EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated as of October 18, 1999, by and among
TeleCorp PCS, Inc., a Delaware corporation ("TeleCorp"), TeleCorp Holding Corp.,
Inc., a Delaware corporation and wholly-owned subsidiary of TeleCorp ("THC"),
Gerald T. Vento and Thomas H. Sullivan (each, a "Management Stockholder"), and
the other investors referred to on Schedule I attached hereto (the
"Stockholders" and together with the Management Stockholders, the "Investors").
WHEREAS, immediately prior to the Closing of the sale of the Shares
pursuant hereto, LMDS (defined below) will effect a sale of its local multipoint
distribution services B Block license for the Orlando, BTA to THC of Orlando
LMDS, Inc. in exchange for shares ("Newco Stock") of such corporation's capital
stock (the "Spin-Off");
WHEREAS, after the Spin-Off, the Investors will continue to own all of the
issued and outstanding shares (the "Shares") of Class A Common Stock, no par
value per share ("Class A Common Stock"), Class C Common Stock, no par value per
share ("Class C Common Stock"), and Series A Preferred Stock, no par value per
share ("Series A Preferred Stock"), of TeleCorp LMDS, Inc., a Delaware
corporation ("LMDS");
WHEREAS, the Investors wish to sell and THC and TeleCorp wish for THC to
purchase all of the Shares in exchange for the shares of TeleCorp capital stock
set forth below;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows.
1. DEFINITIONS
1.1 "Affiliate" means, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with that Person. For purposes of this
definition, "control" (including the terms "controlling" and "controlled") means
the power to direct or cause the direction of the management and policies of a
Person, directly or indirectly, whether through the ownership of securities or
partnership or other ownership interests, by contract or otherwise.
1.2 "Business Day" means any day other than a Saturday, Sunday or a legal
holiday in New York, New York or any other day on which commercial banks in New
York, New York are authorized by law or governmental decree to close.
1.3 "Claim" has the meaning set forth in Section 7.4(a).
1.4 "Class A Common Stock" has the meaning set forth in the second recital.
1.5 "Class C Common Stock" has the meaning set forth in the second recital.
1.6 "Closing" has the meaning set forth in Section 2.2.
1.7 "Closing Date" has the meaning set forth in Section 2.2.
1.8 "Consents" means all consents and approvals of Governmental Authorities
or other third parties necessary to authorize, approve or permit the parties
hereto to consummate the Transactions.
1.9 "Distribution Agreement" means that certain Distribution Agreement of
even date herewith by and among the Investors and LMDS by which LMDS shall
transfer ownership of the Newco Stock to the Investors.
1.10 "FCC " means the Federal Communications Commission.
1.11 "Governmental Authority" means a Federal, state or local court,
legislature, governmental agency (including, without limitation, the United
States Department of Justice), commission or regulatory or administrative
authority or instrumentality.
1.12 "Indemnified Party" has the meaning set forth in Section 7.4(a).
1.13 "Indemnifying Party" has the meaning set forth in Section 7.4(a).
1.14 "Investors' Rights Agreement" means that certain Investors' Rights
Agreement by and among LMDS and the Investors, dated as of February 2, 1998.
1.15 "Law" means applicable common law and any statute, ordinance, code or
other law, rule, permit, permit condition, regulation, order, decree, technical
or other standard, requirement or procedure enacted, adopted, promulgated,
applied or followed by any Governmental Authority.
1.16 "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest, right of first refusal or right of others therein, or
encumbrance of any nature whatsoever in respect of such asset.
1.17 "LMDS" has the meaning set forth in the second recital.
1.18 "Losses" has the meaning set forth in Section 7.2.
1.19 "Management Stockholders" has the meaning set forth in the preamble.
1.20 "Material Adverse Effect" means a material adverse effect on the
business, financial condition, assets, liabilities or results of operations or
prospects of the Person specified.
1.21 "Person" means an individual, corporation, partnership, limited
liability company, association, joint stock company, Governmental Authority,
business trust, unincorporated organization, or other legal entity.
1.22 "Related Agreement" has the meaning set forth in Section 3.1(b).
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1.23 "Section 7.2 Indemnified Party" has the meaning set forth in Section
7.2.
1.24 "Section 7.3 Indemnified Party" has the meaning set forth in Section
7.3.
1.25 "Securities Act" means the Securities Act of 1933, as amended.
1.26 "Series A Preferred Stock" has the meaning set forth in the first
recital.
1.27 "Shares" has the meaning set forth in the recitals.
1.28 "Spin-Off" has the meaning set forth in the recitals.
1.29 "Stockholders" has the meaning set forth in the preamble.
1.30 "Stockholders' Agreement" means that certain Stockholders' Agreement
by and among LMDS and each of the Investors, dated as of February 2, 1998.
1.31 "TeleCorp" has the meaning set forth in the preamble.
1.32 "TeleCorp Stock" means an aggregate of 2,700 shares of TeleCorp's
Series C Preferred Stock, $.01 par value per share, and an aggregate of 270,000
shares of Class A Voting Common Stock, $.01 par value per share, as the same may
be adjusted from time to time in conjunction with a stock split,
recapitalization, reorganization, reclassification, or other change in the
capital structure of TeleCorp affecting such series and classes of capital stock
of TeleCorp after the date hereof.
1.33 "TeleCorp Investors Stockholders' Agreement" means that certain
Investors Stockholders' Agreement by and among AT&T Wireless PCS, LLC, the Cash
Equity Investors, as defined therein, and the Management Stockholders, dated as
of July 17, 1998, as the same may be amended, modified or supplemented in
accordance with the terms thereof.
1.34 "TeleCorp Stockholders' Agreement" means that certain Stockholders'
Agreement by and among TeleCorp, AT&T Wireless PCS, LLC, TWR Cellular, Inc., the
Cash Equity Investors, as defined therein, and the other parties named therein,
as stockholders, dated as of July 17, 1998, as the same may be amended, modified
or supplemented in accordance with the terms thereof.
1.35 "THC" has the meaning set forth in the preamble.
1.36 "Transactions" means the transactions contemplated by this Agreement.
1.37 "Transfer Agreement " means that certain Agreement of even date
herewith by and between LMDS and THC of Orlando LMDS, Inc. by which the Spin-Off
is to be effected.
2. PURCHASE PRICE; CLOSING DATE; DELIVERY
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2.1 Purchase of Shares. In consideration of the ownership of the Shares
being transferred to THC, TeleCorp shall issue to each Investor the amount of
TeleCorp Stock determined as set forth on Schedule I attached hereto on the
Closing Date.
2.2 Closing Date. The closing of the purchase and sale of the Shares (the
"Closing") shall occur on the fifth Business Day following the receipt of the
final consent necessary under Section 6.1(h) and 6.2(e) and immediately
following the closing of the Spin-Off at the offices of McDermott, Will & Emery,
28 State Street, Boston, MA 02109 at 10:00 am EST, or on such other date and at
such other time and/or place as the parties may agree (the "Closing Date").
2.3 Delivery. At the Closing, (a) each Investor shall deliver to THC stock
certificates, representing the Shares owned by him or it, duly endorsed in blank
or accompanied by stock transfer powers transferring the Shares to THC, and (b)
TeleCorp shall issue and deliver to each Investor one or more certificates
representing the TeleCorp Stock to be received by him or it.
3. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each of the Stockholders (severally as to itself and jointly and severally
with the other Investors as to LMDS), and each of the Management Stockholders
(severally as to himself, except with respect to the representations contained
in Sections 3.1(a), 3.1(c), and 3.1(d), and jointly and severally with the other
Investors as to LMDS) represents and warrants to TeleCorp and THC as of the date
hereof and as of the Closing Date with respect to itself and LMDS that:
3.1 Formation and Standing.
(a) It is a limited liability company or limited partnership, as
applicable, duly formed, validly existing and in good standing under the Laws of
its jurisdiction of formation and has the requisite power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted.
(b) It has the requisite power and authority to execute, deliver and
perform this Agreement and each other instrument, document, certificate and
agreement required or contemplated to be executed, delivered and performed
hereunder (each a "Related Agreement") to which it is or will be a party.
(c) It is duly qualified to do business in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary other than any such jurisdiction
in which the failure to be so qualified would not have a Material Adverse Effect
on it or materially adversely affect the Transactions or its ability to perform
its obligations hereunder.
(d) The execution and delivery of this Agreement or any Related Agreement
by it and the consummation of the Transactions by it have been duly and validly
authorized by its General Partner, Manager or Management Board (or other
equivalent body or authorized person) and no other proceedings on its part which
have not been taken (including, without limitation, approval of its
stockholders, partners or members) are necessary to authorize this Agreement or
any Related Agreement or to consummate the Transactions.
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(e) This Agreement has been duly executed and delivered by it and
constitutes its valid and binding obligation, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to enforcement of creditors' rights generally and may be subject to general
principles of equity. Each Related Agreement to which it is a party shall be
duly executed and delivered by it at (or prior to) the Closing and, upon such
execution and delivery, shall constitute its valid and binding obligation,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to enforcement of creditors' rights generally
and may be subject to general principles of equity.
(f) As of the Closing Date, after giving effect to the Transactions, he/it
is not in breach of any obligation under this Agreement or any Related Agreement
to which he or it is a party or any other agreement by and between he or it and
LMDS or any of the other Investors regarding LMDS and/or the Shares.
(g) As of the Closing Date, he/it is the record and beneficial owner of the
Shares determined pursuant to Schedule I, and has good and marketable title
thereto, free and clear of all Liens, and he/it has the right, power and
authority to assign, transfer and deliver all such record and beneficial
ownership of the Shares owned by him/it to THC pursuant to this Agreement.
3.2 Consents; No Conflicts. Neither the execution, delivery and performance
by it of this Agreement or any Related Agreement to which it is a party nor the
consummation of the Transactions will (a) conflict with, or result in a breach
or violation of, any provision of its organizational documents or the
Certificate of Incorporation or Bylaws of LMDS; (b) constitute, with or without
the giving of notice or passage of time or both, a breach, violation or default,
create a Lien, or give rise to any right of termination, modification,
cancellation, prepayment or acceleration, under (i) any Law or (ii) any note,
bond, mortgage, indenture, lease, agreement or other instrument, in each case
which is applicable to or binding upon it or any of its assets; or (c) require
any consent or the approval of its board of directors, general partner, members,
stockholders or similar constituent bodies, as the case may be (which approvals
have been obtained), except in each case, where such breach, violation, default,
Lien, right, or the failure to obtain or give such consent would not have a
Material Adverse Effect on it or materially adversely affect the Transactions or
its ability to perform its obligations under the Agreement and any Related
Agreement. There is no fact relating to it or its Affiliates that would be
reasonably expected to prevent it from consummating the Transactions or
performing its obligations under this Agreement or any Related Agreement.
3.3 Organization and Standing of LMDS. LMDS is a corporation duly organized
and validly existing under, and by virtue of, the laws of the State of Delaware
and is in good standing as a domestic corporation under the laws of said state.
LMDS has no subsidiaries.
3.4 Shares. The Shares are, and when issued in compliance with the
provisions of this Agreement, will be, validly issued, fully paid and
nonassessable and will be free and clear of any and all Liens.
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3.5 Authorized Capital Stock. The authorized capital stock of LMDS consists
of 12,500 shares of Class A Common Stock, of which 12,500 are issued and
outstanding as of the date hereof and of which 12,375 shall be issued and
outstanding as of the Closing Date, 37,500 shares of Class C Common Stock, of
which 37,500 are issued and outstanding as of the date hereof and of which
37,125 shall be issued and outstanding as of the Closing Date, and 420 shares of
Series A Preferred Stock, of which 420 are issued and outstanding as of the date
hereof, and as of the Closing Date, such number of shares shall be issued and
outstanding as are determined pursuant to the redemption provisions of the
Distribution Agreement, which in the aggregate shall comprise as of the Closing
Date all of the Shares. On the Closing Date, after giving effect to the
Transactions, there will not be any existing options, warrants, calls,
subscriptions, or other rights, or other agreements or commitments, obligating
LMDS to issue, transfer or sell any shares of capital stock of LMDS.
3.6 No Liabilities. As of the Closing Date before giving effect to the
Transactions, LMDS has no indebtedness or liability of any nature whatsoever,
absolute or contingent, liquidated or unliquidated. LMDS has no other business
or operations other than owning local multipoint distribution services licenses.
3.7 FCC Compliance. LMDS complies with all eligibility rules issued by the
FCC to hold LMDS licenses, including without limitation, FCC rules on foreign
ownership and the CMRS spectrum cap.
3.8 Compliance with Laws. LMDS has operated in compliance with all
applicable Laws, including all FCC Laws, environmental Laws and Laws relating to
taxes, except for noncompliance that, individually or in the aggregate, has not
and would not reasonably be expected to have a Material Adverse Effect. LMDS has
not received notice to the effect that, or otherwise been advised that, it is
not in compliance with any Laws with respect to the Shares, its business or its
operations, and it has not taken any action or failed to take any action that is
a violation of any such Laws with respect to the Shares or any of its assets,
its business or its operations, except for actions or failures to take action
that, individually or in the aggregate, have not and would not reasonably be
expected to have a Material Adverse Effect or a materially adversely affect the
Transactions.
3.9 Litigation. There are no actions, suits, proceedings or investigations
pending or, to the best of his/its knowledge, threatened against him/it or LMDS
or any of LMDS's properties before or by any court or arbitrator or any
government body, agency or official in which there is a reasonable likelihood of
an adverse decision that could have a Material Adverse Effect on LMDS's
properties or assets or the business of LMDS as presently conducted or proposed
to be conducted.
3.10 No Material Change. Since LMDS's incorporation, there has been no
material adverse change in business, prospects, financial condition, net worth
or results of operations, other than changes occurring in the ordinary course of
business which have not, individually or in the aggregate, had a Material
Adverse Effect on the business, prospects, properties or financial condition of
LMDS.
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3.11 Taxes. Since LMDS's incorporation, it has timely filed, or caused to
be timely filed, or will timely file or cause to be timely filed on or prior to
the Closing Date, all tax returns required to be filed on or prior to the
Closing Date (taking into account any extensions of time to file granted to or
on behalf of LMDS). All taxes for the respective periods covered by such returns
have been or prior to the Closing Date will be, timely paid.
3.12 Investor Acknowledgments. (a) He/it is an "accredited investor" as
defined in Regulation D of the Securities Act. His/its representatives have been
provided an opportunity to ask questions of, and have received answers thereto
from, THC and TeleCorp and their representatives regarding the terms and
conditions of his/its sale of the Shares in consideration of the issuance of the
TeleCorp Stock, and THC and TeleCorp and their proposed business generally, and
have obtained all additional information requested by him/it to verify the
accuracy of all information furnished to him/it in connection with such sale and
issuance.
(b) He/it has such knowledge and experience in financial and business
affairs that it is capable of evaluating the merits and risks of selling the
Shares in consideration of the issuance of the TeleCorp Stock hereunder.
(c) He/it is not relying on and acknowledges that no representation is
being made by any other Investor, TeleCorp, THC or any of their officers,
employees, Affiliates, agents or representatives, except for representations and
warranties expressly set forth in this Agreement, and, in particular, he/it is
not relying on, and acknowledges that no representation is being made in respect
of, (x) any projections, estimates or budgets delivered to or made available to
them of future revenues, expenses or expenditures, or future results of
operations and (y) any other information or documents delivered or made
available to him/it or his/its representatives, except for representations and
warranties expressly set forth in this Agreement and the Related Agreements and
such information and documents obtained by him/it as a stockholder of TeleCorp
and through his/its representatives who serve as members of TeleCorp's board of
directors, as the case may be.
(d) In deciding to invest in TeleCorp, he/it has relied exclusively on the
representations and warranties expressly set forth in this Agreement, and the
investigations made by himself/itself and his/its representatives and his/its
and such representatives' knowledge of the industry in which TeleCorp proposes
to operate. Based solely on such representations and warranties and such
investigations and knowledge and such information obtained by him/it by virtue
of his/its status as a stockholder of TeleCorp, and through his/its
representatives who serve as members of TeleCorp's board of directors, as the
case may be, he/it has determined that the TeleCorp Stock he/it is acquiring is
a suitable investment for him/it.
(e) He/it is acquiring the TeleCorp Stock hereunder for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof (other than in compliance with the Securities Act and all
applicable state securities laws).
4. REPRESENTATIONS AND WARRANTIES OF TELECORP AND THC
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Each of TeleCorp and THC, jointly and severally, represents and warrants to
the Investors as of the Closing Date as follows:
4.1 Organization, Power and Authority.
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware and has the requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted and as proposed to be conducted.
(b) It has the requisite power and authority to execute, deliver and
perform this Agreement and any Related Agreement to which it is a party.
(c) The execution and delivery of this Agreement or any Related Agreement
and the consummation of the Transactions by it have been duly and validly
authorized by its Board of Directors and no other proceedings which have not
been taken are necessary to authorize this Agreement or any Related Agreement to
which it is a party or to consummate the Transactions.
(d) This Agreement has been duly executed and delivered by it and
constitutes the valid and binding obligation of it, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to enforcement of creditors' rights generally and may be subject to general
principles of equity. Each Related Agreement to which it is a party shall be
duly executed and delivered by it at (or prior to) the Closing and, upon such
execution and delivery, shall constitute the valid and binding obligation of it,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to enforcement of creditors' rights generally
and may be subject to general principles of equity.
(e) As of the Closing Date, after giving effect to the Transactions, it is
not in breach of any obligation under this Agreement or any Related Agreement to
which it is a party.
4.2 Consents; No Conflicts. Neither the execution, delivery and performance
of this Agreement and any Related Agreement to which it is a party nor the
consummation of the Transactions will (a) conflict with, or result in a breach
or violation of, any provision of its organizational documents; (b) with or
without the giving of notice or passage of time or both, a breach, violation or
default, create a Lien, or give rise to any right of termination, modification,
cancellation, prepayment or acceleration, under (i) any Law or (ii) any note,
bond, mortgage, indenture, lease, agreement or other instrument, in each case
which is applicable to or binding upon it or any of its assets; or (c) require
any consent or the approval of its Board of Directors or its stockholders (which
approval has been obtained), except in each case where such breach, violation,
default, Lien, right, or the failure to obtain or give such consent would not
have a Material Adverse Effect on it or materially adversely affect the
Transactions, its ability to perform its obligations under this Agreement or any
Related Agreement or the operation of its business after the Closing Date. To
its knowledge, there is no fact relating to it or its Affiliates
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that would be reasonably expected to prevent it from consummating the
Transactions or performing its obligations under this Agreement or any Related
Agreement.
4.3 Litigation. There is no action, proceeding or investigation pending or,
to its knowledge, threatened against it or any of its properties or assets that
would have a Material Adverse Effect on its ability to consummate the
Transactions to which it is a party or to fulfill its obligations under this
Agreement or any Related Agreement to which it is a party, or to operate its
business after the Closing Date, or which seeks to prevent or challenge the
Transactions. There is no judgment, decree, injunction, rule or order
outstanding against it which would limit in any material respect its ability to
operate its business in the manner currently contemplated.
4.4 TeleCorp Stock. The TeleCorp Stock, when issued in compliance with the
provisions of this Agreement will be validly issued fully paid and
nonassessable, and shall be free of any Liens caused or created by TeleCorp,
except as set forth in that certain Stockholders Agreement by and among the
Investors, TeleCorp and the other TeleCorp stockholders named therein dated as
of July 17, 1998, as amended, and TeleCorp's Amended and Restated Certificate of
Incorporation.
4.5 Authorized Capital Stock. The authorized capital stock of TeleCorp as
of the date hereof consists of: (a) 12,595,000 shares of preferred stock, $.01
par value per share, consisting of (i) 100,000 shares of Series A Convertible
Preferred Stock, (ii) 200,000 shares of Series B Preferred Stock, (iii) 215,000
shares of Series C Preferred Stock, (iv) 50,000 shares of Series D Preferred
Stock, (v) 30,000 shares of Series E Preferred Stock, (vi) 5,000,000 shares of
Series F Preferred Stock and (vii) 7,000,000 shares of Senior Common Stock; and
(b) 190,401,000 shares of common stock, $.01 par value per share, consisting of
(i) 95,000,000 shares of Class A Voting Common Stock, (ii) 95,000,000 shares of
Class B Non-Voting Common Stock, (iii) 100,000 shares of Class C Common Stock,
(iv) 300,000 shares of Class D Common Stock, and (v) 1,000 shares of Voting
Preference Common Stock. As of the Closing Date, the authorized, issued and
outstanding shares of Preferred Stock and Common Stock of TeleCorp shall be
changed to the extent necessary in order to effect TeleCorp's initial public
offering of its Class A Voting Common Stock, and to the extent the TeleCorp
Stock is issued pursuant hereto.
5. COVENANTS
5.1 Consummation of Transactions. Each party shall use all commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable and consistent with
applicable Law to carry out all of its/his respective obligations under this
Agreement and any Related Agreement to which it/he is a party and to consummate
the Transactions, which efforts shall include, without limitation, the
following:
(a) The parties shall use all commercially reasonable efforts to cause the
Closing to occur and the Transactions to be consummated in accordance with the
terms hereof, and, without limiting the generality of the foregoing, to obtain
all necessary Consents including the approval of this Agreement and the
Transactions by all Governmental Authorities and agencies and third parties,
including the FCC, and to make all filings with and to give all notices
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to third parties which may be necessary or reasonably required in order for the
parties to consummate the Transactions.
(b) Each party shall furnish to the other parties all information
concerning such party and its Affiliates reasonably required for inclusion in
any application or filing to be made by the Company or any other party in
connection with the Transactions or otherwise to determine compliance with
applicable FCC Law.
(c) Upon the request of any other party, each party shall forthwith execute
and deliver, or cause to be executed and delivered, such further instruments of
assignment, transfer, conveyance, endorsement, direction or authorization and
other documents as may reasonably be requested by such party in order to
effectuate the purposes of this Agreement.
5.2 No Action. During the period from the date hereof until the Closing
Date, other than as required pursuant to the Transfer Agreement, the
Distribution Agreement and any documents related thereto, LMDS and the Investors
shall not (i) sell, transfer, assign or dispose of, or offer to, or enter into
any agreement, arrangement or understanding to, sell, transfer, assign or
dispose of any of the Shares or any interest therein or any of LMDS' properties
or assets, or negotiate therefor, or (ii) create, incur or suffer to exist any
Lien of any nature whatsoever relating to any of the foregoing or any interest
therein.
5.3 Waiver of Rights Under the Stockholders' Agreement. With respect to the
Transactions (i) each of the Management Stockholders hereby waives his right of
first refusal and notice requirements set forth in Section 2 of the
Stockholders' Agreement and (b) each of the Investors hereby waives its co-sale
rights and notice requirements set forth in Section 10 of the Stockholders'
Agreement.
6. CONDITIONS TO CLOSING
6.1 Conditions to Obligations of TeleCorp and THC. The obligation of
TeleCorp and THC to consummate the Transactions shall be further conditioned
upon the satisfaction or fulfillment, at or prior to the Closing, of the
following conditions by each of the other parties, unless waived by TeleCorp and
THC at or prior to the Closing:
(a) The representations and warranties of each Investor contained herein
shall be true and correct in all material respects (except for representations
and warranties that are qualified as to materiality, which shall be true and
correct), in each case when made and at and as of the Closing (except for
representations and warranties made as of a specified date, which shall be true
and correct as of such date) with the same force and effect as though made at
and as of such time, except for inaccuracies in respect of the representations
and warranties set forth in Section 3.9 (disregarding any qualifications as to
materiality contained therein), that in the aggregate would not be reasonably
expected to have a Material Adverse Effect on LMDS or such Investor or to
materially adversely affect the Transactions.
(b) Each Investor shall have performed in all material respects all
agreements contained herein or required to be performed by it at or before the
Closing.
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(c) An officer of each Investor shall have delivered to TeleCorp and THC a
certificate, dated the Closing Date, certifying as to the fulfillment of the
conditions set forth in paragraphs (a) and (b) above as to the party delivering
such certificate.
(d) All limited liability or limited partnership and other proceedings of
each of the Investors in connection with the Transactions, and all documents and
instruments incident thereto, shall be reasonably satisfactory in form and
substance to TeleCorp and THC, and each of the Investors shall have delivered to
TeleCorp and THC such receipts, documents, instruments and certificates, in form
and substance reasonably satisfactory to TeleCorp and THC which TeleCorp and THC
shall have reasonably requested in order to consummate the Transactions.
(e) All directors serving on the Board of Directors of LMDS and all of the
officers of LMDS shall resign from their respective positions except for Thomas
H. Sullivan and Gerald T. Vento.
(f) All of the agreements among the Investors and LMDS, including but not
limited to the Stockholders' Agreement and the Investors' Rights Agreement,
shall be terminated as of the Closing Date without liability.
(g) Each Investor shall deliver to THC on the Closing Date stock
certificates, representing the Shares owned by it, duly endorsed in blank or
accompanied by stock transfer powers transferring the Shares to THC.
(h) All Consents by any Governmental Authority required to permit the
consummation of the Transactions, the failure to obtain or make which would be
reasonably expected to have a Material Adverse Effect on TeleCorp, THC or LMDS
or materially adversely affect the Transactions or TeleCorp's or THC's ability
to perform its obligations under this Agreement or any Related Agreement shall
have been obtained or made.
(i) The Spin-Off and the transfer of the Newco Stock to the Investors shall
have been consummated.
(j) Each Stockholder not currently a party to the TeleCorp Investor
Stockholders' Agreement shall have executed and delivered a joinder agreement to
the TeleCorp Investor Stockholders' Agreement in form and substance reasonably
satisfactory to TeleCorp.
(k) The Investors shall certify in writing to TeleCorp and THC the number
and classification of capital stock of LMDS issued and outstanding as of the
Closing Date and that the Investors own such stock.
6.2 Conditions to the Obligations of the Investors. The obligation of each
Investor to consummate the Transactions contemplated to occur at the Closing
shall be further conditioned upon the satisfaction or fulfillment, at or prior
to the Closing, of the following conditions, unless waived by such Investor at
or prior to the Closing:
(a) The representations and warranties of TeleCorp and THC and each other
Investor contained herein shall be true and correct in all material respects
(except for representations and warranties that are qualified as to materiality,
which shall be true and
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correct), in each case when made and at and as of the Closing (except for
representations and warranties made as of a specified date, which shall be true
and correct as of such date) with the same force and effect as though made at
and as of such time, except for inaccuracies in respect of the representations
and warranties set forth in Section 4.3 (disregarding any qualifications as to
materiality contained therein) that in the aggregate would not be reasonably
expected to have a Material Adverse Effect on TeleCorp, THC or such other
Investor or to materially adversely affect the Transactions.
(b) Each of TeleCorp, THC and each other Investor shall have performed in
all material respects all agreements contained herein or required to be
performed by it at or before the Closing.
(c) An officer of TeleCorp, THC and of each other Investor, respectively,
shall have delivered to such Investor a certificate, dated the Closing Date,
certifying as to the fulfillment of the conditions set forth in paragraphs (a)
and (b) above as to the party delivering such certificate.
(d) TeleCorp shall issue and deliver to each Investor the shares of
TeleCorp Stock he or it is entitled to receive hereunder.
(e) All Consents by any Governmental Authority required to permit the
consummation of the Transactions, the failure to obtain or make which would be
reasonably expected to have a Material Adverse Effect on such Investor or
materially adversely affect the Transactions or its ability to perform its
obligations under this Agreement or any Related Agreement shall have been
obtained or made.
(f) All corporate and other proceedings of each other Investor, TeleCorp
and THC in connection with the Transactions, and all documents and instruments
incident thereto, shall be reasonably satisfactory in form and substance to such
Investor, and each other Investor, TeleCorp and THC shall have delivered to such
Investor all such receipts, documents, instruments and certificates, in form and
substance reasonably satisfactory to such Investor, which such Investor shall
have reasonably requested in order to consummate the Transactions.
(g) The Spin-Off and the transfer of the Newco Stock to the Investors shall
have been consummated.
7. SURVIVAL AND INDEMNIFICATION
7.1 Survival. The representations and warranties made in this Agreement
shall survive the Closing without regard to any investigation made by any of the
parties hereto until the second anniversary thereof and shall thereupon expire
together with any right to indemnification in respect thereof (except to the
extent a written notice asserting a claim for breach of any such representation
or warranty and describing such claim in reasonable detail shall have been given
prior to the expiration of the applicable survival period to the party which
made such representation or warranty). The covenants and agreements contained
herein to be performed or complied with prior to the Closing shall expire at the
Closing. The covenants and agreements contained in this Agreement to be
performed or complied with after the Closing shall
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survive the Closing; provided that the right to indemnification pursuant to this
Article VII in respect of a breach of a representation or warranty shall expire
upon the application of the applicable survival period of the Closing (except to
the extent written notice asserting a claim thereunder and describing such claim
in reasonable detail shall have been given prior to such expiration to the party
from whom such indemnification is sought); provided further, that the
representations and warranties made in Section 4 of this Agreement by TeleCorp
and THC to the Management Stockholders shall not survive the Closing. After the
Closing, the sole and exclusive remedy of the parties for any breach or
inaccuracy of any representation or warranty contained in this Agreement, or any
other claim (whether or not alleging a breach of this Agreement) that arises out
of the facts and circumstances constituting such breach or inaccuracy, shall be
the indemnity provided in this Article VII.
7.2 Indemnification by the Investors. Each Investor shall indemnify and
hold harmless each other Investor, TeleCorp and THC and their respective
Affiliates, and the shareholders, members, managers, directors, officers,
employees, agents and/or the legal representatives of any of them (each, a
"Section 7.2 Indemnified Party"), against all liabilities and expenses
(including amounts paid in satisfaction of judgments, in compromise, as fines
and penalties, and as counsel fees) (collectively, "Losses") incurred by him or
it in connection with the investigation, defense, or disposition of any action,
suit or other proceeding in which any Section 7.2 Indemnified Party may be
involved or with which he or it may be threatened (whether arising out of or
relating to matters asserted by third parties against a Section 7.2 Indemnified
Party or incurred or sustained by such party in the absence of a third-party
claim), that arises out of or results from (a) any representation or warranty of
such indemnifying party contained in this Agreement being untrue in any material
respect as of the date on which it was made or (b) any material default by such
indemnifying party or any of its Affiliates in the performance of their
respective obligations under this Agreement; except to the extent (but only to
the extent) any such Losses arise out of or result from the gross negligence or
willful misconduct of such Section 7.2 Indemnified Party or its Affiliates;
provided that the aggregate liability of each Management Stockholder to
indemnify Section 7.2 Indemnified Parties against Losses arising out of or
resulting from (x) the untruth in any material respect of any representation or
warranty as to LMDS made by such Management Stockholder in this Agreement, (y)
any material default by such Management Stockholder in the performance of his
obligations under this Agreement, shall be limited to the surrender to TeleCorp
of the shares of TeleCorp Stock such Management Stockholder receives hereunder
for his shares of Class A Common Stock, and Section 7.2 Indemnified Parties
seeking indemnification against any Management Stockholder for such Losses
hereunder shall not have recourse to any other assets of such Management
Stockholder.
7.3 Indemnification by TeleCorp and THC. TeleCorp and THC shall jointly and
severally indemnify and hold harmless each of the Investors and their respective
Affiliates, and the shareholders, members, managers, officers, employees, agents
and/or the legal representatives of any of them (each, a "Section 7.3
Indemnified Party"), against all Losses incurred by him or it in connection with
the investigation, defense, or disposition of any action, suit or other
proceeding in which any Section 7.3 Indemnified Party may be involved or with
which he or it may be threatened (whether arising out of or relating to matters
asserted by third parties against a Section 7.3 Indemnified Party or incurred or
sustained by such party in the absence of a third-party claim), that arises out
of or results from (a) any representation or
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warranty of TeleCorp and/or THC contained in this Agreement being untrue in any
material respect as of the date on which it was made or (b) any material default
by TeleCorp and/or THC or any of their respective Affiliates in the performance
of their respective obligations under this Agreement, except to the extent (but
only to the extent) any such Losses arise out of or result from the gross
negligence or willful misconduct of such Section 7.3 Indemnified Party or its
Affiliates; provided, that TeleCorp and THC shall not be obligated to indemnify
the Management Stockholders for any Losses arising from a breach of any
representation or warranty made in Section 4.
7.4 Procedures.
(a) The terms of this Section 7.4 shall apply to any claim (a "Claim") for
indemnification under the terms of Sections 7.2 or 7.3. The Section 7.2
Indemnified Party or Section 7.3 Indemnified Party (each, an "Indemnified
Party"), as the case may be, shall give prompt written notice of such Claim to
the indemnifying party (the "Indemnifying Party") under the applicable Section,
which party may assume the defense thereof, provided that any delay or failure
to so notify the Indemnifying Party shall relieve the Indemnifying Party of its
obligations hereunder only to the extent, if at all, that it is materially
prejudiced by reason of such delay or failure. The Indemnified Party shall have
the right to approve any counsel selected by the Indemnifying Party and to
approve the terms of any proposed settlement, such approval not to be
unreasonably delayed or withheld (unless, in the case of approval of a proposed
settlement, such settlement provides only, as to the Indemnified Party, the
payment of money damages actually paid by the Indemnifying Party and a complete
release of the Indemnified Party in respect of the claim in question).
Notwithstanding any of the foregoing to the contrary, the provisions of this
Article VII shall not be construed so as to provide for the indemnification of
any Indemnified Party for any liability to the extent (but only to the extent)
that such indemnification would be in violation of applicable law or that such
liability may not be waived, modified or limited under applicable law, but shall
be construed so as to effectuate the provisions of this Article VII to the
fullest extent permitted by law.
(b) In the event that the Indemnifying Party undertakes the defense of any
Claim, the Indemnifying Party will keep the Indemnified Party advised as to all
material developments in connection with such Claim, including, but not limited
to, promptly furnishing the Indemnified Party with copies of all material
documents filed or served in connection therewith.
(c) In the event that the Indemnifying Party fails to assume the defense of
any Claim within ten business days after receiving written notice thereof, the
Indemnified Party shall have the right, subject to the Indemnifying Party's
right to assume the defense pursuant to the provisions of this Article VII, to
undertake the defense, compromise or settlement of such Claim for the account of
the Indemnifying Party. Unless and until the Indemnified Party assumes the
defense of any Claim, the Indemnifying Party shall advance to the Indemnified
Party any of its reasonable attorneys' fees and other costs and expenses
incurred in connection with the defense of any such action or proceeding. Each
Indemnified Party shall agree in writing prior to any such advancement that, in
the event he or it receives any such advance, such Indemnified Party shall
reimburse the Indemnifying Party for such fees, costs and expenses to the extent
that it shall be determined that he or it was not entitled to indemnification
under this Article VII.
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(d) In no event shall an Indemnifying Party be required to pay in
connection with any Claim for more than one firm of counsel (and local counsel)
for each of the following groups of Indemnified Parties: (i) the Stockholders,
their respective Affiliates, and the shareholders, members, managers, officers,
employees, agents and/or the legal representatives of any of them; (ii) the
Management Stockholders, their respective successors, assigns, heirs, personal
representatives, beneficiaries, agents and/or the legal representatives of any
of them; and (iii) TeleCorp and THC and their respective Affiliates, and the
shareholders, members, managers, officers, employees, agents and/or the legal
representatives of any of them.
8. TERMINATION
8.1 Termination. In addition to any other rights of termination set forth
herein, this Agreement may be terminated, and the Transactions abandoned,
without further obligation of any party (except as set forth herein), at any
time prior to the Closing Date:
(a) by mutual written consent of the parties;
(b) by any party by written notice to the other parties, if the Closing
shall not have occurred on or before the date that is nine months after the date
hereof, provided that the party electing to exercise such right is not otherwise
in breach of its obligations under this Agreement; or
(c) by any party by written notice to the other parties, if the
consummation of the Transactions shall be prohibited by a final, non-appealable
order, decree or injunction of a court of competent jurisdiction.
8.2 Effect of Termination.
(a) In the event of a termination of this Agreement, no party hereto shall
have any liability or further obligation to any other party to this Agreement,
except as set forth in paragraph (b) below, and except that nothing herein will
relieve any party from liability for any breach by such party of this Agreement.
(b) In the event of a termination of this Agreement pursuant to Section
8.1, all provisions of this Agreement shall terminate, except Articles VII and
IX.
(c) Whether or not the Closing occurs, except as otherwise expressly
provided in this Agreement, all costs and expenses incurred in connection with
this Agreement, any Related Agreement and the Transactions shall be paid by the
party incurring such expenses.
9. MISCELLANEOUS
9.1 Amendment and Modification. This Agreement may be amended, modified or
supplemented only by written agreement of each of the parties.
9.2 Waiver of Compliance; Consents. Any failure of any of the parties to
comply with any obligation, covenant, agreement or condition herein may be
waived by the party or parties entitled to the benefits thereof only by a
written instrument signed by the party granting
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such waiver, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.
9.3 Parties in Interest; Assignment. This Agreement is binding upon and is
solely for the benefit of the parties hereto and their respective permitted
successors, legal representatives and permitted assigns. Neither the Investors
nor TeleCorp or THC may assign its rights and obligations hereunder without the
prior written consent of each of the other parties, provided that TeleCorp and
THC may assign their respective obligations to any of their Affiliates, and
provided, further, that TeleCorp and THC shall have the right to assign their
respective rights under this Agreement to the lenders (the "Lenders") named in
the Credit Agreement, dated as of July 17, 1998, by an among TeleCorp PCS, Inc.,
the lenders party thereto and the Chase Manhattan Bank, as Administrative Agent,
TD Securities (USA) Inc., as Syndication Agent, and Bankers Trust Company, as
Documentation Agent (the "Credit Agreement"), as security pursuant to the terms
of the Credit Agreement and the documents and instruments executed therewith, it
being understood that, in connection with any such assignment to the Lenders,
the Lenders shall not assume any obligations of TeleCorp or THC hereunder.
9.4 Broker's Fee. Each of the parties hereto hereby represents that, on the
basis of any actions and agreements by it, there are no brokers or finders
entitled to compensation in connection herewith.
9.5 Governing Law. This Agreement shall be governed in all respects by the
laws of the Commonwealth of Virginia without regard to the conflict of laws, and
the rules thereof.
9.6 Survival. The representations, warranties, covenants, and agreements
made in this Agreement shall survive any investigation made by the Investors,
TeleCorp or THC.
9.7 Entire Agreement. This Agreement, including the exhibits and schedules
hereto and thereto and the certificates and instruments delivered pursuant to
the terms of this Agreement, constitute the entire agreement and understanding
of the parties hereto in respect of the Transactions. This Agreement supersedes
all prior agreements and understandings between the parties with respect to such
Transactions.
9.8 Notices, etc. All notices and other communications required or
permitted under this Agreement shall be in writing and shall be delivered by
hand, overnight courier or given by electronic facsimile transmission or mailed
by first class, certified or registered mail, return receipt requested, postage
prepaid:
If to the Stockholders, at the address set forth in Schedule I hereto.
If to the Management Stockholders, to the address set forth below for
TeleCorp.
If to TeleCorp or THC, to: TeleCorp PCS, Inc.
1010 N. Glebe Road, Suite 800
Arlington, VA 22201
Attention: Thomas H. Sullivan
Telephone: (703) 236-1100
Facsimile: (703) 236-1376
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With a copy to: Friedman Kaplan & Seiler LLP
875 Third Avenue, 8th Floor
New York, New York 10022
Attention: Gregg S. Lerner
Facsimile: (212) 355-6401
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019
Attention: Mark S. Wojciechowski
Facsimile: (212) 262-1910
All notices and other communications shall be effective upon the earlier of
actual receipt thereof and (a) in the case of notices and communications sent by
personal delivery or telecopy, three hours after such notice or communication
arrives at the applicable address or was successfully sent to the applicable
telecopy number, (b) in the case of notices and communications sent by overnight
delivery service, at noon (local time) on the first business day following the
day such notice or communication was sent, and (c) in the case of notices and
communications sent by U.S. mail, five days after such notice or communication
shall have been deposited in the U.S. mail.
9.9 Severability of this Agreement. If any provision of this Agreement
shall be found by any court of competent jurisdiction to be invalid or
unenforceable, the parties waive such provision to the extent that it is found
to be invalid or unenforceable. Such provision shall, to the maximum extent
allowable by law, be modified by such court so that it becomes enforceable and,
as modified, shall be enforced as any other provision hereof, all the other
provisions hereof continuing in full force and effect.
9.10 Headings. The headings contained in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
9.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
9.12 Further Assurances. Each party hereto shall do and perform or cause to
be done and performed all such further acts and things and shall execute and
deliver all such other agreements, certificates, instruments and documents as
the other party hereto may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of the
Transactions.
9.13 Expenses. Each party hereto shall bear its own expenses incurred on
its behalf with respect to this Agreement and the Transactions, including fees
of legal counsel.
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IN WITNESS WHEREOF, the foregoing agreement is hereby executed as of the
date first above written.
TELECORP PCS, INC.
By: /s/ Thomas H. Sullivan
---------------------------------
Name: Thomas H. Sullivan
Title: Executive Vice President
TELECORP HOLDING CORP., INC.
By: /s/ Thomas H. Sullivan
---------------------------------
Name: Thomas H. Sullivan
Title: President
INVESTORS:
NORTHWOOD VENTURES LLC
By: /s/ Peter Schiff
---------------------------------
Name: Peter G. Schiff
Title: President
NORTHWOOD CAPITAL PARTNERS LLC
By:
---------------------------------
Name: Peter G. Schiff
Title: President
ONELIBERTY FUND IV, L.P.
By: OneLiberty Partners IV, LLC
By:/s/ Stephen Ricci
---------------------------------
Name: Stephen Ricci
Title: Managing Member
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/s/ Thomas Sullivan
------------------------------------
Thomas Sullivan
/s/ Gerald Vento
------------------------------------
Gerald Vento
-19-
SCHEDULE I
Series C Preferred Stock:
Name of Stockholder Shares
- ------------------- ------
OneLiberty Fund IV, L.P. 1,350
One Liberty Square
Boston, Massachusetts 02109
Northwood Ventures LLC 1,181.25
485 Underhill Boulevard
Syosset, New York 11791-3419
Northwood Capital Partners LLC 168.75
485 Underhill Boulevard
Syosset, New York 11791-3419
----------
Total: 2,700
Class A Voting Common Stock:
An aggregate of 270,000 shares of Class A Voting Common Stock shall be issued as
follows:
Stockholders:
Each Stockholder shall receive shares of Class A Voting Common Stock equal
to 270,000 multiplied by a fraction, the numerator of which shall be the
Accreted Value and denominator of which shall be the Fair Market Value.
For the purposes hereof, the term "Accreted Value" shall mean an amount
equal to the accreted value of the LMDS Series A Preferred Stock held by a
Stockholder, post-Spin-Off, less the aggregate face amount of the Series C
Preferred Stock of TeleCorp to be received by such Stockholder at Closing.
For the purposes hereof, the term "Fair Market Value" shall mean an amount
equal to the product of the per share average daily trading price of TeleCorp's
Class A Voting Common Stock for the three business days immediately preceding
the Closing Date times 270,000.
Investors:
Each Investor shall receive a number of shares of Class A Voting Common
Stock equal to the product of its pro rata common stock ownership in LMDS times
the difference between 270,000 shares and the number of shares of Class A Voting
Common Stock issued to the Stockholders above.
The parties hereto acknowledge that the Management Stockholders, in the
aggregate, own fifteen percent (15%) of the issued and outstanding common stock
of LMDS and that the Stockholders, in the aggregate, own eighty five percent
(85%) of the issued and outstanding common stock of LMDS.