Exhibit 10.5
February 28, 2000
AT&T Wireless Services, Inc.
AT&T Wireless PCS, LLC
0000 000xx Xxx, XX
Xxxxxxx, XX 00000
Gentlemen:
In connection with the Asset Exchange Agreement, dated as of February 28, 2000,
by and among AT&T Wireless PCS, LLC, a Delaware limited liability company ("AT&T
PCS LLC"), TeleCorp PCS, Inc., a Delaware corporation ("TeleCorp"), TeleCorp
PCS, LLC, a Delaware limited liability company, TeleCorp Holding Corp, Inc., a
Delaware corporation, TeleCorp Communications, Inc., a Delaware corporation,
TeleCorp Equipment Leasing, L.P., a Delaware limited partnership, TeleCorp
Realty, LLC, a Delaware limited liability company (the "Exchange Agreement") and
the Agreement and Plan of Reorganization and Contribution, dated as of February
28, 2000, by and between TeleCorp, Tritel, Inc. and AT&T Wireless Services, Inc.
(together with AT&T PCS LLC, "AT&T PCS") (the "Merger Agreement"), TeleCorp and
AT&T PCS wish to set forth certain additional mutual rights and obligations, as
set forth in this Letter Agreement ("Letter Agreement").
The parties hereto agree as follows:
1. AT&T PCS agrees to notify TeleCorp prior to consummation of the
Exchange Agreement whether AT&T PCS intends to retain, pursuant to the Exchange
Agreement, the Home Location Register ("HLR") utilized by TeleCorp in
conjunction with the Boston Licenses. In the event that AT&T PCS elects to
retain the HLR, AT&T PCS agrees to permit continued usage of the HLR by TeleCorp
free of charge for as long as reasonably necessary to permit TeleCorp to
accomplish an orderly transition. TeleCorp agrees to use reasonable efforts to
effect a prompt transition. Both parties agree to use reasonable efforts to
minimize any problems which arise during the transition.
-2- February 28, 2000
2. ADDITIONAL MARKETS. Effective upon the Closing (as such term is defined
in the Exchange Agreement) of the Exchange Agreement, the parties agree to the
following terms and conditions:
(a) DES MOINES-QUAD CITIES MTA. In the event that TeleCorp or an
affiliate acquires or enters into an agreement to acquire any PCS License in the
Des Moines-Quad Cities MTA within two years of the date of such Closing (an
"Additional Iowa License"), the area encompassed by any such Additional Iowa
License shall be included in the Licensed Territory under the Network Membership
License Agreement and shall be subject to the mutual obligations set forth in
the Roaming Agreement (as defined in the Stockholders' Agreement), provided that
AT&T PCS and its Affiliates shall not be obligated under Section 8.6(b)(i) of
the Stockholders' Agreement to program subscriber equipment so that PCS Systems
operated by TeleCorp in any such Area is the preferred provider for the
subscribers of AT&T PCS and its Affiliates.
(b) AIRADIGM. In the event that any PCS License originally granted to
Airadigm Communications, Inc. or an Affiliate is auctioned by the FCC, AT&T PCS
or an Affiliate shall enter into an agreement with a qualified entity selected
by AT&T PCS (the "Qualified Entity") pursuant to which (i) AT&T PCS shall fund
an amount equal to one-third of the purchase price of any such license for which
such Qualified Entity is the successful bidder (a "Reauctioned License"),
provided that AT&T PCS shall not be obligated to fund an amount in excess of
$33.333 million in total for such Reauctioned Licenses and TeleCorp agrees to
fund the remaining two-thirds, (ii) such Qualified Entity shall, subject to
applicable FCC requirements, promptly undertake all actions necessary to
disaggregate each Reauctioned License, so that 10 MHz of each such Reauctioned
License shall be retained by such Qualified Entity and 20 MHz of each such
Reauctioned License shall be assigned or otherwise transferred to TeleCorp. AT&T
PCS and TeleCorp shall cooperate in obtaining any regulatory approvals required
to effectuate the provisions of this Section 2(b).
3. RIGHT OF FIRST REFUSAL. Effective upon the Closing (as such term is
defined in the Merger Agreement) of the Merger Agreement, the parties agree to
the following terms and conditions:
(a) ASSET SALE. If TeleCorp enters into a binding agreement to sell,
assign, transfer or otherwise voluntarily alienate or dispose of, in one
transaction or a series of related transactions, any or all of the ROFR Assets
to any Person other than to a Subsidiary of TeleCorp, then AT&T PCS shall have a
right of first refusal to purchase all, but not less than all, of the ROFR
Assets agreed to be sold by TeleCorp (the "Offered Assets") at a per POP price
equal to the per POP price agreed to be paid by such Person. If the Offered
Assets are proposed to be sold as part of a group of assets including assets
that are not Offered Assets, the per POP price shall be equal to the per POP
price proposed to be paid for the entire group of assets (after adjusting for an
appropriate allocation of the aggregate price to any assets other than assets
relating to POPs). TeleCorp shall give notice thereof to AT&T PCS (the "Notice")
within ten
-3- February 28, 2000
(10) business days after the execution of any agreement providing for the sale
of the Offered Assets, which Notice shall specify the party which has agreed to
purchase the Offered Assets, the ROFR Assets constituting the Offered Assets and
the calculation of the per POP purchase price for such Offered Assets (the
"Purchase Price"). The Notice shall constitute a binding offer by TeleCorp to
sell all, but not less than all, of the Offered Assets to AT&T PCS, at the
Purchase Price. Within ten (10) business days of AT&T's receipt of such Notice,
AT&T PCS shall notify TeleCorp whether or not it elects to purchase all, but not
less than all, of the Offered Assets by delivering to TeleCorp written notice
(the "Purchase Notice") stating that AT&T PCS has accepted the Offer, which
Purchase Notice, if affirmative, shall constitute an irrevocable and binding
acceptance of the Offer by AT&T PCS and which shall fix a time, location and
date for the closing of such purchase, which date shall be not less than fifteen
(15) nor more than thirty (30) days after the delivery of the Purchase Notice
provided that if any FCC approvals or other governmental approvals are required
prior to consummation of the Transfer of Control, the closing shall take place
five (5) business days after the FCC or such other governmental authority shall
have granted all such approvals.
(b) TRANSFER OF CONTROL. If TeleCorp enters into a binding agreement to
effect a consolidation, merger or reorganization of TeleCorp with or into any
other Person in which the stockholders of TeleCorp shall own less than sixty
percent (60%) (calculated on an as converted basis, fully diluted) of the voting
securities of the surviving Person, or any transaction or series of related
transactions in which in excess of forty percent (40%) of TeleCorp's voting
power is transferred, or the sale, transfer or lease of all or substantially all
of the assets of TeleCorp (a "Transfer of Control") of TeleCorp, AT&T PCS shall
have a right of first refusal to purchase all, but not less than all, of the
ROFR Assets then owned by TeleCorp at a per POP price equal to the per POP price
being paid for TeleCorp as a whole in connection with such Transfer of Control
(after adjusting for an appropriate allocation of the price being paid for any
assets other than assets relating to POPs). TeleCorp shall give notice thereof
to AT&T PCS (the "Control Notice") within ten (10) business days after the first
public announcement of the execution of any agreement providing for any Transfer
of Control, which Control Notice shall specify the party which is acquiring
control of TeleCorp and which shall contain TeleCorp's calculation of the
purchase price for such ROFR Assets (the "Control Purchase Price"). The Control
Notice shall constitute a binding offer by TeleCorp to sell all, but not less
than all, of the ROFR Assets then owned by TeleCorp to AT&T PCS, at the Control
Purchase Price. Within ten (10) business days of AT&T's receipt of such Control
Notice, AT&T PCS shall notify TeleCorp whether or not it elects to purchase all,
but not less than all, of the ROFR Assets then owned by TeleCorp by delivering
to TeleCorp written notice (the "Control Purchase Notice") stating that AT&T PCS
has accepted the offer, which Control Purchase Notice, if affirmative, shall
constitute an irrevocable and binding acceptance of the offer by AT&T PCS. The
time, location and date for the closing of such purchase shall be the time,
location and date of the consummation of the Transfer of Control. If a Transfer
of Control occurs within 18 months after the Closing Date of
-4- February 28, 2000
the Merger Agreement and either (i) the markets covered by the ROFR Assets (the
"ROFR Markets") do not have at least negative 95 dB signal strength coverage
over 50% of the POPs in such markets (the "ROFR POPs") or (ii) the number of
active customers TeleCorp has in such markets is less than one percent of the
ROFR POPs, then the per POP price shall be reduced by multiplying it first by
the Penetration Percentage (as defined below) (provided that if such number is
not less than 1, it shall be deemed to be 1) and next by the Build Out
Percentage (provided that if such number is not less than 1, it shall be deemed
to be 1). The "Penetration Percentage" shall be 100 times that fraction, the
numerator of which is the number of active customers in the ROFR Markets and the
denominator of which is the total number of ROFR POPs; and the "Build Out
Percentage" shall be two multiplied by that fraction, the numerator of which is
the number of POPs covered by negative 95 dB signal strength and the denominator
of which is the total number of ROFR POPs; provided, however, that the aggregate
purchase price to be paid by AT&T PCS shall equal at least $175 per POP plus the
amount of any capital contributed and operating expenses paid by TeleCorp with
respect to the ROFR Assets.
(c) CLOSING. If AT&T PCS accepts the offer made by the Notice or
Control Notice, then the parties will enter into a purchase and sale agreement
with respect to the Offered Assets containing customary representations,
warranties and conditions; provided that, if the parties fail to do so, this
Letter Agreement will constitute the purchase and sale agreement and customary
representations, warranties and conditions shall be deemed to be incorporated by
reference herein. At the closing of such transaction, TeleCorp shall accept
payment of the Purchase Price or Control Purchase Price, as the case may be, in
cash or by certified or bank check or wire transfer, from AT&T PCS in exchange
for the Offered Assets or ROFR Assets as to which the Notice or Control Notice
applied, as the case may be, accompanied by duly executed instruments of
transfer in form and substance reasonably acceptable to AT&T PCS. Such closing
shall occur simultaneously with the closing of the Transfer of Control.
(d) TRANSFERS TO THIRD PARTIES. If AT&T PCS does not elect to purchase
all of the Offered Assets, or if AT&T PCS fails to respond in writing to the
Notice within the 10 business day period specified above, then TeleCorp shall be
free to sell all or any part of the Offered Assets, to one or more third party
transferees at an aggregate purchase price, in cash or by certified or bank
check or wire transfer, in an amount that equals or exceeds the Purchase Price
specified in the Notice; provided that such sale or issuance and sale (as the
case may be) is consummated within one hundred and twenty (120) days, with an
extension up to the earlier of (i) fifteen (15) days after governmental
approvals have been obtained and (ii) two hundred forty (240) days, after the
later of (y) the giving of the Purchase Notice to TeleCorp wherein AT&T PCS
elects not to purchase all of the Offered Assets and (z) the expiration of the
10 business day period following TeleCorp's delivery of the Notice to AT&T PCS.
If, in the event of a Transfer of Control, AT&T PCS does not elect to purchase
all of the ROFR Assets then owned by TeleCorp, or if AT&T PCS fails to respond
in writing to the Control Notice within the ten business day period specified
above, then TeleCorp
-5- February 28, 2000
shall be free to effect the Transfer of Control which gave rise to such Control
Notice without regard to the right of first refusal provided in this Section
3(b) unless the per POP price being paid for TeleCorp in connection therewith is
reduced by more than 5% from the per POP price set forth in such Control Notice,
in which event the provisions of this Section 3(b) shall again be applicable.
(e) TERMINATION. Notwithstanding the foregoing, if any agreement giving
rise to a Transfer of Control is terminated without a Transfer of Control taking
place, AT&T PCS shall have no rights to acquire the Offered Assets or the ROFR
Assets unless a new sale of assets or Transfer of Control is proposed, in which
case this Section 3 will apply to such transaction.
4. AMENDMENT OF CERTAIN AGREEMENTS.
(a) Upon the consummation of the transactions contemplated by the
Exchange Agreement, the Network Membership License Agreement, the Stockholders
Agreement, the Intercarrier Roamer Services Agreement and the Roaming
Administration Agreement will be amended as shall be required to expand (or
contract) the territories to which such agreements apply to include (or exclude)
the territories covered by licenses transferred to (or by) Holding Company,
TeleCorp or an Affiliate pursuant to the Exchange Agreement.
(b) Upon the consummation of the Contribution contemplated by the
Merger Agreement, the Network Membership Agreement, the Stockholders Agreement,
the Intercarrier Roamer Services Agreement and the Roaming Administration
Agreement will be amended as shall be necessary to expand the territories to
which such agreements apply to include the territories covered by the licenses
transferred to Holding Company or an Affiliate pursuant to the Contribution.
(c) NEW AREAS MINIMUM BUILDOUT PLAN. TeleCorp hereby agrees, and
acknowledges that Holding Company, where applicable, shall be obligated to build
out new areas covered by leases transferred to the Company in the Exchange or
the Contribution ("New Areas") in accordance with a minimum buildout plan to be
agreed upon in customary form between TeleCorp or the Holding Company, as
applicable, and AT&T PCS within sixty (60) days from the date hereof, which will
provide that within five (5) years, specifying the year by year targets, the New
Areas will be built out to a level of 80% of the POPs in the Milwaukee B.T.A.
and 75% elsewhere, plus appropriate coverage of highways and interstates. POPs
are deemed built out if they have coverage of negative 95 dB signal strength (as
is currently the standard under Schedule V of the Stockholders Agreement).
5. The parties agree that at the written request of TeleCorp or AT&T PCS,
this Letter Agreement and all rights and obligations of TeleCorp hereunder shall
be assigned to and assumed by Holding Company. AT&T PCS agrees that it will
cause its Affiliates as appropriate to effect the amendments or take such other
actions as may be necessary to carry out AT&T PCS's obligations hereunder.
-6- February 28, 2000
6. ADDITIONAL DEFINITIONS.
"AFFILIATE," "INTERCARRIER ROAMER SERVICES AGREEMENT," "NETWORK
MEMBERSHIP LEASE AGREEMENT," "PCS LICENSE," "PERSON" and "ROAMING
ADMINISTRATION AGREEMENT" shall have the meanings set forth in the
Stockholders Agreement.
"BOSTON LICENSES," "EXCHANGE" and "POP" shall have the meaning as set
forth in the Exchange Agreement.
"HOLDING COMPANY" shall mean the parent company formed pursuant to the
Merger Agreement after consummation of the transactions contemplated by
the Merger Agreement.
"ROFR ASSETS" shall mean, collectively: (i) the AT&T Assets, as such
term is defined in the Exchange Agreement; (ii) all of the assets to be
transferred under the terms of the Airadigm Purchase Agreement, as such
term is defined in the Exchange Agreement; and (iii) all of the Assets
currently held by Indus, Inc., as such term is defined in that certain
Agreement and Plan of Merger among Milwaukee PCS, LLC, Milwaukee
Acquisition Subsidiary, Inc., Indus, Inc. and Xxxxxx X. Xxx, dated as
of February 26, 2000.
"STOCKHOLDERS AGREEMENT" means that certain Stockholders' Agreement by
and among, inter alia, AT&T PCS and Holding Company to be executed in
conjunction with the closing of the transactions contemplated by the
Merger Agreement.
All notices and other communications hereunder must be in writing. Any notice or
other communication hereunder will be deemed duly delivered upon receipt after
it is sent by registered or certified mail, return receipt requested, postage
prepaid, or via a reputable international overnight courier service, in each
case to the intended recipient at the address therefor set forth on the
signature page hereto. Any party hereto may give any notice or other
communication hereunder by personal delivery or telecopy, but no such notice or
other communication will be deemed to have been duly given unless and until it
actually is received by the party for whom it is intended. Any party may change
the address to which notices and other communications hereunder are to be
delivered by giving the other parties notice in the manner herein set forth.
This Letter Agreement represents the entire agreement among the parties hereto
with respect to the subject matter hereof and may not be contradicted by
evidence of prior or contemporaneous agreements of the parties. There are no
unwritten oral agreements between the parties relating to the subject matter
hereof. This Letter Agreement may not be amended or modified except by a written
instrument signed by each party hereto.
-7- February 28, 2000
THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF
LAW.
If you are in agreement with the foregoing, please execute the enclosed copy of
this Letter Agreement in the space provided below.
This Letter Agreement may be executed in counterparts which, taken together,
shall constitute one and the same instrument.
Very truly yours,
TELECORP PCS, INC.
By:
---------------------------
Name:
Title:
0000 Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
ACCEPTED AND AGREED TO:
AT&T WIRELESS PCS, LLC
-----------------------------
By:
Title:
c/o AT&T Wireless Services, Inc.
0000 000xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
AT&T WIRELESS SERVICES, INC.
----------------------------
By:
Title:
0000 000xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
