of operations or stockholder's equity as previously reported.
Effects of recent accounting pronouncements — In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143 requires the fair value of a liability for an asset retirement obligation to be recognized in the period that it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. For the Company's leased telecommunication facilities, primarily consisting of cell sites and switch site operating leases and operating leases for retail and office space, the Company has adopted SFAS No. 143 as of January 1, 2003.
As previously disclosed, upon adoption of SFAS No. 143, the Company had concluded that, for its leased telecommunications facilities, a liability could not be reasonably estimated due to (1) the Company's inability to reasonably assess the probability of the likelihood that a lessor would enforce the remediation requirements upon expiration of the lease term and therefore its impact on future cash outflows, (2) the Company's inability to estimate a potential range of settlement dates due to our
F-12
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
ability to renew site leases after the initial lease expiration and (3) the Company's limited experience in abandoning cell site locations and actually incurring remediation costs.
It is the Company's understanding that further clarification has been provided by the Securities and Exchange Commission regarding the accounting for asset retirement obligations and specifically relating to factors to consider in determining the estimated settlement dates and the probability of enforcement of the remediation obligation. Based on this information, the Company revised certain of the estimates used in its original analysis and calculated an asset retirement obligation for its leased telecommunication facilities. The Company determined that the aforementioned asset retirement obligations did not have a material impact on its consolidated results of operations, financial position or cash flows and recorded the asset retirement obligations in the third quarter of 2003.
An initial asset retirement obligation of $1,213 was recorded and classified in other non-current liabilities and a corresponding increase in property and equipment of $1,213 were recorded in the third quarter of 2003 relating to obligations that existed upon the adoption of SFAS No. 143. The Company incurred additional asset retirement obligations during the year ended December 31, 2003 of $35 related to new leases entered into during the year. Included in costs of services and operations in the Company's statement of operations for the year ended December 31, 2003 is a charge of $402 related to the cumulative accretion of the asset retirement obligations as of the adoption of SFAS No. 143 as well as an additional $163 in accretion recorded for the year ended December 31, 2003. Included in depreciation and amortization expenses in the Company's statement of operations for the year ended December 31, 2003 is a charge of $364 related to the cumulative depreciation of the related assets recorded at the time of the adoption of SFAS No. 143 as well as an additional $123 in depreciation recorded for the year ended December 31, 2003. For purposes of determining the asset retirement obligations, the Company has assigned a 100% probability of enforcement to the remediation obligations and has assumed an average settlement period of 20 years.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections as of April 2002," which rescinded or amended various existing standards. One change addressed by this standard pertains to treatment of extinguishments of debt as an extraordinary item. SFAS No. 145 rescinds SFAS No. 4, "Reporting Gains and Losses from Extinguishment of Debt" and states that an extinguishment of debt cannot be classified as an extraordinary item unless it meets the unusual or infrequent criteria outlined in Accounting Principles Board Opinion No. 30 "Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions." The provisions of this statement are effective for fiscal years beginning after May 15, 2002 and extinguishments of debt that were previously classified as an extraordinary item in prior periods that do not meet the criteria in Opinion 30 for classification as an extraordinary item shall be reclassified. The adoption of SFAS No. 145 in the quarter ending March 31, 2003 has resulted in a reclassification of the loss on extinguishment of debt that the Company previously reported as an extraordinary item for the year ended December 31, 2001.
In June 2002, the FASB issued SFAS No. 146 "Accounting for Costs Associated with Exit or Disposal Activities," which requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. The provisions of this statement are effective for exit or disposal activities initiated after December 31, 2002 and the adoption of this statement did not have a material impact on the Company's results of operations, financial position or cash flows.
In December 2002, the FASB issued SFAS No. 148 "Accounting for Stock-Based Compensation—Transition and Disclosure," which is an amendment of SFAS No. 123 "Accounting for Stock-Based Compensation." This statement provides alternative methods of transition for a voluntary
F-13
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
change to the fair value based method of accounting for stock-based employee compensation. In addition, this statement amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The provisions of this statement are effective for fiscal years ending after and interim periods beginning after December 15, 2002. As the Company continues to account for stock-based employee compensation using the intrinsic value method under APB Opinion No. 25, the Company, as required, has only adopted the revised disclosure requirements of SFAS No. 148 as of December 31, 2002. (See Stock-Based Compensation section of this note.)
In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities," which amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." This statement is effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003 and did not have a material impact on the Company's results of operations, financial position or cash flows.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." This statement requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances) and is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatorily redeemable financial instruments of nonpublic entities. The adoption of this statement did not have a material impact on the Company's results of operations, financial position or cash flows.
The EITF issued EITF Abstract No. 00-21 "Accounting for Revenue Arrangements with Multiple Deliverables" in May 2003. This Abstract addresses certain aspects of the accounting by a vendor for arrangements under which it will perform multiple revenue-generating activities. Specifically, it addresses how consideration should be measured and allocated to the separate units of accounting in the arrangement. The guidance in this Abstract became effective for revenue arrangements entered into in fiscal periods beginning after June 15, 2003 and the Company has adopted the provisions of this abstract as of July 1, 2003 as discussed previously in this note.
The Company has elected to apply the accounting provisions of this abstract on a prospective basis beginning July 1, 2003. Prior to the adoption of the provisions of this abstract the Company had deferred all activation fee revenue as well as activation costs in a like amount and amortized these revenues and costs over the average life of the Company's subscribers. The existing deferred revenue and costs at July 1, 2003 will continue to be amortized along with that portion of activation fees generated by customers outside of distribution channels controlled by the Company. The adoption of the accounting provisions of this abstract did not have a material impact on the Company's results of operations, financial position or cash flows.
In November 2002, the FASB issued FASB Interpretation No. 45 ("FIN 45"), "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." FIN 45 requires that upon issuance of a guarantee, a guarantor must recognize a liability for the fair value of an obligation assumed under a guarantee. FIN 45 also requires additional disclosures by a guarantor in its interim and annual financial statements about the obligations associated with guarantees issued. The recognition provisions of FIN 45 are effective for guarantees issued after December 31, 2002, while the disclosure requirements were effective for financial statements for periods ending after December 15, 2002. At December 31, 2003, the Company
F-14
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
had not entered into any material arrangement that would be subject to the disclosure requirements of FIN 45. The Company adoption of FIN 45 did not have a material impact on the Company's consolidated financial statements.
In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46" or the "Interpretation"), "Consolidation of Variable Interest Entities, an interpretation of ARB 51." The primary objectives of FIN 46 are to provide guidance on the identification of entities for which control is achieved through means other than through voting rights ("variable interest entities" or "VIEs") and how to determine when and which business enterprise should consolidate the VIE (the "primary beneficiary"). This new model for consolidation applies to an entity which either (1) the equity investors (if any) do not have a controlling financial interest or (2) the equity investment at risk is insufficient to finance that entity's activities without receiving additional subordinated financial support from other parties. In addition, FIN 46 requires that both the primary beneficiary and all other enterprises with a significant variable interest in a VIE make additional disclosures. In December 2003, the FASB completed deliberations of proposed modifications to FIN 46 ("Revised Interpretations") resulting in multiple effective dates based on the nature as well as the creation date of the VIE. For VIEs created prior to January 1, 2004, the Revised Interpretations must be applied no later than the quarter ended March 31, 2004. The Revised Interpretations must be applied to all VIEs created after January 1, 2004. Because the Company does not believe that it has affiliations with any VIEs, this standard will not have a material impact on the Company's consolidated financial statements.
| |
| 4. | MERGERS AND ACQUISITIONS |
The Company completed the acquisitions of three PCS affiliates of Sprint during the first quarter of 2001. On February 14, 2001, the Company completed its acquisitions of Roberts Wireless Communications, L.L.C. ("Roberts") and Washington Oregon Wireless, LLC ("WOW"). On March 30, 2001, the Company completed its acquisition of Southwest PCS Holdings, Inc. ("Southwest"). Each of these transactions was accounted for under the purchase method of accounting and the results of the acquired companies are included in these consolidated financial statements from the date of acquisition.
The merger consideration in the Roberts acquisition consisted of 13.5 million shares of the Company's common stock and approximately $4.0 million in cash. The Company also assumed the net debt of Roberts in the transaction, which amounted to approximately $57 million as of February 14, 2001.
The merger consideration in the WOW acquisition consisted of 6.05 million shares of the Company's common stock and approximately $12.5 million in cash. The Company also assumed the net debt of WOW in the transaction, which amounted to approximately $31 million as of February 14, 2001.
The merger consideration in the Southwest acquisition consisted of 11.1 million shares of the Company's common stock and approximately $5.0 million in cash. The Company also assumed the net debt of Southwest in the transaction, which amounted to approximately $81 million as of March 30, 2001.
F-15
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
The Company obtained independent valuations of Roberts, WOW and Southwest to allocate the purchase price. The results of the allocations were as follows:
| | | | | | | | | | | | | | | | | | |
| | | Roberts | | WOW | | Southwest | | Total |
| Consideration: | | | | | | | | | | | | | | | | |
| Common stock issued | | $ | 291,060 | | | $ | 130,438 | | | $ | 123,543 | | | $ | 545,041 | |
| Stock options granted | | | 1,134 | | | | — | | | | — | | | | 1,134 | |
| Cash (including merger related costs) | | | 8,940 | | | | 15,962 | | | | 12,715 | | | | 37,617 | |
| | | | | | | | | | | | | | | | | |
| Total | | | 301,134 | | | | 146,400 | | | | 136,258 | | | | 583,792 | |
| | | | | | | | | | | | | | | | | |
| Allocated to: | | | | | | | | | | | | | | | | |
| Current assets | | | 4,545 | | | | 1,969 | | | | 5,923 | | | | 12,437 | |
| Property, plant and equipment | | | 53,506 | | | | 35,732 | | | | 36,722 | | | | 125,960 | |
| Intangible assets (other than goodwill) | | | 258,300 | | | | 116,400 | | | | 187,000 | | | | 561,700 | |
| Liabilities acquired (including deferred taxes) | | | (185,452 | ) | | | (85,433 | ) | | | (152,955 | ) | | | (423,840 | ) |
| | | | | | | | | | | | | | | | | |
| Goodwill | | $ | 170,235 | | | $ | 77,732 | | | $ | 59,568 | | | $ | 307,535 | |
|
The unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2001 set forth below, presents the results of operations as if the acquisitions had occurred at the beginning of the period and are not necessarily indicative of future results or actual results that would have been achieved had these acquisitions occurred as of the beginning of the period.
| | | | | | |
| | | For the year ended
December 31, |
| | | 2001 |
| | | (unaudited) |
| Total revenues | | $ | 376,061 | |
| | | | | |
| Loss before income tax benefit | | $ | (251,600 | ) |
| Income tax benefit | | | 88,258 | |
| | | | | |
| Net loss | | $ | (163,342 | ) |
|
| |
| 5. | ACCOUNTS RECEIVABLE |
Customer accounts receivable — Customer accounts receivable represent amounts owed to the Company by subscribers for PCS service. The amounts presented in the consolidated balance sheets are net of an allowance for uncollectible accounts of $6.0 million and $8.5 million at December 31, 2003 and 2002, respectively.
Receivable from Sprint — Receivable from Sprint in the accompanying consolidated balance sheets consists of the following:
F-16
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
| | | | | | | | | | |
| | | December 31, |
| | | 2003 | | 2002 |
| Net roaming receivable | | $ | 8,589 | | | $ | 5,808 | |
| Access and interconnect revenue receivable (payable) | | | (15 | ) | | | (188 | ) |
| Accrued service revenue | | | 2,584 | | | | 3,345 | |
| Customer payments due from Sprint | | | — | | | | 21,136 | |
| Service fee refund | | | 6,418 | | | | 2,475 | |
| Other amounts due from Sprint | | | 889 | | | | — | |
| | | $ | 18,465 | | | $ | 32,576 | |
|
Net roaming receivable includes net travel revenue due from Sprint related to PCS subscribers based outside of the Company's licensed territory who utilize the Company's portion of the PCS network of Sprint. The travel revenue receivable is net of amounts owed to Sprint related to the Company's subscribers who utilize the PCS network of Sprint outside of the Company's licensed territory. In addition, net roaming receivable also includes amounts due from Sprint which have been collected from other PCS providers for their customers' usage of the Company's portion of the PCS network of Sprint.
Access and interconnect revenue receivable (payable) represents net amounts due from Sprint for calls originated by a local exchange carrier ("LEC") or an interexchange carrier ("IXC") that terminate on the Company's network. Under the Company's affiliation agreements with Sprint, Sprint collects this revenue from other carriers and remits 92% of those collections to the Company. The $15 and $188 amounts owed to Sprint at December 31, 2003 and 2002, respectively, are the result of rate adjustments on previously collected amounts.
On July 3, 2002, the Federal Communications Commission issued a ruling on a dispute between AT&T, as an IXC, and Sprint. This ruling addressed wireless carrier's ability to charge terminating access fees to the IXC for calls terminated on a wireless network indicating that such fees could be assessed; however the IXC would only be obligated to pay such fees if a contract was in place providing for the payment of access charges. As a result of this ruling, Sprint has requested that the Company refund approximately $5.6 million in amounts that had been previously paid to the Company by Sprint related to terminating access fees. The Company paid approximately $1.4 million of this amount to Sprint in November 2003 in connection with the amendments to the Sprint agreements entered into related to the debt exchange discussed in Note 11. Although the Company has contested the refund of the remaining amount, a liability has been recorded in the consolidated financial statements as of December 31, 2003.
Accrued service revenue receivable represents the Company's estimate of airtime usage charges that have been earned but not billed at the end of the period.
Customer payments due from Sprint at December 31, 2002 relate to amounts that had been collected by Sprint at the end of the period which were not remitted to the Company until the subsequent period. Prior to the execution of the amendments to the Company's agreements with Sprint in November 2003 as discussed in Note 16, customer payments were processed daily by Sprint and the Company received its share of such collections on a weekly basis under the terms of the affiliation agreements.
Included in the December 31, 2002 balance of customer payments due from Sprint was $12,209 in amounts that were received by the Company subsequent to year end related to payments that Sprint had collected from customers from April 2000 to December 2002 that had not been passed on to the Company due to the methodology that had been previously used by Sprint to allocate cash received from customers.
F-17
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
Service fee refund due from Sprint at December 31, 2003 and 2002 related to a refund of fees paid to Sprint for services such as billing and customer care. Under the previous agreements with Sprint, these fees were determined at the beginning of each year based on estimated costs and were adjusted based on actual costs incurred by Sprint in providing the respective services. This process changed effective December 1, 2003 under the new agreements with Sprint as discussed in Note 14.
Other amounts due from Sprint at December 31, 2003 related to amounts owed to the Company for the Company's portion of enhanced 911 charges billed to customers and the Company's portion of certain revenue from resellers of Sprint PCS products and services.
| |
| 6. | PROPERTY AND EQUIPMENT |
| | | | | | | | | | |
| | | December 31, |
| | | 2003 | | 2002 |
| Land and buildings | | $ | 12,131 | | | $ | 12,086 | |
| Network equipment | | | 572,058 | | | | 535,672 | |
| Vehicles | | | 1,835 | | | | 1,756 | |
| Furniture and office equipment | | | 18,118 | | | | 18,062 | |
| | | | | | | | | |
| | | | 604,142 | | | | 567,576 | |
| Accumulated depreciation | | | (187,032 | ) | | | (122,060 | ) |
| | | | | | | | | |
| Subtotal | | | 417,110 | | | | 445,516 | |
| | | | | | | | | |
| Microwave relocation costs | | | 5,713 | | | | 5,773 | |
| Accumulated amortization | | | (1,074 | ) | | | (792 | ) |
| | | | | | | | | |
| Subtotal | | | 4,639 | | | | 4,981 | |
| | | | | | | | | |
| Construction in progress: | | | | | | | | |
| Network equipment | | | 11,338 | | | | 7,673 | |
| Leasehold improvements | | | 1,753 | | | | 776 | |
| | | | | | | | | |
| Subtotal | | | 13,091 | | | | 8,449 | |
| | | | | | | | | |
| Total | | $ | 434,840 | | | $ | 458,946 | |
|
During the year ended December 31, 2003 and 2002, the Company recorded $2,243 and $1,194, respectively, in impairments of property and equipment. Impairments in 2003 were primarily related to the abandonment of certain network equipment that had become technologically obsolete. Impairments in 2002 were primarily related to the abandonment of a switching facility.
| |
| 7. | DEBT ISSUANCE COSTS |
The Company defers direct costs associated with the issuance of long term debt as well as the execution of amendments to loan agreements. These costs are charged to interest expense over the life of the related debt using the effective interest method. The following table summarizes the activity with respect to debt issuance costs for the years ended December 31, 2003, 2002 and 2001.
F-18
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
| | | | | | | | | | | | | | |
| | | For the year ended December 31, |
| | | 2003 | | 2002 | | 2001 |
| Balance January 1 | | $ | 33,351 | | | $ | 36,654 | | | $ | 13,108 | |
| Costs deferred | | | 2,329 | | | | 1,351 | | | | 32,457 | |
| Amount charged to interest expense | | | (4,599 | ) | | | (4,654 | ) | | | (3,439 | ) |
| Costs charged in debt extinguishments | | | (17,949 | ) | | | — | | | | (5,472 | ) |
| Troubled debt restructuring | | | 1,234 | | | | — | | | | — | |
| Balance December 31 | | $ | 14,366 | | | $ | 33,351 | | | $ | 36,654 | |
|
The costs charged in debt extinguishments in 2003 relate to the portion of deferred loan costs attributable to notes that were tendered in connection with the November 2003 debt exchange discussed in Note 11. This amount was considered in determining the net excess of fair value given to noteholders over the carrying value of debt exchanged (including deferred loan costs) which represents the $1,234 identified as troubled debt restructuring in the above table.
The costs charged in debt extinguishments in 2001 relate to net deferred loan costs associated with a previous credit facility that were charged to expense upon the early termination of that facility in 2001.
| |
| 8. | GOODWILL AND INTANGIBLE ASSETS |
In connection with the acquisitions completed during 2001 discussed in Note 4, the Company allocated portions of the respective purchase prices to identifiable intangible assets consisting of (i) the value of the Sprint agreements in place at the acquired companies and (ii) the value of the subscriber base in place at the acquired companies. In addition to the identifiable intangibles, goodwill was recorded in the amount by which the purchase price exceeded the fair value of the net assets acquired including identified intangibles.
The value assigned to the Sprint agreements is being amortized using the straight-line method over the remaining original terms of the agreements that were in place at the time of acquisition or approximately 17.6 years. The value assigned to the subscriber bases acquired is being amortized using the straight-line method over the estimated life of the acquired subscribers or approximately 3 years.
The Company adopted the provisions of SFAS No. 142, "Goodwill and Other Intangible Assets," on January 1, 2002. SFAS No. 142 primarily addresses the accounting for goodwill and intangible assets subsequent to their initial recognition. The provisions of SFAS No. 142 (i) prohibit the amortization of goodwill and indefinite-lived intangible assets, (ii) require that goodwill and indefinite-lived intangible assets be tested annually for impairment (and in interim periods if certain events occur indicating that the carrying value may be impaired), (iii) require that reporting units be identified for the purpose of assessing potential future impairments of goodwill and (iv) remove the forty year limitation on the amortization period of intangible assets that have finite lives. As of December 31, 2001, the Company had recorded $15.9 million in accumulated amortization of goodwill. Upon the adoption of SFAS No. 142 the amortization of goodwill was discontinued. A purchase price allocation adjustment of $1,718 was recorded in the first quarter of 2002 which reduced goodwill by that amount.
SFAS No. 142 requires that goodwill and indefinite-lived intangible assets be tested annually for impairment using a two-step process. The first step is to identify a potential impairment by comparing the fair value of reporting units to their carrying value and, upon adoption, must be measured as of the beginning of the fiscal year. As of January 1, 2002, the results of the first step indicated no potential impairment of the Company's goodwill. The Company will perform this assessment annually and the first such assessment was done as of July 31, 2002.
F-19
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
The annual assessment as of July 31, 2002 was performed with the assistance of a nationally recognized appraisal firm. In performing the evaluation, the appraisal firm used information from various sources including, but not limited to, current stock price, transactions involving similar companies, the business plan prepared by management and current and past operating results of the Company. The appraisal firm used a combination of the guideline transaction approach, the discounted cash flow approach and the public price approach to determine the fair value of the Company which had been determined to be the single reporting unit. The guideline transaction approach used a sample of recent wireless service provider transactions to determine an average price per POP and price per customer. The discounted cash flow approach used the projected discounted future cash flows and residual values of the Company to determine the indicated value of invested capital. The public price approach was based on the market price for Alamosa Holdings publicly traded equity securities along with an estimated premium for control. This was combined with the carrying value of the Company's debt securities to arrive at the indicated value of invested capital. The results of this valuation indicated that the fair value of the reporting unit was less than the carrying amount.
Based on the indicated impairment resulting from this valuation, the Company proceeded to the second step of the annual impairment testing which involves allocating the fair value of the reporting unit to its identifiable assets and liabilities as if the reporting unit had been acquired in a business combination where the purchase price is considered to be the fair value of the reporting unit. Any unallocated purchase price is considered to be the implied fair value of goodwill. The second step of this impairment test indicated that goodwill had no value and an impairment charge of $291,635 was recorded in the third quarter of 2002. This impairment charge is included as a separate line item in the consolidated statements of operations for the year ended December 31, 2002.
The impairment of goodwill discussed above was deemed to be a "triggering event" requiring impairment testing of the Company's other long-lived assets, including intangibles, under SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." In performing this test, assets are grouped according to identifiable cash flow streams and the undiscounted cash flow over the life of the asset group is compared to the carrying value of the asset group. No additional impairment was recorded as a result of this test.
The trends in the wireless telecommunications industry that drove the Company's decision to launch an exchange offer for its publicly traded debt in 2003 as discussed in Note 11 were deemed to be a "triggering event" again requiring impairment testing of the Company's other long-lived assets, including intangibles. No impairment was recorded as a result of this test.
F-20
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
Goodwill and intangible assets consist of:
| | | | | | | | | | |
| | | December 31, 2003 | | December 31, 2002 |
| | | | | |
| Goodwill | | $ | — | | | $ | — | |
| | | | | | | | | |
| Intangible assets: | | | | | | | | |
| Sprint affiliation and other agreements | | $ | 532,200 | | | $ | 532,200 | |
| Accumulated amortization | | | (85,692 | ) | | | (55,458 | ) |
| | | | | | | | | |
| Subtotal | | | 446,508 | | | | 476,742 | |
| | | | | | | | | |
| Subscriber base acquired | | | 29,500 | | | | 29,500 | |
| Accumulated amortization | | | (27,654 | ) | | | (17,821 | ) |
| | | | | | | | | |
| Subtotal | | | 1,846 | | | | 11,679 | |
| | | | | | | | | |
| Intangible assets, net | | $ | 448,354 | | | $ | 488,421 | |
|
Amortization expense related to intangible assets was $40,067, $40,419 and $32,860 for the years ended December 31, 2003, 2002 and 2001, respectively.
Aggregate amortization expense relative to intangible assets for the periods shown will be as follows:
| | | | | | |
| Year ended December 31, | | |
| 2004 | | $ | 32,079 | |
| 2005 | | | 30,234 | |
| 2006 | | | 30,234 | |
| 2007 | | | 30,234 | |
| 2008 | | | 30,234 | |
| Thereafter | | | 295,339 | |
| | | $ | 448,354 | |
|
The following tables present net loss as if the provisions of SFAS No. 142 had been adopted January 1, 2001:
| | | | | | | | | | | | | | |
| | | For the year ended December 31, |
| | | 2003 | | 2002 | | 2001 |
| Reported net loss | | $ | (83,292 | ) | | $ | (402,762 | ) | | $ | (147,423 | ) |
| Add back: goodwill amortization | | | — | | | | — | | | | 15,899 | |
| Adjusted net loss | | $ | (83,292 | ) | | $ | (402,762 | ) | | $ | (131,524 | ) |
|
| |
| 9. | LEASES |
Operating leases — The Company has various operating leases, primarily related to rentals of tower sites and offices. These leases range from 5 to 10 years in length and generally provide for annual rent escalation based on pre-determined amounts or percentages. The estimated increases in
F-21
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
rent are being recognized over the term of the leases using the straight-line method. Rental expense was $33,358, $33,520 and $26,548 for 2003, 2002 and 2001, respectively. At December 31, 2003, the aggregate minimum rental commitments under noncancelable operating leases for the periods shown are as follows:
| | | | | | |
| Years: | | |
| 2004 | | $ | 30,952 | |
| 2005 | | | 31,103 | |
| 2006 | | | 31,835 | |
| 2007 | | | 32,426 | |
| 2008 | | | 32,396 | |
| Thereafter | | | 63,868 | |
| | | | | |
| Total | | $ | 222,580 | |
|
Capital leases — Capital leases consist of leases for rental of retail space and switch usage. The net present value of the leases was $1,293 and $2,419 at December 31, 2003 and 2002, respectively, and was included in property and equipment. Accumulated amortization recorded under these leases was $812 and $570 at December 31, 2003 and 2002, respectively. At December 31, 2003 the future payments under capital lease obligations, less imputed interest, are as follows:
| | | | | | |
| Years: | | |
| 2004 | | $ | 596 | |
| 2005 | | | 170 | |
| 2006 | | | 150 | |
| 2007 | | | 144 | |
| 2008 | | | 145 | |
| Thereafter | | | 599 | |
| | | | | |
| Total minimum lease payments | | | 1,804 | |
| Less: imputed interest | | | (511 | ) |
| | | | | |
| Present value of minimum lease payments | | | 1,293 | |
| Less: current installments | | | (481 | ) |
| | | | | |
| Long-term capital lease obligations at December 31, 2003 | | $ | 812 | |
|
Asset Retirement Obligations — For the Company's leased telecommunications facilities, primarily consisting of cell sites and switch site operating leases and operating leases for retail and office space, the Company has adopted SFAS No. 143, "Accounting for Asset Retirement Obligations," as of January 1, 2003. The obligations associated with the Company's operating leases primarily relate to the restoration of the leased sites to specified conditions described in the respective lease agreements. For purposes of determining the amounts recorded as asset retirement obligations associated with the respective leases, the Company has estimated the costs by type of lease to be incurred upon the termination of the lease for restoration costs, as adjusted for expected inflation. These costs have been discounted back to the origination of the lease using an appropriate discount rate to determine the amount of obligation to be recorded upon the inception of the lease. The liability is accreted up to the
F-22
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
expected settlement amount over the life of the lease using the effective interest method. A corresponding asset is recorded at the inception of the lease in the same amount as the asset retirement obligation. This asset is depreciated using the same method and life of similar network assets or leasehold improvements. Upon the adoption of SFAS No. 143 on January 1, 2003, the accretion of asset retirement obligations through December 31, 2002 was recorded in the amount of $402. Additionally, the accumulated depreciation of the related assets of $364 was recorded at that time.
The following table illustrates the activity with respect to asset retirement obligations for the year ended December 31, 2003:
| |
| 10. | LONG-TERM DEBT |
Long-term debt consists of the following:
| | | | | | | | | | |
| | | December 31, |
| | | 2003 | | 2002 |
| Senior Notes: | | | | | | | | |
| 12 7/8% Senior Discount Notes, net of discount | | $ | 5,556 | | | $ | 268,862 | |
| 12% Senior Discount Notes, net of discount | | | 193,995 | | | | — | |
| 12½% Senior Notes | | | 11,600 | | | | 250,000 | |
| 13 5/8% Senior Notes | | | 2,475 | | | | 150,000 | |
| 11% Senior Notes | | | 250,798 | | | | — | |
| Total Senior Notes | | | 464,424 | | | | 668,862 | |
| | | | | | | | | |
| Senior Secured Credit Facility | | | 200,000 | | | | 200,000 | |
| | | | | | | | | |
| Total Debt | | | 664,424 | | | | 868,862 | |
| Less current maturities | | | — | | | | — | |
| Long term debt, excluding current maturities | | $ | 664,424 | | | $ | 868,862 | |
|
SENIOR NOTES
12 7/8% Senior Discount Notes — The 12 7/8% Senior Discount Notes were issued in December 1999, mature February 15, 2010, carry a coupon rate of 12 7/8% and provide for interest deferral through February 15, 2005. The 12 7/8% Senior Discount Notes will accrete to their $6,389 face amount by February 8, 2005, after which, interest will be paid in cash semiannually.
12% Senior Discount Notes — The 12% Senior Discount Notes were issued in November 2003 in connection with the debt exchange discussed in Note 11. The 12% Senior Discount Notes mature July 31, 2009, carry a coupon rate of 12% and provide for interest deferral through July 31, 2005. The 12% Senior Discount Notes will accrete to their $233 million face amount by July 31, 2005, after which, interest will be paid in cash semiannually.
12½% Senior Notes — The 12½% Senior Notes were issued in January 2001, mature February 1, 2011 and carry a coupon rate of 12½%, payable semiannually on February 1 and August 1.
Approximately $59.0 million of the proceeds of the 12½% Senior Notes Offering were used by Alamosa (Delaware) to establish a security account (with cash or U.S. government securities) to secure on a pro rata basis the payment obligations under the 12½% Senior Notes and the 12 7/8% Senior Discount Notes. As of December 31, 2003, all of the escrowed proceeds had been used in connection with payment of cash interest.
F-23
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
13 5/8% Senior Notes — The 13 5/8% Senior Notes were issued in August 2001, mature August 15, 2011 and carry a coupon rate of 13 5/8% payable semiannually on February 15 and August 15. Approximately $39.1 million of the proceeds of the 13 5/8% Senior Notes were used by Alamosa (Delaware) to establish a security account to secure on a pro rata basis the payment obligations under all of the Company's unsecured borrowings. As of December 31, 2003, all of the escrowed proceeds had been used in connection with payment of cash interest.
11% Senior Notes — The 11% Senior Notes were issued in November 2003 in connection with the debt exchange discussed in Note 11. The 11% Senior Notes mature July 31, 2010 and carry a coupon rate of 11%, payable semiannually on January 31 and July 31.
Significant terms of the senior notes include:
| |
| • | Ranking — The senior unsecured obligations of Alamosa (Delaware) are equal in right of payment to all future senior debt of Alamosa (Delaware) and senior in right of payment to all future subordinated debt of Alamosa (Delaware). |
| |
| • | Guarantees — The senior unsecured obligations will rank equally with all existing and future senior debt and senior to all existing and future subordinated debt. The obligations are fully and unconditionally, jointly and severally guaranteed on a senior subordinated, unsecured basis, by all the existing and any future restricted subsidiaries of Alamosa (Delaware) with the exception of Alamosa Delaware Operations, LLC, a wholly owned subsidiary of Alamosa (Delaware). Additionally, the 12 7/8% Senior Discount Notes, the 12½% Senior Notes and the 13 5/8% Senior Notes are also guaranteed by Alamosa Holdings. The financial statements of Alamosa Holdings, Inc. and financial information related to its guarantor subsidiaries are included in Alamosa Holdings' Form 10-K. |
| |
| • | OptionalRedemption — The Company may use net proceeds of an equity offering by Alamosa Holdings to redeem up to 35% of the accreted value of the senior notes through the dates and at the redemption prices below. |
| | | | | | | | | | |
| | | Option Through | | Redemption Price |
| 12% Senior Discount Notes | | July 31, 2006 | | | 112.000 | % |
| 12½% Senior Notes | | January 31, 2004 | | | 112.500 | % |
| 13 5/8% Senior Notes | | August 15, 2004 | | | 113.625 | % |
| 11% Senior Notes | | July 31, 2007 | | | 111.000 | % |
|
Additionally, the senior unsecured obligations contain call options as follows:
| | | | | | | | | | | | | | | | | | | | | | |
| | | Redemption Price |
| | | 12 7/8%
Senior
Discount
Notes | | 12% Senior
Discount
Notes | | 12½%
Senior Notes | | 13 5/8%
Senior Notes | | 11%
Senior Notes |
| | | Year Ending
February 15, | | Year Ending
July 31, | | Year Ending
January 31, | | Year Ending
August 15, | | Year Ending
July 31, |
| 2006 | | | 106.438 | % | | | 106.000 | % | | | N/A | | | | N/A | | | | N/A | |
| 2007 | | | 104.292 | % | | | 103.000 | % | | | 106.250 | % | | | 106.813 | % | | | 105.500 | % |
| 2008 | | | 102.146 | % | | | 101.500 | % | | | 104.167 | % | | | 104.542 | % | | | 102.750 | % |
| 2009 | | | 100.000 | % | | | 100.000 | % | | | 102.083 | % | | | 102.271 | % | | | 101.375 | % |
| Thereafter | | | 100.000 | % | | | 100.000 | % | | | 100.000 | % | | | 100.000 | % | | | 100.000 | % |
|
| |
| • | Change of Control — Upon a change of control as defined by the respective offerings, the Company will be required to make an offer to purchase the notes at a price equal to 101% of |
F-24
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
| |
| | the accreted value for the 12 7/8% Senior Discount Notes and 12% Senior Discount Notes and 101% of the face amount for the 12½% Senior Notes, 13 5/8% Senior Notes and 11% Senior Notes. |
| |
| • | Restrictive Covenants — The indentures governing the 12% senior discount notes and the 11% senior notes contain covenants that, among other things and subject to important exceptions, limit our ability and the ability of our subsidiaries to incur additional debt, issue preferred stock, pay dividends, redeem capital stock or make other restricted payments or investments as defined by the indentures, create liens on assets, merge, consolidate or dispose of assets, or enter into transactions with affiliates and change lines of business. The indentures contain cross-default provisions relative to other material indebtedness. The indentures governing the 12 7/8% senior discount notes, the 12½% senior notes and the 13 5/8% senior notes, contain no covenant protection with the exception of the restriction on asset sales. |
| |
| • | Security Agreement — Concurrently with the closing of the 12½% Senior Notes, Alamosa (Delaware) deposited $59.0 million with the collateral agent, to secure on a pro rata basis the payment obligations of Alamosa (Delaware) under the 12½% Senior Notes and the 12 7/8 % Senior Discount Notes. The amount deposited in the security account, together with the proceeds from the investment thereof, will be sufficient to pay when due the first four interest payments on the 12½% Senior Notes. Funds will be released from the security account to make interest payments on the 12½% Senior Notes or the 12 7/8% Senior Discount Notes as they become due, so long as there does not exist an event of default with respect to the 12½% Senior Notes or the 12 7/8% Senior Discount Notes. Approximately $39.1 million of the proceeds of the 13 5/8% Notes Offering were similarly used to establish a security account to secure on a pro rata basis the payment obligations under the 13 5/8% Senior Notes, the 12½% Senior Notes and the 12 7/8% Senior Discount Notes. As of December 31, 2003, all of these escrowed funds had been used for interest payments. |
SENIOR SECURED OBLIGATIONS
Senior Secured Credit Facility — On February 14, 2001, the Company, Alamosa Holdings and Alamosa Holdings, LLC, as borrower, entered into a $280 million senior secured credit facility (the "Senior Secured Credit Facility") with Citicorp USA, as administrative agent, and collateral agent, Toronto Dominion (Texas), Inc., as syndication agent; EDC as co-documentation agent; First Union National Bank, as documentation agent, and a syndicate of banking and financial institutions. On March 30, 2001, the Senior Secured Credit Facility was amended to increase the facility to $333 million in relation to the acquisition of Southwest. The Senior Secured Credit Facility was again amended in August 2001 to reduce the maximum borrowing to $225 million consisting of a 7-year senior secured 12-month delayed draw term loan facility of $200 million and a 7-year senior secured revolving credit facility in an aggregate principal amount of up to $25 million.
On September 26, 2002, the Company further amended the Senior Secured Credit Facility, to among other things, modify certain financial and statistical covenants. Under the Senior Secured Credit Facility, interest will accrue, at Alamosa Holdings, LLC's option: (i) at the London Interbank Offered Rate adjusted for any statutory reserves ("LIBOR"), or (ii) the base rate which is generally the higher of the administrative agent's base rate, the federal funds effective rate plus 0.50% or the administrative agent's base CD rate plus 0.50%, in each case plus an interest margin which was initially 4.00% for LIBOR borrowings and 3.00% for base rate borrowings. In connection with the September 26, 2002 amendment, the initial margin was increased to 4.25% for LIBOR borrowings and 3.25% for base rate borrowings. The applicable interest margins are subject to reductions under a pricing grid based on ratios of Alamosa Holdings, LLC's total debt to its earnings before interest, taxes, depreciation and amortization ("EBITDA"). The interest rate margins will increase by an
F-25
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
additional 200 basis points in the event Alamosa Holdings, LLC fails to pay principal, interest or other amounts as they become due and payable under the Senior Secured Credit Facility. At December 31, 2003 the interest margin was 4.00% for LIBOR borrowings and 3.00% for base rate borrowings.
The weighted average interest rate on the outstanding borrowings under this facility at December 31, 2003 was 4.69%. Alamosa Holdings, LLC is also required to pay quarterly in arrears a commitment fee on the unfunded portion of the commitment of each lender. The commitment fee accrues at a rate per annum equal to (i) 1.50% on each day when the utilization (determined by dividing the total amount of loans plus outstanding letters of credit under the Senior Secured Credit Facility by the total commitment amount under the Senior Secured Credit Facility) of the Senior Secured Credit Facility is less than or equal to 33.33%, (ii) 1.25% on each day when utilization is greater than 33.33% but less than or equal to 66.66% and (iii) 1.00% on each day when utilization is greater than 66.66%. The Company has entered into derivative hedging instruments to hedge a portion of the interest rate risk associated with borrowings under the Senior Secured Credit Facility as discussed in Note 20.
Alamosa Holdings, LLC is also required to pay a separate annual administration fee and a fee on the aggregate face amount of outstanding letters of credit, if any, under the revolving credit facility.
As of December 31, 2003, Alamosa Holdings, LLC had drawn $200 million under the term portion of the Senior Secured Credit Facility. Any amount outstanding at the end of the 12-month period will amortize quarterly beginning May 14, 2004. The September 26, 2002 amendment placed restrictions on the ability to draw the $25 million revolving portion. The first $10 million can be drawn if cash balances fall below $15 million and the Company substantiates through tangible evidence the need for such advances. The remaining $15 million is available only at such time as the leverage ratio is less than or equal to 5.5 to 1. No advances have been drawn on the revolving portion of the Senior Secured Credit Facility. The revolving portion of the Senior Secured Credit Facility will begin reducing quarterly in amounts to be agreed beginning May 14, 2004.
Loans under the term loan portion of the Senior Secured Credit Facility will be subject to mandatory prepayments from 50% of excess cash flow for each fiscal year commencing with the fiscal year ending December 31, 2003, 100% of the net cash proceeds (subject to exceptions and reinvestment rights of asset sales or other dispositions, including insurance and condemnation proceeds) of sales of property by Alamosa (Delaware) and its subsidiaries, and 100% of the net proceeds of issuances of debt obligations of Alamosa (Delaware) and its subsidiaries (subject to exceptions). After the term loans are repaid in full, mandatory prepayments will be applied to permanently reduce commitments under the revolving portion of the Senior Secured Credit Facility.
All obligations of Alamosa Holdings, LLC under the Senior Secured Credit Facility are unconditionally guaranteed on a senior basis by the Company, Alamosa Holdings and, subject to certain exceptions, by each current and future direct and indirect subsidiary of Alamosa (Delaware), including Alamosa PCS, Inc., Roberts, WOW and Southwest.
The Senior Secured Credit Facility is secured by a first priority pledge of all of the capital stock of Alamosa Holdings, LLC and subject to certain exceptions, each current and future direct and indirect subsidiary of Alamosa (Delaware), as well as a first priority security interest in substantially all of the assets (including all five of the Sprint affiliation agreements with the Company) of Alamosa (Delaware) and, subject to certain exceptions, each current and future direct and indirect subsidiary of Alamosa (Delaware).
The Senior Secured Credit Facility contains customary events of default, including, but not limited to:
F-26
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
| |
| • | the non-payment of the principal, interest and other obligations under the new Senior Secured Credit Facility; |
| |
| • | the inaccuracy of representations and warranties contained in the credit agreement or the violation of covenants contained in the credit agreement; |
| |
| • | cross default and cross acceleration to other material indebtedness; |
| |
| • | bankruptcy; |
| |
| • | material judgments and certain events relating to compliance with the Employee Retirement Income Security Act of 1974 and related regulations; |
| |
| • | actual or asserted invalidity of the security documents or guaranties of the Senior Secured Credit Facility; |
| |
| • | the occurrence of a termination event under the management, licenses and other agreements between any of the Company, WOW, Roberts, Southwest and their subsidiaries and Sprint or a breach or default under the consent and agreement entered into between Citicorp USA, Inc., as administrative agent for the lenders, and Sprint; |
| |
| • | loss of rights to benefit of or the occurrence of any default under other material agreements that could reasonably be expected to result in a material adverse effect on Alamosa Holdings, LLC; |
| |
| • | the occurrence of a change of control; |
| |
| • | any termination, revocation or non-renewal by the FCC of one or more material licenses; and |
| |
| • | the failure by Alamosa (Delaware) to make a payment, if that could reasonably be expected to result in the loss, termination, revocation, non-renewal or material impairment of any material licenses or otherwise result in a material adverse affect on Alamosa Holdings, LLC. |
The Senior Secured Credit Facility contains numerous affirmative and negative covenants customary for credit facilities of a similar nature, including, but not limited to, negative covenants imposing limitations on the ability of Alamosa (Delaware), Alamosa Holdings, LLC and their subsidiaries, and as appropriate, Superholdings, to, among other things (i) declare dividends or repurchase stock; (ii) prepay, redeem or repurchase debt; (iii) incur liens and engage in sale-leaseback transactions; (iv) make loans and investments; (v) incur additional debt, hedging agreements and contingent obligations; (vi) issue preferred stock of subsidiaries; (vii) engage in mergers, acquisitions and asset sales; (viii) engage in certain transactions with affiliates; (ix) amend, waive or otherwise alter material agreements or enter into restrictive agreements; and (x) alter the businesses they conduct.
Pursuant to the Senior Secured Credit Facility, the Company is required to maintain a minimum cash balance of $10 million, and future draws are conditioned, among other things, on the Company maintaining a ratio of senior debt to net property and equipment that does not exceed 1 to 1. The Company is also subject to covenants with respect to the ratio of EBITDA to total cash interest expense. Alamosa (Delaware) is also subject to the following financial and statistical covenants:
| |
| • | ratio of senior debt to EBITDA; |
| |
| • | ratio of total debt to EBITDA; |
| |
| • | ratio of EBITDA to total fixed charges (the sum of debt service, capital expenditures and taxes); and |
| |
| • | ratio of EBITDA to pro forma debt service. |
Unless waived by the Senior Secured Credit Facility lenders, the failure of the Company, Alamosa Holdings, LLC and their subsidiaries to satisfy or comply with any of the financial or other
F-27
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
covenants, or the occurrence of an event of default under the Senior Secured Credit Facility, will entitle the lenders to declare the outstanding borrowings under the Senior Secured Credit Facility immediately due and payable and exercise all or any of their other rights and remedies. Any such acceleration or other exercise of rights and remedies would likely have a material adverse effect on the Company, Alamosa Holdings, Alamosa Holdings, LLC and their subsidiaries.
Consent and Agreement for the Benefit of the Holders of the Senior Secured Credit Facility
Sprint entered into a consent and agreement with Citicorp, that modifies Sprint's rights and remedies under the Company's affiliation agreements with Sprint, for the benefit of Citicorp and the holders of the Senior Secured Credit Facility and any refinancing thereof. The consent and agreement with Citicorp generally provides, among other things, Sprint's consent to the pledge of substantially all of the Company's assets, including the Company's rights in its affiliation agreements with Sprint, and that the Company's affiliation agreements with Sprint generally may not be terminated by Sprint until the Senior Secured Credit Facility is satisfied in full pursuant to the terms of the consents and agreement.
Subject to the requirements of applicable law, so long as the Senior Secured Credit Facility remains outstanding, Sprint has the right to purchase the Company's operating assets or the partnership interests, membership interests or other equity interests of its operating subsidiaries, upon Sprint's receipt of notice of an acceleration of the Senior Secured Credit Facility, under certain terms.
If Sprint does not purchase the Company's operating assets or the partnership interests, membership interests or other equity interests of the Company's operating subsidiaries after an acceleration of the obligations under the Senior Secured Credit Facility, then the administrative agent may sell the operating assets or the partnership interests, membership interests or other equity interests of the Company's operating subsidiaries.
F-28
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
DEBT ISSUANCE SUBSEQUENT TO YEAR END
In January 2004, Alamosa (Delaware) completed an offering of $250 million aggregate principal amount of senior notes. The notes mature January 31, 2012 and carry a coupon rate of 8½% payable semiannually on January 31 and July 31 beginning July 31, 2004. The proceeds of this offering were used to permanently repay the outstanding borrowings under the term portion of the Senior Secured Credit Facility and to terminate the facility, including the undrawn revolving credit facility. The remaining proceeds of $42.1 million, after offering costs, will be used for general corporate purposes.
Due to the fact that the Senior Secured Credit Facility was refinanced on a long-term basis subsequent to year end, the entire balance outstanding at December 31, 2003 has been classified as long term in the consolidated balance sheet. Additionally, with the termination of the Senior Secured Credit Facility, the Company has no principal payments due in the next five years.
11. DEBT EXCHANGE
In an effort to proactively manage its capital structure and align it with recent operating trends in the wireless telecommunications industry, the Company launched an offer to exchange its publicly traded debt on September 12, 2003. The offer, as amended on October 15, 2003 (as so amended, the "Exchange Offer"), sought to exchange all of the Company's existing 12 7/8% Senior Discount Notes, 12½% Senior Notes and 13 5/8% Senior Notes for a combination of new notes and convertible Alamosa Holdings preferred stock. The Exchange Offer was successful and closed on November 10, 2003.
Holders of the 12 5/8% Senior Discount Notes due 2010 (the "Discount Notes") who tendered their Discount Notes received, for each $1 accreted amount of the Discount Notes tendered, as of the expiration of the Exchange Offer, (1) $0.65 in original issue amount of new 12% Senior Discount Notes due 2009 (the "New Discount Notes") and (2) one share of series B preferred stock of Alamosa Holdings with a liquidation preference of $250 per share (the "Preferred Stock").
Holders of the 12½% Senior Notes due 2011 and the 13 5/8% Senior Notes due 2010 (collectively, the "Old Cash Pay Notes" and, together with the Discount Notes, the "Old Notes") who tendered their Old Cash Pay Notes received, for each $1 principal amount of the Old Cash Pay Notes tendered, (1) $0.65 in principal amount of new 11% Senior Notes due 2010 (the "New Cash Pay Notes" and together with the New Discount Notes, the "New Notes") and (2) one share of Preferred Stock.
Fractional shares of Preferred Stock were not issued under the Exchange Offer and New Notes were issued only in denominations that are integral multiples of $1. With respect to any holder of Old Notes who would otherwise have received a fractional share of Preferred Stock or New Notes in an amount that was not an integral multiple of $1, the Company substituted a cash payment equal to the liquidation preference allocable to the fractional share of Preferred Stock or the amount by which the amount of New Notes was reduced. The total of these fractional payments was $104.
Upon the expiration and closing of the exchange Offer on November 10, 2003, the Company had received tenders from existing noteholders amounting to $343.6 million or 98 percent of the Discount Notes, $238.4 million or 95 percent of the 12½% Senior Notes and $147.5 million or 98 percent of the 13 5/8% Senior Notes. The consummation of the Exchange Offer was accounted for under the provisions of SFAS No. 15, "Accounting by Debtors and Creditors for Troubled Debt Restructurings." In accordance with the provisions of SFAS No. 15, the New Notes and Preferred Stock were recorded at fair value. The excess of the fair value of the New Notes and Preferred Stock over the carrying value of the existing debt tendered by noteholders of $1,234 has been recorded in debt issuance costs and will be amortized to interest expense over the life of the New Notes due to the fact that the total cash flows associated with the New Notes exceeds the carrying value of the Old Notes. The net excess fair value of consideration of $1,234 discussed herein is comprised of debt issuance costs related to the
F-29
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
notes that were tendered in the amount of $17,949 reduced by deferred future cash interest payments on the New Notes in the amount of $16,715. The net amount is included in debt issuance costs in the consolidated balance sheet and will be amortized as an adjustment to interest expense related to the New Notes over the life of the New Notes using the effective interest method.
In contemplation of the Exchange Offer, Alamosa (Delaware), on September 11, 2003, amended the terms of the respective indentures governing its existing 12 7/8% Senior Discount Notes, 12½% Senior Notes and 13 5/8% Senior Notes to add Alamosa Holdings as a guarantor under the indentures. The Company further amended the indentures governing these notes on October 29, 2003, after receiving the requisite consents from the holders of the notes, to eliminate substantially all covenant protection under such indentures.
12. STOCKHOLDER'S EQUITY
The Company is authorized to issue 1,000 shares of preferred stock, $0.01 par value, of which no shares have been issued. The Company is authorized to issue 9,000 shares of common stock, $0.01 par value of which 100 shares are issued and outstanding at December 31, 2003. All outstanding common stock of the Company is held by Alamosa Holdings.
13. INCOME TAXES
The Company is included in the consolidated tax return of Alamosa Holdings.
Income tax expense (benefit) is comprised of the following:
| | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2003 | | 2002 | | 2001 |
| Current: | |
| U.S. Federal | | $ | — | | | $ | — | | | $ | — | |
| Foreign | | | — | | | | — | | | | — | |
| State | | | — | | | | — | | | | — | |
| Total current expense | | | — | | | | — | | | | — | |
| Deferred: | |
| U.S. Federal | | | (10,967 | ) | | | (58,938 | ) | | | (70,808 | ) |
| Foreign | | | — | | | | — | | | | — | |
| State | | | (563 | ) | | | (8,148 | ) | | | (9,633 | ) |
| Total deferred expense (benefit) | | | (11,530 | ) | | | (67,086 | ) | | | (80,441 | ) |
| Total income taxes expense (benefit) | | $ | (11,530 | ) | | $ | (67,086 | ) | | $ | (80,441 | ) |
|
F-30
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:
| | | | | | | | | | |
| | | December 31, |
| | | 2003 | | 2002 |
| Deferred tax assets: | |
| Net operating loss carryforwards | | $ | 182,710 | | | $ | 170,791 | |
| Original issue discount | | | 40,928 | | | | 30,045 | |
| Non-cash compensation | | | 1,770 | | | | 1,728 | |
| Start-up expenses | | | 153 | | | | 472 | |
| Deferred rent | | | 1,628 | | | | 1,898 | |
| Bad debt allowance | | | 2,340 | | | | 3,468 | |
| Capitalized loan costs | | | 1,670 | | | | 2,593 | |
| Cancellation of indebtedness | | | 6,201 | | | | -- | |
| Other comprehensive income | | | 275 | | | | 916 | |
| Other | | | 1,570 | | | | 1,295 | |
| Gross deferred tax assets | | | 239,245 | | | | 213,206 | |
| | | | | | | | | |
| Deferred Tax liabilities: | |
| Intangible assets | | | 166,339 | | | | 185,600 | |
| Depreciation | | | 57,395 | | | | 45,802 | |
| Other | | | 3,049 | | | | 3,510 | |
| Net deferred tax assets (liabilities) | | | 12,462 | | | | (21,706 | ) |
| Valuation allowance | | | (23,269 | ) | | | — | |
| Deferred tax balance | | $ | (10,807 | ) | | $ | (21,706 | ) |
|
The net deferred tax asset was fully reserved as of December 31, 2000 because of uncertainty regarding the Company's ability to recognize the benefit of the asset in future years. In connection with the acquisitions in 2001 discussed in Note 4, a significant deferred tax liability was recorded. The reversal of the timing differences which gave rise to the deferred tax liability will allow the Company to benefit from the deferred tax assets. As such, the valuation allowance was released in 2001 with a corresponding reduction to goodwill associated with the acquisitions. The valuation allowance increased in 2003 by $23,269 as the Company adjusted the valuation allowance to reflect deferred tax assets at the amounts expected to be realized.
The provision for income taxes is different than the amount computed using the applicable statutory federal income tax rate due to the differences summarized below:
| | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2003 | | 2002 | | 2001 |
| Federal tax benefit at statutory rate | | | (35.00 | )% | | | (35.00 | )% | | | (35.00 | )% |
| Goodwill impairment | | | — | % | | | 21.70 | % | | | — | % |
| Other permanent differences | | | 0.89 | | | | 0.11 | | | | 2.50 | |
| State taxes | | | (2.88 | ) | | | (1.13 | ) | | | (2.79 | ) |
| Valuation allowance | | | 24.54 | | | | — | | | | — | |
| Other | | | 0.29 | | | | 0.06 | | | | (0.01 | ) |
| Provision (benefit) for income taxes | | | (12.16 | )% | | | (14.26 | )% | | | (35.30 | )% |
|
F-31
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
The Company is included in the consolidated federal tax return of Alamosa Holdings.
As of December 31, 2003, the Company has available federal net operating loss carryforwards totaling approximately $493 million which expire beginning in 2020. In addition, the Company has available state net operating loss carryforwards totaling approximately $16 million which expire beginning in 2005. Utilization of net operating loss carryforwards may be limited by ownership changes which could occur in the future.
14. SPRINT AGREEMENTS
In accordance with the Company's affiliation agreements with Sprint, Sprint provides the company various services including billing, customer care, collections and inventory logistics. In addition, Sprint bills the Company for various pass-through items such as commissions to national retail merchants, handset subsidies on handsets activated in the Company's territory but not sold by the Company and long distance charges.
In connection with the debt exchange discussed in Note 11, the Company executed amendments to its affiliation agreements with Sprint. The amendments, among other things, established fixed per subscriber costs for services that the Company purchases from Sprint through December 31, 2006 in the form of two new fees. The amendments created a new combined service bureau fee, which consolidates numerous fees that were previously settled separately, for back office services such as billing and customer care. The combined service bureau fee was set at $7.70 per average subscriber per month through December 31, 2006 and will be recorded in costs of services and operations in the consolidated statement of operations. The amendments also created a new per-activation fee, which consolidates numerous fees that were previously settled separately, for marketing services, such as subscriber activation and handset logistics. The per-activation fee will be calculated as 5% of Sprint PCS' most recently reported cost per gross addition and is applied to the actual number of gross subscriber activations the Company experiences on a monthly basis through December 31, 2006. The per-activation fee will be recorded in selling and marketing expenses in the consolidated statement of operations.
In addition to the new fees, the amendments changed the methodology used for settling cash received from subscribers. Historically, actual weekly cash receipts were passed through to the Company by Sprint based on a calculation of an estimate of the portion of that cash related to the Company's activity. Under the new methodology, the Company receives its portion of billed revenue less actual written off accounts in the month subsequent to billing regardless of when Sprint collects the cash from the subscriber. The provisions of the amendments became effective on December 1, 2003 and the Company has the right to evaluate subsequent amendments to the affiliation agreements of other similarly situated PCS Affiliates of Sprint and adopt the provisions of those amendments if the Company elects to do so.
In addition to the fees discussed above, the Company pays Sprint an affiliation fee equal to 8% of billed revenue as it is defined in the affiliate agreements.
Expenses reflected in the consolidated statements of operations related to the Sprint affiliation agreements are:
| | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2003 | | 2002 | | 2001 |
| Cost of service and operation | | $ | 217,531 | | | $ | 219,866 | | | $ | 152,724 | |
| Cost of products sold | | | 59,651 | | | | 50,974 | | | | 53,911 | |
| Selling and marketing | | | 46,294 | | | | 46,132 | | | | 27,421 | |
| Total | | $ | 323,476 | | | $ | 316,972 | | | $ | 234,056 | |
|
F-32
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
In connection with the billing services provided to the Company by Sprint, the Company relies on Sprint to provide information as to monthly billing activity relative to all subscriber revenues. In addition, Sprint provides the information utilized for the settlement of all roaming revenue.
The Company relies upon Sprint as a service provider to provide accurate information for the settlement of revenue and expense items. The Company makes estimates used in connection with the preparation of financial statements based on the financial and statistical information provided by Sprint. The Company assesses the accuracy of this information through analytic review and reliance on the service auditor report on Sprint's internal control processes prepared by Sprint's external service auditor. Inaccurate or incomplete data from Sprint in connection with the services provided to the Company by Sprint could have a material effect on the Company's financial position, results of operation or cash flow.
15. RELATED PARTY TRANSACTIONS
Agreements with Tech Telephone Company — The Company entered into a telecommunications service agreement with Tech Telephone Company Limited Partnership ("TechTel") to install and provide telecommunications lines between Sprint PCS and the Company's Lubbock-based operations and between the Company's Lubbock-based operations and other markets. TechTel was a limited partnership whose general partner was an entity controlled by the CEO of the Company. The original term of the agreement is three years, but the agreement automatically renews upon expiration for additional successive 30-day terms by either party. The Company has also entered into a distribution agreement with TechTel, authorizing it to become a third party distributor of Sprint PCS products and services for the Company in Lubbock, Texas. The total amount paid for these contracts was $902, $1,157 and $1,315 during the years ended December 31, 2003, 2002 and 2001, respectively. The amounts included in accounts payable relative to these contracts were $89 and $89 at December 31, 2003 and 2002, respectively. TechTel was sold to an unrelated third party in October 2002.
Agreements with Messrs. Michael V. Roberts and Steven C. Roberts
In connection with the acquisition of Roberts, the Company entered into a number of arrangements with Messrs. Michael V. Roberts and Steven C. Roberts and certain companies affiliated with them as described in more detail below. Michael V. Roberts and Steven C. Roberts became directors of the Company in February 2001.
Joint Venture Development Agreement — On October 30, 2000, the Company entered into a joint venture development agreement with Messrs. Michael V. Roberts and Steven C. Roberts. Pursuant to the agreement, if either Mr. Michael V. Roberts or Mr. Steven C. Roberts undertakes an international telecommunications business venture and desires for the Company to be involved in that project, then before either Mr. Michael V. Roberts or Mr. Steven C. Roberts enters into a letter of intent or binding agreement of any nature with another person regarding the project, they must give the Company written notice. The Company has 60 days to notify them of its desire to participate in the project. During such 60-day period, the Company has the exclusive right with respect to the project. Promptly after the Company gives a notice of participation, the Company and either Mr. Michael V. Roberts or Mr. Steven C. Roberts must form a project entity and execute an agreement setting forth the terms, covenants, conditions and provisions for the purpose, ownership, management, financing and operation of the project. Unless the Company and either Mr. Michael V. Roberts or Mr. Steven C. Roberts agree to a different arrangement, the Company will have a 50% interest in each project entity and will have full managerial control of each project entity. Except as described above, neither the Company nor Messrs. Michael V. Roberts and Steven C. Roberts is obligated to bring to the other any opportunity to participate in a project or any activity, domestic or international.
F-33
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
Consulting Agreements — On January 29, 2001, the Company entered into five-year consulting agreements with each of Messrs. Michael V. Roberts and Steven C. Roberts. The consulting agreements provide each of them with an annual compensation of $125, which is paid monthly.
Right of First Negotiation Agreement — On February 14, 2001, the Company entered into a right of first negotiation agreement with Roberts Tower which grants Roberts Tower a right to negotiate tower leases on a "build-to-suit" basis with the Company's present and future territory. During the term of the agreement, whenever the Company or one of its subsidiaries is required to "build-to-suit" communications towers within the present or future territories in which the Company operates, the Company must notify Roberts Tower and Roberts Tower will have the exclusive right for a period of 30 days to negotiate with the company to provide such towers. After such 30-day period, if the Company has not reached an agreement with Roberts Tower, the Company may obtain such tower sites from other third parties. The term of this agreement is five years.
Resale Agreement — On February 14, 2001, the Company entered into a resale agreement with Messrs. Michael V. Roberts and Steven C. Roberts which permits Messrs. Michael V. Roberts and Steven C. Roberts to buy air time at a discount for resale on a basis no less favorable than any other similar agreement to which the Company may be a party. Messrs. Michael V. Roberts and Steven C. Roberts may resell such airtime anywhere such resales are permitted under applicable law. Any arrangement between the Company and Messrs. Michael V. Roberts and Steven C. Roberts for resales and use of air time will be subject to all required approvals of Sprint, Sprint Spectrum and Sprint PCS and/or any other applicable Sprint entities.
Master Lease Agreement — On February 14, 2001, Roberts and Roberts Tower entered into a master lease agreement which provides for the lease from Roberts Tower by Roberts of certain buildings, towers, tanks and/or improvements thereon for the purpose of installing, operating and maintaining communications facilities and services thereon. The initial term of the master lease agreement expires in February 2006, and Roberts has the right to extend the initial term of the lease for four additional terms of five years each. The agreement provides for monthly payments aggregating to approximately $17 per tower per year at inception, subject to an annual adjustment of 4% per annum. Roberts subsequently assigned all of its right, title and interest in the master lease agreement to its wholly owned subsidiary, Alamosa Missouri Properties, LLC (formerly Roberts Wireless Properties, L.L.C.). During the years ended December 31, 2003, 2002 and 2001, $2,785, $2,688 and $2,264, respectively, in rental expense was recorded under this agreement.
In addition to the specific agreements discussed above, the Company paid $287, $346 and $361 in 2003, 2002 and 2001, respectively, to Roberts Tower for other items including the lease of retail space and switching facility space.
Other related party transactions — On December 28, 1998, the Company entered into a long-term agreement to lease space for a retail store in Lubbock, Texas with Lubbock HLH, Ltd., principally owned by one of the Company's directors and the general manager of South Plains Advance Communications & Electronics, Inc. ("SPACE"). SPACE is a stockholder of the Company. This lease has a term of 15 years and provides for monthly payments subject to adjustment based on the Consumer Price Index on the first day of the sixth lease year and on the first day of the eleventh lease year. During the years ended December 31, 2003, 2002 and 2001, $110 per year in rental expense was recorded in connection with this lease. No amount was payable at December 31, 2003. In addition to rental, $24, $20 and $38 was paid to Lubbock HLH, Ltd. in 2003, 2002 and 2001, respectively for taxes and other expenses related to the leased property.
16. EMPLOYEE BENEFITS
Effective July 1, 2000, the Company formed the Alamosa PCS Contributions Savings Plan ("Company Plan"), a defined contribution employee savings plan sponsored by the Company under
F-34
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
Section 401(k) of the Internal Revenue Code. During the years ended December 31, 2003, 2002 and 2001, the Company made contributions of $653, $1,058 and $900, respectively to the Company Plan.
In connection with the acquisition of WOW discussed in Note 4, employees who were formerly employees of WOW continue to participate in the Washington Oregon Wireless 401(k) Savings & Investment Plan, a defined contribution employee savings plan sponsored by the Company under Section 401(k) of the Internal Revenue Code. During the years ended December 31, 2002 and 2001, the Company made contributions of $36 and $41, respectively, to the WOW plan. Effective December 31, 2002 the WOW plan was merged into the Company Plan.
Effective March 1, 2001, the Company adopted the Alamosa Holdings, Inc. Employee Stock Purchase Plan ("ESPP"). The ESPP provides that eligible employees may contribute up to 10% of their earnings towards the purchase of Company common stock. The employee per share purchase price is 85% of the fair market value of Company shares on (i) the offering date or (ii) the exercise date, whichever is lower. During the years ended December 31, 2003, 2002 and 2001, shares totaling 997,325, 585,191 and 40,706, respectively, were issued in connection with purchases by employees under the ESPP. As of December 31, 2003 and 2002, 1,876,778 and 174,103 shares were reserved for issuance under the ESPP.
17. STOCK-BASED COMPENSATION
The Company adopted an Incentive Stock Option Plan (the "Plan") effective November 12, 1999, which provides for the granting of either incentive stock options or nonqualified stock options to purchase shares of Alamosa Holdings' common stock and for other stock-based awards to officers, directors and key employees for the direction and management of the Company and to non-employee consultants and independent contractors. At December 31, 2003, options to purchase 4,022,880 shares of common stock were reserved for issuance under the Plan. The compensation committee of the Board of Directors administers the Plan and determines grant prices and vesting periods. Generally, the options under the Plan vest in varying increments over a three to five-year period, expire ten years from the date of grant and are issued at exercise prices no less than 100% of the fair market value of common stock at the time of the grant.
The Company applies APB No. 25, "Accounting for Stock Issued to Employees" and related interpretation, in accounting for its employee stock options. The Company initially recorded unearned compensation totaling $14,963 relative to the intrinsic value of options granted in 1999 and 2000. This amount was being recognized over the vesting period in accordance with FASB Interpretation No. 28 when applicable. Non-cash compensation for 2001 was a negative $916 due to the forfeiture of unvested options. No non-cash compensation was recorded in 2003 or 2002 related to options as all unvested options for which unearned compensation had been recorded were forfeited in 2001.
The weighted-average fair value for all stock options granted in 2003 and 2001 was $1.86 and $9.01 per share, respectively. The weighted-average fair value for stock options granted during 2002 with an exercise price equal to the fair market value at the date of grant ("at the money") was $1.85 per share. The weighted-average fair value for stock options granted during 2002 with an exercise price greater than the fair market value at the date of grant ("out of the money") was $0.23 per share. The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:
F-35
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
| | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2003 | | 2002 | | 2001 |
| Dividend yield | | 0% | | 0% | | 0% |
| Expected volatility | | 130% | | 106% | | 81% |
| Risk-free rate of return | | 2.5% | | 3.0% | | 4.6% |
| Expected life | | 4.00 years | | 4.00 years | | 4.00 years |
|
The following summarizes activity under the Company's stock option plans:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Number of Options
Year End December 31, | | Weighted Average Exercise
Price Per Share
Year End December 31, |
| | | 2003 | | 2002 | | 2001 | | 2003 | | 2002 | | 2001 |
Options outstanding at beginning
of the period | | | 7,868,495 | | | | 5,505,878 | | | | 6,788,752 | | | $ | 11.12 | | | $ | 16.55 | | | $ | 16.87 | |
| Granted: | |
| At the money | | | 1,665,230 | | | | 1,370,195 | | | | 635,061 | | | | 2.32 | | | | 2.57 | | | | 14.87 | |
| Out of the money | | | — | | | | 1,500,046 | | | | — | | | | — | | | | 0.38 | | | | — | |
| Exercised | | | (29,740 | ) | | | (250 | ) | | | (15,945 | ) | | | 0.27 | | | | 3.90 | | | | 14.95 | |
| Canceled/forfeited | | | (311,551 | ) | | | (507,374 | ) | | | (1,901,990 | ) | | | 12.56 | | | | 15.20 | | | | 16.85 | |
Options outstanding at the end
of the period | | | 9,192,434 | | | | 7,868,495 | | | | 5,505,878 | | | $ | 9.51 | | | $ | 11.12 | | | $ | 16.55 | |
Options exercisable at end
of the period | | | 7,014,075 | | | | 4,216,112 | | | | 2,602,368 | | | $ | 10.75 | | | $ | 14.66 | | | $ | 16.33 | |
|
The following table summarizes information for stock options at December 31, 2003:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Outstanding | | Exercisable |
Range of Exercise
Prices | | Number of
Options | | Weighted
Average
Exercise
Price | | Remaining
Contractual
Life | | Number of
Options | | Weighted
Average
Exercise
Price |
| $ | 0.23 | | | | 0.33 | | | | 294,955 | | | $ | 0.30 | | | | 8.8 | | | | 206,985 | | | $ | 0.28 | |
| | 0.36 | | | | 0.53 | | | | 1,627,776 | | | | 0.38 | | | | 8.8 | | | | 951,892 | | | | 0.37 | |
| | 0.57 | | | | 0.84 | | | | 708,307 | | | | 0.74 | | | | 9.1 | | | | 243,825 | | | | 0.73 | |
| | 0.96 | | | | 1.42 | | | | 335,866 | | | | 1.21 | | | | 8.2 | | | | 157,499 | | | | 1.30 | |
| | 1.53 | | | | 1.53 | | | | 24,000 | | | | 1.53 | | | | 9.5 | | | | 24,000 | | | | 1.53 | |
| | 3.10 | | | | 4.01 | | | | 940,498 | | | | 3.58 | | | | 9.7 | | | | 908,573 | | | | 3.58 | |
| | 4.99 | | | | 6.46 | | | | 458,446 | | | | 5.03 | | | | 8.3 | | | | 345,040 | | | | 5.01 | |
| | 8.00 | | | | 10.75 | | | | 90,787 | | | | 9.90 | | | | 7.0 | | | | 84,107 | | | | 9.85 | |
| | 12.31 | | | | 18.44 | | | | 4,559,799 | | | | 16.60 | | | | 5.5 | | | | 3,986,254 | | | | 16.63 | |
| | 18.79 | | | | 26.25 | | | | 133,000 | | | | 22.45 | | | | 6.6 | | | | 94,500 | | | | 22.33 | |
| | 28.50 | | | | 28.50 | | | | 19,000 | | | | 28.50 | | | | 6.3 | | | | 11,400 | | | | 28.50 | |
| $ | 0.23 | | | | 28.50 | | | | 9,192,434 | | | $ | 9.51 | | | | 7.2 | | | | 7,014,075 | | | $ | 10.75 | |
|
18. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash, accounts payable, and accrued expenses approximate fair value because of the short maturity of these items.
F-36
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
The carrying amount of the Senior Secured Credit Facility approximates fair value at December 31, 2003 because the interest rate changes with market interest rates.
Selected information related to the Company's senior notes is a follows:
| | | | | | | | | | |
| | | December 31, | | |
| | | 2003 | | 2002 |
| Book value | | $ | 464,424 | | | $ | 668,862 | |
| Fair value | | | 501,413 | | | | 187,500 | |
| Net unrecognized gain (loss) | | $ | (36,989 | ) | | $ | 481,362 | |
|
The Company adopted the provisions of SFAS No. 133, "Accounting for Derivatives and Hedging Activities," effective January 1, 2001. This statement requires that all derivatives be recorded on the balance sheet at fair value. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivatives are either recognized in earnings or are recognized in other comprehensive income until the hedged item is recognized in earnings.
In order to manage interest costs and exposure to changing interest rates, the Company enters into interest rate hedges to hedge exposure to variable interest rates on a portion of the Senior Secured Credit Facility. At December 31, 2003, the Company had entered into the following interest rate swaps.
| | | | | | | | | | | | | | | | | | |
| | | | | | | Fair Value
At December 31, |
| Instrument | | Notional | | Term | | 2003 | | 2002 |
| 4.9475% Interest rate swap | | $ | 21,690 | | | 3 years | | $ | (413 | ) | | $ | (1,121 | ) |
| 4.9350% Interest rate swap | | $ | 28,340 | | | 3 years | | | (443 | ) | | | (1,385 | ) |
| | | | | | | | | $ | (856 | ) | | $ | (2,506 | ) |
|
These swaps are designated as cash flow hedges such that the fair value is recorded as a liability in the consolidated balance sheets with changes in fair value (net of tax) shown as a component of other comprehensive income. The swaps were terminated in January 2004 upon the termination of the Senior Secured Credit Facility as discussed in Note 10.
The Company also maintains an interest rate collar with the following terms:
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | Fair Value
At December 31, |
| Notional | | Maturity | | Cap Strike Price | | Floor Strike Price | | 2003 | |
| $28,340 | | | 5/15/2004 | | | | 7.00 | % | | | 4.12 | % | | $ | (419 | ) | |
|
This collar does not receive hedge accounting treatment such that the fair value is reflected as a liability in the consolidated balance sheets and the decrease in fair value of $693 has been reflected as a decrease to interest expense for the year ended December 31, 2003. The increase in fair value of $456 has been reflected as an increase to interest expense for the year ended December 31, 2002. The collar was terminated in January 2004 upon the termination of the Senior Secured Credit Facility as discussed in Note 10.
Approximately $2,680, $2,188 and $1,286 in settlements under the above hedging instruments are included in interest expense for the years ended December 31, 2003, 2002 and 2001, respectively.
In addition to the swaps and collar discussed above, the Company purchased an interest rate cap in February 2002 with a notional amount of $5,000 and a strike price of 7.00%. This cap does not
F-37
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
receive hedge accounting treatment and the fair value reflected in the consolidated balance sheet is zero. This cap was terminated in January 2004 upon the termination of the Senior Secured Credit Facility as discussed in Note 10.
These fair value estimates were obtained from the institutions the Company entered into the agreements with and are subjective in nature and involve uncertainties and matters of considerable judgment and therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates.
19. COMMITMENTS AND CONTINGENCIES
Employment agreements — On October 14, 1998, the then Board of Members of the Company approved an Incentive Ownership Plan. The plan consisted of 3,500 units comprised of 1,200 Series 8, 1,150 Series 15 and 1,150 Series 25 units. The exercise price for each series was based on a pre-defined strike price which increased by an annual rate of 8%, 15% or 25% compounded monthly beginning July 1, 2000. The initial exercise prices were $564.79, $623.84 and $711.88 for Series 8, Series 15 and Series 25 options, respectively. Each unit provided the holder an option to purchase an interest in the Company. Vested units could have been exercised any time from July 1, 2000 to December 31, 2006.
Effective October 1, 1999, the Company entered into a three-year employment agreement with its Chief Executive Officer ("CEO"), and Chairman of the Board. In addition, in December 1999, the Company granted options to the CEO to acquire 242,500 common shares at an exercise price of $1.15 per share which vested immediately prior to the completion of the initial public offering and 1,455,000 shares at an exercise price equal to the initial public offering price which vest 33% per year beginning September 30, 2000. The options expire January 5, 2009. The Company recognized compensation expense of $3,116 related to the 242,500 options issued with an exercise price below the initial public offering price over the options vesting period. No compensation expense was recorded in 2001, 2002 or 2003. The Company entered into a new employment agreement with its CEO and Chairman of the Board on October 1, 2002 as discussed below.
On October 2, 1998, the Company entered into an employment agreement with its then Chief Operating Officer ("COO"). The agreement provided for the granting of stock options in three series. The initial exercise price was determined based on the following formula: $48,500, committed capital at September 30, 1998, multiplied by the percentage interest represented by the option exercised. The exercise price for each series increased by an annual rate of 8%, 15% or 25% compounded monthly beginning at the date of grant as specified by the agreement. Options could be exercised any time from January 1, 2004 to January 5, 2008. The options vested over a three-year period. During 1998, one option from each series was granted under this agreement. The options to acquire membership interests described above were to be exchanged for options in Holdings to acquire an equivalent number of common shares: 242,500 at $1.08 per share, 242,500 at $1.15 per share and 242,500 at $1.25 per share. Effective December 1999, the Company amended the COO's options such that each of the COO's three series of original options were exchanged for two options to acquire a total of 1,697,500 shares of common stock. The first option to acquire 242,500 shares of common stock had a fixed exercise price of $1.15 per share and vested immediately prior to completion of the initial public offering. The second option to acquire 1,455,000 shares of common stock had an exercise price equal to the initial public offering price and vested 25% per year beginning September 30, 2000. The expiration date of all of the COO's options was extended from January 5, 2008 to January 5, 2009. These amendments resulted in a new measurement date. The Company was to record compensation expense totaling $9,341 in connection with these options. This individual left the Company in January 2001 and forfeited all unvested options. As such, compensation expense in 2001 was negative $916 due to the forfeiture of these options. The former COO initiated litigation against the Company in 2002 as discussed under "Litigation" below. No compensation expense was recorded in 2002 or 2003.
F-38
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
Effective December 1, 1999, the Company entered into a five-year employment agreement with its Chief Financial Officer ("CFO"). In addition, the Company granted the CFO options to purchase 1,455,000 shares at the initial public offering price and that will expire January 5, 2009. There is no compensation cost related to these options. The Company entered into a new employment agreement with its CFO and other executives on October 1, 2002 as discussed below.
Effective October 1, 2002, the Company entered into employment agreements with its CEO, CFO, Chief Technology Officer ("CTO"), Chief Marketing Officer ("CMO") and Senior Vice President of Corporate Finance ("SVP"). The terms of the agreements were five years for the CEO and three years for the other officers. In connection with the execution of these employment agreements, options were granted to the executives to acquire a total of 1,700,000 common shares at an exercise price equal to the fair market value at the date of grant such that no compensation expense was recognized in connection with these options. These options vest over the terms of the respective agreements. Additionally, the agreements provide for subsequent annual option grants during the respective terms of the agreements to acquire common shares totaling 1,715,000 shares. Options granted in 2003 totaled 610,000 shares and were immediately vested. Scheduled grants in years subsequent to 2003 will vest six months from the date of grant.
In addition to the option grants, the respective executives were also awarded a total of 700,000 shares of restricted stock for which the Company received $0.01 per share at the date of grant. These restricted shares vest over a three year period and compensation expense will be recorded during the vesting period totaling $224. These shares are considered issued and outstanding but are excluded from basic and diluted earnings per share as discussed in Note 14.
Effective December 1, 2002, the Company entered into an employment agreement with its Chief Operating Officer ("COO"). The terms of this agreement are similar to the October 1, 2002 agreements entered into with the other officers of the Company. The length of the agreement is three years. In connection with the execution of the agreement, options to acquire 300,000 common shares were awarded with an exercise price equal to the fair market value at the date of grant which will vest over the term of the employment agreement. The employment agreement provides for subsequent annual option grants during the term of the agreement to acquire common shares totaling 375,000 shares. Options granted in 2003 under this agreement totaled 150,000 shares and were immediately vested. Scheduled grants in years subsequent to 2003 will vest six months from the date of grant. Restricted stock totaling 100,000 shares were awarded that vest over a three year period for which the Company received $0.01 per share. Compensation expense of $99 will be recognized over the vesting period.
In January 2004, the Company extended the employment agreements with its CFO, CTO and SVP for an additional year and increased the option grants in those agreements and the agreement with its CEO from 2004 through the end of the respective agreements by 1,645,000 shares.
Litigation — The Company has been named as a defendant in a number of purported securities class actions in the United States District Court for the Southern District of New York, arising out of its initial public offering (the "IPO"). Various underwriters of the IPO also are named as defendants in the actions. The action against the Company is one of more than 300 related class actions which have been consolidated and are pending in the same court. The complainants seek to recover damages and allege, among other things, that the registration statement and prospectus filed with the SEC for purposes of the IPO were false and misleading because they failed to disclose that the underwriters allegedly (i) solicited and received commissions from certain investors in exchange for allocating to them shares of common stock in connection with the IPO, and (ii) entered into agreements with their customers to allocate such stock to those customers in exchange for the customers agreeing to purchase additional Company shares in the aftermarket at pre-determined prices. On February 19, 2003, the Court granted motions by the Company and 115 other issuers to dismiss the claims under
F-39
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
Rule 10b-5 of the Exchange Act which had been asserted against them. The Court denied the motions by the Company and virtually all of the other issuers to dismiss the claims asserted against them under Section 11 of the Securities Act. The Company maintains insurance coverage which may mitigate its exposure to loss in the event that this claim is not resolved in the Company's favor.
The issuers in the IPO cases, including the Company, have reached an agreement in principle with the plaintiffs to settle the claims asserted by the plaintiffs against them. Under the terms of the proposed settlement, the insurance carriers for the issuers will pay the plaintiffs the difference between $1 billion and all amounts which the plaintiffs recover from the underwriter defendants by way of settlement or judgment. Accordingly, no payment on behalf of the issuers under the proposed settlement will be made by the issuers themselves. The claims against the issuers will be dismissed, and the issuers and their officers and directors will receive releases from the plaintiffs. Under the terms of the proposed settlement, the issuers will also assign to plaintiffs certain claims which they may have against the underwriters arising out of the issuers IPOs, and the issuers will also agree not to assert certain other claims which they may have against the underwriters, without plaintiffs' consent. The proposed settlement is subject to agreement among the parties on final settlement documents and the approval of the court. Prior to the approval of the court, certain parties have the right to object to the terms of the settlement.
On January 23, 2001, the Company's board of directors, in a unanimous decision, terminated the employment of Jerry Brantley, then President and COO of the Company. On April 29, 2002, Mr. Brantley initiated litigation against the Company and the Chairman of the Company, David E. Sharbutt in the District Court of Lubbock County, Texas, 22nd Judicial District, alleging wrongful termination. In the litigation, Mr. Brantley claims, among other things, that the Company's termination of his employment was without cause under his employment agreement rather than a termination for non-performance. As such, Mr. Brantley's claim seeks money damages for (i) severance pay equal to one year's salary at the time of his termination, (ii) the value of certain unexercised stock options he owned at the time of his termination, (iii) an allegedly unpaid bonus and (iv) exemplary damages, as well as recovery of attorneys' fees and costs. On September 27, 2002, the Court entered an Agreed Order Compelling Arbitration. A panel of three arbitrators was selected. Mr. Brantley's claims against the Company and David Sharbutt, including claims asserted in the Lubbock County lawsuit and in the arbitration, were resolved pursuant to a settlement agreement dated February 6, 2004. The settlement does not materially impact our consolidated financial statements or our operations.
On January 8, 2003 a claim was made against the Company by Southwest Antenna and Tower, Inc. ("SWAT") in the Second Judicial District Court, County of Bernalillo, State of New Mexico, for monies due on an open account. SWAT sought to recover approximately $2.0 million from the Company relative to work performed by SWAT during 2000 for Roberts Wireless Communications, LLC which was acquired by the Company in the first quarter of 2001. This claim was settled for $875,000 during the second quarter of 2003.
In November and December 2003 and January 2004, multiple lawsuits were filed against Alamosa Holdings and David E. Sharbutt, the Company's Chairman and Chief Executive Officer as well as Kendall W. Cowan, the Company's Chief Financial officer. Steven Richardson, the Company's Chief Operating Officer, was also a named defendant in one of the lawsuits. Each claim is a purported class action filed on behalf of a putative class of persons who and/or entities that purchased Alamosa Holdings' securities between January 9, 2001 and June 13, 2002, inclusive, and seeks recovery of compensatory damages, fees and costs. The cases allege violations of Sections 10(b) and 20(a) of the Exchange Act, and Rule 10b-5 promulgated thereunder. Additionally, certain of the suits allege violations of Sections 11, 12(a) and 15 of the Securities Act and seek rescission or rescissory damages in connection with Alamosa Holdings' November 2001 common stock offering. The suits allege, among other things, that Alamosa Holdings' filings with the SEC and press releases issued during the
F-40
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
relevant period were false and misleading because they failed to disclose and/or misrepresented that Alamosa Holdings allegedly (i) was increasing its subscriber base by relaxing credit standards for new customers, (ii) had been experiencing high involuntary disconnections from high credit risk customers that allegedly produced tens of millions of dollars of impaired receivables on its financial statements, and (iii) had experienced lower subscription growth due to tightened credit standards that required credit-challenged customers to pay deposits upon the initiation of services. Each lawsuit was filed in the United States District Court for the Northern District of Texas, in either the Lubbock Division or the Dallas Division. On February 27, 2004, the lawsuits were consolidated into one action pending in the United States District Court for the Northern District of Texas, Lubbock Division. The Company believes that the defendants have meritorious defenses to these claims and intend to vigorously defend these actions. No discovery has been taken at this time, and the ultimate outcome is not currently predictable. There can be no assurance that the litigation will be resolved in the defendants' favor and an adverse resolution could adversely affect the Company's financial condition.
On November 26, 2003, Core Group PC filed a claim against Alamosa PCS and four other PCS Affiliates of Sprint in the United States District Court for the District of Kansas alleging copyright infringement related to the designs used in Sprint retail stores. The complainant seeks money damages and an injunction against Alamosa PCS' continued use of the alleged copyrighted designs. The Company is in the process of evaluating this claim.
The Company is involved in various claims and legal actions arising in the ordinary course of business. The ultimate disposition of these matters are not expected to have a material adverse impact on the Company's financial position, results of operations or liquidity.
20. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The quarterly results of operations (unaudited) for 2002 and 2003 by quarter are as follows:
| | | | | | | | | | | | | | | | | | |
| | | Quarter ended |
| | | March 31 | | June 30 | | September 30 | | December 31 |
| | | (in thousands, except per share amounts) |
| 2002 | |
| Net sales | | $ | 128,387 | | | $ | 130,789 | | | $ | 147,428 | | | $ | 149,088 | |
| Operating loss | | | (21,754 | ) | | | (21,302 | ) | | | (313,173 | ) | | | (14,215 | ) |
| Net loss | | | (28,133 | ) | | | (28,736 | ) | | | (320,847 | ) | | | (25,046 | ) |
| 2003: | |
| Net sales | | $ | 141,108 | | | $ | 155,394 | | | $ | 166,390 | | | $ | 168,158 | |
| Operating income (loss) | | | (10,007 | ) | | | 2,830 | | | | 3,480 | | | | 16,554 | |
| Net loss | | | (30,407 | ) | | | (18,393 | ) | | | (17,407 | ) | | | (17,085 | ) |
|
As discussed in Note 8, the Company recorded a charge relative to its first annual impairment test of goodwill under SFAS No. 142 in the third quarter of 2002. The amount of this charge was $291,635 and is reflected in the operating loss for the third quarter of 2002.
21. GUARANTOR FINANCIAL STATEMENTS
Set forth below are consolidating financial statements of the issuer and guarantor subsidiaries and Alamosa Delaware Operations, LLC which is the Company's non-guarantor subsidiary (the "Non-Guarantor Subsidiary") of the senior notes as of December 31, 2003 and 2002 and for the years ended December 31, 2003, 2002 and 2001. The guarantor subsidiaries are all 100% owned by the Company and the guarantees are full and unconditional. Separate financial statements of each guarantor subsidiary have not been provided because management has determined that they are not material to investors.
F-41
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
Alamosa Holdings is an additional guarantor with respect to the 12 7/8% senior discount notes, the 12½% senior notes and the 13 5/8% senior notes. Separate financial statements for Alamosa Holdings have not been provided as Alamosa Holdings is a holding company which does not independently generate operating revenue. The consolidated financial statements of Alamosa Holdings are included in its annual report on Form 10-K for the year ended December 31, 2003.
F-42
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 2003
(dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | |
| | | Issuer | | Guarantor
Subsidiaries | | Non-Guarantor
Subsidiary | | Eliminations | | Consolidated |
| ASSETS | | | | | | | | | | | | | | | | | | | | |
| Current Assets: | | | | | | | | | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | 27,542 | | | $ | 70,677 | | | $ | 23 | | | $ | — | | | $ | 98,242 | |
| Restricted cash | | | 1 | | | | — | | | | — | | | | — | | | | 1 | |
| Customer accounts receivable, net | | | — | | | | 28,034 | | | | — | | | | — | | | | 28,034 | |
| Receivable from Sprint | | | — | | | | 18,465 | | | | — | | | | — | | | | 18,465 | |
| Intercompany receivable | | | 48,805 | | | | — | | | | 394 | | | | (49,199 | ) | | | — | |
| Receivable from parent | | | 1 | | | | — | | | | — | | | | — | | | | 1 | |
| Inventory | | | — | | | | 7,309 | | | | — | | | | — | | | | 7,309 | |
| Investment in subsidiary | | | 658,874 | | | | — | | | | — | | | | (658,874 | ) | | | — | |
| Prepaid expenses and other assets | | | 194 | | | | 9,569 | | | | — | | | | — | | | | 9,763 | |
| Deferred customer acquisition costs | | | — | | | | 8,060 | | | | — | | | | — | | | | 8,060 | |
| Deferred tax asset | | | — | | | | 4,572 | | | | — | | | | — | | | | 4,572 | |
| Total current assets | | | 735,417 | | | | 146,686 | | | | 417 | | | | (708,073 | ) | | | 174,447 | |
| | | | | | | | | | | | | | | | | | | | | |
| Property and equipment, net | | | — | | | | 434,840 | | | | — | | | | — | | | | 434,840 | |
| Debt issuance costs, net | | | 1,718 | | | | 12,648 | | | | — | | | | — | | | | 14,366 | |
| Intangible assets, net | | | — | | | | 448,354 | | | | — | | | | — | | | | 448,354 | |
| Other noncurrent assets | | | — | | | | 6,393 | | | | — | | | | — | | | | 6,393 | |
| Total assets | | $ | 737,135 | | | $ | 1,048,921 | | | $ | 417 | | | $ | (708,073 | ) | | $ | 1,078,400 | |
| | | | | | | | | | | | | | | | | | | | | |
| LIABILITIES AND STOCKHOLDER'S EQUITY | | | | | | | | | | | | | | | | | | | | |
| Current Liabilities: | | | | | | | | | | | | | | | | | | | | |
| Accounts payable | | $ | — | | | $ | 31,010 | | | $ | — | | | $ | — | | | $ | 31,010 | |
| Accrued expenses | | | 257 | | | | 37,068 | | | | — | | | | — | | | | 37,325 | |
| Payable to Sprint | | | — | | | | 24,290 | | | | — | | | | — | | | | 24,290 | |
| Interest payable | | | 4,563 | | | | 790 | | | | — | | | | — | | | | 5,353 | |
| Deferred revenue | | | — | | | | 22,742 | | | | — | | | | — | | | | 22,742 | |
| Intercompany payable | | | — | | | | 49,199 | | | | — | | | | (49,199 | ) | | | — | |
| Current installments of capital leases | | | — | | | | 481 | | | | — | | | | — | | | | 481 | |
| Total current liabilities | | | 4,820 | | | | 165,580 | | | | — | | | | (49,199 | ) | | | 121,201 | |
| | | | | | | | | | | | | | | | | | | | | |
| Capital lease obligations | | | — | | | | 812 | | | | — | | | | — | | | | 812 | |
| Other noncurrent liabilities | | | — | | | | 8,693 | | | | — | | | | — | | | | 8,693 | |
| Deferred tax liability | | | — | | | | 15,379 | | | | — | | | | — | | | | 15,379 | |
| Senior secured debt | | | — | | | | 200,000 | | | | — | | | | — | | | | 200,000 | |
| Senior notes | | | 464,424 | | | | — | | | | — | | | | — | | | | 464,424 | |
| Total liabilities | | | 469,244 | | | | 390,464 | | | | — | | | | (49,199 | ) | | | 810,509 | |
| | | | | | | | | | | | | | | | | | | | | |
| Stockholder's Equity: | | | | | | | | | | | | | | | | | | | | |
| Preferred stock | | | — | | | | — | | | | — | | | | — | | | | — | |
| Common stock | | | — | | | | — | | | | — | | | | — | | | | — | |
| Additional paid-in capital | | | 1,015,991 | | | | — | | | | — | | | | — | | | | 1,015,991 | |
| LLC member's equity | | | — | | | | 658,457 | | | | 417 | | | | (658,874 | ) | | | — | |
| Accumulated deficit | | | (747,425 | ) | | | — | | | | — | | | | — | | | | (747,425 | ) |
| Unearned compensation | | | (145 | ) | | | — | | | | — | | | | — | | | | (145 | ) |
| Accumulated other comprehensive loss, net of tax | | | (530 | ) | | | — | | | | — | | | | — | | | | (530 | ) |
| Total stockholder's equity | | | 267,891 | | | | 658,457 | | | | 417 | | | | (658,874 | ) | | | 267,891 | |
| Total liabilities and stockholder's equity | | $ | 737,135 | | | $ | 1,048,921 | | | $ | 417 | | | $ | (708,073 | ) | | $ | 1,078,400 | |
|
F-43
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
(dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | |
| | | Issuer | | Guarantor
Subsidiaries | | Non-Guarantor
Subsidiary | | Eliminations | | Consolidated |
| ASSETS | | | | | | | | | | | | | | | | | | | | |
| Current Assets: | | | | | | | | | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | 17,821 | | | $ | 42,681 | | | $ | 23 | | | $ | — | | | $ | 60,525 | |
| Short term investments | | | — | | | | — | | | | — | | | | — | | | | — | |
| Restricted cash | | | 34,725 | | | | — | | | | — | | | | — | | | | 34,725 | |
| Customer accounts receivable, net | | | — | | | | 27,926 | | | | — | | | | — | | | | 27,926 | |
| Receivable from Sprint | | | — | | | | 32,576 | | | | — | | | | — | | | | 32,576 | |
| Interest receivable | | | 973 | | | | — | | | | — | | | | — | | | | 973 | |
| Intercompany receivable | | | 93,191 | | | | 587 | | | | 394 | | | | (94,172 | ) | | | — | |
| Inventory | | | — | | | | 7,410 | | | | — | | | | — | | | | 7,410 | |
| Investment in subsidiary | | | 656,369 | | | | — | | | | — | | | | (656,369 | ) | | | — | |
| Prepaid expenses and other assets | | | — | | | | 7,239 | | | | — | | | | — | | | | 7,239 | |
| Deferred customer acquisition costs | | | — | | | | 7,312 | | | | — | | | | — | | | | 7,312 | |
| Deferred tax asset | | | — | | | | 5,988 | | | | — | | | | — | | | | 5,988 | |
| Total current assets | | | 803,079 | | | | 131,719 | | | | 417 | | | | (750,541 | ) | | | 184,674 | |
| | | | | | | | | | | | | | | | | | | | | |
| Notes receivable | | | — | | | | 35,005 | | | | — | | | | (35,005 | ) | | | — | |
| Property and equipment, net | | | — | | | | 458,946 | | | | — | | | | — | | | | 458,946 | |
| Debt issuance costs, net | | | 20,484 | | | | 12,867 | | | | — | | | | — | | | | 33,351 | |
| Intangible assets, net | | | — | | | | 488,421 | | | | — | | | | — | | | | 488,421 | |
| Other noncurrent assets | | | — | | | | 7,802 | | | | — | | | | — | | | | 7,802 | |
| Total assets | | $ | 823,563 | | | $ | 1,134,760 | | | $ | 417 | | | $ | (785,546 | ) | | $ | 1,173,194 | |
| | | | | | | | | | | | | | | | | | | | | |
| LIABILITIES AND STOCKHOLDER'S EQUITY | | | | | | | | | | | | | | | | | | | | |
| Current Liabilities: | | | | | | | | | | | | | | | | | | | | |
| Accounts payable | | $ | — | | | $ | 27,203 | | | $ | — | | | $ | — | | | $ | 27,203 | |
| Accrued expenses | | | 3 | | | | 34,900 | | | | — | | | | — | | | | 34,903 | |
| Payable to Sprint | | | — | | | | 26,903 | | | | — | | | | — | | | | 26,903 | |
| Interest payable | | | 20,685 | | | | 1,557 | | | | — | | | | — | | | | 22,242 | |
| Deferred revenue | | | — | | | | 18,901 | | | | — | | | | — | | | | 18,901 | |
| Intercompany payable | | | 587 | | | | 93,585 | | | | — | | | | (94,172 | ) | | | — | |
| Current installments of capital leases | | | — | | | | 1,064 | | | | — | | | | — | | | | 1,064 | |
| Total current liabilities | | | 21,275 | | | | 204,113 | | | | — | | | | (94,172 | ) | | | 131,216 | |
| | | | | | | | | | | | | | | | | | | | | |
| Capital lease obligations | | | — | | | | 1,355 | | | | — | | | | — | | | | 1,355 | |
| Other noncurrent liabilities | | | — | | | | 45,646 | | | | — | | | | (35,005 | ) | | | 10,641 | |
| Senior secured debt | | | — | | | | 200,000 | | | | — | | | | — | | | | 200,000 | |
| Senior notes | | | 668,862 | | | | — | | | | — | | | | — | | | | 668,862 | |
| Deferred tax liability | | | — | | | | 27,694 | | | | — | | | | — | | | | 27,694 | |
| Total liabilities | | | 690,137 | | | | 478,808 | | | | — | | | | (129,177 | ) | | | 1,039,768 | |
| | | | | | | | | | | | | | | | | | | | | |
| Stockholder's Equity: | | | | | | | | | | | | | | | | | | | | |
| Preferred stock | | | — | | | | — | | | | — | | | | — | | | | — | |
| Common stock | | | — | | | | 485 | | | | — | | | | (485 | ) | | | — | |
| Additional paid-in capital | | | 799,403 | | | | 1,162,593 | | | | (4,000 | ) | | | (1,158,593 | ) | | | 799,403 | |
| Accumulated (deficit) earnings | | | (664,133 | ) | | | (505,282 | ) | | | 4,417 | | | | 500,865 | | | | (664,133 | ) |
| Unearned compensation | | | (294 | ) | | | (294 | ) | | | — | | | | 294 | | | | (294 | ) |
Accumulated other comprehensive income, net
of tax | | | (1,550 | ) | | | (1,550 | ) | | | — | | | | 1,550 | | | | (1,550 | ) |
| Total stockholder's equity | | | 133,426 | | | | 655,952 | | | | 417 | | | | (656,369 | ) | | | 133,426 | |
| Total liabilities and stockholder's equity | | $ | 823,563 | | | $ | 1,134,760 | | | $ | 417 | | | $ | (785,546 | ) | | $ | 1,173,194 | |
| | | | | | | | | | | | | | | | | | | | | |
|
F-44
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
(dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | |
| | | Issuer | | Guarantor
Subsidiaries | | Non-Guarantor
Subsidiary | | Eliminations | | Consolidated |
| Revenues: | | | | | | | | | | | | | | | | | | | | |
| Subscriber revenues | | $ | — | | | $ | 452,396 | | | $ | — | | | $ | — | | | $ | 452,396 | |
| Roaming revenues | | | — | | | | 150,772 | | | | — | | | | — | | | | 150,772 | |
| | | | | | | | | | | | | | | | | | | | | |
| Service revenues | | | — | | | | 603,168 | | | | — | | | | — | | | | 603,168 | |
| Product sales | | | — | | | | 27,882 | | | | — | | | | — | | | | 27,882 | |
| Total revenues | | | — | | | | 631,050 | | | | — | | | | — | | | | 631,050 | |
| | | | | | | | | | | | | | | | | | | | | |
| Costs and expenses: | | | | | | | | | | | | | | | | | | | | |
| Cost of services and operations | | | — | | | | 317,215 | | | | — | | | | — | | | | 317,215 | |
| Cost of products sold | | | — | | | | 59,651 | | | | — | | | | — | | | | 59,651 | |
| Selling and marketing | | | — | | | | 112,626 | | | | — | | | | — | | | | 112,626 | |
| General and administrative expenses | | | 1,123 | | | | 14,691 | | | | — | | | | — | | | | 15,814 | |
| Depreciation and amortization | | | — | | | | 110,495 | | | | — | | | | — | | | | 110,495 | |
| Impairment of property and equipment | | | — | | | | 2,243 | | | | — | | | | — | | | | 2,243 | |
| Non-cash compensation | | | — | | | | 149 | | | | — | | | | — | | | | 149 | |
| Income (loss) from operations | | | (1,123 | ) | | | 13,980 | | | | — | | | | — | | | | 12,857 | |
| Equity in earnings of subsidiaries | | | 1,337 | | | | — | | | | — | | | | (1,337 | ) | | | — | |
| Debt exchange expense | | | — | | | | (8,694 | ) | | | — | | | | — | | | | (8,694 | ) |
| Interest and other income | | | 630 | | | | 299 | | | | — | | | | — | | | | 929 | |
| Interest expense | | | (84,136 | ) | | | (15,778 | ) | | | — | | | | — | | | | (99,914 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Loss before income tax benefit | | | (83,292 | ) | | | (10,193 | ) | | | — | | | | (1,337 | ) | | | (94,822 | ) |
| Income tax benefit | | | — | | | | 11,530 | | | | — | | | | — | | | | 11,530 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net income (loss) | | $ | (83,292 | ) | | $ | 1,337 | | | $ | — | | | $ | (1,337 | ) | | $ | (83,292 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
|
F-45
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
(dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | |
| | | Issuer | | Guarantor
Subsidiaries | | Non-Guarantor
Subsidiary | | Eliminations | | Consolidated |
| Revenues: | | | | | | | | | | | | | | | | | | | | |
| Subscriber revenues | | $ | — | | | $ | 391,927 | | | $ | — | | | $ | — | | | $ | 391,927 | |
| Roaming revenues | | | — | | | | 139,843 | | | | — | | | | — | | | | 139,843 | |
| | | | | | | | | | | | | | | | | | | | | |
| Service revenues | | | — | | | | 531,770 | | | | — | | | | — | | | | 531,770 | |
| Product sales | | | — | | | | 23,922 | | | | — | | | | — | | | | 23,922 | |
| Total revenue | | | — | | | | 555,692 | | | | — | | | | — | | | | 555,692 | |
| | | | | | | | | | | | | | | | | | | | | |
| Costs and expenses: | | | | | | | | | | | | | | | | | | | | |
| Cost of services and operations | | | — | | | | 343,468 | | | | — | | | | — | | | | 343,468 | |
| Cost of products sold | | | — | | | | 50,974 | | | | — | | | | — | | | | 50,974 | |
| Selling and marketing | | | — | | | | 119,059 | | | | — | | | | — | | | | 119,059 | |
| General and administrative expenses | | | 162 | | | | 14,497 | | | | (3 | ) | | | — | | | | 14,656 | |
| Depreciation and amortization | | | — | | | | 105,121 | | | | — | | | | — | | | | 105,121 | |
| Impairment of goodwill | | | — | | | | 291,635 | | | | — | | | | — | | | | 291,635 | |
| Impairment of property and equipment | | | — | | | | 1,194 | | | | — | | | | — | | | | 1,194 | |
| Non-cash compensation | | | — | | | | 29 | | | | — | | | | — | | | | 29 | |
| Income (loss) from operations | | | (162 | ) | | | (370,285 | ) | | | 3 | | | | — | | | | (370,444 | ) |
| Equity in loss of subsidiaries | | | (319,154 | ) | | | — | | | | — | | | | 319,154 | | | | — | |
| Interest and other income | | | 2,261 | | | | 1,110 | | | | 88 | | | | — | | | | 3,459 | |
| Interest expense | | | (85,707 | ) | | | (17,156 | ) | | | — | | | | — | | | | (102,863 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Income (loss) before income tax | |
| Benefit | | | (402,762 | ) | | | (386,331 | ) | | | 91 | | | | 319,154 | | | | (469,848 | ) |
| Income tax benefit | | | — | | | | 67,086 | | | | — | | | | — | | | | 67,086 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net income (loss) | | $ | (402,762 | ) | | $ | (319,245 | ) | | $ | 91 | | | $ | 319,154 | | | $ | (402,762 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
|
F-46
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2001
(dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | |
| | | Issuer | | Guarantor
Subsidiaries | | Non-Guarantor
Subsidiary | | Eliminations | | Consolidated |
| Revenues: | | | | | | | | | | | | | | | | | | | | |
| Subscriber revenues | | $ | — | | | $ | 231,145 | | | $ | — | | | $ | — | | | $ | 231,145 | |
| Roaming revenues | | | — | | | | 99,213 | | | | — | | | | — | | | | 99,213 | |
| Service revenues | | | — | | | | 330,358 | | | | — | | | | — | | | | 330,358 | |
| Product sales | | | — | | | | 26,781 | | | | — | | | | — | | | | 26,781 | |
| Total revenue | | | — | | | | 357,139 | | | | — | | | | — | | | | 357,139 | |
| Costs and expenses: | | | | | | | | | | | | | | | | | | | | |
| Cost of services and operations | | | — | | | | 237,843 | | | | — | | | | — | | | | 237,843 | |
| Cost of products sold | | | — | | | | 53,911 | | | | — | | | | — | | | | 53,911 | |
| Selling and marketing | | | — | | | | 110,052 | | | | — | | | | — | | | | 110,052 | |
| General and administrative expenses | | | 795 | | | | 13,046 | | | | 12 | | | | — | | | | 13,853 | |
| Depreciation and amortization | | | — | | | | 94,722 | | | | — | | | | — | | | | 94,722 | |
| Non-cash compensation | | | — | | | | (916 | ) | | | — | | | | — | | | | (916 | ) |
| Loss from operations | | | (795 | ) | | | (151,519 | ) | | | (12 | ) | | | — | | | | (152,326 | ) |
| Equity in loss of subsidiaries | | | (85,128 | ) | | | — | | | | — | | | | 85,128 | | | | — | |
| Loss on debt extinguishment | | | — | | | | (5,472 | ) | | | — | | | | — | | | | (5,472 | ) |
| Interest and other income | | | 3,797 | | | | 5,435 | | | | 2,432 | | | | — | | | | 11,664 | |
| Interest expense | | | (65,297 | ) | | | (16,433 | ) | | | — | | | | — | | | | (81,730 | ) |
| Income (loss) before income tax benefit | | | (147,423 | ) | | | (167,989 | ) | | | 2,420 | | | | 85,128 | | | | (227,864 | ) |
| Income tax benefit | | | — | | | | 80,441 | | | | — | | | | — | | | | 80,441 | |
| Net income (loss) | | $ | (147,423 | ) | | $ | (87,548 | ) | | $ | 2,420 | | | $ | 85,128 | | | $ | (147,423 | ) |
|
F-47
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2003
(dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | |
| | | Issuer | | Guarantor
Subsidiaries | | Non-
Guarantor
Subsidiary | | Eliminations | | Consolidated |
| Cash flows from operating activities: | | | | | | | | | | | | | | | | | | | | |
| Net income (loss) | | $ | (83,292 | ) | | $ | 1,337 | | | $ | — | | | $ | (1,337 | ) | | $ | (83,292 | ) |
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | | | | | | | | | | | | | | | | | | | | |
| Equity in earnings of subsidiaries | | | (1,337 | ) | | | — | | | | — | | | | 1,337 | | | | — | |
| Non-cash compensation expense | | | — | | | | 149 | | | | — | | | | — | | | | 149 | |
| Provision for bad debts | | | — | | | | 13,451 | | | | — | | | | — | | | | 13,451 | |
| Non-cash interest benefit on derivative instruments | | | — | | | | (693 | ) | | | — | | | | — | | | | (693 | ) |
| Non-cash accretion of asset retirement obligation | | | — | | | | 565 | | | | — | | | | — | | | | 565 | |
| Depreciation and amortization of property and equipment | | | — | | | | 70,428 | | | | — | | | | — | | | | 70,428 | |
| Amortization of intangible assets | | | — | | | | 40,067 | | | | — | | | | — | | | | 40,067 | |
| Amortization of financing costs included in interest expense | | | 1,721 | | | | 2,549 | | | | — | | | | — | | | | 4,270 | |
| Amortization of discounted interest | | | 329 | | | | — | | | | — | | | | — | | | | 329 | |
| Deferred tax benefit | | | — | | | | (11,530 | ) | | | — | | | | — | | | | (11,530 | ) |
| Interest accreted on discount notes | | | 33,496 | | | | — | | | | — | | | | — | | | | 33,496 | |
| Impairment of property and equipment | | | — | | | | 2,243 | | | | — | | | | — | | | | 2,243 | |
| Debt exchange expenses | | | — | | | | 8,694 | | | | — | | | | — | | | | 8,694 | |
| (increase) decrease in: | | | | | | | | | | | | | | | | | | | | |
| Receivables | | | 973 | | | | 551 | | | | — | | | | — | | | | 1,524 | |
| Inventory | | | — | | | | 101 | | | | — | | | | — | | | | 101 | |
| Prepaid expenses and other assets | | | (194 | ) | | | (1,670 | ) | | | — | | | | — | | | | (1,864 | ) |
| Decrease in: | | | | | | | | | | | | | | | | | | | | |
| Accounts payable and accrued expenses | | | (15,866 | ) | | | (6,368 | ) | | | — | | | | — | | | | (22,234 | ) |
| Net cash provided by (used in) operating activities | | | (64,170 | ) | | | 119,874 | | | | — | | | | — | | | | 55,704 | |
| Cash flows from investing activities: | | | | | | | | | | | | | | | | | | | | |
| Proceeds from sale of assets | | | — | | | | 2,645 | | | | — | | | | — | | | | 2,645 | |
| Purchases of property and equipment | | | — | | | | (38,625 | ) | | | — | | | | — | | | | (38,625 | ) |
| Change in restricted cash | | | 34,724 | | | | — | | | | — | | | | — | | | | 34,724 | |
| Change in intercompany balances | | | 43,798 | | | | (43,798 | ) | | | — | | | | — | | | | — | |
| Net cash provided by (used in) investing activities | | | 78,522 | | | | (79,778 | ) | | | — | | | | — | | | | (1,256 | ) |
| Cash flows from financing activities: | | | | | | | | | | | | | | | | | | | | |
| Capital distribution to parent | | | (4,527 | ) | | | — | | | | — | | | | — | | | | (4,527 | ) |
| Debt issuance costs capitalized | | | — | | | | (2,329 | ) | | | — | | | | — | | | | (2,329 | ) |
| Debt exchange expenses | | | — | | | | (8,694 | ) | | | — | | | | — | | | | (8,694 | ) |
| Payment of fractional notes in debt exchange | | | (104 | ) | | | — | | | | — | | | | — | | | | (104 | ) |
| Payments on capital leases | | | — | | | | (1,077 | ) | | | — | | | | — | | | | (1,077 | ) |
| Net cash used in financing activities | | | (4,631 | ) | | | (12,100 | ) | | | — | | | | — | | | | (16,731 | ) |
| Net increase in cash and cash equivalents | | | 9,721 | | | | 27,996 | | | | — | | | | — | | | | 37,717 | |
| Cash and cash equivalents at beginning of period | | | 17,821 | | | | 42,681 | | | | 23 | | | | — | | | | 60,525 | |
| Cash and cash equivalents at end of period | | $ | 27,542 | | | $ | 70,677 | | | $ | 23 | | | $ | — | | | $ | 98,242 | |
|
F-48
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 200
(dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | |
| | | Issuer | | Guarantor
Subsidiaries | | Non-
Guarantor
Subsidiary | | Eliminations | | Consolidated |
| Cash flows from operating activities: | | | | | | | | | | | | | | | | | | | | |
| Net income (loss) | | $ | (402,762 | ) | | $ | (319,245 | ) | | $ | 91 | | | $ | 319,154 | | | $ | (402,762 | ) |
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | | | | | | | | | | | | | | | | | | | | |
| Equity in loss of subsidiaries | | | 319,154 | | | | — | | | | — | | | | (319,154 | ) | | | — | |
| Non-cash compensation expense | | | — | | | | 29 | | | | — | | | | — | | | | 29 | |
| Non-cash interest on derivatives | | | — | | | | 464 | | | | — | | | | — | | | | 464 | |
| Provision for bad debt | | | — | | | | 40,285 | | | | — | | | | — | | | | 40,285 | |
| Depreciation and amortization of property and equipment | | | — | | | | 64,702 | | | | — | | | | — | | | | 64,702 | |
| Amortization of intangibles | | | — | | | | 40,419 | | | | — | | | | — | | | | 40,419 | |
| Amortization of financing costs included in interest expense | | | 1,969 | | | | 2,290 | | | | — | | | | — | | | | 4,259 | |
| Amortization of discounted interest | | | 395 | | | | — | | | | — | | | | — | | | | 395 | |
| Deferred tax benefit | | | — | | | | (67,086 | ) | | | — | | | | — | | | | (67,086 | ) |
| Interest accreted on discount note | | | 31,655 | | | | — | | | | — | | | | — | | | | 31,655 | |
| Impairment of property and equipment | | | — | | | | 1,194 | | | | — | | | | — | | | | 1,194 | |
| Impairment of goodwill | | | — | | | | 291,635 | | | | — | | | | — | | | | 291,635 | |
| Receivables | | | 1,420 | | | | (46,656 | ) | | | — | | | | — | | | | (45,236 | ) |
| Inventory | | | — | | | | (2,608 | ) | | | — | | | | — | | | | (2,608 | ) |
| Prepaid expenses and other assets | | | 16 | | | | (6,456 | ) | | | — | | | | — | | | | (6,440 | ) |
| Increase (decrease) in: | | | | | | | | | | | | | | | | | | | | |
| Accounts payable and accrued expenses | | | (720 | ) | | | 23,825 | | | | — | | | | — | | | | 23,105 | |
| Net cash provided by (used in) operating Activities | | | (48,873 | ) | | | 22,792 | | | | 91 | | | | — | | | | (25,990 | ) |
| Cash flows from investing activities: | | | | | | | | | | | | | | | | | | | | |
| Proceeds from sale of assets | | | — | | | | 451 | | | | — | | | | — | | | | 451 | |
| Purchases of property and equipment | | | — | | | | (89,476 | ) | | | — | | | | — | | | | (89,476 | ) |
| Change in restricted cash | | | 48,115 | | | | 11,853 | | | | — | | | | — | | | | 59,968 | |
| Intercompany receivable | | | 15,951 | | | | (868 | ) | | | (15,083 | ) | | | — | | | | — | |
| Net change in short term investments | | | 1,300 | | | | — | | | | — | | | | — | | | | 1,300 | |
| Other | | | — | | | | 99 | | | | — | | | | — | | | | 99 | |
| Net cash provided by (used in) investing activities | | | 65,366 | | | | (77,941 | ) | | | (15,083 | ) | | | — | | | | (27,658 | ) |
| Cash flows from financing activities: | | | | | | | | | | | | | | | | | | | | |
| Capital distributions | | | (1,213 | ) | | | — | | | | — | | | | — | | | | (1,213 | ) |
| Borrowings under senior secured debt | | | — | | | | 12,838 | | | | — | | | | — | | | | 12,838 | |
| Debt issuance cost | | | — | | | | (1,351 | ) | | | — | | | | — | | | | (1,351 | ) |
| Payments on capital leases | | | — | | | | (773 | ) | | | — | | | | — | | | | (773 | ) |
| Net cash provided by financing activities | | | (1,213 | ) | | | 10,714 | | | | | | | | — | | | | 9,501 | |
| Net increase (decrease) in cash and cash equivalents | | | 15,280 | | | | (44,435 | ) | | | (14,992 | ) | | | — | | | | (44,147 | ) |
| Cash and cash equivalents at beginning of period | | | 2,541 | | | | 87,116 | | | | 15,015 | | | | — | | | | 104,672 | |
| Cash and cash equivalents at end of period | | $ | 17,821 | | | $ | 42,681 | | | $ | 23 | | | $ | — | | | $ | 60,525 | |
|
F-49
ALAMOSA (DELAWARE), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(dollars in thousands, except as noted)
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 200
(dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | |
| | | Issuer | | Guarantor
Subsidiaries | | Non-
Guarantor
Subsidiary | | Eliminations | | Consolidated |
| Cash flows from operating activities: | | | | | | | | | | | | | | | | | | | | |
| Net income (loss) | | $ | (147,423 | ) | | $ | (87,548 | ) | | $ | 2,420 | | | $ | 85,128 | | | $ | (147,423 | ) |
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | | | | | | | | | | | | | | | | | | | | |
| Equity in loss of subsidiaries | | | 85,128 | | | | — | | | | — | | | | (85,128 | ) | | | — | |
| Non-cash compensation expense | | | — | | | | (916 | ) | | | — | | | | — | | | | (916 | ) |
| Non-cash interest on derivatives | | | — | | | | 656 | | | | — | | | | — | | | | 656 | |
| Provision for bad debt | | | — | | | | 17,490 | | | | — | | | | — | | | | 17,490 | |
| Depreciation and amortization of property and equipment | | | — | | | | 45,963 | | | | — | | | | — | | | | 45,963 | |
| Amortization of goodwill and intangibles | | | — | | | | 48,759 | | | | — | | | | — | | | | 48,759 | |
| Amortization of financing costs included in interest expense | | | 1,529 | | | | 1,745 | | | | — | | | | — | | | | 3,274 | |
| Amortization of discounted interest | | | 165 | | | | — | | | | — | | | | — | | | | 165 | |
| Loss on debt extinguishment | | | — | | | | 5,472 | | | | — | | | | — | | | | 5,472 | |
| Deferred tax benefit | | | — | | | | (80,441 | ) | | | — | | | | — | | | | (80,441 | ) |
| Interest accreted on discount note | | | 27,927 | | | | — | | | | — | | | | — | | | | 27,927 | |
| (Increase) decrease in, net of effects from acquisitions: | | | | | | | | | | | | | | | | | | | | |
| Receivables | | | — | | | | (48,795 | ) | | | 900 | | | | — | | | | (47,895 | ) |
| Inventory | | | — | | | | 1,275 | | | | — | | | | — | | | | 1,275 | |
| Prepaid expenses and other assets | | | 926 | | | | (8,627 | ) | | | 1,046 | | | | — | | | | (6,655 | ) |
| Increase (decrease) in, net of effects from acquisitions: | | | | | | | | | | | | | | | | | | | | |
| Accounts payable and accrued expenses | | | 20,845 | | | | (2,212 | ) | | | (39 | ) | | | — | | | | 18,594 | |
| Net cash provided by (used in) operating activities | | | (10,903 | ) | | | (107,179 | ) | | | 4,327 | | | | — | | | | (113,755 | ) |
| Cash flows from investing activities: | | | | | | | | | | | | | | | | | | | | |
| Purchases of property and equipment | | | — | | | | (143,731 | ) | | | — | | | | — | | | | (143,731 | ) |
| Change in restricted cash | | | (82,840 | ) | | | (11,853 | ) | | | — | | | | — | | | | (94,693 | ) |
| Intercompany receivable | | | (96,907 | ) | | | 98,790 | | | | (1,883 | ) | | | — | | | | — | |
| Equity investment in subsidiary | | | (302,777 | ) | | | — | | | | (4,000 | ) | | | 306,777 | | | | — | |
| Equity investment from parent | | | — | | | | 306,777 | | | | — | | | | (306,777 | ) | | | — | |
| Repayment (issuance) of notes receivable | | | — | | | | — | | | | 11,860 | | | | — | | | | 11,860 | |
| Acquisition related costs | | | — | | | | (37,617 | ) | | | — | | | | — | | | | (37,617 | ) |
| Net change in short term investments | | | 300 | | | | — | | | | — | | | | — | | | | 300 | |
| Other | | | — | | | | 102 | | | | — | | | | — | | | | 102 | |
| Net cash provided by (used in) investing activities | | | (482,224 | ) | | | 212,468 | | | | 5,977 | | | | — | | | | (263,779 | ) |
| Cash flows from financing activities: | | | | | | | | | | | | | | | | | | | | |
| Proceeds from issuance of senior notes | | | 384,046 | | | | — | | | | — | | | | — | | | | 384,046 | |
| Capital contributions | | | — | | | | 9,665 | | | | — | | | | — | | | | 9,665 | |
| Borrowings under senior secured debt | | | — | | | | 253,000 | | | | — | | | | — | | | | 253,000 | |
| Repayments of borrowings under senior secured debt | | | — | | | | (289,421 | ) | | | — | | | | — | | | | (289,421 | ) |
| Debt issuance cost | | | (2,381 | ) | | | (14,122 | ) | | | — | | | | — | | | | (16,503 | ) |
| Payments on capital leases | | | — | | | | (349 | ) | | | — | | | | — | | | | (349 | ) |
| Net cash provided by (used in) financing activities | | | 381,665 | | | | (41,227 | ) | | | — | | | | — | | | | 340,438 | |
| Net increase (decrease) in cash and cash equivalents | | | (111,462 | ) | | | 64,062 | | | | 10,304 | | | | — | | | | (37,096 | ) |
| Cash and cash equivalents at beginning of period | | | 114,003 | | | | 23,054 | | | | 4,711 | | | | — | | | | 141,768 | |
| Cash and cash equivalents at end of period | | $ | 2,541 | | | $ | 87,116 | | | $ | 15,015 | | | $ | — | | | $ | 104,672 | |
|
F-50
REPORT OF INDEPENDENT AUDITORS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of Alamosa (Delaware), Inc.:
Our audits of the consolidated financial statements referred to in our report dated March 9, 2004 appearing in this prospectus also included an audit of the financial statement schedule included in Schedule II of the registration statement of which this prospectus is a part. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
PricewaterhouseCoopers LLP
Dallas, Texas
March 9, 2004
F-51
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
Subject to Completion, dated April 19, 2004
PROSPECTUS
$250,000,000
Alamosa (Delaware), Inc.
Exchange Offer for 8½% Senior Notes due 2012
No dealer, sales representative or other person has been authorized to give any information or to make any representations other than those contained in this prospectus and, if given or made, such information or representations must not be relied upon as having been authorized by Alamosa (Delaware), Inc. or any of its subsidiaries. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities other than the securities to which it relates, nor does it constitute an offer to sell or the solicitation of an offer to buy such securities, in any jurisdiction in which such offer or solicitation is not authorized, or in which the person making such offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make such an offer or solicitation. Neither the delivery of this prospectus nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of Alamosa (Delaware), Inc. and its subsidiaries since the date hereof or that information contained in this prospectus is correct as of any time subsequent to its date.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law (the "DGCL") generally provides that a corporation may indemnify directors, officers, employees or agents against liabilities they may incur in such capacities provided certain standards are met, including good faith and the reasonable belief that the particular action was in, or not opposed to, the best interests of the corporation.
Subsection (a) of Section 145 of the DGCL ("Section 145") empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), by reason of the fact that he is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he 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 conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any person 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 acted in any of the capacities set forth above, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted under standards similar to those set forth above, except that no indemnification may be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation, unless and only to the extent that the Delaware Court of Chancery or the court in which such action or suit was brought shall determine that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to be indemnified for such expenses which the court shall deem proper.
Section 145 further provides that, among other things, to the extent that a director or officer of a corporation has been successful in the defense of any action, suit or proceeding referred to in Subsections (a) and (b) of Section 145, or in the defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith; that indemnification provided for by Section 145 shall not be deemed exclusive of any other rights to which the indemnified party may be entitled; and that a corporation is empowered to purchase and maintain insurance on behalf of a director or officer of the corporation against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify against such liability under Section 145.
Indemnification as described above shall be granted in a specific case only upon a determination that indemnification is proper under the circumstances using the applicable standard of conduct which is made by (a) a majority of directors who were not parties to such proceeding, (b) a committee of such directors designated by majority vote of such directors, (c) independent legal counsel in a written opinion if there are no such disinterested directors or if such disinterested directors so direct, or (d) the stockholders.
The Restated Certificate of Incorporation of Alamosa (Delaware), Inc. (the "Registrant") provides that the liability of the directors of the Registrant to the Registrant or any of its stockholders for monetary damages arising from acts or omissions occurring in their capacity as directors will be limited to the fullest extent permitted by the laws of Delaware or any other applicable law. This limitation does not apply with respect to any action in which a director would be liable under Section 174 of the DGCL nor does it apply with respect to any liability in which a director (1) breached his
II-1
duty of loyalty to the Registrant or its stockholders; (2) did not act in good faith or, in failing to act, did not act in good faith; (3) acted in a manner involving intentional misconduct or a knowing violation of law or, in failing to act, shall have acted in a manner involving intentional misconduct or a knowing violation of law; or (4) derived an improper personal benefit.
The Registrant's Restated Certificate of Incorporation provides that the Registrant will indemnify its directors, officers and employees and former directors, officers and employees to the fullest extent permitted by the laws of Delaware or any other applicable law.
The Registrant has directors' and officers' liability insurance covering its directors and officers.
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits
| | | | | | |
| EXHIBIT NUMBER | | EXHIBIT TITLE |
| 3.1 | | Amended and Restated Certificate of Incorporation of Alamosa Holdings, Inc., filed as Exhibit 1.1 to the Registration Statement on Form 8-A, dated February 14, 2001 (SEC File No. 000-32357) of Alamosa Holdings, Inc., which exhibit is incorporated herein by reference. |
| 3.2 | | Amended and Restated Bylaws of Alamosa Holdings, Inc., filed as Exhibit 1.2 to the Registration Statement on Form 8-A, dated February 14, 2001 (SEC File No. 000-32357) of Alamosa Holdings, Inc., which exhibit is incorporated herein by reference. |
| 3.3 | | Certificate of the Designations, Powers, Preferences and Rights of Series B Convertible Preferred Stock, filed as Exhibit 3.1 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 3.4 | | Certificate of the Designations, Powers, Preferences and Rights of Series C Convertible Preferred Stock, filed as Exhibit 3.2 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 4.1 | | Specimen Common Stock Certificate, filed as Exhibit 1.3 to the Registration Statement on Form 8-A, dated February 14, 2001 (SEC File No. 000-32357) of Alamosa Holdings, Inc., which exhibit is incorporated herein by reference. |
| 4.2 | | Form of Indenture for 12 7/8% Senior Discount Notes due 2010, by and among Alamosa PCS Holdings, Inc., the Subsidiary Guarantors party thereto and Norwest Bank Minnesota, N.A., as trustee, filed as Exhibit 4.1 to Amendment No. 2 to the Registration Statement on Form S-1, dated February 2, 2000 (Registration No. 333-93499) of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 4.3 | | Form of Global Note relating to the 12 7/8% Senior Discount Notes due 2010, filed as Exhibit 4.2 to Amendment No. 2 to the Registration Statement on Form S-1, dated February 2, 2000 (Registration No. 333-93499) of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 4.4 | | Indenture for 12½% Senior Notes due 2011, dated as of January 31, 2001, by and among Alamosa (Delaware), Inc., the Subsidiary Guarantors party thereto and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.4 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 4.5 | | Form of Global Note relating to the 12½% Senior Notes due 2011, filed as Exhibit 4.5 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
|
II-2
| | | | | | |
| EXHIBIT NUMBER | | EXHIBIT TITLE |
| 4.6 | | First Supplemental Indenture for 12 7/8% Senior Discount Notes due 2010, dated as of January 31, 2001, among Alamosa Finance, LLC, Alamosa Limited, LLC, Alamosa (Delaware), Inc. (on behalf of itself and the Existing Subsidiary Guarantors) and Wells Fargo Bank Minnesota, N.A. (formerly known as Norwest Bank Minnesota, N.A.), as trustee, filed as Exhibit 4.6 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 4.7 | | First Supplemental Indenture for 12½% Senior Notes due 2011, dated as of February 14, 2001, among Roberts Wireless Communications, L.L.C., Roberts Wireless Properties, LLC, Washington Oregon Wireless, LLC, Alamosa Holdings, LLC, Alamosa Properties, L.P., Alamosa (Wisconsin) Properties, LLC, Washington Oregon Wireless Properties, LLC, Washington Oregon Wireless Licenses, LLC, Alamosa (Delaware), Inc. (on behalf of itself and the Existing Subsidiary Guarantors) and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.7 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 4.8 | | Second Supplemental Indenture for 12 7/8% Senior Discount Notes due 2010, dated as of February 14, 2001, among Roberts Wireless Communications, L.L.C., Roberts Wireless Properties, LLC, Washington Oregon Wireless, LLC, Alamosa Holdings, LLC, Alamosa Properties, L.P., Alamosa (Wisconsin) Properties, LLC, Washington Oregon Wireless Properties, LLC, Washington Oregon Wireless Licenses, LLC, Alamosa (Delaware), Inc. (on behalf of itself and the Existing Subsidiary Guarantors) and Wells Fargo Bank Minnesota, N.A. (formerly known as Norwest Bank Minnesota, N.A.), as trustee, filed as Exhibit 4.8 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 4.9 | | Registration Rights Agreement, relating to 12½% Senior Notes due 2011, dated as of January 24, 2001, by and among Alamosa (Delaware), Inc., the Subsidiary Guarantors set forth on Schedule I thereto, Salomon Smith Barney Inc., TD Securities (USA) Inc., Credit Suisse First Boston Corporation, First Union Securities, Inc., Lehman Brothers Inc., and Scotia Capital (USA) Inc., filed as Exhibit 4.9 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 4.10 | | Rights Agreement, dated as of February 14, 2001, by and between Alamosa Holdings, Inc. and Mellon Investors Services LLC, as Rights Agent, including the form of Certificate of Designation, Preferences and Rights of Series A Preferred Stock attached as Exhibit 1 thereto and the form of Rights Certificate attached as Exhibit 2 thereto, filed as Exhibit 1.4 to the Registration Statement on Form 8-A, dated February 14, 2001 (Registration No. 000-32357) of Alamosa Holdings, Inc., which exhibit is incorporated herein by reference. |
| 4.11 | | Third Supplemental Indenture for 12 7/8% Senior Discount Notes due 2010, dated as of March 30, 2001, among SWLP, L.L.C., SWGP, L.L.C., Southwest PCS, L.P., Southwest PCS Properties, LLC, Southwest PCS Licenses, LLC, Alamosa (Delaware), Inc. (on behalf of itself and the Existing Subsidiary Guarantors) and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.10 to the Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference. |
| 4.12 | | Second Supplemental Indenture for 12½% Senior Notes due 2011, dated as of March 30, 2001, among SWLP, L.L.C., SWGP, L.L.C., Southwest PCS, L.P., Southwest PCS Properties, LLC, Southwest PCS Licenses, LLC, Alamosa (Delaware), Inc. (on behalf of itself and the Existing Subsidiary Guarantors) and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.11 to the Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference. |
|
II-3
| | | | | | |
| EXHIBIT NUMBER | | EXHIBIT TITLE |
| 4.13 | | Indenture for 13 5/8% Senior Notes due 2011, dated August 15, 2001, among Alamosa (Delaware), Inc., the Subsidiary Guarantors party thereto, and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.12 to the Registration Statement on Form S-4, dated August 28, 2001 (Registration No. 333-68538) of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference. |
| 4.14 | | Form of Global Note relating to the 13 5/8% Senior Notes due 2011, filed as Exhibit 4.13 to the Registration Statement on Form S-4, dated August 28, 2001 (Registration No. 333-68538) of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference. |
| 4.15 | | Registration Rights Agreement, dated August 7, 2001, by and among Alamosa (Delaware), Inc., the Subsidiary Guarantors set forth on Schedule I thereto, Salomon Smith Barney Inc., TD Securities (USA) Inc., First Union Securities, Inc., and Scotia Capital (USA) Inc., relating to the 13 5/8% Senior Notes due 2011, filed as Exhibit 4.14 to the Registration Statement on Form S-4, dated August 28, 2001 (Registration No. 333-68538) of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference. |
| 4.16 | | Indenture for 11% Senior Notes due 2010, dated as of November 10, 2003, among Alamosa (Delaware), Inc., the Subsidiary Guarantors party thereto and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.1 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 4.17 | | Global Note relating to the 11% Senior Notes due 2010, filed as Exhibit 4.3 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 4.18 | | Indenture for 12% Senior Discount Notes due 2009, dated as of November 10, 2003, among Alamosa (Delaware), Inc., the Subsidiary Guarantors party thereto and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.2 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 4.19 | | Global Note relating to the 12% Senior Discount Notes due 2009, filed as Exhibit 4.4 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 4.20 | | Fourth Supplemental Indenture for 12 7/8% Senior Discount Notes due 2010, dated as of September 11, 2003, among Alamosa Holdings, Inc., Alamosa (Delaware), Inc., the Subsidiary Guarantors set forth on Schedule I thereto and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.5 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 4.21 | | Fifth Supplemental Indenture for 12 7/8% Senior Discount Notes due 2010, dated as of October 29, 2003, among Alamosa Holdings, Inc., Alamosa (Delaware), Inc., the Subsidiary Guarantors set forth on Schedule I thereto and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.6 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 4.22 | | Third Supplemental Indenture for 12½% Senior Notes due 2011, dated as of September 11, 2003, among Alamosa Holdings, Inc., Alamosa (Delaware), Inc., the Subsidiary Guarantors set forth on Schedule I thereto and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.7 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
|
II-4
| | | | | | |
| EXHIBIT NUMBER | | EXHIBIT TITLE |
| 4.23 | | Fourth Supplemental Indenture for 12½% Senior Discount Notes due 2011, dated as of October 29, 2003, among Alamosa Holdings, Inc., Alamosa (Delaware), Inc., the Subsidiary Guarantors set forth on Schedule I thereto and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.8 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 4.24 | | First Supplemental Indenture for 13 5/8% Senior Notes due 2011, dated as of September 11, 2003, among Alamosa Holdings, Inc., Alamosa (Delaware), Inc., the Subsidiary Guarantors set forth on Schedule I thereto and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.9 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 4.25 | | Second Supplemental Indenture for 13 5/8% Senior Discount Notes due 2011, dated as of October 29, 2003, among Alamosa Holdings, Inc., Alamosa (Delaware), Inc., the Subsidiary Guarantors set forth on Schedule I thereto and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.10 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 4.26 | | Indenture for 8½% Senior Notes due 2012, dated as of January 20, 2004, among Alamosa (Delaware), Inc., the Subsidiary Guarantors party thereto and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.26 to Form 10-K of Alamosa Holdings, Inc. for the year period ended December 31, 2003 which exhibit is incorporated herein by reference. |
| 4.27 | | Form of Global Note relating to the 8½% Senior Notes due 2012, filed as Exhibit 4.27 to Form 10-K of Alamosa Holdings, Inc. for the year period ended December 31, 2003 which exhibit is incorporated herein by reference. |
| 4.28 | | Registration Rights Agreement, dated as of January 20, 2004, by and among Alamosa (Delaware), Inc., the Guarantors listed on the signature pages thereto, UBS Securities LLC, Bear, Stearns & Co. Inc. and Lehman Brothers Inc., relating to the 8½% Senior Notes due 2012, filed as Exhibit 4.28 to Form 10-K of Alamosa Holdings, Inc. for the year period ended December 31, 2003 which exhibit is incorporated herein by reference. |
| 5.1** | | Form of Opinion of Skadden, Arps, Slate, Meagher & Flom LLP. |
| 10.1 | | CDMA 1900 SprintCom Additional Affiliate Agreement dated as of December 21, 1998, by and between Alamosa PCS, LLC and Northern Telecom, Inc., filed as Exhibit 10.1 to Amendment No. 3 to the Registration Statement on Form S-1, dated February 2, 2000 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 10.2 | | Amendment No. 1 to DMS-MTX Cellular Supply Agreement dated as of January 12, 1999, by and between Alamosa PCS, LLC and Northern Telecom Inc., filed as Exhibit 10.2 to Amendment No. 3 to the Registration Statement on Form S-1, dated February 2, 2000 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 10.3 | | Amendment No. 2 to DMS-MTX Cellular Supply Agreement, dated as of March 1, 1999, by and between Alamosa PCS, LLC and Northern Telecom Inc., filed as Exhibit 10.3 to Amendment No. 3 to the Registration Statement on Form S-1, dated February 2, 2000 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
|
II-5
| | | | | | |
| EXHIBIT NUMBER | | EXHIBIT TITLE |
| 10.4 | | Amendment No. 3 to DMS-MTX Cellular Supply Agreement, dated as of August 11, 1999, by and between Alamosa PCS, LLC and Northern Telecom Inc., filed as Exhibit 10.4 to Amendment No. 1 to the Registration Statement on Form S-1, dated December 23, 1999 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 10.5 | | Sprint PCS Management Agreement (Wisconsin), as amended by Addendum I, dated as of December 6, 1999 by and between Sprint Spectrum, L.P., WirelessCo, L.P. and Alamosa Wisconsin Limited Partnership, filed as Exhibit 10.10 to Amendment No. 3 to the Registration Statement on Form S-1, dated February 2, 2000 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 10.6 | | Sprint PCS Services Agreement (Wisconsin,) dated as of December 6, 1999, by and between Sprint Spectrum, L.P. and Alamosa Wisconsin Limited Partnership, filed as Exhibit 10.11 to Amendment No. 3 to the Registration Statement on Form S-1, dated February 2, 2000 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 10.7 | | Sprint Trademark and Service Mark License Agreement (Wisconsin), dated as of December 6, 1999, by and between Sprint Communications Company, L.P. and Alamosa Wisconsin Limited Partnership, filed as Exhibit 10.12 to Amendment No. 3 to the Registration Statement on Form S-1, dated February 2, 2000 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 10.8 | | Sprint Spectrum Trademark and Service Mark License Agreement (Wisconsin), dated as of December 6, 1999, by and between Sprint Spectrum, L.P. and Alamosa Wisconsin Limited Partnership, filed as Exhibit 10.13 to Amendment No. 3 to the Registration Statement on Form S-1, dated February 2, 2000 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 10.9 | | Engineering Service Contract, System Design and Construction Inspection, dated as of July 27, 1998, as amended, by and between Alamosa PCS, LLC and Hicks & Ragland Engineering Co., Inc., filed as Exhibit 10.14 to Amendment No. 1 to the Registration Statement on Form S-1, dated December 23, 1999 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 10.10 | | Master Site Development and Lease Agreement, as amended, dated as of August 1998, by and between Alamosa PCS, LLC and Specialty Capital Services, Inc., filed as Exhibit 10.15 to Amendment No. 3 to the Registration Statement on Form S-1, dated December 23, 1999 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 10.11+ | | Amended and Restated Employment Agreement, dated as of October 1, 2002, by and between Alamosa Holdings, Inc. and David E. Sharbutt, filed as Exhibit 10.11 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2002, which exhibit is incorporated herein by reference. |
| 10.12+ | | Amended and Restated Employment Agreement, dated as of October 1, 2002, by and between Alamosa Holdings, Inc. and Kendall W. Cowan, filed as Exhibit 10.12 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2002, which exhibit is incorporated herein by reference. |
|
II-6
| | | | | | |
| EXHIBIT NUMBER | | EXHIBIT TITLE |
| 10.13 | | Sprint PCS Management Agreement, as amended by Addendum I, dated as of December 23, 1999, by and between Sprint Spectrum, L.P., WirelessCo, L.P., Cox Communications PCS, L.P., Cox CPS License, LLC, SprintCom, Inc. and Alamosa PCS, LLC, filed as Exhibit 10.22 to Amendment No. 2 to the Registration Statement on Form S-1, dated January 19, 2000 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 10.14 | | Sprint PCS Services Agreement, dated as of December 23, 1999, by and between Sprint Spectrum, L.P. and Alamosa PCS, LLC, filed as Exhibit 10.23 to Amendment No. 2 to the Registration Statement on Form S-1, dated January 19, 2000 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 10.15 | | Sprint Trademark and Service Mark License Agreement, dated as of December 23, 1999, by and between Sprint Communications Company, L.P. and Alamosa PCS, LLC, filed as Exhibit 10.24 to Amendment No. 2 to the Registration Statement on Form S-1, dated January 19, 2000 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 10.16 | | Sprint Spectrum Trademark and Service Mark License Agreement, dated as of December 23, 1999, by and between Sprint Spectrum, L.P. and Alamosa PCS, LLC, filed as Exhibit 10.25 to Amendment No. 2 to the Registration Statement on Form S-1, dated January 19, 2000 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 10.17 | | Amendment No. 4 to DMS-MTX Cellular Supply Agreement by and between Alamosa PCS, LLC and Nortel Networks Inc. (successor in interest to Northern Telecom Inc.) effective as of February 8, 2000, filed as Exhibit 10.20 to Form 10-K of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.) for the year ended December 31, 1999, which exhibit is incorporated herein by reference. |
| 10.18 | | Amended and Restated Master Design Build Agreement, dated as of March 21, 2000, by and between Texas Telecommunications, LP and Alamosa Wisconsin Limited Partnership and SBA Towers, Inc., filed as Exhibit 10.23 to Form 10-K of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.) for the year ended December 31, 1999, which exhibit is incorporated herein by reference. |
| 10.19+ | | Amended and Restated Employment Agreement dated as of October 1, 2002, by and between Alamosa Holdings, Inc. and Loyd I. Rinehart, filed as Exhibit 10.19 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2002, which exhibit is incorporated herein by reference. |
| 10.20 | | Addendum II to Sprint PCS Management Agreement (Wisconsin), dated as of February 3, 2000 and effective as of February 8, 2000, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company, L.P. and Alamosa Wisconsin Limited Partnership, filed as Exhibit 10.27 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.21 | | Addendum III to Sprint PCS Management Agreement (Wisconsin), dated as of April 25, 2000 and effective as of March 15, 2000, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company, L.P. and Alamosa Wisconsin Limited Partnership, filed as Exhibit 10.28 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
|
II-7
| | | | | | |
| EXHIBIT NUMBER | | EXHIBIT TITLE |
| 10.22 | | Addendum IV to Sprint PCS Management Agreement (Wisconsin), dated as of June 23, 2000, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company, L.P. and Alamosa Wisconsin Limited Partnership, filed as Exhibit 10.29 to Form 10-K of Alamosa Holdings, Inc., for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.23 | | Addendum V to Sprint PCS Management Agreement (Wisconsin), dated as of February 14, 2001, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company, L.P. and Alamosa Wisconsin Limited Partnership, filed as Exhibit 10.30 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.24 | | Addendum II to Sprint PCS Management Agreement, dated as of February 3, 2000 and effective as of February 8, 2000, by and among Sprint Spectrum L.P., WirelessCo, L.P., SprintCom, Inc., Cox Communications PCS, L.P., Cox PCS License, LLC, Sprint Communications Company, L.P. and Texas Telecommunications, LP (successor in interest to Alamosa PCS, LLC), filed as Exhibit 10.31 to Form 10-K of Alamosa Holdings, Inc., for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.25 | | Addendum III to Sprint PCS Management Agreement, dated as of April 25, 2000 and effective as of March 15, 2000, by and among Sprint Spectrum L.P., WirelessCo, L.P., SprintCom, Inc., Cox Communications PCS, L.P., Cox PCS License, LLC, Sprint Communications Company, L.P. and Texas Telecommunications, LP (successor in interest to Alamosa PCS, LLC), filed as Exhibit 10.32 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.26 | | Addendum IV to Sprint PCS Management Agreement, dated as of June 23, 2000, by and among Sprint Spectrum L.P., WirelessCo, L.P., SprintCom, Inc., Sprint Communications Company, L.P., and Texas Telecommunications, LP, filed as Exhibit 10.33 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.27 | | Addendum V to Sprint PCS Management Agreement, dated as of January 8, 2001, by and among Sprint Spectrum L.P., WirelessCo, L.P., SprintCom, Inc., Cox Communications PCS, L.P., Cox PCS License, LLC, Sprint Communications Company, L.P. and Texas Telecommunications, LP, filed as Exhibit 10.34 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.28 | | Addendum VI to Sprint PCS Management Agreement, dated as of February 14, 2001, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company, L.P. and Texas Telecommunications, LP, filed as Exhibit 10.35 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.29 | | Sprint PCS Management Agreement, dated as of June 8, 1998, as amended by Addenda I – VIII between Sprint Spectrum L.P., SprintCom, Inc. and Roberts Wireless Communications, L.L.C., filed as Exhibit 10.36 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.30 | | Sprint PCS Services Agreement, dated as of June 8, 1998, between Sprint Spectrum L.P. and Roberts Wireless Communications, L.L.C., filed as Exhibit 10.37 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.31 | | Sprint Trademark and Service Mark License Agreement, dated as of June 8, 1998, between Sprint Communications Company, L.P. and Roberts Wireless Communications, L.L.C., filed as Exhibit 10.38 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
|
II-8
| | | | | | |
| EXHIBIT NUMBER | | EXHIBIT TITLE |
| 10.32 | | Sprint Spectrum Trademark and Service Mark License Agreement, dated as of June 8, 1998, between Sprint Spectrum L.P. and Roberts Wireless Communications, L.L.C., filed as Exhibit 10.39 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.33 | | Sprint PCS Management Agreement, dated as of January 25, 1999, as amended by Addenda I – III, between Sprint Spectrum L.P., WirelessCo, L.P. and Washington Oregon Wireless, LLC, filed as Exhibit 10.40 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.34 | | Sprint PCS Services Agreement, dated as of January 25, 1999, between Sprint Spectrum L.P. and Washington Oregon Wireless, LLC, filed as Exhibit 10.41 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.35 | | Sprint Trademark and Service Mark License Agreement, dated as of January 25, 1999, between Sprint Communications Company, L.P. and Washington Oregon Wireless, LLC, filed as Exhibit 10.42 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.36 | | Sprint Spectrum Trademark and Service Mark License Agreement, dated as of January 25, 1999, between Sprint Spectrum L.P. and Washington Oregon Wireless, LLC, filed as Exhibit 10.42 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.37 | | Amended and Restated Employment Agreement, dated as of October 1, 2002, by and between Alamosa Holdings, Inc. and Anthony Sabatino, filed as Exhibit 10.42 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2002, which exhibit is incorporated herein by reference. |
| 10.38+ | | Amended and Restated 1999 Long Term Incentive Plan, filed as Exhibit 4.2 to the Registration Statement on Form S-8, dated January 10, 2003 (Registration No. 333- 102460) of Alamosa Holdings, Inc., which exhibit is incorporated herein by reference. |
| 10.39+ | | Amended and Restated Alamosa Holdings, Inc. Employee Stock Purchase Plan, filed as Exhibit 10.61 to the Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended June 30, 2002, which exhibit is incorporated herein by reference. |
| 10.40 | | Addendum VI to Sprint PCS Management Agreement (Wisconsin), dated as of March 30, 2001, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company, L.P. and Alamosa Wisconsin Limited Partnership, filed as Exhibit 10.45 to the Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference. |
| 10.41 | | Addendum VII to Sprint PCS Management Agreement, dated as of March 30, 2001, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company, L.P. and Texas Telecommunications LP, filed as Exhibit 10.46 to the Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572), of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference. |
| 10.42 | | Addendum IX to Sprint PCS Management Agreement, dated as of March 30, 2001, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company, L.P. and Roberts Wireless Communications, filed as Exhibit 10.47 to the Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572), of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference. |
|
II-9
| | | | | | |
| EXHIBIT NUMBER | | EXHIBIT TITLE |
| 10.43 | | Addendum IV to Sprint PCS Management Agreement, dated as of March 30, 2001, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company, L.P. and Washington Oregon Wireless, LLC, filed as Exhibit 10.48 to the Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572), of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference. |
| 10.44 | | Sprint PCS Amended and Restated Management Agreement, dated March 30, 2001, as amended by Addendum IV, by and between Sprint Spectrum, L.P., SprintCom, Inc., WirelessCo, L.P., Sprint Communications Company, L.P., and Southwest PCS, L.P., filed as Exhibit 10.49 to the Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference. |
| 10.45 | | Sprint PCS Services Agreement, dated July 10, 1998, between Sprint Spectrum L.P. and Southwest PCS, L.P., filed as Exhibit 10.50 to the Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference. |
| 10.46 | | Sprint Trademark and Service Mark License Agreement, dated July 10, 1998, between Sprint Communications Company, L.P. and Southwest PCS, L.P., filed as Exhibit 10.51 to the Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference. |
| 10.47 | | Sprint Spectrum Trademark and Service Mark License Agreement, dated July 10, 1998, between Sprint Spectrum L.P. and Southwest PCS, L.P., filed as Exhibit 10.52 to the Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference. |
| 10.48+ | | Amended and Restated Employment Agreement dated as of October 1, 2002 by and between Alamosa holdings, Inc. and Margaret Z. Couch, filed as Exhibit 10.60 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2002, which exhibit is incorporated herein by reference. |
| 10.49+ | | Employment Agreement dated as of December 1, 2002 by and between Alamosa Holdings, Inc. and Steven Richardson, filed as Exhibit 10.62 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2002, which exhibit is incorporated herein by reference. |
| 10.50 | | Addendum VI to Sprint PCS Management Agreement and Sprint PCS Services Agreement, dated as of September 12, 2003, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company L.P. and Washington Oregon Wireless, LLC, filed as Exhibit 10.2 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 10.51 | | Addendum X to Sprint PCS Management Agreement and Sprint PCS Services Agreement, dated as of September 12, 2003, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company L.P. and Texas Telecommunications LP, filed as Exhibit 10.3 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 10.52 | | Addendum V to Sprint PCS Management Agreement and Sprint PCS Services Agreement, dated as of September 12, 2003, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company L.P. and Southwest PCS, L.P., filed as Exhibit 10.4 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
|
II-10
| | | | | | |
| EXHIBIT NUMBER | | EXHIBIT TITLE |
| 10.53 | | Addendum IX to Sprint PCS Management Agreement and Sprint PCS Services Agreement, dated as of September 12, 2003, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company L.P. and Alamosa Wisconsin Limited Partnership, filed as Exhibit 10.5 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 10.54 | | Addendum X to Sprint PCS Management Agreement and Sprint PCS Services Agreement, dated as of September 12, 2003, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company L.P. and Alamosa Missouri, LLC, filed as Exhibit 10.6 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 10.55 | | Settlement Agreement and Mutual Release, dated as of September 12, 2003, by and among Sprint Spectrum L.P., SprintCom, Inc., Sprint Communications Company L.P., WirelessCo, L.P., Alamosa Holdings, Inc., Alamosa (Delaware), Inc., Alamosa Missouri, LLC, Southwest PCS, L.P., Washington Oregon Wireless LLC, Alamosa Wisconsin Limited Partnership and Texas Telecommunications LP, Filed as Exhibit 10.7 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 10.56+ | | Amendment to the Amended and Restated Alamosa Holdings, Inc. Employee Stock Purchase Plan, filed as Exhibit 10.8 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 10.57+* | | Amendment No. 1 to Amended and Restated Employment Agreement dated as of March 8, 2004, by and between Alamosa Holdings, Inc. and David E. Sharbutt. |
| 10.58+* | | Amendment No. 1 to Amended and Restated Employment Agreement dated as of March 8, 2004, by and between Alamosa Holdings, Inc. and Kendall Cowan. |
| 10.59+* | | Amendment No. 1 to Amended and Restated Employment Agreement dated as of March 8, 2004, by and between Alamosa Holdings, Inc. and Anthony Sabatino. |
| 10.60+* | | Amendment No. 1 to Amended and Restated Employment Agreement dated as of March 8, 2004, by and between Alamosa Holdings, Inc. and Loyd I. Rinehart. |
| 10.61* | | Addendum VII to Sprint PCS Management Agreement and Sprint PCS Services Agreement, dated March 31, 2004, by and among Sprint Spectrum L.P., Wireless Co. L.P., Sprint Communications Company L.P., and Washington Oregon Wireless, L.L.C. |
| 10.62* | | Addendum XI to Sprint PCS Management Agreement and Sprint PCS Services Agreement, dated March 31, 2004, by and among Sprint Spectrum L.P., Wireless Co, L.P., Sprint Communications Company, L.P. and Texas Telecommunications L.P. |
| 10.63* | | Addendum VI to Sprint PCS Management Agreement and Sprint PCS Services Agreement, dated March 31, 2004, by and among Sprint Spectrum L.P., SprintCom, Inc., WirelessCo, L.P., Sprint Communications Company L.P., and Southwest PCS, L.P. |
| 10.64* | | Addendum X to Sprint PCS Management Agreement and Sprint PCS Services Agreement, dated March 31, 2004, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company L.P., and Alamosa Wisconsin Limited Partnership. |
| 10.65* | | Addendum XI to Sprint PCS Management Agreement and Sprint PCS Services Agreement, dated March 31, 2004, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company L.P., and and Alamosa Missouri, LLC. |
| 12.1* | | Computation of Ratio of Earnings to Fixed Charges. |
|
II-11
| | | | | | |
| EXHIBIT NUMBER | | EXHIBIT TITLE |
| 23.1* | | Consent of PricewaterhouseCoopers LLP. |
| 23.2** | | Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.1). |
| 24.1 | | Powers of Attorney (included on the signature pages to the registration statement). |
| 25.1* | | Statement of Eligibility of Trustee under the Indenture. |
| 99.1* | | Form of Letter of Transmittal. |
| 99.2* | | Form of Notice of Guaranteed Delivery. |
| 99.3* | | Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. |
| 99.4* | | Form of Letter to Clients. |
|
| + | Exhibit is management contract or compensatory plan. |
| * | Exhibit is filed herewith. |
| ** | Exhibit to be filed by amendment. |
| (b) | Financial Statement Schedules: |
II-12
SCHEDULE II
ALAMOSA (DELAWARE), INC.
CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
FOR THE PERIOD DECEMBER 31, 2001 THROUGH
DECEMBER 31, 2003 (in thousands)
| | | | | | | | | | | | | | | | | | | | | | |
| CLASSIFICATION | | Balance at
Beginning
of Period | | Additions
Charged
to Costs
and
Expenses | | Additions
Charged to
Other
Accounts | | Deductions | | Balance
at End of
Period |
| | | | | | | | | | | | | | | | | | | | | |
| December 31, 2001 | | | | | | | | | | | | | | | | | | | | |
| Allowance for doubtful accounts | | $ | 1,503 | | | $ | 17,490 | | | $ | 1,213 | (1) | | $ | (14,314 | ) | | $ | 5,892 | |
| Deferred tax valuation allowance | | | 26,985 | | | | — | | | | 2,313 | (2) | | | (29,298 | )(3) | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| December 31, 2002 | | | | | | | | | | | | | | | | | | | | |
| Allowance for doubtful accounts | | $ | 5,892 | | | $ | 40,285 | | | $ | — | | | $ | (37,726 | ) | | $ | 8,451 | |
| Deferred tax valuation allowance | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| December 31, 2003 | | | | | | | | | | | | | | | | | | | | |
| Allowance for doubtful accounts | | $ | 8,451 | | | $ | 13,451 | | | $ | — | | | $ | (15,919 | ) | | $ | 5,983 | |
| Deferred tax valuation allowance | | | — | | | | 23,269 | | | | — | | | | — | | | | 23,269 | |
|
This schedule should be read in conjunction with the Company's audited consolidated financial statements and related notes thereto that appear in this prospectus.
| |
| (1) | For the year ended December 31, 2001, amount represents allowance for doubtful accounts recorded in connection with acquisitions accounted for under the purchase method of accounting. |
| |
| (2) | Addition represents increase in valuation allowance due to the increase in the effective tax rate applied to deferred tax items. |
This amount represents the reversal of the valuation allowance recorded by the Company against goodwill as a result of the business combinations with Roberts, WOW and Southwest (see Note 4).
II-13
Item 22. Undertakings.
The following undertakings are made by each of the undersigned registrants:
| |
| (a) | The undersigned registrant hereby undertakes: |
| |
| (1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
| |
| (i) | To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; |
| |
| (ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) (§230.424(b) of this chapter) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; |
| |
| (iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
| |
| (2) | That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| |
| (3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
| |
| (b) | Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. |
| |
| (c) | The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. |
| |
| (d) | The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. |
II-14
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Lubbock, State of Texas, on April 16, 2004.
| ALAMOSA (DELAWARE), INC. |
| | | | | | |
| | | By: /s/ David E. Sharbutt
Name: David E. Sharbutt
Title: Chairman of the Board and
Chief Executive Officer |
|
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints David E. Sharbutt and Kendall W. Cowan, and each of them, with full power to act without the other, such person's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this registration statement, and any and all amendments thereto (including post-effective amendments), and to file the same, with exhibits and schedules thereto, and other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing necessary or desirable to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
| | | | |
| NAME | | TITLE | | DATE |
|
| /s/ David E. Sharbutt | | Chairman of the Board of Directors and Chief Executive Officer
(Principal Executive Officer) | | April 16, 2004 |
|
| David E. Sharbutt |
|
| /s/ Kendall W. Cowan | | Chief Financial Officer and Director (Principal Financial and Accounting Officer) | | April 15, 2004 |
|
| Kendall W. Cowan |
|
| | | Director | | April , 2004 |
|
| Ray M. Clapp, Jr. |
|
| /s/ Scotty Hart | | Director | | April 15, 2004 |
|
| Scotty Hart |
|
| /s/ Allen T. McInnes | | Director | | April 15, 2004 |
|
| Allen T. McInnes |
|
| /s/ Schuyler B. Marshall | | Director | | April 15, 2004 |
|
| Schuyler B. Marshall |
|
| /s/ John F. Otto | | Director | | April 15, 2004 |
|
| John F. Otto |
|
| /s/ Thomas F. Riley, Jr. | | Director | | April 16, 2004 |
|
| Thomas F. Riley, Jr. |
|
II-15
| | | | |
| NAME | | TITLE | | DATE |
|
| | | Director | | April , 2004 |
|
| Michael V. Roberts |
|
| | | Director | | April , 2004 |
|
| Steven C. Roberts |
|
| /s/ Jimmy R. White | | Director | | April 15, 2004 |
|
| Jimmy R. White |
|
II-16
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Lubbock, State of Texas, on April 16, 2004.
| Alamosa PCS, Inc. |
| | | | | | |
| | | By: /s/ David E. Sharbutt
Name: David E. Sharbutt
Title: President and Sole Director |
|
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
| | | | |
| NAME | | TITLE | | DATE |
|
| /s/ David E. Sharbutt | | Chairman of the Board of Directors and Chief Executive Officer
(Principal Executive Officer) | | April 16, 2004 |
|
| David E. Sharbutt |
|
| /s/ Kendall W. Cowan | | Chief Financial Officer and Director (Principal Financial and Accounting Officer) | | April 15, 2004 |
|
| Kendall W. Cowan |
|
II-17
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Lubbock, State of Texas, on April 16, 2004.
| Alamosa Holdings, LLC
Alamosa Missouri, LLC
Alamosa Missouri Properties, LLC
Washington Oregon Wireless, LLC
Washington Oregon Wireless Properties, LLC
Washington Oregon Wireless Licenses, LLC
SWLP, L.L.C.
SWGP, L.L.C.
Southwest PCS Properties, LLC
Southwest PCS Licenses, LLC
Alamosa Wisconsin GP, LLC
Alamosa (Wisconsin) Properties, LLC
Alamosa Finance, LLC
Alamosa Limited, LLC
Alamosa Delaware GP, LLC |
| | | | | | |
| | | By: /s/ David E. Sharbutt
Name: David E. Sharbutt
Title: President and Sole Manager |
|
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
| | | | |
| NAME | | TITLE | | DATE |
|
| /s/ David E. Sharbutt | | Chairman of the Board of Directors and Chief Executive Officer
(Principal Executive Officer) | | April 16, 2004 |
|
| David E. Sharbutt |
|
| /s/ Kendall W. Cowan | | Chief Financial Officer and Director (Principal Financial and Accounting Officer) | | April 15, 2004 |
|
| Kendall W. Cowan |
|
II-18
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Lubbock, State of Texas, on April 16, 2004.
| Southwest PCS, L.P. |
| | | | | | |
| | | By: /s/ David E. Sharbutt
Name: David E. Sharbutt
Title: President |
|
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
| | | | |
| NAME | | TITLE | | DATE |
|
| /s/ David E. Sharbutt | | Chairman of the Board of Directors and Chief Executive Officer
(Principal Executive Officer) | | April 16, 2004 |
|
| David E. Sharbutt |
|
| /s/ Kendall W. Cowan | | Chief Financial Officer and Director (Principal Financial and Accounting Officer) | | April 15, 2004 |
|
| Kendall W. Cowan |
|
| SWGP, L.L.C. | | Sole General Partner | | |
|
|
|
| /s/ David E. Sharbutt | | President and Sole Manager | | April 16, 2004 |
|
| David E. Sharbutt |
|
II-19
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Lubbock, State of Texas, on April 16, 2004.
| Alamosa Wisconsin Limited Partnership |
| | | | | | |
| | | By: /s/ David E. Sharbutt
Name: David E. Sharbutt
Title: President |
|
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
| | | | |
| NAME | | TITLE | | DATE |
|
| /s/ David E. Sharbutt | | Chairman of the Board of Directors and Chief Executive Officer
(Principal Executive Officer) | | April 16, 2004 |
|
| David E. Sharbutt |
|
| /s/ Kendall W. Cowan | | Chief Financial Officer and Director (Principal Financial and Accounting Officer) | | April 15, 2004 |
|
| Kendall W. Cowan |
|
| Alamosa Wisconsin GP, LLC | | Sole General Partner | | |
|
|
|
| /s/ David E. Sharbutt | | President and Sole Manager | | April 16, 2004 |
|
| David E. Sharbutt |
|
II-20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Lubbock, State of Texas, on April 16, 2004.
| Texas Telecommunications, LP |
| | | | | | |
| | | By: /s/ David E. Sharbutt
Name: David E. Sharbutt
Title: President |
|
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
| | | | |
| NAME | | TITLE | | DATE |
|
| /s/ David E. Sharbutt | | Chairman of the Board of Directors and Chief Executive Officer
(Principal Executive Officer) | | April 16, 2004 |
|
| David E. Sharbutt |
|
| /s/ Kendall W. Cowan | | Chief Financial Officer and Director (Principal Financial and Accounting Officer) | | April 15, 2004 |
|
| Kendall W. Cowan |
|
| Alamosa Delaware GP, LLC | | Sole General Partner | | |
|
|
|
| /s/ David E. Sharbutt | | President and Sole Manager | | April 16, 2004 |
|
| David E. Sharbutt |
|
II-21
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Lubbock, State of Texas, on April 16, 2004.
| Alamosa Properties, LP |
| | | | | | |
| | | By: /s/ David E. Sharbutt
Name: David E. Sharbutt
Title: President |
|
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
| | | | |
| NAME | | TITLE | | DATE |
|
| /s/ David E. Sharbutt | | Chairman of the Board of Directors and Chief Executive Officer
(Principal Executive Officer) | | April 16, 2004 |
|
| David E. Sharbutt |
|
| /s/ Kendall W. Cowan | | Chief Financial Officer and Director (Principal Financial and Accounting Officer) | | April 15, 2004 |
|
| Kendall W. Cowan |
|
| Alamosa Delaware GP, LLC | | Sole General Partner | | |
|
|
|
| /s/ David E. Sharbutt | | President and Sole Manager | | April 16, 2004 |
|
| David E. Sharbutt |
|
II-22
| | | | | | |
| EXHIBIT NUMBER | | EXHIBIT TITLE |
| 3.1 | | Amended and Restated Certificate of Incorporation of Alamosa Holdings, Inc., filed as Exhibit 1.1 to the Registration Statement on Form 8-A, dated February 14, 2001 (SEC File No. 000-32357) of Alamosa Holdings, Inc., which exhibit is incorporated herein by reference. |
| 3.2 | | Amended and Restated Bylaws of Alamosa Holdings, Inc., filed as Exhibit 1.2 to the Registration Statement on Form 8-A, dated February 14, 2001 (SEC File No. 000-32357) of Alamosa Holdings, Inc., which exhibit is incorporated herein by reference. |
| 3.3 | | Certificate of the Designations, Powers, Preferences and Rights of Series B Convertible Preferred Stock, filed as Exhibit 3.1 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 3.4 | | Certificate of the Designations, Powers, Preferences and Rights of Series C Convertible Preferred Stock, filed as Exhibit 3.2 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 4.1 | | Specimen Common Stock Certificate, filed as Exhibit 1.3 to the Registration Statement on Form 8-A, dated February 14, 2001 (SEC File No. 000-32357) of Alamosa Holdings, Inc., which exhibit is incorporated herein by reference. |
| 4.2 | | Form of Indenture for 12 7/8% Senior Discount Notes due 2010, by and among Alamosa PCS Holdings, Inc., the Subsidiary Guarantors party thereto and Norwest Bank Minnesota, N.A., as trustee, filed as Exhibit 4.1 to Amendment No. 2 to the Registration Statement on Form S-1, dated February 2, 2000 (Registration No. 333-93499) of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 4.3 | | Form of Global Note relating to the 12 7/8% Senior Discount Notes due 2010, filed as Exhibit 4.2 to Amendment No. 2 to the Registration Statement on Form S-1, dated February 2, 2000 (Registration No. 333-93499) of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 4.4 | | Indenture for 12½% Senior Notes due 2011, dated as of January 31, 2001, by and among Alamosa (Delaware), Inc., the Subsidiary Guarantors party thereto and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.4 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 4.5 | | Form of Global Note relating to the 12½% Senior Notes due 2011, filed as Exhibit 4.5 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 4.6 | | First Supplemental Indenture for 12 7/8% Senior Discount Notes due 2010, dated as of January 31, 2001, among Alamosa Finance, LLC, Alamosa Limited, LLC, Alamosa (Delaware), Inc. (on behalf of itself and the Existing Subsidiary Guarantors) and Wells Fargo Bank Minnesota, N.A. (formerly known as Norwest Bank Minnesota, N.A.), as trustee, filed as Exhibit 4.6 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
|
| | | | | | |
| EXHIBIT NUMBER | | EXHIBIT TITLE |
| 4.7 | | First Supplemental Indenture for 12½% Senior Notes due 2011, dated as of February 14, 2001, among Roberts Wireless Communications, L.L.C., Roberts Wireless Properties, LLC, Washington Oregon Wireless, LLC, Alamosa Holdings, LLC, Alamosa Properties, L.P., Alamosa (Wisconsin) Properties, LLC, Washington Oregon Wireless Properties, LLC, Washington Oregon Wireless Licenses, LLC, Alamosa (Delaware), Inc. (on behalf of itself and the Existing Subsidiary Guarantors) and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.7 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 4.8 | | Second Supplemental Indenture for 12 7/8% Senior Discount Notes due 2010, dated as of February 14, 2001, among Roberts Wireless Communications, L.L.C., Roberts Wireless Properties, LLC, Washington Oregon Wireless, LLC, Alamosa Holdings, LLC, Alamosa Properties, L.P., Alamosa (Wisconsin) Properties, LLC, Washington Oregon Wireless Properties, LLC, Washington Oregon Wireless Licenses, LLC, Alamosa (Delaware), Inc. (on behalf of itself and the Existing Subsidiary Guarantors) and Wells Fargo Bank Minnesota, N.A. (formerly known as Norwest Bank Minnesota, N.A.), as trustee, filed as Exhibit 4.8 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 4.9 | | Registration Rights Agreement, relating to 12½% Senior Notes due 2011, dated as of January 24, 2001, by and among Alamosa (Delaware), Inc., the Subsidiary Guarantors set forth on Schedule I thereto, Salomon Smith Barney Inc., TD Securities (USA) Inc., Credit Suisse First Boston Corporation, First Union Securities, Inc., Lehman Brothers Inc., and Scotia Capital (USA) Inc., filed as Exhibit 4.9 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 4.10 | | Rights Agreement, dated as of February 14, 2001, by and between Alamosa Holdings, Inc. and Mellon Investors Services LLC, as Rights Agent, including the form of Certificate of Designation, Preferences and Rights of Series A Preferred Stock attached as Exhibit 1 thereto and the form of Rights Certificate attached as Exhibit 2 thereto, filed as Exhibit 1.4 to the Registration Statement on Form 8-A, dated February 14, 2001 (Registration No. 000-32357) of Alamosa Holdings, Inc., which exhibit is incorporated herein by reference. |
| 4.11 | | Third Supplemental Indenture for 12 7/8% Senior Discount Notes due 2010, dated as of March 30, 2001, among SWLP, L.L.C., SWGP, L.L.C., Southwest PCS, L.P., Southwest PCS Properties, LLC, Southwest PCS Licenses, LLC, Alamosa (Delaware), Inc. (on behalf of itself and the Existing Subsidiary Guarantors) and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.10 to the Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference. |
| 4.12 | | Second Supplemental Indenture for 12½% Senior Notes due 2011, dated as of March 30, 2001, among SWLP, L.L.C., SWGP, L.L.C., Southwest PCS, L.P., Southwest PCS Properties, LLC, Southwest PCS Licenses, LLC, Alamosa (Delaware), Inc. (on behalf of itself and the Existing Subsidiary Guarantors) and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.11 to the Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference. |
| 4.13 | | Indenture for 13 5/8% Senior Notes due 2011, dated August 15, 2001, among Alamosa (Delaware), Inc., the Subsidiary Guarantors party thereto, and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.12 to the Registration Statement on Form S-4, dated August 28, 2001 (Registration No. 333-68538) of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference. |
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| EXHIBIT NUMBER | | EXHIBIT TITLE |
| 4.14 | | Form of Global Note relating to the 13 5/8% Senior Notes due 2011, filed as Exhibit 4.13 to the Registration Statement on Form S-4, dated August 28, 2001 (Registration No. 333-68538) of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference. |
| 4.15 | | Registration Rights Agreement, dated August 7, 2001, by and among Alamosa (Delaware), Inc., the Subsidiary Guarantors set forth on Schedule I thereto, Salomon Smith Barney Inc., TD Securities (USA) Inc., First Union Securities, Inc., and Scotia Capital (USA) Inc., relating to the 13 5/8% Senior Notes due 2011, filed as Exhibit 4.14 to the Registration Statement on Form S-4, dated August 28, 2001 (Registration No. 333-68538) of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference. |
| 4.16 | | Indenture for 11% Senior Notes due 2010, dated as of November 10, 2003, among Alamosa (Delaware), Inc., the Subsidiary Guarantors party thereto and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.1 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 4.17 | | Global Note relating to the 11% Senior Notes due 2010, filed as Exhibit 4.3 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 4.18 | | Indenture for 12% Senior Discount Notes due 2009, dated as of November 10, 2003, among Alamosa (Delaware), Inc., the Subsidiary Guarantors party thereto and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.2 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 4.19 | | Global Note relating to the 12% Senior Discount Notes due 2009, filed as Exhibit 4.4 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 4.20 | | Fourth Supplemental Indenture for 12 7/8% Senior Discount Notes due 2010, dated as of September 11, 2003, among Alamosa Holdings, Inc., Alamosa (Delaware), Inc., the Subsidiary Guarantors set forth on Schedule I thereto and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.5 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 4.21 | | Fifth Supplemental Indenture for 12 7/8% Senior Discount Notes due 2010, dated as of October 29, 2003, among Alamosa Holdings, Inc., Alamosa (Delaware), Inc., the Subsidiary Guarantors set forth on Schedule I thereto and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.6 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 4.22 | | Third Supplemental Indenture for 12½% Senior Notes due 2011, dated as of September 11, 2003, among Alamosa Holdings, Inc., Alamosa (Delaware), Inc., the Subsidiary Guarantors set forth on Schedule I thereto and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.7 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
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| EXHIBIT NUMBER | | EXHIBIT TITLE |
| 4.23 | | Fourth Supplemental Indenture for 12½% Senior Discount Notes due 2011, dated as of October 29, 2003, among Alamosa Holdings, Inc., Alamosa (Delaware), Inc., the Subsidiary Guarantors set forth on Schedule I thereto and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.8 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 4.24 | | First Supplemental Indenture for 13 5/8% Senior Notes due 2011, dated as of September 11, 2003, among Alamosa Holdings, Inc., Alamosa (Delaware), Inc., the Subsidiary Guarantors set forth on Schedule I thereto and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.9 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 4.25 | | Second Supplemental Indenture for 13 5/8% Senior Discount Notes due 2011, dated as of October 29, 2003, among Alamosa Holdings, Inc., Alamosa (Delaware), Inc., the Subsidiary Guarantors set forth on Schedule I thereto and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.10 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 4.26 | | Indenture for 8½% Senior Notes due 2012, dated as of January 20, 2004, among Alamosa (Delaware), Inc., the Subsidiary Guarantors party thereto and Wells Fargo Bank Minnesota, N.A., as trustee, filed as Exhibit 4.26 to Form 10-K of Alamosa Holdings, Inc. for the year period ended December 31, 2003 which exhibit is incorporated herein by reference. |
| 4.27 | | Form of Global Note relating to the 8½% Senior Notes due 2012, filed as Exhibit 4.27 to Form 10-K of Alamosa Holdings, Inc. for the year period ended December 31, 2003 which exhibit is incorporated herein by reference. |
| 4.28 | | Registration Rights Agreement, dated as of January 20, 2004, by and among Alamosa (Delaware), Inc., the Guarantors listed on the signature pages thereto, UBS Securities LLC, Bear, Stearns & Co. Inc. and Lehman Brothers Inc., relating to the 8½% Senior Notes due 2012, filed as Exhibit 4.28 to Form 10-K of Alamosa Holdings, Inc. for the year period ended December 31, 2003 which exhibit is incorporated herein by reference. |
| 5.1** | | Form of Opinion of Skadden, Arps, Slate, Meagher & Flom LLP. |
| 10.1 | | CDMA 1900 SprintCom Additional Affiliate Agreement dated as of December 21, 1998, by and between Alamosa PCS, LLC and Northern Telecom, Inc., filed as Exhibit 10.1 to Amendment No. 3 to the Registration Statement on Form S-1, dated February 2, 2000 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 10.2 | | Amendment No. 1 to DMS-MTX Cellular Supply Agreement dated as of January 12, 1999, by and between Alamosa PCS, LLC and Northern Telecom Inc., filed as Exhibit 10.2 to Amendment No. 3 to the Registration Statement on Form S-1, dated February 2, 2000 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 10.3 | | Amendment No. 2 to DMS-MTX Cellular Supply Agreement, dated as of March 1, 1999, by and between Alamosa PCS, LLC and Northern Telecom Inc., filed as Exhibit 10.3 to Amendment No. 3 to the Registration Statement on Form S-1, dated February 2, 2000 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
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| EXHIBIT NUMBER | | EXHIBIT TITLE |
| 10.4 | | Amendment No. 3 to DMS-MTX Cellular Supply Agreement, dated as of August 11, 1999, by and between Alamosa PCS, LLC and Northern Telecom Inc., filed as Exhibit 10.4 to Amendment No. 1 to the Registration Statement on Form S-1, dated December 23, 1999 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 10.5 | | Sprint PCS Management Agreement (Wisconsin), as amended by Addendum I, dated as of December 6, 1999 by and between Sprint Spectrum, L.P., WirelessCo, L.P. and Alamosa Wisconsin Limited Partnership, filed as Exhibit 10.10 to Amendment No. 3 to the Registration Statement on Form S-1, dated February 2, 2000 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 10.6 | | Sprint PCS Services Agreement (Wisconsin,) dated as of December 6, 1999, by and between Sprint Spectrum, L.P. and Alamosa Wisconsin Limited Partnership, filed as Exhibit 10.11 to Amendment No. 3 to the Registration Statement on Form S-1, dated February 2, 2000 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 10.7 | | Sprint Trademark and Service Mark License Agreement (Wisconsin), dated as of December 6, 1999, by and between Sprint Communications Company, L.P. and Alamosa Wisconsin Limited Partnership, filed as Exhibit 10.12 to Amendment No. 3 to the Registration Statement on Form S-1, dated February 2, 2000 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 10.8 | | Sprint Spectrum Trademark and Service Mark License Agreement (Wisconsin), dated as of December 6, 1999, by and between Sprint Spectrum, L.P. and Alamosa Wisconsin Limited Partnership, filed as Exhibit 10.13 to Amendment No. 3 to the Registration Statement on Form S-1, dated February 2, 2000 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 10.9 | | Engineering Service Contract, System Design and Construction Inspection, dated as of July 27, 1998, as amended, by and between Alamosa PCS, LLC and Hicks & Ragland Engineering Co., Inc., filed as Exhibit 10.14 to Amendment No. 1 to the Registration Statement on Form S-1, dated December 23, 1999 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 10.10 | | Master Site Development and Lease Agreement, as amended, dated as of August 1998, by and between Alamosa PCS, LLC and Specialty Capital Services, Inc., filed as Exhibit 10.15 to Amendment No. 3 to the Registration Statement on Form S-1, dated December 23, 1999 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 10.11+ | | Amended and Restated Employment Agreement, dated as of October 1, 2002, by and between Alamosa Holdings, Inc. and David E. Sharbutt, filed as Exhibit 10.11 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2002, which exhibit is incorporated herein by reference. |
| 10.12+ | | Amended and Restated Employment Agreement, dated as of October 1, 2002, by and between Alamosa Holdings, Inc. and Kendall W. Cowan, filed as Exhibit 10.12 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2002, which exhibit is incorporated herein by reference. |
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| EXHIBIT NUMBER | | EXHIBIT TITLE |
| 10.13 | | Sprint PCS Management Agreement, as amended by Addendum I, dated as of December 23, 1999, by and between Sprint Spectrum, L.P., WirelessCo, L.P., Cox Communications PCS, L.P., Cox CPS License, LLC, SprintCom, Inc. and Alamosa PCS, LLC, filed as Exhibit 10.22 to Amendment No. 2 to the Registration Statement on Form S-1, dated January 19, 2000 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 10.14 | | Sprint PCS Services Agreement, dated as of December 23, 1999, by and between Sprint Spectrum, L.P. and Alamosa PCS, LLC, filed as Exhibit 10.23 to Amendment No. 2 to the Registration Statement on Form S-1, dated January 19, 2000 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 10.15 | | Sprint Trademark and Service Mark License Agreement, dated as of December 23, 1999, by and between Sprint Communications Company, L.P. and Alamosa PCS, LLC, filed as Exhibit 10.24 to Amendment No. 2 to the Registration Statement on Form S-1, dated January 19, 2000 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 10.16 | | Sprint Spectrum Trademark and Service Mark License Agreement, dated as of December 23, 1999, by and between Sprint Spectrum, L.P. and Alamosa PCS, LLC, filed as Exhibit 10.25 to Amendment No. 2 to the Registration Statement on Form S-1, dated January 19, 2000 (Registration No. 333-89995), of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.), which exhibit is incorporated herein by reference. |
| 10.17 | | Amendment No. 4 to DMS-MTX Cellular Supply Agreement by and between Alamosa PCS, LLC and Nortel Networks Inc. (successor in interest to Northern Telecom Inc.) effective as of February 8, 2000, filed as Exhibit 10.20 to Form 10-K of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.) for the year ended December 31, 1999, which exhibit is incorporated herein by reference. |
| 10.18 | | Amended and Restated Master Design Build Agreement, dated as of March 21, 2000, by and between Texas Telecommunications, LP and Alamosa Wisconsin Limited Partnership and SBA Towers, Inc., filed as Exhibit 10.23 to Form 10-K of Alamosa (Delaware), Inc. (formerly Alamosa PCS Holdings, Inc.) for the year ended December 31, 1999, which exhibit is incorporated herein by reference. |
| 10.19+ | | Amended and Restated Employment Agreement dated as of October 1, 2002, by and between Alamosa Holdings, Inc. and Loyd I. Rinehart, filed as Exhibit 10.19 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2002, which exhibit is incorporated herein by reference. |
| 10.20 | | Addendum II to Sprint PCS Management Agreement (Wisconsin), dated as of February 3, 2000 and effective as of February 8, 2000, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company, L.P. and Alamosa Wisconsin Limited Partnership, filed as Exhibit 10.27 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.21 | | Addendum III to Sprint PCS Management Agreement (Wisconsin), dated as of April 25, 2000 and effective as of March 15, 2000, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company, L.P. and Alamosa Wisconsin Limited Partnership, filed as Exhibit 10.28 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
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| EXHIBIT NUMBER | | EXHIBIT TITLE |
| 10.22 | | Addendum IV to Sprint PCS Management Agreement (Wisconsin), dated as of June 23, 2000, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company, L.P. and Alamosa Wisconsin Limited Partnership, filed as Exhibit 10.29 to Form 10-K of Alamosa Holdings, Inc., for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.23 | | Addendum V to Sprint PCS Management Agreement (Wisconsin), dated as of February 14, 2001, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company, L.P. and Alamosa Wisconsin Limited Partnership, filed as Exhibit 10.30 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.24 | | Addendum II to Sprint PCS Management Agreement, dated as of February 3, 2000 and effective as of February 8, 2000, by and among Sprint Spectrum L.P., WirelessCo, L.P., SprintCom, Inc., Cox Communications PCS, L.P., Cox PCS License, LLC, Sprint Communications Company, L.P. and Texas Telecommunications, LP (successor in interest to Alamosa PCS, LLC), filed as Exhibit 10.31 to Form 10-K of Alamosa Holdings, Inc., for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.25 | | Addendum III to Sprint PCS Management Agreement, dated as of April 25, 2000 and effective as of March 15, 2000, by and among Sprint Spectrum L.P., WirelessCo, L.P., SprintCom, Inc., Cox Communications PCS, L.P., Cox PCS License, LLC, Sprint Communications Company, L.P. and Texas Telecommunications, LP (successor in interest to Alamosa PCS, LLC), filed as Exhibit 10.32 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.26 | | Addendum IV to Sprint PCS Management Agreement, dated as of June 23, 2000, by and among Sprint Spectrum L.P., WirelessCo, L.P., SprintCom, Inc., Sprint Communications Company, L.P., and Texas Telecommunications, LP, filed as Exhibit 10.33 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.27 | | Addendum V to Sprint PCS Management Agreement, dated as of January 8, 2001, by and among Sprint Spectrum L.P., WirelessCo, L.P., SprintCom, Inc., Cox Communications PCS, L.P., Cox PCS License, LLC, Sprint Communications Company, L.P. and Texas Telecommunications, LP, filed as Exhibit 10.34 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.28 | | Addendum VI to Sprint PCS Management Agreement, dated as of February 14, 2001, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company, L.P. and Texas Telecommunications, LP, filed as Exhibit 10.35 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.29 | | Sprint PCS Management Agreement, dated as of June 8, 1998, as amended by Addenda I – VIII between Sprint Spectrum L.P., SprintCom, Inc. and Roberts Wireless Communications, L.L.C., filed as Exhibit 10.36 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.30 | | Sprint PCS Services Agreement, dated as of June 8, 1998, between Sprint Spectrum L.P. and Roberts Wireless Communications, L.L.C., filed as Exhibit 10.37 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
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| EXHIBIT NUMBER | | EXHIBIT TITLE |
| 10.31 | | Sprint Trademark and Service Mark License Agreement, dated as of June 8, 1998, between Sprint Communications Company, L.P. and Roberts Wireless Communications, L.L.C., filed as Exhibit 10.38 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.32 | | Sprint Spectrum Trademark and Service Mark License Agreement, dated as of June 8, 1998, between Sprint Spectrum L.P. and Roberts Wireless Communications, L.L.C., filed as Exhibit 10.39 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.33 | | Sprint PCS Management Agreement, dated as of January 25, 1999, as amended by Addenda I – III, between Sprint Spectrum L.P., WirelessCo, L.P. and Washington Oregon Wireless, LLC, filed as Exhibit 10.40 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.34 | | Sprint PCS Services Agreement, dated as of January 25, 1999, between Sprint Spectrum L.P. and Washington Oregon Wireless, LLC, filed as Exhibit 10.41 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.35 | | Sprint Trademark and Service Mark License Agreement, dated as of January 25, 1999, between Sprint Communications Company, L.P. and Washington Oregon Wireless, LLC, filed as Exhibit 10.42 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.36 | | Sprint Spectrum Trademark and Service Mark License Agreement, dated as of January 25, 1999, between Sprint Spectrum L.P. and Washington Oregon Wireless, LLC, filed as Exhibit 10.42 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2000, which exhibit is incorporated herein by reference. |
| 10.37 | | Amended and Restated Employment Agreement, dated as of October 1, 2002, by and between Alamosa Holdings, Inc. and Anthony Sabatino, filed as Exhibit 10.42 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2002, which exhibit is incorporated herein by reference. |
| 10.38+ | | Amended and Restated 1999 Long Term Incentive Plan, filed as Exhibit 4.2 to the Registration Statement on Form S-8, dated January 10, 2003 (Registration No. 333- 102460) of Alamosa Holdings, Inc., which exhibit is incorporated herein by reference. |
| 10.39+ | | Amended and Restated Alamosa Holdings, Inc. Employee Stock Purchase Plan, filed as Exhibit 10.61 to the Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended June 30, 2002, which exhibit is incorporated herein by reference. |
| 10.40 | | Addendum VI to Sprint PCS Management Agreement (Wisconsin), dated as of March 30, 2001, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company, L.P. and Alamosa Wisconsin Limited Partnership, filed as Exhibit 10.45 to the Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference. |
| 10.41 | | Addendum VII to Sprint PCS Management Agreement, dated as of March 30, 2001, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company, L.P. and Texas Telecommunications LP, filed as Exhibit 10.46 to the Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572), of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference. |
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| EXHIBIT NUMBER | | EXHIBIT TITLE |
| 10.42 | | Addendum IX to Sprint PCS Management Agreement, dated as of March 30, 2001, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company, L.P. and Roberts Wireless Communications, filed as Exhibit 10.47 to the Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572), of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference. |
| 10.43 | | Addendum IV to Sprint PCS Management Agreement, dated as of March 30, 2001, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company, L.P. and Washington Oregon Wireless, LLC, filed as Exhibit 10.48 to the Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572), of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference. |
| 10.44 | | Sprint PCS Amended and Restated Management Agreement, dated March 30, 2001, as amended by Addendum IV, by and between Sprint Spectrum, L.P., SprintCom, Inc., WirelessCo, L.P., Sprint Communications Company, L.P., and Southwest PCS, L.P., filed as Exhibit 10.49 to the Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference. |
| 10.45 | | Sprint PCS Services Agreement, dated July 10, 1998, between Sprint Spectrum L.P. and Southwest PCS, L.P., filed as Exhibit 10.50 to the Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference. |
| 10.46 | | Sprint Trademark and Service Mark License Agreement, dated July 10, 1998, between Sprint Communications Company, L.P. and Southwest PCS, L.P., filed as Exhibit 10.51 to the Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference. |
| 10.47 | | Sprint Spectrum Trademark and Service Mark License Agreement, dated July 10, 1998, between Sprint Spectrum L.P. and Southwest PCS, L.P., filed as Exhibit 10.52 to the Registration Statement on Form S-4, dated May 9, 2001 (Registration No. 333-60572) of Alamosa (Delaware), Inc., which exhibit is incorporated herein by reference. |
| 10.48+ | | Amended and Restated Employment Agreement dated as of October 1, 2002 by and between Alamosa holdings, Inc. and Margaret Z. Couch, filed as Exhibit 10.60 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2002, which exhibit is incorporated herein by reference. |
| 10.49+ | | Employment Agreement dated as of December 1, 2002 by and between Alamosa Holdings, Inc. and Steven Richardson, filed as Exhibit 10.62 to Form 10-K of Alamosa Holdings, Inc. for the year ended December 31, 2002, which exhibit is incorporated herein by reference. |
| 10.50 | | Addendum VI to Sprint PCS Management Agreement and Sprint PCS Services Agreement, dated as of September 12, 2003, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company L.P. and Washington Oregon Wireless, LLC, filed as Exhibit 10.2 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 10.51 | | Addendum X to Sprint PCS Management Agreement and Sprint PCS Services Agreement, dated as of September 12, 2003, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company L.P. and Texas Telecommunications LP, filed as Exhibit 10.3 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
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| EXHIBIT NUMBER | | EXHIBIT TITLE |
| 10.52 | | Addendum V to Sprint PCS Management Agreement and Sprint PCS Services Agreement, dated as of September 12, 2003, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company L.P. and Southwest PCS, L.P., filed as Exhibit 10.4 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 10.53 | | Addendum IX to Sprint PCS Management Agreement and Sprint PCS Services Agreement, dated as of September 12, 2003, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company L.P. and Alamosa Wisconsin Limited Partnership, filed as Exhibit 10.5 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 10.54 | | Addendum X to Sprint PCS Management Agreement and Sprint PCS Services Agreement, dated as of September 12, 2003, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company L.P. and Alamosa Missouri, LLC, filed as Exhibit 10.6 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 10.55 | | Settlement Agreement and Mutual Release, dated as of September 12, 2003, by and among Sprint Spectrum L.P., SprintCom, Inc., Sprint Communications Company L.P., WirelessCo, L.P., Alamosa Holdings, Inc., Alamosa (Delaware), Inc., Alamosa Missouri, LLC, Southwest PCS, L.P., Washington Oregon Wireless LLC, Alamosa Wisconsin Limited Partnership and Texas Telecommunications LP, Filed as Exhibit 10.7 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 10.56+ | | Amendment to the Amended and Restated Alamosa Holdings, Inc. Employee Stock Purchase Plan, filed as Exhibit 10.8 to Form 10-Q of Alamosa Holdings, Inc. for the quarterly period ended September 30, 2003, which exhibit is incorporated herein by reference. |
| 10.57+* | | Amendment No. 1 to Amended and Restated Employment Agreement dated as of March 8, 2004, by and between Alamosa Holdings, Inc. and David E. Sharbutt. |
| 10.58+* | | Amendment No. 1 to Amended and Restated Employment Agreement dated as of March 8, 2004, by and between Alamosa Holdings, Inc. and Kendall Cowan. |
| 10.59+* | | Amendment No. 1 to Amended and Restated Employment Agreement dated as of March 8, 2004, by and between Alamosa Holdings, Inc. and Anthony Sabatino. |
| 10.60+* | | Amendment No. 1 to Amended and Restated Employment Agreement dated as of March 8, 2004, by and between Alamosa Holdings, Inc. and Loyd I. Rinehart. |
| 10.61* | | Addendum VII to Sprint PCS Management Agreement and Sprint PCS Services Agreement, dated March 31, 2004, by and among Sprint Spectrum L.P., Wireless Co. L.P., Sprint Communications Company L.P., and Washington Oregon Wireless, L.L.C. |
| 10.62* | | Addendum XI to Sprint PCS Management Agreement and Sprint PCS Services Agreement, dated March 31, 2004, by and among Sprint Spectrum L.P., Wireless Co, L.P., Sprint Communications Company, L.P. and Texas Telecommunications L.P. |
| 10.63* | | Addendum VI to Sprint PCS Management Agreement and Sprint PCS Services Agreement, dated March 31, 2004, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company L.P., and Southwest PCS, L.P. |
|
| | | | | | |
| EXHIBIT NUMBER | | EXHIBIT TITLE |
| 10.64* | | Addendum X to Sprint PCS Management Agreement and Sprint PCS Services Agreement, dated March 31, 2004, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company L.P., and Alamosa Wisconsin Limited Partnership. |
| 10.65* | | Addendum XI to Sprint PCS Management Agreement and Sprint PCS Services Agreement, dated March 31, 2004, by and among Sprint Spectrum L.P., WirelessCo, L.P., Sprint Communications Company L.P., and and Alamosa Missouri, LLC. |
| 12.1* | | Computation of Ratio of Earnings to Fixed Charges. |
| 23.1* | | Consent of PricewaterhouseCoopers LLP. |
| 23.2** | | Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.1). |
| 24.1 | | Powers of Attorney (included on the signature pages to the registration statement). |
| 25.1* | | Statement of Eligibility of Trustee under the Indenture. |
| 99.1* | | Form of Letter of Transmittal. |
| 99.2* | | Form of Notice of Guaranteed Delivery. |
| 99.3* | | Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. |
| 99.4* | | Form of Letter to Clients. |
|
| + | Exhibit is management contract or compensatory plan. |
| * | Exhibit is filed herewith. |
| ** | Exhibit to be filed by amendment. |
| (b) | Financial Statement Schedules: |
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