Exhibit 2.1
August 9, 2002
Mr. Xxxxxx Xxxxx
Price Communications Corporation
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Dear Mr. Price:
RE: NEW LP FINANCING
We refer to (i) the Transaction Agreement dated as of December 18, 2001
(as amended by an amendment dated April 15, 2002 and the letter agreement
dated July 16, 2002) among Price Communications Corporation, Price
Communications Cellular Inc., Price Communications Cellular Holdings, Inc.,
Price Communications Wireless, Inc., Cellco Partnership and Verizon Wireless
of the East LP (the "TRANSACTION AGREEMENT") and (ii) the Exchange
Agreement dated as of December 18, 2001 among Price Communications
Corporation, Price Communications Cellular Inc., Price Communications
Cellular Holdings, Inc., Price Communications Wireless, Inc., Verizon
Communications Inc., Verizon Wireless Inc., Cellco Partnership and Verizon
Wireless of the East LP (the "EXCHANGE AGREEMENT"). Capitalized terms used
and not defined herein shall have the meanings given to such terms in the
Transaction Agreement and the Exchange Agreement.
Notwithstanding the terms set forth in the Transaction Agreement and the
Exchange Agreement, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree that:
(1) The definition of ""EXCESS FINANCING COST" contained in Section 1.01(a)
of the Transaction Agreement is hereby amended and restated in its entirety
as follows:
"EXCESS FINANCING COST" means all reasonable out-of-pocket fees
and other costs and expenses incurred by New LP in connection with the
proposed financing by Xxxxxxx Xxxxx Credit Partners L.P. and the New LP
Financing."
(2) Section 1.01(a) of the Transaction Agreement is hereby amended to
insert the following new definition:
"VCI" means Verizon Communications Inc., a Delaware corporation,
and its successors.""
(3) Section 1.01(b) of the Transaction Agreement is hereby amended to
insert the following terms in appropriate alphabetical order:
Company Guarantee 14.02(q)
Lender Security Agreement 14.02(s)
New Lender 2.06(c)
New LP Preamble
New LP Refinancing 2.06(c)
Price Parent Guarantee 14.02(r)
Vodafone 2.06(a)
VZW Notes 2.06(b)
(4) Section 2.06 of the Transaction Agreement is hereby amended and
restated in its entirety as follows:
"Section 2.06. NEW LP FINANCING. (a) Immediately prior to the
Closing, New LP will, and Cellco will cause New LP to, obtain debt
financing in an amount equal to $350 million (the "NEW LP FINANCING")
from VCI or a wholly-owned Subsidiary of VCI (the "LENDER"); PROVIDED
that (i) the definitive documentation relating to the New LP
Financing shall be reasonably satisfactory to Price Parent and (ii)
the New LP Financing (A) shall be non-recourse to the partners of New
LP (other than pursuant to the Company Guarantee or the Price Parent
Guarantee) and (B) shall not obligate New LP to repay such financing
or any portion thereof (other than upon an event of default based
upon any bankruptcy or insolvency related event) prior to four years
and six months after the Closing Date, except in the event of a VCI
Call Exchange, in which case, not prior to six months after the date
of such VCI Call Exchange. The New LP Financing shall bear interest
at an annual rate as determined in Section 2.06(b), and such interest
shall be payable in cash quarterly in arrears.
(b) Cellco shall solicit bid and ask secondary market quotations
from an unaffiliated securities dealer selected by Cellco for $10 million
principal amount of its outstanding 5.375% Notes due 2006 (the "VZW
NOTES") as of approximately 4:00 p.m., New York time, on each of the
five trading days immediately preceding the Closing Date. The annual rate
of interest payable on the New LP Financing shall be the annual yield on
the VZW Notes implied by the simple average of the midpoints of such bid
and ask quotations, and such rate shall be the annual rate of interest
referred to in clause (i)(A) of the definition of "Rate Adjustment
Percentage" in Section 1.01(a) of the New LP Agreement.
(c) Prior to VCI taking any action (including, without limitation,
as a result of or in response to the exercise by Vodafone Group
Plc ("VODAFONE") of its rights under the Investment Agreement dated as of
April 3, 2000 among Vodafone (formerly Vodafone AirTouch Plc), Verizon
Communications Inc. (formerly Xxxx Atlantic Corporation) and Cellco, as
amended from time to time, to require the purchase or repurchase of all or
a portion of Vodafone's interests in Cellco) which would increase its
interest in Cellco and result in it owning, directly
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or indirectly, 80% or more of the capital or profits interest in Cellco,
Cellco and New LP will use their commercially reasonable efforts to
obtain, immediately prior to VCI taking such action, debt financing in an
amount equal to $350 million (the "NEW LP REFINANCING") from such Person
or Persons (such Person or Persons, the "NEW LENDER") on such terms and
conditions as are determined by New LP, and the proceeds of any such New
LP Refinancing shall be used to refinance the New LP Financing; PROVIDED
that (i) the New Lender shall not be related to any partner of New LP
within the meaning of Treasury regulation Section 1.752-4(b)) and (ii) the
New LP Refinancing (A) shall be non-recourse to the partners of New LP and
Persons related to any such partners within the meaning of Treasury
regulation Section 1.752-4(b) and (B) shall not obligate New LP to repay
such financing or any portion thereof (other than upon an event of
default) prior to four years and six months after the Closing Date."
(5) Section 14.01 of the Transaction Agreement is hereby amended by
deleting clause (g) thereof.
(6) Section 14.02 of the Transaction Agreement is hereby amended by
inserting the following clauses (q), (r) and (s):
"(q) The Company shall have irrevocably and unconditionally
guaranteed the New LP Financing on terms reasonably satisfactory to New LP
(the "COMPANY GUARANTEE") and delivered to New LP all documents it may
reasonably request evidencing such guarantee; it being agreed that the
terms of such Company Guarantee shall require that, prior to the Company
being obligated to make payment under the Company Guarantee, the Lender
shall have (i) demanded payment from New LP in accordance with the terms
of the New LP Financing and (ii) exhausted all remedies against New LP. It
is understood and agreed that the Company Guarantee shall not prevent the
liquidation of the Company or the merger of the Company with or into any
other Price Corporation; PROVIDED that the obligations of the Company
under the Company Guarantee are assumed in full by any other Price
Corporation effective upon such liquidation or merger.
(r) Price Parent shall have irrevocably and unconditionally
guaranteed the Company's obligations under the Company Guarantee as and
when due on terms reasonably satisfactory to New LP (the "PRICE PARENT
GUARANTEE") and delivered to New LP all documents it may reasonably
request evidencing such guarantee.
(s) Price Parent shall have entered into a security agreement (the
"LENDER SECURITY AGREEMENT") with the Lender, in form and substance
reasonably satisfactory to New LP, securing Price Parent's obligations
under the Price Parent Guarantee and pursuant thereto have deposited at
least $70 million in cash or other property (other than the ELP Interest
or any security issued by a Person that has a direct or indirect interest
in the ELP Interest) in a collateral account in which the Lender shall
have a perfected first priority security interest; it being agreed that
the Lender Security Agreement shall (i) permit Price Parent to deposit
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additional collateral (other than the ELP Interest or any security issued
by a Person that has a direct or indirect interest in the ELP Interest) in
the collateral account at any time (with Price Parent having the right to
control the investment of the assets in the collateral account, provided
that such investments shall in no event include the ELP Interest or any
security issued by a Person that has a direct or indirect interest in the
ELP Interest), (ii) not permit Price Parent to obtain the release of any
collateral held in the collateral account other than (A) an aggregate of
up to $5 million of collateral as needed to satisfy its ordinary operating
expenses and (B) any cash interest or ordinary cash dividends paid in
respect of cash or cash equivalents or marketable securities held in the
collateral account; (iii) require that any assets held by the Price
Corporations as of the Closing Date (other than the ELP Interest, rights
under this Agreement and the Ancillary Agreements, and an amount of cash
reserved for liabilities of the Price Corporations existing and known to
be existing as of the Closing Date), which shall include, without
limitation, not less than $2 million of cash in the aggregate, and any
assets received in respect of the sale, pledge or other disposition of any
such assets, or any assets acquired, directly or indirectly, with the
proceeds of any such sale, pledge or other disposition, shall be retained
by the Price Corporations for so long as the Price Parent Guarantee is
outstanding and shall not be distributed or otherwise disposed of by the
Price Corporations (other than to Price Parent or pursuant to an
arms-length sale (or similar transaction) with a third party where the
proceeds of such sale are retained pursuant to this clause (iii)) and (iv)
provide (A) that Price Parent shall immediately pay Lender, as liquidated
damages, if it distributes or otherwise disposes of assets in breach of
clause (iii) of this Section 14.02(s) (subject to a grace period of 10
days), an amount of cash equal to the amount of such distribution or other
disposition in breach of such clause (provided that payment of such
liquidated damages shall not affect Price Parent's obligations under
clause (iii) of this Section 14.02(s)) and (B) that Price Parent agrees
that such liquidated damages are reasonable under the circumstances."
(7) Section 14.03(c) of the Transaction Agreement is hereby amended by
inserting the following immediately after "has not been withdrawn":
"and containing a revised analysis of the allocation of the liability
with respect to the New LP Financing leading to the conclusion that,
although the matter is not free from doubt, such liability should be
allocated to the Company"
(8) Section 14.03 of the Transaction Agreement is hereby amended by
inserting the following clause (j):
"(j) The definitive documentation relating to the Company Guarantee,
the Price Parent Guarantee and the Lender Security Agreement shall be
reasonably satisfactory to Price Parent."
(9) Exhibit I to the Transaction Agreement is hereby amended by (i)
amending the definition of "Transaction Documents" to also include (x) the
Company Guarantee,
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(y) the Price Parent Guarantee and (z) the Lender Security Agreement and (ii)
inserting as a new paragraph number (9) a new paragraph that is the same as
paragraph number (8) except that all references to "Pledge Agreement" shall
instead be references to the "Lender Security Agreement".
(10) Section 1.01(a) of the New LP Agreement is hereby amended to insert
the following definitions in appropriate alphabetical order:
""EXCESS INTEREST" means, for any period, the excess, if any, of the
interest expense incurred during such period by the Partnership under any
New LP Refinancing over the amount of interest expense that New LP would
have incurred during such period under the New LP Financing."
""PARTNERSHIP FINANCING" means the New LP Financing or any New LP
Refinancing."
(11) The definition of "Profits" and "Losses" in Section 1.01(a) of
the New LP Agreement is hereby amended by inserting "(other than pursuant to
Section 4.03(f))" immediately after "pursuant to Section 4.03 hereof" in
clause (v) of such definition.
(12) The definition of "Quarterly Distribution Amount" in Section
1.01(a) of the New LP Agreement is hereby amended and restated in its
entirety as follows:
""QUARTERLY DISTRIBUTION AMOUNT" means, subject to Section 5.01(c),
(i) with respect to each of the first, second and third quarters of any
fiscal year, an amount of cash estimated in good faith by the Managing
General Partner to be equal to 50.00% of Price LP's share of any Profit
for such fiscal quarter which would be allocated to Price LP's Capital
Account pursuant to Sections 4.01(b) and 4.03 if such allocation were made
on a quarterly basis, and (ii) with respect to the fourth quarter of any
fiscal year, an amount of cash equal to (A) if the Price Profit Allocation
for such fiscal year is less than the Threshold Profit Allocation for such
fiscal year, an amount of cash equal to (x) the Price Profit Allocation
minus (y) the sum of the Quarterly Distribution Amounts for the first,
second and third quarters of such fiscal year, or (B) if the Price Profit
Allocation for such fiscal year is greater than or equal to the Threshold
Profit Allocation for such fiscal year, an amount of cash equal to (x) the
Threshold Profit Allocation minus (y) the sum of the Quarterly
Distribution Amounts for the first, second and third quarters of such
fiscal year."
(13) Section 4.03 of the New LP Agreement is hereby amended by inserting
the following new clause:
"(f) EXCESS REFINANCING COSTS. All Excess Interest and all reasonable
fees and other costs and expenses (other than interest) incurred by New LP
in connection with any New LP Refinancing obtained under the circumstances
contemplated by Section 2.06(c) of the Transaction Agreement shall be
allocated to Price LP.
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(14) Section 4.04 of the New LP Agreement is hereby amended and restated
in its entirety as follows:
"Section 4.04. ALLOCATION OF LIABILITIES. Except to the extent that
Code Section 752 or Regulations thereunder are amended following the date
hereof, and based on the facts in existence as of the date hereof, (i)
liability of the Partnership for the New LP Financing shall be allocated
solely for federal income tax purposes to the Price LP and (ii) liability
of the Partnership for the New LP Refinancing shall be allocated solely
for federal income tax purposes to the Company Contributed Assets and,
therefore, to Price LP. The Partnership shall file all Partnership tax
returns consistent with the foregoing allocation and shall not take a
position inconsistent therewith as long as the allocation is permitted
under Code Section 752 and the Regulations thereunder. Notwithstanding the
foregoing, if the Managing General Partner determines in good faith that
such allocation is not permitted under Code Section 752 and the
Regulations thereunder (as interpreted from time to time by the U.S.
courts, including the Tax Court, and by official pronouncements of the
Internal Revenue Service or the Treasury department, such as revenue
rulings, revenue procedures and notices), (i) the Partnership shall inform
the Partners about the conclusion of the Managing General Partner and
shall provide the Partners with an explanation underlying such conclusion,
and (ii) the Partnership shall no longer be required to file its tax
returns in accordance with such allocation. The Partners agree that
allocating liability of the Partnership for the New LP Financing and the
New LP Refinancing, if any, to Price LP is permitted based on the law and
the facts in existence as of the date hereof."
(15) Section 5.01(a) of the New LP Agreement is hereby amended by deleting
"the second anniversary of".
(16) Section 6.09(c) of the New LP Agreement is hereby amended and
restated in its entirety as follows:
"(c) The Partnership shall not until the earlier of two days after
the Exchange Closing Date (as defined in the Exchange Agreement) and four
years and six months after the Closing Date, voluntarily prepay the
Partnership Financing, effect a defeasance with respect to the Partnership
Financing (other than a defeasance that does not affect the treatment of
the liability under Code Section 752), or intentionally take any action or
fail to take any action with the objective of causing an acceleration of
New LP's obligation to repay the Partnership Financing; PROVIDED that
nothing in this Section 6.09(c) shall prevent New LP from refinancing the
New LP Financing pursuant to Section 2.06(c) of the Transaction Agreement."
(17) Section 2.01(b) of the Exchange Agreement is hereby amended by
inserting the following sentence at the end thereof:
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"At the VWI Exchange Closing, VCI shall, or shall cause the Lender
to, as the case may be, fully and unconditionally release (i) the Company
from any and all of its obligations under the Company Guarantee and (ii)
Price Parent from any and all of its obligations under the Price Parent
Guarantee and the Lender Security Agreement."
(18) Section 2.02(a) of the Exchange Agreement is hereby amended by
inserting the following two sentences at the end thereof:
"At the time of consummation of the VCI Mandatory Exchange, provided
that New LP has a minimum net worth (defined as total assets minus total
liabilities, in each case, as reflected on the financial statements most
recently delivered pursuant to Section 7.02 of the New LP Agreement) of at
least $500 million, VCI shall, or shall cause the Lender to, as the case
may be, fully and unconditionally release (i) the Company from any and all
of its obligations under the Company Guarantee and (ii) Price Parent from
any and all of its obligations under the Price Parent Guarantee and the
Lender Security Agreement. If New LP does not have a minimum net worth of
at least $500 million at such time, then (i) the Company shall not be
released from its obligations under the Company Guarantee, (ii) Price
Parent shall not be released from its obligations under the Price Parent
Guarantee or the Lender Security Agreement and (iii) for so long as the
Company remains obligated under the Company Guarantee or Price Parent
remains obligated under the Price Parent Guarantee (A) New LP shall not
take any of the actions set forth in Section 6.04(b)(ii) through (xv) of
the New LP Agreement without Price Parent's prior written consent and
(B) New LP will use its best efforts to repay the New LP Financing within
six months after the VCI Mandatory Exchange or as soon thereafter as
practicable."
(19) Section 2.02(b) of the Exchange Agreement is hereby amended by
inserting the following two sentences at the end thereof:
"At the VCI Call Exchange Closing, provided that New LP has a minimum
net worth (defined as total assets minus total liabilities, in each case,
as reflected on the financial statements most recently delivered pursuant
to Section 7.02 of the New LP Agreement) of at least $500 million, VCI
shall, or shall cause the Lender to, as the case may be, fully and
unconditionally release (i) the Company from any and all of its
obligations under the Company Guarantee and (ii) Price Parent from any and
all of its obligations under the Price Parent Guarantee and the Lender
Security Agreement. If New LP does not have a minimum net worth of at
least $500 million at such time, then (i) the Company shall not be
released from its obligations under the Company Guarantee, (ii) Price
Parent shall not be released from its obligations under the Price Parent
Guarantee or the Lender Security Agreement and (iii) for so long as the
Company remains obligated under the Company Guarantee or Price Parent
remains obligated under the Price Parent Guarantee (A) New LP shall not
take any of the actions set forth in Section 6.04(b)(ii) through (xv) of
the New LP Agreement without Price Parent's prior written consent and (B)
New LP will use its best efforts to repay the
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New LP Financing within six months after the VCI Call Exchange Closing or
as soon thereafter as practicable."
This letter agreement shall be governed by and construed in accordance
with the law of the State of New York.
Please confirm your agreement with the foregoing by signing and returning
to the undersigned the duplicate copy of this letter enclosed herewith.
Very truly yours,
CELLCO PARTNERSHIP
By: /s/
-------------------------------------
Name:
Title:
VERIZON WIRELESS OF THE EAST LP
By: Verizon Wireless of Georgia LLC, as
General Partner
By: Cellco Partnership, as sole member of
Verizon Wireless of Georgia LLC
By: /s/
-------------------------------------
Name:
Title:
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VERIZON COMMUNICATIONS INC.
By: /s/
-------------------------------------
Name:
Title:
VERIZON WIRELESS INC.
By: /s/
-------------------------------------
Name:
Title:
Accepted and agreed as of the
date first written above:
PRICE COMMUNICATIONS CORPORATION.
By: /s/
-------------------------------------
Name:
Title:
PRICE COMMUNICATIONS CELLULAR INC.
By: /s/
-------------------------------------
Name:
Title:
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC.
By: /s/
-------------------------------------
Name:
Title:
PRICE COMMUNICATIONS WIRELESS, INC.
By: /s/
-------------------------------------
Name:
Title:
9
